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PRELIMINARY OFFICIAL STATEMENT Dated April 17, 2019
NEW ISSUE – Book-Entry-Only
Rating: S&P: “___” (See “OTHER INFORMATION– Rating”,
“BOND INSURANCE” and “BOND INSURANCE RISKS” herein)
In the opinion of Bond Counsel (identified below) assuming continuing compliance by the County (defined below) after the date of initial delivery of the Certificates (defined below) with certain covenants contained in the Order (defined below) and subject to the matters described under “TAX MATTERS” herein, interest on the Certificates under existing statutes, regulations, published rulings, and court decisions (1) will be excludable from the gross income of the owners thereof for federal income tax purposes under Section 103 of the Internal Revenue Code, as amended to the date of initial delivery of the Certificates and (2) will not be included in computing the alternative minimum taxable income of the owners thereof (see “TAX MATTERS” herein.)
$16,000,000* ROBERTSON COUNTY, TEXAS
(A political subdivision of the State of Texas) CERTIFICATES OF OBLIGATION, SERIES 2019
Dated Date: May 1, 2019 Due: February 15, as shown on the inside cover page Interest to accrue from the Date of Initial Delivery (defined below) PAYMENT TERMS . . . Interest on the $16,000,000* Robertson County, Texas Certificates of Obligation, Series 2019 (the “Certificates”) will accrue from the Date of Initial Delivery (defined below) and will be payable on February 15 and August 15 of each year commencing February 15, 2020, until stated maturity or prior redemption, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Certificates 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 Certificates may be acquired in denominations of $5,000 or integral multiples thereof within a maturity. No physical delivery of the Certificates will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying 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 Certificates (see “THE CERTIFICATES – Book-Entry-Only System”). The initial Paying Agent/Registrar is UMB Bank, N.A., Austin, Texas (see “THE CERTIFICATES – Paying Agent/Registrar”). AUTHORITY FOR ISSUANCE . . . The Certificates are issued pursuant to the general laws of the State including particularly the Certificate of Obligation Act of 1971, as amended, Texas Local Government Code Sections 271.041 through 271.064, and an order (the “Order”) to be adopted by the Commissioners Court of Robertson County, Texas (the “County”) on the date of sale of the Certificates. The Certificates are direct obligations of the County payable from the levy and collection of a direct and continuing ad valorem tax levied, within the limits prescribed by law, on all taxable property within the County. (see “THE CERTIFICATES – Authority for Issuance” and “THE CERTIFICATES – Security and Source of Payment”). PURPOSE . . . Proceeds from the sale of the Certificates will be used for (1) acquiring, designing, purchasing, constructing, improving, and equipping the County Jail and other Criminal Justice facilities; (2) the purchase of materials, supplies, equipment, machinery, landscaping, land, and rights-of-way for authorized needs and purposes relating to the aforementioned capital improvements; and (3) the payment of professional services related to the design, construction, project management, and financing of the aforementioned projects.
CUSIP PREFIX: 770587
MATURITY SCHEDULE See Inside Front Cover Page
BOND INSURANCE . . . The County has applied for municipal bond insurance on the Certificates and will consider the purchase of such insurance after an analysis of the bids has been made. See “BOND INSURANCE” and “BOND INSURANCE RISKS.” LEGALITY . . . The Certificates are offered for delivery when, as and if issued and received by the initial purchasers thereof (the “Underwriters”) (as hereinafter defined) and subject to the approving opinion of the Attorney General of Texas and the approval of certain legal matters by Norton Rose Fulbright US LLP, Bond Counsel, San Antonio, Texas (see “APPENDIX C – Form of Bond Counsel’s Opinion”). Certain legal matters will be passed upon for the Underwriters by their counsel, McCall, Parkhurst & Horton L.L.P., San Antonio, Texas. DELIVERY . . . It is expected that the Certificates will be available for initial delivery through DTC on May 22, 2019 (the “Date of Initial Delivery”).
UMB BANK, N.A. CITIGROUP _____________ * Preliminary, subject to change.
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2
CUSIP Prefix: 700587(1)
MATURITY SCHEDULE*
Maturity February 15
Principal Amount
Interest Rate
Initial Yield
CUSIP Suffix(1)
2020 $340,000
2021 470,000
2022 475,000
2023 485,000
2024 495,000
2025 505,000
2026 515,000
2027 530,000
2028 540,000
2029 560,000
2030 575,000
2031 590,000
2032 610,000
2033 630,000
2034 655,000
2035 675,000
2036 700,000
2037 725,000
2038 750,000
2039 780,000
2040 810,000
2041 845,000
2042 875,000
2043 915,000
2044 950,000
(Interest Accrues from the Date of Initial Delivery)
_____________ *Preliminary, subject to change. (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. CUSIP numbers are included herein solely for the convenience of the owners of the Certificates. None of the County, the Financial Advisor or the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers shown herein. REDEMPTION . . . The County reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2030, in whole or from time to time in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2029, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see “THE CERTIFICATES –Redemption”). Additionally, the Certificates may be subject to mandatory redemption in the event the Underwriters elect to designate one or more stated maturities as “Term Certificates.”
[The remainder of this page intentionally left blank.]
3
For purposes of compliance with Rule 15c2-12 of the United States Securities and Exchange Commission (the “Rule”), this document constitutes an “official statement” of the County with respect to the Certificates that has been “deemed final” by the County as of its date except for the omission of the information permitted by Subsection (b)(1) of the Rule. No dealer, broker, salesman or other person has been authorized by the County or the Underwriters 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 County or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy Certificates in any jurisdiction in which, or to any person to whom, it is unlawful to make such offer or solicitation. The information set forth or included in this Official Statement has been provided by the County or obtained from other sources believed by the County to be reliable. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder shall create any implication that there has been no change in the financial condition or operations of the County described herein since the date hereof. This Official Statement contains, in part, estimates and matters of opinion that are not intended as statements of fact, and no representation or warranty is made as to the correctness of such estimates and opinion or that they will be realized. See “CONTINUING DISCLOSURE OF INFORMATION” for a description of the County’s undertaking to provide certain information on a continuing basis. IN CONNECTION WITH THE OFFERING OF THE CERTIFICATES, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibility to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. THE CERTIFICATES 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 CERTIFICATES IN ACCORDANCE WITH APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTION IN WHICH THE CERTIFICATES HAVE BEEN REGISTERED, QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. NONE OF THE COUNTY, ITS FINANCIAL ADVISOR, OR THE UNDERWRITERS MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY OR ITS BOOK-ENTRY-ONLY SYSTEM OR ANY MUNICIPAL BOND INSURER PROVIDER, IF ANY, OR ITS POLICY DESCRIBED UNDER “BOND INSURANCE” HEREIN, AS SUCH INFORMATION WAS PROVIDED BY DTC AND THE INSURER (IF ANY), RESPECTIVELY.
TABLE OF CONTENTS
PRELIMINARY OFFICIAL STATEMENT SUMMARY4
TAX INFORMATION ...................................................... 14
COUNTY OFFICIALS, STAFF AND CONSULTANTS 6 INVESTMENTS ............................................................... 18
INTRODUCTION ............................................................... 7 TAX MATTERS ............................................................... 20
THE CERTIFICATES ........................................................ 7 CONTINUING DISCLOSURE OF INFORMATION ... 22
BOND INSURANCE ......................................................... 13 LEGAL MATTERS ........................................................... 24
BOND INSURANCE GENERAL RISKS ....................... 13 OTHER INFORMATION ................................................ 25
FINANCIAL INFORMATION OF THE ISSUER .......................................................................................... APPENDIX A
GENERAL INFORMATION REGARDING THE COUNTY ....................................................................... APPENDIX B
FORM OF BOND COUNSEL’S OPINION ..................................................................................................... APPENDIX C
EXCERPTS FROM THE COUNTY’S CASH BASIS FINANCIAL STATEMENT ................................... APPENDIX D
The cover page hereof, this page, and the appendices included herein and any addenda, supplement or amendment hereto, are part of the Official Statement.
4
PRELIMINARY 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 Certificates 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 COUNTY .................................... Robertson County, Texas (the “County”) is a political subdivision whose county seat is
located in Franklin, Texas. The County was organized in 1838 and operates as specified under the Constitution of the State of Texas and statues which provide for a Commissioners Court consisting of the County Judge and four Commissioners.
The County is approximately 866 square miles in area (see “INTRODUCTION –
Description of the County”). THE CERTIFICATES .......................... The Certificates are issued as $16,000,000* Certificates of Obligation, Series 2019. The
Certificates are issued as serial Certificates maturing on February 15 in each of the years 2020 through and including 2044, unless the Underwriters designate one or more stated maturities as Term Certificates (see “THE CERTIFICATES – Description of the Certificates”).
PAYMENT OF INTEREST .................... Interest on the Certificates accrues from the Date of Initial Delivery (as defined on the
cover page hereof) and is payable on February 15, 2020, and each August 15 and February 15 thereafter until stated maturity or prior redemption (see “THE CERTIFICATES – Description of the Certificate” and “THE CERTIFICATES –Redemption”).
AUTHORITY FOR ISSUANCE .............. The Certificates are issued pursuant to the general laws of the State, particularly the
Certificate of Obligation Act of 1971, as amended, Texas Local Government Code Sections 271.041 through 271.064, and an order to be adopted by the Commissioners Court of the County on the date of sale of the Certificates (the “Order”) (see “THE CERTIFICATES – Authority for Issuance”).
SECURITY .......................................... The Certificates are direct obligations of the County payable from the levy and collection of a
direct and continuing ad valorem tax levied, within the limits prescribed by law, on all taxable property within the County (see “THE CERTIFICATES – Authority for Issuance” and “THE CERTIFICATES – Security and Source of Payment”).
REDEMPTION .................................... The County reserves the right, at its option, to redeem Certificates having stated maturities
on and after February 15, 2030, in whole or from time to time in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2029, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. Additionally, the Certificates may be subject to mandatory redemption in the event the Underwriters elect to designate one or more stated maturities as “Term Certificates”. (see “THE CERTIFICATES – Redemption”)
TAX EXEMPTION ............................... In the opinion of Bond Counsel, subject to the matters described in “TAX MATTERS”
herein, the interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law and will not be included in computing the alternative minimum taxable income of the owners thereof. See “TAX MATTERS – Tax Exemption” for a discussion of the opinion of Bond Counsel.
_____________ * Preliminary, subject to change.
5
USE OF PROCEEDS ............................ Proceeds from the sale of the Certificates will be used for (1) acquiring, designing,
purchasing, constructing, improving, and equipping the County Jail and other Criminal Justice facilities; (2) the purchase of materials, supplies, equipment, machinery, landscaping, land, and rights-of-way for authorized needs and purposes relating to the aforementioned capital improvements; and (3) the payment of professional services related to the design, construction, project management, and financing of the aforementioned projects.
RATING ............................................. The Certificates have been rated “__” by S&P Global Ratings (“S&P”) without regard to
credit enhancement (see “OTHER INFORMATION – Rating”). The County has no currently outstanding ad valorem tax debt.
BOND INSURANCE ............................. The County has applied for municipal bond insurance on the Certificates and will consider
the purchase of such insurance after an analysis of the bids has been made. (See “BOND INSURANCE” and “BOND INSURANCE GENERAL RISKS” herein).
BOOK-ENTRY-ONLY SYSTEM ........... The definitive Certificates 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 Certificates may be acquired in denominations of $5,000 or integral multiples thereof within a maturity. No physical delivery of the Certificates will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying 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 Certificates (see “THE CERTIFICATES – Book-Entry-Only System”).
Payment Record ................................ The only default experienced by the County occurred on the County’s Permanent
Improvement Obligations in 1934 (during the great depression) which default was corrected without refunding.
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COUNTY OFFICIALS, STAFF AND CONSULTANTS ELECTED OFFICIALS
Commissioners Court Years Served Term Expires The Honorable Charles L. Ellison County Judge
4 December 31, 2022
Commissioner Keith Petitt Precinct 1
28 (9 as Justice of the Peace and 11 years as Commissioner)
December 31, 2020
Commissioner Donald Threadgill Precinct 2
12 December 31, 2022
Commissioner Keith Nickelson Precinct 3
15 December 31, 2020
Commissioner James Taylor Precinct 4
2 months December 31, 2022
APPOINTED OFFICIALS
Name Position Years with the County Ms. Candace Anderson County Auditor 34
(23 years as auditor)
Mr. W. Coty Siegert County Attorney 7
Ms. Stephanie Sanders County Clerk 17 (2 years as clerk)
CONSULTANTS AND ADVISORS Auditors ............................................................................................................................................... Pattillo, Brown & Hill, L.L.P. Waco, Texas Bond Counsel .................................................................................................................................... Norton Rose Fulbright US LLP San Antonio, Texas Financial Advisor ............................................................................................................................... Specialized Public Finance Inc. San Antonio, Texas For additional information regarding the County, please contact:
Ms. Candace A. Anderson County Auditor Robertson County 102 E. Decherd St. P.O. Box 619 Franklin, Texas 77856 Phone: (979) 828-3474 Fax: (979) 828-1725 [email protected]
or
Mr. Victor Quiroga, Jr. Managing Director Specialized Public Finance Inc. 13300 Old Blanco Road, Suite 310 San Antonio, Texas 78216 Phone: (210) 239-0204 Cell: (210) 887-1810 Fax: (210) 239-0126 [email protected]
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PRELIMINARY OFFICIAL STATEMENT
RELATING TO
$16,000,000* ROBERTSON COUNTY, TEXAS
CERTIFICATES OF OBLIGATION, SERIES 2019
INTRODUCTION
This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of the $16,000,000* Robertson County, Texas Certificates of Obligation, Series 2019 (the “Certificates”). The Certificates are being issued pursuant to the Constitution and general laws of the State of Texas (the “State”), including particularly the Certificate of Obligation Act of 1971, as amended, Texas Local Government Code Sections 271.041 through 271.064, and an order (the “Order”) to be approved by the Commissioners Court of Robertson County (the “County”) on the date of sale of the Certificates. Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the Order, except as otherwise indicated herein There follows in this Official Statement descriptions of the Certificates and certain information regarding the County 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 County’s Financial Advisor, Specialized Public Finance Inc., San Antonio, Texas, by electronic mail or upon payment of reasonable copying, handling, and delivery charges. This Official Statement speaks only as to its date, and the information contained herein is subject to change. Copies of the Final Official Statement pertaining to the Certificates will be deposited with the Municipal Securities Rulemaking Board through its Electronic Municipal Markets Access (“EMMA”) System. See “CONTINUING DISCLOSURE OF INFORMATION” for a description of the County’s undertaking to provide certain information on a continuing basis. DESCRIPTION OF THE COUNTY . . . The County was organized in 1848 and operates as specified under the Constitution of the State of Texas and statutes which provide for a Commissioners Court consisting of the County Judge and four Commissioners, one from each of the four geographical Commissioners Precincts. The County Judge is elected for a term of four years and the Commissioners for four year staggered terms. Other major County elected officers include the County Clerk and County Treasurer. The County Auditor is appointed for a term of two years by and serves at the will of the District Judges whose courts are located in Robertson County. The estimated 2018 population is 17,203. The County covers approximately 8667 square miles and the City of Franklin is the County Seat.
THE CERTIFICATES DESCRIPTION OF THE CERTIFICATES . . . The Certificates are dated May 1, 2019 (the “Dated Date”) and mature on February 15 in each of the years and in the amounts shown on page 2 hereof. Interest on the Certificates will accrue from the Date of Initial Delivery (as defined on the cover page hereof), will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable on February 15 and August 15 of each year, commencing February 15, 2020 until stated maturity or prior redemption. The definitive Certificates will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company (“DTC”) pursuant to the book-entry-only system described herein. No physical delivery of the Certificates will be made to the owners thereof. Principal of, premium, if any, and interest on the Certificates 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 Certificates. See “THE CERTIFICATES - Book-Entry-Only System” herein. AUTHORITY FOR ISSUANCE . . . The Certificates are issued pursuant to the Constitution and general laws of the State including particularly the Certificate of Obligation Act of 1971, as amended, Texas Local Government Code Sections 271.041 through 271.064, Section 361.052, and the Order. SECURITY AND SOURCE OF PAYMENT . . . Pledge of Ad Valorem Taxes. The Certificates are general obligations of the County, payable from its collection of an ad valorem tax levied annually, within the legal limitations imposed by law, upon all taxable property located in the County (see “TAX INFORMATION” and “TAX INFORMATION – General Obligation Debt Limitation” herein.) _____________________ *Preliminary, subject to change.
8
REDEMPTION . . . The County reserves the right, at its option, to redeem the Certificates having stated maturities on and after February 15, 2030, in whole or from time to time in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2029, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Certificates are to be redeemed, the County may select the maturities to be redeemed. Additionally, serial maturities of the Certificates may be grouped into one or more term Certificates (the “Term Certificates”). Term Certificates will also be subject to mandatory sinking fund redemption. NOTICE OF REDEMPTION . . . At least 30 days prior to the date fixed for any redemption of any Certificates or portions thereof prior to stated maturity, the County shall cause notice of such redemption to be sent by United States mail, first-class postage prepaid, to the registered owner of each Certificate or a portion thereof to be redeemed at its address as it appeared on the registration books of the Paying Agent/Registrar on the day such notice of redemption is mailed. By the date fixed for any such redemption, due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Certificates or portions thereof which are to be so redeemed. If such notice of redemption is given and if due provision for such payment is made, all as provided above, the Certificates or portions thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price from the Paying Agent/Registrar out of the funds provided for such payment. ANY NOTICE OF REDEMPTION SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN IRRESPECTIVE OF WHETHER RECEIVED BY THE CERTIFICATEHOLDER, AND, PROVIDED THAT PROVISION FOR PAYMENT OF THE REDEMPTION PRICE IS MADE AND ANY OTHER CONDITIONS TO REDEMPTION ARE SATISFIED, INTEREST ON THE REDEEMED CERTIFICATES SHALL CEASE TO ACCRUE FROM AND AFTER SUCH REDEMPTION DATE NOTWITHSTANDING THAT A CERTIFICATE HAS NOT BEEN PRESENTED FOR PAYMENT. The Paying Agent/Registrar and the County, so long as a Book-Entry-Only System is used for the Certificates, will send any notice of redemption, notice of proposed amendment to the Order or other notices with respect to the Certificates only to DTC. Any failure by DTC to advise any DTC participant, or of any DTC participant or indirect participant to notify the Beneficial Owner, will not affect the validity of the redemption of the Certificates called for redemption or any other action premised on any such notice. Redemption of portions of the Certificates by the County will reduce the outstanding principal amount of such Certificates held by DTC. In such event, DTC may implement, through its Book-Entry-Only System, a redemption of such Certificates held for the account of DTC participants in accordance with its rules or other agreements with DTC participants and then DTC participants and indirect participants may implement a redemption of such Certificates from the Beneficial Owners. Any such selection of Certificates to be redeemed will not be governed by the Order and will not be conducted by the County or the Paying Agent/Registrar. Neither the County nor the Paying Agent/Registrar will have any responsibility to DTC participants, indirect participants or the persons for whom DTC participants act as nominees, with respect to the payments on the Certificates or the providing of notice to DTC participants, indirect participants, or Beneficial Owners of the selection of portions of the Certificates for redemption (see “THE CERTIFICATES - Book-Entry-Only System” herein.) SELECTION OF CERTIFICATES TO BE REDEEMED . . . The Certificates of a denomination larger than $5,000 may be redeemed in part (in increments of $5,000 or any integral multiple thereof). The Certificates to be partially redeemed must be surrendered in exchange for one or more new Certificates for the unredeemed portion of the principal. If less than all of the Certificates are to be redeemed, the County will determine the amounts to be redeemed and will direct the Paying Agent/Registrar (or DTC while the Certificates are in Book-Entry-Only form) to select, at random and by lot, the particular Certificates, or portion thereof, to be redeemed. If a Certificate (or any portion of the principal sum thereof) will have been called for redemption and notice of such redemption will have been given, such Certificate (or the principal amount thereof to be redeemed), will become due and payable on such redemption date and interest thereon will 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. DEFEASANCE . . . The Order provides for the defeasance of the Certificates when payment of the principal amount of the Certificates plus interest accrued on the Certificates to their due date (whether such due date be by reason of stated maturity, redemption, or otherwise), is provided by irrevocably depositing with a paying agent, or other authorized escrow agent, in trust (1) money in an amount sufficient to make such payment, and/or (2) Government Securities (defined below), 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 Certificates. The foregoing deposits shall be certified as to sufficiency by an independent accounting firm, the County’s Financial Advisor, the Paying Agent/Registrar, or such other qualified financial institution (as provided in the Order). The County has additionally reserved the right, subject to satisfying the requirements of (1) and (2) above, to substitute other Government Securities originally deposited, to reinvest the uninvested moneys on deposit for such defeasance and to withdraw for the benefit of the County moneys in excess of the amount required for such defeasance. The Order provides that “Government Securities” means any securities and obligations now or hereafter authorized by State law that are eligible to discharge obligations such as the Certificates. Current State law permits defeasance with the following types of securities: (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 the purchase thereof, 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 on the date the governing body
9
of the County adopts or approves the proceedings authorizing the financial arrangements have been refunded and are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (d) any additional securities and obligations hereafter authorized by State law as eligible for use to accomplish the discharge of obligations such as the Certificates. County officials are authorized to restrict such eligible securities as deemed appropriate. There is no assurance that the ratings for U.S. Treasury securities acquired to defease any Certificates, or those for any other Government Securities, will be maintained at any particular rating category. Further, there is no assurance that current State law will not be amended in a manner that expands or contracts the list of permissible defeasance securities (such list consisting of these securities identified in clauses (a) through (c) above), or any rating requirement thereon, that may be purchased with defeasance proceeds relating to the Certificates (“Defeasance Proceeds”), though the County has reserved the right to utilize any additional securities for such purpose in the event the aforementioned list is expanded. Because the Order does not contractually limit such permissible defeasance securities and expressly recognizes the ability of the County to use lawfully available Defeasance Proceeds to defease all or any portion of the Certificates, registered owners of Certificates are deemed to have consented to the use of Defeasance Proceeds to purchase such other defeasance securities, notwithstanding the fact that such defeasance securities may not be of the same investment quality as those currently identified under State law as permissible defeasance securities. Upon such deposit as described above, such Certificates shall no longer be regarded to be outstanding or unpaid. After firm banking and financial arrangements for the discharge and final payment of the Certificates have been made as described above, all rights of the County to initiate proceedings to call the Certificates for redemption or take any other action amending the terms of the Certificates are extinguished; provided, however, the County has the option, to be exercised at the time of the defeasance of the Certificates, to call for redemption at an earlier date those Certificates which have been defeased to their maturity date, if the County (i) in the proceedings providing for the firm banking and financial arrangements, expressly reserves the right to call the Certificates for redemption, (ii) gives notice of the reservation of that right to the owners of the Certificates immediately following the making of the firm banking and financial arrangements, and (iii) directs that notice of the reservation be included in any redemption notices that it authorizes. BOOK-ENTRY-ONLY SYSTEM . . . This section describes how ownership of the Certificates is to be transferred and how the principal of, premium, if any, and interest on the Certificates are to be paid to and credited by DTC while the Certificates are registered in its nominee’s 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 County believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The County cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Certificates, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Certificates), or redemption or other 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 Certificates. The Certificates will be issued as fully-registered Certificates 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 Certificate certificate will be issued for each maturity of the Certificates, each in the aggregate principal amount of such maturity, 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 1934. 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 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 S&P Global Ratings 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 www.dtcc.com. Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Certificates on DTC’s records. The ownership interest of each actual purchaser of each Certificate (“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 Certificates are to be accomplished by entries made on the books of Direct and
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Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Certificates, except in the event that use of the book-entry system for the Certificates is discontinued. To facilitate subsequent transfers, all Certificates 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 Certificates with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Certificates; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Certificates 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 Certificates may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Certificates, such as redemptions, tenders, defaults, and proposed amendments to the Certificate documents. For example, Beneficial Owners of Certificates may wish to ascertain that the nominee holding the Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Certificates within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Certificates unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the County as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy). All payments on the Certificates 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 County or the 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 Certificates 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, the Paying Agent/Registrar, or the County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the County or the 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 Certificates at any time by giving reasonable notice to the County or the 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 County 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 to DTC. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the County believes to be reliable, but the County does not take any responsibility for the accuracy thereof. USE OF CERTAIN TERMS IN OTHER SECTIONS OF THIS OFFICIAL STATEMENT . . . In reading this Official Statement it should be understood that while the Certificates 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 Certificates, 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 Order 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 County, the Financial Advisor, or the Underwriters. PAYING AGENT/REGISTRAR . . . The initial Paying Agent/Registrar is UMB Bank, N.A., Austin, Texas. In the Order, the County retains the right to replace the Paying Agent/Registrar. The County covenants to maintain and provide a Paying Agent/Registrar at all times until the Certificates 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 Certificates. Upon any change in the Paying Agent/Registrar for the Certificates, the County agrees to promptly cause a written notice thereof to be sent to each registered owner of the Certificates by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. TRANSFER, EXCHANGE AND REGISTRATION . . . In the event the Book-Entry-Only System should be discontinued, the Certificates may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender to the
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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. Certificates may be assigned by the execution of an assignment form on the Certificates or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Certificates will be delivered by the Paying Agent/Registrar, in lieu of the Certificates being transferred or exchanged, at the designated 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 Certificates issued in an exchange or transfer of Certificates 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 Certificates 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 Certificates registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the Certificates surrendered for exchange or transfer. See “THE CERTIFICATES – Book-Entry-Only System” herein for a description of the system to be utilized initially in regard to ownership and transferability of the Certificates. Neither the County nor the Paying Agent/Registrar shall be required to transfer or exchange any Certificate called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Certificate. RECORD DATE FOR INTEREST PAYMENT . . . The record date (“Record Date”) for the interest payable on the Certificates 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 (a “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 County. Notice of the Special Record Date and of the scheduled payment date of the past due interest (“Special Payment Date”, which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Certificate 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. CERTIFICATEHOLDERS’ REMEDIES . . . The Order does not establish specific events of default with respect to the Certificates. If the County defaults in the payment of the principal of or interest on the Certificates when due, or the County defaults in the observance or performance of any of the covenants, conditions, or Certificates of the County, the failure to perform which materially, adversely affects the rights of the owners, including but not limited to, their prospect or ability to be repaid in accordance with the Order, the Order provides that any registered owner is entitled to seek a writ of mandamus from a court of proper jurisdiction requiring the County to make such payment or observe and perform such covenants, obligations, or conditions. The issuance of a writ of mandamus may be sought if there is no other available remedy at law to compel performance of the Certificates or the Order and the County’s obligations are not uncertain or disputed. The remedy of mandamus is controlled by equitable principles and rests with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Certificates in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. The Order does not provide for the appointment of a trustee to represent the interest of the certificateholders upon any failure of the County to perform in accordance with the terms of the Order, or upon any other condition and accordingly all legal actions to enforce such remedies would have to be undertaken at the initiative of, and be financed by, the registered owners. On June 30, 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006), that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in “clear and unambiguous” language. Because it is unclear whether the Texas legislature has effectively waived the County’s sovereign immunity from a suit for money damages, certificateholders may not be able to bring such a suit against the County for breach of the Certificate or Order covenants. Even if a judgment against the County could be obtained, it could not be enforced by direct levy and execution against the County’s property. Further, the registered owners cannot themselves foreclose on property within the County or sell property within the County to enforce the tax lien on taxable property to pay the principal of and interest on the Certificates. Furthermore, the County is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code (“Chapter 9”). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or certificateholders of an entity which has sought protection under Chapter 9. Therefore, should the County 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 Certificates are qualified with respect to the customary rights of debtors relative to their creditors. AMENDMENTS TO THE ORDER . . . The County may amend the Order without the consent of or notice to any registered owners of the Certificates in any manner not detrimental to the interests of such registered owners, including the curing of any ambiguity, inconsistency, or formal defect or omission therein. In addition, the County may, with the written consent of the holders of a majority in aggregate principal amount of the Certificates then outstanding, amend, add to, or rescind any of the provisions of the Order; except that, without the consent of the registered owners of all of the Certificates 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 Certificates or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Certificates, (2) give any preference to any Certificate over any other Certificate, or (3) reduce the aggregate principal amount of the Certificates required to be held by the holders of such Certificates for consent to any such amendment, addition, or rescission as provided in the Order.
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PURPOSE . . . Proceeds from the sale of the Certificates will be used for (1) acquiring, designing, purchasing, constructing, improving, and equipping the County Jail and other Criminal Justice facilities; (2) the purchase of materials, supplies, equipment, machinery, landscaping, land, and rights-of-way for authorized needs and purposes relating to the aforementioned capital improvements; and (3) the payment of professional services related to the design, construction, project management, and financing of the aforementioned projects. SOURCES AND USES OF PROCEEDS . . . The proceeds from the sale of the Certificates will be applied approximately as follows:
SOURCES OF FUNDS: Par Amount $ Net Reoffering Premium _______________ Total Sources of Funds $ SOURCES OF FUNDS: Construction Fund Deposit $ Underwriters’ Discount _______________ Cost of Issuance Certificate Fund Deposit Total Uses of Funds $
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BOND INSURANCE The County is considering qualifying the Certificates for municipal bond insurance and has made application to municipal bond insurance companies (each, an “Insurer’) to have the payment of the principal of and interest on the Certificates insured by a municipal bond insurance policy (the “Policy”). No representation is hereby made that the County will use municipal bond insurance in connection with the issuance of the Certificates. If the County acquires a Policy from an Insurer, the final Official Statement shall disclose, to the extent necessary, any relevant information relating to the Policy.
BOND INSURANCE GENERAL RISKS
If a Policy is acquired for the Certificates from a qualified Insurer, then in the event of default of the scheduled payment of principal of or interest on the Certificates when all or a portion thereof becomes due, any owner of the Certificates shall have a claim under the Policy for such payments. The payment of principal and interest in connection with mandatory or optional prepayment of the Certificates by the County which is recovered by the County from the Beneficial Owners as a voidable preference under applicable bankruptcy law is covered by the Policy; however, such payments will be made by the Insurer at such time and in such amounts as would have been due absent such prepayment by the County (unless the Insurer chooses to pay such amounts at an earlier date). Payment of principal of and interest on the Certificates is not subject to acceleration, but other legal remedies upon the occurrence of non-payment do exist (see “THE CERTIFICATES – Certificateholders’ Remedies”). The Insurer may direct the pursuit of available remedies, and generally must consent to any remedies available to and requested by the Beneficial Owners. In the event the Insurer is unable to make payment of principal and interest as such payments become due under the Policy, the Certificates are payable from the ad valorem tax levied, within the limitations prescribed by law, on all taxable property located within the County. In the event the Insurer becomes obligated to make payments with respect to the Certificates, no assurance is given that such event will not adversely affect the market price or the marketability (liquidity) of the Certificates. If a Policy is acquired, the long-term rating on the Certificates will be dependent on the financial strength of the Insurer and its claims paying ability. The Insurer’s financial strength and claims paying ability are predicated upon a number of factors which could change over time. No assurance can be given that the long-term ratings of the Insurer and of the rating on the Certificates, whether or not subject to the Policy, will not be subject to downgrade and such event could adversely affect the market price or the marketability (liquidity) for the Certificates (see the disclosure described in “OTHER INFORMATION – Rating” herein.) The obligations of the Insurer under the Policy are general obligations of the Insurer and in an event of default by the Insurer; the remedies available may be limited by applicable bankruptcy law. None of the County, the Underwriters, or the County’s Financial Advisor has made an independent investigation into the claims paying ability of any Insurer and no assurance or representation regarding the financial strength or projected financial strength of any Insurer will be given. Thus, when making an investment decision, potential investors should carefully consider the ability of the County to pay principal of and interest on the Certificates and the claims paying ability of the Insurer, particularly over the life of the investment. See “BOND INSURANCE” herein. CLAIMS-PAYING ABILITY AND FINANCIAL STRENGTH OF MUNICIPAL BOND INSURERS . . . Moody’s Investors Services, Inc., S&P Global Ratings (“S&P”), and Fitch Ratings, Inc. (collectively, the “Rating Agencies”) have since 2008 downgraded, and/or placed on negative credit watch, the claims-paying ability and financial strength of all providers of municipal bond insurance. Additional downgrades or negative changes in the rating outlook for all bond insurers is possible. In addition, recent events in the credit markets have had substantial negative effects on the bond insurance business. These developments could be viewed as having a material adverse effect on the claims-paying ability of municipal bond insurers. Thus, when making an investment decision, potential investors should carefully consider the ability of any such municipal bond insurer to pay principal and interest on the Certificates and the claims-paying ability of any such municipal bond insurer, particularly over the life of the investment.
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TAX INFORMATION
AD VALOREM TAX LAW . . . The appraisal of property within the County is the responsibility of the Robertson County Appraisal District (the “Appraisal District”). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the Appraisal District is required under the Texas Property Tax Code to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property, different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal and market data comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law further limits the appraised value of a residence homestead for a tax year to an amount not to exceed the lesser of (1) the market value of the property for the most recent tax year that the market value was determined by the appraisal office or (2) the sum of (a) 10% of the appraised value of the property for the preceding tax year, (b) the appraised value of the property for the preceding tax year and (c) the market value of all new improvements to the property. The value placed upon property within the Appraisal District is subject to review by an Appraisal Review Board, consisting of three members appointed by the Board of Directors of the Appraisal District. The Appraisal District is required to review the value of property with the Appraisal District at least every three years. The County may require annual review at its own expense, and is entitled to challenge the determination of appraised value of property within the County by petition filed with the Appraisal Review Board. Reference is made to the Texas Property Tax Code, for identification of property subject to taxation; property exempt or which may be exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and limitations applicable to the levy and collection of ad valorem taxes. Article VIII of the State Constitution (“Article VIII”) and State law provide for certain exemptions from property taxes, the valuation of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation. Under Section 1-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) an exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled from all ad valorem taxes thereafter levied by the political subdivision; (2) an exemption of up to 20% of the market value of residence homesteads. The minimum exemption under this provision is $5,000. In the case of residence homestead exemptions granted under Section 1-b, Article VIII, ad valorem taxes may continue to be levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation of the levy would impair the obligation of the contract by which the debt was created. State law and Section 2, Article VIII, mandate an additional property tax exemption for disabled veterans or the surviving spouse or children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12,000. A disabled veteran who receives from the United States Department of Veterans Affairs or its successor 100% disability compensation due to a service-connected disability and a rating of 100% disabled or of individual unemployability is entitled to an exemption from taxation of the total appraised value of the veteran’s residence homestead. Furthermore, the surviving spouse of a deceased veteran who had received a disability rating of 100% is entitled to receive a residential homestead exemption equal to the exemption received by the deceased spouse until such surviving spouse remarries. A partially disabled veteran or the surviving spouse of a partially disabled veteran is entitled to an exemption equal to the percentage of the veteran’s disability, if the residence was donated to the disabled veteran by a charitable organization at no cost to the disabled veteran, or at some cost to the disabled veteran in the form of a cash payment, a mortgage, or both in an aggregate amount that is not more than 50% of the good faith estimate of the market value of the residence homestead made by the charitable organization as of the date the donation is made. Such exemption is transferable to a different property of the surviving spouse, if the surviving spouse has not remarried, in an amount equal to the exemption received on the prior residence in the last year in which such exemption was received. The surviving spouse of a member of the armed forces who is killed in action in entitled to a property tax exemption for all or a part of the market value of such surviving spouse’s residence homestead, if the surviving spouse has not remarried since the service member’s death and said property was the service member’s residence homestead at the time of death. Such exemption is transferable to a different property of the surviving spouse, if the surviving spouse has not remarried, in an amount equal to the exemption received on the prior residence in the last year in which such exemption was received. The surviving spouse of a first responder who is killed or fatally injured in the line of duty is entitled to a property tax exemption for all or part of the market value of such surviving spouse’s residence homestead, if the surviving spouse has not remarried since the service member’s death and said property was the service member’s residence homestead at the time of the death. Such exemption is transferable to a different property of the surviving spouse, if the surviving spouse has not remarried, in an amount equal to the exemption received on the prior residence in the last year in which such exemption was received. Article VIII provides that eligible owners of both agricultural land (Section 1-d) and open-space land (Section 1-d-1), including open space land devoted to farm or ranch purposes or open-space land devoted to timber production, may elect to have such property
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appraised for property taxation on the basis of its productive capacity. The same land may not be qualified under both Section 1-d and Section 1-d-1. Nonbusiness personal property, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing body of a political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation. Article VIII, Section 1-j, provides for “freeport property” to be exempted from ad valorem taxation. Freeport property is defined as goods detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication. Decisions to continue to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal. In addition, effective for tax years 2008 and thereafter, Article VIII, Section 1-n of the Texas Constitution provides for an exemption from taxation for “goods-in-transit,” which are defined as personal property acquired or imported into the state and transported to another location inside or outside the state within 175 days of the date the property was acquired or imported into the state. The exemption excludes oil, natural gas, petroleum products, aircraft and special inventory, including motor vehicle, vessel and out-board motor, heavy equipment and manufactured housing inventory. After holding a public hearing, a taxing unit may take action by January 1 of the year preceding a tax year to tax goods-in-transit during the following tax year. A taxpayer may obtain only a Freeport exemption or a goods-in-transit exemption for items of personal property. Article VIII, Section 1-l provides for the exemption from ad valorem taxation of certain property used to control the pollution of air, water, or land. A person is entitled to an exemption from taxation of all or part of real and personal property that the person owns and that is used wholly or partly as a facility, device or method for the control of air, water or land pollution. The County may create one or more tax increment reinvestment zones within the County (“TIRZ”), under which the tax values on property in the zone are “frozen” at the value of the property at the time of creation of the zone. Other overlapping taxing units levying taxes in the TIRZ may agree to contribute all or part of future ad valorem taxes levied and collected against the value of property in the TIRZ in excess of the “frozen values” to pay or finance the costs of certain public improvements in the TIRZ. Taxes levied by the County against the values of real property in the TIRZ in excess of the “frozen” value are not available for general County use but are restricted to paying or financing “project costs” within the TIRZ. The County also may enter into tax abatement agreements to encourage economic development. The County evaluates tax abatement agreement proposals in a case-by-case basis. Under such tax abatement agreements, a property owner agrees to construct certain improvements on its property. The County in turn agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. A tax abatement agreement could last for a period of up to 10 years. Counties are also authorized, pursuant to Chapter 381, Texas Local Government Code (“Chapter 381”) to establish programs to promote state or local economic development and to stimulate business and commercial activity in the County. In accordance with a program established pursuant to Chapter 381, the County may make loans or grant of public fund for economic development purposes, however, no obligations secured by ad valorem taxes may be issued for such purposes unless approved by voters of the County. EFFECTIVE TAX RATE AND ROLLBACK TAX RATE . . . The Commissioners Court will be required to adopt the annual tax rate for the County before the later of September 30 or the 60th day after the date the certified appraisal roll is received by the County. If the Commissioners Court does not adopt a tax rate by such required date the tax rate for that tax year is the lower of the effective tax rate calculated for that tax year or the tax rate adopted by the County for the preceding tax year. The tax rate consists of two components: (1) a rate for funding of maintenance and operation expenditures, and (2) a rate for debt service. Under the Texas Property Tax Code, the County must annually calculate and publicize its “effective tax rate” and “rollback tax rate”. The Commissioners Court may not adopt a tax rate that exceeds the prior year’s levy until it has held two public hearings on the proposed increase following notice to the taxpayers and otherwise complied with the Property Tax Code (including the requirement that notice be posted on the County’s website if the County owns, operates, or controls an internet website and public notice be given by television if the County has free access to a television channel). If the adopted tax rate exceeds the rollback tax rate, the qualified voters of the County by petition may require than an election be held to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate. “Effective tax rate” means the rate that will produce last year’s total tax levy (adjusted) from this year’s total taxable values (adjusted). “Adjusted” means lost values are not included in the calculation of last year’s taxes and new values are not included in this year’s taxable values. “Rollback tax rate” means the rate that will produce last year’s maintenance and operation tax levy (adjusted) from this year’s values (adjusted) multiplied by 1.08 plus a rate that will produce this year’s debt service from this year’s values (unadjusted) divided by the anticipated tax collection rate. The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year. Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates.
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PROPERTY ASSESSMENT AND TAX PAYMENT . . . Property within the County is generally assessed as of January 1 of each year. Business inventory may, at the option of the taxpayer, be assessed as of September 1. Oil and gas reserves are assessed on the basis of pricing information in either the standard edition of the Annual Energy Outlook or, if the most recently published edition of the Annual Energy Outlook was published Before December 1 of the preceding calendar year, the Short-Term Energy Outlook report published in January of the current calendar year. Taxes become due October 1 of the same year, and become delinquent on February 1 of the following year. Taxpayers 65 years old or older are permitted by State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final installment due on August 1. PENALTIES AND INTEREST . . . Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows:
Cumulative Cumulative Month Penalty Interest Total
February 6% 1% 7% March 7 2 9 April 8 3 11 May 9 4 13 June 10 5 15 July 12 6 18
After July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent in July, up to 20% attorney’s collection fee is added to the total tax penalty and interest charge. COUNTY APPLICATION OF TAX CODE . . . The County grants an exemption to the market value of the residence homestead of persons 65 years of age or older of $3,000.
The County has adopted the tax freeze for citizens who are disabled or are 65 years of age or older.
The County does not tax personal property.
The Robertson County Tax Assessor-Collector collects taxes for the County.
The County does not permit split payments, and discounts are not allowed.
The County does not tax freeport property.
The County has established a tax abatement program to encourage economic development. In order to be considered for tax abatement, a project must meet several criteria pertaining to job creation and property value enhancement. Generally, projects are eligible for a tax abatement of up to 50% for a period of ten years. The County has not entered into any one abatement agreement. Pursuant to the terms of a tax abatement agreement with GATX Corporation (“GATX”), the County has agreed to abate ad valorem taxation on the certified appraised value of any increase in assessed valuation resulting from improvements on eligible property for a term of no more than 10 years. For any improvements placed in service at the GATX facilities within the years 2017 through 2020, the County will abate 100% of the increased value of the property in years one through five; 80% in year six; 60% in year seven; 40% in year eight; 20% in year nine; and 0% in year ten. As a condition to this tax abatement, GATX has agreed to invest between $10 million and $20 million in the subject property by December 31, 2020. Any tax abatement under the agreement with GATX will expire, at the latest, on December 31, 2030, and the currently estimated impact on the County over the full term of the agreement is approximately $500,000 in abated ad valorem tax revenue. GENERAL OBLIGATION DEBT LIMITATION . . . Limited Tax Debt Payable from the $0.80 Constitutional Tax Rate . . . Section 1301.003 of the Texas Government Code limits the amount of bonds that may be issued for certain purposes as follows:
Courthouse Bonds - 2% of Assessed Valuation Jail Bonds - 1 ½% of Assessed Valuation Courthouse and Jail Bonds - 3 ½% of Assessed Valuation Road and Bridge Bonds - 1 ½% of Assessed Valuation
However, courthouse, jail and certain other types of bonds may be issued under the authority of Section 1473.101 of the Texas Government Code which removes the above limitations. Article VIII, Section 9, of the Texas Constitution, imposes a limit of $0.80 per $100 Assessed Valuation for all constitutional purposes, including the General Fund, Permanent Improvement Fund, Road and Bridge Fund and Jury Fund, and debt service of bonds, notes, warrants and anticipation notes issued against such funds. Administratively, the Attorney General of the State of Texas will permit allocation of $0.40 of the $0.80 constitutional tax rate for debt service. The Texas Constitution also authorizes (i) a special Road and Bridge Tax for the further maintenance of the public roads not to exceed $0.15 per $100 of assessed valuation, none of which may be
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used for payment of debt service, and (ii) a tax for Farm-to-Market or Flood Control purposes not to exceed $0.30 per $100 of assessed valuation. The Certificates are limited tax obligations payable from the County’s $0.80 constitutional tax rate. See “THE CERTIFICATES – Security and Source of Payment”. Unlimited Tax Road Bonds . . . Article III, Section 52, Texas Constitution, authorizes the County to levy a separate tax, without legal limit as to rate, to pay debt service on County road bonds issued pursuant to such authority. Article III, Section 52 of the Texas Constitution also provides that unlimited tax road bond debt may not exceed 25% of the County’s assessed valuation of real property. The County has no currently outstanding unlimited tax road bonds. Road Maintenance (Special Road and Bridge Tax) . . . Imposed by the Texas Constitution (Article VIII, Section 9), $0.15 per $100 assessed valuation, no part of which may be used for debt service. The County has not voted a special Road and Bridge Fund tax. Farm-to-Market and Flood Control Purposes . . . Imposed by the Texas Constitution (Article VIII, Section 1-a), $0.30 per $100 assessed valuation after exemption of residential homesteads up to $3,000; no allocation prescribed by statute between debt service and maintenance. The County has not voted a special tax for Farm-to-Market purposes. FINANCIAL POLICIES Basis of Accounting . . . The County’s accounting records of the governmental fund revenues and expenditures are recognized on the a cash basis. Revenues are recognized in the accounting period in which they are available and measurable. Expenditures are recognized in the accounting period in which the fund liability occurred, if measurable, except for unmatured interest on general long-term debt. Proprietary Fund revenues and expenses are recognized on the full accrual basis. Revenues are recognized in the accounting period in which they are earned and become measurable. Expenses are recognized in the accounting period in which they are incurred. Fund Balances . . . Fund balances will be maintained in an amount adequate to assure that any legal requirements are met and that adequate funds are available to meet cash flow requirements. It is the County’s intention to maintain in the General Fund 50% of the next year’s budgeted expenditures. Sixty days of operating expenditures are to be maintained in the Debt Service Fund. Cash balances are to be monitored yearly during budgeting preparation. Use of Bond Proceeds . . . The County’s policy is to use bond proceeds for capital expenditures only. Such revenues are never to be used to fund normal County operations. Budgetary Procedures . . . The County’s fiscal year is the twelve-month period beginning each October 1. Each year by the middle of June the departments submit to the County Auditor a budget of estimated expenditures for the ensuing fiscal year. After review by the County Auditor and the County Judge, a budget of estimated revenues and expenditures is submitted to the Commissioners Court. Subsequently, the Commissioners Court will hold work sessions to discuss and amend the budget to coincide with their direction of the County. Various public hearings may be held to comply with state statutes. The Commissioners Court will adopt a budget prior to October 1. If the Commissioners Court fails to adopt a budget then the budget proposed by the County Auditor is deemed to have been adopted. During the fiscal year, budgetary control is maintained by the monthly review of departmental appropriation balances. Actual operations are compared to the amounts set forth in the budget. Departmental appropriations that have not been expended lapse at the end of the fiscal year. Therefore, funds that are budgeted and not used by the departments during the fiscal year are not available for their use unless appropriated in the ensuing fiscal year’s budget.
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INVESTMENTS The County invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the Commissioners Court of the County. Both state law and the County’s investment policies are subject to change. LEGAL INVESTMENTS . . . Under State law, the County is authorized to invest in (1) obligations of the United States or its agencies and instrumentalities, including letters of credit; (2) direct obligations of the State of Texas or its agencies and instrumentalities; (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency 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 of Texas or the United States or their respective agencies and instrumentalities; (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than “A” or its equivalent; (6) bonds issued, assumed, or guaranteed by the State of Israel; (7) interest-bearing banking deposits that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund or their respective successors, or otherwise meeting the requirements of the Texas Public Funds Investment Act; (8) certificates of deposit and share certificates that (i) are issued by or through an institution that has its main office or a branch in Texas and (a) are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund or their respective successors, (b) are secured as to principal by obligations described in clauses (1) through (7) above, or (c) secured in any other manner and amount provided by law for County deposits, or (ii) certificates of deposit where (a) the funds are invested by the County through 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 County as required by law, or a depository institution that has its main office or a branch office in the State of Texas that is selected by the County; (b) the broker or the depository institution selected by the County 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 County, (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 County appoints the depository institution selected under (a) above, an entity as described by Section 2257.041(d) of the Texas Government Code, or a clearing broker-dealer registered with the United States Securities and Exchange Commission and operating pursuant to Securities and Exchange Commission Rule 15c3-3 as custodian for the County with respect to the certificates of deposit issued for the account of the County; (9) fully collateralized repurchase agreements that (i) have a defined termination date, (ii) are fully secured by a combination of cash and obligations described in clause (1), (iii) require the securities being purchased by the County or cash held by the County to be pledged to the County, held in the County’s name and deposited at the time the investment is made with the County or with a third party selected and approved by the County, and (iv) 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 (7) 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 (7) above and clauses (12) through (15) below, (ii) securities held as collateral under a loan are pledged to the County, held in the County’s name and deposited at the time the investment is made with the County or a third party designated by the County, (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State of Texas, and (iv) the agreement to lend securities has a term of one year or less; (11) certain bankers’ acceptances if the bankers’ acceptance (i) has a stated maturity of 270 days or fewer from the date of issuance, (ii) will be, in accordance with its terms, liquidated in full at maturity, (iii) is eligible for collateral for borrowing from a Federal Reserve Bank, and (iv) is accepted by a State or Federal bank, if the short-term obligations of the accepting bank or its holding company (if the accepting bank is the largest subsidiary) 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 (i) a stated maturity of 270 days or less from the date of issuance, and (ii) a rating of 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 that are (i) registered with and regulated by the United States Securities and Exchange Commission, (ii) provide the County with a prospectus and other information required by the Securities and Exchange Act of 1934; and (iii) comply with Federal Securities and Exchange Commission Rule 2a-7; (14) no-load mutual funds that are (i) registered with the United States Securities and Exchange Commission, (ii) have an average weighted maturity of less than two years, and (iii) either (a) have a duration of one year or more and are invested exclusively in obligations described in this paragraph, or (b) have a duration of less than one year and the investment portfolio is limited to investment grade securities, excluding asset- backed securities; (15) investment pools if the County has authorized investment in the particular pool and the pool invests solely in investments permitted by the Texas Public Funds Investment Act, and is continuously rated no lower than “AAA” or “AAA-m” or at an equivalent rating by at least one nationally recognized rating service; and (16) guaranteed investment contracts that (i) have a defined termination date, (ii) are secured by obligations which meet the requirements of the Texas Public Funds Investment Act in an amount at least equal to the amount of bond proceeds invested under such contract, and (iii) are pledged to the County and deposited with the County or with a third party selected and approved by the County. The County 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 County retains ultimate responsibility as fiduciary of its assets. In order to renew or extend such a contract, the County must do so by order, ordinance, or resolution. The County 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 final stated
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maturity of 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 State law, the County is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that include a list of authorized investments for County funds, the maximum allowable stated maturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups, methods to monitor the market price of investments acquired with public funds, requirements 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 Texas Public Funds Investment Act. All County funds must be invested consistent with a formally adopted “Investment Strategy Statement” that specifically addresses each fund’s investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield. Under State law, the County’s investments must be made “with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person’s own affairs, not for speculation, but for investment considering the probable safety of capital and the probable income to be derived.” At least quarterly the investment officers of the County must submit an investment report to the Commissioners Court detailing: (1) the investment position of the County, (2) that all investment officers jointly prepared and signed the report, (3) the beginning market value, and any additions and changes to market value and the ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) the investment strategy expressed in the County’s investment policy, and (b) the Public Funds Investment Act. No person may invest County funds without express written authority from the Commissioners Court. ADDITIONAL PROVISIONS . . . Under State law, the County is additionally required to: (1) annually review its adopted policies and strategies, (2) adopt an order 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 said order 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 County; (4) require the qualified representative of firms offering to engage in an investment transaction with the County to: (a) receive and review the County’s investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the County and the business organization that are not authorized by the County’s investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the County’s entire portfolio or requires an interpretation of subjective investment standards), and (c) deliver a written statement in a form acceptable to the County and the business organization attesting to these requirements; (5) perform an annual audit of the management controls on investments and adherence to the County’s investment policy; (6) provide specific investment training for the Treasurer, Chief Financial Officer, or other 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 repurchase agreement; (8) restrict the investment in mutual funds in the aggregate to no more than 80% of the County’s monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service and further restrict the investment in non-money market mutual funds of any portion of bond proceeds, reserves and funds held for debt service and to no more than 15% of the County’s monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service and further restrict the investment in no-load money market mutual funds of any portion of bond proceeds reserves and funds held for debt service to no more than 15% of the entity’s monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; (9) require local government investment pools to confirm 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 Issue. CURRENT INVESTMENTS TABLE 1 As of February 28, 2019, the County had no (unaudited) investable funds.
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TAX MATTERS
TAX EXEMPTION . . . The delivery of the Certificates is subject to the opinion of Bond Counsel to the effect that interest on the Certificates 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. 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. In rendering the foregoing opinions, Bond Counsel will rely upon representations and certifications of the County pertaining to the use, expenditure, and investment of the proceeds of the Certificates and will assume continuing compliance by the County with the provisions of the Order subsequent to the issuance of the Certificates. The Order contains covenants by the County with respect to, among other matters, the use of the proceeds of the Certificates and the facilities financed therewith by persons other than state or local governmental units, the manner in which the proceeds of the Certificates 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 Certificates to be includable in the gross income of the owners thereof from the date of the issuance of the Certificates. 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 County 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 Certificates is commenced, under current procedures the IRS is likely to treat the County as the “taxpayer,” and the owners of the Certificates 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 Certificates, the County may have different or conflicting interests from the owners of the Certificates. Public awareness of any future audit of the Certificates could adversely affect the value and liquidity of the Certificates 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 Certificates. Prospective purchasers of the Certificates should be aware that the ownership of tax-exempt obligations such as the Certificates 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 financial asset securitization investment trust (“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 certificateholders of the exclusion of interest on the Certificates 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 Certificates. Prospective purchasers of the Certificates 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 CERTIFICATES . . . The initial public offering price of certain Certificates (the “Discount Certificates”) may be less than the amount payable on such Certificates at maturity. An amount equal to the difference between the initial public offering price of a Discount Certificate (assuming that a substantial amount of the Discount Certificates 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 Certificate. A portion of such original issue discount allocable to the holding period of such Discount Certificate by the initial purchaser will, upon the disposition of such Discount Certificate (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 Certificates 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 Certificate, taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount Certificate 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. However, such interest may be required to be taken into account in determining 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 Certificate by the initial owner prior to maturity, the amount realized by such owner in
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excess of the basis of such Discount Certificate in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Discount Certificate was held) is includable in gross income. Owners of Discount Certificates should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Certificates for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Certificates. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Certificates 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 Certificates (the “Premium Certificates”) may be greater than the amount payable on such Certificates at maturity. An amount equal to the difference between the initial public offering price of a Premium Certificate (assuming that a substantial amount of the Premium Certificates 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 Certificates. The basis for federal income tax purposes of a Premium Certificate in the hands of such initial purchaser must be reduced each year by the amortizable certificate premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable certificate 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 Certificate. 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 Certificates should consult with their own tax advisors with respect to the determination of amortizable certificate premium on Premium Certificates for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Certificates.
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CONTINUING DISCLOSURE OF INFORMATION
In the Order, the County has made the following agreement for the benefit of the holders and beneficial owners of the Certificates. The County is required to observe the agreement for so long as it remains obligated to advance funds to pay the Certificates. Under the agreement, the County will be obligated to provide certain updated financial information and operating data annually, and timely notice of certain specified events, to the Municipal Securities Rulemaking Board (“MSRB”), who will make such information available to the general public, without charge, through its Electronic Municipal Markets Access (EMMA) system at www.emma.msrb.org.
ANNUAL REPORTS . . . The County will provide certain updated financial information and operating data annually to the MSRB. The information to be updated includes financial information and operating data with respect to the County of the general type included in Table 1 of this Official Statement and Tables 1-9 of Appendix A (the “Annual Financial Information”). The County will additionally provide financial statements of the County (the “Financial Statements”), that will be (i) prepared in accordance with the accounting principles described in APPENDIX D or such other accounting principles as the County may be required to employ from time to time pursuant to State law or regulation and shall be in substantially the form included in APPENDIX D and (ii) audited, if the County commissions an audit of such Financial Statements and the audit is completed within the period during which they must be provided. The County will update and provide the Annual Financial Information within six months after the end of each fiscal year and the Financial Statements within 6 months of the end of each fiscal year, in each case beginning with the fiscal year ending in and after 2018. The County may provide the Financial Statements earlier, including at the time it provides its Annual Financial Information, but if the audit of such Financial Statements is not complete within 6 months after any such fiscal year end, then the County shall file updated financial information within such 6 month period, unaudited financial statements within 12 months, and audited Financial Statements for the applicable fiscal year, when and if the audit report on such Financial Statements becomes available.
The County may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by SEC Rule 15c2-12 (the “Rule”).
The County’s current fiscal year end is September 30th, the Annual Financial Information must be provided by the last day of March in each year, and the Financial Statements must be provided by March 31st of each year, unless the County changes its fiscal year. If the County changes its fiscal year, it will notify the MSRB of the change.
NOTICE OF CERTAIN EVENTS . . . The County will also provide timely notices of certain events to the MSRB. The County will provide notice of any of the following events with respect to the Certificates 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 Certificates, or other material events affecting the tax status of the Certificates; (7) modifications to rights of holders of the Certificates, if material; (8) Certificate calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Certificates, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership, or similar event of the County, which shall occur as described below; (13) the consummation of a merger, consolidation, or acquisition involving the County 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; (14) appointment of a successor or additional trustee or the change of name of a trustee, if material; (15) incurrence of a financial obligation of the County (as defined by the Rule, which includes certain debt, debt-like, and debt-related obligations), if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of any such financial obligation of the County, any of which affect security holders, if material; and (16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of any such financial obligation of the County, any of which reflect financial difficulties. Neither the Certificates nor the Order make any provision for debt service reserves, credit enhancement or liquidity enhancement. In the Order, the County will adopt policies and procedures to ensure timely compliance of its continuing disclosure undertakings. In addition, the County will provide timely notice of any failure by the County to provide annual financial information in accordance with their agreement described above under “Annual Reports”.
For these purposes, any event described in (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 County 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 County, 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 County.
AVAILABILITY OF INFORMATION. . . In connection with its continuing disclosure agreement entered into with respect to the Certificates, the County will file all required information and documentation with the MSRB in electronic format in accordance with MSRB guidelines. Access to such filings will be provided, without charge to the general public, by the MSRB at www.emma.msrb.org.
LIMITATIONS AND AMENDMENTS . . . The County has agreed to update information and to provide notices of certain specified events only as described above. The County 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 County makes no representation or warranty concerning such information or concerning its usefulness to a
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decision to invest in or sell Certificates at any future date. The County disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Certificates may seek a writ of mandamus to compel the County to comply with its agreement.
The County 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 County, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Certificates in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Certificates consent to the amendment or (b) any person unaffiliated with the County (such as nationally recognized Bond Counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Certificates. The County 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 underwriter from lawfully purchasing or selling Certificates in the primary offering of the Certificates.
If the County so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under “Annual Reports” an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided.
COMPLIANCE WITH PRIOR UNDERTAKINGS . . . During the last five years, the County has complied in all material respects with all its continuing disclosure agreements pursuant to the Rule.
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LEGAL MATTERS LEGAL OPINION . . . Issuance of the Certificates are subject to the approving legal opinion of the Attorney General of Texas to the effect that the Initial Certificate is a valid and binding obligation of the County payable from the proceeds of an annual ad valorem tax levied, within the limits prescribed by law, upon all taxable property within the County, and based upon examination of a transcript of the proceedings incident to authorization and issuance of the Certificates, an opinion of Bond Counsel to the effect that the Certificates are valid and binding obligations of the County payable from the sources and enforceable in accordance with the terms and conditions described therein, except to the extent that the enforceability thereof may be affected by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors’ rights or the exercise of judicial discretion in accordance with general principles of equity. Bond Counsel’s legal opinion will also address the matters described above under “TAX MATTERS – Tax Exemption.” Such opinion will express no opinion with respect to the sufficiency of the security for or the marketability of the Certificates. In connection with the issuance of the Certificates, Bond Counsel has been engaged by, and only represents, the County. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information under the caption “THE CERTIFICATES” (except the information under the subcaptions “Sources and Uses of Proceeds” and “Certificateholders’ Remedies,” as to which no opinion is expressed), “TAX MATTERS,” “CONTINUING DISCLOSURE OF INFORMATION” (except the information under the subcaption “Compliance with Prior Undertakings,” as to which no opinion is expressed), and the subcaption “LEGAL MATTERS – Legal Opinion,” (except the last two sentences of the first paragraph thereof, as to which no opinion is expressed) in the Official Statement and such firm is of the opinion that the information relating to the Certificates and the legal issues contained under such captions and subcaptions is an accurate and fair description of the laws and legal issues addressed therein and, with respect to the Certificates, such information conforms to the provisions of the Order. Such firm has not, however, independently verified any of the factual information contained in this Official Statement nor has it conducted an investigation of the affairs of the County for the purpose of passing upon the accuracy or completeness of this Official Statement. No person is entitled to rely upon such firm’s limited participation as an assumption of responsibility for, or an expression of opinion of any kind with regard to the accuracy or completeness of any of the information contained herein. The legal fees to be paid Bond Counsel for services rendered in connection with the issuance of the Certificates are based upon a percentage of Certificates actually issued, sold and delivered, and therefore, such fees are contingent upon the sale and delivery of the Certificates. Certain legal matters will be passed upon for the Underwriters by their counsel, McCall, Parkhurst & Horton L.L.P., San Antonio, Texas. The legal fees of Underwriters’ counsel are contingent upon the delivery of the Certificates.
The various legal opinions to be delivered concurrently with the delivery of the Certificates 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. NO-LITIGATION CERTIFICATE . . . The County will furnish to the Underwriters a certificate, dated as of the date of delivery of the Certificates, executed by both the County Judge and County Clerk of the County, to the effect that no litigation of any nature has been filed or is then pending or threatened, either in state or federal courts, contesting or attacking the Certificates; restraining or enjoining the issuance, execution or delivery of the Certificates; affecting the provisions made for the payment of or security for the Certificates; in any manner questioning the authority or proceedings for the issuance, execution, or delivery of the Certificates; or affecting the validity of the Certificates.
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25
OTHER INFORMATION
RATING . . . The Certificates of the County have been rated “___” by S&P Global Ratings (“S&P”) without regard to credit enhancement. An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The rating reflects only the view of such organization and the County makes no representation as to the appropriateness of the rating. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by such rating company, if in the judgment of such company, circumstances so warrant. Any such downward revision or withdrawal of any of such rating may have an adverse effect on the market price of the Certificates. A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. REGISTRATION AND QUALIFICATION OF CERTIFICATES FOR SALE . . . The sale of the Certificates 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 Certificates have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Certificates been qualified under the securities acts of any jurisdiction. The County assumes no responsibility for qualification of the Certificates under the securities laws of any jurisdiction in which the Certificates may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Certificates shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. It is the obligation of the Underwriters to register or qualify the sale of the Certificates under the securities laws of any jurisdiction which so requires. The County agrees to cooperate, at the Underwriters’ written request and sole expense, in registering or qualifying the Certificates or in obtaining an exemption from registration or qualification in any state where such action is necessary; provided, however, that the County shall not be required to qualify as a foreign corporation or to execute a general or special consent to service of process in any jurisdiction. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS . . . Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Certificates are negotiable instruments, investment securities governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political subdivisions or public agencies of the State of Texas. With respect to investment in the Certificates by municipalities or other political subdivisions or public agencies of the State of Texas, the Public Funds Investment Act, Chapter 2256, Texas Government Code, requires that the Certificates be assigned a rating of not less than “A” or its equivalent as to investment quality by a national rating agency. See “OTHER INFORMATION – Rating” herein. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Certificates are legal investments for state banks, savings banks, trust companies with capital of one million dollars or more, and savings and loan associations. The Certificates are eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the County has been made of the laws in other states to determine whether the Certificates are legal investments for various institutions in those states. FINANCIAL ADVISOR . . . Specialized Public Finance Inc. is employed as Financial Advisor to the County in connection with the issuance of the Certificates. The Financial Advisor’s fee for services rendered with respect to the sale of the Certificates is contingent upon the issuance and delivery of the Certificates. Specialized Public Finance Inc., in their 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 Certificates, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. The Financial Advisor to the County 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 County 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. DISTRIBUTION AGREEMENT LANGUAGE . . . Citigroup Global Markets Inc., an underwriter of the Bonds, has entered into a retail distribution agreement with Fidelity Capital Markets, a division of National Financial Services LLC (together with its affiliates, “Fidelity”). Under this distribution agreement, Citigroup Global Markets Inc. may distribute municipal securities to retail investors at the original issue price through Fidelity. As part of this arrangement, Citigroup Global Markets Inc. will compensate Fidelity for its selling efforts. UNDERWRITING . . . The Underwriters have agreed, subject to certain conditions, to purchase the Certificates from the County, at a price equal to the initial offering prices to the public, as shown on page 2 of this Official Statement, less an underwriting discount of $ and no accrued interest. The Underwriters will be obligated to purchase all of the Certificates if any Certificates are purchased. The Certificates to be offered to the public may be offered and sold to certain dealers (including the Underwriters and other dealers depositing Certificates into investment trusts) at prices lower than the public offering prices of such Certificates, and such public offering prices may be changed, from time to time, by the Underwriters.
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The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement pursuant to their responsibilities to investors under the federal securities laws, but the Underwriters do not guarantee the accuracy or completeness of such information. The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the Underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various investment banking services for the County for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the County. FORWARD-LOOKING STATEMENTS . . . The statements contained in this Official Statement, and in any other information provided by the County, that are not purely historical, are forward-looking statements, including statements regarding the County’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 County on the date hereof, and the County assumes no obligation to update any such forward-looking statements. The forward-looking statements 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, therefore, there can be no assurance that the forward-looking statements included in this Official Statement would prove to be accurate. INFORMATION FROM OUTSIDE SOURCES . . . References to web site addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Unless specified otherwise, such web sites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement for purposes of, and as that term is defined, in the Rule. MISCELLANEOUS . . . The financial data and other information contained herein have been obtained from the County’s records, audited financial statements and other sources which 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. The Order authorizing the issuance of the Certificates will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Certificates by the Underwriters. CERTIFICATION AS TO OFFICIAL STATEMENT . . . At the time of payment for and delivery of the Certificates, the Underwriters will be furnished a certificate executed by the proper officials of the County acting in their official capacity, to the effect that: (a) the descriptions and statements of or pertaining to the County contained in the final Official Statement, and any addenda, supplement or amendment thereto, for the Certificates, on the date of such final Official Statement, on the date of sale of said Certificates, and on the date of the delivery, were and are true and correct in all material respects; (b) insofar as the County and its affairs, including its financial affairs, are concerned, such final Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and statements including financial data, of or pertaining to entities, other than the County, and their activities contained in such final Official Statement are concerned, such statements and data have been obtained from sources which the County believes to be reliable and the County 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 County, since September 30, 2017, the date of the last financial statements of the County appearing in the final Official Statement as APPENDIX D.
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Except as set forth in “CONTINUING DISCLOSURE OF INFORMATION” herein, the County has no obligation to disclose any changes in the affairs of the County and other matters described in this Official Statement subsequent to the “end of the underwriting period” which shall end when the County delivers the Certificates to the Underwriters at closing, unless extended by the Underwriters. All information with respect to the resale of the Certificates subsequent to the “end of the underwriting period” is the responsibility of the Underwriters. This Official Statement will be approved by the Commissioners Court of the County for distribution in accordance with the provisions of the Securities and Exchange Commission’s rule codified at 17 C.F.R. Section 240.15c2-12, as amended. County Judge Robertson County, Texas ATTEST: County Clerk Robertson County, Texas
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APPENDIX A
FINANCIAL INFORMATION OF THE ISSUER
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FINANCIAL INFORMATION OF THE ISSUER
ASSESSED VALUATION TABLE 1
2018/2019 Actual Market Value of Taxable Property $4,914,849,646 Less:Disabled Veteran $11,937,906Local Over-65 Exemption 5,600,949Minimum $500 41,769TCEQ/Pollution Control 260,884,070Absolute 188,790Abatement 4,775,147Productivity Loss 1,790,190,557Homesite Cap Loss 38,711,827 $2,112,331,015
2018/2019 Net Taxable Assessed Valuation $2,802,518,631
GENERAL OBLIGATION BONDED DEBT
(As of March 1, 2019)
General Obligation Debt Outstanding(1):
The Certificates(2) $16,000,000 Total General Obligation Tax Debt $16,000,000
Total General Obligation Debt Outstanding $16,000,000
Unaudited, Interest & Sinking Fund Balance as of September 30, 2018 $0
2018/2019 Net Taxable Assessed Valuation $2,802,518,631
Ratio General Obligation Debt to Net Taxable Assessed Valuation 0.57%
Area of County: 866 Square MilesEstimated Population: 17,203 in Year 2018
Per Capital 2018 Net Taxable Assessed Valuation: $162,909Per Capital 2018 General Obligation Tax Debt: $930
DEBT OBLIGATIONS - CAPITAL LEASE AND NOTES PAYABLE TABLE 2
- None -
____________________Note: The above information was taken from the Issuer’s 2017 Annual Financial Report.
_______________________(1) See "AD VALOREM TAX PROCEDURES" in the Official Statement for a description of the Issuer's taxation procedures.(2) Preliminary, subject to change.
_______________________Note: The above figures were taken from the Robertson County Appraisal District which is compiled during the initial phase of the tax year and are subject tochange.
A-1
ESTIMATED LIMITED TAX DEBT SERVICE REQUIREMENTS*
Principal Interest
2019 $0 $0 $0
2020 $340,000 $627,894 967,894 967,894
2021 470,000 502,020 972,020 972,020
2022 475,000 492,570 967,570 967,570
2023 485,000 482,970 967,970 967,970
2024 495,000 473,170 968,170 968,170
2025 505,000 463,170 968,170 968,170
2026 515,000 452,970 967,970 967,970
2027 530,000 441,990 971,990 971,990
2028 540,000 428,060 968,060 968,060
2029 560,000 411,560 971,560 971,560
2030 575,000 394,535 969,535 969,535
2031 590,000 377,060 967,060 967,060
2032 610,000 358,603 968,603 968,603
2033 630,000 337,970 967,970 967,970
2034 655,000 315,483 970,483 970,483
2035 675,000 292,208 967,208 967,208
2036 700,000 268,145 968,145 968,145
2037 725,000 243,208 968,208 968,208
2038 750,000 217,395 967,395 967,395
2039 780,000 190,035 970,035 970,035
2040 810,000 159,600 969,600 969,600
2041 845,000 126,500 971,500 971,500
2042 875,000 92,100 967,100 967,100
2043 915,000 56,300 971,300 971,300
2044 950,000 19,000 969,000 969,000
$0 $16,000,000 $8,224,514 $24,224,514 $24,224,514
TAX ADEQUACY
2018/2019 Net Taxable Assessed Valuation $2,802,518,631
Estimated Maximum Annual Debt Service Requirements for Year Ending: 9/30/2021 $972,020
Indicated Interest and Sinking Fund Tax Rate $0.04
Indicated Interest and Sinking Fund Tax Rate at the following Collection: 98% $985,537
INTEREST AND SINKING FUND MANAGEMENT INDEX
Unaudited, Interest & Sinking Fund Balance as of September 30, 2018 $0
2018 Interest and Sinking Fund Limited Tax Levy @ 98% Collections Produce 0
Total Available for Debt Service $0
Less: Limted Tax Debt Service Requirements, Fiscal Year Ending: 9/30/2019 0
Estimated Balance at Fiscal Year Ending: September 30, 2019 $0
_______________________*Preliminary, subject to change.
The Certificates*Current Total Debt
Service
Fiscal Year
Ending 9/30Combined
Debt Service*Principal &
Interest
A-2
ESTIMATED PRINCIPAL REPAYMENT SCHEDULE*
Fiscal YearEnding 9/30
Currently Outstanding Obligations Principal
Repayment Schedule
The Certificates
Principal Repayment Schedule*
Combined Principal
Repayment Schedule*
2019 $0
2020 $340,000 $340,000 $15,660,000 2.13%
2021 470,000 470,000 15,190,000
2022 475,000 475,000 14,715,000
2023 485,000 485,000 14,230,000
2024 495,000 495,000 13,735,000
2025 505,000 505,000 13,230,000 17.31%
2026 515,000 515,000 12,715,000
2027 530,000 530,000 12,185,000
2028 540,000 540,000 11,645,000
2029 560,000 560,000 11,085,000
2030 575,000 575,000 10,510,000 34.31%
2031 590,000 590,000 9,920,000
2032 610,000 610,000 9,310,000
2033 630,000 630,000 8,680,000
2034 655,000 655,000 8,025,000
2035 675,000 675,000 7,350,000 54.06%
2036 700,000 700,000 6,650,000
2037 725,000 725,000 5,925,000
2038 750,000 750,000 5,175,000
2039 780,000 780,000 4,395,000
2040 810,000 810,000 3,585,000 77.59%
2041 845,000 845,000 2,740,000
2042 875,000 875,000 1,865,000
2043 915,000 915,000 950,000 94.06%
2044 950,000 950,000 0 100.00%
$0 $16,000,000 $16,000,000
Percent of Principal Retired
_______________________*Preliminary, subject to change.
Obligations Remaining
Outstanding at End of the Year*
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NET TAXABLE ASSESSED VALUATION FOR YEARS 2014-2018 TABLE 3
TaxYear Percent (%)
2014 $3,271,168,966 $5,649,545 0.2%
2015 3,237,225,870 -33,943,096 -1.0%
2016 3,032,273,029 -204,952,841 -6.3%
2017 2,806,673,783 -225,599,246 -7.4%
2018 2,802,518,631 -4,155,152 -0.1%
PRINCIPAL TAXPAYERS TABLE 4
Oak Grove Management Co. $868,970,885 31.01%
Union Pacific Failroad Co. 102,764,345 3.67%
Covey Park Operating LLC (WI) 71,610,879 2.56%
Tanos Exploration II LLC 57,383,333 2.05%
Trend Gathering & Treating LP 54,043,288 1.93%
Major Oak Power, LLC 37,845,996 1.35%
Texas-New Mexico Power Co. 33,742,795 1.20%
XTO Energy Inc. 29,451,124 1.05%
Motiva Enterprises LLC 24,022,360 0.86%
Wildhorse Resources MNGT Co. LLC 23,088,300 0.82%
Total (46.49% of 2018 Net Taxable Assessed Valuation) $1,302,923,305 46.49% *
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Net Taxable
________________ Note: The above figures were taken from the Robertson County Appraisal District, Texas Municipal Reports published by the Municipal Advisory Council of Texas and theIssuer’s 2017 Annual Financial Report.
Name
Oil & Gas
2018 Net TaxableAssessed Valuation
Electrical Power Utility
Oil & Gas
% of Total 2018
Amount ($)Change From Preceding Year
Coal Power Plant
Oil & Gas
Oil & Gas
Lignite-Fired Power Plant
Railroad Utility
*As shown in the table above, the top ten taxpayers in the County account for in excess of 46% of the County’s tax base. Adverse developments in economic conditions,especially in a particular industry in which any one of these large taxpayers participates, could adversely impact these businesses and, consequently, the tax values in theCounty, resulting in less local tax revenue. If any major taxpayer, or a combination of top taxpayers, were to default in the payment of taxes, the ability of the County tomake timely payment of debt service on the Certificates may be dependent on its ability to enforce and liquidate its tax lien, which is a time consuming process that may onlyoccur annually. See “THE CERTIFICATES – Certificateholders’ Remedies” in this Official Statement.
Oil & Gas
________________ Note: The above figures were from the Robertson County Appraisal District's Office.
Type of Property
Oil & Gas
Assessed Valuation
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CLASSIFICATION OF ASSESSED VALUATION TABLE 5
2018% ofTotal 2017
% ofTotal 2016
% ofTotal
Single-Family Residence $419,492,328 8.54% $404,253,813 9.21% $366,356,028 7.80%Multi-Family Residence 11,166,104 0.23% 10,654,370 0.24% 9,719,858 0.21%Vacant Lot 20,693,616 0.42% 17,008,098 0.39% 18,515,145 0.39%Ag Land 1,960,565,581 39.89% 1,419,529,028 32.35% 1,407,456,144 29.98%Farm & Ranch Improvement 341,249,295 6.94% 301,999,615 6.88% 287,462,242 6.12%Commercial, Real 71,176,446 1.45% 63,518,336 1.45% 61,447,236 1.31%Industrial, Real 1,150,841,683 23.42% 1,187,751,770 27.07% 1,570,743,656 33.46%Minerals 379,588,036 7.72% 441,971,028 10.07% 417,100,997 8.88%Industrial 291,078,437 5.92% 274,579,806 6.26% 268,097,358 5.71%Commercial, Personal 29,494,555 0.60% 32,106,360 0.73% 30,994,496 0.66%Industrial, Personal 212,847,419 4.33% 209,450,042 4.77% 232,647,027 4.96%Tangible, Other 26,081,302 0.53% 24,888,015 0.57% 23,567,501 0.50%Residential Inventory 123,750 0.00% 135,000 0.00% 185,625 0.00%Totally Exempt Property 451,094 0.01% 277,752 0.01% 468,050 0.01%Total Appraised Value $4,914,849,646 100.00% $4,388,123,033 100.00% $4,694,761,363 100.00% Less:Disabled Veteran $11,937,906 $9,622,595 $7,417,305Local Over-65 Exemption 5,600,949 5,408,571 5,413,881Minimum $500 41,769 31,256 33,705TCEQ/Pollution Control 260,884,070 261,610,492 349,712,030Absolute 188,790 42,529 329,615Abatement 4,775,147 0 1,027,802Productivity Loss 1,790,190,557 1,257,404,608 1,257,863,462Homesite Cap Loss 38,711,827 47,329,199 40,693,534Net Taxable Assessed Valuation $2,802,518,631 $2,806,673,783 $1,670,436,070
TAX DATA TABLE 6
Tax Tax Tax % Collections Year Year Rate Levy Current Total Ended2014 $3,271,168,966 $0.4377 $14,273,689 98.30 100.00 9/30/20152015 3,237,225,870 0.4750 15,198,181 84.60 86.70 9/30/20162016 3,032,273,029 0.4950 13,345,759 98.40 100.00 9/30/20172017 2,806,673,783 0.4580 13,148,438 98.50* 100.00* 9/30/20182018 2,805,839,135 0.4850 13,608,320 (in process) 9/30/2019
Category
Net Taxable Assessed Valuation
_______________Note: The above figures were taken from the Issuer’s 2017 Annual Financial Report, Robertson County Appraisal District, the Robertson County Tax Assessor-Collector's Office and information provided by the Issuer.*Unaudited, as of September 30, 2018.
___________________________Note: The above figures were taken from the Robertson County Appraisal District which is compiled during the initial phase of the tax year and subject to change.
Taxes are due October 1 and become delinquent after January 31. No split payments or discounts are allowed. Penalties and Interest: (a) a delinquent tax incurs apenalty of six percent of the amount of the tax for the first calendar month it is delinquent plus one percent for each additional month or portion of a month the taxremains unpaid prior to July 1 of the year in which it becomes delinquent. However, a tax delinquent on July 1 incurs a total penalty of twelve percent of the amount ofthe delinquent tax without regard to the number of months the tax has been delinquent; (b) a delinquent tax accrues interest at a rate of one percent for each month orportion of a month the tax remains unpaid; and an additional penalty up to a maximum of 20% of taxes, penalty and interest may be imposed to defray costs of collectionfor taxes delinquent after July 1. All percentage of collections set forth below exclude penalties and interest.
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TAX RATE DISTRIBUTION TABLE 7
Tax Year 2018 2017 2016 2015 2014Maintenance & Operations $0.4850 $0.4580 $0.4950 $0.4580 $0.4133Interest & Sinking 0.0000 0.0000 0.0000 0.0000 0.0244Total $0.4850 $0.4580 $0.4950 $0.4580 $0.4377
TABLE 8
9/30/2018* 9/30/2017 9/30/2016 9/30/2015 9/30/2014
ReceiptsTaxes $9,599,085 $10,916,257 $8,766,297 $9,187,551 $8,851,063Intergovernemtnal 99,924 215,873 362,032 109,004 102,779Fines, fees and forfeitures 870,953 858,177 841,161 1,003,264 1,022,233Interest 38,496 35,779 29,805 27,054 28,136Other 89,420 276,437 373,906 220,170 280,806 Total Revenues $10,697,878 $12,302,523 $10,373,201 $10,547,043 $10,285,017
DisbursementsGeneral government $2,838,383 $2,745,859 $2,957,261 $3,174,343 $3,223,853Judicial 1,390,630 1,240,766 1,288,072 1,285,911 1,324,074Legal 1,064,535 1,046,477 1,172,964 1,169,367 1,188,569Public safety 2,974,452 2,726,669 3,025,250 2,883,189 2,869,739Health and welfare 170,979 170,658 168,622 183,358 166,244Conservation 243,322 229,675 235,072 203,605 201,211Capital outlay 1,075,726 209,666 223,055 162,818 3,407,185 Total Disbursements $9,758,027 $8,369,770 $9,070,296 $9,062,591 $12,380,875
Over Expenditures $939,851 $3,932,753 $1,302,905 $1,484,452 ($2,095,858)
$0 $0 $0 $1,022 60811,654 0 0 0 0
0 0 0 0 152,748-425,968 (45,000) (1,271,844) (10,000) (46,738)
0 0 0 0 00 0 0 0 0
-$414,314 ($45,000) ($1,271,844) ($8,978) $106,618
$525,537 $3,887,753 $31,061 $1,475,474 ($1,989,240)
$14,323,100 $10,435,347 $10,404,286 $8,928,812 $10,918,052$14,848,637 * $14,323,100 $10,435,347 $10,404,286 $8,928,812
________________Note: The above information was taken from the Issuer’s 2017 Annual Financial Report and the Robertson County Appraisal District.
Total Other Financing Sources (Uses):
Cash Basis Fund Balance, Ending___________________Note: The above information was taken from the Issuer’s Annual Reports dated September 30, 2013 – 2017.*The County estimates the unaudited general fund balance as of September 30, 2018 will be approximately $14,848,637.
Other Financing Sources (Uses):
Insurance Recoveries
Fiscal Year Ended
Cash Basis Fund Balance, Beginning
Transfers InTransfers Out
Proceeds from Sale of Assets
Excess (Deficit) of Revenues
Capital Leases
Net Change in Cash Basis Fund Balance
Proceeds from sale of assets
SCHEDULE OF CASH RECEIPTS, DISBURSEMENTS, AND CHANGES INCASH BASIS FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND
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(As of February 28, 2019)
Bremond ISD $9,044,999 90.03% $8,143,212
Bryan ISD 197,820,000 0.34% 672,588
Calvert ISD 0 100.00% 0
Franklin ISD 7,640,000 100.00% 764,000
Groesbeck ISD 12,512,000 1.46% 182,675
Hearne ISD 9,135,000 100.00% 9,135,000
Hearne, City of 0 100.00% 0
Leon ISD 6,265,000 7.67% 480,526
Total Gross Overlapping Debt $19,378,001
Robertson County 16,000,000 * 100.00% 16,000,000 *
Total Direct and Overlapping G.O. Debt $35,378,001 *
Ratio of Direct and Overlapping Debt to the 2018 Assessed Valuation 1.26% *Per Capita Overlapping Debt $2,057 *
Subdivision 2018 Net Assessed Valuation 2018 Tax RateBremond ISD $274,834,917 $1.3433Bryan ISD 7,500,303,568 1.3400Calvert ISD 121,502,472 1.1600Franklin ISD 1,725,341,860 1.2300Groesbeck ISD 1,286,014,483 1.2775Hearne ISD 417,846,198 1.2600Hearne, City of 210,437,268 0.7104Leon ISD 731,691,567 1.2500
Subdivision Date of Authorization PurposeAmount
Authorized UnissuedBremond ISD NoneBryan ISD 5/4/2002 Communication System $3,700,000 $3,698,053 $1,947Calvert ISD NoneFranklin ISD NoneGroesbeck ISD 11/7/2017 School Building & Buses 5,000,000 2,300,000 2,700,000 Hearne ISD NoneHearne, City of NoneLeon ISD NoneSouth Limestone Hospital District NoneRobertson County None
The following table indicates the indebtedness, defined as outstanding bonds payable from ad valorem taxes, of governmental entities overlapping the City andthe estimated percentages and amounts of such indebtedness attributable to property within the County. Expenditures of the various taxing bodies overlapping theterritory of the County are paid out of ad valorem taxes levied by these taxing bodies on properties overlapping the County. These political taxing bodies areindependent of the County and may incur borrowings to finance their expenditures. The following statements of direct and estimated overlapping ad valorembonds were developed from information contained in the "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for theamounts relating to the County, the County has not independently verified the accuracy or completeness of such information, and no person should rely uponsuch information as being accurate or complete.
Furthermore, certain of the entities below may have authorized or issued additional bonds since the date stated below, and such entities may have programsrequiring the authorization and/or issuance of substantial amounts of additional bonds, the amount of which cannot be determined.
OVERLAPPING DEBT DATA AND INFORMATION
AmountOverlappingTaxing Jurisdiction
% OverlappingGross Debt
Issued To-Date
________________Source: Texas Municipal Reports published by the Municipal Advisory Council of Texas.
________________Source: Texas Municipal Reports published by the Municipal Advisory Council of Texas.*Includes the Certificates. Preliminary, subject to change.
ASSESSED VALUATION AND TAX RATE OF OVERLAPPING ISSUERS
AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS OF DIRECT AND OVERLAPPING GOVERNMENTAL SUBDIVISIONS
________________Source: Robertson County Appraisal District.
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TABLE 9
Plan Description:
Benefits Provided
Employees covered by benefit terms
Inactive employees or beneficiaries currently receiving benefits 55Inactive employees entitled to but not yet receiving benefits 64Active employees 119
*Averages reported for all active and inactive employees. Average service includes all proportionate service.
Contributions:
Net Pension Liability
The County participates in a nontraditional defined benefit pension plan in the statewide Texas County and District Retirement System(“TCDRS”). The Board of Trustees of TCDRS is responsible for the administration of the statewide agent, multiple-employer, publicemployee retirement system consisting of nontraditional defined benefit pension plans. TCDRS issues a publicly available comprehensiveannual financial report (CAFR) that can be obtained at www.tcdrs.org.
DEFINED BENEFIT PENSION PLAN
At the December 31, 2016 valuation and measurement date, the following employees were covered by the benefit terms:
TCDRS provides retirement, disability and survivor benefits for all eligible employees. Benefit terms are established by the TCDRS Act.The benefit terms may be amended as of January 1, each year, but must remain in conformity with the Act.
All full and part-time non-temporary employees participate in the plan, regardless of the number of hours they work in a year. Employees in a temporary position are not eligible for membership.
The County’s Net Pension Liability (NPL) was measured as of December 31, 2016, and the Total Pension Liability (TPL) used to calculatethe Net Pension Liability was determined by an actuarial valuation as of that date.
Employees for the County were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution rates forthe County were 7.98% and 7.41% in calendar years 2016 and 2017, respectively. The County’s contributions to TCDRS for the yearended September 30, 2017, were $404,187, and were equal to the required contributions.
The contribution rates for employees in TCDRS are either 4%, 5%, 6%, or 7% of employee gross earnings, as adopted by the employer’sgoverning body. Participating employers are required to contribute at actuarially determined rates to ensure adequate funding for eachemployer’s plan. Under the state law governing TCDRS, the contribution rate for each entity is determined annually by the actuary andapproved by the TCDRS Board of Trustees. The replacement life entry age actuarial cost method is used in determining the contributionrate. The actuarially determined rate is the estimated amount necessary to fund benefits in an orderly manner for each participate over his orher career so that sufficient funds are accumulated by the time benefit payments begin, with an additional amount to finance any unfundedaccrued liability.
Members can retire at age 60 and above with 8 or more years of service, with 20 years of service regardless of age, or when the sum of theirage and years of service equals 75 or more. Members are vested after eight years of service, but must leave their accumulated contributionsin the plan to receive any employer-financed benefit. Members who withdraw their personal contributions in a lump sum are not entitled toany amounts contributed by their employer.
Benefit amounts are determined by the sum of the employee’s contributions to the plan, with interest, and employer-financed monetarycredits. The level of these monetary credits is adopted by the governing body of the employer within the actuarial constraints imposed bythe TCDRS Act so that the resulting benefits can be expected to be adequately financed by the employer’s commitment to contribute. Bylaw, employee accounts can earn 7% interest. At retirement, death or disability, the benefit is calculated by converting the sum of theemployee’s accumulated contributions and the employer-financed monetary credits to a monthly annuity using annuity purchase ratesprescribed by the TCDRS Act.
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Actuarial Assumptions:
Inflation 3.0% per yearOverall payroll growth 3.5% per yearInvestment rate of return 8.0%, net of pension plan investment expense, including inflation
Depositing members
Disabled retirees
Asset Class Benchmark
US Equities Dow Jones U.S. Total Stock Market Index 1.50% 4.70%
Private Equity Cambridge Associates Global Private Equity & 16.00% 7.70%
Venture Capital Index (3)
Global Equities MSCI World (net) Index 1.50% 5.00%
International Equities - Developed MSCI World Ex USA (net) 10.00% 4.70%
International Equities - Emerging MSCI EM Standard (net) Index 7.00% 5.70%
Investment-Grade Bonds Bloomberg Barclays U.S. Aggregate Bond Index 3.00% 0.60%
High-Yield Bonds Citigroup High-Yield Cash-Pay Capped Index 3.00% 3.70%
Opportunistic Credit Citigroup High-Yield Cash-Pay Capped Index 2.00% 3.83%
Direct Lending S&P/LSTA Leveraged Loan Index 10.00% 8.15%
Distressed Debt Cambridge Associates Distressed Securities Index (4) 3.00% 6.70%
REIT Equities 67% FTSE NAREIT Equity REITs Index + 33% FTSE 3.00% 3.85%
Master Limited Partnerships (MLPs) Alerian MLP Index 3.00% 5.60%
Private Real Estate Partnerships Cambridge Associates Real Estate Index (5) 6.00% 7.20%
Hedge FundsHedge Fund Research, Inc. (HFRI) Fund of FundsComposite Index
20.00% 3.85%
DEFINED BENEFIT PENSION PLAN (continuation)
The Total Pension Liability in the December 31, 2016, actuarial valuation was determined using the following actuarial assumptions:
The County has no automatic cost-of-living adjustments (“COLA”) and one is not considered to be substantively automatic. Therefore, no assumption forfuture cost-of-living adjustments is included in the actuarial valuation. Each year, the County may elect an ad-hoc COLA for its retirees.
Mortality rates for active members, retirees, and beneficiaries were based on the following:
The actuarial assumptions that determined the total pension liability as of December 31, 2016, were based on the results of an actuarial experience study forthe period January 1, 2009 through December 31, 2012, except for mortality assumptions. Mortality assumptions were updated for the 2015 valuation toreflect projected improvements.
Geometric Real Rate of Return
(Expected minus Inflation)(2)
Target
allocation(1)
(1) Target asset allocation adopted at the April 2017 TCDRS Board meeting.(3) Includes vintage years 2006-present of Quarter Pooled Horizon IRRs.(4) Includes vintage years 2005-present of Quarter Pooled Horizon IRRs.(5) Includes vintage years 2007-present of Quarter Pooled Horizon IRRs.(2) Geometric real rates of return equal the expected return minus the assumed inflation rate of 2.0%, per Cliffwater's 2017 capital market assumptions.
The RP-2000 Active Employee Mortality Table for males with a two-year set-forward and the RP-2000 ActiveEmployee Mortality Table for females with a four-year setback, both projected to 2014 with scale AA and thenprojected with 110% of the MP-2014 Ultimate scale after that.
The RP-2000 Combined Mortality Table projected to 2014 with scale AA and then projected with 110% of the MP-2014 Ultimate scale after that, with a one-year set-forward for males and no age adjustment for females.
RP-2000 Disabled Mortality Table projected to 2014 with scale AA and then projected with 110% of the MP-2014Ultimate scale afterthat, with no age adjustment for males and a twoyear set-forward for females.
Service retirees, beneficiaries and non-depositing members
The long-term expected rate of return on TCDRS is determined by adding inflation to expected long-term real returns, and reflecting expected volatility andcorrelation. The capital market assumptions and information below are based on January 2017 information for a 7 to 10 year time horizon. The valuationassumption for long-term expected return is re-assessed at a minimum of every four years, and is set based on a 30-year time horizon; the most recent analysiswas performed in 2013. The target allocation and best estimates of geometric real rates return for each major assets class are summarized in the followingtable:
The long-term expected rate of return on pension plan investments is 8.0%. The pension plan’s policy in regard to the allocation of invested assets isestablished and may be amended by the TCDRS Board of Trustees.
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Discount Rate:
Changes in the Net Pension Liability:
Total Pension Liability
(a)
Plan FiduciaryNet Pension
(b)
Net PensionLiability(a) - (b)
Balance at 12/31/2015 $19,742,396 $18,338,766 $1,403,630
Changes for the year:
Service Cost 727,240 0 727,240
Interest on total pension liability (1) 1,600,484 0 1,600,484
(252,081) 0 (252,081)
Refund of contributions (76,405) (76,405) 0
(616,837) (616,837) 0
Administrative expenses 0 (14,765) 14,765
Member contributions 0 385,966 (385,966)
Net investment income 0 1,358,554 (1,358,554)
Employer contributions 0 440,002 (440,002)
Other(2) 0 (73,972) 73,972
Balance at 12/31/2016 $21,124,797 $19,741,309 $1,383,488
Sensitivity Analysis:
1% Decrease 7.10%
Current Discount Rate
8.10%1% Increase
9.10%
Total pension liability $24,071,459 $21,124,797 $18,686,806
Fiduciary net position 19,741,309 19,741,309 19,741,309
$4,330,150 $1,383,488 ($1,054,503)
Pension Plan Fiduciary Net Position:
DEFINED BENEFIT PENSION PLAN (conclusion)
The discount rate used to measure the Total Pension Liability was 8.1%. The projection of cash flows used to determine the discountrate assumed that employee and employer contributions will be made at the rates specified in statue. Based on that assumption, thepension plan’s Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active andinactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all period of projectedbenefit payments to determine the Total Pension Liability.
Increase (Decrease)
Benefit payments
The following presents the net pension liability of the County, calculated using the discount rate of 8.1%, as well as what the County’snet pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (7.1%) or 1-percentage-higher(9.1%) than the current rate:
Net pension liability (asset)
Detailed information about the pension plan’s Fiduciary Net Position is available in a separately-issued TCDRS financial report. The reportmay be obtained on the Internet at www.tcdrs.org.
___________________Note: The above information was taken from the Issuer’s Annual Reports dated September 30, 2017.
Effect of economic/demographic gains or losses
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OTHER POSTEMPLOYMENT BENEFITS – GROUP TERM LIFE INSURANCE
Plan Description:
Funding Policy:
OTHER POSTEMPLOYMENT BENEFITS – HEALTH CARE PLAN (continuation)
Plan Description:
Funding Policy:
Attained Age Rate Per Month
65-69 155
70-74 186
75-79 220
80-84 251
85-89 278
90+ 290
Rate Per Month
All Retirees 199
A county employee, which shall include an employee whose salary is covered in part by the State of Texas, who has a minimum of twenty (20) yearsof service to the County and who is not otherwise eligible to draw retirement benefits through the Texas County and District Retirement System andwho is covered by county benefits at the time of separation from employment with the County may continue to receive and be covered by the medicaland dental insurance coverage for a period of years commensurate with service as defined in paragraph 7 herein.
The contribution requirements of plan members and the County are established and may be amended by the Commissioners’ Court. The requiredcontribution is based on projected pay-as-you-go financing requirements in the form of insurance premiums paid to the insurance company. TheCounty does not provide any additional amount to prefund benefits nor does the plan have an actuarial valuation. The County contributes 100 percentof a premium amount established by the insurance company and approved by the Commissioners’ Court for eligible retirees. The monthly premiumspaid by the County are as follows:
Eligible retirees include all employees leaving County employment who are at least sixty (60) years of age and have at least eight (8) years of Countyservice or whose combined age and total County service (each rounded down to whole years) is seventy-five (75) or more and are eligible to draw anannuity through the Texas District & County Retirement System.
Medical
Prescription-Part D
___________________Note: The above information was taken from the Issuer’s Annual Reports dated September 30, 2017.
The County participates in a cost-sharing multiple-employer defined-benefit group term life insurance plan operated by the Texas County & DistrictRetirement System (TCDRS). This plan is referred to as the Group Term Life Fund (GTLF). This optional plan provides group term life insurancecoverage to current eligible employees and, if elected by employers, to retired employees. The coverage provided to retired employees is apostemployment benefit other than pension benefits (OPEB). Retired employees are insured for $5,000.
The GTLF is a separate trust administered by the TCDRS board of trustees. TCDRS issues a publicly available comprehensive annual financial report(CAFR) that includes financial statements and required supplementary information for the GTLF. This report is available at www.tcdrs.org. TCDRS’CAFR may also be obtained by writing to the Texas County & District Retirement System, P. O. Box 2034, Austin, Texas 78768-2034, or by calling800-823-7782.
Each participating employer contributes to the GTLF as a contractually required rate. An annual actuarial valuation is performed and the contractualrate is determined using the unit credit method for providing one-year term life insurance. Robertson County, Texas’ contributions to the GTLF forthe years ended September 30, 2017, 2016, and 2015, were $18,900, $18,670, and $20,157, respectively, which equaled the contractually requiredcontributions each year.
The County Employees Health Care Plan (CEHP) is a single-employer defined benefit health care plan administered by the County’s health insurancecarrier. The obligation for payment of benefits has been effectively transferred from the County to the insurance company, and the County has notguaranteed benefits in the event of the insurance company’s insolvency. The CEHP provides medical and dental insurance benefits to eligible retireesand their spouses through this plan. The Commissioners’ Court has the authority to establish and amend benefit provisions to. The CEHP does notissue a separate publicly available financial report.
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OTHER POSTEMPLOYMENT BENEFITS – HEALTH CARE PLAN (conclusion)
Service Maximum Coverage
Less than 20 years 10 years
20 or more years 20 years
25 or more years 25 years
30 or more years Life
Health and Dental coverage for retirees under this policy will begin at the time of retirement (defined as the date of separation from actual Countyemployment) and continue thereafter as defined below or so long as is economically feasible to the County.
Robertson County reserves the right to place a cap on the amount of monthly premium to be paid for the Retiree Insurance and may require the retireeto pay a portion of the monthly premium should the premiums rise above the cap. Premiums that are due from the retiree must be paid to the CountyTreasurer each month by the first day of each month or said coverage will be terminated.
Retiree’s when eligible for Medicare benefits will be required to enroll in both part A & part B Medicare insurance to be eligible to participate in theretiree insurance program. Retirees will be afforded the opportunity to add their dependents at the time of open enrollment or within 30 days after aqualifying event. Dependent coverage premiums must be paid to the County Treasurer each month by the first day of each month or said coverage willbe terminated.
Retirees will be afforded the opportunity to remain on the Medicare supplement policy with Robertson County after their coverage period has expiredas long as the premiums are paid by the Retiree to the County Treasurer by the first day of each month or said coverage will be terminated.
Once coverage is terminated, the retiree will not be allowed to re-enroll in the insurance program after the expiration of 12 months from the date oftermination.
Contributions Made. For fiscal year 2017, retiree and beneficiaries receiving benefits contributed $30,189 in the form of insurance premiumpayments and the County contributed $130,391.
___________________Note: The above information was taken from the Issuer’s Annual Reports dated September 30, 2017.
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APPENDIX B
GENERAL INFORMATION REGARDING THE COUNTY
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GENERAL INFORMATION REGARDING ROBERTSON COUNTY, TEXAS
Robertson County (the “County”), located in east central Texas, was created in 1838. County Seat: Franklin Economic Base: Mineral: Oil, lignite, coal and gas. Industry: Oil production, government, gas production and agribusiness. Agricultural: Poultry, irrigation, hay, cotton, corn and beef cattle. Oil & Gas 2018: The oil production for this county accounts for 0.08% of the total state production. The county ranks 69 out of all the counties in Texas for oil production. The gas production for this county accounts for 1.26% of the total state production. The county ranks 22 out of all the counties in Texas for gas production.
Oil Production (Texas Railroad Commission): Year Description Volume % Change From Previous Year 2017 Oil 974,135BBL -16.92 2018 Oil 930,491 BBL -4.48
Casinghead (Texas Railroad Commission): Year Description Volume % Change From Previous Year 2017 Casinghead 615,078 MCF -120.73 2018 Casinghead 541,526 MCF -11.93
Gas Well Production (Texas Railroad Commission): Year Description Volume % Change From Previous Year 2017 Gas Well Production 63,956,392 MCF -16.92 2018 Gas Well Production 62,132,927 MCF -4.48
Condensate (Texas Railroad Commission): Year Description Volume % Change From Previous Year 2017 Condensate 4,799 BBL -19.70 2018 Condensate 5,127 BBL 6.83
Retail Sales & Effective Buying Income (The Nielsen Company): Year 2018 2017 2016 Retail Sales $114.1M $143.0M $191.8M Effective Buying Income (EBI) $354.4M $338.8M $363.8M County Median Household Income $44,188 $40,764 $38,986 State Median Household Income $61,175 $57,227 $55,352 % of Households with EBI below $25K 29.0% 33.0% 15.7% % of Households with EBI above $25K 64.2% 60.6% 59.7%
Employment Data (Texas Workforce Commission):
Year 2018 2017 2016 1st Quarter: 4,158 $49.0M 4,044 $44.9M 3,879 $42.3M 2nd Quarter: 4,197 $46.3M 4,182 $52.7M 3,932 $40.1M 3rd Quarter: 4,169 $45.8M 4,138 $44.4M 3,974 $43.0M 4th Quarter: N/A N/A 4,296 $48.8M 4,057 $43.8M
_____________________ Sources: Texas Municipal Reports, published by the Municipal Advisory Council of Texas and DemographicsUSA County Edition. Any data on population, value added by manufacturing or production of minerals or agricultural products are from U.S. Census or other official sources. Labor Force Statistics:
January 2019 December 2018 January 2018 Monthly Change Year Ago Change % Unemployment (U.S.) 4.4 3.7 4.5 0.7 -0.1 % Unemployment (Texas) 4.2 3.6 4.3 0.6 -0.1 % Unemployment (County) 4.4 3.7 4.7 0.7 -0.3
2018 2017 2016 2015 2014 % Unemployment (U.S.) 3.7 3.9 4.5 4.8 5.4 % Unemployment (Texas) 3.6 3.9 4.5 4.2 4.2 % Unemployment (County) 3.7 4.2 4.9 4.6 4.3
________________ Source: Texas Labor Market Review.
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APPENDIX C
FORM OF BOND COUNSEL’S OPINION
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Norton Rose Fulbright US LLP 300 Convent Street, Suite 2100 San Antonio, Texas 78205-3792 United States
Tel +1 210 224 5575 Fax +1 210 270 7205 nortonrosefulbright.com
Norton Rose Fulbright US LLP is a limited liability partnership registered under the laws of Texas.
Norton Rose Fulbright US LLP, Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP and Norton Rose Fulbright South Africa Inc are separate legal entities and all of them are members of Norton Rose Fulbright Verein, a Swiss verein. Norton Rose Fulbright Verein helps coordinate the activities of the members but does not itself provide legal services to clients. Details of each entity, with certain regulatory information, are available at nortonrosefulbright.com.
DRAFT 3/19/2019
IN REGARD to the authorization and issuance of the “Robertson County, Texas Certificates of Obligation, Series 2019” (the Certificates), dated May 1, 2019 in the aggregate principal amount of $___________, we have reviewed the legality and validity of the issuance thereof by the Commissioners Court of Robertson County, Texas (the Issuer). The Certificates are issuable in fully registered form only, in denominations of $5,000 or any integral multiple thereof (within a Stated Maturity), and have Stated Maturities of February 15 in each of the years 2020 through 2044, unless redeemed prior to Stated Maturity in accordance with the terms stated on the face of the Certificates. Interest on the Certificates accrues from the dates, at the rates, in the manner, and is payable on the dates, all as provided in the order (the Order) authorizing the issuance of the Certificates. Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Order.
WE HAVE SERVED AS BOND COUNSEL for the Issuer solely to pass upon the legality and validity of the issuance of the Certificates under the laws of the State of Texas and with respect to the exclusion of the interest on the Certificates from the gross income of the owners thereof for federal income tax purposes and for no other purpose. We have not been requested to investigate or verify, and have not independently investigated or verified, any records, data, or other material relating to the financial condition or capabilities of the Issuer. We have not assumed any responsibility with respect to the financial condition or capabilities of the Issuer or the disclosure thereof in connection with the sale of the Certificates. We express no opinion and make no comment with respect to the sufficiency of the security for or the marketability of the Certificates. Our role in connection with the Issuer’s Official Statement prepared for use in connection with the sale of the Certificates has been limited as described therein.
WE HAVE EXAMINED, the applicable and pertinent laws of the State of Texas and the United States of America. In rendering the opinions herein we rely upon (1) original or certified copies of the proceedings of the Commissioners Court of the Issuer in connection with the issuance of the Certificates, including the Order; (2) customary certifications and opinions of officials of the Issuer; (3) certificates executed by officers of the Issuer relating to the expected use and investment of proceeds of the Certificates and certain other funds of the Issuer and to certain other facts solely within the knowledge and control of the Issuer; and (4) such other documentation, including an examination of the Certificate executed and delivered initially by the Issuer and such matters of law as we deem relevant to the matters discussed below. In such examination, we have assumed the authenticity of all documents submitted to us as originals, the conformity to original copies of all documents submitted to us as certified copies, and the accuracy of the statements and information contained in such certificates. We express no opinion concerning any effect on the following opinions which may result from changes in law effected after the date hereof.
Legal Opinion of Norton Rose Fulbright US LLP, San Antonio, Texas, in connection with the authorization and issuance of “ROBERTSON COUNTY, TEXAS CERTIFICATES OF OBLIGATION, SERIES 2019”
BASED ON OUR EXAMINATION, IT IS OUR OPINION that the Certificates have been duly authorized and issued in conformity with the laws of the State of Texas now in force and that the Certificates are valid and legally binding obligations of the Issuer enforceable in accordance with the terms and conditions described therein, except to the extent that the enforceability thereof may be affected by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors’ rights or the exercise of judicial discretion in accordance with general principles of equity. The Certificates are payable from the proceeds of an ad valorem tax levied, within the limitations prescribed by law, upon all taxable property in the Issuer.
BASED ON OUR EXAMINATION, IT IS FURTHER OUR OPINION that, assuming continuing compliance after the date hereof by the Issuer with the provisions of the Order and in reliance upon the representations and certifications of the Issuer made in a certificate of even date herewith pertaining to the use, expenditure, and investment of the proceeds of the Certificates, under existing statutes, regulations, published rulings, and court decisions (1) interest on the Certificates will be excludable from the gross income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date hereof (the Code), of the owners thereof for federal income tax purposes, pursuant to section 103 of the Code, and (2) interest on the Certificates will not be included in computing the alternative minimum taxable income of the owners thereof.
WE EXPRESS NO OTHER OPINION with respect to any other federal, state, or local tax consequences under present law or any proposed legislation resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Certificates. Ownership of tax-exempt obligations such as the Certificates 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, owners of an interest in a financial asset securitization investment trust, individual recipients of Social Security or Railroad Retirement Benefits, individuals otherwise qualifying for the earned income credit, 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.
OUR OPINIONS ARE BASED on existing law, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service; rather, such opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations and covenants referenced above.
Norton Rose Fulbright US LLP
APPENDIX D
EXCERPTS FROM THE ROBERTSON COUNTY, TEXAS
CASH BASIS FINANCIAL STATEMENT For the Year Ended September 30, 2017
The information contained in this APPENDIX consists of excerpts from the Robertson County, Texas Annual Financial Report for the Year Ended September 30, 2017, and is not intended to be a complete statement of the County’s financial condition. Reference is made to the complete Report for further information
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ROBERTSON COUNTY, TEXAS
CASH BASIS FINANCIAL STATEMENTS
FOR THE YEAR ENDED
SEPTEMBER 30, 2017
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ROBERTSON COUNTY, TEXAS
TABLE OF CONTENTS
SEPTEMBER 30, 2017
Page
Number
FINANCIAL SECTION
Independent Auditors’ Report ....................................................................................... 1 – 3
Management’s Discussion and Analysis ...................................................................... 4 – 7
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position – Cash Basis .................................................................. 8
Statement of Activities – Cash Basis ...................................................................... 9
Fund Financial Statements
Statement of Cash Basis Assets and Fund Balances and
Cash Receipts, Disbursements, and Changes in Cash
Basis Fund Balances – Governmental Funds....................................................... 10
Statement of Cash Basis Net Position – Fiduciary Funds ...................................... 11
Notes to Financial Statements ....................................................................................... 12 – 23
Supplementary Information
Schedule of Cash Receipts, Disbursements, and Changes in
Cash Basis Fund Balance – Budget and Actual – General Fund ......................... 24
Schedule of Cash Receipts, Disbursements, and Changes in
Cash Basis Fund Balance – Budget and Actual –
Road and Bridge Fund ......................................................................................... 25
Notes to Supplementary Budgetary Information .................................................... 26
Schedule of Changes in Net Pension Liability and Related Ratios ……………… 27
Schedule of Employer Contributions……………………………………………... 28
Notes to Schedule of Employer Contributions………………………………. ...... 29
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ROBERTSON COUNTY, TEXAS
TABLE OF CONTENTS
SEPTEMBER 30, 2017
Page
Number
Combining Fund Statements
Nonmajor Governmental Funds
Combining Statement of Cash Basis Assets and Fund
Balances and Cash Receipts, Disbursements, and Changes
in Cash Basis Fund Balances ............................................................................... 30 – 35
Agency Funds
Combining Statement of Cash Basis Net Position .................................................. 36 – 37
COMPLIANCE SECTION
Independent Auditors’ Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Governmental Auditing Standards ................................................................................... 38 – 39
FINANCIAL SECTION
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INDEPENDENT AUDITORS’ REPORT
To the Honorable County Judge and
Commissioners’ Court
Robertson County, Texas
Report on the Financial Statements
We have audited the accompanying cash-basis financial statements of the governmental
activities, each major fund, and the aggregate remaining fund information of Robertson County, Texas,
as of and for the year ended September 30, 2017, and the related notes to the financial statements, which
collectively comprise the County’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with the cash basis of accounting described in Note 1. This includes determining that the
cash basis of accounting is an acceptable basis for the preparation of the financial statements in the
circumstances. Management is also responsible for the design, implementation, and maintenance of
internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
1
2
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors’ judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective cash basis financial position of the governmental activities, each major fund, and the
aggregate remaining fund information of Robertson County, Texas, as of September 30, 2017, and the
respective changes in financial position – cash basis, thereof for the year then ended on the basis of
accounting described in Note 1.
Basis of Accounting
We draw attention to Note I of the financial statements, which describes the basis of accounting.
The financial statements are prepared on the cash basis of accounting, which is a basis of accounting
other than accounting principles generally accepted in the United States of America. Our opinion is not
modified with respect to that matter.
Other Matters
Supplementary and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise Robertson County, Texas’ basic financial statements. The budgetary comparison
information, pension information, OPEB schedule of funding progress, combining and individual
nonmajor fund financial statements and schedules, and the management’s discussion and analysis are
presented for purposes of additional analysis and are not a required part of the basic financial statements.
The budgetary comparison information presented on pages 24 – 26, pension information and
OPEB schedule of funding progress on pages 27 – 29, and combining fund financial statements
presented on pages 30 – 37 is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or
to the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the information is fairly
stated in all material respects in relation to the basic financial statements as a whole on the basis of
accounting described in Note 1.
3
The management’s discussion and analysis on pages 4 – 7 have not been subjected to the
auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not
express an opinion or provide any assurance on such information.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated August
1, 2018, on our consideration of the Robertson County, Texas’ internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing, and not to provide
an opinion on internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards in considering Robertson
County, Texas’ internal control over financial reporting and compliance.
Waco, Texas
August 1, 2018
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MANAGEMENT’S
DISCUSSION AND ANALYSIS
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4
MANAGEMENT’S DISCUSSION AND ANALYSIS
As management of Robertson County, we offer readers of Robertson County’s financial statements this
narrative overview and analysis of the financial activities of Robertson County for the fiscal year ended
September 30, 2017.
FINANCIAL HIGHLIGHTS
The assets cash basis of Robertson County, as of the close of fiscal year 2017, totaled $22,459,405. Of
this amount, $14,231,755 may be used to meet the County’s ongoing obligations.
• The County’s total net position increased by $4,969,893.
• As of September 30, 2017, Robertson County’s governmental funds reported combined
ending cash basis fund balances of $22,459,405, an increase of $4,969,893.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to Robertson County’s basic
financial statements. Robertson County’s financial statements comprise three components: 1)
government-wide financial statements, 2) fund financial statements, and 3) notes to the financial
statements. This report also contains other supplementary information in addition to the basic financial
statements themselves.
Government-wide Financial Statements. The government-wide financial statements are designed to
provide readers with a broad overview of Robertson County’s finances.
The statement of net position presents information of Robertson County’s cash and investments and cash
basis – net position. The reported change in financial condition is a change in cash position and not a
change in the economic condition of the County.
The statement of activities presents information showing how the County’s net position changed during
the most recent fiscal year. All changes in net position are reported as cash receipts are received and
disbursements are made. Thus, receipts and disbursements are reported in these statements.
The governmental activities on the government-wide financial statements of Robertson County are
principally supported by taxes and intergovernmental receipts. The governmental activities of Robertson
County include general government, legal, health and welfare, judicial, public safety, culture and
recreation, roads and bridges and interest on long-term debt.
Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. Robertson County, like
other state and local governments, uses fund accounting to ensure and demonstrate compliance with
finance related legal requirements. All of the funds of the County can be divided into two categories:
governmental funds and fiduciary funds.
5
Governmental Funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
Information is presented separately in the governmental fund balance sheet and in the governmental
fund statement of receipts, disbursements, and changes in cash basis fund balances for the General Fund
and Road and Bridge Fund, all of which are considered to be major funds. Data from the other
governmental funds are combined into a single, aggregated presentation. Individual fund data for each
of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this
report.
Robertson County adopts an annual appropriated budget for its General Fund and Road and Bridge
Fund. A budgetary comparison statement has been provided for these funds to demonstrate compliance
with this budget.
Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties
outside the government. Fiduciary funds are not reflected in the government-wide financial statement
because the resources of those funds are not available to support Robertson County’s own programs.
Notes to the Financial Statements. The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements.
Other Information. In addition to the basic financial statements and accompanying notes, this report
also presents combining fund statements that further support the information in the financial statements.
The combining fund statements and schedules for nonmajor funds are presented immediately following
the required supplementary schedule.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
ROBERTSON COUNTY’S NET POSITION – CASH BASIS
2017 2016
Current assets 22,459,405$ 17,489,512$
Total position 22,459,405 17,489,512
Net position:
Restricted 8,227,650 7,054,665
Unrestricted 14,231,755 10,434,847
Total net position 22,459,405$ 17,489,512$
Governmental Activities
6
An additional portion of Robertson County’s net position represents resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net may be used to
meet the government’s ongoing obligations to citizens and creditors.
Governmental Activities. Governmental activities increased Robertson County’s cash basis net
position by $4,969,893, thereby accounting for an increase of 28% of the total net position of Robertson
County.
ROBERTSON COUNTY’S CHANGES IN NET POSITION – CASH BASIS
2017 2016
Receipts:
Program receipts:
Charges for services 1,773,372$ 1,803,746$
Operating grants and contributions 315,497 750,454
General receipts:
Property taxes 15,161,416 13,310,469
Hotel occupancy tax 112,243 51,717
Interest 49,332 43,708
Other 279,097 377,299
Total receipts 17,690,957 16,337,393
Disbursements:
General government 2,868,221 3,002,925
Judicial 1,240,766 1,288,072
Legal 1,054,108 1,194,416
Public safety 3,003,041 3,104,509
Road and bridge 3,392,742 4,197,571
Health and welfare 170,658 168,622
Conservation 229,675 235,072
Capital outlay 761,853 598,040
Debt service - 2,214,894
Total disbursements 12,721,064 16,004,121
Change in net position 4,969,893 333,272
Net position, beginning 17,489,512 17,156,240
Net position, ending 22,459,405$ 17,489,512$
Governmental Activities
FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
As noted earlier, Robertson County uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental Funds. The focus of Robertson County’s governmental funds is to provide information
on cash receipts and disbursements.
7
At the end of fiscal year 2017, Robertson County’s governmental funds reported combined ending cash
basis fund balances of $22,459,405, an increase of $4,969,893 in comparison with the prior year.
The General Fund is the chief operating fund of Robertson County. At the end of fiscal year 2017, the
General Fund had an ending cash basis fund balance of $14,323,100. As a measure of the General
Fund’s liquidity, it may be useful to compare unassigned fund balance to total fund expenditures.
Unassigned cash basis fund balance represents 171% of total General Fund disbursements.
The fund balance of Robertson County’s General Fund increased by $3,887,753 during 2017. This
increase is primarily due to the decrease in expenditures.
The Road and Bridge Fund had an ending fund balance of $6,335,793, an increase of $987,191. This is
primarily the result of an increased reallocation of ad valorem taxes from the General Fund to the Road
and Bride Fund along with added savings from actual expenditures being 10% less than projected.
General Fund Budgetary Highlights
Various budget amendments were made in fiscal year 2017. Additional budgetary information can be
found on pages 24 – 25 of this report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
Commissioners’ Court adopted the County’s budget for the fiscal year 2018 in September 2017. The
budget was adopted based on anticipated resources and estimated uses in fiscal year 2017.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of Robertson County’s finances for all
those with an interest in the government’s finances. Questions concerning any of the information
provided in this report or requests for additional financial information should be addressed to the County
Auditor.
BASIC
FINANCIAL STATEMENTS
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Governmental
Activities
ASSETS
Cash and investments 22,459,405$
Total assets 22,459,405
NET POSITION - CASH BASIS
Restricted for:
Road and bridge 6,571,810
Judicial 270,920
Public safety 247,420
Records management and preservation 361,308
Community development 747,383
Debt service 28,809
Unrestricted 14,231,755
Total net position - cash basis 22,459,405$
ROBERTSON COUNTY, TEXAS
STATEMENT OF NET POSITION - CASH BASIS
SEPTEMBER 30, 2017
The accompanying notes are an integral
part of these financial statements. 8
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Functions/Programs
Cash
Disbursements
Charges for
Services
Operating Grants
and
Contributions
Net
(Disbursements)
Receipts and
Changes in Net
Position
Governmental activities:
General government 2,868,221$ 652,734$ 186,108$ 2,029,379)$(
Judicial 1,240,766 438,716 21,146 780,904)(
Legal 1,054,108 19,125 - 1,034,983)(
Public safety 3,003,041 70,925 108,243 2,823,873)(
Road and bridge 3,392,742 591,872 - 2,800,870)(
Health and welfare 170,658 - - 170,658)(
Conservation 229,675 - - 229,675)(
Capital outlay 761,853 - - 761,853)(
Net program (disbursements)
receipts 12,721,064$ 1,773,372$ 315,497$ 10,632,195)(
General receipts:
Property taxes 15,161,416
Hotel occupancy tax 112,243
Interest 49,332
Other 279,097
Total general receipts 15,602,088
Change in net position-cash basis 4,969,893
Net position-cash basis, beginning 17,489,512
Net position-cash basis, ending 22,459,405$
Program Cash Receipts
ROBERTSON COUNTY, TEXAS
STATEMENT OF ACTIVITIES - CASH BASIS
FOR THE YEAR ENDED SEPTEMBER 30, 2017
The accompanying notes are an integral
part of these financial statements. 9
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Nonmajor Total
Road Governmental Governmental
General and Bridge Funds Funds
RECEIPTS
Taxes 10,916,257$ 4,245,159$ 112,243$ 15,273,659$
Intergovernmental 215,873 24,416 277,631 517,920
Auto registration - 559,081 - 559,081
Fines, fees and forfeitures 858,177 8,375 145,316 1,011,868
Interest 35,779 13,308 245 49,332
Other 276,437 - 2,660 279,097
Total receipts 12,302,523 4,850,339 538,095 17,690,957
DISBURSEMENTS
General government 2,745,859 - 122,362 2,868,221
Judicial 1,240,766 - - 1,240,766
Legal 1,046,477 - 7,631 1,054,108
Public safety 2,726,669 - 276,372 3,003,041
Road and bridge - 3,310,961 81,781 3,392,742
Health and welfare 170,658 - - 170,658
Conservation 229,675 - - 229,675
Capital outlay 209,666 552,187 - 761,853
Total disbursements 8,369,770 3,863,148 488,146 12,721,064
EXCESS (DEFICIENCY) OF RECEIPTS
OVER (UNDER) DISBURSEMENTS 3,932,753 987,191 49,949 4,969,893
OTHER FINANCING SOURCES (USES)
Transfers in - - 45,000 45,000
Transfers out 45,000)( - - 45,000)(
Total other financing sources (uses) 45,000)( - 45,000 -
CHANGE IN CASH BASIS FUND BALANCES 3,887,753 987,191 94,949 4,969,893
CASH BASIS FUND BALANCES, BEGINNING 10,435,347 5,348,602 1,705,563 17,489,512
CASH BASIS FUND BALANCES, ENDING 14,323,100$ 6,335,793$ 1,800,512$ 22,459,405$
CASH BASIS ASSETS, ENDING
Cash and investments 14,323,100$ 6,335,793$ 1,800,512$ 22,459,405$
CASH BASIS FUND BALANCES, ENDING
Restricted:
Road and bridge -$ 6,335,793$ 236,017$ 6,571,810$
Judicial - - 270,920 270,920
Public safety - - 247,420 247,420
Records management and preservation - - 361,308 361,308
Community development - - 747,383 747,383
Debt service - - 28,809 28,809
Unassigned 14,323,100 - 91,345)( 14,231,755
Total cash basis fund balances, ending 14,323,100$ 6,335,793$ 1,800,512$ 22,459,405$
FOR THE YEAR ENDED SEPTEMBER 30, 2017
ROBERTSON COUNTY, TEXAS
STATEMENT OF CASH BASIS ASSETS AND FUND BALANCES AND CASH RECEIPTS,
DISBURSEMENTS, AND CHANGES IN CASH BASIS FUND BALANCES
GOVERNMENTAL FUNDS
The accompanying notes are an integral
part of these financial statements. 10
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Agency
Funds
ASSETS
Cash and investments 1,054,212$
TOTAL ASSETS 1,054,212$
LIABILITIES
Due to others 1,054,212$
TOTAL LIABILITIES 1,054,212$
ROBERTSON COUNTY, TEXAS
STATEMENT OF CASH BASIS NET POSITION
FIDUCIARY FUNDS
SEPTEMBER 30, 2017
The accompanying notes are an integral
part of these financial statements. 11
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12
ROBERTSON COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The authority of the County governments and their specific functions and responsibilities are
created by and dependent upon laws and legal regulations of the Texas State Constitution and
V.A.C.S.
The financial statements are presented on a cash basis of accounting, which is a basis of
accounting other than accounting principles generally accepted in the United States of America
(GAAP) as established by the Governmental Accounting Standards Board. This basis of
accounting involves the reporting of only cash and cash equivalents and the changes therein
resulting from cash inflows (cash receipts) and cash outflows (cash disbursements) reported in
the period in which they occurred. This cash basis of accounting differs from GAAP primarily
because revenues (cash receipts) are recognized when received in cash rather than when earned
and susceptible to accrual, and expenditures or expenses (cash disbursements) are recognized
when paid rather than when incurred or subject to accrual.
A. Reporting Entity
The County’s basic financial statements include the primary government only. The County
has no oversight responsibility for any other entity since they are not considered financially
accountable to the County. Financial accountability is determined on the basis of budget
adoption, taxing authority, funding and appointment of the respective governing body.
B. Government-wide Fund Financial Statements
The Statement of Net Position and Statement of Activities display information about the
reporting government as a whole. They include all funds of the reporting entity except for
fiduciary funds. Governmental activities generally are financed through taxes,
intergovernmental revenues, and other non-exchange revenues.
Fund financial statements of the reporting entity are organized into funds, each of which is
considered to be a separate accounting entity. Each fund is accounted for by providing a
separate set of self-balancing accounts that constitutes its assets, fund balance, revenues and
expenditures. A fund is considered major if it is the primary operating fund of the County or
meets the following criteria:
Total assets, liabilities, revenues, or expenditures of the individual governmental
fund are at least 5% of the corresponding total for all governmental funds
combined.
13
The County reports the following major governmental funds:
The General Fund is the primary operating fund of the County and always
classified as a major fund. It is used to account for all activities except those
legally or administratively required to be accounted for in other funds.
The Road and Bridge Fund is a Special Revenue Fund used to account for
revenue derived from ad valorem taxes, vehicle registration fees and rebates from
the State of Texas. Expenditures are for maintenance and construction of County
roads and bridges.
Additionally, the County reports the following fund type:
Agency Funds are used to account for assets held by the County as an agent for
individuals and other governments. Agency Funds are custodial in nature and do
not include measurements of results of operations.
The government-wide and fund financial statements are presented under the cash basis of
accounting. The cash basis of accounting involves the measurement of cash and investments
and changes in cash and investments resulting from cash receipt and disbursement
transactions. This basis is a comprehensive basis of accounting other than accounting
principles generally accepted in the United States of America.
As a result of the use of this cash basis of accounting, certain assets and their related
revenues (such as capital assets, accounts receivable and revenue for billed or provided
services not yet collected) and certain liabilities and their related expenses (such as long-term
debt, accounts payable and expenses for goods or services received but not yet paid, and
accrued expenses and liabilities) are not recorded in these financial statements.
If the County utilized the basis of accounting recognized as generally accepted, the fund
financial statements for governmental funds would use the modified accrual basis of
accounting, while the government-wide financials would be presented on the accrual basis of
accounting
As a general rule, the effect of interfund activity has been eliminated from the government-
wide financial statements.
Amounts reported as program revenues include: 1) charges to customers or applicants for
goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital
grants and contributions. Internally dedicated resources are reported as general revenues
rather than as program revenues. Likewise, general revenue includes all taxes.
14
C. Assets, Liabilities and Net Position or Fund Balance
Cash and Investments
Cash investments are stated at fair value and consist of certificates of deposit purchased by
the County. The County is authorized by state law to invest cash in certificates of deposit and
obligations of the United States and the State of Texas, and government investment pools.
Property Tax
Property taxes are levied by October 1, in conformity with Subtitle E, Texas Property Tax
Code. Taxes are due January 1 of the following year and become delinquent on July 1. On
January 1 of each year, a tax lien attaches to property to secure the payment of all taxes,
penalties, and interest ultimately imposed.
Fund Balance – Cash Basis
The governmental fund financial statements present fund balances based on classifications
that comprise a hierarchy that is based primarily on the extent to which the County is bound
to honor constraints on the specific purposes for which amounts in the respective
governmental funds can be spent. The classifications used in the governmental fund financial
statements are as follows:
• Restricted: This classification includes amounts for which constraints have been
placed on the use of the resources either (a) externally imposed by creditors,
grantors, contributors, or laws or regulations of other governments, or (b)
imposed by law through constitutional provisions or enabling legislation.
• Unassigned: This classification includes the residual fund balance for the
General Fund. The unassigned classification also includes negative residual
fund balance of any other governmental fund that cannot be eliminated by
offsetting of assigned fund balance amounts.
When an expenditure is incurred for purposes for which both restricted and unrestricted fund
balance is available, the County considers restricted funds to have been spent first. When an
expenditure is incurred for which committed, assigned, or unassigned fund balances are
available, the County considers amounts to have been spent first out of committed funds,
then assigned funds, and finally unassigned funds.
Net Position – Cash Basis
Equity is classified as net position and displayed in two components:
Restricted net position – consists of net position with constraints placed on the use
either by (1) external groups such as creditors, grantors, contributors, or laws and
regulations of other governments; or (2) law through constitutional provisions or
enabling legislation.
15
Unrestricted net position – all other net position that do not meet the definition of
“restricted.”
It is the County’s policy to first use restricted net position prior to the use of unrestricted net
position when an expense is incurred for purposes for which both restricted and unrestricted
net position are available.
2. DEPOSITS AND INVESTMENTS
Custodial Credit Risk. In the case of deposits, this is the risk that in the event of a bank failure, the
County’s deposits may not be returned to it. State statutes require that all deposits in financial
institutions be fully collateralized by U. S. Government Obligations or its agencies and
instrumentalities or direct obligations of Texas or its agencies and instrumentalities that have a fair
value of not less than the principal amount of deposits. As of September 30, 2017, the County’s
deposit balance was collateralized with securities held by the pledging financial institution in the
County’s name or FDIC.
3. DEFINED BENEFIT PENSION PLAN
Plan Description. The County participates in a nontraditional defined benefit pension plan in the
statewide Texas County and District Retirement System (“TCDRS”). The Board of Trustees of
TCDRS is responsible for the administration of the statewide agent, multiple-employer, public
employee retirement system consisting of nontraditional defined benefit pension plans. TCDRS
issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at
www.tcdrs.org.
All full and part-time non-temporary employees participate in the plan, regardless of the number
of hours they work in a year. Employees in a temporary position are not eligible for membership.
Benefits Provided. TCDRS provides retirement, disability and survivor benefits for all eligible
employees. Benefit terms are established by the TCDRS Act. The benefit terms may be amended
as of January 1, each year, but must remain in conformity with the Act.
Members can retire at age 60 and above with 8 or more years of service, with 20 years of service
regardless of age, or when the sum of their age and years of service equals 75 or more. Members
are vested after eight years of service, but must leave their accumulated contributions in the plan
to receive any employer-financed benefit. Members who withdraw their personal contributions in
a lump sum are not entitled to any amounts contributed by their employer.
16
Benefit amounts are determined by the sum of the employee’s contributions to the plan, with
interest, and employer-financed monetary credits. The level of these monetary credits is adopted
by the governing body of the employer within the actuarial constraints imposed by the TCDRS
Act so that the resulting benefits can be expected to be adequately financed by the employer’s
commitment to contribute. By law, employee accounts can earn 7% interest. At retirement, death
or disability, the benefit is calculated by converting the sum of the employee’s accumulated
contributions and the employer-financed monetary credits to a monthly annuity using annuity
purchase rates prescribed by the TCDRS Act.
Employees covered by benefit terms
At the December 31, 2016 valuation and measurement date, the following employees were
covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 55
Inactive employees entitled to but not yet receiving benefits 64
Active employees 119
238
Contributions. The contribution rates for employees in TCDRS are either 4%, 5%, 6%, or 7%
of employee gross earnings, as adopted by the employer’s governing body. Participating
employers are required to contribute at actuarially determined rates to ensure adequate funding
for each employer’s plan. Under the state law governing TCDRS, the contribution rate for each
entity is determined annually by the actuary and approved by the TCDRS Board of Trustees. The
replacement life entry age actuarial cost method is used in determining the contribution rate. The
actuarially determined rate is the estimated amount necessary to fund benefits in an orderly
manner for each participate over his or her career so that sufficient funds are accumulated by the
time benefit payments begin, with an additional amount to finance any unfunded accrued
liability.
Employees for the County were required to contribute 7% of their annual gross earnings during
the fiscal year. The contribution rates for the County were 7.98% and 7.41% in calendar years
2016 and 2017, respectively. The County’s contributions to TCDRS for the year ended
September 30, 2017, were $404,187, and were equal to the required contributions.
Net Pension Liability. The County’s Net Pension Liability (NPL) was measured as of December
31, 2016, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was
determined by an actuarial valuation as of that date.
17
Actuarial Assumptions
The Total Pension Liability in the December 31, 2016, actuarial valuation was determined using
the following actuarial assumptions:
Inflation 3.0% per year
Overall payroll growth 3.5% per year
Investment rate of return 8.0%, net of pension plan investment
expense, including inflation
The County has no automatic cost-of-living adjustments (“COLA”) and one is not considered to
be substantively automatic. Therefore, no assumption for future cost-of-living adjustments is
included in the actuarial valuation. Each year, the County may elect an ad-hoc COLA for its
retirees.
Mortality rates for active members, retirees, and beneficiaries were based on the following:
Depositing members The RP-2000 Active Employee Mortality Table for males with a two-
year set-forward and the RP-2000 Active Employee Mortality Table
for females with a four-year setback, both projected to 2014 with scale
AA and then projected with 110% of the MP-2014 Ultimate scale after
that.
Disabled retirees RP-2000 Disabled Mortality Table projected to 2014 with scale AA
and then projected with 110% of the MP-2014 Ultimate scale after
that, with no age adjustment for males and a twoyear set-forward for
females.
Service retirees, beneficiaries and
non-depositing members
The RP-2000 Combined Mortality Table projected to 2014 with scale
AA and then projected with 110% of the MP-2014 Ultimate scale after
that, with a one-year set-forward for males and no age adjustment for
females.
The actuarial assumptions that determined the total pension liability as of December 31, 2016,
were based on the results of an actuarial experience study for the period January 1, 2009 through
December 31, 2012, except for mortality assumptions. Mortality assumptions were updated for
the 2015 valuation to reflect projected improvements.
The long-term expected rate of return on pension plan investments is 8.0%. The pension plan’s
policy in regard to the allocation of invested assets is established and may be amended by the
TCDRS Board of Trustees.
18
The long-term expected rate of return on TCDRS is determined by adding inflation to expected
long-term real returns, and reflecting expected volatility and correlation. The capital market
assumptions and information below are based on January 2017 information for a 7 to 10 year
time horizon. The valuation assumption for long-term expected return is re-assessed at a
minimum of every four years, and is set based on a 30-year time horizon; the most recent
analysis was performed in 2013. The target allocation and best estimates of geometric real rates
return for each major assets class are summarized in the following table:
Geometric Real
Rate of Return
Target (Expected minus
Asset Class Benchmark Allocation (1)
Inflation) (2)
US Equities Dow Jones U.S. Total Stock Market Index 13.50% 4.70%
Private Equity Cambridge Associates Global Private Equity &
Venture Capital Index (3) 16.00% 7.70%
Global Equities MSCI World (net) Index 1.50% 5.00%
International Equities - Developed MSCI World Ex USA (net) 10.00% 4.70%
International Equities - Emerging MSCI EM Standard (net) Index 7.00% 5.70%
Investment-Grade Bonds Bloomberg Barclays U.S. Aggregate Bond Index 3.00% 0.60%
High-Yield Bonds Citigroup High-Yield Cash-Pay Capped Index 3.00% 3.70%
Opportunistic Credit Citigroup High-Yield Cash-Pay Capped Index 2.00% 3.83%
Direct Lending S&P/LSTA Leveraged Loan Index 10.00% 8.15%
Distressed Debt Cambridge Associates Distressed Securities Index (4) 3.00% 6.70%
REIT Equities 67% FTSE NAREIT Equity REITs Index + 33%
FTSE2.00% 3.85%
EPRA/NAREIT Global Real Estate Index
Master Limited Partnerships (MLPs) Alerian MLP Index 3.00% 5.60%
Private Real Estate Partnerships Cambridge Associates Real Estate Index (5) 6.00% 7.20%
Hedge Funds Hedge Fund Research, Inc. (HFRI) Fund of Funds
Composite Index20.00% 3.85%
(1) Target asset allocation adopted at the April 2017 TCDRS Board meeting.
(3) Includes vintage years 2006-present of Quarter Pooled Horizon IRRs.(4) Includes vintage years 2005-present of Quarter Pooled Horizon IRRs.(5) Includes vintage years 2007-present of Quarter Pooled Horizon IRRs.
(2) Geometric real rates of return equal the expected return minus the assumed inflation rate of 2.0%, per Cliffwater's 2017
capital market assumptions.
Discount Rate
The discount rate used to measure the Total Pension Liability was 8.1%. The projection of cash
flows used to determine the discount rate assumed that employee and employer contributions
will be made at the rates specified in statue. Based on that assumption, the pension plan’s
Fiduciary Net Position was projected to be available to make all projected future benefit
payments of current active and inactive employees. Therefore, the long-term expected rate of
return on pension plan investments was applied to all period of projected benefit payments to
determine the Total Pension Liability.
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Changes in the Net Pension Liability
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (a) - (b)
Balance at 12/31/2015 19,742,396$ 18,338,766$ 1,403,630$
Changes for the year:
Service cost 727,240 - 727,240 -
Interest on total pension liability (1) 1,600,484 - 1,600,484 - -
Effect of economic/demographic
gains or losses252,081)( - 252,081)(
-
Refund of contributions 76,405)( 76,405)( - -
Benefit payments 616,837)( 616,837)( - -
Administrative expenses - 14,765)( 14,765 -
Member contributions - 385,966 385,966)( -
Net investment income - 1,358,554 1,358,554)( -
Employer contributions - 440,002 440,002)( -
Other (2) - 73,972)( 73,972
Balance at 12/31/2016 21,124,797$ 19,741,309$ 1,383,488$
Increase (Decrease)
(1) Reflects the change in the liability due to the time value of money. TCDRS does not charge fees or
interest.(2)
Relates to allocation of system-wide items.
Sensitivity Analysis
The following presents the net pension liability of the County, calculated using the discount rate
of 8.1%, as well as what the County’s net pension liability would be if it were calculated using a
discount rate that is 1-percentage-point lower (7.1%) or 1-percentage-higher (9.1%) than the
current rate:
Current
1% Decrease Discount Rate 1% Increase
7.10% 8.10% 9.10%
Total pension liability 24,071,459$ 21,124,797$ 18,686,806$
Fiduciary net position 19,741,309 19,741,309 19,741,309
Net pension liability/(asset) 4,330,150$ 1,383,488$ 1,054,503)$(
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s Fiduciary Net Position is available in a separately-
issued TCDRS financial report. The report may be obtained on the Internet at www.tcdrs.org.
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4. OTHER POSTEMPLOYMENT BENEFITS – GROUP TERM LIFE INSURANCE
Plan Description. The County participates in a cost-sharing multiple-employer defined-benefit
group term life insurance plan operated by the Texas County & District Retirement System
(TCDRS). This plan is referred to as the Group Term Life Fund (GTLF). This optional plan
provides group term life insurance coverage to current eligible employees and, if elected by
employers, to retired employees. The coverage provided to retired employees is a postemployment
benefit other than pension benefits (OPEB). Retired employees are insured for $5,000.
The GTLF is a separate trust administered by the TCDRS board of trustees. TCDRS issues a
publicly available comprehensive annual financial report (CAFR) that includes financial
statements and required supplementary information for the GTLF. This report is available at
www.tcdrs.org. TCDRS’ CAFR may also be obtained by writing to the Texas County & District
Retirement System, P. O. Box 2034, Austin, Texas 78768-2034, or by calling 800-823-7782.
Funding Policy. Each participating employer contributes to the GTLF as a contractually required
rate. An annual actuarial valuation is performed and the contractual rate is determined using the
unit credit method for providing one-year term life insurance. Robertson County, Texas’
contributions to the GTLF for the years ended September 30, 2017, 2016, and 2015, were $18,900,
$18,670, and $20,157, respectively, which equaled the contractually required contributions each
year.
5. OTHER POSTEMPLOYMENT BENEFITS – HEALTH CARE PLAN
Plan Description. The County Employees Health Care Plan (CEHP) is a single-employer defined
benefit health care plan administered by the County’s health insurance carrier. The obligation for
payment of benefits has been effectively transferred from the County to the insurance company,
and the County has not guaranteed benefits in the event of the insurance company’s insolvency.
The CEHP provides medical and dental insurance benefits to eligible retirees and their spouses
through this plan. The Commissioners’ Court has the authority to establish and amend benefit
provisions to. The CEHP does not issue a separate publicly available financial report.
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Funding Policy. The contribution requirements of plan members and the County are established
and may be amended by the Commissioners’ Court. The required contribution is based on
projected pay-as-you-go financing requirements in the form of insurance premiums paid to the
insurance company. The County does not provide any additional amount to prefund benefits nor
does the plan have an actuarial valuation. The County contributes 100 percent of a premium
amount established by the insurance company and approved by the Commissioners’ Court for
eligible retirees. The monthly premiums paid by the County are as follows:
Attained Age Rate Per Month
65-69 155$
70-74 186
75-79 220
80-84 251
85-89 278
90+ 290
Rate Per Month
All Retirees 199$
Medical
Prescription-Part D
Eligible retirees include all employees leaving County employment who are at least sixty (60)
years of age and have at least eight (8) years of County service or whose combined age and total
County service (each rounded down to whole years) is seventy-five (75) or more and are eligible to
draw an annuity through the Texas District & County Retirement System.
A county employee, which shall include an employee whose salary is covered in part by the State
of Texas, who has a minimum of twenty (20) years of service to the County and who is not
otherwise eligible to draw retirement benefits through the Texas County and District Retirement
System and who is covered by county benefits at the time of separation from employment with the
County may continue to receive and be covered by the medical and dental insurance coverage for a
period of years commensurate with service as defined in paragraph 7 herein.
Health and Dental coverage for retirees under this policy will begin at the time of retirement
(defined as the date of separation from actual County employment) and continue thereafter as
defined below or so long as is economically feasible to the County.
Years of Full Maximum
Time Service Coverage
Less than 20 years 10 years
20 or more years 20 years
25 or more years 25 years
30 or more years Life
Robertson County reserves the right to place a cap on the amount of monthly premium to be paid
for the Retiree Insurance and may require the retiree to pay a portion of the monthly premium
should the premiums rise above the cap. Premiums that are due from the retiree must be paid to
the County Treasurer each month by the first day of each month or said coverage will be
terminated.
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Retiree’s when eligible for Medicare benefits will be required to enroll in both part A & part B
Medicare insurance to be eligible to participate in the retiree insurance program. Retirees will be
afforded the opportunity to add their dependents at the time of open enrollment or within 30 days
after a qualifying event. Dependent coverage premiums must be paid to the County Treasurer
each month by the first day of each month or said coverage will be terminated.
Retirees will be afforded the opportunity to remain on the Medicare supplement policy with
Robertson County after their coverage period has expired as long as the premiums are paid by
the Retiree to the County Treasurer by the first day of each month or said coverage will be
terminated.
Once coverage is terminated, the retiree will not be allowed to re-enroll in the insurance program
after the expiration of 12 months from the date of termination.
Contributions Made. For fiscal year 2017, retiree and beneficiaries receiving benefits contributed
$30,189 in the form of insurance premium payments and the County contributed $130,391.
6. COMMITMENTS AND CONTINGENCIES
The County participates in grant programs which are governed by various rules and regulations of
the grantor agencies. Costs charged to the respective grant programs are subject to audit and
adjustment by the grantor agencies; therefore, to the extent that the County has not complied with
the rules and regulations governing the grants, refunds of any money received may be required and
the collectability of any related receivable may be impaired. In the opinion of the County, there are
no significant contingent liabilities relating to compliance with the rules and regulations governing
the respective grants; therefore, no provision has been recorded in the accompanying combined
financial statements for such contingencies.
7. RISK MANAGEMENT
The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction
of assets; errors and omissions; injuries to employees; and natural disasters. The County has
obtained coverage for workers’ compensation and law enforcement liability insurance through the
Texas Association of Counties. The Texas Association of Counties provides coverage through a
public entity risk pool in which the association, not the County, bears the risk of loss for the type of
insurance. The pool agrees that it shall maintain an aggregate stop-loss reinsurance treat and/or
reserves to assure that the incurred losses and expenses for the pool shall not exceed the
contributions paid and payable by pool members into this pool. The County has no joint or several
liabilities other than the maximum annual contribution payable by the County. Other risks are
managed through various commercial insurance.
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8. TAX ABATEMENT INCENTIVES
The County enters into economic development agreements designed to promote development
and redevelopment within the County, spur economic improvement, stimulate commercial
activity, and enhance the property tax base and economic vitality of the County. The
economic development agreements are designed to support the creation of new businesses,
the expansion and retention of existing businesses within the County, and the attraction of
companies that offer high impact jobs and share the community’s values. Recipients may be
eligible to receive economic assistance based on the employment, economic or community
impact of the project requesting assistance. Recipients generally commit to building or
remodeling real property and related infrastructure, redeveloping properties, expanding
operations or bringing targeted business to the County. Agreements generally contain
recapture provisions which may require repayment or termination if recipients do not meet
the required provisions of the economic incentives. The County entered into an agreement
under Chapter 381 of the Texas Local Government Code and rebated $2,809 in property
taxes in fiscal year 2017.