OFFICIAL STATEMENT Dated: October 23, 2018

Transcription

1 NEW ISSUE - Book-Entry-Only OFFICIAL STATEMENT Dated: October 23, 2018 Ratings: Moody s: Aa2 (see OTHER INFORMATION - Ratings herein) In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under "TAX MATTERS" herein. THE BONDS HAVE NOT BEEN DESIGNATED AS QUALIFIED TAX-EXEMPT OBLIGATIONS FOR FINANCIAL INSTITUTIONS $1,635,000 EULESS DEVELOPMENT CORPORATION (Tarrant County) SALES TAX REVENUE BONDS, SERIES 2018 Dated Date: October 15, 2018 Due: September 15, as shown on page 2 Interest to accrue from Delivery Date PAYMENT TERMS... Interest on the $1,635,000 Euless Development Corporation, Sales Tax Revenue Bonds, Series 2018 (the Bonds ) will accrue from their date of initial delivery to the Initial Purchaser (as defined herein) thereof (the Delivery Date ), will be payable March 15 and September 15 of each year commencing March 15, 2019, until maturity or prior redemption, and will be calculated on the basis of a 360-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 within a maturity. 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 Agent/Registrar 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. See "THE BONDS - Book-Entry-Only System" herein. The initial Paying Agent/Registrar is U.S. Bank National Association, Dallas, Texas (see "THE BONDS - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE... The Bonds are being issued by the Euless Development Corporation (the "Corporation") pursuant to Texas Local Government Code, Chapters 501, 502 and 505, as amended (collectively, the Act ). The Bonds and their terms are governed by the provisions of a resolution (the "Resolution") adopted by the Board of Directors of the Corporation (see "THE BONDS - Authority for Issuance"). The Bonds, together with the Corporation's Sales Tax Revenue Refunding Bonds, Series 2012 (the "Previously Issued Bonds") and any additional sales tax revenue bonds issued on parity therewith (the "Additional Obligations" and together with the Previously Issued Bonds and the Bonds, the "Parity Obligations") are special obligations of the Corporation, payable from and secured by a lien on and pledge of certain Pledged Revenues which include the proceeds of a 1/2 of 1% sales and use tax levied within the City of Euless, Texas (the "City") for the benefit of the Corporation (see "SELECTED PROVISIONS OF THE BOND RESOLUTION"). The Bonds do not constitute a legal or equitable, pledge, charge, lien, or encumbrance upon any property of the Corporation or the City except with respect to the Pledged Revenues. Neither the State, the City, Tarrant County, or any political corporation, subdivision, or agency of the State shall be obligated to pay the Bonds or the interest thereon and neither the faith and credit nor the taxing power of the State, the City, Tarrant County, or any political corporation, subdivision, or agency thereof, except as authorized by the Act, is pledged to the payment of the principal of or interest on the Bonds. PURPOSE... Proceeds from the sale of the Bonds will be used to (i) pay contractual obligations of the City to be incurred for the construction of parks and park facilities, and (ii) pay the costs associated with the issuance of the Bonds. CUSIP PREFIX: MATURITY SCHEDULE & 9 DIGIT CUSIP Shown on page 2 LEGALITY... The Bonds 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 opinion of Norton Rose Fulbright US LLP, Bond Counsel, Dallas, Texas, (see Appendix C, Form of Bond Counsel's Opinion ). DELIVERY... It is expected that the Bonds will be available for delivery through The Depository Trust Company on or about November 20, 2018.

2 CUSIP Prefix: (1) MATURITY SCHEDULE Price Principal 15-Sep Interest or CUSIP Amount Maturity Rate Yield Suffix (1) $ 70, % 2.100% DB8 60, % 2.250% DC6 60, % 2.400% DD4 65, % 2.500% DE2 65, % 2.600% DF9 65, % 2.700% DG7 70, % 2.850% DH5 70, % 3.000% DJ1 75, % 3.100% DK8 75, % 3.150% (2) DL6 80, % 3.250% (2) DM4 85, % 3.400% (2) DN2 85, % 3.500% (2) DP7 90, % 3.600% (2) DQ5 95, % 3.700% (2) DR3 95, % 3.800% (2) DS1 $430, % Term Bonds due September 15, 2038, priced to yield 4.000%, CUSIP Suffix: DW2 (1) (Interest to accrue from Delivery Date) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Global Market Intelligence on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. The Corporation, the Financial Advisor and the Initial Purchaser take no responsibility for the accuracy of such numbers. (2) Yield shown is yield to first call date, September 15, OPTIONAL REDEMPTION... The Corporation reserves the right, at its option, to redeem Bonds having stated maturities on and after September 15, 2028, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof, on September 15, 2027, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see THE BONDS - Optional Redemption of the Bonds ). MANDATORY SINKING FUND REDEMPTION... The Bonds maturing on September 15, 2038 (the Term Bonds ) are subject to mandatory sinking fund redemption as described herein (see THE BONDS Mandatory Sinking Fund Redemption ). 2

3 No dealer, broker, salesman or other person has been authorized by the Corporation or the Initial Purchaser to give any information, or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Corporation or the Initial Purchaser. This Official Statement does not constitute an offer to sell Bonds 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 Corporation 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 Advisor. Any information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Corporation or other matters described herein since the date hereof. See CONTINUING DISCLOSURE OF INFORMATION for a description of the Corporation s undertaking to provide certain information on a continuing basis. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE INITIAL PURCHASER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE BONDS ARE EXEMPT FROM REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND CONSEQUENTLY HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION, OR EXEMPTION OF THE BONDS IN ACCORDANCE WITH APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTION IN WHICH THE BONDS HAVE BEEN REGISTERED, QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. NONE OF THE CORPORATION, THE INITIAL PURCHASER, OR THE FINANCIAL ADVISOR MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY, AS SUCH INFORMATION HAS BEEN PROVIDED BY THE DEPOSITORY TRUST COMPANY. THIS OFFICIAL STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 21E 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 DIFFERENT 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-LOOKING STATEMENTS. The agreements of the Corporation and others related to the Bonds 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 the Bonds is to be construed as constituting an agreement with the purchasers of the Bonds. INVESTORS SHOULD READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING APPENDICES ATTACHED HERETO, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION. TABLE OF CONTENTS OFFICIAL STATEMENT SUMMARY... 4 CITY OFFICIALS, STAFF AND CONSULTANTS... 5 ELECTED OFFICIALS... 5 SELECTED ADMINISTRATIVE STAFF... 5 CONSULTANTS AND ADVISORS... 5 INTRODUCTION... 6 THE BONDS... 6 DEBT INFORATION TABLE 1 - DEBT SERVICE REQUIREMENTS THE SALES TAX TABLE 2 - HISTORICAL CITY RECEIPTS OF 1% EQUIVALENT SALES TAX TABLE 3 - HISTORICAL RECEIPTS OF 1/2 OF 1% SALES TAX TABLE 4 - CALCULATION OF COVERAGE FOR THE ISSUANCE OF ADDITIONAL OBLIGATIONS TABLE 5 - REVENUE AND EXPENDITURE HISTORY SELECTED PROVISIONS OF THE RESOLUTION 18 INVESTMENTS CURRENT INVESTMENTS TAX MATTERS CONTINUING DISCLOSURE OF INFORMATION. 26 OTHER INFORMATION RATINGS LITIGATION REGISTRATION AND QUALIFICATION OF BONDS FOR SALE LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS LEGAL OPINIONS AND NO LITIGATION CERTIFICATE. 28 AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION FINANCIAL ADVISOR FORWARK-LOOKING STATEMENTS DISCLAIMER INITIAL PURCHASER CERTIFICATION OF THE OFFICIAL STATEMENT APPENDICES GENERAL INFORMATION REGARDING THE CITY... A EXCERPTS FROM THE ANNUAL FINANCIAL REPORT.. B FORM OF BOND COUNSEL'S OPINION... C The cover page hereof, this page, the schedules, and the appendices included herein and any addenda, supplement or amendment hereto, are part of the Official Statement.

4 OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE CORPORATION... The Corporation is a non-profit industrial development corporation of the State, created by the City of Euless, Texas (the City ), organized and existing under the laws of the State of Texas, particularly the Act (see INTRODUCTION - Description of the Corporation ). THE BONDS... The Bonds are issued as $1,635,000 Sales Tax Revenue Bonds, Series The Bonds are issued as serial bonds to mature on September 15 in each of the years 2019 through 2034 and as Term Bonds maturing on September 15, 2038 (see THE BONDS - Description of the Bonds ). PAYMENT OF INTEREST... Interest on the Bonds accrues from the date of the initial delivery of the Bonds, anticipated to be November 20, 2018, and is payable March 15, 2019 and each September 15 and March 15 thereafter until maturity or prior redemption (see "THE BONDS - Description of the Bonds" and THE BONDS Optional Redemption of the Bonds ). AUTHORITY FOR ISSUANCE... The Bonds are being issued by the Corporation pursuant to Texas Local Government Code, Chapters 501, 502 and 505, as amended (collectively, the Act ), and a resolution adopted by the Board of Directors of the Corporation (the Resolution ). SECURITY FOR THE BONDS... The Bonds are special obligations of the Corporation payable solely from a lien on and pledge of the Pledged Revenues (as defined in the Resolution) of the Corporation, including the receipts from a sales tax levied for the benefit of the Corporation pursuant to the Act. See THE BONDS - Security and Source of Payment herein for a more complete description of the revenues pledged and the security for the payment of the Bonds (see THE BONDS Authority for Issuance ). REDEMPTION OF THE BONDS... The Corporation reserves the right, at its option, to redeem Bonds having stated maturities on and after September 15, 2028, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on September 15, 2027 or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see THE BONDS - Optional Redemption of the Bonds ). Additionally, the Term Bonds are subject to mandatory sinking fund redemption as more particularly described herein (see THE BONDS Mandatory Sinking Fund Redemption ). TAX EXEMPTION... In the opinion of Bond Counsel, the interest on the Bonds 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 to (i) pay contractual obligations of the City to be incurred for the construction of parks and park facilities, and (ii) pay the costs associated with the issuance of the Bonds. RATINGS... The Bonds have been rated Aa2 Moody s Investor Services ( Moody s ), without credit enhancement (see "OTHER INFORMATION - Ratings"). BOOK-ENTRY-ONLY SYSTEM... The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of 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. 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 Agent/Registrar 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 (see THE BONDS - Book-Entry- Only System ). For additional information regarding the Corporation, please contact: Ms. Janina Jewell Mr. W. Boyd London, Jr. Finance Director M r. Jason Hughes City of Euless, Texas or Hilltop Securities Inc. 201 North Ector Drive 1201 Elm Street, Suite 3500 Euless, Texas Dallas, Texas (817) (214)

5 CORPORATION ADMINISTRATION THE CORPORATE BOARD OF DIRECTORS Member Member Term Name Since Expires Linda Martin 2007 December 31, 2019 Chariman Linda Eilenfeldt 2014 December 31, 2019 Vice Chairman Jason Turner 2018 December 31, 2019 Director Jeremy Tompkins 2014 December 31, 2019 Director Carmen Deithloff 1999 December 31, 2019 Director Sonja Adams 1993 December 31, 2019 Director Tim Stinneford 2007 December 31, 2019 Director Officers Loretta Getchell Bob Freeman M ike Collins Jania Jewell Kim Sutter Office President First Vice President Second Vice President Treasurer Secretary SELECTED ADMINISTRATIVE STAFF Length of Total Service to Governmental Name Position City Service Loretta Getchell City M anager 21 Years 24 Years Bob Freeman Deputy City Manager 38 Years 40 Years Chris Barker Assistant City M anager 19 Years 19 Years Janina Jewell Director of Finance 11 Years 23 Years Mike Collins Director of Planning and Economic Development 17 Years 30 Years CONSULTANTS AND ADVISORS Auditors... Weaver, LLP Dallas, Texas Bond Counsel... Norton Rose Fulbright US LLP Dallas, Texas Financial Advisor... Hilltop Securities Inc. Dallas, Texas 5

6 OFFICIAL STATEMENT RELATING TO $1,635,000 EULESS DEVELOPMENT CORPORATION SALES TAX REVENUE BONDS, SERIES 2018 INTRODUCTION This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $1,635,000 Euless Development Corporation Sales Tax Revenue Bonds, Series 2018 (the Bonds ). Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the Resolution adopted on the date of sale of the Bonds (the "Resolution") which authorized the issuance of the Bonds, except as otherwise indicated herein (see SELECTED PROVISIONS OF THE RESOLUTION ). There follows in this Official Statement descriptions of the Bonds and certain information regarding the Corporation 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 Corporation's Financial Advisor, Hilltop Securities Inc., Dallas, Texas. DESCRIPTION OF THE CORPORATION... The Corporation is a non-profit corporation duly organized and operating under the laws of the State of Texas, particularly Texas Local Government Code, Chapters 501, 502 and 505, as amended, (collectively, the Act ). The Corporation was created following an election held by the City of Euless, Texas (the City ) on the question of the levy of a 1/2 of 1% local sales and use tax in the City for the benefit of projects authorized by Chapter 505 of the Act. The Corporation as currently organized is to promote and provide for (i) the economic development within the City and the State of Texas as authorized by the Act, (ii) to fund public library improvements and (iii) to fund park improvements in the City. The City Council of the City appoints the members of the Board of Directors of the Corporation. Under the provisions of the Act and the Corporation's by-laws, the City is required to approve certain actions of the Corporation, including the issuance of the Bonds by the Corporation and the undertaking of projects. DESCRIPTION OF THE CITY... The City is a political subdivision and home-rule municipal corporation of the State, duly organized and existing under the laws of the State, including the City s Home Rule Charter. The City was incorporated in 1953, and first adopted its Home Rule Charter in The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and six Councilmembers elected to staggered three year terms. The City Manager is the chief administrative officer for the City. Some of the services that the City provides are: public safety (police and fire protection), highways and streets, water and sanitary sewer utilities, health services, culture-recreation, public improvements, planning and zoning, and general administrative services. The 2010 Census population for the City was 51,340, while the estimated 2018 population is 55,170. The City covers approximately 16.9 square miles. THE BONDS DESCRIPTION OF THE BONDS... The Bonds are dated October 15, 2018 and mature on September 15 in each of the years and in the amounts shown on page 2 hereof. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months and will be payable on March 15 and September 15 in each year, commencing March 15, 2019 until maturity or prior redemption. 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 & Co., the nominee of The Depository Trust Company ("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 Agent/Registrar 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. See "THE BONDS - Book-Entry-Only System" herein. AUTHORITY FOR ISSUANCE... The Bonds are being issued by the Corporation pursuant to Texas Local Government Code, Chapters 501, 502 and 505, as amended (collectively, the Act ). The Bonds and their terms are governed by the provisions of the Resolution. SECURITY AND SOURCE OF PAYMENT... The Bonds, together with the Corporation's Sales Tax Revenue Refunding Bonds, Series 2012 (the "Previously Issued Bonds") and any additional sales tax revenue bonds issued on parity therewith (the "Additional Obligations" and together with the Previously Issued Bonds and the Bonds, the "Parity Obligations") are special obligations of the Corporation, payable solely from a lien on and pledge of the Pledged Revenues (as defined in the Resolution) of the Corporation. The Pledged Revenues include the revenues or receipts from a sales and use tax levied within the City at the rate of 1/2 of 1% pursuant to Chapter 505 of the Act (the Sales Tax ), less any amounts due and owed to the Comptroller of Public Accounts of the State of Texas as charges for the collection of the Sales Tax or retention by said Comptroller for refunds and to redeem dishonored checks and drafts, to the extent such charges and retention are authorized or required by law. The Bonds do not constitute a debt of the City, 6

7 the State or any agency, political corporation or subdivision thereof nor do the Bonds constitute a legal or equitable, pledge, charge, lien or encumbrance upon any property of the Corporation or the City except with respect to the Pledged Revenues. In the Resolution, the Corporation has reserved the right to issue additional revenue obligations payable, in whole or in part, from the Pledged Revenues and, subject to satisfying the terms and conditions prescribed therefor, such additional revenue obligations may be equally and ratably secured by a parity first lien on and pledge of such Pledged Revenues. NEITHER THE FAITH AND CREDIT OF THE CITY, THE STATE, TARRANT COUNTY, OR ANY AGENCY, POLITICAL CORPORATION OR SUBDIVISION THEREOF, HAS BEEN PLEDGED FOR THE PAYMENT OF THE BONDS, EXCEPT AS DESCRIBED HEREIN. Upon the issuance of the Bonds, $1,675,000 in aggregate principal amount of Parity Obligations will be Outstanding pursuant to the Resolution and the resolution relating to the Previously Issued Bonds. See "Table 1 Debt Service Requirements" for the debt service requirements on all Outstanding Parity Obligations. Chapter 321, Texas Tax Code contains provisions which would allow the voters of the City to either reduce or repeal the Sales Tax; however, the Attorney General of Texas has rendered an Opinion (Opinion No. DM-137) to the effect that a "reduction in the sales tax rate, or a limitation on the amount of time the tax may be collected, may not be applied to any bonds issued prior to the date of the rollback election." In so opining, the Attorney General noted any "subsequent legislation which purports to permit the reduction or other limitation of that tax is ineffective to do so, because such alteration would impair the obligation of the contract between the city and such bondholders," and in effect be a violation of Article 1, Section 10 of the United States Constitution and Article I, Section 16 of the Texas Constitution. PLEDGE UNDER RESOLUTION... The Corporation covenants and agrees that the Pledged Revenues, with the exception of those in excess of the amounts required for the payment and security of the Parity Obligations, are irrevocably pledged to the payment and security of the Parity Obligations, including the establishment and maintenance of the special funds created and established in the Resolution or in any resolution authorizing the issuance of Additional Obligations. The Resolution further provides that the Parity Obligations shall constitute a first lien on the Pledged Revenues in accordance with the terms of the Resolution and any resolution authorizing the issuance of Additional Obligations, which lien shall be valid and binding and fully perfected from and after the date of adoption of the Resolution without physical delivery or transfer of control of the Pledged Revenues, the filing of the Resolution or any other act. PLEDGED REVENUE FUND... The Corporation has previously established the "Pledged Revenue Fund" and the City has previously agreed to promptly collect and remit to the Corporation the Gross Sales Tax Revenues for the deposit in the Pledged Revenue Fund. Under the Resolution, the Corporation covenants and agrees to maintain such Pledged Revenue Fund for so long as any Parity Obligations, including the Bonds, remain Outstanding. All Pledged Revenues deposited to the credit of such Fund shall be accounted for separate and apart from all other revenues, receipts and income of the Corporation and, with respect to the Gross Sales Tax Revenues, the Corporation shall further account for such funds separate and apart from the other Pledged Revenues deposited to the credit of the Pledged Revenue Fund. All Pledged Revenues deposited to the credit of the Pledged Revenue Fund shall be appropriated and expended to the extent required by the Resolution or any resolution authorizing the issuance of any Parity Obligations for the following uses and in the order of priority shown below. FLOW OF FUNDS... The Resolution establishes the following funds and accounts for the payment and security of the Parity Obligations (defined as the Previously Issued Bonds, the Bonds and Additional Obligations, if issued) and for the Pledged Revenues with all revenues flowing first to the Corporation's Pledged Revenue Fund: PRIORITY First Priority Second Priority Third Priority Fourth Priority FUND To the payment of the amounts required to be deposited in the Bond Fund for the payment of Debt Service on the Parity Obligations as the same becomes due and payable; To the payment of the amounts required to be deposited in the Reserve Fund to establish and maintain the Required Reserve in accordance with the provisions of the Resolution and any Supplemental Resolution; To the payment of amounts required to be deposited in any other fund or account required by any Supplemental Resolution authorizing the issuance of Parity Obligations; and To any fund or account held at any place or places, or to any payee, required by any other resolution of the Board which authorized the issuance of obligations or the creation of debt of the Corporation having a lien on the Pledged Revenues subordinate to the lien created herein on behalf of the Parity Obligations. Any Pledged Revenues remaining in the Pledged Revenue Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other lawful purpose now or hereafter permitted by law. 7

8 BOND FUND... Under the Resolution, the Corporation agrees and covenants to maintain a separate and special account or fund on the books and records of the Corporation for the purpose of providing funds to pay the principal of and interest on Parity Obligations, (the Bond Fund ), and all monies deposited to the credit of such fund shall be held in a special fund of the City. The Corporation further covenants to deposit into the Bond Fund prior to each principal and interest payment date from the Pledged Revenues an amount equal to one hundred per centum (100%) of the interest on and the principal of the Bonds then falling due and payable, and such deposits to pay principal and accrued interest on the Bonds shall be made in substantially equal monthly installments on or before the 20th day of each month, beginning on or before the 20th day of the month next following the delivery of the Bonds to the initial purchasers until (i) the total amount on deposit in the Bond Fund and Reserve Fund is equal to the amount required to fully pay and discharge all Parity Obligations (principal and interest) then Outstanding or (ii) the Bonds are no longer Outstanding. RESERVE FUND REQUIREMENT... Under the Resolution, the Corporation agrees and covenants to maintain a separate and special fund or account to be known as the Reserve Account (the Reserve Fund ). All Pledged Revenues deposited to the credit of such fund shall be used solely for the payment of the principal of and interest on the Parity Obligations when other funds available for such purposes are insufficient, and, in addition, may be used, to the extent not required to maintain the Required Reserve (as defined below), to pay, or provide for the payment of, the final principal amount of a series of Parity Obligations so that such series of Parity Obligations is no longer deemed to be Outstanding. There is currently on deposit to the credit of the Reserve Fund the sum of $99, By reason of the issuance of the Bonds, the total amount required to be accumulated and maintained in the Reserve Fund is hereby redetermined and calculated to be $160, (the Required Reserve ). ADDITIONAL OBLIGATIONS... Under the Resolution, and subject to the provisions contained therein, the Corporation has reserved the right to issue, from time to time as needed, Additional Obligations for any lawful purpose. Such Additional Obligations may be issued in such form and manner as the Corporation determines, provided, however, prior to issuing or incurring such Additional Obligations, the following conditions precedent for the authorization and issuance of such Additional Obligations are satisfied: (1) the Treasurer of the Corporation (or other officer of the Corporation then having the primary responsibility for the financial affairs of the Corporation) shall have executed a certificate stating that, to the best of his or her knowledge and belief, the Corporation is not in default as to any covenant, obligation or agreement contained in any resolution authorizing the issuance of Parity Obligations; (2) the Corporation has secured from a certified public accountant a certificate or opinion to the effect that, according to the books and records of the Corporation, the Gross Sales Tax Revenues received by the Corporation for either (i) the last completed Fiscal Year next preceding the adoption of the resolution authorizing the issuance of the proposed Additional Obligations or (ii) any twelve (12) consecutive months out of the previous eighteen (18) months next preceding the adoption of the resolution authorizing the Additional Obligations were equal to not less than (i) 1.50 times the average annual Debt Service for all Parity Obligations then Outstanding and after giving effect to the issuance of the Additional Obligations then being issued and (ii) 1.35 times the maximum annual Debt Service for all Parity Obligations then Outstanding after giving effect to the issuance of the Additional Obligations then being issued; and (3) the Required Reserve to be accumulated and maintained in the Reserve Fund is increased to the extent required by the Resolution. GENERAL COVENANT REGARDING THE SALES TAX... The Municipal Sales and Use Tax Act (Texas Tax Code, Chapter 321, as amended) provides that the Sales Tax does not apply to the sale of a taxable item unless the item is also taxable under the Texas Limited Sales, Excise and Use Tax Act (Texas Tax Code, Chapter 151, as amended). The Sales Tax is therefore subject to broadening and reduction in the base against which it is levied by action of the State Legislature without the consent of the City or the Corporation. In the Resolution, the Corporation covenants and agrees that, while any Bonds are outstanding, it will take all legal means and actions permissible to cause the Sales Tax, at its current rate (1/2 of 1%) or at a higher rate if legally permitted, to be levied and collected continuously throughout the boundaries of the City, as such boundaries may be changed from time to time, in the manner and to the maximum extent legally permitted; and to cause no reduction, abatement or exemption in the Sales Tax until all of the Bonds have been paid in full or until they are lawfully defeased in accordance with the Resolution. The Corporation also covenants and agrees that, if, subsequent to the issuance of the Bonds, the City is authorized by applicable law to impose and levy the Sales Tax on any items or transactions that are not subject to the Sales Tax on the date the Resolution was adopted, then the Corporation will use its best efforts to cause the City to take such action as may be required by applicable law to subject such items or transactions to the Sales Tax. OPTIONAL REDEMPTION... The Corporation reserves the right, at its option, to redeem Bonds having stated maturities on and after September 15, 2028, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof, on September 15, 2027, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Bonds are to be redeemed, the Corporation may select the maturities of Bonds to be redeemed. If less than all the Bonds of any maturity are to be redeemed, the Paying Agent/Registrar (or DTC while the Bonds are in Book-Entry-Only form) shall determine by lot the Bonds, or portions thereof, within such maturity to be redeemed. If a Bond (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 become 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 Agent/Registrar on the redemption date. 8

9 MANDATORY SINKING FUND REDEMPTION... The Bonds maturing on September 15, 2038 (the Term Bonds ) are subject to mandatory sinking fund redemption in the amounts and at the price of par plus accrued interest to the redemption date on September 15 in the following years: * Maturity. Term Bonds September 15, 2038 Year Amount 2035 $ 100, , , * 115,000 The particular Term Bonds to be redeemed shall be chosen by the Paying Agent/Registrar at random by lot or other customary method of random selection; provided, however, that the principal amount of the Term Bonds of the stated maturity required to be redeemed on a mandatory redemption date shall be reduced, at the option of the Corporation, by the principal amount of any Term Bonds of like state maturity which, at least fifty (50) days prior to the mandatory redemption date, (1) shall have been acquired by the Corporation at a price not exceeding the principal amount of such Term Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (2) shall have been redeemed pursuant to the optional redemption provisions set forth above and not theretofore credited against a mandatory redemption requirement. NOTICE OF REDEMPTION... Not less than 30 days prior to a redemption date for the Bonds, the Corporation shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bonds to be redeemed, in whole or in part, at the address of each registered owner appearing on the registration books of the Paying Agent/Registrar 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. NOTICE HAVING BEEN SO GIVEN, THE BONDS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY OBLIGATION OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH OBLIGATION OR PORTION THEREOF SHALL CEASE TO ACCRUE. With respect to any optional redemption of the Bonds, unless monies sufficient to pay the principal of and premium, if any, and interest on the Bonds to be redeemed shall have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said redemption is conditional upon the receipt of such monies by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon the satisfaction of any prerequisites set forth in such notice of redemption; and, if sufficient monies are not received or such prerequisites are not satisfied, such notice shall be of no force and effect, the Corporation shall not redeem such Bonds and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the effect that the Bonds have not been redeemed. BOOK-ENTRY-ONLY SYSTEM... This section describes how ownership of the Bonds is to be transferred and how the principal of, premium, if any, and interest on the Bonds are to be paid to and credited by DTC while the Bonds 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 Corporation believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The Corporation cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Bonds, or any 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 any notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official 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 file with DTC. DTC will act as securities depository for the Bonds. The Bonds 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 Bond certificate will be issued for each maturity of the Bonds in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-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 DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 9

10 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among 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 is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. 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 a Standard & Poor s rating of: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds 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. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry-only system for the Bonds is discontinued. To 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 nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect 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 Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as defaults and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds 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 the notices be provided directly to them. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to the Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). All payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from the Corporation or Paying Agent/Registrar on payable date 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 is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC nor its nominee, Paying Agent/Registrar, or the Corporation, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) are, the responsibility of the Corporation or Paying Agent/Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Corporation or Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Corporation may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered (see THE BONDS-Transfer, Exchange and Registration herein). 10

11 Use of Certain Terms in Other Sections of this Official Statement... In reading this Official Statement it should be 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 (ii) except as described above, notices that are to be given to registered owners under the Resolution 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 Corporation or the Initial Purchaser. Effect of Termination of Book-Entry-Only System... In the event that the Book-Entry-Only System is discontinued, printed Bonds will be issued to the Participants or the Beneficial Owners, as the case may be, and the Bonds will be subject to transfer, exchange and registration provisions as set forth in the Resolution and summarized under THE BONDS - Transfer, Exchange and Registration below. PAYING AGENT/REGISTRAR... The initial Paying Agent/Registrar is U.S. Bank National Association, Dallas, Texas. In the Resolution, the Corporation retains the right to replace the Paying Agent/Registrar. The Corporation covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds are duly paid and any successor Paying Agent/Registrar 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 Agent/Registrar for the Bonds. Upon any change in the Paying Agent/Registrar for the Bonds, the Corporation agrees to promptly cause a written notice thereof to be sent to each registered owner of such Bonds by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. Interest on the Bonds shall be paid to the registered owners appearing on the registration books of the Paying Agent/Registrar at the close of business on the Record Date (hereinafter defined), and such interest shall be paid (i) by check sent United States mail, first class, postage prepaid, to the address of the registered owner recorded in the registration books of the Paying Agent/Registrar or (ii) by such other method, acceptable to the Paying Agent/Registrar requested by, and at the risk and expense of, the registered owner. Principal of the Bonds will be paid to the registered owner at the stated maturity upon presentation to the designated payment/transfer office of the Paying Agent/Registrar; provided, however, that so long as Cede & Co. (or other DTC nominee) is the registered owner of the Bonds, all payments will be made as described under THE BONDS - Book-Entry-Only System herein. If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal holiday or a day when banking institutions in the Corporation where the designated payment/transfer office of the Paying Agent/Registrar 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 on the date payment was due. TRANSFER, EXCHANGE AND REGISTRATION... In the event the Book-Entry-Only System should be discontinued, printed certificates will be delivered to the registered owners of the Bonds and thereafter the Bonds may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender of such printed certificates to the Paying Agent/Registrar 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. Bonds may be assigned by the execution of an assignment form on the respective Bonds or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Bonds will be delivered by the Paying Agent/Registrar, in lieu of the Bonds being transferred or exchanged, at the principal office of the Paying Agent/Registrar, 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 Agent/Registrar. New Bonds registered and delivered in an exchange or transfer shall be in denominations of $5,000 or integral multiples thereof for any one maturity and for a like aggregate principal amount as the Bonds surrendered for exchange or transfer. See "THE BONDS - Book-Entry-Only System" for a description of the system to be utilized initially in regard to ownership and transferability of the Bonds. RECORD DATE FOR INTEREST PAYMENT... The record date (the "Record Date") for the interest payable on the Bonds on any interest payment date means the close of business on the last business day of the preceding month. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (the "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Corporation. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "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 registered owner of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. 11

12 REGISTERED OWNERS REMEDIES... The Resolution does not establish specific events of default with respect to the Bonds. In the event the Corporation (a) defaults in payments to be made to the Bond Fund as required by the Resolution or (b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in the Resolution, the Holder or Holders of any Bond shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the governing body of the Corporation and other officers of the Corporation to observe and perform any covenant, condition or obligation prescribed in the Resolution. The issuance of a writ of mandamus is controlled by equitable principles and rests with the discretion of the court, but may not be arbitrarily refused. The enforcement of such remedy may be difficult and time consuming and a registered owner could be required to enforce such remedy on a periodic basis. 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 Resolution does not provide for the appointment of a trustee to represent the interests of the bondholders upon any failure of the Corporation to perform in accordance with the terms of the Resolution, or upon any other condition and, accordingly, all legal actions to enforce such remedies would have to be undertaken at the initiative of, and 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 Corporation s sovereign immunity from a suit for money damages, holders of the Bonds may not be able to bring such a suit against the Corporation for breach of the Bond or Resolution covenants. Even if a judgment against the Corporation could be obtained, it could not be enforced by direct levy and execution against the Corporation s property. Furthermore, the Corporation 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, such as the Pledged Revenues, such provisions are subject to 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 holders of the Bonds of an entity which has sought protection under Chapter 9. Therefore, should the Corporation 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 for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all opinions relative to the enforceability of the Resolution and Bonds are qualified with respect to the customary rights of debtors relative to their creditors. DEFEASANCE... The Resolution provides for the defeasance of the Bonds when the payment of the principal of and premium, if any, plus interest thereon to the due date thereof (whether such due date be by reason of maturity or otherwise), is provided by irrevocably depositing with the Paying Agent/Registrar, or other authorized escrow agent, in trust (1) money sufficient to make such payment or (2) Government Obligations to mature as to principal and interest in 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 Bonds. The Resolution provides that Government Obligations means (a) direct, noncallable 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, on the date of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, (c) 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 of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (d) any other then authorized securities or obligations that may be used to defease obligations such as the Bonds under applicable laws of the State of Texas. The Corporation has the right, subject to satisfying the requirements of (1) and (2) above, to substitute other Government Obligations for the Government Obligations originally deposited, to reinvest the uninvested monies on deposit for such defeasance and to withdraw for the benefit of the Corporation monies in excess of the amount required for such defeasance. There is no assurance that the current law will not be changed in a manner which would permit investments other than those described above to be made with amounts deposited to defease the Bonds. Because the Resolution does not contractually limit such investments, registered owners may be deemed to have consented to defeasance with such other investments, notwithstanding the fact that such investments may not be of the same investment quality as those currently permitted under State law. There is no assurance that the ratings for U.S. Treasury securities used as Government Obligations or that for any other Government Obligation will be maintained at any particular rating category. Upon such deposit as described above, the Bonds shall no longer be regarded to be outstanding or unpaid. After firm banking and financial arrangements for the discharge and final payment of the Bonds have been made as described above, all rights of the Corporation to take any action amending the terms of the Bonds are extinguished. AMENDMENTS... The Corporation may amend the Resolution without the consent of or notice to any registered owner in any manner not detrimental to the interests of the registered owners, including the curing of any ambiguity, inconsistency, or formal defect or omission therein. In addition, the Corporation may with the written consent of the Holders of a majority of aggregate principal amount of the Bonds then outstanding affected thereby, amend, add to, or rescind any of the provisions of the Resolution; except that, without the consent of the registered owners of all of the affected Bonds, no such amendment, addition or rescission may (1) extend the time or times of payment of the principal of, premium, if any, and interest on the Bonds, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the 12

13 principal of, premium, if any, or interest on the Bonds, (2) give any preference to any Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds required to be held by Holders for consent to any such amendment, addition, or rescission. USE OF PROCEEDS... The proceeds from the sale of the Bonds will be applied approximately as follows: Sources: Par Amount $ 1,635, Reoffering Premium 39, TOTAL SOURCES $ 1,674, Uses: Deposit to Project Construction Fund $ 1,595, Underwriter's Discount 22, Rounding Amount 4, Costs of Issuance 52, TOTAL USES $ 1,674, (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) 13

14 DEBT INFORMATION TABLE 1 DEBT SERVICE REQUIREMENTS Fiscal Total Year Debt % of Ending Outstanding Debt Service The Bonds (1) Service Principal 9/30 Principal Interest Total Principal Interest Total Requirements Retired 2018 $ 35,000 $ 1,073 $ 36,073 $ - $ - $ - $ 36, , ,572 70,000 49, , , ,000 58, , , ,000 56, , , ,000 55, , , % ,000 53, , , ,000 51, , , ,000 49, , , ,000 47, , , ,000 44, , , % ,000 41, , , ,000 38, , , ,000 35, , , ,000 31, , , ,000 28, , , % ,000 24, , , ,000 21, , , ,000 17, , , ,000 13, , , ,000 9, , , % ,000 4, , , % $ 75,000 $ 1,645 $ 76,645 $ 1,635,000 $ 731,063 $ 2,366,063 $ 2,442,708 (1) Average life of the Bonds years. 14

15 THE SALES TAX SOURCE AND AUTHORIZATION... The Sales Tax is a 1/2 of 1% limited sales and use tax imposed on all taxable transactions within the City as approved at an election held in the City. The State Comptroller of Public Accounts (the "Comptroller") began collecting the Corporation s Sales Tax on transactions within the City on July 1, The Sales Tax is authorized to be levied and collected against the receipts from the sale at retail of taxable items within the City. The Sales Tax also is an excise tax on the use, storage or other consumption of taxable tangible personal property purchased, leased or rented from a retailer within the City. The City currently levies other sales and use taxes for City purposes: Crime Control and Prevention District ¼ of 1%; reduction of property taxes ¼ of 1%; and Euless Development Corporation ½ of 1% in accordance with State law. The imposition, computation, administration, governance, abolition and use of the Sales Tax is governed by the Texas Limited Sales, Excise, and Use Tax Act except to the extent that there is conflict with the Act, in which case the provisions of the Act control as to the Bonds. Reference is made to the Texas Municipal Sales and Use Tax Act, for a more complete description of the Sales Tax. In general, as applied to the Sales Tax, a taxable item includes any tangible personal property and certain taxable services. "Taxable services" include certain amusement services, cable television services, motor vehicle parking and storage services, the repair, maintenance and restoration of most tangible personal property, certain telecommunication services, credit reporting services, debt collection services, insurance services, information services, real property services, data processing services, real property repair and remodeling and security services. Certain items are exempted by State law from sales and use taxes, including items purchased for resale, food products (except food products which are sold for immediate consumption, e.g. by restaurants, lunch counters, etc.), health care supplies (including medicines, corrective lens and various therapeutic appliances and devices), agricultural items (if the item is to be used exclusively on a farm or ranch or in the production of agricultural products), gas and electricity purchased for residential use (unless a city has taken steps to repeal the exemption), certain telecommunications services, newspapers and magazines. In addition, items which are taxed under other State laws are generally exempted from sales taxes. These items include certain natural resources, cement, motor vehicles and insurance premiums. Alcohol and tobacco products are taxed under both State alcohol and tobacco taxes as well as through the sales taxes. In addition, purchases made by various exempt organizations are not subject to the sales and use taxes. Such organizations include the federal and state governments, political subdivisions, Indian tribes, religious institutions and certain charitable organizations and non-profit corporations. Also, State law provides an exemption from sales taxes on items purchased under a contract in effect when the legislation authorizing such tax (or the increase in the rate thereof) is enacted, up to a maximum of three years. In general, a sale of a taxable item is deemed to occur within the municipality, county or special district in which the sale is consummated. The tax levied on the use, storage or consumption of tangible personal property is considered to be consummated at the location where the item is first stored, used or consumed. Thus, the use is considered to be consummated in a municipality, and the tax is levied there if the item is shipped from outside the state to a point within the municipality. In addition to the local sales and use taxes levied, as described above, the State levies and collects a 6.25% sales and use tax against essentially the same taxable items and transactions as the Sales Tax. Under current State law, the maximum aggregate sales and use tax which may be levied within a given area by an authorized political subdivision within such area, including the State, is 8.25%. The current aggregate sales and use tax levied in the City is 8.25% of which 6.25% is levied by the State, 1% is levied by the City, ¼ of 1% is levied for the Euless Crime Control District, ½ of 1% is levied by the Euless Development Corporation (4B) and ¼ of 1% is levied by the by the City for property tax reduction. See Other Sales Taxes below. The Comptroller administers and enforces all sales tax laws and collects all sales and use taxes levied by the State, and levying counties, municipalities and other special districts having sales tax powers. Certain limited items are taxed for the benefit of the State under nonsales tax statutes, such as certain natural resources and other items described above, and are not subject to the sales tax base available to municipalities and counties, including the tax base against which the Sales Tax is levied. Municipalities may by local option determine to tax certain telecommunication services on the same basis as the State taxes such services (some aspects of telecommunication services, such as interstate telephone calls and broadcasts regulated by the FCC are not subject to either State or local taxation). The City has opted to repeal the local telecommunication services exemption. With respect to the taxation of the residential use of gas and electricity, the State is not authorized to collect a sales tax, while municipalities, on a local option basis, may tax such use. The City has opted to tax the residential use of gas and electricity. In recent years, several changes in the State sales tax laws have contributed to the growth of local sales tax revenues. These changes have added additional goods and services to the list of taxable items. Other items have been subjected to sales tax on an interim basis or have been taxed pursuant to legislation which includes planned phase-outs of the tax. With certain exceptions, sales and use taxes in the State are collected at the point of sale and are remitted to the Comptroller by the "taxpayer" who is, generally speaking, the business that collects the tax resulting from a taxable transaction. Taxpayers owing $500 or more sales and use tax dollars in a calendar month submit their tax collections to the Comptroller on a monthly basis; taxpayers owing less than $500 sales and use tax dollars in a calendar month but $1,500 or more in a calendar quarter submit their tax collections quarterly; and taxpayers owing less than $1,500 in a calendar quarter submit their tax collections annually. Taxpayers are required to report and remit to the Comptroller by the 20th day of the month following the end of the reporting period. The reporting period for yearly filers ends each December 31; for quarterly filers, the reporting period ends at the end of each calendar quarter; and monthly filers report and remit by the 20th of each month for the previous month. The Comptroller is required by law to distribute funds to the receiving political subdivisions periodically and as promptly as feasible as but not less frequently than twice during each fiscal year of 15

16 the State. Historically, and at the present time, the Comptroller distributes the funds monthly with the largest payments being made quarterly in February, May, August and November. In 1989, the Comptroller initiated a direct deposit program using electronic funds transfers to expedite the distribution of monthly allocation checks. If a political subdivision desires to participate in the electronic funds transfers, it may make application to the Comptroller. The City participates in this program. Otherwise, the Comptroller mails the monthly allocation check, which is typically received by the middle of the month following the month in which the taxpayer reports and remits payment on the tax. The Comptroller is responsible for enforcing the collection of sales and use taxes in the State. Under State law, the Comptroller utilizes sales tax permits, sales tax bonds and audits to encourage timely payment of sales and use taxes. Each entity selling, renting, leasing or otherwise providing taxable goods or services is required to have a sales tax permit. Permits are required for each individual location of a taxpayer and are valid for only one year, requiring an annual renewal. As a general rule, every person who applies for a sales tax permit for the first time, or who becomes delinquent in paying the sales or use tax, is required to post a bond in an amount sufficient to protect against the failure to pay taxes. The Comptroller's audit procedures include auditing the largest 2% of the sales and use tax taxpayers (who report about 65% of all sales and use tax in the State annually), each every three or four years. Other taxpayers are selected at random or upon some other basis for audits. The Comptroller also engages in taxpayer education programs and mails a report to each taxpayer before the last day of the month, quarter or year that it covers. Once a taxpayer becomes delinquent in the payment of a sales or use tax, the Comptroller may collect the delinquent tax by using one or more of the following methods; (i) collection by an automated collection center or local field office, (ii) estimating the taxpayers' liability based on the highest amount due in the previous 12 months and billing them for it, (iii) filing liens and requiring a new or increased payment bond, (iv) utilizing forced collection procedures such as seizing assets of the taxpayer (e.g., a checking account) or freezing assets of the taxpayer that are in the custody of third parties, (v) removing a taxpayer's sales and use tax permit, and (vi) certifying the account to the Attorney General's Office to file suit for collection. A municipality may not sue for delinquent taxes unless it joins the Attorney General as a plaintiff or unless it first receives the permission of the Attorney General and the Comptroller. The Comptroller retains 2% of the tax receipts for collection of the tax; additionally, under State law, a taxpayer may deduct and withhold 1/2% of the amount of taxes due on a timely return as reimbursement for the cost of collecting the sales and use taxes. In addition, a taxpayer who prepays its tax liability on the basis of a reasonable estimate of the tax liability for a month or quarter in which a prepayment is made, may deduct and withhold 1 1/4% of the amount of the prepayment in addition of the 1/2% allowed for the cost of collecting the sales and use tax. INVESTOR CONSIDERATIONS... The primary source of security for the Bonds will be certain receipts of the Sales Tax received by the City for the benefit of the Corporation. The amount of revenues from the Sales Tax is closely related to the amount of economic activity in the City. Sales and use tax receipts, unlike other taxes levied by municipalities, immediately reflect changes in the economic conditions of a municipality. Historically, the Comptroller has remitted sales and use tax allocation checks to municipalities on a monthly basis, but State law currently requires that such allocation be made at least twice annually and such procedures could change in the future. Additionally, the taxable items and services subject to State and local sales and use taxes are subject to legislative action, and have been changed in recent years by the State Legislature. State law provides that the Sales Tax cannot be levied against any taxable item or service unless such item or service is also subject to the State sales and use tax. In recent years the State Legislature has enacted laws permitting the State, together with its political subdivisions, to levy sales and use taxes of up to 8.25%, which is among the highest sales tax rates in the nation (although the State has no personal or corporate income tax), and the current total sales and use tax rate within the City s boundaries is 8.25% (including State and City taxes as well as the Sales Tax). The rate of the sales and use taxes authorized in the State could be further increased by the State Legislature and the Corporation has no way of predicting any such increase or the effect that would have on the Sales Tax the pledge of which secures the Bonds. State leaders have appointed committees to study methods of achieving greater tax equity within the State's tax system. Any changes which may be enacted by the State Legislature could effect the tax base against which the Sales Tax is levied; and the Corporation, except in certain limited instances described below, has no control over the components of the tax base. Tax receipts received by the Corporation are expected to be subject to seasonal variations and to variations caused by the State laws and administrative practices governing the remittance of sales and use tax receipts which authorize different taxpayers to remit the tax receipts at different times throughout the year. The Sales Tax is collected by the Comptroller and remitted to the City along with other City sales and use tax receipts. The City allocates a portion of the receipts to the Corporation which represents the ½ of 1% tax rate of the Sales Tax. Generally, sales and use taxes in the State are collected at the point of a taxable transaction and remitted by the taxpayer to the Comptroller. The Comptroller has the primary responsibility for enforcing sales and use tax laws and collecting delinquent taxes (see "The Sales Tax Source and Authorization"). The collection efforts of the Comptroller are subject to applicable federal bankruptcy code provisions with respect to the protection of debtors. Changes in the tax base against which a sales and use tax is assessed, as well as changes in the rate of such taxes, make projections of future tax revenue collections very difficult. No independent projections have been made with respect to the revenues available to pay debt service on the Bonds. 16

17 TABLE 2 - HISTORICAL CITY RECEIPTS 1% EQUIVALENT SALES TAX (1) Collections as of July, TABLE 3 - HISTORICAL RECEIPTS OF ½ OF 1% SALES TAX ¼ of 1% ½ of 1% ¼ of 1% Crime Fiscal Euless Property Control and Year Development Tax Prevention Ended Corporation Reduction District 9/30 Sales Tax Sales Tax Sales Tax 2014 $ 4,387,330 $ 2,193,665 $ 2,169, ,595,916 2,297,958 2,274, ,100,060 2,550,030 2,514, ,316,453 2,658,227 2,644, (1) 4,322,402 2,115,227 2,108,240 Month 1/2% Sales Tax 1/2% Sales Tax 1/2% Sales Tax 1/2% Sales Tax 1/2% Sales Tax 1/2% Sales Tax of Collections Collections Collections Collections Collections Collections Receipt Fiscal 2017/18 Fiscal 2016/17 Fiscal 2015/16 Fiscal 2014/15 Fiscal 2013/14 Fiscal 2012/13 October $ 406,714 $ 426,820 $ 409,096 $ 371,451 $ 324,484 $ 310,419 November 499, , , , , ,797 December 401, , , , , ,330 January 385, , , , , ,570 February 477, , , , , ,167 March 382, , , , , ,346 April 286, , , , , ,864 May 503, , , , , ,017 June 422, , , , , ,366 July 417, , , , ,574 August 489, , , , ,512 September 402, , , , ,072 $ 3,765,127 $ 5,293,527 $ 5,049,618 $ 4,458,027 $ 4,272,026 $ 3,966,034 TABLE 4 - CALCULATION OF COVERAGE FOR THE ISSUANCE OF ADDITIONAL OBLIGATIONS (1) Sales Tax Collection for Fiscal Year Ended 9/30/17 $ 5,316,453 Maximum Annual Debt Service Fiscal Year 2019 $ 160,435 Coverage of Maximum Requirements 33.14x Average Annual Debt Service $ 116,319 Coverage of Average Requirements x (1) Includes the Bonds. 17

18 TABLE 5 REVENUE AND EXPENDITURE HISTORY Fiscal Years Ended September 30, Revenues: General Sales Tax $ 5,316,453 $ 5,100,060 $ 4,595,916 $ 4,387,330 $ 4,042,405 Investment Income 9,582 11,102 13,731 11,240 10,129 Other Revenues Total Revenues $ 5,326,035 $ 5,111,162 $ 4,609,647 $ 4,398,570 $ 4,052,534 Expenditures: Culture and Recreation $ 3,146,540 $ 2,893,450 $ 2,794,959 $ 2,616,240 $ 2,105,404 Development Services 204, , , , ,330 General and Administrative 247, , , , ,172 Debt Service 47, , , , ,913 Capital Outlay 61,574 33,773 50,992-19,148 Total Expenditures $ 3,707,865 $ 3,549,514 $ 4,196,679 $ 4,128,105 $ 3,462,967 Excess (Deficiency) of Revenue Over Expenditures 1,618,170 1,561, , , ,567 Proceeds from Sale of Assets $ 95 $ - $ - $ - $ - Transfers In Transfers Out (2,347,844) (1,715,582) (234,629) (50,000) (325,000) Total Other Financing Sources (Uses) $ (2,347,749) $ (1,715,582) $ (234,629) $ (50,000) $ (325,000) Beginning Fund Balance 3,249,817 3,403,751 3,225,412 3,004,947 2,740,380 Ending Fund Balance $ 2,520,238 $ 3,249,817 $ 3,403,751 $ 3,225,412 $ 3,004,947 SELECTED PROVISIONS OF THE RESOLUTION Additional Obligations - Bonds, notes or other evidences of indebtedness which the Corporation reserves the right to issue or enter into, as the case may be, in the future in accordance with the terms and conditions provided in the Resolution and which, together with the Previously Issued Bonds and the Bonds, are equally and ratably secured by a parity pledge of and claim on the Pledged Revenues under the terms of the Resolution and a Supplemental Resolution. Average Annual Debt Service - That amount which, at the time of computation, is derived by dividing the total amount of Debt Service to be paid over a period of years as the same is scheduled to become due and payable by the number of years taken into account in determining the total Debt Service. Capitalized interest payments provided from proceeds of a borrowing of the Corporation shall be excluded in making the aforementioned computation. Board - The Board of Directors of the Corporation. Bonds - The Euless Development Corporation Sales Tax Revenue Bonds, Series 2018, dated October 15, 2018, authorized by the Resolution. Debt Service - As of any particular date of computation, with respect to any obligations and with respect to any period, the aggregate of the amounts to be paid or set aside by the Corporation as of such date or in such period for the payment of the principal of, premium, if any, and interest (to the extent not capitalized) on such obligations; assuming, in the case of obligations without a fixed numerical rate, that such obligations bear, or would have borne, interest at the maximum legal per annum rate applicable to such obligations, and further assuming in the case of obligations required to be redeemed or prepaid as to principal prior to maturity, the principal amounts thereof will be redeemed prior to maturity in accordance with the mandatory redemption provisions applicable thereto. Depository - A commercial bank or other qualified financial institution eligible and qualified to serve as the custodian of the Corporation s monetary accounts and funds. Fiscal Year - The twelve month financial accounting period used by the Corporation ending September 30 in each year, or such other twelve consecutive month period established by the Corporation. 18

19 Government Obligations - (i) direct noncallable obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States, including obligations unconditionally guaranteed or insured by the agency or instrumentality and, on the date of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, (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 of their acquisition or purchase by the Corporation, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (iv) any other then authorized securities or obligations that may be used to defease obligations such as the Bonds under the then applicable laws of the State of Texas. Gross Sales Tax Revenues - All of the revenues or receipts due or owing to, or collected or received by or on behalf of the Corporation by the City or otherwise pursuant to the Act and the election held January 16, 1993, less any amounts due and owed to the Comptroller of Public Accounts of the State of Texas as charges for the collection of the Sales Tax or retention by such Comptroller for refunds and to redeem dishonored checks and drafts, to the extent such charges and retention are authorized or required by law. Outstanding - When used in the Resolution with respect to Bonds or Parity Obligations, as the case may be, means, as of the date of determination, all Bonds and Parity Obligations theretofore sold, issued and delivered by the Corporation, except: (i) those Bonds or Parity Obligations canceled or delivered to the transfer agent or registrar for cancellation in connection with the exchange or transfer of such obligations; (ii) those Bonds or Parity Obligations paid or deemed to be paid in accordance with the provisions of the Resolution or any Supplemental Resolution authorizing the issuance of Additional Obligations; and (iii) those Bonds or Parity Obligations that have been mutilated, destroyed, lost, or stolen and replacement obligations have been registered and delivered in lieu thereof. Parity Obligations - Collectively, the Bonds, the Previously Issued Bonds and Additional Obligations. Pledged Revenues - Collectively (i) Gross Sales Tax Revenues from time to time deposited or owing to the Pledged Revenue Fund and (ii) such other money, income, revenue, receipts or other property as may be specifically dedicated, pledged or otherwise encumbered in a Supplemental Resolution for the payment and security of Parity Obligations. Previously Issued Bonds the outstanding Euless Development Corporation Sales Tax Revenue Refunding Bonds, Series 2012, dated January 1, 2012, issued in the original principal amount of $3,785,000. Required Reserve - The amount required to be accumulated and maintained in the Reserve Fund under the provisions of the Resolution. Sales Tax - The local sales and use tax authorized under the Act, approved at an election held on January 16, 1993, and the effective date for the imposition and application of such Sales Tax within the corporate limits of the City by the Comptroller of Public Accounts of the State of Texas being July 1, 1993, together with any increases in the rate of such Sales Tax authorized and provided by law. Supplemental Resolution - Any resolution of the Board supplementing the Resolution for the purpose of authorizing and providing the terms and provisions of the Bonds or Additional Obligations, or supplementing or amending the Resolution for any other authorized purpose permitted in the Resolution, including resolutions authorizing the issuance of Additional Obligations or pledging and encumbering income, revenues, receipts or property other than the Gross Sales Tax Revenues to the payment and security of the Parity Obligations. Confirmation and Levy of Sales Tax. In the Resolution, the Board represents that the City has duly complied with the provisions of the Act for the levy of the Sales Tax at the rate voted at the election held by and within the City on January 16, 1993, and such Sales Tax is being imposed within the corporate limits of the City and the receipts of such Sales Tax are being remitted to the City by the Comptroller of Public Accounts on a monthly basis. While any Bonds are Outstanding, the Corporation covenants, agrees and warrants to take and pursue all action permissible to cause the Sales Tax, at such rate or at a higher rate if legally permitted, to be levied and collected continuously, in the manner and to the maximum extent permitted by law, and to cause no reduction, abatement or exemption in the Sales Tax or rate of tax below the rate stated, confirmed and ordered in the Resolution to be ordered or permitted while any Bonds shall remain Outstanding. If hereafter authorized by law to apply, impose and levy the Sales Tax on any taxable items or transactions that are not subject to the Sales Tax on the date of the adoption hereof, to the extent it legally may do so, the Corporation agrees to use its best efforts to cause the City to take such action as may be required to subject such taxable items or transactions to the Sales Tax. The Corporation agrees to take and pursue all action legally permissible to cause the Sales Tax to be collected and remitted and deposited as required in the Resolution and as required by the Act, at the earliest and most frequent times permitted by law. 19

20 The Corporation agrees to use its best efforts to cause the City to comply with the Act and shall cause the Gross Sales Tax Revenues to be deposited to the credit of the Pledged Revenue Fund in their entirety immediately upon receipt by the City. In the alternative and if legally authorized, the Corporation shall, by appropriate notice, direction, request or other legal method, use its good-faith efforts to cause the Comptroller of Public Accounts of the State of Texas (the Comptroller ) to pay all Gross Sales Tax Revenues directly to the Corporation for deposit to the Pledged Revenue Fund. Pledge. In the Resolution, the Corporation covenants and agrees that the Pledged Revenues, with the exception of those in excess of the amounts required for the payment and security of the Parity Obligations, are irrevocably pledged to the payment and security of the Previously Issued Bonds, the Bonds and Additional Obligations, if issued, including the establishment and maintenance of the special funds reaffirmed in the Resolution and any Supplemental Resolution, all as provided in the Resolution. In the Resolution, the Corporation resolves that the Parity Obligations shall constitute a lien on the Pledged Revenues in accordance with the terms of the Resolution and any Supplemental Resolution, which lien shall be valid and binding and fully perfected from and after the date of adoption of the Resolution without physical delivery or transfer or transfer of control of the Pledged Revenues, the filing of the Resolution or any other act; all as provided in Chapter 1208 of the Texas Government Code, as amended ( Chapter 1208 ). Chapter 1208 applies to the issuance of the Bonds and the pledge of the Pledged Revenues granted by the Corporation under the Resolution, and such pledge is therefore valid, effective and perfected. If Texas law is amended at any time while the Bonds are Outstanding such that the pledge of the Pledged Revenues granted by the Corporation under the Resolution is to be subject to the filing requirements of Chapter 9, Business and Commerce Code, then in order to preserve to the registered owners of the Bonds the perfection of the security interest in such pledge, the Corporation agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Business and Commerce Code and enable a filing to perfect the security interest in such pledge to occur. Proceeds of Sale. Immediately following the delivery of the Bonds, the proceeds of sale, less amounts to pay costs of issuance, shall be deposited to the credit of the construction fund maintained at a depository bank of the Corporation, and any additional proceeds shall be deposited to the Bond Fund. Pending expenditure for authorized projects and purposes, Bond proceeds may be invested in authorized investments and any investment earnings realized shall be expended for such authorized projects and purposes or, in the event such projects have been completed, deposited in the Bond Fund. Any surplus proceeds of sale of the Bonds, including investment earnings, remaining after completion of all authorized projects or purposes shall be disbursed for payment of costs of issuance or deposited to the credit of the Bond Fund. Pledged Revenue Fund. In the Resolution, the Corporation agrees and covenants to maintain a fund or account at a Depository for the deposit of the Pledged Revenues as received by the Corporation, which fund or account shall be known on the books and records of the Corporation as the Pledged Revenue Fund. All Pledged Revenues deposited to the credit of such Fund shall be accounted for separate and apart from all other revenues, receipts and income of the Corporation and, with respect to the Gross Sales Tax Revenues, the Corporation shall further account for such funds separate and apart from the other Pledged Revenues deposited to the credit of the Pledged Revenue Fund. All Pledged Revenues deposited to the credit of the Pledged Revenue Fund shall be appropriated and expended to the extent required by the Resolution and any Supplemental Resolution for the following uses and in the order of priority shown: First: To the payment of the amounts required to be deposited in the Bond Fund for the payment of Debt Service on the Parity Obligations as the same becomes due and payable; Second: To the payment of the amounts required to be deposited in the Reserve Fund to establish and maintain the Required Reserve in accordance with the provisions of the resolution authorizing the Previously Issued Bonds, the Resolution and any Supplemental Resolution; Third: To the payment of amounts required to be deposited in any other fund or account required by any Supplemental Resolution authorizing the issuance of Parity Obligations; and Fourth: To any fund or account held at any place or places, or to any payee, required by any other resolution of the Board which authorized the issuance of obligations or the creation of debt of the Corporation having a lien on the Pledged Revenues subordinate to the lien created herein on behalf of the Parity Obligations. Any Pledged Revenues remaining in the Pledged Revenue Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other lawful purpose now or hereafter permitted by law. Bond Fund. For the purpose of providing funds to pay the principal of and interest on Parity Obligations, the Corporation agrees and covenants to maintain a separate and special account or fund on the books and records of the Corporation known as the Euless Development Corporation Debt Service Account (the Bond Fund ), and all monies deposited to the credit of such Fund shall be held in a special banking fund or account maintained at a Depository of the Corporation. In the Resolution, the Corporation covenants there shall be deposited into the Bond Fund prior to each principal and interest payment date from the Pledged Revenues an amount equal to one hundred per centum (100%) of the interest on and the principal of the Bonds then falling due and payable, 20

21 and such deposits to pay principal and accrued interest on the Bonds shall be made in substantially equal monthly installments on or before the 20th day of each month, beginning on or before the 20th day of the month next following the delivery of the Bonds to the initial purchasers. The required deposits to the Bond Fund for the payment of principal of and interest on the Bonds shall continue to be made as hereinabove provided until (i) the total amount on deposit in the Bond Fund and Reserve Fund is equal to the amount required to fully pay and discharge all Parity Obligations (principal and interest) then Outstanding or (ii) the Bonds are no longer Outstanding. Reserve Fund. The Corporation agrees and covenants to maintain on the books and records of the Corporation a separate and special fund or account to be known as the Reserve Account (the Reserve Fund ), which fund or account shall be a special banking fund maintained at the Paying Agent/Registrar; provided, however, at such time as the Previously Issued Bonds are no longer outstanding, the Reserve Fund shall be maintained at a Depository. All Pledged Revenues deposited to the credit of such fund or account shall be used solely for the payment of the principal of and interest on the Parity Obligations when (whether at maturity, upon a redemption date or any interest payment date) other funds available for such purposes are insufficient, and, in addition, may be used to the extent not required to maintain the Required Reserve, to pay, or provide for the payment of, the final principal amount of a series of Parity Obligations so that such series of Parity Obligations is no longer deemed to be Outstanding as such term is defined herein. In accordance with the provisions of the resolution authorizing the Previously Issued Bonds, the total amount currently on deposit in the Reserve Fund is $99, (the Current Reserve ). As a result of the issuance of the Bonds, the total amount required to be deposited to the credit of the Reserve Fund is $160, (the "Required Reserve"), which amount is equal to the lesser of (i) the Average Annual Debt Service (calculated on a Fiscal Year basis) for all Parity Obligations currently Outstanding (after giving effect to the issuance of the Bonds) and (ii) the maximum amount that can be invested without restriction as to yield in a reasonably required reserve fund pursuant to Subsection (d) of Section 148 of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder, as determined on the date the Bonds are to be delivered to the initial purchasers. The Corporation agrees to cause to be deposited to the credit of the Reserve Fund on or before the 20th day of each month, beginning the month next following the delivery of the Bonds until the Required Reserve has been fully accumulated, monthly deposits of not less than 1/36th of the difference between the Required Reserve and the Current Reserve. As and when Additional Obligations are delivered or incurred, the Required Reserve shall be increased, if required, to an amount equal to the lesser of either (i) the maximum annual Debt Service (calculated on a Fiscal Year basis) for all Parity Obligations then Outstanding (after giving effect to the issuance of the Additional Obligations), as determined on the date each series of Additional Obligations are delivered or incurred, as the case may be, or (ii) the maximum amount that can be invested without restriction as to yield in a reasonably required reserve fund pursuant to Subsection (d) of Section 148 of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. Any additional amount required to be accumulated and maintained in the Reserve Fund shall be accumulated by the deposit to the credit of the Reserve Fund of all or any part in cash immediately after the delivery of the then proposed Additional Obligations, or, at the option of the Corporation, by the deposit of monthly installments, made on or before the 20th day of each month following the month of delivery of the then proposed Additional Obligations, of not less than 1/36th of the additional amount to be maintained in such Fund by reason of the issuance of the Additional Obligations then being issued (or 1/36th of the balance of the additional amount not deposited immediately in cash). The Corporation may, at its option, from time to time, recalculate the maximum annual Debt Service for all Parity Obligations then Outstanding as of the date of such calculation and determine a new Required Reserve as of such date. While the cash and investments in the Reserve Fund total not less than the Required Reserve, no deposits need be made to the credit of the Reserve Fund; but, if and when the Reserve Fund at any time contains less than the Required Reserve, the Corporation covenants and agrees to cure the deficiency in the Required Reserve by resuming monthly deposits to such Fund from the Pledged Revenues; such monthly deposits to be in amounts equal to not less than 1/36th of the then total Required Reserve to be maintained in such Fund and to be made on or before the 20th day of each month until the total Required Reserve then required to be maintained in such Fund has been fully restored. The Corporation further covenants and agrees that the Pledged Revenues shall be applied and appropriated and used to establish and maintain the Required Reserve and to cure any deficiency in such amounts as required by the terms of the Resolution and any Supplemental Resolution. During such time as the Reserve Fund contains the total Required Reserve, the Corporation may, at its option, withdraw all surplus in the Reserve Fund in excess of the Required Reserve and deposit such surplus in the Pledged Revenue Fund. Payment of Bonds. While any of the Bonds are Outstanding, the Treasurer of the Corporation (or other designated financial officer of the Corporation) shall cause to be transferred to the Paying Agent/Registrar, from funds on deposit in the Bond Fund, and, if necessary, in the Reserve Fund, amounts sufficient to fully pay and discharge promptly as each installment of interest and principal of the Bonds accrues or matures; such transfer of funds to be made in such manner as will cause immediately available funds to be deposited with the Paying Agent/Registrar for the Bonds at the close of the business day next preceding the date of payment for the Bonds. Deficiencies. If on any occasion there shall not be sufficient Pledged Revenues to make the required deposits into the Bond Fund or Reserve Fund, such deficiency shall be cured as soon as possible from the next available Pledged Revenues, or from any other sources available for such purpose. 21

22 Investments - Security of Funds. Money in any Fund required to be maintained pursuant to the Resolution may, at the option of the Corporation, be invested in obligations and in the manner prescribed by the Public Funds Investment Act of 1987 (Texas, Government Code, Chapter 2256), including investments held in book entry form; provided that all such deposits and investments shall be made in such a manner that the money required to be expended from any Fund will be available at the proper time or times and provided further the maximum stated maturity for any investment acquired with money deposited to the credit of the Reserve Fund shall be limited to five (5) years from the date of the investment of such money. Such investments shall be valued in terms of current market value within 45 days of the close of each Fiscal Year and, with respect to investments held for the account of the Reserve Fund, within 45 days of the date of passage of each authorizing document of the Board pertaining to the issuance of Additional Obligations. All interest and income derived from deposits and investments in the Bond Fund immediately shall be credited to, and any losses debited to, the appropriate account of the Bond Fund. All interest and interest income derived from deposits in and investments of the Reserve Fund shall, subject to the limitations provided in the Resolution, be credited to and deposited in the Pledged Revenue Fund. All such investments shall be sold promptly when necessary to prevent any default in connection with the Parity Obligations. Money deposited to the credit of the Pledged Revenue Fund, Bond Fund and Reserve Fund, to the extent not invested and not otherwise insured by the Federal Deposit Insurance Corporation or similar agency, shall be secured by a pledge of direct obligations of the United States of America, or obligations unconditionally guaranteed by the United States of America. Issuance of Additional Obligations. Subject to the provisions hereinafter appearing as to conditions precedent which must be satisfied, the Corporation reserves the right to issue, from time to time as needed, Additional Obligations for any lawful purpose. Such Additional Obligations may be issued in such form and manner as the Corporation shall determine, provided, however, prior to issuing or incurring such Additional Obligations, the following conditions precedent for the authorization and issuance of the same are satisfied, to wit: (1) The Treasurer of the Corporation (or other officer of the Corporation then having the primary responsibility for the financial affairs of the Corporation) shall have executed a certificate stating that, to the best of his or her knowledge and belief, the Corporation is not then in default as to any covenant, obligation or agreement contained in the Resolution or a Supplemental Resolution. (2) The Corporation has secured from a certified public accountant a certificate or opinion to the effect that, according to the books and records of the Corporation, the Gross Sales Tax Revenues received by the Corporation for either (i) the last completed Fiscal Year next preceding the adoption of the Supplemental Resolution authorizing the issuance of the proposed Additional Obligations or (ii) any twelve (12) consecutive months out of the previous eighteen (18) months next preceding the adoption of the Supplemental Resolution authorizing the Additional Obligations were equal to not less than (i) 1.50 times the Average Annual Debt Service for all Parity Obligations then Outstanding after giving effect to the issuance of the Additional Obligations then being issued and (ii) 1.35 times the maximum annual Debt Service for all Parity Obligations then Outstanding after giving effect to the issuance of the Additional Obligations then being issued. (3) The Required Reserve to be accumulated and maintained in the Reserve Fund is increased to the extent required by the Resolution. Refunding Bonds. The Corporation reserves the right to issue refunding bonds to refund all or any part of the Parity Obligations (pursuant to any law then available) upon such terms and conditions as the Board may deem to be in the best interest of the Corporation, and if less than all such Parity Obligations then Outstanding are refunded, the conditions precedent prescribed (for the issuance of Additional Obligations) set forth in the Resolution shall be satisfied, and shall give effect to the refunding. Subordinate Lien Debt. Except as may be limited by a Supplemental Resolution, the Corporation shall have the right to issue or create any debt payable from or secured by a lien on all or any part of the Pledged Revenues for any lawful purpose without complying with the provisions of the Resolution, provided the pledge and the lien securing such debt is subordinate to the pledge and lien established, made and created in the Resolution with respect to the Pledged Revenues to the payment and security of the Parity Obligations. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) 22

23 INVESTMENTS The Euless Development Corporation is a nonprofit corporation acting on behalf of the City and is subject to the provisions of the Public Funds Investment Act (Texas Government Code, Ch. 2256) with respect to the investment of its funds. The Corporation invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the City Council of the City. Both state law and the Corporation s investment policies are subject to change. LEGAL INVESTMENTS... Available City funds are invested as authorized by Texas law and in accordance with investment policies approved by the City Council. Both State law and the City s investment policies are subject to change. Under State 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 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 are unconditionally guaranteed or insured by or backed by the full faith and credit of, the State or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States; (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) interest-bearing banking deposits that are guaranteed or insured by the Federal Deposit Insurance Corporation or its successor or the National Credit Union Share Insurance Fund or its successor, (8) certificates of deposit and share certificates (i) issued by or through an institution that either has its main office or a branch office in the State of Texas, and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Insurance Fund, or are secured as to principal by obligations described in the clauses (1) through (6) or in any other manner and amount provided by law for City deposits, or (ii) where (a) the funds are invested by the City through (I) a broker that has its main office or a branch office in the State of Texas and is selected from a list adopted by the City as required by law or (II) a depository institution that has its main office or a branch office in the State of Texas that is selected by the City; (b) the broker or the depository institution selected by the City arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located, for the account of the City; (c) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States, and (d) the City appoints the depository institution selected under (a) above, a custodian as described by Section (d) of the Texas Government Code, or a clearing broker-dealer registered with the Securities and Exchange Commission and operating pursuant to Securities and Exchange Commission Rule 15c3-3 (17 C.F.R. Section c3-3) as custodian for the City with respect to the certificates of deposit; (9) fully collateralized repurchase agreements that have a defined termination date, are fully secured by a combination of cash and obligations described in clause (1) which are pledged to the City, held in the City s name, and deposited at the time the investment is made with the City or with a third party selected and approved by the City and are placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in the State; (10) securities lending programs if (i) the securities loaned under the program are 100% collateralized, a loan 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) above, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm at not less than A or its equivalent or (c) cash invested in obligations described in clauses (1) through (6) above, clauses (12) through (14) below, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the City, held in the City's name 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; and (iv) the agreement to lend securities has a term of one year or less, (11) 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 recognized credit rating agency, (12) commercial paper with a stated maturity of 270 days or less that is rated at least A-1 or P-1 or 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, (13) no-load money market mutual funds registered with and regulated by the Securities and Exchange Commission that comply with federal Securities and Exchange Commission Rule 2a-7, and (14) no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, and have a duration of one year or more and are invested exclusively in obligations described in this paragraph or have a duration of less than one year and the investment portfolio is limited to investment grade securities, excluding asset-backed securities. In addition, 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 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 or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAA-m or an equivalent by at least one nationally recognized rating service. The City may also contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b- 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 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 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 23

24 greater than 10 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. 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 maturity of any individual investment, methods to monitor the market price of investments acquired with public funds, a requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus payment basis, and procedures to monitor rating changes in investments acquired with public funds and the liquidation of such investments consistent with the PFIA. All City funds must be invested consistent with a formally adopted Investment Strategy Statement that specifically addresses each funds investment. Each Investment 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 (6) yield. 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 for 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, the ending market value and the fully accrued interest for the reporting period of each pooled fund group, 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 strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council. ADDITIONAL PROVISIONS... Under State law, the City is additionally required to: (1) annually review its adopted policies and strategies; (2) adopt a rule, order, ordinance or resolution stating that it has reviewed its investment policy and investment strategies and records any changes made to either its investment policy or investment strategy in the respective rule, order, ordinance or resolution; (3) 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; (4) require the qualified representative of firms offering to engage in an investment transaction with the City to: (a) receive and review the City s investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the City and the business organization that are not authorized by the City s investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the City s entire portfolio or requires an interpretation of subjective investment standards), and (c) deliver a written statement in a form acceptable to the City and the business organization attesting to these requirements; (5) perform an annual audit of the management controls on investments and adherence to the City s investment policy; (6) provide specific investment training for the Treasurer, chief financial officer and investment officers; (7) 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 purchase agreement; (8) restrict the investment in no-load mutual funds in the aggregate to no more than 15% of the City s monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; (9) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements; and (10) at least annually review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the City. CURRENT INVESTMENTS... As of July 31, 2018 the following percentages of the Corporation s investible funds were invested in the following categories: Book Market % Type of Investment Value Value of Portfolio U.S. Government Agencies $ 2,000,000 $ 1,997, % TexPool Money Market Pool 412, , % TexStar Money Market Pool (1) 363, , % Bank of Texas Certificates of Deposit 41,000 40, % $ 2,816,953 $ 2,814, % 24

25 TAX MATTERS TAX EXEMPTION... The delivery of the Bonds is subject to the opinion of Bond Counsel to the effect that interest on the Bonds for federal income tax purposes (1) will be excludable from gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date of such opinion (the Code ), pursuant to section 103 of the Code and existing regulations, published rulings, and court decisions, and (2) will not be included in computing the alternative minimum taxable income of the owners thereof who are individuals or, except as hereinafter described, corporations. A form of Bond Counsel s opinion is reproduced as Appendix C. The statutes, regulations, rulings, and court decisions on which such opinion is based are subject to change. For taxable years that began before January 1, 2018, interest on the Bonds owned by a corporation will be included in such corporation s adjusted current earnings for purposes of computing the alternative minimum tax on such corporation, other than an S corporation, a qualified mutual fund, a real estate investment trust, a real estate mortgage investment conduit, or a financial asset securitization investment trust ( FASIT ). The alternative minimum tax on corporations has been repealed for taxable years beginning on or after January 1, In rendering the foregoing opinion, Bond Counsel will rely upon representations and certifications of the Corporation made in a certificate dated the date of delivery of the Bonds pertaining to the use, expenditure, and investment of the proceeds of the Bonds and will assume continuing compliance by the Corporation with the provisions of the Resolution subsequent to the issuance of the Bonds. The Resolution contains covenants by the Corporation with respect to, among other matters, the use of the proceeds of the Bonds and the facilities financed therewith by persons other than state or local governmental units, the manner in which the proceeds of the Bonds are to be invested, the periodic calculation and payment to the United States Treasury of arbitrage profits from the investment of proceeds, and the reporting of certain information to the United States Treasury. Failure to comply with any of these covenants may cause interest on the Bonds to be includable in the gross income of the owners thereof from the date of the issuance of the Bonds. Bond Counsel s opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the Corporation described above. No ruling has been sought from the Internal Revenue Service (the IRS ) with respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel s opinion is not binding on the IRS. The IRS has an ongoing program of auditing the tax-exempt status of the interest on tax-exempt obligations. If an audit of the Bonds is commenced, under current procedures the IRS is likely to treat the Corporation as the taxpayer, and the owners of the Bonds would have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt status of the interest on the Bonds, the Corporation may have different or conflicting interests from the owners of the Bonds. Public awareness of any future audit of the Bonds could adversely affect the value and liquidity of the Bonds during the pendency of the audit, regardless of its ultimate outcome. Except as described above, Bond Counsel expresses no other opinion with respect to any other federal, state or local tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Bonds. Prospective purchasers of the Bonds should be aware that the ownership of tax-exempt obligations such as the Bonds may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a FASIT, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances. Existing law may change to reduce or eliminate the benefit to bondholders of the exclusion of interest on the Bonds from gross income for federal income tax purposes. Any proposed legislation or administrative action, whether or not taken, could also affect the value and marketability of the Bonds. Prospective purchasers of the Bonds should consult with their own tax advisors with respect to any proposed or future changes in tax law. TAX ACCOUNTING TREATMENT OF DISCOUNT AND PREMIUM ON CERTAIN BONDS... The initial public offering price of certain Bonds (the Discount Bonds ) may be less than the amount payable on such Bonds at maturity. An amount equal to the difference between the initial public offering price of a Discount Bond (assuming that a substantial amount of the Discount Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such Discount Bond. A portion of such original issue discount allocable to the holding period of such Discount Bond by the initial purchaser will, upon the disposition of such Discount Bond (including by reason of its payment at maturity), be treated as interest excludable from gross income, rather than as taxable gain, for federal income tax purposes, on the same terms and conditions as those for other interest on the Bonds described above under Tax Exemption. Such interest is considered to be accrued actuarially in accordance with the constant interest method over the life of a Discount Bond, taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount Bond and generally will be allocated to an initial purchaser in a different amount from the amount of the payment denominated as interest actually received by the initial purchaser during the tax year. 25

26 However, such interest may be required to be taken into account in determining the alternative minimum tax on corporations for taxable years that began before January 1, 2018, and the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a FASIT, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Moreover, in the event of the redemption, sale or other taxable disposition of a Discount Bond by the initial owner prior to maturity, the amount realized by such owner in excess of the basis of such Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Bond was held) is includable in gross income. Owners of Discount Bonds should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Bonds. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. The initial public offering price of certain Bonds (the Premium Bonds ) may be greater than the amount payable on such Bonds at maturity. An amount equal to the difference between the initial public offering price of a Premium Bond (assuming that a substantial amount of the Premium Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes premium to the initial purchaser of such Premium Bonds. The basis for federal income tax purposes of a Premium Bond in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Bond. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser s yield to maturity. Purchasers of the Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Bonds. CONTINUING DISCLOSURE OF INFORMATION In the Resolution, the Corporation has made the following agreement for the benefit of the registered and beneficial owners of the Bonds. The Corporation is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the agreement, the Corporation will be obligated to provide certain updated financial information and operating data annually, and timely notice of certain events, to the Municipal Securities Rulemaking Board (the MSRB ). ANNUAL REPORTS... The Corporation shall provide annually to the MSRB (1) within six months after the end of each fiscal year ending in or after 2018, financial information and operating data with respect to the Corporation of the general type of information contained in Tables 1 through 5 hereof and (2) within twelve months after the end of each fiscal year ending in or after 2018, audited financial statements of the City. If the audit of such financial statements is not complete within twelve months after any such fiscal year end, the Corporation shall file unaudited financial statements of the City within such twelve month period and audited financial statements for the applicable fiscal year, when and if the audit report on such statements becomes available. The financial information and operating data to be provided may be set forth in full in one or more documents or may be included by specific reference to any document available to the public on the MSRB s Internet Web site or filed with the Securities and Exchange Commission (the SEC ), as permitted by SEC Rule 15c2-12 (the Rule ). The updated information will include audited financial statements, if the City commissions an audit and it is completed by the required time. Any such financial statements will be prepared in accordance with the accounting principles the City is required to employ from time to time pursuant to State law or regulation. The City s and the Corporation s current fiscal year end is September 30. Accordingly, it must provide updated information the tables described above by March 31 in each year and the City s audit by September 30 in each year, unless the Corporation changes its fiscal year. If the Corporation changes its fiscal year, it will notify the MSRB of the change. NOTICE OF CERTAIN EVENTS The Corporation will also provide timely notices of certain events to the MSRB. The Corporation will provide notice of any of the following events with respect to the Bonds to the MSRB in a timely manner (but not in excess of ten business days after the occurrence of the event): (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (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, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the Bonds, or 26

27 other material events affecting the tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) Bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership, or similar event of the Corporation, which shall occur as described below; (13) the consummation of a merger, consolidation, or acquisition involving the Corporation or the sale of all or substantially all of its assets, other than in the ordinary course of business, the entry into of a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. In addition, the Corporation will provide timely notice of any failure by the Corporation to provide annual financial information in accordance with their agreement described above under Annual Reports. For these purposes, any event described in clause (12) in the immediately preceding paragraph is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Corporation in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Corporation, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Corporation. AVAILABILITY OF INFORMATION... In connection with its continuing disclosure agreement entered into with respect to the Bonds, the Corporation will file all required information and documentation with the MSRB in electronic format in accordance with MSRB s guidelines. Access to such filings will be provided, without charge to the general public, by the MSRB at LIMITATIONS AND AMENDMENTS... The Corporation has agreed to update information and to provide notices of certain specified events only as described above. The Corporation 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 Corporation 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 Corporation 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 registered and beneficial owners of Bonds may seek a writ of mandamus to compel the Corporation to comply with its agreement. The Corporation 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, or a change in the identity, nature, status, or type of operations of the Corporation, if (i) the agreement, as amended, would have permitted an Initial Purchaser to purchase or sell Bonds 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 registered and beneficial owners of a majority in aggregate principal amount of the outstanding Bonds consent to the amendment or (b) any person unaffiliated with the Corporation (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the registered and beneficial owners of the Bonds. The Corporation may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an Initial Purchaser from lawfully purchasing or selling Bonds in the primary offering of the Bonds. If the Corporation 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 5 years, the Corporation has had no continuing disclosure requirement. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) 27

28 OTHER INFORMATION RATINGS The Bonds have been rated Aa2 Moody s Investor Services ( Moody s ), without credit enhancement. An explanation of the significance of such rating may be obtained from the company furnishing the rating. The rating reflects only the view of such organization and the Corporation makes no representation as to the appropriateness of the rating. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such rating company, if in the judgment of the company, circumstances so warrant. Any such downward revision or withdrawal of such rating, may have an adverse effect on the market price of the Bonds. LITIGATION It is the opinion of the Corporation s Attorney and City Staff that there is no pending litigation against the Corporation that would have a material adverse financial impact upon the Corporation 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 reliance 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 Bonds been qualified under the securities acts of any jurisdiction. The Corporation 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 IN TEXAS Section of the Public Security Procedures Act (Texas Government Code, Chapter 1201, as amended) provides the Bonds are (i) negotiable instruments, (ii) investment securities to which Texas Business and Commerce Code, as amended, applies and (iii) legal and authorized investments for insurance companies, fiduciaries or trustees and sinking funds of municipalities or other political subdivisions or public agencies of the State. The Texas Finance Code also contains provisions that, subject to a prudent investor standard, provide for the Bonds to be legal investments for state banks, savings banks, trust companies with capital of one million dollars or more, and savings and loan associations. For the Bonds to be an eligible investments for municipalities, political subdivisions or public agencies of the State, the Public Funds Investment Act, Texas, Government Code, Chapter 2256, as amended, provides that a rating of not less than A or its equivalent as to investment quality must be assigned by a nationally recognized investment rating agency. Furthermore, the Bonds are eligible to secure the 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. The Corporation made no investigation of other laws, rules, regulations or investment criteria which might apply to such institutions or entities or which might limit the suitability of the Bonds for any of the foregoing purposes or limit the authority of such institutions or entities to purchase or invest in the Bonds for such purposes. LEGAL OPINIONS AND NO LITIGATION CERTIFICATE The Corporation will furnish the 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 Bond and to the effect that the Bonds are valid and legally binding obligations of the Corporation 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 of the Corporation as described under OTHER INFORMATION - Certification of the Official Statement will also be furnished to the Purchasers. Though it represents the Financial Advisor and investment banking firms such as the Purchaser from time to time in matters unrelated to the issuance of the Bonds, Bond Counsel has been engaged by and only represents the Corporation in connection with the issuance of the Bonds. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Notice of Sale and Bidding Instructions, the Official Bid Form and 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 describing the Bonds in the Official Statement to verify that such description conforms to the provisions of the Resolution. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Bonds is contingent on the sale and delivery of the Bonds. 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 attorney does not become an insurer or 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 any legal dispute that may arise out of the transaction. 28

29 AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records, audited financial statements and other sources that are believed to be reliable. There is no guarantee that any of the assumptions or 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. FINANCIAL ADVISOR Hilltop Securities Inc. is employed as Financial Advisor to the Corporation in connection with the issuance of the 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. Hilltop Securities Inc., in its capacity as Financial Advisor, 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 Bonds, or the possible impact of any present, pending or 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 Corporation for the investment of bond proceeds or other funds of the Corporation upon the request of the Corporation. The Financial Advisor to the Corporation has provided the following sentence for inclusion in this Official Statement. The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the Corporation 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. FORWARD-LOOKING STATEMENTS DISCLAIMER The statements contained in this Official Statement, and in any other information provided by the Corporation, that are not purely historical, are forward-looking statements, including statements regarding the Corporation'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 Corporation on the date hereof, and the Corporation assumes no obligation to update any such forward-looking statements. The Corporation'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 possible 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 Corporation. 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. INITIAL PURCHASER After requesting competitive bids for the Bonds, the Corporation accepted the bid of Robert W. Baird & Co., Inc. (the Purchaser or Initial Purchaser ) to purchase the Bonds at the interest rates shown on the (inside) cover page of the Official Statement at a price of par plus a cash premium (if any) of $16, The Initial Purchaser can give no assurance that any trading market will be developed for the Bonds after their sale by the Corporation to the Initial Purchaser. The Corporation has no control over the price at which the Bonds are subsequently sold and the initial yields at which the Bonds will be priced and reoffered will be established by and will be the responsibility of the Initial Purchaser. CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and delivery of the Bonds, the Corporation will furnish the Purchaser a certificate, executed by an authorized representative of the Corporation, acting in such person s representative capacity, to the effect that to the best of such person s knowledge and belief: (a) the descriptions and statements of or pertaining to the Corporation contained in the Official Statement, and any addenda, supplement or amendment thereto, on the date of the Official Statement, on the date of sale of the 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 Corporation and its affairs, including its financial affairs, are concerned, the 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 light of the circumstances under which they were made, not misleading in any material respect; (c) insofar as the descriptions and statements, including financial data, of or pertaining to entities, other than the Corporation, and their activities contained in the Official Statement are concerned, such statements and data have been obtained from sources which 29

30 the Corporation believes to be reliable and the Corporation 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 Corporation since the date of the last audited financial statements of the Corporation. The Resolution authorizing the issuance of the Bonds also approved the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorized its further use in the reoffering of the Bonds by the Purchaser. LORETTA GETCHELL President Euless Development Corporation 30

31 APPENDIX A GENERAL INFORMATION REGARDING THE CITY

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33 THE CITY LOCATION/POPULATION... The City of Euless (the City ) is located in North Central Texas in Northeast Tarrant County approximately 16 miles west of Dallas and 16 miles east of Fort Worth. The City is readily accessible by Texas Highway 183 which is a six-lane expressway linking Dallas to Fort Worth. Other major highways through the City include State Highway 121, State Highway 360, State Highway 10 and Farm-to-Market Road 157. The City s centralized location provides quick access to both the Dallas and Fort Worth metropolitan areas and is adjacent to Dallas-Fort Worth International Airport ( DFW Airport ), the tenth busiest airport in the World according to Airports Council International. The City is approximately 16.9 square miles and serves a population of approximately 55,170. TRANSPORTATION... Dallas-Fort Worth International Airport provides the City with available service from all major airlines with connecting routes to all major domestic destinations as well as numerous international locales. ECONOMIC OUTLOOK... The City of Euless is located in the heart of the Dallas/Fort Worth ( DFW ) Metroplex adjacent to DFW Airport. Thus, the economic vitality of the region significantly impacts the economic health of the City. DFW Airport serves more than 65 million passengers a year, provides in excess of 228,000 full time jobs, and is attributed with $37 billion in economic activity across North Texas (SOURCE: DFW website DFW Fast Facts). DFW s strategic central location and diverse economy are major factors contributing to businesses relocating to the area making it one of the fastest-growing economic regions in the country. In addition, Tarrant County is one of the fastest growing counties in Texas. DFW is the largest metropolitan area in Texas and has sustained tremendous growth during the past decade. DFW has a highlydiversified economy with thousands of businesses, hundreds of regional and corporate headquarters, 22 Fortune 500 Companies, and a total workforce for the Metroplex topping 3.5 million. Such economic diversity has helped the region weather economic downturns in key sectors better than other regions in the Nation. (SOURCE: North Texas Commission Profile of North Texas 2017). The AllianceTexas development in North Fort Worth is an 18,000-acre master-planned, mixed-use community which is home to more than 425 companies, 44,000 employees, thousands of single-family home options, and is anchored by the inland port known as the Alliance Global Logistics Hub. Fort Worth s Alliance Airport is the first purely industrial airport in the Western Hemisphere and is the cornerstone for the nation s fastest growing industrial complex. The AllianceTexas area offers a variety of commercial real estate options, industrial space, office space and retail and contributed over $4.32 billion in 2014 to the local economy (SOURCE: Alliance Texas Facts). The City receives a significant amount of revenue from a consolidated rental car facility at DFW Airport. The City Council has chosen to utilize this funding source to build reserves and to cash flow capital projects in lieu of debt issuance. Doing so has allowed the City to refrain from becoming overly dependent on a volatile resource while providing needed improvements for citizens. The City of Euless has approximately 614 acres of undeveloped land outside of DFW Airport. State Highway 360, which lies off the eastern border of the City, was expanded thereby providing greater access to undeveloped areas along this highway. Also, the construction of the Dallas Cowboys AT&T Stadium in Tarrant County, with close proximity to Euless, has attracted additional tourism to the City. The City of Euless continues to seek new development and redevelopment opportunities. During the past few years, the City has realized new commercial, industrial, residential, and multi-family developments. The City of Euless continues to focus on bringing quality sustainable development to the area. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) A-1

34 The following table shows the leading employers in the City: The City Company Product or Service Employees LSG Sky Chefs, Inc. Airline Food & Beverage 900 HEB ISD Education 809 Autogrill Group, Inc. Contract Foodservice 450 City of Euless M unicipality 386 Redi-Mix Concrete Concrete Manufacturing 187 Life Outreach International Religious Organization 186 Super Target Retail 175 Lowe's Retail 160 Legend Oaks Healthcare Nursing Home 145 Lazy Dog Restaurant 125 The City also benefits from a well-educated workforce, with a graduation rate of 95.9% in 2017 in the Hurst-Euless-Bedford School District (SOURCE: HEB ISD Quick Facts). In addition, the City s median household income of $58,606 compares favorably to $54,727 for the State of Texas (SOURCE: U.S. Census Bureau). HURST-EULESS-BEDFORD INDEPENDENT SCHOOL DISTRICT... Public education in the City is primarily provided by the Hurst- Euless-Bedford Independent School District. The district operates twenty elementary, five junior high schools, two senior high schools, a career education center, a transition center, and a special education school in the district. Student enrollment during the school year is 23,300. (SOURCE: HEB ISD Quick Facts). COLLEGES AND UNIVERSITIES... The City's proximity to Dallas and Fort Worth gives its residents ready access to a number of colleges and universities. A few of these are Southern Methodist University, Dallas Baptist University, and University of Dallas (Dallas); Texas Christian University, Texas Wesleyan University, and four campuses of the Tarrant County College System (in Fort Worth, Arlington, and Hurst); The University of Texas at Arlington (Arlington); and The University of North Texas and Texas Woman's University (Denton). Vocational-technical education programs are also available. MISCELLANEOUS... The City is served by three area hospitals and multiple clinics. In addition, extensive medical facilities are available across the Dallas/Fort Worth Metroplex region. There are seventeen public parks totaling 345 acres and one library in the City. Additional outdoor recreational facilities include one swimming pool, an aquatics park, 4.35 miles of paved trails, 2.75 miles of unpaved trails, four sand volleyball courts, 15 playgrounds, a splash pad, two fishing piers, 30 athletic fields, six pavilions, four gazebos, two outdoor basketball courts, four tennis courts, and three outdoor amphitheaters. Indoor recreational facilities include a 35,000 square foot recreation center with a 5,000 square foot fitness center, a 35,000 square foot senior center, over 12,000 square feet of rental facility, an almost 2,000 square foot museum, a 1,500 square foot log house, and one indoor pool. In the spring of 1997, the City of Euless opened Texas Star Golf Course designed by Keith Foster. Strategically designed and developed around a natural flowing creek, the course features Mini Verde greens, rolling hills, stacked rock ponds, waterfalls, natural woodlands, and century old trees. The 18 hole, 275 acre course is a recipient of the coveted 4½ Star rating from Golf Digest magazine. In addition to a full-service retail pro shop and a 4,000 square foot outdoor pavilion, other facilities at Texas Star include Raven s Grille, a full-service 100-seat restaurant, and a state of the art Conference Centre. With seating capacity for up to 325 guests, the Conference Centre provides the perfect location for weddings, social occasions, and corporate events. In the spring of 2000, the City purchased the Dr. Pepper Stars Center, a 96,000 square foot community ice skating facility that features two ice rinks, seating for 850 spectators, a concession area, and multi-purpose rooms for meetings, birthday parties, and other special functions. The facility is operated by the Dallas Stars Hockey Club. Over the past several years, the City of Euless has made great progress in completing the multi-year facility plan. With the completion of a new police and courts facility in 2001, the old police station was renovated to accommodate several departments including information services, purchasing, and fire administration. Additionally, the City constructed a new parks maintenance facility and greenhouse. In 2005, the City completed a total renovation of City Hall, including a new state-of-the-art City Council chamber and constructed a new fire station to serve the citizens in the southeast portion of the City.

35 In 2006, the remodel and renovation of the finance building provided additional office space and enhanced security for the finance department, the utility billing office, and human resources. The following year, the City constructed a new Public Works facility, which allowed the City to move all operations from their previous location within the city limits of Bedford, to a more centralized location within the City s boundaries. In 2009, the City completed a 26,000 square foot regional headquarter and training facility for Redi-Mix Concrete which provided job retention within the City and is of continuing and substantial economic benefit to the City of Euless. In 2010, the City remodeled and expanded the Midway Recreation Center into the Euless Family Life Center (EFLC) to include additional space for youth and adult classes, a new fitness center and aerobics area, additional space for pre-school activities, and a dedicated space for teens. In addition, the City constructed a new 35,000 square foot senior citizen center including approximately 5,000 square feet of multi-use space adjacent to the EFLC. This facility offers several classrooms, a ballroom, a game room, and other common areas for senior activities. In 2013 the City opened the outdoor portion of EFLC Aquatic Park and the indoor portion of the facility opened during the winter of The outdoor facility includes play components, shade structures, a bath house, and filtration equipment. The multi-purpose indoor facility is attached to the senior center and offers programs for the senior population as well as general population. In 2017 the City completed the remodel and renovation of the development/engineering building and is in the construction phase of a library remodel. EMPLOYMENT Employment statistics for the City and Tarrant County are as follows: Annual Average City of Euless 2018 (1) Civilian Labor Force 31,777 31,048 30,319 29,901 30,213 Total Employment 30,617 29,943 29,156 28,768 28,744 Unemployed 1,160 1,105 1,163 1,133 1,469 Percent Unemployed 3.7% 3.6% 3.8% 3.8% 4.9% Annual Average Tarrant County 2018 (1) Civilian Labor Force 1,055,792 1,033,317 1,009, , ,015 Total Employment 1,017, , , , ,186 Unemployed 38,048 37,978 40,130 41,169 49,829 Percent Unemployed 3.6% 3.7% 4.0% 4.2% 5.0% Source: Texas Employment Commission, Austin, Texas. (1) Averages through July 2018.

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37 APPENDIX B EXCERPTS FROM THE CITY OF EULESS, TEXAS ANNUAL FINANCIAL REPORT For the Year Ended September 30, 2017 The information contained in this Appendix consists of excerpts from the City of Euless, Texas Annual Financial Report for the Year Ended September 30, 2017, 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.

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