CINCO SOUTHWEST MUNICIPAL UTILITY DISTRICT NO. 3 (A Political Subdivision of the State of Texas Located Within Fort Bend County)
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OFFICIAL STATEMENT DATED NOVEMBER 5, 2012 IN THE OPINION OF BOND COUNSEL, INTEREST ON THE BONDS IS EXCLUDABLE FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES UNDER EXISTING LAW, AND THE BONDS ARE NOT SUBJECT TO THE ALTERNATIVE MINIMUM TAX ON INDIVIDUALS AND CORPORATIONS, EXCEPT FOR CERTAIN ALTERNATIVE MINIMUM TAX CONSEQUENCES FOR CORPORATIONS. SEE "TAX MATTERS" FOR A DISCUSSION OF THE OPINION OF BOND COUNSEL. THE BONDS ARE NOT DESIGNATED "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS. SEE "TAX MATTERS—Not Qualified Tax-Exempt Obligations.” NEW ISSUE-Book-Entry-Only CINCO SOUTHWEST MUNICIPAL UTILITY DISTRICT NO. 3 (A political subdivision of the State of Texas located within Fort Bend County) $1,715,000 $2,005,000 UNLIMITED TAX BONDS UNLIMITED TAX PARK BONDS SERIES 2012A SERIES 2012B The $1,715,000 Unlimited Tax Bonds, Series 2012A (the “Series 2012A Bonds”) and the $2,005,000 Unlimited Tax Park Bonds, Series 2012B (the “Series 2012B Bonds”) (collectively referred to herein as the “Bonds”), are obligations solely of Cinco Southwest Municipal Utility District No. 3 (the “District”) and are not obligations of the State of Texas, Fort Bend County, the City of Houston or any entity other than the District. The Bonds, when issued, will constitute valid and legally binding obligations of the District and will be payable from the proceeds of an annual ad valorem tax, without legal limitation as to rate or amount, levied against taxable property within the District. THE BONDS ARE SUBJECT TO SPECIAL RISK FACTORS DESCRIBED HEREIN. See “RISK FACTORS.” Interest accrues from: December 1, 2012 Due: September 1, as shown below Principal of the Bonds is payable at maturity or earlier redemption at the principal payment office of the paying agent/registrar, initially The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (the “Paying Agent/Registrar”) upon surrender of the Bonds for payment. Interest on the Bonds accrues from December 1, 2012, and is payable each March 1 and September 1, commencing March 1, 2013, until maturity or prior redemption. The Bonds will be issued only in fully registered form in denominations of $5,000 each or integral multiples thereof. The Bonds are subject to redemption prior to their maturity, as shown below. The Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Bonds. Beneficial Owners of the Bonds will not receive physical certificates representing the Bonds, but will receive a credit balance on the books of the nominees of such Beneficial Owners. So long as Cede & Co. is the Registered Owner of the Bonds, the principal of and interest on the Bonds will be paid by the Paying Agent directly to DTC, which will, in turn, remit such principal and interest to its participants for subsequent disbursement to the Beneficial Owners of the Bonds. See “BOOK-ENTRY-ONLY SYSTEM.” See “MATURITY SCHEDULES” on the inside cover The Bonds of each series are offered by the Underwriter subject to prior sale, when, as and if issued by the District and accepted by the respective Underwriter, subject, among other things, to the approval of the Bonds by the Attorney General of Texas and the approval of certain legal matters by Allen Boone Humphries Robinson LLP, Houston, Texas, Bond Counsel. See “LEGAL MATTERS.” Delivery of the Bonds in book-entry form through the facilities of DTC is expected on or about December 6, 2012 in Houston, Texas. MATURITY SCHEDULES THE SERIES 2012A BONDS Initial Initial Principal MaturityCUSIP InterestReoffering Principal Maturity CUSIP Interest Reoffering Amount (September 1) Number(b) Rate Yield(c) Amount (September 1) Number(b) Rate Yield(c) $ 65,000 2013 17239D EG9 1.400 % 1.000 %$ 65,000 2020 (a) 17239D EP9 2.500 % 2.500 % 70,000 2014 17239D EH7 1.400 1.250 65,000 2021 (a) 17239D EQ7 2.500 2.650 70,000 2015 17239D EJ3 1.500 1.500 65,000 2022 (a) 17239D ER5 2.700 2.800 70,000 2016 17239D EK0 1.750 1.750 65,000 2023 (a) 17239D ES3 2.900 3.000 70,000 2017 17239D EL8 2.000 2.000 65,000 2024 (a) 17239D ET1 3.000 3.125 70,000 2018 17239D EM6 2.200 2.200 65,000 2025 (a) 17239D EU8 3.150 3.250 65,000 2019 17239D EN4 2.350 2.350 65,000 2026 (a) 17239D EV6 3.250 3.375 $130,000 Term Bonds due September 1, 2028 (a), CUSIP 17239D EX2 (b), 3.400% Interest Rate, 3.500% Yield (c) $195,000 Term Bonds due September 1, 2031 (a), CUSIP 17239D FA1 (b), 3.650% Interest Rate, 3.750% Yield (c) $130,000 Term Bonds due September 1, 2033 (a), CUSIP 17239D FC7 (b), 3.750% Interest Rate, 3.875% Yield (c) $325,000 Term Bonds due September 1, 2038 (a), CUSIP 17239D FH6 (b), 3.850% Interest Rate, 4.000% Yield (c) THE SERIES 2012B BONDS Initial Initial Principal MaturityCUSIP Interest Reoffering Principal MaturityCUSIP Interest Reoffering Amount (September 1) Number(b) Rate Yield(c) Amount (September 1) Number(b) Rate Yield(c) $ 75,000 2013 17239D FJ2 1.400 % 1.000 %$ 80,000 2020 (a) 17239D FR4 2.500 % 2.500 % 80,000 2014 17239D FK9 1.400 1.250 80,000 2021 (a) 17239D FS2 2.500 2.650 80,000 2015 17239D FL7 1.500 1.500 80,000 2022 (a) 17239D FT0 2.700 2.800 80,000 2016 17239D FM5 1.750 1.750 80,000 2023 (a) 17239D FU7 2.900 3.000 80,000 2017 17239D FN3 2.000 2.000 80,000 2024 (a) 17239D FV5 3.000 3.125 80,000 2018 17239D FP8 2.200 2.200 75,000 2025 (a) 17239D FW3 3.150 3.250 80,000 2019 17239D FQ6 2.350 2.350 75,000 2026 (a) 17239D FX1 3.250 3.375 $150,000 Term Bonds due September 1, 2028 (a), CUSIP 17239D FZ6 (b), 3.400% Interest Rate, 3.500% Yield (c) $225,000 Term Bonds due September 1, 2031 (a), CUSIP 17239D GC6 (b), 3.650% Interest Rate, 3.750% Yield (c) $150,000 Term Bonds due September 1, 2033 (a), CUSIP 17239D GE2 (b), 3.750% Interest Rate, 3.875% Yield (c) $375,000 Term Bonds due September 1, 2038 (a), CUSIP 17239D GK8 (b), 3.850% Interest Rate, 4.000% Yield (c) (a) Bonds maturing on or after September 1, 2020, are subject to redemption at the option of the District prior to their maturity dates in whole, or from time to time in part, on September 1, 2019, or on any date thereafter at a price of par value plus unpaid accrued interest from the most recent Interest Payment Date (as herein defined) to the date fixed for redemption. The Term Bonds are subject to mandatory sinking fund redemption as more fully described herein. See “THE BONDS—Redemption Provisions.” (b) CUSIP Numbers have been assigned to the Bonds by CUSIP Service Bureau and are included solely for the convenience of the purchasers of the Bonds. Neither the District nor the Underwriters shall be responsible for the selection or correctness of the CUSIP Numbers set forth herein. (c) Initial reoffering yield represents the initial offering yield to the public, which has been established by the Underwriters for offers to the public and which subsequently may be changed. 2 TABLE OF CONTENTS MATURITY SCHEDULES ................................................................. 2 TAX DATA ......................................................................................... 31 USE OF INFORMATION IN OFFICIAL STATEMENT ................ 4 Debt Service Tax .................................................................................. 31 SALE AND DISTRIBUTION OF THE BONDS ................................ 5 Contract Tax ......................................................................................... 31 Award of the Bonds ................................................................................ 5 Maintenance Tax .................................................................................. 31 Prices and Marketability ......................................................................... 5 Historical Tax Rate Distribution ........................................................... 31 Securities Laws ....................................................................................... 5 Tax Exemptions .................................................................................... 31 OFFICIAL STATEMENT SUMMARY ............................................. 6 Additional Penalties.............................................................................. 31 SELECTED FINANCIAL INFORMATION (UNAUDITED) ......... 9 Historical Tax Collections .................................................................... 32 THE BONDS ....................................................................................... 10 Tax Roll Information ............................................................................ 32 Description ........................................................................................... 10 Principal Taxpayers .............................................................................. 32 Method of Payment of Principal and Interest ........................................ 10 Tax Adequacy for Debt Service ........................................................... 33 Source of Payment ................................................................................ 10 TAXING PROCEDURES .................................................................. 33 Funds .................................................................................................... 11 Authority to Levy Taxes ....................................................................... 33 Redemption Provisions ......................................................................... 11 Property Tax Code and County-Wide Appraisal District ..................... 33 Authority for Issuance .........................................................................