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Home My WebLink About2005-12-06-9:00AM-REGULARBRAZOS COUNTY BRYAN, TEXAS NOTICE OF MEETING AND AGENDA BRAZOS COUNTY COMMISSIONERS COURT THE COMMISSIONERS COURT OF BRAZOS COUNTY WILL MEET IN REGULAR SESSION ON 6 DECEMBER 2005 AT 9:00 A.M. IN THE COMMISSIONERS COURTROOM OF THE BRAZOS COUNTY COURTHOUSE, 300 E. 26TH STREET, SUITE 115, BRYAN, TEXAS. 1. Invocation and Pledge of Allegiance - Judge Sims 2. Call for citizen's input and/or concerns. Consider and take action on agenda items 3 -16: 3. Personnel Change of Status. 4. Payment of Claims. 5. Brazos County Order #05-011 prohibiting outdoor burning in Brazos County for ninety (90) days, effective 6 December 2005. 6. Contract with Voices for Children, Inc. for services as Guardian ad litem. Term of agreement is 1 September 2005 through 31 August 2006. 7. Change in the reimbursement of expenses paid to jurors, as required by Senate Bill 1704, 79th Legislative Session. 8. Approval of the following changes to positions in the Purchasing Department: a. Promote Senior Buyer to Assistant Purchasing Agent at Group 21, Step 7. b. Promote Buyer to Senior Buyer at Group 19, Step 5. C. Delete the Buyer position. d. Change the Administrative Secretary position from full-time to part-time at Group 9, Step 7. Office of the County Judge • 300 East 26" St. • Suite 114 • Bryan, Texas 77803 . Fax: (979) 361-4503 VOL q6 PAGE 1 • 6 December 2005 Page 2 9. Request from Research Valley Partnership for approval of a Cash Incentive of $10,000.00 to Genetic Resources International (GRI), in accordance with the performance agreement executed on 8 October 2003. 10. Consideration and adoption of an order authorizing the issuance of "Brazos County, Texas Limited Tax Refunding Bonds, Series 2005," and making provisions for the security thereof; authorizing the County's entering into a bond purchase agreement, an escrow agreement, a paying agent/registrar agreement; and approving other matters related thereto. 11. Appointment of Leanne Harvey to the Local Workforce Development Board. Term of appointment is 1 January 2006 to 30 June 2009.- 12. Change to the effective date for Bid 2005-048 Oversized Limestone Aggregate as follows: Original dates: 22 November 2005 thru 29 November 2006 Proposed dates: 30 December 2005 thru 29 November 2006 13. Award of RFP 2006-010 Wireless Public Internet Access Support and Monitoring for the Brazos County Courthouse to Net Near U; no other responses to this RFP were received. 14. Capital purchase of a patrol vehicle for the Precinct 1 Constable (requisition 400007122) 15. Payment authorization from the Brazos Center in the amount of $125.95 to G&K Services. The invoices are dated September but were not received until November. 16. Request from the Health Department for permission to accept a donation of six 5-gallon Crape Myrtle trees to be planted on Brazos County property. 17. Acknowledgement of the Monthly Reports submitted in November 2005. These reports are available for review in the County Judge's Office. 18. Announcement of interest items and possible future agenda topics. 19. Call for citizen input and/or concerns. 20. Agency / Board / Committee reports by Court members. 21. Adjourn The Brazos County Courthouse is wheelchair accessible. Handicap parking spaces are available. Any request for sign interpretive services must be made two business days before the meeting. To make arrangements, call (979) 361-4102. VOL '6 PAGE 2 COMMISSIONERS' COURT REGULAR MEETING DECEMBER 6, 2005 A regular meeting of the Commissioners' Court of Brazos County, Texas was held in the Brazos County Commissioners Courtroom in the Courthouse in Bryan, Brazos County, Texas, beginning at 9:00 a.m. on Tuesday, December 6, 2005 with the following members of the Court present: Randy Sims, County Judge, Presiding; Lloyd Wassermann, Commissioner of Precinct 1; Duane Peters, Commissioner of Precinct 2; Kenny Mallard, Commissioner of Precinct 3; Carey Cauley, Jr., Commissioner of Precinct 4; Karen McQueen, County Clerk. The attached sheet contains the names of the citizens and officials that were in attendance. The County Judge gave the invocation and led the pledge of allegiance. Under citizen input/and or concerns, the following spoke: Demetrios Basdekas a) Discussed the bridge on Old Reliance Road. Commissioner Peters and Bill Jeanes, Risk Manager were very responsive to his concerns. On Monday, he took pictures of the bridge. The Road and Bridge Department crew inspected and replaced some of the broken planks. Unfortunately, even after repairs, the planks are still breaking. The State Bridge Inspector was out of the office yesterday but he left a disc with before and after pictures with Vol 5 Page 3 Commissioners Court meeting December 6, 2005 2 Bill Jeanes. He said he was here today to publicly inform the Court that there may be bridges in other parts of the county that are in the same shape. The County Judge introduced Lynn Allen, the new transcription clerk for the County. The Court proceeded to consider the change of status of employees as submitted on the attached Personnel Action Requests. On motion by Commissioner Cauley, seconded by Commissioner Peters, the Court voted unanimously to approve the changes as submitted. The Court next considered the following Claims as submitted by the County Treasurer for payment: 7013868 through 7014067 On motion by Commissioner Cauley, seconded by Commissioner Mallard, the Court voted unanimously to approve the Claims as submitted. The next matter before the Court was to consider adopting order #05-011, Prohibiting Outdoor Burning in Brazos County. Bill Ballard, Court Counsel noted that there has been a lot of damage in the county due to fires. He then explained the law restricting outdoor burning. On motion by the County Judge, seconded by Commissioner Cauley, the Court voted unanimously to adopt the Order to prohibit outdoor burning. A copy of the Order is attached hereto. Vol -15 Page Lt Commissioners Court meeting December 6, 2005 3 The next matter before the Court was approval of a Contractual Agreement between Brazos County and Voices for Children as Guardian ad litem for Brazos County for children in the custody of the Department of Family and Protective Services as outlined in the Texas Family Code, Section 107.002. The cost to Brazos County will be $20.00 per hour for the services of court appointed Guardian ad litem. The contract is for fiscal year 2006. On motion by Commissioner Peters, seconded by Commissioner Wassermann, the Court voted unanimously to enter into contractual agreement with Voices for Children. A copy of the contractual agreement is attached. The next matter before the Court was consideration of the change in the reimbursement of expenses paid to jurors, as required by Senate Bill 1704, 79th Legislative Session. Katie Conner, County Auditor explained the changes to the law and the options available. On motion by Commissioner Cauley, seconded by Commissioner Peters, the Court voted unanimously to table consideration. The Court will hold a workshop session to discuss this Monday, December 12, 2005. The Court next considered changes to positions in the Purchasing Department. The Purchasing Agent asked for approval of the following changes: Vol 35 Page ,5 Commissioners Court meeting December 6, 2005 a) Reclassify the Senior Buyer to Assistant Purchasing Agent at Group 21, Step 7. b) Promote Buyer to Senior Buyer at Group 19, Step 5. c) Delete the Buyer Position d) Change the Administrative Secretary Position from a full time to a part time Administrative Secretary position at Group 9 Step 7 - Part Time. 4 On motion by Commissioner Mallard, seconded by Commissioner Peters, the Court voted unanimously to reclassify the Senior Buyer position to Assistant Purchasing Agent, promote the Buyer to Senior Buyer and change the Administrative Secretary position from full time to part time. The next matter before the Court was a request from Research Valley Partnership for approval of a cash incentive of $10,000.00 to Genetic Resources International (GRI), in accordance with the performance agreement executed on October 8, 2005. Bob Malaise, representative of the Research Valley Partnership gave an overview of the company. On motion by County Judge, seconded by Commissioner Mallard, the Court voted unanimously to approve the request. A copy of the performance agreement is attached. The Court next considered adopting an Order Authorizing the Issuance of Brazos County, Texas Limited Tax Refunding Vol -75 Page Commissioners Court meeting December 6, 2005 5 Bonds, Series 2005. Bill Newman and Dennis Waley with Public Financial Management, Inc. gave an overview of the issue and answered questions. Paul Martin, Bond Counsel, recommended approval. On motion by the County Judge, seconded by Commissioner Peters, the Court voted unanimously to adopt the Order Authorizing the Issuance of Brazos County Texas Limited Tax Refunding Bonds, Series 2005 and making provisions for the security thereof, authorizing the County entering into a bond purchase agreement an escrow agreement and approving other matters related thereto. The Court next considered the appointment of an individual to serve on the Local Workforce Development Board. On motion by the County Judge, seconded by Commissioner Peters, the Court voted unanimously to appoint Leanne E. Harvey to serve on the board. The appointment is from January 1, 2006 to June 30, 2009. The next matter before the Court was a request from the Purchasing Department to correct the date in the awarding of Bid 2005-048, oversized Limestone Aggregate to Young Contractors. The date on this award was November 30, 2005 through November 29, 2006 but should have read as December 30, 2005 through November 29, 2006. on motion by the County Judge, seconded by Commissioner Cauley, the Court voted Vol 75 Page 7 Commissioners Court meeting December 6, 2005 6 unanimously to approve the request to correct the date. The Court next considered awarding RFP No. 2006-010, Wireless Public Internet Access Support and Monitoring. Pat Howard, Purchasing Agent, recommended acceptance of the RFP submitted by Net Near U as the vendor for RFP No. 2006- Wireless Public Internet Access support and monitoring for the Courthouse. This was the only RFP received. There is a recurring support cost of $185.00. On motion by Commissioner Cauley, seconded by Commissioner Peters, the Court voted unanimously to accept the recommendation of the Purchasing Agent and award the contract to Net Near U. A copy of the bid tabulation is attached. The next matter before the Court was approval of Requisition #00007122 to Dallas Dodge, Inc. in the amount of $21,406.00. This is for the purchase of a patrol vehicle for Constable, Precinct 1. On motion by Commissioner Wassermann, seconded by Commissioner Cauley, the Court voted unanimously to approve the Requisition #00007122 to Dallas Dodge, Inc. in the amount of $21,406.00. The Court next considered approval of a payment authorization to G&K Services in the amount of $125.95. The invoices are dated in September but were not received until November. On motion by the County Judge, seconded by Vol 7 5 Page Commissioners Court meeting December 6, 2005 7 Commissioner Cauley, the Court voted unanimously to approve the payment authorization. The Court next considered authorizing acceptance of donated property in the form of six (6) 5 gallon Crape Myrtle Trees from Commissioner Mallard. The estimated value of the donation is $85.00. The County Judge moved to accept the donation. Commissioner Peters seconded the motion. Commissioners Wassermann, Peters, Cauley and the County Judge voted "Aye". Commissioner Mallard abstained. The motion carried. The Court acknowledged receipt of the Extension Service reports for September, October and November 2005 and acknowledged receipt of reports from the following County and Precinct Offices showing revenues collected and remitted to the County Treasurer: County Clerk District Clerk Justice of the Peace Precinct 1 Justice of the Peace Precinct 2, Place 1 Justice of the Peace Precinct 2, Place 2 Justice of the Peace Precinct 3 Justice of the Peace Precinct 4 Constable Precinct 1 Constable Precinct 2 Constable Precinct 3 Constable Precinct 4 Road & Bridge Sheriff A copy of the Officials' reports can be viewed in the County Vol 5 Page 9 Commissioners Court meeting December 6, 2005 Auditor's office. 8 There were no announcements of interest items and possible future agenda topics. There was no citizen input and/or concerns. Under Agency/Board/Committee reports by Court members, the following spoke: a) The County Judge asked his secretary to put the appointment of Commissioner Peters to TIF #19 on next week's Commissioners Court agenda. b) Michelle Meade, Interim Emergency Management Coordinator asked about a fireworks ban for New Years. The County Judge asked his secretary to place this on the agenda for next week's meeting. Commissioner Mallard a) Met with the Road and Bridge Department in reference to Subdivision and Development Regulations and specifically about smaller developments. Commissioner Peters asked that it be held as a workshop next time so everyone can be involved. There being no further business to come before the Court, the meeting was adjourned. Vol 76 Page The foregoing minutes of the Commissioners Court meeting held December 6, 2005 have been examined and are approved in open Brazos County, Texas. Court this thee- day of 2006, in Bryan, Randy S' s Lloyqf Wassermann Count Judge Commissioner, Precinct 1 Duane Peters Kenny Mallar Commissioner, Precinct 2 Commissioner, ',Precinct 3 Carey Ca ley, Jr. Commis oner, Prec Vct 4 Atte~st- aren McQueen County Clerk Vol 76' Page BRAZOS COUNTY COMMISSIONERS COURT MEETING ON vzatl~- ~O 200,5-AT 9b0 hf~ Name anization/Department a .T e 2 vYl ac,~ ~lh ~c- L-~L i crl~lt p~ 0 VOL 7 5 PAGE 1c2- P u a BRAZOS COUNTY COMMISSIONERS COURT MEETING ON p1nt,~iPh ~v 2005-AT ~:bo M& r Name KP4ltl a `If& Organization/Department /!~(a~'~--rte ~ ~7 lG;.~v VOL ~l 5 PAGE 13 PERSONNEL CHANGE OF STATUS REQUESTS ~r3 Commissioner Court Date: December 6, 2005 Department Submitting Information: Human Resources Purpose of Submissions: Consider and Take Action on i Department Submitting Employee Request Action Requested Request(s) Applies To CCL # 1 Michel, Randall District Clerk Clifton, Jennifer SO/Jail Hadley, Peggy Bowser, Melvin Irwin, Katherine Gonzales, Joseph Tilson, Jeffrey Carter, Carol Terminate Cell Phone Resignation Resignation Transfer to Another Dept. Transfer within Dept. Transfer within Dept. Resignation Transfer to Another Dept. Approved in Commissioners' Court: Decembei County Judge's or Commissioner's Signature: (This Copy to be attached to minutes) VOL -7b PAGE 14 -4r5 BRAZOSCOUNTY BRYAN, TEXAS ORDER NO. 05-011 PROHIBITING OUTDOOR BURNING IN BRAZOS COUNTY WHEREAS, the Commissioners Court of Brazos County finds that circumstances present in all or part of the unincorporated area of the county create a public safety hazard that would be exacerbated by outdoor burning; IT IS HEREBY ORDERED by the Commissioners Court of Brazos County that all outdoor burning is prohibited in the unincorporated area of the county for ninety (90) days from the date of adoption of this Order, unless the restrictions are terminated earlier based on a determination made by the Texas Forest Service or this Court. This Order is adopted pursuant to Local Government Code §352.081 and other applicable statutes. This Order does not prohibit outdoor burning activities related to public health and safety that are authorized by the Texas Natural Resources Commission for (1) firefighter training; (2) public utility, natural gas pipeline or mining operations; (3) planting or harvesting of agricultural crops; or (4) bums that are conducted by a prescribed burn manager certified under Section 153.048, Natural Resources Code, and meet the standards of Section 153.047, Natural Resources Code. In accordance with Local Government Code §352.081 (h), a violation of this Order is a Class C misdemeanor, punishable by a fine not to exceed $500.00. ADOPTED this 6th day of December, 2005 by a vote of S ayes and 0 nays. Sims, County Judge ATTEST: Karen McQueen, ounty Clerk Office of the County Judge • 300 East 2dh St. • Suite 114 • Bryan, Texas 77803 • Fax: (979) 361-4503 VOL_-7 5 PAGE 1 S Contract for Services as Guardian ad litem for Brazos County Contract for Fiscal Year 2006 Contract Number B00001 Effective Date September Page I of 1 1, 2006 Issued By: Brazos County Contractor: Voices for Children, Inc. 300East 24th Street, Suite 114 115 North Main Bryan, Texas 77803 Bryan, Texas 77803 Description of Services to be provided: Court appointed Guardian as litem for children in the custody of the Department of Family and Protective Services as outlines in the Texas Family Code, Section 107.002. Duties will include: • Conduct an investigation to determine the best interests of the child; • Obtain and review copies of the child's relevant medical, psychological and school records; • Interview: The child, Each person who has significant knowledge of the child's history and condition, The parties to the suit; • Encourage settlement and participate in the use of alternative forms of dispute resolution; • Perform any specific task directed by the court (such as home assessments); • Participate in case staffings by an authorized agency concerning the child; Reimbursement for services provided: Voices For Children, Inc. will be reimbursed by the county at a rate of $20 an hour for the services of court appointed Guardian ad litem. A Motion for Guardian ad litem Fees/Approval will be submitted to the County auditor along with an itemized statement of activity. Name and Title of Authorized Representative: Brazos County Date Signed (Please type or print) (2(cX4 (c>5 OarCa,/ Sins Su m v Lont ' Si a of Authorized Representative Name and Title of Authorized Representative: Voices for Children, Inc. Date Signed (Please type or print) edra H. Baker E r ti Di t E x rec o xecu ve (P Signature of Authorized Representative VOL -15 PAGE t0 CERTIFICATE FOR ORDER We, the undersigned County Judge and County Clerk of Brazos County, Texas (the "County") hereby certify as follows: 1. The Commissioners Court of the County (the "Court") convened in regular session, open to the public, on December 6, 2005, at the designated meeting place (the "Meeting"), and the roll was called of the members, to wit: Randy Sims, County Judge, and the following members of the Court: Lloyd Wassermann, E. Duane Peters, G. Kenny Mallard, Jr., and Carey Cauley, Jr. All members of the Court were present, except N11p , thus constituting a quorum. Whereupon among other business, the following was transacted at the Meeting: a written ORDER AUTHORIZING THE ISSUANCE OF "BRAZOS COUNTY, TEXAS LIMITED TAX REFUNDING BONDS, SERIES 2005", AND MAKING PROVISIONS FOR THE SECURITY THEREOF; AUTHORIZING THE COUNTY'S ENTERING INTO AN ESCROW AGREEMENT, A PAYING AGENT/REGISTRAR AGREEMENT, AND A BOND PURCHASE AGREEMENT; AND OTHER MATTERS RELATED THERETO (the "Order") was duly introduced for the consideration of the Court. It was then duly moved and seconded that the Order be finally passed and adopted; and after due discussion, such motion, carrying with it the adoption of the Order prevailed and carried by the following vote: YES: f NOES: ABSTENTIONS: C) 2. A true, full, and correct copy of the Order adopted at the Meeting is attached to and follows this Certificate; the Order has been duly recorded in the Court's minutes of the Meeting; the above and foregoing paragraph is a true, full, and correct excerpt from the Court's minutes of the Meeting pertaining to the adoption of the Order; the persons named in the above and foregoing paragraph are duly chosen, qualified, and acting officers and members of the Court as indicated therein; each of the officers and members of the Court was duly and sufficiently notified officially and personally, in advance, of the time, place, and purpose of the Meeting, and that the Order would be introduced and considered for adoption at the Meeting and each of such officers and members consented, in advance, to the holding of the Meeting for such purpose; and the Meeting was open to the public, and public notice of the time, place, and purpose of the Meeting was given, all as required by Chapter 551, Texas Government Code, as amended. 3. Karen McQueen is the duly el~~ a appeffffed-and acting County Clerk of the County. SIGNED AND SEALED 6th day of December, 2005. C /GfLO Co ty Clerk County Ju (SEAL) VOL~5 PAGE 17 Section 6.11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Attest: By Title (BANK SEAL) Attest: By Q County Clerk (ISSUER SEAL) US BANK, NATIONAL ASSOCIATION Dallas, Texas Title Address: 14241 Dallas Parkway, suite 490 Dallas, Texas 75254 BRAZOS Address: 3WEast 26' Street Bryan, Texas 77803 EXECUTION PAGE OF PAYING AGENT/REGISTRAR AGREEMENT VOL 15 PAGE I? Section 8.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes, and all counterparts shall together constitute one and the same instrument. EXECUTED as of the date first written above. BRA2 By: ATTEST: G County Clerk (SEAL) US BANK, NATIONAL ASSOCIATION As Escrow Agent hereunder By: ATTEST: By: Title (SEAL) EXECUTION PAGE OF ESCROW AGREEMENT VOL T5 PAGE 19 SIGNATURE IDENTIFICATION AND NO-LITIGATION CERTIFICATE We, the undersigned County Judge, County Clerk, and County Treasurer of Brazos County, Texas (the "Issuer"), hereby certify as follows that: (1) This certificate is executed and delivered with reference to that issue of "Brazos County, Texas Limited Tax Refunding Bonds, Series 2005", dated as of December 1, 2005 (the "Bonds"). (2) We officially executed and signed the Bonds by manually signing the Bonds or causing facsimile signatures to be impressed or lithographed on each of the Bonds. (3) The Bonds are substantially in the form, and have been duly executed and signed in the manner, prescribed in the Order authorizing the issuance of the Bonds adopted by the Commissioners Court of the Issuer on December 6, 2005. (4) At the time we so executed and signed the Bonds 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 same. (5) No litigation of any nature has been filed or is now pending to restrain or enjoin the issuance or delivery of the Bonds, 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 Bonds, and that so far as we know and believe no such litigation is threatened. (6) Neither the corporate existence nor boundaries of the Issuer is being contested, no litigation has been filed or is now pending which would affect the authority of the officers of the Issuer, and no authority or proceedings for the issuance of the Bonds have been repealed, revoked, or rescinded. (7) We have caused the official seal of the Issuer to be impressed, or printed, or lithographed on each the Bonds, and said seal on the Bonds has been duly adopted as, and is hereby declared to be, the official seal of the Issuer. EXECUTED and delivered this OFFICIAL TITLES County Judge County Clerk ti~ lr~ I ~ County Treasurer Kay G-Harnilton'-/ VOL 75-PAGE a0 ~9 Karen McQueen STATE OF TEXAS COUNTY OF BRAZOS The undersigned, a Notary Public, certifies and represents that Randy Sims, Karen McQueen, and Kay C. Hamilton are (mown to me to be the County Judge, the County Clerk, and the County Treasurer, respectively, of Brazos County, Texas, and in my presence each executed this -°-resented and each of said person's signature appearing above is genuine. OK TO DATE Given under my hand and seal of office this ~ clay of December, 2005. (NOTARY SEAL) !$otar* Public BEATRIZ D. GREEN R: NOW Public, State of Te m My Con misim E7#m oFr,.• JUNE 11, 2006 VUL 75 PAGE 21 SIGNATURE IDENTIFICATION AND NO-LITIGATION CERTIFICATE We, the undersigned County Judge, County Clerk, and County Treasurer of Brazos County, Texas (the "Issuer"), hereby certify as follows that: (1) This certificate is executed and delivered with reference to that issue of "Brazos County, Texas Limited Tax Refunding Bonds, Series 2005", dated as of December 1, 2005 (the "Bonds"). (2) We officially executed and signed the Bonds by manually signing the Bonds or causing facsimile signatures to be impressed or lithographed on each of the Bonds. (3) The Bonds are substantially in the form, and have been duly executed and signed in the manner, prescribed in the Order authorizing the issuance of the Bonds adopted by the Commissioners Court of the Issuer on December 6, 2005. (4) At the time we so executed and signed the Bonds 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 same. (5) No litigation of any nature has been filed or is now pending to restrain or enjoin the issuance or delivery of the Bonds, 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 Bonds, and that so far as we know and believe no such litigation is threatened. (6) Neither the corporate existence nor boundaries of the Issuer is being contested, no litigation has been filed or is now pending which would affect the authority of the officers of the Issuer, and no authority or proceedings for the issuance of the Bonds have been repealed, revoked, or rescinded. (7) We have caused the official seal of the Issuer to be impressed, or printed, or lithographed on each the Bonds, and said seal on the Bonds has been duly adopted as, and is hereby declared to be, the official seal of the Issuer. EXECUTED and delivered this OFFICIAL TITLES County Judge County Clerk t - County Treasurer Kay amiltofi IDOL-75 PAGE -d-X STATE OF TEXAS COUNTY OF BRAZOS The undersigned, a Notary Public, certifies and represents that Randy Sims, Karen McQueen, and Kay C. Hamilton are known to me to be the County Judge, the County Clerk, and the County Treasurer, respectively, of Brazos County, Texas, and in my presence each executed this instrument before me in the capacity represented and each of said person's signature appearing above is genuine. Given under my hand and seal of office this (NOTARY SEAL) r~ ~A day of December, 2005. tart' Public BEATRIZ D. GREEN .AA..•..,~'sS Notary pubk State of TWW zxi` S•` my C'Mmisow E)Ires r' JUNE 11, 2006 VOL 15 PAGE 23 We, the undersigned, County Judge and County Clerk, respectively, of Brazos County, Texas (the "County"), hereby certify as follows: 1. This certificate is executed for and on behalf of the County for the benefit of the Attorney General of the State of Texas and the respective owners of the ) "Brazos County, Texas Limited Tax Refunding Bonds, Series 2005", dated December 1, 2005, (the "Bonds"), authorized by an order adopted by the Commissioners Court of the County on December 6, 2005 (the "Order"). 2. The County is a duly organized county existing under the Constitution and laws of the State of Texas. 3. No litigation of any nature has ever been filed pertaining to, affecting, questioning, or contesting: (a) the Order; (b) the issuance, execution, delivery, payment, security, or validity of the Bonds; (c) the authority of the governing body and the officers of the County to issue, execute, and deliver the Bonds; (d) the provisions made for the security for the payment of the Bonds; or (e) the validity of the corporate existence or the current tax rolls of the County; and no litigation is pending pertaining to, affecting, or contesting the boundaries of the County. 4. The County is not in default as to any covenant, condition, or obligation in connection with any of its currently outstanding obligations or the orders authorizing their issuance, and each of the funds or accounts, if any, established by the orders, contains the amounts required to be on deposit therein. 5. The currently effective ad valorem tax appraisal rolls are those for the year 2005, being the most recently approved tax rolls of the County; the Commissioners Court of the County has caused the taxable property in the County to be assessed as required by law; and the valuation of taxable property in the County, and the aggregate amount of exemptions, and the net effective taxable value of taxable property in the County, according to the aforesaid tax rolls for-said year, as delivered to the County Clerk of the County, and finally approved and recorded by the Commissioners Court of the County, are as follows: Assessed Value: $9,591,181,680 Exemptions: ( 2,256,322,439) Taxable Value: $7,334.859,241 6. A true, correct, and complete statement of all outstanding indebtedness of the County payable from its collection of ad valorem taxes is attached hereto as Exhibit A. 7. A true and correct schedule showing the annual requirements of all of the outstanding indebtedness of the County payable from its collection of ad valorem taxes, together with the Certificates and the Bonds, is attached hereto as Exhibit B. (Remainder of page intentionally left blank.) VOL-75 PAGE ~24 8. No proceeding or authority for the issuance, execution, or delivery of the Bonds has been repealed, rescinded, amended, or revoked. 9. There has been appropriated from funds lawfully available to the County sufficient money to make the scheduled debt service payment on the Bonds on March 1, 2006 and September 1, 2006, respectively. 10. Randy Sims is the duly elected and acting County Judge and Karen McQueen is the duly elected and acting County Clerk. The current members of the Commissioners Court are Lloyd Wassermann, E. Duane Peters, G. Kenny Mallard, Jr., and Carey Cauley, Jr. (Signatures follow) VOL"7 5 PAGE ~25 SIGNED AND SEALED this County (SEAL) County Judge SIGNATURE PAGE OF GENERAL CERTIFICATE VOL 75 PAGE -c-) (Q EXHIBIT A OUTSTANDING AD VALOREM TAX SUPPORTED DEBT (After Issuance of the Bonds) Certificates of Obligation, Series 1998 7,625,000 General Obligation Improvement Bonds, Series 2001 7,670,000 Public Property Finance Contractual Obligations, Series 2001 500,000 Certificates of Obligation, Series 2002 1,915,000 Certificates of Obligation, Series 2003 9,330,000 Certificates of Obligation, Series 2004 5,000,000 Certificates of Obligation, Series 2005 2,750,000 Limited Tax General Obligation Improvement Bonds, Series 2005 10,500,000 Limited Tax Refunding Bonds, Series 2005 [6,055,000] TOTAL 1 A-1 VOL'75 PAGE 27 EXHIBIT B DEBT SERVICE SCHEDULE B-1 v0L 7 5 PAGE ?S SIGNED AND SEALED this Coun Clerk (SEAL) SIGNATURE PAGE OF GENERAL CERTIFICATE VOL-75 PAGE 0 December 6, 2005 JPMorgan Chase Bank, N.A. 2001 Bryan Dallas, Texas 75201 Re: "Brazos County, Texas Certificates of Obligation, Series 1996", maturing on March I in the years 2007 through 2016, in the outstanding amount of $5,810,000 (the "Certificates"); Ladies and Gentlemen: As the Paying Agent/Registrar for the Certificates, you are hereby notified that the Certificates are being redeemed on SEPTEMBER 1, 2006, and you are hereby instructed at least 30 days prior to the redemption date to mail the attached notice of redemption for the Certificates to each registered owner of the Certificates to be redeemed. Such notice must also be sent to the central post office operated by the Municipal Advisory Council of Texas (www.DisclosureUSA.com). Such notice shall also be sent to any depositories that are registered owners of the Certificates. The expenses incurred in connection with these instructions will be paid by the District. Acknowledged and Agreed to this JPMORGAN CHASE BANK, N.A. By Name: Title: VOL-75PAGE BRAZOS COUNTY, TEXAS IN WITNESS WHEREOF, I have hereunto set my hand as of BRAZOS COUNTY, TEXAS Katie Conner County Auditor EXECUTION PAGE OF FEDERAL TAX CERTIFICATE VOL SPAGE 3I_ December 6, 2005 The Attorney General of Texas Public Finance Section 300 West 15th, 9th Floor Austin, Texas 78701 The Comptroller of Public Accounts Attention: Melissa Mora 208 East 10th, Room 636 Austin, Texas 78701-2407 Re: Brazos County, Texas Limited Tax Refunding Bonds, Series 2005 TO THE ATTORNEY GENERAL The captioned issue of Limited Tax Refunding Bonds (the "Bonds") is being sent to you for your examination and approval and we enclose one executed but undated Signature Identification and No- Litigation Certificate and one executed but undated General Certificate. Upon approval of the Bonds, you are authorized to insert the date of the approval in such certificates. If any litigation should develop, or if any other event should occur which would make any certificate inaccurate, before you approve the Bonds, we will notify you at once by both telephone and facsimile. With this assurance, you can rely on the accuracy of such certificates at the time you approve the Bonds, unless we advise you otherwise. After you have approved the Bonds, please deliver them to the Comptroller of Public Accounts of the State of Texas for registration. TO THE COMPTROLLER The Bond will be sent to you for registration. After the Comptroller's Registration Certificate on the Certificates is duly signed and sealed, you are hereby authorized and directed to send the Contractual Obligations by overnight delivery to Winstead Sechrest & Minick P.C., Attorneys at Law, 700 N. St. Mary's, Suite 1900, San Antonio, Texas, 78205, attention of Clayton S. Binford (or otherwise as directed by Mr. Binford), together with four copies of each of the following: (1) Attorney General's Approving Opinion. (2) Comptroller's Signature Certificate. Very truly yours, VOL 7 5 PAGE 3z RRA7,00CY)TTNPV TVVAe STATE OF TEXAS § COUNTY OF BRAZOS § CLOSING CERTIFICATE This certificate is delivered pursuant to Section 60)(8) of the Bond Purchase Agreement dated as of December 6, 2005 (the "Agreement"), entered into by and between Coastal Securities and the Commissioners Court of Brazos County, Texas acting on behalf of Brazos County, Texas (the "Issuer"), relating to the Issuer's $6,005,000 Limited Tax Refunding Bonds, Series 2005 (the "Bonds"). Capitalized terms used in this certificate and not otherwise defined herein have the meaning assigned thereto in the Agreement. We, the undersigned, County Judge and County Auditor of the Issuer, acting solely in our official capacities, hereby certify as follows: 1. All official action of the Issuer relating to the Bonds, the Issuer Documents and the Official Statement have been duly adopted by the Issuer, are in full force and effect, and have not been amended, modified, supplemented or repealed; 2. The representations and warranties of the Issuer contained in the Agreement are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing; 3. Except as may otherwise be disclosed in the final Official Statement (as the same may be supplemented from time to time pursuant to the provisions of the Agreement), no litigation or proceeding against the Issuer is pending or, to our knowledge, threatened in any court or administrative body, nor is there a basis for litigation, which would (a) contest the right of the members or officials of the Issuer to hold and exercise their respective positions, (b) contest the due organization and valid existence of the Issuer, (c) contest the validity, due authorization and execution of the Bonds or the Issuer Documents or (d) attempt to limit, enjoin or otherwise restrict or prevent the Issuer from functioning and collecting taxes or revenues, including payments on the Bonds, pursuant to the Order, and other income or the levy or collection of the taxes pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof; 4. To the best of our knowledge, no event affecting the Issuer has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein, in light of the circumstances under which made, not misleading in any respect as of the date of the Closing, and the information contained in the Official Statement is correct in all material respects and, as of the date of the Official Statement did not, and as of the date of the Closing does not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the 1 HOU:2524505.1 V00-5 PAGE 33 statements made therein, in the light of the circumstances under which they were made, not misleading; and There has not been any material adverse change in the financial condition of the Issuer since September 30, 2004, the latest date as of which audited financial information is available. [Execution Page Follows] 2 HOU:2524505.1 VOL 75 PAGE 34 EXECUTED this day of Execution Page HoU:2524505.1 VOL -75 PAGE 35 2005. +~s E V sa u, c O c a e ad m~ s` a a E v rs e7 C ~ `a i s` E L za mss? rsz J C,~ eo ~ E ~mW o A a 0 rv m 6 y,r e=' ze° nH~ nC ~L9 -J G Q p T'L FrC c a -'Eu C ~ C g.6 O a a ~ Y c G V ~ vwA 9 N C c v 6 C u E F e, 9 6 PRELIMINARY OFFICIAL STATEMENT Dated: November 29, 2005 I/ /C NEW ISSUE - Book-Entry-Only System S&P RATING: "AA" (See "RATING" and "INSURANCE" herein) In the opinion of Winstead Sechrest & Minick P.C. ("Bond Counsel"), under existing law, and assuming comphance with certain covenants and the accuracy of certain representations, interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bonds will be included in the "adjusted current earnings" of a corporation (other than an S corporation, regulated investment company, REIT, REMIC, or FASIT) for purposes of computing its alternative minimum tax Lability. See ""TAX MATTERS" herein. $6,055,000* BRAZOS COUNTY, TEXAS Limited Tax Refunding Bonds, Series 2005 Dated: December 1, 2005 Due: March 1, as shown below The $6,055,000* "Brazos County, Texas Limited Tax Refunding Bonds, Series 2005" (the "Bonds') are being issued by Brazos County, Texas (the "County"), pursuant to, (i) the Constitution and general laws of the State of Texas, including particularly Chapter 1207, Texas Government Code; and (ii) the terms of an order authorizing the issuance of the Bonds to be adopted by the Commissioners Court of the County on December 6, 2005. The Bonds are issuable only in fully registered form in the denomination of $5,000 or integral multiples thereof initially registered solely in the time of Cede & Co., as registered owner and nominee for The Depository Trust Company ("DTC"), New York, New York, acting as securities depository for the Bonds, until DTC resigns or is discharged. So long as Cede & Co. is the registered owner of the Bonds, as nominee for DTC, the Bonds will be payable to Cede & Co., which will, in turn, remit such amounts to DTC participants for subsequent disbursement to the Beneficial Owners (defined herein) of the Bonds. Interest on the Bonds is payable on March 1 and September 1 of each year, commencing on March 1, 2006. Principal of the Bonds will be paid at maturity only upon presentation and surrender of the Bonds at the principal corporate trust office of US Bank, National Association, Dallas, Texas (the `Paying Agent/Registrar'). The Bonds are direct obligations of the County and are payable both as to principal and interest from an ad valorem tax levied on all taxable property therein, within the limits provided by law. See "THE BONDS - Source of Payment". The County has made application for and anticipates the issuance of a municipal bond insurance policy in conjunction with the issuance of the Bonds. MATURITY SCHEDULE, PRINCIPAL AMOUNTS, INTEREST RATES, PRICE OR YIELD, AND CUSIP NUMBERS Maturity Principal Interest Price or CUSIP Maturity Principal Interest Price or r h l~.ir to tt Rate Yield hl=bers(l) CUSIP 2006 m ° ate Yield Numbers(]) $ 90,000 2012 12 $630,000 2007 245,000 2013 655,000 2008 540,000 2014 685,000 2009 560,000 2015 715,000 2010 580,000 2016 750,000 2011 605,000 (Plus Accrued Interest from December 1, 2005) (1) CUSIP numbers will be assigned to the Bonds by Standard & Poor's CUSIP Service Bureau, a Division of the McGraw-Hill Companies, Inc., and are included solely for the convenience of the registered owners of the Bonds. Neither the County, the Financial Advisor, nor the Underwriter is responsible for the selection or correctness of the CUSIP numbers set forth above. The Bonds are not subject to redemption prior to maturity, The Bonds are offered when, as and if issued, subject to the approving opinion of the Attorney General of the State of Texas and the legal opinion of Winstead Sechrest & Minick P.C., San Antonio, Texas, as Bond Counsel. Certain legal matters will be passed on for the Underwriter by its counsel, Andrews Kurth LLP, Austin, Texas. It is expected that the Bonds will be available for delivery through DTC on or about January 5, 2006, Coastal Securities *Preliminary; subject to change. VOL 75 PAGE .34 For purposes of compliance with Rule 15c2-12 of the Securities Exchange Commission, as amended, and in effect on the date of this Preliminary Official Statement, this document constitutes a Preliminary Official Statement of the Issuer with respect to the Bonds that has been deemed "final" by the Issuer as of its date except for the omission of no more than the information permitted by Rule 15c2-12. This Official Statement is delivered in connection with the sale of securities referred to herein and may not be reproduced or used, in whole or in part, for any other purposes. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the Bonds in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. No dealer, salesperson or other person has been authorized by the County to give any information or to make any representation other than those contained herein, and, if given or made, such other information or representation must not be relied upon as having been authorized by the County, any purchaser or any other person. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement not any sale made hereunder will, under any circumstances, create any implication that there has been no change in the matters described herein since the date hereof. The prices and other terms respecting the offering and sale of the Bonds may be changed from time to time by the Underwriter after such Bonds are released for sale, and the Bonds may be offered and sold at prices other than the initial offering prices, including to dealers who may sell the Bonds into investment accounts. TABLE OF CONTENTS OFFICIAL 9FATEMENT Page Description of the Bonds SELECTED DATA FROM TFIE OFF"ICI.AI. STATEMENT vi FINANCIAL, INTRODUCTION Enforcement of Remedies DF.B'f SERVICE, REQUIR13Mf NTS vii VOL75 PAGE 07 TAX RATE LIMITATIONS AD VALOREM TAXES Tax Levy. .Property Subject to Taxation Valuation of Property for Taxation. Limitations on Tax Rate Increases Collections, Penalty and Interest Tax Liens SPECIAL LEGISLATIVE SESSION AND AD VALOREM TAX POWER TAX DATA Valuation, Exemptions and Debt Obligations Taxable Assessed Valuation by Category Tax Rate Levy and Collection History Tax Rate Distribution iii VOL 75 PAGE 3 9 7 7 8 8 9 9 9 11 11 12 12 13 13 13 14 14 14 15 15 15 15 16 17 20 20 21 21 21 21 22 22 22 22 23 23 24 24 25 25 VERIFICATION OF ARITHMETICAL AND MATIIEMATICAI. COMPUTATIONS 25 CONTINUING DISCLOSURE OF INFORMATION . . . Annual Reports 25 Material Event Notices 25 Availability of Information from NRMSIRs and SID 26 Limitations and Amendments 26 Compliance with Prior Undertakings 26 Audited Financial Report of the County . 27 Forward-Looking Statements 27 27 MISCELLANEOUS, . 28 APPENDICES EXCERPTS FROM TI IF FINANCIAL. REPORT FOR THE FISCAL. YEAR ENDED SEPTEMBER 30,2004 . . . FORM OF OPINION OF BOND COUNSEL .......APPENDIX A . SUMMARY OF OBLIGATIONS REFUNDED APPENDIX B DEPOSITORY TRUST COMPANY APPENDIX C APPENDIX D The cover pages, this page and the Appendices attached hereto are part of the Official Statement. (The remainder of this page is intewtonaily left blank.) iv v~~ S PAGE J1 BRAZOS COUNTY, TEXAS 300 East 26th Street, Suite 314 Bryan, Texas 77803 Commissioners Court Term Expires Randy Sims . County]udge 12-31-2006 Lloyd Wassermann Commissioner Precinct 1 12-31-2008 Duane Peters Commissioner Precinct 2 12-31-2006 Kenny Mallard Commissioner Precinct 3 12-31-2008 Carey Cauley, Jr Commissioner Precinct 4 12-31-2006 Other Elected Officials Term Expires Gerald "Buddy" Winn Tax Assessor/Collector 12-31-2008 Karen McQueen County Clerk 12-31-2006 Jim Kuboviak County Attorney 12-31-2008 Kay Hamilton County Treasurer 12-31-2006 Appointed Officials Katie Conner County Auditor Term Expires 9-30-2007 Richard Vance County Engineer No Term BOND COUNSEL Winstead Sechrest & Minick P.C. San Antonio, Texas FINANCIAL ADVISOR Public Financial Management Austin, Texas CERTIFIED PUBLIC ACCOUNTANT Ingram, Wallis & Company Bryan, Texas For additional information regarding the County, please contact: Katie Conner Dennis P. Waley County Auditor Senior Managing Consultant Brazos County Public Financial Management 300 East 261h Street or 700 Lavaca Suite 314 Suite 1500 Bryan, Texas 77803 Austin, Texas 78701 (979) 361-4359 (512) 472-7194 V005 PAGE 4O SELECTED DATA FROM THE OFFICIAL STATEMENT THIS OFFICIAL STATEMENT SUMMARY, BEING PART OF THE OFFICIAL STATEMENT, IS SUBJECT IN ALL RESPECTS TO THE MORE COMPLETE INFORMATION CONTAINED THEREIN. THE OFFERING OF THE BONDS TO POTENTIAL INVESTORS IS MADE ONLY BY MEANS OF THE ENTIRE OFFICIAL STATEMENT. NO PERSON IS AUTHORIZED TO DETACH THIS SUMMARY FROM THE OFFICIAL STATEMENT OR OTHERWISE TO USE SAME WITHOUT THE ENTIRE OFFICIAL STATEMENT. CERTAIN DEFINED TERMS USED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS OFFICIAL STATEMENT. THIS SUMMARY IS INCLUDED FOR QUICK REFERENCE TO CERTAIN FACTS. THE ENTIRE OFFICIAL STATEMENT REPRESENTS THE COUNTY'S INTENDED DISCLOSURE CONCERNING THE BONDS; THEREFORE, PROSPECTIVE INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT. The County Brazos County was created in 1841. Four elected Commissioners and one elected County judge govern the County, each serving 4-year terms. The total area of the County is approximately 583 square miles. The Bonds The Bonds are being issued in the aggregate principal amount of $6,055,000* pursuant to, (i) the Constitution and general laws of the State of Texas, including particularly Chapter 1207, Texas Government Code; and (ii) the terms of an order authorizing the issuance of the Bonds passed by the Commissioners Court of the County (the "Commissioners Court's on December 6, 2005. Payment of Interest Interest on the Bonds accrues from December 1, 2005 and is payable semiannually on March I and September 1, of each year commencing on March 1, 2006. Security for the Bonds Principal of and interest on the Bonds will be payable from the receipts of an ad valorem tax levied on all taxable properly within the County, within legal limitations. See "THE BONDS - Source of Payment" and "TAX RATE LIMITATIONS". Optional Redemption The Bonds are not subject to redemption prior to their stated maturities. Book-Entry-Only System............ The Bonds are initially issuable only to Cede & Co., the nominee of DTC pursuant to a Book-Entry-Only System. No physical delivery of the Bonds will be made to the Beneficial Owners of the Bonds. Principal and interest will be paid to Cede & Co., which will distribute such payment to the participating members of DTC for remittance to the Beneficial Owners of the Bonds. See "Book-Entry-Only System". Tax Exemption In the opinion of Bond Counsel, interest on the Bonds is excludable from gross income for federal income tax purposes under existing law and is not subject to the alternative minimum tax on individuals. See "TAX MATTERS" for a description of alternative minimum tax consequences for corporations. Ratings Standard & Poor's Rating Group, a Division of The McGraw-Hill Companies, Inc. ("S&P") has delivered an underlying rating of "AA" on the County's ad valorem tax-supported debt, including the Bonds. See "RATING". Insurance Application The County has made application for and anticipates the issuance of a municipal bond insurance policy in conjunction with the issuance of the Bonds. *Preliminary; subject to change Vl L -7-S Use of Proceeds Proceeds from the sale of the Bonds will be used to refund portions of the County's outstanding general obligation debt and to pay certain costs of issuance of the Bonds. See "THE BONDS - Purpose" and "APPENDIX C - Summary of Obligations Refunded". Payment Record The County has never defaulted in paying the principal of or interest on any of its debt. Future Debt The County does not anticipate the issuance of any additional debt payable from ad valorem taxes until the summer of 2006, when the County expects to issue approximately $5,000,000 of new money, ad valorem tax-supported debt. Expected Delivery Delivery of the Bonds is anticipated to occur on or about January 5, 2006. FINANCIAL HIGHLIGHTS (As of November 1, 2005) 2005 Taxable Assessed Valuation $7,334,859,241 (a) Total Debt Payable from Ad Valorem Taxes $ 51,755,000 (b) Ratio of Total Debt to 2005 Net Taxable Value 0.71% 2004 Estimated Population 161,779 (c) Total Debt Per Capita $ 319.91 Net Taxable Assessed Valuation Per Capita $ 45,338.76 Total Overlapping and Net Debt $ 319,980,018 (d) Ratio of Total Overlapping and Direct Debt to 2005 Taxable Assessed Valuation 4.36% Total Overlapping Debt and Direct Debt Per Capita $ 1,977.88 Average Current Tax Collections for Fiscal Years 2001-2005 97.03% Average Total Tax Collections for Fiscal Years 2001-2005 98.89% (a) As certified by the Brazos County Appraisal District. See "AD VALOREM TAXES" and "TAX DATA". (b) Includes the Bonds, excludes the Refunded Obligations. (c) As estimated by the Texas State Data Center. (d) See "TAX DATA - Estimated Overlapping Debt". [The remainder of this page u intenkonally left blank.] vii VOL 75 PAGE ` a PRELIMINARY OFFICIAL STATEMENT Relating to $6,055,000* BRAZOS COUNTY, TEXAS Limited Tax Refunding Bonds, Series 2005 INTRODUCTION This Official Statement provides certain information in connection with the issuance by Brazos County, Texas (the "County' of $6,055,000* "Brazos County, Texas, Limited Tax Refunding Bonds, Series 2005" (the `Bonds"). The Bonds are being issued pursuant to, (i) the Constitution and general laws of the State of Texas, including particularly Chapter 1207, Texas Government Code; and (ii) the terms of an order authorizing the issuance of the Bonds adopted by the Commissioners Court of the County (the "Commissioners Court") on December 6, 2005 (the "Order"). Except as otherwise indicated herein, capitalized terms used in this Official Statement have the same meanings assigned to such terms in the Order. This Official Statement speaks only as to its date, and the information herein contained is subject to change. Copies of the final Official Statement and the Escrow Agreement (hereinafter defined) will be deposited with the Municipal Securities Rulemaking Bond, 1900 Duke Street, Suite 600, Alexandria, Virginia 22314. See "CONTINUING DISCLOSURE OF INFORMATION" for a description of the County's undertaking to provide certain information on a continuing basis. THEBONDS Set forth below is a description of the Bonds. The Order authorizes the issuance and prescribes the respective terms, conditions and provisions for payment of the principal of and interest on the Bonds by the County. Such summary is not a complete description of the Order and is qualified by reference to the Order, copies of which are available from the County or its Financial Advisor. Purpose Proceeds of the sale of the Bonds will be used to (i) refund those outstanding obligations of the County identified in APPENDIX C attached hereto (collectively, the "Refunded Obligations"); and (ii) to pay the costs of issuing the Bonds. The refunding of the Refunded Obligations will result in a present value debt service savings to the County. Refunded Obligations A description and identification of the Refunded Obligations appears in APPENDIX C attached hereto. The Refunded Obligations are to be paid in full, at a price of par plus accrued interest, on the redemption date specified in APPENDIX C, from funds to be deposited pursuant to a certain Escrow and Trust Agreement (the "Escrow Agreement', dated as of December 1, 2005, between the County and US Bank, National Association, Dallas, Texas (the "Escrow Agent"). The Order provides that from the proceeds of the sale of the Bonds, the County will deposit with the Escrow Agent an amount, together with a cash contribution from the County (if any), which, when added to the investment earnings thereon, will be sufficient to accomplish the discharge and final payment of the Refunded Obligations. Such funds will be held by the Escrow Agent in a special escrow account (the "Escrow Fund") and used to purchase direct obligations of the United States of America (the "Federal Securities"). Under the Escrow Agreement, the Escrow Fund is irrevocably pledged to the payment of the principal and interest on the Refunded Obligations. *Preliminary; subject to change. V005 FADE 43 Simultaneously with the issuance of the Bonds, the County will give irrevocable instructions to provide notice to the owners of the Refunded Obligations that the Refunded Obligations will be redeemed prior to their stated maturity on which date money will be made available to redeem the Refunded Obligations from money held under the Escrow Agreement. The Arbitrage Group, Inc., Tuscaloosa, Alabama, will verify at the time of delivery of the Bonds to the Underwriter the mathematical accuracy of the schedules provided by Public Financial Management, acting in its capacity as Financial Advisor to the County, that demonstrates the Federal Securities will mature and pay interest in such amounts which, together with uninvested funds (if any) in the Escrow Fund, will be sufficient to pay, when due, the principal of and interest on the Refunded Obligations. Such maturing principal of and interest on the Federal Securities will not be available to pay the Bonds. See "VERIFICATION OF ARITHMETICAL AND MATHEMATICAL COMPUTATIONS." The Escrow Agent will hold and administer the Escrow Fund and will apply the maturing principal and interest on the Federal Securities to payment of the principal of and interest on the Refunded Obligations. The County has covenanted in the Escrow Agreement to make timely deposits to the Escrow Fund from lawfully available funds, of any additional amounts required to pay the principal of and interest on the Refunded Obligations, if for any reason the cash balances on deposit or scheduled to be on deposit in the Escrow Fund are insufficient to make such payment. Sources and Uses of Funds The proceeds from the sale of the Bonds will be applied approximately as follows: Sources of Funds Par Amount of Bonds $ Net Original Issue Premium/(Discount) County Contribution Accrued Interest Total Sources $ Uses of Funds Deposit to Escrow Fund Underwriter's Discount Costs of Issuance Insurance Premium Deposit to Debt Service Fund Total Uses g Source of Payment The Bonds are payable from the receipts of a separate annual ad valorem tax levied on all taxable property within the County, within the limits prescribed by law. See "TAX RATE LIMITATIONS". Pursuant to the provisions of the Order, the Commissioners Court, as the governing body of the County, has levied and agreed to assess and collect these annual ad valorem taxes. Each year the Commissioners Court, as governing body, will make a determination of the taxes to be collected to pay interest as it accrues and principal as it matures on the Bonds, and will formally levy such taxes for that year. The receipts of such taxes are to be credited to a separate fund to be used solely for the payment of the principal of and interest on the Bonds. Perfection of Interest in Source of Payment Chapter 1208, Texas Government Code, as amended, applies to the issuance of the Bonds and the pledge of taxes to the repayment thereof, as previously described herein, and such pledge is, therefore, valid, effective, and perfected. Should Texas law be amended at any time while the Bonds are outstanding and unpaid, the result of such amendment being that the aforementioned pledge is subject to the filing requirements of Chapter 9, Texas Business and Commerce Code, in order to preserve to the registered owners of the Bonds a security interest in such pledge, the County has agreed to take such measures as it determines are reasonable and necessary to enable a filing of security interest in said pledge to occur. VOL 75' PAG-C +4 Description The Bonds will be dated December 1, 2005, and will bear interest from such date at the stated interest rates indicated on the cover page hereof. Interest on the Bonds will be payable March 1 and September 1 of each year, commencing March 1, 2006. The Bonds will mature on the dates indicated on the cover page hereof. Principal will be payable at maturity by the Paying Agent/Registrar, which initially is US Bank, National Association, Dallas, Texas upon presentation and surrender of the Bonds for payment at such designated offices. Interest on the Bonds is payable by the Paying Agent/Registrar to registered owners as shown on the records relating to the Bonds maintained by the Paying Agent/Registrar (the "Security Registrar') on the Record Date (hereinafter defined). The Bonds are initially issmble only to Cede & Co., the nominee of The Depository Trust Company, New York, New York ("DTC'), pursuant to the Book-Entry-Only System described herein. While the Book-Entry-Only System is being utilized, payments of principal of and interest on the Bonds will be made directly to DTC which in turn will distribute such payments to the participants who will then pay the Beneficial Owners (see "THE BONDS - Book-Entry-Only System" and APPENDIX D for a more complete description of such system.) If the date for the payment of the principal of or interest on a Bond is a Saturday, Sunday, legal holiday, or a day on which banking institutions in the County where the designated office of the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment will be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or a day on which banking institutions are authorized to close and payment on such date will have the same force and effect as if made on the original date payment was due. Optional Redemption The Bonds are not subject to optional redemption prior to their stated maturities. Book-Entry-Only System General DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered certificate will be issued for the Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. APPENDIX D attached hereto describes how ownership of the Bonds is to be transferred and how the principal of and interest on the Bonds are to be paid to and credited by DTC while the Bonds are registered in its nominee's name. The information in this section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this Official Statement. Capitalized terms relating to DTC and its Book-Entry-Only System used, but not defined, in the body of this Official Statement have the meanings given in APPENDIX D. The County, its Financial Advisor, and the Underwriter believe the source of such information to be reliable, but take no responsibility for the accuracy or completeness thereof. The County cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Bonds, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Bonds), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. U n of Term in Other &ctio s of this Offi 1 Stat . In reading this Official Statement, it should be understood that while the Bonds are in the Book-Entry-Only System references in other sections of this Official Statement to registered owners should be read to include the person for which the Direct Participant of Indirect Participant acquires an interest in the Bonds, but (i) all rights of ownership must be exercised through DTC and the Book-Entry-Only System, and (ii) except as described in APPENDIX D attached hereto, notices that are to be given to registered owners under the Order will be given only to DTC. V 9L_7 5-PAGE-46 Ownership The County, the Paying Agent/Registrar, and any other person will treat the person in whose name any Bond is registered as the absolute owner of such Bonds for the purposes of making payment of the principal thereof and the interest thereon and for all other purposes, whether or not such Bond is overdue. Neither the County nor the Paying Agent/Registrar will be bound by any notice or knowledge to the contrary. All payments made to the registered owner of such Bond in accordance with the Order will be valid and effectual and will discharge the liability of the County and the Paying Agent/Registrar for such Bond to the extent of the sums paid. Registration, Transfer and Exchange In the event the Book-Entry-Only System should be discontinued for the Bonds, the Bonds affected by the change may be transferred and exchanged on the Security Register only upon presentation and surrender thereof to the Paying Agent/Registrar at its designated office and such transfer or exchange will be without expense or service charge to the registered owner except for any tax or other governmental charges required to be paid with respect to such registration, exchange, and transfer. The Bonds may be assigned by the execution of an assignment form printed on the Bonds or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Bonds registered and delivered in an exchange or transfer will be of the same type, in authorized denominations, and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Bonds surrendered for exchange or transfer. Record Date for Interest Payment The record date for determining the person to whom the interest is payable on any interest payment date of a Bond ("Record Date') is the close of business on the 15th day of the month next preceding such interest payment date, as specified in the Order. In the event of a nonpayment of interest on a scheduled interest payment date, and for 30 days thereafter, a new Record Date for such interest payment (the "Special Record Date') will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the County. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date," which must be 15 days after the Special Record Date) will be sent at least 5 business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the address of each registered owner of a Bond appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. Defeasance The County may discharge its obligation to the registered owners of any or all of the Bonds to pay principal and interest, within the meaning of the Order when payment of the principal of and interest on such Bonds to the stated maturity thereof has been made, by depositing with any permitted entity, as specified in Chapter 1207, Texas Government Code, as amended, for such Bonds: (i) money sufficient to pay the principal amount of such Bonds plus interest thereon to the date of maturity, (ti) Governmental Obligations certified by an independent public accounting firm to be of such maturities and bearing interest at rates sufficient to provide for the timely payment of the principal amount of such Bonds plus interest thereon to the date of maturity, or (iii) a combination of money and Governmental Obligations together so certified sufficient to make such payment. Upon such deposit, such Bonds will no longer be regarded as outstanding or unpaid. The Order provides that "Government Obligations" means (i) direct noncallable obligations of the United States, including obligations that are unconditionally guaranteed by the United States of America; noncallable obligations of an agency or instrumentality of the United States, including obligations that are unconditionally guaranteed or insured by the agency or instmmentahry and that, on the date the Commissioners Court adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent, or (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the Commissioners Court adopts or approves the proceedings and authorizes the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent. VOL 75 PAGE 'kp Enforcement of Remedies The Order does not establish specific remedies upon an event of default with respect to the Bonds other than the tight to a mandamus action to compel the County to observe the covenants of the County under the Order. Under State law and pursuant to the Order, there is no right to the acceleration of maturity of the Bonds upon the failure of the County to observe any covenant under the Order. No assurance can be given that a mandamus or other legal action to enforce a remedy under the Order would be successful. The enforcement of any such remedy may be difficult and time consuming. The Order does not provide for the appointment of a trustee to represent the interest of the bondholders upon any failure of the County to perform in accordance with the terms of the Order, or upon any other condition. Furthermore, the County is eligible to seek relief from its creditors under Chapter 9 of the U. S. Bankruptcy Code. [The remainder of thu page is intentionally 10 blank.] L-75 d ik, - 47 N a V a W N Qa W Q o e o p Gb m ~ N y o I] W M OJ b P OJ a ~ U aD d' M N r G\ op u'1 O~ b O v) r e-i M o0 Q w Vt V1 'd' N 7 N r O G~ r b v1 G~ op M ~ .L+ CO r W M M N V' G\ V r M M V1 r b b OJ ~-C ~t G O M a M b M N ~/1 M b r M W M G\ M b r~ M O Cl ul M M r- rb l b r b r W cl M F WM M MN C IL r~ b b b' b b P P N V ~t M ✓1 v1 u') vj ~ M M M N N N N N Y N h4 b M M~ N r M O N N r r O ~r O N N c0 M O~ ~/1 r N O ~1 r s} M G1 r M N v r E+ r r r r r r r r b~ M V' N r M O N N~ r N O V r v t r 1 1cl r ll 'O 41 M O O V1 O M Vl H O u N N .Pi H ti O r d' to C es 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ 0 0 0 0 0 0 0 0 0 0 0 V1 M ✓i N O O O vi v1 N N "V a0 M M wl a0 O M vt o0 M C N vt wl N b b b b r r N O CO ~ N b ~(1 r Q 41 v1 1~ V M O] N K W M 'ct O vt N V r b M tl M O Vl M W M N V. ~ O!~ M V1 r b bM -CL 't W H ul P V1 N r M r b M O~ r M 00 P M b co O "n V O O r P O r b b r b r c c Cl v M b" M M N M N O b b b b b b I -N ~ V a d' V Y~ M' N M N N N N N N I r .O N~ W M v1 N b vt r< G~ M r T M .r c0 ~ O vl N b r b V1 G\ a0 M W Q v M O N M o0 vt Cl d' V O r M M r u b o0 W U C7 W V' Vrl K OM .b+ O P W r N M O O O O O O O O O O O O O O O O O O O 0 0C 00 0 0 0 0 000 C 0 0 0 0 0 0 0 0 C 0 00 C 0 0 00 0 0 0 0 0 0 0 0 N V1 ill V1 pp O vl O Vl of O Vl O Vl i(1 O VI vj O O W o0 O O M M P b M M V N r r vi C\ P N M w1 O W P O N M 1 oD N N N' N' .r r W - v ~ b r w C O - N M[~ b~ W G O N M~ M n v 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 w~ W 0 N N N N N N N N N N N N N N N N N N N N VOL-? 5 PAGE 48 C p w v d w 0 0 a W v N v L 4 d v N rC'i C yy C N P ~ V aC. b v ~i U W P. S~ 1 C S v 0 d G 0 fi b TAX RATE LIMITATIONS The Texas Constitution authorizes the County to levy a tax for general fund, jury fund, road and bridge fund and permanent improvement fund purposes (including the Bonds) limited in the aggregate to $0.80 per $100 of assessed valuation (the "$0.80 Tax Limitation; see "AD VALOREM TAXES - Limitations on Tax Rate Increases"). In addition, if voted, the County is authorized to levy a special road and bridge fund tax not to exceed $0.15 per $100 of assessed valuation. The receipts of the special road and bridge fund tax are restricted and are not available to pay debt service on the Bonds. This special road and bridge fund tax provides additional funds for road purposes that would otherwise be paid from taxes subject to the $0.80 Tax Limitation. The County is also permitted to levy a tax for farm-to-market and lateral road purposes not to exceed $0.30 per $100 assessed valuation after a homestead exemption up to $3,000, if approved by the voters. The County has not voted a special road and bridge fund tax or a farm-to-market and lateral road tax. Article III, Section 52 of the Texas Constitution authorizes the County to levy a direct, continuing ad valorem tax on all taxable property within the County, without limit as to rate or amount, to pay the principal of and interest on the County's road bonds, if approved by voters in the County. AD VALOREM TAXES Tax Levy The Commissioners Court is responsible for levying ad valorem taxes on behalf of the County. Property Subject to Taxation Except for certain exemptions provided by Texas law, all real property and certain tangible and intangible personal property with a tax sims in the County is subject to taxation by the County. The County's assessed value, less the assessed value of rolling stock of railroads and intangible properties of railroads and certain common carriers, is the assessed value used by the Commissioners Court to determine the tax rate for the County's levy. Principal categories of exempt property 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 improvements to real property and certain tangible personal property located in designated reinvestment zones on which ad valorem taxes have been abated for a specified period of time pursuant to tax abatement agreements; farm products owned by the producer; certain property owned by qualified charitable, religious, veterans, youth, fraternal or educational organizations; property of a nonprofit corporation that is used in scientific research and educational activities benefiting a college or university; designated historic sites; solar and wind powered energy devices; nonprofit cemeteries; and tangible personal property not held or used for production of income. The County, either by action of the Commissioners Court or through a process of petition and referendum initiated by its residents, may grant partial exemptions for residential homesteads of persons 65 years or older and of certain disabled persons. The Conunissioners Court granted an exemption for residential homesteads for persons 65 years of age or older of up to $75,000 of assessed value for 2005. If requested, the County must grant exemptions to disabled veterans or a surviving spouse or certain surviving dependents of a deceased veteran who died while on active duty in an amount ranging from $5,000 to a maximum of $12,000 of assessed value. The County may also authorize an optional exemption of up to 20% of the value of residential homesteads from ad valorem taxation, however the Commissioners Court did not grant this optional exemption for 2005. If ad valorem taxes have been pledged for the payment of debt prior to the adoption of any such partial exemptions, taxes may be assessed and collected against the exempt value of such homesteads if the cessation of the levy against such exempt value would impair the obligation of the contract by which the debt was created. The County and the other taxing bodies within its territory may agree to jointly create tax increment financing zones, under which the tax values on property in the zone are "frozen" at the value of the property at the time of creation of the zone. The County also may enter into tax abatement agreements to encourage economic development. Under such agreements, a property owner agrees to construct certain improvements on its property. The County or taxing unit (as applicable) in turn agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. Such abatement agreements may last for a period of up to 10 years. The estimated value VOL75-PAGE L0 of property in the County that was subject to tax abatement on January 1, 2005 is approximately $51,017,711. Taxable assessed value figures herein are net of abatements. See Note 13 in "APPENDIX A - Excerpts from the Financial Report for the Fiscal Year Ended September 30, 2004" for information concerning tax increment financing zones and tax abatement agreements affecting the County. Legislation passed by the Texas Legislature during the 2003 legislative session authorizes cities or counties to refrain from increasing the total ad valorem tax (except for increases attributable to certain improvements) on the residence homestead of the disabled or persons 65 years of age or older and their spouses above the amount of tax imposed in the later of (i) the year such residence qualified for an exemption based the disability or age of the owner or (u) the year the city or county chooses to establish the above-referenced limitation. On the receipt of a petition signed by five percent of the registered voters of the County, the County must call an election to detemtine by majority vote whether to establish such a tax limitation. The County has implemented this "tax freeze" pursuant to an Order adopted by the Commissioners Court on September 11, 2004. County administration does not believe that the implementation of this tax freeze will have a material adverse financial impact on the County during fiscal year ending September 30, 2006. The County will continue to monitor the potential impact of the tax freeze on revenue. Article VIII, Section 1-j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport property is defined as goods detained in the state for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication. Decisions to continue to tax freeport property may be reversed in the future; decisions to exempt freeport property are not subject to reversal. The County does not tax freeport property. Valuation of Property for Taxation The Property Tax Code of Texas (the "Property Tax Code") generally requires all taxable property (except property utilized for a qualified "agricultural use" and timberland) to be appraised at 100% of market value as of January 1 of each year. State law limits the appraised value of a residence homestead for a tax year to an amount not to exceed the lesser of (1) the market value of the property, or (2) the sum of (a) 10% of the appraised value of the property for the last year in which the property was appraised for taxation times the number of years since the property was last appraised, plus (b) the appraised value of the property for the last year in which the property was appraised, plus (c) the market value of all new improvements to the property. Residential property that has never been occupied as a residence and is being held for sale is treated as inventory for property tax purposes. The appraisal of taxable property for the County (except certain railroad rolling stock and certain intangible property of railroads and certain common carriers, which still is appraised by the State) and all other taxing entities in the County is the responsibility of the Brazos County Appraisal District (the "Appraisal District"), a county-wide agency created under the Property Tax Code for that purpose. The Appraisal District is governed by a five member board whose members are appointed by vote of the Commissioners Court and the governing bodies of the cities, towns, school districts and, upon request, conservation and reclamation districts in the County under a voting system weighted in direct proportion to the amount of taxes imposed by the voting entities. The Property Tax Code requires the Appraisal District to implement a plan for periodic reappraisal of all taxable property in the County, and reappraisal must be effected at least once every three years. The Appraisal District has established a schedule of reappraisal for different classifications of property to comply with such requirements. Taxable values determined by the chief appraiser of the Appraisal District are submitted for review and equalization to an Appraisal Review Board (the "Appraisal Review Board") appointed by the Appraisal District. Appraisals may be contested before the Appraisal Review Board by taxpayers or, under limited circumstances, the County, and the Appraisal Review Board's orders are appealable to a State district court. Limitations on Tax Rate Increases The Commissioners Court must adopt a tax rate for the County before the later of September 30 of each year, or the 60th day after the date the certified appraisal roll is received by the County; however, if the Commissioners Court does not adopt a tax rate before these dates, the tax rate for the County for that tax year is the lower of the effective tax rate calculated for that tax year or the tax rate adopted by the County for the preceding tax year. Such rates are based on the VOL 7 AGE `Z% assessed values at January 1 of each year, as shown on the tax roll approved by the Appraisal Review Board, which must be used by the County for such purpose. The Property Tax Code imposes limitations on certain tax increases. Under the Property Tax Code, the County must annually calculate and publicize its "effective tax rate" and "rollback tax rate." The Commissioner's Court may not adopt a tax rate that exceeds the lower of the "rollback tax rate" or the "effective tax rate" until it has held two public hearings in two separate weeks on the proposed increase following notice to the taxpayers and otherwise complied with the Property Tax Code. The Property Tax Code provides that if the adopted tax rate exceeds the rollback tax rate, qualified voters of the County, by petition, may require that an election be held to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate. "Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values (adjusted). "Rollback tax rate" means the rate that will produce last year's maintenance and operation levy (adjusted) from this year's values (adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted) divided by the anticipated tax collection rate. "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included in this year's taxable values. Collections, Penalty and Interest The County Tax Assessor-Collector is responsible for collection of taxes. The Property Tax Code contains provisions, which allow the assessment and collection of county taxes by the Appraisal District or another taxing unit if the Commissioners Court elects to enter into a contract for that purpose and the County Tax Assessor-Collector approves such contract. The Property Tax Code also provides for assessment and collection of County taxes by the Appraisal District or another taxing unit in the County if that procedure is approved at an election, which may be initiated by petition of 10,000 qualified voters of the County. Tax statements are required to be mailed by October 1, or as soon thereafter as practicable, and taxes become delinquent on February 1 of the following year. If tax statements ate mailed after January 10, the delinquency date is postponed to the fast day of the next month that will provide a period of at least 21 days between the date the statement is mailed and the date taxes become delinquent. So long as the Commissioners Court or voters of the County have not transferred responsibility for collection of the taxes to another taxing unit or the Appraisal District, the Commissioners Court may permit payment without penalty or interest of one half of the taxes due from each taxpayer by July 1 if one half of the taxes due for the current year from such taxpayers are paid prior to December 1. Delinquent taxes are subject to a 6% penalty for the fast month of delinquency, 1.0% for each month thereafter to July 1, and 12% total if any taxes are unpaid on July 1. Delinquent taxes also accrue interest at the rate of 1.0% per month during the period they remain outstanding. If the delinquency date is postponed, then the postponed date is the date from which penalty and interest accrues on the delinquent taxes. The County may waive penalties and interest on delinquent taxes if the error or omission of a representative of the County or of the Appraisal District caused the failure to pay the tax before delinquency and if the tax is paid within 21 days after the taxpayer knows or should know of the delinquency. Tax Liens The Property Tax Code provides that on January 1 of each year a tax hen attaches to property to secure the payment of all taxes, penalties and interest ultimately imposed for the year on the property. The ben exists in favor of each taxing unit, including the County, having power to tax the property. The 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 other debt or ben existed before the attachment of the tax lien. Taxes levied by the County are the personal obligation of the property owner and, under certain circumstances personal property is subject to seizure and sale for the payment of delinquent taxes, as well as penalties and interest thereon. Except with respect to taxpayers 65 and older, any time after taxes on property become delinquent, the County may file suit to foreclose the lien securing payment of the tax, to enforce personal liability for the tax or both. In filing a suit to foreclose a tax lien on real property, the County must join other taxing units that have claims for delinquent taxes against all or part of the same property. The ability of the County to collect delinquent taxes by foreclosure may be adversely affected by the amount of taxes owed to other taxing units, certain affirmative defenses, adverse market conditions affecting the liquidation of such property, taxpayer redemption rights, general principles of equity, or bankruptcy proceedings which restrain the collection of a taxpayer's debt. VOL'1S PAGE 'al SPECIAL LEGISLATIVE SESSIONS AND AD VALOREM TAX POWER Since the conclusion of the Regular Session of the 79th Legislature, the Governor of Texas has called two 30-day special legislative sessions, the last of which adjourned on August 19, 2005, for the primary purpose of considering legislative proposals related to an overhaul of the State's public school finance system which includes revisiting the use of ad valorem taxes as the primary source of public school funding. No action was taken; however, the Texas Supreme Court has issued a ruling that states that the current school finance system is unconstitutional, and has given the State legislature a June 1, 2006 deadline to fix the system of cited deficiencies or it will enjoin the application of the Texas Education Code relating to financing public education in Texas. The Governor has declared his intent to call another special session to timely address this court ruling. The County can predict neither the ultimate results of any special session nor the potential effects on its future collection of ad valorem taxes. [The remainder of tbis page it intentional# left blank..] 10 VUL TAX DATA (As of November 1, 2005) Valuation, Exemptions and Debt Obligations 2005 Appraised Valuation (100% of Actual) Established by Brazos County Appraisal District $9,591,181,680(a) Less: Exemptions/Reductions at 100% of Market Value Over 65 $ 399,693,176 Disabled Veterans Exemptions 6,664,990 Agricultural Use/Productivity Loss 555,111,290 Tax Abatements 51,017,711 Exempt Property/Homestead Cap Adjustment/Other 1.243 835 27 2.256.322.439 2005 Taxable Assessed Valuation $7,334,859,241 County Debt Payable from Ad Valorem Taxes: Certificates of Obligation $ 27,030,000*(b) Ad Valorem Tax Supported Bonds 18,170,000 Contractual Obligations 500,000 The Bonds 5 000* Debt Payable from Ad Valorem Taxes 0* $ 51,755,00 Debt Service Fund Balance (as of September 30, 2005)(d) 1,623,742 Ratio of Net Debt to Assessed Valuation 0.68%* 2004 Estimated Population - 161,779(c) Per Capita Assessed Valuation - $45,338.76 Per Capita Net Debt - $309.87 Land Area - 583 Square Miles *Preliminary; subject to change. (a) As certified by the Brazos County Appraisal District. (b) Excludes the Refunded Obligations. (c) As estimated by the Texas State Data Center. (d) Unaudited. [The remainder of Ibis page is intention!! 1eft blank.] 11 VOL -?s F6GE 55 Taxable Assessed Valuation by Category (a) "11ax Year 200 5 Tax Year 2004 m n Pre Amount Peter ent Real Property Single Family $3,862,142,459 45.35% $3,568,957,667 45.96% Multifamily 860,101,016 10.10% 826,884,673 10.65% Vacant Lots/Acreage 874,678,624 10.27% 750,260,073 9.66% Farm & Ranch Improvements 270,497,447 3.18% 236,817,441 3.05% Commercial/Industrial 1,506,214,521 17.69% 1,288,621,172 16.59% Oil/Gas/Minerals 141,368,431 1.66% 122,364,537 1.58% Personal Property Utilities 161,820,700 1.90% 169,152,911 2.18% Commercial/Industrial 729,731,848 8.57% 689,505,418 8.88% Other Personal 47,816,424 0.56% 50,562,734 0.65% Real, Inventory 61 610.650 0.72% 62.171285 0.80% Total Appraised R 1 98 1 10.0,00°/9 7 765 97 97 100.001e Tax Year 2003 Tax Year 2002 mount Amours[ mount ercent Real Property Single Family $3,216,056,392 45.00% $2,846,309,856 43.07% Multifamily 806,895,425 11.290/. 754,695,935 11.42% Vacant Lots/Acreage 717,812,812 10.04% 716,127,831 10.84% Farm & Ranch Improvements 223,835,852 3.13% 212,300,293 3.21% Commercial/Industrial 1,192,165,115 16.68% 1,089,080,875 16.48% Oil/Gas/Minerals 113,572,478 1.59% 109,819,640 1.66% Personal Property Utilities 167,124,461 2.34% 170,410,518 2.58% Commercial/Industrial 609,982,397 8.53% 613,777,145 9.29% Other Personal 51,301,334 0.72% 54,704,404 0.83% Real, Inventory 48A68-4l 5 0.68% 40.741.663 0.62 Total Appraised $714.[.81 100.001a E(,_.(,0_ 7 96R 76 100 00°/ (a) Supplied by the Brazos County Appraisal District. Excludes Total Exempt Property. Tax Rate Levy and Collection History Taxable % Collected Fiscal Year End Tax Yeaz Assessed Valuation Tax Rate Tax Lew Curren Total September 30 1996 $3,817,495,232 $0.4180 $15,957,130 98.14% 99.81% 1997 1997 4,080,587,991 0.4174 17,032,374 97.44% 99.79% 1998 1998 4,234,312,672 0.4174 17,674,021 97.80% 99.74% 1999 1999 4,503,291,892 0.4174 18,796,740 97.99% 99.68% 2000 2000 4,950,081,368 0.4100 20,295,334 96.49% 99.46% 2001 2001 5,387,860,063 0.4200 22,629,012 97.17% 99.34% 2002 2002 5,738,197,523 0.4146 23,790,567 94.41% 99.14% 2003 2003 5,885,485,757 0.4350 25,601,863 98.65% 98.17% 2004 2004 6,661,121,332 0.4725 31,473,798 98.44% 98.34% 2005 2005 7,334,859,241 0.4650 34,107,095 (In process of 2006 collection) 12 't `75 Pia 5 Tax Rate Distribution 2M 22005 2004 2003 2002 Operations $0.3949 $0.4093 $0.3839 $0.3723 $0.3857 Debt Service 0.07010.063 2 0.0511 0.0423 0.0343 Total 465 ¢72 Q 435 4L4 0.420 Ten Largest Taxpayers 2005 Taxable % of Total Name of Taxer Nature of Prooerty V la cation Taxable Valuation Verizon Communications, Inc. Communications $ 69,916,040 0.95% CBL & Associates Properties Mall Development 50,480,675 0.69% College Station Hospital Hospital 50,427,940 0.69% Wal-Mart Stores East Retail/Wholesale 48,951,875 0.67% Anadarko C&P Company Oil & Gas 45,951,444 0.63% Sanderson Farms Poultry 44,180,435 0.60% David Alkosser Real Estate 34,479,245 0.47% ETC Texas Pipeline LTD Pipeline 29,349,935 0.40% Adam Development Properties LP Real Estate 26,317,713 0.36% HEB Pantry Foods Grocery Store 25266 90 0.34% TOTAL 32189 % 5.80 Sales Tax As authorized by Chapter 323 of the Property Tax Code, the voters of the County have authorized the County to impose and levy a one-half percent County-wide sales and use tax. The sales and use tax which became effective on January 1, 1988, is collected by the Comptroller of Public Accounts of the State of Texas and is transmitted periodically to the County Treasurer (less a 2% State of Texas service fee). Revenue from the County sales and use tax must be used to reduce the ad valorem property tax rate of the County; money collected from the tax replaces lost property tax revenue. In general, when a county sales and use tax is in effect, the effective tax and rollback tax rate under the Property Tax Code must be offset by the revenue that will be generated by the sales and use tax for the current year. The sales and use tax may be abolished by local option election called in the same manner as the election imposing the tax. The proceeds of this sales and use tax are not pledged to secure payment of the Bonds or any other debt of the County. Revenue from this tax has been: Fiscal Year Total %ofAd Equivalent Ad Collections Ending 9-30 Collected Valorem Tax Levy Valorem Tax Rate Per Cap 1997 $5,763,148 36.12% $0.1510 $41.47 1998 6,217,183 36.50% 0.1524 44.40 1999 6,435,339 36.41% 0.1520 44.87 2000 7,019,814 37.35% 0.1559 46.06 2001 7,358,873 36.26% 0.1487 47.33 2002 7,445,647 32.90% 0.1382 47.60 2003 7,723,283 32.46% 0.1346 47.44 2004 8,413,175 32.86% 0.1429 52.00 2005(1) 8,942,046 28.41% 0.1342 55.27 2006(2) 8,500,000 25.61% 0.1159 52.54 (1) 2005 Estimate. (Unaudited) (2) 2006 Projection. 13 uv~_ 75'.,- 255, Estimated overlapping Debt Expenditures of the various taxing bodies within the territory of the County are paid out of ad valorem taxes levied by these taxing bodies on properties within the County. These political taxing bodies are independent of the County and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax debt was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas, as of November 2, 2004, and other sources. Except for the amounts relating to the County, the County has not independently verified the accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed below may have issued additional debt since the date stated below, and such entities may have programs requiring the issuance of substantial amounts of additional debt, the amount of which cannot be determined. The following table reflects the estimated share of overlapping funded debt of these various taxing bodies. Outstanding Tax Estimated Amount Political C bdivision unuotted Debt % Overlappin Over.ouine Brazos County WC&ID #1 $ 33,000 100.00% $ 33,000 City of Bryan 68,588,617 100.001/0 68,588,617 , Bryan Independent School District 63,475,000 99.80% 00% 100 63,368,010 499 312 69 College Station, City of e Station Independent School District Colle 69,312,499 65,635,000 . 100.00% , , 65,635,000 g Navasota Independent School District 11,815,525 10.90% 2 1287 a9 Total Estimated Overlapping Debt $268,225,018 * Brazos County 51,755,000* 100.000/. 51 755.000 919 980 01 Total Direct and Overlapping Debt Ratio of Direct and Overlapping Funded Deb t to 2005 Taxable Assessed Valuation 4.36% Per Capita Overlapping Funded Debt $1,977.88 *Includes the Bonds, excludes the Refunded Obligations; preliminary, subject to change. Tax Rate Calculation The tax rate calculation set forth below is presented to indicate the tax rates per $100 assessed valuation, that would be required to meet debt service requirements on the tax debt of the County to be outstanding after the issuance of the Bonds if no growth occurs in the County beyond the 2005 Taxable Assessed Valuation of $7,334,859,241. The County's 2006 debt service portion of its fiscal year 2006 tax rate is $0.0701. Average Annual Debt Service Requirements (2006-2025) $3,545,146(a) Tax Rate of $0.0701 on the 2005 Assessed Valuation Produces ..........................................................................$5,141,736 Estimated Maximmn Annual Debt Service Requirement 2008 $5,356,408(a) (a) Includes the Bonds, excludes the Refunded Obligations; preliminary, subject to change. Authorized but Unissued Debt The County has no authorized but unissued ad valorem tax-supported debt. The County, however, tray issue other obligations payable from its collection of ad valorem taxes, including subsequently voted bonds, certificates of obligation, public property finance contractual obligations, and debt of maturity within seven years. In addition, the County can enter into leases for various purposes, which also represent financial obligations thereof payable from annual appropriations of tax proceeds. The County expects to issue approximately $5,000,000 of new money, ad valorem tax-supported debt in the summer of 2006. 14 vu,L 75 , THECOUNTY Creation and Location Encompassing an area of 583 square miles, the County is located in the southeast section of the State of Texas with its boundaries being formed by the Brazos River on the south and the Navasota River on the east. The City of Bryan serves as the county seat and primary commercial center of the County, while the City of College Station is principally a residential community for faculty, students and other personnel of Texas A&M University. The Bryan-College Station metropolitan statistical area (MSA) comprised of the County and surrounding counties, has become one of the fastest growing MSA's in the State. The County's economy is diversified by agribusiness, computer manufacturing, research and development, education, offshore technology, and mineral production. Texas A&M University enterprises are a major economic factor. For additional economic and demographic characteristics, see the Statistical Section under APPENDIX A hereto. Administration of the County The County judge and the four County Commissioners (who collectively comprise the Commissioners Court), the County Tax Assessor/Collector, and the County Treasurer (all of whom are elected officials), together with the County Auditor, have responsibility for the financial administration of the County. The Commissioners Court is the governing body of the County. It has certain powers expressly granted to it by the Constitution and statutes of the State of Texas and powers necessarily implied from such grants. Its duties include approval of the budget, determination of tax rates, approval of contracts in the name of the County, calling elections, issuance of debt and appointment of certain County officials. The County judge is the presiding officer of the Commissioners Court and is elected for a four-year term by the voters of the County and is generally an administrative officer and not a judicial officer. Each Commissioner represents one of four commissioner precincts into which the County is divided and is elected by the voters of his precinct for a four-year term. The County Tax Assessor/Collector is responsible for collecting ad valorem taxes, collecting certain State and County fees and other taxes, and for registering voters in the County. The County Treasurer's dudes include receiving all money collected by the County, investing County revenue, paying and applying County funds as directed by the Commissioners Court in the depository selected by the Commissioners Court and signing all County checks. Payroll administration is the responsibility of the personnel manager and County Treasurer. The County Auditor, the chief financial officer of the County, is responsible for substantially all county finance and accounting control functions. Such functions include auditing, accounting systems design, financial planning and financial relations. Insurance administration is the responsibility of the purchasing agent and the risk manager. The County Auditor is appointed for a two-year term by the State District judges located in Brazos County and is not under the supervision of the Commissioners Court. The County Attorney, an elected official, is responsible for all of the general legal affairs of the Commissioners Court. The County Clerk, an elected official, serves as Clerk of the Commissioners Court. Financial Policies Basis of A ountin The County's policy is to adhere to the accounting principles set out by the Governmental Accounting Standards Board, as amended. See "APPENDIX A - Excerpts from the Financial Report for the Fiscal Year Ended September 30, 2004". Fund Balance in Operating Funds The County practice is to maintain surplus and unencumbered funds equal to at least two months of expenditures (approximately 15% of annual expenditures) in the General Fund and Special Revenue Funds. This allows the County to avoid interim borrowing pending tax receipts. The County attempts to divide each 15 ti,; ti.75 Ewa,'. 57 dollar of taxes collected into its component parts of maintenance and operations and debt service and to deposit the taxes into the proper fund upon receipt. Tax Collections fox Deb[ ervice The County deposits interest and sinking fund taxes collected into separate accounts where such money is invested until required. Debt Service Fund Balance The County's practice is to carry forward at the end of each fiscal year debt service funds sufficient to meet debt service requirements through the fast six months of the ensuing fiscal year. Use of Borrowing Pro a d< Grants Etc.... The County's policy is to use borrowing proceeds for capital expenditures only. Such proceeds are not used to fund County operations. Current Opcrating and Debt Service Funds Budgcdjag Procedure Under the County's budgeting procedures the County judge serves as County Budget Officer and prepares a proposed expenditure budget for the fiscal year after consultation with all elected officials and department supervisors. The proposed expenditure budget, along with the estimated revenue budget, prepared by the County Auditor is presented by the Budget Officer to the Commissioners Court for its consideration. A public hearing on the budget is held by the Commissioners Court, which may increase or decrease any budget item prior to formal adoption. However, the total amount of the budget cannot exceed the County's cash balance at the commencement of the fiscal year plus the County Auditor's estimate of revenues for the budget year. The Commissioners Court may transfer amounts among budget classifications in these funds, but such transfers may not increase the total budget. Purchase orders and contracts are not valid until the County Auditor or the Purchasing Agent has certified that budget levels are sufficient and that funds will be available to make the payment when it comes due. Encumbrances against budgeted appropriations are recorded in the County's records upon execution of purchase orders, contracts or other appropriate documents. All encumbered amounts remaining unexpended at the end of the year are appropriated in the following year's budget. Texas law currently provides that the liability of a unit of local government such as the County is limited to money damages in a maximum amount of $100,000 for each person and $300,000 for each single occurrence for bodily injury or death and $100,000 for each single occurrence for injury to or destruction of property. However, there can be no assurance that the County may not experience claims or suffer losses in the aggregate in excess of the balance in the reserve fund from time to time. Therefore, the County may find it necessary to use current revenues or to incur indebtedness in order to satisfy such claims and losses, which may, either individually or in the aggregate, be significant. Commenting in June 1974, the County self-insured as to workers compensation by participating in the "Texas Political Subdivisions Pool" (the "Pool"). The Pool consists of counties, cities, and special districts throughout the State of Texas. Employers Insurance of Texas serves as administrator for the Pool. To minimize its potential liability as a result of its participation in the Pool, the County intends to purchase reinsurance on an individual and aggregate basis. It is not possible to predict the extent of the County's potential liability under this program of self-insurance due to the absence of prior loss experience. The administrator for the County's health benefits program is Blue Cross/Blue Shield. The County self-insures its accident and health program for employees of the County. In order to reduce its potential liability, the County has purchased reinsurance in excess of its self-insurance limits. In addition, the County has established a fund to cover its liability up to the level of self-insurance. Employee Retirement Benefits The County has a contributory retirement plan with the Texas County and District Retirement System ("TCDRS") covering substantially all of its qualifying employees. Such employees contribute 7.00% of their gross wages and the County anticipates matching these wages with a contribution of 10.93% of such wages for the calendar year 2005. 16 l"s,Ja The plan provisions are adopted by the Commissioners Court, within the options available in the State statutes governing TCDRS. Members can retire at ages 60 and above with 8 or more years of service or with 30 years of service regardless of age or when the sum of their age and years of service equals 75 or more. A member is vested after 8 years but must leave his accumulated contributions in the plan. If a member withdraws his personal contributions in a lump sum, he is not entitled to any amounts contributed by the County. The County's contribution for the fiscal year ended September 30, 2005 of $2,317,063 was based on a covered payroll of $21,514,073 (unaudited figures). Investments The County invests its investable funds in investments authorized by State law in accordance with investment policies approved by the Commissioners Court of the County. Both State law and the County's investment polities are subject to change. Under State law, the County is authorized to invest in (1) obligations, including letters of credit, of the United States or its agencies and instrumentalities, (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 of and interest on which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State or the United States or their respective agencies and instrumentalities, (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 or through 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 its successor or the National Credit Union Share Insurance Fund or its successor, or are secured by obligations described in clauses (1) through (6) or in any other manner and amount provided by law for County deposits, or (ii) where: (a) the funds are invested by the County through a depository institution that has its main office or branch office in the State of Texas and that is selected by the County; (b) the depository institution selected by the County arranges for the deposit of funds in one or more federally insured depository institutions, wherever located; (c) the certificates of deposit are insured by the United States or an instrumentality of the United States; (d) the depository institution acts as a custodian for the County with respect to the certificates of deposit; and (e) at the same time that the certificates of deposit are issued, the depository institution selected by the County receives deposits from customers of other federally insured depository institutions, wherever located, that is equal to or greater than the funds invested by the County through the depository institution selected under clause (ii)(a) above, (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1) above and are placed through a primary government securities dealer or a financial institution doing business in the State, (9) certain bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least "A-1" or "P-1" or the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper that is rated at least "AT' 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 United States or state bank, (11) no-load money market mutual funds 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, (12) no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invests exclusively in obligations described in the preceding clauses; 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; provided, however, that the County is not authorized to invest in the aggregate more than 15% of its monthly average fund balance (excluding bond proceeds and reserves and other funds held for debt service) in such no-load mutual funds, and (13) for bond proceeds, guaranteed investment contracts that have a defined termination date, are secured by obligations of the United States or its agencies and instrumentalities in an amount at least equal to the amount invested under the contract, and are pledged to the County and deposited with the County or with a third party selected and approved by the County. Entities such as the County may also enter into 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) of the preceding paragraph, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized 17 investment rating firm at not less than "A" or its equivalent or (c) cash invested in obligations described in clauses (1) through (6) or (10) through (12) of the preceding paragraph, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the County and held in the County's name or a third party designated by the County; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State; and (iv) the agreement to lend securities has a term of one year or less. The County 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 County may also contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 806-1 et seq.) or with the State Security Board to provide for the investment and management of its public funds or other funds under its control for a term of up to two years but the County retains ultimate responsibility as fiduciary of its assets. The County is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage backed security and bears no interest; (3) collateralized mortgage obligations that have a 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 State law, the County is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a Est of authorized investments for County funds, maximum allowable stated maturity of any individual investment and the maximum average dollaz-weighted maturity allowed for pooled fund groups. As an integral part of its investment policy, the County is required to adopt a separate written investment strategy for each of the funds under its control. Each investment strategy must describe the investment objectives for the particular fund using the following priorities: (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. In addition, State law requires that County investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived". At least quarterly the investment officers of the County shall submit an investment report detailing: (1) the investment position of the County, (2) that all investment officers jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and the ending value of each pooled fund group, (4) the book value and market value of each separately invested asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) State law. No person may invest County funds without express written authority from the Commissioners Court. Additional Provisions: Under State law, the County is additionally required to: (1) annually review its adopted policies and strategies; (2) adopt an order or resolution stating that it has reviewed its investment policy and investment strategies and record any changes made to either its investment policy or investment strategy in such order or resolution; (3) require any investment officers with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the Commissioners Court, (4) require the qualified representative of firms offering to engage in an investment transaction with the County to: (a) receive and review the County's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the County and the business organization that are not authorized by the County's investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the County's entire portfolio or requires an interpretation of subjective investment standards), and (c) deliver a written statement in a form acceptable to the County and the business organization attesting to these requirements; (5) perform an annual audit of the management controls on investments and adherence to the County's investment polity; (6) provide specific investment training for the Treasurer, Chief Financial Officer and investment officers; (7) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (8) restrict the investment in mutual funds in the aggregate to no more than 15% of the entity's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; (9) require local 18 government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements; and (10) at least annually review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the County. The County generally restricts investments to U.S. Treasury and Agency obligations, insured or collateralized bank certificates of deposit and funds such as Texas Local Government Investment Pool, which invest primarily in such instruments. As of November 1, 2005, the County owned investments with a fair value of approximately $6.65 million, which was invested in secured or insured cash accounts. All investments are short term. [The remainder of this page is intentionally 1e blank..] 19 v~ 7 5 PACE (ol FINANCIAL INFORMATION The following summaries of the County's General Fund and Debt Service Fund have been prepared by the Financial Advisor from audited financial records of the County for the fiscal years ended September 30, 2002 through 2005. Such summaries do not purport to be complete, and prospective purchasers of the Bonds are advised to refer to the audited financial statements for complete information concerning the County's finances. General Fund Fiscal Year Ending September 30 2005(a) 2004 2003 2002 Revenues Taxes $36,708,602 $32,481,134 $29,682,391 $28,507,391 Charges for Services 7,498,829 7,175,344 6,794,090 7,079,201 Intergovernmental 1,552,022 1,267,905 1,175,482 1,189,138 Interest 823,465 381,658 404,805 623,336 Other Revenue 931.991 536.590 636775 381.200 Total Revenue $47.514.909 $41.842.631 $38.693.543 $37.780.266 Expenditures General Government $11,379,308 $ 9,297,462 $ 8,207,730 $ 7,696,211 Justice System 7,194,266 9,247,250 8,326,256 7,763,840 Law Enforcement 10,430,257 10,252,016 9,403,369 8,848,247 Juvenile Services 3,037,663 2,934,094 2,966,040 2,960,507 Public Transportation 4,311,707 4,620,767 6,082,584 5,957,282 Public Health 1,606,212 1,533,065 1,747,062 1,727,396 Human Services 1,943,164 1,663,257 1,350,979 1,332,972 Capital Outlay 85,370 71,950 40,993 63,499 Debt Service 0 177.643 177.643 17T643 Total Expenditures $39987.947 $39.797.504 S38302 656 $36,527.597 Net Revenues $ 7.526962 $ 1045127 $ 390,887 $ 1252.669 Other Financing Sources Operating Transfers In $ 0 $ 44,652 $ 8,140 $ 19,147 Operating Transfers Out (844,010) (633,314) (1,752,352) (2,517,245) Proceeds of Sale of Fixed Assets 19.961 39.840 61-628 105.542 (82404 (548.822) (1.682.584) X2392.556) Net Changes to Fund Balance $ 6,702,913 $ 1,496,305 $ (1,291,697) $ (1,139,887) Fund Balance -October 1 $19,644,359 $18,148,054 $19,439,751 $20,579,638 Residual Equity Transfer Out 0 0 0 0 Residual Equity Transfer In 0 0 0 0 Fund Balance - September 30 (a) Unaudited. IT& remainder of Ibis page it intentional# left blank.) 20 VOL 75 PAGE Cea. Debt Service Fund Revenues Property Tax Interest Income Total Revenues Expenditures Principal Interest Agent Fees & Other Total Expenditures Net Revenues (Expenditures) Other Sources Fund Balance - October 1 Fund Balance - September 30 (a) Unaudited. Fiscal Year Ending September 30 2005W 2004 2443 2002 $4,296,436 $3,199,690 $2,470,489 $1,876,475 138.922 _ 67.363 48.587 75.145 35 5 $326705 3 $2,519.07 2 119516 $2,390,000 $1,860,000 $1,500,000 $1,060,000 1,785,488 1,594,431 1,365,802 1,240,364 2.407 1.757 1.707 2-047 89 456 88 S286750 $2302411 257,463 (189,135) (348,433) (350,791) 0 200,000 0 0 1 623 742 $1,881,905 12 877 -1 623 Z42 1.961.310 $1,612,877 3_2. 12 101 $1,961,3.1 LITIGATION The County is a defendant in various lawsuits and is aware of pending claims arising in the ordinary course of the performance of governmental functions, certain of which seek monetary damages that could be substantial. The status of such litigation ranges from an early discovery stage to various levels of appeal of judgments. The amount of damages is limited in certain cases under the Texas Tort Claims Act and is subject to appeal. The County intends to defend these suits vigorously; the County cannot predict, as of the date hereof, the final outcome of any of such claims and suits. The County is insured in the event of unforeseeable outcomes and neither the County nor its independent risk management consultant believes this litigation could have a materially adverse impact on the County's finances or its ability to repay the Bonds. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Under Texas law, the Bonds are legal and authorized investments for banks, savings banks, trust companies, building and loan association, savings and loan associations, insurance companies, fiduciaries and trustees. The Bonds are also legal and authorized investments for the sinking funds of cities, towns, villages, school districts and other political subdivisions or public agencies of the State of Texas or any political subdivision or agency thereof and are lawful and sufficient security for the deposits to the extent of their market value as long as the Bonds maintain a rating as to investment quality by a nationally recognized rating agency of not less than "A", or its equivalent. The County has not made any investigation of any other laws, rules, regulations or investment criteria that affect the suitability of the Bonds for any of the above purposes or limit the authority of any of the above persons or entities to purchase or invest in the Bonds. REGISTRATION AND QUALIFICATION OF THE BONDS FOR SALE The sale of the Bonds has not been registered under the federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Bonds have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds been qualified under the securities acts of any other jurisdiction. The County assumes no responsibility for qualification of the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned, pledged, hypothecated, or otherwise transferred. 21 R 4: f 7 5 r`A",- Ca3 This disclaimer of responsibility for qualification for sale or other disposition of the Bonds must not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. BOND INSURANCE The County has made application for and anticipates the issuance of a municipal bond insurance policy in conjunction with the issuance of the Bonds. RATING Standard & Poor's Rating Group, a Division of The McGraw-Hill Companies, Inc. ("S&P") has delivered an underlying rating of "AA" on the County's ad valorem tax-supported debt, including the Bonds. An explanation of the significance of such a rating may be obtained from the company furnishing the rating. The rating reflects only the views of S&P and the County makes no representation as to the appropriateness of the rating. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by S&P, if in its judgment, circumstances so warrant. Any such downward revision or withdrawal of such a rating may have an adverse effect on the market price of the Bonds. TAX MATTERS Opinion On the date of initial delivery of the Bonds, Winstead Sechrest & Minick P.C., acting in the capacity of Bond Counsel to the County ("Bond Counsel' will render its opinion that, under existing law, and assuming compliance with certain covenants and the accuracy of certain representations, discussed below, interest on the Bonds is excludable from gross income for federal income tax purposes and is not subject to the alternative minimum tax on individuals and corporations; however, interest on the Bonds will be included in the "adjusted current earnings" of a corporation (other than an S corporation, regulated investment company, Real Estate Investment Trust, Real Estate Mortgage Investment Conduit, or Financial Asset Securitization Investment Trust) for purposes of computing its alternative minimum tax liability. Corporate purchasers of the Bonds should consult their tax advisors regarding the computation of alternative minimum tax. See "APPENDIX B - Form of Opinion of Bond Counsel". The Internal Revenue Code of 1986, as amended, (the "Code"), establishes certain requirements that must be met at and subsequent to the issuance of the Bonds in order for interest on the Bonds to be and remain excludable from federal gross income. Included among these continuing requirements are certain restrictions and prohibitions on the use of proceeds, restrictions on the investment of proceeds and other amounts, and rebate to the United States of certain earnings from investments. Failure to comply with these continuing requirements may cause interest on the Bonds to become includable in gross income for federal income tax purposes retroactively to the date of their issuance. The County has covenanted to comply with certain procedures, and has made certain representations and certifications, designed to assure compliance with these Code requirements. In rendering its opinion, Bond Counsel will rely on these covenants, and on representations and certifications of the County relating to matters solely within its knowledge (which Bond Counsel has not independently verified), and will assume continuing compliance by the County. Prospective purchasers of the Bonds should be aware that ownership of, accrual or receipt of interest on, or disposition of the Bonds may have collateral federal income tax consequences for certain taxpayers, including financial institutions, certain subchapter S corporations, United States branches of foreign corporations, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, taxpayers eligible for the earned income credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax- exempt Obligations. The foregoing is not intended as an exhaustive list of potential tax consequences. Prospective purchasers of the Bonds should consult their tax advisors regarding any potential collateral tax consequences. Bond Counsel expresses no opinion regarding any such collateral tax consequences. The statutes, regulations, published rulings, and court decisions on which Bond Counsel has based its opinion are subject to change by Congress, as well as to subsequent judicial and administrative interpretation by courts and the Internal Revenue Service (the "Service"). No assurance can be given that such law or its interpretation will not change in a manner that would adversely affect the tax treatment of receipt or accrual of interest on, or the acquisition, ownership, market value, or disposition of, the Bonds. No ruling concerning the tax treatment of the Bonds has been 22 7 sought from the Service, and the opinion of Bond Counsel is not binding on the Service. The Service has an ongoing audit program of tax-exempt obligations to determine whether, in the Service's view, interest on such tax-exempt obligations is excludable from gross income for federal income tax purposes. No assurance can be given regarding whether or not the Service will commence an audit of the Bonds. If such an audit were to be commenced, under current procedures, the Service would treat the County as the taxpayer, and owners of the Bonds would have no right to participate in the audit process. In this regard, in responding to or defending an audit with respect to the Bonds, the County might have different or conflicting interests from those of the registered owners of the Bonds. The opinions set forth above are based on existing law and Bond Counsel's knowledge of relevant facts on the date of issuance of the Bonds. Such opinions are an expression of professional judgment and are not a guarantee of result. Except as stated above, Bond Counsel expresses no opinion regarding any other federal, state, or local tax consequences under current law or proposed legislation resulting from the receipt or accrual of interest on, or the acquisition, ownership, or disposition of, the Bonds. Further, Bond Counsel assumes no obligation to update or supplement its opinions to reflect any facts or circumstances that may come to its attention or any changes in law that may occur after the issuance date of the Bonds. In addition, Bond Counsel has not undertaken to advise in the future whether any events occurring after the issuance date of the Bonds may affect the tax-exempt status of interest on the Bonds. Original Issue Discount Certain maturities of the Bonds (the "Discount Bonds") may be offered and sold to the public at an "original issue discount" ("CID"). OID is the excess of the stated redemption price at maturity (the principal amount) over the "issue price" of the Discount Bonds. The issue price of Discount Bonds is the initial offering price to the public (other than certificate houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers) at which a substantial amount of Discount Bonds of the same maturity are sold pursuant to that offering. For federal income tax purposes, CID accrues to the owner of a Discount Bond over such Discount Bond's period to maturity based on the constant interest rate method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). Bond Counsel is of the opinion that the portion of OID that accrues during the ownership period of a Discount Bond, @ is interest excludable from the owner's gross income for federal income tax purposes to the same extent, and subject to the same considerations discussed above, as is other interest on the Bonds, and (ii) is added to the owner's tax basis for purposes of determining gain or loss on the maturity, redemption, sale, or other disposition of that Discount Bond. OID may be treated as continuing to accrue even if payment of the Discount Bonds becomes doubtful in the event that the County encounters financial difficulties, and it is treated as interest earned by cash-basis owners (with possible tax consequences under the corporate alternative minimum tax as discussed above), even though no cash corresponding to the accrual is received in the year of accrual. A purchaser of a Discount Bond at its issue price in the initial public offering who holds that Discount Bond to maturity will realize no gain or loss upon the retirement of such Discount Bond. The federal income tax consequences of the acquisition, ownership, redemption, sale, or other disposition of Discount Bonds not purchased in the initial offering at the initial offering price may be determined according to rules different from those described above. Owners of such Discount Bonds should consult their tax advisors regarding the federal, state, and local income tax treatment and consequences of acquisition, ownership, redemption, sale, or other disposition of such Discount Bonds. Original Issue Premium Certain maturities of the Bonds (the "Premium Bonds") may be offered and sold to the public at prices greater than their stated redemption prices (the principal amount) payable at maturity ("Bond Premium"), which, for federal income tax purposes, is amortized over the period to maturity of the Premium Bond based on the yield to maturity of that Premium Bond (or, in the case of a Premium Bond callable prior to its stated maturity, an amortization period and yield determined on the basis of the earliest call date resulting in the lowest yield on that Premium Bond), compounded semiannually. No portion of that Bond Premium is deductible by the Premium Bond owner. For purposes of determining a Premium Bond owner's gain or loss on sale, redemption (including redemption at maturity), or other disposition of a Premium Bond, the owner's tax basis in the Premium Bond is reduced by the amount of Bond Premium that accrues during the ownership period. As a result, an owner of a Premium Bond may 23 ki P~-G realize taxable gain for federal income tax purposes upon the sale or other disposition of such Premium Bond for an amount equal to or less than the amount paid by the owner for that Premium Bond. A purchaser of a Premium Bond at its issue price in the initial offering who holds that Premium Bond to maturity (or, in the case of a callable Premium Bond, to the earliest call date resulting in the lowest yield on that Premium Bond) will realize no gain or loss upon retirement of that Premium Bond. Owners of Premium Bonds should consult their tax advisors with respect to the determination for federal income tax purposes of the amount of Bond Premium properly accruable in any tax year (or portion thereof), and with respect to other federal, state, and local tax consequences of owning and disposing of Premium Bonds. LEGAL PROCEEDINGS The delivery of the Bonds is subject to receipt of the opinion of Winstead Sechrest & Minick P.C., San Antonio, Texas, Bond Counsel, as to the validity of the issuance of the Bonds under the Constitution and laws of the State of Texas. The opinion of Bond Counsel will be based upon an examination of a transcript of certain proceedings taken by the County incident to the issuance and authorization of the Bonds. In its capacity as Bond Counsel, Winstead Sechrest & Minick P.C., has reviewed the information appearing in this Official Statement with respect to the description of the Bonds solely to determine whether such information conforms to and fairly summarizes the provisions of the Orden Such firm has also read and participated in the drafting of the information under the headings "THE BONDS" (except for the material appearing under the subheading entitled `Book-Entry-Only System"), "LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS", "REGISTRATION AND QUALIFICATION OF THE BONDS FOR SALE", "TAX MATTERS", and "CONTINUING DISCLOSURE OF INFORMATION" (except for the material appearing under the subheading entitled "Compliance with Prior Undertakings"). Such firm has not, however, independently verified any of the factual information contained in this Official Statement nor has it conducted an investigation of the affairs of the County for the purpose of passing upon the accuracy or completeness of this Official Statement. No person is entitled to rely upon such firm's limited participation as an assumption of liability for, or an expression of opinion of any kind with regard to, the accuracy or completeness of any of the information contained herein. Certain legal matters will be passed upon for the Underwriter by its legal counsel, Andrews Kurth LLP, Austin, Texas. The fees of Bond Counsel and Underwriter's Counsel for their respective services with respect to the Bonds are contingent upon the sale and delivery of the Bonds. Winstead Sechrest & Minick P.C. represents from time to time the Underwriter in transactions unrelated to the County and the Bonds. Winstead Sechrest & Minick P.C. is not representing the Underwriter in connection with the issuance of the Bonds. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction. The rendering of an opinion does not guarantee the outcome of any legal dispute that may arise out of the transaction. FINANCIAL ADVISOR Public Financial Management (`PFM") is employed by the County as Financial Advisor in connection with the issuance of the Bonds and, in such capacity, has assisted the County in the preparation of documentation relating to the Bonds. PFM's contract for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. Although PFM has read and participated in the preparation of this Official Statement, it has not independently verified any of the information set forth herein. The information contained in this Official Statement has been obtained primarily from the County's records and from other sources which are believed to be reliable, including financial records of the County and entities, but which may be subject to interpretation. No guarantee is made as to the accuracy or completeness of any such information. No person, therefore, is entitled to rely upon the participation of PFM as an implicit or explicit expression of opinion as to the completeness and accuracy of the information contained in this Official Statement. 24 V""OL 75 P iGGE tol? The Underwriter has agreed, subject to certain conditions, to purchase the Bonds from the County at a price of $ (representing the par amount of the Bonds of $ , plus/less a net original issue premium/discount of $ , less an Underwriter's discount of $ plus accrued interest on the Bonds to the date of initial delivery thereof to the Underwriter. The Underwriter's obligation is subject to certain conditions precedent. The Underwriter will be obligated to purchase all of the Bonds, if the Bonds are purchased. The Bonds may be offered or sold to certain dealers and others at prices lower than such public offering prices, and such public prices may be changed, from time to time, by the Underwriter. The Underwriter has provided the following sentence for inclusion in the Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. FINANCIAL STATEMENTS APPENDIX A to this Official Statement contains the general purpose financial statements of the County for the year ended September 30, 2004. These combined financial statements of Brazos County, Texas as of and for the year ended September 30, 2004 included in this Official Statement have been audited by Ingram, Wallis and Company, independent auditors, as stated in their report included with such financial statements in APPENDIX A. At closing, the County will certify that there have been no material adverse changes to its financial condition since September 30, 2004. VERIFICATION OF ARITHMETICAL AND MATHEMATICAL COMPUTATIONS The arithmetical accuracy of certain computations included in the schedules provided by PFM on behalf of the County was examined by The Arbitrage Group, Inc., certified public accountants (the "Accountants"). Such computations were based solely on assumptions and information supplied by PFM on behalf of the County. The Accountants have restricted their procedures to examining the arithmetical accuracy of certain computations and have not made any study or evaluation of the assumptions and information on which the computations are based, and accordingly, have not expressed an opinion on the data used, the reasonableness of the assumptions, or the achievability of forecasted outcome. The Accountants will verify from the information provided to them the mathematical accuracy as of the date of the closing on the Bonds of (i) the computations contained in the provided schedules to determine that the anticipated receipts from the Federal Securities and cash deposits fisted in the schedules provided by PFM, to be held in the Escrow Fund, will be sufficient to pay, when due, the principal and interest requirements of the Refunded Obligations, and (ii) the computations of yield on both the Federal Securities and the Bonds contained in the provided schedules used by Bond Counsel in its determination that the interest on the Bonds is excludable from the gross income of the holders thereof and the defeasance of the Refunded Obligations. CONTINUING DISCLOSURE OF INFORMATION In the Order, the County made the following agreement for the benefit of the holders and beneficial owners of the Bonds. The County is required to observe this agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the Order, the County will be obligated annually to provide certain updated financial information and operating data and timely notice of specified material events, to certain information vendors. This information is available to securities brokers and others who subscribe to receive information from the vendors. Annual Reports The County annually will provide certain updated financial information and operating data to all NRMSIRs and any SID, defined below. The information to be updated includes all quantitative financial information and operating data of the general type included in this Official Statement and tables listed in the main text of the Official Statement under the Subcaption "Taxable Assessed Valuation by Category". The County will update and provide this information within six months after the end of each fiscal year ending in or after 2005. The County will provide updated information to each nationally recognized municipal securities information repository ("NRMSIR") and any state information depository ("SID") designated for the State of Texas and approved by the staff of the United States Securities and Exchange Commission (the "SEC"). 25 75 The County may provide updated information in full text, or may incorporate by reference other publicly available documents, or in such other form consistent with the agreement, as permitted by SEC Rule 15c2-12 (the "Rule'D. The updated information will include audited financial statements, if the County commissions an audit and the audit is completed by the required time. If audited financial statements are not available by the required time, the County will provide unaudited financial statements and audited financial statements when and if they become available. Any such financial statements will be prepared in accordance with the accounting principles described in "APPENDIX A" or such other accounting principles as the County may be required to employ from time to time pursuant to State law or regulation. The County's current fiscal year end is September 30. Accordingly, the County must provide updated information by March 31 in each year, beginning March 31, 2006, unless the County changes its fiscal year. If the County changes its fiscal year, it will notify each NRMSIR and any SID of the change. Material Event Notices The County also will provide timely notices of certain events to certain information vendors. Specifically, the County will provide notice of any of the following events with respect to the Bonds, if such event is material to a decision to purchase or sell Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (7) modifications to rights of holders of the Bonds; (8) Bond calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds; and (11) rating changes. Neither the Bonds nor the Order make any provision for debt service reserves, credit enhancement, or liquidity enhancement. In addition, the County will provide timely notice of any failure by the County to provide annual financial information or operating data and audited financial statements in accordance with its agreement described above under "Annual Reports". The County will provide each notice described in this paragraph to any SID and to either each NRMSIR or the Municipal Securities Rulemaking Board (the "MSRB'). Availability of Information from NRMSIRs and SID The County has agreed to provide the foregoing information only to NRMSIRs and any SID. The information will be available to holders of the Bonds only if the holders comply with the procedures and pay the charges established by such NRMSIRs or SID or obtain the information through securities brokers who have done so. The Municipal Advisory Council of Texas (the "MAC") has been designated by the State of Texas as a SID, and the SEC has issued a "no-action" letter with respect thereto. The MAC address is 600 West 8th Street, P.O. Box 2177, Austin, Texas 78768-2177, and its telephone number is (512) 476-6947. The MAC has also received SEC approval to operate, and has begun to operate, a "central post office" for information filings made by municipal issuers, such as the County. A municipal issuer may submit its information filings with the central post office, which then transmits such information to the NRMSIRs and the appropriate SID for filing. This central post office can be accessed and utilized at www.DisclosureUSA.com ("DisclosureUSA'~. The County may utilize DisclosureUSA for the filing of information relating to the Bonds. Limitations and Amendments The County has agreed to update information and to provide notices of material events only as described above. The County has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that has been provided except as described above. The County makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell bonds at any future date. The County disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Bonds may seek a writ of mandamus to compel the County to comply with its agreement. Nothing in this paragraph is intended or will act to disclaim, waive or limit the County's duties under federal or state securities laws. 26 The County may amend its continuing disclosure agreement to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the County, if the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the offering described herein in compliance with the Rule and either the holders of a majority in aggregate principal amount of the outstanding Bonds consent or any person unaffiliated with the County (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the Beneficial Owners of the Bonds. The County may also amend or repeal the agreement if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid, and the County may amend the agreement in its discretion in any other circumstance or manner, but in either case only to the extent that its right to do so would not prevent an underwriter from purchasing or selling the Bonds in the offering described herein in compliance with the Rule. If the County amends its agreement, it must 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 information and operating data so provided. See APPENDIX A. Compliance with Prior Undertakings During the last five years, the County has complied in all material respects with all continuing disclosure agreements, including agreements to provide material event notices, in accordance with the Rule, in connection with the offering of its securities issued prior to the issuance of the Bonds except as described below. The County did not comply with the covenant to provide continuing disclosure of information for its outstanding securities as required by the orders authorizing such securities and by the Rule for the fiscal year ending 2003. The noncompliance of the County was a result of the failure of the County to timely provide the Comprehensive Annual Financial Report to each nationally recognized municipal securities information repository ("NIRMSIWand to any state information repository ("SID") within six months after the end of its 2003 fiscal year. The failure of the County to provide the Comprehensive Annual Financial Report was remedied by a submission of such information to the NRMSIRs and SID on April 29, 2004. The failure to provide such information was a result of the implementation of Governmental Accounting Standards Board Statement 34 "Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments" ("GASB 34") and was not intentional, an act of fraud, or improper accounting procedures of the County. The County has fully adopted GASB 34 to assure future compliance with the Rule. Audited Financial Report of the County The County requires that an annual audit be performed by an independent public accounting firm in accordance with generally accepted auditing standards. The most recent audit, and additional financial information are available for public inspection, or copies may be obtained by written request, to the extent permitted by law, addressed to the County Auditor. Forward-Looking Statements The statements contained in this Official Statement, and in any other information provided by the County that are not purely historical, are forward-looking statements, including statements regarding the County's expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking statements included in this Official Statement are based on information available to the County on the date hereof, and the County assumes no obligation to update any such forward-looking statements. It is important to note that the County's actual results could differ materially from those 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 County. Any of such assumptions 27 l t~s C LI P..r~ ~ ~ ri lFC 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. MISCELLANEOUS All information contained in this Official Statement is subject, in all respects, to the complete body of information contained in the original sources thereof. In particular, no opinion or representation is rendered as to whether any forecast will approximate actual results, and all opinions, estimates, and assumptions, whether or not expressly identified as such, should not be considered statements of fact. Statements trade herein regarding the Bonds are qualified in their entirety by reference to the forms thereof and the information with respect thereto included in the Order, copies of which are available upon request upon the payment of reasonable reproduction and postage costs. The County's annual audited financial statements are available from the County Auditor, upon the payment of reasonable reproduction and postage costs. THIS OFFICIAL STATEMENT was approved, and the execution and delivery of this Official Statement authorized on behalf of the County by the Commissioners Court on the date set forth on the cover page of this Official Statement. CountyJudge BRAZOS COUNTY, TEXAS 28 APPENDIX A EXCERPTS FROM THE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2004 ?SpA E -7! BRAZOS COUNTY, TEXAS Comprehensive Annual Financial Report For The Year Ended September 30, 2004 Prepared by: Katie Conner, C. P. A. County Auditor BRAZOS COUNTY, TEXAS Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2004 TABLE OF CONTENTS Paee No. Table of Contents i-v INTRODUCTORY SECTION County Auditor's Letter of Transmittal 1-10 GFOA Certificate of Achievement 11 Principal Officials 12 Brazos County Organizational Chart 13 FINANCIAL SECTION Independent Auditors' Report 14-15 Management's Discussion and Analysis (Unaudited) 16-29 Basic Financial Statements: Government - wide Statement of Net Assets 30-31 Government - wide Statement of Activities 32-33 Balance Sheet - Governmental Funds 34-35 Reconciliation of Balance Sheet of Governmental Funds to the Statement of Net Assets 36 Statement of Revenues, Expenditures And Changes in Fund Balances - Governmental Funds 37-38 Reconciliation of the Statement of Revenues, Expenditures, and Changes In Fund Balances of Governmental Funds to the Statement of Activities.... 39 Statement of Net Assets - Proprietary Funds 40 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 41 Statement of Cash Flows - Proprietary Funds 42 Statement of Fiduciary Assets and liabilities - Agency Funds 43 Combining Statement of Changes in Assets and liabilities - Agency Funds...... 44-47 Notes to the Basic Financial Statements 48-76 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget (GAAP basis) and Actual - General Fund 77-89 Retirement System 90 Notes to Required Supplementary Information 91-92 4u€ ~SFt~ °13 BRAZOS COUNTY, TEXAS Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2004 TABLE OF CONTENTS FINANCIAL SECTION (Continued) a No. Supplementary Information Combining and Individual Fund Financial Statements And Schedules: Nonmajor Governmental Funds: Combining Balance Sheet - Nonmajor Governmental Funds -Summary 93 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds - Summary 94 Special Revenues: Combining Balance Sheet - Nonmajor Governmental Funds 95-98 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 99-102 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual: State Lateral Road 103 Unclaimed Property 104 Law Library 105 Appellate Judicial 106 Alternative Dispute Resolution 107 Law Enforcement Education 108 County Records Management and Preservation 109 County Clerk Records Management and Preservation 110 Time Payment Fee 111 Courthouse Security 112 District Clerk Records Management and Preservation 113 Justice of the Peace Technology 114 Special Forfeitures 115 District Attorney Hot Check Collection 116 Bail Bond Board Fees 117 Voter Registration 118 Vehicle Inventory Tax Interest 119 Sheriff Department Crime Fund 120 . District Attorney Crime Fund 121 Grants 122 Debt Service Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual 123 _75 BRAZOS COUNTY, TEXAS Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2004 TABLE OF CONTENTS FINANCIAL SECTION (Continued) Pan No. Capital Project Funds: Combining Balance Sheet 124125 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 126-127 Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual: Certificates of Obligation 2002 128 County Court at Law Courtroom 129 Judicial Software 130 Capital Improvement 131 Road and Bridge Infrastructure - Certificates of Obligation 2002 132 Exposition Center 133 Certificates of Obligation 2003 134 Certificates of Obligation 2004 135 Proprietary Fund Type: Internal Service Fund: Health and Life Insurance - Statement of Net Assets 136 Health and Life Insurance - Schedule of Revenues, Expenses and Changes in Fund Net Assets Budget (GAAP Basis) and Actual.......... 137 Health and Life Insurance - Statement of Cash Flows 138 Fiduciary Fund Types: Combining Balance Sheet 139-140 Capital Assets Used in Operations of Governmental Funds: By Source Schedule of Changes by Function and Activity Schedule by Function and Activity iii 141 142-143 144-145 ~5 75 :!Ja l: BRAZOS COUNTY, TEXAS Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2004 TABLE OF CONTENTS STATISTICAL SECTION Comparative Government-wide Revenues Comparative Government-wide Expenses by Function Comparative Condensed Summary of Revenues All Governmental Fund Types - Last Ten Fiscal Years.. Comparative Summary of Expenditures - All Governmental Fund Types - Last Ten Fiscal Years Property Tax Levies and Collections And Schedule of Property Taxes Receivable - Last Ten Years Assessed and Estimated Actual Value of Taxable Property - Last Ten Years Property Tax Rates - All Direct and Overlapping Governments - Last Ten Years Ten Largest Taxpayers Computation of Legal Debt Margin Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures - Last Ten Years Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita - Last Ten Years Computation of Direct and Overlapping Debt Miscellaneous Statistical Data Property Value and Building Permits - Last Ten Years Annual Compensation and Surety Bonds for Principal Officials...... General Fund Salary and Wages by function - Last Five Years General Fund Annual Salary and Benefits by Function Table No. P e No. iv 1 146 2 147 3 148 4 149-150 5 151-152 6 153 7 154 8 155 9 156 10 157 11 158-159 12 160 13 161-163 14 164 15 165 16 166 17 167 BRAZOS COUNTY, TEXAS Comprehensive Annual FYnanclal Report For the FYscal Year Ended September 30, 2004 TABLE OF CONTENTS Paee No INDEPENDENT AUDITOR'S REPORTS ON COMPLIANCE AND INTERNAL CONTROL OVER FINANCIAL REPORTING Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 168-169 Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 170-171 Schedule of Expenditures of Federal And State Awards for the Year Ended September 30, 2004 Notes to the Schedule of Expenditures of Federal and 172-174 State Awards for the Year Ended September 30, 2004 175 Schedule of Findings and Questioned Costs for the Year Ended September 30, 2004 Schedule of Findings and Questioned Costs for the 176-177 Year Ended September 30, 2003 - Status of Prior Year Findings and Questioned Costs 178-180 yy ~7 Certificate of Achievement for Excellence in Financial Reporting Presented to Brazos County, Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 7003 A CatlBate ofAchlevmeot f wEzccucocc in Pmancial Reporting is pruakd by& OovemmentRoam O ion Association oflhe United Swu end Clnada to gwmnavant units and public eaployee retimmeot systems whose mmpnbmetve nod gaeneiel upuu (CAPRa) achieve the highut standarb to government accounting and financial reporting. president ava Executive Director 11 INGRAM, WALLIS & COMPANY •mgrRbX6LCGana,9TIW CmnfW Public Accounumlu 7100E VIII. Mnk, sdx Ira BRYAN. TEXAS 77607 7.mm D.Ir m. 111 Th. A. W.uk J.,D.Inrnm.IV Rkh.M L. W.hb ydah W. ChIM, Kmn.,h W. Chmmh.l Immae. A. Slllm.n hkknk R. Bhph.m M.II M. SsM D.Id a Bmmma Lamm IamieJ. 2skra INDEPENDENT AUDITOR'c EQRT Honorable Randy Sims, County Judge and the Honorable County Commissioners Brazos County, Texas lnLn (979)776.7600 armna (979) 7717759 Iw9®i ..AIL N.W. npam•wd1We have audited the accompanying financial statements of the governmen tal act ivities, the business-type activities, each major fund, and the aggregate remaining fund information of Brazos County , Texas (the "Cowty'7, as of and for the year ended September 30, 2004, which collectively comprise the County's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County's management. Out responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United Sautes. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the County as of September 30, 2004, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 14 In accordance with Government Auditing Standards, we have also issued our reports dated December 17, 2004, on our consideration of the County's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management's discussion and analysis, retirement system information and budgetary comparison information on pages 16 through 29 and 77 through 89, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Oar audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County's basic financial statements. The accompanying schedule of expenditures of federal and state awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A- 133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County's basic financial statenenta. The introductory section, combining and individual ronmajor fund financial statements, schedule of capital assets used in the operation of governmental funds and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements have been subjected to the auditing procedures applied by us in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a wholes The introductory section, schedules of capital assets used in the operation of governmental funds and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. Bryan, Texas December 17, 2004 GGG 15 75 6:. ~i ,r.. B lJ BRAZOS COUNTY,TEXAS STATEMENT OF NET ASSETS September 30, 2004 ASSETS Cash and Cash Equivalents Prepaid Expenses Receivables, net of allowance for uncollectible amounts Taxes Accounts and Other Inventories Due from Other Funds Permanently Restricted Assets: Cash and Cash Equivalents Receivables: Taxes Accounts and Other Capital Assets (net of accumulated depreciation): Land Buildings improvements Other than Buildings Machinery and Equipment Infrastructure Construction in Progress TOTAL ASSETS Governmental Business-Type Activities Activities TOTAL $ 40,895,640 $ 142,607 $ 41,038,247 261,308 261,308 1,332,386 1,332,386 6,062,187 6,751 6,068,938 323,142 10,772 333,914 80,435 80,435 1,606,787 - 1,606,787 7,740 7,740 9,215 9,215 6,873,819 - 6,873,819 13,216,184 - 13,216,184 3,317,270 - 3,317,270 8,690,441 - 8,690,441 35,299,117 - 35,299,117 3,669,767 3,669,767 $ 121,645,438 $ 160,130 $ 121,805,568 The accompanying notes to the financial statements are an integral part of this statement. 30 ;,a --75 p. r 91 BRAZOS COUNTY, TEXAS STATEMENT OF NET ASSETS - Continued September 30, 2004 LIABILITIES Accounts Payable and Accrued Liabilities Accrued Salaries and Wages Due to Other Governmental Units Unclaimed Funds Liability for Compensated Absences Accrued Interest Payable Noncurrent liabilities: Due within one year Due in more than one year Deferred Tax Revenue TOTAL LIABILITIES Governmental Business-Type Activities Activities TOTAL $ 2,645,097 $ 7,817 396,874 5,378 2,964 _ 173,779 506,834 153,355 2,390,000 38,271,975 _ ,l 18572 44,659,450 13,195 $ 2,652,914 402,252 2,964 173,779 506,834 153,355 2,390,000 38,271,975 118,572 44,672,645 NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for: Debt Service Booneville Cemetary Special Purpose Programs Unrestricted TOTAL NET ASSETS 30,404,623 _ 1,623,742 _ 6,262 1,698,279 _ 43,253,082 146,935 30,404,623 1,623,742 6,262 1,698,279 43,400,017 576,985,988 S 146,935 $ 77,132,923 31 r 'lid ~ ~ cry a H y y H y y H H z H y y H O ~ js7~ ~ N N N I V~ p H H W 06.~+~ N ~ +tV 1~1 00 ~ ~~'O 'RZ yy CDC jV ~ N vi o y C• ~ $O .9 !aeN go r m$ ~ y H HI M eJ N n Herr 1iN N N O N P P N N N e~t~mNYPbY NWPm1~N1~r N Y P m r ~I~I~I~P ° N N r N N W P r m M ~'O rO Yf~ N N m r rorN n O `O OO rMN~NfWM bhWN ° r NONrN y NfN P V a ;Ba bn r~1r .p e.rNmP PN y•n N mPN0 mr ° m NONb OP bum r Pb yOy YNO O~rW m e ° r r N F fr r =Y < O V N N N O • • r b b' ro m m P Y ~"r° ' ° M r r r r r r• m .pp r V pm L V ra e Q e•i V N Y [V ~ •ri N wr q O N N y Y b p L p O O P Y p Y~ r N N r q 'D Y ~ P b V O tl ~ N VI ~ C! r7 O N M N O O r r q° r r r r r r r r r r r••' N N • r N N N N V~ P ° P P q r Y V Y N N N N S m r• W r r r r r ~ ' M ~ r r•• r r r O r • pN P O N O " rn rrr m m q „ ~ U ~ W w m h ~ N n r N y yr w ? 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FO S <y O •a a u.~o .7 v 4 N t-H.9 O°y Wr e ` e` L L r ° ~uq° r . z .i F UNCod O> S rc oE : _ 1 e o e O e o$ NKO•W O.W WO W u CiOp p '~W O7 4 n F y a o uue ia~ . . p e B 4 y p e, , t aa F µW .7 F 0 F z t~ef C1 vi-75 PAGE ~ BRAZOS COUNTY, TEXAS RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS TO STATEMENT OF NET ASSETS September 30, 2004 Amounts reported for governmental activities in the statement of net assets are different because: Total fund balances-governmental funds Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. Certain receivables are not available and, therefore, are deferred in governmental funds. Certain receivables will be collected this year, but are not available soon enough to pay for the current period's expenditures and, therefore, are deferred in the funds. Internal service funds are used by the County's management for self insurance. The assets and liabilities of the funds are included with governmental activities in the Statement of Net Assets but are not included at the fund level. Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds: Bonds payable (40,650,000) Deferred charge for issuance cost (m be amortized as interest expense) 130,972 Issuance premium (to be amortized as interest expense) (11,975) Accrued interest payable (153,355) Compensated absences (506,834) Total net assets--governmental activities The accompanying notes to the financial statements we an integral part of this statement. 36 42,006,521 71,066,598 3,530,530 1,260,910 312,621 (41,191,192) $76,985,9888 10L 75 P,lrr 95 E eV m m U m a~9 e > i• 6 tK~ 6- N N VI » N 51 M i • • q r q q4~ n r Its a8 $ 6 ~ xE m » w w a »NO- 7 ~ av~~rn n r - N I1 C<n r $p~pa 5 sao eM RV 4R Men- n N g p <{ymapap{~~ ~r 63~T ~vgF GG Rll~~a <o ~d A~daaax~ O rIN N^~ , N mm m q N i M1 "a c 0 N N r a w x N N VI w m n N a n 0 W m m m Z5 PA~F 06 BRAZOS COUNTY, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30, 2004 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances--total governmental funds $ 12,823,226 Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount that expenditures for capital outlay exceeded depreciation expense. 1,934,126 Revenues and contributed assets in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 1,448,431 Certain long-term liabilities are accrued at the government-wide level but not at the fund level. This is the current year change in those liabilities, reported as expense in the statement of activities. (40,023) Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount by which proceeds exceeded repayments. (12,910,366) Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet maintenance, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. 57,752 Change in net assets of governmental activities $ The accompanying notes to the financial statements are an integral part of this statement. 39 BRAZOS COUNTY, TEXAS STATEMENT OF NET ASSETS PROPRwrARY FUNDS September 30, 2004 Business - Type Activities - Enterprise Governmental County Funds Jan Activities Internal Service ASSETS Atiomey Commissary Totals Fund Current Assets Cash and Cash Equivalents $ 30,723 $ 111,884 $ 142,607 S 1 135 696 Accounts Receivable 6,637 114 6,751 , , 20 661 Inventories - 10,772 10 772 , Due From Other Ends , Total Current Assets 37,360 122,770 160,130 370 1 156 727 Noncurrent Assets , , Property, Plant and Equipment 54,611 - 54 611 Less: Accumulated Depreciation (54,611) - , (54,611) Total Noncurrent Assets TOTAL ASSETS 37,360 122,770 160,130 1,156,727 LIABILITIES Current Liabilities Accounts Payable 4,273 3,544 7,817 702 811 Accrued Salary and Compensated Leave 1,473 3,905 5 378 , Deferred Revenues , - - 141,295 TOTAL LIABILITIES 5,746 7,449 13,195 ggq,106 NET ASSETS Unrestricted 31,614 115,321 146,935 312,621 TOTAL NET ASSETS ® ® -37 1-46,935 .621 The accompanying notes to tire financial statements ace an integral part of this statement. 40 "4 75 rl,,f'F 9 8 BRAZOS COUNTY, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For The Year Ended September 30, 2004 OPERATING REVENUES Charges for Service Commissary Sales Employee Dependents Self Pays Excess Risk Benefits Participant Payments Brazos County Retirees Other Revenue TOTAL OPERATING REVENUES OPERATING EXPENSES Personnel Services Departmental Support Minor Acquisitions Cost of Goods Sold Life Insurance Stop Loss Premiums Benefit Claims Administrative Fees Professional Services Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NONOPERATING REVENUES Proceeds from Sale of Fixed Assets Interest TOTAL NONOPERATING REVENUES INCOME (LOSS) BEFORE OPERATING TRANSFERS Transfer Aram General Fund CHANGE IN NET ASSETS TOTAL NET ASSETS -OCTOBER I TOTAL NET ASSETS-SEPTEMBER 30 Business - Type Activities - Enterprise Governmental Funds Activities County jail brternd Service Attorney Commissary Totals Fund $ 107,360 $ - $ 107,360 $ - 242,785 242,785 _ " - 842,030 247,564 " - 777,984 ' 221,489 3,774,487 - - 59,112 691 691 107,360 243,476 3K836 5,922,666 92,126 65,719 157,845 _ 2,385 9,074 11,459 _ 755 - 755 - 132,371 132,371 _ - - 36,268 ' 740,825 5,039,073 259,096 1,612 1,612 96,878 207,164 304,042 6 075 262 , , 10,482 36,312 46,794 (152,596) 1,600 - 933 1,600 933 1,600 _ 933 10,348 2533 10,348 12,082 37,245 49,327 (142,248) 200 000 , 12,082 37,245 49,327 57,752 19,532 78,076 97,608 254,869 $ 31,614 . $ 115,321 $ 146,935 ~mun The accompanying notes to the financial statements are an integral pan of this statement. 41 "R 7~ °;r 9 BRAZOS COUNT, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended September 30, 2104 CASH FLOWS FROM OPERATING ACTT VITHS Receipts from customers and uses Receipts from interfiuid services provided Reompts f rorumnvursoce Payments to connectors and vendors Claims paid Payments to employees for services NET CASH PROVIDED BY OPERATING ACrivrnEs CASH FLOWS FROM NONCAPITAL Transfer Frain Genial Food NET CASH PROVIDED BY NONCAPITALAND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVIIIES Proceeds from Sale of Fixed Assets Invesmuent hmome NET CASH PROVIDED BY INVESTING ACTINTHES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, OCTOBER 1 CASH AND CASH EQUIVALENTS, SEPTEMBER 30 Reconciliation of operating imome Ooss) to net cash provided (used) by opeating activities: Operating iucone (loss) Adjusanwts to reconcile operating inoomc (loss) to net cash povided (used) by operating activities: Deprecia m expeme Decrease (Increase) in accounts receivable Decrease Onrrease) in inventory Decrease (Ineressi) in due from odur funds Decrease (Inaease) in accounts payable Decrease Pxrem) in accrued salary and compensated leave Increase in deferred revenues Total adju sur ens Na cash provided by operating activities Business-Type Acflvltlea- > Funds Govw neVal Activities county 7a0 leaerml Service Attorney Casatl®sy Tattle Fluid $ 100,723 $ 243,476 $ 344,199 $ 1,361,559 5,654 786 6,440 3,984,352 1,331,608 (2,940) (156,641) (159,581) (1,015,820) (5,228,611) (90,324) (66,876) (157,200) - 13,113 20,745 33,858 433,088 200M 200,000 1,600 - 1,600 - 904 904 8,978 1,600 904 2,504 8,978 14,713 21,649 36,362 642,066 16,010 90,235 106,245 493,630 130,723 1111,884 $ 142,607 $ 1,135,696 $ 10,482 $ 36,312 $ 46,794 $ (152 596) , 1,612 - 1,612 - (6,637) 786 (5,851) 535,249 - (5,233) (5,233) - 5,654 - 5,654 200,000 4,273 (9,963) (5,690) (163539) (2,271) (1,157) (3,428) - 13,974 2,631 (15,567) (12,936) 585,684 $ 13,113 $ 20,745 $ 33,858 $ 433,088 The amomparrying notes to the firmcial etatemeras are an integral part of this statement. 42 VOL 7S PAGE 90 BRAZOS COUNTY, TEXAS STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUNDS September 30, 2004 ASSETS Cash and Cash Equivalents Investments Prepaid Assets Accounts Receivable Due From Other Funds TOTAL ASSETS LIABILITIES Accounts Payable Due to Other Funds Funds Held in Trust TOTAL LIABILITIES 9,076,040 1,374,609 67,488 1,180 560 10,519,877 2,912,168 78,521 7,529,188 $ 10 519,877 The accompanying notes to the financial statements are an integral part of this statement. 43 75 of l I, ;~~s BRAZOSCOUNTY,TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 309 2004 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of Brazos County, Texas ("County") have been developed to be in conformity with accounting principles generally accepted in the United States of America ("GAAF') for local government units. The Governmental Accounting Standards Board ("GASB") is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The most significant accounting and reporting policies of the County are described in the following notes to the financial statements. A. Reporting Entity The Brazos County Government (the "County") was created in 1841. The County is a public corporation and a political subdivision of the State of Texas. It performs governmental functions as required or authorized by the Texas Constitution and the Laws of the State. A Commissioners' Court composed of an elected County Judge and four elected Commissioners governs the County. The combined financial statements include all departments, funds or accounts for the County, the primary government. The concept underlying the definition of the reporting entity is that elected officials are accountable to their constituents for their actions. The financial statements should allow users to distinguish between the primary government (the County) and its component units. Government Accounting Standards Board Statement 14 defines the reporting entity as the primary government and its component units. Brazos County is the primary governmental unit. The financial statements include all funds, agencies, boards, commissions, and authorities for which the elected officials of the County are financially accountable. The financial statements include those entities for which the nature and significance of the relationship between the entity and the County are such that to exclude the entity from the financial reporting entity would render the financial statements misleading or incomplete. The relationship of the following corporations and the County meet the criteria of related organizations. Brazos County Housing Finance Corporation The Brazos County Housing Finance Corporation ("BCHFC") is a Texas public, non-profit corporation created in accordance with the Texas Housing Finance Corporation Act. This Act authorizes the BCHFC to finance residential housing by issuing tax-exempt revenue bonds to acquire mortgage loans made to low or moderate income persons, and to pledge such mortgage loans as security for the payment of the principal and interest of such revenue bonds. The tax- exempt bonds issued by the BCHFC do not constitute a debt or a pledge of faith or credit of the BCHFC or Brazos County, but are payable by the user pursuant to terms defined in the loan agreement underlying each issue. Interest received on the bonds is generally exempt from federal income tax under Section 103 of the Internal Revenue Code. The BCHFC is governed by a three member Board of Directors which is comprised of three members of the Brazos County Commissioners' Court. dR vot 75 Rls.E 01a NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Reporting Entity (Continued) Brazos County Health Facilities Development Cornoration The Brazos County Health Facilities Development Corporation ("BCHFDC") is a Texas public, non- profit corporation created in accordance with the Texas Health Facilities Development Act of 1981. The BCHFDC purpose is to acquire, construct, provide, improve, finance and refinance health facilities to assist in the maintenance of the public health. The tax-exempt bonds issued by the BCHFDC do not constitute a debt or a pledge of faith or credit of the BCHFDC or the County, but are payable by the user pursuant to terms defined in the loan agreement underlying each issue. Interest received on the bonds is generally exempt from federal income tax under Section 103 of the Internal Revenue Code. The BCHFDC is governed by a five member Board of Directors which is comprised of the members of the Brazos County Commissioners' Court. Brazos County Industrial Development Corporation The Brazos County Industrial Development Corporation ("BCIDC') is a Texas public, non-profit corporation created in accordance with the Texas Development Corporation Act of 1979. The BCIDC purpose is to issue bonds on behalf of the Corporation, to promote and develop industrial and manufacturing enterprises, to promote and encourage employment and the public welfare, and to finance projects as defined by the Act. The tax-exempt bonds issued by the BCIDC do not constitute a debt or a pledge of faith or credit of the BCIDC or the County, but are payable by the user pursuant to terms defined in the loan agreement underlying each issue. Interest received on the bonds is generally exempt from federal income tax under Section 103 of the Internal Revenue Code. The BCIDC is governed by a three member Board of Directors which is comprised of three members of the Brazos County Commissioners' Court. B. Government-wide Financial Statements Government-wide financial statements consist of the Statement of Net Assets and the Statement of Activities. These statements report information on all of the non-fiduciary activities of the primary government and its component units. Governmental activities are supported by taxes and intergovernmental revenues and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The government-wide financial statements are prepared using the economic resources measurement focus and the accrual basis of accounting. Under this measurement focus, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of the timing of cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The effect of inter-fund activity has been eliminated for the government-wide financial statements. 49 75 L73 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Fund Level Financial Statements All governmental funds and agency funds use the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined, and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The County considers revenues as available if they are collected within 60 days after year-end. Expenditures are recorded when the related fund liability is incurred. Debt service expenditures as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. Property tax revenues, the County's primary revenue source, is susceptible to accrual and is considered available to the extent of delinquent taxes collected within sixty (60) days of the fiscal year end. Grant and entitlement revenues are also susceptible to accrual. Encumbrances are used during the year and any un-liquidated items are reported at year-end as a reservation of fund balance. The fund level financial statements are accounted for on a spending "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. For proprietary funds, all revenues and expenses are classified as operating revenues and expenses except for taxes, investment income and interest expense, which are classified as non-operating revenues and expenses. All proprietary funds, including the enterprise fund and internal service funds, are accounted for using the accrual basis of accounting. Revenues are recognized when earned, and expenses when they are incurred. Claims incurred but not reported are included in payables and expenses. These funds are accounted for using a cost of service or "capital maintenance" measurement focus. This means that all assets and liabilities (whether current or non-current) associated with their activity are included in the funds' balance sheets. The agency funds are used to account for assets held solely in a custodial capacity and are accounted for using the accrual basis of accounting. As a result, assets in agency funds are always matched by liabilities to the owners of the assets. The County's accounts are organized on the basis of funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self- balancing accounts, which are comprised of each fund's assets, liabilities, fund equity, revenues and expenditures or expenses. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. The County reports the following funds: 50 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Fund Level Financial Statements (Continued) Governmental Funds General Fund - The General Fund is the principal operating fund of the County. It is used to account for all financial resources except those required to be accounted for in another fund. The fund accumulates reserves for future capital improvements and unforeseen catastrophic events. Special Revenue Funds - Special Revenue Funds account for the proceeds of specific revenue sources (other than expendable trusts and capital projects), which are legally restricted to expenditures for a specified purpose. Debt Service Fund - The Debt Service Fund is used to account for the accumulation of resources for the payment of general long-tern debt principal, interest and related costs. Capital Project Funds - Capital Project Funds account for financial resources to be used for the acquisition or construction of major capital assets and infrastructure. Principal sources of funds for expenditure are general obligation bonds, proceeds from certificates of obligation, and interest income. Proprietary Funds Internal Service Fund - The Internal Service Fund is used to account for the provision of health, dental and life insurance to the departments of the County as well as to outside entities that have contracted with the County for this service. The fund operates on a cost reimbursement basis. Enterorise Funds - The Enterprise Funds are used to account for the operations of the County Attorney and Jail Commissary that are financed and operated in a manner similar to private business or where the County has decided that the determination of revenues earned, costs incurred and/or net income is necessary for management accountability. Agency Funds - The Agency Funds are used to account for assets held by the County as agent for individuals, private organizations, and other governmental funds. D. Proprietary Fund Accounting The County has implemented Statement No. 20 of the Governmental Accounting Standards Board (GASB), "Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities that Use Proprietary Fund Accounting." Pursuant to this statement, the County has elected to follow alternative 1 as set out in GASB 20 for proprietary fund accounting. The County follows: (1) All GASB pronouncements and (2) Financial Accounting Standards Board Statements and Interpretations, APB Opinions, and Accounting Research Bulletins issued on or before November 30, 1989 except those that conflict with GASB pronouncements. 51 ~5 r.Ar 95 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) E. Cash, Cash Eauivalents and Investments The County defines all cash, money market accounts, and certificates of deposit that have an original maturity date of ninety days or less as cash or cash equivalents. Cash and cash equivalents related to restricted assets ate also included. Cash and cash equivalents are short term, highly liquid investments, which may be converwd to cash (see Note 3). The County maintains a cash and investment pool that is available for use by all funds. Equity in cash and cash equivalents and interest income from the cash pool is allocated to the participating funds on a monthly basis. The amount of the allocation is deWrmined by calculating a ratio of each fund's equity in the pool to the total pool. All County funds must be on deposit with the County depository unless the Commissioners' Court directs the County T* mm to invest funds as otherwise provided by law. State statutes authorize the County to invest in obligations of the U.S. Treasury, commercial paper, corporate bonds, and repurchase agreements. Investments are stated at fair value or amortized cost (see Note 3). F. Short Term - Interi3md Receivables and Pavables There are essentially four forms of interfund transactions: 1. Loans - Transfers of monies between funds that are accounted for as balance sheet transactions and reflect a due from/due to. 2. Reimbursements - Transfers which comprise reimbursement of expenditures initially made by one fund, but properly attributable to another fund. Interfund transfers represent reimbursement for an expenditure if the reimbursement is for a specific or directly allocable cost applicable to the reimbursing fund. 3. Quasi-external - Transactions that would be accounted for as revenues or expenditures if they involved an entity external to the government. The receiving fund records the monies as another financing source (revenue) and the disbursing fund records the monies as another financing use (expenditure). 4. Transfers - There are two types of transfers. Residual equity transfers are nonrecurring transfers between funds, which represent a transfer (contribution) of equity between the represented funds. These transactions are recorded directly to fund balance. Operating transfers reflect all transfers that do not fall into one of the previous categories. They are generally ongoing operating subsidies between funds, such as matching funds required by a grant agreement. G. Property Taxes Property taxes attach as an enforceable lien on property as of January 1 of a given year. Taxes levied on October 1 are payable by January 31 of the following year, and by statute become delinquent on February 1 at which time they begin accruing penalty and interest. The enforceable legal claim date for property taxes is the assessment date and therefore the County did not record a receivable for taxes assessed after September 30, 2004. Accordingly, there are no current taxes receivable reported. On July 1, unpaid taxes are subject to additional penalties and collection expenses. 52 NOTE 1- SUNIMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Property Taxes (Continued) Taxes have been reported in the government-wide financial statements net of the allowance for uncollectible taxes. At the governmental fund level, taxes are recognized as revenue when they become available and the amount not yet available (not collectible within sixty days) has been reported as deferred revenue. For the year ended September 30, 2004, the tax rate to finance general governmental services was $0.3839 per $100.00 valuation. The tax rate for the payment of principal and interest on long-term debt was $0.0511 per $100.00 valuation. Under provisions adopted by the State, the maximum rate that can be set to service governmental services is $0.80 per $100 of assessed value. The Brazos County Appraisal District is responsible for the recording and appraisal of property for all taxing units in the County. The Appraisal District is required to assess property at 100% of its appraised value. Real property is subject to reappraisal on a four-year cycle. The County's Tax Assessor-Collector acts as agent in the billing and collecting of taxes for the Brazos County Water Control Improvement District - Big Creek, the City of Bryan, the City of College Station, the Bryan Independent School District, the College Station Independent School District, Brazos County Education District, and Brazos County Rural Fire Prevention Districts 1, 2, 3, and 4. These transactions are recorded in an agency account. H. Inventories and Preoald Items Payments made to vendors for services that will benefit periods beyond September 30, 2004, are recorded as prepaid items, and amortized as expenditures as consumed. The County maintains inventory at various levels. All inventory is valued at cost and is accounted for under the consumption method. Inventories of paper, copier supplies and road maintenance materials are maintained for all departments within the General Fund. An inventory of consumable food and personal items is maintained within the Jail Commissary Enterprise Fund. 1. Capital Assets Capital assets include land, land improvements, right-of-way land, infrastructure, buildings, building improvements, site improvements, leasehold improvements, vehicles, machinery, furniture, equipment, other systems, works of art and intangible assets that are used in operations and benefit more than a single fiscal period. Infrastructure assets are long-lived assets that normally are stationary in nature and typically can be preserved for a significantly greater number of years than most capital assets, such as roads, bridges, and sewer systems. The County defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of three years. Building improvements with an estimated cost to exceed $25,000 are capitalized while infrastructure assets with an estimated cost to exceed $50,000 are capitalized. 53 Y y7-'12_- 01 / NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICE SS (Continued) 1. Capital Assets (Continued) When capital assets are purchased, they are capitalized and depreciated in the government-wide financial statements and the proprietary fund statements. Capital assets are recorded as expenditures of the current period in the governmental fund financial statements. Capital assets are valued at cost where historical records are available and at an estimated historical cost where no records exist. Donated capital assets are valued at their estimated fair market value on the date received. Improvements to capital assets that materially extend the life of the asset or add to the value are capitalized. Other repairs and normal maintenance are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during construction is not capitalized in the governmental activities on the government-wide financial statements. Capital assets except for infrastructure, are depreciated over the useful lives of the assets or classes of assets on a straight-line basis as follows; Buildings and improvements 20 - 40 years Machinery and equipment 3 -10 years The County uses the modified approach to report its infrastructure assets in the government-wide statement of net assets. Infrastructure assets are listed at historical costs but they are not depreciated. Rather, under the modified approach allowed by GASB Statement No. 34, the County reports annual expenses for maintaining roads and bridges and the estimated costs for preserving them at 80% condition level out of a 100% scale. J. Compensated Absences All full-time employees are granted vacation and sick leave benefits based on length of service. Non-exempt employees may earn compensatory time off for overtime worked. Employees are entitled to receive accumulated vacation pay in a lump sum payment if their employment is terminated. The related accrued vacation payable and accumulated compensatory time has been accrued as an expense and a liability at year-end in the govemment-wide statements as a liability for compensated absences. Accumulated sick leave benefits are not recorded, being lost upon termination of employment. Non-exempt, non-law enforcement employees earn compensatory time at one and one-half times the excess of 40 hours per week worked. These employees can accrue a maximum of 240 hours. Non-exempt, law enforcement employees earn compensatory time at one and one-half times the excess of 171 hours in a 28-day work cycle. Non-exempt, law enforcement employees can accrue a maximum of 480 hours. At termination, all compensatory time is paid at the wage rate in place at termination. The maximum amount of vacation time an employee can accrue is 240 hours. At termination, an employee is paid for all vacation time earned up to the date of separation at the current wage rate. 54 VOL 75 PATE 618 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) F;. Revenues and Expenses Program revenues for governmental activities include those generated from general government, justice system, law enforcement, juvenile services, public transportation, public health and human services. L. Lone-Term Oblieations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities under governmental activities. On new bond issues, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as prepaid expenses and amortized over the term of the related debt. Interest expenditures are reported in activities of the general government. M. Fund Balance Deshmated for Health Endowment Fund The County elected to create the Brazos County Community Healthcare Endowment Fund with the funds received from the statewide "Tobacco Settlement." Commissioners' Court designated the corpus of the funds received ($2,000,000) to be invested and the interest earned to be used to provide funding for various County health programs. Commissioners' Court has appropriated $120,000 for anticipated program needs during the 20042005 fiscal year and has designated $225,512 available for future programs. N. Reclassifications As par[ of the adoption of GASB Statement 34, the District Attorney Crime Fund was previously reported as special revenue to include litigation of seizures incurred in law enforcement activities. A separate special revenue fund (District Attorney Hot Check Collection Fund) was established during the current year to account for fees collected by the District Attorney for the administration, processing and prosecution of returned checks. The revenue and expenditure accounts as well as any fund balances have been categorized as agency funds within the District Attorney Hot Check Collection Fund. NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Policv and Procedures Annual budgets are legally adopted for general, special revenue, debt service, and capital project funds. Budgets are adopted on a basis consistent with GAAP (modified accrual basis). The County employs an encumbrance accounting system as a method of accomplishing budgetary control. At year-end, open encumbrances are closed. The department is required to re-appropriate the funds within the following year's budget. The County Judge is recognized by State statutes as the budget officer for the County and responsible for the preparation of the proposed budget. The proposed expenditures may not exceed the revenue estimates prepared by the County Auditor. The County in the preparation 55 NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budgetary Policy and Ptncedures (Continued) of the budget adheres to the following procedures: - Departmental annual budget requests are submitted by the department head to the budget officer during the third quarter of the current fiscal year, for the fiscal year beginning October 1. - The County Auditor prepares an estimate of available resources for the coming fiscal year and presents the estimates to the budget officer by July 15 each year. - Informal departmental hearings are held with the budget officer. - The budget officer prepares the proposed annual operating budget to be presented to the Commissioners' Court for consideration. The budget represents the financial plan for the new fiscal year. - Formal public hearings are held on the proposed budget. - The adopted budget must be balanced; i.e., available resources must be sufficient to support annual appropriations. The adopted budget must be approved by a majority of the Commissioners' Court on or before November 1 each year. - The budget is adopted using classifications within each department. The operating department is the legal level of budgetary control. - The budget may not be increased through the use of supplemental appropriations each year, unless the County Auditor certifies to the Commissioners' Court that supplemental receipts have been realized, and are available to support disbursements, which were not included in the budget for the fiscal year. - Transfer of appropriations between departments requires the expressed permission of Commissioners' Court, and all appropriations lapse at year-end. Appropriations for total budget cannot exceed total resources that will be available for the year as forecast by the County Auditor. This is the legal level of control for the County budget. Expenditures may not exceed budgeted appropriations at the fund level except for General Fund, which is appropriated at the classification level. Administrative control is maintained through the establishment of more detailed line-item budgets. Amendments increasing budget appropriations are restricted to those for "emergency expenditures, in case of grave public necessity, to meet unusual and unforeseen conditions that could not, by reasonably diligent thought and attention, have been included in the original budget." The Commissioners' Court must approve the original budget appropriations and subsequent amendments and adjustments. The County Auditor is required to monitor the expenditures of all the funds in comparison to that which has been appropriated. The following schedule of 56 %10LIS PAGE !bD NOTE 2-STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budeetarv Policy and Ihrocedut es (Continued) changes in the original budget appropriations includes those funds for which the Commissioners' Court has legally adopted a budget, as well as funds with managerial budgets. Original Budgeted Expenditures and Other Supplemental Original As Financing Uses Appropriations Amended General Fund $ 43,067,550 $ 970,675 $ 44,038,225 Special Revenue 2,936,853 652,860 3,589,713 Debt Service 19,438,641 (9,982,000) 9,456,641 Capital Projects 29,370,350 65,052 29,435,402 Totals $ 94,813,394 $ (8,293,413) $ 86,519,981 B. Excess of Expenditures Over Appropriations During the year ended September 30, 2004, the County had no excess of expenditures over appropriations. NOTE 3 - CASH, CASH EQUIVALENTS, AND INVESTMENTS A. Cash and Cash Equivalents Deposits with financial institutions are classified into three categories of credit risk based upon the following: Description 1 Deposits insured by the FDIC or collateralized with securities held by the County or the County's agent in the County's name. 2 Deposits collateralized by securities held by the pledging financial institution's agent in the County's name. 3 Deposits uncollateralized which include deposits collateralized by securities held by the pledging financial institution or by its trust department or agent not in the County's name. 57 VOL5PAGE /D/ NOTE 3 - CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) A. Cash and Cash Equivalents (Continued) The County's depository agreement with First American Bank and the agreements with various other banks regarding funds under custody of the District Clerk require cwllateralization for all funds on deposit. The value of collateral must be equal to or greater than the average daily balance of funds on deposit or 105% of the prior month's average deposit. State statutes require that the collateral be government securities that are acceptable to the Commissioners' Court. At September 30, 2004, the carrying amounts for the County's cash and cash equivalents was $51,721,075. Included in this amount is $10,006,975 invested in Texpool and as a pooled investment is not identifiable and therefore not classified, in accordance with GASB Statement 3. The remaining $41,714,100 is classified as a Category I credit risk. All deposits and time deposits (less than 90 days) are stated at cost and reflected on the balance sheet as "Cash and Cash Equivalents". Certificates of Deposit and Money Market accounts held by the Agency Funds are reflected on the balance sheet as "Investments" but are classified as Category 1 deposits for risk assessment purposes. The deposits include the cash and cash equivalents of all funds. B. Invesfi»ntts The County's investment policy is based on Section 116.112 of the Local Government Code and Government Code Chapter 2256, Subchapters A and B. This document sets forth (1) investment authority, scope of policy and investment objectives; (2) investment types and investment strategies; (3) investment responsibility, control, collateral, and investment safekeeping; and (4) investment reporting and performance evaluation. Investments authorized by the investment policy are set forth in the Local Government Code and are as follows: - direct debt securities of the United States, its agencies and instrumentalities. a.n.. ,...n...e«.rwa ..e,....:.....e........ti....e ,,,..es...e..«.....:«ti «t.e r•......«., ae......:«..........a«ti .,....e..,. - fully collateralized security repurchase agreements with the County depository or with state or national banks domiciled inuTexas. a t rrtl ~s g an Loan aseoct~at os t IIncllen m tits st8t°er,T fnhae cer~nilcate as lU"i`7beCO1a et'ali7.Cte~: or a savings - a bankers' acceptance if it has a stated maturity of 270 days or fewer from the date of issuance and is eligible for collateral for borrowing from a Federal Reserve Bank. - commercial paper is an authorized investment if the commercial paper has a stated maturity of 90 days or fewer from the date of-issuance and is rated not less than A-1 and P-1. - money market funds if the Commissioners' Court by resolution authorizes investment in the fund with limitations. - eligible investment pools if the Commissioners' Court by resolution authorizes investment in the particular pool. To protect against fraud and embezzlement, the County's investment policy requires that the assets of the County be secured through third party custody and safekeeping procedures. 58 a,7s 1 oa NOTE 3 - CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) B. InyesUuerits (Continued) Bearer instruments shall be held only through third party institutions. Investment officials shall be bonded to protect the public against possible embezzlement and malfeasance. In a manner similar to cash deposits, investments are classified into three categories of credit risk based upon the following: Category Description 1 Investments that are insured or registered, or for which the securities are held by the County or its agent in the County's name. Investments that are uninsured and unregistered for which the securities are held by the counter party's trust department or agent in the County's name. 3 Investments that are uninsured and unregistered for which the securities are held by the counter party or by its trust department or agent but not in the County's name. The County is authorized (by the Texas Public Funds Investment Act, Texas Civil Statutes, Article 842a-2, as amended) to purchase, sell and invest its funds and funds under its control. During the year ended September 30, 2004, County investments included funds deposited in alocal government investment pool, and direct debt securities of the United States. Investments in direct debt securities of the United States mature within one year of acquisition, and therefore are reported at amortized cost. Pooled investments are reported at fair value. Those subject to classification are Category 1 investments. The pooled investments are not identifiable investments and therefore not classified, in accordance with GASB Statement 3. The pooled investments are reflected as Cash and Cash Equivalents on the balance sheet. The Money Market and Certificates of Deposit are classified as Category 1 deposits. Investments at September 30, 2004 are as follows: Pooled Investments $ 10,006,975 Money Market and Certificates of Deposit 779,309 Property 595.300 Total Investments 11.381.584 The Money Market and Certificate of Deposit investments are recorded in the Agency Funds and are those funds held in a custodial relationship by the District Clerk as required by the District Courts and are categorized as Category 1 deposits. The listed property is that property recorded in the Bail Bond Board Agency Fund. The property is held by the County as security for the bail bondsman operating in the County and is not classified in accordance with GASB Statement 3. 59 NOTE 4 - TAXES AND OTHER RECEIVABLES The following is a summary of the gross delinquent taxes receivable, penalties and interest on taxes receivable, and other receivables at year-end for the County's individual major funds and non- major, internal service and fiduciary funds in the aggregate, including the applicable allowances for uncollectible accounts: Major Debt Capital Internal General Service Pmjects Nonmaior Service Fiduciary Total Taxes $ 1,201,216 $ 188,020 $ $ $ $ - $ 1,389,236 Penalty & Interest - Taxes 740,270 87,859 - 828,129 Court Fines & Fees 6,428,934 - - 6,428,934 Interest 38,303 1,816 28,257 4,610 - 72,986 Accounts 1,584,288 7,400 428,090 20,661 1,180 2,041,619 Gross Receivables 9,993,011 285,095 28,257 432,700 20,661 1,180 10,760,904 Less: Allowance (3,328,320) 19,8( 77) - - (3,348,197) Net Receivable $ 6,664,691 $ 265218 $28,257 $432,700 $ 20,661 $ 1,180 $ 7,412,707 In addition to the above, included in the statement of net assets of the governmental activities, is a receivable of $80,435 that is due from fiduciary funds. The remainder of this page intentionally kjt blank 60 dvl 75 SAGE loy NOTE 5 - CAPITAL ASSETS Capital Asset activity for the year ended September 30, 2004 was as follows: Balance at Balance at October 1, September 30, 2003 Additions Deletions 2004 Governmental Activities: Capital assets. not being depreciated: Land S 6,854,820 S 19,999 S - $ 6,873,819 Construction in pmgron 2,715,788 1,076,203 (122,224) 3,669,767 34,544,705 754,412 - 35,299,117 Total capital assets, not being depreciated 44,115.313 1.849,614 (122,224) 45,942,703 Capital seats, being depreciated: Buildings 26,396,161 331,432 - 26,727,593 Improvements other than Buildings 4,879,945 - 4,879,945 Machinery and Equipment 12,631,915 2,272,766 (606,749) 14,298,432 being depreciated Total capital aseets 43,907,921 2,604.198 (606,249) 43.903,870 , Less accumulated depreciation for. Buildings (12,942,655) (668,754) - (13,511,409) Improvements other than Buildings (039,643) (222,932) - (1,562,575) Machinery and Equipment (4,708,464) (1,260,128) 360,601 (5,607,991) Total accumulated depreciation (18,890,762) (2.151,814) 360,601 (20,681,975) Total capital assets, being depreciated, net 25 017,159 452,394 (245,648) 25 223,895 Governmental activities capital assets, net $ 69,132,472 S 2,301,998 !_.Q67 872 S 71,066,598 Business-type activities: Capital nuts, being depreciated Machinery and Equipment s 70,923 S S - S 70,923 Total capital suers, being depreciated 70,923 70,923 Lees accumulated depreciation for Machinery and Equipment (69,311) (1,612) (70,923) Total accumulated depreciation (69,311) (1,612) (70,923) Total capital assets, being depreciated, net 1,612 (1,612) Business-type activities capital mess, net $ 1,612 S (1,612) S S 61 -1S jpS NOTE S - CAPITAL ASSETS (Continued) Depreciation expense for FY 2004 was charged to functions as follows: Governmental Activities: General Government $ 510,006 Justice System 136,912 Law Enforcement 685,796 Juvenile Services 180,659 Public Transportation 430,247 Public Health 25,581 Hmnan Services 182,613 Total depreciation expense - governmental activities 2,151,814 Business-type activities: County Attorney 1,612 Total depreciation expense - business-type activities $ 1,612 NOTE 6 - RESTRICTED ASSETS AND LIABILITIES The government-wide and business-type activities fund financial statements utilize a net assets presentation. Net assets are categorized as invested in capital assets (net of related debt), restricted and unrestricted. in the fund financial statements, reserves and designations segregate portions of fund balance that are either not available or have been earmarked for specific purposes. The various designations are established by actions of the Commissioners' Court and management and can be increased, reduced or eliminated by similar actions. NOTE 7 - LEASES A. Operating Leases The County has entered into operating leases as both lessee and lessor. The County currently has facility leases in force that provide for cancellation at each annual anniversary date. These leases are for office space and ground storage having minimum annual lease payments of $55,000. At September 30, 2004, the County had entered into three lease arrangements with outside non-profit entities to provide space within the Brazos Center, a public facility owned by the County. The County's lease arrangement with the Brazos Valley Museum, provides the Museum with space at the annual cost of $1,248. The lease is a 50-year lease expiring in 2040. The County had entered a year-to-year lease with the Junior Service League of Bryan/College Station for $7,800 per year. The lease was renewed in June 2003 for two years. The Brazos Valley Art League maintained an annual lease with the County, expiring each September in the amount of $5,760. The League decided not to renew the lease and moved to a different facility after two months. 62 75 r.r,¢ IOlP NOTE 7 - LEASES (Continued) A. Ooeratina Leases (Continued) The County has entered into eleven non-cancelable operating leases for the use of photocopying equipment. Rent expense for operating leases was $64,596 in 2004. The leases are for a 48 to 60 month period at an annual cost of $64,596. The future minimum lease payments for these leases are as follows: Year Ended S0=bcj 30, 2005 $ 62,852 2006 54,072 2007 22,894 2008 21,814 2009 696 TOW t l fi B. Capital Leases The County had no capital leases at September 30, 2004. NOTE 8 - LONG-TERM DEBT The following are debt issues with activity or outstanding balances at September 30, 2004. Original Interest Date of Date of Outstanding Description Amount Rates % Issue Maturity at 9/30/04 Certificates of Obligation Series 1996 - Various $ 8,500,000 63-6.7 1987 2002 $ 6,605,000 Series 1998 - Various 10,000,000 4.63 1998 2013 8,420,000 Series 2001- Judicial Software 1,000,000 3.4-5.5 2001 2009 625,000 Series 2002 - Various 2,995,000 2.8-3.85 2002 2013 2,275,000 Series 2003 - Various 10,000,000 2.6-4.55 2004 2023 9,725,000 Series 2004 - Various 5,000,000 2.6.4.55 2004 2024 5,000,000 General Obligation Bonds Exposition Center 8,000,000 4.3-6.5 2001 2021 81000,000 Total General Obligation Debt 40,650,000 premium 11,975 Total $ 40,661,975 63 10 / 75 A:rr - 01 NOTE 8 - LONG-TERM DEBT (Continued) Activity for long-term debt of the County for the year ended September 30, 2004 was as follows. Balance Balance Amount Outstanding Issued Retired Outstanding Due Within Description 101112003 During Year During Year 9/30/2004 One Year Certificates of Obligation Series 1996 - Various $ 6,970,000 $ $ 365,000 $ 61605,000 $ 385,000 Series 1998- Various 9,155,000 735,000 8,420,000 795,000 Series 2001- Judicial Software 750,000 125,000 625,000 125,000 Series 2002 - Various 2,635,000 360,000 2,275,000 360,000 Series 2003 - Various 10,000,000 275,000 9,725,000 395,000 Series 2004 - Various 5,000,000 - 5,000,000 General Obligation Bonds Exposition Center 8,000,000 81000,000 330,000 Total General Obligation Debt $ 27,510,000 $ 15,000,000 $ 1,860,000 $ 40,650,000 $ 2,390,000 The remainder of this page intendondly left blank. 64 1 ;;.Io8 NOTE 8 - LONG-TERM DEBT (Continued) Annual debt service requirements as of September 30, 2004 are as follows: Fiscal Year Principal Interest Total 2005 $ 2,390,000 $ 1,786,102 $ 4,176,102 2006 2,420,000 1,666,724 4,086,724 2007 2,725,000 1,556,553 4,281,553 2008 2,800,000 1,439,196 4,239,196 2009 2,885,000 1,317,851 4,202,851 2010-2013 11,400,000 3,979,062 15,379,062 2014-2016 5,930,000 1,829,776 7,759,776 2017-2021 10,100,000 1,755,656 11,855,656 During the year, the County issued $15,000,000 of Certificates of Obligation, with the payment of the related principal and interest to be made from an annual ad valorem tax levied against all taxable property within the County. The Certificate was issued for the acquisition of major capital facilities and/or improvements of the County. The Tax Recovery Act of 1986 established regulations for the rebate to the federal government of arbitrage earnings on certain local governmental bonds issued after December 31, 1985, and all local governmental bonds issued after August 31, 1986. Issuing governments must calculate any rebate due on an annual basis and remit the amount due at least every five years. The County has not incurred any liability during the 2004 fiscal year. In the government-wide governmental activities bond premiums, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium. Issuance costs are reported as prepaid expenses. In the current fiscal year the County issued $15,000,000 in Certificates of Obligation, which generated no premiums on debt issuance and $104,467 in issuance costs. For the year ended September 30, 2004, $1,318 was expensed on the 2002 Certificate of Obligation bond premium. The remaining $11,975 premium is reported as part of long- term debt payable in the government-wide statement of net activities. $6,370 of issuance costs were expensed during the fiscal year and the $130,972 remaining issuance costs are reported as prepaid expenses on the govemment-wide statement of net assets. 65 NOTE 8 - LONGTERM DEBT (Continued) Conmensated Absences Changes in compensated absences in the governmental activities for the year ended September 30, 2004, were as follows: Balance at October 1, 2003 $ 466,811 Accrued Compensated Leave & Vacation 772,149 Compensated Leave & Vacation Expenditure (732.1261 Balance at September 30, 2004 121M NOTE 9 - INTERFUND BALANCES AND TRANSFERS The General Fund has a due from the Narcotics Task Force Grant Fund of $18,521 for unreimbursed expenditures, $18,511 is due from the Brazos Center for fees at year end. The General Fund has $38,667 due from the Bail Bond Agency Fund for fees at year-end. The Tax Assessor Collector Agency Fund has $15,865 that is un-claimed funds due to the Unclaimed Property Fund. The remaining interfund balances are due to normal operational transactions. In the fund financial statements, interfund balances are the result of normal transactions between funds and will be liquidated in the subsequent fiscal year. Balances between governmental funds and between governmental funds and internal service funds are eliminated in the government-wide financial statements. The following is a summary of amounts due from and due to other funds: General Fund Nonmajor Governmental Funds Agency Funds and Other Total Due From Due To $ 82,883 $ 1,713 15,882 19,165 8,118 86,005 $ 106,883 $ 106,883 66 NOTE9-INTERFUND BALANCES AND TRANSFERS (Continued) The following is a summary of the County's transfers for the year ended September 30,2004: Transfer In: Debt Capital Internal General Service Project Nownajor Service Total Transfer Out: General Fund $ - $ 200,000 $ (44,652) $ 233,314 $ 200,000 $ 588,662 Capital project Funds 44,652 - 44,652 $ 44,652 $ 200,000 $ (44.652) $ 233,314 $ 200,000 $ 633,314 General Fund transferred $200,000 to Debt Service Fund to cover anticipated debt issuance. It also transferred another $200,000 to cover higher than anticipated increases in health care costs. Another $233,314 was transferred from the General Fund to Non-major Funds to cover matching requirements for grants. The remaining transfers are due to completion of capital projects. NOTE 10 - RISK MANAGEMENT The County participates in a worker's compensation pool administered by the Texas Association of Counties. The Texas Association of Counties handles claims adjusting and related administrative services for the program. Premiums are evaluated annually by position class code at actuarially determined rates. The County worker's compensation program provides medical and indemnity payments as required by law for on-the-job related injuries and is accounted for by the use of departmental expenditures, based on a percentage of payroll. The pool that the County participates in has provided for reinsurance coverage for excess worker's compensation and employer's liability. The County does not recognize any liability for outstanding losses for incurred but not reported claims. The Texas Association of Counties assumes this responsibility. The County is self-insured for medical claims only. The County has established a Health and Life Insurance Internal Service Fund to account for the costs associated with various health-related insurance programs. The County currently provides medical and dental programs for its employees with basic prescription and life benefits attached. The County pays the full cost for all qualifying employees. The individual pays for dependent and retiree premium expenses (Note 12). The Internal Service Fund acts as a clearing account to collect the premium payments from the County, the employee, and the mum The fund pays all claims and administrative fees. The County has purchased reinsurance that provides a $75,000 stop loss on an individual claim, and an aggregate at $60,000 after the initial individual claim has reached the $75,000. All funds are available to pay claims and have been reserved for such purpose. The County experienced premium cost and claims of $5,039,073, and $5,313,494 for 2004 and 2003 respectively. At September 30, 2004, the County had accrued approximately $633,600 for anticipated claims that had not been filed at year-end This estimate is based on the number of claimer filed subsequent to year-end that were for services rendered prior to year-end. The three months subsequent to the end of the fiscal year were used in this review. In addition, the County has accumulated $312,621 in retained earnings to be used to offset unanticipated costs in future periods. 67 and 75 NOTE 10- RISKMANAGEMENT (Continued) Changes in the balances of unpaid liability during fiscal years 2003 and 2004 were as follows: Current Year Beginning of Claims and Balance Fiscal Year Changes in Claims Fiscal Paid Year E i il' 015 2003 $409 Estimates $ 5,313,494 $4,899,373 $ 823,136 , 2004 823,136 5,039,073 5,228,611 633,598 The Commissioners' Court of Brazos County is aware that the well County hhas risk of uman sloources exposure liability and accidental loss of real and personal property as operations involve a variety of high-risk activities including, but not limited to, cash collections, road and bridge maintenance, law enforcement, and construction. The Commissioners' Court has created the office of Risk Management, whose responsibility it is to identify, evaluate, and manage risk in an effort to reduce the liability and accidental loss of property and human services. In the management process, the Risk Manager is assigned the responsibility of ensuring that all County employees are properly trained in safety. Brazos County employs risk-financing activities to include the purchase of insurance for general liability, vehicle liability, and liability from property damage claims. In addition, the County purchases property insurance, errors and omission coverage, professional liability insurance, as well as crime and fidelity coverage. Any liability that arises from the operation of motorized equipment will be considered to fall within the confines of the Texas Tort Claims Act, and thereby limit the County's exposure. At September 30, 2004, all claims against the County had been paid or accrued for payment, or the County's underwriter had accepted responsibility for the claim. The County has not made any significant reductions in insurance coverage from coverage in the previous fiscal year. No settlements exceeded insurance coverage for the past three fiscal years. NOTE 11- RETIREMENT PLAN A. Plan Descrlu ion The County provides retirement, disability, and death benefits for all of its full-time employees through a nontraditional defined benefit pension plan in the Texas County and District Retirement System ("TCDRS" or "System'). The Board of Trustees of the System is responsible for the administration of the statewide agent multiple-employer system consisting of over 500 nontraditional defined benefit pension plans. TCDRS in the aggregate issues a comprehensive annual financial report (CAFR) on a calendar year basis. This report includes the required six-year trend information. To obtain a copy send a written request for the CAFR to the TCDRS Board of Trustees at P. O. Box 2034, Austin, Texas 78768-2034. The Commissioners' Court of Brazos County adopts the plan provisions, within the options available in the Texas State statutes governing TCDRS (TCDRS Act). Members can retire at ages 60 and above with 8 or more years of service or with 30 years of service regardless of 68 -75 //A NOTE 11 • RETIREMENT PLAN (Continued) A. Plan Deseriotion (Continued) age or when the sum of their age and years of service equals 75 or more. Members are vested after eight years of service but accumulated contributions must be left in the plan. Members who withdraw their personal contributions in a lump sum are not entitled to any amounts contributed by the County. Benefit amounts are determined by the sum of the employee's contributions to the plan, with interest, and County-financed monetary credits. The governing body of Brazos County, within the actuarial constraints imposed by the TCDRS Act, adopts the level of these monetary credits. Therefore, the resulting benefits can be expected to be adequately financed by the County's commitment to contribute. At retirement, death, or disability the benefit is calculated by converting the sum of the employee's accumulated contributions and the County-financed monetary credits to a monthly annuity using annuity purchase rates prescribed by the TCDRS. B. F undine Policy Brazos County has elected the annually determined contribution rate (ADCR) plan provisions of the TCDRS Act. The plan is funded by monthly contributions from both employee members and the employer based on the covered payroll of employee members. Under the TCDRS Act, the contribution rate of the employer is actuarially determined annually. Brazos County contributed using the actuarially determined rate of 11.37% for fiscal year 2004. For 2005, the County's rate is anticipated to decrease to 11.04%. The employee's member contribution rate remained at 7.00% for 2004. C. Annual Pension Cost For the County's fiscal year ending September 30, 2004, the County's annual pension cost for the TCDRS plan for its employees was $2,224,886. The County's annual required contributions were $2,224,886, and the County's actual contributions were $2,224,886. The County's annual pension cost for the fiscal year ended September 30, 2003, was $2,040,628. The annual required contribution for 2004 was actuarially determined as a percent of the covered payroll of the participating employees, and was in compliance with the GASB. Statement No. 27 parameters based on the actuarial valuation as of December 31, 2001, and December 31, 2002, which is the basis for determining the contribution rate for calendar year 2003 and 2004 respectively. The December 31, 2003 actuarial valuation is the most recent valuation. 69 -75 , 113 NOTE 11- RETIREMENT PLAN (Continued) C. Annual Pension Cost (Continued) Actuarial valuation date 12131101 12131102 12!31/03 Actuarial cost method Entry Age Entry Age Entry Age Amortization method Level Percentage Level percentage Level percentage of payroll, open of payroll, open of payroll, open Remaining amortization period 20 years 20 years 20 years Asset valuation method Long-term Long-term Long-term appreciation with appreciation with appreciation with Actuarial assumptions: adjustment adjustment adjustment Investment return 8.0% 8.0% 8.0% Projected salary increases 5.5% 5.5% 5.5% Includes inflation at 3.5% 3.5% 3.5% Cost-of-living adjustments 0.0% 0.0% 0.0% Trend Information for the Retirement Plan for the Employees of Brazos County Flscal Annual Percentage Net Year Pension of APC Pension Ending Cost (APC) Contributed Obligation 09/30/98 $ 1,249,221 100% None 09/30/99 $ 1,505,335 100% None 09/30/00 $ 1,669,144 100% None 09/30/01 $ 1,741,765 100% None 09/30/02 $ 1,910,033 100% None 09/30/03 $ 2,040,628 100% None 09/30/04 $ 2,224,886 100% None NOTE 12 - OTHER EMPLOYMENT BENEFITS A. Post Emolovment Benefits The County provides health care benefits as required by the Federal government under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). COBRA requires employers that sponsor group health plans to provide continuation of group coverage to terminated employees and their dependents in circumstances where coverage would normally end. The election to be covered is at the request of the employee. The employee is then required to pay the premium costs for themselves and their dependents. Expenditures are recognized as claims are submitted. COBRA participants are reimbursed at the same levels as active employees. At September 30, 2004, the County had been fully reimbursed for costs related to COBRA participants. 70 75 / / -4 NOTE 12 - OTHER EMPLOYMENT BENEFITS (Continued) B. Post Retirement Benefits Brazos County has elected to offer post-retirement health care benefits to certain retirees. County policy allows employees to become eligible for post retirement health care benefits after meeting the service and retirement age requirements of the TCDRS retirement plan. County policy restricts post retirement health care benefits to those employees that qualified for health coverage during employment. Health care benefits are available to employees that normally work 1,664 or more hours annually. The County opted to extend health care benefits to retirees that maintained coverage through the County's health care plan as of January 1, 2000. The County provides funding for the post retirement health care benefits. The County recognizes expenditures for post retirement health care benefits as paid, which during fiscal year 2004 totaled $160,543. At September 30, 2004, there were 48 retirees receiving benefits and 51 employees that qualify for retirement and health related benefits. C. Deferred Compensation The County offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Plan, as amended, is available to all employees, and permits them to defer a portion of their salary until future years. The Plan funds are not available to employees until termination, retirement, death, or emergency. Brazos County is not the Plan administrator or the trustee, therefore the assets of the Plan are not a reportable fund within the County's financial statements. NOTE 13 - COMMITMENTS AND CONTINGENCIES A. Contracts County Exposition Center At the November 2000 general election, the voters of Brazos County passed a proposition to allow the County to sell $18.5 million in General Revenue Bonds to be used for the construction of a County Exposition Center. The County has entered into a contract with an architect for the design and construction of the Exposition Center. At September 30, 2004 the County had expended $994,750 in architectural fees and $1,984,000 in legal fees and land acquisition costs. In 2001, the County sold $8,000,000 in General Obligation Bonds with a interest rate of 4.84% and a 20 year repayment schedule to be used for land acquisition and construction of the Center. At September 30, 2004, the County had prepared site plans and was anticipating approval from the Corp of Engineers. It is anticipated that the County will begin construction in 2006. The County plans to issue an additional $6,000,000 in General Revenue Bonds in 2005, with the final $4,500,000 to be issued in 2007. 71 "<:rg_ 75 a".1= 8816 NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued) B. Tax Increment Fnnancine Zones As of September 30, 2004, the County had entered into several inter-local agreements with the cities of Bryan and College Station for the creation of Tax Increment Financing Zones as allowed by Chapter 311 of the Texas Tax Code. Tax Increment Financing Zones (TIFZ) are statutory tools available to municipalities in Texas to promote development or redevelopment in an area that would not occur in the foreseeable future solely through private investment. TIFZ are also means to allow a community, both city and county, to enhance their ability to attract economic development or to allow businesses currently located within their area to expand. Once a city has designated a TIFZ, the Commissioners' Court must decide whether the County is to participate in the TIFZ and to what extent. After the County has elected to participate, a base value for the property located within the TIFZ is established. At the date of creation the appraised value is normally accepted as the base value. As the property within the T1FZ develops the County collects taxes based on the appreciated appraised values at the rate established annually by Commissioner's CourL Once the taxes have been paid each year the County remits the amount of taxes attributable to the increase in the appraised values (captured value) to the Tax Increment Financing Zone to be used to fund the project plan. Project plans normally include the creation of infrastructure such as roads, street improvements, light systems, sewer systems, landscaping, parks, etc. A T1FZ can be terminated either on the date designated in the ordinance creating the zone, or the date on which all project costs, tax increment bonds, and interest on the bonds have been paid. The remainder of this page intentionally left blank 72 NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued) B. Tax Increment Financing Zones (Continued) City of Bryan Brazos County has entered into two inter-local agreements with the City of Bryan to create Reinvestment Zone Number Eight "Park Hudson" and Reinvestment Zone Number Ten - "Traditions". Park Hudson represents approximately 450 acres located on the east side of the City of Bryan and is a 20-year contract. The Traditions zone is approximately 790 acres on the west side of the City of Bryan and is scheduled for 15 years of County participation. The following is a schedule of relevant data with regards to these TIFZ's: Base Captured Tax Captured Zone Value Value Rate* Tax Revenue Park Hudson 2004 $ 35,803 $ 50,717,536 0.3839 $ 198,180 2003 35,803 45,966,540 0.3723 172,732 2002 35,803 35,356,812 0.3857 137,567 2001 35,803 34,357,265 0.3857 132,516 2000 35,803 15,387,041 0.3736 57,486 Traditions 2004 598,490 - 0.3839 2003 598,490 - 0.3723 2002 598,490 - 0.3857 2001 598,490 - 0.3857 City of College Station Brazos County has entered into two inter-local agreements with the City of College Station to create Reinvestment Zone Number One -"Wolf Pen Creek Corridor", Reinvestment Zone Number Seven "Wolf Pen Creek Office, Hotel, and Conference Center". Reinvestment Zone Number Fifteen "30/60 Corridor" was cancelled on June 29, 2004 due to a change in the partners involved in the original T.I.F. plan. The Wolf Pen Creek Office, Hotel and Conference Center Reinvestment Zone consists of approximately 15 acres bounded on the north by Holleman Drive and bounded on the east by Dartmouth Drive. The Hotel and Conference Center is to be located on the northeast side of the city. ='a number one and seven are scheduled for a 20-year duration. The following is a schedule of relevant data with regards to these TWZ's for the fiscal year ended September 30, 2004: 73 -75, 1 NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued) B. Tax Increment Financing Zones (Continued) City of College Station (continued) Base Captured Tax Captured Zone Value Value Rate" Tax Revenue Wolf Pen Creek: Corridor 2004 $ 18,502,607 $ 39,950,673 0.3839 $ 151,815 2003 18,502,607 30,533,129 0.3723 113,675 2002 18,502,607 25,325,687 0.4200 106,368 2001 18,502,607 25,325,687 0.4200 106,368 2000 18,502,607 23,743,340 0.4100 97,348 Wolf Pen Creek: AoteVConference 2004 313,640 - 0.3839 - 2003 313,640 0.3839 - 2002 313,640 0.3723 - 2001 313,640 0.3857 - 2000 313,640 0.3736 ' per $100 valuation The remainder of this page Intentionally left blank 74 NOTE 13 • COMMITMENTS AND CONTINGENCIES (Continued) C. Tax Abatements Chapter 312 of the Texas Tax Code authorizes the County to provide property tax abatements for limited time periods to encourage development or expansion of property. The terms of each agreement are limited by the guidelines and criteria established by Commissioners' Court. At September 30, 2004 the County had established abatement agreements with the following property owners. 2003 Date Of 2003 Appraised Taxable 2004 Taxes Property Owner Abatement Value Value Levied Conoco, Inc. 1995 $ 10,642,170 $ 3,672,823 $ 15,977 SandersonPatms 1995 43,496,865 6,855,184 29,820 Dealer Computer Services, Inc. 1997 754,438 54,964 239 01 Corporation 1997 2,005,540 1,409,140 6,130 Rental Systems, Inc. 1997 1,546,952 389,912 1,696 Saint-Gobain Notporo 1997 14,736,425 8,940,266 38,890 Universal Computer 1997 32,200,770 2,506,022 10,901 CS Development Group L.P. 1998 3,500,000 3,197,660 13,910 Hy-Line International 1998 4,374,958 2,957,397 12,865 Prodigene, Inc. 1998 1,165,515 918,093 3,994 B-CS Economic Development Corp. 1999 4,530,710 3,530,969 15,360 Decision One 1999 1,000,800 751,053 3,267 Stata Corporation 1999 2,326,890 1,016,244 4,421 Betco 2000 4,607,645 3,811,458 16,580 Heat Transfer Research 2001 2,771,675 1,445,217 6,287 Hewlett Packard Company 2003 266,230 79,869 347 Bryan Lumber Remanufact uing 2003 510,065 302,306 1,315 Coca-Cola Enterprises 2003 531,620 531,620 2,313 CW CS 1 2003 7,200,000 2,412,476 10,494 D. Contingent Liabilities The County is a defendant in various lawsuits. All are matters that are pending and have arisen in the normal course of the County's operations. Although the outcome of these lawsuits is not presently determinable, the County's various legal counsels are of the opinion that the settlement of these claims and pending litigation will not have a material effect on the County's financial statements. Consequently, there has been no current provision to reserve funds for such claims. The County receives various grant monies that are subject to audit and adjustment by the grantor agencies. Any disallowed expenditure will become a liability of the County. The amount cannot be determined at this time, but the County expects such amounts, if any, to be immaterial. 75 -75 NOTE 14 - NEW ACCOUNTING PRONOUNCEMENT The Government Accounting Standards Board has issued Statement No. 40 ("GASB 40"), "Deposit and Investment Risk Disclosures" which will be effective for the County in the fiscal year ending September 30, 2005. GASB 40 establishes and modifies disclosure requirements related to investment risks: credit risk (including custodial credit risk and concentrations of credit risk), interest rate risk, and foreign currency risk. This Statement also establishes and modifies disclosure requirements for deposit risks: custodial credit risk and foreign currency risk. The County does not believe the implementation of this standard will have a material impact on its financial statements. The Governmental Accounting Standards Board has issued Statement No. 42 ("GASB 42), "Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries" which will be effective for the County in the fiscal year ending September 30, 2006. GASB 42 establishes guidance for accounting and reporting for the impairment of capital assets and for insurance recoveries. The County does not believe the implementation of this standard will have a material impact on its financial statements. The Governmental Accounting Standards Board has issued Statement No. 44 ("GASB 44), "Economic Condition Reporting: The Statistical Section" which will be effective for the County in the fiscal year ending September 30, 2006. GASB 44 establishes and modifies requirements related to the supplementary information presented in the statistical section. The County does not believe the implementation of this standard will have a material impact on its financial statements. The Governmental Accounting Standards Board has issued Statement No. 45 ("GASB 45), "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" which will be effective for the County in the fiscal year ending September 30, 2009. GASB 45 establishes financial reporting standards for other post employment benefit plans. Currently the County has established a post employment healthcare plan for full time regular employees that retire after January 1, 2000. This statement will require the County to accumulate assets for the payment of postemployment healthcare benefits. The County is currently in the process of determining the financial impact of this requirement. 76 -75 Sao APPENDIX B FORM OF OPINION OF BOND COUNSEL k` { -7s ; 71 ,ai An opinion in substantially the follawingform will be delivered by Winstead Sechrest & Minick P.C, Bond Counsel, upon the delivery of the Bonds, assuming no material changes in facts or law. VN4WMAD [Closing Date] BRAZOS COUNTY, TEXAS LIMITED TAX REFUNDING BONDS, SERIES 2005 IN THE ORIGINAL PRINCIPAL AMOUNT OF $ AS BOND COUNSEL for Brazos County, Texas (the "County"), the issuer of the "Brazos County, Texas Limited Tax Refunding Bonds, Series 2005" described above (the "Bonds"), we have examined into the legality and validity of the Bonds under the Constitution and the laws of the State of Texas and with respect to the exclusion of the interest on the Bonds from gross income of the owners thereof for federal income tax purposes. We have not been requested to investigate or verify, and we have not independently investigated or verified, any records, data, or other material relating to the financial condition or capabilities of the County, and we have not assumed any responsibility with respect thereof. Our participation in the preparation of the Official Statement has been limited as described therein. We have relied solely on information and certifications famished to us by the County with respect to the current outstanding indebtedness of, and assessed valuation of taxable property within, the County. IN OUR CAPACITY AS BOND COUNSEL, we have participated in the preparation of and have examined a transcript of certified proceedings pertaining to the Bonds that contains certified copies of certain proceedings of the Commissioners Court of the County (the "Commissioners Court"); an order of the Commissioners Court authorizing the issuance of the Bonds adopted on December 6, 2005 (the "Order"); the "Escrow Agreement", dated as of December 1, 2005, between the County and US Bank, National Association, Dallas, Texas (the "Escrow Agreement"); a special report of The Arbitrage Group, Inc., certified public accountants, relating to the accuracy of certain mathematical computations as described in the Escrow Agreement (the "Report"); the "Paying Agent/Registrar Agreement", dated as of December 1, 2005, between the City and US Bank, National Association, Dallas , Texas; the approving opinion of the Attorney General of the State of Texas; customary certificates of officers, agents, and representatives of the County, including a "Federal Tax Certificate", and other public officials; and other certified showings relating to the issuance of the Bonds. We have also examined certificates concerning the amount of the principal of and interest due on the County's obligations being refunded with the proceeds of the Bonds (the `Refunded Bonds"), the amount of Bond proceeds being deposited to the "Escrow Fund" (as such term is defined in the Escrow Agreement), and the investment of such proceeds. In such examination, we have assumed the authenticity of all documents submitted to us as originals, the conformity to original copies of all documents submitted to us as certified copies, and the truth and accuracy of the statements contained in such certificates. We have also examined applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), court decisions, Treasury Regulations, and published rulings of the Internal Revenue Service as we have deemed relevant. We have also examined executed Bond No. I-1. BASED ON SAID EXAMINATION, IT IS OUR OPINION THAT THE BONDS have been authorized, sold, and delivered in accordance with law; the Bonds constitute valid and legally binding obligations of the County enforceable in accordance with their terms except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, liquidation, and other similar laws now or hereafter enacted relating to creditors' rights generally; and that ad valorem taxes, within the limit prescribed by law, upon all taxable property within the County, necessary to pay the interest on and principal of the Bonds, have been pledged irrevocably for such purpose. It is further our opinion that firm banking arrangements have been made, with the result being that the Refunded Bonds have been defeased in accordance with the provisions of the documents authorizing their issuance. BASED ON THE FOREGOING, IT IS OUR OPINION that under existing law, interest on the Bonds will be excludable from gross income for federal income tax purposes under section 103 of the Code, and the Bonds will not be treated as "private activity bonds" within the meaning of section 141 of the Code. Accordingly, interest on the Bonds will not be included as an alternative minimum tax preference item for individuals and corporations under section 57(a)(5) of the Code, except that interest on the Bonds will be included in the "adjusted current earnings" of certain corporations for purposes of computing the alternative minimum tax imposed on corporations by section 55 of the Code. The statutes, regulations, published rulings, and court decisions on which such opinions are based are subject to change. Page 1 of 2 pages VOL -~5 PAGE lAd, IT IS FURTHER OUR OPINION that the Escrow Agreement has been duly authorized, executed, and delivered by the County and, assuming the due authorization, execution, and delivery thereof by the Escrow Agent, is a valid and legally binding agreement, enforceable in accordance with its terms (except to the extent that the enforceability thereof may be affected by bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors' rights or the exercise of judicial discretion in accordance with general principles of equity) and that the Refunded Bonds discharged, paid, and retired with certain of the proceeds of the Bonds have been defeased and are regarded as being outstanding only for the purpose of receiving payment from the funds held in trust with the Escrow Agent, pursuant to the Escrow Agreement and in accordance with the provisions of Chapter 1207, Texas Government Code, as amended. In rendering this opinion, we have relied upon the verification in the Report of the sufficiency of cash and investments deposited with the Escrow Agent pursuant to the Escrow Agreement for the purposes of paying the principal of and interest on the outstanding obligations identified therein being refunded and to be retired. IN RENDERING THESE OPINIONS, we have relied upon representations and certifications of the County and the County's financial advisor with respect to matters solely within the knowledge of such parties, respectively, which we have not independently verified, and we assume continuing compliance by the County with covenants pertaining to those sections of the Code which affect the exclusion from gross income of interest on the Bonds for federal income tax purposes. If such representations and certifications are determined to be inaccurate or incomplete, or the County fails to comply with the foregoing covenants, interest on the Bonds could become includable in gross income retroactively to the date of issuance of the Bonds, regardless of the date on which the event causing such inclusion occurs. EXCEPT AS STATED ABOVE, we express no opinion as to any other federal, state, or local tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on or the acquisition, ownership, or disposition of the Bonds. WE CALL YOUR ATTENTION TO THE FACT THAT the ownership of obligations such as the Bonds may result in collateral federal tax consequences to, among others, financial institutions, property and casualty insurance companies, life insurance companies, certain foreign corporations doing business in the United States, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a financial asset securitization investment trust, certain S corporations with Subchapter C earnings and profits, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred expenses allocable to, tax-exempt obligations. THE OPINIONS SET FORTH ABOVE 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 hereafter come to our attention, or to reflect any changes in any law that may hereafter 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 on our review of existing law, and are made in reliance on 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 relating to whether interest on state or local obligations is excludable from gross income for federal income tax purposes. No assurance can be given regarding whether or not the Service will commence an audit of the Bonds. If such an audit is commenced, under current procedures, the Service would treat the County as the taxpayer, and Owners of the Bonds would have no right to participate in the audit process. We observe that the County has covenanted not to take any action, or omit to take any action within its control, that, if taken or omitted, respectively, may result in the treatment of interest on the Bonds as includable in gross income for federal income tax purposes. THIS LEGAL OPINION expresses the professional judgment of this firm as to the legal issues explicitly addressed therein. In rendering a legal opinion, we do not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction. Nor does the rendering of our opinion guarantee the outcome of any legal dispute that may arise out of the transaction. Respectfully submitted, Page 2 of 2 pages t a 75 PACE 1 '13 APPENDIX C SUMMARY OF OBLIGATIONS REFUNDED Bond Series Maturity Date Coupon Par Amount Call Date Call Price Certificates of Obligation, Series 1996 3/1/2007 5.300% $ 435,000 9/1/2006 100 3/1/2008 5.400% 465,000 9/1/2006 100 3/1/2009 5.500% 495,000 9/1/2006 100 3/1/2010 5.500% 525,000 9/1/2006 100 3/1/2011 5.500% 555,000 9/1/2006 100 3/1/2012 5.500% 590,000 9/1/2006 100 3/1/2013 5.500% 625,000 9/1/2006 100 3/1/2014 5.500% 665,000 9/1/2006 100 3/1/2015 5.5000/ 705,000 9/1/2006 100 3/1/2016 5.500% 750,000 9/1/2006 100 $ 5,810,000 is APPENDIX D The following information has been provided by The Depository Trust Company, New York, New York ("DTC'), and neither the County nor the Underwriter guarantees its accuracy or completeness. DEPOSITORY TRUST COMPANY DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (OTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. With respect to the Bonds, one fully-registered certificate will be issued in the aggregate principal amount of each maturity and will be deposited with DTC. DTC, the world's largest 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 securities that its participants ("Direct Participants') deposit with DTC. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 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'D. DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: "AAA". The DTC Rules applicable 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 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in rum to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system described herein is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time , ~ -6 WE ► a5 Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the County as soon as possible after the record date. The Omnibus Prosy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, and principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the County or the Paying Agent/Registrar, on each payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Paying Agent/Registrar, or the County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, and principal and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) are the responsibility of the County or the Paying Agent/Regisrrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the County or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained, security certificates are required to be printed and delivered. The County may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, security certificates will be printed and delivered. _75 lad L.. Ian r r w ■ r r r z O v' V OH b O ~ Y I w N oa ~Cl) H b a 00 a C55~ ~i a ~qv F - 1`r r - r - r w r R r~ w r r r r U N x a Cl) Cl) ~ U C 0 b Vl c d O o p N ~ V rl b w cd H O ~ ° w Q o z H ~ U U o Q z co o t V) pa w u ~ o y 44 c~ 14 0, c~ r 7O . 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O U DG cd Q C's GO U ID U ~ U U ~ ~O W r"o U C,3 O N a 3 CIO o ~t v~ U rig Fq VOL 15 PAGE 1,31 0 AOk F 114 W) r' w rr - is r i.a CCS N V x ~ ~ U U A., O 0 U u ci yy Li (~i N J) CA v 75 0 b ^CY c~ ti ~ g g v B W W W 0 ~ cn ~ w w ~ y ~ ~ a i 0o N ~ b v S IN z C V o o s U u u p U m ~ Q) N a 1 = N 4 i w 0 y O V3 FQ n (j a o° ° o° °o °o o° O 0 0 ui 0 0 0 0 ° n O O O N c,, .--C ~O M V M l~ c-i w m un u-1 0 0 0 u-; 0 un un 0 0 0 0 0 0 N N N 0 N 0 0 N N y \ \ \ \ \ \ M Un Ln \ \ \ u) \ \ \ N N N N N N ~ 3a VOL '15 M -H zzizz ~ C7 C7 C7 C7 , 0 U Q u ~ ~ V v ti f14 ' U g 0 o 0 0 0 0 0 0 p o 0 0 0 0 0 c) Ln r- In Ln C~ 00 O 0 Lr~ - N V' 0 U ) n Lo Ln Ln un 0 0 0 0 0 Cl 0 N 0 0 N N \ \ \ \ Q Ln \.D r- oc N N N N a 0 0 a 4 135 TEXAS LOCAL GOVAFFIDAVIT ERNMENT CODE, CHAPTER 171 STATE OF TEXAS § COUNTY OF BRAZOS § BEFORE ME, the undersigned authority, on ,VL C . ~ ; 2.019 _nersonallyappeazed -1 who being duly sworn, deposes and says: That he/she has a substantial interest in a business entity or real property. Official cen by the Commissioners Co rt of Brazos County, Texas concerning Agenda Item _5the Court Agenda dated 1 05Described as economic effect on that business entity or a special economic effect on the value of the real property, that is distinguishable from the effect on the public. 2. That the substantial interest is (check the following as is appropriate a. Ownership of 10 percent or more of the voting stock or shares of the business entity or either 10 percent or more or $15,000 or more of the fair market value of the business entity; or b. Funds received by me from the business entity exceed 10 percent of my gross income for the previous year; or c. An equitable or legal ownership in real property with a fair market value of $2,500 or more; or d. A person related in the first degree by either affinity or consanguinity to me has a substantial interest as defined above; or (y e. other 3. That I will abstain from participation in the matter referred to in Item 1 unless authorized by law. ) Signature ~ Kam, U l SWORN TO AND SUBSCRIBED BEFORE ME this the ~ day of 20 OS ~ o~ h~I~ ~ d fo a e Filed:' The State of Texas Clerk SEATRIZ D. GREEN F e 3 'qC! ly P'V'0 SWe Of Temms My C~:mm!ssion Expim .,4. JUNE 11, 2006 ~6 /34