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HomeMy WebLinkAboutJuly 17, 2007 Agenda AGENDA CITY OF DENTON CITY COUNCIL July 17, 2007 After determining that a quorum is present, the City Council of the City of Denton, Texas will convene in a Work Session on Tuesday, July 17, 2007 at 4:30 p.m. in the Council Work Session Room at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be consi ere 1. Receive a report, hold a discussion, and give staff direction regarding the final drafts of the Business Plan and Master Plan for the proposed Public Safety Training Facility. 2. Receive a report from the Council Nominating Committee regarding appointment recommendations to the Council Committees. 3. Requests for clarification and discussion of agenda items listed on the agenda for July 17, 2007, including but not limited to the following: A. Receive a report, hold a discussion, and give staff direction regarding a proposed Master Planned Community zoning request for the Hills of Denton Master Planned Community. 4. Receive a report, hold a discussion and give staff direction regarding nominations to the city's Boards and Commissions. The Council may convene into Closed Session under Texas Government Code Section 551.074 to deliberate and discuss the appointment and duties of public officers to boards or commissions exercising discretionary or rule making power as opposed to purely advisory powers, which includes without limitation the Construction Advisory and Appeals Board, the Economic Development Partnership Board, the Historic Landmark Commission, the Planning and Zoning Commission, the Traffic Safety Commission, and the Zoning Board of Adjustment. Following the completion of the Work Session, the City Council will convene in a Closed Meeting to consider specific items when these items are listed below under the Closed Meeting section of this agenda. When items for consideration are not listed under the Closed Meeting section of the agenda, the City Council will not conduct a Closed Meeting and will convene at the time listed below for its regular or special called meeting. The City Council reserves the right to adjourn into a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 of the TEXAS GOVERNMENT CODE, as amended, as set forth below. 1. Closed Meeting: A. Consultation with Attorney -Under Texas Government Code Section 551.071. 1. Consider and discuss status, and discuss possible settlement of litigation styled Robert T. Clifton v. City of Denton, Cause No. 4:06-cv-472, currently pending in the U.S. District Court, Eastern District, Sherman Division. ANY FINAL ACTION, DECISION, OR VOTE ON A MATTER DELIBERATED IN A CLOSED MEETING WILL ONLY BE TAKEN IN AN OPEN MEETING THAT IS HELD IN COMPLIANCE WITH TEXAS GOVERNMENT CODE, CHAPTER 551, EXCEPT TO THE EXTENT SUCH FINAL ACTION, DECISION, OR VOTE IS TAKEN IN THE CLOSED MEETING IN ACCORDANCE WITH THE PROVISIONS OF §551.086 OF THE TEXAS GOVERNMENT CODE (THE `PUBLIC POWER EXCEPTION'). THE CITY COUNCIL RESERVES THE RIGHT TO ADJOURN INTO A CLOSED MEETING OR City of Denton City Council Agenda July 17, 2007 Page 2 EXECUTIVE SESSION AS AUTHORIZED BY TEX. GOVT. CODE, §551.001, ET SE . (THE TEXAS OPEN MEETINGS ACT) ON ANY ITEM ON ITS OPEN MEETING AGENDA OR TO RECONVENE IN A CONTINUATION OF THE CLOSED MEETING ON THE CLOSED MEETING ITEMS NOTED ABOVE, IN ACCORDANCE WITH THE TEXAS OPEN MEETINGS ACT, INCLUDING, WITHOUT LIMITATION §551.071-551.086 OF THE TEXAS OPEN MEETINGS ACT. Regular Meeting of the City of Denton City Council on Tuesday, July 17, 2007 at 6:30 p.m. in the Council Chambers at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: 1. PLEDGE OF ALLEGIANCE A. U.S. Flag B. Texas Flag "Honor the Texas Flag - I pledge allegiance to thee, Texas, one and indivisible." 2. PROCLAMATIONS/PRESENTATIONS A. Proclamations/Awards 3. CONSENT AGENDA Each of these items is recommended by the Staff and approval thereof will be strictly on the basis of the Staff recommendations. Approval of the Consent Agenda authorizes the City Manager or his designee to implement each item in accordance with the Staff recommendations. The City Council has received background information and has had an opportunity to raise questions regarding these items prior to consideration. Citizens may speak on items listed on the Consent Agenda. A Request to Speak Card should be completed and returned to the City Secretary before Council considers the Consent Agenda. Citizen comments on Consent Agenda items are limited to three minutes. Listed below are bids, purchase orders, contracts, and other items to be approved under the Consent Agenda (Agenda Items A - S). This listing is provided on the Consent Agenda to allow Council Members to discuss or withdraw an item prior to approval of the Consent Agenda. If no items are pulled, Consent Agenda Items A - S below will be approved with one motion. If items are pulled for separate discussion, they will be considered as the first items following approval of the Consent Agenda. A. Consider adoption of an ordinance accepting competitive bids by way of an Interlocal Agreement with Tarrant County and awarding a contract for the purchase of cellular phone services; providing for the expenditure of funds therefor; and providing an effective date (File 3 816-Interlocal Agreement with Tarrant County for the purchase of cellular phone services, contract awarded to Progressive Concepts, Inc. in the annual estimated amount of $235,000). B. Consider adoption of an ordinance authorizing the City Manager to execute a Professional Services Agreement with the firm of Freese and Nichols, Inc. to provide engineering services for the design of the North-South Water Line Phase One Project; authorizing the expenditure of funds therefor; and providing an effective date (File 3826 in the amount of $377,600). The Public Utilities Board recommends approval (5-0). City of Denton City Council Agenda July 17, 2007 Page 3 C. Consider adoption of an ordinance accepting competitive bids and awarding a public works contract for the installation sidewalks on Carroll Boulevard; providing for the expenditure of funds therefor; and providing an effective date (Bid 3795-Carroll Boulevard Sidewalks awarded to Floyd Smith Concrete in the amount of $109,873). D. Consider adoption of an ordinance determining a sole source and approving the expenditure of funds for the purchase of the Harris Computer Systems' Public Utility Billing upgrade to NorthStar v6.x, and associated software modules available from only one source in accordance with the provision for State Law exempting such purchases from requirements of competitive bids; and providing an effective date (File 3 825-Purchase of NorthStar v6.x upgrade for Harris Public Utility Billing awarded to Harris Computer Systems in the amount of $43,740). The Public Utilities Board recommends approval (7-0). E. Consider adoption of an ordinance accepting competitive bids and awarding a contract for the purchase of wood grinding services for the City of Denton Compost Facility; providing for the expenditure of funds therefore; and providing an effective date. (Bid 3786-Wood Grinding for Compost Facility awarded to GWG Wood Group, Inc. in the estimated amount of 100,000 yards at $1.20/cubic yard for an amount not to exceed $120,000). The Public Utilities Board recommends approval (7-0). F. Consider adoption of an ordinance of the City of Denton, Texas, approving and ratifying a Letter Agreement between the City of Denton and Texas Woman's University regarding the TWU Triathlon event; authorizing and ratifying the expenditure of funds in connection therewith; and providing an effective date. G. Consider approval of the minutes of: June 4, 2007 June 5, 2007 June 12, 2007 June 19, 2007 H. Consider a request for an exception to the Noise Ordinance for the purpose of the Thin Line Film Fest sponsored by Texas Filmmakers. The event will be held at various locations throughout the City, including Quakertown Park. The film screening in Quakertown Park will be Friday and Saturday nights, August 31 and September 1, 2007. The exception is specifically requested for extension of hours for amplified sound from 10:00 p.m. until 11:00 p.m. and for an increase in decibels from 65 to 70 decibels. I. Consider a request for an exception to the Noise Ordinance for the purpose of the 9th Annual Denton Blues Festival, sponsored by the Denton Black Chamber of Commerce. The event will be held in Quakertown Park on Saturday, September 15, 2007, from 11:00 a.m. to 11:30 p.m. The exception is specifically requested to increase hours of operation for amplified sound from 10:00 p.m. until 11:30 p.m. The amplified sound will not go above the allowable 70 decibels for an outdoor concert. City of Denton City Council Agenda July 17, 2007 Page 4 J. Consider adoption of an ordinance of the City Council of Denton, Texas authorizing the City Manager to execute a Water Main Pro-Rata Reimbursement Agreement between the City of Denton, Texas and Argyle United Methodist Church for reimbursement of the costs of building a water main, through pro-rata charges paid to the city; authorizing the transfer of funds pursuant to the agreement; and providing an effective date. The Public Utilities Board recommends approval (5-0). K. Consider approval of tax refunds for the following property taxes: Name Reason Tax Amount Year 1. First American/816 N Bell LLC Overpayment 2006 $ 2,809.58 2. Seafire Properties/Ezell Air Inc DCAD Supplemental Change 2003 $ 2,530.97 3. Rayzor Inv Ltd DCAD Supplemental Change 2006 $ 1,494.82 4. First American/816 N Bell LLC Overpayment 2006 $ 1,319.75 L. Consider adoption of an ordinance approving assignment of a certain commercial airport operator's lease between Jet Works Aviation, Inc. and Jet Works Air Center Management, LLC and approving a subsequent sublease from Jet Works Aviation, Inc. to Jet Works Air Center Management, LLC; and providing an effective date. The Airport Advisory Board recommends approval (6-0). M. Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving an agreement between the City of Denton and the Denton County Housing Finance Corporation; providing for the use of funds for repairs to homebuyer housing units; authorizing the City Manager to execute the agreement and to expend funds with respect to the agreement; and providing for an effective date. N. Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving an agreement between the City of Denton and the Denton County Housing Finance Corporation; providing for the use of funds for the rehabilitation and reconstruction of owner-occupied housing; authorizing the City Manager to execute the agreement and to expend funds with respect to the agreement; and providing for an effective date. 0. Consider approval of a resolution of the City of Denton, Texas, authorizing a review of the reasonableness and prudence of gas purchases and expenditures of TXU Gas Company, now known as Atmos Energy Corporation, between November 1, 2003 and October 31, 2006; authorizing the City joining with other similarly situated cities in a coalition known as the Atmos Texas Municipalities ("ATM"); authorizing the hiring of special counsel and experts in the purchase or sale of gas; authorizing the intervention in GUD Docket No. 9732 at the Railroad Commission and related proceedings; requiring the reimbursement of reasonable legal and consultant expenses; finding that the meeting complied with the open meetings act; and declaring an effective date. City of Denton City Council Agenda July 17, 2007 Page 5 P. Consider adoption of an ordinance approving Task Order 07-C, Regulatory Services, of the Professional Services Agreement between the City of Denton and R. J. Covington Consulting (RJC) for an amount not to exceed $80,000. The Public Utilities Board recommends approval (7-0). Q. Consider adoption of an ordinance approving Task Order 07-D, Nodal Market Transition, of the Professional Services Agreement between the City of Denton and R. J. Covington Consulting (RJC) for an amount not to exceed $80,000. The Public Utility Board recommends approval (7-0). R. Consider approval of a resolution confirming the appointment of Roy VV. Minter Jr., by the City Manager, as Police Chief for the City of Denton Police Department; and declaring an effective date. S. Consider and confirm the re-appointment by the City Manager of Darhyl Ramsey to the Civil Service Commission. 4. PUBLIC HEARINGS A. Hold a public hearing and consider adoption of an ordinance regarding the rezoning of approximately 2,120 acres from Neighborhood Residential 2 (NR-2), Neighborhood Residential 3 (NR-3), Neighborhood Residential (NR-4), Neighborhood Residential 6 (NR-6), Neighborhood Residential Mixed Use 12 (NRMU-12), Neighborhood Residential Mixed Use (NRMU), Commercial Mixed Use General (CM-G), Planned Development (PD-120) and Rural Residential (RD-5) zoning districts to the Hills of Denton Master Plan Community (Hills of Denton MPC) zoning district. The property is generally located north of Loop 288, west of Locust Street (F.M. 2164), south of Milam Road and east of Bonnie Brae Street. (Z06-0026, Hills of Denton) The Planning and Zoning Commission recommends approval (7-0). B. Hold a public hearing and consider adoption of an ordinance to rezone approximately 2.962 acres from a Downtown Residential 1 (DR-1) zoning district to a Downtown Commercial General (DC-G) zoning district. The property is generally located north of Eagle Drive, east of Pacific Street and west of Myrtle Street. (Z07-0012, Access 1St Capital Bank) The Planning and Zoning Commission recommends approval (3-0). C. Hold a public hearing and consider adoption of an ordinance for a Specific Use Permit to allow a drive through associated with a temporary bank building within a Downtown Commercial General (DC-G) zoning district. The subject property is 0.544 acres in size, and is generally located on the west side of Myrtle Street, north of Eagle Drive. (507-0006, Access 1St Capital Bank) The Planning and Zoning Commission recommends approval (3-0). City of Denton City Council Agenda July 17, 2007 Page 6 5. ITEMS FOR INDIVIDUAL CONSIDERATION A. Consider adoption of an ordinance on first reading to voluntarily annex approximately 9.39 acres into the corporate city limits of the City of Denton, Texas. The first site is approximately 5.44 acres and the second site is approximately 3.95 acres. The sites to be annexed are generally located on the north side of Spencer Road between Woodrow Lane and Brinker Road (see Exhibit 1). The sites are within a tract of land described in the Mary Austin Survey Abstract Number 4 Denton County, Texas and being a part of the called 26.474 acre tract described in the Dis-Annexation Ordinance No 81-83 of the City of Denton, Texas. (A07-0002, Denton Municipal Electric Spencer Complex Annexation) The Planning and Zoning Commission recommends approval (6-0). B. Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of the "City of Denton General Obligation Bonds ($16,070,000), Series 2007"; authorizing the issuance of the bonds; approving and authorizing instruments and procedures relating to said bonds; and enacting other provisions relating to the subject. C. Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of "City of Denton General Obligation Refunding Bonds, Series 2007"; establishing parameters for the redemption of certain outstanding obligations of the city; authorizing the issuance of the bonds; approving and authorizing instruments and procedures relating to said bonds; and enacting other provisions relating to the subject. D. Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of the "City of Denton Certificates of Obligation ($11,500,000), Series 2007"; authorizing the issuance of the certificates of obligation, approving and authorizing instruments and procedures relating to said certificates of obligation, and enacting other provisions relating to the subject. E. Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of the "City of Denton Utility System Revenue Bonds ($16,740,000), Series 2007"; Authorizing the issuance of the bonds; approving and authorizing instruments and procedures relating to said bonds; and enacting other provisions relating to the subject. F. Consider approval of the removal of a signal at the intersection of McKinney Street and Wood Street and the installation of a "HAWK" pedestrian signal. The Traffic Safety Commission recommends denial (6-0). G. Consider adoption of an ordinance accepting a $15,000 matching grant from the Texas Forest Service to hire an urban forestry consultant responsible for reviewing and revising the tree preservation and code regulations and to develop an Urban Forest Master Plan that covers planting, preservation, and care of trees on public property. The Committee on the Environment recommends approval (2-0). City of Denton City Council Agenda July 17, 2007 Page 7 H. Citizen Reports 1. Review the procedures for addressing the City Council. 2. Receive citizen reports from the following: a) Jordan Hudspeth regarding concerns of Southeast Denton. b) Lanisha Hudspeth regarding concerns of Southeast Denton. c) Hagar Hudspeth regarding concerns of Southeast Denton. d) Willie Hudspeth regarding concerns of Southeast Denton. e) Karen McCormick regarding a drainage issue on Ector Street. I. New Business and Announcements This item provides a section for Council Members to suggest items for future agendas, request information from the City Manager, and/or make announcements of public interest. J. City Manager's Report K. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. L. Official Action on Closed Meeting Item(s) under Sections 551.071-551.086 of the Texas Open Meetings Act. CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the day of , 2007 at o'clock (a.m.) (p.m.) CITY SECRETARY NOTE: THE CITY OF DENTON CITY COUNCIL CHAMBERS IS ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT. THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349-8309 OR USE TELECOMMUNICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1-800-RELAY-TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED THROUGH THE CITY SECRETARY' S OFFICE. AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Fire Department ACM: Jon Fortune SUBJECT: Receive a report, hold a discussion, and give staff direction regarding the final drafts of the Business Plan and Master Plan for the proposed Public Safety Training Facility. BACKGROUND: The City of Denton community expects all police and fire personnel to be capable of delivering an outstanding level of service in routine situations and especially in times of emergency. The community desires its public safety officers to be highly trained professionals skilled in a multi- disciplined approach to law enforcement, fire protection, or emergency medical care. Delivering exceptional service demands outstanding training programs by the Police Department and Fire Department. The City of Denton's proposed training facility will dramatically improve the ability to provide for the public safety of the citizens of Denton. To measure the perception of the city's public safety officers regarding current public safety training programs, the consultant for the Master Plan of the Public Safety Training Facility developed and administered a comprehensive survey to members of the Denton Police Department and Denton Fire Department. The survey results indicated a growing concern by police officers and firefighters about the lack of training programs above the basic level, especially as they relate to inadequate training facilities. Public safety members apparently feel they receive the necessary and required training that meets the level required to maintain certification and licensing and provide quality services. However, the survey revealed that public safety officers believe that existing training facilities are outdated and do not improve the ability of officers to provide quality service to the community. Comments from members of both public safety departments placed a very high priority on the need to construct astate-of the-art joint public safety training facility to improve the overall effectiveness and success of their basic training by providing higher levels of training. While this is just one element of justifying the need for a training facility, it nevertheless indicates the rank and file public safety officers' desire to increase their training levels and enhance their professionalism. The initial cost of constructing astate-of the-art public safety training facility necessitates a substantial capital expenditure. Additionally, the facility must be adequately and properly maintained through an annual operating budget to ensure quality operations for many years. The challenge to the City of Denton is to sufficiently fund this training facility without negatively impacting the City's ability to meet its other equally important financial obligations. One of the most important aspects of a Denton public safety training facility is the opportunity to establish an operational partnership with North Central Texas College (NCTC). This relationship will offer the City the potential to offset a significant portion of the operational and maintenance costs of the facility. The community college model has the advantage of State Page 1 of 12 supported funding which enables NCTC to keep ongoing costs at a minimum, ultimately serving to make the facility more marketable. A partnership with NCTC provides a built in tenant who not only improves continuing education opportunities, but also reaches an expanded market to assist with distributing the overall costs of operating the facility. The current trend for developing public safety training facilities nationally as well as in Texas favors a cooperative partnership between community colleges and local jurisdictions. HISTORY OF PLANNING FOR A DENTON PUBLIC SAFETY TRAING FACILITY: To fully grasp the building blocks that formed the essential background for the consultant's master plan, the business plan and ultimately to the recommendations of staff, it is important to understand the historical evolution of Denton's planning for a joint public safety training center 1999/2000/2001: The Police Department and Fire Department individually conducted site visits at several other agencies and came to the conclusion that a j oint facility would be more effective and efficient than two separate training facilities in meeting overall public safety training needs. The Fire Department and Police Department proposed a training facility to the 2000 CIP Citizen Committee for approximately $13 million. Although they endorsed its need and supported the public safety benefits of the proposal, the CIP Committee could not recommend funding the training center because it did not fit within the anticipated CIP budget. 2002: At the beginning of FY01-02, as a supplement to the City's Facilities Master Plan, HOK (Hellmuth, Obata & Kassabaum) consultants developed a preliminary feasibility study for a Public Safety Training Facility. They spent substantial time with Police and Fire staffs to determine training needs related to facilities. Payment of the study's $24,000 cost came from the Police Firearms Facility Bonds account. Infrastructure costs such as parking lots, roadways, sewer, water and drainage were not taken into account by HOK. Table 1 shows the HOK's recommended phased approach. Phase 1 Phase 2 Total % Of Budget Land $1,080,000 $0 $1,080,000 8% (l2 acres @ $15, 000/acre) Fire Tower $4,206,875 $0 $4,206,875 31 Firearms Ran a $1,424,209 $0 $1,424,209 11 Driving Track $0 $3,580,889 $3,089,090 27% Classrooms $1,110,299 $1,978,799 $3,089,098 23% Total $7,821,383 $5,559,681 $13,381,071 100% Table 1. HOK Study Recommendations (2002 2003: Council approved an initial budget of $3.3 million for a Public Safety Training Facility with $2.3 million allocated for land acquisition and $1.0 million allocated for preliminary design and master p anning. 2004: On January 6, 2004, the City Council gave staff direction to proceed with the possible acquisition of an available 88-acre site on Vintage Parkway. Council also directed staff to move Page 2 of 12 forward on a feasibility study to expand the existing firing range to 10 acres of property adjacent to it on Airport Road. As a result of Council's direction to investigate the possibility of enlarging the firing range at its existing site, the Police Department eliminated the firearms range as an element of the joint public safety training facility proposal developed by HOK. As indicated in Table 2, they received $300,000 additional Certificates of Obligation (CO) bonds in the Police Firearms Facility account for making necessary enhancements to their existing range and the possible purchase of adj acent property. Original Budget from 2002 CO Bonds $50,950 Hellmuth, Obata & Kassabaum (HOK~ Study ($24,000 Budget Addition (2004 CO Bonds $300,000 Administrative Charges ($27,995 Total Remaining $298,955 Table 2. Police Firearms Facility Bonds (2002 & 2004) The City's Real Estate Group spent January through August 2004 negotiating contracts to purchase the 88-acre Vintage Parkway site and the 10-acre site adjacent to the firing range on Airport Road. Staff recommended the purchase of the 88-acre site for the Public Safety Training Facility at a cost of $2,038,022 and the City Council approved the purchase with the City Manager executing the Vintage Parkway contract on November 16, 2004. Due to the size of the purchased property and the philosophy to locate all public safety training at one location, the City Council directed Police Department Staff to develop and plan a new firearms range at the proposed Public Safety Training Facility, thereby eliminating further discussion on expanding the existing firing range and purchasing additional property. The Police Department advised that the driving track was no longer a viable option based on the estimated costs and recommended eliminating it from further discussion as an element of the joint public safety training facility proposal developed by HOK. After reviewing and updating the HOK study and eliminating the firing range and driving track, staff requested $ 8.2 million for construction of the first phase of a j Dint public safety training facility which was allocated through the budget process as follows: $1.5 million in FY06-07 and $6.7 million in FY07-08. The $8.2 million project estimation was based specifically on the following elements and phases using HOK's 2004 cost estimates (no escalation factors were added for future funding). Phase 1 Phase 2 Total % Of Budget Fire Tower $6,725,400 $0 $6,725,400 43°/° Firearms Ran a $0 $0 $0 0°/° Driving Track $0 $0 $0 0% Classrooms $1,410,156 $7,417,736 $8,827,892 57% Total $8,135,556 $7,417,736 $15,553,292 100% Table 3. Public Safety Training Facility Funding Request (2004 Page 3 of 12 2005: After a comprehensive RFP and selection process, the City hired Kirkpatrick Architectural Studio for $205,500 to master plan the Public Safety Training Facility. Several meetings were held with the consultant and all stakeholders of the training center, including NCTC, to establish needs and criteria for the facility. 2006/2007: Meetings continued with the consultant and stakeholders of the training center to prioritize needs and criteria for the facility. The Police and Fire Departments formed internal working committees to determine specifications of their specific elements of the training facility. The Police Chief and Fire Chief met with Vintage Parkway residents to present an overview of the proposed training facility. Questions regarding mitigating potential noise were addressed as well as other neighborhood concerns. Police and Fire staff members conducted significant research on the necessary elements of a training center and made field trips to other training facilities. City and NCTC staffs, along with City Council members, toured the state-of the-art Tarrant County College Fire and Law Enforcement Training Center, to see what a world class public safety training center looks like. Comparisons of Historical Data to Recommendations: 2004 Funding CIP HOK Study Funding 2004 Funding Request Consultant Study Request (2002) Request based Request Adjusted for & Staff (2000) on HOK (2004) Adjusted for Increased Recommendation Inflation (2007)3 Scope of (2007) Service (2001) Fire Tower $4,206,875 $6,725,400 $8,431,803 $0 Firearms Ran e $1,424,209 $0 $0 $18391344 $8,167,335 9 , Classrooms $1,110,299 $1,410,156 $1,767,948 $822,0362 $4,403,218::: Sub Totals $10,199,752 $2,661,170 Total $13,000,:000 $7,821,3:83 $8,135,556 $12.,860,922 $12,571,.218 Table 4. Comparison of Costs Based on Historical Evolution of Training Facility and Consultant's Estimates Using Equivalent Components Assumptions of Table 4: ~ HOK Phase 1= 7,241 square feet of classroom space. 2 Adjusted scope of service to add 3,369 square feet to match Consultant's classroom space of 10,610 square feet using $244 per square feet (7,241/$1,767,948). 3 Annual construction inflation rates as determined by the Association of General Contractors of America (AGC): 2003=3.0%; 2004=10.1 2005=6.1 2006=4.3%; 2007=2.9%. 4 Adjusted scope of service to add firearms range using HOK 2002 estimate of $1,424,209 and adjusted for inflation using AGC figures of annual construction inflation. Page 4 of 12 OPTIONS: The consultants developed four phases to reach the ultimate build out of a training facility on the 88-acre Vintage Parkway site. Phase 1 is the minimum phase using existing Certificates of Obligation and requiring no additional funding. Four options for the City Council to consider begin with Option # 1 which is only Phase 1 and then add on additional phases in succeeding options. Option #5 for City Council consideration is to not construct a new training facility, but to annually fund an equal level of training that a new facility would provide. The City of Denton has already invested $3.3 million in purchasing the land, developing a master plan and accomplishing a preliminary conceptual design and site plan. Therefore, $3.3 million should be added to the total cost of each training facility option to determine the complete costs. Staff developed a Public Safety Training Facility Business Plan to evaluate and analyze the following options for City Council consideration. Capital costs were estimated by the Master Plan consultant using January 1, 2007 costs. Estimates for increased construction costs in 2008 range up to 8% emphasizing the need to receive City Council direction on an option for the Public Safety Training Center as soon as possible. OPTION #1 Construct Public Safety Training Center Phase 1 Capital Cost of Phase 1 $8,167,335 Capifal Cosf of Phase 2 NA Capifal Cosf of Phase 3 NA Capifal Cosf of Phase 4 NA Option #1 Capital Investment $8,167,335 Inifial Capifal Costs (land, planning, design) $3, 330, 000 TOTAL OPTION #1 ESTIMATED COST $11,497,335 Annual 0 & M Cost -1St Year $451,054 "Net" Annual 0 & M Cost -1 St Year (o&M-Revenues) $294,485 Table 5. Option #1 Estimated Costs Phase 1 includes: • Two-story residence burn building • Outdoor class room • High rise burn building • Rubble pile • Trench rescue • Confined space ~ Vertical training pads • Propane tank • 10-lane shooting range • Shoot house; pavement • Detention/retentionpnnd • Training water pump system ~ Utilities and storm drainage 1. Option # 1 is the minimum phase of the training facility using appropriated FY06-07 and FY07-08 Certificates of Obligation (COs). No additional funding is anticipated. Page 5 of 12 2. Option # 1 meets the ongoing day-to-day basic training requirements of both public safety departments; however, this phase does not include classroom facilities. Therefore, it provides very limited opportunities for partnerships and the resulting sharing of costs. 3. Operations and maintenance costs have not been budgeted in the City's five-year financial forecast. The Business Plan estimates the first year 0&M of Option #1 to be $451,054 with a 25-year average annual cost of $647,750. However, the "net" 0&M (estimated 0&M minus revenues) is actually $294,485 with a 25-year average "net" 0&M of $213,350. 4. Over the 25-year analysis of financial data by the Business Plan, Option # 1 never achieves a positive net income or positive net cash flow due to the fact that expenses are always greater than revenue. Essentially, the total 0 & M cost will be an ongoing City of Denton expen iture. OPTION #2 Construct Public Safety Training Center Phases 1 and 2 Capifal Cosf of Phase 1 $8,167,335 Additional Capital Cost of Phase 2 $4,403,883 Capifal Cosf of Phase 3 NA Capifal Cosf of Phase 4 NA Option #2 Capital Investment $12,571,218 Inifial Capifal Costs (land, planning, design) $3, 330, 000 TOTAL OPTION #2 ESTIMATED COST $15,901,218 Annual 0 & M Cost -1St Year $1,099,032 "Net" Annual 0 & M Cost -1 St Year (o&M-Revenues) $316,189 Table 6. Option #2 Estimated Costs Option #2/Phase 2 includes: • All the components of Phase 1 • Adds 10,610 square feet of classroom space • Adds 5,380 square feet of office and work areas. 1. Option #2 increases the capabilities of the minimum phase (Phase 1) of a training facility by adding classroom space of 20,500 square feet. 2. Option #2 meets the ongoing day-to-day training requirements of both public safety departments and provides classroom opportunities for partnerships with the anticipated sharing of costs, including basic academies. 3. Option #2 provides an opportunity for a partnership with NCTC for fire and law enforcement programs, including basic academies. 4. Option #2 also increases the potential for regional training of fire and law enforcement personnel which will improve mutual aid and inter jurisdictional relationships. Page 6 of 12 5. Operations and maintenance costs have not been budgeted in the City's five-year financial forecast. The Business Plan estimates the first year 0&M of Option #2 to be $1,099,032 with a 25-year average annual cost of $1,703,655. However, the "net" 0&M for the first year is actually $316,189 with a 25-year average annual "net" 0&M of ($468,346). 6. According to the Business Plan, Option #2 has the highest net income of all the other options along with the earliest positive net income at year 7. In other words, revenues exceed the 0&M costs in the 7th year of operating the facility, thereby eliminating the City's 0&M expenditures after that date. 7. According to the Business Plan, Option #2 has the highest net cash flow of all the other options. OPTION #3 Construct Public Safety Training Center Phases 1, 2 and 3 Capifal Cosf of Phase 1 $8,167,335 Capifal Cosf of Phase 2 $4, 403, 883 Add itional Capital Cost of Phase 3 $10,763,682 Capifal Cosf of Phase 4 NA Option #3 Capital Investment $23,334,900 Inifial Capifal Costs (land, planning, design) $3, 330, 000 TOTAL OPTION #3 ESTIMATED COST $26,664,900 Annual 0 & M Cost -1st Year $1,599,033 "Net" Annual 0 & M Cost -1 st Year (o&M-Revenues) $816,190 Table 7. Option #3 Estimated Costs Option #3lPhase 3 includes: • All the components of Phases 1 and 2 • Additional classrooms; ~ One story residential burn building • Hotel burn building • Skill pad • Driving track/cityscape ~ Swift water rescue • 20 lane addition to shooting range ~ Utilities and storm drainage 1. Option #3 significantly increases the opportunities for partnerships with the anticipated s arong o costs. 2. In addition to meeting basic and intermediate levels, Option #3 also provides an advanced level of training to Denton police officers and firefighters that options 1 and 2 do not prove e. Page 7 of 12 3. The driving track increases the safety of public safety officers and provides substantial shared use with other agencies, including other City departments and allows certified emergency vehicle operator (CEVO) certification. 4. Option #3 provides significant opportunities with the private sector including industry and utility agencies for specialized training. 5. Option #3 increases opportunities for 2-year and 4-year fire science and criminal justice degree programs with NCTC and UNT. 6. Option #3 increases the number of shooting range lanes improving opportunities for shared use with outside agencies. Possible federal funding opportunities increase due to shared use with federal law enforcement agencies (FBI, ATF, DEA and Secret Service). 7. Option #3 allows Denton to conduct multi-agency (local, state, Feds) disaster response and recovery training. The interoperability concept under NIMS is paramount and any training Denton might initiate at the facility with regional participation avails it to certain federal preparedness funds (through COG) and grants, not to mention the reputation garnered as a result of becoming the North Texas leader in emergency response training (public and private sectors included). That reputation builds a repeat customer list for Denton and enhances its sources of potential revenue. 8. Operations and maintenance costs have not been budgeted in the City's five-year financial forecast. The Business Plan estimates the first year 0&M of Option #3 to be $1,599,033 with a 25-year average annual cost of $2,392,153. However, the actual cost to the City for the first year 0&M is only $736,685 with a 25-year average "net" 0&M cost of ($92,216). 9. According to the Business Plan, Option #3 achieves a positive net income in year 15 and a positive net cash flow in year 21. OPTION 4 Construct Public Safety Training Center Phases 1, 2, 3 and 4 Capifal Cosf of Phase 1 $8,167,335 Capifal Cosf of Phase 2 $4, 403, 883 Capifal Cosf of Phase 3 $10, 763, 682 Additional Capital Cast of Phase 4 $1,400.,:837 Option #4 Capital Investment $30,735,737 Inifial Capifal Costs (land, planning, design) $3, 330, 000 TOTAL OPTION #4 ESTIMATED COST $34,065,737 Annual 0 & M Cost -1St Year $2,006,289 "Net" Annual 0 & M Cost -1 St Year (o&M-Revenues) $1,223,448 Table 8. Option #4 Estimated Costs Option #4/Phase 4 includes: • All the components of Phases 1, 2 and 3 • Additional classrooms ~ Strip shopping center burn building Page8ofl2 ~ Convenience store burn building • Tanker truck • RR accident • Fuel spill ~ Car extrication ~ Control tower • Driving track expansion • 10 lane additional shoot range ~ Skid pad and staging area • Pavement ~ Utilities and drainage • Drafting pit 1. Option #4 provides aworld-class public safety training facility and provides the City of Denton high recognition. 2. Option #4 provides advanced training to Denton police officers and firefighters making them aworld-class public safety work force. 3. An expanded driving track provides substantial shared use with other agencies, including other City departments and allows expanded certified emergency vehicle operator (CEVO) certification with provision to outside agencies. 4. The added number of shooting range lanes further increases opportunities for shared use with outside agencies, especially State and Federal law enforcement agencies. 5. Option #4 allows Denton to conduct high level multi-agency (local, state, Feds) disaster response and recovery training. 6. Operations and maintenance costs have not been budgeted in the City's five-year financial forecast. The Business Plan estimates the first year 0&M of Option #4 to be $2,006,289 with a 25-year average annual cost of $2,965,804. The "net" 0&M is actually $1,223,448 for the first year with a 25 year "net" 0&M average of ($113,808). 7. According to the Business Plan, Option #4 achieves a positive net income in year 17 and a positive net cash flow in year 21. OPTION 5 No Training FacilitylEquivalent Training Another option for the City Council to consider is to provide the same anticipated level of training for public safety members without building a training facility. This would require substantial annual increases in current training budgets to send members outside the City to other training facilities or bring in instructors and equipment into the City. This option was analyzed in regards to how much it would cost each department to receive the same equivalent level of training that would be provided by a new City j oint training facility. Page 9 of 12 To receive the same level of training which would be provided by a new training facility, over the next 25 years, the approximate cost of $18,277,340 million (an average of $730,650 per year) would be spent for equal Fire Department training at other training facilities as indicated in the Business Plan. This training includes live fire training, Swiftwater rescue, structural collapse, hazardous materials, confined space rescue, trench rescue, high-angle rescue, vehicle extrication, fire officer I and II. The approximate cost of $8,681,298 million over the following 25 years (an average of $347,252 per year) would be spent for equal Police Department training at other training facilities. This training includes tactical rifle, tactical pistol, advanced tactical pistol, defensive tactics, advanced hostage rescue, counter ambush for patrol, accident investigation, advanced accident investigation, advanced drug interdiction, advanced accident reconstruction, TCLEOSE instructor, firearms and tactics training for SROs, advanced bike and shooting simulator. The combined equivalent training for public safety equals $26,958,638 over 25 years (average of $1,077,901 per year). These costs could be even higher based on paying overtime for officers to receive the training and maintain minimum staffing. Capifal Cosf of Phase 1 NA Capifal Cosf of Phase 2 NA Capifal Cosf of Phase 3 NA Capifal Cosf of Phase 4 NA Option #5 Capital Investment $0 TOTAL OPTION #5 ESTIMATED CAPITAL COST $0 Annual 0 & M Cost -1St Year $807,799 Annual 0 & M Cost - Average of Years 1 to 5 $840,764 TOTAL 0 & M COST - 25 YEARS $26,958,638 Table 9. Option #5 Estimated Costs FINANCIAL PLAN: Early on in the planning process, Staff optimistically believed that the City, with cooperative agreements with NCTC, UNT and the private sector, might possibly recover a significant portion of the capital costs to build a the Public Safety Training Center. However, extensive research did not find a facility of this type generating a return on capital investment. Public safety facilities such as fire stations, police stations, and jails traditionally do not recover initial capital costs. Yet, these facilities necessitate ongoing operational and maintenance funding at some level dependent upon size and use. This remains true with the proposed training facility. On the other hand, the training facility has the potential to open up many revenue opportunities that will offset annual operations and maintenance costs. Although no empirical evidence was found showing public safety facilities generating a return on capital investment, many facilities were found generating sufficient revenue to allow for ongoing maintenance and upgrading of facilities while reducing the training cost to the primary user or users. Existing facilities that attempted to recoup the cost of constructing the facility by passing the total cost along to outside users often found the pricing structure beyond the user's ability to pay. In addition, other public safety training facilities emphasized that their return on investment was primarily the enhanced training and safety of their firefighters and police officers. Page 10 of 12 Extended courses taught at the Training Center will also create a positive economic impact when attendees from outside the area stay in the City of Denton. The Chamber and the City's Economic Development Department estimate the economic impact as approximately $126 per day per attendee ($67 =average daily rate for hotels in Denton + $59 =per diem rate for government employees). A one week stay for 40 students for a one week course might generate up to $25,200. Public Safety Staff developed a Business Plan (attached) to analyze and evaluate all five options available to the City of Denton to construct a Public Safety Training Facility as presented in the Master Plan by the City's consultants. Table 10 compares the 25-year totals of the pro formas of the four options to construct a Public Safety Training Facility from the Business Plan. Option #5 is to not build a training facility. OPTION #1 OPTION #2 OPTION #3 OPTION #4 Phase 1 Phases 1+ 2 Phases 1+ 2+ 3 Phases 1+ 2+ 3+ 4 ($8,167,335) ($12,571,218) ($23,334,900) ($30,735,737) Estimated Revenue $10,860,005 $54,300,026 $62,109,231 $76,990,301 Facility Maintenance Expense $5,672,644 $6,913,406 $12,494,907 $15,902,544 Facility Operating Expense $4,193,473 $11,976,246 $22,409,954 $32,046,885 Personnel Expense $5,872,214 $21,424,606 $22,621,844 $23,918,571 Total 0 & M Costs $16,193,753 $42,591,366 $59,803,813 $74,145,108 Net Income ($5,333,746) $11,708,660 $2,305,417 $2,845,193 Positive Net Income No Year 7 Year 15 Year 17 Debt Service $18,121,319 $25,119,411 $42,302,223 $54,075,865 Cash Flow ($23,455,066) ($13,410,751 ($39,996,806) ($51,230,672) Budget Savings $5,749,188 $5,749,188 $5,749,188 $5,749,188 Net Cash Flow ($17,705,877) ($7,661,562 ($34,247,617) ($45,481,483) Positive Net Cash Flow No Year 21 Year 21 Year 21 Fire Training Savings Undefermined $18,277,340 $18,277,340 Undefermined Police Training Savings2 Undefermined $8,681,298 $8,681,298 Undefermined Total Public Safety Training. Undefermined $26,958,638 $26,958,638 Undefermined Adjusted Net Cash FIow3 Undefermined $19,297,076 ($7,288,919 Undefermined Table 10. Business Plan Comparisons of Option Pro Formas to Construct a Public Safety Training Facility (25-year totals) Assumptions of Table 10: ~ Estimated costs to provide the same level of Fire training provided by the proposed training facility if the facility was not constructed and outside sources were necessary. 2 Estimated costs to provide the same level of Police training provided by the proposed training facility if the facility was not constructed and outside sources were necessary. 3 Revised net cash flow using the Fire and Police training savings. STAFF RECOMMENDATIONS: • Fund and construct Option #2 (Phases 1 and 2) immediately at an estimated cost of $12.6 million. Since the FY2006/2007 ($1.5 million) and FY2007/2008 ($6.7 Million) budgets allocate $8.2 million for design and initial phasing of the training facility, additional funding of approximately $4.4 million dollars must be identified and appropriated. Exact funding requirements will be identified in the design and construction bidding process and brought back to the City Council for final consideration and approval. Page 11 of 12 ~ Staff recommends funding the additional capital costs with Certificates of Obligations (CO) bonds in the FY07-08 budget. Additional funding of approximately $4.4 million dollars will have an annual estimated debt service of approximately $343,000. The equivalent annual cost of this debt service equates to approximately $0.0064 tax rate. ~ Operations and maintenance costs should be added to the City's five-year financial forecast beginning with the FY08-09 budget, estimated to be $316,189 the first year. • After completing the construction of Option #2 and opening the Public Safety Training Center early in 2009, the City should continue to evaluate further options as necessary and financially feasible. One funding possibility might be to budget the training savings for Police and Fire as identified in Option #5 into a Training Facility budget as an annual "public safety training fee." This method would provide identified budgeting to offset annual 0&M costs as well as future capital costs for additional phases. Additionally, when the need arises, funding could be recommended to the City's CIP Committee as part of the next five-year CIP using the "fee" accumulation to fund the annual debt service. If you have any questions, please contact Chief Chadwick. Respectfully submitted, Jon Fortune Assistant City Manager Prepared by: Ross Chadwick Fire Department Attachments City of Denton Public Safety Training Facility 1Vlaster Plan -June 2007 City of Denton Public Safety Training Facility Business Plan -July 2007 Page 12 of 12 • • ` I U J U " • F P ~ 1 1 ~ a • ~1O N I - r • II O .I?I 1 1 • ~ ~ ~II~ { ~ j~~l (}S~&~ ` . / `moo • I r 'Y,a r , r •swb A~cy~ 'Project Team:. y 1 r.... • _Kir-kpatrick Arbitec'tuce, Studio Ar ~hitect,' v 4 • abercrombie creative: Pubbc;Safety Consultant • ~T OF Kimley-Harin"9 Assaciat 3 , 3lnC rCivil'Engineermg Consultant; x I^~I . 4. • / Av'l ru _N ri.f~Y`i! SI~tIj bN ~_I • • • • 6 June 2007 • 0 ARCHITECTURE • • • 0 • • • • • • TABLE OF CONTENTS • • • PREFACE 2 • MASTER PLAN OVERVIEW 3-4 SUMMARY OF RESEARCH FINDINGS 5-6 • • SURVEY RESULTS 7-24 MARKET ANALYSIS 25-27 • • RESPONSE TO FINDINGS 28 • MAJOR COMPONENTS OVERVIEW • Training Field/Tactical Live-Fire Training Village 29-31 • Administrative/Classroom Building 32-33 • GENERAL SPECIFICATIONS • Site and Site Development 34 DETAILED SPECIFICATIONS • Training Field 35-51 • Administration/Classroom Building 52-63 • MISCELLANEOUS ELEMENTS AND USES 64 • • PHASING PLAN 65-76 • CONCEPTUAL DRAWINGS 77-80 • • • • • • • • • • • Kirkpatrick Architecture Studio 1 Denton Police and Fire Training Facility • • • • PREFACE • • The following information was prepared for the proposed Denton • Public Safety Training Center. Every attempt was made to provide • the most accurate information possible at the time of production. This ! document is intended to serve as a guide to future design decisions • and is not intended to be used in the design or construction of elements • described, without further verification, adjustment, and improvement. ! The information herein should provide the basis for a more detailed program to be developed during the design process. The unintended ' use or reproduction of this document without the written permission of ! the producing parties and the City of Denton is prohibited. ! ! • • ! ! ! ! ! • • • ! ! ! • • ! ! ! ! • ! Kirkpatrick Architecture Studio 2 Denton Police and Fire Training Facility ! ! ! MASTER PLAN OVERVIEW ! The world has become a dangerous place to live, work, learn, and ! worship. Natural and man-made disasters continuously demonstrate ! the risk associated with being unprepared. Although few people ! doubt the value of a well-trained public safety response force in the post-9/11 world, even fewer realize the lack of such a trained force in ! communities throughout the country. This is especially true in smaller ! communities where the cost associated with developing response ! capabilities has led many communities to look away and hope for the best. Millions of dollars are spent each day on initiatives designed to ! improve the safety of our nation. Unfortunately, very little of that has ! addressed the greatest, most fundamental need, which is the training ! of public safety forces to handle disasters. ! Recent events in the aftermath of Hurricane Katrina have painfully ! demonstrated the role of local response agencies and brought to light ! the cost associated with neglecting this reality. It is foolish to believe ! that the Federal Government will ever have the resources to deal ! with local tragedies in the first hours and days of a tragedy. If the lo- cal response agencies are not prepared, it is less likely the Federal ! Government can be effective when they finally arrive. The efforts of ! the local governments and response agencies will largely predict the ! extent of the damage and speed of recovery. The responsibility of a ! prepared response falls mainly on the shoulders of the local com- munity. ! ! The unprecedented demands currently placed on emergency . responders, including the constant threat of terrorism, combined with a decreased number of viable training facilities, creates a dangerous ! void in the level of community and agency preparedness. Manycurrent ! facilities lack the ability to replicate the types of hazards responders ! must be prepared to mitigate. The lack of realistic training facilities ! makes it difficult for the most progressive of emergency agencies to provide the level of preparedness that will truly have an impact in ! the early stages of a disaster. The lack of training opportunities has . created a situation in which a great deal of money and paperwork is ! consumed in efforts that make people feel better, but are unlikely to ! make any difference in a community's response capabilities. ! ! ! ! ! ! Kirkpatrick Architecture Studio 3 Denton Police and Fire Training Facility ! • • + In order to effectively make a difference in a community's response capability, a strong educational and training support system is required. • Without a strong system, it becomes difficult, if not impossible, for • responders to safely and effectively meet the challenges faced by the • current service requirements. Each new page we add to the service • delivery book reinforces the need for a strong system. The problem is the system has not kept pace. • • There was a time when public safety training was primarily hands- on. Most departments and communities had access to some type of hands-on training through low-tech firing ranges, and burn buildings, • or by utilizing acquired structures. These types of facilities increasingly • came under close scrutiny, as more people became aware of • environmental issues associated with their use. Over time, due to lack of maintenance and the high cost associated with upgrading and maintaining them, these training facilities were abandoned, in light • of new, tougher enacted standards. Environmental agencies have increasingly frowned upon the use of acquired structures, as well, and • the cost of items, such as lead abatement and air pollution reduction, • has led many to simply do without. This shortage has continued to grow, while the demands placed on the responder have increased dramatically. The addition of services has created the need for a • highly educated, highly trained emergency response force that can • perform at peak levels while executing an unprecedented variety of tasks and skills. These demands have led to the current shortcomings • in emergency response training at national and local levels. • • Construction of an advanced facility, as described in this document, • presents an opportunity for the City of Denton to become a major force in setting new standards for quality emergency service training • and improved community safety and preparedness. By building a state-of-the-art training facility that addresses both the academic • and the technical requirements of the modern emergency responder, • the City of Denton will become a leader in public safety, producing well-educated and realistically trained responders. The results will allow training to move beyond what is required, and address needs • of realistic preparedness and a safer community. • • • • • • • • Kirkpatrick Architecture Studio 4 Denton Police and Fire Training Facility • • • • • SUMMARY OF RESEARCH FINDINGS • • In an effort to discover and validate training needs, an extensive • series of research efforts was completed. The research included • focus group meetings, literature review and discovery, comparative analysis of past findings and departmental surveys. The goal of • the research effort was to make a realistic determination of need, • based on historical evidence and evaluation of current and future • requirements. The analysis of the departmental surveys proved to be • the most compelling of the efforts, because the findings were not only consistent with national data, they were locally unique in revealing • the specific needs of the police and fire departments. A complete review of the findings of the departmental surveys is ' included, and it paints a picture of great need. Members of both police and fire departments frequently expressed the deficient nature of current training programs, with many expressing the inability to recall • any recent training that was beneficial to their position. Most surveyed • members stated that the most valuable training they received was hands-on training, but most also stated the City did not have facilities • to accommodate this type of training. Both departments expressed the feeling that the best, most recent training they have had was in a • specialty field, but most also believed that there was a serious lack of • training on the more common types of calls. • Although current training programs meet state mandated standards, police department responses unanimously reflected a severe • deficiency in the ability to obtain truly beneficial training. Members of • the tactical team listed monthly training as very beneficial to their job, but several expressed the opinion that non-members were deprived of similar quality training. No other population of the police department . expressed confidence in current training capabilities or opportunities. An uncomfortable number of respondents stated "none" when asked what beneficial training they had received recently from within the • department. Most members indicated a strong desire to receive • quality training, but lamented the lack of opportunities. Civilian • employees expressed an even greater lack of training opportunities, • and many stated that they had only received on-the-job training. The trend seemed to be consistent with that of many jurisdictions, where • money and facilities for training are lacking, and as a result, only a select group regularly receives quality training. The fire department respondents expressed an equal lack of training capabilities due to the complete lack of facilities. Most members • indicated that they did not receive realistic training in the areas they • • • Kirkpatrick Architecture Studio 5 Denton Police and Fire Training Facility • • • • are likely to encounter most frequently. Many cited the inability to train in realistic scenarios with multiple companies and multiple agencies. • Some of the veteran firefighters feared the loss of the basic skills of • firefighting, because the only training they seem to have is specialized • training. As with the police department, the trend seems to be consistent with what is found nationwide. Departments are making • do with what they have, and the result is training that does very little • to improve or even maintain job readiness. The comparative breakdown of responses by both agencies is remarkably consistent. A statistically significant number of • respondents from both departments indicated the need for hands- on training. Most ranked hands-on training as the most beneficial • type of training. A similar number indicated that current facilities do very little or nothing at all to address that need. Most courses and • training programs appear to be delivered through lecture, while strong • evidence indicates hands-on is the most beneficial to job performance • and safety. The response to whether current facilities contribute to • beneficial training was overwhelmingly negative. Another disturbing finding was the lack of training between departments. Survey • responses imply a total lack of joint training, when ample evidence • is available demonstrating the importance of this type of training. • The picture painted reveals training that provides for the minimum • required by law, but very little that truly impacts emergency service response in a progressive manner. • • The information discovered is not unique to the City of Denton. • Many communities, especially fast growing communities, are facing similar circumstances. Although the findings are generally • negative, one important positive was revealed: most of the training • deficiencies are due to a lack of funding and facilities, rather than • the lack of a motivated and professional work force. Members of • both departments unanimously expressed the desire to improve their • training and performance capabilities. Most of the training that was reported as positive was the result of dedicated people going above and beyond normally available training. The constant battle to locate • adequate training facilities could very easily suppress the desire and • motivation to train, but members of both departments seem to crave the opportunity for improvement. With this in mind, the research can • be considered positive, in that it provides an opportunity to respond • to a problem, that if not addressed, will continue to worsen as the city • grows. • The findings of the analysis of perceived importance of facilities, were • consistent with all findings of the research, and should be utilized to • assist in phase planning. • • Kirkpatrick Architecture Studio 6 Denton Police and Fire Training Facility • • • • • City of Denton Public Safety • Facilities Master Plan • Survey Results • (Source: All submitted and useable surveys) • • • Note: Charts depict combined scores of Police and Fire • Department respondents. The chart indicates the percentage of em- ployees that responded to the statement. For instance in chart #1, • 10% strongly disagreed, just under 40% disagreed, slightly more than • 20% were neutral, and just under 20% agreed with the statement. • • 5=Strongly Agree • 4=Agree • 3=Neutral 2=Disagree • 1=Strongly Disagree • • • • • • • • • • • • • • • • • • • • • • Kirkpatrick Architecture Studio 7 Denton Police and Fire Training Facility • • • • 5=Strongly Agree Statement 1: • 4=Agree Current Training Provides frequent opportu- • 3=Neutral nities for hands-on practical evolutions. • 2=Disagree • 1=Strongly Disagree 0.6 • 0.5 • Statement 0.4 0.3 • 0.2 • 0.1 .jwjFjANtM9 • 1 2 3 4 5 • Level of Agreement MEAN MEDIAN MODE • POLICE RESPONDENTS 2.656 2 2 FIRE RESPONDENTS 2.598 3WMRWI_ • COMBINED 2.618 2© 2© • • • • Statement 2: • Most Departmental Training is delivered primarily via the Internet. • • 0.6 0 .5 I I 0.4 • Statement • 0.1 • • 1 2 3 4 5 • Level of Agreement • MEAN MEDIAN MODE • POLICE RESPONDENTS 2.08 2 2 • FIRE RESPONDENTS 1.951 2 2 • COMBINED 2.034 • • • • Kirkpatrick Architecture Studio 8 Denton Police and Fire Training Facility • • • • • 5=Strongly Agree Statement 3: • 4=Agree Most Departmental Training is delivered • 3=Neutral utilizing lecture as the primary format. • 2=Disagree • 1=Strongly Disagree 0.8 • 0.6 Statement 0.4 • • 0.2 • 0S■®~ • 1 2 3 4 5 • Level of Agreement MEAN MEDIAN MODE • POLICE RESPONDENTS 3.741 4 4 • FIRE RESPONDENTS 3.721 4 4 • COMBINED 3.734 • • • Statement 4: • Training generally takes place at the • company or individual level. • 0.5 • 0.4 • Statement 0.3 • 4 0.2 I _ 0.1 L • • 1 2 3 4 6 • Level of Agreement MEAN MEDIAN MODE • POLICE RESPONDENTS 3.491 4 4 FIRE RESPONDENTS 3.071 3 Now, • COMBINED 3.341 • • • • Kirkpatrick Architecture Studio 9 Denton Police and Fire Training Facility • • • • 5=Strongly Agree Statement 5: • 4=Agree Officers/Companies frequently train together. 3=Neutral 2=Disagree 1=Strongly Disagree 0.4 • 0.3 Statement 0.2 5 • 0.1 • 1 2 3 4 5 • Level of Agreement • • MEAN MEDIAN MODE • POLICE RESPONDENTS 3.00 3 4 FIRE RESPONDENTS 2.84 3 2 COMBINED 2.942 3 4 • • Statement 6: • Practical Evolutions take place in a very realistic • environment. • 0.5 • 0.4 • Statement 0.3 0.1 • 0 1 2 3 4 5 • Level of Agreement • MEAN MEDIAN MODE • POLICE RESPONDENTS 2.59 2 2 FIRE RESPONDENTS 2.363 2 2 • COMBINED 2.508 2 2 • • • • Kirkpatrick Architecture Studio 10 Denton Police and Fire Training Facility • • • • • 5=Strongly Agree Statement 7: • 4=Agree Current training exceeds the minimum level • 3=Neutral required to maintain certification and licensing. • 2=Disagree 1=Strongly Disagree 0.4 • 0.3 I I - • Statement 02 7 0.1 • ° • 1 2 3 4 5 • Level of Agreement MEAN MEDIAN MODE • POLICE RESPONDENTS 2.94 3 2 FIRE RESPQNDENTtS~ 2.92 3 4 • COMBINED 2.93 • • • • Statement 8: • The most beneficial training I have received • has been delivered within the department. • 0.4 • 0.3 i I - • Statement • 8 0.2 0.1 • 1 2 3 4 5 Level of Agreement • MEAN MEDIAN MODE • POLICE RESPONDENTS 2.742 3 2 • FIRE RESPONDENTIS' 2.885 3 4 • COMBINED 2.774 ~ 2© • • • • Kirkpatrick Architecture Studio 11 Denton Police and Fire Training Facility • • • • 5=Strongly Agree Statement 9: 4=Agree Emergency service agencies frequently train • 3=Neutral together. • 2=Disagree • 1=Strongly Disagree 0.5 • 0.4 • Statement 0.3 • 90.2 • 0.1 1 - - • 0 • 1 2 3 4 5 • Level of Agreement • MEAN MEDIAN MODE POLICE RESPONDENTS 2.036 2 2 • FIRE RESPONDENTS 1.984 2 2 COMBINED 2.017 2 2 • • • Statement 10: • Technology is used in the classroom to enhance • the training environment and improve learning. • 0.6 • 0.5 • Statement 0.3 • 0.2 1 • 0.10 - - • • 1 2 3 4 5 • Level of Agreement MEAN MEDIAN MODE • POLICE RESPONDENTS 3.448 4 4 • FIRE RESPONDENTS 3.279 4 4 COMBINED 3.323 4 4 • • • Kirkpatrick Architecture Studio 12 Denton Police and Fire Training Facility • • • • • 5=Strongly Agree Statement 11: • 4=Agree Technology is used to enhance the realistic • 3=Neutral nature of practical evolutions. • 2=Disagree • 1=Strongly Disagree 0.4 • 0.3 • Statement • 0 • 1 2 3 4 5 • Level of Agreement MEAN MEDIAN MODE • POLICE RESPONDENTS 2.741 3 2 • FIRE RESPONDENTS 2.934 3 3 COMBINED 2.801 ~ 2© • • • • • Statement 12: Current training provides for the minimum • level of training required to maintain • certification and licensing. • 0.61. I I • 0.5 • Statement 0.4 • 12 0 .3 I _ I 02 • 0.1 0 6 .w M ML I • • 1 2 3 4 5 • Level of Agreement • • MEAN MEDIAN MODE POLICE RESPONDENTS 3.66 4 4 FIRE RESPONDENTS 3.28 3 45 • COMBINED 3.485 • • • Kirkpatrick Architecture Studio 13 Denton Police and Fire Training Facility • • • • • 5=Strongly Agree Statement 13: • 4=Agree The most beneficial training to my career has • 3=Neutral involved hands-on training. • 2=Disagree • 1=Strongly Disagree 5 • 0.4 • Statement 0.3 • 130.2 • 0.1 01 • 1 2 3 4 5 • Level of Agreement MEAN MEDIAN MODE • POLICE RESPONDENTS 4.179 4 4 • FIRE RESPONDENTS 4.049 4 4 COMBINED 4.133 4 5 • • • Statement 14: • Most department training programs utilize • practical evolutions and hands-on training. • r • 0.4 ' • 0.3 • Stateme t 1 0.2 0.1 01 • 1 2 3 4 5 • Level of Agreement • • MEAN MEDIAN MODE • POLICE RESPONDENTS 2.804 3 2 • FIRE RESPONDENTS 2.754 3 3 COMBINED 2.786 3 2 • • • Kirkpatrick Architecture Studio 14 Denton Police and Fire Training Facility • • • • 5=Strongly Agree Statement 15: 4=Agree Departmental training is delivered primarily in • 3=Neutral a self-study format. • 2=Disagree / • 1=Strongly Disagree 0.5 - • 0.4 • Statement 0.3 • 15 0.2 0.1 • 0 • 1 2 3 4 5 • Level of Agreement • • MEAN MEDIAN MODE • POLICE RESPONDENTS 2.4 2 2 • FIRE RESPONDENTS 2.54 2 2 • COMBINED 2.45 • • • • Statement 16: Existing training facilities improve my ability to • provide quality service to the community. • • 0.4 Im 0.3 Stateme1 t 0.2 0.1 0 a • 1 2 3 4 5 • Level of Agreement • • MEAN MEDIAN MODE • POLICE RESPONDENTS 2.54 2 2 • FIRE RESPONDENTS 1.90 2 2 COMBINED 2.31 2© 2© • • • • Kirkpatrick Architecture Studio 15 Denton Police and Fire Training Facility • • • • 5=Strongly Agree Statement 17: 4=Agree The most beneficial training I have received 3=Neutral has come from outside the department. • 2=Disagree • 1=Strongly Disagree 0.5 0.4 Statement 0.3 170.2 0.11 - - - -I • 1 2 3 4 6 Level of Agreement • • MEAN MEDIAN MODE • POLICE RESPONDENTS 3.61 4 4 • FIRE RESPONDENTS 3.31 3 4 COMBINED 3.502 4 4 • • • • Statement 18: • Existing training facilities provide a realistic • environment for training. • 0.4 • 0.3 Statement • 180.2 • 0.1 • 1 2 3 4 5 Level of Agreement MEAN MEDIAN MODE POLICE RESPONDENTS 2.348 2 2 • FIRE RESPONDENTS 1.721 1 1 • COMBINED 2.127 2 2 • Kirkpatrick Architecture Studio 16 Denton Police and Fire Training Facility • • • • 5=Strongly Agree Statement 19: 4=Agree Existing training facilities are utilized • 3=Neutral frequently to maintain and improve my skills. • 2=Disagree • 1=Strongly Disagree 0.4 • 0.3 ( _ • Statement 190.2 • • 0.1 lljmmim 'w", • 1 2 3 4 5 • Level of Agreement • • MEAN MEDIAN MODE • POLICE RESPONDENTS 2.634 3 2 • FIRE RESPONDENTS 1.967 2 2 COMBINED 2.398 2© • • • • • Statement 20: The most beneficial training in my career has • been lecture based. • • 0.5 - • 0.4 • Statement 0.3 • 20 0.2 0.1 • 0 l~ • 1 2 3 4 5 • Level of Agreement • • MEAN MEDIAN MODE • POLICE RESPONDENTS 2.241 2 2 • FIRE RESPONDENTS 2.213 2 2 • COMBINED 2.231 2© 2© • • • Kirkpatrick Architecture Studio 17 Denton Police and Fire Training Facility • • • • • FIRE RESPONSES POLICE RESPONSES COMBINED RESPONSES • a) a) • a) ` aa) rn • o o ¢ o a • N m l`0 m 01 co Of Cl N C1 `O N N m 2 N O O N N O • • In Z Q rn w o Z Q In cn O Z Q (n 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 • 1 9 21 17 12 2 13 48 26 22 3 22 69 43 34 5 2 18 31 11 1 0 26 56 25 5 0 44 87 36 6 0 3 3 4 4 46 4 0 8 22 73 9 3 12 26 119 13 • 4 3 17 17 23 1 1 9 36 62 4 4 26 53 85 5 • 5 2 26 14 19 0 7 33 24 42 6 9 59 38 61 6 • 6 11 28 12 9 1 13 47 25 25 2 24 75 37 34 3 • 7 5 17 18 20 1 8 37 29 33 5 13 54 47 53 6 • 8 10 14 13 21 3 14 42 25 22 9 24 56 38 43 12 • 9 21 27 7 5 1 39 43 17 11 2 60 70 24 16 3 • 10 5 9 13 32 2 3 19 26 59 5 8 28 39 91 7 • 11 3 19 20 17 2 7 42 34 29 0 10 61 54 46 2 • 12 2 9 20 30 0 2 12 23 67 8 4 21 43 97 8 13 1 3 7 21 29 2 5 8 51 46 3 8 15 72 75 • 14 7 16 14 23 1 8 38 35 28 3 15 54 49 51 4 • 15 3 29 22 7 0 12 51 39 10 0 15 80 61 17 0 • 16 23 28 3 7 0 21 36 30 22 3 44 64 33 29 3 • 17 2 17 14 18 10 4 17 18 52 21 6 34 32 70 31 • 18 31 20 7 2 1 20 47 29 15 1 51 67 36 17 2 • 19 21 25 11 4 0 11 43 20 35 3 32 68 31 39 3 • 20 15 28 11 4 3 24 52 23 11 2 39 80 34 15 5 • • Total Fire Resonses 61 • Total Police Responses 112 • • Total Combined 173 • • • • • • • Kirkpatrick Architecture Studio 18 Denton Police and Fire Training Facility • • • • ANALYSIS OF RESULTS • REGARDING PRIORITIES OF FACILITIES • Fire Department • • Sixty-one (61) surveys were submitted by members of the fire • department. Of the 61 surveys, 52(85%) were useable. The pages on the remaining surveys were either blank or completed incorrectly. • • Of the 52 useable surveys, data was compiled in different ways. • • The number of times a type of facility was chosen as of one of the top five priorities by the respondents • • The importance of the facilities based on the frequency of • assignment of numerical priorities • • A listing of the facilities based on analysis of responses • • FIRE DEPARTMENT RESPONSES • NUMBER OIMIMESTAXACILITHM WAS SELECTED • (N=52) • Times Listed • FACILITY Regardless of Percentage of • Times Listed Priority • Safety Village 29 55.8 • Classroom 45 86.5 • Tactical Burn Village 50 96.0 Spill/HAZMAT 46 88.0 • Swiftwater 24 46.2 • NFPA Driving Course 33 63.0 • Arson Lab/Trainer 7 13.0 • Bomb Trainer 11 21.2 • EVOC Driving Course 2 3.8 • Tactical Shoot House 4 7.7 • Bike Course 1 .02 • Firing Range 6 .12 • Sniper Range 0 0 • • • • • Kirkpatrick Architecture Studio 19 Denton Police and Fire Training Facility • I • • • • • Fire Department Responses • Number of Times a Facility was selected By Priority • (N=52) • • Total Times • Listed 1 5 • Most 2 3 4 Least N=52 • Important Important • Tactical Burn Village 34 12 2 2 0 50 • Spill/HAZMAT 0 9 15 12 10 46 • Classroom 13 13 7 7 5 45 • NFPA Driving Course 1 6 6 7 13 33 • Safety Village 4 5 9 2 9 29 Swiftwater 0 3 7 6 8 24 • Bomb Trainer 0 2 1 4 2 11 • Arson Lab/Trainer 0 0 2 3 2 7 • Firing Range 0 0 1 0 5 6 • Tactical Shoot House 0 1 0 2 1 4 • EVOC Driving Course 0 0 0 1 1 2 • Bike Course 0 0 0 0 1 1 Sniper Range 0 0 0 0 0 0 • • • • • • • • • • • • • • • • • • • Kirkpatrick Architecture Studio 20 Denton Police and Fire Training Facility • • • • Police Department • One hundred twelve (112) surveys were submitted from employees • of the police department. Of the 112 surveys, 99 (88%) were useable. • The pages on the remaining surveys were either blank or completed incorrectly. • • Of the 99 useable surveys, data was compiled in different ways. • • The number of times a type of facility was chosen as of one of the • top five priorities by the respondents • The importance of the facilities based on the frequency of • assignment of numerical priorities • • A listing of the facilities based on analysis of responses. • • • POLICE DEPARTMENT RESPONSES NUMBER OF TIMES A FACILITY WAS SELECTED • (N=99) • • Times Listed Percentage of • FACILITY Regardless of Times Listed • Priority Safety Village 71 71.7 • Classroom 77 77.8 • Tactical Burn Village 12 12.1 • Spill/HAZMAT 13 13.0 • Swiftwater 4 4.0 • NFPA Driving Course 9 9.0 • Arson Lab/Trainer 10 10.1 • Bomb Trainer 9 9.1 • EVOC Driving Course 73 74.0 Tactical Shoot House 76 76.77 • Bike Course 26 26.0 • Firing Range 87 87.8 • Sniper Range 18 18.0 • • • • • • • Kirkpatrick Architecture Studio 21 Denton Police and Fire Training Facility • • • • • Police Department Responses • Number of Times a Facility was Selected • By Priority (N=99) • • Total Times Listed • 1 5 • Most 2 3 4 Least N=99 • Important Important • Tactical Burn Village 1 1 3 3 4 12 • Spill/HAZMAT 1 2 2 8 13 • Classroom 41 9 11 9 7 77 • NFPA Driving Course 0 1 0 5 3 9 Safety Village 13 18 19 10 11 71 • Swiftwater 0 2 7 1 0 4 • Bomb Trainer 1 1 3 2 2 9 • Arson Lab/Trainer 2 2 3 0 3 10 • Firing Range 25 30 14 13 5 87 • Tactical Shoot House 10 17 18 18 13 76 • EVOC Driving Course 3 12 23 24 11 73 • Bike Course 1 1 1 6 17 26 • Sniper Range 1 1 2 5 9 18 • • • • • • • • • • • • • • • • • Kirkpatrick Architecture Studio 22 Denton Police and Fire Training Facility • • • • • • Combined Responses • Number of Times a Facility was Selected (N=151) • FACILITY Times Listed Regardless Percentage of • of Priority Times Listed • Classroom 122 80.80 • Safety Village 100 66.2 • Firing Range 93 61.59 • Tactical Shoot House 80 52.98 • EVOC Driving Course 75 49.95 • Tactical Burn Village 62 41.10 • Spill/HAZMAT 59 39.00 NFPA Driving Course 42 28.00 • Swiftwater 28 18.50 • Bike Course 27 18.00 • Bomb Trainer 20 13.20 • Sniper Range 18 12.00 • Arson Lab/Trainer 17 11.3 • • Combined Responses Number of Times a Facility was Selected By Priority • (N=151) • Total Times Listed • 1 5 Most 2 3 4 Least N=99 • Important Important • 1-Classroom 54 22 18 16 12 122 • 2-Safety Village 17 23 28 12 20 100 • 3-Firing Range 25 30 15 13 10 93 • 4-Tactical Shoot House 10 18 18 20 14 80 5-EVOC Driving Course 3 12 23 25 12 75 • 6-Tactical Burn Village 35 13 5 5 4 .62 • 7-Spill/HAZMAT 1 11 17 12 18 59 8-NFPA Driving Course 1 7 6 12 16 42 • 9-Swiftwater 0 5 8 7 8 28 • 10-Bike Course 1 1 1 6 18 27 • 11-Bomb Trainer 1 3 4 6 4 18 • 12-Sniper Range 1 1 2 5 9 18 • 13-Arson Lab(Trainer 2 2 5 3 5 17 • • • Kirkpatrick Architecture Studio 23 Denton Police and Fire Training Facility • i • • Priority based on point system • • 125 270 50 5 15 5 5 175 85 0 5 5 10 • 120 88 72 28 48 4 4 52 92 20 12 44 8 • 45 54 54 18 69 6 3 15 84 24 12 51 15 • 26 32 40 24 50 10 12 10 24 14 12 24 6 • 10 12 14 16 12 9 18 4 20 8 4 18 5 326 456 230 91 194 34 42 256 305 66 45 142 44 • Range RoomSH NFPA EVOC Sniper Bike Burn Safety Swift Bomb • Village Village Water Spill • 2 1 5 8 6 13 12 4 3 9 10 7 11 • • • • • • • • • • • • • • • • • • • • • • • • • • • • Kirkpatrick Architecture Studio 24 Denton Police and Fire Training Facility • • • • MARKET ANALYSIS • A market analysis was conducted to determine potential opportunities • for revenue generation through partnering and/or outside participation. • Although no historical evidence was found showing public safety facilities generating return on capital investment, many facilities were • found generating sufficient revenue to allow for ongoing maintenance • and upgrading of facilities, while reducing the training cost to the • primary user or users. Existing facilities that attempted to recoup the • cost of constructing the facility by passing the cost along to outside users, often found their pricing structure exceeded the user's ability • to pay. This factor seemed to be consistent in all of the facilities • benchmarked. In the State of Texas, as well as nationally, the trend • seems to be toward developing training facilities through a cooperative • partnership between community colleges and local jurisdictions. The community college has the advantage of providing a natural • geographical service area and usually has state-supported funding • capabilities that allow for a reduction in cost of delivered training. • Without this type of partnership it becomes difficult to produce quality • training without exceeding the users available funding. • The City of Denton and North Central Texas College (NCTC) are • uniquely positioned to capture a market that is critically underserved. • Market information indicates that the primary users of a training facility of this type come from within a one hour driving distance of the site. • The research also shows that it is difficult for agencies to do training • with multiple companies or officers if a training facility is not within 30 • minutes driving distance. Facilities similar to the one proposed are • located at Collin County Community College in McKinney, Texas and Tarrant County College in Fort Worth, Texas. The distance to these • facilities make it difficult, if not impossible, for the City of Denton to • send large numbers of personnel to conduct joint, multi-agency and • large scale training. It also leaves a large population of small agencies to the North, Northeast, and Northwest without the capabilities for • training at a realistic facility. • • • • • • • • • • • Kirkpatrick Architecture Studio 25 Denton Police and Fire Training Facility • • • • • • • • Montague eCooke Grayson • We Donlon Colin • Parker Tarant 00"s • City of Denton • Service Area • 1/2 hour and 1 hour driving time • • • Montague Cooke Graysm • Wise Denton Collin • • Parker Tarrant Dellas • • NCTC • Service Area • by county • • Due to the incredible growth experienced and anticipated in the area, the proposed facility has the opportunity to capitalize on a • transitioning customer base. The underserved area contains a large • number of small and volunteer emergency response agencies. This • demographic has traditionally been left out when it comes to quality • ongoing training utilizing state-of-the-art facilities. Due to the rapid growth of these areas, many of these agencies will face similar • problems as those faced by a growing population in the Denton area. • The new facility has the opportunity to provide greatly needed training • to this market segment and to cater to their unique, but changing circumstances. As these communities grow, the opportunity exists to • transition these customers into ongoing traditional training programs • and solidify the market position. • • • Kirkpatrick Architecture Studio 26 Denton Police and Fire Training Facility • • • • A review of market information provided in a 2002 study for the City of Denton was determined to be unrealistically inflated and thus, • unusable. Revenue amounts presented were often double the current • market indications. The rationale behind the projected number of • available training days was also questionable, and a review of operating facilities found none that could come close to producing • evidence of numbers this high. • • A review of the major employers in the City of Denton found that • the majority of the medium-sized and large companies are potential customers for the facility in courses such as, confined space training, • extinguisher training, fire brigade training, private security firearms • training, crime prevention and safety training, etc. Although it is • important to provide a level of service to these agencies, it is also important to remember the core user of the facility. Opportunities • should be explored that create partnerships in areas that will help the • response agencies of Denton to work better with these employers in • cases of incidence that impact both parties. • Finally in spite of all of the potentials for revenue and expanded • services, evidence historically points to problems when these • concerns become too important. Many facilities have fallen into the • trap of trying to generate revenues by catering to outside agencies, • especially ones that are willing and able to pay a higher price for training. Often, this benefit comes at the expense of the agencies that • were the inspiration for the facility in the first place. When revenue • becomes the driving factor, the primary user's training schedule is • precluded by revenue-producing schedules, and they become limited • in their ability to train. This effectively negates the reason the facility was constructed in the first place. • • • • • • • • • • • • • • • Kirkpatrick Architecture Studio 27 Denton Police and Fire Training Facility • • • • RESPONSE TO FINDINGS • The construction of the Denton Public Safety Training Center will • produce immediate benefits to the City of Denton, Denton County, • and surrounding counties and communities. Some of the most • obvious broad-based benefits are listed below. (Benefits specific to each major component are contained in the next segment.) • • • Provide much needed space to meet the needs of City of Denton • response agencies, as well as those in the surrounding area • Increase the ability to offer state required continuing education to • Denton police and firefighters as well as to the thousands more in • the surrounding area • • Allow for an expanded curriculum and additional courses • • Provide space for the overlapping of basic academy classes • Provide space for scheduling seminars and major emergency • response conferences, which will increase the visibility and position • of the City of Denton, while providing advanced training at a reduced • cost to the City • • Provide the ability to meet requirements of the Texas Commission on Fire Protection and Texas Commission on Law Enforcement • Officer Standards and Education all in one location • • Provide access to a realistic and complete training environment • combining both the mental and physical requirements of fire fighting, law enforcement and combined emergency response • • The crucial element in the design of this Training Center is the • integration of the parts to create a greater whole. Each of the individual • components of the Training Center fill a very specific need, but the success of the design will be the relationships that are developed • between components that maximize the learning experience. The • separate areas of the Training Center each play a vital role in the • complete product; and the connections and transitions between these • areas should be strongly considered in all design decisions. The loss of connection between any of the components will reduce the • opportunity to create a complete learning environment, by diminishing • the very element that would make it one of the premier public safety • training facilities in the country. • • • • • • • • Kirkpatrick Architecture Studio 28 Denton Police and Fire Training Facility • • • • • MAJOR COMPONENTS OVERVIEW • • Trainina Field/Tactical Live-Fire Trainina Villaae The Training Field, including the Tactical/Live-Fire Training Village, Firing Range, and Emergency Driving Course, is the area of greatest • need and represents the greatest potential for increasing the quality • and quantity of programs. A recent survey of area department • training needs revealed the lack of realistic hands-on training as the • foremost obstacle facing most agencies. This pattern is consistent throughout the country. The decreasing availability of realistic training • has led to an increase in injuries accompanied by a decrease in job • performance. This type of advanced training facility is beyond the • financial capabilities of most communities; but the lack of access to • such a facility can lead to a dramatic increase in losses as the result of injury, liability, crime, and fire damage. • • The construction of the Training Field and its components will: • Improve realistic fire training thereby reducing the number of injuries and deaths of firefighters and civilians • • Reduce the amount of losses associated with fire damage • • Reduce liability associated with incidents requiring force • • Improve officer safety through realistic, real time scenarios • Increase the capabilities and morale of firefighters, police officers, • and all emergency service workers • • Provide improved training to other agencies such as the sheriff's • department, local police departments, volunteer fire departments, ambulance providers, utility companies and private industry • • Provide predictable, consistent, documented and validated • training with live-fire simulators, state-of-the-art firearms training, • and validated emergency driving scenarios. • • Help county communities reduce insurance premiums • Tactical/Live-Fire Training Buildings are the centerpieces of the • Training Drill Field and represent the greatest opportunity for the fire • department in the entire project. The Live-Fire Training Buildings will • provide the ability to conduct many different classes and functions including: • • • Live-Fire Training • • Basic Firefighter Recruit Training • • Industrial Fire Training • • • • Kirkpatrick Architecture Studio 29 Denton Police and Fire Training Facility • • • • • Petroleum Fire Brigade Training • Strategy and Tactics Classes • Fire Inspector Classes • Fire Officer Classes • Arson Training • Apparatus Driver Operator Classes • Hazardous Materials Awareness Training • Hazardous Materials Operations Exercises • Hazardous Materials Strategy and Tactics Training • High Angle Rescue Training • Confined Space Rescue Training • High Rise Command Training • High Rise Fire Training • Ladder Training • Aerial Ladder Apparatus Training • Technical Rescue Training • Pump Operation Training • Standpipe Training • Automatic Fire Protection System Training • Terrorism Training • Mass Casualty Training • • The Live-Fire Training Buildings will be operated by a computer • controlled propane and natural gas fire simulation system. Instructors customize fire-training scenarios by selecting parameters within pre- configured training exercises. Computers relay these specifications • to burner controls and consistently monitor the proficiency of the • trainees as well as the safety conditions within the burn building. • Firefighters will encounter lifelike propagation and realistic responses • to their actions, while constantly being monitored for safety. If safety • guidelines are exceeded, the system automatically shuts down. • Manual shutdown switches are located at egress points around the burn buildings and at the instructor's stations. Printed reports validate • the training experience after each session or data can be stored for • future review. The simulator enables the instructor to create virtually • any fire situation imaginable. Artificial smoke and clean burning fuel • eliminate the environmental hazards in the state-of-the-art Live-Fire • Training Buildings. • • • • • • • Kirkpatrick Architecture Studio 30 Denton Police and Fire Training Facility • • • • • • The benefits of this type of system include: • • Programmable degree of difficulty • • Complete operator control of training • • Consistent and repeatable training exercises • • Logging of training scenario data • Consistent response to trainee actions • • Improved safety • Increased training effectiveness . • Virtual elimination of environmental impact • Increased life span of the Live-Fire Training Building • • Reduced operating cost of live-fire training • . The Tactical/Live Fire Burn Village also provides a unique training . ground for the police department on a scale not available to most departments. The benefits to the police department include the ability to train in a realistic full-scale training village that provides many different types of buildings and structures encountered in the . community. Some of the anticipated training includes: • Building Searches • Forcible Entry • Tactical Team Operations • Traffic Stops • Traffic Incident Investigation . • Drug Lab Intervention and Investigation . • Crowd Control • Multi-Agency Training • Simunition Training • Bike Training • Foot Pursuit • Emergency Driving ' Kirkpatrick Architecture Studio 31 Denton Police and Fire Training Facility • • • • • Administrative/Classroom Building • The Administrative and Classroom Building is the final component • necessary to create an integrated educational public safety training • facility that efficiently serves the emergency responders and the • community. The design goal of this component is to create a building that becomes an integral part of the learning process, rather than • a building to house a learning institution. The idea is to create an environment that plays a role in mentally preparing the student to . learn. The building function should maximize interactive opportunities . and give the student the sense they are truly in a higher education environment. This dynamic learning environment will complement the other areas of the Training Center and provide the opportunity for a unique educational experience. It will also provide tremendous . opportunities to meet the needs of the large service area. The ability to assemble a large number of students in the same facility can have a great impact on the level of communication and educational exchange between area departments. The building will allow the student to . learn in a comfortable environment, with limited distractions, and by . design, will promote interaction and knowledge exchange. Design features that honor the tradition of the police and fire service throughout the years will also help instill a sense of pride and loyalty . in the students attending courses. Each classroom in this facility will be designed to address the unique requirements of emergency response education. Individual design features that consider the firefighter's and police officer's need to blend academic learning with hands-on technical skills will enhance the student's ability to combine the two aspects. All classrooms will be designed to match the nature of the specific types of response education with the most efficient learning environment in . which to accomplish the objectives. Placement of classrooms will also enhance the learning environment by creating a natural grouping of similar classes to promote interaction among students and increase learning opportunities. Each classroom shall have access to a green space when possible, further promoting information exchange and independent study. ' Kirkpatrick Architecture Studio 32 Denton Police and Fire Training Facility • • • The placement of administrative and faculty offices is critical to the function of this building. Interaction between faculty and students • enhances the learning opportunities while contributing to the • understanding of the student problems and needs. Location of • student records to provide accessibility of documentation required by the Texas Commission on Fire Protection, Texas Commission on Law • Enforcement Officer Standards and Education, Texas Department • of Health etc, is equally important. This centralized storage will also • make accessing these records much less painful for the student. All • aspects of day-to-day operations will become more efficient due to the centralization of administrative functions and will permit better • communication exchange. • • • • • • • • • • • • • r r r r. r r r r r r r r r Kirkpatrick Architecture Studio 33 Denton Police and Fire Training Facility • • • GENERAL SPECIFICATIONS • The Site and Site Development • • The site consists of approximately 88 acres located at the southwest • corner of Bonnie Brae and Vintage Parkway. The site includes a variety of terrain and elevation changes, which can be utilized to • enhance the realism and variety of the training scenarios created • on the site. The elevation changes also provide the opportunity to • enhance protection of neighboring elements from both noise and training hazards. Limitations to the site result from the presence of • high voltage transmission lines and an area of the site that lies within • a documented flood plain. All buildings included in these specifications should be designed to compliment the surrounding developments as much as possible. • Liberal amounts of landscaping should be incorporated throughout • the Training Center utilizing predominantly low-maintenance, hardy • plant materials. Plants located throughout the Training Field and near • the Live-Fire Training Buildings, should not be adversely affected by heat generated during training operations. The propane or natural • gas simulators specified in this document provide control of the dissipation of heat throughout a training exercise. A security fence, minimum height of 6 feet, should encircle the entire • Training Center with the exception of the Administration/Classroom Building and the parking lot. The fence may be chain link, masonry or wood picket or, a combination of these as the site plan is developed. • • • r r r r r r r r r Kirkpatrick Architecture Studio 34 Denton Police and Fire Training Facility r • • • • • DETAILED SPECIFICATIONS • The Training Field • • The Training Field, anchored by the Tactical/Live Fire Burn Village • and the Firing Range, will be the driving force behind the continuation and growth of all emergency response training programs. The area • will bridge the gap that exists between current training and real • public safety emergency situations the student may encounter. The • Training Field should be designed for eventual expansion, as future • emergency training methods evolve; growth should occur naturally in a manner similar to how an actual city grows. This factor should • be a key consideration in all design decisions, and great care should • be taken to avoid cutting up and grouping elements in a manner that • would not reflect their context in the city. • The design of the field is a very crucial aspect in reaching the educational goal of training in context. The training field and its components should relate to each other in a manner that enhances . each component and maximizes flexibility and usability. Upon entering the field, the trainee should get a sense they have entered a • small town or city. The layout of the streets and the buildings should match that of what they would encounter on the job. This is not unlike . building a theme park, with the theme being a replication of the City of Denton. Each structure that becomes a part of the field should serve to establish this feeling of community. By creating an environment that recreates the actual work environment in form and function, the educational value and applicability of the training will be improved . tremendously. The goal is to immerse the student into interactive educational opportunities from the moment they enter the field. Examples of the types of simulations that are anticipated include the . following: • Structural Live Fire Vehicle Fire Trench Rescue Confined Space Rescue Structural Collapse Railroad Emergencies . Flashover Training Swift Water Rescue Traffic Stops Tank Truck Emergencies Emergency Pursuit Disaster Drills Natural and LP Gas Fire Hostage Situations Accident Investigation Multi-Company Incident Multi-Agency Incident Mass Casualty Incident . Traffic Incident Vehicle Extrication Hazardous Materials Mitigation ' Kirkpatrick Architecture Studio 35 Denton Police and Fire Training Facility • • • • • All buildings, elevator shafts, drafting pits, underground utility covers, exterior valves and cabinets shall be fitted with locking devices for • security and safety when not in use. Sufficient lighting shall be • provided to allow safe operation during nighttime operations. All • streets shall be constructed to meet the demands of constant use . by large fire apparatus and should match the dimensions of those found in the City of Denton. Special consideration should be given • to recreating a street network that allows simulation of problems the • driver will encounter on the job. • Each training area shall have a covered instructional area where • students can receive short sessions of instruction as well as providing shelter from the elements; similar to roadside park pavilions. (See • Outdoor Classroom) A water station space shall be included at each • sheltered area. The station shall include a stand for a portable water cooler with a cup dispenser and a trash receptacle. Each shelter • shall be fitted with a misting fan cooling system to be used during warm weather. Detailed Major Components of the Training Field: Tactical Live-Fire Training Buildings Tactical/Live-Fire Training Buildings, also referred to as "the burn . buildings," should be designed to allow real-time, live-fire and emergency training simulations. The buildings shall incorporate simulations of the five most commonly encountered structures: Residential, Warehouse/Loading Dock, High Rise, Hotel/Apartment . Complex, Strip Shopping Center/Mercantile. Design consideration . shall be given to fire spread, rescue, ventilation and special problems. The structures shall be designed to maximize the number of simulated emergency and disaster situations possibly encountered and addressed simultaneously. The buildings shall contain all of the following requirements unless otherwise specified: General Tactical/Live-Fire Building Requirements • All portions of the building shall be designed to withstand repeated live-fire training scenarios using computer operated propane fire training simulators. • The structure shall have the means to compartmentalize individual areas to assist in the retention of heat and non-polluting smoke. Kirkpatrick Architecture Studio 36 Denton Police and Fire Training Facility • • • • • • The capability to create dense non-polluting, non-toxic smoke of known composition shall be available throughout the structure. • • Both interior and exterior walls of the building shall provide for the • safety of personnel in training and have the ability to withstand • master stream application of 1500 GPM. • Stairways, both interior and exterior, shall be incorporated in the • building design. • • Stairways shall provide not only a means of access between floor • levels, but also shall simulate fire ground conditions. A variety of • types, widths, and situations should be realistically represented. • Stairways included in the High Rise section shall be so located as • to maximize available interior floor area. • • All stairway treads shall be slip resistant. • • All stairway landings shall be sized to provide room for the • maneuvering of personnel and equipment. • Floor numbers shall be visible on all landings. • • Outside stairways shall be of sufficient height and strength to ensure safety during training evolutions. . • All door and window openings shall be fully framed and located to . simulate situations existing in the field. • A number of exterior or interior door openings shall be selected to • be equipped with a forcible entry-training device. • All doors shall be solid core design and constructed to withstand . high heat without warping. • The burn buildings shall include provisions for standpipe connections at all floor levels. This feature will provide the • opportunity to develop the proper procedures for connecting to . and providing a water supply for the system and may be utilized . for simulated fire attack by fire forces operating in a high-rise building. • The multi-floor buildings shall be fitted with a working sprinkler system on all floors utilizing a dry system. The system shall be designed to provide instruction on sprinkler system operation and tactics and is not intended for building protection. • Siamese connections shall be installed and identified at ground level to accommodate auxiliary water supplies. • Section valves shall be installed in systems at each floor, or ` selected locations, to enable the instructor to shut down only sections, not entire systems, for training purposes. • Roof openings shall be provided for the practice of ventilation procedures. Various size openings on both flat and sloped roof . surfaces shall be designed into the structures so that different situations and types of roof conditions can be simulated. Kirkpatrick Architecture Studio 37 Denton Police and Fire Training Facility • • • • • Interior cutouts shall be included in the ceiling above each window or door that is accessible from the exterior of the • structure. These should be designed to allow the student to check • for fire extension upon entering the structure. They will also be • used to teach overhaul techniques and should allow for the • repeated construction and destruction of a variety of materials. The cutout openings should have a safety device installed to • prevent personnel or tools from falling through. Consideration ' shall be given to avoiding ignition of materials. • The coping of parapet walls shall have a permanent protective material attached to protect the coping from damage during • rope and ladder evolutions. The material shall be such that will • not abrade or damage rope equipment during rescue exercises. • Each floor of the building, including the roof, shall be equipped . with floor drains and/or scuppers and shall ensure the quick run off of water. • Every room shall have an exterior exit or secondary means of egress for safety purposes. . Door stops to hold doors open shall be mounted on the wall, not . on the floor to prevent hose lines from catching on them and causing damage to the hose and doorstops. • All portions of the structure shall be equipped with a quick and easy system to reconfigure the floor plan of the room allowing for an increased number of simulations. The design features of the Tactical/Live-Fire Training Village shall work to create a variety of approach considerations that may be . incorporated into training sessions. Landscaping and street-to-building setback variations will assist in increasing approach considerations. Streetlights shall be located around the burn structures and will be used for both lighting and as a factor in training evolutions. Electrical power line simulation system shall be designed to allow the use of r cable to simulate above ground power lines. The system shall provide for the raising of cables between the light poles and the building and r provide for the removal and storage of cables when not in use. Utility r control simulators including electric, gas and water shall be located r around the structures. r r r r r r r Kirkpatrick Architecture Studio 38 Denton Police and Fire Training Facility s • 2 Story Residence The 2-story residence should be approximately 2,500 to 3,000 square ~ ~l feet r and be representative of a residence commonly found in the city. ~~.t~ ~ ~f ` ~ ~~_~r - This structure represents one of the hi hest riorities of the tactical ~A 9 p - villa a and should bee ui ed r 9 q pp to c eate realistic, real time scenarios - ~g~.. ~s n ~ ~ that can simulate incident performance requirements from notification r ~ to units cleared. The structure should be designed to accommodate - both police and fire scenarios with special attention given to the y_ - ~ ~ protection of sensitive safety equipment to allow for maximum usage _ ~ . ~..f~~ b both a encies. The residence should simulate a 3 or 4-bedroom ~ . ~ .rts ~ Y g ~N~. ~ f home with 2 bathrooms and atwo-car garage. The structure should {p~ i}~ be designed to facilitate fire simulation equipment in each bedroom, ~ ~ fl,. ~ ~ ~ ~ the kitchen, and the garage. Flashover effects should be included x ~ with ~ ~ ~:~~r ~ ~ ~ ~ each fireplace. Breathable doors should be installed at front x T ~ and rear entrances and design should allow for breathable doors to a g g be. installed between the ara a and main residence when desired. i r~ ~f A concrete ceilin should be desi ned to allow for the lacement of 9 g p " ~ - - ~ an attic fire with a re laceable ventilation trainer ositioned above - _ - p the attic fire. The concrete ceiling should be designed to allow for an , ~ opening below the ventilation trainer to allow the trainees to utilize " ~ ~ ~ ~ ceilin removal tools to take out ceilin - _ ~~v_:fi~`;_~ _K~ ~ g g panels from above or below. Gas and electric utilities simulators that can be mani ulated sh I p ou d be included inside and outside of the structure in appropriate locations. i The structure should have the capability to have fire visible to trainees as they approach the building. 1 Story Residence The 1-story residence should be approximately 1,200 to 1,500 square feet and be representative of a residence commonly found in the city. The structure represents the bread and butter operation 1 and th us will provide good usage for all response agencies. The - residence should consist of 3 bedrooms and one bath with gone- r ~ car garage. The structure should be designed to accommodate fire ~ simulation equipment in each bedroom, the kitchen, and the garage. Flashover effects should be included with each fireplace. Breathable doors should be installed at front and rear entrant es and design 1 should allow for breathable doors to be installed between the garage and main residence when desired. Two separate replaceable roof openings should be designed into the structure at opposing ends to 1 allow for real time ventilation operations. Cutout panels should be placed below each ventilation o enin to allow for the use of ceilin p 9 9 removal tools. Breathable panels should also be provided just inside each entry point to allow for trainees to check for fire above them. Gas and electric utilities simulators that can be manipulated h s ould be included inside and outside of the structure in appropriate locations. The structure should have the capabili to have fire visible tY ` to trainees as they approach the building. Kirkpatrick Architecture Studio 39 Denton Police and Fire Training Facility High Rise Office/Hotel (Option 1) The high-rise office/hotel should be a 6-story building that reflects the current trend in hotel and office building construction common in ~ the area. This building will allow for realistic training in coordination i required in this type of structure and greatly exceed the training opportunities provided by traditional fire training towers. The building should be designed so that different floors represent different types of occupancies. The floor plans should include representations of . a hotel, apartment, and office structure. The ground floor should • provide commercial storefront simulations and a mock up of a hotel lobby area. Fire simulation equipment should be accommodated for on each floor with multiple accommodations allowed for future expansion. The structure should be designed to accept breachable • doors in multiple locations. Breachable wall cutouts between units ~ 1 i • should be designed on each floor. Gas and electric utilities simulators that can be manipulated should be included inside and outside of ~ the structure in appropriate locations. The structure should have the capability to have fire visible to trainees as they approach the building. _ _ _ • Simulated utilities and radio equipment should be designed for the • roof and be stabilized to simulate natural tie off points for high angle rescue training. The High Rise shall also include an elevator shaft to simulate elevator rescue as well as allowing training in elevator usage during firefighting operations. A variety of working elevator • doors shall be placed on the different floor levels. A manhole opening shall be placed above the elevator shaft to be used in elevator and confined space rescue courses. Access to the roof of the high rise shall be available via interior stairways. Suspended ceiling simulators • should be placed strategically throughout the building to allow • for inspection for hidden fires. Complete standpipe and sprinkler coverage should be designed into the building but should have the ability to be controlled by the training instructor. A working alarm system should be installed that can also be con- • trolled by the instructor. (It is recommended that a partnership be explored to provide for this equipment and installation.) A full size ~ loading dock should be located at one end of the structure which will house a working equipment room with instructor controlled utility emergencies. A full size cargo truck fire simulator should be located at the loading dock. i t • Kirkpatrick Architecture Studio 40 Denton Police and Fire Training Facility High Rise OfficeNVarehouse (Option 2) The high-rise area shall consist of a 6-story structure designed to recreate the many problems associated with fighting a fire in this a type of building. The Warehouse/Loading Dock area will occupy the • first two floors and remaining floors shall represent high-rise office • and residential occupancies. The 6th floor shall have the ability to simulate an office fire with flashover capabilities. The High Rise area S shall also include an elevator shaft to simulate elevator rescue as • f - - - - well as firefighter usage. A variety of working elevator doors shall be placed on the different floor levels. Access to the roof of the high rise ~ ' shall be available via interior stairways. The roof of the structure shall r be designed for safe use in rappelling and rope rescue courses. The side of the building that is to be used for rappelling exercises should • include a small balcony on the third floor, which can also be used . _ during rope rescue course. A~working roof hatch shall be installed and should allow for safe use as a rope anchor point to simulate _ alternative anchor possibilities. A manhole opening shall be placed ~ ~ ~ ' above the elevator shaft to be used in elevator and confined space • rescue courses. Suspended ceiling simulators should be placed strategically throughout the building to allow for inspection for hidden fires. Complete standpipe and sprinkler coverage should be designed into the building but should have the ability to be controlled by the S training instructor. A working alarm system should be installed that • can also be controlled by the instructor. (It is recommended that a partnership be explored to provide for this equipment and installation.) A full size loading dock should be located at one end of the structure and house a working equipment room with instructor controlled utility • emergencies. A full size cargo truck fire simulator should be located • at the loading dock. i • i • • t • • • • • t Kirkpatrick Architecture Studio 41 Denton Police and Fire Training Facility •  144W • Apartment Complex _ ~ The a artment com lex should re licate one buildin of a ical P p p g tYP ~ ,`~5 ~ ~ a artment complex found in the city. The structure should be three P ~ ` r _ stories high to allow for scenarios simulating both two and three ~ , t- v6, ~ story apartments commonly found in the area. Working standpipe i and sprinkler systems should be installed and have the capability - ~ Fir imulation a ui ment should for instructor controlled function. e s q p - ~ ~ ~ ~ be installed on each floor with the capability for expansion to each .F~ ;.:.~W - - ~~F,~ ~ ~ individual unit. Multiple ventilation cutout panels should be installed _ - ~ ~ - _ ~ on the roof to allow for ventilation training, and cutout panels should ' x ~ ~ - - be laced beneath each to allow for trainee removal of ceiling. Cutout p panels should be located above each entry point, including windows, to allow for checking the overhead extension of fire. Breachable walls , a G~ should be designed between several units to allow for emergency Y ~ ~ ' ~ ~ ~ ~ escape and access training. Gas and electric utilities simulators 1 ~~t, . . - h n be mane ulated should be included ~ns~de and outside of tat ca p G - - the structure in a ro riate locations. The structure should have Pp P ,.x ~ ~ ~ ~ the capability to have fire visible to trainees as they approach the ~..4 ~ building. Asmall parking lot should be constructed in front of the unit f, ~ ~ and positioned to allow for impeded access training. ~.A _ J. q. s Strip Shopping Center The strip shopping center is an increasingly common building type that poses the difficulty of access and common attic fire spread. The shopping center should be designed to replicate multiple business i types and have the ability to have the business type altered by the instructional staff. The building should consist of at least three ~ .m . separate units with an optimum of six either initially or as a result of r""~ ~ ~ ~ future ex ansion or hasin .The exterior should include an overhan - p p g g i n f hese structures. The abili to commonly used in the des g o t ty simulate a merchandise fire should be included in at least one of the retail occupancies, and a commercial kitchen fire shall exist in a separate occupancy. A flat roof ventilation simulator should allow for real time ventilation training with cutout panels/ ceiling removal points beneath each osition. The buildin should allow for actual cuttin p g 9 to take place above each unit of the center. Breachable doors should be installed at both front and rear entrances to each unit. Breachable walls should be designed between each unit. A suspended ceiling simulator should be installed in each unit to allow for checking fire ~ conditions and spread. r Kirkpatrick Architecture Studio 42 Denton Police and Fire Training Facility i  w Gas and electric utilities simulators that can be manipulated should be included inside and outside of the structure in a ro riate Pp p locations. The structure should have the capability to have fire visible ~ to trainees as they approach the building. A small parking lot should be constructed in front of the unit and positioned to allow for impeded access training. Convenience Storel Gas Station The convenience store/gas station should replicate the current trend i : in construction of this type of building. The main store should have a -,z flat roof and include back stocking and office areas. Fire simulation K= ~ a ui ment should re licate a stock shelvin fire in the front and a q p p g ~ - ~ storage fire in the rear. A breachable door should be installed at the rear entrance. A flat roof ventilation trainer should be installed on ~ the roof of the building. There should be multiple fueling stations wi h as um fire simulator and a car fire simulator strate icall t ag p p g y t K.=~ laced. The inclusion of emer enc shutoff of as um s should p 9 Y g p p duplicate those required by code so that trainees must perform all tasks involved in the control of this type of incident. Gas and electric utilities simulators that can be manipulated should be included inside and outside of the structure in a ro riate locations. The structure pp p should have the capability to have fire visible to trainees as they • approach the building. A small parking lot should be constructed in front of the unit and positioned to allow for impeded access training. Design of the site should allow for the addition of a gasoline tank truck spill and fire scenario. Big Boxl Commercial Occupancy The big box commercial occupancy should be designed to replicate occu ancies such as Wal-Mart Home De of Lowe's and Tar et etc. p , p g, The building should allow for the training of incidents complicated by a,?`, " the size and layout of the building. Because of the size of this type of F ($y~i. 'emu ~j z.~ ~ y buildin it ~s recommended that o ortunities be ex lored that would ~ - ~ ~ ` x Y combine functions of a buildin of this size. Exam les mi ht include 9 p 9 stora a and service areas CPAT* testin and trainin defensive g ~ 9 g~ ~ tactics, etc. Design elements should be based on the extent and nature of combined uses. Candidate Physical Ability Testing r Kirkpatrick Architecture Studio 43 Denton Police and Fire Training Facility • Firing Range The firing range is one of the most important elements of the training ~ ~ ~ ~ field for the police department. It also represents one of the greatest potential revenue sources. The outdoor range requirements provided _ ~ ~ V~ by department include the following: w~ Y L ,'_YSG S • 2 hases of 20 stations each- turnin Iwobblin tar ets at each p 9 g 9 ~ station • Lateral moving target on one bay, charging target on the next • Control Booth r r r' F ili Secure A mo e s ac ty ° ~ - • Weapons cleaning roomlarea ~ ~ ht • Ammunition magazine storage • Target supply/Simunition/General Storage Area ~ - ~ • Full baffling for both safety and noise reduction • } , ~ ` • Covered shooting positions 3rE, , • Outdoor Classroom \ ~ Due to the location of current and future development, safety and noise reduction should be mayor design considerations. Natural elevation chan es on the site should be exploited and full baffling for noise and g i bullet control should be considered. Facilitation of lead abatement and removal should also be a prominent design consideration. ~ • Tactical Shoot House The tactical shoot house represents an opportunity to provide some ~ - of the most beneficial live fire training available today. Unlike the ' ~ ti~~ ~ static nature of standard firing range training, the tactical shoot house provides a 360-degree live fire training scenario that can duplicate ~ ~ the hi h stress involved in close- uarters o erations. The tactical g q p shoot house can provide a level of realism that greatly enhances the contextual training of officers in tactics such as room clearing ~4 and hallway navigation. All of this can be accomplished in a safe environment, without resorting to the unrealistic environment most ~ - , often associated with live fire training. The addition of the tactical :y~ ~ ~ ~ ~ shoot house will improve officer performance in highly stressful ~ s~ r ~ "shootldon't shoot" situations and could rove critical in reducin the ~ p 9 ~ chance of death or injury to an officer or a member of the public. This r type of training not only reduces the chance of accidental injury o death but also reatl decreases the chance of costl liti ation b g Y Y g Y .Y i demonstrating verifiable and validated training. f . V:~: 2~ _ . t re Studio 44 Denton Police and Fire Trainin Facilit Kirkpatrick Architec u g y • ~ Due to the nature of risk involved in the design of this type of structure, ~Y it is recommended that the shoot house be designed and purchased - from a reputable vendor who specializes in this type of design and • construction. A Request for Qualifications should be developed, • - ~ ~ and qualifying vendors should be allowed to demonstrate product features, including safety, adaptability, realism, durability, and cost. • The selected vendor should work with the facility design team to incorporate the design into the remainder of the training field design. • The tactical shoot house should share facilities with the firing range to avoid duplication. Emergency Driving Course The emergency driving course is a key element to the training field • as it represents an opportunity to greatly reduce the occurrence • of accidents and associated liability. Vehicle accidents currently account for an extremely high percentage of emergency responder deaths and injuries, and the ability to train under realistic conditions is increasingly difficult due to space and population constraints. A The emergency-driving course should be a continuous road course and skid pad that simulates the different maneuvers encountered by emergency responders in the field. Pump and delivery system should allow for the wetting down of the skid pad and certain portions • of the road course to simulate inclement weather conditions. The course should connect to the Tactical/Live Fire Burn Village streets to allow for combining of training operations and scenarios. A separate connection should be provided at the firing range to allow for drive- • up-and-shoot training scenarios. The ability to secure the course • from non-related traffic is crucial, but should not limit flexibility when combined operations are desired. The course should be designed to withstand repeated evasive maneuvers and heavy traffic consisting of patrol cars, fire apparatus, and Advanced Life Support Vehicles. Kirkpatrick Architecture Studio 45 Denton Police and Fire Training Facility  Now i Detailed Supporting Components of the Training Field: Spill FirelTrain DerailmentlTruckAccidentlHazmat This area should be a multiuse training area that simulates several common transportation emergencies. The spill fire should simulate a running fuel spill that pools in a low-lying area. A train derailment .t~,~ ti ~ simulator should be designed with fire on both sides of the accident. .t, • a4 i ` ~ . A simulated truck railroad-crossing incident should be positioned to z allow for inclusion in spill fire incidents. The rail cars and the tanker F S ~ F- ° y °T`s~~ truck should have simulation equipment that would allow for the N .w ~ { 4 & ~ r release of hazardous chemicals, both gas and liquid. Simulated ~.~Ft c:n"is r+~+ ° ~ ° ~ waterways and storm drains should be designed to allow for runoff ~ containment and mitigation training. Car Fires _ ` ~ ~ Car fire simulators should be laced at several locations around the S f ~,,~K_s '4 : ~ - ~ ~s training site and should be positioned as they would be found in the ~ ~ ~ ~ ~ community. Each carshould simulate fire and smoke from the engine ~ - ~ ~ compartment, the passenger compartment and the trunk. Each car xF.:~- should be equipped with a tare blowout simulator to add to the realism ~ of the incident. At least one light duty truck fire simulator should be a..x ~ ~ placed on the training field and should have a simulated cargo fire _ - ,in the bed. At least one of the car fire simulators should be located inside of a residential garage. Vehicular Incident Simulation Site The Vehicular Incident Simulation Site shall be designed to enable the students to develop the skills required to operate safely and effectively at the scene of a vehicle accident. It should consist of ~ cuttin stora a and main incident simulation areas. The sub~ects 9~ 9 J covered in the Vehicular Incident Simulation Site will demonstrate the tactical approach to a "Casualty Centered Rescue" with consideration given to logistical support by operational personnel. The site shall be designed to allow simulation and investigation of traffic accidents re uirin students to ado t the team a roach to brin the incident q 9 p PP 9 to a successful conclusion. Design shall also consider the many • different locations in which a major incident may occur, including uneven or unstable terrain upon which a vehicle may come to rest, causiing difficult access. The student should also be faced with the possibili of the vehicle bein in a position other than upright. The tY g streets providing access to this area should also force the student to address scene access and control issues that may be encountered in the field. Kirkpatrick Architecture Studio 46 Denton Police and Fire Training Facility • • The vehicle extrication area should be a secured area of gravel or as halt that will allow for the stora a of cars as well as for stabilization p 9 ~ and entry training. This area should have a covered area with bleacher seating that would allow for a vehicle to be brought under the covered area for training. Restroom and watering facilities should also be provided in this area. A misting system should be installed to allow for coolin of artici ants Burin hot weather. Stora a areas for g p p 9 9 equipment should be combined with, or adjacent to, covered training area. Access should allow for placement and removal of vehicles and i for placement of vehicles at different locations throughout the training site. Propane Emergency Simulators Several propane emergency simulators should be provided on the site. The first is a residential propane tank simulator that should - ~ ~ be located in the and of one of the residences. Althou h this e Y 9 tYp ~ + Ra 0. ~ s ~ ~ of incident is increasingly rare, the risk is extremely high and the ± ~ ~ teamwork and awareness that develops as a result of this training ~~..r makes it an important and inexpensive addition to the training field. The second type of simulator is a propane refueling station simulator that would combine the fueling station emergency with that of a common propane delivery truck. The fire and gas simulation should allow for numerous combinations of release and fire situations, and ,f . v~~ Y ~ ~ ~ include actual duplication of safety equipment and shutoffs that can - _ - . be manipulated by the firefighter. Swift Water Rescue Trainer The swift water rescue trainer should be designed to offer a realistic h. - .Yy~j ~ simulation of the conditions and hazards associated with rapidly rising " ~ ~ ~ ~ water. The trainer should include the ability to train on defensive > ,max , . g ~ F~ ~ ~ ~ ~ swim tactics, wading operations, rescue from submerged cars and `.ty;,~,rf ~ ~ ~ low water dam operations. Emphasis should be placed on design % ~ ~ ~t r,Fk ~ ~ safety that allows for the rapid reduction of water flow and depth • ~ i , . 6 E`~~ ~ in the case of emergency. Viewing stations with emergency stops ~y~~-~ ~ should be ositioned alon the site to ensure that students ma be in :~,s . _ ~ constant visual contact. Multi le ent and exit locations should be P ry ~ provided along the training site. Surface treatment of the waterway should provide limited traction without damaging trainee protective equipment. No sharp or protruding elements shall be designed into i the s stem and all pump intakes shall have protection to ensure Y trainees are separated from equipment. Kirkpatrick Architecture Studio 47 Denton Police and Fire Training Facility  lq~ • • • Trench Rescue The trench rescue training site should consist of a series of concrete • trenches of varying width and depth with at least one intersecting • trench. Trenches should be designed to reflect sites as they would be • encountered in the community and thus should be incorporated into • the cityscape as much as possible. Trenches should be designed with multiple simulated utility hazards such as gas lines, electric lines, and water lines. The utilities simulation should include ruptured • water lines that flood the trench, ruptured gas lines with vapor • escape, and ruptured electric with arcing simulation. All simulations should be instructor controlled. The design should also allow for • safety considerations such as rapid evacuation of water in case of • emergency. Confined Space Rescue Multiple sites should be incorporated into the design of the cityscape • to accommodate confined space training. The design of these sites • should include a series of utility vaults and tunnels similar to those • commonly found in the community. The props should allow for the • utilization of a tripod and harness as well as provide for air monitoring simulation. Confined space elements should also be designed into • the structures on site such as the High Rise/Office Building. Future • expansion should seek to incorporate donated vessels and hoppers • that would allow for increased flexibility and realism in available scenarios. • • Simunition Village • The Simunition Village represents a great step forward in providing • realistic scenario-based firearms training for officers. The simunition village incorporates a cityscape replication of the elements found • in the community and allows officers to practice tactical skills in • a realistic force-on-force environment utilizing simunition. Most • villages constructed in the past, utilized buildings of reduced scale, • and although this provides greater realism than the standard firing range, it does have limitations due to size. A better option would • be a full scale replica of community buildings that would increase • the sensation of realism, thus, better duplicating the stress that plays • such a large role in the outcomes of force-on-force encounters. With this in mind, it is recommended that exploration of opportunities to • use simunition safely in the tactical/burn village be exhausted first. • • • • • • • Kirkpatrick Architecture Studio 48 Denton Police and Fire Training Facility • • • • The expense for construction of the Tactical/Burn Village will occur regardless, and it is ideally designed to replicate the situations officers • might encounter on the job. Assurances should be made for the safety • of those not involved in the simunition training, as well as assurances • that simulation equipment and sensors not be damaged, but it is believed that these issues are not insurmountable. If a solution is • not discovered, it is recommended that a separate simunition village • be designed that would include a safety perimeter wall to contain all • simunition within the site. • Bike Course • The construction of the Tactical/Live Fire Training Village provides • the best possible bike course in terms of realistic hands-on training. • Since the village is intended to realistically duplicate the environment • found in the community, it also provides the opportunity to teach skills the bike officer will need to work in that environment. The possibility • of developing an off-road course that would enhance overall rider • capabilities should be considered. Options exist to construct a course • (possibly in the flood plain) that could be accessible to the public as • well. The inclusion of public walking/jogging/biking trails around the perimeter of the site should also be considered and this could serve • to further enhance bike course training. Arson Investigation Trainer • The Arson Investigation Trainer should provide for the repeated construction and burning of small pods simulating different room • environments encountered by the arson investigator. These pods • should be made of concrete floors and walls with the ability to have • conventional building materials attached. Controlled fires will be initiated via known causes and upon extinguishment, the students will • investigate and attempt to reveal that known cause. The simulation • pods should allow for rapid destruction and reconstruction between • training courses. • Obstacle Course • The foot pursuit obstacle training course should be designed to • simulate obstructions an officer might encounter during foot pursuit • incidents. The course should be located near the firing range and • allow the trainee to complete the course by entering the firing range and shooting, similar to the drive and shoot scenarios described • earlier. • • • • • • Kirkpatrick Architecture Studio 49 Denton Police and Fire Training Facility • • • • • Sniper Range/Bomb Squad Range • The feasibility and advisability of including a viable Sniper Range or • active Bomb Squad Range on the proposed site was found to be cost • prohibitive and risky. Recognizing the importance of these training • capabilities, it is recommended that the existing police firing range be considered for redevelopment into a specialized training field • featuring these elements. • The Training Field Functional Areas: • Observation/Control Tower The two-storied Observation/Control Tower shall provide the • continuous observation of various training functions from one location. This will include the ability to control the propane fire and smoke • generation systems via computers located in the tower. The tower • should also provide a sound system, which allows communication • throughout the training field and burn building. The system should • include both two-way radio communication and a public address system. Window space for full observation of the drill area, including • observation of units responding to the burn building from off site, shall • be included. • The first floor of the observation tower shall provide a small office • area for the check-in of students using the field, as well as a small first aid/medical room. A second office of standard size shall be located • on the first floor for the Training Field Operator. Restroom facilities • for both men and women shall be included in this area. The first floor • should also provide storage for ground ladders, hose and other fire • equipment necessary to the operation of the training field. • Outdoor Classrooms • Outdoor classrooms should be strategically located to provide for brief • periods of instruction in a location that limits time away from training props. The outdoor classroom should provide open-air protection • from the elements and have an integrated misting system installed. • The outdoor classrooms should have restroom and watering facilities, • as well as air refilling stations. Additional air refilling stations shall • be added throughout the site as needed. All weather benches or bleachers should provide seating for thirty (30) persons. Whiteboards • shall be placed at the front of the classroom. Equipment storage • areas shall be integrated into the design of the outdoor classroom. • • • • • • Kirkpatrick Architecture Studio 50 Denton Police and Fire Training Facility • • • • Drafting Pit A drafting pit shall be designed to facilitate the training of pump • operators and the testing of pumping apparatus. A capacity of at • least 5,000 gallons of water shall be constructed with the water being • recycled to the pit. The drafting pit shall be constructed to meet all • requirements of Underwriters Laboratories regarding fire apparatus pump certification, which provides a more economical location for fire • agencies to obtain annual pump certification. Consideration should • be given to combining elements of the drafting pit to those of the swift • water rescue holding tanks if possible. • SCBA Storage and Maintenance Room • The SCBA Storage and Maintenance Room shall be located near • the Tactical/Live Fire Village and be part of a larger storage area • that also includes the Equipment Storage Room. The room will be used to store and repair up to 60 Self Contained Breathing Apparatus • (SCBA). Students in live fire training applications will use the SCBAs. • Aworkbench, steel shelving and storage cabinets for spare parts shall • be included. An air compressor with remote filling capabilities shall • also be installed in this room. Special attention should be directed to the air quality of this room to assure there is no infiltration of carbon • monoxide from the other building sources. • • Equipment Storage Room This room of approximately (800 square feet) shall also be adjacent • to the Tactical/Live Fire Village and be part of a larger storage area • including SCBA Storage and Maintenance Room. Heavy-duty steel • shelving and storage cabinets shall be included. • • • • • • • • • • • • • • • • Kirkpatrick Architecture Studio 51 Denton Police and Fire Training Facility • • • • Administrative/Classroom Building • Administrative/Faculty Offices • General Office Specifications • The administrative/faculty offices shall be easily accessible by students • and visitors. Design considerations shall also reduce the amount of distractions from traffic unrelated to administrative functions. The • following features shall be included in all offices unless otherwise • noted in the detailed specification of individual rooms. • Each office shall be wired for phone, and computer network access. • • Electrical outlets in the floor and walls shall be located to • eliminate the use of extension cords. • • Floor covering shall be carpet. • Offices shall be of adequate size to accommodate a desk and • computer workstation, as well as room for file and textbook storage. • Seating space should also be available to facilitate student • counseling. • • Classrooms • General Classroom Specifications • The following features shall be included in all classrooms unless • otherwise noted in the detailed specifications of individual rooms. • • Classrooms shall be wired for complete multimedia presentations. • The control console shall be located in the instructional area. • • The Instructor shall have the ability to control all media, lights and sound via remote technology. • • Each classroom shall have a locking cabinet built into the wall of • the instructional area to house a DVDNCR and provide secure • storage for all remote control devices. • • Multi-media projectors and projection screens shall descend from the ceiling via remote operation. • • A wall-mounted television with cable access shall be located in • one corner of each classroom. • • A dry-marker board shall be installed on the full width of the front wall. • • An 8-foot wide dry-marker board shall be mounted on one of the • remaining walls. • • • • • • Kirkpatrick Architecture Studio 52 Denton Police and Fire Training Facility • • • • • A 6-foot wide tack board shall be mounted near the door. • Electrical outlets in the floor and walls shall be located to eliminate • the use of extension cords and allow maximum flexibility • and growth. • • Provisions for future computer stations shall be included in the design of the floor plan. , • • A combination of fluorescent and recessed incandescent lighting • shall be included. The incandescent fixtures shall include dimmer • controls. • • Natural lighting shall be prominent in each classroom. • At least one door located in each classroom shall access a green • space area where possible. • • Floor covering shall be durable carpeting. • • Each classroom shall have a load-bearing hook recessed in the • ceiling and centered in the instructional area. The hook will be used to demonstrate rope rescue equipment and should support a • minimum of 750 pounds. • • Amphitheater/Lecture Hall • A multipurpose facility, the Amphitheater/Lecture Hall will be used • for course/seminar orientation, testing and continuing education • and degree course instruction. Additionally, it will provide a dynamic • teaching environment for seminars, lectures, conferences and continuing education classes for City of Denton emergency response • personnel, as well as other departments and organizations in the • city. The Amphitheater/Lecture Hall should be the centerpiece of the • classroom facility. The room should be large enough to accommodate • at least 100 students seated theatre style at permanently mounted tables and moveable chairs. A clear line of sight and high quality • sound shall be available at each seating position. Ample space should • be provided at the front of the hall for demonstration of equipment by • the instructor. One front row of removable seating may be included • to allow more space when necessary. Additional storage space shall be provided for furnishings and equipment not used on a permanent • basis. Lighting control shall be designed to provide optimum visual • effects. • • • • • • • • • Kirkpatrick Architecture Studio 53 Denton Police and Fire Training Facility • • • • Multipurpose Classroom The classroom will be used predominately for hands-on instruction, • but shall be designed to serve as an alternate classroom with • seating for thirty (30) students at tables. The room will allow the • use of training props, such as sprinkler risers, alarm panels, and utility simulators. The floor shall be sealed concrete to facilitate • manipulation of equipment. Cabinets with countertops shall be • provided along one wall for equipment storage. The classroom shall be located adjacent to the Fire Cadet Training Classroom. A storage room shall be provided between • the Fire Cadet Training and the Multipurpose Classroom with • access from each room. The storage will be used for tables, • chairs and other equipment. • • Fire Cadet Training Classroom • The Fire Cadet Training Classroom shall be a traditional classroom • with the capability to facilitate multiple configurations. It will serve as a secondary classroom for in-service programs. The • Fire Cadet Training Classroom will provide the ability to conduct • initial training for all future cadet classes. The classroom shall • accommodate forty (40) students seated at tables. The Training • Classroom shall be located near the Multipurpose Classroom and the Multilevel Technical Operations Training Classroom. • • • Multilevel Technical Operations Training Classroom • The Multilevel Technical Operations Training Classroom will serve as the primary classroom for Fire Technical Operations training. • Seating should be provided for thirty (30) students seated at • tables. Seating should be situated on a multilevel floor two rows • deep in a U-shape similar to surgical procedure training rooms. The classroom layout should be designed for enhanced viewing of • hands-on equipment demonstrations. Adequate space should be • provided for instructor demonstrations. The Multilevel Technical • Operations Training Classroom should be adjacent to the Fire • Cadet Training Classroom and the Multipurpose Classroom. • • • • • • • • Kirkpatrick Architecture Studio 54 Denton Police and Fire Training Facility • • • • Continuing Education Classroom #1 Continuing Education Classroom #1 shall be a traditional classroom with the capability to facilitate multiple configurations. Serving as • the primary classroom for the expansion of the continuing education/ • in-service programs for all public safety employees, it may be used for the basic instructional courses of other programs as well. The • classroom shall accommodate fifty (50) students seated at tables. • Storage space shall be provided for teaching aids and equipment. • This classroom shall be located in proximity to the Amphitheater/ • Lecture Hall. • Continuing Education Classroom #2 • Continuing Education Classroom #2 will provide additional space • for the expansion of the continuing education/in-service programs • for all public safety employees. This classroom will be a smaller traditional classroom providing the ability to create a more comfortable • environment for classes that are better suited to a smaller number • of students. Seating should accommodate thirty (30) students at • tables, and should provide flexibility in configuration. Storage shall be provided for instructional aids and equipment, as well as unused • furnishings. The Continuing Education Classroom #2 shall be located near the Continuing Education Classroom #1. Police Academy Classroom The Police Academy Classsroom will be the primary classroom for the • police recruit training programs. This classroom should be a traditional • classroom with seating for forty (40) students at tables. Storage shall • be provided for instructional aids and teaching equipment, as well • as unused furnishings. This room should be located adjacent to the Multilevel Police Lecture Room and the Fire Chemistry/Arson/Drug • Laboratory. Multilevel Police Lecture Classroom • This classroom will be used primarily for police lectures and special operations courses and will facilitate an increase in hands-on • demonstration of equipment, as well as an increase in the number • of courses offered. Seating shall be provided for forty (40) students • seated at tables. Seating shall be situated on a multilevel floor to provide enhanced viewing of equipment demonstrations. The • classroom shall be located near the Police Academy Classroom and • the Fire Chemistry/Arson/Drug Laboratory. • • • • • Kirkpatrick Architecture Studio 55 Denton Police and Fire Training Facility • • • • Laboratories • Fire Chemistry/Arson Laboratory/Drug Laboratory • The Fire and Police Technology Programs, Basic Fire and Police • Academies and the Continuing Education/In-Service Programs will use • the Fire Chemistry/Arson/Drug Laboratory. It will also be accessible to other departments for laboratory related classes. The laboratory shall • be designed as a traditional classroom and accommodate forty (40) • students seated at tables. The dry erase boards located behind the • instructional area should be designed to part in the middle revealing an instructional laboratory consisting of a vented hood system, a • demonstration table with wash sink, and a small chemical storage • cabinet. Outlets for air, gas and water shall be provided to the hood • system and the demonstration table. Space for storing appropriate • safety equipment shall be included in this area. Flooring in the instructional area as well as the laboratory demonstration area shall • be ceramic tile or other suitable hard surface. The Fire Chemistry/ Arson/Drug Lab Laboratory shall be located near the Multilevel Police • Lecture Classroom and the Police Academy Classroom. Computer Laboratory • Centrally located, the lab will be used for Computer Operator Training, Fire and Police Service Software Training, Incident Command . Training, Haz-Mat Training, Emergency Communications Training . and Emergency Service Dispatch Training. The Computer Laboratory shall accommodate at least sixteen (16) students seated at individual computer workstations. An instructor workstation shall be located at . the front of the classroom. Multimedia capabilities shall be consistent with those listed under General Classroom Specifications. • Learning Resource Center/Lounge The Learning Resource Center shall serve as the primary resource . for student and faculty research and study. The LRC will contain . job-related periodicals and technical books, as well as fire and police department regulations, procedures, histories, past and present orders, local, state and national standards. Space shall be provided . to include computer workstations with Internet access that may be . used by both students and staff. Comfortable seating areas shall be . provided to facilitate individual research and study. Food service capabilities should also be included in or near this area. Kirkpatrick Architecture Studio 56 Denton Police and Fire Training Facility • • • Restrooms Students: At least one Women's and one Men's restroom shall be • provided in close proximity to the classroom area. • • Physical Fitness Training Facility • The Physical Fitness Training Facility will be used to prepare firefighters and police officers for the demanding physical requirements they will • face on the job. It will also be used to assist in the preparation for • the physical agility test that is required before a graduate can obtain • employment. Job specific training aids will be added upon completion. Multiple electrical outlets shall be provided to accommodate machines • such as a Stairmaster and treadmill. The facility shall accommodate • at least twenty-five (25) students at one time and be located near or • in the main Administration/Classroom facility. • CPAT Testing Facility • The Candidate Physical Ability Testing (CPAT) program is a validated • physical testing program endorsed by the International Association of • Fire Chiefs, and the International Association of Fire Fighters. The • goal of CPAT testing is to provide realistic job related performance testing for new candidates to the fire service. The CPAT testing facility • should be large enough to facilitate testing in all weather conditions and allow for ongoing familiarization and training of potential recruits. . Consideration should be given to combining this design element with other functional operations, such as defensive tactics training and/or • fitness training. • • Defensive Tactics • Effective defensive tactics techniques are essential to reduce the risk to both suspect and officer. The field of defensive tactics is dynamic • and must constantly adapt to restrictions imposed on law enforcement officers by courts, civil juries, and public opinion. Techniques such . as handcuffing, weapon retention, and subject searches are just a . few examples of the skills necessary to keep the officer safe while securing and maintaining control of the suspect. The risk associated with these close-quarters encounters is great, and the quality of ongoing training is crucial. Kirkpatrick Architecture Studio 57 Denton Police and Fire Training Facility • • • The Defensive Tactics facility should be large enough to accommodate a class of twenty-five to thirty students in hands-on training of close- quarter defensive tactics. The floor in this area should be a shock • absorbing sport court to reduce the incidence of injury. Walls should • be reinforced to withstand the repeated impact of trainee's practicing • maneuvers and should be shock absorbing, as well. Storage for specialized training props should be provided. Strong consideration • should be given to combining this facility with other operational areas • such as CPAT testing and/or Physical Fitness. • Showers • • Students: Women • One women's shower with restroom shall be located near the Physical • Fitness Training Facility. The room shall have the capacity for twenty- five (25) students to shower and dress within a thirty-minute period. • Half lockers shall be provided for each student. Bench seating shall • be located in the locker room. Restroom facilities and accessories • shall include toilet stalls with sanitary napkin dispenser and disposal • receptacle; lavatories with mirrors and hand held hair dryers. A large, commercial hand washing station shall also be provided. • • Students: Men • One men's shower with restroom shall be located next to the women's shower. The room shall have the capacity for twenty-five (25) students • to shower and dress within a thirty-minute period. Half lockers shall • be provided for each student. Bench seating shall be located in the • locker room. Restroom facilities and accessories shall include toilet • stalls, urinals and lavatories with mirrors and hand held hair dryers. A large commercial hand washing station shall also be provided. • • Both shower/locker rooms shall be accessible from the exterior as • well as the interior of the building. The exterior entrance of each • room shall consist of a secluded "dirty area" where students may remove, clean and hang dirty protective equipment prior to entering • the building. Multiple water faucets and adequate waste drainage • shall be provided in this area. Adequate ventilation to remove excess • water vapor should be addressed during the design of this area. • • • • • • • Kirkpatrick Architecture Studio 58 Denton Police and Fire Training Facility • • • Staff: Women One women's showerwith restroom shall be provided with the capacity • for two (2) staff members to shower and dress within a thirty-minute. • period. A minimum of ten (10) half lockers shall be provided in the • dressing area along with bench seating. The restroom facilities and • accessories shall include toilet stalls with sanitary napkin dispenser and disposal receptacle, lavatories with mirrors and hand held hair • dryers. Paper towel dispensers and waste receptacles shall also be provided. • Staff: Men • One men's shower with restroom shall be provided with the capacity • for two (2) staff members to shower and dress within a 30-minute • period. A minimum of ten (10) half lockers shall be provided in the • dressing area along with bench seating. The restroom facilities and accessories shall include toilet stalls, urinals, lavatories with mirrors • and hand held hair dryers. Paper towel dispensers and waste • receptacles shall also be provided. The staff showers shall be located in proximity to the student's showers with access available through interior and exterior doors. • The exterior entrance to each room shall be through the "dirty area" • described above. • • Offices • • Reception / Information Office . The Reception/Information office shall be located near the main entry and be easily recognized as the starting point for students or visitors in need of assistance. Persons entering the building, who are unfamiliar with the floor plan, will naturally gravitate to this area. This space . should also be located in proximity to the Secretarial Offices to allow . the occupants of these offices to perform reception responsibilities, when the Reception/Information Office is unoccupied. Space shall be included to accommodate three computer workstations spaced along a single reception countertop. Floor cabinets shall be installed for . storage of information and supplies. Awaiting area shall be included with this office. Kirkpatrick Architecture Studio 59 Denton Police and Fire Training Facility • • • Secretary/Administrative Assistant Offices Three (3) Secretary /Administrative Assistant Offices shall be located • near the Reception/Information Office and allow for easy access and • visibility to this area. These offices should have convenient access to • the workroom and records storage rooms. • Police/Fire Training Staff Offices • The Police/Fire Training Staff Offices shall consist of four (4) equally • sized offices positioned to maximize student/staff interaction, while • avoiding unnecessary distractions from unrelated traffic. The four offices shall be positioned near the Workroom and the Secretary/ • Administrative Assistant Offices as well as in proximity to each other. • All four offices shall have at least one window to the outside. Training Center Manager's Office The Training Center Manager's Office shall be located near the Police/ • Fire Training Staff Offices and the Secretary/Administrative Assistant • Offices. This office shall be identical in size and configuration to the • Police/Fire Training Staff Offices and be positioned closest to the • Reception/Information Office. • • • • • • • • • • • • • Kirkpatrick Architecture Studio 60 Denton Police and Fire Training Facility • • • Conference/Curriculum Development Room The Conference/Curriculum Development Room shall be located • adjacent to the Police/Fire Training Staff Offices and should provide • space for fourteen (14) people seated at an oval or round conference • table. The conference room will be used for staff meetings, advisory committee meetings, course development sessions and small group • classes. The room shall be equipped with a presentation center, • including projection screen, dry erase board and a presentation • chart enclosed on one wall. This room shall be wired for multimedia • presentations, with the projector descending from the ceiling. Lighting shall consist of recessed incandescent lighting with dimmer • controls. A small cabinet and countertop shall be included for storage • of presentation and room supplies. Electrical outlets in the floor and • walls should be spaced to eliminate the use of extension cords, and • an outlet should be provided to power a coffee maker in the countertop area. This room will be used extensively for brainstorming and • course development and thus should be designed to be conducive to creative thinking. Designers should consider that some sessions • of this type may be free flowing and time consuming, and the room . should assist in facilitating the creative process. Full network access shall be available around the table to provide access for participants using laptops during creative sessions, as well as for other meetings. Natural lighting shall be abundant. Battalion Chief of Training Office • The Battalion Chief of Training Office shall be one part of an administrative suite, which shall include an office for the Lieutenant . of Police Training, two (2) Secretary/Administrative Assistant offices . and a conference room. The office shall be similar to other offices for training officers, but on a larger scale. The location of the office • suite shall consider the different nature of the traffic expected to require access to this office. The office suite need not be located in . the same location as the other listed offices, but should maintain a . functional relationship. Emphasis shall be on serving those who have administrative business, of which many will be unrelated to individual disciplines. A window shall be located on at least one exterior wall. Kirkpatrick Architecture Studio 61 Denton Police and Fire Training Facility • • • Lieutenant of Police Training Office The Lieutenant of Police Training Office shall be one part of an • administrative suite, which shall include an office for the Battalion Chief of Police Training, two (2) Secretary/Administrative Assistant • offices and a conference room. The office shall be similar to other • offices for training officers, but on a larger scale. The location of the office suite shall consider the different nature of the traffic expected • to require access to this office. The office suite need not be located • in the same location as the other listed offices, but should maintain a • functional relationship. Emphasis shall be on serving those who have administrative business, of which many will be unrelated to individual • disciplines. A window shall be located on at least one exterior wall. • Police/Fire Administrative Assistant Offices . The Police/Fire Administrative Assistant Offices shall be located adjacent to the Battalion Chief of Training and the Lieutenant of Police Training Offices and shall be the second part of the administrative suite. The Administrative Assistant offices shall be similar to the • Secretary/Administrative Assistant offices, but on a slightly larger . scale. If the location of the Administrative Suite is different from that of the main office space, a small reception area shall be included in • or near this office. This office shall also have a window on at least one exterior wall. Police/Fire Administrative Conference Room • The Police/Fire Administrative Conference Room shall be adjacent to the Police/Fire Administrative Offices and shall have seating for six . (6) at either a round or oval conference table with space for additional • chairs and conventional conference room furnishings. The conference room will be used forstaff meetings and briefings, personnel interviews, public relations meetings, and other administrative functions. Kirkpatrick Architecture Studio 62 Denton Police and Fire Training Facility • • • Lounges • Staff: One staff lounge shall be provided in close proximity to the • office spaces. The lounge shall include a kitchenette with microwave • oven, refrigerator, wall-hung cabinets, and base cabinets with sink. A • wall-mounted television shall also be included. • Student: One student lounge shall be provided for a typical class • size of twenty-five (25). The lounge shall contain vending machines, • kitchenette with microwave oven, refrigerator, wall-hung and base cabinets with sink. A wall-mounted television shall also be included. • • Restrooms Staff: One Women's and one Men's rest room shall be located near the office area. Standard equipment and accessories shall be included • in each room. • • • • • • • • • • • • • • • • • • Kirkpatrick Architecture Studio 63 Denton Police and Fire Training Facility • • • MISCELLANEOUS ELEMENTS AND USES • Children's Safety Villaae The children's safety village is a crucial learning tool that allows • targeting safety initiatives to children at an age when the message is most likely to have a positive impact on their lives. This concept is • growing in popularity around the country, but there are still relatively • few operational facilities. The United States Fire Administration • comments "Safety Villages and Towns offer a unique method to deliver hands-on interactive safety education to the nations school • children. Typically, various displays in safety villages are sponsored • by different business within the community and include banks, police • departments, airlines, fast food restaurants, insurance companies, • etc." One of the first and most prominent safety villages is located in Hagerstown, Maryland and has grown to a 1.5 Million Dollar village • that has been completed through the use of donations, grants, and volunteer labor. The center serves a population of 121,000 and • currently facilitates the attendance of 2,000 children per year. The • design of the facility is based on a 5/8-scale version of a village and provides for safety training such as fire safety, pedestrian safety, • vehicle safety, 911 usages etc. The village comes with operable • streetlights, crosswalks and street signs, just as would be found in • the local community. Children even have the opportunity to operate miniature vehicles to see what it is like to encounter pedestrians on • the street. • • The recommendation for the City of Denton is that efforts begin • immediately to develop partnerships and secure funding from local businesses and available grants to begin development of a safety • village on the site. It is not recommended that the village utilize funding that would otherwise be utilized to construct other required • elements of the master plan. • The recommended design of the village is one that utilizes the • downtown district as the inspiration. The centerpiece of the village • would be a miniature version of the courthouse with a city square type • of design incorporated for the remaining buildings. The additional buildings should reflect that of the donors and allow for a broad range • of structures encountered in the community. The build-out of the • village could be completed in phases as money is available, but it • is recommended that the site be master planned at the beginning of • the project. Estimated cost for a complete village is 1.5 to 2 Million Dollars. • • • • Kirkpatrick Architecture Studio 64 Denton Police and Fire Training Facility • • • • • • • • • Phasing Plan • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Kirkpatrick Architecture Studio 65 Denton Police and Fire Training Facility • • • Boundary Site Plan r r r v r r r l r v v v v v r9 a°nnmc I 1~ vm • 9N h VINTAfd RVA m • 9f411'8 a°m16a~a me lip • lAWL9ABiLYWAM un------mlvmmua • \ti WAIM • ° ~ ♦ nom airemm,Ln ~ rrlocr. a wa • ` L~ L. 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"t ; AA~ ti u y1+~, a. r' r- r w, • _ 4 x° .Jh`1 ' {i Y Yom{ ' ` fP -ta LLx~ x . • , Er i . sr: IF h • • • • • • • • • Kirkpatrick Architecture Studio 67 Denton Police and Fire Training Facility • • • • • • • • • • DENTON PUBLIC SAFETY TRAINING FACILITY • Denton, Texas PROJECT NO: Master Plan Project Estimate Summary DATE: 8130106 • • DESCRIPTION Estimated Cos CONSTRUCTION DENTON PUBLIC SAFETY TRAINING FACILITY Site Construction Costs $ 1,454,452 (Including Design Contingency & Escalation) Building Construction Costs 5,697,330 (Including Design Contingency & Escalation) SUB TOTAL $ 7,151,782 Percent Estimated Cos Program & Design Fees 10.0% 715,178 1 (Program Management, Architectural & Engineering) Professional Reimbursable 1.0% 71,518 (Not to Exceed Amount) Permits & Inspection Fees 15% $ 107,277 (Building Permits, City Fees & Special Inspection) ' Insurance & Bond 1.7% $ 121,580 SUB TOTAL $ 1,015,553 PHASE I TOTAL $ 8,167,335 Kirkpatrick Architecture Studio 68 Denton Police and Fire Training Facility • Phase 2 L 7v • ~ ~ ~ _ ~ - f'~.;, d~ F ~ ":3 abz jP. 4., fir p ; Sa ji? ~~v - T= J~. she ~ ~aP ~ :a Ka rr ~y X1 A 3 s~rtA a~ S 7W it v . Tl~p .'Ai. F> ^ i i ,~rr ~yy ! . i s A j r • • • • • • • • • Kirkpatrick Architecture Studio 69 Denton Police and Fire Training Facility • • • • • • • • • DENTON PUBLIC SAFETY TRAINING FACILITY • Denton, Texas PROJECT NO: Master Plan Project Estimate Summary DATE: 8130/06 • DESCRIPTION Estimated Cost CONSTRUCTION DENTON PUBLIC SAFETY TRAINING FACILITY . Site Construction Costs $ 101,715 . (Including Design Contingency & Escalation) . Building Construction Costs 3,754,575 (Including Design Contingency & Escalation) . SUB TOTAL $ 3,856,290 Percent Estimated Cos Program & Design Fees 10.0% 385,629 (Program Management, Architectural & Engineering) Professional Reimbursable 1.0% 38,563 (Not to Exceed Amount) Permits & Inspection Fees 1.5% $ 57,844 (Building Permits, City Fees & Special Inspection) Insurance & Bond 1.7% $ 65,557 SUB TOTAL $ 547,593 PHASE 2 TOTAL $ 4,403,883 r r r r r r r Kirkpatrick Architecture Studio 70 Denton Police and Fire Training Facility • • Phase 3 ~ • ~ r i . , ~ a • , . fry ' ~ ~ ~ O'KI Ali, a . , 1 y s ~C - fs C- : - _ -.,a ' :LI^ $.t Pad' f ~".~s y 4y , .r r a ~y r t . •E h''' - „ n I F' 1, Y f`+ • f2 I IL a~ • _ N:v W 3 Y ~ 71 0-14 L • • • • • • • • Kirkpatrick Architecture Studio 71 Denton Police and Fire Training Facility • • • • • • • • • DENTON PUBLIC SAFETY TRAINING FACILITY • • Denton, Texas PROJECT NO: • Master Plan Project Estimate Summary DATE: 8/14106 • DESCRIPTION " • _ Estimated Cost CONSTRUCTION DENTON PUBLIC SAFETY TRAINING FACILITY Site Construction Costs $ 3,424,591 . (Including Design Contingency & Escalation) Building Construction Costs 6,000,700 . (Including Design Contingency & Escalation) SUB TOTAL $ 9,425,291 S Percent Program & Design Fees Estimated Cos 10.0% 942,529 (Program Management, Architectural & Engineering) Professional Reimbursable 1.0% 94,253 (Not to Exceed Amount) Permits & Inspection Fees 1.5% $ 141,379 (Building Permits, City Fees & Special Inspection) Insurance & Bond 1.7% $ 160,230 SUB TOTAL $ 1,338,391 PHASE 3 TOTAL $ 10,763,682 Kirkpatrick Architecture Studio 72 Denton Police and Fire Training Facility i Phase 4 Ira r T~I ~ a i _ -~t -+py.r+wlMw . +W. ril►a' wow rM°*" K • - : 4~ a { c $ xa aw, ar M, 44 . ~ - • ^ r ~ RNA ~F~~. R . ICS, • ~K /'(f~ Ifs! A ! . 4F~ . • - e `.ti~i r 4E~ r Iw_ - ,~.'ta, tips ~ ' ~,.,,R.~, s~~.` , L , ..t , F jifr~- '•~if ~ 14 t'. : ~ ~YW: ayt1~~•.. 'Jlftiix ~ ~ ~ rte. ~ ./r: ' a a..'i~ ` f ' " "1 +il_ ► ~It- - rf~~ Kirkpatrick Architecture Studio 73 Denton Police and Fire Training Facility • • • • • • • • • DENTON PUBLIC SAFETY TRAINING FACILITY • • Denton, Texas PROJECT NO: Master Plan Project Estimate Summary DATE: 8/14/06 • DESCRIPTION Estimated Cos CONSTRUCTION DENTON PUBLIC SAFETY TRAINING FACILITY Site Construction Costs $ 1,884,843 . (Including Design Contingency & Escalation) Building Construction Costs 4,595,750 . (Including Design Contingency & Escalation) SUB TOTAL $ 6,480,593 Percent Estimated Cos Program & Design Fees 10.0% 648,059 (Program Management, Architectural & Engineering) Professional Reimbursable 1.0% 64,806 (Not to Exceed Amount) Permits & Inspection Fees 1.5% $ 97,209 (Building Permits, City Fees & Special Inspection) Insurance & Bond 1.7% $ 110,170 SUB TOTAL $ 920,244 PHASE 4 TOTAL $ 7,400,837 r r r r r r r Kirkpatrick Architecture Studio 74 Denton Police and Fire Training Facility 1 • • Phase 5 t ~ a R~ . r • ~ err _ ~ < ~ + ~ ~ s ^ Y ...-..w.r QdW • w x ! Oat. ~ Y ~ 'l.~ +'`i. -i • Y, 7 ~~i`< t - . ,tit Y7 •i. . h •tx - • aQ 4 + y. • 77. 7" r .4 fimliw d •x 'Y L ~ . • ,-..a~i .~`.,~f'+li u 1~ ' '°`A"it" try . mot" y,~ , t,'s g . ;r- f. jlF - , • v- t vp~ , i • 1A 141- - 01 IN - < • 3 . a ` ~ y'I.9P ~ j- Y 164 3• ~ ~ 'jY *41 • • • • w • • • • • • Kirkpatrick Architecture Studio 75 Denton Police and Fire Training Facility • • • • • POTENTIAL FUTURE AMENITIES • • 911 Center • Emergency Operations Center Public Safety Maintenance Facility • Children's Educational Village • • • POSSIBLE JOINT USAGE • • Park/Jogging/Bike Trails • Bio Refueling Station • Community Center Viewing/Picnic Area • • • • • M Kirkpatrick Architecture Studio 76 Denton Police and Fire Training Facility • • • • • • Conceptual Drawings • • • • • • • • • • • • • • . Kirkpatrick Architecture Studio 77 Denton Police and Fire Training Facility • • • Public Safety Training Facility Floor Plan - Phase I • • • • • CONTROL BOOTH • • • • TL . • SECOND FLOOR PLAN • • I • I L.R.C. CLASSROOM CLASSROOM CLASSROOM CLASSROOM GlA55ROOM . MEN . MECH. COMPUTER lAB . WOMEN I. . LOBBY I. O EDUCATION . ADMINISTRATION O ADMINISTRATION LECT . O CIRCULATION I. FIRST FLOOR PLAN Kirkpatrick Architecture Studio 78 Denton Police and Fire Training Facility • • • i J~ t i NO i '1 . • t `5 W ti w > i ~ ii U U W W U) w a } IL xa U) • W f w 0 0 Z Z 1 s .t I ~Z w i • y J f 1 f i 1 • t ~ i • • Kirkpatrick Architecture Studio 79 Denton Police and Fire Training Facility • • • _ w a • cn • - e k z- W y~ t ^ °r y*" w • v. i • t ~ ~ 4 O • • ( • 1 t 1 w • 1 c~a< • 1 Kirkpatrick Architecture Studio 80 Denton Police and Fire Training Facility • City of Denton P ~ u c a et V rainin enter Denton Police Department Denton Fire Department July 2007 TABLE OF CONTENTS Executive Summary 3 Vision, Mission, Goals 6 Management & Operations Plan 7 Levels of Public Safety Training 9 Services and Programs 10 Market Analysis Summary 11 Milestones 13 Denton Public Safety Training Facility History 14 Financial Plan 18 OPTION #1: Phase 1 20 OPTION #2: Phase 1 + Phase 2 26 OPTION #3: Phase 1 + Phase 2 + Phase 3 34 OPTION #4: Phase 1 + Phase 2 + Phase 3 + Phase 4 42 OPTION #5: No Training Facility/Equivalent Training 49 Denton Public Safety Training Center Business Plan Page 2 EXECUTIVE SU M MARY The City of Denton community expects all police and fire personnel to be capable of delivering an outstanding level of service in routine situations and especially in times of emergency. The community desires its public safety officers to be highly trained professionals skilled in amulti-disciplined approach to law enforcement, fire protection, or emergency medical care. Delivering exceptional service demands the highest level of training. The initial cost ofconstructing astate-of the-art public safety training facility necessitates a substantial capital expenditure. Additionally, the facility must be adequately and properly maintained to ensure quality operations for many years. The challenge to the City of Denton is to sufficiently fund this training facility without negatively impacting the City's ability to meet its other equally important financial obligations. The operational and financial models in this business plan detail several options or phases to provide public safety training ranging from a basic facility meeting current essential training needs up to an expanded world class training facility dramatically improving training procedures and significantly enhancing current training levels and capabilities. Staff recommends starting with Phases 1 and 2 (as detailed in the Master Plan) and identified as Option #2 in this Business Plan and progressing over several years expanding as necessary and financially feasible. Through the establishment of an operational partnership with North Central Texas College (NCTC) for the new training facility, the City has the potential to not only offset the operational and maintenance costs of the facility, but possibly recover some portion of the capital debt incurred in initial and phased construction. In the State of Texas as well as nationally, the trend for developing public safety training facilities favors a cooperative partnership between community colleges and local jurisdictions. The community college model has the advantage of State supported funding which enables NCTC to keep ongoing costs at a minimum, ultimately serving to make the facility more marketable. A partnership with NCTC provides a built in tenant who not only improves continuing education opportunities, but also reaches an expanded market to assist with distributing the overall costs of operating the facility. As the training facility expands, the college provides a ready source of high quality adjunct instructors that will assist the City in keeping personnel costs at a minimum. The City of Denton's proposed training facility will dramatically improve the ability to provide for the public safety of the citizens of Denton. Surrounding communities will also benefit from the training facility through joint use agreements. The University of North Texas (UNT) has also indicated a desire to look at opportunities to provide degree programs to police officers and firefighters through an expanded partnership. Provision for the public safety of its citizens stands as one of the most fundamental requirements of local government. The City of Denton bases its strong commitment to public safety on its responsibility to provide a continuous and progressive training Denton Public Safety Training Center Business Plan Page 3 program which will enable all Denton public safety personnel to serve the community at the highest possible level and to deliver exceptional services effectively, efficiently and safely. The consultants developed four phases in their Master Plan to reach the ultimate build out of a training facility. Phase 1 is the minimum phase using existing Certificates of Obligation and requiring no additional funding. Four options begin with Option # 1 which is just Phase 1 and then add on additional phases in succeeding options. Option #5 for City Council consideration is to not construct a new training facility, but to annually fund an equal level of training that a new facility would provide. OPTION #1 OPTION #2 OPTION #3 OPTION #4 Phase 1 Phases 1+ 2 Phases 1+ 2+ 3 Phases 1+ 2+ 3+ 4 ($8,167,335) ($12,571,218) ($23,334,900) ($30,735,737) Estimated Revenue $10,860,005 $54,300,026 $62,109,231 $76,990,301 Facility Maintenance $5,672,644 $6,913,406 $12,494,907 $15,902,544 Expense Facility Operating Expense $4,193,473 $11,976,246 $22,409,954 $32,046,885 Personnel Expense $5,872,214 $21,424,606 $22,621,844 $23,918,571 Total 0 & M Costs $16,193,753 $42,591,366 $59,803,813 $74,145,108 Net Income ($5,333,746) $11,708,660 $2,305,417 $2,845,193 Positive Net Income No Year 7 Year 15 Year 17 Debt Service $18,121,319 $25,119,411 $42,302,223 $54,075,865 Cash Flow ($23,455,066) ($13,410,751) ($39,996,806) ($51,230,672) Budget Savings $5,749,188 $5,749,188 $5,749,188 $5,749,188 Net Cash Flow ($17,705,877) ($7,661,562) ($34,247,617) ($45,481,483) Positive Net Cash Flow No Year 21 Year 21 Year 21 Fine Training Savings1 Undetermined $18,277,340 $18,277,340 Undetermined Police Training Savings2 Undetermined $8,681,298 $8,681,298 Undetermined Total Public Safety Training Undetermined $26,958,6.38 $26,958,638 Undetermined Adjusted Net Cash Flow Undetermined $19,297,076 ($7,288,979) Undetermined Exhibit 1. Comparisons of Pro Formas (25-year totals) Assumptions of Exhibit 1: 1 Estimated costs to provide the same level of Fire training provided by the proposed training facility if the facility was not constructed and outside sources were necessary. 2 Estimated costs to provide the same level of Police training provided by the proposed training facility if the facility was not constructed and outside sources were necessary. 3 Revised net cash flow using the Fire and Police training savings. The City recognizes that in today's environment of ever expanding risk and liability, communities can no longer afford to provide only the minimum amount of training required by laws and regulations. Public safety employees require frequent hours of training, specialized equipment and facilities, and must obtain this training in a cost effective and time efficient manner. To adequately prepare for the growing challenges to the safety, health and welfare of its citizens, the City of Denton will provide for realistic and dynamic training at a level that produces a highly competent and effective public Denton Public Safety Training Center Business Plan Page 4 safety workforce fully able to respond at all times to any emergency. This requires more focus and commitment on intermediate and advanced levels of public safety training. The City of Denton also understands that the reputation of its public safety personnel can have a giant bearing on the City's overall ranking as a desirable place to live. The economic ramifications of that ranking are far reaching and may have long-term impacts on the City's potential to attract quality businesses, development and future residents. High levels of quality training for Denton Police and Fire members will significantly enhance that reputation. Staff Recommendations Based on the Business Plan: ~ Fund and construct Option #2 (Phases 1 and 2) immediately at an estimated cost of $12.6 million. Since the FY06/07 and FY07/08 budgets allocate $8.2 million for design and initial phasing of the training facility, additional funding of approximately $4.4 million dollars must be identified and appropriated. Exact funding requirements will be identified in the design and construction bidding process. ~ According to the Business Plan, this option has the highest net income of all the other options along with the earliest positive net income at year 7 resulting in no 0&M costs to the City starting in year 8. This option also has the highest net cash flow of all the other options. ~ Staff recommends funding the additional capital costs with Certificates of Obligations (CO) bonds in the FY07-08 budget. Additional funding of $4.4 million dollars will have an annual estimated debt service of approximately $343,000. The annual cost of this debt service equates to approximately $0.0064 tax rate. ~ Operations and maintenance costs should be added to the City's five-year financial forecast beginning with the FY08-09 budget. The Business Plan estimates the first year 0&M of Option #2 to be $1,099,032 with a 25-year average annual cost of $1,703,655, keeping in mind that the 0&M after year 7 is essentially not a City of Denton liability, but a savings. The "net" 0&M (0&M minus revenues) for the first year is $316,189 with a 25-year "net" 0&M average of ($468,346) per year. ~ After completing the construction of Option #2 and opening the Public Safety Training Center early in 2009, the City should continue to evaluate further options as necessary and financially feasible. One funding possibility might be to budget the training savings for Police and Fire as identified in Option #5 into a Training Facility budget as an annual "public safety training fee." This method would provide identified budgeting to offset annual 0&M costs as well as future capital costs for additional phases. Additionally, when the need arises, funding could be recommended to the City's CIP Committee as part of the next five-year CIP using the "fee" accumulation to fund the annual debt service. Denton Public Safety Training Center Business Plan Page 5 VISION The Denton Public Safety Training Center will meet current and future basic, intermediate and advanced public safety training needs by delivering exceptional instruction with state-of the-art facilities and props resulting in highly qualified public safety employees. MISSION The Denton Public Safety Training Center will serve the citizens of Denton, the surrounding North Central Texas College service area, and the North Texas region by enhancing the capabilities, increasing the safety and improving the quality of public safety first responders through realistic and relevant training conducted by highly competent instructors utilizing state-of the-art facilities. G- ~ Enhance the safety of the citizens and public safety employees of Denton. ~ Provide ongoing state-of the-art training to all City of Denton Fire Department and Police Department personnel that not only meets regulatory requirements, but also exceeds them up to and including advanced level training. ~ Develop a strong partnership between the City of Denton and North Central Texas College to improve educational opportunities and quality of training through established operational agreements. ~ Reduce the cost of providing training to City of Denton public safety personnel by developing training partnerships and cooperative agreements with outside agencies and organizations. ~ Become a regional destination for quality training from surrounding communities and local private agencies thus improving multi-agency and multi jurisdictional operational capabilities. ~ Increase recruiting opportunities with aworld-class training facility that will attract the highest quality public safety officers to Denton. ~ Pursue nationally recognized training opportunities that will attract public safety members from departments outside Texas, adding to the pride of current Denton officers and building respect for the City of Denton's commitment to public safety. Denton Public Safety Training Center Business Plan Page 6 MANAGEMENT & OPERATIONS PLAN The Denton Public Safety Training Center and all of its facilities will be owned solely by the City of Denton and thus the City will retain all rights and responsibilities associated with ownership. Operation of the facility will be through a legally created partnership between the City of Denton and North Central Texas College. Operational and facility management decisions will be made via the Operational Leadership Team as clearly established in the developed agreement and shown in Exhibit 2. CITY OF DENTON CITY COUNCIL OPERATIONAL LEADERSHIP TEAM NCTC Provost - DFD Fire Chief - DPD Police Chief NCTC Curriculum, Evaluation, Instruction, Course Scheduling CITY OF DENTON PUBLIC SAFETY TRAINING FACILITY COORDINATOR Facility Operations & Maintenance, Facility Scheduling law Enforcement Programs Fire/EMS Programs Law Enforcement Advisory Committee Fire Advisory Committee Academy CEU Academy CEU Consortium on Private Sector Consortium on Private Sector Administrative Contracts Administrative Contracts Standards Standards Sponsored Un-Sponsored Sponsored Un-Sponsored Exhibit 2. Public Safety Training Center Management Model Denton Public Safety Training Center Business Plan Page 7 The three-person Operational Leadership Team consisting of the City of Denton Fire Chief, City of Denton Police Chief and the Provost of the North Central Texas College Corinth Campus will maintain responsibility for the operational vision and direction and primarily act as liaisons to appropriate City and NCTC policy makers and key administrative personnel. As part of the Training Facility's annual budget request, the Operational Leadership Team will submit an annual report to the City of Denton City Manager and City Council. The City of Denton Public Safety Training Facility Coordinator will manage the day-to- day facility operations, including maintenance, scheduling, and physical operation. This position will be a City of Denton employee selected by the Operational Leadership Team in accordance with City hiring standards. NCTC staff will develop and coordinate fire science and law enforcement curriculum, select instructors and develop schedule courses in accordance with NCTC and State guidelines. The Public Safety Training Facility Coordinator will establish and oversee two working advisory committees who will assist in providing operational focus and regulatory compliance. One committee will serve as advisors to the Fire and EMS programs and the second committee will advise Law Enforcement programs. Committee members will be selected from both disciplines as well as NCTC and the community at large and will meet at least twice annually to approve new policies and procedures, review curriculum as well as to provide assistance in the establishment of future goals and objectives and curricu um. The Advisory Committees under the direction of the Public Safety Training Facility Coordinator will select training representatives at the program level. This will include the training staffs from the City of Denton Fire and Police departments as well as program coordinators from North Central Texas College. The program level coordinators will be responsible for day-to-day training and will serve as advisors and staff to both Advisory Committees. Denton Public Safety Training Center Business Plan Page 8 LEVELS OF PUBLIC SAFETY TRAINING BASIC LEVEI: All police and fire employees must be certified at the "Basic" level with continuing education, drills, and experience required to maintain this level of proficiency. This training level is considered the minimum training required to get certified and then maintain certification. The basic level is initially acquired in the entry-level police and fire academies but the basic level must be constantly reinforced and practiced on the job with ongoing training opportunities. See examples in Exhibit 3 marked "B." Current Reality: The City of Denton currently provides an adequate level of basic training for its public safety employees to meet regulatory requirements. Both Police and Fire Departments accomplish the basic level. INTERMEDIATE LEVEI: As public safety officers gain experience and additional training while maintaining their basic level of certification, they achieve an intermediate level of certification. To maintain this level, additional specialized training is required often necessitating specialized instructors and equipment at a certified facility. See examples in Exhibit 3 marked "I." Current Reality: Because it has no training facility, the City of Denton does not currently provide a continuous level of intermediate training for its public safety employees in the Police Department and Fire Department. Neither public safety department has the budget or the facilities to engage in on-going intermediate training on a department-wide level. This requires officers to go elsewhere to acquire certified intermediate training when the budget allows; otherwise, employees attend training on their own time and at their own expense or do not receive the training. ADVANCED LEVEL: The advance level requires significant use of outside instructors and state-of the-art facilities. To maintain this level, additional specialized training is required often necessitating specialized instructors and equipment at a specialized facility. See examples in Exhibit 3 marked "A." Current Reality: Due to the lack of a certified training facility, the City of Denton currently provides only a very limited amount of certified advanced level training for its public safety employees in the Police Department and Fire Department. Neither department has the budget or the facilities to engage in on-going advanced training on a department-wide level. Officers must go elsewhere to acquire certified advanced training when the budget allows; otherwise, they attend training on their own time and at their own expense or do not receive the training. Outside facilities that provide certified advanced level training are very limited thereby increasing training costs significantly because employees and units Denton Public Safety Training Center Business Plan Page 9 remain out of service for long periods of travel time. This significantly limits the number of officers who can receive the training. SERVICES AND PROGRAMS Training programs planned for the Denton Public Safety Training Center focus on fire, police, emergency medical, and supporting functions from all three disciplines at all three training levels as indicated below (B-Basic; I Intermediate; and A-Advanced). Additional training will be offered to agencies and businesses outside of these core areas that share training requirements that may overlap one of the primary functions. Examples would be extinguisher training, fire safety, high-rise safety, private security operations etc. Key Public Safety Training Programs Basic 536 hour Fire Academies (B) EMT and Paramedic Certification (B, 1, A) Basic 640 hour Peace Officer Academies (B) Continuing Education Certification Training (B, 1, A) Associates Degree in Fire Science (B, 1) In Service Training (B, 1, A) Associates Degree in Criminal Justice (B, 1) Fire Fighting Courses Basic Fire Academy (B) Vehicle Extrication (B, 1, A) Contract Live Fire Training (B, 1, A) Driver/Operator (I) Confined Space (l, A) Strategy and Tactics (l, A) Fire Officer I (I) Trench Rescue (l, A) High Rise Firefighting (B, 1, A) Fire Officer II (A) Rope Rescue (B, 1, A) Aerial Apparatus Training (B, 1, A) Fire Inspector (B, I) Swift Water Rescue (B, 1, A) Weapons of Mass Destruction (B, 1, Arson Investigator (B, I) Rescue Systems 1(B, I) A) Methods of Teaching (B, I, A) Rescue Systems 2 (l, A) Mass Casualty Exercises (B, 1, A) Hazardous Materials (B, I, A) Industrial Fire Brigade (B) National Fire Academy Courses (l, A) Emergency Medical Courses EMT Basic (B, 1) EMS Continuing Education (B, 1, A) Pediatrics (A) EMT Intermediate (1) Advanced Life Support (A) New Paramedic Orientation (A) Paramedic (A) 12-Lead EKG (A) Basic Trauma Life Support (B, 1, A) Police Academy Courses -Range Basic Peace Officer Academy (B) Advanced Shotgun (A) Sub-Machine Gun Tactics (A) Basic Handgun Skills (B, I) Patrol Rifle (B, I) Building Search (B, 1, A) Advanced Handgun Skills Advanced Rifle Tactics (A) Force Decision Making (B, 1, A) Low Light Operations (B, I) Tactical School (l, A) Bike Schools (B, I, A) Bicycle Officer Firearms Skills (B, I) Advanced Tactical School (A) Firearms Qualifying (B, 1, A) Patrol Shotgun (B, 1) Less Lethal Munitions (B, I) Police Academy Courses -Classroom Power Phone Fire Dispatch (B, 1) Advanced Hostage negotiation (A) Hazardous Materials Awareness (B) Basic jailer (B) Basic SRO (B) Hazmat Workshop (B, 1) Records Seminar (B, 1) Basic Academy (B) High Risk Warrants (B, I) Basic Supervision (B, I) Civil Rights TELAP (B, 1) Interview and Interrogation (B, 1, A) Accident Reconstruction (B, 1, A) Criminal Personality Profiling (l, A) Intox Operator (B) Admin and Mgmt of Training (I, A) Crisis Management (I, A) Legal Update (B, 1, A) Advanced Accident Investigation (l, Drug Field Testing (B, I) A) Ethics and the Family Code (B) Exhibit 3. Public Safety Training Programs and Courses Denton Public Safety Training Center Business Plan Page 10 MARKET ANALYSIS SUMMARY Decisions in selecting training providers for public safety personnel are effected by several key factors with cost being one of the most important. Regardless of the quality of training or facilities, limited training budgets make this a crucial consideration when trying to be competitive in the market. Many public safety departments have reduced training to meet regulatory requirements due to budget constraints. Distance to training facilities and qualified instructors are major considerations and important competitive advantages because of the down time associated with releasing personnel and equipment for training outside the City. Travel time to a training facility is one of the key considerations for emergency service response agencies due to the difficulties that occur with loss of service time. Agencies with limited resources are challenged to release personnel and equipment from service. The North Central Texas area is under served in regards to quick access to facilities for all response agencies. There are currently only two similar public safety training facilities and college operations in the area and both of them are outside of the typical 30-minute driving distance that is considered optimum. The quality of the training is also a major decision factor and those competitors who provide a high quality hands-on training experience tend to be the most successful and sought after. City of Denton: Location, superior infrastructure and easy access to markets, makes Denton an excellent location for a regional public safety training center. Access to the City of Denton Public Safety Training Center from the Metroplex and all areas of the North Texas region and South Okalahoma is excellent. Denton is strategically positioned within the Dallas/Fort Worth Metroplex, only 37 miles northwest of Dallas and 35 miles northeast of Fort Worth. Located on the Interstate 35 Corridor where I-35E and I-35W intersect (the North American Free Trade Agreement highway), Denton is able to benefit public safety departments from all over the North Texas region. Dallas/Fort Worth International Airport (DFW), one of the busiest passenger airports in the world, is only 22 miles from downtown Denton. Dallas Love Field Airport (DAL), located in the heart of Dallas is 32 miles from downtown Denton and serves both commercial airlines and corporate user needs. North Central Texas College: As part of the NCTC service area, Cooke and Montague Counties have each experienced approximately 8.5 percent growth over the last 10 years, while Denton County has experienced 47.8 percent growth over the last 1 o years. Population projections indicate that Cooke, Denton and Montague Counties will continue to grow exponentially requiring an increased number of public safety responders resulting in the need for more Denton Public Safety Training Center Business Plan Page 11 training. The educational quality of the training provided through the partnership with the City of Denton and North Central Texas College is an important competitive edge to the facility. The higher education experience provided by the college coupled with the job experience of the city's emergency response personnel will allow for the development of beneficial training programs that can be delivered cost effectively. Market Segmentation: The Denton Public Safety Training Center will essentially serve four (4) primary market segments with additional segments playing a secondary role. Denton Fire Department Instruction requirements range from basic entry-level academies to-in service fire and medical training that maintains and improves response capabilities. Regulatory training will remain an increasing concern of this market segment. In addition, intermediate and advanced level training will be required to maintain operational readiness for special operations including various rescue programs, swift water rescue, regional bomb squad, and regional hazardous material team. Denton Police Department Instruction requirements range from basic entry-level academies to in-service continuing education. The police department is also party to a Denton County training consortium that will require intermediate and advanced training and facilities in conjunction with several surrounding agencies including but not limited to special operations and extensive police department bicycle operations. NCTC Fire Service and Emergency Medical Services (EMS) Training The partnership with NCTC brings the opportunity of providing training for agencies other than the city of Denton and the needs for these agencies are similar to those listed above. One major aspect of this market segment is the large population of volunteer firefighters who have limited access to training opportunities. NCTC Law Enforcement Training The partnership with NCTC also brings the opportunity to provide training for a market segment made up of police agencies outside of the City of Denton. The needs of this segment are similar to that of the Denton Police Department and NCTC will play a maj or role in the police consortium in which the City of Denton is a maj or participant. Small departments in the surrounding area make up a maj or potential market segment with little opportunity for training. Additional markets include private sector agencies and other public service agencies in the North Texas region but outside of the NCTC service areas. These segments cover homeland security, firearms training, emergency management, industrial fire brigades, defensive driving and safety and survival training for utility departments but are anticipated to be sporadic and serve to supplement training provided to the four major market segments. Denton Public Safety Training Center Business Plan Page 12 MILESTONES The milestones listed in the following table provide an overview of key major events leading up to opening day of the Denton Public Safety Training Center based on Staff's recommendation to construct Option #2. Exhibit 3 indicates the key aspects of preparation that must be undertaken in conjunction with the design and construction of the facility. Marketing material must be delivered at least one year prior to opening to allow the prospective customer base to plan for training during budget preparations. NCTC needs to coordinate the start dates for academies with a funding year for the college. From the following possible start dates provided by NCTC, Staff believes that Spring of 2009 is a reasonable choice if the City Council approves Staff's recommendation of planning and constructing Phases 1 and 2 immediately. Spring 2008 (after the 12t"class day) Summer 2008 Fall 2008 Spring 2009 (until the 12t"class day) Spring 2010 (after the 12t"class day) Summer 2010 Fall 2010 Milestone Start Date End Date City Council Direction 6/2007 Ongoing Architect Selection 7/2007 1..0/2007 Architectura Design 10/2007 1/2008 Construction Bid Process 1/2008 2/2008 Facility Construction 4/2008 4/2009 Course Schedule 1/2008 5/2008 Course Pricing 1/2008 5/2008 Website 6/2007 Ongoing Mailing List 7/2007 Ongoing Program Brochure 7/2007 Ongoing Training Equipment Purchase 6/Z008 12/2008 Hiring Personnel 10/2008 1/2009 Facility Testing 12/2008 2/2009 Facility Open 1/2009 Ongoing Law Enforcement Academy Spring/2009 Ongoing Basic Fire Academy Spring/2009 Ongoing NCTC Classes Start Spring/2009 Ongoing Exhibit 4. Public Safety Training Center Milestones Denton Public Safety Training Center Business Plan Page 13 CITYOF DENTON PUBLIC SAFETY TRAINING CENTER HISTORY To fully grasp the building blocks that formed the essential foundation for the consultant's master plan, this business plan and ultimately the recommendations of staff, it is important to understand the historical evolution of Denton's planning for a joint public safety training center 1999/2000/2001: The Police Department and Fire Department individually conducted site visits at several other agencies and came to the conclusion that a j oint facility would be more effective and efficient than two separate training facilities in meeting overall public safety training needs. The Fire Department and Police Department proposed a training facility to the 2000 CIP Citizen Committee for approximately $13 million. Although they endorsed its need and supported the public safety benefits of the proposal, the CIP Committee could not recommend funding the training center because it did not fit within the anticipated CIP budget. 2002: At the beginning of FYO 1-02, as a supplement to the City's Facilities Master Plan, HOK (Hellmuth, Obata & Kassabaum) consultants developed a preliminary feasibility study for a Public Safety Training Facility. They spent substantial time with Police and Fire staffs to determine training needs related to facilities. Payment of the study's $24,000 cost came from the Police Firearms Facility Bonds account. Infrastructure costs such as parking lots, roadways, sewer, water and drainage were not taken into account by HOK. Exhibit 5 shows the HOK's recommended phased-in approach. Phase 1 Phase 2 Total % Of Budget Land $1,080,000 $0 $1,080,000 8% (72 acres @ $15, 000/acre) Fire Tower $4,206,875 $0 $4,206,875 31% Firearms Range $1,424,209 $0 $1,424,209 11% Driving Track $0 $3,580,889 $3,089,090 27% Classrooms $1,110,299 $1,978,799 $3,089,098 23% Total $7,821,383 $5,559,.687 $13,381,071 100% Exhibit 5. HOK Study Recommendations (2002) City Manager's Message, FY02-03 Budget: Long-term training improvements are also being planned. A feasibility study is currently being conducted to evaluate the possibility of a joint police and fire training facility. Items being considered in the study include a dedicated classroom facility, a fire tower, a firearms range, and a driving track. The study will include a utilization plan that not only considers use by the City of Denton but also use by outside agencies as a way of generating revenue to help pay for operations of the facility. The study will be useful for future capital planning. Denton Public Safety Training Center Business Plan Page 14 2003: Council approved an initial budget of $3.3 million for a Public Safety Training Facility with $2.3 million allocated for land acquisition and $1.0 million allocated for preliminary design and master planning. City Manager's Message, FY03-04 Budget: Public Safety Training Facility -The current year budget includes funding to purchase land and design a Fire Department Training Facility. In addition, the Police Department has available bond money to renovate the existing firearms facility. Both the Fire and Police departments are in the process of locating a joint site where a fire training facility and a future firearms facility could be located. Given the nature of these operations, a joint site may or may not be feasible, but it is staff's intent to look for a joint site to leverage the available funding. Search for land to construct a Public Safety Training Facility began with several sites researched and reviewed. Fire Department staff, working closely with the Police Department, generated a comprehensive report listing all the primary sites detailing the advantages and disadvantages of each site along with estimates for construction as part of the initial study on the Public Safety Training Center. 2004: On January 6, 2004, the City Council gave staff direction to proceed with the possible acquisition of an available 88-acre site on Vintage Parkway. Council also directed staff to move forward on a feasibility study to expand the existing firing range to 10 acres of property adj acent to it on Airport Road. As a result of Council's direction to investigate the possibility of enlarging the firing range at its existing site, the Police Department eliminated the firearms range as an element of the joint public safety training facility proposal developed by HOK. As indicated in Exhibit 6, they received $300,000 additional Certificates of Obligation (CO) bonds in the Police Firearms Facility account for making necessary enhancements to their existing range and the possible purchase of adjacent property. Original Budget from 2002 CO Bonds $50,950 Hellmuth, Obata & Kassabaum (HOK) Study ($24,000) Budget Addition (2004 CO Bonds) $300,000 Administrative Charges ($27,995) Total Remaining $298,955 Exhibit 6. Police Firearms Facility Bonds (2002 & 2003) The City's Real Estate Group spent January through August 2004 negotiating contracts to purchase the 88-acre Vintage Parkway site and the 10-acre site adjacent to the firing range on Airport Road. Staff recommended the purchase of the 88-acre site for the Public Safety Training Facility at a cost of $2,03 8,022 and the City Council approved the purchase with the City Manager executing the Vintage Parkway contract on November 16, 2004. Due to the size of the purchased property and the philosophy to locate all Denton Public Safety Training Center Business Plan Page 15 public safety training at one location, the City Council directed Police Department Staff to develop and plan a new firearms range at the proposed Public Safety Training Facility, thereby eliminating further discussion on expanding the existing firing range and purchasing additional property. The Police Department advised that the driving track was no longer a viable option based on the estimated costs and recommended eliminating it from further discussion as an element of the joint public safety training facility proposal developed by HOK. After reviewing and updating the HOK study and eliminating the firing range and driving track, staff requested $8.2 million for construction of the first phase of a joint public safety training facility which was allocated through the budget process as follows: $1.5 million in FY06-07 and $6.7 million in FY07-08. The $8.2 million project estimation was based specifically on the following elements and phases using HOK's 2004 cost estimates (no escalation factors were added for future funding). Phase 1 Phase 2 Total % Of Budget Fire Tower $6,725,400 $6,725,400 43% Firearms Range $0 $0 $0 0% Driving Track $0 $0 $0 0% Classrooms $1,410,156 $7,417,736 $8,827,892 57% Total $8,135,556 $7,:417,736 $15,:553,292 100% Exhibit 7. Public Safety Training Facility Funding Request (2004) City Manager's Message, FY04-05 Budget: Public Safety Training Facility -Staff continues to make progress on the Public Safety Training Facility. After briefing the City Council on several sites, staff has entered into negotiations with a landowner to acquire property for the Public Safety Training Facility. To date, $3.3 million of bonds have been sold to purchase the land and design the Facility. Staff hopes to close on the property this fall and begin the design process shortly thereafter. Construction of the first phase is scheduled to begin in late 2006 and be completed in the fall of 2007. 2005: After a comprehensive RFP and selection process, the City Council directed Staff to hire Kirkpatrick Architectural Studio for $205,500 to master plan the Public Safety Training Facility. Several meetings were held with the consultant and stakeholders of the training center to establish needs and criteria for the facility. 2006/2007: Meetings continued with the consultant and stakeholders of the training center to prioritize needs and criteria for the facility. The Police and Fire Departments formed internal working committees to determine specifications of their specific elements of the training facility. The Police Chief and Fire Chief met with Vintage Parkway residents to present an overview of the proposed training facility. Questions regarding mitigating potential noise were addressed as well as other neighborhood concerns. Denton Public Safety Training Center Business Plan Page 16 Police and Fire staff members conducted significant research on the necessary elements of a training center and made field trips to other training facilities. City and NCTC staffs, along with City Council members, toured the state-of the-art Tarrant County College Fire and Law Enforcement Training Center, to see what a world class public safety training center looks like. COMPARISONS OF HISTORICAL DATA TO RECOMMENDATIONS: 2004 CIP HOK Study Funding 2004 Funding Funding Consultant Request (2002) Request Request Request Study & Staff (2000) based on Adjusted for Adjusted for Recommendati HOK (2004) Inflation Increased on (2007) (2007)3 Scope of Service (2007) Fire Tower $4,206,875 $6,725,400 $8,431,803 $0 Firearms $1,424,209 $0 $0 $1,839,1344 $8,167,335 Range Classrooms $1,110,299 $1,410,156 $1,767,948 $822,0362 $4,403,218 Sub Totals $10,199,752 $2,661,170 Total $13,000,000 $7,821,383 $8,135,556 $12,860,922 $12,571,218 Exhibit 8. Comparison of Costs Based on Historical Evolution of Training Facility and Consultant's Estimates Using Equivalent Components Assumptions of Exhibit 8: 1 HOK Phase 1= 7,241 square feet of classroom space. 2 Adjusted scope of service to add 3,369 square feet to match Consultant classroom space of 10,610 square feet using $244 per square feet (7,241/$1,767,948). 3 Construction inflation rate determined by the Association of General Contractors of America (2003=3.0%; 2004=10.1%; 2005=6.1%; 2006=4.3%; 2007=2.9%). 4 Adjusted scope of service to add firearms range using HOK 2002 estimate of $1,424,209 and adjusted for inflation using AGC figures. Denton Public Safety Training Center Business Plan Page 17 FINANCIAL PLAN Early on in the planning process, Staff optimistically believed that the city, with cooperative agreements with NCTC, UNT and the private sector, might possibly recover a significant portion of the capital costs to build a the Public Safety Training Center. However, extensive research did not find a facility of this type generating a return on capital investment. Public safety facilities such as fire stations, police stations, and jails traditionally do not recover initial capital costs. Yet, these facilities necessitate ongoing operational and maintenance funding at some level dependent upon size and use. This remains true with the proposed training facility. On the other hand, the training facility has the potential to open up many revenue opportunities that will offset annual operations an maintenance costs. Although no empirical evidence was found showing public safety facilities generating a return on capital investment, many facilities were found generating sufficient revenue to allow for ongoing maintenance and upgrading of facilities while reducing the training cost to the primary user or users. Existing facilities that attempted to recoup the cost of constructing the facility by passing the total cost along to outside users often found the pricing structure beyond the user's ability to pay. In addition, other public safety training facilities emphasized that their return on investment was primarily the enhanced training and safety of their firefighters and police officers. Assumptions of Financial Plan: ~ The City of Denton has expended $3.3 million for master planning, preliminary site design and land purchase. See Exhibit 9 for existing debt service on these certificates of obligation. This debt service is added into the total debt service for each of the options and their pro formas. ~ All capital cost estimates were provided by consultants Kirkpatrick Architectural Studio from the Master Plan effective January 2007. Consultants estimate an increase in construction costs of up to 8% in 2008. ~ All operations, maintenance and future training cost estimates were determined by City of Denton Fire Department and Police Department Staffs. ~ All debt service costs were estimated by First Southwest Company based on current interest rate expectations. ~ Extended courses taught at the Training Center will also create a positive economic impact when attendees from outside the area stay in the City of Denton. The Chamber and the City's Economic Development Department estimate the economic impact as approximately $126 per day per attendee ($67 =average daily rate for hotels in Denton + $59 =per diem rate for government employees). A one week stay for 40 students for a one week course might generate up to $25,200. Denton Public Safety Training Center Business Plan Page 18 • • • • • • Pre5mirary • S3.350,000 City of Denton, Texas • Certificates of Obligation, Series 2005 • • Debt Service Schedule • • Date Principal Coupon Interest Total P+I 09!30205 - - - - • 09/30206 65,WO.W 4.150% 186,4058 251409.58 0990209 115,00.0 4.350% 140,396.25 255,396,25 • - 0990208 120,0W.W 4.350% 135,295.W 255,2350 0920209 12500.0 4.350% 129,95625 25195625 • 09/308010 130,00.00 4350% 124,410.W 254,410cO 09/302011 135,00.0 4350% 118.64625 253,646,25 • 09/302012 140,000.00 4.350% 112.665.00 252,665.CO 0902013 145,00.m1 4.350% 106,468.25 251,466,25 • 09/30/2014 155,000 4.350% 9994125 254941.25 09130/2015 10,WO.W 4.750°/ 93,090.00 253,090 CO 09130MI6 170,000.00 0.350% 85912.50 255,912.50 • 09/302017 175,060.W 4,350% 78,408.75 253,40975 09502018 185,000.W 4,350% 70,578.75 255,57475 • W130M19 190,000.0 4.350% 62422.50 253.422.0 09902020 200,000,00 4.350% 53,940.W 253.940.00 • 09/302021 210,(0.0 4,350% 45,022.50 255,022511 09902022 220,000.00 4,350% 35,670.W 255,670.W • 09802023 225,000.00 4.350% 25,99125 250.991.25 09/30/2024 235.000.0 4.350% _ 15,98(,.25 150.986.25_ • 09202025 250,00.00 4,350% 5,437.50 255437,50 "rota) S3.3SO,000.00 51)26,635.83 55,076,635.83 • Yield Statistics • 82nd Yea Do11an S39,692J8 • Ave,. eLife 11.849 tears Avmje Couwn 4.350000% • Veo Intereu Cort IM4 4_750WU% • Ie fCwtnl - 43476333% Bond Yield ld fm Arbitmii 3c Purposes 4341073% • All lnclmive Cost(AIC) 4.3476333% • IRS Form 8098 Net Imerest Cos: 4.35W000% W eivir ed Avemve Maturity 11.849 Years • • • • • Z SCCC21N51 SNG F KetE 1 b1S20G51 9':2w • • First Southwest Company PublicFinanceDe rtment • • Exhibit 9. Existing Debt Service on Land Purchase and Master Plan • • Denton Public Safety Training Center Business Plan Page 19 • • OPfiION ~1 Phase 1 Scenario: Option # l /Phase 1 is the minimum phase of the training facility using designated FY06- 07 and FY07-08 Certificates of Obligation (CO bonds) with the anticipated debt service shown in Exhibit 13. Phase 1 will meet the ongoing day-to-day basic training requirements of both public safety departments; however, this phase does not include classroom facilities. Therefore, it provides very limited opportunities for partnerships and the resulting sharing of costs. Option #1/Phase 1 includes: Two-story residence burn building; outdoor class room; high rise burn building; rubble pile; trench rescue; confined space; vertical training pads; propane tank; 10-lane shooting range; shoot house; pavement; detention/retention pond; training water pump system; and utilities and storm drainage. Estimated Cost Site Construction Costs $1,454,452 (Including Design Contingency & Escalation) Building Construction Costs $5,6797,330 (Including Design Contingency & Escalation) Sub Total $7,151,782 Percent Program & Design Fees 10.0% $715,178 (Program Management, Architectural & Engineering) Professional Reimbursement 01.0% $71,518 (Not to Exceed Amount) Permits & Inspection Fees 01.5% $107,277 (Building Permits, City Fees & Special Inspection) Insurance & Bond 01.7% $121,580 Sub Total $1,015,553 Phase 1 Capital Cost $8,167,335 Exhibit 10. Phase 1 Capital Investment (1/1/2007 costs) Denton Public Safety Training Center Business Plan Page 20 Capital Cost of Phase 1 $8,167,335 Capital Cost of Phase 2 NA Capital Cost of Phase 3 NA Capital Cost of Phase 4 NA Option #1 Capital Investment $8,167,335 Initial Capital Costs (land, planning, design) $3,330,000 TOTAL OPTION #1 ESTIMATED COST $11,497,335 Annual 0 & M Cost -1St Year $451,054 "Net" Annual 0 & M Cost -1St Year $294,485 (0&M -Revenues) Exhibit 11. Option #1 Estimated Costs level of Training Met: Basic with some Intermediate and very limited advanced. Assumptions: ~ Option # 1 is the minimum phase of the training facility using appropriated FY06-07 and FY07-08 Certificates of Obligation (COs). No additional funding is anticipated. ~ Option # 1 meets the ongoing day-to-day basic training requirements of both public safety departments; however, this phase does not include classroom facilities. Therefore, it provides very limited opportunities for partnerships and the resulting s aring o costs. ~ Operations & Maintenance costs for Option #1 are not identified in the City's current five-year financial forecast. The average annual 0 & M costs are estimated as shown in Exhibit 12. 0&M Revenues "NET" 0&M Years 1- 5 Annual Average $476,867 $191,173 $285,694 Years 6 -10 Annual Average $549,073 $307,887 $241,186 Years 11-15 Annual Average $632,128 $428,391 $203,737 Years 16 - 20 Annual Average $732,813 $546,747 $186,666 Years 21- 25 Annual Average $849,962 $697,803 $152,159 25-Year Annual Average $647,750 $434,400 $213,350 Exhibit 12. Option #1 Average Annual 0 & M Costs ~ Over the 25-year analysis of financial data by the Business Plan, Option # 1 never achieves a positive net income or positive net cash flow due to the fact that expenses are always greater than revenue. Essentially, the total 0 & M cost will be an ongoing City of Denton expenditure. Denton Public Safety Training Center Business Plan Page 21 • • • • • • • Preliminary S8.200.000 • City of Denton, Testis • Certificates of Obligation. Series 2007 • • Debt Service Schedule • Date Principal Coupon Interest Total Pil • 0w90ROU7 09/30/2008 35.090,00 475Ub6 615,977.08 650,S77 Iis • 09130/2Wn 27gOW 0:0 .L750% 341,425,00 651,-23,00 06,30/]019 285.000JID 1350% 368,213.7 653_4;,75 00130/211!! _ CO 300.000,4 )3111 ,54354011 6]435001) • -0280/201] ~31 g0aL00 475000 339.X625.0 6J~362n 0913111190 130.1:400 4,750^/0 ?:.662.50 651,112511 • On/i0/1111 315PSI,00 1759;5. 308.63115 653,31.:5 09/30/1015 36U,(M 00 4710% 29138750 651.887.50 09/3012016 280.60 S)1750% 27-31256 6543125.0 • 09/30/'_017 - 395.r>n690 -750% 255 1)06 21- h54Wb_4 09r3cr91R IIS,W0010 4]30°: 236.66X7 651(3875 0950/2019 435,00000 4]50% J6; 181 _'i 651.-181.25 • 09130/20;0 45300000 . " :5"' .11,% 1 17395,3:3,7_ 6J 1337.: 08;10021 44000400 =.1150% ,137.50 _ 653,17.50 • 0913000'2 504000.00 47500.. 149,962 75 649,46250 01130,10'_3 52;_0%)4 00 47500., 125,4 I 650,513 75 1"1301_11 5 .X01, 92,864S E 63.1 81,4 75 • 01)301^_025 5 SSO"" JM W 4 W 4.7iW, 11,650 50 63291250 _09/30,2036 _ 910,",000 4750.6 11650.00 6iOON 1,21 11913820211 033,01)1) ,00 49500,- 15,0Y1.25~ fi50i0X+ • Tur.11 S9290.1IIH1.1111 - 54,1416003,3 SH.0446.S3.33 • Yield Statistics • ❑nn-d Ynr DOllm=_ 5101 993.33 LIT tli. '_1+8Years • .\vvnee C9ulpn _ 4)tfr)gp8e 5.a lmmma cost L]ICI 40000100% • r B id rur 9191c9 Ca AI[ Y591d 1nr A.A,hrh9n,el ~c Pnrpneu _,74404_6 AI[ T7424uv1w6 • IRS Form 8078 • Sellnurevt CruO W,i,hIeJ Are,e:2 >Iawnn. -12 431) 1Years • • • • • • • • FileI C M- SO• 61,g file SF 132V W 341- 112 • First Southwest Company • Public Finance [)apartment Page 1 • • Exhibit 13. Debt Service on Phase 1 • Denton Public Safety Training Center Business Plan Page 22 • • Other TOTAL Year Facility Facility Personnel Training ESTIMATED Maintenance Operating Expense Expense 0 & M 1 $177,102 $130,922 $133,488 $9,542 $451,054 2 $180,644 $133,541 $139,342 $10,019 $463,546 3 $184,257 $136,211 $145,456 $10,520 $476,444 4 $187,943 $138,936 $151,842 $11,046 $489,767 5 $191,701 $141,714 $158,512 $11,599 $503,526 6 $196,535 $144,549 $165,478 $12,179 $518,741 7 $199,446 $147,439 $172,754 $12,787 $532,426 g $203,435 $150,388 $180,354 $13,426 $547,603 g $207,504 $153,396 $192,094 $14,098 $567,092 10 $211,654 $156,464 $196,584 $14,803 $579,505 11 $215,887 $159,593 $205,245 $15,543 $596,268 12 $220,205 $162,785 $214,293 $16,320 $613,603 13 $224,609 $166,041 $223,746 $17,136 $631,432 14 $229,101 $169,362 $233,620 $17,993 $650,076 15 $233,682 $172,749 $243,935 $18,893 $669,259 16 $238,357 $176,204 $254,712 $19,838 $689,111 17 $243,124 $179,728 $271,732 $20,829 $715,413 18 $247,986 $183,322 $277,732 $21,871 $730,911 1g $252,946 $186,989 $290,021 $22,964 $752,920 20 $258,005 $190,729 $302,861 $24,113 $775,708 21 $263,165 $194,543 $316,276 $25,318 $799,302 22 $268,428 $198,434 $330,292 $26,584 $823,738 23 $273,797 $202,403 $344,938 $27,913 $849,051 24 $279,273 $206,451 $360,241 $29,309 $875,274 25 $284,858 $210,579 $376,231 $30,775 $902,443 Total 25-Yr $5,672,644 $4,193,473 $5,872,214 $455,422 $16,193,753 Costs Exhibit 14. Option #10perations and Maintenance Estimates Denton Public Safety Training Center Business Plan Page 23 Estimated Year Estimated Operations & Net Income Revenues Maintenance 1 $156,569 $451,054 ($294,486) 2 $172,225 $463,546 ($291,321) 3 $189,448 $476,444 ($286,997) 4 $208,393 $489,767 ($281,374) 5 $229,232 $503,526 ($274,294) 6 $252,155 $518,741 ($265,585) 7 $277,371 $532,426 ($255,056) g $305,108 $547,603 ($242,496) g $335,619 $567,092 ($227,671) 10 $369,181 $579,505 ($210,324) 11 $387,640 $596,268 ($208,629) 12 $407,022 $613,603 ($206,582) 13 $427,373 $631,432 ($204,159) 14 $448,741 $650,076 ($201,334) 15 $471,178 $669,259 ($198,081) 16 $494,737 $689,111 ($194,372) 17 $519,474 $715,413 ($190,177) 18 $545,448 $730,911 ($185,464) 1g $572,720 $752,920 ($180,200) 20 $601,356 $775,708 ($174,350) 21 $631,424 $799,302 ($167,878) 22 $662,995 $823,738 ($160,743) 23 $696,145 $849,051 ($152,906) 24 $730,952 $875,274 ($144,321) 25 $767,500 $902,443 ($134,944) Tota l 25-Yr $1Q,860,OQ5 $16,193,753 x$5,333,748) Costs Exhibit 15. Option #1 Net Income Pro Forma Denton Public Safety Training Center Business Plan Page 24 Existing Year Net Income Total Debt Cash Flow Budget Net Cash Service Savings Flow 1 ($294,486) $902,287 ($1,196,773) $157,688 ($1,039,085) 2 ($291,321) $906,821 ($1,198,143) $162,419 ($1,035,724) 3 ($286,997) $908,529 ($1,195,526) $167,291 ($1,028,235) 4 ($281,374) $909,306 ($1,190,680) $172,310 ($1,018,370) 5 ($274,294) $904,273 ($1,178,566) $177,479 ($1,001,087) 6 ($265,585) $908,309 ($1,173,894) $182,804 ($991,090) 7 ($255,056) $906,296 ($1,161,352) $188,288 ($973,064) $ ($242,496) $903,354 ($1,145,850) $193,936 ($951,913) g ($227,671) $909,254 ($1,136,925) $199,754 ($937,170) 10 ($210,324) $903,996 ($1,114,320) $205,747 ($908,573) 11 ($208,629) $907,581 ($1,116,211) $211,919 ($904,291) 12 ($206,582) $904,890 ($1,111,472) $218,277 ($893,195) 13 ($204,159) $905,923 ($1,110,082) $224,825 ($885,257) 14 ($201,334) $905,560 ($1,106,894) $231,570 ($875,324) 15 ($198,081) $903,803 ($1,101,884) $238,517 ($863,367) 16 ($194,372) $905,541 ($1,099,914) $245,673 ($854,241) 17 ($190,177) $910,539 ($1,100,711) $253,043 ($847,673) 18 ($185,464) $903,904 ($1,089,368) $260,434 ($828,733) 1g ($180,200) $905,636 ($1,085,836) $268,453 ($817,383) 20 ($174,350) $905,519 ($1,079,869) $276,507 ($803,362) 21 ($167,878) $0 ($167,878) $284,802 $116,924 22 ($160,743) $0 ($160,743) $293,346 $132,603 23 ($152,906) $0 ($152,906) $302,147 $149,241 24 ($144,321) $0 ($144,321) $311,211 $166,890 25 ($134,944) $0 ($134,944) $320,547 $185,604 Total 25-Yr ($5,333,746) $18,121,319 ($23,455,066) $5,749,188 ($17,705,877) Costs Exhibit 16. Option #1 Net Cash Flow Pro Forma Denton Public Safety Training Center Business Plan Page 25 OPfiION ~2 Phase 1 + Phase 2 Scenario: Option #2 adds Phase 2 which increases the capabilities of the minimum phase (Phase 1) of a training facility. It will meet the ongoing day-to-day training requirements of both public safety departments and provide classroom opportunities for partnerships with the anticipated sharing of costs, including basic academies. Option #2/Phase 2 includes: All the components of Phase 1 plus the following classroom facilities. Classrooms and Common Areas = 10,610 square feet Staff Offices, Work Areas, Etc. = 5,380 square feet Circulation Factor (12%~ = 2,460 square feet Mechanical Factor (10%) = 2,050 square feet Total Building Size = 20,500 square feet Estimated Cost Site Construction Costs $101,715 (Including Design Contingency & Escalation) Building Construction Costs $3,754,575 (Including Design Contingency & Escalation) Sub Total 3,856,290 Percent Program & Design Fees 10.0% $385,629 (Program Management, Architectural & Engineering) Professional Reimbursement 01.0% $38,563 (Not to Exceed Amount) Permits & Inspection Fees 01.5% $57,844 (Building Permits, City Fees & Special Inspection) Insurance & Bond 01.7% $65,557 Sub Total $547,593 .Phase 2 Capital Costs $4,403,883 Exhibit 17. Phase 2 Capital Investments (1/1/2007 costs) Denton Public Safety Training Center Business Plan Page 26 Capital Cost of Phase 1 $8,167,335 Additional €apital Cost of Phase.. 2 $4,403,883 Capital Cost of Phase 3 NA Capital Cost of Phase 4 NA Option #2 Capital Investment $12,571,218 Initial Capital Costs (land, planning, design) $3,330,000 TOTAL OPTION #2 ESTIMATED COST $15,901,218 Annual 0 & M Cost -1St Year $1,099,032 "Net" Annual 0 & M Cost -1St Year $316,189 (0&M -Revenues) Exhibit 18. Option #2 Estimated Costs level of Training Met: Basic/Intermediate with some Advanced. Assumptions: ~ Option #2 increases the capabilities of the minimum phase (Phase 1) of a training facility by adding classroom space of 20,500 square feet. ~ Option #2 meets the ongoing day-to-day training requirements of both public safety departments and provides classroom opportunities for partnerships with the anticipated sharing of costs, including basic academies. ~ Option #2 provides an opportunity for a partnership with NCTC for fire and law enforcement programs, including basic academies. ~ Option #2 also increases the potential for regional training of fire and law enforcement personnel which will improve mutual aid and inter jurisdictional relationships. 0&M Revenues "NET" 0&M Years 1- 5 Annual Average $1,167,731 $955,867 $211,864 Years 6 -10 Annual Average $1,374,056 $1,539,433 ($165,377) Years 11-15 Annual Average $1,677,019 $2,141,953 ($464,934) Years 16 - 20 Annual Average $1,972,290 $2,733,735 ($761,445) Years 21-25 Annual Average $2,327,227 $3,489,016 ($1,161,789) 25-Year Annual Average $.1,703,655 $2,172,001 ($468,346) Exhibit 19. Option #2 Average Annual 0 & M Costs ~ Operations and maintenance costs have not been budgeted in the City's five-year financial forecast. The Business Plan estimates the first year O&M of Option #2 to be $1,099,032 with a 25-year average annual cost of $1,703,655. However, the "net" Denton Public Safety Training Center Business Plan Page 27 0&M for the first year is actually $316,189 with a 25-year average annual "net" 0&M of ($468,346). ~ According to the Business Plan, Option #2 has the highest net income of all the other options along with the earliest positive net income at year 7. In other words, revenues exceed the 0&M costs in the 7th year of operating the facility, thereby eliminating the city's 0&M expenditures after that date. ~ According to the Business Plan, Option #2 has the highest net cash flow of all the of er options. ~ Exhibit 24 adjusts the Net Cash Flow from Exhibit 23 by using estimated public safety training savings determined in Option #5, page 49 and shown in Exhibit 41. Denton Public Safety Training Center Business Plan Page 28 • • • • • • Preliminary • S t 2,500.000 CIt\' of Denton, Mesas • Certificates of Obligation. Series 2007 • • Debt Service Schedule • • Date Principal Coupon Interest Total P+I 9Oll?007 PJ3U1^W8 5011,0.00 17J 0% M, 983,797.9? 911 P1%.o'_ • ;9/3111?009 a1000UAO 48 031;100,00 99110113N5 09/)09010 ai9000 1N1 1?Sb:o 561,31 1._5 096.131.21 • 11960Coll 155600(X) 375M, 140.Int75 _ N!S.I9J.75 091;,)/2012 475,W)o00 375m6 319,106H 'n3.l 062; o9"V2013 OAI00000 -175M, a91y5o W 9111900 W • o97io9011 525GH)W -1.75100,!. =711;x(1625 •.1c~0025 o9r3o/2013 550,000,00 I,l1lF~ :4>,()75 no 095,0800 0911011116_ ~__95,WO.W 1,751o, .1131`6?5 993,356 09.'31001)17 601000,W 17506 390331.31 990301.5 To 3603.4125 59;331.8 0"309013 F31.000(1) 4 ,7>1) • 09GOf"_U9 065AW,W -1,750% 33000635 995.006 25 -5 0e,706 25 09/:0!.030 69"(W it, -1,750% 7.70(,., 096 01011 710 r W W 17501. :63,3fi 0 51) -73J.0-60 • 0 U11Z 17D 3.3Jt. - 993, 09 0) 0.3 8W,000 . 00 o0 1750i ' 111 01 4 ]5 5 n6uG375 • W(30x?0?J 3CO,oooon 1750% 1521100A0 `n_pW(A) 09!301]0^_1 33:011000 1750% 111,03110 '196 f018 {19/300?0'_( 9'_S DIIo.W__ -1.7568,01375 99_ 0{375 • 09,,09017 9711,001100 -1,700% 1137.50 993,03250 road $L',j1111,000,IID S7.385.I41.67 fl'I,434.I41,01 • Yield Statistics • 6o~0 \4ar lhtllars _SI91;17607 :UCraS LIi gaiX Years • A_c:auc Cnu W n 0 750IX)OM4 C."♦I(1 _ _ _ IJUCI1001: • I 1 I C1 I1'IC t 1 JU31°o n 9J A-vW . r A F _PU 13o'c3 _ t 71_JOSI • All lndvsilc 1711014% IRS Form 8038 • yo1 oncresl [on _ _ 4 7-IMA00% \CCicF.tcd .\c,rve: \1am11rv L~:B Yca1s • • • • • • • • .o- l Cett~n Gi+mrMirv) 51, IF 1 12 W CO:V'Im1 1 1b lr2 1 11..57 F-1 • First Southwest Company • Public Finance Department Page I • • Exhibit 20. Debt Service on Option tit • • Denton Public Safety Training Center Business Plan Page 29 • • Other TOTAL Year Facility Facility Personnel Training ESTIMATED Maintenance Operating Expense Expense 0 & M 1 $215,840 $373,904 $461,577 $47,711 $1,099,032 2 $220,156 $381,382 $480,555 $50,097 $1,132,190 3 $224,559 $389,009 $500,317 $52,601 $1,166,487 4 $229,051 $396,790 $520,897 $55,231 $1,201,969 5 $233,632 $404,725 $542,329 $57,993 $1,238,978 6 $238,304 $412,820 $564,647 $60,893 $1,276,664 7 $243,070 $421,076 $587,891 $63,937 $1,315,974 $ $247,932 $429,498 $612,095 $67,134 $1,356,659 g $252,890 $438,088 $637,304 $70,491 $1,398,771 10 $257,948 $446,849 $743,398 $74,015 $1,522,210 11 $263,107 $455,786 $774,730 $77,716 $1,571,339 12 $268,369 $464,902 $807,396 $81,602 $1,622,269 13 $273,737 $474,200 $841,453 $85,682 $1,675,071 14 $279,212 $483,684 $876,959 $89,966 $1,729,821 15 $284,796 $493,358 $913,978 $94,465 $1,786,595 16 $290,492 $503,225 $952,575 $99,188 $1,845,478 17 $296,301 $513,290 $992,819 $104,147 $1,906,557 1$ $302,228 $523,555 $1,034,778 $109,355 $1,969,915 1g $308,272 $534,026 $1,078,528 $114,822 $2,035,648 20 $314,438 $544,707 $1,124,146 $120,563 $2,103,854 21 $320,726 $555,601 $1,171,714 $126,592 $2,174,632 22 $327,141 $566,713 $1,221,313 $132,921 $2,248,052 23 $333,684 $578,047 $1,273,034 $139,567 $2,324,331 24 $340,357 $589,608 $1,326,965 $146,545 $2,403,475 25 $347,164 $601,401 $1,383,206 $153,873 $2,485,643 Tota l 25-Yr 6,913,406 $11,976,246 $21,424,606 $2,277,108 $42,591,366 Costs Exhibit 21. Option #2 Operations and Maintenance Estimates Denton Public Safety Training Center Business Plan Page 30 Estimated Year Estimated Operations & Net Income Revenues Maintenance 1 $782,843 $1,099,032 ($316,188) 2 $861,127 $1,132,190 ($271,062) 3 $947,240 $1,166,487 ($219,248) 4 $1,041,964 $1,201,969 ($160,005) 5 $1,146,160 $1,238,978 ($92,519) 6 $1,260,776 $1,276,664 ($15,889) 7 $1,386,854 $1,315,974 $70,879 $ $1,525,539 $1,356,659 $168,879 g $1,678,093 $1,398,771 $279,320 10 $1,845,903 $1,522,210 $323,692 11 $1,938,198 $1,571,339 $366,858 12 $2,035,108 $1,622,269 $412,838 13 $2,136,863 $1,675,071 $461,792 14 $2,243,706 $1,729,821 $513,885 15 $2,355,892 $1,786,595 $569,295 16 $2,473,686 $1,845,478 $628,206 17 $2,597,370 $1,906,557 $690,814 18 $2,727,239 $1,969,915 $757,324 1g $2,863,601 $2,035,648 $827,952 20 $3,006,781 $2,103,854 $902,927 21 $3,157,120 $2,174,632 $982,488 22 $3,314,976 $2,248,052 $1,066,888 23 $3,480,725 $2,324,331 $1,156,394 24 $3,654,761 $2,403,475 $1,251,284 25 $3,837,499 $2,485,643 $1,351,856 Total 25-Yr $54,30Q,026 $42,591,366 $11,708,660 Costs Exhibit 22. Option #2 Net Income Pro Forma Denton Public Safety Training Center Business Plan Page 31 Existing Year Net Income Total Debt Cash Flow Budget Net Cash Service Savings Flow 1 ($316,188) $1,252,728 ($1,568,917) $157,688 ($1,411,229) 2 ($271,062) $1,256,428 ($1,527,490) $162,419 ($1,365,071) 3 ($219,248) $1,256,129 ($1,475,377) $167,291 ($1,308,085) 4 ($160,005) $1,259,544 ($1,419,549) $172,310 ($1,247,239) 5 ($92,519) $1,256,673 ($1,349,192) $177,479 ($1,171,712) 6 ($15,889) $1,257,515 ($1,273,404) $182,804 ($1,090,600) 7 $70,879 $1,256,953 ($1,186,073) $188,288 ($997,786) g $168,879 $1,254,985 ($1,086,106) $193,936 ($892,169) g $279,320 $1,261,385 ($982,065) $199,754 ($782,310) 10 $323,692 $1,251,271 ($927,579) $205,747 ($721,832) 11 $366,858 $1,259,525 ($892,667) $211,919 ($680,748) 12 $412,838 $1,255,909 ($843,071) $218,277 ($624,794) 13 $461,792 $1,255,541 ($793,750) $224,825 ($568,924) 14 $513,885 $1,253,304 ($739,418) $231,570 ($507,848) 15 $569,295 $1,254,078 ($684,782) $238,517 ($446,265) 16 $628,206 $1,257,635 ($629,429) $245,673 ($383,756) 17 $690,814 $1,258,858 ($568,043) $253,043 ($315,001) 18 $757,324 $1,252,854 ($495,530) $260,434 ($234,896) 1g $827,952 $1,254,505 ($426,553) $268,453 ($158,100) 20 $902,927 $1,253,594 ($350,667) $276,507 ($74,160) 21 $982,488 $0 $982,488 $284,802 $1,267,290 22 $1,066,888 $0 $1,066,888 $293,346 $1,360,234 23 $1,156,394 $0 $1,156,394 $302,147 $1,458,540 24 $1,251,284 $0 $1,251,284 $311,211 $1,562,495 25 $1,351,856 $0 $1,351,856 $320,547 $1,672,403 Total 25-Yr $11,708,660 $25,119,411. x$13,410,751) $5 749188 x$7,661,562) Costs Exhibit 23. Option #2 Net Cash Flow Pro Forma Denton Public Safety Training Center Business Plan Page 32 Existing Training Adjusted Year Net Total Debt Cash Flow Budget Savings.. Net Cash Income Service Savings (see Option #5 Flow Exhibit 41) 1 ($316,188) $1,252,728 ($1,568,917) $157,688 $807,799 ($603,430) 2 ($271,062) $1,256,428 ($1,527,490) $162,419 $823,955 ($541,116) 3 ($219,248) $1,256,129 ($1,475,377) $167,291 $840,434 ($467,651) 4 ($160,005) $1,259,544 ($1,419,549) $172,310 $857,242 ($388,997) 5 ($92,519) $1,256,673 ($1,349,192) $177,479 $874,388 ($297,324) 6 ($15,889) $1,257,515 ($1,273,404) $182,804 $909,131 ($181,469) 7 $70,879 $1,256,953 ($1,186,073) $188,288 $927,314 ($70,472) 8 $168,879 $1,254,985 ($1,086,106) $193,936 $945,861 $53,692 9 $279,320 $1,261,385 ($982,065) $199,754 $964,778 $182,468 10 $323,692 $1,251,271 ($927,579) $205,747 $984,073 $262,241 11 $366,858 $1,259,525 ($892,667) $211,919 $1,:022,807 '$342,059' 12 $412,838 $1,255,909 ($843,071) $218,277 $1,:043,263 $418,469 13 $461,792 $1,255,541 ($793,750) $224,825 $1,:064,128 $495,204 14 $513,885 $1,253,304 ($739,418) $231,570 $1,:085,411 $577,563 15 $569,295 $1,254,078 ($684,782) $238,517 $1,:107,119 $660,854 16 $628,206 $1,257,635 ($629,429) $245,673 $1,:148,894 $765,138 17 $690,814 $1,258,858 ($568,043) $253,043 $1,:171,872 $856,871 18 $757,324 $1,252,854 ($495,530) $260,434 $1,:195,310 $960,414 19 $827,952 $1,254,505 ($426,553) $268,453 $1,:209,216 $1,051,116 20 $902,927 $1,253,594 ($350,667) $276,507 $1,:243,600 $1,169,440 21 $982,488 $0 $982,488 $284,802 $1,:291,697 $2,558,983 22 $1,066,888 $0 $1,066,888 $293,346 $1,:317,531 $2,677,765 23 $1,156,394 $0 $1,156,394 $302,147 $1,:343,881 $2,802,421 24 $1,251,284 $0 $1,251,284 $311,211 $1,:370,759 $2,933,254 25 $1,351,856 $0 $1,351,856 $320,547 $1,:398,174 $3,070,577 Total 25-Yr $11,708,.660 $25,119,411 ($13,410,751) $5,749,188 $26,958,638 $19,297,076 Costs Exhibit 24. Option #2 "Adjusted" Net Cash Flow Pro Forma (1 ~ Adjusted for Training Savings as determined in Option #5 and shown in Exhibit 41J Denton Public Safety Training Center Business Plan Page 33 OPfiION Phase 1 + Phase 2 + Phase 3 Scenario: Option #3 adds Phase 3 of the project which significantly increases the opportunities for partnerships with the anticipated sharing of costs. Most importantly, in addition to meeting basic and intermediate levels, it also provides an advanced level of training to Denton police officers and firefighters that phases 1 and 2 do not provide. Option #3/Phase 3 includes: All the components of Phases 1 and 2 plus additional classrooms; one story residential burn building; hotel burn building; skill pad; driving track/city scape; swift water rescue; 20 lane addition to shooting range; and utilities and storm drainage. Estimated Cost Site Construction Costs $3,424,591 (Including Design Contingency & Escalation) Building Construction Costs $6,000,700 (Including Design Contingency & Escalation) Sub Total $9,425,291 Percent Program & Design Fees 10.0% $942,529 (Program Management, Architectural & Engineering) Professional Reimbursement 01.0% $94,253 (Not to Exceed Amount) Permits & Inspection Fees 01.5% $141,379 (Building Permits, City Fees & Special Inspection) Insurance & Bond 01.7% $160,230 Sub Total $1,338,391 Phase 3 Capital Costs $10,763,682 Exhibit 25. Phase 3 Capital Investments (1/1/2007 costs) Denton Public Safety Training Center Business Plan Page 34 Capital Cost of Phase 1 $8,167,335 Capital Cost of Phase 2 $4,403,883 Additional Capital Cost of Phase.. 3 $10,763,682 Capital Cost of Phase 4 NA Option #3 Capital Investment $23,334,900 Initial Capital Costs (land, planning, design) $3,330,000 TOTAL OPTION #3 ESTIMATED COST $26,664,900 Annual 0 & M Cost -1St Year $1,599,033 "Net" Annual 0 & M Cost -1St Year $816,190 (0&M -Revenues) Exhibit 26. Option #3 Estimated Costs level of Training Met: Basic/Intermediate including advanced and specialized courses. Assumptions: ~ Option #3 significantly increases the opportunities for partnerships with the anticipated sharing of costs. ~ In addition to meeting basic and intermediate levels, Option #3 also provides an advanced level of training to Denton police officers and firefighters that options 1 and 2 do not provide. ~ The driving track increases the safety of public safety officers and provides substantial shared use with other agencies, including other City departments and allows certified emergency vehicle operator (CEVO) certification. ~ Option #3 provides significant opportunities with the private sector including industry and utility agencies for specialized training. ~ Option #3 increases opportunities for 2-year and 4-year fire science and criminal justice degree programs with NCTC and UNT. ~ Option #3 increases the number of shooting range lanes improving opportunities for shared use with outside agencies. Possible federal funding opportunities increase due to shared use with federal law enforcement agencies (FBI, ATF, DEA and Secret Service). ~ Option #3 allows Denton to conduct multi-agency (local, state, Feds) disaster response and recovery training. The interoperability concept under NIMS is paramount and any training Denton might initiate at the facility with regional participation avails it to certain federal preparedness funds (through COG) and grants, not to mention the reputation garnered as a result of becoming the North Texas leader Denton Public Safety Training Center Business Plan Page 35 in emergency response training (public and private sectors included). That reputation builds a repeat customer list for Denton and enhances its sources of potential revenue. ~ Operations and maintenance costs have not been budgeted in the City's five-year financial forecast. The Business Plan estimates the first year 0&M of Option #3 to be $1,599,033 with a 25-year average annual cost of $2,392,153. However, the actual cost to the City for the first year 0&M is only $736,685 with a 25-year average "net" 0&M cost of ($92,216). The average annual 0&M costs are estimated as shown in Exhibit 27. 0&M Revenues "NET" 0&M Years 1- 5 Annual Average $1,692,552 $955,867 $736,685 Years 6 -10 Annual Average $1,967,304 $1,539,433 $427,871 Years 11-15 Annual Average $2,350,612 $2,271,675 $78,937 Years 16 - 20 Annual Average $2,741,063 $3,186,142 ($445,079) Years 21- 25 Annual Average $3,209,288 $4,468,729 ($1,259,441) 25-Year Annual Average $.2,392,153 $2,484,369 ($92,216) Exhibit 27. Option #3 Average Annual 0 & M Costs ~ According to the Business Plan, Option #3 achieves a positive net income in year 15 and a positive net cash flow in year 21. ~ Exhibit 32 adjusts the Net Cash Flow from Exhibit 31 by using estimated public safety training savings determined in Option #5, page 49 and shown in Exhibit 41. Denton Public Safety Training Center Business Plan Page 36 • • • • • • Preliminary S 10.800.000 • Citv of Denton, Texas • Certificates of Obligation. Series 2007 • • Debt Service Schedule • • Date Principal Coupon Interest Total 2'.I 09/.9111'I.Y17 1196142:09 30.0(1 0 4,750% ,8 1 1 1161 5 0 dot C635U • 0160/'W9 355,OW.W 4750% 502,1937i i57,193J3 09/30CDI0 37i,O00 .O 4750% 494.85025 813'?856'13 • 0413012011 3l40'00) 00 4,7511",. 166.68750 93/68750 09130,2012 41000.00 1,7511% 44)687.50 357.687SU 0.110/.101 4,000.00 4,]511°: 12717.50 95:73750 • O.rUT_o154 a5.+,0110.0 47yT:: 90,611875 361 ]1475 0960/'0 475,IIIU00 4.78'1 3X4,611 8Y?1,31,'5 • 0138'016 _ 300.0000 {11301. 3b1,.173110 861-17910 OY60CI1p >i(I,DIp l0 4750",e 337,250,00 99,_50 W ,391301'015 51.00 00 4,750';6 i11.'150'5 9569625 • 01304019 575.01000 4750,. 28555625 S(0.35625 098111-010 600,11111) 00 4.75V, "7:150 W 857,150 W 091301'_011 630.O.W00 4,7501. _ 2'81137.50 .95Y'_3Z SD • l%76000"---~-- 660p 000U 13,730'1. 197SOO.W 957,tVtIn 091301'023 695P0000 137509. 165718,75 W,413,7,5 • 09p01'021 730,0000 1,750:. 131,575 GO 46157i~X) 091300025 76100000 4.730:. 96069]5 861,068,75 119/30/30'6 _ 'goo ot00 475a!. 38,90QW ,958.91p1 1N1 • 09%301027 340,00000 19.950W 85995010 'I'nlal S10.801LID011.011 56.312.812.50 S17.19'.812SU • Yield statistics • no.a vrnt Mb" ---S l_4±75 It Life _ 12,. _ Y.,r. • n~cnec r.~l:r.,n _-a79t1xwnx, sot lnin¢etC(Ir sle 5000CO% • roc lmercBlQw TIC) 4,]_.4(197% 1101,34 Yidd ierv4616xgv' Pnr[mses .1 74].1097. • ml _i 1497°0 IRS Form 8038 • 4; 1111crest cunt 75,3001_6 e\birh¢C.\velass_?lain: nv 0.112 Y,ars • • • • • • • • me reanop.cx~ry 111 x61 0 au eomv,~a lvacw751 .nun • First Southwest Company Page I • Public Finance Department • Exhibit 28. Debt Service on Phase 3 • • • Denton Public Safety Training Center Business Plan Page 37 • • Other TOTAL Year Facility Facility Personnel Training ESTIMATED Maintenance Operating Expense Expense 0 & M 1 $390,096 $699,649 $461,577 $47,711 $1,599,033 2 $397,898 $713,642 $482,605 $50,097 $1,644,242 3 $405,856 $727,914 $504,593 $52,601 $1,690,964 4 $413,974 $742,473 $527,583 $55,231 $1,739,261 5 $422,253 $757,322 $551,622 $57,993 $1,789,261 6 $430,698 $772,469 $576,758 $60,893 $1,840,818 7 $439,312 $787,918 $603,041 $63,937 $1,894,208 g $448,098 $803,676 $630,523 $67,134 $1,949,431 g $457,060 $819,749 $659,258 $70,491 $2,006,558 10 $466,201 $836,145 $769,146 $74,015 $2,145,507 11 $475,525 $852,868 $804,556 $77,716 $2,210,665 12 $485,036 $869,925 $841,598 $81,602 $2,278,161 13 $494,737 $887,324 $880,352 $85,682 $2,348,095 14 $504,631 $905,070 $920,811 $89,966 $2,420,478 15 $514,724 $923,171 $963,303 $94,465 $2,495,663 16 $525,019 $941,935 $1,007,669 $99,188 $2,573,811 17 $535,519 $960,468 $1,054,084 $104,147 $2,654,218 18 $546,229 $979,677 $1,102,642 $109,355 $2,737,903 1g $557,154 $999,270 $1,153,440 $114,822 $2,824,686 20 $568,297 $1,019,256 $1,206,583 $120,563 $2,914,699 21 $579,663 $1,039,641 $1,262,181 $126,592 $3,008,077 22 $591,256 $1,060,434 $1,320,343 $132,921 $3,104,954 23 $603,081 $1,081,643 $1,381,194 $139,567 $3,205,485 24 $615,143 $1,103,275 $1,444,852 $146,545 $3,309,815 25 $627,446 $1,125,341 $1,511,451 $153,873 $3,418,111 Tota l 25-Yr $12,494,907 $22,409,954 $22,621,844 $2,277,108 $59,803,813 Costs Exhibit 29. Option #3 Operations and Maintenance Estimates Denton Public Safety Training Center Business Plan Page 38 Estimated Year Estimated Operations & Net Income Revenues Maintenance 1 $782,843 $1,599,033 ($816,190) 2 $861,127 $1,644,242 ($292,753) 3 $947,239 $1,690,964 ($743,725) 4 $1,041,964 $1,739,261 ($697,297) 5 $1,146,160 $1,789,261 ($643,030) 6 $1,260,776 $1,840,818 ($580,041) 7 $1,386,854 $1,894,208 ($507,354) $ $1,525,539 $1,949,431 ($423,892) g $1,678,093 $2,006,558 ($328,466) 10 $1,845,903 $2,145,507 ($299,605) 11 $1,975,116 $2,210,665 ($235,549) 12 $2,113,374 $2,278,161 ($164,788) 13 $2,261,310 $2,348,095 ($86,783) 14 $2,419,602 $2,420,478 ($957) 15 $2,588,974 $2,495,663 $93,312 16 $2,770,202 $2,573,811 $196,692 17 $2,964,116 $2,654,218 $309,898 18 $3,171,605 $2,737,903 $433,702 1g $3,393,617 $2,824,686 $568,930 20 $3,631,170 $2,914,699 $716,470 21 $3,885,352 $3,008,077 $877,276 22 $4,157,327 $3,104,954 $1,052,372 23 $4,448,339 $3,205,485 $1,242,855 24 $4,759,723 $3,309,815 $1,449,907 25 $5,092,904 $3,418,111 $1,674,793 Tota l 25-Yr $62,109,231.. $59,803,813 $2,305,417.. Costs Exhibit 30. Option #3 Net Income Pro Forma Denton Public Safety Training Center Business Plan Page 39 Existing Year Net Income Total Debt Cash Flow Budget Net Cash Service Savings Flow 1 ($816,190) $2,113,791 ($2,929,981) $157,688 ($2,772,293) 2 ($292,753) $2,113,621 ($2,896,736) $162,419 ($2,734,317) 3 ($743,725) $2,115,985 ($2,859,710) $167,291 ($2,692,418) 4 ($697,297) $2,116,231 ($2,813,528) $172,310 ($2,641,218) 5 ($643,030) $2,114,360 ($2,757,390) $177,479 ($2,579,911) 6 ($580,041) $2,115,251 ($2,695,294) $182,804 ($2,512,490) 7 ($507,354) $2,118,671 ($2,626,025) $188,288 ($2,437,738) $ ($423,892) $2,114,616 ($2,538,508) $193,936 ($2,344,572) g ($328,466) $2,122,860 ($2,451,326) $199,754 ($2,251,571) 10 ($299,605) $2,108,521 ($2,408,126) $205,747 ($2,202,379) 11 ($235,549) $2,116,481 ($2,352,030) $211,919 ($2,140,111) 12 ($164,788) $2,116,265 ($2,281,053) $218,277 ($2,062,776) 13 ($86,783) $2,112,991 ($2,199,774) $224,825 ($1,974,949) 14 ($957) $2,111,541 ($2,112,498) $231,570 ($1,880,927) 15 $93,312 $2,111,678 ($2,018,365) $238,517 ($1,779,848) 16 $196,692 $2,118,054 ($1,921,362) $245,673 ($1,675,689) 17 $309,898 $2,120,433 ($1,810,534) $253,043 ($1,557,491) 18 $433,702 $2,113,923 ($1,680,220) $260,434 ($1,419,586) 1g $568,930 $2,113,405 ($1,085,836) $268,453 ($1,276,021) 20 $716,470 $2,113,544 ($1,397,073) $276,507 ($1,120,566) 21 $877,276 $0 $877,276 $284,802 $1,162,078 22 $1,052,372 $0 $1,052,372 $293,346 $1,345,718 23 $1,242,855 $0 $1,242,855 $302,147 $1,545,002 24 $1,449,907 $0 $1,449,907 $311,211 $1,761,118 25 $1,674,793 $0 $1,674,793 $320,547 $1,995,340 Total 25-Yr $2,305,417 $42,302,223 ($39,996,806) $5,749,188 ($34,247,617) Costs Exhibit 31. Option #3 Net Cash Flow Pro Forma Denton Public Safety Training Center Business Plan Page 40 Existing Training Adjusted Year Net Total Debt Cash Flow Budget Savings Net Cash Income Service Savings (see Option #5 Flow .Exhibit 41) 1 ($816,190) $2,113,791 ($2,929,981) $157,688 $807,799 ($1,964,605) 2 ($292,753) $2,113,621 ($2,896,736) $162,419 $823,955 ($1,910,362) 3 ($743,725) $2,115,985 ($2,859,710) $167,291 $840,434 ($1,851,984) 4 ($697,297) $2,116,231 ($2,813,528) $172,310 $857,242 ($1,783,976) 5 ($643,030) $2,114,360 ($2,757,390) $177,479 $874,388 ($1,705,523) 6 ($580,041) $2,115,251 ($2,695,294) $182,804 $909,131 ($1,603,359) 7 ($507,354) $2,118,671 ($2,626,025) $188,288 $927,314 ($1,510,424) 8 ($423,892) $2,114,616 ($2,538,508) $193,936 $945,861 ($1,398,711) 9 ($328,466) $2,122,860 ($2,451,326) $199,754 $964,778 ($1,286,793) 10 ($299,605) $2,108,521 ($2,408,126) $205,747 $984,073 ($1,218,306) 11 ($235,549) $2,116,481 ($2,352,030) $211,919 $1,0'22,807 '($1,117,304)' 12 ($164,788) $2,116,265 ($2,281,053) $218,277 $1,043,263 ($1,019,513) 13 ($86,783) $2,112,991 ($2,199,774) $224,825 $1,064,128 ($910,821) 14 ($957) $2,111,541 ($2,112,498) $231,570 $1,085,411 ($795,516) 15 $93,312 $2,111,678 ($2,018,365) $238,517 $1,107,119 ($672,729) 16 $196,692 $2,118,054 ($1,921,362) $245,673 $1,148,894 ($526,795) 17 $309,898 $2,120,433 ($1,810,534) $253,043 $1,171,872 ($385,619) 18 $433,702 $2,113,923 ($1,680,220) $260,434 $1,195,310 ($224,276) 19 $568,930 $2,113,405 ($1,085,836) $268,453 $1,209,216 ($66,805) 20 $716,470 $2,113,544 ($1,397,073) $276,507 $1,243,600 $123,034 21 $877,276 $0 $877,276 $284,802 $1,291,697 $2,453,775 22 $1,052,372 $0 $1,052,372 $293,346 $1,317,531 $2,663,249 23 $1,242,855 $0 $1,242,855 $302,147 $1,343,881 $2,888,883 24 $1,449,907 $0 $1,449,907 $311,211 $1,370,759 $3,131,877 25 $1,674,793 $0 $1,674,793 $320,547 $1,398,174 $3,393,514 Total 25-Yr $2,305,417 $42,302,223 .($39,996,806) $.5,749,188 $26,958,638 ($7,288,979) Costs Exhibit 32. Option #3 "Adjusted" Net Cash Flow Pro Forma (1" Adjusted for Training Savings as determined in Option #5 and shown in Exhibit 41) Denton Public Safety Training Center Business Plan Page 41 OPfiION Phase 1 +Phase2+Phase3+Phase4 Scenario: Option #4 provides aworld-class public safety training facility and provides the City of Denton high recognition. It provides advanced training to Denton police officers and firefighters making them aworld-class public safety work force. Option #4/Phase 4 includes: All the components of Phases 1, 2 and 3 plus additional classrooms; strip shopping center burn building; convenience store burn building; tanker truck; RR accident; fuel spill; car extrication; control tower; driving track expansion; 10 lane additional shoot range; skid pad and staging area; pavement; utilities and drainage; and drafting pit. Estimated Cost Site Construction Costs $1,884,843 (Including Design Contingency & Escalation) Building Construction Costs $4,595,750 (Including Design Contingency & Escalation) Sub Total 6,480,593 Percent Program & Design Fees 10.0% $648,059 (Program Management, Architectural & Engineering) Professional Reimbursement 01.0% $64,806 (Not to Exceed Amount) Permits & Inspection Fees 01.5% $97,209 (Building Permits, City Fees & Special Inspection) Insurance & Bond 01.7% $101,170 Sub Total $920,244 Phase 4 Capital Costs $7,400,837.. Exhibit 33. Phase 4 Capital Investments (1/1/2007 costs) Denton Public Safety Training Center Business Plan Page 42 Capital Cost of Phase 1 $8,167,335 Capital Cost of Phase 2 $4,403,883 Capital Cost of Phase 3 $10, 763, 682 Additional Capital Cost of Phase 4 $7,400,837 Option #4 Capital Investment $30,735,737 Initial Capital Costs (land, planning, design) $3,330,000 TOTAL OPTION #4 ESTIMATED COST $34,065,737 Annual 0 & M Cost -1St Year $2,006,289 "Net" Annual 0 & M Cost -1St Year $1,223,448 (0&M -Revenues) Exhibit 34. Option #4 Estimated Costs level of Training Met: Basic/Intermediate/Advanced Assumptions: ~ Option #4 provides aworld-class public safety training facility and provides the City of Denton high recognition. ~ Option #4 provides advanced training to Denton police officers and firefighters making them aworld-class public safety work force. ~ An expanded driving track provides substantial shared use with other agencies, including other City departments and allows expanded certified emergency vehicle operator (CEVO) certification with provision to outside agencies. ~ The added number of shooting range lanes further increases opportunities for shared use with outside agencies, especially State and Federal law enforcement agencies. 0&M Revenues "NET" 0&M Years 1- 5 Annual Average $2,120,918 $955,867 $1,165,051 Years 6 -10 Annual Average $2,454,554 $1,539,433 $915,121 Years 11-15 Annual Average $2,906,739 $2,479,273 $427,466 Years 16 - 20 Annual Average $3,386,820 $3,992,893 ($606,073) Years 21- 25 Annual Average $3,952,902 $6,430,594 ($2,477,692) 25-Year Annual Average $2,965,804 $3,079,612 x$113,808) Exhibit 35. Option #4 Average Annual 0 & M Costs ~ Operations and maintenance costs have not been budgeted in the City's five-year financial forecast. The Business Plan estimates the first year 0&M of Option #4 to Denton Public Safety Training Center Business Plan Page 43 be $2,006,289 with a 25-year average annual cost of $2,965,804. The "net" 0&M is actually $1,223,448 for the first year with a 25 year "net" 0&M average of ($113,808). ~ Option #4 allows Denton to conduct high level multi-agency (local, state, Feds) disaster response and recovery training. ~ According to the Business Plan, Option #4 achieves a positive net income in year 17 and a positive net cash flow in year 21. Denton Public Safety Training Center Business Plan Page 44 • • • • • • Preliminary • $7,400.000 Citv of Denton, I'esas • Certificates of Obli=ation. Series 2007 • • Debt Service Schedule • • Date Principal Coupon Interest Total P*1 69r3ar`007 - - - - (M.[.o/2813 35000,00 4]5C'% 5:710-2 494.710A2 'r30009 11500000 4 F0YL 344,018 7 53'! 111375 • 09r3oC01u 1_55,000.00 47509r6 3321-13.7$ 547,4(:]5 Mri WZO1I 370501100 475096 319,675 00 5441,9500 09/3o7aor 2;5.05050 1M%.. _06,612.50 .597.9j6 511 • 0913NAL _000 292,98625 23 3 1 09r30I2014 10,0100, 75C% CO 00 4.750% 273,537.50 53,413] .511 • 0913N2015 ^_,0)0,00_- _.750%, 263,502.'_0_-_ 533,506]5 WriCY'O _ 340,000,00 _ 49509 2;7,71'_.50 586,]C50 (Y59`0 17 3500Q09 .750^6 lil._U61i Y5206.2> N • (,0.30401-1 375fA0,00 wi5% 213963]5 589,3oX75 G9/3UCOIn 395,000!:0 195,3s1.2; S910,531- (NililA2U21! 410.000 Co 1,7511% 176,462 6 536.=02.50 0.000,001.150% 156512.50 • 59(50`5" I 0,913 .i36~C Zn _ 0/2533 175,001)G 00 o 43g196 135 A937_ _)0;19:)_ • CU309O3 0.01)"M 1.75')% 113,106 2D 00 540,06 25 04/3012024 SOO,f,00,00 ! 75% 95,]50,00 5110,250 20 4913111`025 525,00000 4.7505% 659065 N911,3,3k. 2_5 • 0-J13a/20 550.00000 19511°6 ;437500 50 011 0'100220.7 pg000,0~1 4,i>11°°.6 13,656.19 50XS.¢,6550 25 25 • '1'nud ]7.41111.000.oo S4.373.(A1.6] SI 1.773.641.47 • Yield Statistics • ❑nna l'aar DMlnrs _ - 392076..7 Lol, IZ 443 Y.... :\lcnceC'onpon 1 ]_56155°;, • Sn lnn:cq Gxl SIC) 4150(000°:_6 • rrnelnlnc.:cnurrlci '1]2,ma6t6 40114 )I~'l0 for AlAllr'~ge l'urCo5c5 All Incl.. __4,74~_454R?6 _51\'V Cost Ie\~tl 4].2454!56 IRS Form 8078 • Rct Inlemv C, t _ '),]550045%R'dehle0 ,\cence .\14wnn12143 Years • • • • • • • • Rle I arar 00-1.,,/Je. SF 1 741 Cp 20 Yea1 I :112ID 61 3'=3 a11 • • First Southwest Company Public Finance Department Pap 1 • • Exhibit 36. Debt Service on Phase 4 • Denton Public Safety Training Center Business Plan Page 45 • • Other TOTAL Year Facility Facility Personnel Training ESTIMATED Maintenance Operating Expense Expense 0 & M 1 $496,484 $1,000,517 $461,577 $47,711 $2,006,289 2 $506,414 $1,020,528 $484,656 $50,097 $2,061,695 3 $516,543 $1,040,939 $508,889 $52,601 $2,118,972 4 $526,873 $1,061,751 $534,333 $55,231 $2,178,188 5 $537,411 $1,082,993 $561,050 $57,993 $2,239,447 6 $548,159 $1,104,653 $589,102 $60,893 $2,302,807 7 $559,122 $1,126,746 $618,557 $63,937 $2,368,362 g $570,305 $1,149,280 $649,485 $67,134 $2,436,204 g $581,711 $1,172,266 $681,960 $70,491 $2,506,428 10 $593,345 $1,195,711 $795,899 $74,015 $2,658,970 11 $605,212 $1,209,626 $835,694 $77,716 $2,728,248 12 $617,316 $1,244,018 $877,477 $81,602 $2,820,413 13 $629,662 $1,268,899 $921,353 $85,682 $2,905,596 14 $642,256 $1,294,276 $967,421 $89,966 $2,993,919 15 $655,101 $1,320,162 $1,015,790 $94,465 $3,085,518 16 $668,203 $1,346,565 $1,066,580 $99,188 $3,180,536 17 $681,567 $1,373,497 $1,127,474 $104,147 $3,286,685 18 $695,198 $1,400,966 $1,175,904 $109,355 $3,381,423 1g $709,102 $1,428,986 $1,234,700 $114,822 $3,487,610 20 $723,284 $1,457,566 $1,296,435 $120,563 $3,597,848 21 $737,750 $1,486,717 $1,361,257 $126,592 $3,712,316 22 $752,505 $1,516,451 $1,429,320 $132,921 $3,831,197 23 $767,555 $1,546,780 $1,500,786 $139,567 $3,954,688 24 $782,906 $1,544,716 $1,575,821 $146,545 $4,049,988 25 $798,564 $1,609,270 $1,654,616 $153,873 $4,216,327 Tota l 25-Yr 15,902,544 $32,046,885 $23,918,571 $2,277,108 $74,145,108 Costs Exhibit 37. Option #4 Operations and Maintenance Estimates Denton Public Safety Training Center Business Plan Page 46 Estimated Year Estimated Operations & Net Income Revenues Maintenance 1 $782,843 $2,006,289 ($1,223,448) 2 $861,127 $2,061,695 ($1,200,568) 3 $947,240 $2,118,972 ($1,171,931) 4 $1,041,964 $2,178,188 ($1,136,232) 5 $1,146,160 $2,239,447 ($1,093,286) 6 $1,260,776 $2,302,807 ($1,042,030) 7 $1,386,854 $2,368,362 ($981,509) $ $1,525,539 $2,436,204 ($910,665) g $1,678,093 $2,506,428 ($828,334) 10 $1,845,903 $2,658,970 ($813,067) 11 $2,030,493 $2,728,248 ($707,754) 12 $2,233,542 $2,820,413 ($586,872) 13 $2,456,897 $2,905,596 ($448,698) 14 $2,702,586 $2,993,919 ($291,332) 15 $2,972,845 $3,085,518 ($112,673) 16 $3,270,129 $3,180,536 ($89,594) 17 $3,597,142 $3,286,685 $318,023 18 $3,956,856 $3,381,423 $575,433 1g $4,352,542 $3,487,610 $864,932 20 $4,787,796 $3,597,848 $1,189,949 21 $5,266,576 $3,712,316 $1,554,261 22 $5,793,233 $3,831,197 $1,962,037 23 $6,372,557 $3,954,688 $2,417,870 24 $7,009,812 $4,049,988 $2,926,821 25 $7,710,794 $4,216,327 $3,494,471 Total 25-Yr $76,990,301 $74,145,108 $2,845,193 Costs Exhibit 38. Option #4 Net Income Pro Forma Denton Public Safety Training Center Business Plan Page 47 Existing Year Net Income Total Debt Cash Flow Budget Net Cash Service Savings Flow 1 ($1,223,448) $2,704,501 ($3,927,948) $157,688 ($3,770,261) 2 ($1,200,568) $2,702,640 ($3,903,208) $162,419 ($3,740,789) 3 ($1,171,931) $2,703,129 ($3,874,860) $167,291 ($3,707,569) 4 ($1,136,232) $2,705,906 ($3,842,138) $172,310 ($3,669,828) 5 ($1,093,286) $2,700,973 ($3,794,258) $177,479 ($3,616,779) 6 ($1,042,030) $2,703,209 ($3,745,239) $182,804 ($3,562,435) 7 ($981,509) $2,707,259 ($3,688,767) $188,288 ($3,500,480) g ($910,665) $2,703,123 ($3,613,788) $193,936 ($3,419,851) g ($828,334) $2,710,572 ($3,538,906) $199,754 ($3,339,152) 10 ($813,067) $2,694,728 ($3,507,795) $205,747 ($3,302,048) 11 ($707,754) $2,705,350 ($3,413,104) $211,919 ($3,201,184) 12 ($586,872) $2,706,846 ($3,293,718) $218,277 ($3,075,441) 13 ($448,698) $2,699,454 ($3,148,152) $224,825 ($2,923,327) 14 ($291,332) $2,698,054 ($2,989,385) $231,570 ($2,757,815) 15 ($112,673) $2,702,171 ($2,814,844) $238,517 ($2,576,327) 16 ($89,594) $2,706,460 ($2,616,866) $245,673 ($2,371,194) 17 $318,023 $2,710,683 ($2,392,670) $253,043 ($2,139,617) 18 $575,433 $2,704,829 ($2,129,396) $260,434 ($1,868,762) 1g $864,932 $2,703,780 ($1,838,848) $268,453 ($1,570,394) 20 $1,189,949 $2,702,200 ($1,512,251) $276,507 ($1,235,744) 21 $1,554,261 $0 $1,554,261 $284,802 $1,839,064 22 $1,962,037 $0 $1,962,037 $293,346 $2,255,383 23 $2,417,870 $0 $2,417,870 $302,147 $2,720,016 24 $2,926,821 $0 $2,926,821 $311,211 $3,238,032 25 $3,494,471 $0 $3,494,471 $320,547 $3,815,018 Total 25-Yr $2,845,193 $54,075,865 ($51,230,67Z) $5,749,188 ($45,481,483) Costs Exhibit 39. Option #4 Net Cash Flow Pro Forma Denton Public Safety Training Center Business Plan Page 48 OPfiION ~5 NO TRAINING FACILITY/EQUIVALENT TRAINING Scenario: One option for the City is to provide the same anticipated training for public safety members without building a training facility. This would require substantial increases in current training budgets to send members outside the City to other training facilities. This option was analyzed in regards to how much it would cost each department to receive the same equivalent level of training that would be provided by a City training facility. Capital Cost of Phase 1 NA Capital Cost of Phase 2 NA Capital Cost of Phase 3 NA Capital Cost of Phase 4 NA Option #5 Capital Investment $0 TOTAL OPTION #5 ESTIMATED CAPITAL COST $0 Annual 0 & M Cost -1St Year $807,799 Annual 0 & M Cost -Average of Years 1 to 5 $840,764 TOTAL 0 & M COST - 25 YEARS $26,958,638 Exhibit 40. Option #5 Estimated Costs Exhibit 41 summarizes the estimated training costs over a 25-year period if Fire Department and Police Department members received equal training at other training facilities. Over 25 years, the approximate cost of $18.3 million (an average of $730,650 per year) would be spent for equal Fire Department training at other training facilities as indicated in Exhibit 34. This training includes live fire training, Swiftwater rescue, structural collapse, hazardous materials, confined space rescue, trench rescue, high-angle rescue, vehicle extrication, fire officer I and II. The approximate cost of $8,681,298 million over 25 years (an average of $347,252 per year) would be spent for equal Police Department training at other training facilities. This training includes tactical rifle, tactical pistol, advanced tactical pistol, defensive tactics, advanced hostage rescue, counter ambush for patrol, accident investigation, advanced accident investigation, advanced drug interdiction, advanced accident reconstruction, TCLEOSE instructor, firearms and tactics training for SROs, advanced bike and shooting simulator. The combined equivalent training for public safety equals $26,947,514 over 25 years (average of $1,077,901 per year). These costs could be even higher based on paying overtime for officers to receive the training and maintain minimum staffing. Denton Public Safety Training Center Business Plan Page 49 FIRE Training Costs POLICE Training Total Public Safety Year W/0 Training Facility Costs W/0 Training Training Costs W/0 Facility Training Facility 1 $536,765 $271,034 $807,799 2 $547,500 $276,455 $823,955 3 $558,450 $281,983 $840,434 4 $569,619 $287,623 $857,242 5 $581,012 $293,375 $874,388 6 $609,888 $299,243 $909,131 7 $622,086 $305,228 $927,314 8 $634,528 $311,333 $945,861 9 $647,218 $317,559 $964,778 10 $660,163 $323,911 $984,073 11 $692,418 $330,389 $1,022,807 12 $706,266 $336,997 $1,043,263 13 $720,392 $343,737 $1,064,128 14 $734,800 $350,611 $1,085,411 15 $749,496 $357,624 $1,107,119 16 $784,118 $364,776 $1,148,894 17 $799,801 $372,072 $1,171,872 18 $815,797 $379,513 $1,195,310 19 $832,113 $387,102 $1,209,216 20 $848,755 $394,845 $1,243,600 21 $888,955 $402,742 $1,291,697 22 $906,734 $410,797 $1,317,531 23 $924,868 $419,013 $1,343,881 24 $943,366 $427,393 $1,370,759 25 $962,233 $435,941 $1,398,174 Tota l 25-Yr $18,277,340 $8,:.681,:.298 $26,958,638 Costs Exhibit 41. Option #5 "Equivalent" Training Costs Without a City Training Facility Denton Public Safety Training Center Business Plan Page 50 AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: City Manager's Office CM: George Campbell, City Manager SUBJECT Receive a report from the Council Nominating Committee regarding appointment recommendation to the Council Committees. BACKGROUND Mayor McNeill formed this committee at the meeting of June 4, 2007 and requested that it study the current make-up of the Council committees and make recommendations for council appointments to those committees. The Committee will be presenting its recommendations at this meeting. Respectfully submitted: Jennifer Walters City Secretary AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Planning and Development Department ACM: Howard Martin, 349-8232 SUBJECT - Z06-0026 (Hills of Denton) Hold a public hearing and consider an ordinance regarding the rezoning of approximately 2,120 acres from Neighborhood Residential 2 (NR-2), Neighborhood Residential 3 (NR- 3), Neighborhood Residential (NR-4), Neighborhood Residential 6 (NR-6), Neighborhood Residential Mixed Use 12 (NRMU-12), Neighborhood Residential Mixed Use (NRMU), Commercial Mixed Use General (CM-G), Planned Development (PD-120) and Rural Residential (RD-5) zoning districts to the Hills of Denton Master Plan Community (Hills of Denton MPC) zoning district. The property is generally located north of Loop 288, west of Locust Street (F.M. 2164), south of Milam Road and east of Bonnie Brae Street. The Planning and Zoning Commission recommends approval of this rezoning request (7-0) subject to three conditions. BACKGROUND Applicant: Tomlin Investments Addison, TX On April 3, 2007, the City voluntarily annexed approximately 1,199 acres into the City of Denton. The recently annexed property is part of the 2,120 acres the applicant is requesting to rezone into a Hills of Denton MPC zoning district. The Hills of Denton MPC is being designed as a traditional mixed-use development. The development will consist of approximately 1,427 acres of Single Family development, approximately 146 acres of Town home development, approximately 110 acres of Multi-Family development, approximately 183 acres of Commercial, approximately 93 acres of Office/Commercial development, approximately 57 acres of Town Center Commercial development, and approximately 104 acres of Town Center Residential development. The Master Planned Community also includes amenities such as Corridors, Trails, Project Entry, Ponds, an Amenity Center, Community Centers and Hike and Bike Trails. On May 9, 2007, The Planning and Zoning Commission recommended approval of this rezoning request (7-0) subject to the following three conditions: 1. That a legal review is completed and a development plan map is included; and 2. That a phasing plan is included; and 3. That a developer's agreement for water and sewer improvements is approved. The applicant has complied with the conditions of approval by the Planning & Zoning Commission. A development plan map has been prepared and is included as an exhibit, a phasing plan is included, and On May 30, 2007, the Public Utilities Board recommended approval of a Developer's Agreement regarding water and wastewater. The agreement was considered and approved by City Council on June 5, 2007. The following are development thresholds that apply to only the Hills of Denton development: Maximum Number of Single-Family 5,708 Detached Units Maximum Number of Single-Family 1,756 Attached Town-home Units Average Single-Family Density 4.74 units per acre includes Town-homes Maximum number ofMulti-family 2,204 Units Avera e Multi-famil Densi 20 units er acre Maximum number of Units in Town 4,152 Center Total Number of Units 13,820 Single-family to Multi-family Ratio 54% SF to 46% MF includin Town Center Single-family to Multi-family Ratio 77.2% SF to 22.8% MF excludin Town Center A minimum of 2,000 single-family houses shall be constructed (permitted) riot to an multi-famil units bein constructed. Based on average maximum density allowed and excludes Town Center. Maximum number of Multi-family units (excluding the Town Center) shall not exceed 2,204 units. '~*Based on Zoning (30 units per acre in Town Center Residential and 18 units er acre in Town Center Commercial . Staff has been managing all of the development aspects of the Hills of Denton MPC and it is worth noting certain items that will have an impact on the overall development of the site. These include: ❑ The Hills of Denton MPC proposes asingle-family density of 4.0 and a multi- family density of 20.0. The Denton Plan directs a citywide single-family density to be 3.0 units per gross acre, and amulti-family density to be 14.0. ❑ According to the Master Plan Community ordinance, the Development Plan Map should provide the approximate locations for parks, open areas, trails, schools sites, fire stations and police stations. These services are proposed, but the locations of these services have not currently been identified. ❑ The MPC ordinance allows the development standards and subdivision regulations of Subchapter 16 to be amended, not procedures established in the Code. The applicant is proposing to amend the expiration time for Preliminary Plats from 24 to 60 months, and to allow an unlimited number of extensions (expanded from 6 months to 24 months). PRIOR ACTION/REVIEW (Council, Boards, Commissions) April 3, 2007 City Council held the second and final reading of the Ordinance to voluntarily annex approximately 1,199 acres of land, which is part of the Hills of Denton Master Planned Community Development. April 1 1, 2007 Planning and Zoning Commission Work Session April 18, 2007 Planning and Zoning Commission Work Session May 9, 2007 Planning and Zoning Commission Public Hearing May 30, 2007 Public Utilities Board Meeting June 19, 2007 City Council Public Hearing EXHIBITS 1. Proposed Development Plan Map 2. Proposed Phasing Plan 3. Conceptual Single-Family Density Distribution Respectfully submitted: 5 I {.t~~ V ~I r~ .K Brian Lockley, AICP, Interim Director of Planning and Development Prepared by: IIIIIIIIIIIIIIIIIIII IIIIIIIIII II Illlllllllllllllllllllllllllli~lllllllllllllllllllllll IIIIIIIIIIIIIII~~~ ! I! ~II~ IIIIIIIIII IIIIIIIIIIIIIIII, rRUnu~~ 'llllllll ~~~~~~~~~~~~~~~I ~~~~~~~~~~~~~~~~i. ~ ~ ~i~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Ron Mengutia Planner III r"' I v , ~I ~ ~ l " ' { I y f ~ 1 ti } - 1 ~ l L - V r - Y~ _ -l + t ;f ~ ~ Y t ~k xi .y N i t~ 1 { «u i . w'. r w. f - ~ . y ~ ~ .+~~I r ; ~ xi ~V Y Jb I S i S - w .r . .rr...... ,r. - ra r 'F i ti x x' E .p y.r.. . 7 .y 1 _ i sib i 1i~ f a 1 .s i y~ '1 M r 1. r.:M  ii i i. I ~ ~ , i - - - _ ~ j~ _ ~i . ~ ~ ~ _ ' ~ r - L. s- h ~ i . ~ r~ i i - _ . ~ I ' - - r I ~ i i' r' Y' A r 111 ■ r ' A I I +I - - - _~n _ I ~ 1 'r ~ . I { . I - i r _ Y-i I 4 l~ ly JL. 4 ~ 'r r 45 r 1 ~a I i i _ 11~E! } ~i i i ' "  W 1-1 ~ ~ - s, it r- ~ ~ ~ ~ f _ ..r _ - II i~ ~ ~y - ~ - L ~ 4 { Y. ~ +/!S ~Z 1~ + . 1 ~ , I ~ . I~ l.. r,. 1. ?4 ~ r 1 . .x _Y. V 7 ' ~..x ~ j ,:a .'I r 7 •`"P it yy _ _ ~ M1 i I {~~I . x - _ '~I  ~l. AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: City Manager's Office CM: George Campbell, City Manager SUBJECT Receive a report, hold a discussion and give staff direction regarding nominations to the city's boards and commissions. BACKGROUND The list of nominations for boards and commissions will be distributed for consideration at the July 17th meeting and Council will vote on those nominations at the July 24th meeting. As noted on the agenda, Council may adjourn into Closed Session to discuss the appointment and duties of public officers to boards or commission exercising discretionary or rule making power which includes without limitation the Construction Advisory and Appeals Board, Economic Development Partnership Board, Historic Landmark Commission, Planning and Zoning Commission, Traffic Safety Commission and the Zoning Board of Adjustment. If you require any further information, please let me know. Respectfully submitted: Jennifer Walters City Secretary AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Alex Pettit 349-8595 ACM: Jon Fortune SUBJECT An Ordinance accepting competitive bids by way of an Interlocal Agreement with Tarrant County and awarding a contract for the purchase of cellular phone services; providing for the expenditure of funds therefor; and providing an effective date (File 3816-Interlocal Agreement with Tarrant County for the purchase of cellular phone services, contract awarded to Progressive Concepts, Inc. in the estimated amount of $235,000). BACKGROUND An Interlocal Agreement for Cooperative Purchasing was approved by Council on June 16, 1998 with Tarrant County allowing the City of Denton to participate in Tarrant County contracts for the supply of goods and services. Tarrant County Commissioners Court awarded a contract for cellular telephone service in April 2007 to Progressive Concepts, Inc. The contract terms are in effect through April 2010. Three qualified service providers responded to their request. Bids were evaluated by their Technology Services Division and Purchasing Division and awarded to Progressive Concepts, Inc. The City of Garland, City of Carrollton, City of Fort Worth, DFW Airport and Denton County are some of the approximately 125 entities currently participating in this Agreement. Progressive Concepts, Inc. is our current cell phone provider. This new contract will have no effect on the phone numbers assigned to city of Denton phones. Currently, we have approximately 3 3 0 phones and cellular service is a maj or contributor to our communication efforts. PRIOR ACTION/VIEW (COUNCIL, BOARDS, COMMISIONS) • City Council approved an Interlocal Agreement with Tarrant County on June 16,1998. • Tarrant County Commissioners Court approved a contract with Progressive Concepts, Inc. for cellular service on April 17, 2007. RECOMMENDATION We recommend the City of Denton be authorized to participate in this Interlocal Agreement for cellular phone service with Progressive Concepts, Inc. Agenda Information Sheet July 17, 2007 Page 2 PRINCIPAL PLACE OF BUSINESS Progressive Concepts, Inc. Fort Worth, TX ESTIMATED SCHEDULE OF PROJECT New rates will be effective August 1, 2007. FISCAL INFORMATION The division to which each phone is assigned pays the cost of each cellular phone. Based upon current rates and usage a savings of approximately 15% is anticipated. The new rates are shown in Exhibit A of the attached ordinance. Respectfully submitted: . _ ~ Tom Shaw, C.P.M., 349-7100 Purchasing Agent 1-AIS-File 3816 ORDINANCE N0. AN ORDINANCE ACCEPTING COMPETITIVE BIDS BY WAY OF AN INTERLOCAL AGREEMENT WITH TARRANT COUNTY AND AWARDING A CONTRACT FOR THE PURCHASE OF CELLULAR PHONE SERVICES; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR: AND PROVIDING AN EFFECTIVE DATE (FILE 3816-INTERLOCAL AGREEMENT WITH TARRANT COUNTY FOR THE PURCHASE OF CELLULAR PHONE SERVICES, CONTRACT AWARDED TO PROGRESSIVE CONCEPTS, INC. IN THE ANNUAL ESTIMATED AMOUNT OF $235,000). WHEREAS, pursuant to Ordinance 2001-001, Tarrant County, Texas has solicited, received and tabulated competitive bids for the purchase of necessary materials, equipment, supplies or services in accordance with the procedure of state law on behalf of the City of Denton; and WHEREAS, the City Manager or a designated employee has reviewed and recommended that the herein described materials, equipment, supplies or services can be purchased by the City through the Tarrant County Cooperative Purchasing programs at less cost than the City would expend if bidding these items individually; and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be used for the purchase of the materials, equipment, supplies or services approved and accepted herein; NOW THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The numbered items in the following numbered purchase order for materials, equipment, supplies, or services, shown in the "Purchase Orders" listed hereon, and on file in the office of the Purchasing Agent are hereby accepted and approved as being the lowest responsible bids for such items: FILE NUMBER VENDOR AMOUNT 3816 Progressive Concepts, Inc. See Exhibit A SECTION 2. By the acceptance and approval of the above numbered items set forth in the attached purchase orders, the City accepts the offer of the persons submitting the bids to Tarrant County for such items and agrees to purchase the materials, equipment, supplies or services in accordance with the terms, conditions, specifications, standards, quantities and for the specified sums contained in the bid documents and related documents filed with Tarrant County (Bid 2001-001), and the purchase orders issued by the City. SECTION 3. Should the City and persons submitting approved and accepted items set forth in the attached purchase orders wish to enter into a formal written agreement as a result of the City's ratification of bids awarded by the Tarrant County, the City Manager or his designated representative is hereby authorized to execute the written contract which shall be attached hereto; provided that the written contract is in accordance with the terms, conditions, specifications and standards contained in the Proposal submitted to the Tarrant County, quantities and specified sums contained in the city's purchase orders, and related documents herein approved and accepted. SECTION 4. By the acceptance and approval of the above numbered items set forth in the attached purchase orders, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approval purchase orders or pursuant to a written contract made pursuant thereto as authorized herein. SECTION 5. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this day of , 2007. PERRY R. McNEILL, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY r r• ' VP~ 5 , BY: 3-ORD-File 3816 fry....,. ..t~ ~ Exhibit A Pxicing nmm~►ry: Havre ~ectrnnic~, A Division o~P~agressive ancepts Rate Plan #l ~ Manthl~ dourly Plan - Local Low Usage Fixed Rate per month Per Minute-Peak $.Z? peg minute Per Minute~~f~f' Peak x,02 peg minute Long Distance per minute Rpamin~ .6~ peg tnin~ute Rate Plan I~ lot Rate -Local Flat Rate $6~.~~ per month Long Distance (?0~ minutes inc~uded~ per rrzin.ute Roaming .~9 per minute Rate. Plan,#~ - Montl~Iy vMrith Limited. N~nutes,-, Natianal_Plan Montl~iy Rate (includes ?SQ peak l 5~aa off peal{ minutes} ?4,59 per nlanth Per Minute after included minutes $,4~ per minute Rate Plan #4 Monthly with Limited Minutes -National Plan Monthly Rate {iz~elude~ 4~~ peak ~ oft"peak minutes} $3~.7 per n~anth Per Minute after included minutes x.45 per minute Rate Plan #5 I~IonthlY nth l~in~ited Minutes ~ National Plan Monthly Rate includes 9~a peak l Unlimited oi'f peak minutes} I9 per month per Minute after included minutes Per minute Rate Plan Mor~thl~ with- Li~ited Minutes --National Plan M~nth~y Date ~incl~~des 135a peak! Unlimited o'peak rninutes~ ~5~59 per n~anth Per Minute after inciuded minutes .35 per mim~te = Na charge ~`ar bass photae with new activation - l*IawkElectronics agrees to all bid requirements including the followi~zg. Billing on Single point of contact far ali services Non-billable numbers and Internet account itl~ the ~~urts approval of tlus oontract, hawk l~lcetronics also v~ill provide telephones for Tarrant County empioyees to use each year during each authorised election period from two weeks piiar to an election through one week fallowing an election with donated air tune. This service will also he provided in the event of an emergency. AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Frank Payne 349-8946. ACM: Jon Fortune SUBJECT Consider adoption of an Ordinance authorizing the City Manager to execute a Professional Services Agreement with the firm of Freese and Nichols, Inc. to provide engineering services for the design of the North-South Water Line Phase One Project; authorizing the expenditure of funds therefor; and providing an effective date (File 3826 in the amount of $377,600). (The Public Utility Board approved this item by a vote of 5-0). FILE INFORMATION The North-South Water Lines project will eventually extend water from North Loop 288 all the way south to Roselawn Drive. Phase 1 of this project (covered by the attached professional services agreement) will extend up to a 36-inch line from the 36-inch water line at north Loop 288 south and west primarily along Riney Road, Windsor Street and Bonnie Brae Street to the existing storage tank facility in McKenna Park. Phase 2 of this project (to be designed at a later date) will extend up to a 42-in line south from McKenna Park along Bonnie Brae Street to Roselawn Drive. Refer to Attachment 1 for the location of the phases of this project. This North-South Water Lines will provide connection from the major water line along North Loop 288 to the planned Roselawn Water Line and Elevated Storage Tank once sited and constructed. The first phase of this project is slated for construction in the CIP in FY2008 and is important as the first step in the extension of adequate water service to the southwest portion of the City in response to projected growth in the area. The more immediate need for this project is the water demand fostered by the Rayzor Ranch development. The proposed engineering fee of $377,600.00 for the professional services on this project includes amounts for detailed design, survey, geotechnical investigation, cathodic protection system recommendations, temporary construction easements preparation, bid phase assistance and limited construction services support. Fee components calculated in support of this fee included $277,900.00 for basic services and $99,700.00 for special services (survey, geotechnical, cathodic protection, easements and modeling). Agenda Information Sheet July 17, 2007 Page 2 FILE INFORMATION (CONTINUED) The preliminary opinion of probable construction cost for Phase 1 of the project is approximately $6,860,000. Basic services represent approximately 4.05% of the projected construction cost. The total contract amount represents approximately 5.50% of the projected construction cost. Staff referenced two sources for comparison of fees based on a percentage of construction: The American Society of Civil Engineers (ASCE) Manual No. 45 and Consulting Engineers Council of Texas (CEC-T) curves of median compensation. From ASCE Manual No. 45, the design fee is projected at approximately 5.5% of the preliminary opinion of probable construction cost. From CEC-T curve of median compensation "B", the design fee is projected at approximately 5.2% of the preliminary opinion of probable construction cost. PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utilities Board approved this item on June 25, 2007. RECOMMENDATION Award to Freese and Nichols, Inc. in the amount of $377,600. PRINCIPAL PLACE OF BUSINESS Freese and Nichols, Inc. Fort Worth, TX ESTIMATED SCHEDULE OF PROJECT Design services are scheduled for completion within 150 calendar days after the vendor receives the Notice to Proceed. FISCAL INFORMATION This item will be funded from Capital Improvements project account 630160513.1360.21100. Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Map of Project Location Attachment 1 II, _ `RASE 1 q ~ b ~ ~ ~ C~ i~ I ~ 1 i A ~ ~s~ T t J~END PHASE 1 ~ x,-~ , - ~ ice, 1...~. I I~ ~ 1J r~~~~; ~ ~ BEGIN PHASE 2~=~~ 0 ~ ~ ~ ~ F I~ ~ ~ ~ rJJJL if ~ ~v Art ~ ~ PHASE 2 ~ r ~c f~ } _ EXHIBIT 1 ~ L ~r ~ ~ ~ w E; r ~ GPI' LOCATION MAP ~ \ ~ ~ -i~' North South Water Mains ~ ~ ~ , ~r ~r F' s' ORDINANCE N0. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH THE FIRM OF FREESE AND NICHOLS, INC. TO PROVIDE ENGINEERING SERVICES FOR THE DESIGN OF THE NORTH-SOUTH WATER LINE PHASE ONE PROJECT; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (FILE 3826 IN THE AMOUNT OF $377,600). WHEREAS, The professional services provider (the "Provider) mentioned in this ordinance is being selected as the most highly qualified on the basis of its demonstrated competence and qualifications to perform the proposed professional services; and WHEREAS, The fees under the proposed contract are fair and reasonable and are consistent with and not higher than the recommended practices and fees published by the professional associations applicable to the Provider's profession and such fees do not exceed the maximum provided by law; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager is hereby authorized to enter into a professional service contract with Freese and Nichols, Inc., to provide professional engineering services for the design of the North-South Water Line Project, a copy of which is attached hereto and incorporated by re erence erein. SECTION 2. The City Manager is authorized to expend funds as required by the attached contract. SECTION 3. The findings contained in the preamble of this ordinance are incorporated herein by reference. SECTION 4. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2007. PERRY R. McNEILL, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY r r= 5 BY: 3-ORD-File 3826 PRI~~'~IO~A~, ~R'~I~S AIi~EEIVI~NT F~~ AI~H~T~T ~R NINE~R THIS ARFEMENT is made and entexed into as of the da of by and between the fit of Denton T ~ ' exas, a Texas rnunicipa7 corporation, v~ith its principal office at ~ 15 Fast McKinney Street, Denton, Denton fount ,Texas 7~~01 herein and Freese and Nichol ~ ~ after called ~Wner s, Inc,, With its corporate office at 455 International Plaza, quite ~4D, Fart Worth Texas 7'~ 1 ~9 hereinafter called "Design Professional," actin herein b and throe h ~ ~ ~ their duly authorized representatives, In consideration of the covenants and agreements herein contained, the artier hereto p do mutually agree as follows: ~TYI~N 1 ~I~iPL~~YMNT `~F FEIN P~~~'EI~I~A~~ The pity of Dentan North-South Water Mains Project the project Wr1l Include the r J ~ p eparatlon of construction documents for the follaWrng facilities; • Phase I of the Forth-South Water Main Route Study ~ Approximatel 15 linear feet of 3~-rnch Water line from ~ ~~F} oop ZS~ at the old TI plant south to Bonnie BraelWindsor intersection, South on Bonnie Brae to the north right-a~ Way line of Scri tune street endi ~ n at a tYe-ln locatlon to the Water dl~tr~butxon facYl~tres at Mcl~enna Park" ' The Project Wi11 include design and preparation of construction documents far the ~ ater lrr~e alignments lrste~ above with assistance from the City of Dentan" A bid. acka e Will be re aced for p g p p the construction of this Phase described above. ~f a portion of the project 1s s lit into a se orate const " P p ruction pra~ect, then additional cornpensatian Will be allowed at the fee specified. E'~rQN ~ ~ENATZ~N The ~Wner shall compensate the Design Professional as follows; ~.1 ~AI~ ER~I~E ~.l.l For Basic Services and rebated Expenses for Article I, Tasks A-C, the total corn ens p atxon shall be a 1u~np sum amount of $~7~,9~~. Progress payments for Basic Services shall be paid rr~onthly as a percenta e of the total com e~i ` g p cation far the Banc Services satisfactorily completed at the end of the Pi'o`ect. J Page 1 R~~~~~d ~-~o-~~ ~E~IAL ER~I~E ~.~.1 For special services of Article ~~A, Lump hum amount of ~.Z.2 Gornpensation for easements for Special Services of Article II-B ~vi1X be $49~ per each easement prepared., Ten easements axe anticipated far this project, totaling $4,90. Additional easements ~vi11 be prepared at the same rate, only pith v~ritten permission from the G'U~NER For Special services of Article II--F, the total compensation sha11 be a host Pius arnaunt Tot to Exceed $42~,OO. A~]~]ITIDNAE ER~I~E Z.,1 compensation for Additional Services gill be based an the attached schedule of char es. g x.3,2 Compensation for Additional services of the consultant ~I}, sha1X be based on .a m ' ultiple of times the amounts b111ed to the Design Profeslanal for such additional servlces~ ETIN ENTIRE AREEII~ENT This Agreement includes this executed agreement and the follo~vin documents all of which ar hereto and made a art hereof b r g e attached p ~ eference as if fully set forth herein; 1. City of Denton General Conditions to Agreement for Architectural or En 'neerin Services ~ ~ Exhibit A Scope of Services}through l , THY PEACE INTENTI~NAL~Y DEFT BLAND Page 2 ~~~~~~a This Agreement rs signed ~y the parties hereto effective as of the date first above ~r~~ten, CITY' QF DENTIN BY: CE~RCE CAMPBELL CITY A~VACrER ATTEST, JE~NI~`E~ ALTER, CITY EC~ETARY B~': APPR~~EI AS T~ LECAL FOR~VI: ED SNY R CIT ATT B~: Freese aid ~icho~s, In.c, 1 T ~~VIA MATE, P,E Pr~ncipa~ 7TN~ S ; PY: Page 3 R~vis~d 5-3~~02 ~H1B SCOPE ERVI~ AND ~EPONIB~LITIE p~ ~wN~R NDRTH~SO~]TH wATE II~AIN ~'D~ THE CITY ~F DENTIN IVla~ch 1~, X007 GENERAL: The ~it~ of Denton NorthiSouth water Mains Pra'ect . J {the Pro~ect~ well include the preparation of construction documents for the foilowin facilities: • Phase I of the North-South Water Transmission Line - Be innrn a _ t the e~1Sting lnch ater Line stub out at Loop 2~S and Nicosia Road, south to ~i hwa 77 hi hwa and turnip ~ , crassxn the ~ to the west across the parr north property line and then south slop the par's west propert line to windsar Drive Y ,west to Bennie Brae, south along Bonnze Brae and across US DSO to the north right-of war line of Scri tore Street at NIc~ ten th of ~ enna Park for g Appro~lmatel~ ~ ~,~~0 linear feet ~I~~'} of ~ ~-inch water Tine, phase IY w' ill be performed under a separate contract. The Project wlil also include desln and pre arat~an of construction d ; ali ~ A ocu~nents far the water line nments listed above with a.ss~stance from the pity of Denton. The water ern shave shall he cons e portzans listed trusted as one construction cantract. ~f a portion of the ro'ect is s lit Into a separate Cantructlorl ro'ect the ' , p ~ p p ~ n additional compensation will be allowed at the fee s ecified. p AI~TI~LE I BAS ER'~IE; FNI sha11 reader the followin rofessional servi ' develo g p ce ~n connection with the pn~erit of the Project: A. DESIGN PI~A~: PNI shall provide professions services in this h p ase as fo~~ows. ~ . conduct a pra~ect icl~-off meeting with the ~wNEI~ and OwNER's er p cannel along with ~N~ project team 1ner~ber~. At the icl~-off rneetin , FNS and the ~ g NCR wi11 establish communication procedures and paint of contact Burin the course of ' g the pra~ect. A project site visit will also occur at this time to review the ali n~nent heirs ' g designed for with this project. ornplete Technical Design of the water Transmission Pi cline ENS will p ~ prepare and submit to the gwNER far review and use: a. Technical Design Drawings i~ hover ,sheet 1 general Notes heets~ 11, Site Plan l Project overview ~2 Sheets} iii. Pipe~~ne Plan and Profile Drawings ~D heets~ iv, Pipeline gannectzon to I]lstrlhution ystein Details for Testin g and Disinfection Sheets} ~b. onstructzon Details z. water line embedment ~ 1 Sheet} i;. Appurtenances ~i,e,. AEI, Blow-off Valves, Valves, burin and casii~ et g g, c} ~2 Sheets} 111, Thrust Blocking ~ ~ ~heet~ R:l~ont~act120Q71~ontrac~120~71DentonlNo~h South Water Ma~n~.~oc Exhibit A~ ~ iv, erosion Control Details { 1 Sheet} c. Technical Specifications d, Construction Contract Documents e. opinion of probable construction cost to be submitted to the Cit at the ~ ~ ~Io, 900, and la0°1a compete bevel, f. Bidder's proposal fauns {project quantities of the im roven~ents to be c p onstructed. . FNS will subrriit Construction Drawings plan and raffle to the Cit p ~ ~ at the a% review for discussion oi~ the alignment and Specifications and Drawin ~ in whol the ~wNER f ~ e to or review at 0 and 9~°~o completion. FNI will submit to the ~~VI~ER ~ full sire sets of construction plans and 2 sets of bound coast rut~an. docurrients for review t each submittal. Comments from the ~w1VER at the a~~ review will be used to tape the plans to 0~~ completion. Cam~,ents from the ~wN~R at the ~0% review will be used to take the fans to Final cony le i ~ p t an and advertisement. h. The Design Phase shall and ertain to Phase 1 . y p listed ~n the reneral Scope Description. The design pardon will Include a roximatel l aaa linear fe . Pp y ~ et of inch water line. It is assumed that Phase ~ will be bid as one ra'ect and will b p ~ e ane set of construction drawings and specifications. Shauld it be re uired for this P to ~ ~ hase be broken rota separate bid packages, then additional coin enstion will p be required as covered in the Coinpensatzan section of thzs a reerrient. If the ro`ect i broken i F p ~ s nta two bid packages, rt is assumed that the bidding of Phases ~v~ll be consecutive and not concurrent, r. Article ~ of this agreerr~ent entitled "owner's Res ansibilities" ravides , ~ p p mare detailed Irstings of the tasks designated for the OwN~R'S ersonnel. p FNY will attempt to identify the owners of utilities which are located ' . ~n the pro~rity of the proposed i~nprovernents based on field observation and record drawin s r ' p avied by the City. FNS will contact the State one Call service D~CxTESS for unlit 1 ' . ~ ~ y ocat~n assistance. Based an the results of this investigation by FNI, FNS will make further recommendations ~ to whether more e~tenslve an-site locat~an of the fac~l~t~es 1 s required {i,e. potholing}, Furnish such information necessar to unlit com ani f' y Y p s whose ac~lrties maybe affected ar services rriay be required for the Pro `ect. 4, Attend up to sip {6} n~ee~ings with the ~wI~R ar ~wNBR' ersannel to ' p caord1nate design work and review the prod ect. ~ will contact the Teas ~istarical Cofnrnission to ravide them m.a s e~hibi . p p , ts, and written rnformat~an about the project to determine if an additional archaeolo i . gcal tnvestlgation is necessary far any part of the water line route. ~f the THC determines that an archaeological investigation is necessary, that work will be erfored as an additi p oval service to this contract} see Article r~I, paragraph A, The sca e and fee will be ne atiated p g separately from the basic services to be performed with this contract. Furnish ~wNER the engineering data necessar fora lications for routin ' . Y pp e perrrrits required by T~DDT. Preparation of applications and su actin documents pp far government grants ar for planning advances is an Additional Service, R:IContract1~0071Contract120~71DentonlNarth oath Vl~ater Mains.doc Exhibit A-2 BID P~AF, Upon completion of the deli n services and " ~ r~ approval of Final drawings and specifications by ~VI~NFIR, FNI will proceed with the erforrnance of s ' follows: ~ erv~ces in this phase as 1. Provide the ~V4~NF~ with t~va fuli size 22" x 34" and . ~ } four ~4~ half size sets { ~ 1 ~ l 7 } of construction dra~ngs and contract documents . and. d~strlbute there to prospective bidders through FNI's offices. FNS will ost the native of ' ~`N~'s ~vebsi ~ construction an te. FNI will send plans and specifications to two Ian rooms sendin and s eG1f1G~tZ ' ' ~ g.plans ~ ons to additional plan rooms wild be an additional. service. It ~s the responsibility of the to notify the news a er of the ro'ect a . p p p ~ dvertisement and prospective btd opening date, if so desired by the OWNER, Assist ~W11TE in securing bids. issue a Notice to Bidders to ros ' p pect~ve contractors and vendors listed in pity of Dentan's and FNY's database of ros eGtiv ' s ~ • p p e bidders, and to e ected plan rooms, Pravlde a copy of the Native to Bidders for O~VN ' ER to use 1n notifying construction news publications and ublishin a ro riot p pp p e legal nOt~Ge. The cost for publications shall be paid by OWNER, 3. assist Owner by responding to questions and irate retie hid do cun~ents. Prepare. addenda to the bid documents for FNI to distribute to all rOS ec i ' p p ~ ve bidders that have piGl~ed up plans a.nd specifications far biddin . g ONSTRUOTION PHAB: Upon GOn~ Ietion of the hid h . p p ace services, FNI will proceed with the performance of construction phase services as described belo~r ' FNS ~v1II endeavor to protect ~N~R in providing these services; however, it is understood that FNI does not guarantee the Oontractar's performance, nor is FNI res ans~ble far su erv' . antractor's a r p p is~on of the pe anon and employees, FNS shall not be responsible for the rrreans ~netha ds, techniques, sequences or procedures of construction selected b th y e Contractor, ar any safety precautions and proran~s reiating to any wa to the condition of the r ' y p emises, the pork of the antractor or any Subcontractor. FNS shah not be res onsible for . . p the acts or an~issions of any person except its o~vn erriplayees or agents at the Pro'ect site or otheris ' ~ e perforrr~ing any of the orl~ of the Pro~ecti These services are based on the use of Cat of Denton front daGU ' y menu for construction pra~ects. The OWNER agrees that FNI will include rovlsions in the c ' p anstructlan contract documents that will requlxe the construction contractor to Include FNI ' and their subconsultants an this pra~ect to be fisted as an additional insured an contractor's incur • . once policies. 1. ,Attend apre-construction conference, The ~NER wi~i conduct ' the m.eet~n and prepare minutes. FNI will provide the Contractor and OWNED three full siz " e x~4 }sets of plans and conformed specifications each, totalin ions and s ecif' g p p ications. The conformed. sets of boobs will include a half sire set of ions ~ 1 17" . A ~ ~ a. Establish communication procedures with the OWNER and GD ntractor. AlI Gounicatians between FNS and the Contractor wild be throe h the ONFR. Reviev~ contractor's subrr~lttals, inGludin , re uests for information . g q and shop drawings in accordance with the requirements of the construction contract documents ' for the projects. a. FNI w~II be responsible for verifying that aI~ re ulred submittals have ' q been received from the Contractor. FNS will notify the O~VNFR in writin of th e outstanding R:1Cantract12007'IContract12~~71~en~onlNorth ~€~th Water Ma~ns.dac Exhibit A~~ required subn~ttals. It is the responsibility of the ~w1V~R to notif t y he Contractor of the outstanding submittals. b. ~NI will not be responsible for the Io in or distribution f o contractor submittals, which are the responslb1l~ty of the ~wNER. c, FNI will not review pay estimates, which are the res onsibilit of p y the ~wNER, 3. F`I~I will serve in the capacity of General Re resentation d . P uring construction. In this capacity, FN~I will; IVIa1~e four ~4} visits to the site has ditin wished from the continu ' . ous serv1ces of Resident Project Representative} to observe the ro ress and the ' p quality of word and to attempt to determine in general if the word is praceedin in accordance with C~nstructl0n the Contract Documents. In this effort, F~1I will endeavor to rouec ~wNLR a . ~ p t the gainst defects and defic~enc~e ~n the wor1~ of Contractors and will re o P~ any observed deficiencies to ~wl~~R. Visits to the site in excess of th , . e spec~f~ed number are an additional service. Provide general recommendations to the ~wNER far the work of testing laboratories and inspection bureaus re aired far the testin . ~ or ~nspect~on of n~ater~als, witnessed tests, factory testing, etc. far ualit control of the ~ ' . ~ y rod ect, The cost of such qua~lty control shall be paid b ~w~ER and is not i ' y ncluded in the services to be performed by P`NI. c. Interpret the dxawins and specifications far wN~R an d Contractors}. Investigations, analyses, study or design far substitutions of e ui m ' q p ent or rnter~als, corrections of defective or deficient work of the contractor or other deviation from the construction contract documents requested b the contractor and y approved by the owner axe an additional ,service. Substitutions of materials or e ui ' 9 pent ar design modifications requested by the ~wI~R axe an additional service. d. Prepare Record Drawings of the cam leted ro'ect after the fin ~ ~ ~ ~vall~ through. The w~R will coardinate with the C~NTRACTR to roduce a ' p set of plans with n~axkings that represent haw the pipeline was installed that bath artie p s agree an. fihe DwNER will provide the plans to FNI to roduce record drawl ' P ns. PNI will delrver to the w~ER two sets of full sire ~2~."x~" drawin s ~ , one on bonded paper and one an rnylar film, and electronic file of drawin s in ~4CAD ~D~~ form g at. 4. Conduct, in company with ~I~ER's re resentative Qne final r ' p ~ ev~ew of the Pray ect for conformance with the design concept of the Pro`ect and eneral c . . ~ g ornpl~ance with the Construction Contract Docurr~ents. Visitin the site to review ca ' g mpleted worl~ ~n excess of one trip is an additional service. ARTICLE II ~E~AL EI~VIE: A, T~P~R~PH~C ~RVE'Y: ~NI will retain and monitor the of farts of a surveying firm ~Brittain and Crawford} to provide the fallowin curve in services: g yg • Provide survey control along the pipeline route in a coardinate s stem Y approved by the owner, and compatible with other pipeline ra'ects, p~ ~ Provide topographic survey for a lOq-foot width clan the r cline raw g p p tes far up to 15,~~~ linear feet. Topographic survey will not include individual tree sure eys, R:IContract1~0~71Contract12~071~eritonlNorth South water Mains.doc exhibit A-4 • Provide survey ties to ~na~or utility lines, as located b the utilit owners ~ y BASEMENT: ENI will retain and m.onitar the efforts of a sure ' eying firm ~rlttaln and rawford~ to provide the fallowing services: • Provide deed research far the preparation of easement documents. This task doe . . ~ snot include title research} • prepare metes and hounds easement descriptions for cacti rivate tract. A se ~ paste description will be prepared far bath permanent and tens arar easements. P'or bud p Y geting purposes, a maxi~nurn of five tracts are estimated ~ I a Easement Documents , Pa ~ yrnent for parcel descr~pt~ons shall be on ~ per parcel basis. If mare than five ar p cels are required ~ 1 a Easement Documents}, then additional pa n~ent will be re aired for not onl ~ ~ q ' y the cast far easement preparation on a per each bans but also for the cost of additional field work. • Each Temporary and Permanent Easement will be rovided at cast of p per each easement document prepared, Not To Exceed $9,900 for 2~D easements. . E~TEHNIAL ENC~IlIIEERINC: ENl will ravide eatechnical en in _ F eer~ng and a sub consultant dr~111ng and laboratory-testing firm to provide the follawin services: • Review geologic n~a sand the i eline route tai ' ~ p p dentlfy testing locations • Drill up to eight ~S}borings up to ~0 feet deep, Por bud etin u aces a maxim . ~ p rp um of eight ~8~ barrngs are assumed. Scope and fee ma b ad'usted to account for ' ' . ~ dd~t~onal borings, s necessary. Lag the borings, and obtain soil sang les far soil classi~'i " and th ~ P catron e corrosion analysis testing. Provide rock cares and RED of rock, where applicable. • Provide laboratory testing, including Atterberg 1in~its, unconfined siren th of rock sam les sieve anal g p ysis, and water content, • Provide conclusions of testing and geotchnical anal+y■/yfTsis in a re art` far use of th , ~ 4 y ~ T e pipeline designers and prospective bidders. D. EN~IR~NMENT~L PERMITT~: FNS will ravlde office research and ' . p a ~ eld review of the pxpellne route, to determine if any environmental er~nits are re uixed. B ' P q aced on this field review, NI wrll prepare a memorandum to the ~wNER indicatin the ' . ~ ~ conclusions of the analysis and noting 1f any add~t~onal actions are re u~red. It is antici a ~ p ted that no environmental permit notifications will be needed far the ro'ect and the Pro' p ~ sect may be covered by Nationwide Perrn~t No. l2. If environmental errnit a lications or in-de p pp pth environmental studies are required, then these activities would be an additional servic E. WATER M~DELIN ANALYSIS: FNI will ravide the follawin sere' . . _ ~ g ices • Review the hydraulics of the North-South water Main alon the ro ased all fro g p p nment the elevated tank at Riney Road to the proposed terminus at Roselawn. • The hydraulic analysis will evaluate and determine if a booster um is necessar p p y along the pipeline route and the location of a booster pun , if necessar . The final deli p y gn of booster pump is not included in the cost of this contract, • ~'he analysis will also consider the losses in the transmission line due to water line connections along the route. R;IContract12~071Contract1~0071Dentonl~orth South V4~ater Mains,dao Exhibit A-5 F. ~RRD~ION F~I~C~IEERIlV FBI will retain and monitor the services of a corros~an~ engineering firm {orrpro an~panies, Inc,} to rovide the falla~vin ' P services: ~ conduct field soil resist~vit~ sur~e~s alon the ro osed i eline . ~ p p ~ route. conduct tests for foreign pipeline cathodic protection ~ stems, and A rnterfer ence. • conduct labarator~ tests of oil ~aple~, includin H moisture ' ~ , chlorzdes, sulfides and conductivzt~. ~ Anal~~e data and make recan~endatians far arrive cathodic r i . ~ p otect~an systems and p pel~ne n~aterla~s for up to three alternate i e~ine rr~te~ial~ Duc ' . ~ P ~ t~~e iron Pipe, Bar Wrapped concrete cylinder Pipe, and Mortar ated steel . } • Prepare detailed drawings and. specifications far corrosion inanitori ng s ysterns and cathodic protection systems, • During the construction phase, review contractor' subrrzitta~.s and rov' P ode cainn~ents • Pra~vide one dad of on-site inspector training, at the be innin of cans * ~ truct~on eview the contractor s coru.ssionin report. A1~TIL~ III ADITI~AI1 ERVI~: Additional services to be erf ar ` p med b~ FNS, ~f specifically authorized in meriting by DER, Which are not included in the abav - ~ . d e described bas1c serv~ce~, are escr~bed a~ falio~vs: A~HEL~IAI~ EVIS: If s ecificall authari~ed in . . P ~ writzng by the ~t~ of Denton, FNI or its archeological pub-consultant will re are a notific . . , P p atran letter, with acca~npanyin e~hlb~ts, to be gent to the state Historic Preservation officer SH sca ~ PO}, The pe of Archeological Services will be based on the re uirn~ents establis q hed by the Mate Historic Preservation officer ~SHP~} specifical7 far this ro'ect u ' ~ p ~ ,pan regulatory review. he fee will be negotiated once the regulator re uirements are ono . ~ Wn with services rendered on a cast plus basis, B, CIS mapping services ar assistance With these services. Subsurface utility engineering services far revise location of subsur ' . , , p face conflicts and utilities, excluding ~WN~R~ Water and. wastewater lines that the ~WN'F1 . . R is willing to pothole and locate. I~. aping revisions to designs, specifications ar other documents ' hen such designs are l ~ consistent with approvals ar instructions previousl iven b ON'FR y ~ or due to other causes not solely within the control of FIJI. F~. Investigations involving consideration of a eration n~aintenan p ce and overhead expenses, and. the preparation of rate schedules, earnings and ex erase stateznents f ' ' p , easihility studies, appraisals, evaluations, assessment schedules, and material audits or inven . tarter required for certification of force account construction performed. b ~WIVER. F. Providing shop, mill, field or labarator ins ection of material ~ p ~ and equipment. observe factar~ tests of equipment at any site remote to the ra'ect ar observi ' P J rag tests required as a result of equipment failing the initial test, C~. Preparing operation and 1Vlaintenance 1Vlanuals or canductin a . , g perator training. ~:1~antract~.D~71C~ntract1~0~71D~nton~North South Water Main~.~oc ~~hibit A-6 Furnishing the services of a Resident Pro'ect Re resent , , ~ ~ at~ve to act ~'NER s on,srte representative during the Construction Phase, l-r Perfarn~ng investigations, ~tudie and anal ses of . Y substlt~t~ons of equipment andlor rr~aterials or dev~at~ons from the drawings and ecifications. p ~~cept as indicated in Article 7~, Para ra h D rovidin • ~ A > P en~~ron~nental support services including the design and implementation of ecala ical baselin . e studies, en~~ronn~ental monitoring; impact assessn~er~t and analyses; ern~ittin assistan • ' er ~ g ce, preparation Qf a 404 p rn~t application, rnclud1ng pre-construction notification. for a ration wide Perr~~it, request for authorization under re1anal general erit or Zetter . • P of permiss~an procedure, Qr preparation of an ~nd~vidual permit appllcat1an foam, such ~JBACI~ E N~ F~R.M 445; preparation of applications far other permits that are identified b • ~ the study; detailed wetland dellneatiori 1n accordance with the C1AC~' ~ ~ 987 Wetl ` and Dellneat~on Il~anual; archeological and historical properties investi ations autsid . , , g e the scope of Article ll, Paragraph D; consultation in writing, by tele hone ar in erson ' P ~ p with the UACF or other regulatory agencies; surveying of water bodies b a Re istered P ' ~ ublic Land purveyor; or preparation of a co.pensatary mitigation plan. Performing investigations, studies} and anal ses of wor i Y ~ proposed by construction contractors to correct defective war1~. L. Design, contract modifications, studies or anal sis re wire ' y q d to comply ~v~th local, ,State, Federal or over regulatory agencies that become effective after the ' date of tl~s ag~eem~ntr 1VI. services required to resolve bid protests ar to rebid the r ' p o~ect{s} for any reason, including rebidding to lower the post of the project to meet ~'s bud et. g I~, visits to the site in excess of the number of tri s included in . . p Article ~ for periodic site visits, coordination meetings, or contract completion activities, Any services required as a result of defaul t of the contractors} or the failure, for an reason of the contractar~s} to com fete thew ~~f . y ' ork 7R ~t~~n t~~ ~V~tr~~t 4,i~r P. Providing services after the carnpletion of the construction ~ . phase not specifically listed in Article I, Providing basic or additianar services on an accelerated tine schedule, The scope of this service includes cost far Qvertime wages of em to ees and cans P Y ultants, ~nefficienc~es 1n work sequence and plotting or reproduction costs directl attributable ' schedule y to an accelerated t~~ne directed by the ~WN~R. . Providing services made necessaxy because of unforeseen ` . , ,concealed, or differing site cond1t~ons or due to the presence of hazardous substances 1n an form. . Providing services to review or evaluate construction contra • ctor{s} cia~m.(s}, provided said c~ain~s are supported by causes not within the control of FNS. ~:ICantra.ct12~071Contra~t~2DQ?1DentonlNorth South Water Mains.doc ~xh~bit A-7 T. Providing value engineering studies or reviews of cost savin ` gs proposed by construction contractors after bids have been submitted. U. Provide fallow-up professional services Burin ontractar' ~ aunty period. V. Provide modeling of the distribution system. . Providing alternate designs that require si nificant effert. A~TI~L~ I~ TIDE ~F C~PLETZ~N: FNI is authorized to commence w ~ . ork on the Project upon execut~an of this AG~IVIENT and agrees to cony lete the services in . ~ accordance with the following schedule: ~ complete surveying and easement documents in 9a calendar ~a s from ` y the Notice to Proceed ~ ornplete design plans and specifications in 10 calendar Da s from t ~ he Nance to Proceed If ~N~'s services are delayed through no fault of FNI FNI shall , be entitled to adjust contract schedule consistent wrth the number of days of Bela .These Bela s ma . . ~ ~ ~ Include but are not li~nlted to delays ~n ~wN~l~ or regulatory reviews, Bela s on the flaw of znf ' ormatlon to be prcvlded to FNS, governmental approvals, etc. Zf these de~a s are ~cessiv i y e, then ~NI reserves the right to negotiate additional con~pensatian far additional services related to the Bela AkT~LE ~ R~~~NIBILITI~ ~F ~wNE ~NER shall erform the p follaw~n 1n timely n~an~er so as not to delay the services of PIS A., designate in writin ersan to act ` ~ . g p as ~wN~R s representative with respect to the services to be rendered under this AGR~E~~T. ,such erson shall have contr ~ , P act authority to transmit instructions, receive infor~natian, interpret and define ~wNE~'s o1` ' ' p ~cies and decrslons with respect to FNI's services for the Project. . Pro~ride all criteria and full information as to ~w11~R's r . equirements for the Pra~ect, lnclud.ln design objectives and constraints, s ace, ca acit and erf , p p ~ p orn~ance requirements, flex~brl~ty and e~pandab~l~ty, and any bud etar limitations and fu ` Y ~ rn~sh copses of ail design and construction standards which OwN~}~ will re uire to be included in ~ the drawings anal spec~ficat~ons, . Assist PNI by placing at F`NI's disposal all available informati ' on pertinent to the Prod ect including previous reports and any other data relative to deli n or co g nstruct~on of the Project. D. Arrange for access to and make alb ravisians for FNI to ` P enter upon public and przva~te property as required for FNI to perform services under this AREEII~ENT incl uding R;I~ontractl~~~71~o~tra~tlZ~4~}1D~ntonllVar~ South ~LTater Mair~s.doc F . ~xh~bi ~ A. g preparing and abtaining Right-off Entries far en ineerin sure in en i • ~ ~ g, geatechnical, carrasion neer~n and environmental activities. Identify landowners and rovide coordination of fief ~ contacts for d ~var~. If conditions are muddy, the driller will Bela dril~in conditions im rove. Pr g untrl p ovide or pay for any towing required due to soft round candid impassable to four~wheel-driv ans e and tracked equipment and any clearing or radin necessar far access. Re air ar corn ensa g g ~ P p to property owners far any damage, including but not limited to crap damage, ruts, and cracl~ed slabs, caused b normal access and. o er . Y p at~on of exploration equlp~nent. . E~ar~ine all ~tud~es, reports, sl~etches, drawin ~ e ' g , p c~ficat~ons, proposals and other documents presented by Fi1TI, obtain advice of an attorne lnsur y, ante counselor and other consultants s OWNER deems appropriate for such exan~inatYOn an , . d render in wr~t~ng decisions pertaining thereto within a reasonable time sa as not to del ' ay the services of FNI. F. Furnish approvals and permits from a1I overnmental author' ' . ' g ~t1es having ~ur~sd~ctian over the Project and such approvals and consents from others as ma ben y ecessary for completion of the Pra~ect. . Provide title investigations and title insurance, if deemed neces sary by the OWNER. H. Provide such accounting, independent cost estin~atin and in ma b surance counseling services as y ~ required for the Project, such Zegal services as 0~1~ ma re uire or reasonabi r F ~ q F1VI may y eq~est ~u~th regard to 1ega11ssues perta~n~n to the Pro ect rnc~ud~n an th be raised ~ Conti ~ g at may y actox~s~, such auditing service as ~WN~R ma r uire to ascertain ho~v for what u ose Y ~ or p rp any Contractor has used the moneys paid under the construction cantr act, and such inspection services as OWNER ma re uire to ascertain . ~ that Contractors} are complying with a.ny la~v, raze, regulation, ordinance, cads or order appl1cabie to th.e~r furnishing and. perfarmzng the worl~, I. Attend the pre-bid conference, bid o enin , reconstruction c ` p g p onference, construct1an progress and other job related. meetings and substantial cam letion ins ection~ ~ p and final payment inspections. Cive prompt written native to F~II whenever OWNER abserv ' es or ather~vrse becomes aware of any development that affects the scope or timin of FNI's serv' nancanf g Ices, or any defect ar ormance of the word of any contractor. ~'he OILER gill rovide written n ' the Deli n Profession P otrce to g al if the OWNED becomes aware of any errors or on~issians in th e design warp. R. Furnish, or direct FIVI to provide, Additional Services as sti u p dated in E~hrbit A, Article III of this AREI~NIEIV~' or other services as re aired. q L. Provide easement acquisition services. 1VI. Bear all casts incident to compliance with the re uirements of thi ~ ~ Article R:l~antract1200'IlContractl~~~~ID~ntonlNorth oath Water Mains.dac Exhibit A-9 The ~~ner ~vii~ open, tabulate, analyse bids and recommend agar d of contracts. The owner ~vil~ prepare the construction contract for execution b the contractor ' f y and ~~vner and ~v~ll urn~sh copies of the contract dacu~nents to FNI, ~~ner, and antractQr. The V~NER v~ill provide an ~NER' ~ re resentative Burin t ` p he constructror~ phase. The representative will be the first paint of contact with the contractor. The re resen p tatlve w111 receive and distribute a1i submittal, The ~~vner' re resentative ~ri11 rev' p yew and approve payment requests, The ~v~ner's representative gill prepare change orders and field orders. The Owner's representative will reviev~ all claims ~ the contractor. The ' Y D~vner s representative v~l~l prepare all punch-lists and fo~lo~v-up inspections. P, EP~I~I~)T,ITIE~ F AVER -DETAILED TAB LIST I } antact other departments u~~thin the pity of Denton and caordinate 'w' ' nth them to obtain record dra~ving~ of other utilities, buildings, or infrastructure, a} Provide purvey support, including the fol~ain ; Y • ~ • Pravrde prclrrn1nary ~anda~ner list for the curve or Y • Pravrde prelimnary landowner reap far the curve or y Prepare and. obtain right-off entries for all necessar arce~s which cover e ' . Y A ngrneering, survey, corro~~on englneer~ng, geatechnical, environmental and archealo ica~ a . g ~ necessary} activities ARTICLE V1 ~~~~~ATED REPRES~N~'~'~~~ES; FNY and D~VNER deli Hate the folla~vin r ' g epresentat~ves; ~~uner's Designated Representative -Rebecca Guthrie, P,E., Cat of Denton 901 Texas 7G~09• hone: _ _ A Texas Street, Denton, 940 349 8938, fax. 94a-349-895 email: rebecca.guthr~ecit ofdenton.com Ov~ner's Accounting Representative ~ Annie Hunger, pity of Denton, 901-~ Texas Stre 7~~09; hone: 94~-349-843' fax' - et, Denton, Texas P , 940 349-895 email: annie.bungerCcityafder~ton,com ~N~'s Pra jest M~.nager -Steven Metzler, P.E., 4a55 International P~~a Suite 20a F , art forth, Texas 7~ 1 Q9; phone 817-735-739; fax 817-?~-749; email serrlfreese.com F1~I's Accounting Representative -Jana Collier, 4055 International Plaza quite ADO ~ art forth, Texas 7 109; phone 81?-7357354; I'ax 817-735-749; email jvc C~freese.ca~n R;I~antract12~071~antract~.~071DentonlN~rt~ South ~at~r Ma~ns.dac ~xhib~t A,1 ~ ~~MPLNSATION LAMP S[] ~T~ AD~I'~Iq~AL wRi~ BASED TIES ULTI~LI ER A. basic and A~ Authorized Services: compensation to F~II for the Basic and As ~ , Authorized Services shall be a total of Three hundred Seventy Seven Thousand Six l~Iundred Dollars X77 ~ all char ~ ~ , A. detail of ges are per Sectzon 2 of this Professional Services Agreement. If FI sees the Sco e of Services changing so that additional services are needed inclu ' p ding but not 1~rrnted to these services described as Additional Services in Exhibit A, FNI will notify DwNER for OwNER's a royal before r ' Addltlonal Servlees Shah be cony pp p oceedrng. puted based on the Schedule of hares. B. Schedule of char es far A.ddi~ional work: Staff Member Sal host Times Multi lier of p 1. ,9b Resident Re resentative Solar host Times 1Vlulti bier of 2. ~ p a Salary host ~s defined as the cost of salaries including sicl~ leave, vacation, and holida a a ' y P y pplrcable thereto} plus unemployment anal payroll taxes and contributions for social securit y, eruployn~ent compensation insurance, retirement benefits, medical and other insurance, and other rniscellarreous benefits. Qther Direct Ex eases Actual host Tunes Multi lien of p 1,I0 ether direct expenses shall include outside printing and reproduction ex ease communication travel, trans ortation and subsistent p expense, p e away from Dort worth and other miscellaneous expenses directly related. to the worl~, including costs of laboratory analysis, test, and other work re aired to be d q one by ~ndepender~t persons other than staff rriernbers, For SAD services erformed In~house b non ern to ees where F1VI rovides w p y FNI p Y p orkspace and equipment to perform such services, these services wall be billed at cost times a nnultiplier of 2,a, This arl~up approximates the cost to FNI if an F~1I employee was performing the same or sirn~lar services. Rates for -house Services tom user Print~n ~l; $ ~ o.oo per hour Black and white X0,1 ~ per copy P- a~or »and ~ 250 per plot o.~D er co S ecia~ x.00 e p py P p r plot 8~~ $x.75 per book Testiin A aratus Density Meter o.QO per month C as Detection 1 x.00 per test 3-1~-Q4 R;1~°ntract120071~on~ract120~71Der~tpnlNorth ~a~tt~ water Mait~s.doc l CD-~ ~wNER  1 I ~ ~T r ~o~~a~r~~~~ ~ ~~N~ ~lrrrol ~a 'Floe litect ar F~ap~neet's sees coi~s~t of tlias$ vices fnr ~e Pro'cc# as dctii Abe ~ p,~p ~ ~p G`reiiI Condi~at~ are ached 1 ~ ark and anal die to which #hese } l by ~e A~diite or ~igineet (herrein~er called tha " l~esig~. Profcs~anal"~ or ~ l?rof~sion~'s 2c~yces and coaltaa as cnra~d ~ Ar~cles ~ and 3 ~ t,~ttei ~rntdit~i~s ass madi~ed by Agre~iient and. Proposal ~thc "~vioes'~. I~ The ~ Pr~€ess~ti~ will pe~arm sal Se~c~s as ~n indep~ coatta#or to tl~ ~zcvailing prof.essioi stat~lar~ ~us~ v lei of c ~ ordinaa~iy cised 1~+ ~ of sauac profs q,~y ~ m the same Ioe$I~.y undo' similar con~rli#ions, including reasoa~a,hle, inf+orm~ judgments a pr# ti~nel~ act (the "Deg of Care'. ~~rviccs shall he 1~ as etlitin~sly as ~ eo~~ wig the D~ o~C~aFe ~eoessar~r ~ # Orly p~agress of ~roje~. 'pan rcgz of the Owi~r, the Design Professes shall submi# far ~e ~s approval a schc~ule ~e perf~rinancc ol`the Ser~ic~s which he ad~cd as the P~j proceeds, aFid shall iachide alb for periods oftirne i~quir*ed for the ~s reirie~w and for oval ol'~ssians r authorities h~ judi~ioa oche lject; Tie l~rnit~ li hY this sche~dude and appr~vcd by the tamer Shall r~#, except fOr reash~ cause, ,ceederl hY the Best, l~r+afianal or Owner, acid an~r adjt~stn~eait~ to sod~eshall he nth ~Ieta bath garter„ A~'TIE~ SCOPE ~F BA~C ~'VEC~ Z.1 SIC S'~ D~~ The Design Proionat'S Basic ex~ri ~ of #hose descri~red ~ ~ei~ 22 tl~o~igh ~,G o~these Goal Conditions and inclndv ~v~thoutlami'tatrtan~ nonce s~pual, cam, mecbani~al, electric e~ggiiing se~rices ar~d any o~ta'~gservices aiyin duce a~ompiete and acute setof Cons~uc~on I7acu~aeii#s, as deacn~e~ l~r and required m ~ec~an ~.4. Tl~e Banc er~~ ~ 1aa mowed by the Agreemen#. ~,2 [E11~A'C BFN FHB ~Iie B~i~ Prossional, m c~iisuh~#ian 'with #be Ciar, shall devaelop ~ w~#tea dram ` ~e ~ to ascertain Ownec's uee sail ~ estn6lzsh. the ~ regiuremem#s fortheFrojeet 2.~,~ Thu Desxg~ l'rnfcssronal shall provide a p~luninary ett~on ~ ~a ens program, r~ns~ctian sc~~e end ~az~ budged ~egements, each in terms ~fthe other, sul~ect fo the li~i#at~ns set fO in ~ution 5,x.1-- ~.~.3 '1"lie 1]esign l~a£essio~I shall r~tv'iew i tha Q~+ner ala#ive apgi~aches to dew and coon of~,e 1?j Based on mutually weed-n. g le and co~sfiruc~on ~~idt req~, #~e ~s~i 1~~ shy ~ approval. by fhe OvrEt~r, ~cheroa#ic De~gi Ua~men~ consists ol~ cl~wiii~ and adaet docnfs I~nstra ~.e scale ~ ~a~ig of Project comixenfs~ 'lam Sclie~stio l]esigt sill conte~late compiianve with all applicable laws statues, oa~dina coclees and regids~o~. .5 The I~csign P~of~ssianal shall shit ~ the bier a p~ esti~#e of C►anstnictian Cost . ou ~ voiwiic cr ~i cos#~ and ~hlch ind~ca~es the cast o~ eat catego~r of work imro1 is cons°t,;ucting #lic raj and cs~bl~hhes ail elapsed bane for the period nf' Mme from the com~eue~ to die cotnple of c~ns~u~ian, DEAN DEh,OP~N'~' SASE Z.3.i Based on ~e appmvcd S~'e f?esign lcunts and ~y ad~'u~~ au~o~cd hY die Droner in the p~ogta~, sclu~dule ar construction hudg~ the 1 Pro~`essic~al shall pree fnr approval by the der, Desig~t >~eopn Documents consisting afdmwi and o#he~ documen#s r and desa~be the sip yid ~ta~ac~r o~ the Project as to arclawrai, stnictp~al, rnechani and elec~ric~ systems, ~riatet~al,s and s:ich offer deter as mad be $Fprol~ ~wbuich shall oauiy ah applieahle la.~vs~ rtes, ord~ancesy codes and re~io~. Notwitl~s~g Owna~s approval of the ~nfs,1)esign Prosionai aepres~its that e Docu~s and spec~f~iot~ w~ he s~cien# and adegaate to fug dic purposes ofthe Projeck The rgn Professional shall advise the Dwaer o~ aa~ adjien#s ~ ~ cstir~e o~C~on Cost in a fir BetailCd Statemer~ as dcscr~ed ~ Sermon CDN~~~~1~ DD~l~C1S i~ x.4.1 Based as appmv~ T~esigrt Deveiopnt its and attar ~ adjaents ~ the saape yr quality of the Project a~ in ~e con~ion a~aQri by~he Owner, tha L~sigriProi~ssFOital shall prq, ~rapproval hY ~e Comer, Co~r~ion uman~ cansist~g ofl~rawings aril Spcc~ca~aats se~in~ forth in dew requirements for fhe cot~tni~ivn of~ie Froj witiclZ comply with all 1ica~le lags, statutes, orcces, codes and regulations. ~~te Design Prafessiaiial sbail sssisi the Owi~r aai the prepatzo~ the necessary 6idd~ or procpreu~irt ~infarion, bidding or proourerrmeii# fogs, the ~a~ ot'#he can~'ac~, and the ~t~n of~eut between ~.e Owner a car ~.4.~ The design Professia~l aball advise #hc of oily adjusnfs #o pr~ious Preiiu~nai~ emotes ofCa~stn~ct~u Cos# indicated by chaa ~ regnir~ ~rgenerai znarketcondi#~ns. . ~.4,~ The l~si Pro,sional shall ais# the Omer ~ conrteotian w~h the t~s responsi6ity i tag doctia~n~ regn fir app~val o~ ga'~en~ aurriti~ wingjurisdic~oA o~rPject. ~.5 C~N'SJtaTI(~N CONrT~AL'~" P~~CUR~ZI~T x,5.1 'fie ig~ Proional, ~Ilowing the Cwne~s avsl of Constrrtcti~ and o~ lates# pre~mihary detailed a off` C~rstn~ctban Cast, ~ha>~ asses Droner in lamp a corction cc~itiact for the eject through any procurement method tl~# ~ tegal~y applile #o the Project inclnd without Page 1 of3 ~•1Tvliscl~lanlc Form~lGl~RA~, CONI~~'DNS-AR~i~3=lC~IN.~.doc Revised ~~~2  _ a i gn Profession sY ~e ~d to rei~+ upon sub c.catian ~ es~~ t~a# rnrials, systems ~ equipmen# w~ meet ~e pe#forn~oe criteria required the Ccn ~r~i Th~i , f~i11 47L+WA ~ ~~j ML47 WJ.~ 1.+V~{~i~4u L~Yl~ViL V~L ~~~+J3 T~#W J~~+~W~ A~W V~+i~W{14~~ ~LLLLL ~W/e+s+vki LiMI the DesigQ Pro~ssionai ~ provided. ~ Snbsectip~s 3,x.1 3.x.3, far the Owners approval and executiotr ~ acccnalance the Contract Docun~en a~ Y au~or~c tenor changes i~ the work not i~oh~g an adjustt in d1c or an exte~ cff~ Con~rac# ~'ime which are not iraconsisb~t ~ dte irrb~t ofthe Contras Dacus. 2~~14 0~. ~f of tax, ~e ' t Professional sI coAdnct inspections ~ ~ dates of ~u~stia.I Completion and Pinal Completion, ~d if 1egaested by ~e fur s~ issue ~ of u~tantial and Pik Tie l7esia Profe~sionai w~i rccaert+e and rev~w wru guaruutees and related doc#a 1e~.ired ~y the C.act for Cn~avn to ~e asse~l~d C~ntt and ski issue a dal ate ~r ~ upon compliance ~ ~e requ~me~ o#`f~e Con~ormne~s. ~.6.1,5~ The l~~sign Prof~ssio. shai[ and pmviderecor~n~da#io~ on eon~rn' oft Cow 3~ocw~ 4n ~ re P~ of~ie Dyer and Cont~r under the req~~ quest ofei~ier die ,~r ar Cor~kactor ' Desk Prassil's xespouse to suc~i rer~.ests shall ~ n reasonable pmzn~s and ~ t lid aged upc~ be ~,~~pz'e(ations and decisions ofthe lies Profession shall be co~istent with the ia#ent ~f and reasona~y inferable $on~ ~ocurncn~ and shall #a~.g yr m ~e forna ofd~w~~. rhea maldr,g such ip~ons a i dee~sians, ~e Ue Pmfessropal sly endea~ror sure f~i perc>oa~e by bc~tb pw$t~r and Coors aid sal oat be liable fOr resui~ ox aa#erpreior~s oar ciecisivt~ so ndeaed in good ~ iu acco~fancc with ~ the Proms ofthis ~g.t and m the absence ofniigcnee. ,The l?esiga ~i~nal sb~ail render men decision whin a reasaIe as ali caws, disputes or other matbars ~ q~testioa between ~e ~hv~r and contractor relating ~ the man or grass afthe ~ror~ provided in ~ Contest Docurne~s, .~.IS The liga Professional sludl render se~ices under Ag~ernat~.in accardanc~ wifh ~ degree of Care; wili reimburse ~e ~ for ali damages used 6y #be defective designs ~o l]es~, Pmfi~nal prepares; ~d ~3} ~y acirnov~iadging rent by the ~r afany due, sll aunt be leased from any rights Owner ham under ~e Agzeet or dunIIUSh, any c~fdae Li.~t lfessional's obl~gatlons #~er The J~esign Praf~sia~1 slll pro~zde the Owner with„ i`OUr set ofreprod~tci~e prints s~howmg ali sit #o the Cnns~u~ion I~c~~ d ' the Co~#r~n P~Sa. AR'~~ 3 A~~JUN~, S~~C G~I~N~I~,A~, der s~vices described ~ ~4r~cie 3 are not included is ~osic ~~s unie so identified i~ ~e Agr+eerrnent or l~ro, grad they be p fir the as provided in the Agt~enn~ in addi~on to competeion nr Basic services Tie se~ces desaY'~d under Sections ~,2 and 3r4 sl~l only lac pro:riclced a o>r cowed in writing ~y ~e Qrauner. Ifservices descn~aed t~der C~tinge~ Additaonal ~civi~s ih section 3.3 care required to cuc~ces yond ~e ~ Professionals control, d~a Desk Pressioual sl~li. nuo#~y the Owner ~ and vat camtnence such add~uonai services n~ it receive`a writ approval m t Owner td pr+DCx~ed, if ~e ,er icates ~ 1~mimg fat all or part ofs Contingent AdditiO~al Services 8~ required, tie des P~O~SSiDnal shall lie ~ obi #a provide #~ose Services, Eimer will be rponsxble for compensating the resign P~io far Contiugen# Additianai Services otdy if arettotreq~ dpeto the ligcnce arfaultofDcsign Profional. ~I~OJ~CT R'~N~'A~'I~ON BOIL BA,~~ ST~i~E~ 3~.~.1 moro e~ens~,~te represe~.ti~, at the si#n than is descry in Secrion ~.b.5 ~ rcquued, the Design professional shall provide cue or rno,re Project Representatives assis# ~ carrying out each adnal once respo`bi'es. 3.~~ Pra~ct Fese~.ves sb~ali be se[ecfed, empaoyeri and dom. by the ~7esigr~ Pmfessronal, and Design Prooa~ai s cornpe~a~d thor as a,~eed iay the Owner and Iigu Praafession~. 3.3 C~l~T1NG~NTAUD~ON 5~~ 3.x.1 I~g material revision in Drawl Spoca~ or ath~ docun~ when s reviszo~ are: 1+ incv~istent ~ or mst~rctions prev~usiy given by the L?wuer, ittccluding rev~ior~ r,de veceasa~ ad~~~ ~ # pwr~e~s ~ ~ ~r en~torre~sion ofcodes, firs ort~guia;bions subsectto the prepar~~ion ofs docun~tsy ~r 3 due #o cl~nges gyred as a refit of~e E]s ~e #o render decision i~ a timely manner. 3,3.E Providing se~ices required b~ o~sig~iit changes ~ dze Fro~e~ i~du~g, lautnot ~ tn, , qty, cp~pplya ~ ~e OwIIe~s schedule, except forservices requd under Snbsocdoti2,~.~.. 3,33 Preparing l~~.win S ' gs, peca~ca>bions and other ciocnio~, gad sapport~g dad, and prfvidmg otlu~ spices ~ connection with Erige Order and Construction Change ]]irec~es. 3,3,4 Providing cunsulta~on cvrrcer~ng replaee~cnt of wok damaged by or v~~ cane daring construction, and uisia~g services re~quircd in ~nneoa with ~e ><iacen~ent o~such w~ozic. 3.3.E Providing sers►i made na~,~ary ~ tic defer o fthe Color, by major defecfis or deficiencies in wcr~ ~fthe Cuntt~r, or ~ ire o~ pe~omuaaas ofe a Omer or Co~6raL"~T [ntd~ ~e Co~ract foF CoIIstian~, Page ~ $ H;IIVIisc~Bla~ Forrns~GRAL CDNDF`~ONS~~t~~C~=L~CrER.dac ~e~ised S-~Q-~~  r' 4.~ The Ow~x shall designate a represen.,- authar~ed ~ aa# on the Cvvner's behal~vvi#b ect to ~e . dom. resp ~ ~'he Dwyer or such awed represe>~fatrve shall r~s ~ a ~y peg ~ documents suitted ~ Pro£ess~nal ~ order ~ av+oid rrnreasa>aab~ delay is ~ Qrderly and sequ~tia~l prop of ~ l~sign, Pro,ssio~l's se~vives, 4 ire applicable, thu der ~ ~ sum dcscr~ing physibal ~ Iition~ and utdit~r locons farthe site ofthe P~ojact, and a writ~rn Iegal des~rip#zon of#he s The surveys and information shall i>~clud as a~licable, grades and lines ofstre~s, alleys pa~~ and ad,~~mg prop~y and UC>~flr~, adja,c~t r~S~Ii~#QItS, : ~~l]~i~tS, Zbili~g, ~ >[estrictiaaS, l]OL~~S ~ ours of s~tE"y loCatlons, dnneasil}r~ ark. >aeees,ary date per(ain~g ~ ~g abler irnprove~ and fees; and mforr,u c€~n~et'n-ing s~+adabl~ tah~y set~r~ces and lines, both puhlic and pia above agd below ~italrng ink anti depts. All~e infa>rmatia>a and survey sb-all beren~d to affect b~ncbrmar~. 4.6 'tore applicable, ~.e Oar shall ~ ~ o#' geo>pec~lcl, steers why servers are recp2es~d by ~e Design Prc#'ea~l, ~ services may i~lude but aye not limed tQ test bogs, t , de#ert~stions afsoil beating values, platiorl tests, eval~tions of bus m~aterisls, ground co~as~n and r~ s>ty , inaXudblg necessary optioAS an~~ating sod condit~,t~ w and appropxiate pra~ia~al r`ecommeatd'a~ans. ~.6.~ The Cwflershal[ ~ the sus afo#her cous~tan~ ~vboa such services aa~ ~~bly required by the scope ofthe Project ant! are requested. by the Design l~araroii~ssioanal end are xetained Dena Professional as part of its Basic services orAddit~nal exvic~. ~.7 hey not a p of klie Additional Services, the owner shy famsb s~cinral, mec~ac~ical, c~emQ.cal, air a~ water pollution tests, test ~zardous rria~, sad attleer lt:borty a envitaa~ ~ inspections and report re~uir~d by law ar#~e Cam Doct~, ~.8 'Ihe Qwner shall ~ all , acraurg and insu~ce aonnscliu~ services as may n$ce~ary at an~r far the Pra jec~ including auditir services ~e Dwr~er may require to verify ~e Contrac~a~s Appliaiom~ fir Paymen# or #a asin how or for what ~urpases i;antrr has used money p$id by or on belaftbe Owr~. 49 The services, irrforrrtatio>p~,. surveys and. report ~q~ by Cher under Sect[ons ~.5 tfglY 4.$ shall be fntIted at the ~s ea~e~e, and ~e Desi~ Pmional slaail be e~itlcd to rely upon ~e accuracy and compless thefm the al~ence ofany negltgemce Qn the gait oftbe Isn Professio~l, 4.~0 The 4~vner sl~.all g,~re prat var~ten ztotic ~ fhe Design PrssYOnaI if the ~ becaomes aware afarry mat or defect m the Projeat ar r~r~ow~arrnance with ~e C~ Docu~s, ~~li Prasio shall propose la>zge ~r v~rti~cates ar cercations ~ be rec~ested o€~e Deaaig» Pr+ofass~a ar Design Proferssianal~s co~~ ark Mall su6rnit sub ~ ~e Comer ~r review and approval leas# fOUrte~, {1 ~}days prior to execution, The ~wtter ages not to raques# cerb'~catuans float ~vonld rec~ire ~mvledge or service bid scope afttteA~t, ~ C4N~t~1CTY~~ CE)T 5.1 I~S'I'R~G~.'~~1~[ GY~T' DI~~D S.T. The Carman Cost sh~.l be #hetptul cast ar ~ costta the finer oi•all ~ of~e Project designed or sped by Design Pxasioa~al, 5.~,~ The Cons~.vc~on Cali shall i~lude the cost at ~ ~t ram oflabor and ~s firrnishe~d by the der and ~ desed~ sped, sele or sped y provided ~r 6y the Desaiga Professional, pis a reasonable allows ~r tie Caa~hractofs overhead and profit. In addition, a reasat~ble aIIawance for con- tingencies shall be in►~Iuded ~ ca>ndi~aans at t1 tune of bidding and, for d~nges in the w ding ~a ~~~.3 C~r~zuci~an Cast does tit mcin~ compensation of ~e Design P~fesnal and Design PrafcssionaliB aar~lta, the ~ of the .ds rigs-of~way, ~irxg orotbereas~ whiff are fhe responsdityaithe Os as provided in Artie 4. ~f.tr ~+.~~r./~~~J11 I r 1-1~ 4 VN~7 ~ ~{1~~1 ~f R..~1~71 ~.~.1 Bvaiuatia» a#'ae Dwne;~s Project budget; preliminary estates of Co~ivn Cost a~ dod emotes of Cons~ation Cast prepared by the Design Pro~ssxonal represct~ the Design Pro~essianal~s hest judgrnenf as a professional friar oons~uoa iaaalnstry, It is rem, hovvex, tb~at neither the Isra ProfonaI ~r the qw~n~ bas caa~l over cost of labor, r~als ar e~ripnae>a~ aver Contra~or's methods a~ dig bill prices, or oar ~a~p~.tive laid or motet cancans, Accordingly, Design P~fessiar~l aa~ot and des not warrant or tiaa# lids or oust apasaZs w not ~ from the Cwa~s Pxo,~e budget or m any ~ of CO~CtiQII Cost or evaluation prepared ~ agreed ~ by the ~ Professional, 5.?.~ N~o fixed Iirnit of Construc;tian Call shall be establrsf as a lion ofd Anent l~+ ~e Wig, proposal or es~blslunent of a Project budge u~ess such %d limit has been agreed upon in ~ and sued hY parties tO. a linrft l~ bey cs~ablisbed, fhe Design Praonal shah be peril to mcl>Fdo coutrogencies r desi~, bFdd a~ 1 esaalahan, to determine wl~ water, equiprn.en~ cornpone~ syms and ~ oanshuctxar~ are to be irrchtdecl in Coact Doatmen~, to make zeasanable ad~n#s ro the scope of project gud to ~~ude ~ the Contract >smmen>t~ alternate bids to ~fi ~e Coen Cast to the iced li~ni~ Nixed. ~ i#`any, shall be increased in amaunf of can i~rease ~ t#e Contract Sum oc~cumiug aver ~o;a of~e Coat forCaaauctiau. ~.~3 If the ~rocua'ement Pbsse l rat commeaccd v~ 9~ ~ wear Design, Prafetasional su1a the Cons~~tion to pw, any Projxt budget ~ mod. limit ofConstEactian Cast shall be adjusted to rlect chat`~es in the ~ ofpric~s in c~n~vc~n iad~ty be#ween the date ofsulomissiort ofthe Construction. Doaoxnen~ to ~e ~rner and the on wh psis ace sought. '1*iC~ G ~''1~' Alm r~3S1~ 6.~ The fhawitts, pccificatians # dock prepared by the Deign Proofessial ~'or the pro,~ect are iostrume~ ofthe Design Professionals s~rviae and s5all become the property of the ~r upon ~-or wmple of tho The Dcsi~ Pmfessil is e~itled #o ~ copies o#' alI such doc°~eants. Such dactmae~s are intended only be applicable to ~s proj> anal per's use of such doh in other projects steal! be a# Corner's sole rislt anal ease. In the event ~ Comer uses auy-of the ran ar materials develo ed p puc~uant to et in ar~th~ p~,~ect or for other purp~es than are spy in the A,gree;~~t, Design I'rossi~rtal ~ released from any and ail liab~ity ~g to their use in that project Page ~ of g ~'~sclBlauk FbrnasICENEA,L CONDITiDNS~ARC~TECT-~N~IIBl~.d4C RSed S«3~,0~ e i ~ S~5 PAY~~ 4V~~.D No dedcns ~ be made from Design ~oiirssi~mal's cnpensa#io~ on account o~genaCty, li 'da#~ed fr+am paym~en~ to ~03ktt"dGt~i~, ax on u~ o~the cost ofc~ ' or oth~' s~ wield angel ~ the worl~ o ~cse ~r which Des' Professional ~ resp~sible. ~F.~~CN P~~S~OI~AL' AI~~'~'~I C`Q Design Prafe~sian~ small lee ava~~Ie Qwner ar ~"s aat~ori ~e~ese~~,~v~ r~ ao~ dur~.~ p~~s ~ ~ ~ Addit3cnal Servipes a~ services pa{ ~n ~ basis c~ g r~Ia ~ Pe~c F,~~ ~r Ynspe~ion and. PY ~ reg business hozus for tbr{ee years a ~e dad of the 1 C 1'ayt~aett~ o~ ~n r~ate~ ~ ~e Pr~j'~t ~ f~nsi, whichever date is aster, Al~T1~ 9 IlVD~#`#.'~' ~ Dgn P~ossional shall ind ' emery and save+snd hold foss #~e Qwner and its off, agents, and employees from and against and. ~ liability, claims, dema~Ys, dan~ag~s, losses, and expeis~s, ~,rlug, but not hmtted #o ~ot~t Dolts and reas~le attorney ink by the ~wnex, aid includes, without Iiarita~ion, daarag~s €or bodily ~d pcrsot~, iujuty, dead a propart~r dan~aga: sul~ng ~rnm the negligent aces ar emissions ~ Design Prn~ianal or o~.ce~, shareholders, ag~ts, cr emFloyees the performance afthe Agreement, 9.~ ~~rthing b~rein shall lee ccns~zued #c a Iiab€y to any person who, is not a #o thing any a~the partz~s' deuces, bath at ~.w or ui to ~ harem shall waive ~ ~y china, cam of Win, o; liti~~ion filed anyone nit a qty ~o the including the defense of governmental immunity, which de~~ses are herby ~pressly ~'esex'vcd. A~T~~ ~41N'~TRA~~~ During the pe~naaoce o~ the Services under the Agre~m.~t, Design. i'r+ofessicnal shall. ntaiu the following insucc with aan insuran. company Iicens$d or authorized to do business ~ the State of ~'e~cas by tho Stnte prance ~i~~► cr any snvicessor agency that has rating wig best Rate Carriers ofat least an A- yr aboveF I0.1 C.crrnprehe~ive General Li~bili~ Insr~rance with bod0,y injury limits of rat less than ~1,D,404 far ~ ace and not less #hat► x,040,400 in the a.ga#a, and w FroF~ da~go liu~s ofnnt less than ~~Q4,400 ~r each accutrencc rat less ~ $x50,404 is the aggregate. ~ 0,~ Autpmohile ~iabili~r Insr~ancc wifh bodily ih,~ury liix~ts of not Tess fan $5~4, for each person and not less tha~u X500,004 ~ar each amid and wr'th ~rtY d~amagc Ih~ afnot less than X140,400 for each accident. 10.3 porker's Cornpensa~on %ur m accordance wztl~ statu#ory requ~rnents, and ~mploYers' Liabilr Insurance with limits of xzot less than 1~0,04~1 for Bch accident inoluding occupational disease, IU.4 l~rofessicr~i Liabiii#y ~~nce with limn a~ not less tl 1,{~1~,000 annual agg~gate. ~ 0, The Design Prafessi~al sha11 fu~islt insw~nce ce~rca#es or isurance paiiraes to the Owner evidencing instrrar►c~ in coropli~oe with this Article i~ at the time o#' die eacecution of ~c Agreem. ~e ~,iabili~r and Autozno6ile Liability insurance policies shah nonce the Owner as an addikioz~I insured, tie Wor~er$' Coensa~on polrcy shall ~ntant a warve~ a~suhrat~n ~ favor of~o Owner, a. each Policy shall oant~ a provision float such insu~Ce shalt not ba canceled or zuadi~ed. withont thirty ~3U} drys' prior written notice to O~rner and Desi~ Pro#'assional, ~ such event, the Design Prossianal sal, prior to a e~ date oftha change or ~.aocella,tiou, furnish Ownerwith substitute cert~cates of~surance meeting the recluiretrts of~.is Article A~T~C~ T1 1~LLEQU PRO~UI IL1 Thy Agreement shall be governed by # laws oftha Staff ofTe~as. 'venue of any suit or cansc o~aou ur ~ shall Ile e~cclusively in D~#on C`o~y, T~ ~1.~ Tf~e C?wuer and ~es~ Prol'essivnad, t~espec#~+, bind ~eznses, th~r payers, auooesscrrs, assigns and legal to offer l~ to tftrs meat and to the partners, sact~essprs assess anld legal o€ sub n#her l~ w~ to all ooveaants o#''~i~ int~,~ts in the The Dcsig~ lessra~aal sll not assign Agreegtwithoutfihe wra~t~n vons~.toffhe Der ~ ~,3 The tam agent as rased here includes ~e cu~ad ,A.~reement; the Proposal, #hese ~ Condi#ions and other ahments rc. ~ Sec#ion 3 of the Agreement which together repr~t the ~ a~,din#egrated agEeen~ent between ~e Cwn~ Design Pn~l~essinnal anal scXper~edes ail prier negoti~ions, representations ar agreemea~, either ~rx##en or oral., The A~re~nent may be amended onty by ~ anent signed ~ both O~vner and Derma Prafcssion~al. ~ in~prg &~e Agree~aent tho e~ fit, Proposal, these ~ ~onditiois and the o~~ at~achts referees in Set~ioa of the Agreement shall ~ ~e went tl~t is reasonably possible be read so as to baur~ provisions, l~o~r,should. provisions ofth dacwne~s be ~ edict so fhat~tey notbe reasonably harmani~ed, sucb~ docents shall be given p~iodty in doe foIl~ order. 1, executed Agarenk minced m Sedan 3 o~the Agme~otherthan theProposal 3.. These Caen. Provisions Tho Ptvposal 11.4 ~icth~g con#a2ned in #be shall #e a cont<ac~al relationg}~p w~h ar a case of action in 1~a~r of a bird ~ agar ever #bc ~ ar Design Professial,. 11S ~po~ eip# ofprior ~vri#t~n approval of Desk Prosio~,l s6aII baud the rat #o iucludo tens of the ~ of Prcje~ inciu ' o~ ~ o~ the nor gad iior, am ~ ~ Professl's fessional mat,is Tl~ Deli ~~~i~ ~ ~0 ~ ~IDII~A~I ~ ~ ~SSII~S materials Shall IIof IACItE~ l~s ~ ~ 4rIi~~10~ ~ ~ ~ ~dV~S~ I~PSi~fl, I~S5i0~a,l ~ wry p~' SCif1C III~1~]~~i0~ ~On57d the ~VfrIl~l' ~ bG d or,proprietary ~ shall pmvide prossi~omsl ~ for ~e Design l~sional cn ccnstn~t%on s~ and ~ the pronnotior~l,~als 1'arthe Projt, Page 2 of $ H'llirli~cl8l~ PormslGElI~AL GONAI'~~1~~-Ol~'I'EtaT-EN~~NEt.doc R.cvised ~3~,0~  I' Draft Minutes PUBLIC UTILITIES BOARD June 25, 2007 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was present, the Chair of the Public Utilities Board thereafter convened into an Open Meeting on Monday, June 25, 2007 at 9:00 a.m. in the Service Center Training Room, City of Denton Service Center, 901-A Texas Street, Denton, Texas. Present: Chair Charldean Newell, Dick Smith, Phil Gallivan, John Baines and Randy Robinson Absent: Bill Cheek and Bob Bland, excused Ex Officio Members: George C. Campbell, City Manager Howard Martin, ACM Ut111t1eS OPEN MEETING: CONSENT AGENDA: The Public Utilities Board has received background information, staff's recommendations, and has had an opportunity to raise questions regarding these items prior to consideration. 1) Consider recommending adoption of an ordinance of the City Council of Denton, Texas authorizing the City Manager to execute a Water Main Pro-Rata Reimbursement Agreement between the City of Denton, Texas and Argyle United Methodist Church for reimbursement of the costs of building a water main, through pro-rata charges paid to the city; authorizing the transfer of funds pursuant to the agreement; and providing an effective date. 2) Consider approval of Bid No. 3788 from Westco Scientific Instruments, Inc., for acquisition and installation of a SMARTCHEM Automated Chemistry Analyzer in an amount not to exceed $60,000. 3) Consider recommending approval of the proposal from Brown & Caldwell consulting engineers for development of a SCRAPS computer model to identify pipelines at risk of structural and operational failure thereby prioritizing sewer inspections in the Denton wastewater collection system for an amount not to exceed $52,818. Board Member John Baines moved to approve with a second from Board Member Randy Robinson. The motion was approved by a 5-0 vote. ITEMS FOR INDIVIDUAL CONSIDERATION: 5) Consider recommending approval of a Professional Services Agreement for engineering services between the City of Denton and Freese and Nichols, Inc. (FNI) in the amount of $377,600 for the North-South Water Line Phase 1 project. Frank Payne, City Engineer, presented this item which is the design of the first phase of the North-South Water Line to primarily extend the water from the main east/west line along North Loop 288. It's the first leg that goes to McKenna Park. The Agreement negotiated with Freese and Nichols is for basic services at 4% of the construction costs. The overall contract is about 51/2%, which is in line with the old curves and meetings compensation. The proj ect is pretty straight forward although it is going through a very congestive part of town. The main obj ective at this time is to make sure that the City provides water before Rayzor Ranch is up and operating on all cylinders. Board Member Gallivan moved to approve with a second from Board Member Smith. The motion was approved by a 5-0 vote. The meeting was adjourned by consensus at l o: l 5 a.m. AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Frank Payne 349-8946 ACM: Jon Fortune SUBJECT Consider adoption of an Ordinance accepting competitive bids and awarding a public works contract for the installation sidewalks on Carroll Boulevard; providing for the expenditure of funds therefor; and providing an effective date (Bid 3795-Carroll Boulevard Sidewalks awarded to Floyd Smith Concrete in the amount of $109,873). BID INFORMATION The Carroll Boulevard Sidewalks project was funded in 2002 as a CIP project for the purpose of constructing new sidewalk along the eastern side of Carroll Boulevard from Sunset Boulevard to Eagle Drive. The project consists of approximately 2400 feet of new sidewalk, driveway approaches. and sidewalk curb return ramps. The new sidewalk fills in gaps in the existing sidewalk coverage from Sunset Boulevard to Eagle Drive. The project also includes the replacement of a few hundred feet of existing sidewalk, and curb return ramps which are being made compliant with federal ADA requirements. Bids for the construction phase of this project were received on June 7, 2007. There were a total of seven bidders with bids ranging from $109,873.00 to $199,750.00 for the Total Base Bid. The Carroll Boulevard Sidewalks bid summary is included herein as Attachment 1. RECOMMENDATION Award to Floyd Smith Concrete in the amount of $109,873. PRINCIPAL PLACE OF BUSINESS Floyd Smith Concrete Denton, TX STAFF COST ESTIMATE The engineer's opinion of probable construction cost for this project was approximately $116,000.00 for the Total Base Bid. Agenda Information Sheet July 17, 2007 Page 2 ESTIMATED SCHEDULE OF PROJECT This project is scheduled to begin in August 2007 and end in October 2007. FISCAL INFORMATION Funding for this project will come from City of Denton Carroll Boulevard Sidewalk accounts 350040436.1360.40100 in the amount of $63,556.88 and 350040432.1360.40100 in the amount of $46,316.12 for a total amount of $109,873. Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Bid Tabulation 1-AIS-3795 c ~ °o L O 0 ~ ~ ~ > ~ ~ m ~ ~ ~ o ~ ~ L 0 c~ ~ U ~ L ~ ~ ~ N C ~ ~ ~ O _ ~ ~ 0 ~ ~ ~ ~ ~ O ~ U p ~ X ° o ~ M _ ~ U p 00 N ' 0 O N O ~ U ° ~ p ~ X ~ p ~ ~ ~ N ~ ~ ~ ~ N N ~ W O ~ O ~ U p ~ ~ o p O~ ~ o ~ U ~ ~ ~ ~ ~ ~ N ~ ; ~ ~ N O ~ ~ U p s ~ c~ Q ~j O ~ O p N ~ ~ ~ N ~ ~ U ~ O N ~ ~ ~ ~ N ~ N - ~ (n ~ ~ O L O ~ O 0 O U ~ ~ ~ N ~ O L U L N ~ O Y ~ U ~ in Z ~ ~ 0 m m ~ a ~ N o ~ ~ c~ - U m ~ (6 ~ . _ (6 O W ~ O ~ p ~ ~ U ~ ~ ~^^L O ~ L.L O ~ ~ ~ MO \ W ~ ~ O ~ N Z t6 (6 m ❑ U ORDINANCE N0. AN ORDINANCE ACCEPTING COMPETITIVE BIDS AND AWARDING A PUBLIC WORKS CONTRACT FOR THE INSTALLATION OF SIDEWALKS ON CARROLL BOULEVARD; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (BID 3795-CARROLL BOULEVARD SIDEWALKS AWARDED TO FLOYD SMITH CONCRETE IN THE AMOUNT OF $109,873). WHEREAS, the City has solicited, received and tabulated competitive bids for the construction of public works or improvements in accordance with the procedures of State law and City ordinances; and WHEREAS, the City Manager or a designated employee has received and recommended that the herein described bids are the lowest responsible bids for the construction of the public works or improvements described in the bid invitation, bid proposals and plans and specifications therein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The following competitive bids for the construction of public works or improvements, as described in the "Bid Invitations", "Bid Proposals" or plans and specifications on file in the Office of the City's Purchasing Agent filed according to the bid number assigned hereto, are hereby accepted and approved as being the lowest responsible bids: BID NUMBER CONTRACTOR AMOUNT 3795 Floyd Smith Concrete $109,873 SECTION 2. The acceptance and approval of the above competitive bids shall not constitute a contract between the City and the person submitting the bid for construction of such public works or improvements herein accepted and approved, until such person shall comply with all requirements specified in the Notice to Bidders including the timely execution of a written contract and furnishing of performance and payment bonds, and insurance certificate after notification of the award of the bid. SECTION 3. The City Manager is hereby authorized to execute all necessary written contracts for the performance of the construction of the public works or improvements in accordance with the bids accepted and approved herein, provided that such contracts are made in accordance with the Notice to Bidders and Bid Proposals, and documents relating thereto specifying the terms, conditions, plans and specifications, standards, quantities and specified sums contained therein. SECTION 4. Upon acceptance and approval of the above competitive bids and the execution of contracts for the public works and improvements as authorized herein, the City Council hereby authorizes the expenditure of funds in the manner and in the amount as specified in such approved bids and authorized contracts executed pursuant thereto. SECTION 5. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2007. PERRY R. McNEILL, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY r i - - , BY: 3-ORD-Bid 3795 AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Charles Atkinson at 349-7421 ACM: Jon Fortune SUBJECT Consider adoption of an Ordinance determining a sole source and approving the expenditure of funds for the purchase of the Harris Computer Systems' Public Utility Billing upgrade to NorthStar v6.x, and associated software modules available from only one source in accordance with the provision for State Law exempting such purchases from requirements of competitive bids; and providing an effective date (File 3825-Purchase of NorthStar v6.x upgrade for Harris Public Utility Billing awarded to Harris Computer Systems in the amount of $43,740). (The Public Utility Board approved this item by a vote of 7-0). FILE INFORMATION The City of Denton uses the Harris Computer Systems' Public Utility Billing software for maintaining utility customer accounts, producing utility bills, and processing utility revenues. It is essential for the City of Denton to keep up with changing technologies that enhance the ease of the business operation, and ability to provide the customer base with the best service possible. Harris Computer Systems' NorthStar v6.x is a web based software application with significant user-friendly enhancements. It provides quick and easy access to all customer account related information, supports multiple account structures, and the Multiple Data Interface (MDI) design allows simultaneous viewing of account transactions, consumption history, payment history, billing history, and other customer specific screens. NorthStar v.6x also contains a comprehensive online help system, providing details on how to complete forms, how to complete specific processes that span several forms, and the implications of specific field settings. The online system is fully HTML and utilizes interactive screen shots, movies, and other teaching aides to reduce application training and provide a real support resource. The upgrade to NorthStar v6.x is an improvement to the current version, and will allow more flexibility with future system or industry changes. Harris Computer Systems is the sole source vendor for upgrades and continued support of the Harris Public Utility Billing System and associated software modules. Section 252.022 of the Local Government Code provides that procurement of items that are only available from one source do not have to be competitively bid. PRIOR ACTION/VIEW (COUNCIL, BOARDS, COMMISIONS) The Public Utility Board approved this item at its July 9, 2007 meeting. Agenda Information Sheet July 17, 2007 Page 2 RECOMMENDATION Approve expenditure of funds to Harris Computer Systems in the amount of $43,740. This includes the services fee for the upgrade in the amount of $40,500 and travel related expenses which will be billed as incurred, and are estimated at $3,240. PRINCIPAL PLACE OF BUSINESS Harris Computer Systems, Inc. Ottawa, Ontario, Canada ESTIMATED SCHEDULE OF PROJECT System preparation will begin in September 2007. Testing, training, and final implementation will occur during the months of October 2007 -February 2008. The projected go-live date is March 1, 2008. FISCAL INFORMATION This item will be funded from Customer Service account 630800.7879. Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Quote from Harris Computer Systems Attachment 2: Sole Source Letter 1-AIS-File 3825 ~ i 1 Antares, Suite 400 Nepean, Ontario Canada K2E 8C4 (613) 226-5511 Fax: (613) 226-3377 ~,~,~vAFTER cALt,ED ~°gAxx~s~~ Attachment 1 SALES QUOTATION May 3, 2007 BILLING ADDRESS The City of Denton Denton, TX Charles Atkinson v5.2.19 to v6 upgrade License Fee Qty Services Fee Annual SW Annual 3PL Maintenance Maintenance Project Management 5 days $7,500 Implementation Support 10 days $15,000 On-site consulting -training 10 days $15,000 Remote software installation 2 days $3,000 Travel estimate is $3240 TOTAL $40,500 PROJECT TOTAL $40,500 ANNUAL MAINTENANCE No change QUOTATION & PAYMENTTERMS NOTES ANDATTACHMENTS - Quote valid for 90 days from date of issue - Travel related expenses will be billed as incurred, - 50% due on issue of PO - Weekend activity will be billed at an additional $750 per - 50% due on 1St day of training day - Denton will be responsible for providing adequate servers - Training will be scheduled for October, 2007 For additional information, please contact: Kimberly Williams 678-428-1699 cell kwilliams anharriscomputer.com ACCEPTED BY: Harris Computer Systems The City of Denton Signature Signature Please Print Name And Title Please Print Name And Title P. Date Date Attachment 2 Farris or~putery Inc. I~ad~ne Lily ~ Antares Dave, u ite 400 Ottawa, Ontario, Canada KBE 8O4 Dear ad~~n: Your firm has been selected as a vendor providing annual maintenance and continued vendorsuppork of the Harris Public Utility Billing system and associated software modules. You have indicated to us that you are the only existing vendor of thislthese commodities. due to statutory requirements, unless you are the "single or sole source„ of thislthese commodities we must laid their procurement competitively, dingle source, in this case, means thatyou are the only company that can supply us with this commodity. Uve are required to confirm this status with you. Please respond as necessary to the following questions and return this sheet to us via U.. Nlail or fax. fall if yvu have any questions. ~ .Are you the sole or single source vendor for the commodities named above? Yes N o ~ there any other vendor that offers this service? Yes _ ~ No if you are not the single source vendor of this service lease list the other vendars we p need to contact for bids: ~f you answered questions above as a single source vendor please sign below to certify that you are the single source of this material and return to: Tom thaw, Purchasing Agent 901 B Texas street Benton t Texas 109 Or Fax to {940} 49~7'0~ _ l certify that we are the sole source of the above listed commodity or commodities, L ~gned: ~ Tltle: ~~~r1~ cl df Company Official} Print Name: bate: ~ ~ 1..~~ Attachment 2 Farris or~putery Inc. I~ad~ne Lily ~ Antares Dave, u ite 400 Ottawa, Ontario, Canada KBE 8O4 Dear ad~~n: Your firm has been selected as a vendor providing annual maintenance and continued vendorsuppork of the Harris Public Utility Billing system and associated software modules. You have indicated to us that you are the only existing vendor of thislthese commodities. due to statutory requirements, unless you are the "single or sole source„ of thislthese commodities we must laid their procurement competitively, dingle source, in this case, means thatyou are the only company that can supply us with this commodity. Uve are required to confirm this status with you. Please respond as necessary to the following questions and return this sheet to us via U.. Nlail or fax. fall if yvu have any questions. ~ .Are you the sole or single source vendor for the commodities named above? Yes N o ~ there any other vendor that offers this service? Yes _ ~ No if you are not the single source vendor of this service lease list the other vendars we p need to contact for bids: ~f you answered questions above as a single source vendor please sign below to certify that you are the single source of this material and return to: Tom thaw, Purchasing Agent 901 B Texas street Benton t Texas 109 Or Fax to {940} 49~7'0~ _ l certify that we are the sole source of the above listed commodity or commodities, L ~gned: ~ Tltle: ~~~r1~ cl df Company Official} Print Name: bate: ~ ~ 1..~~ ORDINANCE N0. AN ORDINANCE DETERMINING A SOLE SOURCE AND APPROVING THE EXPENDITURE OF FUNDS FOR THE PURCHASE OF THE HARRIS COMPUTER SYSTEMS' PUBLIC UTILITY BILLING UPGRADE TO NORTHSTAR V6.X, AND ASSOCIATED SOFTWARE MODULES AVAILABLE FROM ONLY ONE SOURCE IN ACCORDANCE WITH THE PROVISION FOR STATE LAW EXEMPTING SUCH PURCHASES FROM REQUIREMENTS OF COMPETITIVE BIDS; AND PROVIDING AN EFFECTIVE DATE (FILE 3825-PURCHASE OF NORTHSTAR V6.X UPGRADE FOR HARRIS PUBLIC UTILITY BILLING AWARDED TO HARRIS COMPUTER SYSTEMS IN THE AMOUNT OF $43,740). WHEREAS, Section 252.022 of the Local Government Code provides that procurement of items that are only available from one source, including; items that are only available from one source because of patents, copyrights, secret processes or natural monopolies; films, manuscripts or books; electricity, gas, water and other utility purchases; captive replacement parts or components for equipment; and library materials for a public library that are available only from the persons holding exclusive distribution rights to the materials; need not be submitted to competitive bids; and WHEREAS, the City Council wishes to procure one or more of the items mentioned in the above paragraph; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The following purchase of materials, equipment or supplies, as described in the "File" listed hereon, and on file in the office of the Purchasing Agent, and the license terms attached are hereby approved: FILE NUMBER VENDOR AMOUNT 3 825 Harris Computer Systems $43,740 SECTION 2. The acceptance and approval of the above items shall not constitute a contract between the City and the person submitting the quotation for such items until such person shall comply with all requirements specified by the Purchasing Department. SECTION 3. The City Manager is hereby authorized to execute any contracts relating to the items specified in Section 1 and the expenditure of funds pursuant to said contracts is hereby authorized. SECTION 4. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2007. PERRY R. McNEILL, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY BY: 3-ORD-File 3825 4 ! ~ f ~~NT~AT ~Y AND BET~V~EN CITY ~F DENTDN, T~XA AND ND. ' made and entered into by and beteen Barris Computer T~~ CONTRACT ~s E SCE hereinafter ss l Antares, quite ~a0 ~epean, ~utar~a Canada K~ Systems, v~hose addre home rule rr~ur~icipal 'Contractor " and the CITY DF D~NTDN, T~~AS, a referred to as • "Ci " to be effective upon approval of the Denton Clay corporat~an, hereinafter referred to as er or his dui t execution of this Contract by the Denton City Manag ~ Council and subsequez~ authorised designee. ' avenar~ts and a eements contained herein, and far the Far and m consideration of the c I benefits to be obtained hereby, the parties agree as follows: mutua I. S~P~ ~F SERCES ' lobar recess to provide the City with support in the areas Contractor shall provide all ~ rov~ded ' lin u de Pram v5.2.~9 to v. These services shall be F pertaining to the Ut~lzty Bel ~ p 1s attached hereto ` tractor's ro osal in rspo~ase thereto, a copy of which . accordance with the Can p ~ t cans1sts of this written ' orated herein for all purposes as exhibit A .The Cantrac and ~ncarp which are attached hereto and incorporated herena by agreement and the fallaw~ng items, reference; a Contractor's Proposal. Exhibit Insurance Requirements. ~Exhrbit B tr ~ Exb~b~t " . CI ~ Conflict of Interest uest~anna~re ~ ~ ~c} farm ntract documents and what is called far by one shall be These documents make up the Ca ~ of the ' ed far b all. In the event of an inconsistency or conflict in ~ a binding as ~f call hall be resolved by giving ' ' f the Contract documents, the 1ncons~stency or cor~fl~ct s prov~s~ons o ent then to the contract documents in the order in whic precedence first to the vvr~tten areern 'vel as "Contract Documents}' fisted above. These docurr~ents shall be referred to collects y they are ~ II. TIC D~ COMPLETION that all work hereunder shall be complete within ~ Contractor agrees and covenants da s 150 da s, with start date of Septerriber 1 X007. Y~ ~ ~ ~r IIX. TEI'I OF CONTACT be determined by mutual agreement of bath parties. The 1n~t~al term of this Contract shall tracts11~~1N ~ORI~ FOR CONTRACTIHarris B.plHarri~ fi,~ Contract Agreement ervice~.~oc H.ICon i { 1 ~ IV, wA-AN~~ Contractor warrants and covenants to City that ail goods and services provided by Contractor, Contractor's subcontractors, and agents under the Agreement shall be free of defects and produced and performed i~ a skillful and warlcmanlike manner and shall comply with the specifications for said goods and services as set forth in this Agreement ar~d the Contractor's proposal attached hereto and lnCOrp4rated herein ~ Ex~l~11t f'A". -Contractor warrants that the goods and services provided to City under this Agreement shall b free from defects m material and workmanship, for a period of one ~ 1 } year canan~encing o the date drat City issues final written acceptance of the prof ect. PAYMENT Payments hereunder shall be made to Contractor, 50°/o at time of software installation with the remaining 5o°Io at the time of v~ application training and within thi~y ~3~} days of receiving Cantracto~r's in~ralce far the products and services delivered. Total compensationunder - thicontract shall snot exceed the sum of forty three thousand, seven hundred forty dollars and no cents ~43,74~.00}. Contractor recogizes that this Contract shall commence upon the effective date herein and continue in full force and effect until termination in accordance with its provisions. Contractor and City herein recognize that the continuation of any contract after the close of any given fiscal year of the City of Denton, which fiscal year ends an September ~Oth of each year, shall be subject to Denton City Council approval. ~n the event that the Denton City Council does not approve the appropriation of funds for this contract, the Contract shall terminate at the end of the fiscal year for which funds were appropriated and the parties shall have no fiirther obligations hereunder. VI. PRIITE~TII~N AI~AINT ACCIDENT T~ EMPL~YrEES ,AND THE P~1~LI Contractor ha11 at all times exercise reasonable precautions far the safety of employees and others on or near the work and shall comply with all applicable provisions of Federal, State, and Municipal safety laws. The safety precautions actually taken and the adequacy thereof sha11 be the sole responsibility of the Contractor. Contractor shall indemnify City for any and all losses arising out of or related to a breach of this duty by Contractor pursuant to paragraph VIII. INDEIVINIFIATI~N and paragraph IX. ~~PLI~N~E wITH APPLICABLE LAWS set forth herein, H:IContracts~N~UV FARM FAR ~CNT~A~T1Harris B.~lHarris Contract Agreement 5ervices.dac  l ~ { 4 j III. LOL FRAM NATURAL CAU Unless otherwise specified, all loss or damage to Contractor arising out of the nature of the work to be done, or from the action of the elements} or from any unforeseen circumstances in the prosecution of the same, or from unusual obstructions or difficulties which may be encountered in the prosecution of the work, shall be sustained and borne by the Contractor at its own cost and expense. vrlr, IN~]~NI~'ICATI~N Contractor shall release, defend, indemnify and bald the City, its elected officials, officers and employees harmless from and against all claims, damages, injuries including death}, property damages including loss of use}, losses, demands, suits, judgments and costs, including . attorney's fees and expenses, in any way arising out of, related to, or resulting from the services provided by Contractor under this Agreement or caused by the negligent act or omission or the intentional act or. omission of Contractor, its officers, agents, employees, subcontractors, licensees, invitees or any other third parties for whom Contractor is legally responsible thereinafter 'Claims"}. Contractor is expressly required to defend City against all such Claims, the event the City is a named party to a sort arising out of the subject matter of this Contract, the City shall have reasonable input into the selection of defense counsel to be retained by Contractor in fulfilling its obliga~an hereunder to defend and indemnify City. City reserves the right to provide a portion or all of its own defense; however, City is under no obligation to do so. Any such acon by City is not to be construed as a waiver of Contractor's obligation to . defend City or as a waiver of Contractor's obligation to indemnify City pursuant to this Contract. Contractor shall retain defense counsel within seven ~7} business days of City's written notice that City is invoking its right to indemnification under this Contract. tf Contractor fails to retain counsel within such time period, City shall have the right to retain defense counsel on Its own behalf, and Contractor shall be liable for all costs incurred by C1ty. I~. C~iVIPLIANCE ITS A►~LIABLE LAWS Contractor shall at all times observe and comply with all Federal, Mate and local laws, ordinances and regulations including all amendments and revisions thereto, which in any manner affect Contractor or the work, and shall indemnify and save harmless City against any claim related to ar arising from the violation of any such laws, ordinances and regulations whether by Contractor, its e~mplayees, officers, agents, suhcantractors, or representatives. Yf Contractor observes that the work is at variance therewith, Contractor shall promptly notify Ln wr~ting. H:l~ar~#ractslNE1N FORM FOR CONTRAOTS1Harr~s ~.Q1Hams G.0 Contrac# Areeme~# ervices.d~c  i I I i k t X. ~ENLTL The laws of the Mate of Texas shall govern the interpretation, validity, performance and enforcement of this Contract. The parties agree that this Contract is performable in Denton County, Texas, and that exclusive venue shall lie in Denton County, Teas. ~I. ASSIGNMENT AND ~JBLETTIN Contractor agrees to retain control and to give full attention to the fulfillment of this Contract, that this Contract shall not be assigned ar sublet ~rithout the prior written consent of City, and that no part or feature of the work will be sublet to anyone objectionable to City. Contractor further agrees that the subletting of y portion ar feature of the work, ar materials required the performance of this Contract, shall not relieve Contractor franc its full obligations to City as provided by this Contract. INDEPENDENT ~NTItACT~~ Contractor covenants and agrees that Contractor is an independent contractor and not an af~icer, agent, servant or employee of City; that Contractor shall have exclusive control of and exclusive right to control the details of the work performed hereunder and all persons performing same, and shall be responsible far the acts and omissions of its officers, agents, employees, contractors, subcontractors and consultants; that the doctrine of respondent superior shall not apply as between City and Contractor, its officers, agents, employees, contractors, subcontractors . and consultants} and nothing herein shall be construed as creating a partnership ar joint enterprise between C1ty alld Contractor. INSURANCE AND CERT~EICATES ~F INSURANCE Contractor shall procure and maintain far the duration of the contract insurance coverage as set forth in the Insurance Requirements marked exhibit "C" attached hereto and incorporated herein by reference. Contractor shall pravlde a signed insurance certificate verifying that they have obtained the required insurance coverage prior to the effective date of this Contract. ~I~. I~INDRAN~ES AND DELAYS No claims shall be made by Contractor for damages resulting from hindrances or delays from any cause during the progress of any portion of the work embraced in this Contract. H;IOontractslNEVlI FORM EQR CONTRACT~1H~~i B.~IHarris ~.0 Contract Areer~en~ ervices.doc r ~ AFF~DAT ~F N~ PRI~HIBITETI INTEREST Contractor acknowledges and represents it is aware of all applicable lags, City Charter, and City Cede of Conduct regarding prohibited interests and that the existence of a prohibited interest at any time will render the Contract voidable. Contractor has executed the Af#idavit of ~o prohibited Interest, attached and incorporated herein as Exhzhxt ~~I. ~VEI~ABILIT~ The provisions of this Contract are severable. If any paragraph., section, subdivision, sentence, clause, ar phrase of this Contract is for any reason held to be contrary to the haw ar contrary to any rule ar regulation having the force and effect of the laws such decisions sha11 not affect the remaining portions of the Contract. However, upon the occurrence of such event, either parley may terminate this Contract by giving the other party thirty days written na~ce. ~~II. TERMINATION City may, at its option, with or without cause, and without penalty or prejudice to arty other remedy it may be entitled to at law, or m equity or otherwise under this Contract, terminate further work under this contract, in whale ar in part by giving at least thirty days prior written notice thereof to Contractor with the understanding that ail services being terminated shall cease upon the date such notice is received and provided the City pays Contractor for any services delivered to date, and to expiry of the 34 day written na~ce. ~~I~~ ~NT~~ AGREEMENT This Contract and its attachments embody the entire agreement between the parties and may only be modified in writing if executed by both parties. ~r. C~NTIt.A.CT INTERPRETATION Although this Contract is drafted by City, should any part be in dispute, the parties agree that the Contract shall not be construed more favorably far either party. UCCE~~ AND AII~N This Contract shall be binding upon the parties hereto, their successors, heirs, personal representatives and assigns. H:1Cantr~ctsll~EVll FORM FOR CO~TRAOT1C~arri ~.~IHarr~s fi,0 Oontr~ct Agreement ervices.d~~  i H~AD~N The headings of s ~antract are for the canven~enc of zeference only and hail not a`ect in any manner any of the terms and e~ndi~ons hereof. IN wITNE~ wH~RE~~', the parties ha~re executed this ontraet by signing below. Harris amputer systems By: X15 Date: Tine: ~ r~' CITY DNT~N, TEA Date: ~Y' _ , , ~E~NGE C~. CA~PEELL, C~T'Y ~ALR ATTEST': .~EN'NIFER WALTERS, CITE SECNETAR~ A~'PRD~'ED AS T~ LEGAL FERN: EDWIN M. SN~DEI~, CITY ~,TT~RNE BY: H:lContr~ctsINE1N FORM FOR CONTRA~T~1H~rris fi.O1H~rr~s B.~ contract A~reemer~t ervice~,doc  I y ~~a~ $I~~~ T~~ it~r p~r~~n ~~n#~rl, T~ ~.~.1~ to ~G ~~~~~~e ~ ~~~i~~ ~'~e Ano~~~ Anna~~ ~p~ lliat~~~n ~iat~~~~~~ ~o~c~~ ~ ~~ys ~~~t~~an ~~p~~r~ ~ ~ ~ ~ ~,0~~ ~ S~V~'e i~lla#~n~ ~ days $~,U T~~' ANUA~ ~AN~~~ ~~a~~ ~lJ~'i`AT~~N & PAYI~EN'i' T~~~ N~T~~ ANA ~~i`A~~M~~T~ - valid f~~ d~ #ror~ ~a~ ~ ~~u~ - Trar~l r~lat~~ ~cpe~~s wl ~~ll~ as 1n: ~ dui u~ of - I~~ken~ ~~I~l~► i# be filled ~ ~a~~l ~r due ~n day t~i~ir~~ day - De~#~~ v~~~~ ~9 l~~~na`~bl~ fb~ ~tng a~~gil~1~ - Tralt~~n~ will 1~ ~~l~d ~~r Octal~r~ ~qf ~~~~Ema~an, p~~a r~tat; ~im~rL~ I~~liam~ $7~8-~ ~9~ k~i1R~~m~ ~~e~. y~ ~ r M ~ ~ i Play Arid t 1~ ?~aZe Prifit ~ A+~ ~it~a ~ ~ ~~I~~ ~~~d #~i~~ NDI~~~ .~0 1~1~~ ~~~Z6~~~~~ ~~~~1~~~~~ H~B~T B CITY F DENTIN ~NUENE REl1~REI~E~VT F~ NTRAT bidder's attentlo~a is directed to the lr~sarar~ce requiren~en~s below. ~t is highly recommended that bidders confer with their respect~'ve lnsarance carriers ar brokers to de~ern~ine in advance of Bid submission the avai~abi~ity of insurance ref ~ca~cs a~~ e~rdorsen~ents as ~prescri~ed and provided herein, If a~a apparent low bidder fans ~o comply strictly with the insurance require~nen~s, ghat bidder nay be disgr~al~~ied franc award o, f tie contract ~Tpa~a did award, acll insr~rance re~uire~nen~s shall become contractr~al vbliga~ions, which success, fad i~idder . shall have a duty to n~acintain thraaghaut~ the coarse of this coutrac~ STANDARD PRVIIN: bYithout di~niti~zg any o the other obligations or liabilities of ~Ite 'o~tractor, the C'ontrac~or s~a~I provide and maintain until the co~ttracted work has been completed and accepted by the City of . Denton, Owner, the minimum insurance coverage as indicated hereinafter. . .~s soon as practicable after notification of bid award, Contractor shall~le with the ,Purchasing department satisfactory certi ~cates of insurance, co~tairzi~g fife did n~rnber and tine of the prof ect. Contractor rnay, upon written request to the purchasing Department, ask for c~ari nation of any i~ts~ra~tce requirements at uny tune; however, contractors arc strongly advised to make such requests prior to hid opening, since the insurance requirements may not be rnodied or waived after bid opening unless a written exception has been submitted with fire bid. Contractor shall not commence any work or deliver any material un~`l he or she receives r~o; f ica'on that the canfracet sacs been accept~e~, approved, and signed by ~~e i d~ f Benton. X411 insurance po~icics proposed or obtained in satisfaction of these requirements sha~~ comply with the f ol~o~vin general speci acat~'ons, and shall be n~aintarrted i~a compliance with these general spec~f ications throughout the ~cration of the 'ontract, or longer, f so noted: Each policy shall be issued by a company authorized to do business in the state of Texas with an A.. Best company rating of at least • Any deductibles or self insured retentions shall be declared the bid proposal. If requested by the pity, the insurer shah reduce or elnn~nate such deductibles or self-insured retentions with respect to the City, xts of#ieials, agents, ernp~oyees and volunteers; or, the contractor sha~~ procure a bond guaranteeing payment of losses and related .vestiatlons, claim administration and defense expenses. H:IContractslNEIN FARM FAR ~4NTF~ACT1Harr~~ ~.OlHar~s 6.~ Contrast Agreement ervices.doc  i 1 Liability policies shall be endorsed to provide the following: Name as additional insured the pity of Denton, its ~f~cials, Agents, Pmployees and volunteers. That such insurance is primary to any other insurance available to the additional insured with respect to claims covered under the policy and that this insurance applies separately to each insured against whom claim is made or suit is brought. The inclusion of more than one insured shall not operate to increase the insurer's 11n~1t of llabil~ty. All policies shall be endorsed to re„ ~`SAI~ I'O~~'Y S~A~~ NOS" A~~L~D, ~VO~R.~N~'~W~~ DR ATFRIA~~Y HA ~YI~'OUT 30 DABS AD~A,F~ ~R~T~ ~ ~'IC BF~~Y I Y~~ ~0 THE ~ W~ ~~T~ ~~P~ I~ ROLL' I~` BFI CACFLLF~ FOR DNPA ~.~ViE~' PR'~Uf ~'I~I~I CASF ~ ~ ~A YS AD VA~V~ ~R}TT~ O~~F IS RFC II~~' • Should any of the requrred insurance be provided under a clans-made form, contractor sha11 maintain such coverage continuously throughout the term of this contract and, without lapse, for a period of three years beyond the contract expiration, such that occurrences arising during the contract term which give rise to claims made after expiration of the contract shall be covered. • Should any of the required insurance be prodded under a form of average that includes a general annual aggregate limit providing for claims investigation or legal defense costs to be included ~ the general annual aggregate limit, the contractor shall either double the occurrence limits or obtain ~~vners and ontractars Protective I~1abil~ty Insurance. • Should any required insurance lapse during the contract term, requests for payments originating after such lapse sha11 not be processed until the pity receives satisfactory evidence of reinstated average as required by this contract, effective as of the lapse date. If insurance is not reinstated, pity may, at its sole option, terminate this agreement effective on the date of the lapse. H:IOor~#ract~lNE FORS FOR CONTRACT1Hams ~.~IHarris Contract Agreement eru~oes.doc . PE~F~ ~DDITIh~~IL INSURANCE ECIRE~IENT: insurance ~o~icies proposed or obtained ~n ~at~sfaction of phis Contract sha~~ add~tiona~~y con~p~y with the ~ fal~o~vi~t marked ~~~cif icatior~s, ar~d s~al~ b~ ~naintaine~ in ~o~zp~iar~ce wxt~ these dditiona~ speci cations t~roughot~t the duration o~ f the C'antra~t, ar Ior~er, if so noted: A. general Liability Insurance: general Liability insurance with combined single limits of not Less than 5~0 ,,U4D shall be provided and maintained by the ontractar. The policy shall be written an an occurrence basis either in a single palioy or in a combination of underlying and umbrella or excess policies. If the ammercil general Liability form {7~ Farm C X001 current edition} is used: • average A shall include premises, operations, products, and completed operations, independent contractors, contractual liability covering this contract and broad form property damage coverage. • coverage B shall include personal injury, • coverage medical payments, is not required. if the ~amprehensive General Liability form {lQ Form CL a0a~ current Edition and Farm CL a4a4} is used, it shall include at least: • ~adily 1n~ury and Property Damage Liability for premises, operations, products and completed operations, independent contractors and property damage resulting from explosion, collapse or underground {~~Ll} exposures. • broad form contractual liability {preferably by endorsement} covering this contract, personal ~n~ury 11ab~l~ty and broad farm property damage 1~abil~ty. ~ Automobile Liability Insurance: ~antractar shall provide ammercial Automobile Liability insurance with Combined dingle Limits {CL} of not less than 34~ OU0.0~ either in a single policy ar in a combination of basic and umbrella or excess policies, The policy will include bodily injury and property damage liability arising out of the vpratian, maintenance and use of all automab~les and mobile equipment used m can~unctlon with this contract, atisfactian of the shave requirement shall be in the form of a policy endorsement far: • any auto, or • all owned, hired and non-awned autos, H:1ContractslNEV11 FORM FDR CDN~RAC~s1H~rris 6.41Ha~ris Contract Agreement ~ervices,d~c c ~ [X] Workers ~ornpensation Insurance Contractor shall purchase and maintain w~arker's Compensation insurance which, in addition to meeting the mii~mum statutory requirements for issuance of such insurance, has ~mplayer's Liability limits of at least $1 ~a,~~~ for each accident, 1 ~0,~00 per each employee, and a ~40~00~ policy limit far occupational disease. The City need not be named an "Additional Insured" but the insurer shall agree to waive all rights of subrogation against the City, its officials, agents, employees and volunteers far any work performed for the City by the Named Insured. For building or construction projects, the Contractor shall ca~nply with the provisions of Attachment 1 in accordance with ~4~.09G of the Texas Mbar Cade and rule ZSTAC ~ I~.110 of the Texas worl~er's Cainpensation Commiss~an ~TwCC}. owner"s and I~ontractor"s Protective Liability insurance [ ] 'The Contractor shall obta, pay far and maintain at all times during the prosecution of the warp under this contract, an owner's and Contractor's Protective Liability insurance policy naming the City as insured far property damage and bodily injury which may arise in the prosecution of the warp or Contractor's operations under this contract. Coverage shall be on an "occurrence" basis, and the policy shall be issued by the same insurance company that carries the Contractor"s liability insurance. Policy limits will be at least combined bodily injury and property damage per occurrence with a ~ aggregate, ] ~lre Damage Leal Liability Insurance Coverage is required if Broad form general Liability is not provided ar is ui3available to the contractor or if a contractor leases or rents a portion of City building. Limits of not less than ~ each occurrence are requ~xed. ~ ~ Professional Liability Insurance Professional lability insurance with limits not less than per claim with respect to negligent acts, errors or omissions in connection with professional services is required under this Agreement. [ ~ Builders' Risk insurance Builders' Rile Insurance, on an All-~isl~ form for 1OO4Ia of the completed value shall be provided. such policy sha11 include as "Named Insured" the City of Denton and all subcontractors as their interests may appear. H:IO~ntractslNEVl1 FARM FOR C4NTRACT1Hams B.O1H~rris ~.0 ~ont~act Agreement e~vices,~oc 5 [ ~ vmmercil ~r~me Provides coverage for the theft or disappearance of cash or checks, robbery insideloutside the premises, burglary of the premises, and ernp~oyee ftdelity. The employee fidelity portion of this coverage should be v~ritten on a "blanket' basis to cover all employees, including nevi hires. s type Insurance should be required rf the contractor has access to City funds. I,i~nits o#`not less than each occurrence are required. [ ] Additional insurance ether insurance maybe required on an individual basis for extra hazardous contracts and specific service agreemer~t~. such additional insurance is required far a specific contract, that requirement will be deeribed ixa the "~pecic Conditions" of the contract specifications. H:1Contracts~I~EUV FORM FOR ~ONTRACT~~Harri~ fi.0lHarris 6.~ CaRtract Agreement s~rvic~s.~oc f ~TT~~~~T ~ worker's compensation Coverage for Buildr~g or anstruction Projects far Governmental ~~tities r l~Qf1n1t10ns. ~ertiflCatQ of coverage ~"certificate"}-A Copy of ~ certificate of insurance, ~ certificate of authority to self insure issued ~y the can~niss~on, or ~ coverage agreement ~Tw-81, TwCC-S~, TCC-S3, or Tw~C-S4}, showing statutory workers' corr~pensation insurance coverage for the person's or entity's employees providing services on a project, for the duration of the project. I~ur~an of the project -includes the time from the beginning of the work an the pro j cct until the cantractor'slpersvn's work on the project has been completed and accepted by the governmental entity. persons providing services an the p:raject ~"subcontractor" in §4~~.~9~} -includes all persons or entities performing ~ ar part of the services the contractor has undertaken to pexform an the project, regardless of whether that person contracted directly with the contractor and regardless of whether that person has employees, This includes, without limitation, independent contractaxs, subcontractors, leasing companies, motor carriers, owner-operators, employees of any such en~ty, ar employees of any entity, which furnishes persons to provide services an the project. "Services" include, without limitation, providing, hauling or delivering equipment or materials, ar providing labor, transportation, ar other service related to a pro ject. "services" does not include activities unrelated to the project, such as foadlbverage vendors, office supply deliveries, and delivery of portable toilets, B. The contractor sha11 provide coverage, based an proper reporting of classification cados and payroll amounts and filing of any average agreements, which meets the statutory requirements of Texas Labor fade, ec~an ~ ~ 1 ~4~} far all employees of the Contractor providing services on the project,. far the dr~ratian of the project. . The contractor must pravlde a certificate of coverage to the gavrnznental entity prior to being awarded the contract: D. If the coverage period shaven an the con~ractar's current certificate of coverage ends fluxing the duration of the project, the contractor must, prior to the end of the coverage period, file a new certificate of coverage with the governmental entity showing that coverage has been extended. The contractor shall obtain from each person providing services on a project, and provide to the governmental entity: ~i:ICantrac~slNEVI~ FORM FOR ~gNTRACT1Harri ~.~IWarr~s fi.~ Contract Agreement ervices.dac  i ~ r {1} a certificate of coverage, prior to that person beginning work on the project, so the gavernrnental entity wi11 have on f~1e certificates of coverage showing coverage for all persons providing services an the pra j ect; and ~2} no later than seven days after receipt by the contractor, a new certificate of coverage showing extension of coverage, if tie coverage period shown an the current certificate of coverage ends during the duration of the praj ect. The contractor shall retain all required certificates of coverage for the duration of the project and for one year thereafter. G. The contractor shall ratify the governmental entity . writing by certified mail or personal delivery, within 10 days after the contractor knew or should have known, o f any change that materially affects the provision of coverage of any person providing services on the praj ect. I~, The contractor shall post on each project site a notice, in the text, form and manner prescribed by the Texas workers' Carnpensatran ommisslan, rnfarm~ng all persons providing services an the project that they are required to be covered, and stating haw a person may verify coverage and report lack of coverage. The contractor sha11 contractually require each person with whom it contracts to provide services an a pro jest, too: ~ 1 } provide coverage, based on proper reporting of classification codes and payroll amounts and filing of` any coverage agreements, which meets the statutory requirements of Texas Labor bode, Section 401.411 {44} for all of its employees providing services on the project, far the duration of the project; {2} provide to the contractor, prior to that person beginning work an the project, a certificate of coverage showing that coverage is being provided for all employees of the person providing services an the project, far the duration of the pra j ect; {3} provide the contractor, prior to the end ofthe coverage period, a new certificate of coverage showing extension of coverage, if the coverage period shown on the current certificate ofcaverage ends during the duration ofthe project; obtain from each other person with whom it contracts, and provide to the contractor: {a} a certificate of coverage, prior to the other person beginning work on the project; and H:lContractslN~1N FARM FQR C~NTRACT1Harris ~.OIHa~ris ~.4 Contract Agreement ~ervices.doc x r ~h} anew certificate of average showing e~tensian of average, prior to the end of the average periad, if the coverage period spawn on the current certificate of average ends during the duration afthe project; retain all required certificates of coverage an file far the duration of the project and far one year thereafter; notify the governmental entity i~ writing by certified mail ar personal delivery, within 10 days after the person knew or should have l~nawn, of any change that materially affects the provision of coverage of any person providing services on the pra~ect; an ~7} contractually require each person with whvna it contractor to perfarrn as rewired by paragraphs ~ 1 } - ~7}, with the certificates of coverage to be provided to the person far wham they are providing services. J, By signing this contract or providing or causing to be pravided a cerki~cate of coverage, the contractor is represen~ng to the governmental entity that all employees of the contractor who wi~~ provide services ou the pia j ect ~i~1 be covered by markers' compensation coverage far the duration of the project, that the ~ average will be based an proper reporting of classification codes and payroll amounts, and that all . coverage agreements will be filed with the appropriate insurance carrier or, in the case of a self-insured, with the cor~a~mission's Division of Self li~ouran~e Regulation. Providing false ar misleading information may subs ect the contractor to dmnustratlve penalties, criinlnal penaltieo~ civil penalties, or other civil ac~.ons. I~. The contractor's failure to campy v~ith any afthese provisions is . breach ofcontract by the contractor which entitles the governmental entity to declare the contract void if the contractor does not remedy the breech within ten dais after receipt of notice of breach from the governmental entity. H:1Cor~tractslNEV11 FARM FaR CQNTRACI'1Hams 6.~1Harris s.o Contract Agreement ervices.~oe a ~NFI~IT F ~NTE~ET ~UETi~~VNAIR~ F~RI l ~XHIBIT~ For vendor or other person doing business with focal governmental entity This questionnaire is being filed in aocardance with chapter ~7 of the Local DFF[CE USE ONLY Government Code by a person doing business with the governmental entity. ~at~ ~~c~~~ea Bylaw this questionnaire must be filed with the records administrator of the local government nit later than the ?th business day afker the date the person becornes aware of facts that require the statement to be filed. fee section ~ ~fi.4gfi, Local Government Code. A person commits an offense if the person violates section ~ 7G.~QG, Local Goverment Cade, An offense under this section is a Class C misderr~eanor, Name of person doing business with local governmental entity. Jody Richards - fir, Application Consultant 2 Check #his box if you are filing an update to a previously filed questionnaire. {The [aw requires that you file an updated competed questionnaire with the appropriate filing authority not later than September ~ of the year for which an activity described in sec#ian 11fi.D0~{a~, coca[ Government bode, is pending and not later than the 7th business day after the date the origina[[y filed questionnaire becomes incomplete ar inaccurate.} Describe each affiliation ar business relationship with an employee or carrtractor of the local gavernmei~tal anti#y who makes recommendations to a focal governmer~ officer ol: the local governmerrtai entity with respect to expenditure of money. NONE 4 Describe each affilia#ion or business relationship with a person who is a Iocal government officer and who appois or employs a local government officer of the local governmertal entity that is the subject of this questionnaire. H:1ContractslNEV11 FORM FOR CONTRAOT~IHarris 6.Q1Harris 8.4 Cantraot Agreement erviCes.doc Amended Q1l13170Q6 ~~~IFL1T ~F INTEREST QUETI~NNAIRE F~RI~ ! Por vendor or other person doing business with ~QC~[ gove~nme~tel entity Page Z ~ Name of Iocal government officer v~rith whom filer has affiliation or business relationship. {complete this section only if the Answer #o A, or ~ is YE.~ This section, item 5 including subparts A, B, C & D, must be completed for each officer with wham the filier has affiliation or business relationship. Attach additional pages to this Forrn CIG~ as necessary. A. Is the local government officer named in this section receiving or likely to receive taxable income from the filer of the questionnaire? Yes ~ No B. Is the filer of the questionnaire receiving or likely to receive taxable income from or at the direction of the local government officer named in this section AAiD the taxable income is not from the local govemmenta! entity? ❑ Yes ~ ~!o Is the filer of this q+~es~onnaire affiliated with a corporation yr other business entity that the local government officer serves as an officer or director, ar holds an ownership of ~ ~ percent or more? Q Yes ~ No Describe each affiliation or business relationship. ~ Describe any ather affiliation or business relationship that might cause a conflict of interest, 7 Signature of person doing business with the governmental en~ty Date Amended 0~1?3f?~06 H:1Contra~tslNEVlf ~DRM FDR C~NTRACTS1Harris fi.0lHarris ~.Q Contract Agreement Servic2s.dnc  i 1 DRAFT MINUTES 2 PUBLIC UTILITIES BOARD 3 July 9, 2007 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was 6 present, the Chair of the Public Utilities Board thereafter convened into an Open Meeting on 7 Monday, July 9, 2007 at 9:00 a.m. in the Service Center Training Room, City of Denton Service 8 Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, Bob Bland, John 11 Baines and Randy Robinson 12 13 Ex Officio Members: 14 Howard Martin, ACM Utilities 15 16 OPEN MEETING: 17 18 CONSENT AGENDA: 19 The Public Utilities Board has received background information, staff's recommendations, and 20 has had an opportunity to raise questions regarding these items prior to consideration. 21 22 1) Consider recommending approval of Bid #3786 to GWG Wood Group, Inc. for contract 23 wood waste grinding in an amount not to exceed $120,000. 24 25 ITEMS FOR INDIVIDUAL CONSIDERATION: 26 27 3. Consider recommending approval of Task Order 07-C, Regulatory Services, of the 28 Professional Services Agreement Between the City of Denton and R. J. Covington 29 Consulting (RJC) for an amount not to exceed $80,000. 30 31 Sharon Mays, General Manager, presented this item stating the ongoing changes being 32 introduced almost daily into the existing deregulated electric marketplace design by the Texas 33 Legislature, TPUC, ERGOT staff and electric market participants are often critical to DME's 34 ability to successfully function in the marketplace. Failure of DME to monitor and participate 3 5 effectively in these activities will result in changes to the existing market model harmful to the 36 interest of smaller players such as DME. 37 3 8 Mays stated that Covington has been active in two major TPUC dockets and that the decisions 39 made in these documents will have financial impacts on rates paid by DME customers. Of 40 particular importance is the docket concerning wind generation and legislative mandated 41 development and construction of transmission lines which, if implemented, could cost DME's 42 customers approximately $12.5 million in additional rates over the life of the facilities. 43 44 Board Member Phil Gallivan moved to approve with a second from Board Member Bland. 45 The motion was approved by a 7-0 vote. 46 47 48 Draft Minutes Public Utilities Board meeting 49 July 9, 2007 50 Page 2 of 2 1 2 3 4. Consider recommending approval of Task Order 07-D, Nodal Market Transition, of the 4 Professional Services Agreement Between the City of Denton and R.J. Covington Consulting 5 (RJC) for an amount not to exceed $80,000. 6 7 Sharon Mays, General Manager, presented this item stating that of the activities occurring at 8 ERGOT at this time, the most important is the on-going nodal market implementation process 9 and, because Covington has represented DME through all the changes in the ERGOT market, its 10 staff is capable of representing DME"s behalf during meetings. 11 12 Chair Charldean Newell asked, and the Board Members confirmed, that the minutes reflect that 13 the Board, in the context of a discussing the City's relationship with ERGOT and the state 14 regulatory board, had a fairly serious discussion about the future and is concerned that there is 15 adequate planning and that the City commits to being willing to spend whatever it takes to 16 protect resources and the City. 17 18 Board Member Bill Cheek motioned to approve with a second from Board Member Randy 19 Robinson. The motion was approved by a 7-0 vote. 20 21 The meeting was adjourned by consensus at 9:56 a.m. 22 AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Jim Coulter 349-7194 ACM: Jon Fortune SUBJECT Consider adoption of an Ordinance accepting competitive bids and awarding a contract for the purchase of wood grinding services for the City of Denton Compost Facility; providing for the expenditure of funds therefor; and providing an effective date (Bid 3786-Wood Grinding for Compost Facility awarded to GWG Wood Group, Inc. in the estimated amount of 100,000 yards at $1.20/cubic yard for an amount not to exceed $120,000). (The Public Utility Board approved this item by a vote of 7-0). BID INFORMATION This bid is for an annual contract to supply wood grinding services for the Dyno-Dirt Compost Operation. The contractor will come onsite when approximately 20,000 cubic-yards of brush, yard waste, and clean construction lumber have been accumulated. The wood products are then ground into small pieces and transported to the compost production area. The Beneficial Reuse Division has been contract grinding for the past four years and has found this to be the most economical method for grinding the wood waste. PRIOR ACTION/VIEW (COUNCIL, BOARDS, COMMISIONS) The Public Utility Board approved this item at its July 9, 2007 meeting. RECOMMENDATION We recommend this bid be awarded to the lowest responsible bidder, GWG Wood Group, Inc. in the amount of $1.20 per cubic-yard for an annual expenditure not to exceed $120,000. PRINCIPAL PLACE OF BUSINESS GWG Wood Group, Inc. Ferris, TX ESTIMATED SCHEDULE OF PROJECT This is an annual contract that may be extended if agreed to by both parties, with all pricing, terms and conditions remaining the same. Agenda Information Sheet July 17, 2007 Page 2 FISCAL INFORMATION This service will be funded from account 640400.7802. Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Bid Tabulation 1-AIS-Bid 3786 Attachment 1 BID #3786 DATE: dune 5, 2007 Wood Grindin for Com ost Facilit ITEM QTY. DESCRIPTION VENDOR VENDOR Thelin GWG Wood Recycling Group, Inc. Principle Place of Business: Ft. Worth, TX Ferris, TX 1 100,000 Wood Grinding per specifications $1.34 $1.20 Cu. Yds. ORDINANCE N0. AN ORDINANCE ACCEPTING COMPETITIVE BIDS AND AWARDING A CONTRACT FOR THE PURCHASE OF WOOD GRINDING SERVICES FOR THE CITY OF DENTON COMPOST FACILITY; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (BID 3786-WOOD GRINDING FOR COMPOST FACILITY AWARDED TO GWG WOOD GROUP, INC. IN THE ESTIMATED AMOUNT OF 100,000 YARDS AT $1.20/CUBIC YARD FOR AN AMOUNT NOT TO EXCEED $120,000). WHEREAS, the City has solicited, received and tabulated competitive bids for the purchase of necessary materials, equipment, supplies or services in accordance with the procedures of State law and City ordinances; and WHEREAS, the City Manager or a designated employee has reviewed and recommended that the herein described bids are the lowest responsible bids for the materials, equipment, supplies or services as shown in the "Bid Proposals" submitted therefore; and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be used for the purchase of the materials, equipment, supplies or services approved and accepted herein; NOW, THEREFOR, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The numbered items in the following numbered bids for materials, equipment, supplies, or services, shown in the "Bid Proposals" on file in the office of the City Purchasing Agent, are hereby accepted and approved as being the lowest responsible bids for such items: BID NUMBER VENDOR AMOUNT 3786 GWG Wood Group, Inc. 1.20/Cu.Yd. SECTION 2. By the acceptance and approval of the above numbered items of the submitted bids, the City accepts the offer of the persons submitting the bids for such items and agrees to purchase the materials, equipment, supplies or services in accordance with the terms, specifications, standards, quantities and for the specified sums contained in the Bid Invitations, Bid Proposals, and related documents. SECTION 3. Should the City and the winning bidder(s) wish to enter into a formal written agreement as a result of the acceptance, approval, and awarding of the bids, the City Manager or his designated representative is hereby authorized to execute a written contract in accordance with the terms, conditions, specifications, standards, quantities and specified sums contained in the Bid Proposal and related documents and to extend that contract as determined to be advantageous to the City of Denton. SECTION 4. By the acceptance and approval of the above enumerated bids, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approved bids. SECTION 5. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this day of , 2007. PERRY R. McNEILL, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY r r= 5 _ _ ~ BY: 3-ORD-Bid 3786 1 DRAFT MINUTES 2 PUBLIC UTILITIES BOARD 3 July 9, 2007 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was 6 present, the Chair of the Public Utilities Board thereafter convened into an Open Meeting on 7 Monday, July 9, 2007 at 9:00 a.m. in the Service Center Training Room, City of Denton Service 8 Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, Bob Bland, John 11 Baines and Randy Robinson 12 13 Ex Officio Members: 14 Howard Martin, ACM Utilities 15 16 OPEN MEETING: 17 18 CONSENT AGENDA: 19 The Public Utilities Board has received background information, staff's recommendations, and 20 has had an opportunity to raise questions regarding these items prior to consideration. 21 22 1) Consider recommending approval of Bid #3786 to GWG Wood Group, Inc. for contract 23 wood waste grinding in an amount not to exceed $120,000. 24 25 ITEMS FOR INDIVIDUAL CONSIDERATION: 26 27 3. Consider recommending approval of Task Order 07-C, Regulatory Services, of the 28 Professional Services Agreement Between the City of Denton and R. J. Covington 29 Consulting (RJC) for an amount not to exceed $80,000. 30 31 Sharon Mays, General Manager, presented this item stating the ongoing changes being 32 introduced almost daily into the existing deregulated electric marketplace design by the Texas 33 Legislature, TPUC, ERGOT staff and electric market participants are often critical to DME's 34 ability to successfully function in the marketplace. Failure of DME to monitor and participate 3 5 effectively in these activities will result in changes to the existing market model harmful to the 36 interest of smaller players such as DME. 37 3 8 Mays stated that Covington has been active in two major TPUC dockets and that the decisions 39 made in these documents will have financial impacts on rates paid by DME customers. Of 40 particular importance is the docket concerning wind generation and legislative mandated 41 development and construction of transmission lines which, if implemented, could cost DME's 42 customers approximately $12.5 million in additional rates over the life of the facilities. 43 44 Board Member Phil Gallivan moved to approve with a second from Board Member Bland. 45 The motion was approved by a 7-0 vote. 46 47 48 Draft Minutes Public Utilities Board meeting 49 July 9, 2007 50 Page 2 of 2 1 2 3 4. Consider recommending approval of Task Order 07-D, Nodal Market Transition, of the 4 Professional Services Agreement Between the City of Denton and R.J. Covington Consulting 5 (RJC) for an amount not to exceed $80,000. 6 7 Sharon Mays, General Manager, presented this item stating that of the activities occurring at 8 ERGOT at this time, the most important is the on-going nodal market implementation process 9 and, because Covington has represented DME through all the changes in the ERGOT market, its 10 staff is capable of representing DME"s behalf during meetings. 11 12 Chair Charldean Newell asked, and the Board Members confirmed, that the minutes reflect that 13 the Board, in the context of a discussing the City's relationship with ERGOT and the state 14 regulatory board, had a fairly serious discussion about the future and is concerned that there is 15 adequate planning and that the City commits to being willing to spend whatever it takes to 16 protect resources and the City. 17 18 Board Member Bill Cheek motioned to approve with a second from Board Member Randy 19 Robinson. The motion was approved by a 7-0 vote. 20 21 The meeting was adjourned by consensus at 9:56 a.m. 22 o:lcontingency fundslcity counci11fy2006-071bob1twu triath1on1071707 ais twu triathlon.doc AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: City Manager's Office CMIDCM/ACM: George C. Campbell, City Manager SUBJECT: Consider an ordinance of the City of Denton, Texas, approving and ratifying a Letter Agreement between the City of Denton and Texas Woman's University regarding the TWU Triathlon event; authorizing and ratifying the expenditure of funds in connection therewith; and providing an effective date. BACKGROUND: The purpose of this Ordinance is to use Council Member Bob Montgomery's contingency money in the amount of $400 to assist TWU for the cost of overtime pay for police personnel at the TWU Triathlon event. A Letter Agreement was signed on July 1, 2007 and we are asking Council to ratify the previously signed Agreement. OPTIONS: Approve and ratify the Letter Agreement and approve and ratify all expenditures. RECOMMENDATION: Staff recommends the City Council approve the Ordinance because it serves a public and municipal purpose by encouraging tourism and visitors to the City which will have a positive economic effect for the City. Respectfully submitted, - t } .r ~ - I George C. Campbell City Manager Jan 29 0"~ 1,2: #9p TWU ATHLETIES 5#0-898-~3'~2 p. 1 ~6I~s~~~o7 ~~:5a FAx 940 3~9 ~~96 CITY at` DENTIN C~Jooi M•~, 4 11 f ZI:~ E. MC~ftu~:~ S~t~~ DentQn. Tc~~s 7~s?f~ I t~~~0~ ~Sf7 FAX t;j~~j ~Fl"1C1~ ~F "~~1F~ CiT~ MANAGER lone ZS, ~~T 'VIA FACST[VII~►~; Margie V~}lier~on Fax Na, 8~$.Z~7~ Cha~ese Cann~ors Athletic Duectar ~`exas Woman's Ilnivcrsity P.Q, fox ~4~53~49 Denton T~ 7b~D~ RE: 'I"~'friathlan Lvent Dear Ms. Canners: ~leaee l~ this lutes sorire e~ a ~ettet Agre~nt betv~een the Cry of l'~~ton end the T$xa~ Woman►'s CJ~ver~ity ~'`TWC"~ rurdi~ #be TWU Triathlon Event wrhich is sche~ulad fax ruly X00?. The City agxee~ to pay ~4DD.~Q towards overtime cap fvr paliaz personnel et the event. ~ exche T1NU a to poromate the City of Dcntan f rah will encourage tvurisa~ in the City. Thss eve will serve a public end municipal purpose by tncournging visitors to the City, which will rco~amicelly benefit the City. In ~dditio~ the City r+e8e~re~ the r~ht to audit your retards et a rea~nable time and place to verify the ex~penditure~. Please ssgn a copy of this let#e~ at ~ pace indicated below ~d return ~ me. Sheuld you have ~Y 9uestians please da eat hesitate to call ~ et 9~40~~4~-~3~7. Stn~cerely Geode C. Campbell . City l~at~ger Ch~lese Ca~arsr Athletic Director, T'WU D' R c~ a r N c o a S 4l~ce ~res~ dent fvr Student fe © T~lU "p~di~atcd to ~~Atity ser~v~ee~, S;lOur Docum~n~sl~nance~1~71TVW Triathan Lefter afAgr~etnent ~rd.dac ~RDINANE N0. AN ORDINANCE ~F THE CITY ~F DENTIN, TEA, APPR~VIlV AND RATIFY~NC ~ LETTER AGREEMENT BETWEEN THE CITY ~F DENTON ~ TEA OMAN' UNERITY REARDINC THE TAU TRIATHLON EVENT; AUTH~RI~IIV AND RATI~'YINC~ THE EPENDITUR.E 0~' FUNDS IN C~NNECT~~N THERE~TH~ A~TD 3 FR~IDINC AN EFFECTIVE DATE. AREA, the City ~Vlanager has b.eretofore executed a fetter agreement on behalf of the City of Denton nth Texas Kaman's University ~"TCJ"} regarding the TAU Triathlon event, a copy of v~hih is attached hereto and made part hereof as Exhibit A the "Agreement" ; and IEREA, the City ouncl~ finds that the Agreement serves a puhl~c and munlcrpa~ p~.rpose by encaurag~ng tor~risn~ and ~isitars to the City, which has a beneficial econarnic benefit to the pity; N, THEREFORE, THE C~UNCfL OF THE CITY ~F DENTIN HEREBY ORDAIN: SECTION 1. The Agreement is hereby approved and ratified and ail expenditures prodded far therein are approved and ratified. SETI~N This Ordina~.ce shall became effective immediately upon its passa a and g approval and has retroactive effect to the date of the Agreement. PASSED AND APPROVED this the day of ~0~7. PERRY R. cNEILL, MAYOR ATTEST: JENNI~`ER ALTER, CITY SECRETARY APPROVED A TO LE FO . EDP iVi. , C Y A Y BY:  i J'un ~9 C~~ f TWA R7`H~ETI~ 9~~-~8~~~7 ~ . ~~I~I2~a~ t~; sa aka i~Y ~F ~E~i'I~ oar t ~C;~ C~. ~~~iu~~;y Srt~ n~~n. T~~~s ~t~~[l~ FAQ t~3~~~ ~~~1~~ ~`ET~f N~A#VA~~ER ~u~e 8, 0~7 ~a~ N~, ~.~3'~~ tae ~~r Aed~ ~i~r Qom' ~ ~n1Y~T~~ P.[~. B 4~3~~ 1 'Y'~'~'~~~h~a~ ~v~x~~ ~1~ het tl~ ~e~tc~ ~~r a~ a tit re~n~ b~twn ~ ~y o~ ~t~~ ~ e orn'~ n~ver~i~y ~~r~~ rho T~rJ `aon Ev~~t, ~vh,~ch i~ ~c~ ~Or ~ ~ t X47. ~ ~i ~ ~ ~s ~ ~ ~ ~ ~~Y ~4. ~ o~e~e c ~Or ~oZs p~ar~o~~~ ~t tie eat; ~ ~x~hge'~' ~ ate ~ ~~y alto w r~~ ~ur~g~ torn in the x~r: ~s~ eat ~vi~I vG a pub~~~ and ~ctr~rt~c~pa~ pp~s~ by ens 'n ~~~~r~ ~ w~uch wi~~ ~ ~ ~ ~ Y bit t~~. ~~i ~ r~see~ the r~~h~ ~o a~di~ ~ra~~ roc~ar~s at ~ ~o~ab~ t~~~ and ~ to v► ~h~ expe~drtu~. ~~se sib a c~p~ of this ~et~r P~ it o►u end ~ 5hou~d u harp ~ et~o~~ p~~ d~ hesat~ ca~~ nee ~ae~~ ~a~er bl ark A~e~i~ ~o~ ~ ~ ~ . R c a r ~ c a as ~i ce Pre3 e-~r~ fir u~e~~ f e T~lU "~~~et~d t~ ~~~i~y ervx" CITY OF DENTON CITY COUNCIL MINUTES June 4, 2007 After determining that a quorum was present, the City Council of the City of Denton, Texas convened in a Special Called Work Session on Monday, June 4, 2007 at 11:30 a.m. in the Council Work Session Room. PRESENT: Mayor McNeill; Mayor Pro Tem Kamp; Deputy Mayor Pro Tem Mulroy; Council Members Heggins, Montgomery, and Watts. ABSENT: Council Member Thomson 1. The Council received an update from staff on water and wastewater impact fees. Jim Coulter, Director of Water/Wastewater, reviewed the background information regarding the implementation of the impact fees and the authorization per Chapter 395 of the Local Government Code. The fees were first implemented in September 1998, updated in 2003 and were scheduled for another update in 2008. The purpose of the fee was to provide infrastructure funding for new growth, funding for capital construction costs, funding for costs identified in the 10 year capital improvements plans, and were applicable to developments placing new demands on the City's water/wastewater system. Phase II (2003-2013) was a 10 year planning period with $166 million for water and $73 million for wastewater. Coulter reviewed approved plats and existing lines and future type challenges with undeveloped properties in the Cole property, Petrus property and Robson property. Council discussion- s The Robson community paid for a water line and the city paid for the oversizing of that line. How was the City going to recover the prorata for that oversizing? Coulter indicated that currently there was no mechanism to collect for that oversizing. Anew developer in that area would not have any cost sharing for that line if he tied into the new oversized line. Council encouraged staff to look at a mechanism to recover the oversizing for lines. • A geographical differential was needed for various areas of the city so as to equalize the fee. Coulter continued with a discussion of new meter installation. He reviewed the fund balance history for the water and wastewater impact fee balance. Council discussed the information presented in the agenda backup materials for clarification of contents. Meter sizes might not be a good system for the basis for an amount of fee charge. A change to per bedroom for multifamily projects might be better. Staff worked with developers for proper sizing and/or meter strength. Categories would be reviewed in 2008 with a review of t e current or mance. Council discussed back testing to determine if the amount of fee was appropriate and if too low, recapture the costs. Coulter stated that if improperly charged, the fee would be adjusted. However, there was no mechanism for back testing and providing a refund for overpayment. Council discussed the single meters for large apartment complexes and the need to encourage large apartment complexes to have single meters in order to conserve water. It was felt that City of Denton City Council Minutes June 4, 2007 Page 2 residents might be more energy efficient they had to pay for the bill rather than having the complex pay the bill. Council requested a memo with a city comparison chart with clarification of values. Council questioned if the CIP was based on projected growth and commercial installations. Coulter replied correct. He also indicated that staff was currently discussing zone impact fees with the Public Utilities Board. Brian Lockley, Interim Director of Planning and Development, reviewed development fees assessed in conjunction with impact fees and compared development review fees. He showed all the various development fees and indicated that fees varied city by city. Platting and zoning functions with fees charged by nearby cities were also reviewed. Council requested feedback in memo form for the recaptured cost recovery amount from fees. Lockley reviewed the Freese and Nichols development review fees. The contract review period was coming up and staff could review whether or not to continue to contract with Freese and Nichols. Currently the contract did not include master planned communities. He would like to see a provision in a new agreement for additional services based on the type of project and to look at adding a provision for master planned communities so developers would know how much the engineering review fees would be. 2. The Council held a discussion regarding appointment of a nominating committee for Council committees. Mayor McNeill indicated that in prior years, the Mayor appointed a nominating committee to present a slate of members for each council committee. He appointed Council Member Thomson and Deputy Mayor Pro Tem Mulroy to the committee. The Committee would review current assignments and members should let the Committee know if changes were requested. Council Member Montgomery suggested a j oint membership on the Lake Ray Roberts Planning and Zoning Commission so a new member had background information before he left the Counci . Mayor McNeill indicated that the Committee would report back to Council at the end of June/ early July for appointments. With no further business, the meeting was adjourned at 1:10 p.m. PERRY R. MCNEILL MAYOR CITY OF DENTON, TEXAS JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES June 5, 2007 After determining that a quorum was present, the City Council convened in a Work Session on Tuesday, June 5, 2007 at 4:00 p.m. in the Council Work Session Room at City Hall. PRESENT: Mayor McNeill; Mayor Pro Tem Kamp; Deputy Mayor Pro Tem Mulroy; Council Members Heggins, Montgomery, and Watts. ABSENT: Council Member Thomson 1. The Council received a report, held a discussion and gave staff direction regarding the removal of property in the downtown area from the floodplain and discussed issues relating to flooding experienced during the April 24th storm. Jim Coulter, Director of Water/Wastewater, presented photos from the flood event of areas around City Hall and the Emily Fowler Library. He stated that the drainage fee was established in 2002 to target the major east/west-north/south corridors. The Development Code prohibited homes from being constructed in the floodplain. Channel maintenance improvements had increased. He indicated that during the last storm and during storms in the past, there were a number of people who still drove around barricades during a flood. This was in violation of Transportation Code 472.022. Council had asked how much it would cost to do improvements in the downtown area to remove properties from the floodplain. Staff estimated that PED would cost $4.956 million; Eagle Drive, $3.9 million; Pecan Creek, $39 million; North Pecan, $5.7 million for an approximate total of $59 million in today's dollars to remove properties from the floodplain. Council discussion- • What happened to the estimate by the consulting firm for the drainage master plan for the years 1996-2007? Coulter replied that the 1996 project removed 110 acres around Bell Avenue from the floodplain and the drainage was established in 2002. • A concern was expressed that it took a 100 year flood to get back on track with drainage projects. Coulter reviewed a chart of floodplain/non-floodplain property and appraised values in the downtown area. Council discussed if it would be feasible to go further upstream and not replace so much valuable property - to build for the exception. Coulter reviewed the flood insurance estimates for homes of various values, with and without contents in the flood zone. Notices were sent out annually to residents regarding flood zone areas. Just to fix the problem was an enormous cost and if completed, did not guarantee that there might be a 1000 year storm or higher. The best that could be done was to reduce the frequency homes would be flooded. It was estimated that there were 1400 structures in the floodplain with 166 homes damaged during the last storm. Options to consider included (1) continue the drainage program at the current level, (2) continue the program at the current level and increase efforts to encourage home owners and business owners in the floodplain to purchase flood insurance, (3) purchase developed properties at-risk of City of Denton City Council Minutes June 5, 2007 Page 2 flooding and remove residences or buildings from the floodplain with a cost estimate 150 homes at $80,000 for $12,800.00, (4) obtain drainage easements and construct drainage improvements such as channel widening and culverts or bridges to lower the base flood elevations and contain floodwaters within designated channels and easement areas for a cost estimate for the entire city of $200 million plus. Staff recommendations included continuing the drainage program at the current level, continuing to notify those property owners in the floodplain of flood insurance, and enforcing Transportation Code 472.022 for driving around barricades. Council requested a comparison of land values and structure values of homes in the floodplain with a 5 year projection of cost dollars per year to spend on projects. List a priority of projects detailing where the city could get the most relief for the amount of dollars spent. 2. Staff responded to requests for clarification of agenda items listed on the agenda for June 5, 2007. Following the completion of the Work Session, the City Council convened in a Closed Meeting at 5:00 p.m. to consider the specific items listed below under the Closed Meeting section of this agenda. 1. Closed Meeting: A. Deliberations regarding Personnel Matters -Under TEXAS GOVERNMENT CODE Section 551.074. 1. Deliberated and discussed the evaluation of a candidate for the Internal Auditor position, including the selection, employment and evaluation of a future Internal Auditor. B. Deliberations regarding Real Property -Under TEXAS GOVERNMENT CODE Section 551.072. 1. Received a report, held a discussion, and gave staff direction, pertaining to the possible location of, the purchase price of, and valuation issues respecting the possible acquisition of an approximate three (3) acre tract of real property by the City of Denton Municipal Utilities Department for a public purpose; which real property lies within the Asa Hickman Survey, Abstract No. 521, City of Denton, Denton County, Texas, and is located East of the Kansas City Southern Railway, South of the Denia Park area. C. Deliberation regarding Personnel Matters -Under TEXAS GOVERNMENT CODE section 551.074 1. Deliberated and discussed the evaluation of the City Manager, including a discussion of performance measures for and the duties of the City Council appointee. City of Denton City Council Minutes June 5, 2007 Page 3 D. Consultation with Attorney -Under TEXAS GOVERNMENT CODE Section 551.071. 1. Consulted with attorneys regarding safety procedures and avoidance of liability claims. E. Consultation with Attorney -Under TEXAS GOVERNMENT CODE Section 551.071 and Deliberations regarding Real Property - Under TEXAS GOVERNMENT CODE Section 551.072. 1. Received legal advice from the City Attorney relating to the lease of City right-of way for property at 207 North Elm and deliberations regarding the lease of City property. Regular Meeting of the City of Denton City Council on Tuesday, June 5, 2007 at 6:30 p.m. in the Council Chambers at City Hall. 1. PLEDGE OF ALLEGIANCE The Council and members of the audience recited the Pledge of Allegiance to the U. S. and Texas flags. 2. PROCLAMATIONS/PRESENTATIONS A. Proclamations/Awards There were no proclamations or awards presented at this meeting. 3. CONSENT AGENDA Mayor McNeill requested that Item 3V be pulled for individual consideration. Mulroy motioned, Heggins seconded to approve the Consent Agenda with the exception of Item 3V. On ro11 vote, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Watts "aye" and Mayor McNeill "aye". Motion carried unanimously. Item V was considered. Emerson Vorel, Interim Director of Parks and Recreation, indicated that there were no outstanding issues associated with the request. All of the insurance was up-to-date and the TABC was waiting for council approval to issue the permit. He believed all issues were worked through and the event was ready to go. Mulroy motioned, Heggins seconded to approve Item 3V noting that the TABC license had to be produced before the holding of the event. On roll vote, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Watts "aye" and Mayor McNeill "aye". Motion carried unanimously. City of Denton City Council Minutes June 5, 2007 Page 4 Makalani Jones spoke regarding the event. A. Approved a request for two separate exceptions to the Noise Ordinance (Section 20-1, 4C 2E and 20-1, 3) for the purpose of the Apollo Nights (facilitated by Mr. Harold Jackson) on Tuesday, June 19th from 4:00 p.m. to 11:00 p.m. and the following Sundays: July 1st, July 15th, and July 29th from 5:00 p.m. to 10:00 p.m.; and for Music Nights (also facilitated by Mr. Harold Jackson) on the following Sundays: July 8th and July 22nd. These events will be held in the Fred Moore Park. The requestor was specifically asking for an exception to the noise ordinance to allow amplified sound on the Sundays listed and for amplified sound for hours after 10:00 p.m. on Tuesday, June 19th B. Approved a request for an exception to the Noise Ordinance for amplified sound for a fundraising rodeo and musical concert to be held at the North Texas Fairgrounds on Saturday, June 16, 2007. The exception was specifically requested to extend the hours from 10:00 p.m. to 12:00 a.m. for amplified sound. The event was a fund raiser for the four year old son of Michelle Oldham, a child with medical conditions. C. Approved a request for an exception to the Noise Ordinance for the purpose of the Singing Oaks Church of Christ carnival on Sunday, June 10th from 3:30 p.m. to 7:30 p.m. The event will be held in the church parking lot located at 101 Cardinal Drive. The requestor was specifically asking for an exception to the noise ordinance to allow amplified sound on Sunday. D. R2007-014 - A resolution nominating a member to the Board of Managers of the Denco Area 9-1-1 District; and declaring an effective date. E. Approved a tax refund for the following property tax: Name Reason Tax Amount Year 1. EMC Mot~tgage Overpayment 2006 $ 2,499.3 8 F. 2007-115 - An ordinance of the city of Denton, Texas authorizing the expenditure of funds for payments by the City of Denton for electrical energy transmission fees to five agencies for providing energy transmission services to the City of Denton; and providing an effective date (File 3790-2007 Electrical Energy Transmission Fees in the total amount of $255,904). The Public Utilities Board recommended approval (4-0). G. 2007-116 - An ordinance providing for the expenditure of funds for the emergency purchase of building clean up services due to flood damage for the City of Denton in accordance with provisions of State Law exempting such purchases from requirements of competitive bidding; and providing an effective date (File 3801-Clean Up of Flood Damage to Municipal building and Civic Center for the City of Denton awarded to ServiceMaster Clean in the amount of $40,399.35). City of Denton City Council Minutes June 5, 2007 Page 5 H. 2007-117 - An ordinance accepting competitive bids by way of an Interlocal Cooperative Purchasing Program Participation Agreement with the Lower Colorado River Authority (LCRA) under Section 271.102 of the Local Government Code, for the purchase of 15kVA, 25kVA, and SOkVA transformers; providing for the expenditure of funds therefor; and providing an effective date (File 3789-Interlocal Agreement for Purchase of Transformers with LCRA awarded to Techline, Ltd., in the amount of $189,985.08). The Public Utilities Board recommended approval (4-0). I. 2007-118 - An ordinance authorizing the City Manager to execute an amendment to a Professional Services Agreement with the firm of R.J. Covington, LLC to prepare and coordinate Denton Municipal Electric's 2007 Earning Monitoring Report; authorizing the expenditure of funds therefor; and providing an effective date (File 3747 in an amount not to exceed $31,500 for a total contract amount of $116,500.). The Public Utilities Board recommended approval (4-0). J. 2007-119 - An ordinance accepting competitive bids and awarding a public works contract for the construction of the Pecan Creek Water Reclamation Plant filter improvements for the City of Denton; providing for the expenditure of funds therefor; and providing an effective date (Bid 3776-Pecan Creek Water Reclamation Plant Gravity Filter Improvements awarded to Crescent Constructors, Inc. in the amount of $427,000). The Public Utilities Board recommended approval (4-0). K. 2007-120 - An ordinance accepting competitive bids and awarding a public works contract for the construction of the asphalt and concrete street sections including repairs for the City of Denton Street Department; providing for the expenditure of funds therefor; and providing an effective date (Bid 3708-Annual Contract for Asphalt and Concrete Street Sections and Repairs awarded to the lowest responsible bidder for each item, Jagoe-Public Company in the annual estimated amount of $1,500,000). L. 2007-121 - An ordinance determining a sole source and approving the expenditure of funds for the purchase of phone service for the City of Denton available from only one source in accordance with the provision for State Law exempting such purchases from requirements of competitive bids; and providing an effective date (File 3798-Purchase of a Two-Year Contracted Rate for the City of Denton Phone Service awarded to Verizon Business Network Services in the annual amount of $19,200 for a total award amount of $3 8,400). M. 2007-122 - An ordinance awarding a contract under the Texas Multiple Award Schedule (TXMAS) program for the purchase of two 55' aerial device bucket trucks and one hydraulic rotating digger derrick truck as awarded by the State of Texas Building and Procurement Commission contract TXMAS-7-23V040; providing for the expenditure of funds therefor; and providing an effective date (File 3724-Heavy Services Trucks for Denton Municipal Electric awarded to Grande Truck Center in the amount of $385,357.). The Public Utilities Board recommended approval (5-0). City of Denton City Council Minutes June 5, 2007 Page 6 N. R2007-015 - A resolution authorizing the City Manager to execute an agreement between the City of Denton and the Texas Commission on Environmental Quality (T.C.E.Q.) granting a license to the Texas Commission on Environmental Quality for an air pollution monitoring station; and declaring an effective date. The Airport Advisory Board recommended approval (6-0). The Mobility Committee recommended approval (3-0). 0. 2007-123 - An ordinance of the City of Denton authorizing an agreement between the City of Denton, Texas and South Ridge Recreation Club for the enhancement and beautification of the fence line around the swimming pool; providing for the expenditure of funds therefor; and providing for an effective date. ($200.00) P. 2007-124 - An ordinance appointing Steve Shepherd as Internal Auditor, approving an employment agreement; authorizing the Mayor to execute this agreement employing Steve Shepherd as Internal Auditor of the City of Denton, Texas; and setting the compensation and terms of that employment; authorizing expenditures and actions; and providing an effective date. Q. 2007-125 - An ordinance of the City of Denton, Texas, authorizing the City Manager to execute an agreement by and between the City of Denton, Texas and Denton 288, L.P. for the provisions of sanitary sewer and water facilities pertaining to the Hills of Denton, a development located in the City of Denton, Texas; and providing an effective date. The Public Utilities Board recommended approval (6-0). R. Approved a request for an exception to the Noise Ordinance for the purpose of a music festival, Fry Street Concert Series, conducted by D.H.S. Entertainment in the area of Fry Street, behind Lucky Lou's and Riprocks, to benefit the Susan G. Koman Foundation. The event was to be held on Saturday, June 23, 2007, from 2:00 p.m. to 8:30 p.m. The exception was specifically requested for an increase in the maximum allowable sound level for an outdoor music festival from 70 decibels to 75 decibels. S. 2007-126 - An ordinance amending the City Manager's Employment Agreement and authorizing the Mayor to execute said Agreement setting the compensation and terms of employment; authorizing expenditures and actions; and providing an effective date. T. 2007-127 - An ordinance of the City of Denton authorizing an agreement between the City of Denton, Texas and the Denton Parks Foundation to support the 2007 Juneteenth Celebration; providing for the expenditure of funds therefor; and providing for an effective date. ($250.00) U. 2007-128 - An ordinance directing the publication of Notice of Intention to issue Certificates of Obligation of the city of Denton totaling $12,000,000; and providing for an effective date. V. R2007-016 - A resolution allowing Kramerov Beverages, Inc. to be the sole participant allowed to sell alcoholic beverages at the Makalani Movement Music Festival/Juneteenth Celebration on June 9, 2007, upon certain conditions; City of Denton City Council Minutes June 5, 2007 Page 7 authorizing the City Manager or his designee to execute an agreement in conformity with this resolution; and providing for an effective date. The Parks, Recreation and Beautification Board recommended approval (5-0) contingent on him obtaining all TABC license and permits through a licensed vendor and all other pertinent documentation before submitting the recommendation to City Counci . 4. PUBLIC HEARINGS A. The Council held a public hearing and considered adoption of an ordinance regarding the adjustment of the jurisdictional boundary between the City of Denton and the City of Corinth. The boundary adjustment would result in transferring 0.961 acres from the City of Denton to the City of Corinth (SI06-0003). The Planning & Zoning Commission recommended approval (7-0). Brian Lockley, Interim Director of Planning and Development, stated that this was a request for a boundary adjustment with the City of Corinth. The purpose of the request was to facilitate the negotiation of Lake Sharon Estates for a four lane divided highway in City of Corinth. The proposed Lake Sharon Drive would tie in with Denton's mobility plan. Corinth had already adopted the proposed change. The Mayor opened the public hearing. No one spoke during the public hearing. The Mayor closed the public hearing. The following ordinance was considered: N0.2007-129 AN ORDINANCE APPROVING A BOUNDARY ADJUSTMENT AGREEMENT BETWEEN THE CITY OF DENTON AND THE CITY OF CORINTH; AND PROVIDING AN EFFECTIVE DATE. Kamp motioned, Mulroy seconded to adopt the ordinance. On roll vote, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Watts "aye" and Mayor McNeill "aye". Motion carried unanimous y. B. The Council held a public hearing and considered adoption of an ordinance concerning the creation of an overlay district for approximately 77.628 acres located on the east side of Fort Worth Drive at Fairway Drive. The proposed overlay district will deviate from development standards of the Denton Development Code concerning lot coverage and setbacks and provide additional architectural standards to allow large homes than is currently allowed on the subject property. The property was located within a Neighborhood Residential 2 (NR-2) zoning district (Z06-0035). The Planning and Zoning Commission recommended approval (7-0). Brian Lockley, Interim Director of Planning and Development, stated that this proposal was for an overlay district for Country Club Village. The applicant was requesting to deviate from the requirements in the Denton Development Code regarding lot coverage, side yard setbacks, block City of Denton City Council Minutes June 5, 2007 Page 8 length and cul-de-sac lengths. The purpose was to allow the development of larger homes than could be built under the current regulations and match the existing residential standards being developed in Phase 1 of the subdivisions. The overlay district would include more stringent architectural and site design standards than was currently requested by the Code. Deputy Mayor Pro Tem Mulroy felt that the definition of an overlay was to be more restrictive than less restrictive and he considered this request to be less restrictive. He felt street lengths were more of a variance item rather than an overlay district item. He was not at issue with the merits of the proposal. He was at issue with the definition of overlay. He asked if there was another way to do the proposal without an overlay. Lockley replied that other alternatives were considered and the overlay was the best scenario. City Attorney Snyder stated that the Code did not specifically say that an overlay had to be more restrictive than less restrictive. Staff had reviewed the proposal and could not come up with another vehicle to accommodate the developer's issues. The developer might also have an argument for vested rights in the original zoning based on state law. Deputy Mayor Pro Tem Mulroy indicated that he would have a problem setting a precedent with an overlay that was less restrictive than more restrictive. Council Member Montgomery indicated that the proposal had been through the Planning and Zoning Commission process without a problem. The Mayor opened the public hearing. Larry Reichhart, Spring Brook Planning Group, requested approval. The Mayor closed the public hearing. The following ordinance was considered: N0.2007-130 AN ORDINANCE OF THE CITY OF DENTON, TEXAS, PROVIDING FOR AN OVERLAY DISTRICT ON APPROXIMATELY 77.628 ACRES OF LAND LOCATED ON THE EAST SIDE OF FORT WORTH DRIVE AT FAIRWAY DRIVE CURRENTLY ZONED WITH A BASE ZONING CLASSIFICATION AND USE DESIGNATION OF NEIGHBORHOOD RESIDENTIAL 2 (NR-2), AND MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS IN EXHIBIT A, ATTACHED HERETO, AND DEPICTED ON EXHIBIT B ATTACHED HERETO; PROVIDING FOR A PENALTY IN THE MAXIMUM AMOUNT OF $2,000.00 FOR VIOLATIONS THEREOF; PROVIDING FOR SEVERABILITY AND AN EFFECTIVE DATE. (Z06-0035) Mulroy motioned, Heggins seconded to adopt the ordinance. On roll vote, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Watts "aye" and Mayor McNeill "aye". Motion carried unanimous y. City of Denton City Council Minutes June 5, 2007 Page 9 5. ITEMS FOR INDIVIDUAL CONSIDERATION A. The Council considered nominations to the Denton County Housing Finance Corporation (DCHFC). Mayor McNeill indicated that there were currently two vacancies on the Board. He nominated Phil Diebel, George Highfill and re-nominated Linnie McAdams, Phil Gallivan, and Mark Chew. Mayor Pro Tem Kamp nominated Euline Brock. Mayor McNeill indicated that the Council would vote on the nominations in the order presented. On roll vote for Phil Diebel, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Watts "aye" and Mayor McNeill "aye". Motion carried unanimously. On roll vote for George Highfill, Heggins "aye", Kamp "nay", Montgomery "aye", Mulroy "aye", Watts "aye" and Mayor McNeill "aye". Motion carried with a 5-1 vote. On roll vote for Linnie McAdams, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Watts "aye" and Mayor McNeill "aye". Motion carried unanimously. On ro11 vote for Phil Gallivan, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Watts "aye" and Mayor McNeill "aye". Motion carried unanimously. On ro11 vote for Mark Chew, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Watts "aye" and Mayor McNeill "aye". Motion carried unanimously. Mayor McNeill indicated that the above individuals would fill the vacancies. B. Citizen Reports 1. Council reviewed the procedures for addressing the City Council. 2. The Council received citizen reports from the following: A. Nell Yeldell regarding DCTA surveys. Ms. Yeldell was not present at the meeting. B. Pat Foutch, representing the Lee Meadows Subdivision Property Owners, regarding drainage issues. Ms. Foutch stated homes on Mack Place were flooded during the recent heavy rains. The neighborhood felt that development in the area on Oak Tree Street and the removal of the creek had caused the flooding. No action was taken by the City after the flooding was reported. The neighbors felt that to prevent future flooding, the City needed to complete a study and a survey of the flooded area, provide plans for a drainage system for flooding, install a proper drainage system for the subdivision, be aware that this was a time sensitive issue to address and City of Denton City Council Minutes June 5, 2007 Page 10 implement the procedures as soon as possible, preferably before September 1, 2007 and the beginning of the fall raining season. C. Jan Thompson regarding a presentation on Texas Master Naturalists -Clear Creek. Ms. Thompson presented a framed collage of the Clear Creek site and expressed gratitude to the Council for its support of the area. C. New Business and Announcements There were no items of New Business and Announcements requested by Council. D. City Manager's Report City Manager Campbell did not have any items for Council. E. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. There was no continuation of Closed Meeting. F. Official Action on Closed Meeting Item(s) under Sections 551.071-551.086 of the Texas Open Meetings Act. There was no official action taken on Closed Meeting Items. With no further business, the meeting was adjourned at 7:41 p.m. PERRY R MCNEILL MAYOR CITY OF DENTON, TEXAS JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES June 12, 2007 After determining that a quorum was present, the City Council of the City of Denton, Texas convened in 2nd Tuesday Session on Tuesday, June 12, 2007 at 4:00 p.m. in the City Council Work Session Room at City Hall. PRESENT: Mayor McNeill; Mayor Pro Tem Kamp; Deputy Mayor Pro Tem Mulroy; Council Members Heggins, Montgomery, and Watts. ABSENT: Council Member Thomson 1. The Council discussed the nomination process for the City's Boards and Commissions. Jennifer Walters, City Secretary, reviewed the nomination process for the boards and commissions. Council would be presented with a notebook containing current terms that were expiring, member responses for re-nomination, attendance, new applications and a preference chart for applicants. She asked the council to take the weeks during the summer break to contact their nominations which would be presented to Council at the July 17th meeting. Following the completion of the Work Session, the City Council convened in a Special Called Meeting. 1. The Council held the first of two public hearings to consider the voluntary annexation and service plan for two sites. The first site was approximately 7.85 acres and the second site was approximately 1.54 acres, totaling approximately 9.39 acres. The sites to be annexed were generally located on the north side of Spencer Road between Woodrow Lane and Brinker Road. The sites were within a tract of land legally described as Municipal Utility Addition, Lot 1, Block 2. (A07-0002, Denton Municipal Electric Spencer Complex Annexation) Brian Lockley, Interim Director of Planning and Development, stated that this was a voluntary annexation for a portion of the Denton Municipal Electric Spencer Complex property and associated right-of way. The Mayor opened the public hearing. No one spoke during the public hearing. The Mayor closed the public hearing. No action was required on this item at this time. 2. The Council held the first of two public hearings to consider the voluntary annexation and service plan for approximately 127.9662 acres. The property to be annexed was generally located in the northwestern area of the City of Denton's Extraterritorial Jurisdiction (ETJ) at the northwest corner of I-35N and the future Loop 288 extension. (A07-0001, Westview Commercial Annexation) Brian Lockley, Interim Director of Planning and Development, stated that this was a voluntary annexation for the Westview Commercial property and associated right-of way. There were no future plans for the property, outside the future right-of way for the Loop 288 extension. The notice of annexation had met all state mandated requirements. City of Denton City Council Minutes June 12, 2007 Page 2 Mayor McNeill asked if there would be an advantage to include state right-of way in the annexation. City Manager Campbell stated that it would assist police officers with the enforcement of traffic aws m t e area. Mayor McNeill asked why it had been left out of the annexation. Lockley replied that the property was state right-of way and not westview Commercial property. The State would have to provide permission for the City to annex the right-of way. Deputy Mayor Pro Tem Mulroy indicated that unless the annexation was on a critical path, staff should check with TxDot to include the right-of way in the annexation. The Mayor opened the public hearing. No one spoke during the public hearing. The Mayor closed the public hearing. No action was needed on this item at this time. Following the completion of the Special Called Meeting, the City Council convene in a Closed Meeting at 4:20 p.m. to consider the specific items listed below under the Closed Meeting section of this agenda. 1. Closed Meeting: A. Deliberations regarding certain Public Power Utilities: Competitive Matters - Under TEXAS GOVERNMENT CODE Section 551.086. 1. Received a briefing and information pertaining to certain competitive electric matters including, without limitation: present and future maintenance issues, financial issues, operational issues, reliability issues, and any related issues concerning the City's interest in, and its business relationship with TMPA; and discuss, deliberate, consider, and provide Staff with direction regarding such matters. B. Consultation with Attorney -Under Texas Government Code Section 551.071 1. Consultation with the City's attorneys regarding legal issues, including defense of pending litigation filed by JNC Denton Partners, LLC, associated with annexation of real property in the City's northern ETJ, under annexation case no. A05-0002, along with other legal issues related to the annexation, zoning, land use and subdivision controls, plat applications, annexation plans, development agreements, settlement, annexation agreements, service plans, utility service, and legal issues City of Denton City Council Minutes June 12, 2007 Page 3 relating to the creation of special districts in the ETJ requested by JNC and White Cake Denton, L.P. A public discussion of these legal matters would conflict with the duty of the City's attorneys to the City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas or would jeopardize the city's legal position in any administrative proceedings or potential litigation. C. Consultation with Attorney -Under TEXAS GOVERNMENT CODE Section 551.071 and Deliberations regarding Real Property - Under TEXAS GOVERNMENT CODE Section 551.072. 1. Deliberations regarding value and purchase of Real Property located in downtown Denton including advice from City Attorney regarding legal issues related thereto, and legal advice from the City Attorney related to the sale of City property. With no further business, the meeting was adjourned. PERRY R. MCNEILL MAYOR CITY OF DENTON, TEXAS JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES June 19, 2007 After determining that a quorum was present, the City Council convened in a Work Session on Tuesday, June 19, 2007 at 4:00 p.m. in the Council Work Session Room at City Hall. PRESENT: Mayor McNeill; Mayor Pro Tem Kamp; Deputy Mayor Pro Tem Mulroy; Council Members Heggins, Montgomery, Thomson, Watts. ABSENT: None. 1. The Council received a report, held a discussion, and gave staff direction regarding Request for Proposal (RFP) #3723, Administrative Services Only (ASO) for Medical and Pharmacy Benefits. Scott Payne, Risk Manager, briefed the Council on the transition from a fully insured healthcare program to a self funded health and pharmacy benefits program. He stated they received 19 responses to the RFP. Risk Management staff and the City's benefit consultant evaluated the proposals and chose seven to be given to an evaluation committee for further review. The evaluation committee evaluated each of these proposals based on customer service and professional competency, scope of services, cost of services and network discounts, provider disruption, financial stability, reporting capabilities and data management, references and experience with similar clients, and multi-year rate guarantees. The evaluation committee selected four of these companies to be further evaluated. These finalists were brought in for presentations to the Employee Insurance Committee and a question & answer session with the evaluation committee. The evaluation committee and staff recommended Fiserv Health for self funded medical benefits administration and Express Scripts for self funded pharmacy benefit management services. The 2008 projected self funded cost compared to the 2008 projected fully-insured cost should provide a savings of $1.7 million. The Risk Management staff and the City's consultant would begin contract negotiations and present final contracts for the self funded medical and pharmacy benefits programs to Council for approval in July. Staff would also submit the RFP for stop loss insurance coverage to the market and present final contracts to Council for approval in August. Open enrollment would begin in late September and plan implementation would be January 1, 2008. Consensus of the Council was to proceed with the staff recommendations. 2. The Council received a report, held a discussion and gave staff direction regarding the outcome of the 2007 State Legislative Program of the City of Denton during the 80th Texas Legislature, including future legislative issues and strategies. John Cabrales, Public Information/Intergovernmental Relations Officer, introduced Snapper Carr and Brandon McNally from Hil1Co Partners. Hil1Co was instrumental in helping Denton maintain a presence with the state legislature and key elected officials. Cabrales stated that the biggest victory for Denton and other Texas cities was the defeat of hundreds of bad bills that would have lowered or broadened the current cap on annual increases in property tax appraisals, imposed a property tax revenue cap, enacted costly unfunded mandates, or eroded municipal authority to conduct local affairs. City of Denton City Council Minutes June 19, 2007 Page 2 Denton will benefit from legislation that will expand purchasing/contracting authority, increase funding for local parks, and enact improvements in the "conflicts disclosure" procedures adopted by the legislature in 2005. Denton was successful in leading the opposition to the bill that could have had a negative impact to the City's beneficial reuse (Dyno Products) operations. Several bills were passed that will impact the City's Red Light Camera enforcement program. Staff is still assessing the impact of the bills, but does know that the City will have to begin sharing 50% of revenues from this program with the State. Other bills relating to property tax and sales tax, purchasing, elections, open government, municipal court, parks funding, annexations in our ETJ, utilities, transportation, and environment were also passed. Some bills were passed that will become effective as soon as they are signed; others will become effective on August 27. Cabrales stated that the City had aone-year contract with Hil1Co Partners and had the option to renew for a second year. Consensus of the Council was to proceed with renewal of the contract for another year. 3. The Council received a report, held a discussion and gave staff direction regarding the establishment of Public Improvement District (PID) Guidelines. Linda Ratliff, Director of Economic Development, stated that the Economic Development Partnership Board had drafted guidelines for the City Council to review. She stated that a PID allowed the City to collect and levy a special assessment on property that was located within the City Limits or within the City's ETJ. The funds from the assessment could be used to make certain improvements to the infrastructure to facilitate economic growth within an area. The Board recommended that the Council consider PID applications on a case-by-case basis. Consideration would be given to developments that provided the types of development that diversified and enhanced the tax base. The desired product should be a high quality mixed-use development that did not exist at the time the PID application was presented. The development should promote the policy of the Denton Plan and exceed the Denton Development Code standards in a combination of areas. Consensus of the Council was to proceed with staff recommendations. 4. Staff responded to requests for clarification of agenda items listed on the agenda for June 19, 2007. A. Briefing on Hills of Denton (Public Hearing 4A). Brian Lockley, Interim Director of Planning and Development, stated that staff recommended that this item be continued to the next City Council public hearing date of July 17. Prior to approval of this rezoning request, the legal review of the development plan map needed to be completed. City of Denton City Council Minutes June 19, 2007 Page 3 Deputy Mayor Pro Tem Mulroy also suggested a review of the Master Planned Communities guidelines. Lockley suggested a review of the Council's intent when the MPC guidelines were approved. B. Discuss selection of nominating committee for appointments to the Economic Development Partnership Board. McNeill stated that the Council Members on the nominating committee for the Council Committees could also serve on the nominating committee for the EDPB. Kamp stated that she did not feel the nominating committee for the EDPB should have the same members as the nominating committee for the Council Committees. She stated that in the past, the two committees were different Council members. Kamp stated that Marty Rivers had expressed an interest in serving on the nominating committee. Following the completion of the Work Session, the City Council convened in a Closed Meeting at 5:45 p.m. to consider the following: 1. Closed Meeting: A. Consultation with Attorney -Under TEXAS GOVERNMENT CODE Section 551.071. 1. Consulted with attorneys regarding safety procedures and avoidance of liability claims. B. Deliberations regarding Real Property -Under TEXAS GOVERNMENT CODE Section 551.072; and Consultation with Attorney - Under TEXAS GOVERNMENT CODE Section 551.071. 1. Deliberated the value and leasing of oil, gas, and mineral interests of the Clty m City real property, including City property located at Cross Timbers Park, and advice on related legal issues. C. Consultation with Attorney Under TEXAS GOVERNMENT CODE Section 551.071. 1. Considered and discussed status and settlement demand in litigation styled 1VIcFarling, et al. v. City of Denton, Cause No. 02-06-00238-CV, currently pending in the Court of Appeals, Second District of Texas, Fort Worth Division. City of Denton City Council Minutes June 19, 2007 Page 4 Regular Meeting of the City of Denton City Council on Tuesday, June 19, 2007 at 7:00 p.m. in the Council Chambers at City Hall. 1. PLEDGE OF ALLEGIANCE The Council and members of the audience recited the Pledge of Allegiance to the U.S. and Texas flags. 2. PROCLAMATIONS/PRESENTATIONS A. Proclamations/Awards There were no proclamation/awards for this meeting. B. June Yard-of the-Month Awards Mayor McNeill presented Yard of the Month Awards for: Tom & Teresa Nelson -1144 Riney Road Seth & Lydia Norris and Lindsey Bostick - 609 Mulberry Roque & Hong Cruz - 2005 Oak Tree Drive Joyce Lee & Wayne Ray -18 Oak Forrest Circle Landscaping Design by the late Master Gardener Diane Coulson -1700 Manten Blvd. 3. CONSENT AGENDA Heggins motioned, Kamp seconded to approve the Consent Agenda and accompanying ordinances and resolutions. On roll vote, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Thomson "aye", Watts "aye", and Mayor McNeill "aye". Motion carried unanimous y. A. 2007-131 - An ordinance accepting competitive bids and awarding atwo-year contract for the purchase of water and sewer parts for the City of Denton; providing for the expenditure of funds therefor; and providing an effective date (Bid 3730-Two-Year Contract for Water and Sewer Warehouse Inventory awarded to the lowest responsible bidder for like items, or by section, in the annual estimated amount of $800,000). B. 2007-132 - An ordinance accepting competitive bids and awarding athree-year contract for the purchase of electric meters, CTs, and meter sockets for Denton Municipal Electric; providing for the expenditure of funds therefor; and providing an effective date (Bid 3781-Three-Year Contract for Electric Meters, CTs and Meter Sockets awarded to the lowest responsible bidder for each item in the annual estimated amount of $250,000). C. 2007-13 3 - An ordinance providing for the expenditure of funds for the refurbishing and mounting of an ambulance module on a new 2008 chassis for the Denton Fire Department in accordance with provisions of State Law exempting such purchases from requirements for competitive bidding; and providing an City of Denton City Council Minutes June 19, 2007 Page 5 effective date (File 3 807-Emergency Purchase of Refurbishment and Mounting of Ambulance Module on Chassis for the City of Denton Fire Department awarded to Freeway Ford in the amount of $49,400). D. 2007-134 - An ordinance accepting competitive bids and awarding a public works contract for the installation of a digester cover at the City of Denton Pecan Creek Water Reclamation Plant; providing for the expenditure of funds therefor; and providing an effective date (Bid 3796-Pecan Creek Water Reclamation Plant Digester Improvements awarded to Crescent Constructors, Inc. in the amount of $643,000). E. 2007-13 5 - An ordinance accepting competitive bids and awarding a public works contract for improvements to Cedar Street including sidewalk replacement, accessibility ramps, landscaping, storm drainage, water line and sanitary sewer improvements; providing for the expenditure of funds therefor; and providing an effective date (Bid 3770-Cedar Street Improvements awarded to The Fain Group, Inc. in the amount of $1,170,263). F. 2007-13 6 - An ordinance accepting competitive bids and awarding a public works contract for the construction of sanitary sewer replacements for Skinner and Wilson Streets; providing for the expenditure of funds therefor; and providing an effective date (Bid 3779-Skinner Street and Wilson Street 8" Sanitary Sewer Replacements awarded to Dickerson Construction Company, Inc. in the amount of $179,277.50). G. Approved a tax refund for the following property tax: Name Reason Tax Year Amount 1. Campus Pk Denton Ltd DCAD Supplemental Change 2006 $ 8,121.22 H. Approved the minutes of: May 1, 2007 May 15, 2007 May 22, 2007 I. R2007-017 - A resolution of the City of Denton, Texas authorizing the denial of Atmos Energy Corporation's Mid-Tex Division's ("Atmos Mid-Tex") Gas Reliability Infrastructure Program adjustments for calendar year 2006; authorizing participation in a coalition of cities known as Atmos Texas Municipalities ("ATM"); authorizing the hiring of lawyers and rate experts; authorizing the City's participation to the full extent permitted by law at the Railroad Commission of Texas in GUD Docket Nos. 9734 and 9726; requiring the reimbursement of municipal rate case expenses; finding that the meeting complied with the Open Meetings Act; making other findings and provisions related to the subject; and declaring an effective date. City of Denton City Council Minutes June 19, 2007 Page 6 J. 2007-13 7 - An ordinance authorizing the City Manager to execute an Oil and Gas Lease with Endeavor Energy for 19.45 acres of Cross Timbers Park situated in the N. Britton Survey, Abstract No. 51, in the City of Denton, Denton County, Texas, and related documents; providing severability and an effective date. 4. PUBLIC HEARINGS A. The Council held a public hearing and considered adoption of an ordinance regarding the rezoning of approximately 2,120 acres from Neighborhood Residential 2 (NR-2), Neighborhood Residential 3 (NR-3), Neighborhood Residential 4 (NR-4), Neighborhood Residential 6 (NR-6), Neighborhood Residential Mixed Use 12 (NRMU-12), Neighborhood Residential Mixed Use (NRMU), Community Mixed Use General (CM-G), Planned Development District No. 120 (PD-120), and Rural Residential 5 (RD-5) zoning districts to the Hills of Denton Master Plan Community (Hills of Denton MPC) zoning district. The property was generally located to the north of Loop 288, west of Locust Street (F.M. 2164), south of Milam Road and east of Bonnie Brae Street. (Z06-0026, Hills of Denton) The Planning & Zoning Commission recommended approval (7-0). The Mayor opened the public hearing. A Comment Card was received from Cindy Brazzel, 2524 Craig Lane, in opposition. The following individuals spoke during the public hearing: Sandra Wilkerson, 2526 Craig Lane, spoke in opposition. She suggested that future developments be placed on hold until the City addressed the current issues with the drainage system in Denton. Pamela Shepard, 8316 N. Locust, spoke in opposition. She asked that the land for the widening of Locust Street be taken from the west side of the road. H.V. Shepard, 8316 N. Locust, spoke in opposition. He was concerned that his property would experience additional flooding beyond what already existed if the City did not require adequate drainage for this development. He also requested that the City fix the roads before any of the development began on Shepard Road. Mulroy motioned to continue the public hearing to July 17, Kamp seconded. On roll vote, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Thomson "aye", Watts "aye", and Mayor McNeill "aye". Motion carried unanimously. B. The Council held the second of two public hearings to consider the voluntary annexation and service plan for two sites. The first site was approximately 7.85 acres and the second site was approximately 1.54 acres, totaling approximately 9.39 acres. The sites to be annexed are generally located on the north side of Spencer Road between Woodrow Lane and Brinker Road. The sites were within a tract of land legally described as Municipal Utility Addition, Lot 1, Block 2. (A07-0002, Denton Municipal Electric Spencer Complex Annexation) Brian Lockley, Interim Director of Planning and Development, stated that this was a voluntary annexation for a portion of the Denton Municipal Electric Spencer Complex property and associated right-of way. The property was located within the City's ETJ and was not zoned. City of Denton City Council Minutes June 19, 2007 Page 7 The Mayor opened the public hearing. No one spoke during the public hearing. The Mayor closed the public hearing. No action was required on this item at this time. C. The Council held the second of two public hearings to consider the voluntary annexation and service plan for approximately 127.9662 acres. The property to be annexed was generally located in the northwestern area of the City of Denton's Extraterritorial Jurisdiction (ETJ) at the northwest corner of I-35N and the future Loop 288 extension. The parcel was legally described as a tract of land situated in the BBB & CRR Survey, Abstract No. O l 41 A, Denton County, Texas, and a tract of land situated in the Whitlock Survey, Abstract No. A1403A, Denton County, Texas. (A07-0001, Westview Commercial Annexation) Brian Lockley, Interim Director of Planning and Development, stated that staff requested that this public hearing be withdrawn. 5. ITEMS FOR INDIVIDUAL CONSIDERATION A. The Council considered appointing a nominating committee to develop a slate of appointees for the Economic Development Partnership Board. Kamp nominated Jack Thomson, Joe Mulroy, and Marty Rivers to serve on the nominating committee for the Economic Development Partnership Board. On roll vote, Heggins "aye", Kamp "aye", Montgomery "aye", Mulroy "aye", Thomson "aye", Watts "aye", and Mayor McNeill "aye". Motion carried unanimously. B. New Business and Announcements The following items of New Business were suggested by Council for future agendas: Council Member Montgomery mentioned that on Elm Street by City Hall West there was a sidewalk extension that needed the markings painted. C. City Manager's Report City Manager Campbell did not have any items for Council. D. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. There was no continuation of the Closed Meeting. E. Official Action on Closed Meeting Item(s) under Sections 551.071-551.086 of the Texas Open Meetings Act. City of Denton City Council Minutes June 19, 2007 Page 8 With no further business, the meeting was adjourned at 7:20 p.m. PERRY MCNEILL MAYOR CITY OF DENTON, TEXAS JANE RICHARDSON ASSISTANT CITY SECRETARY CITY OF DENTON, TEXAS AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Parks and Recreation ACM: Howard Martin, 349-8232 SUBJECT Consider a request for an exception to the Noise Ordinance for the purpose of the Thin Line Film Fest sponsored by Texas Filmmakers. The event will be held at various locations throughout the city, including Quakertown Park. The film screening in Quakertown Park will be Friday and Saturday nights, August 31 and September 1, 2007. The exception is specifically requested for extension of hours for amplified sound from 10:00 p.m. until 11:00 p.m. and for an increase in decibels from 65 to 70 decibels. BACKGROUND The Thin Line Film Fest is a four-day documentary film festival to be held from August 30 - September 2, 2007. Thin Line is the only all-documentary inspired film festival in the State of Texas and one of only a few in the United States. Texas Filmmakers will be using Quakertown Park for an outdoor film screening on both Friday and Saturday nights. The screenings will be free to the general public and have family-oriented themes. The event will be held at various venues in Denton, including the Denton Civic Center, Campus Theater, Fine Arts Theater, Center for the Visual Arts, Cool Beans Rooftop Theater, and Quakertown Park. The festival will feature a trade show held at the Civic Center and will host educational events, such as workshops, seminars, panels and discussions, as well as a closing party and award ceremony. EXHIBITS 1. Request Letter from Thin Line Film Fest Respectfully submitted: Emerson Vorel Director of Parks and Recreation Prepared by: Janie McLeod Community Events Coordinator Exhibit 1 ti: r i i p. { . 1 ti ~ I' 1 Y } ti ~ i • ~ f i i ~ ~ i 5 ~ r r r .5 b. r i •r } ~ r I r . r. ~ .a ti . M1 f r  ~ig AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Parks and Recreation ACM: Howard Martin, 349-823 SUBJECT Consider a request for an exception to the Noise Ordinance for the purpose of the 9th Annual Denton Blues Festival, sponsored by the Denton Black Chamber of Commerce. The event will be held in Quakertown Park on Saturday, September 15, 2007, from 11:00 a.m. to 11:30 p.m. The exception is specifically requested to increase hours of operation for amplified sound from 10:00 p.m. until 11:30 p.m. The amplified sound will not go above the allowable 70 decibels for an outdoor concert. BACKGROUND Sharon McClellan, Secretary of the Denton Black Chamber of Commerce, has requested an exception to the Noise Ordinance hours to increase the time from 10:00 p.m. to 11:30 p.m. The event expects to have 2,500 people in attendance to hear conventional Blues music performed by national and local Blues artists. Proceeds from this event will be used to help fund their annual scholarship and Young Minority Entrepreneur Program. Amplified sound will be used for both music and public announcements. PRIOR ACTION/REVIEW (Council, Boards or Commissions) FISCAL INFORMATION None EXHIBITS 1. Request Letter from the Denton Black Chamber of Commerce Respectfully Submitted: Emerson Vorel Director of Parks and Recreation Prepared By: Janie McLeod Community Events Coordinator ~ 7 •1 I ,~J I i i ' 11 I... L 1 r ~~n Exhibit 1 ~ 'S~ 1' - r: T •n ~l~• Imo{ x .11 L 1{ 1 •Y i FI 5 11 J1. 5 '1 1 .VL L i .1 1 . 1 i~l 1 I fl .1 L Tr • 5 4 V 5 1 r n 1 1 ~ 1 L I. 1 I FY ~ ti i 1 r 1 r 1 1 .3 5 5 5 .ti 5 ~'i i + ~ ~ L 1 ~ .LL 1 TI f. . r + 1 r fi 1 -ti I 'Y' 1 l ~ 1 Y ' II ryr ' 1 IL I fiM  r • -ice : ~ 1 r r -i l ~ 1. AGENDA INFORMATION SHEET AGENDA DATE: July 11, 2007 DEPARTMENT: Utility Administration ACM: Howard Martin, 349-8232 SUBJECT Consider adoption of an ordinance of the City Council of Denton, Texas authorizing the City Manager to execute a Water Main Pro-Rata Reimbursement Agreement between the City of Denton, Texas and Argyle United Methodist Church for reimbursement of the costs of building a water main, through pro-rata charges paid to the city; authorizing the transfer of funds pursuant to the agreement; and providing an effective date. The Public Utilities Board recommends approval (5-0). BACKGROUND Argyle United Methodist Church is relocating their campus from the Town of Argyle to a tract of land located on Hwy 377 south of Brush Creek Road (Exhibit I) within the city limits of Denton. Their development requires the extension of a 12 inch water main to serve their property. The proposed water line extension required includes 1,020 ft of offsite waterline and 1,007 ft of frontage waterline for a total of 2,027 ft as shown on Exhibit II. The offsite water line runs along an unplatted portion of the Country Club Village proj ect that will be developed at a later date. Based upon a detailed cost estimate provided by the contractor for the project, staff has prepared a water main pro rata agreement using the standard agreement form (Exhibit III). This pro rata agreement will provide the Argyle Methodist Church to recover the costs of this offsite waterline from the adjacent unplatted portion of the Country Club Village project when it does develop. OPTIONS 1. Approve the Pro Rata Agreement as prepared and submitted by staff. 2. Rej ect the Pro Rata Agreement. RECOMMENDATIONS Staff recommends approval of the Pro Rata Agreement as prepared submitted by staff. The waterline along Hwy 377 was a part of the approved preliminary plat for the Country Club Village Square development and the waterline is currently being extended by the Argyle Methodist Church to serve their development at this time. The water main pro rata agreement provides a mechanism for the Argyle Methodist Church to recover the costs of this offsite water line from the future development and is consistent with the current policies and procedures that these agreements were outlined within the subdivision development code. ESTIMATED SCHEDULE OF PROJECT The Argyle Methodist Church water line is currently under construction. PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS.) This item was presented to the Public Utilities Board at the June 25, 2007 meeting. The Public Utilities Board recommends approval (5-0). 1 FISCAL INFORMATION The City has no financial obligation under this agreement but will be required to collect the pro rata charges and forward these to the Argyle Methodist Church when the adjacent property develops and connects to the waterline. EXHIBITS 1. Argyle Methodist Church Final Plat 2. Proposed Water Line Extension and Offsite Water Line Costs 3. Pro Rata Agreement 4. Public Utilities Board Minutes 06/25/2007 5. Ordinance Respectfully submitted: - Jim Coulter Director of Water Utilities Prepared by: Y/~ {Y _ { F 5 vl 1 K 1 _ _ ~ s ' r' 4 . Tim Fisher, P.E Assistant Director of Water Utilities 2 T ,LISIHX~ . ~f~ ~ ~ ~ f~ ~4 ~ ' ~ _F \ ~ ~~4 - ~ ~ ~ ~ ~ ~ ~ ' a~ i~ ~ ~ 4~~ rya ~ 1 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ - ~ _ r r - ~ ~ t ~ . . ~ ~ ~ ~ 4 ~ ~ 'r ~ q ~ ~ ~ ~ i ~ ~ ~ ~ ti~~ ~ ~ ~ R ~ ~ ~ F~ ~ o ~ ~ ~ a. r i?~ ~ ~7~ ~ ~ ~ ~ ~ ~ ~ RI ~ ~ ~ 44 ~ _ 57 . a. s s. r . ~ ~ ~ s ~ ~ a ~ ~ ~ M ~ ~ ~ ~ ~ ~ ~ ~ ..,..,.,.,,r. ~n as ~ a,,....rrf ..r ~,r . r~ ~ ~rrr r ar r..ry~M ~ r~ ~r ~ W f~ ~r 'r'. +F~r Ir ~Y ~ CIF ~ ~ ~ ~ ~ i~k~~ g~~~ ~ i~.fr ~ r . ~ s . . ~ .~s.~ ~ `Y~ . ~ ~ - - ~ .w ~ ~ r~ ~ ; _ + ~ rt ~ ~ ~ ~1 it . O . t~ ~r 57' r~~ { ~ ~Q~~ Y s .o 1 k ~ - ~ - .  i Argyle Methodist Church Offsite 12 inch waterline prorata cost 1,020 LF of 12 inch PVC waterline x$65.00 per LF = $66,300.00 Connect to system -Lump Sum = $520.00 Misc. Costs: Clear Right of Way - $3,392.00 Survey - $585.00 Reestablish Grass - $1,040.00 Test - $650.00 Trench Safety - $1,950.00 Insurance and Bonds - $4,666.48 Misc. Total - $12,283.48 Total waterline for project - 2,027 LF Offsite waterline portion -1,020 LF of project offsite = 50% Offsite Misc. Cost = $6,141.74 Total Offsite Cost = $72,961.74 ($71.53 per LF)  EXHIBIT 2 l THE STATE O~ TEXAS § COUNTY OF DENTON § ~ WATER MAIN PRO RATA REIMBURSEMENT AGREEMENT BETWEEN THE CITY 4F DENTIN TEXAS AND ARGYLE UNITED METHODIST CHURCH WHEREAS Argyle United Methodist Church (Developer }whose business address is 308 Denton Street Argyle Texas7b22C wishes #a develop and improve ce~rtam real property named Argy}e United Methodist Church Campus Relocation {as shown Exh~brt I attached hereto and incorporated herein ~y reference) located zn the City of Denton Texas or its extrater~tor~al ~ur~sdzchon and is regwr~d to pro~~de such property with adequate water servace by designing constructing and installing a water main and ~ WHEREAS the City of Denton (City } a municipal corporation locatsd at 215 East McKinney Denton Texas 76201 in accordance with its ordinances may reimburse Developer for the costs of the water maul mstal~ed by the De~reloper based upon pro rata charges paad to the City by persons cannectmg to the water main NOW THEREFORE ~n consideration o~ their mutual promises Developer and City f agree as follows € 1 Developer has designed installed arAd constructed a 12 inch diameter off site water main and all necessary appurtenances thereto extending a total distance of j approxFinately 1 020 Feet (Facilkties) located as sawn on E~b~t II attached hereto and incorporated herein by re~'erence This off site water ~a~n shall be subject to pro rata reunbuxsement in accordance with this Agreement 2 Prior to beginnuig construction of Facilxt~es Developer shall obtain at Developer s sole cast and expense alI necessary pe~rttnrts Iicenses and easements If easements are needed the deeds therefore obtained by Developer shall be reviewed and approved as to form and substance by the City pnor to the ' begrmm~g of construction If Developer ~s unable to acq~r~ needed easements Deveiaper shall provide the City with any requested documentation of efforts to ~ obtain such easements including evidence o#' negotiations and reasonable offers made to t~xe affected property ow~exs Any easements for the Facilities obt~ne E by the Developer shall be assigned to City if not taken in City s name pnor to acceptance of the Facilities and Develapex warrants clear title to such easerr~ents and will defend the City against any adverse claim made against such title 3 Tl~e cost for the design construction and mstallahor~ of the FaciIrties sub3ect to 4 pro rata reimbursement is 1 s  EXHIBIT 3 $72 961 79~ (Developer cost} ar $71 53 per linear foot (1 0201~near feet of off site Facilities) $0 00 (City participation cost) ~ i 4 Within thirty (30) days of the acceptance of the Fac~lrties by the CZry Developer sha11 submit to the Cit}r s Assistant CXty Manager o~ Util~t~es the actual cost of the ~ Facilities To deternvne the actual cost of the Fac~lrties the City shall have the right to inspect any and all recoxds of Developer his agents employees contractors ar subcontractors and shall have the right to require Developer to submit to ar~y necessary uiforrnation documents invoices receipts or other records to ve~fy the ac~tuai cost of the Facilrtzes Thy; Assistant City Manager of Utilities shall review and venfy the actual cost of the Facilities and certify the allowable reimbursable cost and the date the ~'acil~ties were accepted which certificate shall be attacY~ed hereto and be ~ncorparated herein by re~'erence 5 After title to the Faculties have vested in fhe City the City sha11 collect a pro rata charge from any person connecting to the off site facilities in accordance with the provisions of tl~e Code of Ord~ances of the City Within thirty {30} days of the receipt of pro rata charges the City shall transfer the appl~cab~e amount collected to Developer ~ 6 Tl~e Ciiy shall transfer to Developer pro rata charges collected for a penod of tie for twenty (20} years from the date Facilftles are accepted by Crty as specified herein but shall not transfer or r~imb~se to the Develflper an amount of s funds m excess of the certified cast of the Facilities 7 The parties hereto recog~uze that the Fac~litres subject to thtis Agreement are necessary to provide water service to ~e Deve~aper s property Tie City has decided that rt will participate in ~e cost cif funding a water rna~n t1~at would ~ provide greater water capacity than the Facilrt~es Developer is regiured to install The City and Developer will enter into a separate Water ~Vlam Participation Agreement to provide for the shanng of cost of such oversxze~ main The pro rata charges to be collected and transferred to Developer shall be based on the terms of this Agreement as though the Fac~lrties subject to this Agreement were installed 8 The pro rata. charges to be collected by t ie City amd ~'ansferred to Developer in accardance with the ordinances o£ the City and thx.s Agreement are intended to reimburse the Developer for the Developer s cast of the Faciht~es by rec}u~nng persons connecting who benef t thereby to participate in the cost of the Facilities This Agreement sha11 not be considered to ~npose any obligation or habilfty upon the City to pay for the Facilities from its general revenues bond funds or any other revenues ~t may receive except for those pro rata fitnds received from persons connecting to such Fac~lit~es 2 9 Should any court of competent ~urisdretron deterz~mne that alI or a part of the ~ City s ordinance upon wl~ch the pro ra#a charges to be paid to Developer under this Agreement are based are found to be unlawful or invalid the City may cease to charge or collect the pro rata charges for connection to the F~ci~ities and shah have no further obligations hereunder 10 All notaces payments or cammunicattons to be given or made pursuant to tl3.~s Agreennen~ by the parties hereto shall be sent to Developer a# the business address given above and to the Assistant City Manager of Ut~lrtXes for the City at the address gzven above i 1 The Developer shall ~ndemx~fy and hold the City harmless from any and alI j G~a~ms damages loss or lzabilrty of any kind whatsoever by reason of ~n~wy to property or person occasioned by any act or ortusston neglect or wrongdoing of ~ Developer, Xts officers agents employees invitees contractors or other persons nth regard to the performance of this Agreement and Developer will at rts own cost ar~d expense defend and protect the City agaanst any and all such claims and ~ C~EITl~.I1CiS ~ i 12 Tl~s inst.~urnent embodies the whole agreemen# of the partzes hereto and there are no promises terms conditions or o~lfgatians other than those contauzed herein This Agreement shall supersede all previous commutucat~ons representations or agreements either verbal or wc-~tten between the parties hereto 13 Developer shall not assign this Agreement without the express vv~tt~n consent of the City I 6 14 Any and all suits far any breacY~ of this Agreement or any other slut perta~~ung to ~ or arising out of ttus Agreement shall be brought and maintained m the co~u t of competent ~unsdiction in Denton County Texas 1 S TYus Agreement shall be effec#ive far a penod of twenty {20) years from the date Facil~t~es are accepted by the City ar until Developer has been paid alI allowable reimbursable pro rata charges for the Fac~l~ties r~vhtchever occurs first provided however should Developer fail ~o compt~t~ substantial constructiat~ of the ~ Fac~lrt~es w~thm one year from the date of execution of thts Agreement tl~s Agreement shall terminate EXECUTED this the day of 2007 CITY OF DENTON TEXAS i BY George C Campbell City Manager 3 ATT~T~I~ ~ .~ent~tfer tern ~ By ~ APP~I A.S T~ L~A~ F~l ~ f E~t.n er i Attorney B Argyle ~n~te~ lleth~~.~st l~~rh B~ ~c ATTT ~y APFR~~ T~ ~~AL F~~ 5 ~~~r ~ocum~r~tsl~ontracts10~1~Nat~r Pra Rata ~~rmt-Generic Firm ~~(13 Exhibit 4 1 Draft Minutes 2 PUBLIC UTILITIES BOARD 3 June 25, 2007 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was 6 present, the Chair of the Public Utilities Board thereafter convened into an Open Meeting on 7 Monday, June 25, 2007 at 9:00 a.m. in the Service Center Training Room, City of Denton 8 Service Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Charldean Newell, Dick Smith, Phil Gallivan, John Baines and Randy 11 Robinson 12 13 Absent: Bill Cheek and Bob Bland, excused 14 15 Ex Officio Members: 16 George C. Campbell, City Manager 17 Howard Martin, ACM Utilities 18 19 OPEN MEETING: 20 21 CONSENT AGENDA: 22 The Public Utilities Board has received background information, staff's recommendations, and 23 has had an opportunity to raise questions regarding these items prior to consideration. 24 25 1) Consider recommending adoption of an ordinance of the City Council of Denton, Texas 26 authorizing the City Manager to execute a Water Main Pro-Rata Reimbursement Agreement 27 between the City of Denton, Texas and Argyle United Methodist Church for reimbursement 28 of the costs of building a water main, through pro-rata charges paid to the city; authorizing 29 the transfer of funds pursuant to the agreement; and providing an effective date. 30 31 Board Member John Baines moved to approve Item 1 with a second from Board Member 32 Randy Robinson. The motion was approved by a 5-0 vote. 33 34 The meeting was adjourned by consensus at 10:15 a.m. 35 ..r ~ ~ Exhibit 5 ~ f ORDIIAE ~ ~~7 A' ODINAI~E OF THE CITY OOIJIL O>~ DEITOI TEA I~THOI~I THE ~T AAER TO EEOUTE AfiER MAIN PLO RA~`A EI~IJREIIET R~EII~IT~ ~~T~E ~'HE OAT OF DEITO TEA ~ LE ~JI~ITF~D A ~'HODIT HH FOIE REIlI~L~FIET OF ~'HF~ OT OF BI~JILDn~I TIC IIII~ THI~O~JH PI~O I►.T1~ HIS FID TO ~"HE IT ~.JTHOI~ THE TFE OF F~~ P~RUAT TO THE rEE11~ET ~1D PRO~IIDI EFF~OTIE I~,ATE HFT~E. the pity of Denton 'texas re~u~res that tl~e devetoprnent owned b Argyle lted lctllodist Ohurch a~n us lelocat~on ~ Omer ~ comrr~only re~`~~red to as ghat read [fin ~ ra ert co~~~n~or~l known as Denton street rg~rle Texas ~~22~~ Denton oty fiexas ~ ~ ore ~ ~r ticularl de acted x~ Exhibit I attael~ed hereto ar~d lncorporate~ herein b reference has ~ ~ ed X11 tl~c 1t ~f Lenten ~'exas its extrat~rr1torral ~~rlsdict~or~ ~ sard Over is re~~~red ~ locat rav~de such real ro ert ~v~th adequate v~ater service b des~gn~n~ constructing and top ~ ~ ~nstallln ~ ater main ar~d VNT~E the 1~y of Denton 'texas may lafull reimburse the Owner for the costs of the tcl~e itach water ~na~n ~nstallat~on by the Or~rner based upon fro rata charges paid tot e ~t of De~~ton Texas b persons connecting to the mater ~~a~n pursuant to the Denton Y Develo x~~c~~t bode Subchapter 35 ~ 1 ~ ~ I and ~ ~ TH>~I.EEO.E f ~'HE ~C~I~IL OF IT OF DE'~OI~ HERE ORDA~IS ~ ~'TIO 1 That the qty Ianagcr ~ s authorized to execute a dater darn Fro data e~~bur~e~~~ct~t regiment Bctv~eer~ the pity of Denton Texas and Argyle I~n~ted lIethod~st church ~tl~~ Agreement ~ to provide for the pre rata rei~nburserrrer~t for the ~esigr~ construction and xnst~ll ~tion of a total of 1 linear feet of water line being an 1~ Inch d~a~neter mater a~n suhst ~~~tlall in the form of the attached Agreement ~vhlch is incorporated herewith by ~1 ~ reference il~d made a art ofthis Ordnance for all purposes subaect hov~ever to Owner Argyle p L~nlted 1.c~~~~odist church enter~rig into a I~eveloprrlent contract h tl~e arty of Denton Texas ~n accord l~~~c wzth the Denton Development bode subchapter 3~ l~ ~0 ~ and ~ l 4 r~ rrO ~ That the qty Manager is hereby authorized to make such expen~rtures and trans ~ c. i s of funds under such eondit7or~s as ai a set fort. in the attached Agreement L~ TrO ~ That this ordinance shall become effective immedlatel upon its passage and appia~ it PASSED ADD FPOED this the day of ~.~~7 ~ pEI.R 1IeIVEtLL AO~ i t ATTEST TENNIF~R WALTERS CITY SECRETARY e By APPROV~'D AS TO LEGAL FORM EDWIN M SNYDER CITY ATTORNEY By f e t 3 i 2  AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Tax ACM: Jon Fortune SUBJECT Consider approval of tax refunds for the following property taxes: Name Reason Tax Amount Year 1. Fii°st Amei°ican/816 N Bell LLC Overpayment 2006 $ 2,809.58 2. Seafire Propehties/Ezell Air Inc DCAD Supplemental Change 2003 $ 2,530.97 3. Rayzor Inv Ltd DCAD Supplemental Change 2006 $ 1,494.82 4. First American/816 N Bell LLC Overpayment 2006 $ 1,319.75 BACKGROUND Chapter 31.11 of the Texas Property Tax Code requires the approval of the governing body of the taxing unit for refunds in excess of $500.00. FISCAL INFORMATION The tax overpayment revenue fund would be reduced by $ 8,15 5.12. Respectfully submitted: Jon Fortune Assistant City Manager AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Transportation Operations ACM: Howard Martin, 349-8232 SUBJECT Consider adoption of an ordinance approving assignment of a certain commercial airport operator's lease between Jet Works Aviation, Inc. and Jet Works Air Center Management, LLC and approving a subsequent sublease from Jet Works Aviation, Inc. to Jet Works Air Center Management, LLC; and providing an effective date. The Airport Advisory Board recommends approval (6-0). BACKGROUND Jet Works Aviation, Inc. has requested that the City of Denton consider the proposed assignment of the Jet Works Aviation, Inc. commercial airport operator lease agreement to Jet Works Air Center Management, LLC to facilitate the sale of the Jet Works facility and all licenses and assets currently owned by Jet Works Aviation, Inc. to Business Air Management (BAM) doing business as (dba) Jet Works Air Center Management, LLC. Jet Works Aviation, Inc. entered into a lease agreement with the city of Denton on the first day of December 2004 and currently leases 2.063 acres (approximately 89,864 sq ft) which includes 38,000 sq ft of office, hangar and shop space. Jet Works Aviation, Inc. currently employs over 75 people, many of which are skilled technicians. Currently Jet Works Aviation, Inc. is the only completion center in the United States for Piaggio aircraft as well as a certified repair and maintenance center for not only Piaggio but Pilatus, Gulfstream, Beechcraft and various other aircraft manufacturers. Jet Works provides a unique combination of services specializing in inspections, complete avionics installations, interior modification and paint for a wide range of turbine powered aircraft, all atone location. Business Air Management (BAM) has been an excellent corporate partner with the City since October 2001, and their current lease hold is approximately 113,652 square feet in addition to apron and separate hangar space. BAM provides aircraft sales and service, charter services, fueling, ground handling, and aircraft maintenance and management. BAM has been a big part of the growth of the Denton Airport over the past five years and continues to increase business. In 2004, they were a major player in the team that influenced Jet Works Aviation, Inc. to relocate to the Denton Airport and provide support services to Jet Works Aviation, Inc.'s operation. BAM and Jet Works have maintained a partnership whereby interior work and aircraft painting for Jet Works is done by BAM related employees. BAM and Jet Works staff brought the official request to Airport Management on June 22, 2007 indicating expedited approval from the City of Denton would be necessary to maintain continuity 1 of their operation and meet financial terms. The closing of the sale of Jet Works Aviation, Inc. to BAM dba Jet Works Aviation Management, LLC is time sensitive to protect Federal Aviation Administration certificates, licenses, forthcoming business contracts and to procure the financing for this transaction. The assignment and sublease agreement will transfer all certificates, licenses and liability to Jet Works Aviation Management, LLC. SCHEDULE OF PROJECT The lease assignment would become effective immediately, July 17, 2007 and continue through the term of the lease ending November of 2019. PRIOR ACTION/REVIEW The sublease was submitted to the City Manager on June 28, 2007 and approved for no longer than 120 days so that the assignment may be considered by Council when they return from summer recess. The City Attorney has reviewed the sublease and the assignment. Airport Advisory Board recommends approval (6-0). FISCAL INFORMATION A $500 transfer fee will be required and an administrative fee for reasonable attorney fees and staff time will also be due. No increase will be applied to the lease rate. EXHIBITS 1. Ordinance 2. Lease Assignment 3. Consent to Sublease 4. Sublease Agreement 5. June 22, 2007 Request Letter 6. Airport Advisory Board Minutes July 1 1, 2007 Respectfully submitted: Tim E. Whitman Airport Manager 2 scour documentslordinances1071airport lease assignment jet works aviation to jet works air center mgmt ordinance.doc ORDINANCE N0. AN ORDINANCE APPROVING ASSIGNMENT OF A CERTAIN COMMERCIAL AIRPORT OPERATOR'S LEASE BETWEEN JET WORKS AVIATION, INC. AND JET WORKS AIR CENTER MANAGEMENT, LLC AND APPROVING A SUBSEQUENT SUBLEASE FROM JET WORKS AVIATION, INC. TO JET WORKS AIR CENTER MANAGEMENT, LLC; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager or his designee is hereby authorized to execute an airport lease assignment of a commercial operator's lease agreement between Jet Works Aviation, Inc. and Jet Works Air Center Management, LLC in substantially the form of the Lease Assignment which is attached to and made a part of this ordinance for all purposes. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2007. PERRY R McNEILL, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY 4~ B t EXHIBIT # 1 c:ldoc~~me~lltewhitmalloca]s~lltemplxpgrpwiseljet works aviation, inc. jet works air center management, llc assig~lment.doc LEASE ASSIGNMENT OF COMMERCIAL OPERATORS LEASE AT DENTON MUNICIPAL AIRPORT DATE: July ~ , 2007 ASSIGNOR: Jet Works Aviation, Inc. . ASSIGNEE: Jet Works Air Center Management, LLC LEASE: Date: December 1, 2004 Landlord: City of Denton, Texas Tenant: Jet Works Aviation, Inc. Premises: Approximately 2.059 acres of land located at 5035 Warbird Lane, Denton, Texas 76207 and more fully described in the Attachment A which is made a part of this Assignment for all purposes. Assignor assigns to Assignee Tenant's interest in the lease. A. Assignee Agrees To: 1. Accept the premises in their present "as is" condition. 2. Complete all obligations of purchase from Assignor prior to this Assigl'~rnent becoming effective. Landlord consents to this assignment, Landlord agrees to notify Assignor within 30 days of any Assignee default and to notify Assignee in the event of Assignor's default. B. Assignor agrees as a condition of Landlord's consent to this Assignment that: 1. Assignor will pay or will have the Assignee pay the Landlord a $500 transfer fee. 2. Assignor will pay or will have the Assignee pay all the Landlord's administrative costs of handling and processing this assignment, including without limitation, all Landlord's reasonable attorneys fees and Landlord's staff time associated with this assignment. PREVIOUS ASSIGNMENTS : None  EXHIBIT # 2 ~ CONSENT TO SUBLEASE The undersigned, the Lessor in that one certain Lease Agreement between the Ci of . tY Denton and Jet Works Av~atlon, Inc., dated the First Day of December , 2004 as amended b the . Y First Amendment dated the 21St day of June, 2005 do hereby a ree and consent to the Sublease g by Jet Works Air Center Management, LLC of a tract of land, identified as Parcel 1 and Parcel 2, being approximately 2.059 acres, drawn, outlined and legally described in Attachment "A", Parcel 1 being approximately $3,2$6.7 square feet or 1.912 acres and Parcel 2 being 6,403.3 square feet or 0.147 acre, such attachments being incorporated by reference (the "Leased Premises") and the 35,000 square ft. hangar/office shop complex to include the 20' x 290' of aircraft staging ramp that serves as access to the public ramp to Jet Works Aviation, Inc, This Consent does not in any manner relieve, waiver or otherwise alter the obligations of Jet Works Aviation, Inc. under the current Airport Lease Agreement. This request is being made in accordance with Section XI. of the current Lease .A.greement with Jet Works Aviation Inc. dated the First Day of December, 2044 as amended by the First Amendment dated the 21 St day of June, 2005. The consent to sublease granted herein sha11 be for the earlier of a period not to exceed 120 calendar days from the date of execution hereof or until final approval by the City Council of the City of Denton of the assignment by Jet Works Aviation, Inc. of the said Lease Agreement ~ to Jet Works Air Center Management, LLC This consent shall be void and of na effect u on the • ~ p . earlier of the expiration of the said 120 day period or the failure or refusal of the City Council to finally approve the assignment of the Lease Agreement. IN WITNESSS WrHEREOF the parties have executed this Sublease Consent to the Lease Agreement as of the day of June, 2007. By: GEORCxE . CAMPBELL, CITY MANAGER CITY OF DENTON APPROVED AS TO LEGAL FORM: EDWIN M. SNYDER, CITY ATTORNEY ri BY:  EXHIBIT # 3 s:lour documentslcontracts1071jet works aviation, inc. jet works air center management, llc assignment.doc For Jet Works Av' tion, Inc.., Assignor ~ 4 By• For Jet 'Works Air Cent anagement, LLC Assignee By; City of Denton, Landlord George C. Campbell, City Manager Attest: Jennifer Walters, City Secretary By: Approved as to Legal Form: Edwin M. Snyder, City Attorney By. ~ STATE OF TEXAS CQUNTY OF DENTON This instrument was acknowledged before me on the ~ da of Y 2007, by Jet Works Aviation, Inc., a State of Texas Corporation, on behalf of said co ration. [SEAL] "~Y ~ Not r Publi State o exas E~► Y ~!y ~arnmi~lon Expires My Commission Expires ~ or Notar Stam  Page 2 of 3 scour documentslcontracts1071jet works aviation, inc, jet works air center management, llc assignment.doc STATE OF TEXAS COUNTY OF DENTON ~d This instrument was acknowledged before me on the 2 day of , 2007, by Jet works Air Center Management, LLC,, a State of Texas Corporation, o behalf of said Corporation. i ~~ERY Mf. C , I~C~l1~Ai~MC3f ~ [SEAL] ~y Cotnmisalan ~x~ire~ Not y Publi , State o xas ~ June ~ e, ~o~ ~ My Commission Expires ~ ~r~~ (or Notary Stamp) STATE OF TEXAS COUNTY OF DENTON This instrument was acknowledged before me on the day of , 20 , by George C. 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W a~ WN~U WIUG}+W~L WI~lI~L•p0 W NIOd Gld W G~l~ W~7CIp WDL wODwxwD W OLm zm Sroy- SL mC SLmL07 2ri}+gro,C ZWr{mm Tm0 LOON 24-U [D Vl d ❑ I- m li. [O v- 3 .v F- v I- n n L..~ c ~ . • •  . rww rumVLU r'Fcoum I-4-a HNmco ~OIp • 0,0x i MIN SUBLEASE AGREEMENT THIS SUBLEASE is made at Fort Worth, Texas between JE T WoRI~S AVIATIaN, INC. called Sublessor in this agreement, and JET WQRKS A1R CENT ER ~~ANAGEMENT, L.L.C., called Sublessee in this agreement. Demise and Descri~atxon ,of Pro e~rty 1. Sublessor leases to Sublessee and Sublessee leases tom Subless or the property, referred to as the subleased premises in this a eement located in Denton County, Texas, described as follows: that one certain airport lease a eement come ' m real operator dated December 1, 2004 wherein the City of Denton, Texas a munici al co ' p rporatxon is referred to therein as Lessor and Jet Works Aviation, Inc" a Texas co or ' rp at~on is referred to therein as Lessee, 2. The term of this sublease shall be for a eriod of time e uivalent ' P q to that period of time described in paragraph 2.5 (b) of that one certain Asset ~ Purchase Agreement by. and between Jet Works Air Center 1Vlanagement, L.L.C. and Jet Works Av' ' zat~on, Inc. dated June 2007. Consideration 3. The consideration for the subleased remises is the Asset Purc p hase Agreement described in paragraph 2. above. Assum tion A eement and Covenants 5. (a) The Sublessee shall comply with all of the rovisions o t ' p f he Lease which is described as that one certain Ax ort Lease A eement Co ' ~ gr mmerc~al Operator effective as of the first day of December 2004, as amended, a true and correct co ' py of wluch is attached hereto that axe to be performed by the Sublessor as Lessee Burin the t ' g erm of tlus sublease, except that the rent provisions of the Main Lease sha11 not a pply to Sublessee. The payment of rent b the Y Sublessee shall be governed by the provisions of Para a h 3 above. p  EXHIBIT # 4 (b} In the event of cancellation or termination of the Main Lease before its ex iration p date and before the expiration date of this sublease or an extensions and renewal ' Y s, or rn the event of the surrender of the Main Lease, whether voluntary, involunt or b a eration ~'Y~ y p of law, the Sublessee shall make full and cony lete attornment to the Lessor for p the balance of the term of this sublease, including any extensions and renewals based on the sana.e covenants and conditions of this sublease, so as to establish direct rivit of estate and contr p Y act between the Lessor and the Sublessee, with the same force and effect as thou this sublea ' ' gh se was originally made directly from the Lessor to the Sublessee, The Sublessee shall male all rent payments therea~er directly to the Lessor. (c) The provisions of the Main Lease, to the extent that the do not ca ' y nflict with specific provisions contained in this sublease, are full into orated into t ' Y rp his sublease. The Sublessee agrees to be bound to the Sublessor b all of the terms of Y the Main Lease and to assume toward Sublessor and perform all of the obligations and res onsibilities that Suble . p ssor. ~ Sublessor shall be entitled to all the ri is an ' gh d remedies entitled to Lessor under the Main Lease and any default by Sublessee of all of the terms and conditions of the Main Lease Agreement which Sublessee is assuming pursuant to this A eement. In addition a d efault by Sublessee against Lessor under the IVlain Lease agreement shall a call be deemed q y a default by Sublessee to Sublessor under this Agreement. In the event of such default Sublessor ' shall be entitled to pursue against Sublessee all of the remedies entitled Lessor under the Main Lease A greement. Limitation of Liabilit and Indemnif Notwithstanding any provision of the Main Lease to the contr nei ary, ther the Lessor nor the Sublessor shall be liable to Sublessee, or an of its a eats em 1o e y g p y es, servants, or invitees, for any damage to persons or pro ert due to the condition ~esi ' p Y , gn, or any defect 1n the building ar its mechanical s stems that m.a exist or Y y subsequently occur. Sublessee, with respect to itself and its agents, employees, servants, and invitees ex ressl assumes all ris p y ks and damage to persons and property, either proximate or remote, by reason of the resent ar future conditio p n of the leased premises ar the building, Sublessee a ees that it will inden~ni fy and hold Sublessor and Lessor harmless from all suits, claims, and actions of eve kind and . ry by reason of any breach, violation, or nonperformance of any term or conditions on the art of the Su p blessee under this agreement. Additionally, Sublessee agrees to indemnif and hold y Sublessor and Lessor harmless from all claims, actions, damages, liabilities and ex erases arse ' p rted against the Sublessor andlar Lessor on account of injuries to person or dama e to ro ert to g p p y the extent that any such damage or injury may be caused, either proximate) or remote) b an act Y y, y y or omission, whether negligent or not, of Sublessee or an of its a eats servan Y g ts, employees, contractors, patrons, or invitees (with such invitees are on the leased remises or of an othe p ) y r person entering upon the leased premises under or with the ex ressed or im lied invitat' p p ion of Sublessee, or if any such injury or damage ma in an other wa arise Y Y y from or out of the occupancy or use of Sublessee, its agents, employees, and invitees of the leased remises. This p paragraph is for the benefit of the Sublessor and Lessor of the leased remises oral and ' p y, no right of action shall accrue under this paragraph to any third art b wa of subro at' ' p Y y y g ion or otherwise. ~ Executed in multiple co ies each of which shall be deem ' ' p ed to be an original. SUBLESSOR; JET WORKS AVIATIUN, INC. B 1 ~ Y' Naive: ~ Title: ~ Dater ~ , 2007 SUBLESSEE; JET WQR.K.S ARZ CENTER. MANAGEMENT L.C. a By~ Name: ~ Title: ~ ~ ~ o ~ Date: ~ , 2007 22 June 2007 Mr. T1111 Whltll1an Airport Manager Denton Airport 5000 Airport Road Denton, TX 76207 Tim: As you have been 111ade aware, a company wholly owned by Wayne Cecil, Damon Ward, Phil Jordan, Trey Bryson and David King is purchasing the assets of Jet Works Aviation. The new entity will remain Jet Works Air Center and. will continue to operate in the same capacity. At this time we formally request assignment of the land lease from the City of Denton to the new entity as specified in the current Jet Works Aviation land lease. We are requesting a simple assignment with no changes to the terms of the current lease. However, our closing date for the assets of the business is June 29, 2007 and we forlllally request authorization to sublease the facility and grounds from Jet Works Aviation until such time that city and associated boards can review and approve the assignment. Please let me know if I have omitted required information or if you have any questions. ~ est Regards - 13r son President Jet Works Air Center cc: W.C., D.W. EXHIBIT # 5 50D7Alrport Road • Denton, Texas 76207 Ph: (940 898-1200 • Fx.~ (940) 382-5602 1 DRAFT MINUTES 2 AIRPORT ADVISORY BOARD 3 JULY 11, 2007 4 5 After determining that a quorum was present, the Airport Advisory Board convened for a 6 Regular Meeting on Wednesday, July 11, 2007 at 5:30 p.m. in the Denton Civic Center 7 Building in the Community Room at 321 East McKinney, Denton, Texas. 8 9 BOARD MEMBERS PRESENT: Chairman Woolfolk, Mr. Brewer, Mr. Brown, Mr. 10 Clark, Mr. Eames, and Dr. Kristoferson. 11 12 BOARD MEMBERS ABSENT: Vice Chairman Dr. Smith with an excused absence. 13 14 STAFF MEMBERS PRESENT: Tim Whitman, Airport Manager, Julie Mullins, 15 Aviation Assistant, Mitch Sprunger, Intern, Mark Nelson, Chief Transportation Officer 16 17 PUBLIC PRESENT: None. 18 19 ITEMS FOR INDIVIDUAL CONSIDERATION 20 21 22 III. Receive a report, hold a discussion, and make a recommendation to City 23 Council to adopt an ordinance approving assignment of a certain commercial 24 airport operator's lease between Jet Works Aviation, Inc. and Jet Works Air 25 Center Management, LLC and approving a subsequent sublease from Jet 26 Works Aviation, Inc. to Jet Works Air Center Management, LLC; and 27 providing an effective date. 28 29 Mr. Whitman explained that on June 2, 2007 Jet Works Aviation, Inc. 30 representatives informed Airport Management that they had an opportunity to 31 sell the business and all its assets to Business Air Management doing business 32 as (dba) Jet Works Air Center Management, LLC. 33 34 Mr. Whitman recommended that to facilitate the sale of the Jet Works facility 35 and all licenses and assets currently owned by Jet Works Aviation, Inc. that 36 they assign their lease to Business Air Management (BAM) doing business as 37 (dba) Jet Works Air Center Management, LLC. 38 39 Mr. Whitman and the Chief Transportation Officer took this item to the City 40 Manager who approved the sublease for a period not to exceed 120 days in 41 which time the assignment should be approved by Council. Mr. Whitman 42 stated that there is a $500 assignment fee plus attorney fees. It is staff s 43 recommendation to approve the assignment. 44 45 Mr. Kristoferson asked why the rush on the assignment. Chairman Woolfolk 46 commented that the bank needed the approval from the City to complete the EXHIBIT #6 1 financials and the approval to transfer the FAA licenses for the repair station. 2 Mr. Whitman commented that all the same partners will be involved; except 3 Mr. Chris Hoskins will no longer be involved. 4 5 Mr. Brown asked if there are any negatives to this sale. Chairman Woolfolk 6 said he sees no negatives, that Mr. Ward has always been a positive asset to the 7 airport. 8 9 Mr. Kristoferson made a motion to approve the assignment from Jet Works 10 Aviation, Inc. to Jet Works Air Center Management, LLC. Mr. Eames 11 seconded the motion. 12 13 Motion carried 6-0 AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Parks and Recreation/Community Development ACM: Howard Martin, 349-8232 SUBJECT Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving an agreement between the City of Denton and the Denton County Housing Finance Corporation; providing for the use of funds for repairs to homebuyer housing units; authorizing the City Manager to execute the agreement and to expend funds with respect to the agreement; and providing for an effective date. BACKGROUND Several months ago, the Community Development staff was informed of an opportunity to request funding from the Denton County Housing Finance Corporation (DCHFC) to support the city's housing programs. Community Development staff prepared two applications, requesting funds for the Homebuyer Assistance Program and the Home Improvement Program. Previously, in 2001, the City received funding from the DCHFC and used it to increase the subsidy amount available to assist low-income homebuyers. Funds provided by the DCHFC can also be used as match for the Home Investment Partnership Program (HOME) which requires a 25% match from non-federal sources. The Homebuyer Assistance Program was awarded $44,000. These funds will be used to complete minor repairs on approximately eight homebuyer housing units. ESTIMATED PROJECT SCHEDULE Funds should be available in August. All funding should be expended by December 2008. PRIOR ACTION/REVIEW (Councils, Boards, Commissions) NIA FISCAL INFORMATION Staff and other costs required to administer the DCHFC funding will be paid from Federal funds. These costs are eligible administrative costs under the Community Development Block Grant (CDBG) and HOME programs. EXHIBITS 1. Ordinance 2. Financial Assistance Agreement Denton County Housing Finance Corporation Page 2 Respectfully submitted: Emerson Vorel Director of Parks and Recreation Prepared by: Barbara Ross Community Development Administrator s:1a~ dacumentslardina~ces1071~chfc hap ~r~inance.~oc ' ~TTET; JEl~NIF~R AFTER, ~~T~ ~1TA~Y BY; AF~~~VED A T LEGAL ~'~R~VI: ~D~ ~VI. NYD~R, IT~Y ATT~R~E BY: - Exhibit 2 DENTON C~I~NTY HCUIN FINANCE C~RP~RATI~N FINA~NCIALAITAI~CR AR~~M~NT This Denton County Hauling Finance Carparation Financial Assistance agreement the "Agreement"} is dated as of June ~ 2a0~, by and between the Denton County Housing Finance Corporation the "Carporatio~n"} and City of Denton, Texas, Community Development Division {the "Recipient"}, relating to the Recipient's HomebuyerAsistance Pragra~rn. R~CITAi~ VvHEREA, the Corporation i a duly created and existing hauling finance corporation organized under the laws of the Mate of Texas; 1~IIHFREA, the Corporation desires to improve the housing conditions :within Denton County, Texas; VvHFRFA, one manner in vrrhich the Carparation will improve the housing conditions within Denton County: Texas, is to provide financial assistance to entities #hat satisfy the criteria set forth below; vHERFA, the Recipient has determined that it satisfies and that it will satisfy the service criteria and the fiscal and program criteria set forth below; VvH~RFA, the Recipient has applied to the Carparation farfinancial assistance; 1~IfHEREA, the Corporation desires to provide the Recipient with financial: assistance as mare specifcally set fvrkh below, provided the Recipient meets the criteria and makes the representations and warranties to the Corporation herein specified; HOVI~, THERFFOR~, in order to induce the Carparation to grant financial assistance to the Recipient and in furtherance of the desire of the Carparation to irnprov~ the hauling conditions within Denton County, Texas and far other goad and valuable consideration, the sufficiency a# which is hereby acknowledged by the parties hereto, the parties hereto agree as follows: 1. e~resentataons an ~ arrant~es a ec~~ient - ~ nrr~ winnnir~~irr~r~r i- 'u nrn~r~r Ay The Recipient hereby represents and warrants to the Carparation as follows: ~ . The activity of the Recipient prinr~arily benefits Iow income persons; The services being pravid~d by the Recipient are currently meeting an urgent community need; - 3, The services being provided by the Recipient are related to the provisions of hauling ar housing rehabilitation; 4. The service being provided by the Recipient is cast effective; 5, The services being provided by the Recipient da not exceed existing levels of need; The financial assistance granted by the Carparation herein leverages funding that the Recipient has from other sources; and The services provided by the Recipient create measurable improvement in the lives of citizens within Denton County, Texas. ~~~2ss~~,~~~~~ooos~ 'yM B. The Recipient further represents and warrants to the Dprporation as follavvs: ~ . The Recipient exercises fiduciary responsibility in regard to all of its funding and funding activities; The Recipient has completed a satisfactory independent audit or an auditor's opinion statement; . 3. The administrative casts of the Recipient are not excessive in relationship to the Recipient's function; 4. The Recipient has established and meets or exceeds stated performance o ~ect~ves; The Recipient has coordinated its services with providers of services v►~hich are related to the services being provided by Recipient; or, if the Recipient has not previously coordinated such services, the Recipient has the capacity to coordinate such services; The services provided by Recipient are conducted within ~a reasonable timeframe: The Recipient has a governing board that meets on a regular basis; 8, The Recipient operates vwrith regular and meaningful reports being made which depict its financial and operating conditions; and g. The Recipient maintains a level of staffing that is sufficient to accomplish the objectives of the Recipien#. ll. Financial Assistance . A. The Dor oration hereb a reel to provide financial assistance to the Recipient in the p y.9 arnount of Farky-Four Thousand Dollars ~44,~~~}, such financial assistance being herein tailed the "rant", The grant made to the Recipient and to be evidenced by this Agreement i conditioned upon the Recipient continually rr~eeting the conditions s ecified below in paragraph B of this ecti~an Il. The Rec~p~ent hereby accepts the p grant and represents and warrants to the Corporation a set forth in paragraph B of this section 11. B. The grant is hereby made to Recipient in consideration of the Recipient representing . and warranting to the corporation and agreeing as follows; 1, The grant will be used exclusively for hauling purposes; !~o administrative costs of Recipient will be paid with Grant funds; The Grant will be ant within eighteen 8} months of the date of execution of p this Agreen~entt unless otherwise approved in vuriting by the Board~of Directors of the Corporation; and 4. The Recipient will provide a financial report and a status repork on the use of grant funds to the Corporation at least an a quarterly basis beginning with the calendar quarker beginning October ~ , ~0~~ and continuing until all the Grant funds have been expended. C. The Grant is hereby conditioned upon the satisfaction of the additional criteria, if any, set forth in exhibit A, which is attached hereto and incorporated herein for all purposes. ~~s~~~~a.~~a~~oaosa ~ lll. ~Iliscellaneous The parties hereto acknowledge and agree that the Grant is subject to the Recipient meeting and maintaining the representations and warranties specified in Section !and in Section hereof. B. The parties hereto acknowledge and agree that failure of the Recipient to meet and maintain the representations and warranties referred to in Section III.A. above may result in a cancellation of the portion of the grant that has not been funded. The entry into this Agreement has been duly authorized by each of the parties hereto. This Agreement shall be and is the entire agreer~ent between the corporation and the Recipient as it relates to the Grant and shall supersede and cancel any prior agreements as to the Grant. This Agreement shall be governed by the laws of the State of Texas. ~ ~o~~~ao~~  LM IN U111TNE UVHEREO~r the parties h~reta have e~ceuted this Agreement as of the date first set far#h abave vui~h the actual executian of this Agreement #aking place an "arparatian" DENTIN ~C~UNTY H~UIN F1NANE ~RP~RATI~N By: Tale: "Recipient" CITY ~F DENTIN, TEAS DO~IMUNITY DEIIELOPIUIE~IT DIIII~I~N Title: ~~~2ss~~,~~o~~o~~s~ 4  Lm E~I~! BIT A Additional rite~ia ~orA~rarding the Grant done ~~ss~7~.~~0~2~~o~s AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Parks and Recreation/Community Development ACM: Howard Martin, 349-8232 SUBJECT Consider adoption of an ordinance of the City Council of the City of Denton, Texas, approving an agreement between the City of Denton and the Denton County Housing Finance Corporation; providing for the use of funds for the rehabilitation and reconstruction of owner-occupied housing; authorizing the City Manager to execute the agreement and to expend funds with respect to the agreement; and providing for an effective date. BACKGROUND Several months ago, the Community Development staff was informed of an opportunity to request funding from the Denton County Housing Finance Corporation (DCHFC) to support the city's housing programs. Community Development staff prepared two applications, requesting funding for the Homebuyer Assistance Program and the Home Improvement Program. Previously, in 2001, the City received funding from the DCHFC to assist homeowners with the renovation or reconstruction of their substandard housing units. Funds provided by the DCHFC can also be used as match for the Home Investment Partnership Program (HOME) which requires a 25% match from non-federal sources. The Home Improvement Program was awarded $44,000. These funds will be used to support the completion of approximately 10 housing rehabilitation and/or reconstruction proj ects. ESTIMATED PROJECT SCHEDULE Funds should be available in August. All funding should be expended by September 2008. PRIOR ACTION/REVIEW (Councils, Boards, Commissions) NIA FISCAL INFORMATION Staff and other costs required to administer the DCHFC funding will be paid from Federal funds. These costs are eligible administrative costs under the Community Development Block Grant (CDBG) and HOME programs. EXHIBITS 1. Ordinance 2. Financial Assistance Agreement Denton County Housing Finance Corporation Page 2 Respectfully submitted: Emerson Vorel Director of Parks and Recreation Prepared by: Barbara Ross Community Development Administrator Exhibit 1 s:lour dacum~ni~lordi~ances1071dchfc dip or~ina~ce.doc ORDIl~ANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS APPROVING AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE DENTON COUNTY HOUSING FINANCE CORPORATION; PROVIDING FOR THE USE OF FUNDS FOR THE REHABILITATION AND RECONSTRUCTION OF OWNER-OCCUPIED HOUSING; AUTHORI~IN THE CITY MANAGER TO EXECUTE THE AGREEMENT AND TO EXPEND FUNDS KITH RESPECT TO THE AGREEMENT; AND PROVIDING FOR AN EFFECTIVE DATE WHEREAS, the City requested and was awarded 44,~D0 in funding from the Denton County Housing Finance Corporation to in~.prove housing conditions within the City of Denton; and WHEREAS, the City has an existing Home I~npravement Pragran~ developed to assist low and moderate-income han~eowner with substandard housing units in need of repair; and WHEREAS, funding provided by the Denton County Hauling F1na~ace Corporation and used by the City to support the Home Improvement Program can be used as match for the Federal Hance Investment Pa.aersh~p Program; and WHEREAS, the C1ty Council deems it ~n the public interest to enter into an agreement for housing program funding with the Dentin County Housing Finance Corporat1on; NOW, THEREFORE, THE COUNCYL OF THE CITY OF DENTON HEREBY ORDAINS. SECTION I. The City Council hereby approves the attached Agreerrient between the City and the Denton County Hauling Finance Corporation to provide additional funding for the City's Hame hnprovemnt Program currently funded through the Community Develapn~ent Blacl~ Grant and Home Investment Partnership programs. SECTION The City Manager, or his designee, is hereby authorised to expend funds for hausin rehabll~tat~an and reconstruction ro' ect in accordance with the terms of the .pJ attached agreement and to exercise all rights and duties of the City of Denton under the Agreement. SECTION This ordinance shall became effective immediately upon. its passage and approval. PASSED AND APPROVED this the day of ~~~7.  i s:lour docut~entslordinance~1071dchfc htp ordinanc~.~oc PERRY ~VIc11~ETLL, .AYR ATTEST: JENNIFER SALTERS, C~I'Y SECRETARY BY. APPROVED A T~ LEGAL F~R~4i: EDWIN M. YDER, CITY ATTORNEY BY:  I mm I Exhibit 2 - D~NT~1V C~UfVTY H~UIN FINANCE C~RP~RATION FINANCIAL AITANCE AGREEMENT This Denton County Housing Finance Corporation Financial Assistance Agreement the "Agreement} i dated a of June 1 , ~DO~, by and between the Denton County Housing Finance Corporation the "Corporation"} and City of Dentont Texas, Cor~munity Develaprnent Division {the "Recipient}, relating to the Recipients Horne Improvement Prograrn,~. RECITAL vIIHEREA, the Corporation is a duly created and existing hauling finance corporation argani~ed under the laws of the state of Texas; vIfHEREA, the Carporatian desires to improve the housing conditionswithin Denton County, Texas; . vI1HEREA, one manner in which the Corporation will improve the hauling conditions within Denton County, Texas, is to provide financial assistance to entities that satisfy the criteria set Earth below; 1~IIHEREA, the Recipient has determined that it satisfe and that it will satisfy the service criteria and the fiscal and program criteria set forth below; - v11HEREA, the Recipient has applied to the Corporation for financial assistance; I~vHEREA, the Corporation desires to provide the Recipient w'rthfinancial- assistance as more specifically set Earth belo~r, provided the Recipient meets the criteria and makes the representatianond warranties to the Corporation herein specified; N~UV, THEREFORE, in order to induce the Corporation to grant financial assistance to the Recipient and in furtherance of the desire of the Corporation to improve the housing conditions v~rithin Denton County, Texas and far other goad and valuable consideration, the sufficiency of which is hereby acknowledged by the parties hereto, the parties hereto agree a follows; 1. Representations and yyarranties of Recipient The Recipient hereby represents and warrants to the Corporation as follows: ~ , The activity of the Recipient primarily benefits Iow Income persons; The services being provided by the Recipient are currently rr~eeting an urgent community need; . The services being provided by the Recipient are related to the provisions of hauling or housing rehabilitation; 4. The service being provided by the Recipient is cost effective; 5. The services being provided by the Recipient do not exceed exiting levels of . need; The financial assistance granted by the Corporation herein leverages funding that the Recipient has from other sources; and 1. The services provided by the Recipient create measurable improvement in the lives of citizens within Denton County, Texas, ~~~~ss~~.~~a~~a~~~~ D, The Recipient further represents and warrants to the Corporation as follows; The Recipient exercises fiduciary responsibility in regard to all of its funding and funding activitiest The Recipient has completed a satisfactory independent audit or an auditor's opinion statement; . The .administrative costs of the Recipient are not excessive in relationship to the Recipient's #unction; 4. The Recipient has established and meets or exceeds stated performance objectives; 5. The Recipient has coordinated its services with providers of services which are related to the services being provided by Recipient; or, if the Recipient has not previously coordinated such services: the Recipient has the capacity to coordinate such services; The services provided by Recipient are conducted within ~a reasonable timeframer . 1. The Recipient has a governing board Chet meets on a regular basis; 8. The Recipient operates with regular and meaningful reports being made which depict its financial and operating conditions; and g. The Recipient maintains a level of staffing that i sufi"icient to accomplish the objectives of the Recipient. ll. Financial Assistance A, The Corporation hereby agrees to provide financial assistance to the Recipient in the amount of Forty-Four Thousand Dollars ~44,aaa}, such financial assistance being herein called the "Grant". The Grant made to the Recipient and to be evidenced by this Agreement is conditioned upon the Recipient continually meeting the conditions specified below in paragraph B of this Section ll. The Recipient hereby accepts the Grant and represents and warrants to the Corporation as set forth in paragraph B of this section ll. B. The Grant i hereby made to Recipient in consideration of the Recipient representing and warranting to the Corporation and agreeing as follows: ~ . The Grant will be used exclusively far hauling purposes; No administrative casts of Recipient will be paid with Grant funds; 3. The Grant will be spent within eighteen ~18~ months of the date ~f execution of this Agreement, unless otherwise approved in writing by the Board of Directors of the Corporation; and The Recipient will provide a financial report and a status report on the use of Grant funds to the Corporation at least an a quarterly basis beginning with the calendar quarter beginning Gctober ~ r ~~al and continuing until all the Grant funds have been expended, C. The Grant is hereby conditioned upan the satisfaction of the additional criteria, if any, set forth in exhibit A, vtirhich is attached hereto and incorporated herein for ail purposes, ~~~~~~~~.~ro~~~~~~s ~  Lm III. Miscellaneous A. The parties hereto ackno~vledge and agree that the Grant i subject ta; the Recipient meeting and maintaining the representations and ~rarranties specified in Section f and in section I I ~ B hereof. The parties hereto acknovuledge and agree that failure of the Recipient to meet and maintain the representations and u~arranties referred to in ectian III.A, above may result in a cancellation of the partian of the grant that has not been funded. The entry into this Agreement has been duly authorized by each of the parties hereto This Agreement shall be and is the entire agreement bet~reen the orp~ration and the Recipient as it relates to the grant and shall supersede and cancel any prior agreements as to the grant. D. This Agreement shall be governed by the lav+~s of the state of Texas. ~~~~s~~a,~~a~~oo~~$  Lm IN VIIITNE~ V~JHEREOF, the parties hereto have executed this Agreement as cf the date first set firth ah~ve ~uith the actual e~cecution of this Agreement taking place on "Corpcratian" DENTON COUNTY HOUiN FINANCE CORPORATION By: Title; "Recipient" CITY OF DENTON, TEAS COMMUNITY DEVELOPMENT DIVllON By: Title; 4~9~~6~4.11~92~4Q~8 ~  i ~~i~~~r~ Addi#ional Criteria ~~r Awarding ~h~ Gr~~~ Nona . ~~~zss~~. ~ fa~~o~os ~ s:lour documentslmiscellaneous1071ais atm prudence review 7-0?.hoc .ENDA INF~RIVIATIDN SHEET AGENDA DATE: July ~ 7, ~~~7 DEPARTIVIENT: Legal Department MIDCM~A~M; John . Knight, senior Assistant pity Attorney SUBJECT: consider a resolution of the pity of Denton, Texas, authorizing a review of the reasonableness and prudence of gas purchases and expenditures of TAU C~as ~ampany, now known as Atn~os Energy orporatian, between l~overr~ber 1, ~0~ and ~ctaber 1, 200; authorizing the pity joining with other similarly situated cities in coalition l~nown as the Atos Texas Municipalities ~"ATM"}; authorising the hiring of special counsel and experts in the purchase or sale of gas; ar~tharizing the intervention in ~tTD Docket Na. 7~~ at the Railroad Commission and related proceedings; requiring the reimbursement of reasonable legal and consultant expenses; finding that the meeting cornplied with the opeu. meetings act; and declaring an effective date DESR~CPTI~N ~n April 0, Atmos made ~ filing wlt~l the Railroad Camrnlsslon of Texas to review its purchasing practices far the th.ree~year period between Naven~ber 1, 2~~ and October ~Q~~. The omrnission will review the cost of gas to see if it was prudently incurred, The ~ornn~issian is expected to rule on this matter by the end of ~~~7. ISIS The term "prudence" will be defined in this docket as well as other public policy issues involving the review of gas purchasing practices. The rulings in this case will result a de ~ facto rule far handling prudence cases of this sort. This case will also deal with the appropriate level of physical hedging ~"storage"} and financial hedging necessary to protect ratepayers from spires i the cost of gas. Undoubtedly the case will also look at the level of spot and non-spat purchases of gas t various ti~,es during thethree-year reconciliation period. FUNDING No municipality has any exposure to municipal rate case expenses. Any city may drop out at any tirrre without any liability far previously incurred rate case expenses, sv long as the Steering ~on~mittee 1 furnished ~ resolution duly adapted by the City Counclt ar 1ty camrnissiorl.  i :lour d~~umentslmiscellaneoasl~'~lais atmprudence review'T-07.dac T~~R~N~ ~M11~TT~E Each city i entitled to participate an a teerin~ aitt~e which sets the panic for ATM and reviews the ~vorl~ of pecia~ oel and the gas experts, The Executive ~on~nittee of the steering ~an~tnittee v~ill review any municipal rate case expenses far re~sona~bleness, Repectfu~l~ submitted, might eniar Assistant ~ Attorney Page 2  i s,laut docutttslresolutionsl~"~1t~so ahn prudence review 7-07.doc i RES ~Lt~TI~N N0. A RES~LTION ~F TIC CITY ~F DENTIN, TEAS, A~JT~I~IINC~ ~ REV~Ew ~F TAE REASONABLENESS AND PR~]DENCE ~F CxAS P~TRCSES AND EENDITRES ~F T~ SAS COMPANY, NOw I~N~N .AS ATM ENERGY C~RF~RAT~~~V, BETWEEN N~VEM~ER f , X003 ~ ~CTEER 1, ~a0; A~JT~RI~n~ THE CITY J~Il~Il~ WITH UTI~ER SIMILARLY SfI'UATED CITIES Ili ~ C~ALITIDN KN~wN AS T`~E ATM TEAS MI~IFALTT~ES ~"ATM"~; AUTI~~R.I~IN TIC INCr ~F SPECIAL C~~TNEL AND EVERTS IN 'I'CE PURCHASE SALE ~F xAS; AUTH~RI~IN TIDE I~'I'ERVEN'TI~N IN BUD D~CI~ET N~. 9'7~ AT 'I'II RAILROAD ~1VIM.~S~~N AND RELATED PR~CEEDINS; RE~JIRINC THE REIMBURSEMENT OF REASONABLE LEGAL AND CONSULTANT EENSES; FZNDIN T~IAT TIDE MEETING COMPLIED WITH THE OPEN MEETINGS ACT; AND DECLARIl~ AN EFFECTIVE DATE WHEREAS, on April 30, ~aa7, Atmos Energy Carp., Mid~Tex Division ~"Atmos"~ filed the Ra~i~road Cam~nislan of Teas its Comhance with C~as IJt1l~ties Docket ~"U~"} No~ ~G~4; and wREA, the ~n was docketed at the Railroad Commission as OUD Docket No. ~73~ and the proceeding way styled as Atn~os Energy Corp., Mid-Tex Division, Oas Contract Review; and wI3EREAS, Atn~os must demonstrate this filing that the gas cast or purchases between Nvven~ber 1, 20~~ and October ~ I, 2a~~ Atmos were reasonable and necessary and that the costs were pruden~.y incurred; and WHEREAS, the Railroad Commission of Texas is en~pawered to order su~{charges or refunds as a rest ofthe review and investigation of said gas casts; and w~IEREAS, it takes special expertise by bath lawyers and consultants in order to assist the City with snch a review; and wI~REA, in order to maximize the efficient use o resources and expertise in re~.ew~a, analyzing, investigating, and reconci~,n said gas casts it makes sense to coordinate the City}s efforts with a caalit~ivn of similarly situated municipalities; and w~IEREAS, a caalit~.on of municipalities, mown as the Alliance of T€J Municipalities ~"ATM"} has been active in gas utility ratea~ng proceedings; and wI~REAS, the City will loin with :other cities paicipatin in ATM a steerin g canttee in order to coordinate the hiring and dixection of legal counsel and consultants working an behalf of ATIVI and the City; New, '~REFORE, SECTION 1. That the statements set out in the preamble to this resolution are hereby all things approved and adopted. s:~our documentslte~alutionsVD7lreso atrn Bence review 7-0?.doc t~ ~~~]r~~ - Page 3  ~ i AGENDA INFORMATION SHEET AGENDA DATE: July 11, 2007 DEPARTMENT: Electric Utility ACM: Howard Martin, 349-8232 SUBJECT Consider adoption of an ordinance approving Task Order 07-C, Regulatory Services, of the Professional Services Agreement between the City of Denton and R. J. Covington Consulting (RJC) for an amount not to exceed $80,000. The Public Utilities Board recommends approval (7-0). BACKGROUND For the past eleven years, it has been the practice of Denton Municipal Electric (DME) to maintain a general regulatory services task order with R. J. Covington, initially as an employee of Resource Management International followed by contracting with his independent consulting firm. The most recent of these contracts was issued in mid January of 2006 in the amount of $100,000. All funds in that Task Order were depleted with the May billing for work under this category. Since the passage of Senate Bill 7, Mr. Covington's firm, working incoordination with DME staff members, has been critical in providing coverage of the Austin based Texas Public Utilities Commission (TPUC) workshops, rule makings, and hearings that occur regularly and impact the structure of existing the retail and wholesale deregulated marketplace. The ongoing changes being introduced almost daily into the existing deregulated electric marketplace design by the Texas Legislature, TPUC, ERGOT staff and electric market participants are often critical to DME's ability to successfully function in the marketplace. Failure of DME to monitor and participate effectively in these activities will result in changes to the existing market model harmful to the interest of smaller players such as DME. For the past several months DME, along with municipal electric utilities such as Austin and San Antonio, large electric transmission and generation cooperatives such as the South Texas Electric Cooperative (STEC) and coalitions of Texas cities, and consumer groups have been active in two major TPUC dockets. The decisions made in these dockets will have maj or financial impacts on the Texas economy and the rates paid by DME customers. The first docket will determine the manner in which the legislative mandated development of Competitive Renewable Energy Zones (CREZs) and the construction of transmission lines from the selected CREZs to load centers in the Electric Reliability Council of Texas (ERGOT) will be implemented. Wind developers and transmission development companies are advocating plans that could add as much as 9000 MVV of new wind resources to the ERGOT generation resource portfolio and require investment of as much as $2.8 billion in new ERGOT transmission construction. If the most extreme proposals are adopted, DME's customers alone would pay approximately $12.5 million in additional Transmission Cost of Service (TCOS) rates over the life of the facilities. Additionally, the cost of paying non-wind generation to remain on-line as a backup to fill energy needs that can not be met if the wind does not blow in the manner forecast could add costs in the area of $300 million ($1.5 million for DME customers) annually to ERGOT fees. While DME has been very careful not to oppose in any way development of wind resources in Texas, it has advocated that the TPUC proceed carefully and thoughtfully with such development, keeping in mind the cost to consumers and the reliability of the ERGOT electric grid. DME has advocated such things as the choice of less costly transmission alternatives, a reasonable schedule for development of wind resources that focuses initially on wind resources whose availability patterns are the most compatible with ERCOT's load patterns, and allowing time for a careful analysis for the backup generation requirements needed to maintain ERCPT's system reliability. The second docket is considering the merits of separating the portion of the existing Entergy electric system located in Texas from the balance of the Entergy system and adding the Entergy Texas system to ERGOT. The incremental impact on ERGOT TCOS, based on Entergy's preliminary estimates, is $1 billion (DME's share would be approximately $5 million). Furthermore, because ERGOT would end up with only older, less efficient Entergy generating units located in Texas that are not sufficient to support the additional Entergy load proposed to be connected to the ERGOT grid, Entergy's own estimates indicate that the Entergy connection proposal would increase the cost of energy to existing ERGOT customers by $1/MWh. DME, along with a number of other interveners, is opposing the Entergy connection proposal. OPTIONS 1. Continue to use the Covington firm's services 2. Reduce DME participation in Texas electric market issues. Rely totally on DME staff for all other technical issues. RECOMMENDATION DME staff recommends approval of the Task Order. PRIOR ACTION/REVIEW (Council, Boards, Commissions) This item was presented to the Public Utilities Board at the July 9, 2007 meeting. The Public Utilities Board recommends approval (7-0). FISCAL INFORMATION The cost of this task order is not to exceed $80,000. EXHIBITS 1. Professional Services Agreement for Task Order 07-C 2. Public Utilities Board Minutes of July 9, 2007 3. Ordinance Respectfully submitted, Sharon Mays, General Manager Denton Municipal Electric Exhibit 1 STATE OF TEXAS § COUNTY OF DENTON § PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES PERTAINING TO DENTON MUNICIPAL ELECTRIC THIS AGREEMENT is made and entered into on the day of , 2007, but effective from and after June 1, 2007, by and between the City of Denton, Texas, a Municipal Corporation, with its principal office at 215 East McKinney Street, Denton, Texas 76201 ("CITY"); and R. J. COVINGTON CONSULTING, LLC, a Texas Limited Liability Corporation, with its principal office at 11044 Research Boulevard, Suite A-325, Austin, Texas 78759, hereafter "COVINGTON"; acting herein by and through their duly authorized representatives. wITNESSETH, that in consideration of the covenants, promises and agreements herein contained, the CITY and COVINGTON do hereby AGREE as follows: ARTICLE I EMPLOYMENT OF CONSULTANT The CITY hereby contracts with COVINGTON, as an independent contractor, and COVINGTON hereby agrees to perform the services herein in connection with the Scope of Services as stated in the Articles to follow as well as the Task Orders, with diligence and in accordance with the professional standards customarily obtained for such services in the State of Texas. ARTICLE II SCOPE OF SERVICES A. COVINGTON shall provide to the CITY professional consulting services pertaining to assisting Denton Municipal Electric in continuing regulatory services at the Electric Reliability Council of Texas ("ERGOT"), as well as the Public Utilities Commission of Texas ("PUCT"), that relate to ever-changing developments that pertain to the transmission costs and the rates paid by DME, in spite of the proposed transmission system expansions; and also concerning priority dispatch issues to certain new market participants at the expense of other market participants, including DME; and other relevant issues that may arise in the various rulemakings and proceedings. RJC will also assist DME staff and legal counsel re interventions made in these proceedings. RJC seeks to minimize any extra costs that the existing members of ERGOT might have to pay upon the joinder into ERGOT of new customers of ERGOT. COVINGTON agrees to perform those services and tasks more particularly and specifically described in Task Order No. 07-C that is attached hereto and incorporated herewith by reference. B. To consult with the City Manager, Assistant City Manager/Utilities, the Director of Electric Utilities, the Utility Attorney, and any other designated administrative personnel regarding any and all aspects of the services to be performed pursuant to this Agreement. ARTICLE III PERIOD OF SERVICE This Agreement shall become retroactively effective on the 1St day of June 2007 and upon the issuance of a notice to proceed by Denton Municipal Electric ("DME"). The termination date of this Agreement shall be upon the earliest to occur of the following events: completion of the work described herein and in the attached Task Order No. 07-C; or upon the depletion and exhaustion of the $80,000 not-to-exceed amount provided for herein; or upon fifteen (15) day's written notice to terminate, issued by the General Manager of DME. This Agreement may be sooner terminated in accordance with the provisions hereof. Time is of the essence in this Agreement. COVINGTON shall make all reasonable efforts to complete the services set forth herein as expeditiously as possible and to meet the schedule established by the CITY, acting through its General Manager of DME. ARTICLE IV COMPENSATION A. COMPENSATION TERMS: "Direct Non-Labor Expense" is defined as that expense for any assignment incurred hereunder by COVINGTON for supplies, long-distance telephone, telecopier, reproduction expense, overnight courier, photocopy expense, transportation, travel, communications, subsistence and lodging away from home and similar incidental expenses reasonably incurred in connection with that assignment. B. BILLING AND PAYMENT: 1. For and in consideration of the professional services to be performed by COVINGTON herein, the CITY agrees to pay COVINGTON, a total fee, including reimbursement for direct non-labor expense, not to exceed $80,000 for those services described in Task Order No. 07- C. 2. The fee for the services described in this Agreement to be performed by COVINGTON are to be billed at the rates previously agreed to. Billing shall be reported in minimum one- quarter (1 /4) hour increments. 3. Payments to COVINGTON will be made by the CITY on the basis of detailed monthly statements rendered to the CITY through its General Manager of DME. The fee bills as submitted, shall be allowed and approved by the General Manager of DME. However, under no circumstances shall any monthly statement for services exceed the value of the work performed at the time a statement is rendered. 4. Nothing contained in this Article shall require the CITY to pay for any work which is unsatisfactory as reasonably determined by the Assistant City Manager for Utilities or the General Manager of DME; or which is not submitted in compliance with the terms of this Agreement. The City shall not be required to make any payments to COVINGTON when COVINGTON is in default under this Agreement. 5. It is specifically understood and agreed that COVINGTON shall not be authorized to undertake any work pursuant to this Agreement which would require additional payments by the CITY for any charge, expense or reimbursement above the maximum not-to-exceed fee as stated, without first having obtained written authorization from the CITY. C. PAYMENT If the CITY fails to make payments due COVINGTON for services and expenses within forty (40) days after receipt of COVINGTON'S undisputed statement thereof, the amounts due COVINGTON will be increased by the rate of one percent (1 per month from the said forty (40th) day, and in addition, COVINGTON may, after giving ten (10) days' written notice to the CITY, suspend services under this Agreement until COVINGTON has been paid in full all amounts due for services, expenses and charges provided. However, nothing herein shall require the CITY to pay the late charge of one percent (1 set forth herein if the CITY reasonably determines that the work of COVINGTON is unsatisfactory, in accordance with this Article IV, Compensation, and the CITY notifies COVINGTON in writing of any such defect. ARTICLE V OBSERVATION AND REVIEW OF THE WORK COVINGTON will exercise reasonable care and due diligence in discovering and promptly reporting to the CITY any defects or deficiencies in his work or the work of any subconsultants performed hereunder. ARTICLE VI OWNERSHIP OF DOCUMENTS All documents, analyses and other data prepared by COVINGTON under this Agreement ("Work Products") are instruments of service and are and shall remain the property of CITY. COVINGTON shall have the right to make and retain copies and use all Work Products; provided, however, the use shall be limited to the intended use for which the services and Work Products are provided under this Agreement. COVINGTON may use and may copyright certain non-sensitive Work Products as property of COVINGTON; provided that prior written approval is obtained from CITY, whose approval shall not be unreasonably withheld, and providing that copywriting will not restrict CITY' S right to retain or make copies of the Work Products for its information, reference and use on the Projector services under the Agreement. The Work Products shall not be changed or used for purposes other than those set forth in this Agreement without the prior written approval of COVINGTON. If CITY releases the Work Products to a third party without COVINGTON' S prior written consent, or changes or uses the Work Products other than as intended hereunder, CITY does so at its sole risk and discretion and COVINGTON shall not be liable for any claims or damages resulting from or connected with the release or any third party's use of the Work Products. ARTICLE VII INDEPENDENT CONTRACTOR COVINGTON shall provide services to the CITY as an independent contractor, not as an employee of the CITY. COVINGTON shall not have or claim any right arising from employee status. ARTICLE VIII INDEMNITY AGREEMENT COVINGTON shall indemnify and save and hold harmless the CITY and its officers, agents, and employees from and against any and all liability, claims, demands, damages, losses and expenses, including but not limited to court costs and reasonable attorney's fees incurred by the CITY, and including without limitation, damages for bodily and personal injury, death and property damage, and damage for professional malpractice resulting from the negligent acts or omissions of COVINGTON or any subconsultants, in performance of this Agreement. COVINGTON'S liability under this Article VIII is expressly limited to the amount of COVINGTON'S insurance coverage as set forth in Article IX. Nothing in this Agreement shall be construed to create a liability to any person who is not a party to this Agreement and nothing herein shall waive any of the party's defenses, both at law or equity, to any claim, cause of action or litigation filed by anyone not a party to this Agreement, including the defense of governmental immunity, which defenses are hereby expressly reserved. ARTICLE IX INSURANCE During the performance of the Services under this Agreement, COVINGTON shall maintain the following insurance with an insurance company licensed to do business in the State of Texas by the State Insurance Commission or any successor agency that has a rating with Best Rate Carriers of at least an "A-" or above: A. Comprehensive General Liability Insurance with bodily injury limits of not less than $500,000 for each occurrence and not less than $500,000 in the aggregate, and with property damage limits of not less than $100,000 for each occurrence, and not less than $100,000 in the aggregate. B. Automobile Liability Insurance with bodily injury limits of not less than $500,000 for each person and not less than $500,000 for each accident; and with property damage limits of not less than $100,000 for each accident. C. Professional Liability Insurance with policy limits of not less than $1,000,000 annual aggregate. D. COVINGTON shall furnish insurance certificates or insurance policies at the CITY's request to evidence such coverages. The insurance policies shall name the CITY as an additional insured on all such policies to the extent legally possible, and shall contain a provision that such insurance shall not be canceled or modified without thirty (30) days prior written notice to CITY and COVINGTON. In such event, COVINGTON shall, prior to the effective date of the change or cancellation, deliver substitute policies furnishing the same coverage to the CITY. ARTICLE X ARBITRATION AND ALTERNATE DISPUTE RESOLUTION The parties agree to settle any disputes under this Agreement by submitting the dispute to arbitration or other means of alternate dispute resolution such as mediation. No arbitration or alternate dispute resolution arising out of or relating to, this Agreement involving one party's disagreement may include the other party to the disagreement without the other's approval. ARTICLE XI LIMITATION OF LIABILITY To the extent permitted by law, the total liability of COVINGTON to CITY for any and all claims arising out of this Agreement, whether caused by negligence, errors, omissions, strict liability, breach of contract or contribution, or indemnity claims based on third-party claims, shall not exceed one million dollars ($1,000,000). ARTICLE XII CONSEQUENTIAL DAMAGES In no event and under no circumstances shall COVINGTON be liable to CITY for any interest, loss of anticipated revenues, earnings, profits, or increased expense of operations, or for any consequential, indirect or special damages. ARTICLE XIII PROFESSIONAL STANDARDS COVINGTON will perform services under this Agreement with the degree of skill and diligence normally practiced by professional engineers or consultants performing the same degree of similar services. No other warranty or guarantee, expressed or implied, is made with respect to the services furnished under this Agreement and all implied warranties are disclaimed. ARTICLE XIV TERMINATION OF AGREEMENT A. Notwithstanding any other provision of this Agreement, either party may terminate this Agreement by giving thirty (30) days advance written notice of termination to the other party. B. This Agreement may be terminated in whole or in part in the event of either party substantially failing to fulfill its obligations under this Agreement. No such termination will be effected unless the other party is given: (1) written notice (delivered by certified mail, return receipt requested) of intent to terminate and setting forth the reasons specifying the nonperformance, and not less than ten (10) business days in which to cure the failure; and (2) an opportunity for consultation with the terminating party prior to termination. C. If this Agreement is terminated prior to completion of the services to be provided hereunder, COVINGTON shall immediately cease all services and shall render a final bill for services to the CITY within thirty (30) days after the date of termination. The CITY shall pay COVINGTON for all services properly rendered and satisfactorily performed and for reimbursable expenses to termination incurred prior to the date of termination in accordance with Article IV, Compensation. Should the CITY subsequently contract with a new consultant for the continuation of services on the Project, COVINGTON shall cooperate in providing information. COVINGTON shall turn over all documents prepared or furnished by COVINGTON pursuant to this Agreement to the CITY on or before the date of termination, but may maintain copies of such documents for its use. ARTICLE XV RESPONSIBILITY FOR CLAIMS AND LIABILITIES Approval by the CITY shall not constitute nor be deemed a release of the responsibility and liability of COVINGTON, or any subconsultants of COVINGTON, for the accuracy and competency of their designs or other work product. ARTICLE XVI NOTICES All notices, communications, and reports required or permitted under this Agreement shall be personally delivered or mailed to the respective parties by depositing same in the United States mail at the address shown below, certified mail, return receipt requested unless otherwise specified herein. Mailed notices shall be sent to the parties at the following addresses: To COVINGTON: To CITY: R.J. Covington Consulting, LLC City of Denton, Texas Attn: Richard J. Covington, President Attn: City Manager 11044 Research Blvd., Suite A-325 215 East McKinney Street Austin, Texas 78759 Denton, Texas 76201 and to City of Denton, Texas Attn: General Manager, DME 1659 Spencer Road Denton, Texas 76205 All notices shall be deemed effective upon receipt by the party to whom such notice is given or within three (3) days after the date of mailing. ARTICLE XVII ENTIRE AGREEMENT This Agreement consisting of nine (9) pages, and three (3) additional pages consisting of Task Order No. 07-C, constitutes the complete and final expression of the agreement of the parties and is intended as a complete and exclusive statement of the terms of their agreements and supersedes all prior contemporaneous offers, promises, representations, negotiations, discussions, communications and agreements which may have been made in connection with the subj ect matter hereof. ARTICLE XVIII SEVERABILITY If any provision of this Agreement is found or deemed by a court of competent jurisdiction to be invalid or unenforceable, it shall be considered severable from the remainder of this Agreement and shall not cause the remainder to be invalid or unenforceable. In such event, the party shall reform this Agreement to replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the intention of the stricken provision. ARTICLE XIX COMPLIANCE WITH LAWS COVINGTON shall comply with all federal, state, local laws, rules, regulations, and ordinances applicable to the work covered hereunder as they may now read or hereinafter be amended. ARTICLE XX DISCRIMINATION PROHIBITED In performing the services required hereunder, COVINGTON shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical an icap. ARTICLE XXI PERSONNEL A. COVINGTON represents that he has secured, or will secure at his own expense any additional personnel required to perform all the services required under this Agreement. Such personnel shall be subconsultants of COVINGTON, and shall not be employees or officers of, nor have any contractual relations with the CITY. COVINGTON shall inform the CITY of any conflict of interest or potential conflict of interest that may arise during the term of this Agreement. B. All services required hereunder will be performed by COVINGTON or under his supervision. All personnel engaged in work shall be qualified and shall be authorized and permitted under state and local laws to perform such services. ARTICLE XXII ASSIGNABILITY COVINGTON shall not assign any interest in this Agreement and shall not transfer any interest in this Agreement (whether by assignment, novation or otherwise) without the prior written consent of the CITY. ARTICLE XXIII MODIFICATION No waiver or modification of this Agreement or of any covenant, condition, limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith and no evidence of any waiver or modification shall be offered or received in evidence in any proceeding arising between the parties hereto out of or affecting this Agreement, or the rights or obligations of the parties hereunder, and unless such waiver or modification is in writing, duly executed; and, the parties further agree that the provisions of this section will not be waived unless as herein set forth. ARTICLE XXIV MISCELLANEOUS A. COVINGTON agrees that CITY shall, until the expiration of three (3) years after the final payment under this Agreement, have access to and the right to examine any directly pertinent books, documents, papers and records of COVINGTON involving transactions relating to this Agreement. COVINGTON agrees that the CITY shall have access during normal working hours to all necessary COVINGTON facilities and shall be provided adequate and appropriate working space in order to conduct audits in compliance with this section. The CITY shall give COVINGTON reasonable advance notice of any intended audits. B. Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton County, Texas. This Agreement shall be governed by, and construed in accordance with the laws of the State of Texas. C. COVINGTON shall commence, carry on, and complete the work required by this engagement with all applicable dispatch, in a sound, economical, efficient manner and in accordance with the provisions hereof. In accomplishing the work, COVINGTON shall take such steps as are appropriate to ensure that the work involved is properly coordinated with related work being carried on by the CITY. D. The CITY shall assist COVINGTON by placing at COVINGTON's disposal all available information pertinent to the work required by this engagement, including previous reports, any other data relative to the project and arranging for the access to, and make all provisions for COVINGTON to enter in or upon, public and private property as required for COVINGTON to perform services under this Agreement. E. The captions of this Agreement are for informational purposes only and shall not in any way affect the substantive terms or conditions of this Agreement. IN WITNESS WHEREOF, the City of Denton, Texas has caused this Agreement to be executed in four (4) original counterparts, by its duly authorized City Manager; and R.J. Covington Consulting, LLC has executed this Agreement by its duly authorized officer on this the day of II~~ ~~ITNESS V~HEREOF; the City of Denton, Texas has caused this Agreement to be executed in four ~4} original counterparts; by its dul~T authorized City Manager; and R.J. Covington Consulting; LLC has executed this Agreement by its duly authorized officer on this the day of ;?oo~. "CITY" CITY OF DE~TTO~. TEAS A Municipal Corporation By: George C. Campbell; Cite Manager ATTEST: _ JEh~NIF'ER V~ALTERS. CITY SECRETARY By: APPROVED AS T4 LEGAL FORM: ED~~ M. S~~YDER. CITY TTORI`~EY By• ' „~o~GTO~T~t R. J. co~lvGTO~~ CO~TSULTING, LLC A Texas Limited Liability Corporation B ~V. C. Starnes, dice-President _ r T~. ` 9 Task Order 07-C Re~ulator~J Senr~ces Budget This Task Order provides for a not to exceed amount of SSD;~OD for professional fees and expenses. This Task Order will not be exceeded without the prior written approval of the City. RJC will bill monthly with supporting documentation of activities performed and expenses incurred. The work being performed will be under the supervision of the General Manager of Denton Municipal Electric; and may be modified at any time upon appropriate notice to RJC. EXECUTED this the day of ~ ; 2DD7. AUTHORIZED BY: ACCEPTED BY: "CITY" "RJC" CITY OF DE~~TOI~~; TEAS R.J. CO~INGTO~j CO~~SULTING; LLC A Texas Municipal Corporation By: _ B~'~ George C. Campbell w. C. Starnes; dice-President. Cit}~ Manager ted: Dated: ~ ~ ~ Da S ATTEST: ~ APPROVED AS TO LEGAL FORM: JEI~~~IFER wALTERS EDwII~~ M. S~~YDER CITY SECRETARY - CITY ATTORh~EY By: By: Dated: .Dated: ~ . 3 of 3 Task Order 07-C Regulatory Services Task Order No. 07-C addresses regulatory issues at the PUCT. Market issues at ERGOT are provided for in a separate task order (No. 07-D). All work performed at the PUCT is conducted under the direction of the General Manager of Denton Municipal Electric. Scope of Services Task A PUCT Regulatory Support Task A-1 Attending Workshops and Hearings at PUCT 1. RJC will stay informed on activities at the PUCT and will attend workshops and hearings as directed by DME. 2. when appropriate, RJC will participate in workshops and hearings to represent interests of DME and the City in accordance with the directions of DME. 3. RJC will work with DME staff in development of positions that should be taken, and strategies for working with parties involved, during the nodal system design and implementation. Task A-2 Analyze Proposed Rules and Policies 1. PUCT proposed new rules and rule changes will be analyzed. 2. RJC will discuss proposed new rules, and changes to existing rules with DME staff and legal counsel, helping to identify areas of concern and preparing positions that represent the interests of the City. 3. RJC will meet with PUCT staff and other parties as appropriate to discuss proposed rules, and present DME's concerns regarding such proposals. Task A-3 Preparation of Comments 1. RJC will prepare or assist in preparing comments to be filed with the PUCT representing the City's position on issues brought up in proposed rules, projects and dockets. 2. These comments will be coordinated through DME staff and legal counsel. 3. RJC will assist the City's legal counsel as necessary in the preparation and filing of comments and testimony in dockets that have been identified by DME staff as requiring intervention to protect DME and the City's interest. Task B Industry Monitoring and Evaluation 1. RJC will maintain continuing communication with DME staff and legal counsel in order to monitor proposed industry changes and address those issues affecting municipalities. 2. An ongoing dialogue will be maintained with DME staff and the legal counsel in order to evaluate changing operating and market requirements and conditions, and evaluate their potential effects on DME operations. 3. Information necessary to supplement and support the decision-making process will be provided as requested. 4. A summary of activities at the PUC and ERGOT will be provided weekly. 2 of 3 Task Order 07-C Regulatory Services Budget This Task Order provides for a not to exceed amount of $80,000 for professional fees and expenses. This Task Order will not be exceeded without the prior written approval of the City. RJC will bill monthly with supporting documentation of activities performed and expenses incurred. The work being performed will be under the supervision of the General Manager of Denton Municipal Electric, and may be modified at any time upon appropriate notice to RJC. EXECUTED this the day of , 2007. AUTHORIZED BY: ACCEPTED BY: "CITY" "RJC" CITY OF DENTON, TEXAS R.J. COVINGTON CONSULTING, LLC A Texas Municipal Corporation By: By: George C. Campbell W. C. Starnes, Vice-President City Manager Dated: Dated: ATTEST: APPROVED AS TO LEGAL FORM: JENNIFER WALTERS EDWIN M. SNYDER CITY SECRETARY CITY ATTORNEY By: By: Dated: Dated: 3of3 EXHIBIT A PROFESSIONAL SERVICES AGREEMENT BETWEEN THE CITY OF DENTON, TEXAS AND R.J. COVINGTON CONSULTING, LLC TASK ORDER N0.07-C Regulatory Services This Task Order is for continuing assistance to Denton Municipal Electric staff ("Staff as they address the continuing changes to the electric industry. Task Order No. 07-C specifically focuses on activities at the Public Utility Commission of Texas ("PUCT"). The PUCT is currently addressing issues that will affect the way DME conducts it business. It is important for DME to be aware of changes to remain in compliance with Texas regulations and to protect its interests and the interests of its ratepayers. In particular, the PUCT is now addressing issues related to the implementation of the nodal market design, issues related to monitoring the new market, market power issues, and resource adequacy in the nodal market. Covington ("RJC") will work with DME staff to develop and present the DME position on those issues that may affect DME and the City of Denton, Texas. The PUCT has been actively hearing a number of various rulemakings and contested case hearings that will have significant impacts on ERGOT transmission rates paid by DME and RJC is currently working with DME staff and legal counsel representing DME interests in these proceedings to insure that transmission rates in ERGOT remain reasonable in spite of the proposed transmission system expansions. Future proceedings addressing these issues are anticipated to address assigning priority dispatch to certain market participants at the expense of other market participants, a concept that runs entirely counter to the current method of operating the ERGOT transmission system, where all transmission system users have equal access to capacity. Expansion of this doctrine, should it be established in these proceedings, may have detrimental impacts in the future on customers with remote generation, such as DME. Additionally, the PUCT is considering expanding the ERGOT footprint by incorporating non- ERCOT Texas utilities into ERGOT. RJC has been assisting DME staff and legal counsel in DME interventions in these proceedings. To date, RJC's has discovered that while it appears that these efforts may improve costs for the customers being incorporated into ERGOT, these new customer benefits come by imposing additional costs on existing ERGOT customers, such as DME. Task Order 07-C, executed even date herewith, allows RJC to supplement DME staff s efforts to keep track of the vast amount of information that is needed to keep up with activities at the PUCT and the Electric Reliability Council of Texas ("ERGOT"). RJC will assist the DME staff in identifying those issues needing DME's attention. In addition to surveying and reporting on ongoing activities at the PUCT and ERGOT, RJC is a resource providing extensive regulatory experience to assist DME's staff in the evaluation of the impact on DME of various issues. Exhibit 2 1 DRAFT MINUTES 2 PUBLIC UTILITIES BOARD 3 July 9, 2007 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was 6 present, the Chair of the Public Utilities Board thereafter convened into an Open Meeting on 7 Monday, July 9, 2007 at 9:00 a.m. in the Service Center Training Room, City of Denton Service 8 Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, Bob Bland, John 11 Baines and Randy Robinson 12 13 Ex Officio Members: 14 Howard Martin, ACM Utilities 15 16 OPEN MEETING: 17 18 ITEMS FOR INDIVIDUAL CONSIDERATION: 19 20 3. Consider recommending approval of Task Order 07-C, Regulatory Services, of the 21 Professional Services Agreement Between the City of Denton and R. J. Covington 22 Consulting (RJC) for an amount not to exceed $80,000. 23 24 Sharon Mays, General Manager, presented this item stating that the ongoing changes being 25 introduced almost daily into the existing deregulated electric marketplace design by the Texas 26 Legislature, TPUC, ERGOT staff and electric market participants are often critical to DME's 27 ability to successfully function in the marketplace. Failure of DME to monitor and participate 28 effectively in these activities will result in changes to the existing market model harmful to the 29 interest of smaller players such as DME. 30 31 Mays stated that Covington has been active in two major TPUC dockets and that the decisions 32 made in these documents will have financial impacts on rates paid by DME customers. Mays 33 stated that of particular importance is the docket concerning wind generation and legislative 34 mandated development and construction of transmission lines which, if implemented, could cost 35 DME's customers approximately $12.5 million in additional rates over the life of the facilities. 36 37 Board Member Phil Gallivan moved to approve with a second from Board Member Bland. 3 8 The motion was approved by a 7-0 vote. 39 40 4. Consider recommending approval of Task Order 07-D, Nodal Market Transition, of the 41 Professional Services Agreement Between the City of Denton and R.J. Covington Consulting 42 (RJC) for an amount not to exceed $80,000. 43 44 Sharon Mays, General Manager, presented this item stating that of the activities occurring at 45 ERGOT at this time, the most important is the on-going nodal market implementation process 46 and, because Covington has represented DME through all the changes in the ERGOT market, its 47 staff is capable of representing DME's behalf during meetings. 48 49 Chair Charldean Newell asked, and the Board Members confirmed, that the minutes reflect that 50 the Board, in the context of discussing the City's relationship with ERGOT and the state 1 Draft Minutes Public Utilities Board meeting 2 July 9, 2007 3 Page 2 of 2 4 5 6 regulatory board, had a fairly serious discussion about the future and is concerned that there is 7 adequate planning, and that the City commits to being willing to spend whatever it takes to 8 protect the City and its resources. 9 10 Board Member Bill Cheek motioned to approve with a second from Board Member Randy 11 Robinson. The motion was approved by a 7-0 vote. 12 13 The meeting was adjourned by consensus at 9:56 a.m. 14 E~iibit 3 ORDINANCE NO 2007 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY O~ DENTON TEXAS ~ AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH R J COVINGTON CONSULTING LLC FOR CONSULTING SERVICES RELATING TO TASK ORDER NO 07 C PROVIDING FOR CONTINUING REGULATORY SERVICES AT THE ELECTRIC RELIABILITY COUNCIL OF TEXAS AND THE PUBLIC UTILITIES COMMISSION OF TEXAS REGARDING TRANSMISSION CONS AND THE RATES TO BE PAID BY DENTON MUNICIPAL ELECTRIC TOGETHER WITH PROPOSED TRANSMISSION SYSTEM EXPANSIONS AND OTHER RELATED PROFESSIONAL SERVICES AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR AND PROVIDING AN EFFECTIVE DATE WHEREAS the City Council deems it ~n the public interest to continue to engage the f rm of R J Covington Consulting LLC of Austin Texas (Covington) to provide further professional consulting services to the City relatzng to Task Order No 07 C which includes without l~mrtat~an services at the Electrzc Rel~abilrty Council of Texas (ERGOT } as well as the Public Utrlrties Commtss~on of Texas (PUCT }regarding transmission casts and the rates paid by Denton Mumc~pal Electric { DME) in spite of new proposed transmission system expansions and also concerning priority dispatch issues to certain new market participants at the expense of existing market participants and for other professional services and WHEREAS the City staff has reported to the City Council that there is a substantial need ~ for the aho~e described specialized professional services and that limited Ci#y staff cannot ~ adequately perform the services and tasks with its owr~ personnel and WHEREAS Chapter 2254 of the Texas Government Code known as the Professional Services Procurement Act generally provides that a City may not select a provider of professional services on the bass of compet~t~ve bids but must select the provider on the basis of demonstrated competence knowledge and qualifications and for a fair and reasonable price and WHEREAS Covington has represented DME continuously and professionally over the last ten (14) years and has proven to be a valuable reliable affordable and competent professional. resource that has expertise in and is well acquainted with the electric operations as well as the financial and regulatory framework of Denton M~uucipal Electric Covington and hzs staff are particularly famFlzar with the characteristics operations and present rate structure of DME Co~tngton s operations are located m Austin Teas and WHEREAS tie Crty Council has provided in the Crty Budget for the appropriation of funds to be used for the purchase of the professional services as set forth rn the Professional Services Agreement NOW THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS 1 er~tees ~ ETI~I~ ~ The pity lianager hereby authorized to eeeute a pr~fessi~~aZ Agreement with J ov~n~ton o~~ult~n LLB Austin Teas far pro~eslonal cen~ult~ng serv~ees re1~t~~g to Tasl~ order Igo ~7 relating to tie pity and to Denton 1lun~e~pa1 Eeetrle ~n an amo~znt not to BOO ~n substantially the ~orrn o~ the Pxafessional erv~ee Agreement that is attached hereto and incorporated herewith ~ refere~ee a.s E~~ubit " f this reeme~t b the fit 1~ an the bass of tie ~ ET~DI~ ~ The ward e g derrionstrated competence knowledge and ~uallficatlon of o~ingto~ and the ability of o~ingtan t~ perform the professlonal er~lee~ ~e~d~~ the 1ty for ~ ~r and reasonable ETID~I _ The e~pendlture of funds as pro~rided in the attached ~rofess~onal er~ices Agreement ~s hereby authorx~ed E~TI~ 4 This ordinance shall become ef~ect~ve immediately upon its passage and approval ~AED AID ~P~DED this the _ day of _ _ i i } k PEA. R cIEILL ADI ` i ATTEST JEII~E~ ALTER IT SECRETARY By 1~p~RDEI~ . TD LEGAL FDR EDI SYDER CITY ATTDIE ~y AGENDA INFORMATION SHEET AGENDA DATE: July 11, 2007 DEPARTMENT: Electric Utility ACM: Howard Martin, 349-8232 SUBJECT Consider adoption of an ordinance approving Task Order 07-D, Nodal Market Transition, of the Professional Services Agreement Between the City of Denton and R. J. Covington Consulting (RJC) for an amount not to exceed $80,000. The Public Utility Board recommends approval (7- 0). BACKGROUND For the past eleven years, it has been the practice of Denton Municipal Electric (DME) to maintain an Electric Reliability Council of Texas (ERGOT) related task order with R. J. Covington, initially as an employee of Resource Management International followed by contracting with his independent consulting firm. These task orders have allowed DME to protect the interests of its customers through participation in ERGOT protocol development, market design, and technical requirement development activities, which are held in Austin. The most recent of these contracts was issued in mid January of 2006 in the amount of $100,000. All funds in that Task Order were depleted with the May billing for work under this category. There are a number of important activities occurring at ERGOT at this time. The most important of which is the ongoing nodal market implementation process. ERGOT has chosen vendors to develop the software required to implement the PUC approved nodal market design. Those vendors are now in the software design and development phase of the project. As that process continues both the software vendors and ERGOT market stakeholders are suggesting changes to the initial market design documents. Incorporation of such changes in the software now being developed can have major impacts on how the nodal market will operate and its cost. There is stakeholder oversight of this process. Some level of monitoring of and participation in the stakeholder oversight process is important. During the first wholesale market implementation effort, fundamental changes were made to the market design in the name of software requirements/limitations. Given the complexity of nodal market software, there will be a significant opportunity to "tweak" the software in ways that will advantage some market participants and disadvantage others. The large players will have staff member heavily involved in every detail of this process, taking every opportunity to make changes that are to their advantage. while small players like DME have no hope of becoming fully engaged in this process, which has evolved to two day formal meetings every two weeks plus other "working group" meetings in Austin, DME must at least make an effort to monitor key areas of the process. In addition to the nodal design effort, there are a number of other important activities occurring at ERGOT. • Refinement of the required cost/benefit analysis used in the review and approval/disapproval for ERGOT operating expenditures and changes to market protocols. • Development of a formal appeal process to the ERGOT Board when ERGOT stakeholder committees reject market design changes proposed by other stakeholders • Implementation of the federally mandated National Electric Reliability Corporation reliability standards, which will be administered in ERGOT by a newly created independent organization that answers directly to the ERGOT Board. How ERGOT interprets and administers the NERC standards has a direct impact on DME, including the potential for significant fines. • Ongoing review of credit requirements for ERGOT market participants. This item is particularly critical because, if the credit requirements are not sufficient to cover funds owed to ERGOT if a participant goes out of business, ERGOT will recover that lost revenue from all remaining ERGOT participants in order to pay its settlement obligations. The largest portion of this credit risk is related to the retail portion of the market. At this point, municipals utilities are the only ERGOT stakeholders left with strong credit ratings. Non opt-in entities' arguments that they should not be subject to credit risks associated with the retail market have been ignored to date. • Stakeholder efforts to find a replacement for a PUC mandated emergency demand response program. The PUC mandated this program following the April 2005 rolling blackouts despite evidence presented by ERGOT stakeholder technical committees that the program, as designed, would not reduce load fast enough to avoid a blackout. However, it would provide as much as $20 million/year of revenue to the small group of industrial customers most likely to be able to qualify for the program. That $20 million/year will be paid by consumers in ERGOT. The PUC has refused to eliminate this program unless ERGOT stakeholders can present a replacement program acceptable to the PUG. All of these activities will take place in Austin, making the use of Covington staff, located in Austin, the most effective way to participate. In addition DME does not have an administrative staff large enough to remain constantly engaged in this process and perform its remaining duties. Because of the Covington firm's representation of DME through all the changes in the ERGOT market, its staff members are capable of actively engaging in dialog and debate on DME's behalf during meetings rather than simply listening and sending a report of the actions taken by others to DME's staff. OPTIONS 1. Continue to use the Covington firm's services 2. Reduce DME participation in Texas electric market issues. Rely totally on DME staff for all other technical issues. RECOMMENDATION DME staff recommends approval of the Task Order. PRIOR ACTION/REVIEW (Council, Boards, Commissions) This item was presented to the Public Utilities Board at the July 9, 2007 meeting. The Public Utilities Board recommends approval (7- 0). FISCAL INFORMATION The cost of this task order is not to exceed $80,000. EXHIBITS 1. Professional Services Agreement for Task Order 07-D 2. Public Utilities Board Minutes of July 9, 2007 3. Ordinance Respectfully submitted, Sharon Mays General Manager Denton Municipal Electric Exhibit 1 STATE OF TEXAS § COUNTY OF DENTON § PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES PERTAINING TO DENTON MUNICIPAL ELECTRIC THIS AGREEMENT is made and entered into on the day of , 2007, but effective from and after June 1, 2007, by and between the City of Denton, Texas, a Municipal Corporation, with its principal office at 215 East McKinney Street, Denton, Texas 76201("CITY"); and R. J. COVINGTON CONSULTING, LLC, a Texas Limited Liability Corporation, wlth 1tS principal office at 11044 Research Boulevard, Suite A-325, Austin, Texas 78759, hereafter "COVINGTON"; acting herein by and through their duly authorized representatives. wITNESSETH, that in consideration of the covenants, promises and agreements herein contained, the CITY and COVINGTON do hereby AGREE as follows: ARTICLE I EMPLOYMENT OF CONSULTANT The CITY hereby contracts with COVINGTON, as an independent contractor, and COVINGTON hereby agrees to perform the services herein in connection with the Scope of Services as stated in the Articles to follow as well as the Task Orders, with diligence and in accordance with the professional standards customarily obtained for such services in the State of Texas. ARTICLE II SCOPE OF SERVICES A. COVINGTON shall provide to the CITY professional consulting services pertaining to assisting Denton Municipal Electric ("DME") in continuing existing monitoring activities at the Electric Reliability Council of Texas ("ERGOT"), related to transition to a nodal market design in the Texas electric market. COVINGTON will keep DME staff informed of the status of the transition design process and will alert DME staff of any issues that may affect the ability of DME to serve its customers in acost-effective and competitive manner. RJC will also assist DME staff and legal counsel re interventions made in these proceedings. RJC will also review the future needs of DME in order to successfully operate in the new market structure being implemented by ERGOT. The needs assessment includes consideration of how to minimize locational marginal prices, risk management techniques to minimize exposure to congestion costs, how to maximize the value of Congestion Revenue Rights ("CRR"), as well as other market activities needed to be successful in the new nodal market environment. COVINGTON agrees to perform those services and tasks more particularly and specifically described in Task Order No. 07-D that is attached hereto and incorporated herewith by reference. B. To consult with the City Manager, Assistant City Manager/Utilities, the General Manager of DME, the Utility Attorney, and any other designated administrative personnel regarding any and all aspects of the services to be performed pursuant to this Agreement. ARTICLE III PERIOD OF SERVICE This Agreement shall become effective retroactively on the 1St day of June, 2007 and upon the issuance of a notice to proceed by Denton Municipal Electric ("DME"). The termination date of this Agreement shall be upon the earliest to occur of the following events: completion of the work described herein and in the attached Task Order No. 07-D; or upon the depletion and exhaustion of the $80,000 not-to-exceed amount provided for herein; or upon fifteen (15) day's written notice to terminate, issued by the General Manager of DME. This Agreement may be sooner terminated in accordance with the provisions hereof. Time is of the essence in this Agreement. COVINGTON shall make all reasonable efforts to complete the services set forth herein as expeditiously as possible and to meet the schedule established by the CITY, acting through its General Manager of DME. ARTICLE IV COMPENSATION A. COMPENSATION TERMS: "Direct Non-Labor Expense" is defined as that expense for any assignment incurred hereunder by COVINGTON for supplies, long-distance telephone, telecopier, reproduction expense, overnight courier, photocopy expense, transportation, travel, communications, subsistence and lodging away from home and similar incidental expenses reasonably incurred in connection with that assignment. B. BILLING AND PAYMENT: 1. For and in consideration of the professional services to be performed by COVINGTON herein, the CITY agrees to pay COVINGTON, a total fee, including reimbursement for direct non-labor expense, not to exceed $80,000 for those services described in Task Order No. 07- D. 2. The fee for the services described in this Agreement to be performed by COVINGTON are to be billed at the rates previously agreed to. Billing shall be reported in minimum one- quarter (1 /4) hour increments. 3. Payments to COVINGTON will be made by the CITY on the basis of detailed monthly statements rendered to the CITY through its General Manager of DME. The fee bills as submitted, shall be allowed and approved by the General Manager of DME. However, under no circumstances shall any monthly statement for services exceed the value of the work performed at the time a statement is rendered. 4. Nothing contained in this Article shall require the CITY to pay for any work which is unsatisfactory as reasonably determined by the Assistant City Manager for Utilities or the General Manager of DME; or which is not submitted in compliance with the terms of this Agreement. The City shall not be required to make any payments to COVINGTON when COVINGTON is in default under this Agreement. 5. It is specifically understood and agreed that COVINGTON shall not be authorized to undertake any work pursuant to this Agreement which would require additional payments by the CITY for any charge, expense or reimbursement above the maximum not-to-exceed fee as stated, without first having obtained written authorization from the CITY. C. PAYMENT If the CITY fails to make payments due COVINGTON for services and expenses within forty (40) days after receipt of COVINGTON'S undisputed statement thereof, the amounts due COVINGTON will be increased by the rate of one percent (1 per month from the said forty (40th) day, and in addition, COVINGTON may, after giving ten (10) days' written notice to the CITY, suspend services under this Agreement until COVINGTON has been paid in full all amounts due for services, expenses and charges provided. However, nothing herein shall require the CITY to pay the late charge of one percent (1 set forth herein if the CITY reasonably determines that the work of COVINGTON is unsatisfactory, in accordance with this Article IV, Compensation, and the CITY notifies COVINGTON in writing of any such defect. ARTICLE V OBSERVATION AND REVIEW OF THE WORK COVINGTON will exercise reasonable care and due diligence in discovering and promptly reporting to the CITY any defects or deficiencies in his work or the work of any subconsultants performed hereunder. ARTICLE VI OWNERSHIP OF DOCUMENTS All documents, analyses and other data prepared by COVINGTON under this Agreement ("Work Products") are instruments of service and are and shall remain the property of CITY. COVINGTON shall have the right to make and retain copies and use all Work Products; provided, however, the use shall be limited to the intended use for which the services and Work Products are provided under this Agreement. COVINGTON may use and may copyright certain non-sensitive Work Products as property of COVINGTON; provided that prior written approval is obtained from CITY, whose approval shall not be unreasonably withheld, and providing that copywriting will not restrict CITY' S right to retain or make copies of the Work Products for its information, reference and use on the Projector services under the Agreement. The Work Products shall not be changed or used for purposes other than those set forth in this Agreement without the prior written approval of COVINGTON. If CITY releases the Work Products to a third party without COVINGTON' S prior written consent, or changes or uses the Work Products other than as intended hereunder, CITY does so at its sole risk and discretion and COVINGTON shall not be liable for any claims or damages resulting from or connected with the release or any third party's use of the Work Products. ARTICLE VII INDEPENDENT CONTRACTOR COVINGTON shall provide services to the CITY as an independent contractor, not as an employee of the CITY. COVINGTON shall not have or claim any right arising from employee status. ARTICLE VIII INDEMNITY AGREEMENT COVINGTON shall indemnify and save and hold harmless the CITY and its officers, agents, and employees from and against any and all liability, claims, demands, damages, losses and expenses, including but not limited to court costs and reasonable attorney's fees incurred by the CITY, and including without limitation, damages for bodily and personal injury, death and property damage, and damage for professional malpractice resulting from the negligent acts or omissions of COVINGTON or any subconsultants, in performance of this Agreement. COVINGTON'S liability under this Article VIII is expressly limited to the amount of COVINGTON'S insurance coverage as set forth in Article IX. Nothing in this Agreement shall be construed to create a liability to any person who is not a party to this Agreement and nothing herein shall waive any of the party's defenses, both at law or equity, to any claim, cause of action or litigation filed by anyone not a party to this Agreement, including the defense of governmental immunity, which defenses are hereby expressly reserved. ARTICLE IX INSURANCE During the performance of the Services under this Agreement, COVINGTON shall maintain the following insurance with an insurance company licensed to do business in the State of Texas by the State Insurance Commission or any successor agency that has a rating with Best Rate Carriers of at least an "A-" or above: A. Comprehensive General Liability Insurance with bodily injury limits of not less than $500,000 for each occurrence and not less than $500,000 in the aggregate, and with property damage limits of not less than $100,000 for each occurrence, and not less than $100,000 in the aggregate. B. Automobile Liability Insurance with bodily injury limits of not less than $500,000 for each person and not less than $500,000 for each accident; and with property damage limits of not less than $100,000 for each accident. C. Professional Liability Insurance with policy limits of not less than $1,000,000 annual aggregate. D. COVINGTON shall furnish insurance certificates or insurance policies at the CITY's request to evidence such coverages. The insurance policies shall name the CITY as an additional insured on all such policies to the extent legally possible, and shall contain a provision that such insurance shall not be canceled or modified without thirty (30) days prior written notice to CITY and COVINGTON. In such event, COVINGTON shall, prior to the effective date of the change or cancellation, deliver substitute policies furnishing the same coverage to the CITY. ARTICLE X ARBITRATION AND ALTERNATE DISPUTE RESOLUTION The parties agree to settle any disputes under this Agreement by submitting the dispute to arbitration or other means of alternate dispute resolution such as mediation. No arbitration or alternate dispute resolution arising out of or relating to, this Agreement involving one party's disagreement may include the other party to the disagreement without the other's approval. ARTICLE XI LIMITATION OF LIABILITY To the extent permitted by law, the total liability of COVINGTON to CITY for any and all claims arising out of this Agreement, whether caused by negligence, errors, omissions, strict liability, breach of contract or contribution, or indemnity claims based on third-party claims, shall not exceed one million dollars ($1,000,000). ARTICLE XII CONSEQUENTIAL DAMAGES In no event and under no circumstances shall COVINGTON be liable to CITY for any interest, loss of anticipated revenues, earnings, profits, or increased expense of operations, or for any consequential, indirect or special damages. ARTICLE XIII PROFESSIONAL STANDARDS COVINGTON will perform services under this Agreement with the degree of skill and diligence normally practiced by professional engineers or consultants performing the same degree of similar services. No other warranty or guarantee, expressed or implied, is made with respect to the services furnished under this Agreement and all implied warranties are disclaimed. ARTICLE XIV TERMINATION OF AGREEMENT A. Notwithstanding any other provision of this Agreement, either party may terminate this Agreement by giving thirty (30) days advance written notice of termination to the other party. B. This Agreement may be terminated in whole or in part in the event of either party substantially failing to fulfill its obligations under this Agreement. No such termination will be effected unless the other party is given: (1) written notice (delivered by certified mail, return receipt requested) of intent to terminate and setting forth the reasons specifying the nonperformance, and not less than ten (10) business days in which to cure the failure; and (2) an opportunity for consultation with the terminating party prior to termination. C. If this Agreement is terminated prior to completion of the services to be provided hereunder, COVINGTON shall immediately cease all services and shall render a final bill for services to the CITY within thirty (30) days after the date of termination. The CITY shall pay COVINGTON for all services properly rendered and satisfactorily performed and for reimbursable expenses to termination incurred prior to the date of termination in accordance with Article IV, Compensation. Should the CITY subsequently contract with a new consultant for the continuation of services on the Project, COVINGTON shall cooperate in providing information. COVINGTON shall turn over all documents prepared or furnished by COVINGTON pursuant to this Agreement to the CITY on or before the date of termination, but may maintain copies of such documents for its use. ARTICLE XV RESPONSIBILITY FOR CLAIMS AND LIABILITIES Approval by the CITY shall not constitute nor be deemed a release of the responsibility and liability of COVINGTON, or any subconsultants of COVINGTON, for the accuracy and competency of their designs or other work product. ARTICLE XVI NOTICES All notices, communications, and reports required or permitted under this Agreement shall be personally delivered or mailed to the respective parties by depositing same in the United States mail at the address shown below, certified mail, return receipt requested unless otherwise specified herein. Mailed notices shall be sent to the parties at the following addresses: To COVINGTON: To CITY: R.J. Covington Consulting, LLC City of Denton, Texas Attn: Richard J. Covington, President Attn: City Manager 11044 Research Blvd., Suite A-325 215 East McKinney Street Austin, Texas 78759 Denton, Texas 76201 and to City of Denton, Texas Attn: General Manager, DME 1659 Spencer Road Denton, Texas 76205 All notices shall be deemed effective upon receipt by the party to whom such notice is given or within three (3) days after the date of mailing. ARTICLE XVII ENTIRE AGREEMENT This Agreement consisting of nine (9) pages, and three (3) additional pages consisting of Task Order No. 07-D, constitutes the complete and final expression of the agreement of the parties and is intended as a complete and exclusive statement of the terms of their agreements and supersedes all prior contemporaneous offers, promises, representations, negotiations, discussions, communications and agreements which may have been made in connection with the subj ect matter hereof. ARTICLE XVIII SEVERABILITY If any provision of this Agreement is found or deemed by a court of competent jurisdiction to be invalid or unenforceable, it shall be considered severable from the remainder of this Agreement and shall not cause the remainder to be invalid or unenforceable. In such event, the party shall reform this Agreement to replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the intention of the stricken provision. ARTICLE XIX COMPLIANCE WITH LAWS COVINGTON shall comply with all federal, state, local laws, rules, regulations, and ordinances applicable to the work covered hereunder as they may now read or hereinafter be amended. ARTICLE XX DISCRIMINATION PROHIBITED In performing the services required hereunder, COVINGTON shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical an icap. ARTICLE XXI PERSONNEL A. COVINGTON represents that he has secured, or will secure at his own expense any additional personnel required to perform all the services required under this Agreement. Such personnel shall be subconsultants of COVINGTON, and shall not be employees or officers of, nor have any contractual relations with the CITY. COVINGTON shall inform the CITY of any conflict of interest or potential conflict of interest that may arise during the term of this Agreement. B. All services required hereunder will be performed by COVINGTON or under his supervision. All personnel engaged in work shall be qualified and shall be authorized and permitted under state and local laws to perform such services. ARTICLE XXII ASSIGNABILITY COVINGTON shall not assign any interest in this Agreement and shall not transfer any interest in this Agreement (whether by assignment, novation or otherwise) without the prior written consent of the CITY. ARTICLE XXIII MODIFICATION No waiver or modification of this Agreement or of any covenant, condition, limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith and no evidence of any waiver or modification shall be offered or received in evidence in any proceeding arising between the parties hereto out of or affecting this Agreement, or the rights or obligations of the parties hereunder, and unless such waiver or modification is in writing, duly executed; and, the parties further agree that the provisions of this section will not be waived unless as herein set forth. ARTICLE XXIV MISCELLANEOUS A. COVINGTON agrees that CITY shall, until the expiration of three (3) years after the final payment under this Agreement, have access to and the right to examine any directly pertinent books, documents, papers and records of COVINGTON involving transactions relating to this Agreement. COVINGTON agrees that the CITY shall have access during normal working hours to all necessary COVINGTON facilities and shall be provided adequate and appropriate working space in order to conduct audits in compliance with this section. The CITY shall give COVINGTON reasonable advance notice of any intended audits. B. Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton County, Texas. This Agreement shall be governed by, and construed in accordance with the laws of the State of Texas. C. COVINGTON shall commence, carry on, and complete the work required by this engagement with all applicable dispatch, in a sound, economical, efficient manner and in accordance with the provisions hereof. In accomplishing the work, COVINGTON shall take such steps as are appropriate to ensure that the work involved is properly coordinated with related work being carried on by the CITY. D. The CITY shall assist COVINGTON by placing at COVINGTON's disposal all available information pertinent to the work required by this engagement, including previous reports, any other data relative to the project and arranging for the access to, and make all provisions for COVINGTON to enter in or upon, public and private property as required for COVINGTON to perform services under this Agreement. E. The captions of this Agreement are for informational purposes only and shall not in any way affect the substantive terms or conditions of this Agreement. related work being carried on by the CITY. D. The CITY shall assist CO~INGTOI~; b ~ lacin r T~ ~ p gat C0~ INGTOIt s disposal all available information pertinent to the work required by this engagement. includin reviou g p s reports; any other data relative to the project and arranging for the access to. and make all ro« i p sons far CO~INGTOh~ to enter in or upon, public and rivate ro as r ' ~ P P P~ equ~red for CO~GTO~ to perform ser~~ces under this A~-eement. E. The captions of this Agreement are far informational u oses onl and shall not i > P rP ~ n and wad affect the substantive terms ar conditions of this Agreement. Ilr~ ~~ITI~TESS WHEREOF. the City of Denton; Texas has caused this Agreement to be executed in four ~4~ original counterparts; by its duly authorized Ci Manager: and R.J. Cov' . ~ngton Consulting; LLC has executed this Agreement by its dui ~ authorized officer on thi ~ s the day of .2007. "CITY" - CITY OF DEhTTO1\~; TEXAS A Murllcipal Corporation By: . George C. Campbell; Cite Manager ATTEST: JE~~~IFER wALTERS; CITY SECRETARY By: APPRO~jED AS TO LEGAL FORM: ED~~~ M. SI\~Y"DER; CITY ATTORI~~EY By: . "CO~~INGTO~r" R. J. CO~~~GT0~1 COI~~SULTFIt~G. LLC A_ TLhas Limited Liabilit~~ Co oration rp B}r: w. C. Starnes, ~~ice-President 9 Task Order 07-D Nodal Market Transition Bud~,et This Task Order calls far a budgeted amount, not-to-exceed X50;000 for rofessional ser~~ice p sand expenses.. Because of the uncertainty regarding the level of acti«t~ required of RJC; this bud et is g an estimate. Additional funds may be required to complete this work, This initial budget will not e exceeded without the prior writtenapproval of the delegated authority of the Ci RJC will bill this Task Order monthly together with supporting documentation of activities erformed. RJC will P send the monthly invoices to Sharon Mays; General Manager of DME. The work bein erformed gP under this Task Order will be under the super<~ision of the General Manager of DME. and ma be y modnfied at any time upon appropriate notice by the City to RJC. EXECUTED this the day of .2007. AUTHORIZED BY: ACCEPTED BY: "CITY" "RJC" CITY OF DEI~~TO~r; TEXAS R.J. CO~~NGTON CONSULTING. LLC exas Municipal Corporation A Texas Limited Liability Co oration By: By: George C. Campbell C. Starnes; Nice-President City Manager . Dated: Dated: p ATTEST: APPRO~~ED AS TO LEGAL FORM: JEI~~rIFER wALTERS; CITY SECRETARY EDWIN M. Sl\rYDER; CITY ATTOR~~EY By: By: ~ Dated: ~ Dated: '7 ~ ~ _ ~ _ 3 of 3 EXHIBIT "A" PROFESSIONAL SERVICES AGREEMENT BETWEEN THE CITY OF DENTON, TEXAS AND R.J. COVINGTON CONSULTING, LLC TASK ORDER N0.07-D Nodal Market Transition The work provided for in this Task Order is directed at continuing existing monitoring activities at the Electric Reliability Council of Texas ("ERGOT"), related to transition to a nodal market design in the Texas electric market. R. J. Covington Consulting ("RJC") will keep Denton Municipal Electric staff ("Staff informed of the status of the transition design process and will alert DME staff of issues that may affect the ability of DME to serve its customers in a cost effective and competitive manner. RJC will participate in ERGOT committees and working groups, as directed by DME staff, to advocate positions that protect DME's ability to cost effectively operate in the existing wholesale electric market and the future nodal market. While the nodal market is being developed and implemented, there may be overlapping issues that impact the current market structure. RJC will focus on all issues that may disadvantage DME either through changes to the current market protocols or implementation of Public Utilities Commission of Texas ("PUG") approved nodal protocols. RJC will watch for changes or limitations in the implementation in either existing or new protocols that may disadvantage DME. In addition to working on ERGOT activities, RJC will assist DME staff in beginning to prepare DME for the new nodal market. This will include review of the future needs of DME in order to successfully operate in the new market structure being implemented in ERGOT. The needs assessment includes consideration of how to minimize locational marginal prices, risk management techniques to minimize exposure to congestion costs, how to maximize the value of Congestion Revenue Rights ("CRR"), and other market activities needed to be successful in the new nodal market environment. The nodal market is targeted to begin January 2009. Because of the uncertainty regarding utility requirements to meet the requirements of the nodal market when implemented, additional funding may be required to complete this work. RJC will focus on the issues that are important to DME in order to work effectively and efficiently to help control budget. RJC will keep the General Manager of Denton Municipal Electric informed of the status of the budget, and work may be stopped at any time by notification by the General Manager of Denton Municipal Electric to RJC to cease work. Task Order 07-D Nodal Market Transition Scope of Services Task A ERGOT Activities Task A-1 Attend ERGOT Meetings 1. RJC will stay informed on activities at the ERGOT Independent System Operator ("ISO") and will attend meetings, as directed by DME staff related to existing market operations and implementation of the nodal market design. 2. RJC will participate in meetings to represent the interests of DME. The meetings that RJC will attend include the Protocol Revision Subcommittee (PRS), the Wholesale Market Subcommittee (WMS), the Texas Nodal Transition Plan Task Force (TPTF), the Technical Advisory Committee (TAG), and the ERGOT Board meetings. Other committees may need to be monitored as the nodal implementation process progresses. 3. RJC will work with DME staff to develop positions that should be advocated and strategies for working with other ERGOT stakeholders. Task A-2 Analyze Proposed Policies and Protocols 1. RJC will continue to review the new market design protocols as they evolve during the transition process and identify concerns related to DME's ability to effectively function in that market. 2. RJC will meet with ERGOT staff and other stakeholders, as requested by DME staff, to discuss nodal market transition issues and negotiate to mitigate negative impacts on DFW loads. Task B Working With Other Affected Parties Task B-1 Coordination With Other Market Participates 1. RJC will continue to work with other affected municipalities, organizations, cooperatives, and associations, where appropriate, to help mitigate the impacts of the nodal market on loads in certain areas of the state. 2. RJC will participate in meetings with other market participants, as requested by DME staff, to discuss strategy and positions. 3. RJC will continue to develop issues, papers and statistics to assist in educating legislators, media and other market participants on nodal market issues. Task B-2 Work With Attorneys 1. RJC will continue to work with the DME legal counsel to educate them on ERGOT related issues and to keep them up-to-date on changes that affect DME. 2. RJC will work with DME staff and legal counsel to assist them in preparing any challenges to the proposed nodal market design or the ERGOT proposed implementation plan to be filed with either ERGOT and/or the PUCT. 2 of 3 Task Order 07-D Nodal Market Transition Bu This Task Order calls for a budgeted amount, not-to-exceed $80,000 for professional services and expenses. Because of the uncertainty regarding the level of activity required of RJC, this budget is an estimate. Additional funds may be required to complete this work. This initial budget will not be exceeded without the prior written approval of the delegated authority of the City. RJC will bill this Task Order monthly together with supporting documentation of activities performed. RJC will send the monthly invoices to Sharon Mays, General Manager of DME. The work being performed under this Task Order will be under the supervision of the General Manager of DME, and may be modified at any time upon appropriate notice by the City to RJC. EXECUTED this the day of , 2007. AUTHORIZED BY: ACCEPTED BY: "CITY" "RJC" CITY OF DENTON, TEXAS R.J. COVINGTON CONSULTING, LLC A Texas Municipal Corporation A Texas Limited Liability Corporation By: By: George C. Campbell W. C. Starnes, Vice-President City Manager Dated: Dated: ATTEST: APPROVED AS TO LEGAL FORM: JENNIFER WALTERS, CITY SECRETARY EDWIN M. SNYDER, CITY ATTORNEY By: By: Dated: Dated: 3of3 Exhibit 2 1 DRAFT MINUTES 2 PUBLIC UTILITIES BOARD 3 July 9, 2007 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was 6 present, the Chair of the Public Utilities Board thereafter convened into an Open Meeting on 7 Monday, July 9, 2007 at 9:00 a.m. in the Service Center Training Room, City of Denton Service 8 Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, Bob Bland, John 11 Baines and Randy Robinson 12 13 Ex Officio Members: 14 Howard Martin, ACM Utilities 15 16 OPEN MEETING: 17 18 ITEMS FOR INDIVIDUAL CONSIDERATION: 19 20 3. Consider recommending approval of Task Order 07-C, Regulatory Services, of the 21 Professional Services Agreement Between the City of Denton and R. J. Covington 22 Consulting (RJC) for an amount not to exceed $80,000. 23 24 Sharon Mays, General Manager, presented this item stating that the ongoing changes being 25 introduced almost daily into the existing deregulated electric marketplace design by the Texas 26 Legislature, TPUC, ERGOT staff and electric market participants are often critical to DME's 27 ability to successfully function in the marketplace. Failure of DME to monitor and participate 28 effectively in these activities will result in changes to the existing market model harmful to the 29 interest of smaller players such as DME. 30 31 Mays stated that Covington has been active in two major TPUC dockets and that the decisions 32 made in these documents will have financial impacts on rates paid by DME customers. Mays 33 stated that of particular importance is the docket concerning wind generation and legislative 34 mandated development and construction of transmission lines which, if implemented, could cost 35 DME's customers approximately $12.5 million in additional rates over the life of the facilities. 36 37 Board Member Phil Gallivan moved to approve with a second from Board Member Bland. 3 8 The motion was approved by a 7-0 vote. 39 40 4. Consider recommending approval of Task Order 07-D, Nodal Market Transition, of the 41 Professional Services Agreement Between the City of Denton and R.J. Covington Consulting 42 (RJC) for an amount not to exceed $80,000. 43 44 Sharon Mays, General Manager, presented this item stating that of the activities occurring at 45 ERGOT at this time, the most important is the on-going nodal market implementation process 46 and, because Covington has represented DME through all the changes in the ERGOT market, its 47 staff is capable of representing DME's behalf during meetings. 48 49 Chair Charldean Newell asked, and the Board Members confirmed, that the minutes reflect that 50 the Board, in the context of discussing the City's relationship with ERGOT and the state 1 Draft Minutes Public Utilities Board meeting 2 July 9, 2007 3 Page 2 of 2 4 5 6 regulatory board, had a fairly serious discussion about the future and is concerned that there is 7 adequate planning, and that the City commits to being willing to spend whatever it takes to 8 protect the City and its resources. 9 10 Board Member Bill Cheek motioned to approve with a second from Board Member Randy 11 Robinson. The motion was approved by a 7-0 vote. 12 13 The meeting was adjourned by consensus at 9:56 a.m. 14 E~iibit 3 ORDINANCE NO 2007 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTIN TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH R J COVINGTON CONSULTING LLC FOR CONSULTING SERVICES RELATING TO TASK ORDER NO 07 D PROVIDING FOR CONTINUING REGULATORY SERVICES AT THE ELECTRIC RELIABILITY COUNCIL OF TEXAS RELATED TO TRANSITION TO A NODAL MARKET DESIGN IN THE TEXAS ¢ ELECTRIC MARKET AND TO KEEP DENTON MUNICIPAL ELECTRIC STAFF INFORMED OF THE STATUS 0~ THE TR.ANSTTION DESIGN PROCESS AND WILL ALERT DENTON MUNICI[AL ELECTRIC REGARDING ANY ISSUES THAT MAY AFFECT THE ABILITY OF DENTON MUNICIPAL ELECTRIC TO SERVCE ITS CUSTOMERS IN A COST EFFECTIVE AND COMPETITIVE MANNER AND OTHER RELATED PROFESSIONAL SERVICES AUTHORIZING THE EXFEND~TURE OF FUNDS THEREFOR AND PROVIDING AN EFFECTIVE DATE WHEREAS the City Council deems it in the public interest to continue to engage the firm of R J Covington Consulting LLC of Austin Texas ("Covington to provide further professional consulting services to the City relating to Task Order No 07 D wYuch includes without limitation ser~viees at the Electric Reliability Council of Texas (ERC~T }related to ~ transition to a nodal market design in the Texas electnc market services to keep Denton Municipal Electric (DME) staff informed of the status of the transition design process and services that will alert DME staff of any issues that may affect the abrlrty of DME to serve fts customers in a cost effective and competitive manner and for other professional sezvices and WHEREAS the City staff has reported to the City Council that there is a substantial need for the above described specialized professional services and that limited Crty staff cannot adequately perform the services and tasks with its own personnel and WHEREAS Chapter 2254 of the Texas Government Code known as the Professional Services Procurement Act generally provides that a Crty may not select a provider of ~ i professional services on the basis of competrttve bids but must select the provider on the basis of ~ demonstrated competence knowledge and quai~fications and for a fair and reasonable price i ~d WHEREAS Covington has represented DME continuously and professionally over the ` last ten (10) years and has proven to be a valuable reliable affordable and competent ~ professional resource that has expertise in and ~s well acquainted with the electric operations as well as the financial and regulatory framework of Denton Municipal Electric Covington and his ~ staff are particularly familiar with the characteristics operations and present rate structure of DME Covington s operations are located m Austin Texas and E WHEREAS the Crty Council has provided in the Crty Budget for the appropnation of funds to be used for the purchase of the professional services asset forth in the Professional Services Agreement NOW THEREFORE i i 1 THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION 1 The City Manager is hereby authorized to execute a Professional Services Agreement with R J Covington Consulting LLC of Austin Texas for professional consulting services relating to Task Order No Q7 D relating to the City and to Denton Municipal Electric m an amount not to exceed $80 000 in substantially the form of the Professional Services ~ Agreement that is attached hereto and incorporated herewith by reference as E~ibit A SECTIQN 2 The award of this Agreement by the City xs on the basis of the demonstrated competence knowledge and qualifications of Covington and the ability of Covington to perform the professional services needed by the City for a fa.~r and reasonable price SECTION 3 The expenditure of funds as provided in the attached Professional Services Agreement is hereby authorized SECTION 4 This ordinance shall become effective immediately upon its passage and i approval PASSED AND APPROVED this the day of 2007 i I PERRY R McNEILL MAYOR ~ E ATTEST JENNIFER WALTERS CITY SECRETARY i By APPROVED AS TO LEGAL FORM EDWIN M SNYDER CITY ATTORNEY 1' ~ ~ By 2  mmmm~ I AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Human Resources ACM. George C. Campbell SUBJECT Consider approval of a resolution confirming the appointment of Roy W. Minter Jr., by the city Manager, as Police Chief for the City of Denton Police Department, and declaring an effective date. BACKGROUND Charles Wiley resigned his position of Police Chief from the City of Denton Police Department on October 27, 2006. Chapter 143.013 (a)(1) of the Texas Local Government Code states, "Unless elected, each department head is appointed by the municipality's chief executive and confirmed by the governing body." City Manager George Campbell has elected to appoint Roy W. Minter Jr. as Police Chief. RECOMMENDATION The City Manager has elected to appoint Roy W. Minter Jr. as the Police Chief, and requests City Council's consideration to confirm this appointment. PRIOR ACTION/REVIEW There has been no prior action or review on this agenda item. FISCAL INFORMATION The annual salary for the Police Chief will be $120,000. Respectfully submitted: Carla J. Romine Director of Human Resources AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Human Resources ACM: Geor e C. Cam bell, Cit Mana er ~ SUBJECT Consider and confirm the re-appointment by the City Manager of Darhyl Ramsey to the Civil Service Commission. BACKGROUND Darhyl Ramsey's term expires in August of 2007; however, he is eligible to serve another term. In compliance with Chapter 143.006 (b) of the Texas Local Government Code, the municipality's chief executive (City Manager) shall appoint a member to serve a thrcc-year term and the governing body (City Council) shall confirm this appointment. RECOMMENDATION The City Manager has elected to re-appoint Darhyl Ramsey to the Civil Service Commission. PRIOR ACTION REVIEW No prior action or review. FISCAL INFORMATION This item has no fiscal impact. Attachment: Bio for Darhyl Ramsey Respectfully submitted: Carla J. Romine Director of Human Resources 1 Darhyl S. Ramsey Dr. Darhyl Ramsey is a professor of music education at the University of North Texas. He holds degrees in music education from Carson-Newman College (BM) and the University of Iowa (MA, Ph.D.). He is in his 21 th year at the University of North Texas. Prior to coming to Denton, he taught at UT-San Antonio and the Pennsylvania State University. He was a band director in the public schools in Virginia. He has been an elder at St. Andrew Presbyterian church where he is a member of several CommltteeS. Dr. Ramsey is a member of the Rotary Club of Denton-South where he is currently the immediate past president. He is involved in distributing funds for community-based charitable organizations and international projects. He is the president of the Owsley Community School program, a joint effort of the City of Denton and the private Owsley Community School organization. He is has been active in a capital campaign to raise funds to complete a new Community Center for the Owsley community (West Denton). He serves as the co-chair for the Carter Blood Care Donor Council and is on the Steering Committee of Leadership Denton for 2007-2008. Work Contact Information Home Contact Information College of Music 2500 Potomac Pkwy. Box 311367 Denton, TX 76210 University of North Texas (940) 566-3170 Denton, TX 76203 (940 3 80-1899 (fax) (940) 565-3749 (940) 206-6283 (cell) (940) 565-2002 (Fax) d.ramsey2@verizon.net ramsey ,music.unt.e u AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Planning and Development Department ACM: Howard Martin, 349-8232 SUBJECT - Z06-0026 (Hills of Denton) Hold a public hearing and consider the adoption of an ordinance regarding the rezoning of approximately 2,120 acres from Neighborhood Residential 2 (NR-2), Neighborhood Residential 3 (NR-3), Neighborhood Residential (NR-4), Neighborhood Residential 6 (NR-6), Neighborhood Residential Mixed Use 12 (NRMU-12), Neighborhood Residential Mixed Use (NRMU), Commercial Mixed Use General (CM-G), Planned Development (PD-120) and Rural Residential (RD-5) zoning districts to the Hills of Denton Master Plan Community (Hills of Denton MPC) zoning district. The property is generally located north of Loop 288, west of Locust Street (F.M. 2164), south of Milam Road and east of Bonnie Brae Street. The Planning and Zoning Commission recommends approval of this rezoning request (7-0). BACKGROUND Applicant: Tomlin Investments Addison, TX On April 3, 2007, the City voluntarily annexed approximately 1,199 acres into the City of Denton. The recently annexed property is part of the 2,120 acres the applicant is requesting to rezone into a Hills of Denton MPC zoning district. The Hills of Denton MPC consists of approximately 2,120 acres and encompasses a traditional mixed-use development. The development will consist of approximately 1,427 acres of Single Family development, approximately 146 acres of Town-home development, approximately 110 acres of Multi-Family development, approximately 183 acres of Commercial development, approximately 93 acres of Office/Commercial development, approximately 57 acres of Town Center Commercial development, and approximately 104 acres of Town Center Residential development. The Master Planned Community also includes amenities such as Corridors, Trails, Project Entrys, Ponds, an Amenity Center, Community Centers and Hike and Bike Trails (see Exhibit 6). The community is being designed with higher density and more intense uses along Loop 288 and a more traditional suburban residential development towards the north. A Town Center will be the focal point of the development. The southern half of the development is designed to be more compact to encourage walking and bicycling for short trips. The development also proposes to use the floodplain as an open space amenity to the proposed single-family uses, and wide sidewalks are proposed to encourage pedestrian activities and to promote an environment for walking and biking. The following are development thresholds that apply to only the Hills of Denton development: Maximum Number of Single-Family 5,708 Detached Units Maximum Number of Single-Family 1,756 Attached Town-home Units Average Single-Family Density 4.74 units per acre includes Town-homes Maximum number ofMulti-family 2,204 Units Avera e Multi-famil Densi 20 units er acre Maximum number of Units in Town 4,152 Center Total Number of Units 13,820 Single-family to Multi-family Ratio 54% SF to 46% MF includin Town Center Single-family to Multi-family Ratio 77.2% SF to 22.8% MF excludin Town Center A minimum of 2,000 single-family houses shall be constructed (permitted) riot to an multi-famil units bein constructed. Based on average maximum density allowed and excludes Town Center. Maximum number of Multi-family units (excluding the Town Center) shall not exceed 2,204 units. '~*Based on Zoning (30 units per acre in Town Center Residential and 18 units er acre in Town Center Commercial . On October 17, 2006, City Council adopted Ordinance No. 2006-303 amending portions of Subchapter 35.7 of the Denton Development Code pertaining to Master Planned Communities. The Master Planned Community (MPC) District is intended to accommodate large-scale, unified, comprehensively planned development that conforms with and enhances the goals and policies contained within the Denton Plan. This district is intended to provide an alternative zoning district and development process to accommodate substantial development for residential, commercial, professional, recreational, industrial or other activities, including combinations of uses appropriately requiring flexibility under controlled conditions, not otherwise attainable under conventional zoning districts. Prior to the MPC District being approved by City Council, the applicant shall submit a Concept Plan, MPC Zoning Document, and a MPC Development Standards Document for the Development Review Committee and the Planning and Zoning Commission to review. The Development Review Committee and the Planning and Zoning Commission have reviewed all three documents and are recommending approval of the MPC. On May 3, 2007, the applicant met with nearby property owners. The property owners that attended the meeting had general concerns about the potential impact the proposed development will have on their properties. Concerns included the potential taking of portions of their property as a result of widening of Locust Street to accommodate the increase traffic, the adequate provisions for water and sewer service to the development, and drainage impact to neighboring property owners. Following the meeting, staff met with the property owners to discuss their concerns further. Staff is working with the applicant to make sure their concerns are addressed. On May 9, 2007, the Planning and Zoning Commission recommended approval of this rezoning request (7-0) subject to the following three conditions: 1. That a legal review is completed and a development plan map is included; and 2. That a phasing plan is included; and 3. That a developer's agreement for water and sewer improvements is approved. The applicant has complied with the three conditions. A proposed Development Plan Map has been submitted for all phases and it is presented in Exhibit 7. A Phasing Plan is presented in Exhibit 10. On May 30, 2007, the Public Utilities Board recommended approval of a Developer's Agreement regarding water and wastewater. The agreement was considered and adopted by City Council on June 5, 2007. Public notification information is provided in Exhibit 5. As of this writing, staff has received three responses from a property owner within 200 feet of the subject site, one in favor, one that is neutral, and one in opposition. PRIOR ACTION/REVIEW (Council, Boards, Commissions) April 3, 2007 City Council held the second and final reading of the Ordinance to voluntarily annex approximately 1,199 acres of land, which is part of the Hills of Denton Master Planned Community Development. April 1 1, 2007 Planning and Zoning Commission Worksession April 18, 2007 Planning and Zoning Commission Worksession May 9, 2007 Planning and Zoning Commission Public Hearing May 30, 2007 Public Utilities Board Meeting June 19, 2007 City Council Public Hearing OPTIONS 1. Approve as submitted. 2. Approve subject to conditions. 3. Deny. 4. Table item. RECOMMENDATION The Planning and Zoning Commission recommends approval of this rezoning request (7-0). EXHIBITS 1. Staff Analysis 2. Existing Zoning Map 3. Proposed Zoning Map 4. Future Land Use Map 5. Notification Information 6. Proposed Concept Plan 7. Proposed Development Plan Map 8. Conceptual Single-Family Density Distribution 9. Existing Conditions 10. Phasing Plan 11. May 9, 2007 Planning and Zoning Commission Minutes 12.Ordinance Respectfully submitted: ~i ~ i~~'I r r i ~ ~ 4 Brian Lockley, AICP, Interim Director of Planning and Development Prepared by: Ron Mengutia Planner III EXHIBIT 1 PLANNING & DEVELOPMENT STAFF ANALYSIS CASE NO.: Z06-0026 DATE TO BE CONSIDERED: July 17, 2007 LOCATION: The property is generally located north of Loop 288, west of Locust Street (F.M. 2164), south of Milam Road and east of Bonnie Brae Street. APPLICANT: Tomlin Investments 4265 Kellway Circle Addison, TX 75001 OWNER: Denton 288 L.P. 4265 Kellway Circle Addison, TX 75001 REQUEST: Consider adoption of an ordinance to rezone approximately 2,120 acres of land from Neighborhood Residential 2 (NR-2), Neighborhood Residential 3 (NR-3), Neighborhood Residential (NR- 4), Neighborhood Residential 6 (NR-6), Neighborhood Residential Mixed Use 12 (NRMU-12), Neighborhood Residential Mixed Use (NRMU), Commercial Mixed Use General (CM-G), Planned Development (PD-120) and Rural Residential (RD-5) zoning districts to the Hills of Denton Master Plan Community (Hills of Denton MPC) zoning district. RECOMMENDATION: The Planning and Zoning Commission recommends approval of this rezoning request (7-0). COMPREHENSIVE The subject site is located within the Rural Areas, Neighborhood PLAN DESIGNATION: Centers, and Commercial Mixed Use Centers future land use designations. SITE AND The approximately 2,120 acres site is currently undeveloped except SURROUNDINGS: for some existing structures. There are approximately nine existing structures on site, all of which will be removed. North: Extraterritorial Jurisdiction (ETJ) South: Regional Center Commercial Neighborhood (RCC-N) and Planned Development (PD-120) East: Neighborhood Residential 2 (NR-2), Neighborhood Residential 4 (NR-4), Neighborhood Residential 6 (NR-6), Neighborhood Residential Mixed Use (NRMU) and Commercial Mixed Use General (CM-G) West: Extraterritorial Jurisdiction (ETJ) BACKGROUND On April 3, 2007, the City voluntarily annexed approximately 1,199 INFORMATION: acres into the City of Denton. The recently annexed property is part of the 2,120 acres the applicant is requesting to rezone into a Hills of Denton MPC zoning district. The Hills of Denton MPC consists of approximately 2,120 acres and encompasses a traditional mixed-use development. The development will consist of approximately 1,427 acres of Single Family development, approximately 146 acres of Town-home development, approximately 110 acres of Multi-Family development, approximately 183 acres of Commercial development, approximately 93 acres of Office/Commercial development, approximately 57 acres of Town Center Commercial development, and approximately 104 acres of Town Center Residential development. The Master Planned Community also includes amenities such as Corridors, Trails, Project Entrys, Ponds, an Amenity Center, Community Centers and Hike and Bike Trails (see Exhibit 6). ANALYSIS: Comprehensive Plan On March 27, 2007, City Council adopted an ordinance that Analysis: exempted Master Planned Communities from the requirements of processing a Comprehensive Plan amendment as part of the MPC proposal if the MPC incorporates the goals and objectives of the Denton Plan. Development Pursuant to Subchapter 35.7.12.2.D.1 of the Denton Development Code/Zoning Analysis Code, the Hills of Denton MPC must comply with the Code, except where modifications are proposed. The applicant has submitted a MPC Zoning Document and MPC Development Standards Documents that outlines the alternative development regulations and standards that deviate from the provisions of the Denton Development Code. The following are alternative development regulations and standards the applicant is proposing to deviate from: Subchapter 5 of the Development Code is excepted with the following zoning districts: SF Single Family Residential TH Town Homes (Attached Single-Family) MF Multi-family Residential C Commercial 0 Office TCC Town Center Commercial TCR Town Center Residential A list of permitted uses, uses permitted with a Specific Use Permit (SUP), and limitations for each of the land use categories are presented in Exhibit A of the ordinance, Hills of Denton MPC Zoning Document. The following general regulations apply to only the Hills of Denton development. General Regulations: General Regulations SF TH MF C 0 TCC TCR Minimum lot area (square 5,500 None 2,500 2,500 2,500 None None feet) Minimum lot width None None 20' S0' S0' None None Minimum lot depth None None 50' None None None None Minimum front yard setback 20' 10' None None 10' None None Minimum side yard 0' 0' 6' None None None None Minimum setback between 10' 10' N/A NIA N/A N/A N/A dwellings Minimum side yard adjacent 10' 10' None None 10' None None to a street Minimum yard abutting a residential use NIA N/A 20' 20' 20' 0' 0' or district Density (dwelling units per 4 12 20 0 0 18 30 acre) Maximum FAR NIA N/A N/A 1.5 1.5 3.0 1.5 Minimum residential unit ~ ~ size (square feet) 1,800 1,400 500 500 0 750 750 Maximum lot coverage 70% 80% 80% 80% 85% 85% 90% Minimum landscape area 30% 20% 20% 20% 15% 15% 10% Maximum building height 45' 45' 65' 65' 100' 100' 100' * Minimum setback between townhouse dwellings (attached single family) refers to groupings of units not individual units. Minimum residential unit size maybe reduced to 1,300 square feet for an Active Adult Retirement Community, where such communities are allowed on an approved Development Plan Map (see Site Design Standards for required architectural features). Clustering Standards/Density Transfer: Non-Attached single-family residential units may be clustered within the SF (Single-Family) zoning districts provided the following standards are met: A. The maximum number of single-family units built in the SF (Single-Family) zoning districts may not exceed 5,708 units. B. The total number of platted single-family lots shall be tracked by the developer as individual Final Plats are submitted for review. The following are development thresholds that apply to only the Hills of Denton development. Development Thresholds: Maximum Number of Single-Family 5,708 Detached Units Maximum Number of Single-Family 1,756 Attached Town-home Units Average Single-Family Density 4.74 units per acre includes Town-homes Maximum number of Multi-family 2,204 Units* Avera e Multi-famil Densi 20 units er acre Maximum number of Units in Town 4,152 Center Total Number of Units 13,820 Single-family to Multi-family Ratio 54% SF to 46% MF including Town Center Single-family to Multi-family Ratio 77.2% SF to 22.8% MF excludin Town Center A minimum of 2,000 single-family houses shall be constructed (permitted) riot to an multi-famil units bein constructed. ~ Based on average maximum density allowed and excludes Town Center. Maximum number of Multi-family units (excluding the Town Center) shall not exceed 2,204 units. ~*Based on Zoning (30 units per acre in Town Center Residential and 18 units er acre in Town Center Commercial . The single-family land use including townhomes has an overall density of 4.74 per acre. Staff had concerns with the proposed single- family use not having different densities. After meeting with staff, the applicant is proposing a Conceptual Single-Family Density Distribution Exhibit to provide a density distribution goal for single- family use (see Exhibit 8). The exhibit illustrates a distribution of density areas and proposed maximum number of units for each area. The exhibit illustrates a density of 5.5 units per acre close to the Town Center, 4.5 units per acre extending north away from the Town Center, and 3 units per acre along the northern portion of the development. Development Plan Map: Prior to submitting any preliminary plat the Developer will submit and obtain approval of a Development Plan Map for each phase. The Development Plan Map shall locate proposed land uses in a zoning category format, identify site access, connectivity, and general public improvements, provide a table showing all the land uses, including the total acreage of each proposed land use and the total acreage of the project, and show boundaries reflecting the phasing plan, along with other requirements established or incorporated by the Denton Development Code, as amended. A Development Plan Map for the Hills of Denton MPC may be reviewed and approved at one time or for each phase, in accordance with §35.7.12 of the Denton Development Code, as amended. With each submission of a Development Plan Map, the developer shall submit a summary of the detached single-family unit count, including but not limited to the number of units proposed in the preliminary plat, the total number of units proposed to date and the remaining number of units. Notwithstanding any other provision of this document, no use shall be allowed in any phase, lot or parcel unless and until a Development Plan Map authorizing such use has been approved for that phase. In addition to Subchapter 5, the applicant is proposing to deviate from Subchapter 13,14, 15, 16, 17, 20 and 23. The propose exceptions to these subchapters are presented in Exhibit A of the ordinance, Hills of Denton MPC Development Standards Document. The Hills of Denton MPC development shall comply with all standards and requirements in Subchapter 3 5 except as described in Exhibit A. Exceptions to the Denton Development Code include the following: ❑ creating new landscape and tree canopy requirements ❑ modifying access, parking and circulation requirements ❑ permitting parking structures with an Alternative Development Plan ❑ permitting parking in front in all districts except Town Center Commercial and Town Center Residential ❑ modifying site development requirements/standards for single-family, multi-family and non-residential (commercial and office buildings) ❑ creating site development standards for Town Center Multi Family, Town Center Nonresidential and Mixed Use Buildings, and Big Box ❑ modifying existing parking space requirements and adding new parking space requirements for new land uses ❑ adding a graphic exception for effective area of signs ❑ modifying expiration time for Preliminary Plats ❑ permitting up to l o% of private and non-private yards that may be disturbed for trails and clearings, but no closer than 25 feet from the stream bank within a Riparian Buffer and Wetland Related Habitat ❑ permitting through lots DEPARTMENT AND The Development Review Committee reviewed the rezoning request AGENCY REVIEW: and provided comments and general information. Staff is working with the applicant to address the following comments. P anning ❑ According to the Master Plan Community ordinance, the zoning document should provide within the development, the approximate locations for parks, schools, fire stations and police stations. These services are proposed, but the locations of these services have not been identified on the plan. The applicant's response "If fire stations, police stations, libraries or other public facilities are needed in the future, the applicant will work with and or negotiate with the City and the associated departments on appropriate locations for those uses. The applicant will also meet with the Parks Department on this issue and will strive to locate school sites adjacent to parks and open space. " FINDINGS: Pursuant to Subchapter 35.7.12.6, before approval or adoption of an application for a MPC Zoning Document, the Planning and Zoning Commission shall find: A. That the development proposed furthers the goals of the Denton Plan. The subject site is located within the Rural Areas, Neighborhood Centers, and Commercial Mixed Use Centers future land use designations. According to the Denton Plan, the future land use designations are described as follows: Large-Lot Rural Single-family large-lot residential uses will be regulated. Outside of the urbanizing areas the size of the lots will be based on Denton County requirements. The remaining land within these areas would remain as agricultural uses. The applicant is proposing low density single family development (3 units per acre) within the Rural Areas future land use designation. In addition, the applicant is proposing to preserve approximately 300 acres of floodplain where much of the Rural Areas future land use designation is located. Neighborhood Centers/New Neighborhoods Within the undeveloped urban and urbanizing areas of the city, new neighborhoods may develop in conventional patterns. Mixed-use and mixed housing types will also be allowed to develop in a pattern of `neighborhood centers' . These are oriented inwardly, focusing on the center of the neighborhood. These neighborhoods will exemplify the inter- relationship between quality of development, density, services and provision for adequate facilities. These developments should locate the center of the neighborhood within a 5- to l o- minute walking distance from the edge of the neighborhood. The center contains uses necessary to support the surrounding neighborhood. These support uses could include service- oriented retail such as a small grocery, hair salon, dry cleaner or small professional offices. Residential uses may occur at higher densities with townhomes or residential flats above service oriented uses. Open space is encouraged in neighborhood centers with park uses including central neighborhood "greens" and floodplain preservation. Civic uses such as fire stations, schools, libraries, and mass transportation nodes are encouraged to be essential elements of neighborhood centers as landmarks that are a focus to the neighborhood. Limited multistory development in the neighborhood may be developed to incorporate shops on the ground floor and offices or residences on the upper floors. Neighborhood centers may develop with uses to serve individual neighborhoods as well as the entire city and surrounding area if designed as part of a comprehensively planned large-scale development of 125 acres and above. The Neighborhood Centers land use designation allows new neighborhoods to develop in conventional patterns. It also allows for mixed use and mixed housing types. The applicant is proposing single family development and a Town Center development within the Neighborhood Centers future land use designation. The medium density single family development (4.5 and 5.5 units per acre) is located adjacent the Town Center development. The Town Center development will consist of a mix of land uses that will include multi family development. Community Mixed-Use Activit Center The focus area of a community activity center contains the shopping, services, recreation, employment, and institutional facilities that are required and supported by the surrounding community. Thus, a community activity center could contain a supermarket, drug store, specialty shops, service stations, one or more large places of worship, a community park, mid- size offices, and employers, high- to moderate-density housing, and perhaps an elementary or middle school. It includes vertically integrated uses where different uses may occur on each floor of the building. Areas within the Community Mixed Use Activity Centers may be developed with uses to serve the entire city and with supportive residential and commercial uses if designed as part of the comprehensively planned development of 125 acres and above. The future land use plan identifies the northwest corner of Locust and Loop 288 as Commercial Centers (see Exhibit 4). As described above the focus area of a community activity center contains the shopping, services, recreation, employment, and institutional facilities that are required and supported by the surrounding community. The applicant is proposing commercial use on the northwest corner of Locust and Loop 288. The Hills of Denton ~VIPC is consistent with the goals of the Denton Plan. B. In the case of proposed residential development, that the development will promote compatible buildings and uses and that it will be compatible with the character of the surrounding area. The proposed residential development by utilizing the regulations and site design standards outlined in the Denton Development code and where excepted by the Hills of Denton NIPC will promote compatible buildings and uses. The surrounding area is rural and generally undeveloped. As development occurs along the periphery, buffer and screening requirements will be required to provide compatibility with the character of the surrounding area. C. That the provisions for public facilities such as schools, fire protection, law enforcement, water, wastewater, streets, public services and parks are adequate to serve the anticipated population within the MPC District. Based on a Cost Impact Analysis provided by the applicant the provisions for public facilities such as schools, fire protection, law enforcement, water, wastewater, streets, public services and parks are adequate to serve the anticipated population within the MPC District. The following information was provided in the Cost Impact Analysis: Schools The analysis identified the type and number of schools required based on the anticipated population within the MPC District. Based on Denton Independent School District factors, 5 elementary schools, 1.5 Middle Schools, and 0.7 High Schools will be needed to support the development. Water A 36' water transmission line exists along the south side of the subject property (north side of Loop 288) from a point approximately 5000 feet west of Locust to Locust and beyond to the east. Water mains internal to the project will be designed and constructed to provide water service to the entire project from this 36" main. Due to water pressure considerations, services above approximately elevation 705 msl will not be able to be served from this line. Due to the limited amount of land in the project above elevation 705 msl it is currently not anticipated that any property above 705 msl will need to be served. Sanitary Sewer The city has acquired a treatment plant site and identified a sanitary sewer interceptor alignment for the Clear Creek Treatment Plant and interceptor. This proposed interceptor would extend up and into the subject tract along Milan Creek. Depending on the cities analysis of other basin needs an interim solution to the construction of the Clear Creek Plant maybe considered. One interim solution may be to place a lift station on the Milan Creek Interceptor and force flow south along Stuart Road to an existing gravity sewer south of Loop 288. Sanitary Sewer mains within the project will be designed and constructed so that all flows will be delivered to the Milan Creek Interceptor. Drainage Virtually the entire project drains to drainage courses located on the project which in turn drain into a section of Milan Creek which is also located entirely on the subject property. The current intent of the project is to preserve existing drainage courses in greenbelt buffers, in part, to convey storm water runoff to Milan Creek and downstream. Preservation of these natural drainage courses will also eliminate the need for onsite detention. Internal drainage systems will be designed and built to convey storm water runoff to these drainage courses located on the property. No offsite easements are anticipated at this time. Traffic The project developers have coordinated with the Mobility Committee and support the current Mobility Plan amendment which identifies several arterial roadways in the project. Detailed traffic analysis will be performed with design phases to justify the size and location of these roadways. Preliminary trip generation projections for the planned project were taken into account when preparing the proposed Mobility Plan Amendment. Fire stations, Police stations, Libraries or other public facilities If fire stations, police stations, libraries or other public facilities are needed in the future, the applicant will work with and or negotiate with the City and the associated departments on appropriate locations for those uses. The applicant will also meet with the Parks Department on this issue and will strive to locate school sites adjacent to parks and open space. D. In the case of proposed commercial, industrial, institutional, recreational and other non-residential uses or mixed-uses, that such development will be appropriate in area, location and overall planning for the purpose intended. The location of proposed commercial, institutional, recreational and other non-residential uses or mixed-uses is proposed in appropriate areas. The majority of the proposed Commercial and Office zoning districts are located at the northwest corner Locust and Loop 288. There are four other proposed Commercial zoning districts located along major arterials located throughout the development (see Exhibit 6). Recreational and other non-residential uses or mixed uses are proposed within the Town Center zoning districts. The Town Center zoning district is located close to higher density and more intense uses. E. That the development is fiscally sound, as demonstrated in the Cost Impact Analysis, and is consistent with adopted policies, infrastructure plans and applicable Capital Improvement Programs (CIP) and that the Development Plan sets forth the phasing and the plan for paying for the infrastructure and responsibilities for payment. The City of Denton Utilities and Legal Departments and the owner/developer have been negotiating an agreement for the provisions for sanitary sewer and water facilities for the development for approximately one year. In negotiating this agreement City Utility Department representatives considered project requirements and impacts to planned city facilities to serve the project and the entire Clear Creek basin of north Denton. The agreement, adopted on June 5, 2007, clearly considers project water and sewer layout, demand, and loading requirements and the schedule at which additional information will be required. EXHIBIT 2 Existing Zoning Map S t I I~ i I IT 1 4 _1 I- i L I ~ II 'I + ~ 'I ' I ~ ~ I~I ~ N I II ~I i v i 4r ~ ~.f' h . I~ t _ c~k _ .L, t. EXHIBIT 3 Proposed Zoning Map S ~ t I r i w L I~~ ~ ~ ~ ~ Y I rf R 4 I _ I ` II L I Y - { 7 ..V " ' t i .E i ~ y. ~ • r _ ~ I i~ ` ~ _ 4i EXHIBIT 4 Future Land Use Map r~• t!~~•r •i• _Fr'K . _ - .i 7 .1 y r EXHIBIT 5 Notification Information rY. I ~ ~i i ~ ti, I... w; I k i ~ FI _ - ~ - ~4 I ~ { 11 ~ - 'I 7 I ' r ~ ~ ~ i ti' ~ , 1 ~ r ~ ' I ~ . I _r~ 4 I I I _ _ 1 ~ - i r-+ ~ ~ i ~ ~ 4r~ it ~ ~ ~ i - ~ ~ - - - R i .i _ ~ r ~ J~ t { ' ~ ~ ~ ~ f ~ ~5~ _ I n ~ _ F I ~i I _ - i zf' 4Y f = 'ti 5 r ~ ` ~ i i{ ~ ~ _ :i Public Notification Date: 4/30/07 - 200' Legal Notices* sent via Certified Mail: 24 r r- ~ ~ ~ y . - ' ~ 500' Courtesy Notices sent via Regular Mail: 20 r~ - ~T,.. ~ Number of responses to 200' Legal Notice t v~ ■ In Opposition: 1 ■ In Favor: 1 ~ ■ Neutral: 1 Percent of land within 200' in opposition: Less than 5 ~ _ { it ~ t_ R y r 6 w3 ra i Y r ' r ~ 4 .....n i _ i + `fq+. I gg~~pp~~ _ akYYd. Ir ,;a s . 0 ~ I ~ •,a s ~ a i I ~ I I 7. 7 . ~ S ,m, .a;r ti. ..'i - x a. .5  i ui r"' I v , ~I ~ ~ l " ' { I y f ~ 1 ti } - 1 ~ l L - V r - Y~ _ -l + t ;f ~ ~ Y t ~k xi .y N i t~ 1 { «u i . w'. r w. f - ~ . y ~ ~ .+~~I r ; ~ xi ~V Y Jb I S i S - w .r . .rr...... ,r. - ra r 'F i ti x x' E .p y.r.. . 7 .y 1 _ i sib i 1i~ f a 1 .s i y~ '1 M r 1. r.:M  ii i ~ ~ - s, it r- ~ ~ ~ ~ f _ ..r _ - II i~ ~ ~y - ~ - L ~ 4 { Y. ~ +/!S ~Z 1~ + . 1 ~ , I ~ . I~ l.. r,. 1. ?4 ~ r 1 . .x _Y. V 7 ' ~..x ~ j ,:a .'I r 7 •`"P it yy _ _ ~ M1 i I {~~I . x - _ '~I  ~l. y S _ ~ S S ~ S S S 1 ! I + ~ ~ I I ti 4 _ l I - i+ Y ~ _ _ i. - rro ~f f _ +e n r- _ _ .C _ - ~ ~ . II i I~ ~ ~ _ ~ r ~ 1 I ' r - - f ~ r k I ` ~ ti ~ 5 _ , I Flr. } ff ~X ~ .z I ~ _ w _ _ _ 1 a IY 1 J h; - r~ r -.l ~ ~ v^~ I t~ . . ~ _ - I ' ~ a I ~ ~ ~ _ ; I ~ _ J I I r t I I •yrrR'YL 1 µrF r- 1 .L I' 4 ~ ~ fl ~ ~ . 7 4. ~4 i~! ~ 8 I 4 I _ r s. _ ~ R r • ~ • } `~i ~e. J ~ ypY 111 I - ~ { L+"- I r ~ i E ~ ~ ~ {I ~ 4 _ I _ ~ ~ f S~ ~ 4 'ti 5 ~t r ~ ~I ~ I _ I ~1 r _ A ~ j r L ~ ti ~r F Ip _ + f ~ti 7 P. _ r L J 'I ~I j _ I r~ ~ 1 ~ 1 i ti _ ~ , I 1 . 1' i o r= I _ ti - i r ~ I r ~ ~ i 1 a. Ir r I I I r ` ' }r . r i I r ~ 1, _ r~r ~lr ~ L; 4 Jr~ ~3 Y :R 1~ ti I i j^Ffi I ~ ~ r R[ J I ~ } rlr ' I ~ ~~yy .1 ~1 I `4 } ~ ~ I IS ~ rt•~ x- h I - - S I I '~11 A r. I ~ _ ti~ b G I 1 ~ j - ~ ~ F _ r I i - ~ ' ~r ~ b ' u.-~ I~ ~ M ~iLr '1~ 1 k 't~ ~ j + ' y u _ ~ . ~ Il IV r s ~ I I ~ ~ I I r r I ~ ~ ' ~ ~ ~ ~ ~ I S 1 I ~ r. £y~R'Sf! ~p!Y~~~III~~1 ~ •vYy F 1199YY11 + ~ r ~ j F ~ r ~ t 1 I ~ N}' s { ~ - • I - ~ - 1 -t' I ~ hl I r IL r ~ ~ ~ ~ ~I ~ I! 5 _ ~ .~i r ~ I f f~ ~ ~ j ~ w I ~ I~ t t~ R ~ I f I 7 ..A ~ a-. L ~ ~ } I' R r~~~~r yr ' A 5 I t~+ I w_ .r ' fi ~ ti I _ . ~ I ~ ~Y. ' _ - ~ ~f~ 5 LI. Y I { ~ till ~ 7i .a' .4~ „ ~ I~' I I~ U~ 4 - II {v ~1 ~ ~ i j I I IL W ~ ~ iI ~ I 1 ; { ~o S - ~ I _ 7' 'I f r _ I I S .~I t K ' ~ ' II ~ _ ~ ~ _ ri f ~:-g I _ r _ 'r _ J I { t r S - ~ vL ti t I mf~ ~ _ I. ~ +r I• ti5 ~ I Is i ~ ~ i ' ~ 1' n t I ~ r-- r 4 ~ .4 ~ ;d+~ I I  I~ -MUM Wumm!r i. I ~ ~ , i - - - _ ~ j~ _ ~i . ~ ~ ~ _ ' ~ r - L. s- h ~ i . ~ r~ i i - _ . ~ I ' - - r I ~ i i' r' Y' A r 111 ■ r ' A I I +I - - - _~n _ I ~ 1 'r ~ . I { . I - i r _ Y-i I 4 l~ ly JL. 4 ~ 'r r 45 r 1 ~a I i i _ 11~E! } ~i i i ' "  W 1-1 EXHIBIT 11 Page I7 Page ~ 9 1 COMII~I~SION~R STRANGE: The next ite~zr will ~ This just basically illustrates ~e ~ be Item No. 4C, lt~cn 4B, which is in the Agenda has been 2 boundary and the location the Hills of Denton ~-the 3 withdrawn. 5o Item No. 4C is the rezonirxg of 3 proposed Hills of Denton Master Plan Cornuni .The 4 approximately 2,124 acres ~rorn. Neighborhood Residential 4 applicant has submits a zonin lan and I'll real ~leighborhood Residential Neighborhood Residential 4, ~ b~iel~ly describe to you, the develo went will consist P o ~eighboi:hood Residential 6, ~~Mr_r•~~, N~ commercial. Mixed 6 approximately 1,42 acres of Sin le Fam~l Develo m t g Y ~ 7 ~Jse General and Planned Development 1 Districts into a 7 approximately ~ 4~ acres of town home develo went p ~ new Denton Master Plan for the Hills of Denton. And Mr. 8 approximately t ~ ~ acres of multi-family develo meet p ~ Menguita. ~ approximately 1 S3 acres of commercial, 9 acres of l 0 , n~Is~r~uFT~; Thanl~ you, . Mr. Chair, 1 ~ OfficelCarrunercial de~relopment, a roxil~ratel 57 acres of Pp y l 1 members of the Commission. 11 Town Center Commercial and a roxirrlatel ~ 04 Town Cen pp y 1 ~ COMMISSF~I~[ER STRANGE; gold on, l 2 Residential Development. The Master Plan Com~nuni al ty so r 3 Menguita, Did somebody Lose their Blacl~be~~ry~ Zt was 1 ~ includes amenities such as corridors, trails ro'ect ,p 1 l4 found downstairs in one of the chairs. I just bought one l4 entries, ponds, an amenity carter, conrnuluni centers and a tY l ~ just like it so I know you' d like t~ have that bank, l 5 hike and hike hail. l ~ Nfx. Menguita; 1 b This exhibit hem illustrates the ro osed p P . i? MR. MENGLJ~TA: Thank you, Mr. Chair, l? density distribution for single family, the area closer to 18 members of the ConuYrission, ~n October l7 of 240b, the 18 the Town Center is pro ~osed at ~,5 units er acre thi P p s . I9 City Council adapted Ordinate l~o~ 20~~-~43 amending 19 area is proposed to be 4,~ units per acre. And then al~n g porti~~s of Subchapter ~~,7 of the Denton Development Code 20 the northern portion af' the development it is ro osed to pp . 21 to pertain to Master Plan Development. 21 be three units per acre. The Master Plan Development Ordinance 22 Pursuant to Subcha ter 35.7.12 th p e 23 allows for the development of urge Comprehensive Plan 23 Development --,Denton Development Code the Dills of } 24 developments that conforms wiith and enhances the goals az~d 24 Denton Master Planned Community must coin 1 with the Code py policies contained within the Denton Plan. On April 3, 25 except where modifications are proposed. The Masten Plan Page 1 ~ Page ~0 1 24~?, pity Council adapted an ordinance annexing port~iQns 1 caning docul~.ent that the applicant has submitted has ~ of the dills of Denton development that's currently shown ~ identified these pro aced zanin districts. Real briefl p g y, ~ here in red, The propose Hills of Denton deve7oplnent is 3 Single Family Residential, Town homes, Multi-famil y 4 .generally located Wiest of Locust Street, north ~f Loop 4 Residential, Commercial, Office, Town Center Cozramercial, 5 288, east of bonnie Brae and south of Milani, Road. ~ and Town Center Residential. ~ The future plan land use designation for G AXong wig the zoning document, the 've y 7 this are is t~Iral areas and neighborhood centers and a 7 also listed their mirliinun~ lot areas, minimum width, S com~xrunity Fixed use enter. On March 27, this year, mznimurn depth, front yard setbacks, side iuinimum setbacks 9 City Council adapted an ardina~ICO that exempted Master 9 between dwellings and so on. f'd 'ust like to dint out J p l0 Plans as they're proposed from requirements of processing i0 the highlighted areas in red, identify the maximum lot l Z a Comprehensive Plan, so, therefore, a Comp Plan would not 1 l area far a Single Fa~nil at ~ 504. And then the rrlinim Y x um Z ~ be required for this zoning change. l ~ residential unit size at l 804 s uare feet. } ~ Z3 Last year irr 240G, the Mobility Plan was l3 They're also proposing the provisions to . 14 also amended. to incorporate the proposed roadways. As you 14 allow cluster-type development. with this pro~rision the 15 can see here in this alignment red, this is the new Bonnie l5 maximum number of single family units detached within the l ~ Brae alignment, w}~ch is a primary arterial. This is the ] ~ zoning district, Slagle l~'a~rily caning District uray not l7 oxterrsion of Cranzer Road, again, pz~mary arterial and then l? exceed 5?48 units. 1 ~ an introduction of a road, secondary arterial road, that 1$ Again, with the zoning doeul~ent th have eY l9 tral~sects east to west, l9 provided a development threshold and these thresholds list 20 This is the current zoning as Mr. Chair had 20 the maximum. number of sin le famil units avera e sin le g y x g g 21 mentioned., number of zoning districts that currently 2Y #`am.ily density, ~rraximu~r number of family units. 1'd like 22 exist. The areas in green are R~-s which is the initial 22 to point out that in ~e items highlighted irI red, again, 23 zor~ng given to an area that's been recently annexed, 23 the maxil~u~r number of single family uses that includes 24 again, back in April Ord of 2a~?, these areas in grin 24 detached and attached is 7,4b4. Maximum multi-famil y 25 were annexed Inca C1ty. LXnItS ~S 2,24, 1'd also l~l~e to rn n~ e on that a minunam PL~~ ZO~I~N 1~E~LA ~~TIN~ IU~A~ ~ . 9T~I, ~OD7 1 ~ - ~n  s .r}y v .c ~ 1 u~~1 L.f ll ondens~~t Page ~ X Page 23 1 of 2,OQ~ single family houses shall be constructed, I that development pro aced fiuthers the oils f th p g o e 2 permitted p~iar to any development of amulti-family unit. ~ Dentin Pin which staff feels that th have. In the a ey c se ~ The fallowing is a list of modifications, ~ of the prapos~l residential develo lnent that the ~ ~ ~ areas that yes. 4 develop~,ent will promote nom ~tible bl~ildir~ an p gs d uses caMLViiiONF~i EAGLETON; song to interrupt. 5 that it will be compatible with the character of the 6 lout just t~ go lack a couple of pages, you mentioned a ~ surrounding area. The current ro Deal we feel is pp 7 maximum lot area? 7 consistent, that the provisions for ublic facilities such p ~ . ~EN~~mr~: tight. 8 as schools, fixe protection, law enforcement water waste ~ CI~1viMIS~IDNER EAC~~~'~oN: Just to be Sure for 9 water streets, public services and arks are ad'acent t p ~ o I ~ the record, yora said maximum. I think you meant minimum; 1 ~ serge the anticipated population within the r~~c District. l 1 is that correct? I l The Engineerin ar~rient as well as al I ~ M~~t~T~; Mini~lum I'm sorry, I ~ have been in coordination as far as develo in a pg minnnum. 13 developer's ag~`eement that addresses some of these 14 ~oMMI~~oN~R ~LETON: okay. I just 14 concerns or these issues. And, also, the r nest at the 1 ~ wanted to make sure, 15 taime of platting will address Somme of the location of the I MR. MENCrIIIT~; Thank you. The following is l ~ schools and fire and law enforcement facilities, 17 a list of the modifications, These are just summaries of 17 And lastly, in case of the pro used p 1 ~ what they are proposing to deviate from the Denton f $ Commercial Development, Industrial, Institutional l9 Development Code, Real briefly, crea~ng a ,-they`re l~ Recreational and nonresidential uses or mixed uses ~aat proposing as past of the zoning document, creating new such development will be ap ro riate to areas located in l~ ~ ~l landscape and tree canopy requirements, modifying access, 21 overall planning for the purpose intended. And we feel Z~ parking and circulation, permitting parking structures 2~ that the location of the Commercial, the Multi-Paznil and y with are ~~p, ~l~ernative Development Plan, perfr~itting the Town Center as well as ~e Single Farnil uses are y ~4 parking in front in ail districts except for Town Center ~4 compatible and also promote die are located in a 2~ ~ Commercial and Town Center Residential, modifying site 2S location that is a ro riate fay those pp p type of uses. Page ~2 Page ~4 1 development require~rients standards for Single Family, l And I`d like to mention that there were 2 Multi-Famzly and non-residential, creating site 2 ter public notices, res Drees sent back to the lan ' p ~ p u~ng 3 development standards for Town Center Multi-family, Town 3 depar4~nent, one in favor, one neutral and one in 4 Center non-residential, and ll~ixed Use building including 4 opposition. The locatio~a of that son that wa i s n ~ big boxes. 5 opposition is address zs 78~~ North Locust within the ~ In addttxon, they're proposing to modify 6 City cf Denton. That concludes any presentation. I'd be 7 existing parking space requir~nents, adding parking space 7 happy to answer any questions. 8 requirements far ne~u land uses that they`re proposing, $ CUMM~IONER STRANCrE: ~n uestions of yq ~ cxeating a graphic exception for effective areas of signs, ~ staf#~ Tha~nl~ you, Mr, Mertguita. 1 ~ modifying expiration time far general development plans 1 ~ M~. ~~~~~tT~; ol~a . Y 11 and preliminary plats, per~xtitting through lots and within l 1 COMMIS~~NER TR~►N~E: I~ the a licant pP 12 the ~s~ perrrutting up to ten percent of an area that may l~ here and do they wish to speak? we'll now o era the ublic p P 13 be disturbed for trails and clearing but no closer than ~5 13 hearing. 14 feet Df the stream bank, 1 ~ m~. RE~CHHART: Thank you, Larry l I'd life to mention that the applicant has 15 Reichllart, Springbrook Plannin ~rrou 24~~5 Masten Dri g Ps ~ l6 met wig the nearby owners and we had a neighborhood t ~ Grapevine, Texas. So~te of dais will be redundant so I'll 17 meeting on Thursday, May ord. Appxi~nately 25 property l7 try to get through it prey quick, You've seen the l S owners were in attendance. And the mee~rng the 18 location. Locust, Loap 2~, I-~5. Qur existin g 19 concerns at that meeting were the potential impact to the 19 conditions, we do have Esc water-related. habitat, ponds, proposed road along Locust as well as the provisions of ~0 flood plain, approximately 3~~ acres, sty buffers. 21 utility services such as water and sewer for that ~I They're scattered trees Dn the property. fur Land Use 22 development. ~Z Plan you've seen. Ran has presented this. Y popped. out ~3 Lastly, pursuant to Subchapter 35.7 of the ~3 the flood plain a little bit darker, so it o s out a la P 24 .Master Plan zoning, the following findings shall be in little bit more for you on the property. ~5 consideration of this coning request. The first one is ~5 here's our land use lan. t 4~7 a r p , C e5 ~f ~~,AI ~N R~Cx~AI~ ~~TIN ~ 9TH. ~~47 Pa~P  .+ac v i~ t 1 "6v !.d -F o~den~It ~ Page ~ Page ~7 1 Single Family at four units per acre. That's the yellow, l and we might have talked about that, the and ~,~oo ~ Our town homes are in the tar~nisb colors. Multi-family is ~ square foot, yeah, ~ went through that ranee before. I'rn 3 the orange. Commercial is the red, as you've seen. ~ did 3 sorry. The Multi-family standards are very siitar to the 4 want to point out ~h~t our Town Homeareas could also be 4 existing Code. ~u~ isn't required as this is part of the 5 developed as dingle Family. And. our iVlulti-family areas 5 N~aster Planned Community. The ro~imi uirement had l~ ~ 6 ~ could be developed as sonnething other than multi-families. ~ been removed but vve increased the masonry requirement. we 7 we discussed earlier, as Commercial or Office Development. 7 added an S~ percent masonry requirement to all multi- 8 Our conceptual density plan, and we went 8 family structures. ~ over this earlier, trying to identify how we might ~ Nonresidential uali is a ain similar to q tY ~ 1 ~ distribute Boone of the Single Farrrily, but, overall, again, 1 ~ existing Codes, but we allowed the buildings to be 1 l it would be four units per acre for the single family. l l oriented towards the street andlor parking areas. And if l2 Phasing plan, aga~~a, we're looking to start in this l ~ ~rou remember, our parking areas have if they if you 13 quadrant right here identified by the brighter yellow. l3 park between the buildin and the street there's l4 g fur permitted uses eve have identified I4 increased landscaping and open space requirements that you 1 ~ different nomenclature for our uses, but they have been l ~ have and buffering requirements, but there's 1 ercent p l6 mirrored after' existing uses in the Dezrton Code, and most 16 masonry requirements for all nonresidential developments. 1? of our nomenclature has been taken after the Denton Code. l7 Additional standards as Ron had identified, l S Our development thresholds and we've tallied l S the big box standards are street tree standards, parking 1 ~ about this, and this is should be familiar to what you 19 dot designs, as ~ said, parking standards. Ron went over have in your backnp with the greets, and the blues and 20 that a little bit, the signage on an entry sign into a ~ 1 everything that you've .sin before, and Z~ve deft it e ~ I subdivision, ff it's on a stone or brick wall the stone 2~ same, but our maxnr~urn number of single family units or brick wall doesn't count as part of the sign, just the ~ including the Town Horne is 7,~~4 units arid, again, 2,~~0 ~3 sign. Trails are permitted in ~s~ areas. we do have ~4 dingle Family units would be permitted. And, you know, Z4 school location criteria that we will follow. That is a 25 we'd permit one, and vac didn't want to wait unt~1 it was brief surnmazy again. we've bee~a through this a number of ~~e 26 ~ag~ 28 t actually built and'have to be built before we could start 1 tunes and l'd be happy to answer any questions that you 2 multi-family. That's why it says permitted. 2 nay have. ~ Our genexal regulations, again, we've been 3 cn~MrsroNEx TRP►NGE: any questions of the ~ through these minimum lot anwas, maximum resideu~ial unit 4 applicant? Thank you, Mr. Reichhart. 5 sizes. Ron did a good job presenting these, Here's our ~ nom. RE~CHHART: you're welcome. ~ landscape and tree canopy. That's because our Single ~ can~~tsro T~~; we do have one card 7 Family Town Nome Districts changed. we had to create our 7 of a person who wishes to speak on this item. ~T.~T. l~ own landscape and tree canvpy and table. S Shepard. ff you'll come forward and give us your name and 9 dingle Family quafity,1,800 square foot 9 address. l 0 minimum lot size. If it's an active adult retirement, 1 ~ SHEP,A~D; F m that guy the other l l that could go down to 1,00 square feet, we talked about. l 1 night, 1VIy Warne is Shepard. I live across the road from I ~ At least ten percent of the houses would be a minimum 12 this development, S31 ~ North Locust Street, My property l3 ~,oQO square Feet and another ten percent would be a 13 is on either side of Milani Creek. I'm voting no for this l4 minimum square feet. Aud if you member 14 right now because the guy wouldn't tell us anything, Oh, l5 additionally with those, they require additional 1 ~ we can't tell you now, but give us the zoning and we'll 1 ~ architectural requirements, also. Town home minhnum 1 ~ build it and then you'll see what's going to happen, l? square footage is l;40o square feet which is a fairly good l? I want to know, A, what"s going to happen 11~ sire unit for a Town Home. Additionally, with the square 1S to all of the flood water that's going to come out of . l~ Single Family, we have increased the architectural l9 these some odd hundred homes because it's oin to come g g 2~ sndards, such as the masonry. They all have two-car right past my house, where die sewer pipe's going to go. 21 garages, roof pitch, and there's a number of other Pm 21 I believe that`s going to come dawn Milani Creek either 22 giving you the reduced version tonight, but there's a 22 right behind my house or right across the creek from my 23 nurx~ber of architectural standards that have been ~3 house, we haven't heard anything about that yet. Azad ~4 incz~ased. 2~ what are we going ~o do with all of the eo le on Locust P p Additional minimum building sizes, also, ~5 street`? This is a two=lane highway, 'he`re going to hate P~~ ~S Page 8  i onde~a~~i~~ Page Page 1 1 to shop in Sanger because there's no way in hell we're 1 major arterial on the Il~obility Plan and we recognize that ~ going ~ get into Denton when these people come in. ~ we will be participating in the construction of that with ~ 'When we get more details, then l'll 3 the development of this project. Again, the extent of 4 consider whether ~ want to vote for these guys or not. 4 that participation will be determined as we a throe h our ~ ~ 5 But right now, they're gating well, give us the zoning and . S T~ and the development of the property. then we"ll let you know later. That's essentially all of So those are the answers to those ~ my concerns. we don't have enough answers yet. And I 7 questions. Thank you. 8 would also Tike t~ know if the City is going to do S COMMI~I~IVER TRANCrE: Thank you, fir. 9 anything about --about the hiway out there. That"s a 9 ~ielke. Staff. l~ State are we going ~ have Locust a six lane or sill a 1~ ~Ix. t1oCI~I.~~; yes. I was also just going 11 two-lane? And how are you going to get fr Ehn Sheet 11 ~ to add to the gentleman's comments that I"d be more than 1 ~ where Elm, and Locust kind of become parallel all into ~ ~ happy we can meet with him to ilk about some of these 13 town? Because all of that traffic is going to be dumped 13 engineering issues that he raises in tens of the 14 right into that light. It"s going to be a mess. Are we 14 plattzng, drainage and transportation issues along Locust. l5 going to on this big sewer line, I derstand that they 15 There are plans and provisions in place that the Ci is I ~ were going to wild a sewer station, a second one on Clear 1 ~ currently reviewing that does address all of those 1 ~ Creek over by Sherman ]give who's paging for that? Are 1? specific issues. I would also l have a question of 1 S these guys going to pay for it ar are we going to do a l8 staff as well that deals with the density 'being proposed 1 ~ ~ bond election? Is it going to came out of my pocket? ~ l ~ on that site in terms of ~e number of units that az~ 20 can't see why l want ~ help these guys. l know the 20 ~ being proposed and how we Can address some of the densi ~1 file dev~lopnient is coming. There"s no way in hell l can 21 issues that are illustrated on the plan; but don't 22 stop it. But Z"d like to know more about it~bfore we do 2~ necessarily reflect the numbers that are also shown in the 23 that. That's my piece: ~ 23 plan as welX in terms of a general Develo meet Plan bein P g 24 CDI~1vIrSSI~~{ STRANGE. Thank you far your 24 included with this submittal. ~5 comu~ents. That was the only card on this item. Do we ~5 . NI~NGUITA: Let one see if 1 can find the . Page 30 Page 3~ 1 have anyone else who wishes to speak? Okay. Does the ~ l exhibit. The proposed development sets a maximum Single ~ applicant wish, to issue any rebuttal state~ne~ts or have 2 Family detach of ~,7~5. The applicant ha.s submitted a 3 any comments regarding this item? ~ ~ density distributzon plan ar map shown here that ~ ~x. ZIE~,~,~: Chairman and Cammissioners,lr~y 4 identifies the areas where the density, again, 5.5 units S name is Rod ~ielke with Tomlin rnvestrnents, 4265 Kelway 5 per acre within this area here, 4.5 units per acre over 6 Circle in Addison..Tust respond really quickly to the ~ here, and three units pei- acre within this area here. Per 7 gentleman's comments that was just up here. 1 conducted ~ discussion with the applicant, we're going to identify the 8 the publzc meeting and tried to address answers to that in 8 number of single family units here as well as the other 9 the meeting. He had three points, .One he was concerned ~ two areas .and hopefully, we'll come up with the total of l~ about flood wat~rs~and we t~ied~to explain that we will be l0 S,?~S to be consistent with what they"re proposing. we ~ 1 doing a flood study as part of the development of the 1 t w~i1l have that exhibit the applicant will prepare thane 12 property and we'11 be compliant with all of the City of ~ 12 numbers and those that exhibit that correlates than 1 Denton's rules and ordinances as far as controlling that 1 ~ nu.mbers for for staff. 14 flood water to ensure that his property does not 14 COMM~IONER T~.t4NG~: Thank you, Mr, 15 experience any additional flooding beyond what already 1~ 1Vlenguita, we will close the public hearing, I will again 1 ~ exists. l6 point out for the audience that we have had multiple work l7 The sewer that he mentioned, we are in the 17 sessions as a Commission an this and been addressed by the 18 process now, we have approved an agre~nent,l understand, ] S developer and have had many occasions visit about these 19 die City's taking it before the Public l.]tility Commission 19 issues. There's really three things that came out of a 2~ far approval in the next couple of weeks. That addresses 20 Work Session we had prior to tonight's meeting. And it 21 the alignment of the sewer, The City is working on that ~ 1 should be included in any l~atian that's rr~ade on this. 22 alignment and we will be building that as part of our ~2 Cne, is that we do a~eed a development plan map. The legal 2~ agreement for the City out of our dollars T'hat' what Z3 review has commenced lout has a few items t~ be concluded 24 ~ the agreement will say. And then in his comments about 24 before it goes t~~ the City CaunciZ. There is a ~5 Locust, we also -i Locust has always been identified as a 25 development agreement that was alluded to that's being ~a~~ ~9 Page 3~  1 ~a~.dens~It~ Page ~ Page 1 worked out right nor between the applicant and tae City. ~ ~ That will need to alsa be ~nali~ed before it goes to the ~ ~ 3 City Council. And we will be looking at some langrxage ~ 4 regarding a phased review. So those would be items that 4 . we would want to include in any motion. Do eve have a ~ . G oration on this item? I~r, Thibodeaux. ~ 7 co~n~~ssior~R ~'~~~o~~,r: i would like to 7 ~ move approval of this item with the conclitians that S 9 there's a completed legal xeview that a development plan ~ ~ 0 reap is included, that phasing plan rs included at~d a 10 11 developer's agment. And with those conditions, I move 11 I ~ approval. 12 13 co~r~~s~raN~,R T~a~r~~: we have a u~a~an by 13 1 ~ Dr. Thibodeaux. Do we have a second? 14 I5 con~~~s~o~r~~R AN~~RON: second. 15 1 ~ ~OI~I~~SSIGhiER STRANGE; ~ SeCOnd by I ~ 17 1VIs~ Anderson. Do we have any discussion? If not, please 17 I8 vote. dote passes 7-~. I think it's clear in the motion ~ 8 I ~ but I' II make it clear for the public record that Chase I 2~ four. items that I~r, Thibodeaux alluded to and that I also . ~ I .entianed will be included in the documentation prior to 21 22 going to ~e City Council; 23 ~ ~3 ~4 ~4 ~5 . Page 34 Page 3~ I 1 2 Z ~ ~ 3 4 4 5 5 ~ 6 7 7 . $ S ~ 9 1~ ID 11 lI ~ 12 13 i3 14 I4 l5 ~5 1~ I6 1~ 1~ 18 1S I~ 19 ~ 2I i ~Z ~2 ~3 ~3 24 ~4 2S ~5 PLANI~INi ~Nl~~i LAS ~ET~T SAY ~~07' ~ Page - Page ~ s:lour document~lordin~ncesl~'~Iz~b-002 option a.doc ORDINANCE NO. F THE CITY OF DENTDN, TEXAS, PROVIDING FOR A ~ON1N~ AN ORDINANCE ~ NEIHBCRI~OOD RESIDENTIAL ~ ~NR'2~}, NEIGHBORHOOD CHANCE FROM A NEIGHBORHOOD ~ ~NR-4}, NEICHBORHOOD RESIDENTIAL 6 RESIDENTIAL 3 ~NR RHOOD RESIDEN~TAL MIXED USE I2 ~NRMU-1~, NEIxHBORI~OOD ~NR-~}, N EIOHB~ ~ USE COMMERCIAL MIXED USE CENERAL ACM-}, RESIDENTIAL YXE LOPNIENT PD-1~~ , AND RURAL RES~ENTIA~ TO TPIE PLANNED DEVE ~ ~ MASTER FLAN COMMUNITY SHILLS OF DENTDN MPG} ~ON1NG HILLS OF DENTDN ATION AND USE DESIGNATION, FOR APFROXIATELY x,21 a DISTRICT CLASSIFIC LY LOCATED ON NORTH OF LOOP 2SS, BEST OF LOCUST ACRES, GENERAL F ~4iILAM ROAD AND EAST OF BONNYE BRAE STREET AND STREET, SOUTH ~ ED ~ ~ TRACT OF .LAND SITUATED rN THE BURNS LEGALLY DESCRIB T NO. 13U THE T. POLL SURVEY, ABSTRACT NO. 999, THE . SURVEY, ABSTRAC ABSTRACT NO~ 45~, THE T. TORY SURVEY, ABSTRACT NO. GAILOR SURVEY, URVEY ABSTRACT X97, THE M. MAY SURVEY, ABSTRACT THE COLLARD } TEART SURVEY, ABSTRACT NO 1150, THE F. MCKETTR.ICI~ NO. 5~7, THE T NO. 846 AND TIDE E, PRITCHETT SURVEY, ABSTRACT NO. SURVEY, ABSTR.AC OUNTY TEXAS SAID 21~~.62a6 ACRE TRACT BEING COMPRISED 1 ~~5, DENTDN C Il~C. ALL OF TEN TRACTS DESCRIBED TO DENTDN CBS, L.P. BY OF AND CONTAIN TY DEEDS RECORDED AS INSTRUMENT NO'S. ~Da6-Z14~9, 2006- SPECIAL ~a06-1~1~4 ~Da6-5631~~, 2aa~~593a7, ~~~6~57777, Z~D6-57774, 2a~- 1 ADS, 2Q06 12~~4, - 13 OFFICIAL RECORDS OF DENTDN COUNT, TEAS; ALL OF 797a, AND Z~06 563 , RACT DESCRIBED TO HARVARD C.G. PROPERTIES, L,L.C~ BY THAT CERTAIN T Y DEED RECORDED AS INTRUMEN'~ NO ~~~~-1951, OFFICIAL SPECIAL TRACT S OF DENTDN COUNTY, TEXAS} ALL OF THAT CERTAIN RECORD CORDED ED TD RICHARD TEDRO AND FIFE BY TY DEED RE DESCRIB • ALL OF E 1154 PACE 836, DEED RECORDS, DENTDN COUNNY, TEXAS, IN VOLUM a IAL TRACT DESCRIBED TO RICHARD GLAIR TEDRO BY SPEC THAT CERTAIN EED RECORDED IN VOLUME 10ZS, PAGE 76 DEED RECORDS, Y D TO Y TEXAS ~ AND ALL OF THAT CERTAIN TRACT DESCRIBED DEN~'ON COUNT TRUSTEE BY DEED OF GIFTS RECORDED IN VOL. 1978, PG. 796, .TAMES TEDRO, OL. ~ 97S PC.80~, VOL. 1975, PC. 8~5, VOL.174, PG.127, VOL~ COL. 197 , PG.799, C } L. 1794 PG,131 VOL.1794, PC. 133, DEED RECORDS, DENTDN 1794, PC. 1 ~9, VO PROV~INC FOR. A PENALTY IN THE MAXIMUM AMOUNT OF COUNTY, TEXAS, TY' IOLA.TIONS THEREOF; AND PRDVIDINO FOR. SEVERABILI , $~,0~~.~~ FOR V SUBORDINATION .AND AN EFFECTIVE DATE. ~~~6-~4~6} ent hay ~ ~~ed for a ehane in ~on~~ for pproxi~na~~el~ WHEREAS, Talrn In~e~tn~ pp . . borhood Res~der~tial 2 ~NR-~}, Nexgh~or~oad Re~~dent~al ~NR-3 , 2,120 ac~e~ ~'ro~n Neigh . ' ' 1 -4 Nei bar~aad Res~er~tlal 6 ~NR-~, Ne~ghborhaad Nelghborhaad Res~de~x1a ~NR la , ' fixed Use 1 ~ ~ 1 ~}s Neihl~arhoad Resider~t~al Mixed Use Re~de~t~al M ~U ' eral CMG P1a~ned Developn~en~ BPD-12~} aid Rur Re~dent~al Commercial Mixed Use Cep ~ ;i „ ' e Hills of De~tan Mater Play Comun~t~ ~ H~~~ of De~~an MPC } _5~ ~an~~~ districts to th ' s~f~aa~iari arxd use des~gnat~on as ~rovxded far in this ordinance; d ~a~.ng d1strict clan s:lour da~umentslor~inances1071zOG-002~ vp~ian a.d~c wHERE~, on ~ctaber 17, 2~~~, the City Council adopted an ordinance an~.ending a portion of subchapter 35.7 and 35.23 of the : Denton Development Code pertaining to Master Planned Communities; and wHEREA, on April 3, 2~~7, the City Council adapted an ordinance to voluntarily annex approximately 1,199 acres into the City of Denton. The 1,1 acres is part of the ~ acres proposed as the Hi11s of Denton 1Vlaster Planned Community; and WHEREAS, on 1VIay 9, 247, the Planning and honing Commission concluded a public hearing as required by law, and recommended approval of the requested change in coning, a~s further conditioned by them; and WHEREAS, pursuant to §35.7.12.2 of the Denton De~relopment Code, the Council fends that the health, safety or public welfare of the residents of the City of Denton may be compromised without cancuxrent submittal of the MPC caning Document and the MPC Developrncnt Standards Document; and WHEREAS, the City Council finds that the change is consistent with the Denton Plan and the Development Cade, specifically including those findings set forth at ~35.7.12.~ of the Denton Development Cade; NOw THERE~'~RE, THE COUNCIL F THE CITY ~F DENTIN HERESY ORDAINS: SECTION 1. 't'he ~nd1ngs and recltatlans canta~ned xn the preamble afthrs ardlnance are incorporated herein by reference and found to be true. SECTION 2, The coning district classification and use designation far approximately 2,120 acres of land described in Exhibit attached hereto and incorporated herein the "Prapert'~, is hereby changed from the Neighborhood Residential 2 {NR-2~, Neighborhood Residential 3 ~NR~3~, Neighborhood Res~dentral ~NR-4}, Neighborhood Residential ~NR-~, Neighborhood Residential Mixed use 12 ~U-12}, Neighborhood Residential Mixed Use Cam~nercial Mixed use general ~M~C~}, Planned Development BPD-120} and Rural Residential ~RD-~} coning districts to the Hills of Denton MPC as provided for herein. ~ r. Notwithstanding the above real property descr~pt1on, the property berg re~aned includes all property to the c enterline o f all add anent streetrights-o f way. SECTION 3. The development of the Property shall be in accordance with the regulations and standards madif~ed or excepted by the Hills of Denton MPC as particularly described in the honing Document and Development Standards Document attached hereto and incorporated herein as Exhibit and shall be in compliance with Concept Plan, Development Plan Map, Phasing Plan, and Conceptual SP Density Distribution attached hereto anal incorporated herein as Exhibit In addition, the Hills of Denton MPC shall provide far the planning of Denton independent shoal District ~"DISD"~ schools in accordance DIED guidelines as generally set forth in Exhibit "D" attached hereto and incorporated herein by  Lm s:lour documentslord~~nances1D71~06-O~~b option a.dac reference. All other provisions of Chapter not specifically excepted by the Mills of Dentan CPC shall rerr~ain ire full farce and effect. Notwithstanding anything contained herein to the contrary, no subdivision of the Property by metes and bounds ar plat, including by conveyance plat is permitted, and no right to develop suchportion of the Property shall be allowed when portion of such property straddles or is in close pra~imity tv different perrr~itted land use boundaries as shown an the Development Plan lap unless and until all affected property owners pursuant to a document acceptable to the City Attorney clearly by legal description delineate and agree to such land use boundaries. ECTI~N 4. The City's official coning map is amended to show the change in coning district classification and use designation to the Mills of Dentan MPC a provided herein. ECTIOIV 5. If any provision of this ordinance or the application thereof to any person ar circumstance is held invalid by any court, such invalidity shall affect the validity of the provisions ar applications, and to this end the provisions of this ordinance are severable. SECTION G, The terms of this ordinance are subordinate to any other ordinance of the City of Dentan., and any conflicts are intended tv be resolved in favor of the other ordinance, unless such conflicting provisions are specified and expressly excepted by this ordinance. ECTI~1~ 7'. Any person violating any provision. of this ordinance shall, upon conviction, be fined a snrri not exceeding $~,Oa~.~O. Each day that a provision of this ordinance is violated shall constitute a separate and distinct offense. ECTI~N S, This ordinance shall became effective fourteen X14} days from the date of its passage, and the City Secretary is hereby directed to cause the caption of this ordinance to be published twice in the Denton Record-Chronicle, a daily newspaper published in the City of Denton, Te~a,s, within ten ~ 1 a} days of the date of its passage. PASSED AID APPR~~ED this the day of 207. { PERRY R. Ic~EII~L, MAYOR ATTEST: ,JENNIFER wA.I~TER, CITY SECRETARY BY: APPROVED AS TO I~EC~AL F~R1VI: EDwII~ NI. NYDER, CITY ATT Y , 1 ;  LM ~xhi~it A Hi~i of ~e~ton BEiI~G a 2120.6206 acre tract of land situated in the J.A. Burns Survey, Abstract NQ. ~ 30, the T.1~ollc Survey, Abstract Na. 999, the V. Gailor Survey, Abstract IVo. 452, the T. Toby Survey, Abstract Na. 288, the ,1. Collard Survey, Abstract No. 291, the Illl. Inlay Survey, Abstract Na. 507, the J. Stewart Survey, Abstract No. 1159, the F. I~cKettrick Survey, Abstract lVa. 840, and the E. Pritchett purvey, Abstract Na. ~ 025, Denton County, Texas, said 2120.6206 acre tract being tarnprised of and containing: all of ten tracts described to DENTIN 288, L,P. by Special ~IIlarranty Deeds retarded as Instrument Na's~ 2006-21489, 2006-12208, 2996-12204, 200612124, 2006-56312, 2006-59307, 2006-57771, 2006-57774, 2006-57'970, and 206-56316, Gfricial Records of Denton County, Texas; ail of that certain tract described to l-~ARVARD D.G. PR~PERTlES, ~.L.C, by Special llvarranty Deed retarded as Instrument IVa. 200- 19521, official Retards of Denton County, Texas; all of that certain tract described to Richard Tedrow and wife by 1Narranty Deed retarded in Volur~e 1154, Page S3G, Deed Retards, Denton County, Texas; all of that certain tract described to Richard Clair Tedrow by Special Vllarranty Deed retarded in Volume 1025, Page 7fi1, Deed Records, Denton County, Texas; and all of that certain tract described to James Tedrow, Trustee by Deed Of Gifts recorded in Va1.178, Pg.196, Val.1978, Pg. 199, Vo1.1918, Pg. 802, Vvl. 1918, Pg. 805, Val. 1794, Pg. 127, Val. 1794, Pg. 129, Vol. 1794, Pg. 131, Vol. 1794, Pg. 133, Deed Retards, Denton County, Texas, said 212Q.620G acre tract being more particularly described a follows: Bf1~V~V1~fG at the southwest end of a corner clip at the intersection of the west line of F.Ni. 2~ 64 with the north line of L~GP 288; T>~IENCE along the north line of LG GP 288 the follov~ri ng: Sl°37'05" Uv a distance of 302.84 feet; 85°30'31" VII a distance of 201.47 feet; fig°52'15" ~U a distance of 295.18 feet; 80° 02'08" Vv a d istante of 16.70 fe et; 80°40'39" IJI! a distance of 308.99 feet; S 71° 39'53" Uv a di stance of 301.95 f eet; ~ 73°4l'S3" ICI a distance of 102.61 feet to the beginning of a curve to the left which has a central angle of Ol° 12'38", a radius of 5849.58 feet, and a chord which bears 75°16'55" 1IIf - X35,61 feet; . Paget ~ vUith said curve to the Ieft, an arc distance of 78G.1 feet; 68°39'~~" 1111 a distance ~f 379.47 feett 7 ~°40'36" 1N a di stance of 307.35 f eet; 7~4°~1'3~" 1111 ~ distance of 419.35 feet; 69° ~ 3'~1" Ilv a distance of 17a.3b feet to the beginning of a curve to the right which has a central angle of 14~ 1 x'49", a radius of 5619,58 feet, and a chard which bears 80°32'3" w - ~ 357.5 feet; vvith said curve to the right, an arc distance of ~ 390.80 feet to the southeast corner of that certain tract described to University of Norkh Texas by deed recorded in Volume 49fifi, Page 999, D eed Recards, Denton County, T exas; THENCE N 0~°23'53" E departing the north line of aforementioned LOOP 288 and along the east line of said University tract, a distance of 1001,E ~ feet to the northeast earner of said U niversity tract; THENCE N 88°43'28" UI1 along the north line of said University tract, a distance of 4182.91 feet to the northwest corner of said University on the east side of an asphalt road known a B Denis Brae Street.; THENCE N 00°23'04" E with the east side of said asphalt road, a distance of ~ 755.7 feet; THENCE N 01°51'27" E a distance of 39.81 feet to the south line of that certain tract described to Hamer IlValter by deed recorded under County Clerk File No. 95-000D9, Real Property Recards, Denton County, Texas; THENCE S9°30'32" E slang the south line of said V~Ialter tract, a distance of 624.61 feet to the southeast corner of said 1~11alter tract; THENCE N 01°00'50" E along the east line of said 1111a1ter tract, passing the northeast corner thereof, also the southeast career ~f that certain tract described to Ruby Finch by deed recorded in Volume 497, Page 547, Deed Records, Denton County, Texas, and continuing, along the east line thereof, a distance of ~ 7G4.~6 feet to the northeast corner of said Finch tract; THENCE along the north line of s aid Finch tract the following: i N 88°69'0" IIU a distance of 498.78 feet; . NOD 5fi E a distance of ~ 85.30 feet; Page 2 of 6  L N 88°29'2" 1JIJ passing the northwest lino of said Finch tract, also the northeast corner of that certain tract described to Scherk~ by deed recorded under County Clerk File Na. 02- 98857, Real Property Records, Denton County, Texas and continuing, along the narkh line thereof, a distance of ~ 541.fi4 feet to the northwest earner of said Schert~ tract, near the middle of aforementioned Bennie Brae Street; THENCE along ar near the middle of said Bonnie Brae Street the follov~ring: N 01°34'05" E a distance of 932.20 feet; N 01°35'23" E a distance of 1003.38 feet near the intersection of the middle of Bonnie Brae Street vuith the middle of Caner Road, at the northwest corner of the aforementioned pENTCN 288 ZOOG-57777 tract, in the east line of that certain tract described to Rancho Vista development Company by deed retarded in Volume 2595, Page 485, Deed R etords, Denton County,. Tex as, THENCE S9°32'32" E along the east line of said Rancho Vista tract, near the middle of panzer Road, a distar~te of 972.02 feet; THENCE N 00°03'28" E continuing clang the east line of said Rancho Vista tract, near the middle of Canzer Road, a distance of 2fi.47 feet to the southwest comer of that certain tract described to Brewer by deed recorded under County Clerk File No. 94- R0095175, Real P roperty Retards, Denton County, T exas; THENCE 89°32`45" E slang the south line of said Brewer tract, the south line of that certain tract described to Stewart by deed recorded in Vol. 599, Pg. the south line of that certain tract described to Hatridge by deed recorded in Vol, 599, Pg. 9, the south line of that certain tract described to Roberts by deed recorded in Vol. 3179, Pg. 273, the south line of that certain tract described to Kitchell by deed recorded in Vol. 529, Pg. 633, the south line of that certain tract described to Rae by deed recorded in Ital. 529, Pg. 414, and the south line of three tracts described tQ Peppler by deeds retarded in 1101. 2398, Pg. 78, Val, 4218, Pg. 207, and Vol, 4218, Pg. 26fi9, Deed Records, Denton County, Texas, a distance of 2707.D7 feet to the southeast corner of said Peppler Val. 428, Pg, 2689 tract; THENCE N 00°2"12" E along the east line of said Peppler Vai. 418, Pg, 2509 tract, a distance of fifi8.1$ feet to a 314" iron rod found for corner at the northeast corner of said Peppler Vol, 4218, Pg, 2089 tract; . THENCE N 00°04'12" E along the east terminus line of Chinn Road, the east lines of those certain tracts described to Yeasts by deeds retarded in Volume 52?, Page 43 and Volume 584, Page 587, Deed Records, ~ Denton County, Texas, the east line of that certain tract described to Souls by deed recorded in Volume 3101, Page 0188, peed Records, Denton County, Texas, and the east line of the aforementioned Rancho Vista tracts a distance of 2649.30 feet to a 518" iron rod found; Page 3 of 6  i THENCE N g~ °00`83" w continuing along the east line of said Rancho Vista tract, a distance of 539.43 feet to a fence post; THENCE N 02°28'55" vy continuing slang the east line of said Rancho Vista firact, a distance of 965.89 feet to a 3" metal fence corner post at the northeast corner of said Rancho Vista tract; T~iENCE N ~°54'04" vV along the narkh ~ line of said Rancho Vista tract, a distance of ~ 97.41 feet to a 3" metal fence earner past at the southeast career of that certain tract described to Brandenberger by deed recorded in Volume 86D, Page ~5, Deed Retards, Denton County, Texas; THENCE N g9°32'20" E along the east line of said Brandenberger tract, a distance of 426.52 feet 3" rectal fence earner past at the southwest corner of that certain called 50.00 acre tract described to Perry Nelson Trietsch by deed retarded under County Clerk File Na. 2001 ~ ROg~1523, Real P raperty Records, Denton County, Texas; THENCE 89°01'15" E departing tl~e east line of said Brandenberger tract and along the south line of said 80.00 acre tract and the south line of fihat certain called 90.92 acre firact described fio w. . Trietsch f=amily Trust by deed retarded under County Clerk File No. 98-8112292, Real Property Retards, Denton County, Texas, a distance of ~ 8~8.~9 feet fia a 12"' metal fence corner post; THENCE continuing along the south line of s aid 90.92 acre tract the fol lowing: 88°47'1x" E a distance of 245.52 feet ta'a steel fence earner post; N 03°Z5'S2" E a distance of 144.80 feet to°a X12" iron rod found far earner; 88°49'4" E a distance of 1622,90 feet to the southeast career of said 90.92 acre tract; THENCE N 00°20'44" 1JV slang the east line of said 90.92 acre tract, a distance of 582,00 feet to a 112" iron rod found at a fence earner post in the south line of that terta~n First Tract described to M. Ronnie Trietsch by deed recorded under Caur~ty Clerk File Na. 9-Rgg6882D, Real P roperty Retards; Denton County, Texas; THENCE 89°Q2'13" E along the south line of said First Tract passing the southeast corner thereof, also the southwest corner of that certain tract described to Rachel Trietsch Bartel by deed recorded in Volume 2508, Page 681, Deed Records, Denton County, Texas, and continuing slang the south line thereof, a distance of 31 X2.72 feet to a capped 518" irar~ rod marked "CARTER BUR~E" found in the west line of F.M. 2 ~ 64; THENCE 40°49'14" E along the west line of said F.~II, 2164 a distance of 1009.93 feet to the northeast earner of that certain trat~ described to North Texas Mate University by deed recorded in Valur~e 642, Page 569, Deed Rec arils, Denton County, Texas; Page 4 ~f G  i THENCE departing tl~e east line of said F.M. 264 and along the north line of said University tract, the following; N 89°02'57" V1I a distance of 559.09 feet to a brass disk marked "Prop Cad' found for corner; N OQ°59'41" VII a distance of ~ 99~7G feet to a brass disk marked "Prop Cor" found for earner; N S9°00'42" I1V a distance of 1189.82 feet to a brass disk narked "Prop Car" found for earner ~t the northwest earner of said University tract; ~'HE~ICE 0a°49'51" E slang the west line of said University tract, a distance of 559.8fi feet to a brass disk marked "Prop Cor" found for corner at the southwest earner of said University tract THENCE 89°08'18" E slang the south line of said University tract, a distance of ~ 749.38 feet to the aforementioned w est I ine of E.M . ~ ~ 54 THENCE along the said west li ne of F.I~, 21G4 the fallowing: 00°50'2fi" E a distance of 53x.73 feet; 10°8'14" VIII a distance of ~ x1.98 f eet; . 00° X0'22" E a d ista nee of 200.09 fe et; ~ 2°48'SS" E a distance of 141.98 feet; 9a°50'22" E a distance of 849.77 feet; 07°41'28" 1JV a d~stane of ~a1.~0 feet; OD°50'23" E a distance of 25D,00 fe et; 09°22'14" E a distance of ~ 01.20 fe et; 0050'23" E a distance of 1312.37 feet; 00° ~ ~'3G" E a distance of ~ ~ 8.80 feet; 10°44'30" w a distance of 99.54 feet; . 01°44'27" E a distance of ~ 6.$7 feet to the northeast corner of that certain tract described to Kenneth ~lelson by deed recorded under County Clerk File No. 95- 80008942, Real P roperky Records, Denton County, Texas; Page ~ of fi  i THENCE N 89°58'57" 11V along the north line of said Nelson tract, ~ distance of 4G8.85 feet to the northwest corner of said Nelson tract; THENCE gQ°07'1 Q" E along the west line of said Nelson tract, ~ distance of 81G.9G feet to the southwest corner of said Nelson tract; THENCE 89°~'~~" E along the south sine of said Nelson tract, a distance of 4Q'i.~Q feet to the aforementioned west i ine of F`.M. fi4; . THENCE along the said west line of x.1111.21G4 the following: 00°43'02" w a distance of GQ2.28 feet; Q5°25'1 X111 a distance of ~ Q0.44 f eet; 0~°40'50" 1111 a di stance of 200.02 f eet; 04°58'49" E a distance of ~ gQ.42 feet; 00°40'43" 1111 a distance of 40g.~ ~ feet; Q9°04'23n V1! a distance of 'l0~ .09 feet; 00°4'43" X111 a distance of 299.88 feet; 07°40'33" E a distance of ~ 01.83 fe et; Og°42'49" 1N a distance of 238.45 feet; OQ°41'38" w a distance of 1940.9 fee#; Q1°52'19" w a distance of 385.5 feet; THENCE 39°1B'01" V11 departing the said ~+rest line of F.M, 2154, a distance of 105.55 feet to the ~~~~T BEGINNING and containing 92,374,235 square feet or 2120.G205 acres of land, mare or less. Bearr'n~s are based upon tha# certain cared 748.953 acre tract described in Special ~Narran~r Deed recorded as lnstrumer~t No. ~~D6-9~~44, D~iciai Records o~Der~tor~ ~our~ty, texas. Piburn Partn~r~, 3445 Highland Rd, quite 20~ Dallas, Texas 75228 X214} 3~8-350 www, metrosurvey_or.com Pagefiof~  - ~ ~7V~V~~~~+ L~Gf~~~~~V~l& The foregoing description i a result of actual on-the-ground surveys jade under my personal supervision and a com pilation of the~deeds referenced therein. John R. Piburn, Jr. Registered Professional Land purveyor Registration Na. 3fi89 Piburn & Par~ner~ LLC 3445 Highland Rd, Suite 205 Dallas, Texas X5228  i ~hi~it B 1 e X11 ~on~n Document enerl ~1~te; except s clearly and specifically stated herein, the provisions of this document are subordinate to all ordinances of general application ~n the City of Denton Texas. The prov11ans of this dacu~nent da nvt modify or amend any ard~nance of the 1ty of Denton, and have no applicability whatsoever o~tslde the Hills of Denton II~P~. The terms of this document serve as limited exceptions to the general ~oni~.g standards of the pity of Denton, only to the limited extent specified herein, and are intended to be construed narrov~ly and restrictively. Any stated exceptions to specific sections of any ordinance or land use standard shall apply only to the limited extent necessary to achieve the stated exception, and all other requiren~er~ts of such cited provisions that are not specifically excepted shall continue to apply in full farce and effect v~rthin the Hills of Denton I~IP, gage - t  Lm ~ ~.5. shl be excepted as ~o~ivws: only those uses listed in the tables below shall be ermitted in eaeh hale of the ~I~lls off' D ~ p enton development 1n a areas so designated on the Development Plan ll~ap. F Single Family Residential TH Town Homes ~~ttached Sin~1e-Family} ~ ll~ulti-family residential ~ Conunercial ~ ~~~1Ce TCC' Town Center Comn~,ercial TAR Town Center Residential permitted use Table: Residential hand Use date cries SF TH 1V1F C ~ TCC TR A ~~ulture HL~ 11) H~1 l } HI~(11) HI~(11) HL,(1 ~ } HL{ 11 } HL~1 ~ } Livestock HL Z N N N ~ N ~ 1e Famil Dwe11~n s P P N N ~ N N Accessory Dwelling Units ~ N N N N N N HL~ 1 Attached Sin le Fan~i1 Dwellin SUP F Hr~ l o} N N P ~ Dwellin ~ Above businesses N N P P N P P Li~eIV4~ark Units N HL S F P N P P Du lexes N ~ N N N N N Comm~ni Homes Foy the Disabled P ~ P P N N P rou H~~nes N N SUP N N N SUP 1VIu1ti-Fami~ Dwellin s N N P N N F p N~anufaced Housin Deve~o menu N SUP SUP N N N N P = ~errnitted, N = Not permitted, XJP = ~ eci~c ~Jse Permit Re~uire~, ~ = Li~ite~ as defined on a e 4 ~f his sectifln - ~ .  i Commercial U~e~ SF TH MF ~ D TCC TCR Horne ~ccu anon P P P N N P P Sales of Product CXro~vn on Site N N N P N N N Hotels N N P P P P P Motels N N N P N N N Bed and Breakfast N N P P SUP P N . Retail Sales and Service N N HL~~} P P P P Movie Theaters N N N SLIP N P SUP Restaurant or Private Club N N HL P P P P Drivc~throu h Facili N N SUP P P N N Professional Services and Office N N HL 6 A P P P Quick Vehicle Servicin N N SUP P P N N - Vehicle Re air N N N P P N N Auto and RV Sales N N N P P N N Lawn Facilities N N P P P P P ~ uestrlan Facl~t~es SUP N N N N N N Outdoor Recreation P P SUP P N N N Indoor Recreation P P ~ P N N N Ma' or Pvent Enterta~iument N N N SUP N P N Carnmercial Parkin Lots N N N P P P P Advristratxv~ or Research Facili N N 4 P P N N , Broadcastin of Production Stadia N N 4 P P N N Sexuall Oriented Business N N N N N N N Tem or Uses HL 9 HL 9 H 9 HL 9 HL 9 Hl~ 9 HL 9 P = Permitted, N ~ Not Permitted, SUP = S ecific Use Permit R ufred, ~ = Limited as defined on a e 4 oft~is sec~on Indu~tr~al La~~ Use Cate ories SF TH MF ~ TCC TCR Printin I Publishin N N N P P N N Bakeries N N N P P P P Manufacture ofNon-odoriferous Pools N N N N P N N Feed Lots N N N N N N N Pond Processin N N N N N N N Li t Manufcturin N N N N P N N . Heav Manu#'acturin N N N N N N N halesale Sales N N N N N N N Wholesale Nurseries HL~12) HL(12} HL~12) HL(12} HL(12} HL~12} ~L(12} Distribution Center N N N N N N N Wholesale torn a and Distribution N N N N N N N Sell=service Stara e N N N N SUP N N Construction Materials Sales N N N N N N N Junk Yards and Auto reckin N N N N N N N Kennels N~ N N N N N N Veterinary Clinics N N P P N N N Sanitary Landfills, Commercial lncirierators, N N N N N N N Transfer Station has dells SUP SUP SLTP SUP SUP N N HL~~} HL~~} H ~ HL~s} HL~~} P = Permitted, N =Not Permitted, SUP = eci~c Case Permit Ike aired, = Limited as defined on a e 4 o#"t~is section Pale - 3  i Instit~utY~na~ Land Use Cate Dries ~ ~ TH N~ ~f ~ T'CR basic [Jt~lities HL~7} HL~7} HL ? SUP SUP N' N Camrnuni er~1ces N N P P P P P Parks and en ace P P P P P P P Churches P P P P P P N Semi- ub~ic, Ha1~s, Cubs and Lod es SUP SUP P P P P N Business ~ Trade School N N H 4 P P N N Adult or Child Da Care SUP SUP P P P P N finder amen, Element School P P P N N N N l~iddie school P P P N N N N ~i h School N N SUP N P N N Colle es N N P P P P P I~os ital N N N N P N N Elderl Housin N SUP P N N P P Medical Centers N N P P P P N Cemeteries N N N N N N N Mortuaries N N N A N N N P = Permitted, N = Not Pe~nitted, SUP - e~ific Use Permit ~ wired, L{X =Limited as defined on e 4 of this section. P~~~ - ~  L~~ 3,,5, shall be excepted to provide the foiYowYng additional Yimi~~tions wYth respect to tiie ~oni~ classifications and use ~lesignati~~s defined by this d~cnment: HL~ 1 } =Accessory dwelling units are permitted, subject to the fallowing additional cxiteria: 1. The proposal must conform to the overall rnaxirnurn lot coverage and setback requirements of the district. The nlax~irnum number of accessory dwelling units sha11 not exceed 1 per lat. The maximum grass habitable floor area {HFA} of the accessary residential stn~cture shall not exceed 50°Ia of the HFA of the primary residence on the lot. 4. one additional parking space shall be provided that conforms to the off-street parking provisions of the Denton Development bode. HL{~} ~ Limited taa two {2} animals on parcels one ~1} to three~3} acres in sire. Additional animals may be added at a rate of one per each acre over three. HL{3} =Limited to sit down an1y, and no drive up service permitted. Limited to na mare than 1 DO seats and no mare than 4,~a0 square feet of restaurant area. HL{4~ =Uses are Iirnited to na mare than I ~,~QO square feet of gross floor area. HL{5} = Uses are limited to no more than 1,5~~ square feet of gross Hoar area per lot. HL{~} =Uses are limited to na mare than ~~,~~0 square feet of gross floor area per use. square footage maybe larger with approval of a peciflo Use permit ~UP~. HL{7} ~ Zf propose use is within feet of a residential zone, apprava~ is subject to a specific Use permit, HL{$} = Must comply with the provisions of ~ 3~ .2~ of the Denton Development bode, bras e11 Drilling and ~raductian. HL{9} =Must meet the requirements of ~5.12.~ ofthe Denton Development fade, Tetnparary Uses. HL{ 10} = Limited to a rnaximun~ density of I ~ units per acre. HL~ 11 } =Permitted an undeveloped parcels or future phases of rnulti~phased develapn~ents. traps such as hay arrow crops are permitted, Livestock sha11 be Iiznited to tracts of 5 acres ar larger. HL{~} = A1lawed as a temporary, non-retail use bene~itting the Hills of Denton development. Page-~  i 3.a, shall he excepted to estah~ish the fol~~wing dditian~l restric~ons or exceptions with respect to the ~o~.i~g ciassi€ications and use designat~ans defined ~n this document: evert Regulations: general Re uiatians F~ TIC MF ~ TC ~`R Minimum iot area ~s uare feet 5,500 None 2,500 x,500 2,500 None Nane Minimum lot wide Nave Nane 20' S0' S0' None Nane Minimum iot de th Nane None 5 Nane Nane None None 1VZinimum firont and setback ~0' 10' Nane Nane 10' None None Mir~imurn side and D' 0' G' None None None None Minimum setback between dv~eiiin s 10' 10'x` NIA NIA NIA NIA NIA Minimurr~ side and ad' scent to a street ~ 0' 10' Nane Nane 10' None Nane Minimum rear and 10' 1 1 None Nane None None Minimum ~rard abutting a residential use or NIA NIA 2 ' ' thstrict ~ 2D ~ 0 Densi d~eliin units er acre} 4 1 ~ 20 ~ 0 18 30 Maximum. FAR NIA NIA NlA 1.5 1.5 3.0 1.5 Nlinirnum residential unit size square feet} 1$~~ 1,400 Sao 500 0 750 750 Maximum lot covers e 70°Io 80°I~ 80°Io SO°I~ 85°fo 85°Io 90°Ia Minimum Landsca a area 30°l0 ~0°Io ~~°In ~0°Io 15°Io 15°Io 10°/0 Maxirnurn buildin hei ht 45' 45' S' G~' ~ DO' 100' 1 a0' i i * Minimum setback between tavvnhouse dweiiins ~attacl~ed singie fmiiy~ refers to groupings of units not individual units. Minimum. detached singie-family residentiai unit sire mad be reduced to 1,3D0 square feet for an Active Adult Retirement ~ouununit~, where such communities axe a~ia~red on an approved Deveiapn~ent Plan 1VIap see bite Design standards for required architectural features Page - ~  i ~ shall be excepted to establish the follo~vin additional restrictions or exceptions with respect to the coning classifications and use designations defined ~n this document: flustering tandardslDensity Transfer Non-Attached single-family reidentia~l units may be clustered within the F {dingle-Fan~i~y} coning di~tr~cts, pro~.ded the following standards are met: A, The n~a~irrYarr~ number of single-family units built in the F dingle-Family} ~onir~g districts may nat exceed 5,75 units. The total number of platted single-farr~ily lots shall be ~racl~ed by the developer as Individual ~"inal Plats are submitted for review. ~ ~5., shall lie excepted to establish the following thresholds for development; I~~~~LOPNI~NT T~IR~H~LI]: Maximum Number of ir~gie-Family ~Jnits 7,44 Avenge ingie-Fa~nrly Density {includes TH} 4,74 units er acre A~iIVIU NU~IVIBER IVIULT~-family Units* ~}2~4 Average Multi-fail Density units per acre le-family to u~it~-family Ratio* 77.2°Io F to 22.5°Io MF Maximum numb er of Units in 'Yawn Center * * 4,15 ~ inglewfamily to Multi-farr~ily Raba inciudin Town Centers ~4°Io ~ to 4% MF ~ minimum of 2,000 single-farnrly houses shall be canstructcd {permitted} prior to any multi-famil units being constructed. * based on average n~axln~u density allowed and Excludes Town Center. 1Vlaximurn number of M units {excludxr~ the Town Centers shall not exceed 2,204 units **Based an caning ~~0 units per acre in TCR and 1S units per acre rn TC} Page rt 7  i ~~~1~ n~~~t n ~t~ ~ uznet energy No~c: Except as clearly and specifically stated herein, the provisions of this document are subordinate to all or~.nances of general appllcat~on in the ~1ty of I]enton, Texas, The provisions of this docun~.ent do not modify or amend any ordinance of the pity of Benton, and have no applicability whatsoever outside the Dills of Denton MPC. The terms of this document serge as iimited exceptions to the general deveropn~ent standards of the pity of Denton, only to the l~ited extent specified herein, and are intended to be construed narrowly and restrictively. Any stated exceptions to specific sections of any ordinance or design standard shall apply only to the limited extent necessary to achieve the stated exception, and ail other requirements of such cited provisions that are not specifically excepted shall continue to apply in full force and effect within the Dills of~Jen~on MP~ Page -1  i Lnscp~ n~ Tree nopy Re~uir~ents: ~andeape and tree eanop~ requirements shad eornply v~th § 5 ~ 1 .7.~ of the ent~n De~elopn~ent Code with, the foilo~rin. e~ce~tion: of Dentom Laud~cpe and Tree canopy l~equ~remen#~ Percent Tree . Percen# Hills of~enton D~tr~ct~ anoPY Landscape Area dove e F dingle Family Residential ~~°Io 40°Io Tv~n ones Attached Ingle- o 0 TH ZOI~ I~ Family N~' ulti~fa~nily Reldenal ~o~Io 35°I~ Commercial ~~°l0 ~°lo ~ff~ee ~ 5°Ia 4~°I~ T ~'o~n Center Con~ercfal ~ °Io 2~°Ia TAR Tom Center Residential 10°Io ~~°I~ T~~~ 111I`~n1n~~ ~3.~,'~,.3,a.~,a. ~ha~l be e~cep#ed a~ nece~~ary aIlo~v the following: A minimum o~ one ~ 1 } tree per lot fer developments v~ith paein not to e~c~ed ~o feet on eente~, ,1.~..3.a.i.b. shall be excepted in i~ entirety from application in the de~e~opment, Pale - 2  i ~ce~~, firkin end ~rcultion R ui~~men#~; 5.13,10.x. ~.c. ~ha~i be excepted to allow the fo~owh~g: Surface parking lots with greater than 15D parking spaces or mare shall: i, Be d~vlded into separate areas by landscaped areas or walkways at least 1 ~ feet . width or by a building or group of buildings. ii, ~'rovide adequate pedestrian circulation within the site. Pedestrian walkways shall be d~xectly linked to entrances and the internal circulation ofthe buildings}. iii, A raised walkway, of a minimum un-obstructive width of ~ feet, shall be installed through parking areas for developments involving a gross floor area in excess of 44,~~0 square feet. ~3.1.1o.B.1.d. ~ha~ be excepted to avow the fotlowing: permeable paving is not rewired for those surface parking spaces that exceed the number of parking spaces required, for each addltlonai parking space that exceeds the number of parking spaces required; i, I sq ft ofparking lot tree canopy above and beyoa~d the mini~nun~ required, or ii, 1 ~°Io of additional parking lot open space shall be provided the parking lot, or iii. Permeable paving, or iv. The equivalent amount of open space ~i.e. 1,~~~ sq, ft, excess parking = 1,~0~ excess open space above and beyond minin~urn required} shall be provided within 1 of the parking lat, ar v, Any combination ofthe above, X35.1. x.4.8.1. ~ha~l be e~eepted to apply the following a~d~tiona~ standard in the ~ill~ of Denton IVIP: harking Structures, harking structures shall require approval of an Alternative Development plan meeting the criteria of Subchapter 3 5. ~ 3.5, song with an additional finding that the proposed architectural elevation is appropriate for the character of the area. 35,1.~O..~. ~ha~ excepted to apply the fo~aw~n ad~i~ional standard in the villa of Denton IVIPC: A 3 fact high berm with a n~axirriu~m 3 an 1 side slopes, lamed with one lar a free far eve 4~ ~ g rY linear feet, except along areas where parking front ofbuildins is permitted, 5.13.14..3, shall be e~cepte~ to allow the ollowin parking between the building and the street is permitted in all districts except Town tenter ornn~ercial and Town tenter residential, provided; a. That the perimeter parking is screened by any one or any combination of the follo~ing: i. A 3 high masonry wail, or ii. A minimum 4~" high tubular steel I wrought iron style fence with masonry columns evenly spaced approximately 4D' on center, or gage - 3  i iii, A wide landscape buffer with ~ n~inimurn 4~" high bey with ~ an 4 maximum side slopes. landscape area must contain one large tree far every 4~ linear feet. b. That the parking area between the building and the street shall reive; i. An additional °I~ tree canopy above and beyond the ~ °I~ required afar total of ~0°l0}. Additional canopy coverage cannot be credited towards other canopy requirements; ii. An additional ~°Io open space above and beyond the 7°I~ required for a total of I a°Io~. Additional open space cannot be credited towards other open space requirements; and iii, Parking lots shall provide interior planting islands between parking spaces at an average of every 1 ~ parl~ing spaces to avoid long caws of paned cars. The planting islands shall be a n~ini~num of 1 square feet and be protected by a G-inch high curb on all sides and a 1 ~-inch wide concrete step-off area adjacent to parking spaces, ~ large tree shall be planted within this planting island. gage - 4  LM i~~Y~~Fmi~y Architecr~~ .~d~rds: 3~.1.1.1.A.4. shall be e~ce~t~d to ~rav~~e Ehe foIIaw~ng ~dd~tianal re~tr~ct~an: ~overe~ front porches The depth of the porch must be at least depth to receive credit as an architectural feature, ~a.1.1.1.A. ~h~li b~ e~ce~ted to a~la~ the fallarpving de~zg~ f~a~ure a~ ~dd~tian~l apron: hovered front porches that extend along at least 0°Io of the front facade excluding the gage shall receive credit as two features. 3a.13.1~.1.. ~h~ll be e~cep~ed fa~aw~; douses with the same facade on either side of ~ given street ~represente~ by below} must be separated by minin~u~n ofthree lots. . ~w,~ .~~M..W.......... ,,.:.::~::~~w . A~~ r~.~ .,z X5.1. ~.1.E. shah ~e e~ceptcd a~ fa~a~v~: All walls, except gabled roof areas, which face a public street other than alley, must contain at least ~~°Io of the wall space in window, faux windows or doors. Faux windows must have shutters. ~.1~.1.1.~". shall be e~cepte~ as falla~v~: Prixnary entrance shall face a public street and siewall~ ar be a courtyard entrance, 5.1.1~.1.H., X5.1.13.1.1, and ~ ~5.1.1.1.~ shah he e~~pted a~ foIIo~~: I~. I of the surface area of the front side of the resldentia~ structure, excluding dormers, gables, porches, windows, doers, and bay windows, shall be masonry, The total percentage of masonry on the entire residential structure, excluding dormers, gables, porches, windows, doors, and bay w~i.ndows, shall be a n~inimun~ of So%. Masonry includes brick, stone, ar stucco. Page -  i I. ~o e~terivr co.bination of brick color, mortar color, and sand color shall be repeated wzthin ~0~ lineal feet on either side of the sa~.e street. AID co.pressors, utility meters, and plumbing clear~outs shall be screened from view of the public right-of-v~a~ using ~adcping ar fences, ~e~ht on piantin~ mate.a~ aver two growing seasons shall be a minimum of ~ inches. Far energy efficiency, Ali compressors sha11 be located an the east or north face of the house, unless doing sa would puce the con~pressar in the front yard, ar facing any street. ~~.13.1.1, ~h~ll be excepted to require the ~ollo~ving a~~itiona~ standards: K. garage access shall not be from a primary or side street, when alley access is mailable. L, each detached single-family dwelling shall have a ~ car enclosed garage ar larger. The minimum square footage of detached single-family dwellings shall be l,S~~ square feet of total Haar area that is air conditioned. 1. This requirement may be reduced to 1,3aa square feet far areas approved on the I)evelorrrent Plan Map far active adult retirement can~munity development, limited by private deed restriction to require that at least one person residing ~ each household shall have attained an age of fifty-fve X55}years. In such cases, a minimum of faun ~4~ of the architectural elements listed in `~A}' above must he utilized an each structure. N. At least 1 D°Io of the detached single family dwellings shall contain a ~ninin~um of ~,~a~ square feet of total Hoar area. that is air conditioned and utilize at least four ~4} of the architectural features listed in shave. At least 10°l0 of the detached single family dwellings shall contain a minimum of ~,~~a square feet of total floor area that is air conditioned and utilize at least four ~4~ of the architectural features listed in above, P. The minimum square footage of attached single~farnily dwellings shall be 1,4aa square feet per unit of fatal floor area. that is air conditioned, . The minimum. square footage aftwo-family dwellings shall be 1,20a square feet of total Haar area that is air conditioned per unit ~~,4~a square feet fatal}. R. All dwellings shall have a roof of slate, the or ~0 year co.asltlan singles with a weight of at least 24~ pounds per 10~ square feet, S . The roof pitch of the primary structure shall be ~_-1 ~ slope minimum. Page ~ d  i 1VIF ul~~i~n~: 5. ~.~.A.1, shad be excepted require the following additional ~ta~dard: fin-street parking, if permitted, shall taunt ta~vards required parking. one an-street parking space shall count as one off-street ~rl~in spa~ee. ~5.1.1~.~.A.1.~. shall b~ e~ccepted ~rarn ppl~eut~an in this development. ~.13.1.~.8.~. sh~l be excepted as fo~o~s: Eighty per cent ~S~°I~} of the surface area of all exterior malls, excluding dormers, gables, porches, windows, doors, and bay windows, shall be masonry, provided that f Oa°I~ masonry shall be required for the front side of residential strr~ctures, excluding dormers, gables, porches, v~indov~s, doors, and bay windows. asanry includes brick, stone, or stucco, Na one masonry element shall exceed 75°/a afthe entire fir~nt facade. Ilan-n~asoniy materials include v~aad. ~~.13.1,~.I~.1. shall be excepted as follows: Facade n~odulatianslbuilding articulation facades must be broken up to gi~re the appearance of a collectioa~ of smaller structures, Elements including, but not limited to, balconies, setbacks and projections, may be utilized to articulate individual units ar collections of units. Unarticulated ar windowless walls facing streets ar principle access lanes are not permitted. Page - 7  Lm x.1.1 ~ha~ ~e excepted to pvide the ~olloing ~t~n in a~ ~rpprvved on the Development ~l~n dap ~~r To~va tenter IVIu~t~~Fa~niiy de►ve~apment: Multi-family developments within Tawn tenter areas sha11 campy with the fallowing additional standards A. orientation, I . At least 7°Io of the front yard frontage shall have buildings within 1 a feet of the right-a way. buildings that are located within 3 a feet of the property line dj scent to front yard shall have at least 4a% of the ground story wall facing the street in window or door areas. . Parking areas sha11 not be located between the building and the street. 4. ~~-street parking, if permitted, shall count towards required parking, one on-street parking space shall taunt as one off street parking space. 5. Buildings shall be directly accessed from the street and sidewalk. sidewalks shah have a mmimun~, width of 8 feet along perimeter streets, and all other pedestrian walkways shah have a rniniun~. width of feet for A ~ninin~um of one ground. Haar pedestrian entrance must be oriented toward the street and include a parch. 8. Private garages nay only be accessed from alleys or parking tats. 9. Building firantaes greater than 1 as feet in length shall have recesses, pro jcctians, windows, arcades, ar other distinctive features to interrupt the length of the building facade. 1 Architectural Fet~xes. Fronts and street sides of bu~ld~ngs v~slble from public rights of way shall include changes in relief, such as columns, cornices, bases, fenestrations, and fluted .asonry, for at least l 5°Io of the exterior wall area 1 1. height and Bulk. Adjacent buildings sha11 have different architectural elevations. ~ 2. The top Haar of and building must captain a distinctive f Wish, consisting of a cornice, banding or other architectural termination. 13. Parking structures. The first scary adjacent to the street except that area needed far access must contain camn~ercial or retail space. Parking structures shall require approval of an Alternative ~]evlapment Play meeting the criteria of subchapter ~ .1 . , along with an additional finding that the proposed architectural elevation is appropriate for the character of the area, 14. Bu~ld~ngs greater than 3a feet m height shall have archltectural e~en~ents to break the height of the building facade. 1 . where passible, buildngs shall incorporate different raoflines. B. Building Materials, 1. windows shall be provided with trim. windows shall not be flush with exterior wall treatment. windows shall be provided with an architectural surround at the j atnb 2. Fronts and street sides of buildings visible from the public right of way shall be nan- reflective and shall be of woad, masonry, stave, decorative block, stucco, ~JQ board or other high quality material customarily used for the building style. Page - S  L .1.1.4. shall be excepted follows: 3.1.13.4 Town tenter Nan~res~dential and 1V1~ed Use Buildings. Design standards town center non-residential buildings or mixed-use buildings those that combine non-residential and residential uses and their lots shall comply with the fol~awing regulations, 3.1.13.4.x.10. shad be excepted as follows: Parking areas shall be located in parking garages or in surface dots behind buildings or on one or both sides Parking structures shall require approval of an Alternative Development Plan meeting the criteria of subchapter 351.5, along with an additional finding that the proposed architectural elevation is appropriate of the area, 35,13,13.4.8.x. shall be e~epted as follows: fronts and street sides of buildings visible from the public right of way shall be 1 ~~~Io masonry, excluding dormers, gables, porches, windows, doors, and trim, 35.13.13.4,, shau be excepted to add the following additional standards: [outdoor storage areas shall not be located between the building and the street, ~oa~ing docks are not permitted to be visible frarn the sheet, and rriay not be accessed directly from the street, Page -1 ~  i X35.13.13.5. and its ~ubsectians shad be excepted folla~s, which shaI~ gaver~ aver the e~is~g praviiaas in this development: ~5.1~.1.5 Large Scale development ltegulat~ons. Developments involving a gross Saar area in excess of 4a,a~~ square feet shall, comply with the basic Site Design Standards and canforn~ to the fallowing standards: building design shall contribute to the uniqueness of the development with predominant materials, elements, features, color range and activity areas tailored specifically to the sate and its context. In the case of a multiple building development, each individual building shall include predominant characteristics shared by all buildings the development, so that the development farms a cohesive place within the zone district or con~rnunity. A standardized prototype design shall be n~odi~ied as necessary to comply with the requirements of this subsection, Developments involving a grass floor area. in excess of 4a,aD0 square feet for a single user shall comply with the following standards: A. Drientation: 1. Architectural features an building facades that are visible from Lapp ~S$, Locust, ar anzerlLang loads excluding facades facing residential prapert~r that are screened by an eight-foot masonry wall and facades facing the side or rear of property zoned and used for commercial or industrial purposes} shall provide all of the following design features: a. Facade walls shall not have an uninterrupted length in excess of one hundred feet ~~aa~}. b. Facades shall provide the following at intervals no greater than one hundred feet ~1 aa'}, excluding elements provided in iterrr d Entryways}, below: ~ 1 } dolor changes, texture changes, and material changes within the walls, ~2} A change in wail plane no less than 1 in depth, extending a length of a minimum oftwenty feet {2a'~, and ~3} Variations in the top of the wall of a minimum of two feet in the height. c. Taps of wa11s shall have overhanging eaves ar horizontal elements extending na less than three ~3~ feet past; supporting walls, sloped roof element, cornice expre~sians, coping details or minimum twelve inches ~1~"} tall. d, Facades shall also provide at least one of the fallowing: ~1} all pane projections or recesses having a depth of at least ~°Io ofthe length of the facade, and extending at least a~/~ of the length of the facade, not to exceed one hundred feet ~1 aa'}. Pilasters projecting from the plane of the wall by a minimum of sixteen inches ~ I G"}. The use of pilasters to interrupt horizontal patterns, such as accent banding, is required. Canopies, awnings, ar porticos projecting a minimum of six feet ~6'~ from the plane ofthe primary facade walls, gage -12  L ~4} Repetitive orientation, including decorative applied features, such as wall- n~ounted light fixtures ar applied materials, Repetitive ornamentation shall be located with a n~.axin~um spacing of f ~ feet 0' Faux windowlfran~ed elements, e, Entryways, each large retail establishment on a site shall have clearly def~r~ed, highly visible cutan~er entrances. Stone is required to he used as a n~a~or portion of wall material each custorr~er entrance. f. The buildings shall have design elements that emulate the Hills of Denton signature feature. This includes building materials and architecturally can~patible light fixt~u~res. These elements should occur at entryways Architectural features an building facades that are facing residential properties and facades facing the side ar rear or properties zoned anal used for commercial or industrial purposes shall have the fallowing ele~ner~ts; a. ,A pattern that includes all of the fallowing elements at intervals of no more than one hundred ~1 ~a'} feet, hori~antally. The following pattern shall also occur vertically at least once within the height of the building, above ten feet ~ l a' } in height: ~ 1 } dolor change, texture change, and a change in plane, no less than in width, such as . offset, reveal ar pra~ecting pilaster with a stepped capital ar taping. b. Variation in the tap of the wall of a minimum two feet ~2' } change in height at maximum aftwa hundred feet ~2~Oa'}intervals. Peals, arches, ar other expressions of front wail form shall be used, c. Tops of walls shall have a cornice ar taping detail a minimum of twelve inches ~ ~ in height, 3. Sidewalk display and caxt storage. areas for customer loading or merchandise shall be clearly delineated, and shall not be lacated in front of any customer entrances, exit daar~s} or within f iftee~. feet ~ 15' } on either side of the daar~s}. 4, Permanent outdoor display, sales and storage. Merchandise nay be stored or displayed far sale to customers on the front or side of the building, only in accordance with this paragraph. a. The fatal square footage of all permanent outdoor storage, display and sates areas shall be limited to l0°Io of the footprint of the building, but shall in no event exceed ~O,Oaa square feet. Home l~nproven~ent stores, may not exceed 45,~aa square feet of outdoor storage and the 1 ~°I~ footprint restriction does not apply. b. Pemanent outdoor storage, display and sales shall be contiguous to the building and shall not be permitted within seventy-five ~7~'} feet afresidential property. c. The permanent storage, display and sales area shall be enclosed by a n~mhnu~n eight- foot ~S'} wall of columns ~~nu two inches wide, of like appearance to the building with wrought Iran or tubular steel fencing between, and topped by wrought Page -13  i iron or tubular steel fencing. No merchandise, other than trees, shall be visible above the ar fence. d. Seasonal outdoor display, size will be limited to ~ 1,Oaa square feet maximum. Dates far outdoor display v~ill be year round. ll~erchandtse may not exceed ten feet { 14' } in height except for trees, Rear Storage, Bulk merchandise maybe stored behind the building. The sides a~ad back of the storage area shall be screened with a chain link fence covered with a windscreen, except far any side or back that ~ is separated from a residential property by an eight-foot masonry wall and landscaped buffer yard, in which case additional screening is not required. Windscreens shall be maintained in good repair and free of tears. The rear starage area shall not be accessible to customers, iVlerchandise shall be stacked no higher than ~5-feet, or level with the top ofthe adjacent wall of the building, whichever is lower, and may not be stacked abQVe the height of the chain link fence, Wall and landscape bufferyard. An eight-foot masonry wa11 or back, stare split block or concrete cast to simulate such materials shall be constructed along the common boundary line of the adjacent residential property, or as close as practicable in the event of intervening alleys, easements or drainage charnels. If the large retail store properties and residential properties are separated by intervening properties under separate ov~ership that is less than ~0 feet wide, a wail shall be constructed along the property line of the large retail stare facing the residential property. 7. Pickup and Delivery. Pickup and delivery of merchandise, equipment or other items, shad not occur within I feet of residential properties. Loading darks must be located to the side or rear of the building unless the loading area is completely screened from the street, and loading docks shall be located more than 1 a0 feet franc residential property, Pavement nay be located within one hundred feet ~ 1 of residential property. S, Trash oliectivn and Compaction. Trash collect and pick up may rat occur within l0a feet of residential property and shall be screened from public view. 9. N~Cechanical equipment, ~a mechanical equipment may be located within 1 a0 feet of residential property. Mechanical equipment shall be screened from public view. Building IVlaterials: 1, Fronts and street sides of buildings, excluding windows visible from public rights-of~ way shall be non-reflective, and shall be constructed of wood, masonry, stone, concrete, decorative block, stucco, ADD board, or other high quality material customarily used, For purposes of this subchapter; ran-reflective means material with an exterior visible reflectance less than 27 percent. ■ Lim.estone or varying colors, sizes and textures ■ concrete -Architectural finish. Texture coated or textured and colored. Pale # t~  i ■ 1Vlasanry -brick ar decorative ■ Porcelain Tile ■ Galvanized metal panels or prefinished architectural metal panels of a neutral~earth tone color; ■ Painted siding of ~ warm, neutrallearth tone color in accent areas only; ■ E~FS or stucco of v~arm, neutrallearth tone color; ■ Accent colors of v~arm, neutrallearth tone range are required, but should be used in a limited manner ■ Natural metals such as but not limited to zinc and copper; ■ Natural mood, stained or painted; ■ hoofing tile, metal shingles and panels, or slate in galvanized or neutrallearth tone color C~raund mounted i~ght~ng or pedestrian level accent lighting 1s required. . StreetscapelPublic Spaces; 1, one square foot of Plaza or Public Space shall be required for every l a square feet of grass ground floor area, Plaza or Public Space maybe located anyv~here within The ~ilis of Denton, 2, Plazas or public spaces shall incorporate at least of the following ~ elements, which maybe located anywhere v~ithin The ill of l]enton. ~ a. Sitting space - t least one sitting space for each ~5~ square feet shall be included in the Plaza.. Seating shall be a n~inin~um of sixteen inches ~1 in height and thirty inches in width, Kedge benches shall have a minimum depth of thirty inches b. A mixture of areas that provide shade. c, Trees i proportion to the space at a rninirnu of ~ tree per SOa square feet. d. dater features or public ark. e, ~utdaar ea.n areas or four vendors. f. Planting areas 1n the sidewalk axe required, Pots ar above-grade planters are allowed, min.i.um of 1 ~ gallons. 3. each freestanding, laarge-scale development building shall have a i~iznum of 1 a~ square foot seating area, including permanent benches along the front sidewalk area. A minimum of one bike rack shall be included slang the storefront, benches and bike racks should be of an architecturally consistent design. D. Mechanical Equipment Screening: All mechanical equiprr~ent shall be fully screened from view from public on site ai public pedestrian spaces. Acceptable methods for screening ground mounted equipment include evergreen shrubbery, or metal or wood screen wall system. Acceptable methods for screening roof equipment include parapet height extensions or screening by sloped roof farms. Page ~ t 5  i E. Accessory Use; AlI accessory uses to large scale de~ela~.ent shah be architecturIy compat~~~e v~th tie main structure. Page -1 ~  Lo sales area. ~.14.4.D., including all subsections shall be excepted as follows, wl~ch shall govern over the emoting provision; Day care facilities having 13 or mare childrenladults. Two spaces per three {3}employees plus 1 loading space for every S children; a minimum of two spaces are required. 2. churches, temples and other places of assembly not specified elsewhere, One {1 } space per three {3 } seats within the main auditorium or one ~ 1 } space for every thirty-five { S} square feet of seating area within the main auditariun~ where there are no fixed seats; eighteen {1$~ lineal Inches of bench shall be cansldered a fixed seat. . golf courses. a. Regulation Course - fight {S} spaces per hale, plus additional spaces for auxiliary uses on the site set Earth in this section. b, Driving Range -One { 1 } space per tee, plus additional spaces for auxiliary uses on the site Set forth In tins section. c. ~iniatu.re golf courses -Three spaces per hale, plus additional spaces for auxiliary uses an the site set Earth in this sect~an~ 4. Hospitals. One and three quarters {1.75} spaces per patient bed. 5. Nursing and convalescent homes. One space per four {4} patient beds. Rest homes, homes far the aged, or assisted living. One { 1 }space per four ~4}patient beds ar one {1~ space per apartment unit. 7. chaols, elementary and junior high. One and one-half ~l ll~} spaces per classroom, ar the requirements for public assembly areas asset forth herein, whichever is greater. 8, High schools. One { 1 ~ space far each member of the Faculty and each en~playee, plus one { 1 } space for each six full-time student capacity, ar the requirements far public assembly as set forth herein, whichever is greater, colleges, universities and trade schools. One and aneWhalf { 1 I12} spaces per classroom, plus one { ~ ~ space per three students the school is designed to accommodate at one time, plus requirements for an-campus student housing, .14.4.F, shall be excepted as follows: Any spaces aver the required number of spaces shall be mitigated per the Access Parking and Circulation Requirements of this document, spaces provided on-street, or within the building footprint of structures, such as in rooftop parking, ar under-structure parking, ar in rnulti-level parking above or below surface lots, shall not apply towards the n~axiun~ number of allowable spaces ~.14~~,A, shall be excepted as follows: The amount of ofd street parking required shall be reduced by the following credit provided for on-street parking; one aff~street parking space credit far even one on-street space. Page -18 §.I.17.5. Ohl be excepted follows: The il~ustratinn f~~ exce~tio to tie effective area of ~gnage on perimeter fencing and e~~ n~~nu~nent ithi~. T~ and 1VIF d~str~cts i as fal~a~vs: .....~..m~~ t ..s. o- W S: . ~ ~ r ate, y, ..~~~~<< ..R ice.. ~ + . ~.n w owe r i + y. << _ < x. . ~m>a ~ ~ ugh,, nwn. c.V::,.,.~~ .'k'" '"<~ov a~rv, 3~ < t t'... s . ..""w'.'~'.S 'i# • .,..R. ....'Y .s. u~~ mow, w~.... m. y . . s": f kti r' . ,-:.ere ,,...a.... o .M ...mow. > , y~ .no-... d. ~ S~: p p..y ~%.3~ :x~~. 1xr ..t 5.~ .~Y. ~ •tt.~.. ~ v > a } . "1{. ...t < .v".. .v V.: v. . . . N '......t. ti....... ttd i. •n v ...>.....~.~<<w.~~ u .i.. ' ~ h..M....~.. t... ~n Page -19  Lm .~0.~.~.3. Ohl he excepted fallaws, and this prav~ian shad avern aver the carrespand~ fade p~rav~ian ~n this development: B~oel~ width. Double fronted lots shah be avolde~ except v~here essential to provide separation of residential development from. n~~or tragic ~.rteries or adjacent nonresidential activities or to overcome specific disadvantages of topagraph~ and orien.tion. ~`hrouh lots shall have a rninirnun~ average depth of one hundred ~ 140} feet. Page -  Lm ~5.~.~. ~ha~ be e~~epted follows: 11at, Double frontage: A lot having frontage on two nonintersecting sheets, s distinguished from a corner tat. 5.1.11.E shad be ~~ceptod a~ fo~lo~v~: Except for preliminary plats filed prior to the effective date of this subchapter, a preliminary plat shall become nail and void sixty months from. the date of approval by the Can~mission~ unless f final plat is fled and approved for a.ll or park of the proliinar~ plat within tiaat time. . within sixty ~~a~ months after approval of the final plat for the first phase of the development, a complete application for a final plat must be approved for the next phase of the development, continuing with each successive phase, until f~ puts have been approved for all of the land subject to the original preliminary plat in accordance this section, If the applicant fails to receive approval for a final plat for any phase of the development within the prescribed period, ar within any extension granted pursuant to section 3 . ~ ~ 1 F, the original preliminary plat shall expire far that phase and for all other phases far which a final plat has not been approved. If an approved final plat expires, the preliminary plat far that phase shall also expire. §,1.~1.F shall be excepted ~oIlo~vs: The Commission may extend a preliminary plat or any phase thereof for a period not to exceed twenty-four {24} months on the written request of the applicant. The request must be considered by the Camn~issian before the preliminary plat or phase expires and must document the reasons for the extension. In determining whether to grant a request, the camn~ission shall take into account the reasons far the requested extension, the ability of the applicant to comply with any conditions attached to the anginal approval, whether extension is likely to result in timely con~pletivn of the prod ect, and the extent to which any newly adopted regulations should be applied to the proposed development. In granting an extension, the commission naay hnpose such conditions as are needed to assure that the land will be developed in a timely fashion and that the public intexest is served, including compliance with one or more new adopted development standards, fore than one extension may be granted. Page - 2~ m m m m ~x~ibil D cho~l~: Dentan Independent schoal District ~DISD~ utilizes a preliminary multiplierlfactar of .75 students per single family un~t* h~ch 1s further drvlded as follows: 0.4~ ~-Elementary School 0.17 -Middle Schaal 0.18_- Iliool 0.75 =75~ students per 100 slf units The multiplier for multifamily developments varies from 0.1 S for a typical development to 0.6~ for a subsidized development. It is not anticipated that any of the multifamily developments X11 be subsidized sa the typical a.18 multiplier vas utilx~ed as follows; 0.10 -Elementary Schaal 0.05 -Middle chaol O.D3 - High schoal 0.18 ~ 180 students per 1000 slf units ~`S`auree.• ~e~e ~o~doway, Director o, f ~~an~i~g ar~d Tra~porta~ion - De~~on Indepe~d~rat Sc~aoo~ District The Hi11s afDenton is proposing a total of 5039 units X6,598 single-family units, x,204 traditional multi-family units and 4,14 rnultlfan~lly units w~thln the town center}. Although the above DADS factors vary up or down depending on ocia-economic and price paints, they are a gaol planning ind1cator an the number of ~choals that might be needed to support the proposed development. Based on the above factors, elementary Schaols~ 1.5 Middle schools and 0.7 High Schools will be needed to support the development. elementary shoals: 6,898 SF units x .4~ = 2,759 students MF units x .10 = 635 students 3,394 student 1650 student per schoal = schools ll~iddlc Schools: 6,895 SF units x .17 =1,173 students 6, 3 5~ MF units x .0 5 = 315 students 1,491 student 11,000 student per school =1. schools ~igl, schools: 6,895 SF units x .1 S =1,241 students 6,30 MF units ~ .03 = 191 students 1,31 student l ,DUO student per schoal ~ U.7 schools  LM energy ho~l Develo ~.~nt ponce t~: Acreage I~egr~~ree~~s. Elementary -12-17 acres, with 15 acres as ideal per DIED Middle - 2~ to 35 acres with 3~ acres as ideal per DISD High to be negotiated with DAD, 7 acres ideal per DIED ~atu~rus 'apac~~ie der BIS'~)s; Elementary - Students Middle -1,00 Students High - 2,000 students a~u~ ~ervie Area (~'c~~dr~ ~Ya~kers ar~a~ ~id~r~}; Elementary - 4-mile Radius Middle - 8.~-rnile Radius High T 9.5-mile Radius ~ia,~r~n~~n Wa~kir~ D~s~ar~ces: Elementary - Miles Middle - Z Miles High - 2 Miles a~rar~~n C'ommt~te ie ~T'~e Spend on ,~.I.S.B. bus}: Elen~enta~ry - Minutes Middle - 45 Minutes High - GO Minutes .~.~.5.~. "o-Bussing ~o~e" (Area Where Bus S'erv~ce nod ~'r~v~ded): Boundary established 2~-~n11es from home campus to student xesldence public roadlstret. students that reside -miles or more fram the campus axe eligible for bus services.  LM Ir~~e~~ela~io~ wit~~ ~V'~i~t~o~oods: ~ ~lernentary: o Nel~borhood shoals; ■ Closely tied and immediately adjacent to residential areas served ■ Incorpoxated with neighborhood facx~~ties -1.e. neighborhood parrs, community centers o Viand Case Relationships: . ■ Immediately abutting within residential developments ■ Primary access Parent Loop} off residential collector ■ Bus service access should be separated from primary access -preferably off of secondary site access ~i.e. fide street} • 1Vliddle School: o annnunl oriented Schools: ■ Located centrally to neighborhoad~ and community areas sez~ed * Incorporated with community facilities - i.e. can~rnunity parks, activity centers o Land ~Jse Relationships: ■ Adequate buffers required between imxn,ediatel~r adjacent residential land uses ~ i.e. park land, green belts, streets ■ Primary access off of residential or commercial collectors ■ Adequate separation betweea~ primary and secondary access ~ preferably secondary site access ~i.e. fide Street} . • High School: o Re~ianal oriented Schools: - ■ Located centrally to the portion of the district seared ■ incorporated with community or regional faclllt~es -1.e. community parks, regional parks, university facilities o Laid ~Jse Relationships: ■ generates traffic, noise, odor, light and other impacts that maybe incompatible with single family land uses ■ generally located at the fringe of commerciallretail nodes with direct connectivity to residential areas served - i.e. thoroughfare network, bicyclelpedestrian systems ■ Primary access off of commercial collectors or secondary arterials ■ Adequate separation between primary and secondary access -preferable secondary 1t~ access ~1.e. 1de Street ~ LandlSite Develo meat onslderations Re uiren~ents: ■ water fewer ■ Drainage ■ electrical Power ■ Natural C~as * Fiber Cablef Communications ■ Street Access  Lm s:~our doc~men~lor~inances1071zDb-0~~b option b.do~ ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEAS, PROVIDING FOIE A ~ON~N CHANCE FROM A NEIGHBORHOOD RESIDENTIAL ~ ~-2}, NEIGHBORHOOD RESIDENTIAL ~ ~NR-3}, NEIGHBORHOOD 4 ~NR-4~, NEIGHBORHOOD RESIDENTL~L NEIGHBORHOOD REST~]ENITAL ED USE ~ 2 ~1VRNIU~ 1 NEIGHBORHOOD RESIDENTIAL I~I~D USE , COERC~AL MIMED USE GENERAL ~C1Vi-}, PLANNED DEVELOPMENT BPD-12~}, AND RURAL RESIDENTIAL ~RD-} TO THE HILLS OF DENTON MASTER PLAN COIVIUNITY SHILLS OF DENTON MPG} ~ONIN DISTRICT CLASSIFICATION AND USE DESI~rNATION, FOR APPROI~VIATELY Z,21 ~ ACRES, GENERALLY LOCATED ON NORTH OF LOOP ASS, BEST OF LOCUST STREET, SOUTH OF [ILA~VI ROAD AND EAST OF BONNIE BRAE STREET AND LEGALLY DESCRIBED AS ~ TRACT OF LAND ITUATEI) IN THE J.A. BURNS SURVEY, ABSTRACT NO. 1 THE T. POLE. SURVEY", ABSTRACT NO, 999, THE C~AILOR SURVEY, ABSTRACT NO.45~, THE T. TORY SURVEY, ABSTRACT NO.25, THE J. COLLARD SURVEY, ABSTRACT NO. X97, THE . MAY SURVEY, ABSTRACT NO. Sal, THE J. STEART SURVEY, ABSTRACT NO 115a, THE F. MCI~ETTRICi~ SURVEY, ABSTRACT NO. 54~, AND THE E. PRITCHETT SURVEY, ABSTRACT NO. 105, DENTON COUNTY, TEAS SAII ZI~~,2~G ACRE TRACT BEING COMPRISED OF AND CONTAINING: ALL OF TEN TRACTS DESCRIBED TO DENTON L,P. BY SPECIAL T`Y DEEDS RECORDED AS INSTRUMENT NO' . 20~~-~ 1459, 2~a~~- 1~2~5, 200-1~2~4, ~~a-1214, ~~~G-~~~ 12, 20~~-593a7, 2D~~-57777, ~Oa-57774, ~a~~- 57974, AND 24~6~56 13, OFF7CL4L RECORDS Off` DENTON COUNTY, TEAS; ALL OF THAT CERTAIN TRACT DESCRIBED TO HARVARD . PROPERTIES, L.L.C. BY SPECIAL TY DEED RECORDED AS INSTRUMENT NO 244-19521, OFFICIAL RECORHS OF DENTON COUNTY, TIJAS; ALL OF THAT CERTAIN TRACT DESCRIBED TO RICHARD TEDRO AND FIFE BY TY DEED RECORI]ED IN VOLUME 1 ~ 54, PACE 5~, DEED RECORDS, DENTON COUTNY, TEAS; ALL OF THAT CERTA~N~ TRACT DESCRIBED TO RICHARD GLAIR TEDRO BY SPECIAL TY DEED RECORDED IN VOLt~ 148, PACE 7~ 1, DEED RECORDS, DI~NTON COCTNTY, TEAS; AND ALL OF THAT CERTAH~ TRACT DESCRIBED TO JAl1~E~ TEDR.O, TRUSTI~E BY DEED F GIFTS RECORDED IN VOL. 1975, PG, 79~, COL. 19 f V, PC, 799, C~L• 19 f V, P. V a/~, 'V'OJ..Ir 197 V, PC r V a5, 7 ~L.17J 4, PC.1 Lf7, VAL. 1794, PG. 129, VOL, 1794, P.131, VOL~ 1794, PCB. 1 DEED RECORDS, DENTON COUNTY, TEAS; PROVIDING FOR A PENALTY IN THE A~IUM AMOUNT OF X2,444.44 FOR VIOLATIONS THEREOF; AND PR.OVIDINC~ FOR SEVERABILITY, SUBORDINATION AND AN EFFECTS DATE, 442G} WHEREAS, Tarnlln Investments bas applied far a change xn zoning for approximately 2,12 acres from Naighharhaod Residential 2 ~NR.-2}, Neighborhood Residential 3 ~NR-~, Nei~borhaod Residential ~NR-4}, Neigh~arhaad Residential ~-G}, Neihbor~.ood Residential Mixed Use 12 ~~-12}, Neighborhood Residential 1Vlixed Use , Co~nereial Nli~ed Use General ACM-G},Planned Development BPD-120} and Rural Residential ~RD-5} zan~n d~tr1ct to tie H111s of Denton 1Vlaster Plan ConHunlt~ ~"Hills of Denton MPC"~ zoning district classi~eation and use designation as provided far in this ordinance; and  i s:lour docum~ntsl~rdinancesl~?IzOG-~~26 op~an b.doc HEREA, on October ~ 7, 2~~, the C1ty Council adopted an ordinance amending a portion of subchapter 35.7 and of the Denton Development Cade pertaining to 1Vlater Planned Camrnunities; and ' HEREA, an April 3, ~~~7, the City Council adopted an ordinance to voluntaril y annex appraxirntely 1,199 acres into the City of Der~tan. 'The 1,199 acres is P of the ~,12~ acres proposed as the Hills of Denton Master Planned Community; and HEREA, on May 9, ~~~7, the Planning and honing Commission concluded a public hearing as required by lave, and recommended approval of the requested change in coning, as further conditioned by them; and HEREA, pursuant to ~ , 7.1 of the Denton Development Cade, the Council finds that the health, safety or public welfare of the reside~.ts of the City of Denton be carripraised without concurrent submittal of the MPC caning Document and the MPC Development standards Document; anal HEREA, the City Council finds that the change ~ consistent v~ith the Denton Plan and the Develapn~ent Code, specica~ly including those findings set forth at ~~,7.1~,~ of the Denton Development Cade; N~ THEREFORE, THE COUNCIL THE CITE ~F DENTIN HERESY ORDAIN; ECTI~N I. The findings and recita~tians contained in the preamble of this ordinance are incorporated herein by reference and found to be true. ECTIN The coning district classification and use designation for approximately ~,1~~ acres of land described in Exhibit "A", attached hereto and incorporated herein the "Property"}, is hereby changed from the Neighborhood Residential ~ ~NR-~~, Neighborhood Residential ~ ~NR-~, Neighborhood Residential ~NR~4}, Neighborhood Residential ~ ~NR-~}, Neighborhood Residential Mixed Use 1 ~ ~I~TRMU-1 Neighborhood Residential Mixed Use Commercial 1Vlixed Use general ACM-C~~, Planned Development BPD-1 and Rural Residential ~RD~S} zoning dlstra.cts to the ~I111s afDenton MPC. Notv~ithstanding the above real property description, the property being rezoned includes all property to the centerline of all add scent streetrights-of=may. SECTION . The develaprrient af; the Property shall be in accordance v~ith the regulations and standards modified ar ecepfed by the Hills of Denton MPC a articular) p y described in the honing Dacun~ent and Development Standards Document attached hereto and incorporated herein a Exhibit "8,,, and shall be in compliance v~ith Concept Plan, Phain Plan, g and Conceptual ~ Density Distribution attached hereto and incorporated herein as Exhibit "C" In addition, the Hills of Denton MPC shall provide for the planning of Denton Independent school District ~"DISD"~ schools in accordance DISD guidelines as generally set forth i~ Exhibit "D" attached hereto and incorporated herein by reference. All other provisions of Chapter 3 not  i s:lour ~ocu~rentslordinances1071~~b~0~~6 option b.~oc specifically excepted by the Mills of Denton MPS shall remain in full force and effect. The Development Plan Map approval is being deferred and gill he subsequently approved on a phase-by-phase basis, in accordance with the standards approved herein, utilizing the procedure set forth at 5,,4 of the Denton Development ~vde. oever, the land uses described by the attached dills of Denton MPS ~onir~g Docut~ent shalt not be permitted in any given phase, unless aid until the Development Plan 1VIap far that phase has been approved in conformity v~-ith the terns of this ordinance. ETI~N 4, The pity's official zoning map is amended to show the change in zoning distnct class~ficatlon and use des~gnatlon to the dills ofDenton 1VIPC as provided herein. ETI~N . If any provision of this ordinance or the application thereof to any person or circumstance is held invalid by any court, such lnvalld~ty shall affect the valrchty of the provisions or applications, and to this end the provisions of this ordnance are severable. ~ ET~~]N The terms of this ordinance are subordinate to an other ordinance of the y pity of Denton, and any conflicts are intended to be resolved in favor of the other ordinance, unless such conflicting provisions are specified and expressly excepted by this ~~rdinance. ~TI~~ 7. Any person violating any provision of this ordinance shall, upon conviction, be dined a suns not exceeding $~,~a~.aa. Each day that a provision of this ordinance is violated shall constitute a separate and distinct offense, ETI~N 8, This ordinance shall became effective fourteen X14} days from the date of Its passage, and the pity Secretary i hereby directed to cause the caption of this ordnance to be published t1ce 1n the Denton Record-chronicle, a daily newspaper published in the pity of Denton, Teas, vtrithin ten ~ 1 days of the date oi' its passage. PASSED AND APPR~ED this the day of , ~4~7. PERRY R. cNEII.,L, MAYOR ATTEST ; JEER ALTER, CITY E~RETARY BY: APPR~vED AS T~ LEGAL F~ ; EDWIN . NYDE CITY AT RNE~ E~chi~it ~ Hi~~ ~f ~~~t~r~ BEING a 2120.6206 acre tract of land situa#ed in the J.A, Burns Serve Abstract No. ~ 0t the T. P0il~ Serve 7 Abstract N0.999 Yr ~ ,the V, Ga~1or Survey, Abstract No, 482, the T. Toby Survey, Abstract No. 288, the J. Collard Survey, Abstract IyO. 297, the III, a Survey, Abstract No. 807, the J. S#e~rart Serve Abstra ~ y, ct No, 1 ~ 50, the F. I~cKe#trick Survey, Abstract 1110, 846, and the E. Pritchett Survey, Abstract N0. ~ p25 Den#0n County, Texas, said 2129.62~G acre tract being comprised 0f and containin ;all of ten #rac#s described to DENTIN L.P, b g y Special 1~1larranty deeds recorded as I nstrurnen# No's. 29QG~2~ 489, 2006- ~ 2208, 20061224, 20061 ~ ~ 2006553 ~ ~ 2006~b9307, 24~fi~57777, 29p6-57774, 20D6~8797a, and 2906,56316, Cfflc~al Records 0f Denton County, Texas; all 0f that certain tract described to HARVARD C.. PR~PERTlES, L.L,C, by Bpecial Uvarranty Deed recorded a Instrurr~ent N0. 20a6- ~ 952 ~ , ~fhcial Records of Den#on County, Texas; all of that certain tract described to Richard Tedrow apd wife by Vvarranty Deed recorded in Volume ~ ~ 54, Page 836, Deed Records, Denton COUn#y, Texas; all 0f th~a# certain tract described t0 Richard Clair Tedrow by Special V1larranty Deed recorded in VOi~,r~e 1028, Page 751, Deed Records Denton County, Te~ces; and all of that certain trac# described t0 James Tedrow, Tres#ee by Deed Cf Gifts recorded in Vol. ~ 978, Pg. 79fi, Val. ~ 9?, Pg. 799, Vol. ~ 978, P .802 Val. ~ 978, Pg. 805, 1101. ~ 794 P . ~ Vol. 179 ~ ' ~ 4} Pg. 129, Val. ~ 794, Pg. ~ 31, Val. ~ 794, Pg. ~ 33, Deed Records, Den#or~ County, Texas, said 2120.6206 acre #ract bein mare particularly described as foil0ws. ~ 0 ~~~I1~~N~ at the southwest end of a corner clip at the intersection of the west line of ~.Nl. 2164 with the north line of LOOP 288; THENCE slang the north line 0f LC CP 288 the fall0v~ri ng: S 87°37'05" ~11J a distance 0f 392.84 feet; 88°3'31" vl! a distance 0f 207,47 feet; S 79°52'15" a distance of 295.78 feet; S 80° 02'08" 1JI! a distance of ~ 6.70 fe etr S 80°40'39" Vv a distance of 308.99 feet; . S 77°39'53" Uv a distance of 307.96 fee#; 7°47'53" X11 a distance of ~ 02.67 fee# to the beginning of a curve to the left which has a central angle 0f 07°12'38", a radius 0f 5849.55 feet,. and a chord which bears S T 5° 15' S5~ 1JII - 735.67 feet; Page ~ of G vl~ith said curve to the left, an arc distance of 73~. ~ ~ feet; ~ 6~°39'20 vl~ a distance of 39.41 feet; 7~°49'3" vV a distance of 391.38 feet; 14°~~'~" vV a distance of 4~ 9.3~ f eet; fi9° ~ 3'2~" 111 a distance of ~ 7'g.fi feet to the beginning of a curve to the right which has a central angle of ~ ~4° ~ 9'~9", a radius of 58~ 9.85 feet, and a chard which bears ~0°32'3" VIII ~ ~ 387.25 feet; vVith said carve to the right, an arc distance of ~ 399.80 feet to the southeast career of that certain tract described to University of North Texas by deed recorded in Volurne 498fi, Page 999, D eed Records, Denton County, Texas; THE~C D~ °23'3" ~ deparking the north line of aforementioned L~~P 238 and slang the east line of said University tract, a distance of ~9Q~.~ ~ feet to the northeast corner of said University tract; THENCE N 88°43'2S" ~!V slang the north line of said University tract, a distance of 4~ 82.9 feet to the northwest corner of said University on the east side of an aspf~alt road knavun as Bonnie Brae Street.; THENCE 1V 9a°23'{44" E with the east side of said asphalt road, a distance of ~158.T0 feet; THENCE N a~ °5'21" E a distance of 39.8 feet to the south line of that certain tract described tQ Homer Vllalter by deed recorded under County Clerk file Na. 95-000309, Rea! Prape~y Records, Denton County, Texas; THENCE 89°30'32" E slang the south line of said vUalter tract, a distance of fi24.51 feet to the southeast c arner of said UValter tract; THEI~ICE N 01 °D4'50" E along the east line of said waiter tract, passing the northeast corner thereof, also the southeast corner of that certain tract described to Ruby Finch by deed recorded in Volume ~9~, Page 547, Deed Records, Denton County, Texas, and continuing, slang the east line thereof, a distance of ~ 704.5 feet to the northeast corner of said Finch tract; THENCE along the north line of s aid Finch tract the following: N ~°09'02" 1JI~ a distance of 498.18 feet; N 00°55'2" E a distance of 185.30 feet; Page ~ of G  L~~ N 88°29'~ 1IU passing the northwest line of said Fi nth tract, also the northeast corner of that certain tract described to Schertz by deed recorded under County Clerk File No, 98851, Real Property Records, Denton County, Texas and continuing, along the north lino thereof, a distance of 154.54 feet to the northwest career of said Schert~ tract, near the middle of aforernentianed Bonnie Brae Street; THENCE along ar near the middle of said Bonnie Brae Street the followin 9 N ~~°84'05" E a distance of 932.29 feet; N 01°35'23" E a distance of 1003.38 feet near the intersection of the middle of Bonnie Brae Street with the middle of Canter Raad, at the northwest -corner of the aforementioned DENTCN 288 200fi-517'7 tract, in the east line of that certain tract described to rancho Vista Development Company by deed recorded in Volume 2fi95 Page 4fi5, Deed Records, Denton County, Texas, THENCE 89°32'321' E along the east line of said Rancho Vista tract, near the middle of Canter Road, a distance of 912.02 feet; THENCE N 00°g3'28" E continuing along the east line of said Rancho Vista tract, near the middle of Canter Road, a distance of 25.01 feet to the southwest carnet of that certain tract described to Brewer by deed recorded under County Clerk File No. 94~ R00~5115, Real P raperty Records, Denton County, T exas; THENCE 89°32'45" E along the south line of said Brewer trac#, the south lire of that certain tract described to Stewart by deed reto~ded in Vol. X99, Pg. 7, the south line of that certain tract described to Hatridge b~ deed recorded in Vol. 599, Pg. 9, the south line of that certain tract described to Roberts by deed retarded in Vol. 3119, Pg. 213, the south line of that certain tract described to IVlitchell by deed recorded in Vol. 529, P . 9 the south sine of that certain tract described to Rae b~ deed retarded in vol. 5?~, Pg. 414, and the south line of three tracts described to Peppler by deeds retarded irr Voi, 2398, Pg. 158, Vol. 8, Pg. 2512, and Val. 4218, Pg. 25fi9, Deed Records, Denton County, Texas, a distance of 2101.07 feet to the southeast carver of said Peppler Vol ~ 42~ 8, P g. 2559 tract; THENCE N 00°28~~2" E along the east sine of said Peppler Vol, 4218, Pg. 2Gfi9 tract, a d~stante of 88.18 feet to a 3~4" iron tad found far corner at the northeast corner of said Peppler Vol. 428, Pg, 25fi9 tract; . THENCE N a9°04'2" E along the east terminus line of Chinn Road, the east lines of those certain tracts described to Yeatt by deeds retarded in Volume 521, Page 43 and Volume 584, Page Gfil, Deed Records, ~ Denton County, Texas, the east line of that certain tract described to Souls by deed retarded in Volume 3151, Page 0~G0, peed Retards, Denton County, Texas, and the east line of the aforementioned Rancho Vista tract, a distance of 2649.30 feet to a 518" iron tad found; P~g~3offi  - ~ i TI~EIVCE 1V III continuing along the east line ~f said Rancho Vista tract, a distance of 539,4 feet to a fence past; THENCE N 02°2$'55 1 continuing slang the east line of said Rancho Vista tree#, a distance of 985,89 feat to a 3" metal fence corner post at the northeast corner of said Rancho Vista tract; - i TI~ENCE N 88°54'04 along the north ~ line of said Rancho Vista tract, a distance of ~ 91,41 fee# to a 3" metal fence comer past at the southeast corner of that certain trec# described to Erandenberger fay deed recorded in Volume 880, Page 015, Deed Records, Denton County, Texas; THENCE N 00°2'20" E along the east line of said Brandenberger tract, a distance of 42.52 feet 3" metal fence corner past at the southwest corner of that certain called 89.00 acre tract descrilaed to ferry Nelson Trie#sch fay deed recorded under County Clerk Flle No. 200-R006~ 523, Rea! P roperty Records, Denton Caur~ty, Texas; THENCE 89°07'5" E departing the east lino of said Brandenberger tract and aiang the south lane of said 80.80 acre tract and the south line of that certain called 90.02 acre tract described to 1. . T'rie#sch Family Trust by deed recorded under County Cleric File Na. 9S-~~ ~ 2292, Rea] Property i~ecards, Denton County, Texas, distance of ~ 838.29 feet to a 3~ ~ 12" metal fence earner past; THENCE con#inuing slang the south line of said 90.92 acre trac# the fallowing: 88°41'~ 1" E a distance of 245.52 feet to'a steel fence corner post; N D3°25'52" E a dis#ance of ~ 44.80 feet to~ a 112" iron rod fund for career; 8849'43" ~ a distance of ~82a90 feet to the sa~~theast corner of said 9Q.a2 acre tract; THENCE N 04°20'44" IIV along the east lire of said 90.92 acre tract, a distance Qf 582.00 feet to a ~l2" iron rod found at a fence corner post in the south fine of that certain First Tract described to M. Ronnie Trietch by deed recorded under County Clerk File 1Va. 93-1~00fi8820, Real P raperty Records; Denton County, Texas; THENCE 89°02'8" E aiang the south line of sand First Tract passing the southeast corner thereof, also the southwest corner of that certain tract descrifaed to Rachel Trietsch Bartel by deed recorded in Volume 25Q8, Page fi8~, Deed Records, Denton Caun#y, Texas, and continuing aiang the auth line thereof, a distance of 3~~~.72 feet to a capped 518" iron rod marked "CARTER BI.IRI.~" found in the west line of F.Nf. 2 ~ 54; THENCE 00°49'14" E along the west line of said F,II~1.21G4 a distance of X099.93 feet to the northeast corner of that certain trac# descrilaed to North Texas Mate university by deed recorded in Vafume 842, Page 5G9, Deed Records, Denton County, Texas; Page 4 of fi  i THENCE departing the east iine of said F.M. 21 and along the north ling of said University tract, the follav~ring; N 89°02'~7't w a distance of 559.fi9 feet to a brass disk marked "Prop Car" found for garner; 1V 00°50'41" a distance of 19~7G feet to a brass disk marked "Prop Cod' found far Garner; N 89°x0'42" 111 a distance of 1189.82 feet to a brass disk marked ~Pr~p Cor" found for career at the narkhwet Corner of said University tract; THENCE Og°49`51." E along the west line of said University tract, a distance of 559.8 feet to a brass disk narked "Prop Car" found for corner at the southwest corner of said University tract THENCE 89°Ofi'18" E along the south fine of said University tract, a distance of ~7~9.38 feet to the afarementianed west fine of F.M. 216 THENCE along the said vuest ii ne of F.M. 21 fi4 the following: OD°5D'26" E a distance of X37.73 feet; 10°28'1 vl! a distance of 101.98 f eat; DO°50'22" E a distance of 200.OO fe et; 12°U8'S8'" E a distance of 101.98 feet; as°50'22" E a d~Stane of 849.77 feet; 07~41'28n a distance of ~ feet; 00°50'23" E a distance of 254.00 fe et; 49°22'14" E a distance of 101,20 fe et; 0454'23" E a distance of 13~ 2.37 feet; . 44°5~'3" E a distance aft 185.80 feet; 1444'34" vl~ a distance of 99.54 feet; 41°44'27" E a distance of 1 fi.87 feet to the northeast Garner of that certain tract described to Ker~netl~ Nelson by deed recorded under County Clerk Fife fro. R4D48942, Real P raper#y Records, ~entan County, Texas; PageSof~ THENCE N 89°~S'~" ~11I along the north line of said Nelson trac#, a distance of 4G8,8~ feet t0 the norkhvuest comer of said Nelson tract; THENCE 00°4~"! 0" ~ along the crest line of said Nelson tract, a distance of 8?G.9~ feet to the so~thwes t corner of said Nelson tract; THENCE 89°50'31" ~ aiong the south line of said Nelson tract, a distance of 48~.~0 feet to tie aforementioned vest ! in of F.I. 4; THENCE along the said west li ne of ~.M. 2154 the foll0~ving; Oo°43'02" 111 a distance of 5D2.28 feet; oG°2~'~ 3" V1f a distance of ~ 00.44 feet; 40°4~'S0n UV a distance of X00.02 feet; 44°58'4" E a distance of ~ 00.42 feet; 00°40'43" a distance of 400. ~ 2 f eet; 09°04'23'f ~V a distance of 101.09 feet; 00°48'43" 1~ a distance of 299.88 feet; 07°4~'3~ ~ a distance of ~ 01.63 fe et; 00°42'49" 1111 a distance of 238.4 f eet; OQ°41'30" 1 a disnce of 1840.96 feet; 01 9" 1111 a distance of 385.0 f eet; THENCE 39° ~G'0~"111! departing the said crest line of F,M. 54, a distance of 105.5 feet to the ~DI~fT ~F ~~~l~~~~~ and containing 92,374x235 square feef or 2120.6206 acres of land, more or less. 8earir~gs are bawd u~or~ ~ha~ certain called 748 983 acrd track dascr~bed irr j~cla~ 1Narrarr~y deed recordad as lnsfrrrmer~# Flo. ~~OS-9~94~, Ol~cial Records of Derr#or~ County, Texas. P~~urn & Partner, LLB 3445 Highland ~d, site 285 l~]allas, Te~~S ~~14} 3~$-300 www,met~c~urveyor.com Page ~ ~f 6  i [~R~I~Y~1~' ~ERTfFlCAT~,~ The farego~ng description is a result of actual on-the~grour~d surveys made under my personal supervision end a compilation a~the~dee~s referenced tf~erein.~ Jahn R. Piburn, .fir. Registered Professional Lard Surveyor Registration No. 8g Piburn Partners, LLB 3445 Hiii~r~hlaTn~yR~~, Ju}iRf~ep z05 ~Rll~~r 1 ~ihGi7 I ~L.LU E~~~bit ~ ~ ~ ~ ~nin ant 3 general Note: Except a clearly and speci~icall~ stated herein, the provisions of this document are subordinate to ail ordinances of general application in the its of Denton, Texas, The provisions of this document do nat mvdif~ or amend and ordinance of the pity of Denton, and have no applicability whatsoever outside the Hills of Dentan 1VI~' The terms of this document serve as limited exceptions to the general zoning standards of the it of Dentan, only to the 1~n~1ted extent specified herern, and are intended to be construed narrowly and restrictivel . stated exceptions to specific sections of and ordinance ar land use standard shall a 1 onl to the ' ~ pP ~ ~ lxn~rted extent necessary to achieve the stated exception, and all other requirements of such cited provisions that are not speci~tcall~ excepted shall continue to apply in full farce and effect within the Hills of Denton MPS, Page -1  i 3~., shl~ be excepted as fo~~o~vs: Upon review and approval of detailed Develapn~ent Plan Map for each phase, locating proposed land uses in a zoning category format, identifying site access, connectivity, and general public improvements, providing a table showing all the land uses, including the total acreage of each proposed land use and the total acreage of the project, and showing boundaries reflecting the phasing plan in conformity with the requirements otherwise associated with a Development Plan ~.p, pursuant to ~entan Development fade 35.3.4., then only thane uses listed in the tables below shall be permitted in each phase of the Hills of Denton development in the areas so desigr~~,ted an the concept Plan Map and Phasing Plan map. No use is permitted in and phase until the Development Plan Map far that phase has been approved, consistent with these defined uses and restrictions. ~f there is a question a to whether a use not listed below is permitted, the Director of Planning shall make a detern~~nat~an whether the use 1s pern~ltted or prab.~blted. ~ Ingle Pauly Resldent~l TAI Town. Haines Attached dingle-~`amily~ ~'IF Multi-family Residential C' ona.~nerc~al ~ office TIC Town eter commercial TAR Town tenter Residential Permitted use Table: Residential Laid Use Cate arses F TAI MP ~ T~~ TAR A ieulture HL~11} HL(11} HL,(11} ~II,~1~} HL~11} HL~(11} ~IL(11} Livestock ~iL ~ N N N N N N din ~e Fanul Dwellin s P~ P N N N N N Accessory Dwelling ~Jruts ~ N N N N N N HL 1 Attached Sin le Farr~il Dwellings SUP P HL(1~} N N P P Dwellin s Above Businesses N N P P N P P Livelwork Units ~ HL 5 P P N P P Du lexes N P N N N N N ornmuni Homes for the Disabled P P P P N N P Cx~ou Haines N N SUS N N N SUP Multi-Fan~il Dwellin s N~ N P N N P P Manufactured I~ousin Devela menu N SUP SUP N N N ~ P = Permitted, N - Not Permitted, ~i]P = S ecific Use Pet~mit Re ~it`ed, ~ _ ~,i~nited as defined on a e ~ of this section - ~  i ornmercial iJse~ TH ~ TCC TCR Home ~ccu ation P P P N N P P Sales oI"Product Groom on Site N N N P N N N Hotels N N P P ~ P P Motels N N N P N N N Bed and Breakfast N N P P SUP P N Reta1~ Sales and Serv1ce N N HL 6 P P P P Movie Theaters N N N SUP N P SUP Restaurant or Private Club N N HL~} P P P P Drive-throe h Pacili N N SUP P P N N Prafessianal Services and Office N N Hf. P P P P Quick Vehicle ervic~n N N SUP P P N N Vehicle e air N N N P P N N Auto and RV Sales N~ N N P P N N Laura ~'ac1l~ties N~ N P P P P P E uestrian Facilities SUP N N N N N N Outdoor Recreation P P SUP P N N N Indoor Recreation P~ P N P N N N Ma `ar Event Entertainment N N N SUP N P N Commercial Parkin Lots N N N P P P P Administrative ar Research Facili N N HL 4 P P N N Broadcastin of Praductian Stadia N N HL 4 P P N N Sexuall Griented Business N N N N N N N Teen ar Uses HL 9 HL~9 HL 9 HL 9 HL 9 HL~9 HL 9 P = Permitted, N = loot permitted, SUP = ecific Use Permit ~e aired, =Limited as defined rnn a e 4 ofthis section Indr~~~rYal Land Lase ~a~e ori~s SF TH MF C ~ ~'CC TR Printin I Publishin N N N P P N N Bakeries N N N P P P P Manufacture of Non-odoriferous Faads N N N N P N N Feed Lots N N N N N N N Foad Pracessin N N N N N N N Li ht Manufacturin N N N N ~ N N Hea Manufactarin N N N N N N N wholesale Sales N N N N N N N wholesale Nurseries HL(12} HL(f2} HL~1~} HL(1~} HL~~2} HL{12} HL(12} Distribution Center N N N N N N N Wholesale Stara a and Distribution N N N N N N N Selfi~service Stara e N N N N SUP N N Co~.struction Materials Sales N N N N N N N Junk Yards and Auta v~reckin N N N N N N N Kennels N N N N N N N Veterinary Clinics N N P P N N N Sanitary Landfills, Commercial Incinerators, N ~ N N N N N Transfer Station Gas wells SUP SUP SUP SUP SUP N N HL 8 HL~} H S HL~$} HL 8 P = Permitted, N ~ Nit Permitted, ~[~P = ecific [use Permit Re aired, L(~ = Limited as defined on a e 4 of this ~ectien P~~~ ' ~  Lm I~~ti~u~io~~i Land ~Jse Cate ~ri~s ~ TH ll~~ Qf ~ Basic Utilities PII~(7} 7} HL 7} SUP SUP N N ~ Ser~ces N N P P P P P Parks and en ace P P P P P P P Churches P~ P P P P P N Semi ublic, Halts, Clubs and Lodges SUP S~JP P P P P N Business l Trade School N N HL 4} P P N N adult or Child Da Cage ~ SUP SUP P P P P N Kinder artery ~lementa chooi P P P N N N N ~Vllddle School P P ~ N N N N iii h School N N SUP N P N N Colle es N N P P P P P Hos i~al N N N N P N N lderl Housin N ~J~P P N N P P N~edical Centers ~ N ~ ~ P p ~ Cemeteries N N N N N N N iVlor~uaries N N N P N N N P = Pernvtted, N = Not Permitted, SUP = S eei~ic Use Permit Re ~ire~, ~ = Limited as defined an e 4 of this section. P~~~ - ~  i 5.5.. h~li be excepted to prade the fallowing additional limitation with respect to the zani~t classifications and use designations defined by tb~is document: L{ I } ~ Accessary dwelling units are permitted, subject to the following additional criteria: I . ~'1~e proposal must conform to the overall maxinlurn lot coverage and setback requirements of the district. 2. The maximum. number of accessory dwelling units shall not exceed 1 per lot. 3. The maximum gross habitable floor area {CH~A} of the accessory residential structure shall not exceed 50°I~ of the CH~'A of the primary residence ors the lot. 4. Cne additional parking space shall be provided that conforms to the off street parking provisions of the Denton Development Code. AIL{2} = Limited tna two {2} animals an parcels one ~ 1 } to three} acres in size. Additional animals mad be added at rate of one per each acre aver three, HL~3} = Limited to sit down only, and na drive up service permitted. Limited to no rr~ore than 10~ seats and no more than 4,~~a square feet of restaurant area. ~L{4} ~ Uses are limited to no more than 1 ~,~0~ square feet of gross Hoar area. HL{5} =uses are limited to no mare than I,S~O square feet of grass floor area per lat. AIL{6~ =Uses are limited to no more than ~~,~00 square feet of grass floor area per use. Square footage may be larger with approval of a Specific Use permit {SI~TP~. HL{7} = If propose use is within ~~0 feet of a residential zone, approval is subject to a ecific Use P permit. HL~S} ~ Must comply with the provisions of ~ 35.~~ afthe Denton Development Code, Cos well Drilling and Production. ILL{9} =Must meet the requirements of ~ ~~.12,~ afthe Denton Development Code, Temporary Uses. ~L{ 10} ~ Limited to a maximum density of 1 ~ units per acre. AIL{ I 1 } =Permitted on undeveloped parcels ar future phases ofmulti-phased developments. Crops such as had or row cxops are perimitted. Livestock shall be limited to tracts of 5 acres or larger. HL~ l 2} = A1lawed as ternparary, non retail use benefittrng the ~ii11s of Denton develaprnent. Page - 5  I ~5., shall be excepted to est~b~YSh the fo~lawin a~~iti~nal restrictYan or exceptions with respect to the ~oning classifications auk use designations defined Yn this document: ener~i Regulativus: ~ener~l a ulations F TH NIF ~ T~ TAR Minimum lot area ~s uare feet} 5,500 None 2,50 2,500 2,5~~ None None Minimum lot width None None 20' SU' S0' None None Mirlin~,um lot de th None Nane None None None None N1ini_mum front and setback 20' 10' None Nane 10' None None Minimum side and 0' 0' None None None None NliniYr~um setback between dellin s 10' ~ 0' * NIA NIA NIA NIA NIA Minin~ui~. side and ad' scent to a street 10' 10' None Nanc 1 D' Nane None Miriir~aum rear and ~ 0' ~ 0' 1 D' Nane None Nane None Minin~un~ yard abutting a residential use ar NIA NIA 20' 20' 20' ~ district Density ~dwellin units er acre} 4 i 2 20 0 ~ 1 S ~ 0 Maxin~urr~ FAR NIA NJA NIA ~ . 5 1.5 ~ . 0 1.5 Minimum residential unit size square feet} 1,800 1,4~~ 500 50~ 4 750 75~ Maximum lat covers e 70~Ia ~0°I~ SD°I~ 80°Ia SS°Ia 85~Ia 9~°Ia Minimum Landsca a area 30~/a 2~°/0 ~0°/0 20°la ~ 15°Ia 15°Io 10°Ia Maximum bu11du1 het ht 45' 45' ~5' ~5' 10~' 100' 100' * Minimum setback between townhouse dwellings attached single family} refers to groupings of units not individual units. 1Vlinimutn. detached single-family residential unit size nay be reduced to 1,300 square feet for an. Active Adult ~.etireinent community, where such communities are a1loed on an approved Development Plan Map see bite Design standards for required architectural features} Page - ~  i shall be excepted to estabi~sh the follov~~ug add~tiona~ restrictions or exce tion,s with A respect to the ~vnin classifications and use des~atio~s defined in this document: flustering tandardslDensity Transfer Nan-Attached sinle~fan~iiy residential units nay be clustered within the sF Sin le-Famil zany ~ ~ ~ districts, provided the fallowing standards are met: A. The maxin~un~ number of single-famliy units built in the F dingle-Farnily~ zoning districts may not exceed 5,75 units. B. The total number of platted single-family lots shall be tracked by the developer as individual Final Plats are submitted for review. 5., shall be excepted to establish the follov~in thresholds for development: DEVEL~p1VIE1~T' T~IRE~LD: 1VIaxlmun~ Number of Single-Fail Units 7,44 Average Single-Family Density ~inc~udes TH} x.74 units er acre p NIAIV~~JIVI IIIUMBE~ OE 1VIU~T~-farnlly Un1ts'~ 2,24 Avera eMulti-family Densit 2D units er acre Single-family to Multi-family Ratio` 77.2°Io to MF Maximum number of Units in Town Center 4,153 Single-family to Multi-family Ratio ~includin Town Centers 54°Io SF to 4°Io MF A minin~un~ of 2,~4~ single~family houses shall be constructed ~perrnitted} rior to an p Y multi-fan~ly units been constructed. Based on average maximum density allowed and Bxcludes Town tenter. Maximum number of 1VIF units excluding the Town Center} shall not exceed 2,24 units ~"~Based on honing ~3Q units per acre in TCR and 1 S units per acre in TCC} ~.5. shall be excepted to establish the follov~in DEVE~~pENT pLA. 1VIAP: Friar to submitting any preliminary plat the Developer will submit and obtain a naval of a pp Development Plan Map for each phase. The Development Flan Map shall locate ro osed land pp uses in a coning category format, identify site access, connectivity, and enerai ublic . g p lmproven~ents, provide a table chewing all the land uses including the total acreage of each proposed land use and the total acreage of ,the project, and show boundaries reflectin the g phasing plan, along with other requiren~e~ts established or into orated b the Denton y Development Code, as amended. Development Plan 1VIap for the Hills of Denton MPC n~a be reviewed and approved at one tune or for each phase, in accordance with 35.7. i2 of the Denton Development Cade, as amended, with each submission of a Development Plan. Maps the developer shall submit sun~m of the detached single-family unit count, including but not limited to the number of units ro osed in. pp the preliminary plat, the total number of units proposed to date and the remainin number of g Page - 7  i un~.t. Notwvithtandin and over pro~is~on of this document, no use shall be allowed in at~y phase, lot o~ parcel unless, and until a Development Plan ~Ip authorizing such use has been approved for that phase. page ~ 8 I~~~~~ ~~t ~t~~ o~n~e~ ener~~ N'vte: Except as cleric and specificail stated herein, the ro~is~ons of t~.s document are suhord~nate to ail ordinances of general application in the pity of Denton, Texas. The provisions of this document do not modify or amend and ordinance of the its of Denton., and have no applicability whatsoever outside the Hills off` Denton MPS. The terms of this dacurnent serve as lbnited exceptions to the general development standards of the ~it~ o Denton, only to the limited extent s~eci~ed herein, and. are intended to be construed narrowly and restricttv~ely. Any stated exceptions to specific sections of any ordinance or design standard shall a~~lY only to the limited extent necessary to achieve the stated exception, and ail other re~uixements of such cited provisions that are not specifically excepted shall continue to apply' in full farce and effect v~ithin the Hills of Denton MPS. Page -1  LM I~aadsa ~ and Tree any a ai~ements: p P~ ~ ~~ndscpe a~.d tree ano~~ ~equirerne~ts shah comply 5 ~ I x.7.8 of the De~tan ~e~relapent fade ,th, the following exeeptlans: of Denton Landscape and Tree ~anoP3~ ~equirement~ Percent Tree of Den Percent ton D~trict~ oPY Landscape Area oven e F Single ~`amily Residential 3a°~o 4~°l~ Tom ~ame~ Attached Single- ~ ~ TH 2a ~0 40 Jo ~'a.~l ~ l~Iulti-fa~nil Residential ~a°fo 5°l0 Came~cxal 2a°Io ~°Io ~ Office 15°/~ 40°Io T Tam tenter an.e~cial ~ 5°Iv ~~~Io T~ Tawn Oenter Residential 1 2~~I~ t~re~t Try lie u~r~n~~t: .~.7..3.a.i.a. shall ~e excepted as necessary to allow the fo~iowin ~ n~iniu of ore ~ ~ ~ free peg lot fay develapme~ts v~ith ~~cin not to exceed ~a feet an center. 3.1~.7...a.i.h. shall be excepted in its entirety from application in this development. Pale - ~  i iii, A wide landscape buffer with a minimum 4}' high berm with ~ on ~ maximum side slopes. Landscape area must contain ore large tree for every 40 linear feet. b, That the parking area between the building ar~d the street shall receive: i. An additional ~°Ia fee canopy above and beyond the 1 required {for a total of ~~°Ia . Additional canopy coverage cannot be credited towards other canopy requirements; ii. An additional ~°I~ open space above and beyond the 7°I~ required {for a total of 1 Additional open space cannot be credited towards other open space requirements; and iii. harking lots shall provide interior planting islands between parking spaces at an avera e of eery 1 ~ parl~ng spaces to avord long rows of parked cars, The planting islands shad be a minimum of 1 ~ square feet and be protected by a ~~inch high curb on all sides and a 1~-inch wide concrete step-off area adjacent to parking spaces. A large tree shall be planted witha~n this planting island. gage , 4  i ing~e~~a~n~~y A~r~hit~ctur~Y tandard: 5.1.13.1.A~.~4. shall he excepted to provide the follawing add~tianal res~iction; hovered front porches The depth of the parch must be at least in depth to receive credit as an architectural feature. .1.13.1.A. shall be excepted to alla~v the fa~a~ing design future as addition aptian: hovered front porches that extend along at least 5~°I~ of the firont ~a~ade excluding the garage} shall receive credit as two features}. ~.13.1~,1.. shall he excepted as follor~s: douses with the same facade on either side of a given street represented by belov~~ must be separated by a mini~nun~. of three lots. Y N r ~;u ya•. 5.~~,~3.1.E. shall be excepted as fa~nws: All v~alls, except gabled roof areas, which face a public street other than an alley, .ust contain at least ~5°Io of the wall space in indov~, faux windows or doors. Faux windows must have shutters. §~,1.~.~,~. shall be excepted as folla~vs: Primary entrance shall face a public street and sid~vall~ or be a courtyard entrance. ~~.13,1.1.1~., ~.1.1.~,I, and 5.1.1~.~.J shall he excepted as follows: H. 10~°I~ of the surface area of the front side of the residential structure, excluding dormers, gables, porches, v~indows, doors, and bay windows, shall be masonry. The total rcenta e g of rr~asonry on the enure res~dentlal structure, excluding dor~r~ers, gables, porches, endows, doors, and bay %ndows, shalt be a minimum of $~~/o. 1V~a,a~ includes brick, stone, ar stucco. Page - 5  i No exterior combination of brie color, rriortar color, and sand color sha~~ be repeated within 200 lineal feet an either side of the same street. J. Ali compressors, utility meters, and plumbing cleanouts shall be screened from viev~ of the public right-of =wad using landscaping or fences, Helht o~. plan~in n~a~terial after two growing seasons shall be a minimum of 3o inches, For energy ef~.ciency, AID compressors shall be located on the east or north face of the house, unless doing so would piece the compressor in the front yard, or facing any street. 35.13.1.1. ~~~ll be e~cep~ed ~o require t~~ fallowing additional ~tand~rd~; . garage access shad not be from a primary or side street, when alley access is available, f,. Each detached single-family dwelling shall have 2 car enclosed garage or larger. ll~, The minimum square footage of detached single-family dwellings shall be 1,8~~ square feet of total floor area that is air conditioned, 1. This requixement nay be reduced to l,oo square feet for areas approved an the Development Plan 1VIap for active adult retirement community development, limited by private deed restriction to require that at least one person residing in each household shall have attained an age of ~fty~f~ve ~5} years. In such cases, a minimum of four ~4~ of the architectural elements listed in "A" above must be utilized on each structure. I~. At least 1 o°I~ of the detached single family dv~ellings shall contain a minimum of 2,~~D square feet of total floor .area that i air conditioned and utilise at leapt four ~4} of the architectural. features I1steCl in "A." above, 0. At least lO~Io of the detached single family dwellings shall contain a minimum of 2,200 square feet of total floor area that is air conditioned and utilize at least four ~4~ of the architectural features listed in "A" above. P, The n~imum square footage of attached single-family dwellings shall be 1,40o square feet per unit of total floor area that is air conditioned. . The minimum square footage of tv~o-family dwellings shall be 1,20o square feet of total f loor area that is air conditioned per unit ~2,~D~ square feet total}. All dv~ellings shah have a roof of slate, tale or 2D year composrtlan singles with a weight of at least 24a pounds per I o~ square feet, , The roof pitch of the primary structure shad be ~-inr l2 slope rri~nimum. Page - G  i NIA eut~on: .1.~..A.1. shall be e~cep~ed to requl~e the fouawin ~d~itlon~l standard: fin-street parking, if permitted, shall count towards required parking, one on~street parking space shall taunt as one off~street parking space. §~,13.~.~,A„l.e. ~h be excepted from application in this development* 3.1.1.~.8.~. shall be excepted a~ fo~l~ws: Eighty per cent ~8~°Io} of the surface area of all exterior vval.ls, excluding dormers, gables, parches, indos, doors} and bay indos, shall be masonry, provided that i~0°I~ masonry shall be rewired for the front side of residential structures, excluding dormers, gables, parches, inda~vs, chars, and bay ~vinda~vs, asanry includes brick, stone, ar stucco. No one masonry element shall exceed 7~°Io ofthe entire franc faade, lean-masonry materials include ~aod, ~.1~.1.~.13.I. shall be excepted a~ follo~~: facade modulationslbuilding articulation: facades must be broken up to give the appearance of a collection of smaller structures, Elements including, but not limited to, balconies, setbacks and pra j ections, n~a~ be ~il~ed to articulate individual units ar calleetions of units. Unar~rculated ar indo~vless ~ls facing streets or principle access lanes are not permitted. Page - 7  I ~.1,1~ shall ~e excepted to provide the fol~owin standards in area a proved o~ the . P~ Development ~Yan N~~p for Town tenter Multi-Family development: Multi-family develapmer~ts wYthin Town tenter areas shall comply with the followin additional standards; ~r~entation. 1. At least 75~Io of the franc yard frontage shall have buildings within l~ feet ofthe ri t-of- way. Buildings that are located within ~0 feet of the property line adjacent to ~ front and shall ~ y have at least 4a I~ of the ground story wall facing the street m w~ndaw or Boar areas. Parking areas shall not be located between the building ar~d the street. 4. n~treet parking, if permitted, shall aunt towards required parkin , one on-street g parking space shall count as ore off street parking space. 5. Buildings shall be directly accessed from. the street and sidewalk. sidewalks shall have a minimum width of S feet along perimeter streets, and all other pedestrian walkways shad have a minimum width of 6 feet far. 7. A minimum of one ground floor pedestrian entrance must be oriented toward the street and include a parch. Private garages may only be accessed from alleys or parking lots. . Building frontages greater ~ 1~0 feet in length shall have recesses, ro`ectians p J windows, arcades, or other stlnctlvc features to interrupt the Ier~ of the buildin g facade. 1 a. Architectural Features. Fronts and street sides of buildings visible from ublic hts of . p g way shall include changes m relief, such a columns, carn~ces, bases, fenestrations, and fluted masonry, far at least ~ of the exterior wall area. 11. Height and Bulk, Adjacent buildings shall have different architectural elevations, 1 ~'he top floor of and building must conta.~ a distinctive finish, consistin of a cornice • g banding or other architectural terrn~nat~on. 1, Parking structures. The first .start' adjacent to the street exce t that area needed f ~ p or access} must contain commercial or retail space, Parking structures shall re uire q approval of an Alternative Development Plan meeting the criteria of ubcha ter ~.l~,S p along v~th an addlt~onal f i~d~ng that the proposed architectural elevation is a ra riate pP p far the character of the area. 14. Buildings greater than 30 feet in height shall have architectural elements to break the hei t of . • f. - the bu~ld~ng faade. 1 . where passible, buildings shall i~ncarparate different raofl~ne~, . B, Building ll~atertals. 1, windows shall be provided with trim. windows shall not be flush with exterior wall treatment. windows shall be provided with an architectural surround at the jamb. Fronts and street sides of buildings visible from the public ri t of wa shall be non- . Y re#~ect~ve and shall be of wood, masonry, stave, decorative block, stucco HD~ board or other high quality material customarily used far the buildin s le, g Page - 8  i 3. Crtass, ~Jse of glass for displays and to allow visual access to interior space is permitted, buildings may nat incorporate glass far mare than 7'~°Io of the building skin, ~Vletal hoofs, Metal roafs are permitted provided that they are of architectural quality. . Buildings shall include changes in relief such as cabs, cornices, bases, fenestration, and Muted masonry, far at feast 15°Io of the exteriar ~va~l area, , treetscape. 1. ~ardscape waving material} shad be utilized to designate "people}' areas, Sa.pie materials could be pavers, scored and colored concrete, grasscrete, ar combinations of the shave, 2, A building shall be setback not more than ~ ~ feet from the right-of-v~y unless the area i used far pedestrian activities such as playas or outside eating areas, . ~utdaor storage areas shall be screened from view firarn adjacent public rights-af-way. Laadig facilities shall be screened and buffered when add scent to residentially zoned land and public streets, Pale - ~  Lm o~~~~den~ll~m~n~r~il end office ~r~ildin ~ Non-residential buildings or mixed-use buildings and their lots not in a Tom tenter area and their lots shall comply with the following additional standards and exceptions. ~,~3.13,.~,1. shaIl be excepted to provide follows: Bu~lding frontages greater than 1 feet 1n length shall have offsets, dogs, or other distinctive changes . the building facade to create shadov~ lines. offsets and j ogs shall be a minimum of ~ feet in depth. ~.1.1.~.A,.4. shall ~e excepted to provide follows: buildings shall have their primary orientation towards the street a~.dlor parl~ng lot. ~~.1.1.~.A. shad he excepted to provide the following additionai provision: Parl~ing areas that are located between the building and the street shall conform to the regulations identified in the Access, Parln and ircuXation Requirements, ~l@ excepted ~oI~O~V$: Fronts and street sides of buildings visible from the public right of v~ay shall be l ~o~I~ masonry, excluding darmers, gables, porches, vvindos, doors, and trim. .1.~.3.3.~, shall be excepted firom application in this development, Page - to  i ~~,1.1.4. shall be excepted follows: 35.1,13,4 'down tenter Non-residential and ~+Iixed ~Jse Bu~ld~ngs. Design standards town center non-residential buildings or mixed-use buildings those that Combine non-res~dentlal and residential uses} ar~d therr lots shall comply nth the follaw~n regulatlous~ 35.13.13.4.A.1~, shat he excepted as follows: Parl~in areas shall be located in parkiug garages or surface lots hehi~d buildings or on one or bath sides. Park%ng strictures shall require approval of an Alternative Development Playa. .eeting the criteria of Subchapter ~~.1 along v~ith an additional finding that the proposed architectural elevation is appropriate of the area. 35.13.13.4.B.Z. shall be excepted as follows: Fronts and street sides of buildings visible from the public right of ~vay shall be I ~~°I~ masonry, excluding dormers, gables, porches, windows, doors, and trim, 35.13.13.4.. shall be excepted to add the ~olla~ving additianal standards: Outdoor storage areas shall not be located between the building and the street, Loading docl~s are not permitted to be visible from the street, and not be accessed directly from the street. Page - ~ 1  LMM ~5,13.1~.. and ~ subsections shall be excepted as ~ohows, which shall govern over the existing provisions in this deve~vpment: 3.1.1. barge kale development ~egnlations. developments involving a gross door area in excess of 4~,~~0 square feet shall, comply with the basic Site IJesign Standards and canforrn to the fallowing standards: Building design shad contribute to the uniqueness of the develop~ner~t with predominant materials, elements, features, color range and activity areas tailored specifically to the site and its context. ~ the case of a muttiple building development, each individual building shah include predominant characteristics shared by all buildings in the development, so that the development farms a cohesive place within the zone district or community. A standardized prototype design shall be modified as necessary to comply with the requirements of this subsection. Developments involving a gross ~.QOr area i~ excess of 44,~~~ square feet for a single user shall comply with the fallowing sta~.dards: rlentatlQ~1: 1. Architectural features on building facades that are visible from Loop 288, Locust, ar anzerlLong Roads excluding facades facing residential property that are screened by an eight~foot masonry wall and facades facing the side ar rear of property zoned and used far commercial or industrial purposes} shall provide all of the following design features: a. Facade galls shall not have an uninterrupted length in excess of one hundred feet ~1~0'~, b, ~a~ades shall provide the fallowing at intervals no greater than one hundred feet excluding elements provided in Item d ntryways~, below: ~ 1 } dolor changes, texture changes, and material changes within the walls, ~2~ A change ~ wa~~ plane Sao leis than in depth, extending a length of a minimum of twenty feet and ~3} ~ariatians in the top of the wall of a minimum of two feet the height. c. Taps of walls shall have overhanging eaves or horizontal elements extending nv less than three feet past: supporting walls, sloped roof element, cornice expressions, coping details or minirnurn twelve inches ~ 12"}tall. d. Facades shall also provide at least one of the following: ~l } wail plane pro~ectians ar recesses hav.g a depth of at least °Io of the length of the facade, and extending at least 2~°Ia of the length of the facade, not to exceed one hundred feet ~ l 0~' ~2} Pilasters prod ccting from the plane of the wall by a m.~ni~nu of sixteen inches The use of pilasters to interrupt horizontal patterns, such as accent banding, is required, canopies, awnings, or porticos pru~ect~ng a n~min~um of six feet from the plane ofthe primary facade walls. Page - ~ ~  Lo ~4} Repetitive orientation, including decorative applied features, such as all- mounted light fixtures or applied materials. Repetitive oan~entation sha11 be located maximum spacing offifty feet {5a'}. Faux windawlfraed elements. e. Entryways. each large retail establishment on a site shall have clearly defined, highly visible customer entrances. Stone is requixed to be used as a nxa~or portion of a wall material at each customer entrance. f, The buildings shall have design elements that emulate the Hills of Denton signature feature. This includes building materials and architecturally corr~patible light fixtures. These elements should occur at entryways Architectural features on building facades that are facing residential properties and facades facing the side ar rear or properties zoned and used for commercial or industrial purposes shall have the following elements: a. A pattern that includes all of the following elements at intervals of no mare than one hundred ~10~'} feet, horizontally. The following pattern shall also occur vertically at least ante within the height of the building, above ten feet ~l in height: ~ 1 } polar change, texture change, and a change in plane, no less than S" in width, such as an offset, reveal or prod ecting pilaster with a stepped capital or coping. b. Variation in the top of the wall of a minim two feet } change in height at maximum of two hundred feet VDU' } intervals. PealCS, arches, or other expressions of front wall form shall be used. c. Tops of walls shall have a cornice or coping detail a mmimun~ of twelve inches ~1 in height. . Sidewalk display and cart stora e, Areas far customer loadin or merchandise shall b g e clearly delineated, and shall nit be tacated in font of any ~ustor~er entrances, exit doors} or within fi~een feet X15'} on either side of the doors}. 4. Permanent outdoor display, sales and storage. iVlerchandise may be stared or dis la ed ~ y. for sale to customers on the front or side of the building, only ~n accordance with thts paragraph, a. The total square footage of all permanent outdoor storage, display and sales areas shall be limited to ~ a°Io of the footprint of the building, but shall in na event exceed ~a,aaa square feet. Name Irnproven~ent stares, may not exceed 4~,a~0 square feet of outdoor storage anal the 1 a°lo footprint restriction does not apply. b. Permanent outdoor storage, display and sales shall be contiguous to the buildin ar~d g shall not be perrn~tted thin seventy-five ~~5 } feet of residential property. c. The permanent storage, display and sales area shall be enclosed by a n~inimun~ ei t- foot }wall of columns m~nnnun~ two inches ~2"} wide, of like appearance to the building with wrought Iran ar tubular steel fencing between, and topped b wrou t y page - t 3  i iron or tubular steel fencing, No merchandise, other than trees, shall be visible above the wall or fence. seasonal outdoor display, Size will be limited to I i,00~ square feet n~axi~num. Dates for outdoor display will be year round. Merchandise may not exceed ten feet ~l a'} in height except for trees. 5. Rear Storage. Bulk merchandise maybe stared behind the building. The sides and back of the storage area shall be screened with a chain, link fence covered with a windscreen, except for any side or back that is separated froze ~ residential praperr by an eight-foot masonry wall and landscaped buffer yard, ~ which case additional screening is not required. Windscreens shall be maintained in good repair a~ad free of tears. The rear storage area shall not be accessible to customers. Merchandise shall be stacked na higher than Z5-feet, or level with the top of the adjacent wall ofthe building, whichever is lower, and may not be stacked above the height of the chain link fence. mall and landscape bufferyard. An eight-fact masonry wall or brick, stare split block or concrete cast to simulate such materials shall be constructed along the common boundary line of the adjacent residential property, ar as close as practicable in the event of intervening alleys, easements or drainage channels. ~f the large retail store properties and residential properties are separated by intervening properties under separate ownershi . p that is less than. ~0 feet wide, a wall shall be constructed along the property line of the large retail stare facing the residential property. 7, Pickup and Delivery, Pickup and delivery of merchandise, equtpn~ent ar other sterns, shall not occur within 1 a~ feet of residential properties, Loading lacks must be located to the side or rear of the building unless the landing area is completely screened from the street, and loading docks shall be located mare than IOa feet from residential property, Pavement may be located within one hundred feet ~laa'~ ofresidential property, 8. Trash collection and an~paction, Trash collect and pick up nay rat occur within l0a feet of residential property, and shall be screened from public view, 9, Mechanical equipment. N~o mechanical equipment may be located wYthin ~ ~a feet of residential property. Mechanical equipment shall be screened from public view. Building Materials: 1. Fronts and sheet sides of buildings, excluding windows visible from public r1 hts~af- g way shall be ran-reflective, and shall be constructed of wood, masonry, stone, concrete, decorative block, stucco, H~]~ board, or other high quality material customarily used. Far purposes of this subchapter, non-reflective means material with an exterior visible reflectance less than 7 percent. ■ l~in~estone or varying calory, sizes and textures ■ concrete -Architectural finish. Texture coated or textured and colored. Page -14 ■ Masonry -brick or decorative 11~U, ■ Porcelain Tile ■ galvanized metal panels ar prefinished architectural metal panels of a neutrallearth tone color; ■ Painted siding of a warm, neutrallearth taae color in accent areas only; ■ EIFS or stucco of , warm, neutrallearth tone color; ■ Accent colors of a warm, neutrallearth tape range are required, but should be used in a limited manner Natural metals such as but not limited to zinc and copper; Natural woad, stained or painted; ■ Roofing tile, metal shingles and panels, or slate in galvanized ar neutrallearth tone color 2, ground mounted lighting ar pedestrian level accent lighting is required. . treetscapelPubl~c Spaces l . one square foot of Plaza or Public Space shall be requixed far every 1 a square feet of grass ground floor area. Plaza or Public Space nay be located anywhere within The Hills of Denton. Plazas or public spaces shall incorporate at least of the following elements, which maybe located anywhere within The Mills of Denton. a. Sitting space - at least one sitting space far each 250 square feet shall be included in the Plaza. Seating shall be a minin~un~ of sixteen inches ~1 in height and thirty inches in width. Ledge beaches shall have a ~ninimurn depth of thirty inches ~ 0"~ • b. A mixture ofreas that provide shack. c. Trees in proportion to the space at a n~ir~i~num of ~ tree per S00 square feet. d. dater features or public art. e. outdoor eating areas or Poor vendors. f. Planting areas in the sidewalk are requried. Pots or above-grade planters are allowed, minimum of 1 ~ gallons. Each freestanding, large-scale development building shall have a minimum of ~ Oa s uare . q foot seating area, ~ncluding pcranent benches along the front sidewalk area. ~ n~inimua of one bike rack shall be included along the storefront. ~ beaches and bike rags should be of an architecturally consistent design. Mechanical Equipment Screening; All a~echaaical equipment shall be fully screened from view from public an site or ubiic edestri • p p an spaces. Acceptable methods far screening ground mounted equipment ~nciude evergreen shrubbery, or metal or woad screen wall system, Acceptable methods far screer~in . g roof equipment include parapet height extens~ans or screening by slo ed roof forms. P Page ^ 1  i Ace~ry ~Jse: AID acc~sso u.s~s to large scale ~~ve~~p~ent shah be archit~cturall~ cvmpatib~e t~ the m.i~. structure, Page -1  I 5,I4.4.A. shall be excepted to provide the fallowing addition~I ar~n uirement: P ~ . Amenity tenter. Twa {2} spaces peer one thousand {1,~~~} square feet of ass floor area. 3.14.4.8,3. ~ha~ be excepted fvi%w~: business, general retail, personnel services, a. General -one {1 }space far two hundred {24~~ square feet of gross floor area. b. furniture and appliances -one space per Hive hundred 5~ s care feet of oss ~ q floor area. 3~. f 4.4.x.4. shall be excepted follows: chapels and n~artuarie. One { I }space per three {}fixed seats in the main cha e~. p 3~.14.4.~.. ~e excepted as foi~ow~; Offices. Medical and dental -one {1}space per one hundred fi l5~ s care feet of oss floor { ~ q area. General -one { 1 }space per two hundred fifty square feet of gross Hoar area., 3.14.4.8.. ~haii be excepted ~ollaws: Restaurants, Kars, ice cream parlors and similar uses. One ~ s ace er four 4 seats or o ~ ~ p p { } ne {1} space per 1 sq. ft. of gross floor area {including outdoor s~r~.n areas} up to s uare feet whit q ' never 1s less, plus ane {1~ space for each 0 square feet of gross fluor area aver 4 0~~ s care feet. ' ~ ~ ~ mmrum of three spaces is required, ~3~.14.4.8.7. shy be excepted a~ follows: Skating rinks. One { I ~ space per one-hundred { I D~~ sq. ft, of gross buildin area. g 3.14.4,B.S. shall be excepted a~ fnllaw~: Theaters, auditor~urns, stadiums, gymnasiums and similar uses. One 1 s ace er. three ~ seats. {gyp p 3.14.4.8. shall be excepted to add the fo~law~g additionoi arldn r uiremen#~: P ~ Stables. One {~}space far each flue {}horses kept on the pren~ses. fain Operated Laundry. One {1}space far each three {3~ ahin machines. g 3.14.4..1. shad be excepted a~ fallow~~ which shall govern over the etin rovisian in ~p the development; Industria.~ uses, except warehousing, One {1} space per flue hundred s care feet of oss { } q r floor area or far each two en~p~ayees on the largest shift, whichever is neater. g 3.14.4..x. shall be excepted as follow, which shall govern aver the etin rav~~on in gP the development; warehousing. a. {~f used exclusively far storage}. One {1 ~ space pcr one thausand 1 ~0~ s uare feet of ~ q grass f loon area or for each two {~}employees, whichever is eater. . b. {If not used exclusively far storage}. One { ~ }space er flive hundred 5~~ s uare feet of p ~ } q gross floor area, plus one { 1 } space per two~hundred f if'ty s ure feet of office ur }q Page -  i sales area, 3.14.4.., iuciudia~ sub~ec~ti~n~, shall be excepted ~oll~w~~ which ~h~ ~ver~, ever ~ • 4 the etmg provision: 1. gay care fac~~ities having 1 ~ ar more childrenldults, Twa spaces per three em to ees p ~ plus 1 loading space for every 8 children; a minimum of two spaces are re aired. 2. Churches, temples and other places of assembly not specified elsewhere. one I s ace er p three {3 ~ seats v~ithin the n~.ain auditorium or one { 1 } space far eve t ' -dive 5 s uare ~ feet of seating area within the main auditorium v~here there are Rio ~i~ed seats; ei teen 1 ~ lineal inches of beach shall be considered f iced seat, . alfcaurses, a. Regulation Course -Eight {S} spaces per hale, plus additional spaces far auxiliary uses o~. the site set forth in this section. b, Driving Range - one {1 }space per tee, plus additional spaces far auxili uses vn the site set forth in this section. c, ll~iniature gaff courses - 'Three {3} spaces per hole, plus additional spaces for auxili . ~ uses an the site set forth in this section. hospitals. one and three quarters {~.'~~}spaces per patient bed. 5. pursing and convalescent homes. one { ~ }space per four {4} patient beds, Rest homes, homes far the aged, or assisted living. one { l }space per four {4} anent beds ar p one { I }space per apaifiment unit. schools, elementary and junior high, one and one-half ll~} spaces per classroan~, or the requirements far public assembly areas as set forth herein, whichever is greater, 8. Nigh schools. one { ~ }space for each. member of the faculty and each em la ee, lu.s one 1 p y p space for each six full-time student capacity, ar the regnirements far public ssembt . Y set forth herein, whichever is greater. 9~ Colleges, universities and trade schools, one and one-half {l 11Z} spaces per classroom, lus p one {I} space per three {}students the school is designed to accannnodate at one tune, lus p requirements for on-campus student housing. 3~.14.4.~. ~h~ he excepted fo~ow~; spaces aver the required number of spaces shall be mitigated per the .~cces parkin and . g Circulation R.equiren~ents of this dacuinent. spaces provided on~street, ar within the buildin faa g tprint of structures, such as m rooftop parking, or under-stricture parking, or in multi-level parking above or belt' surface lots, shall not apply towards the n~aximun~ number of allowable spaces, ~.14..A. shall he excepted a~ fol~aw~: The arriount of off~street parking required shall be reduced b the falla.n credit rovided far g p on~street paving: one off-street parking space credit for every one an-street space. gage - t S ~~1.17., ah b~ ~~cepted a~ follows: The ~ll~strt~an far e~eept~ons to the e~fecti~e area of singe on perimeter fenci~ and entry ~nanuent thin F, TH and MF d~st~icts ~s a fa~la~vs: . . ,.m., .:o:......~A. _ _ .:v...... s ~ . a u .........:.:......M, s r . , ,~..m.. . . , .a; , m., , ~ j M.x u ~ ~.:u ~ %e, Y v~ .a. ,u 4,^ w. w~,~.;.~;. :.x ,e ~.nv ~ . N .u,.. t ~ . . . : ,.t. x .n....... t.. R...M ~ ' i. v. .w r w ~ >,Y. , ,p. ~y .t... .i ; "f.; " .x.. n.. i.. ~ t .t....... Y ..,......w". Yom ..N.A... ~ Y t........... <~t Xi :d nti M.vp '.V..'..~ Y J..fi l~Rf i+~l.I 1 ~Y EFF'E~TIV~ AREA Pale -1 ~  i . ~.7.8.A.1. shall be ~~c~pted f~~ows: lip to ~ of the area may be disturbed far private hard andlar nan~private ~axd structure ~.clud~ng but not lrtted ta; gardens, bards, trails, and clearings, but u~l~ch are na Glaser than 25 feet from the stream bank or riparian buffer Na disturbance is pe~nitted in delineated v~etiands. Page - ~4  i ~.~~.~..3. shall be excepted a~ ollo~vs, and th,~ provision sha~I govern over the curre~pondin~ bode prov~io~n in the deveiopment: Block width. Dou~~e fro~.ted lots shall be avoided. except where essential t~ provide separation of residential development from major traffic arteries or adjacent nonresidential acti~it~es or to overcome speei~ic disadvantages of tapograph~ and orientation. 't'hrough lots shall have a ~ninimurn average depth of one hundred ~ 10~~ feet. Page - 21  i 3~.~.~, shall be ~~cept~d follows: I~ot, Double ~~ontae: A lot wing frontage ~n two n~rtterseeti~g streets, as distinguished tom a corner lot Page - ~  i m m m Exhibit D Schools: Denton Independent School District ~DtSD} utilizes a preli~r~inary n~ultiplierlfactor of .75 students per single fan~tly unit's ~vh~ch 1s further d~v~ded as follows: 0.40 Elementary School O.17 - ll~iddle School 0,1 S ~ h Schaal ~.?5 =7~0 students per 1004 sf~units The multiplier far multifamily develapn~ents caries from 0.1 S for a typical development to 0 ~ 6 fox a subsidized development, It is not anticipated that any ofthe multifamily develapn~ents will be subsidized so the typical ~ 8 multiplier was utilized as Pallas: 0.10 -Elementary Schoat 0.0~ -Middle school 0.03 - Hih,cha,~ol - 0.1 S =1 SO students per 1000 s~f units ~`So~rce: ~~~ae Holloway, Di~e~~o~ of P~an~ti~tg and ~~ataspor~tation - ~e~fora Inde~aendent SchoQ~ Dis~~i~t The Hills of Denton is proposing a total of 509 units ~~,598 single-family units, 2,204 traditional rnul~i~family units and 4,146 ~nultifarnily units within the tom. centers. Although the above RIDS factors vary up or do~rn depending an socio-ecanomrc and price paints, the are a gaud planning indicator an the number of schools that might be needed to support the proposed develaprnent. based on the above factors, ~ Elementary Schaals,1,51VIiddle Schools and Nigh Schools mill be needed to support the development. . ~lcmentary schools: ,89S units ~ .40 = 2,79 students , ~ MF units ~ .10 = 5 students 3,394 student I X50 student per school = .2 schools Nlyddle chool: G, 8 9 S ~ units .17 =1,173 students ,354 F' units x ,05 = 31S students 1,491 student 11,000 student per school =1, schools High Schools: 6,S9S F units ~ .1 g =1,241 students 3 5 0 MF units x. U 3= 191 students 1,312 student 12,OOD student per school = U.7 schools  Lm ~~~er~e~a~io~a wi~~ eig~bor~~vods; ~ Elementary: a Neighborhood choals: ■ Iosely tied ar~d in~rneditely adjacent to residential areas served ■ Incorporated with neighborhood facilities - i,e, neighborhood parks, community centers ~ Land Use Relationships: ■ Ymmediately abutting ~ within residential devcloprnents ■ Primary access Parent Loop} aff residential collector ■ bus service access sl~auld be separated from primary access -preferably off of seco~.dary site access ~i.e. fide street} • ~Vliddle School: o arnmuni oriented Schools: # Located centrally to neighborhoods and co~nmur~ity areas served ■ Incorporated with community facilities - i,e, can~n~unity parks, activity centers o Land Use Relatianshi~s: ■ Adequate buffers required between immediately adjacent residential land uses - i,e, park land, green belts, streets ■ Primary access aff of residential or commercial collectors ■ Adequate separatian between primary and secondary access -preferably secondary site access ~i.e. Side Street} • High. Schaal: o Regional oriented Schools: ■ Located centrally to the portion of the district served ■ incorporated with community ar regional facilities - i.e. camm~unity parrs, regional parks, university facilities o Lana Use Relationships: ■ Generates traffic, noise, odor, light and othex impacts that nay be incompatible with single family land uses ■ Cenerally located at the fringe of co~nerciallretail Hades with direct cannecti~ity to residential areas served - i.e, thoroughfare network, bicyclelpedestrian systems ■ Primary access aff of commercial collectors or secondary arterials ■ Adequate separatian between primary a~ad secondary access ~ preferable secondary site access ~i~e. Side Street} o Landlite De~relopn~ent or~siderations Requirements ■ water Sewer ■ Drainage ■ P~lectrical Power ■ Natural Cos ■ Fiber ablelo~nmu~ictions ■ Street Access AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Planning and Development ACM: Howard Martin, 349-8232 SUBJECT - Z07--0012 (Access 1St Capital Bank) Hold a public hearing and consider the adoption of an ordinance to rezone approximately 2.962 acres from a Downtown Residential 1 (DR-1) zoning district to a Downtown Commercial General (DC-G) zoning district. The property is generally located north of Eagle Drive, east of Pacific Street and west of Myrtle Street. The Planning and Zoning Commission recommends approval (3-0). BACKGROUND Applicant: Spring Brook Planning Group Grapevine, TX The applicant is requesting a zoning change from a Downtown Residential 1 (DR-1) zoning district to a Downtown Commercial General (DC-G) zoning district on an approximately 2.962- acre tract of land. The subject property is comprised of twelve lots under single ownership. The subject property is generally located north of Eagle Drive, east of Pacific Street and west of Myrtle Street. The applicant intends to develop the site with bank and office uses. The applicant is also applying for a Specific Use Permit to allow a drive through for a temporary bank (507- 0006). The temporary bank will occupy three of the parcels of land, and will be in operation while the construction of the permanent bank and office building are completed on the remaining portion of the property. The Planning and Development Department sent notices of the public hearing (Exhibit 6) to all residents within 500 feet of the subject property; as of this writing, one written response in favor of the zoning change has been received. PRIOR ACTION/REVIEW The Planning and Zoning Commission held a public hearing on June 27, 2007. OPTIONS 1. Approve as submitted. 2. Approve subject to conditions. 3. Deny. 4. Table item. RECOMMENDATION The Planning and Zoning Commission recommends approval (3-0) of this rezoning request. EXHIBITS 1. Staff Analysis 2. Location Map 3. Existing Zoning Map 4. Proposed Zoning Map 5. Future Land Use Map 6. Notification Information 7. Letter From Applicant 8. Site Photographs 9. Responses to Notice of Public Hearing 10. Planning and Zoning Commission Minutes, July 27, 2007 11.Ordinance Respectfully submitted: h ~ sr V f ~ rp i 1 ■ 1:ti Brian Lockley, AICP Interim Director, Planning and Development Prepared by: w Jane Gurney, Planner I 2 EXHIBIT 1 PLANNING & DEVELOPMENT STAFF ANALYSIS CASE NO.: Z07-0010 DATE TO BE CONSIDERED: July 17, 2007 LOCATION: The subj ect property is located north of Eagle Drive, east of Pacific Street and west of Myrtle Street. APPLICANT: Spring Brook Planning Group 2405 Mustang Drive Grapevine, TX 76051 OWNER: Carroll-Eagle Partners, LP c/o David Vanderlaan 2925 Country Club Road Denton, TX 76210 REQUEST: Consider the adoption of an ordinance rezoning approximately 2.962 acres from a Downtown Residential 1 (DR-1) zoning district to a Downtown Commercial General (DC-G) zoning district. RECOMMENDATION: The Planning and Zoning Commission recommends approval of this zoning change request (3-0). COMPREHENSIVE Downtown University Core PLAN DESIGNATION: SITE AND The property is comprised of twelve lots generally located north of SURROUNDINGS: Eagle Drive, east of Carroll Boulevard and Pacific Street and west of Myrtle Street. Three of the lots currently have homes on them, two of which are vacant, and the remaining lots are undeveloped. All of the property is currently located within a Downtown Residential 1 (DR-1) zoning district. North: Downtown Residential 1 (DR-1) and Downtown Commercial General (DC-G); Residential and office uses South: Downtown Commercial General (DC-G); QuikTrip, Eagle Point Shopping Center East: Downtown Commercial General (DC-G); residences and commercial uses West: Downtown Residential 1 and 2 (DR-l, DR-2); IOOF Cemetery, commercial and residential development BACKGROUND The applicant is planning to develop the site with a combination of INFORMATION: bank and office uses, and intends to operate a temporary bank with a drive through on a portion of the property while construction of the 3 site is undertaken. The applicant has submitted a companion application for a Specific Use Permit to allow a drive through associated with the temporary bank in a Downtown Commercial General (DC-G) zoning district (507-0006). The Planning and Zoning Commission recommended approval of both applications (3-0). ANALYSIS: Comprehensive Plan The property is located in a Downtown University Core future land Analysis: use district. The Downtown University Core District is defined by the Denton Plan as Specified commercial areas of the downtown university core district should be places of great vitality, with a mix of education, residential, retail, office, service, government, cultural, and entertainment development. The health and vitality of the area can contribute in a major way to the city, its local and regional image, and quality of life. It is a place where residents can live, work, learn, and play in the same neighborhood. It includes different uses which may occur on each floor of the building. The proposed uses are consistent with the Denton Plan future land use designations, and if developed as proposed, will provide services and office spaces in close proximity to residential uses within the Downtown University Core area. Development The requested zoning district, Downtown Commercial General (DC- Code/Zoning Analysis G), permits more commercial and industrial land uses than the existing zoning district, Downtown Residential 1 (DR-1). Many of the commercial and industrial uses that may occur in a DC-G zoning district, including Vehicle Repair and Quick Vehicle Servicing, Auto and RV sales, and Commercial Parking Lots are subject to limitations and/or require Specific Use Permits. DR-1 permits single-family homes and duplexes, while DC-G zoning districts prohibit these uses. DC-G zoning districts also permits multifamily dwellings and attached single-family dwellings. If the zoning change is granted, the development of the project will be subject to the general regulations of the Downtown Commercial General (DC-G) zoning district, as well as the site design standards of the Denton Development Code. General regulations that will apply to the requested zoning district include a requirement fora 20-foot setback from the residential uses and a residential zoning district. If the building height exceeds 30 feet on the subject property, an additional setback of 1 foot for each foot of building height over 30 feet will be required for any areas adjacent to residential uses or 4 districts. The maximum lot coverage for the DC-G zoning district is 85%, and the minimum landscaped area required is 15%. The existing zoning, DR-l, has a maximum permitted lot coverage of 60%, and a minimum landscaped area requirement of 40%. The differences between the existing zoning district (DR-1) and the requested zoning district (DC-G) are summarized in the following table. Uses that do not appear in the table below are regulated in the same manner for both zoning district. i 1 ' ~ I 111 '1 Single Family Dwellings P N Accessory Dwelling Units P N Attached Single Family Dwellings N P Dwellings Above Businesses N P Duplexes P N Group Homes N SUP Multi-Family Dwellings N L 5 ~ ~ ~ . Hotels N P Bed and Breakfast L 8 P Retail Sales and Service N P Movie Theaters N SUP Restaurant or Private Club N P Quick Vehicle Servicing N SUP Vehicle Repair N SUP Auto and RV Sales N L 20 Laundry Facilities N P Indoor Recreation N P Maj or Event Entertainment N SUP Commercial Parking Lots N L 28 Administrative or Research Facilities N P Broadcasting or Production Studio N P ~ ~ . Printing/Publishing N P Bakeries N P Wholesale Sales N SUP/L 36 Wholesale Nurseries N SUP/L 36 Veterinary Clinics N P ~ ~ . Community Service N P Business/Trade School N P Kindergarten, Elementary School P N Colleges N P Hospital N P Elderly Housing N P Mortuaries N P Table Legend: P -Permitted N -Not permitted 5 SUP -Specific Use Permit L(5) -Within this district the density of apartments will be calculated as one bedroom equating to 0.5 units. L(8) -Travelers' accommodations are permitted provided that: 1. The business-owner or manager shall be required to reside on the property occupied by the accommodation, or adjacent property. 2. That each accommodation unit shall have 1 off street parking space, and the owners shall have 2 parking spaces. All spaces shall be in conformance with the requirements of the Off Street Parking section of this Chapter. 3. That only one ground or wall sign, constructed of anon-plastic material, non- interior illuminated of 4 sq. ft. maximum size be allowed. Any exterior illumination of signage shall be installed such that it does not directly illuminate any residential structures adjacent or nearby the travelers' accommodation. 4. That the number of accommodation units allowed shall be proportional to the permitted density of the zone. Each traveler's accommodation unit shall be counted as 0.6 units for the purpose of calculating the permitted number of traveler's accommodations. 5. All traveler's accommodations shall be within 200 feet of a collector or arterial. Street designations shall be as determined by the City Comprehensive Plan. Distances shall be measured via public street or alley access to the site from the arterial. 6. Excluding the business-owner's unit and the area of the structure it will occupy, there must be at least 400 sq. ft. of gross interior floor space remaining per unit. 7. Traveler's accommodations are limited to no more than 8 guest units. L(20) -Permitted, but outdoor storage of autos prohibited. L(28) -Use allowed as part of a consolidated parking plan. L(36) -Permitted when combined with retail sales. DEPARTMENT AND The Development Review Committee has reviewed this application. AGENCY REVIEW: No issues pertinent to the requested zoning change were identified. FINDINGS: The criteria for approval of Zoning Amendments, per 35.3.4.B.2 of the Denton Development Code require that: 1. The proposed rezoning conforms to the Future Land Use element of the Denton Plan, and The requested zoning change conforms to the Downtown University Core Future Land Use designation of the Denton Plan by offering a mix of office and retail uses near residential uses in the downtown area. 2. The proposed rezoning facilitates the adequate provision of transportation, water, sewers, schools, parks, other public requirements and public convenience. Road improvements and sidewalks will be required as part of this development. As such, the proposed rezoning will facilitate the adequate provision of transportation, water, and sewers. 6 EXHIBIT 2 LOCATION MAP . . . . . . f r • 4' ~F'~~t. g EXHIBIT 3 EXISTING ZONING MAP ~ R 5 ~ ti ~s Y . ~F~at. 9 EXHIBIT 4 PROPOSED ZONING MAP r.. . r~ ,r~ ~F'~at. 10 EXHIBIT 5 FUTURE LAND USE MAP . . . .~~s ~r . ~F'~at. 11 EXHIBIT 6 NOTIFICATION INFORMATION R R ' r•.. ' ~ 1 + ;1 ' r 5 • , •iti ~~y ~ ~ ~ . ,r r rz ~ 4 a l r~' r• 1 ~.Y f ~ ti 'f i r~ ; , r ~ r. h . tip. • it .f~ ~ , ~ 1 • ~ ~ • R. i . rg ~~~~t' Public Notification Date: June 17, 2007 200' Legal Notices* sent via Certified Mail: 20 Number of responses to 200' Legal Notice: ■ In Opposition: 0 ■ ®In Favor: 1 ■ Neutral: 0 ~ - A copy of the notification list is available at City Hall West, 221 N. Elm Street, Denton, TX 12 EXHIBIT 7 LETTER FROM APPLICANT ~ ~ I I ~~w ~ ~ i ~ nr~~r ~rrd ~~rrt lily ~ ~ ! lit ~Im TIC ~1 ~ ~ wit I~y~r~~ ~ ~n Din . i I~AP, ~~I~ L~ ~ ~r~11 Id t of qty of ae,, T~. ire i i~ ~ ~ u~ # ' n~~ w ~ drthru, rr ~~~d ~ Ibit ,d • ~ ( ~ r~q~+t rrr~ prrt ~ ~i~~ T~~ ~ i~ wig ~ ~ ~i,~. ~ P'n which ~ ~ r tt ~ ~ ~r~pa I in Barr the ~ ~i~n, w~ ~~e ~r ~t~tir~ ~ ~ ~ ic' r ~ ~ ~ P~rm~t ~ ~ Rp~ bui Inda~r 11 ~~r lydc' ~ I ~d whip #I ern bur~lin ~ I ~ ~ ~ Ilr~n~~y pion i~ the ~ , ~~i~I ~ w~ uy'rs~r~ ir~ . rr#i'r~ r ~a~~, ~i flan wilt ~~ild: ~i~ F i.P i~ ~ R~ I"i~rl'~ fit, why lode ~ir~i ~n~i i ~ ~ ii~r~ ~ b~ ~ubrrr wry f ~ ~ w~, rr~ ' ~ #h ah issues' ~ ~~n r~rilr #ir~r suite ASP i~ Dili rrud. ~ ~I ~th~t ~ ~ irrl~l p~ ~ Ih~~ar~ ~ ail ~quir~d, 13 ~G ~j r 1 E ~ ~r r~~r ~ ~ Ord I~ ~n~, i~~ ~ a~~ gad ~~~tr ~rr~1~~~ ~ ~ ~ ai~~d ~ ~~r~, ~ nt Vie. ir~i~ f ~ ~ ~ , i ~1 14 EXHIBIT 8 SITE PHOTOGRAPHS View of property looking to the northeast, from View of property looking toward the east from the City Right of Way between Eagle Drive and Pacific Street. Pacific Street. Intersection of Carroll and Eagle Drive, looking View of property looking toward the east, toward the north, with the subj ect parcel near the toward Myrtle Street. northeast corner of the intersection. 15 EXHIBIT 9 RESPONSE TO NOTICE OF PUBLIC HEARING ~1~ ~ ~.M~ ~~d c~,.~,w~ ~rfe. ~ ~r Ana, rda w~a e..~ ~ ~ ~ ~d ~w~ a mo~rr■e■~on b ■rw ~l~1 ~ ~IRI i ~IR1~1M11 {~-1~ ~ i dr,k ~ i iFAt ~ ~lo~ Thy ploppwd ~a of Agry~~r ~W hr a P~~~ ~ 1Da■~d ~+I f~ ~aet ~ ~ d~~ ~4! end n~ ~ 4~ ~Mi. 11~ p~ub~ wiY 1~E ~t Rm it ~ ~ Ca+4~ ~ Fri ~d ~ ~'1~ E T~ ~ma~s~ xwr are ~ MME41Q M~ ~e,~ ~ GF ~Ye ~ P~~ ~ ~mns~n w~# ~ k~ ~r ,ham ~ +oq+~1F~d~w~ Corr ~ a~ud e4e ~e ~#g P1e~+*. Y~ ~ for ~'°°r ~Ye~r ~ r4~Owu~ ~~1 ifi ~ ~ ~er~ aQ~~ ~ ~ ~1 d~ nr fi~ puh~~ ~ ~ db 1~n 1~ ~ ~ ' ~ ~r ~qp ■ aR frpr~on: 7~1 ~ Peq~ot ~~rr cwt 71r ~Ifl~n 1~ ~f~~# f■ p~p~~c~~1~w i~ ai4R~p~rt~d iti opp~{~ ~f ~e~ as i~d ~~al ~ ~ cwt PMh~d ~~C . ~ T~p~IM~ Mia~~ P~oY~ldie~e~f p~1~~i~ ~ Cff~~~l';~ ~l~i OITti' PM~L ~r ~ ~Of1~~p{■ + I~Ip„3~Iei+H . ~~In.~10.F~ ~~~Lt~~ 16 EXHIBIT 10 ~ gage 43 _ cQn~tia s,v ~`he~ next tiro mss,.. I . - Through theme ~~ckly i~ you'd like ar I can stop after the 2 Items Na. I and J rela#e to the zoning of approximately 2 zoning case because they are tvvo separate uses. So I'm 3 ~.9~~ acre piece of property from L)o~vntown Residential ~ 3 not sure ifthere's a I assume two separate moons 4 Zoning District to a Downtown Ca~mercial General honing 4 have ~ be made. I just didn't want to aka I'll y ~ District. Ial, I believe you have a comment before we ~ just ga ahead and do bath. Thank you. And I can dust 6 start this. 5 face t way now. _ - . . -~~Tl~~stcase is-a ~v~ ease ~~ich.. ~ Before meeting it was brought to our dettivn that S yvu~ne being asked to consider and make a recom~rtendatian 9 three Qf the nbers of tl~e Planning and Zoning Commission 9 to City Council regarding the rezoning of approximatel . l0 have potential conflicts under Chapter 171 of the Texas ZO ~.9~2 acres of property which is located north of Fagle l I Local Gaverrunent Cade and have filed affidavits to state I l Drive and east of Carroll Boulevard but it lies between their .c~%s lifrcntiorr~fraure d~ _th~s matfer a~~_--_ - Myra -~eet and Pacific street. Across from Fa 1e Drive under the rules that have been promulgated by the~City 1~ to the south is the uek Trip Gas ~~an. Across _ 1 ~ Council ~ will be leaving the rte, during l4 Carroll to the ~ is the InteFnatianal Grder of {kld l S disct~ssian and deliberate and. not participating in the 15 Fellow Cemary ahd l ~ separate lob or panels make. l ~ vote. .I6 up the subject property and all are under sin le . _ g. I just wanted to quid clarify a . 17 a~vae~s}~p__ ~2 its e l S statement that was made in wank sesseon that I sated the l - Dave h~us~s ~n tin d re~rta~~nd~f t ~ap~s.---.---- - _ l9 standard enco~ectly. Because there are such a large 19 undcvelcped. i . -number of pev~le that have filed affidavits under this 20 . current . zanrng of pxaperty 7s . ~1 Chapter 171, it appeared at first as though there might be 21 Downtown residential 1, oR~r which permits some 22 an ception granted under section 171.004.0 of the Texas Z~ residential uses including dingle Farrel and Du lexes. P Local Gavernme~t Cade. Hawev~er, upon closer ex~min~~.on ~3 The proposed coning under cansedexatian now would than the prvvision~ reads tba# ~ a majority of the m~nbe of ~4 the zoning to.Dawntown. C~ercial G~eral or acs mad this ~5 this body were to file such affidavits that all of the ~5 zoning district permits some higher density residential Page 4Z ~ Page 44 l members may gate. Since only three of them have Bled I uses such as multi-family and attachod single family, but . ~ affidavits, three is not a majority' of seven and ~ ~ it also ~ comcial uses such as mil sales and . ~ therefore, the.~ceptean does oat apply. ~ ~ 3 ~ service and professional services such as a licant is pp . 4 Bated upon the fact that we have one nber ~ 4 ~ prnP~ing far t1~.s site. 5 who is absent there wed be three members of this body v~ha ~ ~ The~future land use deli atJ€an of the 6 will be considering both, the zoning case and the Specie 6 ~ ~ properly is Downtown University Care ~ is the. designation 7 Use ~ertnit that's related to it. And out of . three 7 ~ - of all of the property iu the area. And the I~awntown 8 members who axe eligible to vote, a moan would need two 8 University Core designation es defined as an area. offeri 9 votes in order to carry. If there are any further ~ a mix of educational retail afce service, government, l0 questions I'll be happy to answer tam. 10 cultural and entertainment developments and the proposed . l ~ - . co~~s~ot ~v; - ~f~rou~l}.b~r_witlr I _ _ rezonizg -i~ cousestent with this Viand i~se desig~a#aan. . l ~ us for just one moment, please. ~ 1 ~ The public was noted of this hearing. A.nd to date one 13 I~want to thank the public for their l3 r~panse~has been received. And it was included in the 1 ~ patience while we shuffled up here. As preciously stated, l4 backup package, The response removed was in favor of the l 5 this es far Items I and J that the Chairman spelled out 15 request and it's shaven here in the green hatch znarlcs just 1 ~ prior to recusing himself, I believe staff has a l 6 at the inside the red line at the tap northwest of the 17 presentation. 1VIs. Cxurney. 1Vls. Gurney, if you would like 17 property, 1$ far time sake since these are related, if you would like iS 'The same photogra hs of the site here p l9 to present them concurrently.. I~ show the surrounding properties as vtrell as the site. This ~0 . sure, I can do that. ~fl photo was taken from. the earner of Carroll and Ea le g -2l ~oisstorr~,~ ~ron~s: okay. Thank you. ~I looking nadrth along Carroll B.aulevard. This photo h p ~s. soy of. ~ was takes from west edge of the sub jest pr oor~ssrot cos: sort of. 23 looking south along Carroll Boulevard towards the 'ck ~4 s. thank you, I do have the 24 Trip. ~5 pre~sentatior~s broken iota two separate ones so I can run ZS This is the ra to the w t p pe~y es which 1s ~~~~NIri~ ~N1~1T REGULAR EIN ~ETIN JANE ~ ~ - 0~~' gage 4 ~ Page 44  1 ondenseIt~ ~ P e 4~ 1 lnternatianal order of add Fellow Centetary across ~ tl~ site plan submitted b~ tl~e applicant and criteria ~ CalTOll l~aulevard and this is a view of subject ~ far sues they reca~d approval with the recommendation property including one of the existing reside~itial ~ that the sup applies , only to the drive-through use 4 buildings that`s on site now. Again, looking from the 4 associated with this temporary hank building o fiat if a 5 same position but looking dir$ct~y east, this is part of ~ future drive-through use is planned it does not apply to 6 undeveloped area of the lot andmoving this is 5 that, Also, the sup shall expire within 1 S months of the 7 further east from CazTOll or ~'m sorry, from Myrtle Street ~ 7 ~ issuance of a building permit for the temporary building $ looking back towards Carroll and finally, this is the $ or upon vacation of the temporary building, whichever 9 property that's at the southeast corner of this block 9 occurs first. l 0 which is not a pad of tl~s coning change regs~ but it 1 Q And ~inally~ staff recommends that the 1 I is an existing residential use. 1 i single family residences curntl existin to the n rth y g o 1 ~ The staff has reviewed this application and 12 and west of the site and vacated and not used as 1 ~ found that it meets the zoning amendment criteria provided 13 residences after X007. If the properties are still being 14 Yn the Der~tan Development Code and as such staff i4 used as residences on ]az~uary 1st, ~D08 the installation 15 recommends approval of the zoning request. A second item 15 of a wood --six foot woad fence would be reco~nended l 6 as part of this development is a Spec~i~c-Use Ferna.~t fvr ~ l~ between bank and the sidential uses in order to Z ~ to allow adrive-through bank ar adrive-through 17 ensure complete buffering. And #hat's the end of both o~ . . I associated with ~ temporary bat~kk. ~Th~s spe~ifc ~tse only 18 the presentations. If you have any questians,l'd be 19 applies to three of the parcels of this property, sa it's 1 ~ haPpY to answer them. 20 not the enter property. Rather 1t's acres, .~4 acres coMh~s~oN~t ~'~IaMAS; Are there any 21 shown herein dark blue, Again; the current ~vning of ~ 1 questions from the Co~missian fox staff? Thank you, Is property is Downtown Residential Z but based vn the ~ 2Z . the applicant here? If you could state your name and 23 requested coning change if it`s changed to Downtown ~ address. ~4 Com~ercialGeneral, then the proposed use would be 24 ~ . coop: ~bsalute . M name.is . lY Y putted and a drive-tbraugh ~vauld require a~a su~.~ t~~: you might want to announce the ~ Fage 4 S . I Again, the pperty is in Downtown University Core fire 1 op.ing of the public hearing as well, ~ land use designation which supports the proposed change ~ CQMMISI~~ER THO~►; Thank ou. des . y 3 and the proposed use. And public notifcatioh was oracle 3 we're now opening public hearing. Is the a licant pF ~ and one response was received in favor of this re~ues~ 4 here? As we see .is, and if you could state your name 5 .Again, it eras the.same property shown ~in the previous ~ 5 d address. ~ presentatian• 5 Imo. coox:Thank you v mush ~'Y 7 The applicant has submxt~ed a site plan as 7 Coa~issioner. My name is Stephen Cook and 1 represent ~ part of the application shown hie in the yew outline ~ S Springbraok Planning C>~aup.at X405 Mu~ta~g Drive in 9 is the limits of the pectic lase Permit. A closer look 9 ~pevine, ~'exas, If you'll bear with me for ' t a 10 of this plan shows that the access that wih be used hrom 10 second, I'll pull up our presentation that we have far 11 Myrtle t[aet as Well as the temporary bank bialldf~lg and I I these ~'teu]S, I ~ then the drive-through use which is the subjt of this 12 ~efome au this ei is the two da Y ~ l ~ Specific Use der-mgt ~ request, s temporary site is 13 ~ items. "phe ~t is fcr ~~he mzvriin r~qut. T`l~e . . l4 expected to be in operation far appraxii~ately a year: lea 14 rezoning regt is far the area that is c~iz7rentl zoned y 1 S ~ trees will be removed as part of this tnparary use and l ~ a~ the Downtown Residential 1 District, Tl~ a 3icant pp l6 this photograph shows site and the existing l6 is aski~ for a rezoning for a ~~-z or a area which is 17 residential use apt the back of the site which is not 17 concm.T~ent as staff greatly presented with the surroundin g I $ within these elements, but it is an existing residential 1 azea and also with the corrtprehensiveplon and with the 1 structure although it's currently vacant. ~ 19 Downtown Master Flan far areas of infill and redevelopment 2~ This is a view of the site looking t 2~ in the area. 'The area the site and proposed use far ~1 back towards Carroll and finally, this is the photo 21 for~this area i~ a dowiitavvn bank. It is a bank 2~ this photo is from Myrtle street showing the .access to 22 with also the otiali ~ for dove meat of a 'ti p ~ lop dd~ anal ~3 property. And this is, again, the residence that's at 23 retail uses, kind of mired use type of bask wheile you have ~4 southeast lot of that block of properties. Staff has ~4 both public seise and retail uses vuitl~ii~ the same ~5 reviewed the Specific Use Permit request and based on a ~5 structure. The site~would be developed as somethin .much g PLANI~N SON R~LAR ~SIO~ ~ ~ J[T~TE ?fi ~~07 Page 4~ - .Page ~ona~elt Page 4~ ~ gage 5 ~ l more pedestrian,oriented and adjacent to t~vo major ] h►tR, coot: Yes, Yna'am, it is. artena ys a cattier that is been greatly u.aderutili2ed 2 . COMMISSIONER L:.okay. And..then 3 for a majoixty of years, in the past ~0 years in the 3 site plan that you're showing that shows how ou're oin Y g ~ ~ area. And so it would be an appropriate use for this 4 to put your final building an the lot, it looks like ~ Corner. Additionally, previously zoned ~ you're not making a~.owances for the fact that that house 6 area just to the south and west of the intersection of ~ fs sung there. that's the plan there? 7 Eagle Drive and Carroll Boulevard has just recently been 7 ~ . coop: Let uae t to the oth ge er that S rezoned to to kind of again, fulfrll the areas vin 8 ~ cor~ct. 'The this again is an initial drawin ,The g ~ that area. The final coiner on this intersection is of 9 applicant has been in contact with that articular p i 0 coin, the cemetery and no future development of that ~ o property owner and is still in we believe in n otiations l ~ area is anticipated. l ~ with that property owner far that articular site. This p ~ The eleva~on that you see before you is, site if approved with the zoning can be shifted sli tI Y ~ again, a proposed elevation. The applicant is lookizrg at 1 ~ to the north to accoa~xmodate and to not encxoach on to that 1 ~ developing a site that is going to be contact sensitive to ~ 4 particular sate. . 1 S area and the downtown and become basically a comer : 15 LOIVII.I~IISIONER LYKE: aka . o he's worm y g l G that is going to be identifiable as one enters the I G right now on thing to acquire that iece? _ _ p . . l7 ~lov~ntov~nr from the sough. Aid wig that, I'm available far 17 . coot: yes, ma'am, he is. And if those ~ S .any furor questions. on the zoning. l$ notia~ions do not o thro site i ' l9 g ~ s fle~rble And then well go ~ the ~ one here. l9 enough for developer to be able to shift his buildin 2~ regarding the u~, the other item befog us this evening ~ and be able to accommodate that site. 2l is that applicant is requested if granted. the zoning. 21 co~n~sro aka Y• for this area is to be granted ~a temporary site to be ~2 cossro wATI~s: uestion. You bar R e . 23 . utilid to bring in a~ tempoy hank building to begin ~ nu entrance on. to eagle Drive. That's rohibited I p ~4 operations on the site and it wiu be~ utili: on site ~4 a~sume?~. ~o all of~your transporta.~on, ou're lookin at ~ . whip; the: maim-s~nst~ctic~- t ~g ~-ve~u~g . _ _ . ~ _ ~ . . _ idtial-street?. . ~ Page 50 ~ - P~ e ~2 l ~ on the ~naainder of the sate. ' sup is for a sin 1 . ~ R. CK: Agate, Sir, for' the SAP o~' for . ~ dri~re-up window and temporary stricture. T st~t~are is 2 the ~ ~t~e? 3 --has been placed on site to be to minimize any 3 ~DMMI~~~IE~ wAT~iI~TS: z'~ lonki at a 4 kind of interaction with pedestrianism so that there will 4 proposed site plan and I~ akin how are ou of to Y ~ 5 be no pedestrian infraction with the diive aisle from 5 mss that area with ~ cars that ~ ou~re oin ~to brin ? ~ ~ ~ par ng urea- and entering the building. - And~alse no - G. . M~.. Coop: aka ar~n sir the ro used . interaction with the publicalong the. existing sulk ~ site plan that you see on~ the SL'~t~n before ou i a Y along ll~yrtle Avenue. Staff has been city staff has ~S ro used-site iau for the main i P P P s to for fore 9 been .v . erY gracious in working with us and the developer on ..9 deveioprnent of the main Sate. There 15 a: drr~e access for l ~ looking at the conditions of the sL~ and we greatly would l~~ when the site i5 bui.it on toEagle ~ri~e and Aso one orr 1 l appreciate your support iu in both the zoning and I Z to moll boulevard as well as an access back an to t ~ the sup. ~ ~ .1~ N~~rrtle Street as we~.i:. And, that is for e m~.rn site and l3 And this is again proposed: elevation of ~ l3 ~ the. maul coning for the p~ope~y as it v~ouid be devel~o ed~ p 14 the temporary stricture that would be uti for l4 in the r-tea~ Tutu. l 5 ~ sr~P. And, again, that st~.cture would be r~wved once ~ l S ~ ~~11►ISSiONER wA ~S. Where s enough room 1 G ~ main stricture is operational. Thank you very much. 1 G ft'U~ ~e COrne~ of ~ e a~qd y CTOll Boulevard for an, Y ~ COMMI5SIONER THOMAS: Any questions of the l7 e~trance`~ l ~ applicant? ~ 18 MR. DR,AI~E~ Yeah. I think the oint is . ~ 19 coMn~tsslo LYKE: If we can go back a t9 tonight we're ready Concernin ' a~lves with the iand couple frames before. There's a house on the corner that 2~ use and that that will be an ism that's discussed with 21 is not part yes, the house right there is not part of ~I ~'espeet the is when' it cones four p ~ d.. this zoning request? ~ COIVIlV~~St~1~ER wA'NS: okay. Thank you, ~3 . coax: What is comet. ~3 sir. COMMISSION~,i LYE: And it's an ownerslnp ~4 CD1VIlViI~StDNL~ R T~OMA; No other questions? 2~ of somebody different? 2~ we have one card on this issue excu,Se one, vve have orte ~~ANNIN~C ~ ~0~ rULAl ~EI~N ~IEE~II~ JUKE 7TH, ~~~7 tae - Pa e .  1 onds~~t ~ . Page 5~ ~ e 55 l .card -an .t~s item aid if aa~one else-would like to I L ke. And.. ~ we da need them to dill out cards. Mr. y you would 1~ke to speak wig staff? . Robinson, would ~ col~In►trsszor~ WATI[S: yam, ~ would. I'm 3 on like to speaks Y . _ - . ~ somew~iat concerned about the wood fence that would arrive 4 ~ MR. R~$INSON: lure. - . ~ ~ grant of the ~ . Doses if something didn't transpu~e. ~ COMMYSSIOIdER THOS: ~ didn't see an ~ ~ the a , . goes dmstratian of that you're not ready set ~ whets you wanted to speak ar nat. ~ u p far ~t. And I realize that ~'m, certainly not very ~ MR R~~INSON: I always like ~a~ about ~ ~ n, but I dust wonder if some of thaw ~ opportunity t0 Speak. ~ r could be ~ ~ removed ar maved are you comfortable Randy Rabinsan, ~~1~ D~st~ Drive} I]ent 9 with it as std l ~ ~bv~auSly,1`~n in favor of this. ley relationship to the Z ~ . ..~,oa~~,~Y: well, as it's ~ expl~.ined . _ e~o~meat we w~I. be t mom m the. bud.., ~ ~ ~ me, the purpose of delaying tha 1t75tallatlUn of that ~ 2 the bank itself, and so we've ~-1've waked with the . . I ~ . fence is to allow appheant move forward ot~ ~ 3 ~ ~ ownors who are' developing .this for the past few moaths and 13 eonstt~on whit. e at the same tie allowing ~e residents ~.4. riy t~ed~t~~- des' €~f the-inu ~ _ _ _ . . you pro~al~ _ . -cnndnue occupancy of that residence. There's that saw, but this is the very southwest corner of the l5 . sunset. clams iluded bause~the -applicant Itm sorry, . l6 designated dawatawn area and we really want to make this a l~ Deco ant of that . l7 make a statement when ou hit ~i ~ residence is actively seeking to y whey you reach this l7 relocate right now. So the date is iaser~d sa that i l inte~sec~on that you've reached downtown Eton. You see ~ S the event n rre i~nSU~Ce<SSfl~l ~I' ~f t~teir ppSitlan . I9 - a lot of the-featlu ~of b~ildiit~ ar+~~also____-- . . . . _ ..changes-aad~~ ocenpaxray- ~hey~-if-t---a ahead 2~ architecturally similar to coinhouse and we want 2~ and. install the fen i ce at that time during canstructZOn of l ~buil~ to ~ look 100 dears odd when it's wl it o s. 2l . the bank. ~0 tu4t was OuI' Intent, we an~cl ate, i use of the _ 2~ CaMIVII~siON wATN~; .S~-you rre tereparary bu~I~,ng far about a year, whater the ~ comfortable'? 24 construction period takes to get the building open and 24 . yes, sir. Staff is ~5 then hopefully, ante that gets open have it have a~, of 2~ camfo~r#abie with . that. Let me also add dust as a point of Page 54 . 1 the acs around tl;~ property that we need. Sa I'll ~ ~ Page ~ di~cussu~n and clarifcatlon. ''here are three thin s also ~ glad to answer any questions but I did want to say I am in ~ that I would g ~ to make you and the public aware of that ~ favor of the rezoning and # Special use Permit as well. 3 ane; the corner 1 t a an southeast corner of I believe ~ COMivII~SXQNF,~: T~oI~AS: Thank you. Are ~ 4 that's M ~ e and y~ Carroll, the res1dence that was shown cn 5 any questions`? Since I see na other requests to Speak, 5 the illustFatiun ~ we'll close a public hear~in . pn Chi and Bagle,l m sorry, That property g s, again, ~ ~ is not a part of the rezoning request. ~ two different items. e will be voting on Chase ~ C4MMISiONER wATt~.Ilr~~: sight. $ indi~iduahy? Is tl~ire a motion an Item I? g ~+IR. LOC~I,EY: a if they', successfi2l r`n ~ ~o~In~tsior~ w~rl: on 51~ ~-O~~DZ~, ~ 9 n otiatia ~ g the purchase of that site, that site would l0 would wave that we rezone to Imo. l0 t eve to come forward to you again for rezoning if tl~ l l CaMMISIONEI~ T~IOi~IA: Thank you. IS there I l a ~icant Ch Pl? aas~ to include that in the. de°velapment, ~ The 12 a second? t ~ ~ that u' 13 Yo considenng bus evening 2s also temporary COMMISIO~IER LYI~$: second. I~ and that's ~.e~pire in as Ms. l4 ~OIVLMISi~NER T~~MAS: All in favor, lease ~ fey noted ~n 18 p l4 months, 15 vote. ~ excuse me, would you please vote. All right 15 l ~ The motion passes 3-0. o41V~MI~SIQ1~Fi}i wATKrN: ~ . ~ ~ . so when the final ba~ak cages 17 ~n Item again four the i~c i7 forward then they~l~ come before ou ain ' ~ . l S Permit, is there a motion ors this item? - y ag with another . l i 8 s~rn far a drive-ugh facility i~ they chase to have CQN~IVIiI01~R ~ATK,INS: I would make ane if 19 that on their site, And I ceuXd talk with staff Just a little bit. I ~vau~d move then I tl~nk thaw are the only 2~ two But r jest wanted ~ be luxe that you're aware Z l approval. ~l of those as 1. COMMI~I~ T~4MAS: Yon yyad reave ~on~ssrorr~ ~~r~r~: okay. 1 stand ~ b m approval, okay so is there a secand~. Y y . 24 ma~an. COMIv~C5YQNER yes, I second. ~4 con~ISroN Teo: okay, Second b Dr . I'll dust add ane other point . . y of cYar~ieatian; r Code is written with res ect to ~L1~~T~VIN ~I'~INC I ~ .NE ~7Tg, X007 P ~ 3 Pale 5~ onden~eI~~ Page 57 1 peC].f1G Use Perrn~ts ~n ~7ection. ~J.~.~ t0 aoW ~ imposition of various conditions open a Specil"ic Use 3 Per,.it and there's a list of oh, probably ~0 yr so 4 examples, but ~~'s certainly not an exhaustive list and 1t. 5 provides for additional standards that maybe imMpvsed to ~ pr~teet ~ and achieve ~ the-purposes set forth the .~f _ _ ----.--r--- _ _ - _ _ . _ - _ . . _ . gyp.:.-. - ~~a~l~; ~in his a provision ~ that provides for revocation or abandonment of a Speciffc 9 Use Permit. If for some reason those those conditions 1 ~ that are placed on it camrvt be met ~ are not met then 1 t .there is. a_pravisi~on for rev.tion-of -mac Use..... . ~ ~ ~ Permit should that ever b~ecoi~e a problem. . ,4 .1 ~,[~iT+-Lii1~1Vi1111~~~~. k./T.i ~~.~V~ 14 C~MM~S~tgN,~R TI~~MA. Ail rit, fie. have a 15 ~:otion and ~ second. ~vr cica~on, if coup, lVir. . 1 atki~s, does your inotivn include the attached . 17 recommendations from staff 1 ~ ~O1Vi~~iISSI~NER ~ATI~INS: 'Yes. . ~ 9 C~~ISS~~NER T~I~MAS: And I .assume, D~. ~ . y yo~r.second does a1~v. include. that..... _ _ ~ ~ C~M~uII~I~NER LYKE: It does. ~2 C~Iv~vnS~ONER THOMAS: okay: a have a Motion an a second, if vie could pease vote. okay. The. ~4 item passes ~-o. ~ Ali right. ~larif"~cativn on ~y palm, ~5 should eve have the Chairman came back in and end the Page 5~ - ~ ineeti~ag or are tee- _ . ]impends oh ~hether~or not 3 you re ~n a. cow .~noad. : _ _ . ~ C~MA►QSSTON~R TH€}i~A: He _ _ . - _ _ - ~ - - - -mad na _~lt_to. _ _ 5 come back. 6~ Dom: you eerta~nly have a ~uoru~n 7 here ~to call for a motive to adjourn, but if you wanted . S to call hixri back in out of courtesy ynu could do that as 9 well, 10 CDMM~Si~NER THOMAS: I ~ will ailo~r t 1 the haixrnan to close the meetlug bielf. ~ ~ MR. DRAB: I think that technically . ~ 3 because you did have all of the ~neYnber eligible to rote 14 on the motion to adjourn it vas probably the right 1 ~ decision to rr~ae. . 1 ~ ~MMISSZONER TH~~MAS: pn oCCasio~ I do 17 that. 1 S Colv~ll~rSS~DNER STRANGE: I aSS1117~e 19 concluded. the business an the .Agenda.. ~o a have any future Agenda items`? ~eeirig Wane, eve mill adjourn at ~ . 7:5~. Z~ ~~nd of proeeedinsF~ 2 ~ . 24 ~5 PLANS & ~~N~N~x ItEI~LAR EI~N ~ . ~Tl ~ X007 . P ~ 57 - P~a ~  1 s.lour documer~~slord~nanaesl0?1z~7-(~}12.doc EXHIBIT 12 EXHIBIT 11 ORDINANCE ND. AN ~RDINANCF~ ~F THE CITY ~F DENTIN, TEAS, PR~~IHIN FAR ~DNINC CHANCE FROII~ A D~wNTOwN RESIDENTIAL I ~D~-1} ~~NINx DISTRICT TQ A D~wN'~OwN C~ER.CIAL GENERAL ADC-~ ~~N~V DISTRICT; THE AREA FAR ~~NIN~ CHANCE ENCOMPASSES x.962 ACRES CF LAND LOCATED NORTH F EAGLE DRIVE, EAST CF PACIFIC STREET. AND BEST F MYRTLE STREET AND LEGALLY DESCRYBED A TRACTS 163 164 1 166,16,168, ~ 76,177, ~ 78, l 79, l 8~ and 18 ~ GF THE w~ LGVING SURVEY, ABSTRACT N~ER 7'59, IN THE CITY ~F DENTIN, DENTQN COUNTY, TEAS; PROVIDING FOR A PENALTY IN THE AI4iDUNT GF ~,a0a.0~ FAR. vICLATIGNS xHER~~F, ~ E~rERA.BILrrY CLAUSE ~ AN EECTE DATE. ~~a~-aa i ~E,, CarrDll~Eale Partner, LP, has applied far a change In zanrn for approxlrnately 2.962 acres of land from a Downtown Residential 1 CDR-1} zoning distract classification and use dei anon to a Dawntaw~ Commercial General C~C~ zoning district classicatian and use d~Slgnatl~n; and WHEREAS, on July 2~7, 207 the Planning and ~on~ng Commission recommended approval of the requested change in zoning; and WHEREAS, the City Council finds that the change is consistent with the Denton Plan and . the Develapn~ent Cade; NGw, THEREFORE, THE C~UNCn~ CF THE CITY F DENTIN HEREBY ORDAINS: SECTION 1. The findings. ar~d recitations conta.~ned in the preamble of this ordinance are ir~corparated herein by reference as true. SECTION The zoning district classification and use designation is hereby changed from Downtown Residential 1 CDR-I} zoning district classification and use designation to a Downtown Can~mercial General ADC-~} zoning d~tnct classlficat1on and use de~gnatlan far 2.62 acres of land, d acted in Exhibit "B", attached hereto and incorporated herein by reference, and mare particularly . , described in Exhibit "A", attached hereto and incorporated herein by reference the Property Notwithstanding the above real property description, the prapertybein rezoned includes all property to the centerline of all add scent street rights-of way, SECTION . The City's off icial land use snap is amended to shvw the change in the land use designation, SECTION 4. If any provision of this a~rdinance or the application thereof to any person 4r circumstance is held invalid by any court, such invalidity shall not affect the validity afother provisions or applications, and to this end the provisions of this ordinance are severable. ~CTIO~ . Any person violating any provision of this ordinance shall, upon conviction, be fzned a sum not exceedin $2,~~a.aa~ Each day that a provision of this ordinance is violated shall g  IL s:lour dacumentsl~rdinan~esl~?107-OOl ~.doc constitute a separate and distinct offense. ETI~N This ordinance shall become effective fourteen ~l4}days from the date afits asa a and the pity secretary is hereby directed to cause the caption of th~.s ordinance to be ~ ~ ~blished twice in the Denton record-chronicle, a daily newspaper published the pity of Denton, . p Texas, within ten days of the date of Its passage. PASSED AND APP~vED this the ~ day of , ~~~7• PERRY R. cNEIL~, MAYOR ATTEST: . ~ENN~`ER wALTEI~S, CITY SECRETARY APPROVED A T~ LEGAL F~1; EDP TT~RNEY :r . f s:lour docum~ntslrn'dinanc~sl~?Iz07~0012~dac EHIBiT A I~EA~. DERiP`~I~N ~7 ~ ~ II ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ I~ ~ ~ ~ ~ ~ ~ ~ PACE 3 b~~ a«~men~brdNSnces~m~.o~aoiz ns THEtdCE N~tTH 00 DEGREES 38 M~NUTEB 23 SECONDS EAST, WITH TkE EAST LINE OF SAIQ HEASLEY TRACT AND THE WEST LINE OF SAID TRACT DESCRIBED IN A l7EED Tt] JAMES MOODY PiPRIN ET UX, A ~ DISTANCE OF 12.52 FEE7 TO A Ft7UND 5!8 INCH IRON PIN AT T!-IE NOR'CFMIEST COF2NEl2 OF SAID JAMES MDODY PIPPIN TRA~'f ANd THE 54UTHWEST CORNEit OF A CAk.LED 0.201 ACRE TRACT DESGRtBED IN A DEEQ TQ CAMILA MARTINEZ ET ViR, RECORDED IN Dt~UANENT t~lUMBER 20Q5-94711, REAL PR~ERiY RE~C4RDS, CIEhiTdN COUNTY, TEXAS; THENCE NORTH 88 DEGREES 59 MINUTES 28 SECONDS EAST WITH THE NQR7H LINE flF SAID JAMES MOODY PIPPIN TRAGTAND 7HE SOUTFf LINE OF SAID 0.201 ACRE TRACT, A DISTANCE OF 175.9$ FEEL' TO A ~i}UND 112 INCH IRON PIN AT THE NORTiiEAST Cf3RNER OF SKID JAMES MOORY PPPPlN TRACT AND THE SOtJTFiEAST CORNER 4F SAID ~ MARTINEZ TRACT, BEING ON THE WEST LINE OF MYRTLE STREET; THENCE SOUTH OD DEGl~ES 19 MINUTES 06 SECOFtDS EAST WITH THE WEST LINE OF MYRTLE STREET, PART OF THE WAY WITH THE FAST LINE OF SAID JAMES MOOQY PIFPW TRACT PASSING 1NE SpUTFFEq$7 Ct}RNER THEREOF, CONTINUING PART 97F TFlE WAY 1dNTF# THE EAST LINE OF SAID J.E. PIPPIN TRgCT PASSINCa THE SOUTHEAST CORNEFZ THEREQF, ANp CQiVFENUING WITH THE EAST LfNE OF SAID GLEMOD6NE ' 5. PIPPIN TRRCT, A TOTAL DISTANCE OF 159.97 FEET TO A SET 1t2 WCH ~ IRON P1N WITFE A YELIC~ PLASTIC GAR STAMPED "NiETRppLFJ(1 g4g• qT THE 54UTHEp3T CQRtJER OF SA1p GLENOpINE PIPPIN FRACT ANl7 TF1E ~ NdRTH LINE OF SAIp CALLED TRACT 1, DESCRIBEtS IN A DEED TQ i MICHAEL R. WEBB, l2ECURDED IN VOLUME 673, PAGE 239, DEED REGORC7S, OENTOW COUNTY, TEXAS; l THENCE EAST WITH THE NORTH LINE OF p SAID TRACT 1, p DISTANCE ~ 4F 6.69 FEET TO A SET PK NARL AT THE NOR7HEgST CORNER Of E'aAID WEBS TRACT 1 (673.239) SAID Plf NRIL BEING IN MYRTLE BTREET; THENCE SCtUTH PART OF THE WAY WITH THE EAST LINE OF SAID WEBS TRR~CT 1 (673.238} pASSlNG fiFiE SOUTtfEAST CORNER THEREOF, CONTIIVWNG PART OF THE WAY WfTH THE EAST LINE OF SAID WEBB TR,4C:T (629,374) RAS$IN~ THE Sd7UiHEAST CbRNER 7HERE0~ GOhlTINUING WIT!-1 THE EAST LINE OF SND WEBS TRACT (626,474) A TOTAL DI3TANlCE 4F'164.a0 FEET TO A SET PK NAIL AT THE SOti"I"FlEA57 CORAIER OF SAID YYEBB TRgGT (626,674) AND THE NQR'i'HEA3T CORNER' OF A TRACT OESCREBED IN A DEED TO CARLpS MEZA RECORDS[! UNQER GDUNTI' CI.EaK'3 FILE NUMBER 033~47T OF THE REAL P120PERTY RECOI~pS„ pENTdN COUNTY. TEXAS. SAIQ PK hfAtL 6EIA1G IN . MYRTLE STREET; ~ 1 s:\our da~mrnnbMinences\OTzO'/A012.ds THENCE WESF IMTH A 30tiTH LENE OF SAIO tNE6B TRgCT (g7g~g74} ANp FHE IV~kZ'1'H LlhlE OF SFtID MEZA `1'RgCt' p pISTAtdCE OF 188.00 FEET,TO A SET'!f2" iRtN~i PIN WITH A YELLOW PLASTIC Cqp 87AM1PED "METROPLEX 1849" A7 THE SOUTHWEST CQl~sCER pF SAID WEBS TRgC~ (626,474) ANO THE NpR7MWEST GOf?NER OF SAID MEZA T'RgCT, Spip I~ PIN BEING dN THE EAST LINE flF SAID WEBS TRACT 4 (673,239}; THENCE SOUTH WffM AN EAST LINE OF SAfD WEBB TRAC74 (673,238} AND PART` C?F THE #1tAY WITH THE WEST LINE OF SAID MEZA TRACT PASSING AT 60.D0 FEET THE 30UTHWEST CORNER'Ti~{EREOF, CONTINUING A TOTAL DISTAIUCE OF 76.44 FEET TO A SET PK NAII, A7 ' THE SdUTHEAST CQRNER OF S,g117 WEBS TRgCF 4 (673,239), SAID NAIL BEING HV 4NEST FAGLE DRl THENCE WEST PART OF THE WAV WPTH THE SOUTH LINE OF SAID WE88 TRACd 4 (673,239) PASSING'1 FIE SOUTHWEST CORNER TtfiEREOF CL3NTIPIUIMG WITH 7H~ SOUTH LINE 4F SA~b WEB$ TRAGT 3 (673,239) All TOTAL. DISTANCE 4F 212.41 FEET TO A SET PK fVAIL AT THE SOUTHWEST CORNER OF SAID WE66 TRACT AND THE SOUTHEAST CORNER C5F Q TRACT DESCRIBED EN A DEED TO CITY ~ DENTON RECORpED IN VOLUME 595, PAGE 96 4F TFIE DEED RECORDS, DESd7QN COUNTY, TEXAS SAID PK NAIL 9EIt~; IN WEST EAGLE DRN~; THENCE hidRTH WITH THE WEST LINE ~F SAID VVEgg 7RgC1' 3 (673, 239), A D{&TANCE OF f 79.05 FEET TO A SET i!2'" IRON PIN WITH A yEt,t,pyy FLkSFIC CAP STAMPED `METRQPLEX 1849" AT THE NORTFIWEST CORNER OF $AID WEBB TRACT 3 (873,238} AfVD THE NORTHEAST ~j COE2NEFt C7~F SAID CITY OF pENTpPA'ti2pCT (595, T!-}ENGE SQUTH 89 QEGREES 52 MfiVU7ES d6 $ECONOS EA$T WITH THE NORTH LtPlE OF SAt[7 WEB TRACT 3 {673,23$) q p~~yTAIVCE qF 20,43 FEET TO A FOUND iJ2" IRON PIN AT Ti-IE SQU'fHWEST CORNER OF SAID WEBB TRACT 2 (~T3.239j; THENCE NORTH 00 DEGREES 07 MINUTES 14 SECONDS EAST PART OF ' THE WAY WITH THE WEST LUdE OF SAID WEBB TRACT 2 (673,239} PASSIMG THE AlORTH4VESF CORNER FHEREOF CAN71NUIkG WITH THE WEST L1idE OF SRID WEBS TRACT (831,527) AND TFfE EAST LlFtE QF PACIFIC STREET A TQTAI. DISTANCE OF 317.9$ FEET TO A fOCJNp INCH IRON PiN AT TFIE lVOR7HWEST COFtNEit OF SAID WE86 (&3Y,527), BEIiVG THE SOUTHWEST CQRNER t]F Sglp ~pLLED 0.286 ACRE TRACT OESC1ilBEC? !N A DEED TO JAMES ANp SUSAN P1FpIN; i THENCE NORTH 00 QEGREES 34 MINUTES 04 SECONDS WEST, WITH THE WEST LINE OF SAID CALLED b.286 ACRE TRACT DESCFiFBED IN A DEED j TO JAMES PJV~ SUSAN PIPPIN ANp THE EAST t,INE OF PACIFIC STREET, s:w~=eo~um~se~eN~«sw~~.o~aoiz.a~ i A DISTANCE OF 89.72 FEET TQ A FOUND', IhfCH IRON p11V AT THE I~tOR7'HWBST CORNER OP SAID Q.286 ACRE JAMES AND Sll3At~ PIPPIN TRAC3', BEIPlG THE S~U7HWEST CORNER OF SgID 0.294 ACRE TRACT Tp CARROLL 8. PlPPUV, JR. ET UX; 'fkfENCE NORTH 00 DEGREES 49 MdNUTES 38 SECf3ND31NEST, WI7H:THE WEST LIPJE OF SAfp 0.294 ACRE TRgCT TO CARRpLl. 8, PIPPIN. JR. ET t}X Ad+ID THE EAST I~NE O~ PACIFIC BEREFT, A DISTANCE OF 89.22 FEET Tp 1'HE POINT QF BEGINNING AND CONTAINING IN ALi. 2.962 ACRE$ OF L.AN0. PAGE 6 s:lou~r dacume~n#slordir3ances1~71~07-041~.doc E~~~~~~ .~.w.. { ~ ~ ° ~/p V.4wN ~ '4 ~N C , ................_.....-r 6 ~ c ~ ~ ~ ~k 's ~ ~ i ~ ~S t s ~ ~ ~ i 1 [ ~ l i ...s.~..~..~...~.....~....w~~.........~.r~,.•.,..,.....r~ f { ~ S r S ]f(r~ ..i-w-... - i..,..,..., - --v......,...,. 33 ~ ~ ~ E } ~ ! ~ ~E ~ ~ f~ i S 1 i~ F y ~ ~ ~ ~ E ~ st t i ~:t 4 szz, L ~ ~ J~l! ~L14.1 ~~e~ AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Planning and Development ACM: Howard Martin, 349-8232 SUBJECT - 507-0006 (Access 1St Capital Bank) Hold a public hearing and consider the adoption of an ordinance for a Specific Use Permit to allow a drive through associated with a temporary bank building within a Downtown Commercial General (DC-G) zoning district. The subject property is 0.544 acres in size, and is generally located on the west side of Myrtle Street, north of Eagle Drive. The Planning and Zoning Commission recommends approval of the request (3-0). BACKGROUND Applicant: Spring Brook Planning Group Grapevine, TX The applicant is requesting a Specific Use Permit in order to allow a drive through use to be associated with a temporary bank building within a Downtown Commercial General (DC-G) zoning district. The temporary bank use will occupy 0.554 acres of property, and will be in operation while the construction of a permanent bank and office building is completed on the remaining site. The recommended conditions of the Specific Use Permit are outlined in Exhibit 1. The Planning and Development Department sent notices of the public hearing (Exhibit 6) to all residents within 500 feet of the entire subject property; as of this writing, one written response in favor of the request has been received. PRIOR ACTION/REVIEW The Planning and Zoning Commission held a public hearing on June 27, 2007. OPTIONS 1. Approve as submitted. 2. Approve subject to conditions. 3. Deny. 4. Table item. RECOMMENDATION The Planning and Zoning Commission recommends approval (3-0) of this Specific Use Permit request, subj ect to the following conditions: ■ the Specific Use Permit applies only to the drive through use associated with the temporary bank building on the parcel of land as shown in Exhibit 6; ■ the Specific Use Permit shall expire within 18 months of the issuance of a building permit for the temporary building, or upon vacation of the temporary building, whichever occurs frst; and ■ the single family residences to the north and west of the site are vacated and not used as residences after December 31, 2007. If the properties are still being used as residences on January 1, 2008, the installation of a wood fence will be required between the temporary bank and the residences. EXHIBITS 1. Staff Analysis 2. Location Map 3. Zoning Map 4. Future Land Use Map 5. Site Design 6. Notification Information 7. Letter From Applicant 8. Site Photographs 9. Responses to Notice of Public Hearing 10. Planning and Zoning Commission Minutes, July 27, 2007 11.Ordinance Respectfully submitted: h ~ sr V f ~ rp i 1 ■ 1:ti Brian Lockley, AICP Interim Director, Planning and Development Prepared by: w s Jane Gurney, Planner I 2 EXHIBIT 1 PLANNING & DEVELOPMENT S~'AFF ANAL YSIS CASE NO.: 507-0006 DATE TO BE CONSIDERED: June 17, 2007 LOCATION: The subject property is located north of Eagle Drive, east of Pacific Street and west of Myrtle Street. APPLICANT: Spring Brook Planning Group 2405 Mustang Drive Grapevine, TX 76051 OWNER: Carroll-Eagle Partners, LP c/o David Vanderlaan 2925 Country Club Road Denton, TX 76210 REQUEST: Consider the adoption of an ordinance for a Specific Use Permit (SUP) to allow a drive through associated with a temporary bank building in a Downtown Commercial General (DC-G) zoning district. RECOMMENDATION: The Planning and Zoning Commission recommends approval (3-0) of this Specific Use Permit request, subject to the following conditions: ■ the Specific Use Permit applies only to the drive through use associated with the temporary bank building on the parcel of land as shown in Exhibit 5; ■ the Specific Use Permit shall expire within 18 months of the issuance of a building permit for the temporary building, or upon vacation of the temporary building, whichever occurs first; and ■ the single family residences to the north and west of the site are vacated and not used as residences after December 31, 2007. If the properties are still being used as residences on January 1, 2008, the installation of a wood fence will be required between the temporary bank and the residences. COMPREHENSIVE Downtown University Core PLAN DESIGNATION: SITE AND The property is 0.544 acres in size, and is part of a larger proposed SURROUNDINGS: development of 2.962 acres. The subject property is generally located north of Eagle Drive, on the west side of Myrtle Street. The property is within a Downtown Commercial General (DC-G) zoning district. 3 North: Downtown Residential 1 (DR-1) and Downtown Commercial General (DC-G); Residential and office uses South: Downtown Commercial General (DC-G); QuikTrip, Eagle Point Shopping Center East: Downtown Commercial General (DC-G); residential and commercial uses West: Downtown Residential 1 and 2 (DR-l, DR-2); IOOF Cemetery, commercial and residential development BACKGROUND Drive through uses in Downtown Commercial General (DC-G) INFORMATION: zoning districts are permitted with a Specific Use Permit. The applicant intends to use the site as a temporary bank with a drive through while constructing a permanent bank on the property. The Specific Use Permit to allow a drive through only applies to the temporary building. The Planning and Zoning Commission has recommended approval of the Specific Use Permit application (3 -o). ANALYSIS: Development The Denton Development Code, Subsection 3 5.5.3.2, requires a Code/Zoning Analysis Specific Use Permit for drive through uses in Downtown Commercial General (DC-G) zoning districts. Criteria for approval of Specific Use Permits (SUPS) are provided in 3 5.6.4 of the Denton Development Code. The approval criteria for all SUPS states that Specific Use Permits shall be issued only if all of the following conditions have been met: A. That the use would be in conformance with all standards within the zoning district in which the use is proposed to be located, and in conformance with The Denton Plan and federal, state, or local law. Downtown Commercial General (DC-G) zoning districts permit the proposed use, and allow drive through uses with a Speck Use Permit. The proposed bank is consistent with the future land use designation of the property, Downtown University Core, and will provide services and office spaces in close proximity to residential uses within the Downtown University Core area. Therefore, if an SUP is granted, the proposed temporary bank drive through would be in conformance with the Denton Plan and the Denton Development Code. B. A specific permit shall be issued only if all of the following conditions have been met: 1. That the specific use will be compatible with and not injurious to the use and enjoyment of other property nor significantly diminish or 4 impair property values within the immediate vicinity; 2. That the establishment of the specific use will not impede the normal and orderly development and improvement of surrounding vacant property; 3. That adequate utilities, access roads, drainage and other necessary supporting facilities have been or will be provided; 4. The design, location and arrangement of all driveways and parking spaces provides for the safe and convenient movement of vehicular and pedestrian traffic without adversely affecting the general public or adj acent developments; 5. That adequate nuisance prevention measures have been or will be taken to prevent or control offensive odor, fumes, dust, noise and vibration; 6. That directional lighting will be provided so as not to disturb or adversely affect neighboring properties; and 7. That there is sufficient landscaping and screening to ensure harmony and compatibility with adjacent property. As part of the proposed larger development, the applicant will be improving roads, installing sidewalks, and providing or ensuring the existence of adequate infrastructure and utilities to support the proposed development. None of the existing trees on the site will be removed for the phase of the development associated with the Speck Use Permit, and the existing trees will serve to provide some landscaping and buffering between surrounding properties. C. That adequate capacity of infrastructure can and will be provided to and through the subj ect property. Adequate infrastructure and utilities exist to support the proposed temporary bank. D. That the Special Use is compatible with and will not have an adverse impact on the surrounding area. When evaluating the effect of the proposed use on the surrounding area, the following factors shall be considered in relation to the target use of the zone: 1. Similarity in scale, bulk, and coverage. 2. Generation of traffic and effects on surrounding streets. Increases in pedestrian, bicycle, and mass transit use are considered beneficial regardless of capacity of facilities. 3. Architectural compatibility with the impact area. 4. Air quality, including the generation of dust, odors, or other environmental pollutants. 5. Generation of noise, light, and glare. 6. The development of adjacent properties as envisioned in The Denton Plan. 7. Other factors found to be relevant to satisfy the requirements of 5 this Chapter. The applicant has provided elevations and site plans for the subject property (Exhibit 5). The temporary building will not be architecturally compatible with existing areas, but the permanent buildings proposed for the property will conform to the site design standards of the Denton Development Code (Subchapter 35.13). By preserving the existing trees on the site, the applicant will be providing some buffering of noise and light that may be created by the drive through. A condition recommended by the Planning and Zoning Commission includes the installation of a fence to the north and west of the bank site, if the adjacent properties continue to be used as single family dwellings. DEPARTMENT AND The Development Review Committee has reviewed this application. AGENCY REVIEW: Based on the criteria for Specific Use Permits, referred to previously, the Development Review Committee recommends approval of the Specific Use Permit, with the following conditions: a. The existing trees identified on the site plan (Exhibit 6) are not to be removed at this point in time. New tree plantings will not be required at this point in time as part of the buffering, due to the applicants intent to maintain the existing trees on site as part of the temporary use. b. Protective fencing will be correctly installed and maintained around the existing trees adjacent to the construction zones of the proposed temporary bank, drive through, and new parking lot. c. An opaque fence be constructed on the north and west boundaries of the property between the bank and the adjacent residential uses, if the properties continue to be used as single family dwellings after the end of 2007. FINDINGS: The criteria for approval of a Specific Use Permit (SUP), per Subsection 35.6.4. of the Denton Development Code will be met by the proposed temporary use, and as such, staff recommends approval as outlined in the above sections. 6 EXHIBIT 2 LOCATION MAP . . . . . . Specific Use Permit Limits (outlined in white) f r ~4. ~F'~~t. EXHIBIT 3 ZONING MAP r , ~l ~F'~~t. g EXHIBIT 4 FUTURE LAND USE MAP ~ , ~ . ~F'~~t. 9 EXHIBIT 5 SITE DESIGN ~ ~ n r f x ~ ~ r~ ~ r~ ~i , ~ ~ ~ ~r ~ ~ I x _ ~ ~ w ~ ~ ~ ~ I .R x ,i ti ~ # I ■ I ■ ~ ■ ~ ~ i~ e ~ ~@~ ~ r~ ~ ~ 10 EXHIBIT 6 NOTIFICATION INFORMATION . v ,ti ~ ~ 1 S r, . .S • ~ , ti ~ ti. f , ~ ~ .r ~ o ti ~r ` i ~ i. ti r ti ti ~ ~ • J j ~ ~ r ~ ~ ~ ~ ~ , ~ ~ i 7 ~ .x ~ • • 5• • + . r . ~ i~ 5 • 4• .5 ~ f ' ,~y ~ J• ~ r . ~ 'r 1 'r ~ R 1~ • 5 . ~r r r. •k r r~ ti , , Public Notification Date: June 17, 2007 200' Legal Notices* sent via Certified Mail: 20 Number of responses to 200' Legal Notice: ■ In Opposition: 0 ■ ®In Favor: 1 ■ Neutral: 0 ~ - A copy of the notification list is available at City Hall West, 221 N. Elm Street, Denton, TX 11 EXHIBIT 7 LETTER FROM APPLICANT - .~rrrx': I .t ~I a 1• ~ ti t- z ~ - ~ - ~ - ~ ~h . ..n. Y ! M1 ]+s r . .5 . ti ~ Z.. 5 ~ I ~ ~ I• _ ~ L J 'r r i ~ r r -a 1 r I~ ~ I . r .ti ~ 'S I r i ` ~ r '~i I Y r i4~~ III L F i y x~ I 7. I .I } I J f -1 5 4 5 y ~ I i i 7S' ~ ti } { I s v.1 .r. rn n .r 1~ ~ rJr ~ 12 [~A~Ea~le Par~rs~ [P~or~ir~g n. P~e2af3 once the site plan is final¢ed an SUP application f+or the proposed bank drnre through use wil 6e submit6~d_ Related to the 7 c~itena of approval inr an SUP, we aver the following analysis= That the speca~fic use wrofl be campa~6l~e wrtti ar~d not i~j~naus ~o fhe rise arm @f f0]~!?7~,fit Df d~l~~ ~l~~ft]~ IJO~f l~lCB~l~f dlfY~lN3ti Of lf~7/~1t pf~Bf~ 11~f1JB,4 WI~~fIf If?7IB~ 11lCIfN~I- Camd~Eagle Partr~ers, LP cantrds the rema~ing 2.96'1 awes and the ~nre thru has been des~ed m the r~r flf tie building which wil mirrmize the impact to the surnaunding ar+ea_ The div~thr~augh sf~cking wil be contained an site and the use s tiempora~y- 2. That ~e establishmer►t ~f tfie speca~ficc use wi~f rat impede the rior~►~~al and a~rider~y d~e~oprrien# and impr~oti+oement of s~rrvundirig ~aca~ prnperfy The use is irrtended do alla~w the normal developrrrent a~f 1he P~PenY- 3_ That adequate r~ifilies, a~oess rr~a~s, drarriage arm ~tfier necessary sr~ppartirrg fac7li#~es hafroe been oar wrofl fye pr~ov~ided_ Adequate utilities and access a~ available to support the proposed development 4_ The desiign rGaca~►nrr and am~gerner~r of a~l9f ~riv~eways ar~d P~ +9 ~s pr~avndes ~r the sa~ie and caer►v~r~it motiraemerrt of vehrcr~lar e~rd pc~destriarr haf~rc wi~ror~ aduers~ly a~c[ing the generaf pr~c or a~dpacerit dewefopments The location of the temporary 6uildirx~, drive through and pa~idng provides for the safe and convenient movement flf veh~culer and pedestrian traffic without adversely affecting the general p~l~c nr a~acent develapments_ 5_ That adequate nr~isar~e pre~r►~or~ mease~r~s have [a~een or wit! be takes tea preuoen# nr casr~tml a~rrsr~+oe odor, f~m~es, dr~st, nni~•e and vibra~or~_ The only antiapated nose, dust andlor vi6~°ation is dunrx~ consh~~.#inn_ Typical construction preverrtinn measures will be utiized to minim¢e the impad_ 6_ 7T~at dar~iianal ligt~ff~ny wroFl be prnvid~ed so as ~t t~ di~vrb or a~~ne~ely affect The drive-through lane will be IigMed as required per federal regulations_ Pa~ldng lot Ighting wit be shielded do prevent arry adverse ~npsct to adjacent singlesfamily residences_ Addi4onally, Qevelopmerrt {`.ode requ~rnent~ ~9P~ i~aot candle at the properly Ime) will 6e adher+ed tio_ 13 - ~ ~ti ~ i ~ ~ ~ ~ r ti _ ~ I 1 y r ~ r I r 5 ~ti h .ti. 14 EXHIBIT 8 SITE PHOTOGRAPHS Subject property, looking to the northwest. Subject property, looking to the west View from the subject property, looking to the south, Existing curb cut on Myrtle Street into the subject towards the existing single family residence at the property. corner of Myrtle Street and Eagle Drive. Myrtle Street, looking south toward Eagle Drive. Myrtle Street, looking north toward Maple Street. 15 EXHIBIT 9 RESPONSES TO NOTICE OF PUBLIC HEARING ~II~ Rl~~ ~d ~en~~farF d fr1 ~ ~ alrion x~ hdd a p~~ lie~g ~n J~r~ ~T. ~ Viler ~4 ~ ~ ~ fwd Q E ~~e■IJ ~~sd n ~ ~~r ~~d ~h ~ ti1~~ 6~Ie~~AdrQ. ~ P~4~ ~ ~ ~ h■+~ ~ ~rrHr~ ~wlde~rtl~ ~1~, art i pert ~Fo ~qer ~F yldah h~ hid ■n ~p~1on ■~4~ ~d ~ ~1r1 a~~P~~ b G~rR~ ~M~il~~~~ #~le a~~ ~ ti.il hg ~I! be ~ ~nyp~~+l~ b~~[~~il~ ~d ~dlo~ ~~~0'1 ~~~~p ua~ d~ ~~r ~ ~ d ir■fphe~ ~ ~ iid a~o~~ Of E~~ ~4F ~ b~ ~n d~+~+~# ddg o~ I~r~ ~ ~f M1~ ~w■i aid ~ ~ P~~ Iert10 ~ el~rt ~ ~ ~ ti ~ p~ ~srol ~h~4r~ ~ C~ Fhi ~t 216 ~ ~a~ l~r o~ ~~En ire ~4u~~d ■~~~bG, _ ~d ~ ~ ~e~ F'~e~ ~1 Q~ ~ ~Aan ~ be dhwr ~ ~ AIM ~1a fi■ ~ cf the p~l~lfv hp~~~ ~ fl m ~ k'~i~d ~ ■UM hotmm ~r III ~ ~ Ihr~.~N ~la~ h eR ~r~ T~ ~e ~ ~ fi■ ~r~1r ~111L ~a n~~+■~rt ~f#iwl . ~l1~r ~ ~d 1~ ~e~ i~ p~■~~■ ~f rdar~ ilre+~a~e ■rd ti■ Tip. ~#kn ~ t~wd alter p~~ ~Fr~~e~1 h ■~~t +d h ~a~do■, P~~ a~ei ~ ~ ~I~ req~~ ~P~#d b reQulrE F4i~d was ~~q ~1d~ ~ ~ 741~p1~~ NQr~r. Pf~~r ~II~1~~ dF~ ■I~i13~ ~~Lt1~ 16 EXHIBIT 10 ~ gage 43 _ cQn~tia s,v ~`he~ next tiro mss,.. I . - Through theme ~~ckly i~ you'd like ar I can stop after the 2 Items Na. I and J rela#e to the zoning of approximately 2 zoning case because they are tvvo separate uses. So I'm 3 ~.9~~ acre piece of property from L)o~vntown Residential ~ 3 not sure ifthere's a I assume two separate moons 4 Zoning District to a Downtown Ca~mercial General honing 4 have ~ be made. I just didn't want to aka I'll y ~ District. Ial, I believe you have a comment before we ~ just ga ahead and do bath. Thank you. And I can dust 6 start this. 5 face t way now. _ - . . -~~Tl~~stcase is-a ~v~ ease ~~ich.. ~ Before meeting it was brought to our dettivn that S yvu~ne being asked to consider and make a recom~rtendatian 9 three Qf the nbers of tl~e Planning and Zoning Commission 9 to City Council regarding the rezoning of approximatel . l0 have potential conflicts under Chapter 171 of the Texas ZO ~.9~2 acres of property which is located north of Fagle l I Local Gaverrunent Cade and have filed affidavits to state I l Drive and east of Carroll Boulevard but it lies between their .c~%s lifrcntiorr~fraure d~ _th~s matfer a~~_--_ - Myra -~eet and Pacific street. Across from Fa 1e Drive under the rules that have been promulgated by the~City 1~ to the south is the uek Trip Gas ~~an. Across _ 1 ~ Council ~ will be leaving the rte, during l4 Carroll to the ~ is the InteFnatianal Grder of {kld l S disct~ssian and deliberate and. not participating in the 15 Fellow Cemary ahd l ~ separate lob or panels make. l ~ vote. .I6 up the subject property and all are under sin le . _ g. I just wanted to quid clarify a . 17 a~vae~s}~p__ ~2 its e l S statement that was made in wank sesseon that I sated the l - Dave h~us~s ~n tin d re~rta~~nd~f t ~ap~s.---.---- - _ l9 standard enco~ectly. Because there are such a large 19 undcvelcped. i . -number of pev~le that have filed affidavits under this 20 . current . zanrng of pxaperty 7s . ~1 Chapter 171, it appeared at first as though there might be 21 Downtown residential 1, oR~r which permits some 22 an ception granted under section 171.004.0 of the Texas Z~ residential uses including dingle Farrel and Du lexes. P Local Gavernme~t Cade. Hawev~er, upon closer ex~min~~.on ~3 The proposed coning under cansedexatian now would than the prvvision~ reads tba# ~ a majority of the m~nbe of ~4 the zoning to.Dawntown. C~ercial G~eral or acs mad this ~5 this body were to file such affidavits that all of the ~5 zoning district permits some higher density residential Page 4Z ~ Page 44 l members may gate. Since only three of them have Bled I uses such as multi-family and attachod single family, but . ~ affidavits, three is not a majority' of seven and ~ ~ it also ~ comcial uses such as mil sales and . ~ therefore, the.~ceptean does oat apply. ~ ~ 3 ~ service and professional services such as a licant is pp . 4 Bated upon the fact that we have one nber ~ 4 ~ prnP~ing far t1~.s site. 5 who is absent there wed be three members of this body v~ha ~ ~ The~future land use deli atJ€an of the 6 will be considering both, the zoning case and the Specie 6 ~ ~ properly is Downtown University Care ~ is the. designation 7 Use ~ertnit that's related to it. And out of . three 7 ~ - of all of the property iu the area. And the I~awntown 8 members who axe eligible to vote, a moan would need two 8 University Core designation es defined as an area. offeri 9 votes in order to carry. If there are any further ~ a mix of educational retail afce service, government, l0 questions I'll be happy to answer tam. 10 cultural and entertainment developments and the proposed . l ~ - . co~~s~ot ~v; - ~f~rou~l}.b~r_witlr I _ _ rezonizg -i~ cousestent with this Viand i~se desig~a#aan. . l ~ us for just one moment, please. ~ 1 ~ The public was noted of this hearing. A.nd to date one 13 I~want to thank the public for their l3 r~panse~has been received. And it was included in the 1 ~ patience while we shuffled up here. As preciously stated, l4 backup package, The response removed was in favor of the l 5 this es far Items I and J that the Chairman spelled out 15 request and it's shaven here in the green hatch znarlcs just 1 ~ prior to recusing himself, I believe staff has a l 6 at the inside the red line at the tap northwest of the 17 presentation. 1VIs. Cxurney. 1Vls. Gurney, if you would like 17 property, 1$ far time sake since these are related, if you would like iS 'The same photogra hs of the site here p l9 to present them concurrently.. I~ show the surrounding properties as vtrell as the site. This ~0 . sure, I can do that. ~fl photo was taken from. the earner of Carroll and Ea le g -2l ~oisstorr~,~ ~ron~s: okay. Thank you. ~I looking nadrth along Carroll B.aulevard. This photo h p ~s. soy of. ~ was takes from west edge of the sub jest pr oor~ssrot cos: sort of. 23 looking south along Carroll Boulevard towards the 'ck ~4 s. thank you, I do have the 24 Trip. ~5 pre~sentatior~s broken iota two separate ones so I can run ZS This is the ra to the w t p pe~y es which 1s ~~~~NIri~ ~N1~1T REGULAR EIN ~ETIN JANE ~ ~ - 0~~' gage 4 ~ Page 44  1 ondenseIt~ ~ P e 4~ 1 lnternatianal order of add Fellow Centetary across ~ tl~ site plan submitted b~ tl~e applicant and criteria ~ CalTOll l~aulevard and this is a view of subject ~ far sues they reca~d approval with the recommendation property including one of the existing reside~itial ~ that the sup applies , only to the drive-through use 4 buildings that`s on site now. Again, looking from the 4 associated with this temporary hank building o fiat if a 5 same position but looking dir$ct~y east, this is part of ~ future drive-through use is planned it does not apply to 6 undeveloped area of the lot andmoving this is 5 that, Also, the sup shall expire within 1 S months of the 7 further east from CazTOll or ~'m sorry, from Myrtle Street ~ 7 ~ issuance of a building permit for the temporary building $ looking back towards Carroll and finally, this is the $ or upon vacation of the temporary building, whichever 9 property that's at the southeast corner of this block 9 occurs first. l 0 which is not a pad of tl~s coning change regs~ but it 1 Q And ~inally~ staff recommends that the 1 I is an existing residential use. 1 i single family residences curntl existin to the n rth y g o 1 ~ The staff has reviewed this application and 12 and west of the site and vacated and not used as 1 ~ found that it meets the zoning amendment criteria provided 13 residences after X007. If the properties are still being 14 Yn the Der~tan Development Code and as such staff i4 used as residences on ]az~uary 1st, ~D08 the installation 15 recommends approval of the zoning request. A second item 15 of a wood --six foot woad fence would be reco~nended l 6 as part of this development is a Spec~i~c-Use Ferna.~t fvr ~ l~ between bank and the sidential uses in order to Z ~ to allow adrive-through bank ar adrive-through 17 ensure complete buffering. And #hat's the end of both o~ . . I associated with ~ temporary bat~kk. ~Th~s spe~ifc ~tse only 18 the presentations. If you have any questians,l'd be 19 applies to three of the parcels of this property, sa it's 1 ~ haPpY to answer them. 20 not the enter property. Rather 1t's acres, .~4 acres coMh~s~oN~t ~'~IaMAS; Are there any 21 shown herein dark blue, Again; the current ~vning of ~ 1 questions from the Co~missian fox staff? Thank you, Is property is Downtown Residential Z but based vn the ~ 2Z . the applicant here? If you could state your name and 23 requested coning change if it`s changed to Downtown ~ address. ~4 Com~ercialGeneral, then the proposed use would be 24 ~ . coop: ~bsalute . M name.is . lY Y putted and a drive-tbraugh ~vauld require a~a su~.~ t~~: you might want to announce the ~ Fage 4 S . I Again, the pperty is in Downtown University Core fire 1 op.ing of the public hearing as well, ~ land use designation which supports the proposed change ~ CQMMISI~~ER THO~►; Thank ou. des . y 3 and the proposed use. And public notifcatioh was oracle 3 we're now opening public hearing. Is the a licant pF ~ and one response was received in favor of this re~ues~ 4 here? As we see .is, and if you could state your name 5 .Again, it eras the.same property shown ~in the previous ~ 5 d address. ~ presentatian• 5 Imo. coox:Thank you v mush ~'Y 7 The applicant has submxt~ed a site plan as 7 Coa~issioner. My name is Stephen Cook and 1 represent ~ part of the application shown hie in the yew outline ~ S Springbraok Planning C>~aup.at X405 Mu~ta~g Drive in 9 is the limits of the pectic lase Permit. A closer look 9 ~pevine, ~'exas, If you'll bear with me for ' t a 10 of this plan shows that the access that wih be used hrom 10 second, I'll pull up our presentation that we have far 11 Myrtle t[aet as Well as the temporary bank bialldf~lg and I I these ~'teu]S, I ~ then the drive-through use which is the subjt of this 12 ~efome au this ei is the two da Y ~ l ~ Specific Use der-mgt ~ request, s temporary site is 13 ~ items. "phe ~t is fcr ~~he mzvriin r~qut. T`l~e . . l4 expected to be in operation far appraxii~ately a year: lea 14 rezoning regt is far the area that is c~iz7rentl zoned y 1 S ~ trees will be removed as part of this tnparary use and l ~ a~ the Downtown Residential 1 District, Tl~ a 3icant pp l6 this photograph shows site and the existing l6 is aski~ for a rezoning for a ~~-z or a area which is 17 residential use apt the back of the site which is not 17 concm.T~ent as staff greatly presented with the surroundin g I $ within these elements, but it is an existing residential 1 azea and also with the corrtprehensiveplon and with the 1 structure although it's currently vacant. ~ 19 Downtown Master Flan far areas of infill and redevelopment 2~ This is a view of the site looking t 2~ in the area. 'The area the site and proposed use far ~1 back towards Carroll and finally, this is the photo 21 for~this area i~ a dowiitavvn bank. It is a bank 2~ this photo is from Myrtle street showing the .access to 22 with also the otiali ~ for dove meat of a 'ti p ~ lop dd~ anal ~3 property. And this is, again, the residence that's at 23 retail uses, kind of mired use type of bask wheile you have ~4 southeast lot of that block of properties. Staff has ~4 both public seise and retail uses vuitl~ii~ the same ~5 reviewed the Specific Use Permit request and based on a ~5 structure. The site~would be developed as somethin .much g PLANI~N SON R~LAR ~SIO~ ~ ~ J[T~TE ?fi ~~07 Page 4~ - .Page ~ona~elt Page 4~ ~ gage 5 ~ l more pedestrian,oriented and adjacent to t~vo major ] h►tR, coot: Yes, Yna'am, it is. artena ys a cattier that is been greatly u.aderutili2ed 2 . COMMISSIONER L:.okay. And..then 3 for a majoixty of years, in the past ~0 years in the 3 site plan that you're showing that shows how ou're oin Y g ~ ~ area. And so it would be an appropriate use for this 4 to put your final building an the lot, it looks like ~ Corner. Additionally, previously zoned ~ you're not making a~.owances for the fact that that house 6 area just to the south and west of the intersection of ~ fs sung there. that's the plan there? 7 Eagle Drive and Carroll Boulevard has just recently been 7 ~ . coop: Let uae t to the oth ge er that S rezoned to to kind of again, fulfrll the areas vin 8 ~ cor~ct. 'The this again is an initial drawin ,The g ~ that area. The final coiner on this intersection is of 9 applicant has been in contact with that articular p i 0 coin, the cemetery and no future development of that ~ o property owner and is still in we believe in n otiations l ~ area is anticipated. l ~ with that property owner far that articular site. This p ~ The eleva~on that you see before you is, site if approved with the zoning can be shifted sli tI Y ~ again, a proposed elevation. The applicant is lookizrg at 1 ~ to the north to accoa~xmodate and to not encxoach on to that 1 ~ developing a site that is going to be contact sensitive to ~ 4 particular sate. . 1 S area and the downtown and become basically a comer : 15 LOIVII.I~IISIONER LYKE: aka . o he's worm y g l G that is going to be identifiable as one enters the I G right now on thing to acquire that iece? _ _ p . . l7 ~lov~ntov~nr from the sough. Aid wig that, I'm available far 17 . coot: yes, ma'am, he is. And if those ~ S .any furor questions. on the zoning. l$ notia~ions do not o thro site i ' l9 g ~ s fle~rble And then well go ~ the ~ one here. l9 enough for developer to be able to shift his buildin 2~ regarding the u~, the other item befog us this evening ~ and be able to accommodate that site. 2l is that applicant is requested if granted. the zoning. 21 co~n~sro aka Y• for this area is to be granted ~a temporary site to be ~2 cossro wATI~s: uestion. You bar R e . 23 . utilid to bring in a~ tempoy hank building to begin ~ nu entrance on. to eagle Drive. That's rohibited I p ~4 operations on the site and it wiu be~ utili: on site ~4 a~sume?~. ~o all of~your transporta.~on, ou're lookin at ~ . whip; the: maim-s~nst~ctic~- t ~g ~-ve~u~g . _ _ . ~ _ ~ . . _ idtial-street?. . ~ Page 50 ~ - P~ e ~2 l ~ on the ~naainder of the sate. ' sup is for a sin 1 . ~ R. CK: Agate, Sir, for' the SAP o~' for . ~ dri~re-up window and temporary stricture. T st~t~are is 2 the ~ ~t~e? 3 --has been placed on site to be to minimize any 3 ~DMMI~~~IE~ wAT~iI~TS: z'~ lonki at a 4 kind of interaction with pedestrianism so that there will 4 proposed site plan and I~ akin how are ou of to Y ~ 5 be no pedestrian infraction with the diive aisle from 5 mss that area with ~ cars that ~ ou~re oin ~to brin ? ~ ~ ~ par ng urea- and entering the building. - And~alse no - G. . M~.. Coop: aka ar~n sir the ro used . interaction with the publicalong the. existing sulk ~ site plan that you see on~ the SL'~t~n before ou i a Y along ll~yrtle Avenue. Staff has been city staff has ~S ro used-site iau for the main i P P P s to for fore 9 been .v . erY gracious in working with us and the developer on ..9 deveioprnent of the main Sate. There 15 a: drr~e access for l ~ looking at the conditions of the sL~ and we greatly would l~~ when the site i5 bui.it on toEagle ~ri~e and Aso one orr 1 l appreciate your support iu in both the zoning and I Z to moll boulevard as well as an access back an to t ~ the sup. ~ ~ .1~ N~~rrtle Street as we~.i:. And, that is for e m~.rn site and l3 And this is again proposed: elevation of ~ l3 ~ the. maul coning for the p~ope~y as it v~ouid be devel~o ed~ p 14 the temporary stricture that would be uti for l4 in the r-tea~ Tutu. l 5 ~ sr~P. And, again, that st~.cture would be r~wved once ~ l S ~ ~~11►ISSiONER wA ~S. Where s enough room 1 G ~ main stricture is operational. Thank you very much. 1 G ft'U~ ~e COrne~ of ~ e a~qd y CTOll Boulevard for an, Y ~ COMMI5SIONER THOMAS: Any questions of the l7 e~trance`~ l ~ applicant? ~ 18 MR. DR,AI~E~ Yeah. I think the oint is . ~ 19 coMn~tsslo LYKE: If we can go back a t9 tonight we're ready Concernin ' a~lves with the iand couple frames before. There's a house on the corner that 2~ use and that that will be an ism that's discussed with 21 is not part yes, the house right there is not part of ~I ~'espeet the is when' it cones four p ~ d.. this zoning request? ~ COIVIlV~~St~1~ER wA'NS: okay. Thank you, ~3 . coax: What is comet. ~3 sir. COMMISSION~,i LYE: And it's an ownerslnp ~4 CD1VIlViI~StDNL~ R T~OMA; No other questions? 2~ of somebody different? 2~ we have one card on this issue excu,Se one, vve have orte ~~ANNIN~C ~ ~0~ rULAl ~EI~N ~IEE~II~ JUKE 7TH, ~~~7 tae - Pa e .  1 onds~~t ~ . Page 5~ ~ e 55 l .card -an .t~s item aid if aa~one else-would like to I L ke. And.. ~ we da need them to dill out cards. Mr. y you would 1~ke to speak wig staff? . Robinson, would ~ col~In►trsszor~ WATI[S: yam, ~ would. I'm 3 on like to speaks Y . _ - . ~ somew~iat concerned about the wood fence that would arrive 4 ~ MR. R~$INSON: lure. - . ~ ~ grant of the ~ . Doses if something didn't transpu~e. ~ COMMYSSIOIdER THOS: ~ didn't see an ~ ~ the a , . goes dmstratian of that you're not ready set ~ whets you wanted to speak ar nat. ~ u p far ~t. And I realize that ~'m, certainly not very ~ MR R~~INSON: I always like ~a~ about ~ ~ n, but I dust wonder if some of thaw ~ opportunity t0 Speak. ~ r could be ~ ~ removed ar maved are you comfortable Randy Rabinsan, ~~1~ D~st~ Drive} I]ent 9 with it as std l ~ ~bv~auSly,1`~n in favor of this. ley relationship to the Z ~ . ..~,oa~~,~Y: well, as it's ~ expl~.ined . _ e~o~meat we w~I. be t mom m the. bud.., ~ ~ ~ me, the purpose of delaying tha 1t75tallatlUn of that ~ 2 the bank itself, and so we've ~-1've waked with the . . I ~ . fence is to allow appheant move forward ot~ ~ 3 ~ ~ ownors who are' developing .this for the past few moaths and 13 eonstt~on whit. e at the same tie allowing ~e residents ~.4. riy t~ed~t~~- des' €~f the-inu ~ _ _ _ . . you pro~al~ _ . -cnndnue occupancy of that residence. There's that saw, but this is the very southwest corner of the l5 . sunset. clams iluded bause~the -applicant Itm sorry, . l6 designated dawatawn area and we really want to make this a l~ Deco ant of that . l7 make a statement when ou hit ~i ~ residence is actively seeking to y whey you reach this l7 relocate right now. So the date is iaser~d sa that i l inte~sec~on that you've reached downtown Eton. You see ~ S the event n rre i~nSU~Ce<SSfl~l ~I' ~f t~teir ppSitlan . I9 - a lot of the-featlu ~of b~ildiit~ ar+~~also____-- . . . . _ ..changes-aad~~ ocenpaxray- ~hey~-if-t---a ahead 2~ architecturally similar to coinhouse and we want 2~ and. install the fen i ce at that time during canstructZOn of l ~buil~ to ~ look 100 dears odd when it's wl it o s. 2l . the bank. ~0 tu4t was OuI' Intent, we an~cl ate, i use of the _ 2~ CaMIVII~siON wATN~; .S~-you rre tereparary bu~I~,ng far about a year, whater the ~ comfortable'? 24 construction period takes to get the building open and 24 . yes, sir. Staff is ~5 then hopefully, ante that gets open have it have a~, of 2~ camfo~r#abie with . that. Let me also add dust as a point of Page 54 . 1 the acs around tl;~ property that we need. Sa I'll ~ ~ Page ~ di~cussu~n and clarifcatlon. ''here are three thin s also ~ glad to answer any questions but I did want to say I am in ~ that I would g ~ to make you and the public aware of that ~ favor of the rezoning and # Special use Permit as well. 3 ane; the corner 1 t a an southeast corner of I believe ~ COMivII~SXQNF,~: T~oI~AS: Thank you. Are ~ 4 that's M ~ e and y~ Carroll, the res1dence that was shown cn 5 any questions`? Since I see na other requests to Speak, 5 the illustFatiun ~ we'll close a public hear~in . pn Chi and Bagle,l m sorry, That property g s, again, ~ ~ is not a part of the rezoning request. ~ two different items. e will be voting on Chase ~ C4MMISiONER wATt~.Ilr~~: sight. $ indi~iduahy? Is tl~ire a motion an Item I? g ~+IR. LOC~I,EY: a if they', successfi2l r`n ~ ~o~In~tsior~ w~rl: on 51~ ~-O~~DZ~, ~ 9 n otiatia ~ g the purchase of that site, that site would l0 would wave that we rezone to Imo. l0 t eve to come forward to you again for rezoning if tl~ l l CaMMISIONEI~ T~IOi~IA: Thank you. IS there I l a ~icant Ch Pl? aas~ to include that in the. de°velapment, ~ The 12 a second? t ~ ~ that u' 13 Yo considenng bus evening 2s also temporary COMMISIO~IER LYI~$: second. I~ and that's ~.e~pire in as Ms. l4 ~OIVLMISi~NER T~~MAS: All in favor, lease ~ fey noted ~n 18 p l4 months, 15 vote. ~ excuse me, would you please vote. All right 15 l ~ The motion passes 3-0. o41V~MI~SIQ1~Fi}i wATKrN: ~ . ~ ~ . so when the final ba~ak cages 17 ~n Item again four the i~c i7 forward then they~l~ come before ou ain ' ~ . l S Permit, is there a motion ors this item? - y ag with another . l i 8 s~rn far a drive-ugh facility i~ they chase to have CQN~IVIiI01~R ~ATK,INS: I would make ane if 19 that on their site, And I ceuXd talk with staff Just a little bit. I ~vau~d move then I tl~nk thaw are the only 2~ two But r jest wanted ~ be luxe that you're aware Z l approval. ~l of those as 1. COMMI~I~ T~4MAS: Yon yyad reave ~on~ssrorr~ ~~r~r~: okay. 1 stand ~ b m approval, okay so is there a secand~. Y y . 24 ma~an. COMIv~C5YQNER yes, I second. ~4 con~ISroN Teo: okay, Second b Dr . I'll dust add ane other point . . y of cYar~ieatian; r Code is written with res ect to ~L1~~T~VIN ~I'~INC I ~ .NE ~7Tg, X007 P ~ 3 Pale 5~ onden~eI~~ Page 57 1 peC].f1G Use Perrn~ts ~n ~7ection. ~J.~.~ t0 aoW ~ imposition of various conditions open a Specil"ic Use 3 Per,.it and there's a list of oh, probably ~0 yr so 4 examples, but ~~'s certainly not an exhaustive list and 1t. 5 provides for additional standards that maybe imMpvsed to ~ pr~teet ~ and achieve ~ the-purposes set forth the .~f _ _ ----.--r--- _ _ - _ _ . _ - _ . . _ . gyp.:.-. - ~~a~l~; ~in his a provision ~ that provides for revocation or abandonment of a Speciffc 9 Use Permit. If for some reason those those conditions 1 ~ that are placed on it camrvt be met ~ are not met then 1 t .there is. a_pravisi~on for rev.tion-of -mac Use..... . ~ ~ ~ Permit should that ever b~ecoi~e a problem. . ,4 .1 ~,[~iT+-Lii1~1Vi1111~~~~. k./T.i ~~.~V~ 14 C~MM~S~tgN,~R TI~~MA. Ail rit, fie. have a 15 ~:otion and ~ second. ~vr cica~on, if coup, lVir. . 1 atki~s, does your inotivn include the attached . 17 recommendations from staff 1 ~ ~O1Vi~~iISSI~NER ~ATI~INS: 'Yes. . ~ 9 C~~ISS~~NER T~I~MAS: And I .assume, D~. ~ . y yo~r.second does a1~v. include. that..... _ _ ~ ~ C~M~uII~I~NER LYKE: It does. ~2 C~Iv~vnS~ONER THOMAS: okay: a have a Motion an a second, if vie could pease vote. okay. The. ~4 item passes ~-o. ~ Ali right. ~larif"~cativn on ~y palm, ~5 should eve have the Chairman came back in and end the Page 5~ - ~ ineeti~ag or are tee- _ . ]impends oh ~hether~or not 3 you re ~n a. cow .~noad. : _ _ . ~ C~MA►QSSTON~R TH€}i~A: He _ _ . - _ _ - ~ - - - -mad na _~lt_to. _ _ 5 come back. 6~ Dom: you eerta~nly have a ~uoru~n 7 here ~to call for a motive to adjourn, but if you wanted . S to call hixri back in out of courtesy ynu could do that as 9 well, 10 CDMM~Si~NER THOMAS: I ~ will ailo~r t 1 the haixrnan to close the meetlug bielf. ~ ~ MR. DRAB: I think that technically . ~ 3 because you did have all of the ~neYnber eligible to rote 14 on the motion to adjourn it vas probably the right 1 ~ decision to rr~ae. . 1 ~ ~MMISSZONER TH~~MAS: pn oCCasio~ I do 17 that. 1 S Colv~ll~rSS~DNER STRANGE: I aSS1117~e 19 concluded. the business an the .Agenda.. ~o a have any future Agenda items`? ~eeirig Wane, eve mill adjourn at ~ . 7:5~. Z~ ~~nd of proeeedinsF~ 2 ~ . 24 ~5 PLANS & ~~N~N~x ItEI~LAR EI~N ~ . ~Tl ~ X007 . P ~ 57 - P~a ~  1 s:lour docur~~ntslardina~nces1~71s~7~000~ sup crdinance.~o~ ORDINANCE 1~0. AN ORDINANCE OF THE CITY OF DENTON, TEA, PROVIDING FOR PECIF"IC USE PERMIT TO ALLOW A DRI~E~THROUGH USE AOCIATED WITH A ~ANI~ IN ~ DOWNTOWN COMMERCIAL GENERAL ADC-~} ~ONIlrTG DITRIT; THE AREA FOR SPECIFIC USE PERMIT ENCOMPAE 0.554 ACRES DF LAND LOCATED NORTH OF EAGLE DRI~IE AND WET OF MYRTLE STREET AND LEGALLY DECRiBED A TRACTS 177,17, AND 179 OF THE LOVING SURVEY, ABSTRACT NUMBER 759, IN THE CITY OF DENTON, DIINTON COUNTY, TEA; PROVII~ING FOR A PENALTY IN THE AMOUNT OF 2,00~.~0 FOR. VIOLATIONS THEREOF, A EVERABILITY CLAUSE AND AN EFFETE DATE. X07-a~o~~ wHI~REA, Carroll-Eagle Partner, LP, has applied far a specific Use Permit to allow a d~ive- thraughuse associated with a bank far approximately 0.5 54 acres of land, mare particularly described in Exhibit "A", which is attached hereto and incorporated herein by reference the "Prapert~'}, in a Downtown Commercial General ADC-G} caning district classi~.cation and use designation; and WHEREAS, an July ~7, X007 the Planning anal caning Can~issian recommended apprava~ of the requested Specific Use Permit subject to the conditions outlined in Sections and 4; a.d wHEREA, the City Council fnds that the change is consistent with the Denton Plan and meets all criteria set forth in ~3 . ~.4 of the Denton Development .Code; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAIl~: SECTION l , The findings and recitations contained in the preamble of this ordinance are incorporated herein by reference as true. IJCTION 2. The Specific Use Permit S1te Plan attached hereto and ~ncarparated herein ~s Exhibit "B", xs hereby approved for the Property. } . SECTION 3. The Specific Use Permit shall expire 1 ~ months from the issuance ofa permit for the terriparary bank building that thedrive-through use will be associated with, ar upon vacation afthe . temporary bank building, whichever occurs first. SECTION 4. Compliance with the Denton Development Cade, ~5~1.8.~.a.i. Buffer and Screening Requirements} will be required if adjacent properties under con.nan ownership are maintained as single family residences aver January 1, BOOS. SECTION 5. If any provision of this ordinance or the application thereof to any person air circuYnstar~ce is held invalid by any court, such invalidity shall not affect the validity of other provisions ar applications, and tv this end the provisions of this ordinance are severable. ECTXON Any person violating any provision of this ordinance shall, upon conviction, be dined a sum n.at exceeding 2~,OOO~00. Each day that a provision of this ordinance is violated shall constitute a separate and distinct offense.  LM 4. i ECTI~IV This ~rdinanee shall beeon~e ffeeti~e fourteen ~ 14~ days from the date of its passage, and the ity~ eeretary i hereby directed to cause the caption of this ordinance to be published tV4~lce In the Denton Record-hronicl~e, a daily r~e~rspaper published in the pity ofDentan, Texas, ~Vithii] ten ~ 14} days of the date of its passage. PAD ~ AP~R~ED this the day of Z0~7. PARRY .1VIcN~~~, AYR ATT~T; J~NNI~`R. .A~T~R, YTY SPRPTARY 1 . A.PPR~VED A T~ ~,~C~AL~ F~RNI: ~D~ ~ , s  Lm E~iIB~T A L~AL D~RIPTlO~V f~ I ' ~~L~ L. 4 Y L ~,r..........~.- w«w»«~n ~,~,--.-r.......,.,..... ~ ~ ~r 11~ E ~ e fui1W 3 p ~ ~ a k~ f i { ~ 5 i f f~ j i ~ ss 4 t 's E E s } ~ ~ i ~ ~ i ~ i ~ ~ ~ j i E ~ i i i i i s i ~ I F ' ~ _ ~ ! _ ; { 1 j i~ L ~ ~ {yf 5} Y xCC i g 1' Y E ~ ' i ~ ~ S X f i ~ ~ ~ ~ ~4 ~ ~ " F~~ PACE 4  i 1 E~I~IT B SITE D~I~ ~ ~ ~ ~ y . r x . t~ . •r . 1~ R , 4 1 '1 M 1 w X ~ # ~ ; ~ ~ is j r ~ ~ { - ~ . fi 1 ; 4f' r" :f_ ' i"- Cr J _ %:S. 1 fY'; ~'ry~Y~' .'M1. `~f'. i~ :W . r.":w c','c: ~ - _ ; ..sou.":;-~ 3'. ~ "v _ ~ f. . ...i k'\i' ' .i'. :"Y:~' tiF'. ~~'1'::~: :'K, .NY'. .C~~~ ti.'~ 1~~::'. ..y,`'; Y 'S~ _ z. ~!'i J ~'~>ii' ~1 ~.:~..r.~ _ ~..4 i . 1 r. 1' h ' ~ ?.4} tier '~Y'~`a~ ' * :i° ~r.. it4 si :-`'i ~;p,~ . . ~~i ~'i` f.". -y~. _ ~~1 - 4'.' ' , r:'.. t . ,+1;% ' iti .~i='~ t~:. ~ 1. ,r ^.r.. t . r. i. ~r.i• .ti,': , ' ' ' ' . A~%,. J ~ ~ 5 1 ~ w ~ ~ ~ t. ~ ~ ,  i AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Planning and Development ACM: Howard Martin, 349-8232 SUBJECT A07-0002 (Denton Municipal Electric Spencer Complex Annexation) Consider adoption of an ordinance on first reading to voluntarily annex approximately 9.02 acres into the corporate city limits of the City of Denton, Texas. The first site is approximately 3.95 acres, the second site is approximately 0.173 acres, and the third site is approximately 4.897 acres. The sites to be annexed are generally located on the north side of Spencer Road between Woodrow Lane and Brinker Road (see Exhibit 1). The sites are within a tract of land described in the Mary Austin Survey Abstract Number 4 Denton County, Texas and being a part of the called 26.474 acre tract described in the City of Denton Ordinance No 81-83 enacted on July 21, 1981 pertaining to the alteration of certain boundary limits of the City of Denton, Texas by the dis-annexation of certain uninhabited territory, consisting of 26.474 acres of land owned by the City of Denton, Denton County, Texas. The Planning and Zoning Commission recommends the annexation procee as presente 6-0. BACKGROUND Applicant: City of Denton Denton, TX A voluntary annexation proceeding is being considered by the City of Denton for portion of the Denton Municipal Electric Spencer Complex property and associated right-of way. The ownership of the property is City of Denton. The subject sites are currently developed as the Denton Municipal Electric Utility Operation facility (see Exhibit 1). The proposed annexation is being initiated by Denton Municipal Electric. The following items summarize the proposed annexation and important actions taken: ■ On June 27, 2007, Planning and Zoning Commission held a public hearing regarding the proposed annexation and zoning change. ■ On June 19, 2007, City Council held the second of two public hearings. ■ On June 12, 2007, City Council held the first of two public hearings. ■ On April 27, 2007, staff received direction from the City Council to pursue voluntary annexation proceedings for three sites. The first site is approximately 3.95 acres, the second site is approximately 0.173 acres, and the third site is approximately 4.897. The sites are within a tract of land described in the Mary Austin Survey Abstract Number 4 Denton County, Texas and being a part of the called 26.474 acre tract described in the City of Denton Ordinance No 81-83 enacted on July 21, 1981 pertaining to the alteration of certain boundary limits of the City of Denton, Texas by the dis-annexation of certain uninhabited territory, consisting of 26.474 acres of land owned by the City of Denton, Denton County, Texas. ■ The three sites proposed for annexation are located within City of Denton's Extra- territorial Jurisdiction (ETJ) and is not zoned. ■ The Comprehensive Plan identifies this area to be within an Employment Centers land use designation. ■ The annexation is scheduled for completion on September 1 1, 2007 (see Exhibit 2). In accordance with the City's annexation policy plan, approved in June 1993, the City will "assess on a case by case basis the annexations of areas in the ETJ when significant developments are proposed." Annexation should be considered when a property is located within the designated urbanizing area; is expected to accommodate urban growth in the next twenty years; and if the annexation is contiguous to existing city limits, city roads and rights-of way. The subject site is located in Denton's ETJ Division 1. As such, development is subject to only the City's subdivision regulations and not zoning regulations. The subject sites are within a platted lot; however, any subsequent subdivision or reconfiguration of the subject sites will be subject to the City's subdivision regulations. Incorporation of this site into the City would not require additional properties. OPTIONS 1. Proceed with the annexation. 2. Amend the land area proposed for annexation. 3. Amend the Service Plan. 4. Discontinue annexation. RECOMMENDATION The Planning and Zoning Commission recommends the annexation proceed as presented 6-0. PRIOR ACTION/REVIEW (Council, Boards, Commissions) June 12, 2007 First City Council Public Hearing June 19, 2007 Second City Council Public Hearing June 27, 2007 Planning and Zoning Public Hearing FISCAL INFORMATION Development of this property will increase the assessed value of the city, county, and school district. It will require no short-term public improvements that are the responsibility of the city. The proposed annexation area will add additional tax base to the city. EXHIBITS 1. Location Map 2. Annexation Summary Schedule 3. Service Plan 4. Service Area Analysis 5. Notification Map 6. June 27, 2007 Planning & Zoning Commission Minutes 7. Ordinance Prepared by: r Ron Menguita Planner III Respectfully submitted: Brian Lockley, AICP Interim Director of Planning and Development EXHIBIT 1 LOCATION MAP 'k I•~ 11 i i ~{II I 1 { Y I 4 I I y 4 } ~ I ~ ~ ~ ~ ~ ~ ~ r i 'yn. ~ ~ r_ r I~ h EXHIBIT 2 ANNEXATION SCHEDULE SUMMARY Denton Municipal Electric Spencer Complex Potential Annexation Notices to Intent to Annex (30 day prior to lst PH) will be sent on May 4, 2007. Tuesday, 6/12/07 City Council conducts first public hearing. (2nd Tuesday Session) • Public notice must be no less than 10 days and no more than 20 days before public hearing. ❑ Annexation Study prepared and available for public review. ❑ Service Plan prepared and available for public review. Tuesday, 6/19/07 City Council conducts second public hearing. • Public notice must be no less than 10 days and no more than 20 days before public hearing. Wednesday, 6/27/07 Planning and Zoning Commission public hearings -make a recommendation to City Council regarding the ro osed annexation and rezoning request. Tuesday, 7/17/07 City Council by afour-fifths vote institutes annexation procee ings. First reading of annexation ordinance. • Action must be more than 20 days after the second public hearing but less than 40 days from the first public hearing. Sunday, 7/29/07 Ordinance published • The ordinance cannot be acted upon until at least 30 days after publication. Tuesday, 9/11/07 City Council by afour-fifths vote takes final action. Second readin and adoption of the annexation ordinance. City Council considers adoption of zoning request. • Council action must be more than 30 days after publication of ordinance and less than 90 days after council institutes annexation proceedings (adopts ordinance on 1 St reading). The second reading of the ordinance and zoning approval could be held any time between August 28, 2007 and October 15, 2007. Annexations must be rigidly coordinated in conjunction with the City Council public hearing schedule due to specific timing mandates established by Texas State Law. The Texas Local Government Code requires that City Council institute annexation proceedings (1St Reading of the Ordinance) more than 20 days after the second City Council public hearing but less than 40 days from the first City Council public hearing. EXHIBIT 3 CITY OF DENTON SERVICE PLAN FOR A07-0002 Denton Municipal Electric Spencer Complex Annexation I. AREA ANNEXED The annexation area is located on the north side of Spencer Road between Woodrow Lane and Brinker Road. The sites are within a tract of land described in the Mary Austin Survey Abstract Number 4 Denton County, Texas and being a part of the called 26.474 acre tract described in the City of Denton Ordinance No 81-83 enacted on July 21, 1981 pertaining to the alteration of certain boundary limits of the City of Denton, Texas by the dis-annexation of certain uninhabited territory, consisting of 26.474 acres of land owned by the City of Denton, Denton County, Texas. II. INTRODUCTION This service plan has been prepared in accordance with the Texas Local Government Code, Sections 43.021, 43.065, and 43.065(b)-(o) (Vernon 1999, as amended). Municipal facilities and services to the annexed area described above will be provided or made available on behalf of the City in accordance with the following plan. The city shall provide the annexed tract(s) the levels of service, infrastructure, and infrastructure maintenance that are comparable to the levels of service, infrastructure, and infrastructure maintenance available in other parts of the city with similar topography, land use, and population density. III. AD VALOREM (PROPERTY OWNER) TAX SERVICES A. Police Protection, and Animal Control Police service, including patrolling, response to calls, and other routine functions, will be provided to the property upon the effective date of the annexation using existing personnel and equipment. Code enforcement and animal control services will also be provided to the property upon the effective date of the annexation. B. Fire Protection Fire protection (within the limits of existing hydrants) and emergency medical services will be provided to the property upon the effective date of the annexation. The estimated emergency response time in this area is 3.5 minutes from future Station #2, located at 3 3 09 E. McKinney Street. The City of Denton will provide emergency medical services ("EMS"). C. Roads and Streets Roads and streets, which have been properly platted, duly dedicated, and accepted by the City of Denton and/or Denton County, shall be maintained by the City of Denton on the effective date of the annexation. Installation and maintenance of street signs, street lighting and traffic control devices will be maintained by the City of Denton on the effective date of the annexation. D. Parks and Recreation Facilities Parks and recreational facilities in the area to be annexed will begin upon the effective date of the annexation according to the 2000 Parks and Recreation Master Plan. No parks are currently located within the proposed annexation area. Denton neighborhood park facilities are within reasonably close distance of the proposed annexation area. The closest Denton Parks property to the proposed annexation area is Mack Park, approximately 1.5 miles away. Residents of the proposed annexation area will be able to use existing City of Denton park and recreation facilities and programs. E. Library Services Library services will be made available on the effective date of the annexation on the same basis and at the same level as similar library facilities are maintained throughout the city. F. Building Inspections and Consumer Health Services Building inspections and consumer health services will be made available on the effective date of the annexation on the same basis and at the same level as similar facilities are maintained throughout the city. Both services are provided on a "cost recovery" basis, and permit fees offset the costs of services delivered. Incomplete construction must obtain building permits from the Building Inspections Department of the City of Denton. G. Planning and Development Services Planning and development services will be made available on the effective date of the annexation. The Planning and Development Department currently services this property by way of administration of the Denton Development Code, concerning subdivision and land development regu atlons. City Council adopted The Denton Plan, the city's 1999-2020 comprehensive plan, by Ordinance 99-439 on December 7, 1999. The Future Land Use Plan addresses both land in the city and its ETJ, and the subject tract is within the Regional Mixed Use Centers land use designation. The Denton Plan designates future land uses to manage the quality and quantity of growth by organizing the land use patterns, by matching land use intensity with available infrastructure, and by preserving floodplains as environmental and open space corridors. The Denton Plan will be used as a basis for final zoning classifications after t e properties are annexe . IV. UTILITY (RATEPAYER) SERVICES A. Solid Waste Collection The City of Denton is the exclusive residential and commercial solid waste service provider in the City. City Ordinance requires Solid Waste services for all residences and commercial businesses located within the Clty 11m1tS. The City of Denton Solid Waste Department is fully funded through the service fees charged, and receives no funding from city tax revenues. Solid waste refuse collection and recycling collection services will be provided to the newly annexed property immediately upon the effective date of the annexation. To receive solid waste or recycling collection service, the customer must contact the City of Denton Customer Service Office, 940-349-8787, and submit arequest/application for service. Commercial customers are required to complete and submit a Service Agreement to Solid Waste Customer Service prior to receiving service. Commercial Refuse and Recycling Services Each commercial business will be provided with a commercial container(s), which are available in a variety of sizes and frequencies of collection, based on the waste and recyclables types and volumes generated. All refuse placed in the container for collection must be bagged to eliminate wind-blown debris and littering. Refuse that is not placed in the refuse container with the lid closed will not be collected. Refuse placed outside the refuse container is subject to code enforcement regulations, including potential fines. Recyclables placed in a recycling container shall not be bagged. Container lids shall be kept closed at all times during periods of materials storage (when not placing materials in t e container). Landfill Service The City of Denton Solid Waste Landfill hours of operation are 7:00 a.m. to 4:00 p.m. Monday through Friday; and 7:00 a.m. to 12:00 p.m. on Saturdays. For information regarding disposal charges, call the Landfill Office at 940-349-7510. B. Water/WastewaterFaci1ities There are water and wastewater facilities in the area to be annexed. The City will provide a level of water and wastewater service, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the city with topography, land use, and population density similar to those reasonably contemplated or proj ected in the area. C. Drainage Services Drainage maintenance will be provided to the property upon the effective date of the annexation. The City will provide a level of drainage services, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the city with topography, land use, and population density similar to those reasonably contemplated or projected in the area. D. Electrical Services Denton Municipal Electric is certified by the State and is obligated to provide electric utility service to the annexation area should a request be made by a property owner. Electric utility service will be made available on the effective date of the annexation on the same basis and at the same level as similar facilities are maintained throughout the city. V. OTHER SERVICES Other services that may be provided by the City, such as municipal and general administration will be made available on the effective date of the annexation. The City shall provide a level of services, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the City with topography, land use, and population density similar to those reasonably contemplated or proj ected in the area. VI. CAPITAL IMPROVEMENTS PROGRAM (CIP) No new construction of additional water, sewer, street, and drainage facilities is contemplated within the annexed area as a result of this annexation. No construction of public improvements is contemplated as a result of this annexation that would begin within two and a half (2 1/2) years after the effective date of the annexation. The City shall consider construction of other public improvements as the needs dictate on the same basis as such public improvements are considered throughout the City for areas having similar characteristics of topography, land use, and population density. VII. UNIFORM LEVEL OF SERVICES MAY NOT BE REQUIRED Nothing in this plan shall require the City to provide a uniform level of full municipal services to each area of the City, including the annexed area, if different characteristics of topography, land use, and population density are considered a sufficient basis for providing different levels of service. VIII. TERM This service plan shall be valid for a term of ten (l o) years. Renewal of the service plan shall be at the discretion of City Council. IX. AMENDMENTS The service plan may be amended if the City Council determines at a public hearing that changed conditions or subsequent occurrences make this service plan unworkable or obsolete. The City Council may amend the service plan to conform to the changed conditions or subsequent occurrences pursuant to Texas Local Government Code, Section 43.056 (Vernon Supp. 2000). EXHIBIT 4 ANNEXATION REQUEST SERVICE AREA ANALYSIS A07-0002 Denton Municipal Electric Spencer Complex Annexation The Planning and Development Department has received a request for annexation of three tracts, approximately 9.02 acres, located on the north side of Spencer Road between Woodrow Lane and Brinker Road. The sites are within a tract of land described in the Mary Austin Survey Abstract Number 4 Denton County, Texas and being a part of the called 26.474 acre tract described in the City of Denton Ordinance No 81-83 enacted on July 21, 1981 pertaining to the alteration of certain boundary limits of the City of Denton, Texas by the dis- annexation of certain uninhabited territory, consisting of 26.474 acres of land owned by the City of Denton, Denton County, Texas. Size: 9.02 acres Location: North side of Spencer Road between Woodrow Lane and Brinker Road Proposed use: Basic Utility Proposed zoning: Employment Center Commercial (EC-C) The purpose of the service area analysis is to determine how the city would provide services to the area should it be annexed into the city. A service area analysis form is attached. Please provide the requested information and any other pertinent information. To determine the city's ability to provide services to the proposed area it is necessary to document: • each department's existing capacity to provide an adequate level of service to the proposed area; • additional personnel and capital equipmentlfacilities necessary to provide an adequate level of service to the proposed area; and • cost of providing additional service. Existing Conditions: Proximity to existing arterial and collector roads. This property is located on the north side of Spencer Road between Woodrow Lane and Brinker Road. Spencer Road is classified as a Collector Road on the City's Mobility Plan. Future Land Uses. The proposed annexation area is within the Employment Centers land use designation. Existing land uses: The subject property is currently developed as a Municipal Electric Utility Operation facility. Prominent natural features: The Environmentally Sensitive Areas (ESA} map shows that this property is not within an ESA orwithin a floodplain. Proximity to other service providers: The three tracts of land are owned by the City of Denton. The tracts of land are currently use as a Municipal Electric Utility Operation facility. There are various water and sewer lines that transect the tracts. Thank you for your consideration of this request. Please submit any other information that you believe is pertinent to evaluate the provision of services to this area to Ron Menguita in the Planning and Development Department by May 18, 2007, and call (940)349-8328 if there are any questions. ~ ~ F~ - - . ,r ~ y r ~n y I f{ I l 4 ' 'k f + 3' ~ 1 r ~ t i y SERVICE AREA ANALYSIS A07-0002 Denton Municipal Electric Spencer Complex Annexation Fire 1. Fire and Emergency Medical Services can be provided to the area from station(s) # 2, located at 3309 E. McKinney Street. 2. Estimated response time. 3.5 minutes 3. Appropriate response time in the City. 3.5 minutes 4. Is a new fire station approved in the CIP that could serve this area? NO If yes, what is the CIP program year? 5. Will a new fire station be requested in upcoming CIP proposals to serve this area? NO If yes, when should this station be operational? 6. Total estimated funding for equipment, employees and/or facilities needed to serve this area strictly based on annexation and proposed development. NIA 7. Please comment on the cumulative impact of annexation and development. At what population level would another fire station facility be required? NIA Is there an accepted facility/equipment to population ratio that can be used for planning purposes? NIA Is there an accepted firefighter to population ratio that can be used for planning purposes? NIA Additional Comments: NONE Rick Jones, (940) 349-8860 May 17, 2007 Person to contact if there are questions Date SERVICE AREA ANALYSIS A07-0002 Denton Municipal Electric Spencer Complex Annexation Parks and Recreation 1. What neighborhood park and recreational facilities are currently serving this area or are capable of serving this area if annexed and/or developed (federal, state, or local}? None are within the proposed annexation. The closest Denton Parks property to the proposed annexation area is Mack Park,1.5 miles. Since this area is an industrial-government area, no residential currently exist or most likely ever will due to the municipal facilities on the property. 2. What projects and/or equipment will be needed to adequately serve this area if annexed and/or development based on the parks and recreation master plan or similar standards? The 2000 Denton Park and Recreation Master Plan does not indicate a need fora Community Park in the general area of the proposed annexation. Neighborhood Parks: 2.5 (to be dedicated at time of development) acres per 1,000 population 5 acres minimum size. (by developer) cost per acre. Recreation Center: square feet per 1,000 population. squarefeet minimum size. cost per square foot. Other facilities Community Parks: 3 acres per 1,000 population. 30 acres minimum. cost per square foot. 3. How much additional funding will be needed for maintenance if additional park facilities are developed to serve this area? NONE Based on $3,454 (developed) cost per acre cost per square foot 4. How many additional personnel would be needed to properly serve this area if annexed and developed? NONE additional personnel per 1,000 population; additional personnel per 1,000 square feet of facility; or additional personnel per acre of park. 5. Service Standards: 0.5 to 0.7 FTE (depending on type of service) additional personnel per 1,000 population $38,000 per year cost per additional personnel Additional Comments: NONE Bob Tickner, (940) 349-8275 May 25, 2007 Person to contact if there are questions Date SERVICE AREA ANALYSIS A07-0002 Denton Municipal Electric Spencer Complex Annexation Police 1. Estimated average response time for this area based on current department conditions: Priority 4 minutes Non-priority 17 minutes Average 10.5 minutes 2. Appropriate average response time in the city based on current department conditions: Priority 4 minutes Non-priority 17 minutes Average 10.5 minutes 3. If annexed and developed as proposed will additional personnel be needed as a specific result of this proposal? NO If yes, how many? What type? 4. Will additional equipment and funding be needed to serve this area? NO If yes, what type? 5. Will a police substation or other facility be needed to serve this area as a result of annexation and development? NO If yes, when should the new facilities be operational? 6. Please comment on the cumulative impact of annexation and development. At what population level would another police facility be required? NIA Is there an accepted facility/equipment to population ratio that can be used for planning purposes? NO Is there an accepted officer to population ratio that can be used for planning purposes? 1.79 Officers per 1,000 citizens Additional Comments: Lt. Lee Creamer June 5, 2007 Person to contact if there are questions Date SERVICE AREA ANALYSIS A07-0002 Denton Municipal Electric Spencer Complex Annexation LiLibrary 1. Estimated additional funding needed strictly based on proposed annexation and development. $0.00 2. Please comment on the cumulative impact of annexation and development. Since this site is not planned for residential development, the annexation and development of the DME Spencer Complexwill not have a negative impact on library services. 3. At what population level would another libraryfacility be required? 131,738 4. Is there an accepted circulation to population ratio that can be used for planning purposes? YES; 8.7 is the national 2006 annual circulation per capita mean or average for the legal service area population served by the Denton Public Library. 5. Is there an accepted employee to population ratio that can be used for planning purposes? YES;1 FTE per 2,712 population 6. If annexed, can anticipated service demands be met using existing materials, facilities, and personnel? YES 7. If not, how many additional employees and what type of facilities and materials will be needed to provide services? NIA Additional Comments: This annexation will not impact the current level of library services. Eva Poole, (940) 349-8750 May 18, 2007 Person to contact if there are questions Date SERVICE AREA ANALYSIS A07-0002 Denton Municipal Electric Spencer Complex Annexation Solid Waste 1. Is residential solid waste service available to the proposed area for annexation? Residential service has not been requested. The area is developed as an electric utility operations facility, receiving commercial service. 2. Is commercial solid waste service available to the proposed area for annexation? Commercial service is currently being provided. 3. What is the estimated cost to provide this area with solid waste service? Equipment and Maintenance. Incremental customer costs Personnel. Incremental customer costs 4. What is the typical revenue collected per: Household. NIA Commercial Business Based on level of service 5. Will additional equipment be needed to serve this area if annexed or developed? Type of Equipment. NIA Cost of Equipment. NIA 6. Will additional employees be needed to serve this area if annexed or developed? Type of Employees. NIA Number of Employees. NIA 7. Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? NIA Is there an accepted equipment to population ratio that can be used for planning purposes? NO Is there an accepted employee to population ratio that can be used for planning purposes? NO Additional Comments: NONE Scott Lebsack, (940) 349-8069 May 18, 2007 Person to contact if there are questions Date SERVICE AREA ANALYSIS A07-0002 Denton Municipal Electric Spencer Complex Annexation Electric Utilities 1. What is the distance to, location of, and size of the nearest City of Denton electric line? 2. What type of lines and facilities would be required to serve this area? 3. Are any new lines or facilities proposed for construction to serve this area? 4. Are there any potential responsibilities if this area is annexed? 5. Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? Is there an accepted equipment to population ratio that can be used for planning purposes? Is there an accepted employee to population ratio that can be used for planning purposes? Additional Comments: Our obligation to provide electric service if it is requested is tied to the Certificate of Convenience and Necessity (CCN) issued to DME by the Public Utilities Commission of Texas. Our authorized CCN does not correspond with the city limits. It includes most, but not all, of the present city limits and quite a bit of area outside the present city limits. If someone requests us to provide electric service anywhere within our CCN, we must provide that service, regardless of whether the facility is located within or outside the city limits. Therefore there is never any impact on DME from an annexation. Sharon Mays, (940) 349-8487 May 7, 2007 Person to contact if there are questions Date SERVICE AREA ANALYSIS A07-0002 Denton Municipal Electric Spencer Complex Annexation WaterlWastewater 1. What is the nearest City of Denton water line? Size of water line. Location of water line. Distance from proposed annexation. 2. What is the nearest City of Denton sewer line? Size of sewer line. 12-inch Location of sewer line. Along access road to the Water Plant Distance from proposed annexation. Within the annexation area 3. According to the City of Denton master plan what type of lines and facilities would be required for this area and when are those lines and facilities proposed for construction. Size Year Location Water lines Sewer lines None 4. Are there any City of Denton lines included in the proposed annexation?YES,12inch 5. Please comment on the cumulative impact of annexation and development At what population level would additional equipment be required? Is there an accepted equipment to population ratio that can be used for planning purposes? Is there an accepted employee to population ratio that can be used for planning purposes? Additional Comments: Since the property in question has been served water foryears and will add no new population, I have no comments to provide. Tim Fisher, Assistant Director Water, (940) 349-7190 May 4, 2007 P. S. Arora, Assistant Director Wastewater, (940) 349-7189 May 18, 2007 Person to contact if there are questions Date SERVICE AREA ANALYSIS A07-0002 Denton Municipal Electric Spencer Complex Annexation Engineering and Transportation 1. What existing roads, bridges and other transportation facilities will be impacted by this proposed annexation and development in terms of needed improvements or upgrades? Name and location Type of Improvement Approximate Cost Spencer Road No improvements, however ROW will be required if not already dedicated 2. Are any of these improvements presently scheduled to be done at state or federal expense? NO If yes, please identify facility and anticipated date improvements will begin. 3. Please list any drainage improvements that may require local funding, and include estimated cost (if no specific improvements can be determined, please make general comments concerning drainage). 4. Will additional equipment and facilities be needed as a specific result of this annexation and development? NO If yes, what type of equipment or facility? 5. Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? NONE Is there an accepted equipment to population ratio that can be used for planning purposes? NO Is there an accepted employee to population ratio that can be used for planning purposes? NO Additional Comments: As of this writing, Planning has not received a response from Drainage. As soon as information is received, it will be included in the Service Area Analysis. Bud Vokoun, (940) 349-7710 May 7, 2007 Person to contact if there are questions Date SERVICE AREA ANALYSIS A07-0002 Denton Municipal Electric Spencer Complex Annexation Denton Independent School District 1. Education services are currently provided by: 2. If annexed, can anticipated service demands be met using existing materials, facilities and personnel? 3. If not, how many additional employees and what type of facilities and materials will be needed to provide services? 4. Estimate additional funding needed strictly based on proposed annexation and development. 5. Will projected school taxes from this development provide that additional funding? 6. Please comment on the cumulative impact of annexation and development. 7. At what population level would other school facilities be required for the City of Denton? 8. Is there an acceptable employee to population ratio that can be used for planning purposes? Additional Comments: As of this writing, Planning has not received a response from Denton Independent School District. As soon as information is received, it will be included in the Service Area Analysis. Person to contact if there are questions Date EXHIBIT 5 Notification Information t- ~ 4~ f j~ ~ r ti ~ ~ } ~ s - ~ ~ ~ ; 4~ - - - - i, i~ J i r y i ~ I i ~ , i Y• ~ _ V YL~ - ~r r y 1• r - ~ r ~ 4 ~C 4 _ : ~ .t. - 4" ~J -Y- - I ~ - ~ . I _ ~ k i 4 + ~ ` ~ ~ 51 t ti. Y x ~ y ~ i _ w I Y - _ N ~z _ _ ti_ ~I ~ ~ I ~ ; r i ~ ~ ~ , I I I ~ i _ ~ f~ yy ~ ` _ 14 + - t t 5 ~ rr ti ~ i ~ y ■7 I L [ i ~ ~ J ~ # 1 - ~ ' k 4 . _ ~ r ~ rr q I I ~ ~ ~ ~ I ~ 4 'a S / i ~ i~ _ F• ~ F ~ 4' .1 f ~ I• - , I ~ - I } 5 ~f - - k I I I Public Notification Date: 6/13/07 200' Legal Notices* sent via Certified Mail: 1 500' Courtesy Notices sent via Regular Mail: 2 •5 II Number of responses to 200' Legal Notice ■ In Opposition: 0 f ■ In Favor: 0 - ■ Neutral: 0 Percent of land within 200' in opposition: 0 % F ~ ' ~ Il1s~~# ~ Pale ~ 3 gage ~ 1 can~Mis~arl~ rra~: we'll now move to 1 bas lard t~s annexation proposal. They bad their fixst ~ the pubiic pardon of our meeting. For those of you who ~ City Council public hearing on June ~~tb and their second } 3 am not familiar with our process. If you wfsb to speak 3 public bring on June 19th. The Development review 4 on any item that's on the public ling agenda, you. will 4 Con~mitt~ee has reviewed this annexation ro osal and pp . _.ne~ to-f~l out of the- ~-cards-.~ ~ccomn . t~~ie~pu~bli~ ~ear~ng for this subject ~ find outside, turn it down iii the front. ~If ~rou do not ~ annexation be held as scheduled. That concludes ray 7 fill out a card, you will not be able to speak. And we ? presentation. J'd be happy to answer any questions. S would ask that you please mould note from your Agenda what ~ €s~ton~t sr~~~; any questions of Mr. 9 item on the list of items that we have before us tonight ~ lUieIlguita? ie'll now open the public bearin .The Ci ~ g tY, 10 you wish to speak. ~ . l0 suspect Ys the applicant, do you have any fiarther comments ~ l ~ Shown on tonight's Agenda are four items, 1 ~ or do we ]rave anyone from aM~? . 1~ ltems No. A, B, and D which are being~rnaved from . n~~rr~~.T~: ~ asked 1}M~to be t presen i 3 tonight's agenda and will be tabled and rescheduled far a 1 ~ and they. don't have any ca~nents~ . ~ ~ later date. i 4 cozssrox~t sTF.A,~VCrE: okay. A~ right. 15 So we'll now mane to Item E and we win 1 ~ ~Ve have no cards on this item. o we ~ close the l6 probably consider rte~n ~ and F Jt's a voluntary public bearing. Do we have a motion? 17 annexation and service plan for two sites. The fi~cst I'~ caata~ ~v~T~s: I'll move we roceed P l8 site's approximately 7.SS acres and the second site ~ ~8 with the annexation. approximately 1.~4 acres totalling 9.39 acres. The sites ~9 colv~s~i01 TG~: _ we have a motion by ~0 to be annexed are generally located on t~ north side of Mr:.ats. Do we have a .second? ~ 1 spencer Road between Woodrow Lane and Brr Rand. Mr. 21 . a~MMr~art T~oiu~:~ secan~d. Mengu~ta. 22 C~Q1QSIDNER ~T~a~: we~ Dave a second b . . n~~ar~tr~: Thank you, lVfr. Cir, 23 . Th~~odeaux. Please vote: The v a ate p sses 24 members of Commission. The two situ shown a on ~4 . ~5 this exhibit for annexation. ~ witliiu the City's ~ . urge~4 ~ Pue~~ 1 Division 1. It }s part. of the Denton Municipal ~JtYlity 1 ~ ~ operationFacility. ~Tlle~ future Viand .use .mates the . ~ 2 3 area within the acatian ~pareels as employment meter: 3 . - . 4 This exhibit shows the subject sites. Again, in the 4 5 center of the exhibit ~is the Denton Municipal chic 5 . . IJ~ility, Operation Faciiity to~ ttie t~ is~ the Denton . . G . 7 Municipal water Plant. To the east is~~a vacant parcel. ~ . - 8 ~ And to the south is Spencer Road and tot you of - 8 9 ~ Spencer Road is undeveloped land. g l o In accordance with Cry's annexation l o l 1 policy plan approved in June of 1993 the pity will assess i ~ 1~ ~ on a case by ease bads the annexation of areas in ET3 I.~ ~ 3 w significant development are proposed. Annexation ~ 3 ~ ~ . 14 should be considered when a proper is located. win l4 . l ~ designated u~`baniz~ed areas, is expected to accommodate l5 i ~ urban growth. in next ~0 yews, and i~ the .annction ~ ~ 17 is contiguous to existing city limits, .city roads and 17 t8 riglitsrol=way, 18 ~9 Inch~ded ~ your backup is axe 19 2~ annexation sum~.ary schedule that sets forth annexation ~0 ~ 1 proceedings. A ser~rice plan that would be part of the ~Y . .Ordinance and a service area analysis. The analysis was . ~3 sent to~ a number of departme~ to~ receive counts and Z3 ~4 put an the proposed annexation. 24 25 As of today, the City Coun~c~ has met and. . IOC ]~]1~E ~TI'~, 27 P e ~ ~ - P ~  1 Co~~enseI# gage 1~ . . . Page ~ I COh+Il1+i~ssIONER STRANGE: Ne7~t will an Item 1 staff? Tank Yoh IV1r. Men ~ta. I'll n ow open tl~e public 2 No. F which is the zoning of approximately 9.3~ acres of 2 hearing. And, main, we have no one here from 1~~~ as a 3 hand as an Emp~ayrnent Center Ca~mercial. Mr, ll~enguita. 3 speaker. we'll close the pubhc hea~,wg. Do we have ~ ~ . MENGUi'I'A: Thank you, Chair, Abel s o~ 4 matron on this items.? ~ Commission. The tang ragt ~s processed 5 . . s~ION~R THpMAS: SO ]I~.oved, ~ -concurrent wig the annexation petidan that you just ~ co~~oN~ sTR~N - GE. we have a motaon by 7 heard previously. The proposed zoning designation is ~ 7 Mr. T'harmas. Do we have a second? . T'he zoning district given to prop~irty once annexed is s 8 COh+Il►~~sII~NF.R app FAtr~ second. 9 as a default, ' zoning request is not it's not going 9 COMMIS~[~NER STRANCxE: w e have a second by I~ to be considered by City Council until annexation of I~ Dr. Thibodeaux. An discussion? P Y lease vote. Vote 1 I proposed subject sites have been approved. The 1 I passes G~O. . I ~ applicant is requesting the ~r~oning df 9.39 acres fro~a 1 ~ - _ . 1 ~ l~urar~~ Residential to l~mployt ~Cent~ C.ammm~rcial to 13 . 14 combine the sues with the rest of tl Denton Municipal I4 1 ~ Elec Utility Operation Facility into one contiguous 1 ~ 16 zoning district. And as you can see in thzs exhibit, it ~ ~ I7 would be all I~ I ~ The future land use desig~a the as I g . 19 again as 11~np~oymeat Cea~r which is coistence ~ l g ~o ~oniag crest. And as pre°~iousl~ n2entione, si~~ 2ll . ~ i eurntly part of the D~ton Il~tu~icipal~ I~lectric ~pe~ation ~ 1 2~ Facility. To north is the municipal water plant and . to east and south, ~t is currently undeveloped. ~ ~4 'fie request the requested zoning 24 ~5 district is consistent with .the surrounding land use Page ~ 8 Page I mining district. The Developat Rew Cvmmlttee has I 2 reviewed phis ~onuig request aid has pro~id~. its and ~ ~ general information. Pursuant tq ubsectlon 35.~.4.~, a ~3 ~ . ~ zoning amendment shall only be issued only when the 4 . 5 following standards are met. The first criteria is that ~ . 6 .the following zoning conforms with the future land use ~ ~ - - 7 element of the Denton Plan. ~ ~ ~ Again, the proposed ~~c is consistent with g . ~ ~mp~Oyment Center future land. use designation. T - g I O proposed rezoning facility facilitates the ad~te 10 Z 1 provisions of transportadon~, water, sewer,. school parks l I 1 ~ . and oar public depar~ents and public convience. 'The I ~ i subject site is i- sibs are currently develape~ as the I~ I4 Denton IViunicipal 111octric C]tility Operation Facility. Na 1 ~ 15 fir transportation, water, sever, school parks and l ~ 16 otlxer tents of public convenience will.'be naeded. as 1 ~ I~ a result of this~rezoning request. I7 18 Public notifications were sent out and as 1 g . t 9 shown here the foot buffer and the 511 foot buffer as ~ I . 9 ~o of this writing, staff has not ~ceived any responses from, ~ 1 p~'operty owners within ~U~ fed of the sub,~ct site. with ~I ~2 that t1~G DRC would like ° is rec~o~nmending approval of this rezoning request. At this time r'd be ha ~ PpY ~3 ~4 answer any questaons that you nay have. COMMIS'SXONER STRANGE: ,An y questions of ~5 PI.AII~NT~ & ~~lNT1~C RULA i ~ Page ~ 7 Page  ts:lour d~cur~en~slordit~ance~l~71a47-0~42.doc 5 ORDINANCE N~ i~i~i - I i AN ~RDIl~ANCE ~F THE CITY ~F DENTIN, TE~.A, ANNE~NCJ THREE TRACTS ~F ' LAND C~NITINC~ QF APPR~IATELY 9,~2 ACRES CNTILT~~ AND ADJACENT T~ THE CITY ~F DENTIN, GENERALLY LOCATED ~N THE NORTH SIDE OF SPENCER ROAD BETWEEN ~~DR~ LANE ,AND BRIER ROAD AND LEGALLY DESCRIBED A BEING ALL ~F THAT CERTAIN TRACT ~F LAND DESCRIBED ~ THE 1VIA.RY A~T1N tJR~EY ABSTRACT N[JBER 4 DENTIN COUNTY, TEA AND BEING A FART ~F THE CALLED x,474 ACRE TRACT DECR.IBED IN THE CYTY CF DENTIN ~RDIANCE ND. 81-83 ENACTED ~N JULY 21, 1981 PERTAININCx T~ THE ALTERATION ~F CERTAIN BDUNDA~Y LIMITS ~F THE CITY ~F DENTIN, TEA B THE DIANNE~.ATI~N ~F CERTAIN ~N1N~IBITED TERRITORY, C~N~ITINJ ~F ~.4'~4 ACRES ~F LAND ~~VNED B THE CITY ~F DENTIN, DENTIN COUNTY, TEA, ARFROIN A SERVICE FLAN FOR THE ANNE~FD PROPERTY; PRO~IDIN A E~ERABILITY CLAUSE; ~ PRVIDIN AN EFFECTIVE DATE. ~A~7-0~~~ ~VHEREA, Pursuant to section 4~.0~1 of the Texas Local government Code, han~e rude cities axe authorized to annex areas that are not required to be in an annexation plan; and WHEREAS, on or about June ~7, X007, the Planning ar~d honing Commission recon~lnended approval of the annexation of the three tracts legally described in Exhibit "A", attached hereto and incorporated herein by reference the "Property'}; and HEREA, the City Council finds that the Property contains fewer than ~ 00 separate tracts of land on which one or more residential dwellings are located on each tract; and HEREA, this annexation is voluntary and is being made under subchapter C-1 of Chapter 43 of the Texas Local xovernrrient Cade; and a 'HEREA, the City Council finds that any areas caused to be entirely surrounded by, but not included within, the C1ty of Denton, Texas as a result of this annexation, are so surrounded in the public interest; and WHEREAS, the City Council finds that all required notices v~ere given in the time and manner required by lam; and HERE.A, public hearings before the C1ty Council mere held 1n the Council Chambers an June I~, 2Q~7, and June 19, both days being on or after the ZOth day but before the 4th day of the date of the institution of the proceedings} to allow all interested persons to state their viev~s and present evidence bearing upon this annexation; and ~VHEREA, annexation proceedings were instituted far the pro erg described herein b p y Y the introduction of this ordinance at a meeting o~'the City Council July ~ 7, X007; and  I I I s:lour documentslordinances1~71a~7-O~U~.doc . WHEREAS, thrs ordinance has been published in full one tune 1n the official newspaper of the City of Denton an July 207, aver annexation proceedings were instituted and 3a days prior to City Council taking final action, as required by City Charter; and WHEREAS, the City Council finds that the annexation will allow the city to ensure development consistent with The Denton Elan; NOW, TI~EREFOR.E, THE COI~NCYIf OF THE CITY OF DENTON HEREBY ORDAINS: SECTION The findings and recitations contained in the preamble of this ordinance are incorporated herein by reference. SECTION The Property 1s hereby annexed to the C1ty ofDentvn, Texas. SECTION The service plan, a copy of which is attached hereto and made a p hereof by reference as Exhibit "B" the "Service Plan"}, which provides for the extension of mun~c1pal seises to the Property, is approved as part of this ordinance. The Service Plan was made available for public inspection and explanation to the inhabitants of the area being annexed at the above described public hearings. SECTION Should any part of this Qrdinance be held illegal for any reason, the holding shall not affect the remaining portion of this ar~inance and the City Council hereby declares it to be its purpose to annex to the City of Denton all portions of the Property lawfi~lly annexed regardless of whether any other part of the Property is declared not to be lawfully annexed into the City. If any part of the Property is already included within the city limits of the City of Denton ar wlth~n the I~rrnts of any other c1ty, town or village, ar is not within the City of Der~ton's j ur~isdiction to annex, the same is hereby excluded from the territory annexed as fully as if the excluded area were expressly described in this ordnance. SECTION : This ordinance shall becpn~e effective immediately upon its passage and approval. PAS SED ~ APPROVED this the day of , ~~~7, PERRY R. l1~cNEIEII,IV~AYOR t  Lm s:lo~r dacurnentsl~rdinance~10?la0?-0002.~ac ~'~TET: ~ J~NNIF~R AL'~~R, CITY EI'~ARY~ BY. APPR~~~ ~ T~ LE,A.L FOR~VI; EDINNr ~ ~  L~~ ~ ~ 6 ill M~,, ~~,5 $ y ~N' e ~ i f ~ w a~ titi) ~~x~~~i~ ~.I~~)} )~~~~-~~1if ~~~.x ~.l`i'~}~l~t~~i1~~ her:, ~p~YYYZ 7 Tract 1 3.95 Acres All of that certain tract of land situated in the nary Austin Survey Abstract Number 4 Denton ~ounty7 Texas and being a part of the called x.474 acre tract described in the its o f Denton ordinance No. $ ~ 3 enacted an July 21,19 S ~ pertaining to the alteration of certain baundar~ limits afthe pity of Denton, Texas by the disannexatian of certain uninhabited territory, consisting of x.474 acres of land ov~t~ed by the its of Denton, Denton Jaunty, Texas; the subject tract being more particularly described based on bearings tied to Texas State Plane Coordinate System Nosh central done 4202 as follov~s. BEINNI1~ far the Southeast carnet of the tract being described herein at a % inch iron rod found at the Southeast carnet of the said 2.474 acre tract on the North right-off may . of Spencer Road as shaven on the Plat of the Municipal Utility Addition recorded in Cabinet C, Page 34~ of the Plat Records of Denton County, Texas; TPIENCE North S~ Degrees 13 Minutes 4 Seconds hest v~ith the Denton Corporate Limits as defined by the South 1~n.e ofthe 2.x.474 acre tract a distance of 129,5 feet to the Southeast corner of the 17.751 acre tract described in the City of Denton Ordinance Na. 2000133 enacted on April 4, 20D~ pertaining to the voluntary annexation of 17.751 acres of land contiguous and adjacent to the City of Denton, Denton County, Texas, THENCE Northerly with the Denton Corporate Limits as defined by the East line of the 17.751 acre tract the following 8 calls: 1. North 12 Degrees 0G Minutes 55 Seconds East a distance of 180.5 feet; 2. North S9 Degrees 5S Minutes 59 Seconds hest a distance of294.3 feet; 3. North 00 Degrees 0~ Minutes 33 Seconds hest a distance of 151.4 feet} 4. North 88 Degrees 53114inutes 5G Seconds East a distance af~8.3 feet; 5. North 00 Degrees ~4 Minutes 22 Seconds East a distance of 114.1 feet; South 89 Degrees 39 Minutes 31 Seconds East a distance of 255.1 feet; 7. North ~3 Degrees 1 S Minutes 1 S seconds East a distance of 5G3,3 feet; 8. North 41 Degrees 47 Minutes 49 Seconds hest a distance of 3 5.4 feet, more ar less, to the 1Vorth line ofthe 2.474 acre tract;  i t TINGE North S9 Degrees 48 Minutes 25 ecands East with the Denton Co~parate ~lmits as defined h~ the North line of the said 2,474 acre tract a distance of 112.4 feet, mare ar less, to the Northeast corner thereof; 'HENCE youth 03 Degrees 23 Minutes 1~ seconds hest v~ith the Benton Corporate Limits as defined by the East line of the 2G.474 acre tract a distance of ~ 041.7 feet to the PLACE DF BEINNTNG and enclosing 3.9 acre of land. 5 THENCE Sauth 5~ degrees ~ M~nu~es 52 Seconds East with the Denton Carporate Llm1t as defined h~ Sauth line ofthe17.75 ~ acre tract and the North right-of-a~ of spencer Raad as sha~vn b~ the plat of Munlc~pal ~t~~ity Add~tian a d~~tance of X392.9} feet to the bein~.~a~g of a curve to the left having a radius of 52~ feet; ~ fiHENCE autheasterly cor~tlnuing pith t~.e saki Dentan Corporate Lin~lts and tho North right-of-v~ay of spencer load slang the said cure an arc distance of ~,8 feet, ~~hor~ Bearing Sauth 7~ Degrees ~H Minutes 29 Seconds East a distance of 2SS.9 feet}, to the PLACE DF BEC~INNn~ and enclosing 0. ~ 73 of an acre of land. i  Lm i 5 ~a:..,:w ~i '`r ~~r ~}r ..~Y ~ fox h$~ f.~ ~x Tract ~ 4.8 9 7 Acres All of that certain tract of land situated in the Mary Austin Survey Abstract Number 4 Denton Caunty, Texas and being a part of the called 2G.474 acre tract described in the City of Denton ordinance No. 81-~~ enacted an July 21,19 1 pertaining to the alteration of certain boundary limits of the City of Dentan, Texas by the disannexation of certain uninhabited territory, consisting of ZG.474 acres of land owned by the City ofDentan, Denton Caunty, Teas; the subject tract being mare particularly described based on bearings tied to Texas State Plane Coordinate System Narth Central done 422 as fo1l~~rs: BEINN~N~ far the mast westerly Southwest corner ofthe tract being described herein at the mast Westerly Southwest comer of the 2.474 acre tract, called to be on the North line of Spencer Raa.d at the rr~ost Westerly Southwest canner of the called ~ ~ acre tract described in the deed from Len R. Hendersan et ux to the City of Denton recorded in Volun~.e 3~5, Page 57G of the Deed records ofDentan Caunty, Texas; THENCE North 8 Degrees 50 Minutes 1~ Secands East with the Dentan Corparate Limits as defined by the North line of the 26,474 acre tract a distance of 511. S feet to an angle point therein; THENCE North S9 Degrees 4S Minutes 1~ ~ecands East continuing with the Denton Corparate Limits as defined by the North line ofthe 2G.474 acre tract a distance of~Ol~.7 feet, more or less, to the Dentan Corporate Lirnits as defined by the hest line of the 17.751 acre tract described in the Annexatian ordinance of the City of Dentan, Texas ordinance Na. 200-13~ pertaining to the voluntary annexation of 17.751 acres of land contiguous and adjace~.t to the City afDenton; Pram which a III inch Iran rod found at the Northv~est corner thereof bears Northeasterly a distance of feet.  l THENCE outherl~ with the Denton Corporate Limits as defined by the Vest line ofthe 17. ~ 75 acre tract the folxowing calls: 1, youth 4~ Degrees 55 Minutes 47 seconds hest a distance of 131.8 feet; Z. auth ~0 Degrees 33 Minutes 1~ seconds hest a distance of Za6,S feet; 3. North 89 Degrees 30 Minutes 38 seconds west distance of49.~ feet; 4. auth 0~ Degrees Z3 Minutes 54 seconds East a distance of ~~9. feet; 5, oath ~3 Degrees 4 Minutes 48 seconds East a distance of 89.7 ~cet, more or less, to the Denton Cor~arate Lx~nits as defined b~ the youth line of the 2~.~74 acre tact firarn which a 11~ inch iron rod found t the southwest corner of the 17.751 acre tract bears youth ~ Degrees 34 Minutes 4S seconds west a distance of 1.7 feet; ~ THENCE North 47 Degrees ~7 Minutes 5 S seconds west with the Denton Corporate L1rnits as defined by the South line of the 2.474 acre tract a distance of G98,1 feet to the PLACE DF EEINNTNC and enclosing 4.897 acres of land.  i i r Q ~ 5; ~ f ~ ~ ~ ~~o°C~ f1} , A * 4 ~ ~ W'~ H aJ~ ~ ~O~W~ ~ ~ ~ ~ ~4 ~ UJ~ ~ u ~ ~a~ ~ ~m~Q ~ , ' W T`~~ _ ~ * V~~~~ ~ u~ I ~~"d~~ C~1 ~ ~ ❑ ~ ~ ur W ~ 00 ~7 , W p Z z~ ~ ; ~ ~ ~ ~ ~ 111 ~"~a~. U~ ~ 0~ ' a,, Oti ~ ~ , v ~ ~ ~ ~ ~ ~ ~ Y ~ W ~ ~ ~ ~ ~ ~ O ~ ' ' 'q' J c0 ~ pa N ~ ~ ~ ~ N o ~ ~ ~ ~ ~ a~ ~ ~ 11 W~ ~(.LU ~W~, ~J L~ W a X 4 OC ~ d I-- ~ ~ ' ~ ~ 4 ~ ❑ " w: ~ ~ ~ F ' f~1 ~ ' ~ ' fE cu U ~ ~ ~ ~ ~ ~ Q k d, q` ~ Gj r o~~; ~ ~ J ~ ~ o~ ~ ~ ~,.i i"} ~ ~ ~ U - ~ ~ ~ aka ~ ~¢rn~ ~ ~ oc~~~ ~ fi~ ~ ~ ~ L'~D w ~ N ~ N T7 ~ ~ ~W~~~ ` ~ d~ ~ ~ ~ ~ ~ ~ per, ~~^~us p7 ~~~~a ~ ~ ~ ~ w~v~N ww~ ~~o ~ ~W~~~ )j~ ~~w~a ~ ~ (N~ .C107~ LJ ~ JG]Q ~ 1.:€ r~~~d ~~~OJ ~ ~ ~Q~~ ~ ~ DN ~~JDU ~ ~  Lm ~~HIBIT B CYTY ~F I~ENT~N ER~ICE PLA~11 A07-~OO~ Dentvn N~unYCipl Electric fencer Compie~ Annex~tio~. I. AREA ANNEXED The annexation area i located on the north side of Spencer Road between Woodrow Lane and Brinker Road. The sites are within a tract of land described in the 1Vlary Austin Survey Abstract Number 4 Denton County, Texas and being a part of the called 2.474 acre tract described in the City of Denton ~xdinance Na S 1-83 enacted on duly ~ 1, 19S 1 pertaining to the alteration of certain boundary limits of the City of Denton, Texas by the dis-annexation of certain uninhabited territory, consisting of 2b.474 acres of land owned by the City of Denton, Denton County, Texas. INTRUDUCTY~N This service plan has been prepared in accordance with the Texas Local C~overn~nent Code, Sections 43.42, 43.0, and 43,~~S~b}-~a~ ~~ernon 1999, as amended}. ll~unicipal facilities and services to the annexed area described above will be provided or made available on behalf of the City in accordance with the fallowing plan. The City shall prodde the annexed tracts} the levels of service, infrastructure, and infrastructure maintenance that are ca.parable to the levels of service, infrastructure, and infrastructure maintenance available in other parts of the city with similar topography, land use, and population density, III. AD VALI~REIVI PR~PERT~' ~wNEI~ TAB SERVICES A. Police Protection, and AnXn~al Control Police service, including patrolling, response to calls, and other routine functions, wi1~ be prodded to the property upon the effective date of the annexat~an using exlstvig personnel and equ~pmentF Code enforcement and animal central services will also be provided to the property upon the effective date of the anmexation. . Fire Protection Fire protectioia within the ~irnits of existing hydrants} and emergency medical services will be provided to the property upon the effective date of the annexation. The estimated emergency response time in this area is 3.5 minutes from future Station #~,lacated at 3349 E. iVlcl~inney Street. The City of Denton will provide emergency medical services ~"EMS"}, . Rands and Streets Roads and streets, which have been properly platted, duly dedicated, and accepted by the City of Denton. ar~dlor Denton County, shall be maintained by the City of Denton on the effective date of the annexation, ~nstallatian  L. m and maintenance of street signs, street lighting and traffic control devices i will be n~aintair~ed by the City of Denton vn the effective date of the annexation, D. Pars and Recreation Facilities Parks and recreational facilities in the area to be annexed wi11 begin upon the effective date of the annexation according to the ~~~a Parks and Recreation Master Pion. No parks are currently located within the proposed annexation area.. Denton neighborhood park facilities are within reasonably close distance of the proposed annexation area. The closest Dentar~ Parks property to the proposed annexation area is Mack Park, appraxi~nately 1.~ miles away. Residents of the proposed annexation area wi11 be able to use existing City of Denton park and recreation facilities and programs. Library ~rvices Library services gill be made available on the effective date of the annexation on the same basis and at the sane level as similar library facilities are maintained throughout the city. F. Bui~d~ing Inspections and consumer health e~rvYCes Building inspections and consumer health services wi11 be made available on the effective date of the annexation on the carne basis and at the same 1eve1 as similar facilities are maintained throughout the City. Both services are prodded on a "cast recovery" basis, and permit fees offset the costs of services delivered. Incomplete construction must obtain building permits frarn the Building Inspections Department of the City of Denton. . Planning and Development Services Planning and development services will be made available an the effective date of the annexation. The Planning and Development Department currently services this property by way of administration of the Denton Development Code, concerning subdivision and land development regulations. City Council adopted The Denton Plan, the city's 1999-~02~ comprehensive plan, by ordinance 99-4~9 an December I999. The Future Land Use Plan addresses bath land in the city and its ETJ, and the subject tract is within tl~e Regional Mixed Use Centers land use designation. The Denton Plan designates future land uses to manage the quality and quantity of growth by orgar~i~ing the land use patterns, by nxatching land use intensity with available infrastructure, and by preserving flaadpiains as environmental and open space corridors. The Denton Plan v~i11 be used as a basis for final caning classifications after the properties are annexed.  i r ~ IV, UTILITY ~RA►.TEPAYEIt~ E„R A, Solid waste Collection The pity of Denton is the exclusive residential and con~n~ercial solid waste service provider in the pity. qty Ordinance requ1res So11d Waste services far all residences and commercial businesses located within the city 1llrlits. The C1ty of Denton solid Waste Department 1s fully fiulded through the service fees charged, and receives no funding from. city tax revenues. Solid waste refine collection and recycling collection services will be provided to the newly annexed property immediately upon the effective date of the annexation. To receive solid waste or recycling ~ collection service, the customer must contact the pity of Denton ustotner Service Offices 940-X49-787, and submit a requestJapplicatian for service. ~orrrmercial customers are required to complete and submit a Service Agreement to Solid 'ante customer Service prior to receiving service, orumercial Refuse and Recycling Services Each canarnercial business will be provided with a commercial container~s~, which are available in a variety of sizes and frequencies of collection, based on the waste and recyclables types and volumes generated. All refuse placed in the container for collection must be bagged to eliminate wind-blown debris and littering. Refuse that is not placed in the refuse container with ,the lid closed will not be collected. Refuse placed outside the reuse container is subject to code enforcement regulations, including potential dines. Recyclbles placed in a recycling container sha11 not be bagged. antainer lids shall be kept closed at all tunes during periods of materials storage {when not placing materials in . the container. Landfill Service The pity of Denton Solid haste Landfill houxs of operation are 7:00 a.rn~ to 4:00 p,rn. Monday through. p'riday; and 7. a.m. to 1 ~:~0 p,iri. on Saturdays. for information regarding disposal charges, call the Landfill Office at 94Q-34~-7510. B. ~Vater~~~e~vater Facilities 'There are water and wastewater facilities in the area to be annexed, The pity will provide a level of water and wastewater service, infrastructure and infrastructure maintenance that is comparable to the level of services, Infrastructure, and infrastructure maintenance available in other parts of the city with topography, land use, and population density similar to those reasonably contemplated ar.prajected in the area.  i 4 j I~, Dra~~ae ervice~ Drainage maintenance will be provided to the property upon the effective date of the annexation, The pity mill provide a level of drainage services, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance mailable other parts of the city with topography, land use, and population density s1milar to those reasonably contemplated ar projected in the area. D. ~leetricai services Denton 1Vlunicipal electric is certified by the Mate and is obligated to provide electric utility service to the annexation area should a request be made by a property owner, electric utility service will be made available vn the effective date of the annexation an the same basis and at the same level as shnllar facilities are maintained throughout the city. ~T~E ~I~VY~E ether services that nay be provided by the pity, such as municipal and general administration will be~ made available on the effective date of the annexation. The pity shall provide a level of services, infrastructure, and infrastructure maintenance that is comparable to the 1eve1 of services, infrastructure, and ~nfrastrr~ctu~e maintenance available in other parts of the pity with topography, land use, and population density similar to those reasonably contemplated or projected in the area. V~~, APYTA~L IPR~VE~NT P~~~RAIVi _ Na new construction of additional water, sewer, street, and drainage facilities ~s contemplated w~thln the annexed area as a result of this annexation, Na construction of public irripravements is contemplated as a result of this annexation that would begin. within two and a half years after the effective date of the annexation. The pity sha11 consider construction of other public ilnpravements as the needs dictate an the same basis as such public irnprovernents are considered throughout the City for areas having sirriilar characteristics of topography, land use, and population density. VII. ~JN~'~R1VY ~EVL F ERVIC~ MAC' NAT ~E RE~U _IR~~] bathing in this plan shall require the pity to provide a uniform 1eve1 of full municipal services to each area of the pity, including the annexed area, if different characteristics of topography, land use, and population density are considered a sufficient basis fad providing different levels of service. VIII, T~IiM This service plan sha11 be valid far a term often ~1~} years. ~.enewal of the service plan shall be at the discretion of pity council. r f I~. AMEIVI~NT The service p1ar~ may be amended ~f the pity council determines at a public hearing that changed conditions yr subsequent occurrences me this service plan unarkable or obsolete. The pity auncil may amend the service plan to conform to the changed conditions or subsequent occurrences pursuant to Texas Local Cavement bode, section 4~.45G {~ernon upp. ~~a0}. AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Fiscal Operations ACM: Jon Fortune SUBJECT Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of the "City of Denton General Obligation Bonds ($16,070,000), Series 2007"; authorizing the issuance of the bonds; approving and authorizing instruments and procedures relating to said bonds; and enacting other provisions relating to the subject. BACKGROUND This ordinance authorizes the issuance, sale and delivery of General Obligation Refunding and Improvement Bonds (GOs) in the amount of $16,070,000 to fund the following capital improvements: $10,784,000 Streets and Transportation 4,886,000 Parks and Beautification 400,000 Building/Improvements (Senior Center) $16,070,000 Total CIP Projects These items represent projects as approved by voters on February 5, 2005. Following a comprehensive analysis on the City's financial outlook and stability, the City has obtained favorable bond ratings on these Bonds from both Standard and Poor's and Moody's Investor Services. The ratings are summarized below: General Obligation Bonds ($16,070,000), Series 2007 ~ , • Standard and Poor's AA- • Moody's Aa3 These Bonds will be sold through a negotiated sale process following the guidelines established in the City's Debt Service Management Policy [Section 403.07 XII (A)]. Our financial advisor, First Southwest, has gathered all the data and has negotiated the sale of the bonds. Due to the timing of the negotiated sale being based on the most current market conditions, final pricing will not occur until July 16 with Council approval on July 17. Once the sale is finalized all documents will be completed with the final sale information. The attached preliminary official statement shows a total sale of $42,550,000. This was done in anticipation of refunding additional GO and CO bonds in the next 90 days (see related agenda item). Agenda Information Sheet July 17, 2007 Page 2 Your agenda information packet includes various documents as it relates to the issuance of the General Obligation Bonds. Included in your backup is the ordinance authorizing the issuance of the bonds, the rating agency reports, the preliminary official statement, paying agent/registrar agreement, as well as, the capital improvement program. The attached rating agency reports, preliminary official statement, and capital improvement program document are the same documents used for the Certificates of Obligation. Please be aware that information as it relates to the pricing of the bonds will not be available until final pricing occurs on July 16. Following approval of the negotiated sale by the City Council, the interest rates and information from the successful purchaser will be included in the preliminary official statement making it final. PRIOR ACTION/REVIEW (Council, Boards, Commission) These projects were approved by voters in a successful bond election held on February 5, 2005. These projects were approved by the City Council in the Capital Improvement Program (CIP), fiscal year ending 2007-2011. Changes or additions to the CIP as it relates to timing and use of GOs have been reviewed and recommended by the Citizen Oversight Committee, various City Council committees (Mobility, Audit/Finance and etc.), as well as to the City Council at the June 5, 2007, Work Session. FISCAL INFORMATION An estimated debt service schedule is included on page 22 in the Preliminary Official Statement attached. The estimated average annual debt service payment on the new debt, including principal and interest, will total approximately $1,245,000. This payment is anticipated and included in the City's Long Range Financial Plan. EXHIBITS 1. Ordinance 2. Rating Agency Reports a. Moody's b. Standard & Poor's 3. Preliminary Official Statement 4. Paying Agent/Registrar Agreement 5. Capital Improvement Program Respectfully submitted: Jon Fortune Assistant City Manager Exhibit 1 ORDINANCE ND. ~047- AN ORDINANCE CNSIDER~N~ ALL MATTERS INCIDENT AND RELATED T~ THE ISSUANCE, SALE AND DELIVERY OF THE "CITY CF DEN~TDN GENERAL OBL7~ATIDN BONDS 1 x,070,004},SERIES 2007"; A[JTHOR~~INC THE ISSUANCE DF THE BONDS; Ai~PRD~TIN~ AND AUTHDRI~~NG INSTRUMENTS AND PROCEDURES RELATING TD SAID BONDS; AND ENAT'IN DTHERPRD~ISIDNS RELA.TIN TD THE S[~B,IECT. THE STATE OF TEAS COUNTY OF DENTON CITY OF DENTON : ~ wHER~AS, an election was held on February 5, 200 at which the City Council was authorized to issue certain of the bonds hereinafter authorized; and WHEREAS, at said election the fallowing bonds were authorized to be Issued: An~aunt Prop. Amount Amount Beim Preciously Noted Na. Authorized Issued Issued But Unissued 1 {Senior Center ~ 4,000,000 $400,004 2,5,000 $1,0,000 Library} ~ Streets} ~7,'~00,000 10,784,000 5,415,b04 1 I,S00,404 3 ~Par~~} 10,740,000 4,SSG,000 9$4,400 4,8~9,~04 WHEREAS, the bonds hereina~er authorised are to be issued, sold, anal delivered pursuant to Chapter 13~ 1, Texas C~overnnxent Code, as amended, the City's Horne Rule Charter and other applicable lames; and WHEREAS, it is considered to be in the best interest of the City that said interest bearing bonds he issued, NDw, THEREFORE THE CDUNCrL DF THE CITY OF DENTDN HEREBY ORDAINS: Section 1. AMOUNT AND PURPOSE DF THE BONDS. The bond or bonds of the City ofDenton, Texas the "Issuer"} are hereby authorized to be issued and delivered in the aggregate principal amount of $1 ~,07D,000, FAR THE PLIRPDSE DF THE ACE~ISITIDN DF PROPERTY AND MAI~INCr IIVIPRD~EIVIENTS FDR PUBLIC PURPOSES TN SAID CITY, TO,wYT: STREET IPRDVEMENT, SENYDR CENTER IIViPRDVEMENT AND PARK LAND ACQUISITIONS AND INIPRD~EMENTS. Section DESI~NATIDN DF THE BONDS. Each bond issued pursuant to this Ordinance shall be designated: "CITY OF DENTON GENERAL OBLIGATION BOND, SERIES 2007, and initially there shall be issued, sold, and delivered hereundera single fu11y registered bond, without interest coupons, payable in instali~.ents of priancipal the "Initial Bond"}, but the Initial Bond may be assigned and ~ansferred andlor converted into anal exchanged for a life aggregate principal amount offully registered bands, without interest coupons, having serial maturities, and in the denomination or denominations of 5,0D0 or any Integral rnulti- pie ofd,000, all in the manner hereina~er provided. The term "Bonds' as used in this Ordinance sha11 mean and include collectively the Initial Bond and all substitute bonds exchanged therefor, as well as all other  i substitute bonds and replacement bands issued pursuant hereto, and the term "Bands" shall mean ar~y afthe Bands. section 3. INITIAL DATB, I~ENONITNATION, NUMBER, ~ATUI~iTIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND. ~a} The In~tral Bond is hereby authar~zed to be issued,Bald, and delivered hereunder as a single fully registered Band, without interest coupons, dated July 15, 2047, in the denomination and aggregate principal amount of I~,474,404, numbered R~1, payable in annual installments of principal to the initial ~ registered owner thereof to-wit: RBC RAIN RAC~CI~ER, n~C. ar to the registered assignee ar assignees of said Bond or any portion ar portions thereof din each case, the "registered owner"}, with the annum installments afprincipal of the Initial Bond to be payable on the dates, respectively, and in the principal atnaunts, respectively, stated in the FORM OF INYTIAI~ BOND set forth in this Ordinance. fib} The Initial Bond ~i}maybe prepaid or redeemed prior to the respective scheduled due dates of installments of principal thereof, iii} may be assigned and transferred, viii} may be converted and exchanged far other Bonds, (xv} shall have the characteristics, and ~v} shall be signed and sealed, and the principal of and interest on the initial Bond shall be payable, all as provided, and in the manner realuired ar indicated, in the FORM OF rNITIAL BOND set forth in this Ordinance. Section 4. INTEREST. The unpaid principal balance of the In~t1a1 Bond shall bear interest from the date of the Initial Band to the respective scheduled due dates, ar to the respective dates of prepayment ar redemption, of the installments of principal of the Initial Bond, and sold interest shall be payable, all in the manner provided and at the rates and on the dates stated in the FORM OF INITIAL BOND set forth in this Ordinance. Section 5. FORII~ OF INITIAL BOND. The ~on~ of the Initial Band, including the form of Registration Certificate of the Coinptraller of Public Accounts of the State of Texas to be endorsed on the Initial Bond, shall be substantially as follows: FORM OF INITIAL BOND NO. R-1 16,~70,40~ I.TNITED STATES OF AMERICA STATE OF TEXAS . COUNTY OF DENTON CITY OF DENTON GENERAL OBLIGATION BOND SERVES 2447 THE CITY OF DENTON, in Denton County, Texas the "Issuer"}, being a political subdivision of the State of Texas, hereby promises to pay to 2  I ar to the registered assignee or assignees of this Bond or any portion yr portions hereof din each case, the "registered owner"}the aggregate principal amount of $I~,a7D,00a ~STEEN Ni1~LION E~ENTY THOUSAND D~f,~AR} in annual installments afprincxpal due and payable on February 1 in each ofthe years, and in the respective principal amounts, as set forth in the fallowing schedule, and to pay interest, from the date of this Bond hereina~er stated, an the balance of each such installment of principal, respectively, from time to time remaining unpaid, at the rates per annum as follows: PRINCIPAL I~TERET PRINCIPAL ~NTERET YEAR AIVf~UNT RATB °Io YEAR AMOUNT RATE ~Io Interest sha11 first be due and payable on February I5, 20DS, and semiannually on each August I5 ar~d February 15 thereafter while this Bond or any portion hereof is outstanding and unpaid. laid interest shall be calculated an the basis of a ~~0-day year composed of twelve ~-day months. THE INTAI~LEN~T~ ~F PRINCIPAL THE INTEREST ON this Bond are payable in lawful money ofthe United states ofA.merica., without exchange or collection charges. The installrner~ts of principal and the interest on this Band are payable to the registered owner hereafthrough the services ofTHE BANK OF NEw YORK TRUST CO1ViPANY, NATIONAL ASOCrATION, AUSTIN, TEXAS, which xs the "Paying AgentlRegistrar" far this Band. Payment of all principal of and interest on this Bond shall be made by the Paying AgentlReistrarto the registered owner hereofon each principal andlor interest payment date by check, dated as ofsuch date, drav~n by the Paying Ager~tlRegistrar on, and payable solcly from, funds ofthe Issuer required by the ardinat~ce authorizing the issuance ofthis Band the "Band Ordinance"~ to be on deposit with the Paying AgentlRegistrar for such purpose as hereinafter provided; and such check sha11 be sent by the Paying AgentlRegistrar by United States mail, fixst-class postage prepaid, on each suchprinci, poi andlar interest payment date, to the registered owner hereof at the address ofthe registered owner, as it appeared at the close of business on the last day of the month next preceding each such date the "Record Date"} on the Registration Books kept by the Paying AgentlRegistrar, as hereinaer described. The Issuer covenants with the registered owner of this Baud. that on or before each principal andlor interest payment date far this Band it will make available to the Paying AgentlRegistrar, from the "Interest and Sinking Fund" 3  L created by the Band ordinance, the amounts required to provide far the pay~nent~ in immediately available funds, of all principal of and interest on this Bond, when due. IN THE EVENT of a nanpayn~ent of interest on a scheduled payment date, and far thirty ~30~ days thereafter, a new record date for such interest payment ~a "Special Record Date"} will be established by the Paying Agent~Registrar, if and when funds far the payment of such interest have been received from the Issuer. Nance ofthe Special Record Date and afthe scheduled payment date afthe past due interest ~"Special Payment Date", which shall be fifteen X15}days after the Special Record Date} shall be sent at least eve ~5} business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each I~alder of a Bond appearing on the registration books of the Paying AgentlRegistrar at the close of business an the 15th business day next preceding the date of mailing of such notice IF THE DATE far the payment of the principal of or interest on this Band. shall be a Saturday, Sunday, a legal haliday, or a day on which banking institutions in the City where the Paying AgentlRegistrar is located are authorized by law ar executive aver to close, then the date far such payment shall be the next succeeding day which is riot such a Saturday, Sunday, legal holiday, or day an which banking institutions are authorized to close; and payment an such date shall have the same farce and effect as if made on the original date payment was due. THIS BAND has been authorized in accordance withthe Constitution and laws ofthe State afTexas FDR THE PURPOSE ~F THE AC~UISITI~N DF PROPERTY AND MAKING IMPR~~EMENTS FQR PUBLIC PURPOSES fN SAID CITY, T~'iT: STREET IMPR~'~EMENTS, SENIOR CENTER I11~IPR~VEMENTS AND PARI{ LAND AC~UISITI~~S AND IMPR~V'EMENTS. ON FEBRUARY 1 2417, or an any date whatsoever therea~er, the unpaid installments ofprincipal of this Band may be prepaid ar redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any available source, as a whole, or in part, and, if in part, the particular paian of this Bond to be prepaid ar redeemed sha11 be selected and designated by the Issuer ~pravided that a portion afthis Band naay be redeemed only in an integral multiple of $5,040, at the prepayment ar redemption price afthe par or principal arnaunt thereof, plus accrued interest to the date fixed for prepayment or redemption. THE BANDS of this Series scheduled to nature on FEBRUARY I 20_ and FEBRUARY 1 ~0_ are subject to mandatary redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in park prior to their scheduled maturities, with money from the Mandatory Redemption Account of the Interest and Sinking Fund, with the particular Bands ar portion thereafea be redeemed to be selected by the Paying AgentfRegistrar, by lot ar other customary method ~pravided that a pardon of a Bond maybe redeemed only in an integral multiple of $5,040, at a redemption price equal to the par ar principal amount thereofand accrued in#~rest to the date ofreden~ption, an the dates, and in the principal amounts, respectively, as show in the fallowing schedule; February l5~ ~0 Nlaturit~ 99~IIPW~~ Mandatary Pr~nctpal Redem lion Dates Amounts February l5, ~0_ February I5, 2a_ ~rr~aturity} 4  i Febru~ 15, 2~ _ lot Mandatory Principal Redemption Dates Amounts February 15, ~0_ February 15, 20_ {maturity} T'he principal amount ofthe Bonds required to be redeemed an the Mandatory Redemption Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the principal amount of any Bonds out of the maturity scheduled for February 15, Zo~ and February 15, which, at least ~5 days prior to the aforesaid appropriate redemption date { I }shall have been acquired by the Issuer at a price not exceeding the principal amount of such Bands plus accrued interest to the date of purchase thereof, and delivered to the Paying AgentlRegis~ar for cancellation, ar {2~ as shall have been redeemed pursuant to the optional rederrxption provisions hereafand not previously credited to the mandatory sinking fund redemption. During any period in which ownership of the Bands is deterrni~aed by a hook entry at a securities depository for the Bands, if fewer than all ofthe Bonds ofthe same matr~rity and bearing such interest rate are to be redeemed, the Bundy, or portions thereof, to be redeemed sha11 be selected in accordance with the arrangements between the Yssuer and the securities depository. AT I1EAT 30 days prior to the date fixed far any such prepayment ar redemption a written notice of such prepayment or redemption shall be mailed by the Paying Agent~Registrar to the registered owner hereof. By the date fixed for any such prepayment or redenlptian due provision sha11 be made by the issuer with the Paying Agent~Registrar far the payment of the required prepayment or redemption price far this Bond or the portion hereofwhich is to be so prepaid ar redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption, If such written notice of prepayment or redemption is given, and if due provision for s€~ch payment is made, all as provided above, this Bond, or the portion thereof which is to be sa prepaid or redeemed, thereby automatically shall be treated as prepaial or redeemed prior to its scheduled due date, and sha11 not bear interest after the date fixed far its prepayment or redernptian, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or reden~ptian from the Paying Agent~Reg~strar out ofthe funds provided far such payment. The Paying A.gcntlRegistrar shall record in the Rcgis~ration Books all such prepayments or redemptions of principal of this Bond or any portion hereof. THIS BOND, to the e~ctent ofthe unpaid or unredeemed principal balance hereof, or any unpaid and unredeemed portion hereofin any integral multiple af$~,Q~~, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying AentlRegistrarcting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance. Among other requirements for such transfer, this Bond must be presented and surrendered to the Paying AgentlRegitrar for cancellation, together with proper instruments of assignment, in farm and with guarantee of signatures satisfactory to the Paying Agent~Registrar, evidencing assignment by the initial registered owner of this Band, or any portion or portions hereofin any Integral multiple of 5,04, to the assignee or assignees in whose name or names this Bond ar any such portion or portions hereof is or are to be transferred and registered. Any instrument or instruments of assignment satisfactory to the Paying Agent~Reistrar may be used to evidence the assignment ofthis Bond or any such portion or portions hereof by the initial registered owner hereaf~ Anew hand or bonds payable to such assignee or assignees which then will be the new registered owner ar owners of such new Bond or Bonds} ar to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying AgentlRegistrar inconversion ofand exchange #`or this 5  Lm Bond or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange afthis Band ar any portion hereof. The registered owner ofthis Band shall be deemed and treated by the Issuer and the Paying Agent~Regitrar as the absolute owner hereof far all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying A.gentlRegistrar sha11 not be affected by any notice to the contrary. AS PR~~IDED above and in the Bond ordinance, this Bond, to the extent of the unpaid or unredeemed principal balance hereof may be converted into and exchanged far a 1i~e aggregate principal amount of fully registered bonds, without interest coupons, payable to the assignee ar assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion afthis Bond which is not being assigned and transferred by the initial registered owner, in any denomination ar denominations in any integral rn~ultiple of $5,000 ~sub~ect to the requirement hereinafter stated that each substitute bond issued in exchange for any portion ofthis Band shall have a single stated principal maturity date}, upon surrender of this Band to the Paying Ager~tlRegistrar for cancellation, all in accordance with the form and procedures set forth in the Band dinance~ If this Band or any portion hereof is assigned and transferred ar converted each band issued in exchange for any portion hereof sha11 have a single stated principal maturity date corresponding to the due date of the installment of principal of this Bond or portion hereof for which the substitute band is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of principal or portion thereof, Such bands, respectively, shall be subject to redemption prior to maturity an the same dates and far the same prices as the corresponding installment of principal afthis Bond ar portion hereof for which they are being exchanged. No such band sha11 be payable in instalments, but shall have only one stated principal maturity date. ~ PR~~IDED IN THE BAND ~RDINANE, THIS BAND IN ITS PRESENT FDRM MAY BE AIC~NED AND TRANSFERRED ~ N~ERTED ~N~E ~NI1Y, and to one or more assignees, but the bonds Issued and delivered in exchange far this Bond or any portion hereaf~nay be assigned and transferred, and converted, subsequently, as provided in the Bond ordinance. The Issuer shall pay the Paying AgentlRegistrar's standard ar customary fees and charges far transferring, converting, and exchanging this Band or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes ar governmental charges required to be paid with respect thereto, The Paying Agent~Registrar sha11 not be required to male any such assignment conversion, ar exchange ~i}during the period commencing with the close ofbusiness on any Record Date and ending with the opening of business an the next follov~in principal ar interest payment date, ar, ~ii~ w~ respect to any Bond ar portion thereof called for prepayment ar redemption prior to maturity, within 45 days pr~ar to its prepayment or rcde~nption date. IN THE EVENT any Paying AgentlRegistrar far this Bond is changed by the Issuer, resigns, ar otherwise ceases to act as such, the Issuer has covenanted in the Bond ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owner of this Bond. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly voted, authari~ed, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to ar in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law; thatthis Bond is general obligation afthe Issuer, issued an the fu11 faith and credit thereof; and that annual ad valorem. taxes sufficient to provide for the payment afthe interest an and principal afthis Bond, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged irrevocably far such payment, within the limit prescribed by law  Lm BY BECOMING the registered owner afthis Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisiansfi acknowledges that the Band Ordinance is duly recorded and available far infection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Band and the Bond Ordinance constitute a contract between the registered owner hereof and the Issuer. IN FITNESS WHEREOF, the Issuer has caused this Band to be signed with the manual ar facsimile signatuxe of the Mayor of the Issuer and countersigned and attested with the manual ar facsimile signature afthe City Secretary afthe Issuer, has caused the official seal afthe Issuer to be duly impressed, or placed in facsimile, on this Bond and has caused this Band to be dated July 1 , ~aa7, ATTEST; CITY OF DENTON, TEAS By: By. Jennifer ~walter Perry R. McNeill City Secretary, City of Denton, Texas Mayor, City of Denton, Texas CITY SEAL} INSERT BOND INSURANCE LEGEND, IF AN~Y~ FORM OF REGISTRATION CERTIFICATE OF THE COMP'I~ROLLER OF PUBLIC ACCOUNTS; ~To be attached to Initial Band only} COMPTROLLER'S REGISTRATION CERTIFICATE; REGISTER NO. I hereby certify that this Band has been examined, certified as to validity, and approved by the Attorney Creneral of the State of Texas, and that this Bond has been registered by the Carnptroller of Public Accounts ofthe Mate of Texas. witness my signature and seal this Comptroller of Public Accounts of the State of Texas COMPTROLLER'S SE,AL~ Section ADDITIONAL CHARACTERISTICS OF THE BONDS. ~a} Registration and Transfer. The Issuer shall keep ar cause to be kept at the principal corporate trust office of THE BANK OF NEw YORK TRUST COMPANY, NATIONAL .ASSOCIATION, DALLAS, TEAS the "Paying AgentlRegistrar"} books arrecords aftheregistrationndtransfer ofthe Bonds the "Registration Baaks"}, and the Issuer hereby appoints the Paying AgentlRegistrar as its registrar and transfer agent to keep such books or records and make such transfers and registt~.tions under such reasonable regulations as the Issuer and Paying AgentlRegistrar may prescribe; and the Paying Agent~Reistrar shall Hooke such transfers and registrations as herein provided. The Paying AgentlRegistxar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall 7 be mailed, as herein provided; but it sha11 be the duty of each registered owner to notify the Paying AentlRegistrar in writing ofthe address to which payments shall be mailed, and such interest payments sha11 not be mailed unless such nat1ce has been given, The Issuer sha11 have the right to inspect the Registration Boars during regular business hours ofthe Paying AgentlRegistrar,but otherwise the Paying Aent~Registrar shall keep the Registration Baaks can~dential and, unless otherwise required by law, shall not permit their inspection by any other entity, Registration of each Bond may be transferred in the Regis~ation Banks only upon presentation and surrender of such Bond to the paying AgentJRegistrar for transfer of registration and cancellation, together with proper written instruments afasignment, in form and with guarantee of signatures satisfactory to the Paying Agent~Registrar, {i}evidencing the assignment afthe Bond, ar any portion thereof ire any integral multiple of$5,~0~, to the assignee ar assignees thereof, and {iii the right ofsuch assignee or assignees to have the Band or any such pardon thereaf registered in the Warne of such assignee ar assignees. Upon the assignment and transfer of any Band ar any portion thereof, a new substitute Bond or Bonds shall be issued m conversion and exchange thereforrn the manner herein provided. The Initial Bond, to the extent of the unpaid or unredeemed principal balance thereof, may be assigned and transferred by the initial registered owner thereaf ante an1y, and to one ar more assignees designated in ~rriting by the initial registered owner thereof. All Bonds issued and delivered in conversion of and exchange for the Initial Bond sha11 be in any denomination or denominations afany integral multiple af,00~ {subject to the requirement hereinafter stated that each substitute Bond shall have a single stated principal maturity date}, shall be in the form prescribed in the FARM UBTITUTB B~N~ set forth. in this ordinance, and sha11 have the characteristics, and may be assigned, transferred, and converted as hereinafter provided. Ifthe Initial Bend or any pardon thereof is assigned and transferred ar converted the Initial Bond must be surrendered to the Paying AgentlRegistrar far cancellation, and each Bond issued in exchange for any portion afthe Initial Band shall have a single stated principal maturity date, and sha11 not be payable in installments;and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal ar portion thereoffar which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of pr~nc~pal or portion thereaf fur which ~t is being ex- changed. If only a portion of the Initial Bond i assigned and transferred, there shall be delivered to and registered in the Warne afthe initial registered owner substitute Bonds in exchange for the unassigned balance of the Initial Bond in the same manner as if the initial registered owner were the assignee thereof. If any Bond or portion thereof other than the Initial Bond is assigned and transferred ar converted each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond ~ far which it is exchanged. A faun of assignment shall be printed or endorsed an each Bond, excepting the Initial Band, which shall be executed by the registered owner or its duly authorized attorney or representative to evidence an assignment thereof. Upon surrender of any Bonds or any portion ar pordans thereaf far transfer of registration, an authorized representative of the Paying AgentlRegistrar shall make such transfer In the Registration Books, and sha11 deliver a new fully registered substitute Bond or Bonds, having the characteristics herein described, payable to such assignee or assignees {which then will be the registered owner ar owners of such new Bond or Bonds}, or to the previous registered owner in case only a portion of a Bond is.being assigned and transferred, all in conversion afand exchange far said assigned Bond or Bonds or any portion or portions thereof, in the same faun and manner, and with the same effect, as provided in ectian ~{d}, below, for the conversion and exchange of Bonds by any registered owner of a Bond. The Issuer shall pay the Paying AgentlRegistrar's standard or customary fees and charges for making suchtransfer and delivery of a substitute Bond or Bonds, but the arse requesting such transfer shall pay any taxes ar other governmental charges required to be paid with respect thereto, The Paying AgentlRegistrar shall not be required to make transfers of registration of any Bond ar any portion thereof {i} during the period commencing with the close ofbusiness on any Record Date and ending with the opening ofbusiness on the next following principal or interest payment date, or, {ii} with respect to any Bond or any portion thereaf called for redemption. prior to maturity, within 45 days prior to its redemption date. 8  i fib} Ownership of Bonds, The entity in whose name any Bond shall be registered in the Regxstratxon Books at any tirr~e sha11 be deemed and treated as the absolute owner thereoffor all purposes of this Ordinance, whether nr not such Bond sha11 be overdue, and the Issuer and the Paying .AgentlRegistrar sha11 not be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, and interest on any such Bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sung or sums so paid. ~c} Pay_pa,,e,n~ of Bands and .Interest. The Issuer hereby further appoints the Paying AgentlRegistrar to act a the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to convert and exchange or replace Bonds, all as provided in this Ordinance. The Paying AgentlRegistrarsholl keep proper records ofa11 payments made by the Issuer and the Paying AgentJRegistrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty ~30~ days thereafter, a new record date for such interest payment ~a "Special Record Date"} ;will be established by the Paying AgentlReistrar, if and when funds for the payment of such interest have been recei►~ed from the Issuer. Notice of the Special Record Date and ofthe scheduled payment date ofthe past due interest ~"Special Payment Date", which shall be fiffeen ~I} days after the Special Record Date shall be sent at least eve ~5~ business days prior to the special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying AgentlRegistrar atthe close of business on the 15th business day next preceding the date of mailing of such notice. ~d} Canverion ~nd~Exchane ox Replacement; Authentication. Each Bond Issued and delivered pursuant to this Ordinance, to the extent ofthe unpaid or unredeemed principal balance or principal amount thereof, may, upon surrender of such Bond at the principal corporate frost office of the Paying AgentlRegistrar, together with a written guest therefor duly executed by the registered owner or the assignee or assignees thereof, ar its or their duly authorized attorneys ar representatives, with guarantee of signatures satisfactory to the Paying Agent~Registrar, may, at the option of the registered owner or such assignee or assignees, as appropriate, be converted into aand exchanged for fully registered bonds, without interest coupons, in the form prescribed in the F`OR11~ SUBSTITUTE BOND set forth in this Ordinance, in the denomination of $5,000, or any integral multiple of $5,000 subject to the requirement heretnaffer stated that each substitute Bond shall have a single stated maturity date, as requested in writing by such registered Qwner or such assignee or assignees, in an aggregate principal a~.ount equal to the unpaid or unre- deemed principal balance or principal amount of any Bond or Bands so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be~ Ifthe Initial Bond 1s assigned and transferred or converted each substitute Bond issued in exchange for any portion ofthe Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal .aturity date corresponding to the due date of the installrn~nt of principal or portion thereof for which the substitute Band is being exchanged; and each such Band shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If a portion of any Bond bother than the Initial Bondi shall be redeemed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in the denomination or denominations of any integral multiple of $5,000 at the request of the registered owner, and in aggregate principal. amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof far cancellation. If any Bond or portion thereof~other than the Initial Bond} i assigned and transferred or converted, each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it i being exchanged. Each substitute Bond shall bear a letter andlar number to distinguish it from each other Bond, The Paying q  LM AentlRegistrar shall con~rert and exchaange or replace Bonds as prodded herein, and each fully registered band delivered in conversian ofand exchange far ar replacement ofany Bend ar portion thexeafas permitted or required by any pravision of this Ordinance shall constitute one of the Bands for all purposes of this Ordinance, and nay main be converted and excha~.ged or replaced. It is specifically prodded that any Band authenticated in conversion of and exchange for or replacement of another Bond on or prior to the first scheduled Record Date far the Initial Bond shall bear interest from the date of the Initial Band, but each substitute Band so authenticated after such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on which such substitute Band was so authenticated, unless such Band is authenticated after any Record Date but on or before the next following interest payment date, in which case it shall bear interest from such next following interest payrr~ent date; pra~rided, however, that if at the time of delivery of any substitute Band the interest on the Band for which it is being exchanged is due but has not been paid, then such Band shall bear interest frarn the date to which such interest has been paid in foil, THB INITIAL BOND issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying AgentlRegistrar, but on each substltute Bond issued In conversion of and exchange for or replacement of any Bond or Bands issued under this Ordinance there shall be printed a certifcate in the farm substantially as follows: "PAYING AGENTIR~~STRAR'S A[~'~NTICATION CERTiFICATB It is hereby certified that this Band has been issued under the prodsions of the Bond Ordinance described in this Bond; and that this Bond has been issued in conversion of and exchange for or replacement of a bond, bands, or a portion of a bond ar bands of an issue which originally was approved by the Attorney General ofthe State of Texas and registered by the Comptroller ofPublic Accounts of the state of Texas. T BANK OP New YORK TRUST COMPANY, NATIONAL AOIATION, DALLAS, TE~.AS, Paying AgentlReistrar Dated By Authari~ed Representative" An authorized representative ofthe Paying Aentl~Registrar shall, before the delivery of any such Bond, date and manually sign the above Bond, and na such Band shall be deemed to be issued ar outstanding unless such Bond is so executed. The Paying Agent~Registrar promptly shall cancel all Bonds surrendered for conversion and exchange or replacement. No additional ordinances, orders, or resolutions need be passed or adopted. by the governing body of the Issuer or any other body or person so a.s to accomplish the foregoing conversion and exchange or replacement of any Bond ar portion thereof, and the Paying AgentlRegistrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be oftype co~.position printed on paper with lithographed or steel engraved borders afcustQrn,ary weight and strength. Pursuant to Chapter 120 t, Texas Government Code, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying AgentlRegistrar, and, . upon the execution of the above Paying AgentlRegistrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Band which originally was issued pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. The issuer shall pay the Paying AgentlReistrar's standard ar customary fees and charges for transferring, canvertirig, and exchanging any Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay 10  i any taxes ar governmental charges required to be paid with respect thereto as ~ condition precedent to the exercise ofsuch privilege ofconversion and exchange. The Paying AentlRegistrar shall not be required to make any such conversion and exchange or replacement of ~ onds or any portion thereof ~~}during the period commencing with the close afbusiness an any Record Date and ending with the opening of business on the next fallowing principal ar interest payment date, ar, iii}with respect to any Bond or portion thereof called for redemption prior to maturity, within 4~ days prior to its redemption date. fie} In general. A,li Bands issued in conversion and exchange or replacement of any other Bond or portion thereof, ~i} shad be issued in fully registered farm, without interest coupons, with e principal of and interest an such Bonds to be payable only to the registered owners thereof, iii} may ar shall be redeemed prior to their scheduled maturities, viii} may be transferred and assigned, Div} may be converted and ex~ j changed for other Bands, ~v} shall have the characteristics, Zvi} sha11 be signed and sealed, and vii} the principal of anal interest on the Bonds shall be payable, all a provided, and in the manner required or 1nd1cated, m the FORM OF UBTITUTE BOND set Earth m this Ordinance. ~f~ Payment of Fees and charges. The Issuer hereby covenants with the registered owners of the Bands that it will ~i}pay the standard or customary fees and charges afthe Paying AgentlRegistrar for its services with respect to the payment of the principal of and interest an the Bonds, when due, and ~ii~ pay the fees and charges afthe Paying Agent~Registxar far services with respect to the transfer ofregistration of Bands, and with respect to the conversion and exchange afBands solely to the extent above provided in this Ordinance. fig} substitute Paving A e~ nt~Re, The Issuer covenants with the registered owners afthe Bands that at all tiames while the Bands are outstanding the issuer mill provide a competent and legally qualified bank trust company, financial institution, or other agency to act as and perform the services of Paying AentfRegistrar for the Bands under this Ordinance, and that the Paying AgentlRegistrar will be one entity. The Issuer reserves the right to, and may, at its option, change the Paying ~.gent~Regis~rar upon not less than 1~0 days written notice to the Paying AgentlRegistrar, to be effective not later than d0 days prior to the next principal ar interest payment date aver such notice. In the event that the entity at any tl~ne acting as Paying AgentlRegistrar {ar its successor by merger, acquisition, ar other method} should resign ar otherv~ise cease to act as such, the Issuer covenants that it wi11 promptly appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying AgentlRegistrar under this Ordnance. Upon any change in the Paying AgentlRegistrar, the previous Paying AgentlRelstrar shall promptly transfer and deliver the Registration Books (or a cagy thereof},along with all other pertinent books and records relating to the Bonds, to the new Paying AgentlRegistrar designated and appointed by the Issuer. Upon any change in the Paying Agent~Rcgistrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying AgentlRegistrarto each registered owner afthe Bands, by United Mates mail, first- ciass postage prepaid, which notice also shall give the address of the new Paying AgentlRegistrar. By accepting the position end performing as such, each Paying AgentlRegistrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying AgentlRegistrar, section 7, FORM OF UBTITUTB BOND. The form of all Bonds issued in conversion and exchange orreplacement ofany otherBand orpartianthereof, ~ncludinthe farm ofPayingAgentlRegis~rar's Band to be printed on each afsuch Bonds, and the Form al~,~ssignment to be printed an each afthe Bands, . shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted ar required by this Ordinance, FORM OF SUBSTITUTE BOND 11  LM Book-Entx~r Gnly Legend, if appropriate} ND. UNITED TATS GF AMERICA PRINCIPAL AMGUNT STATE OF TEAS $ GGUNTY GF DENTON CITY OF DEN~'GN GENERAL GBLIGA'fION BGND SERIES 207 INTEREST RATE MATURITY DATE DATED DATE CUSIP NG, ON THE MATURITY DATE specified above the CITY GF DENTDN, in Denton bounty, Texas the "Issuer"}, being a political subdivision of the Mate of Texas, hereby promises to pay to ar to the registered assignee hereof neither being hereinafter called the "registered owner"~ the principal amount of and to pay interest thereon, calculated on the basis of a 36a-day year composed of twelve 30~day rr~onths, from July 1 ~~a7, to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above; with interest being first due and payable an February 15, ~~08, and semiannually on each August 1 ~ and February 15 thereafter, except that if the date of authentication of this Band is later than the first Record Date thereinafter defined},such principal amount sha11 bear interest from the interest payment date next preceding the date of authentication,unless such date of authentication is of`ter any Record Date ~hereinaffer defined} but an or before the next following interest payment date, in which case such principal amount sha11 bear Interest from such next following interest payment date. THE PRINCIPAL AND INTEREST N this Bond are payable in lawful money of the United Mates of Arnerlca, without exchange or collection charges. The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender ofthis Band at maturity or upan the date fixed far its redemption prior to niatur~ty, at the principal carparate trust office of TIC BANK DF NEw YORK TRUST GMPANY, NATIONAL ASS~IATIGN, DALLAS, TEXAS, which is the "Paying AgentlRegistrar'~ for this Band. The payment of interest on this Bond sha11 be made by the Paying AgentfRegistrar to the registered owner hereof on each interest payment date by check, dated as of such interest payment date, drawn by the Payin,AgentlRegistrar on, and payable solely from, funds ofthe Issuer requrred by the ardlnance autharY~~ng the issuance ofthe Bends the "Band ordinance"} to be on deposit with the Raying AgentlRegistrar for such purpose as hereina~er prodded; and such check shall be sent by the Paying AgentlRegistrar by United Mates mail, first~class postage prepaid, an each such interest payment date, to the registered owner hereof, at the address of the registered owner, as ~it appeared at the close of business on the last day of the month next preceding each such date the "Record Date"~ on the Registration Books kept by the Paying AgentfRegistrar, as hereinafter described, However, the payment of such interest maybe made by any other nrethad acceptable to the Paying AentlRegistrar and requested by, and at the rfsk and expense of, the registered owner hereof. Any accrued interest due upan the redemption of this Bond priax to maturity as prodded herein sha11 be paid to the registered owner at the principal corporate trust office of the Paying Agent~Registrar upon presentation and surrender of this Band for redemption and payment at the principal corporate trust af~ice ofthe Paying AgentlRegistrar. The Issuer co~renants with the registered owner of this Bond that on ar before each principal payment date, interest payment date, and accrued interest i~  i payment date for this Bond it wi11 make available to the Paying Agentl Registrar, from. the "Interest and Sinking Fund" created by the Band Drdinancep the amounts rewired tv provide for the payment, in inunediately available funds, of all principal of and interest an the Bonds, when due, IN THE E~E~T of a nonpayment ofinterest on a scheduled payment date, and far thirty X30}days thereafter, a new retard date for such interest payment ~a "Special Record Date"} will be established by the Paying Aen#JRegis~ar, if and when funds far the payment of such interest have been received from the Issuer, Notice afthe Special Record Date and ofthe scheduled payment date o~"the past due interest ~"Special Payment Date", which shall be l"~f~een ~15~ days after the Special Record Dated shall be sent at least five business days prior to the Special Record Date by United States snail, first class postage prepaid, to the address of each Haider of a Bond appearing on the registration books of the Paying AgntlRegis~ar at the close of business an the I nth business day next preceding the date of mailing of such notice. IF THE DATE far the payment of the principal afar interest an this Bond shall be a Saturday, Sunday, a legal holiday, or a day an which banking institutions in the pity where the Paying gentlRegistrar is located are authorized by law ar executive order to claw, then the date for such payment shall be the nest succeeding day which is not such a Saturday, Sunday, legal holiday, ar day an which. banking institutions are authari~ed to close; and payment on such date shall have the same force and effect as if made an the anginal date payment was due. THIS BDND is one of an issue of Bands initially dated Duly l 5, 2007, authorized in accordance with the constitution and laws ofthe State afTexas ~n the principal amount ofd 1 ~,070,0~0, FDR THE PURPOSE DF THE ACUISITIDI~ DF PROPERTY AND MAI~INGr IMPRD'~El1~ENTS FDR PUBLIC PURPOSES l~ SAID CITY, T~-wIT: STREET IMPRQVEME~TS, SENIOR CENTER IMPROVEMENTS AND PARK LAND AUISITIOI~S AND IMPROVEMENTS. ON FEBRUARY I5, 2017, ar an any date whatsoever thereafter, the Bands of this Series maybe redeemed prior to their scheduled maturities, at the option afthe Issuer, with funds derived from any available and lawful source, as a whale, or in part, and, if in part, the particular Bands, ar portions thereof, to be redeemed shall be selected and designated by the Issuer provided that a portion afa Band may be redeemed only in an integral multiple of ~,000~, at the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption. THE BONDS ofthis Series scheduled to mature an FEBRUARY I~, 20_ and FEBRUARY I, 24~ are subject to mandatary redemption prior to their scheduled maturities, and shad be redeemed by the issuer, in part, prior to their scheduled maturities, v~~th money tram the Mandatory Redempt1on Account of the Interest and Sinking Fund, with the particular Bonds ar portion thereofto be redeemed to be selected by the Paying AentlRegistrar, by lot ar other customary method ~pravided that a portion of a Bond maybe redeemed only in an integral multiple of $5,000}, at a reden~ptian price equal to the par ar principal amount thereafand accrued interest to the date afredemption, anthe dates, and in the principal amounts, respectively, as show in the fallowing schedule: February 1 , 20 Maturity Mandatary Principal Reden~ tiara Dates Amounts February I5, 20_ February 15, 20_ maturity} 13  L_ February 15, ZO Maturity . Mandatary Principal Reden~ tion Dates Amounts February 15, February I5, ~0, maturity} The principal amount ofthe Bands required to be redeemed on the Mandatary ~.eden~ption Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the principal a~naunt of any Bonds out of the maturity scheduled for February 15, and February 15, ~0_ which, at least 4 days prior to the aforesaid appropriate redemption date ~1}shall have been acquired by the Issuer at a price not exceeding the principal amount of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying AgentJReistrar for cancellation, or ~2} as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credzted to the mandatory sinking fund redemption. During any period In which ownership of the Bands is detern~~r~ed by a book entry at a securities deposltory for the Bands, if fewer than all afthe Bonds afthe same maturity and bearing such interest rate are to be redeemed, the Bonds, ar portions thereof, to be redeemed shall be selected in accordance with the arrangements between the issuer and the securities depositary. AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying AgentlRegistrar by United Mates mail, first-class postage prepaid, to the registered owner of each Band to be redeemed at its address as it appeared on the 45th day prior to such redemption date; provided, however, that the failure to send, mail, ar receive such notice, or any defect therein ar in the sending or nailing thereof, shall not affect the validity ar effectiveness of the proceedings for the redemption of any Bond. By the date fixed fvr any such redemption due provision shall be made with the Paying AentfRegistrar for the payment ofthe required redemption price for the Bands or portions thereof which are to be sa redeemed, plus accrued interest thereon to the date fixed for redemption. Yf such written notice afredemption is given and ifdue provision far such payment is made, all as provided above, the Bonds ar portions thereofwhich are to be so redeemed thereby automatically shall be treated a redeemed prior to their scheduled maturities, and they shall not bear interest oiler the date fixed for redemption, and they shall not be regarded as being outstanding except far the right of the registered owner to receive the redemption price plus accrued interest from the Paying Agent~Registrar out afthe funds provided for such payment. If a pardon of ariy Band shall be redeemed a substitute Bond or Bonds having the Barrie maturity date, bearing interest at the same rate, in any denomination or denomination in any integral multiple af5,00~, at the written request ofthe registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense ofthe lssuer, all as provided in the Bond ordinance. THIS BAND DRANY PORTION OR P~RTION~S HEREOF ANY II~TEC~RAL MU~TIFLB DF $5,~~~ may be assigned and shall be transferred only in the Registxation Books of the Issuer kept by the Paying Aent~Registrar acting in the capacity of registrar far the Bonds, upon the terms and conditions set forth in the Band ordinance, Arnvr~g other requirements far such a~s~igntn.ent and transfer, this Bond must be presented and surrendered to the Paying Agentegistrar, together with proper instnurncnts ofassignent, inform and with guarantee of signatures satisfactory to the Paying AgentlRegistrar, evidencing assignment of this Bend ar any portion ar portions hereof in any integral multiple of $S,OOa to the assignee ar assignees in whose name or names this Bond or any such portion or portions hereof is ar are to be transferred and 14  I registered, The form of Assignment printed ar endorsed an this Band sha11 be executed by the registered owner ar its duly authorized attorney ar representative, to evidence the assignment hereof. Anew Bandar Bonds payable to such assignee or assignees which then will be the new registered owner ar owners of such new Band ar Bands}, ar to the previous registered owner in the ease ofthe assignment and transfer ofonly a pardon of this Band, may be delivered by the Paying AgentlRegistrar in conversion of and exchange for this Bond, all in the farm and manner as provided in the next paragraph hereof far the conversion and e~cchange afother Bands. The Issuer shall pay the Paying AgentJRegistrar'"s standard ar customary fees and charges for making such transfer, but the one requesting such transfer shall pay any taxes ar other governmental charges required to be paid with respect thereto. The Paying AgentlRegistrar sha11 not be required to make transfers afregistration ofthis Band ar any portion hereaf ~i} during the period commencing with the close of business an any Recard Date and ending with the opening ofbusiness an the next fallowing principal or interest payment date, or, iii) with respect to any Bond or any portion thereof called far redemption prior to maturity, within 4S days prior to its redemption date. The registered owner afthis Bond shall be deemed and treated by the Issuer and the Paying AgentlReistrar sthe absolute owner hereaf for ail purposes, including payment and discharge afliability upan this Band to the extent of such payment, and the issuer and the Paying AgentlRe~strar sha11 not be affected by any natlce to the contrary. ALL BDNDS ~F THIS SERIES are issuable solely as fu11y registered bands, without interest coupons, in the denomination of any Integral nxultiple of 5,~Q0. As provided in the Bond Ordinance, this Band, ar any unredeemed pardon hereof, n1ay, at the request of the registered owner ar the assignee ar assignees hereaf, be converted into and exchanged far a like aggregate principal amount of fu11y registered bands, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case nay be, having the carne maturity date, and bearing interest at the same rate, in any denomination ar denominations in any integral multiple af5,~00 as requested in writing by tk~e appropriate registered owner, assignee, ar assignees, as the case maybe, upan surrender of this Bond to the Paying AgentlRegistrar far cancellation, all in accordance with the form and procedures set forth in the Band Ordinance, The Yssuer shall pay the Paying AgentJRegistrar's standard ar customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the ane requesting such transfer, conversion, and exchange shall pay any taxes ar gavernrnental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying AgentlRegistrar sha11 not be required to make any such conversion and exchange ~i~ during the period commencing with the close of business an any Recard Date and ending with the opening of business an the next fallowing principal or interest payment date, or, iii} with respect to any Band or portion thereof called for redemption prier to maturity, within 45 days prior to its redemption date. IN THE EVENT any Paying Agent~Registrar far the Bands is changed by the Issuer, resigns, ar otherwise ceases to act as such, the Issuer has covenanted in the Band ordinance that it promptly will appoint a can~petent and legally qualified subs~tute therefor, and will promptly cause written notice thereofta be mailed to the registered owners of the Bands. IT r HEREBY certified, recited, and covenanted that this Bond has been duly and validly voted, authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to ar in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law; that this Band is a general obligation afehe Issuer, issued an the full faith and credit thereof; and that annual ad valorem taxes sufficient to provide for the payment afthe interest on and principal afthi Band, as such interest canes due and such principal matures, have been leveed and ordered. to be levied against all taxable property in the Issuer, and have been pledged irrevocably far such payment, within the limit prescribed by law. 15  i BY BECOMING the registered owner afthis Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly retarded and available far inspection in the aicial minutes and retards of the governing body of the Issuer, and agrees that the ter~n,s and provisions of this Bond and the Band Ordinance cansti~ute a contract between each registered owner hereof and the issuer. IN WITNESS wHEIOF, the Issuer has caused this Bond to be signed with the manual or Facsimile signature of the Mayor of the issuer and countersigned and attested with the manual or facsimile signat~.re of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, an this Band. ATTEST: CITY OF D~NTON, TEAS Jennifer Walters Perm R. McNeill City Secretary, City of Denton, Teas Mayor, City of Denton, Texas CITY SEAL} FORM OF PAYING ACrENT~REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENTIREISTRAR'S AUTHENTICATION CERTIFICATE ~To be executed if this Bond is not accorripanied by an executed Registration Certificate ofthe Comptroller of public Accounts aFthe Mate of Texas} It is hereby certi~.ed that this Bond has been issued under the provisions of the Bond Ordinance described in this Band; and that this Bond has been issued in conversion of and exchange far or replacement of a band, bonds, or a portion of a band ar bonds of an issue which originally was approved by die Attorney General of the State of Texas and registered by the Cainptroller of Public Accounts of the state of Texas. TIDE BANK OF NEw YORK TRUST COMPANY, NATIONAL ASSOCIATION, DA~,LAS; TEXAS, Paying Agent~Registrar Da#ed By Authorized Representative . INSERT BOND INSURANCE LEGEND, IF ANY} 1~  i F~~.M ASSIGNMENT: ASSIGNMENT FGA ~ALI~E RECEI~BD, the undersigned registered owner of this Bond, or duly authorized representative yr attorney thereof, hereby assigns this Bond to 1 ~ Assignee's social sprint ar typewrite Assignee's name and security or Taxpayer address, including yip coded i Identification Nun~ber~ and hereby irrevocably constitutes and appoints attorney to transfer the registration of this Bond on the Paying Agentl~egistrar's Registration Banks with fu11 power of substitution in the prc~.ises. Dated: Signature Guaranteed: NGTI~E: Signatures} must be guaranteed by Registered liner ~ an eligible guarantor institution participating in NGTIGE; This signature must correspond with a securities transfer association recognised the name vfthe Registered Gwner appearing on signature guarantee program., the face of this Cer~lficate in every particular without alteration or enlargement or any change whatsoever. Section 8. TAB LEVY. A special Interest and Sinking Fund the "Interest and inking Fund"~ is hereby created solely far the benefit ofthe Bonds, and the Interest and Sinking Fund shall be established and. maintained by the Issuer at an off'xcial depository bank vfthe Issuer. A Mandatory Redemption Account is hereby established within the Interest and finking Fund, The Interest and finking Fund shall be Dept separate and apart from all other funds and accounts ofthe Issuer, and shall be used only for paying the interest an and principal ofthe Bonds. All ad valorem taxes levied and collected for and on account ofthe Bonds,together with any premium and accrued interest received upon sale of the Bonds, shall be deposited, as collected, tv the credit ofthe interest and Sinking Fund, wring each year while any ofthc Bonds or interest thereon. axe outstanding and unpaid, the governing body ofthe Issuer sha11 compute and ascertain a rate and antvunt of ad valorem tax which will be sufficient to raise and produce the rnvney required to pay the interest on the Bonds as such interest becomes due, and tv provide and maintain a sinking fund adequate to pay the principal of its Bands a such principal matures ar is scheduled for redemption abut never less than 2°/0 of the original principal amount ofthe Bands as a sinking fund each year},including such amounts as are necessary to satisfy the mandatory sinking fund schedule for the Bonds maturing February 15, and February 15, 2D asset forth in the Form of Initial Bond and the Form of substitute Bond con#ined herein, which amounts sha11 be deposited iota the l~iandatary I~edernption Account, with such mandatory redenption constituting payment at maturity. Said tax shall be based on the latest approved tax rails vfthe Issuer, with full allowance being made for tax delinquencies and the cast of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the Issuer far each year while any ofthe Bonds or interest thereon arc outstanding and unpaid; and said tax shall be assessed and collected each such year anal deposited tv the credit ofthe aforesaid Interest and Sinking Fund. Said ad valorem taxes 17  sufficient to provide far the payt~ent ofthe interest an and principal afthe Bonds, as such interest camel due and such principal natures or is scheduled far redemption, are hereby pledged for such payment, within the limit prescribed by law Section 9. DEFEASANE ~F BAND. ~a}Any Band and the interest thereon shall be deemed to be paid, retired, and no longer autstatxding ~a "Defeased Band"} within the meaning of this ordinance, except to the extent provided in subsection ~d} of this Section 9, when payment of the principal of such Band, plus interest thereon to the due date whether such due date be by reason of maturity, upon redemption, or otherwise} either ~i} shall have been made ar caused to be made in accordance with the terms thereof ~inc~ lading the giving ofany required notice ofredemption~, or ~ii~ shall have been provided for an ar before such due date by irrevocably depositing with ar making available to the Paying AgentlRegistrar for such payment ~ I } lawful money of the United States of America. sufficient to make such payment ar Government Gbligatians which mature as to principal and interest in such amounts and at such tunes as wi11 insure the availability, without reinvestment, of sufficient money to provide far such payment, and when praper arrangements have been made by the Yssuer with the Paying AgentlRegistrar far the payment of its services until ail Defeased Bands shall have became due and payable. At such time as a Band shall be deemed to be a Defeased Band hereunder, as aforesaid, such Bond and the interest thereon shall na longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Grdir~ance, and such principal and interest shall be payable solely from such money or government Gbliations. fib} Any moneys so deposited with. the Paying Agentll~egis~ar may at the written direction of the Issuer also be invested in C~avernment ~bligatians,maturing in the amounts and times as hereir~before set forth, and all incarne from such Government Gbligatians received by the Paying Agentf~.egistrar which is not required for the payment ofthe Bands and interest thereon, with respect to which such money has been sa deposited, shall be turned over to the Yssuer, ar deposited s directed in writing by the issuer. ~c} The term. "Cravernment Obligationsr' as used in this Section shall mean ~i} direct, nancallable obligations ofthe United Mates afAmerica, including obligations that are unconditionally guaranteed by the United Mates ofAmerica., iii} nancallable obligations of an agency or instrumentality ofthe United Mates of America, including obligations that are unconditionally guaranteed or insured by the agency or intstrurnentality and that, an the date of the purchase thereof are rated a to investment quality by a nationally recognised investment rating ~irrn not less than AAA or its equivalent, and viii} noncallable obligations of a state or an agency or a county, municiplaity , ar other political subdivision or a state that have been refunded and that, an the date the governing body of the District adopts or approves the proceedings authorizing the financial a~angements are rated as to investment quality by a natianal.ly recognized investment rating firm not less than AAA ar its equivalent, ~d} Until alI Defeased Bands shall have become due and payable, the Paying AgentlRegistrar shall perfarrn the services of Paying AgentlRegistrar fvr such Defeased Bonds the sane as if they had not been defeased, and the rssuer shall make praper arrangements to provide and pay for such services as required by this ordinance. ~ectian l~. DAMAGED, NiUTiLATED, LGST, STGLE~T, Old DBT~~ED BG1~DS. ~a~ ite l,~cernent fonds. ~n the event any outstanding Band is damaged, mutilated, last, stolen, ar destroyed, the Paying AgentlReistrar shall cause to be printed, executed, and delivered, a new bond ofthe same principal amount, maturity, and interest rate, as the damaged, mutilated, last, stolen, or destroyed Bond, in replacement far such Bond in the manner hereinafter provided. 18  LM fib} Application far Replacement Bonds, Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bands shall be nude by the registered owner thereofta the Paying AgentlRegistrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying AgentlRegistrar such security or indemnity as may be required by them to save each ofthem harmless from any loss or damage with respect thereto. Also, in every case of lass, theft, or destruction of a Bond, the registered owner shall furnish to .the Issuer and the Paying AgentlRegistr~ar evidence to their satisfaction of the loss, theft, or destruction ofsuch Bond, as the case may be. In every case of damage or mutilation of a Band, the registered owner shall surrender to the Paying AgentlRegistrar for cancellation the Bond so damaged or mutilated, ~c} Igo Default Occurred. Natwithstandingtbe foregoing provisions ofthis Section, in the event of any such Bond shall have matured, and no default has occurred which is then continuing in the payment afthe principal of}redemption premium, ifany, or interest on the Bond, the Issuer nay authorize the payment ofthe same {without surrender thereof except in the case ofa damaged or mutilated Bond} instead ofissuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section, {d} Charge for issuing Replacement Bonds. Prior to the issuance of any replacement bond, the Paying AgentlRegistrar shall charge the registered owner of such Bond with a111egal, printing, and other expenses in connection therewith, Every replacement bond issued pursuant to the provls~ons ofthYS Section by virtue ofthe fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation ofthe issuer whether or not the last, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all ether Bonds duly issued under this Ordinance {e} Authority for Issuing Replacement Bonds. In accordance with Chapter 12D1, Texas C~avernment Code, this Section of this Ordinance shall constitute authority far the issuance of any such replacement band without necessity of further action by the governing body of the Issuer or any other body or person, and the duty afthe replacement ofsuch bands is hereby authorized and impaled upon the Paying Agent~Registrar, and the Paying A.gent~Regis~rar shall authenticate and deliver such. Bands in the farm and manner and with the effect, as provided in Section ~~d} ofthis Ordinance far Bonds issued in conversion and exchange for other Bonds. section 11. COVENANTS RECrARDINC TAX-E~MPTION, The issuer covenants to refrain from taking any action which would adversely affect, or to take such action to assure, the treatment of the Bonds as obligations described in section 10~ ofthe Internal Revenue Code of 1984, as amended {the "Code"},the interest on which is not ~ncludahle in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: to take any action to assure that na more than 10 percent of the proceeds of the Bands ar the projects financed therewith {less anxounts deposited to a reserve fund, if any} are used for any "private business use", as defined in section 141 of the Code, ar ifmore than 10 percent of the proceeds ar the prod ect financed therewith are so used, such amounts, whether ar not received by the Issuer, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide far the payment of more than 1 Q percent of the debt service on the Bonds, in contravention of section l41 {b}{~} of the Cade; {b} to take any action to assure that in the event that the "private business use" described in subsection {a} hereof exceeds five percent of the proceeds of the Bonds or the projects financed therewith {less amounts deposited into a reserve fund, ifany} then the amount in excess of five 19  L percent is used fora "private business use" which is "related" and not "disprapartionate~', within the meaning of section 141 ~b}~3 } of the bode, to the gavern~nental use; ~c} to take any action to assure that no amount which is greater than the lesser Qf $S,OD~,000, or five percent of the proceeds afthe Bonds bless amounts deposited into a reserve fund, if any} is, directly or indirectly, used to finance loans to persons, other than state ar local gavernmental units, in contraventian of section 141 ~c} of the bode; ~d} to refrain from taking any action v~hich would otherwise result in the Bonds being treated as "private activity bonds'" within the meaning of sectian 141 } of the fade; fie} to refrain from taking any action that would result in the Bands being "federally guaranteed" within the meaning of section 149~b} afthe bode; to refrain from using any portion ofthe proceeds ofthe Bonds, directly ar indirectly, to acquire or to replace funds which were used, directly ar indirectly, t4 acquire investment property has defined in section 148~b}~~} ofthe bode}which produces a materially higher yield over the term of the B onds, other than investment property acquiredwith ~ 1 } praceeds ofthe Bands invested far a reasonable temporary period of 3 years or less, or in the case ofa refunding bonds, far a period af90 days or less until such proceeds are needed far the purpose for which the Bonds are issued, ~2} amounts invested in a bona Fide debt service fund, within the meaning of section 1.14$ 1 ~b~ of the Treasury Regu1at14ns, and amounts deposited in any reasonably required reserve ar replacement fund to the extent such amounts da not exceed 1~ percent ofthe stated principal amount far, in the case of a discount, the issue price} of the praceeds of the Bonds; } to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 148 of the bode relating to arbitrage},section 14~~g} of the bode relating to hedge bonds}, and, to the extent applicable, section 149~d} of the Qde relating to advance refundings~; anal ~h} to pay to the United Mates of Anxerica t least once during each five-year period beginning on the date of delivery of the Bonds} an amount that is at least equal to 90 percent of the ''Excess Warnings", within the meaning ofsection l4S~f} ofthe fade and to pay tQ the United Mates of ~.n~erica, not later that ~0 days after the Bonds have been paid in full,l On percent of the amount then xequired to be paid as a result QfB~cess Warnings under sectian 148~f} ofthe bode. 1~'or purposes ofthe foregoing and the issuer understands that the term "proceeds" includes "disposition praceeds' as defined in the Treasury Regulations and, in the case afref~nding bonds,transferred proceeds ~i~' any} and proceeds of the refunded bonds expended prior to the date of Issuance of the Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the fade and any regulations or rulings promulgated by the U,. Department of the Treasury pursuant thereto In the event that regulations or rulings are hereafter prarnulgated which modify, or expand provisions afthe bode, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained ~0  Lm herein to the extent that such failure to comply, in the opinion ofnationally-recognized band counsel, will oat adversely affect the exemption fra~n federal inca.e taxation of interest on the Bonds under section 1 a3 of the Code. In the event that regulations or rulings are hereafter prorriulgated which impose additional requirements which are applicable to the Bands, the Issuer agrees to comply with the additional requirements to the extent necessary and reasonably possible, in the opinion of natianally~recognized bond counsel, to preserve the exemption from federal income taxation afinterest on the Bonds under section l0~ ofthe Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor of the Issuer to execute any documents, certificates or reports required by the Cade and to make such elections, on behalf of the Issuer, which may be permitted by the Cade as are consistent with the purpose far the issuance ofthe Bonds. The Issuer covenants to comply with the covenants in this section after defeasance of the Bonds. In order to facilitate compliance with the above covenant ~h~, a "Rebate Pund" is hereby established by the Issuer far the sole benefit of the United States afAmerica, and such fund shall not be subject to the claim ofany other person, including without limitation, the bondholders. The Rebate Fund is established for the additional purpose of carnpiiance with section 1~8 of the Cade. Section 1 . ALLOCATION OF, AND LIMITATION ON, E~PENDITURBS FOR THE PROJBCT. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section 1 ofthis Ordinance {the "Project"} on its books and records in accordance with the requirements of the Internal Revenue Cade. The Issuer recognizes that in order far the proceeds to be considered used for the reimburserr~ent of casts, the proceeds mint be allocated to expenditures within l S months ofthe later afthe date that ~ i ~ the expenditure is made, or the Pra j ect is campletedp but in no event later than three years after the date on which the original expenditure is paid. The foregoing notwithstanding, the Issuer recognizes that in order far proceeds to be expended under the Internal Revenue Code, the sale proceeds ar investment earnings must be expended na more than b0 days after the later of ~l~ the fifth anniversary of the delivery of the Bands, or ~2}the date the hands are retired. The Issuer agrees to obtain the advice ofnationally-recognized band counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Bands. p`ar purposes hereof, the Issuer shall oat be obligated to comply with this covenant if It obtains an ap~nion that such failure to comply will oat adversely affect the excludability for federal income tax purposes from gross income of the interest. section 1 DISPOSITION OF PROJECT. The Issuer covenants that the property constituting the Project wi11 not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such sale or other disposition will oat adversely affect the tax~exempt status ofthe Bonds. Far purposes hereof, the Issuer shall oat be obligated to comply with this covenant if it obtains a legal opinion that such failure to comply will oat adversely affect the excludability far federal income tax purposes frog. gross income ofthe interest. Section 14. CUSTODY, APPROVAL, AND RBOITRA'1~0~1 OF BONDS; BOND COUNSEL'S OPINION, CUSS NUMBERS, PREAMBLB AND II~SURANCB. The Mayor of the Issuer is hereby authorized to have control of the Initial Band Issued hereunder and all necessary records and. praceecii.ngs pertaining to the Initial Band pending its delivery and its investigation, exarr~inatian, and approval by the Attorney Creneral of the State of Texas, and its registration by the Can~ptroller ofPublic Accounts afthe State ofTexas. Upon reg~strat~on afthe Initial Band said Comptroller afPubl;c Accounts far a deputy designated in writing to act for said Comptroller} shall manually sign the Comptroller's Registration Certificate on the initial Band, and the seal of said Comptroller shall be impressed, or placed in facsimile, an the Initial Bond, The approving legal opinion afthe Issuer's Band Counsel and the assigned CUSIP numbers may, atthe option 21  Lm of the Issuer, be printed an the Initial Bond or on any Bonds issued and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds. The preamble to this ordinance is hereby adopted and made a part hereof for all purposes. If insurance is obtained on any of the Bonds, the Initial Bond and all other Bands shall bear an appropriate Legend concerning insurance as provided by the insurer. Section l5. SALE INITIAL BDND; ~FFICYAL STATEMENT; BAND INSURANCE. ~a} The Initial Bond is hereby sold and shall be delivered to RBC DAIN RAUSCI~ER INC., as representative ofthe underwriters, in accordance with the Purchase Contract dated the date of this meeting and presented to the C1ty Council of the Clty at this n~eet~ng. The City Council hereby finds that the terms of the Purchase Contract are the must advantageous terms for the City that are reasonably available. The Nlayor of the Issuer is authorised and directed to execute, on behalf of the Issuer, said Purchase Contraact in the form and substance submitted at this meeting. {b~ An Official Statement dated as of the date of this meeting has been prepared in connection with the sale of the Initial Bond and the Bonds, in the farm and substance submitted at this meeting. Said ~fI'icial Statement and any supplement or addenda thereto have been and are hereby approved, and their use inthe offer and sale ofthe Bonds is hereby approved, It is further officially found, determined, and declared that the statements and representations contained in said official Statement are true and correct in all material respects, to the best knowledge and beliefof the Issuer. The distribution and use ofthe Preliminary Official Statement dated July 20a7, prior to the date hereof is hereby ratified and approved. ~c~ The Yssuer approves the insurance of the Bonds by BIA Insurance Corporation and the payment of the premium on the Insurance Policy, and agrees to comply with the terms of the "Provisions Relating to Bond Insurance" attached hereto a.s Exhibit C and incorporated herein. Section 1 G. INTEREST EARNINGS BOND PROCEEDS. Interest earnings derived from the investment ofproceeds from the sale ofthe Initial Band shall be used along with other bond proceeds for the acquisition and construction of the improvements for which the Bonds are issued; provided that after completion of such improvements, ifany ofsuch interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking pond. It is further provided, however, that any interest earnings on bond proceeds which are required to be rebated to the United States afAmerica pursuant to Section 11 hereof in order to prevent the Bonds from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Section. Section 17. DTC RECISTRATIDN. The Bonds initially shall be issued and delivered in such manner that no physical distribution of the Bonds will be made to the public, and The Depository Trust Cvn~pany ~"DTC"}, New York, New York, initially will act a.s depository for the Bonds. DTC has represented that it is limited purpose trust company incorporated under the laws ofthe state ofNew York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Cade, and a "clearing agency„ registered under Section I7A afthe federal Securities Exchange Act of 1934, as amended, and the Issuer accepts, but in no way verifies, such representations. The Initial Band authorised by this Ordinance shall be delivered to and registered in the name afthe Purchaser, Plowever, it is a conditianafdelivery and sale that the Purchaser, immediately after such delivery shall cause the Paying Agen#JRRegistrar, as provided for in this Ordinance, to cancel said Initial Bond and deliver in exchange therefor a substitute Bond for each n~atunity of such Initial Band, with each such substitute Bond to be registered in the name of CEDE CO,, the nominee of DTC, and it shall be the duty of the Paying AgentlRegistrar totake such action. It is expected that DTC will hold the Bands on behalfofthe purchaser ~2  Lm andlar The DTC Participants, as defined and described in the Official Statement referred to and approved in Section IS hereof {the "ITT participants'"}. Sa long as each Bond is registered in the name ofCEDE CO., the Paying AgentlRegistrar shad feat and deal. with DTC in all respects the same as if it were the actual and beneficial owner thereof. It is expected that DTC will maintain a book entry system which will identify beneficial ownership of the Bands by DTC Participants in integral a~naunts of $5,00, with transfers of ownership being effected on the retards of DTC and the DTC Participants pursuant to rules and regulations established by them, and that the substitute Bonds initially deposited with DTC sha11 be imn~abilized and not be further exchanged far substitute Bonds except as hereinafter provided. The Issuer is not responsible ar liable far any functions of DTC, will not be responsible for paying any fees ar charges with respect to its services, will not be responsible ar liable far maintaining, supervising, or reviewing the retards of DTC ar the DTC Participants, or protecting any interests ar rights ofthe beneficial owners ofthe Bands, It shall be the duty ofthe Purchaser and the DTC Participants to make all arrangements with DTC to establish this boak- entrysystem, the benef~c1al ownership of the Bands, and the method of paying the fees and charges of DTC. The Issuer does not represent, nor does it in any way covenant that the initial bank-entry system established with DTC will be maintained in the future. The Issuer reserves the right and option at any time in the future, xn its sole discretion, to terminate the DTC {CBDE . CO.~ book-entry only registration requirement described above, and to permit the Bands to be registered in the name of any owner. Ifthe Issuer exercises its right and option to terminate such requirement, it sha11 give written notice of such termination to the Paying AgentlRegistrarand tv DTC, and thereaer the Paying AgentlRegistrar shall, upon presentation and proper request, register any Bond in any name as provided for in this Ordinance. Notwithstanding the initial establishment oftheforeoing book-entry system with DTC, iffor any reason any afthe originally delivered substitute Bands is duly filed with the Paying Agent~Registrar with proper request far transfer and substitu- tion, as pravidedfor inthis Ordinance, substitute Bands will be duly delivered as provided in this ordinance, and there will be no assurance or representation that any book-entry system will be maintained far such Bands. section l~. CONTI~i~I~G DYCI~OSURE. ~a~ Annual Reports. ~i} The Issuer sha11 provide annually to each NI~SIR and any SID,within six months after the end of each fiscal yeax ending in or aver ~0~7, financial information and operating data with respect to the Issuer of the general type included in the final Official Statement authari~ed by Section 15 of this Ordinance, being the information described in Bxhibit A hereto, which Exhibit is attached to and incorporated in this Ordinance as if written word far ward herein. Any financial statements so to be prodded shall be ~ 1 ~ prepared in accordance with the accounting principles described in Exhibit A hereto, or such ether accounting principles as the Issuer may be required to employ from time to thne pursuant to state law or regulation, and audited, ~f the issuer cvn~missinns an audit of such statements and the audit is cvtnpleted within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the Issuer shall provide unaudited financial statements by the required time and wi11 provide audited financial statements for the applicable fiscal year to each NI~IIrISIR and any 1D, when and ifthe audit report an such statements become available, {ii} Ifthe Issuer changes its fiscal year, it will notify each NRIVIIR and any SID ofthe change {and of the date of the new fiscal year end} prior to the next date by which the Issuer otherwise would be required to pravidc financial information and apexating data pursuant to this section. The financial information and operating data to be prodded pursuant to this eetian may be set forth in full in one or more dacurnents or may be included by specific reference to any document {including an official statement ar other offering document, ifit is available from the ~RB~ that theretofore has been provided to each ~RMSIR and any SID or f fled with the CEO. 23  LM fib} Material Event Notices. The fssuer shall notify any fD and each NRMIR, in a timer manner, of and of the following events with respect to the Fonds, if such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; Non-payment related defaults; 3, Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled. draws on credit enhancements reflecting f~riancial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; Adverse tax opinions or events affectingthetax-exempt status of the Bonds; 7. Modifications to rights of holders of the Bands; S. Bond calls; 9. Defeasances; l Release, substitution, or sale of property securing repayment of the Bonds; and 11. Rating changes. The Issuer shall notify arty SID and each NRMIR, in a timely manner, of any failure by the Issuer to provide financial information or operating data in accordance with subsection ~a} ofthis Section by the time required by such subsectlan. ~c} Limitations. Disclaimers, and Ame~dept~. ~i} The Issuer shall be obligated to observe and perforrn the covenants specified in this Section for so larrg a~, but only fur so long as, the Issuer remains an "obligated person" with respect tv the Bands within the meaning of the Rule, except that the Issuer in any event will give the notice required by Subsection fib} hereofofany Bond calls and defeasance that cause the Issuer to no longer be such an "obligated person", iii} The provisions ofthis section are for the sole benefit of the registered owners and beneficial owners ofthe Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal ar equitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agxeed to provide pursuant to this Section and does not hereby undertake to provide any other information that maybe relevant or material to a complete presentation of the Issuer's financial results, conditt~an, or prospects yr hereby undertake tv update any information provided in accordance with this Section ar otherwise, except as expressly provided herein. The Issuer does not make any representation or warranty conceiving such information or its usefulness to a decision to invest In or sell Worlds at any future date. viii} UNDER N~ CIRCUMSTANCES SHALL THE ISSUER, ITS ~FIERS, ACrENTS AND EPL~YEES, BE LIABLE T~ THE REGISTERED ~wNER ~R BENEFICIAL ~wNER OF ANY BAND ~R ANY OTI~R ~ERS~N, IN CONTRACT DR TART, ~F~R DAMAGES RESULTING IN 24  LM wI~OLE OR nv PART FROM BREACI~ THE ISSUER, wI~ETHER r~~GLrGENT OR wITI~OUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EERY RIOT AND REMEDY OF ANY SUCH PERSO~i, IN CONTRACT ~R TORT, FOR ~R ON ACCOUNT OF ANY SUCK REACI~ SfIALL BE LIMITED TO AN ACTION FOR ANDAIVIUS OR SPECIFYC PERFORMANCE. Div} No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the Ordinance for purposes of any othex provision of this Qrdinance. Nothing in this Section is intended or sha11 act to disclaim, waive, or otherwise limit the duties ofthe Ysuer under federal and Mate securities laws. ~v} The provisions of this Section nlay be amended by the Issuer from time to time to adapt to changed circumstances that arise fromm a change in Iega1 requirements, a charxge in law, ar a change in the identity, nature, status, or type ofoperations ofthe Issuer, but only if~l} the provisions ofthis Section, as so amended, would have permitted an underwriter to purchase or se11 Bands in the primary offering ofthe Bonds incompliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and ~Z} either ~a} the registered owners of a majority in aggregate principal amount far any greater amount required by any other provision of this Ordinance that authorizes such an. amendment} of the outstanding Bonds consent to such amendment or a person that is unaffiliated with the Issuer such as nationally recognized bond counsel} determined that such amendment will not materially in~paix the interest of the registered owners ar~d benelicil owners of the Bonds. If the Issuer so amends the provisions of this Section, it shall include with at~y amended financial information or operating data next provided in accordance with subsection ~a} ofthis Section an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of I"inancial information or operating data so provided, The Issuer nxay also amend or repeal the provisions of this continuing disclosure agreement if the SEC ~ amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters~udgmentthat such provisions ofthe Rule are invalid, but only ifand to the extent that the provisions ofthis sentence would not prevent an u~aderwriter from lawfully purchasing ar selling Bonds in the primary offering ofthe Bonds. ~d} Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: "ISRB" means the Nf unicipal Securities Rulemaking Board, "NRSI.R"' means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities inforrnatian repository within the meaning ofthe Ru.Ie fram time to time. "Rule"" means SEC Rule 1c~-12, as amended from time to tune. "SEC" means the United States Securities and Exchange Co~nn~issian. ""SID'S means any person designated by the Mate of Texas or an authorised depar~xient, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule fram tune to time. Section I9. PROTECTION OF PLEDGE. Chapter 1 ADS, Government Code, applies to the issuance of the Bonds and the pledge of the taxes granted by the Issuer under Section S of this Ordinance, and is therefore valid, effective, and perfected. If Texas law is amended at any time while the bands are outstanding ~5  i and unpaid such that the pledge of the taxes granted by the Issuer under Section 8 of this Ordinance is to be subject to the .ling requirements of Chapter 9, Texas Business Commerce Cade, then in order to preserve to the registered owners of the Bonds the perfection of the security interest in said pledge, the Issuer agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Texas Business & Can~nerce Cade and enable a filing to perfect the security interest in said pledge to occur. Section 2~. FURTFIER P~.OCED[~RE. The Mayer ofthe Issuer, the City Secretary of the Issuer, and all other officers, employees, and agents of the Issuer, and each of there, shall be and they are hereby expressly authorised, empowered, and directed franc time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and an behalfofthe Issuer all such instruments, whether or not herein mentioned, as nay be necessary or desirable in order to carry out the terms and provisions of this Ordinance, the Bands, the sale of the Bands, and the Official Staterr~ent; and the Assistant City Manager of the City shall cause the expenses of issuance of the Bands to be paid from the proceeds of sale of the Initial Band ar from any other lawfully available funds of the Issuer. In case any officer whose signature shall appear on any Bond shall cease to be such af~'icer before the delivery ofsuch Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery, section 21. OPEN MEETINCrS. The City Council has found and determined that the meeting at which this Ordinance is considered open to the public and that notice thereof was given in accordance v~th the provisions of the Texas Open Meetings, Law, Tex. Gov't. Code, Chapter ~ 1, as amended, Section 2~. EFFECTIVE DATE. This Ordinance shalt become effective immediately upon its passage and approval, 2~ PASSED ANA APF~~~D this tie 17th day Of JUIy, ~~0 f . Perry R. c~ei11, Maya ATTEST: Jennifer falters, City secretary ~y: APPRO'~E~ A~ '~0 I~EC~Af, F~RIVI; Edv~~ , Snyder Attu . Y ~~~~~~~~~~r~rrrrrrrrrrswwwwwwrrwrwaww  Lm ~11 li D~S~RIPT~ON OF ANNUAL FINANCIAL tNFOR1V~ATIOI~ The following infarn~ation is referred to in Section 18 ofthis ordinance: Aunaal Financial S4u#emen~ and Operating Data The fnanciaZ information and operating data with respect to the issuer to be provided annually in accordance with such Section are as specified hand inctuded in the Appendix or under the tables of the official Statement referred to}below: Tables numbered 1 through 5 and 7 through 14, inclusive, under the captions "Tax Information", ""Debt Information" and "Financial infarmation" in the a#~icial Statement. Appendix B in the ~fi~ciai Statement. Accounting Frinciple~ The accounting principles referred to in such Section are the accaunting principles described i~ the Hates to the financial statements referred to in the paragraph above. I i  LM i PR~~~I]N ~E~ATIN~ T~ B~IY~ ~URAN~E Global Credit Research New Issue Exhibit 2a ~ ~ 2 J U L 2007 New Issue: Denton (City ofi~ TX MOODY'S ASSIGNS Aa3 RATING TO THE CITY OF DENTON [TX] $42.6MILLION GO BONDS, SERIES 2007 AND $11.5 MILLION CERTIFICATES OF OBLIGATION,_SERIES 2007 RATING AFFECTS $138 MILLION IN OUTSTANDING PARITY DEBT INCLUDING CURRENT SALES Municipality TX Moody's Rating ISSUE RATING General Obligation Refunding and Improvement Bonds, Series 2007 Aa3 Sale Amount $42,550,000 Expected Sale Date 07/16/07 Rating Description General Obligation, Limited Tax Certificates of Obligation Aa3 Sale Amount $11,500,000 Expected Sale Date 07/16/07 Rating Description General Obligation, Limited Tax Opinion NEW YORK, Jul 2, 2007 Moody's has assigned a Aa3 rating to the City of Denton's [TX] $42.6 million General Obligation Refunding and Improvement Bonds, Series 2007 and $11.5 million Certificates of Obligation, Series 2007. Concurrently, Moody's affirms the Aa3 rating on the city's $84 million in outstanding parity debt. The rating affirmation reflects the city's sizeable and solidly expanding tax base, adequate financial operations, and manageable debt burden. Moody's also considers the city's ongoing borrowing needs and swift principal payout rate. Approximately $14.7 million of the Bond proceeds will be used to finance various street improvements, senior center improvements and park land acquisitions and improvements. The remainder will be used to refund certain outstanding debt for a net present value savings. The Certificates will finance the construction of a public safety training facility, renovations and improvements to existing city buildings, improvements to the city's solid waste disposal system, acquisition and instillation of security, multi-media and other technology equipment, acquisition of fire engines, and construction of a multi- modaltransit station. Annual principal and interest payments on both the bonds and certificates are secured by the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed bylaw, on all taxable property within the city. The Certificates are additionally secured by a limited pledge of surplus net revenues of the city's utility system not in excess of $10,000. STRONG RESIDENTIAL AND COMMERCIAL GROWTH DRIVING TAX BASE EXPANSION The City of Denton is located within Denton County (general obligation rated Aa2) at the apex of the Dallas- Fort Worth-Denton industrial triangle and covers an area of 98.1 square miles. Situated approximately 38 miles northwest of Dallas and 36 miles northeast of Fort Worth, the city's 2007 estimated population is 108,381, representing a 35% increase since 2000. Denton's economy is diversified by manufacturing, state supported institutions, healthcare, and agriculture. As a result of healthy residential and retail development, the city's tax base has grown on average 10.1 % annually over the past five years to reach $5.4 billion FY 2007. The FY 2007 A.V. increased 13.6% or $652 million and of the increase, approximately $255 million was derived from new construction. Key recent developments have included the significant expansion of several hospitals, the construction of new facilities at Texas Woman's University and The University of North Texas, the opening of a $30 million international headquarter facility for Sally Beauty Company, and the opening of the 52 -acre "Denton Crossing" retail development. A 90 -acre, 900,000 square foot business park is slated to be full developed within 5 years. Other projects currently in progress or slated for future development include new office and warehouse space, substantial single family residential, the near completion of the 340,000 square -feet "Denton Crossing" retail development, and the Unicorn Lake mixed use development which will include restaurants, residential areas, commercial areas, and park trails. In light of current development, officials conservatively estimate a 13.5% increase in assessed valuation in FY 2008. As steady migration patterns into the city continue, spurring demand for services and housing, it is Moody's I._I:_f 1V _1 ll-_ _:1.....:ll __._l:.-.._ 1_ I-__Ill-.. l_.. I-___ -.~_...ll- r_..ll-_ I_.._____I_I_ r..l..~_  L)UII✓I lfldl (IIU (:Ily WIII (:UII(IIIUU LU UXPUIIUFl(;U Iledl(Ily LdX Udbe YlL)W(Il IUI (IIU IUlUbUUd[Jle IU(UIU- ADEQUATE FINANCIAL RESERVES BEING MAINTAINED WITH CONSERVATIVE FINANCIAL PLANNING AND HEALTHY REVENUE GROWTH The city has historically maintained adequate financial operations. With a FY 2004 commitment to maintain at least 13% of budgeted annual expenditures in reserves, the city achieved 15%. The reserve goal was increased to 13.5% for FY 2005 and city officials continue to maintain an annual commitment to increase general fund balances in ~/2% increments, as a percentage of budgeted expenditures, with an ultimate goal of 15% in FY 2008. Boosted by stronger than expected sales tax revenues (FY 2006 revenues increased 7%), increased transfers from the utility fund, and some cost reductions, the city's General Fund increased by approximately $5 million to reach $15.1 million or 21 % of revenues. For fiscal 2007, officials anticipate that the General Fund will be drawn down moderately for one time capital projects. Officials expect the ending FY 2007 balance to equal at least 17% of expenditures. The city's financial position is primarily supported by property taxes (38.5%) and sales taxes (25.9%). In addition to property tax and sales tax revenues, a sizeable 21 % of total revenues were funded by transfers from the city's utility system. Given the size of these transfers, Moody's believes the city's General Fund operations would be considerably pressured in the event that the utility system faced an unexpected decline in net revenues and was no longer able to make such sizeable contributions. In order to mitigate this risk, officials hope to decrease the amounts transferred into the General Fund from the utility system over time. Considering an adequate fund balance, conservative and prudent budgeting (including a recently initiated multi year financial forecast), and healthy revenue growth, Moody's believes the city's financial position remains consistent with the Aa3 rating category. ELEVATED DEBT BURDEN WITH ONGOING BORROWING PLANS In February 2005, Denton voters approved the city's request fora $42 million general obligation authorization. After the current sales, approximately $22 million remains available. Inclusive of the current sales, the city's debt profile remains elevated but manageable, with debt burdens of 2.2% direct and 8.6% overall, both represented as a percentage of assessed valuation. The considerably high overall debt burden reflects sizeable debt issuances by Denton I.S.D. and Denton County. Payout of principal is favorable with approximately 66% retired over ten years. As the City's population continues to grow at a solid pace, capital needs abound. Officials expect to issue $10.7 million of general obligation bonds in FY 2008 and $7 million in FY 2009. In addition, $11.7 million of certificates of obligation is slated to be issued in FY 2008 with $4 million in FY 2009. Additionally, the city will likely return to voters in 2008 to seek a new bond authorization. Considering the city's ongoing borrowing plans, the debt burdens will remain elevated. However, Moody's believes the city's debt position will also remain manageable given expectations of continued tax base growth and a favorable payout rate. KEY STATISTICS: 2007 Estimated Population: 108,381 Full Fiscal 2007 Full Valuation: $5.4 billion Full Valuation per Capita: $50,205 Direct Debt Burden: 2.2% Overall Debt Burden: 8.6% Payout of Principal (10 years): 66% FY 2006 General Fund Balance: $15 million or 21 % of General Fund Revenues Post Sale Parity Debt Outstanding: $138 million Analysts Anil Chandy Analyst Public Finance Group Moody's Investors Service Gera M. McGuire Backup Analyst Public Finance Group Moody's Investors Service Douglas Benton ~aninr rrArlit llffirAr  vvN 11 v1 VI V%A1L V IIIVVI Public Finance Group Moody's Investors Service Contacts Journalists: (212) 553-0376 Research Clients: (212) 553-1653 ©Copyright 2007, Moody's Investors Service, Inc. and/or its licensors including Moody's Assurance Company, Inc. (together, "MOODY'S").All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided "as is" without warranty of any kind and MOODY'S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability orfitness for any particular purpose of any such information. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of factor recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling. MOODY'S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODY'S have, prior to assignment of any rating, agreed to pay to MOODY'S for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,400,000. Moody's Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moody's Investors Service (MIS), also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody's website at www.moodys.com under the heading "Shareholder Relations -Corporate Governance -Director and Shareholder Affiliation Policy." Exhibit 2b ~ ~ RESEARCH Summary: Denton Texas General Obli ation g Publication date: 11-Jul-2007 Primary Credit Analyst: Theodore Chapman, Dallas (1) 214-871-1401; theodore_chapman@standardandpoors.com Secondary Credit Analyst: Peter V Murphy, New York (1) 212-438-2065; peter_murphy@standardandpoors.com Credit Profile US$16.07 mil GO imp bnds ser 2007 dtd 0711512007 due 0211512027 Long Term Rating AA-(Stable New US$11.5 mil certs of oblig ser 2007 dtd 07/15/2007 due 02/15/2027 Long Term Rating AA-(Stable New Denton GO Long Term Rating AA-(Stable Affirmed Rationale Standard & Poor's Ratings Services assigned its'AA-'standard long-term rating, and stable outlook, to Denton, Texas' series 2007 GO improvement bonds and series 2007 certificates of obligation and affirmed its 'AA-'standard long-term rating and Standard & Poor's underlying rating (SPUR), with a stable outlook, on the city's parity GO debt. The ratings reflect the city's: • Participation in the deep, diverse Dallas-Fort Worth MSA; • Solid financial position with sound reserves; and • Stable employment base, which features higher education and public sector employment opportunities and a continually expanding commercial sector. The city's growth-driven, high overall net debt burden moderates these strengths; but management attributes most of the total debt burden to Denton Independent School District, the overlapping school district. An unlimited ad valorem property tax pledge secures the bonds. An ad valorem property tax pledge limited to $2.50 per $100 of assessed valuation (AV) and surplus net revenues of the city's waterworks and sanitary sewer system secure the certificates. Officials will use bond proceeds to fund a variety of general government improvements that the electorate authorized in a 2005 election. They will use certificate proceeds to fund capital equipment outlays. Denton, with a population of about 108,000, is roughly 35 miles north of, and equidistant to, Dallas, Texas and Fort Worth, Texas; and residents have easy access to both cities along Interstate 35. While job opportunities exist in manufacturing and some industry --along with the rapidly growing retail, service, and health care sectors --the public sector or higher education account for seven of the 10 leading employers. Per capita income indicators are a slightly less than average 94% of state and national levels due, in large part, to a significant student populace. University of North Texas, with an estimated enrollment of 31,000; the city and Denton County; local schools; and Texas Women's University anchor employment. AV has increased by more than 50% over the past five years to roughly $5.4 billion in fiscal 2007; the appraisal district's preliminary valuations indicate double-digit AV gains for fiscal 2008. The city is not dependent on any of its principal taxpayers. Denton's financial position remains strong. In fiscal 2006, the $13.3 million unreserved, undesignated general fund balance equated to 20.9% of operating expenditures, which again exceeded management's policy of maintaining a minimum of 15.0% in reserve (up from 13.5% in fiscal 2004). Management intends to make any fund balance in excess of its minimum requirements available for further appropriations to fund nonrecurring items. Fiscal 2007 projections indicate that, even after funding those onetime items, reserves should still be about 18% of expenditures, boosted by continued gains in sales tax revenues. Sales taxes, the second leading revenue generator next to property taxes, have rebounded strongly from their brief 2000-2001 slump; officials budgeted fora 5% increase for fiscal 2007, and year-to-date results indicate revenues are fully in-line with that forecast. Both residential and nonresidential sectors continue to demonstrate robust growth with additional projects announced or already under development. In addition to the rapidly expanding retail sector, growth related to the city's investment at its municipal airport and a University of North Texas-sponsored R&D park have boosted the commercial base. Additional mobility projects, such as those planned by the county's regional transportation authority, should also create desirable commercial frontage and AV growth. Overall, general fund revenue sources are diverse with no one source exceeding 30% of total revenues in the fiscal 2007 budget. The 2007 tax rate of 62.7 cents per $100 of AV is stable and in-line with comparable cities in the MSA. Standard & Poor's deems Denton's financial management practices "good" under its Financial Management Assessment (FMA) methodology, indicating practices exist in most areas, though not all might be formalized or regularly monitored by governance officials. Management has recently enhanced its long-term financial and capital planning efforts, which it had historically performed in concert with its preparation of the annual budget. Overall net debt is high at more than 8% of market value due primarily to Denton Independent School District's recent undertaking of very large capital efforts. Debt service as a percent of expenditures has changed little over time, and the direct debt burden of roughly 2% of AV has remained unchanged over the past decade. Street and park improvements are the primary focus of the city's five-year capital improvement plan. Management plans to issue additional debt to fund the majority of the estimated $83.7 million capital program through fiscal 2011. Outlook The stable outlook reflects the expectation that the city will maintain a sound financial position with growing and diversifying economic and employment bases providing continued momentum. The stable outlook also reflects the expectation that the city's continued healthy AV growth should help management mostly offset the debt required to finance any necessary capital requirements needed to support its expansion. If Denton's continued efforts to promote economic development prove successful, including further debt burden moderation, we would consider cone-notch upgrade. Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Ratings Detail (As Of 11-Jul-2007) Denton GO (AMBAC) Unenhanced Rafing AA-(SPUR)IStable Affirmed Denton GO (CIFG} Unenhanced Rafing AA-(SPUR)IStable Affirmed Denton GO (FGIC} Unenhanced Rafing AA-(SPUR}IStable Affirmed Denton GO (FSA) Unenhanced Rafing AA-(SPUR}IStable Affirmed Denton GO (MBIA} Unenhanced Rafing AA-(SPUR}IStable Affirmed Many issues are enhanced by bond insurance. fir, . ~ ~ ~ I'ItEI~I'~IIti.~KI' ()!~'I;1t;;'IAI, S'I',~~I`liaVll':S•I' Ratings: w Moody's: "Applied For" Dated July 6, 2007 S&l:': "Applied For" See ("Other Information - NEW ISSUE -Book-Entry-Only Ratings" herein) ~a In the opinion of Bond Counsel, interest on the Bonds will be excludable from grass income for federal income tax purposes under statutes, regulations, published ~ rulings and court decisions existing on the date thereof, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on ~ corporations. f ~ W' THE BONDS WILL NOT BE DESIGNATED AS " UALIFIEDTRX-EXEMPT OBLIGATIONS" FOR FINANCIAL [NSTITUTIONS ~ 542,550,000* ~ ~ CITY OF DENTON, TEXAS ~ (Denton County) GENERAL OBLIGATION REFUNDING AND IMFROVEMENT BONDS, SERIES 20th ~ ~ Dated Date: duly I5, 2007 Due: February 15, as shown below ~ PAYMENT TERMS ...Interest on the $42,550,000* City of Denton, Texas General Obligation Refunding and Improvement Bands, Series 2007 (the "Bonds") will ~ accrue from July l5, 2007, (the "Dated Date") and will be payable February 15 and August 15 of each year commencing February 15, 2008, and will be calculated on ~ the basis of a 3b0-day year consisting of twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC"} pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in ~ ~ denominations of $5,000 or integral multiples thereof. Nv physical delivery of the Bands will be made to the beneficial owners thereof. Principal of, premium, if ~ any, and interest on the Bands will be payable by the Paying AgentlRegisirar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC far subsequent payment to the beneficial owners of the Bonds. See "The Bonds -Book-Entry-Only System" herein. The initial Paying AgentlRegistrar is The Bank of New York Trust Company, N.A., Dallas, Texas (see "The Bonds and Certificates -Paying AgentlRegistrar"}. ~ ~ AUTSORITY FOR ISSUANCE ...The Bonds are issued pursuant to the Constitution and general laws of the State of Texas, (the "State") including particularly Vernon's Texas Codes Annotated ("V,T.C.A."), Government Code, Chapters 1207 and 1331, as amended, and an election held in the City of Denton, Texas on February S, 2005, and are direct obligations of the City of Denton, Texas (the "City"}, payable from a direct annual ad valorem tax levied on all taxable property ~ within the City, within the limits prescribed by law, as provided in the ordinance authorizing the Bands (the "Bond Ordinance") (see "The Bonds and Certificates - ~ ~ Authority for Issuance"}, ~ ~ n -n , ~ PURPOSE ...Proceeds from the sale of the Bonds will be used for (a) for various street improvements, senior center improvements and park land acquisitions and tJ ~ s ~ improvements, (b) to refund a portion of the City's outstanding general obligation debt as shown on Schedule I hereto, for debt service savings, and (c) to pay the costs of issuing the Bands. ~~f~ ~l ~i f ~ ~ MATURITY SCHEDULE* CUSIP Frefix: 248865t'} ~~a ~ ' Principal Interest CUSIP Principal Interest CUSIP ~f ~ Amount Maturity Rate Yield Sufi-txt~~ Amount Maturity Rate Yield Sufftxt~} ~ w ~ 420,000 2oog ~ 4,295,000 2018 r !J w 500,000 2009 3,s2o,000 2019 ~ ~ ~ 525,000 2010 3,225,000 2020 ,T 545,000 2011 3,345,000 2021 1,075,000 2012 2,490,000 2022 ~ ^ ~ 1,805,000 2013 975,000 2023 :"a ` 2,820,000 2014 1,025,000 2024 aw-• 4,000,000 2015 1,080,000 2025 - ~ ~ ~ 4,095,000 201b 1,135,000 202b f ' 4,185,000 2017 1,190,000 2027 ~ ~a ~ r (Accrued Interes# from July I5, 2007 tv be added) a ~ ~ (1) CUSIP is a registered trademark of the American Bankers Association. CUSP data herein is provided by Standard and Poor's CUSIP Service Bureau, a division .y .w ~ ~ of the McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute far the CUSIP Services. CUSIP ~ :.j ' numbers are provided for convenience of reference only. The City, the Financial Advisor and the Underwriters take no responsibility for the accuracy of such numbers. J ,,,r U r, ~ ~ ~ REDEMPTION ...The City reserves the right, at its option, to redeem Bonds having stated maturities on and after February 15, 2018, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February l5, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. (see "The Bonds and Certificates -Optional Redemption"). ~ SEPARATE ISSUES ...The Bonds are being offered by the City concurrently with one other issue, the "City of Denton, Texas, Certificates of Obligation, Series ~ 2007", in the principal amount of $11,500,000* (the "Certificates"), under a common Official Statement, and such Certificates and the Bands are hereunafter . _ ~ sometimes referred to collectively as the "Obligations". The Bonds and the Certificates are separate and distinct securities offerings being issued and sold ~ ~ independently except for the common Official Statement, and, while the Obligations share certain common attributes, each issue is separate from the other and should u ~ " be reviewed and anal zed lode endentl , includin the a of obli ation bein offered, its terms fora ent, the securi for its a ent, the ri hts of the holders, Y P Y g tYP g g P Ym ty P Ym 8 ~ ~ and other features. ~ u LEGALITY ...The Bonds are offered for delivery when, as and if issued and received by the Underwriters and subject to the approving opinion of the Attorney ~ General of Texas and the opinion of McCall, Parkhurst & Horton, L.L.P., Bond Counsel, Dallas, Texas {see Appendix C, "Form of Bond Counsel's Opinions"}. ~ Certain legal matters will be passed upon for the Underwriters by Fulbright & Jaworski L.L.P., Dallas, Texas, Counsel for the Underwriters. . r~ ~ , fi ~ DELIVERY It is expected that the Bonds will be available for delivery through The Depository Trust Company an August 21, 2007. RBC CAPITAL MARKETS ~ MQRGAN KEEGAN & COMPANY, INC. CITI ~f ~ . * Preliminary, subject to change THIS PAGE LEFT BLANK INTENTIONALLY 2 ~ u~ I'ItF1LI?4Il:~Alik 4:lI:F'I["IAI.~ ti'1'A'1'I:tr1l~:l~"I' Ratings: Moody's: "Applied For" Dated July 20(17 S&P: "Applied For" See ("tither Information - ~ ~ NEW ISSUE -Book-Entry-Only Ratings" herein} ~ u~ a~ ~ In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for federal income tax purposes under statutes, regulations, published rulings and . ~ ~ court decisions existing an the date thereof, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations. THE CERTIFICATE WILL NOT BE DE I NATED AS " ALIFIEDTRX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTI N Q $I I,54U,400k . ~ ~ CITY OF DENTON, TEXAS ~ ~ (Denton County) ~ ~ CERTIFICATES OF OBLIGATION, SERBS 2x17 Dated Date: July 15, 2(It17 Due: February 15, as shown below PAtrMtrrrr TERMS ...Interest on the $11,500,000 City of Denton, Texas Certificates of Obligation, Series 2007 (the "Certificates") will accrue from ]uly 1 S, 2007, (the "Dated ~ Date") and will be payable February 15 and August 15 of each year commencing February 15, 2008, and will be calculated on the basis of a 3b0-day year consisting of twelvc 3Q- r day months. The definitive Certificates will be initially registered and delivered only to Cede & Co., the nominee of The Depositary Trust Company ("DTC") pursuant to the Bvak- ~ Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of ~ the Certificates will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying AgentlRegistrar to Cede ~ Co., which will make distribution of the amounts so paid to the participating members of DTC far subsequent payment to the beneficial owners of the Certificates. See "The Bonds and Certificates -Book-Entry-only System" herein. The initial Paying AgentlRegistrar is The Bank of New York Trust Company, N.A., Dallas, Texas (see "The Bonds and ~ Certificates -Paying AgentlRegistrar"). ~ ~ r AvTtlortrnr ~oR Issnnrrct? ...The Certificates are issued pursuant to the Constitution and general laws of the State of Texas, (the "State")particularly Subchapter C of Chapter c ~ ~ 27i, Texas Local Government Code (the Certificate of Obligation Act of 1971), as amended, and constitute direct obligations of the City of Denton, Texas (the "City"), payable ~ ~ from a combination of i the le and collection of a direct annual ad valorem tax, within the limits rescribed b law, on all taxable roe within the Ci and u) a limited ry P Y p P rtY ty, pledge of surplus net revenues of the City's Utility System not in excess of $10,000, as provided in the ordinance authorizing the Certificates {the "Certificate Ordinance") (see "The Bonds and Certificates -Authority far Issuance"). ~ ~ w ra PtrttposE . , .Proceeds from the sale of the Certificates will be used for the purchase, construction and acquisition of certain real and personal property, including: (a} design, ~ ~ :a constructive and equipping of a public safety training facility; (b}renovations and improvements tv existing City buildings, including the acquisition and installation of replacement ~ , n heating, venting and air conditioning equipment; (c) improvements to the City's solid waste disposal system and acquisition of related equipment; (d) acquisition and installation of ~ security, multi-media and other technology equipment for City buildings, including the municipal court in City Hall East; (e) acquisition of fire engines and vehicles and equipment f ~ far the City's motor pool; (f) construction and equipping of amulti-modal transit station; and also for the purpose of paying all or a portion of the City's contractual obligations for ~ u professional services, including engineers, architects, attorneys, map makers, auditors, and financial advisors, in connection with the preparation of the City's Capital Improvement Plan (including an animal services facilities master plan}, and with the Certificates. v~~~~ c' MATURITY SCHEDULE" CUSIP Prefix: 24$StiS~ri a .W a ~ Principal Interest CUSIP Principal Interest CUS1P s Amount Maw t~ Rate Yield Suffix t'} Amount Maturity Rate Yield Suffix t't $ 965,044 2008 $ 265,aa4 2ols 1,060,000 2009 280,000 2019 ~ ~ ~ 1,145,000 2010 290,000 2020 w~~ 1,155,000 2011 300,000 2021 ;r a ~ 1,210,040 2412 320,400 2022 a ~ 500,000 2013 335,000 2023 ~ ~ ~ 520,444 2014 350,000 2024 C Y 545,000 2015 360,400 2025 a _ ~ ~ 565,000 2016 3 80,400 2026 a~ = ~ 595,000 2017 400,000 2027 f ~ {Accrued Interest from July 15, 20U7 to be added) a ~ {1) CUSIP is a registered trademark of the American Bankers Association. CL)SIP data herein ~s provided by Standard and Poor's CUSIP Service Bureau, a division of the y McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute far the CUSIP Services. CUSIP numbers are provided ~ ~ ~ for convenience of reference only. The City, the Financial Advisor and the Underwriters take no responsibility for the accuracy of such numbers. ~v , , ~ ~ ~ ~ R~~a~Mr~[orr . , ,The City reserves the right, at its option, to redeem Certificates having stated maturities on and after February I5, 2018, in whole or in part in principal amounts of ~ ~ $5,000 ar any integral multiple thereof, an February 15, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. (see "The Bands and w . ~ J Certificates -Optional Redemption"). ~ ~ 5t'<PnRn~ Issuers ...The Certificates are being offered by the City concurrently with one other issue, the "City of Denton, Texas, General Obligation Refunding and Improvement Bonds, Series 2007", in the principal amount of $42,550,000* (the "Bonds"), under a common Official Statement, and such Bonds and the Certificates are hereinafter sometimes ~ referred to collectively as the "Obligations", The Certificates and the Bonds are separate and distinct securities offerings being issued and sold independently except for the ~ ~ common Official Statement, and, white the Obligations share certain common attributes, each issue is separate from the other and should be reviewed and analyzed independently, ~ _ including the type of obligation being offered, its terms for payment, the security for its payment, the rights of the holders, and other features. w~:~ . ~ L~cAtrty ...The Certificates are offered for delivery when, as and if issued and received by the Underwriters of the Certificates and subject to the approving opinion of the Attorney General of Texas and the opinion of McCall, Parkhurst & Horton, L.L.P., Bvnd Counsel, Dallas, Texas (see Appendix C, "Farm of Band Counsel's Opinions"}, Certain legal matters will be passed upon for the Underwriters by Fulbright & Jaworski L.L.P., Dallas, Texas, Counsel for the Underwriters. v . ~ ~ DELIVERY It is expected that the Certificates will be available for delivery through The Depository Trust Company on August 21, 2007. a RBC CAPITAL MARKETS ~ .'f r ~ ' M~RGAN KEEGAN & COMPANY, INC. CITY FJ r ~ ~ ~ Preliminary, subject to change ;J: 3 f . THIS PAGE LEFT BLANK INTENTIONALLY 4 This Off cial Statement, which includes the cover page and the Appendices hereto, does not constitute an offer tv set[ or [he solicitation of an offer to buy in any jurisdiction to any person to whom tt is unlawful to make such offer, solicitation, ar sale. No dealer, broker, salesperson, or other person has been authorized !a give information or to make any representation other than those contained in this O~cial Statement, and, if given or made, such other information or representations must not be relied upon. For purposes of compliance with Rule l Sc2-I2 of the Securities and Exchange Commission (the "Rule'J, this document constitutes an Oj~cial Statement of the City with respect to the Bonds and Certif cotes that has been "deemed final" by the City as of its date except jor the omission of no more than the information permitted by the Rule. The information set forth herein has been obtained from the Ciry and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the representation, promise, or guarantee of the Financia! Advisor. This Off cial Statement contains, in part, estimates _ and matters of opinion which are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. Any information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this O~cia! Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been na change in the affairs of the City or other matters described herein since the date hereof. See "Continuing Disclosure of Information" far a description of the City's undertaking to provide certain information on a continuing basis. Neither the Ciry nor its Financial Advisor make any representation as to the accuracy, completeness, or adequacy of the information supplied by The Depository Trust Company for use in this O~cial Statement. The cover page contains certain information for general reference only and is not intended as a summary of this offering. Investors should read the entire O~cial Statement, including all appendices hereto, tv obtain information essential to making an informed investment decision. 1N CONNECTION WITH THIS OFFERING, THE UNDER WRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE THE MARKET PRICE OF THE OBLIGATIONS AT A LEVEL ABOVE THA T WHICH MIGHT OTHERWISE PREVAIL 1N THE OPEN MARKET: SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Underwriters have provided the following sentence for inclusion in this O~cia! Statement. The Underwriters have reviewed the information in the Of~cia! Statement in accordance with, and as part af, !heir responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters da not guarantee the accuracy or completeness of such information. The agreements of the Ciry and others related to the Obligations are contained solely in the contracts described herein. Neither this Official Statement nor any other statement made in connection with the offer or sale of [he Obligations is to be construed as constituting an agreement with the purchaser of the Obligations. INVESTORS SHOULD READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING ALL SCHEDULES AND APPENDICES ATTACHED HERETO, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION. This O~cia! Statement contains "Forward-Looking" statements within the meaning of Section 2l E of the Securities Exchange Act of 1934, as amended Such statements may involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, and achievements to be d~erent from future results, performance, and achievements expressed or implied by such forward-looking statements. Investors are cautioned that the actual results could differ materially from those set forth in the forward-lookingstatements. The Bonds and Certificates are exempt from registration with the Securities and Exchange Commission and consequently have not been registered therewith. The registration, qualification, or exemption of the Bands and Certificates in accordance with applicable securities law provisions of the jurisdiction in which these securities have been registered, qualified or exempted should not be regarded as a recommendation thereof. TABLE OF CONTENTS PRELINCINARY OFFICIAL STATEMENT SUMMARY ......................5 FINANCIAL INFORMATION..,...............................................................25 TABLE l2 - CHANGES IN NET ASSETS ...............................................25 CITY OFFICIALS, STAFF AND CONSULTANTS S TABLE l2A -GENERAL FUND REVENUES AND EXPENDITURE HISTORY26 ELECTED OFFICIALS 8 TABLE 13 - MUMCIPAL SALES TAX HISTORY...........,.......................27 SELECTED ADMINISTRATNE STAFF $ TABLE 14 -CURRENT INVESTMENTS ..................... .............................29 CONSULTANTS ANI] ADVISORS 8 J TAX MATTERS INTRODUCTION 9 CONTIN[1ING DISCLOSURE OF INFOR~1'IATION ............................32 Pi.AN OF FINANCih'G ...............................................................................9 OTHER INFORMATION ..........................................................................33 THE BONDS AND CERTIF'ICATES IU RATINGS................,........................... .........................,..,..,.,...............33 LITIGATION ........................................................................................33 TAX iNFORMATION ................................................................................15 REGISTRATION AMID QUALIFICATION OF BONDS AND CERTIFICATES FOR TABLE 1 -VALUATION, EXEMPTIONS AND GENERAL OBLIGATION SALE ......................................................................................33 DEBT I8 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TABLE 2 -TAXABLE ASSESSED VALUATIONS BY CATEGORY ...........19 TEJCAS .......................................... ..........................................33 TABLE 3 -VALUATION AND GENERAL OBLIGATION DEBT HISTORY 20 LEGAL OPINIONS 34 TABLE 4 -TAX RATE, LEVY AND COLLECTION HISTORY 2a FINANCIAL ADVISOR .................................. .........................,...,..........34 TABLE 5 -TEN LARGEST TAXPAYERS 20 VERIFICATION OF ARITHMETICAL AND MATHEMATICAL TABLE b -ESTIMATED OVERLAPPING DEBT 2 L COMPUTATIDNS 34 UNDERWRITING 3 5 UI;B'I' INFORMATION 7 FORWARD-LOOKING STATEMENTS ❑ISCLA[MER................................35 TABLE 7 -GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS..... 7 MISCELLANEOUS ................................................................................35 TABLE 8 -INTEREST AND SINKING FUND BUDGET PROJECTION 23 TABLE 9 - COMPUTATION OF SELF-SUPPOATTNG DEBT 23 SCHEDiIIaE OF REFUNDED OBIIGATIONS.,..,.........,..........Schedule l TABLE 10 -AUTHORIZED BUT UNCSSUED GENERAL OBLIGATION BONDS ...23 APPENDICES TABLE 1 I - OTHER OBLIGATIONS 23 GENERAL INFORMATION REGARDING THE CITY A EXCERPTS FROM TIIE ANNUAL 1' T~iANCIAL REPORT B FDkM OF BOND COUNSEL'S OPINIONS C The cover page hereof, this page, the appendices included herein and any addenda, supplement or amendment hereto, are part of the Preliminary Official Statement. 5 PRELIMINARY OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the mare complete information and definitions contained or incorporated in this Preliminary Official Statement. The offering of the Bonds and Certif cafes to potential investors is made only by means of this entire Preliminary Official Statement. No person is authorised to detach this summary from this Preliminary Off vial Statement or to otherwise use it without the entire Preliminary Official Statement. THE CITY The City of Denton is a political subdivision and municipal corporation of the State, located in Denton County, Texas. The City covers approximately 79.8 square miles (see "Introduction - Description of City"). THE BONDS The Bonds axe issued as $42,554,444* General Obligation Refunding and I:mpravement Bonds, Series 2447. The Bands are issued as serial bonds maturing February 15, 2448 through February 15, 2027. (see "The Bands and Certificates -Description of the Bonds"}. THE CERTIFICATES The Certificates are issued as $11,500,000* Certificates of Obligation, Series 2407. The Certificates are issued as serial certificates maturing February 15, 2608 through February 15, 2027. (see "The Bonds and Certificates -Description of the Certificates"}. PAYMENT OF INTEREST Interest on the Bonds and Certificates accrues from July 15, 2447, and is payable February 15, 2448, and each August 15 and February 1 S thereafter until maturity or prior redemption (see "The Bonds and Certificates -Description of the Bonds," and "The Bands and Certif cotes - Optional Redemption"}. AUTHORITY FOR ISSUANCE...,...... The Bonds are issued pursuant to the Constitution and general laws of the State, including particularly Chapters 1207 and 1331, Texas Government Cade, as amended, an election held in the City on February 5, 2045, and the Bond Ordinance passed by the City Council of the City (see "The Bonds and Certificates -Authority for Issuance"). The Certificates are issued pursuant to the general laws of the State, particularly Subchapter C of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act: of 1971), as amended, and the Certificate Ordinance passed by the City Council of the City (see "The Bonds and Certificates -Authority for Issuance"). SECURITY FOR THE BONDS The Bonds constitute direct and voted obligations of the City, payable from a direct annual ad valorem tax levied, within the limits prescribed by law, on all taxable property located within the City (see "The Bonds and Certificates -Security and Source of Payment"). SECURITY FOR THE CERTIFICATES The Certificates constitute direct obligations of the City, payable from a combination of (i} a direct annual ad valorem tax levied, within the limits prescribed by law, on all taxable property within the City, and (ii} a limited pledge (not to exceed $10,000} of surplus net revenues of the City's Utility System (see "The Bands and Certificates -Security and Source of Payment"). REDEMPTION The City reserves the right, at its option, to redeem Bonds and Certificates, as the case may be, having stated maturities an and after February 15, 2018, in whole or in part in principal amounts of $5,044 or any integral multiple thereof, on February i5, 2417, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. (see "The Bonds and Certificates -Optional Redemption"). TAx ExEMIrrION In the opinion of Band Counsel, the interest on the Bonds and Certificates will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under the caption "Tax Matters" herein, including the alternative minimum tax on corporations. USE OF PROCEEDS Proceeds from the sale of the Bonds will be used for (a) for various street improvements, senior center improvements and park land acquisitions and improvements, (b) to refund a portion of the City's outstanding general obligation debt as shown on Schedule I hereto, for debt service savings, and (c} to pay the costs of issuing the Bonds. * Preliminary, subject to change b Proceeds from the sale of the Certificates will be used for the purchase, construction and acquisition of certain real and personal property, including: (a} design, construction and equipping of a public safety training facility; (b) renovations and improvements to existing City buildings, including the acquisition and installation of replacement heating, venting and air conditioning equipment; (c} improvements to the City's solid waste disposal system and acquisition of related equipment; {d) acquisition and installation of security, multi-media and other technology equipment for City buildings, including the municipal court in City Hall East; (e} acquisition of fire engines and vehicles and equipment for the City's motor pawl; (f}construction and equipping of a multi-modal transit station; and also far the purpose of paying all or a portion ofthe City's contractual obligations far professional services, including engineers, architects, attorneys, map makers, auditors, and financial advisors, in connection with the preparation of the City's Capital Improvement Plan (including an animal services facilities master plan), and with the Certif sates. RATINGS The presently outstanding general obligation debt of the City is rated "Aa3" by Moody's Investors Service, Inc. ("Maody's"} and "AA-" by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"}. The City also has issues outstanding which are rated "Aaa" by Maody's and "AAA" by S&P through insurance by various commercial insurance companies. Applications far contract ratings on the Bonds and Certificates have been made to Moody's and S&P (see "Other Information -Ratings"). Boox-ENTRY-ONLY SYSTEM...... The definitive Bonds and Certif sates will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Baok-Entry-Only System described herein. Benef vial ownership of the Bonds and Certificates may be acquired in denominations of $S,DOa or integral multiples thereof. Na physical delivery of the Bonds and Certificates will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds and Certif sates will be payable by the Paying AgentlRegistrar to Cede Co., which will make distribution of the amounts so paid to the participating members of DTC far subsequent payment to the Benef cial owners of the Bonds and Certificates (see "The Bonds and Certificates -Book-Entry-Only System"). PAYMENT RECORD The City has never defaulted. SELECTED FINANCIAL INFORMATION Funded Ratio Funded Fiscal Per Capita Tax Per Capita Tax Debt to Year Estimated Taxable Taxable Debt Funded Taxable % of Ended City Assessed Assessed at End Tax Assessed Total Tax 9130 Po ulation Valuation Valuation of Year Debt Valuation Collections 2003 90,3SS $ 3,756,343,085 $ 41,573 $1 43,883,437 $ l,1 Sa 2.77% 99.9$% 2004 93,697 4,112,454,803 43,891 l i0,00S,aaa 1,174 2.67% 104.34% 20Q5 98,28$ 4,374,943,831 44,511 113,800,04Q 1,158 2.64% 99.28% 2006 103,220 4,7$9,376,811 46,444 121,000,000 1,172 2.53% 98.71% 2007 108,381 5,441,228,909 t'~ 50,205 137,930,040 1,273 c2) 2.53%t~~ 99.60% (31 {1) Source: Denton Central Appraisal District as of July 28, 2aab. {2) Projected, includes the Bands and Certificates. Excludes the Refunded Obligations. Preliminary, subject to change. (3} Collections for part year only, through June 1, 2407. Far additional information regarding the City, please contact: Mr. Jon Fortune David K. Medanich Assistant City Manager Laura Alexander City of Denton First Southwest Company 215 E. McKinney Street or 777 Main Street, Suite 1240 Denton, Texas 76241 Fort Worth, Texas 76142 {940) 349-8288 (817) 332-9714 7 CITY OFFICIALS, STAFF AND CONSULTANTS ELECTED OFFICIALS Term City Council Ex Tres Perry McNeill May, 2008 Mayor Pete Kamp May, 2009 Mayor Pro Tem, District 2 Joe Mulroy May, 2008 Deputy Mayor Pro Tem, At Large Place 6 Charlye Heggins May, 2009 Councilmember, District 1 Jack Thomson May, 2009 Councilmember, District 3 Chris Watts May, 2009 Councilmember, District 4 Bab Montgomery May, 2008 Councilmember, At Large Place 5 SELECTED ADMINISTRATIVE STAFF Name Position Gearge C. Campbell City Manager Howard Martin Assistant City Manager Jan Fortune Assistant City Manager Jennifer K. Walters City Secretary Edwin M. Snyder City Attorney CONSULTANTS AND ADVISORS Auditors KPMG LLP Dallas, Texas Bond Counsel McCall, Parkhurst & Horton L.L.P. Dallas, Texas Financial Advisor First Southwest Company Fort Worth, Texas 8 PRELIMINARY OFFICIAL STATEMENT RELATING TO $42,554,440* $11,500,444* CITY 4F DENTUN, TEXAS CITY 4F DENT4N, TEXAS GENERAL OBLIGATION REFUNDING CERTIFICATES OF OBLIGATION, SERIES 2007 AND IMPROVEMENT BONDS, SERIES 2007 INTRUDUCTI4N This Preliminary Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $42,550,000 City of Denton, Texas, General Obligation Refunding and Improvement Bonds, Series Za07 (the "Bonds") and $11,500,000* City of Denton, Texas, Certificates of Obligation, Series 2U07 (the "Certifcates"}. Capitalized terms used in this Preliminary Official Statement have the same meanings assigned to such terms in the Bond Ordinance and Certificate Ordinance each to be adopted on the date of sale of the Bonds and Certificates which will authorize the issuance of the Bonds and Certificates, respectively, except as otherwise indicated herein. The Bonds and the Certificates are being offered by the City concurrently under a common Official Statement, and the Bonds and Certificates are hereinafter sometimes referred to collectively as the "obligations". The Bonds and the Certificates are separate and distinct securities offerings being issued and sold independently except far the common Official Statement, and, while the Obligations share certain common attributes, each issue is separate from the other and should be reviewed and analyzed independently, including the type of obligation being offered, its terms for payment, the security for its payment, the rights ofthe holders, and other features. There follows in this Preliminary Official Statement descriptions of the Bonds and Certificates and certain information regarding the City and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Fort Worth, Texas. DESCRIPTION OF THE CITY ...The City of Denton, Texas is a political subdivision located in Denton County operating as a home- rule city under the laws of the State of Texas and a charter approved by the voters in 1959. The City operates under the CouncillManagerform ofgovernment where the Mayor and six Councilmembers are elected far staggeredtwo-year terms. The City Council formulates operating policy for the City while the City Manager is the chief administrative officer. The City is approximately 79.8 square miles in area. PLAN OF FINANCING PURPOSE ...Proceeds from the sale of the Bonds will be used for (a~ for various street improvements, senior center improvements and park land acquisitions and improvements, (b) to refund a portion of the City's outstanding general obligation debt as shown on Schedule I hereto (the "Refunded Obligations"), for debt service savings, and (c) to pay the casts of issuing the Bands. Proceeds from the sale of the Certificates will be used for the purchase, construction and acquisition of certain real and personal property, including: (a} design, construction and equipping of a public safety training facility; (b}renovations and improvements to existing City buildings, including the acquisition and installation of replacement heating, venting and air conditioning equipment; (c} improvements to the City's solid waste disposal system and acquisition of related equipment; (d} acquisition and installation of security, multi-media and other technology equipment far City buildings, including the municipal court in City Hall East; {e) acquisition of fire engines and vehicles and equipment for the City's motor pool; and {f) construction and equipping of amulti-modal transit station; and also for the purpose of paying all or a portion of the City's contractual obligations for professional services, including engineers, architects, attorneys, map makers, auditors, and financial advisers, in connection with the preparation of the City's Capital Improvement Plan (including an animal services facilities master plan}, and with the Certificates. REFUNDED QBLIGATIUNS ...The principal and interest due on the Refunded Obligations are to be paid on the scheduled interest payment dates and the respective redemption dates of such Refunded Obligations, from funds to be deposited pursuant to a certain Escrow Agreement (the "Escrow Agreement") between the City and The Bank of New York Trust Company, N.A., Dallas, TX {the "Escrow Agent"). The Bond Ordinance provides that from a portion of the proceeds of the sale of the Bonds received from the Underwriters, the City will deposit with the Escrow Agent the amount necessary to accomplish the discharge and final payment of the Refunded Obligations on their respective redemption dates. Such funds will be held by the Escrow Agent in a special escrow account {the "Escrow Fund"} and used to purchase direct obligations of the United States of America (the "Federal Securities"}. Under the Escrow Agreement, the Escrow Fund is irrevocably pledged to the payment of the principal of and interest on the Refunded Obligations. * Preliminary, subject to change. 9 Grant Thornton LLP, certified public accountants, a nationally recognized accounting fum, will verify at the tune of delivery of the Bonds to the Underwriters the mathematical accuracy of the 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 sufficient to pay, when due, the principal of and interest on the Refunded Obligations. Such maturing principal of and interest on the Federal Securities will not be available to pay the Bonds or the Certificates (see "Other Information -Verification of Arithmetical and Mathematical Computations"}. By deposit of the Federal Securities and cash, if necessary, with the Escrow Agent pursuant to the Escrow Agreement, the City will have effected the defeasance of all the Refunded Obligations in accordance with the law. It is the opinion of Bond Counsel that as a result of such defeasance and in reliance upon the report of Grant Thornton LLP, certified public accountants, the Refunded Obligations will be outstanding only for the purpose of receiving payments from the Federal Securities and any cash held for such purpose by the Escrow Agent and such Refunded Obligations will not be deemed as being outstanding bonds of the City payable from taxes nor for the purpose of applying any limitation on the issuance of debt. The City has covenanted in the Escrow Agreement to make timely deposits to the Escrow Fund, from lawfully available funds, of any additional amounts required to pay the principal of and interest on the Refunded Obligations if for any reason the cash balances on deposit or scheduled to be on deposit in the Escrow Fund are or will be insufficient to make such payment. SOURCES AND USES OF PROCEEDS ...The proceeds from the sale of the Obligations will be applied as follows: The Bonds The Certificates Sources of Funds Par Amount of Obligations $ - $ - Accrued Interest - - Total Sources of Funds $ - ~ - Uses of Funds Deposit to Escrow Fund $ - $ - Deposit to Construction Fund - - Deposit to Interest and Sinking Fund - - Cost of Issuance try - - TotalUses ofFunds $ - $ - (1 } Includes Underwriters' Discount. THE BONDS AND CERTIFICATES DESCRIPTION OE THE BONDS AND CERTIFICATES ...The Bonds and Certificates are dated July 15, 2007, and mature, or are subject to redemption prior to maturity, on February 15 in each of the years and in the amounts shown on the cower page and page 3 hereof. Interest will be computed on the basis of a 3G0-day year of twelve 30-day months, and will be payable on August 15 and February 15, commencing February 15, 2008. The definitive Bonds and Certificates will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company, New York, New York ("DTC"}pursuant to the Book-Entry••Only System described herein. No physical delivery of the Bonds and Certificates will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds and Certificates will be payable by the Paying AgentlRegistrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds and Certificates. See "The Bonds and Certificates -Book-Entry-Only System" herein. AUTHORITY FOR ISSUANCE The Bands are being issued pursuant to the Constitution and general laws of the State of Texas, particularly Chapters 1207 and I331, Texas Government Cvde, as amended; an election held and passed by a majority of the participating voters on February 2, 2005; and the Ordinance authorizing the Bonds (the "Bond Ordinance"). See "Table 10 - Authorized But Unissued General Obligation Bonds." The Certificates are being issued pursuant to the Constitution and general laws of the State of Texas, particularly Subchapter C of Chapter 271, Texas Local Government Code (the Certificate of Obligation Act of 1971}, as amended, and the Ordinance authorizing the Certificates (the "Certificate Ordinance", together with the Bond Ordinance, the "Ordinances"). 10 SECURITY AND SOURCE OF PAYMENT . The Bonds ...All taxable property within the City is subject tv a direct annual ad valorem tax levied by the City sufficient to provide for the payment of principal of and interest on all Bonds which tax must be levied within the limits prescribed by law. The Certif cotes ...All taxable property within the City is subject to a direct annual ad valorem tax levied by the City cuff cient to provide for the payment of principal of and interest on all obligations payable in whole or in part from ad valorem taxes, which tax must be levied within limits prescribed by Law. Additionally, the Certificates are payable from and secured by a Limited pledge of surplus net revenues of the City's Utility System, not in excess of $10,000, as provided in the Certil~cate Ordinance authorizing the Certificates. TAX RATE LIMITATION ...All taxable property within the City is subject tv the assessment, levy and collection by the City of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and limits its maximum ad valorem tax rate to $2.50 per $100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the Ciry adopts the constitutionally authorized maximum tax rate of $2.50 per $100 Taxable Assessed Valuation. QPTIUNAL REDEMPTIQN ...The City reserves the right, at its option, to redeem Bonds and Certificates, as the case may be, having stated maturities on and after February 15, 2018, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, an February 15, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Bonds or Certificates are to be redeemed, the City may select the maturities of Bonds and Certificates to be redeemed. If less than all the Bonds ar Certificates of any maturity are to be redeemed, the Paying AgentlRegistrar (or DTC while the Bonds and Certif cater are in Book-Entry-Only farm} shall determine by lot the Bonds or Certificates, or portions thereof, within such maturity to be redeemed. If a Bond or Certificate (or any portion of the principal sum thereof) shall have been called far redemption and notice of such redemption shall have been given, such Bond or Certificate (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds far the payment of the redemption price and accrued interest thereon are held by the Paying AgentlRegistrar anthe redemption date. NOTICE of REDEMPTION ...Not less than 3d days prior to a redemption date for the Bonds ar Certificates, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bonds or Certificates to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying AgentlRegistrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE .SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. If a Bond or Certificate (or any portion of its principal sum} shall have been duly called for redemption and notice of such redemption duly given, then upon the redemption date such Bond (or the portion of its principal sum to be redeemed) shall become due and payable, and, if moneys for the payment of the redemption price and the interest accrued on the principal amount to be redeemed to the date of redemption are held for the purpose of such payment by the Paying AgentlRegistrar, interest shall cease to accrue and be payable from and after the redemption date on the principal amount redeemed. DEFEASANCE ...The Ordinances provide that any Obligation and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Obligation"} within the meaning of such Ordinance when payment of the principal of such Obligation, plus interest thereon to the due date either (i) shall have been made ar caused to be made in accordance with the terms thereof, or (ii} shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying AgentlRegistrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the City with the Paying Agent/Registrar for the payment of its services until all Defeased Obligations shall have become due and payable. At such time as an Obligation shall be deemed to be a Defeased Obligation hereunder, as aforesaid, such Obligation and the interest thereon shall no longer be secured by, payable from, yr entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in the Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. Any moneys so deposited with the Paying AgentlRegistrar may at the written direction of the City also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received by the Paying AgentlRegistrar which is not required for the payment of the Obligations and interest thereon, with respect to which such money has been so deposited, shall be turned over to the City, or deposited as directed in writing to the City. The Ordinances provide that "Government Obligations" means (a} direct, nancallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (b} noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (c) noncallable obligations of a state ar an agency or a county, municipality, or other political subdivision of a state that have been refunded and that are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. 11 Upon such deposit as described above, such defeased Obligations shall no longer be regarded to be outstanding obligations payable from ad valorem taxes levied by the City or from the other revenues pledge tv their payment in the Ordinances, but will be payable only from the funds and defeasance securities deposited in escrow and will not be considered debt of the City for any purpose. After f rm banking and financial arrangements for the discharge and final payment or redemption of the Obligations have been made as described above, all rights of the City to initiate proceedings to call the Obligations far redemption or take any other action amending the terms of the Obligations are extinguished; provided, however, that the right to call the Obligations for redemption is not extinguished if the City: (i} in the proceedings providing for the f rm banking and financial arrangements, expressly reserves the right to call the Obligations far redemption; (ii} gives notice of the reservation of that right to the owners of the Obligations immediately following the making of the firm banking and financial arrangements; (iii} directs that notice of the reservation be included in any redemption notices that it authorize; and (iv} at the time of the redemption, satisfies the conditions of the preceding paragraph with respect to such Obligations as though it was being defeased at the time of the exercise of the option to redeem the Obligations, after taking the redemption into account in determining the sufficiency of the provisions made for the payment of the Obligations. Boox-ENTRY-UNLY SYSTEM ...This section describes how ownership of the Obligations is to be transferred and how the principle af, premium, if any, and interest on the Obligations are to be paid to and accredited by DTC while the obligations are registered in its nominee name. The information in this section concerning DTC and the Book-Entry-only system has been provided by DTC for use in disclosure documents such as this Official Statement. The City believes the source of such information to 6e reliable, but takes no responsibility far the accuracy or completeness thereof. The City cannot and does not give any assurance that ~l) DTC will distribute payments of debt service on the Obligations, or redemption or other notices, to DTC Participants, ~2~ DTC Participants ar others will distribute debt service payments paid to DTC or its nominee has the registered owner of the Obligations, or redemption or other notices, to the Benef vial Owners, ar that they will do so on a timely basis, or ~3~ DTC will serve and act in the manner described in this O~cial Statement. The current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on f le with DTC. DTC will act as securities depository for the Obligations. The Obligations will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered security certificate will be issued for the Obligations in the aggregate principal amount thereof and will be deposited with DTC. DTC, the world's largest depository, is alimited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Cade, and a "clearing agency" registered pursuant to the provisions of Section I7A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for ever 2.2 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instrument from over 1qU countries that DTC's participants ("Direct Participants"} deposit with DTC. DTC also facilitates the post-trade settlement ~imong Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC and EMCC, also subsidiaries of DTCC), as well as by the New York Stack Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable tv its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.vr~. Purchases of Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit far the Obligations on DTC's records. The ownership interest of each actual purchaser of each Obligation ("Beneficial Owner"} is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Director Indirect Participant through which 1:he Beneficial Owners entered into the transaction. Transfers of ownership interest in the Obligations are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Benef cial Owners will not receive certificates representing their ownership interests in the Obligations, except in the event that use of the book-entry system far the Cbligations is discontinued. To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Obligations with DTC and their registration in the name of Cede & Cv. or such other DTC nominee do not effect any change in beneficial ownership. DTC has na knowledge of the actual Beneficial Owners of the Obligations; DTC's records reflect only 12 the identity of the Direct Participant to whose account such Obligations are credited, which may ar may not be the Beneficial Owners, The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Benef vial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Benef vial Owners of Obligations may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Obligations, such as redemptions, tenders, defaults, and proposed .amendments to the Obligation documents. For example, Beneficial Owners of Obligations may wish to ascertain that the nominee holding the Obligations for their benefit has agreed to obtain and transmit notices to Beneficial Owners, In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC, If less than all of the Obligations within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co, will consent or vote with respect to the Obligations unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the County as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Obligations are credited on the record date (identif ed in a listing attached to the Omnibus Proxy). Redemption proceeds and principal and interest payments on the Obligations will be made to DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the City or the Paying AgentlRegistrar on payable dates in accordance with their respective holdings shown an DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as in the case with securities held far the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent ar the City, subject to any statutory ar regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and principal and interest to DTC is the responsibility of the City, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Obligations at any time by giving reasonable notice to the City and the Paying AgentlRegistrar. Under such circumstances, in the event that a successor securities depository is not obtained, Obligation certificates are required to be printed and delivered. The City may decide to discontinue use of the system ofbook-entry transfers through DTC (or a successor securities depositary). In that event, Obligations will be printed and delivered. Use of Certain Terms in Other Sections of this Dff vial Statement. In reading this Official Statement it should be understood that while the Obligations are in the Book-Entry-Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Obligations, but (i) all rights of ownership must be exercised through DTC and the Boak-Entry-Only System, and (ii} except as described above, notices that are to be given to registered owners under the Ordinances wall be given only to DTC. Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the City, the Financial Advisor or the Underwriters. Effect of Termination ofBook-Entry-Only System In the event that the Book-Entry-Only System is discontinued by DTC or the use of the Boak-Entry-Only System is discontinued by the City, printed Obligations will be issued to the holders and the Obligations will be subject to transfer, exchange and registration provisions as set forth in the Ordinances and summarized under "The Obligations -Transfer, Exchange and Registration" below, PAYING AGENTIREGISTRAR ,The initial Paying AgentlRegistrar is The Bank of New York Trust Company, N.A,, Dallas, Texas. In the Ordinances, the City retains the right to replace the Paying AgentlRegistrar. The City covenants to maintain and provide a Paying AgentlRegistrar at all times until the Bonds and Certificates are duly paid and any successor Paying AgentlRegistrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying AgentlRegistrar far the Bonds and Certificates. Upon any change in the Paying AgentlRegistrar far the Bonds and Certificates, the City agrees to promptly cause a written notice thereof to be sent to each registered owner of the Bands and Certificates by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying AgentlRegistrar, Principal of the Bonds and Certificates is payable to the registered holder appearing on the registration books of the Paying AgentlRegistrar (the "Registered Owner") at the designated corporate trust office of the Paying Agent/Registrar upon surrender of the Bonds and Certificates for payment. Interest on the Bonds and Certificates is payable to the Register Owners appearing an the registration books of the Paying AgentlRegistrar at the close of business an the Record Date (identified below) and such interest shall be paid by the Paying AgentlRegistrar by check mailed, first class postage prepaid, to the Register Owner or by such other arrangement, acceptable to the Paying AgentlRegistrar, requested by and at the risk and expense of the Registered i3 Owner. If the date for the payment of the principal of or interest on the Bonds and Certificates shall be a Saturday, Sunday, a legal holiday, yr a day when banking institutions in the city where the designated corporate office of the Paying AgentlRegistrar is located is authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, ar day when banking institutions are authorized to close; and payment on such date shall have the same farce and effect as if made on the original date payment was due. TRANSFERz EXCHANGE AND REGISTRATION In the event the Book-Entry-Only System should be discontinued, printed Obligations will be delivered to the registered owners and thereafter the Obligations may be transferred and exchanged on the registration books of the Paying AgentlRegistraromy upon presentation and surrender of such printed Obligations to the Paying AgentlRegistrar and such transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Obligations may be assigned by the execution of an assignment form on the Obligations or by other instrument of transfer and assignment acceptable to the Paying Agent/RegistTar. New Obligations will be delivered by the Paying AgentlRegistrar, in lieu of the Obligations being transferred or exchanged, at the designated office of the Paying AgentlRegistrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Obligations issued in an exchange or transfer of Obligations will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Obligations to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner yr his duly authorized agent, in farm satisfactory to the Paying AgentlRegistrar. New Obligations registered and delivered in an exchange or transfer shall be in any integral multiple of $5,00(1 far any one maturity and for a like aggregate principal amount as the Obligations surrendered for exchange or transfer. See "The Obligation-Book-Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Obligations, Neither the City nor the Paying AgentlRegistrar shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Certificate or Bond. RECORD DATE FOR INTEREST PAYMENT ...The record date ("Record Date"} for the interest payable on the Bonds and Certif sates on any interest payment date means the close of business on the last business day of the month next preceding such interest payment date. In the event of anon-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment ~a "Special Record Date"} will be established by the Paying AgentlRegistrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest ~"Special Payment Date", which shall be 15 days after the Special Record Date} shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond and Certif sate appearing on the registration books of the Paying AgentlRegistrar at the close of business on the last business day next preceding the date of mailing of such notice. OBLIGATIQNHOLDERS' REMEDIES ...The Ordinances do not specify events of default with respect to the :Bonds or the Certif sates. If the City defaults in the payment of principal, interest, or redemption price on the Bonds or Certificates when due, or the City defaults in the observation or performance of any other covenants, conditions, or obligations set forth in an Ordinance, the registered owners of the Bonds or Certificates, as applicable, may seek a writ of mandamus to compel the City or City officials to carry out the legally imposed duties with respect to the applicable Obligations if there is no other available remedy at law to compel performance of the Obligations or the Ordinances and the City's obligations are not: uncertain or disputed. The issuance of a writ of mandamus is controlled by equitable principles, so rests with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Obligations in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. The Ordinances do not provide for the appointment of a trustee to represent the interest of the holders of the Bonds or the Certificates upon any failure of the City to perform in accordance with the terms of the Ordinances, or upon any other condition and accordingly all legal actions to enforce such remedies would have to be undertaken at the initiative of, and be financed by, the registered owners, On June 30, 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006} that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in "clear and unambiguous" language. Because it is unclear whether the Texas legislature has effectively waived the City's sovereign immunity from a suit for money damages, Obligatianholders may not be able to bring such a suit against the City for breach of the Bonds ar Certificates or respective Ordinance covenants. Even if a judgment against the City could be obtained, it could not be enforced by direct levy and execution against the City's property. Further, the registered owners cannot themselves foreclose on property within the City or sell property within the City to enforce the tax lien on taxable property to pay the principal of and interest on the Obligations. Furthermore, the City is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code ("Chapter 9"). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or Obligationholders of an entity which has sought protection under Chapter 9. Therefore, should the City avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court {which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides far broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinions of Band Counsel will note that all opinions relative to the enforceability of the Obligations are qualified with respect to the customary rights of debtors relative to their creditors. 14 TAX INFORMATION AD VALUREM TAX LAW ...The appraisal of property within the City is the responsibility of the Denton Central Appraisal District (the "Appraisal District"}. Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the Appraisal District is required under V.T.C.A., Tide I, Tax Code, as amended (the "Property Tax Code"} to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property, different methods of appraisal may be used, including the cast method of appraisal, the income method of appraisal and market data comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law further limits the appraised value of a residence homestead for a tax year to an amount not to exceed the lesser of (1}the market value of the property, or (2}the sum of (a} 10% of the appraised value of the property for the last year in which the property was appraised far taxation times the number of years since the property was last appraised, plus (b}the appraised value of the property for the last year in which the property was appraised plus (c} the market value of all new improvements to the property. The value placed upon property within the Appraisal District is subject to review by an Appraisal Review Board, consisting of three members appointed by the Board of Directors of the Appraisal District. The Appraisal District is required to review the value of property within the Appraisal District at least every three years. The City may require annual review at its own expense, and is entitled to challenge the determination of appraised value of property within the City by petition filed with the Appraisal Review Board. Reference is made to the Property Tax Code, for identification of property subject to taxation; property exempt or which may be exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and limitations applicable to the levy and collection of ad valorem taxes. Article VIII of the State Constitution ("Article VIII"} and State law provide far certain exemptions from property taxes, the valuation of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation, Under Section 1-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) an exemption of not less than $3,004 of the market value of the residence homestead of persons d5 years of age ar older and the disabled from all ad valorem taxes thereafter levied by the political subdivision; (2) an exemption of up to 20% of the market value of residence homesteads. The minimum exemption under this provision is $5,040. In the case of residence homestead exemptions granted under Section 1-b, Article VIII, ad valorem taxes may continue to be levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation of the levy would impair the obligation of the contract by which the debt was created. As of January 1, 204, under Article VIII and State law, the governing body of a county, municipality or junior college district may provide far a freeze on fatal amount of ad valorem levied on the residence homestead of a disabled person or persons b5 years of age or older above the amount of tax imposed in the year such residence qualif ed far such exemption. Also, upon receipt of a petition signed by five percent of the registered voters of the county, municipality ar junior college district, an election must be held to determine by majority vote whether to establish such a limitation on taxes paid on residence homesteads of persons 65 years of age or who are disabled. Upon providing for such exemption, the total amount of taxes imposed on such homestead cannot be increased except for improvements and such freeze is transferable to a different residence homestead and to the surviving spouse living in such homestead who is disabled or is at least 55 years of age. Once established such freeze cannot be repealed ar rescinded. State law and Section 2, Article VIII, mandate an additional property tax exemption far disabled veterans or the surviving spouse or children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or personal property with the amount of assessed valuation exempted ranging from $5,004 to a maximum of $12,x04. Article VIII provides that eligible owners of both agricultural land (Section 1-d} and open-space land (Section 1-d-1}, including open-space land devoted to farm or ranch purposes oropen-space land devoted to timber production, may elect to have such property appraised for property taxation on the basis of its productive capacity. The same land may not be qualified under both Section 1-d and 1-d-1. Nanbusiness personal property, such as automobiles ar light trucks, are exempt from ad valorem taxation unless the governing body of a political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation. Article VIII, Section 1 j, provides for "Feeport property" to be exempted from ad valorem taxation. Freeport property is defined as goads detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication. Notwithstanding such exemption, counties, school districts, junior college districts and cities may tax such tangible personal property provided official action to tax the same was taken before April 1,1990. Decisions to continue to tax may be reversed in the future; decisions to exempt freepart property are not subject to reversal. The City or Denton County may create one or more tax increment financing districts ("TIF"} within the City or Denton County, as applicable, and freeze the taxable values of property in the TIF at the value at the time of its creation. Qther overlapping taxing units levying taxes in the TIF may agree to contribute all or part of future ad valorem taxes levied and collected against 15 the value of property in the TIF in excess of the "frozen values" to pay or finance the costs of certain public improvements in the TIF, Taxes levied by the City against the values of real property in the TIF in excess of the "frozen" value are not available for general city use but are restricted to paying or financing "project casts" within the TIF. The City also may enter into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to construct certain improvements on its property. The City in turn agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement could last far a period of up to 10 years. EFFECTIVE TAX RATE AND RQLLBACK TAX RATE ...Under the current Property Tax Code a governing body of a taxing unit is required to adopt its annual tax rate per $100 taxable value for the unit before the later of September 30 or the 60th day afrer the date the certified appraisal roll is received by the taxing unit, and a failure to adopt a tax rate by such required date will result in the tax rate for the taxing unit for the tax year to be the lower of the effective tax rate calculated for that tax year or the tax rate adopted by the taxing unit for the preceding tax year. By each September 1 or as soon thereafter as practicable, the City Council adopts a tax rate per $100 taxable value for the current year. The tax rate consists of two components: (1) a rate far funding of maintenance and operation expenditures, and (2} a rate for debt service. Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate". The City Council may not adopt a tax rate that exceeds the lower of the effective tax rate ar the rollback tax rate until it has held two public hearings on the proposed increase following notice to the taxpayers and otherwise complied with the Property Tax Code. If the adopted tax rate exceeds the rollback tax rate the qualified voters of the City by petition may require that an election be held to determine whether or not to reduce the tax rate adapted for the current year to the rollback tax rate. "Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values adjusted}, "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included in this year's taxable values. "Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's values adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted} divided by the anticipated tax collection rate. The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tai: rate and the rollback tax ra#e calculations are required to be offset by the revenue that will be generated by the sales tax in the cu~:Tent year. Reference is made to the Property Tax Cade for definitive requirements for the levy and collection of ad valorem 1:axes and the calculation of the various defined tax rates. PROPERTY ASSESSMENT AND TAx PAYMENT , ..Property within the City is generally assessed as of January 1 of each year. Business inventory may, at the option of the taxpayer, be assessed as of September 1. Oil and gas reserves are assessed on the basis of a valuation process which uses an average of the daily price of oil and gas for the prior year, Taxes become due October 1 of the same year, and become delinquent on February 1 of the following year. Taxpayers 65 years old or older ~~re permitted by State law to pay taxes on homesteads in four installments with the first due on February 1 of each year ;end the Final installment due on August 1. PENALTIES AND INTEREST , Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows: Cumulative Cumulative Month Penalty Interest Total February 6% 1% 7% March 7 2 9 April 8 3 11 May 9 4 13 June 10 5 1 S July 12 6 18 After July, penalty remains at l2%, and interest increases at the rate of l% each month. In addition, if an account is delinquent in July, an attorney's collection fee of up to 2Q% may be added to the total tax penalty and interest charge. tJnder certain circumstances, taxes which become delinquent on the homestead of a taxpayer 65 years old ar older incur a penalty of 8% per annum with no additional penalties or interest assessed. In general, property subject to the City's lien may be sold, in whole or in parcels, pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities, including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order Lifting the stay is obtained from the bankruptcy court. In many cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. 16 CITY APPLICATION OF TAX CODE . , ,The City grants an exemption to the market value of the residence homestead of persons 65 years of age or older of $25,000 and those who are disabled of $10,000. The City grants an additional one-half of one percent, or a minimum of $5,000 exemption of the market value of residence homesteads. See Table 1 far a listing of the amounts of the exemptions described above. Ad valorem taxes are not levied by the City against the exempt value of residence homesteads for the payment of debt. The City does not tax nonbusiness personal property; and the City collects its own taxes. Starting fiscal year 2007-08 the County will begin collecting taxes for the City. The City does not allow split payments, and discounts are not allowed. The City does not tax freeport property. The City collects the additional one-half cent sales tax far reduction of ad valorem taxes. The City has not adopted the tax freeze for citizens who are disabled or are 65 years of age or older, which became a local option and subject to local referendum on January 1, 20x4. The City has adopted a tax abatement policy, TAX ABATEMENT POLICY , ..The City has established a tax abatement program to encourage economic development. In 1990 the City Council adopted a resolution setting guidelines and criteria far granting abatements in reinvestment zones created within the City. These guidelines specif tally note that incentives are limited to companies which create new wealth and do not adversely affect existing businesses operating within the City. On July 31, 2001, the council voted to abate taxes on 100% of new valuation generated from the expansion of the Peterbilt Motors regional headquarters building in Denton for ten years. The company was required to spend a minimum of $5,0x0,000 on the renovation and consolidate approximately 35 jobs to the facility. 0n May 13, 2003, the council voted to rebate 40% of ad valorem taxes paid for a new facility and new equipment to Sally Beauty Company far 10 years, beginning in 2004, under a Section 380 Economic Development Program Agreement. The new property value is estimated at $24,000,000. 0n September 2, 20x3, the council voted to abate taxes on 35% of $30,000,000 for expansion and renovations to an existing facility to Flowers Foods Bakeries Group far 5 years beginning in 2005, Flower Foods is a new corporate citizen and plans to begin construction in 2004. Flower Foods employs approximately 94 employees and estimates 216 employees in its 5th year. The tax abatement agreement provides for athree-year phase-in of the total project. The agreement requires a total threshold of $30,000,040 over the 3-year period. The company will receive a prorated abatement amount based an the percentage increase in valuation, On March 2, 2004, the council voted to abate taxes on 35% on approximately $6,000,000 for a new facility and equipment to Fastenal Company for five years, beginning in 2007. Fastenal is locating a new regional headquartersldistribution center near the Denton Municipal Airport. They are working with the University of North Texas' Logistics Department, employing students. The tax abatement agreement requires a minimum threshold of $5,000,000 in valuation over the five-year period. On March 1, 2005, the council voted to grant an amount equal to 5x% of the ad valorem taxes paid for new facilities within the Granite Point Business Park far ten years. Granite Properties is constructing Denton's first speculative building industrial park, When complete the park will have aver 90x,000 square feet under roof. I7 TABLE ~ -VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT 2006107 Market Valuation Established by Denton Central Appraisal District $5,838,926,790 Less ExemptionslReductians at 100% Market Value: Residence Homestead Exemptions $ 75,549,791 Over 65 Exemptions 92,945,282 Disabled Persons Exemptions 2,440,243 Disabled Veterans Exemptions 3,935,664 Agricultural Land Use Productivity 220,987,641 HistoricaVOther Exemptions 4,586, l O6 Freeport Exemptions 149,589,587 Abatement Exemptians 7,623,547 House Bill 366 66,562 Prorated Exempt Property 1,065,571 Pollution Exemptions 23,500,600 Homestead Cap Adjustment 11,335,081 ,593,625,675 2006107 Taxable Assessed Valuation (as of 7-19-06} $ 5,245,301,115 Plus Supplements 195,927,794 2006107 Taxable Assessed Valuation, inclusive of Supplements (as of 7-19-06) $ 5,441,228,909 City Funded Debt Payable from Ad Valorem Taxes (as of 6-1-07} (~1 General Obligation Bonds $ 39,385,000 Tax and Certificates of Obligation 44,495,000 The Certificates 11,500,000 (3) The Bonds 42,550,000 (3) Funded Debt Payable from Ad Valorem Taxes $ 137,930,000 Less Self Supporting General Obligation Debt (4) Solid Waste System General Obligation Debt (5?(~1 $ 16,194,6$3 Drainage System General Obligation Debt (b1 3,903,5$$ 20,098,271 Net Tax Supported Debt Payable from Ad Valorem Taxes $ 117,831,729 Interest and Sinking Fund as of 6-1-07 $ 1,336,381 Ratio Total Funded Debt to Taxable Assessed Valuation . . . . . 2.63% Ratio Net Funded Debt to Taxable Assessed Valuation . 2.25% 2007 Estimated Population - 108,381 Per Capita Taxable Assessed Valuation - $48,397 Per Capita Total Funded Debt - $1,273 Per Capita Net Funded Debt - $1,087 (1) The above statement of indebtedness does not include $277,305,000 Utility System Revenue Bands as thf:se bonds are payable solely from the net revenues of the Utility System (the "System"}, as defined in the ordinances authorizing I:he bands. (2) Excludes the Refunded Obligations. Preliminary, subject to change. (3) Preliminary, subject to change. (4) General Obligation debt in the amounts shown far which repayment is provided from revenues of the respective revenue systems. The amount of self supporting debt is based on the percentages of revenue support as shown in Table 10. It is the City's current policy to provide these payments from respective system revenues; this policy is subject to change in the future. (5) Includes a portion of the Certificates. Preliminary, subject to change. (6} Includes a portion of the Bonds. Preliminary, subject to change, 18 TABLE Z -TAXABLE ASSESSED VALUATIQNS BY CATEGORY Taxable A praised Value for Fiscal Year Ended September 30, 2007 2004 2005 % of % of % of Category _ Amount Total Amount Total Amount Total Real, Residential, Single Family $ 2,927,902,799 50.15% $2,430,845,438 50.72% $ 2,445,993,713 51.84% Real, Residential, Multi-Family 454,710,640 7.79% 444,271,900 8.60% 415,779,403 8.82% Real, VacantLatslTracts 131,508,053 2.25% 98,411,369 1.90% 89,988,573 1.91% Real, Acreage (Land Only} 277,588,810 4.75% 222,710,244 4.29% 218,495,173 4.43% Real, Farm and Ranch Improvements 29,732,528 0.51% 23,381,957 0.45% 18,470,344 0.40% Real, Commercial and Industrial 1,085,722,435 18.40% 1,000,517,019 19,29% 859,873,094 18.23% Real, Oil, Gas, and Other Mineral Reserves 57,823,440 0.99% 24,722,880 0.52% 22,481,700 0.48% Real and Tangible Personal, Utilities 42,085,822 1.04% d1,453,b59 1.18% 71,234,279 1.51% Tangible Personal, Commercial and Industrial 737,240,202 12.43% 577,041,1 59 11.12% 474,612,410 10.04% Tangible Personal, Other 23,654,377 0.41% 24,019,704 0.50% 27,083,367 0.57% Real and Special Property, Inventory 50,263,274 0.84% 73,514,372 1.42% 71,809,892 1.52% Total Appraised Value Before Exemptions $ 5,838,252,582 100.00% $ 5,184,895,723 100.00% $ 4,716,223,950 100.00% Less: Total ExemptionslReductions (593,425,475} (493,123,258) (445,814,852) Noncatagorizable Property 474,208 - - Supplements 195,927,794 95,404,34b 144,534,733 Taxable Assessed Value $ 5,441,228,909 $ 4,789,374,811 $ 4,374,943,831 Taxable Appraised Value far Fiscal Year Ended Se tember 34, 20aa 2003 of % of Category _ _ Amount Total Amount Total Real, Residential, Single Family $2,243,246,471 51.54% $2,014,091,440 48.25% Real, Residential, Multi-Family 397,490,655 9.14% 395,473,434 9.47% Real, Vacant LotslTracts 100,332,493 2.31 % 72,222,153 1.73% Real, Acreage (Land Only} 221,844,849 5.10% 204,320,591 4.89% Real, Farm and Ranch Improvements 17,401,518 0.40% 17,390,233 0.42% Real, Commercial and Industrial 747,983,391 17.19% 742,450,124 17.77% Real, Oil, Gas, and Other Mineral Reserves - 0.00% - 0.00% Real and Tangible Personal, Utilities 48,858,470 1.58% 75,491,705 1.81% Tangible Personal, Commercial and Industrial 454,589,724 10.49% 554,273,112 13.31% Tangible Personal, Other 28,504,241 0.65% 30,443,435 0.73% Real Property, Inventory 49,711,912 1.40% 48,040,744 1.43% Total Appraised Value Before Exemptions $4,352,144,344 100.00% $4,178,834,993 100.00% Less: Total ExemptionslReductians (442,887,140) (475,424,478} Supplements 203,177,597 52,930,570 Taxable Assessed Value $ 4,112,454,803 $ 3,754,343,085 ~l) Valuations shown are certified taxable assessed values reported by the Denton Central Appraisal District to the State Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District updates records. For the Fiscal Year ended 2447 the values are as of July 28, 2404. 19 TABLE 3 -VALUATION AND GENERAL OBLIGATION DEBT HISTORY Ratio Fiscal Taxable Tax Debt Tax Debt Funded year Taxable Assessed Outstanding to Taxable Debt Ended Estimated Assessed Valuation at End Assessed Per 9130 Pa ulation Valuation Per Capita of Year Valuation Ca~~ 2003 90,355 $3,756,343,0$5 $41,573 $103,$$3,037 2.77% $1,150 2004 93,697 4,112,454,$03 43,$91 110,005,000 2.67% 1,174 2005 98,2$$ 4,374,943,$31 44,511 113,$00,000 2.b0% 1,158 2006 103,220 4,7$9,376,$11 46,400 121,000,000 2.53% 1,172 2007 10$,381 5,441,228,909 (z) 50,205 137,930,000 (3~ 2.53% (3) 1,273 (3) (1} Source: City Officials. (2} Source: Denton Central Appraisal District as of July 28, 2006. (3} Projected, includes the Bonds and Certificates. Excludes the Refunded Obligations. Preliminary, subject to change. TABLE 4 -TAX RATE, LEVY AND COLLECTION HISTORY Fiscal Year Distribution Ended Tax General Interest and % Current % Total 9130 Rate Fund Sinkin Fund Tax Le Collections Collections 2003 $ 0.54$15 $ 0.33816 $ 0.20999 $ 20,590,395 98.58% 99.9$% 20x4 0.54815 x.34928 0.19$$7 22,542,421 98.47% 100.34% 2005 x.59815 0.39928 0.19887 26,457,399 98.33% 99.47% 2x06 0.60815 0.4292$ 0.178$7 29,126,595 97.81% 99.29% 2007 0.62652 0.44765 0.17887 34,090,387 97.40% ~'1 99.6x% (~1 (1 } Collections for part year only, through June 1, 2007. TABLE S -TEN LARGEST TAXPAYERS 2006107 % of Total Taxable Taxable Assessed Assessed Name of Taxpayer Nature of Property Valuation Valuation TTHR Limited Partnership HospitaVProfessional Building $ $0,831,779 1.49% Inland Western Denton Crossing Ltd PS Real Estate Development 62,605,324 1.15% Columbia Medical Center of Denton HospitallProfessionalBuflding 57,873,491 1.4b% Paccar Inc. Diesel Truck Manufacturing 52,002,196 0.96% Anderson Merchandisers Distribution Center 36,049,229 0.66% Robson Denton Dev LP Real Estate Development 34,024,156 0.63% Verizon Southwest Telephone Utility 33,184,680 x.61% FMP Denton Retail Development 29,316,215 0.54% Timber Links Apts. LP Apartment Complexes 28,3$9,481 x.52% Flowers Baking Company Bakery 25,247,393 0.46% $ 439,523,944 8.08% Source: Denton Central Appraisal District. GENERAL OBLIGATION DEBT LIMITATION Na general obligation debt limitation is imposed on the City under current State law or the City's Home Rule Charter (see "The Bonds and Certificates--Tax Rate Limitation"}. 20 TABLE ~ -ESTIMATED OVERLAPPING DEBT Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax bonds ~"Tax Debt"} was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the City, the City has not independently verified the accuracy ar completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional Tax Debt since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional Tax Debt, the amount of which cannot be determined. The fallowing table reflects the estimated share of overlapping Tax Debt of the City. 2006107 City's Authorized Taxable 2004107 Total Estimated Overlapping But Unissued Assessed Tax Funded Funded Debt Debt As Of Toxin Jurisdiction Value Rate Debt livable As of 5-1-07 5-1-07 228,909 $0.6 (52 $117,831,729 104.00% $117,831,729 $ 22,102,000 City of Denton $ 5,441, Denton lndependent School District 7,756,315,893 1.76400 463,432,579 64.47% 3D8,043,535 40,004,713 Denton County 43,348,577,811 0.23192 290,782,571 12.55% 36,493,213 95,595,625 Argyle Independent School District 797,644,808 1.76943 37,648,877 7.30% 2,748,368 - Krum Independent School District 696,509,Ob6 1.59550 41,670,303 1.78% 741,731 - Total Direct and Overlapping Funded Debt $ 465,858,675 Ratio of Direct and Overlapping Funded Debt to Taxable Assessed Valuation . 8.56% Per Capita Overlapping Funded Debt . . . . . . $ 4,298.34 ~l) Includes the Bonds and Certificates, less self-supporting debt. Excludes the Refunded Bonds. Preliminary, subject to change. ~2) Excludes the Bonds being offered herein. 21 DEBT INFORMATION ~ a ~ ~ ° ~ ~ o O 'U ,w ~ ~ ~ M O ~ N vrj 00 G~ O ~ ^ b❑❑A O ~ N r M ~ OG 00 ~D ~D N ~ Oti ~D Oti il'~ r N N ~ O Q y c~ r1 c*~ ~n ^ ~ +n ~ vt N v1 ~ v1 r oo N c~ d~ ~ O N ~ U ypj a0 O N N N ~D Ot N~~ N~ M M T O^ O~ N n n n n n n n n n n n n n n n n n n n n n O ~ oo O~ a~ d• O v~ r oo ~ ~ O ~ ~ ~G ^ ~ ~ ov ~D v~ r~, O O ~ ~ O• ~ ~M M m O 00 0~ N N ~ ~D O~ ~ ~ ~0 vl N ~ U O ~ ~ ~ ~p ~ 00 ~ m M O o0 ~ N ~ ~ O ~D i~ ~ 00 DO -y ~ ~ ~ n n n n n n n n n n n n n n F'' ~ O O m r~ N N O O Q~ O~ O~ oo r r ~D vi tt m N N N aj ~ ~ ~ ~ ~ ~ ~ ~ v ~ y, bA ~ O d' M~~ r O r C v1 ~ ~ ~ ~ i i i i i ~ 0~ O r' tiA M ~O O1 O~ 00 00 O ~7 N ~'`1 y ~ 0 0~ ~i m N 0 ~D o0 o c*i r m O~ ~ W , •vi ~ ~ N ~ ~ M v1 r N O r M ~D ~ ~ ~ ~ ~ ❑ ~p t~ V'~ X17 V'1 V1 '~t ~t ~ ~1 N ~ p ~ ~ ~ ~ 0 0o et O ~ ~n a~ ~ oo O O m m M m O~ m M ~ O T , ~ ~ cf, ~ ~ r N ~O oo r- r O N O M M ~ oo v~ N oo ~ O1 O ~ r ~ M ~D t~ r ~O o0 r oo d^ ao m m ^ oo ~1 r ^ ~ O D N ~ ~ 0 ~ V~ ~ 3 O Q~ M ti0 N O ~0 N O G~ 00 00 ^ ~ r N N O N 0~ ~ 0 ~ 04 ~f1 'rt ~ ^ O OC O T G~ O~ G~ 00 ^ OQ 00 ~ O ~ ~ ~ ~ tL 'G y ~ ~ m N d f Q~ ~D O G~ ao ~D ~D ~0 tiG ~D ~D M c+1 M N V1 ~ ~ ~ 0 N .~oo 4i ~ O ~ i ~ i i i i ~ i i i ~ i ~ ~ ~ i i i ~ i ~ ~ a ~ ~ ~ 0 a ~ o °3 c o b~ o ;o.' O A p G. 4.r ~ ~ ~ ~ ~ ~ 0 ~ ~ O r ~D ~p ^ m r ..r ty oo ^ x ~ ~ ~ O O m R+ 00 4,., N O ~n ~n ~ ov N !n ~n M ~ r ~G ~ r O r oa ~n ~n t- p ~ O ~ oo m o0 00 0 ~ ~ M o o ~ ~ ~ o a~ ^ ~D N o r a ^ 'fl V~ ~(1 ~ m M N N N ~ ~ ~ N DO ~(7 N ~ N r ~ ~ ~ t,.,, p ~ r ~D 04 N O N O ~D ~ ~ 00 ~ ~ r ao Q1 'tt ~ N N ~ ~ 0 cd G O ~ r O ~ at oo ~ ~ N o0 ^ N ~ r m m ~ N ~ ~D ^ p ~ L n n n n n ~ n n n n n n n n n n n n n L^ ~ ~~~~n~MN~^ooa~ooc=c-~c~~MN^ N ~ ~ ~ ~ W m ~n m m O ~n {n M o0 00 00 ~n O ~ ~ oa ~ O O O v~ W ~ N ^ ~ ~ r N ~D o0 oG M r ~ r N oo r O ~n O r ~ ~ ~ 0~ N ~ ~0 ~ d~ C C O ~ ~D m ~ N m v~ ^ N ~n O ~ ~ 00 ~ O ~ oo ~G N O ~ O> ~ M ~ ~ a; M ~D O~ ~D ~ ~ cd O M ~ O ~1 C~ V1 m ^ 00 ~p ~ N ^ O o0 V1 ~ N aC ~ ~ ~ ~ m N N N N ^ r, amen ~ ~ U ~ ~ ~ ~ ~ p., ~ v U o 0 0 o O o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ ~ o 0 o v o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ v-; c ~i ~ o 0 0~ Sri vi ~i o 0 0 0 Sri o 0 0 0 0 ~ ~ y E-~ v ~D ~D O ~n O N ~t ~D ~ ~D o0 ~ O N c+~ v1 ~ 00 O O ~ 0~ O~~ N v's v~ ~ vt ~ N N N M M M M M m~ v1 ~ A~ ~ ~ ~ N ~ ~ ' ~ ~ aooooo~noo~n~n~no~n~no~n~no~no m v~~ U ~ ~ op V'3 ~ ~1 ~ N O O N N N~ N r O r r V'l r ~n ~ q b ~ ` ^ O v3 r ^ ~ O t0 ~D tiD l~ ~D m ~ 00 00 N ~ l~ O 0 G 0 n n n n n n n n n n n n 0 }J ~ Z m O ~ oQ vi 0~ ri M O m ^ 00 N ~ N v~ vl m Ci M 4J ~ y ~ C~ ~ N O~ N ~ ~t m N ^ ~ C~ M '~t C~ a0 N ~D ~ +r N O O O O~ 0~ 00 ~D ~ N O ~ ~D d' M N ^ ^ d' , bA O U N ~ ~ ~ N N N N r.: r; N .C ~ ~ .dam N W ~ ~ ° n 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 AG o o a o 0 0 0 0 0 0 0 0 0 0 o v o 0 0 0 0 ~ r, ~ O o 0 0 0 0 0 0 0 0 0 0 o a o 0 0 0 0 0 0 ~ a~ ~ W n n n n n n n n n n n n n n ~ ~ O o vi vi Sri ~n o o ~n ~n vi o ~n ~n o ~n ~n o ~n o o 0 ~ U N O N ~ O N O Or AO a~ N N ~ 0~ r N oo m O~ ~n 0 ~ C rt ~ ~ ~ O o0 00 ~ O N ~ N M ~t ~ ~ a ^ ~ O ~ ~ b9 5R ~ O N ~ ~ N ~ U Q N O o0 a~ vi oo N N Gti N N O d• ~0 N oo v~ N M N ~ Z y oo N ~ r N ~ ~ oo Or m ~ ~ ~ 04 m N ~ ~D oo ~0 C~ . ~ ~ ~ n n n n n n n ~ n n n ~ n n n O O M O r O~ O~ d~ r ~ ~G ^ ~ ~ oo ~ O oo N O oo ~n ~ O ~ r O~ ^ ~ ~ N ~ 00 cr ^ ~ tD ~ N o4 ~D r W V`~ 0 U Q ~ V7 m m N N N^~~ w^ O ~ m p O O W ~ Q b4 0 rn ~ ~ a1 0 G ~ o0000000000ooooovooo o ~ a ooovooooo00oooooaooo o v+~+~.o 4 ~ ~ 0000000000ovOC~o00000 o Q a a~ r~ ~i~i~~i~~io~rioo~ioo~n~io~iooo ~i W O m m ~ ^a ~n ~D oo N ^ m ~n -r -y O M r ~ l~ oo ~n ~ O d~ py 4 . g c~ o 0o t ~ ~ ^ v~ ~n ~ a ^ ~D t ~ oo ~D r oo ~ ~ r- ~ ~ ~ ~ Lzl ~ C~ Oi 00 00 00 ~D ~ M m N N N N N N N N ~ ~ ~ O O ~ 41 bA bA n ~ ~ ~ ~ ~ U ~ c^d ~ ~ O r oo ~ O ^ N m tt ~n ~D ao O~ O ^ N m ~ ~ ~ ~ ~ ~ ~ U v ^a m O O O^^ ~ N N N N N N N N m ~ O o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 d w W~ N N N N N N N N N N N N N N N N N N N N N N ~u~~u TABLE S -INTEREST AND SINKING FUND BUDGET PROJECTION Tax Supported Debt Service Requirements, Fiscal Year Ending 9/34/2007 . . . $14,775,$24 Interest and Sinking Fund Balance as of 9130106 $ 439,658 Interest and Sinking Fund Tax Levy 9,732,726 Budgeted Transfers . . 5,043,098 15,215,482 Estimated Balance, 9130107 . . $ 439,658 TABLE ~ -COMPUTATION OFSELF-SUPPORTING DEBT Net Revenue from Solid Waste System, Fiscal Year Ended 9-30-06 $ 3,132,306 Less: Solid Waste System Revenue Band Requirements, 2007 Fiscal Year - Balance Available for Other Purposes $ 3,132,306 Solid Waste System General Obligation Bond Requirements, 2007 Fiscal Year , 2,580,378 Balance $ 551,928 Net Revenue from Drainage System, Fiscal Year Ended 9-30-06 $ 1,184,034 Less: Drainage System Revenue Bond Requirements, 2007 Fiscal Year . - Balance Available for Other Purposes . $ 1,184,034 Drainage System General Obligation Bond Requirements, 2007 Fiscal Year 627,714 Balance $ 556,320 TABLE IO -AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS Amount Amount Date Amount Heretofore Being Unissued _ Purpose Authorized Authorized Issued Issued Balance tla Street and Traffic Improvements 12/13/1986 $ 7,736,004 $ 6,919,000 $ - $ 757,000 Parks 12/13/1986 5,950,004 4,550,000 - 1,400,000 Street and Traffic lmprovements 2/24/1994 11,112,000 11,110,000 - 2,000 Drainage lmprovements 2/24/1996 7,238,004 4,930,x00 - 2,308,000 Transportation 2/5/2005 27,700,000 5,415,600 10,784,000 11,500,400 Parks 21512005 10,704,000 984,400 4,886,000 4,829,600 Buildings 2/5/2005 4,000,000 2,295,000 400,000 1,305,000 $ 74,436,000 $ 36,264,000 $16,070,000 $ 22,102,000 (1) Excludes the Bonds being offered herein. TABLE 1I -OTHER OBLIGATIONS The City has entered into capital lease agreements. The following is a schedule of future minimum lease payments under these capital leases and the present value of the net minimum lease payments as of September 30, 2006: Year Annual Ending Lease 3~ Payment 2007 $1,046,319 2008 1,046,319 2008 924,811 2010 803,303 Total Minimum Lease Payment $ 3,820,752 Less: Amount Representing Interest 261,010) Present Value of Minimum Future Lease Payments $ 3,559,742 23 PENSION FUND ...The City provides pension benefits for all of its full-time employees (except firefighters} through the Texas Municipal Retirement System ("TMRS"), a State-wide administered pension plan. The City makes annual contributions to the plan equal to the amounts accrued for pension expense. The City provides pension benefits for firefighters through the Denton Firemen's Relief and Retirement fund. The funding policy for the fund requires the City to make contributions equal to 11% for FY 200G-07 and 12% for FY 2007-08. (For mare detailed information concerning the retirement plans, see Appendix B, "Excerpts from the City's Annual Financial Report, Note V.A., page 51 IMPLEMENTATION 0~' NEW ACCOUNTING STANDARDS...Certain financial data included in this Official Statement for the years ended September 30, 2002, 2003, 2004, 2005, and 2006 (principally, data used in Tables 12 and 12A} are derived from unaudited financial statements of the City. For the year ended September 30, 2002, the City implemented the provisions of the Governmental Accounting Standard Board ("GASB") Statement No, 34, Basic Financial Statements -and Management's Discussion and Analysis -for State and Local Governments, GASB Statement No. 37, Basic Financial Statements -and Management's Discussion and Analysis -far State and Local Governments: Omnibus, and GASB Statement No. 38, Certain Financial 1Vote Disclosures which results in a change in content and format of the City's financial statements (collectively, the "New GASB Statements"}, The audited financial statements of the City for the year ended September 30, 2006, prepared in accordance with the New GASB Statements, are in included in Appendix C hereto. The purpose of the New GASB Statements is to create new information and restructure much of the information that governments have presented in the past to provide a mare comprehensive demonstration of their annual financial performance on a system-wide basis. Among the significant changes effected by the new accounting standards are new presentations for proprietary or business-type operations of the City, such as those reported for the City's electric, water and waste water operations (the "Proprietary Funds"}. As required by the new GASB statements, the City's annual report consists of three basic financial statements for the Proprietary Funds: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes in Net Assets; and the Statement of Cash Flows. Those statements are included in the financial statements of the City for the year ended September 30, 2006 in Appendix C. In addition to the changes discussed in the preceding paragraph, certain items comprising the Pledged Revenues are na longer reported in the City's financial statements in the same detail as in prior years. For various reasons, including budgeting for each business-type activity as a cost center, and for purposes of its disclosure obligations, the City maintains additional detail, some of which is included in tables used herein. While the information for 2002, 2003, 2004, 2005, and 2004 is consistent with the Proprietary Fund information contained in its audited financial statements, the 2002, 2003, 2004, 2005, and 200b columns have been marked as unaudited to reflect the inclusion of additional detail maintained in the financial records of the City, but which are no longer reported in the audited financial statements. GASB released the Statement of General Accounting Standards Na. 45 ("GASB 45"), Accounting by Employers for Other Post- employment Benefits ("OPEB"), in June 2004. The City will be required to implement GASB 45, for the fiscal year beginning October I, 2008. GASB 45 sets forth standards for the measurement, recognition, and display of post-employment benefits, other than pensions, such as health and life insurance for current and future retirees. Those subject to this pronouncement are required to: (i) measure the cost of benefits, and recognize other post-employment benefits expense, on the accrual basis of accounting over the working lifetime of the employees; (ii) provide information about the actuarial liabilities :for promised benefits associated with past services and whether, ar to what extent, the future costs of those benefits have been funded; and provide information useful in assessing potential demands on the employer's future cash flaws. The employer's contributions to OPEB costs that are less than an actuarially determined annual required contribution will result in a net OPEB cost, which under GASB 45 will be required to be recorded as a liability in the employer's financial statements. In 2006, the City engaged an actuarial firm to prepare a preliminary baseline report for the City's OPEB's (the "200b Report"} measured as of January 1, 2006. The 2004 Report provides the City with a baseline report of the City's OPEB requirements assuming the City's plan offerings, designs and cost share approach remain constant. The 2006 Report estimated the City's accrued liability for OPEBs at $5.1 million, which represented the present value of all future benefits to be provided by the City to current and future eligible (and electing) retirees, less future normal costs and any pre-funded amounts held in trust. Using this same baseline information, the City's annual required contribution for the City's 2006 fiscal year would have been approximately $743,000. Although the 2006 Report does not present the City's final liability for GASB 45 purposes, the report provides a starting point for the City and its f nancial staff to consider strategies to impact the required future liability reporting. The magnitude of OPEBs is dependent on a variety of factors, including whether a government that is subject to GASB 4S determines to use "pay-as-you-ga" funding (the City's current method), to partially fund the costs or to fully fund the costs. In addition, the City is evaluating various options as to haw it will report OPEB costs in its f nancial statements, and is reviewing potential State law changes that could affect how the City accounts for OPEBs. A discussion of the New GASB Statements is set forth in the Management Discussion and Analysis and in various notes to the City's financial statements in Appendix B. 24 FINANCIAL INFURMATI~N TABLE 12~ -CHANGES [N NET ASSNS (t) Fiscal Year Ended September 30, Revenues: ~ 2006 2005 2004 2003 2002 Program Revenue: Charges for Services $ 13,9b5,099 $ 11,998,876 $ 10,224,627 $ 10,175,929 $ 8,193,b53 Operating Grants and Contributions 3,712,817 2,995,978 3,264,777 3,221,264 2,480,309 Capital Grants and Contributions 5,53b,786 7,426,194 14,046,071 14,023,05b 4,379,228 General Revenue: Property Tax 30,000,847 2b,678,783 23,149,916 20,964,738 19,075,268 Sales Tax 20,343,413 18,998,057 17,871,380 16,047,297 15,875,935 Other TaxeslFees 17,914,704 16,628,912 15,689,937 15,099,363 13,063,774 Miscellaneous 5,859,560 4,218,245 4,213,163 5,354,783 7,237,530 Total Revenue $ 97,333,226 $ 88,945,045 $ 88,459,871 $ 84,886,430 $ 72,305,697 Expenditures: General Government $ 22,165,661 $ 26,675,799 $ 26,411,408 $ 22,933, ! 07 $ 16,240,418 Public Safety 36,62b,b35 33,642,445 30,508,765 28,837,158 27,322,153 Public WorlCs 12,485,281 11,986,881 11,053,131 10,274,822 13,691,514 Parks and Recreation 10,497,241 9,912,996 9,418,580 8,419,508 7,362,939 lnterest on Lang-Term Debt 4,333,428 4,175,466 4,494,851 4,18b,051 4,252,970 Total Expenses $ 8b,108,246 $ 86,393,587 $ 81,886,935 $ 74,650,646 $ 68,869,994 Increase in Net Assets before Transfers $ 11,224,980 $ 2,551,458 $ 6,572,936 $ 10,235,784 $ 3,435,703 Transfers 895,106 864,493 1,410,947 1,000,305 1,073,857 Increase (Decrease} in Net Assets $ 12,120,086 $ 3,415,951 $ 7,983,883 $ 11,236,089 $ 4,509,560 Prior Period Adjustment - - 191,800 - - Net Assets at Beginning of Year 126,082,552 122,6b6,601 114,490,918 103,254,829 98,745,269 Net Assets at End of Year $138,202,638 $126,082,552 $122,6bb,601 $114,490,918 $103,254,829 (1} Beginning with fiscal year ended September 30, 2002, the City implemented Government Accounting Standards Board Statement No. 34 ("GASB 34"}. In accordance with GASB 34, the City's financial statements for the fiscal year ended September 30, 2a~6, which are attached hereto as Appendix B, include a management discussion and analysis of the operating results of such fiscal year. Reference is made to Appendix B far such information. 25 TABLE 12A - GENER4L FUND REVI±JNUES AND ExPENDITURE HISTORY Fiscal Year Ended September 30, Revenues: 2006 2005 2004 2003 2002 Taxes $ 41,906,626 $ 37,179,874 $ 32,863,098 $ 29,455,465 $ 27,264,954 Licenses and Permits 1,383,169 1,235,337 1,700,044 1,151,169 91,049 Franchise Fee 16,499,994 14,250,484 13,215,882 12,571,989 11,930,612 Fines and Forfeitures 4,639,922 3,959,476 3,338,979 3,422,952 3,522,895 Fees for Service 3,661,522 5,520,074 6,178,245 6,020,190 4,852,845 Interest Revenue 761,159 621,164 441,755 856,204 1,011,454 Net (Decrease) Increase in Fair Value of Investments - - - - 16,805 lntergavernmental 541,968 629,259 664,894 692,581 458,189 Miscellaneous 447,200 382,494 1,581,327 418,817 268,673 Total Revenues $ 69,841,560 $ 63,778,162 $ 59,984,226 $ 54,589,367 $ 49,417,476 Expenditures: General Government $16,304,027 $18,214,630 $19,524,403 $16,166,690 $10,430,176 Public Safety 35,073,613 32,252,497 29,347,031 28,081,091 25,913,382 Public Works 4,950,734 5,228,666 4,465,283 4,342,542 7,866,251 Parks and Recreation b,817,078 6,810,881 6,060,086 5,873,122 5,610,114 Capital Outlay 281,258 341,958 160,477 147,196 _ 267 558 Total Expenditures $ 63,426,710 $ 62,848,632 $ 59,556 880 $ 54,610 641 _ $ 50,087,481 Excess (Deficiency) of Revenues Over Expenditures $ 6,414,850 $ 929,530 $ 427,346 $ {21,274) $ {670,005) Proceeds of Capital Lease - - " Operating Transfers In 579,878 748,065 1,110,160 529,721 195,259 Operating Transfers {Out) 1,867,799 1,365,b89 500,219 393,074 _ 831,469 Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses $ 5,126,929 $ 311,906 $ 1,037,287 $ 115,373 $ {1,306,215} Beginning Fund Balance 9,929,186 9,617,280 8,579,993 8,464,620 9,770,835 Ending Fund Balance $15,056,115 $ 9,929,186 $ 9,617,280 $ 8,579,993 $ 8,464,620 26 TABLE 1~ -MUNICIPAL SALES TAX HISTORY The City has adopted the Municipal Sales and Use Tax Act, V.T.C.A., Tax Cade, Chapter 321, which grants the City the power to impose and levy a 1% Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not pledged tv the payment of the Bonds or the Certif cotes. Collections and enforcements are effected through the offices of the Comptroller of Public Accounts, State of Texas, who remits the proceeds of the tax, after deduction of a 2% service fee, to the City monthly. In January 1994, the voters of the City approved the imposition of an additional one-half of one percent (1/~ of 1%) for property tax reduction. In September 2003, the voters of the City approved the imposition of an additional one-half of one percent (112 of 1%) for the Denton County Transportation Authority. The implementation of this tax began January 2004. Fiscal Year 2% % of Equivalent of Ended Total Ad Valorem Ad Valorem Per 9130 Callectedtli Tax I.e Tax Rate Capita- 2003 $1b,047,297 77.94% $0.4272 $ 178 2x04 17,871,38a 79.28°/4 x.4346 191 2005 1$,99$,057 71,81% x.4342 193 20ab 20,343,413 49.84% x.4248 197 2aa7 (Z) 13,782,988 4x.43% 0.2533 127 (1) Source: City of Denton Annual Program of Services. (2) Collections through lone 1, 2aa7. The sales tax breakdown far the City is as follows: Property Tax Relief x.50¢ Denton County Transportation Authority 0.5x¢ City Sales & Use Tax 1.00¢ State Sales & Use Tax b.25¢ Total 8.25¢ FINANCIAL PaLicIES Basis of Accounting . , .The accounting policies of the City conform to generally accepted accounting principles of the Governmental Accounting Standards Board and program standards adopted by the Government Finance Officers Association of the United States and Canada The GFOA has awarded a Certificate of Achievement far Excellence in Financial Reporting to the City of Denton far each of the fiscal years ended September 30, 1983 through September 30, 2005. The City's current report has been submitted to GFOA to determine its eligibility for another Certificate. The City has also received the GFOA's award for Distinguished Budget Presentation each year since 1988. The measurement focuses far the Enterprise Funds, Internal Service Funds and Nonexpendable Trust Funds are income determination and cost of service, respectively. Accordingly, the accrual basis, whereby revenues and expenses are identifed in the accounting period in which they are earned and incurred and net income, is utilized for these funds. The modified accrual basis, whereby revenues are recognized when they become both measurable and available for use during the year and expenditures are recognized when the related fund liability is incurred, is used for all other funds. Budgetary Procedures As prescribed by City Charter the City Manager, and within the time period required by law, submits to the City Council a proposed budget for the fiscal year beginning the following October 1. The budget includes proposed expenditures and revenues required to fund the expenditures. Following Council considerations, amendments and refinements, a public hearing is ordered and conducted far the purpose of obtaining taxpayer comments. The budget is finally approved and adopted by passage of an ordinance by the City Council prior to the beginning of the fiscal year. The budget is adopted on a basis consistent with generally accepted accounting principles. 27 INVESTMENTS The City invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the City Council, Both Texas law and the City's investment policies are subject to change. LEGAL INVESTMENTS ...Under Texas law, the City is authorized to invest in (1) obligations, including letter of credit, of the United States or its agencies and instrumentalities, (2} direct obligations of the State of Texas or its agencies and instrumentalities; (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations, the principal and interest of which is guaranteed or insured by or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities; (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent; (6) bonds issued, assumed or guaranteed by the State of Israel; {7) certificates of deposit and share certificates meeting the requirements of the Texas Public Funds Investment Act (Chapter 2254, Texas Government Code, as amended} that are issued by or through an institution that either has its main office or a branch in Texas, and are ,guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in clauses {1) through (6} or in any other manner and amount provided by law for City deposits, (S) fully collateralized repurchase agreements that have a def ned termination date, are fully secured by obligations described in clause (1}, and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9) certain bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recagnizecl credit rating agency, { 10) commercial paper with a stated maturity of 270 days or less that is rated at least A- l or P- i ar the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, {11} no-load money market mutual funds registered with and regulated by the Securities and Exchange Commission that have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (12} no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invest exclusively in obligatians described in the this paragraph, and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent. if specifically authorized in the authorizing document, bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations of the United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract, other than the prohibited obligations described in the next succeeding paragraph. The City may invest in such obligations directly ar through government investment pools that invest solely in such obligations provided that the pools are rated na lower than AAA orAAA-m or an equivalent by at least one nationally recognized .rating service. The City is specifically prohibited from investing in: (1 } obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays na principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3} collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4} collateralized mortgage obligations the interest rate of which is determined by an index that adjusts apposite to the changes in a market index. Effective September 1, 2003, governmental bodies in the State are authorized to implement securities lending programs if (i}the securities loaned under the program are 100% collateralized, aloan made under the program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are described in clauses (1} through (6) of the first paragraph under this subcaption, (b} irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm not less than "A" or its equivalent, or (c} cash invested in obligatians that are described in clauses (1) through (b} and (10) through (I2) of the first paragraph under this subcaption, or an authorized investment pool; (ii} securities held as collateral under a loan are pledged to the governmental body, held in the name of the governmental body and deposited at the time the investment is made with the City or a third party designated by the City; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State of Texas; and (iv}the agreement to lend securities has a term of one year or less. INVESTMENT POLICIES ...Under Texas law, the City is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for City funds, maximum allowable stated ir~aturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All City funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each lnvestment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2} preservation and safety of principal, (3}liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (b}yield. 28 Under Texas law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not far speculation, but for investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the City shall submit an investment report detailing: (1) the investment position of the City, (2) that all investment officers jointly prepared and signed the report, (3} the beginning market value, any additions and changes to market value and the ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5}the maturity date of each separately invested asset, (6) the account or fund ar pooled fund group fc~r which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a} adopted investment strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council. ADDITIONAL PROvISIQNS ...Under Texas law the City is additionally required to: (1} annually review its adopted policies and strategies; (2) require any investment officers' with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council; (3) require the registered principal of Firms seeking to sell securities to the City to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c) deliver a written statement attesting to these requirements; (4} perform an annual audit of the management controls an investments and adherence to the City's investment policy; (5} provide specific investment training far the Treasurer, Chief Financial Df~cer and investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (7} restrict the investment in non-money mutual funds of any portion of bond proceeds, reserves and funds held for debt service and tv no more than 15% of the entity's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; and (8} require local gavemment investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements. TABLE ~4 -CURRENT INVESTMENTS As of June 1, 2007, the City's investable funds were invested in the fallowing categories: Market Descri Lion Percent Value U.S. Federal Agency Coupon 40.01% $115,674,400 U.S. Federal Agency Discounts 1x.38% 30,000,000 U.S. Federal Agency Callables 16.95% 49,4x0,000 U.S. Federal Agency Step-Ups 5.3b% 15,500,4x0 U.S. Treasury Securities 1x.3$% 30,000,040 Money MarketJCash 16.93% 48,935,260 10x.00% $ 2$9,109,260 29 TAX MATTERS QPINIONS On the date of initial delivery of the Obligations, McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel, will render its opinions that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof ("Existing Law"}, (I} interest on the Bonds and the Certificates for federal income tax purposes will be excludable from the "gross income" of the holders thereof and (2} neither the Bonds nor the Certificates will be treated as "specified private activity bands" the interest on which would be included as an alternative minimum tax preference item under section 57(a}(5} of the Internal Revenue Code of 186 the "Code"}. Except as stated above, Bond Counsel will express no opinion as to any other federal, state ar loco! tax consequences of the purchase, ownership or disposition of the Obligations. See "Appendix C Form of Band Counsel's Opinions". In rendering its opinions, Bond Counsel will rely upon (a} certain information and representations of the City, including information and representations contained in the City's federal tax certificate, and fib} covenants of the City captained in the Obligation documents relating to certain matters, including arbitrage and the use of the proceeds of the Obligations and the Refunded Obligations and the property financed or refinanced therewith and (c} the verification report prepared by Grant Thornton L.L.P. Failure by the City to observe the aforementioned representations or covenants could cause the interest on the Obligations to become taxable retroactively to the date of issuance. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisf ed subsequent to the issuance of the Obligations in order for interest on the Obligations to be, and to remain, excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Obligations to be included in grass income retroactively to the date of issuance of the Obligations. The opinions of Bond Counsel are conditioned on compliance by the City with such requirements, and Bond Counsel has not been retained to monitor compliance with these requirements subsequent to the issuance of the Obligations. Bond Counsel's opinions represent its legal judgment based upon its review of Existing Law and the reliance on the aforementioned information, representations and covenants. Band Counsel's opinions are not a guarantee of a result. Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Obligations. A ruling was not sought from the Internal Revenue Service by the City with respect to the Obligations or the property f nanced or refinanced with proceeds of the Obligations or the Refunded Obligations. No assurances can be given as to whether the Internal Revenue Service will commence an audit of the Obligations. Bond Counsel's opinions are not binding an the Internal Revenue Service. If an Internal Revenue Service audit is commenced, under current procedures the Internal Revenue Service is likely to treat the City as the taxpayer and the holders of the Bonds or the Certificates may have no right to participate in such procedure. No additional interest will be paid upon any determination of taxability. FI{;DERAI. INCOME TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT ...The initial public offering price to be paid for one or more maturities of the Obligations may be less than the principal amount thereof or one ar more periods for the payment of interest on the Obligations may not be equal to the accrual period ar be in excess of one year (the "Original Issue Discount Obligations"). In such event, the difference between ~i} the "stated redemption price at maturity" of each Original Issue Discount Obligation, and (ii} the initial offering price to the public of such Original Issue Discount Obligation would constitute original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the Obligations less the amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods for during any unequal period if it is the initial or final period} and which are made during accrual periods which do not exceed one year. Under existing law, any owner who has purchased such Original Issue Discount Obligation in the initial public offering is entitled to exclude from gross income (as def ned in section 61 of the Code) an amount of income with respect to such Original Issue Discount Obligation equal to that portion of the amount of such original issue discount allocable to the accrual period. Far a discussion of certain collateral federal tax consequences, see discussion set forth below. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Obligation prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Obligation in the hands of such owner adjusted upward by the portion of the original issue discount allocable to the period far which such Original Issue Discount Obligation was held by such initial owner) is includable in gross income. Under existing law, the original issue discount on each Original Issue Discount Obligation is accrued daily to the stated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Obligations and ratably within each such six-month period} and the accrued amount is added to an initial owner's basis for such Original Issue Discount Obligation For purposes of determining the amount of gain or lass recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to ~a) the sum of the issue price and the amount of original issue discount accrued in prior periods 3U multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (b}the amounts payable as current interest during such accrual period on such Original Issue Discount Obligation. The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Obligations which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Obligations should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Obligations and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Obligations. COLLATERAL FEDERAL INCOME TAX CONSEQUENCES ...The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Obligations. This discussion is based on existing statutes, regulations, published rulings and court decisions, all of which are subject to change or modification, retroactively. The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as financial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social Security ar Railroad Retirement benef ts, individuals allowed an earned income credit, certain S corporations with accumulated earnings and profits and excess passive investment income, foreign corporations subject to the branch profits tax and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligations. THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE. INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE OBLIGATIONS. Interest on the Obligations will be includable as an adjustment far "adjusted current earnings" to calculate the alternative minimum tax impaled on corporations by section 55 of the Code. Section 55 of the Code impales a tax equal to 2U percent for corporations, ar 26 percent for noncorporate taxpayers (2$ percent for taxable income exceeding $175,00}, of the taxpayer's "alternative minimum taxable income," if the amount of such alternative minimum tax is greater than the taxpayer's regular income tax for the taxable year. Under section b0I2 of the Code, holders oftax-exempt obligations, such as the Obligations, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1 X76 of the Cade provides for ordinary income tax treatment of gain recognised upon the disposition of atax-exempt obligation, such as the Obligations, if such obligation was acquired at a "market discount" and if the f xed maturity of such obligation is equal to, or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the accrued market discount of such bonds; although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price at maturity or, in the case of an obligation issued at an original issue discount, the "revised issue price" (i.e., the issue price plus accrued original issue discount}. The "accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. STATE, LOCAL AND FOREIGN TAXES ...Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Obligations under applicable state or local laws, Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. 31 CONTINUING DISCLOSURE OF INFORMATION In each of the Ordinances, the City has made the following agreement for the benefit of the halders and beneficial owners of the Bonds and the Certificates. The City is required to observe the agreement for sa long as it remains obligated to advance funds to pay the Bonds and the Certificates. Under the agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified material events, to certain information vendors, This information will be available to securities brokers and others who subscribe to receive the information from the vendors. ANNUAL REPORTS ...The City will provide certain updated financial information and operating data to certain information vendors annually. The information to be updated includes all quantitative financial information and operating data with respect to the City of the general type included in this Off vial Statement under Tables numbered 1 through 5 and 7 through 14 and in Appendix B. The City will update and provide this information within six months after the end of each fiscal year ending in or after 2007. The City will provide the updated information to each nationally recognized municipal securities information repository ("NRMSIR"} approved by the staff of the United States Securities and Exchange Commission ("SEC"} and to any state information depository ("SID") that is designated and approved by the State of Texas and by the SEC staff. The City may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by SEC Rule 15c2-12. The updated information will include audited f nancial statements, if the City commissions an audit and it is completed by the required time. If audited f nancial statements are not available by the required time, the City will provide unaudited financial information by the required time, and audited financial statements when and if such audited f nancial statements become available. Any such financial statements will be prepared in accord~unce with the accounting principles described in Appendix B or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. The City's current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each year, unless the City changes its f scat year. If the City changes its fiscal year, it will notify each NRMSIR and the SID of the change. The Municipal Advisory Council of Texas has been designated by the State of Texas and approved by the SEC staff as a qualified SID. The address of the Municipal Advisory Council is 600 West 8th Street, P. 0. Box 2177, Austin, 'T'exas 78768- 2177, and its telephone number is S 121476-6947. The Municipal Advisory Council has also received SEC approval to operate, and has begun to operate, a "central past off ce" repository for information filings made by municipal issuers, such as the City, which repository then transmits the filed information to the NRMSIRs and the appropriate SID. This central post office can be accessed an~i utilized at www.DisclosureUSA.com ("DisclosureUSA"). The City may utilize DisclosureUSA far the filing of information relating to the Obligations. MATERIAL EVENT NOTICES ...The City will also provide timely notices of certain events to certain information vendors. The City will provide notice of any of the following events with respect to the Bonds and the Certificates, as applicable, if such event is material to a decision to purchase or sell Bonds ar Certificates: (1}principal and interest payment delinquencies; (2) non- payment related defaults; (3} unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial diff culties; (5) substitution of credit or liquidity providers, ar their failure to perform; (6} adverse tax opinions or events affecting the tax-exempt status of the Bonds or Certificates; (7} modifications to rights of holders ofthe Bands or Certificates; (8} Bonds or Certificate calls; (9} defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds or Certificates; and (11) rating changes. Neither the Bonds or Certificates or the Ordinances make provisions for debt services reserves, or liquidity enhancement. In addition, the City will provide timely notice of any failure by the City to provide information, data, or financial statements in accordance with its agreement described above under "Annual Reports." The City will provide each notice described in this paragraph to the SID and to each NRMSIR. AVAILABILITY OF INFORMATION FROM NRMSIRS AND SID ...The City has agreed to provide the foregoing information only to NRMSIRs and the SID. The information will be available to holders of Bonds and the Certificates only if the halders comply with the procedures and pay the charges established by such information vendors or obtain the information throj~gh securities brokers who do so. LIMITATIQNS AND AMENDMENTS ...The City has agreed to update information and to provide notices of material (;vents only as described above. The City has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds or Certif cotes at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from ,any statement made pursuant to its agreement, although holders of Bonds or Certificates may seek a writ of mandamus to compel the City to comply with its agreement. The City may amend its continuing disclosure agreement from time to time to adal}t to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, ,status, or type of operations of the City, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds or 32 Certificates in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Bands or Certificates consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel} determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds or Certificates. The City may also amend ar repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the SEC Rule 15c2-12 or a court of final jurisdiction enters judgment that such provisions of the SEC Rule 15c2-12 are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds ar Certificates in the primary offering of the Bonds ar Certificates. If the City so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS ...During the last five years, the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12. OTHER INFURMATI4N RATINGS The presently outstanding tax supported debt of the City is rated "Aa3" by Moody's Investors Service, Inc. ("Moody's") and "AA-" by Standard & Poar's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"}. The City also has issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies. Applications for contract ratings on the Bonds and the Certificates have been made to Moody's and S&P. An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect only the respective views of such organization and the City makes no representation as to the appropriateness ofthe ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of the Bonds and Certificates. LITIGATION It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF BONDS AND CERTIFICATES FOR SALE The sale of the Bonds and Certif sates has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a}(2); and the Bands and Certificates have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bands and Certificates been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Bonds and Certificates under the securities laws of any jurisdiction in which the Bonds and Certificates may be said, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale ar other disposition of the Bonds and Certificates shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Cade) provides that the Bonds and Certif cafes are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized investments for insurance companies, f duciaries, and trustees, and for the sinking funds of municipalities or other political subdivisions or public agencies of the State of Texas. With respect to investment in the Bonds and Certif sates by municipalities or other political subdivisions or public agencies of the State of Texas, the Public Funds investment Act, Chapter 2256, Texas Government Code, requires that the Bonds and Certificates be assigned a rating of at least "A" or its equivalent as to investment quality by a national rating agency. See "other Information -Ratings" herein. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Bonds and Certificates are legal investments for state banks, savings banks, trust companies with at capital of one million dollars or mare, and savings and loan associations. The Bonds and Certificates are eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the City has been made of the laws in other states to determine whether the Bonds and Certificates are legal investments for various institutions in Chase states. 33 No representation is made that the Obligations will be acceptable to public entities to secure their deposits or acceptable to such institutions for investment purposes. The City made no investigation of other laws, rules, regulations ar investment criteria which might apply to such institutions or entities or which might limit the suitability of the Obligations far any of the foregoing purposes or limit the authority of such institutions or entities to purchase or invest in the Obligations for such. LEGAL OPINIONS The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Obligations, including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Bond and the Inltlal Certificates and to the effect that the Obligations are valid and legally binding obligations of the City, and based upon examination of such transcript of proceedings, the approving legal opinions of Bond Counsel, to like effect and to the effect that the interest an the Obligations will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations. Bond Counsel was not requested to participate, and did not take part, In the preparation of the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information under captions "Plan of Financing" (exclusive of the sub-caption "Sources and Uses of Proceeds"}, "The Bonds and the Certificates" (exclusive of subcaptions "Book-Entry-Only System" and "Obligationholders' Remedies"}, "Tax Matters" and "Continuing Disclosure of Information" and the subcaptions "Legal Opinions" and "Legal Investments and Eligibility to Secure Public Funds in Texas" under the caption "Other Information" in the Official Statement and such firm Is of the opinion that the information relating to the Obligations and the legal issues contained under such captions and subcaptions is an accurate and fair description of the laws and legal issues addressed therein and, with respect to the Obligations, such Information conforms to the Ordinance. The legal fees to be paid to Bond Counsel for services rendered in connection with the issuance of the Obligations is contingent on the sale and delivery of the Obligations. The legal opinions will accompany the Obligations deposited with DTC or will be printed on the Obligations in the event of the discontinuance of the Book-Entry-Only System. Certain legal matters will be passed upon for the Underwriters by Fulbright & Jaworski, L.L.P., Dallas, Texas, Counsel to the Underwriters. The legal opinions to be delivered concurrently with the delivery of the Obligations express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Obligations. The Financial Advisor's fee far services rendered with respect to the sale of the Obligations is contingent upon the issuance and delivery of the Obligations. First Southwest Company, in its capacity as Financial Advisor, does not assume any responsibility for the information, covenants and representations contained In any of the legal documents with respect to the federal Income tax status of the Obligations, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. The Financial Advisor has agreed to sell to the City the Federal Securities for deposit into the Escrow Fund in connection with the refunding. In the normal course of business, the Financial Advisor may also from time to time sell investment securities to the City for the investment of band proceeds or other funds of the City upon the request of the City. The Financial Advisor to the City has provided the fallowing sentence for inclusion in this Official Statement, ~Che Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the City and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information. VERIFICATION OF ARITHMETICAL AND MATHEMATICAL CUMPUTATIONS The arithmetical accuracy of certain computations included in the schedules provided by First Southwest Company on behalf of the City relating to (a} computation of forecasted receipts of principal and interest on the Federa! Securities and the forecasted payments of principal and interest to redeem the Refunded Obligations and (b} computation of the yields of the Refunding Bonds and the restricted Federal Securities were verified by Grant Thornton, LLP, certified public accountants. Such computations were based solely on assumptions and information supplied by First Southwest Company on behalf of the City. Gant Thornton, LLP has restricted its procedures to verifying the arithmetical accuracy of certain computations and has not made any study or evaluation of the assumptions and information an which the computations are based and, accordingly, has not expressed an opinion an the data used, the reasonableness of the assumptions, or the achievability of the forecasted outcome. 34 UNDERWRITING The Underwriters have agreed, subject to certain conditions, to purchase the Bonds from the City, at an underwriting discount of $ .The Underwriters will be obligated to purchase all of the Bonds if any Bonds are purchased. The Bonds to be offered to the public may be offered and sold to certain dealers (including the Underwriters and other dealers depositing Bonds into investment trusts} at prices lower than the public offering prices of such Bonds, and such public offering prices may be changed, from time to time, by the Underwriters. The Underwriters have agreed, subject to certain conditions, to purchase the Certificates from the City, at an underwriting discount of $ .The Underwriters will be obligated to purchase all of the Certificates if any Certificates are purchased. The Certificates to be offered to the public may be offered and sold to certain dealers (including the Underwriters and other dealers depositing Certificates into investment trusts) at prices lower than the public offering prices of such Certificates, and such public offering prices may be changed, from time to time, by the Underwriters. RBC Capital Markets is the name under which RBC Dain Rauscher Inc. will be performing underwriting services in connection with the Bonds. FORWARD-LOOKING STATEMENTS DISCLAIMER The statements contained in this Official Statement, and in any other information provided by the City, that are not purely historical, are forward-looking statements, including statements regarding the City's expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking statements included in this Official Statement are based on information available to the City on the date hereof, and the City assumes no obligation to update any such forward-looking statements. The City's actual results could differ materially from those discussed in such forward-looking statements. The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the passible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the City. Any of such assumptions could be inaccurate and, therefore, there can be na assurance that the forward-looking statements included in this Official Statement will prove to be accurate. MISCELLANEOUS The financial data and other information contained herein have been obtained from the City's records, audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions ar estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. The Ordinances authorizing the issuance of the Obligations will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Obligations by the Underwriters. I sl PERRY McNE1:LL Mayor City of Denton, Texas ATTEST: Isl JENNIFER K. WALTERS City Secretary 35 Schedule I SCHEDULE OF REFUNDED OBLIGATIONS* Certificates of Obligation, Series 1998 Principal Principal Original Original Interest Amount Amount Dated Date Maturi Rate Outstandin Refunded 411/1998 2/15/2012 4.900% $ 70,aa0 $ 70,a0a 2/15/2013 5.000% 75,x00 75,Oaa 211512a 16 {l} 5 x00% 255,aaa 255,aa0 2/15/2018 5.000% 195,x00 195,000 $ 595,aa0 $ 595,Oaa The 2012 - 2x18 maturities will be redeemed prior to original maturity on February 15, 2x08 at par, plus accrued interest, if any. (1} Term Bonds with annual mandatary sinking fund redemptions. Genera! Obligation Bands, Series 1998 Principal Principal Original Original Interest Amount Amount Dated Date Maturi Rate Outstandin Refunded 4/1/1998 2/15/2012 4.900% $ 480,x00 $ 480,OOa 211512x13 5.aaa% 480,O0a 48x,000 2/15/2014 5.000% 48a,00a 480,0x0 211512x15 5.aaa% 480,aa0 480,000 211512x1b 5.000% 48a,a00 48a,00a 2/15/2017 S.Oa0% 480,Oaa 48x,000 2115120 1 S 5.00x% 48a,ax0 48x,000 $3,36x,000 $3,360,Oaa The 2012 - 2018 maturities will be redeemed prior to original maturity on February 15, 2x08 at par, plus accrued interest, if any. Certificates of Obligations, Series 1999 Principal Principal Original Original Interest Amount Amount Dated Date Maturi Rate Outstandin Refunded 3/15/1999 211512013 4.70x% $ 295,Oaa $ 295,xx0 2/15/2014 4.754% 295,axa 295,Oxa 2/15/2015 4.800% 295,00x 295,0xx 2/15/2016 S.OOa% 295,x00 295,Oaa 211512x17 5.00x% 295,0x0 295,xaa 2115120 1 ~ 5.aaa°i° 295,xaa 295,axa 2115120 19 5.oaa°i° 295,aaa 295,aaa $2,a65,axa $2,a65,aax The 2013 - 2019 maturities will be redeemed prior to original maturity on February 15, 2009 at par, plus accrued interest, if any. * Preliminary, subject to change. General 4bIigation Bonds, Series 1999 Principal Principal Original Original Interest Amount Amount Dated Date Maturi Rate Outstandin Refunded 3115/1999 2/15/2013 4.700% $ 410,000 $ 414,440 2115/2014 4.800% 410,000 414,000 2/15/2415 4.900% 410,000 410,000 2/15/2016 5.000% 414,000 410,000 2/15/2017 5.000% 410,000 410,000 2/15/2018 5.000% 410,000 410,000 2/15/2019 5.000% 410,000 410,000 $2,s7a,4DD $2,874,OD4 The 2013 2019 maturities will be redeemed prior to original maturity on February 15, 2009 at par, plus accrued interest, if any. Certificates of Qbligatian, Series 2001 Principal Principal Original Original Interest Amount Amount Dated Date Maturi Rate Outstandin Refunded 5/1/2001 2/15/2014 5.000% $ 265,040 $ 265,000 2/15/2015 5.100% 260,440 264,004 2/15/2016 5.200% 260,400 260,000 2/15/2017 5.250% 260,000 260,000 2/15/2018 5.250% 260,400 260,000 2/15/2019 5.250% 260,DD0 260,000 2/15/2020 5.250% 260,000 260,000 2/15/2021 5.250% 260,000 260,000 $2,085,000 $2,085,000 The 2014 2021 maturities will be redeemed prior to original maturity an February 15, 2011 at par, plus accrued interest, if any. General Obligation Bands, Series 2001 Principal Principal Original Original Interest Amount Amount Dated Date Maturi Rate Outstanding Refunded 5/1/2001 2/15/2014 5.004% $ 715,000 $ 715,000 2/15/2015 5.100% 715,000 715,000 2/15/2016 5.150% 715,000 715,040 2/15/2417 5.240% 715,000 715,040 21151201$ 5.250% 715,400 715,000 2/15/2019 5.254% 715,004 715,440 2/15/2020 5.250% 715,044 715,440 2/15/2021 5.250% 715,044 715,400 $5,724,000 $5,720,000 The 2014 - 2021 maturities will be redeemed prior to original maturity on February 15, 2011 at par, plus accrued interest, if any. Certificates ofObligatian, Series 2002 Principal Principal Original Original Interest Amount Amount Dated Date Maturi Rate Outstandin Refunded 4/1/2042 2/15/2015 5.400% $ 475,000 $ 475,000 2/15/2016 5.440% 495,440 495,400 2/15/2017 5.404% 520,004 520,000 21151201$ 5.125% 555,000 555,000 2/15/2019 5.200% 580,400 5$0,000 2/15/2024 5.250% 610,000 610,000 2/15/2021 5.250% 645,000 645,000 2/15/2022 5.250% 6$0,040 6$0,004 $4,560,444 $4,560,000 The 2415 - 2022 maturities will be redeemed prior to original maturity on February 15, 2012 at par, plus accrued interest, if any. General Obligation Bonds, Series 2002 Principal Principal Original Original Interest Amount Amount Dated Date Maturi Rate Outstanding Refunded 4/1/2002 2/15/2015 5.000% $ 670,000 $ 670,004 2/15/2016 5.000% 705,000 705,000 2/15/2017 5.125% 745,000 745,004 21151201$ 5.125% 7$5,000 785,000 2/15/2020 5.250% 1,695,040 1,695,040 2/15/2022 5.250% 1,$90,000 1,$90,000 $6,490,000 $6,490,000 The 2014 - 2022 maturities will be redeemed prior to original maturity on February 15, 2012 at par, plus accrued interest, if any. ~1} Term Bonds with annual mandatory sinking fund redemptions. APPENDIX A GENERAL INFORMATION REGARDING THE CITY LocATTOw ...The City of Denton is located in the northern portion of the DallaslFort Worth Consolidated Statistical Area (CSMA}. The City is a part of the DallaslFort Worth Metroplex, and is situated at the apex of a triangle based by Dallas (38 miles to the southeast} and Fort Worth (36 miles to the southwest). The City has excellent access to and from all parts of the area. ECONOMIC Fu~rux~ ...The fiscal year 2005-2Q06 brought exciting news in economic development. Listed below are just a few of the highlights. NIAdDR EMPLOYER Bc INDUSTRIAL NEWS • Granite Point Please I has constructed two speculative buildings for a combined 297,540 square feet of space. Other officelwarehouse buildings include 7,540 square feet far Spilde Harrison; Two buildings for CR Smith Investments totaling 28,678 square foot; 9,997 square feet of aff ce and warehouse space for Bobcat; 3,2QQ square feet for a new steel building for Pioneer Equipment Rental; and 8,1 QQ square feet for a new training center at Peterhilt Motors Company. DEVELOPMENT AT DENTON MUNICIPAL AIRPORT The arrival of the Denton Municipal Airport's new air traff c control tower in May of 24Q4 precipitated a reclassif cation of air space from Class G to Class D during daily operation hours of 8 a.m. and 10 p.m. and increased our corporate jet traffic. • The Denton MunicipaCAirport has approximately 72,585 square feet of new space in the form of three aircraft hangars with a valuation of $2,216,462. The realignment of the taxiway is nearly complete, providing a secondary emergency runway. Construction of the new terminal building will begin in 2QQ7. RETAIL NEWS • Denton Towne Crossing, a 43 -acre retail development located in the southeastern corner of Brinker Road and Loop 288, is nearing its completion of 340,QQQ square feet of retail space. Several restaurant and retail pads, including a banking center are now complete, leaving one retail-building site under construction. Home Depot and Super Target opened for business in 204b. • Construction of the mixed-use development known as Unicorn Lake continues. The master plan for the development includes restaurants, residential areas, commercial areas, and park trails. It incorporates the urban style development of residential over retail along the lake with a public facility, such as a library. The most current phase to be completed is a 2,993 square foot commercial office building. The Brick House Gym will also locate in the center with a 12,676 square foot facility in 2QQ7. HEALTHCARE 1N DENTON In 2005 both of Demon's hospitals completed or began expansion plans that confirm Dentvn's status as a regional center for quality medical services. The hospitals spent approximately $150 million on these facility expansions. • Denton Regional Medical Center expanded adding 27,431 square feet of medical office space. Locate+~ adjacent to North Texas Hospital, the North Texas Long Term Acute Care (38,041 square feet), Caring far Women (13,4Q2 square feet}, and the Texas Back Institute (10,076 square feet} have a combined valuation of $8,5Q6,863. Other medical facilities include Select Medical, a $20 million rehabilitation hospital specializing in spinal injuries and brain trauma. OTHER DEVELDPMENTS • Rayzor Ranch development recently received zoning approval for an overlay district creating a 414-acre mixed use development. The $S50 million project will provide approximately 2.1 million square feet of retail and will include a 15-acre park with an amphitheater and large water feature, hotels, single family, apartments and town homes. The southern portion of the property is adjacent to Presbyterian Hospital and will be home to the new Select Medico! facility. Senior assisted living is also planned in this area. • Several banks built new facilities in Denton in 20061Q7: Northstar Bank, Wells Fargo (two new branches} and Washington Federal Savings at an average value of over $500,QQQ. A-1 INDUSTRY AND BUSINESS Major Employers Approximate Number of Employer Description Employees University of North Texas Educational Facility 7,351. Denton Independent School District School System 2,600 Peterbilt Matars-Headquarters & Plant Diesel Trucks 2,00(1 Denton State School MHMR Facility 1,45(1 Denton County County Government 1,441 City of Denton City Government 1,30(1 Texas Woman's University Educational Facility 1,15 FEMA (Regional Heaquarters Federal Government Call Center 300 -1100 Denton Regional Medical Center Hospital 80(1 Presbyterian Hospital of Denton Hospital 75(1 Victor Equipment Welding Equipment 567 Sally Beauty World HQ Beauty Supply Company 500 Anderson Merchandisers Consumer Products Distributor 50(1 .lostens Class Ring Manufacturer Class Ring Manufacturer 28(1 Progressive Industries MHMR Facility 27ti United Copper Copper Wire 261 Vacation Tour & Travel Call Center 251 lames Wood Auto Park Car (Truck Sales & Service 252 Precision Pattern Inc. het Interior Manufacturing 237 Acme Brick Brick Manufacturer 225 Nucon Steel Steel Manufacturing 181) CBS Mechanical Mechanical Contractor 175 Tetra Pak Aseptic Packaging 1711 Morrison Milling Flour Grain Mill 161 Wells Fargo Bank 161 Denton Rehabilitation & Nursing Center RetirementlRehabilitation 161 Mayday Manufacturing Aeorspace Machined Parts 16~J Flowers Baking Company Bakery 15'? General Telemarketing International Call Center 15~J Russell Newman Manufacturing Ladies Lingerie 150 The Vintage Retirement & Healthcare Center Senior HousinglHealthcare Services 150 Senior Care Health and Rehabilitation Center RetirementlRehabilitationCmter 145 DATCU Financial Institution 13b Denton Goad Samaritan Village Retirement Center 120 Lake Forest Gaad Samaritan Village Retirement Center 120 Mayhill Hospital Psychiatric & Rehabilitation 115 Bill Utter Ford Automobile SaleslServices 107 Ben E. Keith Beers Beverage Distributor 100 Denton Publishing Company Newspaper 100 Hulcher Services Railroad Emergency Response 100 Integrated Alliance, LP Call Center 100 Source: City of Denton and Denton Chamber of Commerce Economic Development Offices Denson is proud to boast over 35 companies and institutions that employ 100 ar more people, several of them representing a corporate, regional and international headquarters. Well over 100 companies that produce, manufacture, and distribute goods all over the world call Denton home. Mcare than 3,000 businesses employing 1 to 6,937 people choose to do business in Denton. With small, medium, and large businesses operating in a variety of industries, diversity is strength in Denton. Statistics show most of these workers are skilled and receive their training right here in Denton. A-2 ECONOMIC AND PopULATIQN GAINS At the end of 2aa6 the Denton population surpassed the laa,aaa-milestone, as the city grew to 1x1,543 citizens! Historical population totals from U.S. Census depict Demon's consistent population increases commensurate with Demon's steady economic growth. 194a Census -11,192 1950 Census 21,345 1960 Census - 26,844 197a Census - 39,874 198a Census - 49,x79 199a Census - 64,270 2000 Census - Sa,537 estimated 2007 Population is 1x$,381 Source: North Central Texas Council of GovernmentlCity of Denton. The City's ascension toward a top economic position in Texas is attributable to the steady influence of governmental activity that include the annual expansion of the two state-supported universities, and due to several desirable environmental factors. Denton is located in a rich agricultural, oil and gas production region; is part of the DallaslFort Worth Metroplex; has proximity to three of Texas' largest reservoirs (Lake Texoma is only 40 miles from Denton}; a mild climate; and the influential aspects of social, cultural and educational advantages have prompted professional workers to select Denton as their residence. ECONUMIC RANIQNG ...The fallowing data was taken from Claritas 20x6 Survey. Of Population Whose Age is: a-17 22.aa% 18-34 39.ax% 35-54 25.aa% 55-64 7.x0% 65 and aver 7% Households 43,015 City of Denton Average Household Income $ 58,1x9 $25a,aaa + l.ax% $1 aa,aa0 - $249,999 13.aa% $ 5a,aaa - $ 99,999 27.aa°io $ 35,aa0 - $ 49,999 ld.aa% $ 25,xaa - $ 34,999 13.ax% Population by Occupation; Sales & Office 29.xa% Professional & Related Occupations 24.00% Service 17.aa% Management, Business & Finance 1 l.aa% Production & Transportation 10.xa% Construction 9.ax°i° Fanning, Fishing, & Forestry ~l.xa% EMPLOYMENTILABUR FARCE ...The 2aa6 annual available workforce in Denton is 58,159. Additionally Denton is fortunate to draw workers from the Dallas and Fart Worth MSA's representing 5.1 million people, as well as north to southern Oklahoma. EDUCATION ...Denton is home to the University of North Texas, founded in 189x, Texas Woman's University, founded in 19x1. North Central Texas College, established in 1924 built an extension campus just outside Demon's ETJ in adjacent city, Corinth. A-3 The two universities and community college have a combined enrollment of more than 44,044 students and approximately 8,8$7 faculty members. With an enrollment of over 30,000, the University of North Texas exceeds the combined f;nrallment of Southern Methodist University in Dallas, Texas Christian University in Fort Worth and Rice University in Houston. Texas Woman's University has an approximate enrollment of 9,5x0 in Denton with an additional 1,500 students attending in Dallas and Houston. The University of North Texas AUNT) campus comprises a land area of more than 425 acres valued in excess of $167 million. The University encompasses nine colleges and schools of study and offers Bachelor's degrees in 93 fields, Master's degrees in 114 areas and Doctoral programs in 49 disciplines. UNT maintains a tow 18:1 student-faculty ratio more prevalent among private rather than public institutions. UNT is listed in both America's 100 Best College Buys and America's lOfl Most Wired Colleges. Texas Woman's University (TWU}, a major state-supported teaching research institution, it the nation's largest public university attended primarily by women, who comprise 9a% of attending students. Almost 90% of TWU's faculty members hold a Doctoral degree or other appropriate terminal degree in their fields. Through its seven schools and colleges, TWU offers 6S programs leading to a Bachelor's degree, 75 Master's degree fields, and Doctoral degrees in 21 specialization areas. In 2001, TWU's Doctoral health studies program tied with Harvard University for second place nationally in a study of recommended practices by the NatianalAssociation ofGraduate-Professional studies. North Central Texas College NCTC), established in 1924, offers Associate Degrees in Occupational Therapy Assistance, Criminal Justice, Mid-Management Training and Micro Computer Applications, among other fields. NCTC specializes in training geared directly to business and industry needs. NCTC serves the citizens of Denton with quality education by offering a broad scope of educational choices and offers the local business community educational options as well. The competitive need to keep employees current with modern technology and methodology is easier due to NCTC's customized training which teaches curriculum developed closely with business management to ensure individual company needs are met. Over 17,000 students enrolled in the Denton independent School District (DISD) for the 2005-2046 school year. Students attend 27 schools, including 1S elementary schools grades K-5), four middle schools ~6-8},three high schools ~9-12}, one early childhood center, and six alternative schools. DISD offers classes at each school and at the instructional center for students who experience learning disabilities or handicaps. Counselors, speech and language specialists, psychologists and reading and diagnostic consultants are available far all grade levels. In 2044-2005, DISD continued to experience a very law drop out rate of less than 1.8%. Ina "Best High Schools" survey conducted by D Magazine, Denton High school was 26~' and Ryan High School was ranked 36~' our of 95 high schools surveyed in the Dallas-Fort Worth Metroplex. The ranking were based on AP scores and the percentage of students who passed the exams. In 2044, the district had five students who qualified as National :Merit Scholar Semifinalists, seven commended student, one National Hispanic Recognized student and one National African-American recognized student. Denton State, School is one of the country's most modern and progressive educational institutions. This state supported educational institution far mentally handicapped Texas residents is located on a 2aa-acre site paid far by Denton citizens. Present facilities include residences that accommodate 653 students, more than 20 buildings for physically handicapped individuals, and a 32 bed acute hospital with supporting facilities such as X-ray, laboratory, dental, and pharmaceutical. Additional buildings include a modem administration building, an academic building, laundry facility, chapel, maintenance shop and a warehouse. The school has a staff of 1,450 with an annual budget of $44 million. DENTON UNIVERSITIES EXPAND ...Texas Woman's University (TWU} has grown dramatically with a 27.9% increase in student enrollment between 2400 and 2004. TWU's fall 2005 enrollment was 11,353, an increase of 5.6% over fall 2004. To meet growing housing demand, TWU completed a 167-unit apartment -style dormitory residence hall in August 200.5. The dorm complex features a community center, activity deck and early childcare program. A parking area was added to provide an additional 88 spaces near the student union and administrative offices. Almost half of TWU students (45%} are graduate students. Health science majors comprise 42% of TWU students and TWU produces more new nurses than any other program in Texas and is among the nation's leading providers of health care professionals. TWU is proud of its diversity; minority students comprise 35% of students, and 7i% of the most recent semester's graduates were first generation college graduates. Recognized far excellence in baccalaureate and master degree nursing programs, TWU student's first-time pass rate for nursing licensure exceeds 95%, ahead of the national average of 87°/a. University of North Texas AUNT) - UNT Research Park, a 277-acre, 553,000 square foot facility purchased from Texas Instruments is the site of research and patents in the field of nanotechnology and the site of the UNT Engineering School that occupies approximately 180,000 square feet. Masters and bachelors degrees in electrical engineering degrees have been added to the existing engineering programs in materials science, computer science, and engineering technology. UNT expects to have 6S0 engineering students by 2407 and 1,250 by 2010. Longer-term plans for the Research Park include housing additional research fields and a new business incubator program. The 2004-2045 academic year began with the official dedication of UNT's new 105,444 square foot, $30 million Chemistry Building that houses state-of the-art research facilities, laboratories and classrooms, Also dedicated was Victory Hall, a 600-bed, $25.3 million residence hall featuring a #3.9 million dining hall and a 8.9 million athletic center with a total square footage of 220,000. Two large courtyards flank a student center with a cyber cafe, computer lab, kitchenette, media room, classroom, and game and seating areas. AGRICULTURE ...Northwestern Denton County is one of the more diversified agricultural areas in Texas. With soil types ranging from rich black to sandy load, and good, soft artesian water, it is ideal for diversified farming and livestock. Principal crops are corn, wheat, oats, hay, grain sorghums and peanuts. Beef cattle, sheep, chickens and turkeys contribute a substantial and steady income annually to the farmers and ranchers of the County. Avery significant concentration of valuable world A-4 champion horse farms east of the City's corporate boundaries; provide a prosperous economic resource far the City and area. Products significant to the economy are horses, beef, eggs, wheat, grain sorghums, hay, and nursery craps. TRANSPORTATION ...Denton is located only 20 miles northeast of the Dallas-Fort Worth International Airport which began operations in January 1974. In addition, Dallas' Love Field Airport and Fart North's Meacham International Airport are inclose proximity to Denton. Alliance Airport, located about 20 miles southwest of Denton, is the only purely industrial airport in the world. Accompanying the Alliance Airport are five business parks. Together, Alliance's access to highway, rail and air transportation offers an excellent opportunity for future industrial growth. Much development is occurring at the Denton Municipal Airport. The runway will be expanded within the next 12 months from 4,000 to 7,000 feet. A control tower and additional private hangar space have also been built. A terminal building will also be constructed. Denton's airport is a designated "super reliever" airport far DIFW International Airport. The Kansas City Southern Railroad and the Union Pacific Railroad provide daily service to Denton. Full switching is available, providing direct access to all major markets across the nation. Greyhound/Trailways serves Denton through Dallas and Oklahoma City. Motor freight in Denton is included in the DIFW commercial trade zone and is served by major freight carriers. BANKING ...There are 15 banks in Denton: Bank of America, N.A., Bank One, N.A., Wells Fargo Bank, N.A., Farmers and Merchants state Bank, First State Bank, Northwest Bank Texas, N.A., Provident Bank, Guaranty Federal Bank, Point Bank, TexasBank, First Bank, Inwood National Bank, Washington Mutual, Denton's only locally-owned bank, Northstar Bank, and First United Bank with Denton's first "Banco" branch specializing in serving Denton's Hispanic community. GRowTH INDICES City State Fiscal Building Values (millions) <<~ Water Sewer Electric Unemployment Unemployment Year Commercial Residential Total Customers Customers Customers Rates (2) Rates 2002 $ 22 $ 2I6 $ 238 24,x54 22,225 36,591 6.78°/fl 6.33% 2003 36 277 313 24,978 23,329 37,057 7.19% 6.76% 2004 48 267 315 26,416 24,453 39,507 5.10% 5.30% 2005 85 260 345 27,584 25,695 41,846 4.41% 5.67% 2006 45 242 287 2$,805 26,951 42,186 3.10% 5.10% (1) New Construction Only. (2) Source: Texas Workforce Commission. MEDICAL ...Denton is well on its way to becoming a regional medical destination serving north Texas and southern Oklahoma. Denton Regional Medical Center is a 184-bed community hospital that serves the growing population of Denton, Wise, Cooke, and Montague Counties. Offering afull-spectrum of healthcare including advanced open-heart surgery and neurosurgery programs. Denton Regional opened a new $7 million, 13,500 square-foot day surgery center on a 2-acre lot adjacent to the hospital. A $19 million expansion project is underway to add a fifth floor to the four-story building will add 24,500 square feet and will house a 29-bed progressive care unit. Presbyterian Hospital of Denton formerly Denton Community Hospital} celebrated the grand opening of its 272',,538 square- foot, 161-bed facility. An 80,000 square-foot, medical office building was also completed. Anew 52,000 square-foot, $14 million physical rehabilitation hospital will be built across from Presbyterian Hospital and will be modeled after the Kessler Institute far Rehabilitation. Additional new medical facilities beginning or completing construction in 2005 include North Texas Hospital's 60,400 square foot special hospital featuring eight surgical suites and 16 inpatient beds and the 44,000 square-foot Mayhill Hospital featuring physical rehabilitation and behavioral health services. RECREATION ...Lake Ray Roberts, located approximately 8 miles northeast of the City's corporate boundary on the Elm Fork of the Trinity River, is a major water conservation and flood control facility of more than 799,600 acre-feet of storage that allows for an abundance of parks and ether water and outdoor related recreational facilities. Nearby Lake Lewisville, one of North Texas' largest lakes is one of Texas' most popular recreation areas. Lake Lewisville has a shoreline of 183 miles located entirely in Denton County. Lake Lewisville attracts over 3,000,000 visitors to its shares annually. The upper reaches of the lake are only about 3 miles east of the Denton City Limits, while the dam is 15 miles from downtown Denton. Grapevine Lake, another large body of water created by the U.S. Army Carps of Engineers, is located in Denton and Tarrant Counties. The darn is 23 miles from Denton. Parks and recreational areas abound on the shores of Lake Ray Roberts, Lake Lewisville, and Grapevine Lakes. Boating fishing, hunting, swimming and all water sports are the favorite recreational pastimes, which, because +af this area's favorable climate, are in use the year round. The City of Denton Parks and Recreation Department and the Denton Independent School District have created a partnership to produce a signature water recreation attraction. The $12.14 million Denton Aquatic Park opened in 2003. A-5 APPENDIX B EXCERPTS FROM THE CITY OF DENTDN, TEXAS ANNUAL FINANCIAL REPORT Far the Year Ended September 3Q, 20Q6 The information contained in this Appendix consists of excerpts from the City of Denton, Texas Annual Financial Report for the Year Ended September 3Q, ZOQb, and is not intended to be a complete statement of the City's financial condition, Reference is made to the complete Report for further information. KPMG t.l.P Suite 3 ~ D~ 717 Nol#h M~rwood Street oa!las, TX 752~T-~58~ independent Auditors' Report Tl~e Honorable Mayor and Members of City Council City of Denton, `l`exas: We have audited the accompanying f nancial statements of the governmental activities, business type activities, each major fund. and the aggregate remaining fund information of the City of ~c-ntan, Texas the City} as of and for the year ended September 3U, 2006, which. collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. nur responsibility is to express opinions an these f nancial statements loosed on our audit. We cand~~cted our audit in accordance with auditing standards generally accepted. in the l.Jnil:ed States of America and the standards applicable to financial audits contained in. Crovern~nent Auditin~~ ~fitandard~s, issued by the Comptroller general of the l~)nited States. Those standards require that we plan and perform the audit to obtain. reasonable assurance about whether the f nancial statements are free of material misstatement. An audit includes consideration of internal control aver financial reporting a~~ a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on fhe effectiveness of the City's internal control over financial reporting, Ace{ardingly, we express no such opinion.. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the f nancial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Vv'e believe that our audit provides a reasonable basis far our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective f nancial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City as of September 30, 2006, and the respecti~re changes in f nancial position, and, where applicable, cash flows thereof. and the budgetary carnparison for the General Lund far the year then ended in conformity with ~J.S, generally ac~:epted accounting principles. In accordance with Government .~uditx~g ~`tandardsr, we have also issued our report dated February 2, 207 on our consideration. of the City's internal control over financial reporting and on our tests of it4 compliance with. certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and. not to provide an opinion. on the internal control over financial reporting or an compliance. That report is an integral part of an audit performed in accordance with Government Auditing ~~tandards~ and should be considered in assessing the results of our audit. iCPMG LLP, a 1}.S. limited Lability pa~nerslt~, is the 11.5. rne~er firm of KPM~ Int~rr~atianal, a Swiss cnapr}ratve. The management's discussion and analysis, the schedule of TMRS funding progress and contributions and the schedule of Dentan's Firemen's Relief anal Retirement Plan funding progress and cont~~ib~rtions an pages 3 through l 57 and 58, respectively, are not a required part of the basic financial statements but are supplementary information reyuired by U~~. generally accepted accounting principles. we have applied certain limited procedures, which consisted principally of inquiries of management regarding the metl~uds of measurement and presentation of the required supplementary information, However, we did not audit the information and express no opinion on it, (fur audit was conducted for the purpose of forming opinions on the rnancial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual fund f nancial statements and schedules, capital assets used. in the operatio~~ of governmental funds schedules, regulatory section and statistical section are presented for purposes of additional analysis a~ad are not a required part of the basic f nancial statements. The combining and individual f and financial statements and schedules have been. subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic fiinancial statements taken as a whole. The introductory section, capital assets used in the operation of governmental funds schedules, regulator~~ section and statistical sec:tinn have not been subjected to #.he auditing procedures applied in the audit of the basic fnancial statements and accordingly, we express nca opinion olt them . February 2, 207 2 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 200b The City of Demon's Management's Discussion and Analysis is designed to ~a} assist the reader in focusing on significant financial issues, fib} provide an overview of the City's financial activity, ~c} identify changes in the City's financial position fits ability to address the next and subsequent years' challenges}, ~d} identify any material deviations from the financial plan the approved budget}, and fie} identify individual fund issues or concerns. Since the Management's Discussion and Analysis ~N1D&A} is designed to focus on the current year's activities, resulting changes and currently known facts, please read it in conjunction with the Transmittal Letter beginning on page i} and the City's financial statements (beginning on page 11}. FINANCIAL ffiGHLIGHTS • The assets of the City exceeded its liabilities at the close of the fiscal year ended September 30, 2006, by $473,495,449 (net assets}. 4f this amount, $121,195,876 unrestricted net assets} may be used to meet the government's ongoing obligations to citizens and creditors. • The City's total net assets increased by $45,766,034, This increase can be attributed to the net revenue of the governmental activities, business-type activities and the contribution of capital assets by developers. • As of September 30, 2006, the City's governmental funds reported combined fund balances of $53,871,114, an increase of $12,205,141 in comparison with the prior fiscal year, due to increased revenue from taxes. Approximately 35% of the $53,871,114, $18,798,728, is available for spending at the government's discretion (unreserved fund balance}. • At the end of the fiscal year, the unreserved and undesignated fund balance for the General Fund was $13,264,027, or 18.84% of budgeted general fund expenditures. • The City's total noncurrent liabilities increased by $7,268,702 during the fiscal year. Z"he primary reason far the increase was the issuance of $8.5 million of revenue bonds, $3.7 million of general obligation bonds, and $12.6 million of certificates of obligation bonds along with the normal pay dawn of general obligation bonds and certificates of obligation bonds of $9.1 million, and the normal pay down of revenue bonds of $12.3 million. OVERVIEW OF THE FINANCIAL STATEMENTS The Management's Discussion and Analysis is intended to serve as an introduction to the City of Denton's basic financial statements. The City's basic f nancial statements comprise three component;: ~ 1 } government- wide financial statements, ~2} fund f nancial statements and ~3} notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Finaneiai Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances in a manner similar to private-sector business. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Dver time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. Thus, revenues and expenses are reported in this statement for same items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but not used vacation leave}. Both the statement of net assets and the statement of activities are prepared using the accrual basis of accounting as opposed to the modif ed accrual basis. In its Statement of Net Assets and the Statement of Activities, the City is divided between two kinds of activities: • Gavernmental activities. Most of the City's basic services are reported here, including police, fire, libraries, development, public services and operations, public works, building inspection, technology 3 CTf Y OF DENTUN, TEXAS MANAGEMENT' S DISCU5SIQN AND ANALYSIS continued) SEPTEMBER 30, 2006 services and general administration, Property taxes, sales taxes and franchise taxes finance most of these activities. • Business-type activities. The City charges a fee to customers to cover the cost of services it provides. The City's utility system (electric, water and wastewater} and solid waste activities are reported here. The government-wide financial statements can be found on pages 1 I -13 of the report. Fund Financial Statements. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. Fund financial statements provide detailed information about the most significant funds, not the City as a whole. Some funds ire required to be established by state law or bond covenants. However, the City Council establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal respo~~sibilities for using certain taxes, grants and other monies. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. • Governmental funds. The majority of the City's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method identified as the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future tc~ finance the City's programs. By comparing information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements, readers may butter understand the long-term impact of the government's near-term f nancing decisions. The relationship or differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities} and governmental funds is detailed in a reconciliation following the fund financial statements. The City of Denton maintains I I individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the general fund, debt service fund and capital projects fund, all of which are considered to be major funds. Data from the other eight governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. • Proprietary funds. The City charges customers for certain services it provides, whether to outside customers or to other units within the City. These services are generally reported in proprietary funds. Proprietary funds are reported in the same manner that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the City's enterprise funds (a component of proprietary funds} are similar to the business-type activities that are reported in the government-wide statements but provide more detail and additional information, such as cash flows. The internal service funds (the other component of proprietary funds} are utilized to report activities that provide supplies a.nd services for the City's other programs and activities, such as the City's municipal warehouse, the City's self insurance fund and equipment maintenance function. Because these services benefit both governmental and business-type functions, they have been included in both the governmental and business-type activities in the government-wide financial statements. The City of Denton maintains four enterprise funds. The City uses enterprise funds to account for its electric, water and wastewater systems and solid waste operations. The funds provide the same type of information as the government-wide financial statements, only in more detail and include some of the internal service fund-type activity. The City considers all enterprise funds to be major funds. 4 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS continued} SEPTEMBER 30, 2006 • Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Agency funds are a component of fiduciary funds. Agency funds differ from other fiduciary funds in that they do not typically involve a formal trust agreement. Agency funds are used to account for situations where the City's role is purely custodial, such as receipt, temporary investment and remittance of fiduciary resources to individuals, private organizations, or other governments. The City maintains three fiduciary funds. The City uses agency funds to account for the collection and payment of the Ciry's payroll and associated liabilities, employee-purchased insurance and other similar relationships. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund Fnancial statements. The notes to the financial statements can be found on pages 29 - 56 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As of September 30, 2006, the City's combined net assets were $473,095,449, of which $138,202,638 can be attributed to governmental activities and $334,892,811 attributed to business-type activities. This analysis focuses on the net assets Table 1 }and changes in net assets Table 2} of the City's governmental and business- type activities. The largest portion of the City's net assets X67.7%} reflects its investment in capital assets ~e~.g., land, building, machinery and equipment}, less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Table 1 Net Assets din thousands Governmental Business-type Activities Activities Total 2006 2045 2006 2005 2006 2005 L~rrent and other assets $ 81,555 $64,709 $246,829 $222,072 $328,384 $286,781 Capital assets 180465 177 493 422,062 402,296 642,527 579.789 Total assets _ 262,020 242,22 6b8,891 624x368 930 911 86b 570 Lori-term llab~lltles outstanding 107,706 100,426 283,310 28G,448 391,016 386,474 ether 11ab11itieS 16111 15 694 50,688 37,8074 66 799 52 768 Total liabilities 123 817 116120 , 333,998 323,1„22 .457,815 439,242 Net assets: Invested in capital assets, 769 net of related debt 107,410 107,112 213,075 193,657 320,485 300, 440 451 30,975 30,864 31,415 31,315 Unrestricted 30 353 18 519 90,543 76726 121196 95 245 Total net assets 1 8 2 126 082 ~ $334.893 $341,247 73 27 29 5 CITY OF DENTON, TEAS MANAGEMENT'S DISCUSSION AND ANALYSIS ~continued~ SEPTEMBER 30, 2006 Gavernmental activities and business-type activities increased the City's net assets by $12,120,086 and $33,645,948, respectively, The key elements of these increases are contained in Table 2. Table 2 Changes in Net Assets in thousands Governmental Business-type Activities Activities Total 200b 204.x.__ _..2_Q~i 2005 Revenue: Program Revenue: Charges for services $13,965 $ 11,999 $221,151 $188,258 $235,116 $200,257 Operating grants and contributions 3,713 2,996 - - 3,713 2,996 Capital grants and contributions 5,537 7,426 10,023 9,809 15,560 17,235 General Revenue: Property tax 30,001 26,679 - - 30,001 26,679 Sales tax 20,343 18,998 - - 20,343 18,998 Franchise tax 16,500 14,250 - - 16,500 14,250 Hotel occupancy tax 1,133 989 - - 1,133 989 Beverage tax 258 216 - - 258 216 Bingo tax 24 25 - - 24 25 Investment Income 1,967 1,149 5,971 3,252 7,938 4,401 Miscellaneous 3 892 4 218 1955 1036 5,847 5 254 Total revenue 97,333 88,945, 239,100 ..202 355 _336,433 291,300 Expenses: General government 22,166 26,676 - - 22,166 26,676 Public safety 36,627 33,643 - - 36,627 33,643 Public works 12,485 11,987 - - 12,485 11,987 Parks and recreation 10,497 9,913 - - 10,497 9,913 Interest on long-term debt 4,333 4,176 - - 4,333 4,176 Electric - - 145,368 132,830 145,365 132,830 Water - - 26,708 22,381 26,7'08 22,381 Wastewater - - 19,028 18,808 19,028 18,808 Solid waste - - 13 455 13 169 13,455 13 169 Total expenses 86,108 86,395,. 204 559 1$71$8 290,667. 273,583 Increase in net assets before transfers 11,225 2,550 34,541 15,167 45,766 17,717 Transfers 895 865 895 865 - - Increase in net assets 12,120 3,415 33,646 14,302 45,7'66 17,717 Net assets at beginning ofyear - 126 482 122 667 301247 286 945 , 427 329 409 612 Net assets at end of year $138,202 $126,082 $334,893 $301,247 $473,095 $427,329 Governmental activities. The most signif cant governmental activities expense was in providing public safety, which incurred expenses of $36,626,635. These expenses were funded by revenues collected from a variety of sources, with the largest being from property taxes, which are $30,000,847 for the fiscal year ended September 30, 2006. The most significant portion of public safety is the cost of personnel., which totaled $28,549,149. Other significant governmental activities expense far the City includes general government, which incurred $22,165,661 in expenses, of which $11,935,769 represented personnel charges. 6 CITY 4F DENT4N, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued} SEPTEMBER 30, 2006 Business-type activities. Business-type activities increased the City's net assets by $33,645,948, accounting for 73.5% of the total growth in the government's net assets. A key element of this increase is capital contributions, emerging as a major revenue source for the Water and Wastewater funds during the current fiscal year, producing $10,022,654 in revenue. Contributions of assets arise from new property development within the City. Charges for services increased $32,893,779 due to various rate increases and increased sales. The expense increase between fiscal years 2005 and 2006 reflects increased costs of production, FINANCIAL ANALYSIS 4F THE GOVERNMENT'S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental fuads. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of resources available to spend. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current f scat year, the City's governmental funds reported a combinE;d ending fund balance of $53.9 million, an increase of $12.2 million in comparison with the prior year. Approximately $18.8 million constitutes unreserved, undesignated fund balance, which is available for spending at the government's discretion. In addition to unreserved, undesignated fund balance, the governmental funds reported unreserved, designated fund balance of $1.5 million. The remainder of the fund balance is reserved to indicate that it is not available for new spending because it has already been committed 1) to purchase or construct capital assets x$32.8 million), 2) to pay debt service x$0.4 million), or 3) to liquidate contracts and purchase orders of the prior period x$0.2 million}. The general fund is the chief operating fund of the City. At September 30, 2006, the ~~nreserved and undesignated fund balance of the general fund was $13.3 million, or 18.$4% of budgeteii general fund expenditures. The unreserved and undesignated fund balance of the general fund increased by $3.5 millian during the current fiscal year due to expenditures being less than anticipated and due to higher than anticipated revenues from return on investment and franchise fees. The entire balance of the capital projects fund is reserved for capital construction and acquisition. At the end of the fiscal year, the capital projects fund has a fund balance of $32.8 million, and increase of $5.2 million. In 2006, the City received $9.5 million of proceeds from the issuance of debt while expending `67.5 million on construction and acquisition. In addition tv 2006 debt proceeds, the capital projects fund received $1.0 million in interest income and $1.4 million of revenue related to gas wells. The debt service fund has a total fund balance of $0.4 million all of which is reserved for the payment of debt service. The overall decrease in the debt service fund balance was $11,388. Proprietary funds. The City's proprietary funds pravide the same type of information found in the government-wide f nancial statements, but in more detail. Unrestricted net assets in Electric, Water, and Wastewater at September 30, 2006 are $62.4 million, $17.6 million, and $5.6 million respectively. Solid Waste has unrestricted net assets of $2.7 millian. The results reflect an increase of unrestricted net assets in each fund, specifically $3.6 million in Electric, $5.1 million in Water, $4.0 million in Wastewater, and $0.3 million in Solid Waste. Dther factors concerning the f nances of these funds have already been addressed in the discussion of the City of Demon's business-type activities. 7 CITY 4F DENTUN, TEXAS MANAGEMENT' S DISCUSSION AND ANALYSIS (continued} SEPTEMBER 30, 2006 GENERAL FUND BUDGETARY HIGHLIGHTS In May 2006, the City Council amended the original budget (Ordinances 2006-142} from $69,921,911 to $70,421,911 to allow for the appropriation of funds for an adjustment of $500,000 for the increase cost of electricity. For fiscal year 2005-06, General Fund actual expenditures (including transfers} on a budget~~ry basis were $68.9 million compared to the amended budget of $70.4 million. The $1.5 million variance was primarily due to reduced personnel costs for the general government. Actual revenue (including transfers} can a budgetary basis was $73.9 minion compared to the original budget of $70.1 million. Of the $3.8 million variance, approximately $2.1 million was due to increased franchise fees and collections of sales taxes were $0.9 million above expectations. Over the years, the Denton City Council has followed a policy of maintaining a general fund balance in order to plan for unforeseen emergencies and place the City in a more favorable position. In 1997-1998, the policy level was increased from 10% to 12.5% of general fund expenditures. In 1999-2000, the percentage was increased to 13% and in 2004-2005 to 13.5%. The 2005-06 budget increased the policy level 1;0 14.0%. The City of Demon's unreserved and undesignated fund balance at September 30, 2006 is $13.3 million, or 18.84% of budgeted expenditures. Below is a listing of the ending unreserved balances for the past three years, as well as f scam year 2005-06 projected and actual. For those years where the actual ending balance has exceeded the pc►licy level, the following year's budget has included utilization of that amount for one-time expenditures. By using the fund balance for one-time expenditures only, the f nancial impact on future budgets is eliminated. Actual Actual Actual Projected Actual 9130103 9130!04 9130105 9130106 9130106 Unreserved balances $5,442,942 $9,504,988 $9,718,368 $9,789,068 $13,264,027 of total budgeted expenditures 13.64% 14.68% 13.98% 14.00% 18.84% Policy level 13.00% 13.00% 13.50% 14.00% 14.00% The largest revenue source of the General Fund's budget was the ad valorem tax. Demon's ad valorem tax rate is comprised of two components. The first is the operations and maintenance component that is used to calculate revenue far the City's General Fund operations. The second component is the debt portion that is used to calculate revenue to pay the City's general debt service obligations. The Denton Central Appraisal District's certified appraisal roll shows an increase of 9.47% over the prior year certified value and 8.26% over the final 2004 value (including supplements}. This increase consisted of $213.3 million of new ~~alue added for 2005 and a $201.1 million increase in value for property on the tax rolls in 2004. The 2005-06 ad valorem tax rate was increased by $0.01 to $.60815 per $100 of valuation, which was used to fund additional police officers as well a 1 % cost of living increase for all employees. CAPITAL ASSET AND DEBT ADMIl~ISTRATION Capital assets. At the end of fiscal year 2006, the City had $602,526,832 invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, bridges and water and sewer lines (see Table 3 on the following page}. This amount represents a net increase (including additions and deductions} of $22,737,443 or 3.9% over the prior fiscal year. S CITY 4F DENTUN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued} SEPTEMBER 30, 2006 Table 3 Capital Assets at Year-end r 1 Governmental Business-type Activities Activities Totals 2006 2005 2006 2005 2006 2005 Land $ 7,830 $ 7,848 $ 9,780 $ 8,467 ~ 17,610 $ 16,315 Landfill improvements - - 549 899 549 899 Buildings and improvements 39,084 36,172 4,171 - 43,255 36,172 Plant, machinery and equipment 28,666 28,660 98,879 100,758 127,545 129,418 Water rights - - 57,795 58,492 57,795 58,492 Infrastructure 95,255 94,285 213,637 203,403 308,892 297,688 Construction in progress 9 630 _ 1 D,528 _ 37,251 30,277 46,881 40,805 Total capital assets $180,465 $177,493 $422,062 $402 296 $602,527 $579,789 This year's major additions included: Descri tion Amount Cooper Creek Lift Station $ 4,265,374 Civic Center Renovation 2,084,674 Emily Fowler Building Renovation 1,966,132 Colorado Street Resurfacing 944,279 Pockrus Substation 771,387 Residential Refuse Carts 723,189 Locus Transformer 624,676 Total $ 11,375,711 Additional information on the City's capital assets can be found in note IV. D. on pages 40 - 42 of this report. Debt. At year-end, the City had $401.4 million in bonds and notes outstanding as compared to $398.1 million at the end of the prior fiscal year, an increase of 0.8%, as shown in Table 4. Table 4 outstanding Debt at Year-end in thousands Governmental Business-type Activities Activities Totals 2006 2005 2006 2005 2006 2005 General obligation bonds $ 58,743 $58,871 $ 3,582 $ 3,904 $ 62,325 $ 62,775 Certificates of obligation 46,700 41,792 11,975 9,233 58,67~~ 51,025 Revenue bonds - - 277,305 281,120 277,305 281,120 Notes - - 3,141 3,141 3,141 3,141 Total $105,443 $100,663 $296,003 $297,398 $401,446 $398,061 These amounts do not include net unamortized premiumsl~discounts~ of $7,837,894 ar net defe~~red gainl~loss} on refunding of x$8,670,432}. 9 CITY qF DENTgN, TEXAS MANAGEMENT'S DISCUSSIgN AND ANALYSIS ~continued~ SEPTEMBER 30, 2006 During the current fiscal year, the City issued debt in July 2006. The new debt resulted primarily from the issuance of $3,695,000 in general obligation bonds, $12,665,000 in certificates of obligation, and $8,515,000 in utility revenue bends. Moody's Investor's Service, Inc. has given the City's General obligation Bonds and the Certificates of Obligation a rating of "Aa3." Standard and Paor's Corporation has given both the City's General Obligation Bonds and Certificates of Obligation an "AA-" rating. The City's Utility Revenue Bonds early "A 1" and "A+" ratings by Moody's and Standard and Poor's respectively. The City is permitted by Article XI, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services including the payment of principal and interest on general obligation long-term debt. The current ratio oftax-supported debt to certified assessed value of all taxable property is 2.19°/j. gther Tong-term liabilities. The City maintains a self insurance program for general liability, auto liability, public officials' liability, errors and omission liability, police professional liability, and workers' compensation. Private insurance companies cover claims for property loss over $50,000 per occurrence and for workers' compensation and liability over $500,000 per occurrence. The City has a reserve for claims and judgments of $2.9 million outstanding at year-end compared with $1.8 million at the end of the prior fiscal year. Other obligations include accrued vacation pay and sick leave. More detailed information about the City's long-term liabilities is presented in Note IV. G., on pages 45 - 50 of this report. EC4NgMIC FACTgRS AND NEXT YEAR'S BUDGETS AND RATES All indicators are pointing tv continued growth of the Denton community, and the 2006-07 Budget includes the resources to provide City services to meet demands. The 2006-07 budget includes a $.018371$100 valuation increase in the ad valorem tax rate to provide enhanced services for police, streets, code enforcement and library services. Sales tax revenue is projected to increase 2.5%, and the general fund baiance reserve has been increased to 14.5% of budgeted expenditures. The 2006-07 budget includes no base rate increases for electric customers. Increased attention to water conservation has precipitated a 2% increase in retail water rates for high volume water customer~~~, predominantly fvr irrigation. No base rates changes are proposed for wastewater customers, while residential solid waste customer rates will receive minor rate adjustments and commercial solid waste rates will increase 4%. REQUESTS FqR INF4RMATIgN This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Denton Finance Department, 215 E. McKinney, Denton, Texas 76201. 10  I CITY OF DENTON, TEXAS Exhibit I STATEMENT OF NET ASSETS SEPTEMBER 30, 2006 Prima Government Governmental Business-type Activities Activities Total ASSETS: Current assets: Cash, cash equivalents and investments, at fair value $ 35,164,460 $ 100,005,402 $ 135,169,862 Receivables, net of allowances: Taxes 4,151,426 - 4,151,426 Accounts - 13,108,014 13,108,014 Unbilled utility service - 9,220,108 9,220,108 Interest 731,081 735,014 1,46b,095 Other 2,90b,655 3,840 2,910,495 Internal balances (5,768,778) 5,768,778 Due from other governments 1,791,218 - 1,791,218 Inventory 4,033,346 - 4,033,346 Prepaid items 30,746 12,567 43,313 Deferred debt issuance costs 601005 lb7 445 7b8,4S0 Total current assets 43 641159 129 021168 172 bbl 27 Noncurrent assets: Restricted assets: Cash, cash equivalents and investments, at fair value 35,915,679 114,635,101 150,550,7811 Escrow deposits 1,934,7bb 281,700 2,21b,466 Accrued interest 9,b89 907,b28 917,317 Deferred debt issuance costs 54,091 1,983,197 2,037,288 Capital assets not being depreciated: Land 7,829,494 9,779,660 17,609,154 Construction in progress 9,630,Ob3 37,250,781 4b,880,844 Capital assets, net of accumulated depreciation: Buildings 39,084,441 4,171,116 43,255,557 Plant, machinery and equipment 28,665,707 98,879,073 127,544,7$0 Infrastructure 95,254,999 213,636,790 308,891,789 Landfill improvements - 549,290 549,290 Water rights - 57 795 418 57,795,418 Total noncurrent assets 218 378 929 539 869 754 758 48 683 Total assets 2b2 020 088 bb8 890 922 _ 930,911010 LIABILITIES: Current liabilities: Accounts payable 3,007,119 23,920,887 26,928,OOb Retainage payable 84,657 - 84,b57 Deposits - 3,786,395 3,78b,395 Accrued interest 653,690 - b53,690 Due to other governments 39b - 39b Noncurrent liabilities due within one year 11,b66,375 17,089,747 28,75b,122 Other liabilities 65b,690 - 656,690 Unearned revenue 20,218 - 20,218 Payable from restricted assets: Accounts payable 21,881 958,800 980,b81 Retainage payable - 251,020 251,020 Accrued interest - 4 b8101b 4,681,O1b Total current liabilities lb 111026 50 b87 865 bb 798 891 Noncurrent liabilities: Noncurrent liabilities due in more than one year 107 706 424 283 310 24b _ 391,016,670 Total noncurrent liabilities 107 706 424 283,310,246_ 391,016,670 Total liabilities 123,817,450 333 998111 457 815 561 NET ASSETS: Invested in capital assets, net of related debt 107,410,289 213,074,701 320,484,990 Restricted: Restricted for debt service 439,b58 29,190,154 29,629,81.2 Restricted for capital acquisition - 1,784,771 1,784,771 Unrestricted 30 352 691 90 843185 121195 876 Total net assets 138 202 638 334 92 811 $ 473,09..449 The notes to the basic financial statements are an integral part of this statement. 11 CITY OF DENTUN, TEXAS STATEMENT OF ACTIVITIES FUR THE YEAR ENDED SEPTEMBER 30, 2006 Pro ram Revenues Operating Capital Charges far Grants and Grants and FunctionslPro rams Eg eases Services Contributions Contributions Primary government: Governmental activities: General government $ 22,165,661 $ 3,904,941, $ 2,341,699 $ 30,359 Public safety 36,626,635 6,023,100 1,170,441 - PubGc works 12,485,281 802,711 - 5,506,427 Parks and recreation 10,497,241 3,234,347 200,677 - Interest expense 4,333,428 - - Total governmental activities 86,108,246 13,965,099 3,712,817 5,536,786 Business-type activities: Electric system 145,368,132 149,419,800 - - Watersystem 26,708,095 33,436,651 - 3,625,072 Wastewater system 19,027,926 23,670,458 - 6,397,582 Solid waste 13,454,556 14,624,132 - - Total business-type activities 204,558,709 221,151,041 - 10,022,654^ Total primary government $ 290,666,955_ S 235116140 $ 3 712 817 $ 15,559 440 General revenues: Taxes: Property tag Sales tag Franchise tag Hotel occupancy tag Beverage tag Bingo tag Investment income Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets at beginning of year Net assets at end of year The notes to the basic financial statements are an integral part of this statement. 12 Exhibit II Net (Expense) Revenue and Changes in Net Assets Prima Government Governmental Business-type Activities Activities Total $ (15,888,662) $ - $ (15,888,662) (29,433,094) - (29,433,094} (6,176,143} - (d,17d,143) {7,Od2,217) - (7,Od2,217) (4,333,42 - 4,333,428 62,893,544 - 62,893,544 - 4,051,668 4,051,668 - 10,353,628 10,353,628 - 11,040,114 11,040,114 - 1,169,574 1,169,576_ - 26,614,986 26,614,986 (62,893,544 24,614,984 36,278,558 30,000,847 - 30,000,847 20,343,413 - 20,343,413 14,499,994 - 14,499,994 1,132,500 - 1,132,500 257,950 - 257,950 24,260 - 24,260 1,967,473 7,298,870 9,266,343 3,892,087 627,198 4,519,285 895,104 _ (895,106 - 75,013,630 7,030,962 82,044,592 12,120,086 33,445,948 45,766,034 126,082,552 301,244,863 427,329,415 $ 138 202 638 S 334,892,811 $ 473 095 449 13 CITY OF DENTON, TEXAS Exhibit III BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2006 Other Total General Capital Governmental Governmental Fund Debt Service Pra~ects Funds _ Funds ASSETS: Cash, cash equiva{eats and investments, at fair value $ 11,260,085 $ 402,739 $ 32,494,877 $ 5,747,685 $ 49,905,386 Receivables, net of allowances far uncollectibles: Taxes 3,90b,675 144,751 - - 4,151,426 Accrued interest 209,625 - 396,086 35,328 641,039 Other 2,130,327 - 472,526 190,275 2,793,128 Interfund receivables 1,440,895 - 180,902 765,581 2,387,378 Due from other governments 522,658 - - 1.,268,560 1,791,218 Total assets S 19.470~~ S ..647490 ,~~~4Z2. _ LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable 1,383,051 - 471,129 510,083 2,364,263 Retaina~e payable - - 84,657 - 84,657 Interfund payables 1,357,762 - - 1,163,640 2,521,402 Due to other governments 396 - - - 396 Other liabilities 644,683 - - 12,007 656,690 Deferred revenues 1,028,258 207,832. 147965 786,99$__ _ 1,171,053 Total liabilities 4 414150 207 832 703 751 2 472 728 7,798,461.. FUND BALANCES: Reserved far: Debt service - 439,658 - - 439,658 Encumbrances 242,088 - - - 242,088 Capital projects - - 32,840,640 - 32,8411,640 Unreserved, designated for, reported in: Sales tag contingency 500,000 - - - 500,000 Self insurance 500,000 - - - 500,000 Future capital projects 500,000 - - - 500,000 Code enforcement 50,000 - - - 50,000 Unreserved, undesignated reported in: General fund 13,264,027 - ~ - 13,264,027 Special revenue funds - - - 5 534 701 5,534,7Q1_ Total fund balances 15,056,115 439 658 32,840 644 5 534 701 53,871,114_ Total liabilities and fund balances ~ 19~470~~ S 647.490 _ _ The notes to the basic financial statements are an integral part of this statement. 14 CITY OF DENTQN, TEI~AS Exhibit N RECUNCILIATIQN OF THE BALANCE SHEET QF GUVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS AS OF SEPTEMBER 30, 2006 Total fund balances -governmental funds (Exhibit ITI) $ 53,871,114 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. 180,464,704 Certain receivables will be collected next year but are not available soon enough to pay for the current period's expenditures and therefore are reported as deferred revenues in the funds. 2,150,835 An internal charge to business-type activities is not recorded at the fund level. (2,468,226) Several internal service funds are used by the City's management. The assets and liabilities of the internal service funds are included with governmental activities. Total assets of internal service funds $ 51,202,395 Less: Capital assets reported above (23,382,719) Less: Total liabilities of internal service funds (20,625,031) Liabilities reported below 13,428,443 20,623,088 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year-end consist of: General obligation bonds payable $ (58,742,900) Certificates of obligation payable (46,700,000) Less: Deferred charge far issuance costs 567,013 Arbitrage payable (25,968) Accrued interest on the bonds (653,690) Leases payable (3,559,742) Compensated absences X7,323,590) ~ (116,438,877) Total net assets of governmental activities (Exhibit i) $ 138,202,638 The notes to the basic financial statements are an integral part of this statement. 15 CITY OF DENTON, TEXAS Exhibit V STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GUVERNIVIENTAL FUNDS FUR THE YEAR ENDED SEPTEMBER 30, 2006 Other Total General Capital Governmental Governmental Fund Debt Service Pro'ects Funds Funds REVENUES: Taxes $ 41,906,626 $ 8,738,654 $ - $ 1,132,500 $ 51,777,780 Licenses and permits 1,383,169 - - - 1,383,169 Franchise fees 16,499,994 - - - 16,499,994 Fines and forfeitures 4,639,922 - - - 4,b39,922 Fees for services 3,661,522 - - 3,118,382 6,779,904 Investment revenue 761,159 - 1,045,445 160,869 1,967,473 Intergovernmental 541,968 - 332,235 4,379,855 5,254,058 Miscellaneous ~ 447,2.00 _ - ].,676,555 1301031 _ 3 424 786 Total revenues 69,841,564 8,738,654 3054 235 10,092637 _ 91,727,086_ EXPENDITURES: Current; General government 16,304,027 - 56,908 4,178,071 20,539,006 Public safety 35,073,613 - - 739,716 35,813,329 Public works 4,950,734 - - 255,490 5,206,224 Parks and recreation 6,817,078 - - 2,731,338 9,548,416 Capital outlay 281,258 - 7,571,510 1,203,334 9,056,102 Debt service: Principal retirement - 5,914,819 - - 5,914,819 Bond issuance casts - - 70,745 - 70,745 Interest and other charges - 4,210!628 _ - - _ 4 210 628 Total expenditures 63 426 710 10,125,447 7 699163 9,107,949 _ 90 359 69 Excess (deficiency) of revenues over sunder} expenditures ~ 6,414,850_. 1386 793 4 644 928 984 688 _ 1367 817 OTIIER FINANCING SOURCES (USES}; Issuance of long-term debt - - 9,550,000 - 9,550,000 Premium an debt issuance - - 49,644 - 49,644 Transfers in 579,878 1,375,405 933,457 1,206,278 4,095,018 Transfers ou# 1867 799 718 785 270 754 _ 2 857 338 Total other financing sources (uses) 1287 921 __1.375,405 9,814,316. _ 935,524 ~ 10,837,324. , Net change in fund balances 5,126,929 X11,388} 5,169,388 1,920,212 12,205,141. Fund balances at beginning of year _ 9,929,186 _ 451,04E 27 671252 3 614 489. 41665 973 Fund balances at end of year $ 15,056.115 439 658 2 840 64 5 34 701 53 871114 The notes to the basic f nancial statements are an integral part of this statement. 16 CITY OF DENTON, TEXAS Exhibit VI RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2006 Net change in fund balances -total governmental funds (Exhibit V} $ 12,205,141 Amounts reported for governmental activities in the statement of activities are different because: Governmental foods report capital outlays as expenditures. However, io the statement of activities the cast of those asses is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation and retirement of assets ($11,748,927=$15,830,638 - $4,081,711 internal service portion} exceeded capital outlays ($9,056,102} ifl the current period. {2,692,825) Revenues in the statement of activifies that da not provide current financial resources are not reported as revenues in the funds. Such amounts arE recorded in the funds when considered available. 302,985 The net effect of various miscellaneous transactions involving capital asset` (i.e., sales, trade-ins and donations} is to increas net assets. 5,251,153 Bond proceeds provide current Bnancial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets, Repayment of band principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount by which proceeds exceeded payments, (3,635,181} Fund-level financials report costs related to bonds as expenditures; however, these are deferred and amortized nn the government-wide financials (109,757] Certain expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (399,5'99} Internal service funds are used by management to charge the casts of certain activities, such as insurance and telecommunications, to individual funds. A portion of the net revenue (expense) of certain internal service funds h reported with governmental activities. The amount reported with business-type activities is $1,139,720. 1,198,166 Change in net assets of governmental activities (Exhibit II) S 12,120,Q86 The notes to the basic f nancial statements are an integral part of this statement. ~,7 14; ,r ''ie ':ji S~ 4 ~ / III I I ~L, 1 III %~Y ~ yy Y r i 1' - 18 CITY OF DENTUN, TEXAS Exhibit VII STATEMENT OF REVENUES, EXPENDTTURES AND CHANGES IN FUND BALANCE - BUDGET TU ACTUAL GENERAL FUND FUR THE YEAR ENDED SEPTEMBER 30, 2006 Variance with Adjustments - Actual on a Final Budget - Budgeted Amounts Actual Budgetary Budgetary Positive Uriginal Final Amounts Basis Basis (Negative) REVENUES: Taxes $ 40,781,226 $ 40,781,226 S 41,906,626 $ - $ 41,906,626 $ 1,125,400 Licenses and permits 1,504,746 1,504,746 1,383,169 - 1,383,169 (121,577} Franchise fees 14,381,197 14,381,197 16,499,994 - 16,499,994 2,118,797 Fines and forfeitures 4,118,800 4,118,800 4,639,922 - 4,639,922 521,122 Fees for services 3,433,366 3,433,366 3,661,522 - 3,661,522 228,156 Investment revenue 515,000 515,000 761,159 - 761,159 246,159 Intergovernmental 4,035,122 4,035,122 541,968 3,566,061 4,108,1129 72,907 Miscellaneous 586,358 586,358 447,200 - 447,200 (139,158) Total revenues 69,355,815 b9,355,815 69,841,560 3,566,061 73,407,621 4,051,806 EXPENDITURES: General government 21,321,945 21,821,945 16,304,027 3,566,061 19,870,(188 1,951,857 Public safety 35,508,132 35,508,132 35,073,613 - 35,073,ti13 434,519 Public works 5,454,931 5,454,931 4,950,734 - 4,950,734 504,197 Parka and recreation 6,937,458 6,937,458 6,81.7,078 - 6,817,07$ 1.20,380 Capital outlay 315,393 315,393 281,258 - 281,258 34,135 Total expendi#ures 69,537,859 70,037,859 63,426,710 3,566,061 66,992,771 3,045,088 Excess (deficiency) of revenues over expenditures (182,044) (682,044) 6,414,850 - b,414,850 7,096,894 OTHER FINANCING SUURCES (USES}: Transfer in 786,779 786,779 579,878 - 579,878 (206,901} Transfers out (384,052} (384,052} (1,867,799} - (1,867,799) (1,483,747) Total other financing sources (uses) 402,727 402,727 (1,287,921) - (1,287,921) (1,690,b48} Excess (deficiency) of revenues and other sources over (under) expenditures and other uses 220,683 (279,317) 5,126,929 - 5,126,929 5,406,246 Fund balances at beginning of year 9,929,186 9,929,186 9,929,186 - 9,929,186 - Fund balance at end of year $10,149,869 $ 9,649,869 $ 15,056,115 $ - $ 15,056,115 $ 5,406,246 Adjustments -Budgetary Basis include $3,566,061 of expenditures allocated to and reimbursed by ather funds. These expenditures are recorded in the other funds' financials. The notes to the basic financial statements are an integral part of this statement. 19 CITY OF DENTON, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS AS OF SEPTEMBER 30, 2006 Business-type Activities -Enterprise Funds Electric Water Wastewater Solid S stem System _ S stem Waste ASSETS: Current assets: Cash, cash equivalents and investments, at fair value $ 70,857,635 $ 19,237,037 $ 3,245,896 $ 6,664,834 Receivables, net of allowances: Accounts 9,545,940 1,633,218 1,130,241 798,615 Unbilled utility service 6,425,619 1,182,883 969,777 b41,829 Accrued interest 445,1.55 200,979 44,450 44,430 Other - 3,840 - - Interfund receivables 1,380,283 381,847 230,014 129,645 Merchandise inventory - - - - Prepaid items 953 2,170 9,444 - Deferreddebt issuance costs 55,060 63,082 38,084 11,219 Total current assets 88,710,645 22,705,056 5,667,906 8,290,572 Noncurrent assets: Restricted assets: Cash, cash equivalents and investments, at fair value 38,634,645 43,259,867 27,396,36d 5,344,223 Escrow deposit 134,579 88,765 58,356 - Accrued interest 369,95b 300,182 178,615 58,875 Interfund receivables 2,429,896 186,597 98,113 41,662 Deferred debt issuance casts 673,908 812,446 390,586 106,257 Capital assets, net of accumulated depreciation 91,242,624 181,628,246 133,686,196 ~15,5a5,062 Total noncurrent assets 133,485,b08 226,276,103 161,808,232 21,056,079 Total assets 222,19d,253 248,981,159 167,476,138 29,346,651 LIABILITIES: Current liabilities: Accounts payable 23,203,393 300,551 199,299 217,644 Claims payable - - - - Campensatedabsences payable 435,578 449,821 257,094 236,862 Leases payable - - Deposits 3,436,143 273,174 4,029 73,049 Accrued interest - - - Interfund payables 6T,198 411,264 77,984 1,020,593 Payable from restricted assets: Accounts payable 168,023 531,307 61,190 198,280 Retainage payable - 151,107 76,307 23,6D6 Accrued interest 1,355,557 2,180,756 1,044,224 100,479 Interfund payables 466 - - - Revenue and certificate and general obligation bonds 4,889,449 5,298,423 3,586,869 1,935,651 Total current liabilities paid from restricted assets 6,413,495 8,161,593 4;768,590 ~ 2,258,016 Total current liabilities 33,555,807 9,596,403 5,306,996 _ 3,806,164 20 Ezhibit VIII Governmental Activities - Total Internal Enterprise Service Funds Funds $ 100,005,402 $ 18,156,690 13,108,014 - 9,220,108 - 735,014 90,042 3,840 113,527 2,121,789 370,110 - 4,033,346 12,567 30,746 167,445 8,606 125,374,179 22,803,067 114,635,101 3,018,063 281,700 1,934,766 907,628 9,689 2,756,268 - 1,983,197 54,091 412,062,128 23,382,719 542,626,022 28,399,328 668,000,101 51,201,395 23,920,887 642,856 - 453,750 1,379,355 1$7,471 - 935,736 3,786,395 - - 58,950 1,577,039 3,536,638 958,800 21,881 251,020 - 4,681,016 - 466 - 15,710,392 1,395,514 21,601,694 1,417,395 52,265,370 7,132,796 (continued} Z1 CITY OF DENTUN, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS AS 4F SEPTEMBER 30, 2006 Business-type Activities -Enterprise Funds Electric Water Wastewater Solid System System System Waste Noncurrent liabilities: Leases payable S - $ ~ - ~ - Payablefrom restricted assets: Arbitrage payable 2,642 513 1,950 - General obligation bonds payable - - - 3,130,594 Certificates ofobligation - - - 10,515,386 Revenue bands payable, net of premiumldiscount 81,321,329 128,993,752 60,609,950 - Deferred amount an refunding (2,338,073) (4,515,455) (1,305,398) (118,301} Notes payable - 3,141,212 - - Compensatedabsences payable 31,780 44,028 28,675 76,244 Claims payable - - - - Landfill closurelpostclosure costs - - - 3,689,408 Total noncurrent liabilities 79,017,678 127,664,060 59,335,177 17,293,331 Total liabilities 112,573,485 137,260,463 64,642,173 21,099,495 NET ASSETS: Invested in capital assets, net of related debt 36,021,512 81,357,474 90,192,282 5,503,433 Restricted for debt service 11,187,124 12,021,875 5,981,155 - Restricted for capital acquisition - 751,714 1,033,057 - Unrestricted 62,414,132 17,589,633 5,627,471 2,743,723 Total net assets S 109 622 768 $111720 696 S 102 833 965 $ 8 247156 Adjustment to reflect inclusion of internal service fund activities related to enterprise funds. Net assets ofbusiness-type activities (E~hibit i) The Hates to the basic financial statements are an integral part of this statement, Z2 Exhibit VII[ Governmental Activities - Total Internal Enterprise Service Funds Funds $ - $ 2,624,006 5,105 - 3,130,594 4,091 10,515,38b 8,196,434 270,925,031 - (8,277,227) - 3,141,222 - 180,727 26,241 - 2,541,463 3,689,408 - 283,310,246 13,392,235 335,575,616 20,625,031 213,074,701 16,867,439 29,190,154 - 1,784,771 - 88,374,959 13,709,925 $ 332,424,585 $ 30:577,364 2,468,226 $ 334,892,811 (concluded) 23 CITY OF DENTON, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FUR THE YEAR ENDED SEPTEMBER 30, 2006 Business-type Activities -Enterprise Funds Electric Water Wastewater Solid System System System - Waste OPERATING REVENUES: Utility services $ 142,984,230 $ 25,708,728 $ 21,045,736 $ 14,572,633 Charges for goods and services - - - " Other fees b,435,570 3,782,958 1,002,331 51,499 Miscellaneous - - 11,007 _ - Tataloperating revenues 149,419,800 29,491,686 22,059,074 _ 14,b24,132 4PERATIlVG EXPENSES: Operating expenses before depreciation 137,989,588 16,124,174 12,424,105 11,729,1411 Depreciation 4,074,474 4,391,403 3,837,806 _ 1,513,700 Total operating expenses 142,064,062 20,515,577 1b,261,911 13,242,840 Operating income 7,355,738 8,976,109 5,797,163 ~ 1,381,292 NUN-OPERATING REVENUES (EXPENSES): Investment revenue 3,747,451 2,193,478 1,120,627 237,314 Interest expense and fiscal charges (3,607,0611} (b,481,247) (3,007,285} (518,447) Impact fee revenue - 3,944,965 1,611,384 - Gain (loss) on disposal of capital assets (43,367) 454,203 45,537 - Uthernon-operating revenues (expenses} - 160,753 10,472 - Total non-operating revenues (expenses) 97,024 272,152 (219,665) _ (281,1.33) Income before contributions and transfers 7,452,762 9,248,261 5,577,498 1,1011,159 CONTRIBUTIONS AND TRANSFERS: Capital contributions - 3,625,072 6,397,582 - Transfers in - - 124 - Transfersout (63,617} (103,776} (680,414} (47,423} Total contributions and transfers (63,617} 3,521,296 5,717,292 (47,423} Change in net assets 7,389,145 12,769,557 11,294,790 1,052,73b Total net assets at beginning of year 102,233,623 98,951,139 91,539,175 7,194,420 Total net assets at end of year $ 109,b22,7b8 $ 111,720,696 $ 102,833,965 $ 8,247,156 Change in fund net assets of proprietary funds Adjustment to reflect inclusion of interra! service fund activities related to enterpirise funds. Change in net assets ofbusiness-type activities (Exhibit II} The notes to the basic financial statements are an integral part of this statement. Z4 Eg6ibit IX Governmental Activities - Total Internal Enterprise Service Funds Funds $ 204,311,327 $ - - 25,149,915 11,272,358 - 11,007 208,255 215,594,692 25,358,170 178,267,D07 19,310,280 13,817,383 4,081,711 192,084,390 23,391,991 23,510,302 1,966,179 7,298,870 661,043 (13,b14,039) (454,336} 5,556,349 - 456,373 451,329 170,825 (3,384) (131,622) 654,652 23,378,680 2,620,831 10,022,654 59,629 124 251,645 (895,230) (594,219) 9,127,548 (282,945) 32,506,228 2,337,886 299,918,357 28,239,478 $ 332,424,585 $ 30,577,364 32,506,228 1,139,720 $ 33,645,948 Z5 CITY OF DENTON, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2006 Business- a Activities - Ente rise Funds Electric Water Wastewater System System ~ System . _ CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers ~ $ 148,261,332 ' $ 29,649,621 $ 21,821,225 Cash paid to employees far services (5,187,592) (8,693,107) {4,697,507) Cash paid to suppliers 114 40130 6 875 234 8169 74 Net cash provided by operating activities 28,733,610 14 081280 8 953 71 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers out (63,617} {103,776} (680,414} Transfers in - - ~ 124 Net cash used by noncapital financing activities: (63 617 103 77 b80 290 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital contributions - - - Principal payments on capital debt (3,625,692} (4,684,132} {3,277,765} Interest and f seal charges (3,637,945) (6,530,745) (3,037,423) Principal payments under capital lease obligation - - - Proceedsfromissuance ofcapital debt 8,026,750 - - Proceeds from impact fees - 3,944,965 1,611,384 Proceeds from sale of capital assets - 454,203 45,537 Acquisition and construction of capital assets 10 999 420 7110 53 ~ 3 268 499 Net cash used by capital financing activities 10 36 0 13 926 246 7 926 766 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale and maturities of investment securities 27,703,032 26,508,065 11,453,389 Purchase of investment securities (42,140,000} {29,455,000} (12,495,000) Interest received on investments 3 919 358 2,038,765 1,062663 Net cash provided (used) by investing activities 10 517 610 908170 ~ 21,052__ Net increase (decrease} in cash and cash equivalents 7,916,076 (856,912} 367,967 Cash and cash equivalents at beginning of year 2,437,305 2,207,228 1,25D,463 Cash and cash equivalents at end of year 10,353,381 1,350,316 1,618,430 Inves#ments, at fair value (Note TV.A~.) 99,138,899_ 61146 588 _ 29 003 687 Cash, cash equivalents and investments, at fair value $ 109.492,280 62 496 9 4 ~ 0 22117 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income $ 7,355,738 _ $ 8 976109 $ 5 797163 Adjustments: Depreciation expense 4,474,474 4,391,403 3,837,806 Decrease (Increase) in receivables (702,557) 44,953 (225,490) Decrease (Increase) in interfund receivables (455,911} 112,983 (12,359} Decrease in inventories - - Decrease(Increase} in prepaid items 7,278,909 (2,170) (9,444} Increase (Decrease) in accounts payable 11,161,173 480,875 (100,119} Increase in compensated absences payable 68,121 91,925 25,736 Increase in closurelpostclosureliability - - Increase(Decrease} in interfund payables (46,337 14 798 _ 359 22 Total adjustments 21z377,872.~ 5105171 ~ 3156 808 Net cash provided by operating activities $ 28,733,b10 $ 14 081280 S 8 95, 3971 NONCASH CAPITAL, INVESTING AND FINANCING ACTIVITIES: Noncash activity during the year consisted of contributed capital assets far the Water and Wastewater funds in the amount of $3,625,072 and $6,397,582, respectively; the change in the fair value of investments of ($11,058), $410,d94, $321,422 and $36,790 far the Electric, Water, Was#ewater and Solid Waste funds, respectively; the addition o1 a capital lease in the Internal Service funds of $2,365,000; and the change in fair value of investments of ($8,756) for the Internal Service funds. The pates to the basic financial statements are an integral part of this statement. 26 Exhibit X Governmental Activities Total Internal Solid Enterprise Service Waste Funds Funds $ 14,207,080 $ 213,939,258 $ 25,52b,466 (5,427,047} (24,005,253} (3,610,233) 4864 780 (134,249,891) 14 912 362 3 915 253 55,684,114 7,003,871__ (47,423) (895,230) (594,219) . 124 251,645_ 47 423 (895,106} 342 574 - - 59,629 2,420,749 (9,166,840} (1,161,564) (487,440} (13,693,553} (462,799) _ - (2,287,515) _ 8,026,750 2,307,012 _ 5,556,349 - _ 499,740 - 2 074 620 (23,453,076) 1678 836 1,41311 (32,230,630) 3 224 073 5,448,998 71,113,484 7,349,415 (8,744,000) (92,834,D0(1} (9,900,000} 186 492 7,207,278 626 052 ~3z108_ ,510) (14,513,238 1924 533 618,009 8,045,140 1,512,691 747,097 6,642,093 1,331,220 1,365,106 14,687,233 2,843,911 10 643 951 199,933,125 18 330 842 12 0 0 7 $ 214,620,38 . 21174 7 $ 1381292 $ 23,510,302 $ 1,9d6,179 1,513,704 13,817,383 4,081,711 (372,483) (1,255,577) {29,307) (44,569} (399,856) 197,603 - - 385,521 _ 7,267,295 (8,419} 160,737 11,702,666 1,187,779 42,041 227,823 9,364 277,781 277,781 - 956,754 536,297 (786,560 2,533,961 32,173,812 _ 5,037~69Z $ 3,915,253 $ 55,484,114 $ 7,003,871 27 CITY OF DENTON, TEXAS Ezhibit XI STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS AS OF SEPTEMBER 30, 2006 Total Agency Funds ASSETS: Cash, cash equivalents and investments, at fair value $ 1,326,923 Uther receivables 76,393 Total assets $ 1,403,316 LIABILITIES: Accounts payable $ 1,403,316 Totalliabili#ies $ 1,4x3,316 The notes to the basic financial statements are an integral part vfthis statement. 28 CITY OF DENTON, TEXAS NOTES T4 BASIC FINANCIAL STATEMENTS SEPTEMBER 34, 2446 E S Y 4F SIGNIFICANT ACCOUNTING POLICIES The City of Denton is a municipal corporation governed by an elected mayor and six-member council. The City receives funding from state and federal government sources and must comply with the requirements of these funding source entities. However, the City is not included in any other governmental "reporting entity," as defined in pronouncements by the Governmental Accounting Standards Board GASB} Statement No. 14, "The Financial Reporting Entity," since council members are elected by the public and have decision-making authority, the authority to levy taxes, the power to designate management, the ability to significantly influence operations, and primary accountability for fiscal matters, During fiscal year 2o0G, the Ciry implemented GASB Statement 44, "Economic Condition :Reporting: the Statistical Section", which requires the City to disclose f ve categories of information: financial trends, revenue capacity, debt capacity, demographic and economic and operating information. The overall obi ectives of this Statement are to improve the understandability and usefulness of the statistical section information. The City also implemented GASB Statement 42, "Accounting for Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries." The financial statements of the City have been prepared to conform to U.S. generally accep~~ed accounting principles (GAAP} as applicable to state and local governments. GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies. A. Reporting entity An elected mayor and asix-member council govern the City. As required by U.S. generally accepted accounting principles, these financial statements present the City the primary government} and its component units, which are entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City's operations, and so data from these units are combined with data of the primary government. A discretely presented component unit, on the other hand, is reported in a separate column in the government-wide financial statements to emphasize it is legally separate from the City, The City had no discretely presented or blended component units at September 30, 200b. B. Government-wide and fund financial statements The basic financial statements include both government-wide abased on the City as a whole} and fund financial statements. The reporting focus is either the City as a whole government-wide financial statements} or major individual funds within the fund financial statements}. The government-wide financial staterents ~i.e., the statement of net assets and the statement of activities} report information on all non-f duciary activities of the primary government. For the most part, the effect of inter-fund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from businessYtype activities, which rely to a significant extent on fees and charges for support. The government-wide statement of activities demonstrates the degree to which the direct expenses of a functional category public safety, public works, etc.} or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include ~l}charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment; (2} grants and contributions that are restricted to meeting operational requirements of a particular function or segment; and ~3}grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. The net cast (by function or business-type activity) is normally covered by general revenue ~~property taxes, sales taxes, franchise fees, intergovernmental revenues, interest income, and the like}. 29 CITY ~F DENT4N, TEXAS NUTES T4 BASIC FINANCIAL STATEMENTS (continued} SEPTEMBER 30, 2046 Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide f nancial statements. Major governmental funds and major enterprise funds are reported as separate columns in the fund financial statements. GASB Statement No. 34 sets forth minimum criteria percentage of assets, liabilities, revenues or expenditureslex~►enses of either fund category and for the governmental and enterprise funds combined} for the determination cif major funds. Non-major funds are combined in a column in the fund financial statements. Internal service funds, which traditionally provide services primarily to other funds of the g+avernment, are presented in summary form as part of the proprietary fund financial statements. The financial statements of internal service funds are allocated abased on the percentage of goods or services provided} between the governmental and business-type activities when presented at the government-wide level. The City's fiduciary funds are presented in the fund financial statements. Since by definition these assets are being held for the benefit of a third party bother local governments, individuals, etc.) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements. The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the f scal period. The focus of the fund financial statements is on the major individual funds of the governmental and business-type categories, as well as the 'fiduciary funds Eby category}. Each presentation provides valuable information that can be analyzed and compG~red to enhance the usefulness of the information. C, Measurement focus, bans of accounting and financial statement presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund statements. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash fllows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund-level financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible wi~rhin the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, t:he government considers revenues to be available if they are collected within 60 days of the end of the currer,~it fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property tax, franchise fees, sales tax and other taxes associated with the current fiscal period are all susceptible to accrual and so have been recognized as revenues of the current fiscal period. All of the other revenue items are considered to be measurable and available only when cash is received. The City reports the following major governmental funds: The general fund is the City's primary operating fund. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this und. From the fund are paid general operating costs, fixed charges and capital improvement costs that are not paid through other funds. The debt service fund accounts for the payment of principal and interest on general long-term liabilities, paid primarily by taxes levied by the City, and for payment of principal and interest on capi~~al leases in the governmental funds, 30 CITY OF DENTIN, TEXAS NDTES T4 BASIC FINANCIAL STATEMENTS ~conlinued} SEPTEMBER 30, 2006 The capital projects fund accounts for financial resources used for the acquisition or construction of major capital facilities being f nanced from bond proceeds, capital contributions, or transfers from other funds, other than those recorded in the enterprise funds and internal service funds. Other governmental funds is a summarization of all of the non-major governmental funds. The City reports the following major proprietary funds: The City utility system is made up of three separate funds as follows; The electric fund accounts for electrical utility services to the residents and commercial establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The water fund accounts for water utility services to the residents and commercial establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The wastewater fund accounts for sewer and storm water services to the residents aJ~d commercial establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The City provides additional services through the following fund: The solid waste fund accounts for the provision of solid waste services to the residents of the City. Activities necessary to provide such services are accounted for in the fund, including, but: not limited to, administration, operations, maintenance, finance and related debt service. The City additionally reports the fallowing funds: Internal service funds are used to account for the financing of materials and services provided by one department of the City to other departments of the City on acost-reimbursement basis. Agency funds are used to account for the payment of payroll, employee insurance, and other similar liabilities. The City holds the assets in an agency capacity for individuals, private organizations or other governments. Private-sector standards of accounting and financial reporting has issued by the Financial Accounting Standards Board} issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the GASB. Governments also have the option of following subsequent private-sector guidance for business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private sector guidance. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's electric, water, wastewater and solid waste funds are charges to customers for services. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. For deferred charges, the City recognizes, as an asset or a liability, the difference between the electric fund's energy cost adjustment ~ECA} revenue collected and related costs, incompliance with Financial Accounting Standards Board Statement No. 71. When both restricted and unrestricted resources are available for use, it is the City's policy tc~ use restricted resources first, and then unrestricted resources as they are needed. 31 CITY 4F DENTUN, TEXAS NOTES T4 BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 D. Assets, liabilities and net assets or equity 1. Cash cash e uivalents and investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments are carried at fair market value or cost, if maturities are one year or less. Fair market value is determined as the price at which two willing parties would complete an exchange. Interest earned on investments is recorded in the funds in which the investments are recorded. 2. Receivables outstanding balances between funds are reported as "interfund receivableslpayables." Any residual balances between governmental activities and business-type activities are reported in the government-wide statements as "internal balances." Trade and property tax receivables are shown net of an allowance for uncollectibles. The City accrues amounts for utility services provided in September, but not billed at September 30, 2006. 3. Inventories Inventories of supplies are maintained at the City warehouse for use by all City funds and are accounted for by the consumption method. Cost is determined using a moving average method. No inventories exist in the governmental fund types. 4. Restricted Assets Certain proceeds of the City's proprietary fund revenue bonds, general obligation bonds, and certificates of obligation, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Assets collected from impact fees are limited in use and also shown as restricted on the balance sheet of the Water and Wastewater funds. 5. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets ~e.g., roads, bridges, sidewalks and similar items} are reported inapplicable governmental or business-type activities columns in the government-wide financial statements and in the proprietary fund financial statements. The City defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the time received. Major outlays for capital assets and improvements are capitalized as projects are constructed. Net interest incurred during the construction phase of capital assets of business-type activities and enterprise funds is included as part of the capitalized value of the assets constructed. For 2006, net interest capitalization of $293,779 was recorded for electric fund projects, $122,035 was recorded far water fund projects and $63,239 was recorded for wastewater fund projects. 32 CITY ~F DENT4N, TEXAS NOTES TIC BASIC FINANCIAL STATEMENTS (continued} SEPTEMBER 30, 2006 Capital assets are depreciated using the straight-line method over the following useful lives: Assets Years Buildings 40 Infrastructure 30 40 Streets 20 General improvements 10 Machinery and equipment 10 - 20 Furniture and office equipment 10 Computer equipmentlsoftware 3 -10 Plant and equipment 5 Underground pipe 40 Water storage rights 50 -100 Water recreation rights 54 Communication equipment 5 Vehicles 3 -10 Renewals and betterments of property and equipment are capitalized, whereas normal repair and maintenance are charged to expense as incurred. 6. Compensated Absences The City allows employees to accumulate unused vacation up to 320 hours X480 hours for Civil Service Fire employees.} Upon termination, any accumulated vacation time will be paid to an employee. Generally, sick leave is not paid upon termination except for fire fighters and police officers. Firefighl:ers and police off cers accumulate unused sick leave up to a maximum of 1080 hours and 720 hours, respectively. All other employees are paid only upon illness while in the employ of the City. Accumulated vacation and sick leave is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. The General Fund has been used in prior ye~~rs to liquidate governmental funds' related liability. 7. Arbitra;~e Arbitrage involves the investment of the proceeds from the sale oftax-exempt securities in a taxable money market instrument that yields a higher rate, resulting in interest revenue in excess of interest costs. Federal tax code requires that these excess earnings be rebated to the federal government. The Capital Projects Fund has been used in prior years to liquidate governmental funds' related liability. 8. Lon -term obli ations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term obligations are reported as liabilities. Bond premiums and discounts, as well as iissuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Gains and losses on refunding are amortized over the Life of the refunded debt or the life of the new issue, whichever is shorter. In the fund f nancial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether o~r not withheld from the actual debt proceeds received, are reported as debt service expenditures. 33 CITY 4F DENT4N, TEXAS NGTES Ta BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2006 9. Fund e ui In the fund f nancial statements, governmental funds report reservations of fund balance four accounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balances represent management plans that are subject to change. II. REC4NCILIATI4N OF GGVERNMENT-WIDE AND FUND FINANCIAL STATEMEN7S A. Explanation of certain differences between the governmental fund balance sheet and the government- wide statement of net assets The governmental fund balance sheet includes a reconciliation between fund balance -total governmental funds and net assets -governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains the "long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds," The details of this $116,438,877) difference are shown below. General obligation bands payable $ X58,742,900} Certificates of obligation payable X46,700,000} Less: deferred charge for issuance cost 567,013 Arbitrage liability X25,968} Accrued interest on bands (653,690} Leases payable X3,559,742} Compensated absences 7_~323z5~ Net adjustments to reduce fund balance -total governmental funds to arrive at net assets -governmental activities 4 ~ B. Explanatioa of certain differences between the governmental fund statement of revenues, expenditures and changes in fund balances and the government-wide statement of activities The governmental fund statement of revenues, expenditures and changes in fund balanc;es includes a reconciliation between net changes in fund balances total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains, "Governmental funds report capital outlays as expenditures. However, i:n the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported .as depreciation expense." The details of the $2,692,825}difference are as follows: Capital outlay $9,056,102 Depreciation expense 1174$ 9':..~ Net adjustment to decrease net changes in fund balances -total governmental funds to arrive at changes in net assets of governmental activities 34 CITY of DENTON, TEXAS NOTES To BASIC FINANCIAL STATEMENTS (continued} SEPTEMBER 30, 2006 Another element of that reconciliation states, "Bond proceeds provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount by which proceeds exceeded payments." The details of this $(3,63 5,181 } difference are as follows. Debt issued or incurred: Issuance of general obligation debt $(3,695,000} Issuance of certificates of obligation X5,855,000} Principal repayments: Principal retirement 5,914 $19 Net adjustment to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of governmental activities ~ Another element of that reconciliation states, "The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins and donations} is to increase net assets." The details of this $5,251,153 difference are as follows; Loss on disposal of capital assets (25,344} Adjustment for depreciation expense on governmental activities 71,946 Donations of capital assets increase net assets in the statement of activities but do not appear in the governmental funds because they are not financial resources. 5,2o4,:i51 Net adjustment to increase net changes in fund balances -total governmental funds to arrive at changes in net assets of governmental activities ~ 2 Another element of that reconciliation states, "Certain expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures of governmental funds." The details of the $(399,599) difference are as follows: Compensated absences $ X381,689} Arbitrage liability (25,9{68) Accrued interest 8 058 Net adjustments to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of governmental activities III. sTEwARDSg~P, coMPL~ANCE AND AccouNTAB~rrY A. Budgetary information The City Council follows these procedures, as prescribed by City Charter, in establishing the budgets reflected in the financial statements: 35 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 1. At least sixty days prior to the beginning of each fiscal year, the City Manager submits to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted prior to the adoption of the budget in order to obtain taxpayer comments. 3. The annual budget adopted by the City Council covers the general fund, special revenue funds Recreation Fund, Police Confiscation Fund, Emily Fowler Library Fund, and Tourist and Convention Fund only}, the debt service fund, the enterprise funds, and internal service funds except for the Risk Retention Fund}. The budget is legally enacted by the City Council through passage o~f an ordinance prior to the beginning of the fiscal year. The basic f nancial statements reflect the legal level of control, (i.e. the level at which expenditures cannot legally exceed the appropriated amount} whic~~ is established at fund level as approved by City Council. 4. The City Charter provides that the City Manager has the authority to transfer any unencumbered appropriation balances from one appropriation to another within a single function office, department, or agency}, City Council approval is not required at this level. The Charter also provides that at any time during the year, at the request of the City Manager, City Council may by resolution transfer any part of the unencumbered appropriation balances or the entire balance thereof between functions, as well as make any increases in fund appropriations. Budgets are adopted on a basis for the governmental funds, proprietary funds, and the budgeted special revenue funds where encumbrances are treated as budgeted expenditures in the year of commitment to purchase; and depreciation expense for the proprietary funds is not budgeted. At the end of the year, encumbrances for which goods and services have not been received are cancelled. At the beginning of the subsequent yeax, management reviews all open encumbrances and, as provided in the budget ordinance appropriation, these encumbrances may be re-established. In 200b no encumbrances were carried forward in the budget. Also, during the budgetary process, amounts are included in fund budgets to recognize administrative transfers between funds for goods or services. These amounts are not included in the reporting of actual activity for ~:he funds. For funds reporting required budget-to-actual comparisons, these administrative transfers are included as adjustments -budgetary basis. B. Deficit fund equity The Recreation special revenue fund had a deficit fund balance of $1,027,034} at September :10, 2006. This deficit was a result of less than anticipated revenue from park admission, summer camp attendance, swim lesson attendance, concession sales and fall adult softball registration. Elimination of the def cit fund balance is anticipated by 2018 through the imposition of aone-cent property tax increase beginning in 2004. IV. DETAILED NOTES ON ALL FUNDS A. Cash and investments In order to facilitate effective cash management practices, the operating cash of all funds is pooled into common accounts for the purpose of increasing income through combined investment activities. At year-end, the City had $23,601,725 in cash and cash equivalents, including $20,500,000 invested in money marker funds that the City considers cash equivalent. 0f the $23,b01,725, agency funds reported $1,32b,923. The bank balance was covered by collateral with a fair value of $24,465,949. In addition, the City had $13,743 in petty cash at year- end. Statutes authorize the City to invest in obligations of the U.S. Treasury; U.S. agencies, fully collateralized repurchase agreements, public fund investment pools, 5EC-registered, no-load, money market mutual funds, investment-grade, rated municipal securities of any state and fully collateralized certificates of deposit. The investments reported at September 30, 2006, were similar to those held during the f scat year. 36 CITY 4F DENT4N, TEXAS NOTES T4 BASIC FINANCIAL STATEMENTS (conlinued~ SEPTEMBER 30, 2006 The City reports all investments in the financial statements at fair value. At September 30, 2006, the City's investments carried a fair value of $283,932,097. As of September 30, 2006, City investments were as follows: Weighted Avera;~e Investment T e Fair Value Maturi Da s Money Market Fund $ 20,500,000 ~ U.S. Treasury Securities 164,410,077 407 U.S. Agency Securities-Coupon 56,389,875 583 U. S. Agency Securities-Callable 15,407,969 680 U.S. Agency Securities-Discount 27 224176 763 Total fair value of investments $283,932,097 Portfolio weighted average maturity 462 interest rate risk. In accordance with its investment policy, the City manages its exposure to ~~eclines in fair values due to interest rate fluctuations by limiting the weighted average maturity of its investment portfolio to less than eighteen months. With review and approval of the City's investment committee, the weighted average maturity of its investment portfolio may be extended beyond eighteen months. Credit risk. The City's investment policy limits investments to obligations of the United States of America and its agencies, investment quality obligations of the States with a rating not less than AA,, fully insured Certificates of Deposit, and commercial paper that has a maturity of 270 days or less and arating; of A-1 or P- l . The City's investments in the bonds of U.S. agencies was rated AAA by Standard & Poor's anc~ Fitch Ratings and Aaa by Moody's Investors Service. Custodial credit risk. This is the risk that in the event of a bank or counterparty failure, the Ci1:y's deposits or investments may not be returned to it. The policy states that all bank deposits and bank investments of City funds shall be secured by pledged collateral with a market value equal to no less than l02 percent of the principal plus accrued interest less an amount insured by FDIC, if a deposit. 37 CITY OF DENT4N, TEXAS NOTES T4 BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 Cash, cash equivalents and investments, at fair value, are reported together on the financial statements. Investments, at fair value, excluding money market funds, by fund were as follows: tither General Capital Governmental Fund Projects Funds Electric - . Unrestricted inves~ne~ats $ 10,921,424 $ 30,990,078 $ 3,432,694 $ 60,721,844 Change in fair value X9,840) X156,539} X9,687} X1,340,943} Restricted investments - - - 40,269,162 Change in fair value - - - X511,164} Total $ 10,911,584 $ 30,833,539 $ 3,423,007 $ 99,138,899 Internal Total Service City Water Wastewater Solid Waste Funds Investments Unrestricted investir~ents $ 18,970,094 $ 3,404,517 $ 5,731,252 $ 16,680,242 $ 150,852,14.► Change in fair value X7,435} X6,596} X37,615} X228,462} ~ 1,797,11''} Restricted investments 42,870,654 25,966,455 4,956,430 1,900,102 115,962,79<~ Change in fair value ~686,72I} X360,689) (6,116} X21,040} ~I,585,730} Total $ 61,146,558 $ 29,003,687 $ 10,643,951 $ 18,330,842 $ 263,432,09 B. Property taz revenue Property taxes attach as an enforceable Iien on property as of January l . Taxes are levied on October 1 and are due and payable at that time; therefore, the legally enforceable claim arises on actober 1. A receivable is recorded at that time, All unpaid taxes levied October 1 become delinquent February 1 of the following year. Property taxes at the fund level are recorded as receivables and revenue at the time the tax levy is billed. Current-year revenues recognized are those ad valorem taxes collected within the current period gar soon enough thereafter to pay current liabilities, which is sixty days after year-end. Current tax collections for the year ended September 30, 2006, were 98.7% of the tax levy. An allowance is provided for delinquent taxes not expected to be callected in the future. At September 30, 2006, the City had a tax rate of $0.60815 per $100 valuation. Based upon the maximum ad valorem tax of $Z.50 per $100 valuation imposed by Texas Constitutional law, the City had a tax: rate margin of $1.89185. Additional revenues up to $90,607,825 could be raised per year based on the current year's certified assessed value of $4,789,376,811 before the limit is reached. 38 CITY QF DENT4N, TEXAS NOTES T4 BASIC FINANCIAL STATEMENTS ~contiuued~ SEPTEMBER 30, ZOOG C. Receivables Receivables at September 3D, 2006, for the City's individual major funds and other funds anon-major funds, internal service funds and fiduciary funds}, including the applicable allowances for uncollectible accounts, are shown below. Capital General Debt Service Projects Electric Water Receivables: Taxes $4, i 84,802 $ 342,661 $ - $ - $ - Accounts - - - 21,430,294 3,097,191 Accrued interest 209,625 - 396,486 815,111 501,161 Unbilled utility service - - - 6,425,619 1,182,883 Other 7,587,777 - 472,526 _ 3,844 Gross receivables 11,952,204 342,661 868,612 28,671,024 4,785,075 Less: Allowance for uncollectibles 5 735 577 97 910 - 11884 354 1463 973 Net total receivables 6 246 627 244 751 $ 868,612 $ 16,786,670 3 321 102 Other Internal Waste- Solid Governmental Service water Waste Funds Funds Total Receivables: Taxes $ - $ - $ - $ - $ 4,527,463 Accounts 2,755,232 2,022,864 - - 29,308,581 Accrued interest 223,065 103,305 35,328 99,731 2,383,412 Unbilled utility service 969,777 641,829 - - 9,220,108 Other - - 190,275 ^ 113,527 8,367,945 Gross receivables 3,951,074 2,767,998 225,603 213,258 53,807,509 Less: Allowance for uncollectibles 1627 991 1224 249 - - ~22~054 Net total receivables $2,323,083 $ 1,543,749 $ 225,603 $ 213,258 31773 455 39 CITY OF DENT4N, TEXAS NQTES TD BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, ZOOb D. Cnpitni assets Capital assets balances and transactions for the year ended September 30, 2006 are summarized below and on the following page. Governmental activities: Balance at Balance at Qctaber 1, 2005 Increases Decreases Se tember 30, 2006 Capital assets not being depreciated: Land $ 7,848,270 $ - $ (18,776) $ T,829,494 Construction in progress 10,528,18b 9,616,781 10 514 904 9!,630,063 Total capital assets not being depreciated 18,376.456 9,616,781 10 533 680 1 1',459,557 Capital assets being depreciated: Buildings 46,787,662 4,096,176 (14,300) 50,869,538 Infrastructure 157,398,404 8,806,125 (20,700) 166,183,829 Plant, machinery and equipment 60,35.2321 7,339,226 ~463,~4,g 14} 6?'~,056,733 Total capital assets being depreciated 264,538,387 20 241527 4 669 814 28C~,~110,100 Less accumulated depreciation for: Buildings 10,616,133 1,183,264 (14,300} 11,785,097 Infrastructure 63,113,080 7,836,450 (20,700) 70,928,830 Plant, machinery and equipment ,31,692,709 6,810,923 4112 606) 3q'F,3911026 Total accumulated depreciation 105,421,922 ,15,830,637 4147 606} 11i'w104,953 Tatal capital assets, being depreciated, net 159,116,465 4,410,890 522 208 16?'~ 00,_ 5,147 Governmental activities capital assets, net 1 4 2 2 14 2 11 $1$Ci.464.704 Capital assets for governmental activities include capital assts held in the internal service funds. (Cantinued) CITY nF DENTIN, TEXAS NQTES T4 BASIC FINANCIAL STATEMENTS ~continned} SEPTEMBER 30, 2006 Balance at Balance at Business-type activities: October 1, 2005 Increases Decreases Se tember 30, 2006 Capital assets not being depreciated: Land $ 8,466,829 $ 1,312,831 $ - $ 9,779,660 Construction in progress 30,277,357 23,571L603 16 598179 37,250,781 Total capital assets not being depreciated 38,744,186 24,884,434 16 59$179 47,030,441 Capital assets being depreciated: Buildings - 6,779,729 (160,337} 6,619,392 Landfill improvements 9,795,557 90,107 - 9,8$5,664 Water rights 69,883,098 - - 69,883,098 Infrastructure 260,336,899 17,071,580 (377,450} 277,031,029 Plant, machinery and equipment 177,527,661 8,326,778 7 202 738 ~ 78,651 ~7Q 1_ Total capital assets being depreciated 517 543 215 .32,26$,194 7 740 525 542,070,884 Less accumulated depreciation for: Buildings - 2,511,760 (63,484) 2,448,276 Landfill improvements 8,896,825 439,549 - 9,336,374 Water rights 11,391,349 696,331 - 1.2,087,680 Infrastructure 56,932,976 6,763,931 (302,668} 63,394,239 Plant, machinery and equipment 76,769,783 3 405 812 402 967 i'9,772 X28 Total accumulated depreciation 153,990,933 13,817,383 769119 167,039,197 Total capital assets, being depreciated, net 363,552,282 ,18,450,811 6 971406 375,031,687 Business-type activities capital assets, net .062.128 (The prior period included $6,779,729 of Plant, machinery and equipment that has been reclassified as Buildings. The Increases and Decreases columns above reflect these adjustments.} Depreciation expense was charged to governmental activities functionslprograms as follows: Governmental activities: General government $ 2,226,360 Public safety 1,117,693 Public works 7,392,270 Parks and recreation 1,012,603 Capital assets held by the internal service funds are charged to the various functions based upon usage _ 4,081,711 Total depreciation expense -governmental activities 1 Business-type activities: Electric $ 4,074,474 Water 4,391,403 Wastewater 3,837,806 Solid Waste _ 1_,51.3,70_ ~ Total depreciation expense -business-type activities 1 1 41 CITY DF DENT(IN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 Construction commitments The City has several major construction projects planned or in progress as of September 30., 2006. These projects are evidenced by contractual commitments with contractors and include: Remaining Pr, oject Sent-to-Date Commitment Fire Station #7 $1,724,932 $2,581,952 U S 377 Alternate 1,476,290 2,023,709 R D Wells Interchange 101,956 3,224,009 Denton West R D Wells Transmission 943,860 2,317,813 R D Wells Hickory Substation 201,280 1,498,422 Hwy 380 Water and Wastewater Relocate IH35 & West 10,945 1,542,551 Water SW Storage Area & BP Station 3,152,145 2,202,585 Landfill Cell 3A 485,336 2,022,764 E. Interfund receivables, payables and transfers A summary of interfund receivables and payables (in thousands} at September 30, 2006, is as follows: Interfund payables: Governmental Major Funds Business-Type Major Funds Nan-Major Internal Interfund Governmental Solid Service Receivables: General Fund Funds Electric Water Wastewater Waste Funds Total Governmental Major Funds: General Fund $ - $ 1,164 $ - $ - $ 1 $ - $ 277 $ 1,441 Capital Projects Fund 181 - - - - - - 181 Non-Major Governmental Funds 489 - 64 93 49 47 24 766 Business-Type Major Funds: Electric 84 - - 141 - 973 2,612 3,810 Water 294 - - - - - 274 568 Wastewater - - - 71 - - 257 328 Solid Waste - - - 83 12 - 77 172 Internal Service Funds 310 - 3 23 17 1 16 370 Total $ 1,358 $ 1,164 $ 67 $ 411 $ 78 $ 1,021 $ 3,537 $ 7,636 42 CITY 4F DENTIN, TEXAS MUTES TQ BASIC FINANCIAL STATEMENTS (continued SEPTEMBER 30, 2006 The more significant interfund receivables and payables include the following; Interfund receivables Interfund pa, a~ Amount Electric fund Internal service funds $2,429,896 Non-Major governmental funds General fund 488,482 Electric fund Solid Waste fund 972,976 General fund Non-Major governmental funds 957,948 The balance between Non-Major Governmental Funds and the General Fund reflects the; current year contribution to other post retirement benefits reserve. The outstanding balances between the Electric Fund and the Internal Service Funds are a result of the cash position in the Materials Management Fund due to inventory purchases. The balance between the Electric Fund and the Solid Waste Fund reflects the purch~~se and sale of investments between funds. The balance between the General Fund and Non-Major Governmental Funds reflects the General Fund's support of the Recreation Fund. This particular payable is not expected to be repaid within one year. Transfers between funds din thousands during the year were as follows: Transfers Out: Governmental Major Funds Business-Type Majar Funds Capital Nan-Majar Internal General Projects Governmental Solid Service Transfers In: Fund Fund Funds Electric Water Wastewater Waste Funds Total Gavemmental Majar Funds: General Fund $ - $ - $ 261 $ - $ - $ - $ - $ 319 $ 580 Debt Service Fund 31 462 - - - 631 - 251 1,375 Capital Projects Fund 914 - 9 - 10 - - - 933 Nan-Major Governmental Funds 923 5 - 64 94 49 47 24 1,206 Internal Service Funds - 252 - - - - - - 252 Total $ 1,868 $ 719 $ 274 $ b4 $ 104 $ 680 $ 47 $ 594 4,346 43 CITY OF DENTIN, TEXAS NOTES T4 BASIC FINANCIAL STATEMENTS ~contlnued) SEPTEMBER 30, 2046 The more significant transfers include the following: Transfers from fund Transfers to fund Amount General fund Capital Projects $913,72D General fund Non-Major governmental funds 500,000 General fund Non-Major governmental funds 350,552 Internal service funds General fund 318,610 Wastewater fund Debt service fund 631,764 Capital projects fund Debt service fund 461,602 Transfers from the General Fund to Capital Projects are to fund future capital projects. Transfers from the General Fund to Non-Major Governmental Funds reflect the funding of other post-employment benefits as well as the Recreation Fund's share of current year property tax revenues. Transfers from the Wastewater Fund and Capital Projects Fund to the Debt Service Fund are used to move revenues from the fund ~►with collection authorization to the Debt Service Fund as debt service principal and interest payments become due. Transfers from the Internal Service Funds to the General Fund reflect direct operating cost transfers for Risk Retention. F. Lease Leases payable represent the remaining principal amounts payable under lease purchase agreements for the acquisition of equipment through the motor pool fund, an internal service fund. These leases are recorded as capital leases. Remaining requirements, including interest, under these leases are as follows: Year Payments 2007 $1,046,319 2008 1,D46,319 2D09 924,511 2010 503,30 Total minimum lease payments 3,820,752 Less: amount representing interest 261 D 10 Present value of minimum future lease payments 42 The following schedule provides an analysis of the City's investments in equipment under capital lease arrangements as of September 30, 2006: Equipment $2,665,584 Less: Accumulated Depreciation 60D,804 Total 4 44 CITY QF DENT4N, TEXAS NOTES TG BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2046 G. Long-term debt Long-term liabilities transactions for the year ended September 30, 2004, are summarized as follows below and on the following page: Balance at Balance at October 1, September 30, Due Within 2005 Increases Decreases 2006 One Year Governmental Activities: General obligation bonds $ 58,87D,849 $ 3,695,000 $ 3,822,949 $ 58,742,900 $ 4,017,583 Certif sates of obligation 41,791,588 8,160,000 3,251,588 46,700,000 3,425,000 Obligations under capital leases 2,210,846 2,365,000 1,016,104 3,559,742 935,736 Arbitrage payable - 25,968 - 25,968 - Compensated absences payable 6,932,537 3,098,880 2,707,827 7,323,59D 2,804,264 Claims payable 1,803,000 1,740,353 548,140 2,995,213 453,750 Unamortized premiuml(discounts} 394,367 53,087 28,863 418,591 30,042 Unamartized deferred gainl(loss} (508,493} - (115,288) (393,2D5~1 - Total governmental long-term liabilities $111,494,694 $ 19,138,288 $11,240,183 $ 119,372,799 $11,666,375 Business-type Activities: Revenue bonds $281,120,DDD $8,515,000 $12,330,000 $277,305,000 $13,325,000 General obligation bonds 3,904,151 - 322,051 3,582,100 482,417 Certificates of obligation 9,233,412 4,505,000 1,743,412 11,975,000 1,450,000 Arbitrage payable 1,218 3,887 - 5,105 - Compensated absences payable 1,332,259 1,462,748 1,234,925 1,560,082 1,379,355 Note payable 3,141,222 - - 3,141,222 - Landfill closurelpost-closure costs 3,411,627 277,781 - 3,689,408 - Unamortized premiuml(discounts) 7,867,76$ 23,012 471,477 7,419,303 452,975 Unamortized deferred gainl(loss} 9,002,261 - 725,034 8,277,227 ~ - Total business-type activities 301,009,396 14,787,428 15,396,831 300,399,993 17,089,747 Total long-term liabilities $412,504,090 $33,925,716 $26,457,014 $419,772,792 $28,756,122 45 CITY OF DENT~N~ TEXAS NUTES TO BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, ~OOb General bonded debt -General obligation and certificates of obligation issued for general government purposes at September 30, 2006 are comprised of the following: Gross Amount Original Outstanding at Interest Rate Final Amount September 30, Bonded Debt % Issue Date Maturi of Issue 2006 General obligation 5.0 to 7.0 1997 2017 $ 4,700,00() $ 455,000 General obligation 5.25 to 5.25 1998 2018 9,660,00() 5,780,000 General obligation 4.1 to 5.0 1999 2019 8,215,001) 5,330,000 General obligation refunding 3.2 to 5.0 1999A 2016 5,538,78() 4,185,645 General obligation 5.25 to 6.125 2000 2020 3,750,00() 945,000 General obligation 4.5 to 5.5 2001 2021 14,245,00() 10,695,000 General obligation 5.0 to 5.25 2002 2022 12,075,000 10,760,000 General obligation refunding 3.0 to 4.75 2003 2023 7,233,06:1 4,767,255 General obligation refunding 2.5 to 5.0 2004 2020 7,370,001) 7,235,000 General obligation 3.0 to 5.0 2005 2025 5,000,000 4,895,000 General obligation 4.25 to 4.875 2006 2026 3,695,000 3,695,000 Total general obligation bonds 81,481,84:1 58,742,900 Certificates of obligation 4.0 to 5.0 1998 2018 5,625,001 905,000 Certif cater of obligation 4.1 to 5.0 1999 2019 5,926,273 3,835,000 Certif sates of obligation 5.25 to 6.125 2000 2020 3,125,000 775,000 Certificates of obligation 4.25 to 5.25 2001 2021 10,400,OOI~ 4,555,000 Certificates of obligation 4.7 to 5.25 2002 2022 7,145,000 6,485,000 Certificates of obligation 3.0 to 4.75 2003 2023 5,650,000 4,695,000 Certificates of obligation 2.0 to 5.0 2004 2024 12,805,OOI~ 12,085,000 Certificates of obligation 3.0 to 4.375 2005 2025 5,575,00~~ 5,205,000 Certificates of obligation 4.0 to 4.75 2006 202b 8,160,00~~ 8,160,000 Total certificates of obligation 64,411,273 4b,700,000 Total general bonded debt $145,893,11 $105,442,900 [The amounts do not include net unamortized premiumsl(discounts} of $418,591 nor net deferred gainl(loss~ on refunding of ($393,205.] Proceeds of general bonded debt are restricted to the uses for which they were approved in the bond elections. The City Charter expressly prohibits the use of bond proceeds to fund operating expenses, The general obligations are collateralized by the full faith and credit of the City and, primarily, payable from property taxes. In prior years, the City defeased general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the vld bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City's financial statements. 0n September 30, 2006, $5,925,000 of general obligation bonds considered defeased are still outstanding. 4b CITY OF DENTDN, TEXAS NQTES T4 BASIC FINANCIAL STATEMENTS (continued} SEPTEMBER 30, 2006 In July 2006, the City issued $ I2,665,000 in certificates of obligation and $3,695,000 of general obligation bonds. The debt was issued to pay the cost of various Capital Project improvements ($!x,550,000} and proprietary fund capital improvements ~$b,8I0,000}. The bonds and obligations are payable over the next 20 years. Revenue bonds -Revenue bonded debt at September 30, 2006, is comprised of the following is~;ues: Principal Net Net Original Outstanding at Unamartized Outstanding at Interest Rate Issue Final Amount September 30, Premium) September 30, Revenue Bonds % Date Maturi of Issue 2006 Discount 2006 Utility system refunding 3.55 to 6.75 1993 2008 $ 6,045,000 $ 580,000 $ (703) $ 579,297 Utility system refunding 5.3 to 7.8 1996 2025 36,510,000 865,000 (4,110} 860,890 Utility system 5.3 to 7.4 1996 2017 2,750,000 125,000 - 125,000 Utility system 4.3 to 6.3 1998 2018 7,175,000 1,800,000 - 1,800,000 Utility system refunding 4.65 to 6.65 1998 2030 3b,795,000 19,665,000 (220,657} 19,444,343 Utility system refunding 4.0 to 5.0 1998 2015 7,640,000 7,150,000 - 7,150,000 Utility system 4.974 to b.0 2000 2020 54,880,000 17,920,000 18,985 17,938,955 Utility system 4.0 to 5.4 2001 2021 59,545,000 50,725,000 456,828 51,181,528 Utility system 4.25 to 5.0 2002 2022 56,710,000 49,265,000 284,223 49,549,223 Utility system 5.0 to 6.5 2002 2022 13,985,000 3,860,000 (10,837} 3,849,163 Utility system 3.625 to refunding 5.625 2003 2022 50,180,000 39,105,000 1,291,352 40,396,352 Utility system refunding 2.0 to 5.25 2004 2024 24,850,000 23,940,000 1,133,738 25,073,738 Utility system refunding 3.0 to 5.0 2005 2023 53,545,000 53,790,000 4,445,952 58,235,952 Utility system 4.5 to 5.0 2006 2026 8,515,000 8,515,000 - 5,5I5,ooo Total revenue Bonds $419,425,000 $277,305,000 $7,394,771 $254,699,771 The amounts do not include net unamortized gain)(loss} on refunding of ($8,15$,926}.] In July 200b, the City issued $8,515,000 in revenue bond debt. The debt was issued to pay :for the cost of various utility system improvements and upgrades. The bonds axe payable over the next 20 years, 47 CITY 4F DENTIN, TEXA5 NUTES TO BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 Other enterprise obiigations -General obligation bonds and certif cafes of obligation issued for solid waste fund at September 30, 2006, is comprised of the following: Gr+~ss Amount Interest Original Outstanding at Rate Issue Final Amount Se~~tember 30, Other Obli ations % Date Maturi of Issue 2006 General obligation refunding 3.2 to 5.0 1999 2016 $ 1,481,220 $ 1,119,355 General obligation refunding 3.0 to 4.75 2003 2023 846,935 547,745 General obligation refunding 2.5 to 5.0 2004 2015 2,040,000 1,915,000 Total general obligation bonds 4,368,155 3,582,100 Certif cater of obligation 4.25 to 5.25 2001 2021 3,845,000 1,015,000 Certificates of obligation 4.7 to 5.25 2002 2022 5,445,000 3,050,000 Certificates of obligation 3.0 to 4.75 2003 2023 1,755,000 980,000 Certificates of obligation 2.0 to 5.0 2004 2024 1,195,000 1,010,400 Certificates of obligation 3.0 to 4.375 2005 2025 1,570,000 1,415,000 Certificates of obligation 4.0 to 4.75 2006 2026 4,505,000 4,505,000 Total certificates of obligation 23,315,046 11,975,000 Total other enterprise obligations $27,6$3,201 $15,557,100 [The amounts do not include net unamortized premiumsl(~iscounts) of $24,532 nor net deferred gainl~loss} on refunding of x$118,301 The revenue bonds are collateralized by the revenue of the Denton utility system funds System} and the various special funds established by the band ordinance. The ordinance provides that the revenue of the System is to be used f rst to pay operating and maintenance expenses of the System and second to establish ar~d maintain the revenue bond funds. Any remaining revenues may then be used for any lawful purpose. The ordinance also contains provisions, which among other items restricts the issuance of additional revenue bonds unless the special funds noted above contain the required amounts and certain financial ratios are met. Management believes the City is in compliance with all significant requirements. Assets in these accounts consist of cash and U.S. government securities. Below is a summary of the various net asset balances in the fu~~ds required by the bond ordinance to be restricted for debt service. Interest and sinking fund $11,$$4,032 Reserve fund 17,306,122 Total restricted net assets restricted for debt service $29,190,154 In prior years, the City defeased revenue bands by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bands are not included in the City's financial statements. 0n September 30, 2006, $87,145,000 of revenue bonds considered defeased is still outstanding. 48 CITY 4F DENT4N, TEAS NDTES TO BASIC FINANCIAL STATEMENTS ~eontinued} SEPTEMBER 30, 2006 Note payable In 1984, the City and the City of Dallas contracted with the Army Corps of Engineers for the construction and development of Ray Roberts Reservoir in Denton County. In contracts with the Army Corp of Engineers, the City will pay for twenty-six X26%} percent of the estimated water storage rights of the reservoir. Water obtained from the reservoir will be pro rata on the basis of each city's proportional share of total construction cost. The closing of the dam was completed in 1987 with water being available from the reservoir in 1989. The note will become due and payable when the Army Corps of Engineers provides the City the final and complete costs for the greenbelt and recreation area. Schedule of long-term debt maturities Aggregate maturities of the long-term debt principal and interest) for the years subsequent to September 30, 2446, are shown below and on the following page: Governmental Activities: Certificates of General Obligation 4bli ation Capital Leases Total Fiscal Year Pri~ •nci~al Interest Pn'ncipal lnterest Princi al Interest Prt'ncpa~ Interest 2007 $ 4,017,583 $ 2,703,907 $ 3,425,000 $ 2,048,955 $ 935,736 $ 110,583 $ 8,378,319 $ 4,863,445 2008 3,890,723 2,512,586 3,540,000 1,879,026 965,932 80,386 8,396,6SS 4,471,998 2009 3,728,569 2,343,172 3,650,000 1,732,870 875,636 49,175 8,254,205 4,125,217 2010 3,664,885 2,179,616 3,665,000 1,580,218 782,438 20,865 8,108,323 3,780,699 2011 3,877,630 2,007,655 3,400,400 1,427,360 - - 7,277,630 3,435,015 2012-2014 20,092,510 7,212,666 11,325,000 5,499,593 - - 31,417,510 12,712,259 2017-2021 1S,26S,000 2,741,731 11,265,000 2,859,520 - - 24,530,000 5,601,251 2022-2026 4,210,000 342,572 6,430,000 541,250 - - 10,640,000 883,822 Total $58,742,900 $22,043,905 $46,700,000 $17,568,792 $3,559,742 $261,009 $109,002,642 $39,873,706 49 CITY DF DENTUN, TEXAS NUTES TO BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 Business-Type Activities: Certificates of General 4bli ag tion ~bli ation Revenue Fiscal Year Princi al Interest Principal Interest Principal Interest 2007 $ 482,417 $130,088 $ 1,450,000 $ 517,874 $13,325,000 $ 13,386,845 2008 449,277 115,145 1,155,000 450,434 14,130,000 12,746,9~~1 2009 471,431 100,124 985,000 408,408 14,220,000 12,022,21.9 2010 474,115 83,630 945,000 368,321 14,745,000 11,270,599 2011 332,370 68,146 805,000 330,084 13,605,000 10,540,834 2012-2016 1,372,490 131,536 2,935,000 1,171,942 76,845,000 41,888,7!4 2017-2021 - - 2,385,000 613,474 87,725,000 21,448,3E►3 2022-2026 - - 1,315,004 120,512 32,775,000 5,526,4~~ 1 2027-2031 - - - - 9,935,000 1,051,2~i6 Total $3,582,100 $628,669 $11,975,000 $3,981,049 $277,305,000 $129,882,3q~2 Notes Pa able Total Fiscal Year Pr~'nci~ Interest Pr~'ncipaf Interest 2007 $ - $ - $15,257,417 $14,034,807 2008 3,141,222 - 18,875,499 13,312,570 2009 - - 15,676,431 12,530,751 2010 - - 16,164,115 11,722,550 2011 - 14,742,370 10,939,064 2012-2016 - - 81,152,490 43,192,202 2017-2021 - ~ - 90,110,000 22,061,857 2022-2026 - - 34,090,000 ~ 5,646,993 2027-2031 - - 9,935,000 1,051,266 Total $3,141,222 $ - $296,003,322 $134,492,060 [The amounts above and on the previous page do not include net unamortized premiuml~discount} of $7,837,894 nor net unamortized gainl~loss} on refunding of x$8,670,432}.] Bonds authorized and unissued General obligation bonds authorized but unissued as of September 30, 2006, amounted to $33,710,000. When issued, the proceeds will be allocated to the applicable capital projects. H. Landfill closure and post-closure cost State and federal laws and regulations reQuire the City to place a final cover on its Mayhill Road landfill site upon closure and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and post-closure care costs will be paid only upon anticipated closure, the City reports a portion of these costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. Based on a model created by a 2005 engineering study, total landfill closure and post- closure cost increased from $14,226,967 to $14,582,641 and increased this year's reported landfill closure and post-closure expense by $277,781. The $3,689,408 reported as landfill closure and post-closure care liability represents the cumulative amount incurred to date based on the use of 25.3% of the estimated capacity of the entire landfill at September 30, 2006. Based on this estimate, the remaining potential estimated liability for closure and post-closure c~~re of the entire landfill is $10,893,233. The City will recognize the remaining estimated cost of closure and post-closure care as the remaining capacity is filled. These amounts are based on what it would cost to perform closure and post- closure care in 2006. Actual cost may fluctuate due to inflation, changes in technology, or changes in 50 CITY 4F DENT4N, TEAS NOTES TD BASIC FINANCIAL STATEMENTS ~continued~ SEPTEMBER 30, ZOOb regulations, The landfill has a remaining life of 28 years, and the City expects to close the landfill in fiscal year 2034. The solid waste fund has provided for a designation of cash and investments of $3,689,408 at September 30, 2006, and anticipates increasing the reserve in future periods as the closure and post-closure activities are carried out. v. DTHER INFORMATION A. Pension puns Texas Municipal Retirement Plan Plan description The City provides pension benefits for all of its full-time employees except fire fighters} through a non- traditional, joint contributory, hybrid-def ned benefit plan in the state-wide Texas Municipal Retirement System TMRS}, one of 811 administered by TMRS, an agent multiple-employer public employee retirerent system. Benefits Benefits depend upon the sum of the employee's contributions to the plan, with interest, and thE, City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent X200%} of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits far service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of their salary in the last three years that axe one ,year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with five or more years of service or with 20 years of service regardless of age. A member is vested after five years. The plan provisions are adopted by the g;overning body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. These retirees may alsa participate in the City's health, dental, a~1d vision plans as other post employment benefits. Contributions The contribution rate for the employees is 7%, and the City matching ratio is currently 2 to 1, both as adopted by the governing body of the City. Under the state law governing TMRS, the actuary annually determines the city contribution rate. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching per~,ent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time a retirement becomes effective. The prior service contribution rate amortizes the unfunded actuarial liability over the remainder of the plan's 25-ye~rr amortization period. The unit credit actuarial cost method is used for determining the City contribution rate. Both the employees and the City make contributions monthly, Three-Year Trend Informatioa for TMRS Fundiag Year ending Annual required contribution tARC} $9,347,195 $8,707,103 $8,313,904 Actual contributions $9,347,195 $8,707,103 $8,313,904 Percent contributed 100% 100% 100% 51 CITY 4F DENT4N, TEXAS NOTES Tn BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 Actuarial Assumption 12/31/05 Actuarial cost method Unit credit Amortization method Level percent of payroll Remaining amortization period 25 years -open period Asset valuation method Amortized cost Investment rate of return 7% Projected salary increases None Includes inflation at 3.5% Cost-of living adjustments None The City of Denton is one of S 11 municipalities having the benefit plan administered by TMR►~. Each of the S 11 municipalities has an annual, individual actuarial valuation performed. All assum~~tions for the December 31, 2005, valuations are contained in the 2005 TMRS Comprehensive Annual Financial Report, a copy of which may be obtained by writing to P.Q. Box 149153, Austin, Texas 78714-9153. Denton firemen's Relief and Retirement Plan Plan description The Board of Trustees of the Denton Firemen's Relief and Retirement Fund is the administrator of a single- employerdefined benefit pension plan. The Denton Firemen's Relief and Retirement Fund cover firefighters in the Denton Fire Department. The table below summarizes the membership of the fund as of December 31, 2005, the most recent biennial actuarial valuation. 121311{~5 1. Retirees and beneficiaries currently receiving benefits and terminated employees entitled to 53 benefits but not yet receiving #hem 2. Current employees a. Vested 73 b. Nonvested 92 3. Total 218 The Denton Firemen's Relief and Retirement Fund provides service retirement, death, disability ~~nd withdrawal benef ts. These benef is vest after 10 years of credited service. Firefighters may retire at age 5() with 20 years of service. As of the December 31, 2005 actuarial valuation date, the Plan effective May 1, 2005 and amended June 14, 2006 provided a monthly normal service retirement benefit, payable in a Join and Two-Thirds to Spouse form of annuity, equal to 2.44% of Highest 36-Month Average Salary for each year of service. These retirees may also participate in the City's health, dental, and vision plans as other post employment benefits. There is no provision for automatic postretirement benefit increases. The fund has the authority to provide, and has periodically in the past provided for, ad hoc postretirement benefit increases. The benefit provisions of this 52 CITY 4F DENTUN, TEXAS NDTES TQ BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 plan are authorized by the Texas Local Fire Fighter's Retirement Act ~TLFFRA}. TLFFR4 provides the authority and procedure to amend benefit provisions. Contributions Required and Contributions Made The contribution provisions of this plan are authorized by TLFFRA. The TLFFRA provides the authority and procedure to change the amount of contributions determined as a percentage of pay by each f refighter and a percentage of payroll by the city, While the contribution requirements are not actuarially determined, state law requires that an eligible actuary must approve each plan of benef is adopted by the fund. The actuary certifies that the contribution commitment by the firefighters and the city provides and adequate financing arrangement, Using the entry age actuarial cost method, the plans' normal cost contribution rate is determined as a percentage of payroll. The excess of the total contribution rate over the normal cost contribution rate is used to amortize the plan's unfunded actuarial accrued liability, and the number of years needed to amortize the plan's unfunded actuarial accrued liability is determined using an open, level percentage of payroll method. The costs of administering the plan are financed from the fund. The funding policy of the Denton Firemen's Relief and Retirement Fund requires contributions equal to 12% of pay by the firefighters. The City of Denton contributed 10% of payroll during January through September 2006, will contribute 11 % of payroll Qctober 2006 through September 2007, and is planning to contribute 12% of payroll Dctober 2007 through September 2008 and then to begin contributing the same percentage of payrall that the city contributes to the Texas Municipal Retirement System for other employees. The December 31, 2005 actuarial valuation assumes that the city contribution rate will average 12.75% beginning October 2008. Three-Year Trend Information far Denton Firemen's Relief and Retirement Fua~iing Year ending 121~_]1Q5 12131104, , 1;131103 Annual required contribution (ARC} $1,970,632 $1,868,444 $1,~~46,396 Actual contributions $1,970,632 $1,868,444 $1,~~46,396 Percent contributed 100% 100% 1100% Actuarial Assumptions 12/31/05 Actuarial cost method Entry age Amortization method Level percent of payroll, open Amortization period for ARC 23 years Asset valuation method 5-year adjusted market value Investment rate of return 7.75% Projected salary increases 4.50% plus promotion and longevity Includes inflation at 4.0% Cost-of living adjustments None Payroll increases 4.50% ARC as percent of payroll Budgeted rates Financial statements are available and can be obtained by contacting the Denton Fire Departmen~r at the City of Denton at 332 E. Hickory, Denton, Texas 76201. 53 CITY 4F DENT4N, TEXAS NaTES T4 BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, X006 The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all permanent City employees, permits them to defer, until future years, up to 25% of annual grass earnings not to exceed $15,500. Employees who are age 50 or older ma,~ contribute an amount not to exceed $20,500. Em to ees who are within three years of retirement may elect to participate in a py catch-up provision allowed by Section 457, which has an annual maximum contribution amount of $31,000. The withdrawal of deferred compensation funds is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are, until paid or made available to the employee or other beneficiary, solely the property and rights of the employees. Accordingly, the assets and associated liability of the plan are not included in the City's financial statements. It is the opinion of the City's legal counsel that the City has na liability for losses under the plan, C. Self-insurance plan The City has established a self insurance plan for workers' compensation benef is and general liability. Employee health insurance is afully-insured plan. Accrued claims payable include provisi~ans for claims reported and claims incurred but not reported. The provision for reported claims is determined by estimating the amount, which will ultimately be paid for each claimant. The provision for claims incur~~ed but not yet reported is estimated based on an actuarial evaluation. The City's costs associated with the self insurance plan are reported as interfund transactions. Accordingly, they are treated as operating revenues of the Internal Service Risk Retention Fund and operating expenditures expenses} of the other funds. Workers` compensation and general liability insurance The City of Denton self insures the first $500,000 per occurrence for workers' compensation claims or general liability. Commercial liability insurance coverage is purchased for public officials, airport operations, emergency medical services, take-home vehicles, and employee theft and dishonesty. Additionally, excess insurance is purchased for general liability and workers' compensation exposure. The City reports liabilities when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated, Liabilities include an amount for claims that have been incurred but not reported. Because actual claims liabilities depend on such complex factors as inflation, changes in legal doctrines, and damage awards, the process used in computing claims liability does not necessarily result in an exact amount. Claims liabilities are re-evaluated periodically to take into consideration settlement of claims, r.~ew claims and other factors. As of September 30, 2006, the estimated value of these liabilities was $2,995,213. Changes in balances of claims liabilities during fiscal years 2006 and 2005 were as follows: Claims Liability Claims and Claims Liability Beginning of Change in Claims End of Fiscal Year Estimates Pa ments Fiscal Ye~~r porkers' Compensation 2006 $1,450,000 $1,437,485 $46$,787 $2,415,69~g 2005 1,450,000 518,915 518,915 1,450,000 General Liability 2006 $ 353,000 $ 302,868 $ 79,353 $ 576,515 2005 353,000 395,882 395,882 353,000 54 CITY 4F DENTON, TEXAS NUTES TQ BASIC FINANCIAL STATEMENTS ~continued~ SEPTEMBER 30, 20Q6 Qn September 30, 2006, the City of Denton held net assets of $1,683,514 in the Risk Retention Fund for payment of claims. There were no significant reductions in insurance coverage from coverage in the prior year, and the amount of settlements did not exceed insurance coverage in the current year or in any of the past three fiscal years. D. Commitments and contingencies Agreement with TMPA In 1976, the City, along with the cities of Bryan, Greenville, and Garland, Texas the Cities} entered into a Power Sales Contract with the Texas Municipal Power Agency TMPA}. TMPA was created through concurrent ordinances of the Cities and is governed by a Board of Directors consisting of eight members, two appointed by the governing body of each city. Under the terms of the agreement, TMPA agreed to construct or acquire electric generating plants to supply energy and power to the Cities for a period of not less than 35 years. The Cities in turn agreed to purchase all future power and energy requirements in excess cif the amounts generated by their systems from TMPA at prices intended to cover operating costs and retirement: of debt. In the event that revenues are insufficient to cover all costs and retire the outstanding debt, each of the Cities has guaranteed a portion of the unpaid debt based, generally, upon its pro rata share of the energy delivered to consumers in the prior operating year, As of September 30, 2006, total TMPA long-term debt outstanding was approximately $1,072,169,000, and the City's percentage was approximately 21.3°/a. In the opinion of management, the possibility of a material payment in the near future under this guarantee is remote in that TMPA is generating operating profits and assets exceed liabilities. TMPA operates a 452-megawatt, lignite-fueled generating plant. In 1996, TMPA switched to an external source of lignite to reduce costs. Should TMPA be dissolved, each city would be entitled to an undivided interest in the property. Selected financial statement information of TMPA is as follows: September 30 Unaudited} 2006 2005 ~OOOs} (OOOs) operating revenues $ 244,480 $ 234,871 Operating expenses 103,876 98,050 Operating income 140,604 136,821 4thervon-operating sources 8,413 4,120 Current assets 55,778 56,539 Total assets 1,245,503 1,284,353 Long-term debt 1,072,169 1,120,231 Total liabilities 1,209,944 1,249,909 Total equity 35,559 34,444 Agreement with the City of Dallas During 1985, the City entered into an agreement with the City of Dallas that provides for the purchase of a minimum of 500,000 gallonslday of untreated water from the City of Dallas from Lake Lewisville. This contract will be effective for 30 years. The cost of water purchased under this agreement during fiscal year 2006 was $79,195. 55 CITY 4F DENT4N, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 E. Litigation Various claims and lawsuits are pending against the City. In accordance with GAAP, those judgments considered "probable" are accrued, while those claims and judgments considered "reasonably possible" are disclosed but not accrued. In the opinion of City management and legal counsel, the maximum amount of all significant claims considered reasonably possible, excluding condemnation proceedings, is approximately $500,000 as of September 30, 200. Potential losses after insurance coverage on all probable claims and lawsuits wilt not have a material effect on the City's financial position as of September 30, 200b. 56 CITY OF DENTON, TEXAS REQUIRED SUPPLEMENTARY INFORMATION Exhibit XH SCHEDULE OF TMRS FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE FISCAL YEARS (Unaudited) Actuarial Unfunded Accrued Actuarial Actuarial Actuarial Liability (AAL) Accrued Fiscal Valuation Value of Uni# Credit Liability Funded Year Date Assets Method (UAAL) Percent 20114 12131!2003 $ $7,651,690 $ 118,817,8$4 $ (31,166,194) 73.8°/a 2005 12/31/2004 95,204,213 127,827,803 (32,623,594) 74.5 2006 12/3112405 98,051,747 133,853,457 (35,801,710} 73.3 UAAL as Percent of Annual Fiscal Covered Covered Required Actual Percent Year Payroll Payroll Contributions Contributions Contributed 2004 $ 45,774,694 68.1% $ 8,313,904 $ 8,313,904 100.0% 2005 46,415,828 70.3 8,707,143 8,707,103 100.0 2006 46,394,303 77.2 9,347,195 9,347,195 100.0 57 CITY OF DENTON, TEXAS REQUIRED SUPPLEMENTARY INFORMATION Exhibit XIII SCHEDULE OF DENTON'S FIREMEN'S RELIEF AND RETIREMENT PLAN FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE VALUATION YEARS (Unaudited) Actuarial Unfunded Accrued Actuarial Actuarial Actuarial Liability (AAL) Accrued Fiscal Valuation Value of Unit Credit Liability Funded Year Date Assets Method (UAAL) Percent 2002 12/31/2001 $ 26,061,756 $ 29,786,004 $ (3,724,248) $7.5% 2004 12/31/2003 30,538,352 37,557,733 (7,019,381) 81.3 2006 12031/2005 34,677,009 45,341,724 (10,664,715) 76.5 UAAL as Percent of Annual Fiscal Covered Covered Required Actual Percent Year Payroll Payroll Contribu#ians Coa#ributions Contributed 2002 $ 7,947,098 46.9°/a $ 1,504,$22 $ 1,504,$22 1011.0% 2004 8,459,472 83.0 1,846,396 1,846,396 100.0 2006 10,445,026 102.1 1,970,632 1,970,432 100.0 58 APPENDIX C FORM OF BOND COUNSEL'S OPINYONS Proposed Form of Opinion of Bond Counsel ~4n opinion in substantially the fallowing form wilt be delivered by McCall, Parkhurst c~ Horton L.L.P., Bond Counsel, upon the delivery of the Bonds, assuming no material changes in facts or law. CITY OF DENTON GENERAL OBLIGATION REFUNDING AND IMPROVEMENT BOND SERIES 2007 DATED JULY 15, 2007 IN THE PRINCIPAL AMOUNT OF $42,550,000 AS BOND COUNSEL for the City of Denton, in Denton County, Texas (the "'Issuer"}, we have examined into the legality and validity of the bond issue initially evidenced by the bond described above (the "Initial Bond"}, which Initial Bond originally has been issued and delivered as a single fully registered bond, without interest coupons, with the principal amount thereof payable, asset forth in the Initial Bond, and with the unpaid balance of each installment of principal, respectively, bearing interest from the date of the Initial Bond to the scheduled due date ("maturity"}, or to the date of prepayment or redemption, of each installment of principal, at the rates per annum for each maturity set forth in the Initial Bond with interest, calculated on the basis of a 3ti0-day year composed of twelve 30-day months, payable on February 15, 2008, and semiannually on each August 15 and February 15 thereafter, and with the then outstanding principal of the Initial Bond being subject to~~repayment or redemption, as a whole or in part, prior to scheduled maturity, in accordance with the terms ands conditions stated on the face of the Initial Bond. The lnitial Bond may, at the request of the registered owner, be transferred and converted into, andlor exchanged for, fully registered bonds, without interest coupons, in the denomination of $5,000 or any integral multiple of $5,000, and such bonds again may be transferred andlor exchanged, all subject to the conditions stated and in the manner provided in the Ordinance authorizing the issuance of the Initial Bond (the "Bond Ordinance"},with any such bonds which are registered, authenticated, and delivered in accor- dance with the Bond Ordinance being hereinafter called "Definitive Bonds". WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of the State of Texas, and have examined and relied upon a transcript of certified proceedings of the Issuer and other pertinent instruments furnished by the Issuer relating to the authorization of the lnitial Bond and Definitive Bands and the issuance and delivery of the Initial Bond, including the executed lnitial Bond and a printed specimen of the form for Definitive Bands initially made available by the Issuer for completion and exchange for the Initial Bond; and we have examined and relied upon (i) the Issuer's Federal Tax Certificate, of even date herewith, and (ii}the report and mathematical verifications of Grant Thornton LLP, certified public accountants, with respect tv tree adequacy of certain escrowed funds to accomplish the refunding purposes of the Initial Bond. BASED ON SAID EXAMINATION, IT IS OUR OPINION that the Initial Bond and Definitive Bonds have been duly authorized, and the Initial Band has been duly issued and delivered, all in accordant:e with law, and that, except as may be limited by laws applicable to the Issuer relating to bankruptcy, reorganization, and other similar matters affecting creditors' rights or by general principles of equity which permit the exercise of judicial discretion, the Initial Bond constitutes and the Definitive Bonds will constitute valid and legally binding obligations of the Issuer; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Initial Bond and Definitive Bonds have been levied and pledged for such purpose, wit'.hin the limit prescribed by law. IN OUR OPINION, except as discussed below, the interest on the lnitial Bond and the Definitive Bonds (collectively, the "Bonds"} is excludable from the grass income of the owners for federal income t~~x purposes under the statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We are further of the opinion that the Bonds are not "specified private activity bonds" and that, accordingly, interest on the Bonds will not be included as an individual or corporate alternative minimum tax preference item under section 57~a}(5} of the Internal Revenue Code of 1986 the "Code"'}. In expressing the aforementioned opinions, we have relied on certain representations, the accuracy of which we have not independently verified, .and assume compliance with certain covenants regarding the use and investment of the proceeds of the Bonds ar.~d the use of the property financed therewith. We call your attention to the fact that if such representations are determined to be inaccurate or if the Issuer fails to comply with such covenants, interest on the Bonds may become includable in gross income retroactively to the date of issuance of the Bonds. EXCEPT AS STATED ABOVE, we express no opinion as to any federal, state, or local tax consequences of acquiring, carrying, owning, or disposing of the Initial Band and the Definitive Bonds. WE CALL YOUR ATTENTION TO THE FACT that the interest ontax-exempt obligations, such as the Bonds, is included in a corporation's alternative minimum taxable income for purposes of determining the alternative minimum tax imposed on corporations by section 55 of the Code. OUR OPINIONS ARE BASED ON EXISTING LAW, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or suplalement our opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect ~~ny changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guaranl:ee of result and are not binding on the Internal Revenue Service (the "Service"}; rather, such opinions represent our legal judgment based upon our review of existing law and in reliance upon the representationsand covenants referenced above that we deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income far federal income tax purposes. No assurance can be given whether or not the Service will commence an audit of the Bonds. If an audit is commenced, in accordance with its current published procedures the Service is likely to treat the Issuer as the taxpayer. We observe that the Issuer has covenanted not to take any action, or omit to take any action within its control, that if taken or omitted, respectively, may result in the treatment of interest on tree Bonds as includable in gross income for federal income tax purposes. WE EXPRESS NO OPINION as to any insurance policies issued with respect to the payments due for the principal of and interest on the Bonds, nor as to any such insurance policies issued in the future. OUR SOLE ENGAGEMENT in connection with the issuance of the Bands is as Bond Counsel for the Issuer, and, in that capacity, we have been engaged by the Issuer for the sole purpose of rendering our opinions with respect to the legality and validity of the Bonds under the Constitution and laws of the State of Texas, and with respect to the exclusion from gross income of the interest on the Bonds for federal income tax purposes, and for no other reason or purpose. The foregoing opinions represent our legal judgment based upon .a review of existing legal authorities that we deem relevant to render such opinions and are not a guarantee of a result. We have not been requested to investigate or verify, and have not independently investigated or verified, any records, data, or other material relating to the financial condition or capabilities of the Issuer, or the disclosure thereof in connection with the sale of the Bonds, and have not assumed any responsibility with respect thereto. ~We express no opinion and make no comment with respect to the marketability of the Bonds. Our role in connection with the Issuer's Official Statement prepared for use in connection with the sale of the Bonds has been limited as described therein. Respectfully, 2 Proposed Form of Upinion of Bond Counsel An opinion in substantially the following form will be delivered by McCall, Parkhurst ~ Dorton L. L. P., Bond Counsel, upon the delivery of the Cert f ►cafes, assuming no material changes in facts or law. CITY OF DENTON CERTIFICATES OF OBLIGATION, SERIES 2007 DATED JULY 15, 2007 IN THE PRINCIPAL AMOUNT OF $11,500,000 AS BOND COUNSEL for the City of Denton, in Denton County, Texas the "Issuer"'}, we have examined into the legality and validity of the issue of Certif cater of Obligation initially evidenced by the certificate described above (the "Initial Certificate"},which Initial Certificate originally has been. issued and delivered as a single fully registered certificate, without interest coupons, with the principal amount thereof payable as set forth in the Initial Certificate, and with the unpaid balance of each installment of principal, respectively, bearing interest, calculated on the basis of a 360-day year composed of twelve 30-day months, from the date ofthe Initial Certificate to the scheduled due date ~"maturity"} of each installment of principal, at the rates per annum for each maturity, set forth in the Initial Certificate with interest ~~ayable on February 15, 2008, and semiannually on each August 15 and February 15 thereafter, and with the then outstanding principal of the Initial Certif cate being subject to prepayment or redemption, as a whole or in part, prior to scheduled maturity, in accordance with the terms and conditions stated on the face o~f the Initial Certif cafe. The Initial Certificate may, at the request of the registered owner, be transferred anti converted into, andlor exchanged for, fully registered certif cafes, without interest coupons, in the denornination of $5,000 or any integral multiple of $5,000, and such certificates again may be transferred andlor exchanged, all subject to the conditions stated and in the manner provided in the Ordinance authorizing the issuance of the Initial Certificate the "Certificate Ordinance"},with any such certificates which are registered, authenti- cated, and delivered in accordance with the Certificate Ordinance being hereinafter called "Def nitive Certificates". WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of the State of Texas, and have examined and relied upon a transcript of certified proceedings of the Issuer and other pertinent instruments furnished by the Issuer relating to the authorization of the Initial Certificate and Definitive Certificates and the issuance and delivery of the Initial Certif care, including the executed Initial Certificate and a specimen of the form for Definitive Certificates initially made available by the Issuer for completion and exchange for the Initial Certificate; and we have examined and relied upon the Issuer's Federal Tax Certif cate, of even date herewith. BASED ON SAID EXAMINATION, IT IS OUR OPINION that the Initial Certificate and Definitive Certificates have been duly authorized and the Initial Certificate has been duly issued and delivered, all in accordance with law, and that, except as may be limited by laws relating to bankruptcy, reorganization, and other similar matters affecting creditors' rights or by general principles of equity which permit the exercise of judicial discretion, the covenants and agreements in the Certif cate Ordinance constitute valid ~~nd binding obligations of the Issuer, and the Initial Certificate constitutes and Definitive Certificates collectively, the "Certificates"} will constitute valid and legally binding abligations of the Issuer, which, together with the interest thereon, and together with other parity obligations of the Issuer, are payable from and se~~ured by (i} annual ad valorem taxes, within the limit prescribed by law, levied on all taxable property withir► the Issuer, and iii) certain surplus revenues knot to exceed $10,000 in aggregate amount} derived by the IssL~er from the ownership and operation of the City's Utility System consisting of the City's combined waterworks system, sanitary sewer system, and electric light and power system}, all as provided in the Certificate Crdinance. THE ISSUER has reserved the right to issue, in accordance with law, and in accordan~.ce with the Certificate Ordinance, other and additional obligations, and to enter into contracts, payable from ad valorem taxes andlor revenues of the City's Utility System, on a parity with, or with respect to said revenues, superior in lien to, this Certif cate. THE ISSUER also has reserved the right, subject to the restrictions stated in the Certif cate Ordinance, to amend the Certif cate Ordinance with the approval of the holders orowners offifty-one percent in principal amount of all outstanding Certificates which are payable from and secured by cerl:ain surplus revenues. IT IS FURTHER OUR OPINION, except as discussed below, that the interest on the Ce:rtif cafes is excludable from the gross income of the owners for federal income tax purposes under the statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We are further of the opinion that the Certificates are not "specif ed private activity bonds" and that, accordingly, interest on the Certificates will not be included as an individual or corporate alternative minimum tax preference item under section 57~a}~5} of the Internal Revenue Code of 1956 the "Code"). In expressing the aforementioned opinions, we have relied on certain representations, the accuracy of which we have not independently verified, and assume compliance with certain covenants regarding the use and investment of the proceeds of the Certif cates and the use of the property f nanced therewith. We call your attention to the fact that if such representations are determined to be inaccurate or if the Issuer fails to comply with such cavena~lts, interest on the Certificates may become includable in gross income retroactively to the date of issu~~nce of the Certificates. EXCEPT AS STATED ABOVE, we express no opinion as to any other federal, state, or local tax consequences of acquiring, carrying, owning, or disposing of the Certificates. WE CALL YOUR ATTENTION TO THE FACT that the interest ontax-exempt obligations, such as the Certificates, is included in a corporation's alternative minimum taxable income for purposes of determining the alternative minimum tax imposed on corporations by section 55 of the Code. 4UR OPINIONS ARE BASED ON EXISTING LAW, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may thereafter come to our attE~ntion or to reflect any changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service the "Service"); rather, such opinions represent our legal judgment based upon our review of existing law and in reliance upon the representations and covenants referenced above that we deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes. No assurance can be given whether or not the Service will commence an audit of the Certificates. If an audit is commenced, in accardance with its current published procedures the Service is likely to treat the Issuer as the taxpayer. We obse~:ve that the Issuer has covenanted not to take any action, or omit to take any action within its control, that if taken or omitted, respectively, may result in the treatment of interest on the Certificates as includable in gross income for federal income tax purposes. WE EXPRESS NO OPINION as to any insurance policies issued with respect to the payments due for the principal of and interest on the Certificates, nar as to any such insurance policies issued in the future, 2 4UR SOLE ENGAGEMENT in connection with the issuance of the Certificates is as Bo»d Counsel for the Issuer, and, in that capacity, we have been engaged by the Issuer for the sole purpose of rendering our opinions with respect to the legality and validity of the Certificates under the Constitution and caws of the State of Texas, and with respect to the exclusion from gross income of the interest on the Certif cater for federal income tax purposes, and for no other reason or purpose. The foregoing opinions represe~r~t our legal judgment based upon a review of existing legal authorities that we deem relevant to render such opinions and are not a guarantee of a result. We have not been requested to investigate or verify, anti have not independently investigated or verified, any records, data, or other material relating to the financial condition or capabilities of the Issuer, or the disclosure thereof in connection with the sale of the Certificates, and have not assumed any responsibility with respect thereto. We express no opinion and make no comment with respect to the marketability of the Certificates. Our role in connection with the Issuer's official Statement prepared for use in connection with the sale of the Certif cater has been limited as described therein. Respectfully, 3 Exhibit 4 PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT entered into as of July 15, 2007 (this "Agreement"), by and between the City of Denton, Texas (the "Issuer"), and The Bank of New York Trust Company, National Association, a national banking association (the "Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its General Obligation Bonds, Series 2007 (the "Securities") in the aggregate principal amount of $16,070,000 such Securities to be issued in fully registered form only as to the payment of principal and interest thereon; and WHEREAS, the Securities are scheduled to be delivered to the initial purchaser thereof on or about August 21, 2007; and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the registered owners thereof; and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities. As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof, all in accordance with this Agreement and the "Ordinance" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the "Ordinance." The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Security means the date on and after which the principal or any or all installments of interest, or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the principal corporate trust office of the Bank as indicated on the signature page hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Fiscal Year" means the fiscal year of the Issuer, ending September 30. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Ordinance" means a written request or ordinance signed in the name of the Issuer by the Mayor of the Issuer delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "Ordinance" means the ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the City Secretary or any other officer of the Issuer and delivered to the Bank. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Ordinance). "Redemption Date" when used with respect to any Bond to be redeemed means the date fixed for such redemption pursuant to the terms of the Ordinance. "Responsible Officer" when used with respect to the Bank means the Chairman orVice-Chairman of the Board of Directors, the Chairman or Vice-chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above 2 designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfer of the Securities. "Stated Maturity" means the date specified in the Ordinance the principal of a Security is scheduled to be due and payable. Section 2.02. Other Definitions. The terms "Bank," Issuer," and Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT Section 3.01. Duties of Paying_Agent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the Bank Office. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and preparing and sending checks by United States Mail, first class postage prepaid, on each payment date, to the Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the address appearing on the Security Register or by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Ordinance. Section 3.03. Reporting Requirements. To the extent required by the Code or the Treasury Regulations, the Bank shall report to the Holders and the Internal Revenue Service the amount of interest paid or the amount treated as interest accrued on the Bond which is required to be reported by the Holders on their returns of federal income tax. 3 ARTICLE FOUR REGISTRAR Section 4.01. Security Register -Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register"), and, if the Bank Office is located outside the State of Texas, a copy of such books and records shall be kept in the State of Texas, for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as maybe reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transferor exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02. Bonds. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Security Re is~ter. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04. List of Security Holders. 4 The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank toprovide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Cancelled Bonds. All bonds surrendered to the Bank, at the designated Payment/Transfer Office, for payment, redemption, transfer, or replacement, shall be promptly cancelled by the Bank. The Bank will provide to the Issuer, at reasonable intervals determined by the bank, a bond evidencing the destruction of canceled bonds. Section 4.06. Mutilated, Destroyed, Lost or Stolen Securities. The Issuer hereby instructs the Bank, subject to the applicable provisions of the Ordinance, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an overissuance. Incase any Security shall be mutilated, or destroyed, lost or stolen, the Bank, in its discretion, may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents, Etc. 5 (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on bonds or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Moneys Held by Bank. The Bank shall deposit any moneys received from the Issuer into a segregated account to be held by the Bank solely for the benefit of the owners of the Securities to be used solely for the payment of the Securities, with such moneys in the account that exceed the deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas and to the extent permitted by the laws of the United States of America to secure and be pledged as collateral for such accounts until the principal and interest on such securities have been presented for payment and paid to the owner thereof. Payments made from such account shall be made by check drawn on such account unless the owner of such Securities shall, at its own expense and risk, request such other medium of payment. 6 Subject to the Unclaimed Property Law of the State of Texas, any money deposited with the Bank for the payment of the principal, premium (if any), or interest on any Security and remaining unclaimed for three years after the final maturity of the Security has become due and payable will be paid by the Bank to the Issuer if the Issuer so elects, and the Holder of such Security shall hereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease. If the Issuer does not elect, the Bank is directed to report and dispose of the funds in compliance with Title Six of the Texas Property Code, as amended. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction within the State of Texas to determine the rights of any Person claiming any interest herein. Section 5.08. Depository Trust Company Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements," effective August 1,1987, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02. Assi n.~. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. 7 Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on the signature page of this Agreement. Section 6.04. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severabili . In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of A re,~ ement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire A re,~ ement. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between his Agreement and the Ordinance, the Ordinance shall govern. Section 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (60) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securi- ties, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. 8 Section 6.11. Governing. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. 9 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION By Title 2001 Bryan Street, 10th Floor Dallas, Texas 75201 CITY OF DENTON, TEXAS By Mayor 215 E. McKinney Denton, Texas 76201 SCHEDULE A Paying Agent/Registrar Fee Schedule [To be supplied by the Bank] In U ~ Q ~ Q~ ~ i i i i i i i i i i i i i i N i U i i i i i~ X L r W Q o c 00000000000000000000000 ~ 00000000000000000000000 00000000000000000000000 ~ W H 0 0 0~~~ 0 0 0 0 0 ~0 0 0 0 0 0 0 0 0 0 0 0 N ~O~ON~O~O~OOrC~~00~OO~OOOOf~ Q ~ONf~~NNN~N~~ c~~~~~NaO~~ O ~ ~ N ~ ~ ~ ~ ~j ~ ~ ~ ~ .p ~ N O O H i i i i i i i i i i i i i i i i i i i i i 0 0 ~ Z Z O O Q Q O O U r ~ O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O ~ W Q 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0' 0 Z 0 0 0~~~ 0 0 0 0 0 ~0 0 0 0 0 0 0 0 0 0 O O~~ ~ ~O~ON~O~O~OOrc'')~00~OO~OOO f~ ~oN~~nNNN~N~~ c'~~~~~NaO o~ (~U' ~ J N r ~ ~ r N r ~ ~ ~ ~ N O 0 0 0 0 0 0 O ~ ' ' ' ' ' ' ' ' O ' ' ' ' ' ' O O O O O O ' O W Q ~ 0 0 0 0 0 O = N ~~~~NaO 0~ W U ~ ~ ~ ~ a p ~ W N p ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ Q ~ ~ H ~ ~ ~ Z ~ Z Q ~ ~ CW Z 0 C = ~ ~ W Z C W p 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O ~ C W p 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O ~ C N_ W 00000000 ' 000000 ' ' ' ' ' ' ' O U ~ Z ~ ~ OOO~n~~OO 000000 O ~ C ~ Q H ~O~ON~0~0 OOrc`')~00~ f~ - C W = H ~DNf~~nNNN~ c'~ O ~ ~ Z ('')Nrr ~ ~ N a 0 ~ r ~ ~ ~ Q ~ o ~ ~ as cry ~ ~ Z p ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 aW "o ~ ~ W m ~ 0 ~ W ~ U C ~ 0 ~ ~ Q o ~ ~ ~ ~ a~ W ~ ~ ~ _ ~ D ~ON > Z ~ mho o 0 ~ 0 a ~ ~ oa ~ O N ~ C U O O L ~ ~ ~ ~ ~ 0 ~ ~ 0 ~ ~ U N N N ~ 0 ~ ~ ~ 0 ~ CC - W ~ ~ ~ ~ ~ ~ ~ C U ~ ~ ~ ~ ~ ~ ~ U ~ ~ U Z m O Q~ 0- 0~ C N~~ ~ N O- 0 0 iL Q ~ U ~ ~ ~ v o ~U ~~~Q~ ~ o ~ ~w~ ~ W ~ ~ ~ 3 ~ o ~ 0 ~ 3 U~ U U 0 0._ a ~~U~~~ ~oU~ °oW ~U~~~ ~>~o~ 0 QQa~QQ W cn N cn ~ cn N cn ~ cn N N cn cn cn cn ~ ~ ~ ~ ~ ~ `n cn ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ L i L ~ L W W W W W W ~ ~ ~ ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0~~~~~~ 0 } ~ U N m m m m m m Uo ~ 0000000000000000000000 W ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ U 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 U~ ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ N N N N N N N N N N N N N N N N N N N N N N _ ~ ~ CC ~ ~ ~ N ~o ~ o~ ~ 0 ~ ~ c~ 0~ 00 ~ ~ X ~ lN~ N C'~ ~000~ ~ 0~} X r~c~~ N Oo ~ ~ ~ Oo ~ r ~ C ~ ~ ~ C ~ ~ ~ ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O O O O O O O O O O O O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O O O O O O O O O O O O ~ U y 0 0 0~ 0 0 0 0 0 0 0~ 0 0 0 0 0 0 0 0 0 0 0 0 S U N 0 0~ 0 0 0~ 0 0 0 0 0 0 Q W H O~~ O O~ O~ O~~~~ O O r 0~ 0 0 0 0 0 0 0 Q W H 0 0~~ 0~~~ 0 0 0 0 0 H Oo0NN0~N0001~~N~00~N~0~00000~ N ~c~~01~00~N0000~ OO O Oc'~NNN~O~('')N~ c'')~ NNf~u~u~0~~ OO 0 rNN~~~NNf~~C~No~ ~pG NN r~ ~oN Nrc'~ c~ NCO ~ c`1 ~ r ~ ~ ~ ~ O O N i i i i i i i i i i i i i i i i i i i i i i 0 0 N i i i i i i i i i i i i i p Z Z O O p Z Z Q 0 Q 0 U r~ U ~ ~ ~ ~ 0000000000000000000000 0 0000000000000 p o000000000000000000000~o p 0000000000000 ~ W O 0 0 0~ 0 0 0 0 0 0 0~ 0 0 0 0 0 0 0 0 0 0 O ~ W O 0 0~ 0 0 0~ 0 0 0 0 0 0 OCR Z O~~OO~O~O~~~~OOr0~00000 O GCS Z 00~~0~~~00000 Q-~ Oo0NN0~N0001~~N~00~N~0~0000 ~ Q-~ ~c~~01~00~N0000~ O Z O c'~ N N N ~ 0~ N ~ c'~ ~ N N f~ ~ u~ 0 ~ U Z r N N ~ ~ ~ N N f~ ~ N o~ ~ NN r~ ~oN N N ~ c'~ NCO OC ~ N OC ~ r ~ ~ ~ ~ ~ O O O O O ~ O O O O W O O O O O O W O O O O O ~ f~u~u~0 I~ ~ ~c'~NO O L SON N ~ O ~ N~~ 0 ~ 0 U ~ ~ U ~ ~ a p p ~ N p ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ N p ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ = V1 = N a ~ N ~ N ~ ~ Z ~ Z Z Q ~ Q ~ W Z Z ~ b~} 6~} ~ 64 Ef} W ~ O W p O O O O O O O O O O O O O O O O O O O p 0 0 0 0 0 0 0 0 0 O C W p O O O O O O O O O O O O O O O O O O O W p 0 0 0 0 0 0 0 0 0 O ~ N W 0 0 0~ 0 0 0 0 0 0 0~ 0 0 0 0 0 0 O N W 0 0~ 0 0 0~ 0 0 O ~ Z ~ ~ O~~OO~O~O~~~~OOr0~0 O ~ ~ OOr~O~~UO O ~ 0 H OoONND~N000I~~N~o0~N~0~ ~ O N~ Q.('~~OI~OO~NO ~ W = H Oc'~NNN~o~('')Nr c`')r NN ~ = N rNN~~~NNf~ o~ ~ Z N N r r O ~ Z c~ ~o ao r ~ ~ Q tf} tf} Q t~ tf} ~ ~ as cry cry U~ Z p ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Z p ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ N W ~ Z ~ Z N ~ aW yo No 00 W {f} 6~} W m b`} Ef} ~ r W ~ U ~ ~ ~ ~ Q D ~ N W ~ ~ - ~ } ~ ~ W ~ ~ ~ 0 ~ N 0 ~ ~ ~ 0 ~ 0 ~ p•~ ~ 0 ~ ~U•O ~ ~ a Q U~ ~ L 0~ ~ Q a~ m ~ ~ ~ 00 ~ ~ 0 ~ O ~ U U ~ ~ ~ ~ ~ U ~ ~ O ~ ~ ~ U U ~ Q ~ ~ ~ ~0 ~ o ~~~L~•-a~QOc 3~, ~o ~ ~ Nom- ~ ~ ~ 0= 0 0 ~ 0~ ~ > a~ ~ ~ ~ o > a~ ~ c o x,00=~~0 000 ~ ~~•~•°o~ ~00~~00 }mac }0~0coQ ~OO~U ~0}c~O~U W ~ N ~ _ ~ ~ W ~ cn N ~ ~ ~ C ~ ~ ~ ~ ~ U W ~ cn ~ ~ N C cn ~ U Q U ~c0~0ooUL~~~O 0~~ ~~-0 U ~0-0 ~~~030 ~°'0~~'co~o°'0~~~~ ~a~m~~=0QQ ~ °'a~3c~~~~UoO}Q o•- 0 N m a~ 3 ~ ~•c 0 ~ a~0 0~~}~~~ p N a~ 3 0 0 Q~•u 0 ~ a ~o~~ °o~zW~ ~~~U>o~ ~ ~~~oU~zC7wQ> 0 W cn N cn ~ cn N cn cn cn N N cn cn cn cn cn cn cn ~ ~ ~ ~ vi W cn vi v~ vi cn cn cn vi cn vi ~ ~ cn ~ C~~~ C~ ~L ~L ~L L i i~ L i i~ W W W W C p C C~~ W W 0 U ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ C m m m m m m U 0 ~~~~~~~~o~~o~~ oc 00000000000000000000000 oc 000000000000 Q Q o~aoaoooo~aoaoooo~aoaooo W 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 W O O O O O O O O O O O O V 0 } 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ O O O O O O O O O O O O N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N - ~ ~ L i i i i i i i i i i i i i i i i i ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 00000 00000 00000 00000 00000 00000 ~ U y 0 0 0 0 0 ~ U y 0 0 0 0 0 ~ V y O O O O O Q W H OO OO Q Q W y OO OO Q Q W y ~ ~ OO O ONc'')~DN oo O OI~C'~~01~ oo O Of~(~~01~ HoG U ANN O HOG U u~c~N ~ HOG U ~c'~N ~ ~ ~ ~ ~ ~ ~ ~4 H i i i i i H i i i i i H i i i i i y y y ~ Z Z ~ Z Z ~ Z Z Q O Q O Q O U U U ~ ~ ~ ~ ~ ~ 00000 00000 00000 00000 00000 00000 ~ W O 0 0 0 0 0 ~ W O 0 0 0 0 0 ~ W O 0 0 0 0 0 Qoc~ Z o000o Q~~ Z o000o Qoc~ Z 00000 o oo~~no o oo~~no o oo~~o O~U Z ~NN~o ~~U Z o~N~01~ ~~U Z O~~N~ol~ ~ ~ ~ O O O O O O O O O O O O ~ ' 0 0 0 0 ~ ' 0 0 0 0 ~ ' 0 0 0 0 W O OO O O OO W O OO O O OO W 0 D O O OO ~ N c'') ~o N ~ ~ c~ ~o ~ ~ ~ c~ ~o ~ Q~ N N Ui Q~ c'~ N ~o O~ c~ N ~o Q o 0 0 0 0 0 0 0 0 ~ W O O W O O W O O O N D O"' O N_ 0 O"' O N 0 O"' O O O O O O O O ~ = y O O = y O O = y O O a H y ~ ~ H y ~ ~ H y ~ ~ ~ ~ Z ~ Z ~ Z Z Q ~ Q ~ Q ~ W Z Z Z W ~ O W W ~ W ~ W 0 N W i i i i i N W i i i i i N W i i i i i ~ Z ~ ~ ~ ~ ~ ~ O y O y O y _ W ~ ~ ~ Z ~ Z ~ Z Q O Q cf} cf} Q ~ ~ Q ' ~ ~ ~ ~ ~ as cry cry cry U~ z o ~ ~ ~ ~ ~ z o ~ ~ ~ ~ ~ z o ~ ~ ~ ~ ~ W ~ Z ~ Z ~ Z N Q W y O y O y O ~ c 00 W {f} {f} W ~ W ~ b4 b~} ~ j ~ U ~ _U ~ ~ Q D N W _ ~ ~ ~ O Z ~ O W ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o a o a o a L ~ L ~ L C C A N C A N C C N U 0 N F U N F U N F U C ~ C ~ C II ~ ~U W > U W > U W > U Q z ~a~~ z ~a~~ z ~a~~ W ~ ~ } ~ J W ~ ~ } ~ J W ~ ~ } ~ J ~ .cn ~ ~~~~0 ~ ~~~~0 ~ ~a~}0 0 Q Q Q Q Q Q Q Q Q Q Q ~ ~ ~ ~ 0 ~ W ~ ~ ~ ~ W ~ ~ ~ ~ W ~ ~ ~ U ~ W W W W ~ W W W W O W U W W ~ ~ ~ ~ \ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ C ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ U N m m m m m m m m CD 00 00 ~ C U~ ~ ~ r ~ 0000 NNNN Q O~Q~Q~Q~ Q 0000 Q ~ U W 0 0 0 0 W W U U } 0 0 0 0 } 0 0 0 0 ~ O O O O N N N N N N N N N N N N _ ~ ~ AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Fiscal Operations ACM: Jon Fortune SUBJECT Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of "City of Denton General Obligation Refunding Bonds, Series 2007"; establishing parameters for the redemption of certain outstanding obligations of the city; authorizing the issuance of the bonds; approving and authorizing instruments and procedures relating to said bonds; and enacting other provisions relating to the subject. BACKGROUND The City's Debt Service Management Policy (403.07 XI) as approved by the City Council includes a provision that addresses the circumstance by which refunding or restructuring debt options will be considered. Specifically the Policy states: "The City shall consider refunding debt whenever an analysis indicates the potential for present value savings of approximately 3.5% of the debt service being refunded or if beneficial to the City in another way." The City's financial advisor, First Southwest, monitors existing City debt compared to market conditions to identify opportunities by which the City could save money on existing debt service requirements. The following refunding was originally to be included in the July 17 General Obligation Bond sale, however, due to adverse market conditions the refunding does not meet the policy guidelines at this time. PROPOSED REFUNDING 1998 G.O. - $ 3,360,000 1998 C.O. - $ 595,000 1999 G.O. - $ 2,870,000 1999 C.O. - $ 2,065,000 2001 G.O. - $ 5,720,000 2001 C.O. - $ 2,085,000 2002 G.O. - $ 6,490,000 2002 C.O. - $ 4,560,000 Total $27,745,000 Agenda Information Sheet July 17, 2007 Page 2 Rather than eliminate the refunding, staff is recommending Council approve the attached ordinance which authorizes a three month window for the refunding to occur. This will allow additional opportunity if the market changes. The refunding will only occur if the Debt Service Management Policy guidelines as stated above are met. The refunding, should it occur, will be similar to the sale of revenue refunding bonds in March 2007. With the approval of the attached ordinance, once the parameters are met the refunding will occur without additional Council approval. Originally the refunding was anticipated to yield a net present value savings of $987,744 or 3.56 percent. The present value savings equate to an estimated $95,000 in annual debt service savings over the life of the bonds. PRIOR ACTION/REVIEW (Council, Boards, Commission) The refunding was presented to the Audit/Finance Committee at the May 15, 2007 meeting and to the Council during the June 5, 2007 Work Session. FISCAL INFORMATION The refunding will only occur if the 3.50% net present value savings can be met. The 3.5% net present value savings includes all costs associated with the refunding. EXHIBITS 1. Ordinance 2. Paying Agent/Registrar Agreement Respectfully submitted: Jon Fortune Assistant City Manager Exhibit 1 ORDINANCE NO.20o7- AN ORDINANCE CONSIDERn~1G .ALL MATTERS INCIi]ENT AND RELATED TO THE ISSUANCE, SALE AND DELI~IERY OF "CIT'Y OF DENTON GENERAL OBLIGATION REF~J~NDING BONDS, SERIES 2007"; ESTABLISHING PARATERS FOR THE REDEMPTION OF CERTAn~ OUTSTANDING OBLICrATIONS OF THE CITY; AIJTHORIING THE ISSUANCE OF THE BONDS; APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING TO SAID BONDS; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT. THE STATE OF TEAS COUNTY OF DENTON CITY OF DENTON WHEREAS, there axe presently outstanding bonds and certlflCates of obligation of the City of Denton, Texas the "Issuer"} payable from a pledge by the Issuer to levy ad valorem taxes sufficient to pay principal of and Interest on the bands as they become due and, with respect to the certificates of obligation, further secured by a limited pledge of surplus revenues derived by the Issuer from the ownership and operation of the Issuer's Utility system consisting of the Issuer"s combined waterworks system, sanitary sewer system, and electric light and power system}; WHEREAS, the Issuer now desrres t0 refund all or part of the bonds and certificates of obllga~tlon described in Schedule I attached hereto, collectively, the "Eligible Refunded Obligations", and those Eligible Refunded Obligations desxgriated by the Pricing Officer in the Pricing Certificate, each as defined below, to be refunded are herein referred to as the "Refunded Obligations""; WHEREAS, Chapter 1207, Texas Gavernnaent Cade, authorizes the Issuer to issue refunding bonds and to deposit the proceeds from the sale thereof, together with any other available funds or resources, directly with a paying agent far the Refunded Obligations or a trust company or commercial bank that does not act as a depository for the Issuer and is named in these proceedings, and such deposit, if made before the payment dates of the ReI"un.ded Obligations,- sha11 constitute the n~a~ing of firm banking and financial arrangements for the discharge and final payment of the Refunded Obligations; WHEREAS, Chapter I207, Texas G`rovernment Code, further authorizes the Issuer to enter into an escrow agreement with such paying agent far the Refunded Obligations or trust cainpany or conan~ercial bank with respect to the safekeeping, investment, reinvestment, administration and disposition Qfany such deposit, upon such teams and conditions as the Issuer and such paying agent or trust company ar commercial bank may agree; WHEREAS, the Escrow Agreement hereinafter authorized between the Issuer and The Bank of New York Trust Company, N.A., Dallas, Texas, constitutes an agreement ofthe kind authorized and permitted by said Chapter 1207, Texas Government Cade, and The Bank of New Yank Trust Con~paniy, N.A,, Dallas, Texas, is so Warned as the Escrow Agent in accordance with Section 1207.D 1, Texas Goveri~rlent Code; and WHEREAS, this City Council hereby finds and determines that 1t is a public purpose and to the best interests of the Issuer to refund the Refunded Obligations in order to achieve a present value debt service savings of not less than 3.5°l0, with such savings, among other infarrnation and terms to be included in a  i pricing certificate the "Pricing Certificate"} to be executed by the Pricing Officer thereinafter designated, all in accordance with the provisions of section 107.007, Texas C~overnn~.ent Cade; wFIEREA, all the Refunded Obligations mature or are subject to redelnptian prior to maturity within 20 years of the date of the bands hereinafter authorized; WHEREAS, the bonds hereinafter authorl~ed are to be issued, sold, and delivered pursuant to Chapters 1207, Texas Oavernment Code, as amended, the City's Flame Rule Charter and other applicable laws; and wHEREAS,1t 1 considered to in the best interest of the C1ty that said interest bearing bonds be issued, NOW, THEREFORE THE COCTCiL OF THE CITY OF DENTON HEREBY ORDAINS; Section 1. RECITALS, AMOUNT Alm PURPOSE THE BOLDS. ~a} The recitals set forth in the preamble hereof are incorporated herein and shall have the same force and. effect as if set Earth in this Section. ~b~ The bonds ofthe City afDenton, Texas tthe "issuer"~ are hereby authorized to be issued and delivered in the aggregate principal amount hereinafter provided far the public purpose of providing funds to refund a por~ian ofthe Issuer's outstand~g indebtedness and to pay the costs incurred in connection with the issuance of the Bonds. Section DESIGNATIO~i OF THE BOLDS. Each bond issued pursuant to this Ordinance shall be designated; "CITY OF DENTON GENERAL OBLICATiON REFUNDING B0~1D,SERIES 2007, and initially there shall be issued, said, and delivered hereunder a single fully registered bond, without interest coupons, payable in installments f principal the "initiaa. Band"}, but the Initial Bond lnay be assigned and transferred and~or converted into and exchanged for a like aggregate principal amount of fully registered bands, without interest coupons, having serial maturities, and in the denolninatian or denominations of$,D00 or and integral multiple of $x,000, all in the manner hereinafter provided. The term "Bonds" as used in this Ordinance shall mean and include collectively the Initial Band and all substitute bonds exchanged therefor, as we~1 as all other substitute bands and repla~ccment bonds issued pursuant hereto, and the term "ands" shah mean any of the Bands. Section DELEGATION TO PRICING OFFICER. tai As authorized by Section 1207,007, Texas overntnent Code, as amended, the City Manager ar Assistant City Manager tthe "Pricing Officer") is hereby authorized to act on behalfofthe Issuer in ceiling and delivering the Bands, determining which ofthe Eligible Refunded Obligations sha11 be refunded and carrying out the other procedures specified in this Ordinance, . including, determining the date of the Bonds, any additional ar difFerent designation or title by which the Bonds shall be known, the price at which the Bonds wi11 be sold, the years in which the Bonds will mature, the principal amount to mature in each of such years, the rate of interest to be borne by each such maturity, the interest payment and retard dates, the price and terms upon and at which e Bonds shad be subject to redemption prior to maturity at the option of the Issuer, as well as any mandatory sinking fund redemption provisions, and all other matters relating to the issuance, sale, and delivery of the Bands and the refunding ofthe Refunded Obligations, including without limitation establishing the redemption date far and effecting the redemption of the Refunded Obligations and obtaining municipal bond insurance far all or any portion of the Bonds and providing for the terms and provisions thereof applicable to the Bonds, all of which shall be specified in the Pricing Certificate; provided that:  i {i} the aggregate original principal amount of the Bonds shall not exceed 29,Daa,aa0; {iii the price to he paid for the Bands shall not be less than 97°Io ofthe aggregate original principal amount thereof plus accrued interest thereon franc its date to its delivery; {iii none ofthe Bands shall bear interest at a rate greater than G.Oa°/~ per annum and the net effective interest rate an the Bands shall not exceed ,aa°Io; Div} the refunding must produce present value debt service savings of at least 3.~O~Io, net of any Issuer contribution; and the delegation made hereby shall expire if not exercised by the Pricing Officer an ar prior to October 17, ~a07. {b} In establishing the aggregate principal amount of the Bonds, the Pricing O~'~cer shall establish an amount not exceeding the amount authorized in subsection {a}hereof, which shall be sufficient in amount to provide for the purposes far which the Bonds arc authorized and to pay costs of issuing the Bands. The Bonds shall be sold with and subject to such terms as set Earth in the Pricing certificate, section 4. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, iNTEIST AND OHARACTERITIS OF THE INITIAL BOND. ~a} The Initial Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Band, without interest coupons, dated the date set forth in the Pricing erti~cate, in the denomination and aggregate principal amount set forth in the Pricing ertiffcate, numbered R-l, payable in annual installments of principal to the initial registered owner thereof or to the registered assignee or assignees of said Bond or any portion ar pardons thereof din each case, the 'tregistered owner"}, with the annual installments of principal of the Initial Bond to be payable on the dates} respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL BOND set Earth in this Ordinance. {b} The Initial Band ~i~ may he prepaid or redeemed prior to the respective scheduled due dates of installments of principal thereof, iii} may be assigned and transferred, viii} may be converted and exchanged for other Bonds, Div} shall hive the characteristics, and {v} shall be signed and sealed, and the principal of and interest on the Initial Band shall be payable, alI as provided, and in the manner required or indicated, in the FORM OF INITIAL BO1~D set forth in this Ordinance. {c} The unpaid principal balance ofthe Initial Bond shall bear interest from the date afthe Initial Band to the respective scheduled due dates, or to the respective dates of prepayrne~t ar reden~ptian, of the installments of principal afthe Initial Band, and said interest shall be payable, all in the manner provided and at the rates and an the dates stated in the FORM OF INITIAL BOND set forth in this Ordinance. ~ectian 5. FORM OF INITIAL BOND, The farm of the Initial Band, including the form of Registration ertilicate of the ~omptrollcr of Public Accounts of the State of Texas to be endorsed an the Initial Band, shall be substantially as follows, with such appropriate variations, omissions or .sertians as are permitted or required by this Ordinance, and with the Ynitial Bond to be modified pursuant to, and completed with infarrr~ation set forth i~n, the pricing certificate; 3  I FARM ~F INITIAL BAND N0. R-I 4~,50,~00 UNITED STATES ~F AMERICA STATE DF TEXAS COUNTY ~F DENTIN CITY ~F DENTC~N GENERAL ~BLIC~ATIN REFUNI~IN BAND SERIES ZaO~ TFIE CfTY DF DENTON, in Denton County, Texas the "Issuer"'~, being a political subdivision of the State of Texas, hereby promises to pay to or to the registered assignee ar assignees of this Band or any portion or portions hereof din each case, the "registered owner"'}the aggregate principal amount of DOLLARS} in annual installments of principal due and payable on in each of the years, and in the respective principai amounts, as set forth in the fallowing schedule, and to pay interest, Pram the date ofthis Bond hereina~er stated, an the balance of each such installment of principal, respectively, from tune to time remaining unpaid, at the rates per annum as follows: PRINCIPAL fNTEREST PRINCIPAL INTEREST YEAR AIVIOUNT RATE °I~ YEAR AMOUNT RATE °Io ~Informatian from Pricing Certificate to be inserted} Interest shall first be due and payable on , and erniannually on each and therea~er while this Bond ar any portion hereaf is outstanding and unpaid. Said interest shall be calculated on the basis of a 3~~~day year can~posed of twelve 0-day months. THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST this Bond are payable in lawfi~l money ofthe United States ofAmerica, without exchange or collection charges. The installments of principal and the interest on this Bond are payable to the registered owner hereofthraugh the services ofTHE BAND OF NEw YORK TRUST C~1ViPANY, NATIONAL ASSCYATION, AUSTIN, TEAS, which is the "paying Agent~Registrar" for this Bond Payment of all principal of and interest on this Band shall be made by the paying Agent~Registrar to the registered owner hereofon each principal andlor interest payment date by check, dated as afsuch date, drawn by the Paying AgentlRegistrar an, and payable solely from, funds ofthe Issuer required by the ordinance authorizing the issuance of this Bond the,Band ordinance"~ to be on deposit with the Paying Agen~Registrar for such purpose a hereinafter provided; and such check shall be sent by the Paying AgentlRegistrar by United States nail, first-class postage prepaid, on each such princi- pal andlorinterest payment date, to the registered owner hereaf, at the address ofthe registered owner, as it appeared at the close afbusiness on the day ofthe month nest preceding each such date the "Record 4  Lm Date"} an the Regis~ratian Baaks kept by the Paying AgentlReistrar, a~ hereinafler described. The Issuer covenants with the registered owner of this Band that on ar before each principal andlor interest payment date far this Band it will make available to the Paying AgentlRegistrar, from the "Interest and Sinking Fund„ created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of ail principal of and interest on this Bond, when due. IN THE EVENT of a nonpayment of interest an a scheduled payment date, and far thirty ~3 days thereafter, a new retard date for such interest payment ~a "Special Record Date"} will be established by the Paying AgentJ~Registrar, if and when funds for the payment of such interest have been received from the lssuer. Notice afthe special Retard Date and ofthe scheduled payment date afthe past due interest ~"Special Payment Date', which shall be fifteen X15} days aver the Special Retard Dated shall be sent t least five ~5} business days prior to the Special Record Date by C~nited States ~nai1, first class postage prepaid, to the address of each folder of a Bond appearing on the registration books of the Paying AgentlReistrar at the close of business ors the 1 nth business day next preceding the date of rna~~ing of such natice~ IF THE DATE for the payment of the principal of or interest on this Band shall be a Saturday, Sunday, a legal holiday, or a day an which banking institutions in the pity where the Paying AgentlRegistrar is located are authorized by law ar executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, ar day an which banking institutions are authorized to close; and payment on such date shall have the same farce and effect as if made on the original date payment was due. TI~~ BOND has been authorised in accordance with the Constitution and laws afthe State afTexas fox the public purposes of refunding certain outstanding obligations of the Issuer, and to pay the casts incu~ed 1n cannect~an with the lsuance of the Bonds, ON , ar an any date whatsoever therea~er, the unpaid installments of prnacipal of this Bond may be prepaid ar redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any available source, as a whole, or in part, and, if in part, the particular portion of this Bond to be prepaid ar redeemed shall be selected and designated by the Issuer ~pra~rided that a pardon afthis Bond nay be redeemed only in an integral multiple of~5,~a0~, at the prepayment or redemption price ofthe par or principal amount thereof, plus accrued interest to the date fixed far prepayment or redemption. THE BONDS of this Series scheduled to mature on and are subject to mandatary redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior to their scheduled maturities, pith money from the Mandatory Redemption Account ~f the lnterest and S inking Fund, with the particular Bonds or pardon thereof to be redeemed to be selected by the Paying Agent~Registrar, by tat or other customary method provided that a pardon of a Band may be redeemed only in an integral multiple of $5,aaa~, at a redemptiar~ price equal to the par or principal arnaunt thereofand accrued interest to the date afredemption, on the dates, and in the principal amounts, respectively, a show in the following schedule; Maturi Mandatary Principal Redemptio,~, I]a~e Any ~maturl 5  i ll~aturi Mandatary Principal Reden~ tiara Dates ~ {maturity} The principal amount of the Bands required to be redeemed on the Mandatory Redempt~an Dates pursuant to the faregaing shall be reduced, at the aptian afthe Issuer by the principal amount afany Bonds out ofthe maturity scheduled far _ and , ~ which, at least ~5 days prior to the aforesaid appropriate redemption date ~1} shall have been acquired by the issuer at a price not exceeding the principal arnaunt of such Bands plus accrued interest to the date of purchase thereof, and delivered to the Paying Agentl~egistrar far cancellation, ar ~2} as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to the mandatory sinking fund redemption. During any period in which ownership of the hands is determined by a boob entry at a securities depository far the Bonds, if fewer than all of the Bands ofthe same maturity and bearing such interest rate are to be redeemed, the Bonds, or portions thereof, to be redeemed shall be selected in accordance with the arrangements between the Yssuer and the securities depositary. AT ,EAT 30 days prior to the date fixed far any such prepayment ar redemption a written native of such prepayment or redemption shall be mailed by the Paying Agent~Registrar to the registered owner hereof. By the date fixed far any such prepayment ar redemption dine provision shall be made by the Issuer with the Paying Agentf~egistrar for the payment of the required prepayment or redemption price for this Bond or the portion hereof which is to be sa prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment ar redemption. Yfsuch written notice afprepayment ar redemption ~s given, and if due provision far such payment is made, all as provided above, this Bond, ar the portion thereof which is to be so prepaid ar redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest aver the date fixed far its prepayment or redemptiau, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued Ynterest to the date fixed far prepayment or redemption firo the Paying AgentJReis~ar out afthe funds provided for such payment, The Paying AgentlRegistrar shall record in the Registra~.an Books all such prepayments or redemptions of principal of this Band or any portion hereof. THIS BOND, to the extent afthe unpaid or unredeemed principal balance hereof, or any unpaid and unredeemed portion hereof in any integral multiple of S,o~D, may he assigned by the initial registered owner hereof and shall be transferred only in the registration Books of the Issuer kept by the Paying AgentlRegistrarocting in the capacity of xegistrax for the Bonds, upon the tcrrns and conditions set forth in the Bond Ordinance. Among other requirements far such transfer, this Bond must be presented and surrendered to the Pa in A entf~eistrar for cancellation, together with proper instruments of assinnment, y g g in form and with guarantee of signatures satisfactory to the Paying AgentlRegistrar, evidencing assigt~rnent by the initial registered owner of this Bond, ar any portion ar portions hereof in any integral multiple of $5,00, to the assignee or assignees in whose name ar names this Bond ar any such portion or portions-hereaf is ar are to be transferred and registered. Any instr~urnent or instruments of assiginnent satisfactory to the Paying Agentl~egistrar may be used to evidence the assignment ofthis Band or any such pardon ar portions hereof by the initial registered owner hereaf~ A nevi band ar bonds payable to such assignee or assignees which then will be the new registered owner ar owners of such new Bond or Bands} or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying AgentlReistrar inconversion of and exchange for this Bond ar any pardon or pardons hereof, but solely in the farm and manner as provided in the next paragraph hereof far the conversion and exchange ofthis Bond ar any portion hereof. The registered owner ofthis Bond shall be deemed and treated by the Issuer and the Paying AgentlRegistrar asthe absolute owner hereof far all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying AgentlRegis~ax sha11 not be affected by any notice to the contrary. A~ PROVIDED above and in the Band Ordinance, this Bend, to the extent of the unpaid or unredeemed principal balance hereof, may be converted into and exchanged for a like aggregate principal atnaunt of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the ln~tlal registered owner hereof, or to the initial registered owner as to any portion afthis Bond v~hxch is oat being assigned and transferred by the initial registered owner, in any denomination or denominations in any integxal multiple of S,aOa subject to the requirement hereina~er stated that each substitute bond issued in exchange far any portion ofthis Bond shall have a single stated principal maturity date},upon surrender of this Bond to the Paying ~AgentlRegistrar for cancellation, all in accordance with the farm and procedures set forth in the Band Ordinance. If this Bond or any po~ian hereof is assigned and transferred or converted each band issued in exchange far any portion hereof shall have single stated principal maturity date corresponding to the due date of the installment of principal of this Band ar portion hereof far which the substitute bond is being exchanged, and sha11 bear interest at the rate applicable to and borne by such installment of principal or portion thereof. such bands, respectively, shall be subject to redemption prior to maturity on the same dates and for the same prices as the corresponding ir~stalln~ent of principal afthis Bond or portion hereof for which they are being exchanged. Na such bond shall be payable in installments, but shall have only one stated principal maturity date. A PRO~YDED IN THE BOND ORDINANOE, THY BOND YN 1T PRESENT FORM M~~ BE As1GNED AND TRANI~`ERRED OR CONVERTED ONCE ONI:~~, and to one or more assignees, butthe bonds issued and delivered in exchange for this Band or any portion hereofrnay be assigned and transferred, and converted, subsequently, a.s provided in the Band Ordinance. The Issuer shall pay the Paying Agent~Registrar's standard ar customary fees and charges for transferring, converting, and exchanging this Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange sha11 pay any taxes ar governmental charges required to be paid with respect thereto. The Paying AgentlRegistrar shall oat berequired to make any such assignment, conversion, or exchange ~i}during the period commencing with the close ofbusiness an any Record Date and ending with the opening ofbusiness on the next following principal or interest payment date, or, iii} with respect to any Bond or portion thereof called far prepayment or redemption prior to maturity, within 45 days prior to its prepayment ar redemption date, TN THE EVENT any Paying AgentlReistrar for this Bond is changed by the Issuer, resigns, ar otherwise ceases to act as such, the Issuer has covenanted in the Band Ordinance that it promptly will appoint . a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owner of this Band. 1T 1 HERBY certified, recited, and covenanted that this Bond has been duly and validly voted, authorized, issued, Bald, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be lane precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been lane in accordance with law; that this Band is a general obligation ofthe Issuer, issued on the full faith and credit thereof; and that annual ad valorenrx taxes sufficient to provide 1'or the payme~at ofthe interest on and principal ofthis Bond, as such interest carves due and such principal matures, have been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged irrevocably far such payment, within the limit prescribed by la~v. 7  Lm BY BECONIINC~ the registered owner ofthis Bond, the registered owner hereby acknowledges all of the terms and provisions of the Band Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Band Ordinance is duly recorded and available far inspection the offcial minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Band Ordinance constitute a contract between the registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile signature o~the Mayor ofthe Issuer and countersigned and attested with the manual ar facsimile signature of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Band and has caused this Bond to be dated 207. ATTEST: CITY OF DENTON, TEA By: ~y; Jennifer Walters Perry R. McNeill City Secretary, City of Denton, Texas IVla~ror, City of Denton, Texas CITY SEAL} INSERT BOND INSURANCE LEGEND, IF ANY} FORM OF REGISTRATION CERTIFICATE OF T~ COMPTROLLER DF PUBLIC ACCOUNTS: ~To be attached to Initial Bond only COMPTROLLER'S REGISTRATION CERTIFICATL~: RECITER NO. I hereby certify that this Bond has been exan~~ned, certified as to ~aiidity, and approved by the Attorney General ofthe State afTexas, and that this Bond has been registered by the Comptroller ofPublic Accounts of the State of Texas. witness my signature and seal this Comptroller of Public Accounts of the State of Texas ~COMPTROLLL~R'S SEAL Section d. ADDITIONAL CHARACTERISTICS OF THE BONDS. ~a,}~ ,.tratian and Transfer. The Issuer shall keep or car~se to be kept at the principal corporate trust office of THE BAND OF NEw YORK TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEAS the '"Paging AgentlRegistrar"'} books or records ofthe registration ar~d transfer of the Bands the "Registration Books'"}, and the Issuer hereby appoints the Paying AgentlRegistrar as its registrar and transfer agent to keep such S  I boars ar records and make such transfers and registrations under such reasonable regulations as the Issuer and Paying AgentlRegistrar may prescribep and the Paying ~lgentlRegistrar shall make such transfers and registrations as herein provided The Paying Agent~fRegistrar sha11 obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bands shall be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying AgentlRegistrar ~n Ming ofthe address to which payments shah be rn.ailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer shalt have the right to inspect the Registration Soaks during regular business hours ofthe Paying Aent~Regis~rar, but otherwise the Paying AgentlRegistrar shall beep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. Registration of each Bond may be transferred in the Registration Baaks only upon presentation and surrender of such Band to the Paying AgentlRegistrar far transfer of registration and cancellation, together with proper written instruments ofasignment, in form and with guara~atee vfsignat~ares satisfactory to the Paying AgentlRegistrar, ~t}evidencing the assignment ofthe Bond, or any portion thereof in any integral multiple of S,Oaa, to the assignee ar assignees thereof, and iii}the right of such assignee or assignees to have the Bond ar any such portion thereof registered in, the name of such assignee ar assignees, Upon the assignment and transfer of any Bond ar any pardon thereof, a new substitute Bond ar Bands shall be issued In conversion and exchange therefor in the manner herein provided. The Initial Bond, to the extent of the unpaid or unredeemed principal balance thereof, may be assigned and transferred by the initial registered owner thereof once only, and to one ar more assignees designated in writing by the initial registered owner thereof. A11 Bands issued and delivered in conversion afand exchange for the Initial Band. shall be in any denomination or denominations of any integral multiple of 5,aaa {subj ect to the requirement hereina~er stated that each substitute Bond shalt have a single stated principal maturity date}, shall be in the form prescribed in the FOR Ole sUBTITUTE BOND set forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as hereina~er provided. Ifthe Initial Bond or any portion thereof is assigned and transferred ar converted the Initial Bond must be surrendered to the Paying AgentlRegistrar for cancellation, and each Band issued in exchange for any portion ofthe Initial Band shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date carrespar~ding to the due date of the installment of principal or portion thereoffor which the substitute Bond is being exchanged; and each such Band shall bear interest at the single rate applicable to and borne by such installment of principal ar portion thereof far which it is being ex- changed. If only a portion of the Initial Bond is assigned and transferred, there shall be delivered to and registered in the name afthe initial registered owner substitute Bands in exchange for the unassigned balance of the Initial Band in the same manner a if the initial registered owner were the assignee thereof, If any Band ar portion thereof other than the Initial Band is assigned and transferred ar converted each Band issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond far which It is exchanged. A farm of assignment sha11 be printed or endorsed on each Band, excepting the Initial Band, which shall be executed by the registered owner or its duly authorized attorney ar representative to evidence an assignment thereof. Upon surrender of any Bands ar any portion or portions thereof far transfer of registration, an authorised representative of the Paying entlRegistrar shall make such transfer in the Registration Books, and shall deliver a new fully registered substitute Bond ar Bonds, having the characteristics herein described, payable to such assignee ar assignees which then will be the registered owner or owners of such new Bond or Bands}., ar to the previous registered owner in case only a portion of a Bond is being assigned and transferred, all m conversion of and exchange far said assigned Band ar Bands ar any portion ar portions thereof, in the same farm and manner, and with the same effect, a provided in ectian did}, below, far the conversion and exchange of Bonds by any registered owner of a Band, The Issuer shall pay the Paying AgentlRegistrar's standard ar customary fees and charges far making such transfer and delivery of a substitute Bond or Bands, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying AgentlRegistrar shall not be required to make transfers of registration of any Band yr any portion thereof ~i} during the period  i commencing with the close ofbusiness on any Record Date and ending v~ith the opening of business an the next following prrncipai or interest payment date, ar, iii} with respect to any Bond or any portion thereof called for rede~.ptian prior to maturity, within 45 days prior to tts redemption date fib} Ownershi of Bonds. The entity in whose name any Bond sha11 be registered in the Registration Books at any tune shall be deemed and treated as the absolute owner thereoffor all purposes of this Ordinance, whether or not such Bond shall be overdue, and the issuer and. the Paying AgentlRegistrar shall gnat be affected by any notice to the contrary; and payment af, ar an account of, the principal of, premium, if any, and interest an any such Bond shall be made only to such registered owner. A.ll such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums sa paid. ~c} Payment of .Bo~ds_,~nd ~n#erest. The Issuer hereby further appoints the Paying .AgentlRegistrar to act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to convert and exchange or replace Bonds, all as provided in this Ordinance. The Paying AgentJRegistrar shallkeep proper records of all payments made by the Issuer and the Paying AgentlRegistrar with respect to the Bonds, and of all conversions and exchanges of Bands, and all replacements of Bands, as provided in this Ordinance. However, in the event of a nonpayment of interest an a scheduled payment date, and for thirty 0} days thereaer, a new record date for such interest payment ~a `Special Record Date"} wi11 be established by the Paying AgentlReistrar, if and when funds fvr the payment of such interest have been received from the issuer. Notice of the special Record Date and ofthe scheduled payment date afthe past due interest ~"Special Payment Date", which shall be fi~een X15}days after the Special Record Gate} shall be sent at least five ~5} business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address ofeach Holder of a Bond appearing on the registration books afthe Paying ~gentlRegistrar at the close of business on the ISth business day next preceding the date ofmailing nfuch notice. ~d} Oonversion„and ~xchan e~ orReplacement; Authen~~ction. Each Bond issued and delivered pursuant to this Ordinance, to the extent ofthe unpaid or unredeemed principal balance or principal amount thereof, nay, upon surrender of such Bond at the principal corporate trust office of the Paying AgentlRegistrar, together with a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorised attorneys or representatives, with guarantee of signatures sa~txsfactary to the Paying AgentlRegistrar, may, at the option of the registered owner ar such assignee or assignees, as appropriate, be converted into and exchanged for fully registered bands, without interest coupons, in the form prescribed in the FORM OF SUBSTI~'UTE BOND set forth in this Ordinance, in the denomination of $5,000, ar any integral multiple of $5,000 subject to the requirement hereinai~er stated that each substitute Bond shall have a single stated maturity date}, as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal arnour~t equal to the unpaid ar unre- deemed principal balance or principal amount of any Band ar Bands so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case maybe. Ffthe Initial Bond is assigned and transferred ar converted each substitute B and issued in exchange far any portion ofthe Initial Band shall have a single stated principal maturity date, and shad not be payable in rnstalhnents; and each such Band shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof far which the substitute Bond is bung exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such i~3stallment of principal or portion thereof for which it is~being exchanged. If a portion of any Bond bother than the Tnitia,l Band} shall be redecrn.ed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in the deno~ninatlon or dena~.inations of any integral multiple of $5,00 at the request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the I0  i registered owner upon surrender thereaffar cancellation. If any Bond or pardon thereof (other than the Initial Bondi is assigned and transferred or converted, each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is being exehanged~ Each substitute Bond shall bear a letter andlar number to distinguish it from each other Band. The Paying Agent~Registrar shall convert and exchange ar replace Bands as provided herein., and each fully registered bond delivered in conversion ofand exchange far ar replacement ofany Bond or portion thereafas permitted or required by any provision of this Ordinance sha,11 constitute one of the Bonds far all purposes of this Ordinance, and may again be converted and exchanged ar replaced. It is specifically provided that any Bond authenticated in conversion of and exchange for or replacement of another Bond on ar prier to the first scheduled Record Date for the Initial Band sh11 bear interest Born the date of the Initial Band, but each substitute Bond sa authenticated after such first scheduled Record Date shall bear interest fra~n the interest payment date next preceding the date on which such substitute Bond was so authenticated, unless such Bond is authenticated aver any Record Date but on or before the next fallowing interest payment date, in winch case it sha11 bear interest fi"arn such next fallowing interest payment date; provided, however, that if at the time of delivery of any substitute Bond the interest on the Bond for which it is being exchanged is due but has not been paid, then such Bond shall bear interest from the date to which such interest has been paid in full, THB fNrTfAI1 BAND issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying Aent~Registrar, but on each substitute Bond issued in conversion of and exchange for or replacement ofany Band or Bonds issued wader this Ordinance there shall be printed a band, in the form substantially as follows: "PAYING AGENTIRBGITRAR' ATHENTrCATI~N CERTIFICA.TB It is hereby certified that this Bond has been issued under the provisions of the Band Ordinance described in this Bond; and that this Bond has been issued in conversion ofand exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney general of the Mate of Texas and registered by the Canap~oller of Public Accounts of the Mate of Texas. THB BAND OF NEw YORi~ TR[T~T COMPANY, NATIONAL ASOCIATfON, DALLAS, TB~.A, Paying AgentJRegistrar Dated By Authorized Represe~atative" An authorised representative afthe Paying AentlRegistrar shall, before the delivery ofany such. Bond, date and manually sign the above B ond, and no such Bond shall be deemed to be issued or outstanding unless such Band is so executed. The Paying AgentlRegistrar promptly shall cancel all Bonds surrendered for canvversion and exchange ar replacement. No additional ordinances, orders, ar resolutions need be passed ar adopted by the governing body of the Issuer ar any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Band or portion thereof, and the Paying Aent,~Registrar shad provide for the prin~ng, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be oftype composition printed an paper with lithographed or steel engraved borders ofcustarnary weight and strength. Pursuant to Chapter 12Q 1, Texas Coverntn,ent Cade, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby irr~posed upon the Paying Agen#~Registrar, and, upon the execution of the above Paying AgentlRegistrax's Authentication Certif cafe, the converted and exchanged ar replaced Bond shall be vaf id, incontestable, and enforceable in the same mataner and with e 11  i same effect a.s the Initial Bond which originally was issued pursuant to this Ordinance, approved by the Attorney General, and registered by the Co~nptraller of Public Accounts. The Issuer shall pay the Paying AgentlRegistrar"sstandard arcustomary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying AgentlRegistrar sha11 not be required to make any such conversion and exchange or replacement afBonds ar any portion thereof ~i~ during the period can.encing with the close of business on any Record Date acid ending with the opening of business an the next following principal or interest payment date, or, iii}with respect to any Bond or portion thereof called far redemption prior to maturity, within 45 days prior to its redemption date, fie} In General. A11 Bonds issued in conversion and exchange or replacement ofany other Bond or portion thereof, ~i} shall be~ issued in fully registered form, without interest coupons, with the principal of and interest an such Bonds to be payable only to the registered owners thereof, iii} may or shall be redeemed prior to their scheduled maturities, X111} may be transferred and assigned, Div} may be converted and ex~ changed far other Bands, ~v} shal,l have the characteristics, ~v1~ shall be signed and sealed, and vii} the principal of and interest on the Bonds shall be payable, all a~s provided, and in the manner required or indicated, in the FGRM GF ~UBTITUTE BOLD set forth in this Ordinance. Payment of Fees and Chan. The Issuer hereby covenants with the registered owners of the Bonds that it will ~i~ pay the standard or customary fees and charges of the Paying AgentlRegistrar for its services with respect to the payment ofthe principal of and interest an the Bonds, when due, and {ii}pay the fees and charges of the Paying Agent~Registrar far services with respect to the transfer of registration of Bonds, and with respect to the conversion and exchange of Bonds solely to the extent above provided in this ordinance. fig} ,ub~ti~~ute Paying ~ eg ntJRe ig stray. The Issuer covenants v~ith the registered owners ofthe ~ Bonds that at all times while the Bonds are outstanding the Yssuer will provide a competent and legally qualified bank, trust company, financial institution, or ether agency to act as and perform the services of Paying Agent~Reis~rar for the Bonds under this Ordinance, and that the Paying AgentlRegistrar will be one entity. The Issuer reserves the right to, and may, at Its option, change the Paying AgentlReglstrar upon not less than l2D days written notice to the Paying AgentlRegistrar, to be effective not later than ~D days prior to the next principal or interest payment date after such notice, In the event that the entity at any tune acting as Paying Agent~Registrar far its successor by merger, acquisition, ar other method} should resign or otherwise cease to act as such, the Issuer covenants that it will promptly appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying AgentlRegistrar under this Ordinance. Upon any change in the Paying AgentlRegitrar, the previous Paying Agent~Reistrar shall promptly transfer and deliver the Registration Books for a copy thereof}, along with all other pertinent books and records relating tv the Bonds, to the new Paying AgentlRegistrar designated and appointed by the Issuer. Upon any change in the Paying AgentlRegistrar, the Issuer promptly wi11 cause a written notice thereof tQ be sent by the new Paying Agentl~egistraar to each registered owner afthe Bonds, by United Mates mail, first- class postage prepaid, which notice also shall give the address of the new Paying Agent~Regis~rax. By accepting the position and performing as such, each Paying AentlRegis~ar shall be deemed to have agreed to the provisions afthis Ordinance, and a certified copy ofthis Ordinance sha11 be delivered to each Paying AgentlReglstrar, section 7, FORM OF SUBSTITUTE BO1~D. The form of all Bonds issued in conversion and exchange or replacement of any other Bond ar portion thereof, including the form ofPaying A.gentlRegistrar's Band to be printed on each of such Bonds, and the Form of Assignment to be printed an each of the Bonds, 12 i ' shall be, respectively, substantially as follows, with such appropriate variat~ans, omissions, ar insertions as are permitted or required by this Ordinance, and with the Bands to n~adied pursuant to, and carnpleted with information set forth in, the P~.cing Certificate. FORM DF SUBSTITUTE BOND {Book~Entry Dnty Legend, if apprapriate~ ND~ UNITED STATES DF AMERICA PRINCIPAL AMOUNT STATE ~F TEXAS COUNTY DF DENTDN CITY DF DENTDN GENERAL DBLI~AT~DN REFUNDING BOND SERIES X07 INTEREST RATE MATURITY DATE DATED DATE CUSIP 4~# DN THE MATURITY DATE specified above the CITY DF DENTDN, in Denton County, Texas {the "Issuer"}, being a political subdivision afthe State of Texas, hereby promises to pay to or to the registered assignee hereof {either being hereinafter called the ""registered owner"}the principal amount of and to pay interest thereon, calculated on the basis of a 3~a-day year composed of twelve 30-day m.anths, franc , to the rr~aturity date specified above, or the date ofredemption prior to maturity, at the interest rate per annum specified above; w1th Interest being first due and payable an , and sem.iannualiy on each and thereer, except that ifthe date ofauthenti- ction ofthisBond islater than the first Record Date {hereinafter defined},such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Reca~rd Date {hereinafter defined} but on or before the next following interest payment date, in which case such. principal amount shall bear interest from such next fallowing interest payment date. THE PRINCIPAL OF A.ND INTEREST DN this Bond are payable in lawful nxoney of the united States of America, without exchange ar collection charges. The principal of this Band shall be paid to the registered owner hereafupon presentation and surrender ofthis Bond at maturity or upon the date fxed for its redemption prior to maturity, at the principal corporate trust offce of THE BANS DF NEw Y~RI~ TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the "Paying Agentll~egistrar" for this Band. The payment of interest on this Band shall be made by the Paying AentlRegistrar to the registered ownex hereof on each interest payment date by check, dated as of such interest payment date, drawn by the Paying AgentlReistrar an, and payable solely from, funds ofthe Issuer required by the ordinance authorizing the issuance ofthe Bands {the "'Bond Ordinance"} to be on deposit with the Paying AgentlRegis~rar for such purpose as hereinafter provided; and such check shall be sent by the Paying AgentlRegistrar by United States mail, firstWclass postage prepaid, on each such interest payment date, to the registered owner hereof, at the address ofthe registered owner, as it appeared at the close afbusiness an the day of the month next preceding each such date {the '"Record Bate"} on the Registration Books l~  Lm kept by the Paying .AgentlRegistrar, as hereinafter described. However, the payment of such interest maybe made by any other method acceptable to the Paying AgentfRegistrar and requested by, and at the risk and expense af, the registered owner hereaf~ Any accrued Interest due upon the rede~nptian of this Band priar to maturity as provided herein shall be paid to the registered owner at the principal corporate trust office of the Paying AgentlRegistrax upon presentation and surrender of this Band for rede~nptian and payment at the principal corporate trust office ofthe Paying Agent~Registrar. The Issuer covenants with the registered owner of this Band that an or before each principal payment date, Interest payment date, and accrued interest payment date for this Bond it will make available to the Paying Agentl Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide far the payment, in immediately available funds, of all principal of and interest an the Bands, when due l'N THE EVENT of a nonpayment of interest on a scheduled payment date, and for thirty ~3 0}days thereafter, a new record date far such interest payment ~a "5pcial Record Dater} will be established by the Paying Agent~Registrar, if and when funds for the payment of such interest have been received from the Yssuer. Notice afthe Special Record Date and ofthe scheduled payment date ofthe past due interest ~"special Payment Date",which shall be fifteen ~ 1 } days aftex the Special Record Dated shall be sent at least ftve ~5} business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying AgentJRegistrar at the close of business on the 15th business day next preceding the date of mailing of such notice. IF THE DATE far the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, yr a day on which banking institutions in the City where the Paying AgentlRegistrar is located are authorized by law ar executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, ar day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made an the original date payment was due THIS BAND is one of an issue of Bonds initially dated , , authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of for the public purposes of refunding certain outstanding obligations of the Issuer, and to pay the casts incurred in connection with the issuance of the Bands. DN or an any date whatsoever thereafter, the Bonds of this series may redeemed prior to their scheduled maturities, at the option ofthe Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Bands, or portions thereof, to be redeemed shall be selected and designated by the Issuer provided that a pottian of a Band may be redeemed only in an integral multiple of $5,00}, at the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption. THE BANDS of this Series scheduled to mature an , ~ and , are subject to mandatory redemption priarto their scheduled maturities, and shall be redeemed by the Issuer, in part} prior to their scheduled maturities, with money from the 1Vlandatory Redemption Account of the lnnterest and Sinking Fund, with the particulax Bands or portion thereafto be redeemed to be selected by the Paying AgentfRegistrar, by lot ar other customary method ~pravided that a portion of a Band may be redeemed only in an integral multiple of $5,D00}, at a redemption price equal to the pax ar principal amount thereofand accrued interest to the date ofrede~nption, an the dates, and in the principal amounts, respectively, as show in e fallowing schedule; Maturi l~ Mandatory Principal Redem tion Dates Amounts ~maturity~ Maturi Nfandatary Principal Redemption Dates A.m ~~maturity~ The principal amount ofthe Bonds required to be redeemed on the Mandatory Redemption Dates pursuant to the foregai~g sha11 be reduced, at the option ofthe Issuer by the principal amount of any Bonds out ofthe maturity scheduled far and , ~ which, at least 45 days prior to the aforesaid appropriate redemption date {1~ shall have been acquired by the Issuer at a price not exceeding the principal amount of such Bands plus accrued interest to the date of purchase thereof, and delivered to the Paying AgentlRegistrar far cancellation, or as shall have been redeemed pursuant to the optional redemption. previsions hereofand not previously credited to the mandatary sinking fund redemption. During any period in which ownership afthe Bonds is determined by a book entry at a securities depository for the Bonds, if fewer than all ofthe Bonds afthe same maturity and bearing such interest rate are to be redeemed, the Bonds, ar portions thereof, to be redeemed shall be selected in accordance with the at~rangements between the Issuer and the securities depository. AT LEAST 30 days prior to the date fixed for any redemption of Bonds or port~ians thereof prior to maturity a written notice of such redemption sha11 be sent by the Paying AgentlRegistrar by United Mates mail, first-class postage prepaid, to the registered owner of each Bond to be redeemed at its address as xt appeared an the 45th day prior to such redemption date; provided, however, that the faiiure to send, nail, or receive such native, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the reden~ptron of any Bond. By the date fixed far any such redemption due provision shall be made with the Paying AgentlRegistrar far the payment ofthe required redemption price far the Bands ar portions thereof which are to be sa redeemed, plus accrued interest thereon to the date fixed far redemption, If such written native ofredemption is given and ifdue provision for such payment is made, all as provided above, the Bonds or pawns thereof which are to be so redeemed thereby autemativally shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed far redemption, and they shall not be regarded a being outstanding except far the right of the registered owner to receive the redemption price plus accrued interest from the Paying AgentlReistrar cut ofthe funds provided far such payment. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing lr~terest at the same rate, in any denomination or deno~ninatians in any integxal multiple of S,Oaa, at the written request afthe registered owner, and in aggregate principal arnaunt equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense ofthe Issuer, all as provided in the Bond Ordinance. T~II~ BOND OR ANY PORTION OR PORTION HEREOF IN ANY INTEGRAL MULTIPLE OF $5,00 may be assigned and shall be transferred only in the Registration Baaks of the Issuer kept by the Paying AgentlRegistraractin inthe capacity of registrar for the Bonds, upon the terms and conditions set 15  i forth in the Band Drdinance, Among other requirements for such assignment and transfer, this Bond trust be presented and surrendered to the Paying ~gentlRegistrar, together with proper instruments afassigtttnent, in form and with guarantee of signatures satisfactory to the Paying AgentlRegistrar, evidencing assigt~naent of this Bond or any portion or portions hereof in any integral multiple of $5,~~0 to the assignee or assignees in ~rhose name or names this Bond ar any such portion of portions hereof is or are to be transferred and registered. The fay. of Assignment printed or endorsed on this Bond shall be executed by the regist~ted owner or its duly authorized attorney or representative, to evidence the assignment hereof. ~ new Bond ar Bonds payable to such assignee or assignees which then will be the new registered owner or owners of such new Band ar Bonds}, or to the previous registered owner in the case ofthe assigt~xnent and transfer ofonly a pardon of this Bond, may be delivered by the Paying ~entlRegistrar in conversion of and exchange far this Bond, ail the form and manner a provided in the next paragraph hereof for the conversion and exchange ofather Bands. The Issuer shall pay the Paying AgenRegistrar's standard ar customary fees and charges for making such transfer, but the are requesting such transfer shall pay any taxes ar other governmental charges requited to be paid with respect thereto. The Paying AgentlRegistrar shah rat be required to snake transfers ofregisttatian afthis Bond ar any portion hereaf~i} during the period cotntnencing with the close ofbusiness on any Recatd Date and ending with the opening ofbusiness on the next following principal ar interest payment date, ar, iii} with respect to any Bond ar any portion thereof called for redetnptian prior to maturity,within 4~ days prior to its redemption date. The registered owner of this Bond shall be deemed and treated by the Yssuer and the Paying AgntlReistrar as the absolute owner hereof far ail purposes, including payment and discharge ofliability upon this Bond to the extent afsuch payment, and the Issuer and the Paying AgentlRegist~ar shall not be affected by any notice to the contrary. A.~L BDND DF THIS SERIES are issuable solely as fully registered bands, without interest coupons, in the denomination of any integral multiple of ~,Oaa. As provided in the Bond ordinance, this Band, ar any unredeemed pa~ian hereaf, may, at the request of the registered owner or the assignee ar assignees hereof, be converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case tray be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of S,aa~ as requested in writing by the appropriate registered owner, assignee, or assignees, as the case maybe, upon surrender of this Band to the Paying AgentlRegistrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. The Issuer shall pay the Paying AgentlRegistrar's standard ar customary fees and charges for transferring, canoeing, and exchanging any Band or any portion thereof, but the one requesting such transfex, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying Agent~Registrar shall rat be required to mare any such conversion and exchange ~i} during the period conunenczng with the close of business an any Record Date and ending with the opening of business on the next fallowing principal or interest payment date, or, iii} with respect to any Bond ar portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. IN THE E~TEI~T any Paying ~gentlRegistrar for the Bonds is changed by the Issuer, resigns, or otherwise ceases to act a such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualif ed substitute therefor, and wi11 promptly cause written native thereof to be mailed to the registered owners of the Bands. IT I HEREBY certi~ted, recited, and covenanted that this Bond has been duly and validly voted, authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be dare precedent to or in the authorization, issuance, and delivery of this Band have been performed, existed, and been lane in accordance with law; that this Band is a general obligation afthe Issuer, 1G  Lm issued on the full faith and credit hereof; and that annual d valorem taxes sufficient to provide for the payment ofthe interest on and principal ofthis Band, as such interest carves due and such principal matures, have been levied and ordered to be levied against ail taxable property in the Issuer, and have been pledged irrevocably for such payment, within the limit prescribed by law. B'~ BECONIINCr the registered owner afthis Bond, the registered owner thereby acknowledges all of the terms and pravisions of the Band Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Band Ordinance is duly reoarded and available for inspection in the afficil minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between each registered owner hereaf and the Issuer. IN WITNESS ~wHEREOF, the Issuer has caused this Bond to be signed with the manual ar facsimile signature ofthe Niayar ofthe Issuer and countersigned and attested with the manual or facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Yssuer to be duly impressed, or placed in facsimile, an this Band, ATTEST: CITY OF DENTON, TEAS Jennifer Walters Perry R. McNeill City Secretary City of Denton, Texas Mayor, City of Denton, Texas ~CYTY SEA.I~} FORM OF PAYIN~x AGENTIRE~ISTRA~'S AUTHENTICATION CERTIFICATE PA~INO AOENTfR.EC~ISTRAR'S AUT~IENTICATION CERTIFICATE ~Ta be executed if this Band is not accompanied by an executed Registration Certificate ofthe Comptroller ofPublic Accounts ofthe State ofTexas~ It is hereby certified that this Bond has been issued under the provisions of the Band Ordinance described in this Bond; and that this Bond has been issued in conversion of and exchange for ar replacement ofa band, bands, or a pardon of a band or bonds afan issue which originally was approved by the Attorney General of the State of Texas and registered by the Carr~p~roller of Public Accounts of the State of Texas. THE BANK OF NEw CORK TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEAS, _ Paying Agentegistrar Dated . By Authorized Representative i~  Lm ~1NERT BOND INIJRANE LEGEND, IF ANY} FDRM DF ASSIGNMENT; ASSIGNMENT FGR VAL~TE RECEIVED, the undersigned registered owner of this Bond, or duly authari~ed representative or attorney thereof, hereby assigns this Band to 1 1 ~Assxgnee's Social sprint ar typewrite Assignee's name and Security or Taxpayer address, including zip code} Identification Nurn.bex} and hereby irrevocably constitutes and appoints attorney to transfer the registration ofthis Bond an the Paying AgentlRegistrar's Registration Books with full power of Substltutlon. In the premises. Dated: Signature Guaranteed: NOTICE. Stgnature~s~ must be guaranteed by Registered Dwner an el~glble guarantor 1nstltut~On partlclpating ~n NOTICE: This signature must correspond with a securities transfer association recoged the name ofthe Registered ~wnerappearing on signature guarantee program. the face of this ~ertif~cate in every particular without alteration or enlargement or any change whatsoever, Section S, TAX LEVY, A special Interest and Sinking Fund the "Interest and Sinking Fund"} is hereby created solely for the benefit ofthe Bondsy and the Interest and Sinking Fund shah be established and maintained by the Issuer at an ollicial depository bank of the Issuer. A Mandatory Redernptlon Account 1s hereby establis-bed within the Interest and Sinking Fund ifsa required pursuant to the Pricing Certificate. The Interest anal Sinking Fund shall be kept separate and apart from all other funds and accounts ofthe Issuer, and shad be used only far paying the interest an and principal of the Bonds. All ad valorem taxes levied and collected for and on account afthe Bonds, together with any premium and accrued interest received upon sale ofthe Bands, shall be deposited, as collected, to the credit of the interest and Sinking Fund. During each year while any ofthe Bonds or interest thereon are outstanding and unpaid, the governing body afthe Issuer shall compute and ascertain a rate and acount of ad valaren~ tax which will be sufficient to raise and produce the money required t4 pay the interest on the Bonds as such interest becomes due, and to provide and maintain a sinking fund adequate to pay the principal of its Bonds a such principal matures or is scheduled for redemption abut never less than ~°lo of the original principal amount of the Bonds as a sinking fund each - year}, including such amounts as are necessary to satisfy the mandatary sinking fund schedule for the Bands as nay be set forth in the Pricing ertillcate~ which amounts shall be deposlted into the Mandatary Redemption Account, with srh mandatory redemption constituting payment at maturity. Said tax shad be based an the latest approved tax rolls ofthe Issuer, with fu11 allowance being made for tax delinquencies and the cast oftax collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to 1S  ~ - be levied, against all taxable property in the Issuer for each year while any afthe Bends ar interest thereon are outstanding and unpaid; and said tax shall be assessed and collected each such year and deposited to the credit afthe aforesaid interest and Sinking Fund. Said ad valorem takes sufficient to provide for the payment of the i~aterest an and principal of the Bands, as such interest comes due and such principal ~rlatures or is scheduled for rede~nptian, are hereby pledged far such payment, within the limit prescribed by law. Section 9. DEFEAANOE OF BONDS. ~a}Any Band and the interest thereon shall be deemed to be paid, retired, and na langer outstanding ~a "Defeased Band'r}within the meaning ofthis Ordinance, except to the extent provided in subsection ~d} afthis Section 9, when payment ofthe principal of such Band, Pius interest therean to the due date whether such due date be by reason of maturity, upon reden~ptian, ar otherwise}either (i} shall have been made ar caused to be made in accordance with the terms thereof ~inc- ludingthe giving afany rewired notice ofredemption}, or iii} shalt have been provided for on or before such due date by irrevocably depositing with ar rn.aking available to the Paying AgentlRegistrar for such payment ~ I } lawful money of the United States of America su~"cient to male such payment ar Government Obligations which mature as to principal and interest in such amounts and at such tunes as will insure the availability, without reinvestment, of sufficient money to provide far such payment, and when proper arrangements have been made by the Issuer with the Paying A,gentlRegistrar for the payment afits services until ail Defeased Bands shall have became due and payable. At such time as a Bond snail be deemed to be a Defeased Bond hereunder, as aforesaid, such Band and the interest thereon shall no langer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable safely Pram such m.aney or Government Oblrgatlans. (b~ .Any moneys so deposited with the Paying Agent~Registrar may at the written direction of the Issuer also be invested in Government Obligations, maturing in the amounts and times as hereinbefare set Earth, and all income franc such Government Obligations received by the Paying AgentlRegistrar which is not required for the payment afthe Bands and interest therean, with respect to which such n~aney has been so deposited, shall be turned aver to the issuer, ar deposited as directed in writing by the Issuer, ~c} The term "Government Obligat~ans'r as used xn thls Sect~an shall mean ~i} direct, nancallable obligations ofthe United States afAmerica, including obligations that are unconditionally guaranteed by the United States of America., iii} noncallable obligations of an agency ar instrumentality of the United States of America, ~nclud~ng obligations that are unconditionally guaranteed or insured by the agency ar intstrumentalityandthat, onthe date afthe purchase hereof are rated as to investment quality by a nationally recagni~ed investment rating firm not less than A.AA ar its equivalent, and ~111~ nancailable abltgat~ars of a state or an agency ar a county, municlpta~ty , ar other political subdivision or a state that have been refunded and that, on the date the governing body of the Dis~ict adapts or approves the proceedings authorizing the financial arrangements are rated as to investment quality by a nationally recognized investment rating Firm not less than AAA or its equivalent, ~d~ Until all Defeased Bands sha11 have become due and payable, the Paying AgentlReistrar shall perform the services of Paying AentlRegtstrar far such Defeased Bonds the same as if they had not been defeased, and the Issuer shalt rr~al~e proper arrangements to provide and pay for such services as required by this Ordinance, Section I0, DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS, ~a} Replacement Bonds. In the event any outstanding Band is damaged, mutilated, lost, staler, or destroyed, the Paying AgentJRegxstrars~all cause to be printed, executed, and delived, a new band ofthe same principal 19  Lm i amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement far such Bond in the manner hereinafter provided, fib} A fiction for Re lacement Bands. Application for replacement ofdamaged, mutilated, lost, stalen, ar destroyed Bands shall be made by the registered owner thereof to the Paying AentlRegistrar. ~n every case of lass, theft, ar destruction of a Bond, the registered owner applying for a replacement band shall furnish to the Issuer and to the Paying AgentlReistrar such security ar indemnity as may be required by them to save each afthem harmless from any loss ar damage with respect thereto, Also, in every case of lass, theft or destruction of a Bond, the registered owner shall furnish to the Issuer and the Paying Agentlltegistrarevidence to their satisfaction afthe lass, theft, or destruction of such Bond, as the case may bc, In every case of damage ar mutilation of a Band, the registered owner shall surrender to the Paying AgentlRegistrar far cancellation the Band sa damaged or mutilated. ~c} lea Default Occurred. Notwithstanding the foregoing provisiar ofthis ectian, in the event of any such Bond shall have matured, and no default has occurred which is then continuing in the payment ofthe principal af, redemptionprerniurr~, ifany, or interest an the Band, the Issuermay authari~e the payment ofthe sane ~~vithout surrender thereafexcept in the case of a damaged ar mutilated Bond} instead afissuing a replacement Band, provided security ar indemnity is furnished as above provided in this ectian. ~d) Char e for ~ssuin Ike lacement Bands. Friar to the issuance of any replacement band, the Paying AgentlR.egistrar shall charge the registered owner of such Bond with all legal, printing, acid other expenses in connection therewith. Beery replacement bond issued pursuant to the prav~sians ofthis ~ectton by virtue afthe fact that any Band is last, stalen, or destroyed shall constitute a contractual obligation afthe Issuer whether or not the lost, stalen, or destroyed Bond shall be found at any tune, ar be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately nth any and all other Bonds duly issued under this Ordinance. ~e~ Au~tY for Issuinplacement Bond. In accordance with Chapter 101, Texas ~avernment Cade, this Section ofthis Ordinance shall constitute authority far the issuance of any such replacement band without necessity of further action by the governing body ofthe Issuer ar any other body ar person, aril the duty ofthe replacement ofsuch bands is hereby authorised and imposed upon the Paying AentJ~eistrar, and the Paying AgentlRegistrar shall authenticate and deliver such Bands in the form and manner and with the effect, as provided in section 6~d} of this Ordinance for Bands issued in conversion and exchange far other Bonds. Section 11, CO~V~]~ANT CrARDINCr ~`-EXBIVIPTION. The Issuer covenants to refrain from taking any action which would adversely affect, or to take such action to assure, the treatment of the Bands a obl1gatians described in section 103 ofthe Internal revenue Cade of 19~~, as amended the "Code"),the interest on which is not includable in the "gross income" of the holder far purposes of federal income taxation, In furtherance thereof, the Issuer covenants as fallaws~ a to take any action. to assure that no mare than 10 percent of the proceeds of the Bonds ar the pro j ects financed therev~ith bless amounts deposited to a reserve fiord, if any}are used for any "private business use", as def fined in section 14 I ~b}~d} ofthe Code, ar if mare than 1 a percent afthe proceeds ar the proj ects financed therewith are so used, such amounts, whether ar not received by the Issuer, with respect to such private business use, do not, under the terms ofthis Ordinance or any underlying arrangement, directly ar indirectly, secure ar provide for the payment of mare than 10 percent afthe debt service on the Bonds, in contravention of section 141~b~~~~ afthe Cade; 20  Lm to take any action to assure that in the event that the "private business use" described in subsection ~a} hereof exceeds fire percent of the proceeds of the Bonds ar the pro j ects financed therewith bless amounts deposited into a reserve fund, if any} then the a~naunt in excess of eve percent is used fora "private business use" which is "related"' and not "disproportionate",withinthe i meaning of section 141~b}~3} of the Code, to the governn~ental~use; ~c~ to take any action to assure that no amount which is greater than the lesser of $S,a4a,0~0, ar Five percent afthe proceeds ofthe Bonds ~les~s amounts deposited into a reserve fund, if any} is, directly or indirectly, used to Finance loans to persons, other than state or local . governmental units, in contravention of section 141 ~c} of the Code; ~d} to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within. the meaning of section 141~b} ofthe Code; fie} to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning afsectian 14~~b} of the Code; ~f~ to refrain from using any portion afthe proceeds afthe Bands, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property has defined in section 148~b}~~} ofthe Cade}which produces a materially higher yield aver the terra of the Bands, other than investment property acquiredwith ~ 1 } proceeds ofthe Bonds invested for a reasonable temporary period of 3 years or less, ar in the case of a refund1ng bonds, far a period of 9U days ar less until such proceeds are needed for the purpose for which the Bands are issued, an~aunts invested in a bona fide debt service fund, within the meaning of section 1.148- ~ fib} of the Treasury Regulations, and ~3} amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts da not exceed 10 percent of the stated principal amount for, in. the case of a discount, the issue price} of the proceeds of the Bands; fig} to otherwise restrict the use of the proceeds of the Bands ar amounts treated as proceeds of the Bonds, as may be necessary, o that the Bonds da not otherwise contravene the requirements afsectian 14S ofthe Code relating toarbitrage~, section 14~~g}~ofthe Code {reltrng to hedge bonds}, and, to the extent applicable, section 149~d} of the Cade relating to advance refundings}; and to a to the United States of America at least once during each five-year period p y beginning on e date of delivery ofthe Bands} an amount that is at least equal to 90 percent ofthe "Excess Earnings", within the meaning afsectian 14S~f} of e Code and to pay to tie United States ofAn~erica, not later that ~0 days after the Bonds have been paid in full,l~a percent afthe amount then required to be paid as a result ofExcess Earnings under section 148~f~ afthe Code. far purposes of the foregoing ~a} and the Issuer understands that the term "proceeds" includes "disposition proceeds" as defined ~n the ~'reasury Regulations and, in the case afrefundin bonds,transferred proceeds cif any} and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. Yt i the understanding of the Issuer that the covenants contained herein are intended to assure compliance 1  ~ - with the Code and any regulations or ~.lings promulgated by the U.. Department ofthe Treasury puxsuant thereto, In the event that regulations ar rulings are hereafter promulgated which modify, or expand provisions afthe Cade, as applicable to the Bands, the Issuerwill not be requiredta comply with any covenant contained herein to the extent that such failure to comply, in the opinion ofnationally-recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Ba~~.sunder section 1a3 of the Code. In the event that regulations or rulings are herea~er promulgated which irnpase additional requirements which are applicable to the Bands, the Issuer agrees to comply w1th the addltlanal requirements to the extent necessary and reasonably passible, in the opinion ofnationally-recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section la3 oftl~e bode. In furtherance of s►~ch intention, the Issuer hereby authorises and directs the Mayor of the Issuer to execute any documents, certi.cates or reports required by the Code and to make such elections, on behalf of the Issuer, which nay be permitted by the Code s are consistent with the purpose far the issuance of the Bands. The Issuer covenants to comply with the covenants in this section afier defeasance of the Bonds. In order to facilitate compliance with the above covenant ~h}, a "Rebate Fund'" is hereby established by the Issuer for the sole benefit of the United States of America, and such fond shall not be subject to the claim. ofany other person, including without limitation, the bondholders. The Rebate Fund is established far the additional purpose of compliance with section 148 of the Code, Section 1 DISPOSITION OF PRO~BCT, The Issuer covenants that the property constituting the projects financed with the Refunded Obligations wi11 not be sold or otherwise disposed in a transaction resulting in the receipt by the issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally-recognized band counsel that such sale or other disposition will not adversely affectthetax-exempt status of the Bonds. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains a legal opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from grass income of the interest Section 13. CUSTODY, APPROVAL, AND RBGiSTRATION OF BONDS; BOND COUNSBL" OPINION, CUSIP NUIViBERS, I~RBA1vIBLB AND INSURANCE. The ll~ayor of the Issuer is hereby authorized to have control of the initial Band issued hereunder and all necessary records and proceedings pertaining to the Initial Band pending its delivery and its Investigation, examination, and approval by the Attorney General of the State ofTexas, and its regist~ratian by the Comptroller ofPublic Accounts ofthe State of Texas. Upon registration ofthe Initial Bond said Carnptrallex ofPublic Accounts for a deputy designated in writing to act for said Comptroller} shall manually sign the Comp~raller"s Registration Certificate on the Initial Bond, and the seal afraid Comptroller shall be impressed, ar placed in facsimile, on the Initial Bond. The approving legal opinion ofthe Issuer's Bond Counsel and the assigned CUIP numbers rnay, at the option of the issuer, be printed on the Initial Bond ar on any Bands issued and delivered. in conversion of and exchange or replacement of any Band, but neither shall have any legal effect, and shall be safely far the convenience and information of the registered owners of the Bands. The preamble to this Ordinance is hereby adapted and made a part hereof for all purposes, if insurance is obtained on any of the Bonds, the Initial Bond and all other Bonds shad bear an appropriate legend concerning insurance as provided by the insurer. Section 14. SALE OF INITIAL BOND; BOND INSLIR.ANCE. ~a~ The Bonds shall be Bald and delivered subject to the provisions of Section 1 and Section 2 and pursuant to the terms and provisions of a bond purchase agreement the "Purchase Agreement"'}, the terms and provisions of which are to be determined by the Pricing Officer in accordance with Section 3, and in which the purchaser or purchasers the "Underwriters""} ofthe Bands shall be designated. The Pricing Officer is hereby authorized to execute and deliver the Purchase A.green~ent for an on behalf vfthe Issuer, The Bands shall initially be registered in the name afthe Underwriters a set forth in the Pricing certificate. fib} The Pricing Officer is authorized, in connection with effecting the sale afthe Bonds, to attain from a municipal band insurance con~pavy so designated in the Purchase Agreement the ""Insurer""} a municipal bond insurance policy the ""Insurance Policy'"} In support ofthe Bonds, To that end, should the Pricing Officer exercise such authority and commit the Issuer to obtain a municipal band insurance polio, for so long as the Insurance Policy is in effect, the requirements ofthe Insurer relating to the issuance afthe Insurance Polio as set forth in the Pricing Oertif~cate are incorporated by reference into this Ordinance and made a part hereof for all purposes, notwithstanding any other provision of this Ordinance to the contrary. The Pricing Officer shall have the authority to execute any documents to effect the issuance of the Insurance Policy by the Insurer. section l~. OFFICIAL TATEEN~T. The Mayor and the pity secretary are authorized and directed to execute and deliver for and on behalfof the Issuer copies of a Preliminary O~cial taten~ent and Official statement, prepared in connection with the offering of the Bands by the Underwriters, in final form as may be required by the U~aderwriters,and such final Official statement inthe form and content as approved by the Pricing Officer or as manually executed by said officials shall be deemed to be approved by the Oity Oouncil of the Issuer and canstitnte the Official statement authorized for distribution and use by the Underwriters. section 1 G. REFUNDI~O OF REFUNDED OBLIGATION. {a} ub~ect to execution and delivery of the Purchase Agreement with the Underwriters, the Issuer hereby directs that the Refunded Obligations be called for redern.ption on the dates and. at such prices as set forth in the Pricing certificate, The Pricing Officer is hereby authorized and directed to issue or cause to be issued l~otice ofRedemption afthe Refunded Obl~atlons Ir! substantially the form set Earth In ~~hlbl~ A attached hereto, completed with Infarmat~on from the Pricing Oertificate, to the paying agents for the Refunded Obligations. ~ In addition, the paying agents for the Refunded Obligations are hereby directed to provide the appropriate notices vfredemption and defeasance as specified by the orders ar ordinances authorizing the issuance of Refunded Obligations and are hereby directed to make appropriate arrangements so that the Refunded Obligations may be redeemed on their redemption dates. The Refunded Obligations shall be presented for redemption at the paying agent therefor, and. sha~i not bear interest after the date fixed for redemption. ~c} Ifthe redemption ofthe Refunded Obligations results in the partial refunding ofany maturity of the Refunded Obligations, the Pricing Of~'icer shall direct the paying agentlregistrar far the Refunded Obligations to designate at randvnl alad by lot which ofthe Refunded Obligations will be payable krona anal secured solely from ad valorem taxes and pledged revenues, as the case maybe, pursuant to the ordinance of the Issuer a~uthorizing the issuance of such Refunded Obligations the ""Refunded Obligation Ordinance'"~. For purposes of such determination and designation, all Refunded Obligations registered in denominations greater than S,OOD shall be considered to be registered in separate S,DOU denominations. The paying agentlregistrarsholl notify by f~rst~class mail all registered owners of all affected bands of such maturities that: ~1~ a portion of such bonds have been refunded and are secured unt11 final maturity solely with cash and investments maintained by the Escrow Agent in the Escrow Fund, iii}the principal amount of all affected bonds of such maturities registered in the name of such registered owner that have been refunded and are payable solely from cash and investments in the Escro~r Fund and the remaining principal amount of all affected bonds of such maturities registered in the name of such registered owner, if any, have not been 23  LM refunded and are payable and secured solely from ad valorem taxes and pledged revenues, as the case may be, of the Issuer described in the Refunded Obligation Ordinance, viii} the registered owner is required to submit his or her Refunded Cblrgatians to the paying agenreglstrar, for the purposes ofre-registering such registered owner's bonds and assigning new C~JSIP numbers in order to distinguish the source of payment for the principal and interest on such bands, and ~iv~ payment ofprincipal vfand interest an such bands may, in same circumstances, be delayed until such bonds have been reregistered and new CUSIP numbers have been assigned as required by viii}above. ~d} The source offends far payment of the principal ofand interest on the Refunded Obligations an their respective maturity ar redemption dates shall be from the funds deposited with the escrow Agent pursuant to the Escrow Agreement approved in Section 17 ofthis Ordinance, SectlOn I7. APPRD~AL CRDw ACrREEMENT AND TRANSFER DF F[.INDS. The Prlc~ng OfI"icer ar the Mayor and City Secretary are further authorized to enter rota and execute on behalf of the Yssuer with the escrow agent named herein, an escrow agreement, in the fanr~ and substance as shall be approved by the Pricing Officer, which escrow agreement will provide far the payment in full of the Refunded Obligations, in addition, the 1Vlayor or the Pricing Officer is authorized to purchase such securities, to execute such subscriptions far the purchase of the escrowed Securities has defined in the Escrow Agreement}, and to authorize such contributions for the escrow fund as provided in the Escrow Agreement. Section 1 S. DTC REGISTRATION. The Bands initially shall be issued and delivered in such manner that no physical distribution of the Bonds will be made to the public, and The Depository Trust Company ~"'DTC""}, New York, New Yark, initially wilt act as depositary for the Bands. DTC has represented that it is a limited purpose trust company incorporated under the laws of the State of New Yark, a member of the Federal Reserve System, a "clearing corporation'" within the meaning of the New York Unifarn~ Commercial Code, and a "clearing agency's registered under Section 17A ofthe federal Securities Exchange Act of 1934, as amended, and the Issuer accepts, but in na way verifies, such representations. The Initial Bond authorised by this Ordinance shall be delivered to and registered in the name of the Purchaser. PIowever, it is a condi~.an ofdelivery and sale that the Purchaser, immediately after such delivery, shall cause the Paying AgentlRegistrar, as provided far in this Ordinance, to cancel said Initial Bond and deliver in exchange therefor a substitute Band for each maturity of such Initial Bard, with each such substitute Band to be registered in the name of CEDE CO., the nominee of DTC, and it sha11 be the duty of the Paying AentlRegxstrar totake such action. It is expected that DTC will bold the Bonds an behalfafthe Purchaser andlor The DTC Participants, as defined and described in the Off~cia~ Statement referred to and approved in Section IS hereof{the'~DTC Participants"~, So long as each Band is registered inthe name ofCEDE CO., the Paying AentlRegistrar shall treat and deal with DTC in all respects the same as if it were the actual and beneficial owner thereof. It is expected that DTC will maintain a book entry system which will identify beneficial ownership of the Bonds by DTC Participants in integral amounts of S,OOa, with transfers of ownership being effected on the records ofDTC and the DTC Participants pursuant to rules and regulations established by them, and that the substitute Bands initially deposited with DTC sha11 be inimobili~ed and not be further exchanged for substitute Bands except as hereinafter provided. The Issuer is not responsible or liable far any functions of DTC, will not be responsible for paying any fees or charges with respect to its services, will not be responsible or liable far maintaining, supervising, ar reviewing the records of DTC or the DTC Participants, or protecting airy interests or rights of the benef vial owners of the Bonds. It shall be the duty afthe Purchaser and the DTC Participants to make all arrangements with DTC-to establish this boak- entrysystem,the beneficial ownership of the Bands, and the method ofpaying the fees and charges ofDTC. The Issuer does not represent, nor does it in any way covenant that the initial hank-entry system established with DTC will be maintained in the future. The Issuer reserves the right and option at any tir~ae in the future, in its sole discretion, to terminate the DTC CEDE & C0.} baak~entry only registration requirement described 24  i above, and to pernxit the Bands to be registered . the Warne of any owner. Ifthe Issuer exercises its right and option to ter~n~nate SUCK requirement, ~t Shall give written notice Of such tern~lnatian to the Paying Agentegistrar and to DTC, and thereafter the Paying AgeritlReistrar shall, upon presentation and proper request, register any Bond in any name as provided for in this Ordinance. Notwithstanding the initial establishment ofthe foregoing bvok~entry system with DTC, if for any reason any ofthe originally delivered substitute Bonds is duly filed with the Paying AentlRegistrar with proper request for transfer and substitu- tion, as pravidedfor inthis Ordinance, substitute Bonds wi11 be duly delivered as provided in this Ordinance, aril there will be na assurance ar representation that any book-entry system will be maintained for such Bonds. Section 19. CONTINU~INO DISCLOSURE. ~a} Annual Reparts~ ~i~ The Issuer shall provide annually to each NRMSIR and any III,within six months after the end of each fiscal year ending in ar after ~~~7, financial infarn~ation and operating data with respect to the Issuer ofthe general type included in the final Official Statement authorized by Section I S of this Ordinance, being the information described in the Pricing Certificate, Any financial stateients sa to be provided shall be ~1} prepared in accordance with the accounting principles described in the financial stateients appended to the Official Statement, ar such other accounting principles as the Issuer may be required to employ from tune to time pursuant to state law or regulation, and ~2} audited, ifthe Issuer commissions an audit of such statements and a audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the Issuer shall provide unaudited financial statements by the required tame and will provide audited financial statements for the applicable fiscal year to each NRNIIR and any SYD, when and ifthe audit report an such statements became available. iii} Ifthe Issuer changes its fiscal year, it will notify each NRMSIR and any SII) ofthe change hand ofthe date afthe new fiscal year end} prior to the next date by which the Issuer otherwise would be required to provide financial information anal operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document including an oI`fiGia1 statement ar other offering dacuinent, ifit is available from the NISRB~ that theretofore has been provided to each N~SIR and any SII] ar filed with the SEC. ~ 1Vlaterial Event Notices. The 1SSUer shall notify any SAD and each NRMSIR, in a timely manner, of any of the following events with respect to the Bonds, xf such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; 2. Nan-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit ar liquidity providers, ar their failure to perform; Adverse tax opinions or events affectingthetax-exempt status ofthe Bends, 7. Modificatioia to rights of holders of the Bonds; ZS  i g. Bond calls; 9. Defeasances; Io. Release, substitution, or sale of property securing repayment of the Bonds; and 11. Rating changes. The Issuer shall notify any SID and each NRMSIR, in a timely manner, ofany failure by the Issuer to provide financial information or operating data in accordance with subsection ofthi Section by the time required by such subsection, {c} Limitations Disclaimers and Amendments. {i~ The Issuer shall be obligated to observe and perfarrn the covenants specified in this Section far sa long as, but only for so long as, the Issuer remains an "obligated person"" with respect to the Bands within the meaning of the Rule, except that the Ysuer in any event will give the notice required by Subsection {b~ hereof of any Bond calls and defeasance that cause the Issuer to no longer be such an ""obligated person". {ii} The provisions of this Section are for the sole benefit of the registered owners and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other peron. The Issuer undertakes to provide only the financial information, operating data, financial statenxe~ats, and notices which it has expressly agreed to provide pursuant to this section and does not hereby undertake to provide any other information that maybe relevant or material to a complete presentation of the Issuer's financial results, condition, ar prospects ar hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided hexein. The Issuer does oat make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bands at any future date. {iii} UNDER NO OIROUMSTAN~ES SHALL TIDE ISSUER, ITS OFFIOERS, RENT AND EMPLOYEES, BE LIABLE TO THE REOISTBRED OWNER OR BENE~`ICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN OONTRAOT OR TORT, FOR DAMAGES RESULTING IN THOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NELIENT OR WITHOUT FAULT ON ITS PART, OF ANY OOVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUGH PERSON, IN OONTRACT OR TORT, FOR OR ON AOOOUNT OF ANY SCTG~I BREAOH SHALL BE LIMITED TO AN AOTION FOR MANDAMUS OR SPEOIFIC PERFORMANCE. . Div) No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, ar otherwise limit the duties of the Issuer under federal and state securities laws. {v} The provisions of this Section may be amended by the Issuer from time to tune to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations afthe Issuer, but only if{ 1 }the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the pri~n,ary offering ofthe Bonds in compliance with the Rule, taking into account any amendments or interpretations ofthe Rule since such offering as well as such changed circumstances and either {a} the registered owners of a majority in aggregate principal amount {ar any greater amount required by any other provision of this Ordinance that Z6  i authorizes such an arnendm.ent} afthe outstanding Bonds consent to such amendment ar fib} a person that is unaffiliated with the Issuer such a nationally recognized bond caunsel~ determined that such an~end~nent will not materially impair the Interest of the registered owners and bene#lcial owners of the Bands. Il~ the Issuer so amends the provisions of this Section, it shall include with any amended financial information ar operating data next provided in accordance with subsection ~a~ of this Section an explanation, narrative form, of the reason for the amendment and of the impact of any change in the type of financial information or operating data sa provided. The Issuer may also amend ar repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the yule ar a court of final jurisdiction enters judgment that such provisions afthe Rule are invalid, but only ifand to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing ar selling Bands in the primary offering of the Bands. ~d.} Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: "l1~SRB" means the lV[unicipal Securities Rulemak~ng Board. "NRMSIR" means each person wham the SEC or Its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule franc time to time, "Rule" rr~eans SEC Rule 15c2- I as amended from time to tune, means the United States 5ecunties and Exchange Cominissian. "SID" means any person designated by the State of Texas ar an authorized department, aff~cer, ar agency thereof as, anal determined by the SEC ar its staff' to be, a state information depository within the meaning of the Rule from time to time. Section 2~, PROTECTION 0~' PLBD~E. Chapter I208, ~overn.n~.ent Code, applies to the issuance of the Bands and the pledge of the taxes granted by the Issuer under ectian S of this Ordinance, and is therefore valid, effective, and perfected. If Texas law is amended at any tune while the Bands are outstanding and unpaid such that the pledge ofthe taxes granted by the Issuer under Section S afthis Ordinance is to be subject to the f Zing requirements ofChpter ~,Texas Business o.nierce Code, then in order to preserve to the registered owners of the Bands the perfect~an of the security .interest in said pledge, the Issuer agrees to take such measures as it determines are reasonable and necessary under Texas Iaw to comply with the applicable provisions of Chapter , Texas Business ~ Commerce Cade and enable a filing to perfect the security interest in said pledge to occur. Section ~ 1. FURTHER PROCEDURES. The Nlayar afthe Issuer, the City Secretary of the Issuer, and all other officers, employees, and agen#s of the Issuer, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perfann all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and an behalfafthc Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable xn order to carry out the terms and provisions of this Ordinance, the Bonds, the sale of the Bands, and the Dfficiai Statement; and the Assistant City l~Ianager of the City shall cause the expenses of issuance of the Bands to be paid from the proceeds ofsale afthe Initial Bond ar from any other lawfully available funds of the Issuer. In case any officer whale signature shall appear on any Band shall cease to be such officer before the delivery ofsuch Bond, such signature sha11 nevertheless be valid and sufficient far alI purposes the same as ifsuch officer had remained in af~ce until such delivery. ~7  I section ~2, OPEC MEETING. The pity council has found and determined that the meeting at v~hich this Ordinance is considered is open to the public and that notice thereaf~vas given in accordance with the provisions of the Texas Open Meetings, Gave, Tex. Gav't. bode, chapter 55 1, as amended, Section ~3. ~F~1J~TIVE DATI~. This Ordinance shall become effective immediately upon its passage and approval. 28  i AASSED ADD APP~~~ED this the ~ 7th day of Judy, 2~07~ Perry ~,1VIcN~e~i1, ayar ATTEST: Jennai~er afters, pity Secretary ~y. APPROVED AS T~ LErAL F`~R: Edwin iVI. Snyde A~~rn By: ~ ~ ~r ~ir~T riT~  i pity of Dentaa ecate~ of ~b}igatian, e~ie~ X998 Principal Amount N1atu~ity Date Dutstandin 211512012 7~,~~0 21151201 ~ 75,004 211512016 255,404 211512018 195 404 Tatai $595,00 ~t~ of Deata~ Geae pbiig~t~on ~and~, series 1998 P~incipai Amount Maturi Date Dutstandin~ 211512012 $484,OU4 L+I J.~~Se~~J TV~gV~~ ~ 1 T T V ~ ~~~l~l~V~~ /~~V~~~V(~~ 211 ~ ~ 484,040 21151218 454,0~~ Total $,340,040 i of Dentaa certificates of ~b~atian, erie~ X999 - Pri~~~pa1 Amou~.t atr~ri Date Qutstandi~~ 211512 13 $295,444 211512014 295,000 211512015 295,444 211512Q 1 d 295,040 21151217 295,400 211512018 295,000 211512D19 295 000 Taal $2,065,000  Lm City ~f ~en~~n ~~nel (~bliga~on Bon~~, Series X999 Pt~ncipal Amount Maturi Date Dutstandin~ 21151241 ~ $410,000 211512414 410,000 211512015 410,040 21151201 410,44a 211512017 414,4D0 2115120 ~ 8 414,400 211512019 410 044 Total 2,87a,D04 Yty of Dea~On ecnte~ of ~~liga~o~, Series - Principal A.n~o~nt ~aturi Date Dutstand~ 211512014 $25,044 211512015 240,444 21151201 Z~D,aaO 211512417 2b0,44 a ~ 512a ~ s 2~4,04a +'211 X12019 ~2}6a,/0'~/a}n0 rLf l ~1G~~G}~a,V1~1}V Lf ~JfLa~~ L~~ ~Va Total $2,085,004 its o~ Den~n ener~l ~b~g~tion Bonds, Series 0~1 Principal Amount Maturity Date Ds~andin 211512014 $715,400 211512015 715,aaa 21151201 b 715,40 211512017 715,Op0 211512018 715,4x4 211512019 715,400 211512020 715,Oaa 2115!2021 715 404 Total $5,724,D00  Lm ~~y o~ I~entoa erbf~ca of ~bliga~~n~ ~ri~s Principal Amount Ma~u~~ty, Date ~u~~tandi~~ 21151215 $475,000 2115120 ~ G 495,000 21151207 520,000 2115120 ~ 8 555,000 211512D 19 580,000 211512020 610,D00 211512021 445,000 211512022 G$0 000 Toil $4,SG0,000 arty a~ ~en~an eaer~ ~bliga~an Bond, series ~~(1~ Principal Amount ~Viaturi~ Dade Dutstandin~ 211512015 ~G70,000 2115120 ~ ~ 705,000 211512017 745,400 211512018 785,004 21 ~ 512020 1,G95,004 211512022 ~ 890 Tetai $d,4~4,OD0 ~11.aj.Di i R NOTICE ~F PRIOi~ 1~EMP'T~~11~ TSE CITY DF 3IE1~N,'I'~~S NOTICE IS I~EREBY GIVEN that the City of Denton, Texas has called for redemption the outstanding Certificates ar Bands ofthe City described as follows: €City of Denton General Obligation Bands, series _ ,dated , ~ scheduled tv mature vn February ~ 5, tbxaugh February l5, ~ aggregating $ ~ar~d being all of the outstanding bands of said series scheduled to mature an and after February 15, ; Call date: , - - ;redeemable at a redemption price of par plus accrued interest at the principal corporate offices of The Bank of New York Trust Company, N.A., only upon presentation by the owner thereof.] [City of Denton Certificates of Obligation, Series ,dated , scheduled to mature an February 15, through February l5, aggregating $ hand being all afthe outstanding bands of said series scheduled to mature on and afler February l5, Call date: ~ - - ;redeemable at a redemption price of par plus accrued interest at the principal corporate a'ices of The Bank of New York Trust Company, N.A., only upon presentation by the owner thereof.] If irianeys sufficient for the payment of such redemption price are held by yr an behalf of the paying agent, the described Bands shall become due and payable on the redemption date specified, and the interest thereon shalt cease to acc.e from and afar the redemption date. In cainpliance with section 4( ofthe fnternal revenue Code of 198G, payers making certain pay.ents due an debt securities iriay be obligated to deduct and withhold 0 percent of such payment from the remittance to any payee who has failed to provide such payor with a valid taxpayer identification number. To avoid the imposition of the withholding oftax, such payees should submit a taxpayer identi~icatian number when surrendering the bonds for redemption. NOTICE IS FI~RTI~ER GNEN that all Bonds shored be s~ubmittcd to ~.e following address: The Bank of New York Trust Ca~.pany, National Association ~succcssor to ~PMorgan Chase Bank, N.A.} Z~D1 Bryan ~treet,l~th Flaar Dallas, Texas 75~OI Attu; Dated: , , 207 By: The Bank of New York Trust Company, National Association  i Exhibit 2 PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT entered into as of , 2007 (this "Agreement"), by and between the City of Denton, Texas (the "Issuer"), and The Bank of New York Trust Company, National Association, a national banking association (the "Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its General Obligation Refunding Bonds, Series 2007 (the "Securities") in the aggregate principal amount of $ such Securities to be issued in fully registered form only as to the payment of principal and interest thereon; and WHEREAS, the Securities are scheduled to be delivered to the initial purchaser thereof on or about ;and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the registered owners thereof; and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities. As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof, all in accordance with this Agreement and the "Ordinance" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the "Ordinance." The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Security means the date on and after which the principal or any or all installments of interest, or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the principal corporate trust office of the Bank as indicated on the signature page hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Fiscal Year" means the fiscal year of the Issuer, ending September 30. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Ordinance" means a written request or ordinance signed in the name of the Issuer by the Mayor of the Issuer delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "Ordinance" means the ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the City Secretary or any other officer of the Issuer and delivered to the Bank. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Ordinance). "Redemption Date" when used with respect to any Bond to be redeemed means the date fixed for such redemption pursuant to the terms of the Ordinance. "Responsible Officer" when used with respect to the Bank means the Chairman orVice-Chairman of the Board of Directors, the Chairman or Vice-chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above 2 designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfer of the Securities. "Stated Maturity" means the date specified in the Ordinance the principal of a Security is scheduled to be due and payable. Section 2.02. Other Definitions. The terms "Bank," Issuer," and Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT Section 3.01. Duties of Paying_Agent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the Bank Office. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and preparing and sending checks by United States Mail, first class postage prepaid, on each payment date, to the Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the address appearing on the Security Register or by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Ordinance. Section 3.03. Reporting Requirements. To the extent required by the Code or the Treasury Regulations, the Bank shall report to the Holders and the Internal Revenue Service the amount of interest paid or the amount treated as interest accrued on the Bond which is required to be reported by the Holders on their returns of federal income tax. 3 ARTICLE FOUR REGISTRAR Section 4.01. Security Register -Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register"), and, if the Bank Office is located outside the State of Texas, a copy of such books and records shall be kept in the State of Texas, for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as maybe reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transferor exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02. Bonds. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Security Re is~ter. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04. List of Security Holders. 4 The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank toprovide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Cancelled Bonds. All bonds surrendered to the Bank, at the designated Payment/Transfer Office, for payment, redemption, transfer, or replacement, shall be promptly cancelled by the Bank. The Bank will provide to the Issuer, at reasonable intervals determined by the bank, a bond evidencing the destruction of canceled bonds. Section 4.06. Mutilated, Destroyed, Lost or Stolen Securities. The Issuer hereby instructs the Bank, subject to the applicable provisions of the Ordinance, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an overissuance. Incase any Security shall be mutilated, or destroyed, lost or stolen, the Bank, in its discretion, may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents, Etc. 5 (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on bonds or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Moneys Held by Bank. The Bank shall deposit any moneys received from the Issuer into a segregated account to be held by the Bank solely for the benefit of the owners of the Securities to be used solely for the payment of the Securities, with such moneys in the account that exceed the deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas and to the extent permitted by the laws of the United States of America to secure and be pledged as collateral for such accounts until the principal and interest on such securities have been presented for payment and paid to the owner thereof. Payments made from such account shall be made by check drawn on such account unless the owner of such Securities shall, at its own expense and risk, request such other medium of payment. 6 Subject to the Unclaimed Property Law of the State of Texas, any money deposited with the Bank for the payment of the principal, premium (if any), or interest on any Security and remaining unclaimed for three years after the final maturity of the Security has become due and payable will be paid by the Bank to the Issuer if the Issuer so elects, and the Holder of such Security shall hereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease. If the Issuer does not elect, the Bank is directed to report and dispose of the funds in compliance with Title Six of the Texas Property Code, as amended. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction within the State of Texas to determine the rights of any Person claiming any interest herein. Section 5.08. Depository Trust Company Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements," effective August 1,1987, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02. Assi n.~. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. 7 Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on the signature page of this Agreement. Section 6.04. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severabili . In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of A re,~ ement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire A re,~ ement. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between his Agreement and the Ordinance, the Ordinance shall govern. Section 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (60) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securi- ties, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. 8 Section 6.11. Governing. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. 9 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION By Title 2001 Bryan Street, 10th Floor Dallas, Texas 75201 10 CITY OF DENTON, TEXAS By Mayor 215 E. McKinney Denton, Texas 76201 11 SCHEDULE A Paying Agent/Registrar Fee Schedule [To be supplied by the Bank] 12 AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Fiscal Operations ACM: Jon Fortune SUBJECT Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of the "City of Denton Certificates of Obligation ($11,500,000), Series 2007"; authorizing the issuance of the certificates of obligation, approving and authorizing instruments and procedures relating to said certificates of obligation, and enacting other provisions relating to the subject. BACKGROUND This ordinance authorizes the issuance, sale and delivery of Certificates of Obligation (COs) in the amount of $11,550,000 (including issuance costs) to fund the following capital improvements: $ 2,500,000 Multi Modal Station 1,500,000 Public Safety Training Facility 3,000,000 Vehicle Replacements 1,500,000 Facility Capital Maintenance Programs 250,000 Capital Improvement Planning 150,000 Technology Improvements for Municipal Courts 2,600,000 Solid Waste $11,500,000 Each of these items meets the stated purposes included in the City's Debt Service Management Policy [Section 403.07 IX(C)] for which COs may be issued. The Policy specifically states that COs maybe issued to: • finance permanent improvements and land acquisition, the need for which arose between bond elections • finance costs associated with capital project overruns ~ acquire equipment/vehicles • leverage grant funding • renovate, acquire, construct facilities and facility improvements ~ construct street improvements • provide funding for master plans/studies • address necessary life safety needs Agenda Information Sheet July 17, 2007 Page 2 Following a comprehensive analysis on the City's financial outlook and stability, the City has obtained favorable bond ratings on these Bonds from both Standard and Poor's and Moody's Investor Services. The ratings are summarized below: Certificates of Obligation ($11,500,000), Series 2007 ~ Standard and Poor's AA- • Moody's Aa3 These certificates will be sold through a negotiated sale process following the guidelines established in the City's Debt Service Management Policy [Section 403.07 XII (A)]. Our financial advisor, First Southwest, has gathered all the data and has negotiated the sale of the bonds. Due to the timing of the negotiated sale being based on the most current market conditions, final pricing will not occur until July 16 with Council approval on July 17. Your agenda information packet includes various documents as it relates to the issuance of the Certificates of Obligation. Included in your backup is the ordinance authorizing the issuance of the certificates, the rating agency reports, the preliminary official statement, paying agent/registrar agreement, as well as, the capital improvement program. Because the backup is the same and the preliminary official statement (POS) is quite large, we have included the rating agency reports, POS, and capital improvement program with the backup for the sale of the general obligation bonds. Please be aware that information as it relates to the pricing and insurance provisions of the certificates will not be available until final pricing occurs on July 16. Following approval of the negotiated sale by the City Council, the interest rates and information from the successful purchaser, as well as bond insurance provisions, will be included in the preliminary official statement making it final. PRIOR ACTION/REVIEW (Council, Boards, Commission) These projects were approved by the City Council in the Capital Improvement Program (CIP), fiscal year ending 2007-201 1. Changes or additions to the 2007-2011 CIP as it relates to the current use of CO's have been reviewed and approved by the Audit/Finance Committee. The City Council approved an Ordinance on June 5, 2007, directing the publication of Notice of Intention to issue the Certificates of Obligation. FISCAL INFORMATION An estimated debt service schedule is included on page 22 in the Preliminary Official Statement attached. The estimated average annual debt service payment, including principal and interest, will total approximately $769,000. This payment is anticipated and included in the City's Long Range Financial Plan. Agenda Information Sheet July 17, 2007 Page 3 EXHIBITS 1. Ordinance 2. Rating Agency Reports -included with General Obligation Bbond Ssale Aagenda Iitem 3. Preliminary Official Statement -included with General Obligation Bbond Ssale aAgenda iItem 4. Paying Agent/Registrar Agreement 5. Capital Improvement Program -included with General Obligation Bbond Ssale aAgenda iItem Respectfully submitted: r Jon Fortune Assistant City Manager Exhibit 1 ORDINANCE NO.2~~7- AN ORDINANCE CONSIDERING ALL MATTERS INCIDENT AND RELATED TO THE ISSUANCE, SALE AND DELIVERY OF THE '~CIT"~ OF DENTON CERTIFICATES OF OELIGATION ~$11,5a4,~00~, SERIES 207'}; AUTHORISING THE ISSUANCE OF THE CERTIFICATES OF OBLIGATION; APPROVING AND AUTHORISING INSTRUMENTS AND PROCEDURES REEATINC TO SAID CERTIFICATES OF OBLIGATION; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT'. THE STATE OF TEAS C0~1NTY OF DENTON ; CIT4~ Off' DENTON wHEREA~ the Certif cote of Obligation Act of 1971, Subchapter ~ of Chapter 271 of the Texas Local Government Code, as amended the "Act"} permits the City to issue and sell fur cash the Certificates of 061igatian hereinafter uthari~ed; and wHEREA.S, the City has duly caused notice of its intention to issue the Certificates of 061iation hereinafter authorised to be published at the times and in the manner required by the Act and no petition has been f led protesting the issuance thereof, NOw, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY' ORDAINS: Section 1. AMOUNT AND PURPOSE OF THE CERTIFICATES. The certificate or certificates of the City of Denton, Teas the "Issuer"} are hereby authorized to be issued and delivered in the aggregate principal amount of $11,5~O,OOD, for the purpose of paying all or pardon of the City's contractual obligations incurred pursuant to contraacts for the purchase of certain real and personal property, to-wit: ~a} design, construction and equipping of a public safety training facility; ~ renovations and improvements to existing City buildings, including the acquisition and installation of replacement heating, venting and air conditioning equipment; ~c} improvements to the City's solid waste disposal system and acquisition of related equlp~nent} ~d} a~quxsition and installation of security, multiwmed~a and other technology equlpmen~ for City buildings, including the municipal court in City Hall East; fie} acqulslt~on of ire engines and vehicles and equipment far the City's motor gaol; ~f~ construction and equipping of a multi-modal transit station; and also for the purpose of paying all or a portion of the City's contractual obligations fur professional services, including engineers, architects, attorneys, map makers, auditors, and financial advisors, in connection with the preparation of the City`s Capital Improvement Plan including an animal services facilities master piano, . and v~ith said Certificates of Obligation. section 2. DESIGNATYON Ok' THE CERTIFICATES. Each certificate issued pursuant to this Ordinance shall be designated; "CITY OF DENTON CERTIFICATE OF OBLIGATION, SERIES 20U7", and initially there shall be Issued, Bald, and delivered hereunder single fu11y registered certificate,without interest coupons, payable in installments ofprincipal the "Initial Certificate"}, but the Initial Certilicate may be assigned and transferred andlor converted into and exchanged for like aggregate principal amount of fully registered certificates, without interest coupons, having serial maturities, and in the denomination or denominations ofS,o~O or any integral multiple of ~5,~~0, all in the manner hereinafter provided. The term "Certificates' as used in this Ordinance shall mean and include collectively the Initial Certificate and all substitute certificates exchanged therefor, as well as all other substitute certificates and replacement certificates issued pursuant hereto, and the term "Certificates" shall mean any of the Certificates.  i Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL RBECrISTERED O~UNER, AND CHARACTERISTICS OF THE INITIAL CERTIFICATE. ~a} The Initial Certificate is hereby authorized to be issued, sold, and delivered hereunder as a single fu11y registered Certificate, without interest coupons, dated July 15, ~0~7, in the denomination and aggregate principal amount of 11,~0~,~00, numbered - 1, payable in annual installments ofprincipal to the initial registered owner thereof, to-~vit: R.BC RAIN RAUC INC. or to the registered assignee or assignees of said Certificate or any portion nr portions thereof ~ each ease, the "registered ones"}, with the annual 1nSlallnlents ofprincipal ofthe Ynitial Certificate to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL CERTIFICATE set forth in this Ordinance. fib} The Initial Certifcate ~i~ may or shall be prepaid or redeemed prior to the respective scheduled due dates of installments of principal thereof, iii}may be assigned and transferred, 111}may be con~rerted and exchanged for other Certificates, ~lv}shall have the characteristics, and ~v} sha11 be signed and sealed, and the principal ofand interest on the Initial Certificate shall be payable, ail as prodded, and in the manner required or indicated, in the FORM OF INITIAL CERTIFICATE set forth in this Ordinance, Section 4. INTEREST. The unpaid principal balance ofthe Initial erti~oate shall bear interest fraln the date ofthe Initial Certificate to the respective scheduled due dates ofthe installments of principal afthe Initial Certificate, and said interest shall be payable, all in the manner pra~rided and at the rates and on the dates stated the FORM OF INITIAL CER.TIFrCATE set forth in this Ordinance. Section 5, FORM OF INITIAL CERTIFICATE, The form afthe Initial Certificate, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Certificate, sha11 be substantially as follows: FORM OF INITIAL CERTIFICATE NO. R- ~ ~ ~ 1,50~,~~~ ITNITED STATES OF AMERICA STATE OF TEAS COUNTS OF DENTON CITY OF DENTON CERTIFICATE OF OBLIGATION SERIES ~~07 THE CITE' OF DENTON, in Denton, County, Texas the 'Issuer"}, being a political subdivision of the State of Texas, hereby promises to pay to i or to the registered assignee or assignees ofthis Certificate or any portion or portions hereof din each case, the "registered owner"}the aggregate principal amount of $I1,5~O,o~~ ~ELE~EN MILLION FIDE HUNDRED THO[JSAND DOLLARS in annual installments ofprincipal due and payable oii February 15 in each ofthe years, and iri the respective principal amounts, as set forth in the following schedule, and to pay interest, from the date ofthis Certifcate hereinafter stated, vn the balance of each such installment of principal, respectively, from time to tine retraining unpaid, at the rates per annum as follows: PRINCIPAL INTEREST PRINCIPAL n~TERET YEAR AMOUNT RATE °Io ~ AlVIOUNT RATE °Io Interest shall first be due and payable an Febt~uary 15, 2005, and semiannually on each August I5 and February l5 thereafter while this Certificate ar any portion hereof is outstanding and unpaid. Said interest shall be calculated on the basis of 3~0-day year carnpnsed aftwelve 3~-day months. THE INSTALLIVIENTS OF PRIN~IPA.L DF AND THE INTEREST ON this Certif cafe are payable in lawful money of the United States of America, without exchange ar collection charges. The installments ofprincipal and the interest on this Certificate are payable to the registered owner hereof through the services ofTHE BANK OF NEw YORK TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the "Paying AgentlReistrar" far this Certificate, Payment of all principal of and interest an this Certificate shall be made by the Paying AgentlReistrar to the registered owner hereof an each principal andlar interest payment date by check dated as of such date, drawn by the Paying Agent~Registrar on, and payable solely from, funds afthe Issuer required by the orda'nance authorizing the issuance afthis Certificate the "ertifica#e ordinance"~ to be an deposit with the Pay~.g AgentlRegistr~,r for such purpose as hereinafter provided; ar~d such check shall be sent by the Paying AgentlReistrar by United States mail, first-class postage prepaid, on each such principal andlor interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the last day of the month next preceding each such date the "Record Date"} on the Registration Books kept by the Paying Aent~Reistrar, as hereinafter described. The Issuer covenants with the registered owner ofthis Certificate that on or before each principal andlar interest payment date for this Certificate it will make available to the Paying AgentlRegistrar, from the "interest and Sinking Fund" created by the Certificate Ordinance, the amounts required to provide far the payment, in immediately available funds, of all principal of and interest on this Certificate, when due. I"N THE EVENT ofa nonpayment afinterest on a scheduled payment date, and for thixty X30}days therea~er, a new record date for such interest payment ~a "Special Record Date"} will be established by e Paying AgentlReistrar, if and when funds far the payment of such interest have been received from the Issuer. Notice ofthe Special Record Date and ofthe scheduled payment date ofthe past due interest ~~'pecial Payment Date", which sha11 be fifteen ~l5} days aver the Special Record Date} shall be sent at least five ~5} business days prier to the Special Record Date by United States mail, first elan postage prepaid, to the address of each Holder of Certificate appearing on the registration books ofthe Paying AgentlRegistrar at the close of business on the 15th business day next preceding the date of mailing of such notice. IF THE DATE for the payment ofthe principal off" ar interest on this Certificate shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying AgentlRegistrar is located are autho~.zed by la~v or executive order to close, then the date far such payment shall be the next 3  Lm succeeding day which is not such a Saturday, Sunday, legal holiday, ar day an which baking institutions are authorized to close; and payment an such date shall have the same farce and effect as ifmade on the original date payment was due, THIS CERTIFICATE has been a~thori~ed in accordance with the Constitution and laws ofthe State of Texas in the principal amount of $ 11,5~0,~0~ for the purpose of paying all or a portion of the City's contractual obligations incurred pursuant to contacts far the purchase of certain real and personal property, to-wit: ~a~ design, construction and equipping of a public safety training facility; fib} renovations and improvements to existing City buildings, including the acquisition and installation of replacement hewing, venting and air conditioning equipment; ~c} improvements to the City's solid waste disposal system and acquisition of related equipment; ~d} acquiition and installation of security, multi-media and other technology equipment for City buildings, including the municipal court in City ~Ial1 East; fie} acquisition of ire engines and vehicles and equipment for the City's motor pool; canstr~uction and equipping of a multi-modal tt.nsit station; and also for the purpose of paying all or a portion of the City's contractual obligations for professional services, including engineers, architects, attorneys, snap makers, auditors, and financial advisors, in connection with the preparation of the City's Capital Improvement Plan including an animal services facilities master plan}, and with said Certificates of ~bligatian, ~ FEBRUARY 15, 17, nr an any date whatsoever thereafter, the unpaid installments afprincipal afthis Certificate of~bligation may be prepaid ar redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any available source, as a whole, ar in part, at the prepayment or redemption price of the pax ar principal amount thereof, plus accrued interest to the date fixed for prepayment or redemption. Ifless than all ofthe Certificates are to be redeemed, the Issuer may select the maturities of the Certificates to be redeemed. ~f less than all of the Certificates of any maturity are to be redeemed, the Paying AgentlRegistrarsball determine by lot the Certificates, or portfons thereof, within such maturity to be redeemed. THE CERTIFICATES of this Series scheduled to mature on FERR~IARY 1 , ~4 and FEBR~IARY I5, 2~ are subject to rr~andatary redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior to their scheduled maturities, with money from the Il~andatory Redemption Account of the Interest and S inking Fund, with the particular Certificates ar portion thereof to be redeemed to be selected by the Paying AgentlReistrar, by lot or other customary method provided that a portion ofa Certi#icate may be redeemed only in an integral multiple af$S,~OD}, at a redemption price equal to the par or principal amount thereof and accrued interest to the date of reden~ptlon, an the dates, and in the principal amounts, respectively, as show in the following schedule: Februat~ l5, Maturity Mandatory Principal . Redem lion Dates Amounts February 15, 2~~ February 15, {maturity} Feb 15 20 aturi 1Vlandatory Principal Redem lion Dates Amounts February 15, 20_ 4  i February 15, ~0~ ~n~aturity} The principal amount of the Certificates required to be redeemed on the 1V~andatary Redemption Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the principal amount of any Certificates out of the maturity scheduled for February 1, 20_ and February 15, ~0_ which, at least 4 days prior to the aforesaid appropriate redemption date ~ 1 } shall have been acquired by the Issuer at a price not exceeding the principal amount ofsuch Certificates plus accrued interest to the date ofpurchase thereof, and delivered to the Paying Agent~Registrar for cancellation, or ~2} s shall have been redeemed pursuant to the optionai redemption provisions hereof and not previously credited to the mandatory sinking fund redemption. During any period in which ownership of the Certificates is determined by a book entry at a securities depositary farthe Certificates, iffewer than all ofthe Certificates ofthe same maturity and bearing such interest rate are to be redeemed, the Certificates, or portions thereof, to be redeemed shall be selected in accordance with the arrangements between the issuer and the securities depositary. AT LEAST days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed by the Paying AgentlR.egistrar to the registered owner hereof. By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the Paying AentlRegistrar for the payment of the required prepayment or redemption price for this Certificate or the portion hereof which is to be so prepaid ar redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption, ~f such written notice of prepayment or redemption is given, and ifdue provision for such payment is made, all as provided above, this Certificate, ar the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, ar~d shall not bear interest aver the date fixed for its prepayment or rederr~ptian, and shall not be regarded as being outstanding except for the right afthe registered owner to receive the prepayment ar redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent~Registrar out ofthe funds provided for such payment. The Paying AgentlRegistrar shall retard in the Registration Banks all such prepayments ar redemptions ofprincipal ofthis Certificate or any portion hereof. THIS CERTIFICATE, to the extent of the unpaid principal balance hereof, or any unpaid portion hereofin any integral multiple af$,O~o, may be assigned by the initial registered owner hereofand shall be transferred only in the Registration Books of the Issuer kept by the Paying AgentlReistrar acting in the capacity ofregistrar far the Certificates, upon the terms anal conditions set Earth in the Certif~ca~te ordinance, Among other requirements for such transfer, this Certificate ~.ust be presented and surrendered to the Pa in Yg AgentlRegistrar~or cancellation, together with proper instruments ofasignrnent, in form and with guarantee ofsignatures satisfactory to the Payhrg AgentlReistrar, evidencing assignnxent by the initial registered owner of this Certificate, ar any portion ar portions hereof to any integral ~nultlple of $~,00~, to the assignee ar assignees in whose name or nanxes this Certificate or any such portion ar portions hereof is or are to be ~ans- ferredand registered. Any instruament or instruments ofassignment satisfactory to the Paying Agent~Registrar may be used to evidence the assignment of this Certif cafe a~ any such portion or portions hereofby the initial registered owner hereof, A new certificate or certificates payable to such assignee or asi ees which then . ~ will be the new registered owner or owners of such new Certificate or Certificates or to the Initial registered owner as to any portion ofthis Certificate which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying Agent~Registrar in conversion of and exchange for this Certificate or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of this Certificate or any portion hereof. The registered owner of this Certificate shall be deemed and treated by the Issuer and the Paying Agent~Registrax as the absolute owner hereoffor all purposes, including payment and discharge ofliability upon this Certificate to the e~ctent ofsuch payment, and the Issuer and the Paying AgentlReistraarsholl not be affected by any notice to the contrary. A PRIDED above and in the Certificate ordinance, this Certificate, to the extent ofthe unpaid principal balance hereof, may be converted into and exchanged for a like aggregate principal amount of fu11y 5  I registered certificates, without interest coupons, payable to the assignee ar assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any pardon of this Certificate which is not being assigned and transferred by the initial registered owner, in any denomination or denom~natlons in any rntegral multiple of S,OU~ subject to the requirement hereinatler stated that each substitute certificate issued in exchange far any portion ofthis Certificate shall have a single stated principal maturity date, upon surrender of this Certificate to the Paying AgentlRegistrar far cancellation, ail in accordance with the forzri and procedures set forth in the Certificate Ordinance. If this Certificate or any portion hereof is assigned and transferred ar converted each certificate issued in exchange for any portion hereof shall have single stated principal maturity date corresponding to the due date of the installment of principal of this Certificate ar portion hereaffor which the substitute certificate is being exchanged, and shall hear interest at the rate applicable to and borne by such insta.iient ofprincipal ar pord.an thereof. No such certificate shall be payable in installments, but shall have only one stated principal maturity date. A PROVIDED IN TIDE CERTIFICATE ORDINANCE, TFII CERTIFICATE IN ITS PRESENT FORM MAY BE ALINED ANI] TRANSFERRED CONU~ERTED ONCE ONI~~, and to one or mare assignees, but the certificates issued and delivered in exchange for this Certificate or any portion hereofmay be assigned and transferred, and converted, subsequently, as provided in the Certificate Ordinance, The Issuer shall pay the Paying AgentfRegistrar's standard or customary fees and charges for transferring, converting, and exchanging this Certificate or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto, The Paying A entlRe istrar shall not be re aired to make an such assi ~ ~ ' g g q y gnment,conversion, ar exchange during the period commencing with the close afbusiness an any Record Date and ending with the opening o~'business on the ' next following principal ar interest payment date. IN THE EVENT any paying Aent~Registrax for this Certificate is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer h,as covenanted in the Certificate Ordinance that it promptly will appoint a competent and legally quaii~ed substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owner of this Certificate. IT IS HEREBY certified, recited, and covenanted that this Certificate has been duly and validly authorised, issued, and delivered; that all acts, conditions, and things re aired or ro er to be erformed p p p exist, and be done precedent to or in the authorisation, issuance, and delivery ofthis Certificate have been performed, existed, and been done in accordance with law; that this Certificate is a general obligation afthe Issuer, issued on the full faith and credit thereof; and that annual ad valorem taxes sufficient to provide for the payment ofthe interest on and principal ofthis Certificate, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged irrevocably far such payment, within the limit prescribed by law; and that, together with other parity obligations, this Certificate additionally is payable from and secured by certain surplus revenues gnat to exceed $ I O,o~o in aggregate amount} derived by the Issuer franc the ownership and operation of the City's Utility System consisting ofthe City's combined waterwari~s system, sanitary sewer system, and electric right . and power system}, all as provided in the Certificate Ordinance. THE iUER has reserved the right to issue, accordance with law, and in accordance with the Certificate Ordnance, other and additional obl~gat~ons, and to enter ~nta contacts, payable f`rarn ad valorem taxes andlor revenues ofthe City~s Utility system, on, a parity with, ar with respect to said revenues, superior in lien ta, this Certi#icatei BY BECOMING the registered owner ofthis Certificate, the registered owner thereby acknowledges all ofthe terms and provisions ofthe Certificate ordinance, agrees to be bound by such terms and provisions, acl~owledges that the Certificate Ordinance is duly recorded and available far inspection in the official. minutes and records of the governing body of the Issuer, and agrees that the terms and. provisions of this Certificate and the Certif sate Ordinance constitute a contract between the registered owner hereof and the G not permit their inspection by any other entity, Registration of each Certificate nxay be transferred in the Registration Baaks only upon presentation and surrender of such Certificate to the Paying AgentlRegistrar far transfer ofregistratian and cancellation,together with proper written instruments of assignment, inform and with guarantee of signatures satisfactory to the Paying Agent~Registxar, ~i~ evidencing the assignment of the Certificate, or any portion thereof in any integral multiple of $5,~0~, to the assignee ar assignees thereof, and iii}the right of such assignee or assignees to have the Certificate or any such portion thereof registered in the Warne of such assignee ar assignees. Upon the assignment and transfer of any certificate ar any portion thereof, a new substitute Certificate or Certificates shall be issued in conversion and exchange therefor in the manner herein provided. The Initial Certificate, to the extent ofthe unpaid principal balance thereof, nay be assigned and transferred by the initial registered owner thereof once only, and to one or mare assignees designated in v~riting by the initial,registered owner thereof. Ali Certificates issued and delivered in conversion of and exchange for the Initial Certificate shad be in any denarnination ar denominations of any integral multiple of $5,00 subject to the requirenxent hereinafter stated that each substitute Certificate shall have a single stated principal maturity date}, shall be in the form prescribed in the FORD[ OF U~TITUT~ BRTYFICATE set forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as hereinafter provided. Ifthe Initial Certificate or any portion thereof is assigned and transferred or converted the Initial Certificate must be surrendered td the Paying AgentlRegistrar for cancellation, and each certificate issued ixY exchange for any portion of the Initial Certificate shad have a single stated principal maturity date, and shall not be payable in instaiiments;and each such Certificate shall have a principal maturity date carrespanding to the due date of the installment of i principal or portion thereoffor which the substitute Certificate is being exchanged; and each such Certificate shall bear interest at the single rate applicable to and borne by such installment afprincipal or portion thereof for which it is being exchanged. If only a portion df the Initial Certificate is assigned and transferred, there shall be delivered td and registered in the Warne of the initial registered owner substitute Certificates in exchange for the unassigned balance of the Initial Certificate in the same manner as if the initial registered owner were the assignee thereof. If any Certificate or portion thereof other than the Ynitial Certificate is assigned and transferred ar converted each Oertificate issued in exchange therefor shall have the carne principal maturity date and bear interest at the same rate as the Cert~f irate for which It is exchanged. A. farm afassignxnent shall be printed yr endorsed on each Certificate, excepting the Initial Certificate, which shall be executed by the registered owner ar its duly authorised attorney or representative to evidence an assignment thereof, Upan surrender of any Oertifxcates ar any portion or portions thereof far transfer of registration, an authorized representative of the Paying AgentlRegistrar shall nxake such tarransfer in the Registration BoaiCS, and shall deliver a new fully registered substitute Certificate or Certificates, having the characteristics herein described, payable to such assignee ar assignees which then will be the registered owner ar owners of such new Certificate or Certificates? or to the previous registered owner in case Drily a portion afa Certificate is being assigned and transferred, ail in conversion of and exchange for said assigned Certif irate or Certificates or any portion or portions thereof, in the same farm and manner, and with the same effect, as provided in section ~d~, below, for the conversion and exchange ofCertificates by any registered _ owner of a Certificate. The Issuer shall pay the Paying AgentlRegistrar's standard ar customary fees and charges far making such transfer and delivery ofa substitute Certificate or Certificates, but the one requestin g such ~ansfer shall pay any taxes ar other governmentaY charges required to be paid with respect thereto. The Paying Agent~IRegistrar shall oat be required to moire transfers afregistratian aI'an Certif rate ar an artian Y Yp thereof during the period can~rnencing with the close of business an any Record Date and ending with the opening of business an the next fallav~ing principal or interest payment date, Ownershi ofCertificates. The entity in whose name any ertificate shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereoffar all purposes of this Ordinance, whether ar oat such Certificate shall be overdue, axed the Issuer and the Payin AgentlRe istrar shall oat be affected b an g g y y notice to the contrary; and payment af, ar on account of, the principal of, premium, if any, and interest an airy such Certificate shall be made only to such re istered g owner. A11 such payments shall be valid and effectual to satisfy and discharge the liability upon such S  i Certif ca~te to the extent of the sum or sums so paid. ~c~ .~ay~~f~,,,cat~d„ Imo, Wit. The Issuer hereby further appoints the ~ayir~ AgentJRegistrar taact asthe paying agent far paying the principal ofand interest oan the Certif cotes, and to act as its went to convert and exchange ar replace Certificates, all as provided in this Ordinance, The Paying AgentlRegistrarshcll keep proper records of all payments made by the Issuer and the Paying AgentlReistrar with respect to the Certif cotes, and ofall conversions and exchanges ofCertificates, and aII replacements of Certificates, as provided m this Ordinance. ~Iawever, in the event of a nonpayment afinterest on a scheduled payment date, and for thirty ~0} days thereafter, a new record date for such interest payment ~a "Special Record Date"~ will be established by the Paying AgentlRegistrar, ifand when funds for the payment afsuch interest have been received tram the Issuer l~otice ofthe special Record Date and afthe scheduled payment date of the past due interest ~„Special Payment Date", which shall be f fifteen ~ 1 S} days oiler the Special Record Date} shall be sent at least five ~}business days prior to the Special Record 1~ate by United States nail, first class postage prepaid, to the address of each Holder of a Certificate appearing on the registration books afthe Paying AgentlRegistrar at the close ofbusiness an the 1 nth business day next preceding the date of rnaiiing of such notice. ~d} Conversion and Exchan a or Re lacement• Authentication. Each Certifca~te issued and delivered pursuant to this Ordinance, to the exte~at ofthe unpaid principal balance or principal amount thereof, may, upon surrender of such Certifcate at the principal corporate trust o#fice of the Paying AgentlRegistrar, together with a written request therefor duly executed by the registered owner ar the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory to the Paying AgentlRegistrar, may, at the option of the registered owner ar such assignee or assignees, as appropriate, be converted into and exchanged for fully registered certificates, without interest coupons, xn the form presct~ibed in the FORM DF SC~BTITIITE CERTIFICATE set forth in this Ordinance in the denaminatxon of$S,~D~, ar any integral multiple of$5,00~ ~sub~ect to the requirement hereinafter stated that each substitute Certificate shall have a single stated maturity date}, as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid principal balance or principal amount of any Certificate ar Certificates sa surrendered,and payable to the appropriate registered owner, assignee, or assignees, as the case may be. If the Initial Certificate is assigned and transferred or converted each substitute Certificate issued in exchange for any portion of the I=nitil Certificate shall have a single stated principal maturity date, and shall not be payable in installments; and each such Certif cote shall have a principal maturity date corresponding to the due date ofthe ~nstaXlment of principal or portion thereof for which the substitute Certificate is being exchanged; and each such Certificate shall bear interest at the single rate applicable to and barne by such installment of principal or portion thereof for which it is being exchanged. Ifany Certificate ar portion thereof~other than the Initial Certificated is assigned and transferred or can~verted, each Certificate issued in exchange therefor shall have the carne principalmaturity date and bear interest at the same rate as the Certif cote for which it is being exchanged. Each substitute Cer~ifcate shalt bear a letter andlvr number to distinguish it from each other Certificate. The Paying AgentlRegistrar shall can~vert and exchange or replace Certificates as provided herein, and each fully registered certificate delivered in conversion of anal exchange for ar replacement of any Certificate or portion thereof as permitted or required by any provision. of this Ordinance shall constitute one Qf the Certificates for all ores of this p Ordinance, and ~.ay again be converted and exchanged ar replaced. It is specifically provided that any Certificate authenticated in canversian of and exchange for ar replacement of another Certifcate on ar prior to the first scheduled Record Date far the Initial Certificate shall bear interest from the date of the Initial Certificate, but each substitute Certificate so authenticated after such fist scheduled Record I]ate shall bear interest from the Interest payment date next preceding the date on which such substitute Certificate was so authenticated, unless such Certificate i authenticated offer any Record Date but an or before the next following interest payment date, in which case it shall bear interest from such next following interest payment date; provided, however, that if at the time of delivery of any substitute Certificate the interest on the Certificate for which it is being exchanged is due but has not been paid, then such Certificate shall bear 9  i interest from the date to which such interest has been paid ~ fit. T n~TIAL CERTIFICATE issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying AgentlReistrar, but an each substitute Certiflcte issued in conversion ofand exchange for ar replacement afany Certificate or Certifcates issued under this Ordinance there shall be printed a certificate, in the farm substantially as follows: "PAn11G AGENTIRECrISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been issued under the provisions of the Certificate Ordinance described on a face afthis Certificate; and that this Certificate has been issued in conversion of and exchange for ar replacement of a certificate, certificates, Qr pardon of a certif sate ar certificates of an issue which originally was approved by the Attorney Creneral of the Mate of Texas and registered by the Comptroller of Public Accounts of the State of Texas. THE ~ANI~ NF~w FOR TRUST COMPANY, NA.T'~ONAL ASOCiATrON, DALLAS, T.~XA, Paying AgentlReistrar Dated By "Authorized Representative" An authorized representative afthe Paying AgentJRegistrar shall, before the delivery ofany such Certificate, date and manually sign the above Certificate, and no such Certificate shall be deemed to be issued or outstanding unless such Certificate is sa executed. The Paying Agent~Registrar promptly shall cancel all Certificates surrendered for can~versian and exchange ar replacement. Na additional ordinances, orders, ar resolutions need be passed ar adopted by the governing body afthe Issuer ar any other body ar person so as to accomplish the foregoing conversion and exchange ar replacement of any Ce~ificate ar pa~ion thereof, and the Paying AgentlRegistrar shall provide for the printing, execution, and delivery of the substitute Certificates in the manner prescribed herein. Pursuant to Chapter 1Or, Texas Government Cade, the duty of conversion and exchange or replacerr~ent of Ce~if cotes as aforesaid is hereby imposed upon the Paying Aent,~Registrar, and, upon the execution ofthe above Paying AgentlRegistrar's Authentication Certificate, the converted and exchanged orreplaced Certificate shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Certificate which originally was issued pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. The f suer shall pay the Paying AgentlRegistrar's standard or customary fees and charges for transferring, converting, and exchanging any Certificate or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying AgentlRegistrar shall not be required to mare any such conversion and exchange or replacement of Certificates ar any potion thereofduring the period canxmencing with the close ofbusiness on any Record Date and ending with the opening of business on the next following principal or interest payment date, fie} In General. All Certificates issued in conversion and exchange or replacement ofany other Certificate or portion thereof, ~i~ shall be issued in fully registered foam, without interest cou ans, with the P principal of and interest on such Certificates to be payable only to the registered owners thereof, iii}may or shall be redeemed prior to their scheduled maturities, ~111~ may be transferred and assigned, ~iv~ nay be converted and exchanged far other Certificates, ~v~ shall have the characteristics, Zvi} shall be signed and sealed, and vii}the principal Qf and interest on the Certificates shall be payable, all as provided, and in the IO  i manner required or indicated, in the FORM DF SUBSTITUTE CERTIFICATE set forth in this Ordinance. fit} Pay~n„eft of pees and„Char~~es. The Issuer hereby covenants with the registered owners of the Certif ~cates that it viii ~i} pad the standard ar custama fees and charges of the Pa~~.g AgentlRegistr~r far its services with respect to the payment ofthe principal ofand interest an the Certificates, when due, and iii) pay the fees and charges of the Paying AgentlRegistrar far services with respect to the transfer of regis~ation ofCertificates, and with respect to the conversion and exchane ofCerticates solely to the extent above provided in this Ordinance. fig} substitute Pa in A ent~IRe istrar, The Issuer covenants with the registered owners of the Certificates that at all times while the Certificates are outstanding the Yssuer will provide a competent and legally qualified bank, trust company} financial institution, or other agency to act as and perform the services ofPayin AgentlRegistrar for the Certificates under this Ordinance, ar~d that the Paying Agentl~egistrar wi11 be one entity, The Issuer reserves the right ta, and may, at its option, change the Paying AgentlRegistrar upon not less than 1~0 days written notice to the Paying Agent~Registrar, to be effective not later than 0 days prior to the next principal ar interest payment date aver such notice, In the event that the entity at any ~.n~e acting as Paying Agentll~egis~ar for its successor by merger, acquisition, ar other method} should resign ar otherwise cease to act as such, the Issuer covenants that it will promptly appoint a ca~apetent and 1ega11y qualified bank, trust company, financial institution, or other agency to act as Paying AgentlRegistraronder this Ordinance. Upon any change in the Paying AgentlRegis~ar, the previous Paying A.gentlRegistrar ha11 promptly transfer and deliver the I~egistratian Banks for a copy thereo#~, along with all other pertinent boobs and records relating to the Certificates, to the new Paying Agenteglstrar designated and appointed by the Issuer. Upon any change in the Paying AgentlRegistrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying AgentlRegistrar to each registered owner of the Certificates, by United Mates mail, first~class postage prepaid, which notice also shall give the address of the new Paying AentlRegistrar. By accepting the position and performing as such, each Paying Agentll~egistrar sha11 be deemed to have agreed to the provisions of this Ordinance, and a certified cagy of this Ordinance shall be delivered to each Paying AgentlRegistrar. Section 7, FOIE OF UBTITUTE CETIFICATE. The form of all Certificates issued in conversion and exchange ar replacement of any other Certificate or portion thereof, including the farm of Paying AgentlRegistrar's Certificate to be printed on each of such Certificates, and the Faun ofAssignment to be printed on each ofthe Certificates, shall be, respectively, substantially as follows, with such appropriate var~atians, on~iss~o~.s, or means as are permitted ar required by this Ordnance, pOR OF SUBSTITUTE CERTIFICATE ~Bnok-Entry Only Legend, if appropriate} . NO. L]NITED STATES OF AIVIEI~ICA PRI~CfPAL AlVI0U1~T STATE OF TEAS $ COUNTY Op DENTON CITY Off` DE~TON CERTIFICATE OF O~LYCrATIO~ SERIES X007 INTEREST RATE ATUITY DATE DATED DATE CUSIP NO. 0~ TFIE 1VIATURITY DATE specified above the CITY Op DE~iTO~, I~entan County, Texas the "Issuer"}, being a political subdivision ofth Mate of Texas, hereby promises to pay to I1  LIM or to the registered assignee hereof neither being hereinafter called the "registered owner"} the principal mount of and to pay interest thereon, calculated on the basis ofa 3G0-day gear composed oftv~elve 3~-day months, from ,Tiny ~ , 207, to the maturity date specified above, at the interest Fate per annum specified above; with interest being f rst due and payable on February I5, 2~~8, and semiannually on each August 1 S and February ~ 5 thereafter, except that ifthe date ofauthentication ofthis Certifiicate is later than the first Retard Date thereinafter defined}, such principal amount shall bear interest from the interest payment date next preceding the date ofauthentication, unless such date ofauthentictivn is after any Record Date thereinafter defined} but on ar before tY~e next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date. THE PRfNCIPAL OF AND INTEREST ~N this Certificate are payable in lawful money of the United States of,Arnerica, v~ithout exchange or collection charges The principal of this Certificate shall be paid to the registered owner hereof upon presentation and surrender of this Certificate at maturity, at the principal corporate trust office of TFIE BA1~K DF NEB ~C~RI~ TRUST COIVIPAN'~, NATi~NAL AS~CIATrDNy DALLAS, TEXAS, which is the "'Paying AgentlRegistrar" for this Ceitifica~te. The payment of interest on this Certificate shall be made by the Paying Agent~Registrar to the registered ownex hereof on each interest payment date by check dated as of such interest payment date, drawn by the Paying AgentlRegistrar on, and payable solely from, funds of the Issuer required by the ordinance authoring the Issuance ofthe Certificates the "Certificate Qrdinance""} to be on deposit with the Paying Aent~Registrar for such purpose as hereinafter provided; and such check shall be sent b~ the Paying AgentlRegistrar by United States mail, fixst~lass postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at .e close of business on the last day of the month next preceding each such date tthe "Record Date"} on the Registration Eooks kept by the Paying AgentlRegisar, as hereinafter described. I~owever, the payment ofsuch interest may be made by any other method acceptable to the Paying AentlRegistrar and requested by, and at the risk and expense of, the registered owner hereof, The Issuer covenants with the registered owner ofthis Certificate that on or before each principal payment date, interest payment date, and accrued interest payment date for this Certificate it will make available to the Paying Agent~JRegistrar, from the "interest and Sinking Fund" created by the Certificate ordinance, the amounts required to provide for the payment, in inunediately available funds, of all principal ofand interest on the Ceificates, when due. IN TUE EXTENT afa nonpayment of interest on a scheduled payment date, and for thirty X30}days thereafter, a new record date for such interest payment to ""Special Record Date""~ ~vi11 be established by the Paying Agent~Registrar, if and when funds for the payment of such interest have been received from the Issuer, Notice of the Special Record Date and ofthe scheduled payment date ofthe past due interest {"Special Payment Date"', which shall be fiffeen t15~ days after the Special Record Date} shall be sent at least five t5~ business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address ofeach Holder ofa Certificate appearing on the registration books ofthe Paying AgentfRegistrar at the close of business on the 15th business day next preceding the date of mailing of such notice. IF THE DATE for the payment ofthe principal ofor interest on this Ce~ificate shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City v~here the Paying Agent~Reistrar is located axe a~uthori~ed by law or executive order to close, then the date for such. payment shall be the next succeeding day which is not such~a Saturday, Sunday, legal holiday, ar day on which banking institutions are 1~  I authorized to close; and payment an such date shall have the carne force and effect as ifrnade on the anginal date payment was due, THIS CERTIFICATE is one of an issue of Certificates initially dated duly 15, 20D7, authorized in accordance with the Constitution and laws of the Mate of Texas in the principal amount of $11,D0,4D0, far the purpose of paying all or a portion of the City's contractual obligations incurred pursuant to contracts for the purchase ofcertain real and personal property, to-wits {a} design, constructtQn and equipping afa public safety training facility, {b} renovations and improvements to existing City buildings, including the acquisition and installation of replacement heating, venting and air conditioning equipment; {c) in~pravernents to the City's solid waste disposal system and acquisition of related equipment; {d} acquisition and installation of security, multi-media and other technology equipment far City buildings, including the municipal court in City Hail fast; {e} acquisition of fixe engines and vehicles and equipment for the City's motor pool; {t} construction and egt~~pping afa multi-modal txansit station; and also for the purpose ofpayin all or a portion afthe City's contractual obligations for professional services, including engineers, architects, attorneys, map rnal~ers, auditors, and financial advisors, in connection with the preparation ofthe City's Capital Improvement Plan {including an animal services facilities master plan}, and with said Certificates of Obligation. ON FEBRCJARY 15, 2D 17, ar on any date whatsoever thereafter, the Certificates ofthis series inay be redeemed prior to their scheduled maturities, at the aptioti of the Issuer, with funds derived from any available and lawful source, as a whale, ar in pad, at the redemption price of ~e par ar principal amount thereof, plus accrued interest to the date fixed far redemption. If less than all afthe Certificates are to be redeemed, the Issuer may select the maturities of the Certificates to be redeemed. If less than all of the Certificates of any maturity are to be redeemed, the paying AgentfReistrar shall determine by lot the Certificates, ar portions thereof, within such maturity to be redeemed. TIC CERTIFICATES of this series scheduled to nature an FEBRUARY 1 , 2U and. FEBRUARY 1 , 2~~ are subject to mandatary redemption prior to their scheduled maturities, and ha11 be redeemed by the Issuer, in part, prior to their scheduled maturities, with money from the Mandatary Redemption Account of the Interest and Sinking Fund, with the particular Certificates or portion thereafta be redeemed to be selected by the paying AgentlRegistrar, by lot ar other customary rnethad {provided that a portion afa Certificate niay be redeemed only in an integral multiple of$5,040~, at a redemption price equal to the pax orprincipal arnaunt thereofand accrued interest to the date ofredemption, on the dates, and in the principal amounts, respectively, as Shaw in the following schedule: Feb I5 24 1Viaturi Mandatary Principal Redeni tion Dates Amounts February 15, ~0~ . February I~, {maturity} February 15, Maturity Mandatary Principal Redem tian Dates Amounts February 15, February 1 20~ {n~aturity~ 1~  i The principal amount of the Certificates required to be redeemed on the Mandatory Redemption Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the principal amount of any Certificates out of the naa~uity scheduled for February l ~o~ and February I5, which, at least 4 days prior to the aforesaid appropriate redemption date ~ 1 ~ shall have been acquired by the Issuer at a rice p not exceedirxg the principal amount ofsuch Certificates plus accrued interest to the date ofpurchase thereof, and delivered to the Paying Agent~Registrar for cancellation, or as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to the mandatory sinkin fund. g rederr~ption. During any period in which ownership ofthe Certificates is determined by a book entry at a securities depositary for the Certificates, iffewer than all ofthe Certificates ofthe same m.atutity and bearing such interest rate are to be redeemed, the Certificates, or portions thereof, to be redeemed shall be selected 1n accordance with the arrangenlentS between the Issuer and the securities depository. AT FEAT 30 days priox to the date fixed for any redemption ofCerti~cates or portions thereofprior to matut~ty a written nonce of such redemption shall be sent by the Paying Agent~Regis~ar by CJnited Mates amail, first-class postage pxepaid, to the registered owner of each Certificate to be redeemed at its address as it appeared on the 4th day prior to such redemption date; rovided however that the failure ' p to send, maul, or receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness ofthe proceedings for the redemption of any Certifcate, By the date fixed far any such redemption due provision shall be made with the Paying AgentlRegistrar for the payment of the re aired q redemption price far the Certificates or portion thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption, Ifsuch written notice ofredemption is given and if due rovision P for such payment is made, all as provided above, the Certificates or portions thereof which are to be so redeemed thereby automatically shall be treated as redeemed priox to their scheduled maturities, and the shall not bear interest after the date fixed for rede~n ti y p on, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest from the Paying A.entlRegistrarout ofthe funds provided for such payment. If a portion of any Certificate shall be redeemed a substitute Certificate or Certificates having the same maturity date, bearing interest at the same rate, in any denorninatian or denominations in any integral multiple of~,oo0, at the written request ofthe registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof far cancellation, at the expense of the Issuer, all as provided in the Certificate Ordinance. THIS CERTIFICATE OR ANY PORTION OR PORTIONS HEPEOF ~N ANY INTECRA~ MC~LTIPLE OF $,OOO may be assigned and shall be transferred only in the Registration Books ofthe Issuer kept by the Paying Agent~Registrar acting in the capacity ofregistrar for the Certificates, upon the terms and conditions set forth in the Certificate Ordinance. Among other requirements for such assignment and transfer, this Certl#icate must be presented anal surrendered to the Paying AgentlRegfstrar, together with ro er instruments of assi ent in form and with p p ~ y guarantee of signatures satisfactory to the Paying Agent~Registrar, evidencing assignment of this Certificate or any portion or portions hereof in any rote 1 multiple of $S,oO~ to the asi ee or assi ees in w ~ gn hose name or names this Certificate or any such portion or portions hereofis or arc to he transferred and registered, The form ofAssignn7ent printed or endorsed on this Certificate shall be executed by the registered owner or its duly authorised attorne or re resentative to y P evidence the assignment hereof, Anew Certificate or Certificates payable to such assignee or assi pees ~wh~ch then will be the new re istered owner or owners g g of such new Certificate or Certificates}, or to the previous registered owner the case ofthe assignment and transfer ofonly a portion ofthis Certificate; ma be delivered by the Pa in A entlRe istrar in conversion of y g g g and exchange for this Certificate, all in the form and rr~anner as provided in the next paragraph hereof far the conversion and exchange ofother Certificates, The Issuer shall pay the Paying AgentlRegistrar's standard or customary fees and char es for makin such transfer but the one re uesti such g g q ng transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying AgentlReis~ar shall not be required tv make transfers of registration ofthis Certi#icate or any portion herevfduring the period commencing with the close ofbusiness 14  - ~ Certif sate and the Certificate Ordinance constitute a confiract between each registered owner hereof and dte Issuer. IN WITNESS wI~EREOF, the Issuer has caused this Certificate to be signed with the manual ar fa~csirnile signature of the Mayor of the Issuer and countersigned anal attested with the manual or facsimile signature of the City Secrefiary of fihe Issuer, and has caused the official seal of fine Issuer to be dul impressed, or placed in facsimile, on this Certi~cate~ ATTEST; CITY DENTON, TEXAS B f ` Jennifer Walters Pe R. McNeill City Secretary, City of Denton, Texas NCayor, City of Denton, Texas CITY SEAL FORM OF SAYING AGENTIRECxI~TRAR'S AUTI-IENTICATION CERTIFICATE PAYINCr AGENTIREGITRAR'S AUThIENTICATION CERTIFICATE It is hereby certified that this Certificate has been issued under the provisions of the Certificate Ordinance described on the face ofthis Certificate; and that this Certificate has been issued in conversion of and exchange for or repiacernent afa certificate, certifcates, or a pardon ofa certi~cafie or certificates ofan issue which originally was approved by the Attorney General of the State of Texas and registered b the Comptroller of Public Accounts of the Sfiate of Texas. y TIC BAND OF NEw YORK TR~1ST COMPANY, NATIONAL ASOCt,ATION, DALLAS, TEXAS, Paylr~g Agent~Reg~strar Dated Authorized Representative INSERT BOND INSURANCE LEGEND, IF ANY} FORM OF ASSIGNMENT; ASSIGNMENT FOR SALE RECEIVED, the undersigned registered ownea~ afthxs Certificate, or duly authorised representative or attorney thereof, hereby assigns this Certificate to l~  i ~~ssignee's Social sprint or typewrite ~sstgnee's name and Security or Taxpayer address, including zip code} ~dentificatian dumber and hereby irrevocably constitutes and appoints attorney to transfer the registration afthis Certificate un the Paying Agentl~egistrar's registration Books with full paver of substitution in the premise, bated: l7  i Signature Guaranteed: NpTICE: Signatures} must be guaranteed by registered Gwner an eligible guarantorinstitutionparticipating in a securities transfer association recognised ~GTICE: This signature must correspond with signature guarantee program. the name afthe registered Gwner appearing on the face of this Certificate in every particular without alteration ar enlargement or any change whatsoever, Section 8, TAB LEVY. A special Interest and Sinking Fund the "Interest and Sinking Fund"} is hereby created solely for the benefit ofthe Certificates, and the Interest and Sinking Fund shall be established and maintained by the Issuer at an official depositary hank ofthe Issuer. A Mandatory Redemption Account is hereby established within the Interest and Sinking Fund. The Interest and Sinking Fund shall be Dept separate and apart from all other funds and accounts of the Issuer, and shall be used only for paying the interest on and principal ofthe Certificates. A11 ad valorem taxes levied and collected for and on account of the Certificates, together with any premium and accrued interest received upon sale afthe Certificates, shall be deposited, as collected, to the credit ofthe Interest and Sinking Fund. During each year while any afthe Certificates or interest thereon are outstanding and unpaid, the governing body of the Issuer shall carnpute and ascertain a rate anal amount of ad valorem tax which will be sucient to raise and produce the mone y required to pay the interest on the Certif icates as such interes# becan~es due, and to provide and maintain a sinking fund adequate to pay the princi a1 of its Certificates as such rinci al m p p p stores or is scheduled far redemption abut never less than ~°Ia ofthe original principal amount afthe Cert~f~cates as a sinking fund each year}, including such amounts as are necessary to satisfy the mandatory sinking fund schedule for the Certificates maturing February I, 2D~ and February 15, Z4~ as set forth in the Farm oflnitial Certificate and the Form afSubstitute Certificate contained herein, which amounts sha11 be deposited into the Mandatory Redemption Account, with such mandatary redemption constituting payment at rr~aturity. Said tax shall be based on the latest approval tax rolls afthe Issuer, with full allowance being nude for ta~c delinquencies and the cost oftax collection, Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levled, against all taxable property in the Issuer far each year while any of the Ceificates ar interest thereon are outstanding and unpaid; and said ~ shall be assessed and collected each suchyear and de osited to the credit of the aforesaid Interest and ~irikin F 4 p g and. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal oI'the Certificates, as such interest canes due and such principal matures ar is scheduled far redemption, are hereby pledged for such payment, within the 1in~it prescribed by law. Section 9, URI'LUS REVENUES. The Certificates additionally shall be payable from and secured by surplus revenues in accordance with Section 150 of the Texas Government Cade, as amended, to the extent hereinafter permitted, derived by the Issuer from the ownership and a eratian of the Issuer's Utili p system consisting of its combined waterworks system, sanitary sewer system, and electric light and power system} remaining aver ~a} payment ofall amounts constituting operation and maintenance expenses afraid Utility System, and fib} payment of all debt service, reserve, and other requirements and a~naunts re aired to be paid under all ordinances heretofore or herea~er authari~ing ~i}all bonds and iii} all other obli ations not an a parity with the Certificates which ate a g p gable from and secured by any [.ltility System revenues, and ~c} payment of all a~naunts payable frarn any Utility System revenues pursuant to contracts heretofore or hereafter entered into by the Issuer in accordance with law the 'Surplus revenues"}. If, far an ream the y ~ Yssuer fails to deposit ad valorem. taxes levied pursuant to Section S hereof to the credit of the Interest and Sinking Fund in an amount suf#icient to pay, when due, the princi al ofand interest an the Ce~ificates then p 3 l7  i Surplus Revenues, to the extent hereina~er permitted, shall be deposited to the credit of the Interest and Sinking Fund and used to pay such principal andlar interest A maximum aggregate of 1 ~,ODa of Surplus Revenues ~.ay be used to pay principal andlvr interest on the Certificates and any obligations an a parity therewith, The Certificates and any obligations on a pity therewith are not, and shall not be deemed to be, payable from or secured by any Surplus Revenues in excess of an aggregate of 1 O,O~Q. Until and unless an aggregate of 1~,00~ of Surplus Revenues actually is used to pay any such principal andlor interest, add~tlanal obligations, payable franc and secured by all or any remaining unused paxt of said aggregate of 10,1~D~ of surplus Revenues, may be issued by the Issuer on a parity with the Certificates and any other then outstanding parity vbligatians, wig the Certificates and ail such additional parity obligations to be payable from and secured equally and ratably by all ar any remaining unused part of said aggregate, The Yssuer reserves, and shall have, the right to issue bands, and other obligations not an a parity with the Certificates, and to enter rota contracts, in accordance with applicable laws, to be payable from and secured by any Utility System revenues other than the aggregate of ~ x,400 of Surplus Revenues as described above. The Certificates are on a parity with those issues ofCity afDenton Certificates ofObligation,Series 1995, series 1999, Series 2404, Series ZD01, Series 00~, Series 2D03, Series X004, Series 2005 and Series 2004 the "Outstanding Oertiflcates"}, as permitted in the Ordinances authorising sane; and it is hereby found and determined that none ofthe above defined Surplus Revenues have ever been used tv pay any principal andlar interest on the Outstanding Certificates. Section I4. D~FEASANOE OF CERTIFICATES, ~a}Any Certificate and the interest thereon shall be deemed to be paid, retired, axed no longer outstanding ~a "1]efeased Certificate"} within the meaning ofthis Ordinance, except to the extent provided in subsection ~d}ofthis Section, when payment afthe principal of such Certif cote, plus interest thereon to the due date either ~i~ shall have been made or caused to be made in accordance with the terms thereof, ar ~ii~ shall have been provided fvr an ar before such due date by irrevocably depositing with or making available to the Paying AentlRegistrar far such payment ~l}lawful money of the United States of America sufficient to make such payment or Oovernn~ent Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of suf#icient money to provide for such payment, anal when proper arrangements have been made by the Issuer with the Paying Agent~Reistrar far the payment of its services until all I~efeased Certificates shall have became due and payable. At such time as a Certificate shall be deemed to be a I]efeased Certificate hereunder, as aforesaid, such Certificate and the interest thereon shall na longer be secured by, payable from, ar entitled to the benefits af, the ad valorenx taxes herein levied and pledged a:s provided In this Ordinance, and such principal and interest shall be payable solely from such money ar Government Obligations. fib} Any moneys so deposited with the Paying AgentlRegistrar may at the written direction of the Issuer also be invested in Cavement Obligations, maturing in the amounts and times as he~reinbefore set forth, and all income from such Crovernment Obligations received by the Paying Agent~Registrar which i not required far the payment ofthe Certificates and interest thereon, with respect to which such money has been sa deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. ~c) The term "Crovernn~ent Obligations" as used in this Section shall mean ~i} direct, nor~callable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America,, iii} noncallable obligations of an agency or instrumentality of the United States of Arne~ica, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, an the date ofthe purchase thereofare rated. as to investment quality by a nationally recognized investment rating fr not less than AAA or its equivalent, and ~11t} noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the District adopts or approves the proceedings authorizin the l9  i financial a~rangern~r~ts are .ted as to investment quality by a nationally recognized investment gating firm not less than AAA or its equivalent, {d} Until all Defeased certificates shall have become due and payable, the Paying Agentll~egistrar shall perform the services ofPaying AgentlRegistrar for such Defeased Certif cotes the same as if they had not been defeaseoi, and the Issuer shall make proper arrangements to provide and pay for such services as require. by this ordinance. Section 11. DAA~D, MUTILATED, LUST, ST~L~N, ~R DEST~QYED CERTIFICATES. Re Iacern,ent Certificates, In the event any outstanding Certif ica~te is damaged, mutilated, lost, stolen, ar destroyed, the Paying AgentlRegistrar shall cause to be printed, executed, and delivered, a new certificate ofthe carne principal amount, maturity, and Interest rate, as the damaged, mutilated, lost, stolen, or destroyed Certificate, in replacement for such certificate in the manner hereir~affer pravided. fib} A lication far Re lacen~ent Certificates. Application far replacement of damaged, mutilated, lost, stolen, or destroyed Certificates shall be made by the registered owner thereafta the Paying Agentll~egistrar. In every case of loss, theft, ar destruction of a Certificate, the registered owner applying for a replacement certificate shall furnish. to the Issuer and to the Paying AgentlRegistrarluch security or indemnity as rr~ay be required by them tv save each afthem harmless from any loss or damage with respect thereto. Also, ire every case of loss, theft, or destruction of a Certificate, the registered owner shall furnish to the Issuer and the Paying AgentJRegistrar evidence to their satisfaction ofthe Ions, theft, yr destruction of such Certificate, as the case m,ay be, In every case of damage ar mutilation of a Certificate, the registered owner shall surrender to the Paying AgentfReistrar for cancellatiar~ the Certificate sa damaged ar mutilated, {c} Na Default Occurred, Notwithstanding the foregoing provisions ofthis ectian, in the event of any such Certificate shall have matured, and. no default has occurred which is then continuing in the payment of the principal of, or interest on the Certificate, the Issuer may authorize the payment of the same {without surrender thereof except in the case of a damaged or mutilated Certificate} instead of issuing a replacement Certificate, prodded security ar inderr~nity is furnished as shove pravided in this Section. ~d} Char e for Issuin Re Iacement Certificates Prior to the issuance of any replacement certificate, the Paying A.entll~egistrar shall charge the registered owner of such Certificate with all legal, printing, and other expenses in connection therewith. Every replacement certificate issued pursuant to the provisions afthis Section by virtue ofthe fact that any Certificate is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether ar not the lost, stolen, ar destroyed Certificate shall be found at any time, ar be enforceable by anyone, aid shah be entitled to all the benefits of this ordinance equally and proportionately with any and all other Certificates duly issued under this ordinance. fie} Authori for Issuin ~ e lacement Certificates. In accordance with Chapter 12~ 1, Texas government Oode, this Section of this ordinance shall constitute a~uthvrity for the issuance of any such replacement certificate without necessity of further action by the governing body ofthe Issuer or any other body or person, and the duty ofthe replacement afsuch certificates is hereby authorized and impaled upon the Paying AgentlRegistrar, and the paying Agent~R.egistrar shall authenticate and deliver such Certificates in. the form and manner and with the effect, as provided in Section ~{d} of this ordinance far Certificates issued in conversion and exchange far other Certificates. Section I~. CUSTUDY, APPR~~AL, AND R~GISTRATIUN 0~' CERTIFICATES; CERTIFICATE COUNSELS ~PINY~N, CIJSIP N~CIMBE~S, PREAMBLE AND INSURANCE. The Nlayar ofthe Issuer is hereby authari~ed to have control ofthe Initial Certificate issued hereunder and all necessaxy records and proceedings. pertaining to the Initial Certificate pending its delivery and its investigation, exami- nation, and approval by the Attorney General ofthe State of Texas, and its registration by .e Comptroller ~0  i ~B} amounts invested in a bona fide debt service fund, within the meaning ofsectian 1.148-1 ~ of the Treasury regulations, acrd amounts deposited in any reasonably required reserve ar replacement fund to the extent such amounts do oat exceed 10 percent ofthe proceeds ofthe Certificates; ~7} to otherwise res~ict the use ofthe proceeds ofthe Certificates ar amounts treated as proceeds ofthe Certificates, as may he necessary, sathatthe Certificates da not otherwise contravene the requirements of section l48 of the Cade relating to arbitraged and, to the extent applicable, section 149~d} of the Cade relating to advance refundins}; and ~8} to pay to the United States of Arr~erica t least once during each ~iwe-year period beginning on the date ofdelivery ofthe Certificates an an~aunt that is at least equal to 9~ percent ofthe "Excess Earnings," within the meaning ofsectton I4~~ afthe Cade and to pay to the United States ofAmerica, not later than ~U days after the Certificates have been paid in ful1,100 percent of the a~rrount then required to be paid as a result ofExcess Earnings under section 148~f} ofthe Code, fib} Proms The Issuer understands that the terra "proceeds" includes r'disposition proeeeds~~ s defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds cif any} and proceeds of the refunded bonds expended prior to the date of issuance of the Certificates, It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department ofthe Treasury pursuant thereto In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Certificates, the Issuer will not be required tv comply with any covenant contained herein to the extent that such failure to carrrply, in the opinion of nationally recognized band counsel, will not adversely affect the exemption from federal income taxation of interest on the Certificates under section I ~3 of the Cade. In the event that regulations or rulings are herea~er promulgated wlr~eh impose additional requirements which are applicable to the Certificates, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of" nationally recognized bend counsel, to preserve the exemption from federal income taxation of interest on the Certificates under section I4~ of the Code. In furtherance of such intention, the issuer hereby authorises and directs the Mayor tv execute any documents, certllxcates or reports required by the Code and to male such elections, on behalf of the Issuer, which may be permitted by the Cade as are consistent with the purpose for the issuance ofthe Certificates. Section l4. ALL~CATI~N ~F, ~I~D LIMITATI~~i E~PEI~DITURES pOr THE Pr~~ECT. The Issuer covenants to account far the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section 1 of this ordinance the "Project"~ on its books and records in accordance with the requirements ofthe Internal revenue Code The Issuer recognizes that in order far the proceeds to be considered used for the reimbursement of casts, the proceeds must be allocated to expenditures within I S months afthe later afthe date that ~ I ~ the expenditure is made, or ~2}the Project is completed; but in no event later than three years after the date on which the anginal expenditure is paid. The foregoing notwithstanding, the Issuer recognizes that in order for proceeds to he expended under the Internal revenue Cade, the sale proceeds ar investment earnings must be expended no more than ~D days after the earlier of ~l~ the ~if~h anniversary ofthe delivery ofthe Certificates, or ~Z}the date the Certificates are retired. The Issuer agrees to obtain the advice of nationally-recognized hand counsel if .such expenditure fails to comply with the foregoing to assure that such expenditure wi11 not adverselyaffectthe ta.x-exempt status ofthe Certificates, for purposes hereof, the Issuer shall oat be obligated to carnply with this covenant if it obtains an opinion that such failure tv comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. 2~  I Section 15, DISPOSITION OF PROJECT, The Issuer covenants that the property constituting the Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash ar other compensation, unless the Issuer obtains an opinion afnativnally-recagni~ed band counsel that such sale ar other disposition will not adversely affect the tax-exempt status of the certificates. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains a legal ~pinian that such failure to comply will not adversely affect the excludability far federal income tax purposes from grass lncom,e Of the Interest. Section 1 INTP;REST EARNINGS ON CRTIFIC,ATE PROCE~I~S. Interest earnings derived from the investment ofproceeds from the sate ofthe Initial Certificate shall be used along with other proceeds far the purposes for which. the Certificates are issued.; provided that after completion ofsuch purposes, ifany ofsuch interest earnings remain an hand, such interest earnings shall be deposited in the Interest and Sinking Fund, It is further provided, however, that any Interest earnings on certificate proceeds which are required to be rebated to the Ignited States afAmerica pursuant to section 13 hereofin order to prevent the Certificates from being "arbitrage bands" within the meaning of the Code shall be sa rebated and not considered interest earnings far the purposes of this Section. Section I7. SALE OF INITIAL CERTIFICATE} BOND INSI~RANC~. ~a~ The Initial Certificate is hereby Bald and shall be delivered to RBC RAIN R~.IJSCHER INC., a representative ofthe underwriters, in accordance with the Purchase Contract dated the date ofthis meeting and presented to the City Council ~f the City at this meeting, The City Council hereby frnds that the terms of the Purchase Contract are the most advantageous terms for the City that are reasonably available. The Mayor of the Issuer is authorized acid directed to execute, on behalf ofthe Issuer, said Purchase Contract in the form and substance submitted at tlus rr~eetiYlg. fib} The Issuer approves the insurance of the Certificates by MBIA Insurance Corporation and the payment afthe premium on the Insurance Policy, and agrees to can~ply with the terms ofth''Provisions Relating to Bond Insurance" attached hereto as Exhibit ~ and incorporated herein. Section 18.OFFICIAL STATEMENT, An Official Statement dated as afthe date afthis meeting has been prepared in connection with the sate of"the Initial ertilicate and the Certificates, in the fog and substance submitted at this meeting. Said Official Statement at~d any supplement or addenda thereto have been, and are hereby approved, and their use in the offer and sate of the Certificates is hereby approved, It is further ofriciatty found, determined, and declared that the statements and representations contained in said Official Statement are true and correct in all material respects, to the best knowledge and belief oI' the Issuer. The distribution and use of the Preliminary Official Statement dated Duty ~ 207, prior to the date hereof is hereby ratified and approved. Section l~, DTC REGISTRATION, The certificate initially shall be issued and delivered in such. manner that no physical distribution afthe Certificates will be made to the public, and The De asito Trust p rY Company ~"DTC"}, New York, New York, initially will act as depository for the Certificates. DTC has represented that it is a limited purpose trust can~pany incorporated under the laws ofthe State afNew York, a member o the Federal Reserve System, a. "clearing corporation" within the meaning of the New York IJr~iform Commercial Code, and a r'ctearing agency„ registered under Section 17A of the federal Securities Exchange Act of I934, as amended, and the Issuer accepts, but in no way verifies, such representations. The Initial Certificate authorized by this Ordinance shall be delivered to and registered in the name of the Purchaser. However, it xs a condition ofdelivery and sale that the Purchaser, immediately after such delivery, shall cause the Paying AentlReistrar, as provided for in this Ordinance, to cancel said Ynitial Certificate and deliver in exchange therefor a substitute Certificate far each maturity of such Initial Certificate, with each such substitute Certif irate to be registered in the name of CEDE CO.,the nominee of DTC, and it shall be the duty ofthe Paying AgentJRegitrar to take such. action. It is expected that ITC will hold the Certificates ~3  I on behalf of the Purchaser andlor the DTC Participants, as defined and described in the ~fficiai Statement reFerred to and approved in Section 18 hereof {the "DTC Participants"~, So fang as each Certificate is registered in the name of CEDE CO., the Paying AgentlRegistrar shall treat and deal with DTC in all respects the same as if it were the actual and beneft.cial owner thereof, It is expected that DTC will maintain a book entry system which will identify beneficial ownership of the Certif rcates by DTC Participants in integral a~naunts of S,~Q~, with transfers of ownership being effected on the records afDTC and the DTC Participants pursuant to rules and regulations established by them,and that the substitute Certificates initially deposited with DTC shall be immobilized and not be further exchanged for substitute Certificates except as hereinafter provided. The Issuer is not responsible or liable for any functions ofDTC, wi11 not be responsible for paying any fees or chaarges with respect to its services, will not be responsible or liable far maintaining, supervising, or re►~iewing the records of DTC or the DTC Participants, or protecting any interests or rights of the beneicial owners of the Certificates, It shall be the duty of the Purchaser and the DTC Participants to make aiI arrangements with DTC to establish this baok,entry system, the beneficial ownership of the Certificates, and the method ofpaying the fees and charges ofDTC. The Issuer does not represent, nor does it in any way covenant that the initial book-entry system established with DTC wi11 be maintained in the future. The Issuer reserves the right and option at any time in the future, in ifis sale discretion, to terminate the DTC CEDE CO.~ book~entry only registration requirement described above, and to permit the Certif cater to be registered in the name of any owner, If the Issuer exercises its right and option to terminate such requirement, it shall give wrxttennatice afsuch termination to the Paying AgentlRegis~ar and to DTC, and thereafter the Paying AgentlRegistrax shall, upon presentation and proper request, register any Certificate in any name as provided far in this Ordinance. Notwithstanding the initial establishment of the foregoing book-entry system with DTC, iffor any reason any afthe originally delivered substitute Certificates is duly filed with the Paying Agentll~egistrar with proper request for transfer and substitution, as provided for in this Ordinance, substitute Certificates wilt be duly delivered as provided in this Ordinance, and there wilt be no assurance ar representation that any bank-entry system will be maintained for such Certificates. section 20. CONT~INC DISCLOSURE. {a} Annual I~ep~ ~i} The Issuer shall provide annually to each NISIR and any SII], within six months after the end ofeach fiscal year ending in ar after Z~~7, financial information and operating data with respect to the Issuer ofthe general type included in the final official Statement authorized by Section 1 ~ of this Ordinance, being the information described in Exhibit A hereto, which Exhibit is attached to and incorporated in this Ordinance as ifwritten word far word herein. Any financial statements so to be provided shall be ~l~ prepared in accordance with the accounting principles described in Exhibit A hereto, or such other accounting principles a the Issuer may be required to employ from time to tune pursuant to state law or regulation, and ~~}audited, if the Issuer commissions an audit ofsuch statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the Issuer shall provide unaudited financial statements by the required time and wi11 provide audited financial statements far the applicable fiscal year to each NRMSIR and any SID, when and xf the audit report on such statements become available. ~ii~ Ifthe Issuer changes its fiscal year, it wi11 notify each NR~rISI~ and any SID ofthe change hand of the date of the new fiscal year end} prior to the next date by which the Issuer otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents ormay be included by specific reference to any document including an of~'~cia1 statement or other offering document, ifit is available from the MSI}that theretofore has been provided to each NRMSIR and any SID or fried with the SEC. fib} lVlaterial Event Notices. The Issuer shall notify any SID and each N1~1VIfR, in a timely manner, of any of the following events with respect to the Certificates, if such event is material within the meaning of the federal securities laws: ~4  i I. Principal and interest payment delinquencies; Non-payment related defaults; 3, Unscheduled draws on debt service reserves reflecting fnancial difficulties; 4, Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit ar liquidity providers, or their failure to perfarm; 6. Adverse tax opinions or events affecting the tax~exen~pt status ofthe Certificates; 7, MOd~ficat~ans to r1~tS oI" holders of the Certificates; S. Certificate calls; 9. Defeasances; I Release, substi.tion, ar sale afproperty securing repayment ofthe Certificates; and I I. Rating changes. The Issuer shall notify any SID and each NRMSIR, in a timely manner, afany failure by the Issuer to provide financial information ar operating data in accordance with subsection ~a} ofthis Section by the tune required by such subsection, ~c} Limitations Disclaimers and Amendments. ~i} The Issuer shall be obligated to observe and perform the covenants specif red 1n this Section far so long as, but only for sa fang as, the Issuer remains an "obligated person's with respect to the Certificates within the meaning afthe Rule, except that the Issuer in any event will give the notice required by Subsection fib} hereof of'any Certificate calls and defeasance that cause the Issuer to no longer be such an "obligated person". (ii} The provisions afthi Section are for the sale benefit of`the registered owners and benef vial owners afthe+Certificates, and nothing in this Section, express ar implied, shall give any benefit or any legal ar equitable right, remedy, or clann hereunder to any other person. The Issuer undertakes to provide only the financial infarm~ation, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to p~ro►vide any other information that maybe relevant or material to a carriplete presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, exce t p as expressly provided herein. The Issuer does not make any representation ar warranty concerning such information or its usefulness to a decision to invest in or sell Certif cater at any future date, viii} UNDER ND CIRCUMSTANCES SHALL THE ISSUER, ITS OFFICERS, ACrENTS AND EMPLOYEES, BE LL4BLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TART, FOR DAI4IAES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY ' ISSUER, wHE'I'HER NELIOENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. 25 No default by the issuer in observing ar performing its obligations under this Section shall comprise a breach afar default under the Ordinance for purposes ofany other prevision of this Ordxnancey bathing in this Section is intended ar shall act to disclaim, waive, or otherwise Iimit the duties of ~e Issuer under federal and state securities laws. ~v} The provisions efthis Section ntay be amended by the Issuer from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, ar a change in the identity, nature, status, or type afaperatians of the Issuer, but only if ~I} the provisions afthis Section, as sa mended, would have permitted an underwriter to purchase ar sell Certificates in the primary offering efthe Certificates in compliance with the Rule, taking into account any amendments or Interpretations ofthe Rule since such offering as well as such changed circumstances and ~Z} either ~a} the registered owners of a majority in aggregate principal amount far any greater amount required by any other prevision of this Ordinance that authari~es such an amendment} ofthe outstanding Cer~ifxcatea consent to such amendment er fib} a person that is unaffiliated with the Issuer such as nationally recognised bond counsel} determined that such amendment will not rnate~ally impair the interest of the registered owners and beneficial owners efthe Certificates. Ifthe Issuer sa amends the provisions efthis Section, it shall include with any amended f nancial information ar operating data next provided in accordance with subsecctian ~a~ of this Section an explanation, in narrative form, afthe reason for the amendment and ofthe impact of any change in the type of financial information or operating data so provided. The Issuer may also amend ar re cal the revisions P p afthis continuing disclosure agreement ifthe SAC amends or repeals the applicable provision afthe Rule or a court offinal jurisdiction enters judgment that such provisions efthe Rule are invalid, but only ifand to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Certificates in the primary a#i~ering of the Certificates. ~d~ Defrnitian. used In thls Sectlan, the fallowing terms have the meanings ascribed to such terms below; „MSRB" means the Municipal Securities Rulen~aking Board. "NRM~IR" means each person. wham the SAC ar its staff' has determined to be a nationally recognized nlunlc~pal secur~ttes ~nfarmat~an~ repository w~thtn the meaning of the Rule from t1~ne to t~m.e. "Buie" means PLC Rule t 5c~~ 12, s amended from time to tinge. "SEC" means the United States Securities and ~xcl~ange Commission. means any person designated by the State of Texas ar an authorized department, officer, or agency thereof as, and determined by the SEC ar its staff to be} a state infornation de osito within the p ameanin ofthe Rule from tine to time. . Section ~ I . PROTECTION OF PLEDCrE, Chapter r X48, Government Code, applies to the issuance ofthe Certificates and the pledge of the taxes and surplus revenues granted by the Issuer under Sections ~ and 9 of this Ordinance, and is therefore valid, effective, and perfected, If Texas law is amended at an time y while the Certificates are outstanding and unpaid such that the pledge of the taxes ands ius revenues ted b the Issuer under Sections i~ Y 8 and 9 of this Ordnance ~s to be sub j ect to the f~l~n requirements of Chapter , Texas Business ~ Commerce Code, then. in order to preserve to the registered owners of the Certificates the perfect1on of the security interest in said pledge, the Issuer agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable revisions of P Chapter 9, Texas Business Commerce Code and enable a filing to perfect the security interest in said pledge to occur.  i Section 2~. F~kTI~ER A~OC~i~U~ES, The Mayor ofthe Issuer, the City ecre ofthe Issuer and all other off icer~, eplayees, ar~d aex~t~ of the suer, and each v~ theme, shall be a~ad the are here expressly authorized, ern. owered and directed ~ y ~ p am time to ti.e and at any tune to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalfofthe Issuer all such instruments, whether or not herein mentioned, as rn.ay be necess or desirable in order to c out the terms and ravlslans of ~ p this Certificate ~rd~nance, the Cert~~cates, the gale ofthe Certificates, the Notice of Sale and bidding Instructions and the official Statement; and the Assistant I Mans erliscal and 1Vlunici al Servi ~ p ce ofthe City shall cause the expenses of 1SSUance of the Certificates to be paid from the proceeds of sale of the Initial Certificate or from other lawfully available funds of the Issuer. In case any officer whose signature shall appear on any Certificate shall cease to be such officer before the delivery of such ertilicate, such signature shall nevertheless be valid and sufficient far alI purposes the same as if such officer had remained in office until such delivery. Section 3. OPEN METING. The City Council has found and determined that the meetin at which this ordinance is considered is o en to the ublic an g P p d that notice thereofwas given in accordance with the provisions of the Texas open Meetings, haw, Tex, Gov't. Code, Chapter 5 I, as amended. ectian Z4, ~FF~CTIV'l~ DATE, This ordinance shall became effective immediately upon. its passage and approval. 27 ~A~~D ADD APPR~~~D this the 17th dad a',Tuly, ~0~7. Pew McNetr~, ll~~~ror ATTEST, .~ennife~ Walters, City Secretary APPR~VE~ ~S TO LEA~L FARM: Edwin N[. n ,Attu ByF ~ ~~TM~k~ ~~~IY~~~ ~ ~~r1Y~ ~i~~Rli~~~~ ~ rf  i ~11 Ll DE~~IPTI~N ~F ANNU'AL FrNANIAL IlYF~RMATI~N The following ainfarm.atian ~ referred to ~ Section of this ordinance: nn~~ F~n.c~~ ~~e~ent~ and ~pera~tg D~~a The fxnanci~ information and operating data with respect to the issuer to be provided annuaily in accordance with such Section are as speei~ed {a~.d included in the ,Appends or under the tables of the ~cial statement referred to}below: Tables numbered 1 through 5 anal 7 through 14, inclusive, under the captions "'pax ~~zformation", ,Debt ~nfonnation't and'Financial Information" in the official Statement. Appendix B in the official Statement. ~.~oonnting F~nc~ples The accounting principles referred to in such Section are the accounting principles described in the Hates to the financial statements referred to to the paragraph above. i ~~VYI~~ RELA'I TD BAND INS►NIi Exhibit 4 PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT entered into as of July 15, 2007 (this "Agreement"), by and between the City of Denton, Texas (the "Issuer"),and The Bank of New York Trust Company, National Association, a national banking association (the "Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its Certificates of Obligation, Series 2007 (the "Securities") in the aggregate principal amount of $11,500,000 such Securities to be issued in fully registered form only as to the payment of principal and interest thereon; and WHEREAS, the Securities are scheduled to be delivered to the initial purchaser thereof on or about August 21, 2007; and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the registered owners thereof; and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities. As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof, all in accordance with this Agreement and the "Ordinance" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the "Ordinance." The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Security means the date on and after which the principal or any or all installments of interest, or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the principal corporate trust office of the Bank as indicated on the signature page hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Fiscal Year" means the fiscal year of the Issuer, ending September 30. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Ordinance" means a written request or ordinance signed in the name of the Issuer by the Mayor of the Issuer delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "Ordinance" means the ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the City Secretary or any other officer of the Issuer and delivered to the Bank. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Ordinance). "Redemption Date" when used with respect to any Bond to be redeemed means the date fixed for such redemption pursuant to the terms of the Ordinance. "Responsible Officer" when used with respect to the Bank means the Chairman orVice-Chairman of the Board of Directors, the Chairman or Vice-Chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above 2 designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfer of the Securities. "Stated Maturity" means the date specified in the Ordinance the principal of a Security is scheduled to be due and payable. Section 2.02. Other Definitions. The terms "Bank," Issuer," and Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT Section 3.01. Duties of Paying_Agent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the Bank Office. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and preparing and sending checks by United States Mail, first class postage prepaid, on each payment date, to the Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the address appearing on the Security Register or by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Ordinance. Section 3.03. Reporting Requirements. To the extent required by the Code or the Treasury Regulations, the Bank shall report to the Holders and the Internal Revenue Service the amount of interest paid or the amount treated as interest accrued on the Bonds which is required to be reported by the Holders on their returns of federal income tax. ARTICLE FOUR REGISTRAR 3 Section 4.01. Security Register -Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register"), and, if the Bank Office is located outside the State of Texas, a copy of such books and records shall be kept in the State of Texas, for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02. Certificates. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Security Re is~ter. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank toprovide an up-to-date listing or to convert the information into written form. 4 The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Cancelled Certificates. All certificates surrendered to the Bank, at the designated Payment/Transfer Office, for payment, redemption, transfer, or replacement, shall be promptly cancelled by the Bank. The Bank will provide to the Issuer, at reasonable intervals determined by the bank, a certificate evidencing the destruction of canceled certificates. Section 4.06. Mutilated, Destroyed, Lost or Stolen Securities. The Issuer hereby instructs the Bank, subject to the applicable provisions of the Ordinance, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an overissuance. Incase any Security shall be mutilated, or destroyed, lost or stolen, the Bank, in its discretion, may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible 5 Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the state- ments of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Moneys Held by Bank. The Bank shall deposit any moneys received from the Issuer into a segregated account to be held by the Bank solely for the benefit of the owners of the Securities to be used solely for the payment of the Securities, with such moneys in the account that exceed the deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas and to the extent permitted by the laws of the United States of America to secure and be pledged as collateral for such accounts until the principal and interest on such securities have been presented for payment and paid to the owner thereof. Payments made from such account shall be made by check drawn on such account unless the owner of such Securities shall, at its own expense and risk, request such other medium of payment. Subject to the Unclaimed Property Law of the State of Texas, any money deposited with the Bank for the payment of the principal, premium (if any), or interest on any Security and remaining unclaimed for three years after the final maturity of the Security has become due and payable will be paid by the Bank to the Issuer if the Issuer so elects, and the Holder of such Security shall hereafter look only to the Issuer for 6 payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease. If the Issuer does not elect, the Bank is directed to report and dispose of the funds in compliance with Title Six of the Texas Property Code, as amended. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction to determine the rights of any Person claiming any interest herein. Section 5.08. Depository Trust Company Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements," effective August 1,1987, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02. Assi n.~. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on the signature page of this Agreement. Section 6.04. Effect of Headings. 7 The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severabili . In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of A re,~ ement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire A re,~ ement. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between his Agreement and the Ordinance, the Ordinance shall govern. Section 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (60) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termina tion of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securi- ties, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. Section 6.11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION By Title 2001 Bryan Street, 10th Floor Dallas, Texas 75201 10 CITY OF DENTON, TEXAS By Mayor 215 E. McKinney Street Denton, Texas 76201 11 SCHEDULE A Paying Agent/Registrar Fee Schedule 12 AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Fiscal Operations ACM: Jon Fortune SUBJECT Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of the "City of Denton Utility System Revenue Bonds ($16,740,000), Series 2007"; Authorizing the issuance of the bonds; approving and authorizing instruments and procedures relating to said bonds; and enacting other provisions relating to the subject. BACKGROUND This ordinance authorizes the issuance, sale and delivery of Utility System Revenue Bonds (Revenue Bonds) in the amount of $16,740,000 to fund capital improvements for Electric and Water System infrastructure. The amount includes the necessary deposit into the debt service reserve fund and cost of issuance. The revenue bonds will be used for various electric transmission and distribution projects, water storage, and water transmission proj ects. Following a comprehensive analysis on the Utility System's financial outlook and stability, the City has obtained favorable bond ratings on these Bonds from both Standard and Poor's and Moody's Investor Services. The ratings are summarized below: Utilit~ystem Revenue Bonds ($16,740,000), Series 2007 • Standard and Poor's A+ • Moody's Al These Bonds will be sold through a competitive bid process following the guidelines established in the City's Debt Service Management Policy [Section 403.07 XII (A)]. All bids on these Bonds must be delivered to the City prior to 11:00 a.m., on July 17tH Award of the sale to the successful bidder will occur during the City Council meeting on July 17, 2007 at 6:30 p.m. I am providing this information to allow you ample time to review it prior to the sale. However, please be aware that information as it relates to the bids submitted, interest rates, pricing, and insurance provisions will not be available until the bidding period closes on July 17. Following the award of the bid by the City Council, the interest rates and information from the successful bidder will be included in the Preliminary Official Statement and other bond documents making it final. Agenda Information Sheet July 17, 2007 Page 2 PRIOR ACTION/REVIEW (Council, Boards, Commission) The projects funded from the Revenue Bonds were approved by the Public Utilities Board and the City Council, in the Capital Improvement Program (CIP), fiscal year ending 2007-2011. FISCAL INFORMATION An estimated debt service schedule is included on page 46 in the Preliminary Official Statement attached. The estimated average annual debt service payment, including principal and interest, will total approximately $1,280,000. This payment is anticipated and included in the Utility System long-range financial pro forma. EXHIBITS 1. Ordinance 2. Rating Agency Reports a. Moody's b. Standard & Poor's 3. Preliminary Official Statements 4. Notice of Sale and Bidding Instructions 5. Paying Agent/Registrar Agreement Respectfully submitted: Jon Fortune Assistant City Manager Exhibit 1 ~RDINAN~E N0.20Q7- AN GRDINANE ~GNS~rDERn~G ALL MATTERS INCIDENT AND RELATED THE ISSUANCE, SALE AND DELIVERY GF THE "GIT~ GF DENTON CJTiLITY SYSTEM REVENUE BGNDS ~1d,740,OQ0}, SERIES 2DQ7"'; AUTH~RI~ING THE ISSUANCE GF THE BONDS; APFR~V1hiC~ AND AUTHGRI~~NC INSTRUMENTS AND PROCEDURES RELATING TD SAID BANDS; AND ENACTING ETHER PROVISIONS RELATING TO THE SUBJECT 'THE STATE OF TE~A,S COUNTY OF DENTON CI~'Y DF DENTON WHEREAS, the City of Dentan, Texas, heretafare has duly issued the follav~in revenue bands: City of Denton Utility System Revenue Refunding Bands, Taxable Series 1993-B, dated June 1, 1993; City afDenton Utility System Revenue Bands, Series 1998, dated March 15,1998; City QfDentan Utility System Revenue Refunding Bonds, Series 1998A, dated July 15,1998; City of Dentan Utility System Revenue Refunding Bands, Series 199SB, dated August 1,1998; City afDenton Utility System Revenue Bonds, Series 20QOA, dated Apri115, 2QQ0; City of Denton Utility System Revenue Bands, Taxable Series 200QB, dated April 1 S, 2QOQ; City of Denton Utility System Revenue Refunding and Irn.pravement Bonds, Series 2001, dated Apri115, 2001; City of Denton Utility System Revenue Bonds, Series 2002A, dated April 1, 2002; City of Denton Utility System Revenue Bands, Taxable Series 2002B, dated April 1, 2002; City of Denton Utility System Revenue Refunding and Impravement Bonds, Series 2003, dated April 1, 2043; City of Dentan Utility System Revenue Refunding Bands, Series 2004, dated September 1, 2404; City of Denton Utility System Revenue Refunding Bands, Series X005, dated May 15, 2005; City afDenton Utility Systenx Revenue Bands, Series 200, dated July 15, 200; City of Dentan Ut11~ty System Revenue R.efunding Bands, Series 20Q7, dated February 15, 2407 ; and WHEREAS, the Series X407 Bands hereina#~er autharized and described are to be issued, sold and delivered pursuant to Chapters 1502, Texas Crovernment Dade, the City"s Hame Rule Charter, and other applicable lav~s~ NOS T~IEREFQRE  i THE COUNCIL OF TIE CITY ~F DENTON HEREBY C~RI]AINS: Section 1. AMOUNT AND PURPOSE ~F THE BONDS. The bond yr bonds afthe City ofDenton, Texas the'Issuer"} are hereby authorized to be Issued and delivered m the aggregate principal amou~at of 1~,740,00D, far the purpose of ~a~ fund capital in~pravements for the electric system transmission and distribution facilities; ~ miscellaneous water systerr~ improvements; ~c} make a deposit to the System debt service reserve fund; and ~d}pay the costs of issuance of the Bonds. Section DESCRIPTION OF THE BONDS, ~a}Each band issued pursuant to this Ordinance shall be designated: "CITY OF DENTON UTILITY SYSTEM REVENUE BOND, SERIES 20Q7," kith respect to the Series 2007 Bonds, initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest coupons, payable in installments afprincipal the "Initial Series 2007 Bond"},but the Initial Series 2007 Band may be assigned and transferred andlor converted into and exchanged far a like aggregate principal amount offully registered bonds, without interest coupons, having serial maturities, and in the denomination or denominations of S,Ol~O or any integral multiple of X5,000, all in the manner hereina~er provided. The term 'Series 2007 Bands" as used in this Ordinance shall mean and include collectively the Initial Series 2007 Band and all substitute bonds exchanged therefor, as well as all other substitute bonds and replace~.ent bands issued pursuant hereto, and the term "Series 2007 Bond" shall mean any of the Series 2007 B ands. fib} The term "Initial Band" as used in this Ordinance sha11 mean and include collectively the Initial Series 200' Bond, the term "Bands" as used in this Ordinance shall mean and include collectively the Initial Bond and all substitute bands exchanged therefor, as well as ail other substitute bonds and replacement bands issued pursuant hereto, and the terns "Bond" shall mean any of the Bonds. Section 3, INITIAL DATE, DENQMrNATIDN, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND. {a} The Initial Series 2007 Bond is hereby authorized to be issued, Bald, and delivered hereunder as a single fully registered Bond, without interest coupons, dated July l , 2aa7, in the denomination and aggregate principal amount of1,740,000numbered R-l, payable in annual installments ofprincipal to the initial registered owner thereof, to-wit; C ~ ] or to the registered assignee or assignees of said Bond or any portion or portions thereof din each case, the "registered owner"},with the annual installments ofprincipal of the Initial Series 2007 Bond to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL BOND set forth in this Ordinance, fib} The Initial Series 2007 Band ~i} nay and shall be prepaid or redeemed .prior to the respective scheduled due dates of installments of principal thereof, ~~~}may be assigned and transferred, (fly} may be converted and exchanged fvr other Bonds, Div} sha11 have the characteristics, and ~v} shall be signed and sealed, and the pi~ricipal afand interest on the Initial Series 2007 Band shall be payable, all as provided, and in the manner required or indicated, in the FORM OF INITIAL SERIES 2007 BOND set forth in this Ordinance. Section 4, T.~TEREST. The unpaid principal balance of the Initial series 2007 Band shall bear interest from the date of each Initial Series 2007 Bond to the respecve scheduled due dates, or to the respective dates ofprepayment or redemption, afthe installments ofprincipal ofthe Initial Series 2007 Band, 2  i and said interest shall be payable, alb in the manner pravided and at the rates and on the dates Mated in the FORM OF INITIAL ~a07 BOND set forth in this Ordinance. Section FORM INITL4L SERIES X007 BOND, The faun of the Initial Series X007 Bond, including the form afRegistration Certificate ofthc Comptroller ofFublic Accounts afthe State ofTexas to be endorsed on the Initial Series ~a0~ Bond, shall be substantially as fallows: o~ ~N~TrAL SERIES ~oo~ BOND NO. 1 1,14a,aaa UNITED STATES OF AMERICA STATE TEXAS COUNTY OF DENTDN CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 2aa7 THE CITY DENTON, in Denton County, Teas (the "Issuer"~, being a political subdivision of the State of Teas, hereby promises to pay to or to the registered assignee ox assignees of this Bond or any portion or portions hereof din each case, the „registered owner"} the aggregate principal amount of 1 ~,740,0~0 ~SI~TEEN MILLION SEVEN HUNDRED FORTY THOUSAND DOLLARS in, annual installments afprincipal due and payable on December 1 in each. ofthe years, and in the respective principal amounts, as set forth in the fallowing schedule, and. to pay interest, from the date of this Bond hereinafter stated, on the balance of each such installment of principal, respectively, frarn time to time remaining unpaid, at the rates as follows. PRINCIPAL INTEREST. PRTNCIFAL INTEREST Y~ AMOUNT RATE °Io YEAR AMOUNT RATE °Ia Interest shall first be due and payable on December 1, ~Oa7, and semiannually on~each June 1 and December I therea~er while this Band or any portion hereof is outstanding and unpaid. Said interest shall be calculated an the basis ofa 3~0-day year composed oftwelve 30-day months, THE INSTALLMENTS OF PRINCIPAL OE AND THE INTEREST ON this Band are payable in Lawful money o~the United States ofAmerica, without e~cchange or caltection charges. The installments of 3  i principal and the interest on this Band are payable to the registered owner hereof through the services ofthe Dallas, Texas corporate trust af~ice of THE BANK OF New YORE TRUST COMPANY, NATIONAL ASSOCIATION, which is the "Paying AentJRegistrar" far this Bond. Payment of all principal of and interest an this Band shall be made by the Paging AgentlRegistrar to the registered owner hereof an each principal andlor interest payment date by check, dated a.s of such date, drawn by the Paying AgentlRegistrar on, and payable solely from, funds of the Issuer required by the ordinance authariz~ng the issuance of this Fond the "Band Ordinance"~ to be on deposit with the Paying AgentlRegistrax far such purpose a hereinafter provided; and such. check shad be sent by the Paying AgentlRegxstrar by United Mates mail, first-class postage prepaid, an each such principal andlor interest payYnent date, to the registered owner hereof, at the address ofthe registered owner, as it appeared on the 15th day ofthe month next preceding each such date the "Record Date"} an the Registration Baaks kept by the Paying AgentlReg~strar, as hereinafter described. The Issuer covenants with the registered owner of this Band that on or before each principal andlor interest payment date for this Bond it will make available to the Paying AgentlRegistrar, from the "Interest and Sinking 1~`und"maintained pursuant to the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all p~,ncipal of and interest on this Band, when due. ~i THE EVENT of a nonpayment of interest an ~,scheduled payment date, and for thirty X30}days thereafter, a nevi record date for such interest payment ~a "Special Record Date"} will be established by the Paying AgentlRegistrar, if and when funds for the payment of such interest have been received from the Issuer. Notice afthe Special Record Date and afthe scheduled payment date of the past due interest ~"Special Payment Date", which shall be ftfteen ~ 1 } days after the Special Record Date} shall be sent at least dive business days prior to the special Record Date by United Mates mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books afthe Paying AgentfRegistrar at the close of business on the 15th business day next preceding the date of mailing of such notice. IF "fflE DATE for the payment of the principal. of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, ar a day an which banking institutions in the City v~here the Paying AgentfRegistxar is located axe authorized by law ar executive order to close, then the date far such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment an such date shall have the same force and effect as if made on the original date payment was due. . THIS BOND has been authorized in accordance with e Constitution and laws of the State of Texas in the princlpal amount of 1 ~,74~,000 for the purpose of ~a} fund capital improvements far the electric system transmission and distribution facilities; fib} miscellaneous water system irnprove~nents;~c} make a deposit to the system debt service reserve fund; and ~d} pay the costs of issuance ofthe Bonds ON DECENfBER I, 17, ar on any date whatsoever thereafter, the unpaid installments afprincipal of this Bond may be prepaid or redeemed priox to their scheduled due dates, at the option of the Issuer, with funds derived fra~n any available source, as a whole, or in part, and, if in part, the particular portion oftlus Bond to be prepaid or redeemed shall be selected and designated by the Issuer provided that a portion ofthis Bond may be redeemed only in an integral multiple of$5,000}, at the prepayment ar redemption price ofthe par ar principal amount thereof, plus accrued interest to the date ftxed for prepayment ar redemption. THP1 BONDS afthis series scheduled to mature an DECEMBER 1, ~0 ~ and DECEIVIBER 1, ~0 are subject to mandatary redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior to their scheduled maturities, with money from the Interest and finking Fund, with the particular Bands or portion thereof to be redeemed to be selected by the Paying AgentlRegistrar, by lot or other customary method provided that a portion of a Bond nay be redeemed only in an integral multiple of 4 ,D~~}, at a redemption price equal to the par or principal amount thereof and accrued .terest to the date of redemption, on the dates, and in the principal amounts, respectively, as show in the following schedule: December 1 Z~ Maturi Mandatory Principal Redem tion~ Dates Amounts December 1, 20 Dece~.ber 1, 20~ {maturity} December 1 ~ 2~ Maturi Mandatory Principal ~e~ption Dates Amounts December 1, ~0~ December 1, ~0_ maturity} The principal amount of the Bonds required to be redeemed on the Mandatary Redemption Dates pursuant to the foregoing shall be reduced, at the option ofthe Issuer by the principal amount of any Bonds out ofthe maturity scheduled for December I, and December 1, 0_ which, at least 45 days prior to the aforesaid appropriate redemption date ~ 1 }shall have been acquired by the Issuer at a price not exceeding the principal atnaunt of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying AentlRegitrar for canceilatian, or as shall have been redeemed pursuant to the optional redemption provisions hereofand oat previously credited to the mandatory sinking fund redemption. During any period in which ownership of the Bonds is determined by a book entry at a securities depository for the Bonds, if fewer than all afthe Bonds ofthe same maturity and hearing such interest rate are to he redeemed, the Bands, ar portions thereof, to be redeemed shall be selected in accordance with the arrangements between the issuer and the securities depository. AT LEAST 3o days prior to the date fixed far any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed by the Paying AgentlRegistrar to the registered owner hereof. By the date hied for any such prepayment or redemption due provision shall be made by the Issuer with the Paying AgentlRegistrar for the payment of the required prepayment or redemption price for this Bond ar the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed far prepayment or redemption, If such written native of prepayment or redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest aver the date fixed for zts prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying AentlRegistrarout ofthefunds provided for such payment. The Paying Agent~Registrar half record in the Registration Books all such prepayments or redemptions of principal of this Band ar any portion hereof. THIS BOND, to the extent ofthe unpaid or unredeemed principal balance hereof, or arty unpaid and unredeerr~ed portion hereof in any integral n~r~ltiple of5,40~, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying AgentlRegistrarocting in the capacity of registrar far the Bonds, upon the terms and conditions set Earth in 5  L~~ the Band ordinance. Among other requirements far such transfer, this Bond must be presented and surrendered to the Paying AgentlRegistrar for cancellation, together with proper instruments of assignment, in form a~ad with guarantee of signatures satisfactory to the Paying A.gentlRegistrar, evidencing assignna.ent by the initial registered owner of this Bond, ar any portion or portions hereaf in any integral multiple of $5,00, to the assignee or assignees in whose name ar names this Bond or any such portion ar portions hereof is or are to be transferred and registered. Any instrument ar instruuments of assignment satisfactory to the Paying AgentlRegistrar may be used to evidence the assignment of this Band. ar any such portion ar pardons hereof by the initial registered awr~er hereof. Anew band or bonds payable to such assignee or assignees which then will be the new registered owner ar owners of such new Bond or Bonds} or to the initial registered owner as to any portion afthis Band which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying AgentlRegistrar in conversion of and exchange for this Bond ar any pardon ar pardons hereof, but solely in the faun and manner as provided in the next paragraph hereaffor the conversion and exchange afthis Bond ar any pardon hereof. The registered owner of this Bond shall be dee~.ed and heated by the Issuer and the Paying AgentlReist~rar as the absolute owner hereaf far alt purposes, including payment and discharge ofliability upon this Bond to the extent of such payment, and the Issuer and the Paying AentlRegistrarsholl not be affected by any notice to the contrary. A PR~~IDED above and in the Bond ordinance, this Bond, to the extent of the unpaid or unredeemed principal balance hereof, may be converted into and exchanged for a like aggregate principal an~vunt of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner hereof, ar to the initial registered owner as to any portion afthis Bond which is not being assigned and transferred by the initial registered owner, in any denaminatian ar denominations in any integral multiple of $5,000 ~sub~ect to the requirement hereina~er stated that each substitute bond issued in exchange for any portion of this Band shall have a single stated principal maturity . date), upon surrender of this Bond to the Paying AgentlRegistrar for cancellation, all in accordance with the form and procedures set forth in the Bond ordinance. If this Bond or any pardon hereaf is assigned and transferred or converted each band issued in exchange for any portion hereaf shall have a single stated principal maturity date corresponding to the due date of the installment of principal of this Bond or portion hereof for which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of principal or portion thereof. such bonds, respectively, shall be subject to redemption prior to maturity an the same dates and far the same prices as the corresponding installment of principal afthis Bond or portion hereaffor which they are being exchanged. Na such bond shall be payable rn installments, but shall have only one stated principal maturity date. A PR~VII~~U IN TIC BAND ~RDINAN~E, THIS BAND IN ITS PRESENT F~~M MAY BE AsIrNED AND TRANSFERRED DN~ERTED DNE ONLY, and to one or moxe assignees, but the bonds issued and delivered in exchange for this Bond ar any portion hereofmay be assigned and transferred,and converted, subsequently, as provided in the Bond ordinance. The Issuer shall pay the Paying Agent~Registrar's standard ar customary fees and charges far transferring, converting, and exchanging this Band or any portionthereof, but the one requesting such transfer, conversion, and exchange shall pay any takes ar governrnentl charges required to he paid with respect thereto. The Paying AgentJRegis~ar shall not be required to make any such assignment, conversion, or exchange ~i} during the period commencing with the close ofbusiness on any Record Date and ending with the opening of business on the next following principal or interest payment date or, ii with res ect to an p y Band or portion thereof called far prepayment or redemption prior to maturity, within 4S days prior to its prepayment or redemption date, IN TIC EXTENT any Paying AgentJRegistrar for this Bond is changed by the Issuer, resigns, ar otherwise ceases to act as such, the Issuer has covenanted in the Bond ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owner afthis Band. IT I ~IEREBY certified, recited, and covenanted that this Band has been duly and validly authot~zed, issued, Bald, anddeiivered; that all acts, conditions, and things required or.properto be performed, exist, and be done precedent to or in the authori~atian, issuance, and delivery of this Band have been performed, existed, and been done In accordance with law; that this Bond is a special obllgatlnn ofthe Issuer, secured by anal payable, together with other bonds, from a fist lien on and pledge ofthe "Pledged Revenues", which include, but are not limited to, the "Net Revenues afthe System's as such terms are defined in the Bond Ordnance, with the System consisting ofthe City's entire combined waterworks, sewer, and electric tight and power system. THE IS S UDR has reserved the right, sub j ect to the restrict~ans stated in the Bond Ordinance, to issue Additional Bands payable from and secured by a first lien on and pledge of the ('Pledged Revenues' on a parity with this Bond. THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to amend the Band Ordinance with the approval of the holders or owners of fifty-one percent in principal almount of all outstanding bonds which are secured by and payable from a first lien on and pledge of the Pledged Revenues. THE REOITERIID OWNER hereafshali never have the right to demand a meat afthis Band or py the interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than specilred in the Bond Ordinance. BY BECOn~Cr the registered owner ofthis Bond, the registered owner thereby acknowledges all of the terms and previsions of the Bond Ordinance, agrees to be bound by such terns and provisions, acknowledges that the Bo~ad Ordinance is duly recorded and available for inspection in the official nxinutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between the registered owner hereof and the Issuer. TN FITNESS HEREOF`, the Issuer has caused this Band to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned and attested with the manual signature ar facsimile ofthe City Secretary ofthe Issuer, has caused the official seal ofthe Issuer to be duly impressed on this Bond, and has caused this Bond to be dated July 15, ~~07. ATTEST: CITY OF DENTON, TEAS By: By. Jennifer w'alters Peary R.1VIcNeill City Secretary, City of Denton, Texas Mayor, City of Denton, Texas CITY SEAS} BOND INSURANCE LEGEND, IF ANY} FORIVI OF REGISTRATION CERTIFICATE OF T COMPTROLLER OF PUBLIC ACCOUNT; 7 ~~MPTROLLER' REGISTRATiGN CERTI~`1ATE: REGISTER NG. ~ hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General ofthe Mate of Texas, and that this Bond has been registered by the Comptroller afPublic Accounts of the Mate of Texas. wztness xny signature and seal this Canrptroller of Public Accounts of the Mate of Texas ~C~IVIPTRGLLER'S SEAL Section ADI~ITI~NAL C~ARACTERIST~CS 4F THE BGNDS. Reg•i~tration ar~d~~er. ~a~ The Issuer shall keep or cause to be kept at the ~a11as, Texas, corporate trust office of THE BANK ~F NEw ~ YGR~ TRUST COMPANY, NATIONAL ASSOIATI~N the "Paying A.gentlRegistrar"~ books or records afthe registraatian and transfer afthe Bonds the "Registration Books"}, and the Yssuer hereby appoints the Paying AgentlRegistrar as its registrar and ~ansfer agent to keep such books or records and nuke such transfers and registra~ons under such reasonable regulations as the Issuer and Paying AgentlRegistrar nay prescribe; and the Paying .AgentlReistrarshall inakesuchtransfersandregistrations asherein provided, The Paying AentlRegistrar shall obtain. and record in the Registration Books the address ofthe registered owner of each Bond to which payments with respect to the Bonds shalt be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying A.gentlRegistrar inwriting ofthe address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given, The issuer shall have the right to inspect the Registration Books during regular business hours of the Pa in AgentlRe istrar, but otherwise the Pa in A entlR y g g y g egistrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. Registration ofeach Bond nay be transferred in the Registration Banks only upon presentation and surrender ofsuch Bond to the Paying AgcntlRegistrar far transfer of registratson and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying AgentlRegistrar, evidencing {i}the assignment afthe Bond, yr any portion thereof in any integral multiple of $5,040, to the assignee or assignees thereof, and ~ii~ the right of such assignee or assignees to have the Bond or any such portion thereof registered in the Warne of such assignee or assignees. Upon the assigi~nrent and transfer of any Bond or any portion thereof, a new substitute Bend ar Bonds shall be issued in conversion and exchange therefor in the manner herein provided. The initial Bond, to the extent afthe unpaid or unredeemed rinci a1 P p balance thereof, may be assigned and transferred by the initial registered owner thereafonce only, and to one or more assignees designated in writing by the initial registered owner thereof. All Bonds issued and delivered in conversion of and exchange for the Initial Bond shall be in any denanrinatian or denominations afany integral multiple of$,Ol~~ subject to the requirement hereina~er stated that each substitute Bond shall have a single stated principal maturity date), shall be in the farm prescribed in the FARM OF SUBSTITUTE SERIES 2447 BGND set forth. in this Grdinance, and shall have the characteristics, and may be assn ed, transferred, and converted as hereinafter provided. Ifthe Initial Band or any portion thereof is assured and transferred or converted the Initial Band must be surrendered to the Paying Agent~Registrar for cancellation, and each Bond issued in exchange for any portion of the Initial Band shall have a single stated princi al maturity date, and shall not be a able in installm P P y eats; and each such Band shall have a principal maturity date corresponding to the due date of the installment of principal ar portion thereof for which the substitute Bond is being exchanged; each such Bond shall bear interest at the single rate applicable to and borne b such installment of rinci al or rtion thereof for which i ' Y P P pa t rs being exchanged. If only a portion of the Initial Bond is assigned and transferred,there shall be delivered to and registered in the Warne ofthe initial re istered owner substitute Bonds in exchan a for the unassi ' ' ~ g g fined balance ofthe Irnt~al Bond in the same manner as if  i the initial registered owner were the assignee thereof. If any Bond or portion thereof other than the Inftlal Bond is assigned and transferred ar converted each Bond issued in exchange therefor shall have the same principal rrzaturity date and bear interest at the same rate as the Band far which it is exchanged, A farm of assignment shall be printed or endorsed an each.Bond, excepting ~e Initial Baud, which shall be executed by the registered owner or its duly authorized attorney or representative to evidence an assignment thereof. span surrender of any Bonds ar any portion or portions thereof for transfer of registration, an authorized representative of the paying AentJRegistrarsholl make such transfer in the registration Books, and shall deliver a new fully registered substitute Bond ar Bonds, having the characteristics herein described, payable to such assignee or assignees which then will be the registered owner ar owners of such new Bond ar Bands, ar to the previous registered owner in case only a portion ofa Bond is being assigned and transferred, all in conversion ofand exchange far said assigned Band ar Bonds or any portion or portions thereof, in the same form and manner, and with the same effect, as provided in Section ~~d}, below, for the conversion and exchange of Bonds by any registered owner of a Bend. The Issuer shall pay the Paying AgentlReistrar"s standard or customary fees and charges for making such transfer and delivery of a substitute Bond or Bands, but the one requesting such transfer shall pay any takes ar other gavernrnental charges required to be paid with respect thereto. The Paying Agent~Reistrar shall not be required to make transfers of regis#~ration of any Bond or any portion thereof ~i~ during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, ~ii~ with respect to any Band or any portion thereof called far rederrzptian prior to maturity, within 45 days prior to its redemptiar~ date. {b~ of Bo,,, ds, The ent1 in v~hose r~.ame any Band shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for X11 purposes of this ordinance,. whether or not such Bond shall be overdue, and the Issuer and the Paying Agent~Registrar shall not be affected by any native to the contrary; and payment af, or on account of, the principal of, premium, if any, and interest on any such Bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum ar sums so paid. ~c} Payment of Bands and ,.,Interest. The Issuer hereby further appoints the Baying AgentlRegis~ar to act as the paying agent for paying the rinci al of and interest on the Bands an p p d to act as Its agent to convert and exchange ar replace Bonds, all as provided In this ordinance. The Paying AgentlRegistrar sha~I keep proper records ofall payments made by the Issuer and the Paying AgentlRegistrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, a.s provided in this Ordinance, however, in the event of a nonpayment of interest on a scheduled payment date, and fog thirty ~3~} days thereafter, a new record date far such interest payment ~a "Special Record Date"} will be established by the Paying AgentlRegistrar, if and when funds far the payment of such interest have been received frarn the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest ~"Special Payment Date"", which shall be fifleen ~l5}days after the Special Record Date} shall be sent at least ~.ve ~5}business days prior to the Special Record Date by ~Jnited States mail, first class postage prepaid, to the address of each I~alder of a Bond appearing on the registration books of the Paying AgentlRegistrar atthe close of business on the ~ nth business day next recedin the date of mailin of such P g g n~t1Ce. ~d} anversian and Exchan a or Re lacement~ Authentication, Each Bond issued and delivered pursuant to this Ordinance, to the extent afthe unpaid or unredeemed principal balance ar principal arnaunt thereof, may, upon surrender of such Band at the principal corporate trust office of the Pa in yg A.gentlRegistrar, together with a written request therefor duly executed by the registered owner or the assignee ar assignees thereof, or its ar their duly authorized attorneys ar representatives, with guarantee of signatures satisfactory to the Paying AgentlRegistrar, rrtay, at the option of the registered owner ar such 9  i assignee or assignees, as appropriate, be converted into and exchanged for fully registered bands, without interest coupons, in the form prescribed in the FORIVI OF UB~TITUTE ERIE X007 BOND set forth in this Ordinance, in the denomination of~,Q~O, ox any integral multiple of~~,0~0 subject to the requirement heretna~er stated that each substitute Bond shall have a single stated maturity date}, as requested ~ writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid ar unredeemed principal balance or principal amount of any Bond or Bonds sa surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case maybe. If the Initial Bond is assigned and transferred or converted each substitute Bond issued in exchange for any portion afthe Initial Band shall have a single stated principal maturity date, and shall not be payable in installrrrents; each such Bond shall have a principal rr~aturity date corresponding to the due date ofthe installment of principal or portion thereof for which. the substitute Bond is being exchanged; and each such Bond shad hear interest at the single rate applicable to and borne by such installment of principal ar pardon thereof for which it is being exchanged, If a portion of any Band bother than the Initial Bond} shall be redeemed prior to its scheduled maturity as provided herein, a substitute Bond ar Bonds having the carne maturity date, bearing interest at the same rate, in the denam.ination or denominations of any integral multiple of ~,00~ at the xequest of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, viii be issued to the registered owner upon surrender thereoffor cancellation. If any Band or pardon thereaf~ather than the Initial Bondi is assigned and transferred ar converted each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is being exchanged, Bach substitute Bond shall bear a letter andlor number to distinguish it from each other Bond. The Paying AgentlRegistrarchall convert and exchange or replace Bands as provided herein, and each fully registered band delivered in conversion ofand exchange for or replacement ofany Bond or portion thereof as permitted ar required by any provision of this Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again be converted and exchanged ar replaced. It is specifically provided that any Bond authenticated in conversion of and exchange for or replacement of another Band an ar prior to the first scheduled Record Date for the Initial Bond shall bear interest from the date of the Initial Bond, but each substitute Bond sa authenticated aver such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on which such substitute Band was sa authenticated, unless such Bond is authenticated aver any Record Date but an or before the next following Interest payment date, in which case it shall bear interest Pram such next following interest payment date; provided, however, that if at the time of delivery of any substitute Bond the interest on the Band for which it is being exchanged is due but has not been paid, then such Band shall hear interest from the date to which such interest has been paid in fill. The Ini~al Bond issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying A.ent~Registrar, but on each substitute Band issued in conversion of and exchange for or replacement of any Bond or Bands issued under this Ordinance there shall be printed a certificate, in the form substan#ially as follows: r~pA"~IN ACE~TIRE~ITRAR' AUTHEN~'I~ATION ERTIFIATE It is hereby certif ed that this Band has been issued under the provisions of the Bond Ordinance described in this Bond; and that this Band has been issued in conversion afand exchange far or replacement ofa bond, bonds, or a portion ofa bond ar bonds of an issue which originally was approved by the Attorney General of the Mate of Texas and registered by the ~omptraller of Public Accounts of the Mate of Texas. 10  I THE BANK OF NEB CORK TRUST OMPAN~Y, NATIONAL ASSOCIATION, Paying A.gentlRegls~rar Dated By Authorised Representative„ An authorized representative of the Paying Agent~Reg~strar shall, before the delivery of any such Band, date and manually sign the above erti~cate, and na such Bond sha11 be deemed to be issued or outstanding unless such Certificate is so executed. Tl~e Paying Agent~Reistrar promptly shall cancel all Bends surrendered far conversion and exchange ar replacement. No additional ordinances, orders, ar resolutions need be passed or adopted by the governing body ofthe issuer or any other body or person sa as to accomplish the foregoing conversion and exchange or replacement ofany Bond or portion thereof, and the Paying AgentlRegistrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein. Pursuant to Chapter l2~ 1, Texas Government Cade, the duty of conversion and exchange or replacement of Bands as aforesaid is hereby imposed upon the Paying Agentl`Registrar, and, upon the execution of the above Paying Agent~Registrar's Authentication ertillcate, the converted and exchanged orreplaced Band shall be valid, incontestable, and enforceable in the sane manner and with the same effect as the Initial Bond which originally was issued pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. The Issuer sha11 pay the Paying AentlRegitrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange The Paying AgentlReistrars~all not be required to nee any such conversion and exchange ar replacement of Bonds or any portion thereof ~i~ during the period commencing with the close of business an any Record Date and ending with the opening ofbusiness on tho next following principal ar interest payment date, or, iii} Frith respect to any Bond or portion thereof called far redemption prior to maturity, within 4 days prior to its redemption date. ~e~ In C eneral, All Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, ~i} shall be issued in fully registered form., without interest coupons, with the principal of and interest on such Bonds to be payable a~.y to the registered owners thereof, iii} may and shall be redeemed prlor to their scheduled mat~'1t1es, ~~11}may transferred and assigned, ~iv~ may be converted and exchanged for other Bonds, ~v} shall have the characteristics, Zvi} sha11 be signed and sealed, and vii} the principal of and interest an the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORM Off' UBTIT[JTE ERiE ~~07 BOND set forth in this Ordinance. ~f~ Payment of Fees and C~arg~s~ The Issuer hereby covenants with the registered owners of the Bonds that it will ~i~ pay the standard or customary fees and charges of the Paying AgentlReistrar for its services with respect to the payment afthe principal of and interest on the Bonds, when due, and iii}pay the fees and charges of the Paying AentlRegistrax for services with respect to the transfer of registration of Bonds, and with respect to the conversion and exchange ofBonds solely to the extent above provided in this Ordinance. ~ „u~st~tute Paying ~ eg ntlRe. The Issuer covenants with the registered owners ofe Bands that at all times while the Bands are outstanding the Issuer will provide a competent and legally qualified bank, trust company, fin~.neial institution, or other agency to act as and perform the services of Paying AgentlRegistrax far the Bonds under this Ordinance, and that the Paying AgentlRegistrar wi11 be one entity. The Issuer reserves the right to, and may, at its option, change the Paying AgentlReistrar upannot lI  Lm less than 1 days written native to the Paying AgentlRegistrar, to effective not later than Ga days prior to the next principal ar interest payment date after such notice. In the event that the entity at any time acting as Paying AgentlRegistrar for its successor by merger, acquisition, or other methad~ should resign or otherwise cease to act as such, the Issuer covenants that it will prainptly appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying AentlRegistraruader this Ordinance. Upon any change in the Paying AgentlRegistrar, the previous Paying AgentlRegistrar shall promptly transfer and deliver the Registration Banks far a cagy thereof, along with all other pertinent banks and records relating to the Fonds, to the newPaying AgentlRegis~ar designated and appointed by the Issuer. [Jean any change in the Paying AentJRegistrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying AgentfRegistrar to each registered owner of the Bands, by United States mail, first-class postage prepaid, which notice also shall give the address ofthe new Paying AgentlRegistra~. By accepting the position and performing as such, each Paying AentlRegistrar shall 6e deemed to have agreed to the provisions of this Ordinance, and a certified copy ofthis Ordinance shall be delivered to each Paying AgentlRegistrar. section 7, FORM OF SUBSTITUTE SERIES Za07 BOND. The form of all Series ~U07 Bands issued in can~ersion and exchange or replacement afany other Series 2007 Bond or portion thereof, including the farm of Paying AentlRegtstrar's Certificate to be printed on each of such series ~~07 Bonds, and the Farm of Assigiin~ent to be printed on each ofthe Series 2~0'~ Bonds, sha11 be, respectively, substantially as follows, with such appropriate variation, omissions, or Insertions as are permitted or required by this Ordinance. FORM OF SUBSTITUTE SERIES ~0~7 BOND NO. UNITED STATES OP AMERICA PRINCIPAL AMOUNT STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON UTYLITY SYSTEM REVENUE BOND SEINES 2~~7 INTEREST MATURITY ORIGAL DATE RATE DATE OF ISSUE CUSI~ NO. °Io ,luly 1 ~aa7 ON T~ MATURITY DATE speciEed above the CITY' OF DENTON, in Denton County, Texas the "Yssuer"}, being a political subdivision of the Mate of Texas, hexeby promises to pay to ar to the registered assignee hereof neither being hereina~er called the "registered owner"} the principal amount of and to pay interest thereon from. ~u1y 15, 2a~7, to the maturity date specified above, ar the date ofredeption prior to maturity, at the interest rate per annum specified above; with interest being first due and payable on December I, ~Oa7, and semiannually on each .Tune 1 and December 1 thereafler, except that if the date of authentication of this Band is later than the first Record Date ~iereinfler defined}, such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date l~ of authentication is after any Record Date ~hereinaf~er defined} but an or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date, Said interest shall be calculated on the basis of a 3~~-day year composed oftwelve 3~-day manths~ THE PRINIPAI~ DF AND INTEREST ~N this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Band shall he paid to the registered owner hereof upon presentation and surrender afthis Bond at maturity or upon the date fixed for its redemption prior to maturity, at the Dallas, Texas, corporate trust office of THE BAND OP NEw YDRI~ TRUST DNIPAN~Y, NATIONAL ASSDIATI~N, which is the "Paying AentlReistrar" for this Bond. The payment of interest on this Bond shall be made by the Paying AentlRegistrar tothe registered owner hereof an each interest payment date by check, dated as of such interest payment date, drawn by the Paying AgentlRegistrax on, anal payable solely from, f~uids of the Issuer required by the ordinance authorizing the issuance of the Bands the "Bond Ordinance"} to be on deposit with the Paying Agent~Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying AgentlRegistrar by United Mates mail, fist-class postage prepaid, on each such interest payment date, to the re istered owner hereof at the g address of the registered owner, as it appeared at the close of business on the I nth day of the month next preceding each such date the "Record Date"} on the Registration Boobs kept by the Paying AgentlRegistrar, as hereinafter described. However, the payment of such interest may be made by any other method acceptable to the Paying AgentlRegistrar and requested by, and at the risk and expense af, the registered owner hereof, Any accrued interest due upon the redemption of this Bond prior to maturity as provided ' herein shall be paid to the registered owner at the principal corporate trust office of the Pa in yg AgentlRegistrar upon presentation and surrender of this Band far redemption and payment at the principal corporate trust office ofthe Paying AgentlRegistrar. The Issuer covenants with the registered owner afthis Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it will make available to the Paying AgentlRegistrar, from the "Interest and Sinking Fund" . created by the Band Ordinance, the amounts required to provide fox the payment, in immediately available funds, of all principal of and interest on the Bands, when due. IN THE EVENT of a nonpayment ofinterest on a scheduled payment date, and for thirty ~30~ days thereafter, a new record date for such interest payment ~a "Special Record Date"} will be established by the Paying Agentll~egistrar,1f and when funds for the payment of such interest have been recelved from the Issuer. Notice afthe special Record Date and ofthe scheduled payment date ofthe past due interest ~"peciai Payment Date", which shall be been MI5} days afer the Special Record Date} shall be sent at least five business days priar to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying Agen~Registrar at the close of business on the ISth business day next preceding the date of mailing of such notice. ZF THE DATE for the payment of the prncipal of or interest an this Band shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the pity where the Paying AgentlRegistrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, ar day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as ifade an the original date payment was due, THIS BOND is one ofa series ofBonds initially dated July I5, ~~~7, authorized in accordance with the constitution and laws ofthe State ofTexas in the principal amount of1~,740,~~~ for the purpose of a fund c ~ ~ ~ ap~tal improvements for the electric transm.~ss~on and d~strrbut~an facilities; ~b}miscellaneous water system i~pravement; ~c} mare a deposit to the System debt service reserve fund; and ~d~ pay the costs of Issuance of the Bands. 13  i DN DECE~BE~ I, ~a 1 or on any date whatsoever thereafter, the Bands of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived ftam any available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the Issuer provided that pardon ofa Bond may be redeemed only an integral multiple of $5,004, at the rede~.ption price of the par or principal amount thereof, plus accrued interest to the date Fixed for redemption, TIDE BANDS ofthis Series scheduled to nature on DE~BIVIBER 1, ~0_ and DECENIBE~ I, are subject to mandatary redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, priar to their scheduled maturities, with money firam the Interest and Sinking fund, with the particular Bonds or portion thereof to be redeemed to be selected by the Paying Agentlegisttar, by lot or other customary method ~pravided that a portion of a Bond nay be redeemed only in an integral ~nuitiple of $5,000, at a redemption price equal to the par ar principal amount thereof and accrued interest to the date ofredemptian, an the dates, and in the principal amounts, respectively, as show in the following schedule; December ~ aturi Nlandatvey Principal R~d~ptionDa,. to Amy December 1, December I, 2~_ ~~naturity} December 1, 20 l~atuti Mandatory Principal Itedemptio„n~ An December 1, 2~ December 1, 24~ ~n~aturity} The principal amount ofthe Bonds required to be redeemed on the ll~andatary ~edemptian Datos pursuant to the foregoing shall be reduced, at the option of the Issuer by the principal arnaunt afany Bends out of the maturity scheduled far December I, ~4_ and December I, ~0_ which, at least 45 days prior to the aforesaid appropriate redemption date ~ 1 } shall have been acquired by the Issuer at a price not exceeding the principal amount of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agentegistrar far cancellation, or ~2} as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to the mandatary sinking fund redemption. Dori an etiod Yp in which ownership of the Bands is deterrn,ined by a book entry at a securities depository 1"or the Bands, if fewer than all ofthe Bands afthe same maturity and bearing such interest rate are to be redeemed, the Bands, or par~ians thereaf, to be redeemed shalt be selected in. accordance with the arrangement between the Issuer and the securities depositary. AT LEAST 3~ days prior to the date fixed for any redemption ofBonds or portions thereofprior to maturity a written notice of such redemption shall be sent by the Paying Agentll~eistrar by 1Tnited States mail, fast-class postage prepaid, at least days priar to the date fixed for any such redemption, to the registered owner of each Band to be redeemed at its address a it appeared vn the ~Sth day prior to such redemption date and. to n~alor securities depositories, national band rating agencies and bond infor~natian l4 services; prodded, however, that the failure of the registered owner to receive Bach notice, or any defect therein, ar in the sending ar mailing thereof, shall not affect the validity or effecctiveness of the roceedin s p g for the redemption of any Bond, By the date fixed for any such redemption due provision. shall be made with the Paying AgentlRegistrar far the payment ofthe rewired redemption price for the Bonds ar portions thereof that are to be so redeemed. Ifsuch written notice ofredernptian is sent and ifdue provision for such payment is made, all as provided above, the Bands orportions thereafthat are to be so redeemedthereby automaticall y shall be treated as redeemed prior to their scheduled maturities, and they shah not bear interest aver the date fixed far redemption, and they shall notbe regarded a being outstanding except forthe right ofthe re istered g owner to receive the redemption price from the Paying Aer~tlRegis~ar out of the funds provided far such payment. if a portion ofany Bond shall be redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest t the same rate, in any denomination or denominations in any irate ai multi le of p ~,Q~O, at the written request of the registered owner, and in aggregate principal amount a ual to the q unredeemed portianthereaf, will be issued to the registered owner upon the surrender~thereoffor cancellation, at the expense of the fssuer, all as provided in the Band Ordinance. TITS BOND OR AMY PORTION OR PORTION I~BREOk' I~ ANY INTEGRAL NIC~LTIPLF OP 5,00 may be assigned and shall be transferred only in the Registration Books of the Issuer iCe t b the p Y Paying AgentJReistrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance. Among other requirements far such assignment and transfer, this Band must be presented and surrendered. to the Paying .Agent~Registrar, together with proper instruments of assi ent, m farm and with tee of si stores satisf ~ ~ ~ gua~'an gn actary to the Paying AgentlRegistrar, ev~denc~n assignment afthis Band or any portion or portions hereof in any integral multiple af5,~40 to the assignee ar assi ees in whose name ar names this Bond ar any such portion ar portions hereof is ar are to be transferred and registered. The farm of Assignment printed ar endorsed an this Bond shall be executed by the registered owner or its duly authorized attorney or representative, to evidence the assignment hereof. Anew Band ar Bonds payable to such assignee ar assignees which then will be the new registered owner ar owners ofsuch new Band or Bands}, or to the previous registered owner in the case ofthe assignment and transfer of only a portion ~fthis Band, nay be delivered by the Paying Agent~Registrar in conversion ofand exchan a far g this Bond, all in the farm and manner as provided in the next paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall pay the Paying AgentlRegistrar's standard or custom fees and charges for ri~al~in such transfer but the one r ~ g equesting such transfer shall pay any taxes ar other gavernn~.ental charges required to be paid with respect thereto. The Paying AgentlRegistrar shall not be required to make transfers ofregistratian of this Band or any pardon hereof~i}during the period commencing with the close ofbusir~ess on any Record Date and ending with the opening afbusiness an the next followin g principal or interest payment date, or, ~ii~ with respect to any Band or any portion thereof called for redemption prior to maturity, within 4 days prior to its redemption date, The registered owner ofthis Bond shall be deemed and treated by the Issuer and the Paying AgentlRegistrar as the absolute owner hereof for all p~uposes, including payment ar~d discharge ofliabrlity upon this Band to the extent ofsuch ent, and the Issuer and the Pa m A entlRe `stray sha11 n y g g of be affected by any notice to the contrary. AI,L BONDS OF THIS SERIES are issuable solely as fully registered bands, without interest coupons, in the denomination of any integral multiple of $5,100. As provided in the Bond Ordinance, this Band, or any unredeemed pa~ion hereof, may, at the request of the registered owner or the assi ee or assignees hereof, be converted into and each ed f an or. a like aggregate pa~ncipal amount of fully registered bands, without interest coupons, payable to the appropriate registered owner, assi ee, or assi ees as the case nxay be, having the carne maturity date, and bearing interest at the same rate, in any denomination ar denominations in any integral multiple afS,004 as requested in writing by the appropriate re istered owner assignee, or assi ees as the case ma be ~ g ~ ' y ,upon surrender of thus Bond to the Paying AgentlRegistrar for cancellation, all in accordance with the form and procedures set Earth in the Band Ordinance, The Issuer shall pay the Paying AgntlRegistrar's standard ar customary fees and charges for transferring, converter ,and g 15  i exchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any tapes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying A.gentlRegistrar shall not be required to make any such conversion and exchange ~i~ during the period commencing with the claw of business on any Record I]ate and ending with the opening of business on the next following principal or interest payment date, or, ~ii~ with respect to any Bend or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. IN THE EVENT any Paying AgentlRegistrar far the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Band ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and will pran~ptly cause written notice thereof to be mailed to the registered owners of the Bonds. IT Y bIEREBY certified, recited, and covenanted that this Band has been duly and validly authorized, issued, sold, and delivered; that ail acts, conditions, and thsngs required or proper to be perfonned, exist, and be done precedent to ar in the authorization, issuance, and delivery of this Bond have been perfa~.ned, existed, and been done in accordance with law; that this Bond is a special obligation ofthe Issuer, secured by and payable, together with other bonds, from a first lien on and pledge of'the "Pledged Revenues", which include, but are not limited to, the "Net Revenues afthe System'", as such terms are defined in the Bond ordinance, with the System consisting ofthe City's entire combined waterworks, sewer, and electric light and power system, THE ISS~JER has reserved the right, subject to the restrictions stated in the Bond ordinance, to issue A~dditianal Bands payable from and secured by a fist Lien on and pledge of the "Pledged Revenues" on a parity with this Bond and series of which it is a part, THE ISS[JBR also lras reserved the right, subject to the restrictions stated in the Bond ordinance, to amend the Bond ordinance with the approval of the holders or owners of fifty-one percent in principal amount of all outstanding bonds which are secured by and payable from a first lien on and pledge of the Pledged Revenues. TIC REGISTERED ~NER hereof shall never have the right to demand payment of this Band or the interest hereon out of any funds raised or to be raised by taxat~or~ ar from any source whatsoever other than specified in the Bond Grdinance. B~ BECG~ING the registered owner ofthis Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Grdinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Grdinance is duly recorded and available far inspection in the official minutes and records of the governing body of the Issuer and agrees that the terms and praviston of this Band and the Bond Qrdinance constitute a con#ract between each registered owner hereof and the Issuer. 16 IN wITISS wHBREGF, the Issuer has caused this Band to be signed with the manual or facsimile signature ofthe Mayor ofthe Issuer and countersigned and attested with the manual ar facsirniXe signature of the City Secretary of the Issuer, and .hay caused the afli~ial seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. ATTBST, CITY QF I)ENTGN, TEAS By. By Jennifer Walters Fete R, McNeill City secretary, City ofl~enton, Texas l~ayar, City afI]entan, Texas CITY SB,AL~ FGRNI CF FA~YING AGENTIR'~GISTRAR~S AUTHBNTICATI~N CERTIFICATE PAYING AGENTfREGISTRAR"~ AUTHENTICATION CERTIFYCATE It is hereby certified that this Bond has been issued under the provisions of the Band Ordinance described in this Band; and that this Band has been issued in canversian ofand exchange for or replacement of a band, bonds, ar a portion of a bond or bands of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Fublic Accounts of the state of Texas. THE BAND GE NEw YGRK TRUST CGMPANY, NATIGNAL ASSGCIATI~N, paying ~AgentJReistrar Dated By Authvri~ed Representative {BGND INSURANCE LEGEND, ~ A~IY} FDRII~ GF ASSI~NIVIENT: ,ASINN~ENT FGR VALC~E RECEIVE, the undersigned registered owner of this Bind, ar duly authorised representative or attorney thereof, hereby assigns this Bond to . ~ ,Assignee's Social sprint or typewrite Assi eets name and Security ar Taxpayer address, including zip cadet Identification Number} and hereby irrevocably constitutes and appoints 17 attorney to transfer the registration afth~s Bond an the Paying AentlRegitrar's Registratfan Books wig full power of substitution in the premises. Dated Signature Guaranteed: NOTICE: Signatures} must be guaranteed by Registered Owner an eligible guarantor institution participating in NOTICE: This signature must correspond with securities transfer assaciatlan recognized the name of the Registered Owner appearing an signature guarantee pragran~. the face of this Band in every particular w~thaut alteration or enlargement ar any change whatsoever. Section 8. DE~I~ITIONS. As used in this Ordinance the fallowing terns shall have the meanings set forth below, unless the text hereof specifically indicates otherwise; ~a} The terms "City" and "Issuex" shall mean the City ofDenton, in Denton County, Texas. fib} The term r'City Council" ar "Council" shall mean the governing body afthe City. ~c} The term "Bonds" shall mean collectively the Initial Band as defined and described in Section of this Ordinance and ali substitute bonds exchanged therefor, and alI other substitute bands and replacement bands, issued pursuant to and a provided in this Ordinance. ~d} The term "Parity Bands" shalt mean collectively ~i}the outstanding City ofDenton Utility System Revenue Refunding Bonds, Taxable Series 1993-8, authorized by ordinance passed on dune 8, ~ 99 the "Series 1993,B Bonds"}, iii}the outstanding City afDenton Utility System Revenue Bands, Series 1995, authorized by an ordinance passed on March 24,1998 the "Series 1998 Bonds"}> viii}the outstanding City ofDenton Utility System Revenue Refunding Bonds, Series 1998A, authorized by an ordinance passed an July 21, 1998 the "Series 1998A Bonds"}, Div} the outstanding City ofDenton Utility System Revenue Refunding Bands, Series 19988, authorized by an ordinance passed on August 4,1998 the "Series 19988 Bondi"}, ~v} the outstanding City ofDenton Utility System Revenue fonds, series ZUDOA, authorized by an ordinance passed on April 25, 2000 the "Series ZOOOA Bonds"}, Zvi}the outstanding City ofDenton Utility system Revenue Bands, Taxable Series Zo04B, authorized by an ordinance passed on April 25, ZOD~ the „Taxable Series ZOOOB Bonds"}, {vii} the outstanding City ofDenton Utility System Revenue Refunding and Improvement Bond, Series 2001, authorized by an ordinance passed an April 17, 2001 the "Series 2001 Bonds"}, viii}the outstanding City afDenton Utility System Revenue Bonds, Series 2002A, authorized by an ordinance passed an April 9, 2oQ2 the "S~ries ZOOZA Bands"}, ~~}the outstanding City ofDenton [ltility System Revenue Bands, Taxable Series 20028, authorized by an ordinance passed on April 9, 2002 the "Taxable Series ZQOZB Bondsf'} ~x}the outstanding City afDenton Utility System Revenue Refunding and Irnpraverr~ent Bonds, Series 2003, authorized by an ordinance passed on April r, 2i}03 the "Series 2043 Bonds'}, ~xi} the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 2004, authorized by an ordinance passed an September 7, 204 {the "Series 2004 Bonds"}, ~xii}the outstanding City afDenton Utility System Revenue Refunding Bonds, Series 20D5, authorized by an ordinance passed on May 24, 2005 ~#~he "Series 2005 Bands"}, ~~x1~}the outstanding pity af~entan Utility System Revenue Bonds, Series 2004, authorized by an ordinance passed on duly 15, 200 the "Series 20Q6 Bonds"}, ~~iv} the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 2007, authorized by an ordinance passed a~. Janu.aty 23, 2007 the"Series 2007 Refunding Bands"}, and ~xv~ the Bonds. 18  Lm fie} The term "Additional Bands" shall mean the additional parity revenue bonds which the pity reserves the right to issue in the ture, in accordance with Section ~b afthis Ordinance. Theterm "System" shall mean ~1}the City's entire existing waterworks and sewer system and the pity's entire existing electric light and power system, together with all future extensions, improvements, enlargements, and additions thereto, and all replacements thereof, and any other related facilities, all or any part of the revenues ar income from which do, in the future, at the option of the City, and in accordance with law, become ~"Pledged Revenues" as hereinafter defined; provided. that, notwithstanding the foregoing, and to the extent now ar herea~er authorized or permitted by law, the term System. shall not mean any water, sewer, electric, ar other facilities of any kind which are declared not to be a part of the System, and which are acquired or constructed by the pity with the proceeds from the issuance of "special Facilities Bands", which are hereby defined as being special revenue obligations of the pity which are not payable from or secured by any Pledged Revenues, but which are secured by and payable from liens an and piedges of any other revenues, sources, ar payments, including, but not limited to, special contract revenues or payments received frv~n any other Regal entity in connection with such facilities; and such revenues, sources, or payments shall not be considered as ar constitute Grass Revenues of the system, unless and to the extent otherwise provided in the ordinance ar ordinances authorizing the issuance afsuch "special Facilities Bonds". fig} The terms "Gross Revenues of the system" and "Gross Revenues" shall mean .all revenues and income afevery nature derived ar received by the City from the operation and ownership ofthe System, including the interest income from the investment or deposit of money in any Fund created by this Ordinance. ~h} The terms "Net Revenues ofthe system",and "Net Revenues" shall mean all Orals Revenues aver deducting therefrom an amount equal to the current expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs, and extensions necess to render efficient ser~iee provided, however, that only such repairs and extensions, as in the~udgment ofthe pity ~ouncit,reasonably and fairly exercised by the adoption ofappropriate resolutions, axe necessary to keep the system in operation and render+adequate seise to said pity and the inhabitants thereof, ar such as might be necessary to meet same physical accident or condition which would otherwise Impair the Bends or Additional Bands, shall be deducted in determining "'Net Revenues'". Payments required to be made by the pity foi~ water supply or water facilities, sewer services or sewer facilities, fuel supply, anal for the purchase ofelectric power, which payments under law constitute operation and mintenar~ee expenses ofany part ofthe System, shall constitute and be regarded as expenses of operation and maintenance ofthe system under this Ordinance, Depreciation and amortization shall not constitute ar be regarded as expenses ofaperatian and maintenance ofthe System. ~i} ~ The term "'Pledged Revenues" shall mean ~l} .the Net Revenues, plus ~2} the net revenues of the Drainage System, which shall be calculated on the same basis as the Net Revenues of the System, plus ~3} any additional revenues, income, or other resources relating to the System which are expected to be avaltable to the City on a regular perrod~c basls,lncluding, without limitation, any grants, donations, or income received or to be received from. the ~]nited States Government, ar any other public ar private source, whether pursuant to an agreement or otherwise, which in the future may, at the option of the Oity, be pledged to the payment of the Parity Bonds ar Additional Bonds, ~9  i ~l } The term "year" ar "f"iscal year" shall mean the ~ scal year used by the City in connection with the operation of the System, {k~ The term "Covernm,ent Obligations" shall mean {i} direct, noncaiiable obligations of tl~e United States ofAn~erica, including obligations that are unconditionally guaranteed by the United States of America., iii} noncallable obligations of an agency or xnstr~mentality of the United States of America, including obligations that are unconditionally guaranteed ar inured by the agency or irirumentality and that, on the date ofthe purchase thereofare rated as to investment quafity by a nationally recagnl~ed investment rating firth not less than AAA or its equivalent, and {iii} nancallable obligations of a state ar an agency or a county, municipality, ar other pol~t~cal sUbdlvlslan of a state that have been refunded and that, on the date the governing body of the District adepts ar approves the proceedings authorizing the financial arrangements are rated as to vestment quality by a nationally recognized investment rating firm not less than AAA ar its equivalent. "'Drainage System" means the City's entire existing drainage system and all fa~cilitles related thereto. {m} "Rate Stabilization Fund" means the City's separate Rate Stabili~atian Fund established for the purpose of stabilising rates far ratepayers. Section 9. PLEDGE. {a} The Bonds are "Additianal Bonds"" as permitted by Sections and 25 of the ordinance passed an 1Vlarch 1 a,1983, authorizing the City of Denton Revenue Refunding Bonds, Series 1983 the "Series 1953 Bonds"}; and it is hereby determined, declared, and resolved that all of the Parity Bonds {including the Bonds} are secured and payable equally and ratably on a parity, and that ectians S through ~S, of this Ordinance are supplemental to and cumulative of Sections 7 through of the aforesaid ordinance passed on lurch 10, 1953, with Sections 8 through ~9 of this Ordinance being applicable to all ofth Parity Bands. {h} The Parity Bands and any Additional Bonds, and the interest thereon, Including any interest coupons appertaining thereto, are and shall be secured by and payable brain a first lien on and pledge afthe Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the Funds created by this Ordinance, and any Funds created by any ordinance authorizing the issuance of any Additional Bonds, The Parity Bonds and any Additianal. Bands are not and wi11 not be secured by or payable from a mortgage or deed oftruust on any real, personal, or mixed properties cortituting the System. Section 10. SSTEIVI FUND, Where heretofore hay been anal is hereby created and there shall be established and maintained an the books ofthe City, and accounted far separate and apart from all other funds ofthe City, a special fund to be entitled the "pity afDentan Utility System Fund" {the "ystetn Fund"'}. All Gross Revenues shall be credited to the System Fund immediately upon receipt, unless otherwise provided in this Ordinance. All current expenses ofoperation and maintenance afthe System shall be paid from such Grass Revenues credited to the System Fund as a first charge against same. Before making any deposits hereinafter required to be made from the System Fund, the City shall retain in the System Fund at all times an amount at Ieast equal to one-sixth afthe amount budgeted far the then current .scal year far the current operation and maintenance expenses of the System. Section 11. INTERE~' AND INKII~I FUND. Fax the sole purpose ofpaying the principal of and interest on all Parity Bonds and Additional Bonds, there heretafore has been and Is hereby created and there shall be established and maintained on the books of the City, and accounted for separate and apart from all other funds of the City, a separate fund to be entitled the "~~ty of Denton Utllfty System Revenue Bonds Interest and Sinlaing Fund" the "'Interest and Sinking Fund"~. ~a  i Section 1~. RESERVE FUND. There heretofare has been, and is hereby, created, and there shall be established and maintained at ,l-P~iorgan Chase Bank, Naanal Association, and hereaer, at the op~on ofthe City, established and maintained at any tune at any national bank having a capital and surplus in excess of $Z~,Da0,~00, a separate fund to be entitled the "City ofDenton Utility System Bands and Additianal Bonds Reserve Fund" the "Reserve Fund"}, The Reserve Fund shall be used to pay the principal ofand interest on any Parity Bands or Additional Bands when and to the extent the amounts in the Interest and Sinking Fund available far such payment axe insufficient for such purpose, and may be used for the purpase of finally retiring the last of any Parity Bonds or Additional Bonds. Section 13. ETENS~ON A1~D IMPI~O~EMENT FUND. There heretofore has been and is hereby created and. there sha11 be established and .aintained an the baoks of the City, and accounted for separate and apart from ail other funds ofthe City, a separate fund to be entitled the "City ofDenton Utility System ~xtensian and lmproveinent Fund" the "Extension and Improvement Fund"}. The Extension and hmprovement Fund shall be used for the purpose of paying the casts of improvements, enlargements, extensions, additions, rep€acements, or other capital expenditures related to the System, ar for paying the casts of unexpected or extraordinary repairs or replacements of the System far which System funds are not available, or far paying unexpected or extraordinary expenses of operation and maintenance of the System for which System funds are not otherwise available, or for any other lawful purpose. Section t4, ENIERC~ENCY FUND. There i hereby created and there shall be established and maintained on the books of the City, and accounted for separate and apart from all other funds of the City,. a separate fund to be entitled the "City afDenton Utility system Emergency Fund" the "Emergency Fund"}, The Emergency Fund shall be used for the purpose ofpaying unexpected or extraordinary expenses ofrepair, replacement, operation, and maintenance of the System for which neither System funds nor the moneys in the Extension and Improvement Fund are available. There was deposited in the Emergency Fund simultaneously v~ith the delivery of the Series 1953 Bonds to the initial purchasers thereof from lawfully available funds of the City the amount of ~Sa,~DD. All investment interest income from the Emergency Fund shall be transferred to the System Fund as received Section 1. DEPOSITS OF PLEDGED REVENUES. Pledged Revenues shall be credited to or deposited in the Interest and Sinking Fund., the Reserve Fund, the Extension and Improvement Fund, and ether funds when and as rewired by this Ordinance and any ordinance authorizing the issuance afAdditionai Bonds. Section 1. INVES'TNIENTS. To the extent permitted by law, money in any Fund established pursuant to this Ordinance or any ordinance authorizing the issuance ofAdditional Bands, rriay, at the option ofthe City, be placed in time deposits ar certificates ofdeposit secured by obligations ofthe type hereina~er described, or be invested in Government Obligations has defined ~ Section S hereo#} or obligation guaranteed or insured by the United Mates ofAmerica, which, in the opinion ofthe Attorney Creneral ofthe United States, are backed by its full faith and credit ar represent its general abliations, or invested in obligations of instrumentalities of the United Mates of America, including, but not limited to, evidences of Indebtedness 15SLl~d, insured, Or guaranteed by such governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks, Banks for Cooperatives, Federal Hame Loan Banks, Government National lVlortage Association, united States Postal Service, Fanners Name Administration, Federal Home Loan Mortgage Association, Small Business Administration, Federal Housing Association, or Participation Cei~ificates in the Federal Assets Financing Test; provided that all such deposits and investments sha11 be made in Bach manner as will, in the opinion ofthe City, permit the money rewired to be expended from any Fund to be available at the proper time or times as expected to be needed, Such investments except united States Treasury Obligations--State and Local Government Series investments held in boob entry farm, which shall at all tunes be valued at cost} shall be valaed in terms of cunent market value as of the last day of each ~l  I f~isca~ year. Unless otherwise set forth herein, all interest and income derived from such deposits and investments immediately shall be credited to, and any losses debited to, the Fund from which the depositor investment was made, and surpluses xn any Fund shall ar may be disposed of as hereina~er provided, Such inves~.nents shall be sold promptly when necessary to prevent any default ire connection with the Parity Bands or additional Bands consistent with the ordinances, respectively, authorizing their issuance. Section 1?, FUNDS SECURED. That money in all Funds created by this ordinance, to the extent oat invested, shall be second in the manner prescribed by law. Section 18. PRIORITY OF DEPOSITS AND PaYNIENTS FROM SYSTEM FUND. That the City shall make the deposits and payments from Pledged Revenues in the System Fund when and as required by this Ordinance and any ordinance authorizing any additional Bonds, and such deposits shall be made in the following manner and v~ith the fallowing irrevocable priorities, respectively: Firstp to the Interest and Sinking Fund, when and in the amounts required by this Ordinance and any ordinance authorizing the Parity Bonds or any Additional Bands; then Second, to the Reserve Fund, when and in the atnaunts required by this ordinance and any ordinance authorizing the Parity Bands or any Additional Bonds; then Third, to the Extension and Improvement Fund, when and as required by section ~ 1 ofthis Ordinance. Section 1. INTEREST AND STNI~IN FUND REQ[TIREIVIENTS. The City shall cause to be deposited to the credit of the Interest and Sinking Fund the accrued interest received from the sale of the Initial Bond, and on or before the 25th day of each month, the City shall cause to be deposited to the credit of the Interest and Sinking Fund, in approximately equal, monthly payments, amounts sufficient, to ether g with any other funds on hand therein, to pay all oI'the interest or principal and interest corning due, including the principal amount of any Parity ~ Bonds required to be redeemed prior to maturity pursuant to any mandatory redemption requirements, on the Parity Bonds and any additional Bonds on the next succeeding interest payment date, Any moneys so deposited in the Interest and S inking Fund with respect to a rr~andatory redemption requirement, together with other lawfully available funds ofthe City, maybe used by the City, to purchase, in advance of a mandatory redemption date and at a price not exceeding the principal amount thereof plus accrued interest thereon to the date of purchase, Parity Bonds which would be sub j ect to being chaen for mandatary redemption on such mandatory redemption date. The Paying Agent shall cancel any Parity Bonds so purchased. Section RE~ER'~E FUND REUIRBMENTS. There is now on hand in the Reserve Fund amount of money and Government Obligations which is in excess of $3,000,000 and which is at least equal to the average annual principal and interest requirements of the outstanding Taxable Series 1993-B Bands, the Series 1998 Bands, the Series 199SA Bonds, the Series I998B Bonds, the Series 200~A Bonds, the Series 2~00B Bonds, the Series 2001 Bands, the Series ~0I~2~4 Bonds, the Taxable Series 2002B Bonds, the Series 2403 Bonds, the Series 2004 Bonds, the Series 2D05 Bonds, the Series 200 Bands and the Series 2007 Refunding Bonds the current "Required Reserve Amount"}, Following the issuance and delivery of the Initial Bonds the Required Reserve Amount shall become and be an amount ofmoney and investrn.ents equal to the average annual principal and interest requirements of all the outstanding Parity Bonds and Additional Bonds; provided further, however, that the Required Reserve Amount shall never be less than $3,00D,00~ if the ma~imurn annual principal and interest requirements on all outstanding Parity Bonds and additional Bonds exceeds $3,000,000. Immediately aver the issuance and delivery of the Initial Bond there shall be 22  i deposited to the credit afthe Reserve Fund, from the proceeds oI"the sale of the Initial Bond, money sucient to cause the Reserve Fund to contain an aggregate amount af~noney and investments equal to the Required Reserve Amount for all then outstanding Parity Bands, After the delivery afany future Additional Bonds the City shall cause the Reserve Fund to be Increased, if and to the extent necessary, sa that such Fund will contain an amount of money and investments equal to the Required Reserve Amount. Any increase in the Required Reserve Amount may be funded from Pledged Revenues, or frarn proceeds from the sale of any Additional bonds, ar any other available source nr combination afsources. All or any part afthe Required Reserve Amount not funded initially and hnmediately aver the delivery of any installment or issue Additional Bonds shall be funded, within not more than five years from the date of such delivery, deposits of Pledged Revenues in appraxi~nately equal monthly install~,ents on or before the 25th day of each month, Principal amounts of the Parity Bonds and any Additional Bonds which must be redeemed pursuant to any applicable mandatory redemptiap requirements shall be deemed to be maturing amounts afprincipal for the purpose of calculating principal and interest requirements an such bands. when ar~d so long as the amount in the Reserve Fund is not less than the Required Reserve Amount na deposits sha11 be made to the credit of the Reserve Fund; but when and if the Reserve Fund at any time contains less than the Required Reserve Amount, then the City shall transfer from Pledged Revenues in the System Fund, and deposit to the credit afthe Reserve Fund, monthly on or before the 25th day ofeach month, a sum equal to UG4th afthe Required Reserve Amount, until the Reserve Fund is restored to the Required Reserve Amount. The City specifically covenants that when and so long as the Reserve Fund contains the Required Reserve Amount, the City shall cause alI amounts in excess afthe Required Reserve Amount to be deposited to the credit ofthe Interest and Sinking Fund. Section ~ 1. ETENSICN AND 1NiPROVEMENT FUND RBUIREMENTS. During each year, subject and subordinate to making the required deposits to the credit ofthe Interest and Sinking Fund and the Reserve Fund, the City shall be required to deposit to the credit of the Extension and lmprove~nent Fund, from Pledged Revenues in the System Fund, an amount equal to 8°Io ofthe ""Adjusted cross Revenues afthe System", which term is hereby defined to mean the following; the Cross Revenues ofthe System for such year after deducting brow such Cross Revenues an amount equal to the current expenses ofoperation and n~air~tennce ofthe System far such year which are directly attributable to ~i} ail fuel casts related to the production of electric energy by the City andlar ~Ii}the purchase of electric energy by the City. Additional excess Pledged Revenues may, at the option ofthe City Council, be deposited to the credit of the Extension and Improvement Fund as permitted by Section 23{b} hereof, but no such additional deposit is required, All investment interest income from the Extension and Improvement Fund shall be retained in aid remain a part oI" such Fund. action RATE STABILI~ATICN FUND, ~a~ In each fscal year, the City hereby agrees to transfer the Transfer Amount has defined below} f corn the Rate Stabilisation Fund into the System Fwd for the purpose of paying the current expenses of operation and rr~aintenance of the System and pledges such Transfer Amount to the payment of the Bonds, all Parity Bonds and any Additional Bands. fib} The Transfer Amount shall be an amount of moneys and investments captained in the Rate Stabili~atian Fund equal to the amount for each fiscal year afthe City that will, when added to the otherwise expected Pledged Revenues for that fscal year, produce an amount afPledged Revenues during such fiscal year at least equal to the greater of I , times the average annual principal and interest requirements of all then outstanding Bonds, Parity Bonds and Additional Bonds ar 1.25 tunes the succeeding fiscal year's principal and interest requirements of all then outstanding Bands, Parity Bonds and Additional Bands. 23  i ~c} The Transfex Amount will be calculated and reflected in the annual budget for each fiscal year and will, on the first day of such final year, be ~ansferred from the Rate Stabilization Fund into the ysten~ Fund, section 23, DBFfCIBNCIES; B~CFSS PLBDED R.BVEN[JE~. ~a} If on any occasion there shad not be sufficient Pledged Revenues to make the required deposits into the Interest and Sinking Fund or the Reserve Fund, such deficiency shall be made up as soon as possible from the next available Pledged Revenues. fib} Subject to making the required deposits to the credit of the various Funds when and as required by this Ordinance or any ordinance authorizing the issuance of Additional Bonds, any surplus Pledged Revenues may be used by the City for any lawful purpose. ectian 24, PAYMENT OF PARITY BONDS ANI] ADDITIONAL BOND. On ar before December 1, 207, and semiannually on or before each dune I and December 1 tl~ereaffer while any of the Parity Bonds ar Additional Bonds are outstanding and unpaid the City shall make available to the Paying Agents therefor, out of the Interest and Sinking Fund, or if necessary, out of the Reserve Fund, money sufficient to pay, on each of such dates, the principal of and interest an the Parity Bonds and Additional Bonds as the same natures and corner due, ar to redeem the Parity Bonds or Additional Bonds prior to maturity, either upon mandatary redemption ar at the option of the City. At the direction of the City the Paying Agents shall either deliver paid Parity Bonds and Additional Bonds, and any Interest coupons appertaining thereto, to the City or destroy all paid Parity Bonds and Additional Bonds, and any coupons appertaining thereto, and furnish the City with an appropriate certificate of cancellation or destruction. section FINAL DEPOIT. ~a} Any Parity Bond ar Additional Bond shall be deemed to be paid, retired, arzd no longer outstanding within the meaning ofthis Ordnance when payment ofthe principal of, redemption premium, ifany, on such Parity Bond or Additional Bond, plus interest thereon to the due date thereof whether such due date be by reason of maturity, upon redemption, or otherwise} either ~i} shall have been made ar caused to be made in accordance with the terms thereof including the giving of any required notice of redemption or provision for the proper giving of such notice having been made}, ar iii} shall have been provided by it~evacably depositing with or making available to a Paying Agent therefor, intrust and irrevocably set aside exclusively for such payment, ~l} n~aney sufficient to make such payment or overr~ment Obligations which mature as to principal and interest in such amounts and at such tunes as will insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation, and expenses of such Paying .Agent pertaining to the Parity Bonds and Additional Bands with respect to which such deposit is .ode shall have been paid ar the payment thereof provided far to the at~sfact~on of such paying agent. ,At such time as a Bond or Additional Bond shall be deemed to be paid hereunder, as aforesaid, it shall no longer be secured by or entitled to the benefits ofthis Ordinance or a lien on and pledge of the Pledged Revenues, and shall be emitted to payment olety from such money or C overnment Obligations. Any moneys so deposited with a paying agent may at the direction of the City also be invested in Oovernnlent Obligations, maturing in the amounts and times as hereinbefore set forth and all income from all Oovernment Obligations in the hands ofthe paying agent pursuant to this section which is not required for the payment afthe Parity Bonds and Additional Bands, the redemption premlutr~, ifany, and interest thereon, with xepect to which such rnaney has been so deposited, shall be turned aver to the City or deposited as directed by the City. Section 26. ADDITIONAL BONDS. ~a} The City shall have the right and power at any thne and from tune to time, and in one ar more series ar issues, to authorize, issue, and deliver additional parity ~4  i revenue bonds ~ierein called'Additional Bonds"}, in accordance with law, in any amounts, for any lawful purpose, including the refunding of any Parity Bands yr Additional Bonds, or other obligations. Such Additional Bonds, ifand when authori,~ed, issued, and delivered In accordance with this ordinance, shall be payable from and secured by an irrevocable fixst lien on and pledge of the Pledged Revenues, equally and ratably on a parity in all respects with the Parity Bands and any other outstanding Additional Bonds. fib} The principal ofall Additional Bonds must be scheduled to be pall or mature an IJecember ~ of the years in which such principal is scheduled to be paid or mature. Section 2~, FURTIR RE[~IRBN~BI~TS FCR ADDITIONAL BANDS. Additional Bonds shah be issued only in accordance with this Ordinance, and no installment, Series, or issue of Additional Bonds shall be issued or delivered unless; ~a} The 1Vlayar ofthe City and the City secretary sign a written certificate to the effect that the pity is not in default as to any covenant, condition, or obligation in connection with all then outstanding Parity Bonds and Additional Bonds, and the ordinances authorising same, and that the interest and Sinking Fund and the Reserve Fund each contains the amount then required to be therein. fib} An independent certified public accountant, or independent firm of certified pubiic accountants, acting by and through a certified public accountant, signs a written certificate to the effect that, in his or its opinion, during either the next preceding fiscal year, or arty twelve consecutive calendar month period out vfthe 18-month period immediately preceding the month in which the ordinance authorizing the issuance ofthe then proposed Additional Bonds is passed, the Pledged Revenues were at least ~i} 1.25 times an amount equat to the average annual principal and interest requirements, and iii} 1,10 times an amount equal to the principal and interest requirements during the fiscal year during which such requirements are scheduled to be the greatest, ofall Parity Bonds and Additional Bends which are scheduled to be outstanding after the delivery of the then proposed Additional Bonds. It is specifically provided, however, that in calculating the amount of Pledged revenues for the purposes of this subsection ifthere has been any increase in the rates yr charges for services of the System which is then in effect, but which was not in effect during all ar any part of the entire period for which the Pledged Revenues are being calculated ~hereinafler referred to as the "entire period"~ then the certified public accountant, or in lieu of the certified public accountant a firm of consulting engineers, shall determine and certify the amount of Pledged Revenues as being the total of ~i~ the actual Pledged Revenues for the entire period, plus iii} a sum equal to the aggregate arnvu~nt by which the actual billings to cutvrners of the System during the entire period would have been increased if such increased rates or charges had been effect during the entire period. {c} Provision shall be made in the ordinance authorizing their issuance for increasing the Reserve Fund to the Required Reserve Amount as required by Section 20 hereof. ~d} All calculations of average annual principal and interest requirements of any bonds made in connection with the issuance of any then proposed Additional Bonds sha11 be made as of the date of such Additional Bonds; and also in making calculations for such purpose, and for any other purpose under this Ordinance, principal amounts of any bonds which must be redeemed prior to maturity pursuant to any applicable mandatory redemption requirements shall be deemed to be maturing amounts ofprxncipal afsuch bonds. Section 2S, GEIiTBRAL C~VEI~ANT, The City further covenants and agrees that in accordance with and tv the extent required or permitted by law: 25  i ~a~ Performance. It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Ordinance, and each ordinance authvri~ing the issuance of Additional Bands, and in each and every Parity Bond and Additional Bond; that it will promptly pay ar cause to be paid the principal of and interest an every Pa~.ty Bond and Additional Bond, on the dates and in the places and manner prescribed in such ordinances and Parity Bonds or Additional Bonds; and that it will, at the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the Interest and inl~ing Fund and the Reserve Fund; and any balder ofthe Panty Bends or Additional Bends may require the City, its officials, and employees, to carry out, respect, ar enforce the covenants and obligations ofthis Ordinance, or any ordinance authari~in the xssu.ance afAdditional Bonds, by all legal and equitable means, including specifically, but without limitation, the use and filing afmandan~us proceedings, In any court ofcompetent~unsd~ctlan, against the City, its officials, and. employees. fib} Cites Legal Authority, The City is a duly created and existing Name rule city of the Mate ofTexas, and is duly authorized under the laws ofthe Mate ofTexas to create and issue the Parity Bonds and Additional Bonds; that alI action on its part for the creation and issuance of the said obligations has been or will be duly and effectively tal~en, and that said obligations in the hands ofthe holders and owners thereof are and will be valid and enforceable special obligations of the City in accordance with their terms, ~c} Title, The City has ar will obtain lawful title to the lands, bu~ldxns, structures, and facllftles canstitutfng the system, that it warrants that it will defend the title to all the aforesaid lands, buildings, structures, and facilities, and every part thereof, far the benefit afthe holders and owners vfthe Parity Bonds and Additional Bends, against the claims and demands afa1l persons whvrnsoever, that it is lawfully qualified to pledge the Pledged Revenues to the payment of the Parity Bands and Additional Bonds in the manner prescribed herein, and has lawfully exercised such rights. {d~ Lam, The City will from time to time and before the same become delinquent pay and. discharge ail taxes, assessments, and governmental charges, ifany, which shall be lawfully imposed upon it, or the system, that it will pay all lawful claims for rents, royalties, labor, materials, and supplies which if unpaid might by law became a lien ox charge thereon, the Tien of which would be prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner prv~rided herein, and that it will not create ar suffer to be created any mechanuc's, laborer's, ~naterialman's, or other Iien ar charge which might ar could be prior to the liens hereof, or do ar suffer any matter or thing whereby the I~ens hereof might or could be unpaired; provided, however, that no such tax, assessment, or charge, and that no such claims which might be used as the basis of a mechanic's, laborer's materialan's, or ether Iien ox charge, shall be required to be paid so long as the validity ofthe same shall be contested in good faith by the City, fie} ~ eration ofd sten~• No Free service, while the Parity Bands ar any Additional Bonds are outstanding and unpaid the City shall continuously and. efficiently operate the System, and shall maintain the ~ystern in goad condition, repair, and wording order, all at reasonable cvst~ ~Io free ser.ce ofthe system shall be allowed, and should the City or any of its agencies, instrurnentalfttes, lessors, ar concessionaires male use of the services and facilities of the ysten~, pay~.ent monthly of the standard retail price of the services provided shall be made by the City yr any of its agencies, instrumentalities, lessors, ar concessionairesout vffunds framsources other than the revenues of the yste~n, unless made from surplus Pledged Revenues as permitted by Section ~3~b}hereof, Further Encumbrance, while the Parity Bonds ar any Additional Bands are outstanding ar~d unpaid, the City shall not additionally encumber the Pledged Revenues in any manner, except as permitted in this Ordinance in connection with Additional Bands, unless said encumbrance is made junior and subordinate in all respects to the liens, pledges, covenants, and agreements of this Ordinance and any  I ordinance authorizing the issuance of Additional Bonds; but the right of the City to issue revenue bonds payable from a subordinate lien on surplus Pledged revenues is specifically recognized and retained, a~s permitted under Section ~3~b} hereof. fig} Sale Lease ar Ibis oral afPro e . No part othe System shall be sold, leased, mortgaged, demolished, removed or otherwise disposed of, except as follows: ~ I ~ To the extent permitted by law, the City may sell, lease, mortgage, demolish, remove or otherwise dispose afat any tune and from time to time any property ar facilities constituting part afthe System only if~A}the City Council shall determine, as evidenced by aresolutivnta that effect, such property or facilities are not useful in the operation afthe System, ar ~B}the proceeds ofsuch sale are 25a,aaa or less, or the City Council shall determine, as evidenced by a resolution to that effect, the fair market value ofthe property ar facilities exchanged is $~~,a00 ar less, or ifsuch proceeds ar fair market value exceed $~5~,04~ the City Council shall determine, as evidenced by resolution to that effect, that the sale or exchange of such property ar facilities will not impair the ability afthe City to comply during the current or any future fscal year with the covenant ofthe City set forth in Section ~$~i} ofthis Ordinance. The proceeds of any such sale ar exchange not used to acquire other property necessary or desirable for the sale ar efficient operation of the System shall forthwith, at the option afthe City, ~i} to be used to redeem or purchase Parity Bands or Additional Bands, ~~1} otherwlse be used to provide for the payment ofParlty Bands ar Add~tlonal Bands or X111} be used for any other lawful purpose. To the extent permitted by law, the City may lease or make contracts ar grant licenses far the operation of, or make arrangements far the use of, or grant easements ar other rights with respect ta, any part of the System, provided that any such lease, contract, license, arrangement, easement or right ~A} does not impede the operation. of the System by the City and }does not in any manner impair or adversely affect the rights or security of the owners of the Parity Bands ar Additional Bands under this Ordinance; and provided, further, that if the depreciated cast of the property to be covered by any such lease, contract, license, arrangement, easement ar other right is in excess af54a,Daa, the City Council shall determine, as evidenced by a resolution to that effect, that the action afthe City with respect thereto does not result in a breach of the conditions under this clause Any payments received by the City under or in connection with any such lease, contract, license, arrangement, easement or right in respect of the System or any part thereof shall cons#~tute dross revenues. ~h} Insurance. ~l} The City sha11 cause to be insured such parts afthe Systerr~ as would usually be insured by corporations operating like properties, with a responsible insurance canapany ar ca~npanies, against risks, accidents, ar casualties against which and to the extent insurance is usually carried by _ corporations operating like properties, including, to the extent reasonably abtaina~le, ire and extended coverage insurance, insurance against damage by ~.aads, and use and. occupancy insurance Public liability and property damage insurance also shall be carried unless the City Attorney gives a written opinion to the effect that the City is not liable for claims which would be protected by such insurance. All insurance premiums shall be paid as an expense ofoperation ofthe System. At any time while any contractor engaged in construction work shall be fully respansible therefor, the City shall not be required to carry insurance on the work being constructed ifthe contractor is required to carry appropriate insurance. All such policies shall be open to the inspection of the Bondholders and their representatives at all reasonable times. Upon the happening of any Toss ar damage covered by insurance from one ar mare of said causes, the City shall make due proof of loss and shall do all things necessary ar desirable to cause the insuring companies to make pay~.ent in full directly to the City. The proceeds of insurance covering such praper~y, together with any other funds necessary and available for such purpose, shall be used forthwith by the City for repairing the 27  i property damaged ar replacing the property destroyed; provided, however, that ifsaid insurance proceeds and other funds are insufficient far such purpose, then said insurance proceeds pertaining to the system shall be deposited in a special and separate trust fund, at an aff~cial depositary of the City, to be designated the Insurance Account. The Insurance Account shall be held until such time a~s other funds become available which, together with the Insurance Accaunt, will be suf~tcient to make the repairs or replacements ariginall~ required, ~2} The annual audit hereinafter required may contain a section commenting an whether or not the City has complied with the requirements of this section with respect to the maintenance of insurance, and shall state whether ar not all insurance ~premiurns upon the insurance policies to which reference is made have been paid. ~i} A;,~n~ et and Rate,Cav~. The City shall prepare, prior to the beginning of each fiscal year, an atmual budget, in accordance with law, reflecting an estimate of cash receipts and disbursements for the ensuing fiscal gear in sufficient detail to indicate the probable Gross Revenues and Pledged Revenues for such fiscal year. The City shall fix, establish, maintain, and collect, such rates, charges, and fees far the use and availability ofthe system at all tines as are necessary ~1} to produce Grass Revenues sufficient, together with any other Pledged Revenues, to pay all current operation and maintenance expenses of the system, and to produce an amount of Pledged Revenues during each fiscal year at least equal to the greater of 1.~ tunes the average annual principal and interest requirements afall then outstanding Parity Bonds and Additional Bonds ar 1.~5 times the succeeding fiscal year's principal and interest requirements of all then outstanding Parity Bands and Additional Bands. ~j} Records. The City shall keep proper books ofrecard and account in which full,true, proper, and correct entries will be made ofall dealings, activities, and transactions relating to the system, the Pledged Revenues, and the Funds created pursuant to this Ordinance, and all baoks, documents, and vouchers relating thereto shall at all reasonable tames be made available for inspection upon request of any Bondholder, provided, that all books, documents, and vouchers relating to the City's electric system shall be made available for inspection only to the extent required by law, including, without limitation, the provisions of ectian 55.133 of the ~'exas Government Code. Tv the extent consistent with the provisions of this Ordinance, the City shall keep its baoks and records in a manner conforming to standard accounting practices as usually would be followed by private corporations owning and operating a similar ystern, with appropriate recognition bung given to essential differences between municipal and corporate accounting practices, ~k} Audits. After the close afeach fiscal year while any ofthe Parity Bands or any Additional Bonds axe outstanding, an audit will be made of the books and accounts relating to the system and the Pledged Revenues by an independent certified public accountant or an independent firm of certified public accountants, As soon as practicable after the close afeach such year, and when said audit has been completed and made available to the City, a copy of such audit far the preceding year shall be mailed to the Municipal Advisory Council afTexas, tv each paying agent far any bonds payable from Pledged Revenues, and to any Ban~dholders who shall sa request in writing. The annual audit reports shall be open to the inspection ofthe Bondholders and their agents and representatives atoll reasonable times. ~l} ,C~overnmentalA entres. It will comply with all ofthe terms and conditions of any and all franchises, permits, and authorizations applicable to ar necessary with respect to the system, and which have been obtained from any governmental agency; and the City has or will obtain and keep in full force and effect all franchises, permits, authorization, and ether requirements applicable to or necessary with respect to the a~quisitian, construction, equipment, operation, and maintenance of the system. 2S gym} No Competition, It will not operate, or grant any franchise or, to the extent it legally may, permit the acquisition, construuction, or operation af, any facilities which would be in competition with the System, and to the extent that it legally may, the City will prohibit any such competing facilities. {n} No Arbitrage. The City covenants to and with the purchasers of the Parity Bands and any Additional Bonds that no use ~vi11 he made of the proceeds of any of such hands at any titre throughout the terra of any of such bands which, if such use had been seasonably expected an the date of delivery of auy of such bonds to and payment therefor by the purchasers, would have caused any afsuch bands to be arbitrage bonds wxthtn the meaning of Section 148 ofthe lt~ternal Revenue Code af19Sb, as amended the "Code"}, or any regulations or rulings pertaining thereto; and by this covenant the City is obligated to comply with the requirements ofthe aforesaid Cade and all applicable and pertinent Department ofthe Treasury regulations relating to arbitrage bonds. The City further covenants that the proceeds ofa11 such bonds will rat otherwise be used directly or indirectly so as to cause all or any part of such bands to he ar become arbitrage bonds within the meaning of the aforesaid Cade, or any regulation pertaining thereto. Section 9. ANDMENT OF ORDn~A~CE. ~a} The holders or owners of Parity Bands and Additional Bands aggregating in principal amount S l°Io ofthe aggregate principal amount afthen outstanding Parity Bands and Additional Bands shall have the right from time to time to approve any amendment to this Ordinance which ntay be deemed necessary or desirable by the City, provided, however, that nothing herein contained shall pet~nit or be construed to permit the amendment ofthe terms and conditions in this Ordinance or in the Parity Bonds or Additional Bonds so as to: ~l} fake any change in the maturity ofthe outstanding Parity Bands or Additional Bonds; Reduce the rate afinterest borne by any ofthe outstanding Parity Bonds or Additional Bands; Reduce the amount ofthe principal payable on the outstanding Panty Bands ar Additional Bonds; ~4} 1V[odify the terms of payment of principal of or interest vn the outstanding Parity Bonds or Additional Bonds, or impose any conditions with respect to such payment; ~5} Affect the rights ofthe holders ar owners ofless than all ofthe Parity Bands and Add~tivn~al Bonds then outstanding; Change the minimum percentage of the principal amount of Parity Bonds and Additional Bonds necessary far consent to such amendment. ~h} ~f at any time the City shall desire to amend the Ordinance under this Section, the City shall cause notice of the proposed amendment to be published in a financial publication of general circulation in The City of I~ew York, New York, ante daring each calendar weep for at least two successive calendar weei~s. Such native shall briefly set Earth the nature of the proposed amendment and shall state that a copy thereafis on file at the principal office ofthe Paying Agents for inspection by all holders or owners of Parity Bands and Additional Bonds. Such ublication is not re aired however ifnotice in writin is 'ven to each ' P q a ~ g holder or owner ofParity Bonds and Additional Bonds. ~c~ whenever at any time not less than thirty days, and within one year, from the date ofthe ~t publication ofsaid notice or other service ofwritten native the City sha11 receive an instrument or instruments executed by the holders or owners of at least 51°I~ in aggregate principal amount of all Parity Bands and Additional Bands then outstanding which instrument ar instruments shall refer to the proposed amendment ~9 described in said notice and which specifically consent to and approve such amendment n substantially the form ofthe copy thereofan file with the Paying Agents, the City Council may pass the amendatory ordinance in substantially the same form. ~d~ Upon the passage of any arnendatary ordnance pursuant to the provisions of this ectian, this ordinance shall be deemed to be amended in accordance with such amendatory ordinance, and the respective rights, duties, and obligations under this ordnance of the City, and all the holders or owners of then outstanding Parity Bands and Additional Bonds and all future Parity Bands and Additional Bonds shah thereat~er be determined, exercised, and er~farced hereunder, sub j ect in all respects to such amendments, fie} Any consent given by the holder ar owner of a Parity Bond or Additional Bond pursuant to the provisions ofthis Section shall be irrevocable far a period ofane year from the date ofthe first publication of doe notice provided far in this Section, and shall be conclusive and binding upon all future holders or owners ofthe same Parity Band or Additional Band du~.ng such period such consent may be revoked at any time aver one year from the date afthe first publication of such notice by the holder or av~ner who gave such consent, ar by a successor n title, by f ling notice thereof with the paying agents and the City, but such revocation shall not be effective if the holders yr owners of ~l°Io in aggregate principal amount of the then outstanding Parry Bonds and Additional Bonds a in this Section defined have, prior to the attempted revocation, consented to, and approved the amendment. ~f} Fur the purpose afthis ectian, the fact ofthe holding ofParity Bands or Additional Bands which are ire bearer, coupon farm, by any bondholder and the amount and numbers of such bearer Parity Bonds or Additional Bands and the date of their balding same, may be proved by the affidavit of the person claiming to be such holder ar owner, ar by a certificate executed by any trust company, bank, banker, ar any other depository wherever situated showing that at the date therein mentioned such person had on deposit with such truest company, bank, banker, or other depository, the Parity Bonds and Additional Bonds described in such certificate. "the City m.ay conclusively assume that such ownership continues until written notice to the contrary is served upon the City. The ownership of all registered Parity Bonds and Additional Bonds shall be determined from the registration books kept by the registrar therefor. Section ~a. DAMACEI], l1~UTILATBD, LOST, ST~LB~, ~R I)ESTR~YED B~NI~. ~a} Replacement B„onds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying AgentlRegl~trar shall cause to be printed, executed, and delivered, a new band of the carne principal an~aunt, maturity, and interest rate, as the~damaged, mutilated, last, stolen, ar destroyed Bond, in replacement far such Band in the manner hereina~er provided. fib} A licatian for Re lacen~ent Bands Application far replacement of damaged, mutilated, last, stolen, ar des~oyed Bands shall be made by the registered owner thereofto the Paying AgentlRegistrar. In every case_af lass, they, or destruction of a Band, the registered ov~ner applying for a replacement bond shall furnish to the Issuer and to the Paying AgentlRegistrar such security or indemnity as may be required by them to save each ofthem harmless from. an loss or damn a with. re ect thereto. Also in . y g p every case of loss, theft ar destruction of a fond, the registered owner shall fiirnish to the issuer and to the Paying AgentlReistrarevidence totheir satisfaction ofthe loss, they, or destruction of such Band, as the case may be. Yn every case of damage or mutilation of a Bond, the registered owner sha11 surrender to the Paying AgentlRegistrar for cancellation the Band so damaged or mutilated. ~c} No default Occurred. Natthstanding the foregoing provisions ofthis section, in the event any such Bond shall have matured, and na default has occurred which is then continuing 1n the payment of the principal of, redemption premium, if any, or interest on the Band, the Issuer may authari~e the payment 30  i of the sage without surrender thereof except in the case of a damaged or mutilated Bond} instead of issuing a replacement Bond, provided security or ~ndemn~ty is furbished as above provided in this ectian. Chge for Issuing Replacement Bonds. Prior to the issuance afany replacement bond, the Paying AgentlRegistrar shall charge the registered owner of such Band with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions ofthis section by virtue afthe fact that any Band is last, stolen, ox destroyed shall constitute a contractual obligation ofthe Issuer whether or not the last, stolen, or destroyed Band shall be found at any tame, ar be enforceable by anyone, and shall be entitled to all the benefits of this Grdinance equally and proportionately with any and all other Bonds duly issued under this Grdinance, fie} Autk~ar~ty far Yssuinplacement Bands. In accordance with Chapter 101, Texas Government Cade, this section of this Grdanance shall constitute authority for the issuance of any such replacement bond without necessity affurther action by the governing body ofthe Issuer ar any other body or person, and the duty of the replacement of such bonds is hereby authari~ed and imposed upon the Paying AgentlRegistrar, and the Paying AgentlRegistrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in section 6~d} ofthis Grdiraar~ce for Bonds issued in conversion and exchange for other Bonds. ectian 31. CO'~E~ANT REGARDING TAB-EXBNIPTIGN. The Issuer covenants to refrain from any action which would adversely affect, and to tape such action to ensure, the treatment of the Bonds a obligations described in section 10~ ofthe Code, the interest on which is not includable in the "gross income" afthe holder for purposes of federal income taxation, In furtherance thereof, the Issuer covenants as follows; ~a} to take any action to assure that no mare than 1~ percent of the proceeds of the Bonds bless amounts deposited to a reserve fund, if any} are used for any "private business use", as defined in section 141~b}~d} ofthe Code or, ifmore than 10 percent ofthe proceeds are so used,that amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Grdinance ar any underlying arrangement, directly or indirectly, secure or provide far the payment ofmore than l~ percent ofthe debt service onthe Bonds, in contravention of section l 41 of the Code; fib} to take and' actl0rl t~ ciS^~lire that In the event that tlle''private business use" described in subsection ~a} hereofexceeds 5 percent afthe proceeds ofthe Bands ~1ess amounts deposited rota a reserve fund, if any} then the amount in excess of 5 percent is used fora "private business use" which is'~related~' and not "disproportionate",within the meaning afsection 141~b~~3} ofthe Code, to the governmental use; ~c} to take any action to assure that na a~naunt which is greater than the lesser of $5,~~~,400, or 5 percent ofthe proceeds of the Bands bless amounts deposited into a reserve fund, ifany} is directly ar indirectly usedto finance loans to persons, otherthan state ar local governmental units, in contravention of section 141 ~c} of the Code; ~d} to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds within the meaning of section 141 } of the Code; fie} to refrain from taking any action that would result in the Bonds being 'federally guaranteed" within the meanng of section 14~~b} of the Cade; 31 ~f} to refrain frarn wing any partl.an ofthe proceeds of the Bonds, directly ar indirectly, to acquire ar to replace funds which were used, directly or indirectly, to acquire investment property has defined in section I48~b}~~} ofthe Cade} which produces a materially higher yield over the term of the Bonds, other than investment property acquired with ~ 1 ~ proceeds of the Bands invested for a reasonable temporary period of 30 days or Iess in the case of an advance refunding band end 90 days of less in the case of a current refunding bond, am~aunts invested ire a bona fide debt service fund, within the n~eanin of g section 1.145-1 fib} of the Treasury Regulations, and ~3} amounts deposited in any reasonably required reserve or replacement fund to the extent such a.aunts do not exceed 10 percent of the stated principal amount for, in the case of a discount, the issue price} ofthe Bonds; {g} to otherwise restrict the use of the proceeds of the Bands or amounts treated as proceeds of the Bonds, as nay be necessary, so that the Bonds da not otherwise contravene the requ~re~nents of section 148 of the Cade ~relattn to arbltrage}, section 149~g} ofthe Code {relating to hedge bonds, and, to the extent applicable, section 149~d~ of the Code relating to advance refundings}; and ~h} to pay to the United states of America at least ante during each five-year period beginning on the date ofdelivery afthe Bands} an arnauntthat is at Ieast equal to ~0 percent ofthe "Excess Earnings", withinthe meaning ofsection 148~F} ofthe Code and to pay to the United Mates ofAmerica, not later that 6a days aver the Bonds have been paid in Fui1,100 percent afthe amount then required to be paid as a result of Excess Earnings under section 148~f} of the Code, For purposes ofthe foregoing {a} and ~b}, the Issuer understands that the term "proceeds" includes 'disposition proceeds" as defined in the Treasury Regulations and, in the case afrefunding bands,transferred proceeds cif any} and proceeds of the refunded bands expended prior to the date of issuance of the Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.. Department Qfthe Treasury pursuant thereto. In the event that regulations or rulings axe hereafter promulgated which modify, or expand provisions vfthe Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to canriply, m the apinlori of nat1anally-recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest an the Bonds under section 1 a3 of the Code. In the event that regulations ar rulings are hereafter prorriulgated which impose additional requirements which are applicable to the Bonds, the issuer agxees to cainply nth the additional requirements to the extent necessary and reasonably possible, in the opinion ofnationally-recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bands under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the 1V[ayor to execute any docurrients, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which nay be permitted by the Cade as are consistent with the purpose for the issuance of the Bonds. The Issuer covenants to comply with the covenants contained in this section after defeasance of the B ands. In order to Facilitate compliance v~ith the above covenant ~h}, a'Rebate Fund' is hereby established by the Issuer for the sole benef t of the United Mates of America and such fund shall not be sub j ect to the claim of any other person, including without limitation, the owners of the Bonds. The Rebate Fund is established For the additional purpose of compliance with section 148 ofthe Cade. 2  i Section 3Z. ALLOCATION OF, AND LIMITATION ~N, BENDITLIRES FOR THE PROJECT. The City covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section l of this ordinance the "Project"~ an its books and records in accordance with the requirements afthe Cade. The City recagni~es that in order far the proceeds to be considered used far the reimbursement of casts, the proceeds must be allocated to expenditures within 18 months ofthe later afthe date that ~l}the expenditure xs made, or the Project is completed; but in.na event later than three years after the date an which the original expenditure is paid. The foregoing notwithstanding, the City recognizes that in order far proceeds to be expended under the Cade, the sale proceeds or investment earnings must be expended no mare than ~ days after the earlier of ~ 1 ~ the ~if~h anniversary of the delivery of the Bonds, ar ~~}the date the Bands are retired. The City agrees to obtain the advise of nationally-recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax~exempt status of the Bands. Far purposes hereof, the City shall ~aat be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability far federal income tax purposes from gross income of the interest. Section 3~. DISPGSITION OF PROJECT. The Issuer covenants that the property constituting the projects financed will not be sold ar otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other canxpensatian, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such sale ar other disposition will not adversely affect the tax-exempt status ofthe Bonds. Far purposes of the foregoing, the portion of the property comprising personal property and disposed of in the ordinary course shalt not be treated as a transaction resulting in the receipt of cash or other compensation. Far purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 34. INTEREST EARNINGS ON BOND PROCEEDS. Interest earnings derived from the investment of proceeds from. the sale of the Initial Bonds, other than proceeds deposited in the Interest and Sinking Fund and the Reserve Fund, shall be used slang with other available proceeds for Improving the System; provided that after camp~etia~n of the improvements if any of such interest earnings remain an hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided, however, that any interest earnings on bond proceeds which are required to be rebated to the United States of America pursuant to the Covenants Regarding Tax-Exemption herein sa as to prevent the Bonds from being arbitrage bonds shall be so rebated and not considered a Interest earnings far the purposes of this Ordinance. Section 35. CUST~DY~ APPROVAL, AND REGISTRATION OF BOND; BOND COUNSEL'S OPINION, CUSIP NUIVIBER, PREAMBLE, AND iNSURANCF. The Mayor of the Issuer is hereby authorized to have control ofthe Initial Bonds issued hereunder and all necessary records and proceedings pertaining to the Initial Bond pending their delivery anal the investigation, examination, and approval by the Attorney General of the State of Texas, and the registration by the Comptroller of Public Accounts of the state of Texas. Upon registration of the Initial Bond said Comptroller of Public Accounts for a deputy designated in writing to act for said Comptroller} shall manually sign the Camptrallerts Registration Certificate on the Ir~itia.l Band, and the seal of said Comptroller sha11 be impressed, or placed in facsimile, on the Initial Bonds. The approving legal opinion of the Issuer's Band Counsel and the assigned CUSIP r~u~nbers nay, at the option ofthe Issuer, be printed on the Initial Bond or on any Bands issued and delivered in conversion of and exchange or replacement ofany Bond, but neither shall have any legal effect,~and shall be solely far the convenience and information of the registered owners of the Bonds. The preamble to this Ordinance is hereby adapted and made a P hereof far all purposes. If insurance is obtained an any of the Bonds, the Initial Band and all other Bands shall bear an appropriate legend concerning insurance as provided by the insurer. 33  i Section 3G. SALE OF INITIAL BOND. The Initial Bond is hereby sold and shall be delivered to for cash for the pax value thereofand accrued interest thereon to date of delivery plus a premium of {accrued interest to be deposited into the Interest and Si~rking Fund}. It is hereby officially found, determined, and declared that the Initial Bond has been Bald t public sale to the bidder offering the lowest Interest cast, after receiving sealed bids pursuant to a Notice of Sale and Bidding Ins~ruuctions and Preliminary Official Statement dated July 5, X007, prepared and distributed in connection with the sale of the Initial Bend, Said Notice of Sale and Bidding Instructions and Preliminary Official Statement, and any addenda, supplement, or amendment thereto haae been and are hereby approved by the governing body of the Issuer, and their use in the offer and sale of the Bond is hereby approved, It is further officially found, determined, and declared that the statements and representations contained in said Notice of Sale and Bidding Instructions and Preliminary Oflicial Statement are true and correct in all material respects, to the best knowledge and belief of the governing body of the Issuer. section 37. OFFICIAL STATEMENT, An Official Statement dated as ofthe date ofthis meeting has been prepared in connection with the sale ofthe Initial Bonds and the Bonds, in the form and substance submitted at this meeting. Said Official Statement and any supplement or addenda. thereto have been and are hereby approved, and their use in the offer and sale of the Bonds is hereby approved, It is further officially found, determined, and declared that the statements and representations contained in said Offtcial Statement axe true and correct in a1I material respects, to the best knowledge and belief ofthe Issuer. The distribution and use of the Preliminary Official Statement dated duly Z007, prior to the date hereof is hereby ratified and approved. Section 3 S. DTC REGISTRATION. The Bonds initially shall be issued and delivered in such manner that no physical distribution of the Bonds will be made to the public, and The Depository Trust Company {~~DTC"~, New York, New York, initially will act as depository for the Bonds. DTC has represented that it is a lxrnited purpose trust company incorporated under the laws ofthe State ofNew York, a member of the Federal Reserve System, "clearing corporation" within the meaning of the N'ew York Uniform ComYnercial Cade, and a "clearing agency' registered under Section 17A ofthe federal Securities Exchange Act of 1934, as amended, and the Issuer accepts, but in no way verifies, such representations. The Initial Bond authorized 6y this Ordinance shall be delivered to and registered in the name ofthe Purchaser, ~Iowever, it is a condition ofdelivery and sale that the Purchaser, immediately after such delivery, shall cause the Paying Agent.lRegistrar, as provided for to this Ordinance, to cancel said Initial Bond and deliver in exchange therefor a substitute Bond for each maturity of such Initial Band, with each such substitute Bond to be registered in the name of CEDE ~ CO., the nominee of DTC, and it shall be the duty of the Paying AgentlRegistrar totake such action. It is expected that DTC will hold the Bonds on behalf of the Purchaser andlor the DTC Participants, as defined and described in the Ocia1 Statement referred to and approved in Section ~ hereof{the "DTC Participants"~. So long as each Bond is registered in the name ofCEDE CO., the Paying AgentlRegistrar shall treat and deal with DTC in all respects the same as if it were the actual and beneficial owner thereof. It is expected that DTC will maintain a book entry system which will identify beneficial ownership of the Bonds by DTC Participants in integral amounts of $5,00, with transfers of ownership being effected on the records ofDTC and the DTC Participants pursuant to rules and regulations established by them, and that the substitute Bonds initially deposited with DTC shall be immobilized and not be further exchanged for substitute Bonds except as hereinafter provided, The Issuer is not responsible or liable for any functions of DTC, will not be responsible for paying any fees or charges with respect to its services, gill oat be responsible or liable for maintaining, supervising, or reviewing the records ofDTC or the DTC Participants, or protecting any interests ar rights of the beneftcial owners of the Bands. It shall be the duty of the Purchaser and the DTC Participants to make all arrangements with DTC to establish this book-entry system, the beneficial ownership ofthe Bonds, and the method ofpaying the fees and charges of DTC, The Issuer does not represent, oar dues it in any way covenant that the ini~.al book'entry system established rth DTC w~11 be rnamtauled in the future The Issuer reserves the right and option at any tune 34  i in the future, in its sole discretion, to terminate the DTI ~OEDE book-entry v.y registration requixement described above, and tv permit the Bands to be registered in the name afany owner. Ifthe Issuer exercises its right and option to terminate such requirement, it shall give written notice of such termination to the Paying AgentlRegistrar and to DT, and therea~ex the Paying Agentegistrar shall, upon presentation and proper request, register any Bond in any name as provided far in this Ordinance. notwithstanding the initial es~.blishment of the foregoing book-entry system with DTI, if far any reason any of the originall Y delivered substitute Bonds is duly filed with the Paying AgentJRegistrar with proper request far transfer and substitution, as provided for in this Ordinance, substitute Bands will be duly delivered as provided in this Ordinance, and there wilt be no assurance ar representation that any baak-entry system will be maintained far such Bonds. Section ~ 9. COMPLIANCE WITH I~CTf,E 15c~- I ~a} Annual, Reuor,~ts. {i} The Issuer shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year endin g in or after ~~07, financial information and operating data with respect to the Issuer of the general type included in the f~na% Official Statement authorized by Section 3~ of this Ordinance, being the information described in Exhibit A hereto, which Exhibit is attached to and incorporated in this Ordinance as if written word far word herein. Any financial statements sa to be provided shall be ~l~ prepared in accordance with the accounting principles described in Bxh~bit A hereto, or such other accounting principles as the Issuer may be required to employ from time to time pursuant to state law or regulation, and audited, if the Issuer carnmissians an audit ofsuch statements and the audit is completed within the period during which they must be provided. If the audit ofsuch financial statements is not complete within such period, then the Issuer shall provide unaudited financial statements by the required time and will provide audited financial statements far the applicable fiscal year to each ~MSIR and any SID, when and if the audit report on such statements became available. iii} Iffihe Issuer changes its fiscal year, it wi11 notify each NI~.MSIR and any SID afthe change hand of the date of the new fiscal year end} prior to the next date by which fine Issuer otherwise would be required to provide financial information and operating data pursuant to this Section, The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or mare documents or may be included by specific reference to any dacurnent ~inoluding an oi.cial statement or other offering document, ifit is available from the MS1~B} thattheretofore has beenpravided to eachNRMSII and any SID ar f lied with the E~. fib} Material Event l~otices, The Issuer shall notify any SID and each NRM~II~, in a timely manner, afany ofthe following events with respect to the Bands, if such evenfi is material within the meaning of the federal securities laws. 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting fu~ancral difficulties; 4. Unscheduled draws on credit enhancements reflecting financial dif~.culties; Substitution of credit or liq~.dity providers, ar their failure to perform; G. Adverse tax opinions or events affectingthetax-exempt status ofthe Bonds; Modiflcatians to rights afholders of the Bonds;  I Band calls; 9. Defeasances; 10. Release, substitution, ar sale of property securing repayment of the Bonds; and 11, Rating changes, The Issuer shall notify any SID and each NRMSIR, in a timely manner, ofany failure by the Issuer to provide financial information or operating data in accordance with subsection ~a} ofthis Section by the time required by such subsection, ~c} Limitations Disclaimers and Amendments. ~i} The Issuer shah be obligated to observe and perform the covenants specified in this Sectran for so long as,but only far so long as, the Issuer remains are "obligated person'" with respect to the Bands within the meaning of the Rule, except that the Issuer in any event gill give the notice required by Subsection fib} hereof of any Band calls and defeasance that cause the Issuer to na longer be such an "obligated person". iii} The provisions of this Section are for the sole benefit of the registered owners and beneficial owners afthe Bonds, and nothing in this Section, express or irr~plied, shall give any benefit ar any legal or equitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other infannatian that maybe relevant ar material to a complete presentation of the Issuer's financial rests, condition, or prospects or hereby undertake to update any infar~nation provided in.accordance with this Section or otherwise, except as expressly provided herein. The Issuer does not make any representation or warranty concerning such inforn~,atian or its usefulness to a decision to invest in ar sell Bands at any future date, viii} UNDER NO CIRCUMSTANCES SHALL THE ISSUER ITS OFFICERS} AGENTS AND EMPLOYEES, BE LIABLE TO TIE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER. PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING fN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER., WHETHER NEGLIGENT OR wIT~OUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN T~II SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR. TORT, FDR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS DR SPECIFIC PERFORMANCE. ~iv~ No default by the Issuer in abscing ar performing its obligations under this Section shall comprise a breach of ar default under the. Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer under federal and state securities laws. ~v} The provisions of this Section may be amended by the Issuer from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, ar a change in the identity, nature, status, or e of operations ofthe Issuer, but only if~I}the provisions ofthis Section, as so arner~ded, would have permitted an underwriter to purchase ar sell Bands in the primary offering ofthe Bands incompliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and ~2~ either ~a} the registered owners of a majority in aggregate principal amount far any greater amount required by any other provision of this Ordinance that authari~es such an amendment} afthe outstanding Bonds consent to such a~nend~nent or ~b~ a person that is 3G unaffiliated with the Issuer such as nationally recognized band counsel} determined that such amendment will not materially irr~pair the interest of the registered owners and beneficial owners of the Bonds If the issuer so amends .e provisions of this Section, it shah include with any amended financial information or operating data next provided xn accordance with subsection ~a} of this Section an explanation, in narrative form, afthe reason for the amendment and afthe impact of any change in the type of financial information or operating data so provided, The issuer may also amend ar repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or court of fina.i ~urisdictio~a enters judgment that such provisions ofthe yule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. ~d} Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below; ~,MRB,~ means the Municipal Securities Rule~naking Board. "NRMSYR'~ means each person whom the SBC ar its staff has determined to be a nationally recognized ~.unicipal securities information repository within the mea~aing of the Rule from time to time. „Rule" .eons SEC Rule ISc~-1, as amended from time to time. means the United Mates Securities and Exchange Commission. " ID" rr~eans any person designated by the Mate of Texas or an authorized department, ofd cer, or agency thereof as, and determined by the SEC ar its staff to be, a state information depository within the meaning of the Rule from time to time. Section 4~, PROTBCTION OF PLB~C~E. Chapter I~QS, Government Code, applies to the issuance of the Bands and the pledge of the revenues granted by the Issuer under Section 9 of this Ordinance, and is therefore valid, effective, and perfected. IfTexas law is aamended at any tune while the Bonds are outstanding and unpaid such that the pledge ofthe revenues granted by the Issuer under Section 9 afthis Ordinance is to be subject to the filing requirem.en#s of Chapter 9, Texas Business Commerce Cade, then in order to preserve to the registered owners ofthe Bonds the perfection afthe security interest in said pledge, the Issuer agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Texas Business Corntnerce Code and enable a fling to perfect the security interest in said pledge to occur, Section ~ 1. FURTHER PROCEDURES. The Mayor afthe Issuer, the City Secretary afthe Issuer, and all other officers, employees, and agents of the Issuer, and each of them, sha11 be and they are hereby expressly authorized, empowered, and directed from time to tune and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalfofthe Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and pravisior ofthis Bond Ordinance, the Bonds, the sale of the Bonds, and the Official Statement; and the Assistant City ManaerlFinance of the City shall cause the expenses of issuance of the Bands to he paid from the proceeds of sale of the Initial Bonds or from other lawfully available funds ofthe issuer. Incase any officer whose signature shall appear an any Band shall cease to be such officer before the detivery of such. Bond, such signature sha11 nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delive , 37 ~ectian 4~, OPEN M~ETIN. The Clty council has found and determined that the meeting at which this Ordinance is considered is apen to the public and that notice thereafwas given in accordance with the provisions afthe Texas Open Meetings, Law, Tex. xov`t. bode, chapter 551, as arnended~ section 4. REPEAf,E~. A.11 indentures, ordinances ar resolutions, or parts thereof, that are in conflict ar inconsistent with any provision ofthis Ordinance are hereby repealed to the extent ofsucl~ conflict and the pro~isivns of this Ordinance shall be and remain controlling as to the matters captained herein. ectior~ ~4, EFFETr~E D~4T~, This Ordinance shall become effective imn~.ediately upon its passage and appra~al. [remainder of page intentionally 1e~ blanl~] 38  i PASSED AND APP~~'ED t~i~ the ~ 7 day of July, 2407. Aerry R,11~C~ei~~, Mayor ATTEST: ~enn~fer falters, ~t~y Secretary AFP~OVED AS TD LEGAL FD~VI: Edv~in IVi, Snyder, i arne M ~f i ~ ~~~~~~f •Y~~ ~ ~~~ifi~~~~~~ f f~i E A ~LCIPTI~N DF ANNUAL FINANCIAL INF~RIV~ATYf~N The following information is referred to in Section 3 S of this ordinance; Anau~I Fin~nci~i ta~eme~~ ~n~ ~per~ting D~~a The financial infar~nation and operating data with respect to the issuer to be provided annually in accordance with such Section axe as specified hand included in the Appendix or under the tables of the ~f~cial Statement referred to}below: Tables numbered 1 through 10, inclusive, under the captions "The electric System", "The dater ~St~", "The Wastewater System", "Debt Information" and ~'FinanCia,l Information" in the ~ff~Gia1 Statement. Appendix ~ in the Official Statement. Accaa~nti~g Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in the paragraph above.  i Global Credit Research Exhibit 2a New Issue ~ ~ 2 J U L 2007 New Issue: Denton (City ofi~ TX MOODY'S ASSIGNS Al RATING TO THE CITY OF DENTON [TX] $16.4 MILLION UTILITY SYSTEM REVENUE BONDS,_SERIES 2007 RATING AFFECTS $281 MILLION IN OUTSTANDING PARITY DEBT INCLUDING CURRENT SALE Municipality TX Moody's Rating ISSUE RATING Utility System Revenue Bonds, Series 2007 Al Sale Amount $16,390,000 Expected Sale Date 07/17/07 Rating Description Utility System Revenue Opinion NEW YORK, Jul 2, 2007 Moody's has assigned an Al rating to the City of Denton's [TX] $16.4 million Utility System Revenue Bonds, Series 2007. At the same time, Moody's has affirmed the Al rating on the City's $265 million in outstanding parity debt. The rating affirmation reflects improved debt service coverage, sizeable reserves, and a steadily expanding customer base. The rating also considers the System's significant future borrowing needs as well as the challenges presented by the deregulated Texas electricity market. STRONG UTILITY SYSTEM CUSTOMER GROWTH DRIVEN BY DENTON'S RESIDENTIAL AND COMMERCIAL EXPANSION IN RECENT YEARS Strong population growth in Denton (35% from 2000 to 2007) has driven residential and commercial expansion over the past several years. As residential and commercial developments have expanded, demand for utility services has grown similarly. The customer base has increased at approximately 4% annually over the past four years. As of FY 2006, the city provides service to 42,186 electric customers, 28,805 water customers, and 26,951 sewer customers. Officials expect the water and sewer customer base to continue to grow between 3% to 5% annually over the medium term and the electric system customer base to increase at 2% to 3% annually. Ample treated water is available to meet the growing needs of the city well into the future and is supplied primary by the system's own treatment facilities that are capable of treating and pumping 48.8 million gallons per day (MGD). The maximum volume pumped was 32.8 MGD in 2006. Raw water for the system is ample and is obtained primarily from Lewisville Lake (4.9 MGD) and Ray Roberts Lake (19.8 MGD). The city has a raw water supply contract with Dallas obligating Denton to purchase at least 500,000 gallons per day from Dallas. Due to the city's current surplus reservoir water supply, the city has contracted with the Upper Trinity Regional Water District to provide raw water on an interim basis from the excess capacity. The city has owned and operated its electric light and power system since 1905. In order to secure access to along -term generating facility, the Cities of Bryan, Denton, Garland, and Greenville, Texas created the Texas Municipal Power Agency (TMPA)(rated by Moody's A2 with stable outlook). TMPA owns the Gibbons Creek Steam Electric Station, acoal -fired generating plant located in Grimes County, Texas which has a net generating capacity of 462 megawatts (MW). The City's contractual right to TMPA's generation amounts to approximately 98 MW, or approximately 32% of the City's projected 2006 peak system -wide demand. Though the city can choose to not take its prorated share of energy from TMPA, Denton is obligated nevertheless to purchase or pay for 21.3% of TMPA's fixed costs, including debt service, as well as TMPA's variable costs (i.e. fuel costs) relating to the energy that the city takes from TMPA. To meet energy needs above what is provided by TMPA, the city has a contract with Constellation Power Source, which was recently renewed in 2006. STABILITY DRIVEN BY IMPROVED DEBT SERVICE COVERAGE COUPLED WITH AMPLE RESERVES AND RECENT RATE INCREASES - °----•-°-J  HiLUI UUCiirlirly irUrn L.0 urriUS ar][]Uai UULJL Service iri r r iyZIy LO 1./-,3 urrlUS in r r /-UU-+, cuverayU IUCUVUFUU modestly in FY 2005 reaching 1.45 times. In FY 2006, high fuel costs were accommodated by higher electric utility rates. Specifically, the city's variable cost component of the electric rate -the Energy Cost Adjustment (ECA) -was substantially elevated compared to prior years. The ECA together with the base rate comprises a resident's electric utility rate. The ECA reflects the underlying costs of providing power based upon any changes in commodity fuel expenses. As a result of the higher electric rates and strong demand, debt service coverage improved considerably in FY 2006. FY 2006 net revenues provided for a sound 2.29 times annual debt service and maximum annual debt service coverage of 2.15 times. The coverage calculations do not factor the payment by the system for franchise fees and return on investment (RO1) to the General Fund, which along with administrative transfers amounted to approximately $16 million. ROI is set at 3.5% of gross operating revenues while the franchise fee is equal to 4%. The ROI is formally capped at an amount not to exceed 6% of net fixed assets. Treating these transfers as expenditures would result in a lower but still adequate FY 2006 annual debt service coverage of 1.80 times and MADS coverage of 1.69 times. In addition to improved debt service coverage, the system benefits from ample reserves. Net working capital in FY 2006 stood at approximately $162 million, including a rate stabilization reserve of $62 million that can be pledged to meet debt service coverage. Of the $62 million aforementioned rate stabilization reserve, $50 million is allocated to the electric system to help the electric component address base rate challenges while much of the remainder is allocated for water. The electric rate stabilization fund was created to be utilized in lieu of electric rate increases which could otherwise be required in order to pay the cost of purchased power as well as the city's share of TMPA debt. The system has also benefited from recent rate increases. The electric base rate was raised 6% in FY 2006 for the residential and general service class. Additionally, wastewater rates were increased 4% in FY 2004, 9% in FY 2005, and 6% in FY 2006 while water rates were raised 2% in FY 2006. In order to support a total of nearly $100 million in expansion to the city's two water treatment plants, water rates were increased 2% in FY 2007 and will increase 5% annually from FY 2008 through FY 2012. SATISFACTORY LEGAL REQUIREMENTS Legal covenants are satisfactory. The rate covenants require pledged revenues to equal at least 1.25 times average annual debt service or 1.25 times the succeeding year's debt service, whichever is greater. The ordinance also allows the inclusion of rate stabilization funds to be utilized for meeting coverage. The additional bonds test calls for pledged revenues to equal at least 1.25 times average annual debt service and 1.10 times MADS on all outstanding and proposed bonds. ELECTRIC SYSTEM FACING CHALLENGES FROM DEREGULATED RETAIL LANDSCAPE Similar to other municipal electric systems in the state, Denton's electric system has been faced with substantial changes to the electric utility regulation brought about by the enactment of Senate Bill 7 by the Texas legislature in 1999. SB 7 provided for open retail electric competition in the part of the state that is within the service area of the Electric Reliability Council of Texas (ERGOT). Denton is located within the ERGOT service area. Municipally -owned utilities are not required to participate in the competitive market, although they are given the ability to irrevocably "opt in". The city has taken a cautionary approach to the new market, and has not decided to open the city to retail electric competition. The city has identified the most significant risk related to opting into competitive markets to be the city's ability to pay its portion of TMPA fixed costs. Another issue of relevance includes the possible reduction of fund transfers to the General Fund of the city from the electric system ($10.5 million in FY 2006) if the city opted into a competitive electric retail market. The city has also considered the increased costs relating to technology upgrades that would be needed to accommodate multiple retail energy providers if the electric system were to choose to remain as the sole transmission and distribution utility in the city. Considering the substantial risks associated with opting into competitive markets at the present, the city's ability to provide electric service to residents at competitive rates is imperative. UTILITY SYSTEM TO INCUR SIGNIFICANT ADDITIONAL DEBT GOING FORWARD As of FY 2006, the system's debt ratio was moderately elevated at approximately 50%. Payout is steady with approximately 55% of principal structured to be retired over the next ten years. In order to accommodate ongoing infrastructure needs, the system will have considerable borrowing requirements going forward. For the electric system, officials anticipate issuing $33 million in revenue debt in fiscal 2009, $20 million FY 2009, $17 million in FY 2010, $15 million in FY 2011, and $21.6 million in FY 2012. In addition, officials expect to issue $30.5 million for water/sewerldrainage in FY 2008, $27.5 million in FY 2009, $18 million in FY 2010, $14.5 million in FY 2011, and $33 million in FY 2012. Considering sizeable debt issuance plans, the system will continue to remain leveraged. It is Moody's expectation that officials will manage future debt offerings prudently and continue to raise utility rates as necessary. KEY STATISTICS: Water Customers: 28,805 Sewer Customers: 26,951 Electric Customers: 42,186 FY 2006 Debt service coverage: 2.29x; MADS: 2.15x FY 2006 Coverage Adjusted for Transfers Out to General Fund: 1.80x; MADS:1.69x FY 2006 Net Working Capital: $162 million Payout of Principal (10 years): 55% Debt Ratio: 50% Operating Ratio: 81% Post Sale Parity Debt Outstanding: $281 million Analysts Anil Chandy Analyst Public Finance Group Moody's Investors Service Gera M. McGuire Backup Analyst Public Finance Group Moody's Investors Service Douglas Benton Senior Credit Officer Public Finance Group Moody's Investors Service Contacts Journalists: (212) 553-0376 Research Clients: (212) 553-1653 ©Copyright 2007, Moody's Investors Service, Inc. andlor its licensors including Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided "as is" without warranty of any kind and MOODY'S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability orfitness for any particular purpose of any such information. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of factor recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling. MOODY'S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODY'S have, prior to assignment of any rating, agreed to pay to MOODY'S for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,400,000. Moody's Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moody's Investors Service (MIS), also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody's website at www.moodys.com under the heading "Shareholder Relations -Corporate Governance -Director and Shareholder Affiliation Policy." Exhibit 2b ~ ~ RESEARCH Summary: Denton Combined Utilit y Publication date: 12-Jul-2007 Primary Credit Analyst: Peter Murphy V, New York (1) 212-438-2065; peter_murphy@standardandpoors.com Secondary Credit Analyst: Theodore Chapman, Dallas (1) 214-871-1401; theodore_chapman@standardandpoors.com Credit Profile US$16.285 mil util sys rev bnds ser 2007 dtd 07/15/2007 due 12/01/2026 Long Term Rating A+IStable New Denton util sys Long Term Rating A+IStable Affirmed Denton util sys (AMBAC) Unenhanced Rafing A+(SPUR}IStable Affirmed Denton util sys (FSA) Unenhanced Rafing A+(SPUR}IStable Affirmed Denton util sys (MBIA} Unenhanced Rafing A+(SPUR}IStable Affirmed Many issues are enhanced by bond insurance. Rationale Standard & Poor's Ratings Services assigned its'A+' rating to Denton, Texas' series 2007 utility system revenue bonds. The outlook is stable. In addition, the'A+' rating and underlying SPUR on the city's utility system debt were affirmed. The 'A+' rating reflects the following credit risks associated with the city's combined electric water and sewer system: • The electric system's reliance on the Texas Municipal Power Agency's (TMPA) Gibbons Creek coal facility for more than half of its energy requirements, resulting inabove-average electric system capacity costs through 2018, although rate stabilization funds established to offset such costs have been maintained at high levels and above original expectations; • Capital pressures associated with Denton's expanding population base, resulting in continued expansion of Denton's electric, water, and sewer systems; and • Pressure to maintain competitive rates, particularly in the electric system, which has resulted in low debt service coverage levels. The rating also reflects: • A growing service area economy whose population recently topped 100,000, with good access to employment throughout the strong and diverse Dallas-Fort Worth metropolitan area; • Adequate capacity to meet rising demand in each of the three systems; and • Strong liquidity, including the rate stabilization reserves, of more than six months' operating expenditures. The bonds are secured by a first-lien pledge of net revenues of Denton's electric water and sewer funds. The electric system is dominant, typically accounting for three fourths of total revenues. Denton's combined utilities business profile of '5' is average, reflecting retail rate competitiveness and proactive management. However, TMPA wholesale power costs are projected to rise according to current debt service schedules. In addition, the system faces challenges posed by the above-average fixed charges and dependence on TMPA for the bulk of its power needs. Denton benefits from its location in the diverse Dallas-Forth Worth Metroplex. The city's electric system, which provides about 74% of the combined utility revenues, has shown stable retail energy sales growth, a 4.7% annual increase by megawatt-hour (MWh) from 2002 to 2006, and a 16.9% annual growth in dollar volume between during the same period, as power costs have surged linked to volatility in the price of natural gas. Through June 2011, the electric system's power supply agreement with Constellation Energy Commodities Group (Constellation), requires Constellation to supply the city, at a cost that varies and is linked to market movements, with all its power requirements above what the city receives from its TMPA base load resource. In addition, Constellation will provide certain ancillary services that permit the city to receive energy from the Electric Reliability Council of Texas power grid. Historically, financial operations have been sound, although as debt issuance has increased in support of recent capital projects, particularly in the water department, debt service coverage has declined. For the past three fiscal years, Denton has used its rate stabilization reserves to offset above-market costs associated with its debt-laden TMPA power resource, although in fiscals 2005 and 2006 this amount was limited. The rate stabilization reserve was established to cope with the high debt imbedded in Denton's base load resource, TMPA's Gibbons Creek coal plant, and has not been depleted as fast as earlier projections indicated, due to numerous factors. All TMPA debt matures by 2018, and the reserve is designed to make Denton's electric rates competitive in the interim. Denton is anticipating modest recurring annual draws on the fund in the next several years, but is expected to maintain strong reserves for the foreseeable future. Adjusted fixed-charge coverage, which factors in rate stabilization fund withdrawals, off-balance-sheet debt, and sizeable transfers to the city's general fund, improved to 1.45x in 2006 on strong sales to customers. Audited results for fiscal 2006, which ended Sept. 30, 2006, indicate solid cash balances, including $64 million of rate stabilization funds, equal to about five months' expenditures. Denton's five-year capital plan (2008-2012) is sizeable, yet manageable, and includes an additional $107 million of new debt during the next five years to fund projects spread evenly between the three utility systems. Outlook The stable outlook reflects Denton's sizeable rate stabilization reserves and sufficient rate-setting flexibility, which will allow its electric utility to remain competitive for several years, as a deregulated energy market evolves in Texas. The outlook also reflects the assumption that Denton will continue to fully pass along variable fuel charges to its customers on a timely basis and increase base rates as necessary. In addition, the outlook reflect the assumption that the rate stabilization fund will not be depleted at a faster rate than anticipated, enabling the city to continue to offset high capacity charges associated with its base-load Gibbons Creek coal plant. Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. ~ ~ PRELI'~IItiAR1~' f)FI;IC`IAL STATE1~lE:~T Ratings: Maady's: "Applied For" Dated July 5, 2007 S&P: "Applied For" J See ("Other Information - v ~a ~ ~ NEW ISSUE -Book-Entry-only Ratings" herein} r ~ In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under statutes, regulations, published rulings and court decisions existing on the date thereof, subject to the matters described under "Tax Matters" herein, ° including the alternative minimum tax on corporations. c ~ ~ THE BONDS WILL NUT BE DESIGNATED A5 " UALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS ~ a _ $16,740,000 CITY OF DENTUN, TEXAS r (Denton County) ~ UTILITY SYSTEM REVENUE BLINDS, SERIES 200'1 f c Dated Date; July 15, 2007 Due: December 1, as shown below ~ c PAYMENT TERMS ...Interest on the $16,740,000 City of Denton, Texas Utility System Revenue Bonds, Series 2007 (the "Bonds"} will accrue from July 15, 2007, (the "Dated Date"}and will be payable December 1 and June 1 of each year commencing December 1, 2007, and will be calculated an the basis of a 360-day year consisting of twelve 30-day months. The definitive Bonds will be initially registered and delivered only ~ w ~ to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herf;in. Beneficial a ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be . ~ ~ ~ made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying AgE;ntlRegistrar to ~ . ~ f Cede & Co., which will make distribution of the amounts sa paid to the participating members of DTC for subsequent payment to the beneficial ~ owners of the Bonds. See "The Bonds -Book-Entry-Only System" herein. The initial Paying AgentlRegistrar is The Bank of New York Trust ~ ~ Company, N.A., Dallas, Texas (see "The Bonds -Paying AgentlRegistrar"). f AUTHORITY FOR ISSUANCE ...The Bonds are issued pursuant to the general laws of the State of Texas, particularly Vernon's Texas Codes ~~c:~ ~ Annotated ("V.T.C.A") Government Code, Chapter 1502, as amended, and an ordinance (the "Series 2007 Ordinance"} passed by the City ~ Council, and are special obligations of the City of Denton (the "City"), payable, both as to principal and interest, solely from and secured by a first lien on and pledge of certain Pledged Revenues, including the Net Revenues of the Ciry's combined water, sewer and electric light and power system the "System"}. Special reference is made to "The Electric System" herein for a description of certain legal and regulatory changes that ~ ~ have affected, and are expected to further affect, the environment in which the Ciry's electric utility system operates. The City has not covenanted or obligated itself to pay the Bands from monies raised or to be raised from taxation (see "The Bonds -Authority for Issuance" and "The Bonds -Security and Source of Payment"). - r r r ~ PURrosE , ..Proceeds from the sale of the Bonds will be used to (a) fund capital improvements for the System; (b} fund a deposit to the System Cj J debt service reserve fund; and (c}pay the costs of issuance of the Bonds. s 'a MATURITY SCHEDULE CUSIP Prefix ~1~; 249015 u a ~ ~ Principal Interest CUSP Principal Interest CUSIP w., ' J w ~ Amount Maturity Rate Yield S ufftx ~ Amount Maturity Rate Yield Suffix } $ 605,000 2007 $ 82o,aao 2017 ` 535,000 2008 865,000 201$ f~; ~ 560,000 2009 900,000 2019 a 590,000 2010 950,000 2020 r 620,000 20I 1 990,000 2021 ~ ~ 650,000 2012 1,040,000 2022 ~ ~ 6$0,000 2013 1,090 000 2023 ~ ~ ~ ~ 715,000 2014 1,140,000 2024 w 750,000 2015 1,200,000 2025 ~ 785,000 2016 1,255,000 2026 n ~ ~ (Accrued Interest from July 15, 2007 to be added} V n , rti (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard and Poor s +,.USIP Service Bureau, a division of the McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve ~in any way as a ~ ~ substitute for the CUSIP Services. CUSIP numbers are provided for convenience of reference only. The City, Financial Advisor and the Initial r " Purchaser take na res nsibili for the accurac of such numbers. ~ ~ 1~ ty Y v ~ ~ REDEMPTION . , .The City reserves the right, at its option, to redeem Bonds having stated maturities on and after December 1, 2018, in whole or s ~ ~ in part in principal amounts of $5,000 or any integral multiple thereof, on December 1, 2017, or any date thereafter, at the par value thereof plus ~ ~ accrued interest to the date of redemption (see "The Bonds -Optional Redemption"). r ~ LEGALITY ...The Bands are offered for delivery when, as and if issued and received by the Initial Purchaser and subject to the approving opinion of the Attorney General of Texas and the o inion of McCall, Parkhurst & Horton, L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, p ~ ~ " "Form of Bond Counsel's Opinion"). ~f DELIVERY It is expected that the Bands will be available for delivery through The Depositary Trust Company on August 21, 2G~Ob. . MM .V SEALED BIDS DUE TUESDAY, JULY 17, 2007 , AT 11:00 AM, CDT For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, as amended and in of ect` on the date hereof, this document constitutes an Off vial Statement of the City with respect to the Bonds that has been "deemed~inal" by the Ciry as of its date except for the omission of no more than the information permitted by Rule 15c2-I2. No dealer, broker, salesman or other person has been authorized by the Ciry to give any information, or tv make any representations other than those contained in this Off cial Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Ciry. This Of zcial Statement does nc~t constitute an offer to sell Bands in any jurisdiction to any person to whom it is unlawful to make such offer in such jurisdiction. Certain information set forth herein has been obtained from the City and other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Financial' A~dvisar. Any information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Off cial Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or other matters described herein since the date hereof. See "Continuing E~isclosure of Information"for a description of the City's undertaking to provide certain information on a continuing basis. THE BDNDS ARE EXEMPT FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMI~II~~SION AND CONSEQUENTLY HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFIC~4TION, OR EXENfPTION OF THE BDNDS IN ACCORDANCE WITH APPLICABLE SECURITIES LAW PROVISI(7~S OF THE .IURISDICTION IN WHICH THESE SECURITIES HAVE BEEN REGISTERED DR EXEMPTED SHO(IL~~ NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THE CITY NOR ITS FINANCIAL ADVISOR MAKE ANY REPRESENTA TION OR WARRANTY WITh' RESPECT TD THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRU'ST' COMPANY OR ITS BOOK-ENTRY ONLYSYSTEM. TABLE OF CONTENTS PRF..LaIMINARY OFFICIAL STATEMENT SELECTED PROVISit)NS OF THE BOI~'D~ St~MMARY .............................................................3 ORDINANCE.........................................,............... ~ 1 CITE' OFFICIALS, STAFF AND CONS[]LTANTS .....4 TAX MATTERS 62. ELECTED OFFICIALS ......••••...4 TION. 63 SELECTED ADMINISTRATIVE STAFF .............................4 OTHER INFORMA CONSULTANTS AND ADVISORS ....4 RATINGS 6~ LIT[GATION b4 IN'TROD[1CTION S REGISTRATION AND QUALIFICATION OF BONDS FOR SALE 64 THE BONDS........••••.•••.•••••••••••••••••••••••.•......•............•.•.••••~ LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN •I'EXAS G4 MANAGENIEN"I' OF 'THE SYS"I"ENI I2 LEGAL OPINIONS...................................................... 64 CONTINUING DISCLOSURE OF INFORMATION b5 TIIE ELE(:TRI(: SYSTEM ...........................................13 FINANCIAL ADVISOR..................................,............. 6~ TABLE I -HISTORICAL OPERATING AND FINANCIAL AUTHENTICITY OF FINANCIAL DATA AI*iD OTHER DATA I5 INFORMATION................................................. 66 TABLE ~-CURRENT ELECTRIC RATE SCHEDULES I6 INITIAL PURCHASER TIIE WATER SY STEM FORWARD-LOOKINGSTRTEMENTS DIS~~L~~[MER b~ ............................4~ CERTIFICATION OF THE OFFICIAL STATI~M.ENT TABLE ~ -WATER USAGE .........................................43 TABLE 4 -TOP TEN WATER CUSTOMERS ...................43 TABLE S -WATER RATES .........................................43 APPENDICES GENFRAi, INFORMATION REGARDING THI=CITY A. TIIE WASTE~'~'ATER SYSTEM ..................................44 DESCRIPTION OF SENATE I31LL ~ AND TIIE TEXAS TABLE f -WASTEWATER RATES ...............................44 MUNICIPAL PC)WER AGENCY'.............,................ I3 EXCERPTS FROM THE ANNt~AL FINAN(:lAL REPORT.. C FQRi~t OI~ BOND COUNSEL'S OPIIv'ION D WATER AND i~4'ASTEWATER RATE M,ANAGEMENT 45 The rover page hereof, this page, the appE~nd.ices included DEBT INFORMATION .................................................4b herein and any addenda, supplement ar amen~~ment hereto, TABLE ~ -DEBT SERVICE REQUIREMENTS .................46 are part of the Preliminary Official Statement. FINANCIAL INFORMATION 4T TABLE $ -COMPARABLE CALCULATION OF NET REVENUES AVAILABLE FOR DEBT SERVICE 47 TABLE g -COVERAGE AND FUND BALANCES .............4$ TABLE I0 -CURRENT INVESTMENTS 50 PRELIMINARY OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the mare complete information and definitions contained ar incorporated in thus Preliminary Official Statement. The offering of the Bands to potential investors is made only by means of this entire Preliminary Official Statement. No person is authorized to detach this summary from this Preliminary Official Statement or to otherwise use it without the entire Preliminary Official Statement. THE CITY The City of Denton is a political subdivision and municipal corporation of the State, located in Denton County, Texas, The City covers approximately 74.8 square miles (see "]fntraduction - Description of City"). THE BONDS The Bands are issued as $1d,740,000 Utility System Revenue Bands, Series 2007. The Bonds are issued as serial bands maturing December 1, 2007 through December 1, 2024 (see "The Bonds - Description afthe Bands"}, PAYMENT OF INTEREST Interest an the Bonds accrues from July 15, 2007, and is payable December 1, 2007, ,end each June 1 and December 1 thereafter until maturity or prior redemption (see "The Bonds -Description of the Bonds," and "The Bands -Optional Redemption"}. AUTHORITY FOR ISSUANCE...,......, The Bands are issued pursuant to the general laws of the State, including particul,~rly V.T.C.A. Government Cade, Chapter 1502, as amended, and an Ordinance passed by the City Council of the City (see "The Bands -Authority far Issuance"}. SECURITY FOR THE BONDS The Bands constitute special obligations of the City payable, bath as to principal and iinterest, safely from and secured by a first lien on and pledge of certain Pledged Revenues including the Net Revenues of the City's combined water, sewer and electric light and power system (the "System"}, Special reference is made to "The Electric System" herein for a description of certain legal and regulatory changes that have affected, and are expected to further affect, the environment in which the City's electric utility system operates. The City has not covenanted or obligated itself to pray the Bonds from monies raised or to be raised from taxation (see "The Bands - Autharifiy far Issuance" and "The Bonds -Security and Source of Payment'). REDEMPTION The City reserves the right, at its option, to redeem Bonds having stated maturities on and after December 1, 2018, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on December 1, 2017, ar any date thereafter, at the par value thereof plus accrued interest to the date of redemption. TAx ExEMPTION In the opinion of Bond Counsel, the interest on the Bonds will be excludable from grc►ss income far federal income tax purposes under existing law, subject to the matters described under the caption "Tax Matters" herein, including the alternative minimum tax on corporations. USE OF BOND PROCEEDS Proceeds from the sale of the Bands will be used to (a} fund capital improvements for the System; (b} fund a deposit to the System debt service reserve fund; and (c} pay the costs of i~►suance of the Bands. RATINGS The presently outstanding System revenue debt of the City is rated "A1" by Moady's Investors Service, Inc. ("Maady's") and "A+" by Standard & Poar's Ratings Services, a division of The McGraw-Hill Companies, Inc, ("SBcP"). The City also has outstanding System debt which is rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies. Applications far contract ratings on the Bonds have been made to Maady's and S&P (see "Other Information -Ratings"). BOOK-ENTRY-ONLY SYSTEM The definitive Bonds will be initially registered and delivered only to Cede & Ca., the nominee of DTC pursuant to the Boak-Entry•Only System described herein, Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal af, pre,mium, if any, and interest an the Bands will be payable by the Paying AgentlRegistrar to Cede & Ca., which will make distribution of the amounts so paid to the participating members of DTC fir subsequent payment to the beneficial owners of the Bonds (see "The Bands - Baak-Entry-Only System"}. PAYMENT RECORD The City has never defaulted with respect to the payment of bonds secured by revenues of the System. Far additional information regarding the City, please contact: M r. Jon Fortune Laura Alexander Assistant City M onager David K. M edanich City of Denton First Southwest Company 215 E. M cKinney Street or 777 M ain Street, Suite 1200 Denton, Texas 74201 Fort Worth, Texas 74102 (940} 349-828$ (817) 332-9714 3 CITY OFFICIALS, STAFF AND CONSULTANTS ELECTED OFFICIALS Term Ci Council Ex Tres Perry McNeill May, 200$ Mayor Pete Kamp May, 2009 Mayor Pro Tem, District 2 Joe Mulroy May, 2008 Deputy Mayor Pro Tem, At Large Place 6 Charlye Heggins May, 2009 Cauncilmember, District 1 Jack Thomson May, 2009 Councilmember, District 3 Chris Watts May, 2009 Councilmember, District 4 Bob Montgomery May, 2008 Cauncilmember, At Large Place S SELECTED ADMINISTRATIVE STAFF Name Position George C. Campbell City Manager Howard Martin Assistant City Manager Jon Fortune Assistant City Manager Jennifer K. Walters City Secretary Edwin M. Snyder City Attorney CONSULTANTS AND ADVISORS Auditors KPMG LLP Dallas, Texas Band Counsel McCall, Parkhurst & Horton L.L.P. Dallas, Texas Financial Advisar First Southwest Company Fort Worth, Texas 4 PRELIMINARY OFFICIAL STATEMENT RELATING TO $16,740,400 CITY OF DENTON, TEXAS UTILITY SYSTEM REVENUE BONDS, SERIES 2407 INTRODUCTION This Preliminary Off vial Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $16,740,400 City of Denton, Texas Utility System Revenue Bonds, Series 2007 (the "Bonds"}, Capitalized term.> used in this Official Statement have the same meanings assigned to such terms in the Ordinance to be adapted on the date of sale of the Bands (the "Ordinance"} which will authorize the issuance of the Bonds, except as otherwise indicated herein (see "Selected Provisions of the Bond Ordinance"}. There follows in this Preliminary Official Statement descriptions of the Bonds and certain information regarding thE; City and its finances, including, particularly, the City's combined water, sewer and electric light system (the "System"}. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Dallas, Texas. DESCRIPTION OF THE CITY ...The City of Denton, Texas is a political subdivision located in Denton County operating as a home- rule city under the laws of the State of Texas and a charter approved by the voters in 1959. The City operates under the CaunciVManager farm of government in which the Mayor and six Cauncilmembers are elected for staggeredtwo-year terms. The City Council formulates operating policy for the City while the City Manager is the chief administrative officer. The City is approximately 74.$ square miles in area. THE BONDS DESCRIPTION OF THE BONDS ...The Bonds are dated July 15, 2007, and mature on December i in each of the years and in the amounts, and accrue interest at the per annum rates, shown on the cover page hereof. Interest will be computed an 1.he basis of a 360-day year of twelve 30-day months, and such interest will be payable on December 1 and tune 1, commencing December 1, 2007. The definitive Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Ca., the nominee of The Depository Trust Camp~~ny ("DTC"} pursuant to the Book-Entry-Only System described herein. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying AgentlRegistrar to Cede & Ca., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "The Bonds - Baok-Entry-Only System" herein. AvTHQRITY FOR ISSUANCE AND PURPOSE ...The Bonds are issued pursuant to the general laws of the State of Texas, particularly V.T.C.A. Government Code, Chapter 1502, as amended, and the Ordinance. Proceeds of the bonds will (a) fund a]~proximately $9 million of water system improvements and approximately $7 million of electric system improvements; (b} fund a deposit to the System debt service reserve Fund; and (c) pay the costs of issuance of the Bonds. SECURITY AND SOURCE OF PAYMENT ...The Bonds are special obligations of the City payable, both as to principal and interest, solely from and, together with certain outstanding revenue bonds of the City (collectively with the Bonds, the "P~~rity Bonds") and any additional parity bonds ("Additional Bonds"} that may be issued in the future, secured by a first lien on and pledge of the Pledged Revenues, including the Net Revenues of the System. In the Ordinance, the "System" is defined as the City's entire existing waterworks and sewer system and the City's entire existing electric light and power system, together with all future extensions, improvements, enlargements, and additions thereto, and all replacements thereof, and any other related facilities, but excluding any water, sewer, electric, or other facilities of any kind that are declared not to be a part of the System, and which are acquired or constructed by the City with the proceeds from the issuance of "Special Facilities Bonds." The Ordinance defines "Gross Revenues" to include all revenues and income received by the City from the operation and ownership of the System, including the interest income from the investment or deposit of money in any fund created by the Ordinance. Tlie Ordinance defines "Net Revenues" as all Gross Revenues after deducting the current expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs, and extensions necessary to render efficient service. Maintenance and operating expenses of the System include contractual payments which under Texas laws and their provisions are established as operating expenses. The City has several contracts for the purchase of water and energy that are maintenance expenses of the System, See "The Electric System - "Introduction" and "The Water System -Water Supply". The Ordinance defines "Pledged ]revenues" as (a) the Net Revenues of the System, plus (b) the net revenues of the City's drainage system, plus (c) any additional revenues, income or other resources relating to the System which are expected to be available on a regular periodic basis which in the future may, at the option of the City, be pledged to the payment of the Parity Bonds and any Additional Bonds issued hereafter (see "Selected Provisions of the Bond Ordinance" herein). The City currently has outstanding Parity Bonds as follor~vs: 5 Outstanding Dated Principal Date Amount Issue Description 6!111993 $ 385,aa0 Utility System Revenue Refunding Bonds, Taxable Series 1993-B 3/15/1998 1,44x,000 Utility System Revenue Bonds, Series 1998 7/15/1998 3,21x,x00 Utility System Revenue Refunding Bonds, Series 1998-A 8/1/1998 5,76x,000 Utility System Revenue Refunding Bands, Series 1998-B 4115120aa 14,61a,aax Utility System Revenue Bands, Series 2aaa-A 411512a0a 1,a8a,0ax Utility System Revenue Bands, Taxable Series 2xaa-B 4/15/2001 23,825,x00 Utility System Revenue Refunding and lmprovement Bands, Series 2x01 41112x02 47,180,000 Utility System Revenue Bonds, Series 20x2-A 41112xa2 3,4a5,aaa Utility System Revenue Bonds, Taxable Series 20x2-B 41112xx3 36,555,a0a Utility System Revenue Refunding and Improvement Bonds, Series :~xa3 91112aa4 23,865,aaa Utility System Revenue Refunding Bonds, Series 2aa4 5!15120x5 53,69a,aaa Utility System Revenue Refunding Bands, Series 2ax5 711512x06 8,21 a,aaa Utility System Revenue Bands, Series 2ax6 2/15/2007 41,795,aa0 Utility System Revenue Refunding Bonds, Series 2007 Total $ 265,a1a,0aa ~1} As of June 1, 20x7. The Bonds are not a charge upon any other income ar revenues of the City and shall never canstitnte an indebtedness ar pledge of the general credit ar taxing powers of the City. The Ordinance does not create a lien ar mortgage on the System, except the Pledged Revenues, and any judgment against the City may not be enforced by levy and execution against any property owned by the City. Special reference is made to "The Electric System" herein far a description of certain legal and regulatory changes that have affected, and are expected to further affect, the environment in which the City's electric utility system operates. PLEDGED REVENUES ...The payment of the Parity Bonds and any Additional Bonds and the interest thereon constitui~es a first lien upon the Pledged Revenues. TxE RESERVE FUND ...The Ordinance confirms the establishment of the "Reserve Fund" by the City and requires the City to maintain therein an amount of money and investments equal to the average annual principal and interest requirements of all the outstanding Parity Bonds and Additional Bonds (the "Required Reserve Amaunt"}; provided, however, that the Required Reserve Amount shall never be less than $3,00x,axx if the maximum annual principal and interest requirements on all outstanding Parity Bonds and Additional Bonds exceeds $3,000,000. Immediately after the issuance and delivery of the Bonds there shall be deposited to the credit of the Reserve Fund, if and to the extent necessary, from the proceeds oi' tN+e sale of the Bonds, an amount of money sufficient to cause the Reserve Fund to contain an aggregate amount of money ~u~dl investments equal to the Required Reserve Amount far all then outstanding Parity Bonds, After the delivery of any future Addiitional Bonds the City shall cause the Reserve Fund to be increased, if and to the extent necessary, so that the Reserve Fund wall contain an amount of money and investments equal to the Required Reserve Amaunt. Any increase in the Required Reser~~e Amount may be funded from Pledged Revenues, or from proceeds from the sale of any Additional Bonds, or any other availabble source or combination of sources. All or any part of the Required Reserve Amount not funded initially and immediately after the delivery of Additional Bonds shall be funded, within not mere than five years from the date of such delivery, by deposits of Pledged Revenues in approximately equal monthly installments on or before the 25th day of each month. If at any time after the funding of the Required Reserve Amount there is a depletion therein or the Reserve Fund otherwise holds less than the Required Reserve Amount, the Ordinance requires that the City commence making transfers of Pledged Revenues from the System Fund to the Reserve Fund monthly in an amount equal to U64th of the Required Reserve Amount, until the Reserve Fund is restored to the Required Reserve Amount. The Reserve Fund shall be used to pay the principal of and interest on any Parity Bonds or Additional Bonds when and to the extent the amounts in the Interest and Sinking Fund available for such payment are insufficient for such purpose, and may be used far the purpose of finally retiring the last of any Parity Bondls or Additional Bands. See "Selected Provisions of the Band Ordinance" herein. FLOW vF FUNDS ...The Ordinance confirms the creation of the "System Fund," the "Interest and Sinking Func1," the "Reserve Fund" and the "Extension and Improvement Fund," among others, and provides that all Gross Revenues be credited to the System Fund immediately upon receipt. The current expenses of operation and maintenance of the System are required to be paid from the Gross Revenues as a f rst charge from amounts in the System Fund. Before making the deposits ta~ the other funds described below, the City is required by the Ordinance to retain in the System Fund an amount at least equal to one-sixth of the amount budgeted for the then current fiscal year for the current operation and maintenance expenses of the System. Thereafter, the City is required to transfer Pledged Revenues in the System Fund to the funds described below and in the following order of priority: 6 First, to the Interest and Sinking Fund, on or before the 25th day of each month in approximately equal monthly payments, amounts sufficient, together with any other funds on hand therein, to pay all of the interest or principal and interest coming due, including with respect to any mandatory redemption requirements, on the Parity Bands and any Additional Bonds on the next interest payment date; Second, to the Reserve Fund, to fund the Required Reserve Requirement, as described above; and Third, to the Extension and Improvement Fund, an amount equal to 8% of the "Adjusted Gross Revenues of the System", which means the Grass Revenues of the System for each year after deducting fram the Gross Revenues an amount equal to the current expenses of operation and maintenance of the System for such year that are directly attributable to ~i) all fuel costs related to the production of electric energy by the City andlor (ii) the purchase of electric energy by the City. The Extension and Improvement Fund shall be. used far the purpose of paying the costs of improvements, enlargements, extensions, additions, replacements, or other capital expenditures related to the System, or far paying the costs of unexpected or extraordin~uy repairs or replacements of the System for which System funds are not available, or for paying unexpected or extraordinary expenses of operation and maintenance of the System far which System funds are not otherwise available, or far any other lawful purpose. Subject to making the required deposits to the credit of the various Funds when and as required by the Ordinance or any ordinance authorizing the issuance of Additional Bonds, any surplus Pledged Revenues may be used by the City far any lawful purpose. See "Selected Provisions of the Band Ordinance" herein. RATES ...The Ordinance requires the City to establish, maintain and collect, such rates, charges and fees for the use and availability of the System that are at all times in amounts necessary (1) to produce Gross Revenues sufficient, tage~rher with any other "Pledged Revenues" (which consist of the Net Revenues and any additional revenues, income, or other resources which are expected to be available to the City on a regular periodic basis that in the future, at the option of the City, may be pledged to the payment of the Parity Bonds and any Additional Bonds}, to pay alI current operation and maintenance expenses of the System, and (2} to produce an amount of Pledged Revenues during each fiscal year at least equal to the greater of 1.25 times the average annual principal and interest requirements of all then outstanding Parity Bonds and Additional Bonds or 1.;t5 times the succeeding fiscal year's principal and interest requirements of all then outstanding Parity Bonds and Additional Bonds. The City has established certain accounts (the "rate stabilization funds"} within each of its water, sewer and electric light enterprise funds to serve as operating reserves #hat may be drawn upon from time to time in lieu of increasing utility rates. In accordance with the terms of the Ordinance, the City Council may pledge all or part of the amounts in one ar more of the rate stabilization funds to secure the Parity Bands, in which event, such pledged amounts will became "Pledged Revenues" that may be taken. into account by the City for purposes. of satisfying the foregoing rate covenant. See "Selected Provisions of the Band Ordinance" herein. QPTIONAL REDEMPTION ...The City reserves the right, at its option, to redeem Bonds having stated maturities on and after December 1, 2418, in whole or in part in principal amounts of $5,444 or any integral multiple thereof, on December 1, 2417, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Bands are to be redeemed, the City may select the maturities of Bonds to be redeemed. If less than all the Bonds of any maturity are to be redeemed, the Paying AgentlRegistrar (or DTC while the Bonds are in Book-Entry-Only form) shall determine by l~at the Bonds, or portions thereof, within such maturity to be redeemed. If a Band (or any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been given, such Bond (or the principal amount thereof to be redeemed) shall became due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying AgentlRegistrar onthe redemption date. NOTICE OF REDEMPTION ...Nat less than 34 days prior to a redemptian date for the Bonds, the City shall caus~~e a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bands to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration banks of the Paying AgentlRegistrar at the close of business an the business day next preceding the date of mailing such notice. ANY NOTICE SO MAILE1r► SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERI~D OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE BONDS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY BOND OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCK BOND OR PORTION THEREOF SHALL CEASE TO ACCRUE. ADDITIONAL BONDS ...Subject to satisfying certain conditions far the issuance of parity bonds, the City has reserved the right in the Ordinance to issue Additional Bonds from time to time. Any such Additional Bands will be secured on a parity with the pledge of the Pledged Revenues that secures the outstanding Parity Bonds including the Bonds. Among the conditions required by the Ordinance far the issuance of Additional Bonds, is the delivery to the City of a written certifcation fram an independent certified public accountant to the effect that, in his or its opinion, during either the next preceding fiscal year, car any twelve consecutive calendar month period out of the 18-month period immediately preceding the month in which the ordinance authorizing the issuance of the then proposed Additional Bands is passed, the Pledged Revenues were at least (i)1.25 times an 7 amount equal to the average annual principal and interest requirements, and (ii} l.lU times an amount equal to t:he principal and interest requirements during the fiscal year during which such requirements are scheduled to be the greatest, of ,all Parity Bonds and Additional Bonds which are scheduled to be outstanding oiler the delivery of the then proposed Additional Bonds. In calculating the amount of Pledged Revenues for this purpose, if there has been any increase in the rates or charges for services of the System which is then in effect, but which was not in effect during all or any part of the entire period for which the Pledged Revenues are being calculated (hereinafter referred to as the "entire period") then the certified public accountant, or in lieu of the certified public accountant a firm of consulting engineers, may determine and certify the amount of Pledged Reve~~ues as being the total of (i) the actual Pledged Revenues far the entire period, plus (ii} a sum equal to the amount by which th.e actual billings to customers of the System during the entire period would have been increased if such increased rates or charge, had been in effect during the entire period. Reference is made to "Selected Provisions of the Bond Ordinance" for further requiirements with respect to the issuance of Additional Bonds. AMENDMENT OF THE QRDINANCE ...The Ordinance provides that the holders or owners of Parity Bonds and Additional Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding Parity Bonds and Additional Bonds shall have the right from time to time to approve any amendment to the Ordinance which may be deemed necessary or desirable by the City, provided, however, that without the consent of all holders or owners of Parity Bonds and Additional Bonds, no amendment may be made that would: (1} make any change in the maturity of the outstanding Parity Bonds or Additional Bonds; (2) reduce the rate of interest borne by any of the outstanding Parity Bonds or Additional Bonds; (3} reduce the ~unount of the principal payable on the outstanding Parity Bonds or Additional Bonds; (4) modify the terms of payment of principal of or interest on the outstanding Parity Bonds or Additional Bands, or impose any conditions with respect to such payment; (5} affect the rights of the holders or owners of less than all of the Parity Bonds and Additional Bonds then outstanding; change the minimum percentage of the principal amount of Parity Bonds and Additional Bands necessary for consent to such amendment. For a description of the notice requirements and other provisions pertaining to the amendment of the Ordinance, see "Selected Provisions of the Bond Ordinance." DEFEASANCE OE BONDS ...The Ordinance provides for the defeasance of the Bands when payment of the principal of and premium, if any, on Bonds, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, redemption, or otherwise}, is provided by irrevocably depositing with a paying agent, intrust (I) money sufficient to make such payment or (2) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest m such amounts and at such times to insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation and expenses of the paying agent for the :respective series of Bonds. The Ordinance provides that "Defeasance Securities" means (I}direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (2} noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally ;;uaranteed or insured by the agency or instrumentality and that are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (3} noncallable obligations of a state or an agency or a county, m~~nicipality, or other political subdivision of a state that have been refunded and that are rated as to investment quality by a nationally recognized investment rating firm not less than AAA ar its equivalent. The City has additionally reserved the right, subject to satisfying the requirements of (1) and (2} above, to substitute other Defeasance Securities for the Defeasance Securities originally deposited, to reinvest the uninvested moneys an deposit for such defeasance and to withdraw for the bf~nefit of the City moneys in excess of the amount required for such defeasance. Upon such deposit as described above, such defeased Bonds shall no longer be regarded to be outstanding obligations payable from Pledged Revenues, but will be payable only from the funds and defeasance securities deposited in escrow and will not be considered debt of the City for purposes of applying any limitation on the City's ability to issue revenue obligations or for any other purpose. After firm banking and financial arrangements far the discharge and final payment or redemption of the Bonds have been made as described above, all rights of the City to initiate proceedings to call the Bonds for redemption or take any other action amending the terms of the Bonds are extinguished; provided, however, that the right to call the Bonds for redemption is not extinguished if the City: (i) in the proceedings providing far the firm banking and financial arrangements, expressly reserves the right to call the Bonds for redemption; (ii) gives notice of the reservation of that right to the owners of the Bands immediately following the making of the firm banking and financial arrangements; (iii) directs that notice of the reservation be included in any redemption notices that it authorize; and (iv) at the time of the redemption, satisfies the conditions of the preceding paragraph with respect to such Bonds .as 'though it was being defeased at the time of the exercise of the option to redeem the Bonds, after taking the redemption into account in determining the sufficiency of the provisions made for the payment of the Bonds. Bvox ENTRY-ONCI~SYsrE~r ...This section describes haw ownership of the Bonds is to be transferred and how the principle of, premium, if any, and interest on the Bands are to be paid to and accredited by DTC while the Bonds are registered in its nominee name, The information in this section concerning DTC and the Baak-Entry-only System has been providf~d by DTC far use in disclosure documents such as this Official Statement. The City believes the source of such information to b+~ reliable, but takes no responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurance that ~I~ DTC will distribute payments of debt service on t`he Bonds, or redemption or other notices, to DTC Participants, ~2~ DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Bonds, or redemption or other notices, to the Benef cial Owlzers, or that they will da so on a timely basis, or (3}DTC will serve and act in the manner described in this Official Statement. ~nhe current rules 8 applicable to DTC are an f le with the Securities and exchange Commission, and the current prncedures of DTC to be followed in dealing with DTC Participants are nn f le with DTC. DTC will act as securities depository for the Bands. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee}, One fully registered certificate will be issued far each maturity of the Bonds in the aggregate principal amount of each such maturity and will be deposited with DTC. The Depositary Trust Company ("DTC"}, New York, New York, will act as securities depository for the Bonds. Thee Bonds will be issued as fully-registered securities registered in the name of Cede B~ Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered security certificate will be issued for the Bonds in the aggregate principal amount thereof and will be deposited with DTC. DTC, the world's largest depository, is alimited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instrument from over li~U countries that DTC's participants ("Direct Participants"} deposit with DTC. DTC also facilitates the post-trade settlement a,mang Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"}. DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC}, as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access tv the DTC system is also available to others such as both U.S. ~tnd non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"}. DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.o~. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bands on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Benef vial Owners are expected to receive written canf rmations providing details of the transactions, as well as periodic statements of their holdings, from the Director Indirect Participant through which the Beneficial Owners entered into the transaction. Transfers of ownership interest in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system far the Bonds is discontinued. Ta facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records refiect only the identity of the Direct Participant to whose account such Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Benef vial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to the Bands unless authorized by a Direct 1?articipant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the County as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Particip~~nts to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy}. Redemption proceeds and principal and interest payments on the Bonds will be made to DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the City o:r the Paying AgentlRegistrar on payable dates in accordance with their respective holdings shown on DTC's records. :Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as in the case with securities held for the accounts of customers in bearer farm or registered in "street name," and will be the responsibility of such 9 Participant and not of DTC, the Paying Agent ar the City, subject to any statutory or regulatory requirements as ma;y be in effect from time to time. Payment of redemption proceeds and principal and interest to DTC is the respansibili~ty of the City, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Benef vial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depositary with respect to the Bonds at any time by giving reasonable notice to the City and the Paying AgentlRegistrar. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certif sates are required tv be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through DTC (ar a successor securitie.~ depository). In that event, Bonds will be printed and delivered. Use of Certain Terms in Other Sections of this O~cial Statement. In reading this Official Statement it should be ur~~derstood that while the Bonds are in the Book-Entry-Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Bonds, but (i) all rights of ownership must be exercised through DTC and the Book-Entry-Only System, and (ii} except as described above, notices that acre to be given to registered owners under the Order will be given only to DTC. Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not gua~~anteed as to accuracy or completeness by, and is not to be construed as a representation by the City, the Financial Advisor ar the Underwriters. Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should lie understood that while the Bonds are in the Book-Entry-Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Bonds, but (i)~ all rights of ownership must be exercised through DTC and the Book-Entry-Only System, and iii} except as described above., notices that are to be given to registered owners under the Ordinance will be given only to DTC. Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the City or the Financial Advisor. Effect of Termination of Book-Entry-Only System. In the event the Book-Entry-Only System with respect to the Bonds is discontinued by DTC, or the use of the Baak-Entry-Only System with respect to the Bonds is discontinued by ~rhe City, printed securities certif sates will be issued to the respective holders of the Bonds, as the case may be, and the respective Bands will be subject to transfer, exchange, and registration provisions as set forth in the Ordinance, summarized under "The Bonds -Transfer, Exchange, and Registration" below. PAYING AGENTIREGISTRAR ...The initial Paying AgentlRegistrar is The Bank of New York Trust Company, N.A., Dallas, Texas. In the Ordinance, the City retains the right to replace the Paying AgentlRegistrar. The City covenants to maintain and provide a Paying AgentlRegistrar at all times until the Bands are duly paid and any successor Paying AgentlRegistrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying AgentlRegistrar for the Bonds. Upon any change in the Paying AgentlRegistrar for the Bonds, the City agrees to promptly cause a written notice thereof to be sent to each registered owner afthe Bonds by United States mail, first class, postage prepaid, which notice shall also give the address afthe new Paying AgentlRegistrar. Interest on the Bonds shall be paid to the registered owners appearing on the registration books of the Paying AgeiitlRegistrar at the close of business on the Record Date (defined below}, and such interest shall be paid (I} by check sent United States Mail, f rst class postage prepaid to the address of the registered owner recorded in the registration books of the Paying A~,entlRegistrar or (ii} by such other method, acceptable to the Paying AgentlRegistrar requested by, and at the risk and expense af, the registered owner. Principe! of the Bonds will be paid to the registered owner at their stated maturity or earlier redemption upon presentation to designated paymentJtransferofflce of the Paying AgentlRegistrar. If the date for the payment at the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal holiday or a day when banking institutions in the city where the designated paymentltransfer office of the Paying AgentlRegistrar is located are authorized to close, then the date for such payment shall be the next succeeding day which is not such a day, and payment on such date shall have the same force and effect as if made an the date payment was due. TRANSFI;JR, EXCHANGE AND REGISTRATION In the event the Book-Entry-Only System should be discontinued, printed certificates will be deliver to the registered owners and thereafter the Bonds may be transferred and exchanged on the registration books of the Paying AgentlRegistrar only upon presentation and surrender of such printed certificates to the Paying AgentlRegistrar and such transferor exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer.. Bonds may be assigned by the execution of an assignment form an the respective Bonds or by other instrument of transfer ar►d assignment acceptable to the Paying AgentlRegistrar. New Bonds will be delivered by the Paying AgentlRegistrar, in lieu of the Bonds 10 being transferred ar exchanged, at the designated office of the Paying AgentlRegistrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Bonds to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying AgentlRegistrar. New Bands registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate designated amount as the Bonds surrendered for exchange or transfer. See "The Bonds -Book-Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability afthe Bonds. Neither the City nor the Paying AgentlRegistrar shall be required to transfer or exchange any Band called for redemption, in whole or in past, within ~5 days of the date fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Bond. RECURD DATE FOR INTEREST PAYME1vT ...The record date ("Record Date") for the interest payable on the Bands on any interest payment date means the 15d' day of the preceding month. In the event of anon-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date"} will be established by the Paying AgentlRegistrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be 1 S days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying AgentlRegistrar at the close of business on the last business day next preceding the date of mailing of such notice. BUKDHULDERS REMEDIES ...The Ordinance does not specify events of default with respect to the Bonds. If the City defaults in the payment of principal, interest, or redemption price on the Bonds when due, ar the City defaults in the observation or performance of any other covenants, conditions, or obligations set forth in the Ordinance, the registered owners may seek a writ of mandamus to compel the City ar City officials to carry out the legally imposed duties with respect to the Bonds if there is no other available remedy at law to compel performance of the Bonds or the Ordinance and the City's obligations are not uncertain or disputed. The issuance of a writ of mandamus is controlled by equitable principles, so rests with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Bonds in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year, The Ordinance does not provide for the appointment of a trustee to represent the interest of the owners of the Bonds, upon any failure of the City to perform in accordance with the terms of the Ordinance, or upon any other condition and accordingly all legal actions to enforce such remedies would have to be undertaken at the initiative of, and be financed by, the registered owners. On June 30, 2006, the Texas Supreme Court ruled in . Tooke v. City of It'Iexia, 197 S.W. 3rd 325 (Tex. 2006), that a waiver of sovereign immunity in a contractual dispute must be provided far by statute in "clear and unambiguous" language. Because it is unclear whether the Texas legislature has effectively waived the City's sovereign immunity from a suit for money damages, owners of the Bonds may not be able to bring such a suit against the City for breach of the Bonds, or the Ordinance covenants. Even if a judgment against the City could be obtained, it could not be enforced by direct levy and execution against the City's property. Furthermore, the City is eligible 'to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Cade ("Chapter 9"}. Although Chapter 9 provides far the recognition of a security interest represented by a specifically pledged source of revenues, such provision is subject to judicial construction. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or owners of the Bonds which has sought protection under Chapter 9. Therefore, should the City avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of o#her federal or state court); and the Bankruptcy Cade provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding br°ought before it. The opinion of Bond Counsel will note that all opinions relative to the enforceability of the Bonds are qualified. with respect to the customary rights of debtors relative to their creditors and by general principles of equity which permit the exercise of judicial discretion. 11 MANAGEMENT OF THE SYSTEM The System includes the City's entire existing electric, light and power system and the existing waterworks and sewer system, together with all future extensions, improvements, enlargements and additions thereto. The Public Utilities Board By City Charter, there has been created a Public Utilities Board the "Board"} composed of seven members, appointed by the City Council with the City Manager and the Assistant City Manager of Utilities serving as ex-officio, non-voting members of the Board. The Board serves the Department of Utilities as a consulting and advisory board. The duties of the Board are summarized as follows: 1. Review of the Annual Utility Operating Budget and 5-year Capital Improvements Plan, and the transmission thereof to the City Council. 2. Review of recommended: a. expansion of, additions to, betterment of, or extensions to the System; b. incurring of debt; c. issuance of bonds and d. establishment of rates and charges. All actions of the Board are subject to final approval of the City Council. 1l~fanagement of the System ...The System is managed by the Assistant City Manager of Utilities, who is responsible to the City Manager. The System is organized into three major services, Electric, Water and Wastewater, and consists of approximately 308 employees. In addition, within Utility Administration, there are various administrative staff, customer service, enerlry management, and financial administration responsibilities. The Electric Utility is composed of seven main divisions: i. Electric Production, 2. Electric Distribution, 3. Electric Substations, 4, Electric Engineering, 5. Electric Metering, b. Electric Administration, and 7. Electric Marketing. The WaterlWastewaterUtiiitiesare composed of five main divisions, each of which is headed by a Division Manager. ~~hey include: 1. Water Production, WaterlWastewaterFieid Services, 3. Wastewater Treatment Plant, 4. Municipal LabaratveylEnvironmental Services, 5. Drainage, and G. Engineering Services. The System utilizes the services of the City's Finance Department for accounting, purchasing and warehousing. rChe System also utilizes various administrative departments of the City for its personnel, and data processing needs. UTILITY RATES It is the City's policy to review electric, water and wastewater rates an an annual basis to assure adequacy and equity. Independent consultants are generally used every 5th year, with City staff completing the work in house during the interim. Rate recommendatiansore submitted by the staff to the Board for review and approval, which then forwards a recommendation to the City Council for f nal approval. To date, the City Council has approved all rate recommendations ofthe Board. 12 THE ELECTRIC SYSTEM INTRQDUCTIQN ...The City has owned and operated its electric light and power system (the "Electric System") since 1905. In order to secure access to a long-term baseload electric generating facility, the Cities of Bryan, Denton, Garland and Greenville, Texas created the Texas Municipal Power Agency ("TMPA"} in 1975. TMPA is a joint power agency without taxing power, and a separate municipal corporation and political subdivision of the State that operates in accordance with Chapter 163, Texas Utilities Cade, as amended. (See "The Electric System -The TMPA Power Sale Agreement" below and "Appendix B - Description of Senate Bi117 and the Texas Municipal Power Agency -Texas Municipal Power Agency."} TMl?A owns the Gibbons Creek Steam Electric Station ("Gibbons Creek"), acoal-fired generating plant located in Grimes County, ~Cexas, which has a net generating capacity of 462 megawatts ("MW"}. The City's contractual right to TMPA's generatia~n represents approximately 98 MW, or approximately 26% of the City's projected 2006 peak system-wide demand. The City's rights and obligations relative to TMPA are set forth in an agreement (the "TMPA Agreement"}, dated as of September 1, 1976, between TMPA and the cities of Bryan, Denton, Garland and Greenville (collectively, the "Member Cities"). In June 2001, the City sold its uneconomical generating units, having a capacity of 17$ MW, and entered into afive-year power purchase agreement (the " 2001 Power Purchase Agreement") with PG&E Energy Trading -Power, L.P. ("PG&E") the agreement was subsequently assigned by PG&E to Constellation Power Source, Inc. Effective November 1, 2004, Constellation Power Source, Inc. became known as Constellation Energy Commodities Group, Inc. ("Constellation Commodities Group"). The 2001 Power Purchase Agreement expired on June 29, 2006.On May 16, 2006, the City Council approved a new 5 year agreement with {constellation Commodities Group (the "2006 Power Purchase Agreement"), the terns of which begins vn June 34, 2006 and expires on June 30, 2011 unless terminated prior to that date as permitted under certain exceptional circumstances set forth in the 2006 Power Purchase Agreement. See "The Electric System -Electric System Challenges and Responses -Power Purchase Agreements." The Electric System, like other municipal electric systems in the State, is presently functioning as a traditional electric utility, supplying all aspects of electric service to its customers, within an electric system structure that has largely been unbundled and deregulated by the fundamental changes to the system of electric utility regulation in the State brought about by the enactment of Senate Bill 7 ("SB 7") by the Texas Legislature (the "Legislature") in 1999, and, in addition, by subsequent regulatory actions. See "The Electric System -The New Nodal Design Rine". As further described below, SB 7 provides for open competition in the provision of retail electric service in the State, which competition commenced on January 1, 2002 in the part of the State that is within the service area of the Electric Reliability Council of Texas ("ERGOT"). The City is located in the ER.C~T service area. See "The Electric System -Texas Deregulation Structure, Status and Issues -ERGOT." Municipally-owned utilities ("MOUs"}, like the Electric System, are not required to participate in the competitive retail market, although they may "opt in" to retail electric competition, To date, no MGU in ERC4T has opted into competition, and under the statutory schemE, of SB 7 any decision by a MOU to opt in would be irrevocable. The City Council tv date has decided not to open the City to retail electric competition based on various technical and f nancial analyses. The most recent comprehensive assessment of the City's options with respect to retail electric competition was made in January 2004. In that review, management of the Electric System ("Electric System Management") reported to the City Council and the Board, identifying several conceptual options available to the City should it decide to apt in to retail competition, including continuing to provide the current services in a competitive environment or converting the Electric System into a transmission and distribution utility, and discontinuing service as a retail provider of energy. The issues surrounding the opt in decision remain the same as Chase identified in the 2004 report. The report described issues that would need to be addressed by the City Council in the event that it or a future Council should be disposed toward opting in to retail competition; certain of the issues would affect all options available to the City, while other issues would apply only in selected scenarios, The report identified a number of risks and uncertainties associated with opting in to retail electric deregulation, but concl~~ded that the largest single issue is the City's ability to pay its TMPA obligations. The City's TMPA contract requires each Member City to approve certain changes affecting the consortium, and the City is contractually obligated to pay its portion of TMPA fixed costs through at least 2018, which provides the prospect of potentially large "stranded costs" for the City (see "The Electric System - The TMPA Power Sale Agreement"). Other issues identified in the report include a recommendation for reduction of fund transfers to the General Fund of the City, which has been implemented by the City. The transfers are allowed by the City Charter to be made by the Electric System (see "The Electric System - Contributions to the City of Denton"}, tither factor, noted in the report include additional costs that would be borne by the City in connection with technology upgrades needed to accommodate multiple retail energy providers if the Electric System were to opt to remain as the sole transmission and distribution utility in the City, as is permitted by SB 7. While SB 7 generally deregulates the retail sale of energy in the State, SB 7 maintains the existing regulated structure with respect to electric transmission and distribution services in the State. As discussed below under "The Electric System -The New Nadal Design Rule," on April 5, 2006, the Public Utility of Commission of Texas (the "PUG"} ordered the adoption of a new, nodal wholesale market design within ERC4T based on the theory of locational marginal pricing of energy. The operation of the nodal system was ordered by the PUC to begin on January 1, 2009, or as soon thereafter as technically possible, through implementation of aset of ERC4T-proposed protocols (the "Nodal Design Rule"}, ERGOT is presently projecting 1;hat the nodal protocols can be implemented by January 1, 2009. However, since the ERGOT nodal system design differs from nodal protocols used elsewhere, Electric System Management is of the view that, due to a number of challenges, including that ERC4T will require a large number of additional skilled staff to create and implement the necessary complex software system required by the Texas nodal system, there is some risk that this date will not be met. The Nodal Design Rule will dramatically alter the wholesale market design in ERGOT. However, for the reasons discussed below, Electric System Management is of the view that the Electric System is positioned to continue to participate in the distribution of energy within the City's service area, which in 13 recent years has experienced strong growth trends, particularly with respect to energy sales to the City's primarily residential customer base. See "Appendix B -Description of Senate Bill 7 and the Texas Municipal Power Agency -Texas Municipal Power Agency -Senate Bill 7, TMPA and the Member Cities" and "Appendix B -Description of Senate Bill 7 and the Texas Municipal Power Agency -Senate Bi117." FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY ...The electric utility industry in the State in general hoc, been, and in the future may be, affected by a number of factors that could impact the financial condition and competitiveness ofthe Electric System. Such factors include: • prevailing governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission ("FERC"}, the Environmental Protection Agency, the Texas Commission on Environmental Quality ~"TCEQ"}, the PUC and ERCOT, with respect to: - wholesale market design, including allocation of transmission congestion costs; - transmission cost rate structure; - purchased power and recovery of investments; - acquisitions and disposal of assets and facilities; - operation and construction of facilities; - present or prospective wholesale and retail competition; - changes in and compliance with environmental and safety laws and policies; and - developments in Federal law with respect to the ability of the City and TMPA to finance and operate facilities and make energy sales in a manner that permits them to f nance facilities with, and honor existing covenants with respect to, tax-exempt debt; • continued implementation of the legislation passed during the 1999, 2001, 2003 and 2005 sessia~ns of the Texas Legislature to restructure the electric utility industry in Texas or any amendments that may be er~acted to that legislation in future Texas legislative sessions; • power costs and availability, including the continued development, and financial stability of owners of, merchant power plants in the State; • weather conditions and other natural phenomena, and acts of sabotage, wars or terrorist activities; • unanticipated population growth or decline, and changes in market demand and demographic pattern`,; • changes in business strategy, development plans or vendor relationships; • competition for retail and wholesale customers; • access to adequate and reliable transmission facilities to meet changing demands; • pricing and transportation of coal, natural gas and other commodities that may affect the cost of er~er~;y sold to the City by TMPA and others; • unanticipated changes in interest rates, commodity prices or rates of inflation; • unanticipated changes in operating expenses and capital expenditures; • commercial bank market and capital market conditions; • competition for new energy development and other business opportunities; • legal and administrative proceedings and settlements; • inability of the various counterparties to meet their obligations with respect to the Electric 'System's power purchase arrangements; • significant changes in the Electric System's relationship with its employees, including the availabiilit;y of qualif ed personnel; • significant changes in critical accounting policies material to the Electric System; and • actions of rating agencies. The City cannot fully predict what effects such factors will have on the operations and financial condition of the Electri{~ System, but the effects could be significant. The discussion of such factors herein does not purport to be comprehensive or defit~itive, and these matters are subject to change subsequent to the date hereof. Extensive information on the electric utility industry is, and will be, available From the legislative and regulatory bodies and other sources in the public domain, and potential purchasers of the Bonds should obtain and review such information. The table below sets forth certain operating and financial data with respect to the Electric System for each of the five most recently completed fiscal years. 14 TABLE 1-HISTORICAL OPERATING AND FINANCIAL DATA The table below sets forth certain operating and f nancial data with respect to the Electric System for each of the five most recently completed fiscal years. Average Number of Monthly Year Ended September 30, Customers by Service Classification 2006 2005 2004 2003 2002 Residential 37,148 36,699 34,635 32,478 31,974 Commercial and Industrial 4,490 4,574 4,269 4,120 4,083 Other 548 573 603 459 534 Total 42.,186 41,846 39,507 37,057 36,591 Annual Megawatt Hours Sales by Service Classification Residential 478,791 443,400 411,893 414,411 396,546 Commercial and Industrial 770,098 735,225 685,470 654,257 636,347 Offer 39,284 39,873 38,787 38,910 39 5ubtntal 1,288,173 1,218,498 1,136,150 1,107,578 1,071,923 Sales for Resale - - - - Total Sales 1,288,173 1,218,498 1,136,150 1,107,578 1,071,923 Loss and Unaccounted 54,442 62,286 54,885 57,561 50,030 Total MW to System 1,342,615 1,280,784 1,191,035 1,165,139 1,121,953 Lass and Unaccounted 4.05% 4.86% 4,61% 4.94% 4,46% Annual Revenue by Service Classification in Thousands) ct~ Residential $ 60,765 $ 47,717 $ 41,011 $ 38,746 $ 33,670 Commercial and Industrial 83,878 65,116 55,342 48,746 43,128 Other 6,252 5,313 4,816 5,904 4,039 Total $ 150,895 $ 118,147 $ 101,169 $ 93,395 80,837 Analysis of Electric Billing Residential Customers Avg. Monthly Bill per Customer $ 139.85 $ 107.62 $ 95.84 $ 99.01 $ 87.81 Avg. Monthly kWh per Customer 1,073 1,003 986 1,075 1,038 Avg. Monthly Cents per kWh 13.04 10.73 9.77 9.21 8.46 Commercial and Industrial Customers Avg. Monthly Bill per Customer $ 1,587.47 $ 1,191.63 $ 1,083.70 $ 997.83 $ 872.68 Avg. Monthly kWh per Customer 14,306 13,480 13,346 13,269 13,025 Avg. Monthly Cents per kWh 11.10 8.84 8.12 7.52 6.70 Capacity and Energy Mix (rounded to nearest MW}Capacity Owned Capacity (MW} - - - - - Firm Purchase (MW) -TMPA 98 98 98 98 98 Firm Purchase (MW) -Other 248 242 236 230 227 Total 346 340 334 328 325 Annual Peak Demand 319 299 277 286 266 Energy Owned Capacity (MWH} - - - - - Firm Purchase (MWH} -TMPA 759,493 731,647 672,531 722,401 672,087 Firm Purchase (MWH} -Other 583,123 549,137 518,504 442,738 449,866 Total 1,342,616 1,280,784 1,191,035 1,165,139 1,121,953 (1) Changes in revenue from period to period is attributable in large part to change in the cost of fuel during the respective period, and the resulting changes made by the City in the energy cost adjustment ~"ECA") factor of the System's electric rate schedules. The ECA is adjusted quarterly to recover the cost associated with purchased power. The ECA is a pass through of fuel cost to Electric System Customers. The average ECAs far fiscal years 2Q42, 20Q3, 2Q04, 2QQ5, and 2QQ6 were $Q.Q2625IKWh, $O.Q348IKWh, $Q.Q3931KWh, $Q.Q465II~Wh, and $Q.Q6881KWh, respectively. 15 TABLE ~-CURRENT ELECTRIC RATE SCHEDULES Approximately 97% of the Electric System customers are billed under the rate schedules summarized below. Special rate schedules are available for customers with unique load curves such as city street lighting, etc. Residential Service Ra#e (Effective October 2006} Applicable to any customer for all electric service used far residential purposes in an individual private dwelling or an individually metered apartment, supplied at one point of delivery and measured through one meter. This rate is not applicable to resale service in any event, nor to temporary, standby, or supplementary service. Facility Charge Single-Phase $ 8.251 bill Three-Phase $16.50 I bill Ener Char a -Winter Rates First 600 kWH 5.70¢ 1 kWH Additional kWH 3.79¢ 1 kWH Ener Char a -Summer Rates All kWH 5.70¢ 1 kWH Energy Cost Adjustment See Schedule ECA below. General Service Lame Effective October 1, 2006) The General Service Large Rate (GSL} is applicable to any commercial or industrial customer having a minimum actual demand of 250 KVA or 225 kW far all electric service supplied at one point of delivery and measured through one meter. Customers with an average actual demand equal to or greater than 200 kVA ar 180 kW during the previous twelve month period may be allowed service under this rate, subject to the minimum billing provision. Customers other than commercial and i~~dustrial may be allowed service under this rate, subject to the minimum billing provision. Customers who elect to discantin~ae service under this rate are ineligible far service under this rate for 12 months. This rate is not applicable to resale service in an.y event, or to temporary, standby, or supplementary service. Facilit,~Charg_e $65.551 bill Demand Charge $ 9.331 kVA (Minimum of 250 kVA billed) Ener Char e er billin eriod First 20Q,OQ0 kWh 2.14¢ 1 kWh Additional kWh 1.21 ¢ 1 kWh EnergGast Adjustment ..See Schedule ECA below. Minimum Billing For each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: (1) The Facility Charge plus: ~2) The Demand Charge 16 General Service Medium (Effective October 1, 20x6) The General Service Medium ("GSM") rate is applicable to any commercial or industrial customer having a maxir~aum demand of at least 20 kW in any one of the twelve (12}previous months but less than 225 kW in each of the previous twelve (12) months for all electric service supplied at one point of delivery and measured through one meter. This rate is not applic~~ble to resale service in any event, or to temporary, standby, or supplementary service. Facili Char e Single-Phase $15.801 bill Three-Phase $ 21.101 bill Demand Charge $ 4.001 kW (All kW) Ener Char e er billin eriod First 6,000 kWh 4,43¢ 1 kWh Additional kWh 3.66¢ I kWh Ener~y Cost Adjustment See Schedule ECA below. Minimum Billing Far each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: (1) The Facility Charge plus: (2) The Demand Charge General Service Small (Effective October 1, 2006) The General Service Small (GSS} rate is applicable to any commercial or industrial customer having a maximum demand of less than 20 kW in each of the previous twelve (12) months far all electric service supplied atone point of delivery and measured through one meter, if demand in any month exceeds 20kW, billing will be made under the Rate Schedule GSM a.nd Customer must remain an the GSM rate for a minimum of twelve (12) billing periods. This rate is not applicable to resale service in any event, or to temporary, standby, or supplementary service. Facility Charge Single Phase $15.801 bill Three Phase $21.101 bill Ener Char a er billin eriod First 2,500 kWh 7.02¢ 1 kWh Additional kWh 3.67¢ l kWh Ener Cost Adjustment See Schedule ECA below. Minimum Billing For each billing period, the Customer shall be obligated to pay the fallowing charges as a minimum, whether ar not any energy was actually used; Single-Phase Facility Charge Three-Phase Facility Charge Ener~y Cost Adjustment (Effective October 1, 2006) The Energy Cost Adjustment rate is set by the Public Utilities Board. The ECA rate shall be reviewed an a monthly basis and adjusted as defined below to recover the variable cast of energy delivered to customers. Variable energy cost includes the variable cost of Texas Municipal Pvwer Agency (TMPA} energy (excluding the portion of TMPA's energy charge associated with fixed costs), the variable cast of purchased energy (excluding demand payments or fees far services), and fuel costs. 17 Ener Cost Ad ustment Balancln Account Cal,, gy - - 1 ' g ~,_culation The ECA Balancing Account shall be calculated using the following formula: ECA Balancing Account = (Actual plus Projected ECA revenue) - (Projected Energy Cost) Where: Projected Energy Cost = (Actual plus Projected cumulative cost of fuel} + (Actual plus Projected cumulative variable cost of TMPA energy} + (Actual plus Projected cumulative variable purchased energy cost). The Director of Electric Utilities or his~her designee shall calculate the ECA Balancing Accaunt balance monthly, In the event that the ECA Balancing Account balance calculated during the last month of each fiscal quarter (December,l4~arch, June, and September} is greater than or less than zero dollars ($0} by $540,444 or more during the next quarter, the Electric Utility Director ar hislller designee must recommend to the Public Utilities Board an ECA rate adjustment suff cient to rec;overlreturn any underlover collection, and maintain the Electric System in a financially sound position. The Public Utilities Board shall consider that recommendation and may adjust the ECA rate for the quarter immediately following as necessary to maintain the Electric System in a financially sound position. Energy Cost Adjustment Calculation ECA =[(Projected Energy Cost) + (ECA Balancing Accaunt)]I(ProjectedkWh sales) Energ CY ast Adjustment Charge The Energy Cost Adjustment Charge shall be based on actual kWh consumption during the billing period. Energy Cost Adjustment Charge = kWh x ECA rate Extraordin Circumstance ECA Rate Adjustment In the event that the ECA Balancing Account balance calculated for any month is greater than ar less than zero dollars ($4} by $2,544,444 or more during the next month, the Electric Utility Director or hisser designee shall recommend to the Public Utilities Board an ECA rate adjustment sufficient to recoverlreturn any underlover collection, and maintain the Electric System in a financially sound position, The Public Utilities Board shall consider that recommendation and may adjust the ECA rate far the month immediately fallowing with the goal of maintaining the Electric System in a financially sound position. Far FY 2446-47, the quarterly ECA rates have been set at $4.438CKWH for the first quarter, $4.435 for the se~~ond quarter, $0.432 far the third quarter and $0.032 far the fourth quarter. MANAGEMENT 0~" THE ELECTRIC SYSTEM ...The Board serves the City's Department of Utilities as a consulting and advisory board. All actions of the Board are subject to f nal approval of the City Council. The City's Director of Ele+~tric Utilities manages the Electric System with responsibility for wholesale power supply, distribution, engineering, substati.ans, marketing, metering, planning and safety operations. The staff of the Electric System includes approximately l I4 full-tirr~e rind part-time professional and administrative staff. THE ELECTRIC SYSTEM BUSINESS PLAN . , .Although there are many evolving issues concerning retail electric competition in the State and potential changes in the wholesale market design, for the early years of retail electric choice in the State, the Electric System identified and implemented a business strategy, which is described below, designed to penmil: the City to accommodate its long-term contractual commitment to purchase energy from TMPA, while positioning the Electric System for flexibility in the short to intermediate time frame, In accordance with its strategy, the City has taken a number of steps in connection with the changing market, including, in particular, the transactions described under "The Electric S~rstem -Electric System Challenges and Responses -Power Purchase Agreements." In anticipation of the changes effected by SB 7, the Electric System undertook an extensive examination +~f the financial implications of retail electric deregulation on its operations, under a variety of assumptions for the major components of its expenses. The analysis was made only for internal planning purposes, with an objective of designing a strategy to protect the Electric System from the volatility and potentially fluid nature of the deregulated market design while assuring that its capacity and energy supplies are competitive with the cost of those resources to other competitors operating in ERC~T. Although, recent regulatory developments, most notably the 2046 order of the PUC with respect to the Nodal Design Rule, were not specifically addressed in that analysis, the strategies it laid out have functioned as planned by placing the Electric System in a position to adjust to these changes with the same level of flexibility as deregulated electric providers. The City's strategies must continue to evolve with new market developments, including the impact on the City's electric customers of increased fossil fuel costs, and regulatory and legal developments that effect the operations of the Electric System and ERCOT market in general, thus the City 18 closely monitors Federal and State legislative and regulatory actions for the purpose of observing and influencing, to the extent possible, developments that could affect the operations of the Electric System and the options of the City relative t+~ the Electric System. The City has actively engaged as a stakeholder in connection with the New Nodal Design Rule, althvul;h during the PUC administrative hearings the City and other similarly-situated MOUs presented several proposed modifications to the Nodal Design Rule that were generally intended to preserve the benefits of existing MOU power supply agreements, h+~wever those modifications were rejected by the PUC in adopting its Apri15, 2006 order implementing the Nadal Design Rule. The current Electric System business plan generally provides that the electric facilities owned by the City will be transmission and distribution facilities, which provide a return on investment established by the City Council, whether or not the City Council elects to open the City to full retail electric service competition. This Electric System business plan was implemented in anticipation of the restructuring of the Texas energy market that occurred in 2QQ2 in accordance with SB 7. The business plan was implemented to provide the City with a relatively safe cash flow from the Electric System transmission anti distribution business, which is not subject to competition, even under a retail deregulation scenario, while reducing risk to the City of holding unneeded generation capacity in the event the City Council should elect to open the Electric System's service terr:itary to retail power competition. In addition, it is the City's policy to bond-f Hance transmission and distribution facilities, which permits the City to amortize the cost of such facilities over a period that approximates the useful life of the facilities. The Ciiry anticipates that it will continue to bond-finance such facilities using relatively low-cost tax-exempt debt, and the Bands are being issued to fund $7 million of system improvements for the Electric System. See "The Electric System -Capital Impravem.ent Plan and Additional Debt." Principal policy initiatives that have been pursued in light of the enactment of SB 7 include the City's sale off' its obsolete generating assets in 2001 and replacement of these assets with capacity and energy through power supply and management contracts. In entering into the 2001 Power Purchase Agreement and the 2006 Power Purchase Agreement (collectively with the 2001 Power Purchase Agreement, the "Power Purchase Agreements"}, the City has augmented the energy it is obligated to purchase from TMPA with energy purchased under the agreements, which has represented approximately 40% to 45% of the City's energy purchases. The 204b Power Purchase Agreement, together with the energy to be purchased und~,r the TMPA Agreement means that the City has established energy supply agreements for all of its requirements through dune of 2011, which will extend beyond the inauguration of the ERGOT protocols that constitute the Nodal Design Rule in 200'.x. The City anticipates that any increased cost far energy delivered from TMPA as a result of the Nodal Design Rule will be limited, at least in the short-term, due to (1}the fact that Gibbons Creek is presently located in the same "load zone" as the Electric System, and under the Nodal Design Rule charges to loads will be based on the average zone cost and (2} the Nadal Protocols adopted by the PUC provide far "preassigned congestion revenue rights" for delivery of Gibbons Creek energy to the City in irhe event the present zone configuration is changed in a way that places Gibbons Creek in a different zone from the Electric System, which could result in additional congestion costs being borne by the City for delivery of Gibbons Creek energy. Additionally, the 2006 Power Purchase Agreement provides the City greater certainty with respect to energy price and services for it;~ non-TMPA energy purchases during the transition from the existing zonal market design in ERGOT to the nodal market design, as compared to contracting for supplemental energy under a contract of shorter duration, purchasing a substantial portion of its supplemental energy needs in ERGOT spot market, or some combination thereof. The ERGOT wholesale market, from which all retail energy providers ("REPS") serving retail customers in ERGOT purchase their power, has evolved into a market that is priced largely on the marginal generation cost in ERGOT, which i.s natural gas fueled combined cycle generation, regardless of the generation source the energy is delivered from. The Electric System's ability to provide 55% to 60% of its customer's energy requirements at actual cast of service fram a coal fired plant, with the remaining power supply coming from the same wholesale market that serves deregulated REPS, has helped to offset ttie fixed cost associated with TMPA debt payments. This resource mix, combined with selective use of a rate stabilization fund, which was established in 199b (the "Rate Stabilization Fund"} to address the TMPA debt and competitive issues, have to date allowed the Electric System to maintain rates that are competitive with the rates available in the deregulated areas of ERGOT, even after base rate increases were implemented by the Electric System in January and October of 2005 (see "The Electric System -Electric System Challenges and Responses -Rate Study; Transmission Cast Filing and the Rate Stabilization Fund"}. Based on these considerations, Electric System Management does not expect that potential competitors would be able to substantially undercut the City's electric service rate to residential or commercial customers, although large load, industrial customers could be aggressively recruited by potential competitors. Presently, the City's customer base is only 11% industriallcc~mmercial in composition, based upon the number of customer accounts, although for the year ended September 30, 2006, appro~;imately b0% of the City's energy sales were generated by commercial and industrial customers. It is possible that competitors could use factors other than price in efforts to obtain such customers, which generally use significantly more energy than cio residential customers. ELECTRIC SYSTEM CHALLENGES AND RESPONSES ...The Electric System is committed to maintaining its electric rates at levels that are competitive with other retail electric providers. In the view of Electric System Management, among the mast significant challenges facing the Electric System are those arising from the City's long-term power purchase agreement with TMPA, under which the City is obligated to purchase or pay for 21.3% of TMPA's f xed costs, including debt service, as well as TMPA's variable costs relating to the energy that the City takes from TMPA. Depending upon the relative cost of natural gas and coal, and owing to the relatively high debt service requirements of TMPA, the total TMPA energy cost from time to time may be above market (i.e., a "stranded cost"}. Over the past four years, however, natural gas prices have generally ha+~ a sustained 19 upward trend, with increasingly extreme price volatility during the past two years, particularly as a result of the {disruption in supply caused by Hurricanes Katrina and Rita, and as a result TMPA's coal-generated energy costs have been amractive relative to gas-generated energy in the ERGOT market, particularly during times when demand for energy in ERGOT is~~ high. (See "Appendix B -Description of Senate Bill 7 and the Texas Municipal Power Agency -Texas Municipal Power Agency - Outstanding Debt.") In the event that the City should open its service area to retail competition, the Electric System could and likely would seek to recover any stranded costs represented by the TMPA power purchase agreement through. the use of the nonbypassable competitive transition charge that SB 7 allows municipal electric utilities to place an their distribution rates. Other significant challenges confronting the Electric System for the future include issues arising from the continued development of the wholesale and retail energy markets in the State, transmission constraints that may affect the cost of energy delivered to the Ciry, environmental compliance and political considerations that could affect the City's "opt in" decision in years to came. Electric System Management is of the view that the greatest potential impact on the Electric System from SB 7 could result from a decision by the City Council to participate in the competitive retail electric market. The potential effects of a decision to compete include the potential loss of customers to other REPS resulting in a reduced electric load, while the City's obligations under the TMPA Agreement would require the continuation of the City's take-or-pay obligations to TMPA. On the c►ther hand, if the City's retail rates and its ability to deliver dependable service are competitive with those of other REPS, the City may be successful in retaining existing customers should the City determine to open the City's service area to retail cornp~~tition. Any decision of the City Council to participate in full retail competition would also permit the Electric System to offer electric service to customers that are not presently within the certified service area of the City. A decision of the City Council not to compete may have other consequences, such as declines in economic development activity within the City due to the "protected" rate structure of the Electric System, if the rate structure is higher in cost than rates in areas that are open to competition. Under the Nodal Design Rule, the cost of energy will include charges assessed with respect to transmission constraints that affect power delivery within a particular load zone area. Therefore, the Nodal Design Rule is likely to result in lower energy delivery costs to utilities in load zones that have fewer transmission constraints than those located in more constrained areas. At present, the City is located in a load zone that is more highly constrained than same other zones in ERGOT. However, this level of transmission constraint has been reduced since the end of 2004 due to new transmission facility construction to serve North ~~exas. ERGOT has an organized statewide transmission system planning process that identifies such constraints and is capable ~of assuring that needed transmission facilities are built. The cost for such transmission is paid for an a statewide "postage st~~np" basis that assures funds are available for identified transmission projects needed to reduce congestion. The ERGOT transrn~ission planning process is continuing to pursue transmission projects designed to increase transmission delivery to DallaslForl; Vflorth area in which the Electric System is located, Measures Relating to TMPA. TMPA has reduced its operation and maintenance expenses in recent years through certain measures, including those described herein under "Appendix B -Description of Senate Bill 7 and the Texas Municipal Power Agency -Texas Municipal Power Agency," and Electric System Management believes that the variable costs of TMPA energy are likely to be competitive for the foreseeable future. However, the City's share of TMPA's fixed costs, particularly its debt service requirements, could result in the total cost of the City's purchased power from TMPA exceeding the cost ~of power that is marketed within ERGOT from time to time. (See "The Electric System -Litigation and Potential Litigation Concerning Cost of Energy Delivered by TMPA under the TMPA Agreement" for a discussion of the potential impact that the Nodal Design Rule could have on the cost of delivering energy to the respective Member Cities of TMPA, depending upon a va~~ieiy of factors, including whether the TMPA generating assets and each of the Member Cities continue to be included in a common load zone.) The price of natural gas, which fuels a significant part of the energy presently generated and marketed within ER~COT, will in large part determine the relative cost of TMPA energy to other marketed energy in both the wholesale and retail markets that the City views as benchmarks. As shown below under "Appendix B - Description of Senate Bi117 and the Texas Municipal Power Agency -Texas Municipal Power Agency -Outstanding Debt," the debt service vn TMPA's Revenue Boncis, as currently structured, increases from approximately $112 million in the fiscal year ending September 30, 2007 fan increase of approximately 35% over 2041 TMPA debt service requirements) to approximately $119 million in the year en+~ing September 30, 2010, which represents an approximately 5.$% increase from 2007 levels. As described under "The Electric System -The TMPA Power Sale Agreement," a series of amendments to the TMPA Agreement made during 1997 provide flexibility to the Electric System, while at the same time establishing a firm percentage c►bligation for the Electric System with respect to its TMPA payment obligations. Prior to the amendment of the TMPA Agreement, the City's proportion of TMPA costs fluctuated from year to year although it typically was between 21% and 23% of TMPA costs). Except as described below under "The TMPA Power Sale Agreement -The Debt Service Guarantee Percentage," under the 1997 amendments to the TMPA Agreement, the City has a fixed obligation to pay for 21.3% of TMPA's annual system costs, including the payment of TMPA's debt service requirements and operating and maintenance expenses and, in connection with such obligation, the City is entitled to receive the same percentage of TMPA's available output of energy. See "The Electric System -Litigation and Potential Litigation Concerning Cast of Energy Delivered by TMPA under the TMPA Agreement.") The 1997 amendments to the TMPA Agreement also repealed provisions of the TMPA Agreement that had. prohibited the Member Cities from purchasing energy from others or from constructing new generating facilities of their awn. P'ria~r to the 1997 amendments, the Member Cities were, in effect, acting as a consortium for all power production and off-system cnergy sales. As described below under "The Electric System -Electric System Challenges and Responses -The Power Purchase Agreements," the Electric System has taken advantage of this flexibility to act independently from the other Member Cities in car~nection with the sale in 2001 of obsolete generation units and by negotiating the Power Purchase Agreements. 20 As described below under "The Electric System -The TMPA Power Sale Agreement -Rebate of Excess Revenues to the Member Cities," the 1997 amendments also require that TMPA annually rebate to each Member City its proportionate share of TMPA revenues that are in excess of the amount needed by TMPA to pay its operating casts and to meet its debt service requirements. The City has deposited these rebates into a rate stabilization fund (the "Stabilization Fund"). Seethe discussion of the Stabilization Fund below. It should be noted, however, that the resolutions under which TMPA has issued its outstanding first lien revenue bends (the "TMPA Prior Lien Resolution") and certain other resolutions under which TMPA has issued subordinate lien debt (such resolutions, together with the TMPA Prior Lien Resolution are collectively, the "TMPA Resolution") contain covenants for the protection of its bondholders and the maintenance of the tax-exempt status of its debt, which could affect the means available to both TMPA and the Electric System in responding to developing market conditions. The 2006 Power Purchase A regiment.... On May 16, 2aa6, the City Council approved the 2aa6 Power Purchase Agreement with Constellation Commodities Group. Under the 2aa6 Power Purchase Agreement, Constellation Commodities Group is obligated to supply all the capacity and energy requirements of the City above those supplied from the City's existing purchased power agreement with TMPA (see "The Electric System -The TMPA Power Sale Agreement"}. All energy resources of the City during the term of the 2aa6 Power Purchase Agreement, including power supplied to the City under its TMPA power purchase agreement, will be delivered to the City in accordance with the terms of the 2aa6 Power Purchase Agreement at points of delivery located within the City. In addition to supplying the City's energy in excess of the City's TMPA allocation, the 2aa6 Power Purchase Agreement requires Constellation Commodities Group to perform certain ancillary services for the City that are necessary to permit the City to receive energy from the ERGOT power grid. Such services include scheduling and dispatch of energy. Given the nature of ERGOT as a closed grid with few interconnections with other power grids, energy supplied to the City by Constellation Commodities Group that are in excess of amounts supplied from the City's TMPA power supply agreement must be generated from other resources within ERGOT. The City is obligated to give Constellation Commodities Group notice each day of the City's energy requirements for the next day, which requirements are required to be supplied to the City from a combination of energy taken from TMPA and other energy supplied by Constellation Commodities Group. The cost to the City of energy provided to the City under the 2aa6 Power Purchase Agreement in excess of that delivered to the City from its TMPA resource is not fixed, but will vary Pram time to time depending upon a number of factors, including the cost of fuel and energy transmission and other factors, aithaugh the City has the right under the agreement to hedge its natural gas fuel requirements for energy supplied by Constellation Commodities Group. The obligations of Constellation Commodities Group under the 2aa6 Power Purchase Agreement have been secured andlar guaranteed within certain limits by Constellation Energy Group, Inc. and under certain extraordinary conditions described in the 2aa6 Power Purchase Agreement, the City is obligated to provide additional collateral tv secure its payment obligations. As is the case with the TMPA Agreement, the City's payment obligations under the 2aa6 Power Purchase Agreement will constitute an operating and maintenance expense of the System. Constellation Commodities Group is a Delaware corporation and awholly-owned subsidiary of Constellation Energy Group, Inc., the shares of which trade on the New York Stock Exchange. Constellation Commodities Group is the wholesale energy operation of Constellation Energy, a Fortune 2aa, integrated energy company. Constellation Commodities Group is the largest supplier of wholesale power in North America, with a business focus on energy sales to wholesale customers such as electric cv- aperatives, power marketers, municipalities and utilities. Constellation Energy provides energy generation through its affiliate, Constellation Generation Group, LLC ("Constellation Generation") which owns or co-owns 7$ electricity generating units across the U.S., with a generating capacity of approximately 8,7aa MWs. During 2aa6, Constellation Generation provided approximately 34,65a MW of peak load in the aggregate to distribution utilities, municipalities, commercial, industrial, and governmental customers; provided approximately 355,aaa million British Thermal Units ("MMbtu") of natural gas tv commercial, industrial, and governmental customers; delivered 26a million tons of coal to international and domestic third-party customers and to its awn fleet; and managed approximately 8,6$a MW of generation capacity as of December 31, 2aa6. In December 2aa6, Constellation Generation sold its only generation facility in ERGOT, the saa MW combined-cycle generating facility located in Seguin, Texas, known as the Rio Nogales plant. All information regarding the operations of Constellation Energy, its business operations, plans, affiliates and subsidiaries is derived from information published by Constellation Energy, including its most recent from laK, filed with the Securities and Exchange Commission an February 27, 2aa7. Rate Stud and the Rate Stabilization Fund. In 1996, the City established the Rate Stabilization Fund by transferring approximately $45.1 million from the unreserved fund balances of the Electric System. In general, the Rate Stabilization Fund was created to serve as a reserve that could be drawn upon, at least in part, in lieu of increasing electric rates in the full amount required to provide funding to pay the cost of purchased power from TMPA as the amount of TMPA debt service (and thus the City's contract payments) increases. At September 3a, 2aa6, the City had approximately $50.2 million on deposit in the Rate Stabilization Fund, which included approximately $2 million contributed to the Rate Stabilization Fund in Fiscal Year 2aa6 from Electric System operations. The use of the Rate Stabilization Fund is part of the City's business plan to maintain competitive electric rates after the advent of SB 7. Effective .Ianuary 1, 2aa5, the City increased the base rates charged to its residential and general service customer classes. A base rate increase was implemented effective October 1, 2aa5 far the Government, Temporary Service, Weekend, Athletic Fields, and Lighting customer classes. The City's rates, including the 2aa5 rate increases, remain competitive with 'rXU Energy, the incumbent investor owned utility that serves a portion of the dual certified area of the City, and all ether retail energy providers presently marketing in the Dallas-Fort Worth area.. TXU Energy was obligated to offer the price-to-beat rate ("PTB rate") to requesting residential and small business customers in the historical service territory of TXU Electric Delivery 21 Company, its incumbent utility, through January 1, 2007. As of January 1, 20a5, TXU Energy was permitted under the terms of SB 7 to offer electricity to the residential customers in its historical service territory at a price other than the PTB rate. In accordance with SB7, the PTB rate was eliminated on January 1, 2007. The City is unable to predict how this change will affect energy prices in the Dallas-Fort Worth area. However, since the City's energy rates were significantly lower than 'the PTB rate offered by TXU Energy in the Dallas-Fart Worth at the end of Zaa6, the City anticipates that the Electric System rates will remain competitive, at least in the short-term. On February 26, 2007, TXU Corp., of which TXU Energy is an affiliate, announced (the "TXU Announcement") that two leading private equity firms and a leading global investment bank had executed a definitive merger agreement ~ancler which an investor group led by the private equity f rms will acquire TXU Carp. in a transaction valued at $45 billion (the "Pr~aposed TXU Acquisition"}. In the TXU announcement, TXU noted that the proposed transaction would close in the second half' of 20x7 and that the transaction is subject to a number of factors, including the availability of financing and other circumstances beyond the control of TXU. Among other aspects of the Proposed TXU Acquisition, TXU has suspended its efforts to obtain air permits from TCEQ for 11 new coal-fired generating plants that TXU announced an April 20, 2006, to provide 9,OG~0 :MW of new electric generation in ERCOT. The TXU Announcement states that the Proposed TXU Acquisition is contingerrt in part on obtaining permits to build three new generating plants, representing 2,000 MW of new capacity that TXU haci announced in Zaas. The TXU Announcement also described a plan to reduce energy costs to TXU customers who are purchas~ing~ power from TXU under the PTB rate. Such plan has been modified since the original TXU Announcement, and covers ~~XU Energy customers that average at least 1,5x0 KWh per month in energy use . Such TXU customers began receiving a 6 percent reduction on their April 2007 bills, will receive another 4% reduction with their June 2007 bill and an additional 4 percent reduction will be applied at the close of the transaction; such cuts will remain in place through September 2008. The City is unable to predict whether the Proposed TXU Acquisition will occur, or how the announced rate cuts will affect energy prices in general in the Dallas-Fort Worth area. However, since the City's energy rates were significantly lower than the PTB rate offered by TXU Energy in the Dallas-Fort Worth at the end of 2006, the City anticipates that the Electric System rates will remain competitive, at least in the short-term. Marketing. In light of the increased levels of electric market advertising, particularly by the investor owned utilities, that resulted from the onset of retail electric competition, the Electric System has instituted a campaign to raise the aw~Ueness of its customers of the services it offers, and to reinforce in the minds of its customers that the City provides the same level of service and service options as are available in the open market (to this end, for example, in 2004 the City initiated a gr~~eri energy rate option for its residential customers and added commercial and industrial customer green rates effective October 1, 2006}, A marketing program aimed to develop, implement, and maintain programs that effectively solicit new customers, cultivate and reinforce customer loyalty, and improve and expand available services to customers is in place. The marketing i~ro~gram targets key large commercial and industrial customers and promotes various energy eff ciency, energy audit, and other programs across all rate classes. TxE TMPA POWER SALE AGREEMENT ...The City's rights and obligations with respect to TMPA are set forth in the TMPA Agreement. Under the TMPA Agreement, the City is obligated to take or pay for its percentage share of the energy ,generated by TMPA, and TMPA is obligated to devote its best efforts to the generation and delivery of energy from the generatinl; facilities of TMPA, but the failure of TMPA to provide energy under the TMPA Agreement will not relieve any Mernbe,r City of its obligations under the TMPA Agreement, as such obligations are unconditional and absolute. The City's payment obligations under the TMPA Agreement are equal to the greater of the "Take or Pay Percentage" (as defined below) and the "1Debt Service Guarantee Percentage" (as defined below). For additional information regarding TMPA, see "Appendix B - Description of Senate Bill 7 and the Texas Municipal Power Agency -Texas Municipal Power Agency." The Take or Pay_Percentage. Under the TMPA Agreement, each of the Member Cities is unconditionally obligated to pay to TMPA, without offset or counterclaim and without regard to whether energy is delivered by TMPA to the Member Cities, their percentage of TMPA's annual system costs, including the payment of TMPA's debt service requirements and operating and maintenance expenses, as set forth below; City of Bryan, Texas 21.70% City of Denton, Texas 21.3x% City of Garland, Texas 47.00% City of Greenville, Texas 10.x0% A City may choose to take ar not take energy from the TMPA generating assets, as it sees fit (as Hated above, while the City's TMPA resources have represented approximately one-third of the City's f rm power capacity in recent years, 'the City has averaged taking approximately 55% to 60% of its energy from TMPA aver the last three fiscal years}. Whilf; the City is obligated to pay its fixed percentage of the annual system costs, it becomes obligated to pay the variable casts of generating energy only to the extent that it actually takes energy from TMPA. 22 The Debt Service Guarantee Percenta e. In any instance where TMPA's band, reserve fund and contingency funds, created by the TMPA Prior Lien Resolution, are not funded to the amount then required to be on deposit therein, without giving consideration to transfers made from funds other than TMPA's revenue fund or from proceeds of its bonds (provided that transfers may be made from TMPA's reserve fund to its debt service fund for not more than two (2} consecutive calendar months), the Member Cities are obligated to make their percentage share of a payment to TMPA in the amount that is necessary to establish or reestablish the amount then required, under the terms of the TMPA Prior Lien Resolution, to be on deposit in such funds. The percentage share of the payment to be made by each Member City under the TMPA Agreement is determined by calculating the percentage relationship that each Member City's Net Energy for Load (as def ned in the TMPA A~;reement) for the contract year immediately preceding the contract year in which the calculation is being made to the total aggregate Net Energy for Load of all Member Cities far such contract year, and the sum of the adjusted percentages shall equal 14LI°/a. Allocation o Ener b TMPA. Each Member City shall be entitled to schedule and receive, each month far its own. account, the proportion of the available energy from TMPA's generation facilities equal to the Take or Pay Percentage, as such percentage may be from time to time adjusted in accordance with the provisions of the TMPA Agreement. TMPA A Bement Term. The contract term of the TMPA Agreement is for a period ofthirty-five years from September 1,1976 or until all bonds and certain other indebtedness of TMPA is paid, whichever occurs later. At present, the final maturity of TMPA's indebtedness is September 1, 24I although it is possible that TMPA could restructure its debt to shorten or extend the schedule of its debt retirement. Construction o ~Vew Pra ~ects. The TMPA Agreement provides that TMPA must give notice of intent to each Member City containing a general description of any new proposed project, the projected sources and uses of funds in connection therewith, and a statement of TMPA's opinion that such proposed project is necessary far TMPA to meet its commitments under the TMPA Agreement and is economically feasible. Each Member City is required thereafter to notify TMPA, within 64 days, of its approval or disapproval of the project. if each Member City approves the project, TMPA may thereafter issue bands to finance the project without further approval of the Member Cities. Any Member City disapproving a proposed project is required to elect one of two options set forth in the TMPA Agreement. The TMPA Agreement includes provisions that differ from those described above for the sharing of energy and costs in the event that a new project is proposed and one or more Member Cities do not determine to participate in the project. There are na current plans far TMPA to initiate a new generation project. TMPA is constructing new transmission projects in accordance with transmission system expansion plans developed through the ERC~T regional transmission planning process. A enc Rates. The TMPA Agreement provides that the rates and charges for power, energy and services charged to each Member City by TMPA shall be (1 } nondiscriminatory, {2} fair and reasonable and based on the cost of providing the power, energy and services with respect to which the rates or charges are based and {3} an amount suff cient to (i} pay TMPA's annual System Casts, {ii} make the deposits to the funds required by the TMPA Resolution, (iii} fund the annual capital budget of TMPA, and (iv) with respect to other funds or other accounts established by the board of directors of TMPA {the "Board of Directors") and not required by the provisions of the TMPA Resolution, fund such funds or accounts in an amount not greater than 3.5% of TMPA's annual system budget, or such greater amount as may be approved by the affirmative vote of at least six members of the Board of Directors with at least one member of the Board of Directors appointed by each Member City voting in favor of any such increase. Rebate o Excess Revenues to the Member Cities. Except far funds held for purposes of self insurance, any funds held by TMPA on the last day of each fiscal year (commencing September 34,199$) over and above the amounts required in connection with subsections (i}, (ii), (iii} and (iv) of clause (3} of the preceding paragraph shall be returned to the Member Cities within 124 days of such date in the same percentage as the percentage each City contributed to such amounts. Funds held pursuant to clause subsection (iv) of clause (3} of the preceding paragraph, if approved by the affirmative vote of at least six members of the Board of Directors with at least one member of the Board of Directors appointed by each Member City voting in the affirmative, may be used to reduce the debt of TMPA. TMPA A regiment Pa menu Constitute G eratin Ex enses a the Ci .The TMPA Agreement provides that all payments by a Member City under the TMPA Agreement, including any payments required to be made to TMPA's bond, reserve and contingency funds, shall constitute an operating expense of its electric system payable solely from the revenues and receipts of such electric system. Rate Covenant under the TMPA A regiment. Under the TMPA Agreement, each Member City has covenanted to establish, maintain and collect rates and charges far the electric service of its electric system which shall produce revenues at least sufficient, together with other revenue available to such electric system and available electric system reserves, to enable it to pay to TMPA, when due, all amounts payable by such city under the TMPA Agreement. Sale ar Assi nment o Electric S stenos. Under the TMPA Agreement and the TMPA Resolution, no sale or other disposition by a Member City of its electric utility distribution system as a whole or substantially as a whale may become effective without the consent of all the Member Cities and TMPA during the term of the TMPA Agreement. A Member City may assign its rights under the TMPA Agreement but such assignment shall not relieve such Member City of its financial obligations under the TMPA Agreement during the time any TMPA Revenue Bonds are outstanding. ~3 CAPITAL IMPROVEMENT PLAN AND ADDITIONAL DEBT , , .Capital projects involve the acquisition or constr<.~ctian of major facilities and equipment. Each year, the City Council adopts a capital budget far the Electric System that difh~rs from the operating budget because it is a "multi-year" process. "Multi-year" means that the project's budget is active until the project is finished. Due to the multi-year nature of capital projects, budgeted expenditures in these plans consist of carryover projects from previous years and new projects being initiated in the current year. Due to its nature as a planning tool, a capital budget, while identifying and prioritizing capital expenditures, is subject to revision as circumstances change, including ~cht~nges in the economy and in the need for various governmental services and the placement of such services within the City. Consequently, the inclusion of an expenditure in a capital budget is not a firm commitment to a project, particularly as the plan~ling horizon extends into the future. The Electric System's current capital improvement plan (the "Electric CIP") identifies projects for five-year period ending September 30, 2011, The Electric CIP identifies approximately $102.5 million in transmission and distribution projects, of which approximately 99% are projected to be band-financed, including the use of funds from prior bond issues. The current Electric CIP indicates the total level of bond funded expenditures (including the use of both bond funds availablE; from previous bond issues and bond funds from new issues) for Electric System improvements in the following amounts: Total Band Funded Year Ex enditures 2007 $26.6 million 2008 19.0 million 2009 19.0 million 2610 18.6 million 2011 18.9 million ELECTRIC SYSTEM'S SERVICE AREA AND SERVICE AREA COMPOSITION In 1976, the Public Utility Commissiion of Texas (the "PUC") issued the City a Certificate of Convenience and Necessity ("CCN"} to serve electricity to an area encompassing the City's then boundaries, plus its extraterritorial jurisdiction area ("ETJ"). SB 7 provided that the City may file with the PUC to single certificate areas within its municipal boundaries as they existed on February 1, 1999. With the exception of two existing subdivisions being served by TXU Energy and CoServ Electric ("CoServ"), the City was granted single certification of these areas in April of 2002. The territory now single-certified for electric service for the City is approximately 60square miles in area, Dual and occasional triple certification presently exist in the ETJ. Approximately 49% of the City's electric st;rvice area is multiple-certified, representing an area of approximately 53 square miles. While the City's electric service customers in the multiple-certified service area will not be open to new competitors unless the City Council "opts in" tv retail competition, the Electric System competes for new customers that move rota the multi-certified service area against the other utilities that have been certif ed in the past to provide service in that area. For the year ended September 30, 2006, the Electric System provided electric service to a monthly average of X2,657 custamers located in the certified service territory of the Electric System. As a result of the economic catalysts of the Dalla;~-Fort Worth International Airport, Fort Worth's Alliance Airport and the major business districts in the northern parts of the: Dallas-Fort Worth metropolitan area ("DFW"), Denton and the DFW area have in recent years experienced significant electric load and population growth. According to ERGOT, the load in Denton County has experienced significant and sustained growth over the past decade and ERGOT projects that the County will have load growth averaging 4.2% over the five-year period beginning in 2007 (for the entire ERGOT area, ERGOT projects future demand using a 2.1% growth per year for each of the next five years). In May 200?, ERGOT reported that over 93% of the 2007 summer load for Denton County is projected to be imported from generation sources outside of the County. Denton County is in the nine-county DFW ozone nonattainment area which will restrict the construction of traditional generation capacity in the County. ERGOT forecasts show that by the se~nvner of 2012, approximately 95% of energy to meet the Denton County load will be imported from outside of the County (ERGOT currently projects no new generating units being constructed in the County during the f ive year period covered by ERCO'T's current load forecasts). Denton County's energy impart statistics are similar to those for the other three counties in the former four-county ozone non-compliance area (the area was expanded to nine counties in April 2004), in which construction of new generation has been, and is expected to continue to be, restricted due to environmental compliance issues. (See "The ElE;cb°ic System - Environmental Regulation -State Implementation Plan for DFW Ozone Non-Attainment Status."} The need tai import energy into the DFW area contributes to the transmission constraint status of the north Texas area. (See "The Electric System -Texas Deregulation Structure, Status and Issues."} For the year ended September 30, 2006, the customer base that was served by the Electric System measured b;y number of accounts is approximately 88% residential and approximately 11% commercial and industrial in composition, although commercial and industrial accounts provided approximately 60% of the energy sold. Far the year ended September 30, 2006, the top ten custamers of the Electric System provided 24% of the tarriffed rate revenues of the Electric System and purchased 2$% of the energy sold by the Electric System. Two State institutions of higher education, the University of North Texas and Texas Woman's University (collectively, the "Universities"), were included in the top ten customers of the Electric Systerrt for each of the five most recently completed fiscal years. For the year ended September 30, 2406, the Universities provided of the 24 tarriffed rate revenues of the Electric System and purchased l l% of the energy sold by the Electric System. State law provides that utilities that provide electric service to State educational institutions, such as the Universities, must do sa in accordance with rate tariffs that are equal to the utilities' established rate for the customer class applicable to such State educational institutions, less an additional 20% discount. As a result of the discounted service that the City must provide to the Universities, the Universities' cost of energy is less than the costs incurred by the Electric System for providing such energy. In accordance with SB7, this discount requirement terminates September 1, 2007. The Electric System has competed successfully for customers with TXU Energy and CoServ in multiple-certif e+J areas since 197b. According to records of the Electric System, approximately 100% of the new residential subdivisions and large industrial accounts in the multiple-certified service area have become customers of the City during the last three fiscal years. LUAD REQUIREMENTS ...The City's capacity requirements are calculated based upon the City's peak summer demand. For the year ending September 30, 2006, the City's peak capacity requirement was 319 MW, which occurred in July 200b. The City has forecasted a maximum load of 32.0 MW for 2007. INTERCONNECTIONS. .The City is interconnected with two TMPA 138 kilovolt ("kV") lines and one Br~~zos Electric Cooperative 138 kV transmission system. The TMPA transmission system serves the City via a 138 kV loop around the City. TMPA furnishes energy to the loop via a 34S kV transmission system and two 138 kV ties also interconnected with the TXU Energy transmission system. Over the last f ve years, the City has funded approximately $50 million of elf;ctric system impravements, a significant portion has been for transmission and distribution facility improvements. The distribution impravements are consistent with the City's strategy of maintaining a commitment to its distribution system in orde~~ to provide a City-established rate of return for the City in the event that the City should elect to open to retail competition. The transmission improvements are part of the ERGOT planned transmission system upgrades. The Electric System receives TCt~S payments from the ERGOT "postage stamp" transmission system structure that covers the cost of investment in and maintenance of its transmission system. LITIGATION AND POTENTIAI, LITIGAT[ON CONCERN[NG COST OF ENERGY DEGIVEAED BY TMPA UNDER THE TMPA AGREEMENT In 1997, the PUC adapted open access transmission regulations that required each transmission customer to nominate load for development of the approved cost of transmission service matrix on an annual basis. After adoption of these regulations a dispute arose between TMPA and the cities of Denton, Garland, and Greenville (the "Northern Cities"), on the one hand, and the City of Bryan ("Bryan"}, on the other, concerning which entity, TMPA ar Bryan, could nominate the load far transmission service to Bryan. The dispute also involved whether TMPA could include in its wholesale rates for power and energy to the four Member Cities the costs of the ERGOT charges associated with open access transmission service from Gibbons Creek to the Member pities. After bath TMPA and Bryan attempted to nominate the load for Bryan, and Bryan filed a complaint at the PUC concerning the dispute, the PUC, in July 1999, ruled that under its regulations and transmission pricing orders, Bryan was entitled to nominate the load for transmission service to Bryan (the "PUC Decision"}. The PUC Decision also held that while TMPA could nominate the load far the Northern Cities as their agent, TMPA could not include the ERGOT charges associated with transmission service to the Northern Cities in its rates to Bryan. TMPA appealed the PUC Decision arguing, among other things, that the PUC did not have jurisdiction to change TMPA's delivery obligations under the TMPA Agreement, to adjudicate a contract dispute, to require TMPA to provide unbundled transmission service, or to regulate TMPA's wholesale rates for power and energy. The PUC Decision was appealed and has became the subject of a series of rulings by Texas district and appellate courts. In May 2004, the Texas Court of Appeals affirmed a lower court's holding that the PUC has jurisdiction to determine the reasonableness of TMPA's transmission rate to Bryan. The Court of Appeals decision 'was appealed to the Texas Supreme Court, which granted TMPA's petition for review, and the Supreme Court heard oral argument in the case on October 1 S, 2005 (the case is styled: "Texas Municipal Power Agency, et al. v. Public Utility Commission of Texc7s, et al." and is referred to herein as "TMPA v. PUC"). As of the date of this document, the Texas Supreme Court has not ruled in the case. If the appellate court decision ultimately stands, it would mean that TMPA may be unable to allocate open access transmission costs to the Member Cities in accordance with the fixed percentages set forth in the TMPA Agreement. However, under the current postage stamp method used by the PUC to price open access transmission service until the initiation of the Nodal Design Rule in ERGOT, the cost to transmit power from Gibbons Creek to each Member City is equal to each Member C'ity's contract share of the cost of transmission service to all four Member Cities. Under the Nodal Design Rule, transmission congestion is addressed by including in the cost of wholesale power a component known as "transmission congestion rent," the result being that the cast of wholesale power delivered to loads located in zones with greater transmission congestion will be higher than the cost of wholesale power in zones having less transmission congestion. The Nodal Design Rule thus uses location sensitive, or nodal, cast methodology to address transmission congestion (see "The Electric System -The New Nodal Design Rule"}. Under the Nadal Design Rule, the cast of Gibbons Creek power to any one TMPA member could be different than the cost of Gibbons Creek power to other TMPA member cities, depending upon the load zone or zones to which the TMPA member cities and Gibbons Creek are assigned. At present, each TMPA Member City and Gibbons Creek are in the northern load zone of ERGOT, thus under the Nodal Design Rule all Member Cities would be assessed the same cost far power from Gibbons Creek. However, under the Nodal protocols adopted by the PUC, after three years, zone designations could be changed, which could cause the cast of Gibbons Creek power to na longer 17e identical far all TMPA cities. 25 The PUC has completed its administrative rulemaking relating to the Nodal Design Rule, but has indical:ed that a new administrative project to examine issues relating to creating and changing load zones in the nodal market should be initiated, but such rulemaking has not yet been launched. Under the ERCGT protocols adopted by the PUC an Apri15, 2006, the nodal zone configurations will not change from the current four zone configuration far the first three years after the start date of the nodal wholesale system, thus during such period all TMPA Member Cities and Gibbons Creek will remain in the North Texas zone. The new PUC rulemaking is to determine what method will be used to calculate, review, and approve any future changes to the zones. It is possible that, at some point after the first three years of nodal operation, smaller, more localized zo~r~es could be created that would result in substantially different prices far energy delivered to one or more of the Member Cities, ~~nd that such price could be substantially higher than the percentage of TMPA's annual system costs. Gibbons Creek is located approximately 19 miles east of Bryan and 22.5 miles southeast of the City. There are significant transmission constraints for energy coming into the DFW area, where the Northern Cities are located, from the south where Gibbons Creek is located, particularly as compared to transmission capacity between Gibbons Creek and the City of Bryan. However, the Nodal Design Rules provide all TMPA cities with "preassigned congestion revenue rights" that may offset the additional transmission congestion costs associated with a TMPA city being placed in a different load zone from Gibbons Creek. (See "The Electric System -Texas Deregulation Structure, Status and Issues -Transmission Constraints.") During the administrative hearing held by the PUC in connecl:ion with the adoption of the order implementing the Nodal Design Rule, each of the Northern Cities filed legal briefs and ~prc~vided expert testimony to the effect that such result would, among other impacts, impair their rights under the TMPA Agreement and violate various provisions of the Texas Utilities Code. Each of the Northern Cities asserted that the TMPA Agreement .provides that each Member City shall be responsible for its percentage share of TMPA's annual system costs, including debt service, operation and maintenance costs, which include energy delivery costs. The Northern Cities and TMPA also asserted that provisions of the legislation under which TMPA was created, as well as provisions of SB 7 that relate to M4Us, prohibit the PUC .from interfering with such agreements. The City of Bryan intervened in the administrative hearing in support of the adoption of the Nodal Design Rule. In its April 5, 2006 order promulgating the Nodal Design Rule, the PUC stated that the modifications supported by TMPA were not presented in a manner that met the standard established by the PUC in its preliminary order r~;lating to the hearing. That standard provided, among other things, that the Nodal Design Rule would be presumed to be valid, and that the burden of proof would be placed upon a party challenging the Nodal Design Rule to show that the Rule should be modified. TMPA and the TMPA Northern Cities filed motions for rehearing challenging the validity of the April 5, 2006 order on a number of grounds, which motion was denied by the PUC on May 16, 2006. 4n dune 15, 2006, TMPA and the Ci~ly of Garland filed suits in State District Court in Travis County to appeal the denial of the motion far rehearing. To date r►o action has occurred in these cases. The final decision of the Texas Supreme Court in TMPA v, PUC, which is still awaite+l, could provide important precedent either for or against the arguments of TMPA and the City of Garland, as both matters involve questions of the PUC's regulatory powers vis-a-vis the rights and obligations of TMPA and the Member Cities under the TMPA Agreement. CUNTRIBUTIDNS TO THE CITY OF DENTON ...The Electric System enterprise fund annually transfers an amount t+a the General Fund of the City to reimburse for the Electric System's share of administrative overhead of the City, as determined by an independent consultant engaged for that purpose. The Electric System also makes an annual transfer to the General Fund in lieu of a franchise payment equal to 4% of the Electric System's revenues. In addition, the City Charter provides that 'the City shall be entitled to receive an annual return on its net investment from excess revenues, if any, of the Electric Systern not more than 6% of the net investment as a "return on investment." The City Council has adopted an ordinance providing that transfers from the Water System, Wastewater System and Electric System Rate Stabilization Funds which represent excess revenues from prior years} may be transferred to the General Fund to the extent needed to maintain compliance with the City's bond covenants see "The Bonds -Rates"}. In satisfaction of this Charter requirement, the Electric System annually makes an additional transfer to the General Fund of the City in an amount calculated at 3.5% of revenues, For calculation of both the Franchise Fee payment and the "return on investment" payment calculations the portion of the ECA revenues that is included in the calculation of revenues subject to transfer is capped at 4.0 cents per kWh for FY 2007; 3.5 cents per kVVh for FY 2008; 3.25 cents per kWh for FY 2009; and 3.0 cents per kVVh going forward from and after FY 2010. The amount transferred to the General Fund for administrative overhead is an operating expense of the Electric System, while amounts transferred in lieu of a franchise tax and as a return on investment are made after the Electric System has provided for the payment of operating expenses an+~ debt service requirements. TEXAS DEREGULATION STRUCTURE, STATUS AND ISSUES . , .The following discussion, as well as the discussion set forth under "The Electric System -The New Nodal Design Rule" and "The Electric System -Status of Deregulation; Issues Reported by the PUC to the State Legislature" is presented for the purpose of providing information concerning the current Texas legal and market structure, which is unique in many respects from deregulated markets in other parts of the United States, in hart due to the isolation of the market in ERCGT din which the City is located}, which is essentially a transmission grid and associated generation facilities comprising an "island," there being few interconnects to other transmission grids. While the City has not "opted in" to full retail competition, it does participate in the wholesale energy market through its use of power purchase agreements, specifically, the 2006 Power Purchase Agreement, to meet its energy needs above the energy supplied by its TMPA entitlement and its use of the ERCGT transmission system to deliver power from its share of the Gibbons Creek. generating unit, owned and operated by TMPA, to its customers. 26 The wholesale energy market in ERGOT was established by legislation enacted in the 1995 Texas Legislature, and has been significantly modified and developed through enactment of SB 7 and the commencement ofretail electric choice in the Texas on January 1, 2402. The discussion below describes some of the effects on the market and the challenges presented to the market as a whole, as well as, in some instances, local regions within ERGOT that are facing particular effects of deregulation. The continuing development of wholesale and retail competition in the ERGOT market will affect the planning, actions, options, cost structure and other essential factors of the Electric System. The information in the sections referenced above is derived from various PUC and ERGOT source materials, and in particular, portions of this section are excerpted from the 2003 and 2005 PUC Reports to the Texas Legislature. The information in the section "The Electric System Status of Deregulation; Issues Reported by the PUC to the State Legislature" is based closely upon selected portions of the PUC's Report to the $0~' Texas Legislature, entitled Scope o~ f Competition in Electric Nfar~ets in ~'exas (the "2007 PUC Report" and, collectively with the 2003 and 2405 PUC Reports, the "PUC Legislative Reports"). Tl~e 2007 PUC Report is available in full an the PUC website at h :Ilwww. uc.state.tx.uslelectriclre rtslsco elindex.cfm and previous biennial reports to the Texas Legislature are available in full on the PUC website at h :Ilwww. uc.state.tx.uslelectriclre ortslsco elarchive.cfm. Except for specific references to the City or as otherwise noted as being provided by another source or entity, all expressions of opinion, summaries of events and statistical information contained in such sections are from the PUC Legislative Reports. The City is does not take responsibility fvr the content of the PUC Legislative Reports or other information presented an the PUC website. In general, the restructuring of the electric utility industry in accordance with SB 7 continues to evolve, and the City is observing and evaluating the changes in the developing energy market in the State. The elimination of the PTB rate an January 1, 2007 and the planned implementation of the Nodal Design Rule on January 1, 2009 are key dates in the evolution of the restructured market. Since January 1, 2002 when consumer choice began in competitive areas of ERGOT, Electric System Management has noted the continued development within ERGOT of amarket-driven wholesale market in which energy is a commodity. It is apparent that traditional planning methods using known generation resources paired with known load has become Less important as a planning approach in the market in general. As the competitive market matures in Texas, the market will almost certainly experience ebbs and flows in the construction of new generation and transmission facilities, and some of the existing generation will be displaced by newer resources, which may affect the market price of energy on bath the retail and wholesale levels, as well as the demands on, and capacity of, the existing electric transmission system. ERC4T ERGOT is one of 10 Regional Reliability Councils in the North American Electric Reliability Council. The ERGOT bulk electric system is located entirely within the State of Texas and serves more than 20 million customers, representing approximately 85% of Texas' electrical load. The ERGOT service region covers more than 75%, ar 206,000 square miles of the State and contains a total of approximately 38,000 miles of transmission lines, including approximately $,000 miles at 34S kV, and more than 500 generation units. The ERGOT grid serves $5% of the State's electric load. ERGOT also manages financial settlement for the competitive wholesale bulk-power market and administers customer switching for 5.9 million Texans in competitive choice areas. According to ERGOT, the all time peak demand in ERGOT occurred on August 17, 2006 when 62,339 MWs of power was used. ERGOT is connected electrically to other reliability councils through two direct current lines, providing only limited importlexport capability. Other electric reliability councils, such as the Southwest Power Pool, serve areas in the Texas panhandle, east Texas and west Texas. In response to legislative directive, ERGOT amended its articles of incorporation to establish an independent system operator ("ISO") in 1 g96. Under ERCOT's organizational structure, the ISO reports to the ERGOT Board of Directors. ISO responsibilities include security operations of the bulk system, facilitation and efficient use of the transmission system by all market participants, and coordination of regional transmission planning among transmission owning utilities and providers. Under Texas law, ERGOT is required to perform four primary functions: ensuring non-discriminatory access to the transmission and distribution systems far all electricity buyers and sellers; ensuring the reliability and adequacy of the regional electric network; ensuring that information related to customer retail choice is provided in a timely manner; and ensuring that electricity production and delivery are accurately accounted for among all regional generators and wholesale buyers and sellers. The PUC has primary jurisdiction over ERGOT. ERGOT regulations require that each market participant, including MOUs, either be, or engage, a qualified scheduling entity ("QSE") to submit schedules and ancillary services bids and settle payments with ERGOT. From July of 2006 through June of 2011, Constellation Commodities Group will provide QSE services to the Electric System under the 2006 Power Purchase Agreement. Individual electric utilities awn sections ar components of the ERGOT transmission grid and are responsible for operating and maintaining their own transmission lines and equipment. The ISO coordinates the operation of the transmission grid to ensure its reliability, and ERGOT coordinates with the various transmission-owning electric utilities to make sure the transmission system will meet the needs of the electric market. With the adoption of SB 7, investor owned utilities have functionally "unbundled" their respective electric generation business, electric transmission and distribution business and retail electric business from one another. See "Appendix B - Description of Senate Bill 7 and the Texas Municipal Power Agency -Senate Bill 7." 27 Overview o the Senate Bid17 Market Structure ...Senate Bill 7 dramatically altered the production and sale of electricity to retail customers in the State. Prior to SB 7, all retail customers were served by integrated investor owned electric utilities, electric cooperatives ("Electric Co-ops"}, or Malls. The PUC certificated the service areas of utilities, Electric Co-ops, and MOUs, where, for the most part, these entities were granted the exclusive right and obligation to service customers in an area. integrated utilities, MQUs, and Electric Co-ops built generation plants and constructed transmission and distribution facilities and performed retail functions such as billing and customer service to meet their obligations to serve. The PUC set electric rates, for those utilities over which it had rate-making authority, that gave those utilities the opportunity to earn a reas~anable return on prudent investments and to recover reasonably incurred expenses, but that were also just and reasonable to retail customers. As described below under "The Electric System -The New Nodal Design Rule," the Nadal Design Rule will again dramatically alter the wholesale market dynamics in ERCaT. The wholesale electric market was opened to competition as a result of the amendments to the Texas Public Utility Regulatory Act ("PURA") adopted by the Legislature in 1995. As a part of these amendments, independent power producers {"IPPs") were permitted to construct generation facilities and were granted access to the transmission lines of utilities, Electric; Co-ops, and MOUs in order for IPPs and power marketers to move power to wholesale customers. As noted above, SB 7, adopted by the Legislature in 1999, established a framework to allow retail electric customers to select a provider of electricity other than the traditional utility beginning in January 1, 2002, unless the PUC delayed cotr~petition far a utility's service area. The governing boards of Electric Co-ops and Molls were granted the authority to decid+~ ii' and when to open their service areas to customer choice. See "Appendix B -Description of Senate Bill 7 and the Texas li~Iunicipal Power Agency -Senate Bill 7." Although transmission and distribution facilities remain regulated by the PUC, the prices for the production and sale of electricity to both wholesale and retail customers are now predominantly dictated by market forces instead of regulatory rate- setting procedures. Customers with peak demand of one MW or less were provided access to the regulated PTB rate until January 1, 2QQ7 (beginning January 1, 2QQ5, affiliated REPS were permitted to offer rates lower than the price to beat), and the PUC is required to designate "providers of last resort" ("PoLRs") to ensure that all customers have access to electricity in the competitive market. The POLR for the City would be determined when and if the City opts into retail competition, SB 7 established a framework for retail competition that is different from that adopted in other states. Formerly integrated investor-awned utilities were required to separate their business functions into three distinct companies: a power generation company ("PGC"), a transmission and distribution utility ("TDU"), and an REP. PGCs operate as wholesale providers of generation services, in the same manner as independent generators. REPS operate as retail providers of electricity and energy services, and are the entities that have the primary contact with retail customers in the new market. TDUs remain regulated by the PUC, and are required to provide non-discriminatory access to the transmission and distribution grid at rates and terms of access prescribed by the PUC. In Texas, ERGOT performs functions in the retail market that are performed by the TDUs in other states that have introduced retail competition. Key elements in the design of the ERGOT retail market are the creation of a single, large retail market throughout the region and the use of a neutral third party to perform tasks related to the scheduling of power and settlement functions. ERGOT also serves as the registration agent for all retail transactions. All customer switch requests, move-in and move-out requests, and monthly electricity usage data flow through ERCoT. In November 2004, the PUC adopted rules to enhance its ability to execute its statutory duties in overseeing the operations of ERCaT, one rule requires ERGOT to immediately report to the PUC any event or situation that could reasonably be anticipated to adversely affect the reliability of the regional electric network; the accounting procedures applicable to ERC4T or the ERCoT market; ERCDT's performance of activities related to the customer registration function; or the public's confidence in the ERCGT market or in ERCoT's performance of its duties. In the 2QQ7 PUC Report to the Legislature, the P[]C has requested additional clarifying legislation with respect to its oversight of ERC4T. REPS generally provide electricity to customers by purchasing wholesale electricity from generators located within the ERGOT region. REPS use a QSE to schedule power through ERGOT to meet their customers' daily energy needs. A.11 schedules and transactions within ERGOT "flow," which means that schedules are not contingent upon a determination that 1:here is adequate transmission capacity available to move power from the generation resource to the load. If all of the schedules submitted far a particular day or hour cannot be accommodated because of transmission constraints, ERGOT uses amarket-t~as~ed congestion management system to clear the congestion and maintain reliability. The casts associated with clearing the congestion are assigned to market participants under methods outlined in the protocols adapted by ERCoT (the "ERGOT Protocols" or the "Protocols") and approved by the PUG. Texas has not frozen prices at levels below market prices, as in same other parts of the country. In contrast to the fixed-price regimes established in other states, SB 7 created a framework whereby the remaining regulated rates charged by the affiliated REPS were reduced from 1999 levels, but can be adjusted to reflect changes in the market prices of natural gas ~~nd purchased energy, which have resulted in increases in rates by the incumbent providers, who have passed through, with I'll+u approval, at least portions of the increased fuel charges that have affected gas-generated facilities since January 1, 2QQ2. In most areas of the State that are open to competition, these PTB rates charged by affiliated REPS provided a d% reduction from January 1999 rates, adjusted for changes in fuel costs, from the opening of the market until January 1, 2007. These rates generally have remained above market rates, permitting other competitive REPS to enter the market and profitably serve retail customers. Generation Ca aci Ade ua .According to the ERC4T Report on Existing and Potential Electric System Constraints and Needs, December 2006 (the "ERGOT Transmission Report"}, from 1999 to 2005 the peak demand on the ERGOT system has increased approximately 2.5% per year. The current forecast for 2Q07 to 2012 indicates ERC4T's peak demand i~~ expected to increase 2.1% annually. Currently there are about 8,7QQ MW of generation within ERC4T that is over 40 years in age. Generation maturity is important to ERGOT planners in determining available capacity, long-range reliability, and whether there will be enough new capacity to compensate far load growth requirements. Age is one indication of the efficiency and maintenance cost of a generating unit, which are major factors in the decommissioning of units. Most of the capacity greater than 50 years old is around DFW. Other areas with high concentrations of older plants are Central Texas and along the Rio Grande border. Since 1999 the ERGOT system has added 61 plants, added new units to existing plants, and upgraded existing units. The total is aver 25,000 MW of new generation. Three of these new plants are capable of serving ERGOT and the Southwest Power Pool or the SERC Reliability Corporation . Much of the new generation is around Houston and in the Rio Grande Valley. Several large wind projects have been built in West Texas. These new plants, especially the wind generation, have resulted in significant changes which have placed new challenges on the adequacy and the reliability of the existing transmission grid. According to the March 20Q7 update to the PUC's "New Electric Generating Plants in Texas Since 1995" report, companies in the electric business have made significant investments in Texas (State-wide, including non-ERCaT areas} in .recent years. Eighty-six new generation plants were installed in Texas between January 1995 and March 2007, leading to resen~~e margins in excess of 14.6% in ERGOT far 2007. About 34,$21 MW of new capacity has been added in Texas since 1995, with another 3,223 MW under construction and some 22,048 MW of new capacity has been announced but has not yet begun construction (all statistics in this paragraph include fossil -fueled and renewable generation). In May 2QQ7, ERC4T had added 29,000 MW of new generation development since 1996, and it had signed new generation interconnection agreements (which signifies new construction that will tie into the grid} comprising 3,571 MW of new generation. In December 2Q06, ERCO`I' reported it completed 70 generation interconnection screening studies and 62 full interconnection reviews. However, this figure represents plants that have been publicly announced, as well as plants that are in preliminary planning stages.. There is uncertainty associated with the proposed plants for a variety of reasons, including that many are in competition with other proposed plants and they require large financial commitments and the receipt of environmental permits; a significant portion of this potential capacity will likely not be constructed. The chart below provides information on ERGOT projected summer reserve margin for the years 2QQ7 through 2011. ERC4T experiences peak demand during the summer; projected winter reserve margins are substantially higher than the projected summer margins. Total Summer Load Resources Reserve Year Forecast (MW} Available (MW) cap Margin . 20Q7 62,649 71,812 14.6Q% 2008 64,010 72,048 I2.60% 2QQ9 65,383 71,96Q 1Q.10% 2010 66,830 72,394 8.30% 2011 68,331 72,939 6.70% 2012 69,608 73,703 5.90% Source: ERGOT Report an the Capacity, Demand, and Reserves in the ERC4T Region, May, 20Q7. (1 } Summer Laad Forecast is ERCOT's firm load forecast, not peak summer load. (2} Total Resources Available include installed capacity, capacity from private networks, effective load-carrying capability ("ELCC"} of wind generation, RMR units, 50% of non-synchronous ties, switchable units, available mothballed generation, planned units (not wind} with signed interconnection agreement ("IA"} and air permit and ELCC of planned wild units with signed IA. Total Resources Available excludes retiring units, mothballed capacity, 5Q% of non-synchronous ties and planned units without IA and air permit. ERCnT has performed technical studies and reviewed the appropriate level of reserve margins. As a result of such studies, ERC4T has established a 12.5% reserve margin goal for the ERC4T market. The PUC has opened a rulemaking project to determine whether the adequacy of reserve margins should be left to market forces, or whether other means should be created to help ensure a minimum reserve margin. 29 Transmission Constraints ...One of the fundamental market design elements in the current ERGOT Protocols is the use of a zonal congestion management system to resolve transmission congestion. Congestion can occur in any electrical system when the lowest-cost mix of generating plants to serve customer needs cannot be used because transmission lines would bE; overloaded under that pattern of generation and load. If transmission facilities limit the operation of the optimal set of generation plants, the transmission grid is said to be "congested." Congestion is relieved through rearranging or "re-dispatching" generation such that the flaw of electricity on the grid is altered, and the constraining line is nv longer in danger of being overloadE;d. Generating units that are ordered by ERGOT to lower or increase their output to relieve congestion receive payments to do s+~ from other market participants. In the ERGOT zonal system, the transmission elements that are most likely to limit the free flow of electricity are identified as "commercially significant constraints" ("CSCs"}, and the transmission grid is divided into congestion zones such that each of the generators and loads within a zone has a similar effect an the CSCs between the zones. Determination of zones wijrhin ERGOT is an annual event and far 2.007 ERGOT has identified four congestion zones (Houston, North, South and West}, In a zonal system, most congestion occurs between zones ("zonal congestion" or "inter-zonal congestion"), but it can also occur within a zone ("intrazonal congestion"}. In the ERGOT zonal system, the transmission elements that are most likely to lirr~it the free flow of electricity are identified as "commercially significant constraints" ("CSCs"), and the transmission grid is divided into congestion zones such that each of the generators and loads within a zone has a similar effect on the CSCs betcvef;n the zones. Determination of zones within ERGOT is an annual event and for 2007 ERGOT has identified four congestion zones (Houston, North, South and West). In a zonal system, mast congestion occurs between zones ("zonal congestion" or "inter-zonal congestion"), but it can also occur within a zone ("intrazonal congestion"). ERGOT reports zonal congestion costs have decreased from over $140 million in 2001 to less than $SO million in 2.005 and less than $40 million far January thr~augh August 2006. This decrease can be attributed to the implementation of direct assignment of zonal costs to market participants scheduling energy over the constraints and an-going improvements to the transmission system. Since 2005 ERGOT TDUs have completed projects casting approximately $1.3 billion. The projects that are being considered aver the next five years to meet the growing electricity needs are estimated to cost $3.1 billion. ERGOT has implemented a zonal balancing energy market for the resolution of transmission congestion between t:he four 2007 identified zones. A CSC is generally a high voltage (13$ kV to 345 kV}power line which acts as an interface between two zones and physically limits (due to its design capacity) the economic flow of energy between the zones to a commercially significant degree. When an ERGOT system operator determines a CSC is congested, the system operator reduces the line loading by issuing instructions to increase the generation in the zone importing the power and to decrease generation in the za~ne exporting the power. The instructions are based upon the generators' bids available in the balancing market. The resulting; overall higher costs are defined as zonal congestion costs and are directly assigned on a pro-rata basis to those market participants scheduling energy over the CSC. Intro-zonal Con estion Infra-zonal, or local, congestion occurs when the lack of sufficient transmission infra:~tructure in a given area (within a single congestion zone) results in a limitation, or bottleneck, of the flow of energy into or r~vithin that area. Far 2004-2005 ERGOT identified nine general areas with local constraints, including an eight county area within the North Texas zone, designated as the DFW infra-zonal area, which includes the City. Infra-zonal congestion is usually remedied by running higher-cost, less-efficient generation in the local area to reduce transmission flows and tv improve the voltage profiles in the area. To resolve infra-zonal congestion, three different ERGOT market services for the use of generation-unit-specific deployments are used. These are Out-of--Merit Energy ("OOA~IE"), Out-of= Merit Capacity ("OOMC") and Reliability Must-Run ("RMR"). The cost of providing these services is collectiively defined as infra-zonal (local} congestion costs and is uplifted to all load-serving entities within the ERGOT region. Infra-zonal congestion costs are highly dependent on local generation availability, the limits of the current transmission infrastructure (including the impact of scheduled and non-scheduled outages), the local area load demand, and projected load growth. ERGOT is working diligently with market participants to develop both short-range and long-range pl~~ns to minimize infra-zonal congestion costs. Intrazonal congestion costs have also decreased from over $400 million in 200:0 to about $250 million in 2005 and less than $150 million from January through August 2006. Most of this decrease can be attributed to improvements in the transmission system and operational improvements. Transmission Constraints in the Dallas-Fart Worth Area ...The DFW area is the large, dense load center comprised of many of the cities in north Texas. The large load in this area continues to grow by a significant amount each year. In addlition, several generating units in the area have recently been mothballed. The increasing load in DFW, as well as mothballing of these older gas units, has led to increased requirements on the transmission system in the area. These increased requiremen1~s include the need for additional transmission capacity into DFW and into certain subsections within DFW, as welll as additional autotransformer capacity to allow power to be transferred from the 345 kV bulk transmission system down to the load that is served off the l3$ kV system. 3a The DFW area, in which the City is located, is one of ERCOT's two largest load centers, with a total load in 2005 of about I8,000 MW for the four counties in the central DallaslFort Worth area (Dallas, Tarrant, Collin, Denton), but a combined capacity of only about 5,000 MW. Since 1999 about 2,600 MW of generation has been built and another 3,300 MW of generation is planned near DFW, but all these plants are outside the transmission-constrained metro area. Sites for ne~N generation development are limited and are likely to encounter public opposition. In some cases, the siting of the new generation has been strongly influenced by air quality issues affecting the DFW area, as described below. Construction of generation in the four-county DFW area is further compounded by the fact that the area is part of arsine-county area that has been designated by the Environmental Protection Agency ("EPA"} and TCEQ as anon-attainment area far ground- levelozone, which is produced in part from nitrogen oxide ~oflen referred to as "NOx") emissions from fossil -fuel burning. For a discussion of current State Implementation Plan ("SIP") mandates of specific actions to reduce emissions of NOx from various sources within the area, see "The Electric System -Environmental Regulation -State Implementation Plan for DFW Ozone Non- Attainment Status." To conform to the SIP, DFW power plants will be required either to retrofit existing generation units with new NOx reduction devices or to reduce or cease operation. Because the existing DFW transmission system was designed assuming continued operation of this in-area generation capacity, the DFW area could experience significant problems of peak period supply adequacy and voltage stability if significant amounts of the in-area generation becomes unavailable aid no new in- areaplants are built. Congestion Under Nadal_Market.Desi n On April 5, 2006 the PUC issued an order accepting the ERGOT proposed draft protocols for implementing a nodal market design in Texas by January 1, 2009. In contrast to the zonal market design discussed above, there is no infra-zonal congestion, with the result that all congestion is treated in a manner similar to current zonal (or inter-zonal) congestion with the exception of haw the cost of congestion is determined and to which party that cast is assigned. Under the nodal market design, all paints of receipt or delivery into the ERGOT transmission system are assigned a value of energy at that unique point. The difference between the prices between any two points is considered the imputed cost of transmission between those two points, including any congestion costs. ERGOT will act as a centralized dispatching agent, charging all loads, or users for electricity based on calculated nodal prices and paying all providers, ar generators, of energy based on the appropriate nodal price for the point where their energy is injected into the transmission system. Zones will still be used in the nodal market design, but only for financial settlement purposes. Under the approved Texas version of the nodal market design, all loads, or users of energy within a designated zone will pay the same average price based an the weighted average price of all load nodes in that zone. The zones initially established in the draft nodal protocols approved by the PUC are basically the four existing zones plus three zones f ar three non- opt-in entities ("NOIEs"}, specif tally, the municipal utilities of San Antonio, Austin, and the Lower Colorado River Authority. Up to seventeen additional non-apt-in utilities may also request their awn zone designations prior to the implementation of the protocols, if they desire. The PUC's order also directed a future proceeding be initiated to examine the issues of creating and changing load zones in a nodal market to ensure that any changes occur in a systematic procedural manner that do not adversely impact any parties. Ta date, this proceeding has not been initiated by the PUC. For the City, the move to a nodal market design would mean that the Electric System would get paid by ERGOT the calculated nodal price at Gibbons Creek far the City's portion of generation output at Gibbons Creek by ERGOT, and would pay ERGOT the zonal average price for the zone in which it is located, for all usage by the City. Unlike the zonal market, where there was a distinct advantage to having both Gibbons Creek and the Electric System in the same congestion zone to avoid incurring zonal (ar inter-zonal) congestion casts, the load zones created in the nodal market will not impact the price that ERGOT will pay for Gibbons Creek production. The City has taken a proactive step to ensure its ratepayers are protected from the initial impacts of potential price differences between Electric System load and the Gibbons Creek nodal price that will be created in the nodal market design. Under the terms of the 2006 Power Purchase Agreement, Constellation will bear the risk for fluctuations in price between the City's contract price and the nodal price at Gibbons Creek when the nodal market design is implemented. The 2006 Power Purchase Agreement will not expire until June 30, 201 I, which will give the City customers more than one year of protection from any adverse impacts of the nodal market design. In the City's view, it is particularly important during the early implementation period to avoid impacts of market dislocations and inefficiencies that invariably occur during the start up phase of a new market structure. STATUS OF DEREGULATION; ISSUI';S REPORTED BY THE PUC TO THI', STATE LI'aGISLATURE . 1'he following information is derived from the 2~~7 PUC Report, which is available in full on the PU(~' website at htt : //www. uc. state, tx. us/electric/re arts/sco e/index. c m. E ect o Com etition on Rates and Service • Introduction ...Dramatic changes in the price of natural gas were key factors affecting the electric industry in Texas in the recent past, because natural gas is an important input in the production of electricity in the competitive wholesale market in Texas. Prices for natural gas escalated sharply in 2005 and fell gradually in 2006. As a result, the price of electricity for most residential customers rose during late 2445 and early 2446. 31 The price of electricity in the wholesale market within ERGOT closely correlates to natural gas prices, conse~iuently retail electricity prices for residential customers increased as natural gas prices increased. Fifty percent of the electricity in the Texas market (compared to 1$% nationally} is generated by the burning of natural gas; thus natural gas prices are a major factor in Texas electric prices because natural gas fired generating units set the ERGOT wholesale market clearing prices during mast hours. Natural gas futures prices tripled from January I, 2442, to September 1, 2006. For a brief time in late 2045 after Hurricanes Katrina and Rita, natural gas prices were more than faun times their 2042 levels. Because of these higher gas prices, wholesale power paces increased in 2005. Natural gas prices moderated in 2006; by October 2006, spot natural gas and wholesale electricity prices had fallen below the prices in May 2005. The incumbent REPS were required to oi~'er a partly- regulated rate, the price to beat, for residential and small commercial customers in their home territory. The incumbent REPS could change this rate up to twice a year, based on changes in natural gas prices. The incumbent REPS raised the PTB each year from 2002 through 2405. Most of them raised the PTB twice in both 2004 and 2005. PTB rates far residential and small commercial customers increased 90% from January 1, 2002, to January 1, 2005, but, for the most part, they did not change during 2006. As natural gas and wholesale electricity prices fell in 2006, the affiliated REPS, for the most part, left their prices at post-Katrina levels. The PTB rates that were in the $ to 9 cent per kilowatt-hour (kWh} range in early 2002 climbed to a 12 to 13.5 cent range in the summer of 2005, as natural gas prices rose. The PTB rates exceeded 14 cents per kWh in early 2006, following increases that were approved late in 2005. As gas prices fell in 2006, the incumbent REPS did not, for the most part, reduce; tree PTB rates. During a period of gradually rising energy prices, the PTB allowed the incumbent retail providers to increase retail rates to cover their higher casts of serving customers, and in most periods it allowed new retail providers in the market an opportunity to offer Lower prices and induce customers to switch away from the incumbents. Most customers chose to continue to purchase service from the incumbent REPS and pay prices that were above the prices offered by competitive REPS. Some competitive REPS offered significant savings compared to the PTB. REPS provide electricity to retail customers by purchasing wholesale electricity from PGCs in the ERGOT market, a market which features some 75 actively competing REPS. Many of the REPs with large shares of the retail market are affiliates or former affiliates of large electric utility companies. At the start of retail competition, these companies inherited most of the customers in the service areas of the utilities from which the REPs were formed. These are referred to as "affilliated REPs," although not all remained under common ownership with the formerly integrated utility. The biggest challenge for retail providers and consumers in the Texas retail electric market in the past two years has been significant price increases in wholesale electricity. In a market of steadily increasing prices, competitive REPs were able to offer prices below the price 1.o beat, and new REPs continued to enter the marketplace, selling diverse products ranging from traditional f xed and variable rate products to renewable power to "time-of use" products for more sophisticated industrial customers. As of September 2006, approximately 34% of all customers had taken advantage of their opportunity to change REP, including almost 34% of residential and nearly 40% of commercial customers. Including the largest users of electricity in ~~he market, 56% of electricity sold in the competitive market in Texas is supplied by providers other than the traditional affiliated :IZEP. Residential Rates ...The affiliated REPs have been allowed to offer alternative plans to their customers since ~~anuary 1, 2005. Several of the affiliated REPs have taken advantage of this option, offering discounts and alternative terms of service to customers in their own territories, including renewable, variable, and fixed rate plans of various terms. The number of REPs and offers has increased steadily since 2002. Since January 2042, affiliated REPs have requested adjustments to the fuel factors resulting in total increases in the. overall price to beat of between 67% and l 14%, depending on territory. Savings of between 16% and 3l% were available as of December 2046 for a typical 1,000 kWh per month residential customer, or about 50% to 60% of the increases in the priice to beat since 2002 Wholesale Prices ...The daily on-peak market price for electricity in ERGOT rose from approximately $40 per MWh in January 2004 to a high of about $120 per MWh in September 2005. The high electricity prices in the ERCO'I' market were a direct result of the effects of Hurricanes Katrina and Rita and high winter demand, which pushed natural gas prices over $l3 per million MMBtu. By August 2046, natural gas prices dropped to below $6 per MMBtu, and electricity wholesalf; prices retreated to the $60-$70 per MWh range. The Balancing Energy Service Market typically represents less than 5% of the total energy consumed in EF~COT, and is primarily used by ERGOT to balance supply and demand in real time. Market participants also have the option within limits to rely on the Balancing Energy Service Market to serve some or all of their power needs, in lieu of bilateral contracts. ERGOT procures balancing energy in each of the major congestion zones. At times when there is no transmission congestion, prices in each of the zones are equal. When transmission congestion limits the transfer of power between zones, prices willl typically be higher in those zones that are transmission constrained. The average price for balancing energy in ERGOT was $44.64 per MWh in 2004 and $72.79 r MWh in 20(15, reflectin the 1~ g increase in natural gas prices. In its 2005 state of the market report, Potomac Economics ("Potomac"}, an energy consulting firm, noted that the increases in natural gas prices were largely due to the effects of the hurricanes on the productive capability of the Gulf Coast Region of the State. Even though 2446 gas prices have retreated to their 2444 levels, the bal~~ncing energy average price remains in the $60-$80 per MWh level. 32 All-in Price for Electricity A total or "all-in" cost of electricity at the wholesale level can be constructed from the costs for balancing energy, ancillary service capacity, and uplift charges. This construction assumes that a customer buys all of its energy needs from the ERGOT-operated energy and capacity markets. Energy costs make up the bulk of the all-in cost, with ancillary services and uplift charges accounting for about 5% to 8% of the total. Uplift charges represent services that ERGOT purchases for the benef t of the market but cannot assign to a specific market participant. They are spread to the market on a load-ratio share basis. Most of the uplift charges are for Out-of Merit Energy (OOME), Out-of Merit Capacity ~OOMC}, and Reliability-Must-Run ~RMR) agreements. ERGOT uses out-ofinerit energy to manage local transmission congestion, and it uses out-of merit capacity to ensure that there is enough generation capacity available on an hourly basis to ensure local reliability. RMR agreements are sometimes necessary to ensure local reliability over a longer term period. Prior to 2003, net revenues were well below the levels necessary to justify new investment in coal and nuclear generation. However, high natural gas prices have caused power prices to remain at levels high enough for these technologies to be economically viable. Available Choice, or_Customers ...Despite the large number of service offers from which customers may choose, roughly twa- thirds of customers continue to pay high PTB rates. By June 2a0b, 75 REPS were providing service to custome~~s, with other REPS in the process of beginning operation. There are 32 REPS serving at least 500 residential customers, acid residential customers throughout the competitive market have multiple providers from which to choose. Commercial and industrial customers taking service at the secondary voltage level have shown a greater propensity to switch than residential customers. This most likely is driven by the fact that most of these customers have higher energy usage, and thus higher electric bills, than most residential customers. As of September 200b, 39.4% of commercial and industrial customers had changed providers. The largest customers in this customer class have been the most ready switchers, as is shown by the fact that 67.5% of MWh sold to this class in September 200b were sold by REPS other than the affiliated REP. Primary and transmission voltage level customers tend to be large customers. Many of these customers have demand greater than 1 MW, and thus have been ineligible for price to beat since January 2402. Approximately b l% of the primary and transmission customers had switched by September 2a06. This is an increase from about 42% in September 2004. Few if any of the remaining 40% of customers are an a default rate, with many of them having negotiated competitive contracts with the affiliated REP. Approximately 68% of MWh Bald to this class were provided by REPS other than the affiliated REP. This number has been roughly stable since 2004. Reserve Margin ...New construction of thermal generation proceeded at a slow pace in the last two years, reflecting very high reserve margins in prior years. Approximately 1,b00 MW of natural gas-fired capacity was completed state-wide in 2005 and the first half of 200b, and more than 900 MW of wind generation was completed during this period. There were not many new announcements of mothballed or retired capacity in the last two years. The relatively new, natural gas powered, 1,100 MW Hays power station, which had been mothballed in January 2004 due to law wholesale market prices, was returned to service in May 2405. The level of capacity under RMR contracts in ERGOT declined from 1,625 MW in 2004 to about 270 MW in 2006. In most cases, ERGOT developed plans to eliminate the need for these RMR contracts through transmission construction, and the TDUs built the transmission facilities that were needed for this purpose. The wholesale market is a competitive market, in which mast of the owners and developers of generation facilities respond to their perception of the market opportunities and risks, and deploy capital accordingly. Declining reserve margins and the possibility of selling power that would be produced by fuels with a lower cost than natural gas at natural gas based marginal clearing prices has recently resulted in strong interest among developers in building new generating capacity in ERGOT, particularly wind and coal generation. In August 200b, ERGOT reported that it was tracking 81 active generation interconnection ar change requests representing more than 40,000 MW of new capacity. Forty percent of this capacity would came from coal or lignite resources, 41% from wind, and 17% from natural gas. The coaUlignite capacity includes the 9,a00 MW of new generation announced by TXU, 800 MW announced by LS Power, 750 MW announced by CPS Energy, 630 MW announced by Sempra, and 500 MW announced by Brazos Electric Cooperative. Far the long-term, TXU and NRG Energy have announced plans to build a combined total of more than 3,3x0 MW of nuclear capacity, which would come on-line in the 2014 to 2020 time frame, and Exelon is also considering the addition of nuclear capacity in ERGOT, of course no assurances can be given that any one of these announced plants will be built, due to the need to obtain regulatory approvals and secure financing, among other considerations. Meeting Demand or Electricity In the competitive market, the decision to build new electric generating capacity or to retire existing generation is a financial decision that power generation companies make without regulatory review (other than environmental permits that may be required). During the late 1990's and early years of this decade, significant amounts of new thermal generation was built and put into service in ERGOT. Consequently, in the early years of the current decade the ERGOT region had ample supplies of electric generation. In the recent past, development activity has slowed, in large part because of the abundant generating capacity in the region and the resulting low market prices. Construction of new wind generation has continued, however. The abundant new, efficient natural gas-fired generation in the market has displaced production from older, less-efficient gas-fred generation, and large quantities of the older gas generation have been retired ar mothballed. 33 While these changes were occurring with respect to production capability, demand for electricity continued to g;rnw, and the projection for the future is continued strong growth in demand. There is a renewed interest among developers in building new generating capacity in ERC4T, but mast of the new capacity is not expected to be completed until 2x09 or later. A significant portion of the new generating capacity that is contemplated would be coal-fired. With gas prices that are three times higher than in 2001, developers see an opportunity to produce power with coal at a lower cost than gas-fired generation anci sell it in an energy market with a natural gas price influenced marginal clearing price. However, there has been public opposition to the coal plants to a large degree based on concerns about emissions in the Dallas-Fort Worth area and the contribution of coal emissions (carbon dioxide} to global warming. While the market has signaled a need for new capacity, developers face challenges with respect to environmental permitting, financing, construction, and public acceptance, depending an the nature of 1:he capacity that they plan to build. ERGOT has forecast that the generation capacity available in 2009 will be slightly below the level required to assure adequate reserve margins and thus adequate service if a critical generator or transmission line "trips off' during peak-load period. Because of the prospect of limited capacity reserves in 2009 and an unusual event that occurred on April 17, 200b, when Bonne customers' power was interrupted to maintain reliable service far the remaining customers, ERGOT and the PUC aredeveloping new demand-reduction programs that could be implemented for 2007 and 2008. In addition, ERC4T has requested that the owners of mothballed generation capacity provide updates of their plans far 2007. ~'rnancial Status o 2'exas Electric Indust TDUs, because they remain under regulation and are essentially monopoly providers of electric delivery service, have generally stable and predictable financial characteristics. The smaller REPS and PGCs typically have smaller individual market shares and feature diverse financial qualities, which one would expect in an evolving competitive market. A large majority of PGC market participants have credit ratings, although only slightly more than half are rated investment-grade. By contrast, a large majority of REPS do not have credit ratings. The REP market: consists of a few well-capitalized companies that serve large numbers of customers, and a substantial number of smaller R'E~Ps that are not rated by the credit rating agencies and serve a smaller number of customers. The large number of competitors in the marketplace highlights the fact that many companies can meet the PUC's technical and financial requirements to became certified in the state of Texas. Although the regulatory barriers to entry are relatively low, other qualities are also required to be successful in the market, and with significant increases in natural gas and electricity prices in 2005 six REPS ceased operations and transferred their customers to the Providers of Last Resort or other REPS, PGCs operate as wholesale, independent providers of electricity, selling to REPS, integrated utilities oat ;yu>r ject to retail competition, and ERGOT for services to help maintain the reliability of the electricity network. Many of the PGCs in ERGOT also own generating facilities in ether markets. Therefore, their f nancial success is dependent on market males and market conditions both in Texas and in other states. In many regions of the country, there was an abundant supply of electricity in the early years of this decade. This oversupply, the Enron bankruptcy, and other market disturbances resulted in the lo,yses of access to capital markets and investor confidence for many PGCs. As the economy has improved and demand for electricity and wholesale prices have risen, the confidence of the capital markets in IPPs has likewise improved, but some independent PGCs are still rated below investment grade, and problems do occasionally arise. For example, Calpine, one of the largest PGCs in ERC4T, filed a Chapter 1 i bankruptcy proceeding in 1De~cember 2005. Nevertheless, demand in ERGOT continues to grow, and projections indicate that future growth will also be strong. The five largest TDUs that provide the highways for electricity traff c -AEP TCC, AEP TNC, CenterPoint, T(vA~IP, and TXU ED -all have investment-grade credit ratings. (Since the date of the 20x7 PUC Report TXU Energy has been d~awngraded to below investment grade by one national rating service and two other rating agencies have warned that the large increase in debt associated with the Proposed TXU Acquisition is likely to result in similar actions). Approximately three quarters of the large REPS have credit ratings, or are affiliated with companies that have credit ratings. Gf these, only one REP has a {credit rating that is below investment grade. However, a majority of these companies have negative outlooks. By contrast,, the companies comprising the group of small REPs do not have credit ratings, either on their own or through affiliate relationships. However, these companies, such as Stream Gas and Electric and Green Mountain Energy, have established a visible presence in the retail market. The market far PGCs, like the market for REPS, is bifurcated. A small group of large market share PGCs provides approximately $5% of the generation supply, and almost all are credit-rated entities. However, this group is oat as financially strong as the comparable REP group discussed above, because approximately 35% of the PGCs have below-investment-grade credit ratings. Moreover, several PGCs in this group currently have negative outlooks from the credit rating, aencies. The group of smaller market share PGCs is financially stronger than the small REP group discussed above, as evidenced by the large number of credit ratings (although a number of them are not investment grade}. There is no clear uptrend or iiovrntrend in the historical credit ratings of PGCs over the last several years. Thus, this category is riskier and not as financially robust as the TDU or large REP categories. 34 PUC Regulatory Activities Wholesale Market Oversr ht ...Beginning in September 200b, the PUC selected Potomac to serve as the independent market monitor ("IMM") for ERGOT, a function that was legislated at the request of the PUC by the 2005 Texas Legislatuz~e. The IMM has the authority to conduct monitoring, analysis and reporting activities but has na enforcement authority. A PUC rule provides that the IMM shall report directly to the PUC any potential market manipulations, including market power abuse, and any violations of PUC rules or ERGOT Protocols. The PUC rule establishes the IMM as an office independent from ERGOT, which is not subject to the supervision of ERGOT with respect to its monitoring and investigative activities. ERGOT funds the operations of the IMM, but thE; budget and expenditures of the IMM are subject to PUC supervision and oversight. The ethical standards governing the IMM director and staff are intended to prevent conflicts of interest between the IMM and a market participant or an affiliate of a market participant. The rule took effect in April 2006. Among ether activities undertaken by the IMM in the last two years was an investigation into relative shortages of energy in the balancing energy market, which is used by ERGOT to ensure that supply and demand match at all times, and usually comprises around 5% of the energy used in the market. Potomac concluded that a significant amount of available energy that could have been offered into the balancing energy market was not, because of barriers and economic risks inherent in the balancing energy market, rather than physical or economic withholding. Potomac's report expressed the view that such ineff ciencies will be addressed when ERGOT implements a nodal market design for the wholesale market in 2x09. ERC~T' dversigh~ by the PUC ...Other legislation enacted in 2005 clarified that the PUC has complete authority to oversee and investigate ERCOT's finances, budget, and operations as necessary to ensure that ERGOT is accountable. The PUC reports that it continues to expend signif cant resources in overseeing ERGOT. Renewable Ener~y Mandate SB 7 established the State's goal for renewable energy in 1999 but made no special provisions for transmission to interconnect renewable resources. The rapid development of wind power in west Texas since 2001 has shown that wind farms can be built more quickly than transmission, however; this timing difference poses a dilemma for planning: it is difficult to know whether a new line will be needed if the generation facilities do not yet exist, but a wind farm is diff cult to finance if there is no certainty that suff dent transmission will be available to deliver generated electricity. Senate Bill 20, enacted by the Texas Legislature in 2005 ("SB 20"} authorized the PUC to regulate in this area, and specifically authorized the PUC to identify an area with sufficient renewable energy potential, known as competitive renewable energy zones ("CREZs") and pre-designate the need for transmission facilities serving the area evert if no specif c renewable generation projects exist or are under construction. The designation of CREZs in regions with developable renewable resources would be partially based on financial commitments of wind project developers desirous of building in the zone. According to the PUC, it anticipates issuing its first order designating a CREZ in late spring 2007. Texas achieved two signif cant renewable energy milestones in 2006. First, the state exceeded the 2,880 MW goal 1:or renewable energy that had been established in 1999 by Senate Bill 7, a goal that the Legislature had mandated be reached by 21]09. Second, Texas surpassed California as the state with the greatest amount of installed wind power. 0n a worldwide scale, the only countries that have more wind power than Texas are: Germany (18,42$ MW}, Spain (10,027 MW}, and Denmark (3,122 MW). Wind-powered resources account for 78% of the state's 3,263 MW of installed renewable capacity, and 97% of the 2,462 MW of capacity installed since the enactment of Senate Bi117. About 2.1% of the electricity generated in Texas during 20C16 came from renewable energy resources, up from 1.5% for all of 2005. Within the ERGOT power region, renewable resources provided 2.1 % ofpeak-period generation during 2006 (up from 1.5% in 2005), and 3.2% of off peak generation (up from 2.2°,~° in 2005}. The Legislature increased the state's renewable energy goal in 2005 with the enactment of SB 20. As amended by SB 20, PURA directs that the cumulative installed renewable capacity in the State must total 2,2$0 MW by January 1, 2407; 3,272 MW by January 1, 2009; 4,264 MW by January 1, 201 l; 5,256 MW by January 1, 2013; and 5,880 MW by January 1, 2015. Further, the PUC is directed to establish a target of 10,000 MW by January 1, 2025. The legislation includes a target of 5()0 MW from renewable resources other than wind power. In addition, SB 20 requires the PUC to designate CREZs to expedite transmission planning. Emerging Issues System Hardenin;~ ...PUC Staff initiated a project to identify ways to improve electric and telecommunications infrastructure, and to minimize the utilities' downtime occurring as the result of Gulf Coast hurricanes. To accomplish this, Staff conducted industry workshops at the PUC as well as town hall meetings in the Houston, Beaumont, and Corpus Christi areas. Additional information was obtained directly from the utilities as well as interested parties. The final report concluded with three recommendations for utilities along the Gulf Coast and nine recommendations for all of the utilities in the state. Eight recommendations will ultimately require rulemakings over the next 12 months tv define the requirements thoroughly for the ut111tleS. 35 Demand Res onse ...Demand response, the ability of customers to reduce usage in response to high prices or grid conditions, will play an increasing role in the electricity market in the coming years. Some customers have some ability to res~aond to high prices by reducing usage at times when the price of electricity rises to a high level, This option may be attractive ~to additional customers, if developments in metering allow smaller customers to have their consumption metered at intervals shorter than one month and if they take advantage of retail prices that are based on wholesale prices. For ERCOT's settlement system to allow smaller customers to respond readily to spat market prices, advanced metering will be required. When advance+~ meters are deployed, REPS will have the chance to offer demand response products to smaller customers, which will in turn allow customers to have more control aver their electric bills. The PUC has opened a rulemaking project on advanced metering. Alternative ~'ransmission Models . , . According to the PUC, there has been interest in building transmission under a different set of rules. A power generation company might, for example, be willing to build and operate transmission facilities at its own expense (with no support from regulated rates) to connect to the transmission grid, without incurring the obligation to provide open-access to other entities. Such an arrangement might, far example, permit one or more generation companies that are outside of ERGOT to connect their facilities to the ERGOT transmission network at their own expense, without running the risk that they would be obligated to provide service to other customers. A similar transmission arrangement might permit a group of wind generators to build transmission to move the power they generate from West Texas to a location closer to population centers in East and Central Texas. Developers might also be interested in building merchant transmission connections between ERGOT and other power regions (the eastern or western United States or Mexico), where the interconnections are lirrcited today. THE NEW NQDAL DESIGN RUDE . rntroductian... In August 2003, the PUC adapted an order setting forth the parameters of the Nodal Design Rule. In. adopting its order, the PUC required that the rule be developed with consideration of microeconomic principles, and implemented through a stakeholder process developed under the auspices of ERGOT, which established the Texas Nadal Team ("TNT") for the purpose of developing new protocols on which the wholesale market design in ERGOT would be based. In November 20144, ERGOT filed acost-benefit study with the PUC and a set of draft protocols describing a proposed nodal market design similar to the market design adopted by FERC in its Standard Market Design. Pure theoretical nodal market design is based upon the costs incurred for delivery of energy to a specif c location on the electric grid, and assessing that cost to the specific location as opposed to spreading the cast to all participants on the grid, as in the current "zonal" wholesale market design of ERGOT. This nodal approach is used in the service areas of several national ISOs, particularly, those in the northeast region of the United States. The Texas design is a variation of that theoretical approach in which load costs are settled by zones ~~nd all other participant costs are settled by specifc location (node). On September 25, 2005, the Texas nodal protocols were filed with the PUC, and a series of administrative hearings were held by the PUC in late 2005 during which expert testimony anti legal briefs were presented by over 40 stakeholders, including consumer groups, associations representing large energy users, independent power producers, investor owned utilities, MOUs, Electric Ca-ops, ERGOT, the Office of Public Counsel of the PUC, and energy aggregation groups. Com orison o the Existin Zona! Market to a Nodal Market ...The existing ERGOT zonal market operates iti a manner that allows parties to meet their contractual requirements and deliver power based upon those contracts. It also allows entities to self supply their energy requirements from their owned resources without any market impacts other than the potential of reliability related transmission congestion costs. An MOU, such as the City, is able to schedule all of its energy, reliability and other ancillary energy services from its own resources, and if so scheduled those resources will be dispatched tai provide those services. Under the current scheme, ERGOT may only move such resources off of their dispatch points to address system reliability concerns. The current ERGOT zonal market design also includes a balancing energy market operated by ERGOT to cover atiy deviations in scheduled transactions and actual requirements. This market clears energy transactions on a uniform price within each geographical load zone. The transmission system is divided into faun zones based upon the electrical configuration of the transmission system. Each of the four zones includes all of the load and generation resources geographically bottnded by the designated electrical system network. If a generating resource is moved from its scheduled dispatch paint to another dispatch point, either up or down, tha# resource receives compensation based upon the direction of movement and a uniform clearing price across that single load zone. The balancing energy market approximates 5% of the total energy delivered within the ERGOT system, with the remaining 95% representing energy sold bilaterally among contracting buyers and sellers of energy. One of the key features of a market based on bilateral contracts is that there is an ability to gain price assurance for the cost. of meeting the energy requirements on a short-term and long-term basis. In contrast to the existing zonal wholesale market design, the nodal market design uses the locational marginal price ("LMP") solutions model, which requires all generating units to offer energy to the market at some price, and all energy ~~raansactions are settled through an ERGOT-developed LMP algorithm. Under a nodal LMP market, ERGOT will calculate a price for every monitored location within the transmission grid. These prices reflect the impact of each and every generator or virtual injection and the relationship of each and every megawatt of energy withdrawn from the system relative to the load carrying capability of the transmission system. This is done on a system-wide basis for each and every settlement period. Under a no~~al LMP model more money is purposefully collected from "Load Serving Entities" (MOUs, Electric Co-ops or REPS that sell energy to retail customers) than is necessary to compensate the supply side (generators or wholesale power marketers}. This is dune through the 36 introduction of a new pricing element called "congestion rent" into the market. The revenue from this "congestion rent" is disbursed to holders of Congestion Revenue Rights ("CRRs") associated with each specif c transmission element in ERGOT. CRRs can be obtained by any entity, that meets specified credit standards, wishing to bid in an ERGOT managed CRR auction. CRRs obtained through the ERGOT auction process can be traded between entities in secondary markets. CRRs may be obtained by Load Serving Entities as a hedge against "congestion rents" they may be assessed or by entities wishing to trade in this commodity market purely far the opportunity it offers to provide a return on their investment. In adopting the Nadal Design Rule on April 5, 2006, only one change was made to the protocols that were filed with the PUC by ERGOT in September 2005. That change was suggested by an Electric Co-ap and included definitional changes related to ancillary energy services to allow for self scheduling of generation load in the scheduling with ERGOT to permit separate determination of congestion charges or payments and energy imbalance service charges or payments to permit self scheduling entities to designate a source and sink for their transactions. In addition, the PUC recommended that additional study be given to three issues raised during the administrative proceeding, specifcally, (1) co-optimization of energy reserves in the real-time market (measures designed to optimize the resources that produce energy as contrasted with those relied on to provide operating reserves, i.e., co-optimization of energy and reserves}, (2} load participation in the nodal market (the ability ai" supply side participants to participate in the market with energy and capacity services and to encourage the demand side of 1:he market to respond better to wholesale "price signals") and (3} creating and changing load zones in the nodal market, includling any load zones that may be created by NOIEs (the PUC has expressed its intent to establish a separate rulemaking project to address how load zones will be determined and changed, which will impact how broad or narrow a load zone is for purposes of spreading congestion costs among the participants in that area, although to date that rulemaking project has not been initiated). Ccncerns Ex ressed b the Ci with Res ect to the Devela ment o the Nodal Desi Rule ...During the course of the stakeholder process during which the nodal protocols were developed and during the administrative hearings, the City has expressed concerns that the Nodal Design Rule may reallocate the costs of alleviating transmission constraints in a manner that could Increase the total cost of energy in transmission constrained areas of ERGOT, which include the City. It has also expressed an overall concern that, based on the experience in electric markets, which operate under a nodal design, application of a nodal design in ERGOT will increase the volatility of energy prices and cause a system wide increase in energy costs paid by consumers. The City challenged the authority of the PUC to implement the Nodal Design Rule on several grounds .and proposed modifications to the proposed protocols that were designed tv ensure that the City will continue to have energy price certainty under the terms of the TMPA Agreement for energy purchased by the City from TMPA, The City's challenges ~tnd proposed modifications, as well as those of other participants, were rejected by the PUC in its order of April 5, 2006. (See ~~The Electric System B Litigation and Potential Litigation Concerning Cost of Energy Delivered by TMPA under the TMPA Agreement.@} FEDERAL REGULATIQN OF ELECTRIC TRANSMISSION SERVICES . ~'he Ener~y Policy Act a~' 199Z. The Federal Energy Policy Act of 1992 (the "Energy Act"), greatly expanded the authority of FERC to order utilities, including utilities within ERGOT, to provide transmission service for other utilities, qualifying facilities, and independent power producers. FERC also has authority to determine the prices that may be charged far transmission, but has generally deferred to the PUC electric transmission open access rules for access and pricing within ERGOT. Retail Wheeling. The authority to order retail wheeling, which allows a retail customer to be located inane utility's service area and to obtain power from another utility or non-utility source, is specifically excluded from the enhanced authority granted to FERC under the Energy Act. However, while the States may have authority to determine whether retail wheeling will be permitted, FERC has determined that it has jurisdiction aver the rates, terms and conditions of retail wheeling. FERC Final Rules and Pro osed Rulemakin s in Federal Re elation o Electric Utilities. To establish foundation~~ necessary to develop a competitive wholesale electricity market and effectuate the transmission access provisions of the Energy Policy Act, on April 24, 1996, FERC issued two final rules ("FERC Final Rules") on non-discriminatory open access transmission services by public utilities and stranded cost recovery. The first of the FERC Final Rules, Order Na. 888, requires all public utilities that own, control or operate facilities used for transmitting electric energy in interstate commerce to (i) file open-access, non-discriminatory transmission tariffs containing, at a minimum, the non-price terms and conditions set forth in 'the order and (ii) functionally unbundle wholesale power services by (1} applying unified transmission tariffs system to all customers, (2) providing separate rate systems for wholesale generation, transmission and ancillary services and (3) relying on the same electronic information dissemination network that its transmission customers rely on in selling and purchasing energy. The second of the FERC Final Rules, Order No. 889, requires all public utilities to establish ar participate in an Open Access Same-Time Information System (OASIS) that meets certain specifications, and comply with standards of conduct designed to prevent employees of a public utility (or any employees of its affiliates) engaged in wholesale power marketing ft~nctions from obtaining preferential access to pertinent transmission system information. FERC stated that its overall objective is to ensure that all participants in wholesale electricity markets have non-discriminatory open access to transmission service, including network transmission service and ancillary services. FERC also indicated that it intends to apply the principles set forth in the FERC Rules to the maximum extent to municipal and other non-FERC regulated utilities, both in deciding cases brought under the Federal Power Act and by requiring such utilities to agree to provide open access transmission service as a condition to securing transmission service from jurisdictional investor-owned utilities under open access tariffs. 37 Although the FERC Rules do not directly regulate municipally-owned and other non-FERC-regulated utilities such as the Electric System, the FERC Rules have a significant impact on such utilities' operations. The FERC Rules have significantly changed the competitive climate in which the non-FERC regulated utilities operate, giving their customers much greater access to alternative sources of electric transmission services. The rules require them to provide open access transmission service conforming to the requirements for investor owned utilities whenever they are properly requested to do so under the Energy Policy Act or as a condition of taking transmission service from an investor awned utility. In certain circumstances, the non-FERC-regulated utilities are required to pay compensation to their present suppliers of wholesale power anal energy for stranded costs that may arise when the non-FERC-regulated utilities exercise their option to switch to an alternative supplier of electricity. Over the past several years, various efforts have been made to provide same interstate connections with the ERCt)T transmission grid. These efforts have resulted in protracted judicial and administrative proceedings involving ERGOT members. FERC has issued orders, which, among other things, permit the ERGOT members to avoid Federal regulation of rates as 'the result of the ordered interconnections with another interstate connected utility. PRQI'OSED FEDERAL LEGISLATION ...Many bills have been introduced in the United States House of Representatives and the United States Senate to deregulate the electric utility industry on the Federal or state level. Many of the bills provide for open competition in the furnishing of electricity to all retail customers (i.e., retail wheeling}. In addition, various bills have been introduced that would impact the issuance aftox-exempt bonds far electric transmission and generation facilities. lJa prediction can be made as to whether these bills or any future proposed Federal bills will become law or, if they become law, what their final form or effect would be. ENVIRONMENTAL REGULATION . General. Electric utilities are subject to numerous environmental regulations administered at the Federal and State level. Over time such regulations have become more stringent as water and air quality goals have tightened, and as pollution control technologies have advanced. Although it is expected that this trend will continue into the future, the uncertainty associated with future regulations, coupled with the piecemeal and uncoordinated manner in which they are implemented, presents the electric utility industry with a formidable challenge. This challenge was further compounded in 1999 when EPA launched a major enforcement initiative targeting older coal-fired electric generation plants. In undertaking this action, it was EPA's assertion that a number of coal-fired electric generation plants have undertaken major modifications in the past without concufl~ently upgrading pollution controls as required under the new source review ("NSR") provision of the Federal Clean Air Act ("FCE~A"). On April 2, 2007 the U.S. Supreme Court released its ruling in the case of the State of Massachusetts vs. th~~ E~rvironmental Protection Agency (the "Massachusetts decision"). Massachusetts and eleven other states, along with several local governments and non-governmental organizations (the "Petitioners"), sued the EPA for not regulating the emissions of four gree~lhouse gases, including carbon dioxide, from the transportation sector. The Supreme Court ruled in favor of the Petitioners, finding that EPA has the authority to regulate carbon dioxide and other greenhouse gases. The Massachusetts decision could lead to regulation of greenhouse gases under the FCAA, and it could catalyze calls for more comprehensive federal climate change legislation - legislation that covers sectors other than transportation as well as non-carbon dioxide greenhouse gases. The Massachusetts decision may also lend support for state efforts such as California legislation to regulate greenhouse gases, and in t«rn, expanded state activity may build pressure for a more uniform federal program of regulation. Through several rulemaking actions, the EPA has attempted to provide both clarity and some degree o~E r~efarm to the implementation of the NSR provisions. However the rules have been challenged and will likely be tied up in litiigation for some time to come. In an opinion released on December 22, 2005 in the case South Coast Arr Quality Management District v. EPA (the "South Coast decision"), the U.S. Court of Appeals for the District of Columbia ruled that the EPA may not disregard NSR as a control measure in determining whether state implementation plans adapted far the purpose of mf,eting the 1990 Amendments (as defined below} meet targets for reduction of ozone and the Court artier the EPA to issue new regulations. See "Appendix B -Description of Senate Bill 7 and the Texas Municipal Power Agency -Texas Municipal Power Agency -Clean Air Act Compliance." The Federal Clean Air Act. In 1990, legislation was signed into law that significantly amended the FC'A~~ (the "1990 Amendments"). Among other requirements, the 1990 Amendments addressed acid rain deposition through the reduction of sulfur dioxide and nitrogen oxide emissions from electric utility power plants, particularly those fueled by coal. In ~~n innovative approach to pollution control, sulfur dioxide emissions were limited by means of a market-based emissiaai c.ap and trade program, which was implemented in two phases. The Gibbons Creek facility of TMPA was subject to Phase II of this program, which went into effect in year 2000. Under the program, the unit received sufficient sulfur dioxide allowances to sustain current operating requirements. See "Appendix B -Description of Senate Bill 7 and the Texas Municipal Power ,4gency -Texas Municipal Power Agency -Clean Air Act Compliance." The 1990 Amendments also required coal units to reduce nitrogen oxide emissions. As with the sulfur dioxide program, the nitrogen oxide program consists of a two-phase strategy, with the first set units achieving compliance in 1996 and the second in 2000. Gibbons Creek is covered under Phase II. The Gibbons Creek facility became subject to the sulfur dioxide emission requirements but, based on the switch from lignite to Power River Basin coal as a fuel, it was able to reduce its sulfur dioxide emissions and currently TMPA has sufficient sulfur dioxide allowances for continued operation of the facility. 38 Ambient Air uali Standards. The EPA has established national air quality standards for six regulated pollutants: ozone, lead, carbon monoxide, sulfur dioxide, nitrogen dioxide, and particulate matter. When a pollutant concentration in an ~°ea exceeds a standard, the area is classified as "nonattainment" far that pollutant. A nonattainment designation then triggers a process by which the affected state must develop and implement a plan to improve air quality and "attain" compliance with the appropriate standard. This so called State Implementation Plan or "SIP" entails enforceable control measures and time frames. Of these six pollutants, large urban areas have had the greatest difficulty achieving the ozone standard. This challenge was compounded in July of 1997, when EPA adopted a revised and more stringent ozone standard along with a new standard for fine particulates. The tighter atone standard is often referred to as the 8-hour standard because it is based on an 8-hour average and is intended to protect public health against longer exposure. Whereas the previous standard was based on a 1-hour average, both the 8-hour ozone and fine particulate standard withstood a formidable challenge and were ultimately upheld by the Supreme Court in February of 2001. In the South Coast decision, the Court of Appeals for the District of Columbia ruled that the EPA had violated provisions of the 1990 Amendments when it adopted rules in 2004 that weakened pollution control requirements for areas violating both the old 1-hour standard and the 8-hour standard. In response to the court order issued in the South Coast decision, on .tune 20, 200'1, the EPA proposed to strengthen the national ambient air quality standards for ground-level ozone, the primary component of smog. In issuing the proposed new standards the "Proposed Air Quality Standards"}, the EPA stated that the proposed revisions reflect new scientific evidence about ozone and its effects on people and public welfare, including evidence that adverse public health effects occurs following; exposure to ozone at levels below the current standard, particularly in those with respiratory illnesses. In addition, the EP~~ stated, new scientific evidence since its last review shows that repeated exposure to low levels of ozone damages vegetation, trees and craps leading to increased susceptibility to disease, damaged foliage, and reduced crop yields. The Proposed Air Quality Standards would revise both the primary ozone standard, designed to protect human health, and the secondary standard, designed to protect welfare, such as vegetation and crops. The existing primary and secondary standards, set in 1997, are identical: an 8-hour standard of 0.08 parts per million ("ppm"}. (In practice, because of rounding, an area meets the standard if ozone levels are 0.084 ppm or lower.) The Proposed Air Quality Standards for the primary standard EPA proposes to set the primary (health} standard to a level within the range of 0.070-0.075 ppm. The EPA also requested comments on alternative levels of the 8-hour primary ozone standard, within a range from 0.060 ppm up tv and including retention of the current standard X0.084 ppm}. The EPA proposed two options for the secondary standard: one option would establish a new form of standard designed specifically to protect sensitive plants from damage caused by repeated ozone exposure throughout the growing season. Thiis cumulative standard would add daily ozone concentrations across athree-month period. The EPA also proposed to set the level of the cumulative standard within the range of 7 to 21 ppm-hours. The other option would follow the current practice of making the secondary standard identical to the proposed primary 8-hour standard. In its release of the Proposed Air Quality Standards, the EPA advised that it will take public comment far 90 days following publication of the proposal in the Federal Register and will issue final standards by March 12, 2008. Based on that date, the EPA has estimated the following implementation schedule: by June 2009 states make recommendations far areas to be designated attainment and nonattainment; by lone 2010 th~~ EPA makes final designations of attainment and nonattainment areas; by 2013 state implementation plans, outlining how states will reduce pollution to meet. the standards, are due to the EPA. The EPA projects that states will be required to meet the new standards between 2013 and 2030, with deadlines depending on the severity of the problem. In addition, legislation has been introduced during the current session of the U.S. Congress that would regulate emissions of so- called "greenhouse gases," including carbon dioxide, which has not been previously regulated as a pollutant in tl~~e U.S. Such legislation provides for a phased in reduction of such gases and would require power plants, factories and ail companies, among others, to operate within specified allowances of emissions of such gases beginning in 2012, when the current emission levels would be reduced by half. The legislation includes additional emissions reductions thereafter and provides for the establishment of a market for the trade of such emission allowances. Similar legislation has been introduced in prior sessions of Congress but have not been enacted and the City cannot predict whether this or any similar bill will be enacted in this or any fut~~re session of Congress, or whether State legislation could be enacted that would regulate carbon dioxide emissions. Moreover, the City cannot predict the financial impact that any such legislation, if finally enacted and signed into law, would have on tl~e City or the electric market in general. State Actions and Im lementation Plan or DFW Ozone Nan~Attainrnent Status. In an effort to improve the air quality in both existing; and impending nonattainment areas, the State has implemented two regional programs targeted at reducing statewide nitrogen oxide emissions from power plants. Nitrogen oxide emissions are targeted in that these compounds react with volatile organic compounds in the presence of sunlight to farm ground level ozone. The f rst program, which was part of SB 7, required that "grandfathered" power plants, i.e., facilities that were constructed prior to the 1971 Texas Clean Air Act, abtai~n a Texas Air Permit and reduce nitrogen oxide emissions by approximately 50%. See "Appendix B -Description of Senate ~3ill 7 and the Texas Municipal Power Agency -Texas Municipal Power Agency -Clean Air Act Compliance." The second program was implemented on April 19, 2000, when TCEQ adapted a regional nitrogen oxide reduction rule affecting; permitted power plants in the attainment counties in the eastern half of the State. The regional rule, as with the grandfathered provisions of SB 7, calls for an approximate 50% reduction of nitrogen oxide from permitted power plants. Gibbons Creek is affected by this rule and has achieved compliance with the regional rule. See "Appendix B - Description of Senate Bill 7 and the Texas Municipal Power Agency -Texas Municipal Power Agency -Clean Air Act Compliance." 39 Through these regional nitrogen oxide reductions, the power plant sources located in the nonattainment regions are facing much more severe nitrogen oxide control requirements. The DallaslFort Worth ozone nonattainment area (initially, Collin, Dallas, Denton, and Tarrant Counties, and as of April 15, 2004, Ellis, Johnson, Kaufman, Parker and Rockwall Counties were added to the nonattainment area) was originally designated "moderate" under the FCAA amendments of 199x, and thus was required to attain the 1-hour ozone standard b;y 1`~ovember 15, 1996 (a 1-hour standard is an EPA measure that specifies that certain pollutants not be at or above a particular level on more than three days aver three years). As required by the FCAA, the State submitted an attainment demonstration plan (a SIP} in 1994 which projected attainment of the ozone air quality standard by 1996. This plan was based on a volatile organic compounds reduction strategy. DFW did not attain the ozone standard in 1996. The EPA is authorized to redesignate an area to the next higher classif cation ("bump up") if it fails to attain by the rcquired date. Consequently, in March 1998, and in accordance with FCAA, EPA reclassif ed DFW from moderate to serious, based on monitored exceedances of the ozone standard between 1994 and 1996. The reclassification required the State to sulfmit a revised State Implementation Plan demonstrating attainment of the ozone standard by November 15,1999. Because DFW continued to exceed the ozone standard in 1999, EPA required submittal of a revised SIP by May 1, 2000, demonstrating attai~unent. On April 19, 2000, the Texas Natural Resources Conservation Commission (now TCEQ) adopted a new SIP, which included a plan for the then four-county DFW nonattainment area that included Denton County. In February 2x01, EPA accepted the SIP and the DFW plan. In accepting the plan, EPA did not reclassify the DFW area from serious to severe, and deferred the compliance date far the DFW area to November 15, 2007 from November 15,1999. The nine-county area is now classified as a "moderate" ozone nonattainment area under the 8-hour ozone standard. The requirements of the 1-hour standard remained in effect for the four care counties until EPA revoked that standards on June 15, 2005. At that time the entire nine-county area became subject to the 8-hour requirements. In April 20x4, along with its classification of new counties in the DFW under the 8-hour ozone standard, EPA also addressed other aspects of 8-hour attainment in Phase I of its Implementation Rule, promulgated April 30, 2x04. The Implementation Rule outlines a number of options for areas with outstanding obligations for an approved 1-hour ozone attainmen~`. demonstration, which applies to the DFW nonattainment area. Should EPA ultimately determine in accordance with its review time line that the State fails to demonstrate attainment, EPA may bump up the area to the severe classification. (The FCAA 1}rovides various punitive measures for areas that are classified as "severe." Two of these measures involve the loss of Federal highway funding and the implementation of a more stringent environmental permitting program far commercial and industrial entities, possibly retarding economic growth in such areas.} On November 29, 2005, EPA finalized Phase II of its 8-hour Ozone Implementation Rule, which detailed re~asanable further progress ("RFP"} requirements far 8-hour ozone nonattainment areas, such as DFW. On November 21, 2005,, TCEQ filed revisions to the DFW 8-hour non-attainment area SIP (the "Revised DFW SIP"}. After public comments were received through February 12, 2007, TCEQ adapted the Revised DFW SIP on May 23, 2x07. The Revised DFW SIP notes that the DFW 8-hour ozone nonattainment area consists of two sets of counties:l.he original four one-hour nonattainment counties (Collin, Dallas, Denton, and Tarrant) and the five new nonattainment counties (E;llis, Johnson, Kaufman, Parker, and Rockwall). Because of this circumstance, TCEQ has two options for fulfilling its 8-hoer ozone RFP requirements for the DFW area: (1} to treat all nine counties as a single area with a single RFP reduction target of 15 percent reduction in volatile organic compound ("VOC") emissions from the entire nine-county area between 2002 and 201)8 or (2) treat the two sets of counties as separate areas with separate RFP targets. TCEQ has elected option 2 which requires a 15 percent VOC reduction between 2002 and 2008 for the five new nonattainment counties, and a 15 percent reduction in emissions for the original four county area between 2002 and 2008, and either VOC, NOx or a combination of the two may be used 1:o achieve the required reductions. The TCEQ chose option 2 to fulfill the 8-hour ozone RFP requirements for the DFW area, using the mandate of Vt)C reductions for the f ve-county area and NOx reductions for the four-county area. Using NOx reductions for the four-county area is consistent with the DFW 8-hour ozone attainment demonstration SIP that shows reductions in NOx emissions are more effective than reductions in VOC emissions for reducing ozone levels in the DFW nine-county area. The Revised DFW SIP is intended to bring North Texas' ozone down to the current federal limit by fall 2009 (although the SIP will not meet the Proposed Air Quality Standards, should they ultimately be implemented, under the' Revised DF'i~ ~~IP}, with the expectation that the State will submit a new plan designed to maintain legal levels in June 2010. Major elements of the Revised DFW SIP include: a 40% cut in smog-causing emissions from cement plants in Ellis County, located south of the City; new standards for power plants in the nine counties in the nonattainment area; emissions cuts from pipeline compressor engines in East Texas; voluntary measures such as an enhanced state incentive program far replacing old, highly polluting diesel engines; planned local traffic improvements; continuing vehicle emissions checks; and planned new federal vehicle standards in 2009. The Revised DFW SIP does not address new coal-burning power plants ar require additional cuts from existing power plants outside the nonattainment area. The Revised DFW SIP does not demonstrate clear attainment of the federal ozone standard, but relies on an argument called "weight of evidence" that predicts success without being able to prove it. 40 The Revised DFW SIP notes that the DFW area was initially designated as nonattainment for ozone in 1991. Since then, the TCEQ and DFW area local governments have consistently taken steps to improve DFW air quality through the implementation of numerous control measures targeting attainment of the one-hour ozone National Ambient Air Quality Standard ("NAAQS"}. These control strategies resulted in significant improvements to DFW's air quality as demonstrated by the decrease; in the DFW area's i-hour ozone design value over the past 15 years. The DFW area's 1-hour ozone design value decreased fr+am 144 parts per billion ~"ppb"} in 1994 to 125 ppb in 2445. On June I5, 2445, the 1-hour ozone NAAC)S was revoked, leaving only an 8- hour ozone standard, which became effective June 15, 2444. The DFW area was required to attain the new f3-hour ozone standard by the end of ozone season 2449. Therefore, the Revised DFW SIP is the first DFW SIP revision under the 8-hour ozone standard. Despite the significant decreases in I-hour ozone design values, and NOx and VOC emissions in the DFW area, 'the increased stringency of the 8-hour ozone standard requires further reductions tv bring the area into attainment of the .48 ppm 8-hour standard by modeling 84 ppb or less by 2049 (however, the Revised DFW SIP notes that two monitoring locations, in the City and in nearby Frisco, are modeled to be above the taxget of 85 ppb, each projected at $7.7 ppb}. Rapid populatio~l growth and economic development in the DFW nonattainment area present numerous and complex challenges to reducing N{fix and VOC emissions. On-road and non-road mobile sources are the largest contributors to NOx emissions in the DFW area. The 1-hour ozone design value has decreased about 10.7 percent aver the past 15 years, while the 8-hour ozone design value has decreased 9.5 percent during the same period. In 2005, the peak 1-hour ozone design value was reduced to 125 ppb, while the peak 8-hour ozone design value dropped to 95 ppb. NOx and VOC emissions trends demonstrate decreasing emiissions in the DFW area. Mercu Re lotion and Clean Air Act Re orms. In an attempt to provide regulatory certainty and some degree of reform, while achieving the nation's air quality goals; in 2002 the Bush Administration proposed the Clear Skies Initiative ~"C;lear Skies"), which would have required electric generators to reduce sulfur dioxide, nitrogen oxide and mercury emissions by about 70% by 2018. However, in the spring of 2045, when it became apparent that Clear Skies legislation would not be enacted by Congress, the EPA implemented the Clear Skies emission reductions through rulemakings under the existing Clean Air Act. The Clean Air Interstate Rule ("LAIR") is a cap and trade program designed to bring states in the eastern half of the United States into compliance with the ozone and fine particulate standards by reducing nitrogen oxides and sulfur dioxides in upwind states. The rule applies to power plants in 28 states, including Texas and in the District of Columbia. The reductions will be achieved through a cap and trade program modeled after EPA's acid rain program. The reductions will be implemented in two phases, beginning in 2009 and culminated in 2015 with about 74% emission reductions. The Clean .Air Mercury I~ule is also a market based cap and trade program that is imposed on all coal fired power plants. As with CAIR, the reductions will be achieved in two phases, beginning in 2414 and culminating in 201$ with an approximate 74% reduction. The efl~ects of these regulations vn Gibbons Creek are currently being investigated by TMPA. In an attempt to provide regulatory certainty and clarity with respect to the aforementioned NSR program, the EPA introduced a NSR reform package that consisted of two separate rulemaking actions issued in late 2442 and the fall of 2003. Although both rules were challenged, the more controversial of the two, which is intended to better clarify those activities considered to be "routine maintenance, repair and replacement," was vacated by the D.C. Circuit Court of Appeals on March 17, 200G. See "Appendix B -Description of Senate Biil 7 and the Texas Municipal Power Agency -Texas Municipal Power Agency -Clean Air Act Compliance." 41 THE WATER SYSTEM The water system provides retail water service to all customers located within the City limits, as well as wholesalf; treated and raw water service to the Upper Trinity Regional Water District {"UTRWD"} for its use and for resale to two oaf its customer cities. The water distribution system consists of 2 water treatment plants, 520 miles of water mains, I4 million gallons of ground storage, and 4.36 million gallons of elevated storage. The City continues to operate the water system in compliance with all State and Federal water quality requirements. Water Supply ...The present municipal supplies are obtained from surface sources. The City has conservation storage rights in Lewisville Reservoir, which was constructed by the U.S. Corps of Engineers. This Reservoir has a maximum conservation storage area of 436,000 acre feet of water. The City holds the rights to 21,000 acre feet of storage, with the balance being held by the City of Dallas ("Dallas"}. Based on the safe yield of 90.24 MGD, the City receives 4.34 million gallons per day ("MGD"} in water rights from Lewisville Reservoir. The City also has 207,896 acre feet of annual withdrawal rights from the Ray Roberts Reservoir X799,600 acre feet} located on the Elm Fork of the Trinity River nine miles upstream from the Lewisville Reservoir. The City and Dallas have determined and agreed by contract that the safe yield of Ray Roberts Reservoir is 76 MGD, and that the City's share is 26% or 19..7$6 MGD, and Dallas' share is 74% or 56.24 MGD. The City projects that the combined 24.62 MGD of currently available surface water volume from Lewisville Reser`~oir (the City has rights to 4.86 MGD in Lewisville Reservoir, including wastewater effluent returns) and Ray Roberts Lake (the City's rights in Ray Roberts total 19.76 MGD) will be sufficient to serve the City's needs for approximately seven years. The ity's retail and wholesale treated water volume during 2006 averaged approximately 19.44 MGD. The City has a raw water supply contract with Dallas, dated August 7,1985, that has a 30 year term, provided that 'the City can, upon five years' notice to Dallas, reduce or cease taking water under the contract. The contract obligates the Cit!~ to purchase at least 500,000 gallons per day from Dallas. This is a minimum contract volume that the City maintains in order to keep open a long term option to purchase additional raw water from Dallas in the future that may be provided from existing or new water resources developed by Dallas. The water contract with Dallas is similar to the contracts far retail andlor whol+~sale water that Dallas supplies to 23 other North Texas municipalities. As regional water provider, Dallas is actively exploring prospects for obtaining additional water resources to serve its customer cities. The City's wholesale water purchase price from Dallas is currently 0.4360 cents per 1,000 gallons. State legislation has been enacted in recent years to organize similarly-situated water use areas into water planning groups. The City is working with Dallas and the other water users of the State's seventeen-county Region C Water Planning Group, which are conducting along-range water supply study to determine the water requirements and supply alternatives far the region through 2050. Given its raw water contract with Dallas, the City is of the view that it has the flexibility to work with. Dallas at least through the remaining term of the agreement, but that it could also become a participant or a customer of other regional water suppliers that are investigating additional water supplies for the Region C Water Planning Group. The City h,~s adopted a draught contingency plan, designed to Delp reduce water system demands in the event of a reduced water supply duc, to extended draught conditions or a temporary loss of critical facilities. Since the City shares two water supply reservoirs with Dallas, the drought contingency plan of the City shares common "trigger paints" with the Dallas with respect to water that may be taken from the shared water supply reservoirs, although the City may implement its drought contingency plan for ~wa~ter treatment andlor distribution system limitations even if Dallas has not implemented its drought contingency plan. Water Treatment Plants ...The City's water treatment plants are capable of treating and pumping 48.75 MGD. Tlhe maximum volume pumped to date was 32.78 MGD in 2006. In June 2003, the operations began at the City's second water treatment plant, which has a capacity of 20 MGD. Upper Trinity Regional Water District On June i6, 1989, the City, in cooperation with 32 other Denton County cities, towns and water supply entities, effected the creation of the UTRWD in accordance with enabling State Legislation. The UTRWD's purpose is to provide future raw water supplies, wholesale water and wastewater services to entities primarily in, but not limited to, Denton County. UTRWD is controlled by a Board of Directors representing the cities in the region. The I1TCtWD is also authorized to plan, acquire or develop future raw water supplies or reservoirs for its participating members. The City began selling raw water to UTRWD in 1994 from the surplus capacity of the Lewisville Reservoir. I3uring the 2004 Fiscal Year, a raw water pipeline from a new reservoir in east Texas was completed, which allows UTRWD to pass raw water through Lewisville Reservoir to a treatment plant in which it has an ownership interest. Although the UTRWD has completed the waterline into the Lewisville Reservoir, due to recent drought conditions, at present the City is continuing to sell wholesale raw water to the UTRWD. The pricing of the water sold to UTRWD by the City is at a wholesale, untreated rate. Because the raw water sales fluctuate the revenue is not a component of the water rate models. The City's contract with UTRWD provides for treated water sales to the UTRWD for resale to the City of Sanger, a municipality with a population of approximately 5,950 ("Sanger"). Banger's water purchases are currently based an a demand charge far .5 MGD, plus a volume charge based upon actual water taken. In 2006, treated water sales by the City for resale to the City of Sanger averaged 175,822 gall'~.ans per day. In 42 2004, the City contracted with UTRWD to deliver City treated water to UTRWD for resale to the City of Krum, a municipality of about 3,250 people ("Krum"}. The City began selling water to Krum through the UTRWD in April 2005, and iit is expected that the water sales to Krum will continue for a term of eight years (to 2013}. Like the Sanger water contract, the Krum water contract also includes demand and use components. For 2007, Krum has designated to take .2 MGD of water under its contract with the City. In 2006, treated water sales to Krum averaged 66,984 gallons per day. The City's contract with CJTRWD will expire in July 2012, unless it is extended by mutual agreement. TABLE ~ -WATER USAGE (GALLONS Average Maximum Year Da (Sales) Da 2002 13,890,891 26,031,000 2003 14,334,020 29,340,000 2004 13,571,727 25,030,004 2405 15,156,884 30,090,000 2006 19,444,940 32,783,004 TABLE 4 -TOP TEN WATER CUSTOMERS 2006 Annual Consumption Name of Customer (Gallons) Revenue University of North Texas 318,423,000 $ 914,053 Texas Woman's University 161,449,764 463,438 Denton Independent School District 153,598,140 440,827 City of Denton 125,203,290 361,279 Upper Trinity Regional Water District 83,274,000 384,785 Peterbilt 63,710,000 182,848 Denton County 47,154,910 135,373 The Ridge @ North Texas 44,390,700 ~ 127,401 Robson Community 43,484,100 124,872 Denton State School 41,654,600 119,549 1,082,342,500 $ 3,254,425 TABLE 5 ~-WATER RATES (EFFECTIVE UCTOBER ~ ~ ZOOG~ Residential Inside City Limits Outside Cit~tmits Facility Charge 314" meter $ 9.55 per month $11.00 per month 1"meter 11.44 per month 13.10 per month 1 112" meter 16.25 per month 18.65 per month 2" meter 18.10 per month 20.80 per month Volume Charge Summer Winter Inside Ci Limits (Ma -October) ovember-A ril} 0-15,000 gallons $2.60 per 1,400 gallons $2.60 per 1,000 gallons 15,001-30,000 gallons 3.60 per 1,000 gallons 2.60 per 1,0x0 gallons 30,001-50,000 gallons 4.60 per 1,000 gallons 2.60 per 1,000 gallons Over 50,000 gallons 5.00 per 1,000 gallons 2.60 per 1,000 gallons Outside City Limits 0-15,000 gallons $3.00 per 1,040 gallons $3.04 per 1,000 gallons 15,001.30,000 gallons 4.15 per 1,000 gallons 3.00 per 1,400 gallons 30,001.50,000 gallons 5.30 per 1,000 gallons 3.00 per 1,000 gallons Over 50,000 gallons 5.75 per 1,000 gallons 3.00 per 1,000 gallons 43 Commercial and Industrial {Inside City Limits} Facility Charge 314" meter $20.20 per month 1"meter 22.20 per month 1112" meter 25.75 per month 2" meter 31.65 per month Volume Charge 2.87 per 1,000 gallons Residential Irr'r ation Rate Summer Winter (May-October} November-A ril} 0-15,000 gallons $3.60 per 1,000 gallons $2.b0 per 1,000 gallons 15,001-30,000 gallons 4.60 per 1,000 gallons 2.b0 per 1,000 gallons Over 30,000 gallons 5.60 per 1,000 gallons 2.b0 per 1,000 gallons Commercial Irri atian Rate Summer Winter (Ma -October November-A ril All Volumes $3.45 per 1,000 gallons $2.87 per 1,000 gallons THE WASTEWATER SYSTEM The wastewater system provides retail wastewater collection and treatment service to City citizens, as well as the City's four wholesale wastewater customers. The collection system consists of approximately 459 miles of gravity wastewater lines, 21 miles of farce mains, and 27 lift stations. Wastewater Reclamation Rlant In 1994 the City completed an expansion of its wastewater reclamation plant, which has an operating permit far treatment of up to 15 MGD. A 6 MGD expansion was completed at the reclamation pl~~nt in December 2003, bringing total permitted treatment capacity to 21 MGD, which the City projects will meet its needs thraug;h 2013. The City's treated wastewater effluent volume averaged 12.06 MGD in 2006. The wastewater system is subject to, and is presently operated and maintained in compliance with, applicable State and Federal laws, regulations and effluent discharge permits. The City's discharge permit for the wastewater reclamation plant imposes stringent limitations on the removal of ammonia, dechlorination, and sludge conditioning and treatment. Wholesale Customers ...The City has contracts to treat wholesale wastewater for the Cities of Corinth, Krum, Argyle and the Lake City Municipal Utility Authority. In 20ob, the wholesale treatment volume averaged approximately 1.41 MG1D. Compost and Ef~iuent Rrograms ...Use of wastewater byproducts and recycled yard waste to make compost; material has provided an additional means of sludge disposal for the City, and has produced a new revenue source through sale of the compost product. The City has seven acres of roller-compacted concrete surface at its wastewater reclamation plant that is used for the City's compost program. All sludge from the reclamation plant is composted by the City. The City has also implemented a reuse system for treatment effluent. The City is expanding its reuse water program far sale to major irrigation ~~sers in the City. The effluent waterline project was completed in March 2004. In 2406, the City received $375,000 in revenues from the sale of effluent to the local electric generating plant and to irrigation customers, representing an 70% increase in this rE,venue source from 2005. TABLE G -WASTEWATER RATES EFFECTIVE OCTQSER L, 2005} Residential Commercialllndustrial _ Facility Charge $7.45 per month Facility Charge $19.47 per month Volume Charge 2.85 per 1,000 gallons Volume Charge 3.70 per 1,00~~ gallons (Based on 98% of average water consumption billed during Based on 85% of monthly water consumption) December through February; volumes are capped at 18,000 Industrial surcharge based on concentration of biochemical gallonslbill} oxygen demand and total suspended solids of effl.ue~nt) Residential Customer Outside City Limits Facility Charge $8.60 per month Minimum Billing $29.55 per month Volume Charge $3.29 per 1,040 gallons Rate Regulation ...Within its boundaries, the City has exclusive jurisdiction over the water and wastewater system rates. Rate Management For a discussion of the City's wastewater system rate structure, see "Water and W,~stewater -Rate Management." 44 WATER AND WASTEWATER RATE MANAGEMENT Since the late 1990's, the City has financed substantial amounts of new water and wastewater infrastructure improvements to meet increased demands for service. Na new infrastructure has been financed since 2004. However, the City is funding $9 million for water facilities from this issue of Bonds, but will not fund any wastewater system improvements with debt during fiscal year 2007. Prior to the 2003 fiscal year the City had not increased water or wastewater rates since fiscal ye~~r 1996. The City increased wastewater rates by 4%, 9% and 6% in 2004, 2005 and 2006, respectively. No rate increases are currently planned for the wastewater system, since these recent rates have put the wastewater system in position tv meet capacity costs and debt requirements at least for the short term. At the beginning of fiscal year 2006, water rate revenue was increased by 2%. The ability of the City to maint~~in relatively stable rates is attributable to several factors, including a relatively stable cost to the City for raw water. In addition., the City has benefited from a decline in interest rates that has permitted it to borrow and ref nonce System debt at favorable rates. Another significant factor in the City's management of water and wastewater rates include the implemen#atian of water and wastewater impact fees that occurred in 1998 and in May 2003, when impact fees for new utility connections were increased from $2,044 to $3,155 far water and from $483 to $1,437 for wastewater. In May 2006, the City increased wastewater impact fees and differentiated the fees by drainage basin: impact fees for the Pecan and Hickory Creek basins were increased to $:1,570 and for the Clear Creek basin to $1,893. The increases in May 2006 were originally approved with the 2003 Impact Fee Ordinance as a phased approach. These fees are assessed to offset the additional infrastructure costs associated with service to new development areas. Impact fees allow the City to meet new development requirements without the need to recover costs from existing customers through higher utility or tax rates. As shown under "DEBT INFORMATION -Anticipated ISSUanCE~ of Revenue Bonds," the City is projecting that it will issue more debt over the next five years for water system projects. As a result, and to maintain relatively level water cost for its customers while meeting increases in costs of labor and supplies, the City is projecting a 2% water rate increase for each year beginning in 2008 through 2013. The City's current water and wastewater rates are comparable, though slightly higher, than rates charged in nearby municipalities of similar size, though the City's rates are somewhat lower than other water suppliers operating in the immediate area adjoining the City. The City has identified significant water and wastewater infrastructure that it anticipates will be funded thhrough a mix of currently-generated funds, the use of financial reserves and System debt over the next five years (see "Debt l:nformatian - Anticipated Issuance of Revenue Bonds"}. The increasing capital expenditures and growth in debt service associated with the capital expenditures, particularly for the wastewater system, are signif cant contributors to the increased wastewater rates, discussed above. In addition, the wastewater increases reflect a financial goal for both the water and wastewater systems to (i} generate net revenues each year in amounts equal to the System's debt service coverage ratio of 1.25 times debt service, after payment of operating expenses of each system, with each component of the System meeting the rate. covenant on a stand-alone basis, and (ii} with each system building toward the accumulation of reserves equal to 60 days of working capital and an unreserved fund balance of 15% of budgeted expenses. In f scal year 2006, the City reached these goals. Reserve funds, including rate stabilization accounts, that were established to address future capital and contingency requirements and to provide financial flexibility are being used to minimize rate increases, Through the use of such reserves, the City can meet budget demands during cycles of wet weather, such as occurred in the summer of 2004, that reduce the cash flow of the water system. The use of rate stabilization funds also permits the City to temporarily absorb increases in variable operating costs. In accordance with the terms of the Ordinance, the City Council may pledge all or part of the amounts inane ar more of the rate stabilization funds to secure the Parity Bonds, in which event, such pledged amounts become "Pledged Revenues" that may be taken into account by the City for purposes of satisfying the debt service coverage covenant described in 1:he preceding paragraph. For the year ended September 30, 2006 the City added $3,000,000 to the water rate stabilization fund, and $2.65 million to the wastewater rate stabilization fund from increased water sales during the current draught. Fvr fiscal year 2007, the City does not anticipate using any rate stabilization reserves from water or wastewater. The City's fiscal year 2007 budget includes a beginning combined balance of approximately $10 million in the water rate stabilization fund and $4.0 million in the wastewater rate stabilization fund. The City Charter provides that the City shall be entitled to receive annually on the net investment from excess revenues of its utility enterprise funds, if any, of not more than 6 percent of the net investment of such funds in each year. In satisi:action of this "rate of return" transfer provision, the City annually makes transfers from the water and wastewater system (excep'r for amounts attributable to drainage operations, as described below} to the City's General Fund that equal to 3.5% of the rate revenue of each fund. In addition, a there is an annual transfer of 4% of rate revenue as a payment in lieu of franchise taxes and an indirect allocation for recovery of administrative overhead, which, for fiscal year is equal to 3.3% of rate revenue. Since February 2002, when the City implemented its drainage fee, drainage projects have been funded by such fee, which is administered through the wastewater system budget. During the 2003 Texas legislative session, legislation was t~pproved that exempted State agencies, including State institutions of higher education, from paying drainage fees. As a result of this change in the law, prior year projections of drainage revenues were reduced by $252,000 each year. To address the loss of such funds, commencing with fiscal year 2006, the City has determined that na transfers will be made to the General Fund from drainage revenues that are comparable to the rate of return or payment in lieu of franchise taxes made to the General Fund from the water system and other rate revenues of the wastewater system. The City will also cease making a transfer to the wastewater system equivalent to the drainage fee. The net result is expected to be an approximately $200,000 benefit for drainage operations. 45 DEBT INFURMATI~N TABLE 7 -DEBT SERVICE REQUIREMENTS li fiscal Year Total % of Ended Outstanding Revenue Bonds ~ The Bands (2} Outstanding Principal 9130 Principal _ Interest Tatal Principal Interest Total Debt ~ Retired 2007 $ 13,325,axx $ 12,863,848 $ 26,188,848 $ - $ - $ - $ 26,188,84!1 2008 14,235,000 12,422,346 26,657,346 605,000 676,401 1,281,401 27,938,747 2009 14,330,x00 11,693,274 26,423,274 535,000 745,773 1,280,773 27,3a4,04ti 2010 14,870,000 10,936,954 25,8xb,954 560,0x0 720,440 1,280,x40 27,086,99~R 2011 13,730,0x0 10,202,189 23,932,189 590,000 693,015 1,283,0 1 S 25,215,20E 24,6d% 2012 14,335,000 9,513,682 23,848,682 620,0x0 664,580 1,284,580 25,133,262 2x13 14,985,000 8,815,190 23,800,190 650,0x0 634,735 1,284,735 25,0$4,92'1 2x14 15,705,0x0 8,088,752 23,793,752 680,000 603,4sa 1,283,480 25,077,231 2015 16,160,000 7,332,146 23,492,146 715,400 570,698 1,285,698 24,777,84E 2016 16,170,000 6,553,327 22,723,327 750,x00 53d,27a 1,286,270 24,009,597 52.04% 2017 1b,990,a00 5,741,371 22,731,371 785,000 500,198 1,285,198 24,a16,56~► 2018 17,650,x00 4,907,594 22,557,594 820,000 462,480 1,282,480 23,84x,07~~ 2019 18,195,0x0 4,061,541 22,256,541 865,000 422,883 1,287,883 23,544;42q~ 2020 19,135,0x0 3,177,201 22,312,2x1 900,0x0 381,405 1,281,405 23,593,606 2021 15,890,0x0 2,346,049 18,236,049 950,000 337,930 1,287,930 19,523,'979 83,28% 2022 12,735,000 1,656,8x9 14,391,8x9 990,0x0 292,340 1,282,340 15,674,149 2023 7,495,000 1,170,297 8,665,297 1,040,0x0 244,635 1,284,635 9,949,'93; 2024 4,815,0x0 883,109 5,698,109 1,090,0x0 194,580 1,284,580 6,982,+685 2025 5,055,000 651,144 5,7x6,144 1,14x,000 142,175 1,282,175 6,988,.319 2x26 2,825,x00 470,$59 3,295,$59 1,200,x00 $7,185 1,2$7,185 4,583,x44• 96,29% 2x27 2,275,0x0 362,697 2,637,697 1,255,0x0 29,493 1,284,493 3,922,189 2x28 2,370,000 265,413 2,635,413 - - - 2,635,413 2029 2,475,0x0 162,456 2,637,456 - - - 2,637,~t5ta~ 2030 2,585,000 54,931 2,639,931 - - - 2,639,!31 100.0x% $ 278,335,000 $ 124,333,180 $ 402,668,180 $ 16,740,x00 $ 8,94x,293 $ 25,68x,293 $ 428,348,473 (1} "Outstanding Revenue Bonds" does not include leaselpurchase obligations. (2) Average life of the issue - 11.363 years. Interest on the Bonds has been calculated at the rate of 4.70% fo.r purposes of illustration, VQTED BUT UNISSUED REVENUE BONDS ...The City has no voted but unissued revenue bonds. ANTICIPATED ISSUANCE OF REVENUE BONDS ...The City has developed a five year capital improvement plan for the System the "CIP"). The CIP includes improvements that will be funded with revenues of the System as well as through the issuance of Additional Bonds. The CIP is a planning tool and the City is not obligated to fund the CIP. The funding of the CIP will be dependent in part an continued demand far services, economic conditions in the City and the financial ability of the System to support the funding of the CIP, among other factors. The current five year CIP includes total capital expenditures for the System of approximately $341 million, of which, approximately $289 million are planned to be funded from proceeds of System debt (a portion of such expenditures will be made from prior issues of System debt}. The planned issuances of revenue iiebt is shown in the following table. Pro'ected Revenue Band Sales 000's (1) 2x07-08 2008-09 2009-1a 2x10-11 2011-12 Electric Utilities $ 7,x00 $ B,Oaa $ 8,0x0 $ 8,000 $ 8,000 Water Utilities 29,0x0 17,000 8,5x0 3,500 30,000 WastewaterlDrainage Utilities 1,500 10,500 9,500 10,000 3,0x0 $ 37,500 $ 35,500 $ 26,0x0 $ 21,500 $ 41,0x0 (1) The Electric System will revise its bond issuance plans in September 2007 for the five year period shown in tl~e table. 46 FINANCIAL INFORMATION TABU S -COMPARABLE CALCULATION OF NET REVENUES AVAILABLE FUR DEBT SERVICE The table below provides comparable calculations of Net Revenues available for debt service for the periods shown. Such calculations include all operating revenues plus interest income, less operating expenses. For purposes of they calculation, depreciation, amortization, franchise fees, and payments in lieu of taxes are excluded from operating expenses. Fiscal Year Ended September 30, Gross Revenues _ 2006 2005 2004 2003 c~~ 2002 c>>c7~ Electric Service $ 142,984,230 $ 127,207,343 $ 109,297,461 $ L41,842,084 $ 87,736,178 Water Service 25,708,728 20,899,624 18,222,344 19,348,543 18,202,404 Wastewater Service 21,045,73b 18,261,9b2 16,476,726 15,677,355 14,085,531 Other Feest3~ 11,231,866 4,081,191 4,51b,158 5,168,922 4,748,502 InterestIncome~4~ 6,340,498 5,141,512 4,141,819 6,919,311 8,406,425 Impact Fees ts~ 5,55b,349 4,206,630 6,771,b71 5,150,000 4,294,000 Total Revenues $ 212,867,407 $ 179,798,262 $ 159,424,179 $ 154,126,215 $ 137,473,040 Expenses Electric System Fuel and Purchased Power $ 113,375,234 $ 103,375,311 $ 91,622,708 $ 85,714,083 $ 69,869,177 Other Operating and Administrative Expenses 15,042,972 14,393,426 13,238,404 12,971,1 i7 16,649,839 $ 128,418,206 $ 117,768,737 $ 104,861,312 $ 98,687,200 $ 86,519,016 Water System Fuel and Purchased Power $ 1,533,389 $ 1,190,957 $ 970,035 $ 932,3$8 $ 791,629 Water Purchased 73,269 b6,779 71,454 118,979 112,523 Other Operating and Administrative Expenses 12,600,682 9,528,608 8,715,391 8,463,887 7,138,159 $ 14,207,340 $ 10,786,344 $ 9,754,880 $ 9,515,254 $ 8,042,311 Wastewater System Fuel and Purchased Power $ 1,004,980 $ 880,197 $ 744,984 $ 641,772 $ 485,381 Other Operating and Administrative Expenses 10,Ob8,157 10,191,287 9,925,5 57 8,906,191 10,023,440 $ 11,073,137 $ 11,071,484 $ 10,670,541 $ 9,547,963 $ 10,508,821 Total Expenses $ 153,698,683 $ 139,626,565 $ 125,288,733 $ 117,750,417 $ 105,070,148 Net Revenue Available for Debt Service and Other Lawful Purposes $ 59,168,724 $ 40,171,697 $ 34,137,446 $ 36,375,798 $ 32,402,892 Contribution to Net Revenues Available Electric System 40.50% 35.20% 27.10°/a 2$.46% 27.10% Water System 36.30% 39.50% 45.30% 4b.65% 53.24% Wastewater System 23.20% 25.30% 27.60% 24,49% 19.66% Electric Customers 42,186 41,846 39,507 37,057 36,591 Water Customers 28,805 27,584 26,270 24,913 24,054 Wastewater Customers 26,951 25,695 24,435 23,329 22,225 (1) Data is derived from financial statements of the City that are audited. ~2) The decline in electric revenue and cast of energy purchased in 2002 is attributable in large part to a decline in fuel cost in that year, as compared to 2001 and 2003, in particular. For additional information, see footnote 1 to Table 1 in. this Official Statement. ~3) Includes a reimbursement for the electric transmission as well as water and wastewater tapping fee revenues. ~4) Excludes changes in nan-cash Fair Market "value in years 2002 through 2006. ~S) In years 2004 through 2006, impact fees are recognized as collected. Prior to 2004, impact fee revenues were deferred until spent at which time it is recognized as earned revenue. 47 TABLE 9 - CUVERAGE AND FUND BALANCES Average Annual Principal and Interest Requirements, 2007-2030 $ 17,847,$53 Coverage of Average Requirements by 9-30-06 Net Available 3.32 times ~z~ Maximum Principal and Interest Requirements, 2008 $ 27,938,747 t~} Coverage of Maximum Requirements by 9-30-06 Net Available 2.12 times tz~ Utility System Revenue Bonds Outstanding as of 6-1-07 $ 265,010,000 The Bonds 16,740,000 Total Outstanding Revenue Bonds $ 281,750,000 Interest and Sinking Fund, as of b-1-07 $ 8,997,983 Aggregate of All Rate Stablization Funds $ 64,207,183 Reserve Fund, as of 6-1-07 $ 16,858,382 Emergency Fund, as of 6-1-07 $ 250,000 Extension and Replacement Fund, as of 6-1-07 $ 7,174,323 (1) Includes the Bonds. (2) Unaudited. IMPLEMENTATION OF NEW ACCOUNTING STANDARDS...Certain financial data included in this Official Statement for the years ended September 30, 2002, 2003, 2004, 2005 and 2006 (principally, data used in Tables 8 and 9} are derived from unaudited financial statements of the City. For the year ended September 30, 2002, the City implemented the pr{visions of the Governmental Accounting Standard Board ("GASB"} Statement No. 34, Basic Financial Statements -and M'anagement's Discussion and Analysis -for State and Local Governments, GASB Statement No. 37, Basic Financial St~~tements -and Management's Discussion and Analysis -for State and Local Governments: omnibus, and GASB Statement rdo. 38, Certain Financial Note Disclosures which results in a change in content and format of the City's financial statements (collectively, the "New GASB Statements"}. The audited financial statements of the City for the year ended September 30, 2006, prepared in accordance with the New GASB Statements, are in included in Appendix C hereto. The purpose of the New GASB Statements is to create new information and restructure much of the information that governments have presented in the past to provide a more comprehensive demonstration of their annual financial performance an a system-wide basis. Among the significant changes effected by the new accounting standards are new pres+~ntations far proprietary or business-type operations of the City, such as those reported for the City's electric, water and waste water operations (the "Proprietary Funds"}. As required by the new GASB statements, the City's annual report consists of three basic financial statements for the Proprietary Funds: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes in Net Assets; and the Statement of Cash Flows. Those statements are included in the financial statements of the City for the year ended September 30, 2006 in Appendix C. In addition to the changes discussed in the preceding paragraph, certain items comprising the Pledged Revenues au~e no longer reported in the City's financial statements in the same detail as in prior years. For various reasons, including budgeting for each business-type activity as a cast center, and for purposes of its disclosure obligations, the City maintains additional. detail, some of which is included in tables used herein. While the information far 2002, 2003, 2004, 2005 and 2006 is consistent with the Proprietary Fund information contained in its audited financial statements, the 2002, 2003, 2004, 2005 and 2006 columns have been marked as unaudited to reflect the inclusion of additional detail maintained in the f nancial records of the City, but which are no longer reported in the audited financial statements. A discussion of the New GASB Statements is set forth in the Management Discussion and Analysis and in vari{aus notes to the City's financial statements in Appendix C. 48 FINANCIAL POLICIES Basis of Accounting ...The accounting policies of the City conform to generally accepted accounting principles of the Governmental Accounting Standards Board and program standards adopted by the Government Finance Officers Association of the United States and Canada (GFOA}. The GFOA awarded a Certificate of Achievement far Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended September 34, 2446. This Certif sate is the highest farm of recognition for excellence in state and local government financial reporting. A Certif sate of Achievement is valid for a period of one year only. The City has received a Certificate since 19$4. In addition to the Certificate, the City received GFOA's Award for Distinguished Budget Presentation for its fiscal year 244b annual budget document. The measurement focuses for the Enterprise Funds, Internal Service Funds and Nanexpendable Trust Funds are income determination and cost of service, respectively. Accordingly, the accrual basis, whereby revenues and expenses are identified in the accounting period in which they are earned and incurred and net income, is utilized for these funds. The modified accrual basis, whereby revenues are recognized when they became both measurable and available for use during the year and expenditures are recognized when the related fund liability is incurred, is used far all other funds. Budgetary Procedures As prescribed by City Charter the City Manager, at least b4 days prior to the beginning of each fiscal year, submits to the City Council a proposed budget for the fiscal year beginning the following October 1. The budget includes proposed expenditures and revenues required to fund the expenditures. Following Council considerations, amendments and refinements, a public hearing is ordered and conducted for the purpose of obtaining taxpayer comments. The budget is finally approved and adopted by passage of an ordinance by the City Council prior to the beginning of the fiscal year. The budget is adopted on a basis consistent with generally accepted accounting principles. INVESTMENTS The City invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the City Council. Both state law and the City's investment policies are subject to change. INVESTMENT AUTHORITY AND INVESTMENT PRACTICES 0~ THE CITY ...Available City funds are invested as authorized by Texas law and in accordance with investment policies approved by the City Council. Bath state law and the City''s investment policies are subject to change. Under Texas law, the City is authorized to invest in (1} obligations of the United States or its agencies and instrumentalities, including letters of credit; (2) direct obligations of the State of Texas or its agencies and instrumentalities; (3} collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency ar instrumentality ofthe United States; (4) other obligation, the principal and interest of which is guaranteed ar insured by or backed by the full faith and credit af, the State of Texas or the United States ar their respective agencies and instrumentalities; (S) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent; (G} bands issued, assumed or guaranteed by the State of Israel; (7) certificates of deposit that arf; issued by a state or national bank domiciled in the State of Texas, a savings bank domiciled in the State of Texas, or a state or :federal credit union domiciled in the State of Texas and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in clauses (1}through (6) or in any other manner and amount provided by law for City deposits, fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1}, and are placed through a primary government securities dealer ar a financial institution doing business in the State of Texas, (9) certain bankers' acceptances with the remaining term of 274 days or less, if the short-term obligations of the accepting bank ar its parent are rated at least ,a-I ar P-1 or the equivalent by at least one nationally recognized credit rating agency, (14} commercial paper with a stated maturity of 274 days or less that is rated at least A-1 or P-I or the equivalent by either (a) two nationally recognized credit rating agencies ar (b} one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11} no-load money market mutual funds registered with and regulated by the Securities and Exchange Commission that have a dollar weighted average stated maturity of 94 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (12} no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invest exclusively in obligations described in the this paragraph, and are continuously rated as to investment quality by at least one nationally recognized investment rating f rm of not less than AAA or its equivalent. In addition, if specifically authorized in the authorized document, bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations, including letters of credit, of the United States or its agencies and instrumentalities in an amount at least equal to the amount of band proceeds invested under such contract, other than the prohibited obligations described in the next succeeding paragraph. The City may invest in such obligations directly or through government investment pools that invest safely in such abli~gations provided that the pawls are rated no lower than AAA ar AAAm ar an equivalent by at least one nationally reco;~nized rating service. The City may also contract with an investment management firm registered under the Investment Advisers Act of 1944 (15 U.S.C. Section $4b-1 et seq.} or with the State Securities Board to provide for the investment and management; of its public funds or other funds under its control for a term up to two years, but the City retains ultimate responsibility as fiduciary of its assets. In order to renew or extend such a contract, the City must do so by order, ordinance, or resolution. The City is specifcally prohibited from investing in: (1} obligations whose payment represents the coupon payments an the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3} collateralized mortgage obligations that have a stated final maturity of greater than 14 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. 49 Governmental bodies in the State are authorized to implement securities lending programs if (i} the securities loaned under the program are 100% collateralized, aloan made under the program allows for termination at any time and a loan made under the program is either secured by (a} obligations that are described in clauses (1} through (6) of the first paragraph under this subcaption, (b) irrevocable letters of credit issued by a state ar national bank that is continuously rated by a nationally recognized investment rating firm not less than "A" or its equivalent, or (c) cash invested in obligations that are described in clauses (1) through (6) and (la} through (12) of the first paragraph under this subcaption, or an authorized investment pool; (ii} securities held as collateral under a loan are pledged to the govemmental body, held in the name of the governmental body and deposited at the time the investment is made with the governing body or a third party designated by the such governmental bocky; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State of Texas; and (iv) the agreement to lend securities has a term of one year or less. Under Texas law, the City is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that include a list of authorized investments for City funds, the maximum allowable stated maturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All Ciry funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses, each fund's investment, Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of inve,strnent type, (2) preservation and safety of principal, (3} liquidity, (4} marketability of each investment, (5) diversif cation of the ,portfolio, and (6) yield. Under Texas law, the City's investments must be made "with judgment and care, under prevailing circumstances,, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment considering the probable safety of capital and probable income to be derived." At least quarte~~ly the City's investment officers must submit an investment report to the City Council detailing: (1} the investment position. of the City, (2} that all investment officers jointly prepared and signed the report, (3) the beginning market value, and any additions and changes to market value and the ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset, (6} the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a} adopted investment strategies and (b} Texas law. No person may invest City funds without: eacpress written authority from the City Council. Under Texas law, the City is additionally required to: (1) annually review its adopted policies and strategies, (2.) require any investment off cers with personal business relationships or family relationships with firms seeking to sell securities to the City to disclose the relationship and file a statement with the Texas Ethics Commission and the City, (3) require the registered principal of firms seeking to sell securities to the City to: (a} receive and review the City's investment policy, (b) ackr►owledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c) deffiver a written statement attesting to these requirements; (4} in conjunction with its annual financial audit, perform a compliance audit of the management controls on investments and adherence to the City's investment policy, (5) restrict reverse repurchase agreements to not more than 9a days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse repurchase agreement, (6) restrict the investment in non-money mutual funds in the aggregate to no mare than 15% of the City's monthly average fund balance, excluding band proceeds and reserves and other funds held for debt service, (7) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements and (8}provide specific investment training for the Treasurer, the chief financial officer (if oat ~~~he Treasurer) and the investment officer. TABLE lO -CURRENT INVESTMENTS As of June 1, 2U07, the following percentages of the City's investable funds were invested in the following categories oil investments: Market Descri tion Percent Value U.S. Federal Agency Coupon 4a.al% $ 115,674,aaa U.S. Federal Agency Discounts 1 a.38% 3a,aaa,000 U.S. Federal Agency Callables 16.95% 49,aaa,aa0 U.S. Federal Agency Step-Ups 5.3d% 15,5x0,000 U.S. Treasury Securities 1x.38% 30,Oaa,xxx Money MarketlCash 16.93% 48,935,260 1OO.Qa% $ 289,109,26a As of such date, the market value of such investments (as determined by the City by reference to published quotations, dealer bids, and comparable information} was aver 100% of their book value. No funds of the City are invested in derivative securities, i.e., securities whose rate of return is determined by reference to some other instrument, index, or commodity. 5a SELECTED PROVISIONS 4F THE BOND QRDINANCE On the date of the sale of the Bonds, the City Council will adopt the Ordinance authorizing the Bonds, which will be in substantially the same form as the ordinances authorizing the outstanding Parity Bonds. Selected provisions of the Ordinance are set forth below. The complete Ordinance is available from the City, the City's Financial Advisor and, during the offering period for the Bonds, from the Initial Purchaser, upon request. Section 8. DEFINITIONS. As used in this Ordinance the following terms shall have the meanings set forth below, unless the text hereof specifically indicates otherwise: (a) The terms "City" and "Issuer" shall mean the City of Denton, in Denton County, Texas. (b) The term "City Council" or "Council" shall mean the governing body of the City. (c) The term "Bands" shall mean collectively the Initial Band as defined and described in Section 2 of this Ordi~~ance and all substitute bonds exchanged therefor, and all other substitute bonds and replacement bonds, issued pursuant to and as provided in this Ordinance. (d} The term "Parity Bonds" shall mean collectively (i} the outstanding City of Denton Utility System Revenue Refunding Bonds, Taxable Series 1993-B, authorized by ordinance passed on June 8,1993 (the "Series 1993-B Bonds"}, (ii) the outstanding City of Denton Utility System Revenue Bonds, Series 1996, authorized by an ordinance passed an May 7, 1996 (the "Series 1996 Bonds"), (iii) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 1996-A, autkEOrized by an ordinance passed on May 7, 1996 (the "Series 1996•A Bands"}, (iv) the outstanding City of Denton Utility System Revenue Bands, Series 1998, authorized by an ordinance passed on March 24, 1998 (the "Series 1998 Bvnds"}, (v) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 1998A, authorized by an ordinance passed on July 2'.1, 1998 (the "Series 1998A Bonds"), (vi) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 199$1B, authorized by an ordinance passed on August 4, 1998 (the "Series 1998B Bonds"}, (vii) the outstanding City of Denton Utility System Revenue Bonds, Series 2000A, authorized by an ordinance passed on April 25, 2000 (the "Series 2000A Bond,"), (viii} the outstanding City of Denton Utility System Revenue Bvnds, Taxable Series 20008, authorized by an ordinance parsed on April 25, 2000 (the "Taxable Series 2000B Bonds"), (ix} the outstanding City of Denton Utility System Revenue Refunding and Improvement Bonds, Series 2001, authorized by an ordinance passed an April 17, 2001 (the "Series 2001 Bonds"), (x) the outstanding City of Denton Utility System Revenue Bonds, Series 2002A, authorized by an ordinance passed on April 9, 2002 (the "Series 2002A Bonds"}, (xi} the outstanding City of Denton Utility System Revenue Bonds, Taxable Series 2002B, authorized by an ordinance passed on April 9, 2002 (the "Taxable Series 2002B Bvnds") (xii) the outstanding City of Denton Utility System Revenue Refunding and Improvement Bands, Series 2003, authorized by an ordinance passed on April 1, 2003 (the "Series 2003 Bonds"), (xiii) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 2004, authorized by an ordinance passed an September 7, 2004 (the "Series 2004 Bands"}, (xiv) the outstanding City of Denton Utility System Revenue Refunding Bvnds, Series 2005, authorized by an ordinance passed an May 24, 2005 (the "Series 2005 Bonds"}, (xv) the outstanding City of Denton Utility System Revenue Bonds, Series 2006, authorized by an ordinance passed vn July 18, 2006 (the "Series 2006 Bonds"), (xvi) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 2007, authorized by an ordinance passed on January 23, 2007 (the "Series 2007 Bonds"), and (xvii}the Bonds. (e) The term "Additional Bands" shall mean the additional parity revenue bonds which the City reserves the right to issue in the future, in accordance with Section 26 of this Ordinance. (f) The term "System" shall mean (1} the City's entire existing waterworks and sewer system and the City's entire existing electric light and power system, together with all future extensions, improvements, enlargements, and additions thereto, and all replacements thereof, and (2) any other related facilities, all or any part of the revenues or income from which do, in the future, at the option of the City, and in accordance with law, become "Pledged Revenues" as hereinafter defined; provided that, notwithstanding the foregoing, and to the extent now yr hereafter authorized or permitted by law, the term System slhall not mean any water, sewer, electric, or other facilities of any kind which are declared not to be a part of the System, a~~d which are acquired ar constructed by the City with the proceeds from the issuance of "Special Facilities Bonds", which are hereby defined as being special revenue obligations of the City which are not payable from or secured by any Pledged Revenues, but which are secured by and payable from liens on and pledges of any other revenues, sources, ar payments, including, but not limited to, special contract revenues or payments received from any other legal entity in connection with such facilities; and such revenues, sources, or payments shall not be considered as or constitute Gross Revenues of the System, unless and to the extent otherwise provided in the ordinance or ordinances authorizing the issuance of such "Special Facilities Bonds". (g) The terms "Gross Revenues of the System" and "Gross Revenues" shall mean all revenues and income of every nature derived ar received by the City from the operation and ownership of the System, including the interest income from the investment or deposit of money in any Fund created by this Ordinance. (h) The terms "Net Revenues of the System", and "Net Revenues" shall mean all Gross Revenues after deducting therefrom an amount equal to the current expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs, 51 and extensions necessary tv render efficient service, provided, however, that only such repairs and extensions, as i:n tl~e judgment of the City Council, reasonably and fairly exercised by the adoption of appropriate resolutions, are necessary to keep the System in operation and render adequate service to said City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the Bonds or Additional Bands, shall be deducted in determining "Net Revenues". Payments required to be made by the City for water supply or water facilities, sewer services or sewer facilities, fuel supply, and for the purchase of electric power, which payments under law constitute operation anal maintenance expenses of any part of the System, shall constitute and be regarded as expenses of operation and maintenance of the System under this Ordinance. Depreciation and amortization shall not constitute ar be regarded as expenses of operation and maintenance of the System. {i} The term "Pledged Revenues" shall mean (1) the Net Revenues, plus (2) the net revenues of the Drainage System, which shall be calculated on the same basis as the Net Revenues of the System, plus (3) any additional revenues, income, or other resources relating to the System which are expected to be available to the City on a regular periodic basis, including, without limitation, any grants, donations, or income received or to be received from the United States Government, or any other public or private source, whether pursuant t+~ an agreement or otherwise, which in the future may, at the option of the City, be pledged to the payment of the Parity Bonds or Additional Bonds. ~j) The term "year" or "fscal year" shall mean the fiscal year used by the City in connection with the operation of the System. (k} The term "Government Obligations" shall mean (i} direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America., (ii) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of the purchase thereof are rated a.s to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (iii) noncallable obligations of a state or .an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the District adopts or approves the proceedings authorizing the financial arrangements are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. (1} "Drainage System" means the City's entire existing drainage system and all facilities related thereto. (m) "Rate Stabilization Fund" means the City`s separate Rate Stabilization Fund established for the purpose of stabilizing rates for ratepayers. Section 9. PLEDGE. (a) The Bonds are "Additional Bonds" as permitted by Sections 24 and ~.5 of the vrdin.arnce passed on March 10, 19$3, authorizing the City of Denton Revenue Refunding Bonds, Series 19$3 (the "Series 1983 Bands"); and it is hereby determined, declared, and resolved that all of the Parity Bonds (including the Bonds) are secured and payable equally and ratably on a parity, and that Sections 8 through 28, of this Ordinance are supplemental to and cumulative of Sections 7 through 27 of the aforesaid ordinance passed on March 1,1983, with Sections $ through 29 of this Ordinance being applicable to alI of the Parity Bonds. {b} The Parity Bonds and any Additional Bonds, and the interest thereon, including any interest coupons appertaining thereto, are and shall be secured by and payable from a first lien an and pledge of the Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the Funds created by this Ordinance, and any Funds created by any ordinance authorizing the issuance of any Additional Bonds. The Parity Bonds and any Additional Bonds are not: aril will not be secured by or payable from a mortgage or deed of trust on any real, personal, or mixed properties constituting the System. Section 10. SYSTEM FUND. There heretofore has been and is hereby created and there shall be established an+~ maintained on the books of the City, and accounted for separate and apart from all other funds of the City, a special fund to be enti~rled the "City of Denton Utility System Fund" {the "System Fund"}. All Gross Revenues shall be credited to the System Fund immediately upon receipt, unless otherwise provided in this Ordinance. All current expenses of operation and maintenance of the System shall be paid from such Gross Revenues credited to the System Fund as a first charge against same. Before making any deposits hereinafter required to be made from the System Fund, the City shall retain in the System Fund at all times an amount at least equal to one-sixth of the amount budgeted for the then current fiscal year for the current operation and maintenance expenses of the System. Section 1 1. INTEREST AND SINKING FUND. For the sole purpose of paying the principal of and interest on all Parity Bonds and Additional Bonds, there heretofore has been and is hereby created and there shall be established and maintained vn the books 52 of the City, and accounted for separate and apart from all other funds of the City, a separate fund to be entitled the "City of Denton Utility System Revenue Bonds Interest and Sinking Fund" the "Interest and Sinking Fund"). Section 12. RESERVE FUND. There heretofore has been, and is hereby, created, and there shall be established anal maintained at JPMorgan Chase Bank, National Association, and hereafter, at the option of the City, established and maintained at any time at any national bank having a capital and surplus in excess of $25,000,000, a separate fund to be entitled the "City of Denton Utility System Bonds and Additional Bonds Reserve Fund" the "Reserve Fund"). The Reserve Fund shall be used to pay the principal of and interest on any Parity Bands or Additional Bonds when and to the extent the amounts in the Interest and Sinking Fund available for such payment are insufficient for such purpose, and may be used for the purpose of f pally retiring the last of any Parity Bonds or Additional Bonds. Section 13. EXTENSION AND IMPROVEMENT FUND. There heretofore has been and is hereby created and 1:here shall be established and maintained on the books of the City, and accounted for separate and apart from all other funds of the City, a separate fund to be entitled the "City of Denton Utility System Extension and Improvement Fund" (the "Exxtension and Improvement Fund"). The Extension and Improvement Fund shall be used for the purpose of paying the casts of improvements, enlargements, extensions, additions, replacements, or other capital expenditures related to the System, or for paying; the costs of unexpected ar extraordinary repairs or replacements of the System for which System funds are not available, or for paying unexpected or extraordinary expenses of operation and maintenance of the System far which System funds are riot otherwise available, ar for any other lawful purpose. Section I~. EMERGENCY FUND. There is hereby created and there shall be established and maintained on the books of the City, and accounted for separate and apart from all other funds of the City, a separate fund to be entitled the "City of Denton Utility System Emergency Fund" (the "Emergency Fund"). The Emergency Fund shall be used for the purpose of paying unexpected or extraordinary expenses of repair, replacement, operation, and maintenance of the System for which nc;ither System funds nor the moneys in the Extension and Improvement Fund are available. There was deposited in the Emergency Fund simultaneously with the delivery of the Series 1983 Bonds to the initial purchasers thereof from lawfully available funds of the City the amount of $250,000. All investment interest income from the Emergency Fund shall be transferred to the System Fund as received. Section 15. DEPOSITS OF PLEDGED REVENUES. Pledged Revenues shall be credited to or deposited in thE: Interest and Sinking Fund, the Reserve Fund, the Extension and Improvement Fund, and other funds when and as required by tt►is Ordinance and any ordinance authorizing the issuance of Additional Bonds. Section 16. INVESTMENTS. To the extent permitted by law, money in any Fund established pursuant to this Ordinance or any ordinance authorizing the issuance of Additional Bonds, may, at the option of the City, be placed in time deposits or certificates of deposit secured by obligations of the type hereinafter described, or be invested in Government Obligations ~,as defined in Section 8 hereof or obligations guaranteed or insured by the United States of America, which, in the opinion of the Attorney General of the United States, are backed by its full faith and credit or represent its general obligations, or invested i.n obligations of instrumentalities ofthe United States of America, including, but not limited to, evidences of indebtedness issued, ensured, or guaranteed by such governmental agencies as the Federal Land Banks, Federal intermediate Credit Banks, Banks for Cooperatives, Federal Home Loan Banks, Government National Mortgage Association, United States Postal Seniice, Farmers Home Administration, Federal Home Loan Mortgage Association, Small Business Administration, Federal Housing Association, or Participation Certificates in the Federal Assets Financing Trust; provided that all such deposits and investments s►hall be made in such manner as will, in the opinion of the City, permit the money required to be expended from any Fund to be a~Tailable at the proper time or times as expected to be needed. Such investments (except United States Treasury Obligations--State and Local Government Series investments held in book entry farm, which shall at all times be valued at cost} shall be valued in terms of current market value as of the last day of each fiscal year. Unless otherwise set forth herein, all interest and income derived from such deposits and investments immediately shall be credited to, and any losses debited to, the Fund from which the depositor investment was made, and surpluses in any Fund shall or may be disposed of as hereinafter provided. Such investments shall be sold promptly when necessary to prevent any default in connection with the Parity Bonds or Additional Bands consistent with the ordinances, respectively, authorizing their issuance. Section 17. FUNDS SECURED. That money in all Funds created by this Ordinance, to the extent not invested, shall be secured in the manner prescribed by law. Section 18. PRIORITY OF DEPOSITS AND PAYMENTS FROM SYSTEM FUND. That the City shall make the deposits and payments from Pledged Revenues in the System Fund when and as required by this Ordinance and any ordinance authorizing any Additional Bands, and such deposits shall be made in the following manner and with the following inevocalble priorities, respectively: First, to the Interest and Sinking Fund, when and in the amounts required by this Ordinance and any ordinance authorizing the Parity Bonds or any Additional Bonds; then 53 Second, to the Reserve Fund, when and in the amounts required by this Ordinance and any ordinance authorizing the Parity Bonds or any Additional Bands; then Third, to the Extension and Improvement Fund, when and as required by Section 21 of this Ordinance. Section 19. INTEREST AND SINKING FUND REQUIREMENTS. The City shall cause to be deposited to the credit of the Interest and Sinking Fund the accrued interest received from the sale of the Initial Bond, and on or before the ~!5t:h day of each month, the City shall cause to be deposited to the credit of the Interest and Sinking Fund, in approximately equal monthly payments, amounts suff dent, together with any other funds an hand therein, tv pay all of the interest or principal and interest coming due, including the principal amount of any Parity Bonds required to be redeemed prior to maturity pursuant to any mandatory redemption requirements, on the Parity Bonds and any Additional Bands on the next succeeding interest payment date. Any moneys so deposited in the Interest and Sinking Fund with respect to a mandatory redemption requirement, together with other lawfully available funds of the City, may be used by the City, to purchase, in advance of a mandatory redemption date and at a price not exceeding the principal amount thereof plus accrued interest thereon to the date of purcha;~e, Parity Bonds which would be subject to being chosen for mandatory redemption vn such mandatary redemption date. The Pa;ding Agent shall cancel any Parity Bonds so purchased. Section 20. RESERVE FUND REQUIREMENTS. There is now on hand in the Reserve Fund an amount of money and Government Obligations which is in excess of $3,000,000 and which is at least equal to the average annual principal and interest requirements ofthe outstanding Taxable Series 1993-B Bonds, the Series 1996 Bonds, the Series 1996-A Bonds, the Series 1998 Bonds, the Series 1998A Bonds, the Series 1998B Bands, the Series 2000A Bonds, the Series 2000B Bonds, the Series 2001 Bonds, the Series 2002A Bonds, the Taxable Series 2002B Bonds, the Series 2003 Bonds, the Series 2004 Bonds, the Series 2005 Bonds, the Series 2006 Bonds and the Series 2007 Bonds (the current "Required Reserve Amount"). Following the issuance and delivery of the Initial Bands the Required Reserve Amount shall become and be an amount: of maney and investments equal to the average annual principal and interest requirements of all the outstanding Parity Bonds ar~d Additional Bonds; provided further, however, that the Required Reserve Amount shall never be less than $3,000,000 if the maximum annual principal and interest requirements on all outstanding Parity Bands and Additianal Bonds exceeds $3,000,000. Immediately after the issuance and delivery of the Initial Bond there shall be deposited to the credit of the Reserve Fund, from. the proceeds of the sale of the Initial Bond, money suff dent to cause the Reserve Fund to contain an aggregate amount o:f money and investments equal to the Required Reserve Amount for all then outstanding Parity Bonds. After the delivery of any future Additianal Bonds the City shall cause the Reserve Fund to be increased, if and to the extent necessary, so that such Fund will contain an amount of maney and investments equal to the Required Reserve Amount. Any increase in the R+~quired Reserve Amount may be funded from Pledged Revenues, or from proceeds from the sale of any Additional Bands, ar any oirher available source or combination of sources. All or any part of the Required Reserve Amount not funded initially and imme;di;~tely after the delivery of any installment or issue of Additional Bonds shall bye funded, within not more than five years from the date of such delivery, by deposits of Pledged Revenues in approximately equal monthly installments on or before the 25th da}~ vif each month. Principal amounts of the Parity Bonds and any Additional Bonds which must be redeemed pursuant to any applicable mandatary redemption requirements shall be deemed to be maturing amounts of principal for the purpose of calculating principal and interest requirements on such bonds. When and sa long as the amount in the Reserve Fund is not less than the Required Reserve Amount no deposits shall be made to the credit of the Reserve Fund; but when and if the Reserve Fund at any time contains less than the Required Reserve Amount, then the City shall transfer from Pledged Revenues in the System Fund, anal deposit to the credit of the Reserve Fund, monthly on or before the 25th day of each month, a sum equal to ll60th of the Req~~ired Reserve Amount, until the Reserve Fund is restored to the Required Reserve Amount. The City specifically covenants drat when and so long as the Reserve Fund contains the Required Reserve Amount, the City shall cause all amounts in excess ~of the Required Reserve Amount to be deposited to the credit of the Interest and Sinking Fund. Section 21. EXTENSION AND IMPROVEMENT FUND REQUIREMENTS. During each year, subject and subordinate to making the required deposits to the credit of the Interest and Sinking Fund and the Reserve Fund, the City shall bye required to deposit to the credit of the Extension and Improvement Fund, from Pledged Revenues in the System Fund, an ~~m~ount equal to 8% of the "Adjusted Gross Revenues of the System", which term is hereby defined to mean the following: the Gross Revenues of the System far such year after deducting from such Gross Revenues an amount equal t+a the current expenses of operation and maintenance of the System far such year which are directly attributable to (i} all fuel costs related to the production of electric energy by the City andlor (ii) the purchase of electric energy by the City. Additional excess Pledged Revenues may, at the option of the City Council, be deposited to the credit of the Extension and Improvement Fund as permitted by Section 23(b) hereof, but no such additional deposit is required. All inv~~st~ment interest income from the Extension and Improvement Fund shall be retained in and remain a part of such Fund. Section 22. RATE STABILIZATION FUND. (a) In each fiscal year, the City hereby agrees to transfer the Transfer Amount (as defined below} from the Rate Stabilization Fund into the System Fund for the purpose of paying the current expenses of operation and maintenance of the System and pledges such Transfer Amount to the payment of the Bonds, all P~~ri1.y Bonds and any Additianal Bonds. 54 (b) The Transfer Amount shall be an amount of moneys and investments contained in the Rate Stabilization Fund equal to the amount for each fiscal year of the City that will, when added to the otherwise expected Pledged Revenues for that fiscal year, produce an amount of Pledged Revenues during such fiscal year at least equal to the greater of 1.25 times the average annual principal and interest requirements of all then outstanding Bonds, Parity Bvnds and Additional Bonds or 1..~5 times the succeeding fiscal year's principal and interest requirements of all then outstanding Bonds, Parity Bonds and Additio~ial Bonds. (c} The Transfer Amount will be calculated and reflected in the annual budget far each fiscal year and will, on th.e first day of such fiscal year, be transferred from the Rate Stabilization Fund into the System Fund. Section 23. DEFICIENCIES; EXCESS PLEDGED REVENUES. (a) If on any occasion there shall not be sufficient Pledged Revenues to make the required deposits into the Interest and Sinking Fund or the Reserve Fund, such deficiency s~~hall be made up as soon as possible from the next available Pledged Revenues. (b) Subject to making the required deposits to the credit of the various Funds when and as required by this Ordinance yr any ordinance authorizing the issuance of Additional Bonds, any surplus Pledged Revenues may be used by the City f+~r any lawful purpose. Section 24. PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS. On or before December l~, 2aa7, and semiannually on or before each June 1 and December 1 thereafter while any of the Parity Bonds or Additional Bonds are outstanding and unpaid the City shall make available to the Paying Agents therefor, out of the Interest and Sinking Fund, ar if necessary, out of the Reserve Fund, money sufficient to pay, on each of such dates, the principal of and interest on the Parity Bonds and Additional Bands as the same matures and comes due, or to redeem the Parity Bonds or Additional Bands prior to maturity, either upon mandatary redemption or at the option of the City. At the direction of the City the Paying Agents shall either deliver paid Parity Bonds and Additional Bands, and any interest coupons appertaining thereto, to the City nor destroy all paid Parity Bands and Additional Bonds, and any coupons appertaining thereto, and furnish the City with an appropriate certificate of cancellation or destruction. Section 25. FINAL DEPOSITS. (a) Any Parity Band or Additional Band shall be deemed to be paid, retired, and na longer outstanding within the meaning of this Ordinance when payment of the principal of, redemption premium, if any, on such Parity Bond or Additional Bond, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, upon redemption, ar otherwise} either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption or provision for the proper giving of such notice having been made}, or (ii) shall have been provided by irrevocably depositing .with or making available to a Paying Agent therefor, intrust and irrevocably set aside exclusively for such payment, (l) money sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in, such amounts and at such times as will insure the availability, without reinvestment, of sufficient money tv make such payment, and all necessary and proper fees, compensation, and expenses of such Paying Agent pertaining to the Parity Bonds and Additional Bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of such paying agent. At such time as a Bond or Additional Bond shall be deemed to be paid hereunder, as aforesaid, it shall nv longer be secured by or entitled to the benefits of this Ordinance or a lien on and pledge of the Pledged Revenues, and shall be entitled to payment solely from such money or Government Obligations. (b) Any moneys so deposited with a paying agent may at the direction of the City also be invested in Gavernmen~r Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from all Government Obligations in the hands of the paying agent pursuant to this Section which is not required for the payment of the Parity Bonds and Additional Bonds, the redemption premium, if any, and interest thereon, with respect to which such money has been sv deposited, shall be turned over to the City or deposited as directed by the City. Section 26. ADDITIONAL BONDS. (a) The City shall have the right and power at any time and from time to time, and in one or mare series ar issues, to authorize, issue, and deliver additional parity revenue bonds (herein called "Additional Bonds"), in accordance with law, in any amounts, for any lawful purpose, including the refunding of any Parity Bonds or Additional Bonds, or other obligations. Such Additional Bonds, if and when authorized, issued, and delivered in accordance with this Ordinance, shall be payable from and secured by an irrevocable first lien on and pledge of the Pledged Revenues, equally and ratably on a parity in all respects with the Parity Bonds and any other outstanding Additional Bonds. (b} The principal of all Additional Bonds must be scheduled to be paid or mature on December 1 of the years in which such principal is scheduled to be paid or mature. Section 27. FURTHER REQUIREMENTS FOR ADDITIONAL BONDS. Additional Bvnds shall be issued only i~~n accordance with this Ordinance, and no installment, Series, or issue of Additional Bands shall be issued or delivered unless: (a) The Mayor of the City and the City Secretary sign a written certificate to the effect that the City is not in default as to any covenant, condition, or obligation in connection with all then outstanding Parity Bonds and Additional Bands, and the ordinances authorizing same, and that the Interest and Sinking Fund and the Reserve Fund each contains the amount then required to be therein. 55 (b} An independent certified public accountant, or independent firm of certified public accountants, acting by acid through a certified public accountant, signs a written certificate to the effect that, in his or its opinion, during either the ne:Kt preceding fiscal year, or any twelve consecutive calendar month period out of the l8-month period immediately preceding the month in which the ordinance authorizing the issuance of the then proposed Additional Bonds is passed, the Pledged Revenues were at Least (i)1.25 times an amount equal to the average annual principal and interest requirements, and (ii)1.10 times an amount equal to the principal and interest requirements during the fiscal year during which such requirements are scheduled to be the greatest, of all Parity Bonds and Additional Bonds which are scheduled to be outstanding after the delivery of the then proposed Additional Bands. It is specifically provided, however, that in calculating the amount of Pledged Revenues for the purposes of this subsection (b), if there has been any increase in the rates or charges for services of the System which is then i.n effect, but which was not in effect during all or any part of the entire period for which the Pledged Revenues are being calculated (hereinafter referred to as the "entire period") then the certified public accountant, or in lieu of the certified public accountant a firm of consulting engineers, shall determine and certify the amount of Pledged Revenues as being the total cif (i) the actual Pledged Revenues for the entire period, plus (ii} a sum equal to the aggregate amount by which the actual billings ~to customers of the System during the entire period would have been increased if such increased rates ar charges had been in effect during the entire period. (c} Provision shall be made in the ordinance authorizing their issuance for increasing the Reserve Fund to the Required Reserve Amount as required by Section 20 hereof. (d} All calculations of average annual principal and interest requirements of any bands made in connection with the issuance of any then proposed Additional Bands shall be made as of the date of such Additional Bonds; and also in making calculations for such purpose, and far any other purpose under this Ordinance, principal amounts of any bonds which must be redeemed prior to maturity pursuant to any applicable mandatory redemption requirements shall be deemed to be maturing amounts of principal of such bands. Section 28. GENERAL COVENANTS. The City further covenants and agrees that in accordance with and i:o the extent required or permitted by law; (a} Performance. It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Ordinance, and each ordinance authorizing the issuance of Additional Bonds, and in each and every Parity Band and Additional Bond; that it will promptly pay ar cause to be paid the principal of and interest on every I'ariity Bond and Additional Band, on the dates and in the places and manner prescribed in such ordinances and Parity Bonds or Additional Bonds; and that it will, at the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the Interest and Sinking Fund and the Reserve Fund; and any holder of the Parity Bands or Additional Bands may require the City, its officials, and employees, to carry out, respect, or enforce the covenants and obligations of this Ordiniance, or any ordinance authorizing the issuance of Additional Bonds, by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings, in any court of competent jurisdiction, against the City, its ~afficials, and employees. (b) City's Legal Authority. The City is a duly created and existing home rule city of the State of Texas, and is duly authorized under the laws of the State of Texas to create and issue the Parity Bonds and Additional Bonds; that all action on its part for the creation and issuance of the said obligations has been or will be duly and effectively taken, and that said obligati~~ns~~ in the hands of the holders and owners thereof are and will be valid and enforceable special obligations of the City in accordance with their tf'iCIYt5. (c} Title. The City has or will obtain lawful title to the lands, buildings, structures, and facilities constituting the System, that it warrants that it will defend the title to all the aforesaid lands, buildings, structures, and facilities, and every part thereof, for the benefit of the holders and owners of the Parity Bonds and Additional Bonds, against the claims and demands a~f all persons whomsoever, that it is lawfully qualified to pledge the Pledged Revenues to the payment of the Parity Bonds and Additional Bands in the manner prescribed herein, and has lawfully exercised such rights. (d) Liens. The City will from time to time and before the same become delinquent pay and discharge all taxes, assessments, and governmental charges, if any, which shall be lawfully imposed upon it, or the System, that it will pay all lawl:ul claims for rents, royalties, labor, materials, and supplies which if unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner provided herein, and that it will not create or suffer to be created any mechanic's, laborer's, materialman's, or other lien or charge which might or could be prior to the liens hereof, or do or suffer any matter or thing whereby thE; liens hereof might or could be impaired; provided, however, that no such tax, assessment, or charge, and that no such claims wl~ich might be used as the basis of a mechanic's, laborer's, materialman's, or other lien or charge, shall be required to be paid s~a long as the validity of the same shall be contested in good faith by the City. (e) Operation of System; Na Free Service. Vdhile the Parity Bonds or any Additional Bonds are outstanding and unpaid the City shall continuously and efficiently operate the System, and shall maintain the System in good condition, repair, and working ~6 order, all at reasonable cost. No free service of the System shall be allowed, and should the City or any of its agencies, instrumentalities, lessors, or concessionaires make use of the services and facilities of the System, payment mt~nthly of the standard retail price of the services provided shall be made by the City or any of its agencies, instrumentalities, lessors, or concessionaires out of funds from sources other than the revenues of the System, unless made from surplus Pledged Revenues as permitted by Section 23(b) hereof (f} Further Encumbrance. While the Parity Bonds or any Additional Bonds are outstanding and unpaid, the City shall not additionally encumber the Pledged Revenues in any manner, except as permitted in this Ordinance in connection wiirh Additional Bonds, unless said encumbrance is made junior and subordinate in all respects to the liens, pledges, covenants, and agreements of this Ordinance and any ordinance authorizing the issuance of Additional Bonds; but the right of the City to issue rF;venue bonds payable from a subordinate lien on surplus Pledged Revenues is specif tally recognized and retained, as permitted under Section 23(b} hereof. (g) Sale, Lease or Disposal of Property. No part of the System shall be sold, leased, mortgaged, demolished, removed or otherwise disposed of, except as follows: (1) Ta the extent permitted by law, the City may sell, lease, mortgage, demolish, remove or otherwise dispose of at any time and from time to time any property or facilities constituting part of the System only if (A}the City Council shall determine, as evidenced by a resolution to that effect, such property or facilities are not useful in the operation of the System, or (B) the proceeds of such sale are $25,004 or less, ar the City Council shall determine, as evidenced by a resolution to that effect, the fair market value of the property or facilities exchanged is $250,000 or less, or (C) if such proceeds or fair market value exceed $250,000 the City Council shall determine, as evidenced by a resolution to that effect, that the sale or exchange of such property or facilities will not impair the ability of the Crry to comply during the current or any future fiscal year with the covenant of the City set forth in Section 2$(i) of thus Ordinance. The proceeds of any such sale or exchange not used to acquire other property necessary or desirable far the sale or efficient operation of the System shall forthwith, at the option of the City, (i) to be used to redeem or purchase Parity Bands or Additional Bonds, (ii) otherwise be used to provide for the payment of Parity Bonds or Additional Bonds or (iii} be used for any other lawful purpose. (2) To the extent permitted by law, the City may lease or make contracts or grant licenses for the op~eratian of, or make arrangements for the use of, or grant easements or other rights with respect to, any part of the System, provided that any such lease, contract, license, arrangement, easement or right (A) does not impede the operation of the System by the City and (B}does not in any manner impair or adversely affect the rights ar security of the owners ofthe Parity Bonds or Additional Bonds under this Ordinance; and provided, further, that if the depreciated cost of the property to . be covered by any such lease, contract, license, arrangement, easement or other right is in excess of $500,000, the City Council shall determine, as evidenced by a resolution to that effect, that the action of the City with respect thereto does not result in a breach of the conditions under this clause (2}. Any payments received by the City under or in connection with any such lease, contract, license, arrangement, easement or right in respect of the System or any part thereof shall constitute Gross Revenues. (h} Insurance. (l) The City shall cause to be insured such parts of the System as would usually be insured by corporations operating like properties, with a responsible insurance company or companies, against risks, accidents, ar casualties against which and to the extent insurance is usually carried by corporations operating like properties, including, to the extent reasonably obtainable, fire and extended coverage insurance, insurance against damage by floods, and use and occupancy insurance. Public liability and property damage insurance also shall be carried unless the City Attorney gives a written opinion to tlhe effect that the City is not liable for claims which would be protected by such insurance. All insurance premiums shall ~~e paid as an expense of operation of the System. At any time while any contractor engaged in construction work shall be fully responsible therefor, the City shall not be required to carry insurance on the work being constructed if the contractor is required to carry appropriate insurance. All such policies shall be open to the inspection of the Bondholders and their representatives at all reasonable times. Upon the happening of any loss or damage covered by insurance from one or more of said causes, the City shall make due proof of loss and shall do ail things necessary or desirable to cause the insuring companies to make payment in full directly to the City. The proceeds of insurance covering such property, together with any other funds necessary and available far such purpose, shall be used forthwith by the City for repairing the property damaged or replacing the property destroyed; provided, however, that if said insurance proceeds and other funds are insufficient for such purpose, then said insurance proceeds pertaining to the System shall be deposited in a special and separate trust fund, at an official dep~asitory of the City, to be designated the Insurance Account. The Insurance Account shall be held until such time as other funds become available which, together with the Insurance Account, will be sufficient to make the repairs or replacements originally required. (2} The annual audit hereinafter required may captain a section commenting on whether or pat the City has complied with the requirements of this Section with respect to the maintenance of insurance, and shall state whetiher or not all insurance premiums upon the insurance policies to which reference is made have been paid. (i} Annual Budget and Rate Covenant. The City shall prepare, prior to the beginning of each fiscal year, an anneal budget, in accordance with law, reflecting an estimate of cash receipts and disbursements far the ensuing fiscal year in sufficient detail to 57 indicate the probable Gross Revenues and Pledged Revenues for such fiscal year. The City shall fix, establish, maintain, and collect, such rates, charges, and fees for the use and availability of the System at all times as are necessary (1} to produce Gross Revenues sufficient, together with any other Pledged Revenues, to pay all current operation and maintenance expenses of the System, and (2} to produce an amount of Pledged Revenues during each fiscal year at least equal to the greater of 1.25 times the average annual principal and interest requirements of all then outstanding Parity Bonds and Additional Bonds or 1.25 times the succeeding fiscal year's principal and interest requirements of all then outstanding Parity Bonds and Additional Bands. (j} Records. The City shall keep proper books of record and account in which full, true, proper, and correct entries will be made of all dealings, activities, and transactions relating to the System, the Pledged Revenues, and the Funds created pursuant to this Ordinance, and all books, documents, and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of any Bondholder, provided, that all books, documents, and vouchers relating to the City's electric system shall be made available for inspection only to the extent required by law, including, without limitation, the provisions of Section 552.133 of the Texas Government Code. To the extent consistent with the provisions of this Ordinance, the City shall keep its books and records in a manner conforming to standard accounting practices as usually would be followed by private corporations owning and operating a similar System, with appropriate recognition being given to essential differences between municipal and corporate accounting practices. (k) Audits. After the close of each fiscal year while any of the Parity Bonds or any Additional Bonds are outstanding, an audit will be made of the books and accounts relating to the System and the Pledged Revenues by an independent certified public accountant or an independent firm of certified public accountants. As soon as practicable after the close of each such year, and when said audit has been completed and made available to the City, a copy of such audit for the preceding year shall be mailed to the Municipal Advisory Council of Texas, to each paying agent for any bonds payable from Pledged Reveni~es~, and to any Bondholders who shall so request in writing. The annual audit reports shall be open to the inspection of the Bondholders and their agents and representatives atoll reasonable times. (1) Governmental Agencies. It will comply with all of the terms and conditions of any and all franchise's, ,permits, and authorizations applicable to or necessary with respect to the System, and which have been obtained from any governmental agency; and the City has or will obtain and keep in full force and effect all franchises, permits, authorization, and other requirements applicable to or necessary with respect to the acquisition, construction, equipment, operation, and maintenance of the System. (m} No Competition. It will not operate, or grant any franchise or, to the extent it legally may, permit 1:he acquisition, construction, or operation of, any facilities which would be in competition with the System, and to the extent that: it legally may, the City will prohibit any such competing facilities. ~ ' (n) No Arbitrage. The City covenants to and with the purchasers of the Parity Bonds and any Additional Bonds that na use will be made of the proceeds of any of such bonds at any time throughout the term of any of such bonds which, if such use had been reasonably expected on the date of delivery of any of such bands to and payment therefor by the purchasers, would have caused any of such bonds to be arbitrage bonds within the meaning of Section l48 of the Internal Revenue Code of 1936, as amended (the "Code"), or any regulations ar rulings pertaining thereto; and by this covenant the City is obligated to amply with the requirements of the aforesaid Code and all applicable and pertinent Department of the Treasury regulations relating; to arbitrage bonds. The City further covenants that the proceeds of all such bonds will not otherwise be used directly or indirectly so as to cause all or any part of such bonds to be or become arbitrage bonds within the meaning of the aforesaid Code, or an;y regulations pertaining thereto. Section 29. AMENDMENT OF ORDINANCE. (a) The holders or owners of Parity Bonds and Additional Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding Parity Bonds and Additional Bonds shall have the right from time to time to approve any amendment to this Ordinance which may be deemed necessary or desirable by the City, provided, however, that nothing herein contained shall permit or be construed to permit the amendment of t~~e terms and conditions in this Ordinance or in the Parity Bonds or Additional Bands so as to: (1} Make any change in the maturity of the outstanding Parity Bonds or Additional Bonds; (2) Reduce the rate of interest borne by any of the outstanding Parity Bonds or Additional Bonds; (3} Reduce the amount of the principal payable on the outstanding Parity Bonds ar Additional Bonds; (4} Modify the terms of payment of principal of or interest on the outstanding Parity Bonds or Additional Bonds, or impose any conditions with respect to such payment; (5) Affect the rights of the holders or owners of less than all of the Parity Bonds and Additional Bands then outstanding; 58 (6} Change the minimum percentage of the principal amount of Parity Bonds and Additional Bonds ~lecessary for consent to such amendment. (b} If at any time the City shall desire to amend the Ordinance under this Section, the City shall cause notice of the proposed amendment to be published in a f nancial publication of general circulation in The City of New York, New York, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Paying Agents for inspection by all holders ar owners of Parity Bonds and Additional Bonds. Such publication is not required, however, if notice in writing is ;liven to each holder or owner of Parity Bonds and Additional Bonds. (c} Whenever at any time not less than thirty days, and within one year, from the date of the first publication of said notice or other service of written notice the City shall receive an instrument or instruments executed by the holders or ownf;rs of at least 51% in aggregate principal amount of all Parity Bonds and Additional Bands then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying Agents, the City Council may pass the amendatory ordinance in substantially the same form. (d) Upon the passage of any amendatory ordinance pursuant to the provisions of this Section, this Ordinance shall ~be deemed to be amended in accordance with such amendatory ordinance, and the respective rights, duties, and obligations under this Ordinance of the City, and all the holders or owners of then outstanding Parity Bonds and Additional Bonds and all future Parity Bonds and Additional Bonds shall thereafter be determined, exercised, and enforced hereunder, subject in all respects to such amendments. (e} Any consent given by the balder or owner of a Parity Band or Additional Bond pursuant to the provisions o;F this Section shall be irrevocable for a period of one year from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders or owners of the same Parity Bond or Additional Bond. during such period. Such consent may be revoked at any time after one year from the date of the first publication of such notice by the holder or owner who gave such consent, or by a successor in title, by filing notice thereof with the paying agents and the City, but such revocation shall not be ef~'ective if the holders or owners of S l% in aggregate principal amount of the then outstanding Parity Bands and Additional Bonds as in this Section defined have, prior to the attempted revocation, consented to, ,tnd approved the amendment. (fl For the purpose of this Section, the fact of the holding of Parity Bonds or Additional Bands which are in bf;arer, coupon form, by any bondholder and the amount and numbers of such bearer Parity Bonds or Additional Bonds and the date of their balding same, may be proved by the affidavit of the person claiming to be such holder or owner, or by a certificate; executed by any trust company, bank, banker, or any other depository wherever situated showing that at the date therein mentioned such person had an deposit with such trust company, bank, banker, or other depository, the Parity Bonds and Additional Bonds described in such certif cote. The City may conclusively assume that such ownership continues until written notice to the contrary is served upon the City. The ownership of all registered Parity Bonds and Additional Bonds shall be determined from the registration books kept by the registrar therefor. Section 3d. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a} Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying AgentlKegistrar shall cause to be printed, executed, and delivered, a new band of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Band, in replacement for such Band in the manner hereinafter provided, (b) Application for Replacement Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bands shall be made by the registered owner thereof to the Paying AgentlRegistrar. In every case of loss, theft, ar destruction of a Band, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying AgentlR.egistrar such security or indemnity as may be required by them to save each of them harmless from any loss yr damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and 1:o the Paying AgentlRegistrareoidence tv their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage yr mutilation of a Bond, the registered owner shall surrender to the Paying AgentlRegistrar for cancellation the Bond so damaged or mutilated. (c} No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Boiid shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premu~m, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in 1:he case of a damaged or mutilated Bond} instead of issuing a replacement Bond, provided security or indemnity is furnislied as above provided in this Section. (d} Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond, the Paying AgentlRegistrar shall charge the registered owner of such Bond with all Iegal, printing, and other expenses in connection there~~ith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed 59 shall constitute a contractual obligation of the Issuer whether ar not the last, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and praportionate~ly with any and all other Bonds duly issued under this Ordinance. (e} Authority far Issuing Replacement Bonds. In accordance with Chapter 1201, Texas Government Code, this Section of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying AgentlRegistrar, and the Paying AgentlRegistrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 6(d} of this Ordinance far Bands issued in conversion ;end exchange for other Bonds. Section 31. COVENANTS REGARDING TAX-EXEMPTION. The Issuer covenants to refrain from any action which would adversely affect, and to take such action to ensure, the treatment of the Bonds as obligations described in sectia~n 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: (a} to take any action to assure that no more than 10 percent of the proceeds of the Bonds (.less amounts deposited to a reserve fund, if any} are used for any "private business use", as defined in section 14:1(b}(6} of the Code or, if more than 10 percent of the proceeds are so used, that amounts, whether or not receiv~;d by the Issuer, with respect to such private business use, do not, under the terms of this Ordinance ar any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the. debt service on the Bonds, in contravention of section 141(b}(2) of the Code; (b} to take any action to assure that in the event that the "private business use" described in subsE,ctivn (a} hereof exceeds 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used fora "private business use" which is "related" and not "disproportionate", within the meaning of section 141(b)(3) of the Code, to the governmental use; (c} to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any} is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c} of the Code; (d) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (e) to refrain from taking any action that would result in the Bonds being "federally guaranteetl" within the meaning of section 149(b) of the Code; (t} to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as def ned in section 14$(b)(2) of the Code) which produces a materially higher yield aver the term of the Bonds, other than investment property acquired with (1} proceeds of the Bonds invested for a reasonable temporary period of 30 days or less in the case of an advance refunding band and 90 days of less in the case of a current refunding bond, (2} amounts invested in a bona fde debt service fund, within the meaning of section 1„14$-1(b} of the Treasury Regulations, and (3) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the stated principal amount (or, in the case of a discount, the issue price} of the Bonds; (g} to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of t]'ne Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 14$ of the Code (relating to arbitrage), Section 149(8) of the Cade (relating to hedge bonds}, and, to the extent applicable, section 149(d} of the Code (relating to advance refundings}; and (h) to pay to the United States of America at least once during each five-year period (beginning; an the date of delivery of the Bonds} an amount that is at least equal to 90 percent of the "Excess Earnings", within the meaning of section 1480 of the Cade and to pay to the United States of America, not later that 60 days after the Bands have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 14$(1} of the Code. b0 For purposes of the foregoing ~a} and ~b}, the Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Cade and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify, or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any coven,~nt contained herein to the extent that such failure to comply, in the opinion of nationally-recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 1Q3 of the Cade. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary and reasonably possible, in the opinion o~f nationally- recognized band counsel, to preserve the exemption from federal income taxation of interest on the Bonds under s+~ctian I03 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. The Issuer covenants to comply with t:he covenants contained in this section after defeasance of the Bands. In order to facilitate compliance with the above covenant (h}, a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other person, including without limitation, the owners of the Bonds. The Rebate Fund is established for the additional purpose of compliance with Section 148 of the Code. Section 32. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT. The City covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section 1 of this Ordinance (the "Project") on its books and records in accordance with the requirements of the Code. The City reco~mizes that in order for the proceeds to be considered used for the reimbursement of costs, the proceeds must be allocated to expenditures within 1$ months of the later of the date that (I}the expenditure is made, or (2} the Project is completed; but in no event later than three years after the date on which the original expenditure is paid. The foregoing notwithstanding, the City recognizes that in order for proceeds to be expended under the Code, the sale proceeds or investment earnings must be expended no more than b0 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or ~2) the date the Bonds are retired. The City agrees to obtain the advise afnationally-recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Bands. For purposes hereof, the City shall not be obligated tv comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 33. DISPOSITION OF PROJECT, The Issuer covenants that the property constituting the projects financed will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax- exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed of in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from grass income of the interest. Section 34. INTEREST EARNINGS ON BOND PROCEEDS. Interest earnings derived from the investment of proceeds from the sale of the Initial Bonds, other than proceeds deposited in the Interest and Sinking Fund and the Reserve Fund, shall be used along with other available proceeds far improving the System; provided that after completion of the improvements if any of such interest earnings remain an hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided, however, that any interest earnings on band proceeds which are required to be rebated to the United States of America pursuant to the Covenants Regarding Tax-Exemption herein so as to prevent the Bonds from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Ordinance. bl TAX MATTERS UPINION 0n the date of initial delivery of the Bonds, McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel, will render its opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof ("Existing Law"}, (I}interest an the Bands will be excludable from the "grass income" of the holders thereof and {2} the Bonds will not be treated as "private activity bonds" the interest on which would be included as an alternative minimum t~nc preference item under section 57(a)(S) of the Internal Revenue Code of 1986 (the "Code"}, Except as stated above, Bond Counsel will express no opinion as to any other federal, state or local tax consequences of the purchase, ownership or disposition of the Bonds. See Appendix D - Form of Bond Counsel's Opinion. In rendering its opinion, Bond Counsel will rely upon (a} certain information and representations of the City, including information and representations contained in the City's federal tax certificate, (b} covenants of the City contained in the Bond documents relating to certain matters, including arbitrage and the use of the proceeds of the Bonds and the property financed ar refinanced therewith. Failure of the City to comply with these representations orcovenants could cause the interest an the Bands to become includable in gross income retroactively to the date of issuance of the Bands. The Cade and the regulations promulgated thereunder contain a number of requirements that must be satisf ed subsequent to the issuance of the Bonds in order far interest on the Bonds to be, and to remain, excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Bonds to be included in ;brass income retroactively to the date of issuance of the Bonds. The opinion of Bond Counsel is conditioned on compliance b,~ the Issuer with such requirements, and Bond Counsel has not been retained to monitor compliance with these requirements subsequent to the issuance of the Bonds. Bond Counsel's opinion represents its legal judgment based upon its review of Existing Law and the reliance on the aforementioned information, representations and covenants. Bond Counsel's opinion is not a guarantee of a result. Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Bonds. A ruling was not sought from the Internal Revenue Service by the Issuer with respect to the Bonds or the property financed or refinanced with proceeds of the Bonds. No assurances can be given as to whether the Internal Revenue Service will commence an audit of the Bonds. Band Counsel's opinion is not binding on the Internal Revenue Service. If an Internal Revenue Service audit is commenced, under current procedures the Internal Revenue Service is likely to treat the Issuer as the taxpayer and the Bondholders may have no right to participate in such procedure. Na additional interest will be paid upon any determination of taxability. FEDERAL INCOME TAx ACCOUNTING TREATMENT OF UR[C[NAL ISSUE DISCOUNT .The initial public offering priice to be paid for one or more maturities of the Bonds may be less than the principal amount thereof or one ar more periods fo:r tlr~e payment of interest on the bonds may not be equal to the accrual period or be in excess of one year (the "Original Issue Disc+}unt Bonds"}, In such event, the difference between (i) the "stated redemption price at maturity" of each Original Issue Discount Bond, and (ii) the initial offering price to the public of such Original Issue Discount Bond would constitute original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the bonds less the amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods (or during any unequal period if it is the initial or final period} and which are made during accrual periods which do not exceed one year. Under Existing Law, any owner who has purchased such Original Issue Discount Band in the initial public offering such initial owner is entitled to exclude from grass income (as defined in section 61 of the Code} an amount of income with respect to such Original Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the accrual period. For a discussion of certain collateral federal tax consequences, see the discussion set forth below. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the bands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such {)riginal Issue Discount Bond was held by such initial owner} is includable in gross income. Under Existing Law, the original issue discount on each Original Issue Discount Bond is accrued daily to thy, skated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Bands and ratably within each such six-month period} and the accrued amount is added to an initial owner's basis for such Original Issue Discount Bond far purposes of determining the amount of gain ar loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis far each accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (b}the amounts payable as current interest during such accrual period on such Bond. 62 The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined acco~~ding to rules which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax c;ansequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds. COLLATERAL FEDERAL INCOME TAX CONSEQUENCES ...The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Bands. This discussion is based on existing statutes, regulations, published rulings and court decisions, all of which are subject to change or modification, retroactively. The following discussion is applicable to inves#ors, other than those who are subject to special provisions of the C"ode, such as financial institutions, property and casualty insurance companies, life insurance companies, individual recipiea~ts of Social Security or Railroad Retirement benefits, individuals allowed earned income credit, certain S corporations with accumulated earnings and prof is and excess passive investment income, foreign corporations subject to the branch profits tax and taxpayers who may be deemed to have incurred ar continued indebtedness to purchase tax-exempt obligations. THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE. INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OFTAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THI; BONDS. Interest on the Bands will be includable as an adjustment for "adjusted current earnings" to calculate the alternative ;minimum tax imposed on corporations by section 55 of the Cade. Section 55 of the Code imposes a tax equal to 20 percent for corporations, or 26 percent for non corporate taxpayers (2$ percent for taxable excess exceeding $175,000), of the taxpayer's "alternative minimum taxable income," if the amount of such alternative minimum tax is greater than the taxpayer's regular income tax for the taxable year. Under section 6012 of the Code, holders of tax-exempt obligations, such as the Bonds, may be required to dis~~lose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of atax-exempt obligation, such as the Bonds, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" tv the extent such gain does not exceed the accrued market discount of such bonds, although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price ar, in the case of a bond issued at an original issue discount, the "revised issue price" ~i.e., the iss~~ue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. STATE, LOCAL AND FURECGN TAXES ...Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership ar disposition of the Bonds under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. OTHER INFORMATION RA~'CNGS The presently outstanding System revenue debt of the City is rated "A1" by Moody's and "A+" by S&P. The City also has System issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by variou:~ commercial insurance companies. Applications for contract ratings on this issue have been made to Moody's and S&P. An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ra#ings reflect only the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrav~m entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, ar either of them, may have an adverse effect on the market price of the Bonds. The Texas Public Utilities Regulatory Act ~"PURA") provides that municipalities, such as the City, that operate electric utilities may exempt information or records that relate to the electric utility from the requirements of the State's open records act, if the information or records are reasonably related to a competitive matter, and without regard to whether the municipally owned utility has adopted customer choice or serves in a multiple certificated service area. PURA defines such protected i~aformation to 63 include commercial information that the municipality believes would, if disclosed, give advantage to competitors or prospective competitors. In applying for ratings on the Bonds, the City has provided certain information that it deems to be protected from public disclosure under PURR to the Rating Agencies. Such information has been provided under the terms of confidentiality agreements. LITIGATION It is the opinion of the City Attorney and City Staffthat there is no pending litigation against the City that would have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF BONDS FOR SALE The sale of the Bonds has not been registered under the Federal Securities Act of 1933, as amended, in rel~.ialice upon the exemption provided thereunder by Section 3(a}(2}; and the Bonds have not been qualified under the Securities .Act of Texas in reliance upon various exemptions contained therein; nor have the Bands been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS [N TEI~AS Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Bands are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorii:ed investments for insurance companies, f duciaries, and trustees, and for the sinking funds of municipalities or other political subbdivisions ar public agencies of the State of Texas. With respect to investment in the Bonds by municipalities or other political subdivisions or public agencies of the State of Texas, the Public Funds Investment Act, Chapter 225G, Texas Government Cocle, requires that the Bonds be assigned a rating of at least "A" ar its equivalent as to investment quality by a national rating agency. See "OTHER INFORMATION -Ratings" herein. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Bonds are legal investments for state banks, savings banks, trust companies with at capital of one million dollars ar more, and savings and loan associations. The Bonds are eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the City has been made of the laws in other states to determine whether the Bonds are legal investments far various institutions in those states. LEGAL OPINIONS The City will furnish to the Initial Purchaser a complete transcript of proceedings had incident to the authorization and issuance of the Bonds, including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Band and to the effect that the Bonds are valid and legally binding obligations of the City, and based upon examination of such transcript of proceedings, the approving legal opinion of Bond Counsel, to like effect and to the effect that the interest on the Bonds will be excludable from gross income for federal income tax purposes under Section 103(a} of the Code, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations. The customary closing papers, including a certificate to the effect that no litigation of any nature has been filed ar is then pending to restrain the issuance an+~ delivery of the Bonds, or which would affect the provision made for their payment or security, or in any manner questioning the validity of said Bonds will also be furnished. In its capacity as Bond Counsel, McCall, Parkhurst & Horton L.L.P. has reviewed the information describing the Bonds in the Official Statement to verify that such description conforms to the provisions of the Ordinance. The legal fee to be paid Bond Counsel far services rendered in connection with the issuance of the Bonds is contingent on the sale and delivery of the Bonds. McCall, Parkhurst & Horton L.L.P, has also served as disclosure counsel to the City far the limited purpose of reviewing the information under the captions "The Electric System," "The Water System" and "The Wastewater System," In connection with the issuance of the Bonds, McCall, Parkhurst & Horton L.L.P. represents only the City. The legal opinion will accompany the Bonds deposited with DTC or will be printed on the Bonds in the event of the discontinuance of the Baak-Entry-Only System. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the 2~ttorney does not become an insurer ar guarantor of the expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction, nor does the rendering of an opinion guarantee the outcome of ar+y :legal dispute that may arise out of the transaction. 64 CONTINUING DISCLOSURE OF INFORMATION In the Ordinance, the City has made the following agreement for the benefit of the holders and beneficial owners of the Bonds. The City is required to observe the agreement far so long as it remains obligated to advance funds to pay the Bonds. Under the agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified material events, to certain information vendors. This informa#ion will be available to securitiesy brokers and others who subscribe to receive the information from the vendors. ANNUAL REPORTS ...The City will provide certain updated financial information and operating data to certain information vendors annually. The information to be updated includes all quantitative financial information and operating data. with respect to the City of the general type included in this Official Statement under Tables numbered I through 10 and in Appendix C. The City will update and provide this information within six months after the end of each fiscal year ending in and after 2007. The City will provide the updated information to each nationally recognized municipal securities information repository ("NRMSIR"} and to any state information depositary ("SID") that is designated by the State of Texas and approved by the State of Texas and approved by the staff of the United States Securities and Exchange Commission (the "SEC"). The City may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by SEC Rule 15c2-12. The updated information will include audited financial statements, if the City commissions an audit and it is completed by the required time. If audited financial statements are not available by the required time, the City will provide unaudited financial information by the required time and audited financial statements when and if such audited financial statements become available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix C or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. The City's current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each year, unless the City changes its fiscal year. If the City changes its fiscal year, it will notify each NRMSIR and the SID of the change. The Municipal Advisory Council of Texas has been designated by the State of Texas and approved by the SEC staff as a qualified SID. The address of the Municipal Advisory Council is 600 West 8th Street, P. 0. Bax 2177, Austin, Texas 78768- 2177, and its telephone number is 5121476-6947. The Municipal Advisory Council has also received SEC approval to operate, and has begun to operate, a "central post off ce" repository far information filings made by municipal issuers, such as the City, which repository then transmits the filed information to the NRMSIRs and the appropriate SID. This central post office can be accessed and utilized at www.DisclosureUSA.org ("DisclosureUSA"}. The City may utilize DisclosureUSA for the filing of information relating to the Bonds. MATERIAL EVENT NOTICES... The City will also provide timely notices of certain events to certain information vendors. The City will provide notice of any of the following events with respect to the Bonds, if such event is material to a decision to purchase or sell Bonds: (1} principal and interest payment delinquencies; (2} non-payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4} unscheduled draws on credit enhancements reflecting financial difficulties; (5} substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (7} modifications to rights of holders of the Bonds; (8) Bond calls; (9) defeasances; (10} release, substitution, or sale of property securing repayment of the Bonds; and (11}rating changes. (Neither the Bonds nor the Ordinance make any provision for liquidity enhancement.) In addition, the City will provide timely notice of any failure by the City to provide information, data, or f nancial statements in accordance with its agreement described above under "Annual Reports." The City will provide each notice described in this paragraph to the SID and to each NRMSIR. AVAILABILITY OF INFORMATION FROM NRMSIRs AND SID ...The City has agreed to provide the foregoing information only to NRMSIRs and the SID. The information will be available to holders of Bonds only if the holders comply with tl~e procedures and pay the charges established by such information vendors or obtain the information through securities brokers wrio do so. LIMITATIONS AND AMENDMENTS... The City has agreed to update information and to provide notices of material events only as described above. The City has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Bands may seek a writ of mandamus to compel the City to comply with its agreement. The City may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, ar a change in the identity, nature, status, ar type of operations of the City, if (i} the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the offering described herein in 65 compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii} either (a) the holders of a majority in aggregate principal amount of i:he outstanding Bonds consent to the amendment or (b} any person unaffiliated with the City (such as nationally recognized band counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the .Bonds. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the SEC Rule 15c2-12 ar a court of final jurisdiction enters judgment that such provisions of the SEC Rule ISc2-1~ are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds, If the City so amends the agreement, pit ~~as agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLL4NCE WITH PRIOR UNDERTAKINGS ...During the last five years, the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule lSc2-1~. FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of th.e Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. First Southwest Company may submit a bid far the Bonds, either independently or as a member of a syndicate organized to submit a bid for the Bonds. First Southwest Company, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bands, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. In the normal course +3f lousiness, the Financial Advisor may also from time to time sell investment securities to the City for the investment of band proceeds or other funds of the City upon the request of the City. The Financial Advisor to the City has provided the following sentence for inclusion in this Official Statement. The Financial Advisor has reviewed the information in this Offcial Statement in accordance with, and as part of, its responsibilities to the City and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this ~trauasaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information, AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records, audited financial st~3tements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates c~antained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Preliminary Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. ReferE,nce is made to original documents in all respects. INITIAL PURCHASER After requesting competitive bids for the Bonds, the City accepted the bid of (the "Initials Purchaser") to purchase the Bonds at the interest rates shown on the cover page of the Official Statement at a price of par plus a cash premium of $ .The Initial Purchaser can give no assurance that any trading market will be developed for the Bonds after their sale by the City to the Initial Purchaser. The City has no control over the price at which the Bonds are subsequently sold and the initial yield at which the Bands will be priced and reoffered will be established by and will be the responsibility of the Initial Purchaser FORWARD-LOOKING STATEMENTS DISCLAIMER The statements contained in this Official Statement, and in any other information provided by the City, that are not purely historical, are forward-looking statements, including statements regarding the City's expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking statements included in this Official Statement are based on information available to the City on the date hereof, and the City assumes no obligation to update any such forward-looking statements. The City's actual results could differ materially from those discussed in such forward-looking statements. G6 The forward-looking statements included herein are necessarily based on various assumptions and estimates and axe inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of tl7~e underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including custom~;rs, suppliers, business partners and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive,, and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the City. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Official Statement will prove to be accurate. CERTIFICATION 4F THE OFFICIAL STATEMENT At the time of payment for and delivery of the Bonds, the City will furnish a certificate, executed by proper officers, acting in their official capacity, to the effect that to the best of their knowledge and belief (a) the descriptions and statements of or pertaining to the City contained in its Official Statement, and any addenda, supplement ar amendment thereto, on the date of such Official Statement, on the date of sale of said Bonds and the acceptance of the best bid therefor, and on the date of the delivery, were and are true and correct in all material respects; (b) insofar as the City and its affairs, including its financial affairs, are concerned, such. Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, of or pertaining to entities, other than the City, and their activities contained in such gfficial Statement are concerned, such statements and data have been obtained from sources which the City believes to be reliable and the City has no reason to believe that they are untrue in any material respect; and (d} there has been no material adverse change in the financial condition of the City since the date of the last audited f nancial statements of the City. The Ordinance authorizing the issuance of the Bonds will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Bonds by the Purchaser, PERRY McNEI LL Mayor City of Denton, Texas ATTEST; JENNIFER K. V~ALTERS City Secretary 67 APPENDIX A GENERAL INFORMATION REGARDING THE CITY LOCATI01~ ...The City of Denton is located in the northern portion of the DallaslFort Worth Consolidated Statistical Area (CSMA}. The City is a part of the DallaslFort Worth Metroplex, and is situated at the apex of a triangle based by Dallas (38 miles to the southeast} and Fart Worth (36 miles to the southwest). The City has excellent access to and from all parts of the area. ECONOMIC Fu~['URE ...The fiscal year 2005-2606 brought exciting news in economic development. Listed below ,ire just a few of the highlights. MAJOR EMPLOYER ~ INDCISTRIAL VIEWS • Granite Point Phase I has constructed two speculative buildings far a combined 297,500 square feet of ~~pace. tither officelwarehouse buildings include 7,540 square feet for Spilde-Harrison; Two buildings for CR Smith Investments totaling 28,678 square foot; 9,997 square feet of office and warehouse space for Bobcat; 3,200 square f yet for a new steel building for Fi'oneer Equipment Rental; and 8,100 square feet far a new training center at Pets►ruilt Motors Company. DEVELOPMENT AT DENTDN MUNICIPAL AIRPORT The arrival of the Denton Municipal Airport's new air traffic control tower in May of 2604 precipitated a reclassilicatian of air space from Class G to Class D during daily operation hours of 8 a.m. and 10 p.m. and increased our corporate jet traffic. • The Denton Municipal Airport has approximately 72,585 square feet of new space in the form of three aircraft hangars with a valuation of $2,216,462. The realignment of the taxiway is nearly complete, providing a secondary emergency runway. Construction of the new terminal building will begin in 2007. RETAIL NEWS • Denton Towne Crossing, a 43 -acre retail development located in the southeastern corner of Brinker Road and Loop 288, is nearing its completion of 34x,000 square feet of retail space. Several restaurant and retail pads., including a banking center are now complete, leaving one retail-building site under construction, Home Depot and Super Target opened for business in 2006. • Construction of the mixed-use development known as Unicorn Lake continues. The master plan for the development includes restaurants, residential areas, commercial areas, and park trails. It incorporates the urban style development of residential over retail along the lake with a public facility, such as a library. The most current phase to be completed is a 2,993 square foot commercial office building. The Brick House Gym will also ~lacate in the center with a 12,676 ' square foot facility in 20x7. HEALTHCARE 1N DENTON In 2605 both of Demon's hospitals completed or began expansion plans that confirm Denton's status as a regional center for quality medical services. The hospitals spent approximately $156 million on these facility expansions. • Denton Regional Medico! Center expanded adding 27,431 square feet of medical office space. Located adjacent to North Texas Hospital, the North Texas Lang Term Acute Care (3$,x41 square feet}, Caring for Wa~men (13,462 square feet), and the Texas Back Institute (1x,076 square feet) have a combined valuation of $8,5011,863. Other medical facilities include Select Medical, a $20 million rehabilitation hospital specializing in spinal injuries and brain trauma. OTHER DEVELOPMENTS • Raynor Ranch development recently received zoning approval for an overlay district creating a 410-acre mixed use development. The $850 million project will provide approximately 2.1 million square feet of retail and will include a 15-acre park with an amphitheater and large water feature, hotels, single family, apartments and town homes. The southern portion of the property is adjacent to Presbyterian Hospital and will be home to the new Select Medical facility. Senior assisted living is also planned in this area. • Several banks built new facilities in Denton in 20061x7: Northstar Bank, Wells Fargo (two new branches} and Washington Federal Savings at an average value of over $506,66x. A-1 INDUSTRY AND BUSINESS Major Employers Approximate Number of Em loyer Description E~ mplcryees University of North Texas Educational Facility 7,351 Denton Independent School District School System 2,600 Peterbilt Motors-Headquarters & Plant Diesel Trucks 2,400 Denton State Schaal MHMR Facility 1,450 Denton County County Government 1,441 City of Denton City Government 1,300 Texas Woman's University Educational Facility 1,159 FEMA (Regional Heaquarters Federal Government Call Center 300 -11~~0 Denton Regional Medico! Center Hospital SUO Presbyterian Hospital of Denton Hospital ?50 Victor Equipment Welding Equipment 567 Sally Beauty World HQ Beauty Supply Company 500 Anderson Merchandisers Consumer Products Distributor 500 Jostens Class Ring Manufacturer Class Ring Manufacturer 280 Progressive Industries MHMR Facility 2.76 United Copper Capper Wire 2.64 Vacation Tour & Travel Call Center 2-56 James Wood Auto Park Car (Truck Sales & Service 2.52 Precision Pattern Inc. Jet Interior Manufacturing 2,37 Acme Brick Brick Manufacturer 2,25 Nucon Steel Steel Manufacturing 180 CBS Mechanical Mechanical Contractor l75 Tetra Pak Aseptic Packaging 174 Morrison Milling Flour Grain Mill 160 Wells Fargo Bank 160 Denton Rehabilitation & Nursing Center RetirementlRehabilitation 1.60 Mayday Manufacturing Aeorspace Machined Parts 164 Flowers Baking Company Bakery 152 General Telemarketing International Call Center 154 Russell Newman Manufacturing Ladies Lingerie l 54 The Vintage Retirement & Healthcare Center Senior HousinglHealthcare Services l 54 Senior Care Health and Rehabilitation Center RetirementlRehabilitationGenter 1.45 DATCU Financial Institution 1.3b Denton Good Samaritan Village Retirement Center 1.20 Lake Forest Good Samaritan Village Retirement Center 1.20 Mayhill Hospital Psychiatric & Rehabilitation 1.1 S Bill Utter Ford Automobile SaleslServices 1.07' Ben E. Keith Beers Beverage Distributor 1.04 Denton Publishing Company Newspaper 1.00' Hulcher Services Railroad Emergency Response 1.00 Integrated Alliance, LP Call Center 1.00 Source: City of Denton and Denton Chamber of Commerce Economic Development Offices Denton is proud to boast over 35 companies and institutions that employ 100 or more people, several of them rf,presenting a corporate, regional and international headquarters. Well over 100 companies that produce, manufacture, and distribute goods all over the world call Denton home. More than 3,000 businesses employing 1 to 6,937 people choose to do business in Denton. With small, medium, and large businesses operating in a variety of industries, diversity is strength in Denton. Statistics show most of these workers are skilled and receiYe their training right here in Denton. A-2 ECONOMIC Alm PUPULATION GAINS At the end of 2006 the Denton population surpassed the 100,000-milestone, as the city grew to 101,543 citizens! Historical population totals from U.S. Census depict Denton's consistent population increases commensurate with Denton's steady economic growth. 1940 Census -11,192 1950 Census - 21,345 1960 Census - 24,844 1970 Census - 39,874 1980 Census - 49,079 1990 Census - 66,274 2000 Census - 80,537 estimated 2007 Population is 108,3$1 Source: North Central Texas Council of GovernmentlCity of Denton. The City's ascension toward a top economic position in Texas is attributable to the steady influence of governmental activity that include the annual expansion of the two state-supported universities, and due to several desirable environmental factors. Denton is located in a rich agricultural, oil and gas production region; is part of the DallaslFort Worth Metroplex; has proximity to three of Texas' largest reservoirs (Lake Texoma is only 40 miles from Denton}; a mild climate; and the influential aspects of social, cultural and educational advantages have prompted professional workers to select Denton as their residence. ECONaMIC RANICTNG ...The following data was taken from Claritas 2006 Survey. Of Population Whose Age is: 0-17 22.00% 18-34 39.00% 35-54 25.00% 55-64 7.00% b5 and over 7% Households 43,015 City of Denton Average Household Income $ 58,1x9 $250,444 + 1.44°i° $100,000 - $249,999 13.00% $ 50,000 - $ 99,999 27.00% $ 35,000 - $ 49,999 16.00% $ 25,000 - $ 34,999 13.00% Population by Occupation: Sales & Office 29.00% Professional & Related Occupations 24.04% Service 17.00% Management, Business & Finance 11.00% Production & Transportation 10.00% Construction 9.00% Farming, Fishing, & Forestry ~ 1.00% EMPLOYMENTILABOR FORCE ...The 2006 annual available workforce in Denton is 58,159. Additionally Dentvn is fortunate to draw workers from the Dallas and Fart Worth MSA's representing 5.1 million people, as well as north to southern Oklahoma. EDUCATION ...Denton is home to the University of North Texas, founded in 1590, Texas Woman's University, founded in 1901. North Central Texas College, established in 1924 built an extension campus just outside Dentan's ETJ in adjacent city, Corinth. A-3 The two universities and community college have a combined enrollment of more than 44,ODa students and approximately $,$$7 faculty members. With an enrollment of over 3a,4aa, the University of North Texas exceeds the combined enrollment of Southern Methodist University in Dallas, Texas Christian University in Fort Worth and Rice University in Houston. Texas Woman's University has an approximate enrollment of 9,5aa in Denton with an additional 1,5aa students attending in Dallas and Houston. The University of North Texas (UNT) campus comprises a land area of more than 425 acres valued in excess of $167 million. The University encompasses nine colleges and schools of study and offers Bachelor's degrees in 93 fields, Master's degrees in 114 areas and Doctoral programs in 49 disciplines. UNT maintains a low l$;l student-faculty ratio mere prevalent among private rather than public institutions. UNT is Iisted in both America's 144 Best College Buys and America's laa Most Wired Colleges. Texas Woman's University (TWU), a majarstate-supported teaching research institution, it the nation's largest public university attended primarily by women, who comprise 9a% of attending students. Almost 9a% of TWU's faculty members hold a Doctoral degree or other appropriate terminal degree in their fields. Through its seven schools and colleges, TV4'U offers 65 programs leading to a Bachelor's degree, 75 Master's degree f elds, and Doctoral degrees in 21 specialization are~is. In 2401, TWU's Doctoral health studies program tied with Harvard University for second place nationally in a study of recommended practices by the National Association of Graduate-Professional studies. North Central Texas College (NCTC}, established in 1924, offers Associate Degrees in occupational Therapy Assistance, Criminal Justice, Mid-Management Training and Micro Computer Applications, among other fields. NCTC s~~ecializes in training geared directly to business and industry needs. NCTC serves the citizens of Denton with quality education ley offering a broad scope of educational choices and offers the local business community educational options as well. The caml~etitive need to keep employees current with modern technology and methodology is easier due to NCTC's customized training; which teaches curriculum developed closely with business management to ensure individual company needs are met. liver 17,aaa students enrolled in the Denton Independent School District (DISD) for the 24a5-2aa6 school year. St<idents attend 27 schools, including 15 elementary schools (grades K-5}, four middle schools (6-$),three high schools (9.12}, one early childhood center, and six alternative schools. DISD offers classes at each school and at the instructional center fc~r students who experience learning disabilities or handicaps. Counselors, speech and language specialists, psychologists acid reading and diagnostic c onsultants are available for all grade levels. In 2aa4-2aa5, DISD continued to experience a very law ~drap out rate of less than 1.8 /o. Ina Best High Schools survey conducted by D Magazrne, Denton High school was 26 and Ryan High School was ranked 36~' our of 95 high schools surveyed in the Dallas-Fort Worth Metroplex. The ranking were based one AP scores and the percentage of students who passed the exams. In 2404, the district had five students who qualified as National Merit Scholar Semifinalists, seven commended student, one National Hispanic Recognized student and one National Afiriarn-American recognized student. Denton State School is one of the country's most modern and progressive educational institutions. This stage supported educational institution for mentally handicapped Texas residents is located an a 20a-acre site paid for by Denton citizens. Present facilities include residences that accommodate 653 students, more than 2a buildings far physically handicapped individuals, and a 32 bed acute hospital with supporting facilities such as X-ray, laboratory, dental, and pharmaceutical. Additional buildings include a modern administration building, an academic building, laundry facility, chapel, main~:enance shop and a warehouse. The school has a staff of 1,45a with an annual budget of $44 million. DENTQN UNIVERSITIES EXPAND ...Texas Woman's University (TWU) has grown dramatically with a 27.9% increase in student enrollment between 204a and 2Qa4. TWU's fall 2aa5 enrollment was 11,353, an increase of 5.6% over fall 24L14. To meet growing housing demand, TWU completed a ld7-unit apartment --style dormitory residence hall in August 2~i05. The dorm complex features a community center, activity deck and early childcare program. A parking area was added to provide an additional $8 spaces near the student union and administrative offices. Almost half of TWU students (45°ro} are graduate students. Health science majors comprise 42% of TWU students and TWU produces more new nurses than any other program in Texas and is among the nation's leading providers of health care professionals. TWU is proud of its diversity; minority students comprise 35% of students, and 71% of the most recent semester's graduates were f rst generation college graduates. Recognized for excellence in baccalaureate and master degree nursing programs, TWU student's f rst-time pass rate for nlirsiing licensure exceeds 95%, ahead of the national average of $7%. University of North Texas (UNT) - UNT Research Park, a 277-acre, 553,040 square foot facility purchased from Texas Instruments is the site of research and patents in the field of nanotechnology and the site of the UNT Engineering; School that occupies approximately 1$a,aaa square feet. Masters and bachelors degrees in electrical engineering degrees have been added to the existing engineering programs in materials science, computer science, and engineering technology. UNT expects to have 65a engineering students by 20a7 and 1,250 by gala. Longer-term plans for the Research Park include housing additional research fields and a new business incubator program. The 2044-2aa5 academic year began with the official dedication of UNT's new la5,a0a square foot, $3a million Chemistry Building that houses state-of--the-art research facilities, laboratories ,end classrooms. Also dedicated was Victory Hall, a 604-bed, $25.3 million residence hall featuring a #3.9 million dining hall aril ~a $.9 million athletic center with a total square footage of 22a,a00. Two large courtyards flank a student center with a cyber cafe, computer lab, kitchenette, media roam, classroom, and game and seating areas. AGIUCULTURE ...Northwestern Denton County is one of the more diversified agricultural areas in Texas. With sail types ranging from rich black to sandy load, and good, soft artesian water, it is ideal for diversified farming and livestock. Principal craps are corn, wheat, oats, hay, grain sorghums and peanuts. Beef cattle, sheep, chickens and turkeys contribute a substantial and steady income annually to the farmers and ranchers of the County. Avery significant concentration of valuable world A-4 champion horse farms east of the City's corporate boundaries; provide a prosperous economic resource far the City and area. Products significant to the economy are horses, beef, eggs, wheat, grain sorghums, hay, and nursery crops. TRANSPORTATION ...Denton is located only 20 miles northeast of the Dallas-Fort Worth International Airport which began operations in January 1974. In addition, Dallas' Love Field Airport and Fort Worth's Meacham International Airpo~~t are inclose proximity to Denton. Alliance Airport, located about 20 miles southwest of Denton, is the only purely industrialairport in the world. Accompanying the Alliance Airport are five business parks. Together, Alliance's access to highway, rail and air transportation offers an excellent opportunity for future industrial growth. Much development is occurring at the Denton Municipal Airport. The runway will be expanded within the next 12 months from 6,400 to 7,000 feet. A control tower and additional private hangar space have also been built. A terminal building; will also be constructed. Dentan's airport is a designated "super reliever" airport for DIFW International Airport. The Kansas City Southern Railroad and the Union Pacific Railroad provide daily service to Denton. Full switching; is available, providing direct access to all major markets across the nation. GreyhoundlTrailways serves Denton through Dallas and Oklahoma City. Motor freight in Denton is included in the DIFW commercial trade zone and is served by major freiight carriers. BANKING ...There are 15 banks in Denton: Bank of America, N.A., Bank One, N.A., Wells Fargo Bank, N.A., Farmers and Merchants state Bank, First State Bank, Northwest Bank Texas, N.A., Provident Bank, Guaranty Federal Bank, Point Bank, TexasBank, First Bank, Inwood National Bank, Washington Mutual, Demon's only locally-owned bank, Northstar Bank, and First United Bank with Denton's first "Banco" branch specializing in serving Denton's Hispanic community. GROWTH INDICES City State Fiscal Building Values (millions} Water Sewer Electric Unemployment Unemployment Year Commercial Residential Total Customers Customers Customers Rates Rates (Z) 2002 $ 22 $ 216 $ 23$ 24,054 22,225 36,591 6.7$% 6.33% 2003 36 277 313 24,978 23,329 37,057 7.19% 6.76% 2004 4$ 267 315 26,416 24,453 39,507 5.10% 5.30% 2005 $5 260 345 27,584 25,695 41,$46 4.41% 5.67% 2006 45 242 2$7 28,$05 26,951 42,1$6 3.10% 5.10% ~1) New Construction Dnly. ~2) Source: Texas Workforce Commission. MEDICAL ...Denton is well on its way to becoming a regional medical destination serving north Texas and southern Oklahoma. Denton Regional Medical Center is a 184-bed community hospital that serves the growing population of Denton, Wise, Cooke, and Montague Counties. offering a full-spectrum of healthcare including advanced open-heart surgery and neurosurgery programs. Denton Regional opened a new $7 million, 13,504 square-foot day surgery center on a 2-acre lot adjacent to the hospital. A $i9 million expansion project is underway to add a fifth floor to the four-story building will add 24,5{14 square feet and will house a 29-bed progressive care unit. Presbyterian Hospital of Denton ~farmerly Denton Community Hospital) celebrated the grand opening of its 271,538 square- foot, 161-bed facility. An 80,000 square-foot, medical office building was also completed. Anew 52,000 square-foot, $14 million physical rehabilitation hospital will be built across from Presbyterian Hospital and will be modeled after the Kessler Institute for Rehabilitation. Additional new medical facilities beginning or completing construction in 2005 include North Texas Hospital's 60,400 square foot special hospital featuring eight surgical suites and I6 inpatient beds and the 40,000 square-foot Mayhill Hoslital featuring physical rehabilitation and behavioral health services. Rti;CREATION ...Lake Ray Roberts, located approximately 8 miles northeast of the City's corporate boundary an the Elm Fork of the Trinity River, is a major water conservation and flood control facility of more than 799,604 acre-feet of stara;~e that allows for an abundance of parks and other water and outdoor related recreational facilities. Nearby Lake Lewisville, one of North Texas' largest lakes is one of Texas' most popular recreation areas. Lake Lewisville has a shoreline of 183 miles located entirely in Denton County. Lake Lewisville attracts over 3,040,000 visitors to its shores annually. The upper reaches of the lake are only about 3 miles east of the Denton City Limits, while the dam is 15 miles from downtown Denton. Grapevine Lake, another large body of water created by the U.S. Army Corps of Engineers, is located in Denton and Tarrant Counties. The dam is 23 miles from Denton. Parks and recreational areas abound on the shares of Lake Ray Roberts, Lake Lewisville, and Grapevine Lakes. Boating fishing, hunting, swimming and all water sports are the favorite recreational pastimes, which, because of this area's favorable climate, are in use the year round. The City of Denton Parks and Recreation Department and the Denton Independent School District have created a partnership to produce a signature water recreation attraction. The $12.16 million Denton Aquatic Park opened in 2003. A-5 APPENDIX B DESCRIPTION OF SENATE BILL 7 AND THE TEXAS MUNICIPAL POWER AGENCY TEXAS MUNICIPAL POWER AGENCY... TMPA is governed by a Board of Directors made up of two representatives from each Member City and is empowered to plan, finance, acquire, construct, own, operate and maintain facilities to be used in the business of generation, transmission and sale of electric energy to the Member Cities. The TMPA Agreement requi~~es TMPA to prepare annual budgets, projecting its Annual System Casts for the succeeding year, including debt service requir~;ments on its bonds, and to submit the same to the Member Cities. Based on these and other budgetary facts and estimates, TMPA sets the rates and charges to be paid by the Cities for the ensuing year. TMPA's Generation Unit. TMPA's power supply source consists of the Gibbons Creek Steam Electric Station located in Grimes County, Texas, and includes a single net 462 megawatt ("MW"} Wyoming Powder River Basin coal fueled steam electric plant, reservoir, railroad spur, associated transmission facilities, an adjacent surface mine na longer in use and related properties and equipment ("Gibbons Creek"). Gibbons Creek began commercial operation on October 1, 19$3. For the fiscal year ended September 30, 2006, Gibbons Creek's capacity and availability were 88.71 % and 91.$1 respectively, each of which represents a marginal increase in these areas of productivity over 2005. In recent years, the productivity of Gibbons CrF,ek has been increased, in part due to gains achieved from better boiler management placed in operations with the modifications made to Gibbons Creek for the purpose of limiting nitrogen oxide ("NOx") emissions. See "Description of Senate Bill 7 and the Texas Municipal Power Agency -Texas Municipal Power Agency -Clean Air Act Compliance." Gibbons Creek also p~~rticipated in ERCOT's balancing uploads protocol, in which capacity payments are paid by ERGOT to owners of generation based on the market clearing price for capacity in non-spinning reserves. Modifications to Plant and Qperations. Gibbons Creek was designed to burn lignite mined at a mine located on approximately 18,000 acres adjacent to the facility (the "Gibbons Creek Mine") and owned by TMPA, In 1996, TMPA commenced various modifications to Gibbons Creek, including the conversion of the plant to burn western coal mined in the Wyoming Powder River Basin. The modif cations included the installation of an advanced design steam path turbine and the installation of additional superheat sections. These modifications have increased the generation capacity and the operating efficiency of the plant. The modifications made to Gibbons Creek relating to the fuel conversion were completed in the summer of 1997. Mining operations were halted by TMPA at the Gibbons Creek Mine in February 1996. In 1997, TMPA terminated several leveraged leases far certain mining equipment by acquiring the equipment and then selling it in order to reduce operating expenses at the Gibbons Creek Mine. The modifications to the plant and the change in fuel were made with the expectation that they would. provide fuel cast savings in comparison with the operation of the Gibbons Creek Mine for fuel, to reduce the planned outage cycle at Gibbons Creek and to allow TMPA to achieve compliance with the federal Clean Air Act (the "FCAA"} without the need for additional sulfur dioxide allowances based on current regulations. Over the period from fiscal year 1992-93 to 199$-99, TMPA reduced operating and maintenance costs of its plant, including through the reduction of employees and personnel casts. During such time, the number of regular employees was reduced by approximately 67%. In July 2403, TMPA entered into an agreement with Kennecott Coal Sales Company effective January 1, 2004. Tlae agreement for a supply of coal from the PRB is a six-year agreement which, unless terminated earlier, expires on December 31, 2009. Pricing under the agreement was fixed far the first three years (i.e. calendar years 2444-2006) subject to adjustment as provided in the agreement. Pricing for the last three years was subject to the parties reaching mutual agreement during a negotiating period in 240b. On July 14, 2006, following the negotiation period, the parties executed an agreement establishing pricing for calendar years 2007-2009. The primary source of coal under the agreement is the Cordero Roja Complex. IJowever, the agreement provides that, under certain circumstances, coal may be supplied from other mines, including the Jacobs Ranch Mine and the Antelope Mrne. On October 2, 1995, TMPA entered into a coal transportation agreement with the Burlington Northern Railroad Company, now the Burlington Northern Santa Fe ("BNSF"), under which BNSF was obligated to provide rail transportation for the coal purchased by TMPA from the PRB. The agreement expired an March 31, 200 i . TMPA pursued negotiations with BNSF through the summer of 2000, but was unable to secure a satisfactory new or extended contract arrangement to take effect upon expiration of the 1995 agreement. Therefore, in July 2040, TMPA formally requested BNSF to establish rates and terms far common carrier coal transportation service to Gibbons Creek, in both shipper and carrier- supplied railcars, effective at the conclusion of the 1995 contract. In August 2000, BNSF gave a partial response by quoting a common carrier rate in cars supplied by BNSF. TMPA considered this rate to be unacceptable, and in October 2000 petitioned the Federal Surface Transportation Board (the "STB") to compel BNSF to set reasonable rates far the Gibbons CrE;ek service in bath carrier-supplied and shipper-supplied railcars. On March 21, 2003, the STB issued a decision holding that BN~SF's common carrier rate to TMPA was in excess of the maximum reasonable rate allowed by law. The decision established a maximum reasonable rate and requires BNSF to make a reparations payment to account for the difference between the rate charged and the maximum reasonable rate allowed by law, On April 14, 2403, TMPA and BNSF each filed a petition far reconsideration of the STB's decision. B-1 In September 2003, TMPA and BNSF reached an agreement relating to the obligation of BNSF to pay TMPA for amounts charged in excess of maximum allowed common carrier rates. Based on this agreement, TMPA recorded a refuald amount by reducing 2003 fuel cost and recognizing interest earned on the refund amount as of the September agreement date. Payment of the refund, in the amount of $3.5 million, occurred on December 12, 2003. On September 24, 2004, the STB issued a ruling on the petitions far reconsideration. The ruling, though confirmin;~ that the rate that had been originally appealed by TMPA exceeded the maximum reasonable rate allowed by law, increased the maximum reasonable rate by approximately $2.7 million, thus reducing the amount that BNSF had previously refunded to TMPA. As of September 30, 2004, TMPA accrued a liability to BNSF, resulting from this increase in the prescribed rate, of $2.7 million. On December 3, 2004, TMPA discharged this liability by refunding to BNSF $2.8 million, TMPA did not engage :in any further appeal of the rate prescribed by the STB. Coal transportation services to TMPA by BNSF are currently governed by the final STB Order and the BNSF tariff as approved in that proceeding. Subsequent to the March 2003 decision of the STB, TMPA began conducting certain engineering, environmental,, routing, and related studies to determine the feasibility of constructing a railroad spur between Gibbons Creek and a rail line of the Union Pacific Railroad. These feasibility studies are ongoing. TMPA's Transmission Facilities. TMPA-owned transmission system consists of 345-kV and 138-kV switchyard facilities and transmission line facilities in the vicinity of the Gibbons Creek Station, as well as additional 345-kV and 1:38-kV lines and substation facilities in Brazos, Collin, Dallas, Denton, Grimes, Hunt, Montague, Robertson, Rockwall, and Vise counties of Texas. These facilities provide 345-kV ties to TXU Electric and Reliant Energy, Incorporated at several points tluaughout the ERCOT system. These facilities provide ties to the Member Cities, TXU Electric, Reliant Energy, Incorpora.tecl, and Brazos Electric Power Cooperative, Inc. at a number of points in the ERCOT system. TABLE B1-OUTSTANDING DEBT Fiscal Year % o f Ending Outstanding Debt Principal 9130 Principal Interest Total Retired 20x7 $ 68,343,278 $ 52,157,436 $ 120,500,314 2008 73,801,448 49,397,03$ 123,198,4$4 2009 80,717,825 47,168,943 127,88b,768 2010 82,781,394 44,462,936 127,244,330 2011 85,949,662 41,376,106 127,325,768 44,51% 2012 89,045,218 38,585,110 127,630,32.8 2013 47,909,852 80,422,463 128,332,515 2014 38,962,390 89,374,637 128,337,028 2015 31,514,054 97,372,434 128,884,490 201b 29,662,133 99,224,358 128,886,490 71.45% 2017 27,920,020 100,971,470 128,891,490 201$ 223,275,000 $,161,490 231,436,490 100.00% $ 879,882,274 $ 748,674,221 $ 1,628,556,495 ~1} Includes $216,005,000 Tax-exempt Commercial Paper Notes and $7,270,000 Taxable Commercial Paper Nc~tes~, which have been illustrated at the interest rates of 3.60% and 5.30%, respectively, for purposes of illustration. B-2 In accordance with the TMPA Agreement, the City is responsible for a proportion of the casts of TMPA, including debt service, as described above. On March 10, 2005, the Board of Directors of TMPA adopted resolutions (i) re-issuing, as Series 2005A, the taxable commercial paper notes, in an amount not to exceed $20 million, and (ii) re-issuing, as Series 2005, the tax-exempt commercial paper notes, in an amount not to exceed $255 million, representing an increase of $60 million in the amount of tax- exempt commercial paper notes authorized to be issued. TMPA has plans to issue additional fixed rate indebtedness within the next twelve month period to refinance a portion of its commercial paper notes and to finance additional transmission. projects, but at present the amount of such financings has not been determined. The TMPA Resolution provides that TMPA shall fund certain funds and accounts, including a bond reserve fund, and shall annually maintain rates to produce net revenues equal to at least 1.25 times the debt service on the Revenue, Bonds. At September 30, 2006, TMPA's debt service reserve fund was valued at approximately $103.7 million. Amounts collected by TMPA from the Member Cities over and above its requirements for the expenses of operations and maintenance, the payment of debt service and maintaining the funds and accounts relating thereto are rebated back to each Member City as described below under "The Electric System -The Power Sales Contract." SB 7, TMPA AND THE MEMBER CITIES ...Several provisions in SB 7 pertain to TMPA and its Member Cities. One of these provisions (the "Debt Retirement Provision") provides that TMPA shall "set as an objective the extinguishment of the agency's debt by September 1, 2000," and further provides that, in the event the objective is not met, TMPA must "provide detailed reasons to the electric utility restructuring legislative oversight committee by November 1, 2000, why the agency was not able to meet this objective." The Debt Retirement Provision goes on to state that each municipal power agency "shall extinguish the agency's indebtedness by sale of the electric facility to one ar more purchasers, by way of a sale through the issuance of taxable or tax-exempt debt to the member cities, or by any other method." The Debt Retirement Provision does not provide for any penalty or remedial action to be taken against a municipal power agency for the failure to meet the objective of extiinguishing its debt by September 1, 2000. In July 1999, the Board of Directors of TMPA established a Debt Retirement Committee to study and to recommend options for achieving the objective of extinguishing TMPA's debt. Based on the work of the Committee, in October 2000, TM]?A submitted to the Join# Committee on Oversight of Electric Utility Restructuring (i.e. the electric utility restructuring legislative oversight committee referred to in SB 7) the report required by the Debt Retirement Provision. The report, in addition to explaining the reasons why TMPA was not able to extinguish all of its debt by September 1, 2000, identified the options explored by the Committee and available to TMPA to reduce TMPA's debt service requirements in the future. The options that are available to TMPA may be affected, and possibly limited, by certain provisions of the TMPA Agreement that pertain to asset sales and provisions of the TMPA Resolution that require it to comply with federal requirements that govern the use of facilities that have been financed with proceeds oftax-exempt bonds, among other factors. In addition, SB 7 provides that TMPA may, at its option, use the rate of return method for calculating its transmission cost of service. If the rate of return method is used, the return component for the transmission cost of service ("TC(~S") revenue requirement shall be suff cient to meet the transmission function's pro rata share of levelized debt service and debt service coverage ratio and other annual debt obligations; provided that the total levelized debt service may not exceed lrhe total debt service under TMPA's current payment schedule. Any additional revenue generated by this methodology must 'be applied to reduce TMPA's outstanding indebtedness. This provision of SB 7 allows TMPA to take into account in determining the transmission revenue requirement a portion of the transmission system's share of TMPA debt service as if such debt service was level instead of increasing over time, which accelerates the recovery of that portion of debt service vis-a-vis actual debt requirements. Pursuant to this provision of SB 7, TMPA applied for, and, on February 16, 2001, received from the 1?UC an order revising and levelizing TMPA's TCOS. On August 1, 2001, the PUC approved a plan for the use of the additional revenues resulting from the levelized TCOS for the reduction of TMPA's debt. The major components for the plan are determination of the transmission portion of TMPA's debt service; calculation of TCOS revenues based on levelized and actual debt service, and identification of the indebtedness instruments that would maximize reduction of debt service. in addition, TMPA has established a debt retirement reserve far purpose of accounting for the additional revenues. As additional revenues are used to retire outstanding indebtedness identif ed in the PUC approved plan, the debt retirement reserve will be relieved. In accordance with the TMPA plan, which was approved by the PUC, the leveling of TMPA's TCOS produced additional revenues of approximately $18.3 million dollars during the years 2001 through 2006, which have been invested under escrow agreements an+J used to pay down approximately $28.3 million in TMPA debt due far payment in the years 2007 through 2017. SB 7 also provides that the PUC, if requested by a Member City of TMPA, shall examine all areas within the N[ember City's service area that are also certificated to one or more other retail electric utilities and, after notice and hearing, the PUC may amend the retail electric utilities' CCNs so that only one retail electric utility is certificated to provide distribution services in the area, provided that an application is f led with the PUC prior to September 1, 2400 and is limited to single certification of the area within the Member City's boundaries as of February 1,1999 and that the right of an electric utility or an electric cooperative to serve its existing customers, including any property owned or leased by any customer, is preserved. See "The Electric System - Electric System's Service Area and Service Area Composition" far a discussion of actions that have been taken by the City under this provision of SB 7. B-3 Clean Air Act Compliance. The Gibbons Creek facility is subject to sulfur dioxide emission requirements under the FCAA, but based on the sulfw dioxide emission reductions achieved in connection with the change to Wyoming Powder River Basin coal, TMPA has sufficient sulfur dioxide allowances for projected operating rates of Gibbons Creek. The 1990 amendments to the FCAA also implement more stringent rules designed to achieve compliance with the national ambient air quality standard for ozone see "The Electric System -Environmental Regulation -The Federal Clean Air Act"). The Texas Commission an Environmental Quality ~"TCEQ"} concluded that emissions from electric utilities located in central and east Texas are contributing to ozone formation in three ozone non-attainment areas located in Texas: the Dallas-Fort Worth, Houston-Galveston, and Beaumont-Port Arthur areas. As a result an April 19, 2000, the TCEQ issued final r«les that will require the reduction of NOx emissions at large electric utilities located in 31 east and central Texas counties, including Grimes County, where Gibbons Creek is located. For coal-fired electric utilities including Gibbons Creek, the combustion unit must achieve an average annual nitrogen oxide emission rate of O.lbS pounds of nitrogen oxide per million BTU of heat generated. Compliance with this standard was mandatory by May 1, 2005. To achieve the required level of emissions, Gibbons Creek has undergone significant modification using a phased. approach to achieving compliance. The initial two phases involved modifications to the fuel and air supply systems to control the combustion process and to limit the formation of nitrogen oxides in the boiler. These phases were completed following the spring 2002 outage. Completion of the final tuning of the system occurred in early 2003. No additional pest-combustion controls were necessary. The final cast of meeting the standards for the NOx emissions was approximately $12 million. New cooling water intake structure regulations were introduced in July 2004 for existing power generating facilities with intake structures that withdraw 50 million gallons per day or mare. The effects of these regulations on the Gibbons Creek Power plant are currently being investigated by TMPA. In March 2005, the EPA finalized two significant rules targeting NOx, SO2 and mercury emissions from power plants. See "The Electric System -Environmental Regulation -Mercury Regulation and Clean Air Act Reforms." TMPA is currently investigating emissions control technologies for meeting these new standards. B-~ APPENDIX C EXCERPTS FROM THE CITY 4F DENTQN, TEXAS ANNUAL FINANCIAL REPORT For the Year Ended September 30, 2a0b The information contained in this Appendix consists of excerpts from the City of Denton, Texas Comprehensive Annual Financial Report for the Year Ended September 30, 2Q4b, and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further information. c.., KPMG LLP Suits 31QQ 7 # 7 Noah Ha rwgnd 5#ree# Dallas, T5209-585 ~nlciependent Auditors' Report Tl~e Honorable Mayar and Members of City Council City of Denton, ~l'eacas: we have audited the accompanying financial statements of the governmental. activities, business type activities, each major fund. and the aggregate remaining fund information of the City of l:}er~ton, Texas the City} as of and far the year ended September 3~, ~~nd, which. collectively comprise the (~ity's ba.5ic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. C3ur responsibility is to express opinions on these financial statement[► based on our audit. we conducted our audit in accordance with auditing standards generally accepted in the [Jrlited States of America and the standards applicable to f nancial audits contained in. G~ver~ment Auditi~~g ~Standard~~, issued by the Comptroller General of the ~,lnited States. Those standards require that we pla~~ ~~nd perform the audit to c}brain reasonable assurance about whether the iinan~ial statements are free of material misstatement, An audit includes consideration of internal cantrol over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for tl~e purpose of expressing an opinion on the effectiveness of the City's internal cantrol over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principle4~ used and signif cant estimates made by management, as well as evaluating the overall f nanc,ia( statement presentation.. we believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial. statements referred to above present fairly, in all material r+~spects, the respective financial position of the governmental activities, the business-type activities, ea{~h major Fund and the aggregate remaining fund information of the City as of September 3U, 2a46, and the respective changes in financial position, and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended inconformity with U.S. generally accepted account ink; principles. (n accordance with Gvu~rnm~nt 9udr'tr'n~ ~Standard~4~, we have also issued our report dated February 2, ~OQ7 an our consideration. of the City's internal cantrol aver .financial reporting and on o~~r tests cif its campliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal cantrol aver finaa~cial reporting and campliance and the results of that testing, and not to provide an opinion on the intcrnG~l ~~ontral over financial reporting or on cc~mpliancc. That report is an integral part of an audit performed in accordance with Government .Audrtin~ Standards and should be considered in assessing tlae results of our at~dit. KPNi~ LLP, a U.S. limited liability ~artnersh~, is the U.S. mender firm at KPMG Iri~arnatianal, a Saui55 CAO~erative. The management's discussion and analysis, the schedule of TMRS funding progress and contributions and the schedule of Denton's Firemen's Relief and Retirement Plan funding progress and contrib~~tions on ages 3 through l0, 57 and respectively, are not a required part of the basic financial statements but are p supplementary information required by ~J.~. generally accepted accounting principles. we have applied certain limited rocedures, which consisted principally of inquiries of management regarding the methods P of measurement and presentation of the required supplementary information, However, we did nat audit the information and express no opinion on it. Cur audit was conducted far the purpose of forming opinions on the Cnancial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual fund financial statements and schedules, capital assets used in the operation of governmental fund~~ schedules, regulatoc}1 section and statistical section are presented for purposes of additional analysis ar,~d are not a required part at'the basic financial statements. The combining and individual. fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic ti.nancial statements taken as a whale. The introductory section, capital assets used in the operation of gc~vcrnmental funds schedules, regulatory section anal statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and accordingly, we express nc► op~n~on on them . ~ February 2, 2QD7 CITY OF DENTON, TEAS MANAGEMENT' S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2006 The City of Demon's Management's Discussion and Analysis is designed to (a} assist the reader in focusing on significant financial issues, (b} provide an overview of the City's f nancial activity, (c} icieYitify changes in the City's financial position (its ability to address the next and subsequent years' challenges}, (d} identify any material deviations from the financial plan (the approved budget}, and (e} identify individual fund issues or concerns. Since the Management's Discussion and Analysis (MD&A} is designed to focus on the current year's activities, resulting changes and currently known facts, please read it in conjunction with the Transmittal Letter (beginning on page i} and the City's financial statements (beginning on page 11 FINANCIAL HIGHLIGHTS • The assets of the City exceeded its liabilities at the close of the fiscal year ended September 30, 2006, by $473,095,449 (net assets}. Qf this amount, $121,195,576 (unrestricted net assets} may lbe used to meet the government's ongoing obligations to citizens and creditors. • The City's total net assets increased by $45,766,034. This increase can be attributed to the net revenue of the governmental activities, business-type activities and the contribution of capital assets by developers. • As of September 30, 2006, the City's governmental funds reported combined fund balances of $53,$71,114, an increase of $12,205,141 in comparison with the prior fiscal year, due to increased revenue from taxes. Approximately 35% of the $53,871,114, $18,798,728, is available far spending at the government's discretion (unreserved fund balance}. • At the end of the fiscal year, the unreserved and undesignated fund balance for thie General Fund was $13,264,027, or 18.84% of budgeted general fund expenditures. + The City's total noncurrent liabilities increased by $7,268,702 during the fiscal year. ~~he primary reason for the increase was the issuance of $8.5 million of revenue bands, $3.7 million +~f general obligation bonds, and $12.6 million of certificates of obligation bonds along with the normal pay down of general obligation bonds and certificates of obligation bonds of $9.1 million, and the normal pay down of revenue bonds of $12.3 million. OVERVIEW OF THE FINANCIAL STATEMENTS The Management's Discussion and Analysis is intended to serve as an introduction to the City of Denton's basic financial statements. The City's basic financial statements comprise three components: (1 } government- wide fnancial statements, (2} fund financial statements and (3} notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide l~nancial Statements. The government-wide financial statements are ~~esigned to provide readers with a broad overview of the City's f nances in a manner similar toprivate-sector business. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Dver time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net assets char.~ged during the most recent fiscal year. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. Thus, revenues and expenses are reported in this statement for sc►me items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but not used vacation leave}. Both the statement of net assets and the statement of activities are prepared using the accrual basis of accounting as opposed to the modified accrual basis. In its Statement of Net Assets and the Statement of Activities, the City is divided between two kinds of activities: • Governmental activities. Most of the City's basic services are reported here, including police, fire, libraries, development, public services and operations, public works, building inspection, technology 3 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS continued) SEPTEMBER 30, ZOOG services and general administration. Property taxes, sales taxes and franchise taxes finance most of these activities. • Business-type activities. The City charges a fee to customers to cover the cost of services it provides. The City's utility system (electric, water and wastewater} and solid waste activities are reported here. The government-wide f nancial statements can be found on pages 11-13 of the report. Fund Financial Statements. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. Fund financial statements provide detailed information about the most significant funds, not the City as a whole. Some funds ~~re required to be established by state law or bond covenants. However, the City Council establishes many othher funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other monies. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. • Governmental funds. The majority of the City's basic services are reported in governrraental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method identifed as the mo+~ified accrual basis of accounting, which measures cash and all other f nancial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future tc~ f nance the City's programs. By comparing information presented for governmental funds with similar inf ormation presented for governmental activities in the government-wide financial statements, readers may beater understand the long-term impact of the government's near-term financing decisions. The relations~~hip or differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities} and governmental funds is detailed in a reconciliation following the fund f nancial statements. The City of Denton maintains 11 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the general fund, debt service fund and capital projects fur~d, all of which are considered to be major funds. Data from the other eight governmental funds are combined into a single, aggregated presentation. Individual fund data far each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. • Proprietary funds. The City charges customers for certain services it provides, whether to outside customers or to other units within the City. These services are generally reported in proprietary funds. Proprietary funds are reported in the same manner that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the City's enterprise funds (a compo~aent of proprietary funds} are similar to the business-type activities that are reported in the government-wide statements but provide more detail and additional information, such as cash flows. The internal service funds (the other component of proprietary funds} are utilized to report activities that provide supplies and services for the City's other programs and activities, such as the City's municipal warehouse, the City's .self insurance fund and equipment maintenance function. Because these services benefit both governmenta:~ and business-type functions, they have been included in both the governmental and business-type activities in the government-wide financial statements. The City of Denton maintains four enterprise funds. The City uses enterprise funds to account for its electric, water and wastewater systems and solid waste operations, The funds provide the same type of information as the government-wide financial statements, only in more detail and include some of the internal service fund-type activity. The City considers all enterprise funds to be major funds. 4 CITY OF DENTUN, TEXAS MANAGEMENT'S DISCUSSIGN AND ANALYSIS (continued} SEPTEMBER 30, 200b • Fiduciary funds. Fiduciary funds are used to account for resources held for the benef t of parties outside the government. Fiduciary funds are not reflected in the gavernment-wide financial shat+~ment because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Agency funds are a component of fiduciary funds. Agency funds differ from other fiduciary funds in that they do not typically invcalve a formal trust agreement. Agency funds are used to account for situations where the City's role is purely custodial, such as receipt, temporary investment and remittance of fiduciary resources to individuals, private organizations, or other governments. The City maintains three fiduciary funds. The City uses agency funds to account for the collection and payment of the City's payroll and associated liabilities, employee-purchased insurance and other similar relationships. Notes to the financial statements. The notes provide additional information that is f~ssential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 29 - 56 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As of September 30, 2406, the City's combined net assets were $473,095,449, of which $138,202,638 can be attributed to governmental activities and $334,892,811 attributed to business-type activities. This analysis focuses on the net assets (Table 1 }and changes in net assets (Table 2} of the City's governmental and business- type activities. The largest portion of the City's net assets 167.7%} reflects its investment in capital assets (e.g., land, building, machinery and equipment}, less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Table 1 Net Assets din thousands) Governmental Business-type Activities Activities 'I otal 20(16 2005 2006 2005 ~ 2005 Current and other assets $ 81,555 $64,709 $246,529 $222,072 $328,3&~ $286,781 Capital assets 180465 177 493 _ 422,062 402x2,,,96 89 Total assets 262 020 242 202 66S 891 624 368 934 911 866,570_ Long term liabilities outstanding 107,706 100,426 283,310 286,048 391,016 386,474 Qtller liabilities 16111 15 694 „ 50.688 _37074 9 52 768 Total liabilities 123 817 116120 333 998 323122 457,51 S 439 242 Net assets: Invested in capital assets, net of related debt 107,410 107,112 213,075 193,657 320,485 300,769 Restricted 440 451 30,975 30,864 31;415 31,315 Unrestricted 30 353 18 519 90 843 76 726 121,1_9b 95 245 Total net assets 138 20 12 082 334 3 1247 73 0 2 329 5 CITY (IF DENT4N, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued} SEPTEMBER 30, ZOOb Governmental activities and business-type activities increased the City's net assets by $1,2,120,086 and $33,645,948, respectively. The key elements of these increases are contained in Table 2. Table 2 Changes in Net Assets in thousands Governmental Business-type Activities Activities Total 2 06 2005 _2005 ~,20D6 2005 Revenue: Program Revenue: Charges for services $13,965 $ 11,999 $221,151 $188,258 $235,116 $200,257 operating grants and contributions 3,713 2,996 - - 3,713 2,996 Capital grants and contributions 5,537 7,426 10,023 9,809 15,560 17,235 General Revenue: Property tax 30,001 26,679 - - 30,0~~1 26,679 Sales tax 20,343 18,998 - - 20,3~~3 18,998 Franchise tax 16,500 14,250 - - 16,5~~0 14,250 Hotel occupancy tax 1,133 989 - - 1,133 989 Beverage tax 258 216 - - 2.58 216 Bingo tax 24 25 - - ;~4 25 investment Income 1,967 1,149 5,971 3,252 7,938 4,401 Miscellaneous 3,892 4,21 S 1955 1036 S,S47 5,254, Total revenue 97 333 88 945 239100 202 355 336,433 291300 Expenses: General government 22,166 26,676 - - 22,166 26,676 Public safety 36,627 33,643 - - 36,6;7 33,643 Public works 12,485 11,987 - - 12,485 11,987 Parks and recreation 10,497 9,913 - - 10,4'97 9,913 Interest on long-term debt 4,333 4,176 - - 4,333 4,176 Electric - - 145,368 132,830 145,368 132,830 Water - - 26,708 22,381 26,708 22,381 Wastewater - - 19,028 18,808 19,028 18,808 Solid waste - - 13 455 13169 13,4.55 13,19 Total expenses 86,108 _$6395. 204,559 187,188. 290_,667 273 583 Increase in net assets before transfers 11,225 2,550 34,541 15,167 45,766 17,717 Transfers 895 865 895 865 - - Increase in net assets 12,120 3,415 33,646 14,302 45,766 17,717 Net assets at beginning of year ~ 126 082 122 667 301247 286 945 _427,3:29 409,612 Net assets at end of year $138,202 $126,082 $334,893 $301,247 $473,0'45 $427,329 Governmental activities. The most significant governmental activities expense was in pr+widing public safety, which incurred expenses of $36,626,635. These expenses were funded by revenues cc'llected from a variety of sources, with the Largest being from property taxes, which are $30,000,847 for the fiscal year ended September 30, 2006. The most significant portion of public safety is the cost of personnel, which totaled $28,549,149, Other significant governmental activities expense for the City includes general government, which incurred $22,165,661 in expenses, of which $11,935,769 represented personnel charges. 6 CITY OF DENTIN, TEXAS MANAGEMENT'S DISCUSSIQN AND ANALYSIS ~continued~ SEPTEMBER 30, 2006 Business-type activities. Business-type activities increased the City's net assets by $33,645,948, accounting for 73.5% of the total growth in the government's net assets. A key element of this increase is capital contributions, emerging as a major revenue source for the Water and Wastewater funds during the current fiscal year, producing $10,022,654 in revenue. Contributions of assets arise from new property development within the City. Charges for services increased $32,893,779 due to various rate increases and increased sales. The expense increase between fiscal years 2005 and 2006 reflects increased costs of production. FINANCIAL ANALYSIS DF THE GOVERNMENT' S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financ{e-related legal requirements. Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of resources available to spend. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a usef ul measure of a government's net resources available for spending at the end of the f seal year. As of the end of the current fiscal year, the City's governmental funds reported a combined ending fund balance of $53.9 million, an increase of $12.2 million in comparison with the prior year. Approximately $18,8 million constitutes unreserved, undesignated fund balance, which is available for spending at the government's discretion. In addition to unreserved, undesignated fund balance, the governmental funds reportE~d unreserved, designated fund balance of $1.5 million, The remainder of the fund balance is reserved to indicate that it is not available for new spending because it has already been committed 1 } to purchase or constnact capital assets x$32.8 million), 2} to pay debt service x$0.4 million}, or 3} to liquidate contracts and purchase orders of the prior period x$0.2 million}. The general fund is the chief operating fund of the City. At September 30, 2006, the unreserved and undesignated fund balance of the general fund was $13.3 million, or 18.84% of budgeted general fund expenditures. The unreserved and undesignated fund balance of the general fund increased b;~ $3.5 million during the current fiscal year due to expenditures being less than anticipated and due to higher than anticipated revenues from return on investment and franchise fees. The entire balance of the capital projects fund is reserved for capital construction and acquisition. At the end of the fiscal year, the capital projects fund has a fund balance of $32.8 million, and increase of $5.2 million. In 2006, the City received $9.5 million of proceeds from the issuance of debt while expending $7.5 million on construction and acquisition. In addition to 2006 debt proceeds, the capital projects fund received $1.0 million in interest income and $1.4 million of revenue related to gas wells. The debt service fund has a total fund balance of $0.4 million all of which is reserved for the payment of debt service. The overall decrease in the debt service fund balance was $11,388. Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets in Electric, Water, and Wastewater at September 30, 2006 are $62.4 million, $17.6 million, and $5.6 million respectively. Solid Waste has unurestricted net assets of $2.7 million. The results reflect an increase of unrestricted net assets in each fund, specifically $3.6 million in Electric, `65.1 million in Water, $4.0 million in Wastewater, and $0.3 million in Solid Waste. Dther factors concerning 1:he finances of these funds have already been addressed in the discussion of the City of Denton's business-type activities. 7 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS continued} SEPTEMBER 30, 2406 GENERAL FUND BUDGETARY HIGHLIGHTS In May 2006, the City Council amended the original budget Ordinances 2006-142} from $69,921,911 to $70,421,911 to allow for the appropriation of funds for an adjustment of $500,000 for the increase cost of electricity. For fiscal year 2005-06, General Fund actual expenditures (including transfers} on a budget~~.ry basis were $68,9 million compared to the amended budget of $70.4 million. The $1.5 million variance wa~> primarily due to reduced personnel costs for the general government. Actual revenue including transfers} can a budgetary basis was $73.9 million compared to the original budget of $70.1 million. Of the $3.8 million variance, approximately $2.1 million was due to increased franchise fees and collections of sales taxes were $0.9 million above expectations. Over the years, the Denton City Council has followed a policy of maintaining a general fund balance in order to plan for unforeseen emergencies and place the City in a more favorable position. In 1997-1998, the policy level was increased from 10% to 12.5% of general fund expenditures. In 1999-2000, the percentage was increased to 13% and in 2004-2005 to 13.5%. The 2005-06 budget increased the policy level ~;0 14.0°/a The City of Demon's unreserved and undesignated fund balance at September 30, 2006 is $13.3 million, or 18.84% of budgeted expenditures. Below is a listing of the ending unreserved balances for the past three years, as well as f sca;l year 2005-06 projected and actual. For those years where the actual ending balance has exceeded the policy level, the following year's budget has included utilization of that amount for one-time expenditures. By using the fund balance for one-time expenditures only, the financial impact on future budgets is eliminated. Actual Actual Actual Projected Actual 9130103 9130104 9130105 9130106 9130106 Unreserved balances $8,442,942 $9,504,988 $9,718,368 $9,789,068 $13,264,027 % of total budgeted expenditures 13.64% 14,68% 13.98°/a 14.00% 18.84% Policy level 13.00% 13.00% 13.50% 14.00% 14.00% The largest revenue source of the General Fund's budget was the ad valorem tax. Demon's ad valorem tax rate is comprised of two components. The first is the operations and maintenance component 1;hat is used to calculate revenue for the City's General Fund operations. The second component is the debt portion that is used to calculate revenue to pay the City's general debt service obligations. The Denton Ce~r~tral Appraisal District's certified appraisal roll shows an increase of 9.47% over the prior year certified value and 8.26% over the final 2004 value including supplements). This increase consisted of $213.3 million of new value added for 2005 and a $201.1 million increase in value for property on the tax rolls in 2004. The 2005-06 ad valorem tax rate was increased by $0.01 to $.60815 per $100 of valuation, which was used to fund additional police off cers as well a 1 % cost of living increase for all employees. CAPITAL ASSET AND DEBT ADMIl~TISTRATION Capital asset. At the end of fiscal year 2006, the City had $602,526,832 invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, bridges and water and sewer lines (see Table 3 on the following page}. This amount represents a net increase including additions and. deductions} of $22,737,443 or 3.9% over the prior fiscal year. S CITY GF DENTQN, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS continued) SEPTEMBER 34, 2446 Table 3 Capital Assets at Year-end D T Governmental Business-type Activities Activities Totals 2006 2005 2006 2005 2006_ 2005 Land $ 7,830 $ 7,848 $ 9,780 $ 8,467 ~ 17,610 $ 16,315 Landfill improvements - - 549 899 549 899 Buildings and improvements 39,084 36,172 4,171 - 43,255 36,172 Plant, machinery and equipment 28,666 28,660 98,879 100,758 127,545 129,418 Water rights - - 57,795 58,492 57,795 58,492 Infrastructure 95,255 94,285 213,637 203,403 308,892 297,688 Construction in progress 9,630 10528 37251 30277 46,851 _ 40,805 Total capital assets $180,465_ $1793 $422,062 $402,296 $6~7 $5791789 This year's major additions included: Descri tion Amount _ Cooper Creek Lift Station $ 4,265,374 Civic Center Renovation 2,084,674 Emily Fowler Building Renovation 1,966,132 Colorado Street Resurfacing 944,279 Pockrus Substation 771,387 Residential Refuse Carts 723,189 Locus Transformer 620,676 Total $ 11,375,711 Additional information on the City's capital assets can be found in note IV. D. on pages 40 - 42 o:f this report. Debt. At year-end, the City had $401.4 million in bonds and notes outstanding as compared to ;398.1 million at the end of the prior fiscal year, an increase of 0.8%, as shown in Table 4. Table 4 Outstanding Debt at Year-end in thousands Governmental Business-type Activities Activities 'Totals 2006 2005 2006 2005 2006 2005 General obligation bonds $ 58,743 $58,871 $ 3,582 $ 3,904 $ 62,3~z5 $ 62,775 Certifcates of obligation 46,700 41,792 11,975 9,233 58,675 51,025 Revenue bonds - - 277,305 281,120 277,3~~5 281,120 Notes - - 3,141 3,141 3,141 _ 3,141 Total $105,443 $100,663 $296,003 $297,398 $401,446 $398,061 These amounts do nat include net unamortized premiumsl~discounts} of $7,837,894 or net deferred gainl~loss} on refunding of x$8,670,432}, 9 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS continued} SEPTEMBER 30, 2006 During the current fiscal year, the City issued debt in July 2006. The new debt resulted primarily from the issuance of $3,695,000 in general obligation bonds, $12,665,000 in certificates of obligation, anti $8,515,000 in utility revenue bonds. Moody's Investor's Service, Inc. has given the City's General Gbligation Bonds and the Certif cater of Gbligation a rating of "Aa3." Standard and Poor's Corporation has given both the City's Gen{eral Gbligation Bonds and Certificates of Gbligation an "AA-" rating. The City's Utility Revenue Bonds carry "A 1" and "A+" ratings by Moody's and Standard and Poor's respectively. The City is permitted by Article ~I, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services including the payment of principal and interest on general obligation long-term debt. The current ratio oftax-supported debt to certified assessed value of all taxable property is 2.19°/a. tither long-term liabilities. The City maintains a self insurance program far general liability, auto liability, public officials' liability, errors and omission liability, police professional liability, and workers' compensation. Private insurance companies cover claims for property loss over $50,000 per occurrence and for workers' compensation and liability over $500,000 per occurrence. The City has a reserve for claims and judgments of $2.9 million outstanding at year-end compared with $1.8 million at the end of the prior fiscal year. tither obligations include accrued vacation pay and sick leave. More detailed information about the City's long-term liabilities is presented in Note IV. G., on pages 45 - 50 of this report. ECONOMIC FACTORS AND NEXT YEAR' S BUDGETS AND RATES All indicators are pointing to continued growth of the Denton community, and the 2006-07 Budget includes the resources to provide City services to meet demands. The 200607 budget includes a $.018371$10{0 valuation increase in the ad valorem tax rate to provide enhanced services for police, streets, code enforcement and library services. Sales tax revenue is projected to increase 2.5%, and the general fund balance reserve has been increased to 14.5% of budgeted expenditures. The 2006-07 budget includes no base rate increases for electric customers. Increased attention to water conservation has precipitated a 2% increase in retail water rates for high volume water customers, predominantly for irrigation. No base rates changes are proposed for wastewater customers, while residential solid waste customer rates will receive minor rate adjustments and commercial solid waste rateswill increase 4%. REQUESTS FUR INFORMATION This f nancial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this rei~ort or requests for additional financial information should be addressed to the City of Denton Finance Department, 215 E. McKinney, Denton, Texas 76201. 10 CITY OF DENTUN, TEXAS Exhibit [ STATEMENT 4F NET ASSETS SEPTEMBER 30, 2006 Prima Government Governmental Business-type Activities Activities Total _ ASSETS: Current assets: Cash, cash equivalents and investments, at fair value $ 35,164,460 $ 100,005,402 $ 135,169,862 Receivables, net of allowances: Taxes 4,151,426 - 4,151,426 Accounts - 13,108,014 13,108,014 Unbilled utility service - 9,220,108 9,220,1.08 Interest 731,081 735,014 1,466,095 Uther 2,906,655 3,840 2,910,495 Internal balances (5,768,778) 5,768,778 Due from other governments 1,791,218 - 1,791,218 Inventory 4,033,346 - 4,033,346 Prepaid items 30,746 12,567 43,313 Deferred debt issuance costs 601005 167 445 768 450 Total current assets 43,641,159 _ 129 021168 172 662 27_ Noncurrent assets: Restricted assets: Cash, cash equivalents and investments, a# fair value 35,915,b79 114,635,101 150,550,780 Escrow deposits 1,934,766 281,700 2,216,466 Accrued interest 9,689 907,628 917„'117' Deferred debt issuance costs 54,091 1,983,197 2,037,288' Capital assets not being depreciated: Land 7,829,494 9,779,660 17,609,154 Construction in progress 9,630,063 37,250,781 46,8811,844 Capital assets, net of accumulated depreciation; Buildings 39,084,441 4,171,116 43,255,557' Plant, machinery and equipment 28,665,707 98,879,073 127,544,7801 Infrastructure 95,254,999 213,636,790 308,891,789 Landfill improvements - 549,290 549,290 Waterrights - 57,795,418 57,795 418• Total noncurrent assets 218 378 929 539 869 754 758 48 683' Total assets 262 020 088 668,8902922 930 9110101 LIABILITIES: Current liabilities: Accounts payable 3,007,119 23,920,887 26,928,1106 Retainage payable 84,657 - 84,651' Deposits - 3,786,395 3,786,39!1 Accrued interest 653,690 - 653,6911 Due to other governments 396 - :l9ti Noncurrent liabilities due within one year 11,666,375 17,089,747 28,75b,121~ Uther liabilities 656,690 - 656,6911 Unearned revenue 20,218 - 10,211 Payable from restricted assets; Accounts payable 21,881 958,800 980,681 Retainage payable - 251,020 251,0211 Accrued interest - 4,681,016 4 681 OIEi Total current liabilities 16111026 50 687 865 66,798091_ Noncurrent liabilities: Noncurrent liabilities due in more than one year 107 70b 424 283 310 246 391016 6711 Total noncurrent liabilities 107,706 424 283 10 46 391,016,E?(I Total liabilities 123 817 450 333 998111 457,815~561~ NET ASSETS: Invested in capital assets, net of related debt 107,410,289 213,074,701 320,484,9911 Restricted: Restricted far debt service 439,658 29,190,154 29,629,81.! Restricted for capital acquisition - 1,784,771 1,784,771[ Unrestricted 30 352 691 90 843185 121195 8711 Total net assets 138 .02 638 334 $92 811 473 095 44',I The notes to the basic financial statements are an integral part of this statement 11 CITY OF DENTON, TEI~AS STATEMENT OF ACTIVITIES FUR THE YEAR ENDED SEPTEMBER 30, 2006 Pro ram Revenues Operating Capital Charges for Grants and Greats and FunctionslPrograms Ezpenses Services Contributions Canl;ributions Primary government: Governmental activities: General governmea# $ 22,165,661 $ 3,904,941 $ 2,341,699 $ 30,359 Public safety 36,626,b35 6,023,100 1,170,441 - PubGcworks 12,485,281 802,711 - 5,506,427 Parks and recreation 10,497,241 3,234,347 200,677 - Interest expense 4,333,428 - - - Total governmental activities 86,108,246 13,965,099 3,712,817 5,536,786 Business-type activities: Electric system 145,368,132 149,419,$00 - - Wstersystem 26,708,095 33,436,651 - 3,625,072 Wastewater system 19,027,926 23,670,458 - 6,397,582 Solid waste 13,454,556 14,624,132 - Total business-type activities 204,558,709 221,151,041 - 1x,022,654 Tatal primary government $ 290,666,955 $ 235116140 $ 3 712 817 w$ 15,559,44Q General revenues: Taxes: Property tag Sales tag Franchise tag Hotel occupancy tax Beverage tag Bingo tag Investment income Miscellaneous Transfers Total general revenues and transfers Change in set assets Net assets at beginning of year Net assets at end of year The Hates to the basic financial statements are an integral part of this statemen#. 1Z Exhibit II Net (Expense) Revenue and Changes in Net Assets Prima Government Governmental Business-type Activities Activities Total $ (15,888,662) $ - $ (15,888,662} (29,433,094) - 429,433,094} 46,176,143) - (6,176,143) 47,062,217) - (7,Ob2,217) (4,333,428) - 44,333,428} 462,893,544 - 62,893,544 - 4,051,668 4,051,668 - 10,353,628 10,353,b28 - 11,040,114 11,040,114 - 1,169,576 1,169,576 - 26,614,986 26,614,986 (62,893,544} 2b,614,986 (3b,278,558} 30,000,847 - 30,000,847 20,343,413 - 20,343,413 16,499,994 - 1b,499,994 1,132,500 - 1,132,500 257,950 - 257,950 24,260 - 24,260 1,967,473 7,298,870 9,266,343 3,892,087 627,198 4,519,285 895,106 (895,106} - 75,013,630 7,030,962 82,044,592 12,120,086 33,645,948 45,76b,034 12b,082,552 301,246,863 427,329,415 $ 138 202 638 $ 334,892,811 $ 473,095,449 13 CITY OF DENTON, TEXAS Exhibit III BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2006 Other Total General Capital Governmental Governmental Fund Debt Service Pra~ects Funds _ .Funds ASSETS: Cash, cash equivalents and investments, at fair value $ 11,260,085 $ 402,739 $ 32,494,877 $ 5,747,685 $ 49,905,386 Receivables, net of allowances for uncollectibles: Taxes 3,906,675 244,751 - - 4,151,426 Accrued interest 209,625 - 396,086 35,328 641,039 Other 2,130,327 - 472,526 190,275 2,793,128 Interfund receivables 1,440,895 - 180,902 765,581 2,387,378 Due from other governments 522,658 - - 1,268,560 1,791,218 Total assets , ~ 19,47~.Z~ ~ 647,44~_.33.544~ _ LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable 1,383,451 - 471,129 510,083 2,364,263 Retainage payable - - 84,657 - 84,657 Interfund payables 1,357,762 - - 1,163,640 2,521,442 Due to other governments 396 - - - 39b Other liabilities 644,683 - - 12,007 656,690 Deferred revenues 1028 258 207,532_ 147 965 786 998 _ 2171053 Total liabilities 4 414150 207,832 , 703,751__ 2 472 728 _ 7,798,461 FUND BALANCES: Reserved for: Debt service - 439,b58 - - 439,658 Encumbrances 242,088 - - - 242,088 Capital projects - - 32,840,640 - 32,840,b40 Unreserved, designated for, reported iv: Sales tag cox#ingency 500,000 - - - 500,000 Self insurance 500,000 - - - 500,000 Future capital projects 500,000 - - - 500,000 Code enforcement 50,000 - - - 50,000 Unreserved, undesignated reported in: General fund 13,264,027 - - - 13,264,027 Special revenue funds - - - 5 534 701 5,534701 Total fund balances 15,056,115 439 658 32,840,640 5,534,701,_ _ 53,871,114 Total liabilities and fund balances S ~~.490 S 33,544.39 S 8.007.42,Q_ ~S b1.6G9~~75T_ The notes to the basic financial statements are an integral part of this statement. 14 CITY OF DENTON, TEXAS Exhibit lv RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS AS OF SEPTEMBER 30, 200b Total fund balances -governmental funds (Exhibit III) $ 53,871,114 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. 180,464,704 Certain receivables will be collected neat year but are not available soon enough to pay for the current period's expenditures and therefore are reported as deferred revenues in the funds. 2,150,835 An internal charge to business-type activities is not recorded at the fund level. (2,4b8,226) Several internal service funds are used by the City's management. The assets and liabilities of the internal service funds are included with governmental activities. Total assets of internal service funds S 51,202,395 Less; Capi#a1 assets reported above (23,382,719} Less; Total liabilities of internal service funds (20,b25,031} Liabilities reported below 13,42$,443 20,623,088 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities io the funds. Long-term liabilities atyear-end consist of: General obligation bonds payable $ (58,742,900) Certificates of obligation payable (46,700,000) Less: Deferred charge for issuance costs 5b7,013 Arbitrage payable (25,9b8) Accrued interest on the bonds (b53,b90) Leases payable (3,559,742) Compensated absences (7,323,590) (l1b,438,877) Total net assets of governmental activities (Exhibit ~ $ 138,202,b38 The Hates to the basic financial statements are an integral part of this statement. 15 CITY OF DENTON, TEXAS Exhibit V STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FUR THE YEAR ENDED SEPTEMBER 30, 2006 Other Total General Capital Governmental Governmental Fund Debt Service Pro'ects Funds Funds REVENUES: Taxes $ 41,90b,626 $ 8,738,454 $ - $ 1,132,500 $ 51,777,780 Licenses and permits 1,383,169 - - - 1,383,169 Franchise fees 16,499,994 - - - 16,499,994 Fines and forfeitures 4,639,922 - - - 4,639,922 Fees for services 3,661,522 - ~ - 3,118,382 6,779,9D4 Investment revenue 761,159 - 1,045,445 1b0,869 1,967,473 Intergovernmental 541,968 - 332,235 4,379,855 5,254,058 Miscellaneous 447 200 - 1 b76 555 _ 1,3D1031_ _ 3 424 786 Total revenues 69,841,560 8 738 654 3 054 235 10 092 637 _ 91727 086 EXPENDITURES: Current: General government 1b,304,427 - 5b,908 4,178,071 20,539,OOb Public safety 35,073,b13 - - 739,716 35,813,329 Public works 4,950,734 - - 255,490 5,20b,224 Parks and recreation b,817,078 - - 2,731,338 9,548,416 Capital outlay 281,258 - 7,571,510 1,203,334 9,056,102 Debt service: Principal retirement - 5,914,819 - - 5,914,819 Bond issuance costs - - 70,745 - 70,745 Interest and other charges - 4 210 62$ - - _ 4 210 628 Total expenditures b3 42b 710 10,125,447 7 699163 9107 949 _ 90 359 269 Excess (deficiency) of revenues over (under) expenditures b 414 850 1386 793 4 644 928 984 688 _ 1367 817 OTHER FINANCING SOURCES (USES): Issuance aflong-term debt - - 9,550,000 - 9,550,000 Premium on debt issuance - - 49,b44 - 49,644 Transfers in 579,878 1,375,405 933,457 1,206,278 4,095,018 Transfers out 1867 799 - 718 785 270 754 _ 2 857 338 Total other financing sources (uses) 1287 921 1,37S,4D5 _ 9 81.4 316 935 524 _ 10,837,324 Net change in fund balances 5,126,929 (11,388) 5,1b9,388 1,920,212 12,205,141 Fund balances at beginning of year 9 929,186 45104b 27,671,252__ 3,614,489 - 41665 973 Fund balances at end of year 15 056115 439 658 32 840 640 5 534 701 5 871114 The notes to the basic financial statements are an integral part of this statement. 16 CITY OF DENTON, TEXAS Exhibit VI RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2006 Net change in fund balances -total governmental funds (Exhibit V) $ 12,20S,1~i1 Amounts reported for governmental activities in the statement of ac#ivities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation and retiremen# of asset` ($11,748,927515,830,638 - $4,081,711 internal service portion) exceeded capital outlays ($9,056,102} in the current period. {2,692,8!5} Revenues in the statement of activities that da not provide current financial resources are not reported as revenues io the funds. Such amounts arE recorded in the funds when considered available. 302,938 The net effect of various miscellaneous transactions involving capital asset (i.e., sales, trade-ins and donations} is to increas net assets. 5,251,1,'3 Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces Iong-term liabilities in the statement of net assets. This is the amount by which proceeds exceeded payments, (3,635,1111) Fund-level financials report costs related to bonds as expenditures; however, these are deferred and amortized on the government-wide financials (109,7:57) Certain expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (399,5~~9) Internal service funds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. A portion of the net revenue (expense) of certain internal service funds is reported with governmental activi#ies. The amount reported with business-type activities is $1,139,720. 1,198,1116 Change in net assets of governmental activities (Exhibit II) ~ 12,120,0136 The notes to the basic fwancial statements are an integral part of this statement. 17 Y`'~ i;`, y 1: "4 ~ B ~3I , ; ' ~ 18 CITY OF DENTUN, TEXAS Exhibit VII STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET TU ACTUAL GENERAL FUND FUR THE YEAR ENDED SEPTEMBER 30, 200b Variance with Adjustments - Actual on a Final Budget - BudgetedAmounts Actual Budgetary Budgetary Positive Uriginal Final Amounts Basis Basis (Negative) REVENUES: Tager $ 40,781,226 $ 40,781,226 S 41,906,626 $ - $ 41,906,626 $ 1,125,400 Licenses and permits 1,504,746 1,504,746 1,383,169 - 1,383,1b9 (121,577) Franchise fees 14,381,197 14,381,197 16,499,994 - 16,499,994 2,118,797 Fines and forfeitures 4,118,800 4,118,800 4,639,922 - 4,639,922 521,1.22 Fees far services 3,433,36b 3,433,366 3,661,522 - 3,bb:1,522 228,156 Investment revenue 515,000 515,000 761,159 - 76:1,159 246,159 Intergovernmental 4,035,122 4,035,122 541,968 3,566,061 4,108,029 72,907 Miscellaneous 586,358 586,358 447,200 - 447,200 (139,158) Total revenues 69,355,815 69,355,815 69,841,560 3,566,061 73,407,621 4,051,806 EXPENDITURES: General government 21,321,945 21,821,945 16,304,027 3,566,061 19,870,088 1,95I,S57 Public safety 35,508,132 35,508,132 35,073,b13 - 35,07:3,613 434,519 Public works 5,454,931 5,454,931 4,950,734 - 4,950,734 504,197 Parks and recreation 6,937,458 6,937,458 6,817,078 - 6,817,078 120,380 Capital outlay 315,393 315,393 281,258 - 28:1,258 34,135 Total expenditures 69,537,859 70,037,859 63,426,710 3,5b6,061 66,992,771 3,045,088 Excess (def ciency) of revenues aver expenditures (182,044} (682,044) 6,414,850 - 6,414,850 7,096,894 UTHER FINANCING SUURCES (iJSES): Transfer in 786,779 786,779 579,878 - 579,878 (206,901} Transfers out (384,052) (384,052) (1,867,799) - (1,867,799) (1,483,747) Total other financing sources {uses) 402,727 402,727 (1,287,921) - (1,287,921) (1,690,648) Excess (deficiency) of revenues and other sources over (under) expenditures and other uses 220,b83 (279,317) 5,126,929 - 5,12b,929 5,406,24b Fund balances at beginning of year 9,929,186 9,929,186 9,929,186 - 9,929,186 - Fund balance at end of year $ 10,149,8b9 $ 9,b49,869 $ 15,056,115 $ - $ 15,05b,115 $ 5,406,24b Adjustments -Budgetary Basis include $3,5bb,061 of expenditures allocated to and reimbursed by other funds. These expenditures are recorded in the other funds' financials. The Hates to the basic financial statements are an integral part of this statement. 19 CTf Y OF DENTON, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS AS OF SEPTEMBER 30, 2006 Business-type Activities -Enterprise Funds Electric Water Wastewater Solid Sys#em S stem Stem Waste ASSETS: Current assets: Cash, cash equivalents and investments, at fair value $ 70,857,635 $ 19,237,037 $ 3,245,896 $ 6,bb4,834 Receivables, net of allowances: Accounts 9,545,940 1,b33,218 1,130,241 798,615 Unbilled utility service 6,425,619 1,182,883 9b9,777 641,829 Accrued interest 445,155 200,979 44,450 44,430 Other - 3,840 - - Interfund receivables 1,380,283 381,847 230,014 129,645 Merchandise inventory - - - Prepaid items 953 2,X70 9,444 - Deferreddebtissuance costs 55,060 b3,D82 38,084 11,219 Total current assets 88,710,645 22,705,056 5,667,90b 8,290,572 Noncurren# assets: Restricted assets: Cash, cash equivalents and investments, at fair value 38,634,645 43,259,8b7 27,39b,3b6 5,344,223 Escrow deposit 134,579 88,7b5 58,356 - Accrued interest 369,95b 300,182 178,615 58,875 In#erfund receivables 2,429,896 186,597 98,113 41,662 Deferred debt issuance costs 673,908 812,446 390,586 106,257 Capital assets, net of accumulated depreciation 91,242,624 181,628,246 133,686,196 1.5,505,062__ Total noncurrent assets 133,485,608 226,27b,103 161808,232 ~'~1,056,079 Total assets 222,196,253 248,981,159 167,476,138 ~'~9,34_ 6,b~ LIABILITIES: Current liabilities: Accounts payable 23,203,393 300,551 199,299 217,644 Claims payable - - - " Compensated absences payable 435,578 449,821 257,094 236,862 Leases payable - - - " Deposits 3,436,143 273,174 4,029 73,049 Accrued interest - - " Interfund payables b7,198 411,264 77,984 1,020,593 Payable from restricted assets: Accounts payable 168,023 531,307 b1,190 198,280 Retainage payable - 151,107 76,3D7 23,606 Accrued interest 1,355,557 2,180,756 1,044,224 100,479 In#erfund payables 466 - - Revenue and certificate and general obligation bonds 4,889,449 5,298,423 3,586,869 1,935,651 Total current liabilities paid from restricted assets 6,413,495 8,161,593 4,768,5902,258,016 Total current liabilities 33,555,807 9,596,403 5,306,996 3,806,164 20 Exhibit VIII Governmental Activities - Total Internal Enterprise Service Funds Funds $ 100,005,402 $ 18,156,690 13,108,014 - 9,220,108 - 735,014 90,042 3,840 113,527 2,121,789 370,110 - 4,033,346 12,567 30,746 167,445 8,606 125,374,179 22,803,067 114,635,101 3,018,063 281,700 1,934,766 907,628 9,689 2,756,268 - 1,983,197 54,091 422,062,128 23,382,719 542,626,022 28,399,328 668,000,201 51,202,395 23,920,887 642,856 - 453,750 1,379,355 187,471 - 935,736 3,786,395 - - 58,950 1,577,039 3,536,638 958,800 21,881 251,020 - 4,681,016 - 466 - 15,710,392 1,395,514 21,601,694 1,417,395 52,265,370 7,232,796 (continued} Z1 CITY OF DENTON, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS AS OF SEPTEMBER 30, 2006 Business-type Activities -Enterprise Funds Electric Water Wastewater Solid S stem System ~ System _ Waste Noncurrent liabilities: Leases payable $ - $ - $ - ~ ` Payable from restricted assets: Arbitrage payable 2,642 513 1,950 - Generalobligation bonds payable - - - 3,130,594 Certificates of obligation - - - 10,515,386 Revenue bonds payable, net of premiumldiscount 81,321,329 12$,993,752 60,609,950 - Deferredamount on refunding (2,338,073} (4,515,455) (1,305,398) (118,301) Notes payable - 3,141,222 - - Compensatedabsences payable 31,780 44,028 28,675 76,244 Claims payable - - - Landfill closurelpostclvsure costs - - - 3,689,408 Total noncurrent liabilities 79,017,678 127,664,060 59,335,177 17,293,331 Total liabilities X12,573,4$5 137,260,463 64,642,173 21,099,495 NET ASSETS: Invested in capital ease#s, net of related debt 36,021,512 51,357,474 90,192,282 5,503,433 Restricted for debt service 11,187,124 12,021,875 5,981,155 - Restricted for capital acquisition - 751,714 1,033,057 - Unrestricted 62,414,132 17,589,633 5,627,471 2,743,723 Total net assets $109,6x2,76$ S 111720 696 $102,833,965,_ _ S 8,247,156_ Adjustment to reflect inclusion of internal service fund activities related to enterprise funds. Net assets afbusiness-type activities (Exhibit I) The notes to the basic financial statements are an Integra! part of this statement. 22 Exhibit VIII Governmental Activities - Total Internal Enterprise Service Funds Funds $ - $ 2,624,006 5,105 - 3,130,594 4,091 10,515,386 8,196,434 270,925,031 - (8,277,117} - 3,141,222 - 180,727 26,241 - 2,541,463 3,689,408 - 283,310,246 13,392,135 335,575,616 20,625,031 213,074,701 16,867,439 29,190,154 - 1,784,771 - 88,374,959 13,709,925 $ 332,414585 $ 30r577~364 2,468,126 $ 334,892,811 concluded} Z3 CITY OF DENTON, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2006 Business-type Activities • Enterprise Funds Electric Water . Wastewater Solid System System System r Waste OPERATING REVENUES: Utility services S 142,984,230 $ 25,708,728 $ 21,045,736 $ 14,572,633 Charges for goods andservices - - - - Otherfees 6,435,570 3,782,958 1,002,331 51,499 Miscellaneous - - 11,7 _ - Total operating revenues 149,419,800 29,491,686 22,059,074 - 14,624,132 OPERATING EXPENSES: Operating expenses before depreciatian 137,989,588 16,124,174 12,424,145 11,729,1,40 Depreciation 4,074,474 4,391,4113 3,537,806 - 1,513,700 Tatal operating expenses 142,064,062 20,515,577 16,261,911 - 13,242,840 Operating income 7,355,738 8,976,109 5,797,163 - 1,381,292 NON-OPERATING REVENUES (EXPENSES): Investment revenue 3,747,451 2,193,478 1,120,627 237,314 Interest expense and fiscal charges (3,607,060} (6,481,247) (3,007,285} (518,447} Impact fee revenue - 3,944,965 1,61.1,384 - Gain (lass) on disposal of capital assets (43,367} 454,203 45,537 - Othernon-operating revenues (expenses} - 160,753 10,072 - Total non-operating revenues (expenses} 97,024 272,152 (219,665} (251,133) Income before contributions and transfers 7,452,762 9,248,261 5,577,498 1,100,159 CONTRIBUTIONS AND TRANSFERS: Capital contributions - 3,625,072 b,397,582 - Transfers in - - 124 - Transfers out (63,617} (103,776} (680,414) 147,423} Total contributions and transfers (63,617} 3,521,296 5,717,292 (47,423) Change in net assets 7,389,145 12,769,557 11,294,790 1,052,736 Total aet assets at beginning of year 102,233,623 98,951,139 91,539,175 7,194,420 Total net assets a# end of year $ 109,622,768 $ 111,720,696 $ 102,833,965 $ 8,247,156 Change in fund net assets of proprietary funds Adjustment to reflec# inclusion of internal service fund activities related to enterp~~ise funds. Change in net assets ofbusiness-type activities (Exhibit II} The notes to the basic financial statements are an integral part of this statement. 24 Exhibit TK Governmental Activities - Total Internal Enterprise Service Funds Funds ~ 204,311,327 $ - - 25,149,915 11,272,358 - 11,007 208,255 215,594,692 25,358,170 178,267,007 19,310,280 13,517,383 4,081,711 192,084,390 23,391,991 23,510,302 1,966,179 7,298,870 661,043 (13,614,039) (454,336) 5,556,349 - 456,373 451,329 170,825 (3,384} (131,622) 654,652 23,378,680 2,620,831 10,022,654 59,629 124 251,645 (895,230) (594,219) 9,127,548 (282,945) 32,50b,228 2,337,88b 299,918,357 28,239,478 S 332,424,585 $ 30,577,364 32,SOb,228 1,139,720 $ 33,645,948 25 CITY OF DENTON, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FUR THE YEAR ENDED SEPTEMBER 30, 2006 Business- a Activities - Ente rise Funds Electric Water R~astewater S stem System S stem CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 148,261,332 $ 29,449,621 $ 21,821,225 Cash paid to employees far services (5,187,592) (8,693,107) (4,697,507} Cash paid to suppliers 114 40130 d 875 34 S 149 74 Net cash provided by operating activities 28 733 410 14 081 SO 8 953 71 CASH FLOWS FROM NONCAPTTAL FINANCING ACTIVITIES: Transfers out (63,617) (103,776) (680,414) Transfers in - - 124 Net cash used by noneapital financing activities: d3 61 103 776 ~ 480 90 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capita! contributions ~ - Principalpayments an capital debt (3,625,692} (4,b84,132) (3,277,745) Interest and fiscal charges (3,437,945) (4,530,745} (3,037,423) Principal payments under capital lease obligation - - - Proceedsfrom issuance of capital debt 8,026,750 - Proceeds from impact fees - 3,944,9dS 1,411,384 Proceeds from sale of capital assets - 454,203 45,537 Acquisition and construction of capital assets 10 999 420 711053 ~ 3 d8 499 Net cash used by capital financing activities l0 36 0 13 924 4 ~ 7 924 7dd CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale and maturities of investment securities 27,703,032 26,S08,Od5 11,453,389 Purchase of investment securities (42,140,000) (29,455,000} x(12,495,000) Interest received on investments 3 919 35S 2 038 745 ~ 1062 dd3 Net cash provided (used) by investing activities 1~0 517 410 908170 _ Net increase (decrease) in cash and cash equivalents 7,916,076 (854,912) 367,967 Cash and cash equivalents at beginning of year 2,437,305 2,207,228 1,250,443 Cash and cash equivalents at end of year 10,353,381 1,350,314 1,418,430 Investments, at fair value (Note IV.A.) _ 99,138,899 61146 588 29 003 487 Cash, cash equivalents and investments, at fair value 1 492 280 d2 494 04 30 22117 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income $ 7 55 738 $ 8 974109 $ 5,797,163 Adjustments: Depreciation expense 4,074,474 4,391,403 3,837,804 Decrease (Increase} in receivables (702,557} 44,953 (225,490) Decrease (Increase) io interfund receivables (455,911} 112,983 (12,359) Decrease in inventories - r Decrease (Increase) in prepaid items 7,278,909 (2,170) (9,444) Increase (Decrease) in accounts payable 11,141,173 480,875 (100,119) Increase in compensated absences payable 48,121 91,925 25,736 Increase in closurelpostclosurellability - Increase (Decrease} in interfund payables 46 33 14 798 359 322 Total adjustments 21 77 872 5105171 ~ 3154 808 Net cash provided by operating activities $ 28 733 410 $ 14 081280 8 953 971 NONCASH CAPITAL, INVESTING AND FINANCING ACTIVITIES: Noncash ac#iv~ty during the year consisted of contributed capital assets for the Water and Wastewater funds in the ~~mount of $3,425,072 and $4,397,582, respectively; the change in the fair value of investments of ($11,058), $410,694, $321,422 and $34,790 for the Electric, Water, Wastewater and Solid Waste funds, respectively; the addition of a capital lease in the Internal Service funds of $2,345,000; and the change in fair value of investments of ($8,75b) for the Internal Service funds. The notes to the basic financial statements are an integral part of this statement. 26 Exhibit X Governmental Ac#ivities Totai lnternai SaGd Enterprise Service Waste Funds Funds $ 14,207,080 $ 213,939,258 $ 25,526,466 (5,427,047) (24,005,253} (3,610,233) 4 864 780 (134,249,891} (14,912,362) 3 915 53 55,684,114 7 003 871 (47,423) (895,230) (594,219) _ 124 251,645 47 423 (895,106} ~ (342,574 - - 59,629 2,420,749 (9,166,840) (1,161,564) (487,440) (13,693,553} (462,799) - - (2,287,515) 8,026,750 2,307,012 - 5,556,349 - 499,740 - 2 074 620 (23,453,076) (1,678,836. 141311 _ (32,230,630 (3,224,073 5,448,998 71,113,484 7,349,415 (8:744,000) (92,834,000) (9,900,000} 186,492 7,207,278 _ 626,052 3108 510 (14,513,238) (1,924,533 618,009 8,045,140 1,512,691 747,097 6,642,093 1,331,220 1,365,106 14,687,233 2,843,911 10,643,951 _ 199,933,125 18 330 842 ~ 12.009.057 S 214.bZ0.358 ~ 21.174,753__. $ 1 81292 $ 23,510,302 $ 1966,179 . 1,513,700 1.3,817,383 4,081,711 (372,483) (1,255,577} (29,307) (44,569} (399,856) 197,603 - - 385,521 - 7,267,295 (8,419) 160,737 11,702,666 1,187,779 42,041 227,823 9,364 277,781 277,781 - 956 754 536,297 786 560 2,533,961. 32,173,812 ~ 5,037,692 $ 3,915,253 $ 55684114 $ 7,003,871 27 CITY 4F DENT4N, TEXAS Exhibit XI STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS AS OF SEPTEMBER 34, 2006 Total Agency Funds ASSETS: Cash, cash equivalents and investments, at fair value $ 1,326,923 Qther receivables T6,393 Tote! assets $ 1,403,316 LIABILITIES: Accounts payable $ 1,443,316 Tatal liabilities $ 1,403,316 The notes to the basic financial statements are an integral part of this statement. Z8 CITY 4F DENTUN, TEXAS NUTES TU BASIC FINANCIAL STATEMENTS SEPTEMBER 34, 2446 L S Y QF SIGNIFICANT ACCOUNTING POLICIES The City of Denton is a municipal corporation governed by an elected mayor and six-member council, The City receives funding from state and federal government sources and must comply with the requirements of these funding source entities. However, the City is not included in any other governmental "'reporting entity," as defined in pronouncements by the Governmental Accounting Standards Board (GASB} Statement No. 14, "The Financial Reporting Entity," since council members are elected by the public and have decision-making authority, the authority to levy taxes, the power to designate management, the ability to significantly influence operations, and primary accountability for f scal matters. During fiscal year 2006, the City implemented GASB Statement 44, "Economic Condition Reporting: the Statistical Section", which requires the City to disclose five categories of information: financial trends, revenue capacity, debt capacity, demographic and economic and operating information. The overall objectives of this Statement are to improve the understandability and usefulness of the statistical section information. The City also implemented GASB Statement 42, "Accounting for Financial Reporting for Impairment of Capital Assets and far Insurance Recoveries," The financial statements of the City have been prepared to conform to U.S. generally accepted accounting principles ~GAAP} as applicable to state and local governments. GASB is the accepted standard-setting body for establishing governmental accounting and f nancial reporting principles. The following is .a summary of the more significant policies. A, Reporting entity An elected mayor and asix-member council govern the City. As required by U.S, generally accepted accounting principles, these Fnancial statements present the City (the primary government} a:nd its component units, which are entities for which the City is considered to be financially accountable. Bl~~ncled component units, although legally separate entities, are, in substance, part of the City's operations, and so data from these units are combined with data of the primary government. A discretely presented component unit, on the other hand, is reported in a separate column in the government-wide financial statements to emphasize it is legally separate from the City. The City had no discretely presented or blended component units at September 30, Zoo6. B. Government-wide and fund fmaacial statements The basic financial statements include both government-wide abased on the City as a whole} and fund financial statements. The reporting focus is either the City as a whole (government-wide financial statements) or major individual funds (within the fund financial statements). The government-wide financial statements (i.e., the statement of net assets and the statement of activities} report information on all non-fiduciar~r activities of the primary government. For the most part, the effect of inter-fund activity has been removed from these statements, Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent an fees and charges for support. The government-wide statement of activities demonstrates the degree to which the direct expenses of a functional category (public safety, public works, etc.} or segment are offset by program revenues. Direct expenses are those that are clearly identif able with a specific function or segment. Program revenues include (I) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment; (2} grants and contributions that axe restricted to meeti~~ng operational requirements of a particular function or segment; and (3} grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. The net cost (by function or business-type activity} is normally covered by general revenue (~~roperty taxes, sales taxes, franchise fees, intergovernmental revenues, interest income, and the like}. 29 CITY DF DENTDN, TEI~AS NDTES TD BASIC FINANCIAL STATEMENTS ~continued~ SEPTEMBER 30, 2006 Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major governmental funds and major enterprise funds are reported as separate columns in the fund f nancial statements. GASB Statement No. 34 sets forth minimum criteria percentage of assets, liabilities, revenues or expenditureslexpenses of either fund category and for the governmental and enterprise funds combined for the determination of major funds. Non-major funds are combined in a column in the fund financial statements. Internal service funds, which traditionally provide services primarily to other funds of the government, are presented in summary form as part of the proprietary fund financial statements. The financial statements of internal service funds are allocated abased on the percentage of goods or services providedl} between the governmental and business-type activities when presented at the government-wide level. The City's fiduciary funds are presented in the fund financial statements. Since by definition these assets are being held far the benefit of a third party bother local governments, individuals, etc.) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements. The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the f seal period, The focus of the fund financial statements is on the major individual funds of the governmental and business-type categories, as well as the ~~duciary funds Eby category}. Each presentation provides valuable information that can be analyzed and compared to enhance the usefulness of the information. C. Measurement focus, basis of accounting and financial statement presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund statements. Revenues are recordecl when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund-level financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible wil;hin the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, tl~e government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and ,judgments, are recorded only when payment is due. Property tax, franchise fees, safes tax and other taxes associated with the current fiscal period are all susceptible to accrual and so have been recognized as revenues of the current fiscal period. All of the other revenue items are considered to be measurable and available only when cash is received. The City reports the following major governmental funds: The general fund is the City's primary operating fund. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted ..for in this f und. From the fund are paid general operating costs, fixed charges and capital improvement costs that are not paid through other funds. The debt service fund accounts for the payment of principal and interest on general long-germ liabilities, paid primarily by taxes levied by the City, and for payment of principal and interest on capilral leases in the governmental funds. 30 CITY nF DENTIN, TEXAS NOTES TO BASIC FINANCLAL STATEMENTS ~continued~ SEPTEMBER 30, 2006 The capital projects fund accounts for financial resources used for the acquisition or construction of major capital facilities being f nanced from bond proceeds, capital contributions, or transfers from other funds, other than those recorded in the enterprise funds and internal service funds. Qther governmental funds is a summarization of all of the non-major governmental funds. The City reports the following major proprietary funds: The City utility system is made up of three separate funds as follows: The electric fund accounts for electrical utility services to the residents and commerci~~l establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The water fund accounts for water utility services to the residents and commercial establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, f nonce and related debt service. The wastewater fund accounts for sewer and storm water services to the residents ar~d commercial establishments of the City. Activities necessary to provide such services axe accounted far in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The City provides additional services through the following fund: The solid waste fund accounts for the provision of solid waste services to the residents of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The City additionally reports the following funds: Internal service funds are used to account for the financing of materials and services pr~~vided by one department of the City to other departments of the City on acost-reimbursement basis. Agency funds are used to account for the payment of payroll, employee insurance, and. other similar liabilities. The City holds the assets in an agency capacity for individuals, private organizations or other governments. Private-sector standards of accounting and financial reporting ~as issued by the Financial Accounting Standards Board} issued prior to December 1,1989, generally are followed in both the government-wide and proprietary fund f nancial statements to the extent that those standards do not conflict with or contradict guidance of the GASB. Governments also have the option of following subsequent private-sector guidance l:or business-type activities and enterprise funds, subject to this same limitation. The City has elected not to fc~llc~w subsequent private sector guidance. Proprietary funds distinguish operating revenues and expenses from non-operating items. operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's Electric, water, wastewater and solid waste funds are charges to customers for services. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses anal depreciation on capital assets. All revenues and expenses not meeting this definition are reported asnon-operating revenues and expenses. For deferred charges, the City recognizes, as an asset or a liability, the difference between the electric fund's energy cost adjustment ~ECA} revenue collected and related costs, incompliance with Financial Accounting Standards Board Statement No. 71. when both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, and then unrestricted resources as they are needed. 31 CITY 4F DENTI)N, TEXAS NQTES TQ BASIC FINANCIAL STATEMENTS (continued} SEPTEMBER 30, 2006 D. Assets, liabilities and aet assets or equity 1. Cash cash a uivalents and investments The City's cash and cash equivalents are considered to be cash on .hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments are carried at fair market value or cost, if maturities are one year or less. Fair market value is determined as the price at which two willing parties would complete an exchange. Intf;rest earned on investments is recorded in the funds in which the investments are recorded. 2. Receivables Outstanding balances between funds are reported as "interfund receivableslpayables." Any residual balances between governmental activities and business-type activities are reported in the government-wide statements as "internal balances." Trade and property tax receivables are shown net of an allowance for uncollectibles. Tl ~e City accrues amounts for utility services provided in September, but not billed at September 30, 2006. 3. Inventories Inventories of supplies are maintained at the City warehouse for use by all City funds and ar~~ accounted for by the consumption method. Cost is determined using a moving average method. No inventories exist in the governmental fund types. 4. Restricted Assets .Certain proceeds of the City's proprietary fund revenue bonds, general obligation bonds, anti certificates of obligation, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Assets collected from impact fees are limited in use and also shown as restricted on the balance sheet of the Water and Wastewater funds. 5. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets ~e.g., roads, bridges, sidewalks and similar items} are reported in applicable governmental or business-type activities columns in the government-wide financial statements and in the proprietary fund financial statements. The City defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased ar constructed. Donated capital assets are recorded at estimated fair market value at the time received. Major outlays for capital assets and improvements are capitalized as projects are constructed. Net interest incurred during the construction phase of capital assets of business-type activities and enterprise funds is included as part of the capitalized value of the assets constructed. For 2006, net interest capitalization of $293,779 was recorded for electric fund projects, $122,035 was recorded for water fund projects and $63,239 was recorded for wastewater fund projects. 32 CITY OF DENT4N, TEXAS NDTES T4 BASIC FINANCIAL STATEMENTS (continued SEPTEMBER 30, 2006 Capital assets are depreciated using the straight-line method over the following useful lives: Assets Years Buildings 40 Infrastructure 30 - 40 Streets 20 General improvements 10 Machinery and equipment 1 D 20 Furniture and office equipment 10 Computer equipmentlsoftware 3 -10 Plant and equipment 5 Underground pipe 40 Water storage rights 50 -100 Water recreation rights 50 Communication equipment 5 Vehicles 3 -10 Renewals and betterments of property and equipment are capitalized, whereas normal repair and maintenance are charged to expense as incurred. b. Com ensated Absences The City allows employees to accumulate unused vacation up to 320 hours X480 hours for Civil Service Fire employees.} Upon termination, any accumulated vacation time will be paid to an employee. Generally, sick leave is not paid upon termination except for fire fighters and police officers. Firefighters and police off cers accumulate unused sick leave up to a maximum of 1080 hours and 720 hours, respectively. All other employees are paid only upon illness while in the employ of the City. Accumulated vacation and sick leave is accrued when incurred in the government-wide and proprietary fund financial. statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. The General Fund has been used in prior ye~rrs to liquidate governmental funds' related liability. 7. Arb~ltra .Le Arbitrage involves the investment of the proceeds from the sale of tax-exempt securities in a taxable money market instrument that yields a higher rate, resulting in interest revenue in excess of interest costs. Federal tax code requires that these excess earnings be rebated to the federal government. The Capital Projects Fund has been used in prior years to liquidate governmental funds' related liability. 8. Lon -term obligations In the government-wide f nancial statements and proprietary fund types in the fund financial statements, long-term obligations are reported as liabilities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net caf the applicable bond premium or discount. Gains and losses on refunding are amortized aver the life of the refunded debt or the life of the new issue, whichever is shorter. in the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 33 CITY ~F DENTIN, TEXAS NOTES TQ BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, Zoo6 9. Fund e ui In the fund financial statements, governmental funds report reservations of fund balance for accounts that are not available for appropriation or are legally ,restricted by outside parties for use for a specif c purpose. Designations of fund balances represent management plans that are subject to change. IL RECQNCILIATIQN 4F GOVERNMENT-WIDE AND FUND FINANCIAL STATEMEN7CS A. Explanation of certain differences between the governmental fund balance sheet and the government- widestatement ofnet assets The governmental fund balance sheet includes a reconciliation between fund balance -total, governmental funds and net assets -governmental activities as reported in the government-wide statement of riet assets. one element of that reconciliation explains the "long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds." The details of this $~l 16,438,877} difference are shown below. General obligation bonds payable $ ~58,742,9~00} Certificates of obligation payable ~46,700,0~00} Less: deferred charge for issuance cost 567,013 Arbitrage liability X25,968} Accrued interest on bonds ~653,b~90} Leases payable X3,559,742} Compensated absences 7~, ,323,590,E Net adjustments to reduce fund balance -total governmental funds to arrive at net assets -governmental activities 11 4 B. Explanation of certain differences between the governmental fund statement of revenues, expenditures and changes in fuad balances and the government-wide statement of activities The governmental fund statement of revenues, expenditures and changes in fund balances includes a reconciliation between net changes in fund balances -total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. Gne element of that reconciliation explains, "Governmental funds report capital outlays as expenditures. However, ire the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of the $2,692,825}difference are as follows: Capital outlay $9,056,102 Depreciation expense 1174$ 9~ Net adjustment to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of governmental activities 34 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 Another element of that reconciliation states, "Bond proceeds provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is expenditure in the governmental funds, but the repayment reduces long-tern liabilities in the statement of net assets. This is the amount by which proceeds exceeded payments." The details of this $3,635,181 }difference are as follows. Debt issued or incurred: Issuance of general obligation debt $~3,695,O~D0} Issuance of certificates of obligation ~5,855,o+a0} Principal repayments: Principal retirement 5,914 S 19 Net adjustment to decrease net changes in fund balances -total governmental funds to arrive at changes in net assets of governmental activities Another element of that reconciliation states, "The net effect of various miscellaneous transactions involving capital assets ~i.e., sales, trade-ins and donations} is to increase net assets." The details of this $5,251,153 difference are as follows: Loss on disposal of capital assets X25,344} Adjustment for depreciation expense on governmental activities 71,9~~6 Donations of capital assets increase net assets in the statement of activities but do not appear in the governmental funds because they are not financial resources. 5,20 `i51 Net adjustment to increase net changes in fund balances -total governmental funds to arrive at changes in net assets of governmental activities Another element of that reconciliation states, "Certain expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures of governmental funds." The details of the $399,599} difference are as follows: Compensated absences $ ~381,6~89} Arbitrage liability X25,9+58} Accrued interest 8 0.58 Net adjustments to decrease net changes in fund balances -total governmental funds to arrive at changes in net assets of governmental activities IIL STEWARDSHIP, COMPLIANCE AND ACCOiINTABILITY A. Budgetary information The City Council follows these procedures, as prescribed by City Charter, in establishing the l~u~dgets reflected in the financial statements: 35 CITY OF DENTUN, TEXAS NOTES T4 BASIC FINANCIAL STATEMENTS (continued} SEPTEMBER 34, X446 1. At least sixty days prior to the beginning of each fiscal year, the City Manager submits to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted prior to the adoption of the budget in order to obtain taxpayer comments. 3. The annual budget adopted by the City Council covers the general fund, special revenue funds Recreation Fund, Police Confiscation Fund, Emily Fowler Library Fund, and Tourist and Convention Fund only}, the debt service fund, the enterprise funds, and internal service funds except for the Risk Retention Fund). The budget is legally enacted by the City Council through passage of an ordinance prior to the beginning of the fiscal year. The basic financial statements reflect the legal level of control, ~i.e. the level at which expenditures cannot legally exceed the appropriated amount} which is established at fund level as approved by City Council. 4, The City Charter provides that the City Manager has the authority to transfer any unencumbered appropriation balances from one appropriation to another within a single function office, department, or agency}. City Council approval is not required at this level. The Charter also provides ghat at any time during the year, at the request of the City Manager, City Council may by resolution transfer any part of the unencumbered appropriation balances or the entire balance thereof between functions, as well as make any increases in fund appropriations. Budgets are adopted on a basis for the governmental funds, proprietary funds, and the budgeted ~~pecial revenue funds where encumbrances are treated as budgeted expenditures in the year of commitment to purchase; and depreciation expense for the proprietary funds is not budgeted. At the end of the year, encumbrances for which goods and services have not been received are cancelled. At the beginning of the subsequent year, management reviews all open encumbrances and, as provided in the budget ordinance appropriation, these encumbrances may be re-established. In 2006 no encumbrances were carried forward in the budget. Also, during the budgetary process, amounts are included in fund budgets to recognize administrative transfers between funds for goods or services. These amounts are not included in the reporting of actual activity for 1:he funds. For funds reporting required budget-to-actual comparisons, these administrative transfers are included as adjustments -budgetary basis. B. Deficit fund equity The Recreation special revenue fund had a deficit fund balance of $1,027,034} at September ~s0, 2006. This deficit was a result of less than anticipated revenue from park admission, summer camp attendance, swim lesson attendance, concession sales and fall adult softball registration. Elimination of the deficit fund balance is anticipated by 201$ through the imposition of aone-cent property tax increase beginning in 2006. IV. DETAILED MUTES UN ALL FUNDS A. Cash aad investments In order to facilitate effective cash management practices, the operating cash of all funds is pooled into common accounts for the purpose of increasing income through combined investment activities. At year-end, the City had $23,601,725 in cash and cash equivalents, including $20,500,000 invested in money market funds that the City considers cash equivalent. 0f the $23,601,725, agency funds reported $1,326,923. The bank balance was covered by collateral with a fair value of $24,465,949. In addition, the City had $13,743 in petty cash at year- end. Statutes authorize the City to invest in obligations of the U.S. Treasury; U.S. agencies, fully collateralized repurchase agreements, public fund investment pools, SEC-registered, no-load, money market mutual funds, investment-grade, rated municipal securities of any state and fully collateralized certificates of deposit. The investments reported at September 30, 2006, were similar to those held during the fiscal year. 3b CITY ~F DENTQN, TEXAS NOTES TQ BASIC FINANCIAL STATEMENTS ~confinued} SEPTEMBER 30, 2046 The City reports all investments in the financial statements at fair value. At September 30, 21)06, the City's investments carried a fair value of $283,932,097. As of September 30, 2006, City investments were as follows: Wei;~hted Average Investment T e Fair Value Maturi Da s Maney Market Fund $ 20,500,000 1 U.S. Treasury Securities 164,410,077 407 U.S. Agency Securities-Coupon 56,389,875 583 U.S. A;~ency Securities-Callable 15,407,969 680 U.S. A;~ency Securities-Discount _ 27,224,.176 763 Total fair value of investments $283,932,097 Portfolio weighted average maturity 462 Interest rate risk In accordance with its investment policy, the City manages its exposure to declines in fair values due to interest rate fluctuations by limiting the weighted average maturity of its investment portfolio to less than eighteen months, With review and approval of the City's investment committee, the weighted average maturity of its investment portfolio may be extended beyond eighteen months. Credit risk. The City's investment policy limits investments to obligations of the United States of America and its agencies, investment quality obligations of the States with a rating not less than A,A, fully insured Certificates of Deposit, and commercial paper that has a maturity of 270 days or less and arating of A-1 or P- l . The City's investments in the bonds of U.S. agencies was rated AAA by Standard ~ Poor's anal Fitch Ratings and Aaa by Moody's Investors Service. Custodial credit risk. This is the risk that in the event of a bank or counterparty failure, the Cityy's deposits or investments may not be returned to it. The policy states that all bank deposits and bank investments of City funds shall be secured by pledged collateral with a market value equal to no less than 102 percent of the principal plus accrued interest less an amount insured by FDIC, if a deposit. 37 CITY ~F DENT4N, TE~A,S NaTES T4 BASIC FINANCIAL STATEMENTS ~conlinued} SEPTEMBER 30, 200b Cash, cash equivalents and investments, at fair value, are reported together on the financial statements. Investments, at fair value, excluding money market funds, by fund were as follows: Other General Capital Governmental Fund Pro'ects Funds Electric Unrest icted investinnents $ 10,921,424 $ 30,990,078 $ 3,432,694 $ 60,721,844 Change in fair value X9,840} X156,539} X9,687) X1,340,943) Restricted invesame~ats - - - 40,269,162 Change in fair value - - - X511,164) Total $ I0,911,584 $ 30,833,539 $ 3,423,007 $ 99,138,899 Internal Total Service City Water Wastewater Solid Waste Funds Investments Unrestricted investir~erlts $ 18,970,094 $ 3,404,517 $ 5,731,252 $ 16,680,242 $ 150,852,145 Change in fair value X7,435) X6,596} X37,61 S) X228,462} ~ 1,797,117) Restricted investments 42,870,650 25,966,455 4,956,430 1,900,102 115,962,799 Change in fair value X686,721} (360,689) X6,1 I6) X21,040) ~1,585,730~) Total $ 61,146,588 $ 29,003,687 $ 10,643,951 $ 18,330,842 $ 263,432,097 B. Property tax revenue Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on October 1 and are due and payable at that time; therefore, the legally enforceable claim arises on October 1. receivable is recorded at that time. All unpaid taxes levied October 1 become delinquent February 1 of the following year. Property taxes at the fund level are recorded a~ receivables and revenue at the time the tax levy is billed. Current-year revenues recognized are those ad valorem taxes collected within the current period or soon enough thereafter to pay current liabilities, which is sixty days after year-end. Current tax collections for the year ended September 30, 2006, were 98.7% of the tax levy. An allowance is provided for delinquent taxes rr~ot expected to be collected in the future. At September 30, 2006, the City had a tax rate of $0.60815 per $100 valuation. Based upon the maximum ad valorem tax of $2,50 per $100 valuation imposed by Texas Constitutional law, the City had a tax, rate margin of $1.89185. Additional revenues up to $90,607,825 could be raised per year based on the current year's certified assessed value of $4,789,376,811 before the limit is reached. 38 CITY 4F DENT4N, TEXAS N4TE5 TD BASIC FINANCIAL STATEMENTS continued) SEPTEMBER 30, 2006 C. Receivables Receivables at September 30, 2006, for the City's individual major funds and aaer funds anon-major funds, internal service funds and fiduciary funds), including the applicable allowances for uncollectible accounts, are shown below. Capital General Debt Service Projects Electric Water Receivables: Taxes $4,184,802 $ 342,661 $ - $ - $ - Accounts - - - 21,430,294 3,097, 191 Accrued interest 209,625 - 396,086 815,111 501,161 Unbilled utility service - - - 6,425,619 1,182,383 Qther 7,587,777__ - 472 526 - 3x340 Gross receivables 11,982,204 342,661 868,612 28,671,024 4,785,075 Less: Allowance for uncollectibles 5 735 577 97 910 - 11884 354 ~1,4d~3 !~73 Net total receivables 6 246 627 244 751 $ 868~b 12 _ 16 786 670 3 321 102 ether Internal Waste- Solid Governmental Service water Waste Funds Funds Total Receivables: Taxes $ - $ - $ - $ - $ 4,52.7,463 Accounts 2,758,232 2,022,864 - - 29,308,:]81 Accrued interest 223,065 103,305 35,328 99,731 2,383,412 Unbilled utility service 969,777 641,829 - - 9,22,0,108 ether - - 190,275 113,527 ,.~.~~~45 Gross receivables 3,951,074 2,767,998 225,603 213,258 53,807,:09 Less: Allowance far uncollectibles 1627 991 1224 249 - - 22 034 Net total receivables 2 323 083 1543 749 $ 225 603_ $ 213,258_ 31773 455 39 CITY 4F DENTUN, TEXAS NOTES T~ BASIC FINANCIAL STATEMENTS continued) SEPTEMBER 34, 2046 D. Capital as~et~ Capital assets balances and transactions for the year ended September 30, 2n06 are summarized below and on the following page. Governmental activities: Balance at Balanc{~ at October 1, 2005 Increases Decreases September ~r0, 2006 Capital assets not being depreciated: Land $ 7,848,270 $ - $ X18,776} $ 7,829,494 Construction in progress 10 528186 9 616 781 10 514 904 9,630,063 Total capital assets not being depreciated 18 376 456 9,616,78.1 10 533 680 17,459,557 Capital assets being depreciated: Buildings 46,7$7,662 4,096,176 (14,300) 50,869,538 Infrastructure 157,398,404 8,806,125 (20,700} 166,183,829 Plant, machinery and equipment ~60,352~321 _7,339,224 X4,634, S1~ 63,056,733 Total capital assets being depreciated 264 538 387 20,241,527 4 669 814 280110,100 Less accumulated depreciation for: Buildings 10,616,133 1,183,264 (14,300} 11,785,097 Infrastructure 63,113,080 7,836,450 (20,700} 70,928,830 Plant, machinery and equipment 31,692,709 6 810 923 4112 606} 34,391,026 Total accumulated depreciation 105,421,922 15,_83.0,637 4147 606} 117,104,953 Total capital assets, being depreciated, net 159,116,465 4 410 890 522 208 163,005,147 Governmental activities capital assets, net 1 4 21 $14 2 1 1 $1$Q 4. 64.704 Capital assets for governmental activities include capital assts held in the internal service funds. (Continued} 40 CITY aF DENTIN, TEXAS NOTES TU BASIC FINANCIAL STATEMENTS continued) SEPTEMBER 30, 2006 Business-type activities: Balance at Balance at actober 1, 2005 Increases Decreases September 30, 2006 Capital assets not being depreciated: Land $ 8,466,829 $ 1,312,831 $ - 9,779,660 Construction in progress 30,277,357 23,571,603 16 598179 37,250,781 Total capital assets not being depreciated 38,744,186 24,884,434 16 598179 47,030,44.1__ Capital assets being depreciated: Buildings - 6,779,729 (160,337} 6,619,392 Landfill improvements 9,795,557 90,107 - 9,885,664 Water rights 69,883,098 - - ti9,883,098 Infrastructure 260,336,899 17,071,580 (377,450} 277,031,029 Plant, machinery and equipment 177,527,661 8,326,778 7 202 738 1'8,651,701 Total capital assets being depreciated 517,543215 32,268,194 7 740 525 5~12,070z884 Less accumulated depreciation for; Buildings - 2,511,760 (63,484} 2,448,276 Landfill improvements 8,896,825 439,549 - 9,336,374 Water rights 11,391,349 696,331 - 112,087,680 Infrastructure 56,932,976 6,763,931 (302,668) ti3,394,239 Plant, machinery and equipment 76,769,783 3,405,812 402 967 79,772,628 Total accumulated depreciation 153,990,933 13,817,383 769119 167,039,197 Total capital assets, being depreciated, net 363,552,282 18,454,811 6 971406 375,031,687 Business-type activities capital assets, net (The prior period included $6,779,729 of Plant, machinery and equipment that has been reclassified as Buil{~ings. The Increases and Decreases columns above reflect these adjustments.) Depreciation expense was charged to governmental activities functionslprograms asfollows: Governmental activities: General government $ 2,226,360 Public safety 1,117,693 Public works 7,392,270 Parks and recreation 1,012,603 Capital assets held by the internal service funds are charged to the various functions based upon usage 4,081,711 Total depreciation expense -governmental activities Business-type activities: Electric $ 4,074,474 Water 4,391,403 Wastewater 3,537,806 Solid Waste 1,513,700 Total depreciation expense -business-type activities 1 41 CITY DF DENTUN, TEXAS NOTES T4 BASIC FINANCIAL STATEMENTS ~continued~ SEPTEMBER 30, 2006 Construction commitments The City has several major construction projects planned or in progress as of September 30., 2006. These projects are evidenced by contractual commitments with contractors and include: Remaining Project Sprent-to-Date Commitment Fire Station #7 $1,724,932 $2,581,952 U S 377 Alternate 1,47b,290 2,023,709 R D Wells Interchange 101,956 3,224,009 Denton West R D Wells Transmission 943,860 2,317,$13 R D Wells Hickory Substation 201,280 1,498,422 Hwy 380 Water and Wastewater Relocate IH35 & West 10,948 1,542,551 Water SW Storage Area & BP Station 3,182,145 2,202,885 Landfill Cell 3A 485,336 2,022,764 E. Interfund receivables, payables and transfers A summary of interfund receivables and payables din thousands} at September 30, 2006, is as follows: Interfiand Payables: Governmental Major Funds Business-Type Major Funds Non-Major Internal Interfund Governmental solid Service Receivables: General Fund Funds Electric Water Wastewater Waste Funds Total Governmental Major Funds: General Fund $ - $ 1,164 $ - $ - $ 1 $ - $ 277 $ 1,441 Capital Projects Fund 181 - - - - - - 181 Nan-Major Governmental Funds 489 - 64 93 49 47 24 766 Business-Type Major Funds: Electric 84 - - 141 - 973 2,612 3,810 Water 294 - - - - - 274 568 Wastewater - - - 71 - - 257 328 Solid Waste - - - 83 12 - 77 172 Internal Service Funds 310 - 3 23 17 1 1b 370 Total $ 1,358 $ 1,164 $ 67 $ 4ll $ 78 $ 1,021 $ 3,537 $ 7,636 4Z CITY OF DENT4N, TEXAS NnTES TO BASIC FINANCIAL STATEMENTS (continued} SEPTEMBER 30, 2006 The more significant interfund receivables and payables include the following: Interfund receivables Interfund a abler Amount Electric fund Internal service funds $2,429,896 Non-Maj or governmental funds General fund 4$ 8,482 Electric fund Solid Waste fund 972,976 General fund Non-Major governmental funds 957,948 The balance between Non-Major Governmental Funds and the General Fund reflects the current year contribution to other post retirement benefits reserve. The outstanding balances between the F;lectric Fund and the Internal Service Funds are a result of the cash position in the Materials Management Fund due to inventory purchases. The balance between the Electric Fund and the Solid Waste Fund reflects the purch~~se and sale of investments between funds. The balance between the General Fund and Non-Major Goverrunental Funds reflects the General Fund's support of the Recreation Fund. This particular payable is not expected to be repaid within one year. Transfers between funds din thousands} during the year were as follows: Transfers hut: Governmental Major Funds Business-Type Major Funds Capital Non-Majar Intemal General Projects Governmental Solid Service Transfers In: Fund Fund Funds Electric Water Wastewater Waste Funds Total Governmental Major Funds: General Fund $ - $ - $ 261 $ - $ - $ - $ - $ 319 $ 580 Debt Service Fund 31 462 - - - b3l - 251 1,375 Capital Projects Fund 914 - 9 - 10 - - - 933 Nan-Majar Governmental Funds 923 5 - 64 94 49 47 24 1,246 Intemal Service Funds - 252 - - - - - 252 Total $ 1,868 $ 719 $ 270 $ d4 $ 104 $ 684 $ 47 $ 594 $ 4,344 43 CITY OF DENTQN, TEXAS NUTES T4 BASIC FINANCxAL STATEMENTS ~continued~ SEPTEMBER 30, 2006 The more significant transfers include the following: Transfers from fund Transfers to fund Amount General fund Capital Projects $913,720 General fund Non-Maj or governmental funds 500,000 General fund Non-Major governmental funds 350,552 Internal service funds General fund 318,610 Wastewater fund Debt service fund 631,764 Capital projects fund Debt service fund 461,602 Transfers from the General Fund to Capital Projects are to fund future capital projects. Transfers from the General Fund to Non-Major Governmental Funds reflect the funding of other post-employment benefits as well as the Recreation Fund's share of current year property tax revenues. Transfers from the Wastewater Fund and Capital Projects Fund to the Debt Service Fund are used to move revenues from the fund with collection authorization to the Debt Service Fund as debt service principal and interest payments become due. Transfers from the Internal Service Funds to the General Fund reflect direct operating cost transfers far Risl~ Retention. F. Leases Leases payable represent the remaining principal amounts payable under lease purchase agreements for the acquisition of equipment through the motor pool fund, an internal service fund. These leases ~~re recorded as capital leases. Remaining requirements, including interest, under these leases are as follows: Year Pa menu 2pQ7 $1,046,319 2008 1,046,319 2009 924,811 2010 803,3.03 Total minimum lease payments 3,820,752 Less: amount representing interest ~ 261,010 Present value of minimum future lease payments 42 The following schedule provides an analysis of the City's investments in equipment under capital lease arrangements as of September 30, 2006: Equipment $2,665,584 Less: Accumulated Depreciation _ 600,804 Total 2 4 44 CITY OF DENT4N, TEXAS NOTES T~ BASIC FINANCIAL STATEMENTS (continued} SEPTEMBER 30, 2006 G. Long-term debt Long-term liabilities transactions far the year ended September 30, 200b, are summarized as follows below and an the following page: Balance at Balance at October 1, September 30, Due Within 2005 Increases Decreases 2006 One Year Governmental Activities: General obligation bonds $ 58,870,849 $ 3,695,000 $ 3,822,949 $ 58,742,900 $ 4,017,583 Certificates of obligation 41,791,588 8,160,000 3,251,588 46,700,000 3,425,000 Obligations under capital leases 2,210,846 2,365,000 1,016,104 3,559,742 935,736 Arbitrage payable - 25,968 - 25,9ti8 - Compensated absences payable 6,932,537 3,098,$80 2,707,827 7,323,5'.0 2,804,264 Claims payable 1,803,000 1,740,353 54$,140 2,995,2:13 453,750 Unamortized premiuml(discounts} 394,367 53,087 28,863 418,591 30,042 Unamortized deferred gainl(loss} (508,493} - (115,288} (393,205) - Total governmental long-term liabilities $111,494,694 $19,138,288 $11,2b0,183 $119,372,T.~9 $11,6bb,375 Business-type Activities: Revenue bonds $281,120,000 $8,515,000 $12,330,000 $277,305,000 $13,325,000 General obligation bonds 3,904,15 i - 322,051 3,582,1()0 482,417 Certificates of obligation 9,233,412 4,505,000 1,763,412 11,975,0()0 1,450,000 Arbitrage payable 1,218 3,887 - 5,105 - Compensated absences payable 1,332,259 1,462,748 1,234,925 1,560,082 1,379,355 Note payable 3,141,222 - - 3,141,222 - Landfill closurelpost-closure costs 3,411,627 277,781 - 3,689,41)8 - Unamortized premiuml(discounts) 7,867,7b8 23,012 471,477 7,419,3()3 452,975 Unamortized deferred gainl(loss} 9,002,261 - 725,034 ~ 8,277,2~'~ - Total business-type activities 301,009,396 14,787,428 15,396,831 300,399,993 17,089,747 Total long-term liabilities $412,504,090 $33,925,716 $26,657,014 $419,772,792 $28,75b,122 45 CITY aF DENTIN, TEXAS NOTES Ta BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 General bonded debt -General obligation and certificates of obligation issued for general government purposes at September 30, 2006 are comprised of the following: Gross Amount Griginal Outstanding at Interest Rate Final Amount September 30, Bonded Debt % Issue Date Maturi of Issue 2006 General obligation 5.0 to 7.0 1997 2017 $ 4,700,00[« $ 455,000 General obligation 5.25 to 5.25 1998 2018 9,660,00[1 5,780,000 General obligation 4.1 to 5.0 1999 2019 8,215,00[1 5,330,000 General obligation refunding 3.2 to 5.0 1999A 2016 5,538,78[1 4,185,645 General obligation 5.25 to 6.125 2000 2020 3,750,000 945,000 General abligation 4.5 to 5.5 2001 2021 14,245,OOCI 10,695,000 General obligation 5.0 to 5.25 2002 2022 12,075,00[1 10,760,000 General obligation refunding 3.0 to 4,75 2003 2023 7,233,065 4,767,255 General obligation refunding 2.5 to 5.0 2004 2020 7,370,000 7,235,000 General obligation 3.0 to 5.0 2005 2025 5,000,00[1 4,595,000 General obligation 4.25 to 4.875 2006 2026 3,695,000 3,695,000 Total general obligation bonds 81,481,84`i 58,742,900 Certificates of obligation 4.0 to 5.0 1998 2418 5,625,00(1 905,000 Certificates of obligation 4.1 to 5.0 1999 2019 5,926,2?:~ 3,835,000 Certif sates of obligation 5.25 to 6.125 2000 2020 3,125,00(1 775,000 Certificates of obligation 4.25 to 5.25 2001 2021 10,400,00[1 4,555,000 Certificates of obligation 4,7 to 5.25 2002 2022 7,145,00(1 6,485,000 Certificates of obligation 3.0 to 4.75 2003 2023 5,650,00(1 4,695,000 Certificates of obligation 2.0 to 5.0 2004 2024 12,805,00(1 12,085,000 Certificates of obligation 3.0 to 4.375 2005 2025 5,575,00(1 5,205,000 Certificates of abligation 4.0 to 4.75 2006 2026 8,160,00(? 8,160,000 Total certificates of obligation 64,411,27=~ 46,700,000 Total general bonded debt $145,893,11 $105,442,900 [The amounts do not include net unamortized premiumsl~discounts} of $418,591 nor net deferred gainl~loss} on refunding of x$393,205}.] Proceeds of general bonded debt are restricted to the uses for which they were approved in the lbond elections. The City Charter expressly prohibits the use of bond proceeds to fund operating expenses. The general obligations are collateralized by the full faith and credit of the City and, primarily, payable from property taxes. In prior years, the City defeased general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City"s financial statements, 0n September 30, 2006, $5,925,000 of general obligation bands considered defeased are still outstanding. 46 CITY 4F DENTIN, TEXAS NIITES TO BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 In July 2006, the City issued $12,665,000 in certificates of obligation and $3,695,000 of general abligation bonds. The debt was issued to pay the cost of various Capital Project improvements R;${x,550,000) and proprietary fund capital improvements ~$6,8i0,000}. The bonds and obligations are payable over the next 20 years. Revenue bonds -Revenue bonded debt at September 30, 2006, is comprised of the following issues: Principal Net Net Original Outstanding at Unamortized Outstanding at Interest Rate Issue Final Amount September 30, Premium) September 30, Revenue Bonds Date Maturity of Issue 2006 Discount) 2006 Utility system ~ ~ ~ - refunding 3.55 to 6.75 1993 2008 $ 6,045,000 $ 580,000 $ X703} $ 579,297 Utility system refunding 5.3 to 7.8 1996 2025 36,510,000 865,000 (4,110) 860,890 Utility system 5.3 to 7.4 1996 2017 2,750,000 125,000 125,000 Utility system 4.3 to 6.3 1998 2018 7,175,000 1,800,000 1,800,000 Utility system refunding 4.65 to 6.65 1998 2030 36,795,000 19,665,000 X220,657) 19,444,343 Utility system refunding 4.0 to 5.0 1998 2015 7,640,000 7,150,000 7,150,000 Utility system 4.974 to 6.0 2000 2020 54,880,000 17,920,000 18,985 17,938,985 Utility system 4.0 to 5.4 2001 2021 59,545,000 50,725,000 456,82f~ 51,181,828 Utility system 4.25 to 5.0 2002 2022 56,710,000 49,265,000 284,22~~ 49,549,223 Utility system 5.0 to 6.5 2002 2022 13,985,000 3,860,000 ~10,83i') 3,849,163 Utility system 3.625 to refunding 5.625 2003 2022 50,180,000 39,105,000 1,291,35! 40,396,352 Utility system refunding 2.0 to 5.25 2004 2024 24,850,000 23,940,000 1,133,73~► 25,073,738 Utility system refunding 3.0 to 5.0 2005 2023 53,845,000 53,790,000 4,445,95' 58,235,952 Utility system 4.5 to 5.0 2006 2026 8,515,000 8,515,000 8,515,000 Total revenue Bonds $419,425,000 $277,305,000 $7,394,771 $284,699,771 [The amounts do not include net unamortized gainl~loss) on refunding of x$8,158,926).] In July 2006, the Ciry issued $8,515,000 in revenue bond debt. The debt was issued to pa;y for the cost of various utility system improvements and upgrades. The bonds are payable over the next 20 years. 47 CITY DF DENTUN, TEXAS NOTES TD BASIC FINANCIAL STATEMENTS (continued} SEPTEMBER 30, 2006 Uther enterprise obligations -General obligation bonds and certificates of obligation issued for solid waste fund at September 30, 2006, is comprised of the following: Gross Amount Interest Original Outstanding at Rate issue Final Amount September 30, Other Obli ations % Date Maturi of Issue 2006 General obligation refunding 3.2 to 5.0 1999 2016 $ 1,481,220 $ 1,119,355 General obligatian refunding 3.0 to 4.75 2003 2023 846,935 547,745 General abligation refunding 2.5 to 5.0 2004 2015 2,040,000 1,915,000 Total general obligation bonds 4,368,155 3,582,100 Certificates of obligation 4,25 to 5.25 2001 202 i 3,845,000 1,015,000 Certificates of obligation 4.7 to 5.25 2002 2022 5,445,000 3,050,000 Certificates of obligation 3.0 to 4.75 2003 2023 1,755,000 980,000 Certificates of obligation 2.0 to 5.0 2004 2024 1,195,000 1,010,000 Certificates of obligation 3.0 to 4.375 2005 2025 1,570,000 1,415,000 Certificates of obligation 4.0 to 4.75 2006 2026 4,505,000 4,505,000 Total certificates of obligation 23,315,046 11,975,000 Total other enterprise obligations $27,683,201 $15,557,100 [The amounts do not include net unamortized premiumsl~discounts} of $24,532 nor net deferred gainl~loss} on refunding of x$118,301).] The revenue bonds are collateralized by the revenue of the Denton utility system funds System} .and the various special funds established by the bond ordinance. The ordinance provides that the revenue of the System is to be used first to pay operating and maintenance expenses of the System and second to establish and maintain the revenue bond funds. Any remaining revenues may then be used for any lawful purpose. The ordinance also contains provisions, which among other items restricts the issuance of additional revenue bonds unless the special funds noted above contain the required amounts and certain financial ratios are met. Management believes the City is in compliance with all signif cant requirements. Assets in these accounts consist of cash and [1.5. government securities. Below is a summary of the various net asset balances in the funds required by the bond ordinance to be restricted for debt service. Interest and sinking fund $11,884,032 Reserve fund 17,306,122 Total restricted net assets restricted for debt service $29,190,154 In prior years, the City defeased revenue bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City's financial statements. On September 30, 2006, $87,145,000 of revenue bonds considered defeased is still outstanding. 48 CITY OF DENTDN, TEXAS N4TE5 TD BASIC FINANCIAL STATEMENTS continued) SEPTEMBER 30, 200b Note payable In 1950, the City and the City of Dallas contracted with the Army Corps of Engineers for the construction and development of Ray Roberts Reservoir in Denton County. In contracts with the Army Corp of Engineers, the City will pay far twenty-six X26%} percent of the estimated water storage rights of the reservoir. Water obtained from the reservoir will be pro rata on the basis of each city's proportional share of total construction cost. The closing of the dam was completed in 1987 with water being available from the reser~~oir in 1989. The note will become due and payable when the Army Corps of Engineers provides the City the final and complete costs for the greenbelt and recreation area. Schedule of long-term debt maturities Aggregate maturities of the long-term debt (principal and interest} for the years subsequent ito September 30, 2006, are shown below and on the following page: Governmental Activities: Certificates of General ~bli a~ Obli ation Ca ital Leases Tota! Fiscal Year Pr_ 'ncipal Interest Principal Interest Pr_ 'ncpal Interest Princi~a~l Interest 2007 $ 4,017,583 $ 2,703,907 $ 3,425,000 $ 2,048,955 $ 935,736 $ 110,583 $ 8,378,319 $ 4,863,445 2008 3,890,723 2,512,586 3,540,000 1,879,026 965,932 80,386 8,396,655 4,471,998 2009 3,728,569 2,343,172 3,650,000 1,732,870 875,636 49,175 8,254,2,05 4,125,217 2010 3,660,885 2,179,616 3,665,000 1,580,218 782,438 20,865 5,10"3,323 3,780,699 2011 3,877,630 2,007,655 3,400,000 1,427,360 - - 7,277,630 3,435,015 2012-2016 20,092,510 7,212,666 11,325,000 5,499,593 - - 31,41'1,510 12,712,259 2017-2021 15,265,000 2,741,731 11,265,000 2,859,520 - - 26,5311,000 5,601,251 2022-2026 4,210,000 342,572 6,430,000 541,250 - - 10,641~,0~00 883,822 Total $58,742,900 $22,043,905 $46,700,000 $17,568,792 $3,559,742 $261,009 $109,002,642 $39,873,706 49 CITY 4F DENT4N, TEAS NOTES TU BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 Business-Type Activities: Certificates of General4bli anon 4bli anon Revenue Fiscal Year Principal Interest Princi al Interest Princi al Interest 2007 $ 482,417 $130,088 $ 1,450,000 $ 517,574 $13,325,000 $ 13,386,845 2008 449,277 115,145 1,155,000 450,434 14,130,000 12,746,991 2009 471,431 100,124 9$5,000 40$,408 14,220,000 12,022,219 2010 474,115 83,630 945,000 368,321 14,745,000 11,270,59'9 2011 332,370 68,146 805,000 330,084 13,605,000 10,540,834 2012-2016 1,372,490 131,536 2,935,000 1,171,942 76,845,000 41,888,72,4 2017-2021 - - 2,385,000 613,474 87,725,000 21,448,383 2022-2026 - - 1,315,000 120,512 32,775,000 5,526,48 1 2027-2031 - - - - 9,935,000 1,051,266 Total $3,552,100 $628,669 $11,975,000 $3,951,049 $277,305,000 $129,882,342 Notes Payable Total Fiscal Year Pr~ncipal Interest Pn'ncipal Interest 2007 $ - $ - $15,257,417 $14,034,807 2008 3,141,222 - 18,575,499 13,312,570 2009 - - 15,676,431 12,530,751 2010 - - 16,164,115 11,722,550 2011 - - 14,742,370 10,939,064 2012-2016 - - 51,152,490 43,192,202 2017-2021 - - 90,110;000 22,061,857 2022-2026 - - 34,090,000 5,646,993 2027-2031 - - 9,935,000 1,051,266 Total $3,141,222 $ - $296,003,322 $134,492,060 [The amounts above and on the previous page do not include net unamortized premiuml(discount} of $7,837,894 nor net unamortized gainl~loss} on refunding of ($8,670,432}.] Bonds authorized aad unissued General obligation bonds authorized but unissued as of September 30, 2006, amounted to $33,710,000. when issued, the proceeds will be allocated to the applicable capital projects. H. Landfill closure and post-closure cost State and federal laws and regulations require the City to place a final cover on its Mayhill Road landfill site upon closure and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and post-closure care casts will be paid only upon anticipated closure, the City reports a portion of these casts as an operating expense in each period based on landf 11 capacity used as of each balance sheet date. Based on a model created by a 2005 engineering study, total landf 11 closure and post- closure cost increased from $14,226,967 to $14,5 82,641 and increased this year's reported landfill closure and post-closure expense by $277,781. The $3,689,408 reported as landfill closure and post-closure care liability represents the cumulative amount incurred to date based on the use of 25.3% of the estimated capacity of the entire landfill at September 30, 2006. Based on this estimate, the remaining potential estimated liability for closure and post-closure c~~re of the entire landfill is $10,893,233. The City will recognize the remaining estimated cost of closure and post-closure care as the remaining capacity is f fled. These amounts are based on what it would cast to perform closure and post- closure care in 2006. Actual cost may fluctuate due to inflation, changes in technology, or changes in 50 CITY DF DENTQN, TEXAS NDTES TO BASIC FINANCIAL STATEMENTS ~continued~ SEPTEMBER 30, ZOOb regulations, The landfill has a remaining life of 28 years, and the City expects to close the landfill in f seal year 2034. The solid waste fund has provided for a designation of cash and investments of $3,689,408 at September 30, 2006, and anticipates increasing the reserve in future periods as the closure and post-closur~J activities are carried out. V. UTHER INF~RMATI4N A. Pension plans Texas Municipal Retirement Plan Plan description The City provides pension benefits for all of its full-time employees except fire f ghters;~ through anon- traditional,joint contributory, hybrid-defined benefit plan in the state-wide Texas Municipal Retirement System TMRS}, one of 811 administered by TMRS, an agent multiple-employer public employee retirement system. Benefits Benefits depend upon the sum of the employee's contributions to the plan, with interest, and i:he; City-financed monetary credits, with interest. At the date the plan began, the City granted monetary cred'~its for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for servi~;e since the plan began are a percent X200%} of the employee's accumulated contributions. In addition, the C`ih~ can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of their salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulate+~ contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with f ve or more years of service or with 20 years of service regardless of age. A member is vested after five years. The plan provisions are adopted by thy; governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. These retirees may also participate in the City's health, dental, acid vision plans as other post employment benefits. Contributions The contribution rate for the employees is 7%, and the City matching ratio is currently 2 to 1, both as adopted by the governing body of the City. Under the state law governing TMRS, the actuary annually determines the city contribution rate. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching p~lrcent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time a retirement becomes effective. The prior service contribution rate amortizes the unfunded actuarial liability over the remainder of the plan's 25-ye~~r amortization period. The unit credit actuarial cost method is used for determining the City contribution rate. Both the employees and the City make contributions monthly. Three-Year Trend Iaformation for TMRS Funding Year ending _ 12~3.~ ~0,~ , 1213.1104 1131103 Annual required contribution ARC} $9,347,195 $8,707,103 $8,313,904 Actual contributions $9,347,195 $8,707,103 $8,313,904 Percent contributed 100% 100% 100% 5~. CITY 4F DENTON, TEXAS NDTES TO BASIC FINANCIAL STATEMENTS ~continued~ SEPTEMBER 34, 2446 Actuarial Assumptions 12/31/05 Actuarial cost method Unit credit Amortization method Level percent of payroll Remaining amortization period 25 years ~-open period Asset valuation method Amortized cost Investment rate of return 7% Projected salary increases None Includes inflation at 3.5% Cost-of living adj ustments None The Ciry of Denton is one of 811 municipalities having the benefit plan administered by TMR~~. Each of the 811 municipalities has an annual, individual actuarial valuation performed. All assum~~tions for the December 31, 2005, valuations axe contained in the 2005 TMRS Comprehensive Annual Fina~~cial Report, a copy of which may be obtained by writing to P.a. Box 149153, Austin, Texas 78714-9153. Denton Firemen's Relief and Retirement Plaa Plan description The Board of Trustees of the Denton Firemen's Relief and Retirement Fund is the administrator of a single- employerdefined benef t pension plan, The Denton Firemen's Relief and Retirement Fund cover firefighters in the Denton Fire Department. The table below summarizes the membership of the fund as of December 31, 2045, the most recent bif.nnial actuarial valuation. 12/31/05 1. Retirees and beneficiaries currently receiving benefits and terminated employees entitled to 53 benef is but not yet receiving them 2. Current employees a. Vested 73 b, Nonvested 92 3 . Total 218 The Denton Firemen's Relief and Retirement Fund provides service retirement, death, disability and withdrawal benefits. These benefits vest after 10 years of credited service.. Firef ghters may retire at age 5(1 with 20 years of service. As of the December 31, 2005 actuarial valuation date, the Plan effective May 1, 200,5 and amended June 14, 2006 provided a monthly normal service retirement benefit, payable in a Join and Two-Thirds to Spouse form of annuity, equal to 2.44% of Highest 36-Month Average Salary for each year of service. These retirees may also participate in the City's health, dental, and vision plans as other post employme~~t benefits. There is no provision for automatic postretirement benef t increases. The fund has the authority to provide, and has periodically in the past provided for, ad hoc postretirement benefit increases. The benefit pr+avisions of this 52 CITY aF DENT4N, TEXAS NOTES TD BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, ZOOb plan are authorized by the Texas Local Fire Fighter's Retirement Act ~TLFFRA}. TLFFR4 provides the authority and procedure to amend benefit provisions. Contributions Required and Contributions Made The contribution provisions of this plan are authorized by TLFFRA. The TLFFRA provides the authority and procedure to change the amount of contributions determined as a percentage of pay by each firefighter and a percentage of payroll by the city. while the contribution requirements are not actuarially determined, state law requires that a~~ eligible actuary must approve each plan of benefits adopted by the fund. The actuary certifies that the contribu~.tion commitment by the f refighters and the city provides and adequate financing arrangement. Using the entry age actuarial cost method, the plans' normal cost contribution rate is determined as a percentage of payroll. ~Che excess of the total contribution rate over the normal cost contribution rate is used to amortize the plan's unfunded actuarial accrued liability, and the number of years needed to amortize the pun's unfunded actuarial accrued liability is determined using an open, level percentage of payroll method. The costs of administering the plan are financed from the fund. The funding policy of the Denton Firemen's Relief and Retirement Fund requires contributions equal to 12% of pay by the firefighters. The City of Denton contributed 10% of payroll during January thro~~gh September 2006, will contribute 11 % of payroll October 2006 through September 2007, and is planning to contribute 12% of payroll Qctober 2007 through September 2008 and then to begin contributing the same percentage of payroll that the city contributes to the Texas Municipal Retirement System far other employees. The December 31, 2005 actuarial valuation assumes that the city contribution rate will average 12.75% beginning Qctober 2008. Three-Year Trend Information for Denton Firemen's Relief and Retirement I~ni~ing Year ending 1Z1,~1105 12/31/04 _ .]x',131103 Annual required contribution tARC} $1,970,632 $1,568,444 $1,1146,396 Actual contributions $1,970,632 $1,868,444 $1,1146,396 Percent contributed 100% 100% :~00% Actuarial Assumptions 12/31/05 Actuarial cost method Entry age Amortization method Level percent of payroll, open Amortization period for ARC 23 years Asset valuation method 5-year adjusted market value Investment rate of return 7.75% Projected salary increases 4.50% plus promotion and longevity Includes inflation at 4.0% Cost-of living adjustments None Payroll increases 4.50°/a ARC as percent of payroll Budgeted rates Financial statements are available and can be obtained by contacting the Denton Fire Department at the City of Denton at 332 E. Hickory, Denton, Texas 76201. 53 CITY OF DENTUN, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS ~continued~ SEPTEMBER 30, 2006 The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all permanent City employees, permits them to defer, until future years, up to 25% of annual gross earnings not to exceed $15,500. Employees who are age 50 or older ma;y contribute an amount not to exceed $20,500. Employees who are within three years of retirement may elect to participate in a catch-up provision allowed by Section 457, which has an annual maximum contribution amo~int of $31,400. The withdrawal of deferred compensation funds is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensatian deferred under the plan, all property and rights purchased with 1~hose amounts, and all income attributable to those amounts, property or rights are, until paid ar made available to the employee or other beneficiary, solely the property and rights of the employees. Accordingly, the assets and associated liability of the plan are not included in the City's financial statements. it is the opinion of the City's legal counsel that the City has no liability for losses under the plan. C. Self-insurance plan The City has established a self insurance plan far workers' compensation benefits and general liability. Employee health insurance is afully-insured plan. Accrued claims payable include provisi+~ns for claims reported and claims incurred but not reported. The provision for reported claims is determined by estimating the amount, which will ultimately be paid for each claimant. The provision for claims incur~~ed but not yet reported is estimated based on an actuarial evaluation. The City's costs associated with the self insurance plan are reported as interfund transactions. Accordingly, they are treated as operating revenues of the Internal Service Risk Retention Fund and operating expenditures ~expenses~ of the other funds. Workers' compensation and general liability insurance The City of Denton self insures the first $500,000 per occurrence for workers' compensation claims or general liability. Commercial liability insurance coverage is purchased for public officials, airport operations, emergency medical services, take-home vehicles, and employee theft and dishonesty. Additionally, excess insurance is purchased for general liability and workers' compensation exposure. The City reports liabilities when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported. Because actual claims liabilities depend on such complex factors as inflation, changes in legal doctrines, and damage awards, the process used in computing claims liability does not necessarily result in an exact amount. Claims liabilities are re-evaluated periodically to take into consideration settlement of claims, r.~ew claims and other factors. As of September 30, 2006, the estimated value of these liabilities was $2,995,213. Changes in balances of claims liabilities during fiscal years 2006 and 2005 were as follows: Claims Liability Claims and Claims Liability Beginning of Change in Claims End of Fiscal Year Estimates Pa ments Fiscal Ye~~r Workers' Compensation 2006 $1,450,000 $1,437,485 $468,787 $2,418,698 2005 1,450,000 518,915 518,915 1,450,OOla General Liability 2006 $ 353,000 $ 302,868 $ 79,353 $ 576,51;~ 2005 353,000 395,882 395,882 353,000 54 CITY 4F DENTUN, TEXAS NQTES T4 BASIC FINANCIAL STATEMENTS continued} SEPTEMBER 30, 2006 4n September 30, 2006, the City of Denton held net assets of $1,683,514 in the Risk Retention Fund for payment of claims. There were no significant reductions in insurance coverage from coverage in the prior year, and the amount of settlements did not exceed insurance coverage in the current year or in any of the past three fiscal years. D. Commitments and contingencies Agreement with TMPA In 1976, the City, along with the cities of Bryan, Greenville, and Garland, Texas the Cities} entered into a Power Sales Contract with the Texas Municipal Power Agency TMPA}, TMPA was created through concurrent ordinances of the Cities and is governed by a Board of Directors consisting of eight members, two appointed by the governing body of each city. Under the terms of the agreement, TMPA agreed to construct or acquire electric generating plants to supply energy and power to the Cities for a period of not less than 35 years. The Cities in turn agreed to purchase all future power and energy requirements in excess of the amounts generated by their systems from TMPA at prices intended to cover operating costs and retirement, of debt. In the event that revenues are insufficient to cover all costs and retire the outstanding debt, each of the Cities has guaranteed a portion of the unpaid debt based, generally, upon its pro rata share of the energy delivered to consumers in the prior operating year. As of September 30, 2006, total TMPA long-term debt outstanding was approximately $1,072,1 ~i9,000, and the City's percentage was approximately 21,3%. In the opinion of management, the possibility of a material payment in the near future under this guarantee is remote in that TMPA is generating operating profits and assets exceed liabilities. TMPA operates a 452-megawatt, lignite-fueled generating plant. In 1996, TMPA switched to an external source of lignite to reduce costs. Should TMPA be dissolved, each city would be entitled tc~ an undivided interest in the property. Selected financial statement information of TMPA is as follows: September 30 ~t]naudited} 2006 2005 ~DOOs} ~ooos} operating revenues $ 244,480 $ 234,871 operating expenses 1 D3,876 98,050 Operating income 140,604 136,821 Qtheroon-operating sources 8,413 4,120 Current assets 55,778 56,539 Total assets 1,245,503 1,284,353 Long-term debt 1,072,169 1,120,23 I Total liabilities 1,209,944 1,249,909 Total equity 35,559 34,444 Agreement with the City of Dallas During 1985, the City entered into an agreement with the City of Dallas that provides for t11e purchase of a minimum of 500,OOD gallonslday of untreated water from the City of Dallas from Lake Lewisville. This contract will be effective for 30 years. The cost of water purchased under this agreement during fiscal year 2006 was $79,195. 55 CITY OF DENTUN, TEXAS NDTES TO BASIC FINANCIAL STATEMENTS (continued SEPTEMBER 34, 244b E. Litigation Various claims and lawsuits are pending against the City. In accordance with GAAP, those judgments considered "probable" are accrued, while those claims and judgments considered "reasonably possible" are disclosed but not accrued. In the opinion of City management and legal counsel, the maximurri amount of all significant claims considered reasonably possible, excluding condemnation proceedings, is approximately $500,000 as of September 30, 2006, Potential losses after insurance coverage on all probable claims and lawsuits will not have a material effect on the City's financial position as of September 30, 2006. 56 crrY of DENTON, TExAs REQUIRED SUPPLEMENTARY INFORMATION Exhibit XII SCHEDULE OF TMRS FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE FISCAL YEARS (Unaudited) Actuarial Unfunded Accrued Actuarial Actuarial Actuarial Liability (AAL) Accrued Fiscal Valuation Value of Unit Credit Liability Funded Year Date Arse#s Method (UAAL) Percent 2004 12/31/2003 $ 87,651,690 $ 118,$17,$$4 $ (31,166,194) 73.8% 2405 12/3112004 95,204,213 127,827,803 (32,623,590) 74.5 2006 12/31/2005 98,051,747 133,853,457 (35,801,710) 73.3 UAAL as Percent of Annual Fiscal Covered Covered Required Actual Percent Year Payroll Payroll Contributions Contributions Contributed 20114 $ 45,774,694 68.1% $ 8,313,904 $ 8,313,904 100.0% 2005 46,415,828 70.3 8,707,103 8,707,103 100.0 2006 46,394,303 77.2 9,347,195 9,347,195 100.0 57 CITY OF DENTON, TEXAS REQUIRED SUPPLEMENTARY INFORMATION Eabibi# XIII SCHEDULE OF DENTON'S FIREMEN'S RELIEF AND RETIREMENT PLAN FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE VALUATION YEARS (Unaudited) Actuarial Unfunded Accrued Actuarial Actuarial Actuarial Liability (AAL) Accrued Fiscal Valuation Value of U©it Credit Liability Funded Year Date Assets Method (UAAL) Percent 2002 12!3112001 $ 26,061,756 $ 29,786,004 $ (3,724,24$) 87.5% 2004 12131/2003 30,538,3x2 37,557,733 (7,019,3$1) 81.3 2006 12/3112005 34,677,009 45,341,724 (10,664,715) 76.5 UAAL as Percent of Annual Fiscal Covered Covered Required Actual Percent Year Payroll Payroll Contributions Contributions Contributed 2002 $ 7,947,098 46.9% $ 1,504,$22 $ 1,504,$22 100.0% 2004 $,459,472 83.0 1,$46,396 1,846,396 1.00.0 2006 10,445,026 102.1 1,970,632 1,970,632 100.0 58 APPENDIX D FORM OF BOND COUNSEL'S OPINION Proposed Form of Opinion of Bond Counsel An opinion in substantially the following form wilt be delivered by McCall, Parkhurst c~ Horton L.L.P., Pond Counsel, upon the delivery of the Bonds, assuming no material changes in facts or taw. CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 2007 DATED JULY 15, 2007 IN THE PRINCIPAL AMOUNT OF $16,740,000 AS BOND COUNSEL for the City of Denton, in Denton County, Texas the "Issuer"}, we have examined into the legality and validity of the bond issue initially evidenced by the bond described above the "Initial Bond"}, which Initial Bond originally has been issued and delivered as a single full~T registered bond, without interest coupons, with the principal amount thereof payable as set forth en the Initiall Band, and with the unpaid balance of each installment of principal, respectively, bearing interest from the date of the Initial Bond to the scheduled due date ~"maturity"}, or to the date ofpre-payment or redempti+an, of each installment of principal, at the rates per annum for each maturity set forth in the Initial Bond wilth interest, calculated on the basis of a 360-day year composed of twelve 30-day months, payable on December 1, 2007, and semiannually on each June 1 and December 1 thereafter, and with the then outstanding principal of the Initial Bond being subject to prepayment or redemption, as a whole, or in part, prior to scheduled maturity, at the option of the Issuer, on December 1, 2017, or on any date whatsoever thereafter, en accordance with the terms and conditions stated on the face of the Initial Bond. The Initial Bond may, at the request of the registered owner, be transferred and converted into, andlor exchanged for, fully registered bonds, without interest coupons, in the denomination of $5,000 or any integral multiple of $5,000, and such bond~~ again may be transferred andlor exchanged, all subject to the conditions stated and in the manner provided in the Ordinance authorizing the issuance of the Initial Bond the "Bond Ordinance"}, with any such bonds which are registered, authenticated, and delivered in accordance with the Bond Ordinance being hereinafter called "Definitive Bands". WE HAVE EXAMINED the applicable and pertinent provisions of the Constituteon and laws of the State of Texas, and have examined and relied upon a transcript of certified proceedings of the Issuer and other pertinent instruments furnished by the Issuer relating to the authorization of the Initial Bond and Definitive Bonds and the issuance and delivery of the Initial Bond, including the executed Initial Bond and a printed specimen of the form for Definitive Bonds initially made available by the Issuer for completion and exchange for the Initial Bond; and we have examined and relied upon the Issuer's Federal Tax Certificate, of even date herewith, incorporating certain schedules prepared by First Southwest Company, financial advisor to the Issuer. BASED ON SAID EXAMINATION, IT IS DUR OPINION that the Initial Band and Definitive Bonds collectively, the "Bonds"} have been duly authorized, and that the Initial Bond has been duly issued and delivered, all in accordance with law, and that, except as may be limited by laws relating to bankruptcy, reorganization, and other similar matters affecting creditors' rights or by general p~rinceples of equity which permit the exercise of judicial discretion, the covenants and agreements in the Bond Ordinance constitute valid and binding obligations of the Issuer, and the Initial Bond constitutes and Definitive Bonds will constitute valid and legally binding special obligations of the Issuer, secured by and payable, together with other bonds, from a first lien on and pledge of the "Pledged Revenues", which include initially the "Net Revenues of the System" as such terms are def ned in the Bond Ordinance, with the System consisting of the City's entire combined waterworks, sewer, and electric light and power system. THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Ordinance, to issue additional parity revenue bonds which also may be secured by and made payable from a :first lien on and pledge of the Pledged Revenues. THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to amend the Bond Ordinance with the approval of the holders orowners offifty-one percent in principal amount of all outstanding Bonds which are secured by and payable from a f rst lien on and pledge of the Pledged Revenues. THE REGISTERED OWNERS of the Bonds shall never have the right to derr~arid payment of the principal thereof or interest thereon out of any funds raised or to be raised by taxation, or from any source whatsoever other than specified in the Bond Ordinance. IT IS FURTHER OUR OPINION, except as discussed below, that the interest ors the Bonds is excludable from the gross income of the owners for federal income tax purposes under the statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We are further of the opinion that the Bonds are not "specif ed private activity bonds" and that, accordingly, interest on the Bonds will not be included as an individual or corporate alternative minimum tax preference item under section 57~a}(5} of the Internal Revenue Code of 198b the "Code"}. In expressing the aforementioned opinions, we have relied on certain representations, the accuracy of which we have not independently verified, and assume compliance with certain covenants regarding the use and investment of the proceeds of the Bonds and the use of the property f nanced therewith. We call your attention to the fact that if such representations are determined to be inaccurate or if the Issuer fails to comply with such covenants, interest on the Bonds may become includable in gross income retroactively to the date of issuance of the Bonds. WE CALL YOUR ATTENTION TO THE FACT that the interest on 1:ax-exempt obligations, such as the Bonds, is included in a corporation's alternative minimum taxable ~.ncome for purposes of determining the alternative minimum tax imposed on corporations by section 55 of the Code. EXCEPT AS STATED ABOVE, we express no opinion as to any other federal, state, or local tax consequences of acquiring, carrying, owning, or disposing of the Bonds. OUR OPINIONS ARE BASED ON EXISTING LAW, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no dutr~ to update or supplement our opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service the "Service"}; rather, such opinions represent our legal judgment based upon our review of existing law and in relia~~ce upon the representationsand covenants referenced above that we deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes. No assurance can be given whether or not the Service will commence an audit of the Bonds. If an audit is commenced, in accordance with its current published procedures the Service is likely to treat the Issuer as the taxpayer. We observe that the Issuer has covenanted not to take any action, or omit to take any action within its control, that if taken or omitted, respectively, may result in the treatment of interest on the Bonds as includable in gross .income for federal income tax purposes. WE EMPRESS NO OPINION as to any insurance policies issued with respect to the payments due for the principal of and interest on the Bonds, nor as to any such insurance policies issued in the future. OUR SOLE ENGAGEMENT in connection with the issuance of the Bonds is as Bond Counsel for the Issuer, and, in that capacity, we have been engaged by the Issuer for the sole purpose of rendering our opinions with respect to the legality and validity of the Bonds under the Constitution and laws of the State of Texas, and with respect to the exclusion from gross income of the interest on the: Bonds for federal income tax purposes, and for no other reason or purpose. The foregoing opinions represent our legal judgment based upon a review of existing legal authorities that we deem relevant to render such o~ainions and are not a guarantee of a result. We have not been requested to investigate or verify, an~~ have not independently investigated or verified, any records, data, or other material relating to the financi~~l condition or capabilities of the Issuer, or the disclosure thereof in connection with the sale of the Bonds, acrd have not assumed any responsibility with respect thereto. We express no opinion and make no comment vvith respect to the marketability of the Bands. Our role in connection with the Issuer's Official St~~tement prepared for use in connection with the sale of the Bonds has been limited as described therein. Respectfully, NOTICE OF SALE AND BIDDING INSTRUCTIONS ON $16,740,000 CITY OF DENTON, TEXAS ~Dentan County) tITiLITY SYSTEM REVENUE BONDS, SERIES 2007 Sealed Bids Due Tuesday, July 17, 2007, at 11;00 AM, CDT THE BANDS WILL NOT BE DESIGNATED AS " UALIFIEDTRX-EXEMPT OBLIGATIONS" FOR FINANCIAL 1NC~TITUTIONS. THE SALE BONDS OFFERED FOR SALE AT COMPETITIVE BIDDING. , .The City of Denton, Texas (the "City"} is offering for sale its $16,740,000 Utility System Revenue Bands, Series 20x7 (the "Bonds"). Bidders may submit bids for the Bands by any i~f the following methods: (1) Deliver bids directly to the City as described below in "Bids Delivered to the City," (2) Submit bids electronically as described below in "Electronic Bidding Procedures;" or (3) Submit bids by telephone or facsimile as described below in "Bids by Telephone ar Facsimile." BIDS DELIVERED TO C[TY ...Sealed bids, plainly marked "Bid for Bonds," should be addressed to "Mayor and City Council, City of Denton, Texas," and should be delivered to the City's Financial Advisor at 777 Main Street, Suite 1200, Fart Worth, Texas 76102, prior to 11:04 AM, CDT, on the date of the sale. ELECTRONIC BIDDING PROCEDURE ...Any prospective bidder that intends to submit an electronic bid must submi~~ its electronic bid through the facilities of PARITY. Subscription to i-Deal's BIDC4MP Competitive Bidding System is requir~;d in order to submit an electronic bid. The City will neither confirm any subscription nor be responsible far the failure of any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit Dffvial Bid Forms. An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Bonds on the terms provided in this Notice of Sale, and shall be binding upon the bidder as if made by a signed, sealed bid delivered to 'the City. The City shall not be responsible for any malfunction or mistake made by, ar as a result of the use of the facilities af, PARITTY, the use of such facilities being the sole risk of the prospective bidder. If any provisions of the Notice of Sale shall conflict with information provided by PARITY as the approved provider of electronic bidding services, this Native of Sale shall control. Further information about PARITY, including any fee charged, may be obtained from Parity Customer Support, 40 West 3rd Street, 5th Floor, New York, New York 10010, (212} 404-8102. Far purposes of the bidding process, regardless of the bidding method, the time as maintained by i-Deal shall constit«te the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the City, as described under "Basis for Award" below. All electronic bids shall be deemed to incorporate the provisions of this Notice of Sale and the Official Bid Form. BIDS BY TELEPHONE OR FACSIMILE ...Bidders must submit, prior to July 17, 2007, SIGNED Official Bid Forms to David Medanich, First Southwest Company, 777 Main Street, Suite 120x, Fort Worth, Texas 76102, and submit their bid b!r telephone or facsimile (fax) on the date of the sale. Telephone bids will be accepted at (817} 332-9710, between 14:00 AM, CDT and 11:00 AM, CDT an the date of the sale. Fax bids will be received between 10:00 AM, CDT and 11:00 AM, CDT, on the date o€ the sale at (817) 336-5572, attention: Rhonda Van Iderstine. First Southwest Company will not be responsible far submitting any bids received after the above deadlines. The City and First Southwest Company are not responsible if such telephone or facsimile numbers are busy which prevents a bid or bids from being submitted an a timely basis. First Southwest Company assumes no responsibility ar liability with respect to any irregularities associated with the submission of bids if any options are exercised. i PLACE AND TIME OI' BID OPENING... The bids for the Bonds will be publicly opened and read at the off ces of the Financial Advisor, at 11:00 AM, CDT, Tuesday, July 17, 2007. AWARD 0~' THE BONDS ...The City Council will take action to award the Bands (or reject all bids} at a meeting scheduled to convene at 6:30 PM, CDT, on the date of the bid opening, and adopt an ordinance authorizing the Bands and approving the Official Statement (the "Bond Ordinance"}. THE BONDS DESCRIPTION ...The Bonds will be dated July 15, 2007 (the "Dated Date"}. Interest will accrue from the Dated Date and will be due on December 1, 2007, and each June 1 and December 1 thereafter until the earlier of maturity or prior redemption, The Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity. The Bonds will mature an December 1 in each year as follows: MATURITY SCHEDULE Principal Principal Principal Year Amount Year Amount Year Amount 2407 $ 605,040 2014 $ 715,400 2020 $ 950,000 2408 535,040 2015 754,040 2421 994,044 2009 564,000 2016 7$5,000 2422 1,444,400 2010 590,004 2017 820,000 2023 1,094,000 2411 620,040 2018 565,000 2424 1,144,000 2012 650,000 2019 90x,000 2025 1,200,000 2013 680,000 2026 1,255,000 OPTIONAL REDEMPTION ...The City reserves the right, at its option, to redeem Bonds having stated maturities on and after December 1, 2018, in whole or in part in principal amounts of $5,004 or any integral multiple thereof, an December 1, 2017, or any date thereafter, at the par value thereof plus accrued interest to the date frxed for redemption. SERIAL BONDS ANDIOR TERM BANDS ...Bidders may provide that all of the Bonds be issued as serial Bonds or may provide that any two or mare consecutive annual principal amounts be combined into one or more term Bonds. MANDATORY SiNKiNG FUND If the successful bidder elects to alter the Maturity Schedule reflected above and convert principal amounts of the Serial Bonds into "Term Bonds",such "Term Bonds" shall be subject to mandatory redemption on the first December 1 next following the last maturity far Serial Bonds, and annually thereafter vn each December 1 until the stated maturity for the Term Bands at the redemption prices of par plus accrued interest to the date of redemption. The principal amounts of the Term Bonds to be redeemed on each mandatory redemption date shall be the principal amounts that would have been due and payable in the Maturity Schedule shown above had no conversion to Term Bonds occurred. At least thirty (30} days prior tv eac,h mandatory redemption date, the Paying AgentlRegistrar shall select by lot the Term Bands to be redeemed and cause a notice of redemption to be given in the manner provided in the Preliminary Official Statement. The principal amount of the Term Bonds required to be redeemed pursuant to the operation of such mandatani redemption provisions may be reduced, at the option of the City, by the principal amoun# of the Term Bands of the same maturity v~rhich (i) shall have been acquired by the City at a price not exceeding the principal amount of such Term Bands plus accrued interest to the date or purchase thereof, and delivered to the Paying AgentlRegistrar for cancellation or (ii} shall have been redeemed pursuant tv the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. A final official statement will incorporate the mandatory redemption provisions for the Bonds in the event the successful bidder elects to convert serial maturities into one or more Term Bonds. BOOx-ENTRY-ONLY SYSTEM ...The City intends to utilize the Book-Entry-Only System of The Depository Trttst Company ("DTC"}. See "The Bonds -Book-Entry-Only System" in the Preliminary Official Statement. PAYING AGENTIREGISTRAR ...The initial Paying AgentlRegistrar shall be The Bank of New York Trust Comp~u~y, National Association (see "The Bonds -Paying AgentlRegistrar" in the Preliminary Official Statement}. SOURCE OF PAYMENT ...The Bonds are payable, bath as to principal and interest, solely from and secured by a first lien on and a pledge of the Pledged Revenues including the Net Revenues of the Utility System after payment of maintenance a.nd operating expenses (see "The Bonds -Security and Source of Payment"). Further details regarding the Bonds are set forth in the Preliminary official Statement. ii CONDITIONS OF THE SALE TYPE OF BIDS AND INTEREST RATES ...The Bonds will be sold in one block on an "All ar None" basis, and at a price of not less than par value plus accrued interest from the dated date of the Bonds (the "Dated Date"} to the date of delivery ,of the Bonds. Bidders are invited to name the rate(s) of interest to be borne by the Bonds, provided that each rate bid must be in a multiple of 118 of 1% or 11100 of 1% and the net effective interest rate must not exceed 15%. The highest rate bid may not exceed the lowest rate bid by more than 1% in rate. Using the interest rate established for the December 1, 2018 maturity as the base year, interest rates far successive maturities shall be structured in ascending order such that for each succeeding maturity, rates shall be equal to or greater than the interest rate for the maturity of the preceding year. No limitation is impaled upon bidders as to the number of rates or changes which may be used. All Bonds of one maturity must bear one and the same rate. No bids involving supplemental interest rates will be considered. BASIS FOR AWARD ...The sale of the Bands will be awarded to the bidder making a bid that conforms to the specifications herein and which produces the lowest True Interest Cost rate to the City. The True Interest Cost rate is that rate which, when used to compute the total present value as of the Dated Date of all debt service payments on the Bands on the basis of semi-annual compounding, produces an amount equal to the sum of the par value of the Bonds plus any premium bid (but not interest accrued from the Dated Date to the date of their delivery}. In the event of a bidder's error in interest cast rate calculations, the interest rates, and premium, if any, set Earth in the Official Bid Farm will be considered as the official bid. GOOD FAITH DEPOSIT A Good Faith Deposit, payable to the "City of Denton, Texas", in the amount of $334,800.00, is required. Such Gaad Faith Deposit shall be a bank cashier's check or certified check, which is to be retained uncashed by the Ci1,y pending the Initial Purchaser's compliance with the terms of the bid and the Notice of Sale and Bidding Instructions. The Good Faith Deposit may accompany the Official Bid Form or it may be submitted separately. If submitted separately, it shall be made available to the City prior to the opening of the bids, and shall be accompanied by instructions Pram the bank on which drawn which authorize its use as a Good Faith Deposit by the Initial Purchaser tivha shall be named in such instructions. The Good Faith Deposit of the Initial Purchaser will be returned to the Initial Purchaser upon payment for the Bonds. No interest will be allowed on the Good Faith Deposit. In the event the Initial Purchaser should fail or refuse to take up and pay for the Bonds in accordance with the bid, then said check shall be cashed and accepted by the City as full and complete liquidated damages. The checks accompanying bids other than the winning bid will be returned immediately after the bids are opened, and an award of the Bonds has been made. DELIVERY OF THE BLINDS AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS It is anticipated that CUSIP identification numbers will appear on the Bonds, but neither the failure to print or type such number on any Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Iruitial Purchaser to accept delivery of and pay far the Bands in accordance with the terms of this Notice of Sale and Bidding Instructions and the terms of the Off cial Bid Form. All expenses in relation to the printing or typing of CUSIP numbers on the Bonds shall be paid by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of the numbers shall be the responsibility of and shall be paid for by the Initial Purchaser. DELIVERY of BONDS . , .Initial Delivery will be accomplished by the issuance of one Initial Bond (also called the "Band" or "Bonds"), either in typed or printed form, in the aggregate principal amount of $16,740,000, payable in stated ins#allments to the Initial Purchaser or its designee, signed by the Mayor and City Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts. Upon delivery of the Initial Bond, it shall be immediately cancelled and one definitive Bond far each maturity will be registered and delivered only to Cede & Ca., and deposited with DTC in connection with DTC's Book-Entry-Only System. Delivery will be at the corporate trust office of the Paying AgentlRegistrar in ]Dallas, Texas. Payment for the Bonds must be made in immediately available funds for unconditional credit #o the City, or as otherwise directed by the Ciry. The Initial Purchaser will be given six business days' notice of the time fixed for delivery of the Bands. It is anticipated that delivery of the Bonds can be made on ar about August 21, 2407, and it is understood and agreed that the Initial Purchaser will accept delivery and make payment for the Bonds by 10;00 AM, CDT, an August 21, 2007, or thereafter on the date the Bond is tendered far delivery, up to and including September 4, 2047. If for any reason the City is unable to make delivery on or before September 4, 2007, the City shall immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend its offer for an additional thirty days. If the Initial Purchaser does not elect to extend its offer within six days thereafter, then its Goad Faith Deposit will be returned, and bath the City and the Initial Purchaser shall be relieved of any further obligation. In no event shall the City be liable for any damages by reason of its failure to deliver the Bonds, provided such failure is due to circumstances beyond the City's reasonable control, CONDITIONS TO DELIVERY ...The obligation of the Initial Purchaser to take up and pay far the Bands is subject to the Initial Purchaser's receipt of (a} the legal opinion of McCall, Parkhurst & Horton, L.L.P., Dallas, Texas, Bond Counsel for the City ("Bond Counsel"}, (b} the na-litigation certificate, and (c} the certification as to the Preliminary Official Statement, all as further described in the Preliminary Official Statement. In order to provide the City with information required to enable it to comply with certain conditions of the Internal 1~;evenue Code of 1986 relating to the exemption of interest on the Bonds from the gross income of their owners, the Initial Purchaser will be required to complete, execute, and deliver to the City (on or before the 6th business day prior to the delivery of the Bonds) a certification as to their "issue price" substantially in the farm and to the effect attached hereto ar accompanying 1;his Notice of iii Sale and Bidding Instructions. In the event the successful bidder will not reoffer the Bonds for sale, such certificate may be modified in a manner approved by the City. In no event will the City fail to deliver the Bonds as a result [rf the Initial Purchaser's inability to sell a substantial arnoun~t of the Bonds at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver such a certif cute by the date of delivery of the Bonds, if its bid is accepted by the City. It will be the responsibility of the Initial Purchaser to institute such syndicate reporting requirements to make such investigation, ar otherwise to ascertain the facts necessary to enable it to make such certification wi1:h reasonable certainty, Any questions concerning such certification should be directed to Band Counsel. LEGAL OPINIONS ...The Bonds are offered when, as and if issued, subject to the approval of the Attorney General of the State of Texas. Delivery of and payment far the Bands is subject to the receipt by the Initial Purchaser of opinions of Bond Counsel, to the effect that the Bonds are valid and binding obligations of the City and that the interest on the Bands will be excludable from gross income far federal income tax purposes under existing Law, subject to the matters described under "Tax Matters" in the Preliminary Official Statement, including alternative minimum tax consequences for corporations. CERTIFICATION OF PRELIMINARY QFFICIAL STATEMENT At the time of payment for and Initial Delivery of the Bands, the City will execute and deliver to the Initial Purchaser a certificate in the form set forth in the Preliminary Official Statement. CHANGE IN TAX EXEMPT" STATUS ....At any time before the Bonds are tendered for delivery, the Initial Purchaser may withdraw its bid if the interest received by private holders an obligations of the same type and character shall be declared to be incluciable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any ]~ederal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding Instructions. GENERAL FINANCIAL ADVISOR ...First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Bonds. The Financial Advisor's fee far services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. First Southwest Company may submit a bid for the Bonds, either independently ar as a member of a syndicate organised to submit a bid for the Bonds. First Southwest Company, in its capacity as Financial Advisor, leas relied on the opinion of Band Counsel and has not verified and dues not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, ar the possible impact of any present, pending ar future actions taken by any legislative or judicial bodies. In the normal course of business, the Financial Advisor may from time to time sell investment securities to the City for the investment of bond proceeds or other funds of the City upon the request ofthe City. BLUE SKY LAWS By submission of its bid, the Initial Purchaser represents that the sale of the Bonds in states other than Texas will be made only pursuant tv exemptions from registration or, where necessary, the Initial Purchaser will register the Bonds in accordance with the securities law of the states in which the Bonds are offered or sold. The City agrees tv cooperate ~~ith the Initial Purchaser, at the Initial Purchaser's written request and expense, in registering the Bonds or obtaining an exemption from registration in any state where such action is necessary, provided, however, that the City shall not be obligated to qualify as a foreign corporation or to execute a general ar special consent to service of process in any such jurisdiction. NOT AN QFFER TO SELL ...This Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Bonds, but is merely notice of the sale of the Bonds. The offer to sell the Bonds is being made by means of the Notice of Sale and Bidding Instructions, the Official Sid Form and the Preliminary Official Statement. Prospective purchasers are urged to carefully examine the Preliminary Official Statement to determine the investment quality of the Bonds. ISSUANCE OF ADDITIONAL DEFT ...The City does not anticipate the issuance of additional utility system revenue debt within the next I2 months. RATINGS ...The presently outstanding tax supported debt of the City is rated "Al" by Moody's Investors Service, Inc. ("Moady's"} and "A+" by Standard & Poor's Ratings Services, A Division of McGraw-Hill Companies, Inc. ("S&P"). The City also has issues outstanding which are rated "Aaa" by Moady's and "AAA" by S&P through insurance by various commercial insurance companies. Applications for contract ratings on this issue have been made to Moody's and SB~P. The results of their determinations will be provided as soon as possible. MUNICIPAL BOND INSURANCE In the event the Bands are qualified for municipal band insurance, and the Initial Purchaser desires to purchase such insurance, the cast therefore will be aid b the Initial Purchaser, Any fees to be paid to the rating agencies as a result of said insurance will be aid b the Ci . It will be the responsibility of the Initial Purchaser to disclose the existence of insurance, its terms and the effect thereof with respect to the reoffering of the Bands. iv THE PRELIMINARY ~F'FICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15C2-12 The City has prepared the accompanying Preliminary Official Statement and, for the limited purpose of complying with SEC Rule 15c2-12., deems such Preliminary Off vial Statement to be final as of its date within the meaning of such Rule for the purpose of review prior to bidding. To the best knowledge and belief of the City, the Preliminary Official Statement contains information, inclu+~ing financial information or operating data, concerning every entity, enterprise, fund, account, or person that is material to an evaluation of the offering of the Bands. Representations made and to be made by the City concerning the absence of material misstatements and omissions in the Preliminary Official Statement are addressed elsewhere in this Notice of Sale and Bidding Instructions and in the Preliminary Official Statement. The City will furnish to the Initial Purchaser, acting through a designated senior representative, in accordance wi1:h instructions received from the Initial Purchaser, within seven (7} business days from the sale date an aggregate of 150 copies of the Official Statement reflecting interest rates and other terms relating to the initial reoffering of the Bonds. The cost of any Official Statement in excess of the number specified shall be prepared and distributed at the cost of the Initial Purchaser. The Initial Purchaser shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by t>•~e close of the next business day after the award. Except as noted above, the City assumes no responsibility ar obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the subject securities. CONTINUING DISCLOSURE AGREEMENT ...The City will agree in the Band Ordinance to provide certain periodic information and notices of material events in accordance with Securities and Exchange Commission Rule 15c2-12, as described in the Preliminary Official Statement under "Continuing Disclosure of Information". The Initial Purchaser's obligation to accept and pay for the Bands is conditioned upon delivery to the Initial Purchaser or agent of a certified copy of the Bond Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR [JNDERTAKINGS ...The City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule l 5c2-12. ADDITIONAL COPIES OI; NOTICE, BID FORM AND STATEMENT A limited number of additional copies of this Notice of Sale and Bidding Instructions, the Official Bid Form and the Preliminary Official Statement, as available over and above the nc►rmal mailing, may be obtained at the offices of First Southwest Company, Investment Bankers, 325 North St. Paul, Suite 800, Dallas, Texas 75201, Financial Advisor to the City. On the date of the sale, the City will, in the Bond Ordinance authorizing the issuance of the Bonds, confirm its approval of the farm and content of the Preliminary Official Statement, and any addenda, supplement or amendment thereto, and authorize' its use in the reoffering of the Bonds by the Initial Purchaser. PERRY MfcNEILL Mayor City of Denton, Texas ATTEST: JENNIFER WALTERS City Secretary July 5, 2007 v BLIND YEARS Bands Accumulated Bonds Maturing Amount Bond Years Bond Years Maturing 2007 605,000 228.556 228.55b 2007 2008 535,000 737.111 965.bb7 2008 2009 560,004 1,331.55b 2,297.222 2009 2014 590,000 1,992.889 4,294.111 2010 2011 620,DD0 2,714.222 7,004.333 2011 2412 650,OD0 3,495.556 10,499.889 2012 2013 680,000 4,336.889 14,$36.778 2013 2014 715,000 5,275.111 20,111.8$9 2014 2015 750,000 6,.283.333 26,395.222 2015 2416 755,000 7,361.556 33,756.778 2016 2017 820,000 8,509.77$ 42,266.556 2417 201$ 865,440 9,841.778 52,108.333 2418 2019 900,000 11,144.000 b3,248.333 2019 2020 950,000 12,708.8$9 75,957.222 2020 2021 990,000 14,234.000 94,191.222 2021 2422 1,444,400 15,992.889 146,184.111 2422 2023 1,090,000 17,851.778 124,035.889 2023 2024 1,140,000 19,810.667 143,846.556 2024 2025 1,200,000 22,053.333 1b5,899.889 2425 202b 1,255,000 24,319.111 190,219.000 202b Average Maturity .............................11.363 Years OFFICIAL BID FORM Honorable Mayor and City Council July 17, 2x07 City of Denton, Texas Honorable Mayor and Members of the City Council; Reference is made to your Preliminary Offcial Statement and Notice of Sale and Bidding Instructions, dated July 5, 2007 of $Ib,740,000 CITY OF DENTON, TEXAS UTILITY SYSTEM REVENllE BONDS, SERIES 2007, both of which constitute a part hereof. Far your legally issued Bands, as described in said Notice of Sale and Bidding Instructions and Preliminary Official Statement, we will pay you par and accrued interest from date of issue to date of delivery to us, plus a cash premium of $ ~ for Bonds maturing and bearing interest as follows: Principal Interest Principal Interest Principal Interest Maturi Amount Rate Maturity Amount Rate Ma! turity Amount Rate 12/1/2007 $ 6x5,440 % 1211!2014 $ 715,aaa % 12111202a $ 95a,aa0 12/1/2008 535,000 % 12/1/2015 754,004 % 12/1/2021 990,000 % 12/112009 560,000 % 12/1/2016 785,x00 % 1211/2022 1,a40,a01) °f° 12/1/2010 590,000 % 12/1/2417 $20,000 % 12/1/2023 1,090,040 % 12/1/2011 b20,004 % 12/1/2018 865,000 % 12/1/2024 1,140,000 12/1/2412 650,000 % 12/1/2019 900,000 % 12/1/2025 1,200,000 % 12/1/2013 68a,a0a % 12/1/2026 1,255,Oa0 Of the principal maturities set forth in the table above, term bands have been created as indicated in the fallowing table (which may include multiple term bonds, one term bond or no term band if none is indicated}. For those years which have been combined into a term bond, the principal amount shown in the table above shall be the mandatory sinking fund redemption amounts in such years except that the amount shown in the year of the term bond maturity date shall mature in such year. The term bonds created are as follows: Year of Maturity Date First Mandatory Principal Irnrerest December I Redemption Amount Fate $ °/a via $ ova $ ~~o n~v Our calculation (which is not a part of this bid} of the true interest cost from the above is: TRUE INTEREST COST We are having the Bands of the following maturities insured by at a premium of $ ,said remium to be aid b the initial PurehasQr. Any fees to be paid to the rating agencies as a result of said insurance will be laid by the City. The Initial Bonds shall be registered in the name of ,which will, upon payment for the Bands, be canceled by the Paying AgentlRegistrar. The Bonds will then be registered in the name of Cede & Co. (DTC's partnership nominee), under the Book-Entry-Only System. A bank cashier's check or certified check of the Bank, , in the amount of $334,844.00, which represents our Goad Faith Deposit his attached hereto) ar Chas been made available to you prior to the opening of this bid}, and is submitted in accordance with the terms as set forth in the Preliminary Official Statement and Notice of Sale and Bidding Instructions. ~e agree to accept delivery of the Bonds utilizing the Boak-Entry-Only System through DTC and make payment :for the Initial Bond in immediately available funds in the Corporate Trust Division, The Bank of New York Trust Company, Nationa:~ Association, not later than 14:00 AM, CDT, on August ~l, 2007, or thereafter on the date the Bands are tendered for delivery, pursuant to the terms set forth in the Notice of Sale and Bidding Instructions. It will be the obligation of the purchaser of the Bands; to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete, execute, and deliver to the City, at least six business days prior to delivery of the Bonds, a certif cafe relating to the "issue price" of the Bonds in the form and to the effect accompanying the Notice of Sale and Bidding Instructions, with such changes thereto as may be acceptable to the City. We agree to provide in writing the initial reoffering prises and other terms, if any, to the Financial Advisor by the class of the next business day after the award. Respectfully submitted, Syndicate Members: Name of Underwriter or Manager Authorized Representative Phone Number Signature ACCEPTANCE CLAUSE The above and foregoing bid is hereby in all things accepted by the City of Denton, Texas, subject to and in accord~~nce with the Notice of Sale and Bidding Instructions, this the 17th day of July, 2007. ATTEST: Mayor City of Denton, Texas City Secretary CERTIFICATE OF UNDERWRITER The undersigned hereby certifies as follows with respect to the bid and purchase of the City of Denton, Texas 1Jtility System Revenue Bonds, Series 2047 (the "Bonds"}: 1. The undersigned is the duly authorized representative of the purchaser (the "Purchaser"} of the Bonds from the City of Denton, Texas (the "Issuer"}. 2. All of the Bonds have been offered to members of the public in a bona fide initial offering. For purposes of thus Certificate, the term "public" does not include any bondhouses, brokers, dealers, and similar persons or organizations acting ire the capacity of underwriters or wholesalers (including the Purchaser or members of the selling group or persons that are related to, or controlled by, ar are acting on behalf of or as agents far the undersigned or members of the selling group). 3. Each maturity of the Bonds was offered to the public at a price which, on the date of such offering, was reason~~bly expected by the Purchaser to be equal to the fair market value of such maturity. 4. Other than the obligations set forth in paragraph 5 hereof (the "Retained Maturity" or "Retained Maturities"), the first pricelyield at which a substantial amount (i.e., at least ten (10} percent} of the principal amount of each maturity of the Bonds was sold to the public is set forth below. Principal Offering Principal Offering Amount Year of Price Amount Year of Price Maturing Maturity (%IYield} Maturing Maturity (%IYi~,ld) $ 445,004 2407 $ 820,004 2417 535,040 2008 865,444 2418 56D,000 2009 900,404 2019 594,000 2010 950,404 2420 620,044 2011 990,004 2021 650,000 2012 1,444,400 2422 680,040 2013 1,090,400 2023 715,000 2014 1,140,440 2024 750,040 2015 1,200,400 2025 785,044 2016 1,255,00D 2026 5. In the case of the Retained Maturities, the Purchaser reasonably expected on the offering date tv sell a substantial amount (i.e., at least ten (10} percent) of each Retained Maturity at the initial offering pricelyield as set forth below: Principal Offering Principal Offering Amount Year of Price Amount Year of Prim Maw. Maturity (%IYield) Maturin Maturity (%IYield) $ 645,040 2047 $ 820,40D 2017 535,000 2448 865,440 2018 560,400 2009 940,440 2019 590,000 2010 950,000 2020 620,000 2011 990,040 2021 650,000 2012 1,040,000 2022 680,000 2413 1,490,40D 2023 715,440 2414 1,140,440 2024 '150,000 2415 1,200,000 2025 785,000 2016 1,255,400 2026 b, Please choose the appropriate statement: ( }The Purchaser will not purchase bond insurance for the Bonds. ~ }The Purchaser will purchase bond insurance from the "Insurer"} for a feelpremium of $ the "Fee"}. The Fee is a reasonable amount payable solely for the transfer of credit risk for the payment of debt service on the Bonds and does not include any amount payable for a cost other than such guarantee, e.g., a credit rating or legal fees. The Purchaser represents that the present value of the Fee far each obligation constituting the Bands to which such Fee is properly allocated and which are insured thereby is less than the present value of the interest reasonably expected to be saved as a result of the insurance on each obligation constituting the Bonds. The Fee has been paid to a person who is not exempt from federal income taxation and who is not a user ar related to the user of any proceeds of the Bonds. In determining present value for this purpose, the yield of the Bvnds (determined with regard to the payment of the guarantee fee} has been used as the discount rate. No portion of the Fee is refundable upon redemption of any of the Bonds in an amount which would exceed the portion of such Fee that has not been earned, 7. The Purchaser understands that the statements made herein will be relied upon, by the Issuer in its effort to comply with the conditions imposed by the lnternal Revenue Code of 198b, and by Bond Counsel in rendering their opinion that tl~e interest on the Bands is excludable from the grass income of the owners thereof, EXECUTED and DELIVERED this day of July, 2007. (Name of Underwriter or Manager} By Title} Exhibit 4 PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT entered into as of July 15, 2007 (this "Agreement"), by and between the City of Denton, Texas (the "Issuer"),and The Bank of New York Trust Company, National Association, a national banking association (the "Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its Utility System Revenue Bonds, Series 2007 (the "Securities") in the aggregate principal amount of $16,740,000 such Securities to be issued in fully registered form only as to the payment of principal and interest thereon; and WHEREAS, the Securities are scheduled to be delivered to the initial purchaser thereof on or about August 21, 2007; and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration, transfer and exchange thereof by the registered owners thereof; and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities. As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof, all in accordance with this Agreement and the "Ordinance" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the "Ordinance." The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Security means the date on and after which the principal or any or all installments of interest, or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the principal corporate trust office of the Bank as indicated on the signature page hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Fiscal Year" means the fiscal year of the Issuer, ending September 30. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Ordinance" means a written request or ordinance signed in the name of the Issuer by the Mayor of the Issuer delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "Ordinance" means the ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the City Secretary or any other officer of the Issuer and delivered to the Bank. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Ordinance). "Redemption Date" when used with respect to any Bond to be redeemed means the date fixed for such redemption pursuant to the terms of the Ordinance. "Responsible Officer" when used with respect to the Bank means the Chairman orVice-Chairman of the Board of Directors, the Chairman or Vice-chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above 2 designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfer of the Securities. "Stated Maturity" means the date specified in the Ordinance the principal of a Security is scheduled to be due and payable. Section 2.02. Other Definitions. The terms "Bank," "Issuer," and Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT Section 3.01. Duties of Paying_Agent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the Bank Office. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and preparing and sending checks by United States Mail, first class postage prepaid, on each payment date, to the Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the address appearing on the Security Register or by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Ordinance. Section 3.03. Reporting Requirements. To the extent required by the Code or the Treasury Regulations, the Bank shall report to the Holders and the Internal Revenue Service the amount of interest paid or the amount treated as interest accrued on the Bond which is required to be reported by the Holders on their returns of federal income tax. ARTICLE FOUR REGISTRAR Section 4.01. Security Register -Transfers and Exchanges. 3 The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register"), and, if the Bank Office is located outside the State of Texas, a copy of such books and records shall be kept in the State of Texas, for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02. Bonds. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Security Re is~ter. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank toprovide an up-to-date listing or to convert the information into written form. 4 The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Cancelled Bonds. All bonds surrendered to the Bank, at the designated Payment/Transfer Office, for payment, redemption, transfer, or replacement, shall be promptly cancelled by the Bank. The Bank will provide to the Issuer, at reasonable intervals determined by the bank, a bond evidencing the destruction of canceled bonds. Section 4.06. Mutilated, Destroyed, Lost or Stolen Securities. The Issuer hereby instructs the Bank, subject to the applicable provisions of the Ordinance, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an overissuance. Incase any Security shall be mutilated, or destroyed, lost or stolen, the Bank, in its discretion, may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on bonds or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible 5 Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the state- ments of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Moneys Held by Bank. The Bank shall deposit any moneys received from the Issuer into a segregated account to be held by the Bank solely for the benefit of the owners of the Securities to be used solely for the payment of the Securities, with such moneys in the account that exceed the deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas and to the extent permitted by the laws of the United States of America to secure and be pledged as collateral for such accounts until the principal and interest on such securities have been presented for payment and paid to the owner thereof. Payments made from such account shall be made by check drawn on such account unless the owner of such Securities shall, at its own expense and risk, request such other medium of payment. Subject to the Unclaimed Property Law of the State of Texas, any money deposited with the Bank 6 for the payment of the principal, premium (if any), or interest on any Security and remaining unclaimed for three years after the final maturity of the Security has become due and payable will be paid by the Bank to the Issuer if the Issuer so elects, and the Holder of such Security shall hereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease. If the Issuer does not elect, the Bank is directed to report and dispose of the funds in compliance with Title Six of the Texas Property Code, as amended. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction within the State of Texas to determine the rights of any Person claiming any interest herein. Section 5.08. Depository Trust Company Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements," effective August 1,1987, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02. Assi n.~. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the 7 Issuer or the Bank, respectively, at the addresses shown on the signature page of this Agreement. Section 6.04. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severabili . In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of A re,~ ement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire A re,~ ement. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between his Agreement and the Ordinance, the Ordinance shall govern. Section 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (60) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securi- ties, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. 8 Section 6.11. Governing. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. 9 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, Dallas, Texas By Title 2001 Bryan Street 10th Floor Dallas, Texas 75201 CITY OF DENTON, TEXAS By Mayor 215 E. McKinney Denton, Texas 76201 SCHEDULE A Paying Agent/Registrar Fee Schedule AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Utility and CIP Engineering ACM: Howard Martin, 349-8232 SUBJECT Receive a report, hold a discussion and consider approval of the removal of a signal at the intersection of McKinney Street and Wood Street and the installation of a "HAWK" pedestrian signal. The Traffic Safety Commission recommends denial (6-0). BACKGROUND The original major traffic and pedestrian generator for this signal was Sullivan Keller Elementary School. This school was closed in May, 2002 and the children moved to its new location at the Ann Windle School for Young Children, 901 Audra Lane. The old school had three school safety zones: one on Ruddell Street, another on Davis Street, and the third on Wood Street. As there were no school children using this school at that time, this item was presented to the Traffic Safety Commission on October 7, 2002 with a staff recommendation for their removal. The Traffic Safety Commission agreed with staff to recommend to City Council for the removal of the zones, which was presented to City Council on November 5, 2002 with the subsequent ordinance #2002-352 being approved for removal. After Sullivan Keller Elementary School was remodeled, it reopened in August 2004 to accommodate the relocation of the Lester Davis School. The Davis School is for the DISD's Alternative Education Program. Students are temporarily placed on this campus for disciplinary reasons. It is mandatory that all students ride the bus to and from the campus. Students may not walk or drive to and from the campus nor may parents/guardians transport students to and from the campus. Traffic Safety Commission minutes indicate that this intersection and the intersection of McKinney Street and Crawford Street were studied in 1992 because of concerns as a result of vehiclelpedestrian accidents in the area during this time. The result was the installation of the traffic control signal at McKinney Street and Wood Street sometime later. The City of Denton utilizes the Texas Manual of Uniform Traffic Control Devices (MUTCD) as a standard, which is adopted from the Federal Highways Administration's (FHWA) MUTCD. The MUTCD is the authoritative text federal, state, county and city governments use to determine the proper type and use of various traffic control devices for streets and highways. The MUTCD indicates that if traffic patterns change, consideration should be given to removing a traffic control signal that no longer meets warrants and replacing it with an appropriate alternate traffic control device. After the opening of the Lester Davis School, staff started visually reviewing the area's traffic circulation patterns and decided to investigate the continued need for the traffic control signal at McKinney Street and Wood Street. Vehicle counts were taken in May, 2006 and a signal warrant analysis done shortly thereafter. The signal warrant analysis not only indicated that the traffic signal is no longer warranted, but that it did not meet any hour of any warrant, based upon vehicle volumes. Finding that the traffic control signal warrants were not met, staff prepared the various items for a study period and provided information to the public. In accordance with the MUTCD, the signal was then placed on flash on January 19, 2007 and additional studies conducted. A second traffic volume study was conducted on Wood Street in April 2007 (understanding that the volumes on McKinney Street are sufficient throughout the day to meet the warrants and so were not counted again) and a second analysis (using the McKinney street volumes from the first study) indicated again, that this intersection not only did not meet any of the warrants, it did not meet any hour of any warrant. In April 2007, a traffic volume study was also conducted for Ruddell Street, north of McKinney Street, to see if there were any changes in traffic patterns on this street (as a result of the traffic control signal at Wood Street and McKinney Street being placed on flash) to justify a change in the existing traffic control device. The warrant study indicates that this intersection also does not meet any warrant. Part of the study included the placing of signage near the intersection indicating notice of the removal study and providing a phone number to solicit comments from the public. The City received a total of 96 calls from individuals (some callers, who left their names, did so multiple times but were only counted once) within the 90 day test period with 12 in favor and 84 against the signal removal. It should be noted that a number of the calls were left as a message with no name, phone number or other personal information. It could be assumed that at least some of these are repeat callers; however there is no manner of verifying this assumption. It should also be noted that the volumes counted on McKinney Street were slightly over 18, 000 vehicles per day and therefore, the call-ins represent approximately 0.5% (one-half of one percent) of the total using this intersection. Some of the most noted concerns expressed by those citizens calling in that want the signal to remain are 1) The removal will cause an increase in accidents. During the first 90 days the traffic control signal was on flash, the police indicate that there were no accidents at this intersection. No review was done at other intersections up and down the way from this intersection, as it was felt that they would be coincidental and not necessarily the result of the traffic control signal being or not being on flash. It should be noted that the information provided in the MUTCD indicates that it is likely that traffic control signals can create more accidents after installation than prior to its installation, but can reduce some that are more severe. 2) Concerns for pedestrians crossing McKinney Street. Staff did a number of pedestrian counts during the AM, noon and PM hours during the first 90 days of flash and found that pedestrians are crossing McKinney Street, primarily to access the convenience store on the northwest corner of McKinney Street and Wood Street. It should be noted that these counts, while not done fora 12 hour period, appear to be substantially less than those reported in 1992, possibly reflecting the change in use of the school. Also, the most observed during any hour was 20 pedestrians (understanding that many of these were counted once going in one direction and then counted again going the other direction) with the rest of the observed times having many less than this. Staff was informed that a new pedestrian signal (HAWK) was approved for testing in January 2007 by the Federal Highway Administration (FHWA), and staff applied for experimentation. Refer to Exhibits 11 and 12. The City received permission to be a test site for this new pedestrian signal. In the event that a HAWK pedestrian signal should be installed in the City of Denton, staff will work with various public noticing agencies (including the City's TV station and the local newspaper) to notify the public as how this new signal works prior to its use. 3) Speeding on McKinney Street. The perception is that the signal helps slow down traffic. This certainly is the case when the signal is red. However, it is not uncommon for drivers to: a) speedup at the onset of the amber in order to not have to stop for the imminent red; b) when vehicles are some distance from the signal and the driver sees it turn green, it is not uncommon to observe vehicles speedup in order to be able to pass through that green and not have to stop for the next red; c) having stopped for the red indication, front line vehicles typically speed up from the intersection in order to make up for lost time. In addition, this intersection was typically on flash (with McKinney Street having the amber flash) from IOPM-6AM every day and thus the traffic control signal would not have been an effective speed deterrent during these times. As traffic control signals are not installed to control speeds, random enforcement by the police can typically better address this concern. 4) Delays trying to turn left without the traffic control signal: There are short periods when the queues from both directions on McKinney Street are such that it can be difficult to make this maneuver without having to wait awhile. However, field observations during the peak periods also show that vehicles are driving up to the stop bar and immediately turning left without delay. It should be noted that there are alternate routes for this situation. Southbound drivers turning left onto eastbound McKinney Street can instead drive north and use Paisley Street, which is a designated collector street located approximately 1550ft north of McKinney Street and intersects with and can allow one to turn right onto Woodrow Lane, which is signalized at McKinney Street. Northbound drivers turning left onto westbound McKinney Street can instead drive south and use Hickory Street, which is a designated collector street located approximately 550ft south of McKinney Street and intersects Bell Avenue (which is signalized) and Bell Avenue intersects McKinney Street (which is also signalized). It should be noted that when the traffic control signal was working colors at Wood Street and McKinney Street that if a driver was on southbound Wood Street and approached McKinney Street, just as Wood Street turned from green to amber to red, that this traffic control signal was running semi-actuated (no detection on McKinney Street) and therefore the green for McKinney Street was such that the vehicle on Wood Street would have to wait (delayed) 30 seconds before receiving a green. During the flashing period and peak periods, many vehicles on Wood Street that turned left were observed doing so in less than 3 0 seconds OPTIONS 1. Approve the removal of the traffic control signal at the intersection of McKinney Street and Wood Street. 2. Approve the removal of the traffic control signal and install the "HAWK" pedestrian signal at the intersection of McKinney Street and Wood Street for enhanced pedestrian protectlo access. 3. Not approve the removal of the traffic control signal at the intersection of McKinney Street and Wood Street and instruct staff to turn the traffic control signal back to working colors. 4. Provide alternative direction to staff. RECOMMENDATION Staff recommends that the City Council approve the removal of the traffic control signal at the intersection of McKinney Street and Wood Street and the installation of a stop sign for southbound Wood Street at McKinney Street. Staff further recommends the City Council approve the installation of the HAWK pedestrian signal at this intersection. PRIOR ACTION/REVIEW The Traffic Safety Commission considered this item on June 4, 2007 and made a recommendation to City Council that the traffic control signal at McKinney Street and Wood Street be turned back to working normal working colors. (6-0) EXHIBITS 1. Location Map 2. E-mail from Denton Independent School District (DISD) 3. Traffic Safety Commission Minutes of 1992 4. Justification Of A Traffic Control Signal Removal 5. Traffic Control Signal Warrants 6. Traffic Control Signal warrant analysis June, 2006 for McKinney Street/VVood Street (north leg) 7. Traffic Control Signal warrant analysis April, 2007 for McKinney Street/Wood Street (north leg) 8. Accident listing during 90 day flashing period 9. Traffic Control Signal warrant analysis April, 2007 for McKinney Street/Ruddell Street (north leg) 10. Pedestrian volume counts. 11. The "HAWK" pedestrian signal 12. Request for experimentation by City of Denton 13. Permission to experiment with the "HAWK" pedestrian signal at the intersection of McKinney Street and Wood Street 14. Traffic Safety Commission minutes of June 4, 2007 Respectfully submitted: _.f ,r Frank G. Payne, P.E. City Engineer W ~ ~o ~ U N ~ 0 U ~ ~ ~ ~ ~ o ~ ~ ~ a ~ ~ ~ ~ 0 ~ ~ o ~ ~ 0 U 0 ~ o N ~ N ~ ~ ~ ~ ~ ~ ~~i~ N'0 a~ ~ x ~ E-MAIL FROM DISD ATTACHMENT #2 "Gene Holloway" <ghollowaYl (a,dentonisd.or~> 5/2/200711:24 AM Bud, The Sullivan Keller Early Childhood Center was closed in May 2002 due to the opening of the New Ann Windle School for Young Children in August of that same year. It was utilized as administrative office space and renovated between 2002-2004. The facility re-opened August 2004 to accommodate the relocation of the Lester Davis School. The Davis School is DISD's Alternative Education Program. Students are temporarily placed on this campus for disciplinary reasons. It is mandatory that all students ride the bus to and from the campus. Students may not walk or drive to and from the campus. Additionally, parents/guardian cannot transport students to and from the campus. As you can see, parent traffic around the Davis Campus isnon-existent. Four school buses drop-off students at 7:30 am and pick-up at 2:30 pm. Approximately 30 staff vehicles and arrive at 7:15 am and leave the campus between 3:15 - 4:00 pm. Please contact me if I can be of further help. -----Original Message----- From: Bernard Vokoun ~mailto:Bernard.Vokoun~a,cityofdenton.com~ Sent: Thursday, April 26, 2007 2:06 PM To: Gene Holloway Subject: Sullivan Keller Elementary School Can you give me a date that this school "officially" closed for the use as an elementary school? Can you give me: a date as to when the Sullivan Center (is this the correct name?) opened at this location and what its current function is and where the students generally come from and how they get there any other pertinent information you may have thanks much TRAFFIC SAFETY COMMISSION MINUTES -1992 ATTACHMENT #3 a ~ ~ - Yx Xi tiV r III } .5 . k{ Y }Y ~ Y ' ~ S x x{ ~k 3i r i ' i I a ~ ~r? k i 1 r i .5 } Y i5 5' Ji Ji ' .5 'h ~i S ~ _ Y ' - } it i Y ' •r ' t 1y ~ _ r ~ 5~ f ~ 4 i . } f .p. y~. 'l f l i. { ~L 1' I~~ f ~ } .i X5 X5 5X ll S I L tir ~'i . tl n a. tii? ' t S Y S f r ! } Y _ ~ ~ J~ J. .5 ~51k • r ti• •r•• 4 r •i• ti r ~r ~,+R . rx . - t xr xr ~r - • 5 ~ x s y5 5 i~1C i N Y ' 0. ,r 5 +k r~L4. r• r r 5 4 ~ ri L 4 r !A . . r i •~I . i _ . rx . Y VIII r . r 3I J ti •r ' • k. i 5 ~ i x •r r •i• 15 Jy i L .5 r• ~ ~ .5 v I I rr 9 r.5 i ~ _ . S { a .5 L I ir.l ~ f. h r _ i ~ f Y ~ +i. r { v y: r ~ a`+ r •r •r ~r ~ I ~ ~ U L ~ ~ - r k ~ i LL 4 . 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JUSTIFICATION OF A TRAFFIC CONTROL SIGNAL REMOVAL nTTnCHMeNT~4 IIA~nu~l an Uni~arrn Tr~~ic Corr~d Device far Sh~e~t= ~d HIS= _ ~ ~ ~ 1 ~t~ - r~!► Traffic S1 .r a. I ~ _ .i ~ V ~ Y t V' M1 ~ r. n~ ~ Y _ l I •x~ •S r . ~ r. 3 F Y +P Y ~ ~ I fi r f .n ~r r i _ ] r ' r _ s . _ t r J _ t 5 t r k ~ 5 - n r G i •R 7 v • f r f _ 7 5& x{ i _ 5 ,k ~ ~ .i ter- k AE r +C{ { I 5 J tii Y p - ~ - _ dye;: s y . 'i~~ . ~ n rI s i i i .,oo- ,a. _ ~ - ti . Y }t III; i r .v J5 . ~ } . .r Y S { Y. _ M. Y ~ t 5 .r . l F . t.4 ¢ maYx+ ~ ° f+-F ~ ~ ~ 1-..... E-- 4 ~E ~ .~fy~, p: ,y - +Yt _ n by ~ ~ ~ i ~ ~ n t r ~ ~G. 'k,~ .~7. t~6 F'-~~ ~ i~ ~ tt i `F h ~ ~ ~t'`~I~ { ~ t ~ r ~`f ~ r~ t T ~`T ~ ~ ~ f~ ~ t f p ~ {{y ~tl ~qi ~`"i~'~... ~Htk ~{.„.~~..E-,~ ~1~^~ :.ks...E~; ~e '~~+K,~at~~'~,nt~ e ~ I~'"~ ~ k~,~ a~~~~`~' ~ ~~,F~' ~+E ~F.t~. b„~ ~F'd ets »r:; 'r F~l r'. 'Gt~~ ~,~G~.t~ ~~~+kt • v } ' ~ 4' JY` t ~ M1 ~ I . ri y~ yy Y l ~ f Y'.$ L . f 1 F ~ i i 3 1 } ~ ~ ~ t r _ _ Y ~k ~ 5~ t i 1 n r r _ A x~ 1 . .r 5 r - + ~ I ~I y ri i v • 5 V Y , - .M H. \ I } .r • * 1 _ ` 3 11 t L {f r ~rr~;'~ r q }~5 a 4. - y ~ 'ih ~ ' 1 ' .v ~ . r it TRAFFIC CONTROL SIGNAL WARRANTS ATTACHMENT #5 .M, r { L 1 5 x • n. ~ - ~ , r { T i S 'k J ~ r r• s ?gyp yx ti r a,s} ~ 5< ~ ' i n ti ti 1x h ti s i rv t n n n s . C sq~ r _a. _ .,t t . W. Y } • ~ r ~ A ii, h ,y r v h. ti .r - r •i{' i +I~ - ~ } L I I k 1 2 I e ~ l r. i i r o ti k a t .-0 ~ I~ ~ } iii,`. Y r i ~ A . r ]n ih rl Y r. . .p .j. 5 a`+ r. ~ . _ it r v ~ X{ { ' S + { _ • . r J x •r r - I ' { ~ } 4. • ~ A r _ q r .x. r ~r - r J y } - I t } .i i r 1±4 1. A v i III I~ I ~S - 5 r { ~ V V V - 5' Y - r. A A r ~ 4,. r, K{ h; f- ~ I. r I ~L a • _fr i ~ ~ .I. i I. I 1 - •r 'J. ti . . . I n ~ s A• - . _ r w" k I . r. .i . h . ii ~ ~i i • I' i ~ .I V ~ I ~ k ' ~~f~{ i~ r •r .,S ~ ~ ~ r { e r ...i „ 4I 5. ~ ~ ' I ~4'i=`. • I ' ~ 1 l . ~ y~. { } r r• _ _ .4 5 - r i i. •x • i~ 'k tlE X no- . _ .i w i . . A . r ~ r ~ w i _ i _ .I ' V on r 'r 'k T ti • a r F { ~ r .ti r .mro.. .M1 n . s i i 5 r S ~1j S ~ r. .i n+1 . vs ~ S Till i~ I~ { { I f ~ • n I} ri I` t { { 5 c t r . . } I. n t V 5 f .f Y . ' T i I ~!~~i1 I K r k . L r 1 ~ } ~ r t y. , n YR.? - < _ _ wY .k . a ,c s ~ - .8~ ~ ill • _ ,i ~ r. ro . n ~v v• 7 ti ~ t+~ ~ 5 S 1 % Y I Y~ ~ ~9 . ~ v. 5 ~ r ri JC . h II II ~ i +C~ Y 5 9~ YL +C~ } ! } a l } . M f } iti i0 ' gr v y ~ ~x~u~2 { w . n • ti I x~ s ~ ~ p u k• Y, { ~ c Y .n. r4 • .1 P' r l 5 V t n ' ~5 + y i n J - 1 } M1 r 1 ~ s ~b. . r i ~ .ti 4 Y r. k . A - }h a t ~ ~ . 5 i v Y.5 5 ~ ' Y S t t _ 4 y { 7 r - 5 .5 x of 5' ~ h { S Jk ~n 5 ' \ \ J I' ..AF76. v 1 I v A - iv } } ~ F V ~ v L ~ I. h { . } 5 A 1 ~i. r s s• i ~ Y ~k x ~ ti 5 r v I I:~ + + ~ ~ 5 n I• I. t Y t Y ] ~ .5 • k r .a ,oav.. 2 s •r i - r r K{ +C{ k{ 5 }g .~i v Ili t 5 . I I i~ - • 4. i J s. S J • • I' k 5~ r 'YL ~ I } LL 5 5 .v M..I 7 n } ~F r i. ~ y r - i w{ ~i, b _ } i s r 1 . I ti ~ - n,. k n. • ~ i 3 • Lf r V ' Y 5 r h h i ~ ti !.i ?P 2VC5 C 571 ~ II ~ h ~ . 5' M1 ~ ,i I, b. R i 1 ~ J i . 5 ~ II n - ~y L rt I 5 i. ~i ~ 5 5 i S 5 . 1 y ri~ A l ri{ ri~ i v H . 5 } 1 t _ .t 7 i Li l J' ti f ~ 5 / Y ' • 5 Y 5' 'r 5Y~ 5' 'JY } J' { I~ f +O4 P' S ?'+f i i n 4r •r r ~ 5 ~ r. S ~r . s 3 ICI 4 • i .ry ~ ~ J. J •~r, y •r A . ~ n n. M V V < < r Sr r •r y• r •r :u• i ~ 1 { • r. y s 1 s ~ 3 r yr r. k 1 r 5 V ' Yi I' y I x _ a „}a.. 5 . . I m f } T ~ k LL t t M. ..A V V V V l _ 1 1 { ~ n I. r . V f } • x J n .5. _ i. r k ' r t• t 7 ..,}w ~ ~ ~ _ a y ix 4 s r• 7 t +F ~ • ` lira 1 r V } w •r• •r ~ •r f h v ~ ~ . ~ ' V v S 1 V J V 5 r • v A 5 J 5 ~ ~ f WOOD STREET WARRANT ANALYSIS, JUNE 2006 ATTACHMENT #6 ■ ■ I 4 d ~ I 7 - ~ .r ;r,, SS -d ~ 4 ! ii i. V~'•.. L t s. - - ' ' 'sr - ~ h''4 L Ja • I ' ~ - ~ . ~v 4 t ~ ~ ~ ~ - { 1 :t I I ' I 'I I III r ti - - ■ ~ I , - ~ - 4- , , _ _ - li _ ~~I II -'x - ' a, I I I I II ~ ~ ~ ' _ - _ . ~ ; ' ' I t I II ~ I I I I ~ I I ~I ~ ' I I ~ ' III - ~ ~ - - Irl, - _ ~I _ I I, ~ _ ,I ~ I ~ I i I • L I I~■ ' II 1 - - i5 _ .I I I I I I I I I ~ I - - ~ ' -t~ _ _ _ - , ti ! I I I I I I I _ ~ I' ~ ~ I 5• 1 ~ I ~ ~ •ti I I _ I ~ I F ~ I ~ ~ ~ I ' ~ - a ~ ~--~v - tip.-, ~.:r ~ - ~ - _-t~~ r ~ s i ' ~ r I 'Z , .1 r„ i ~ ■ ~ k 4. i- - i fir, - ~ t,Wr , i. r •k I I• . 1 i .ir , _ _ _ I I y4'- iv 1 ~''Y. r.ri i I 4ti ~i _na+ t3' _ y - i - i _ ~ t - 1 fir. . I 11 r • _ I `i ! 5 ~ ' ~ II' ' ~ ; - i I,'!:•~-.-i.s}IJI - I` - -s , s~,~ ~ a 5. I ~7~ I 1 ~13~ ~i.~~.~ I + I ~ '{.Fri 1 - a~FT~ r 1 ~ I --e r' y~~-~i ~ - - ~7+ •r I ~ - s e' 3 } ~ 4 I r ' I ~ v+ ' TM _ _ + I ~ ' • - $ w'~ ,r.~:,' ''y '-rr , Mfr}y ~ - y ~r ~d-.~~.i I i y~r ~ ' ~ i 1 ` I ~'I f ~s~i ~ ~ •L._kr .•__r+~~ -fQ 5i" t, F1titi~: ~ - I - 5 ~r L r AIM k~~ ~i-v~~~~ ~i f fY-',' r'. r ~ _ y.~ L •I r.~~.. J,YI , 'r I ~ -'7 ~ ~i,~'~h~. ~ Ir ~ i f.r+ tii~ - • r t~ .1.' ' t I - ~ ~ y~. I I _ ~f~l I - ~ 4 ` - i ,a. ` au•raur.~v 11*.ny+ay e,._ • ' '1~' ~ l i ' ~r rti•~i'. • ~ 'l s ~ p 7 _ _ _ I i is i F _ ql ~r , ~ L,L,.,v .ti ~ f ~ J t ~ I ~ ~ ' I - + ~ I ~ •I Ilk y - ' ~ . I - ~ _ ~ ~ ~ { - " ti Y . WOOD STREET WARRANT ANALYSIS, APRIL 2007 ATTACHMENT #7 ■ ■ - - - i - - ■ 7 ,-r_ r - ti - r •,•r• I• _ ~ i nr• i 1 • r ' 5l1 ~ i Y rl i ~J :I Y ti 1Y' ti a •F . ~ F ~ - L ~ ~ ~ - - 5~' 5. Y r ~ ~ i ~ y t r - • - - r - r z F ~ ~ x ' ~ ~•'.F~r- _ ,fa- nl! 1.~ J}.'. Y. Fin, v 1r ~ II I. 1 - i J .-,r. ~ iny, - _ G ~ 4• ~ :,f' . _ -sr ~ _ yy I _ . i ~ a ~ I' ~ . z _ - I - F.. y + j ~ IN ~ • I - I - 1 ~ - - } r~ 1 _ • - ~ _ . • _.r Ir`k' rI ~ y 1 l i- I I I, - i I I ~ ~ it I I . I II I ' 1 ~ - r ~ ~ f~ I I I ~ +t I I~ ~ I _ I I I I ~ ~ L ' - I ~ - 1I 7 I + I I . ~ I I - - ~ II I - ~ r 1 - - I 'L ~ ~ I I ' ' r. f i I ' I s _ - - _ _ - _ ' ~ I ~ w ' I' I I ~ I i II '4• ' ~ ' - - - - • - • _ ~ - - - ~ ' r- ~ I ~ I I 1 J I f I ~ I I I: _ 7 - ti-- ti- r F.r •1 } U 1 ' Ir.. ~ ' 9 f~ , ~ . .tea --r ~ J 'sue _ ~ F n ' i i .I} .anv `J 1 3 f' ~I I,~ _ - - I.~ - ' i - - - - r - - - ~ . ~ ~ _ ~ + ~ ' _ .I ~+I I fly-- ~ ^Ir+ t ~ ~ 1 -i 1' i It+l. 'r'J ~ L-~ ii-?a~4 r'r 1`'}TY'e ! ,~yt~'i $'~i i .f ~ + t { yam, ~ I} 1 ~ ,.r ~ - I~ ! ~I 14k. I'ti~.,. 7,1..7 s ~ ~-~:,:7{~r,' / 2 i11 1 ~ I ~t_. Y ~ ' ~ -•W~ _ tit . ~f..~~ - LL {r?t~v .•n , r~r ~ : ~ 1 ,I I j1 + , I y ~i- tiiJ Yf [ - ~ I ~ I 1~ 11 5 ~ y c... 4 s - ..v ~ +-~~-4,.5.x;1, rW , -•.v, a~'1N f~ -rc - r. II I ~ ~ ~ h ~ ~ - ' 1115 L F y''S F-~ ti~ I v t ~ ~ h _ } ' ~ I 11 I ~ , ~ ~ I ~ I L ~ I 1 y ~ ~ I f-- r t ~ ~ •If- - L: ~v v ~ ~ II r• ~ ~ d 1ti- ~ ~ 'L . r 1~ ~ 1 _ 1 r~ Yeti r i~~l I I .r - ~ ~ ~ I 1 ' { If ~ I II k }G~ I' f f ~ ' f- h iL - '~1 1 ~ ~ ~ i 1. • ~ ~ 'r .1: .r l~ r r gI' •tisr• 'I I: ~y n.,w 1. 4 i~ : `{i~,~ ~ - 7 'rt . ' tip? i ti ~,.~i ~ y L 1 r ` y • .I J ~ ~ , I ~ r v; J I ~ Jt r!, - f I - 5~y ~ +'S s... _ I..,.- ~~r.,.s iS mot. 4 POLICE ACCIDENT INFORMATION ATTACHMENT #8 Susan Hilton 4/18/2007 6:42 PM I do not show any accidents at this location. Susan Hilton Senior Records Tech Denton Police Dept Records Division Bernard Vokoun 4/18/200710:29 AM Sgt Golden: We are approaching our minimum 90day test period for this signal. Would you please provide me with the traffic accident reports that have happened since it went on flash on January 19, 2007 Let me know when you sent them so I can look for them Note, that I have been moved to the Service Center Thanks much for your time RUDDELL STREET WARRANT ANALYSIS, APRIL 2007 ATTACHMENT #9 ■ - - - I I 1 i - - - ~ _ i ~ti - ~ - - - , ~ ~ N ..I - ~ r - ■ ■ 1 - - 7rJ.Y 1~ 1 L* I 4~ ~~r t _ ~ - , ~ , - I IS r - r~~ i' I r + J ti ~ y- ~ - ' - - , .r - ~ ~ - , - ~ - 7 _ . ~ _ ~ _ - . I I 1I I ~ ~ JI I ~ I - - r n~ _ • I ~ 1 ' i :I T rx I ~ ~ ~ - i I• I~ I I I ~ I ~ I I • I ' I ~ I I I I • r ~ I I ~ ~ y I - 'fi, ~ ~ I I I I I I ~ 5 I I I ~ I ~ I •i I I . ~ I I • • • • ~I I " I I I _ _ - • ~ - - I i , ~ I - , _ I, - I „ - I I ~ ~ I . _ ti.~ - - • 1 'y_ ' L:M'+y'~• ' ti ~-4 '4f - v ~ V4. '''Vi'e ~ ' ~ + I I ~ ILI _ - ~ _ - - - - - - i' sts - ' - ~ ~ ~ L ~ ~ ~ . I y yr 7 4 r.L ~ ~ - 'T ' . I ~ ~ I ~ ~ rr.+~.k~lr7 r.+~L? ~.~a~ ~f~ ti ~ i 7 _ ~ S ~ IIR I - - y I r~ f ~ 14 y ~ ~ n `L I s k - 4 y ti - ~ y.,,.~ ■ r ' I I , fiy+ n~rh t •7a t an ryZypM1 ~~.a~~~iii a ~y~~ 4 ~ ~ i ti~l }fti + •ti i w ~ ~ ~ 4 II ~-ti, ~'.",yl _ ,I ~ , ~ 'rte ~x~r ~ T I ~ I~' 7 Y~i ~ I T 'II-a9 I ' ' yny .r. ~ ~ I ~ rr "T I i ~ ~ +t i, - ' ' I ~ ' f _ I~ i ry-x ~ ~ I I _ -rt,r • ~ ~y I ~~,r r' ~ I ~ ~ ~ r ,4 .I . I ~ ~ I ..rte- ~Y - - I2 ~ - - •IA I' I L - ~ ~ {I I - ~ II I I ~ ~ i I I _ ~ I I I I I :I: ~ I I I , 1 ' ~ : r - I I ~ -I ~ I - ~ I I: ~ II I ~ ~ i I as _ ~ L I I II I I I II ~ i I ~ fy ~ ~ ~ I~ ;I a I ~ 1 L I ' ; I 'I II ~ , ~ ~ II ~ ' I 1~ I i' ~f I ' ui I~ I ~ I • I I ~ I I ~ I I I' ~J J IL~ ~ - ~'•I1 I I I I I I 'I II I • I ~ ~ ; I~ _ I ~ 'tik i ~ ~ I I' ~ ~ I I I 4I I I w ~ ~ ill ~ I •I I I I 1~ s ~ _ ~ _ I]• ~'i I ~ , _ fy } r N I I + , ~ 1 1 k` I ~ I~ I I I . 1 ' I I I L I I I r r , I '1 I ~ , I , I I " . - I _ yt.. I ! ~ I ~ ILIA ' I 1 { - w~ I ~I I. I I J I ~ ~ I ~ '~I :I I I I ~ I I • I ~ ~ + I I "I 1 I - r,, ~ ~ ~ Y 'I I . • ' • ti, I a I I ~ I ~ , ~ I ~ I r , I L ~ ' I I I ~ I ~ .r ~ ; ~ I I If ~ I I I I I ~ ~ - ~I • I III I I' 5 _ - - _ _ _ mC: _ ~ ~ .gam r I' I I I I ~ I ~4 • II I• ~ t ~ '•M .ti I - I ` ' .y I I ~I if I I by fM1l ~ 'I I it ~ ~ I _ I ~ I I III I r ~ I I : ~ l it I I - I. f~ + II ~ I s ti, I II , ~ •r ' ~ I~ ~ ~ _ ~ f I ~ z ti ~ I ~ :I ~J ~I}~Y .y •I ~ R ~~J I 7• I s`#~ •I I 'I I ~ I:~ I ' I I' Irk .s :I 11 I ~ ~ I I I ~ ~I ~ . , •If -r ~ - - - 'Ir ~g - Ys R ~rs f I I I i ~ 11 I ti I ~ ,'I •52 1 III ~ '~1 4 ~ .a ~h I ~ i I' 'I - ~ I • II[ I I'il I II i k fir! ~ •I ~ _ ~Z i - 'r 4r - _ I _ y-_ } s _ _ I J rrII I I I' I ~ I r I C. II f .I _ ~ lip I ~ ~ , IIIIIII. - r . ; I I - j IIIa -0 R'r I ,5. n=':i _ 1,` ~ ' - ~ I r + I yl „ - - I-.; 1 i _ 5' - i ~ ' •'i y f 'rt+-'I x•51 -i= +l ~'"I I,! _ I' ' ~-lid++~ll~f~ . ~l I r - y= 1I - 1 dI • I _ 4 s I I s. I i I lr'r~{ r, .~I r - I 1I ~ ~ , ' ~ I ~F IF ~ I - ~ ~r~. ..'I~ ~~I ..-..~44~~ry,~.. ~4F `h I  on _ ~ ~ F ~ •r _ _ _ I I, ~I~ : ' - - ' ~ I I I I 1 I pI ~ I I ' 11 ~ II I I I I I I I I I I I I I - I II~ I I I II I t 4 it I I I I _ ~ _ I ~ ~ s::l I 1 I I I I I II r I .f ~ r ~I I I ~ I I ~ I r ~I I I~ f ti ■ I I I ~L` I I I X I~ I , + ~r~l I I 1 I ~ I ■ I I ~ ~ I ' . a I I ■ ~ I_ - f ~~~I I' I I I ~ I I I ~I I~ I I = - 11 I I ~ I I~ I ~ ~ ~ I ll I I ~ ~ I ~ I , ~ II ~ - - - f i~ III I . ~ ~ i I■ 1 ' I' I~- - Ir±- ' I~ I~ 1- I I I~ I I I ■ it I I t II 5 I ~ I I ~ I } I I I I I IIC~ I ~ I I I I ~ ~~I ~ I II I - ~ . 1 ~ -I. I I'. I Ir r I 7 17 T~ T. ■ I ~ ti~ - -r • r ~ Ire 5 f( 1~ + I ~ li•` ~ ~ I I I II - 'r~ I I I i I I I I I I ~ ~ ~ II ■ . _ - ~ 5 ~ ~ ~ I I I III l1 r~ - I ~ ` ~ ~ ~ T ~4 I I ~ ~ I I .I I ~ ~ I ~ ■ I '~1 I`I I - - ` I ~ ~ ~ I~ ■I II ~ rl ~ I ~ l 1 I I I I ~ I J I~ I I I I I -1 r I I I 1 I I y ~ _ 'il' ~ I ~ 3~~. 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I I I ~~I (r. - -I I I , ' 1 F ~ I _ - + Y~, " -L~ _ I I I I I _I r' .f' I I I I - . h ~ f • 13; i• 1 ire - J I I I i r• •r  ' _ 4m "HAWK" PEDESTRIAN SIGNAL ATTACHMENT #ll I~kkp.~~n~Uk~~.~r~~~ N~UT~D Home 1. Requlaton+lV+larninq Signs 2. uidelMatorist Information Signs 3. Markings 4. Signals 5. Temporan+Tra~ic controls 6. Railroad grade ~rossinas 7. Bicycles 8. Research + June 2007 Meeting Information Technical Committee Recommendations for Chances to MUTED Add a ChaPlerfar trafficcantmF6eacans-far PedesUians as fallovrs:l i CHAPTERd~I-TRAFFIC~ON TROL$EIUCON S-FOR~EDESTRIAN S1 1 Section~01-~ApPlication-aF Pedestrian~oons7 i ~t1 i Apedestrian 6eacmis a speaal type ofbeacan used to warn and cmtrd tratficat an u~g~af¢ed- locatian-to~ asses- pedes~ar~s~ n~aoss~g-a~street~arFr[~rray~at~a~ marked- i i obi i Apadestr~an beacm maybe ou~dered far ~atim ah a location tl~at does not meetaTher traTficsig~al warranFs to rac~-ate pedestrian- aos~gs-i i s~a~d:t i IFused,- s~wo-6e i~r~ F4alfw~atloca5ons e~Mrara~ass astree~orhi~way.-A~edeStria~rbeaoonslnlFanly-brir~lle~a4ainadoe~ crasswrakT i Giidarroe~ i Ife location rneeFs tt~e tratfic~antrd signal rrarrarLs uda Sec~ar- 40.05 andlar 4C.06and~ a-deas~an~ is~ rnade~nat~ta-~~ a~trafficsantrd~s~~al.' a'Pe~~an' 6eacm' shard 6e car~dered. if one aftt~e steal warrar~Fs afCF~aptQr4G ~s metand a traffic oantrdsigial is justified byan a~ea~g s~dy, and iF a decisiaris rnadeia ~a1 a tratfic~antrd~g~al, i sFiaWd be ~a1ed based man-use pro~ar~s afCr~apter 4~.1 Ifa~tratficsantrdl~s~al~ ~s~ nat~}~~fied~ u~dertt~e~s~~al~ rrarrar~Fs~ of~F~apter 4C~and-rt~ gaps~n~trafficare~nd~adequate~ ta~pemrl~pns~ta~cross,-ar~F~tl~e~speed~ farveFrdes~ appr+oadrg m tl~e rnajar street ~s too h~ to perrrrl padestr~ar~s to crass, arrf pedestrian dc~layis e~ooe~nne,~he need fora pades~ian beaem sFiadd be oor~dered mtt~e bass ofan ag s~dy that oms~ders-rr~or-street ~akmes, speeds, w~f~s, andgaps-n oar~rr~m wpm pede~n wkmes, wal~g speeds,- ana delay-i 1 Fora rt~ajar str~# wFwr~ tt~e posted ar Mary speed-fmi artt~e ~"~eroenUie spaed~~s~ BD~IurYh~arless~ ar~s~ 35~ mphv~ less, ~tt~e~ need Tara pedes~an~ 6eacan~ sha~d~ 6e- ~ Pa~dvF10'~ ~ar~idered"~f"1he" ~4"shady" fr~ds"1t~at"the"Platted" Part" repre~er~~4~ lire"v~hde~s" Pe~trar~ an ~ the ~ R-~- ~ ~ ~ ~PPr~ ~ ~ ~J ~ ~ ped~triarrs~ ~ras~rg~ltre~ m~ajar~strt~ f+or~ 1 ~har-{any-fa~r-~art~ea~tiv~-1 ~--rr~ute-Periods~~ ofan-a~nerage-day-ia~s-a6avwe-the-appfi~a6le-ar~neir-Figire-4M-1 -f~nr-ltre-lerrglh- af~tre- ~ra~w~c{rrred-n-fe~~---~ Frl~~_ -G~id~iia~ a~ Be~con~o►rLo~ P'ee~Raad~ra goo ~ Speeds 3~ rrrph ar less C = U7 ~ {J1 OS O ~ C7 C 300 ~ m ~ ~ ~ ~ ~ ~ ~ ~ 200 - ~ ~ ~ o rq ~ 100 ~ 0 a goo ~ooo ~~ao ~ooo M ajor Street - T ~tal of Both Approaches- l~ehicles P er Hour (1~PH) +34 ~ ~0 #72 ~ 100 Sig nal ~1Varrant Prlinimum pedestrian ~ • Fars-rrrajar-sweet-~rFrere-the-pae~#ed-ar-stay-speed-frr~-ar-ltre-~' ~lie- sPeed~exoeeds~60~lmr~h-arexoeeds~3~~mph~-the-rreed-fiora-pedestr~arr- 6e~aoan-shald-be- oar~idered~~f~ihe~~r~ra~~9~ sh~dy~frrds~lhat~ltre-Pldted~ Par~t-repre~en~r9~the~r~hi~d~s~ Perfrar~ an~ttre~rrrajor~street~ ~~al~ of~balh- aPPr}~ ~~J~~ pad rrs-tea rg-the-rrrajarstreek-fort-her-{anY#ar-~art~e~a~tivwe-l~--rr~rute-Periods}- a~fan-ar~rage-da~r-ia~s-abarne-the-appfi~a6le-arv~~-Figire-4M- -finrltre-ler~tr- of~tre- cras~w~c{rrre~red~n~ few-~ F rye- 2-- idsi~ar~ a~ B~~~ffi~r ~R4uadir~a~rs~ rs~~io~ _ ~ L .L J ~ J ~ ~ L L ~ ~1~~~~ ~t~~~t - T~t~l ~~tl~ ~ ~ - ~ I~i~l~ ~ ~ H~ ~H~ ~ ~ ~'1 ~ ~i~r~~l ~~~~~t ~ ~1i~ir~~..~r~ ~~~~~t~i~~ . i~~ ~ III-rr . i~r~ ~E~ ~ IFi~ ~F ~]li~F ~ III' ~~F ~ ~ . ir~ll i~ ~IF~ir~l ~F ~EIF~ir~ll~ 1~- IF ~ ~i~ ~al~1iD~~ CIE.YI'~1'~fl~l~ffl~' 5~1 'ffldS' 'f1 Of1' Ofd' 1~ 1~1.*~~1~~ $I~II~ AiParl~~garrd-dtrersi~t-a6s~rctiarrs- sha~d-be-prah~~d- f+nr-~-least-3i0-m{100-1t}- n-adrra~oe~f-and-at-leek-6.1-m{ZO-1t~~e~ond-ttre-mrarked~ro~sw~c~~ B_~The-n~atian- sha~d-~rdude-s~■~Fable- siar~dard-sir~rs~ and~Pen~rr~r~t~rrrarl~~s~~ arm ~_~Ifir~#a~ed-w~F~r-a-sir~ral~ sern~~ltre-p~destrian- 6eaoan-stra~d-6e-~anrdrrated-~ ~P~ Pede~rr-hea~oarrs-rrra~~e-lammed-a~v~er-lhe-raadMr -ar-a~oer~t-ta-ea~~h-side-of-ltre- ra~dwr~Y~t~a~st~a6le~ larr-~ ~idar~ae~ i Onappraaches-har~rg-pae~ted-speed- frr~s-ar~lFr--per~oer~ie-speeds-~r-e~aoess-of~0- IQn1h -mph-and-an-appra~hes-harms-tra~ffic~r-ap ~q-oar~tiorrs-chat-ward-#end- #~a re- .y-of-roadside-6ee~oan-lar:~arrs~-at-leaf- one-of-lire-pedestrian- 6eeoarrs- shaid-be-~ts~a~ed- a~v~er~he-roadw-~ On~~hlarre-appra$ches-hav~g-patted-speed- fm~s-ar-~h--per~aer~ie- speeds-of-60- IQrr1h -mph -ar-less,-e~trera-pedestrian-6e~aarr-shad-6e-~r~#a~ed-arr-eac~r-side-of-lhe- aPPraa~ch~if-a-rrre~ian-of iaer~t-with-e~ts~-ar-at-lest- arre-of-tire-pie rr-beaoarrs- sha~d-6e-~tsl~a~ed- m~r~he-raadw~y-~ ~4~ed~trian- bea~oarrsha~d-~arnpl~tr-lhe-sir~r~al-ia~Oe~raiart~-~e~a~ed-~- ec~ons_ 1 and-4~_ 17-~ 7 5:~ 1slR~ ~ S1~IF~LIC-~'T~R~N~E~[s~~o I ic~ed~a I I} lRi ~Z:i1~ I F b~ i~raFfac~ aPPr~oach{s~Seb~a~w 28-4- i~aFfac~ i~~r"o'~+ide~sIF si~aFfiac~~ ~P~an~ ~4~ede~arr-~1N11-2~-si~- ~~ee-e~tiarr-_41~-w~h-an-~41-IF~4D~1N1~-9p~- s~plernental-plaque- m~r~e-pla~oad- ~-adrrarroe-ofa- pedestrian- 6~a~aan_ - -~►-warr~rq- bea~oarrirra~r~e- ~r~a~ed- t~-s~plernent-lhe-1N11-- sir- and- rrra~~e-pra~arrrned-t~-ar- flash!4~1he-~r~e~awr-and-red al~ ~d~ort~~ a~f#he~ Ped~iarr 6~a~an-~ S~dard:~ ~~~i~ IFa,rarn:~6e~aoO.ris:~~le~vo ~.~p~e~tl~rrrii-s-Si~,~hraesq~ran~ IEoo~ann to~tl~rprorisians~FSe~4o~41C01~nd-4K0'.L' i Yehicular4afficapproacl~iq fU~rbcabo~ramni~orstre~or~irewaysslnlF 6ecantrolle~br-STDPsia~T 1 1 Section~11~0~-0 'on-aFPedestrian~eacons~ i s~a~a:t i sIwIH6e-dark{no~illuni~a~d}d~riq~-periods6ednee~r aoWadans_1 i ~iFa~~,-:gr Y~aw~~F:.a~.~,~i ~cu~nR v~nr~ si~aFinaicaboe,~Fo~ ~si~aF:~aicabons wad[ i~rval,,followed~6y~l ngCRCU1.AR' REgsi~nFidicabons i~rraF[see-Fi~r~4Y~}- Upon~m• - clearanc~i~rral, sIwIF rerertto'alwo-illuni~cadida~l ra~enFlo~ a - - - - - I. ~ I~ ■ I a i ~ ~ r - - T I , I y r,._~- - - ~ t ~ ~ - ~ ~ J~ i ~1~1 1 i -~~5~.1 L M 1 ~1 ~ ~ A J ~ ~ ~ ' ~~I~ ' ~rl~r~~~ir~ -~]li~l-i~--TIC ~i~Fi~. i~~~~ arm. i~~ F IF 1- ~f ~ ' ~ ~i~ the stcady ye~awnterral skald have ~ of~praourraFsiy 3 to 6 seauds [see Seim 4D.10].-ihe larger ~ienrals shu~d be resa~ned far use m apprdad~s wih -i REQUEST FOR EXPERIMENTATION ATTACHMENT #12 March 22, 2007 Mr. Tony Furst Acting Director Office of Transportation of Operations FHWA 400 7th Street SW HOTO-l, Room 3401 Washington DC 20590 Subject: Request for permission to Experiment with High Intensity Activated Crosswalk (HAWK) Beacon Signal Dear Mr. Furst: The City of Denton, TX formally requests to experiment with the HAWK beacon signal, as outlined in the Manual on Uniform Traffic Control Devices (Section 1 A.10) A. Problem Statement Location Map McKinney Avenue/FM426 looking west McKinney Avenue/FM426 looking east The Denton Independent School District (DISD) recently changed the use of an elementary school at the intersection of Wood Street and Davis Street, one block (approximately 660 feet) north of McKinney Avenue/FM426. As a result there are currently no children walking to it that are crossing McKinney Avenue/FM426 and vehicle traffic volumes have dropped significantly on Wood Street. Thus, the existing traffic control signal at the intersection of McKinney Avenue/FM426 and Wood Street no longer meets traffic control signal warrants and is currently in flash and under further study for possible removal. Wood Street: The traffic control signalized portion of this street is a residential asphalt street with curb and gutter, approximately 27ft in width, face to face, 3 blocks long (approximately 2400feet in length) and "Ts" into McKinney Avenue/FM426 from the north. Wood Street also "Ts" into McKinney Avenue/FM426 from the south approximately 450ft to the east thereof and is stop sign controlled. McKinney Ave/FM426: This roadway is currently a 4 lane (44ft face to face in width) undivided roadway without left turn pockets and is designated on the City's mobility plan as a Primary Arterial (by City Code, a future six-lane divided roadway). ADT's are currently in the range of 18,000 vehicles per day with the 2 highest peak hours being recently counted as being 1,410 and 1,387 vehicles with a total of l Ohours each being over 1,000 vehicles. Speed limits in the area of Wood Street are currently posted at 30MPH as a result of studies by and the recommendation of the Texas Department of Transportation (TxDOT). The closest traffic control signal to the east is approximately 2100 feet and the closest traffic control signal to the west is approximately 2750 feet. As a result, queues from these traffic control signals are well dispersed by the time they get to Wood Street and thus reduce the number of gaps sufficient to cross this roadway. As this is a primary roadway, properties along it are generally designated or being converted from residential to small, local office/retail use. The residential portions are considered to be low income and therefore, produce more pedestrian traffic and less vehicle traffic to these neighborhood services. The pedestrian traffic is both random and inconsistent and thus, the pedestrian warrants are not met for a traffic control signal, but are sufficient enough for concern as they access to the various commercial developments along both the north and south sides. Intersection of McKinney Avenue/FM426 and Wood Street: In particular, pedestrians use the intersection of McKinney Ave/FM426 and Wood Street because the northwest corner has a convenience store and further to the west is a window screening company followed by 2 Mexican restaurants. In addition, the northeast corner has a proposed self serve laundry to be constructed within the year and further to the east is a small furniture store followed by apest-extermination office. At the present, the south side has residential houses on both side of the traffic control signalized intersection. However, on the south side there is a discount bakery 11/2 blocks to the west and the Denton County courthouse/ jail and applicable facilities are located two blocks to the east. The traffic control signal at this intersection is currently a span wire type with pedestrian push- buttons and heads. There is only one crosswalk across the westerly portion of McKinney/FM426. Therefore, the traffic control signal can easily be modified so as to remove the vehicle movement heads, applicable poles and wiring for the traffic control device; leave the pedestrian equipment for the McKinney Avenue/FN426 crossing; and install the applicable vehicle heads and signing for the HAWK beacon signal. Because of the noted concern for the pedestrian traffic but the failure to meet the MUTCD warrants for a full traffic control signal, the HAWK beacon signal could be used as the middle ground between this potential uncontrolled pedestrian crossing and the unwarranted traffic contro slgna . If the City Council should decide to remove the unwarranted traffic control signal at the end of the test period, the modification of this traffic control signal to a HAWK beacon signal is easily done and would be more palatable to the City's administration, as it would still allow for the protection of pedestrians across McKinney AvenuelFM426 in this area. B. Description of the Device, Deviation from the MUTCD and Improvement Over Standard. The City of Denton would like to install the HAWK beacon signals in essentially the same manner as Tucson, AZ. The HAWK beacon signal uses an atypical signal head configuration with two red indications placed horizontally to each other and one yellow indication placed beneath the red signal heads. The HAWK beacon signal indications are dark and the pedestrian signal displays a solid DON' T WALK until the pedestrian activates the device. When the pedestrian push button is pressed, the signal will flash yellow for several seconds and then change to solid yellow for the standard ITE calculated length of time (between 3 and 6 seconds). The two red indications illuminate and the pedestrian signal displays a WALK indication. At the end of the WALK phase, the red signals toggle back-and-forth, corresponding with the pedestrian signal FLASHING DON'T WALK phase. The back-and-forth red indication means that drivers may proceed after stopping, if safe. The HAWK beacon signal goes dark and the pedestrian signal returns to solid DON' T WALK until activated by another pedestrian. The main deviation from the MUTCD is that the beacon signal remains dark until activated. If the device is considered a beacon, then it is allowable by MUTCD to be dark. MUTCD notes that full traffic control signals (red, yellow, and green) must remain on at all times. The other deviation is the use of the alternating red indication. Typically, the alternating red flashing is reserved for warning at a drawbridge, emergency beacons and railroad signals. The HAWK beacon signal's main advantage may be that it is dark until activated. The flashing yellow should capture a driver's attention where as a continually flashing signal may not. The HAWK beacon signal would only be activated when needed by the pedestrian, reducing the likelihood of misunderstanding between drivers' and pedestrians' intent. In addition, the use of pedestrian push buttons and pedestrian heads would further aid the pedestrian in understanding when to walk and thus provide greater protection. C. Illustration of Use Figure 4M-3 below shows the phase sequences for the HAWK beacon signal as provided on the NCUTCD Webb site. Figure 4M-3. Example of Sequence for a Pedestrian Beacon i~ .1 ~ Dark Until Activated Flashing Yellow for Steady Yellow for 3to6sec 3to6sec ' i~ Steady Red during Alternating Flashing Red During Pedestrian Clearance Pedestrian Walk Interval Interval Figure 2 is an example of an installation in Tucson, AZ and similar to what will be used by the City of Denton (the Denton installation will be wood pole, span wire type rather than the steel pole type shown with the usable existing applicable traffic control signal components continuing to be employed) if approved by the FHWA. Figure 2 courtesy of Tucson, AZ Webb page D. Supporting Data for use of Device The Texas Transportation Institute, funded by the Transit Cooperative Research Program (TCRP D-08) and the National Cooperative Highway Research Program (NCHRP 3-71) conducted a study to evaluate the safety of pedestrians using various crossing treatments. The HAWK beacon signal and another treatment called the HALF signal (not discussed herein) received 97% motorist compliance, the highest of all the evaluated treatments. Both the NCHRP and Road Safety Audit (RSA) studies support placing the HAWK beacon signal in the MUTCD. E. Patent The HAWK beacon signal is not a patented device. It can be constructed by any transportation agency using appropriate signal heads, mounting equipment, traffic controllers and ancillary items from any number of qualified manufacturers. F. Duration and Locations of Experiment The City of Denton would like to evaluate and experiment with the HAWK beacon signal for a minimum period of 5 years or until the formal adoption of this traffic control device into the MUTCD. This time frame allows adequate time to evaluate the "before" conditions and collect crash and other data for a minimum 3-year "after" period. The potential location is as identified earlier in this document. The location of the proposed HAWK beacon signal is on a roadway that the City has assumed the street maintenance and the current traffic control signal is City owned and operated. Because McKinney Avenue is a designated FM roadway, TxDOT is being CCed by this letter as a formal courtesy. Upon approval by the FHWA of this proposal, the City would implement its installation, upon approval by the City Council, of the modification of the existing traffic control signal to a HAWK beacon signal. G. Evaluation Plan The City of Denton will evaluate the location where the HAWK beacon signal is installed. Before Data: ~ Crash analysis for a minimum of 5 years prior to implementation • Average daily vehicle counts (complete) • Speed Study (completed by TxDOT) • Pedestrian observations Implementation of the HAWK beacon signal: • Public information and education awareness campaign with several media outlets prior to installation and for at least the first 2 months after installation • Signage at the intersection providing for the solicitation of the public for their comments about the HAWK beacon signal and the centralized collection of these remarks. ~ Use of MUTCD compliant Signage at the HAWK beacon signal intersection ~ Countdown pedestrian signal heads ~ Staff monitoring of opening day for vehicular and pedestrian compliance After Data: • Crash analysis for 1, 3 and every odd year thereafter until the end of the experiment • Pedestrian volumes for applicable times • Observational notes of pedestrian and vehicle compliance with HAWK beacon signal and comments from the public for 1, 3 and every odd year thereafter until the end of the test period H. Agreement to restore: In the event that safety concerns arise that are attributable to the HAWK beacon signal, the City of Denton is willing to terminate the experimentation. I. Progress Reports City of Denton agrees to provide update progress reports for the 1St, 3rd and every odd year thereafter until the end of the experiment. J. Proj ect Management The City of Denton is responsible for all project management, administration, funding and implementation. The project manager will be: Bud Vokoun, PE, PTOE, TE Senior Civil Engineer/Traffic City of Denton 901-A Texas Street Denton, TX 76209 bernard.vokoun(a,citYofdenton.com Please feel free to contact me if additional information is needed to process this request. Thank you for your time and consideration on this matter. Thank you for your time on this matter, Bud Vokoun, PE, PTOE, TE Attachments: none CC: Howard Martin, Assistance City Manager Jim Coulter, Director, Public Utilities Frank G. Payne, PE -City Engineer Curt Arndt, Traffic Operations Manager Claude P. Elsom III, PE Area Engineer Texas Department of Transportation 2624 West Prairie Denton, TX 76201-5117 W. Scott Wainwright, P.E., PTOE Highway Engineer, MUTCD Team Federal Highway Administration Office of Transportation Operations, HOTO-1 400 7th Street, SW, Room 3408 Washington, DC 20590 PERMISSION TO EXPERIMENT ATTACHMENT #13 F i • 4 E 1 + . ~t J _ f k ~ L _a. _ 1~ ~ i~ I F ~ S#+ Iii' i ry ~ ~ ~ 14 I r ~ ■ ■ ATTACHMENT # 14 1 MINUTES 2 TRAFFIC SAFETY COMMISSION 3 June 4, 2007 4 5 After determining that a quorum of the Traffic Safety Commission of the City of Denton, Texas 6 was present, the Chair of the Traffic Safety Commission convened into an Open Meeting on 7 Monday, June 4, 2007 at 5:30 p.m. in the Council Chambers, City of Denton City Hall, 215 E. 8 McKinney Street, Denton, Texas. 9 10 Present: Chair Greg Sawko, Pet Cheek, Linda Brown, Lelia Howard, Murray Ricks, and 11 John Crew 12 13 Absent: Dr. Michael Kozak, Charles Guarnaccia and Harry Phillips, excused 14 15 Also Present: Frank Payne, City Engineer 16 Bud Vokoun, Traffic Engineer 17 Ann Forsythe, Coordinator Boards & Committees 18 19 OPEN MEETING: 20 21 The minutes were approved as circulated. 22 23 2) Receive a report, hold a discussion and consider approval of the removal of an unwarranted 24 signal at the intersection of McKinney Street and Wood Street and the installation of a 25 "HAWK" pedestrian signal. 26 27 Bud Vokoun, Traffic Engineer presented this item stating that the Commission had received 28 extensive backup material in the packet and that he was available for questions after a short 29 presentation. 30 31 Vokoun stated that because of changing traffic conditions in the Wood/McKinney area as a result 32 of the Sullivan Keller Elementary School closing, staff initiated an investigation to determine if 3 3 the traffic control signal was still warranted. While under consideration, staff learned of a 34 pedestrian signal approved for testing by the Federal Highway Administration and currently in 35 use in Tucson, Arizona. Staff applied for the HAWK pedestrian signal and received permission 36 for the City of Denton to be a test site. Should the Traffic Safety Commission recommend that 37 the traffic control signal be removed, there is concern for pedestrian traffic and staff would 38 recommend the installation of the "HAWK" pedestrian signal at McKinney Street and Wood 39 Street. 40 41 Vokoun also presented concerns expressed by citizens who called in stating they wanted the 42 signal to remain. Major concerns expressed by the citizens were that the removal of the signal 43 would increase accidents, make it unsafe for pedestrians crossing McKinney Street, cause an 44 increase in speeding by motorists, and create delays for motorists turning left with no traffic 45 control signal. 46 47 In response to those citizen concerns, Vokoun stated that during the first 90 days that the traffic 48 control signal was on flash, police indicated there had been no accidents at this intersection, and 49 that observed pedestrian crossings counted a maximum of 20 in one hour during AM, noon, and 50 PM hours. Pedestrians were crossing McKinney Street primarily to access the convenience store 1 Minutes Traffic Safety meeting 2 June 4, 2007 3 Page 2 of 3 4 5 6 on the northwest corner of McKinney Street and Wood Street. As such, it met the warrants for 7 the HAWK pedestrian signal. As to the removal of the signal increasing motorist speeding, it is 8 not uncommon for drivers to speedup at the onset of the amber in order to not have to stop for 9 the red. Drivers will speedup from a distance so as to pass through that green, and having 10 stopped for red, front line vehicles typically speed up to make up for lost time. That there is an 11 understanding that there would be delays without the traffic control signal, but that the signal 12 was timed to give up to 30seconds of delay when working colors and drivers did have alternate 13 routes north and south of McKinney Street. 14 15 John Crew, Commission Member stated that currently there was a signalized light for pedestrian 16 at that intersection and staff wanted to remove it and replace it with a HAWK signal? He then 17 asked about the economy of the change. 18 19 Vokoun replied that was correct and that there are always costs associated with modifications, 20 but that because most of the equipment was already there, most of the cost would be for the 21 removal of the extra items not needed for the HAWK and many of the items removed could be 22 used at other locations. 23 24 Howell asked how staff would inform the driving public how the signal operated. 25 26 Vokoun stated he has been in communication with the Tucson people and they are willing to 27 share a video which staff would televise on the cable channel. Staff would also arrange for 28 coverage in the local newspaper and post information on the city's web page. 29 30 Commissioner Ricks asked if the HAWK was an instantaneous device in providing the walk and 31 that it appeared it would be more user friendly than an existing stop signal. 32 33 Vokoun replied that once the push button was activated, the wait time could be considerably less 34 than the current traffic control signal and that it is very user friendly. 35 36 Commission Member Cheek asked why the stop light was placed on flashing and why staff was 3 7 considering removal of the signal. 38 39 Vokoun replied that according to the Manual of Uniform Traffic Control Devices (MUTCD), a 40 signal should be studied if circulation has changed, considered for removal if it no longer meets 41 the warrants of the MUTCD and, if it does not meet the warrants, should be placed on flash a 42 minimum of 90 days for further studies and observations. As traffic circulation has changed 43 considerably with the closing of the Sullivan Keller Elementary School, the signal warrants study 44 was undertaken and the traffic signal found not to meet the traffic volume, pedestrian volume or 45 accident warrants. 46 47 Chair Sawko stated he was not sure he agreed with the school closing data which was from 48 August of 1992 and was conducted around the time when no school was in session. 49 50 1 Minutes Traffic Safety meeting 2 June 4, 2007 3 Page 3 of 3 4 5 Vokoun replied it can be assumed that staff had been directed to conduct additional studies after 6 August and as the signal was installed, the studies would have had to be done. 7 8 Chair Sawko then opened the meeting for public comments. 9 10 There were 8 citizens who spoke in opposition to removing the signal and 1 citizen who spoke in 11 favor. 12 13 Chair Sawko stated he was in agreement with the opposition that removing the traffic signal 14 could create a dangerous circumstance, and while the traffic flow is such that it may not meet the 15 warrants criteria, the signal does certainly slow traffic down. 16 17 Commissioner Cheek stated she also supported the opposition. The light should remain and be 18 placed back on working colors. 19 20 Commissioner Cheek moved that the commission recommend to the City Council that the 21 signal at McKinney Street and Wood Street be restored to its original function with a 22 second from Commission Crew. The motion was approved by a 6-0 vote. 23 24 The meeting was adjourned by consensus at 6:53 p.m. 25 AGENDA INFORMATION SHEET AGENDA DATE: July 17, 2007 DEPARTMENT: Planning and Development ACM: Howard Martin, 349-8232 SUBJECT - SI07-0001 (Urban Forestry Partnership Program) Consider the adoption of an ordinance accepting a $15,000 match grant from the Texas Forest Service to hire an urban forestry consultant responsible for reviewing and revising the tree preservation and code regulations and to develop an Urban Forest Master Plan that covers planting, preservation, and care of public trees on public property. The Council Committee on the Environment recommends approval (2-0). BACKGROUND The City of Denton has requested and been approved to receive a $15,000 matching grant from the Texas Forest Service. The purpose of the grant is to hire an urban forestry consultant, responsible for reviewing and revising the tree preservation and code regulations and to develop an Urban Forest Master Plan that covers planting, preservation, and care of trees on public and private property. The grant and local funds, which equates to $30,000, will pay for the contracted consultant fees. In 2003 the Planning and Zoning Commission and city staff, after numerous community meetings, developed a draft tree preservation ordinance for City Council's consideration. As proposed, the draft ordinance required tree preservation for all developments, mitigation requirements, incentives to preserve trees, enforcement, a provision to seek relief from the ordinance, the establishment of a tree fund, and additional requirements to protect trees during construction. In October 2004, the City Council approved the tree ordinance with the added requirement that the ordinance be brought back to the Planning and Zoning Commission in six months for a review of effectiveness. In January 2005, a Citizen's Tree Committee (CTC) was appointed to conduct a review of the ordinance and present their report to the City Council Tree Committee. On 6-21-05, the CTC presented their report to the City Council Tree Committee who then directed staff to present the CTC reports to the City Council Committee on the Environment. On 3-6-06, staff presented an overview of the CTC reports to the City Council on the Environment. At that meeting, the CTC was directed to critique development's impact on tree removal for projects under construction and pursue the possibility of the City hiring an Urban Forester. After numerous meetings the CTC concluded in their final report that more effective implementation is required to fully meet the goals and objectives of the tree ordinance including: • Support for hiring an Urban Forester • The mitigation option may be used too often • Site design variation should be approved if it means more trees are preserved • Support of conservation development practices • Inventory of existing tree cover including ETJ • Accountability of Tree Fund expenditures • Offer incentives to plant or preserve more trees on single family lots The CTC committee felt the ordinance was a good first step, but the ordinance is complex and enforcement is lacking. Although additional Citizen Tree Committee meetings are not anticipated, planning staff intends to keep the past members updated on the progress of their report recommen ations. OPTIONS 1. Approve the $15,000 matching grant from the Texas Forest Service. 2. Deny the $15,000 matching grant from the Texas Forest Service. 3. Table item RECOMMENDATION The City Council Committee on the Environment recommends approval of acceptance for this matching grant from the Texas Forest Service to hire a tree expert to review and revise the tree preservation and mitigation regulations and to prepare an Urban Forest Master Plan for the City of Denton. ESTIMATED PROJECT SCHEDULE 1. Revised tree preservation and mitigation regulations could be presented to the Committee on the Environment by December 2007. 2. An Urban Forester could be hired within three to six months after approval to create and fund the new position. 2 PRIOR ACTION/REVIEW November 5, 2003 Planning and Zoning Commission Work Session November 12, 2004 Planning and Zoning Commission Public Hearing December 2, 2004 City Council Work Session January 6, 2004 City Council Public Hearing January 28, 2004 City Council Tree Subcommittee Meeting February 4, 2004 City Council Tree Subcommittee Meeting February 11, 2004 City Council Tree Subcommittee Meeting February 18, 2004 City Council Tree Subcommittee Meeting February 25, 2004 City Council Tree Subcommittee Meeting March 10, 2004 City Council Tree Subcommittee Meeting April 5, 2004 City Council Tree Subcommittee Meeting May 18, 2004 City Council Tree Subcommittee Meeting July 1, 2004 City Council Tree Subcommittee Meeting August 3, 2004 City Council Work Session September 21, 2004 City Council Public Hearing October 6, 2004 City Council Tree Subcommittee Meeting October 19, 2004 City Council Public Hearing January 26, 2005 Citizens Tree Committee Meeting February 16, 2005 Citizens Tree Committee Meeting March 24, 2005 Citizens Tree Committee Meeting April 6, 2005 Citizens Tree Committee Meeting May 19, 2005 Citizens Tree Committee Meeting June 9, 2005 Citizens Tree Committee Meeting June 21, 2005 Joint City Council Tree Subcommittee /Citizens Tree Committee October 17, 2005 Citizens Tree Subcommittee Meeting November 7, 2005 City Council Environment Committee Meeting November 21, 2005 City Council Tree Subcommittee Meeting March 6, 2006 City Council Committee on the Environment Meeting April 12, 2006 Citizens Tree Committee Meeting May 10, 2006 Citizens Tree Committee Meeting June 7, 2006 Citizens Tree Committee Meeting March 5, 2007 City Council Committee on the Environment Meeting June 12, 2007 City Council Committee on the Environment Meeting EXHIBITS 1. Resolution Ordinance to be signed by Mayor 2. Approved Grant Application 3. June 12, 2007 City Council Committee on the Environment Minutes 3 Prepared by: x Nona Elaine Muncie Landscape Administrator Respectfully submitted: Brian Lockley, AICP Interim Director, Planning & Development 4 s:lour docum~ntslordinances1~71urban forestry grant ordinance.~oc EXHIBIT 1 AN DR~~NAI~C~ TIDE CITY ~F DENT~~ AUTI~~I~IN TFI~ CITY 1VI~~A~I~ T~ P~FCUT~ AENI~~IT A~IAT~D ITS TIE "UR.~AN FDR~TY pARTNERI~7p P~Cr4IVI" GRANT REUT; C~IVIIV~~TTII~C~ QED COSTS ~F TI~~ P~~JECT A D~CR.I~P~D IN T~~ GRANT APPLICATION FROII~ PRE~I~ULY ~UDP~T~D FUNDS, NOT TO ~C~~ ~ 15,OOO.o~; ~NI) PQ~IDII~Cr AN EFF~CTI~E I~AT. 'U~HEI~, the 1 ~ ~ st Congress of the United States, in developing the Forestry Title of the 199 Farm ~i~l, found that the health of forests in urban areas and communities is an the decline; these forests, trees, and Open spaces ln~pr~ve the quality Of 11fe for residents, enhance economic value of property and are more effective than rural trees at reducing the buildup of carbon dioxide due to the added energy savings for urban residents; and ~~REAS, Congress defined the purpose of this pragrarn to include improving the understanding of the benefits of preserving existing tree cover; encourage propert~r owners to rriaintain trees and expand forest cover; provide educat~anal and technical ass1stanc to local organizations in rriaintaining and expanding forest cover; provide competit1ve matching grants to local units of avernment and other approved organizations for urban forestry products; implement a tree planting progr.n; promote the establishment of demonstration projects to illustrate the benefits of forest cover; and enhance technical skills of individuals involved in establishing ar maintaining the urban forest; and V~HE~AS, the C1ty of Denton 1s eligible to part1c~pate in this program and has successfully submitted a grant application in the amount of $15,~~0.~4. TH~FOE, TAE C~U~CIL ~F Ti~E CITY OF D~~T~~ I~~R~BY ORI]~1~5, ~CTIQN 1. The City of I~entan hereby authorises the City l~ar~ager, or his designee, to execute all agreements associated with the "Urban Forest Partnership Program" Grant with the Texas Forest Service. ECTrOI~ The City of Denton commits to providing its share of the project costs through previously budgeted matching funds a described in the grant application, v~hich is attached hereto and incorporated herein by reference, not to exceed 1 ,~00~0~. ~CTI~I~ 3. Th1s ordnance shall become effective ledlatel~ upon its passage and appro~ral PASI~ A1~D APPR~~'ED this the ~ day of , ~~07. PERRY R. c~P~ILL, AYR ' ATT~T: ,IE~~R 'U~ALT~~, CITY' ER~TA'Y AP~~~'~~D A TO ~~CAr, FC~R: EDP l~, ~ TTO~~ B ~ f,. ~ Pa.e ~ ~f _ , J . ~ - r • - F Y ~~~~1y Y ~►'y} # de #F ~[I i4 Y11i4 ~r FF aa..ll ii'~~ ~~J ~i~ laal4ta! aa.ae~~ ~~1 '~r~ ~ ~~~z ~ r~ ~'r~ D r~.~ ' l~c~~ o ~ ~ro~~Gt Title: City cfDent~n ~Jrban ~'ore~ter o U~.~ant . ~ranizatian; City ~f ]]e~~~~..~~a~nz-n and ~ g evelop~nt ~ep~ent aiding Address: North ~n pity: Denton tate~ ~ ~P.7~~~1 Contaot PersonlTitle; Nona E~ai.~e Muncie ~.an~sca e A • , P ~trator Daytime Telepphone: ~4~-4~..5~3 ~-email Address: ~ , nonaYrnunc~e~c~t~ofdentonico roux organization tax exempt? ~'e ~ Na ~e deral employer ~D Nbe . r. 75 ~0005~4 A narrative of na mare fan free ~3 } ed ~ es mus of this n p ~ accompany each grant applicat~an dorm.. 'f`h arra~ve should be in a fornx of a one~paragraph xecut~`ve a first park nary that ~ne~y describes the pro~ect~ The second part of the narrative should briery discus fou " r care ele~nents~~ afurban farestty ~ your oon~nunity~ Does the comnau,ty have a forester or arbarist? ~s ~e the gees on public or private roe ? re a fee ozdinance in place? Does it affect p P ere an inventory and plan for the care of p~rblic trees? ~s tree board or local advocacy organizations Next, ex lain how the r ' there a the elements above and its wi p P o~ect proposed addresses one or rnore of thin the nussia~, and goals of your organization; what as ` , - the role of the orga~izatlon in promoting urban fares ~ tl~e co ~ rntss~on~ ghat is to your or ani~atiou and ~ x►un~ty. mat the Iong~te~ benefits ~ e connnun~ty be? The #~rd part afthe narrative should address the foil . owing areas. 1. Project description; describe .1 activities fanned product, Name the r ' - p , who will manage the protect, and the end result or p affect partners and what they wih da. Describe how volunteers i7 ' Tiuaeline; describe the timetable for ro'ect com l ~ ~ 1 be involved. p J p et~on, ~ taslr~ltim.el~ne chaff may be ~cluded to summarize the activities budget ~~planatfon: state how grant ids wi~~ be ~ ent . o~ride sources and values far ~ ~ °n~ Y IocaZ cash contributions. each m-mid contribution listed. 4. Project Publicity; explain how the project will be u6 ' ' p l~e~zed m the conununity, or how the end raduct he distributed. p ~.1 ~ ~~p~~se ~ateg~ry Grant ~`u~~~ ~ ~ ~ Local dash ~~cal ~n~ nd ~erson~e~: Gf~ice E~pen~es; Tra~re~; ~~pp~~cs and 1~Iaterial~: Eq~~ent; Profes~~onal erv~~es; ~or~~ra~tua~: I ~,OOa,~~ ~ 5,004.0 ~~e~ ~ '~~~~unzn To~a1s. ~ ~ 5,000.0 $ ~ ~ 0~0 .00 $0,00 =~xra~t R~que~t, and Local Ma~c~ Total ~d}-(~~~-~c) ~ ~oca~ I1~atch Tata1; $ ~ 5,000, 00 ~ ~ ~ hereby certify that ~ have met i~h ~ ~icant to ree ~ . ~ this propasal and a ~rararn requ~rem~ent~, and ha~re recon~nended and ehan e~ fat ~e C~rbar~ ~o ~ ld heZp the pro~e~t achieve a gaals of restry Part~~~~~ip Gxant Program, ~na~e ofT~S Forester Date As a du~~ authorized re resent~tive o P f the argan~zat~on ~na~ this a ~~ca~ian ~ he a1Y the ~uformat~on pro~ded herein ~s due P~ i reby cer~f,~ that and represents the de~~res of ~ or a~~at~an certify that ~ understand the ose and rui . ~ further ~ e afthe program, asset out ~ e A ~ication ~u~de. ~ Loc~~, ~nt~r, ~Ia~ Der e~tor Fame and T~tI~ ofAut~arize~ Represontative c signs ofAuth~n~ epres~nta#ive Da  ,t ~~1 1r ~L~i ~ i ■ ~ V~~~~ 1 The City of Denton fanning and Develo ment services De arl;ment ~ p requesting assistance from the Texas Forest service in affsetting the initial costs of Kirin ~ . 9 consulting Urban Forester to revise our tree preservation and mitigation ordinance and develop an Urban Forest Master Plan City Council has directed staff to sim ~i and . ~ cfar~fy our tree code that gas adapted in l~avemf~er ~gD~, Plannin staff believes th ~ ~ most efficient gay to proceed !s to contract far professional services v~ith an ex silence p d Urban Forester to revie our current regulations and draft the necessa code revisions rY Planning stafF ~s also preparing a ~Og~-~a~ budget request to create a new full tine position for a Tree Program Manager iti~ens and city stall=have both reca nixed a tree g ordinance, ithaut an Urban Farester to enforce it, is not efFectiv, The new Urban Forester v~ill be responsible for tree code enforcement, including field ins ection for tree pratect~on fences, tree protect~Qn signs, and tree clearing pr~ar to permit a raval~ pp ether duties rill include public educat~on,~ fang terra planr~ing, and Fnvironrnentail . ~ ~ ens~tive Area adrn~n~strat~an, City Council has ~ndacated their intent to look favorabl u on ~ . ~ p our request to create a near pos~t~on to enforce and rnonitar the tree reservation p and m~t~gat~on ordanar~ce and other environrnentafly related land code Issues, Park ~~I: a~~~VI7~l'TIaNA~. ~~l ~a~ is overa~~ m~ss~an ya~r oa~~zatian? "To be a leader among cities in delivering outstanding qualityservices and roducts ~ through c~t~zen involvement, ~nnovat~on, and efficient use of resources" is the rr~isian stater~ent for the City of I)entan, City of Denton staff and Keep Denton ~eautifu! merr~bers actively participate in the Cross Timbers Urban Forestry Councilr The ur ose pp of the CTUFC is to promote interest and public av~areness of tree plantin efforts 'fn the ■ , i ` + * ; Crass `embers region, stimulate and encourage clt~~ensf private business ersons and p government entrt~es to take an active role ~n tree planting and conservation; and prorr►ote conservation of current trees and ~raoded areas thraugh education and other efforts ar~ong groups and individuals. The i_andscape Administrator hay `rrn lemented an p interns! TREE Ti*AMr cof~pr~sed of Meld ~nspectvrs from ~u~ld~ng ~nspectinns, l~llatershed Protection Code l;nforcement, and i*ngineering to identify development projects that are removing trees friar to permit approval, This team of Meld ins ectars quill be able to p assist the ne~u Urban Farester u~ith ~veekly drive-by site visits to construction sites under development, Aber the Urban Farester is hired, infarrnation on tie Ci ebsite vuill tY include ~nstruc~ons on hoer to report suspected unapproved tree clearin s, g Dons the con~~~~t~ have a forester or ~r~ori~ to manage the tread No not yet, Planning and Develvpn~ent services vuill be requesting afull-time em to ee to serve . p Y as Tree Program Manager in next yeas budget, ~ t~er~ ~ free ard~nano~ in p~ac? Yes. Day it aff~c~ the tr oa public and ~riv~at~ ~rop~r~y? Yes, I there a ~~a~ in glace ~o Dare for pu~lie trees? No, nQt yet, The i.andsca e ~d i ' ~ ~ p n~ nastratar and the Cansult~ng Arborist ~~ll development an~ Urban Forest Master Pian, The primary goal ~vill beta improve Denton's urban forest canopy cover, The ab'ectives J ~vill beta: encourage the preservation and planting of trees an private properly, Fnsure thraugh education and outreach efl:Qrts that all stakeholders a reciate pp the value of Denton s trees, - ~ improve coordination and communication re ardin ci tree re ' . . ~ tY gulat~or~s, and plant#ng and preservation standards and gutdel~nes~ insure that tree planting and preser~atior~ are ins octant el p ement of our streetscapes. r Preserve eXlting w0aded parks aid n~t~ll a~ a~'~~S ~1 Id ~an~ try . ~ es an pub~~c open spaces to ~rnprove Denton overall tree canopy, Ensure that urban forest maintenance practices continue to im r . ~ ave the quality of tree canopy in Denton to maxir~i~e potential benefits to the carom ' ~ there a~ env ~ ~ unity. e~to of pu~~~c tree. ivo, not yet. I~I1ith the hirir~ of a full~tirne Urban Forester this ~ " ~ may become a priority, rs there ~ tree board or ~oca~ advocacy or ar~~zat~on that ~ u~por prom rn for r~ai~r~ta~r~~r~g tree cover or rnanag~~g ub~~c tree? Yes . . p , beep Denton beautiful, Please refer to a~kached Native ~.andscapes Coi~nrnittee ~~~7 An _ Waal Acton Plan, The ~evelopn~ent Review Chairman has the authari to establish a Tr . F , ee Trust areas that have a m~n~rnum of one acre with characteristics afthe Cross T . . n~bers are eligible to be classified as a Tree Trust, Tree Trusts are preserved with a er~na p Went easement that runs with the land, that lir~nits any future land disturbin activi or constru " 9 tY coon that vuoufd damage the trees. what will the ~on~~term benefits he?The long~tern~ bene~ 'include ' health and sus an increasingly y tainable urban forest, Preservation efforts combined with uaii tr lan i g ~ ee p t ngs w~~l benefit f)ent~n by increasing citizen en~a ment of reen a . ~ 9 p ces and adding value to both pub~~c and private proper~es, Pad z: P~o,~~T' I~RI~ PLAN - ~ro~ect ~ecr~ptio~; Landscape ~dn~inistrator will work closet with t ` Y he prafess~onal consultant on the tree preservation and i~ii~gation code amendments; Land scope ~drninitratar and con~uftant will afsa develop and ir~plerr~ent a Ci of Denton tY Urban . Forest Master Plan., The end result of hiring a professional cansc~ltant to revise . , , the current tree preservation and mitigation regufatians will produce a sim lifted ordnance ~vith hi h " . ~ g standards and an easier to understand process. Hirir~ a full time Urban f=or ~ g ester to enforce a revised tree ordinance will help resolve several issues includi The inconsistent reserva ` ~ ~ p ton and protection ofthe remaining ren~nai~ts of the Cross Timbers The inconsistent care of public trees Improving the relationships between utility tree tr#rnrnin cvntractars a 9 nd neighborhoods improving the survival rates of street trees by plantin the ri ht trees i 9 9 n the right places TlrneNine~ tafl+ intends to bring the Cade a~iendments to the Plannin and 2 ' ~ aping Comtriission and City Council before the end of the year. Budget ~xp~anat~oinr The 15,D~~ requested state rant funds a weft as . 9 the ~5,aDa matching funds v~ill be used to contract professional services to revise th e tree preservation and mitigation regulations and draft an Urban Forest Master Plan, project Publ~c~ty= Publicity for the receipt of this grant will be handled wi th a formal dress release coordinated through the pity of Dei~tan's Public ~riformatian ~f~ce Landscape ~dm~nistratar will aio coordinate addit~anal publici with the Den . tY ton Retard Cl~rvnicfe, City s television channel the KDE guarterl newsit~er th Y e CTt1FC quarterly newsletter, and the City of Denton wel~site}  " i i.,r ~~~rma~y ~r~iown as Na~`ve Plant ~ Urban Porast Commit~ee~} ~~7 A~~~~ ct~r~ Goad,tate~nen~: ~ro~note reforestat~o~ efforts ~y ~na~~tai~d~ tae i~_~or~se tree ~ui~se , ,Action ttan~ent: fiche dine nur~er,~ ar~da~ to ~e-pat, step~up and eel ~a~ta~e~ trees Goad S~ate~ne~t. ~Proo~e reforestatia~ ~y~rovddi~g trees free o cda~cr a to ro ram arci ~ ~ ~ pay ts. ~ct~an t~.ten~ent: ~ra~d~ an~~.a~ ~r~e r1~e~~vay e~e~t~ ~~tian taten~~nt: ~ana~e the eih~azoods Free P~a~t~,g Praran~ to lace trees in r~-dete~ed de~able ~vcat~an ~ut~~~~ng pax~c~~atian ~ntereted ~choa~s, nei borhoad ~n~. nan-profit raups~ Goad Stateet; S'~pport o~~er oru~ad~a~io~as that promote ~r~a~a orest rY Act~an tat~m.ent~ ene~r r~en~ber~h~p o~~ roes ~'irnber~ r~~n ~ores ~ounci~ and the Teas urban Farestr~ ~o~nc~~~ Good S'tat~~te~t: .P~o~note tree care ~c~.an tat~~ent: operate ~ tree ed~catian baath at the a~nua~ `eat ~Am.erican ~leanu a~.d the a~n~.~l F P Denton Redbird Fett~v~. Goad S`tate~e~t: .Promote ase o~ f ~ati~e pda~ts for ~an~scd~~~a D~~~o~. 1~ct~an taternent: create ~ ~np~ement dater smart garden tour ear~~ sinner. Goad '~atet: Go~dete aid ma~~ta~n add earre~st gur~e ~°ost ~ Grove, ~en~a ~ctton t~teent: Add and ra~ra~g~ pants at these sites a needed, .~Ct~~n tat~ent; a~1~1t ~~~Un$ee~'S t~ upp~em.ent ~a.ttee s. Act~cn tatent~ Design. and ~nsta~[ s~gnage t c~rnpYeted sites. _ , EXHIBIT2 ~ - r • - F Y ~~~~1y Y ~►'y} # de #F ~[I i4 Y11i4 ~r FF aa..ll ii'~~ ~~J ~i~ laal4ta! aa.ae~~ ~~1 '~r~ ~ ~~~z ~ r~ ~'r~ D r~.~ ' l~c~~ o ~ ~ro~~Gt Title. City cfDent~n ~Jrban ~'ore~ter o U~.~ant . ~ranizatian; City ~f ]]e~~~~..~~a~nz-n and ~ g evelop~nt ~ep~ent aiding Address: North ~n pity: Denton tate~ ~ ~P.7~~~1 Contaot PersonlTitle; Nona E~ai.~e Muncie ~.an~sca e A • , P ~trator Daytime Telepphone: ~4~-4~..5~3 ~-email Address: ~ , nonaYrnunc~e~c~t~ofdentonico roux organization tax exempt? ~'e ~ Na ~e deral employer ~D Abe . r. 75 ~0005~4 A narrative of na mare fan free ~3 } ed ~ es mus of this n p ~ accompany each grant applicat~an dorm.. 'f`h arra~ve should be in a fornx of a one~paragraph xecut~`ve a first park nary that ~ne~y describes the pro~ect~ The second part of the narrative should briery discus fou " r care ele~nents~~ afurban farestty ~ your oon~nunity~ Does the comnau,ty have a forester or arbarist? ~s ~e the gees on public or private roe ? re a fee ozdinance in place? Does it affect p P ere an inventory and plan for the care of p~rblic trees? ~s tree board or local advocacy organizations Next, ex lain how the r ' there a the elements above and its wi p P o~ect proposed addresses one or rnore of thin the nussia~, and goals of your organization; what as ` , - the role of the orga~izatlon in promoting urban fares ~ tl~e co ~ rntss~on~ ghat is to your or ani~atiou and ~ x►un~ty. mat the Iong~te~ benefits ~ e connnun~ty be? The #~rd part afthe narrative should address the foil . owing areas. 1. Project description; describe .1 activities fanned product, Name the r ' - p , who will manage the protect, and the end result or p affect partners and what they wih da. Describe how volunteers i7 ' Tiuaeline; describe the timetable for ro'ect com l ~ ~ 1 be involved. p J p et~on, ~ taslr~ltim.el~ne chaff may be ~cluded to summarize the activities budget ~~planatfon: state how grant ids wi~~ be ~ ent . o~ride sources and values far ~ ~ °n~ Y IocaZ cash contributions. each m-mid contribution listed. 4. Project Publicity; explain how the project will be u6 ' ' p l~e~zed m the conununity, or how the end raduct he distributed. p ~.1 ~ ~~p~~se ~ateg~ry Grant ~`u~~~ ~ ~ ~ Local dash ~~cal ~n~ nd ~erson~e~: Gf~ice E~pen~es; Tra~re~; ~~pp~~cs and 1~Iaterial~: Eq~~ent; Profes~~onal erv~~es; ~or~~ra~tua~: I ~,OOa,~~ ~ 5,004.0 ~~e~ ~ '~~~~unzn To~a1s. ~ ~ 5,000.0 $ ~ ~ 0~0 .00 $0,00 =~xra~t R~que~t, and Local Ma~c~ Total ~d}-(~~~-~c) ~ ~oca~ I1~atch Tata1; $ ~ 5,000, 00 ~ ~ ~ hereby certify that ~ have met i~h ~ ~icant to ree ~ . ~ this propasal and a ~rararn requ~rem~ent~, and ha~re recon~nended and ehan e~ fat ~e C~rbar~ ~o ~ ld heZp the pro~e~t achieve a gaals of restry Part~~~~~ip Gxant Program, ~na~e ofT~S Forester Date As a du~~ authorized re resent~tive o P f the argan~zat~on ~na~ this a ~~ca~ian ~ he a1Y the ~uformat~on pro~ded herein ~s due P~ i reby cer~f,~ that and represents the de~~res of ~ or a~~at~an certify that ~ understand the ose and rui . ~ further ~ e afthe program, asset out ~ e A ~ication ~u~de. ~ Loc~~, ~nt~r, ~Ia~ Der e~tor Fame and T~tI~ ofAut~arize~ Represontative c signs ofAuth~n~ epres~nta#ive Da  ,t ~~1 1r ~L~i ~ i ■ ~ V~~~~ 1 The City of Denton fanning and Develo ment services De arl;ment ~ p requesting assistance from the Texas Forest service in affsetting the initial costs of Kirin ~ . 9 consulting Urban Forester to revise our tree preservation and mitigation ordinance and develop an Urban Forest Master Plan City Council has directed staff to sim ~i and . ~ cfar~fy our tree code that gas adapted in l~avemf~er ~gD~, Plannin staff believes th ~ ~ most efficient gay to proceed !s to contract far professional services v~ith an ex silence p d Urban Forester to revie our current regulations and draft the necessa code revisions rY Planning stafF ~s also preparing a ~Og~-~a~ budget request to create a new full tine position for a Tree Program Manager iti~ens and city stall=have both reca nixed a tree g ordinance, ithaut an Urban Farester to enforce it, is not efFectiv, The new Urban Forester v~ill be responsible for tree code enforcement, including field ins ection for tree pratect~on fences, tree protect~Qn signs, and tree clearing pr~ar to permit a raval~ pp ether duties rill include public educat~on,~ fang terra planr~ing, and Fnvironrnentail . ~ ~ ens~tive Area adrn~n~strat~an, City Council has ~ndacated their intent to look favorabl u on ~ . ~ p our request to create a near pos~t~on to enforce and rnonitar the tree reservation p and m~t~gat~on ordanar~ce and other environrnentafly related land code Issues, Park ~~I: a~~~VI7~l'TIaNA~. ~~l ~a~ is overa~~ m~ss~an ya~r oa~~zatian? "To be a leader among cities in delivering outstanding qualityservices and roducts ~ through c~t~zen involvement, ~nnovat~on, and efficient use of resources" is the rr~isian stater~ent for the City of I)entan, City of Denton staff and Keep Denton ~eautifu! merr~bers actively participate in the Cross Timbers Urban Forestry Councilr The ur ose pp of the CTUFC is to promote interest and public av~areness of tree plantin efforts 'fn the ■ , i ` + * ; Crass `embers region, stimulate and encourage clt~~ensf private business ersons and p government entrt~es to take an active role ~n tree planting and conservation; and prorr►ote conservation of current trees and ~raoded areas thraugh education and other efforts ar~ong groups and individuals. The i_andscape Administrator hay `rrn lemented an p interns! TREE Ti*AMr cof~pr~sed of Meld ~nspectvrs from ~u~ld~ng ~nspectinns, l~llatershed Protection Code l;nforcement, and i*ngineering to identify development projects that are removing trees friar to permit approval, This team of Meld ins ectars quill be able to p assist the ne~u Urban Farester u~ith ~veekly drive-by site visits to construction sites under development, Aber the Urban Farester is hired, infarrnation on tie Ci ebsite vuill tY include ~nstruc~ons on hoer to report suspected unapproved tree clearin s, g Dons the con~~~~t~ have a forester or ~r~ori~ to manage the tread No not yet, Planning and Develvpn~ent services vuill be requesting afull-time em to ee to serve . p Y as Tree Program Manager in next yeas budget, ~ t~er~ ~ free ard~nano~ in p~ac? Yes. Day it aff~c~ the tr oa public and ~riv~at~ ~rop~r~y? Yes, I there a ~~a~ in glace ~o Dare for pu~lie trees? No, nQt yet, The i.andsca e ~d i ' ~ ~ p n~ nastratar and the Cansult~ng Arborist ~~ll development an~ Urban Forest Master Pian, The primary goal ~vill beta improve Denton's urban forest canopy cover, The ab'ectives J ~vill beta: encourage the preservation and planting of trees an private properly, Fnsure thraugh education and outreach efl:Qrts that all stakeholders a reciate pp the value of Denton s trees, - ~ improve coordination and communication re ardin ci tree re ' . . ~ tY gulat~or~s, and plant#ng and preservation standards and gutdel~nes~ insure that tree planting and preser~atior~ are ins octant el p ement of our streetscapes. r Preserve eXlting w0aded parks aid n~t~ll a~ a~'~~S ~1 Id ~an~ try . ~ es an pub~~c open spaces to ~rnprove Denton overall tree canopy, Ensure that urban forest maintenance practices continue to im r . ~ ave the quality of tree canopy in Denton to maxir~i~e potential benefits to the carom ' ~ there a~ env ~ ~ unity. e~to of pu~~~c tree. ivo, not yet. I~I1ith the hirir~ of a full~tirne Urban Forester this ~ " ~ may become a priority, rs there ~ tree board or ~oca~ advocacy or ar~~zat~on that ~ u~por prom rn for r~ai~r~ta~r~~r~g tree cover or rnanag~~g ub~~c tree? Yes . . p , beep Denton beautiful, Please refer to a~kached Native ~.andscapes Coi~nrnittee ~~~7 An _ Waal Acton Plan, The ~evelopn~ent Review Chairman has the authari to establish a Tr . F , ee Trust areas that have a m~n~rnum of one acre with characteristics afthe Cross T . . n~bers are eligible to be classified as a Tree Trust, Tree Trusts are preserved with a er~na p Went easement that runs with the land, that lir~nits any future land disturbin activi or constru " 9 tY coon that vuoufd damage the trees. what will the ~on~~term benefits he?The long~tern~ bene~ 'include ' health and sus an increasingly y tainable urban forest, Preservation efforts combined with uaii tr lan i g ~ ee p t ngs w~~l benefit f)ent~n by increasing citizen en~a ment of reen a . ~ 9 p ces and adding value to both pub~~c and private proper~es, Pad z: P~o,~~T' I~RI~ PLAN - ~ro~ect ~ecr~ptio~; Landscape ~dn~inistrator will work closet with t ` Y he prafess~onal consultant on the tree preservation and i~ii~gation code amendments; Land scope ~drninitratar and con~uftant will afsa develop and ir~plerr~ent a Ci of Denton tY Urban . Forest Master Plan., The end result of hiring a professional cansc~ltant to revise . , , the current tree preservation and mitigation regufatians will produce a sim lifted ordnance ~vith hi h " . ~ g standards and an easier to understand process. Hirir~ a full time Urban f=or ~ g ester to enforce a revised tree ordinance will help resolve several issues includi The inconsistent reserva ` ~ ~ p ton and protection ofthe remaining ren~nai~ts of the Cross Timbers The inconsistent care of public trees Improving the relationships between utility tree tr#rnrnin cvntractars a 9 nd neighborhoods improving the survival rates of street trees by plantin the ri ht trees i 9 9 n the right places TlrneNine~ tafl+ intends to bring the Cade a~iendments to the Plannin and 2 ' ~ aping Comtriission and City Council before the end of the year. Budget ~xp~anat~oinr The 15,D~~ requested state rant funds a weft as . 9 the ~5,aDa matching funds v~ill be used to contract professional services to revise th e tree preservation and mitigation regulations and draft an Urban Forest Master Plan, project Publ~c~ty= Publicity for the receipt of this grant will be handled wi th a formal dress release coordinated through the pity of Dei~tan's Public ~riformatian ~f~ce Landscape ~dm~nistratar will aio coordinate addit~anal publici with the Den . tY ton Retard Cl~rvnicfe, City s television channel the KDE guarterl newsit~er th Y e CTt1FC quarterly newsletter, and the City of Denton wel~site}  " i i.,r ~~~rma~y ~r~iown as Na~`ve Plant ~ Urban Porast Commit~ee~} ~~7 A~~~~ ct~r~ Goad,tate~nen~: ~ro~note reforestat~o~ efforts ~y ~na~~tai~d~ tae i~_~or~se tree ~ui~se , ,Action ttan~ent: fiche dine nur~er,~ ar~da~ to ~e-pat, step~up and eel ~a~ta~e~ trees Goad S~ate~ne~t. ~Proo~e reforestatia~ ~y~rovddi~g trees free o cda~cr a to ro ram arci ~ ~ ~ pay ts. ~ct~an t~.ten~ent: ~ra~d~ an~~.a~ ~r~e r1~e~~vay e~e~t~ ~~tian taten~~nt: ~ana~e the eih~azoods Free P~a~t~,g Praran~ to lace trees in r~-dete~ed de~able ~vcat~an ~ut~~~~ng pax~c~~atian ~ntereted ~choa~s, nei borhoad ~n~. nan-profit raups~ Goad Stateet; S'~pport o~~er oru~ad~a~io~as that promote ~r~a~a orest rY Act~an tat~m.ent~ ene~r r~en~ber~h~p o~~ roes ~'irnber~ r~~n ~ores ~ounci~ and the Teas urban Farestr~ ~o~nc~~~ Good S'tat~~te~t: .P~o~note tree care ~c~.an tat~~ent: operate ~ tree ed~catian baath at the a~nua~ `eat ~Am.erican ~leanu a~.d the a~n~.~l F P Denton Redbird Fett~v~. Goad S`tate~e~t: .Promote ase o~ f ~ati~e pda~ts for ~an~scd~~~a D~~~o~. 1~ct~an taternent: create ~ ~np~ement dater smart garden tour ear~~ sinner. Goad '~atet: Go~dete aid ma~~ta~n add earre~st gur~e ~°ost ~ Grove, ~en~a ~ctton t~teent: Add and ra~ra~g~ pants at these sites a needed, .~Ct~~n tat~ent; a~1~1t ~~~Un$ee~'S t~ upp~em.ent ~a.ttee s. Act~cn tatent~ Design. and ~nsta~[ s~gnage t c~rnpYeted sites. EXHIBIT 3 1 DRAFT MINUTES 2 CITY COUNCIL COMMITTEE ON THE ENVIRONMENT 3 June 12, 2007 4 5 6 After determining that a quorum of the Committee on the Environment of the Denton City 7 Council was present, the Chair of the Committee on the Environment convened into a meeting 8 on Tuesday, June 12, 2007 at 2:32 p.m. in the Council Work Session Room, 215 East McKinney 9 Street, Denton, Texas. 10 11 Present: Chair Joe Mulroy and Council Member Pete Kamp 12 13 Absent: Jack Thomson, excused 14 15 Ex Officio Member: 16 Howard Martin, ACM Utilities 17 18 Also Present: Jim Coulter, Director Water Utilities 19 Kenny Banks, Manager, Division of Environmental Quality 20 Katherine Barnett, Utilities Special Project Coordinator 21 Nona Muncie, Landscape Administrator 22 Brian Lockley, Interim Planning Director 23 Ann Forsythe, Boards and Committee Coordinator 24 25 26 1) Consider approval of the Committee on the Environment Meeting minutes of: 27 a. April 2, 2007 28 29 The minutes were approved as circulated. 30 31 2) Consider the adoption of an ordinance to accept a $15,000 matching grant from the Texas 32 Forest Service to hire an urban forestry consultant, responsible for reviewing and revising the 33 tree preservation and code regulations and to develop an Urban Forest Master Plan that 34 covers planting, preservation, and care of trees on public and private property. 35 36 Nona Muncie, Landscape Administrator, presented this item. The $15,000 matching grant is 37 proposed to be used to hire a tree expert that is familiar with the City's municipal tree code to 3 8 review and revise the regulations with the goal being to simplify and clarify the tree regulations. 39 The consultant will be responsible for drafting a streamlined ordinance with high standards and 40 an easier to understand process. 41 42 Staff is ready to move forward with code amendments to the tree preservation and mitigation 43 ordinance that was adopted in November 2004. Muncie noted that the City has been approved to 44 receive a Texas Forest Service grant and staff is now requesting formal approval. Upon approval 45 by COE, staff is prepared to submit an ordinance to the City Council for approval. 46 47 Staff has been in touch with 5 urban forestry consultants who are interested in bidding on the 48 contract. Staff will keep the Citizens Tree Committee (CTC) updated on progress of code 49 amendments. The majority of the draft amendments will come from the CTC report and 50 suggestions from the internal staff Tree Team suggestions for Subchapter 13. 1 Draft Minutes of the Committee on the Environment 2 June 12, 2007 3 Page 2 of 5 4 5 6 Chair Mulroy asked that Muncie explain the Tree Team concept, when it started, and how the 7 Team will be involved. Muncie stated that the Tree Team is comprised of inspectors from Code 8 Enforcement, Building Inspections, Engineering, and Watershed Protection. This group of 9 inspectors will work with Muncie to keep track of ongoing construction. Whenever they observe 10 tree clearing, and are uncertain if it is a permitted removal, they will stop and talk to the 11 contractor, determine is a clearing grading tree removal sign posted on site, or they will call 12 Muncie who will meet with the developer and builder. Muncie also stated that staff has worked 13 with John Cabrales, Public Information Officer, to post information concerning a tree removal 14 report on the web site. Prior to web posting, staff will ensure that resources are available to 15 respond to the reports and concerns. 16 17 Muncie then provided an update on Tree Fund stating that currently there is $300,077.50 in the 18 Fund. By code, the Tree Fund maybe used to purchase, plant, and maintain trees on public 19 property, to preserve wooded property that remains in a natural state, and to provide achy-wide 20 tree inventory. Staff will meet on Thursday afternoon to explore options on possible land 21 purchases, or to look at specific public sites on which to plant new trees. Planning, Parks, and 22 Environmental teams will meet with Katherine Barnett and Muncie to identify different options 23 for Tree Fund expenditures that will be brought back to the next Committee on the Environment 24 meeting. 25 26 Staff is asking the Committee on the Environment to recommend approval to accepting the 27 Texas Forest Service grant and to also support funding of the new Urban Forester position. 28 Upon receiving Committee approval staff is prepared to take this item to the City Council on 29 July 17tH 30 31 Chair Mulroy asked about a time frame. Muncie replied about 6 months with funding being July 32 to December. Staff expects to have a final report by December 2007. 33 34 Chair Mulroy made a motion to accept the grant with a second from Committee Member 35 Kamp. The motion was approved by a 2-0 vote. 36 37 Chair Mulroy made a motion to approve creation of a new full time Urban Forester 3 8 position to become the City of Denton Tree Program Manager with a second from 39 Committee Member Kamp. The motion was approved by a 2-0 vote. 40 41 3) ACM Report: 42 a. Receive an update regarding Wind Generation devices. 43 44 Kenny Banks, Manager, Division of Environmental Quality, provided this update in response to 45 information requested during the last Committee meeting. Banks summarized items needed to 46 be considered for wind generation devices. As stated during the last COE meeting, the City of 47 Oak Point recently adopted a municipal ordinance designed to deal specifically with wind power 48 generation and staff has relied heavily on that ordinance. Staff did not find any information 49 specific to the issues associated with construction of a tower and some of the nuances associated 50 with running a wind powered system. Banks stated he believed that staff has a good starting 1 2 Draft Minutes of the Committee on the Environment meeting 3 June 12, 2007 4 Page 3 of 5 5 6 point for an ordinance for wind generation if the City chooses to go that route. There will be 7 several items to be discussed at staff level and have legal review to make sure that everyone is 8 comfortable. Items to be address will include issues associated wind towers, lighting, tower 9 design, sound levels, set back requirements, need for an SUP, insurance, abandonment, remedies l0 of the City. 11 12 Chair Mulroy stated this was going to be a mixed bag of possibilities and from the planning and 13 zoning aspect the next step would be to have an informational meeting with all the departments 14 that could be affected and see if it should be presented to the Public Utility Board. He did not 15 think that the COE would want to make that determination. 16 17 Howard Martin, ACM, stated that the PUB has received information on alternate energy 18 generation and he did not see any problem from the PUB's standpoint of the city being able to 19 provide that public service. Power construction and planned use and those things are outside the 20 purview of the PUB. 21 22 Mulroy stated he believed this was not the "hottest item" but eventually an ordinance would be 23 needed and that there is ample time to circulate, but senior management should decide who takes 24 the lead on this. 25 26 b. Receive a report regarding the U.S. Conference of Mayors Climate Protection Agreement 27 28 Katherine Barnett, Project Manager, presented this item stating Euline Brock, Denton's former 29 Mayor, signed the Agreement in 2005. In order to confirm our continued commitment Mayor 30 McNeill will sign the agreement and an update of our activities to date. Initially the City of 31 Seattle provided tracking of participants in the agreement. To address the growing participation 32 in and the implementation of strategies, tracking management is being transferred to the U.S. 33 Conference of Mayors. Barnett called attention to the City of Denton's many programs which 34 have centered on the City's unique environmental projects. 35 36 Chair Mulroy asked how the City measured up to other cities. Barnett replied that with other 37 cities the size of Denton, Denton is well ahead of most of them. 38 39 Committee Member Kamp asked how many cities had signed the agreement. Barnett replied 40 over 300 and that the City of Denton was among the first 50. 41 42 c. Receive a report regarding the City of Austin's Climate Protection Plan 43 44 Banks presented this item stating this information has been distributed at the North Central Texas 45 Council of Governments and a few conferences that have been attended by staff. In essence, 46 earlier this year the City of Austin released what has become known as the "Austin Climate 47 Protection Plan." This is a very aggressive plan to deal with energy efficiency and to mitigate 48 global warming related issues. The plan is being supported and spearheaded by Austin's Mayor 49 who is a member of the U.S. Conference of Mayors Climate Protection group and Chairs its 50 Energy Committee. It is also strongly supported by the City Manager of Austin. The elements 1 Draft Minutes of the Committee on the Environment meeting 2 June 12, 2007 3 Page 4 of 5 4 5 6 associated with the plan can be broken into four parts. The Municipal Plan is Part 1 and states 7 that all municipal facilities will be carbon neutral by the year 2020. It is specified that the 8 utilities will take a much more renewable focus and will be somewhere on the order of 30% of 9 overall needs being met by renewable resources. It also specified that 100 megawatts of that 10 would be solar. The Plan also commits to any new electrical generation capacity funded through 11 Austin Energy to be carbon neutral. 12 13 There is a home and buildings plan which is designed to make sure that all single family homes 14 are zero net energy capable by year 2015. That does not mean that they are going to be 15 functioning that way, it means there will be the capability of being zero net energy with multi 16 directional meters, and the ability to feed electricity back into the system as well consuming 17 electricity. An additional element within the home and building plan was a 75% increase in 18 efficiency of all other new construction. The summary information it does not give any details 19 about how that will actually be measured and how those percentages are going to be established. 20 21 The last one is the Community Plan which deals with public information. The goal is to provide 22 a carbon footprint calculator that businesses and residences in the community can actually utilize 23 and work on providing incentives for reducing the carbon footprint. 24 25 Staff has been in the process in trying to find additional details from the Austin folks, but have 26 been unable to make contact, but hope to do so soon. 27 28 Chair Mulroy asked if a cost had been established. Banks replied not at this time that Austin 29 wanted to establish a Climate Protection Climate Team that would take one year of time to come 30 up with that information to be shared with the City Council. It would include cost information, a 31 progressive plan according to the implementation strategy and related information. 32 33 Committee Member Kamp asked when the plan was published. Banks replied at the beginning 34 of the year in the January/February time frame. 35 36 Chair Mulroy stated that it appears there will need to be technology advances to meet some of 37 the outlined goals. The tangible element would be the carbon calculator and it would be a tool, 3 8 once available, for the City to look at and apply across the city. Chair Mulroy asked staff to 39 determine what types of carbon calculators were available from ICLEI or other sources, and to 40 see what information would be needed to perform these types of calculations. 41 42 d. Receive a report regarding a meeting with Urban Solutions Center personnel 43 44 Banks presented a summary of the meeting staff had on March 23, 2007 with the Urban Solution 45 folks. The Center is an outgrowth of the Texas A&M Extension Service and the idea is that 46 A&M has realized that its focus on agriculture and related research should begin to focus on 47 urban systems. Instead of performing predominately agricultural research to look at the 48 efficiency of growing a crop, for example, they are now looking at applying research to improve 49 aspects of turf grasses, ornamentals, and various other types of urban vegetation management. 50 1 Draft Minutes of the Committee on the Environment meeting 2 June 12, 2007 3 Page 4 of 5 4 5 6 The Center has also branched out to other types of research associated with things like Best 7 Management Practices for storm water which are similar to some of things staff has looked at 8 with the 319 Grant, water conservation, land reclamation, soil improvement, urban wildlife, plant 9 management, non-point sources pollution management, etc. 10 11 Banks stated The Center is interested in sharing research and learning more about UNT and what 12 the City of Denton does. There maybe some opportunities for research or grant collaboration in 13 the future. 14 15 e. Receive an update on the Clear Creek Natural Heritage (CCNHC) 16 17 Barnett discussed upcoming activities at Clear Creek, including UNT Governor's School, which 18 will about 180 high school sophomore students (60 each night) for three nights of activities. The 19 slide presentation also showed the effect to the wetlands from the flooding that occurred in April. 20 21 Also highlighted was a second grade group that came out and did a prairie curriculum, the 22 group's chief complaint was that they did not have enough time on the site. Barnett stated that 23 all Denton ISD second and fifth grade classes have been scheduled for next school year. 24 25 Slides also chronicled the site preparation and structure which is now on site. 26 27 4) New Business: This provides an item for the Committee on the Environment members to 28 suggest items for future agendas or to request information from the City Manager. 29 30 Chair Mulroy asked about the progress of scheduling a fact finding trip to Seattle to meet with 31 Council Member Conlin regarding Seattle's environmental sustaining achievements. Barnett 32 replied that finding free days on his schedule was a challenge but two dates in October, the Stn 33 and the 12th, are available. 34 3 5 Action Item: Barnett was directed to coordinate a visit in October and to invite the Mayor 36 and include the necessary staff. 37 3 8 The meeting was adj ourned by consensus at 3 :06 p.m.