OFFICIAL STATEMENT Dated January 22, 2009 Ratings: Moody’s: “Aa2” S&P: “AA” Fitch: “AA” NEW ISSUE – Book-Entry-Only See (“RATINGS” herein) In the opinion of Co-Bond Counsel (named below), assuming continuing compliance by the City (defined below) after the date of initial delivery of the bonds described below (the “Bonds”) with certain covenants contained in the Ordinance authorizing the Bonds and subject to the matters set forth under “TAX MATTERS” herein, interest on the Bonds for federal income tax purposes under existing statutes, regulations, published rulings, and court decisions (1) will be excludable from the gross income of the owners thereof pursuant to section 103 of the Internal Revenue Code of 1986, as amended to the date of initial delivery of the Bonds, and (2) will not be included in computing the alternative minimum taxable income of individuals or, except as described herein, corporations. See “TAX MATTERS” herein. $163,755,000 CITY OF SAN ANTONIO, TEXAS WATER SYSTEM REVENUE AND REFUNDING BONDS, SERIES 2009 Dated Date: January 15, 2009 Due: May 15, as shown on inside cover PAYMENT TERMS . Interest on the $163,755,000 City of San Antonio, Texas Water System Revenue and Refunding Bonds, Series 2009 (the “Bonds”) will accrue from January 15, 2009 (the “Dated Date”) and will be payable on May 15 and November 15 of each year, commencing May 15, 2009, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company, New York, New York (“DTC”), acting as a securities depository (the “Securities Depository”), pursuant to the Book-Entry-Only System described herein. The City reserves the right to discontinue the use of the Securities Depository. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds (see “THE BONDS – Book-Entry-Only System” herein). The initial Paying Agent/Registrar is Wells Fargo Bank, National Association, Austin, Texas (see “THE BONDS – Paying Agent/Registrar” herein). AUTHORITY FOR ISSUANCE AND SECURITY . The Bonds are issued pursuant to the general laws of the State of Texas (the “State”), particularly Chapters 1207, 1502 and 1371, as amended, Texas Government Code (collectively, the “Act”), and an ordinance (the “Ordinance”) adopted by the City Council (the “City Council”) of the City of San Antonio, Texas (the “City” or the “Issuer”), and are special obligations of the City, payable, both as to principal and interest, solely from and secured by, together with the currently outstanding Previously Issued Senior Lien Obligations (as defined in the Ordinance), a first lien on and pledge of the Pledged Revenues (as defined herein) of the City’s water system (the “System”). The City has not covenanted or obligated itself to pay the Bonds from monies raised or to be raised from taxation (see “THE BONDS – Security and Source of Payment” herein). In the Ordinance, the City has authorized the Board of Trustees of the System (the “Board”) to manage, operate, and maintain the System. As permitted by certain provisions of the Act, the Board (defined herein) has, in the Ordinance, delegated the authority to various City officials and employees to execute the pricing certificate evidencing the final terms of sale with respect to, and finalizing certain characteristics of, the Bonds. PURPOSE . Proceeds from the sale of the Bonds will be used to (1) provide funds for the purposes of acquiring, purchasing, constructing, improving, renovating, enlarging, and equipping the System, (2) refund the obligations designated on Schedule I, and (3) to pay the costs of issuance. The refunding of a portion of the currently outstanding Commercial Paper Notes shown on Schedule I will provide the System additional capacity for the System’s Commercial Paper Program. ____________________________________________ CUSIP PREFIX: 79642B MATURITY SCHEDULE & 9 DIGIT CUSIP See Schedule on Inside Cover Page LEGALITY . The Bonds are offered for delivery when, as and if issued and received by the initial purchasers thereof named below (the “Underwriters”) and subject to the approving opinion of the Attorney General of Texas and the approval of certain legal matters by Fulbright & Jaworski L.L.P., San Antonio, Texas and Escamilla & Poneck, Inc., San Antonio, Texas, Co-Bond Counsel (see “APPENDIX E, Form of Co-Bond Counsel’s Opinion” herein). Certain legal matters will be passed upon for the City by the City Attorney, for the Board by Bracewell & Giuliani LLP, San Antonio, Texas, and for the Underwriters by McCall, Parkhurst & Horton L.L.P and Law Offices of William T. Avila, P.C., both of San Antonio, Texas, Co-Counsel for the Underwriters. DELIVERY . It is expected that the Bonds will be available for initial delivery through the services of DTC on or about Thursday, February 12, 2009. CITI J.P. MORGAN CABRERA CAPITAL MARKETS, LLC COASTAL SECURITIES, INC. LOOP CAPITAL MARKETS LLC (1) MATURITY SCHEDULE CUSIP NO. PREFIX: 79642B Stated Stated Principal Maturity Interest Initial CUSIP No. Principal Maturity Interest Initial CUSIP No. Amount (May 15) Rate Yield Suffix(1) Amount (May 15) Rate Yield Suffix(1) $ 3,865,000 2009 3.000% 0.500% FX6$ 3,430,000 2020 5.000% 3.730% (2) GL1 2,635,000 2010 3.000% 1.150% FY4 400,000 2020 4.000% 3.730% (2) GM9 2,715,000 2011 3.000% 1.570% FZ1 4,025,000 2021 5.000% 4.050% (2) GN7 2,800,000 2012 3.000% 1.700% GA5 3,525,000 2022 5.000% 4.230% (2) GQ0 2,885,000 2013 3.000% 1.950% GB3 700,000 2022 4.000% 4.230% GP2 2,970,000 2014 3.000% 2.210% GC1 3,080,000 2023 5.000% 4.410% (2) GS6 3,060,000 2015 3.000% 2.460% GD9 1,355,000 2023 4.200% 4.410% GR8 3,170,000 2016 4.000% 2.680% GE7 2,935,000 2024 5.000% 4.590% (2) GU1 3,315,000 2017 5.000% 2.920% GF4 1,715,000 2024 4.300% 4.590% GT4 1,930,000 2018 5.000% 3.150% GG2 400,000 2025 4.500% 4.720% GV9 1,550,000 2018 4.000% 3.150% GH0 2,995,000 2028 5.000% 5.050% GW7 3,095,000 2019 5.000% 3.410% (2) GJ6 1,665,000 2029 5.000% 5.125% GX5 (2) 550,000 2019 4.000% 3.410% GK3 $22,055,000 Term Bonds Due May 15, 2029 @ 5.125% Priced to Yield 5.125% - CUSIP No. Suffix(1) GY3 $35,120,000 Term Bonds Due May 15, 2034 @ 5.250% Priced to Yield 5.340% - CUSIP No. Suffix(1) GZ0 $45,815,000 Term Bonds Due May 15, 2039 @ 5.375% Priced to Yield 5.400% - CUSIP No. Suffix(1) HA4 (Accrued Interest from January 15, 2009 to be added) OPTIONAL REDEMPTION . The City has reserved the right, at its option, to redeem Bonds having stated maturities on and after May 15, 2019, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof, on November 15, 2018, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see “THE BONDS – Optional Redemption” herein). Additionally the Bonds maturing on May 15 in the years 2029, 2034 and 2039 (the "Term Bonds") are subject to mandatory sinking fund redemption (see "THE BONDS – Mandatory Sinking Fund Redemption"). ________________ (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard and Poor’s CUSIP Service Bureau, a Division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP services. The City, the Co-Financial Advisors, and the Underwriters are not individually or collectively responsible for the selection or correctness of the CUSIP numbers set forth herein. (2) Yield calculated based on the assumption that the Bonds denoted and sold at a premium will be redeemed on November 15, 2018, the first optional call date for the Bonds, at a redemption price of par plus accrued interest to the redemption date. [The remainder of this page intentionally left blank] 2 USE OF INFORMATION This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale. No dealer, broker, salesperson or other person has been authorized by the City, the Co-Financial Advisors, or the Underwriters to give information or to make any representation other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. The information set forth herein has been obtained from the City and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as a representation, promise or guarantee of the Co- Financial Advisors or the Underwriters.