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Ord 804 Authorizing the Issuance and Sale of Combination Tax and Revenue Certificates of Obligation Series 2016 TRANSCRIPT OF PROCEEDINGS RELATING TO $9,180,000 Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2016 Date of Delivery: December 22,2016 MCCA PARKHURST & HORTON 717 North Harwood, Suite 900, Dallas, Texas 75201 Transcript of Proceedings $9,180,000 Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2016 Document Tab Certified Intent Resolution................................................................................. 1 Affidavit of Publication...................................................................................... 2 Certified Ordinance Authorizing the Issuance of the Certificates...................... 3 WinningBid ....................................................................................................... 4 Paying Agent/Registrar Agreement.................................................................... 5 Notice of Sale and Preliminary Official Statement............................................ 6 Final Official Statement...................................................................................... 7 Signature Identification and General Certificate................................................ 8 Certificate as to Official Statement.................................................................... 9 Federal Tax Certificate....................................................................................... 10 Form8038-G ...................................................................................................... 11 Attorney General Opinion and Comptroller Registration Certificate ................ 12 Opinion of Bond Counsel................................................................................... 13 RatingLetter....................................................................................................... 14 Receipt and Disbursement of Funds................................................................... 15 Closing Instructions Letter................................................................................. 16 CERTIFICATE FOR RESOLUTION THE STATE OF TEXAS § COUNTIES OF TARRANT AND DENTON § TOWN OF WESTLAKE § We, the undersigned officers of the Town of Westlake, Texas (the "Town"), hereby certify as follows: 1. The Town Council (the "Council") of the Town convened in a regular meeting on October 24, 2016, at the designated meeting place, and the roll was called of the duly constituted officers and members of said Council,to wit: Laura Wheat, Mayor Carol Langdon,Mayor Pro Tem Michael Barrett, Council Member Alesa Belvedere, Council Member Wayne Stoltenberg, Council Member Rick Rennhack, Council Member Kelly Edwards,Town Secretary all of said persons were present except Michael Barrett, thus constituting a quorum. Whereupon, among other business,the following was transacted at said meeting: a written RESOLUTION DIRECTING PUBLICATION OF NOTICE OF INTENTION TO ISSUE CERTIFICATES OF OBLIGATION; AND RESOLVING OTHER MATTERS RELATING TO THE SUBJECT was duly introduced for the consideration of the Council. It was then duly moved and seconded that said Resolution be adopted and, after due discussion, said motion, carrying with it the adoption of said Resolution, prevailed and carried with all members present voting "AYE" except the following: NAY: 0 ABSTAIN: 0 2. A true, full and correct copy of the aforesaid Resolution adopted at the meeting described in the above and foregoing paragraph is attached to and follows this Certificate; that said Resolution has been duly recorded in the Council's minutes of said meeting; that the above and foregoing paragraph is a true, full and correct excerpt from the Council's minutes of said meeting pertaining to the adoption of said Resolution; that the persons named in the above and foregoing paragraph are the duly chosen, qualified and acting officers and members of the Council as indicated therein; that each of the officers and members of the Council was duly and sufficiently notified officially and personally, in advance, of the time, place and purpose of the aforesaid meeting, and that said Resolution would be introduced and considered for adoption at said meeting, and each of said officers and members consented, in advance, to the holding of said meeting for such purpose, and that said meeting was open to the public and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code. 3. The Council has approved and hereby approves the aforesaid Resolution; and that the Mayor and the Town Secretary of the Town hereby declare that their signing of this Certificate shall constitute the signing of the attached and following copy of said Resolution for all purposes. SIGNED AND SEALED THIS OCTOBER 24, 2016. T Secretary, Mayor, Town of Westlake Town of Westlake (Town Seal) �0�1N OF m � kAS. RESOLUTION DIRECTING PUBLICATION OF NOTICE OF INTENTION TO ISSUE CERTIFICATES OF OBLIGATION; AND RESOLVING OTHER MATTERS RELATING TO THE SUBJECT THE STATE OF TEXAS § COUNTIES OF TARRANT AND DENTON § TOWN OF WESTLAKE § WHEREAS, the Town Council of the Town of Westlake, Texas (the "Town"), deems it advisable to give notice of intention to issue certificates of obligation of the Town (the "Certificates of Obligation"), as hereinafter provided; and WHEREAS, it is hereby officially found and determined that the meeting at which this Resolution was considered was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code, as amended; NOW THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: Section 1. Attached hereto and marked Exhibit A is the form of Notice of Intention to Issue Certificates of Obligation of the Town (the "Notice"), the form and substance of which are hereby passed and approved. Section 2. The Town Secretary shall cause the Notice to be published in substantially the form attached hereto, in a newspaper of general circulation in the Town, and published in the Town, once a week for two consecutive weeks, the date of the first publication thereof to be no later than the 31 st day prior to the date set for the adoption of the ordinance authorizing the issuance of such Certificates of Obligation as shown in the Notice. Section 3. The facilities and improvements to be financed with proceeds from the proposed Certificates of Obligation are described in the attached Notice. Section 4. This Resolution is intended to satisfy the official intent requirements set forth in section 1.150-2 of the Treasury Regulations. Section 5. This Resolution shall be effective immediately upon adoption. ------------------------------- Exhibit A NOTICE OF INTENTION TO ISSUE COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION OF THE TOWN OF WESTLAKE,TEXAS NOTICE IS HEREBY GIVEN that it is the intention of the Town Council (the "Council")of the Town of Westlake, Texas (the "Town"), to issue one or more series of interest bearing certificates of obligation of the Town for the purpose of paying all or a portion of the Town's contractual obligations to be incurred in connection with (i) acquiring, constructing, installing and equipping fire-fighting facilities and (ii) paying legal, fiscal, engineering and architectural fees in connection with such projects and to pay costs of issuance of the certificates of obligation. The Council tentatively proposes to adopt an ordinance authorizing the issuance of said certificates of obligation at the Council Chambers, 1301 Solana Blvd., Building 4, Suite 4202, 2 d Floor, Westlake, Texas, at a meeting to commence at 5:00 p.m. on December 5, 2016. The maximum amount of certificates of obligation indebtedness that may be authorized to be sold on said date for such purposes described above is $9,200,000. The Town proposes to provide for the payment of such certificates of obligation from the levy and collection of ad valorem taxes in the Town as provided by law, and by a limited pledge of the surplus net revenues of the Town's combined waterworks and sewer system remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve and other requirements in connection with all of the Town's revenue bonds or other obligations (now or hereafter outstanding) that are payable from all or part of said revenues. The certificates of obligation are to be issued, and this notice is given, under and pursuant to the provisions of Texas Local Government Code, Chapter 271, Subchapter C. TOWN OF WESTLAKE,TEXAS AFFIDAVIT OF PUBLICATION THE STATE OF TEXAS § COUNTY OF TARRANT § BEFORE ME, the undersigned authority, on this day personally appeared the person whose name is subscribed below,who,being by me first duly sworn,upon oath deposed and said: 1. That this affiant is a duly authorized officer or employee of the Fort Worth Star-Telegram, which is a newspaper of general circulation in the Town of Westlake, Texas. 2. That said newspaper is a newspaper as defined by Section 2051.044, Texas Government Code, as amended, and as such: (1) devotes not less than 25 percent of its total column lineage to general interest items; (2) is published at least once a week; (3) is entered as second-class postal matter in the county where published; and (4) has been published regularly and continuously for at least 12 months prior to publishing the notice referenced below. 3. That attached hereto is a true, full and correct copy of NOTICE OF INTENTION TO ISSUE COMBINATION TAX .AND REVENUE CERTIFICATES OF OBLIGATION OF THE TOWN OF WESTLAKE, TEXAS which was published in said newspaper on the following dates, to wit: October 27,2016; and November 3, 2016. a) Auth ed icer o Employe SWORN TO AND SUBSCRIBED BEFORE ME, this the day of2016. Notary Public, State of Tex LESLIE BUCKLEY Y PV [NOTARY SEA " MY COMMISSION EXPIRES __ SEPTEMBER 24, 2017 NOTARY ID: 128058260 QF 1 , 86 I s> STAR-TELEGRAM I {{ I ., THURSDAY.,k6p EMBEk'3 2 i I. Legal cps Notice's �, Grapevine,, Q a �I.,.nantal :. y,,...�edic�l.Qf;)Z#il.y,��, ,� ..���wMedjcai Dental 9For, OF CHAPTER 3, OR EW' PRO- ^519-9388.'. Peasterdwn 81330-85gb erry c eyno s -3 49 eveRrytrhingeal SYou netate red.buck situated f y OMEGA XL,Vaccum needs work$25. CEDURES,ii SECTIONS 3:503 NOTICE OF INTENTION TO ISSUE ( j 2000 ACRES,'TOM'GREEN, CO, TX. m a quiet&clean park.A1,100 mo. 817-370.4425 Rhome 817. 59 Historic Door Key Ranch. Hunting; Call,today!"817-295.749 NOS ROOFING shingles 5 bundles PROCESS FOR ZONING IAPPLICA REVENUE,CERTIFICATES OF www:Lon Tide.com 1 Fishing, Livestock & Recreation. COMBINATION TAX AND $10 each (817)•473 0018 TION WITHDRAWALS;PROVIDING OBLIGATION OF THE, g Deer;Turkey,, 15 min to San 1956 FORD Parts Car $200. (817) THAT THIS ORDINANCE.SHALL BE TOWN OF WESTLAKE TEXAS (B17)595-2816 Angelo &Airport(325),315-8775 Rooms for Ren# 473-0018. CUMULATIVE PROVIDING A NOTICE IS''HEREBY GIVEN'that it Se Habla Espano1817.330-4886` 20.79 AC. N. OF SAN ANGELO. SEVERABIEIT(! CLAUSE;,PROVID- is the Intention of the'Town Council SEASONAL GREEK; DEER HOG5, FURN pRIV bath'gated traliwlk pool NEW,16LB sledge hammer$20 ING A PENALTY CLAUSE; PRO- (the "Council") of the Town of USDA-Communities TURKEY,, & DOVE.;NEAR Men only$575 bills paffi-500412M -307-3862 VIDING FOR PUBLICATION IN THE Westlake,Texas (the"Town"),to AVaIIdbIE!i, LAKE E.V.SPENCE.$3,622:OOWN Sell our stuff for$9:99 817 yy o OFFICIAL NEWSPAPER; AND issue one or more series of interest $600/M0. 800-876=9720 in.Merchandise.,, hg<& HOGSes PROVIDING AN EFFECTIVE DATE bearing certificates of obligation of ranchenterprisesitd.com SECTION 4. REAd THE le a1 notices in-our stable Buiidl g Any erson,firm,or corporation,who the Town for the purpose of paying 21.32 AC.W OF ROBERT LEE.LEVEL Legal Sectionl p all or a portion of the 'Town's i obeys,omits, neglects contractual obligations to be !n• WITH GOOD MESQUITE&BRUSH PICK A pony in our Farm & vio ates,.disobeys, or refuses to comply with or who cursed in connection with (i) ac• COVER. DEER HOGS, TURKEY, Ranch;Sectionl resists the enforcement of any of uiring constructing,installing and QUAIL& DOVE NEAR LAKE E.V. " the provisions Of this ordinance eqquipp(ng firefighting facilities and SPENCE. $2;926 DOWN'$485/M0. shall'be fined not more than Two (il)paying legal,fiscal engineering 800'-876-9720` � Lk Thousand Dollars ($2,000.00) for and architectural fees fn connection Arlington for'Sale ranchenterprisesitd.com each offense: Each, day that a with such projects and to pay costs 76708 Bosqque River; 40ac,-hear ? violation exists shall constitute a of issuance of the certificates,of $3500 MOVE IN PURCHASES, lust Hko;,$4;685/ac, $6;000 down' or separate offense: obligation. The Copuncii tentatively Make Payments. 3-5 bdrm homes discount for cash 512.423=7136 - �? adoption and publication halltakeof required h i 313-2186. 91:83 AC 8mi 5E of Graham,TX joins SECTION 8. pro ores to adopt an ordinance www.homeusa.us 817= This'ordinance shall take effect re upon cut certificates the Issuance of said Wildcatter Ranch. Great hunting APPROVED AS TO FORM AND Council Idte b4 sou 13042 Oland lion at the A2le fi0r S81e deer,turkey,hogsl0mim Wildcatter by law. g restaurant & lodge, '/_', mi from LEGALITY. Ffoor; Westlake, .TeXas,, ,at a ZERO MOVE-IN PURCHASES. Just Brazos river$2795/ac 9,40-550-8558 Make Payments. 3-5 bdrm homes, /s/Melinda, Ramos meeting to commence'at 5:00 P.M. www.homeusa.us 817.313-2186, Real Estate Services Sr.Assistant City Attorney on December 5,2016'.The maxlnium Adopted: 04tober 11,2016 amount of certificates of obligation } A copy of this ordinance may be Bedford For Sale ' 3 reviewed in'the City,5ecretaryiEs indebtedness that may be'autho- Office; Fort Worth Municipal razed to be sold on said date for l fi such ppurposes described above is $3500 MOVE-IN PURCHASES. Just r Building/City Hall, 1000 Throck• $9,20 000.The Town proposes to Make Payments. 3-5 bdrm homes ti morton, Fort Worth;Texas. provide for the payment of such www.homeusa.us 817.313.2186. 2 /s/Mary J.,Kayser certificates of obligation from the a � STORAGE BUILDINGS MARY J.KAYSER,CITY SECRETARY levy and collection of ad valorem Benbrook for Sale Buys 10x16$2000,,12x24$2800 16X32 CITY OF FORT WORTH taxes In the Town as!provided by $4400 Built on Site,214.869-1703 CITY OF FORT WORTH law,and by a limited pledge of the °"" � PUBLIC NOTICE surplus net revenues of the Town's 76126 - Nice 3-2-2 appprox 1984sf 1 Sewing Machine remodeled.FSBO.$205,000 e41 .Notice, is hereby. given that the combined waterworks, sewer recently following ordinance was adopted sirstem remaining after payment of 817.941.0517 ; x b the Fort Worth City.Council at a I operation and maintenance ex LIKE NEW Bernina 770 Pd $5500, their regular meeting. held on penses thereof,and all debt service, CrOvvley.For Sales " Now$3000. (817)727-7660 Tuesday, November'1, 2016: 'reserve and other requirements in iw ORDINANCE N0. 22489.11-2016 connection with all of the Town's �1QS f a Sports,& Excercise.Gear AN ORDINANCE AMENDING CHAP• revenue bonds or other obligations ZERO MOVE-1M PURCHASES. Just TER 34 "VEHICLES FOR HIRE 11 (now or hereafter outstanding)that Make Payments. 3-5 bdrm homes r; fi h , AMERICAN HERITAGE 81.pool table, ARTICLE VI "GROUND, TRANS- are payable from all or part of said www.homeusa.us 817.313.2186. SS 5 $1500 matne57k@gmail:com 817• PORTATION FOR HIRE, OF THE revenues: The certificates of obii- w s s ✓ 992-6757 CODE: OF THE CITY OF FORT gation are to be Issued, and,this Fort Worth WEB notice is given,under and'pursuant. ' BUY GOLF BALLS AMENDSD, BY AMENDING SEC to the provisions of Texas Local B WORTH' TEXAS (2015); AS $3500 MOVE71N PURCHASES. Just '- 682 552.7076 a Government Code' Chapter 271, Make Payments. 3.5 bdrm homes LO E TIFICATION" TO REQUIREC AN Subchapter C. TOWN OF WEST- AN www.homeusa.us 817.313-2186. "' (.� TION 34=203, "COMPLIANCE p w Buy Orta Trade APPLICANT FOR OR HOLDER OF LAKE;TEXAS 76107 4325 Donnelly Ave 3 BR/2 ro A VEHICLE FOR HIRE OPERATING STAR-TELEGRAM, BA 3/2,,100°o'remodeled:Must see! Kathy FREON R12 WANTED: Certified LICENSE TO CERTIFY THAT A CLASSIFIEDS. Hire,Sell,&,Buy $219,500 817-897-5616, e* • buyer, will pfckup and pay CASH NATIONAL CRIMINAL, BACK- -.all in one place! askins@valuetex.com �9 p B13 for cylinders and cases of cans. GROUND CHECK AND DRIVER'S SELL YOUR 817 � 5 in sell@refrigerantfinders.com 312- LICENSE CHECK HAS BEEN PER- Merchandise for$9:99 291-9169 FORMED ON ALL DRIVERS WITHIN 817-332-33331�ll�l�,l1lfS�fDUS�S.118�, THE PAST TWELVE MONTHS; COWBOYS-Buy/sell PSLs&Tickets PROVIDING THAT NATIONAL Step PSLsource.com or 800-252-8055 CRIMINAL BACKGROUND CHECKS Legal Notices AND a RIVER'S LICENSE CHECKS SHALL i VERIFY THAT DRIVERS NOTICE OF PUBLIC HEARING MEET THE CITY'S DRIVER QUAL- TO ALL,INTERESTED'CITIZENS " ° with IFiCATiONS; PROVIDING THAT AND ORGANIZATIONS iN THE �,,� THIS ORDINANCE SHALL BE CU- CITY OF ARLINGTON,TEXAS 76108-Motivated seller Beautiful � , , r• 7��, f MULATIVE OF ALL PRIOR ORDI- On'Thursday,November 10,2016 at home in gated community What��' =ids Proposals NANCES•AND REPEAL CONFLICT- 6:15 p.m:;the.Arlington Landmark � r & s r a �a ING ORDINANCES,PROVIDING FOR Preservation Commission(LPC)will 76108-Owner Finance 3-2-2 brick, g CITY OF GRAND PRAIRIE A SEVERABILITIJ CLAUSE- PRO- .conduct public,hearings at the remodel.Bad creditok 817-903-5235 u� ppe�an(�' ADVERTISEMENT FOR MDS VIDING FOR A SAVING5''CLAUSE; Vandergriff Building,255 N.Center '° pY t? bids will,be received at the PROVIDING A PENALTY CLAUSE,,- SealedStreet, ,Conference Room •(first t ffice of the'Purchasing division, "'PROYIDING FOR'PUBLICATION IN fluor), Arlington;7X'76010. r ,a ll 326 W.MainStreet Grand Prairie, THE OFFICIAL NEWSPAPER OF The purpose of these public hearIn s a g Texas,until November 28,2016 at THE CITY;r AND PROVIDING AN ls'-;to receive Input from ge w == 10:00 AM,and publicly opened and EFFECTIVE S DATE. . d ner(s) and/or representatives) read at that time for the purchase S. THURSDAY OCTOBER 27 2016 I I STAR-TELEGRAM sl Legal NoticeLegNot ceps 'Crowley,ForSale tl Farms,stands, Ranches Real Estate Ser+ ' ,,gym m , �. . Higfiway151 (SH-161). intersec- Westlake,Texas (the"Town"),to ZERO MOVE-IN PURCHASES. Just JOSHUA 5.92 Acres,$35,000. EILEEN PETROSI , �� g tion,is zoned Planned Development issue one or more series of interest' s 15-&a'quarter;'acres w/brick 3.2.2,, 283 (PD=283) District for General' bearing certificates of obligation of Payments: 3.5 bdrm home Lego[ Notices Retail and Commercial.°uses and Is, the Town forthe purpose of paying www,homeusa.us 817.313.2186, shop;.pand;can,divtde 817.832.2074 re withn the SH•161,Corrtdor Overlay all,or a portion of the 'Town's "�""' "" 105Ac Cranbury,Tolar area:csti,wtr, property,aad6 essede2441 Houston, District. contractual obligations to be in Fort Worth JerryMcReynolds RE 817279-3949 Streeis generally located south SU351101/S161104 - Specific Use curved in connection with (1) ac- A, s - , of,Houston ener Street and locate of NW,south Permit - Poilo Regio on S Carrier qulringl constructing,installing and $3500 MOVE-1N PURCHASES.,Just 2000 ACRES, TOM GREEN, CO,TX. wy (City'Council District 2). equipping fire fighting facilities and Historic Door Key Ranch. Hunting, 25th Street.The roperty is zoned Make Payments. 3;5 bdrm homes Ftshln , Livestock & Recreation. Light induStrtai ppLI District. The Consider at request`,to approve A (ii)paying legal;fiscal,'engineering www.homeusa.us 817-313-2186. (. Deer, urkey,.Quail.15 min to San property rs also located within. to construct and operate a res- with architectural connectionAngelo &Airport to con with anddrive-through.a The of with such projects and to;paycosts P (325) 315x8775 (CBD-1),Business District No. isuance of the,certificates of 2132 AC,W OF ROBERT LEE.LEVEL 0:71-acre property,.located at 3713 obligation.The Council tentatively WIT.H'GOOD MESQUITE'&.BRUSH SU150602A - Specific Use Permit S.Carrier Parkway,is zoned General( proposes to"adopt.an ordinance t COVER. DEER;' HOGS;,,TURKEY,' Renewal-2305 Fort Worth-Street p ��m Retail(GR)`District. authorizing the'issuance of said (City Council for heindefinite District 1)• Consider SU161102 - Specific Use Permit certificates of obligation at the l SSPENCE DOVE. 2 9 6 DOWN$48%M0. a request for the indefinite renewal G&B Bumper Tech (City Council Council Chambers, 1301 Soiana s 800-876-9720 of Specific Use Permit No. 970 BEST (.ASH 01 District 5). Consider a request to Blvd., Building 4, Suite 4202, 2nd ' u ranchenterprisesitd,com (Ordinance No. 9889-2015) per- a prove an Specific Use Permit to Floor, Westlake, Texas, at a ,u a _,E, mitting the operation of a Plumbing p 76708 Bosque River, 40ac, near FOR YOUR Ht Contractor facility. The 0.703 acre allow for Outside Storage Uses in meeting to commence at 5:00 p.m. 76108-Motivated seller-Beautiful Hico, $4,685/ac,.$6,000 down or MORE MONEY FOR conjunction with Used Auto'Parts on December 5,2016.The maximum property, addressed 2305 Fort home in gated community discount for cash 512-423-7136 No Repairs Sales at an acres. retail business amount n certificates of obligation ., T, 91,$3 AC Smi SE of Graham,TX joins " No Commission Worth Street, is located at the t on 1.142 acres. he 1.142 acre indebtedness that may be autho- southwest corner ,of Fort Worth propertyWildcatter Ranch. Great; hunting ' No Closing Cost Street,and NW 23rd Street. The r is located west of S.E.S,E. sized to be sold sc said, is deeY,t' Fast"Closing p date for property is zoned Light;'Industrial p feet0 urkey,ho 510mimWildcatter 1outh f E,Main approximately y 541 S.E. such. 000. Th described gg , • 25 Years Buying.Homes (LI) District. The property is also south of E.Main Street.(143;8,1. $9,20 ,000. The Town pro'of such: fi Brazos river$2g795/ac 940-550.8558' t.dliTOday.214-W 16th Street).The property is zoned provide for he payment, oses to restaurant Mod od e, z mi from locat within Central Business Light.Industrial (LI) District and certificates of,obligation the www.HouseHuntersofDal District No.1(CBD-1): lies within the Central Business levy and collection of ad valorem, Real Estate Services , SU150604A - Specific Use Permit District(CBD) Corridor;Section 3. taxes in the'Town as provided by 3 Renewal 2422 NW Dallas Street The property has an existing lave,,and by a limited pledge of the. (City Council District 1). Consider a request for the Indefinite renewal Specific Use Permit 685(SUP-585) surplus net revenues of the Town's allowing for Reclamation/Recy-' combined waterworks and sewer of Specific Use Permit .No. 968 r cling; system remaining after payment of: KATH (Ordinance No. 9876.2015) per- Z161101- Zoning Change-General, all opefation antl maintenance ex mitting the operation of a Con- g tractor's Shop with Limited Outdoor Retail ll SEC o Belt st ri and penSes thereof,'+and all debt service, Storage. The 0.35 acre property, Marshall fCity Council District 2). reserve and other requirements in BUYS Apt • Arlingtor addressed as 2422 NW Dallas acres fromSingle Fem1rezone y Two;(Sf revenueibondstoraoYher the �. � ' xar Tei 2)"Districtto a Planned'Develop- (now or hereafter outstanding) 760X0 EtILLS PAlO. $10! tent District for r are'; � r,,.w Street, is enterally locatednorth of m 1st rct Gene al ;Retail ,payable,from all or of said; 76108-3.2'R rd g oda hl 1350 on ,to $25 app,tete,Eff.,1;2&3'bi, of NW Dallas Street and uV s Call 81.-640-1051 for ava! NW 24th St.The subject property120 bi 2 rd 51,900 hood,con ,to uses:' The sublecf propert ,'is revenues. The,certificates of obli= g y is zoned Light Industrial's(LI) Dis 120,30&820$151,900 817.270-0 50 : trict. The property is also located. generallyrivelocated B the S C of nation are to,en,u issued, pursuant Apt - Fort Wort in Central Business District No. 1, Marshal! Drive and Belt Line:Road to is given under and pursuant 7Fin$1.2-2 Brick,New Remod 235 - fGBD•1). and addressed as 2010'and 20385: ' to the.provisions of Texas Local Fin$10 nine:+T&1 817-903.5235 r SU351001A -Specific ecific.Use Permit; TA161001 Road,ext��Amendmentr Government C�Code, NhOF Chapter272,', 76116 Ridgmar Open House-r% f :,76107-A"r`I Hghts 1.1-on"Cc Renewal-Auto Care Central(City Consider s request for approval 08 LAKE,TEXAS 1:00-3:00,,1809 DAKAR RD E. '- quiet complex$625.817-7. Council District 2). Consider a WOASIS":',portions of Areticle 6 lDensity antl:; "NOTICE OF PUBLIC MEETING TO:.' � _ 76107:-i`tidrm duplex st; request for the indefinite renewal 76133 »`3813 Wharton-Dr; 3BR/2 d of Specific Use Permit No. 8296. , story private quiet 3117' e Dimensional requirements of the DISCUSS BA Open house Sat and'Sun fpm- $650 917-308-9391 (Ordinance No. 9953.2015) per- Unified:.,pevelopment,'Cade, said. 2016 SCHOOL FIRST RATING spm call Veronika 214.518.1184 mitting the operation of a Used The.Lake Worth�Independent School •' �p1r Auto Sales lot. The 1.23 acre nts provide for: 1)" an • � « amen District will hold a public meetin Duplex Fort Worth Pioneer,isdeslocated 0 the, Administrative conversions s carports g ale, � � ,��,,�� property, addressed as.520 W. and garage conversions that are at�7:00,pm,November 14;2016,at Grapevine For;S generally routinely appYoved;by the Zoning the Lake.Worth'ISDAdministration X76105 SE.Fort.Worth 1.1'°st north side of Pioneer Pkwy and Board of Adjustment and Appeals Building, 6805 Tele h ne Road,; GRAPEVINE 3-2z/z less'theq 5 mi $550.mo/$550.'dep,;(817)8 • east of S. Carrier Pkwy. The p S kwy h Lake>Worth,TX:76135.The from IakH Incredlbie inV: oppty. (ZBA) or'are located within. ori � � Kathy, ila7 ��^����«•� « property is zoned Planned Devel- existing mobile home park or single, of this meeting is.to discuss the Ready for remodel or rent immed. tpment 56 (PD-56) District. family detached condominium de- school,districVs,performagce under, *Motivated Seller;,Won't Last Longl, Fort Worth,For Rf S 1510046 - Specific Use Permit vele ment,,2)enhanced,.ZBA dts the�S;chooi FIRST (Financial Jri $285K ll68 Silveelake 682 438-4527 '( Q QQQI; i Renewal-309SE 14th Street(City cret on granting relief for larger toggr�ity Rating System of Texas)'; � •* * ^ri ��., * ���r+��+✓✓✓ ' �76108,CUTE New Rerriodell t Council District 5), Consider a and/or uniquelyshapedcarports or A financial management report will Keller for„Saleuplex$120/wk 817403-5: request for the indefinite renewal garage conversions, and 3 resHOuses.net of Specific Use Permit No. 978A ) be;`tlistributed�'andpubiic partici Kathy pealing, the requirement for a patios in the.discussion,is Invited. � � Hurst for Rent, (Ordinance No. 10086 2016) Per- $3500,MOVE-1N PURCHASER.,Just minimum 6 foot building separation, ^ PUBLIC HEARING NOTICE Make'Payme ts. 3-5 bdrm homes "pl. mitting the operation of a Major between primary and',accessory, public hearings will be. held by www.homeuslus 817.313.2186. 3-2-2, FORMAL-Laving,&'DI • Auto Repair AND Auto Bogy&Paint structures. facility. The 0.3 acre"property, pp Den VV/fp 18005f, $160C J addressed as 309 SE 14th Street, TAmendin - Text Amendment &Mansfield City oust!&On 11/14 :? Mansfield for Sdie McNaC Co.Com 817.2684 Amending portions of Section &Man s field on 11/7/15'at 6 30 m r C is generally located south of Jef E �. .� , 22.2.13, Section 22:2,14, and 6&11/28/16; 7 m "� � ferson Street and west of SE 14th P in Ctty,Count 1 Johnson County For I A tion. e2�of the Unified Develop Nlransfle d�TX„ o consider $3500 MOVE-14 PURCHASES. Juste i Street, The property is zoned " 00 E BroadSt-',� d Commercial c District.The property ment Code, and further amending ZC#16.020: Request for Historic Make Payments. 3=5,bdrm homes ,, BURLESON Senior Liv. 2-2 t ' a : is also located within Central (typo correction)Section 14.5.11 of www.homeusa.us 817-313-2186. s/ Business District No. 3 (CBD-3). Article 14: Drainage of the Unified Landmark Overlay District for $895;11.1 dplx$795 817-3E g property located at 114.NMain St.+ 'wv SU151005A - Specific Use Permit Development Code; ,said amend- N.Ftichiand HIItsSale� rct Renewal-3318E Jefferson'Street mehts will increase inspection fees °� w �F � 1(Business Prop.ReniJL >m (City Council District 5). Consider assessed for Inspections of multi- �� i> a request for the indefinite renewal $3500 NI0 E-IN PURCHASES;Just: family structures,new commercial r "' yy RETAIL/OFFICE of Specific Use Permit No. 977 F a ��r Make Payments: 3.5 bdrm homes construction,commercial finish out, y www homegsa.us 817.x313-2186. ' WEST LOOP 820.761(11 (Ordinance No, 9955.2015) per- and commercial remodels. , mitting the operation of a used r-.«._ - "` CERTIFICATE FOR ORDINANCE THE STATE OF TEXAS § COUNTIES OF TARRANT AND DENTON § TOWN OF WESTLAKE § We, the undersigned officers of the Town of Westlake, Texas (the "Town"), hereby certify as follows: 1. The Town Council(the"Council")of the Town convened in a regular meeting on December 5, 2016,at the designated meeting place,and the roll was called of the duly constituted officers and members of the Council,to wit: Laura Wheat,Mayor Carol Langdon,Mayor Pro Tem Michael Barrett,Council Member Alesa Belvedere,Council Member Wayne Stoltenberg,Council Member Rick Rennhack,Council Member Kelly Edwards,Town Secretary and all of said persons were present except Michael Barrett,thus constituting a quorum. Whereupon,among other business,the following was transacted at said meeting: a written AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF TOWN OF WESTLAKE,TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION,SERIES 2016;LEVYING AN ANNUAL AD VALOREM TAX AND PROVIDING FOR THE SECURITY FOR AND PAYMENT OF SAID CERTIFICATES; APPROVING AN OFFICIAL STATEMENT; PROVIDING AN EFFECTIVE DATE;AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT was duly introduced for the consideration of the Council. It was then duly moved and seconded that said Ordinance be adopted and, after due discussion, said motion, carrying with it the adoption of said Ordinance,prevailed and carried with all members present voting"AYE" except the following: NOES: 0 ABSTAIN: 0 2. A true,full and correct copy of the aforesaid Ordinance adopted at the meeting described in the above and foregoing paragraph is attached to and follows this Certificate;that said Ordinance has been duly recorded in the Council's minutes of said meeting;that the above and foregoing paragraph is a true,full and correct excerpt from the Council's minutes of said meeting pertaining to the adoption of said Ordinance; that the persons named in the above and foregoing paragraph are the duly chosen, qualified and acting officers and members of the Council as indicated therein; that each of the officers and members of the Council was duly and sufficiently notified officially and personally, in advance, of the time, place and purpose of the aforesaid meeting,and that said Ordinance would be introduced and considered for adoption at said meeting,and each of said officers and members consented,in advance,to the holding of said meeting for such purpose, and that said meeting was open to the public and public notice of the time, place and purpose of said meeting was given,all as required by Chapter 551,Texas Government Code. 3. The Council has approved and hereby approves the aforesaid Ordinance; the Mayor and the Town Secretary of the Town have duly signed said Ordinance; and the Mayor and the Town Secretary of the Town hereby declare that their signing of this Certificate shall constitute the signing of the attached and following copy of said Ordinance for all purposes. SIGNED AND SEALED ON DECEMBER 5,2016. 1"All Town Secretary Mayor sof WEF.'.r!! _ 0' Tow eal)-., Ir TE X P5 CERTIFICATE FOR ORDINANCE Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation,Series 2016 TOWN OF WESTLAKE ORDINANCE 804 AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF TOWN OF WESTLAKE, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2016; LEVYING AN ANNUAL AD VALOREM TAX AND PROVIDING FOR THE SECURITY FOR AND PAYMENT OF SAID CERTIFICATES; APPROVING AN OFFICIAL STATEMENT; PROVIDING AN EFFECTIVE DATE;AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT WHEREAS, the Town Council (the "Council") of the Town of Westlake, Texas (the "Town" or "Issuer"),deems it advisable to issue Certificates of Obligation in the amount of$9,180,000 for the purposes hereinafter set forth;and WHEREAS, the Certificates of Obligation hereinafter authorized and designated are to be issued and delivered for cash pursuant to Subchapter C of Chapter 271, Local Government Code; and Chapter 1502 Texas Government Code; and WHEREAS, the Council has heretofore passed a resolution authorizing and directing the Town Secretary to give notice of intention to issue Certificates of Obligation, and said notice has been duly published in a newspaper of general circulation in the Town on October 27,2016 and November 3,2016, said newspaper being a"newspaper" as defined in Section 2051.044,Texas Government Code; and WHEREAS,the Town received no petition from the qualified electors of the Town protesting the issuance of such Certificates of Obligation; and WHEREAS, during the preceding three years, the Issuer has not submitted a bond proposition to authorize the issuance of bonds for the same purpose for which the Certificates are hereby being issued and which proposition was disapproved by voters;and WHEREAS, it is considered to be to the best interest of the Town that said interest-bearing Certificates of Obligation be issued; and WHEREAS, it is officially found, determined, and declared that the meeting at which this Ordinance has been adopted was open to the public and public notice of the time,place and subject matter of the public business to be considered and acted upon at said meeting,including this Ordinance,was given, all as required by the applicable provisions of Texas Government Code,Chapter 551; NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE,TEXAS: Section 1. RECITALS,AMOUNT AND PURPOSE OF THE CERTIFICATES. The recitals set forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set forth in this Section. The certificates of the Town are hereby authorized to be issued and delivered in the aggregate principal amount of$9,180,000 for paying all or a portion of the Issuer's contractual obligations incurred in connection with: (i)acquiring,constructing,installing and equipping fire-fighting facilities and (ii)paying legal,fiscal,engineering and architectural fees in connection with such projects and to pay costs of issuance of the Certificates(collectively,the"Project"). Section 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS, AND MATURITIES AND INTEREST RATES OF CERTIFICATES;REDEMPTION PROVISIONS. (a) Each certificate issued pursuant to this Ordinance shall be designated: "TOWN OF WESTLAKE, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2016," and initially there shall be issued, sold, and delivered hereunder one fully registered certificate,without interest coupons,dated December 1,2016,in the principal amount stated above and in the denominations hereinafter stated,numbered T-1, with certificates issued in replacement thereof being in the denominations and principal amounts hereinafter stated and numbered consecutively from R-1 upward,payable to the respective Registered Owners thereof(with the initial certificate being made payable to the Purchaser as described in Section 10 hereof), or to the registered assignee or assignees of said certificates or any portion or portions thereof(in each case, the"Registered Owner"), and said certificates shall mature and be payable serially on the dates and in the principal amounts,respectively,and shall bear interest from the Issuance Date set forth in the FORM OF CERTIFICATE set forth in Exhibit A of this Ordinance to their respective dates of maturity or redemption prior to maturity at the rates per annum, as set forth in the following schedule: Maturity Date Principal Interest (February 15) Amount Rate 2018 $ 200,000 3.00% 2019 205,000 3.00 2020 210,000 3.00 2021 215,000 3.00 2022 225,000 3.00 2023 230,000 3.00 2024 235,000 3.00 2025 245,000 3.00 2037 3,575,000 3.00 2038 360,000 4.00 2040 765,000 4.00 2042 835,000 4.00 2044 900,000 4.00 2046 980,000 4.00 The term"Certificates"as used in this Ordinance shall mean and include collectively the certificates initially issued and delivered pursuant to this Ordinance and all substitute certificates exchanged therefor, as well as all other substitute certificates and replacement certificates issued pursuant hereto, and the term "Certificate"shall mean any of the Certificates. (b) The Certificates shall be subject to redemption prior to maturity as set forth in the FORM OF CERTIFICATE attached hereto as Exhibit A. 2 Section 3. CHARACTERISTICS OF THE CERTIFICATES. (a) Registration, Transfer, Conversion and Exchange; Authentication. The Issuer shall keep or cause to be kept at the principal corporate trust office of U.S. Bank National Association,Dallas,Texas (the "Paying Agent/Registrar") books or records for the registration of the transfer, conversion and exchange of the Certificates (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers, conversions and exchanges under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such registrations, transfers, conversions and exchanges as herein provided. The Paying Agent/Registrar Agreement in the form presented at the meeting at which this Ordinance is adopted is hereby approved. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of each Certificate to which payments with respect to the Certificates shall be mailed,as herein provided;but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar,but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, conversion, exchange and delivery of a substitute Certificate or Certificates. Registration of assignments, transfers, conversions and exchanges of Certificates shall be made in the manner provided and with the effect stated in the FORM OF CERTIFICATE set forth in this Ordinance. Each substitute Certificate shall bear a letter and/or number to distinguish it from each other Certificate. (b) Except as provided in Section 3(d) of this Ordinance, an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Certificate, date and manually sign said Certificate, and no such Certificate shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all paid Certificates and Certificates surrendered for conversion and exchange. No additional ordinances,orders,or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing conversion and exchange of any Certificate or portion thereof,and the Paying Agent/Registrar shall provide for the printing,execution,and delivery of the substitute Certificates in the manner prescribed herein, and said Certificates shall be printed or typed on paper of customary weight and strength. Pursuant to Chapter 1201, Government Code, as amended,the duty of conversion and exchange of Certificates as aforesaid is hereby imposed upon the Paying Agent/Registrar,and,upon the execution of said Certificate,the converted and exchanged Certificate shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Certificates that initially were issued and delivered pursuant to this Ordinance,approved by the Attorney General and registered by the Comptroller of Public Accounts. (c) Payment of Certificates and Interest. The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Certificates,all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Certificates, and of all conversions and exchanges of Certificates,and all replacements of Certificates,as provided in this Ordinance. However,in the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer. Notice of the past due interest shall be sent at least five(5)business days prior to the Special Record Date by United States mail,first-class postage prepaid,to the address of each registered owner appearing on the Registration Books at the close of business on the last business day next preceding the date of mailing of such notice. 3 (d) In General. The Certificates (i) shall be issued in fully registered form, without interest coupons,with the principal of and interest on such Certificates to be payable only to the registered owners thereof,(ii)may be redeemed prior to their scheduled maturities,(iii)may be converted and exchanged for other Certificates, (iv) may be transferred and assigned, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal of and interest on the Certificates shall be payable, and(viii) shall be administered and the Paying Agent/Registrar and the Issuer shall have certain duties and responsibilities with respect to the Certificates, all as provided, and in the manner and to the effect as required or indicated,in the FORM OF CERTIFICATE set forth in this Ordinance. The Certificate initially issued and delivered pursuant to this Ordinance is not required to be,and shall not be,authenticated by the Paying Agent/Registrar,but on each substitute Certificate issued in conversion of and exchange for any Certificate or Certificates issued under this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF CERTIFICATE. (e) The Issuer covenants with the registered owners of the Certificates that at all times while the Certificates are outstanding the Issuer will provide a competent and legally qualified bank, trust company,financial institution,or other entity to act as and perform the services of Paying Agent/Registrar for the Certificates under this Ordinance,and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to,and may,at its option,change the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar,to be effective not later than 60 days prior to the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar(or its successor by merger,acquisition,or other method)should resign or otherwise cease to act as such, the Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust company,financial institution,or other agency to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Certificates, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each Registered Owner of the Certificates, by United States mail, first-class postage prepaid,which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such,each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. (f) Except as provided below,no Certificate shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided in this Ordinance,duly authenticated by manual execution of the Paying Agent/Registrar. It shall not be required that the same authorized representative of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Certificates.In lieu of the executed Certificate of Paying Agent/Registrar described above,the Initial Certificate delivered on the closing date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided in this Ordinance,manually executed by the Comptroller of Public Accounts of the State of Texas or by his duly authorized agent, which certificate shall be evidence that the Initial Certificate has been duly approved by the Attorney General of the State of Texas and that it is a valid and binding obligation of the Issuer,and has been registered by the Comptroller. (g) Book-Entry Only System. The Certificates issued in exchange for the Certificate initially issued to the Purchaser specified herein shall be initially issued in the form of a separate single fully registered Certificate for each of the maturities thereof. Upon initial issuance,the ownership of each such Certificate shall be registered in the name of Cede& Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), and except as provided in subsection (f) hereof, all of the outstanding Certificates shall be registered in the name of Cede&Co.,as nominee of DTC.With respect to Certificates 4 registered in the name of Cede&Co.,as nominee of DTC,the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation to any securities brokers and dealers,banks,trust companies, clearing corporations and certain other organizations on whose behalf DTC was created("DTC Participant")to hold securities to facilitate the clearance and settlement of securities transactions among DTC Participants or to any person on behalf of whom such a DTC Participant holds an interest in the Certificates. Without limiting the immediately preceding sentence,the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede &Co. or any DTC Participant with respect to any ownership interest in the Certificates, (ii) the delivery to any DTC Participant or any other person, other than a Registered Owner of Certificates, as shown on the Registration Books, of any notice with respect to the Certificates,or(iii)the payment to any DTC Participant or any other person,other than a Registered Owner of Certificates,as shown in the Registration Books of any amount with respect to principal of or interest on the Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the Issuer and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Registration Books as the absolute owner of such Certificate for the purpose of payment of principal and interest with respect to such Certificate, for the purpose of registering transfers with respect to such Certificate,and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on the Certificates only to or upon the order of the Registered Owners, as shown in the Registration Books as provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer's obligations with respect to payment of principal of and interest on the Certificates to the extent of the sum or sums so paid. No person other than a Registered Owner,as shown in the Registration Books, shall receive a Certificate evidencing the obligation of the Issuer to make payments of principal and interest pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede&Co.,and subject to the provisions in this Ordinance with respect to interest checks being mailed to the Registered Owner at the close of business on the Record date,the words"Cede&Co."in this Ordinance shall refer to such new nominee of DTC. The previous execution and delivery of the Blanket Letter of Representations with respect to obligations of the Issuer is hereby ratified and confirmed;and the provisions thereof shall be fully applicable to the Certificates. (h) Successor Securities Depository;Transfers Outside Book-Entry OnlySystem. In the event that the Issuer determines that DTC is incapable of discharging its responsibilities described herein and in the representations letter of the Issuer to DTC or that it is in the best interest of the beneficial owners of the Certificates that they be able to obtain certificated Certificates, the Issuer shall (i) appoint a successor securities depository, qualified to act as such under Section 17A of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Certificates to such successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of Certificates and transfer one or more separate certificated Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event,the Certificates shall no longer be restricted to being registered in the Registration Books in the name of Cede&Co.,as nominee of DTC,but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Registered Owners transferring or exchanging Certificates shall designate,in accordance with the provisions of this Ordinance. (i) Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Certificate is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of and interest on such Certificate and all notices with respect to such Certificate shall be made and given,respectively,in the manner provided in the representations letter of the Issuer to DTC. 0) Cancellation of Initial Certificate. On the closing date,one initial Certificate representing the entire principal amount of the Certificates,payable in stated installments to the purchaser designated in 5 Section 10 or its designee,executed by manual or facsimile signature of the Mayor or Mayor Pro Tem and Town Secretary of the Issuer, approved by the Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas,will be delivered to such purchaser or its designee. Upon payment for the initial Certificate, the Paying Agent/Registrar shall cancel the initial Certificate and deliver to the Depository Trust Company on behalf of such purchaser one registered definitive Certificate for each year of maturity of the Certificates,in the aggregate principal amount of all of the Certificates for such maturity. (k) Conditional Notice of Redemption. With respect to any optional redemption of the Certificates,unless certain prerequisites to such redemption required by this Ordinance have been met and money sufficient to pay the principal of and premium,if any,and interest on the Certificates to be redeemed will have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said redemption may, at the option of the Issuer, be conditional upon the satisfaction of such prerequisites and receipt of such money by the Paying Agent/Registrar on or prior to the date fixed for such redemption or upon any prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given and such prerequisites to the redemption are not fulfilled, such notice will be of no force and effect, the Issuer will not redeem such Certificates, and the Paying Agent/Registrar will give notice in the manner in which the notice of redemption was given,to the effect that such Certificates have not been redeemed. Section 4. FORM OF CERTIFICATES. The form of the Certificates,including the form of Paying Agent/Registrar's Authentication Certificate, the form of Assignment and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Certificates initially issued and delivered pursuant to this Ordinance, shall be substantially in the form provided in Exhibit A, with such appropriate variations, omissions or insertions as are permitted or required by this Ordinance. Section 5. INTEREST AND SINKING FUND; SURPLUS REVENUES. (a) A special "Interest and Sinking Fund" is hereby created and shall be established and maintained by the Issuer at an official depository bank of said Issuer. Said Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of said Issuer,and shall be used only for paying the interest on and principal of said Certificates. All amounts received from the sale of the Certificates as accrued interest shall be deposited upon receipt to the Interest and Sinking Fund,and all ad valorem taxes levied and collected for and on account of said Certificates shall be deposited,as collected,to the credit of said Interest and Sinking Fund. During each year while any of said Certificates are outstanding and unpaid, the governing body of said Issuer shall compute and ascertain a rate and amount of ad valorem tax that will be sufficient to raise and produce the money required to pay the interest on said Certificates as such interest comes due,and to provide and maintain a sinking fund adequate to pay the principal of said Certificates as such principal matures(but never less than 2%of the original amount of said Certificates as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of said Issuer,with full allowances being made for tax delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby levied,and is hereby ordered to be levied, against all taxable property in said Issuer,for each year while any of said Certificates are outstanding and unpaid,and said tax shall be assessed and collected each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of said Certificates, as such interest comes due and such principal matures,are hereby pledged for such payment,within the limit prescribed by law. (b) The Certificates are additionally secured by a limited pledge of$1,000 of the revenues of the Issuer's waterworks and sewer system that remain after the payment of all maintenance and operation expenses thereof,and all debt service,reserve and other requirements in connection with all of the Issuer's 6 revenue obligations (now or hereafter outstanding) which are payable from all or any part of the net revenues of the Issuer's waterworks and sewer system, constituting "Surplus Revenues". The Issuer shall deposit such Surplus Revenues to the credit of the Interest and Sinking Fund created pursuant to this Section,to the extent necessary to pay the principal and interest on the Certificates. If Surplus Revenues or other lawfully available moneys of the Issuer are actually on deposit in the Interest and Sinking Fund in advance of the time when ad valorem taxes are scheduled to be levied for any year, then the amount of taxes that otherwise would have been required to be levied pursuant to subsection(a) of this Section may be reduced to the extent and by the amount of the Surplus Revenues or other lawfully available funds then on deposit in the Interest and Sinking Fund. (c) Article 1208,Government Code,applies to the issuance of the Certificates and the pledge of the taxes and Surplus Revenues granted by the Issuer under this Section and Section 9,respectively,and is therefore valid,effective,and perfected. Should Texas law be amended at any time while the Certificates are outstanding and unpaid, the result of such amendment being that the pledge of the taxes and Surplus Revenues granted by the Issuer under this Section and Section 9,respectively,is to be subject to the filing requirements of Chapter 9, Business & Commerce Code, in order to preserve to the registered owners of the Certificates a security interest in said pledge, the Issuer agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Business&Commerce Code and enable a filing of a security interest in said pledge to occur. Section 6. DEFEASANCE OF CERTIFICATES. (a) Any Certificate and the interest thereon shall be deemed to be paid,retired and no longer outstanding(a"Defeased Certificate")within the meaning of this Ordinance,except to the extent provided in subsection(d)of this Section,when payment of the principal of such Certificate,plus interest thereon to the due date(whether such due date be by reason of maturity or otherwise)either(i)shall have been made or caused to be made in accordance with the terms thereof,or(ii)shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar in accordance with an escrow agreement or other instrument (the "Future Escrow Agreement") for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Defeasance Securities that mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Certificates shall have become due and payable. At such time as a Certificate shall be deemed to be a Defeased Certificate hereunder, as aforesaid, such Certificate and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged or the pledge of Surplus Revenues as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Defeasance Securities. Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided that any determination not to redeem Defeased Certificates that is made in conjunction with the payment arrangements specified in subsection 6(a)(i) or(ii) shall not be irrevocable,provided that: (1) in the proceedings providing for such payment arrangements, the Issuer expressly reserves the right to call the Defeased Certificates for redemption; (2) gives notice of the reservation of that right to the owners of the Defeased Certificates immediately following the making of the payment arrangements; and (3) directs that notice of the reservation be included in any redemption notices that it authorizes. (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the Issuer be invested in Defeasance Securities,maturing in the amounts and times as hereinbefore set forth, and all income from such Defeasance Securities received by the Paying Agent/Registrar that is not required for the payment of the Certificates and interest thereon, with respect to which such money has been so deposited, shall be turned over to the Issuer,or deposited as directed in writing by the Issuer. Any Future Escrow Agreement pursuant to which the money and/or Defeasance Securities are held for the payment of 7 Defeased Certificates may contain provisions permitting the investment or reinvestment of such moneys in Defeasance Securities or the substitution of other Defeasance Securities upon the satisfaction of the requirements specified in subsection 6(a)(i) or(ii). All income from such Defeasance Securities received by the Paying Agent/Registrar which is not required for the payment of the Defeased Certificates, with respect to which such money has been so deposited,shall be remitted to the Issuer or deposited as directed in writing by the Issuer. (c) The term "Defeasance Securities" means any securities and obligations now or hereafter authorized by State law that are eligible to refund, retire or otherwise discharge obligations such as the Certificates. (d) Until all Defeased Certificates shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Certificates the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. (e) In the event that the Issuer elects to defease less than all of the principal amount of Certificates of a maturity,the Paying Agent/Registrar shall select,or cause to be selected, such amount of Certificates by such random method as it deems fair and appropriate. Section 7. DAMAGED,MUTILATED,LOST, STOLEN,OR DESTROYED CERTIFICATES. (a) Replacement Certificates. In the event any outstanding Certificate is damaged,mutilated, lost, stolen or destroyed, the Paying Agent/Registrar shall cause to be printed, executed and delivered, a new certificate of the same principal amount, maturity and interest rate, as the damaged,mutilated, lost, stolen or destroyed Certificate,in replacement for such Certificate in the manner hereinafter provided. (b) Apylication for Replacement Certificates. Application for replacement of damaged, mutilated,lost,stolen or destroyed Certificates shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft or destruction of a Certificate,the registered owner applying for a replacement certificate shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also,in every case of loss,theft or destruction of a Certificate,the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss,theft or destruction of such Certificate,as the case may be. In every case of damage or mutilation of a Certificate,the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Certificate so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Ordinance,in the event any such Certificate shall have matured, and no default has occurred that is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Certificate, the Issuer may authorize the payment of the same(without surrender thereof except in the case of a damaged or mutilated Certificate) instead of issuing a replacement Certificate, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Certificates. Prior to the issuance of any replacement certificate, the Paying Agent/Registrar shall charge the registered owner of such Certificate with all legal, printing,and other expenses in connection therewith. Every replacement certificate issued pursuant to the provisions of this Section by virtue of the fact that any Certificate is lost,stolen or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen or destroyed Certificate shall be found at any time,or be enforceable by anyone,and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Certificates duly issued under this Ordinance. 8 (e) Authority for Issuing Replacement Certificates. In accordance with Sec. 1206.022, Government Code,this Section 7 of this Ordinance shall constitute authority for the issuance of any such replacement certificate without necessity of further action by the governing body of the Issuer or any other body or person,and the duty of the replacement of such certificates is hereby authorized and imposed upon the Paying Agent/Registrar,and the Paying Agent/Registrar shall authenticate and deliver such Certificates in the form and manner and with the effect, as provided in Section 3(a) of this Ordinance for Certificates issued in conversion and exchange for other Certificates. Section 8. CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES; BOND COUNSEL'S OPINION; CUSIP NUMBERS AND CONTINGENT INSURANCE PROVISION, IF OBTAINED; ENGAGEMENT OF BOND COUNSEL. (a) The Mayor and Mayor Pro Tem of the Issuer are hereby authorized to have control of the Certificates initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Certificates pending their delivery and their investigation,examination,and approval by the Attorney General of the State of Texas, and their registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Certificates said Comptroller of Public Accounts(or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Certificates,and the seal of said Comptroller shall be impressed,or placed in facsimile,on such Certificate. The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Certificates issued and delivered under this Ordinance,but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Certificates. In addition,if bond insurance is obtained,the payment of the insurance premium is hereby approved and the Certificates may bear an appropriate legend as provided by the insurer. (b) The obligation of the Purchaser to accept delivery of the Certificates is subject to the Purchaser being furnished with the final, approving opinion of McCall, Parkhurst&Horton L.L.P.,bond counsel to the Issuer,which opinion shall be dated as of and delivered on the date of initial delivery of the Certificates to the Purchaser. The engagement of such firm as bond counsel to the Issuer in connection with issuance,sale and delivery of the Certificates is hereby approved and confirmed. The execution and delivery of an engagement letter between the Issuer and such firm, with respect to such services as bond counsel, is hereby authorized in such form as may be approved by the Mayor or Mayor Pro Tem,and the Mayor or Mayor Pro Tem are hereby authorized to execute such engagement letter. Section 9. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE CERTIFICATES. (a) Covenants. The Issuer covenants to take any action necessary to assure, or refrain from any action that would adversely affect,the treatment of the Certificates as obligations described in section 103 of the Code,the interest on which is not includable in the"gross income"of the holder for purposes of federal income taxation. In furtherance thereof,the Issuer covenants as follows: (1) to take any action to assure that no more than 10 percent of the proceeds of the Certificates (less amounts deposited to a reserve fund, if any) are used for any "private business use,"as defined in section 141(b)(6)of the Code or,if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts,whether or not received by the Issuer,with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Certificates,in contravention of section 141(b)(2)of the Code; 9 (2) to take any action to assure that in the event that the "private business use" described in subsection (1) hereof exceeds 5 percent of the proceeds of the Certificates or the projects financed therewith(less amounts deposited into a reserve fund,if any)then the amount in excess of 5 percent is used for a"private business use"that is"related" and not"disproportionate," within the meaning of section 141(b)(3)of the Code,to the governmental use; (3) to take any action to assure that no amount that is greater than the lesser of $5,000,000,or 5 percent of the proceeds of the Certificates (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units,in contravention of section 141(c)of the Code; (4) to refrain from taking any action that would otherwise result in the Certificates being treated as"private activity bonds"within the meaning of section 141(b)of the Code; (5) to refrain from taking any action that would result in the Certificates being "federally guaranteed"within the meaning of section 149(b)of the Code; (6) to refrain from using any portion of the proceeds of the Certificates, directly or indirectly,to acquire or to replace funds that were used,directly or indirectly,to acquire investment property(as defined in section 148(b)(2)of the Code)that produces a materially higher yield over the term of the Certificates, other than investment property acquired with- (A) proceeds of the Certificates invested for a reasonable temporary period of 3 years or less or,in the case of a refunding bond,for a period of 90 days or less until such proceeds are needed for the purpose for which the bonds are issued, (B) amounts invested in a bona fide debt service fund,within the meaning of section 1.148-1(b)of the Treasury Regulations,and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Certificates; (7) to otherwise restrict the use of the proceeds of the Certificates or amounts treated as proceeds of the Certificates, as may be necessary, so that the Certificates do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable,section 149(d)of the Code(relating to advance refundings); (8) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Certificates)an amount that is at least equal to 90 percent of the"Excess Earnings,"within the meaning of section 148(f)of the Code and to pay to the United States of America, not later than 60 days after the Certificates have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(0 of the Code;and (9) to assure that the proceeds of the Certificates will be used solely for new money projects. (b) Rebate Fund. In order to facilitate compliance with the above covenant(a)(8), a"Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund shall not be subject to the claim of any other person, including without limitation the certificateholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. 10 (c) Use of Proceeds. For purposes of the foregoing covenants (a)(1) and (a)(2), the Issuer understands that the term"proceeds"includes"disposition proceeds"as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Certificates. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated that modify or expand provisions of the Code, as applicable to the Certificates,the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply,in the opinion of nationally recognized bond counsel,will not adversely affect the exemption from federal income taxation of interest on the Certificates under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated that impose additional requirements applicable to the Certificates, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Certificates under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor, Mayor Pro Tem, Town Manager, Finance Director and Town Secretary, individually or jointly, to execute any documents, certificates or reports required by the Code and to make such elections,on behalf of the Issuer,that may be permitted by the Code as are consistent with the purpose for the issuance of the Certificates. (d) Allocation of, and Limitation on, Expenditures for the Project. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the construction and acquisition of the Project on its books and records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed. The foregoing notwithstanding,the Issuer shall not expend proceeds of the sale of the Certificates or investment earnings thereon more than 60 days after the earlier of(1)the fifth anniversary of the delivery of the Certificates,or (2)the date the Certificates are retired,unless the Issuer obtains an opinion of nationally-recognized bond counsel that such expenditure will not adversely affect the status, for federal income tax purposes,of the Certificates or the interest thereon. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (e) Disposition of Project. The Issuer covenants that the Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless any action taken in connection with such disposition will not adversely affect the tax-exempt status of the Certificates. For purpose of the foregoing,the Issuer may rely on an opinion of nationally-recognized bond counsel that the action taken in connection with such sale or other disposition will not adversely affect the tax-exempt status of the Certificates.For purposes of the foregoing,the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation.For purposes hereof,the Issuer shall not be obligated to comply with this covenant if it obtains a legal opinion that such failure to comply will not adversely affect the excludability for federal income tax proposes from gross income of the interest. (f) Designation as Qualified Tax-Exempt Obligations. The Issuer hereby designates the Certificates as "qualified tax-exempt obligations" as defined in section 265(b)(3) of the Code. In furtherance of such designation,the Issuer represents,covenants and warrants the following:(a)that during the calendar year in which the Certificates are issued,the Issuer(including any subordinate entities)has not designated nor will designate obligations that when aggregated with the Certificates, will result in more than $10,000,000 of "qualified tax-exempt obligations" being issued; (b) that the Issuer reasonably anticipates that the amount of tax-exempt obligations issued, during the calendar year in which the Certificates are issued,by the Issuer(or any subordinate entities)will not exceed$10,000,000;and,(c)that the Issuer will take such action or refrain from such action as necessary, and as more particularly set forth 11 in Section 9 hereof,in order that the Certificates will not be considered "private activity bonds"within the meaning of section 141 of the Code. Section 10. SALE OF CERTIFICATES AND APPROVAL OF OFFICIAL STATEMENT; FURTHER PROCEDURES. (a) The Certificates are hereby sold and shall be delivered to FTN Financial Capital Markets (the "Purchaser") for the purchase price of$9,284,436.07 (representing the aggregate principal amount of the Certificates, plus an aggregate reoffering premium of $246,750.40, less the Purchaser's discount of $142,314.33). The Certificates shall initially be registered in the name of the Purchaser or its designee. It is hereby officially found, determined and declared that the terms of this sale are the most advantageous reasonably obtainable. (b) It is hereby officially found, determined and declared that the Certificates have been sold at public sale to the bidder offering the lowest interest cost,after receiving sealed bids pursuant to an Official Notice of such and Bidding Instructions. It is further officially found, determined and declared that the Certificates have been offered pursuant to a Preliminary Official Statement prepared and distributed in connection with the sale of the Certificates. Said Preliminary Official Statement, the Official Statement, and any addenda,supplement or amendment thereto,have been and are hereby approved by the governing body of the Issuer, and its use in the offer and sale of the Certificates is hereby approved. It is further officially found,determined and declared that the statements and representations contained in said Official Statement are true and correct in all material respects,to the best knowledge and belief of the Council. (c) The Mayor and Mayor Pro Tem, the Town Manager, Finance Director and Town Secretary, individually or jointly, shall be and they are hereby expressly authorized, empowered and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge and deliver in the name and under the corporate seal and on behalf of the Issuer such documents, certificates and instruments,whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance, the Letter of Representations, the Certificates, the sale of the Certificates and the Official Statement. In case any officer whose signature shall appear on any Certificate shall cease to be such officer before the delivery of such Certificate, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. Section 11. INTEREST EARNINGS ON CERTIFICATE PROCEEDS. Interest earnings derived from the investment of proceeds from the sale of the Certificates shall be used along with other Certificate proceeds for the Project; provided that after completion of such purpose, if any of such interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided,however, that any interest earnings on certificate proceeds that are required to be rebated to the United States of America pursuant to Section 9 hereof in order to prevent the Certificates from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Section. Section 12. CONSTRUCTION FUND. (a) The Issuer hereby creates and establishes and shall maintain on the books of the Issuer a separate fund to be entitled the "Series 2016 Certificate of Obligation Construction Fund" (the "Construction Fund") for use by the Issuer for payment of all lawful costs associated with the Project as hereinbefore provided. Proceeds of the Certificates in the amount of$9,200,000 (representing the par amount of the Certificates plus premium in the amount of$20,000)shall be deposited into the Construction Fund. The remaining amounts of Certificate proceeds shall be used to pay the costs of issuance of the Certificates. Upon payment of all such Project costs, any moneys remaining on deposit in said Fund shall be transferred to the Interest and Sinking Fund. Amounts so deposited to the Interest and Sinking Fund shall be used in the manner described in Section 5 of this Ordinance. 12 (b) The Issuer may place proceeds of the Certificates(including investment earnings thereon) and amounts deposited into the Interest and Sinking Fund in investments authorized by the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended; provided,however,that the Issuer hereby covenants that the proceeds of the sale of the Certificates will be used as soon as practicable for the purposes for which the Certificates are issued. (c) All deposits authorized or required by this Ordinance shall be secured to the fullest extent required by law for the security of public funds. Section 13. COMPLIANCE WITH RULE 15c2-12. (a) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: "MSRB"means the Municipal Securities Rulemaking Board. "Rule"means SEC Rule 15c2-12,as amended from time to time. "SEC"means the United States Securities and Exchange Commission. (b) Annual Reports. (i) The Issuer shall provide annually to the MSRB,in the electronic format prescribed by the MSRB certain updated financial information and operating data pertaining to the Issuer, being the following:(i)the Issuer's annual financial audit report;and(ii)the information found in Tables 1 through 12 in the Official Statement. The Issuer will update and provide the information in the numbered tables within six months after the end of each fiscal year ending in and after 2016 and, if not submitted as part of such annual financial information,the Issuer will provide its audited financial statements when and if available, and in any event,within 12 months after the end of each fiscal year ending in and after 2016. If the audit of such financial statements is not complete within 12 months after any such fiscal year end,then the Issuer will file unaudited financial statements within such 12 month period and audited financial statements for the applicable fiscal year, when and if the audit report on such statements becomes available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B to the Official Statement or such other accounting principles as the Issuer may be required to employ from time to time pursuant to State law or regulation. (ii) Any financial information so to be provided shall be (i) prepared in accordance with the accounting principles described in the financial statements of the Issuer appended to the Official Statement, or such other accounting principles as the Issuer may be required to employ from time to time pursuant to state law or regulation, and(ii) audited,if the Issuer commissions an audit of such statements and the audit is completed within the period during which they must be provided. (iii) If the Issuer changes its fiscal year, it will notify the MSRB of the change(and of the date of the new fiscal year end)prior to the next date by which the Issuer otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document that is available to the public on the MSRB's internet website or filed with the SEC. All documents provided to the MSRB pursuant to this Section shall be accompanied by identifying information as prescribed by the MSRB. 13 (c) Event Notices. The Issuer shall notify the MSRB in an electronic format as prescribed by the MSRB,in a timely manner(but not in excess of ten business days after the occurrence of the event)of any of the following events with respect to the Certificates: 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 or 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 Certificateholders,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 an obligated person (which is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Issuer 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 Issuer, 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 Issuer); 13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business,the entry into 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. The Issuer shall notify the MSRB, in a timely manner, of any failure by the Issuer to provide financial information or operating data in accordance with subsection(b)of this Section by the time required by such subsection. (d) Limitations Disclaimers and Amendments. (i) The Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as,but only for so long as,the Issuer remains an"obligated person"with respect to the Certificates within the meaning of the Rule, except that the Issuer in any event will give notice of any deposit made in accordance with this Ordinance or applicable law that causes Certificates no longer to be outstanding. 14 (ii) The provisions of this Section are for the sole benefit of the registered owners and beneficial owners of the Certificates,and nothing in this Section,express or implied,shall give any benefit or any legal or equitable right,remedy,or claim hereunder to any other person. The Issuer undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise,except as expressly provided herein. The Issuer does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Certificates at any future date. (iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON,IN CONTRACT OR TORT,FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION,BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. (iv) No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim,waive, or otherwise limit the duties of the Issuer under federal and state securities laws. (v) Should the Rule be amended to obligate the Issuer to make filings with or provide notices to entities other than the MSRB,the Issuer hereby agrees to undertake such obligation with respect to the Certificates in accordance with the Rule as amended. The provisions of this Section may be amended by the Issuer from time to time to adapt to changed circumstances that arise from a change in legal requirements,a change in law,or a change in the identity,nature,status,or type of operations of the Issuer, but only if(1) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Certificates in the primary offering of the Certificates in compliance with the Rule,taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and(2) either(a)the registered owners of a majority in aggregate principal amount(or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the outstanding Certificates consent to such amendment or(b) a person that is unaffiliated with the Issuer (such as nationally recognized 1 counsel) determined that such amendment will not materially impair the interest of the registered owners and beneficial owners of the Certificates. If the Issuer so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with subsection(b) of this Section an explanation, in narrative form,of the reason for the amendment and of the impact of any change in the type of financial information or operating data so provided. The Issuer may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters 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. Section 14. METHOD OF AMENDMENT. The Issuer hereby reserves the right to amend this Ordinance subject to the following terms and conditions,to-wit: (a) The Issuer may from time to time,without the consent of any holder,except as otherwise required by paragraph (b) below, amend or supplement this Ordinance in order to(i)cure any ambiguity, defect or omission in this Ordinance that does not materially adversely affect the interests of the holders, 15 (ii) grant additional rights or security for the benefit of the holders, (iii) add events of default as shall not be inconsistent with the provisions of this Ordinance and that shall not materially adversely affect the interests of the holders,(iv)qualify this Ordinance under the Trust Indenture Act of 1939,as amended, or corresponding provisions of federal laws from time to time in effect, or(v)make such other provisions in regard to matters or questions arising under this Ordinance as shall not be inconsistent with the provisions of this Ordinance and that shall not in the opinion of the Issuer's Bond Counsel materially adversely affect the interests of the holders. (b) Except as provided in paragraph (a) above, the holders of Certificates aggregating in principal amount 51%of the aggregate principal amount of then outstanding Certificates that are the subject of a proposed amendment shall have the right from time to time to approve any amendment hereto that may be deemed necessary or desirable by the Issuer; provided, however, that without the consent of 100% of the holders in aggregate principal amount of the then outstanding Certificates, nothing herein contained shall permit or be construed to permit amendment of the terms and conditions of this Ordinance or in any of the Certificates so as to: (1) Make any change in the maturity of any of the outstanding Certificates; (2) Reduce the rate of interest borne by any of the outstanding Certificates; (3) Reduce the amount of the principal of,or redemption premium,if any,payable on any outstanding Certificates; (4) Modify the terms of payment of principal or of interest or redemption premium on outstanding Certificates or any of them or impose any condition with respect to such payment;or (5) Change the minimum percentage of the principal amount of any series of Certificates necessary for consent to such amendment. (c) If at any time the Issuer shall desire to amend this Ordinance under subsection(b) of this Section, the Issuer shall send by U.S. mail to each registered owner of the affected Certificates a copy of the proposed amendment. (d) Whenever at any time within one year from the date of mailing of such notice the Issuer shall receive an instrument or instruments executed by the holders of at least 51% in aggregate principal amount of all of the Certificates then outstanding that are required for the amendment,which instrument or instruments shall refer to the proposed amendment and that shall specifically consent to and approve such amendment,the Issuer may adopt the amendment in substantially the same form. (e) Upon the adoption of any amendatory Ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be modified and amended in accordance with such amendatory Ordinance, and the respective rights, duties, and obligations of the Issuer and all holders of such affected Certificates shall thereafter be determined, exercised, and enforced, subject in all respects to such amendment. (f) Any consent given by the holder of a Certificate pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the mailing of the notice provided for in this Section, and shall be conclusive and binding upon all future holders of the same Certificate during such period. Such consent may be revoked at any time after six months from the date of the mailing of said notice by the holder who gave such consent, or by a successor in title, by filing notice with the Issuer, but such revocation shall not be effective if the holders of 51% in aggregate principal amount of the affected 16 Certificates then outstanding, have, prior to the attempted revocation, consented to and approved the amendment. (g) For the purposes of establishing ownership of the Certificates, the Issuer shall rely solely upon the registration of the ownership of such Certificates on the registration books kept by the Paying Agent/Registrar. Section 15. DEFAULT AND REMEDIES (a) Events of Default. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an Event of Default: (i) the failure to make payment of the principal of or interest on any of the Certificates when the same becomes due and payable;or (ii) default in the performance or observance of any other covenant, agreement or obligation of the Town,the failure to perform which materially,adversely affects the rights of the registered owners of the Certificates,including,but not limited to,their prospect or ability to be repaid in accordance with this Ordinance,and the continuation thereof for a period of 60 days after notice of such default is given by any Registered Owner to the Town. (b) Remedies for Default. (i) Upon the happening of any Event of Default, then and in every case, any Registered Owner or an authorized representative thereof, including,but not limited to, a trustee or trustees therefor, may proceed against the Town for the purpose of protecting and enforcing the rights of the Registered Owners under this Ordinance,by mandamus or other suit,action or special proceeding in equity or at law, in any court of competent jurisdiction,for any relief permitted by law, including the specific performance of any covenant or agreement contained herein,or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Registered Owners hereunder or any combination of such remedies. (ii) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Registered Owners of Certificates then outstanding. (c) Remedies Not Exclusive. (i) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies,but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Certificates or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the Certificates shall not be available as a remedy under this Ordinance. (ii) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. (iii) By accepting the delivery of a Certificate authorized under this Ordinance, such Registered Owner agrees that the certifications required to effectuate any covenants or representations contained in this Ordinance do not and shall never constitute or give rise to a personal or pecuniary liability or charge against the officers,employees or trustees of the Town or the Council. 17 Section 16. APPLICATION OF PREMIUM FROM SALE OF CERTIFICATES. The Certificates have an aggregate premium of$246,750.40 which shall be allocated as follows: (i) the amount of $84,436.07 shall be applied to pay costs of issuance of the Certificates(with any excess to be deposited into the Interest and Sinking Fund); (ii) the amount of$142,314.33 shall be applied to pay the Purchaser's discount;and (iii) the amount of$20,000.00 shall be deposited to the Construction Fund. Section 17. EFFECTIVE DATE. In accordance with the provisions of Texas Government Code, Section 1201.028,this Ordinance shall be effective immediately upon its adoption by the Council. Section 18. SEVERABILITY. If any section,article,paragraph,sentence,clause,phrase or word in this Ordinance,or application thereof to any persons or circumstances is held invalid or unconstitutional by a court of competent jurisdiction, such holding shall not affect the validity of the remaining portion of this Ordinance,despite such invalidity,which remaining portions shall remain in full force and effect. Section 19. APPROPRIATION. To pay the debt service corning due on the Certificates,if any, prior to receipt of the taxes levied to pay such debt service,there is hereby appropriated from current funds on hand,which are hereby certified to be on hand and available for such purpose,an amount sufficient to pay such debt service,and such amount shall be used for no other purpose. ------------------------------------------- 18 EXHIBIT A FORM OF CERTIFICATES. (a) The form of the Certificates,including the form of Paying Agent/Registrar's Authentication Certificate, the form of Assignment and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Certificates initially issued and delivered pursuant to this Ordinance,shall be,respectively,substantially as follows,with such appropriate variations,omissions or insertions as are permitted or required by this Ordinance. NO.R-_ UNITED STATES OF AMERICA PRINCIPAL STATE OF TEXAS AMOUNT TOWN OF WESTLAKE,TEXAS $ COMBINATION TAX AND REVENUE CERTIFICATE OF OBLIGATION, SERIES 2016 Interest Rate Issuance Date Maturity Date CUSIP No. % December 22,2016 February 15,20_ REGISTERED OWNER: PRINCIPAL AMOUNT: ON THE MATURITY DATE specified above, the Town of Westlake, in Tarrant and Denton Counties,Texas(the"Issuer"),being a political subdivision and municipal corporation of the State of Texas, hereby promises to pay to the Registered Owner specified above, or registered assigns(hereinafter called the"Registered Owner"),the Principal Amount specified above. The Issuer promises to pay interest on the unpaid principal amount hereof(calculated on the basis of a 360-day year of twelve 30-day months)from the Issuance Date above at the Interest Rate per annum specified above. Interest is payable on February 15, 2017 and semiannually on each August 15 and February 15 thereafter to the Maturity Date specified above, or the date of redemption prior to maturity;except,if this Certificate is required to be authenticated and the date of its authentication is later than the first Record Date (hereinafter defined), such Principal Amount shall bear interest from the interest payment date next preceding the date of authentication,unless such date of authentication is after any Record Date but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date; provided,however,that if on the date of authentication hereof the interest on the Certificate or Certificates, if any,for which this Certificate is being exchanged is due but has not been paid,then this Certificate shall bear interest from the date to which such interest has been paid in full. THE PRINCIPAL OF AND INTEREST ON this Certificate are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Certificate shall be paid to the registered owner hereof upon presentation and surrender of this Certificate at maturity, or upon the date fixed for its redemption prior to maturity,at the principal corporate trust office of U.S. Bank National Association, Dallas, Texas, which is the "Paying Agent/Registrar" for this Certificate. The payment of interest on this Certificate shall be made by the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance A-1 authorizing the issuance of this Certificate (the"Certificate Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided;and such check or draft shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at its address as it appeared on the last business day of the month preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. In addition, interest may be paid by such other method, acceptable to the Paying Agent/Registrar,requested by,and at the risk and expense of,the registered owner. 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 Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest (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 owner of a Certificate appearing on the Registration Books at the close of business on the last business day next preceding the date of mailing of such notice. ANY ACCRUED INTEREST due at maturity or upon the redemption of this Certificate prior to maturity as provided herein shall be paid to the registered owner upon presentation and surrender of this Certificate for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants with the registered owner of this Certificate that on or before each principal payment date,interest payment date,and accrued interest payment date for this Certificate it will make available to the Paying Agent/Registrar,from the"Interest and Sinking Fund"created by the Certificate Ordinance,the amounts required to provide for the payment,in immediately available funds,of all principal of and interest on the Certificates,when due. IF THE DATE for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday,a legal holiday or a day on which banking institutions in the city where the principal corporate trust office of the Paying Agent/Registrar is located are authorized by law or executive order to close,then the date for such payment shall be the next succeeding day that is not such a Saturday, Sunday,legal holiday or day on which banking institutions are authorized to close;and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS CERTIFICATE is one of a series of Certificates dated December 1, 2016, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of$9,180,000 for paying all or a portion of the Issuer's contractual obligations incurred in connection with (i) acquiring, constructing, installing and equipping fire-fighting facilities and (ii) paying legal, fiscal, engineering and architectural fees in connection with such projects and to pay costs of issuance of the Certificates (collectively,the"Project"). ON FEBRUARY 15, 2026,or any date thereafter,the Certificates of this series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Certificates, or portions thereof, to be redeemed shall be selected and designated by the Issuer(provided that a portion of a Certificate may be redeemed only in an integral multiple of$5,000),at a redemption price equal to the principal amount to be redeemed plus accrued interest to the date fixed for redemption. IN ADDITION, THE CERTIFICATES scheduled to mature on February 15 in each of the years 2037,2040,2042,2044 and 2046(the"Term Certificates")are subject to scheduled mandatory redemption by the Paying Agent/Registrar by lot,or by any other customary method that results in a random selection, at a price equal to the principal amount thereof,plus accrued interest to the redemption date,out of moneys available for such purpose in the interest and sinking fund for the Certificates, on the dates and in the respective principal amounts,set forth in the following schedule: A-2 Term Certificate Term Certificate Maturity:February 15,2037 Maturity: February 15,2040 Principal Principal Mandatory Redemption Date Amount Mandatory Redemption Date Amount February 15,2026 $250,000 February 15,2039 $375,000 February 15,2027 260,000 February 15,2040` 390,000 February 15,2028 265,000 February 15,2029 275,000 February 15,2030 285,000 February 15,2031 290,000 February 15,2032 300,000 February 15,2033 310,000 February 15,2034 320,000 February 15,2035 330,000 February 15,2036 340,000 February 15,2037` 350,000 Term Certificate Term Certificate Maturity:February 15,2042 Maturity: February 15,2044 Principal Principal Mandatory Redemption Date Amount Mandatory Redemption Date Amount February 15,2041 $410,000 February 15,2043 $440,000 February 15,2042* 425,000 February 15,2044* 460,000 Term Certificate Maturity: February 15,2046 Principal Mandatory Redemption Date Amount February 15,2045 $480,000 February 15,2046* 500,000 Stated Maturity. The principal amount of Term Certificates of a stated maturity required to be redeemed on any mandatory redemption date pursuant to the operation of the mandatory sinking fund redemption provisions shall be reduced,at the option of the Issuer,by the principal amount of any Term Certificates of the same maturity which,at least 45 days prior to a mandatory redemption date(1)shall have been acquired by the Issuer at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase thereof,and delivered to the Paying Agent/Registrar for cancellation,(2)shall have been purchased and canceled by the Paying Agent/Registrar at the request of the Issuer at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase, or (3) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. A-3 AT LEAST THIRTY days prior to the date fixed for any redemption of Certificates or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States mail,first-class postage prepaid to the registered owner of each Certificate to be redeemed at its address as it appeared on the 45th day prior to such redemption date;provided,however,that the failure of the registered owner to receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Certificate. 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 that are to be so redeemed. If such written notice of redemption is sent and if due provision for such payment is made,all as provided above,the Certificates or portions thereof that 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. If a portion of any Certificate shall be redeemed, a substitute Certificate or Certificates having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of$5,000,at the written request of the registered owner,and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation,at the expense of the Issuer,all as provided in the Certificate Ordinance. WITH RESPECT TO ANY OPTIONAL REDEMPTION OF THE CERTIFICATES, unless certain prerequisites to such redemption required by the Certificate Ordinance have been met and money sufficient to pay the principal of and premium, if any, and interest on the Certificates to be redeemed will have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said redemption may, at the option of the Issuer,be conditional upon the satisfaction of such prerequisites and receipt of such money by the Paying Agent/Registrar on or prior to the date fixed for such redemption or upon any prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given and such prerequisites to the redemption are not fulfilled, such notice will be of no force and effect, the Issuer will not redeem such Certificates, and the Paying Agent/Registrar will give notice in the manner in which the notice of redemption was given,to the effect that such Certificates have not been redeemed. ALL CERTIFICATES OF THIS SERIES are issuable solely as fully registered certificates,without interest coupons, in the principal denomination of any integral multiple of$5,000. As provided in the Certificate Ordinance, this Certificate may, at the request of the registered owner or the assignee or assignees hereof, be assigned, transferred, converted into and exchanged for a like aggregate principal amount of fully registered certificates, without interest coupons, payable to the appropriate registered owner, assignee or assignees, as the case may be,having the same denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee or assignees, as the case may be, upon surrender of this Certificate to the Paying Agent/Registrar for cancellation,all in accordance with the form and procedures set forth in the Certificate Ordinance. Among other requirements for such assignment and transfer,this Certificate must be presented and surrendered to the Paying Agent/Registrar,together with proper instruments of assignment,in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Certificate or any portion or portions hereof in any integral multiple of$5,000 to the assignee or assignees in whose name or names this Certificate or any such portion or portions hereof is or are to be registered. The form of Assignment printed or endorsed on this Certificate may be executed by the registered owner to evidence the assignment hereof,but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Certificate or any portion or portions hereof from time to time by the registered owner. The Paying Agent/Registrar's reasonable standard or customary fees and charges for assigning, transferring, converting and exchanging any Certificate or portion thereof will be paid by the Issuer. In any circumstance, any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such assignment, A-4 transfer, conversion or exchange, as a condition precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be required to make any such transfer, conversion, or exchange any Certificates during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date or, with respect to any Certificate or any portion thereof called for redemption prior to maturity,within 45 days prior to its redemption date. IN THE EVENT any Paying Agent/Registrar for the Certificates is changed by the Issuer,resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Certificate Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and cause written notice thereof to be mailed to the registered owners of the Certificates. IT IS HEREBY certified, recited and covenanted that this Certificate has been duly and validly authorized, issued and delivered; that all acts, conditions and things required or proper to be performed, exist and be done precedent to or in the authorization, issuance and delivery of this Certificate have been performed,existed and been done in accordance with law;that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Certificate, as such interest comes due and such principal matures,have been levied and ordered to be levied against all taxable property in said Issuer,and have been pledged for such payment, within the limits prescribed by law, and that this Certificate is additionally secured by and payable from a limited pledge of the Surplus Revenues of the Issuer's waterworks and sewer system remaining after payment of all operation and maintenance expenses thereof, and all debt service,reserve and other requirements in connection with all of the Issuer's revenue obligations (now or hereafter outstanding) that are payable from all or part of said Surplus Revenues of the Issuer's waterworks and sewer system,all as provided in the Certificate Ordinance. THE ISSUER HAS RESERVED THE RIGHT to amend the Certificate Ordinance as provided therein,and under some(but not all)circumstances amendments thereto must be approved by the registered owners of a majority in aggregate principal amount of the outstanding Certificates. BY BECOMING the registered owner of this Certificate, the registered owner thereby acknowledges all of the terms and provisions of the Certificate Ordinance,agrees to be bound by such terms and provisions, acknowledges that the Certificate Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Certificate and the Certificate Ordinance constitute a contract between each registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Certificate to be signed with the manual or facsimile signature of the Mayor (or in the Mayor's absence, of the Mayor Pro Tem) of the Issuer and countersigned with the manual or facsimile signature of the Town Secretary of said Issuer,and has caused the official seal of the Issuer to be duly impressed,or placed in facsimile,on this Certificate. (signature) (signature) Town Secretary Mayor (SEAL) PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Certificate is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Certificate has been issued under the provisions of the Certificate Ordinance described in the text of this Certificate;and that this Certificate has been issued in conversion or A-5 replacement of,or in exchange for,a certificate,certificates,or a portion of a certificate or certificates of a series that originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated: U.S.BANK NATIONAL ASSOCIATION, Dallas,Texas Paying Agent/Registrar By: Authorized Representative ASSIGNMENT For value received,the undersigned hereby sells,assigns and transfers unto: Please insert Social Security or Taxpayer Identification Number of Transferee Please print or type name and address, including zip code of Transferee the within Certificate and all rights thereunder,and hereby irrevocably constitutes and appoints: , attorney,to register the transfer of the within Certificate on the books kept for registration thereof,with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an NOTICE: The signature above must correspond eligible guarantor institution participating in a with the name of the registered owner as it appears securities transfer association recognized signature upon the front of this Certificate in every particular, guarantee program. without alteration or enlargement or any change whatsoever. COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Certificate has been examined,certified as to validity and approved by the Attorney General of the State of Texas,and that this Certificate has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) (b) Initial Certificate Insertions. A-6 (i) The initial Certificate shall be in the form set forth is paragraph(a)of this Section, except that: A. immediately under the name of the Certificate, the headings "Interest Rate" and "Maturity Date" shall both be completed with the words "As shown below" and"CUSIP No. "shall be deleted. B. the first paragraph shall be deleted and the following will be inserted: "THE TOWN OF WESTLAKE, TEXAS, in Tarrant and Denton Counties, Texas (the "Issuer"), being a political subdivision and municipal corporation of the State of Texas,hereby promises to pay to the Registered Owner specified above, or registered assigns (hereinafter called the "Registered Owner"), the Principal Amounts below on the Maturity Dates below and bearing interest at the per annum Interest Rates set forth in the following schedule: Maturity Date Principal Interest (February 15) Amount Rate 2018 $ 200,000 3.00% 2019 205,000 3.00 2020 210,000 3.00 2021 215,000 3.00 2022 225,000 3.00 2023 230,000 3.00 2024 235,000 3.00 2025 245,000 3.00 2037 3,575,000 3.00 2038 360,000 4.00 2040 765,000 4.00 2042 835,000 4.00 2044 900,000 4.00 2046 980,000 4.00 The Issuer promises to pay interest on the unpaid principal amount hereof(calculated on the basis of a 360- day year of twelve 30-day months)from the Issuance Date above,at the respective Interest Rate per annum specified above. Interest is payable on February 15, 2017 and semiannually on each August 15 and February 15 thereafter to the date of payment of the principal installment specified above, or the date of redemption prior to maturity; except,that if this Certificate is required to be authenticated and the date of its authentication is later than the first Record Date(hereinafter defined),such Principal Amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date but on or before the next following interest payment date,in which case such principal amount shall bear interest from such next following interest payment date; provided, however,that if on the date of authentication hereof the interest on the Certificate or Certificates,if any,for which this Certificate is being exchanged is due but has not been paid,then this Certificate shall bear interest from the date to which such interest has been paid in full." A-7 C. The Initial Certificate shall be numbered"T-1." A-8 OFFICIAL BID FORM Mayor and Members of Town Council December 5,2016 Town of Westlake 1301 Solana Blvd.,Building 4,Suite 4202 Westlake,Texas 76262 Reference is made to your Notice of Sale and Bidding Instructions and Preliminary Official Statement,dated November 18, 2016, both of which constitute a part hereof relating to the Town of Westlake, Texas Combination Tax and Revenue Certificates of Obligation,Series 2016(the"Certificates"). For your legally issued Certificates, as described in such Notice of Sale and Bidding Instructions and Preliminary Official Statement, we will pay you the par amount of the Certificates, plus a cash premium of$104,436.07 (representing a $246,750.40 original issue premium, less a $142,314.33 underwriting discount); as the purchase price for your legally issued Certificates maturing and bearing interest as follows: Maturity Schedule Maturity Principal Interest (Feb 15) Amount Rate 2018 $ 200,000 3.00% 2019 205,000 3.00% 2020 210,000 3.00% 2021 215,000 3.00% 2022 225,000 3.00% 2023 230,000 3.00% 2024 235,000 3.00% 2025 245,000 3.00% 2038{x31 360,000 4.00% Bidders shall have the option of submitting bids using Term Certificates subject to mandatory sinking fund redemption for all or any portion of Certificates scheduled to mature in any of the years set forth in the above table, provided that the sinking fund redemption amounts shall be the same size as the maturity amounts shown in the Notice of Sale and Bidding Instructions. The Term Certificates,if any,shall be described in the following table: Term Certificate Information Maturity Date Year of First Principal Amount Interest (February 15) Mandatory Redemption of Term Certificate Rate 2037 2026 $3,575,000 3.00% 2040 2039 $765,000 4.00% 2042 2041 $835,000 4.00% 2044 2043 $900,000 4.00% 2046 2045 $980,000 4.00% Our calculation(which is not part of this bid)of the interest cost from the above is: TRUE INTEREST COST RATE(as of expected date of initial delivery,December 22,2016): 3.4760665%. The Initial Certificate shall be registered in the name of FTN Financial Capital Markets (syndicate manager). We will advise U.S. Bank National Association,Dallas, Texas,the Paying Agent/Registrar,on forms to be provided by the Paying Agent/Registrar,of our registration instructions at least 5 business days prior to the date set for delivery. in accordance with the terms of the Notice of Sale and Bidding Instructions,and the Good Faith Deposit,a bank cashier's or bans:certified check in the amount of S 184,000 drawn on Frost Bank is herewith enclosed or has been made available to you prior to opening of the bid with authorizing instructions from such bank. Such Good Faith Deposit is payable to the order of Town of Westlake,Texas", If the Certificates are awarded to us,the Good Faith Deposit will remain uncashed and will be returned to us at the time of delivery of the Certificates by the Town. We agree to accept delivery of the Certificates utilizing the book-entry-only system through DTC and make payment for the Initial Certificate in immediately available funds at the corporate trust offices of U.S. Bank National Association, Dallas, T'cxas not later than 10:00 a.m.,Central time,on December 22,2016,or thereafter on the date the Certificates are tendered for delivery,pursuant to the terms set forth in the Notice of Sale and Bidding instructions. It will be the obligation of the Initial Purchaser of the Certificates to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete,execute and deliver to the Tonin,within five(5)business days of the award of sale of the Certificates.a certificat_relating to the"issue price"of the Certificates in the form accompanying the Notice of Sale and Bidding Instructions,with such changes thereto as may be acceptable to the Town,alone with the information required by the Texas Bond Review Board pursuant to Section 1.202.008,Texas Government Code. If the bid is accepted by the Town,this bid shall thereupon become a contract of purchase for the Certificates under the terms contained in this official B_d Form and in the Notice of Sale and Bidding Instructions. We hereby acknowledge that we have received and read the Notice of Sale and Bidding Instructions and Preliminary official Statement referred to above. Respectfully submitted, Name ofL'nderwriteror Manaerr Signature: Printed?game&Title:_': Telephone: Syndicate Members:- _ACCEPTANCE CLAUSE THE FOREGOING BID IS I IEREBY ACCEPTED this 5th day of December, 2016,by ordinance of the Town Council oI' the Town of NVestlake,Texas_ TO1N1 OF WESTLAKE,,TEXAS \4ayar By:. Town �retar% 2 PAYING AGENT/REGISTR.AR AGREEMENT THIS AGREEMENT is entered into as of December 5,2016(this"Agreement"),by and between the Town of Westlake,Texas(the"Issuer"),and U.S.Bank National Association,Dallas,Texas(the"Bank"). RECITALS WHEREAS,the Issuer has duly authorized and provided for the issuance of its Combination Tax and Revenue Certificates of Obligation, Series 2016 (the "Securities"), such Securities to be issued in fully registered form only as to the payment of principal and interest thereon; and WHEREAS,the Securities are scheduled to be delivered to the initial purchaser thereof on or about December 22,2016;and WHEREAS,the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on said Securities and with respect to the registration,transfer and exchange thereof by the registered owners thereof;and WHEREAS,the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW,THEREFORE,it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities. As Paying Agent for the Securities,the Bank shall be responsible for paying on behalf of the Issuer the principal, premium(if any),and interest on the Securities as the same become due and payable to the registered owners thereof,all in accordance with this Agreement and the"Order" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the"Order." The Bank hereby accepts its appointment,and agrees to serve as the Paying Agent and Registrar for the Securities. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar,the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities,which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer,and shall be effective upon the first day of the following Fiscal Year. In addition,the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Security means the date on and after which the principal or any or all installments of interest,or both,are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the principal corporate trust office of the Bank as indicated in Section 6.03 hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Fiscal Year"means the fiscal year of the Issuer. "Holder"and"Security Holder"each means the Person in whose name a Security is registered in the Security Register. "Issuer Request"and"Issuer Order"means a written request or order signed in the name of the Issuer by the Mayor,Mayor Pro Tem,Finance Director or Town Manager,any one or more of said officials, delivered to the Bank. "Legal Holiday"means a day on which the Bank is required or authorized to be closed. "Order" means the order, ordinance or resolution of the governing body of the Issuer pursuant to which the Securities are issued,certified by the Town Secretary or any other officer of the Issuer and delivered to the Bank. "Person" means any individual, corporation, partnership, joint venture, association,joint stock company,trust,unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities"of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security(and,for the purposes of this definition,any mutilated,lost,destroyed,or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Order). "Redemption Date"when used with respect to any Security to be redeemed means the date fixed for such redemption pursuant to the terms of the Order. "Responsible Officer"when used with respect to the Bank means the Chairman or Vice-Chairman of the Board of Directors,the Chairman or Vice-chairman of the Executive Committee of the Board of Directors, the President, any Vice President,the Clerk, any Assistant Clerk,the Treasurer, any 2 Assistant Treasurer,the Cashier,any Assistant Cashier,any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means,with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register"means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfer of the Securities. "Stated Maturity"means the date specified in the Order the principal of a Security is scheduled to be due and payable. Section 2.02. Other Definitions. The terms"Bank," "Issuer," and"Securities(Security)"have the meanings assigned to them in the recital paragraphs of this Agreement. The term"Paying Agent/Registrar"refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT Section 3.01. Duties of Paying Agent. As Paying Agent,the Bank shall,provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer,pay on behalf of the Issuer the principal of each Security at its Stated Maturity,Redemption Date,or Acceleration Date,to the Holder upon surrender of the Security to the Bank at the Bank Office. As Paying Agent,the Bank shall,provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer,pay on behalf of the Issuer the interest on each Security when due,by computing the amount of interest to be paid each Holder and preparing and sending checks by United States Mail,first class postage prepaid,on each payment date,to the Holders of the Securities(or their Predecessor Securities)on the respective Record Date,to the address appearing on the Security Register or by such other method,acceptable to the Bank,requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Order. 3 ARTICLE FOUR REGISTRAR Section 4.01. Security Register-Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the"Security Register")and,if the Bank Office is located outside the State of Texas,a copy of such books and records shall be kept in the State of Texas, for recording the names and addresses of the Holders of the Securities,the transfer,exchange and replacement of the Securities and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers,exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer,the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers,in form satisfactory to the Bank,duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Securities. To the extent possible and under reasonable circumstances,the Bank agrees that, in relation to an exchange or transfer of Securities,the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three(3)business days after the receipt of the Securities to be canceled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02. Securities. If the book-entry system of securities transfers and registrations shall be discontinued,the Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping,which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Security Register. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. 4 Section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer,upon payment of the required fee,a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the contents of the Security Register to any person other than to,or at the written request of,an authorized officer or employee of the Issuer,except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register,the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Cancellation of Securities. All securities surrendered to the Bank, at the designated Payment/Transfer Office, for payment, redemption,transfer or replacement,shall be promptly canceled by the Bank. The Bank will provide to the Issuer,at reasonable intervals determined by it,a certificate evidencing the destruction of canceled securities. Section 4.06. Mutilated,Destroyed,Lost or Stolen Securities. The Issuer hereby instructs the Bank,subject to the applicable provisions of the Order,to deliver and issue Securities in exchange for or in lieu of mutilated,destroyed,lost,or stolen Securities as long as the same does not result in an overissuance. In case any Security shall be mutilated,or destroyed,lost or stolen,the Bank,in its discretion,may execute and deliver a replacement Security of like form and tenor,and in the same denomination and bearing a number not contemporaneously outstanding,in exchange and substitution for such mutilated Security,or in lieu of and in substitution for such destroyed lost or stolen Security,only after(i)the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction,loss or theft of such Security, and of the authenticity of the ownership thereof and(ii)the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation,execution and delivery of a replacement Security shall be borne by the Holder of the Security mutilated,or destroyed,lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will,within a reasonable time after receipt of written request from the Issuer,furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.0 1,and Securities it has delivered in exchange for or in lieu of mutilated,destroyed,lost,or stolen Securities pursuant to Section 4.06. Section 4.08 Reporting Requirements. To the extent required by the Internal Revenue Code of 1986, as amended, and any regulations or rulings promulgated by the U.S.Department of the Treasury pursuant thereto,the Bank shall report or assure that a report is made to the Holder and the Internal Revenue Service the amount of interest paid or the amount treated as interest accrued on the Security which is required to be reported by a Holder on its returns of federal income tax. 5 ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents Etc. (a) The Bank may conclusively rely,as to the truth of the statements and correctness of the opinions expressed therein,on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer,unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder,or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security,or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities,but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument,opinion,report, notice,request, direction, consent,order,bond,note,security or other paper or document supplied by Issuer. (e) The Bank may consult with counsel,and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken,suffered,or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perforin any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer,and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer,any Holder or Holders of any Security,or any other Person for any amount due on any Security from its own funds. 6 Section 5.04. May Hold Securities. The Bank,in its individual or any other capacity,may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar,or any other agent. Section 5.05. Moneys Held by Bank. The Bank shall deposit any moneys received from the Issuer into a trust account to be held in a paying agency capacity for the payment of the Securities,with such moneys in the account that exceed the deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas to secure and be pledged as collateral for trust accounts until the principal and interest on such securities have been presented for payment and paid to the owner thereof. Payments made from such trust account shall be made by check drawn on such trust account unless the owner of such Securities shall,at its own expense and risk, request such other medium of payment. Subject to the Unclaimed Property Law of the State of Texas,any money deposited with the Bank for the payment of the principal,premium(if any),or interest on any Security and remaining unclaimed for three years after the final maturity of the Security has become due and payable will be paid by the Bank to the Issuer if the Issuer so elects, and the Holder of such Security shall hereafter look only to the Issuer for payment thereof,and all liability of the Bank with respect to such monies shall thereupon cease. If the Issuer does not elect,the Bank is directed to report and dispose of the funds in compliance with Title Six of the Texas Property Code,as amended. Section 5.06. Indemnification. To the extent permitted by law,the Issuer agrees to indemnify the Bank for, and hold it harmless against,any loss,liability,or expense incurred without negligence or bad faith on its part,arising out of or in connection with its acceptance or administration of its duties hereunder,including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim,demand, or controversy over its person as well as funds on deposit,in either a Federal or State District Court located in the State and County where the administrative offices of the Issuer are located,and agree that service of process by certified or registered mail,return receipt requested,to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction within the State of Texas to determine the rights of any Person claiming any interest herein. Section 5.08. Depository Trust Company Services. It is hereby represented and warranted that,in the event the Securities are otherwise qualified and accepted for 'Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements," effective August 1, 1987,which establishes requirements for securities to be 7 eligible for such type depository trust services,including,but not limited to,requirements for the timeliness of payments and funds availability,transfer turnaround time,and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request,demand,authorization,direction,notice,consent,waiver,or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank,respectively,at the addresses set forth below: Issuer Town of Westlake,Texas 1301 Solana Blvd.,Suite 4202 Westlake,Texas 76262 Paving Agent/Registrar U.S.Bank National Association 13737 Noel Road,Suite 800 Dallas,Texas 75240 Section 6.04. Effect of HeadinEs. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns,whether so expressed or not. Section 6.06. Severability. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 8 Section 6.07. Benefits of Agreement. Nothing herein,express or implied,shall give to any Person,other than the parties hereto and their successors hereunder,any benefit or any legal or equitable right,remedy,or claim hereunder. Section 6.08. Entire Agreement. This Agreement and the Order constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Order, the Order shall govern. Section 6.09. Counterparts. This Agreement may be executed in any number of counterparts,each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate(i)on the date of final payment of the principal of and interest on the Securities to the Holders thereof or(ii)may be earlier terminated by either party upon sixty(60)days written notice;provided,however,an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt,delay or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement,the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securities,to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. Section 6.11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. (Execution Page Follows) 9 r Y 3 gC Y IN WITNESS WHEREOF,the parties hereto have executed this Agreement as of the day and year first above written. i j U.S.BANK NATIONAL ASSOCI F Title: Israel Lugo, Vice President z a S fi 5 4 3 f TOWN OF WESTLAKE, TEXAS Mayor SCHEDULE A Paying Agent/Registrar Fee Schedule (See attached) bane Schedule of Fees for Services as Paying Agent/ Registrar For Town of Westlake, Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 Paying Agent: $450 Annual fee for the standard paying agent services associated with the administration of the account. Administration fees are payable in advance. Direct Out of Pocket Expenses At Cost Reimbursement of expenses associated with the performance of our duties, including but not limited to publications, legal counsel after the initial close,travel expenses and filing fees. Extraordinary Services Extraordinary Services are duties or responsibilities of an unusual nature, including termination, but not provided for in the governing documents or otherwise set forth in this schedule. A reasonable charge will be assessed based on the nature of the services and the responsibility involved. At our option, these charges will be billed at a flat fee or at our hourly rate then in effect. A$300 fee will be charged on optional redemptions. Account approval is subject to review and qualification. Fees are subject to change at our discretion and upon written notice. Fees paid in advance will not be prorated. The fees set forth above and any subsequent modifications thereof are part of your agreement. Finalization of the transaction constitutes agreement to the above fee schedule,including agreement to any subsequent changes upon proper written notice. In the event your transaction is not finalized, any related out-of-pocket expenses will be billed to you directly. Absent your written instructions to sweep or otherwise invest,all sums in your account will remain uninvested and no accrued interest or other compensation will be credited to the account. Payment of fees constitutes acceptance of the terms and conditions set forth. IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT: To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain,verify and record information that identifies each person who opens an account. For a non-individual person such as a business entity,a charity,a Trust or other legal entity we will ask for documentation to verify its formation and existence as a legal entity. We may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation. Dated: December 6, 2016 NOTICE OF SALE AND BIDDING INSTRUCTIONS FOR $9,200,000 TOWN OF WESTLAKE (Tarrant and Denton Counties,Texas) COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION,SERIES 2016 Sealed Bids Due on Monday,December 5,2016,at 11:00 A.M.,Central time(the"Sale Date") (The Town will designate the Certificates as "Qualified Tax-Exempt Obligations"for financial institutions.) THE SALE CERTIFICATES OFFERED FOR SALE AT COMPETITIVE BIDDING: The Town of Westlake, Texas (the "Town") is offering for sale its$9,200,000* Combination Tax and Revenue Certificates of Obligation, Series 2016 (the "Certificate(s)"). Bidders may submit bids for the Certificates by either of the following methods: (1) Submit bids electronically as described below under"ELECTRONIC BIDDING PROCEDURE"or (2) Submit bids by facsimile as described below under"BIDS BY FACSIMILE." Bids by physical delivery shall not be allowed. ELECTRONIC BIDDING PROCEDURE: Any interested bidder that intends to submit an electronic bid must submit Its electronic bid through the facilities of i-Deal, LLC Parity System ("'PARITY"). Bidders must submit their electronic bids to the Town by 11:00 A.M., Central time, on the date of sale, December 5, 2016. Subscription to i-Deal's BIDCOMP Competitive Bidding System is required in order to submit an electronic bid.The Town will neither confirm any subscription nor be responsible for the failure of any prospective bidder to subscribe. Bidders submitting an electronic bid shall not be required to submit signed Official Bid Forms prior to award. An electronic bid made through the facilities of PARITY shall be deemed an irrevocable offer to purchase the Certificates on the terms provided in this Notice of Sale and Bidding Instructions and shall be binding upon the bidder as if made by a signed, sealed bid delivered to the Town's Financial Advisor. The Town shall not be responsible for any malfunction or mistake made by, or as a result of the use of the facilities of, PARITY, the use of such facilities being the sole risk of the prospective bidder. If any provisions of this Notice of Sale and Bidding Instructions shall conflict with information provided by PARITY as the approved provider of electronic bidding services, this Notice of Sale and Bidding Instructions shall control. For further information about PARITY, potential bidders may contact i-Deal LLC at 1359 Broadway, 2nd Floor,New York,New York 10018,telephone 212-849-5021. For purposes of the bidding process, regardless of the bidding method, the time as maintained by PARITY shall constitute the official time. For information purposes only, bidders are requested to state in their electronic bids the true interest cost to the Town, as described under"CONDITIONS OF SALE-BASIS FOR AWARD"below. All electronic bids shall be deemed to incorporate the provisions of this Notice of Sale and Bidding Instructions and the Official Bid Form. BiDS BY FACSIMILE: Any interested bidder may, at its option and risk, submit its bid by facsimile, using the Official Bid Form provided herewith, to the Town's financial advisor, Lawrence Financial Consulting LLC (the "Financial Advisor"). Fax bids will be received between 10:00 A.M., Central time, and 11:00 A.M., Central time, on the date of the sale at (512) 582-8259,attention: Tom Lawrence. A bidder submitting a bid by facsimile shall not be required to submit a signed Official Bid Form prior to the award. Any prospective bidder that intends to submit a bid by facsimile should, as a courtesy, inform Tom Lawrence by email(tlawrence(a)lfctexas.com)on the business day immediately preceding the Sale Date. Neither the Town nor Lawrence Financial Consulting LLC shall be responsible for any failure of the Financial Advisor's or the bidder's fax machine. Bids received by facsimile after the bid deadline will not be accepted. Bidders who fax bids do so at their own risk. All such bids are binding on the bidder. Lawrence Financial Consulting LLC will not be responsible for submitting any bids received after above deadlines. *Subject to adjustment as described herein. 1 PLACE AND TIME OF BID OPENING: All bids will be opened and read at the Financial Advisor's office at 11:00 AM,Central Time,December 5,2016,and the winning bidder will be identified and asked to fax or email a signed bid form prior to the award. AWARD OF THE CERTIFICATES:The Town Council of the Town will take action to award the Certificates(or reject all bids)at a meeting scheduled to commence at 5:00 p.m., Central time, on Monday, December 5, 2016, and adopt an ordinance (the "Ordinance")authorizing the Certificates and approving the official statement relating to the Certificates(the"Official Statement') and authorizing the accompanying Preliminary Official Statement in connection with the sale of the Certificates. THE CERTIFICATES DESCRIPTION OF CERTIFICATES: The Certificates will be dated December 1, 2016 (the "Dated Date"). Interest on the Certificates will accrue from the date of delivery (the "Date of Delivery") and will be payable on August 15, 2017 and each February 15 and August 15 thereafter until the earlier of final maturity or prior redemption. The Certificates will be issued only in fully registered form in any integral multiple of$5,000 for any one maturity. The Certificates are being sold on an all or none basis. The Certificates will mature serially on February 15 in each year as follows: MATURITY SCI-IEDULE* Maturity Principal Maturity Principal Maturity Principal (Feb 15 Amount Feb 15 Amount Feb 15 Amount 2018 $205,000 2028 $ 270,000 2038 $ 365,000 2019 210,000 2029 280,000 2039 375,000 2020 215,000 2030 285,000 2040 390,000 2021 220,000 2031 295,000 2041 400,000 2022 225,000 2032 305,000 2042 415,000 2023 235,000 2033 315,000 2043 430,000 2024 240,000 2034 325,000 2044 450,000 2025 245,000 2035 335,000 2045 465,000 2026 255,000 2036 345,000 2046 485,000 2027 265,000 2037 355,000 *Subject to adjustment as described herein. ADVANCE MODIFICATION OF PRINCIPAL AMOUNTS: The Maturity Schedule for the Certificates set forth above represents an estimate of the principal amount of Certificates to be sold. The Town hereby reserves the right to change the Maturity Schedule, based on market conditions prior to the sale. In the event that the Town elects to change the Maturity Schedule prior to the sale it will provide notice to potential bidders through PARITY. Such notice shall be considered an amendment to this Notice of Sale and Bidding Instructions. POST BID MODIFICATION OF PRINCIPAL AMOUNTS: After final computation of the bids,the Town reserves the right in its sole discretion either to decrease or increase the principal amount of any maturity of the Certificates; provided, however, that the aggregate principal amount of the Certificates shall not exceed $9,200,000. Such adjustment(s), if any, shall be made within four (4) hours of receipt of the rates for the Certificates. The price at which such adjusted principal amount of Certificates will be sold will be the same price per$1,000 of Certificates as the price per$1,000 for the original par amount of Certificates bid(although the Certificates will be sold only in denominations of$5,000 or any integral multiple thereof). In order to calculate the yield on the Certificates for federal tax law purposes and as a condition precedent to the award of the Certificates, bidders must disclose to the Town in connection with their respective bids the price (or yield to maturity)at which each maturity of the Certificates will be reoffered and sold or expected to be sold to the public. In the event of any such adjustment and or revision, no rebidding of the Certificate interest rates will be permitted, and the purchase price as may have been bid on the Certificates shall be adjusted accordingly. Any such adjustment of the aggregate principal amount of the Certificates and/or the maturity schedule for the Certificates made by the Town or its Financial Advisor shall be subsequent to the award of the Certificates to the winning bidder as determined pursuant to"CONDITIONS OF THE SALE-BASIS FOR AWARD" herein and shall not affect such determination. The successful bidder may not withdraw its bid as a result of any changes made within the aforementioned limits. If such adjustment is made, it is possible that the actual cash premium generated in the transaction may result in a cash premium amount less than or greater than the amounts shown in the bid for the Certificates. There is no guarantee that adjustments and/or revisions will not be necessary in order to properly size the Certificates to achieve the desired financial structure by the Town. Accordingly, the Town reserves the right in its sole discretion to make 2 adjustments as previously described above, even if the issue size of the Certificates does not change from the original par amount of Certificates. BOOK-ENTRY-ONLY SYSTEM: The Town intends to issue the Certificates in book-entry form through the Book-Entr-Only System of The Depository Trust Company, New York, New York ("DTC"). See "DESCRIPTION OF THE CERTIFICATES - Book-Entry-Only System" in the Preliminary Official Statement. OPTIONAL REDEMPTION: The Certificates maturing on and after February 15,2027 are subject to redemption prior to maturity, in whole or in part, in principal amounts of$5,000 or any integral multiple thereof,on February 15,2026,or any date thereafter at the option of the Town. See "DESCRIPTION OF THE CERTIFICATES — Optional Redemption" in the Preliminary Official Statement. SERIAL CERTIFICATES AND/OR TERM CERTIFICATES: Bidders may provide that all the Certificates be issued as serial Certificates or may provide that any two or more consecutive annual principal amounts be combined into one or more "Term Certificates." MANDATORY SINKING FUND REDEMPTION: If the successful bidder designates principal amounts to be combined into one or more Term Certificates,each such Term Certificate shall be subject to mandatory sinking fund redemption commencing February 15 of the first year which has been combined to form such Term Certificate and continuing on February 15 in each year thereafter until the stated maturity date of the Term Certificate. The amount redeemed in any year shall be equal to the principal amount for such year set forth in the Maturity Schedule shown above (subject to change as described above under "POST BiD MODIFICATION OF PRINCIPAL AMOUNTS"). Certificates to be redeemed in any year by mandatory sinking fund redemption shall be redeemed at par and shall be selected by lot or other customary method of random selection from among the Tenn Certificates then subject to mandatory redemption. The Town, at its option, may credit against any mandatory sinking fund redemption requirement Term Certificates of the maturity then subject to redemption that have previously been purchased and canceled by the Town or have been redeemed pursuant to applicable optional redemption provisions described above and not theretofore credited against any mandatory sinking fund redemption requirement. PAYING AGENT/REGISTRAR: The initial Paying Agent/Registrar for the Certificates shall be U.S. Bank National Association, Dallas,Texas. See"DESCRIPTION OF THE CERTIFICATES—Paying Agent/Registrar"in the Preliminary Official Statement, SOURCE OF PAYMENT: The Certificates will be direct obligations of the Town payable from ad valorem taxes levied,within the limits prescribed by law, against taxable property located within the Town, as provided in the Ordinance. Additionally, the Certificates are secured by and payable from a limited pledge of$1,000 of the net revenues of the Town's waterworks and sewer system remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve, and other requirements in connection with all of tine Town's revenue bonds or other obligations (now or hereafter outstanding), which are payable from all or any part of the net revenues of the Town's waterworks and sewer system See "DESCRIPTION OF THE CERTIFICATES—Security"in the Preliminary Official Statement. Further details regarding the Certificates and certain covenants of the Town contained in the Ordinance are set forth in the Preliminary Official Statement,to which reference is made for all purposes. CONDITIONS OF SALE TYPE OF BIDS AND INTEREST RATES: The Certificates will be sold in one block on an "All or None" basis. No bid producing a cash premium on the Certificates that results in a dollar price of less than 101% or greater than 106% will be considered; provided, however, that any bid is subiect to adiustment as described above under the caption "THE CERTIFICATES— POST BID MODIFICATION OF PRINCIPAL AMOUNTS." Bidders are invited to specify the rate or rates of interest the Certificates will bear, provided that each rate bid must be in a multiple of 1/8 or 1/1.00 of 1%, and the net effective interest rate bid must not exceed 15%. The highest interest rate bid for any single maturity of Certificates may not exceed the lowest interest rate bid by more than 3.00% in rate. No limitation is placed on bidders as to the number of rates or rate changes,except that all Certificates of one maturity must bear one and the same rate,and no bids involving supplemental interest rates will be considered.Each bidder shall state the true interest cost rate of its bid, which shall be considered informative only and not as a part of the bid. BASIS FOR AWARD: Subject to the Town's right to reject any or all bids and to waive any irregularities except time of filing,the sale of the Certificates will be awarded to the bidder making a bid that conforms to the specifications herein and which produces the lowest "True Interest Cost" rate on the Certificates. The True Interest Cost rate is the rate that, when used to compute the total present value as of the Date of Delivery of all debt service payments on the Certificates on the basis of using a 360-day year composed of 12 consecutive 30-day months, produces an amount equal to the sum of the par value of the Certificates plus any premium bid. in the event of a bidder's ctTo• in interest cost calculations, the interest rates, and premium, if any, set forth in the Official Bid Form will be considered as the intended bid. 3 GOOD FAITH DEPOSIT: A bank cashiers check or certified check payable to the order of"Town of Westlake, Texas" in the amount of$184,000.00,which is 2%of the par value of the Certificates (the "Good Faith Deposit"), is required to be provided in connection with any bid. The Good Faith Deposit may accompany the Official Bid Form or may be submitted separately. If submitted separately, it shall be made available to the "Town prior to the opening of the bids and shall be accompanied by instructions from the bank on which drawn which authorize its use as a Good Faith Deposit by the bidder who shall be named in such instructions. Except as otherwise provided below, the Good Faith Deposit of the winning bidder (upon execution of the Official Bid Form and the adoption of the Ordinance,herein referred to as the"Initial Purchaser'will be retained uncashed by the Town pending the Initial Purchaser's compliance with the terms of its bid and this Notice of Sale and Bidding Instructions. In the event the Initial Purchaser should fail or refuse to take up and pay for the Certificates in accordance with its bid,then such check will be cashed and accepted by the Town as full and complete liquidated damages. The Good Faith Deposit of the Initial Purchaser will be returned to the Initial Purchaser following initial delivery of the Certificates.No interest will be allowed on the Good Faith Deposit. Checks accompanying bids other than the bid of the Initial Purchaser will be returned promptly after the bids are opened and an award of the Certificates has been made. "file Good Faith Deposit should be mailed or delivered to"Tom Lawrence, Lawrence Financial Consulting LLC,403 Bonaire Court, Austin,Texas 78738-1775, 512-375-3424 (phone), by such means as to be received by Mr. Lawrence prior to the deadline set for bidding on the Certificates. ADDITIONAL CONDITION OF AWARD—DISCLOSURE OF INTERESTED PARTY FORM: New obligation of the Town to receive information from winning bidder. Effective January 1, 2016, pursuant to Texas Government Code Section 2252.908 (the "Interested Party Disclosure Act"), the Town may not award the Certificates to a bidder unless the winning bidder submits a Certificate of Interested Parties Form 1295 (the "Disclosure Form") to the Town as prescribed by the Texas Ethics Commission ("TEC"). In the event that the bidder's bid for the Certificates is the best bid received, the Town, acting through the Financial Advisor, will promptly notify the winning bidder. Such notification will serve as the Town's conditional verbal acceptance of the bid,and will obligate the winning bidder to establish(unless the winning bidder has previously so established)an account with the "TEC,and promptly file a completed Disclosure Form,as described below,in order to allow the Town to complete the award. Process for completing the Disclosure Form. For purposes of illustration, the Disclosure Form is attached hereto, and reference should be made to such form for the following information needed to complete it: (a) item 2—name of the governmental entity (Town of Westlake)and(b)item 3—the identification number assigned to this contract by the Town(Series 2016 Certificates)and description of the goods or services (Purchase of Certificates) . The Interested Party Disclosure Act and the rules adopted by the TEC with respect thereto(the "Disclosure Rules") require a business entity contracting with the Town to complete the Disclosure Form electronically at https://vvww.ethics.state.tx.tis/main/file.litm, print, sign, notarize, and deliver the certified Disclosure Form that is generated by the TECs "electronic portal" to the Town. The notarized Disclosure Form must be sent by email, to the Financial Advisor at dawrencenallfetexas.com, as soon as possible following the notification of conditional verbal acceptance and prior to the final written award.Upon receipt of the final written award,the winning bidder must email the Disclosure Form in PDF format to Debbie Piper at dpiper�r,westlake-tx.org,with a copy thereof also emailed to esettle(amphlegal.com. Preparations for completion. and the significance of, the reported information. In accordance with the Interested Party Disclosure Act, the information reported by the bidder MUST BE ACKNOWLEDGED BY AND SUBMITTED UNDER A NOTARY STAMP.No exceptions may be made to that requirement. The Interested Party Disclosure Act and the Disclosure Form provides that such acknowledgment is made"under oath and under penalty of perjury." Consequently,a bidder should take appropriate steps prior to completion of the Disclosure Form to familiarize itself with the Interested Party Disclosure Act, the Disclosure Rules and the Disclosure Form.Time will be of the essence in submitting the form to the Town,and no final award will be made by the Town regarding the sale of the Certificates until a completed Disclosure Form is received by email.The Town reserves the right to reject any bid that does not satisfy the requirement of a completed Disclosure Form, as described herein. Neither the Town nor its consultants have the ability to verify the information included in a Disclosure Form, and neither party has an obligation nor undertakes responsibility for advising any bidder with respect to the proper completion of the Disclosure Form. Consequently, an entity intending to bid on the Certificates should consult its own advisors to the extent it deems necessary and be prepared to submit the completed form promptly upon notification from the Town that its bid is the conditional winning bid. Instructional videos on logging in and creating a certificate are provided on the TEC's website at https://www.ethics.state.tx.us/whatsnew/elf info form1295.1-itm. The Town reserves the right to reject any and all bids and to waive any irregularities except time of submission. DELIVERY OF THE CERTIFICATES AND ACCOMPANYING DOCUMENTS CUSIP NUMBERS: It is anticipated that CUSIP identification numbers will be printed on the Certificates,but neither the failure to print such number on any Certificate nor any error with respect thereto shall constitute cause for a failure or refusal by the Initial Purchaser to accept delivery of and pay for the Certificates in accordance with the terns of the Official Bid Form and this Notice of Sale and Bidding Instructions. All expenses in relation to the printing of CUSIP numbers on the Certificates shall be paid by the Town;however,the CUSIP Service Bureau's charge for the assignment of the numbers shall be paid by the Initial Purchaser. DELIVERY OF CERTIFICATES: Delivery of the Certificates will be accomplished by the issuance of one fully registered Certificate in the aggregate principal amount of the Certificates payable to the Initial Purchaser(the"Initial Certificate"),signed by 4 the Mayor and Town Secretary of the of the Town, by their manual or facsimile signatures, approved by the Texas Attorney General, and registered and manually signed by the Texas Comptroller of Public Accounts. Delivery will be at the corporate trust office of the Paying Agent/Registrar. Upon delivery of the Initial Certificate, it shall be immediately canceled and one definitive Certificate for each maturity of the Certificates in the aggregate principal amount of such maturity payable to Cede&Co. will be delivered to DTC in connection with DTC's Book-Entry-Only System. Payment for the Certificates must be made in immediately available funds for unconditional credit to the 'fown, or as otherwise directed by the Town. The Initial Purchaser will be given 6 business days'notice of the time fixed for delivery of the Certificates. It is anticipated that the delivery of the Initial Certificate can be made on or about December 22,2016,but if for any reason the Town is unable to make delivery by January 26,2017,then the Town shall immediately contact the Initial Purchaser and offer to allow the Initial Purchaser to extend its obligation to take up and pay for the Certificates an additional 30 days. If the Initial Purchaser does not elect to extend its offer within 6 days thereafter,then its Good Faith Deposit will be returned, and both the Town and the initial Purchaser shall be relieved of any further obligation. III no event shall the Town be liable for any damages by reason of its failure to deliver the Certificates, provided that such failure is due to circumstances beyond the Town's reasonable control. CONDITIONS TO DELIVERY: The obligation of the Initial Purchaser to take up and pay for the Certificates is subject to the Initial Purchaser's receipt of(1)the legal opinion of McCall,Parkhurst&Horton L.L.P.,Dallas,Texas,Bond Counsel for the Town ("Bond Counsel"), (2) the Town's no-litigation certificate, and (3) the certification as to the Official Statement, all as further described in the Official Statement. In order to provide the Town with information required to enable it to comply with certain conditions of the internal Revenue Code of 1986,as amended(the"Code"),relating to the exclusion of interest on the Certificates from the gross income of their owners,the Initial Purchaser will be required to complete, execute, and deliver to the Town a certification as to their "issue price" (the"Issue Price Certificate") substantially in the form and to the effect attached hereto or accompanying this Notice of Sale and Bidding Instructions. In the event the successful bidder is unable to sell a substantial amount of the Certificates of any maturity to the public, the Issue Price Certificate may be modified in a manner approved by Bond Counsel. In no event will the Town fail to deliver the Certificates as a result of the Initial Purchaser's inability to sell a substantial amount of the Certificates at a particular price prior to delivery. Each bidder, by submitting its bid, agrees to complete, execute, and deliver the Issue Price Certificate within 5 business days of the award of the sale of the Certificates,if its bid is accepted by the Town. It will be the responsibility of the Initial Purchaser to institute such syndicate reporting requirements, to make such investigation, or otherwise to ascertain the facts necessary to enable it to make such certification with reasonable certainty. Any questions concerning such certification should be directed to Bond Counsel. The Initial Purchaser shall also be required to disclose to the Town in writing additional information regarding the reoffering of the Certificates by the Initial Purchaser, including the amounts to be designated by the initial Purchaser as, or considered to be, takedown,underwriting risk,management flees,underwriters counsel fees,spread expenses,etc.,or any other information necessary for the Town to comply with its reporting obligations pursuant to Section 1202.008,Texas Government Code. LEGAL OPINIONS:The Certificates are offered when,as and if issued,subject to the approval of the Attorney General of the State of Texas. Delivery of and payment for the Certificates is subject to receipt by the Initial Purchaser of the opinion of Bond Counsel, substantially in the form reproduced in APPENDIX A to the Preliminary Official Statement, to the effect that the Certificates are valid and binding obligations of the Town,and that the interest on the Certificates will be excludable from gross income for federal income tax purposes under existing law and the Certificates are not"private activity bonds,"subject to the matters described under "TAX MATTERS" in the Preliminary Official Statement, including the alternative minimum tax on corporations. See "TAX MATTERS"in the Preliminary Official Statement. CERTIFICATION OF O1-FICIAL STATEMENT: At the time of payment and initial delivery of the Certificates, the Town will execute and deliver to the Initial Purchaser a certificate in the form set forth in the Preliminary Official Statement(see"OTHER MATTERS—Certification of Official Statement"in the Preliminary Official Statement). CHANGE IN TAX-EXEMPT STATUS:At any time before the Certificates are tendered for initial delivery to the Initial Purchaser, the Initial Purchaser may withdraw its bid if the interest received by private holders on obligations of the same type and character shall be declared to be includable in gross income under present federal income tax laws, either by ruling of the Internal Revenue Service or by a decision of any federal court, or shall be declared taxable or be required to be taken into account in computing any federal income taxes, by the terms of any federal income tax law enacted subsequent to the date of this Notice of Sale and Bidding Instructions. GENERAL FINANCIAL ADVISOR: Lawrence Financial Consulting LLC is employed as Financial Advisor to the Town 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. Lawrence Financial Consulting LLC, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the 5 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. BLUE SKY LAWS: By submission of its bid, the Initial Purchaser represents that the sale of the Certificates in states other than Texas will be made only pursuant to exemptions from registration or,where necessary,the Initial Purchaser will register the Certificates in accordance with the securities laws of the states in which the Certificates are offered or sold. The Town agrees to cooperate with the Initial Purchaser, at the Initial Purchaser's written request and expense, in registering the Certificates or obtaining an exemption from registration in any state where such action is necessary, provided,however,that the Town shall not be obligated to qualify as a foreign corporation or execute a general or special consent to service of process in any such jurisdiction. NOT AN OFFER TO SELL: This Notice of Sale and Bidding Instructions does not alone constitute an offer to sell the Certificates, but is merely notice of sale of the Certificates. The offer to sell the Certificates is being made by means of this Notice of Sale and Bidding Instructions, the Official Bid Form and the Preliminary Official Statement. Prospective bidders are urged to carefully examine the Preliminary Official Statement to determine the investment quality of the Certificates. ANTICIPATED ISSUANCE OF AD VALOREM TAX DEBT: After the issuance of the Certificates, the Town may issue additional ad valorem tax debt in the next 12 months although the amount and timing thereof have not yet been determined. RATING: A municipal bond rating application has been made to S&P Global Ratings ("S&P"). The result of S&P's determination will be provided as soon as possible. See"RATING"in the Preliminary Official Statement. THE OFFICIAL STATEMENT AND COMPLIANCE WITH SEC RULE 15c2-12: The Town has prepared the accompanying Preliminary Official Statement and, for the limited purpose of complying with SEC Rule 15c2-12 (the "Rule"), will deem such Preliminary Official Statement to be final as of its date within the meaning of the Rule for the purpose of review prior to bidding. To the best knowledge and belief of the Town, the Preliminary Official Statement contains information, including financial information or operating data,concerning every entity,enterprise,fund,account,or person that is material to an evaluation of the offering of the Certificates. Representations made and to be made by the Town concerning the absence of material misstatements and omissions in the Preliminary Official Statement are addressed elsewhere in this Notice of Sale and Bidding Instructions and in the Preliminary Official Statement. The Town will furnish to the Initial Purchaser, acting through a designated senior representative, in accordance with instructions received from the Initial Purchaser, within seven (7) business days from the sale date, a copy of the Official Statement, including any supplement(s) reflecting interest rates and other terms relating to the initial reoffering of the Certificates, in word-searchable PDF format. The Initial Purchaser shall be responsible for providing in writing the initial reoffering prices and other terms, if any, to the Financial Advisor by the close of the next business day after the award. Except as noted above,the Town assumes no responsibility or obligation for the distribution or delivery of any copies of the Official Statement in connection with the offering or reoffering of the Certificates. CONTINUING DISCLOSURE AGREEMENT: The Town will agree in the Ordinance to provide certain periodic information and notices of certain events in accordance with the Rule, as described in the Official Statement under"OTHER MATTERS — Continuing Disclosure of Information." The obligation of the Initial Purchaser to accept and pay for the Certificates is conditioned upon delivery to the Initial Purchaser or its agent of a certified copy of the Ordinance containing the agreement described under such heading. COMPLIANCE WITH PRIOR UNDERTAKINGS: During the last five years, the Town has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. ADDITIONAL COPIES OF NOTICE, BID FORM AND STATEMENT: PDF copies of this Notice of Sale and Bidding Instructions, the Official Bid Form, and the Official Statement, may be obtained from Lawrence Financial Consulting LLC, attention:Tom Lawrence,512-375-3424(phone)or dawrencea,lfetexas.com(email),Financial Advisor to the Town. On the date of the sale,the Town Council will,in the Ordinance authorizing the issuance of the Certificates, approve the form and content of the Official Statement,and any addenda,supplement or amendment thereto,and authorize its use in the reoffering of the Certificates by the Initial Purchaser. TOWN OF WESTLAKE,TF,XAS Laura Wheat Mayor Kelly Edwards Town Secretary November 18,2016 6 OFFICIAL BID FORM Mayor and Members of Town Council December 5,2016 Town of Westlake 1301 Solana Blvd.,Building 4, Suite 4202 Westlake,Texas 76262 Reference is made to your Notice of Sale and Bidding Instructions and Preliminary Official Statement, dated November 18, 2016, both of which constitute a part hereof relating to the Town of Westlake, Texas Combination Tax and Revenue Certificates of Obligation,Series 2016(the"Certificates"), For your legally issued Certificates, as described in such Notice of Sale and Bidding Instructions and Preliminary Official Statement, we will pay you the par amount of the Certificates, plus a cash premium of$ (being a price of no less than 101%nor more than 106%of the par value);provided,however,that any bid is sullied to adiustment as described in the Notice of Sale and Bidding Instructions under the caption "THE CERTIFICATES — POST BID MODIFICATION OF PRINCIPAL AMOUNTS") as the purchase price for your legally issued Certificates maturing and bearing interest as follows: Maturity Schedule Principal Maturity Price/ Principal Maturity Price/ Principal Maturity Price/ Amount Feb 15 Yield AmountFe( b 15) Yield Amount Feb 15 Yield $ 205.000 2018 $ 270,000 2028 $ 365,000 2038 210,000 2019 280,000 2029 375,000 2039 215,000 2020 285,000 2030 390.000 2040 220,000 2021 295,000 2031 400,000 2041 225,000 2022 305,000 2032 415,000 2042 235,000 2023 315,000 2033 430,000 2043 240,000 2024325,000 2034 450,000 2044 245,000 2025335,000 2035 465,000 2045 255,000 2026 345,000 2036 485,000 2046 265,000 2027 355,000 2037 If an adjustment of the principal amounts is made as described in the Notice of Sale and Bidding Instructions, it is possible that the actual cash premium generated in the transaction may result in a cash premium amount less than or greater than the amounts shown in the bid for the Certificates. Cash premium paid,after adjustment is$ Bidders shall have the option of submitting bids using Term Certificates subject to mandatory sinking fund redemption for all or any portion of Certificates scheduled to mature in any of the years set forth in the above table, provided that the sinking fund redemption amounts shall be the same size as the maturity amounts shown in the Notice of Sale and Bidding Instructions. The Term Certificates,if any,shall be described in the following table: Term Certilicate Information Maturity Date Year of First Principal Amount Interest (February 15) Mandatory Redemption of Term Certificate Rate Our calculation(which is not part of this bid)of the interest cost from the above is: TRUE INTEREST COST RATE(as of expected date of initial delivery,December 22,2016) % The Initial Certificate shall be registered in the name of (syndicate manager). We will advise U.S. Bank National Association, Dallas, Texas, the Paying Agent/Registrar, on forms to be provided by the Paying Agent/Registrar,of our registration instructions at least 5 business days prior to the date set for delivery. 1 *Subject to acjuslinent as described in the Notice of Sale and Bidding Instructions. In accordance with the terms of the Notice of Sale and Bidding Instructions, and the Good Faith Deposit,a bank cashier's or bank certified check in the amount of$ drawn on is herewith enclosed or has been made available to you prior to opening of the bid with authorizing instructions from such bank. Such Good Faith Deposit is payable to the order of"Town of Westlake, Texas". If the Certificates are awarded to us, the Good Faith Deposit will remain uncashed and will be returned to us at the time of delivery of the Certificates by the Town. We agree to accept delivery of the Certificates utilizing the book-entry-only system through DTC and make payment for the Initial Certificate in immediately available funds at the corporate trust offices of U.S. Bank National Association, Dallas, Texas not later than 10:00 a.m., Central time, on December 22,2016, or thereafter on the date the Certificates are tendered for delivery, pursuant to the terms set forth in the Notice of Sale and Bidding Instructions. It will be the obligation of the Initial Purchaser of the Certificates to complete the DTC Eligibility Questionnaire. The undersigned agrees to complete, execute and deliver to the Town, within five (5) business days of the award of sale of the Certificates, a certificate relating to the "issue price"of the Certificates in the form accompanying the Notice of Sale and Bidding Instructions,with such changes thereto as may be acceptable to the Town,along with the information required by the Texas Bond Review Board pursuant to Section 1202.008,Texas Government Code. If the bid is accepted by the Town,this bid shall thereupon become a contract of purchase for the Certificates under the terms contained in this Official Bid Form and in the Notice of Sale and Bidding Instructions. We hereby acknowledge that we have received and read the Notice of Sale and Bidding Instructions and Preliminary Official Statement referred to above. Respectfully submitted, Name of Underwriter or Manager Signature: Printed Name&Title: Telephone: Syndicate Members: ACCEPTANCE CLAUSE THE FOREGOING BID IS HEREBY ACCEPTED this 5th day of December, 2016, by ordinance of the Town Council of the Town of Westlake,Texas. TOWN OF WESTLAKE,TEXAS By: Mayor By: Town Secretary 2 ISSUE PRICE CERTIFICATE The undersigned hereby certifies as follows with respect to the bid and purchase of the$ Town of Westlake,Texas Combination Tax and Revenue Certificates of Obligation,Series 2016(the"Certificates"): 1. The undersigned is the duly authorized representative of the purchaser (the "Initial Purchaser") of the Certificates from the Town of Westlake(Tarrant and Denton Counties),Texas(the"Town"). 2. All of the Certificates have been offered to members of the public in a bona fide initial offering. For purposes of this Certificate issue, the term "public" does not include any bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers (including the Initial Purchaser or members of the selling group or persons that are related to,or controlled by,or are acting on behalf of or as agents for the undersigned or members of the selling group). 3. Each maturity of the Certificates was offered to the public at a price which, on the date of such offering, was reasonably expected by the Initial Purchaser to be equal to the fair market value of such maturity. 4. Other than the obligations set forth in paragraph 5 hereof (the "Retained Maturity" or "Retained Maturities"),the first price/yield at which a substantial amount(i.e., at least ten(10)percent)of the principal amount of each maturity of the Certificates was sold to the public is set forth below. ORIGINAL INITIAL ORIGINAL INITIAL ORIGINAL INITIAL MATURITY PRINCIPAL OFFERING MATURITY PRINCIPAL OFFERING MATURITY PRINCIPAL OFFERING (FEB. 15) AMOUNT PRICE (FEB. 15) AMOUNT PRICE (FEB, 15) AMOUNT PRICE 2018 2028 2038 2019 2029 2039 2020 2030 2040 2021 2031 2041 2022 2032 2042 2023 2033 2043 2024 2034 2044 202- 2035 2045 2026 2036 2046 2027 2037 5. In the case of the Retained Maturities, the Initial Purchaser reasonably expected on the offering date to sell a substantial amount (i.e., at least ten (10) percent) of each Retained Maturity at tine initial offering price/yield as set forth below: ORIGINAL INITIAL ORIGINAL INITIAL ORIGINAL INITIAL MATURITY PRINCIPAL OFFERING MATURITY PRINCIPAL OFFERING MATURI'T'Y PRINCIPAL OFFERING (FER 15) AMOUNT PRICE (FEB. 15) AMOUNT PRICE (FEB. 15) AMOUNT PRICE 2018 2028 2038 2019 2029 2039 2020 2030 2040 2021 2031 2041 2022 2032 2042 2023 2033 2043 2024 2034 2044 2025 2035 2045 2026 2036 2046 2027 2037 I 6. The Initial Purchaser — has/ has not purchased bond insurance for the Certificates. The bond insurance, if any, has been purchased from (the "Insurer") for a fee of $ (net any nonguarantee cost, e.g., rating agency fees). The amount of such fee is set forth in the Insurer's commitment and does not include any payment for any direct or indirect services other than the transfer of credit risk, unless the compensation for those other services is separately stated, reasonable, and excluded from such fee. Such fee does not exceed a reasonable, arm's-length charge for the transfer of credit risk and it has been paid to a person who is not exempt from federal income taxation and who is not a user or related to the user of any proceeds of the Certificates. The present value of the debt service savings expected to be realized as a result of such insurance exceeds the amount of the fee set forth above. For this purpose, present value is computed using the yield on the Certificates, determined by taking into account the amount of the fee set forth above, as the discount rate. No portion of the fee payable to the Insurer is refundable upon redemption of any of the Certificates in an amount which would exceed the portion of such fee that has not been earned. 7. The Initial Purchaser understands that the statements made herein will be relied upon, by the Town in its effort to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended, and by McCall, Parkhurst&Horton L.L.P.,Bond Counsel to the Town, in rendering their opinion that the interest on the Certificates is excludable from the gross income of the owners thereof. EXECUTED and DELIVERED this day of ,2016. [NAME OF INITIAL PURCHASER] By: Name: Title: 2 CERTIFICATE OF INTERESTED PARTIES FORM 1295 OFFICE USE ONLY Complete Nos. 1 - 4 and 6 if there are interested parties. Complete Nos. 1, 2, 3, 5, and 6 if there are no interested parties. 1 Name of business entity filing form,and the city,state and country of the business entity's place of business. 2 Name of governmental entity or state agency that is a party to the contract for which the form is being filed. 3 Provide the identification number used by the governmental entity or state agency to track or identify the contract, and provide a description of the services,goods,or other property to be provided under the contract. t 4 City,State,Country 41 ire of Interest(check applicable) Name of Interested Party (place of business)..,, Controlling Intermediary NO � 0 ,b i. ff m � Q 5 Check only if there is NO Interested Party. ❑ 6 AFFIDAVIT I swear, or affirm, under penalty of perjury, that the above disclosure is true and correct. Signature of authorized agent of contracting business entity AFFIX NOTARY STAMP ( SEAL ABOVE Sworn to and subscribed before me,by the said this the day of ,20 ,to certify which,witness my hand and seal of office. Signature of officer administering oath Printed name of officer administering oath Title of officer administering oath ADD ADDITIONAL PAGES AS NECESSARY Form provided by Texas Ethics Commission www.ethics.state.tx.us Revised 4/8/2016 a PRELLN11NARY OFFICIAL.STATEMENTDATED NOVF<NI131SR 13,2016 NEW ISSUE: Book-Entry-Only RATING:S&P"AAA"(stable outlook) (See "Rating"herein) er In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for federal income tar purposes under statutes, regulations,published rulings and court decisions existing on the date thereof, subject to the matters described under "TAX MATTERS"herein,including the alternative minimwn tax on corporations. The Issuer will designate the Certificates as"qualified la--c-exempt obligations"for financial institutions. G •Y $9,200,000* Town of Westlake (Tarrant and Denton Counties,Texas) Combination Tax and Revenue Certificates of Obligation,Series 2016 J. f Dated:December 1,2016 Due: February 15,as shown below (Interest accrues from date of delivery) 'Y The Town of Westlake,Texas,Combination Tax and Revenue Certificates of Obligation, Series 2016(the"Certificates")are s authorized and issued in accordance with the Constitution and laws of the State of Texas, including Chapter 271, Subchapter C, Texas Local Government Code, as amended, and an ordinance (the "Ordinance") adopted by the Town Council of the Town of Westlake,Texas (the "Issuer"), and constitute direct obligations of the Issuer, payable from an annual ad valorem tax, levied upon all taxable property within the Issuer, within the limits prescribed by law, sufficient to provide for the payment of principal and interest due on the Certificates, as provided in the Ordinance. Additionally, the Certificates are secured by and payable from a limited pledge of$1,000 of the net revenues of the Issuer's waterworks and sewer system, remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve, and other requirements in connection with all of the Issuer's revenue bonds or other obligations (now or hereafter outstanding),which .= are payable from all or any part of the net revenues of the Issuer's waterworks and sewer system (the "Revenues"). See "DESCRIPTION OF THE CERTIFICATES—Security for the Certificates"herein. J r The Certificates are initially issuable only to Cede& Co.,the nominee of The Depository Trust Company,New York,New York("DTC"),pursuant to the book-entry system described herein. Beneficial ownership of the Certificates may be acquired in denominations of$5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the r. purchasers thereof. Principal of and interest on the Certificates will be payable to Cede&Co.,which will make distributions of the amounts so paid to the participating members of DTC for subsequent remittance to the owners of beneficial interests in the Certificates. Such book-entry-only system will affect the method and timing of payment and the method of transfer for the Certificates. Interest on the Certificates will be payable on February 15 and August 15 of each year,commencing August a 15, 2017, until maturity or prior redemption. Principal of the Certificates will be payable at maturity or prior redemption. The initial Paying Agent/Registrar for the Certificates is U.S. Bank National Association. The Certificates maturing on and after February 15, 2027 are subject to redemption at the option of the Issuer, in principal amounts of$5,000 or integral multiples thereof,on February 15, 2026 or any date thereafter, at the price of the principal amount so called for redemption =_ G plus accrued interest thereon to the redemption date. See"DESCRIPTION OF THE CERTIFICATES"herein. 4 = Proceeds of the Certificates are expected to be used to pay for (i) acquiring, constructing, installing and equipping fire- fighting facilities;and(ii)legal,fiscal and engineering fees in connection with such projects. See"PLAN OF FINANCING" " — herein. ✓ ' The Certificates are offered when, as and if issued, subject to approval of legality by the Attorney General of the State of Texas and the approval of certain legal matters by McCall,Parkhurst&Horton L.L.P.,Dallas, Texas,Bond Counsel.Definitive Certificates are expected s to be available for delivery on December 22,2016,through the facilities of The Depository Trust Company,Arew York,NY. J BIDS DUE MONDAY,DECEMBER 5,2016 at 11:00 A.M. CENTRAL TIME *Preliminary;subject to change. .j � J ti CUSIP Prefix: 96048P(') MATURITY SCHEDULE* $9,200,000 Serial Certificates-Interest accrues from the date of delivery Maturity Principal Interest Initial CUSIP Maturity Principal Interest Initial CUSIP Feb 15 Amount Rate Yield Suffix(l) Feb 15 Amount Rate Yield Suffix") 2018 $ 205,000 2033(2) 315,000 2019 210,000 2034(23 325,000 2020 215,000 2035(2) 335,000 2021 220,000 2036(2) 345,000 2022 225,000 20372) 355,000 2023 235,000 2038'2) 365,000 2024 240,000 2039(2 375,000 2025 245,000 2040'2' 390,000 2026 255,000 2041(21 400,000 20272) 265,000 2042(2) 415,000 2028(2) 270,000 2043(21 430,000 2029(2) 280,000 2044(2) 450,000 2030(2) 285,000 2045(2) 465,000 2031(2) 295,000 2046'2) 485,000 2032(2, 305,000 (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard&Poor's Financial Services LLC 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. Neither the Issuer, the Financial Advisor nor the Initial Purchaser takes any responsibility for the selection or correctness of the CUSIP numbers set forth herein. (2) The Issuer reserves the right, at its option, to redeem Certificates maturing on and after February 15, 2027, in whole or in part in principal amounts of$5,000 or any integral multiple thereof, on February 15, 2026, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. If less than all of the Certificates within a maturity are to be redeemed, the Paying Agent/Registrar shall determine by lot the Certificates, or portions thereof, within such maturity to be redeemed.See "DESCRIPTION OF THE CERTIFICATES-Optional Redemption." (3)For Certificates maturing on February 15 20_through February 15, 20_, the yield shown is the yield to the first call date, February 15, 2026 *Preliminary;subject to change. i TOWN OF WESTLAKE 1301 Solana Blvd.,Building 4, Suite 4202 Westlake,Texas 76262 (817)430-0941 ELECTED OFFICIALS Term Expires Term Town Council Ma Occupation Inception Laura Wheat,Mayor 2018 Community Service 2008 Carol Langdon,Mayor pro-tem,Member 2017 Retired,Marketing 2008 Michael Barrett,Member 2018 Sr.Executive,Financial Services 2012 Alesa Belvedere,Member 2018 Realtor 2014 Rick Rennhack,Member 2017 Consultant 2009 Wayne Stoltenberg,Member 2017 Senior VP,CFO,Cinco Resources,Inc. 2013 APPOINTED AND OTHER TOWN OFFICIALS Name Title Years with Town Thomas E.Brymer Town Manager 9 Debbie Piper Finance Director 14 Kelly Edward Town Secretary 7 CONSULTANTS AND ADVISORS Name Title Weaver and Tidwell,L.L.P. Auditor Dallas,Texas McCall,Parkhurst&Horton L.L.P. Bond Counsel Dallas,Texas Lawrence Financial Consulting LLC Financial Advisor Austin,Texas ii USE OF INFORMATION IN OFFICIAL STATEMENT For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document constitutes an official statement of the Issuer with respect to the Certificates that has been deemed "final" by the Issuer as of its date except for the omission of no more than the information permitted by Subsection(b)(1)of Rule 15c2-12. No dealer, broker, salesman or other person has been authorized to give any information or make any representations other than those contained in this Oficial Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by the Issuer or any other person. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy,and there shall not be any sale of,the Certificates in any state in which it is unlawful to make such offer,solicitation or sale. The information and expressions of opinion contained herein have been obtained from the Issuer and other sources that are believed to be reliable,but the accuracy and completeness of information obtained from sources other than the Issuer cannot be guaranteed. The information and expressions of opinion contained herein are subject to change without notice,and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer or other matters described herein since the date hereof. See "OTHER MATTERS - Continuing Disclosure of Information" herein for a description of the Issuer's agreement to update certain information contained in this Official Statement. The prices and other terms respecting the offering and sale of the Certificates may be changed from time to time by the initial purchaser(s) of the Certificates after the Certificates are released for sale, and the Certificates may be offered and sold at prices other than the initial offering prices,including to dealers who may sell the Certificates into investment accounts. NEITHER THE ISSUER, ITS FINANCIAL ADVISOR NOR THE INITIAL PURCHASER MAKES 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 HEREIN. 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 ASA RECOMMENDATION THEREOF. IN CONNECTION WITH THIS OFFERING, THE INITIAL PURCHASER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE THE MARKET PRICE 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. iii TABLE OF CONTENTS SUMMARYSTATEMENT................................................................................................................................................................v INTRODUCTION...............................................................................................................................................................................l PLANOF FINANCING......................................................................................................................................................................1 Purposeof the Certificates.................................................................................................................................................................I Sourcesand Uses of Funds................................................................................................................................................................l DESCRIPTION OF THE CERTIFICATES.....................................................................................................................................2 General..............................................................................................................................................................................................2 Book-Entry-Only System..................................................................................................................................................................2 Authorityfor Issuance....................................................................................................................................................................... Securityand Source of Payment........................................................................................................................................................4 Noticeof Redemption........................................................................................................................................................................6 PayingAgent/Registrar......................................................................................................................................................................6 Transferand Exchange......................................................................................................................................................................7 ReplacementCertificates...................................................................................................................................................................7 Amendmentsto the Ordinance..........................................................................................................................................................7 Certificateholders'Remedies.............................................................................................................................................................8 ISSUER DEBT AND AD VALOREM TAX INFORMATION.....................................................................................................10 Table 1 -Current Appraised Valuation,Exemptions and Tax Supported Debt...............................................................................10 Table 2-Appraised Valuation and Exemptions by Category..........................................................................................................l I Table 3—Tax Rates,Levies,Collections and Ratios.......................................................................................................................12 Table4-Ten Largest Taxpayers.....................................................................................................................................................13 EstimatedOverlapping Debt............................................................................................................................................................13 Table 5-Debt Service Requirements..............................................................................................................................................14 Table 6-Authorized But Unissued Tax Bonds...............................................................................................................................15 Table7-Other Obligations.............................................................................................................................................................15 Table8—Tax Adequacy..................................................................................................................................................................15 PropertyTax Code...........................................................................................................................................................................15 OTHERFINANCIAL INFORMATION.........................................................................................................................................19 Table 9-General Operating Fund Summary Revenues and Expenditures......................................................................................19 Table9A—Changes in Net Position................................................................................................................................................20 Table 10-General Fund Summary Balance Sheet..........................................................................................................................21 Table l0A—Consolidated Statement of Net Position.....................................................................................................................21 Investments......................................................................................................................................................................................22 Table 12-Status of Current Investments........................................................................................................................................24 LEGALMATTERS...........................................................................................................................................................................25 TAXMATTERS................................................................................................................................................................................25 Opinion............................................................................................................................................................................................25 Federal Income Tax Accounting Treatment of Original Issue Discount.........................................................................................26 Collateral Federal Income Tax Consequences.................................................................................................................................27 State,Local and Foreign Taxes........................................................................................................................................................27 Information Reporting and Backup Withholding............................................................................................................................27 Qualified Tax-Exempt Obligations for Financial Institutions..........................................................................................................28 Futureand Proposed Legislation.....................................................................................................................................................28 RATING.............................................................................................................................................................................................28 OTHERMATTERS..........................................................................................................................................................................28 LitigationCertificate........................................................................................................................................................................28 Legal Investments and Eligibility to Secure Public Funds in Texas................................................................................................29 FinancialAdvisor............................................................................................................................................................................29 AnnualFinancial Report..................................................................................................................................................................29 Registration and Qualification of Certificates for Sale....................................................................................................................29 Saleof the Certificates.....................................................................................................................................................................30 Continuing Disclosure of Information.............................................................................................................................................30 Certificationof Official Statement..................................................................................................................................................31 Forward-Looking Statements Disclaimer........................................................................................................................................32 Conclusion.......................................................................................................................................................................................32 APPENDIX A-FORM OF BOND COUNSEL OPINION.............................................................................................................A APPENDIX B—COMPREHENSIVE ANNUAL FINANCIAL REPORTS..................................................................................B APPENDIX C-GENERAL INFORMATION REGARDING THE ISSUER..............................................................................C iv SUMMARY STATEMENT This summary statement is subject in all respects to the more complete information and to the 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, including the cover page and all appendices. No person is authorized to detach this summary statement from this Official Statement or to otherwise use it without the entire Official Statement. The Issuer The Town of Westlake,located in Tarrant and Denton Counties,Texas(the"Issuer"),was incorporated in 1956 and operates as a "Type A general law city" under the laws of the State of Texas. See APPENDIX C. "GENERAL INFORMATION REGARDING THE ISSUER" The Certificates The Certificates are being issued in the aggregate principal amount set forth on the cover page pursuant to the laws of the State of Texas, particularly Chapter 271, Subchapter C, Texas Local Government Code, as amended, and an ordinance adopted by the Town Council of the Issuer(the "Certificate Ordinance" or"Ordinance"). The Certificates are subject to redemption at the option of the Issuer prior to maturity on and after February 15,2026. See"DESCRIPTION OF THE CERTIFICATES—Optional Redemption." Security The Certificates constitute direct obligations of the Issuer, payable from a continuing annual ad valorem tax levied upon all taxable property located within the Issuer, within the limitations prescribed by law. The Certificate Ordinance irrevocably pledges such ad valorem taxes in an amount sufficient to provide for the payment of the Certificates while they remain outstanding. Additionally, the Certificates are secured by and payable from a limited pledge $1,000 of the net revenues of the Issuer's waterworks and sewer system remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve, and other requirements in connection with all of the Issuer's revenue bonds or other obligations (now or hereafter outstanding), which are payable from all or any part of the net revenues of the Issuer's waterworks and sewer system(the"Revenues").See"DESCRIPTION OF THE CERTIFICATES-Security." Tax Matters In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for purposes of federal income taxation under statutes,regulations,published rulings and court decisions existing on the date thereof, subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations. The Issuer will designate the Certificates as"qualified tax-exempt obligations"for financial institutions. Summary of Key Analytical Data General Fund Equity Balance as of 09/30/2015 $ 7,680,550 Estimated Population of the Issuer 1,200 Net Taxable Assessed Valuation(TAV)for Fiscal Year 2016-17 $1,105,075,652 TAV per capita $ 920,896.38 Gross Ad Valorem Tax Debt as of 09/30/2016,plus the Certificates $ 36,342,000 Ratio of Gross Ad Valorem Tax Debt to TAV 3.29% Gross Ad Valorem Tax Debt per capita $ 301,285.00 Net Ad Valorem Tax Debt as of 09/30/2016(' $ 1,627,000 Ratio of Net Ad Valorem Tax Debt to TAVI') 0.15% Net Ad Valorem Tax Debt per capita(') $ 1,355.83 Sources:Tarrant and Denton Central Appraisal Districts,the Issuer's audited financial statements,and U.S.Census Bureau. (1)Although all of the Issuer's ad valorem tax debt is secured by a pledge of its ad valorem tax,it is currently paying only a minor portion of such debt from its ad valorem tax and the remainder from other available sources.See"ISSUER DEBT AND AD VALOREM TAX INFORMATION." *Preliminary;subject to change. v OFFICIAL STATEMENT relating to $9,200,000* Town of Westlake (Tarrant and Denton Counties,Texas) Combination Tax and Revenue Certificates of Obligation, Series 2016 INTRODUCTION This Official Statement provides certain information in connection with the issuance by the Town of Westlake, Texas (the "Issuer" or"Town") of its Combination Tax and Revenue Certificates of Obligation, Series 2016 (the "Certificates"). Capitalized terms used herein have the same meanings assigned to such terms in the Certificate Ordinance(the"Ordinance"). There follows in this Official Statement descriptions of the plan of financing, the Certificates and certain information about the Issuer 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 Issuer. PLAN OF FINANCING Purpose of the Certificates Proceeds of the Certificates will be used to pay for(i)acquiring, constructing, installing and equipping fire-fighting facilities;and(ii)legal,fiscal and engineering fees in connection with such projects. Sources and Uses of Funds The following is a summary of the anticipated sources and uses of proceeds of funds(excluding accrued interest)in connection with the issuance of the Certificates: Sources of Funds Principal Amount of Certificates $ - Original Issue Premium - Total Sources $ - Uses of Funds Deposit to Construction Fund $ - Issuance Costs - Underwriting Discount - Estimated Rounding Amount - Total Uses $ - *Preliminary;subject to change. 1 DESCRIPTION OF THE CERTIFICATES General The Certificates are dated December 1,2016. Interest on the Certificates,at the rates set forth on page i hereof,will accrue from the date of their initial delivery and will be payable semiannually on February 15 and August 15 of each year,commencing August 15,2017,until maturity or prior redemption. The Certificates are stated to mature on February 15 in the years and in the principal amounts set forth on page i following the cover page hereof. The Certificates will be initially issued utilizing the Book-Entry-Only System of The Depository Trust Company("DTC"), and will be in fully registered form, payable to Cede& Co.,as nominee for DTC. See "Book-Entry-Only System" below. The Certificates are issued only as fully registered obligations in the denomination of$5,000 principal amounts or any integral multiple thereof(an "Authorized Denomination"), within a stated maturity and of like interest rate. Principal and redemption price of the Certificates is payable on the maturity or redemption date upon surrender at the corporate trust office of U.S.Bank National Association(the"Paying Agent/Registrar");provided,however,that so long as the Certificates are in book-entry-only form and are registered in the name of Cede&Co.,as nominee for DTC, payment of the principal of and interest on the Certificates will be made to the beneficial owners thereof as described below under"Book-Entry-Only System." . Interest on the Certificates payable on any interest payment date shall be paid to the owner (the "Owner") whose name appears in the registration books of the Paying Agent/Registrar (the "Register") at the close of business on the Record Date (the last business day of the month immediately preceding an interest payment date) and shall be paid by the Paying Agent/Registrar by check sent United States mail,first class,postage prepaid,to the address of the Owner recorded in the Register or by such other method,acceptable to the Paying Agent/Registrar,requested by,and at the risk and expense of,the Owner. In the event of a non-payment of interest on a scheduled payment date with respect to the Certificates,that remains unpaid for 30 days thereafter,the Ordinance requires the Paying Agent/Registrar to establish a Special Record Date, if and when funds for the payment of such interest are received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest(the "Special Payment Date" that 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 Owner of a Certificate appearing on the 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. If the date specified for the payment of the principal of or interest on the Certificates is a Saturday, Sunday, legal holiday or day on which banking institutions in the city where the Paying Agent/Registrar is located are authorized or required to be closed, then such payment will be made on the next succeeding day which is not one of the foregoing days, without additional interest and with the same force and effect as if made on the specified date for such payment. Book-Entry-Only System This section describes how ownership of the Certificates are to be transferred and how the principal of,premium, if any, and interest on the Certificates are to be paid to and credited by The Depository Trust Company("DTC'), New York New York, while the Certificates are registered in its nominee name. The information in this section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this Oficial Statement. The Issuer believes the source of such information to be reliable, but takes no responsibilityfor the accuracy or completeness thereof. The Issuer cannot and does not give any assurance that (1) DTC will distribute payment 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 Oficial 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. 2 DTC will act as securities depository for the Certificates.The Certificates will be issued as fully-registered securities registered in the name of Cede&Co. (DTC's partnership nominee)or such other name as may be requested by an authorized representative of DTC.One fully registered certificate will be issued for each maturity of the Certificates, in the aggregate principal amount of each 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 Standard&Poor's rating of"AA+."The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.More information about DTC can be found at 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 Indirect Participants acting on behalf of Beneficial Owners.Beneficial Owners will not receive certificates representing their ownership interests in the 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 Paying Agent/Registrar and request that copies of notices be provided directly to them. 3 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 the 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 Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede&Co.'s consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited on the record date(identified in a listing attached to the Omnibus Proxy). Redemption proceeds and principal and interest 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 Issuer or the Paying Agent/Registrar, on payable dates in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as in the case with securities held for the accounts of customers in bearer form or registered in"street name," and will be the responsibility of such Participant and not of DTC,the Paying Agent or the Issuer,subject to any statutory or regulatory requirements as may be in effect from time to time.Payment of redemption proceeds and principal and interest to Cede&Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer 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. A Beneficial Owner shall give notice to elect to have its Certificates purchased or tendered,through its Participant, to the Tender Agent, and shall effect delivery of such Certificates by causing the Direct Participant to transfer the Participant's interest in the Certificates, on DTC's records, to the Tender Agent. The requirement for physical delivery of Certificates in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Certificates are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Certificates to the Tender Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Certificates at any time by giving reasonable notice to the Issuer or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained,the Certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository).In that event,the Certificates will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Issuer believes to be reliable,but the Issuer takes not responsibility for the accuracy thereof. Authority for Issuance The Certificates are authorized and issued pursuant to the Constitution and general laws of the State of Texas, including particularly Chapter 271,Subchapter C,Texas Local Government Code,as amended,and the Ordinance. Security and Source of Payment The Certificates will constitute direct obligations of the Issuer, payable from ad valorem taxes levied against all taxable property located within the Issuer, within the limitations prescribed by law. The Ordinance irrevocably pledges such ad valorem taxes to the payment of the principal of and interest on the Certificates while they remain outstanding. See"ISSUER DEBT AND AD VALOREM TAX INFORMATION"herein. The Constitution of the State of Texas provides that the ad valorem tax levied by the Issuer for general purposes and for the purpose of paying debt service requirements of the Issuer's general obligation debt shall not exceed$1.50 for each $100 of assessed valuation of taxable property. There is no limitation within the $1.50 rate for interest and sinking fund purposes. Administratively, however, the Attorney General of the State of Texas will not permit 4 allocation of more than $1.00 of the $1.50 maximum tax rate for all tax supported debt based on a 90%collection rate. Additionally,the Certificates are secured by and payable from a limited pledge of$1,000 of the net revenues of the Issuer's waterworks and sewer system remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve, and other requirements in connection with all of the Issuer's revenue bonds or other obligations(now or hereafter outstanding),which are payable from all or any part of the net revenues of the Issuer's waterworks and sewer system(the"Revenues"). FYE Sept.30 2015 2014 2013 Utility Fund Operating Revenues $3,549,775 $3,428,702 $3,382,327 Utility Fund Operating Expenses 4,065,926 2,921,066 2,646,505 Utility Fund Operating Income("Revenues") _ 16 151 50 ,b6 73 822 Source:Issuer's Comprehensive Annual Financial Reports for the fiscal years indicated. Notwithstanding the requirements of the Ordinance to levy and collect an ad valorem tax to pay debt service on the Certificates, if Revenues or other lawfully available moneys of the Issuer are actually on deposit in the Interest and Sinking Fund in advance of the time when ad valorem taxes are scheduled to be levied for any year,then the amount of taxes that otherwise would have been required to be levied may be reduced to the extent and by the amount of the Revenues or other lawfully available funds then on deposit in the Interest and Sinking Fund. Optional Redemption The Issuer reserves the right, at its option, to redeem Certificates maturing or subject to mandatory sinking fund redemption on and after February 15, 2027, in whole or in part in principal amounts of$5,000 or any integral multiple thereof, on February 15, 2026,or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. If less than all of the Certificates within a maturity are to be redeemed, the Paying Agent/Registrar shall determine by lot the Certificates,or portions thereof,within such maturity to be redeemed. Mandatory Sinking Fund Redemption The Certificates maturing on February 15 in the years indicated in the following schedule(the"Term Certificates") shall be subject to mandatory redemption in part prior to maturity at the redemption price of par and accrued interest to the date of redemption on the dates and in the respective principal amounts,set forth in the following schedule: Term Certificates Due February 15,20 Term Certificates Due February 15,20_ Redemption Date Amount Redemption Date Amount The particular Term Certificates to be redeemed shall be chosen by the Paying Agent/Registrar at random by lot or other customary method; provided, however, that the principal amount of Term Certificates of a stated maturity required to be redeemed on any mandatory redemption date pursuant to the operation of the mandatory sinking fund redemption provisions shall be reduced,at the option of the Issuer,by the principal amount of any Term Certificates of the same maturity which, at least 45 days prior to a mandatory redemption date(1) shall have been acquired by the Issuer at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, (2) shall have been purchased and canceled by the Paying Agent/Registrar at the request of the Issuer at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase,or(3)shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. 5 Notice of Redemption Not less than 30 days prior to a redemption date for the Certificates,the Issuer shall cause a notice of redemption to be sent by United States mail,first class,postage prepaid,to each Owner of a Certificate to be redeemed,in whole or in part, at the address of the Owner appearing in the Register at the close of business on the business day next preceding the date of mailing of such notice. ANY NOTICE GIVEN SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN AND ALL OTHER CONDITIONS TO REDEMPTION ARE SATISFIED, THE CERTIFICATES CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND, NOTWITHSTANDING THAT ANY CERTIFICATE OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH CERTIFICATE OR PORTION THEREOF SHALL CEASE TO ACCRUE. With respect to any optional redemption of the Certificates,unless certain prerequisites to such redemption required by the Ordinance have been met and money sufficient to pay the principal of and premium, if any, and interest or maturity value on the Certificates to be redeemed will have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said redemption may, at the option of the Issuer,be conditional upon the satisfaction of such prerequisites and receipt of such money by the Paying Agent/Registrar on or prior to the date fixed for such redemption or upon any prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given and such prerequisites to the redemption are not fulfilled,such notice will be of no force and effect, the Issuer will not redeem such Certificates, and the Paying Agent/Registrar will give notice in the manner in which the notice of redemption was given, to the effect that the Certificates have not been redeemed. The Paying Agent/Registrar and the Issuer, 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 Ordinance 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,shall 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 Issuer 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 Ordinance and will not be conducted by the Issuer or the Paying Agent/Registrar. Neither the Issuer 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 "DESCRIPTION OF THE CERTIFICATES—Book-Entry-Only System"herein. Paying Agent/Registrar The initial Paying Agent/Registrar is U.S. Bank National Association, Dallas, Texas. In the Ordinance, the Issuer retains the right to replace the Paying Agent/Registrar. The Issuer covenants to maintain and provide a Paying Agent/Registrar at all times while the Certificates are outstanding, and any successor Paying Agent/Registrar shall be a bank,trust company, financial institution 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 Issuer agrees to promptly cause a written notice thereof to be sent to each Owner by United States mail, first class, postage prepaid, which notice shall also give the effective date of the change and the address of the new Paying Agent/Registrar. If the Paying Agent/Registrar is replaced, the new Paying Agent/Registrar shall accept the previous Paying Agent/Registrar's records and act in the same capacity as the previous Paying Agent/Registrar. 6 Transfer and Exchange In the event the Book-Entry-Only System shall be discontinued with respect to the Certificates, such Certificates will be printed and delivered to the registered owners thereof,and thereafter the Certificates may be transferred and exchanged on the Register only upon presentation and surrender thereof to the Paying Agent/Registrar, and such transfer or exchange shall be without expense or service charge to the Owner, except for any tax or other governmental charges required to be paid with respect to such registration,exchange and transfer. A Certificate may be assigned by the execution of an assignment form on the Certificate or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. A new Certificate or Certificates will be delivered by the Paying Agent/Registrar, in lieu of the Certificate being transferred or exchanged, at the Trust Office, or sent by United States mail, first class, postage prepaid,to the new Owner or its designee. New Certificates registered and delivered in an exchange or transfer shall be in Authorized Denominations for any one stated maturity and for a like aggregate principal amount and interest rate as the Certificate or Certificates surrendered for exchange or transfer. Neither the Issuer nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate in whole or in part during the period commencing with the close of business on any Record Date or Special Record Date and ending on the day subsequent to the immediately following payment date or,with respect to any Certificate called for redemption, in whole or in part, within 45 days of the date fixed for redemption, provided that such limitation of transfer shall not be applicable to the exchange by the registered owner of the uncalled balance of a Certificate. The Paying Agent/Registrar shall require payment by the Owner requesting such transfer or exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. Replacement Certificates If any Certificate is mutilated, destroyed, stolen or lost, a new Certificate in the same principal amount and bearing the same rate of interest as the Certificate so mutilated, destroyed, stolen or lost will be issued under the conditions set forth in the Ordinance. In the case of a mutilated Certificate, such new Certificate will be delivered only upon surrender and cancellation of such mutilated Certificate. In the case of any Certificate issued in lieu of and substitution for a Certificate which has been destroyed, stolen or lost, such new Certificate will be delivered only upon(a)the filing with the Issuer and the Paying Agent/Registrar of evidence satisfactory to establish to the Paying Agent/Registrar proof of the ownership and the circumstances of loss, destruction or theft of such Certificate, and (b) the furnishing to the Paying Agent/Registrar of such security of indemnity satisfactory to it to hold it and the Issuer harmless. The person requesting the authentication and delivery of a new Certificate must comply with such other reasonable requirements as the Issuer and the Paying Agent/Registrar may prescribe and pay such expenses as may be incurred in connection therewith. Amendments to the Ordinance In the Ordinance,the Issuer has reserved the right to amend the Ordinance without the consent of any holder for the purpose of amending or supplementing the Ordinance to(i)cure any ambiguity,defect or omission therein that does not materially adversely affect the interests of the holders,(ii)grant additional rights or security for the benefit of the holders, (iii) add events of default as shall not be inconsistent with the provisions of the Ordinance that do not materially adversely affect the interests of the holders, (iv) qualify the Ordinance under the Trust Indenture Act of 1939, as amended, or corresponding provisions of federal laws from time to time in effect or(v)make such other provisions in regard to matters or questions arising under the Ordinance that are not inconsistent with the provisions thereof and which, in the opinion of Bond Counsel for the Issuer,do not materially adversely affect the interests of the holders. The Ordinance further provides that the holders of the Certificates aggregating in principal amount 51% of the outstanding Certificates shall have the right from time to time to approve any amendment not described above to the Ordinance if it is deemed necessary or desirable by the Issuer;provided,however,that without the consent of 100% of the holders in original principal amount of the then outstanding Certificates,no amendment may be made for the purpose of (i) making any change in the maturity of any of the outstanding Certificates; (ii) reducing the rate of interest borne by any of the outstanding Certificates; (iii) reducing the amount of the principal of, or redemption premium, if any, payable on any outstanding Certificates; (iv) modifying the terms of payment of principal or of interest or redemption premium on outstanding Certificates, or imposing any condition with respect to such 7 payment; or(v)changing the minimum percentage of the principal amount of the Certificates necessary for consent to such amendment. Reference is made to the Ordinance for further provisions relating to the amendment thereof. Defeasance The Ordinance provides for the defeasance of the Certificates when payment of the principal of and premium,if any, on Certificates, plus interest thereon to the due date thereof(whether such due date be by reason of maturity, redemption, or otherwise), is provided by irrevocably depositing with a paying agent or other authorized entity, in trust (1) money sufficient to make such payment or (2) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest 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 respective series of Certificates, and thereafter the Town will have no further responsibility with respect to amounts available to such paying agent (or other financial institution permitted by applicable law) for the payment of such defeased Certificates, including any insufficiency therein caused by the failure of such paying agent (or other financial institution permitted by applicable law) to receive payment when due on the Defeasance Securities. The Ordinance provides that "Defeasance 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:(1)direct,noncallable obligations of the United States of America,including obligations that are unconditionally guaranteed by the United States of America, (2) noncallable obligations of an agency or instrumentality of the United States of America,including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the Town adopts or approves the proceedings authorizing the financial arrangements, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent,and(3)noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the Town adopts or approves the proceedings authorizing the financial arrangements,are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. The Issuer has additionally reserved the right, subject to satisfying the requirements of(1) and (2) above,to substitute other Defeasance Securities for the Defeasance Securities originally deposited,to reinvest the uninvested moneys on deposit for such defeasance and to withdraw for the benefit of the Issuer moneys in excess of the amount required for such defeasance. 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 or redemption of the Certificates have been made as described above, all rights of the Issuer to initiate proceedings to call the Certificates for redemption or take any other action amending the terms of the Certificates are extinguished; provided, however, that the right to call the Certificates for redemption is not extinguished if the Issuer: (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. There is no assurance that the current law will not be changed in a manner which would permit investments other than those described above to be made with amounts deposited to defease the Certificates. Because the Ordinance does not contractually limit such investments, registered owners may be deemed to have consented to defeasance with such other investments, notwithstanding the fact that such investments may not be of the same investment quality as those currently permitted under State law. There is no assurance that the ratings for U.S. Treasury securities used as Defeasance Securities or those for any other Defeasance Security will be maintained at any particular rating category. Certificateholders'Remedies The Ordinance establishes specific events of default with respect to the Certificates. If the Issuer defaults in the payment of the principal of or interest on the Certificates when due or the Issuer defaults in the observance or performance of any of the covenants, conditions, or obligations of the Issuer, the failure to perform which materially, adversely affects the rights of the owners of the Certificates, including but not limited to,their prospect 8 or ability to be repaid in accordance with the Ordinance, and the continuation thereof for a period of 60 days after notice of such default is given by any owner to the Issuer, the Ordinance provides that any registered owner is entitled to seek a writ of mandamus from a court of proper jurisdiction requiring the Issuer 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 Ordinance and the Issuer's obligations are not uncertain or disputed. The remedy of mandamus is controlled by equitable principlesand 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 Ordinance does not provide for the appointment of a trustee to represent the interest of the owners of the Certificates upon any failure of the Issuer to perform in accordance with the terms of the Ordinance,or upon any other condition and accordingly all legal actions to enforce such remedies would have to be undertaken at the initiative of,and be financed by,the registered owners. The Texas Supreme Court ruled in Tooke v. City of Alexia, 197 S.W.P 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 Issuer's sovereign immunity from a suit for money damages, owners of the Certificates may not be able to bring such a suit against the Issuer for breach of the Certificates or Ordinance covenants. Even if a judgment against the Issuer could be obtained, it could not be enforced by direct levy and execution against the Issuer's property. Further, the registered owners cannot themselves foreclose on property within the Issuer or sell property within the Issuer to enforce the tax lien on taxable property to pay the principal of and interest on the Certificates. Furthermore, the Issuer 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 owners of the Certificates of an entity which has sought protection under Chapter 9. Therefore,should the Issuer 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 and by general principles of equity which permit the exercise of judicial discretion. Initially, the only registered owner of the Certificates will be Cede & Co., as DTC's nominee. See "DESCRIPTION OF THE CERTIFICATES - Book-Entry-Only System" herein for a description of the duties of DTC with regard to ownership of Certificates. [Remainder of page intentionally left blank.] 9 ISSUER DEBT AND AD VALOREM TAX INFORMATION Table 1-Current Appraised Valuation,Exemptions and Tax Supported Debt Tarrant County Denton County Total Total Market Value of Issuer Property for FY 2016-17 $ 1,568,214,122 $ 20,043,379 $ 1,588,257,501 Homestead Cap Loss (62,483,152) - (62,483,152) Ag Deferrals(Productivity Loss) (78,172,761) (16,643,604) (94,816,365) Total Appraised Value of Issuer Property for FY 2016-17 $ 1,427,558,209 $ 3,399,775 $ 1,430,957,984 Less Exemptions: Homestead Exemption-Local Option(General) (100,346,357) - (100,346,357) Homestead Exemption-Local Option(Over 65) (595,000) - (595,000) Abatements(l) (135,433,473) - (135,433,473) Reduction for Cases Before ARB (59,278,265) - (59,278,265) Reduction for Incomplete/In Process Accounts (12,758,433) - (12,758,433) Absolute Exemptions (12,352,533) (2,241,248) (14,593,781) Other Exemptions,Reductions (2,877,023) - (2,877,023) Total Adjustments,Exemptions (323,641,084) (2,241,248) (325,882,332) Taxable Assessed Valuation for FY 2016-17 $ 1,103,917,125 $ 1,158,527 $ 1,105,075,652 Gross Principal Amount of Ad Valorem Tax Supported Debt as of 09/30/2016 $ 27,142,000 The Certificates 9,200,000 Less:Principal Amount Such Debt Being Repaid From Sources Other Than Ad Valorem Taxes (34,715,000) Net Amount of Ad Valorem Tax Supported Debt as of 09/30/2015 $ 1,627,000 Debt Service Fund Balance as of 09/30/2015 $ 20,916 Sources:Tarrant and Denton Central Appraisal Districts,Issuer financial statements. (1) The Issuer has granted partial tax abatements for two major facilities within its boundaries, including those used by Deloitte LLP and Fidelity Investments. Such abatements have 10 year terms and are subject to various terms and conditions, including the satisfaction of certain employment targets in order to qualify for abatement in any given year. [The remainder of this page is intentionally left blank.) 10 Table 2-Appraised Valuation and Exemptions by Category Fiscal Years Ending September 30, 2017 2016 2015 Market Valuation Amount %of Total Amount %of Total Amount %of Total Real Estate,Residential $ 879,417,798 55.37% $ 669,171,945 50.52% $ 617,469,021 48.62% Real Estate,Commercial 466,391,373 29.36% 455,595,734 34.40% 427,483,453 33.660% Personal Prop,CommUlndust 146,514,438 9.22% 122,122,330 9.22% 146,956,302 11.57% Agricultural Properties 95,250,592 6.00% 77,0731.547 5.82% 77,486,314 6.10% Utilities 683,300 0.04% 555,495 0.04% 497,410 0.040/. Total Market Valuation 1,588,257,501 100.00% 1,324,519,051 100.00% 1,269,892,500 100.00% Less Exemptions&Reductions Homestead Cap Loss (62,483,152) (5,553,073) (16,626,670) Agricultural,Productivity Loss (94,816,365) (76,467,922) (76,873,063) Homestead-Local Option (100,346,357) (85,558,380) (86,061,862) Over 65-Local Option (595,000) (605,000) (561,700) Disabled-Local Option - - - Abatements(l) (135,433,473) (162,354,187) (163,938,263) Reduction for ARB Cases (59,278,265) (9,842,969) (7,517,937) Reduction for Incomplete Accts (12,758,433) (22,863,722) (1,780,074) Absolute Exemptions (14,593,781) (14,706,044) (14,813,387) Disabled Veterans - - - Nominal Value - - - Other Exemptions,Reductions (2,877,023) - Net Taxable Assessed Valuation $1,105.075.652 $ 946.567.754 $ 901.719.544 Fiscal Years Ending September 30, 2014 2013 Market Valuation Amount %of Total Amount %of Total Real Estate,Residential $ 574,506,369 46.22% $ 545,598,263 44.65% Real Estate,Commercial 438,047,262 35.24% 443,779,916 36.31% Personal Prop.,Commercial/Indust. 151,927,427 12.22% 140,063,086 11.46% Agricultural Properties 78,589,129 6.32% 92,015,149 7.53% Utilities - 0.000/0 584,960 0.05% Total Market Valuation 1,243,070,187 100.00% 1,222,041,374 100.00% Less Exemptions&Reductions Homestead Cap Loss (2,499,033) (4,783,528) Agricultural,Productivity Loss (76,828,073) (80,257,943) Homestead-Local Option (77,856,727) (72,510,736) Over 65-Local Option (551,700) (535,000) Disabled-Local Option - (101000) AbatementsM (172,174,981) (168,861,045) Reduction for ARB Cases - Reduction for Incomplete Accts (2,574,101) (2,695,142) Absolute Exemptions (12,122,064) (6,148,041) Disabled Veterans - (12,000) Nominal Value (910) (780) Other Exemptions,Reductions Net Taxable Assessed Valuation $ 898.462.598 $ 886.227,159 (1) The Issuer has granted partial tar abatements for two major facilities within its boundaries,including those used by Deloitte LLP and Fidelity Investments. Such abatements have 10 year terms and are subject to various terms and conditions,including, in the case of Fidelity,the satisfaction of certain employment targets in order to qualify for abatement in any given year. 11 Table 3—Tax Rates,Levies,Collections and Ratios Fiscal Years Ending September 30, 2017 2016 2015 2014 2013 Bond Tax Rate $ 0.00813 $ 0.01687 $ 0.01924 $ 0.01796 $ 0.01487 Maintenance Tax Rate 0.12882 0.13947 0.13710 0.13888 0.14197 Total Tax Rate $ 0.13695 $ 0.15634 $ 0.15634 $ 0.15684 $ 0.15684 Taxable Assessed Valuation $ 1,105,575,652 $ 946.567,764 $ 901,719,544 $ 898,462,598 $ 886,227,159 Total Ad Valorem Taxes Levied $ 1,514,086 $ 1,470,666 $ 1,450,643 $ 1,350,188 $ 1,352,097 Current Collection Ratio In process 98.16% 96.59% 99.23% 99.90% Total Collection Ratio In process 99.77% 98.02% 99.20% 99.93% Gross Ad Valorem Tax Debt(') $ 35,232,000 $ 27,142,000 $ 28,232,000 $ 29,304,000 $ 30,212,000 Gross Tax Debt Ratio to TAV 3.19% 2.87% 3.13% 3.26% 3.41% Net Ad Valorem Tax DebP $ 1,552,000 $ 1,627,000 $ 1,727,000 $ 1,824,000 $ 1,917,000 Net Tax Debt Ratio to TAV 0.14% 0.17% 0.19% 0.20% 0.22% Estimated Population 1,200 1,200 1,194 1,194 1,014 TAV per Capita $ 921,313 $ 788,806 $ 755,209 $ 752,481 $ 873,991 Gross Tax Debt per Capital) $ 29,360.00 $ 22,618.33 $ 23,644.89 $ 24,542.71 $ 29,794.87 Net Tax Debt per Capital) $ 1,293.33 $ 1,355.83 $ 1,446.40 $ 1,527.64 $ 1,890.53 Sources:The Town's audited financial statements; Tarrant and Denton Central Appraisal Districts. (1) As offiscal year end,-most recent fiscal year end amount is a projection and is subject to change. (2) Currently all of the Issuer's ad valorem tax supported debt is being repaid from sources other than its ad valorem tax,except for the Issuer's Combination Tax and Revenue Certificates of Obligation,Series 2011. The Issuer is authorized, at its option, to pay all or any portion of its debt from ad valorem taxes, other lawfully available revenues such as sales tax revenues, or any combination thereof, and may determine in the future to change the sources being used to repay all or any portion of its outstanding debt. [Remainder of page intentionally left blank.] 12 Table 4-Ten Largest Taxpayers Type of TAV for FY %of TAV NO= Business(l) 2016-17 $ 1,105-075,652 BRE Solana LLC Commercial Real Estate $ 173,218,573 15.67% FMR Texas I LLC/Ltd.Partnership Commercial Real Estate 80,939,255 7.32% DCLI,LLC Conference Center 47,521,483 4.30% Fidelity Investments Inc. Financial Services 39,098,584 3.54% Dallas MTA LP(dba Verizon Wireless) Wireless Telecommunications 38,537,456 3.49% Marsh USA Inc. Risk Mgt.,Insurance 15,402,373 1.39% Lexington TNI Westlake,LP Commercial Real Estate/REIT 14,618,533 1.32% Prince Whipple Trust Private Trust 7,070,782 0.64% Keith Hutton Personal 6,391,904 0.58% Vernon Wells III and Charlene Wells Personal 5,837,063 0.53% Totals $ 428.636.006 38.26% Source:Tarrant and Denton Central Appraisal Districts. (1)Of the top ten taxpayers, the valuations of three are related to commercial real estate,representing approximately 24%of the Issuer's total tax base. The valuations of such property may fluctuate substantially from year to year.A downturn in the commercial real estate market could adversely affect the Issuer's tax base. Estimated Overlapping Debt As in the case of the Issuer,various taxing units within the Issuer's boundaries may incur debts that are paid from ad valorem taxes levied by such taxing units on taxable properties within the Issuer's boundaries. Such taxing units are separate legal entities and independent of the Issuer. The information in this table shows direct and estimated overlapping ad valorem tax debt and is based on information obtained from the individual taxing units or from the Texas Municipal Reports published by the Municipal Advisory Council of Texas. The Issuer has not independently verified the accuracy or completeness of information relating to any taxing unit other than itself, and no person should rely upon such information as being accurate or complete. Additionally,taxing units listed herein may have issued additional tax debt since the date hereof,and such taxing units may have programs requiring the issuance of substantial amounts of additional tax debt,the amount of which cannot be determined at this time. Estimated Overlapping Taxing Unit Gross Debt As of %Overlapping Debt Carroll ISD $ 204,151,047 09/30/16 5.67% $ 11,5751.364 Denton County 602,995,000 09/30/16 0.02% 120,599 Keller ISD 728,705,387 09/30/16 4.56% 33,228,966 Northwest ISD 733,049,556 09/30/16 1.37% 10,042,779 Tarrant County 338,430,000 09/30/16 0.78% 2,639,754 Tarrant County Hospital District 22,335,000 09/30/16 0.78% 174,213 Trophy Club MUD#1 10,845,000 09/30/16 18.76% 2,034,522 Total Overlapping Debt 59,816,197 Gross Amount of Issuer's Outstanding Debt as of 9/30/2016,plus the Certificates 36.342.000 Total Direct&Overlapping Debt(gross amount) $ 96.158.197 Total Overlapping Debt(see above) $ 59,816,197 Net Amount of Issuer's Outstanding Debt as of 9/30/2016"' 1,627,000 Total Direct&Overlapping Debt(net amount) $ 612443,197 (1) Currently all of the Issuer's ad valorem tax supported debt is being repaid from sources other than its ad valorem tax,except for the Issuer's Combination Tax and Revenue Certificates of Obligation,Series 2011 which had a balance of$1,627,000 as of 09/30/2016. *Preliminary:subject to change. 13 Table 5-Debt Service Requirements Fiscal Plus: %of Principal Year End Existing the Certificates* Gross Debt Net Debt Principal Retired(2) 9/30 Debt Service(l) Principal Interest Total Service(l) Service(2) Balance $ 36,342,000 2017 $ 2,041,394 $ - $ 202,807 $ 202,807 $ 2,244,201 $ 113,148 $35,232,000 3.05% 2018 2,040,191 205,000 311,300 516,300 2,556,491 115,300 33,878,000 6.78% 2019 2,042,255 210,000 307,150 517,150 2,559,405 117,356 32,485,000 10.61% 2020 2,048,122 215,000 302,900 517,900 2,566,022 119,316 31,048,000 14.57% 2021 2,047,406 220,000 298,000 518,000 2,565,406 121,180 29,572,000 18.63% 2022 2,051,057 225,000 291,875 516,875 2,567,932 123,936 28,051,000 22.81% 2023 2,053,188 235,000 284,975 519,975 2,573,163 126,572 26,480,000 27.14% 2024 2,056,629 240,000 277,850 517,850 2,574,479 129,088 24,859,000 31.60% 2025 2,056,845 245,000 270,575 515,575 2,572,420 131,484 23,198,000 36.17% 2026 2,063,837 255,000 263,075 518,075 2,581,912 134,748 21,471,000 40.92% 2027 2,062,814 265,000 255,275 520,275 2,583,089 137,868 19,683,000 45.84% 2028 2,068,698 270,000 247,250 517,250 2,585,948 140,844 17,829,000 50.94% 2029 2,061,303 280,000 239,000 519,000 2,580,303 144,664 15,913,000 56.21% 2030 2,060,492 285,000 230,525 515,525 2,576,017 148,316 13,930,000 61.67% 2031 2,062,141 295,000 221,825 516,825 2,578,966 151,800 11,870,000 67.34% 2032 2,069,154 305,000 212,825 517,825 2,586,979 - 9,720,000 73.25% 2033 475,169 315,000 203,525 518,525 993,694 - 9,090,000 74.99% 2034 477,269 325,000 193,925 518,925 996,194 - 8,435,000 76.79% 2035 478,769 335,000 184,025 519,025 997,794 - 7,755,000 78.66% 2036 479,669 345,000 172,100 517,100 996,769 - 7,050,000 80.60% 2037 475,763 355,000 158,100 513,100 988,863 - 6,325,000 82.60% 2038 477,078 365,000 143,700 508,700 985,778 - 5,575,000 84.66% 2039 477,850 375,000 128,900 503,900 981,750 - 4,800,000 86.79% 2040 477,300 390,000 113,600 503,600 980,900 - 3,995,000 89.01% 2041 475,400 400,000 97,800 497,800 973,200 - 3,165,000 91.29% 2042 477,800 415,000 81,500 496,500 974,300 - 2,300,000 93.67% 2043 479,400 430,000 64,600 494,600 974,000 - 1,400,000 96.15% 2044 - 450,000 47,000 497,000 497,000 - 950,000 97.39% 2045 - 465,000 28,700 493,700 493,700 - 485,000 98.67% 2046 - 485,000 9,700 494,700 494,700 - - 100.00% Totals $38,136,993 $ 9,200,000 $5,844,382 $ 15,044,382 $ 53,181,375 $ 1,955,620 (1)Secured by a pledge of the Issuer's ad valorem tax.Debt service for a substantial portion of such debt is currently being paid from the Issuer's sales tax and other lawfully available revenues.Although the pledge of the Issuer's ad valorem tax continues for as long as any such debt remains outstanding, the Issuer may use other funds to pay debt service. (2) Only that portion of aggregate debt service that is attributable to the Issuer's Combination Tax and Revenue Certificate of Obligation,Series 2011(with an outstanding principal balance as of 09/30/2016 of$1,627,000), is currently being paid from ad valorem tax revenues.Although the pledge of the Issuer's ad valorem tax continues for as long as all debt reflected in this table remains outstanding,the Issuer may use other funds to pay debt service. *Preliminmy and for illustrative purposes only;based on an estimated net interest cost of 3.36%;subject to change. 14 Table 6-Authorized But Unissued Tax Bonds Voter Authorized but Unissued Ad Valorem Tax Bonds: None Ad Valorem Tax Bond Elections Planned for Next 12 Months: None New Money Ad Valorem Tax Debt Not Requiring Voter Approval Planned During Next 12 Months: Undetermined Although the Issuer currently has no voter authorization to issue new money general obligation bonds, it may issue ad valorem tax secured certificates of obligations and other tax-supported debt without voter authorization. The Issuer does not currently have specific plans to issue any additional new money tax supported obligations within the next 12 months. Regardless of the Issuer's future borrowing activities, the Issuer may be required to increase its annual ad valorem tax rate as a result of factors unrelated to the level of its outstanding debt and otherwise outside its control, including,for example,the following: (i)a reduction in its taxable assessed valuation,(ii)a reduction in tax collections,(iii)availability of sources other than ad valorem taxes currently being used to pay debt service, or (iv)changes in State law. Table 7-Other Obligations As of September 30,2015,the Issuer had certain other proprietary,contractual,special revenue and lease obligations payable from and secured by sources other than ad valorem taxes as described more fully in the Issuer's audited financial statements under Note 5 beginning on page 53 of the audited financial statements attached hereto as APPENDIX B. Table 8—Tax Adequacy Gross Ad Est.Gross Net Ad Est.Net Valorem Tax Ad Valorem Valorem Tax Ad Valorem Fiscal Year Debt Service Tax Rate(1)(2) Debt Service Tax Rate(1)(2) Current Year(2016-17) $2,201,478 $0.1992 $113,148 $0.0102 Maximum Annual Debt Service $2,406,432 $0.2178 $151,800 $0.0137 Average Annual Debt Service $1,673,509 $0.1514 $130,375 $0.0118 (1) Prior to 2010-11, the Issuer had not levied an ad valorem tax.Instead it paid debt service on all of its ad valorem tax debt from other lawfully available revenues. Only that portion of aggregate debt service that is attributable to the Issuer's Combination Tax and Revenue Certificate of Obligation, Series 2011 (with an outstanding principal balance as of 09/3012016 of $1,627,000), is currently being paid from ad valorem tax revenues.Although the pledge of the Issuer's ad valorem tax continues for as long as all debt reflected in this table remains outstanding, the Issuer may use other funds to pay debt service. (2) The Estimated Ad Valorem Tax Rate is the rate that would be required to be levied to pay debt service assuming no other source of payment,and further assuming a 100%collection ratio applied to the Issuer's current Taxable Assessed Valuation. *Preliminary;subject to change. Property Tax Code General. Receipts from ad valorem taxation are one of the Issuer's principal sources of operational revenue and its principal source of funds for debt service payments. See "OTHER FINANCIAL INFORMATION." The following is a summary of certain provisions of the Texas Property Tax Code,as amended(the"Property Tax Code"),relating to ad valorem taxation procedures. Property Tax Code and County-Wide Appraisal District. Pursuant to Chapter 6 of the Texas Property Tax Code,as amended(the"Property Tax Code"),each county in the State comprises a single appraisal district with responsibility for recording and appraising property for all taxing units within the county, and each county establishes a single appraisal review board for the purpose of reviewing and equalizing the values established by the appraisal district. Chapter 25 of the Property Tax Code requires the appraisal district,by May 15 of each year or as soon thereafter as practicable, to prepare appraisal records listing all property that is taxable in the appraisal district and stating the appraised value of each parcel or item. Property is required to be appraised as of January 1 of each year(except for 15 business inventories which may be assessed as of September 1 and mineral reserves which are assessed on the basis of a monthly average), and Chapter 23 of the Property Tax Code generally requires appraisals at 100% of market value. Tax appraisers are authorized to use alternative methods(cost,income and market data comparison methods) to determine the market value of property, and the most appropriate method is to be used. Appraisals are subject to review by the appraisal review board, and under certain circumstances, taxpayers and taxing units (such as the Issuer)may appeal the orders of the appraisal review board by filing a petition for review in the district court. In such event, the value of the property in question will be determined by the court or by a jury if requested by any party. Absent any such appeal,the orders of the appraisal review board must be used by each taxing jurisdiction in establishing its tax rolls and tax rate. Based upon their respective relative total appraised values,school districts are each entitled to vote, with other taxing entities, upon the selection of members of the board of directors of the county-wide appraisal districts in their respective counties. Although each taxing unit retains the authority to establish its own tax rates and to levy and collect taxes each year, under the county-wide appraisal plan implemented by the Property Tax Code, the taxing units are unable to influence appraisal standards or determine the frequency of revaluation or reappraisal. Chapter 25 of the Property Tax Code requires each appraisal district to implement a plan for periodic reappraisal of property to update appraised values, and the plan must provide for reappraisal of all real property in the appraisal district at least once every three years. Property Subject to Taxation by the Issuer. Except for certain exemptions provided by Texas law, all real and tangible personal property and certain intangible personal property in each taxing unit, including the Issuer, is subject to taxation by such taxing unit. Principal categories of exempt property which may be exempted under Chapter l 1 of the Property Tax Code include: property owned by the State of Texas or its political subdivisions, if the property is used for public purposes; property exempt from ad valorem taxation by federal law; certain household goods,family supplies and personal effects that are not held or used for the production of income; farm products owned by the producer; certain property owned by charitable organizations, youth development associations, religious organizations and qualified schools; designated historical sites; solar and wind powered energy devices;and certain tangible personal property known as "freeport goods." Effective for tax years 2008 and thereafter,Article VII,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 outboard motor,heavy equipment and manufactured housing inventory.After holding a public hearing,a taxing unit may take action by January I of the year preceding a tax year to tax goods-in-transit during the following tax year. A taxpayer may obtain only an exemption for "freeport goods" or"goods-in-transit" for items of personal property. In addition,owners of agricultural,timber and open space land may,under certain circumstances,request valuation of such land on the basis of productive capacity rather than market value. Article VIII, Section 2 of the Texas Constitution and Texas law mandate an additional exemption for disabled veterans and the surviving spouses and children of persons dying while on active duty in the armed forces, which exemption applies to either real or personal property and may range from $5,000 to $12,000. A taxing unit may also exempt portions of the taxable value of residential homesteads(see "Residential Homestead Exemption" below).New penalties will apply to taxes which have been wholly or partially exempted upon application of a taxpayer, if it is subsequently determined that the taxpayer did not qualify for the exemption. Residential Homestead Exemption. Pursuant to Article VIII, Section 1-b of the Texas Constitution and the Property Tax Code,the governing body of each political subdivision in the State,including the Issuer,is authorized to exempt from ad valorem taxes(1)up to 20 percent of the appraised value of residential homesteads but not less than$5,000, and (2) at least $3,000 of the appraised value of the residential homesteads of persons at least 65 years old and disabled persons. Article VIII, Section 1-b of the Texas Constitution provides that,with respect to the homestead exemptions granted thereunder, a taxing unit may nevertheless continue to levy taxes against such exempted property if(1)ad valorem taxes had been pledged for the payment of such taxing unit's debt incurred prior to the granting of such exemption, and (2) the loss of ad valorem tax revenues attributable to such exempted property would impair the taxing unit's obligation under the contract pursuant to which the debt was created. 16 In addition to the foregoing exemptions available to all taxing units, Texas law authorizes additional homestead exemptions for school districts, including(1)a basic $15,000 exemption for all homeowners, and(2)an additional $10,000 for persons at least 65 years old or disabled; provided, however, that a person at least 65 years old and disabled may receive only one $10,000 exemption, and only one such exemption is available per family, per residence homestead. Except for increases in appraised value resulting from certain improvements,a school district is prohibited from increasing the total ad valorem tax on the residence homestead of a person 65 years of age or older above the amount of tax imposed in the year such residence qualified for the $10,000 exemption. The tax "freeze"provided on the amount of ad valorem taxes levied on the homestead of a taxpayer 65 years of age or older transfers in proportionate amount to a different residence homestead of such taxpayer. Also,a surviving spouse of a taxpayer who qualifies for the freeze on ad valorem taxes is entitled to the same exemption so long as the property is the homestead of the surviving spouse and the spouse is at least 55 years of age at the time of the death of the individual's spouse. The increase of the appraised value on a residence homestead is limited to ten percent of the appraised value of the property for the last year in which the property was appraised times the number of years since the property was last appraised. Other Reductions in Assessed Valuation. The Issuer and other taxing units may jointly agree to the creation of a tax increment financing zone,under which the tax values on properties within the zone are"frozen"at their values at the time such zone is created. The Issuer and other taxing units may also enter into tax abatement agreements to encourage economic development. Under such agreements, a property owner agrees to construct certain improvements on its property, while the taxing unit would in turn agree to not levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement may last for as long as 10 years. Notice and Hearing Procedures. The ability of a taxing unit, such as the Issuer,to increase its tax levy from year to year is limited by Chapter 26 of the Property Tax Code,which imposes limitations on certain tax levies(other than tax levies for the payment of debt) based upon a complex formula. These limitations require that, prior to establishing and levying a rate of taxation for a year, the taxing unit compute an "effective rate" for such year pursuant to the Property Tax Code. Generally,this effective rate is the rate which will produce the same amount of operating revenue that the taxing unit levied in the previous year on the same property being taxed for both years, plus the amount necessary to pay bonded indebtedness of the taxing unit for the next year. The governing body of the Issuer may not adopt a tax rate that, if applied to the total taxable values, would impose an amount of taxes exceeding the prior year's levy without holding a public hearing and otherwise complying with the requirements for giving notice of such public hearing. If the rate of taxation to be levied for a year exceeds the sum of(i) the effective rate times 1.08,plus(ii)the Issuer's current debt rate(the"Rollback Rate"), 10%of the qualified voters of the Issuer may petition to require an election to limit the tax levied by the Issuer in the current year to the Rollback Rate. Levy and Collection of Taxes. Each taxing unit, including the Issuer, is responsible pursuant to Chapter 31 of the Property Tax Code for the collection of its taxes, unless it elects to transfer such functions to another governmental entity. By September I of each year,or as soon thereafter as practicable,the rate of taxation is set by the governing body of each taxing unit based upon the valuation of property within the taxing unit as of the preceding January 1. Generally,taxes are due October 1,or when billed,whichever comes later,and become delinquent after January 31 of the following year. A delinquent tax incurs a penalty of 12 percent of the amount of the tax through June 30 and additionally accrues interest at the rate of one percent per month. If the tax is not paid by July 1, an additional penalty of up to 15 percent may be imposed by the taxing unit to pay attorney fees for collection of the delinquent tax. Chapter 31 of the Property Tax Code also makes provision each year for consideration of split payments of taxes, discounts for early payment and the postponement of the delinquency date of taxes under certain circumstances.Abatement or deferral of a suit to collect delinquent taxes on residences is available to the extent that the delinquent taxes relate to the portion of the homestead that exceeds the appraised value by 105 percent of the valuation for the prior year. If the collection of the delinquent taxes are abated or deferred, they may not be collected until the taxpayer no longer owns the property and interest continues to accrue on the delinquent taxes at a rate of eight percent. Collection of Delinquent Taxes. Taxes levied by each taxing unit are a personal obligation of the owner of the property. On January I of each year,a tax lien attaches to property to secure the payment of all taxes,penalties and interest ultimately imposed for the year on the property, whether or not the taxes are imposed in the year the lien 17 attaches. The lien exists in favor of each taxing unit,including the Issuer,having the power to tax the property. The Issuer's tax lien is on a parity with the tax liens of all other such taxing units. A tax lien on real property has priority over the claims of most creditors and other holders of liens on the property encumbered by the tax lien,whether or not the debt or lien existed before the attachment of the tax lien. Personal property under certain circumstances is subject to seizure and sale for the payment of delinquent taxes, penalties and interest. At any time after taxes on property become delinquent,the Issuer may file suit to foreclose the lien securing payment of the tax or to enforce personal liability for the tax, or both. In filing a suit to foreclose a tax lien on real property, the Issuer must join other taxing units that have claims for delinquent taxes against all or part of the same property. The ability of the Issuer to collect delinquent taxes by foreclosure may be adversely affected by the amount of taxes owed to other taxing units, adverse market conditions, taxpayer redemption right or bankruptcy proceedings which restrain the collection of taxpayer debt. Issuer Application of Property Tax Code. The following table summarizes the current status of the Issuer's property tax procedures: Description Issuer Procedure Age 65/Disabled Homestead Exemption in addition to$10,000 basic exemption Allowed Exemption for Homestead(at least$5,000,up to 20%of market value) Allowed(up to 20%) Split Payment of Taxes Not allowed Discounts for Early Payment of Taxes Not allowed Nonbusiness Personal Property Not taxed Freeport Property Exemption Allowed Goods in Transit Exemption Not allowed Tax Abatement Policy Adopted Tax Increment Financing Zone None adopted Tax Collector for the Issuer Tarrant County Tax Assessor-Collector [The remainder of this page is intentionally left blank.] 18 OTHER FINANCIAL INFORMATION Table 9-General Operating Fund Summary Revenues and Expenditures Fiscal Years Ended September 30, Revenues: 2015 2014 2013 2012 2011 Sales tax $ 3,587,323 $ 3,471,344 $ 3,061,948 $ 2,534,774 $ 1,502,020 Property tax 1,256,796 1,198,374 1,236,978 1,271,975 1,226,689 Mixed beverage tax 59,184 51,602 39,727 38,286 19,721 Franchise tax 963,040 795,322 734,935 664,991 586,836 Interest income 10,078 10,503 9,286 14,060 10,679 Building permits and fees 1,200,790 1,175,075 969,735 598,394 520,646 Fines and penalties 734,152 730,441 695,167 622,338 605,705 Intergovernmental 3,810 3,540 10,331 - - Contributions 10,000 - 11,094 325,520 180,063 Miscellaneous 81,539 70,338 73,933 80,936 91,015 Total Revenues 7,906,712 7,506,539 6,843,134 6,151,274 4,743,374 Expenditures: General government and admin. 2,411,239 2,236,360 1,910,545 1,878,885 1,733,324 Public safety 2,490,551 2,146,587 1,967,584 2,224,469 1,842,751 Cultural and recreational 130,322 123,541 113,924 111,765 122,400 Economic development - - - - - Public works 744,028 615,781 532,675 391,115 324,874 Capital outlay 748,297 20,875 50,014 - 41,037 Debt service 48,237 48.240 Total Operating Expenditures 6,572,674 5.191,384 4.574,742 4,606,234 4.064,386 Excess(deficiency)of revs over exp 1,334.038 2,315,155 2,268.392 1.545,040 678.988 Other Financing Sources(Uses): Proceeds from sale of assets - - - - - Note proceeds - 34,710 - - 50,000 Other proceeds(insurance,asset sales) 162,059 7,000 Transfersin(') 521,320 56,419 609,826 583,857 2,178,403 Transfers ouP (2,290,385) (1.504,397) (1.090,392) (880,486) (2.691,982) Total Other Sources(Uses) (1,607,006) (1,413.268) (480,566) (296,629) (456,579) Net Change in Fund Balance (272,968) 901,887 1,787,826 1,248,411 222,409 Beginning Fund Balance 7,953,518 7,051,631 5,263,805 4,015,394 3,792,985 Ending Fund Balance $ 7,680,550 $ 7,953,518 $ 7,051,631 $ 5,263,805 $ 4,015,394 Source:Derived from the Issuer's Comprehensive Annual Financial Reports;please refer directly to such Reports for important Notes and more detailed information. (1) Detailed information relating to transfers may be found in the notes to the audited financial statements included in the Issuer's Comprehensive Annual Financial Reports. For the most recent fiscal year,see Note 9 on page 62 of the Comprehensive Annual Financial Report included hereivith as APPENDIX B. 19 Table 9A-Changes in Net Position Governmental Activities-Fiscal Years Ended September 30, 2015 2014 2013 2012 2011 Revenues: Program revenues: Fees,fines,charges for services $ 2,466,032 $ 2,127,786 $ 1,798,529 $ 1,417,879 $ 1,253,967 Operating grants,contributions 7,615,653 6,592,642 4,907,472 5,269,841 4,472,999 Capital grants,contributions 19,983,078 80,472 5,897,456 - 425,900 General revenues: Taxes Sales taxes 4,925,428 4,725,845 4,375,397 3,657,274 4,609,626 Property taxes 1,438,969 1,367,069 1,366,633 1,441,238 1,260,112 Hotel occupancy taxes 872,179 796,481 709,578 590,853 527,261 Mixed beverage taxes 59,184 51,602 39,727 38,286 19,721 Franchises taxes 963,040 795,322 734,935 664,991 586,836 Unrestricted grants 28,904 - - - - Interest on investments 198,199 26,713 24,218 33,353 46,248 Miscellaneous - 246,633 1,023,149 1,112,858 691,345 Extraordinary items - - - (124,346) 56,704 Special item - - - 67,760 - Gain on sale of capital assets - - - - 7,000 Total revenues 38,550,666 16,810,565 20,877,094 14,169,987 13,957,719 Expenses: General government 3,145,716 2,784,587 2,606,785 2,518,490 2,478,826 Public safety 2,381,437 2,190,050 1,978,803 1,883,424 1,801,585 Culture and recreation 129,970 123,541 113,924 111,765 122,400 Economic development 171,757 147,680 267,973 216,901 680,823 Public works 1,081,996 955,794 626,423 546,039 470,054 Visitor services 665,936 493,087 521,521 475,719 356,365 Education 8,598,261 7,147,411 5,803,611 6,193,560 4,884,985 Interest on long-term debt 1,022,201 998,951 1,031,328 897,573 1,127,913 Total expenses 17,197,274 14,841,101 12,950,368 12,843,471 11,922,951 Excess(deficiency)before transfers 21,353,392 1,969,464 7,926,726 1,326,516 2,034,768 Transfers 323,100 43,399 (485,591) 45,507 145,216 Change in net position 21,676,492 2,012,863 7,441,135 1,372,023 2,179,984 Effect of accounting principle change (530,877) (647,443) - - - Net position,beginning 33,422,961 32,057,541 24,616,406 23,244,383 21,0641.399 Net position,ending $ 54,568,576 $ 33,422,961 $ 32,057,541 $ 24,616,406 $ 23,244,383 Source:Derived from the Issuer's Comprehensive Annual Financial Reports;please refer directly to such Reports for important Notes and more detailed information. 20 Table 10-General Fund Summary Balance Sheet Fiscal Years Ended September 30. Assets: 2015 2014 2013 2012 2011 Cash and investments $ 7,106,297 $ 7,399,920 $ 6,219,206 $ 4,637,252 $ 3,379,864 Property tax receivables 5,379 14,353 1,961 1,796 4,643 Accounts receivable 824,725 771,499 703,875 557,579 259,938 Due from other funds 164,147 157,353 165,140 149,641 296,555 Other assets 13,334 8,821 6,906 6,856 62,020 Restricted cash&investments 293.363 264.709 428.463 Total Assets $ 8,113,882 $ 8.351.946 $ 7,390,451 $ 5.617,833 $ 4,431.483 Liabilities,Deferred Inflows&Fund Balance: Liabilities: Unearned revenue - - 1,961 1,796 2,796 Accounts payable 427,953 372,092 336,859 352,232 413,293 Due to other funds 11.983 Total Liabilities 427,953 384.075 338,820 354,028 416.089 Deferred Inflows of Resources: Unavailable resources-prop taxes 5.379 14.353 - Total Deferred Inflows 5.379 14.353 Fund Balances: RestrictedlCommitted/Nonspendable 296,949 282,345 300,269 271,565 490,483 Unassigned 7.383,601 7,671.173 6.751,362 4.992,240 3.524,911 Total Fund Equity 7,680.550 7,953.518 7,051.631 5.263.805 4,015.394 Total Liabilities and Fund Equity $ 8.113,882 $ 8,351,946 $ 7.390,451 $ 5.617,833 $ 4,431.483 Table 10A-Consolidated Statement of Net Position Governmental Activities-Fiscal Years Ended September 30, 2015 2014 2013 2012 2011 Assets Current and other assets $ 29,451,181 $ 14,197,535 $ 21,781,962 $ 12,185,864 $ 12,449,931 Capital assets 54,470,449 50,205,686 41,121,883 34,313,615 33,665,877 Total Assets 83,921.630 64,403,221 62,903,845 46,499,479 46.115,808 Deferred outflows of resources 1,549,467 1,194,749 1,247,851 - - Liabilities Non-current liabilities 29,466,305 29,866,622 27.611,536 20,098,829 20,731,060 Other liabilities 1,377,466 2,308,387 1,986,917 1,784,244 2,140,365 Total Liabilities 30,843,771 32,175,009 29,598,453 21,883,073 22,871,425 Deferred inflows of resources 58,750 - - - - Net Position Net investments in capital assets 29,633,298 32,048,991 21.177,426 14,866,299 14,188,516 Restricted 17,827,177 2,284,947 4,242,491 4,726,376 5,607,767 Unrestricted 7,108,101 {910,977) 6,637,624 5,023,731 3,448,100 Total Net Position $ 54,568,576 $ 33,422,961 $ 321.057,541 $ 24,616,406 $ 23,244,383 Source:Derived from the Issuer's Comprehensive Annual Financial Reports;please refer directly to such Reports for important Notes and more detailed information. 21 Table 11-Municipal Sales Tax History The Issuer has adopted the Municipal Sales and Use Tax Act, Texas Tax Code, Chapter 321, as amended, which grants the Issuer the power to impose and levy a 1%Local Sales and Use Tax within the boundaries of the Issuer; the proceeds are credited to the General Fund and are not pledged to the payment of the Certificates. Collection and enforcement are effected through the Office of the Comptroller of Public Accounts of the State of Texas, which remits the proceeds of the tax, after deduction of a 2% service fee, to the Issuer monthly. Revenue_from the 1% Local Sales and Use Tax,for the years shown,has been: Sales Tax Percentage Ad Valorem FYE Revenues- of Ad Valorem Tax Rate Breakdown of Sales Tax Collected 30-Sen Govfl.Funds til Tax Levy Equivalent Taxing Uni Tax Rate 2011(') $4,609,626 335.05% $0.5251 The Issuer(approximate allocation) 2012 $3,657,274 254.02% $0.3868 General Fund $0.0100 2013 $4,375,397 323.27% $0.4937 4B Economic Dev.Fund $0.0050 2014 $4,725,845 338.56% $0.0527 Property Tax Reduction $0.0050 2015 $4,925,428 352.86% $0.5348 State of Texas $0.0625 Total $0.0825 Source:the Issuer's audited financial statements. (1) Includes a substantial amount of one-time sales tax payments attributable to construction,furnishing and equipping of a 750,000 square foot campus on a 107-acre tract and known as Deloitte University. The campus,which cost$135 million, serves as a central training destination for Deloitte LLP employees. Investments The Issuer invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the Town Council of the Issuer. Both State law and the Issuer's investment policies are subject to change. Legal Investments. Available Town funds are invested as authorized by State law and in accordance with investment policies approved by the Town Council.Both State law and the Town's investment policies are subject to change.Under State law,the Town is authorized to invest in(1)obligations of the United States or its agencies and instrumentalities, including letters of credit; (2)direct obligations of the State or its agencies and instrumentalities; (3)collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations,the principal and interest of which is guaranteed or insured by or backed by the full faith and credit of, the State or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States; (5)obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent;(6)bonds issued, assumed or guaranteed by the State of Israel; (7)certificates of deposit and share certificates(i)issued by a depository institution that has its main office or a branch office in the State, that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in clauses(1)through(6)or in any other manner and amount provided by law for Town deposits,or(ii)where(a)the funds are invested by the Town through(1)a broker that has its main office or a branch office in the State and is selected from a list adopted,at least annually,by the Town as required by law or(Il) a depository institution that has its main office or a branch office in the State that is selected by the Town; (b)the broker or the depository institution selected by the Town 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 Town;(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 Town appoints the depository institution selected under (a) above, a custodian 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 Council and operating pursuant to Securities and Exchange Council Rule 156-3 (17 C.F.R. Section 240.15c3-3) as custodian for the Town with respect to the certificates of deposit; (8)fully collateralized repurchase agreements that have a defined termination date, are fully 22 secured by a combination of cash and obligations described in clause(1)which are pledged to the Town,held in the Town's name, and deposited at the time the investment is made with the Town or with a third party selected and approved by the Town and are placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in the State of Texas; (9) securities lending programs if(i) the securities loaned under the program are 100%collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either secured by(a)obligations that are described in clauses(1) through(6)above,(b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm at not less than A or its equivalent or(c) cash invested in obligations described in clauses(1)through(6) above, clauses (11)through(13) below, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the Town,held in the Town's name and deposited at the time the investment is made with the governmental body or a third party designated by the governmental body; (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, (10) certain bankers'acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency,(11)commercial paper with a stated maturity of 270 days or less that is rated at least A-1 or P-1 or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S.or state bank,(12) no-load money market mutual funds registered with and regulated by the Securities and exchange Commission that have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of$1 for each share, and (13) no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invest exclusively in obligations described in this paragraph,and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent.In addition,bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations, including letters of credit,of the United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract, other than the prohibited obligations described in the next succeeding paragraph. The Issuer may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAA-m or an equivalent by at least one nationally recognized rating service. The Issuer may contract for a term not to exceed two years with an investment management firm registered under the Investment Advisors Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or registered with the State Securities Board to provide for the investment and management of Issuer funds or finds under its control. The Issuer is also authorized to contract,for a term not to exceed seven years,for the purchase of investments with proceeds of taxes levied or to be levied to pay debt service on bonds,provided that the Issuer must solicit and receive bids from at least three separate providers and accept the qualifying bid that provides for the highest yield investments over the term of the contract and such contract may provide only for the purchase of an obligation described in clause(1),above. The Issuer is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal;(2)obligations whose payment represents the principal stream of cash flow from the underlying mortgage- backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. Investment Policies. Under Texas law,the Issuer is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for Issuer funds, maximum allowable stated maturity of any individual investment, the maximum dollar-weighted average maturity allowed for pooled fund groups,methods to monitor the market price of investments acquired with public funds,and requirement for settlement of all transactions,except investment pool funds and mutual funds,on a delivery versus payment basis. All Issuer funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each fund's investment. Each Investment Strategy Statement will 23 describe its objectives concerning: (1) suitability of investment type; (2) preservation and safety of principal, (3) liquidity,(4)marketability of each investment,(5)diversification of the portfolio,and(6)yield. Under Texas law,Issuer 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 Issuer shall submit to its governing body an investment report detailing: (1)the investment position of the Issuer,(2)that all investment officers jointly prepared and signed the report, (3) the beginning market value, the ending market value and the fully accrued interest during the reporting periodof each pooled fund group,and the fully accrued interest for the reporting period,(4)the book value and market value of each separately listed asset at the end of the reporting period; (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) State law. No person may invest Issuer funds without express written authority from its governing body. Additional Provisions. Under Texas law the Issuer is additionally required to: (1) annually review its adopted policies and strategies, (2) require any investment officers' with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and its governing body; (3) require the registered principal of firms seeking to sell securities to the Issuer or the registered principal of an investment management firm under contract with the Issuer to: (a) receive and review the Issuer's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude unauthorized investment activities, and (c) deliver a written statement attesting to these requirements; (4)perform an annual audit of the management controls on investments and investment officers; (5) provide specific investment training for the Treasurer, Chief Financial Officer, or other investment officers; (6) restrict reverse repurchase agreements to not more than 90 days; (7) restrict the investment of funds in any one mutual fund to an amount not greater than 10%of the total assets of such mutual fund;(8)restrict the investment in non-money market mutual funds in the aggregate to no more than 15% of the Issuer's monthly average fund balance,excluding bond proceeds and reserves and other funds held for debt service; (9)prohibit the investment in non-money market mutual funds of any portion of bond proceeds,reserves and funds held for debt service and; (10) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation,and advisory board requirements. The Issuer's current investment policy is in compliance with the State law requirements described above. Table 12-Status of Current Investments As of August 31,2016,the Issuer's investment portfolio, including its General Fund, Capital Projects Fund, Utility Fund, and other miscellaneous governmental, proprietary and component unit funds, was invested as follows (with no material difference between book and market values): Westlake Investment Description Issuer Academy 1) Total Bank Accounts(cash and cash equivalents) $ 15,626,265 $ 1,041,688 $ 16,667,953 TexPool 250 100 350 Total $ 15,626,515 $ 1,041,788 $ 16,668,303 Source: The Issuer's monthly statements and financial records,unaudited.See Comprehensive Annual Financial Report(Note 2, included herewith as APPENDIX B,for more investment information. (1)Represents investments of the Westlake Academy,a component unit of the Issuer, the balances and transactions of which are blended with the balances and transactions of the Issuer. Investments of other component units of the Issuer may also be blended with the Issuer or alternatively may be excluded and "discretely presented." See Note 1 to the Issuer's audited financial statements, beginning on page 33, included in its Comprehensive Annual Financial Report included herewith as APPENDIX B for more information regarding component units. 24 LEGAL MATTERS The Town will furnish to the Initial Purchaser a complete transcript of proceedings had incident to the authorization and issuance of the Certificates,including the unqualified approving legal opinion of the Attorney General of Texas approving the Certificates and to the effect that the Certificates are valid and legally binding obligations of the Town,and based upon examination of such transcript of proceedings,the approving legal opinion of Bond Counsel, to like effect,and to the effect that the interest on the Certificates will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations.The customary closing papers,including a certificate to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Certificates, or which would affect the provision made for their payment or security, or in any manner questioning the validity of the Certificates will also be furnished.Though it may represent the Financial Advisor and purchasers of bonds, such as the Initial Purchaser from time to time in matters unrelated to the issuance of the Certificates, Bond Counsel has been engaged by and only represents the Town in the issuance of the Certificates. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained herein, except that, in its capacity as Bond Counsel, such firm has reviewed the information describing the Certificates in the Official Statement to verify that such description conforms to the provisions of the Ordinance.The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Certificates is contingent on the sale and 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 from the transaction. TAX MATTERS Opinion On the date of initial delivery of the Certificates,McCall,Parkhurst&Horton L.L.P.,Dallas,Texas,Bond Counsel, will render its opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof("Existing Law"), (1) interest on the Certificates for federal income tax purposes will be excludable from the "gross income" of the holders thereof and(2)the Certificates will not be treated as "specified private activity bonds"the interest on which would be included as an alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). Except as stated above, Bond Counsel will express no opinion as to any other federal,state or local tax consequences of the purchase,ownership or disposition of the Certificates. See APPENDIX A,FORM OF OPINION OF BOND COUNSEL. In rendering its opinion, Bond Counsel will rely upon (a) certain information and representations of the Issuer, including information and representations contained in the District's federal tax certificate,and(b)covenants of the District contained in the Certificate documents relating to certain matters, including arbitrage and the use of the proceeds of the Certificates and the property financed therewith(the"Project.Failure by the District to observe the aforementioned representations or covenants could cause the interest on the Certificates to become taxable retroactively to the date of issuance. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the issuance of the Certificates in order for interest on the Certificates to be,and to remain,excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Certificates to be included in gross income retroactively to the date of issuance of the Certificates. The opinion of Bond Counsel is conditioned on compliance by the District with such requirements, and Bond Counsel has not been retained to monitor compliance with these requirements subsequent to the issuance of the Certificates. 25 Bond Counsel's opinion represents its legal judgment based upon its review of Existing Law and the reliance on the aforementioned information, representations and covenants. Bond Counsel's opinion is not a guarantee of a result. The Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that such Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase,ownership or disposition of the Certificates. A ruling was not sought from the Internal Revenue Service by the District with respect to the Certificates or the property financed or refinanced with proceeds of the Certificates. No assurances can be given as to whether the Internal Revenue Service will commence an audit of the Certificates,or as to whether the Internal Revenue Service would agree with the opinion of Bond Counsel. If an Internal Revenue Service audit is commenced,under current procedures the Internal Revenue Service is likely to treat the District as the taxpayer and the Certificateholders may have no right to participate in such procedure. No additional interest will be paid upon any determination of taxability. Federal Income Tax Accounting Treatment of Original Issue Discount The initial public offering price to be paid for one or more maturities of the Certificates (the "Original Issue Discount Certificates") may be less than the maturity amount thereof or one or more periods for the payment of interest on the Certificates may not be equal to the accrual period or be in excess of one year. In such event,the difference between(i)the "stated redemption price at maturity"of each Original Issue Discount Certificate,and(ii) the initial offering price to the public of such Original Issue Discount Certificate would constitute original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the Certificates less the amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods(or during any unequal period if it is the initial or final period) and which are made during accrual periods which do not exceed one year. Under Existing Law, any owner who has purchased such Original Issue Discount Certificate in the initial public offering is entitled to exclude from gross income (as defined in section 61 of the Code) an amount of income with respect to such Original Issue Discount Certificate equal to that portion of the amount of such original issue discount allocable to the accrual period. For a discussion of certain collateral federal tax consequences, see discussion set forth below. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Certificate prior to stated maturity,however,the amount realized by such owner in excess of the basis of such Original Issue 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 Original Issue Discount Certificate was held by such initial owner) is includable in gross income. Under Existing Law,the original issue discount on each Original Issue Discount Certificate is accrued daily to the stated maturity thereof(in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Certificates and ratably within each such six-month period)and the accrued amount is added to an initial owner's basis for such Original Issue Discount Certificate for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to(a)the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period)less(b)the amounts payable as current interest during such accrual period on such Original Issue Discount Certificate. The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Certificates which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Certificates should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption,sale or other disposition of such Original 26 Issue Discount Certificates and with respect to the federal,state,local and foreign tax consequences of the purchase, ownership,redemption,sale or other disposition of such Original Issue Discount Certificates. Collateral Federal Income Tax Consequences The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Certificates. This discussion is based on existing statutes, regulations, published rulings and court decisions,all of which are subject to change or modification,retroactively. The following discussion is applicable to investors, other than those who are subject to special provisions of the Code,such as financial institutions,property and casualty insurance companies,life insurance companies,individual recipients of Social Security or Railroad Retirement benefits,individuals allowed an earned income credit,certain S corporations with accumulated earnings and profits and excess passive investment income, foreign corporations subject to the branch profits tax, taxpayers qualifying for the health insurance premium assistance credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligations. THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE.INVESTORS,INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE CERTIFICATES. Interest on the Certificates will be includable as an adjustment for "adjusted current earnings" to calculate the alternative minimum tax imposed on corporations by section 55 of the Code. Under section 6012 of the Code, holders of tax-exempt obligations, such as the Certificates, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt obligation, such as the Certificates, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to,or exceeds,one year from the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the accrued market discount of such bonds; although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the "revised issue price" (i.e., the issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. State,Local and Foreign Taxes Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Certificates under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. Information Reporting and Backup Withholding Subject to certain exceptions, information reports describing interest income, including original issue discount, with respect to the Certificates will be sent to each registered holder and to the IRS. Payments of interest and principal may be subject to backup withholding under Section 3406 of the Code if a recipient of the payments fails to furnish to the payor such owner's social security number or other taxpayer identification number ("TIN"), furnishes an incorrect TIN, or otherwise fails to establish an exemption from the backup withholding tax. Any amounts so withheld would be allowed as a credit against the recipient's federal income tax. Special rules apply to partnerships, estates and trusts,and in certain circumstances,and in respect of Non-U.S.Holders,certifications as to foreign status and other matters may be required to be provided by partners and beneficiaries thereof. 27 Qualified Tax-Exempt Obligations for Financial Institutions Section 265(a) of the Code provides, in pertinent part, that interest paid or incurred by a taxpayer, including a "financial institution," on indebtedness incurred or continued to purchase or carry tax-exempt obligations is not deductible in determining the taxpayer's taxable income. Section 265(b) of the Code provides an exception to the disallowance of such deduction for any interest expense paid or incurred on indebtedness of a taxpayer that is a "financial institution"allocable to tax-exempt obligations,other than"private activity bonds,"that are designated by a "qualified small issuer" as "qualified tax-exempt obligations." A "qualified small issuer" is any governmental issuer (together with any "on-behalf of and "subordinate" issuers) who issues no more than $10,000,000 of tax- exempt obligations during the calendar year. Section 265(b)(5)of the Code defines the term"financial institution"as any "bank" described in Section 585(a)(2) of the Code, or any person accepting deposits from the public in the ordinary course of such person's trade or business that is subject to federal or state supervision as a financial institution.Notwithstanding the exception to the disallowance of the deduction of interest on indebtedness related to "qualified tax-exempt obligations" provided by Section 265(b) of the Code, Section 291 of the Code provides that the allowable deduction to a "bank," as defined in Section 585(a)(2) of the Code, for interest on indebtedness incurred or continued to purchase"qualified tax-exempt obligations" shall be reduced by twenty-percent(20%)as a "financial institution preference item." The District will designate the Certificates as "qualified tax-exempt obligations" within the meaning of section 265(b) of the Code. In furtherance of that designation, the District will covenant to take such action that would assure,or to refrain from such action that would adversely affect,the treatment of the Certificates as"qualified tax- exempt obligations." Potential purchasers should be aware that if the issue price to the public exceeds $10,000,000,there is a reasonable basis to conclude that the payment of a de minimis amount of premium in excess of$10,000,000 is disregarded; however,the Internal Revenue Service could take a contrary view.If the Internal Revenue Service takes the position that the amount of such premium is not disregarded, then such obligations might fail to satisfy the $10,000,000 limitation and the Certificates would not be "qualified tax- exempt obligations." Future and Proposed Legislation Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level,may adversely affect the tax-exempt status of interest on the Certificates under Federal or state law and could affect the market price or marketability of the Certificates.Any such proposal could limit the value of certain deductions and exclusions, including the exclusion for tax-exempt interest. The likelihood of any such proposal being enacted cannot be predicted. Prospective purchasers of the Certificates should consult their own tax advisors regarding the foregoing matters. RATING The Certificates have been rated"AAA"(stable outlook)by S&P Global Ratings("S&P"). Such rating reflects only the view of S&P. No application has been made at any other rating agency. The explanation of the significance of such rating may be obtained from S&P. There is no assurance that such rating will continue for any period of time or that such rating will not be revised or withdrawn. A revision or withdrawal of such rating may have a materially adverse effect on the market price of the Certificates. OTHER MATTERS Litigation Certificate In the opinion of Issuer officials,the Issuer is not a party to any litigation or other proceeding pending or to their knowledge threatened, in any court, agency or other administrative body (either state or federal)which, if decided adversely to the Issuer,would have a material adverse effect on the financial condition of the Issuer. At the time of the initial delivery of the Certificates,the Issuer will provide the Initial Purchaser with a certificate to the effect that except as disclosed in the Official Statement, no litigation of any nature has been filed or is then 28 pending challenging the issuance of the Certificates or that affects the payment and security of the Certificates or in any other manner questioning the issuance,sale or delivery of the Certificates. Legal Investments and Eligibility to Secure Public Funds in Texas Section 1201.041 of the Public Securities Procedures Act (Chapter 1201, Texas Government Code, as amended) 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, as amended, 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 "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 at least$1 million of capital,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. The Issuer has made no investigation of other laws, rules, regulations or investment criteria which might apply to such institutions or entities or which might limit the suitability of the Certificates for any of the foregoing purposes or limit the authority of such institutions or entities to purchase or invest in the Certificates for such purposes. The Issuer has made no review of laws in other states to determine whether the Certificates are legal investments for various institutions in those states. Financial Advisor Lawrence Financial Consulting LLC is retained as Financial Advisor to the Issuer to assist in the issuance of the Certificates. In this capacity, the Financial Advisor has compiled certain data relating to the Certificates that is contained in this Official Statement.The Financial Advisor has not independently verified any of the data contained herein or conducted a detailed investigation of the affairs of the Issuer to determine the accuracy or completeness of this Official Statement.Because of its limited participation,the Financial Advisor assumes no responsibility for the accuracy or completeness of any of the information contained herein. The fee of the Financial Advisor for services with respect to the Certificates is contingent upon the issuance and sale of the Certificates. The Financial Advisor 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 Issuer 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. Annual Financial Report The Issuer's Annual Financial Report, including its audited basic financial statements and related footnotes,for the year ended September 30,2015,is included as APPENDIX B to this Official Statement. 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 Issuer 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. 29 Sale of the Certificates After requesting competitive bids for the Certificates, the Town has accepted a bid tendered by (the "Initial Purchaser")to purchase the Certificates at the rates shown on page i of this Official Statement at a price of$ . No assurance can be given that any trading market will be developed for the Certificates after their initial sale by the Town. The Town has no control over the prices at which the Certificates will initially be reoffered to the public. Continuing Disclosure of Information In the Ordinance,the Issuer has made the following agreement for the benefit of the holders and beneficial owners of the Certificates. The Issuer is required to observe the agreement for so long as it remains an"obligated person" with respect to the Certificates,within the meaning of the Securities and Exchange Commission's Rule 15c2-12(the "Rule"). Under the agreement, the Issuer 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 (the"MSRB")through its Electronic Municipal Market Access("EMMA")system. Annual Reports. The Issuer will provide certain updated financial information and operating data to the MSRB annually. The information to be updated includes all quantitative financial information and operating data with respect to the Issuer of the general type included in this Official Statement under Tables numbered 1 through 12 and in APPENDIX B, which is the Issuer's annual audited financial report. The Issuer will update and provide the information in the numbered tables within six months after the end of each fiscal year ending in and after 2016 and, if not submitted as part of such annual financial information, the Town will provide audited financial statements when and if available, and in any event, within 12 months after the end of each fiscal year. If the audit of such financial statements is not complete within 12 months after any such fiscal year end, then the Issuer will file unaudited financial statements by the required time and audited financial statements for the applicable fiscal year, when and if the audit report on such statements becomes available.Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the Issuer may be required to employ from time to time pursuant to State law or regulation. The Issuer's current fiscal year end is September 30. Accordingly, the Issuer must provide updated information included in the above-referenced tables by the last day of March in each year, and audited financial statements for the preceding fiscal year(or unaudited financial information if the audited financial statements are not yet available) must be provided by September 30 in each year, unless the Issuer changes its fiscal year. If the Issuer changes its fiscal year, it will file notice of the change(and of the date of the new fiscal year end)with the MSRB prior to the next date by which the Issuer otherwise would be required to provide financial information and operating data as set forth above. All financial information,operating data,financial statements and notices required to be provided to the MSRB shall be provided in an electronic format and be accompanied by identifying information prescribed by the MSRB. Financial information and operating data to be provided as set forth above may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document) available to the public on the MSRB's Internet Web site or filed with the Securities and Exchange Commission(the"SEC"),as permitted by the Rule. Event Notices. The Issuer will also provide notices of certain events to the MSRB. The Issuer will provide notice of any of the following events with respect to the Certificates to the MSRB in a timely manner and not more than 10 business days after 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 payment of the Certificates, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership, or similar event of the 30 Issuer, which shall occur as described below; (13) the consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of its assets,other than in the ordinary course of business, the entry into of a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. For these purposes, any event described in the immediately preceding paragraph(12)is considered to occur when any of the following occur:the appointment of a receiver,fiscal agent,or similar officer for the Issuer 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 Issuer,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 Issuer. Neither the Certificates nor the Ordinance make any provision for debt service reserves, credit enhancement,or liquidity enhancement.In addition,the Issuer will provide timely notice of any failure by the Issuer to provide information, data, or financial statements in accordance with its agreement described above under "Annual Reports".The Issuer will provide each notice described in this paragraph to the MSRB. Availability of Information. The Town has agreed to provide the foregoing information only as described above. Investors will be able to access continuing disclosure information filed with the MSRB free of charge at www.emma.msrb.org.. Limitations and Amendments.The Issuer has agreed to update information and to provide notices of events only as described above. The Issuer 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 Issuer makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Certificates at any future date. The Issuer 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 Issuer to comply with its agreement. The Issuer 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 Issuer, 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 Issuer (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the registered owners of the Certificates. The Issuer 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 Issuer 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 Issuer has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. Certification of Official Statement At the time of payment for and delivery of the Certificates,the Town will furnish a certificate,executed by a proper officer, acting in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or pertaining to the Town contained in this Official Statement, and any addenda, supplement or amendment thereto,on the date of such Official Statement,on the acceptance of the best bid therefor, and on the date of the delivery,were and are true and correct in all material respects; (b)insofar as the Town and its 31 affairs, including its financial affairs, are concerned,the Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect;(c)insofar as the descriptions and statements,including financial data,of or pertaining to entities,other than the Town,and their activities contained in this Official Statement are concerned,such statements and data have been obtained from sources which the Town believes to be reliable and the Town 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 Town since the date of the last audited financial statements of the Town. Forward-Looking Statements Disclaimer The statements contained in this Official Statement,and in any other information provided by the Issuer,that are not purely historical, are forward-looking statements, including statements regarding the Issuer'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 Issuer on the date hereof, and the Issuer assumes no obligation to update any such forward-looking statements. The Issuer's actual results could differ materially from those discussed in such forward-looking statements. The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative,judicial, and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Issuer. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Official Statement will prove to be accurate. Conclusion No person has been authorized 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 Issuer.This Official Statement does not constitute an offer to sell or solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer of solicitation. The information set forth herein has been obtained from the Issuer's records, audited financial statements and other sources which the Issuer considers to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will ever be realized.All of the summaries of the statutes,documents and the Ordinance contained in this Official Statement are made subject to all of the provisions of such statutes, documents, and the Ordinance. These summaries do not purport to be complete statements of such provisions and reference is made to such summarized documents for further information. Reference is made to official documents in all respects. The Ordinance authorizing the issuance of the Certificates will approve the form and content of this Official Statement,and any addenda,supplement or amendment thereto,and will authorize its further use in the reoffering of the Certificates by the Initial Purchaser. TOWN OF WESTLAKE,TEXAS Mayor Town Clerk 32 APPENDIX A-FORM OF BOND COUNSEL OPINION A- 1 LAW OFFICES M-CALL, PARKHURST & HORTON L.L.P. 600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N.ST.MARY'S STREET 1800 ONE AMERICAN CENTER NINTH FLOOR 1525 ONE RIVERWALK PLACE AUSTIN,TEXAS 78701-3248 DALLAS,TEXAS 75201-6587 SAN ANTONIO,TEXAS 78205-3503 TELEPHONE:512 478-3805 TELEPHONE:214 754.9200 TELEPHONE:210225-2800 FACSIMILE:512 472-0871 FACSIMILE:214 754-9250 FACSIMILE:210 225-2984 Proposed Form of Opinion of Bond Counsel An opinion in substantially the following form will be delivered by McCall, Parkhurst&Horton L.L.P., Bond Counsel, upon the delivery of the Certificates of Obligation, assuming no material changes in facts or law. TOWN OF WESTLAKE,TEXAS COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION,SERIES 2016 IN THE AGGREGATE PRINCIPAL AMOUNT OF$ AS BOND COUNSEL FOR THE TOWN OF WESTLAKE,TEXAS (the"Issuer") in connection with the issuance of the Issuer's Combination Tax and Limited Surplus Revenue Certificates of Obligation, Series 2016, described above (the "Certificates of Obligation"), we have examined into the legality and validity of the Certificates of Obligation,which bear interest from the date and mature on the dates,and are subject to redemption,in accordance with the terms and conditions stated in the text of the Certificates of Obligation. Terms used herein and not otherwise defined shall have the meaning given in the ordinance of the Issuer authorizing the issuance and sale of the Certificates of Obligation(the"Ordinance"). WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of the State of Texas,a transcript of certified proceedings of the Issuer,and other pertinent instruments authorizing and relating to the issuance of the Certificates of Obligation, including one of the executed Certificates of Obligation(Certificate of Obligation Number T-1). BASED ON SAID EXAMINATION,IT IS OUR OPINION that the Certificates of Obligation have been duly authorized,issued,and delivered in accordance with law; and that the Certificates of Obligation, except as may be limited by laws applicable to the Issuer relating to govermental immunity,bankruptcy, reorganization and other similar matters affecting creditors'rights generally or by general principles of equity which permit the exercise of judicial discretion,constitute valid and legally binding obligations of the Issuer; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of said Certificates of Obligation have been levied and pledged for such purpose,within the limit prescribed by law, and that the Certificates of Obligation are additionally secured by and payable from surplus revenues of the Issuer's waterworks and sewer system,remaining after payment of all operation and maintenance expenses thereof,and all debt service,reserve, and other requirements in connection with all of the Issuer's revenue bonds or other obligations(now or hereafter outstanding),which are payable from all or any part of the net revenues of the Issuer's waterworks and sewer system,as provided in the Ordinance. IT IS FURTHER OUR OPINION,except as discussed below,that the interest on the Certificates of Obligation is excludable from the gross income of the owners for federal income tax purposes under the statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We are further of the opinion that the Certificates of Obligation are not"specified private activity bonds" and that, accordingly, interest on the Certificates of Obligation will not be included as an individual or corporate alternative minimum tax preference item under section 57(a)(5)of the Internal Revenue Code of 1986 (the "Code"). In expressing the aforementioned opinions,we have relied on,certain representations,the accuracy of which we have not independently verified,and assume compliance with certain covenants,regarding the use and investment of the proceeds of the Certificates of Obligation and the use of the property financed therewith. We call your attention to the fact that if such representations are determined to be inaccurate or upon a failure by the Issuer to comply with such covenants,interest on the Certificates of Obligation may become includable in gross income retroactively to the date of issuance of the Certificates of Obligation. EXCEPT AS STATED ABOVE,we express no opinion as to any other federal, state, or local tax consequences of acquiring,carrying,owning,or disposing of the Certificates of Obligation. WE CALL YOUR ATTENTION TO THE FACT that the interest on tax-exempt obligations,such as the Certificates of Obligation, is included in a corporation's alternative minimum taxable income for purposes of determining the alternative minimum tax imposed on corporations by section 55 of the Code. WE EXPRESS NO OPINION as to any insurance policies issued with respect to the payments due for the principal of and interest on the Certificates,nor as to any such insurance policies issued in the future. 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 (the "Service"); rather, such opinions represent our legal judgment based upon our review of existing law and in reliance upon the representations and covenants referenced above that we deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes.No assurance can be given whether or not the Service will commence an audit of the Certificates. If an audit is commenced,in accordance with its current published procedures the Service is likely to treat the Issuer as the taxpayer. We observe that the Issuer has covenanted not to take any action, or omit to take any action within its control, that if taken or omitted,respectively,may result in the treatment of interest on the Certificates as includable in gross income for federal income tax purposes. OUR SOLE ENGAGEMENT in connection with the issuance of the Certificates is as Bond Counsel for the Issuer,and,in that capacity,we have been engaged by the Issuer for the sole purpose of rendering our opinions with respect to the legality and validity of the Certificates under the Constitution and laws of the State of Texas, and with respect to the exclusion from gross income of the interest on the Certificates for federal income tax purposes,and for no other reason or purpose. The foregoing opinions represent our legal judgment based upon a review of existing legal authorities that we deem relevant to render such opinions and are not a guarantee of a result. We have not been requested to investigate or verify, and have not independently investigated or verified,any records,data,or other material relating to the financial condition or capabilities of the Issuer,or the disclosure thereof in connection with the sale of the Certificates,and have not assumed any responsibility with respect thereto. We express no opinion and make no comment with respect to the marketability of the Certificates and have relied solely on certificates executed by officials of the Issuer as to the current outstanding indebtedness of,and assessed valuation of taxable property within, and the sufficiency of the pledged revenues of,the Issuer. 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. Respectfully, OFFICIAL STATEMENT DATED DECEMBER 5,2016 NEW ISSUE: Book-Entry-Only RATING:S&P"AAA"(stable outlook) (See "Rating"herein) In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for federal income tax purposes under statutes,regulations,published rulings and court decisions existing on the date thereof,subject to the matters described under "TAX MA7TERS"herein,including the alternative minimum tax on corporations. The Issuer has designated the Certificates as"qualified tax-exempt obligations"for financial institutions. $9,180,000 Town of Westlake (Tarrant and Denton Counties,Texas) Combination Tax and Revenue Certificates of Obligation,Series 2016 Dated:December 1,2016 Due: February 15,as shown below (Interest accrues from date of delivery) The Town of Westlake,Texas,Combination Tax and Revenue Certificates of Obligation,Series 2016(the"Certificates") are authorized and issued in accordance with the Constitution and laws of the State of Texas, including Chapter 271, Subchapter C, Texas Local Government Code, as amended, and an ordinance (the "Ordinance") adopted by the Town Council of the Town of Westlake,Texas(the"Issuer"), and constitute direct obligations of the Issuer, payable from an annual ad valorem tax,levied upon all taxable property within the Issuer,within the limits prescribed by law, sufficient to provide for the payment of principal and interest due on the Certificates, as provided in the Ordinance. Additionally, the Certificates are secured by and payable from a limited pledge of $1,000 of the net revenues of the Issuer's waterworks and sewer system,remaining after payment of all operation and maintenance expenses thereof,and all debt service,reserve,and other requirements in connection with all of the Issuer's revenue bonds or other obligations(now or hereafter outstanding), which are payable from all or any part of the net revenues of the Issuer's waterworks and sewer system(the"Revenues").See"DESCRIPTION OF THE CERTIFICATES—Security for the Certificates"herein. The Certificates are initially issuable only to Cede & Co.,the nominee of The Depository Trust Company,New York, New York("DTC"),pursuant to the book-entry system described herein. Beneficial ownership of the Certificates may be acquired in denominations of$5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the purchasers thereof. Principal of and interest on the Certificates will be payable to Cede&Co.,which will make distributions of the amounts so paid to the participating members of DTC for subsequent remittance to the owners of beneficial interests in the Certificates. Such book-entry-only system will affect the method and timing of payment and the method of transfer for the Certificates. Interest on the Certificates will be payable on February 15 and August 15 of each year,commencing August 15,2017,until maturity or prior redemption. Principal of the Certificates will be payable at maturity or prior redemption. The initial Paying Agent/Registrar for the Certificates is U.S. Bank National Association. The Certificates maturing or subject to mandatory sinking fund redemption on and after February 15,2027 are subject to redemption at the option of the Issuer, in principal amounts of$5,000 or integral multiples thereof, on February 15, 2026 or any date thereafter, at the price of the principal amount so called for redemption plus accrued interest thereon to the redemption date. See"DESCRIPTION OF THE CERTIFICATES"herein. Proceeds of the Certificates are expected to be used to pay for(i)acquiring, constructing, installing and equipping fire- fighting facilities; and (ii) legal, fiscal and engineering fees in connection with such projects. See "PLAN OF FINANCING"herein. CUSIP PREFIX:96048P/MATURITY SCHEDULE&9-DIGIT CUSIP—See inside cover The Certificates are offered when, as and if issued, subject to approval of legality by the Attorney General of the State of Texas and the approval of certain legal matters by McCall,Parkhurst&Horton L.L.P.,Dallas, Texas,Bond Counsel.Definitive Certificates are expected to be available for delivery on December 22,2016,through the facilities of The Depository Trust Company,New York,NY. FTN Financial Capital Markets CUSIP Prefix:96048P(') MATURITY SCHEDULE $2,125,000 Serial Certificates-Interest accrues from the date of delivery Maturity Principal Interest Initial CUSIP Feb 15 Amount Rate Yield Suffix') 2018 $ 200,000 3.00% 1.15% FF8 2019 205,000 3.00% 1.45% FG6 2020 210,000 3.00% 1.55% FH4 2021 215,000 3.00% 1.70% FJO 2022 225,000 3.00% 1.85% FK7 2023 230,000 3.00% 2.00% FL5 2024 235,000 3.00% 2.10% FM3 2025 245,000 3.00% 2.20% FNl 2038(2)(3) 360,000 4.00% 3.25% FQ4 $7,055,000 Term Bonds-Interest accrues from the date of delivery $3,575,000 3.00%Term Certificates due February 15,2037(2)—Priced at 100%,CUSIP Suffix(":FP6 $765,000 4.00%Term Certificates due February 15,204012)(3)—Priced to Yield 3.35%,CUSIP Suffix('):FR2 $835,000 4.00%Term Certificates due February 15,2042(2)(3)—Priced to Yield 3.45%,CUSIP Suffix('):FSO $900,000 4.00%Term Certificates due February 15,2044(2)")—Priced to Yield 3.50%,CUSIP Suffix('):FT8 $980,000 4.00%Term Certificates due February 15,2046(21(3)—Priced to Yield 3.60%,CUSIP Suffix('):FU5 (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard&Poor's Financial Services LLC 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. Neither the Issuer, the Financial Advisor nor the Initial Purchaser takes any responsibility for the selection or correctness of the CUSIP numbers set forth herein. (2) The Issuer reserves the right, at its option, to redeem Certificates maturing or subject to mandatory sinking fund redemption on and after February 15, 2027, in whole or in part in principal amounts of$5,000 or any integral multiple thereof, on February 15, 2026, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. If less than all of the Certificates within a maturity are to be redeemed, the Paying Agent/Registrar shall determine by lot the Certificates, or portions thereof, within such maturity to be redeemed. See "DESCRIPTION OF THE CERTIFICATES-Optional Redemption." (3) For Certificates maturing on February 15 2038 through February 15, 2046, the yield shown is the yield to the first call date, February 15, 2026 i TOWN OF WESTLAKE 1301 Solana Blvd.,Building 4,Suite 4202 Westlake,Texas 76262 (817)430-0941 ELECTED OFFICIALS Term Expires Term Town Council (May) Occupation Inception Laura Wheat,Mayor 2018 Community Service 2008 Carol Langdon,Mayor pro-tem,Member 2017 Retired,Marketing 2008 Michael Barrett,Member 2018 Sr.Executive,Financial Services 2012 Alesa Belvedere,Member 2018 Realtor 2014 Rick Rennhack,Member 2017 Consultant 2009 Wayne Stoltenberg,Member 2017 Senior VP,CFO,Cinco Resources,Inc. 2013 APPOINTED AND OTHER TOWN OFFICIALS Name Title Years with Town Thomas E.Brymer Town Manager 9 Debbie Piper Finance Director 14 Kelly Edwards Town Secretary 7 CONSULTANTS AND ADVISORS Name Title Weaver and Tidwell,L.L.P. Auditor Dallas,Texas McCall,Parkhurst&Horton L.L.P. Bond Counsel Dallas,Texas Lawrence Financial Consulting LLC Financial Advisor Austin,Texas ii USE OF INFORMATION IN OFFICIAL STATEMENT No dealer,broker, salesman or other person has been authorized to give any information or 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 Issuer or any other person. This Official Statement does not constitute an offer to sell or solicitation of an offer to buy,and there shall not be any sale of,the Certificates in any state in which it is unlawful to make such offer,solicitation or sale. The information and expressions of opinion contained herein have been obtained from the Issuer and other sources that are believed to be reliable,but the accuracy and completeness of information obtained from sources other than the Issuer cannot be guaranteed. The information and expressions of opinion contained herein are subject to change without notice,and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer or other matters described herein since the date hereof. See "OTHER MATTERS - Continuing Disclosure of Information" herein for a description of the Issuer's agreement to update certain information contained in this Official Statement. The prices and other terms respecting the offering and sale of the Certificates may be changed from time to time by the initial purchaser(s) of the Certificates after the Certificates are released for sale, and the Certificates may be offered and sold at prices other than the initial offering prices,including to dealers who may sell the Certificates into investment accounts. NEITHER THE ISSUER, ITS FINANCIAL ADVISOR NOR THE INITIAL PURCHASER MAKES 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 HEREIN. 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 ASA RECOMMENDATION THEREOF. IN CONNECTION WITH THIS OFFERING, THE INITIAL PURCHASER MAY OVER-ALLOT OR EFFECT TRANSACTIONS-WHICH STABILIZE THE MARKET PRICE 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. iii TABLE OF CONTENTS SUMMARYSTATEMENT................................................................................................................................................................v INTRODUCTION...............................................................................................................................................................................1 PLANOF FINANCING......................................................................................................................................................................1 Purposeof the Certificates.................................................................................................................................................................l Sourcesand Uses of Funds................................................................................................................................................................1 DESCRIPTION OF THE CERTIFICATES.....................................................................................................................................2 General..............................................................................................................................................................................................2 Book-Entry-Only System..................................................................................................................................................................2 Authorityfor Issuance.......................................................................................................................................................................4 Securityand Source of Payment........................................................................................................................................................4 Noticeof Redemption........................................................................................................................................................................6 PayingAgent/Registrar......................................................................................................................................................................6 Transferand Exchange......................................................................................................................................................................7 ReplacementCertificates...................................................................................................................................................................7 Amendmentsto the Ordinance..........................................................................................................................................................7 Certificateholders'Remedies.............................................................................................................................................................9 ISSUER DEBT AND AD VALOREM TAX INFORMATION.....................................................................................................10 Table 1 -Current Appraised Valuation,Exemptions and Tax Supported Debt...............................................................................10 Table 2-Appraised Valuation and Exemptions by Category..........................................................................................................l 1 Table 3—Tax Rates,Levies,Collections and Ratios.......................................................................................................................12 Table4-Ten Largest Taxpayers.....................................................................................................................................................13 EstimatedOverlapping Debt............................................................................................................................................................13 Table 5-Debt Service Requirements..............................................................................................................................................14 Table 6-Authorized But Unissued Tax Bonds...............................................................................................................................15 Table7-Other Obligations.............................................................................................................................................................15 Table8—Tax Adequacy..................................................................................................................................................................15 PropertyTax Code...........................................................................................................................................................................15 OTHERFINANCIAL INFORMATION.........................................................................................................................................19 Table 9-General Operating Fund Summary Revenues and Expenditures......................................................................................19 Table9A—Changes in Net Position................................................................................................................................................20 Table 10-General Fund Summary Balance Sheet..........................................................................................................................21 Table l0A—Consolidated Statement of Net Position.....................................................................................................................21 Investments......................................................................................................................................................................................22 Table 12-Status of Current Investments........................................................................................................................................24 LEGALMATTERS...........................................................................................................................................................................25 TAXMATTERS................................................................................................................................................................................25 Opinion............................................................................................................................................................................................25 Federal Income Tax Accounting Treatment of Original Issue Discount.........................................................................................26 Collateral Federal Income Tax Consequences.................................................................................................................................27 State,Local and Foreign Taxes........................................................................................................................................................27 Information Reporting and Backup Withholding............................................................................................................................27 Qualified Tax-Exempt Obligations for Financial Institutions..........................................................................................................28 Futureand Proposed Legislation.....................................................................................................................................................28 RATING.............................................................................................................................................................................................28 OTHERMATTERS..........................................................................................................................................................................28 LitigationCertificate........................................................................................................................................................................28 Legal Investments and Eligibility to Secure Public Funds in Texas................................................................................................29 FinancialAdvisor............................................................................................................................................................................29 AnnualFinancial Report..................................................................................................................................................................29 Registration and Qualification of Certificates for Sale....................................................................................................................29 Saleof the Certificates.....................................................................................................................................................................30 Continuing Disclosure of Information.............................................................................................................................................30 Certification of Official Statement..................................................................................................................................................31 Forward-Looking Statements Disclaimer........................................................................................................................................32 Conclusion.......................................................................................................................................................................................32 APPENDIX A-FORM OF BOND COUNSEL OPINION.............................................................................................................A APPENDIX B—COMPREHENSIVE ANNUAL FINANCIAL REPORTS..................................................................................B APPENDIX C-GENERAL INFORMATION REGARDING THE ISSUER..............................................................................C iv SUMMARY STATEMENT This summary statement is subject in all respects to the more complete information and to the 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, including the cover page and all appendices. No person is authorized to detach this summary statement from this Official Statement or to otherwise use it without the entire Official Statement. The Issuer The Town of Westlake,located in Tarrant and Denton Counties,Texas(the"Issuer"),was incorporated in 1956 and operates as a "Type A general law city" under the laws of the State of Texas. See APPENDIX C, "GENERAL INFORMATION REGARDING THE ISSUER." The Certificates The Certificates are being issued in the aggregate principal amount set forth on the cover page pursuant to the laws of the State of Texas, particularly Chapter 271, Subchapter C, Texas Local Government Code, as amended, and an ordinance adopted by the Town Council of the Issuer(the "Certificate Ordinance" or"Ordinance"). The Certificates are subject to redemption at the option of the Issuer prior to maturity on and after February 15,2026. See"DESCRIPTION OF THE CERTIFICATES—Optional Redemption." Security The Certificates constitute direct obligations of the Issuer, payable from a continuing annual ad valorem tax levied upon all taxable property located within the Issuer, within the limitations prescribed by law. The Certificate Ordinance irrevocably pledges such ad valorem taxes in an amount sufficient to provide for the payment of the Certificates while they remain outstanding. Additionally, the Certificates are secured by and payable from a limited pledge $1,000 of the net revenues of the Issuer's waterworks and sewer system remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve, and other requirements in connection with all of the Issuer's revenue bonds or other obligations (now or hereafter outstanding), which are payable from all or any part of the net revenues of the Issuer's waterworks and sewer system(the"Revenues"). See"DESCRIPTION OF THE CERTIFICATES-Security." Tax Matters In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for purposes of federal income taxation under statutes, regulations,published rulings and court decisions existing on the date thereof, subject to the matters described under"TAX MATTERS" herein, including the alternative minimum tax on corporations.The Issuer has designated the Certificates as"qualified tax-exempt obligations"for financial institutions. Summary of Key Analytical Data General Fund Equity Balance as of 09/30/2015 $ 7,680,550 Estimated Population of the Issuer 1,200 Net Taxable Assessed Valuation(TAV)for Fiscal Year 2016-17 $1,105,075,652 TAV per capita $ 920,896.38 Gross Ad Valorem Tax Debt as of 09/30/2016,plus the Certificates $ 36,322,000 Ratio of Gross Ad Valorem Tax Debt to TAV 3.29% Gross Ad Valorem Tax Debt per capita $ 30,268.33 Net Ad Valorem Tax Debt as of 09/30/2016"' $ 1,627,000 Ratio of Net Ad Valorem Tax Debt to TAV(') 0.15% Net Ad Valorem Tax Debt per capita") $ 1,355.83 Sources:Tarrant and Denton Central Appraisal Districts,the Issuer's audited financial statements,and U.S.Census Bureau. (1)Although all of the Issuer's ad valorem tax debt is secured by a pledge of its ad valorem tax,it is currently paying only a minor portion of such debt from its ad valorem tax and the remainder from other available sources.See "ISSUER DEBTAND AD VALOREM TAX INFORMATION" v OFFICIAL STATEMENT relating to $9,180,000 Town of Westlake (Tarrant and Denton Counties,Texas) Combination Tax and Revenue Certificates of Obligation,Series 2016 INTRODUCTION This Official Statement provides certain information in connection with the issuance by the Town of Westlake, Texas (the "Issuer" or"Town") of its Combination Tax and Revenue Certificates of Obligation, Series 2016 (the "Certificates"). Capitalized terms used herein have the same meanings assigned to such terms in the Certificate Ordinance(the"Ordinance"). There follows in this Official Statement descriptions of the plan of financing, the Certificates and certain information about the Issuer 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 Issuer. PLAN OF FINANCING Purpose of the Certificates Proceeds of the Certificates will be used to pay for(i)acquiring,constructing, installing and equipping fire-fighting facilities;and(ii)legal,fiscal and engineering fees in connection with such projects. Sources and Uses of Funds The following is a summary of the anticipated sources and uses of proceeds of funds(excluding accrued interest)in connection with the issuance of the Certificates: Sources of Funds Principal Amount of Certificates $ 9,180,000.00 Original Issue Premium 246,750.40 Total Sources $ 9,426,750.40 Uses of Funds Deposit to Construction Fund $ 9,200,000.00 Underwriting Discount 142,314.33 Issuance Costs 81,113.55 Estimated Rounding Amount 3,322.52 Total Uses $ 9,426,750.40 1 DESCRIPTION OF THE CERTIFICATES General The Certificates are dated December 1,2016. Interest on the Certificates,at the rates set forth on page i hereof,will accrue from the date of their initial delivery and will be payable semiannually on February 15 and August 15 of each year,commencing August 15,2017,until maturity or prior redemption. The Certificates are stated to mature on February 15 in the years and in the principal amounts set forth on page i following the cover page hereof. The Certificates will be initially issued utilizing the Book-Entry-Only System of The Depository Trust Company("DTC"), and will be in fully registered form, payable to Cede& Co., as nominee for DTC. See "Book-Entry-Only System" below. The Certificates are issued only as fully registered obligations in the denomination of$5,000 principal amounts or any integral multiple thereof(an "Authorized Denomination"), within a stated maturity and of like interest rate. Principal and redemption price of the Certificates is payable on the maturity or redemption date upon surrender at the corporate trust office of U.S.Bank National Association(the"Paying Agent/Registrar");provided,however,that so long as the Certificates are in book-entry-only form and are registered in the name of Cede&Co.,as nominee for DTC, payment of the principal of and interest on the Certificates will be made to the beneficial owners thereof as described below under "Book-Entry-Only System." . Interest on the Certificates payable on any interest payment date shall be paid to the owner (the "Owner") whose name appears in the registration books of the Paying Agent/Registrar (the "Register") at the close of business on the Record Date (the last business day of the month immediately preceding an interest payment date) and shall be paid by the Paying Agent/Registrar by check sent United States mail,first class,postage prepaid,to the address of the Owner recorded in the Register or by such other method,acceptable to the Paying Agent/Registrar,requested by,and at the risk and expense of,the Owner. In the event of a non-payment of interest on a scheduled payment date with respect to the Certificates,that remains unpaid for 30 days thereafter,the Ordinance requires the Paying Agent/Registrar to establish a Special Record Date, if and when funds for the payment of such interest are received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest(the "Special Payment Date" that 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 Owner of a Certificate appearing on the 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. If the date specified for the payment of the principal of or interest on the Certificates is a Saturday, Sunday, legal holiday or day on which banking institutions in the city where the Paying Agent/Registrar is located are authorized or required to be closed, then such payment will be made on the next succeeding day which is not one of the foregoing days, without additional interest and with the same force and effect as if made on the specified date for such payment. Book-Entry-Only System This section describes how ownership of the Certificates are to be transferred and how the principal of,premium, if any, and interest on the Certificates are to be paid to and credited by The Depository Trust Company("DTC'), New York, New York, while the Certificates are registered in its nominee name. The information in this section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this Oficial Statement. The Issuer believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The Issuer cannot and does not give any assurance that (1) DTC will distribute payment 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 Oficial 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. 2 DTC will act as securities depository for the Certificates.The Certificates will be issued as fully-registered securities registered in the name of Cede&Co. (DTC's partnership nominee)or such other name as may be requested by an authorized representative of DTC.One fully registered certificate will be issued for each maturity of the Certificates, in the aggregate principal amount of each 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 Standard&Poor's rating of"AA+"The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission.More information about DTC can be found at 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 Indirect Participants acting on behalf of Beneficial Owners.Beneficial Owners will not receive certificates representing their ownership interests in the 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 Paying Agent/Registrar and request that copies of notices be provided directly to them. 3 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 the 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 Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede&Co.'s consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited on the record date(identified in a listing attached to the Omnibus Proxy). Redemption proceeds and principal and interest 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 Issuer or the Paying Agent/Registrar, on payable dates in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as in the case with securities held for the accounts of customers in bearer form or registered in"street name," and will be the responsibility of such Participant and not of DTC,the Paying Agent or the Issuer,subject to any statutory or regulatory requirements as may be in effect from time to time.Payment of redemption proceeds and principal and interest to Cede&Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer 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. A Beneficial Owner shall give notice to elect to have its Certificates purchased or tendered,through its Participant, to the Tender Agent, and shall effect delivery of such Certificates by causing the Direct Participant to transfer the Participant's interest in the Certificates, on DTC's records, to the Tender Agent. The requirement for physical delivery of Certificates in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Certificates are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Certificates to the Tender Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Certificates at any time by giving reasonable notice to the Issuer or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained,the Certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository).In that event,the Certificates will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Issuer believes to be reliable,but the Issuer takes not responsibility for the accuracy thereof. Authority for Issuance The Certificates are authorized and issued pursuant to the Constitution and general laws of the State of Texas, including particularly Chapter 271,Subchapter C,Texas Local Government Code,as amended,and the Ordinance. Security and Source of Payment The Certificates will constitute direct obligations of the Issuer, payable from ad valorem taxes levied against all taxable property located within the Issuer, within the limitations prescribed by law. The Ordinance irrevocably pledges such ad valorem taxes to the payment of the principal of and interest on the Certificates while they remain outstanding. See"ISSUER DEBT AND AD VALOREM TAX INFORMATION"herein. The Constitution of the State of Texas provides that the ad valorem tax levied by the Issuer for general purposes and for the purpose of paying debt service requirements of the Issuer's general obligation debt shall not exceed$1.50 for each $100 of assessed valuation of taxable property. There is no limitation within the $1.50 rate for interest and sinking fund purposes. Administratively, however, the Attorney General of the State of Texas will not permit 4 allocation of more than$1.00 of the$1.50 maximum tax rate for all tax supported debt based on a 90%collection rate. Additionally,the Certificates are secured by and payable from a limited pledge of$1,000 of the net revenues of the Issuer's waterworks and sewer system remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve, and other requirements in connection with all of the Issuer's revenue bonds or other obligations(now or hereafter outstanding),which are payable from all or any part of the net revenues of the Issuer's waterworks and sewer system(the"Revenues"). FYE Sept.30 2015 2014 2013 Utility Fund Operating Revenues $3,549,775 $3,428,702 $3,382,327 Utility Fund Operating Expenses 4,065,926 2,921,066 2,646,505 Utility Fund Operating Income("Revenues") x(516 151 5 7 636 7 5 822 Source:Issuer's Comprehensive Annual Financial Reports for the fiscal years indicated. Notwithstanding the requirements of the Ordinance to levy and collect an ad valorem tax to pay debt service on the Certificates, if Revenues or other lawfully available moneys of the Issuer are actually on deposit in the Interest and Sinking Fund in advance of the time when ad valorem taxes are scheduled to be levied for any year,then the amount of taxes that otherwise would have been required to be levied may be reduced to the extent and by the amount of the Revenues or other lawfully available funds then on deposit in the Interest and Sinking Fund. Optional Redemption The Issuer reserves the right, at its option, to redeem Certificates maturing or subject to mandatory sinking fund redemption on and after February 15, 2027, in whole or in part in principal amounts of$5,000 or any integral multiple thereof, on February 15, 2026, or any date thereafter, at the par value thereof plus accrued interest to the date fixed for redemption. If less than all of the Certificates within a maturity are to be redeemed, the Paying Agent/Registrar shall determine by lot the Certificates,or portions thereof,within such maturity to be redeemed. Mandatory Sinking Fund Redemption The Certificates maturing on February 15 in the years indicated in the following schedule(the"Terns Certificates") shall be subject to mandatory redemption in part prior to maturity at the redemption price of par and accrued interest to the date of redemption on the dates and in the respective principal amounts,set forth in the following schedule: Term Certificate Maturity February 15,2037 Term Certificate Maturity February 15,2040 Term Certificate Maturity February 15,2042 Redemption Date Amount Redemption Date Amount Redemption Date Amount 2/15/2026 $250,000 2/15/2039 $375,000 2/15/2041 $410,000 2/15/2027 260,000 2/15/2040(maturity) 390,000 2/15/2042(maturity) 425,000 2/15/2028 265,000 2/15/2029 275,000 Term Certificate Maturity February 15,2044 Term Certificate Maturity February 15,2046 2/15/2030 285,000 Redemption Date Amount Redemption Date Amount 2/15/2031 290,000 2/15/2043 $440,000 2/15/2045 $480,000 2/15/2032 300,000 2/15/2044(maturity) 460,000 2/15/2046(maturity) 500,000 2/15/2033 310,000 2/15/2034 320,000 2/15/2035 330,000 2/15/2036 340,000 2/15/2037(maturity) 350,000 The particular Term Certificates to be redeemed shall be chosen by the Paying Agent/Registrar at random by lot or other customary method; provided, however, that the principal amount of Term Certificates of a stated maturity required to be redeemed on any mandatory redemption date pursuant to the operation of the mandatory sinking fund redemption provisions shall be reduced,at the option of the Issuer,by the principal amount of any Term Certificates 5 of the same maturity which, at least 45 days prior to a mandatory redemption date(1) shall have been acquired by the Issuer at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, (2) shall have been purchased and canceled by the Paying Agent/Registrar at the request of the Issuer at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase,or(3)shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. Notice of Redemption Not less than 30 days prior to a redemption date for the Certificates,the Issuer shall cause a notice of redemption to be sent by United States mail,first class,postage prepaid,to each Owner of a Certificate to be redeemed,in whole or in part, at the address of the Owner appearing in the Register at the close of business on the business day next preceding the date of mailing of such notice. ANY NOTICE GIVEN SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN AND ALL OTHER CONDITIONS TO REDEMPTION ARE SATISFIED, THE CERTIFICATES CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND, NOTWITHSTANDING THAT ANY CERTIFICATE OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH CERTIFICATE OR PORTION THEREOF SHALL CEASE TO ACCRUE. With respect to any optional redemption of the Certificates,unless certain prerequisites to such redemption required by the Ordinance have been met and money sufficient to pay the principal of and premium, if any, and interest or maturity value on the Certificates to be redeemed will have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said redemption may, at the option of the Issuer,be conditional upon the satisfaction of such prerequisites and receipt of such money by the Paying Agent/Registrar on or prior to the date fixed for such redemption or upon any prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given and such prerequisites to the redemption are not fulfilled,such notice will be of no force and effect, the Issuer will not redeem such Certificates, and the Paying Agent/Registrar will give notice in the manner in which the notice of redemption was given, to the effect that the Certificates have not been redeemed. The Paying Agent/Registrar and the Issuer, 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 Ordinance 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,shall 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 Issuer 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 Ordinance and will not be conducted by the Issuer or the Paying Agent/Registrar. Neither the Issuer 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 "DESCRIPTION OF THE CERTIFICATES—Book-Entry-Only System"herein. Paying Agent/Registrar The initial Paying Agent/Registrar is U.S. Bank National Association, Dallas, Texas. In the Ordinance, the Issuer retains the right to replace the Paying Agent/Registrar. The Issuer covenants to maintain and provide a Paying Agent/Registrar at all times while the Certificates are outstanding, and any successor Paying Agent/Registrar shall be a bank, trust company, financial institution 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 Issuer agrees to promptly cause a written notice thereof to be sent to each Owner by United States mail, first class, postage prepaid, which notice shall also give the effective date of the 6 change and the address of the new Paying Agent/Registrar. If the Paying Agent/Registrar is replaced,the new Paying Agent/Registrar shall accept the previous Paying Agent/Registrar's records and act in the same capacity as the previous Paying Agent/Registrar. Transfer and Exchange In the event the Book-Entry-Only System shall be discontinued with respect to the Certificates, such Certificates will be printed and delivered to the registered owners thereof,and thereafter the Certificates may be transferred and exchanged on the Register only upon presentation and surrender thereof to the Paying Agent/Registrar, and such transfer or exchange shall be without expense or service charge to the Owner, except for any tax or other governmental charges required to be paid with respect to such registration,exchange and transfer. A Certificate may be assigned by the execution of an assignment form on the Certificate or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. A new Certificate or Certificates will be delivered by the Paying Agent/Registrar, in lieu of the Certificate being transferred or exchanged, at the Trust Office, or sent by United States mail, first class, postage prepaid,to the new Owner or its designee. New Certificates registered and delivered in an exchange or transfer shall be in Authorized Denominations for any one stated maturity and for a like aggregate principal amount and interest rate as the Certificate or Certificates surrendered for exchange or transfer. Neither the Issuer nor the Paying Agent/Registrar shall be required to issue,transfer or exchange any Certificate in whole or in part during the period commencing with the close of business on any Record Date or Special Record Date and ending on the day subsequent to the immediately following payment date or,with respect to any Certificate called for redemption, in whole or in part, within 45 days of the date fixed for redemption, provided that such limitation of transfer shall not be applicable to the exchange by the registered owner of the uncalled balance of a Certificate. The Paying Agent/Registrar shall require payment by the Owner requesting such transfer or exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. Replacement Certificates If any Certificate is mutilated, destroyed,stolen or lost, a new Certificate in the same principal amount and bearing the same rate of interest as the Certificate so mutilated, destroyed, stolen or lost will be issued under the conditions set forth in the Ordinance. In the case of a mutilated Certificate, such new Certificate will be delivered only upon surrender and cancellation of such mutilated Certificate. In the case of any Certificate issued in lieu of and substitution for a Certificate which has been destroyed, stolen or lost, such new Certificate will be delivered only upon(a)the filing with the Issuer and the Paying Agent/Registrar of evidence satisfactory to establish to the Paying Agent/Registrar proof of the ownership and the circumstances of loss, destruction or theft of such Certificate, and (b) the furnishing to the Paying Agent/Registrar of such security of indemnity satisfactory to it to hold it and the Issuer harmless. The person requesting the authentication and delivery of a new Certificate must comply with such other reasonable requirements as the Issuer and the Paying Agent/Registrar may prescribe and pay such expenses as may be incurred in connection therewith. Amendments to the Ordinance In the Ordinance,the Issuer has reserved the right to amend the Ordinance without the consent of any holder for the purpose of amending or supplementing the Ordinance to(i)cure any ambiguity,defect or omission therein that does not materially adversely affect the interests of the holders,(ii)grant additional rights or security for the benefit of the holders, (iii) add events of default as shall not be inconsistent with the provisions of the Ordinance that do not materially adversely affect the interests of the holders, (iv) qualify the Ordinance under the Trust Indenture Act of 1939, as amended, or corresponding provisions of federal laws from time to time in effect or(v)make such other provisions in regard to matters or questions arising under the Ordinance that are not inconsistent with the provisions thereof and which, in the opinion of Bond Counsel for the Issuer, do not materially adversely affect the interests of the holders. The Ordinance further provides that the holders of the Certificates aggregating in principal amount 51% of the outstanding Certificates shall have the right from time to time to approve any amendment not described above to the Ordinance if it is deemed necessary or desirable by the Issuer;provided,however,that without the consent of 100% of the holders in original principal amount of the then outstanding Certificates,no amendment may be made for the 7 purpose of: (i) making any change in the maturity of any of the outstanding Certificates; (ii) reducing the rate of interest borne by any of the outstanding Certificates; (iii) reducing the amount of the principal of, or redemption premium, if any, payable on any outstanding Certificates; (iv) modifying the terms of payment of principal or of interest or redemption premium on outstanding Certificates, or imposing any condition with respect to such payment;or(v)changing the minimum percentage of the principal amount of the Certificates necessary for consent to such amendment. Reference is made to the Ordinance for further provisions relating to the amendment thereof. Defeasance The Ordinance provides for the defeasance of the Certificates when payment of the principal of and premium,if any, on Certificates, plus interest thereon to the due date thereof(whether such due date be by reason of maturity, redemption, or otherwise), is provided by irrevocably depositing with a paying agent or other authorized entity, in trust (1) money sufficient to make such payment or (2) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest 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 respective series of Certificates , and thereafter the Town will have no further responsibility with respect to amounts available to such paying agent (or other financial institution permitted by applicable law) for the payment of such defeased Certificates, including any insufficiency therein caused by the failure of such paying agent (or other financial institution permitted by applicable law) to receive payment when due on the Defeasance Securities. The Ordinance provides that "Defeasance 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:(1)direct,noncallable obligations of the United States of America,including obligations that are unconditionally guaranteed by the United States of America, (2) noncallable obligations of an agency or instrumentality of the United States of America,including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the Town adopts or approves the proceedings authorizing the financial arrangements, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent,and(3)noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the Town adopts or approves the proceedings authorizing the financial arrangements,are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. The Issuer has additionally reserved the right, subject to satisfying the requirements of(1) and (2) above,to substitute other Defeasance Securities for the Defeasance Securities originally deposited,to reinvest the uninvested moneys on deposit for such defeasance and to withdraw for the benefit of the Issuer moneys in excess of the amount required for such defeasance. 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 or redemption of the Certificates have been made as described above, all rights of the Issuer to initiate proceedings to call the Certificates for redemption or take any other action amending the terms of the Certificates are extinguished; provided, however, that the right to call the Certificates for redemption is not extinguished if the Issuer: (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. There is no assurance that the current law will not be changed in a manner which would permit investments other than those described above to be made with amounts deposited to defease the Certificates. Because the Ordinance does not contractually limit such investments, registered owners may be deemed to have consented to defeasance with such other investments, notwithstanding the fact that such investments may not be of the same investment quality as those currently permitted under State law. There is no assurance that the ratings for U.S. Treasury securities used as Defeasance Securities or those for any other Defeasance Security will be maintained at any particular rating category. 8 Certificateholders'Remedies The Ordinance establishes specific events of default with respect to the Certificates. If the Issuer defaults in the payment of the principal of or interest on the Certificates when due or the Issuer defaults in the observance or performance of any of the covenants, conditions, or obligations of the Issuer, the failure to perform which materially, adversely affects the rights of the owners of the Certificates, including but not limited to,their prospect or ability to be repaid in accordance with the Ordinance, and the continuation thereof for a period of 60 days after notice of such default is given by any owner to the Issuer, the Ordinance provides that any registered owner is entitled to seek a writ of mandamus from a court of proper jurisdiction requiring the Issuer 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 Ordinance and the Issuer'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 Ordinance does not provide for the appointment of a trustee to represent the interest of the owners of the Certificates upon any failure of the Issuer to perform in accordance with the terms of the Ordinance,or upon any other condition and accordingly all legal actions to enforce such remedies would have to be undertaken at the initiative of,and be financed by,the registered owners. The Texas Supreme Court ruled in Tooke v. City of Alexia, 197 S.W. 3`d 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 Issuer's sovereign immunity from a suit for money damages, owners of the Certificates may not be able to bring such a suit against the Issuer for breach of the Certificates or Ordinance covenants. Even if a judgment against the Issuer could be obtained, it could not be enforced by direct levy and execution against the Issuer's property. Further, the registered owners cannot themselves foreclose on property within the Issuer or sell property within the Issuer to enforce the tax lien on taxable property to pay the principal of and interest on the Certificates. Furthermore, the Issuer 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 owners of the Certificates of an entity which has sought protection under Chapter 9. Therefore,should the Issuer 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 and by general principles of equity which permit the exercise of judicial discretion. Initially, the only registered owner of the Certificates will be Cede & Co., as DTC's nominee. See "DESCRIPTION OF THE CERTIFICATES - Book-Entry-Only System" herein for a description of the duties of DTC with regard to ownership of Certificates. [Remainder of page intentionally left blank.] 9 ISSUER DEBT AND AD VALOREM TAX INFORMATION Table 1-Current Appraised Valuation,Exemptions and Tax Supported Debt Tarrant County Denton County Total Total Market Value of Issuer Property for FY 2016-17 $1,568,214,122 $ 20,043,379 $1,588,257,501 Homestead Cap Loss (62,483,152) - (62,483,152) Ag Deferrals(Productivity Loss) (78,172,761) (16,643,604) (94,816,365) Total Appraised Value of Issuer Property for FY 2016-17 $1,427,558,209 $ 3,399,775 $1,430,957,984 Less Exemptions: Homestead Exemption-Local Option(General) (100,346,357) - (100,346,357) Homestead Exemption-Local Option(Over 65) (595,000) - (595,000) Abatements(') (135,433,473) - (135,433,473) Reduction for Cases Before ARB (59,278,265) - (59,278,265) Reduction for Incomplete/In Process Accounts (12,758,433) - (12,758,433) Absolute Exemptions (12,352,533) (2,241,248) (14,593,781) Other Exemptions,Reductions (2,877,023) - (2,877,023) Total Adjustments,Exemptions (323,641,084) (2,241,248) (325,882,332) Taxable Assessed Valuation for FY 2016-17 $1.103.917.125 $ 1_158.527 X1.105.075.652 Gross Principal Amount ofAd Valorem Tax Supported Debt as of09/30/2016 $ 27,142,000 The Certificates 9,180,000 Less:Principal Amount Such Debt Being Repaid From Sources Other Than Ad Valorem Taxes (34,695,000) Net Amount ofAd Valorem Tax Supported Debt as of 09/30/2015 $ 1,627,000 Debt Service Fund Balance as of 09/30/2015 $ 20,916 Sources:Tarrant and Denton Central Appraisal Districts;Issuer financial statements. (1) The Issuer has granted partial tax abatements for two major facilities within its boundaries, including those used by Deloitte LLP and Fidelity Investments. Such abatements have 10 year terms and are subject to various terms and conditions, including the satisfaction of certain employment targets in order to qualify for abatement in any given year. [The remainder of this page is intentionally left blank.] 10 Table 2-Appraised Valuation and Exemptions by Category Fiscal Years Ending September 30, 2017 2016 2015 Market Valuation Amount %of Total Amount %of Total Amount %of Total Real Estate,Residential $ 879,417,798 55.37% $ 669,171,945 50.52% $ 617,469,021 48.62% Real Estate,Commercial 466,391,373 29.36% 455,595,734 34.40% 427,483,453 33.66% Personal Prop,Comml/Indust 146,514,438 9.22% 122,122,330 9.22% 146,956,302 11.57% Agricultural Properties 95,2501,592 6.00% 77,073,547 5.82% 77,486,314 6.10% Utilities 683,300 0.04% 555,495 0.04% 497,410 0.04% Total Market Valuation 1,588,257,501 100.00% 1,324,519,051 100.000/0 1,269,892,500 100.00% Less Exemptions&Reductions Homestead Cap Loss (62,483,152) (5,553,073) (16,626,670) Agricultural,Productivity Loss (94,816,365) (76,467,922) (76,873,063) Homestead-Local Option (100,346,357) (85,558,380) (86,061,862) Over 65-Local Option (595,000) (605,000) (561,700) Disabled-Local Option - - - Abatements") (135,433,473) (162,354,187) (163,938,263) Reduction for ARB Cases (59,278,265) (9,842,969) (7,517,937) Reduction for Incomplete Accts (12,758,433) (22,863,722) (1,780,074) Absolute Exemptions (14,593,781) (14,706,044) (14,813,387) Disabled Veterans - - - Nominal Value - - - Other Exemptions,Reductions (2.877,023) Net Taxable Assessed Valuation $1,105.075,652 $ 946,567.754 $ 901.719.544 Fiscal Years Ending September 30, 2014 2013 Market Valuation Amount %of Total Amount %of Total Real Estate,Residential $ 574,5061369 46.22% $ 545,598,263 44.65% Real Estate,Commercial 438,047,262 35.24% 443,779,916 36.31% Personal Prop.,Commercial/Indust. 151,927,427 12.22% 140,063,086 11.46% Agricultural Properties 78,589,129 6.32% 92,015,149 7.53% Utilities - 0.00% 584,960 0.05% Total Market Valuation 1,243,070,187 100.00% 1,222,041,374 100.00% Less Exemptions&Reductions Homestead Cap Loss (2,499,033) (4,783,528) Agricultural,Productivity Loss (76,828,073) (80,257,943) Homestead-Local Option (77,856,727) (72,510,736) Over 65-Local Option (551,700) (535,000) Disabled-Local Option - (10,000) Abatements(]) (172,174,981) (168,861,045) Reduction for ARB Cases - - Reduction for Incomplete Accts (2,574,101) (2,695,142) Absolute Exemptions (12,122,064) (6,148,041) Disabled Veterans - (12,000) Nominal Value (910) (780) Other Exemptions,Reductions - Net Taxable Assessed Valuation $ 898,462.598 $ 886.227.159 Sources:Tarrant and Denton Central Appraisal Districts. (1) The Issuer has granted partial tax abatements for two major facilities within its boundaries,including those used by Deloitte LLP and Fidelity Investments. Such abatements have 10 year terms and are subject to various terms and conditions,including, in the case of Fidelity,the satisfaction of certain employment targets in order to qual fy for abatement in any given year. 11 Table 3—Tax Rates,Levies,Collections and Ratios Fiscal Years Ending September 30, 2017 2016 2015 2014 2013 Bond Tax Rate $ 0.00813 $ 0.01687 $ 0.01924 $ 0.01796 $ 0.01487 Maintenance Tax Rate 0.12882 0.13947 0.13710 0.13888 0.14197 Total Tar Rate $ 0.13695 $ 0.15634 $ 0.15634 $ 0.15684 $ 0.15684 Taxable Assessed Valuation $1,105.575.652 $946.567.764 $ 901.719.544 $898.462.598 $ 886.227.159 Total Ad Valorem Taxes Levied $ 1,514,086 $ 1,470,666 $ 1,450,643 $ 1,350,188 $ 1,352,097 Current Collection Ratio In process 98.16% 96.59% 99.23% 99.90% Total Collection Ratio In process 99.77% 98.02% 99.20% 99.93% Gross Ad Valorem Tax Debt(') $ 35,212,000 $ 27,142,000 $ 28,232,000 $ 29,304,000 $ 30,212,000 Gross Tax Debt Ratio to TAV 3.18% 2.87% 3.13% 3.26% 3.41% Net Ad Valorem Tax Debt(2) $ 1,552,000 $ 1,627,000 $ 1,727,000 $ 1,824,000 $ 1,917,000 Net Tax Debt Ratio to TAV 0.14% 0.17% 0.19% 0.20% 0.22% Estimated Population 1,200 1,200 1,194 1,194 1,014 TAV per Capita $ 921,313 $ 788,806 $ 755,209 $ 752,481 $ 873,991 Gross Tax Debt per Capita(" $ 29,343.33 $ 22,618.33 $ 23,644.89 $ 24,542.71 $ 29,794.87 Net Tax Debt per Capita(e) $ 1,293.33 $ 1,355.83 $ 1,446.40 $ 1,527.64 $ 1,890.53 Sources:The Town's audited financial statements;Tarrant and Denton Central Appraisal Districts. (1) As of fiscal year end,•most recent fiscal year end amount is a projection and is subject to change. (2) Currently all of the Issuer's ad valorem tax supported debt is being repaid from sources other than its ad valorem tax, except for the Issuer's Combination Tax and Revenue Certificates of Obligation,Series 2011. The Issuer is authorized, at its option, to pay all or any portion of its debt from ad valorem taxes, other lawfully available revenues such as sales tax revenues, or any combination thereof, and may determine in the future to change the sources being used to repay all or any portion of its outstanding debt. [Remainder of page intentionally left blank.] 12 Table 4-Ten Largest Taxpayers Type of TAV for FY %of TAV Name Businesso) 2016-17 S 1,105,075,652 BRE Solana LLC Commercial Real Estate $ 173,218,573 15.67% FMR Texas I LLC/Ltd.Partnership Commercial Real Estate 80,939,255 7.32% DCLI,LLC Conference Center 47,521,483 4.30% Fidelity Investments Inc. Financial Services 39,098,584 3.54% Dallas MTA LP(dba Verizon Wireless) Wireless Telecommunications 38,537,456 3.49% Marsh USA Inc. Risk Mgt.,Insurance 15,402,373 1.39% Lexington TNI Westlake,LP Commercial Real Estate/REIT 14,618,533 1.32% Prince Whipple Trust Private Trust 7,070,782 0.64% Keith Hutton Personal 6,391,904 0.58% Vernon Wells III and Charlene Wells Personal 5,837,063 0.53% Totals $ 428.636.006 38.2616 Source:Tarrant and Denton Central Appraisal Districts. (1)Of the top ten taxpayers,the valuations of three are related to commercial real estate, representing approximately 24%of the Issuer's total tax base. The valuations of such property may fluctuate substantially from year to year.A downturn in the commercial real estate market could adversely affect the Issuer's tax base. Estimated Overlapping Debt As in the case of the Issuer,various taxing units within the Issuer's boundaries may incur debts that are paid from ad valorem taxes levied by such taxing units on taxable properties within the Issuer's boundaries.Such taxing units are separate legal entities and independent of the Issuer. The information in this table shows direct and estimated overlapping ad valorem tax debt and is based on information obtained from the individual taxing units or from the Texas Municipal Reports published by the Municipal Advisory Council of Texas.The Issuer has not independently verified the accuracy or completeness of information relating to any taxing unit other than itself, and no person should rely upon such information as being accurate or complete. Additionally, taxing units listed herein may have issued additional tax debt since the date hereof,and such taxing units may have programs requiring the issuance of substantial amounts of additional tax debt,the amount of which cannot be determined at this time. Estimated Overlapping Taxin,Unit Gross Debt As of %Overlapping Debt Carroll ISD $204,151,047 09/30/16 5.67% $11,575,364 Denton County 602,995,000 09/30/16 0.02% 120,599 Keller ISD 728,705,387 09/30/16 4.56% 33,228,966 Northwest ISD 733,049,556 09/30/16 1.37% 10,042,779 Tarrant County 338,430,000 09/30/16 0.78% 2,639,754 Tarrant County Hospital District 22,335,000 09/30/16 0.78% 174,213 Trophy Club MUD#1 10,845,000 09/30/16 18.76% 2,034,522 Total Overlapping Debt 59,816,197 Gross Amount of Issuer's Outstanding Debt as of 9/30/2016,plus the Certificates 36,322,000 Total Direct&Overlapping Debt(gross amount) $96.138.197 Total Overlapping Debt(see above) $59,816,197 Net Amount of Issuer's Outstanding Debt as of 9/30/2016"' 1,627,000 Total Direct&Overlapping Debt(net amount) $61,443,197 (1) Currently all of the Issuer's ad valorem tax supported debt is being repaid from sources other than its ad valorem tax,except for the Issuer's Combination Tax and Revenue Certificates of Obligation,Series 2011 which had a balance of$1,62 7,000 as of 09/3012016. 13 Table 5-Debt Service Requirements Fiscal Plus: %of Principal Year End Existing the Certificates Gross Debt Net Debt Principal Retired(Zr 9/30 Debt Service(]) Principal Interest Total Service(l) Service(2) Balance $36322.000 2017 $ 2,041,394 $ - $ 203,098 $ 203,098 $ 2,244,493 $ 113,148 $35,212,000 3.06% 2018 2,040,191 200,000 310,800 510,800 2,550,991 115,300 33,863,000 6.77% 2019 2,042,255 205,000 304,725 509,725 2,551,980 117,356 32,475,000 10.59% 2020 2,048,122 210,000 298,500 508,500 2,556,622 119,316 31,043,000 14.53% 2021 2,047,406 215,000 292,125 507,125 2,554,531 121,180 29,572,000 18.58% 2022 2,051,057 225,000 285,525 510,525 2,561,582 123,936 28,051,000 22.77% 2023 2,053,188 230,000 278,700 508,700 2,561,888 126,572 26,485,000 27.08% 2024 2,056,629 235,000 271,725 506,725 2,563,354 129,088 24,869,000 31.53% 2025 2,056,845 245,000 264,525 509,525 2,566,370 131,484 23,208,000 36.10% 2026 2,063,837 250,000 257,100 507,100 2,570,937 134,748 21,486,000 40.85% 2027 2,062,814 260,000 249,450 509,450 2,572,264 137,868 19,703,000 45.75% 2028 2,068,698 265,000 241,575 506,575 2,575,273 140,844 17,854,000 50.85% 2029 2,061,303 275,000 233,475 508,475 2,569,778 144,664 15,943,000 56.11% 2030 2,060,492 285,000 225,075 510,075 2,570,567 148,316 13,960,000 61.57% 2031 2,062,141 290,000 216,450 506,450 2,568,591 151,800 11,905,000 67.22% 2032 2,069,154 300,000 207,600 507,600 2,576,754 - 9,760,000 73.13% 2033 475,169 310,000 198,450 508,450 983,619 - 9,135,000 74.85% 2034 477,269 320,000 189,000 509,000 986,269 - 8,485,000 76.64% 2035 478,769 330,000 179,250 509,250 988,019 - 7,810,000 78.50% 2036 479,669 340,000 169,200 509,200 988,869 - 7,110,000 80.43% 2037 475,763 350,000 158,850 508,850 984,613 - 6,390,000 82.41% 2038 477,078 360,000 146,400 506,400 983,478 - 5,645,000 84.46% 2039 477,850 375,000 131,700 506,700 984,550 - 4,870,000 86.59% 2040 477,300 390,000 116,400 506,400 983,700 - 4,065,000 88.81% 2041 475,400 410,000 100,400 510,400 985,800 - 3,225,000 91.12% 2042 477,800 425,000 83,700 508,700 986,500 - 2,350,000 93.53% 2043 479,400 440,000 66,400 506,400 985,800 - 1,440,000 96.04% 2044 - 460,000 48,400 508,400 508,400 - 980,000 97.30% 2045 - 480,000 29,600 509,600 509,600 - 500,000 98.62% 2046 - 500,000 10,000 510,000 510,000 - - 100.00% Totals $ 38,136,993 $ 9,180,000 $5,768,198 $ 14,948,198 $53,085,192 $ 1,955,620 (1)Secured by a pledge of the Issuer's ad valorem tax.Debt service for a substantial portion of such debt is currently being paid from the Issuer's sales tax and other lawfully available revenues.Although the pledge of the Issuer's ad valorem tax continues for as long as any such debt remains outstanding,the Issuer may use other funds to pay debt service. (2) Only that portion of aggregate debt service that is attributable to the Issuer's Combination Tax and Revenue Certificate of Obligation,Series 2011(with an outstanding principal balance as of 09/30/2016 of$1,627,000), is currently beingpaidfrom ad valorem tax revenues.Although the pledge of the Issuer's ad valorem tax continues for as long as all debt reflected in this table remains outstanding,the Issuer may use other funds to pay debt service. 14 Table 6-Authorized But Unissued Tax Bonds Voter Authorized but Unissued Ad Valorem Tax Bonds: None Ad Valorem Tax Bond Elections Planned for Next 12 Months: None New Money Ad Valorem Tax Debt Not Requiring Voter Approval Planned During Next 12 Months: Undetermined Although the Issuer currently has no voter authorization to issue new money general obligation bonds, it may issue ad valorem tax secured certificates of obligations and other tax-supported debt without voter authorization. The Issuer does not currently have specific plans to issue any additional new money tax supported obligations within the next 12 months. Regardless of the Issuer's future borrowing activities, the Issuer may be required to increase its annual ad valorem tax rate as a result of factors unrelated to the level of its outstanding debt and otherwise outside its control, including,for example,the following: (i)a reduction in its taxable assessed valuation,(ii)a reduction in tax collections,(iii)availability of sources other than ad valorem taxes currently being used to pay debt service, or (iv)changes in State law. Table 7-Other Obligations As of September 30,2015,the Issuer had certain other proprietary,contractual,special revenue and lease obligations payable from and secured by sources other than ad valorem taxes as described more fully in the Issuer's audited financial statements under Note 5 beginning on page 53 of the audited financial statements attached hereto as APPENDIX B. Table 8—Tax Adequacy Gross Ad Est.Gross Net Ad Est.Net Valorem Tax Ad Valorem Valorem Tax Ad Valorem Debt Service Tax Rate(1)(2) Debt Service Tax Rate(1)(2) $2,244,493 $0.2031 $113,148 $0.0102 $2,576,754 $0.2332 $151,800 $0.0137 $1,769,506 $0.1601 $130,375 $0.0118 (1) Prior to 2010-11, the Issuer had not levied an ad valorem tax. Instead it paid debt service on all of its ad valorem tax debt from other lawfully available revenues. Only that portion of aggregate debt service that is attributable to the Issuer's Combination Tax and Revenue Certificate of Obligation,Series 2011 (with an outstanding principal balance as of 0913012016 of $1,627,000), is currently beingpaid fr om ad valorem tax revenues.Although the pledge of the Issuer's ad valorem tax continues for as long as all debt refected in this table remains outstanding,the Issuer may use other funds to pay debt service. (2) The Estimated Ad Valorem Tax Rate is the rate that would be required to be levied to pay debt service assuming no other source of payment,and further assuming a 100%collection ratio applied to the Issuer's current Taxable Assessed Valuation. Property Tax Code General. Receipts from ad valorem taxation are one of the Issuer's principal sources of operational revenue and its principal source of funds for debt service payments. See"OTHER FINANCIAL INFORMATION." The following is a summary of certain provisions of the Texas Property Tax Code, as amended(the "Property Tax Code"),relating to ad valorem taxation procedures. Property Tax Code and County-Wide Appraisal District. Pursuant to Chapter 6 of the Texas Property Tax Code, as amended(the"Property Tax Code"),each county in the State comprises a single appraisal district with responsibility for recording and appraising property for all taxing units within the county, and each county establishes a single appraisal review board for the purpose of reviewing and equalizing the values established by the appraisal district. Chapter 25 of the Property Tax Code requires the appraisal district,by May 15 of each year or as soon thereafter as practicable, to prepare appraisal records listing all property that is taxable in the appraisal district and stating the appraised value of each parcel or item. Property is required to be appraised as of January 1 of each year(except for business inventories which may be assessed as of September 1 and mineral reserves which are assessed on the basis 15 of a monthly average), and Chapter 23 of the Property Tax Code generally requires appraisals at 100% of market value. Tax appraisers are authorized to use alternative methods(cost,income and market data comparison methods) to determine the market value of property,and the most appropriate method is to be used. Appraisals are subject to review by the appraisal review board, and under certain circumstances, taxpayers and taxing units (such as the Issuer) may appeal the orders of the appraisal review board by filing a petition for review in the district court. In such event, the value of the property in question will be determined by the court or by a jury if requested by any party. Absent any such appeal,the orders of the appraisal review board must be used by each taxing jurisdiction in establishing its tax rolls and tax rate. Based upon their respective relative total appraised values, school districts are each entitled to vote, with other taxing entities, upon the selection of members of the board of directors of the county-wide appraisal districts in their respective counties. Although each taxing unit retains the authority to establish its own tax rates and to levy and collect taxes each year, under the county-wide appraisal plan implemented by the Property Tax Code, the taxing units are unable to influence appraisal standards or determine the frequency of revaluation or reappraisal. Chapter 25 of the Properly Tax Code requires each appraisal district to implement a plan for periodic reappraisal of property to update appraised values, and the plan must provide for reappraisal of all real property in the appraisal district at least once every three years. Property Subject to Taxation by the Issuer. Except for certain exemptions provided by Texas law, all real and tangible personal property and certain intangible personal property in each taxing unit, including the Issuer, is subject to taxation by such taxing unit. Principal categories of exempt property which may be exempted under Chapter 11 of the Property Tax Code include: property owned by the State of Texas or its political subdivisions, if the property is used for public purposes; property exempt from ad valorem taxation by federal law; certain household goods,family supplies and personal effects that are not held or used for the production of income; farm products.owned by the producer; certain property owned by charitable organizations, youth development associations, religious organizations and qualified schools; designated historical sites; solar and wind powered energy devices;and certain tangible personal property known as "freeport goods." Effective for tax years 2008 and thereafter,Article VII,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 outboard 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 an exemption for "freeport goods" or"goods-in-transit" for items of personal property. In addition,owners of agricultural,timber and open space land may, under certain circumstances,request valuation of such land on the basis of productive capacity rather than market value. Article VIII, Section 2 of the Texas Constitution and Texas law mandate an additional exemption for disabled veterans and the surviving spouses and children of persons dying while on active duty in the armed forces, which exemption applies to either real or personal property and may range from $5,000 to $12,000. A taxing unit may also exempt portions of the taxable value of residential homesteads(see "Residential Homestead Exemption" below).New penalties will apply to taxes which have been wholly or partially exempted upon application of a taxpayer, if it is subsequently determined that the taxpayer did not qualify for the exemption. Residential Homestead Exemption. Pursuant to Article VIII, Section I-b of the Texas Constitution and the Property Tax Code,the governing body of each political subdivision in the State,including the Issuer,is authorized to exempt from ad valorem taxes(1)up to 20 percent of the appraised value of residential homesteads but not less than$5,000, and (2) at least $3,000 of the appraised value of the residential homesteads of persons at least 65 years old and disabled persons. Article VIII, Section 1-b of the Texas Constitution provides that,with respect to the homestead exemptions granted thereunder, a taxing unit may nevertheless continue to levy taxes against such exempted property if(1)ad valorem taxes had been pledged for the payment of such taxing unit's debt incurred prior to the granting of such exemption, and (2)the loss of ad valorem tax revenues attributable to such exempted property would impair the taxing unit's obligation under the contract pursuant to which the debt was created. 16 In addition to the foregoing exemptions available to all taxing units, Texas law authorizes additional homestead exemptions for school districts, including(1)a basic$15,000 exemption for all homeowners,and(2)an additional $10,000 for persons at least 65 years old or disabled; provided, however, that a person at least 65 years old and disabled may receive only one $10,000 exemption, and only one such exemption is available per family, per residence homestead. Except for increases in appraised value resulting from certain improvements,a school district is prohibited from increasing the total ad valorem tax on the residence homestead of a person 65 years of age or older above the amount of tax imposed in the year such residence qualified for the $10,000 exemption. The tax "freeze"provided on the amount of ad valorem taxes levied on the homestead of a taxpayer 65 years of age or older transfers in proportionate amount to a different residence homestead of such taxpayer. Also,a surviving spouse of a taxpayer who qualifies for the freeze on ad valorem taxes is entitled to the same exemption so long as the property is the homestead of the surviving spouse and the spouse is at least 55 years of age at the time of the death of the individual's spouse. The increase of the appraised value on a residence homestead is limited to ten percent of the appraised value of the property for the last year in which the property was appraised times the number of years since the property was last appraised. Other Reductions in Assessed Valuation. The Issuer and other taxing units may jointly agree to the creation of a tax increment financing zone,under which the tax values on properties within the zone are"frozen"at their values at the time such zone is created. The Issuer and other taxing units may also enter into tax abatement agreements to encourage economic development. Under such agreements, a property owner agrees to construct certain improvements on its property, while the taxing unit would in turn agree to not levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement may last for as long as 10 years. Notice and Hearing Procedures. The ability of a taxing unit,such as the Issuer,to increase its tax levy from year to year is limited by Chapter 26 of the Property Tax Code,which imposes limitations on certain tax levies(other than tax levies for the payment of debt) based upon a complex formula. These limitations require that, prior to establishing and levying a rate of taxation for a year, the taxing unit compute an "effective rate" for such year pursuant to the Property Tax Code. Generally,this effective rate is the rate which will produce the same amount of operating revenue that the taxing unit levied in the previous year on the same property being taxed for both years, plus the amount necessary to pay bonded indebtedness of the taxing unit for the next year. The governing body of the Issuer may not adopt a tax rate that, if applied to the total taxable values, would impose an amount of taxes exceeding the prior year's levy without holding a public hearing and otherwise complying with the requirements for giving notice of such public hearing. If the rate of taxation to be levied for a year exceeds the sum of(i) the effective rate times 1.08,plus(ii)the Issuer's current debt rate(the "Rollback Rate"), 10%of the qualified voters of the Issuer may petition to require an election to limit the tax levied by the Issuer in the current year to the Rollback Rate. Levy and Collection of Taxes. Each taxing unit, including the Issuer, is responsible pursuant to Chapter 31 of the Property Tax Code for the collection of its taxes, unless it elects to transfer such functions to another governmental entity. By September 1 of each year,or as soon thereafter as practicable,the rate of taxation is set by the governing body of each taxing unit based upon the valuation of property within the taxing unit as of the preceding January 1. Generally,taxes are due October 1,or when billed,whichever comes later,and become delinquent after January 31 of the following year. A delinquent tax incurs a penalty of 12 percent of the amount of the tax through June 30 and additionally accrues interest at the rate of one percent per month. If the tax is not paid by July 1, an additional penalty of up to 15 percent may be imposed by the taxing unit to pay attorney fees for collection of the delinquent tax. Chapter 31 of the Property Tax Code also makes provision each year for consideration of split payments of taxes, discounts for early payment and the postponement of the delinquency date of taxes under certain circumstances.Abatement or deferral of a suit to collect delinquent taxes on residences is available to the extent that the delinquent taxes relate to the portion of the homestead that exceeds the appraised value by 105 percent of the valuation for the prior year. If the collection of the delinquent taxes are abated or deferred, they may not be collected until the taxpayer no longer owns the property and interest continues to accrue on the delinquent taxes at a rate of eight percent. Collection of Delinquent Taxes. Taxes levied by each taxing unit are a personal obligation of the owner of the property. On January 1 of each year,a tax lien attaches to property to secure the payment of all taxes,penalties and interest ultimately imposed for the year on the property, whether or not the taxes are imposed in the year the lien 17 attaches. The lien exists in favor of each taxing unit,including the Issuer,having the power to tax the property. The Issuer's tax lien is on a parity with the tax liens of all other such taxing units. A tax lien on real property has priority over the claims of most creditors and other holders of liens on the property encumbered by the tax lien,whether or not the debt or lien existed before the attachment of the tax lien. Personal property under certain circumstances is subject to seizure and sale for the payment of delinquent taxes, penalties and interest. At any time after taxes on property become delinquent,the Issuer may file suit to foreclose the lien securing payment of the tax or to enforce personal liability for the tax, or both. In filing a suit to foreclose a tax lien on real property, the Issuer must join other taxing units that have claims for delinquent taxes against all or part of the same property. The ability of the Issuer to collect delinquent taxes by foreclosure may be adversely affected by the amount of taxes owed to other taxing units, adverse market conditions, taxpayer redemption right or bankruptcy proceedings which restrain the collection of taxpayer debt. Issuer Application of Property Tax Code. The following table summarizes the current status of the Issuer's property tax procedures: Description Issuer Procedure Age 65/Disabled Homestead Exemption in addition to$10,000 basic exemption Allowed Exemption for Homestead(at least$5,000,up to 20%of market value) Allowed(up to 20%) Split Payment of Taxes Not allowed Discounts for Early Payment of Taxes Not allowed Nonbusiness Personal Property Not taxed Freeport Property Exemption Allowed Goods in Transit Exemption Not allowed Tax Abatement Policy Adopted Tax Increment Financing Zone None adopted Tax Collector for the Issuer Tarrant County Tax Assessor-Collector [The remainder of this page is intentionally left blank.] 18 OTHER FINANCIAL INFORMATION Table 9-General Operating Fund Summary Revenues and Expenditures Fiscal Years Ended September 30, Revenues: 2015 2014 2013 2012 2011 Sales tax $ 3,587,323 $ 3,471,344 $ 3,061,948 $ 2,534,774 $ 1,502,020 Property tax 1,256,796 1,198,374 1,236,978 1,271,975 1,226,689 Mixed beverage tax 59,184 51,602 39,727 38,286 19,721 Franchise tax 963,040 795,322 734,935 664,991 586,836 Interest income 10,078 10,503 9,286 14,060 10,679 Building permits and fees 1,200,790 1,175,075 969,735 598,394 520,646 Fines and penalties 734,152 730,441 695,167 622,338 605,705 Intergovernmental 3,810 3,540 10,331 - - Contributions 10,000 - 11,094 325,520 180,063 Miscellaneous 81,539 70.338 73,933 80,936 91,015 Total Revenues 7,906,712 7,506,539 6,843,134 6,151,274 4,743,374 Expenditures: General government and admin. 2,411,239 2,236,360 1,910,545 1,878,885 1,7331324 Public safety 2,490,551 2,146,587 1,967,584 2,224,469 1,842,751 Cultural and recreational 130,322 123,541 113,924 111,765 122,400 Economic development - - - - - Public works 744,028 615,781 532,675 391,115 324,874 Capital outlay 748,297 20,875 50,014 - 41,037 Debt service 48,237 48,240 Total Operating Expenditures 6,572.674 5,191.384 4,574,742 4.606,234 4,064,386 Excess(deficiency)of revs over exp 1,334,038 2,315,155 2.268.392 1,545,040 678,988 Other Financing Sources(Uses): Proceeds from sale of assets - - - - - Note proceeds - 34,710 - - 50,000 Other proceeds(insurance,asset sales) 1627059 7,000 Transfers in(l) 521,320 56,419 609,826 5831.857 2,178,403 Transfers oue" (2.290,385) (1.504,397) (1,090,392) (880,486) (2.691,982) Total Other Sources(Uses) (1,607,006) (1,413,268) (480,566) (296.629) (456,579) Net Change in Fund Balance (272,968) 901,887 1,787,826 1,248,411 222,409 Beginning Fund Balance 7,953,518 7,051,631 5,263,805 4,015,394 3,792,985 Ending Fund Balance $ 7,680,550 $ 7,953,518 $ 7,051,631 $ 5,263,805 $ 4,015,394 Source:Derived from the Issuer's Comprehensive Annual Financial Reports;please refer directly to such Reports for important Notes and more detailed information. (I) Detailed information relating to transfers may be found in the notes to the audited financial statements included in the Issuer's Comprehensive Annual Financial Reports.For the most recent fiscal year,see Note 9 on page 62 of the Comprehensive Annual Financial Report included herewith as APPENDIX B. 19 Table 9A-Changes in Net Position Governmental Activities-Fiscal Years Ended September 30, 2015 2014 2013 2012 2011 Revenues: Program revenues: Fees,fines,charges for services $ 2,466,032 $ 2,127,786 $ 1,798,529 $ 1,417,879 $ 1,253,967 Operating grants,contributions 7,615,653 6,592,642 4,907,472 5,269,841 4,472,999 Capital grants,contributions 19,983,078 80,472 5,897,456 - 425,900 General revenues: Taxes Sales taxes 4,925,428 4,725,845 4,375,397 3,657,274 4,609,626 Property taxes 1,438,969 1,367,069 1,366,633 1,441,238 1,260,112 Hotel occupancy taxes 872,179 796,481 709,578 590,853 527,261 Mixed beverage taxes 59,184 51,602 39,727 38,286 19,721 Franchises taxes 963,040 795,322 734,935 664,991 586,836 Unrestricted grants 28,904 - - - - Interest on investments 198,199 26,713 24,218 33,353 46,248 Miscellaneous - 246,633 1,023,149 1,112,858 691,345 Extraordinary items - - - (124,346) 56,704 Special item - - - 67,760 - Gain on sale of capital assets - - - - 7,000 Total revenues 38,550,666 16,810,565 20,877,094 14,169,987 13,957,719 Expenses: General government 3,145,716 2,784,587 2,606,785 2,518,490 2,478,826 Public safety 2,381,437 2,190,050 1,978,803 1,883,424 1,801,585 Culture and recreation 129,970 123,541 113,924 111,765 122,400 Economic development 171,757 147,680 267,973 216,901 680,823 Public works 1,081,996 955,794 626,423 546,039 470,054 Visitor services 665,936 493,087 521,521 475,719 356,365 Education 8,598,261 7,147,411 5,803,611 6,193,560 4,884,985 Interest on long-term debt 1,022,201 998,951 1,031,328 897,573 1,127,913 Total expenses 17,197,274 14,841,101 12,950,368 12,843,471 11,922,951 Excess(deficiency)before transfers 21,353,392 1,969,464 7,926,726 1,326,516 2,034,768 Transfers 323,100 43,399 (485,591) 45,507 145,216 Change in net position 21,676,492 2,012,863 7,441,135 1,372,023 2,179,984 Effect of accounting principle change (530,877) (647,443) - - - Net position,beginning 33,422,961 32,057,541 24,616,406 23,244,383 21,064,399 Net position,ending $ 54,568,576 $ 33,422,961 $ 32,057,541 $ 24,616,406 $ 23,244,383 Source:Derived from the Issuer's Comprehensive Annual Financial Reports;please refer directly to such Reports for important Notes and more detailed information. 20 Table 10-General Fund Summary Balance Sheet Fiscal Years Ended September 30, Assets: 2015 2014 2013 2012 2011 Cash and investments $ 7,106,297 $ 7,399,920 $ 6,219,206 $ 4,637,252 $ 3,379,864 Property tax receivables 5,379 14,353 1,961 1,7% 4,643 Accounts receivable 824,725 771,499 703,875 557,579 259,938 Due from other funds 164,147 157,353 165,140 149,641 296,555 Other assets 13,334 8,821 6,906 6,856 62,020 Restricted cash&investments 293,363 264.709 428.463 Total Assets $ 8.113,882 $ 8,351,946 $ 7,390,451 $ 5.617,833 $ 4,431,483 Liabilities,Deferred Inflows&Fund Balance: Liabilities: Unearned revenue - - 1,961 1,796 2,796 Accounts payable 427,953 372,092 336,859 352,232 413,293 Due to other funds 11.983 Total Liabilities 427.953 384.075 338,820 354,028 416,089 Deferred Inflows of Resources: Unavailable resources-prop taxes 5.379 14.353 - Total Deferred Inflows 5.379 14,353 Fund Balances: Restricted/CommittediNonspendable 296,949 282,345 300,269 271,565 490,483 Unassigned 7.383.601 7.671,173 6,751,362 4.992,240 3.524,911 Total Fund Equity 7.680.550 7,953.518 7.051,631 5.263.805 4.015.394 Total Liabilities and Fund Equity $ 8,113.882 $ 8.351.946 $ 7.390.451 $ 5,617,833 $ 4,431,483 Table 10A-Consolidated Statement of Net Position Governmental Activities-Fiscal Years Ended September 30, 2015 2014 2013 2012 2011 Assets Current and other assets $ 29,451,181 $ 14,197,535 $ 21,781,962 $ 12,185,864 $ 12,449,931 Capital assets 54,470,449 50,205,686 41,121,883 34,313,615 33,665,877 Total Assets 83,921,630 64,403,221 62,903,845 46,499,479 46,115,808 Deferred outflows of resources 1,549,467 1,194,749 1,247,851 - - Liabilities Non-current liabilities 29,466,305 29,866,622 27,611,536 20,098,829 20,731,060 Other liabilities 1,377,466 2,308,387 1,986,917 1,784,244 2,140,365 Total Liabilities 30.843,771 332,175,009 29,598,453 21,883,073 22.871,425 Deferred inflows of resources 58,750 - - - - Net Position Net investments in capital assets 29.633,298 32,048,991 21,177,426 14,866,299 14,188,516 Restricted 17,827,177 2,284,947 4,242,491 4,726,376 5,607,767 Unrestricted 71108,101 (910,977) 6,637,624 5,023,731 3,448,100 Total Net Position $ 54,568,576 $ 33,422,961 $ 32,057,541 $ 24,616,406 $ 23,244,383 Source:Derived from the Issuer's Comprehensive Annual Financial Reports;please refer directly to such Reports for important Notes and more detailed information. 21 Table 11-Municipal Sales Tax History The Issuer has adopted the Municipal Sales and Use Tax Act, Texas Tax Code, Chapter 321, as amended, which grants the Issuer the power to impose and levy a I%Local Sales and Use Tax within the boundaries of the Issuer; the proceeds are credited to the General Fund and are not pledged to the payment of the Certificates. Collection and enforcement are effected through the Office of the Comptroller of Public Accounts of the State of Texas, which remits the proceeds of the tax, after deduction of a 2% service fee, to the Issuer monthly. Revenue from the 1% Local Sales and Use Tax,for the years shown,has been: Sales Tax Percentage Ad Valorem FYE Revenues- of Ad Valorem Tax Rate Breakdown of Sales Tax Collected 30-Sen Govt'].Funds Tax Levy FAuivalent Taxing Unit Tax Rate 2011') $4,609,626 335.05% $0.5251 The Issuer(approximate allocation): 2012 $3,657,274 254.02% $0.3868 General Fund $0.0100 2013 $4,375,397 323.27% $0.4937 4B Economic Dev.Fund $0.0050 2014 $4,725,845 338.56% $0.0527 Property Tax Reduction $0.0050 2015 $4,925,428 352.86% $0.5348 State of Texas $0.0625 Total $0.0825 Source:the Issuer's audited financial statements. (1) Includes a substantial amount of one-time sales tax payments attributable to construction,furnishing and equipping of a 750,000 square foot campus on a 107-acre tract and known as Deloitte University. The campus,which cost$135 million, serves as a central training destination for Deloitte LLP employees. Investments The Issuer invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the Town Council of the Issuer. Both State law and the Issuer's investment policies are subject to change. Legal Investments. Available Town funds are invested as authorized by State law and in accordance with investment policies approved by the Town Council.Both State law and the Town's investment policies are subject to change.Under State law,the Town is authorized to invest in(1)obligations of the United States or its agencies and instrumentalities, including letters of credit; (2) direct obligations of the State or its agencies and instrumentalities; (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations,the principal and interest of which is guaranteed or insured by or backed by the full faith and credit of, the State or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States; (5)obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent;(6)bonds issued, assumed or guaranteed by the State of Israel; (7) certificates of deposit and share certificates(i)issued by a depository institution that has its main office or a branch office in the State, that are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in clauses(1)through(6)or in any other manner and amount provided by law for Town deposits,or(ii)where(a)the funds are invested by the Town through(1)a broker that has its main office or a branch office in the State and is selected from a list adopted,at least annually,by the Town as required by law or(II) a depository institution that has its main office or a branch office in the State that is selected by the Town; (b)the broker or the depository institution selected by the Town 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 Town; (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 Town appoints the depository institution selected under (a) above, a custodian 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 Council and operating pursuant to Securities and Exchange Council Rule 15c3-3 (17 C.F.R. Section 240.15c3-3) as custodian for the Town with respect to the certificates of deposit;(8)fully collateralized repurchase agreements that have a defined termination date, are fully 22 secured by a combination of cash and obligations described in clause(1)which are pledged to the Town,held in the Town's name, and deposited at the time the investment is made with the Town or with a third party selected and approved by the Town and are placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in the State of Texas; (9) securities lending programs if(i) the securities loaned under the program are 100%collateralized,a loan made under the program allows for termination at any time and a loan made under the program is either secured by(a)obligations that are described in clauses(1) through (6)above, (b)irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm at not less than A or its equivalent or(c) cash invested in obligations described in clauses (1)through (6) above, clauses (11)through (13) below,or an authorized investment pool;(ii) securities held as collateral under a loan are pledged to the Town,held in the Town's name and deposited at the time the investment is made with the governmental body or a third party designated by the governmental body; (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, (10) certain bankers'acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency,(11)commercial paper with a stated maturity of 270 days or less that is rated at least A-] 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,(12) no-load money market mutual funds registered with and regulated by the Securities and exchange Commission that have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of$1 for each share, and (13) no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invest exclusively in obligations described in this paragraph,and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent.In addition,bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations,including letters of credit,of the United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract,other than the prohibited obligations described in the next succeeding paragraph. The Issuer may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAA-m or an equivalent by at least one nationally recognized rating service. The Issuer may contract for a term not to exceed two years with an investment management firm registered under the Investment Advisors Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or registered with the State Securities Board to provide for the investment and management of Issuer funds or fiords under its control. The Issuer is also authorized to contract,for a term not to exceed seven years,for the purchase of investments with proceeds of taxes levied or to be levied to pay debt service on bonds,provided that the Issuer must solicit and receive bids from at least three separate providers and accept the qualifying bid that provides for the highest yield investments over the term of the contract and such contract may provide only for the purchase of an obligation described in clause(1),above. The Issuer is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal;(2)obligations whose payment represents the principal stream of cash flow from the underlying mortgage- backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. Investment Policies. Under Texas law, the Issuer is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for Issuer funds, maximum allowable stated maturity of any individual investment, the maximum dollar-weighted average maturity allowed for pooled fund groups,methods to monitor the market price of investments acquired with public funds,and requirement for settlement of all transactions,except investment pool funds and mutual funds,on a delivery versus payment basis. All Issuer funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each fund's investment. Each Investment Strategy Statement will 23 describe its objectives concerning: (1) suitability of investment type; (2) preservation and safety of principal, (3) liquidity,(4)marketability of each investment,(5)diversification of the portfolio,and(6)yield. Under Texas law,Issuer 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 Issuer shall submit to its governing body an investment report detailing: (1)the investment position of the Issuer,(2)that all investment officers jointly prepared and signed the report, (3) the beginning market value, the ending market value and the fully accrued interest during the reporting period of each pooled fund group,and the fully accrued interest for the reporting period,(4)the book value and market value of each separately listed asset at the end of the reporting period; (5) the maturity date of each separately invested asset, (6)the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) State law. No person may invest Issuer funds without express written authority from its governing body. Additional Provisions. Under Texas law the Issuer is additionally required to: (1) annually review its adopted policies and strategies, (2) require any investment officers' with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and its governing body; (3) require the registered principal of firms seeking to sell securities to the Issuer or the registered principal of an investment management firm under contract with the Issuer to: (a) receive and review the Issuer's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude unauthorized investment activities, and (c) deliver a written statement attesting to these requirements; (4)perform an annual audit of the management controls on investments and investment officers; (5) provide specific investment training for the Treasurer, Chief Financial Officer, or other investment officers; (6) restrict reverse repurchase agreements to not more than 90 days; (7) restrict the investment of funds in any one mutual fund to an amount not greater than 10%of the total assets of such mutual fund;(8)restrict the investment in non-money market mutual funds in the aggregate to no more than 15% of the Issuer's monthly average fund balance,excluding bond proceeds and reserves and other funds held for debt service; (9)prohibit the investment in non-money market mutual funds of any portion of bond proceeds,reserves and funds held for debt service and;(10) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation,and advisory board requirements. The Issuer's current investment policy is in compliance with the State law requirements described above. Table 12-Status of Current Investments As of August 31, 2016,the Issuer's investment portfolio, including its General Fund, Capital Projects Fund, Utility Fund, and other miscellaneous governmental, proprietary and component unit funds, was invested as follows (with no material difference between book and market values): Westlake Investment Description Issuer Academy 1) Total Bank Accounts(cash and cash equivalents) $ 15,626,265 $ 1,041,688 $ 16,667,953 TexPool 250 100 350 Total $ 15,626,515 $ 1,041,788 $ 16,668,303 Source: The Issuer's monthly statements and financial records;unaudited.See Comprehensive Annual Financial Report(Note 2), included herewith as APPENDIX B,for more investment information. (1)Represents investments of the Westlake Academy, a component unit of the Issuer, the balances and transactions of which are blended with the balances and transactions of the Issuer. Investments of other component units of the Issuer may also be blended with the Issuer or alternatively may be excluded and "discretely presented" See Note 1 to the Issuer's audited financial statements, beginning on page 33, included in its Comprehensive Annual Financial Report included herewith as APPENDIX B for more information regarding component units. 24 LEGAL MATTERS The Town will furnish to the Initial Purchaser a complete transcript of proceedings had incident to the authorization and issuance of the Certificates, including the unqualified approving legal opinion of the Attorney General of Texas approving the Certificates and to the effect that the Certificates are valid and legally binding obligations of the Town,and based upon examination of such transcript of proceedings,the approving legal opinion of Bond Counsel, to like effect,and to the effect that the interest on the Certificates will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "TAX MATTERS" herein, including the alternative minimum tax on corporations.The customary closing papers, including a certificate to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Certificates, or which would affect the provision made for their payment or security, or in any manner questioning the validity of the Certificates will also be furnished.Though it may represent the Financial Advisor and purchasers of bonds, such as the Initial Purchaser from time to time in matters unrelated to the issuance of the Certificates, Bond Counsel has been engaged by and only represents the Town in the issuance of the Certificates. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained herein, except that, in its capacity as Bond Counsel, such firm has reviewed the information describing the Certificates in the Official Statement to verify that such description conforms to the provisions of the Ordinance. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Certificates is contingent on the sale and 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 from the transaction. TAX MATTERS Opinion On the date of initial delivery of the Certificates,McCall,Parkhurst&Horton L.L.P.,Dallas,Texas,Bond Counsel, will render its opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof ("Existing Law"), (1) interest on the Certificates for federal income tax purposes will be excludable from the "gross income" of the holders thereof and(2)the Certificates will not be treated as "specified private activity bonds"the interest on which would be included as an alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). Except as stated above, Bond Counsel will express no opinion as to any other federal,state or local tax consequences of the purchase,ownership or disposition of the Certificates. See APPENDIX A,FORM OF OPINION OF BOND COUNSEL. In rendering its opinion, Bond Counsel will rely upon (a) certain information and representations of the Issuer, including information and representations contained in the District's federal tax certificate, and(b)covenants of the District contained in the Certificate documents relating to certain matters, including arbitrage and the use of the proceeds of the Certificates and the property financed therewith. Failure by the District to observe the aforementioned representations or covenants could cause the interest on the Certificates to become taxable retroactively to the date of issuance. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the issuance of the Certificates in order for interest on the Certificates to be,and to remain,excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Certificates to be included in gross income retroactively to the date of issuance of the Certificates. The opinion of Bond Counsel is conditioned on compliance by the District with such requirements, and Bond Counsel has not been retained to monitor compliance with these requirements subsequent to the issuance of the Certificates. 25 Bond Counsel's opinion represents its legal judgment based upon its review of Existing Law and the reliance on the aforementioned information, representations and covenants. Bond Counsel's opinion is not a guarantee of a result. The Existing Law'is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that such Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase,ownership or disposition of the Certificates. A ruling was not sought from the Internal Revenue Service by the District with respect to the Certificates or the property financed or refinanced with proceeds of the Certificates. No assurances can be given as to whether the Internal Revenue Service will commence an audit of the Certificates,or as to whether the Internal Revenue Service would agree with the opinion of Bond Counsel. If an Internal Revenue Service audit is commenced,under current procedures the Internal Revenue Service is likely to treat the District as the taxpayer and the Certificateholders may have no right to participate in such procedure. No additional interest will be paid upon any determination of taxability. Federal Income Tax Accounting Treatment of Original Issue Discount The initial public offering price to be paid for one or more maturities of the Certificates (the "Original Issue Discount Certificates") may be less than the maturity amount thereof or one or more periods for the payment of interest on the Certificates may not be equal to the accrual period or be in excess of one year. In such event,the difference between(i)the"stated redemption price at maturity" of each Original Issue Discount Certificate,and(ii) the initial offering price to the public of such Original Issue Discount Certificate would constitute original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the Certificates less the amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods (or during any unequal period if it is the initial or final period) and which are made during accrual periods which do not exceed one year. Under Existing Law, any owner who has purchased such Original Issue Discount Certificate in the initial public offering is entitled to exclude from gross income (as defined in section 61 of the Code) an amount of income with respect to such Original Issue Discount Certificate equal to that portion of the amount of such original issue discount allocable to the accrual period. For a discussion of certain collateral federal tax consequences, see discussion set forth below. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Certificate prior to stated maturity,however,the amount realized by such owner in excess of the basis of such Original Issue 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 Original Issue Discount Certificate was held by such initial owner) is includable in gross income. Under Existing Law,the original issue discount on each Original Issue Discount Certificate is accrued daily to the stated maturity thereof(in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Certificates and ratably within each such six-month period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Certificate for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to(a)the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period)less(b)the amounts payable as current interest during such accrual period on such Original Issue Discount Certificate. The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Certificates which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Certificates should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption,sale or other disposition of such Original 26 Issue Discount Certificates and with respect to the federal,state,local and foreign tax consequences of the purchase, ownership,redemption,sale or other disposition of such Original Issue Discount Certificates. Collateral Federal Income Tax Consequences The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Certificates. This discussion is based on existing statutes, regulations, published rulings and court decisions,all of which are subject to change or modification,retroactively. The following discussion is applicable to investors, other than those who are subject to special provisions of the Code,such as financial institutions,property and casualty insurance companies,life insurance companies,individual recipients of Social Security or Railroad Retirement benefits,individuals allowed an earned income credit,certain S corporations with accumulated earnings and profits and excess passive investment income, foreign corporations subject to the branch profits tax, taxpayers qualifying for the health insurance premium assistance credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligations. THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE.INVESTORS,INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE CERTIFICATES. Interest on the Certificates will be includable as an adjustment for "adjusted current earnings" to calculate the alternative minimum tax imposed on corporations by section 55 of the Code. Under section 6012 of the Code, holders of tax-exempt obligations, such as the Certificates, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt obligation, such as the Certificates, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to,or exceeds,one year from the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the accrued market discount of such bonds; although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the "revised issue price" (i.e., the issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. State,Local and Foreign Taxes Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Certificates under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. Information Reporting and Backup Withholding Subject to certain exceptions, information reports describing interest income, including original issue discount, with respect to the Certificates will be sent to each registered holder and to the IRS. Payments of interest and principal may be subject to backup withholding under Section 3406 of the Code if a recipient of the payments fails to furnish to the payor such owner's social security number or other taxpayer identification number ("TIN"), furnishes an incorrect TIN, or otherwise fails to establish an exemption from the backup withholding tax. Any amounts so withheld would be allowed as a credit against the recipient's federal income tax. Special rules apply to partnerships, estates and trusts,and in certain circumstances,and in respect of Non-U.S.Holders,certifications as to foreign status and other matters may be required to be provided by partners and beneficiaries thereof. 27 Qualified Tax-Exempt Obligations for Financial Institutions Section 265(a) of the Code provides, in pertinent part, that interest paid or incurred by a taxpayer, including a "financial institution," on indebtedness incurred or continued to purchase or carry tax-exempt obligations is not deductible in determining the taxpayer's taxable income. Section 265(b) of the Code provides an exception to the disallowance of such deduction for any interest expense paid or incurred on indebtedness of a taxpayer that is a "financial institution" allocable to tax-exempt obligations,other than "private activity bonds,"that are designated by a "qualified small issuer" as "qualified tax-exempt obligations." A "qualified small issuer" is any governmental issuer (together with any "on-behalf of and "subordinate" issuers) who issues no more than $10,000,000 of tax- exempt obligations during the calendar year. Section 265(b)(5)of the Code defines the term"financial institution"as any "bank" described in Section 585(a)(2) of the Code, or any person accepting deposits from the public in the ordinary course of such person's trade or business that is subject to federal or state supervision as a financial institution.Notwithstanding the exception to the disallowance of the deduction of interest on indebtedness related to "qualified tax-exempt obligations" provided by Section 265(b) of the Code, Section 291 of the Code provides that the allowable deduction to a "bank," as defined in Section 585(a)(2) of the Code, for interest on indebtedness incurred or continued to purchase"qualified tax-exempt obligations" shall be reduced by twenty-percent(20%)as a "financial institution preference item." The District has designated the Certificates as "qualified tax-exempt obligations" within the meaning of section 265(b) of the Code. In furtherance of that designation, the District has covenanted to take such action that would assure,or to refrain from such action that would adversely affect,the treatment of the Certificates as "qualified tax- exempt obligations." Potential purchasers should be aware that if the issue price to the public exceeds $10,000,000,there is a reasonable basis to conclude that the payment of a de minimis amount of premium in excess of$10,000,000 is disregarded;however,the Internal Revenue Service could take a contrary view.If the Internal Revenue Service takes the position that the amount of such premium is not disregarded, then such obligations might fail to satisfy the $10,000,000 limitation and the Certificates would not be "qualified tax- exempt obligations." Future and Proposed Legislation Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level,may adversely affect the tax-exempt status of interest on the Certificates under Federal or state law and could affect the market price or marketability of the Certificates.Any such proposal could limit the value of certain deductions and exclusions, including the exclusion for tax-exempt interest. The likelihood of any such proposal being enacted cannot be predicted. Prospective purchasers of the Certificates should consult their own tax advisors regarding the foregoing matters. RATING The Certificates have been rated"AAA"(stable outlook)by S&P Global Ratings("S&P"). Such rating reflects only the view of S&P. No application has been made at any other rating agency. The explanation of the significance of such rating may be obtained from S&P. There is no assurance that such rating will continue for any period of time or that such rating will not be revised or withdrawn. A revision or withdrawal of such rating may have a materially adverse effect on the market price of the Certificates. OTHER MATTERS Litigation Certificate In the opinion of Issuer officials,the Issuer is not a party to any litigation or other proceeding pending or to their knowledge threatened, in any court, agency or other administrative body (either state or federal) which, if decided adversely to the Issuer,would have a material adverse effect on the financial condition of the Issuer. At the time of the initial delivery of the Certificates,the Issuer will provide the Initial Purchaser with a certificate to the effect that except as disclosed in the Oficial Statement, no litigation of any nature has been filed or is then 28 pending challenging the issuance of the Certificates or that affects the payment and security of the Certificates or in any other manner questioning the issuance,sale or delivery of the Certificates. Legal Investments and Eligibility to Secure Public Funds in Texas Section 1201.041 of the Public Securities Procedures Act (Chapter 1201, Texas Government Code, as amended) 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, as amended, 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 "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 at least$1 million of capital,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. The Issuer has made no investigation of other laws, rules, regulations or investment criteria which might apply to such institutions or entities or which might limit the suitability of the Certificates for any of the foregoing purposes or limit the authority of such institutions or entities to purchase or invest in the Certificates for such purposes. The Issuer has made no review of laws in other states to determine whether the Certificates are legal investments for various institutions in those states. Financial Advisor Lawrence Financial Consulting LLC is retained as Financial Advisor to the Issuer to assist in the issuance of the Certificates. In this capacity, the Financial Advisor has compiled certain data relating to the Certificates that is contained in this Official Statement.The Financial Advisor has not independently verified any of the data contained herein or conducted a detailed investigation of the affairs of the Issuer to determine the accuracy or completeness of this Official Statement.Because of its limited participation,the Financial Advisor assumes no responsibility for the accuracy or completeness of any of the information contained herein. The fee of the Financial Advisor for services with respect to the Certificates is contingent upon the issuance and sale of the Certificates. The Financial Advisor 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 Issuer 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. Annual Financial Report The Issuer's Annual Financial Report, including its audited basic financial statements and related footnotes,for the year ended September 30,2015,is included as APPENDIX B to this Official Statement. 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 Issuer 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. 29 Sale of the Certificates After requesting competitive bids for the Certificates, the Town has accepted a bid tendered by FTN Financial Capital Markets (the"Initial Purchaser")to purchase the Certificates at the rates shown on page i of this Official Statement for the purchase price of$9,284,436.07 (representing the principal amount of the Certificates, plus an aggregate reoffering premium of$246,750.40, less an underwriter's discount of$142,314.33). No assurance can be given that any trading market will be developed for the Certificates after their initial sale by the Town.The Town has no control over the prices at which the Certificates will initially be reoffered to the public. Continuing Disclosure of Information In the Ordinance,the Issuer has made the following agreement for the benefit of the holders and beneficial owners of the Certificates. The Issuer is required to observe the agreement for so long as it remains an"obligated person" with respect to the Certificates,within the meaning of the Securities and Exchange Commission's Rule 15c2-12(the "Rule"). Under the agreement, the Issuer 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 (the"MSRB")through its Electronic Municipal Market Access("EMMA")system. Annual Reports. The Issuer will provide certain updated financial information and operating data to the MSRB annually. The information to be updated includes all quantitative financial information and operating data with respect to the Issuer of the general type included in this Official Statement under Tables numbered 1 through 12 and in APPENDIX B, which is the Issuer's annual audited financial report. The Issuer will update and provide the information in the numbered tables within six months after the end of each fiscal year ending in and after 2016 and, if not submitted as part of such annual financial information, the Town will provide audited financial statements when and if available, and in any event, within 12 months after the end of each fiscal year. If the audit of such financial statements is not complete within 12 months after any such fiscal year end, then the Issuer will file unaudited financial statements by the required time and audited financial statements for the applicable fiscal year, when and if the audit report on such statements becomes available.Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the Issuer may be required to employ from time to time pursuant to State law or regulation. The Issuer's current fiscal year end is September 30. Accordingly, the Issuer must provide updated information included in the above-referenced tables by the last day of March in each year, and audited financial statements for the preceding fiscal year(or unaudited financial information if the audited financial statements are not yet available) must be provided by September 30 in each year, unless the Issuer changes its fiscal year. If the Issuer changes its fiscal year, it will file notice of the change(and of the date of the new fiscal year end)with the MSRB prior to the next date by which the Issuer otherwise would be required to provide financial information and operating data as set forth above. All financial information,operating data,financial statements and notices required to be provided to the MSRB shall be provided in an electronic format and be accompanied by identifying information prescribed by the MSRB. Financial information and operating data to be provided as set forth above may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document) available to the public on the MSRB's Internet Web site or filed with the Securities and Exchange Commission(the"SEC"),as permitted by the Rule. Event Notices. The Issuer will also provide notices of certain events to the MSRB.The Issuer will provide notice of any of the following events with respect to the Certificates to the MSRB in a timely manner and not more than 10 business days after 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 payment of the 30 Certificates, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership, or similar event of the Issuer, which shall occur as described below; (13) the consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of its assets,other than in the ordinary course of business, the entry into of a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. For these purposes, any event described in the immediately preceding paragraph(12)is considered to occur when any of the following occur:the appointment of a receiver,fiscal agent,or similar officer for the Issuer 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 Issuer, 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 Issuer. Neither the Certificates nor the Ordinance make any provision for debt service reserves, credit enhancement,or liquidity enhancement.In addition,the Issuer will provide timely notice of any failure by the Issuer to provide information, data, or financial statements in accordance with its agreement described above under "Annual Reports".The Issuer will provide each notice described in this paragraph to the MSRB. Availability of Information. The Town has agreed to provide the foregoing information only as described above. Investors will be able to access continuing disclosure information filed with the MSRB free of charge at www.emma.msrb.org.. Limitations and Amendments. The Issuer has agreed to update information and to provide notices of events only as described above. The Issuer 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 Issuer makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Certificates at any future date. The Issuer 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 Issuer to comply with its agreement. The Issuer 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 Issuer, 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 Issuer (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the registered owners of the Certificates. The Issuer 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 Issuer 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 Issuer has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. Certification of Official Statement At the time of payment for and delivery of the Certificates,the Town will furnish a certificate,executed by a proper officer, acting in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or pertaining to the Town contained in this Official Statement, and any addenda, supplement or amendment thereto,on the date of such Official Statement,on the acceptance of the best bid therefor, 31 and on the date of the delivery,were and are true and correct in all material respects; (b)insofar as the Town and its affairs, including its financial affairs, are concerned,the Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading in any material respect;(c)insofar as the descriptions and statements,including financial data,of or pertaining to entities,other than the Town,and their activities contained in this Official Statement are concerned,such statements and data have been obtained from sources which the Town believes to be reliable and the Town 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 Town since the date of the last audited financial statements of the Town. Forward-Looking Statements Disclaimer The statements contained in this Official Statement,and in any other information provided by the Issuer,that are not purely historical, are forward-looking statements, including statements regarding the Issuer'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 Issuer on the date hereof, and the Issuer assumes no obligation to update any such forward-looking statements. The Issuer's actual results could differ materially from those discussed in such forward-looking statements. The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative,judicial, and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Issuer. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Official Statement will prove to be accurate. Conclusion No person has been authorized 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 Issuer.This Official Statement does not constitute an offer to sell or solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer of solicitation. The information set forth herein has been obtained from the Issuer's records, audited financial statements and other sources which the Issuer considers to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will ever be realized.All of the summaries of the statutes,documents and the Ordinance contained in this Official Statement are made subject to all of the provisions of such statutes, documents, and the Ordinance. These summaries do not purport to be complete statements of such provisions and reference is made to such summarized documents for further information. Reference is made to official documents in all respects. The Ordinance authorizing the issuance of the Certificates approved the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorized its further use in the reoffering of the Certificates by the Initial Purchaser. TOWN OF WESTLAKE,TEXAS Laura Wheat Mayor Kelly Edwards Town Clerk 32 APPENDIX A-FORM OF BOND COUNSEL OPINION A- 1 LAW OFFICES M`CALL, PARKHURST & HORTON L.L.P. 600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N.ST.MARY'S STREET 1800 ONE AMERICAN CENTER NINTH FLOOR 1525 ONE RIVERWALK PLACE AUSTIN,TEXAS 78701-3248 DALLAS,TEXAS 75201-6587 SAN ANTONIO,TEXAS 78205-3503 TELEPHONE:512478-3805 TELEPHONE:214754-9200 TELEPHONE:210 225-2800 FACSIMILE:512 472-0871 FACSIMILE:214 754-9250 FACSIMILE:210 225-2984 Proposed Form of Opinion of Bond Counsel An opinion in substantially the following form will be delivered by McCall, Parkhurst&Horton L.L.P.,Bond Counsel, upon the delivery of the Certificates of Obligation, assuming no material changes in facts or law. TOWN OF WESTLAKE,TEXAS COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2016 IN THE AGGREGATE PRINCIPAL AMOUNT OF$9,180,000 AS BOND COUNSEL FOR THE TOWN OF WESTLAKE,TEXAS (the "Issuer")in connection with the issuance of the Issuer's Combination Tax and Limited Surplus Revenue Certificates of Obligation, Series 2016, described above (the "Certificates of Obligation"), we have examined into the legality and validity of the Certificates of Obligation,which bear interest from the date and mature on the dates,and are subject to redemption,in accordance with the terms and conditions stated in the text of the Certificates of Obligation. Terms used herein and not otherwise defined shall have the meaning given in the ordinance of the Issuer authorizing the issuance and sale of the Certificates of Obligation(the"Ordinance"). WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of the State of Texas,a transcript of certified proceedings of the Issuer,and other pertinent instruments authorizing and relating to the issuance of the Certificates of Obligation, including one of the executed Certificates of Obligation(Certificate of Obligation Number T-1). BASED ON SAID EXAMINATION,IT IS OUR OPINION that the Certificates of Obligation have been duly authorized,issued,and delivered in accordance with law; and that the Certificates of Obligation, except as may be limited by laws applicable to the Issuer relating to govermental immunity,bankruptcy, reorganization and other similar matters affecting creditors'rights generally or by general principles of equity which permit the exercise of judicial discretion,constitute valid and legally binding obligations of the Issuer; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of said Certificates of Obligation have been levied and pledged for such purpose,within the limit prescribed by law, and that the Certificates of Obligation are additionally secured by and payable from surplus revenues of the Issuer's waterworks and sewer system,remaining after payment of all operation and maintenance expenses thereof, and all debt service,reserve,and other requirements in connection with all of the Issuer's revenue bonds or other obligations(now or hereafter outstanding),which are payable from all or any part of the net revenues of the Issuer's waterworks and sewer system,as provided in the Ordinance. IT IS FURTHER OUR OPINION,except as discussed below,that the interest on the Certificates of Obligation is excludable from the gross income of the owners for federal income tax purposes under the statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We are further of the opinion that the Certificates of Obligation are not"specified private activity bonds"and that, accordingly, interest on the Certificates of Obligation will not be included as an individual or corporate alternative minimum tax preference item under section 57(a)(5)of the Internal Revenue Code of 1986(the "Code"). In expressing the aforementioned opinions,we have relied on,certain representations,the accuracy SIGNATURE IDENTIFICATION AND GENERAL CERTIFICATE THE STATE OF TEXAS § TARRA.NT AND DENTON COUNTIES § TOWN OF WESTLAKE § We, the undersigned officers of the Town of Westlake, Texas (the "Issuer"), hereby certify that we are executing and delivering this certificate with reference to the Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2016, dated December 1, 2016, in the principal amount of$9,180,000 (the "Certificates"). The certifications herein are made this, the 22"d day of December, 2016. Certifications as to Execution of Certificates and Issuer Seal 1. We officially executed and signed the Certificates with our manual signatures or by causing facsimiles of our manual signatures to be placed on each of the Certificates, and we hereby adopt said facsimile signatures as our own, respectively, and declare that said facsimile signatures constitute our signatures the same as if we had manually signed each of the Certificates. 2. The Certificates are substantially in the form, and have been duly executed and signed in the manner,prescribed in the Ordinance authorizing the issuance of the Certificates. 3. At the time we so executed and signed the Certificates we were, and at the time of executing this certificate we are, the duly chosen, qualified and acting officers indicated therein, and authorized to execute the same. 4. We have caused the official seal of the Issuer to be impressed or placed in facsimile on the Certificates; and said seal on the Certificates has been duly adopted as, and is hereby declared to be, the official seal of the Issuer. Certifications as to Litigation 5. No litigation of any nature has been filed or is now pending to restrain or enjoin the issuance or delivery of the Certificates, or which would affect the provision made for their payment or security, or in any manner questioning the proceedings or authority concerning the issuance of the Certificates, and that so far as we know and believe no such litigation is threatened. 6. No litigation of any nature has ever been filed pertaining to, affecting, questioning or contesting, and so far as we know and believe no such litigation is threatened, with respect to: (a) the issuance, delivery, payment, security or validity of the Certificates, (b) the authority of the Town Council and the officers of said Town Council to issue, execute and deliver the Certificates; or(c)the current Tax Rolls of the Issuer. 7. Neither the corporate existence nor boundaries of the Issuer is being contested, no litigation has been filed or is now pending, and so far as we know and believe no such litigation is threatened, that would affect the authority of the officers of the Issuer to issue, execute, sign, and deliver the Certificates, and no authority or proceedings for the issuance of the Certificates have been repealed,revoked or rescinded. Certifications as to the Organization, Existence and Oualifications of the Issuer 8. The Issuer is a duly incorporated Type A general law municipality, having less than 5,000 inhabitants, operating under the Constitution and laws of the State of Texas. The Issuer's population as of the last census was 992. Certification as to No Default 9. The Issuer is not in default with respect to the Certificates or the ordinance authorizing the issuance of the Certificates. Certification as to the Issuer's Tax-Supported Debt 10. After the issuance of the Certificates, the Issuer will have $36,322,000 in aggregate principal amount of tax-supported bonded indebtedness outstanding. A schedule of the debt service requirements for all outstanding general obligation tax debt of the Issuer, including the Certificates, is included as Table 5 to the Official Statement dated December 5, 2016 pertaining to the Bonds and the Issuer,which schedule is incorporated herein. Certification as to the Issuer's Current Tax Roll 11. That the currently effective ad valorem tax appraisal roll of the Issuer(the "Tax Roll") is the Tax Roll prepared and approved during the calendar year 2016-17, being the most recently approved Tax Roll of the Issuer; that the taxable property in the Issuer has been appraised, assessed and valued as required and provided by the Texas Constitution and Property Tax Code (collectively, "Texas law"); that the Tax Roll for said year has been submitted to the Town Council of the Issuer as required by Texas law, and has been approved and recorded by said Town Council; and according to the Tax Roll for said year the net aggregate taxable value of taxable property in the Issuer (after deducting the amount of all applicable exemptions required or authorized under Texas law), upon which the annual ad valorem tax of the Issuer has been or will be imposed and levied, is $1,105,075,652. Submission of Documents to the Attorney General 12. The initial securities certificates for the Certificates are directed to be sent to the Office of the Attorney General of the State of Texas, Public Finance Division (the "Attorney General"), by the Issuer's Bond Counsel, McCall, Parkhurst & Horton L.L.P. The Issuer requests that the Attorney General examine and approve the initial Certificate in accordance with applicable law. After such approval, the Attorney General is requested to deliver the Certificates to the Comptroller of Public Accounts for registration. 2 Authorization of the Attorney General to Execute this Certificate 13. The Attorney General is hereby authorized and directed to date this Certificate concurrently with the date of approval of the Certificates. If any litigation or contest should develop pertaining to the Certificates or any other matters covered by this Certificate, the undersigned will notify the Attorney General thereof immediately by telephone. With this assurance the Attorney General can rely on the absence of any such litigation or contest, and on the veracity and currency of this Certificate, at the time the Certificates are approved,unless the Attorney General is notified otherwise as aforesaid. Certification as to Absence of Petition for Referendum 14. No petition protesting the issuance of the Certificates and requesting a referendum election has been received. Certifications as to Waterworks and Sewer System 15. None of the revenues or income of the Issuer's combined Waterworks and Sewer System (the "System") have been pledged or encumbered to the payment of any debt or obligation of the Issuer or the System, except in connection with the Certificates and in connection with the Issuer's (i) Combination Tax Revenue Certificates of Obligation, Series 2013, which are currently outstanding in the principal amount of$8,830,000, and (ii) Combination Tax Revenue Certificates of Obligation, Series 2011, which are currently outstanding in the principal amount of$1,627,000. 16. Attached hereto as Exhibit A is a true, full and correct schedule of the income(consisting of operating income and interest income) and expenses (consisting of operating expenses, but excluding depreciation and debt service) of the System for the most recent three years for which financial information is available. 17. The Issuer's current water and sewer rates are set forth in Exhibit B attached hereto. Certification as to Texas Ethics Commission 18. With respect to the contracts contained within the transcript of proceedings filed with the Attorney General in connection with the issuance of the Certificates, all disclosure filings and acknowledgments required by Section 2252.908, Texas Government Code, and the rules of the Texas Ethics Commission related to said provision,have been made. [Remainder ofpage left blank intentionally] 3 The persons named below were, on the date of authorization of the Certificates, the duly elected and qualified incumbents of the offices of the Issuer set opposite their respective names, and the signatures below are the genuine signatures of said officers. By signing below, such officers hereby evidence their lawful signatures, adopt same as facsimiles for the purpose of executing the Certificates and attest to the truthfulness of the foregoing certifications. MANUAL SIGNATURES OFFICIAL TITLES Mayor, Town of Westlake Town Secretary, Town of Westlake Before me, on this day personally appeared the foregoing individuals, known to me to be the officers whose true and genuine signatures were subscribed to the foregoing instrument in my presence. Given under my hand and seal of office this 'S:2 day of December, 2016. `DsN GINGER ROBERT'S AWT-R7ij.l7 Notary Public STATE OF TEXAS Notary hIc Nota�rF O1 My ommrE10 N 12433747.7 C 4n" xt.S�18.On (Notary Seal) S-1 EXHIBIT A SCHEDULE OF THE INCOME AND EXPENSES OF THE SYSTEM Fiscal Year Gross Revenues Expenses Net Revenues 2013 $ 3,388,792 $ 2,213,877 $ 1,174,915 2014 3,435,737 2,490,539 945,198 2015 3,556,771 3,572,825 (16,054) EXHIBIT B CURRENT WATER AND SEWER RATES See next page rw ,, WATER Ek SEWER RATES 2015 Town of Westlake*3 Village Circle#202*Westlake,TX 76262 Tel: (817)430-0%1 * Fax: (817)430-1812 www.westlako-tx.org e4m& Rau Effd d1n: 01JOiMIS BASE SERVICE CHARGES ...RaeSldentlal Ct1ff.v Meet•:;Size Wufett" Sewer WaterSir 4" 1" $73 SRO $78 1.5" $143 $120 $1,7 $144 2" $227 $1W 5.24$ $228 31 93 10 gr2 92 4" $888 00 73 $840 em $1,663 SIA50 $3.8W $1,610 S' $2,403 100 $4,U3 $2,320 VOLUME per Jft gafliihi VfDtGf/tfA _. 6F' ,Q Sew 0-2,000 litre -53.40 $0.00 $3.74 $20:18 86.85 2,001-20,000 $3.40 $5.85 $3.74 $Z0.18 $6.85 20,001-100 000 $4.45 $5.86 $4.90 $20.18 $6.85 100 1-400 000 5.50 $5.85 1 sox $20.18 56.85 over 400,t10O gallam 1 $8.80 1 $5.85 1 1 7.48 1 $20.18 1 $8.85 DEPOSITS RasldAf1 - 0 114 314" '$200 $150 $200 $150 1" $250 00 $250 $200 1.5" $300 $250 2' $500 5500 $320 3" $100 S7t)0 ;$1000 $700 4" 51800 $1200 $100 $1,200 fr $3,750 $2,500 $3,750 52,500 8" $6,400 $3.600 $6,400 $3,600 WATER TAP FEES MeterSl►�s ._" Fri! 5ervlcsLfrr«e 7"` Fses »tf8ore 3t4" $1,100 11,100 1" $$50 $1,250 $1,20D 1.5" $875 $1750 $1,300 2*Disc $1-100 $2,400 $1,400 Fef 2 Compound or fir,m unusual sfetts@®A ,fidevill be St R*W O&A to VA T&OM plua 10%. "Tap fee$br oonnec dws InsW&d by tha Town wM ba fret toTmvn !O%. Dow nutuda City of Fart ftM wdw or~impact teas. SEWER TAP D r.,:It trovft tlrtrt" ice, v _...< 0 r--8 fust. 50 1300 6--12W $450 50 .$7 00 12-IS feat $450 $1,2.50 $1800 FORT e _ IMPACT _ u em0 77 $J4" $704 $704 1" 1.173 $1,173 1.5' $2,345 $2,345 2 U,752 $3.7.52 WinterAmBge: Deo,lan-Feb d applied to March cor anption falls(which we mailed out In April) a�v�o>+ a>�r� wrotraota Ordinance No.740 2015 Gas Well Water Rate Model Alssumpti©ns Usage Volume = 5,000,000 gallons Total assumed usage per well Usage Period = 10 days Assumed time frame for drilling &Fracing Probability of Peak Period = 2/3 Peaks are assumed to only occur in the "summer" months Jun-Aug Affected years = 1.5 Assumed Current Annual Effect(MGD) FW Rate Effect Max Day 0.5 $156,017.00 $78,008.50 Max Hour 0.020833333 $30,616.00 $ 637.83 Potential annual effect $78,646.33 per 1,000 gallons 15,000 Probability 2/3 Affected years x 1.5 Rate of use effect $ 15.75 Base cost + $ 4.43 Proposed Rate $20.18 per 1000 gals. rev. 1/1/15 Ordinance 740 Page 5 of 5 CERTIFICATE AS TO OFFICIAL STATEMENT THE STATE OF TEXAS COUNTIES OF TARRANT AND DENTON TOWN OF WESTLAKE 1, the undersigned, hereby certify that I am the Mayor of the Town of Westlake, Texas (the "Town"), and, in such official capacity and on behalf of the Town, I further certify as follows: I. That this certificate is executed for and on behalf of the Town with reference to the issuance of Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2016, in the principal amount of $9,180,000 (the "Certificates"). This certificate is made in accordance with the provisions of the Notice of Sale of the Certificates, dated November 18, 2016 (the "Notice of Sale"), pursuant to which the Town solicited bids for the sale of the Certificates. Capitalized terms used herein but not defined have the meanings assigned to such terms in the Notice of Sale. 2. To the best of my knowledge and belief: (a) the descriptions and statements of or pertaining to the Town contained in the Official Statement, and any addenda, supplement or amendment thereto, on the date of the Official Statement, on the date of sale of the Certificates and the acceptance of the best bid therefor, and on the date hereof,were and are true and correct in all material respects; (b) insofar as the Town and its affairs, including its financial affairs, are concerned, the Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect; (c) insofar as the descriptions and statements, including financial data, of or pertaining to entities, other than the Town, and their activities contained in the Official Statement are concerned, such statements and data have been obtained from sources which the Town believes to be reliable and the Town 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 Town since the date of the last audited financial statements of the Town. [Signature page follows] SIGNED this December 22, 2016. TOWN OF WESTLAKE, "TEXAS Mayor FEDERAL TAX CERTIFICATE 1. In General. 1.1. The undersigned is the Mayor of the Town of Westlake,Texas(the"Issuer"). 1.2. This Certificate is executed for the purpose of establishing the reasonable expectations of the Issuer as to future events regarding the Issuer's Combination Tax and Revenue Certificates of Obligation, Series 2016 (the"Obligations"). The Obligations are issued pursuant to an Ordinance of the Issuer duly adopted by the Issuer(the"Ordinance"). The Ordinance is incorporated herein by reference. 1.3. To the best of the undersigned's knowledge, information and belief, the expectations contained in this Federal Tax Certificate are reasonable. 1.4. The undersigned is an officer of the Issuer delegated with the responsibility of issuing and delivering the Obligations. 1.5. The undersigned is not aware of any facts or circumstances that would cause him to question the accuracy of the representations made by FTN Financial Capital Markets(the"Underwriter")in the Issue Price Certificate attached hereto as Exhibit"D",and by Lawrence Financial Consulting LLC(the"Financial Advisor")with respect to the Schedules attached hereto as Exhibit"E". 2. The Purpose of the Obligations and Useful Lives of Proiects. 2.1. The Obligations are being issued pursuant to the Ordinance(a)to provide for the payment of costs of issuing the Obligations,and(b)to pay all or a portion of the Issuer's contractual obligations for the purpose of acquiring,constructing,installing and equipping fire-fighting facilities(the"Projects"). 2.2. The Issuer expects that the aggregate useful lives of the Projects exceed 30 years from the later of the date the Projects are placed in service or the date on which the Obligations are issued. 2.3. All earnings,such as interest and dividends,received from the investment of the proceeds of the Obligations during the period of acquisition and construction of the Projects and not used to pay interest on the Obligations,will be used to pay the costs of the Projects,unless required to be rebated and paid to the United States in accordance with section 148(f) of the Internal Revenue Code of 1986 (the "Code"). The proceeds of the Obligations,together with any investment earnings thereon,are expected not to exceed the amount necessary for the governmental purpose of the Obligations. The Issuer expects that no disposition proceeds will arise in connection with the Projects or the Obligations. 3. Expenditure of Certificate Proceeds and Use of Projects. 3.1. The Issuer will incur,within six months after the date of issue of the Obligations,a binding obligation to commence the Projects,either by entering into contracts for the construction of the Projects or by entering into contracts for architectural or engineering services for such Projects, or contracts for the development,purchase of construction materials,or purchase of equipment,for the Projects,with the amount C:\Users\csettle\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.OUtlook\B2M284NI\Westlake(Town of)-New$-CSST- fedtaxcert-v2.doc 12/14/2016 10:20 AM to be paid under such contracts to be in excess of five percent of the proceeds which are estimated to be used for the cost of the Projects. 3.2. After entering into binding obligations,work on such Projects will proceed promptly with due diligence to completion. 3.3. All original proceeds derived from the sale of the Obligations to be applied to the Projects and all investment earnings thereon (other than any amounts required to be rebated to the United States pursuant to section 148(f)of the Code)will be expended for the Projects no later than a date which is three years after the date of issue of the Obligations. 3.4. The Ordinance provides that allocations of proceeds to expenditures for the Projects are expected not to be later than 18 months after the later of the date of the expenditure or the date that the Projects are placed in service,but,in any event,not longer than 60 days after the earlier of five years of the date hereof or the date the Obligations are retired. 3.5. Only Project costs paid or incurred by the Issuer on or after 60 days prior to the date the Issuer approved the funding of the Project (the "60-day period") through its declaration of official intent ("Qualified Costs")will be paid or reimbursed with Bond proceeds. For this purpose Qualified Costs also include preliminary expenditures,incurred prior to the 60-day period before the approval of the Issuer through its declaration of official intent,up to an amount not in excess of 20 percent of the aggregate amount of the Obligations. No Qualified Cost represents the cost of property or land acquired from a related party. 3.6. The Issuer will not invest the proceeds prior to such expenditure in any guaranteed investment contract or other nonpurpose investment with a substantially guaranteed yield for a period equal to or greater than four years. 3.7. Other than members of the general public,the Issuer expects that throughout the lesser of the term of the Obligations,or the useful lives of the Projects,the only user of the Projects will be the Issuer or the Issuer's employees and agents. The Issuer will be the manager of the Projects. In no event will the proceeds of the Obligations or facilities financed therewith be used for private business use in an amount greater than$15 million. 3.8. Except as stated below, the Issuer expects not to sell or otherwise dispose of property constituting the Projects prior to the earlier of the end of such property's useful life or the final maturity of the Obligations. The Ordinance provides that the Issuer will not sell or otherwise dispose of the Projects unless the Issuer receives an opinion of nationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Obligations. 3.9. For purposes of Subsection 3.8 hereof,the Issuer has not included the portion of the Projects comprised of personal property that is disposed in the ordinary course at a price that is expected to be less than 25 percent of the original purchase price. The Issuer,upon any disposition of such property,will transfer the receipts from the disposition of such property to the general operating fund and expend such receipts within six months for other governmental programs. 4. Interest and Sinkin Fund. 4.1. A separate and special Interest and Sinking Fund has been created and established,other than as described herein, solely to pay the principal of and interest on the Obligations (the "Bona Fide Debt Service Portion"). The Bona Fide Debt Service Portion constitutes a fund that is used primarily to achieve a proper matching of revenues and debt service within each bond year. Such portion will be completely 2 depleted at least once each year except for an amount not in excess of the greater of(a)one-twelfth of the debt service on the Obligations for the previous year, or(b)the previous year's earnings on such portion of the Interest and Sinking Fund. Amounts deposited in the Interest and Sinking Fund constituting the Bona Fide Debt Service Portion will be spent within a thirteen-month period beginning on the date of deposit,and any amount received from the investment of money held in the Interest and Sinking Fund will be spent within a one-year period beginning on the date of receipt. 4.2. Any money deposited in the Interest and Sinking Fund and any amounts received from the investment thereof that accumulate and remain on hand therein after thirteen months from the date of deposit of any such money or one year after the receipt of any such amounts from the investment thereof shall constitute a separate portion of the Interest and Sinking Fund. The yield on any investments allocable to the portion of the Interest and Sinking Fund exceeding the sum of(a) the Bona Fide Debt Service Portion and (b) an amount equal to the lesser of five percent of the sale and investment proceeds of the Obligations or $100,000 will be restricted to a yield that does not exceed the yield on the Obligations. 5. Yield. 5.1. The issue price of the Obligations included in the Form 8038-G,is based on the Issue Price Certificate attached hereto. 5.2. The Issuer has not entered into any qualified guarantee or qualified hedge with respect to the Obligations. The yield on the Obligations will not be affected by subsequent unexpected events,except to the extent provided in section 1.148-4(h)(3) of the Treasury Regulations when and if the Issuer enters into a qualified hedge or into any transaction transferring,waiving or modifying any right that is part of the terms of any Certificate. The Issuer will consult with nationally recognized bond counsel prior to entering into any of the foregoing transactions. 6. Invested Sinking Fund Proceeds,Replacement Proceeds. 6.1. The Issuer has,in addition to the moneys received from the sale of the Obligations,certain other moneys that are invested in various funds which are pledged for various purposes. These other funds are not available to accomplish the purposes described in Section 2 of this Certificate. Any Project cost not paid with proceeds of the Obligations will be paid by contribution of the Issuer from sources other than proceed of bonds the interest on which is tax exempt. As such,these amounts will serve to supplement and not replace the amounts received from the proceeds of the Obligations. 6.2. Other than the Interest and Sinking Fund,there are,and will be,no other funds or accounts established,or to be established,by or on behalf of the Issuer(a)which are reasonably expected to be used,or to generate earnings to be used,to pay debt service on the Obligations,or(b)which are reserved or pledged as collateral for payment of debt service on the Obligations and for which there is reasonable assurance that amounts therein will be available to pay such debt service if the Issuer encounters financial difficulties. Accordingly,there are no other amounts constituting"gross proceeds"of the Obligations,within the meaning of section 148 of the Code. 7. Other Obligations. 7.1. There are no other obligations of the Issuer that(a)are sold at substantially the same time as the Obligations,i.e.,within 15 days of the date of sale of the Obligations,(b)are sold pursuant to a common plan of financing with the Obligations, and (c)will be payable from the same source of funds as the Obligations. 3 7.2. The Issuer(including any of its related entities)has not issued nor does it expect to issue any other tax-exempt obligations during the current calendar year,including certain lease purchase agreements in amounts not greater than$483,000,which when aggregated with the Obligations would exceed$10,000,000, within the meaning of section 265(b)of the Code. 8. Federal Tax Audit Responsibilities. The Issuer acknowledges that in the event of an examination by the Internal Revenue Service(the "Service")to determine compliance of the Obligations with the provisions of the Code as they relate to tax- exempt obligations, the Issuer will respond, and will direct its agents and assigns to respond, in a commercially reasonable manner to any inquiries from the Service in connection with such an examination. The Issuer understands and agrees that the examination may be subject to public disclosure under applicable Texas law. The Issuer acknowledges that this Certificate,including any attachments,does not constitute an opinion of Bond Counsel as to the proper federal tax or accounting treatment of any specific transaction. 9. Record Retention and Private Business Use. The Issuer has covenanted in the Ordinance that it will comply with the requirements of the Code relating to the exclusion of the interest on the Obligations under section 103 of the Code. The Service has determined that certain materials,records and information should be retained by the issuers of tax-exempt obligations for the purpose of enabling the Service to confirm the exclusion of the interest on such obligations under section 103 of the Code. ACCORDINGLY,THE ISSUER SHALL TAKE STEPS TO ENSURE THAT ALL MATERIALS,RECORDS AND INFORMATION NECESSARY TO CONFIRM THE EXCLUSION OF THE INTEREST ON THE OBLIGATIONS UNDER SECTION 103 OF THE CODE ARE RETAINED FOR THE PERIOD BEGINNING ON THE ISSUE DATE OF THE OBLIGATIONS AND ENDING THREE YEARS AFTER THE DATE THE OBLIGATIONS ARE RETIRED. The Issuer acknowledges receipt of the letters attached hereto as Exhibit"B"which discusses limitations related to private business use and Exhibit"C"which,in part,discusses specific guidance by the Service with respect to the retention of records relating to tax-exempt bond transactions. 10. Rebate to United States. The Issuer has covenanted in the Ordinance that it will comply with the requirements of the Code, including section 148(f) of the Code,relating to the required rebate to the United States. Specifically,the Issuer will take steps to ensure that all earnings on gross proceeds of the Obligations in excess of the yield on the Obligations required to be rebated to the United States will be timely paid to the United States. The Issuer acknowledges receipt of the memorandum attached hereto as Exhibit "A" which discusses regulations promulgated pursuant to section 148(f)of the Code. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 4 DATED as of December 22,2016. TOWN OF WESTLAKE,TEXAS By: lzlldA� 4 &Idz Mayor Town of Westlake,Texas,Combination Tax and Revenue Certificates of Obligation,Series 2016 The undersigned represents that,to the best of the undersigned's knowledge,information and belief, the representations contained in the Schedules attached hereto as Exhibit"E"are,as of December 22,2016, accurate and complete. We understand that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in this Federal Tax Certificate and by McCall,Parkhurst& Horton L.L.P.(i)in connection with rendering its opinion to the Issuer that interest on the Obligations is excludable from gross income thereof for income tax purposes,and(ii)for purposes of completing the IRS Form 8038-G. The undersigned is certifying only as to facts in existence on the date hereof.Nothing herein . represents the undersigned's interpretation of any laws or the application of any laws to these facts. LAWRENCE FINANCIAL CONSULTING LLC By: Name: Tom Lawrence Title: President Town of Westlake,Texas,Combination Tax and Revenue Certificates of Obligation,Series 2016 Exhibit"A" LAW OFFICES MCCALL, PARKHURST & HORTON L.L.P. 600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N.ST.MARY'S STREET SUITE 1800 SUITE 900 SUITE 1525 AUSTIN,TEXAS 78701-3248 DALLAS,TEXAS 75201-6587 SAN ANTONIO,TEXAS 782053503 TELEPHONE:(512)478-3805 TELEPHONE:(214)7549200 TELEPHONE:(210)2252800 FACSIMILE:(512)472-0871 FACSIMILE:(214)754.9250 FACSIMILE:(210)225-2984 January 1, 2006 ARBITRAGE REBATE REGULATIONS© The arbitrage rebate requirements set forth in section 148(f) of the Internal Revenue Code of 1986(the"Code")generally provide that in order for interest on any issue of bonds' to be excluded from gross income (i.e., tax-exempt)the issuer must rebate to the United States the sum of,(1)the excess of the amount earned on all"nonpurpose investments"acquired with "gross proceeds" of the issue over the amount which would have been earned if such investments had been invested at a yield equal to the yield on the issue, and (2)the earnings on such excess earnings. On June 18, 1993, the U.S. Treasury Department promulgated regulations relating to the computation of arbitrage rebate and the rebate exceptions. These regulations, which replace the previously-published regulations promulgated on May 15, 1989, and on May 18, 1992, are effective for bonds issued after June 30, 1993. This memorandum was prepared by McCall, Parkhurst&Horton L.L.P. and provides a general discussion of these arbitrage rebate regulations. This memorandum does not otherwise discuss the general arbitrage regulations, other than as they may incidentally relate to rebate. This memorandum also does not attempt to provide an exhaustive discussion of the arbitrage rebate regulations and should not be considered advice with respect to the arbitrage rebate requirements as applied to any individual or governmental unit or any specific transaction. Any tax advice contained in this memorandum is of a general nature and is not intended to be used, and should not be used, by any person to avoid penalties under the Code. McCall, Parkhurst& Horton L.L.P. remains available to provide legal advice to issuers with respect to the provisions of these tax regulations but recommends that issuers seek competent financial and accounting assistance in calculating the amount of such issuer's rebate liability under section 148(f)of the Code and in making elections to apply the rebate exceptions. Effective Dates s In this memorandum the word "bond" is defined to include any bond, note, certificate, financing lease or other obligation of an issuer. Copyright 2006 by Harold T. Flanagan, McCall, Parkhurst& Horton L.L.P. All rights reserved. The regulations promulgated on June 18, 1993, generally apply to bonds delivered after June 30, 1993, although they do permit an issuer to elect to apply the rules to bonds issued prior to that date. The temporary regulations adopted by the U.S.Treasury Department in 1989 and 1992 incorporated the same effective dates which generally apply for purposes of section 148(f) of the Code. As such, the previous versions of the rebate regulations generally applied to bonds issued between August 1986 and June 30, 1993(or,with an election,to bonds issued prior to August 15, 1993). The statutory provisions of section 148(f)of the Code,other than the exception for construction issues, apply to all bonds issued after August 15, 1986, (for private activity bonds) and August 31, 1986, (for governmental public purpose bonds). The statutory exception to rebate applicable for construction issues generally applies if such issue is delivered after December 19, 1989. The regulations provide numerous transitional rules for bonds sold prior to July 1, 1993. Moreover, since, under prior law, rules were previously published with respect to industrial development bonds and mortgage revenue bonds, the transitional rules contained in these regulations permit an issuer to elect to apply certain of these rules for computing rebate on pre- 1986 bonds. The regulations provide for numerous elections which would permit an issuer to apply the rules (other than 18-month spending exception)to bonds which were issued prior to July 1, 1993 and remain outstanding on June 30, 1993. Due to the complexity of the regulations, it is impossible to discuss in this memorandum all circumstances for which specific elections are provided. If an issuer prefers to use these final version of rebate regulations in lieu of the computational method stated under prior law (e.g., due to prior redemption) or the regulations, please contact McCall, Parkhurst & Horton L.L.P. for advice as to the availability of such options. Future Value Computation Method The regulations employ an actuarial method for computing the rebate amount based on the future value of the investment receipts (i.e., earnings)and payments. The rebate method employs a two-step computation to determine the amount of the rebate payment. First, the issuer determines the bond yield. Second,the issuer determines the arbitrage rebate amount. The regulations require that the computations be made at the end of each five-year period and upon final maturity of the issue(the"computation dates"). THE FINAL MATURITY DATE WILL ACCELERATE IN CIRCUMSTANCES IN WHICH THE BONDS ARE OPTIONALLY REDEEMED PRIOR TO MATURITY. AS SUCH, IF BONDS ARE REFUNDED OR OTHERWISE REDEEMED, THE REBATE MAY BE DUE EARLIER THAN INITIALLY PROJECTED. In order to accommodate accurate record-keeping and to assure that sufficient amounts will be available for the payment of arbitrage rebate liability, however,we recommend that the computations be performed at least annually. Please refer to other materials provided by McCall, Parkhurst & Horton L.L.P. relating to federal tax rules regarding record retention. Under the future value method,the amount of rebate is determined by compounding the aggregate earnings on all the investments from the date of receipt by the issuer to the computation date. Similarly, a payment for an investment is future valued from the date that the payment is made to the computation date. The receipts and payments are future valued at a discount rate equal to the yield on the bonds. The rebatable arbitrage, as of any computation date, is equal to the excess of the (1) future value of all receipts from investments (i.e., earnings), over (2) the future value of all payments. McCall, Parkhurst & Horton L.L.P. - Page 2 The following example is provided in the regulations to illustrate how arbitrage rebate is computed under the future value method for a fixed-yield bond: "On January 1, 1994, City A issues a fixed yield issue and invests all the sale proceeds of the issue ($49 million). There are no other gross proceeds. The issue has a yield of 7.0000 percent per year compounded semiannually (computed on a 30 day month/360 day year basis). City A receives amounts from the investment and immediately expends them for the governmental purpose of the issue as follows: Date Amount 2/1/1994 $ 3,000,000 4/1/1994 5,000,000 6/1/1994 14,000,000 9/1/1994 20,000,000 7/1/1995 10,000,000 City A selects a bond year ending on January 1, and thus the first required computation date is January 1, 1999. The rebate amount as of this date is computed by determining the future value of the receipts and the payments for the investment. The compounding interval is each 6-month (or shorter) period and the 30 day month/360 day year basis is used because these conventions were used to compute yield on the issue. The future value of these amounts, plus the computation credit, as of January 1, 1999, is: Date Receipts (Payments) FY(7.0000 percent) 01/1/1994 ($49,000,000) ($69,119,339) 02/1/1994 3,000,000 4,207,602 04/1/1994 5,000,000 6,932,715 06/1/1994 14,000,000 19,190,277 09/1/1994 20,000,000 26,947,162 01/1/1995 (1,000) (1,317) 07/1/1995 10,000,000 12,722,793 01/1/1996 (1,000) (1.229) Rebate amount(01/01/1999) $878,664" General Method for Computing Yield on Bonds In general,the term "yield,"with respect to a bond, means the discount rate that when used in computing the present value of all unconditionally due payments of principal and interest and all of the payments for a qualified guarantee produces an amount equal to the issue price of the bond. The term "issue price" has the same meaning as provided in sections 1273 and 1274 of the Code. That is, if bonds are publicly offered (i.e., sold by the issuer to a bond house, broker or similar person acting in the capacity of underwriter or wholesaler), the issue price of each bond is determined on the basis of the initial offering price to the public(not McCall, Parkhurst& Horton L.L.P. - Page 3 to the aforementioned intermediaries) at which price a substantial amount of such bond was sold to the public (not to the aforementioned intermediaries). The "issue price" is separately determined for each bond (i.e., maturity) comprising an issue. The regulations also provide varying periods for computing yield on the bonds depending on the method by which the interest payment is determined. Thus, for example, yield on an issue of bonds sold with variable interest rates (i.e., interest rates which are reset periodically based on changes in market)is computed separately for each annual period ending on the first anniversary of the delivery date that the issue is outstanding. In effect, yield on a variable yield issue is determined on each computation date by "looking back" at the interest payments for such period. The regulations, however, permit an issuer of a variable-yield issue to elect to compute the yield for annual periods ending on any date in order to permit a matching of such yield to the expenditure of the proceeds. Any such election must be made in writing, is irrevocable, and must be made no later than the earlier of(1)the fifth anniversary date, or(2)the final maturity date. Yield on a fixed interest rate issue(i.e., an issue of bonds the interest rate on which is determined as of the date of the issue) is computed over the entire term of the issue. Issuers of fixed-yield issues generally use the yield computed as of the date of issue for all rebate computations. Such yield on fixed-yield issues generally is recomputed only if(1)the issue is sold at a substantial premium, may be retired within five years of the date of delivery, and such date is earlier than its scheduled maturity date, or(2)the issue is a stepped-coupon bond. In such cases, the regulations require the issuer to recompute the yield on such issues by taking into account the early retirement value of the bonds. Similarly, recomputation may occur in circumstances in which the issuer or bondholder modify or waive certain terms of,or rights with respect to, the issue or in sophisticated hedging transactions. IN SUCH CIRCUMSTANCES ISSUERS ARE ADVISED TO CONSULT McCALL PARKHURST & HORTON L.L.P. TO ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THESE TRANSACTIONS. For purposes of determining the principal or redemption payments on a bond,different rules are used forfixed-rate and variable-rate bonds. The payment is computed separately on each maturity of bonds rather than on the issue as a whole. In certain circumstances, the yield on the bond is determined by assuming that principal on the bond is paid as scheduled and that the bond is retired on the final maturity date for the stated retirement price. For bonds subject to early redemption or stepped-coupon bonds, described above, or for bonds subject to mandatory early redemption, the yield is computed assuming the bonds are paid on the early redemption date for an amount equal to their value. Premiums paid to guarantee the payment of debt service on bonds are taken into account in computing the yield on the bond. Payments for guarantees are taken into account by treating such premiums as the payment of interest on the bonds. This treatment, in effect, raises the yield on the bond, thereby permitting the issuer to recover such fee with excess earnings. The guarantee must be an unconditional obligation of the guarantor enforceable by the bondholder for the payment of principal or interest on the bond or the tender price of a tender bond. The guarantee may be in the form of an insurance policy, surety bond, irrevocable letter or line of credit, or standby purchase agreement. Importantly, the guarantor must be legally entitled to full reimbursement for any payment made on the guarantee either immediately or McCall, Parkhurst& Horton L.L.P. - Page 4 upon commercially reasonable repayment terms. The guarantor may not be a co-obligor of the bonds or a user of more than 10 percent of the proceeds of the bonds. Payments for the guarantee may not exceed a reasonable charge for the transfer of credit risk. This reasonable charge requirement is not satisfied unless it is reasonably expected that the guarantee will result in a net present value savings on the bond(i.e.,the premium does not exceed the present value of the interest savings resulting by virtue of the guarantee). If the guarantee is entered into after June 14, 1989, then any fees charged for the nonguarantee services must be separately stated or the guarantee fee is not recoverable. The regulations also treat certain"hedging"transactions in a mannersimilarto qualified guarantees. "Hedges" are contracts, e.g., interest rate swaps, futures contracts or options, which are intended to reduce the risk of interest rate fluctuations. Hedges and other financial derivatives are sophisticated and ever-evolving financial products with which a memorandum, such as this,can not readily deal. IN SUCH CIRCUMSTANCES ISSUERS AREADVISED TO CONSULT WCALL PARKHURST & NORTON L.L.P. TO ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THESE TRANSACTIONS. Earnings on Nonpurpose Investments The arbitrage rebate provisions apply only to the receipts from the investment of"gross proceeds"in"nonpurpose investments." For this purpose, nonpurpose investments are stock, bonds or other obligations acquired with the gross proceeds of the bonds for the period prior to the expenditure of the gross proceeds for the ultimate purpose. For example, investments deposited to construction funds, reserve funds(including surplus taxes or revenues deposited to sinking funds)or other similar funds are nonpurpose investments. Such investments include only those which are acquired with "gross proceeds." For this purpose, the term "gross proceeds"includes original proceeds received from the sale of the bonds, investment earnings from the investment of such original proceeds,amounts pledged to the payment of debt service on the bonds or amounts actually used to pay debt service on the bonds. The regulations do not provide a sufficient amount of guidance to include an exhaustive list of"gross proceeds"for this purpose;however,it can be assumed that"gross proceeds"represent all amounts received from the sale of bonds, amounts earned as a result of such sale or amounts (including taxes and revenues) which are used to pay, or secure the payment of, debt service for the bonds. The total amount of "gross proceeds" allocated to a bond generally can not exceed the outstanding principal amount of the bonds. The regulations provide that an investment is allocated to an issue for the period (1) that begins on*the date gross proceeds are used to acquire the investment, and (2)that ends on the date such investment ceases to be allocated to the issue. In general, proceeds are allocated to a bond issue until expended forthe ultimate purpose forwhich the bond was issued or for which such proceeds are received (e.g., construction of a bond-financed facility or payment of debt service on the bonds). Deposit of gross proceeds to the general fund of the issuer(or other fund in which they are commingled with revenues or taxes)does not eliminate or ameliorate the Issuer's obligation to compute rebate in most cases. As such, proceeds commingled with the general revenues of the issuer are not "freed-up" from the rebate obligation. An exception to this commingling limitation for bonds, other than private activity bonds, permits"investment earnings"(but not sale proceeds or other types of gross proceeds) to be considered spent when deposited to a commingled fund if those amounts are reasonably McCall, Parkhurst& Horton L.L.P. - Page 5 expected to be spent within six months. Other than for these amounts, issuers may consider segregating investments in orderto more easily compute the amount of such arbitrage earnings by not having to allocate investments. Special rules are provided for purposes of advance refundings. These rules are too complex to discuss in this memorandum. Essentially,the rules relating to refundings, however, do not require that amounts deposited to the escrow fund to defease the prior obligations of the issuer be subject to arbitrage rebate to the extent that the investments deposited to the escrow fund do not have a yield in excess of the yield on the bonds. Any loss resulting from the investment of proceeds in an escrow fund below the yield on the bonds, however, may be recovered by combining those investments with investments deposited to other funds, e.g., reserve or construction funds. The arbitrage regulations also provide an exception to the arbitrage limitations for the investment of bond proceeds in tax-exempt obligations. As such,investment of proceeds in tax exempt bonds eliminates the Issuer's rebate obligation. A caveat;this exception does not apply to gross proceeds derived allocable to a bond,which is not subject to the alternative minimum tax under section 57(a)(5)of the Code, if invested in tax-exempt bonds subject to the alternative minimum tax, i.e., " private activity bonds." Such "AMT-subject" investment is treated as a taxable investment and must comply with the arbitrage rules, including rebate. Earnings from these tax-exempt investments are subject to arbitrage restrictions, including rebate. Similarly, the investment of gross proceeds in certain tax-exempt mutual funds are treated as a direct investment in the tax-exempt obligations deposited in such fund. While issuers may invest in such funds for purposes of avoiding arbitrage rebate, they should be aware that if"private activity bonds"are included in the fund then a portion of the earnings will be subject to arbitrage rebate. Issuers should be prudent in assuring that the funds do not contain private activity bonds. The arbitrage regulations provide a number of instances in which earnings will be imputed to nonpurpose investments. Receipts generally will be imputed to investments that do not bear interest at an arm's-length (i.e., market) interest rate. As such, the regulations adopt a "market price" rule. In effect, this rule prohibits an issuer from investing bond proceeds in investments at a price which is higher than the market price of comparable obligations, in order to reduce the yield. Special rules are included for determining the market price for investment contracts, certificates of deposit and certain U.S. Treasury obligations. For example, to establish the fair market value of investment contracts a bidding process between three qualified bidders must be used. The fair market value of certificates of deposit which bear a fixed interest rate and are subject to an early withdrawal penalty is its purchase price if that price is not less than the yield on comparable U.S.Treasury obligations and is the highest yield available from the institution. In any event, a basic"common sense"rule-of-thumb that can be used to determine whether a fair market value has been paid is to ask whether the general funds of the issuerwould be invested at the same yield or at a higher yield. An exception to this market price rule is available for United States Treasury Obligations - State or Local Government Series in which case the purchase price is always the market price. Reimbursement and Working Capital McCall, Parkhurst& Horton L.L.P. - Page 6 The regulations provide rules for purposes of determining whether gross proceeds are used for working capital and, if so, at what times those proceeds are considered spent. In general, working capital financings are subject to many of the same rules that have existed since the mid-1970s. For example,the regulations generally continue the 13-month temporary period. By adopting a"proceeds-spent-last"rule,the regulations also generally require that an issuer actually incur a deficit (i.e., expenditures must exceed receipts) for the computation period (which generally corresponds to the issuer's fiscal year). Also, the regulations continue to permit an operating reserve, but unlike prior regulations the amount of such reserve may not exceed five percent of the issuer's actual working capital expenditures for the prior fiscal year. Another change made by the regulations is that the issuer may not finance the operating reserve with proceeds of a tax-exempt obligation. Importantly, the regulations contain rules for determining whether proceeds used to reimburse an issuer for costs paid prior to the date of issue of the obligation, in fact, are considered spent at the time of reimbursement. These rules apply to an issuer who uses general revenues for the payment of all or a portion of the costs of a project then uses the proceeds of the bonds to reimburse those general revenues. Failure to comply with these rules would result in the proceeds continuing to be subject to federal income tax restrictions,including rebate. To qualify for reimbursement, a cost must be described in an expression (e.g., resolution, legislative authorization)evidencing the issuer's intent to reimburse which is made no later than 60 days after the payment of the cost. Reimbursement must occur no later than 18 months after the later of(1)the date the cost is paid or(2)the date the project is placed in service. Except for projects requiring an extended construction period or small issuers, in no event can a cost be reimbursed more than three years after the cost is paid. Reimbursement generally is not permitted forworking capital;only capital costs,grants and loans may be reimbursed. Moreover,certain anti-abuse rules apply to prevent issuers from avoiding the limitations on refundings. IN CASES INVOLVING WORKING CAPITAL OR REIMBURSEMENT, ISSUERS ARE ADVISED TO CONTACT McCALL, PARKHURST & HORTON L.L.P. TO ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION. Rebate Payments Rebate payments generally are due 60 days after each installment computation date. The interim computation dates occur each fifth anniversary of the issue date. The final computation date is on the latest of(1)the date 60 days after the date the issue of bonds is no longer outstanding, (2) the date eight months after the date of issue for certain short-term obligations (i.e., obligations retired within three years), or (3) the date the issuer no longer reasonably expects any spending exception, discussed below, to apply to the issue. On such payment dates,other than the final payment date,an issuer is required to pay 90 percent of the rebatable arbitrage to the United States. On the final payment date,an issuer is required to pay 100 percent of the remaining rebate liability. Failure to timely pay rebate does not necessarily result in the loss of tax-exemption. Late payments, however, are subject to the payment of interest, and unless waived, a penalty of 50 percent(or, in the case of private activity bonds,other than qualified 501(c)(3)bonds, 100 McCall, Parkhurst & Horton L.L.P. - Page 7 percent) of the rebate amount which is due. IN SUCH CIRCUMSTANCES, ISSUERS ARE ADVISED TO CONSULT McCALL, PARKHURST & HORTON L.L.P. TO ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THESE TRANSACTIONS. Rebate payments are refundable. The issuer, however, must establish to the satisfaction of the Commissioner of the Internal Revenue Service thatthe issuer paid an amount in excess of the rebate and that the recovery of the overpayment on that date would not result in additional rebatable arbitrage. An overpayment of less than $5,000 may not be recovered before the final computation date. Alternative Penalty Amount In certain cases, an issuer of a bond the proceeds of which are to be used for construction may elect to pay a penalty, in lieu of rebate. The penalty may be elected in circumstances in which the issuer expects to satisfy the two-year spending exception which is more fully described under the heading "Exceptions to Rebate." The penalty is payable, if at all, within 60 days after the end of each six-month period. This is more often than rebate. The election of the alternative penalty amount would subject an issuer, which fails the two-year spend-out requirements, to the payment of a penalty equal to one and one-half of the excess of the amount of proceeds which was required to be spent during that period over the amount which was actually spent during the period. The penalty has characteristics which distinguish it from arbitrage rebate. First, the penalty would be payable without regard to whether any arbitrage profit is actually earned. Second, the penalty continues to accrue until either(1)the appropriate amount is expended or (2) the issuer elects to terminate the penalty. To be able to terminate the penalty, the issuer must meet specific requirements and, in some instances, must pay an additional penalty equal to three percent of the unexpended proceeds. Exceptions to Rebate The Code and regulations provide certain exceptions to the requirement that the excess investment earnings be rebated to the United States. a. Small Issuers. The first exception provides that if an issuer (together with all subordinate issuers)during a calendar year does not issue tax-exempt bonds2 in an aggregate face amount exceeding $5 million, then the obligations are not subject to rebate. Only issuers with general taxing powers may take advantage of this exception. Subordinate issuers are those issuers which derive their authority to issue bonds from the same issuer, e.g., a city and a health facilities development corporation, or which are controlled by the same issuer, e.g., a state and the board of a public university. In the case of bonds issued for public school capital expenditures, the$5 million cap may be increased to as much as $15 million. For purposes of measuring whether bonds in the calendar year exceed these dollar limits, current refunding 2 For this purpose, "private activity bonds" neither are afforded the benefit of this exception nor are taken into account for purposes of determining the amount of bonds issued. McCall, Parkhurst & Horton L.L.P. - Page 8 bonds can be disregarded if they meet certain structural requirements. Please contact McCall, Parkhurst& Horton L.L.P. for further information. b. Spending Exceptions. Six-Month Exception. The second exception to the rebate requirement is available to all tax-exempt bonds,all of the gross proceeds of which are expended during six months. The six month rule is available to bonds issued after the effective date of the Tax Reform Act of 1986. See the discussion of effective dates on page two. For this purpose, proceeds used for the redemption of bonds(other than proceeds of a refunding bond deposited to an escrow fund to discharge refunded bonds)can not be taken into account as expended. As such, bonds with excess gross proceeds generally can not satisfy the second exception unless the amount does not exceed the lesser of five percent or $100,000 and such de minimis amount must be expended within one year. Certain gross proceeds are not subject to the spend-out requirement, including amounts deposited to a bona fide debt service fund, to a reserve fund and amounts which become gross proceeds received from purpose investments. These amounts themselves, however, may be subject to rebate even though the originally expended proceeds were not. The Code provides a special rule for tax and revenue anticipation notes(i.e.,obligations issued to pay operating expenses in anticipation of the receipt of taxes and other revenues). Such notes are referred to as TRANs. To determine the timely expenditure of the proceeds of a TRAN, the computation of the "cumulative cash flow deficit" is important. If the "cumulative cash flow deficit" (i.e., the point at which the operating expenditures of the issuer on a cumulative basis exceed the revenues of the issuer during the fiscal year)occurs within the first six months of the date of issue and must be equal to at least 90 percent of the proceeds of the TRAN,then the notes are deemed to satisfy the exception. This special rule requires,however, that the deficit actually occur, not that the issuer merely have an expectation that the deficit will occur. In lieu of the statutory exception for TRANs, the regulations also provide a second exception. Under this exception, 100 percent of the proceeds must be spent within six months, but before note proceeds can be considered spent, all other available amounts of the issuer must be spent first("proceeds-spent-last" rule). In determining whether all available amounts are spent, a reasonable working capital reserve equal to five percent of the prior year's expenditures may be set aside and treated as unavailable. 18-Month Exception. The regulations also establish a non-statutory exception to arbitrage rebate if all of the gross proceeds(including investment earnings)are expended within 18 months after the date of issue. Under this exception, 15 percent of the gross proceeds must be expended within a six-month spending period,60 percent within a 12-month spending period and 100 percent within an 18-month spending period. The rule permits an issuer to rely on its reasonable expectations for computing investment earnings which are included as gross proceeds during the first and second spending period. A reasonable retainage not to exceed five percent of the sale proceeds of the issue is not required to be spent within the 18-month period but must be expended within 30 months. Rules similar to the six-month exception relate to the definition of gross proceeds. Two Year Exception. Bonds issued after December 19, 1989 (i.e., the effective date of the Omnibus Reconciliation Act of 1989),at least 75 percent of the net proceeds of which are to be used for construction, may be exempted from rebate if the gross proceeds are spent McCall, Parkhurst& Horton L.L.P. - Page 9 within two years. Bonds more than 25 percent of the proceeds of which are used for acquisition or working capital may not take advantage of this exception. The exception applies only to governmental bonds, qualified 501(c)(3) bonds and private activity bonds for governmentally- owned airports and docks and wharves. The two-year exception requires that at least 10 percent of the available construction proceeds must be expended within six months after the date of issue, 45 percent within 12 months,75 percent within 18 months and 100 percent within 24 months. The term "available construction proceeds"generally means sale proceeds of the bonds together with investment earnings less amounts deposited to a qualified reserve fund or used to pay costs of issuance. Under this rule, a reasonable retainage not to exceed five percent need not be spent within 24 months but must be spent within 36 months. The two-year rule also provides for numerous elections which must be made not later than the date of issuance of the bonds. Once made, the elections are irrevocable. Certain elections permit an issuer to bifurcate bond issues, thereby treating only a portion of the issue as a qualified construction bond; and,permit an issuer to disregard earnings from reserve funds for purposes of determining "available construction proceeds." Another election permits an issuer to pay the alternative penalty amount discussed above in lieu of rebate if the issuer ultimately fails to satisfy the two-year rule. Issuers should discuss these elections with their financial advisors prior to issuance of the bonds. Of course, McCall, Parkhurst& Horton L.L.P. remains available to assist you by providing legal interpretations thereof. Debt Service Funds. Additionally, an exception to the rebate requirement, whether or not any of the previously discussed exceptions are available,applies for earnings on"bona fide debt service funds." A"bona fide debt service fund"is one in which the amounts are expended within 13 months of the accumulation of such amounts by the issuer. In general, most interest and sinking funds(other than any excess taxes or revenues accumulated therein)satisfy these requirements. For private activity bonds, short term bonds (i.e., have a term of less than five years)or variable rate bonds, the exclusion is available only if the gross earnings in such fund does not exceed $100,000, for the bond year. For other bonds issued after November 11, 1988, no limitation is applied to the gross earnings on such funds for purposes of this exception. Therefore, subject to the foregoing discussion, the issuer is not required to take such amounts into account for purposes of the computation. FOR BONDS ISSUED AFTER THE EFFECTIVE DATE OF THE TAX REFORM ACT OF 1986 WHICH WERE OUTSTANDING AS OF NOVEMBER 11, 1988, OTHER THAN PRIVATE ACTIVITY BONDS, SHORT TERM BONDS OR VARIABLE RATE BONDS, A ONE-TIME ELECTION MAY BE MADE TO EXCLUDE EARNINGS ON "BONA FIDE DEBT SERVICE FUNDS"WITHOUT REGARD TO THE $100,000, LIMITATION. THE ELECTION MUST BE MADE IN WRITING (AND MAINTAINED AS PART OF THE ISSUER'S BOOKS AND RECORDS) NO LATER THAN THE LATER OF MARCH 21, 1990, OR THE FIRST DATE A REBATE PAYMENT IS REQUIRED. Conclusion McCall, Parkhurst& Horton L.L.P. hopes that this memorandum will prove to be useful as a general guide to the arbitrage rebate requirements. Again, this memorandum is not intended as an exhaustive discussion nor as specific advice with respect to any specific transaction. We advise our clients to seek competent McCall, Parkhurst & Horton L.L.P. - Page 10 financial and accounting assistance. Of course, we remain available to provide legal advice regarding all federal income tax matters, including arbitrage rebate. If you have any questions, please feel free to contact either Harold T. Flanagan or Stefano Taverna at(214) 754-9200. McCall, Parkhurst & Horton L.L.P. - Page 11 EXHIBIT"B" LAW OFFICES MCCALL, PARKHURST & HORTON L.L.P. 600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N.ST.MARY'S STREET SUITE 1800 SUITE 900 SUITE 1525 AUSTIN,TEXAS 78701-3248 DALLAS,TEXAS 75201-6587 SAN ANTONIO,TEXAS 78205-3503 TELEPHONE:(512)478-3805 TELEPHONE:(214)754-9200 TELEPHONE:(210)225-2800 FACSIMILE:(512)472-0871 FACSIMILE:(214)754-9250 FACSIMILE:(210)225-2984 May 21, 2013 Certain Federal Income Tax Considerations for Private Business Use of Bond-Financed Facilities This memorandum provides a general discussion of those types of contractual arrangements which give rise to private business use, and to what extent that use rises to a prohibited level. Generally, in order for bonds issued by governmental units to be tax- exempt, no more than a de minimis amount of the proceeds of the bonds or the facilities financed with such proceeds may be used by non-governmental users. That is,there may be no more than an incidental use by persons,other than state or local governments. Too much private business use can cause the bonds to become taxable. Private business use for this purpose can be direct or can result from indirect benefits being conveyed to a private person by contractual arrangement. The following discussion describes, in general terms, those types of arrangements which need to be scrutinized. We hope that this general guideline will be useful to you in interacting with private parties regarding the use of bond proceeds or bond-financed facilities. While the statements contained herein are not intended as advice with regard to any specific transaction,McCall, Parkhurst&Horton L.L.P.remains available should you have questions about these rules. If you have any specific questions or comments,please feel free to contact Stefano Taverna or Harold T. Flanagan at(214)754-9200. I. Private Business Use Arrangements that involve use in a trade or business by a nongovernmental person of bond proceeds or facilities financed with bond proceeds may cause a "private business use" problem. Bond-financed facilities may be used by a variety of people with differing consequences under these rules. For example, students, teachers, employees and the general public may use bond-financed facilities on a non-exclusive basis without constituting private business use. More problematic,however,is use of bond-financed facilities by groups such as managers,lessees(e.g.,book store owners),persons providing services(e.g.,food or cleaning), seminar groups, sports and entertainment groups, and even alumni associations. The benefits also may be considered to pass to a private person where the right to the output produced by the facility is transferred. For this purpose, the federal government is considered a non-governmental person. Use by an organization organized under section 501(c)(3)of the Internal Revenue Code in a trade or business unrelated to the exempt purpose of such organization also is considered use by a private person. The term "use"includes both actual and beneficial use. As such, private business use may arise in a variety of ways. For example,ownership of a bond-financed facility by a non-governmental person is private business use. The leasing of a bond-financed facility by a non-governmental person can also cause a private business use problem. Along the same line,management of such facilities by a non-governmental person can cause a problem with private business use, absent compliance with the management contract rules discussed below. Essentially,such use can occur in connection with any arrangement in which the non- governmental user has a preference to benefit from the proceeds or the facilities. Therefore, any arrangement which results in a non-governmental person being the ultimate beneficiary of the bond financing must be considered. 1. Sales and Leases. The sale of a bond-financed facility to a non- governmental person would cause a private business use problem if that facility involved the use of more than 10 percent of the bond proceeds. Since state law often prohibits a governmental issuerfrom lending credit,this circumstance generally does not occur. Leases, however,also could be a problem because such arrangements grant a possessory interest in the facility which results in the lessee receiving a right to use the facility which is superior to members of the general public. 2. Management Contracts. Having a private manager will give rise to private business use unless certain terms of the management agreement demonstrate that beneficial use has not been passed to the manager. These factors relate to the compensation arrangements, contract term, cancellation provisions, and the relationship of the parties. The primary focus of these rules is on compensation. In general,compensation must be reasonable and not be based,in whole or in part,on a share of net profits. Compensation arrangements may take one of four forms: (1)periodic fixed fee;(2)capitation fee; (3)per- unit fee; or(4) percentage of fees charged. In general, a periodic fixed fee arrangement, however, is required in which at least 50 percent of annual compensation be based on a predetermined fee. During the initial two year start-up period,compensation may be based on a percentage of fees charged (i.e., gross revenues, adjusted gross revenues or expenses). The term of a management contract,generally,may not exceed five years,including all renewal options,and must be cancelable by the governmental unit at the end of the third year. If per-unit fee compensation is used, the term is limited to three years, with a cancellation option for the governmental unit at the end of two years. Where compensation is based on a percentage of gross revenues,the contract may not extend beyond a term of two years, cancelable by the governmental unit at the end of the first year. In each instance, cancellation may be upon reasonable notice, but must be "without penalty or cause," meaning no covenant not to compete, buy-out provision or liquidated damages provision is allowed. Finally,the manager may not have any role or relationship with the governmental unit that would limit the ability of the governmental unit to exercise its rights under the contract. Any voting power of either party which is vested in the other party, including its officers, directors, shareholders and employees, may not exceed 20 percent. Further, the chief executive officer of either party may not serve on the governing board of the other party. Similarly, the two parties must not be members of the same controlled group or be related persons, as defined in certain provisions of federal tax law. 3. Cooperative Research Agreements. A cooperative research agreement with a private sponsor whereby the private party uses bond-financed facilities may cause a private business use problem. Nevertheless, such use of a bond-financed facility by a non- governmental person is to be disregarded for purposes of private business use if the arrangement is in one of the following forms. First,the arrangement may be disregarded if the sponsoring party is required to pay a competitive price for any license or other use of resulting technology, and such price must be determined at the time the technology is available. Second, an arrangement may also qualify if a four-part requirement is met: (1)multiple, unrelated industry sponsors must agree to fund university-performed basic research;(2)the university must determine the research to be performed and the manner in which it is to be performed;(3)the university must have exclusive title to any patent or other product incidentally resulting from the basic research;and(4)sponsors must be limited to no more than a nonexclusive, royalty-free license to use the product of any such research. McCall, Parkhurst&Horton L.L.P. - Page 2 4. Output Contracts. In some circumstances, private business use arises by virtue of contractual arrangements in which a governmental unit agrees to sell the output from a bond-financed facility to a non-governmental person. If the non-governmental person is obligated to take the output or to pay for output even if not taken,then private business use will arise. This is because the benefits and burdens of the bond-financed facility are considered as inuring to the non-governmental purchaser. In addition to the general rule, output-type facilities,including electric and gas generation,transmission and related facilities (but not water facilities)are further limited in the amount of private business use which may be permitted. If more than 5 percent of the proceeds are used for output facilities and if more than 10 percent of the output is sold pursuant to an output arrangement,then the aggregate private business use which may result(for all bond issues)is$15,000,000. II. How Much Private Business Use is Too Much? In general, there is too much private business use if an amount in excess of 10 percent of the proceeds of the bond issue are to be used, directly or indirectly, in a trade or business carried on by persons other than governmental units,and other than as members of the general public. All trade or business use by persons on a basis different than that of the general public is aggregated for the 10 percent limit. Private business use is measured on a facility or bond issue basis. On a facility basis, such use is generally measured by relative square footage,fair market rental value or the percentage of cost allocable to the private use. On a bond issue basis, the proceeds of the bond issue are allocated to private and governmental(or public)use of the facility to determine the amount of private business use over the term of the bond issue. Temporary use is not necessarily"bad" (Le, private use) even though it results in more than 10 percent of the facility being so used. For example, if 100 percent of a facility is used for a period equal to five percent of the term of the bond such use may not adversely impact the bonds. The question is whether the benefits and burdens of ownership have transferred to the private user, as in the case of a sale, lease or management contract. If these benefits and burdens have not transferred,such use may be disregarded for purposes of private business use. In no event should private business use exceed$15,000,000. In addition, if the private use is considered "unrelated or disproportionate" to the governmental purpose for issuance of the bonds,the private business use test is met if the level of the prohibited private use rises to 5 percent. The"unrelated"question turns on the operational relationship between the private use and use for the governmental purpose. In most cases, a related use facility must be located within or adjacent to the related governmental facility, e.g., a privately-operated school cafeteria would be related to the school in which it is located. Whereas, the use of a bond-financed facility as an administrative office building for a catering company that operates cafeterias for a school system would not be a related use of bond proceeds. Nonetheless,even if a use is related,it is disproportionate to the extent that bond proceeds used for the private use will exceed proceeds used for the related governmental use. III. When are the tests applied to analyze the qualification of a bond? A bond is tested both(1)on the date of issue, and(2)over the term. The tests are applied to analyze the character of the bond on the date of issue, based on how the issuer expects to use the proceeds and the bond-financed property. This is known as the "reasonable expectations"standard. The tests also continuously are applied during the term of the bonds to determine whether there has been a deviation from those expectations. This is known as the "change of use" standard. When tested, bonds are viewed on an "issue-by-issue"basis. Generally,bonds secured by the same sources of funds are part of the same"issue"if they are sold within 15 days of one another. IV. What is the reasonable expectations standard? McCall, Parkhurst&Horton L.L.P. - Page 3 The reasonable expectations standard will be the basis on which McCall,Parkhurst& Horton L.L.P.,as bond counsel,will render the federal income tax opinion on the bonds. The statement of expectations will be incorporated into the Federal Tax Certificate, previously referred to as the Federal Tax Certificate. The certificate also will contain information about the amounts to be expended on different types of property,e.g.,land,buildings,equipment,in order to compute a weighted useful life of the bond-financed property. Based on the information on useful life, the maximum weighted average maturity of the bonds tested to ensure that is restricted to no more than 120 percent of the useful life of the property being financed or refinanced. V. Change of Use Standard. The disqualified private business use need not exist on the date of issue. Subsequent use by non-governmental persons also can cause a loss of tax-exemption. Post- issuance"change of use"of bond-financed facilities could result in the loss of the tax-exempt status of the bonds, unless certain elements exist which demonstrate the change was unforeseen. For this purpose,a change in use includes a failure to limit private business use subsequent to the date of issuance of the bonds. A reasonable expectation element requires that,as of the date of issue of the bonds,the governmental unit reasonably have expected to use the proceeds of the issue for qualified facilities for the entire term of the issue. To fall within the safe harbor rules which avoid loss of tax-exempt status the governmental unit must assure that no circumstances be present which indicate an attempt to avoid directly or indirectly the requirements of federal income tax law. Finally,the safe harbor requires that the governmental unit take remedial action that would satisfy one of the following provisions: redemption of bonds; alternative use of disposition proceeds of a facility that is financed by governmental bonds;or,alternative use of a facility that is financed by governmental bonds. For purposes of the latter two remedial action provisions,the governmental unit has 90 days from the date of the change of use to satisfy the requirements. In addition, there is an exception for small transactions for dispositions at a loss. VI. Written Procedures. The Internal Revenue Service("IRS")has initiated an active audit program intended to investigate the compliance of governmental issuers with the private activity bond rules described herein and the arbitrage rules described in the other memorandum provided to you by our firm. In connection with the expansion of this program,auditors and their supervisors have expressed the viewpoint that each governmental issuer should establish written procedures to assure continuing compliance. Moreover,the IRS is asking issuers to state in a bond issue's informational return (such an 8038-G)whether such procedures have been adopted. The federal tax certificate, together with the attached memoranda and bond covenants can be supplemented by standard written practices adopted by the executive officer or legislative bodies of the issuer. Accordingly,our firm is prepared to advise you with respect to additional practices which we believe would be beneficial in monitoring compliance and taking remedial action in cases of change in use. There is no standard uniform practice for all issuers to adopt because each issuer operates in unique fashion. However,if you wish us to assist you in developing practices which might assist you in complying with the viewpoints expressed by the IRS and its personnel, please contact your bond lawyer at McCall, Parkhurst&Horton LLP. Disclosure Under IRS Circular 230: McCall Parkhurst&Horton LLP informs you that any tax advice contained in this memorandum, including any attachments, was not intended or written to be used, and cannot be used,for the purpose of avoiding federal tax related penalties or promoting,marketing or recommending to another party any transaction or matter addressed herein. McCall, Parkhurst&Horton L.L.P. - Page 4 Exhibit "C" LAW OFFICES MCCALL, PARKHURST & HORTON L.L.P. 600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N.ST.MARY'S STREET SUITE 1800 SUITE 900 SUITE 1525 AUSTIN,TEXAS 78701-3248 DALLAS,TEXAS 75201-6587 SAN ANTONIO,TEXAS 78205-3503 TELEPHONE:(512)478-3805 TELEPHONE:(214)754-9200 TELEPHONE:(210)225-2800 FACSIMILE:(512)472-0871 FACSIMILE:(214)754-9250 FACSIMILE:(210)225-2984 December 5,2016 Debbie Piper Finance Director Town of Westlake,Texas 1301 Solana Blvd., Suite 4202 Westlake,Texas 76262 Re: Town of Westlake,Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 Dear Ms.Piper: As you know, the Town of Westlake, Texas (the "Issuer") will issue the captioned obligations in order to provide for the acquisition and construction of the project. As a result of that issuance,the federal income tax laws impose certain restrictions on the investment and expenditure of amounts to be used for the project or to be deposited to the interest and sinking fund for the captioned obligations. The purpose of this letter is to set forth,in somewhat less technical language,those provisions of the tax law which require the timely use of bond proceeds and that investment of these amounts be at a yield which is not higher than the yield on the captioned obligations. For this purpose,please refer to line 2 l(e)of the Form 8038-G included in the transcript of proceedings for the yield on the captioned obligations. Please note that the Form 8038-G has been prepared based on the information provided by or on your behalf by your financial advisor. Accordingly, while we believe that the information is correct you may wish to have the yield confirmed before your rebate consultant or the paying agent attempt to rely on it. Generally,the federal tax laws provide that,unless excepted,amounts to be used for the project or to be deposited to the interest and sinking fund must be invested in obligations the combined yield on which does not exceed the yield on the obligations. Importantly,for purposes of administrative convenience,the obligations,however,have been structured in such a way as to avoid, for the most part, this restriction on investment yield. They also contain certain covenants relating to expenditures of proceeds designed to alert you to unintentional failures to comply with the laws affecting expenditures of proceeds and dispositions of property. First,the sale and investment proceeds to be used for the new money project may be invested for up to three years without regard to yield. (Such amounts,however,may be subject to rebate.) Thereafter,they must be invested at or below the bond yield. Importantly,expenditure of these proceeds must be accounted in your books and records. Allocations of these expenditures must occur within 18 months of the later of the date paid or the date the project is completed. The foregoing notwithstanding,the allocation should not occur later than 60 days after the earlier of(1)of five years after the delivery date of the obligations or(2)the date the obligations are retired unless you obtain an opinion of bond counsel. Second, the interest and sinking fund is made up of amounts which are received annually for the payment of current debt service on all the Issuer's outstanding obligations. Any taxes or revenues deposited to the interest and sinking fund which are to be used for the payment of current debt service on the captioned obligations,or any other outstanding obligations,are not subject to yield restriction. By definition,current debt service refers only to debt service to be paid within one year of the date of receipt of these amounts. For the most part,this would be debt service in the current fiscal year. These amounts deposited to the account for current debt service may be invested without regard to any constraint imposed by the federal income tax laws. Third,a portion of the interest and sinking fund is permitted to be invested without regard to yield restriction as a"minor portion." The"minor portion"exception is available for de minimis amounts of taxes or revenues deposited to the interest and sinking fund. The maximum amount that may be invested as part of this account may not exceed the lesser of five percent of the principal amount of the obligations or$100,000. Accordingly, you should review the current balance in the interest and sinking fund in order to determine if such balance exceeds the aggregate amounts discussed above. Additionally,in the future it is important that you be aware of these restrictions as additional amounts are deposited to the interest and sinking fund. The amounts in this fund which are subject to yield restriction would only be the amounts which are in excess of the sum of(1)the current debt service account and(2)the"minor portion"account. Moreover,to the extent that additional obligations are issued by the Issuer,whether for new money projects or for refunding,these amounts will change in their proportion. The Ordinance contains covenants that require the Issuer to comply with the requirements of the federal tax laws relating to the tax-exempt obligations. The Internal Revenue Service(the"Service")has determined that certain materials,records and information should be retained by the issuers of tax-exempt obligations for the purpose of enabling the Service to confirm the exclusion of the interest on such obligations under the Internal Revenue Code. Accordingly, the Issuer should retain such materials, records and information for the period beginning on the issue date of the captioned obligations and ending three years after the date the captioned obligations are retired. Please note this federal tax law standard may vary from state law standards. The material,records and information required to be retained will generally be contained in the transcript of proceedings for the captioned obligations,however,the Issuer should collect and retain additional materials,records and information to ensure the continued compliance with federal tax law requirements. For example,beyond the transcript of proceedings for the obligations,the Issuer should keep schedules evidencing the expenditure of certificate proceeds, documents relating to the use of bond- financed property by governmental and any private parties(e.g.,leases and management contracts,if any)and schedules pertaining to the investment of certificate proceeds. In the event that you have questions relating to record retention,please contact us. The Service also wants some assurance that any failure to comply with the federal tax laws was not due to an issuer's intentional disregard or gross neglect of the responsibilities imposed on it by the federal tax laws. Therefore,to ensure post-issuance compliance,an issuer should consider adopting formalized written guidelines to help the issuer perform diligence reviews at regular intervals. The goal is for issuers to be able to timely identify and resolve violations of the laws necessary to maintain their obligations' tax-favored status.While the federal tax certificate,together with its attachments,may generally provide a basic written guideline when incorporated in an organizations' operations, the extent to which an organization has appropriate written compliance procedures in place is to be determined on a case-by-case basis Moreover,the Service has indicated that written procedures should identify the personnel that adopted the procedures,the personnel that is responsible for monitoring compliance, the frequency of compliance check activities,the nature of the compliance check activities undertaken,and the date such procedures were originally adopted and subsequently updated,if applicable.The Service has stated that the adoption of such procedures will be a favorable factor that the Service will consider when determining the amount of any penalty to be imposed on an issuer in the event of an unanticipated and non-curable failure to comply with the tax laws. Finally,you should notice that the Ordinance contains a covenant that limits the ability of the Issuer to sell or otherwise dispose of bond-financed property for compensation. Beginning for obligations issued after May 15, 1997 (including certain refunding certificates),or in cases in which an issuer elects to apply new private activity bond regulations, such sale or disposition causes the creation of a class of proceeds referred to as"disposition proceeds." Disposition proceeds,like sale proceeds and investment earnings,are tax-restricted funds. Failure to appropriately account, invest or expend such disposition proceeds would adversely affect the tax-exempt status of the obligations. In the event that you anticipate selling property, even in the ordinary course,please contact us. Obviously, this letter only presents a fundamental discussion of, among other tax rules, the yield restriction rules as applied to amounts deposited to the interest and sinking fund. This letter does not address the rebate consequences with respect to the interest and sinking fund and you should review the memorandum attached to the Federal Tax Certificate as Exhibit "A" for this purpose. If you have certain concerns with respect to the matters discussed in this letter or wish to ask additional questions with regards to certain limitations imposed,please feel free to contact our firm. Thank you for your consideration and we look forward to our continued relationship. Very truly yours, McCALL,PARKHURST&HORTON L.L.P. cc: Chris Settle Exhibit"D" ISSUE PRICE CERTIFICATE [To be attached hereto] ISSUE PRICE CERTIFICATE The undersigned hereby certifies as IbI lows with respect to the bid and purchase of the$9,180,000 Town of Westlake.Texas Combination Tax and Revenue Certificates of Obligation.Series 2016(the"Certificates'): 1. The undersigned is the duly authorized representative of the purchaser (the "Initial Purchaser") of the Certificates from the Tomm ol'Westlake(Tarrant and Denton Counties). I'exas(the"Town"). 2. All of the Certificates have been offered to members of the public in a bona ride initial offering. For purposes of this Certificate issue, the term "public" does not include an? hondhouses. brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers (including the Initial Purchaser or members of the selling group or persons that are related to,or controlled by,or are acting on behalf of or as agents for the undersigned or members of the selling group). 3. Each maturity of the Certificates was offered to the public at a price which.on the date of such offering, was reasonably expected by the Initial Purchaser to be equal to the lair market value of'such maturity. 4. Other than the obligations set forth in paragraph ; hereof (the "Retained Maturity" or "Retained Maturities').the first price/Yield ata-hick a substantial amount(i.e..at Icasl ten(10)percent)ofthe principal amount of each maturity-of the Certificates was sold to the public is set(inti below. ORIGINAL. INITIAL. ORIGINAL. INITIAL. MATURITY PRINCIPAL_ OFFERING MATURITY PRINCIPAL OFFERING (1=613. 1i) AMOUNT(S) PRICE(%) (FI R. 15) AMOUNTO PRICE(:.,) 2018 200.000 1.15 2038 360.000 3.25 2019 205,000 1.43 rav 2020 210,000 153 20.10 765.000 335 2021 215.000 1.70 "* i 2022 225,000 1.85 2042 835,000 3.45 2023 2330,000 2.00 `"' 2024 235,000 2.10 2044 000,000 3.50 2025 245.000 2.20 "* *"* 2046 980.000 3.60 2037 3,575,00o 300 5. In the case of the Retained Maturities,the Initial Purchaser reasonably expected on the offering date to sell a substantial amount(i.e., at least ten (10) percent)of each Retained Maturity at the initial offering price/yield as set Ibrth below: ORIGINAL INITIAL ORIGINAL INITIAL_ ORIGINAL INITIAL MATURITY PRINCIPAL OFFERING NIATURITY PRINCIPAL_ OFFERING MATURITY PRINCIPAL OFFERING (FEB. 15) AMOUNT PRICE (FEB. 15) AMOUNT PRICE (FFR 15) AMOUNT PRICE- 2018 2028 2038 2019 2029 2039 2020 2030 2040 2021 2031 2041 2022 2032 _ 21)42 2023 20-13 �(4 2024 r 2034 2044 2023 t -!� 2033 2(45 2026 _ 2036 2046 2027 2037 z I 6. The Initial Purchaser understands that the statcmcnts made herein N ill be relied upon,by the Town in its ell'ort to comply with the conditions imposed by the Internal Revenue Code of 1986. as amended. and by McCall, Parkhurst& Noiton L.L.P., Bond Counsel to the Town, in rendering their opinion that the interest on the Certificates is excludable from the gross income of the owners thereof: EXECUTED and DELIVERED this 22nd day of December,2016, FIN FINANCIAL.I/CAICT'Al. MARKI:;Ts By: ! INamc: Title: VP -- i i x a t 1 I Exhibit"E" SCHEDULES OF FINANCIAL ADVISOR [To be attached hereto] Town of Westlake,Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Table of Contents Report Debt Service Schedule 2 Sources&Uses ^^ 5 Summary Of Underwriter's Discount Y _ 6 Derivation Of Form 8038 Yield Statistics 7 Proof of Premium/SYr Call Bond Selection of Call D 8 Proof of D/S for Arbitrage Purposes _ 9 Proof Of Bond Yield Q 3.0708747% 10 2016 CO I SINGLE PURPOSE 1 12/512016 1 11:31 AM Lawrence • r Town of Westlake,Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Pricing Summary Maturity Maturity Type of Bond Coupon Yield Value Price YTM Call Date Call Price Dollar Price 02/15/2018 Serial Coupon 3.000% 1.150% 200,000.00 102.101% - - - 204,202.00 02/15/2019 Serial Coupon 3.000% 1.450% 205,000.00 103.264% - - - 211,691.20 02/15/2020 Serial Coupon 3.000% 1.550% 210,000.00 104.435% - - - 219,313.50 02/15/2021 Serial Coupon 3.000% 1.700% 215,000.00 105.183% - - - 226,143.45 02/15/2022 Serial Coupon 3.000% 1.850% 225 000.00 105.620% - 237,645.00 02/15/2023 Serial Coupon 3.000% 2.000% 230,000.00 105.755% - - - 243,236.50 02/15/2024 Serial Coupon 3.000% 2.100% 235,000.00 105.942% - - - 248,963.70 02/15/2025 Serial Coupon 3.000% 2.200% 245,000.00 105.935% - - - 259,540.75 02/15/2037 Term 1 Coupon 3.000% 3.000% 3,575,000.00 100.000% - - - 3,575,000.00 02/15/2038 Serial Coupon 4.000% 3.250% 360,000.00 105.890% c 3.600% 02/15/2026 100.000% 381,204.00 02/15/2040 Term 2 Coupon 4.000% 3.350% 765,000.00 105.081% c 3.672% 02/15/2026 100.000% 803,869.65 02/15/2042 Term 3 Coupon 4.000% 3.450% 835,000.00 104.279% c 3.736% 02/15/2026 100.000% 870,729.65 02/15/2044 Term 4 Coupon 4.000% 3.500% 900,000.00 103.881% a 3.770% 02/15/2026 100.000% 934,929.00 02/15/2046 Term 5 Coupon 4.000% 3.600% 980,000.00 103.090% c 3.823% 02/15/2026 100.000% 1,010,282.00 Total - - - $9,180,000.00 - - - - - $9,426,750.40 Bid Information Par Amount of Bonds $9,180,00000_ Reoffering Premium or(Discount) _ 246,750 40 Gross Production $9,426,750.40 Total Underwriter's Discount1.550% $ 142,314.33 �._ -_______�. ) 9,284,436.07 Total Purchase Price $9,284,436.07 Bond Year Dollars $159,736.50 ............._.__.._..__.........._-___._______.._...._..__.__.._____ ..._.____..___....__...._...__.........._...._.._____..._...__......._.__._.__.._.__._._..__.__..,...__._._____._._--_---._____._.._. Average Life _ 17.400 Years Average Coon _____ _ 3.6110709% Net Interest Cost(NIC) __ 3.5456907% True Interest Cost(TIC) 3.4760665% 2016 CO I SINGLE PURPOSE 1 12/5/2016 1 11:31 AM Lawrence Financial Consulting LLC Town of Westlake, Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Debt Service Schedule Part 1 of 3 Date Principal Coupon Interest Total P+I Fiscal Total 12/22/2016 - - 08/15/2017 203,098.33 203,098.33 09/30/2017 - - - - 203,098.33 02/1512018 200,000.00 3.000% 156,900.00 356,900.00 - 08/15/2018 - 153,900.00 153,900.00 09/30/2018 —� - y - - 510,800.00 02/15/2019 205,000.00 3.000% 153,900.00 358,900.00 - 08/15/2019 - - 150,825.00 150,825.00 - 09/30/2019 - - - - 509,725.00 02/15/2020 210,000.00 3.000% 150,825.00 360,825.00 08/15/2020 - - 147,675.00 147,675.00 - 09/30/2020 - - - - 508,500.00 02/15/2021 215,000.00 3.000% 147,675.00 362,675.00 - 08/15/2021 - - 144,450.00 144,450.00 - 09/30/2021 - - - 507,125.00 02/15/2022 225,000.00 3.000% 144,450.00 369,450.00 - 08/15/2022 - - 141,075.00 141,075.00 - 09/30/2022 - - - - 510,525.00 02/15/2023 230,000.00 3.000% 141,075.00 371,075.00 - 08/15/2023 137,625_.00 137,625.00 - 09/30/2023 - - J- - -� - 508,700.00 02/15/2024 235,000.00 3.000% 137,625.00 372,625.00 - 08/15/2024 - - 134,100.00 134,100.00 - 09/30/2024 - - - - 506,725.00 02/15/2021 3.000% 134,100.00 379,100.00 - - 08/15/2025 - - 130,425.00 130,425.00 09/30/2025 - - - - 509.525.00 02/15/2026 250,000.00 3.000% 130,425.00 380,425.00 08/15/2026 - - 126,675.00 126,675.00 - 09/30/2026 - 5.07,_100.00 02/15/2027 260,000.00 3.000% 126,675.00 386,675.00 08/15/2027 - - 122,775.00 122,775.00 - 09/30/2027 - - - - 509,450.00 02/15/2028 265,000.00 3.000% 122,775.00 387,775.00 - 08/15/2028 - - 118,800.00 118,800.00 - 09/30/2028 - - - - 506,575.00 02/1512029 275,000.00 3.000% 118,800.00 393,800.00 - 08/15/2029 - - 114,675.00 114,675.00 - 09/30/2029 - - - - 508,475.00 02/15/2030 _ —� _ 285,000.00 _ 3000%° Y— _ 114,675,00..- _—_ —_ 399,675.00_ 08/15/2030 - - 110,400.00 110,400.00 - 09/30/2030 - - - - 510,075.00 02/15/2031 290,000.00 3.000% 110.400.00 400,400.00 - 2016 CO ( SINGLE PURPOSE 1 12/5/2016 1 11:31 AM Town of Westlake, Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Debt Service Schedule Part 2 of 3 Date Principal Coupon Interest Total P+I Fiscal Total 08/15/2031 106,050.00 106,050.00 - 09/30/2031 - _ - - 506,450.00 02/15/2032 300,000.00 v� 3000% —� — 106,050.00 —� 406,050.00 08/15/2032 - - 101,550.00 101,550.00 - 09/30/2032 - - - - 507,600.00 02/15/2033 310,000.00 3.000% 101,550.00 411,550.00 08/15/2033 - 96,900.00 96,900.00 _ 09/30/2033 - - - _ - 508,450.00 02/15/2034 320,000.00 3.000% 96,900.00 416,900.00 - 08/15/2034 - - 92,100.00 92,100.00 - 09/30/2034 - - - - 509,000.00 02/15/2035 330,000.00 4 3.000% 92,100_00 08/15/2035 - - 87,150.00 87,150.00 - 09/30/2035 - - - - 509,250.00 02/15/2036 340,000.00 3.000% 87,150.00 427,150.00 - 08/15/2036 - - 82,050.00 82,050.00 - 09/30/2036 -_ _ __ _ _ 509,200.00 02/15/2037 350,000.00 —_— 3.000% — J� 82,050.00 —432,050.00 Y - 08/15/2037 - - 76,800.00 76,800.00 - 09/30/2037 - - - - 508,850.00 02/15/2038 360,000.00 4.000% 76,800.00 436,800.00 - 08/15/2038 - 69,600.00 69,600.00 09/30/2038 - - - - 506,400.00 02/15/2039 375,000.00 4.000% 69,600.00 444,600.00 - 08/15/2039 - - 62,100.00 62,100.00 - 09/30/2039 - - - - 506,700.00 02/15/2040 390,000.00 4.000% _62,100.00 452,100.00 - 08/15/2040 - - 54,300.00 54,300.00 - 09/30/2040 - - - - 506,400.00 02/15/2041 410,000.00 4.000% 54,300.00 464,300.00 - 08/15/2041 - - 46,100.00 46,100.00 - _09/30/2041 - - __ __ - 510,400.00 02/15/2042 425,000.00— 4.000% 46,100.00— 471,100.00 - 08/15/2042 - - 37,600.00 37,600.00 - 09/30/2042 - - - - 508,700.00 02/15/2043 440,000.00 4.000% 37,600.00 477,600.00 - 08/15/2043 - 28,800.00 28,800.00 - --09/30/2043 - _— - _- --- 506,400.00 02/15/2044 460,000.00 4.0000/6 28,800.00 488,800.00 - 08/15/2044 - - 19,600.00 19,600.00 - 09/30/2044 - - - - 508,400.00 02/15/2045 480,000.00 4.0000/6 19,600.00 499_600.00 08/15/2045 10 000.00 10 000.00 2016 CO I SINGLE PURPOSE 1 12/5/2016 1 11:31 AM i • Town of Westlake,Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Debt Service Schedule Part 3 of 3 Date Principal Coupon Interest Total P+I Fiscal Total 09/30/2045 - - - - 509,600.00 02/15/2046 500,000.00 4.000% 10,000.00 510,000.00 - 09/30/2046 - - - - 510,000.00 Total 59,180,000.00 - S5,768,198.33 S14,948,198.33 - Yield Statistics Bond Year Dollars _ _...._.._.__.._. _ _�_...___.._...__ _.._..... $159736.50 Average Life _ 17.400 Years Average Coupon _ 3.6110709% Net Interest Cost NIC 3.5456907% True Interest Cost TIC 3.4760665% Bond Yield for Arbitrage Purposes 3.0708747%0 st(A All Inclusive CoIC)____ 3.5469445% IRS Form 8038 Net Interest Cost___ 3.3625_349% Weighted Average Maturity 17.419 Years 2016 CO 1 SINGLE PURPOSE 1 12/5/2016 1 11:31 AM Lawrence Financial Consulting LLC Town of Westlake,Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Sources & Uses Dated 12/22/2016 1 Delivered 12/22/2016 Sources Of Funds Paz Amount of Bonds —_ _ .____._.,._.._..._ .__ .__ ___.. _— __._...._�. . _ _ $9,180,000.00 Reoffering Premium _ _ _ __�. 246_750,40 Total Sources S9,426,750.40 Uses Of Funds Deposit to Project Construction Fund _ _...... __........._ 9,200,000;00 ___ Underwriter'erwriter's Discount (1.5500 142,314.33 _.._al Und Costs of Issuance _ 81,113.55 Rounding Amount 3,322.52 Total Uses $9,426,750.40 2016 CO 1 SINGLE PURPOSE 1 12/5/2016 1 11:31 AM Town of Westlake,Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Summary Of Underwriter's Discount + = Issuance Maturity Concession Takedown Total Value 02/15/2018 - 200,000.00 02/15/2019 - - - 205,000.00 02/15/2020 - - - 210,000.00 02/15/2021 - - - 215,000.00 02/15/2022 - - 225,000.00 02/15/2023 - _ - - 230,000.00 02/15/2024 - - - 235,000.00 02/15/2025 - - - 245,000.00 02/15/2037 - - - 3,575,000.00 02/15/2038 - 360,000.00 02/15/2040 - 765,000.00 02/15/2042 - 835,000.00 02/15/2044 - - 900,000.00 02/15/2046 - - - 980,000.00 Total - - - $9,180,000.00 Underwriting&Issuance Expenses Total Mapagement Fees X1.550%�y __. _ _ $142,31433 TOTAL UNDERWRITING SPREAD(1.550%; $142,314.33 2016 CO I SINGLE PURPOSE 1 12/5/2016 11:31 AM Town of Westlake, Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Derivation Of Form 8038 Yield Statistics Issuance Issuance Maturity Value Price Price Exponent Bond Years 12/22/2016 - - - - - 02/15/2018 200,000.00 102.101% 204,202.00 1.1472222x 234,265.07 02/15/2019 205,000.00 103.264% 211,691.20 2.1472222x 454,548.05 02/15/2020 210,000-00 104.435% 219,313.50 3.1472222x 690,228.32 02/15/2021 215 000.00 105.183% 226,143.45 4.1472222x 937,867.14 02/15/2022 225,000.00 105.620% 237,645.00 5.1472222x 1,223,211.63 02/15/2023 230,000.00 105.755% 243,236.50 6.1472222x 1,495,228.82 02/15/2024 235,000.00 105.942% 248,963.70 7.1472222x 1,779,398.89 02/15/2025 245,000.00 105.935% 259,540.75 8.1472222x 2,114,536.17 02/15/2026 250,000.00 100.000% 250,000.00 9.1472222x 2,286,805.56 02/15/2027 260,000.00 100.0000/0 260,000.00 10.1472222x 2,638,277.78 02/15/2028 265,000.00 100.000% 265,000.00 11.1472222x 2,954,013.89 02/15/2029 275,000.00 100.000% 275,000.00 12.1472222x 3,340,486.11 02/15/2030 285,000.00 100.000% 285,000.00 13.1472222x 3,746,958.33 02/15/2031 29_0,000.00 _ 100.000% _ 290_,000.00__ __ 14.1472222_x _ 4,102,694.44 02/15/2032 300,000.00 100.000% Y 300,000.00 15.1472222x 4,544,166.67 02/15/2033 310,000.00 100.000% 310,000.00 16.1472222x 5,005,638.89 02/15/2034 320,000.00 100.000% 320,000.00 17.1472222x 5,487,111.11 02/15/2035 330,000.00 100.000% 330,000.00 18.1472222x 5,988,583.33 02/15/2036 340,000.00 100.000% 340,000.00 19.1472222x 6,510,055.56 02/15/2037 350,000.00 100.0000/0 350,000.00 20.1472222x 7,051,527.78 02/15/2038 360,000.00 105.890% 381,204.00 21.1472222x 8,061,405.70 02/15/2039 375,000.00 105.081% 394,053.75 22.1472222x 8,727,195.97 02/15/2040 390,000.00 105.081% 409,815.90 23.1472222x 9,486,099.71 02/15/2_041 410,000.00 _104.279% 427,543.90 24.1472222x v 10,323=99756 02/15/2042 425,000.00 _ v 104.279% 443,185.75 25.1472222x 11,144,890.54 02/15/2043 440,000.00 103.881% 457,076.40 26.1472222x 11,951,278.20 02/15/2044 460,000.00 103.881% 477,852.60 27.1472222x 12,972,370.72 02/15/2045 480,000.00 103.090% 494,832.00 28.1472222x 13,928,146.27 02/15/2046 500,000.00 103.090% 515 450.00 __ �29.1472222x 15,023,935.69 Total $9,180,000.00 - S9,426,750.40 - S164,204,923.89 IRS Form 8038 -Weighted Ave�e Maturity=Bond Years/Issue Price 17.419 Years Total Interest from Debt Service _ 5,768,198.33 Reoffering(Premium)or Discount (246,750.40) Total Interest 5,521,447.93 NIC=Interest/(Issue Price*Average Matures) 3.3625349% Bond Yield for Arbitrage Purposes 3.0708747% 2016 CO I SINGLE PURPOSE 1 12/5/2016 1 11:31 AM Town of Westlake,Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Proof of Premium/5W Call Bond Selection of Call Dates/Prices PV at Bond Maturity Call Date Call Price Yield Lowest? 02/15/2038 - - 411,723.70 No 02/15/2038 02/15/2026 100.000% 386,478.16 Yes 02/15/2040 - - 880,363.26 No 02/15/2040 02/15/2026 100.000% 821,266.09 Yes 02/15/2042 - 968,406.49 No 02/15/2042 02/15/2026 100.000% 896,414.62 Yes 02/15/2044 - - 1,051,395.26 No 02/15/2044 02/15/2026 100.000% 966,195.40 Yes 02/15/2046 - - 1,152,630.79 No 02/15/2046 02/15/2026 100.000% 1.052,079.43 Yes 2016 CO I SINGLE PURPOSE 1 12/512016( 11:31 AM Lawrence Financial Consulting LLIC Town of Westlake, Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Proof of D/S for Arbitrage Purposes Date Principal Interest Total 12/22/2016 - - - 08/15/2017 - 203,098.33 203,098.33 02/15/2018 200,000.00 156,900.00 356,900.00 08/15/2018 - 153,900.00 153,900.00 02/15/2019 205,000.00153,9_00.0_0_ 358,900.00 08/15/2019 - _ 150,825.00 150,825.00 02/15/2020 210,000.00 150,825.00 360,825.00 08/15/2020 - 147,675.00 147,675.00 02/15/2021 215,000.00 147,675.00 362,675.00 08/15/2021 _ 144,450.00 144,450.00 02/15/2022 225,000.00 _ 144,450.00 369,450.00 08/15/2022 - 141,075.00 141,075.00 02/15/2023 230,000.00 141,075.00 371,075.00 08/15/2023 - 13.7,625.00 137,625.00 02/15/2024 235 000.00 _ 137,625.00 372,625.00 08/15/2024 - 134,100.00 a _ 134,100.00 02/15/2025 245,000.00 134,100.00 379,100.00 08/15/2025 - 130,425.00 130,425.00 02/15/2026 4,090,000.00 130,425.00 4,220,425.00 08/15/2026 ^_V - _ 49,875.00_ __ _ 49,875.00 02/15/2027 260,000.00 49,875.00 309,875.00 08/15/2027 - 45,975.00 45,975.00 02/15/2028 265,000.00 45,975.00 310,975.00 08/15/2028 - 42,000.00 42,000.00 _02/15/2029 275,0_00.00 _ __42,000.00_ _ 317,000.00 08/15/2029 - 37,875.00 37,875.00 02/15/2030 285,000.00 37,875.00 322,875.00 08/15/2030 - 33,600.00 33,600.00 02/15/2031 290,000.00 33,600.00 323,600.00 08/15/2031 - _ 29,250.00 29,250.00 02/15/2032 300,000.00 29,250.00 329,250.00 08/15/2032 - 24,750.00 24,750.00 02/15/2033 310,000.00 24,750.00 334,750.00 08/15/2033 - 20,100.00 20,100.00 02/15/2034 320,000.00 20,100.00 340,100.00 08/15/2034 - 15,300.00 15,300.00 02/15/2035 330,000.00 15,300.00 345,300.00 08/15/2035 - 10,350.00 10,350.00 02/15/2036 340,000.00 10,350.00 350,350.00 08/15/2036 _ _ 5,250.00 5,250.00 02/15/2037 350,000.00 ^ 5,250.00 355,250.00 Total S9,180,000.00 53,268,798.33 512,448,798.33 2016 CO 1 SINGLE PURPOSE 1 12/5/2016 1 11:31 AM Town of Westlake, Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Proof 4f Bond Yield @ 3.0708747% Part 1 of 2 Present Cumulative Date Cashflow PV Factor Value PV 12/22/2016 - 1.0000000X - - 08/15/2017 203,098.33 0.9804689x 199,131.60 199,131.60 02/15/2018 356,900.00 0.9656421x 344,637.66 543,76926 08/15/2018 153,900.00 0.9510395x 146,364.97 690,134.23 02/15/2019 358,900M 0.9366577x 336,166.44 1,026,300.67 08/15/2019 150,825M 0.9224934x 139,135.06 1,165,435.73 02/15/2020 360,825.00 0.9085433x 327,825.12 1,493,260.85 08/15/2020 147,675.00 0.8948041x 132,140.20 1,625,401.05 02/15/2021 362,675.00 0.8812727x 319,615.58 1,945,016.63 08/15/2021 144,450.00 0.8679459x 125,374.79 2,070,391.42 02/15/2022 369,450.00 0.8548207x 315,813.51 2,386,204.93 08/15/2022 141,075.00 0.8418940x 118,770.19 2,504,975.12 02/15/2023 371,075.00 0.8291627x 307,681.54 2,812,656.66 08/15/2023 137,625.00 0.8166239x 112,387.87 2,925,044.53 0_2115/2024372,625.00 0.80427_48x_ _ _ 299,692.90 3,224,737.43_ 08/15/2024 134,100.00 0.7921124x 106,222.27 - 3,330,959.70 02/15/2025 379,100.00 0.7801339x 295,748.78 3,626,708.48 08/15/2025 130,425.00 0.7683366x 100,210.30 3,726,918.78 02/15/2026 4,220,425.00 0.7567177x 3,193,670.24 6,920,589.02 08/15/2026 49,875.00 0,7452745x37,170.56 6,957,75958 02/15/2027 309,875.00 0.7340043x - 227,449.58 7,185,209.16 08/15/2027 45,975.00 0.7229045x 33,235.54 7,218,444.69 02/15/2028 310,975-00 0.7119726x 221,405.69 7,439,850.39 08/15/2028 42,000.00 0.701206lx 29,450.65 7,469,301.04 02/15/2029 317,000.00 0.6906023x 218 920.93 __ 7,688,221.97 ____.-------.-----------__..----�_ z_____.._ 08/15/2029 37,875-00 0.6801589x 25,761.02 7,713,982.99 02/15/2030 322,875.00 0.6698734x 216,285.37 7,930268.37 08/15/2030 33,600.00 0.6597435x 22,167.38 7,952,435.75 02/15/2031 323,600.00 0.6497667x 210,264.50 8,162,700.25 08/15/2031 29,250.00 0.6399408x 18,718.27 8,181,418.52 02/15/2032 329,250.00 0.6302635x 207,514.26 8,388,932.77 08/15/2032 24,750.00 0.6207325x 15,363.13 8,404,295.91 02/15/2033 334,750.00 0.6113457x 204,647.98 8,608,943.88 08/15/2033 20,100.00 0.6021008x 12,102.23 8,621,046.11 _02/15/2034 340,100.00 0.5929958x_ 201,677.86 8,822,723.97 08/15/2034 15,300.00 0.5840284x _ 81935.63 T 8,831,659.60 02/15/2035 345,300.00 0.5751966x 198,615.38 9,030,274.98 08/15/2035 10,350.00 0.5664984x 5,863.26 9,036,138.24 02/15/2036 350,350.00 0.5579317x 195,471.36 9,231,609.60 08/15/2036 _5,250.00 �0S494945x _- 2,884.85 �____--_9,234,494.44 02/15/2037 355,250.00 0.5411850x 192,255.96 9,426,750.40 Total $12,448,798.33 - $9,426,750.40 - 2016 CO I SINGLE PURPOSE 1 12/5!2016 1 11:31 AM Lawrence Financial Consultin• Town of Westlake,Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 (Fire Station) Proof Of Bond Yield @ 3.0708747% Part 2 of 2 Derivation Of Target Amount Par Amount of Bonds _ _ _ _ _ T $9,180,000.00 _Reoffering Premium or(Disco246,750.40 Original Issue Proceeds $9,426,750A0 2016 CO I SINGLE PURPOSE 1 12/5/2016 1 11:31 AM Exhibit"F" CERTIFICATE OF ELECTION PURSUANT TO SECTION 148(f)(4)(C) OF THE INTERNAL REVENUE CODE OF 1986 I,the undersigned, being the duly authorized representative of the Town of Westlake, Texas(the "Issuer") hereby state that the Issuer elects the provisions of section 148(f)(4)(C)of the Internal Revenue Code of 1986(the "Code"),relating to the exception to arbitrage rebate for temporary investments,as more specifically designated below, with respect to the Issuer's Combination Tax and Revenue Certificates of Obligation,Series 2016(the"Obligations") which are being issued on the date of delivery of the Obligations. The CUSIP Number for the Obligations is stated on the Form 8038-G filed in connection with the Obligations. The Issuer intends to take action to comply with the two-year temporary investments exception to rebate afforded construction bonds under section 148(f)(4)(C)of the Code or any of the other exceptions available to the Issuer in accordance with section 1.148-7 of the Treasury Regulations. Capitalized terms have the same meaning as defined in the Federal Tax Certificate. ® 1. PENALTY ELECTION. In the event that the Issuer should fail to expend the"available construction proceeds"of the Obligations in accordance with the provisions of section 148(0(4)(C)of the Code,the Issuer elects,in lieu of rebate,the penalty provisions of section 148(f)(4)(C)(vii)(I)of the Code. ® 2. RESERVE FUND ELECTION. The Issuer elects to exclude from "available construction proceeds,"within the meaning of section 148(f)(4)(C)(vi)of the Code,of the Obligations, earnings on the Reserve Fund in accordance with section 148(f)(4)(C)(vi)(IV)of the Code. ® 3. MULTIPURPOSE ELECTION. The Issuer elects to treat that portion ofthe Obligations the proceeds of which are to be used for the payment of expenditures for construction,reconstruction or rehabilitation of the Projects, as defined in the instrument authorizing the issuance of the Obligations,in an amount which is currently expected to be equal to$ as a separate issue in accordance with the provisions of section 148(f)(4)(C)(v)(II)of the Code.(Note.This election is not necessary unless less than 75 percent of the proceeds of the Obligations will be used for construction,reconstruction or renovation.) ® 4. ACTUAL FACTS. For purposes of determining compliance with section 148(f)(4)(c)of the Code(other than qualification of the Obligations as a qualified construction issue),the Issuer elects to use actual facts rather than reasonable expectations. M5. NO ELECTION. The Issuer understands that the elections which are adopted as evidenced by the check in the box adjacent to the applicable provision are irrevocable. Further,the Issuer understands that qualification of the Obligations for eligibility forthe exclusion from the rebate requirement set forth in section 148(f)of the Code is based on subsequent events and is unaffected by the Issuer`s expectations of such events as of the date of delivery of the Obligations. Accordingly, while failure to execute this certifrcate and to designate the intended election does not preclude auaUlkation,it would preclude the Issuer front the relief afforded by such election. DATED:December 22,2016 Town Manager Town of Westlake,Texas 1301 Solana Blvd.,Suite 4202 Westlake,Texas 76262 Employer I.D.Number: 75-2449357 LAW OFFICES MCCALL, PARKHURST & HORTON L.L.P. 600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N.ST.MARY'S STREET SUITE 1800 SUITE 900 SUITE 1525 AUSTIN,TEXAS 78701-3248 DALLAS,TEXAS 75201-6587 SAN ANTONIO,TEXAS 78205-3503 TELEPHONE:(512)478-3805 TELEPHONE:(214)754-9200 TELEPHONE:(210)225.2800 FACSIMILE:(512)472.0871 FACSIMILE:(214)754.9250 FACSIMILE:(210)225-2984 January 17, 2017 VIA UPS 2ND DAY AIR#1Z56404W0293904998 Internal Revenue Service Center 1973 North Rulon White Boulevard Ogden,Utah 84201-1000 Re: Information Reporting-Tax-Exempt Bonds Town of Westlake, Texas Combination Tax and Revenue Certificates of Obligation, Series 2016 Ladies and Gentlemen: Pursuant to the requirements of Section 149(e)of the Internal Revenue Code of 1986,enclosed please find an original of Form 8038-G which is hereby submitted to you for the above-captioned bonds issued December 22,2016. Sincerely, McCALL, PARKHURST&HORTON L.L.P. r Stefano Taverna ST: vm Enclosures cc: Chris Settle Form 8038-G Information Return for Tax-Exempt Governmental Obligations (Rev.September 2011) ►Under Internal Revenue Code section 149(e) OMB No.1545-0720 Department of the Treasury ►See separate instructions. Internal Revenue Service Caution:If the issue price is under$100,000,use Form 8038-GC. Reporting Authority If Amended Return,check here 10- 1 1 Issuer's name 2 Issuer's employer identification number(EIN) Westlake,Texas(Town of) 75-2449357 3a Name of person(other than issuer)with whom the IRS may communicate about this return(see instructions) 3b Telephone number of other person shown on 3a None NIA 4 Number and street(or P.O.box if mail is not delivered to street address) Room/suite 5 Report number(For IRS Use Only) 1301 Solana Boulevard 4202 6 City,town,or post office,state,and ZIP code 7 Date of issue Westlake,Texas 76262 12122/2016 8 Name of issue 9 CUSIP number Combination Tax and Revenue Certificates of Obligation,Series 2016 96048P FU5 10a Name and title of officer or other employee of the issuer whom the IRS may call for more information(see 10b Telephone number of officer or other instructions) employee shown on 10a Thomas E.Brymer,Town Manager (817)490-5720 Type of Issue(enter the issue price).See the instructions and attach schedule. 11 Education. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Health and hospital . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 Public safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 9,426,750 15 Environment(including sewage bonds) . . . . . . . . . . . . . . . . . . . . 15 16 Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 17 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 18 Other.Describe ► 18 19 If obligations are TANS or RANs,check only box 19a . . . . . . . . . . . . . ► ❑ f If obligations are BANS,check only box 19b . . . . . . . . . . . . . . . . ► ❑ 20 If obligations are in the form of a lease or installment sale,check box . . . . . . . . ► ❑ Description of Obli ations.Complete for the entire issue for which this form is being filed. (a)Final maturity date (b)Issue price (c)Stated redemption (d)weighted (e)Yield price at maturity average maturlty 21 02/1512046 9,426,750 9,180,000 17.41 ears 3.0708 % Uses of Proceeds of Bond Issue including underwriters' discount) 22 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . . . . 22 -0- 23 Issue price of entire issue(enter amount from line 21,column(b)) . . . . . 23 9,426,750 24 Proceeds used for bond issuance costs(including underwriters'discount). 24 223,428 25 Proceeds used for credit enhancement . . . . . . . . . . . . 25 -0- 26 Proceeds allocated to reasonably required reserve or replacement fund 26 -0- V 27 Proceeds used to currently refund prior issues . . . . . . . . . 27 -0- 28 Proceeds used to advance refund prior issues . . . . . . . . . 28 -0- a 29 Total(add lines 24 through 28) . . . . . . . . . 29 223,428 30 Nonrefunding proceeds of the issue(subtract line 29 from line 23 and enter amount here) 1 30 1 9,203,322 Description of Refunded Bonds.Com tete this part only for refunding bonds. Not applicable 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . . ► years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . . . ► years 33 Enter the last date on which the refunded bonds will be called(MM/DD/YYYY) . . . . . . ► 34 Enter the date(s)the refunded bonds were issued►(MM/DD/YYYY) For Paperwork Reduction Act Notice,see separate instructions. Cat.No.637735 Form 8038-G(Rev.9-2011) Westlake,Texas(Town of) EIN: 75-2449357 Form 8038-G(Rev.9-2011) Page 2 Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . . 35 -0- 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC)(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . 36a -0- b Enter the final maturity date of the GIC► c Enter the name of the GIC provider► 37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units . . . . . . . . . . . . . . . . . . . . . . . . 37 .0. 38a If this issue is a loan made from the proceeds of another tax-exempt issue,check box► ❑and enter the following information: b` Enter the date of the master pool obligation► c Enter the EIN of the issuer of the master pool obligation 10- d d Enter the name of the issuer of the master pool obligation► 39 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III)(small issuer exception),check box ► 40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate,check box . . . . . . . . . . . . . ► ❑ 41a If the issuer has identified a hedge,check here► ❑ and enter the following information: b Name of hedge provider► C Type of hedge► d Term of hedge lo- 42 42 If the issuer has superintegrated the hedge,check box . . . . . . . . . . . . . . . . . . . . . ► ❑ 43 if the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations(see instructions),check box . . . . . . . . 0- 44 44 If the issuer has established written procedures to monitor the requirements of section 148,check box . . . . . ► ✓❑ 45a If some portion of the proceeds was used to reimburse expenditures,check here► ❑✓ and enter the amount of reimbursement . . . . . . . . . ► $100,000- b Enter the date the official intent was adopted► -preliminary expenses Under penalties of perjury,I declare that I have examined this return and accompanying schedules and statements,and to the best of my knowledge Signature and belief,they are true,correct,and complete,i further declare that I consent to the IRS's disclosure of the Issuer's return Information,as necessary to and process this return,to the person that i have authorized above. Consent 12/22/2016 , Thomas E. Bremer,Town Manager signature of issuer's au 'o represen ve 'el Date Type or print name and tRle Paid Print(Type preparer's name Prepa is na a Date [:] PTIN Check if Preparer Stefano Taverna 1 12/22/2016 1 self-employed P01067358 Use Only Firm's name ► McCall,Parkhurst&Horto .P. Firm's EIN ► 75-0799392 Firm's address ► 717 N.Harwood,Suite 900,Dallas,TX 75201 Phone no. 214.754.9200 Form 8038-G(Rev.9-2011) .•, , s = V, KEN PAXTON V ATTORNEY GENERAL OF TEXAS December 16,2016 THIS IS TO CERTIFY that the Town of Westlake,Texas(the"Issuer"),has submitted the Town of Westlake. Texas Combination Tax and Revenue Certificate of Obligation_ Series 2016(the "Certificate") in the principal amount of$9,180,000 for approval. The Certificate is dated December 1, 2016, numbered T-1, and was authorized by Ordinance No. 804 of the Issuer passed on December 5, 2016 (the "Ordinance"). The Office of the Attorney General has examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Issuer contained in the certified proceedings and other certifications of public officials furnished to its without undertaking to verify the same by independent investigation. We express no opinion relating to the official statement or any other offering material relating to the Certificate. Based on our examination, we are of the opinion, as of the date hereof and under existing law, as follows (capitalized terms. except as herein defined, have the meanings given to them in the Ordinance): (1) The Certificate has been issued in accordance with law and is a N,alid and binding obligation of the Issuer. (2) The Certificate is payable from the proceeds of an annual ad valorem tax levied, within the limits prescribed by law, against all taxable property in the Issuer and is additionally secure by and payable from a limited pledge of the Surplus Revenues of the Issuer's water and sewer system, as provided in the Ordinance. Therefore, the Certificate is approved. No.62228 Book No.2016-U MA ----- Attorney General of the State of Texas *See attached Signature Authorization Post Office Box 12548, Austin, Texas 78711-2548 • (512) 463-2100 • www.texasattornevgeneral.gov OFFICE OF THE ATTORNEY GENERAL § § OF THE STATE OF TEXAS § I,KEN PAXTON,Attorney General for the State of Texas,do hereby authorize the employees of the Public Finance Division of the Office of the Attorney General to affix a digital image of my signature,in my capacity as Attorney General,to the opinions issued by this office approving the issuance of public securities by the various public agencies, non-protit corporations. district, entities, bodies politic or corporate, or political subdivisions of this State as required by taw, the opinions approving those contracts designated by the Legislature as requiring the approval of the Attorney General, and the obligations, proceedings and credit agreements required by taw to be approved by the Attorney General. The authorized digital image of my signature is attached as Exhibit A and is hereby adopted as my own for the purposes set forth herein. This supersedes any prior signature authorizations for the same purpose. The: authority.granted herein is to be exercised on those occasions when t am unavailable to personally sign said opinions,and upon the condition that the opinions to which the digital image signature is affixed have been approved by an authorized Assistant Attorney General following the completion of the Public Finance Division's review of the transcripts of proceedings to which the opinions relate. Given under my hand and seal of office at Austin,Texas, this the day of January,2015. KENT PAX ON Attorney General of the State of Texas. OFFICE OF COMPTROLLER OF THE STATE OF TEXAS I, Melissa Mora, [] Bond Clerk FX Assistant Bond Clerk in the office of the Comptroller of the State of Texas, do hereby certify that, acting under the direction and authority of the Comptroller on the 16th day of December 2016, 1 signed the name of the Comptroller to the certificate of registration endorsed upon the: Town of Westlake, Texas Combination Tax and Revenue Certificate of Obligation Series 2016, numbered T=1, dated December 1, 2016, and that in signing the certificate of registration I used the following signature: 4 IN WITNESS WHE OF I have executed thi rtificate this the 16th day of December 2016. I, Glenn Hegar, Comptroller of Public Accounts of the State of Texas, certify that the person who has signed the above certificate was duly designated and appointed by me under authority vested in me by Chapter 403, Subchapter H, Government Code, with authority to sign my name to all certificates of registration, and/or cancellation of bonds required by law to be registered and/or cancelled by me, and was acting as such on the date first mentioned in this certificate, and that the bonds/certificates described in this certificate have been duly registered in the office of the Comptroller, under Registration Number 88340. GIVEN under my hand and seal of office at Austin, Texas, this the 16th day of December 2016. GLENN HEGAR Comptroller of Public Accounts of the State of Texas OFFICE OF COMPTROLLER OF THE STATE OF TEXAS 1, GLENN HEGAR, Comptroller of Public Accounts of the State of Texas, do hereby certify that the attachment is a true and correct copy of the opinion of the Attorney General approving the: Town of Westlake Texas Combination Tax and Revenue Certificate of Obligation, Series 2016 numbered T-1, of the denomination of $ 9,180,000, dated December 1, 2016, as authorized by issuer, interest various percent, under and by authority of which said bonds/certificates were registered electronically in the office of the Comptroller, on the 16th day of December 2016, under Registration Number 88340. Given under my hand and seal of office, at Austin, Texas, the 16th day of December 2016. GLENN HEGAR Comptroller of Public Accounts of the State of Texas LAW OFFICES M-CALL, PARKHURST & HORTON L.L.P. 600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N, ST MARY'S STREET 1800 ONE AMERICAN CENTER NINTH FLOOR 1525 ONE RIVERWALK PLACE AUSTIN,TEXAS 78701-3248 DALLAS,TEXAS 75201.6587 SAN ANTONIO,TEXAS 78205.3503 TELEPHONE,512 478.3805 TELEPHONE:214 754.9200 TELEPHONE:210 225.2800 FACSIMILE:512 472.0871 FACSIMILE:214 754.9250 FACSIMILE:210 225.2984 December 22, 2016 TOWN OF WESTLAKE,TEXAS COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2016 IN THE AGGREGATE PRINCIPAL AMOUNT OF$9,180,000 AS BOND COUNSEL FOR THE TOWN OF WESTLAKE, TEXAS (the "issuer") in connection with the issuance of the Issuer's Combination Tax and Limited Surplus Revenue Certificates of Obligation, Series 2016, described above (the "Certificates of Obligation"), we have examined into the legality and validity of the Certificates of Obligation,which bear interest from the date and mature on the dates,and are subject to redemption, in accordance with the terms and conditions stated in the text of the Certificates of Obligation. Terms used herein and not otherwise defined shall have the meaning given in the ordinance of the Issuer authorizing the issuance and sale of the Certificates of Obligation (the "Ordinance"). WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of tile State of Texas,a transcript of certified proceedings of the Issuer,and other pertinent instruments authorizing and relating to the issuance of the Certificates of Obligation, including one of the executed Certificates of Obligation (Certificate of Obligation Number T-1). BASED ON SAID EXAMINATION,IT IS OUR OPINION that the Certificates of Obligation have been duly authorized, issued,and delivered in accordance with law;and that the Certificates of Obligation, except as may be limited by laws applicable to the Issuer relating to govermental immunity, bankruptcy, reorganization and other similar matters affecting creditors'rights generally or by general principles of equity which permitthe exercise of judicial discretion,constitute valid and legally binding obligations of the Issuer; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of said Certificates of Obligation have been levied and pledged for such purpose,within the limit prescribed by law, and that the Certificates of Obligation are additionally secured by and payable from surplus revenues of the Issuer's waterworks and sewer system,remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve, and other requirements in connection with all of the Issuer's revenue bonds or other obligations(now or hereafter outstanding),which are payable from all or any part of the net revenues of the Issuer's waterworks and sewer system, as provided in the Ordinance. IT IS FURTHER OUR OPINION,except as discussed below,that the interest on the Certificates of Obligation is excludable from the gross income of the owners for federal income tax purposes under the statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We are further of the opinion that the Certificates of Obligation are not "specified private activity bonds"and that, accordingly, interest on the Certificates of Obligation will not be included as an individual or corporate alternative minimum tax preference item under section 57(a)(5)of the Internal Revenue Code of 1986(the "Code"). In expressing the aforementioned opinions,we have relied on,certain representations,the accuracy of which we have not independently verified,and assume compliance with certain covenants,regarding the use and investment of the proceeds of the Certificates of Obligation and the use of the property financed therewith. We call your attention to the fact that if such representations are determined to be inaccurate or upon a failure by the Issuer to comply with such covenants, interest on the Certificates of Obligation may become includable in gross income retroactively to the date of issuance of the Certificates of Obligation. EXCEPT AS STATED ABOVE, we express no opinion as to any other federal, state, or local tax consequences of acquiring, carrying, owning, or disposing of the Certificates of Obligation. WE CALL YOUR ATTENTION TO THE FACT that the interest on tax-exempt obligations, such as the Certificates of Obligation, is included in a corporation's alternative minimum taxable income for purposes of determining the alternative minimum tax imposed on corporations by section 55 of the Code. WE EXPRESS NO OPINION as to any insurance policies issued with respect to the payments due for the principal of and interest on the Certificates,nor as to any such insurance policies issued in the future. 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(the "Service"); rather. such opinions represent our legal judgment based upon our review of existing law and in reliance upon the representations and covenants referenced above that we deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes. No assurance can be given whether or not the Service will commence an audit of the Certificates. If an audit is commenced, in accordance with its current published procedures the Service is likely to treat the Issuer as the taxpayer. We observe that the Issuer has covenanted not to take any action, or omit to take any action within its control, that if taken or omitted, respectively,may result in the treatment of interest on the Certificates as includable in gross income for federal income tax purposes. OUR SOLE ENGAGEMENT in connection with the issuance of the Certificates is as Bond Counsel for the Issuer,and, in that capacity,we have been engaged by the Issuer for the sole purpose of rendering our opinions with respect to the legality and validity of the Certificates under the Constitution and laws of the State of Texas, and with respect to the exclusion from gross income of the interest on the Certificates for federal income tax purposes,and for no other reason or purpose. The foregoing opinions represent our legal judgment based upon a review of existing legal authorities that we deem relevant to render such opinions and are not a guarantee of a result. We have not been requested to investigate or verify, and have not independently investigated or verified,any records,data,or other material relating to the financial condition or capabilities of the Issuer,or the disclosure thereof in connection with the sale of the Certificates,and have not assumed any responsibility with respect thereto. We express no opinion and make no comment with respect to the marketability of the Certificates and have relied solely on certificates executed by officials of the Issuer as to the current outstanding indebtedness of,and assessed valuation of taxable property within, and the sufficiency of the pledged revenues of,the Issuer. 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. Respectfully, �d� S&P Global Ratings RatingsDirect' ............................................................................................................. Summary: Westlake, Texas; General Obligation Primary Credit Analyst: Alexander L Laufer,Dallas 214-765-5876;alexander.laufer@spglobal.com Secondary Contact: James Hobbs,Dallas(972)367-3345;James.Hobbs@spglobal.com Table Of Contents ..........................................I.......I............................ ................ ............ Rationale Outlook Related Research WWW.STANDARDANDPOORS.COM/RATINGSDIRECT NOVEMBER 18, 2016 1 1 75530'5 j J,0 Iii Summary: Westlake, Texas; General obligation US$9.2 mil Combination tax and rev certs of oblig ser 2016 dtd 12/01/2016 due 02/15/2046 Long Term Rating AAA/Stable New Westlake GO Long Term Rating AAA/Stable Upgraded Westlake GO Unenhanced Rating AAA(SPUR)/Stable Upgraded Many issues are enhanced by bond insurance. Rationale S&P Global Ratings raised its long-term and underlying ratings on Westlake,Texas'general obligation(GO)bonds to 'AAA'from We base the higher rating on the city's expanding economy and extremely high per capita incomes, and consistent financial performance,as demonstrated by management's ability to maintain very strong reserves above 75%of expenditures. At the same time,we assigned our'AAA'long-term rating to the city's series 2016 combination tax and revenue certificates of obligation.The outlook on all ratings is stable. Westlake's GO bonds are eligible to be rated above the sovereign because we believe the city can maintain better credit characteristics than the nation in a stress scenario.Under our criteria,titled"Ratings Above The Sovereign: Corporate And Government Ratings--Methodology And Assumptions,"published Nov. 19, 2013 on RatingsDirect,the city has predominantly locally derived revenue from property and sales taxes with independent taxing authority and independent treasury management from the federal government. The series 2016 certificates are secured by a limited ad valorem tax levied on all taxable property within the city.The maximum allowable rate in the state of Texas is$2.50 per$100 of assessed value(AV)for all purposes,with the portion dedicated to debt service limited to$1.50.The city's levy is well below the maximum,at 13.7 cents,0.813 cents of which is dedicated to debt service.The certificates are additionally secured by a limited pledge of surplus revenues(not to exceed$1,000)from the city's waterworks and sewer utility system.We rate the bonds under our GO criteria because we do not differentiate between the city's limited-and unlimited-tax pledges due to its tax rate flexibility,very strong liquidity,and high investment-grade debt.Proceeds will be used to finance public safety related capital projects. The ratings reflect our assessment of the city's: WWW.STANDARDANDPOORS.COM/RATINGSDIRECT NOVEMBER 18,2016 2 17 11 i',1,9 5 ; 30!902(1F Summary: Westlake, Texas; General Obligation • Very strong economy,with access to a broad and diverse metropolitan statistical area(MSA),but a concentrated local tax base; • Strong management,with"good"financial policies and practices under our Financial Management Assessment methodology; • Strong budgetary performance,with operating surpluses in the general fund and at the total governmental fund level in fiscal 2015; • Very strong budgetary flexibility,with a high available fund balance in fiscal 2015 of 100%of operating expenditures; • Very strong liquidity,with total government available cash at 81.7%of total governmental fund expenditures and 7.4x governmental debt service,and access to external liquidity that we consider strong; • Weak debt and contingent liability position,with debt service carrying charges at 11%of expenditures and net direct debt that is 99%of total governmental fund revenue;and • Strong institutional framework score. Very strong economy We consider Westlake's economy very strong.The city,with an estimated population of 1,200,is located in Denton and Tarrant counties in the Dallas-Fort Worth-Arlington MSA,which we consider to be broad and diverse.The city has a projected per capita effective buying income of 227%of the national level,which we view as extremely high and a positive credit factor and per capita market value of$920,897. Overall,the city's market value grew by 16.7%over the past year to$1.1 billion in 2017.Constraining Westlake's economy is a concentrated local tax base,with the 10 largest taxpayers accounting for 38.8%of the total tax base.The weight-averaged unemployment rate of the counties was 4.2%in 2015. Serving a population of roughly 1,200 and encompassing portions of Denton and Tarrant counties,Westlake is approximately 25 miles northeast of Fort Worth, 30 miles west of Dallas and 18 miles south of Denton. Its favorable location among the three leading regional cities offers residents several employment opportunities,including nearby Dallas-Fort Worth International Airport and Fort Worth's Alliance Gateway Airport.The city's tax base,while predominantly residential,also has a significant commercial base as well,making up approximately 55%,and 39%of 2017 assessed value(AV),respectively According to representatives,the average home value is$1.2 million.Single family and mixed-use development construction continues to support tax base growth,including a new estate home development of 92 sites ranging in home value from$2 million to$5 million.The city's commercial presence includes major employers and taxpayers such as Deloitte University,an international training facility for Deloitte; Fidelity;and the Solana complex.The Solana mixed-use complex contains several offices, eateries,and a hotel. Continued growth in each of these sectors has supported 25%cumulative AV growth over the past five years to$1.1 billion. City officials attribute residential demand to the city's favorable location as well as the opening of a local charter school,Westlake academy.Westlake's sizeable commercial presence attributes to its concentrated tax base. However,officials have no concerns with any of the city's leading taxpayers and employers. Additionally, continued economic expansion has resulted in improvement of tax base concentration from 41%in fiscal 2013 to 38%in fiscal 2017.We anticipate further planned residential and commercial construction to continue to support local tax base growth and further diversification over the next two years. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT NOVEMBER 18,2016 3 :;>r9.19s 1 :.;0190.1:a Summary: Westlake, Texas; General Obligation Strong management We view the city's management as strong,with"good"financial policies and practices under our Financial Management Assessment methodology,indicating financial practices exist in most areas,but that governance officials might not formalize or monitor all of them on a regular basis. Highlights of the city's practices include its: • Revenue and expenditure assumptions based,in part,on five years of historical trends and estimates of the city's needs; • Quarterly budget reports to the city council on a year-to-date comparison of the budget and amendments performed as needed; • Formal investment policy that management reviews annually with quarterly reports on investment performance and holdings to the council; • Formal long-term financial plan and five-year forecast of revenue and expenditures across all funds; • Rolling five-year capital plan that identifies funding sources and uses;and • Formal minimum general fund balance policy of maintaining 90 days'operating expenditures in available fund balance. The city currently lacks a debt management policy. Strong budgetary performance Westlake's budgetary performance is strong in our opinion.The city had operating surpluses of 13.6%of expenditures in the general fund and of 4%across all governmental funds in fiscal 2015.Our assessment accounts for the fact that we expect budgetary results could deteriorate somewhat from 2015 results in the near term. After adjusting for recurring transfers and large one-time expenditures,general fund operational surpluses in each of the past three audited years support the city's very strong budgetary performance. Sales tax is the city's leading revenue source followed by property taxes,accounting for 45%and 16%of general fund revenue,respectively. Sales tax has grown 11.5%annually during the last three audited years.The city estimates the city will finish with another $452,000 or 1.2%surplus in the general fund in 2016.The city has conservatively budgeted for a total governmental fund deficit in fiscal 2017,which we believe could lead to structural deterioration from the city's previously very strong performance in 2015. However,the city operational performance has demonstrated the ability to exceed budgeted expectations,indicated by an$822,561 positive budgeted variance in 2015. Given the city's conservative budgetary practices in addition to stable growth in local revenues,we expect the city to maintain strong budgetary performance during the current and subsequent fiscal years. Very strong budgetary flexibility Westlake's budgetary flexibility is very strong,in our view,with a high available fund balance in fiscal 2015 of 100%of operating expenditures,or$7.4 million.We expect the available fund balance to remain above 75%of expenditures for the current and next fiscal years,which we view as a positive credit factor. Westlake currently maintains available fund balances of more than 75%of expenditures,which we believe to be exceptional. In fact,management has maintained available fund balances of more than 100%of expenditures in each of the past three audited fiscal years. Officials are projecting the fund balance ratio will remain more than 100%in WWW.STANDARDANDPOORS.COM/RATINGSDIRECT NOVEMBER 18,2016 4 175:9395 1 W 1902 11 H Surnnrary: Westlake, Texas; General Obligation fiscal years 2016. Based on projections,we do not expect the budgetary flexibility score to decrease below what we consider a very strong level.Flexibility is additionally supported by the city's formal fund balance policy equal to a minimum of 90 days of operating expenses. Very strong liquidity In our opinion,Westlake's liquidity is very strong,with total government available cash at 81.7%of total governmental fund expenditures and 7.4x governmental debt service in 2015. In our view,the city has strong access to external liquidity if necessary. Westlake has demonstrated strong access to capital markets with several GO-supported debt issues over the past 20 years.The city historically had what we consider very strong cash balances. Because the city has no significant plans to spend down reserves,we do not believe its cash position will likely weaken materially.The city's investments comply with state statutes.At fiscal year-end 2015, city investments held liquid maturities in TexPool and commercial paper,which we do not consider aggressive. Weak debt and contingent liability profile In our view,Westlake's debt and contingent liability profile is weak.Total governmental fund debt service is 11%of total governmental fund expenditures,and net direct debt is 99%of total governmental fund revenue.The city currently has no plans to issue additional debt over the next two years. Westlake's pension contributions totaled 1.9%of total governmental fund expenditures in 2015.The city made its full annual required pension contribution in 2015.Westlake provides pension benefits through the statewide Texas Municipal Retirement System.The city historically paid its annual pension cost in full.Using updated reporting standards in accordance with Governmental Accounting Standards Board(GASB)Statement No. 67,the city's net pension liability was$707,597 as of Dec. 31, 2014.The plan was 83.7%funded based on its net position as a percent of the total pension liability. (For additional details on GASB Nos. 67 and 68,please see our report,titled"Incorporating GASB 67 And 68: Evaluating Pension/OPEB Obligations Under Standard&Poor's U.S. Local Government GO Criteria,"published Sept. 2, 2015,on RatingsDirect.)The city does not offer other postemployment benefits. Strong institutional framework The institutional framework score for Texas municipalities is strong. Outlook The stable outlook reflects our opinion that Westlake will likely continue to benefit from its location in the Dallas-Fort Worth-Arlington MSA,allowing for continued tax-base growth and diversification.The outlook also reflects our expectation that the city will likely maintain its very strong budgetary flexibility and strong budgetary performance.We do not expect to change the rating during the two-year outlook period.Finally,the outlook also reflects our expectation that the city's debt and contingent liabilities profile will likely remain weak but that the city will likely prudently issue additional debt in a manner that will not significantly increase overall budgetary pressure related to debt service carrying charges.We could lower the rating if the city were to experience multiyear financial deterioration resulting in a material reduction of available reserves, coupled with an elevated debt profile,and weakening economic WWW.STANDARDANDPOORS.COM/RATINGSDIRECT NOVEMBER 18,2016 5 1759395 1 30190211r Summary: Westlake, Texas; General Obligation characteristics. Related Research • S&P Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency,Sept. 12, 2013 • Incorporating GASB 67 And 68:Evaluating Pension/OPEB Obligations Under Standard&Poor's U.S. Local Government GO Criteria,Sept.2,2015 Certain terms used in this report,particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria,and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com.All ratings affected by this rating action can be found on the S&P Global Ratings'public website at www.standardandpoors.com. Use the Ratings search box located in the left column. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT NOVEMBER 18,2016 6 173939;; 1 3 0 1902.1IE Copyright©2016 by Standard&Poor's Financial Services LLC.All rights reserved. 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Westlake, TX GO Bond Rating Raised To 'AAA' On Expanding Economy, Stable Financial Performance Primary Credit Analyst: Alexander L Laufer,Dallas 214-765-5876;alexander.laufer@spglobal.com Secondary Contact: James Hobbs,Dallas(972)367-3345;James.Hobbs@spglobal.com DALLAS (S&P Global Ratings) Nov. 18, 2016--S&P Global Ratings raised its long-term and underlying ratings on Westlake, Texas' general obligation (GO) bonds to 'AAA, from 'AA+I . At the same time, S&P Global Ratings assigned its 'AAA' long-term rating to the city's series 2016 combination tax and revenue certificates of obligation. The outlook on all ratings is stable. "We base the higher rating on the city's expanding economy and extremely high per capita incomes, and consistent financial performance, as demonstrated by management's ability to maintain very strong reserves above 75% of expenditures, " said S&P Global Ratings credit analyst Alexander Laufer. Westlake's GO bonds are eligible to be rated above the sovereign because S&P Global Ratings believes the city can maintain better credit characteristics than the nation in a stress scenario. Under the rating service's criteria "titled Ratings Above The Sovereign: Corporate And Government Ratings--Methodology And Assumptions, " published Nov. 19, 2013 on RatingsDirect, the city has predominantly locally derived revenue from property and sales taxes with independent taxing authority and independent treasury management from the federal government. The series 2016 certificates are secured by a limited ad valorem tax levied cn all taxable property within the city. The maximum allowable rate in the state of Texas is $2.50 per $100 of assessed value (AV) for all purposes, with the portion dedicated to debt service limited to $1.50. The city's levy is well below the maximum, at 13.7 cents, 0.813 cents of which is dedicated to debt service. The certificates are additionally secured by a limited pledge of surplus revenues (not to exceed $1,000) from the city's waterworks and sewer ViWW.STANDARDANDPOORS.COrd/RATINGSDIRECT NOVEMBER 18,2016 1 Westlake, TX GO Bond Rating Raised To 'AAA' On Expanding Economy, Stable Financial Performance utility system. The rating service rates the bonds under its GO criteria because it do not differentiate between the city's limited- and unlimited-tax pledges due to its tax rate flexibility, very strong liquidity, and high investment-grade debt. Proceeds will be used to finance public safety related capital projects. RELATED RESEARCH • S&P Public Finance Local GO Criteria: How We Adjust Data For Analytic Consistency, Sept. 12, 2013 • Incorporating GASB 67 And 68: Evaluating Pension/OPEB Obligations Under Standard & Poor's U.S. Local Government GO Criteria, Sept. 2, 2015 Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com and at www.spcapitaliq.com. All ratings affected by this rating action can be found on the S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column. WWW.STANDARDANDPOORS.COM/RATINGS DIRECT NOVEMBER 18,2016 2 1'759380 1 30190:!18 Copyright©2016 by Standard&Poor s Financial Services LLC.All rights reserved. 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WWW.STANDARDANDPOORS.COM/RATINGSDIRECT NOVEMBER 18,2016 3 ._59380 1 301,0_; ,. { s a i s RECEIPT AND DISBURSEMENT OF FUNDS j 1 U.S. Bank National Association (the 'Bank") hereby acknowledges receipt of the sum of $9,284,436.07 for the account and on behalf of the Town of Westlake,Texas(the"Town"),with respect to k its Combination Tax and Revenue Certificates of Obligation,Series 2016,and pursuant to instructions from f the Town, such funds have been applied, allocated and deposited in the manner set forth in the attached Exhibit A. r: DATED this December 22,2016. U.S.BANK NATIONAL ASSOCIATION s Ey: Authorized Officer a r A a k Y 4 i i i 'S S a u if i ii t h u t { Exhibit A See Tab No. 16 Lawrence Financial Consulting LLC Registered Municipal Advisor&Texas Securities Dealer Austin,Rxas Closing Memorandum Th: Tom Brymer Thwn of Westlake 817490-5720(ph) Debbie Piper Town of Westlake 817490-5712(ph) Chris Settle McCall,Parkhurst&Horton L.L.P. 214-754-9237(ph) Leroy Grawunder McCall,Parkhurst&Horton L.L.P. 214-754-9201(ph) Hank Mmey FTN Financial Capital Markets 901435-8428(ph) Tiffany Williamson FTN Financial Capital Markets 901435-8428 (ph) Mary Ann Bohne FTN Financial Capital Markets 901435-8428(ph) Israel Lugo U.S.Bank N.A. 972-581-1623(ph) Ricca Coursey First Financial Bank,NA 817-329-8601(ph) From: Tom Lawrence Lawrence Financial Consulting LLC 512-375-3424(ph) Re: $9,180,000 Town of Westlake Combination Tax andRewnue Certificates of Obligation, Series 2016 Date: December 20, 2016 The purpose of this memorandum is to describe certain events and transfers, which will occur on December 22, 2016 (the "Closing"or "Closing Date') with respect to the above captioned Certificates of Obligation (the "Certificates') to be issued by the Town of Westlake, Texas (the `Issuer" or the "Town"). The Closing will take place at 10:00 AM, Central Time, at the offices of the Paying Agent/Registrar for the Certificates (the "Paying Agent"), U.S. Bank National Association, 13737 Noel Road, Suite 800, Dallas, Texas 75240, Attention:Israel Lugo. I. Registration of Certificates Prior to the Closing, the initial certificate in the name of FTN Financial Capital Markets, (the "Underwriter") named in the Official Bid Form (the "Official Bid Form"), submitted for the Certificates and accepted by the Issuer on December 5, 2016, (the `Initial Certificate")will be prepared by McCall, Parkhurst & Horton L.L.P. (`Bond Counsel")and delivered to the Texas Attorney General for approval. Upon approval by the Texas Attorney General, the Initial Certificate will be registered by the Comptroller of Public Accounts to the State of Texas and delivered by Bond Counsel to the Paying Agent no later than the Closing Date. II. Payment of Purchase Price Pursuant to the terms of a Official Bid Form, the Underwriter shall wire transfer, on the Closing Date, the total purchase price for the Certificates in the amount of$9,284,436.07 (representing the original par amount of the Certificates, plus $246,750.40 of net original issue premium, less $142,314.33 of Underwriter's discount) to the Paying Agent, as follows: 1 Amount: $9,284,436.07 To: U.S. Bank National Association 13737 Noel Road, Suite 800, Dallas,TX 75240 ABA: 091000022 Account Name: U.S. Bank Trust N.A. Account Number: 180121167365 FFC: Westlake Certificates of Obligation 2016 1301 Solana Blvd, Ste 4202, Westlake, TX 76262 Attn: Israel Lugo (972-582-1623) Upon receipt of the full purchase price by the Paying Agent, the Town will promptly endorse the good faith check and send it to Tiffany Williamson, FTN Financial Capital Markets 845 Crossover Ln.,Ste. 150,Memphis, TN381174904,901-435-8428(phone). III. D is burs a me nts by the Paying Agent Following the transfer of funds described in Section II, the Paying Agent shall make the following wire transfers and disbursements: A. Deposit to Construction Fund. The Paying Agent shall wire transfer$9,200,000.00 to First Financial Bank, N.A., as follows: To: First Financial Bank, N.A. 95 Trophy Club Dr, Trophy Club, TX 76262 ABA: 111301122 Account Number: 9111-000-6904 Account Name Town of Westlake General Fund Attn: Ricca Coursey(817-329-8601) The amount so transferred, together with the earnings thereon and Project disbursements therefrom, shall be separately accounted for by the Issuer as its Construction Fund established pursuant to the Ordinance. B. Issuance Costs and Rounding Amount. The Paying Agent shall retain $450.00 to cover its initial Paying Agent fee. The remaining $83,986.07 shall be used by the Paying Agent and used to pay the remaining costs of issuance relating to the Certificates on the Closing Date, i.e., bond counsel fee and expenses (including reimbursement for payment of Attorney General fee), financial advisor fee and expenses, and rating agency fee. Invoices should be submitted to the Paying Agent, attention: Israel Lugo, israel.luao(@usbank.com (e-mail), 972-581-1660 (fax), with a copy to Tom Lawrence, tlawrenceOlfctexas.com (e-mail), 512-582-8259 (fax). Funds remaining after the payment of the foregoing expenses, if any, shall be wire transferred to the Town as follows: 2 3 Amount: [TBD I To: First Financial Bank NA 95 Trophy Club Dr, Westlake, TX 76262 ABA: 111914849 Account Name: Town of Westlake General Fund Account Number: 9111-000-6904 Attn: Danella West (817-329-8601) Upon receipt, the Town shall transfer such funds into the interest and sinking fund established for the Certificates in accordance with the Ordinance. IV. Release and Cancellation of Certificates Immediately upon receipt of the purchase price for the Certificates (see Section II above) and approval of the Closing by Bond Counsel, all the closing documents will be dated the Closing Date and the Paying Agent will cancel the Initial Certificate. Certificates in 'book-entry-only" form will be released by the Paying Agent to the Underwriter by contacting DTC at 212-855-3752. 4