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REMARKETING MEMORANDUM Dated October 21, 2016 · PDF file the Remarketing Agent. This Remarketing Memorandum contains, in part, estimates and matters of opinion which are not intended

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  • REMARKETING MEMORANDUM Dated October 21, 2016

    REMARKETING (NOT A NEW ISSUE)– Book-Entry-Only Ratings: Fitch: “AA” Moody’s: “Aa2”

    S&P: “AA” (See “RATINGS” herein.)

    In the Original Opinion (hereinafter defined), Co-Bond Counsel (named below) rendered an opinion that, assuming continuing compliance by the City (defined below) after the date of initial delivery of the Bonds (defined below) with certain covenants contained in the Ordinance (defined below) 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) is 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) is not included in computing the alternative minimum taxable income of the owners thereof who are individuals or, except as herein described, corporations. Because the Bonds are being converted from the Initial Interest Rate Period (defined herein) to a new Term Rate Period (defined herein), Co-Bond Counsel will render an opinion to the Paying Agent/Registrar (defined herein) that such remarketing will not adversely affect the excludability of interest on the Bonds for federal income tax purposes. The Remarketing Agent (defined below) will be allowed to rely on this opinion. See “TAX MATTERS” herein.

    $98,795,000 CITY OF SAN ANTONIO, TEXAS

    (A political subdivision of the State of Texas located primarily in Bexar County) WATER SYSTEM VARIABLE RATE JUNIOR LIEN REVENUE AND REFUNDING BONDS, SERIES 2013F (NO RESERVE FUND)


    Originally Dated: October 1, 2013 Interest to accrue from the November 1, 2016 Conversion Date

    Mandatory Tender Date: November 1, 2021 Maturity Date: May 1, 2043

    GENERAL…The City of San Antonio, Texas (the “City”), acting on behalf and for the benefit of the San Antonio Water System (“SAWS”), initially issued its $100,000,000 Water System Variable Rate Junior Lien Revenue and Refunding Bonds, Series 2013F (No Reserve Fund) (the “Bonds”) pursuant to the general laws of the State of Texas, including particularly Chapters 1207, 1371, and 1502, as amended, Texas Government Code, the City’s Home Rule Charter, and the ordinance relating to the Bonds adopted by the City Council of the City (the “City Council”) on September 19, 2013, and as amended by ordinance of the City Council adopted on September 29, 2016 (such ordinance, as amended, the “Ordinance”). The definitive Bonds have been registered and delivered to Cede & Co., the nominee of the Depository Trust Company (“DTC”) pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds in the New Interest Period (defined herein) may be acquired in denominations of $5,000 or any integral multiple 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 U.S. Bank National Association, Dallas, Texas, as the paying agent/registrar for the Bonds, to Cede & Co., which will make distribution of the amounts so paid to the beneficial owners of the Bonds. See “THE BONDS – Book-Entry-Only System” and “– General – Paying Agent/Registrar” herein.

    REMARKETING…The Bonds are multi-modal variable interest rate obligations, currently outstanding in the aggregate principal amount of $100,000,000 and bearing interest at a variable rate in the initial interest mode that expires on October 31, 2016. On November 1, 2016, the Bonds will be mandatorily tendered for purchase and $98,795,000 in Bonds will be remarketed into a five-year interest rate period that commences on such date and ends on October 31, 2021 (the “New Interest Period”), during which New Interest Period such remarketed Bonds will bear interest at a Term Rate (defined herein). The Bonds are being remarketed to provide proceeds to pay the purchase price of the aforementioned mandatorily-tendered Bonds due on November 1, 2016. The foregoing is authorized pursuant to a resolution (the “Remarketing Resolution”) adopted by the SAWS Board of Trustees (the “Board”) on September 13, 2016 and the Ordinance and is undertaken in accordance with applicable Texas law. In the Remarketing Resolution (defined herein), the Board delegated to certain authorized SAWS officials (each an “Authorized Official”) the authority to establish the final remarketing terms of the Bonds in the New Interest Period, which final terms are evidenced in an “Approval Certificate” executed by an Authorized Official on October 21, 2016 (see table appearing under “NEW TERM RATE PERIOD INFORMATION” on page ii hereof for a description of such finalized terms).

    INTEREST…During the New Interest Period, the Bonds will bear interest at the Term Rate identified above, with such interest initially payable on May 1, 2017 and on each November 1 and May 1 (each an “Interest Payment Date”) thereafter through and including November 1, 2021 (which is the Interest Payment Date immediately succeeding the expiration of the New Interest Period and the “Conversion Date” for the Bonds). Interest on the Bonds in the New Interest Period is calculated on the basis of a 360-day year of twelve 30-day months.

    TENDER; REDEMPTION; REMARKETING AND CONVERSION…During the New Interest Period, the Bonds (i) are not subject to optional or mandatory tender and (ii) are not subject to redemption. On the Conversion Date, the Bonds are subject to mandatory tender, without right of retention, and are subject to redemption at the option of the City. At the conclusion of the New Interest Period, the City expects to convert and remarket the Bonds at such time subject to mandatory tender into a new Interest Mode (as defined in the Ordinance) in accordance with the provisions of the Ordinance (which may include a conversion of Interest Mode or the same Interest Mode in the same or of a different duration). See “THE BONDS – Conversion of Interest Modes; Mandatory Tender; Purchase of Tendered Bonds” and “THE BONDS – Redemption” herein.

    All tenders of Bonds must be made to U.S. Bank National Association, Dallas, Texas, as tender agent for the Bonds. Bonds tendered for purchase will be bought from the proceeds derived from the remarketing of such Bonds, if any; provided, however, that should the date for tender of the Bonds occur on an Interest Payment Date, the accrued interest portion of the Purchase Price (defined herein) is to be paid by the City.

    NO LIQUIDITY SUPPORT…During the New Interest Period, the Bonds are not subject to the benefit of a liquidity facility provided by a third party. Accordingly, a failure by the Remarketing Agent (defined herein) to remarket the Bonds at the conclusion of the New Interest Period will result in the rescission of the notice of mandatory tender with respect thereto and the City not having any obligation to purchase such Bonds at that time. The occurrence of the foregoing will not result in an event of default under the Ordinance or the Bonds. Until such time as the City redeems or remarkets such Bonds, those Bonds shall bear interest at the applicable Stepped Rate, calculated on a 30/360 basis and actual number of days elapsed. See “THE BONDS – Conversion of Interest Modes; Mandatory Tender; Purchase of Tendered Bonds” herein.

    SECURITY…The Bonds are special obligations of the City, payable, both as to principal and interest, solely from and secured by, together with the other currently outstanding Junior Lien Obligations (as defined and described herein), a junior lien on and pledge of the Net Revenues (defined herein) of the System (defined herein) remaining after the City’s satisfaction of its debt service payment and reserve fund obligations relating to the Senior Lien Obligations (as defined and described herein). The Reserve Fund (defined herein) providing additional security for certain of the outstanding Junior Lien Obligations does not additionally secure the Bonds. The City has not covenanted or obligated itself to pay the Bonds from money raised or to be raised from taxation (see “THE BONDS – Security and Source of Payment; Pledge of Net Revenues” herein). In the Ordinance, the City has authorized the SAWS Board of Trustees (the “Board”) to manage, operate, and maintain the System.

    LEGALITY…The Bonds were originally delivered to the initial purchasers, together with the approving opinions of the Attorney General of the State of Texas and the Original Opinion of Norton Rose Fulbright US LLP (formerly Fulbright & Jaworski LLP), San Antonio, Texas, and Escamilla & Poneck, LLP, San Antonio, Texas, Co-Bond Counsel (see “APPENDIX F - FORM OF CO-BOND COUNSEL’S OPINION” herein). Certain legal matters with respect to the remarketing of the Bonds will be passed upon for the City by Co-Bond Counsel, and for the remarketing agent for the Bonds identified below (the “Remarketing Agent”) by McCall, Parkhurst & Horton L.L.P., San Antonio, Texas.

    SETTLEMENT…It is expected that the settlement of the remarketing of the Bonds will occur through the services of DTC on or about November 1, 2016.


  • - ii -


    Interest Period

    Commencement Interest Period

    Expiration Mandatory

    Tender Date Term Rate Stepped Rate CUSIP No.(1)