PUBLIC NOTICE: RIESEL CITY COUNCIL MEETING AGENDA

NOTICE IS HEREBY GIVEN that the City Council of the City of Riesel, McLennan County, Texas, will hold a REGULAR called meeting on Tuesday, January 8th, 2013 at 6:30pm at Riesel City Hall, 104 N Hwy 6, to discuss the following matters: 01. Call meeting to order

02. Consent Items: A. Approval of Minutes from the Regular Council Meeting on Tuesday, December 11th, 2012 and

Minutes from the Work Session on January 3rd, 2013. B. Authorization of Payment of Bills/Payroll C. Financial Reports

03. Visitor’s Comments: This is an opportunity for visitors to bring any item to the City Council’s attention which is not listed as a separate agenda item below. No deliberation may be held on the matter, except limited to a proposal to put the subject on the agenda for a subsequent meeting.

04. Plant Update from Sandy Creek Services – Mark Spencer.

05. Mayor’s Report: A. Work Session Update/Briefing B. City Projects: Arsenic Reduction, Sewer/Water Line Replacement, Mullens Park C. Departmental News: Police, Utility, Streets, Administrative

06. Secretary’s Report: A. Payroll Changes to go into effect. W-2’s being prepared. B. End of 1st Quarter – Financial Reports being prepared. C. City Audit prep underway; Worker’s Comp Audit Complete D. RMS Proposed Budget prepared; meeting to be set for budget adoption; auditor to be selected E. Phone Service update F. Desks Ordered G. Power Plant tour completed H. MS Works files being converted into compatible files I. Vendor change for office supplies bring significant cost savings J. IUP submitted by Brent Bassett K. Billing – Bookkeeping update L. Court update

07. Consider/Action on approval of Addendum Clarifying Tax Abatement Agreement between City of Riesel and Sandy Creek Energy.

08. Consider/Action regarding the maintenance of the sewer irrigation field.

09. Consider/Action on Coastal Securities Financial Advisory Services.

10. Consider/Action regarding bridge maintenance and Mullens park mowing.

11. Consider/Action regarding contract with Allied Tank Services for tank inspections & maintenance.

12. Consider/Action regarding when to post minutes in the Rustler Newspaper.

13. Adjourn Meeting

I hereby certify that this notice was placed at its present location at least 72 hours prior to the above meeting time. Posted on January 4th, 2013 at 4:00 pm: ___________________________________________________ Alisha Flanary City Secretary, City of Riesel

CITY OF RIESEL REGULAR COUNCIL MEETING MINUTES ~ DECEMBER 11, 2012

BE IT REMEMBERED that on Tuesday DECEMBER 11TH , 2012, the Riesel City Council met in a REGULAR called session, at 6:30 p.m. in the Riesel City Hall Meeting Room, at 104 Hwy. 6 North in Riesel, Texas, with notice of said meeting having been posted at least 72 hours in advance in accordance with Section 551, Texas Government Code. Call to Order: The meeting was called to order by Mayor Roger Fitzpatrick, presiding officer, at 6:30 p.m. Council Members Present: Gerry Suttle, Jeanne Lehrmann, Al Bumelis & Phyllis Koester Absent: Deena Tobias Employees Present: Teresa Ellis, Danny Krumnow, Pete Zuniga, Kyndra Padilla and Alisha Flanary Visitors Present: Mark Spencer, Debra Haynes, Ray Kemp, Katherine Bode, Doug Wells Consent Items : Gerry Suttle made a motion to approve all consent items including Minutes from November 13th, 19th and December 4th, the payment of bills/payroll and the November Income and Expense Report. Jeanne Lehrmann seconded the motion. Motion carried unanimously. Visitor’s Comments: Katherine Bode congratulated all new council members and asked that the minutes and the agendas be printed in the Rustler as they had been in the past. Plant Update: Sandy Creek Project Director, Mark Spencer, reported another successful month with no safety incidents. The plant is now in testing mode and they’re producing 265 megawatts during this phase and will eventually be producing over 900 megawatts when able to go commercial, which is expected in late March to early April. Arsenic Reduction Plan: Al Bumelis made a motion to authorize KSA to proceed with the submission of an IUP (Intended Use Plan) for the Arsenic Reduction Project, which is the first step for eligibility for TWDB Funding. Phyllis Koester seconded the motion. Motion carried unanimously. Charles Street Project: Al Bumelis made a motion to put the project on hold in order to further research the TWDB SRF (State Revolving Fund) and other funding options. Phyllis Koester seconded the motion. Motion carried with three (3) Ayes and one (1) Nay (Gerry Suttle). Holiday Coverage: Phyllis Koester made a motion to ask for one officer to volunteer to work 10-12 hours on Christmas Eve and the day after Thanksgiving and in addition to the 8 hours of holiday pay, the officer would be paid for the hours worked at a rate of one and one half of his normal hourly pay. Jeanne Lehrmann seconded the motion. Motion carried unanimously. Cell Phone Service: Quotes requested from AT&T and Verizon are not available yet. Al Bumelis made a motion to authorize Mayor Fitzpatrick to make a final decision for purchase of smart phones and USB air cards, based on the quotes pending quotes from AT&T & Verizon. Gerry Suttle seconded the motion. Motion carried unanimously. Bridge Easement: Gerry Suttle made a motion to table discussion on the cleanup of the bridge easement until quotes could be received. Jeanne Lehrmann seconded the motion. Motion carried unanimously. RMS Board Members: Gerry Suttle made a motion for Roger to be nominated as an RMS Board Member. Al Bumelis made a motion for Gerry Suttle to also be an RMS Board Member. Jeanne Lehrmann seconded both motions. Both motions carried unanimously. Rattlesnake Well Study: Gerry Suttle made a motion to continue to look into issues with aerated water from the new well. Al Bumelis seconded the motion. Motion carried unanimously. Office Furniture: Roger Fitzpatrick presented a quote from Total Office Solutions for new office furniture, including 3 Hon desks with returns and above head storage, chairs, & mats including delivery and installation for a total price of $4,046.00. Jeanne Lehrmann made a motion to approve the purchase as quoted for $4,046.00. Gerry Suttle seconded the motion. Motion carried unanimously. With no further business and with no objection, the meeting adjourned at 8:30 pm. _______________________________________________________

Roger Fitzpatrick, Mayor Attest: Alisha Flanary City Secretary

CITY OF RIESEL WORK SESSION MINUTES ~ JANUARY 3, 2013

BE IT REMEMBERED that on Thursday January 3rd , 2013, the Riesel City Council met in a SPECIAL called meeting to hold a work session, at 6:30 p.m. in the Riesel City Hall Meeting Room, at 104 Hwy. 6 North in Riesel, Texas, with notice of said meeting having been posted at least 72 hours in advance in accordance with Section 551, Texas Government Code. Call to Order: The meeting was called to order by Mayor Fitzpatrick, presiding officer, at 6:30 p.m. Council Members Present: Jeanne Lehrmann, Al Bumelis, Phyllis Koester Absent: Gerry Suttle, Deena Tobias Employees Present: Alisha Flanary Visitors Present: Debi Haynes, Ben Rosenberg, Stephen Dorman KSA & Coastal Securities: Steven Dorman of KSA briefly informed new council members and mayor about the Charles Street Sewer & Water Line Replacement project. Ben Rosenberg presented options for funding city projects and refinancing existing debt. Irrigation Field Maintenance: In order to save the City money, Roger suggested bidding out the maintenance of the irrigation field (bailing of hay). He proposed that we allow someone to cut and bale the hay and they would sell it and pay the city a percentage of the sale price. This would free the city from having to cover the cost of cutting the field and save a good bit of time in labor. DR Trimmer: Discussion regarding the purchase of a heavy duty trimmer for cleaning and maintain ditches and easements. The regular weed eaters are not really sufficient to handle most of the heavy growth. Rattlesnake Bridge Easement: Bridge easement has been mowed. Discussion was held about contracting out future mowing of the steep sides to someone who is bonded. Mullens Park: Roger stated that he had talked with the school about building barbecue pits and picnic tables. They will build them if the city supplies the materials. Culvert: Discussion was held on a culvert being filled in on 1860 next to Cornerstone Church. The ditch being filled in will cause drainage problems and needs to be addressed. CPA: Services with CPA should be reduced soon as training should be wrapped up by end of January. Committees: Discussion was held on establishing or updating committees for Zoning, Parks, & Charles St. Project. Allied Tank: Discussion was held regarding maintenance contract with Allied Tank. Discussed cancelling or amending the contract to save the city $3,000 per year, inspection can be done in house in the future. No fee for cancellation. There was no action made during this work session. The meeting adjourned at 8:25 pm. ______________________________________________________________________________

Roger Fitzpatrick, Mayor Attest: Alisha Flanary, City Secretary

City Secretary’s Report – January 2013 PAYROLL CHANGES: As determined by council, the new payroll changes will take effect this week. The first pay period began on January 1st, and ends on January 4th, with checks being issued on January 11th. To ensure employees still receive a full paycheck, they may use vacation or comp time to cover the week that is being held back. Or, if they choose, the city is offering to make a loan to them, which would be deducted from their checks for the following 12 weeks. 1st Quarter: It’s the end of the first quarter, which is a very busy time for us here in the office, with all the additional reporting that is required at this time. The CPA’s are handling the preparation of the quarterly financial reports, which will be complete as soon as all the bank accounts are reconciled. Audit: I’ve been in contact with Bob Bestor in preparation for the City of Riesel’s annual audit. There is an extensive amount of records that must be gathered and prepared before the audit process begins. But, we hope to have most of that complete by the end of this month.

RMS: As you know, the City of Riesel is in charge of the bookkeeping for RMS Water Supply. RMS just ended their fiscal year on December 31st, and the final YTD numbers are in for the year, and they finished the year off with much less revenue than budgeted, and with far greater expenses than budgeted. I’ve prepared a preliminary budget which they will be working on at their next meeting, but they are facing some difficult challenges. There is the possibility that a new auditor will be selected. PHONE SERVICE: Phone service contract was signed with Verizon. We are now on a state contract, which has discounted rates, shared minutes, and allows us the option to cancel at any time without penalty. Five smart phones and otter boxes were ordered and three USB air cards. According to the police and water department employees, the phone service is excellent and there have been no issues to report thus far. DESKS: As determined by council, new desks have been ordered and are expected to be here soon. In addition, we have found that Total Office Solutions has substantially lower prices on paper and ink and most of our other office supplies, so we’ve started ordering most of our supplies through TOS which will save the City money in the future. POWER PLANT: Several employees, council members and a couple of citizens attended a tour of the power plant. The City would like to thank Sandy Creek for allowing us this opportunity. We appreciate their continued efforts to include the community in their progress. File Conversions: Almost all of the city’s records for payroll, taxes, bookkeeping etc. were saved in Works based files, which are not compatible with Word or Excel. The new computers do not have Works, and you can no longer buy and install Works, so I’ve begun the painstaking process of converting each of these files so that we may be able to use them in the future. This process is a bit slow, and may take a while. IUP for TWDB State Revolving Funds: Brent Basset of KSA Engineers has submitted an Intended Use Plan for the City’s Arsenic Reduction Plan. This is the first step required for eligibility of TWDB loans. The application process is a few months later. Bookkeeping/Billing: Teresa Ellis has moved into the position of Bookkeeper/Billing Clerk and has worked closely with the Patillo, Brown & Hill CPA, Christie Byrd, in learning the many requirements and procedures of City Finance and Bookkeeping. Teresa is also still involved in the Court and is working with Kyndra Padilla to provide further training and assistance to the Court. Court: Kyndra Padilla has moved into the full time position of Chief Clerk. She has had a lot more responsibility handed to her, and she has excelled in the handling of the extra duties. She also eagerly helps water customers and anyone else who comes in the office. TRANSITION: Everyone here in the office is in the process of learning new responsibilities, and much of the time we have to research and investigate before we can even act. Thank you for your patience with us, and please bear with us as we continue through this transition period. Alisha Flanary, City Secretary

Roger Fitzpatrick – Mayor Danny Krumnow – Chief of Police Daryl Uptmore – Utility Superintendent Alisha Flanary – City Secretary

Council Members: Phyllis Koester – Mayor ProTem Gerry Suttle – Treasurer Jeanne Lehrmann Al Bumelis Deena Tobias

ADDENDUM CLARIFYING TAX ABATEMENT AGREEMENT BETWEEN CITY OF RIESEL, TEXAS AND SANDY CREEK ENERGY ASSOCIATES, L.P.

WHEREAS, the City of Riesel, Texas (hereinafter “City”) and Sandy Creek Energy Associates, L.P. entered into that certain Tax Abatement Agreement between the City of Riesel, Texas and Sandy Creek Energy Associates, L.P. (hereinafter “Agreement”) approved on January 3, 2006; and

WHEREAS Sandy Creek Energy Associates, L.P. assigned an undivided interest in the Sandy Creek Energy Station and the Agreement to Brazos Sandy Creek Electric Cooperative, Inc.; and

WHEREAS the term “Sandy Creek” as used hereinafter and in the Agreement shall mean Sandy Creek Energy Associates, L.P. and Brazos Sandy Creek Electric Cooperative, Inc.; and

WHEREAS, a typographical or grammatical error or ambiguity has created potential confusion as to the Start Date for tax abatement under the Agreement; and

WHEREAS, the parties desire to avoid such confusion and to clarify the intent of the parties by this Addendum to the Agreement.

NOW, THEREFORE, the City and Sandy Creek agree that:

1) The Start Date for abatement of property taxes shall be January 1, 2013. Thus, the first tax year of abatement shall be the 2013 tax year for which taxes are payable on January 31, 2014.

2) All terms of the Agreement shall be read in light of this clarification, and this Addendum shall control any inconsistency between this Addendum and the Agreement.

SANDY CREEK: CITY:

_________________________________ ___________________________________ By: George S. Scienski By: Vice President Sandy Creek Energy Associates, L.P. _________________________________ By: Clifton Karnei Executive Vice President and General Manager Brazos Sandy Creek Electric Cooperative, Inc.

COASTAL SECURITIES, INC.

401 RR 620 SOUTH, SUITE 225 • AUSTIN, TEXAS 78734 PHONE (512) 807-2060 • FAX (713) 435-4628

January 7, 2013 Mayor Roger Fitzpatrick City of Riesel 104 N. Highway 6 Riesel, Texas 76682 Re: Project Option Summary Dear Mayor Fitzpatrick: Thank you for the opportunity of working with the City of Riesel and allowing me to present several financing options for your consideration. Per your request at the City Council workshop held on January 3, 2013, I will attempt to summarize these options here. For a point of clarification, it appeared that the City was very concerned with the actual “interest rate” that it could get to finance these transactions. As I explained, interest rates are a factor of several variables - the MMD rates (Municipal Yield Curve – that fluctuates daily based on what goes on in the world markets), the City’s credit rating/history, and supply and demand of bonds on the day of sale. I started working on these calculations for the City back in October and assumed a flat 3% interest rate for illustrative purposes. In December, we priced three similar credit transactions and received the following rates – 2.22%, 3.10% and 3.67%. I also checked the Texas Water Development Board (TWDB) website for their current rates and found the following for two of their popular programs – DFund 4.25% and DWSRF 2.26%. As you can see, rates vary a bit depending on timing and method of sale. I therefore would like to adjust our analysis to a 3.50% rate for illustrative purposes. If hired to represent the City, we will do everything to minimize the borrowing costs to the City, but many things are beyond our control. One other consideration we discussed was pursuing a private placement transaction (where we would solicit bids from the banking community – this offers most flexibility and normally would not require a credit rating), a competitive market transaction (would require a credit rating, but normally provides lowest interest rate) or a TWDB DWSRF Loan (could offer extended terms and below market interest rates, but includes additional red tape and borrowing time). Lastly, we discussed the possibility of obtaining credit enhancement through purchasing insurance and the fact that that may also require a credit rating in the current credit environment. With that said, I hope to summarize the options we discussed and then provide information for the different instruments available to the city. If you have any questions, please do not hesitate to call. I look forward to working with the City to finance these important City projects. Thanks again for this opportunity to represent the City of Riesel. Sincerely, Ben J. Rosenberg Senior Vice President

COASTAL SECURITIES

5555 SAN FELIPE SUITE 2200 HOUSTON, TEXAS 77056

PHONE (713) 435-4500 (800) 489-3232 FAX (713) 435-4448

Existing Debt Service After the current fiscal year is over 9/30/13 – the City’s average annual debt $ 59,508 service for the next 27 years until 2039. It lowers to approximately $32,000 after that for the next 10 years. (Series 1983 will be paid off this year) : Option 1 – Borrow $500,000 for Charles Street Project-April Timeframe Charles Street Project – Total Cost $1,000,000. Use $500,000 of existing cash and borrow $500,000 on the open market. Assume 3.50% interest rate. New additional 20 year average annual debt service until 2033: $ 38,459 Option 2 – TWDB Loan for Arsenic Project-October Timeframe Secure TWDB DWSRF Loan for the Arsenic Project. Project cost $1,250,000. Assumes 2.35% interest rate and includes TWDB loan origination fee of 2.25%. New additional 20 year average annual debt service until 2033: $ 86,667 Total Average Debt Service – until 2033 $183,834 Total average debt service – 2034-2039 59,370 Total average debt service – 2040-2049 32,306 Option 3 – Combine Refunding and New Money Projects-April Timeframe Refund and restructure existing debt to shorten and lower interest borrowing costs over the remaining useful life to save approximately $695,615 in interest. This would be accomplished by including the cash reserve balances from the existing debt service and using the $500,000 existing cash toward the refunding. New Refunding average debt service until 2024 : $ 52,497 Borrow $1.75Mil for both projects on the open market. Assume 3.50% interest rate. Total Average Debt Service – until 2033 $161,466

COASTAL SECURITIES

5555 SAN FELIPE SUITE 2200 HOUSTON, TEXAS 77056

PHONE (713) 435-4500 (800) 489-3232 FAX (713) 435-4448

Private Placement Transaction

• We solicit bids from local and regional banking community – 30+ banks • Term normally 15 years or less; sometime 20 years • Normally don’t require a rating or credit enhancement insurance • Offers most flexibility • Offers lower standard of continuing disclosure • Normally no underwriting costs • Bank Qualified rates are currently very competitive – close to market sale but usually higher due to

restrictions. Used 3.50% interest rate for this analysis. Market Transaction

• Access to national market for municipal government investors • Aggressive competitive sale market because of national demand, particularly for Bank Qualified paper • Requires a credit rating • Credit enhancement insurance will be evaluated and/or included • Full ongoing disclosure requirements

Used 3.50% interest rate for this analysis. TWDB Loan

• Numerous programs offer extended terms – typically up to 30 years • Depending on program – can offer below market interest rates • Extended time for application process and closing period • No guarantee for funding • Normally don’t require a rating or credit enhancement insurance • DWSRF program requires re-procuring services contracts for engineer, bond counsel and financial advisor • Davis Bacon wage requirement for contractors • Full ongoing disclosure requirements

Used 2.35% interest rate for this analysis.

2011 Taxable Assessed Valuation 59,853,809$ 2011 W&S Net Revenues 366,422$ Collection Rate 95%2011 Tax Rate 0.2500$

2011 W&S Dated Date 4/1/2013 Dated Date 10/1/2013

Net RevenuesFYE Assesed Outstanding New Total Avail for 9/30 Valuation Debt Service Principal Interest * Total Principal Interest * Total Debt Service Other Purposes2013 59,853,809$ 73,299$ -$ 4,813$ 4,813$ -$ -$ -$ 78,111 366,422$ 2014 59,853,809 59,909 20,000 19,250 39,250 60,000 23,970 83,970 183,129 366,422 2015 59,853,809 60,199 20,000 18,550 38,550 55,000 30,550 85,550 184,299 366,422 2016 59,853,809 59,441 20,000 17,850 37,850 55,000 29,258 84,258 181,549 366,422 2017 59,853,809 59,663 20,000 17,150 37,150 55,000 27,965 82,965 179,778 366,422 2018 59,853,809 59,864 20,000 16,450 36,450 60,000 26,673 86,673 182,987 366,422 2019 59,853,809 59,018 25,000 15,750 40,750 60,000 25,263 85,263 185,031 366,422 2020 59,853,809 60,151 25,000 14,875 39,875 60,000 23,853 83,853 183,879 366,422 2021 59,853,809 59,216 25,000 14,000 39,000 65,000 22,443 87,443 185,659 366,422 2022 59,853,809 60,261 25,000 13,125 38,125 65,000 20,915 85,915 184,301 366,422 2023 59,853,809 59,237 25,000 12,250 37,250 65,000 19,388 84,388 180,874 366,422 2024 59,853,809 59,213 30,000 11,375 41,375 70,000 17,860 87,860 188,448 366,422 2025 59,853,809 59,121 30,000 10,325 40,325 70,000 16,215 86,215 185,661 366,422 2026 59,853,809 59,009 30,000 9,275 39,275 70,000 14,570 84,570 182,854 366,422 2027 59,853,809 59,828 30,000 8,225 38,225 75,000 12,925 87,925 185,978 366,422 2028 59,853,809 58,579 30,000 7,175 37,175 75,000 11,163 86,163 181,917 366,422 2029 59,853,809 59,310 35,000 6,125 41,125 75,000 9,400 84,400 184,835 366,422 2030 59,853,809 59,952 35,000 4,900 39,900 80,000 7,638 87,638 187,489 366,422 2031 59,853,809 59,526 35,000 3,675 38,675 80,000 5,758 85,758 183,958 366,422 2032 59,853,809 60,031 35,000 2,450 37,450 80,000 3,878 83,878 181,359 366,422 2033 59,853,809 59,469 35,000 1,225 36,225 85,000 1,998 86,998 182,691 366,422 2034 59,853,809 58,838 - - - - - - 58,838 - 2035 59,853,809 59,166 - - - - - - 59,166 - 2036 59,853,809 59,406 - - - - - - 59,406 - 2037 59,853,809 59,577 - - - - - - 59,577 - 2038 59,853,809 59,633 - - - - - - 59,633 - 2039 59,853,809 59,599 - - - - - - 59,599 - 2040 59,853,809 32,478 - - - - - - 32,478 - 2041 59,853,809 32,549 - - - - - - 32,549 - 2042 59,853,809 32,580 - - - - - - 32,580 - 2043 59,853,809 32,569 - - - - - - 32,569 - 2044 59,853,809 32,518 - - - - - - 32,518 - 2045 59,853,809 32,424 - - - - - - 32,424 - 2046 59,853,809 32,290 - - - - - - 32,290 - 2047 59,853,809 32,114 - - - - - - 32,114 - 2048 59,853,809 31,898 - - - - - - 31,898 - 2049 59,853,809 31,639 - - - - - - 31,639 - Total 1,943,575$ 550,000$ 228,813$ 778,813$ 1,360,000$ 351,678$ 1,711,678$ 4,434,065 -

* Interest of 3.25% for market transaction and 2.3% for TWDB DWSRF loan used for illustrative purposes only.

CITY OF RIESEL, TEXASCombined Debt Service Analysis - No Refunding

Certificates - Charles Street $500K TWDB Loan - Arsenic Project $1.25Mil

2011 Taxable Assessed Valuation 59,853,809$ 2011 W&S Net Revenues 366,422$ Collection Rate 95%2011 Tax Rate 0.2500$

2011 W&S Dated Date 4/1/2013 Dated Date 4/1/2013

Less Net RevenuesFYE Assesed Outstanding Refunded New Total Avail for 9/30 Valuation Debt Service Debt Service Principal Interest * Total Principal Interest * Total Debt Service Other Purposes2013 59,853,809$ 73,299$ 73,299$ -$ 4,200$ 4,200$ -$ 15,881$ 15,881$ 20,081$ 366,422$ 2014 59,853,809 59,909 59,909 35,000 16,800 51,800 45,000 63,525 108,525 160,325 366,422 2015 59,853,809 60,199 60,199 40,000 15,575 55,575 45,000 61,950 106,950 162,525 366,422 2016 59,853,809 59,441 59,441 40,000 14,175 54,175 45,000 60,375 105,375 159,550 366,422 2017 59,853,809 59,663 59,663 40,000 12,775 52,775 50,000 58,800 108,800 161,575 366,422 2018 59,853,809 59,864 59,864 40,000 11,375 51,375 55,000 57,050 112,050 163,425 366,422 2019 59,853,809 59,018 59,018 45,000 9,975 54,975 50,000 55,125 105,125 160,100 366,422 2020 59,853,809 60,151 60,151 45,000 8,400 53,400 55,000 53,375 108,375 161,775 366,422 2021 59,853,809 59,216 59,216 45,000 6,825 51,825 60,000 51,450 111,450 163,275 366,422 2022 59,853,809 60,261 60,261 50,000 5,250 55,250 55,000 49,350 104,350 159,600 366,422 2023 59,853,809 59,237 59,237 50,000 3,500 53,500 60,000 47,425 107,425 160,925 366,422 2024 59,853,809 59,213 59,213 50,000 1,750 51,750 65,000 45,325 110,325 162,075 366,422 2025 59,853,809 59,121 59,121 - - - 120,000 43,050 163,050 163,050 366,422 2026 59,853,809 59,009 59,009 - - - 125,000 38,850 163,850 163,850 366,422 2027 59,853,809 59,828 59,828 - - - 130,000 34,475 164,475 164,475 366,422 2028 59,853,809 58,579 58,579 - - - 130,000 29,925 159,925 159,925 366,422 2029 59,853,809 59,310 59,310 - - - 135,000 25,375 160,375 160,375 366,422 2030 59,853,809 59,952 59,952 - - - 140,000 20,650 160,650 160,650 366,422 2031 59,853,809 59,526 59,526 - - - 145,000 15,750 160,750 160,750 366,422 2032 59,853,809 60,031 60,031 - - - 150,000 10,675 160,675 160,675 366,422 2033 59,853,809 59,469 59,469 - - - 155,000 5,425 160,425 160,425 366,422 2034 59,853,809 58,838 58,838 - - - - - - - - 2035 59,853,809 59,166 59,166 - - - - - - - - 2036 59,853,809 59,406 59,406 - - - - - - - - 2037 59,853,809 59,577 59,577 - - - - - - - - 2038 59,853,809 59,633 59,633 - - - - - - - - 2039 59,853,809 59,599 59,599 - - - - - - - - 2040 59,853,809 32,478 32,478 - - - - - - - - 2041 59,853,809 32,549 32,549 - - - - - - - - 2042 59,853,809 32,580 32,580 - - - - - - - - 2043 59,853,809 32,569 32,569 - - - - - - - - 2044 59,853,809 32,518 32,518 - - - - - - - - 2045 59,853,809 32,424 32,424 - - - - - - - - 2046 59,853,809 32,290 32,290 - - - - - - - - 2047 59,853,809 32,114 32,114 - - - - - - - - 2048 59,853,809 31,898 31,898 - - - - - - - - 2049 59,853,809 31,639 31,639 - - - - - - - - Total 1,943,575$ 1,943,575$ 480,000$ 110,600$ 590,600$ 1,815,000$ 843,806$ 2,658,806$ 3,249,406 -

* Interest of 3.25% used for illustrative purposes only.

The Refunding Bonds Certificates-Combined Projects $1.75 Mil Wrapped

CITY OF RIESEL, TEXASCombined Debt Service Analysis - Refunding and Wrapped Debt Service

CONTRACT FOR FINANCIAL ADVISORY SERVICES

City of Riesel, Texas McLennan County This Contract for Financial Advisory Services (the “Contract”) is made as of _______________ by and between the City of Riesel (“City”) and Coastal Securities, Inc. (“Coastal”).

Recitals

1. The City is contemplating the sale of debt obligations from time to time in amounts to be determined for various purposes. 2. This agreement shall apply to any and all evidences of indebtedness or debt obligations that may be authorized and issued or otherwise created or assumed by the City or its entities (“Obligations”) from time to time during the time in which this agreement shall be effective. 3. The City is expected to retain a recognized municipal bond attorney (“Bond Counsel”) who will prepare the proceedings and advise the steps necessary to be taken in the legal issuance and final delivery of Obligations and who will issue an opinion approving the legality of such Obligations. Now, therefore, in consideration of the promises and other good and valuable consideration and of the mutual benefits, covenants and respective agreements hereinafter set forth and expressed, the City and Coastal agree as follows:

I.

Coastal will serve as financial advisor to the City in connection with the sale of Obligations by the City and in such capacity Coastal will perform those services normally performed by financial advisors, and such other services as, in our judgement, may be necessary or advisable including, as follows, to: 1. Provide our financial services and our facilities as Financial Advisor and agree to direct and coordinate all programs of financing as may be considered and authorized during the period in which this agreement shall be effective; 2. Review the financial resources of the City in order to devise a plan of financing, a maturity schedule for each issue of Obligations, options of prior payment and other such matters of a financial nature, all in order to issue Obligations under terms and conditions most advantageous to the City consistent with a minimum effective interest rate; 3. Attend meetings, as requested by the City, in connection with the sale of the Obligations; 4. Advise the City of current bond market conditions, forthcoming bond issues and other general information and economic data which might be normally expected to influence bids and interest rates and to recommend the best method of sale, the date and conditions for sale;

CONTRACT FOR FINANCIAL ADVISORY SERVICES City of Riesel, Texas Page 2 5. As appropriate, prepare financial loan application for submission of requirements for financial assistance to local, state or federal lending agencies, as appropriate. Coordinate and cooperate activities with other consultants in the preparation of such loan application. 6. Coordinate the preparation of the offering documents approved for use in the sale of the Obligations (the “Offering Documents”) containing information and data ordinarily found in such documents and to arrange for the publication and distribution of the Offering Documents. The Offering Documents shall be approved by the City upon or prior to the sale of the Obligations; 7. Recommend the advisability of obtaining a credit rating or ratings and coordinate the preparation of such information required for submission to the rating agency, or agencies. Where the advisability of personal presentation of information to the rating agencies is appropriate, arrange for such personal presentations and be represented at such presentations. 8. Represent the City at the sale of the Obligations by negotiating with the underwriter(s) to ensure the Obligations are sold on favorable conditions or, if the Obligations are sold at competitive sale, tabulate the bids and make a recommendation as to the best bid; 9. Coordinate with Bond Counsel to make appropriate arrangements for the delivery of the Obligations to the purchaser; 10. Perform such other duties as are customary in the performance of financial advisory services as necessary, in the judgement of Coastal, or as requested by the City.

II.

The City, in consideration of the services to be performed by Coastal, agrees to pay, for each series of Obligations issued: a fee of 2% of the first $1,000,000 par amount; plus 1.00% of the next $1,000,000 par amount; plus .75% of the next $1,000,000 par amount; plus .50% over $3,000,000 par amount. The minimum for any issue shall be $20,000. For each series of Obligations purchased by the Texas Water Development Board, the fee shall be 110% of the fee calculated according to the schedule above. Such fee is contingent on the sale of the Obligations and shall become due and payable as soon as practicable after delivery of the Obligations. The City also agrees to pay the costs set out in Exhibit A.

CONTRACT FOR FINANCIAL ADVISORY SERVICES City of Riesel, Texas Page 3

III.

This Agreement shall become effective at the date of acceptance by the City set out herein and below and may be terminated with or without cause by the City upon thirty (30) days written notice. In the event of such termination, it is understood and agreed that only the amount due to Coastal for services provided and expenses incurred to the date of termination will be due and payable. No penalty will be assessed for termination of this Agreement.

IV.

In witness whereof, the parties hereto have caused the Contract to be signed in duplicate originals as of the date and year specified herein. COASTAL SECURITIES

By: ___________________________________ Ben J. Rosenberg Senior Vice President

CITY OF RIESEL By: __________________________________ Officer By: __________________________________ Title ______________ Date of Approval

CONTRACT FOR FINANCIAL ADVISORY SERVICES City of Riesel, Texas Page 4

EXHIBIT A

EXPENSE ITEMS

Expenses associated with the issuance, sale and delivery of Obligations to be paid by the Issuer are as follows:

Preparation, printing and distribution of Offering Documents and accompanying documents

Printing, distribution and delivery costs of applications for financial assistance

Reports or fees of independent consultants

Information meetings with investors, as necessary

Rating Fees

Credit Enhancement Fees

Travel to rating meetings

Travel to state or federal agency meetings

Verification of calculations for refunding issues, if required

Computer and Structuring Fee for advance refunding issues

Costs, if any, associated with the delivery of Obligations

Printing of the Obligations

Bond Counsel and legal counsel fees