north texas municipal water district...apr 23, 2020 · and lloyd gosselink for rate modeling...

NORTH TEXAS MUNICIPAL WATER DISTRICT 501 E. Brown Street • Wylie, Texas 75098

(972) 442-5405 – Phone • (972) 295-6440 – Fax

TO: BOARD OF DIRECTORS FROM: THOMAS W. KULA, EXECUTIVE DIRECTOR DATE: APRIL 16, 2020 SUBJECT: REGULAR MEETING – THURSDAY, APRIL 23, 2020 I. APRIL 2020 BOARD/COMMITTEE MEETINGS (via teleconference)

The following Committee meetings were held on April 8, 2020: • Executive Committee • Finance/Audit Committee

The following Committee meetings will be as follows:

• Tuesday, April 21, 2020 o 2:00 p.m. – Water Committee Meeting

• Wednesday, April 22, 2020 o 2:00 p.m. – Wastewater Committee

The regular Board meeting will be held on Thursday, April 23, 2020, at 4:00 p.m.

II. MONTHLY REPORTS/APPENDIX

Please note the following reports/documents are enclosed in the Board packet for your reference as appendices: • Glossary of Terms • Board Policies Manual, Section IX. Board of Directors Meeting Agenda Policy • Water Consumption Report • Water Quality Reports

o Bonham Water Treatment Plant o Tawakoni Water Treatment Plant o Wylie Water Treatment Plant

• Wastewater Flow Report • Wastewater Treatment Plant Capacity Report • Wastewater Quality Report • Solid Waste Tonnage Report • NTMWD Financial Statements

o Monthly Financial Statements for the month ended March 31, 2020 o NTMWD Investment Summary for the Quarter ended March 31, 2020

MEMORANDUM TO BOARD OF DIRECTORS APRIL 16, 2020 PAGE 2

o NTMWD Employee’s Retirement Fund for the three months ended March 31, 2020

o NTMWD Retiree Health Insurance Fund for the six months ended March 31, 2020

• Engineering Activity Report • Construction Progress Report • Bois d’Arc Lake Report • Preliminary Official Statement – Panther Creek Regional Wastewater System

Revenue Bonds, Series 2020 • Preliminary Official Statement – Mustang Creek Wastewater Interceptor System

Contract Revenue Bonds, Series 2020

III. WATER CONTRACT AMENDMENT PROCESS

Following is a summary of the costs related to the Water Contract Amendment activities as of March 12, 2020:

FY16 FY17 FY18 FY19 FY20 TOTAL Contract Amendment Activities (a)

$156,882.85 $143,184.38 $54,670.67 $28,301.03

$383,038.93

PUC Activities (b) $383,180.88 $1,949,386.65 $1,708,756.74 $208,023.18 $4,242,347.35

Litigation Activities (c) $816,152.29 $86,303.72 $100,854.61 $3,602.00

$1,006,372.62

TOTAL $156,882.85 $1,342,517.55 $2,090,361.04 $1,837,912.38 $204,085.08

$5,631,758.90

(a) Includes payments to NewGen Strategies, Raftelis, Strategic Government Resources

and Lloyd Gosselink for rate modeling services, facilitation services and legal support (b) Includes payments to Lloyd Gosselink for legal support to respond to PUC petition (c) Includes payments to Lloyd Gosselink for legal support for bond validation and PUC

jurisdictional activities

The hourly rate charges for Lloyd Gosselink are as follows:

IV. STRATEGIC HIGHLIGHT: Goal 3 Partnerships

Public Information on NTMWD Response to COVID-19 As part of our commitment to keep the communities we serve informed, NTMWD has created a dedicated page on NTMWD.com with the most current information about our response to COVID-19. This includes messages to assure the public that drinking water is safe, NTMWD workers continue to provide essential services 24/7, and the public can help our workers by not flushing wipes or alternatives to toilet paper to prevent system issues. Our dedicated operators, laboratory technicians and other personnel are working

LEGAL COST TO NTMWD HOURLY RATE RANGE Paralegal $115 - $200 Associate $150 - $280 Principal $225 - $485

MEMORANDUM TO BOARD OF DIRECTORS APRIL 16, 2020 PAGE 3

around the clock to continue the vital services we all count on. NTMWD is also taking precautions to keep workers healthy and protected. It’s personal for us. We live here and our families rely on these services, too. Follow us on social media and find current information about NTMWD operations during this crisis here: https://www.ntmwd.com/ntmwd-response-to-covid-19-latest-information/ Education on Solid Waste Member City Acceptable Use and Drop-Off Requirements Our Solid Waste Member City resident disposal program has been very successful over the years helping those who live in Allen, Frisco, McKinney, Plano and Richardson dispose of excess household waste that is not able to fit in their cart. In partnership with our Cities, NTMWD allows those qualifying residents to use our facilities up to twice per month. To help those residents “know before they go” to one of our locations, there is now a quick reference guide on what can and cannot be accepted as part of the program. It includes information on who qualifies for the twice-monthly free program, location maps with hours of operation for each facility, easy-to-follow graphics, and answers to the most frequently asked questions. Last year, over 142,000 residents used the program bringing in approximately 17,100 tons of waste. The Custer Road Transfer Station continues to be the busiest of the four customer convenience drop-off centers, seeing 109,186 resident vehicles in FY19 including a single-day high that year of 1,459 vehicles. The new guide was produced as a graphic representation to reinforce the Acceptable Use Policy as approved by the Board of Directors and agreed upon by the Solid Waste Member Cities. You can view the new How-To-Guide on our website, and it also will be offered as a tool for our cities to use for informing their residents: https://www.ntmwd.com/documents/acceptable-waste-drop-off-guide/

https://www.ntmwd.com/ntmwd-response-to-covid-19-latest-information/

https://www.ntmwd.com/documents/acceptable-waste-drop-off-guide/

________________

1Persons with disabilities who plan to attend the NTMWD Board of Directors meeting and who may need auxiliary aids or services are requested to contact Shannon Sauceman in the NTMWD Administrative Offices at (972) 442-5405 as soon as possible. All reasonable efforts will be taken to make the appropriate arrangements.


(972) 442-5405 – Phone • (972) 295-6440 – Fax

BOARD OF DIRECTORS REGULAR MEETING (BY TELECONFERENCE)

THURSDAY, APRIL 23, 2020 4:00 P.M.

Notice is hereby given pursuant to V.T.C.A., Government Code, Chapter 551, that the Board of Directors of North Texas Municipal Water District (NTMWD) will hold a regular meeting by teleconference, accessible to the public, on Thursday, April 23, 2020, at 4:00 p.m. In accordance with the COVID-19 public health threat and the related March 16, 2020, action by the Office of the Governor, temporarily suspending certain provisions of the Texas Open Meetings Act, NTMWD will hold its meeting by telephonic conference call. In lieu of physical attendance of the meeting, the public may teleconference in to the April 23, 2020, Board meeting by calling 1-844-621-3956 and entering the following access code: 928 587 040. Members of the public wishing to make public comment during the meeting should follow the instructions for on-line registration listed under Item V. below no later than the start time of the meeting. The meeting will be recorded and the audio recording will be available on the NTMWD website after the meeting. The Board of Directors is authorized by the Texas Open Meetings Act to convene in closed or executive session for certain purposes. These purposes include receiving legal advice from its attorney (Section 551.071); discussing real property matters (Section 551.072); discussing gifts and donations (Section 551.073); discussing personnel matters (Section 551.074); or discussing security personnel or devices (Section 551.076). If the Board of Directors determines to go into executive session on any item on this agenda, the Presiding Officer will announce that an executive session will be held and will identify the item to be discussed and provision of the Open Meetings Act that authorizes the closed or executive session.

AGENDA1

I. CALL TO ORDER

II. INVOCATION

III. ROLL CALL/ANNOUNCEMENT OF QUORUM NTMWD staff will call the roll and confirm attendance of Board members by voice confirmation. The Board Secretary shall announce a quorum.

AGENDA – APRIL 23, 2020 PAGE 2 IV. INSTRUCTIONS FROM MODERATOR

A member of NTMWD staff will serve as moderator for the teleconference and provide instructions to Board members, staff and the public for conducting the meeting by teleconference.

V. PUBLIC COMMENTS

INSTRUCTIONS FOR PUBLIC COMMENT ON-LINE REGISTRATION: Prior to the start of the Board meeting, members of the public wishing to provide public comment must submit via email to [email protected] their first and last name, organization, comment topic, mailing address and email address. During the public comment portion of the meeting, speakers will be recognized by name and asked to provide their comments. The time limit is five (5) minutes per speaker, not to exceed a total of thirty (30) minutes for all speakers. The Board may not discuss these items, but may respond with factual or policy information.

VI. OPENING REMARKS

A. President’s Remarks concerning current events, conduct of meeting, posted agenda items, committee assignments, and related matters

B. Executive Director’s Status Report concerning legislation and regulatory matters,

budgets, current projects and ongoing programs of the District including the Regional Water System, Regional Wastewater System, Regional Solid Waste System, Watershed Protection, and Water Conservation

VII. CONSENT AGENDA ITEMS

The Consent Agenda allows the Board of Directors to approve all routine, noncontroversial items with a single motion, without the need for discussion by the entire Board. Any item may be removed from consent and considered individually upon request of a Board member or NTMWD staff member. A. Regular Board Meeting Minutes – Consent Agenda Item No. 20-04-01

• Consider approval of March 26, 2020, Board of Directors Regular meeting minutes

B. Monthly Construction Report – Consent Agenda Item No. 20-04-02

• Consider approval of April 2020 Monthly Construction Report

C. Declaration of NTMWD Property as Salvage or Surplus and authorizing entering contract to facilitate sale of such assets – Consent Agenda Item No. 20-04-03 • Consider declaring certain NTMWD property as salvage or surplus and

authorizing the Executive Director to enter into a contract with Rene Bates Auctioneers, Inc., for the auction sale of such assets as listed in Consent Agenda Item No. 20-04-03

mailto:[email protected]

AGENDA – APRIL 23, 2020 PAGE 3

D. Authorize legal services for Indian Creek Force Main No. 2 Project – Consent Agenda Item No. 20-04-04 • Consider authorizing legal services in the amount of $20,000 with Saunders,

Walsh & Beard, Attorneys & Counselors for Project No. 501-0454-17, Indian Creek Force Main No. 2

VIII. AGENDA ITEMS FOR INDIVIDUAL CONSIDERATION

GENERAL/ADMINISTRATIVE SERVICES ITEMS A. Adoption of Resolution commending Thomas W. Kula’s service to the

NTMWD • Consider adoption of Resolution No. 20-18 commending Thomas W. Kula for

six years of dedicated service to the NTMWD

B. Authorize issuance, sale, and delivery of Panther Creek Regional Wastewater System Treatment Plant Contract Revenue Bonds, Series 2020 – Administrative Memorandum No. 5547 • Consider adoption of Resolution No. 20-15 authorizing the issuance, sale and

delivery of approximately $5,200,000 of NTMWD Panther Creek Regional Wastewater System Treatment Plant Contract Revenue Bonds, Series 2020, and approving and authorizing instruments and procedures relating thereto

C. Authorize issuance, sale, and delivery of Mustang Creek Wastewater Interceptor System Contract Revenue Bonds, Series 2020 – Administrative Memorandum No. 5548 • Consider adoption of Resolution No. 20-16 authorizing the issuance, sale, and

delivery of approximately $4,215,000 of NTMWD Mustang Creek Wastewater Interceptor System Contract Revenue Bonds, Series 2020, and approving and authorizing instruments and procedures relating thereto

D. Appointment of auditors for FY 2020 audit services – Administrative

Memorandum No. 5549 • Consider authorizing appointment of Crowe, LLP, in the amount of $634,250

for annual audit services in the amount of $634,250 starting in FY 20 and subject to review for renewal annually

E. Authorize final settlement agreement with Denali Water Solutions – Administrative Memorandum No. 5550 • Consider authorizing final settlement agreement with Denali Water Solutions

related to Wylie Water Treatment Plant Complex, water treatment residuals removal and disposal

BOIS D’ARC LAKE AGENDA ITEMS

F. Authorize Amendment No. 11 to Construction Manager At-Risk Agreement

(CMAR) – Administrative Memorandum No. 5551 • Consider authorizing execution of Amendment No. 11 to the CMAR agreement

for partial guaranteed maximum price No. 8 as follows: o Decrease the Bois d’Arc Lake Raw Water Pipeline by $4,823,672.39 due

to a reduction in work package scope, Project No. 101-0424-16; and,


o Additional funding of $49,309,074.72 for installation of large diameter water pipeline and the cathodic protection system for the treated water pipeline from Leonard Water Treatment Plant to McKinney No. 4, Project No. 101-0425-16

WATER SYSTEM AGENDA ITEMS

G. Authorize additional inspection services for Wylie Water Treatment Plant IV

Expansion Project – Administrative Memorandum No. 5552 • Consider authorizing additional inspection services with Mbroh Engineering,

Inc., in the amount of $180,000 for Project No. 101-0387-15, Wylie Water Treatment Plant IV 70 MGD Expansion to 210 MGD

H. Award of Construction Contract for Kaufman 20-inch Waterline Assessment,

Phase II Project – Administrative Memorandum No. 5553 • Consider authorizing award of construction contract with Mountain Cascade of

Texas, LLC, in the amount of $1,215,500 for Project No. 101-0427-16, Kaufman 20-inch Waterline Assessment, Phase II

I. Authorize filing for temporary water use permit regarding Lavon Lake –

Administrative Memorandum No. 5554 • Consider adoption of Resolution No. 20-17 authorizing filing of temporary water

use permit application, which authorizes the Executive Director to execute and prosecute an application for temporary water use permit authorizing the overdraft of Lavon Lake for a three-year period

WASTEWATER SYSTEM AGENDA ITEMS

J. Authorize engineering services agreement for Panther Creek Wastewater

Treatment Plant Expansion – Administrative Memorandum No. 5555 • Consider authorizing execution of engineering services agreement with HDR

Engineering, Inc., in the amount of $5,364,255 for preliminary and final engineering design for Project No. 307-0493-18, Panther Creek Wastewater Treatment Plant Expansion to 15 MGD

K. Authorize engineering services agreement for Forney Mustang Creek Lift Station, Phase II, and Forney Force Main Improvements Project – Administrative Memorandum No. 5556 • Consider authorizing execution of engineering services agreement with Hazen

and Sawyer in the amount of $1,331,400 for final engineering design for Project No. 509-0561-20, Forney Mustang Creek Lift Station Phase II and Forney Force Main Improvements

L. Authorize award of construction contract for Beck Branch Parallel

Interceptor Improvements Project – Administrative Memorandum No. 5557 • Consider authorizing award of construction contract to ARK Contracting

Services, LLC, in the amount of $21,014.584 for Project No. 501-0439-16, Beck Branch Parallel Interceptor Improvements, Beck Branch Parallel Interceptor, Phase II, and Plano Spring Creek Force Main Parallel


M. Ratification of action on Executive Director evalution and employment contract • Consider authorizing ratification of action taken at April 16, 2020, Special

Board meeting wherein public access teleconference line failed on Executive Director evaluation and employment contract

N. Authorize action on Executive Director vacancy • Consider action on Executive Director vacancy, including appointment of

interim Executive Director and search process

IX. DISCUSSION ITEMS A. Update on Boardroom Technology

B. Appointment of Nominating Committee to develop recommendation for slate of

officers for 2020-2021 C. Discuss status of Member City contract matters including:

1. Petitions of the Cities of Garland, Mesquite, Plano and Richardson Appealing Wholesale Water Rates Implemented by North Texas Municipal Water District, Docket Nos. 46662, 47863, 49043, 50382 before the Public Utility Commission of Texas

2. Facilitation with Member Cities regarding alternate cost methodologies to the Amendatory Water Supply Contract

D. Update on litigation involving North Texas Municipal Water District/advice from legal counsel, including: 1. North Texas Municipal Water District v. S.J. Louis Construction of Texas, Ltd.,

ACT Pipe and Supply, Inc., North American Pipe Corporation, J-M Manufacturing, Inc., d/b/a JM Eagle, Inc., Cause No. 429-06607-2019, 429th Judicial District, Collin County, Texas (121 Force Main)

E. Review of items for follow up raised during meeting F. Opportunity for Board members to request potential future agenda items

(No substantive discussion of items will take place at this time)

X. ADJOURNMENT

NORTH TEXAS MUNICIPAL WATER DISTRICT APRIL 2020 CONSENT AGENDA ITEM NO. 20-04-01

MARCH 2020 REGULAR BOARD MEETING MINUTES

RECOMMENDATION The Executive Director and NTMWD staff recommend the Board of Directors approve the minutes of the regular Board meeting held on Thursday, March 26, 2020 as presented. (See attached.)


(972) 442-5405 – Phone • (972) 295-6440 – Fax

MINUTES REGULAR MEETING (BY TELECONFERENCE) OF THE BOARD OF DIRECTORS

MARCH 26, 2020

The North Texas Municipal Water District (NTMWD) Board of Directors met in regular meeting by teleconference on Thursday, March 26, 2020, at 3:00 p.m. Notice of the meeting was legally posted in accordance with Government Code, Title 551, Open Meetings.

I. CALL TO ORDER President Don Gordon called the meeting to order at approximately 3:00 p.m. President Gordon advised the following regarding today’s meeting: In accordance with the COVID-19 public health threat and the related March 16, 2020, action by the Office of the Governor, temporarily suspending certain provisions of the Texas Open Meetings Act, NTMWD will hold its meeting by telephonic conference call.

In lieu of physical attendance at the meeting, the public may teleconference in to the March 26, 2020, Board meeting by calling (469) 210-7159 and entering the following access code: 138 994 37. Members of the public wishing to make public comment during the meeting should follow the instructions for on-line registration listed under Item V. below no later than the start time of the meeting. The meeting will be recorded and the audio recording will be made available on the NTMWD website after the meeting.

II. INVOCATION

Board Secretary Darrell Grooms offered the invocation.

President Gordon announced that the Board would forego the Pledge of Allegiance and the Pledge of Allegiance to the Texas Flag due to meeting by teleconference.

III. ROLL CALL/ANNOUNCEMENT OF QUORUM

Secretary Darrell Grooms called the roll in alphabetical order and confirmed that all Board Members were in attendance with voice confirmation as follows:

1 Anderson, Terry Sam 2 Carr, John 3 Crump, George 4 Dyer, Phil 5 Farmer, Joe

MINUTES – MARCH 26, 2020 PAGE 2

6 Fuller, Marvin 7 Gordon, Don 8 Grooms, Darrell 9 Hogan, Rod 10 Hollifield, David 11 Imrie, Chip 12 Johnson, Blair 13 Joplin, Joe 14 Kerr, James (Jim) 15 May, Jack 16 McKissick, Charles 17 Murphy, John 18 Parks, Larry 19 Patrick, Brenda Jean 20 Peasley, Richard 21 Shuyler, Lynn 22 Sweeden, John 23 Stephens, Keith

The following NTMWD legal and financial consultants attended the meeting by teleconference:

Lauren Kalisek – Lloyd Gosselink Rochelle & Townsend Lewis Isaacks and Mark Walsh – Saunders Walsh & Beard Nick Bulaich and David Medanich - Hilltop Securities Molly Carson and Alan Raynor – McCall Parkhurst & Horton

IV. INSTRUCTIONS FROM MODERATOR Executive Director Tom Kula served as moderator for the teleconference and provided instructions to Board Members, staff and the public for conducting the meeting by teleconference. He first thanked all the Directors and those necessary individuals present in the Board Room for their flexibility in order to conduct the meeting. Instructions included: • Remember to unmute your phone when you acknowledge your presence, provide

comments, make a motion/second, and vote. Please then return to mute to minimize any background noise.

• Please announce your name when speaking. • If for some reason you drop off the call, simply follow the instructions to redial into

teleconference. • Audio for this meeting will be recorded and made available on the website in

accordance with the current modified requirements. It was noted that some members of the public had called to listen to the teleconference.

• Secretary Darrell Grooms will oversee the voting process and confirm the votes of each Director.

V. PUBLIC COMMENTS

Executive Director Tom Kula advised the following regarding the public comments portion of the meeting:


• Prior to the start of the Board meeting, members of the public wishing to provide public comment submitted via email to NTMWD their first and last name, organization, comment topic, mailing address and email address.

• Speakers will be recognized by name and asked to provide their comments. • The time limit is five (5) minutes per speaker, not to exceed a total of thirty (30)

minutes for all speakers. • The Board may not discuss these items but may respond with factual or policy

information.

There were no requests for public comments from members of the public.

VI. OPENING REMARKS

A. President’s Remarks concerning current events, conduct of meeting, posted agenda items, committee assignments, and related matters

President Don Gordon stated that these are some unusual times due to COVID-19. He stated the Board and staff carefully considered what needed to be included on this agenda in order to accomplish the NTMWD mission of providing essential services of water, wastewater, and solid waste while at the same time continuing to monitor developments around the spread of COVID-19. Every item on this agenda is vital and essential to keep business moving forward. President Gordon advised that if there are questions on the agenda items, please keep questions germane to the vote. If there are any other questions, please save those for the staff tomorrow.

Per the Governor’s Order, this meeting is being recorded and will be made available on the website in the future. In the interest of time and because this meeting is telephonic, there will be no Executive Session. There were no operations Committee meetings conducted this month, however operations agenda items have been reviewed with the Committee Chairs and Vice-Chairs. Those Committee Chairs will provide a review of items as they appear on the agenda and will be prepared to make motions. The Operations Committee Chairs’ motions do not represent a recommendation from the Committees since the Committees did not meet.

President Gordon advised that those who would like to make a motion or second to please identify themselves first. Discussion will be held after the motion and second, per Roberts Rules of Order. President Gordon advised that Director Phil Dyer will abstain from voting on the Consent Agenda items. Director Larry Parks will abstain from voting on Agenda Item No. VIII. F. The April 2020 Board and Committee meeting schedule is still tentative; however, the following meetings are planned:

o Wednesday, April 8, 2020: 11:30 a.m. – Executive Committee


o Thursday, April 23, 2020 4:00 p.m.

• The location for this meeting is to be confirmed. It was originally planned for the meeting to be held at the JBS Wetland Center, but it will need to be changed if a teleconference is needed.

o This is the current schedule; however, the schedule is subject to change

as to when, where, and how. o The tentative Main Stem Pump Station Tour scheduled for April 23rd has

been cancelled and will be rescheduled. o The April 25th Board Planning Workshop has been cancelled and will be

rescheduled.

B. Executive Director’s Status Report concerning legislation and regulatory matters, budgets, current projects and ongoing programs of the District including the Regional Water System, Regional Wastewater System, Regional Solid Waste System, Watershed Protection, and Water Conservation Executive Director Tom Kula advised that employees began the response plan regarding COVID-19 on March 12, 2020. Daily operations have been modified in accordance with Executive Orders received. He advised that the NTMWD work force has 829 people. Of those 177 have worked from home for the past two weeks. In Wastewater, Water, Solid Waste, 529 employees are reporting to work to continue providing essential services. As of now there are 72 people off work; 31 of those are on leave. Everyone is healthy and currently not affected by COVID-19. He noted that three employees’ family members have been tested for the virus; one was negative and the other two are awaiting results. Executive Director Kula offered his thanks to the District employees, and to the member and customer cities for continuing the duties to provide essential services. He also provided the most recent statistics on cases in Texas and in counties supported by the NTMWD. Executive Director Kula advised that today Governor Greg Abbott issued another Order for people who are traveling by plane to Texas from New York, Connecticut, New Jersey and New Orleans. The order states that those individuals must self-quarantine for 14 days. Mr. Kula advised he has published information to District employees (currently the 3rd edition) with answers to frequently asked questions regarding sick leave and what to do if they or a family member are affected by COVID-19. Executive Director Kula advised that Bois d’Arc Lake is coming along well. March has been another wet month, causing some delays. The notch is now closed on the coffer dam. The schedule will be caught up this summer with drier weather.

VII. CONSENT AGENDA ITEMS

The Consent Agenda allows the Board of Directors to approve all routine, noncontroversial items with a single motion, without the need for discussion by the entire Board. Any item may be removed from consent and considered individually upon request of a Board member or NTMWD staff member. Director Phil Dyer clarified that he is abstaining from voting on Consent Agenda Item G. (20-03-07).


Upon a motion by Director Rod Hogan and a second by Director Larry Parks to approve the Consent Agenda items, the Board of Directors voted to approve. A. Regular Board Meeting Minutes – Consent Agenda Item No. 20-03-01

• Consider approval of February 26, 2020, Board of Directors Regular meeting minutes

B. Special Board Meeting Minutes – Consent Agenda Item No. 20-03-02

• Consider approval of January 8, 2020, Special Board Meeting Minutes

C. Special Board Meeting Minutes – Consent Agenda Item No. 20-03-03 • Consider approval of March 4, 2020, Special Board Meeting Minutes

D. Monthly Construction Report – Consent Agenda Item No. 20-03-04

• Consider approval of March 2020 Monthly Construction Report

E. Resolution Conveying Property to Oncor Electric Delivery Company – Consent Agenda Item No. 20-03-05 • Consider adoption of Resolution No. 20-08 conveying property at Wylie Water

Treatment Plant Water System Operations Center site in the form of a 0.0735 acre permanent easement to Oncor Electric Delivery Company, LLC, Project No. 101-0352-14

F. Resolution authorizing encroachment agreement with Oncor Electric Delivery Company – Consent Agenda Item No. 20-03-06 • Consider adoption of Resolution No. 20-09 authorizing an encroachment

agreement with Oncor Electric Delivery Company, LLC, at the Wylie Water Treatment Plant No. III site, Project No. 101-0518-18

G. Engineering Services Agreement for Contracted Project Management Services – Consent Agenda Item No. 20-03-07 • Consider authorizing execution of an engineering services agreement with

Kimley-Horn and Associates, Inc., in the amount of $162,600 for contracted project management services on Project No. 507-0484-17, Buffalo Creek Parallel Interceptor, Phase I; Project No. 507-0549-19, Buffalo Creek Force Main Parallel; Project No. 509-0455-17, Forney Mustang Creek Lift Station, Phase I

H. Legal Services for Sister Grove Regional Water Resource Recovery Facility – Consent Agenda Item No. 20-03-08 • Consider authorizing legal services with Lloyd Gosselink Rochelle &

Townsend, PC, in the amount of $25,000 for Project No. 301-0426-16, Sister Grove Regional Water Resource Recovery Facility

I. Conveyance of Permanent Easement to Oncor Electric Delivery Company –

Consent Agenda Item No. 20-03-09 • Consider adoption of Resolution No. 20-10 conveying property at Casa View

Pump Station site in the form of a 0.083 acre permanent easement to Oncor Electric Delivery Company, LLC, Project No. 101-0419-16


J. Credit to Engineering Services Agreement – Consent Agenda Item No. 20-03-10 • Consider authorizing a credit to the additional engineering services with Carollo

Engineers, Inc., in the amount of $26,160 on Project No. 309-0252-11, Stewart Creek West Wastewater Treatment Plant Expansion to 10 MGD

K. License Agreement with Dallas Area Rapid Transit – Consent Agenda Item

No. 20-03-11 • Consider authorizing execution of license agreement with Dallas Area Rapid

Transit for Project No. 501-0473-17, Plano Spring Creek Lift Station No. 2 Improvements

VIII. AGENDA ITEMS FOR INDIVIDUAL CONSIDERATION

GENERAL/ADMINISTRATIVE SERVICES ITEMS A. Regional Water System Contract Revenue Refunding Bonds –

Administrative Memorandum No. 5529 • Consider adoption of Resolution No. 20-11 authorizing the issuance, sale, and

delivery of North Texas Municipal Water District Water System Revenue Refunding Bonds, Series 2020, in an approximate amount not-to-exceed amount of $110 million, and approving and authorizing instruments and procedures relating thereto

Finance/Audit Committee Chair Phil Dyer advised that this item was reviewed and approved on March 11, 2020 by the Finance/Audit Committee and made a motion to adopt Resolution 20-11 authorizing the issuance of the refunding bonds. This refunding will result in an estimated $13 million in savings in debt service over the remaining life of the bonds if market conditions are favorable. Director Chip Imrie seconded the motion. Deputy Director Rodney Rhoades advised this is a refunding for savings and will not extend the life of the bonds. The resolution today will allow for the validation action in advance of the refunding. He advised that these bonds are expected to go market in September after the bonds are validated.

Upon a motion by Director Phil Dyer and a second by Director Chip Imrie, Secretary Darrell Grooms called the roll for a vote. The Board of Directors voted unanimously to approve as presented.

BOIS D’ARC LAKE AGENDA ITEMS

B. Amendment No. 10 to Construction Manager At-Risk Agreement –

Administrative Memorandum No. 5530 • Consider authorizing execution of Amendment No. 10 to the Construction

Manager At-Risk (CMAR) Agreement for partial Guaranteed Maximum Price (GMP) No. 7 as follows: • Establish a partial GMP No. 7 in the amount of $14,996,101.29 for CMAR

construction services for right-of-way clearing, a stand-alone tunneling work package, and the purchase of small diameter gate and air release valves for the Treated Water Pipeline from Leonard Water Treatment Plant to McKinney No. 4.


Water Committee Chair Jack May advised that this action will provide funding for right-of-way clearing, temporary fences and gates, the installation of a tunnel beneath the East Fork of the Trinity River and DART railroad, and the purchase of gate vales and air release valves.

Director May advised that he and the Water Committee Vice-Chairman reviewed this item with staff on March 24, 2020 and made a motion to recommend the Board authorize execution of Amendment No. 10 to the CMAR Agreement for partial GMP No. 7 in the amount of $14,996,101.29 for CMAR construction services for right-of-way clearing, a stand-alone tunneling work package, and the purchase of small diameter gate valves and air release valves for the Treated Water Pipeline from Leonard Water Treatment Plant to McKinney No. 4. Director Blair Johnson seconded the motion.

Upon a motion by Director Jack May and a second by Director Blair Johnson, Secretary Darrell Grooms called the roll for a vote. The Board of Directors voted unanimously to approve as presented.

WATER SYSTEM AGENDA ITEMS C. Engineering Services Agreement for Wylie Water Treatment Plant II

Structural and Mechanical Improvements – Administrative Memorandum No. 5531 • Consider authorizing execution of engineering services agreement with Jacobs

Engineering Group, Inc., in the amount of $1,526,183, for final engineering design on Project No. 101-0517-18, Wylie Water Treatment Plant II Structural and Mechanical Improvements, Phase II

Water Committee Chair Jack May advised that this item addresses structural deficiencies and conflicting piping configurations that compromise transition to biologically active filtration process. It also provides expanded design and construction phase services that support coordination with the CMAR project delivery approach.

Director May advised that he and the Water Committee Vice-Chairman reviewed this item with staff on March 24, 2020 and made a motion to recommend the Board authorize execution of an engineering services agreement with Jacobs Engineering Group, Inc., in the amount of $1,526,183, for final engineering design on Project No. 101-0517-18, Wylie Water Treatment Plant II Structural and Mechanical Improvements, Phase II. Director Jim Kerr seconded the motion. Upon a motion by Director Jack May and a second by Director Jim Kerr, Secretary Darrell Grooms called the roll for a vote. The Board of Directors voted unanimously to approve as presented.

D. Construction Manager At-Risk Agreement for Wylie Water Treatment Plant

IV Filter Complex Wall Repairs – Administrative Memorandum No. 5532 • Consider authorizing a Construction Manager At-Risk agreement with Felix

Construction Company in the amount of $187,625 and authorize funding for pre-construction services and procurement services for the Wylie Water Treatment Plant IV Filter Complex Wall Repairs, Project No. 101-0422-16


Water Committee Chair Jack May advised that the CMAR project delivery method brings a contractor into the design process and takes advantage of the construction manager’s ability to provide input for value engineering, constructability reviews, scheduling, cost estimating, phasing of construction, and development and procurement of work packages in a manner that matches NTMWD’s funding and schedule. It is a highly advantageous project delivery method for complex projects such as repairing the Plant IV filter complex wall.

Director May advised that he and the Water Committee Vice-Chairman reviewed this item with staff on March 24, 2020 and made a motion to recommend the Board authorize a Construction Manager At-Risk agreement with Felix Construction Company in the amount of $187,625 and authorize funding for pre-construction services and procurement services for the Wylie Water Treatment Plant IV Filter Complex Wall Repairs, Project No. 101-0422-16. Director Blair Johnson seconded the motion. Upon a motion by Director Jack May and a second by Director Blair Johnson, Secretary Darrell Grooms called the roll for a vote. The Board of Directors voted unanimously to approve as presented.

E. Change Order No. 2 on Trinity River Main Stem Pump Station and Raw Water

Pipeline – Administrative Memorandum No. 5533 • Consider authorizing Change Order No. 2 to Guaranteed Maximum Price with

Garney Companies, Inc., for a reduction in the amount of $2,000,000 on Project No. 101-0269-11, Trinity River Main Stem Pump Station and Raw Water Pipeline

Water Committee Chair Jack May advised that the CMAR is close to completing the Main Stem Pump Station Project and is projected to come in under the original Guaranteed Maximum Price amount. This deductive change order reduces the GMP and will allow the District to reassign funds to other capital projects.

Director May advised that he and the Water Committee Vice-Chairman reviewed this item with staff on March 24, 2020 and made a motion to recommend the Board authorize Change Order No. 2 to Guaranteed Maximum Price with Garney Companies, Inc., for a reduction in the amount of $2,000,000 on Project No. 101-0269-11, Trinity River Main Stem Pump Station and Raw Water Pipeline. Director John Murphy seconded the motion. Upon a motion by Director Jack May and as second by Director John Murphy, Secretary Darrell Grooms called the roll for a vote. The Board of Directors voted unanimously to approve as presented.

F. Engineering Services Agreement for Texoma to Wylie Raw Water Pipeline

Crossing – Administrative Memorandum No. 5534 • Consider authorizing execution of engineering services agreement with Freese

and Nichols, Inc., in the amount of $34,580 for final engineering design on Project No. 101-0557-20, Texoma to Wylie Raw Water Pipeline crossing at State Highway 121, Tunnel Casing Extension

Water Committee Chair Jack May advised that TxDOT is moving quickly to widen State Highway 121 over NTMWD’s Texoma to Wylie Raw Water Pipeline, crosses the ROW, and the protective pipeline casing must be extended by approximately 100 feet to clear the new TxDOT ROW limits.


Director May advised that he and the Water Committee Vice-Chairman reviewed this item with staff on March 24, 2020 and made a motion to recommend the Board authorize execution of engineering services agreement with Freese and Nichols, Inc., in the amount of $34,580 for final engineering design on Project No. 101-0557-20, Texoma to Wylie Raw Water Pipeline crossing at State Highway 121, Tunnel Casing Extension. Director Blair Johnson seconded the motion. Upon a motion by Director Jack May and a second by Director Blair Johnson, Secretary Darrell Grooms called the roll for a vote. The Board of Directors voted to approve as presented. Director Larry Parks abstained from voting on this item. WASTEWATER SYSTEM AGENDA ITEMS

G. Award of Construction Contract for Plano Spring Creek Lift Station No. 2 Improvements – Administrative Memorandum No. 5535 • Consider authorizing award of construction contract to Eagle Contracting, LP,

in the amount of $8,329,000 for Project No. 501-0473-17, Plano Spring Creek Lift Station No. 2 Improvements

Wastewater Committee Chair Rod Hogan advised this item will increase capacity of Plano Spring Creek Lift Station No. 2 to 60 million gallons per day, redirect flow from Plano Spring Creek Lift Station No. 1, and decommissioning of Lift Station No. 1 to meet growth projections in the Upper East Fork Interceptor System.

Director Hogan advised that he and the Wastewater Vice-Chairman reviewed this item

with staff on March 24, 2020 and made a motion to recommend the Board authorize award of a construction contract to Eagle Contracting, LP, in the amount of $8,329,000 for the Plano Spring Creek Lift Station No. 2 Improvements project. Director David Hollifield seconded the motion.

Upon a motion by Director Rod Hogan and a second by Director David Hollifield, Secretary

Darrell Grooms called the roll for a vote. The Board of Directors unanimously voted to approve as presented. H. Change Order No. 20 and Partial Reduction in Retainage on Wilson Creek

Regional Wastewater Treatment Plant Expansion Project – Administrative Memorandum No. 5536 • Consider authorizing ratification of Change Order No. 20 with Sundt

Construction, Inc., in the amount of $30,735.28 and authorizing partial reduction in retainage in the amount of $1,617,811.93 on Project No. 301-0437-16, Wilson Creek Regional Wastewater Treatment Plant Expansion

Wastewater Committee Chair Rod Hogan advised that expansion of Wilson Creek has reached substantial completion and is in operation. This action reduces retainage from 5% to 3%, in the amount of $1,617,811.93; and ratifies a change order in the amount of $30,735.28. The change order provides for optimization of performance and reliability of the solids dewatering facility and to support an exposed electrical duct bank.


Director Hogan advised he and the Wastewater Committee Vice-Chairman reviewed this item with Staff on March 24, 2020 and made a motion to recommend the Board authorize the retainage reduction and the change order. Director David Hollifield seconded the motion. Director Phil Dyer inquired whether the agenda item authorizes the release of the retainage. Executive Director Kula advised that Director Hogan’s recommendation in the form of a motion authorizes the release. Director Joe Farmer asked whether this ratifies an action taken by the Executive Director. Executive Director Kula responded yes, that he ordered the Change Order amount of $30,735.28 and that is within his authority.

Upon a motion by Director Rod Hogan and a second Director David Hollifield, Secretary

Darrell Grooms called the roll for a vote. The Board of Directors unanimously voted to approve as presented.

I. Additional Engineering Services on Wilson Creek Transfer Force Main

Project – Administrative Memorandum No. 5537 • Consider authorizing additional engineering services with Espey Consultants,

Inc., in the amount of $189,000, for final engineering design on Project No. 501-0495-18, Wilson Creek Transfer Force Main

Wastewater Committee Chair Rod Hogan advised that this item recommends additional engineering services to construct two parallel force mains from the Wilson Creek Lift Station to the North McKinney Transfer Lift Station and ultimately Sister Grove Regional Water Resource Recovery Facility for treatment; rather than constructing an original pipeline and installing a parallel soon thereafter. This will result in lower overall construction cost and minimize disruption to public right-of-way and private properties. Director Hogan advised he and the Wastewater Committee Vice-Chairman reviewed this item with Staff on March 24, 2020 and made a motion to recommend the Board authorize additional engineering services with Espey Consultants, Inc., in the amount of $189,000, for the Wilson Creek Transfer Force Main project. Director John Murphy seconded the motion.

Upon a motion by Director Rod Hogan and a second by Director John Murphy, Secretary

Darrell Grooms called the roll for a vote. The Board of Directors unanimously voted to approve as presented.

J. Reduction in Engineering Services on Rowlett Creek Regional Wastewater

Treatment Plant Peak Flow Management Improvements Project – Administrative Memorandum No. 5538 • Consider authorizing a reduction in engineering services with CH2M HILL

Engineers, Inc., in the amount of $188,561.03 on Project No. 301-0328-13, Rowlett Creek Regional Wastewater Treatment Plant Peak Flow Management Improvements, Phase 1

Wastewater Committee Chair Rod Hogan advised this action recommends a reduction in engineering fees due to a design error. This provides funding for a change order in the following action item (K.) to resolve the issue at no additional cost to the District. Director Hogan advised he and the Wastewater Committee Vice-Chairman reviewed this item with Staff on March 24, 2020 and made a motion to recommend the Board authorize


a reduction in engineering services with CH2M HILL Engineers, Inc. on the Rowlett Creek Regional Wastewater Treatment Plant Peak Flow Management Improvements, Phase 1 project. Director David Hollifield seconded the motion. Upon a motion by Director Rod Hogan and a second Director David Hollifield, Secretary Darrell Grooms called the roll for a vote. The Board of Directors unanimously voted to approve as presented. K. Change Order on Rowlett Creek Regional Wastewater Treatment Plant Peak

Flow Management Improvements Project – Administrative Memorandum No. 5539 • Consider authorizing Change Order No. 22 with Pepper Lawson Waterworks,

LLC, in the amount of $188,561.03 on Project No. 301-0328-13, Rowlett Creek Wastewater Treatment Plant Peak Flow Management Improvements, Phase 1

Wastewater Committee Chair Rod Hogan advised this action recommends a change order in the amount of $188,561.03 for additional work to be completed by the contractor to overcome a design error. Additionally, the MBR manufacturer proposes a credit of $114,240.30 for their portion of the design error. With the reduction in engineering fee from the previous action item (J.) this issue is being resolved at no additional cost to the District. Director Hogan advised he and the Wastewater Committee Vice-Chairman reviewed this item with Staff on March 24, 2020 and made a motion to recommend the Board authorize Change Order No. 22 with Pepper Lawson Waterworks, LLC on the Rowlett Creek Wastewater Treatment Plant Peak Flow Management Improvements, Phase 1 project. Director David Hollifield seconded the motion.

Upon a motion by Director Rod Hogan and a second Director David Hollifield, Secretary Darrell Grooms called the roll for a vote. The Board of Directors unanimously voted to approve as presented.

SOLID WASTE AGENDA ITEMS L. Award of Construction Contract for Sector 5D Construction, Clay Liner, and

Leachate Collection System at 121 Regional Disposal Facility – Administrative Memorandum No. 5540 • Consider authorizing award of construction contract with LD Kemp Excavating,

Inc., in the amount of $720,336.60 for Project No. ENG 19-16, Sector 5D Construction, Clay Liner and Leachate Collection System, 121 Regional Disposal Facility

Solid Waste Committee Chair Richard Peasley advised that the Solid Waste Committee discussed this item on November 5, 2019 and that he and Vice-Chairman George Crump reviewed it with staff on March 23, 2020.

Director Peasley advised this item allows for construction of a clay liner and leachate collection system for Sector 5D at the 121 Regional Disposal and will facilitate the completion of the overall work in Sector 5D and ensure sufficient airspace is available to support landfill operations. This Administrative Memorandum is for the earthwork portion.


Director Richard Peasley made a motion that the Board authorize award of a construction contract with LD Kemp Excavating, Inc., in the amount of $720,336.60 for Project No. ENG 19-16, Sector 5D Construction of a Clay Liner and Leachate Collection System for the 121 Regional Disposal Facility. Director George Crump seconded the motion. Upon a motion by Director Richard Peasley and a second by Director George Crump, Secretary Darrell Grooms called the roll for a vote. The Board of Directors unanimously voted to approve as presented.

M. Award of Construction Contract for Sector 5D Construction, Geosynthetic

Liner Material Purchase and Install, 121 Regional Disposal Facility – Administrative Memorandum No. 5541 • Consider authorizing award of construction contract with Patriot

Environmental, LLC, in the amount of $593,885.66 for Project No. ENG 19-17, Sector 5D Construction, Geosynthetic Liner Material Purchase and Install, 121 Regional Disposal Facility

Solid Waste Committee Chair Richard Peasley advised that the Solid Waste Committee discussed this on November 5, 2019 and that he and the Vice-Chairman George Crump reviewed this item with staff on March 23, 2020.

Director Peasley advised that this item allows for installation of a geosynthetic liner for Sector 5D at the 121 Regional Disposal Facility. This project will facilitate the completion of the overall work in Sector 5D and ensure sufficient airspace is available to support landfill operations. This Administrative Memorandum is for the liner material that will be used in the previous portion.

Director Peasley made a motion that the Board authorize award of a construction contract with Patriot Environmental, LLC, in the amount of $593,885.66 for Project No. ENG 19-17, Sector 5D Construction, Geosynthetic Liner Material Purchase and Installation at the 121 Regional Disposal Facility. Director George Crump seconded the motion.

Upon a motion by Director Richard Peasley and a second by Director George Crump, Secretary Darrell Grooms called the roll for a vote. The Board of Directors unanimously voted to approve as presented.

N. Award of Construction Contract for 121 Regional Disposal Facility

Intermediate Cover Improvements Project – Administrative Memorandum No. 5542 • Consider authorizing award of construction contract with Hammett Excavation,

Inc., in the amount of $1,456,263.35 for Project No. 401-0560-20, 121 Regional Disposal Facility Intermediate Cover Improvements

Solid Waste Committee Chair Richard Peasley advised that the Solid Waste Committee discussed this on November 5, 2019 and that he and Vice-Chairman George Crump reviewed this item with staff on March 23, 2020.

Director Peasley advised that this item allows for grading, drainage, and grass seeding improvements that are needed for the intermediate cover in Sectors 1 through 4 of the 121 Regional Disposal Facility to remain compliant with the Texas Commission on Environmental Quality operational regulations.


Director Peasley made a motion that the Board authorize award of a construction contract with Hammett Excavation, Inc., in the amount of $1,456,263.35 for Project No. 401-0560-20, 121 Regional Disposal Facility Intermediate Cover Improvements. Director George Crump seconded the motion.

Director Joe Joplin asked what the term “intermediate” means. Director Peasley responded that it means as you cover and finish working on an area, the Texas Commission on Environmental Quality (TCEQ) requires drainage and topsoil to make the area have an almost permanent cover. This particular portion of the landfill is getting an intermediate cover. Assistant Deputy Jeff Mayfield agreed that this description was accurate.

Upon a motion by Director Richard Peasley and a second by Director George Crump, Secretary Darrell Grooms called the roll for a vote. The Board of Directors unanimously voted to approve as presented.

LAND ACQUISITION/RIGHT-OF-WAY AGENDA ITEMS O. Property Acquisition Program for North McKinney Transfer Station, Right-

of-Way Acquisition Program for North McKinney Transfer Force Main, and Adoption of Resolution authorizing use of eminent domain to acquire property and right-of-way – Administrative Memorandum No. 5543 • Consider authorizing execution of property acquisition program for North

McKinney Transfer Lift Station project with a budget of $955,000; authorizing execution of right-of-way acquisition program for North McKinney Transfer Force Main project with a budget of $2,335,000; and consider adoption of Resolution No. 20-12 authorizing the use of eminent domain to acquire both the property for the North McKinney Transfer Lift Station, Project No. 501-0513-18, and the right-of-way for the North McKinney Transfer Force Main, Project No. 501-0514-18, and delegating authority to initiate condemnation proceedings to the NTMWD Executive Director

Director Terry Sam Anderson made a motion to approve this item. Director Rod Hogan seconded the motion. Director Joe Farmer inquired whether there was a committee recommendation on this item. Executive Director Kula responded there was not, however it is being recommended by the Engineering Department. Assistant Deputy R.J. Muraski advised that this is not traditionally covered by a committee and he is able to answer any questions. Director Farmer expressed that it he thought it should have been considered by a committee. Secretary Darrell Grooms called the roll for a vote. The Board of Directors voted to approve as presented. Director John Murphy was not present for this vote.

P. Right-of-Way Acquisition Program for Kaufman 20-Inch Waterline

Assessment, Phase II, Project – Administrative Memorandum No. 5544 • Consider authorizing execution of right-of-way acquisition program for

Kaufman 20-Inch Waterline Assessment, Phase II, project with a budget of $25,000; and consider adoption of Resolution No. 20-13 authorizing the use of eminent domain to acquire right-of-way for the Kaufman 20-Inch Waterline Assessment, Phase II, Project No. 101-0427-16, and delegating authority to initiate condemnation proceedings to the NTMWD Executive Director


Director Joe Joplin made a motion to approve this item. Director Phil Dyer seconded the motion. Secretary Darrell Grooms called the roll for a vote. The Board of Directors unanimously voted to approve as presented.

Q. Right-of-Way Acquisition Program for Wilson Creek Transfer Force Main

Project – Administrative Memorandum No. 5545 • Consider authorizing execution of right-of-way acquisition program for Wilson

Creek Transfer Force Main Project with a budget of $3,310,000; and consider adoption of Resolution No. 20-14 authorizing the use of eminent domain to acquire right-of-way for the Wilson Creek Transfer Force Main, Project No. 501-0495-18, and delegating authority to initiate condemnation proceedings to the NTMWD Executive Director

Director Charles McKissick made a motion to approve this item. Director Jim Kerr seconded the motion. Secretary Darrell Grooms called the roll for a vote. The Board of Directors unanimously voted to approve as presented.

OTHER AGENDA ITEM

R. Final Settlement Agreement with Engineering Defendant on Wylie Water

Treatment Plant IV Filter Complex Structural Evaluation Project – Administrative Memorandum No. 5546 • Consider authorizing final settlement agreement with engineering defendant

on Project No. 101-0422-16, Wylie Water Treatment Plant IV Filter Complex Structural Evaluation

President Don Gordon advised that this item was previously discussed with the Board of Directors in Executive Session in February, and previously discussed with the Executive Committee as well as the Water Committee.

Water Committee Chair Jack May advised that a proposed final settlement was discussed with the Board of Directors at their regular meeting on February 26, 2020, and the settlement has been accepted by Black & Veatch. NTMWD staff and Saunders Walsh & Beard recommended the Board authorize a final settlement agreement, which would result in a final resolution of the entire lawsuit. Director May advised that he and the Water Committee Vice-Chairman reviewed this item with staff on March 24, 2020 and made a motion to recommend the Board authorize a final settlement agreement. Director Blair Johnson seconded the motion. Attorney Mark Walsh advised that after the last Board meeting and with direction from that Board meeting, an agreement in principle was made with Black & Veatch to settle the remaining claims in the amount of $1.25 million. Since that time a settlement agreement has been drafted that makes payment of $1.25 million to the District, and that along with the previous settlement with the construction defendants will yield a total settlement of $6.25 million for this case to be paid to the District within 30 days of execution of the agreement. He advised that he Black & Veatch has executed the settlement agreement. Upon a motion by Director Jack May and a second by Director Blair Johnson, Secretary Darrell Grooms called the roll for a vote. The Board of Directors voted unanimously to approve as presented.

MINUTES – MARCH 26, 2020 PAGE 15 IX. DISCUSSION ITEMS

Legal Counsel Lauren Kalisek provided a brief update on the Member City matters. She advised that the NTMWD case is not on the Public Utility Commission agenda currently but possibly could be on it April 17th or May 1st. She will update the Board regarding the date.

A. Discuss status of Member City contract matters including:

1. Petitions of the Cities of Garland, Mesquite, Plano and Richardson Appealing Wholesale Water Rates Implemented by North Texas Municipal Water District, Docket Nos. 46662, 47863, 49043, 50382 before the Public Utility Commission of Texas

2. Facilitation with Member Cities regarding alternate cost methodologies to the Amendatory Water Supply Contract

B. Review of items for follow up raised during meeting Executive Director Kula thanked everyone for their responsiveness on conducting this meeting. He will follow up by email to the Directors for suggestions on how to do such a meeting in the future. Director Brenda Jean Patrick offered her appreciation to the leadership team and the Board of Directors for the preparation that went into this first successful teleconference meeting.

C. Opportunity for Board members to request potential future agenda items

(No substantive discussion of items will take place at this time) There were no requests for potential future agenda items.

X. ADJOURNMENT There being no further business, the meeting adjourned at approximately 4:23 p.m. The next regular meeting of the NTMWD Board of Directors will be held Thursday, April 23, at 4:00 p.m. at the North Texas Municipal Water District offices at 501 E. Brown Street, Wylie, Texas, unless otherwise posted.

APPROVED: ___________________________________

DON GORDON, President ATTEST: ________________________________ DARRELL GROOMS, Secretary


MONTHLY CONSTRUCTION REPORT

RECOMMENDATION The Executive Director and NTMWD staff recommend the Board of Directors authorize the Monthly Construction Report in accordance with NTMWD’s Board Policies Manual for project changes greater than $100,000 and less than $500,000.

I. CONSTRUCTION CHANGE ORDERS ONLY

WATER SYSTEM a. Project No.101-0344-13, Bois d’Arc Lake Dam and Intake Structure, Amendment No.

14, Change Order No. 4.

Description Amount Days Original Contract Amount (through Amendment No. 14) $218,482,992.73 1,163 Amendment No. 14 Guaranteed Maximum Price (GMP – Reference Consent Agenda Item (CAI) No. 20-02-05 $216,427,079.73 0 Prior Change Orders 58 Proposed Amendment No. 1

CAI 20-02-05 Amendment No. 14 Final GMP 0 Preconstruction Services (decrease) $(122,111.13) 0 Final GMP (increase) $122,111.13 0

Proposed Final GMP (Amendment No. 1) $216,549.190.86 1,221 Revised Contract Amounts $218,482,992.73 1,221

Original Completion Dates: Substantial – November 4, 2020; Final – May 6, 2021 Revised Completion Dates: Substantial – January 1, 2021; Final – July 3, 2021. No funding is requested for this action. This action reduces the Preconstruction Services by $122,111.13 and increases the Final GMP by the same amount. The final contract price remains the same for this project.

WASTEWATER SYSTEM a. Project No. 301-0432-16, Floyd Branch Regional Wastewater Treatment Plant

Process Optimization Improvements, Change Order No. 2

Description Amount Days Original Contract Amount $14,193,000.00 945

CONSENT AGENDA ITEM NO. 20-04-02 PAGE 2

Prior Change Order(s) Total ($23,753.60) 0 Change Order No. 2

Provide load bank connection box and generator modifications $101,595.90 0 Provide fire hydrant per City fire department $2,570.00 0

Change Order No. 2 Increase $104,165.90 0 Revised Contract Amounts $14,273,412.30 945

Original Completion Dates: Substantial – December 11, 2021; Final – February 9, 2022 Revised Completion Dates: No change. Funding in the amount of $104,165.90 for Change Order No. 2 to Eagle Contracting, L.P., is available in the Regional Wastewater System 2018 Construction Fund.

SOLID WASTE SYSTEM a. None.

II. AUTHORIZATION TO ISSUE CONSTRUCTION FINAL PAYMENT ONLY

Work on the following projects is substantially complete with only minor deficiencies remaining. Final payment in the total amounts shown will be made on these projects when completion of all deficiency items is verified.

WATER SYSTEM a. None.

WASTEWATER SYSTEM a. None.


III. CONSTRUCTION CHANGE ORDER AND AUTHORIZATION TO ISSUE FINAL PAYMENT ONLY

Work on the following projects is substantially complete with only minor deficiencies remaining. Final payment in the total amounts shown will be made on these projects when all work associated with the change order shown on the tabulation shall have been completed and accepted, and completion of all deficiency items is verified.


WASTEWATER SYSTEM a. None.


SOLID WASTE SYSTEM a. Project No. 401-0482-17, 121 Regional Disposal Facility Sector 5 (Cells 5B through

5D) Excavation and Development, Task 482B – Cell 5B-B, 5C, and 5D Excavation

Description Amount Days Original Contract Amount $12,166,208.61 636 Prior Change Order(s) Total $60,142.47 141 Proposed Change Order No. 3

Adjustment to contract quantity for silt fence (credit) ($6,000.00) 0 Adjustment to contract quantity for check dam (credit) ($9,600.00) 0

Proposed Change Order No. 3 Decrease ($15,600.00) 0 Final Contract Amounts $12,210,751.08 777

Original Completion Dates: Substantial – August 31, 2019; Final – September 30, 2019 Revised Completion Dates: Substantial – January 19, 2020; Final – February 18, 2020 Funding in the amount of ($15,600) for Change Order No. 3 to DelHur Industries, Inc., will be credited back to the Regional Solid Waste System 2017 Construction Fund. IV. AMENDMENTS TO ENGINEERING, INSPECTION AND/OR LEGAL SERVICES ONLY:


WASTEWATER SYSTEM a. Project No. 301-0432-16, Floyd Branch Regional Wastewater Treatment Plant

Process Optimization Improvements

DESCRIPTION AMOUNT

Original ESA $1,004,887

Prior Additional Services $353,549

Proposed Additional Services $4,023

Prepare a permanent easement for Oncor

Revised ESA Amount $1,362,459 The cumulative additional amount requested exceeds 25% of the original contract value. NTMWD staff recommends approval of the additional services on this report in lieu of an individual Administrative Memorandum due to minimal amount requested and the need to prepare a permanent easement for the completion of the project.

CONSENT AGENDA ITEM NO. 20-04-02 PAGE 4 Funding in the amount of $4,023 to Arcadis US, Inc., is available in the Regional Wastewater 2018 Construction Fund

b. Project No. 301-0508-18, Wilson Creek Regional Wastewater Treatment Plant Step Feed and Plant Drain Improvements

DESCRIPTION AMOUNT

Original ESA $516,211


Additional Services $83,400 Electrical and instrumentation design changes, revise bid documents, and provide additional bidding services

Revised ESA Amount $608,721 Funding in the amount of $83,400 to CH2M HILL Engineers, Inc., a subsidiary of Jacobs Engineering Group, is available in the Regional Wastewater System 2019 Construction Fund

c. Project No. 507-0484-17, Buffalo Creek Parallel Interceptor, Phase I

DESCRIPTION AMOUNT

Original ESA $1,345,990


Additional Services $78,740 Mitigation Bank Payment for United States Army Corps of Engineers (USACE) permit SWF-2019-00031

$75,240

Texas Historical Commission Report Revision and Submission $3,500

Revised ESA Amount $1,761,160 The cumulative additional amount requested exceeds 25% of the original contract value. NTMWD staff recommends approval of the additional services on this report in lieu of an individual Administrative Memorandum due to most of the fee being a required direct expense to purchase credits from the mitigation bank per the project’s USACE permit. The engineering additional services is a minimal amount. Funding in the amount of $78,740 to Huitt Zollars, Inc., is available in the Buffalo Creek Interceptor System 2019 Construction Fund



REQUEST TO DECLARE CERTAIN NTMWD PROPERTY SALVAGE OR SURPLUS AND AUTHORIZATION TO ENTER INTO A CONTRACT TO FACILITATE

THE AUCTION SALE OF SUCH ASSETS

ACTION (What)

Declare certain NTMWD property salvage or surplus and authorize the Executive Director to enter into a contract to facilitate the auction sale of such assets.

PURPOSE (Why) Each asset listed below has been replaced with a new unit or determined to be of no further beneficial use to NTMWD. Any items not sold at the auction will be disposed of as scrap.

RECOMMENDATION

The Executive Director and NTMWD staff recommend the Board of Directors declare the assets listed below as salvage or surplus, and authorize the Executive Director to enter into a contract with René Bates Auctioneers, Inc., for the auction sale of such assets as follows: Vendor: René Bates Auctioneers, Inc. Scope: Auction NTMWD Property Declared Salvage or Surplus Project: N/A Amount: 7.5% of Sale Value

DRIVER(S) FOR THIS PROJECT

☐ Regulatory Compliance ☐ Capacity ☐ Relocation or External Requests ☒ Safety ☐ Policy

☒ Asset Condition ☐ Redundancy/Resiliency ☐ Operational Efficiency ☐ Administrative ☐ Other ______________

BACKGROUND

PURPOSE OF ACTION

• All actions taken on the disposition of these assets are in accordance with past NTMWD practices, state law, and the NTMWD Personnel Policies Manual and Board Policies Manual.


Vehicles

Dept. Asset Number Description Serial Number Mileage

5772 397 2006 DODGE STRATUS 1B3EL46T66N199834 122,310 5330 398 2006 DODGE 1500 1D7HU16N66J171215 134,156

501 454 2007 FORD F150 W/TOMMY GATE 1FTRF12267KC19702 147,070

5723 550 2008 FORD F350 (AGE/CONDITION) 1FDWX37R78ED51400 60,949

5722 599 2009 FORD F250 1FTSF21R19EA42581 103,846 5338 682 2011 CHEVROLET IMPALA 2G1WF5EK0B1145216 151,507 5723 684 2011 FORD 3/4T CARGO VAN 1FTNE2EW6BDA42247 144,396 5523 696 2011 FORD F150 1FTMF1EM9BKD23083 105,555 5713 757 2012 FORD F150 1FTMF1EM4CKD50144 163,180 5713 784 2013 FORD F150 1FTMF1CM1DKE24396 144,505 5723 798 2013 FORD F150 1FTFX1CF1DKE18816 200,620 5723 852 2014 FORD E150 1FTNE1EW2EDA65037 165,783

Trailers


5723 18 1983 SHOP MADE TRAILER SHOP MADE N/A 5722 20 1984 SHOP MADE TRAILER TR167135 N/A 5722 37 1999 CM CARGO TRAILER 49TCB1011X1042918 N/A

5722 38 1999 TEM-TRAIL FLATBED TRAILER F314007253 N/A

313 130 1988 LEDWELL BELT PRESS TRAILER (SALVAGE) 1L9KH71B4JL033784 N/A

5523 197 1988 CLEMENT TRAILER 1C9BB38BXJM110343 N/A 5523 199 1993 BROTHERS TRAILER 1B9CC4025PM187243 N/A 5523 200 1994 THIELE TRAILER 1T9TS4024RW358948 N/A 5523 204 1998 THIELE TRAILER 1T9TS4024WW358511 N/A 5523 209 2000 DURABUILT TRAILER 105400 N/A

5523 316 2002 SPEC TEC STEEL PUSHOUT TRAILER 1S9ES38202S188427 N/A

5512 319 2002 SPEC TEC STEEL PUSHOUT TRAILER 1S9ES38202S188430 N/A

5722 464 2005 EAST TX TRAILER, MOUNTED GENERATOR 5J2US11245E002230 N/A

5180 493 2006 G & H ROLL-OFF TRAILER 1G9HT31266A116002 N/A 5523 517 1988 TRAILMASTER TANKER 1T9AE14B1JF003120 N/A

5180 565 2008 SHOP MADE UTILITY TRAILER SHOP MADE N/A

5180 566 2008 SHOPMADE TRAILER SHOPMADE N/A 5330 622 2004 X-TREME NH3 W/TANK 2GVFU20294W001436 N/A

5723 718 2010 CARGO CRAFT CARGO TRAILER 4D6EB1229AC025072 N/A


Heavy Tractor Trucks


5523 162 1982 INTERNATIONAL 1HTDF2273CGB16204 143,658 5523 188 2002 INTERNATIONAL F-2674 1HSGLAER52H408024 350,481 5530 624 2009 STERLING 5500 3F6WJ76AX8G351070 77,471

5723 843 2015 INTERNATIONAL TERRASTAR SFA 4X2 1HTJSSKK1FH099840 184,418

Heavy Equipment

Dept. Asset Number Description Serial Number Hours

5523 767 2012 CAT 349EL TRACK TYPE EXCAVATOR TFG00438 12,821

Light Equipment

Dept Asset Number Description Serial Number Hours

5722 41 2000 INGERSOLL RAND INGERSOLL RAND 318522UAL214 N/A

5180 143 1998 INGERSOLL RAND INGERSOLL RAND 286876UC1214 5

5722 470 2006 MAGNUM MLT4060 5AJLS16106B0D4219 2,324 5722 814 2013 SCAG MOWER C7030260 1,746 5180 1278 2002 SCAG MOWER 7710016 5,431

ATV

Dept. Asset Number Description Serial Number Hours

5080 1169 2018 YAMAHA 2+2 ADVENTURE SPORT (Wrecked) NA 509

5334 1254 2016 POLARIS Ranger (Wrecked) 3NSRTA576GG521917 1,871 Miscellaneous

Dept. Lot Number Description Serial Number

5523 1 STEEL BULK OIL TANK 50"X61" (3) N/A

5523 2 L SHAPED FUEL TANK WITH ELECTRIC PUMP & TOOL BOX N/A

5523 3 250 GAL. BULK STEEL ANTIFREEZE TANK WITH AIR PUMP N/A

5523 4 SET OF 22" CATERPILLAR D6 DOZER TRACKS N/A

5523 5 M-B COMPANY INC. 8FT HYDRAULIC POWER BROOM N/A

5722 6 TRUCK FLAT BED 8FT W X 9FT L STEEL FLAT BED WITH HEADACHE RACK, 2 TOOL BOXES, GOOSENECK BALL

N/A

5523 8 CHAMPION 30 GAL AIR COMPRESSOR WITH 14HP KOHLER GAS R15110357

5523 9 TARGET ECOLINE II CONCRETE COMMERCIAL SAW WITH 24HP ENGINE 412705


5523 10 AMERICAN CLEANING SYSTEMS INC. STEAM CLEANER WITH HONDA 20HP GAS ENGINE 231057

5523 11 3408 CATERPILLAR DIESEL ENGINE (SALVAGE) N/A

5523 12 DEUTZ MODEL F4L913 75HP DIESEL WATER (SALVAGE) N/A

5523 13 MITSUBISHI 6D24-TLE2A DIESEL ENGINE (2) (SALVAGE) N/A

5523 14 CATERPILLAR 3306 DIESEL ENGINE OUT OF D6 DOZER (SALVAGE) N/A

5523 15 CATERPILLAR C-16 600HP ENGINE (SALVAGE) N/A 5523 16 CATERPILLAR 3406B DIESEL ENGINE (SALVAGE) N/A

5523 17 KAWASAKI TURNTABLE HYDRAULIC DRIVE FOR KOBELCO 6371091

5523 19 8 GAL NORTH STAR GAS AIR COMPRESSOR WITH 160CC HONDA ENGINE 11124189

5523 21 MILLER BOBCAT 225 GAS PORTABLE WELDER LH4906511H

5523 22 INGERSOLL RAND T30 AIR COMPRESSOR V-TWIN COMP 5HP 230V MODEL 2475D5 816950

5523 23 NORTH STAR 3" SEMI-TRASH PUMP HONDA GX 160 ENGINE 9165296

5523 24 POWERHORSE 2" SEMI-TRASH PUMP 212 CC GAS ENGINE 12180243

5523 25 POWERHORSE 2" SEMI-TRASH PUMP 212 CC GAS ENGINE 12180094

5523 26 ECHO BACKPACK GAS BLOWER PB-580T P44614002774 5523 27 PORTACOOL 16" 3 SPEED 180103-08 5530 28 COATS WHEEL BALANCER 1150-2D N/A 5530 29 HUSKY TOOL BOX 22 DRAWER N/A 5530 30 COATS TIRE MACHINE 40-40SA 1192153424

5530 31 BRIGGS & STRATTON PRESSURE WASHER 2200 MAX PSI ELITE SERIES N/A

5530 32 PALLET MISC PART - MIRRORS, EXHAUST ITEMS, LIGHTS, BELTS N/A

5530 33 ROUGH NECK BRUSH GUARD N/A

5723 34 LOT OF REDWOOD BOARDS USED IN WATER TREATMENT PROCESS N/A

N/A – Not available


UPPER EAST FORK INTERCEPTOR SYSTEM INDIAN CREEK FORCE MAIN NO. 2

PROJECT NO. 501-0454-17

LEGAL SERVICES

ACTION (What)

Authorize legal services with Saunders, Walsh & Beard, Attorneys & Counselors (SW&B) for the Indian Creek Force Main No. 2 project.

PURPOSE (Why)

Legal services to assist in determining the party(ies) legally responsible for the additional work created by the improper installation of the force main, as well as assisting in enforcing contractual rights against the responsible party(ies).

RECOMMENDATION

The Executive Director and NTMWD staff recommend the Board of Directors authorize legal services as follows: Consultant: Saunders, Walsh & Beard, Attorneys & Counselors (SW&B) Scope: Legal Services Project: No. 501-0454-17, Indian Creek Force Main No. 2 Amount: $20,000 This will be an item on the April 22, 2020, Wastewater Committee meeting agenda.


☐ Regulatory Compliance ☐ Capacity ☐ Relocation or External Requests ☐ Safety ☐ Policy

☐ Asset Condition ☐ Redundancy/Resiliency ☐ Operational Efficiency ☐ Administrative ☒ Other Legal Services


PROJECT PURPOSE • The force main was installed by the contractor via horizontal directional drilling in a manner

that improperly created intermediate high points along the force main thus requiring the need for additional air release valves.

• The project included constructing approximately 21,500 linear feet (LF) of 24-inch force main from the Indian Creek Lift Station entrance gate at the intersection of Round Springs Lane and McKamy Trail to the new Legacy West Pressure Sewer upstream of the Preston Road Lift Station as shown on the attached map to convey wastewater flow from the proposed Indian Creek Lift Station No. 2 to the Preston Road Lift Station.The Board of Directors originally authorized the award of a contract to Excel Trenching, LLC during the June 2018 Board of Directors meeting.

LEGAL SERVICES • The contractor refuses to install the air relief valves without additional compensation from the

NTMWD, which District staff argues should be at the contractor’s expense due to their deviation from the plans.

• NTMWD staff recommends SW&B be retained for legal services related to determining the party(ies) legally responsible for the improper installation of the force main, as well as assisting with enforcing contractual rights with the goal of correcting the defective work.

LEGAL SERVICES FEE

Description Amount Legal Services $20,000 Requested Amount $20,000

FUNDING FUND(S): Upper East Fork Interceptor System 2018 Construction Fund

NORTH TEXAS MUNICIPAL WATER DISTRICT

RESOLUTION NO. 20-18

A RESOLUTION COMMENDING THOMAS W. KULA FOR SIX YEARS OF DEDICATED SERVICE TO THE NTMWD

WHEREAS, Thomas (Tom) W. Kula began his tenure with the NTMWD on May 1, 2014, and

served the NTMWD continuously until his retirement on April 30, 2020; and, WHEREAS, prior to joining NTMWD, Tom Kula honorably served for 32 years in the U.S. Army, with his last assignment as commander of the Southwestern Division, U.S. Army Corps of Engineers. Mr. Kula’s previous military assignments included assignments in Germany, Fort Leonard Wood, the 82nd Airborne Division, Fort Bragg, N.C.; the Pentagon; and deployments in support of Operation Iraqi Freedom.

WHEREAS, Tom Kula became Executive Director/General Manager of the NTMWD and has been responsible for all aspects of the management, planning, operation and maintenance of NTMWD’s water, wastewater and solid waste systems since May 2014; and,

WHEREAS, Tom Kula has worked closely with the member cities, customers, and other constituents to ensure that new facilities and resources are strategically placed into service as the service area continues to expand; and,

WHEREAS, critical to the operation of the NTMWD, Tom Kula provided significant contribution to

the development of new water supplies, specifically the Bois d’Arc Lake – the first major reservoir to be built in Texas in 30 years – to meet the region’s projected long-term water needs; and,

WHEREAS, Tom Kula has been instrumental in establishing the NTMWD’s vision, mission, core

values, and strategic plan; and,

WHEREAS, Tom Kula’s public service is commended for being a visionary leader in the water industry, water planning, and water reuse, all while balancing the environmental water needs at a local, regional, and statewide level; and,

WHEREAS, throughout his six years of service with the NTMWD, Tom Kula has been

instrumental in assessing, developing, maintaining, and executing long-range plans in the water, wastewater, and solid waste systems, resulting in millions of dollars of operating efficiencies for the benefit of the ratepayers of the NTMWD.

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE NORTH TEXAS MUNICIPAL WATER DISTRICT THAT: Thomas W. Kula has served as a distinguished staff member and leader of the North Texas Municipal Water District from 2014 to 2020 and through his diligent efforts has sought to continuously improve and enhance NTMWD programs and activities. The thanks of the Board of Directors, staff, and cities served cannot express the true appreciation deserved. THIS RESOLUTION PASSED BY THE NTMWD BOARD OF DIRECTORS ON THIS THE 23RD DAY OF APRIL 2020. DARRELL GROOMS, Secretary DON GORDON, President


APRIL 2020 ADMINISTRATIVE MEMORANDUM NO. 5547

PANTHER CREEK REGIONAL WASTEWATER SYSTEM CONTRACT REVENUE BONDS, SERIES 2020


ACTION (What)

Request authorization to issue Revenue Bonds for the Panther Creek Regional Wastewater System Treatment Plant.

PURPOSE (Why)

Fund improvements to the Panther Creek Regional Wastewater System Treatment Plant.

RECOMMENDATION

The Executive Director and NTMWD staff recommend the Board of Directors adopt Resolution No. 20-15, “A Resolution Authorizing the Issuance, Sale and Delivery of North Texas Municipal Water District Panther Creek Regional Wastewater System Treatment Plant Contract Revenue Bonds, Series 2020; and Approving and Authorizing Instruments and Procedures Relating Thereto.” Contracting Party: N/A Scope: Fund Improvements to the Panther Creek Regional Wastewater System Project: Expansion to 15 MGD (Design) Amount: Approximately $5.2 million of 2020 contract revenue bonds will be issued

Actual amount to be determined at date of pricing Staff reviewed with the Finance/Audit Committee on April 8, 2020.

ADMINISTRATIVE MEMORANDUM NO. 5547 PAGE 2



☐ Asset Condition ☐ Redundancy/Resiliency ☐ Operational Efficiency ☒ Administrative ☐ Other ______________

BACKGROUND

• The Finance/Audit Committee met on April 8, 2020, to review the proposed bond sale to fund

the expansion to 15 MGD (Design). • Staff and members of Hilltop Securities, Inc., also presented the Finance/Audit Committee

with timelines for the sale and a summary of the financing plan. • At this time, it is expected that approximately $5.2 million of 2020 contract revenue

improvement bonds will be issued. The actual amount of the bond sale will be determined on the date of pricing.

• The transaction will be sold via competitive bid on April 23, 2020, and the estimated interest rate is 2.60%.

• NTMWD bond counsel, McCall, Parkhurst & Horton, LLP, has prepared the attached Bond Resolution and NTMWD financial advisor, Hilltop Securities, Inc., has prepared the attached Preliminary Official Statement.

• Representatives from McCall, Parkhurst & Horton, LLP, as well as Hilltop Securities, Inc., will be available at the Board meeting to review the documents and financing procedures.

FUNDING FUND(S): N/A


RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OFNORTH TEXAS MUNICIPAL WATER DISTRICT PANTHER CREEKREGIONAL WASTEWATER SYSTEM CONTRACT REVENUE BONDS,SERIES 2020, AND APPROVING AND AUTHORIZING INSTRUMENTS ANDPROCEDURES RELATING THERETO

WHEREAS, North Texas Municipal Water District (the "Issuer") is a political subdivisionof the State of Texas, being a conservation and reclamation district created and functioning underArticle 16, Section 59 of the Texas Constitution, pursuant to Chapter 62, Acts of 1951, 52ndLegislature of Texas, Regular Session, as amended (the "Act"); and

WHEREAS, the Board of Directors of the Issuer is authorized to issue the bonds hereinafterauthorized pursuant to Chapter 30, Texas Water Code and other applicable laws.

THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF NORTHTEXAS MUNICIPAL WATER DISTRICT THAT:

Section 1. AMOUNT AND PURPOSE OF THE BONDS. The bond or bonds of NorthTexas Municipal Water District (the "Issuer") are hereby authorized to be issued and delivered inthe aggregate principal amount not to exceed $6,000,000, (i) FOR THE PURPOSE OF (i) FOR THEACQUISITION, CONSTRUCTION, DESIGN AND IMPROVEMENT OF THE PANTHERCREEK REGIONAL WASTEWATER SYSTEM EXPANSION TO 15 MGD, AND OTHERSYSTEM IMPROVEMENTS, (ii) TO FUND A RESERVE FUND (AS DEFINED HEREIN), AND(iii) TO PAY COSTS OF ISSUANCE OF THE BONDS AUTHORIZED HEREIN.

Section 2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Resolutionshall be designated: "NORTH TEXAS MUNICIPAL WATER DISTRICT PANTHER CREEKREGIONAL WASTEWATER SYSTEM CONTRACT REVENUE BOND, SERIES 2020," andinitially there shall be issued, sold, and delivered hereunder a single fully registered bond, withoutinterest coupons, payable in installments of principal (the "Initial Bond"), but the Initial Bond maybe assigned and transferred and/or converted into and exchanged for a like aggregate principalamount of fully registered bonds, without interest coupons, having maturities, and in thedenomination or denominations of $5,000 or any integral multiple of $5,000, all in the mannerhereinafter provided. The term "Bonds" as used in this Resolution shall mean and includecollectively the Initial Bond and all substitute bonds exchanged therefor, as well as all othersubstitute bonds and replacement bonds issued pursuant hereto, and the term "Bond" shall mean anyof the Bonds.

Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIALREGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND.

(a) As authorized by Chapter 1371, Texas Government Code, the President of the Boardof Directors, the Executive Director, the Deputy Director - Administrative Services, and AssistantDeputy - Finance of the Issuer are each hereby designated as an "Authorized Officer" of the Issuer,and each is hereby authorized, appointed, and designated as the officer or employee of the Issuer

authorized to act on behalf of the Issuer, which actions shall be evidenced by a certificate executedby such Authorized Officer (the "Approval Certificate") for a period not to extend beyondSeptember 25, 2020, in the selling and delivering of the Bonds and carrying out the other proceduresspecified in this Resolution, including the use of a book-entry only system with respect to the Bondsand the execution of an appropriate letter of representations if deemed appropriate, the determiningand fixing of the date and the date of delivery of the Bonds, any additional or different designationor title by which the Bond shall be known, the price at which the Bonds will be sold (but in no eventless than 97% of the principal amount of the Bonds), the principal amount (not exceeding$6,000,000) of the Bonds, the amount of each maturity of principal thereof, the due date of eachsuch maturity (not exceeding forty years from the date of the Bonds), the rate of interest to be borneby each such maturity (but in no event to result in the net effective interest rate on the Bondsexceeding 6.00%), the initial interest payment date, the date or dates of optional redemption thereof,any mandatory sinking fund redemption provisions, and procuring bond insurance, if any, approvingmodifications to this Resolution and executing such instruments, documents and agreements as maybe necessary with respect thereto, and all other matters relating to the issuance, sale and delivery ofthe Bonds

(b) The Initial Bond is hereby authorized to be issued, sold, and delivered hereunder asa single fully registered Bond, without interest coupons, in the denomination and aggregate principalamount set forth in the Approval Certificate (not exceeding $6,000,000), numbered TR-1, payablein annual installments of principal to the initial registered owner thereof or to the registered assigneeor assignees of said Initial Bond or any portion or portions thereof (in each case, the "registeredowner"), with the annual installments of principal of the Initial Bond to be payable on the dates,respectively, and in the principal amounts, respectively, and may and shall be prepaid or redeemedprior to the respective scheduled due dates of installments of principal thereof, all as set forth in theApproval Certificate.

(c) The Initial Bond (i) if so provided in the Approval Certificate, may and/or shall beprepaid or paid on the respective scheduled due dates of installments of principal thereof, (ii) maybe assigned and transferred, (iii) may be converted and exchanged for other bonds, (iv) shall havethe characteristics, and (v) shall be signed and sealed, and the principal of and interest on the InitialBond shall be payable, all as provided, and in the manner required or indicated, in the ApprovalCertificate and the FORM OF INITIAL BOND set forth in this Resolution.

Section 4. INTEREST. The unpaid principal balance of the Initial Bond shall bear interestfrom the date of delivery the Initial Bond to the Purchaser (as defined in Section 32 hereof) to therespective scheduled due dates, or to the respective dates of prepayment or redemption, if any, ofthe installments of principal of the Initial Bond, and said interest shall be payable, all in the mannerprovided and at the rates and on the dates stated in the Approval Certificate and the FORM OFINITIAL BOND set forth in this Resolution.

Section 5. FORM OF INITIAL BOND. The form of the Initial Bond, including the formof Registration Certificate of the Comptroller of Public Accounts of the State of Texas to beendorsed on the Initial Bond, shall be substantially as follows with blank or bracketed informationto be completed or deleted based upon the Approval Certificate:

2

FORM OF INITIAL BOND

NO. TR-1 $__________*UNITED STATES OF AMERICA

STATE OF TEXASNORTH TEXAS MUNICIPAL WATER DISTRICTPANTHER CREEK REGIONAL WASTEWATER

SYSTEM CONTRACT REVENUE BOND,SERIES 2020

NORTH TEXAS MUNICIPAL WATER DISTRICT (the "Issuer"), being a politicalsubdivision of the State of Texas, hereby promises to pay to _____________________________*,or to the registered assignee or assignees of this Bond or any portion or portions hereof (in eachcase, the "registered owner") the aggregate principal amount of _______________________________________________________________ AND __/100 DOLLARS, in annual installments ofprincipal due and payable on JUNE 1 in each of the years, and in the respective principal amounts,as set forth in the following schedule:

Year* Principal Amount* Year*

PrincipalAmount*

and to pay interest, calculated on the basis of a 360-day year composed of twelve 30-day months,from the date of initial delivery to the Purchaser (as defined in the Bond Resolution (hereinafterdefined)), on the balance of each such installment of principal, respectively, from time to timeremaining unpaid, at the rates as follows:

Year* Rate* Year* Rate*

with said interest being payable semiannually on each June 1 and December 1, commencing__________, ____,* while this Bond or any portion hereof is outstanding and unpaid.

3* From Approval Certificate.

THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond arepayable in lawful money of the United States of America, without exchange or collection charges. The installments of principal and the interest on this Bond are payable to the registered owner hereofthrough the services of THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONALASSOCIATION., in Dallas, Texas, which is the "Paying Agent/Registrar" for this Bond. Paymentof all principal of and interest on this Bond shall be made by the Paying Agent/Registrar to theregistered owner hereof on each principal and/or interest payment date by check dated as of suchdate, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer requiredby the resolution authorizing the issuance of this Bond (the "Bond Resolution") to be on deposit withthe Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sentby the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each suchprincipal and/or interest payment date, to the registered owner hereof, at the address of the registeredowner, as it appeared on the 15th day of the month next preceding each such date (the "RecordDate") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. TheIssuer covenants with the registered owner of this Bond that on or before each principal and/orinterest payment date for this Bond it will make available to the Paying Agent/Registrar, from the"Bond Fund" created by the Bond Resolution, the amounts required to provide for the payment, inimmediately available funds, of all principal of and interest on this Bond, when due.

IF THE DATE for the payment of the principal of or interest on this Bond shall be aSaturday, Sunday, a legal holiday, or a day on which banking institutions in the City where thePaying Agent/Registrar is located are authorized by law or executive order to close, then the datefor such payment shall be the next succeeding day which is not such a Saturday, Sunday, legalholiday, or day on which banking institutions are authorized to close; and payment on such dateshall have the same force and effect as if made on the original date payment was due.

THIS BOND has been authorized in accordance with the Constitution and laws of the Stateof Texas FOR THE PURPOSE OF PROVIDING FUNDS (i) FOR THE ACQUISITION,CONSTRUCTION, DESIGN, AND IMPROVEMENT OF THE PANTHER CREEK REGIONALWASTEWATER SYSTEM, (ii) TO FUND A RESERVE FUND (AS DEFINED IN THE BONDRESOLUTION), AND (iii) TO PAY COSTS OF ISSUANCE OF THIS BOND.

ON ______, ____*, or on any date whatsoever thereafter, the unpaid installments of principalof this Bond may be prepaid or redeemed prior to their scheduled due dates, at the option of theIssuer, with funds derived from any available source, as a whole, or in part, and, if in part, theparticular portion of this Bond to be prepaid or redeemed shall be selected and designated by theIssuer (provided that a portion of this Bond may be prepaid or redeemed only in an integral multipleof $5,000), at the prepayment or redemption price of the par or principal amount thereof, plusaccrued interest to the date fixed for prepayment or redemption.

**[THE PRINCIPAL INSTALLMENTS OF THIS BOND maturing on June 1, ____ andJune 1, ____ are subject to mandatory prepayment or redemption prior to maturity in part, at a priceequal to the principal amount of this Bond or portions hereof to be prepaid or redeemed plus accruedinterest to the date of prepayment or redemption, on September 1 in the each of years and in theamounts as follows:

* From Approval Certificate.**If applicable, from the Approval Certificate. 4

Principal Installment due on June 1, ___

Years Amounts

Principal Installment due on June 1, ___

Years Amounts

The amount of any principal installment of this Bond required to be prepaid or redeemedpursuant to the operation of such mandatory prepayment or redemption provisions shall be reduced,at the option of the Issuer, by the principal amount of such principal installment of this Bond which,at least 50 days prior to the mandatory prepayment or redemption date (1) shall have been acquiredby the Issuer at a price not exceeding such principal amount plus accrued interest to the date ofpurchase thereof, (2) shall have been purchased by the Paying Agent/Registrar at the request of theIssuer at a price not exceeding such principal amount plus accrued interest to the date of purchase,or (3) shall have been prepaid or redeemed pursuant to the optional prepayment or redemptionprovisions and not theretofore credited against a mandatory prepayment or redemption requirement.]

AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a writtennotice of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to theregistered owner hereof. By the date fixed for any such prepayment or redemption due provisionshall be made by the Issuer with the Paying Agent/Registrar for the payment of the requiredprepayment or redemption price for this Bond or the portion hereof which is to be so prepaid orredeemed, plus accrued interest thereon to the date fixed for prepayment or redemption. If suchwritten notice of prepayment or redemption is given, and if due provision for such payment is made,all as provided above, this Bond, or the portion thereof which is to be so prepaid or redeemed,thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, andshall not bear interest after the date fixed for its prepayment or redemption, and shall not be regardedas being outstanding except for the right of the registered owner to receive the prepayment orredemption price plus accrued interest to the date fixed for prepayment or redemption from thePaying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrarshall record in the Registration Books all such prepayments or redemptions of principal of this Bondor any portion hereof.

THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or anyunpaid and unredeemed portion hereof in any integral multiple of $5,000, may be assigned by theinitial registered owner hereof and shall be transferred only in the Registration Books of the Issuerkept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms

5

and conditions set forth in the Bond Resolution. Among other requirements for such transfer, thisBond must be presented and surrendered to the Paying Agent/Registrar for cancellation, togetherwith proper instruments of assignment, in form and with guarantee of signatures satisfactory to thePaying Agent/Registrar, evidencing assignment by the initial registered owner of this Bond, or anyportion or portions hereof in any integral multiple of $5,000, to the assignee or assignees in whosename or names this Bond or any such portion or portions hereof is or are to be transferred andregistered. Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrarmay be used to evidence the assignment of this Bond or any such portion or portions hereof by theinitial registered owner hereof. A new bond or bonds payable to such assignee or assignees (whichthen will be the new registered owner or owners of such new Bond or Bonds) or to the initialregistered owner as to any portion of this Bond which is not being assigned and transferred by theinitial registered owner, shall be delivered by the Paying Agent/Registrar in conversion of andexchange for this Bond or any portion or portions hereof, but solely in the form and manner asprovided in the next paragraph hereof for the conversion and exchange of this Bond or any portionhereof. The registered owner of this Bond shall be deemed and treated by the Issuer and the PayingAgent/Registrar as the absolute owner hereof for all purposes, including payment and discharge ofliability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrarshall not be affected by any notice to the contrary.

AS PROVIDED above and in the Bond Resolution, this Bond, to the extent of the unpaidor unredeemed principal balance hereof, may be converted into and exchanged for a like aggregateprincipal amount of fully registered bonds, without interest coupons, payable to the assignee orassignees duly designated in writing by the initial registered owner hereof, or to the initial registeredowner as to any portion of this Bond which is not being assigned and transferred by the initialregistered owner, in any denomination or denominations in any integral multiple of $5,000 (subjectto the requirement hereinafter stated that each substitute bond issued in exchange for any portionof this Bond shall have a single stated principal maturity date), upon surrender of this Bond to thePaying Agent/Registrar for cancellation, all in accordance with the form and procedures set forthin the Bond Resolution. If this Bond or any portion hereof is assigned and transferred or convertedeach bond issued in exchange for any portion hereof shall have a single stated principal maturitydate corresponding to the due date of the installment of principal of this Bond or portion hereof forwhich the substitute bond is being exchanged, and shall bear interest at the rate applicable to andborne by such installment of principal or portion thereof. Such bonds, respectively, shall be subjectto redemption prior to maturity on the same dates and for the same prices as the correspondinginstallment of principal of this Bond or portion hereof for which they are being exchanged. No suchbond shall be payable in installments, but shall have only one stated principal maturity date. ASPROVIDED IN THE BOND RESOLUTION, THIS BOND IN ITS PRESENT FORM MAY BEASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or moreassignees, but the bonds issued and delivered in exchange for this Bond or any portion hereof maybe assigned and transferred, and converted, subsequently, as provided in the Bond Resolution. TheIssuer shall pay the Paying Agent/Registrar's standard or customary fees and charges fortransferring, converting, and exchanging this Bond or any portion thereof, but the one requestingsuch transfer, conversion, and exchange shall pay any taxes or governmental charges required to bepaid with respect thereto. The Paying Agent/Registrar shall not be required to make any such

6

assignment, conversion, or exchange (i) during the period commencing with the close of businesson any Record Date and ending with the opening of business on the next following principal orinterest payment date, or, (ii) with respect to any Bond or portion thereof called for prepayment orredemption prior to maturity, within 45 days prior to its prepayment or redemption date.

IN THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns,or otherwise ceases to act as such, the Issuer has covenanted in the Bond Resolution that it promptlywill appoint a competent and legally qualified substitute therefor, and promptly will cause writtennotice thereof to be mailed to the registered owner of this Bond.

IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validlyauthorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to beperformed, exist, and be done precedent to or in the authorization, issuance, and delivery of thisBond have been performed, existed, and been done in accordance with law; that this Bond is aspecial obligation of the Issuer which, together with other bonds, are secured by and payable froma first lien on and pledge of the "Pledged Revenues" as defined in the Bond Resolution, includingthe Gross Revenues of the District's Panther Creek Regional Wastewater System, and includingspecifically certain payments to be received by the District from the City of Frisco, Texas (the"Participant"), under the "Panther Creek Regional Wastewater System Contract", dated September23, 2004, between the Participant and the District, and any payments to be received by the Districtunder all similar contracts with any future Additional Participants as defined and permitted in saidcontracts. This Bond and the series of which it is a part are on a parity in all respects with thecurrently outstanding bonds of those issues of "North Texas Municipal Water District Panther CreekRegional Wastewater System Revenue Refunding Bonds, Series 2014," in the original principalamount of $19,940,000 and "North Texas Municipal Water District Panther Creek RegionalWastewater System Revenue Refunding Bonds, Series 2017," in the original principal amount of$11,050,000.

THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Resolution,to issue Additional Bonds payable from and secured by a first lien on and pledge of the "PledgedRevenues" on a parity with this Bond.

THE ISSUER also has reserved the right to amend the Bond Resolution with the approvalof the registered owners of 51% in principal amount of all outstanding bonds secured by and payablefrom a first lien on and pledge of the "Pledged Revenues".

THE REGISTERED OWNER hereof shall never have the right to demand payment of thisBond or the interest hereon out of any funds raised or to be raised by taxation or from any sourceother than the Pledged Revenues.

BY BECOMING the registered owner of this Bond, the registered owner therebyacknowledges all of the terms and provisions of the Bond Resolution, agrees to be bound by suchterms and provisions, acknowledges that the Bond Resolution is duly recorded and available forinspection in the official minutes and records of the governing body of the Issuer, and agrees thatthe terms and provisions of this Bond and the Bond Resolution constitute a contract between theregistered owner hereof and the Issuer.

7

THIS BOND shall not be valid or become obligatory for any purpose or be entitled to anysecurity or benefit under the Bond Resolution until a manually signed Comptroller’s RegistrationCertificate has been attached hereto or endorsed hereon.

IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manualsignature of the President of the Board of Directors of the Issuer and countersigned with the manualsignature of the Secretary of the Board of Directors of the Issuer, has caused the official seal of theIssuer to be duly impressed on this Bond, and has caused this Bond to be dated _______________*.

xxxxxxx xxxxxxx Secretary, Board of Directors, President, Board of Directors,North Texas Municipal Water District North Texas Municipal Water District

(DISTRICT SEAL)

FORM OF REGISTRATION CERTIFICATE OF THECOMPTROLLER OF PUBLIC ACCOUNTS:

COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.

I hereby certify that this Bond has been examined, certified as to validity, and approved bythe Attorney General of the State of Texas, and that this Bond has been registered by theComptroller of Public Accounts of the State of Texas.

Witness my signature and seal this_______________________________Comptroller of Public Accounts

of the State of Texas(COMPTROLLER'S SEAL)

Section 6. ADDITIONAL CHARACTERISTICS OF THE BONDS. Registration andTransfer. (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of THEBANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, in Dallas,Texas (the "Paying Agent/Registrar") books or records of the registration and transfer of the Bonds(the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrarand transfer agent to keep such books or records and make such transfers and registrations undersuch reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the PayingAgent/Registrar shall make such transfers and registrations as herein provided. The PayingAgent/Registrar shall obtain and record in the Registration Books the address of the registered ownerof each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; butit shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of theaddress to which payments shall be mailed, and such interest payments shall not be mailed unlesssuch notice has been given. The Issuer shall have the right to inspect the Registration Books during* From Approval Certificate.

8

regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shallkeep the Registration Books confidential and, unless otherwise required by law, shall not permittheir inspection by any other entity. Registration of each Bond may be transferred in theRegistration Books only upon presentation and surrender of such Bond to the PayingAgent/Registrar for transfer of registration and cancellation, together with proper written instrumentsof assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar,evidencing (i) the assignment of the Bond, or any portion thereof in any integral multiple of $5,000,to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to have the Bondor any such portion thereof registered in the name of such assignee or assignees. Upon theassignment and transfer of any Bond or any portion thereof, a new substitute Bond or Bonds shallbe issued in conversion and exchange therefor in the manner herein provided. The Initial Bond, tothe extent of the unpaid or unredeemed principal balance thereof, may be assigned and transferredby the initial registered owner thereof once only, and to one or more assignees designated in writingby the initial registered owner thereof. All Bonds issued and delivered in conversion of andexchange for the Initial Bond shall be in any denomination or denominations of any integral multipleof $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a singlestated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE Bondset forth in this Resolution, and shall have the characteristics, and may be assigned, transferred, andconverted as hereinafter provided. If the Bond or any portion thereof is assigned and transferred orconverted the Bond must be surrendered to the Paying Agent/Registrar for cancellation, and eachBond issued in exchange for any portion of the Initial Bond shall have a single stated principalmaturity date, and shall not be payable in installments; and each such Bond shall have a principalmaturity date corresponding to the due date of the installment of principal or portion thereof forwhich the substitute Bond is being exchanged; and each such Bond shall bear interest at the singlerate applicable to and borne by such installment of principal or portion thereof for which it is beingexchanged. If only a portion of the Initial Bond is assigned and transferred, there shall be deliveredto and registered in the name of the initial registered owner substitute Bonds in exchange for theunassigned balance of the Initial Bond in the same manner as if the initial registered owner were theassignee thereof. If any Bond or portion thereof other than the Initial Bond is assigned andtransferred or converted each Bond issued in exchange therefor shall have the same principalmaturity date and bear interest at the same rate as the Bond for which it is exchanged. A form ofassignment shall be printed or endorsed on each Bond, excepting the Initial Bond, which shall beexecuted by the registered owner or its duly authorized attorney or representative to evidence anassignment thereof. Upon surrender of any Bonds or any portion or portions thereof for transfer ofregistration, an authorized representative of the Paying Agent/Registrar shall make such transfer inthe Registration Books, and shall deliver a new fully registered substitute Bond or Bonds, havingthe characteristics herein described, payable to such assignee or assignees (which then will be theregistered owner or owners of such new Bond or Bonds), or to the previous registered owner in caseonly a portion of a Bond is being assigned and transferred, all in conversion of and exchange for saidassigned Bond or Bonds or any portion or portions thereof, in the same form and manner, and withthe same effect, as provided in Section 6(d), below, for the conversion and exchange of Bonds byany registered owner of a Bond. The Issuer shall pay the Paying Agent/Registrar's standard orcustomary fees and charges for making such transfer and delivery of a substitute Bond or Bonds, butthe one requesting such transfer shall pay any taxes or other governmental charges required to bepaid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers ofregistration of any Bond or any portion thereof (i) during the period commencing with the close ofbusiness on any Record Date and ending with the opening of business on the next following

9

principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called forredemption prior to maturity, within 45 days prior to its redemption date.

(b) Ownership of Bonds. The entity in whose name any Bond shall be registered in theRegistration Books at any time shall be deemed and treated as the absolute owner thereof for allpurposes of this Resolution, whether or not such Bond shall be overdue, and the Issuer and thePaying Agent/Registrar shall not be affected by any notice to the contrary; and payment of, or onaccount of, the principal of, premium, if any, and interest on any such Bond shall be made only tosuch registered owner. All such payments shall be valid and effectual to satisfy and discharge theliability upon such Bond to the extent of the sum or sums so paid.

(c) Payment of Bonds and Interest. The Issuer hereby further appoints the PayingAgent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, andto act as its agent to convert and exchange or replace Bonds, all as provided in this Resolution. ThePaying Agent/Registrar shall keep proper records of all payments made by the Issuer and the PayingAgent/Registrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and allreplacements of Bonds, as provided in this Resolution.

(d) Conversion and Exchange or Replacement; Authentication. Each Bond issued anddelivered pursuant to this Resolution, to the extent of the unpaid or unredeemed principal balanceor principal amount thereof, may, upon surrender of such Bond at the principal corporate trust officeof the Paying Agent/Registrar, together with a written request therefor duly executed by theregistered owner or the assignee or assignees thereof, or its or their duly authorized attorneys orrepresentatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at theoption of the registered owner or such assignee or assignees, as appropriate, be converted into andexchanged for fully registered Bonds, without interest coupons, in the form prescribed in the FORMOF SUBSTITUTE Bond set forth in this Resolution, in the denomination of $5,000, or any integralmultiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall havea single stated maturity date), as requested in writing by such registered owner or such assignee orassignees, in an aggregate principal amount equal to the unpaid or unredeemed principal balance orprincipal amount of any Bond or Bonds so surrendered, and payable to the appropriate registeredowner, assignee, or assignees, as the case may be. If the Initial Bond is assigned and transferred orconverted each substitute Bond issued in exchange for any portion of the Initial Bond shall have asingle stated principal maturity date, and shall not be payable in installments; and each such Bondshall have a principal maturity date corresponding to the due date of the installment of principal orportion thereof for which the substitute Bond is being exchanged; and each such Bond shall bearinterest at the single rate applicable to and borne by such installment of principal or portion thereoffor which it is being exchanged. If a portion of any Bond (other than the Initial Bond) shall beredeemed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds having thesame maturity date, bearing interest at the same rate, in the denomination or denominations of anyintegral multiple of $5,000 at the request of the registered owner, and in aggregate principal amountequal to the unredeemed portion thereof, will be issued to the registered owner upon surrenderthereof for cancellation. If any Bond or portion thereof (other than the Initial Bond) is assigned andtransferred or converted, each Bond issued in exchange therefor shall have the same principalmaturity date and bear interest at the same rate as the Bond for which it is being exchanged. Eachsubstitute Bond shall bear a letter and/or number to distinguish it from each other Bond. The PayingAgent/Registrar shall convert and exchange or replace Bonds as provided herein, and each fullyregistered Bond delivered in conversion of and exchange for or replacement of any Bond or portion

10

thereof as permitted or required by any provision of this Resolution shall constitute one of the Bondsfor all purposes of this Resolution, and may again be converted and exchanged or replaced. It isspecifically provided that any Bond authenticated in conversion of and exchange for or replacementof another Bond on or prior to the first scheduled Record Date for the Initial Bond shall bear interestfrom the date of the Initial Bond, but each substitute Bond so authenticated after such first scheduledRecord Date shall bear interest from the interest payment date next preceding the date on which suchsubstitute Bond was so authenticated, unless such Bond is authenticated after any Record Date buton or before the next following interest payment date, in which case it shall bear interest from suchnext following interest payment date; provided, however, that if at the time of delivery of anysubstitute Bond the interest on the Bond for which it is being exchanged is due but has not beenpaid, then such Bond shall bear interest from the date to which such interest has been paid in full. THE INITIAL Bond issued and delivered pursuant to this Resolution is not required to be, and shallnot be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued inconversion of and exchange for or replacement of any Bond or Bonds issued under this Resolutionthere shall be printed a certificate, in the form substantially as follows:

"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE

It is hereby certified that this Bond has been issued under the provisions of the BondResolution described in this Bond; and that this Bond has been issued in conversion of and exchangefor or replacement of a Bond, Bonds, or a portion of a Bond or Bonds of an issue which originallywas approved by the Attorney General of the State of Texas and registered by the Comptroller ofPublic Accounts of the State of Texas.

THE BANK OF NEW YORK MELLON TRUSTCOMPANY, NATIONAL ASSOCIATION

Paying Agent/Registrar

Dated: __________ _____________________________Authorized Representative"

An authorized representative of the Paying Agent/Registrar shall, before the delivery of any suchBond, date and manually sign the above Certificate, and no such Bond shall be deemed to be issuedor outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shallcancel all Bonds surrendered for conversion and exchange or replacement. No additionalordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer orany other body or person so as to accomplish the foregoing conversion and exchange or replacementof any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing,execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shallbe of type composition printed on paper with lithographed or steel engraved borders of customaryweight and strength. Pursuant to Chapter 1206, Texas Government Code, the duty of conversionand exchange or replacement of Bonds as aforesaid is hereby imposed upon the PayingAgent/Registrar, and, upon the execution of the above Paying Agent/Registrar's AuthenticationCertificate, the converted and exchanged or replaced Bond shall be valid, incontestable, andenforceable in the same manner and with the same effect as the Initial Bond which originally was

11

issued pursuant to this Resolution, approved by the Attorney General, and registered by theComptroller of Public Accounts. The Issuer shall pay the Paying Agent/Registrar's standard orcustomary fees and charges for transferring, converting, and exchanging any Bond or any portionthereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes orgovernmental charges required to be paid with respect thereto as a condition precedent to theexercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not berequired to make any such conversion and exchange or replacement of Bonds or any portion thereof(i) during the period commencing with the close of business on any Record Date and ending withthe opening of business on the next following principal or interest payment date, or, (ii) with respectto any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to itsredemption date.

(e) In General. All Bonds issued in conversion and exchange or replacement of anyother Bond or portion thereof, (i) shall be issued in fully registered form, without interest coupons,with the principal of and interest on such Bonds to be payable only to the registered owners thereof,(ii) may and, if so provided in the Approval Certificate, shall be redeemed prior to their scheduledmaturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for otherBonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal ofand interest on the Bonds shall be payable, all as provided, and in the manner required or indicated,in the FORM OF SUBSTITUTE Bond set forth in this Resolution.

(f) Payment of Fees and Charges. The Issuer hereby covenants with the registeredowners of the Bonds that it will (i) pay the standard or customary fees and charges of the PayingAgent/Registrar for its services with respect to the payment of the principal of and interest on theBonds, when due, and (ii) pay the fees and charges of the Paying Agent/Registrar for services withrespect to the transfer of registration of Bonds, and with respect to the conversion and exchange ofBonds solely to the extent above provided in this Resolution.

(g) Substitute Paying Agent/Registrar. The Issuer covenants with the registered ownersof the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competentand legally qualified bank, trust company, financial institution, or other agency to act as and performthe services of Paying Agent/Registrar for the Bonds under this Resolution, and that the PayingAgent/Registrar will be one entity. The Issuer reserves the right to, and may, at its option, changethe Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar,to be effective not later than 60 days prior to the next principal or interest payment date after suchnotice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor bymerger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuercovenants that promptly it will appoint a competent and legally qualified bank, trust company,financial institution, or other agency to act as Paying Agent/Registrar under this Resolution. Uponany change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shalltransfer and deliver the Registration Books (or a copy thereof), along with all other pertinent booksand records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed bythe Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a writtennotice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds,by United States mail, first-class postage prepaid, which notice also shall give the address of the newPaying Agent/Registrar. By accepting the position and performing as such, each Paying

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Agent/Registrar shall be deemed to have agreed to the provisions of this Resolution, and a certifiedcopy of this Resolution shall be delivered to each Paying Agent/Registrar.

Section 7. FORM OF SUBSTITUTE BONDS. The form of all Bonds issued in conversionand exchange or replacement of any other Bond or portion thereof, including the form of PayingAgent/Registrar's Certificate to be printed on each of such Bonds, and the Form of Assignment tobe printed on each of the Bonds, shall be, respectively, substantially as follows, with blank orbracketed information to be completed or deleted based upon the Approval Certificate, and withsuch appropriate variations, omissions, or insertions as are permitted or required by this Resolution.

FORM OF SUBSTITUTE BOND

THE FOLLOWING TWO BRACKETED PARAGRAPHS ARE TO BE DELETED IFBOND IS NOT BOOK ENTRY ONLY:

[Unless this Bond is presented by an authorized representative of The Depository TrustCompany, a New York corporation ("DTC") to the Issuer or its agent for registration of transfer,exchange, or payment, and any Bond issued is registered in the name of Cede & Co. or in such othername as is requested by an authorized representative of DTC (and any payment is made to Cede &Co. or to such other entity as is requested by an authorized representative of DTC), ANYTRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TOANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has aninterest herein.

As provided in the Bond Resolution referred to herein, until the termination of the systemof book-entry-only transfers through DTC, and notwithstanding any other provision of the BondResolution to the contrary, this Bond may be transferred, in whole but not in part, only to a nomineeof DTC, or by a nominee of DTC to DTC or a nominee of DTC, or by DTC or a nominee of DTCto any successor securities depository or any nominee thereof.]

PRINCIPALAMOUNT

NO. R-__ $___________UNITED STATES OF AMERICA

STATE OF TEXASNORTH TEXAS MUNICIPAL WATER DISTRICTPANTHER CREEK REGIONAL WASTEWATER

SYSTEM CONTRACT REVENUE BOND,SERIES 2020

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MATURITYINTEREST RATE DATE ISSUE DATE CUSIP NO.

_____% JUNE 1, ____ ___________, ____* ________

ON THE MATURITY DATE specified above NORTH TEXAS MUNICIPAL WATERDISTRICT (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to payto CEDE & CO., or to the registered assignee hereof (either being hereinafter called the "registeredowner") the principal amount of ________________ ____________________________ and to payinterest thereon, calculated on the basis of a 360-day year composed of twelve 30-day months, fromthe Issue Date specified above, to the Maturity Date specified above, or the date of redemption priorto maturity, at the interest rate per annum specified above; with interest being payable semiannuallyon each June 1 and December 1, commencing _________, ____** except that if the date ofauthentication of this Bond is later than the first Record Date (hereinafter defined), such principalamount shall bear interest from the interest payment date next preceding the date of authentication,unless such date of authentication is after any Record Date (hereinafter defined) but on or before thenext following interest payment date, in which case such principal amount shall bear interest fromsuch next following interest payment date.

THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of theUnited States of America, without exchange or collection charges. The principal of this Bond shallbe paid to the registered owner hereof upon presentation and surrender of this Bond at maturity orupon the date fixed for its redemption prior to maturity, at the principal corporate trust office of THEBANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION., in Dallas,Texas, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bondshall be made by the Paying Agent/Registrar to the registered owner hereof on each interest paymentdate by check dated as of such interest payment date, drawn by the Paying Agent/Registrar on, andpayable solely from, funds of the Issuer required by the resolution authorizing the issuance of theBonds (the "Bond Resolution") to be on deposit with the Paying Agent/Registrar for such purposeas hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United Statesmail, first-class postage prepaid, on each such interest payment date, to the registered owner hereof,at the address of the registered owner, as it appeared on the 15th day of the month next precedingeach such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar,as hereinafter described. However, notwithstanding the foregoing provisions, the payment of suchinterest may be made by any other method acceptable to the Paying Agent/Registrar and requestedby, and at the risk and expense of, the registered owner hereof. Any accrued interest due upon theredemption of this Bond prior to maturity as provided herein shall be paid to the registered ownerat the principal corporate trust office of the Paying Agent/Registrar upon presentation and surrenderof this Bond for redemption and payment at the principal corporate trust office of the PayingAgent/Registrar. The Issuer covenants with the registered owner of this Bond that on or before eachprincipal payment date, interest payment date, and accrued interest payment date for this Bond it willmake available to the Paying Agent/Registrar, from the "Bond Fund" created by the BondResolution, the amounts required to provide for the payment, in immediately available funds, of allprincipal of and interest on the Bonds, when due.

* Date of initial delivery to the Purchaser (as defined in Section 33 of this Resolution). ** ** From Approval Certificate. 14


THIS BOND is one of an issue of Bonds initially dated as of ______*, 2020, authorized inaccordance with the Constitution and laws of the State of Texas in the principal amount of$__________* FOR THE PURPOSE OF PROVIDING FUNDS (i) FOR THE ACQUISITION,CONSTRUCTION, AND IMPROVEMENT OF THE PANTHER CREEK REGIONALWASTEWATER SYSTEM, (ii) TO FUND A RESERVE FUND (AS DEFINED IN THE BONDRESOLUTION), AND (iii) TO PAY COSTS OF ISSUANCE OF THIS BOND.

ON _________ 1, ____*, or on any date whatsoever thereafter, the Bonds of this Series maybe redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived fromany available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, orportions thereof, to be redeemed shall be selected and designated by the Issuer and within a maturitythe particular Bonds or portions thereof to be selected by the Paying Agent/Registrar by lot or othercustomary method of random selection (provided that a portion of a Bond may be redeemed onlyin an integral multiple of $5,000), at the redemption price equal to the principal amount thereof, plusaccrued interest to the date fixed for redemption.

**[THE BONDS maturing on June 1, _____ and June 1, ____ (the "Term Bonds") aresubject to mandatory redemption prior to maturity in part, by lot or other customary random methodselected by the Paying Agent/Registrar, at a redemption price equal to the principal amount of theTerms Bonds or portions thereof to be redeemed plus accrued interest to the redemption date, onJune 1 in each of the years and in the principal amounts as follows:

Bonds Maturing on June 1, ______

Years Amounts

Bonds Maturing on June 1, ______

Years Amounts

The principal amount of the Term Bonds of a maturity required to be redeemed pursuant tothe operation of such mandatory redemption provisions shall be reduced, at the option of the Issuer,by the principal amount of the Term Bonds of such maturity which, at least 50 days prior to themandatory redemption date (1) shall have been acquired by the Issuer at a price not exceeding the

* From Approval Certificate.** If applicable, from the Approval Certificate 15

principal amount of such Term Bonds plus accrued interest to the date of purchase thereof, anddelivered to the Paying Agent/Registrar for cancellation, (2) shall have been purchased and canceledby the Paying Agent/Registrar at the request of the Issuer at a price not exceeding the principalamount of such Term Bonds plus accrued interest to the date of purchase, or (3) shall have beenredeemed pursuant to the optional redemption provisions and not theretofore credited against amandatory redemption requirement.]

DURING ANY PERIOD in which ownership of the Bonds is determined by a book entryat a securities depository for the Bonds, if fewer than all of the Bonds of the same maturity andbearing the same interest rate are to be redeemed, the particular Bonds of such maturity and bearingsuch interest rate shall be selected in accordance with the arrangements between the Issuer and thesecurities depository.

AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereofprior to maturity at the option of the Issuer, a written notice of such redemption shall be mailed bythe Paying Agent/Registrar by United States mail, first-class postage prepaid, to the registered ownerof each Bond to be redeemed at its address as it appeared on the 45th day prior to such redemptiondate; provided, however, that the failure to send, mail, or receive such notice, or any defect thereinor in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedingsfor the redemption of any Bond at the option of the Issuer. By the date fixed for any suchredemption due provision shall be made with the Paying Agent/Registrar for the payment of therequired redemption price for the Bonds or portions thereof which are to be so redeemed, plusaccrued interest thereon to the date fixed for redemption. If such written notice of redemption isgiven and if due provision for such payment is made, all as provided above, the Bonds or portionsthereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to theirscheduled maturities, and they shall not bear interest after the date fixed for redemption, and theyshall not be regarded as being outstanding except for the right of the registered owner to receive theredemption price plus accrued interest from the Paying Agent/Registrar out of the funds providedfor such payment. If a portion of any Bond shall be redeemed a substitute Bond or Bonds havingthe same maturity date, bearing interest at the same rate, in any denomination or denominations inany integral multiple of $5,000, at the written request of the registered owner, and in aggregateprincipal amount equal to the unredeemed portion thereof, will be issued to the registered ownerupon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the BondResolution.

THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRALMULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books ofthe Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, uponthe terms and conditions set forth in the Bond Resolution. Among other requirements for suchassignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar,together with proper instruments of assignment, in form and with guarantee of signaturessatisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion orportions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name ornames this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Bond shall be executed by the registered owneror its duly authorized attorney or representative, to evidence the assignment hereof. A new Bondor Bonds payable to such assignee or assignees (which then will be the new registered owner or

16

owners of such new Bond or Bonds), or to the previous registered owner in the case of theassignment and transfer of only a portion of this Bond, may be delivered by the PayingAgent/Registrar in conversion of and exchange for this Bond, all in the form and manner as providedin the next paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall paythe Paying Agent/Registrar's standard or customary fees and charges for making such transfer, butthe one requesting such transfer shall pay any taxes or other governmental charges required to bepaid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers ofregistration of this Bond or any portion hereof (i) during the period commencing with the close ofbusiness on any Record Date and ending with the opening of business on the next followingprincipal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called forredemption prior to maturity, within 45 days prior to its redemption date. The registered owner ofthis Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absoluteowner hereof for all purposes, including payment and discharge of liability upon this Bond to theextent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by anynotice to the contrary.

ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, withoutinterest coupons, in the denomination of any integral multiple of $5,000. As provided in the BondResolution, this Bond, or any unredeemed portion hereof, may, at the request of the registered owneror the assignee or assignees hereof, be converted into and exchanged for a like aggregate principalamount of fully registered bonds, without interest coupons, payable to the appropriate registeredowner, assignee, or assignees, as the case may be, having the same maturity date, and bearinginterest at the same rate, in any denomination or denominations in any integral multiple of $5,000as requested in writing by the appropriate registered owner, assignee, or assignees, as the case maybe, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordancewith the form and procedures set forth in the Bond Resolution. The Issuer shall pay the PayingAgent/Registrar's standard or customary fees and charges for transferring, converting, andexchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, andexchange shall pay any taxes or governmental charges required to be paid with respect thereto asa condition precedent to the exercise of such privilege of conversion and exchange. The PayingAgent/Registrar shall not be required to make any such conversion and exchange (i) during theperiod commencing with the close of business on any Record Date and ending with the opening ofbusiness on the next following principal or interest payment date, or, (ii) with respect to any Bondor portion thereof called for redemption prior to maturity, within 45 days prior to its redemptiondate.

IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns,or otherwise ceases to act as such, the Issuer has covenanted in the Bond Resolution that it promptlywill appoint a competent and legally qualified substitute therefor, and promptly will cause writtennotice thereof to be mailed to the registered owners of the Bonds.

IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validlyauthorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to beperformed, exist, and be done precedent to or in the authorization, issuance, and delivery of thisBond have been performed, existed, and been done in accordance with law; that this Bond is aspecial obligation of the Issuer which, together with other bonds, are secured by and payable froma first lien on and pledge of the "Pledged Revenues" as defined in the Bond Resolution, including

17

the Gross Revenues of the District's Panther Creek Regional Wastewater System, and includingspecifically certain payments to be received by the District from the City of Frisco, Texas (the"Participant"), under the "Panther Creek Regional Wastewater System Contract", dated September23, 2004, between the Participant and the District, and any payments to be received by the Districtunder all similar contracts with any future Additional Participants as defined and permitted in saidcontracts. This Bond and the series of which it is a part are on a parity in all respects with thecurrently outstanding bonds of those issues of "North Texas Municipal Water District Panther CreekRegional Wastewater System Revenue Refunding Bonds, Series 2014," in the original principalamount of $19,940,000, and "North Texas Municipal Water District Panther Creek RegionalWastewater System Revenue Refunding Bonds, Series 2017," in the original principal amount of$11,050,000.

THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Resolution,to issue Additional Bonds payable from and secured by a first lien on and pledge of the "PledgedRevenues" on a parity with this Bond and series of which it is a part.

THE ISSUER also has reserved the right to amend the Bond Resolution with the approvalof the registered owners of 51% in principal amount of all outstanding bonds secured by and payablefrom a first lien on and pledge of the "Pledged Revenues".

THE REGISTERED OWNER hereof shall never have the right to demand payment of thisBond or the interest hereon out of any funds raised or to be raised by taxation or from any sourcewhatsoever other than the Pledged Revenues.

BY BECOMING the registered owner of this Bond, the registered owner therebyacknowledges all of the terms and provisions of the Bond Resolution, agrees to be bound by suchterms and provisions, acknowledges that the Bond Resolution is duly recorded and available forinspection in the official minutes and records of the governing body of the Issuer, and agrees thatthe terms and provisions of this Bond and the Bond Resolution constitute a contract between eachregistered owner hereof and the Issuer.

THIS BOND shall not be valid or become obligatory for any purpose or be entitled to anysecurity or benefit under the Bond Resolution until the Authentication Certificate hereon shall havebeen signed by the Paying Agent/Registrar.

IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual orfacsimile signature of the President of the Board of Directors of the Issuer and countersigned withthe manual or facsimile signature of the Secretary of the Board of Directors of the Issuer, and hascaused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond.

xxxxxxx xxxxxxx Secretary, Board of Directors, President, Board of DirectorsNorth Texas Municipal Water District North Texas Municipal Water District

(DISTRICT SEAL)

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FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE

PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE

It is hereby certified that this Bond has been issued under the provisions of the BondResolution described in this Bond; and that this Bond has been issued in conversion of and exchangefor or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally wasapproved by the Attorney General of the State of Texas and registered by the Comptroller of PublicAccounts of the State of Texas.

THE BANK OF NEW YORK MELLON TRUST COMPANY,NATIONAL ASSOCIATION


Dated: ___________ _____________________________Authorized Representative

FORM OF ASSIGNMENT

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto

Please Insert Social Security orOther Identifying Number of Assignee/___________________________________/

____________________________________________________________(Name and Address of Assignee)

the within Bond and does hereby irrevocably constitute and appoint _________________________to transfer said Bond on the books kept for registration thereof with full power of substitution in thepremises.

Date: _____________________

____________________________________

Signature Guaranteed: ____________________________________

NOTICE: The signature to this assignment must correspond with the name as it appears uponthe face of the within Bond in every particular, without alteration or enlargement orany change whatever; and

NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating ina Securities Transfer Association recognized signature guarantee program.

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Section 8. ADDITIONAL DEFINITIONS. As used in this Resolution the following termsshall have the meanings set forth below, unless the text hereof specifically indicates otherwise:

The term "Additional Bonds" shall mean the additional parity revenue bonds permitted tobe authorized in the future in this Resolution.

The term "Additional Participants" shall mean a city or cities in addition to the City ofFrisco, Texas with which the District enters into a contract for receiving, transporting, treating,and/or disposing of Wastewater (as defined in the Contract) through the System.

The term "Board" shall mean the Board of Directors of the Issuer, being the governing bodyof the Issuer, and it is further resolved that the declarations and covenants of the Issuer containedin this Resolution are made by, and for and on behalf of the Board and the Issuer, and are bindingupon the Board and the Issuer for all purposes.

The terms "Bond Resolution" and "Resolution" shall mean this resolution authorizing theBonds.

The term "Bonds" shall mean collectively the Initial Bond as described and defined inSection 1 of this Resolution, and all substitute bonds exchanged therefor as well as all othersubstitute and replacement bonds issued pursuant to this Resolution.

The term "Contract" shall mean collectively the Panther Creek Regional WastewaterContract, dated as of September 23, 2004, between the Issuer and the Participant, together with allsimilar contracts which may be executed in the future between the Issuer and AdditionalParticipants, as defined and permitted in the aforesaid contract.

The terms "District" and "Issuer" shall mean North Texas Municipal Water District.

The terms "District's System", "Issuer's System", and "System" shall mean all of the Issuer'sfacilities acquired, constructed, used, or operated by the Issuer for receiving, transporting, treating,and disposing of Wastewater (as defined in the Contract) of and for the Participants, pursuant to theContract, including the contracts with Additional Participants (but excluding any facilities acquiredor constructed with Special Facilities Bonds, and excluding any facilities required to transportWastewater to any Point of Entry (as defined in the Contract) of the System), together with anyimprovements, enlargements, or additions to said System facilities and any extensions, repairs, orreplacements of said System facilities acquired, constructed, used, operated, or otherwiseincorporated into or made a part of said System facilities in the future by the Issuer. Said terms shallinclude only those facilities which are acquired, constructed, used, or operated by the Issuer toprovide service to Participants pursuant to the Contract, including any contracts with AdditionalParticipants, and which, as determined by the Issuer, can economically and efficiently provideservice to Participants.

The term "fiscal year" shall mean the 12 month period beginning each October 1, or suchother 12 month period hereafter established by the Issuer as a fiscal year for the purposes of thisResolution.

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The term "Gross Revenues of the System" shall mean all of the revenues, income, rentals,rates, fees, and charges of every nature derived by the Board or the Issuer from the operation and/orownership of the System, including specifically all payments constituting the "Annual Requirement"(consisting of the "Operation and Maintenance Component" and the "Bond Service Component"),and all other payments and amounts received by the Board or the Issuer from the Participantspursuant to the Contract, including any contracts with Additional Participants.

The term "Net Revenues of the System" shall mean the Gross Revenues of the System lessthe Operation and Maintenance Expense of the System.

The term "Operation and Maintenance Expense" shall mean all costs of operation andmaintenance of the Issuer's System including, but not limited to, repairs and replacements, the costof utilities, supervision, engineering, accounting, auditing, legal services, insurance premiums, andany other supplies, services, administrative costs, and equipment necessary for proper operation andmaintenance of the Issuer's System, any payments required to be made under the Contract into theContingency Fund (as defined in the Contract), payments made for the use or operation of anyproperty, payments of fines, and payments made by Issuer in satisfaction of judgments or otherliabilities resulting from claims not covered by Issuer's insurance or not paid by one particularParticipant arising in connection with the operation and maintenance of the Issuer's System. Depreciation shall not be considered an item of Operation and Maintenance Expense.

The term "Parity Bonds" shall mean, collectively, (i) the Bonds, (ii) the outstanding Series2014 Bonds, and (iii) the outstanding Series 2017 Bonds.

The term "Participant" shall mean the City of Frisco, in Collin and Denton Counties, Texas.

The term "Participants" shall mean the Participant, together with all Additional Participants.

The term "Pledged Revenues" shall mean: (a) the Gross Revenues of the System and (b)any additional revenues, income, receipts, or other resources, including, without limitation, anygrants, donations, or income received or to be received from the United States Government, or anyother public or private source, whether pursuant to an agreement or otherwise, which in the futuremay, at the option of the Issuer, be pledged to the payment of the Bonds or the Additional Bonds.

The term "Series 2014 Bond Resolution" shall mean the resolution adopted by the Board ofDirectors of the Issuer on October 23, 2014, authorizing the Series 2014 Bonds.

The term "Series 2014 Bonds" shall mean the unpaid and unrefunded North Texas MunicipalWater District Panther Creek Regional Wastewater Contract Revenue Refunding Bonds, Series2014, dated October 1, 2014, that will be outstanding after the issuance and delivery of the Bonds.

The term "Series 2017 Bond Resolution" shall mean the resolution adopted by the Board ofDirectors of the Issuer on November 29, 2017, authorizing the Series 2017 Bonds.

The term "Series 2017 Bonds" shall mean the unpaid and unrefunded North Texas MunicipalWater District Panther Creek Regional Wastewater Contract Revenue Refunding Bonds, Series2017, dated December 1, 2017, that will be outstanding after the issuance and delivery of the Bonds.

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The term "Special Facilities Bonds" shall mean revenue obligations of the Issuer which arenot secured by or payable from Annual Payments under the Contract, but which are payable solelyfrom other sources; but Special Facilities Bonds may be made payable from payments from anyperson, including any Participant, under a separate contract whereunder the facilities to be acquiredor constructed are declared not to be part of the system and are not made payable from the AnnualPayments as defined in the Contract.

Section 9. PLEDGE. The Bonds authorized by this Resolution are hereby designated, andshall be "Additional Bonds" as permitted by Sections 22 and 23 of the Series 2014 Bond Resolutionand the Series 2017 Bond Resolution, and it is hereby determined, declared, and resolved, that allof the Bonds collectively, as defined above, are and shall be secured and payable equally and ratablyon a parity, and that Sections 8 through 25 of this Resolution are supplemental to and cumulativeof Sections 8 through 25 of the Series 2014 Bond Resolution and the Series 2017 Bond Resolution,with Sections 8 through 25 of this Resolution being equally applicable to all of the Parity Bonds. The Parity Bonds and any Additional Bonds, and the interest thereon, are and shall be secured byand payable from a first lien on and pledge of the Pledged Revenues, and the Pledged Revenues arefurther pledged to the establishment and maintenance of the Bond Fund and the Reserve Fund asprovided in this Resolution.

Section 10. REVENUE FUND. There has been created and established and shall bemaintained at an official depository of the Issuer (which must be a member of the Federal DepositInsurance Corporation) a separate fund entitled the "North Texas Municipal Water District PantherCreek Regional Wastewater System Revenue Bonds Revenue Bonds Fund" (hereafter called the"Revenue Fund"). All Gross Revenues of the System shall be credited to the Revenue Fundimmediately upon receipt.

Section 11. BOND FUND. For the sole purpose of paying the principal of and interest onall outstanding Parity Bonds and any Additional Bonds, as the same come due, there has beencreated and established and shall be maintained at The Bank of New York Mellon Trust Company,National Association, a separate fund entitled the "North Texas Municipal Water District PantherCreek Regional Wastewater System Revenue Bonds Bond Fund" (hereinafter called the "BondFund").

Section 12. RESERVE FUND. There has been created and established and shall bemaintained at The Bank of New York Mellon Trust Company, National Association, a separate fundentitled the "North Texas Municipal Water District Panther Creek Regional Wastewater SystemRevenue Bonds Reserve Fund" (hereinafter called the "Reserve Fund"). The Reserve Fund shall beused solely for the purpose of finally retiring the last of the outstanding Parity Bonds and AdditionalBonds, or for paying principal of and interest on any outstanding Parity Bonds and AdditionalBonds, when and to the extent the amount in the Bond Fund is insufficient for such purpose.

Section 13. DEPOSITS OF PLEDGED REVENUES. The Pledged Revenues shall bedeposited into the Bond Fund and the Reserve Fund when and as required by this Resolution.

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Section 14. INVESTMENTS. Money in any Fund established pursuant to this Resolutionmay, at the option of the Issuer, be invested in any or all of the authorized investments described inthe Public Funds Investment Act, Chapter 2256, Texas Government Code (or any successor statute),in which the Issuer may purchase, sell and invest its funds and funds under its control; provided thatall such deposits and investments shall be made in such manner that the money required to beexpended from any Fund will be available at the proper time or times. Such investments shall bevalued in terms of current market value as of the 15th day of January of each year. Interest andincome derived from such deposits and investments shall be credited to the Fund from which thedeposit or investment was made. Such investments shall be sold promptly when necessary toprevent any default in connection with the Parity Bonds or Additional Bonds. No investment of anyFund shall be made in any way which would violate any provision of this Resolution.

Section 15. FUNDS SECURED. Money in all Funds described in this Resolution, to theextent not invested, shall be secured in the manner prescribed by law, including particularly, thePublic Funds Collateral Act, Chapter 2257, Texas Government Code, for securing funds of theIssuer.

Section 16. DEBT SERVICE REQUIREMENTS. (a) Immediately after the delivery of theInitial Bond the Issuer shall deposit to the credit of the Bond Fund, from the proceeds received fromthe sale and delivery of the Initial Bond, all accrued interest, if any.

(b) The Issuer shall transfer from the Pledged Revenues and deposit to the credit of theBond Fund the amounts, at the times, as follows:

(1) such amounts, deposited in approximately equal monthly installments on orbefore the 25th day of each month as will be sufficient, together with other amounts, if any,then on hand in the Bond Fund and available for such purpose, to pay the interest scheduledto accrue and come due on the Parity Bonds and any Additional Bonds on the nextsucceeding interest payment date; and

(2) such amounts, deposited in approximately equal monthly installments on orbefore the 25th day of each month as will be sufficient, together with other amounts, if any,then on hand in the Bond Fund and available for such purpose, to pay the principal scheduledto mature and come due, and/or mandatorily required to be redeemed prior to maturity, onthe Parity Bonds and any Additional Bonds on the next succeeding principal payment dateor mandatory redemption date.

Section 17. RESERVE REQUIREMENTS. Simultaneously with the delivery of the Bondsto the initial purchasers thereof, the Issuer shall cause to be deposited to the credit of the ReserveFund, out of proceeds of the Parity Bonds, an amount of money, if any, sufficient to cause theReserve Fund to contain together with any other money and/or investments on hand therein, anamount of money and/or investment equal in market value to the average annual principal andinterest requirements on all the Bonds. So long as the money and investments in the Reserve Fundare at least equal to the average annual principal and interest requirements on all Parity Bonds andAdditional Bonds then outstanding (the "Required Amount"), no deposits need be made to the creditof the Reserve Fund; but when and if the Reserve Fund at any time contains less than said Required

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Amount in market value, then, subject and subordinate to making the required deposits to the creditof the Bond Fund, the Issuer shall transfer from Pledged Revenues and deposit to the credit of theReserve Fund, on or before the 25th day of each month, a sum equal to 1/60th of the average annualprincipal and interest requirements of all then outstanding Parity Bonds and Additional Bonds, untilthe Reserve Fund is restored to said Required Amount. So long as the Reserve Fund contains saidRequired Amount, all amounts in excess of such Required Amount shall, on or before the 10th dayprior to each interest payment date, be deposited to the credit of the Bond Fund; and otherwise anyearnings from the deposit and investment of the Reserve Fund shall be retained in the Reserve Fund.

Section 18. DEFICIENCIES. If on any occasion there shall not be sufficient PledgedRevenues to make the required deposits into the Bond Fund and the Reserve Fund, then suchdeficiency shall be made up as soon as possible from the next available Pledged Revenues, or fromany other sources available for such purpose.

Section 19. EXCESS PLEDGED REVENUES. Subject to making the required deposits tothe credit of the Bond Fund and the Reserve Fund, when and as required by this Resolution, or anyResolution authorizing the issuance of Additional Bonds, subject to any credits required by theContract, the excess Pledged Revenues first shall be used to pay the Operation and MaintenanceExpenses of the System, and then, subject to paying such Operation and Maintenance Expenses ofthe System, may be used for any other lawful purpose.

Section 20. PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS. Semiannuallyon or before the last day of each May and November while any of the Parity Bonds or AdditionalBonds are outstanding and unpaid, the Issuer shall make available to the paying agents therefor, outof the Bond Fund or the Reserve Fund, if necessary, money sufficient to pay such interest on andsuch principal of the Parity Bonds and Additional Bonds as will accrue or mature on the June 1 orDecember 1 immediately following.

Section 21. FINAL DEPOSITS. At such times as the aggregate amount of money andinvestments in the Bond Fund and the Reserve Fund are at least equal in market value to (1) theaggregate principal amount of all unpaid (unmatured and matured) outstanding Parity Bonds andAdditional Bonds, plus (2) the aggregate amount of all unpaid interest, including all unpaid(unmatured and matured) outstanding interest coupons, appertaining to such Parity Bonds andAdditional Bonds, no further deposits need be made into the Bond Fund or the Reserve Fund. Indetermining the amount of such Parity Bonds and Additional Bonds, and unpaid interestappertaining thereto, outstanding at any time, there shall be subtracted and excluded the amount ofany such Parity Bonds and Additional Bonds, and unpaid interest appertaining thereto, which shallhave been duly called for redemption and for which funds shall have been deposited with the payingagents therefor sufficient for such redemption.

Section 22. ADDITIONAL BONDS. (a) The Issuer shall have the right and power at anytime and from time to time, and in one or more Series or issues, to authorize, issue, and deliveradditional parity revenue bonds (herein called "Additional Bonds"), in any amounts, for any lawful

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purpose of relating to the System, including the refunding of any Parity Bonds or Additional Bonds. Such Additional Bonds, if and when authorized, issued, and delivered in accordance with thisResolution, shall be secured by and made payable equally and ratably on a parity with the ParityBonds, and all other outstanding Additional Bonds, from a first lien on and pledge of the PledgedRevenues.

(b) The Bond Fund and the Reserve Fund, established by this Resolution shall secure andbe used to pay all Additional Bonds as well as the Parity Bonds. However, each Resolution underwhich Additional Bonds are issued shall provide and require that, in addition to the amountsrequired by the provisions of this Resolution and the provisions of any other Resolution orResolutions authorizing Additional Bonds to be deposited to the credit of the Bond Fund, the Issuershall deposit to the credit of the Bond Fund at least such amounts as are required for the paymentof all principal of and interest on said Additional Bonds then being issued, as the same come due;and that the aggregate amount to be accumulated and maintained in the Reserve Fund shall beincreased (if and to the extent necessary) to an amount not less than the average annual principal andinterest requirements of all Parity Bonds and Additional Bonds which will be outstanding after theissuance and delivery of the then proposed Additional Bonds; and that the required additionalamount shall be so accumulated by the deposit in the Reserve Fund of all or any part of said requiredadditional amount in cash immediately after the delivery of the then proposed Additional Bonds, or,at the option of the Issuer, by the deposit of said required additional amount (or any balance of saidrequired additional amount not deposited in cash as permitted above) in monthly installments, madeon or before the 25th day of each month following the adoption of the Resolution authorizing theissuance of the then proposed Additional Bonds, of not less than 1/60th of said required additionalamount (or 1/60th of the balance of said required additional amount not deposited in cash aspermitted above).

(c) All calculations of average annual principal and interest requirements made pursuantto this Section shall be made as of and from the date of the Additional Bonds then proposed to beissued.

(d) The principal of all Additional Bonds must be scheduled to be paid or mature on June1 of the years in which such principal is scheduled to be paid or mature; and all interest thereon mustbe payable on June 1 and December 1.

Section 23. FURTHER REQUIREMENTS FOR ADDITIONAL BONDS. AdditionalBonds shall be issued only in accordance with this Resolution, but notwithstanding any provisionsof this Resolution to the contrary, no installment, Series, or issue of Additional Bonds shall be issuedor delivered unless the President and the Secretary of the Board sign a written certificate to the effectthat the Issuer is not in default as to any covenant, condition, or obligation in connection with alloutstanding Parity Bonds and Additional Bonds, and the Resolutions authorizing same, and that theBond Fund and the Reserve Fund each contains the amount then required to be therein.

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Section 24. GENERAL COVENANTS. The Issuer further covenants and agrees that:

(a) PERFORMANCE. It will faithfully perform at all times any and all covenants,undertakings, stipulations, and provisions contained in this Resolution and each resolutionauthorizing the issuance of Additional Bonds, and in each and every Parity Bond and AdditionalBond; that it will promptly pay or cause to be paid the principal of and interest on every Parity Bondand Additional Bond, on the dates and in the places and manner prescribed in such resolutions andParity Bonds or Additional Bonds; and that it will, at the times and in the manner prescribed, depositor cause to be deposited the amounts required to be deposited into the Bond Fund and the ReserveFund; and any holder of the Parity Bonds or Additional Bonds may require the Issuer, its Board, andits officials and employees, to carry out, respect, or enforce the covenants and obligations of theSeries 2006 Bond Resolution, this Resolution or any resolution authorizing the issuance ofAdditional Bonds, by all legal and equitable means, including specifically, but without limitation,the use and filing of mandamus proceedings, in any court of competent jurisdiction, against theIssuer, its Board, and its officials and employees.

(b) ISSUER'S LEGAL AUTHORITY. The Issuer is a duly created and existingconservation and reclamation district of the State of Texas pursuant to Article 16, Section 59 of theTexas Constitution, and Chapter 62, Acts of 1951, 52nd Legislature of Texas, Regular Session, asamended (originally compiled as Vernon's Ann. Tex. Civ. St. Article 8280-141), and is dulyauthorized under the laws of the State of Texas to create and issue the Parity Bonds; that all actionon its part for the creation and issuance of the Bonds has been duly and effectively taken, and thatthe Parity Bonds in the hands of the holders and owners thereof are and will be valid and enforceablespecial obligations of the Issuer in accordance with their terms.

(c) TITLE. It has or will obtain lawful title to, or the lawful right to use and operate, thelands, buildings, and facilities constituting the System, that it warrants that it will defend, the titleto or lawful right to use and operate, all the aforesaid lands, buildings, and facilities, and every partthereof, for the benefit of the holders and owners of the Parity Bonds and Additional Bonds againstthe claims and demands of all persons whomsoever, that it is lawfully qualified to pledge thePledged Revenues to the payment of the Parity Bonds and Additional Bonds in the mannerprescribed herein, and has lawfully exercised such rights.

(d) LIENS. It will from time to time and before the same become delinquent pay anddischarge all taxes, assessments, and governmental charges, if any, which shall be lawfully imposedupon it, or the System, that it will pay all lawful claims for rents, royalties, labor, materials, andsupplies which if unpaid might by law become a lien or charge thereon, the lien of which would beprior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall befully preserved in the manner provided herein, and that it will not create or suffer to be created anymechanic's, laborer's, materialman's, or other lien or charge which might or could be prior to theliens hereof, or do or suffer any matter or thing whereby the liens hereof might or could be impaired;provided, however, that no such tax, assessment, or charge, and that no such claims which might beused as the basis of a mechanic's, laborer's, materialman's, or other lien or charge, shall be requiredto be paid so long as the validity of the same shall be contested in good faith by the Board.

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(e) OPERATION OF SYSTEM. While the Parity Bonds or any Additional Bonds areoutstanding and unpaid it will cause the System to be continuously and efficiently operated andmaintained in accordance with accepted good business and engineering practices.

(f) FURTHER ENCUMBRANCE. While the Parity Bonds or any Additional Bonds areoutstanding and unpaid, the Issuer shall not additionally encumber the Pledged Revenues in anymanner, except as permitted in this Resolution in connection with Additional Bonds, unless saidencumbrance is made junior and subordinate in all respects to the liens, pledges, covenants, andagreements of this Resolution and any resolution authorizing the issuance of Additional Bonds; butthe right of the Issuer and the Board to issue revenue bonds payable from a subordinate lien on thePledged Revenues is specifically recognized and retained.

(g) SALE OF PROPERTY. While the Parity Bonds or any Additional Bonds areoutstanding and unpaid, the Issuer will maintain its current legal corporate status as a conservationand reclamation district, and the Issuer shall not sell, convey, mortgage, or in any manner transfertitle to, or lease, or otherwise dispose of the entire System, or any significant or substantial partthereof; provided that whenever the Issuer deems it necessary to dispose of any machinery, fixtures,and equipment, it may sell or otherwise dispose of such machinery, fixtures, and equipment whenit has made arrangements to replace the same or provide substitutes therefor, unless it is determinedby the Issuer that no such replacement or substitute is necessary.

(h) INSURANCE. (1) It will cause to be insured (including self-insurance) such partsof the System as would usually be insured by corporations operating like properties, with aresponsible insurance company or companies, against risks, accidents, or casualties against whichand to the extent insurance is usually carried by corporations operating like properties, including fireand extended coverage insurance. Public liability and property damage insurance shall also becarried unless the general counsel for Issuer, or the Attorney General of Texas, gives a writtenopinion to the effect that the Issuer, the Board, and its officers and employees, are not liable forclaims which would be protected by such insurance. At any time while any contractor engaged inconstruction work shall be fully responsible therefor, the Issuer shall not be required to carryinsurance on the works being constructed, but the contractor shall be required to carry appropriateinsurance. All such policies shall be open to the inspection of the Bondholders and theirrepresentatives at all reasonable times.

(2) Upon the happening of any loss or damage covered by insurance from one or moreof said causes, the Issuer shall make due proof of loss and shall do all things necessary or desirableto cause the insuring companies to make payment in full directly to the Issuer. The proceeds ofinsurance covering such property, together with any other funds necessary and available for suchpurpose, shall be used forthwith by the Issuer for repairing the property damaged or replacing theproperty destroyed; provided, however, that if said insurance proceeds and other funds areinsufficient for such purpose, then said insurance proceeds pertaining to the System shall be usedpromptly as follows:

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(a) for the redemption prior to maturity of the Parity Bonds and AdditionalBonds, if any, ratably in the proportion that the outstanding principal of each series or issueof Parity Bonds or Additional Bonds bears to the total outstanding principal of all ParityBonds and Additional Bonds; provided that if on any such occasion the principal of any suchseries or issue is not subject to redemption, it shall not be regarded as outstanding in makingthe foregoing computation; or

(b) if none of the outstanding Parity Bonds or Additional Bonds is subject toredemption, then for the purchase on the open market and retirement of said Bonds andAdditional Bonds, in the same proportion as prescribed in the foregoing clause (a), to theextent practicable; provided that the purchase price for any such Parity Bond or AdditionalBonds shall not exceed the redemption price of such parity Bond or Additional Bond on thefirst date upon which it becomes subject to redemption; or

(c) to the extent that the foregoing clauses (a) and (b) cannot be complied withat the time, the insurance proceeds, or the remainder thereof, shall be deposited in a specialand separate trust fund, at an official depository of the Issuer, to be designated the InsuranceAccount. The Insurance Account shall be held until such time as the foregoing clauses (a)and/or (b) can be complied with, or until other funds become available which, together withthe Insurance Account, will be sufficient to make the repairs or replacements originallyrequired, whichever of said events occurs first.

(3) The annual audit hereinafter required shall contain a list of all such insurance policiescarried, together with a statement as to whether or not all insurance premiums upon such policieshave been paid.

(i) RATE COVENANT. It will fix, establish, maintain, and collect such rentals, rates,charges, and fees for the use and availability of the System as are necessary to produce GrossRevenues of the System sufficient, together with any other Pledged Revenues, (a) to make allpayments and deposits required to be made into the Bond Fund, and to maintain the Reserve Fund,as required by the resolutions authorizing all Parity Bonds and Additional Bonds, and (b) to pay allOperation and Maintenance Expenses of the System.

(j) RECORDS. Proper books of record and account will be kept in which full, true, andcorrect entries will be made of all dealings, activities, and transactions relating to the System, thePledged Revenues, and all Funds described in this Resolution; and all books, documents, andvouchers relating thereto shall at all reasonable times be made available for inspection upon requestof any bondholder.

(k) AUDITS. Each year while any of the Parity Bonds or Additional Bonds areoutstanding, an audit will be made of its books and accounts relating to the System and the PledgedRevenues by an independent certified public accountant or an independent firm of certified publicaccountants.

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(l) GOVERNMENTAL AGENCIES. It will comply with all of the terms and conditionsof any and all agreements applicable to the System and the Parity Bonds or Additional Bondsentered into between the Issuer and any governmental agency, and the Issuer will take all actionnecessary to enforce said terms and conditions; and the Issuer will obtain and keep in full force andeffect all franchises, permits, and other requirements necessary with respect to the acquisition,construction, operation, and maintenance of the System.

(m) CONTRACTS WITH PARTICIPANTS. It will comply with the terms andconditions of the Contract, including any contracts with Additional Participants, and will cause theParticipants to comply with all of their obligations thereunder by all lawful means; and the Issueragrees to prepare an annual budget as required by the Contract.

Section 25. AMENDMENT OF RESOLUTION. (a) The holders or owners of Parity Bondsand Additional Bonds aggregating 51% in principal amount of the aggregate principal amount ofthen outstanding Parity Bonds and Additional Bonds shall have the right from time to time toapprove any amendment to this Resolution or any resolution authorizing the issuance of AdditionalBonds, which may be deemed necessary or desirable by the Issuer, provided, however, that nothingherein contained shall permit or be construed to permit the amendment of the terms and conditionsin said resolutions or in the Parity Bonds or Additional Bonds so as to:

(1) Make any change in the maturity of the outstanding Parity Bonds or AdditionalBonds;

(2) Reduce the rate of interest borne by any of the outstanding Parity Bonds orAdditional Bonds;

(3) Reduce the amount of the principal payable on the outstanding Parity Bonds orAdditional Bonds;

(4) Modify the terms of payment of principal of or interest on the outstanding ParityBonds or Additional Bonds, or impose any conditions with respect to such payment;

(5) Affect the rights of the holders of less than all of the Parity Bonds and AdditionalBonds then outstanding;

(6) Change the minimum percentage of the principal amount of Parity Bonds andAdditional Bonds necessary for consent to such amendment.

(b) If at any time the Issuer shall desire to amend a resolution under this Section, theIssuer shall cause notice of the proposed amendment to be published in a financial newspaper orjournal published in the City of New York, New York, or in the City of Austin, Texas, once duringeach calendar week for at least two successive calendar weeks. Such notice shall briefly set forththe nature of the proposed amendment and shall state that a copy thereof is on file at the principaloffice of each Paying Agent for each series of Parity Bonds and Additional Bonds for inspection by

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all holders of Parity Bonds and Additional Bonds. Such publication is not required, however, ifnotice in writing is given to each holder of Parity Bonds and Additional Bonds.

(c) Whenever at any time not less than thirty days, and within one year, from the dateof the first publication of notice or other service of written notice the Issuer shall receive aninstrument or instruments executed by the holders or owners of at least 51% in aggregate principalamount of all Parity Bonds and Additional Bonds then outstanding, which instrument or instrumentsshall refer to the proposed amendment described in said notice and which specifically consent to andapprove such amendment in substantially the form of the copy thereof on file as aforesaid, the Issuermay adopt the amendatory resolution in substantially the same form.

(d) Upon the adoption of any amendatory resolution pursuant to the provisions of thisSection, the resolution being amended shall be deemed to be amended in accordance with theamendatory resolution, and the respective rights, duties, and obligations of the Issuer and all theholders or owners of then outstanding Parity Bonds and Additional Bonds and all future AdditionalBonds shall thereafter be determined, exercised, and enforced hereunder, subject in all respects tosuch amendment.

(e) Any consent given by the holder or owner of a Parity Bond or Additional Bondpursuant to the provisions of this Section shall be irrevocable for a period of six months from thedate of the first publication of the notice provided for in this Section, and shall be conclusive andbinding upon all future holders or owners of the same Parity Bond or Additional Bond during suchperiod. Such consent may be revoked at any time after six months from the date of the firstpublication of such notice by the holder or owner who gave such consent, or by a successor in title,by filing notice thereof with each Paying Agent for each series of Parity Bonds and AdditionalBonds, Texas, and the Issuer, but such revocation shall not be effective if the holders of 51% inaggregate principal amount of the then outstanding Parity Bonds and Additional Bonds as in thisSection defined have, prior to the attempted revocation, consented to and approved the amendment.

(f) For the purpose of this Section, the ownership of all Parity Bonds and AdditionalBonds shall be ascertained by the registration books pertaining thereto kept by the registrar. TheIssuer may conclusively assume that such holding or ownership continues until written notice to thecontrary is served upon the Issuer.

Section 26. DEFEASANCE OF BONDS. (a) Each of the Bonds, including the Initial Bondand each of the other Bonds (as hereinbefore defined), and the interest thereon shall be deemed tobe paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of thisResolution, except to the extent provided in subsection (d) of this Section, when payment of theprincipal of such Bond, plus interest thereon to the due date (whether such due date be by reason ofmaturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made inaccordance with the terms thereof (including the giving of any required notice of redemption), or(ii) shall have been provided for on or before such due date by irrevocably depositing with ormaking available to the Paying Agent/Registrar for such payment (1) lawful money of the UnitedStates of America sufficient to make such payment or (2) Government Obligations which mature

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as to principal and interest in such amounts and at such times as will insure the availability, withoutreinvestment, of sufficient money to provide for such payment, and when proper arrangements havebeen made by the Issuer with the Paying Agent/Registrar for the payment of its services until allDefeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to bea Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer besecured by, payable from, or entitled to the benefits of, the Pledged Revenues as provided in thisResolution, and such principal and interest shall be payable solely from such money or GovernmentObligations.

(b) Any moneys so deposited with the Paying Agent/Registrar may at the writtendirection of the Issuer also be invested in Government Obligations, maturing in the amounts andtimes as hereinbefore set forth, and all income from such Government Obligations received by thePaying Agent/Registrar which is not required for the payment of the Bonds and interest thereon,with respect to which such money has been so deposited, shall be turned over to the Issuer, ordeposited as directed in writing by the Issuer.

(c) The term "Government Obligations" as used in this Section shall mean (i) directobligations of the United States of America, including obligations the principal of and interest onwhich are unconditionally guaranteed by the United States of America, and which may be in book-entry form, and (ii) noncallable obligations of an agency or instrumentality of the United States,including obligations that are unconditionally guaranteed or insured by the agency or instrumentalityand that, on the date the governing body of the issuer adopts or approves the proceedings authorizingthe issuance of refunding bonds, are rated as to investment quality by a nationally recognizedinvestment rating firm not less than AAA or is equivalent.

(d) Until all Defeased Bonds shall have become due and payable, the PayingAgent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds thesame as if they had not been defeased, and the Issuer shall make proper arrangements to provide andpay for such services as required by this Resolution.

Section 27. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. In the event any outstanding Bonds or Bond authorized by this Resolutionis damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to beprinted, executed, and delivered, a new bond of the same principal amount, maturity, and interestrate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in themanner hereinafter provided.

(b) Application for Replacement Bonds. Application for replacement of damaged,mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to thePaying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered ownerapplying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar suchsecurity or indemnity as may be required by them to save each of them harmless from any loss ordamage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, theregistered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their

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satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case ofdamage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrarfor cancellation the Bond so damaged or mutilated.

(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, inthe event any such Bond shall have matured, and no default has occurred which is then continuingin the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuermay authorize the payment of the same (without surrender thereof except in the case of a damagedor mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity isfurnished as above provided in this Section.

(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacementbond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal,printing, and other expenses in connection therewith. Every replacement bond issued pursuant tothe provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shallconstitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bondshall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits ofthis Resolution equally and proportionately with any and all other Bonds duly issued under thisResolution.

(e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1206, TexasGovernment Code, this Section of this Resolution shall constitute authority for the issuance of anysuch replacement bond without necessity of further action by the governing body of the Issuer orany other body or person, and the duty of the replacement of such bonds is hereby authorized andimposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate anddeliver such Bonds in the form and manner and with the effect, as provided in Section 6(d) of thisResolution for Bonds issued in conversion and exchange for other Bonds.

Section 28. COVENANTS REGARDING TAX-EXEMPTION. (a) Covenants. The Issuercovenants to refrain from any action which would adversely affect, or to take such action to assure,the treatment of the Bonds as obligations described in section 103 of the Code, the interest on whichis not includable in the "gross income" of the holder for purposes of federal income taxation. Infurtherance thereof, the Issuer covenants as follows:

(1) to take any action to assure that no more than 10 percent of the proceeds ofthe Bonds or the projects financed therewith (less amounts deposited into a reserve fund, ifany) are used for any "private business use," as defined in section 141(b)(6) of the Code, orif more than 10 percent of the proceeds or the projects financed therewith are so used, suchamounts, whether or not received by the Issuer, with respect to such private business use, donot, under the terms of this Resolution or any underlying arrangement, directly or indirectly,secure or provide for the payment of more than 10 percent of the debt service on the Bonds,in contravention of section 141(b)(2) of the Code;

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(2) to take any action to assure that in the event that the "private business use"described in subsection (a) hereof exceeds five percent of the proceeds of the Bonds or theprojects financed therewith (less amounts deposited into a reserve fund, if any) then theamount in excess of five percent is used for a "private business use" which is "related" andnot "disproportionate," within the meaning of section 141(b)(3) of the Code, to thegovernmental use;

(3) to take any action to assure that no amount which is greater than the lesserof $5,000,000, or five percent of the proceeds of the Bonds (less amounts deposited into areserve fund, if any) is, directly or indirectly, used to finance loans to persons, other thanstate or local governmental units, in contravention of section 141(c) of the Code;

(4) to refrain from taking any action that would otherwise result in the Bondsbeing treated as "private activity bonds" within the meaning of section 141(b) of the Code;

(5) to refrain from taking any action that would result in the Bonds being"federally guaranteed" within the meaning of section 149(b) of the Code;

(6) to refrain from using any portion of the proceeds of the Bonds, directly orindirectly, to acquire or to replace funds which were used, directly or indirectly, to acquireinvestment property (as defined in section 148(b)(2) of the Code) which produces amaterially higher yield over the term of the Bonds, other than investment property acquiredwith --

(A) proceeds of the Bonds invested for a reasonable temporary period of 3years or less or, in the case of a refunding bond, for a period of 90 days or less untilsuch proceeds are needed for the purpose for which the Bonds are issued,

(B) amounts invested in a bona fide debt service fund, within the meaningof section 1.148-1(b) of the Treasury Regulations, and

(C) amounts deposited in any reasonably required reserve or replacementfund to the extent such amounts do not exceed 10 percent of the stated principalamount (or, in the case of a discount, the issue price) of the Bonds;

(7) to otherwise restrict the use of the proceeds of the Bonds or amounts treatedas proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwisecontravene the requirements of section 148 of the Code (relating to arbitrage), or section149(g) of the Code (relating to hedge bonds); and

(8) to refrain form using the proceeds of the Bonds or proceeds of any priorbonds to pay debt service on another issue more than 90 days after the date of issue of theBonds in contravention of the requirements of section 149(d) of the Code (relating toadvance refundings); and

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(9) to pay to the United States of America at least once during each five-yearperiod (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and topay to the United States of America, not later than 60 days after the Bonds have been paidin full, 100 percent of the amount then required to be paid as a result of Excess Earningsunder section 148(f) of the Code.

For purposes of the foregoing, the Issuer understands that the term "proceeds" includes "dispositionproceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferredproceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of theBonds.

(b) Compliance with Code. It is the understanding of the Issuer that the covenantscontained herein are intended to assure compliance with the Code and any regulations or rulingspromulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulationsor rulings are hereafter promulgated which modify or expand provisions of the Code, as applicableto the Bonds, the Issuer will not be required to comply with any covenant contained herein to theextent that such failure to comply, in the opinion of nationally-recognized bond counsel, will notadversely affect the exemption from federal income taxation of interest on the Bonds under section103 of the Code. In the event that regulations or rulings are hereafter promulgated which imposeadditional requirements which are applicable to the Bonds, the Issuer agrees to comply with theadditional requirements to the extent necessary, in the opinion of nationally-recognized bondcounsel, to preserve the exemption from federal income taxation of interest on the Bonds undersection 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directsits President, the President of the Board of Directors, the Executive Director, the Deputy Director -Administrative Services, and Deputy Director - Finance to execute any documents, certificates orreports required by the Code and to make such elections, on behalf of the Issuer, which may bepermitted by the Code as are consistent with the purpose for the issuance of the Bonds. The Issuercovenants to comply with the covenants contained in this section after defeasance of the Bonds.

(c) Rebate Fund. In order to facilitate compliance with the above covenant (a)(9), a"Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States ofAmerica, and such fund shall not be subject to the claim of any other person, including withoutlimitation, the bondholders. The Rebate Fund is established for the additional purpose ofcompliance with section 148 of the Code.

(d) Written Procedures. Unless superseded by another action of the Issuer to ensurecompliance with the covenants contained herein regarding private business use, remedial actions,arbitrage and rebate, the Issuer hereby adopts and establishes the instructions attached hereto asExhibit A as their written procedures applicable to Bonds issued pursuant to the Contract.

Section 29. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THEPROJECT. The Issuer covenants to account for the expenditure of Bond proceeds and investmentearnings to be used for the construction or acquisition of the property constituting the projects

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financed or refinanced with proceeds of the sale of the Bonds on its books and records by allocatingproceeds to expenditures within 18 months of the later of the date that (1) the expenditure is madeor (2) such construction or acquisition is completed. The foregoing notwithstanding, the Issuer shallnot expend proceeds of the Bonds or investment earnings thereon more than 60 days after the earlierof (1) the fifth anniversary of the delivery of the Bonds or (2) the date the Bonds are retired, unlessthe Issuer obtains an opinion of nationally-recognized bond counsel that such expenditure will notadversely affect the tax-exempt status of the Bonds. For purposes hereof, the Issuer shall not beobligated to comply with this covenant if it obtains an opinion that such failure to comply will notadversely affect the excludability for federal income tax purposes from gross income of the intereston the Bonds.

Section 30. DISPOSITION OF PROJECT. The Issuer covenants that the propertyconstituting the projects financed or refinanced with proceeds of the Bond will not be sold orotherwise disposed in a transaction resulting in the receipt by the Issuer of cash or othercompensation, unless the Issuer obtains an opinion of nationally-recognized bond counsel that suchsale or other disposition will not adversely affect the tax-exempt status of the Bond. For purposesof the foregoing, the portion of the property comprising personal property and disposed in theordinary course shall not be treated as a transaction resulting in the receipt of cash or othercompensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenantif it obtains an opinion that such failure to comply will not adversely affect the excludability forfederal income tax purposes from gross income of the interest on the Bonds.

Section 31. CUSTODY, APPROVAL, AND REGISTRATION OF INITIAL BOND;BOND COUNSEL'S OPINION, CUSIP NUMBERS, INSURANCE, AND PREAMBLE. ThePresident of the Board of Directors of the Issuer is hereby authorized to have control of the InitialBond issued hereunder and all necessary records and proceedings pertaining to the Initial Bondpending its delivery and its investigation, examination, and approval by the Attorney General of theState of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Initial Bond said Comptroller of Public Accounts (or a deputy designatedin writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificateon the Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, onthe Initial Bond. The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIPnumbers may, at the option of the Issuer, be printed on the Initial Bond or on any Bonds issued anddelivered in conversion of and exchange or replacement of any Bond, but neither shall have anylegal effect, and shall be solely for the convenience and information of the registered owners of theBonds. If insurance is obtained on any of the Bonds, the Initial Bond and all the Bonds shall bearan appropriate legend concerning insurance as provided by the insurer. The preamble to thisResolution is hereby adopted and made a part hereof for all purposes. As evidenced in the ApprovalCertificate, the Authorized Officer may also approve the inclusion herein or attachment hereto ofany bond insurance required provisions.

Section 32. SALE OF BONDS; PURCHASE AGREEMENT. Pursuant to the authorizationsin Section 3 hereof, as approved by the Authorized Officer, the Bonds may be sold either pursuantto the taking of bids therefor as provided in the Official Notice of Sale or pursuant to a purchase

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agreement (the "Purchase Agreement") with a purchaser or purchasers (collectively, the "Purchaser")to be approved by the Authorized Officer, and any supplements thereto which may be necessary toaccomplish the issuance of Bonds. Such Purchase Agreement is hereby authorized to be dated,executed and delivered on behalf of the Issuer by an Authorized Officer, with such changes thereinas shall be approved by the Authorized Officer, the execution thereof by the Authorized Officer toconstitute evidence of such approval. The delegation of authority to the Authorized Officer toapprove the final terms of the Bonds as set forth in this Resolution is, and the decisions made by theAuthorized Officer pursuant to such delegated authority will be, in the best interests of the Issuer,and the Authorized Officer is authorized to make a finding to such effect in the Approval Certificate.

Section 33. OFFICIAL STATEMENT. A Preliminary Official Statement relating to theBonds is hereby authorized to be approved by the Authorized Officer distributed to prospectiveinvestors and other interested parties in connection with the underwriting and sale of the Bonds, withsuch changes therein as shall be approved by the Authorized Officer, including such changes as arenecessary for distribution as a final Official Statement. It is further officially found, determined, anddeclared that the statements and representations contained in said Preliminary Official Statement aretrue and correct in all material respects. The use and distribution by the Purchaser of the OfficialStatement relating to the Bonds, is hereby approved. For the purpose of review by the Purchaserprior to purchasing the Bonds, the Issuer deems said Preliminary Official Statement to have been"final as of its date" within the meaning of Securities and Exchange Commission Rule 15c2-12.

Section 34. FURTHER PROCEDURES. The President and Secretary, respectively, of theBoard of Directors of the Issuer, the Executive Director of the Issuer, and all other officers,employees, and agents of the Issuer, and each of them, shall be and they are hereby expresslyauthorized, empowered, and directed from time to time and at any time to do and perform all suchacts and things and to execute, acknowledge, and deliver in the name and under the corporate sealand on behalf of the Issuer all such instruments, whether or not herein mentioned, as may benecessary or desirable in order to carry out the terms and provisions of this Bond Resolution, theBonds, the sale of the Bonds, and the Notice of Sale and Official Statement. The expenses of issuingthe Bonds shall be paid from the proceeds from the sale of the Initial Bond. In case any officerwhose signature shall appear on any Bond shall cease to be such officer before the delivery of suchBond, such signature shall nevertheless be valid and sufficient for all purposes the same as if suchofficer had remained in office until such delivery.

Section 35. DTC REGISTRATION. The Bonds initially issued in exchange and substitutionfor the Initial Bond shall be issued and delivered in such manner that no physical distribution of theBonds will be made to the public, and the Depository Trust Company ("DTC"), New York, NewYork, initially will act as depository for the Bonds. DTC has represented that it is a limited purposetrust company incorporated under the laws of the State of New York, a member of the FederalReserve System, a "clearing corporation" within the meaning of the New York Uniform CommercialCode, and a "clearing agency" registered under Section 17A of the federal Securities Exchange Actof 1934, as amended, and the Issuer accepts, but in no way verifies, such representations. The InitialBond authorized by this Resolution shall be delivered to and registered in the name of the Purchaser. However, it is a condition of delivery and sale that the Purchaser, immediately after such delivery,shall cause the Paying Agent/Registrar, as provided for in this Resolution, to cancel said Initial Bondand deliver in exchange therefor a substitute Bond for each maturity of the Initial Bond, as provided

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for in this Resolution, with each such substitute Bond to be registered in the name of CEDE & CO.,the nominee of DTC, and it shall be the duty of the Paying Agent/Registrar to take such action. Itis expected that DTC will hold the Bonds on behalf of the Purchaser and/or the DTC Participants,as defined and described in the Official Statement referred to and approved in Section 32 hereof (the"DTC Participants"). So long as each Bond is registered in the name of CEDE & CO., the PayingAgent/Registrar shall treat and deal with DTC in all respects the same as if it were the actual andbeneficial owner thereof. It is expected that DTC will maintain a book entry system which willidentify beneficial ownership of the Bonds by DTC Participants in integral amounts of $5,000, withtransfers of ownership being effected on the records of DTC and the DTC Participants pursuant torules and regulations established by them, and that the substitute Bonds initially deposited with DTCshall be immobilized and not be further exchanged for substitute Bonds except as hereinafterprovided. The Issuer is not responsible or liable for any functions of DTC, will not be responsiblefor paying any fees or charges with respect to its services, will not be responsible or liable formaintaining, supervising, or reviewing the records of DTC or the DTC Participants, or protectingany interests or rights of the beneficial owners of the Bonds. It shall be the duty of the Purchaserand the DTC Participants to make all arrangements with DTC to establish this book-entry system,the beneficial ownership of the Bonds, and the method of paying the fees and charges of DTC. TheIssuer does not represent, nor does it in any way covenant that the initial book-entry systemestablished with DTC will be maintained in the future. The Issuer reserves the right and option atany time in the future, in its sole discretion, to terminate the DTC (CEDE & CO.) book-entry onlyregistration requirement described above, and to permit the Bonds to be registered in the name ofany owner. If the Issuer exercises its right and option to terminate such requirement, it shall givewritten notice of such termination to the Paying Agent/Registrar and to DTC, and thereafter thePaying Agent/Registrar shall, upon presentation and proper request, register any Bond in any nameas provided for in this Resolution. Notwithstanding the initial establishment of the foregoing book-entry system with DTC, if for any reason any of the originally delivered substitute Bonds is dulyfiled with the Paying Agent/Registrar with proper request for transfer and substitution, as providedfor in this Resolution, substitute Bonds will be duly delivered as provided in this Resolution, andthere will be no assurance or representation that any book-entry system will be maintained for suchBonds.

Section 36. CONTINUING DISCLOSURE UNDERTAKING.

(a) Annual Reports.

The Issuer shall provide or cause the Significant Obligated Person to provide annually to theMSRB, (1) within six months after the end of each fiscal year ending in or after 2020, financialinformation and operating data of the general type included in the final Official Statement authorizedby Section 33 of this Resolution, being the information described in tables 1 through 3 in the OfficialStatement and Appendix B to the Official Statement and (2) when and if available, audited financialstatements of the Issuer and each Significant Obligated Person. Any financial statements so to beprovided shall be prepared in accordance with generally accepted accounting principles or suchother accounting principles as the Issuer or any such Significant Obligated Person may be requiredto employ from time to time pursuant to state law or regulation. If the audit of such financialstatements of the Issuer or a Significant Obligated Person is not complete within 12 months after therespective fiscal year end, then the Issuer shall provide or cause to be provided by each Significant

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Obligated Person unaudited financial statements within such 12-month period and audited financialstatements when and if the audit report on such statements become available.

If the Issuer or any such Significant Obligated Person changes its fiscal year, the Issuer willnotify or cause the Significant Obligated Person to notify the MSRB of the change (and of the dateof the new fiscal year end) prior to the next date by which the Issuer or any such SignificantObligated Person otherwise would be required to provide financial information and operating datapursuant to this Section.

The financial information and operating date to be provided pursuant to this Section may beset forth in full in one or more documents or may be included by specific reference to any document(including an official statement or other offering document, if it is available from the MSRB) thattheretofore has been provided to the MSRB or filed with the SEC

(b) Event Notices.

The Issuer shall notify, or cause a Significant Obligated Person to notify, the MSRB, in atimely manner, of any of the following events with respect to the Bonds, not in excess of tenBusiness Days after occurrence of the event:

1. Principal and interest payment delinquencies;

2. Non-payment related defaults, if material;

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, the issuance by the Internal Revenue Service ofproposed or final determinations of taxability, Notices of Proposed Issue (IRS Form5701-TEB) or other material notices or determinations with respect to the tax status of thesecurity, or other material events affecting the tax status of the security;

7. Modifications to the rights of security holders, if material;

8. Bond calls, if material, and tender offers;

9. Defeasances;

10. Release, substitution or sale of property securing repayment of the securities,if material;

11. Rating changes;

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12. Bankruptcy, insolvency, receivership or similar event of the Issuer or aSignificant Obligated Person;

13. The consummation of a merger, consolidation, or acquisition involving theIssuer or a Significant Obligated Person or the sale of all or substantially all of the assets ofthe Issuer or a Significant Obligated Person, other than in the ordinary course of business,the entry into a definitive agreement to undertake such an action or the termination of adefinitive agreement relating to any such actions, other than pursuant to its terms, if material;and

14. Appointment of a successor or additional trustee or the change of name of atrustee, if material.

15. Incurrence of a Financial Obligation of the Issuer or a Significant ObligatedPerson, if material, or agreement to covenants, events of default, remedies, priority rights,or other similar terms of a Financial Obligation of the Issuer or a Significant ObligatedPerson, any of which affect security holders, if material; and

16. Default, event of acceleration, termination event, modification of terms, orother similar events under the terms of a Financial Obligation of a Significant ObligatedPerson, any of which reflect financial difficulties.

For these purposes, (a) any event described in the immediately preceding paragraph(12) is considered to occur when any of the following occur: the appointment of a receiver,fiscal agent, or similar officer for the Issuer or a Significant Obligated Person in aproceeding under the United States Bankruptcy Code or in any other proceeding under stateor federal law in which a court or governmental authority has assumed jurisdiction oversubstantially all of the assets or business of the Issuer, or if such jurisdiction has beenassumed by leaving the existing governing body and officials or officers of the Issuer or aSignificant Obligated Person in possession but subject to the supervision and orders of acourt or governmental authority, or the entry of an order confirming a plan of reorganization,arrangement, or liquidation by a court or governmental authority having supervision orjurisdiction over substantially all of the assets or business of the Issuer or a SignificantObligated Person; (b) as used in clauses 14 and 15 above, the term "Financial Obligation"means: (i) a debt obligation; (ii) a derivative instrument entered into in connection with, orpledged as security or a source of payment for, an existing or planned debt obligation; or (iii)a guarantee of (i) or (ii). The term Financial Obligation shall not include MunicipalSecurities as to which a final official statement has been provided to the MSRB consistentwith the Rule; the term "Municipal Securities" means securities which are direct obligationsof, or obligations guaranteed as to principal or interest by, a state or any political subdivisionthereof, or any agency or instrumentality of a state or any political subdivision thereof, orany municipal corporate instrumentality of one or more states and any other MunicipalSecurities described by Section 3(a)(29) of the Securities Exchange Act of 1934, as the samemay be amended from time to time.

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The Issuer shall notify or cause the appropriate Significant Obligated Person to notify, in anelectronic format as prescribed by the MSRB, the MSRB, in a timely manner, of any failure by theIssuer or any such Significant Obligated Person to provide financial information or operating datain accordance with Section 36(a) of this Resolution by the time required by such Section.

(c) Limitations, Disclaimers, and Amendments.

The Issuer shall be obligated to observe and perform or cause a Significant Obligated Personto observe and perform the covenants specified in this Section for so long as, but only for so longas, such Significant Obligations Persons remain a "Significant Obligated Person" with respect to theBonds, except that the Issuer in any event will give notice of any deposit made in accordance withSection 26 hereof that causes Bonds no longer to be Outstanding.

The provisions of this Section are for the sole benefit of the Holders and beneficial ownersof the Bonds, and nothing in this Sections, express or implied, shall give any benefit or any legal orequitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to provideor cause to be provided only the financial information, operating data, financial statements, andnotices which it has expressly agreed to provide pursuant to this Section and does not herebyundertake to provide or cause to be provided any other information that may be relevant or materialto a complete presentation of the issuer's or any Significant Obligated Person's financial results,condition or prospect or hereby undertake to update any information provided in accordance withthis Section or otherwise, except, as expressly provided herein. The Issuer does not make anyrepresentation or warranty concerning such information or its usefulness to a decision to invest inor sell Bonds at any future date.

UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE HOLDEROR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT ORTORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BYTHE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANYCOVENANT SPECIFIED IN THIS SECTION, BUT VERY RIGHT AND REMEDY OF ANYSUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACHSHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIED PERFORMANCE.

No default by the Issuer in observing or performing its obligations under this Section shallcomprise a breach of or default under this Resolution for purposes of any other provision of thisResolution.

Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit theduties of the Issuer under federal and state securities laws.

The provisions of this Section may be changed prior to delivery of the Bonds in order toconform to the requirements of any amendments to the Rule which become applicable to the Bondsprior to the delivery thereof to the purchaser. Any such changes shall be approved by theAuthorized Officer as evidenced by the Approval Certificate.

The provisions of this Section may be amended by the Issuer from time to time after issuanceof the Bonds to adapt to changed circumstances that arise from a change in legal requirements, a

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change in law, or a change in the identify, nature, status, or type of operations of the Issuer or anySignificant Obligated Person, but only if (1) the provisions of this Section, as so amended, wouldhave permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds incompliance with the Rule, taking into account any amendments or interpretations of the Rule sincesuch offering as well s such changed circumstances and (2) either (a) the Holders of a majority inaggregate principal amount (or any greater amount required by any other provision of thisResolution that authorizes such an amendment) of the outstanding Bonds consent to suchamendment or (b) a Person that is unaffiliated with the Issuer (such as nationally recognized bondcounsel) determined that such amendment will not materially impair the interest of the Holders andbeneficial owners of the Bonds. If the Issuer so amends the provisions of this Section, it shallinclude with any amended financial information or operating data next provided in accordance withSubsection (a) hereof an explanation, in narrative form, of the reason for the amendment and of theimpact of any change in the type of financial information or operating data so provided. The Issuermay also amend or repeal the provisions of this continuing disclosure agreement if the SEC amendsor repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment thatsuch provisions of the Rule are invalid, but only if and to the extent that the provisions of thissentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primaryoffering of the Bonds.

(d) Definitions.

As used in this Section, the following terms have the meanings ascribed to such terms below:

"Financial Obligation" means a (a) debt obligation; (b) derivative instrument entered intoin connection with, or pledged as security or a source of payment for, an existing or planned debtobligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that"financial obligation" shall not include municipal securities as to which a final official statement (asdefined in the Rule) has been provided to the MSRB consistent with the Rule.

"MSRB" means the Municipal Securities Rulemaking Board.

"Rule" means SEC Rule 15c2-12, as amended from time to time.

"SEC" means the United States Securities and Exchange Commission and any successor toits duties.

"Significant Obligated Person" means, at any point in time, any Participant, AdditionalParticipant, or other party contracting with the Issuer, in any case whose payments to the Issuer forthe use of or service from the System in the calendar year preceding any such determination,exceeded 10% of the Gross Revenues of the System.

Section 37. ATTORNEY GENERAL FEES. The Issuer hereby authorizes and directspayment, from legally available funds of the Issuer, of the nonrefundable examination fee of theAttorney General of the State of Texas required by Section 1202.004, Texas Government Code, asamended.

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Section 38. REPEAL OF CONFLICTING RESOLUTIONS. All resolutions and all partsof any resolutions which are in conflict or inconsistent with this Resolution are hereby repealed andshall be of no further force or effect to the extent of such conflict or inconsistency.

Section 39. SECURITY INTEREST. Chapter 1208, Government Code, applies to theinsurance of the Bonds and the pledge of the Pledged Revenues granted by the Issuer under Section9 of this Resolution, and is therefore valid, effective, and perfected. If Texas law is amended at anytime while the Bonds are outstanding and unpaid such that the pledge of the Pledged Revenuesgranted by the Issuer under Section 9 of this Resolution is to be subject to the filing requirementsof Chapter 9, Business & Commerce Code, then in order to preserve to the registered owners of theBonds the perfection of the security interest in said pledge, the Issuer agrees to take such measuresas it determines are reasonable and necessary under Texas law to comply with the applicableprovisions of Chapter 9, Business & Commerce Code and enable a filing to perfect the securityinterest in said pledge to occur.

Section 40. EFFECTIVENESS. This Resolution shall be effective from and after the dateof adoption thereof by the Issuer.

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EXHIBIT A

WRITTEN PROCEDURES RELATING TO CONTINUINGCOMPLIANCE WITH FEDERAL TAX COVENANTS

A. Arbitrage. With respect to the investment and expenditure of the proceeds of theBonds and any Additional Bonds (the "Obligations") the Issuer's Executive Director and Directorof Finance (the "Responsible Persons") will:

For Obligations issued for newly acquired property or constructed property:

· instruct the appropriate person or persons that the construction, renovation oracquisition of the facilities must proceed with due diligence and that bindingcontracts for the expenditure of at least 5%of the proceeds of the Obligations will beentered into within 6 months of the date of delivery of the Obligations (the "IssueDate");

· monitor that at least 85% of the proceeds of the Obligations to be used for theconstruction, renovation or acquisition of any facilities are expended within 3 yearsof the Issue Date;

· restrict the yield of the investments (other than those in the Reserve Fund) to theyield on the Obligations after 3 years of the Issue Date;

· monitor all amounts deposited into a sinking fund or funds, e.g., the Interest andRedemption Fund and the Reserve Fund, to assure that the maximum amountinvested at a yield higher than the yield on the Obligations does not exceed anamount equal to the debt service on the Obligations in the succeeding 12 monthperiod plus a carryover amount equal to one-twelfth of the principal and interestpayable on the Obligations for the immediately preceding 12-month period;

· assure that no more than 50% of the proceeds of the Obligations are invested in aninvestment with a guaranteed yield for 4 years or more;

· assure that the maximum amount of the Reserve Fund invested at a yield higher thanthe yield on the Obligations will not exceed the lesser of (1) 10% of the originalprincipal amount of the Obligations, (2) 125% of the average annual debt service onthe Obligations measured as of the Issue Date, or (3) 100% of the maximum annualdebt service on the Obligations as of the Issue Date;

For Obligations issued for refunding purposes:

· monitor the actions of the escrow agent (to the extent an escrow is funded withproceeds) to assure compliance with the applicable provisions of the escrowagreement, including with respect to reinvestment of cash balances;

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For all Obligations:

· maintain any official action of the Issuer (such as a reimbursement resolution) statingits intent to reimburse itself or the City with the proceeds of the Obligations anyamount expended prior to the Issue Date for the acquisition, renovation orconstruction of the facilities;

· assure that the applicable information return (e.g., IRS Form 8038-G, 8038-GC, orany successor forms) is timely filed with the IRS;

· assure that, unless excepted from rebate and yield restriction under section 148(f) ofthe Code, excess investment earnings are computed and paid to the U.S. governmentat such time and in such manner as directed by the IRS (i) at least every 5 years afterthe Issue Date and (ii) within 30 days after the date the Obligations are retired.

B. Private Business Use. With respect to the use of the facilities financed or refinancedwith the proceeds of the Obligations the Responsible Persons will:

· monitor the date on which the facilities are substantially complete and available tobe used for the purpose intended;

· monitor whether, at any time the Obligations are outstanding, any person, other thanthe Issuer or the City, the employees of the Issuer or the City, the agents of the Issueror the City or members of the general public has any contractual right (such as alease, purchase, management or other service agreement) with respect to any portionof the facilities;

· monitor whether, at any time the Obligations are outstanding, any person, other thanthe Issuer or the City, the employees of the Issuer or the City, the agents of the Issueror the City or members of the general public has a right to use the output of thefacilities (e.g., water, gas, electricity);

· monitor whether, at any time the Obligations are outstanding, any person, other thanthe Issuer or the City, the employees of the Issuer or the City, the agents of the Issueror the City or members of the general public has a right to use the facilities toconduct or to direct the conduct of research;

· determine whether, at any time the Obligations are outstanding, any person, otherthan the Issuer or the City, has a naming right for the facilities or any othercontractual right granting an intangible benefit;

· determine whether, at any time the Obligations are outstanding, the facilities are soldor otherwise disposed of; and

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· take such action as is necessary to remediate any failure to maintain compliance withthe covenants contained in the resolution authorizing the Obligations.

C. Record Retention. The Responsible Persons will maintain or cause to be maintainedall records relating to the investment and expenditure of the proceeds of the Obligations and the useof the facilities financed or refinanced thereby for a period ending three (3) years after the completeextinguishment of the Obligations. If any portion of the Obligations is refunded with the proceedsof another series of tax-exempt obligations, such records shall be maintained until the three (3) yearsafter the refunding obligations are completely extinguished. Such records can be maintained inpaper or electronic format.

D. Responsible Persons. Each Responsible Person shall receive appropriate trainingregarding the Issuer's accounting system, contract intake system, facilities management and othersystems necessary to track the investment and expenditure of the proceeds and the use of thefacilities financed with the proceeds of the Obligations. The foregoing notwithstanding, theResponsible Persons are authorized and instructed to retain such experienced advisors and agentsas may be necessary to carry out the purposes of these instructions.

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MUSTANG CREEK WASTEWATER INTERCEPTOR SYSTEM CONTRACT REVENUE BONDS, SERIES 2020


ACTION (What)

Request authorization to issue Revenue Bonds for the Mustang Creek Wastewater Interceptor System.

PURPOSE (Why)

Fund improvements to the Mustang Creek Wastewater Interceptor System.

RECOMMENDATION

The Executive Director and NTMWD staff recommend the Board of Directors adopt Resolution No. 20-16, “A Resolution Authorizing the Issuance, Sale and Delivery of North Texas Municipal Water District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds, Series 2020; and Approving and Authorizing Instruments and Procedures Relating Thereto.” Contracting Party: N/A Scope: Fund Improvements to the Mustang Creek Wastewater Interceptor System Projects: Mustang Creek Wastewater Interceptor System Projects. Amount: Approximately $4.215 million of 2020 contract revenue improvement

bonds will be issued. Actual amount to be determined at date of pricing. Staff reviewed with the Finance/Audit Committee on April 8, 2020.





BACKGROUND

• The Finance/Audit Committee met on April 8, 2020, to review the proposed bond sale

including: o Lift Station Phase II (Design) o Force Main Improvements (Design and Property)

• Staff and members of Hilltop Securities, Inc., also presented the Finance/Audit Committee with timelines for the sale and a summary of the financing plan.

• At this time, it is expected that approximately $4.215 million of 2020 contract revenue improvement bonds will be issued. This includes reimbursement to the City of Forney for upfront funding of contracts. The actual amount of the bond sale will be determined on the date of pricing.

• The transaction will be sold via competitive bid on April 23, 2020, and the estimated interest rate is 3.0%.

• NTMWD bond counsel, McCall, Parkhurst & Horton, LLP, has prepared the attached Bond Resolution and NTMWD financial advisor, Hilltop Securities, Inc., has prepared the attached Preliminary Official Statement.

• Representatives from McCall, Parkhurst & Horton, LLP, as well as Hilltop Securities, Inc., will be available at the Board meeting to review the documents and financing procedures.

FUNDING FUND(S): N/A


RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OFNORTH TEXAS MUNICIPAL WATER DISTRICT MUSTANG CREEKWASTEWATER INTERCEPTOR SYSTEM CONTRACT REVENUE BONDS,SERIES 2020; AND APPROVING AND AUTHORIZING INSTRUMENTS ANDPROCEDURES RELATING THERETO

WHEREAS, North Texas Municipal Water District (the "Issuer") is a political subdivisionof the State of Texas, being a conservation and reclamation district created and functioning underArticle 16, Section 59 of the Texas Constitution, pursuant to Chapter 62, Acts of 1951, 52ndLegislature of Texas, Regular Session, as amended (the "Act");

WHEREAS, the Board of Directors of the Issuer is authorized to issue the bonds hereinafterauthorized pursuant to Chapter 30, Texas Water Code and other applicable laws.

THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF NORTHTEXAS MUNICIPAL WATER DISTRICT THAT:

Section 1. AMOUNT AND PURPOSE OF THE BONDS. The bond or bonds of NorthTexas Municipal Water District (the "Issuer") are hereby authorized to be issued and delivered inthe aggregate principal amount not to exceed $5,000,000, (i) FOR THE PURPOSE OF (i) THEACQUISITION, CONSTRUCTION, AND IMPROVEMENT OF THE MUSTANG CREEKWASTEWATER INTERCEPTOR SYSTEM, LIFT STATION AND OTHER SYSTEMIMPROVEMENTS, (ii) TO FUND A RESERVE FUND (AS DEFINED HEREIN), AND (iii) TOPAY COSTS OF ISSUANCE OF THE BONDS AUTHORIZED HEREIN.

Section 2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Resolutionshall be designated: "NORTH TEXAS MUNICIPAL WATER DISTRICT MUSTANG CREEKWASTEWATER INTERCEPTOR SYSTEM CONTRACT REVENUE BOND, SERIES 2020", andinitially there shall be issued, sold, and delivered hereunder a single fully registered bond, withoutinterest coupons, payable in installments of principal (the "Initial Bond"), but the Initial Bond maybe assigned and transferred and/or converted into and exchanged for a like aggregate principalamount of fully registered bonds, without interest coupons, having serial maturities, and in thedenomination or denominations of $5,000 or any integral multiple of $5,000, all in the mannerhereinafter provided. The term "Bonds" as used in this Resolution shall mean and includecollectively the Initial Bond and all substitute bonds exchanged therefor, as well as all othersubstitute bonds and replacement bonds issued pursuant hereto, and the term "Bond" shall mean anyof the Bonds.

Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIALREGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND.

(a) As authorized by Chapter 1371, Texas Government Code, the President of the Boardof Directors, the Executive Director, the Deputy Director - Administrative Services, and AssistantDeputy - Finance of the Issuer are each hereby designated as an "Authorized Officer" of the Issuer,and each is hereby authorized, appointed, and designated as the officer or employee of the Issuerauthorized to act on behalf of the Issuer, which actions shall be evidenced by a certificate executed

by such Authorized Officer (the "Approval Certificate") for a period not to extend beyond October23, 2020, in the selling and delivering of the Bonds and carrying out the other procedures specifiedin this Resolution, including the use of a book-entry only system with respect to the Bonds and theexecution of an appropriate letter of representations if deemed appropriate, the determining andfixing of the date and the date of delivery of the Bonds, any additional or different designation ortitle by which the Bond shall be known, the price at which the Bonds will be sold (but in no eventless than 97% of the principal amount of the Bonds), the principal amount (not exceeding$5,000,000) of the Bonds, the amount of each maturity of principal thereof, the due date of eachsuch maturity (not exceeding forty years from the date of the Bonds), the rate of interest to be borneby each such maturity (but in no event to result in the net effective interest rate on the Bondsexceeding 6.00%), the initial interest payment date, the date or dates of optional redemption thereof,any mandatory sinking fund redemption provisions, and procuring bond insurance, if any, approvingmodifications to this Resolution and executing such instruments, documents and agreements as maybe necessary with respect thereto, and all other matters relating to the issuance, sale and delivery ofthe Bonds

(b) The Initial Bond is hereby authorized to be issued, sold, and delivered hereunder asa single fully registered Bond, without interest coupons, in the denomination and aggregate principalamount set forth in the Approval Certificate (not exceeding $6,000,000), numbered TR-1, payablein annual installments of principal to the initial registered owner thereof or to the registered assigneeor assignees of said Initial Bond or any portion or portions thereof (in each case, the "registeredowner"), with the annual installments of principal of the Initial Bond to be payable on the dates,respectively, and in the principal amounts, respectively, and may and shall be prepaid or redeemedprior to the respective scheduled due dates of installments of principal thereof, all as set forth in theApproval Certificate.

(c) The Initial Bond (i) if so provided in the Approval Certificate, may and/or shall beprepaid or paid on the respective scheduled due dates of installments of principal thereof, (ii) maybe assigned and transferred, (iii) may be converted and exchanged for other bonds, (iv) shall havethe characteristics, and (v) shall be signed and sealed, and the principal of and interest on the InitialBond shall be payable, all as provided, and in the manner required or indicated, in the ApprovalCertificate and the FORM OF INITIAL BOND set forth in this Resolution.

Section 4. INTEREST. The unpaid principal balance of the Initial Bond shall bear interestfrom the date of delivery the Initial Bond to the Purchaser (as defined in Section 32 hereof) to therespective scheduled due dates, or to the respective dates of prepayment or redemption, if any, ofthe installments of principal of the Initial Bond, and said interest shall be payable, all in the mannerprovided and at the rates and on the dates stated in the Approval Certificate and the FORM OFINITIAL BOND set forth in this Resolution.

Section 5. FORM OF INITIAL BOND. The form of the Initial Bond, including the formof Registration Certificate of the Comptroller of Public Accounts of the State of Texas to beendorsed on the Initial Bond, shall be substantially as follows:

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FORM OF INITIAL BOND

NO. TR-1 $__________*UNITED STATES OF AMERICA

STATE OF TEXASNORTH TEXAS MUNICIPAL WATER DISTRICT

MUSTANG CREEK WASTEWATER INTERCEPTOR SYSTEM CONTRACT REVENUE BOND,

SERIES 2020

NORTH TEXAS MUNICIPAL WATER DISTRICT (the "Issuer"), being a politicalsubdivision of the State of Texas, hereby promises to pay to _____________________________*,or to the registered assignee or assignees of this Bond or any portion or portions hereof (in eachcase, the "registered owner") the aggregate principal amount of ___________________________________________________* DOLLARS in annual installments of principal due and payableon JUNE 1 in each of the years, and in the respective principal amounts, as set forth in the followingschedule:

Year*Principal Amount* Year*

PrincipalAmount*

and to pay interest, calculated on the basis of a 360-day year composed of twelve 30-day months,from the date of initial delivery of this Bond to the Purchaser (as defined in the Bond Resolution(hereinafter defined)), on the balance of each such installment of principal, respectively, from timeto time remaining unpaid, at the rates as follows:

Year* Rate* Year* Rate*% %

with said interest being payable semiannually on each June 1 and December 1, commencing ______,____*, while this Bond or any portion hereof is outstanding and unpaid.

THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond arepayable in lawful money of the United States of America, without exchange or collection charges. The installments of principal and the interest on this Bond are payable to the registered owner hereof

* From Approval Certificate.3

through the services of The Bank of New York Mellon Trust Company, National Association, inDallas, Texas, which is the "Paying Agent/Registrar" for this Bond. Payment of all principal of andinterest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereofon each principal and/or interest payment date by check dated as of such date, drawn by the PayingAgent/Registrar on, and payable solely from, funds of the Issuer required by the resolutionauthorizing the issuance of this Bond (the "Bond Resolution") to be on deposit with the PayingAgent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the PayingAgent/Registrar by United States mail, first-class postage prepaid, on each such principal and/orinterest payment date, to the registered owner hereof, at the address of the registered owner, as itappeared on the 15th day of the month next preceding each such date (the "Record Date") on theRegistration Books kept by the Paying Agent/Registrar, as hereinafter described. The Issuercovenants with the registered owner of this Bond that on or before each principal and/or interestpayment date for this Bond it will make available to the Paying Agent/Registrar, from the BondFund confirmed by the Bond Resolution, the amounts required to provide for the payment, inimmediately available funds, of all principal of and interest on this Bond, when due.


THIS BOND has been authorized in accordance with the Constitution and laws of the Stateof Texas FOR THE PURPOSE OF PROVIDING FUNDS (i) FOR THE ACQUISITION,CONSTRUCTION, AND IMPROVEMENT OF THE MUSTANG CREEK WASTEWATERINTERCEPTOR SYSTEM, (ii) TO FUND A RESERVE FUND (AS DEFINED IN THE BONDRESOLUTION), AND (iii) TO PAY COSTS OF ISSUANCE OF THIS BOND.

ON __________, ____*, or on any date whatsoever thereafter, the unpaid installments ofprincipal of this Bond may be prepaid or redeemed prior to their scheduled due dates, at the optionof the Issuer, with funds derived from any available source, as a whole, or in part, and, if in part, theparticular portion of this Bond to be prepaid or redeemed shall be selected and designated by theIssuer (provided that a portion of this Bond may be redeemed only in an integral multiple of $5,000),at the prepayment or redemption price of the par or principal amount thereof, plus accrued interestto the date fixed for prepayment or redemption.

**[THE PRINCIPAL INSTALLMENTS OF THIS BOND maturing on June 1, ____ andJune 1, ____ are subject to mandatory prepayment or redemption prior to maturity in part, at a priceequal to the principal amount of this Bond or portions hereof to be prepaid or redeemed plus accruedinterest to the date of prepayment or redemption, on June 1 in each of the years and in the amountsas follows:

* From Approval Certificate.** From Approval Certificate, if applicable. 4

Principal Installment due on June 1, ____

Years Amounts

Principal Installment due on June 1, _____

Years Amounts

The amount of any principal installment of this Bond required to be prepaid or redeemedpursuant to the operation of such mandatory prepayment or redemption provisions shall be reduced,at the option and direction of the Issuer, by the principal amount of such principal installment of thisBond which, at least 50 days prior to the mandatory prepayment or redemption date (1) shall havebeen acquired by the Issuer at a price not exceeding such principal amount plus accrued interest tothe date of purchase thereof, or (2) shall have been purchased by the Paying Agent/Registrar at therequest of the Issuer at a price not exceeding such principal amount plus accrued interest to the dateof purchase, or (3) shall have been prepaid or redeemed pursuant to the optional prepayment orredemption provisions and not theretofore credited against a mandatory prepayment or redemptionrequirement.]

AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a writtennotice of such prepayment or redemption shall be mailed by United States mail, postage prepaid,by the Paying Agent/Registrar to the registered owner hereof at the address of such registered ownerappearing on the registration books of the Issuer kept by the Paying Agent/Registrar at the close ofbusiness on the business day next preceding the date of mailing of such notice. Any notice somailed shall be conclusively presumed to have been duly given, whether or not the registered ownerreceives such notice. By the date fixed for any such prepayment or redemption due provision shallbe made by the Issuer with the Paying Agent/Registrar for the payment of the required prepaymentor redemption price for this Bond or the portion hereof which is to be so prepaid or redeemed, plusaccrued interest thereon to the date fixed for prepayment or redemption. If such written notice ofprepayment or redemption is given, and if due provision for such payment is made, all as providedabove, this Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automaticallyshall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interestafter the date fixed for its prepayment or redemption, and shall not be regarded as being outstandingexcept for the right of the registered owner to receive the prepayment or redemption price plusaccrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar outof the funds provided for such payment.

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THIS BOND, to the extent of the unpaid principal balance hereof, or any unpaid portionhereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof andshall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registraracting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the BondResolution. Among other requirements for such transfer, this Bond must be presented andsurrendered to the Paying Agent/Registrar for cancellation, together with proper instruments ofassignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar,evidencing assignment by the initial registered owner of this Bond, or any portion or portions hereofin any integral multiple of $5,000, to the assignee or assignees in whose name or names this Bondor any such portion or portions hereof is or are to be transferred and registered. Any instrument orinstruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence theassignment of this Bond or any such portion or portions hereof by the initial registered owner hereof. A new bond or bonds payable to such assignee or assignees (which then will be the new registeredowner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion ofthis Bond which is not being assigned and transferred by the initial registered owner, shall bedelivered by the Paying Agent/Registrar in conversion of and exchange for this Bond or any portionor portions hereof, but solely in the form and manner as provided in the next paragraph hereof forthe conversion and exchange of this Bond or any portion hereof. The registered owner of this Bondshall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute ownerhereof for all purposes, including payment and discharge of liability upon this Bond to the extentof such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any noticeto the contrary.

AS PROVIDED above and in the Bond Resolution, this Bond, to the extent of the unpaidprincipal balance hereof, may be converted into and exchanged for a like aggregate principal amountof fully registered bonds, without interest coupons, payable to the assignee or assignees dulydesignated in writing by the initial registered owner hereof, or to the initial registered owner as toany portion of this Bond which is not being assigned and transferred by the initial registered owner,in any denomination or denominations in any integral multiple of $5,000 (subject to the requirementhereinafter stated that each substitute bond issued in exchange for any portion of this Bond shallhave a single stated principal maturity date), upon surrender of this Bond to the PayingAgent/Registrar for cancellation, all in accordance with the form and procedures set forth in theBond Resolution. If this Bond or any portion hereof is assigned and transferred or converted eachbond issued in exchange for any portion hereof shall have a single stated principal maturity datecorresponding to the due date of the installment of principal of this Bond or portion hereof for whichthe substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne bysuch installment of principal or portion thereof. Such bonds, respectively, shall be subject toredemption prior to maturity on the same dates and for the same prices as the correspondinginstallment of principal of this Bond or portion hereof for which they are being exchanged. No suchbond shall be payable in installments, but shall have only one stated principal maturity date. ASPROVIDED IN THE BOND RESOLUTION, THIS BOND IN ITS PRESENT FORM MAY BEASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or moreassignees, but the bonds issued and delivered in exchange for this Bond or any portion hereof maybe assigned and transferred, and converted, subsequently, as provided in the Bond Resolution. TheIssuer shall pay the Paying Agent/Registrar's standard or customary fees and charges fortransferring, converting, and exchanging this Bond or any portion thereof, but the one requestingsuch transfer, conversion, and exchange shall pay any taxes or governmental charges required to be

6

paid with respect thereto. The Paying Agent/Registrar shall not be required to make any suchtransfer, conversion, or exchange (i) during the period commencing with the close of business onany Record Date and ending with the opening of business on the next following principal or interestpayment date, or, (ii) with respect to any Bond or portion thereof called for prepayment orredemption prior to maturity, within 45 days prior to its prepayment or redemption date.

IN THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns,or otherwise ceases to act as such, the Issuer has covenanted in the Bond Resolution that it promptlywill appoint a competent and legally qualified substitute therefor, and promptly will cause writtennotice thereof to be mailed to the registered owner of this Bond.

IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validlyauthorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to beperformed, exist, and be done precedent to or in the authorization, issuance, and delivery of thisBond have been performed, existed, and been done in accordance with law; that this Bond is aspecial obligation of the Issuer which, together with other bonds, are secured by and payable froma first lien on and pledge of the "Pledged Revenues" as defined in the Bond Resolution, includingthe Gross Revenues of the District's System (as defined in the Bond Resolution), and includingspecifically certain payments to be received by the District from the City of Forney (the"Participant"), under the "Mustang Creek Interceptor System Contract", dated March 24, 2011,between the Participant and the District, and any payments to be received by the District under allsimilar contracts with any future Additional Participants as defined and permitted in said contract.

THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Resolution,to issue Additional Bonds payable from and secured by a first lien on and pledge of the "PledgedRevenues" on a parity with this Bond.

THE ISSUER also has reserved the right to amend the Bond Resolution with the approvalof the registered owners of 51% in principal amount of all outstanding bonds secured by and payablefrom a first lien on and pledge of the "Pledged Revenues," subject to the restrictions stated in theBond Resolution.

THE REGISTERED OWNER hereof shall never have the right to demand payment of thisBond or the interest hereon out of any funds raised or to be raised by taxation or from any sourcewhatsoever other than specified in the Bond Resolution.

BY BECOMING the registered owner of this Bond, the registered owner therebyacknowledges all of the terms and provisions of the Bond Resolution, agrees to be bound by suchterms and provisions, acknowledges that the Bond Resolution is duly recorded and available forinspection in the official minutes and records of the governing body of the Issuer, and agrees thatthe terms and provisions of this Bond and the Bond Resolution constitute a contract between theregistered owner hereof and the Issuer.

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IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual orfacsimile signature of the President of the Board of Directors of the Issuer and countersigned withthe manual or facsimile signature of the Secretary of the Board of Directors of the Issuer, has causedthe official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond, and hascaused this Bond to be dated as of ________________*.

xxxxxxxxxxxx xxxxxxxxxx Secretary, Board of Directors, President, Board of Directors,North Texas Municipal Water District North Texas Municipal Water District

(DISTRICT SEAL)

FORM OF REGISTRATION CERTIFICATE OF THECOMPTROLLER OF PUBLIC ACCOUNTS:

COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.

I hereby certify that this Bond has been examined, certified as to validity, and approved bythe Attorney General of the State of Texas, and that this Bond has been registered by theComptroller of Public Accounts of the State of Texas.

Witness my signature and seal this

_______________________________Comptroller of Public Accounts

of the State of Texas(COMPTROLLER'S SEAL)

Section 6. ADDITIONAL CHARACTERISTICS OF THE BONDS. Registration andTransfer. (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of TheBank of New York Mellon Trust Company, National Association, in Dallas, Texas (the "PayingAgent/Registrar") books or records of the registration and transfer of the Bonds (the "RegistrationBooks"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agentto keep such books or records and make such transfers and registrations under such reasonableregulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrarshall make such transfers and registrations as herein provided. The Paying Agent/Registrar shallobtain and record in the Registration Books the address of the registered owner of each Bond towhich payments with respect to the Bonds shall be mailed, as herein provided; but it shall be theduty of each registered owner to notify the Paying Agent/Registrar in writing of the address to whichpayments shall be mailed, and such interest payments shall not be mailed unless such notice hasbeen given. The Issuer shall have the right to inspect the Registration Books during regular businesshours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep theRegistration Books confidential and, unless otherwise required by law, shall not permit theirinspection by any other entity. Registration of each Bond may be transferred in the RegistrationBooks only upon presentation and surrender of such Bond to the Paying Agent/Registrar for transfer

8*From Approval Certificate.

of registration and cancellation, together with proper written instruments of assignment, in form andwith guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing (i) theassignment of the Bond, or any portion thereof in any integral multiple of $5,000, to the assigneeor assignees thereof, and (ii) the right of such assignee or assignees to have the Bond or any suchportion thereof registered in the name of such assignee or assignees. Upon the assignment andtransfer of any Bond or any portion thereof, a new substitute Bond or Bonds shall be issued inconversion and exchange therefor in the manner herein provided. The Initial Bond, to the extent ofthe unpaid or unredeemed principal balance thereof, may be assigned and transferred by the initialregistered owner thereof once only, and to one or more assignees designated in writing by the initialregistered owner thereof. All Bonds issued and delivered in conversion of and exchange for theInitial Bond shall be in any denomination or denominations of any integral multiple of $5,000(subject to the requirement hereinafter stated that each substitute Bond shall have a single statedprincipal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE BOND setforth in this Resolution, and shall have the characteristics, and may be assigned, transferred, andconverted as hereinafter provided. If the Initial Bond or any portion thereof is assigned andtransferred or converted the Initial Bond must be surrendered to the Paying Agent/Registrar forcancellation, and each Bond issued in exchange for any portion of the Initial Bond shall have asingle stated principal maturity date, and shall not be payable in installments; and each such Bondshall have a principal maturity date corresponding to the due date of the installment of principal orportion thereof for which the substitute Bond is being exchanged; and each such Bond shall bearinterest at the single rate applicable to and borne by such installment of principal or portion thereoffor which it is being exchanged. If only a portion of the Initial Bond is assigned and transferred,there shall be delivered to and registered in the name of the initial registered owner substitute Bondsin exchange for the unassigned balance of the Initial Bond in the same manner as if the initialregistered owner were the assignee thereof. If any Bond or portion thereof other than the InitialBond is assigned and transferred or converted each Bond issued in exchange therefor shall have thesame principal maturity date and bear interest at the same rate as the Bond for which it is exchanged. A form of assignment shall be printed or endorsed on each Bond, excepting the Initial Bond, whichshall be executed by the registered owner or its duly authorized attorney or representative toevidence an assignment thereof. Upon surrender of any Bonds or any portion or portions thereoffor transfer of registration, an authorized representative of the Paying Agent/Registrar shall makesuch transfer in the Registration Books, and shall deliver a new fully registered substitute Bond orBonds, having the characteristics herein described, payable to such assignee or assignees (whichthen will be the registered owner or owners of such new Bond or Bonds), or to the previousregistered owner in case only a portion of a Bond is being assigned and transferred, all in conversionof and exchange for said assigned Bond or Bonds or any portion or portions thereof, in the sameform and manner, and with the same effect, as provided in Section 6(d), below, for the conversionand exchange of Bonds by any registered owner of a Bond. The Issuer shall pay the PayingAgent/Registrar's standard or customary fees and charges for making such transfer and delivery ofa substitute Bond or Bonds, but the one requesting such transfer shall pay any taxes or othergovernmental charges required to be paid with respect thereto. The Paying Agent/Registrar shallnot be required to make transfers of registration of any Bond or any portion thereof (i) during theperiod commencing with the close of business on any Record Date and ending with the opening ofbusiness on the next following principal or interest payment date,or, (ii), if the Bonds are subject toredemption, with respect to any Bond or any portion thereof called for redemption prior to maturity,within 45 days prior to its redemption date.

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(b) Ownership of Bonds. The entity in whose name any Bond shall be registered in theRegistration Books at any time shall be deemed and treated as the absolute owner thereof for allpurposes of this Resolution, whether or not such Bond shall be overdue, and the Issuer and thePaying Agent/Registrar shall not be affected by any notice to the contrary; and payment of, or onaccount of, the principal of, premium, if any, and interest on any such Bond shall be made only tosuch registered owner. All such payments shall be valid and effectual to satisfy and discharge theliability upon such Bond to the extent of the sum or sums so paid.

(c) Payment of Bonds and Interest. The Issuer hereby further appoints the PayingAgent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, andto act as its agent to convert and exchange or replace Bonds, all as provided in this Resolution. ThePaying Agent/Registrar shall keep proper records of all payments made by the Issuer and the PayingAgent/Registrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and allreplacements of Bonds, as provided in this Resolution.

(d) Conversion and Exchange or Replacement; Authentication. Each Bond issued anddelivered pursuant to this Resolution, to the extent of the unpaid principal balance or principalamount thereof, may, upon surrender of such Bond at the principal corporate trust office of thePaying Agent/Registrar, together with a written request therefor duly executed by the registeredowner or the assignee or assignees thereof, or its or their duly authorized attorneys orrepresentatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at theoption of the registered owner or such assignee or assignees, as appropriate, be converted into andexchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORMOF SUBSTITUTE BOND set forth in this Resolution, in the denomination of $5,000, or any integralmultiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall havea single stated maturity date), as requested in writing by such registered owner or such assignee orassignees, in an aggregate principal amount equal to the unpaid principal balance or principalamount of any Bond or Bonds so surrendered, and payable to the appropriate registered owner,assignee, or assignees, as the case may be. If the Initial Bond is assigned and transferred orconverted each substitute Bond issued in exchange for any portion of the Initial Bond shall have asingle stated principal maturity date, and shall not be payable in installments; and each such Bondshall have a principal maturity date corresponding to the due date of the installment of principal orportion thereof for which the substitute Bond is being exchanged; and each such Bond shall bearinterest at the single rate applicable to and borne by such installment of principal or portion thereoffor which it is being exchanged. If any Bond or portion thereof (other than the Initial Bond) isassigned and transferred or converted, each Bond issued in exchange therefor shall have the sameprincipal maturity date and bear interest at the same rate as the Bond for which it is beingexchanged. Each substitute Bond shall bear a letter and/or number to distinguish it from each otherBond. The Paying Agent/Registrar shall convert and exchange or replace Bonds as provided herein,and each fully registered bond delivered in conversion of and exchange for or replacement of anyBond or portion thereof as permitted or required by any provision of this Resolution shall constituteone of the Bonds for all purposes of this Resolution, and may again be converted and exchanged orreplaced. It is specifically provided that any Bond authenticated in conversion of and exchange foror replacement of another Bond on or prior to the first scheduled Record Date for the Initial Bondshall bear interest from the date of the Initial Bond, but each substitute Bond so authenticated aftersuch first scheduled Record Date shall bear interest from the interest payment date next preceding

10

the date on which such substitute Bond was so authenticated, unless such Bond is authenticated afterany Record Date but on or before the next following interest payment date, in which case it shallbear interest from such next following interest payment date; provided, however, that if at the timeof delivery of any substitute Bond the interest on the Bond for which it is being exchanged is duebut has not been paid, then such Bond shall bear interest from the date to which such interest hasbeen paid in full. THE INITIAL BOND issued and delivered pursuant to this Resolution is notrequired to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substituteBond issued in conversion of and exchange for or replacement of any Bond or Bonds issued underthis Resolution there shall be printed a certificate, in the form substantially as follows:

"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE


THE BANK OF NEW YORK TRUST MELLONCOMPANY, NATIONAL ASSOCIATION


Dated: __________ _____________________________Authorized Representative"

An authorized representative of the Paying Agent/Registrar shall, before the delivery of any suchBond, date and manually sign the above Certificate, and no such Bond shall be deemed to be issuedor outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shallcancel all Bonds surrendered for conversion and exchange or replacement. No additionalordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer orany other body or person so as to accomplish the foregoing conversion and exchange or replacementof any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing,execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bondsshall be of type composition printed on paper with lithographed or steel engraved borders ofcustomary weight and strength. Pursuant to Chapter 1201, Texas Government Code, the duty ofconversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon the PayingAgent/Registrar, and, upon the execution of the above Paying Agent/Registrar's AuthenticationCertificate, the converted and exchanged or replaced Bond shall be valid, incontestable, andenforceable in the same manner and with the same effect as the Initial Bond which originally wasissued pursuant to this Resolution, approved by the Attorney General, and registered by theComptroller of Public Accounts. The Issuer shall pay the Paying Agent/Registrar's standard orcustomary fees and charges for transferring, converting, and exchanging any Bond or any portionthereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes orgovernmental charges required to be paid with respect thereto as a condition precedent to the

11

exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not berequired to make any such conversion and exchange or replacement of Bonds or any portion thereof(i) during the period commencing with the close of business on any Record Date and ending withthe opening of business on the next following principal or interest payment date, or, (ii), if the Bondsare subject to redemption, with respect to any Bond or portion thereof called for redemption priorto maturity, within 45 days prior to its redemption date.

(e) In General. All Bonds issued in conversion and exchange or replacement of anyother Bond or portion thereof, (i) shall be issued in fully registered form, without interest coupons,with the principal of and interest on such Bonds to be payable only to the registered owners thereof,(ii) if so provided in the Approval Certificate may and/or shall be redeemed prior to their scheduledmaturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for otherBonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal ofand interest on the Bonds shall be payable, all as provided, and in the manner required or indicated,in the FORM OF SUBSTITUTE BOND set forth in this Resolution.

(f) Payment of Fees and Charges. The Issuer hereby covenants with the registeredowners of the Bonds that it will (i) pay the standard or customary fees and charges of the PayingAgent/Registrar for its services with respect to the payment of the principal of and interest on theBonds, when due, and (ii) pay the fees and charges of the Paying Agent/Registrar for services withrespect to the transfer of registration of Bonds, and with respect to the conversion and exchange ofBonds solely to the extent above provided in this Resolution.

(g) Substitute Paying Agent/Registrar. The Issuer covenants with the registered ownersof the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competentand legally qualified bank, trust company, financial institution, or other agency to act as and performthe services of Paying Agent/Registrar for the Bonds under this Resolution, and that the PayingAgent/Registrar will be one entity. The Issuer reserves the right to, and may, at its option, changethe Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar,to be effective not later than 60 days prior to the next principal or interest payment date after suchnotice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor bymerger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuercovenants that promptly it will appoint a competent and legally qualified bank, trust company,financial institution, or other agency to act as Paying Agent/Registrar under this Resolution. Uponany change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shalltransfer and deliver the Registration Books (or a copy thereof), along with all other pertinent booksand records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed bythe Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a writtennotice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds,by United States mail, first-class postage prepaid, which notice also shall give the address of the newPaying Agent/Registrar. By accepting the position and performing as such, each PayingAgent/Registrar shall be deemed to have agreed to the provisions of this Resolution, and a certifiedcopy of this Resolution shall be delivered to each Paying Agent/Registrar.

Section 7. FORM OF SUBSTITUTE BONDS. The form of all Bonds issued in conversionand exchange or replacement of any other Bond or portion thereof, including the form of PayingAgent/Registrar's Certificate to be printed on each of such Bonds, and the Form of Assignment to

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be printed on each of the Bonds, shall be, respectively, substantially as follows, with suchappropriate variations, omissions, or insertions as are permitted or required by this Resolution.

FORM OF SUBSTITUTE BOND

THE FOLLOWING TWO BRACKETED PARAGRAPHS ARE TO BE DELETED IFBOND IS NOT BOOK-ENTRY ONLY:

[Unless this Bond is presented by an authorized representative of The Depository TrustCompany, a New York corporation ("DTC") to the Issuer or its agent for registration of transfer,exchange, or payment, and any Bond issued is registered in the name of Cede & Co. or in such othername as is requested by an authorized representative of DTC (and any payment is made to Cede &Co. or to such other entity as is requested by an authorized representative of DTC), ANYTRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TOANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has aninterest herein.

As provided in the Bond Resolution referred to herein, until the termination of the systemof book-entry-only transfers through DTC, and notwithstanding any other provision of the BondResolution to the contrary, this Bond may be transferred, in whole but not in part, only to a nomineeof DTC, or by a nominee of DTC to DTC or a nominee of DTC, or by DTC or a nominee of DTCto any successor securities depository or any nominee thereof.]

PRINCIPALAMOUNT

NO. R-__ $___________UNITED STATES OF AMERICA

STATE OF TEXASNORTH TEXAS MUNICIPAL WATER DISTRICT

MUSTANG CREEK WASTEWATER INTERCEPTOR SYSTEM CONTRACT REVENUE BOND,

SERIES 2020

MATURITYINTEREST RATE DATE ISSUE DATE CUSIP NO.

_____% JUNE 1, ____ ______________* ________

ON THE MATURITY DATE specified above NORTH TEXAS MUNICIPAL WATERDISTRICT (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to payto CEDE & CO., or to the registered assignee hereof (either being hereinafter called the "registeredowner") the principal amount of ________________ ____________________________ and to payinterest thereon, calculated on the basis of a 360-day year composed of twelve 30-day months, fromthe Issue Date specified above, to the Maturity Date specified above, or the date of redemption priorto maturity, at the interest rate per annum specified above; with interest being payable semiannuallyon each June 1 and December 1, commencing ____________, _____**, except that if the date of

* Date of delivery of Initial Bond to the Purchaser (as defined in Section 32 hereof).** From the Approval Certificate.

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authentication of this Bond is later than the first Record Date (hereinafter defined), such principalamount shall bear interest from the interest payment date next preceding the date of authentication,unless such date of authentication is after any Record Date (hereinafter defined) but on or before thenext following interest payment date, in which case such principal amount shall bear interest fromsuch next following interest payment date.

THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of theUnited States of America, without exchange or collection charges. The principal of this Bond shallbe paid to the registered owner hereof upon presentation and surrender of this Bond at maturity orupon the date fixed for its redemption prior to maturity, at the principal corporate trust office of TheBank of New York Mellon Trust Company, National Association, in Dallas, Texas, which is the"Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by thePaying Agent/Registrar to the registered owner hereof on each interest payment date by check datedas of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from,funds of the Issuer required by the resolution authorizing the issuance of the Bonds (the "BondResolution") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafterprovided; and such check shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at theaddress of the registered owner, as it appeared on the 15th day of the month next preceding eachsuch date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, ashereinafter described. However, notwithstanding the foregoing provisions, the payment of suchinterest may be made by any other method acceptable to the Paying Agent/Registrar and requestedby, and at the risk and expense of, the registered owner hereof. Any accrued interest due upon theredemption of this Bond prior to maturity as provided herein shall be paid to the registered ownerat the principal corporate trust office of the Paying Agent/Registrar upon presentation and surrenderof this Bond for redemption and payment at the principal corporate trust office of the PayingAgent/Registrar. The Issuer covenants with the registered owner of this Bond that on or before eachprincipal payment date, interest payment date, and accrued interest payment date for this Bond itwill make available to the Paying Agent/Registrar, from the Bond Fund confirmed by the BondResolution, the amounts required to provide for the payment, in immediately available funds, of allprincipal of and interest on the Bonds, when due.


THIS BOND is one of a series of Bonds dated as of _________*, authorized in accordancewith the Constitution and laws of the State of Texas in the principal amount of $__________*,FORTHE PURPOSE OF PROVIDING FUNDS (i) FOR THE ACQUISITION, CONSTRUCTION, ANDIMPROVEMENT OF THE MUSTANG CREEK WASTEWATER INTERCEPTOR SYSTEM, (ii)TO FUND A RESERVE FUND (AS DEFINED IN THE BOND RESOLUTION), AND (iii) TOPAY COSTS OF ISSUANCE OF THIS BOND.

14* From Approval Certificate.

ON ______, ____*, or on any date whatsoever thereafter, the outstanding Bonds may beprepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with fundsderived from any available source, as a whole, or in part, and, if in part, the maturities and amountsof the Bonds to be redeemed shall be selected and designated by the Issuer and within a maturitythe particular Bonds or portions thereof to be selected by the Paying Agent/Registrar by lot or othercustomary method of random selection (provided that a portion of this Bond may be redeemed onlyin an integral multiple of $5,000), at redemption price of the principal amount thereof, plus accruedinterest to the date fixed for redemption.

**[THE BONDS maturing on June 1, ____ and June 1, ____ (the "Term Bonds") are subjectto mandatory redemption prior to maturity in part, by lot or other customary random methodselected by the Paying Agent/Registrar, at a redemption price equal to the principal amount of theTerm Bonds or portions thereof to be redeemed plus accrued interest to the redemption date, on June1 in each of the years and in the principal amounts as follows:

Term Bonds maturing on June 1, ____

Years Amounts

Term Bonds maturing on June 1, _____

Years Amounts

The principal amount of the Term Bonds of a maturity required to be redeemed pursuant tothe operation of such mandatory redemption provisions shall be reduced, at the option and directionof the Issuer, by the principal amount of the Term Bonds of such maturity which, at least 50 daysprior to the mandatory redemption date (1) shall have been acquired by the Issuer at a price notexceeding the principal amount of such Term Bonds plus accrued interest to the date of purchasethereof, and delivered to the Paying Agent/Registrar for cancellation, or (2) shall have beenpurchased and canceled by the Paying Agent/Registrar at the request of the Issuer at a price notexceeding the principal amount of such Term Bonds plus accrued interest to the date of purchase,or (3) shall have been redeemed pursuant to the optional redemption provisions and not theretoforecredited against a mandatory redemption requirement.]

DURING ANY PERIOD in which ownership of the Bonds is determined by a book entryat a securities depository for the Bonds, if fewer than all of the Bonds of the same maturity andbearing the same interest rate are to be redeemed, the particular Bonds of such maturity and bearingsuch interest rate shall be selected in accordance with the arrangements between the Issuer and thesecurities depository.

* From the Approval Certificate.** If applicable, from the Approval Certificate.

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AT LEAST 30 days prior to the date fixed for any such redemption a written notice of suchredemption shall be mailed by United States mail, postage prepaid, by the Paying Agent/Registrarto the registered owner hereof at the address of such registered owner appearing on the registrationbooks of the Issuer kept by the Paying Agent/Registrar at the close of business on the business daynext preceding the date of mailing of such notice. Any notice so mailed shall be conclusivelypresumed to have been duly given, whether or not the registered owner receives such notice. By thedate fixed for any such redemption due provision shall be made by the Issuer with the PayingAgent/Registrar for the payment of the required redemption price for this Bond or the portion hereofwhich is to be so redeemed, plus accrued interest thereon to the date fixed for prepayment orredemption. If such written notice of redemption is given, and if due provision for such paymentis made, all as provided above, this Bond, or the portion thereof which is to be so redeemed, therebyautomatically shall be treated as redeemed prior to its scheduled maturity, and shall not bear interestafter the date fixed for its redemption, and shall not be regarded as being outstanding except for theright of the registered owner to receive the redemption price plus accrued interest to the date fixedfor redemption from the Paying Agent/Registrar out of the funds provided for such payment. If aportion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date,bearing interest at the same rate, in any denomination or denominations in any integral multiple of$5,000, at the written request of the registered owner, and in aggregate principal amount equal tothe unredeemed portion thereof, will be issued to the registered owner upon the surrender thereoffor cancellation, at the expense of the Issuer, all as provided in the Bond Resolution.

THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRALMULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books ofthe Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, uponthe terms and conditions set forth in the Bond Resolution. Among other requirements for suchassignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar,together with proper instruments of assignment, in form and with guarantee of signaturessatisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion orportions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name ornames this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Bond shall be executed by the registered owneror its duly authorized attorney or representative, to evidence the assignment hereof. A new Bondor Bonds payable to such assignee or assignees (which then will be the new registered owner orowners of such new Bond or Bonds), or to the previous registered owner in the case of theassignment and transfer of only a portion of this Bond, may be delivered by the PayingAgent/Registrar in conversion of and exchange for this Bond, all in the form and manner as providedin the next paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall paythe Paying Agent/Registrar's standard or customary fees and charges for making such transfer, butthe one requesting such transfer shall pay any taxes or other governmental charges required to bepaid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers ofregistration of this Bond or any portion hereof (i) during the period commencing with the close ofbusiness on any Record Date and ending with the opening of business on the next followingprincipal or interest payment date, or (ii) with respect to any Bond or portion thereof called forredemption prior to maturity within 45 days prior to its redemption date. The registered owner ofthis Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absoluteowner hereof for all purposes, including payment and discharge of liability upon this Bond to the

16

extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by anynotice to the contrary.

ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, withoutinterest coupons, in the denomination of any integral multiple of $5,000. As provided in the BondResolution, this Bond, or any unredeemed portion hereof, may, at the request of the registered owneror the assignee or assignees hereof, be converted into and exchanged for a like aggregate principalamount of fully registered bonds, without interest coupons, payable to the appropriate registeredowner, assignee, or assignees, as the case may be, having the same maturity date, and bearinginterest at the same rate, in any denomination or denominations in any integral multiple of $5,000as requested in writing by the appropriate registered owner, assignee, or assignees, as the case maybe, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordancewith the form and procedures set forth in the Bond Resolution. The Issuer shall pay the PayingAgent/Registrar's standard or customary fees and charges for transferring, converting, andexchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, andexchange shall pay any taxes or governmental charges required to be paid with respect thereto asa condition precedent to the exercise of such privilege of conversion and exchange. The PayingAgent/Registrar shall not be required to make any such conversion and exchange (i) during theperiod commencing with the close of business on any Record Date and ending with the opening ofbusiness on the next following principal or interest payment date or (ii) with respect to any Bondor portion thereof called for redemption prior to maturity, within 45 days prior to its redemptiondate.

IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns,

or otherwise ceases to act as such, the Issuer has covenanted in the Bond Resolution that it promptlywill appoint a competent and legally qualified substitute therefor, and promptly will cause writtennotice thereof to be mailed to the registered owners of the Bonds.

IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validlyauthorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to beperformed, exist, and be done precedent to or in the authorization, issuance, and delivery of thisBond have been performed, existed, and been done in accordance with law; that this Bond is aspecial obligation of the Issuer which, together with other bonds, are secured by and payable froma first lien on and pledge of the "Pledged Revenues" as defined in the Bond Resolution, includingthe Gross Revenues of the District's System (as defined in the Bond Resolution), and includingspecifically certain payments to be received by the District from the City of Forney (the"Participant"), under the "Mustang Creek Interceptor System Contract", dated March 24, 2011,between the Participant and the District, and any payments to be received by the District under allsimilar contracts with any future Additional Participants as defined and permitted in said contract.

THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Resolution,to issue Additional Bonds payable from and secured by a first lien on and pledge of the "PledgedRevenues" on a parity with this Bond and series of which it is a part.

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THE ISSUER also has reserved the right to amend the Bond Resolution with the approvalof the registered owners of 51% in principal amount of all outstanding bonds secured by and payablefrom a first lien on and pledge of the "Pledged Revenues," subject to the restrictions stated in theBond Resolution.

THE REGISTERED OWNER hereof shall never have the right to demand payment of thisBond or the interest hereon out of any funds raised or to be raised by taxation or from any sourcewhatsoever other than specified in the Bond Resolution.

BY BECOMING the registered owner of this Bond, the registered owner therebyacknowledges all of the terms and provisions of the Bond Resolution, agrees to be bound by suchterms and provisions, acknowledges that the Bond Resolution is duly recorded and available forinspection in the official minutes and records of the governing body of the Issuer, and agrees thatthe terms and provisions of this Bond and the Bond Resolution constitute a contract between eachregistered owner hereof and the Issuer.

IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual orfacsimile signature of the President of the Board of Directors of the Issuer and attested andcountersigned with the manual or facsimile signature of the Secretary of the Board of Directors ofthe Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile,on this Bond.

xxxxxxxxxxxx xxxxxxxxxx Secretary, Board of Directors, President, Board of DirectorsNorth Texas Municipal Water District North Texas Municipal Water District

(DISTRICT SEAL)

FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE

PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE


THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION


Dated: ___________ _____________________________Authorized Representative

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FORM OF ASSIGNMENT

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto

Please Insert Social Security orOther Identifying Number of Assignee/___________________________________/

____________________________________________________________(Name and Address of Assignee)

the within Bond and does hereby irrevocably constitute and appoint _________________________to transfer said Bond on the books kept for registration thereof with full power of substitution in thepremises.

Date: _____________________

____________________________________

Signature Guaranteed: ____________________________________

NOTICE: The signature to this assignment must correspond with the name as it appears uponthe face of the within Bond in every particular, without alteration or enlargement orany change whatever; and

NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating ina Securities Transfer Association recognized signature guarantee program.

FORM OF STATEMENT OF INSURANCE

STATEMENT OF INSURANCE*

Section 8. ADDITIONAL DEFINITIONS. In addition to the terms defined in the recitalsor otherwise herein, as used in this Resolution the following terms shall have the meanings set forthbelow, unless the text hereof specifically indicates otherwise:

The term "Additional Bonds" shall mean the additional parity revenue bonds permitted tobe authorized in the future in this Resolution.

The term "Additional Participants" shall mean a city or cities in addition to the City ofForney, Texas with which the District makes a contract for receiving and transporting Wastewater(as defined in the Contract) through the System.

19*From Approval Certificate, if applicable.

The term "Board" shall mean the Board of Directors of the Issuer, being the governing bodyof the Issuer, and it is further resolved that the declarations and covenants of the Issuer containedin this Resolution are made by, and for and on behalf of the Board and the Issuer, and are bindingupon the Board and the Issuer for all purposes.

The terms "Bond Resolution" and "Resolution" mean this resolution authorizing the Bonds.

The term "Bonds" means collectively the Initial Bond as described and defined in Sections1 and 2 of this Resolution, and all substitute bonds exchanged therefor as well as all other substituteand replacement bonds issued pursuant to this Resolution.

The term "Contract" shall mean collectively the Mustang Creek Interceptor System Contract,dated as of March 24, 2011, between the Issuer and the Participant, together with all similarcontracts which may be executed in the future between the Issuer and Additional Participants, asdefined and permitted in the aforesaid contracts.

The terms "District" and "Issuer" shall mean North Texas Municipal Water District.

The terms "District's System", "Issuer's System", and "System" shall mean all of the Issuer'sfacilities acquired, constructed, used, or operated by the Issuer for receiving, transporting, treating,and disposing of Wastewater (as defined in the Contract) of and for the Participants, pursuant to theContract, including the contracts with Additional Participants (but excluding any facilities acquiredor constructed with Special Facilities Bonds, and excluding any facilities required to transportWastewater to any Point of Entry (as defined in the Contract) of the System), together with anyimprovements, enlargements, or additions to said System facilities and any extensions, repairs, orreplacements of said System facilities acquired, constructed, used, operated, or otherwiseincorporated into or made a part of said System facilities in the future by the Issuer. Said terms shallinclude only those facilities which are acquired, constructed, used, or operated by the Issuer toprovide service to Participants pursuant to the Contract, including any contracts with AdditionalParticipants, and which, as determined by the Issuer, can economically and efficiently provideservice to Participants.

The term "fiscal year" shall mean the 12 month period beginning each October 1, or suchother 12 month period hereafter established by the Issuer as a fiscal year for the purposes of thisResolution.

The term "Gross Revenues of the System" shall mean all of the revenues, income, rentals,rates, fees, and charges of every nature derived by the Board or the Issuer from the operation and/orownership of the System, including specifically all payments constituting the "Annual Requirement"(as defined in the Contract) (consisting of the "Operation and Maintenance Component" and the"Bond Service Component", as such terms are defined in the Contract), and all other payments andamounts received by the Board or the Issuer from the Participants pursuant to the Contract, includingany contracts with Additional Participants.

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The term "Net Revenues of the System" shall mean the Gross Revenues of the System lessthe Operation and Maintenance Expense of the System.

The term "Operation and Maintenance Expense" shall mean all costs of operation andmaintenance of the Issuer's System including, but not limited to, repairs and replacements, the costof utilities, supervision, engineering, accounting, auditing, legal services, insurance premiums, andany other supplies, services, administrative costs, and equipment necessary for proper operation andmaintenance of the Issuer's System, any payments required to be made under the Contract into theContingency Fund (as defined in the Contract), payments made for the use or operation of anyproperty, payments of fines, and payments made by Issuer in satisfaction of judgments or otherliabilities resulting from claims not covered by Issuer's insurance or not paid by one particularParticipant arising in connection with the operation and maintenance of the Issuer's System. Depreciation shall not be considered an item of Operation and Maintenance Expense.

The term "Parity Bonds" shall mean collectively (i) the Bonds, (ii) the outstanding "NorthTexas Municipal Water District Mustang Creek Wastewater Interceptor System Contract RevenueRefunding Bonds, Series 2012," in the original principal amount of $10,620,0000, authorized by aresolution of the Issuer on August 23, 2012 (the "2012 Bond Resolution"), and (iii) the outstanding"North Texas Municipal Water District Mustang Creek Wastewater Interceptor System ContractRevenue Bonds, Series 2019" in the original principal amount of $19,620,0000, authorized by aresolution of the Issuer on March 28, 2019 (the "2019 Bond Resolution").

The terms "Participant" or "Participants" shall mean the City of Forney, Texas in KaufmanCounty, Texas, together with all Additional Participants.

The term "Pledged Revenues" shall mean: (a) the Gross Revenues of the System and (b)any additional revenues, income, receipts, or other resources, including, without limitation, anygrants, donations, or income received or to be received from the United States Government, or anyother public or private source, whether pursuant to an agreement or otherwise, which in the futuremay, at the option of the Issuer, be pledged to the payment of the Bonds or the Additional Bonds.

The term "Special Facilities Bonds" shall mean revenue obligations of the District which arenot secured by or payable from Annual Payments under the Contract, but which are payable solelyfrom other sources; but Special Facilities Bonds may be made payable from payments from anyperson, including any Participant, under a separate contract whereunder the facilities to be acquiredor constructed are declared not to be part of the system and are not made payable from the AnnualPayments as defined in the Contract.

Section 9. PLEDGE. (a) The Bonds authorized by this Resolution are hereby designatedas, and shall be, "Additional Bonds" as permitted by Section 22 of the 2012 Bond Resolution andthe 2019 Bond Resolution, and it is hereby determined, declared, and resolved that all of the ParityBonds, including the Bonds authorized by this Resolution, are and shall be secured and payableequally and ratably on a parity, and that Sections 9 through 25 of this Resolution substantially restateand are supplemental to and cumulative of the applicable and pertinent provisions of the resolution

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authorizing the issuance of the previously issued Parity Bonds, with Sections 9 through 25 of thisResolution being equally applicable to all of the Parity Bonds, including the Bonds.

(b) The Parity Bonds and any Additional Bonds, and the interest thereon, are and shallbe secured by and payable from a first lien on and pledge of the Pledged Revenues, and the PledgedRevenues are further pledged to the establishment and maintenance of the Bond Fund and theReserve Fund as provided in this Resolution.

Section 10. REVENUE FUND. There has been created and established and there shall bemaintained at an official depository of the Issuer (which must be a member of the Federal DepositInsurance Corporation) a separate fund to be entitled the "North Texas Municipal Water DistrictMustang Creek Wastewater Interceptor System Contract Revenue Bonds Revenue Fund" (hereaftercalled the "Revenue Fund"). All Gross Revenues of the System shall be credited to the RevenueFund immediately upon receipt.

Section 11. BOND FUND. For the sole purpose of paying the principal of and interest onall outstanding Parity Bonds and any Additional Bonds, as the same come due, there has beencreated and established and shall be maintained at the Paying Agent/Registrar, a separate fund tobe entitled the "North Texas Municipal Water District Mustang Creek Wastewater InterceptorSystem Contract Revenue Bonds" (hereinafter called the "Bond Fund").

Section 12. RESERVE FUND. There has been created and established, and there shall bemaintained at the Paying Agent Registrar, a separate fund to be entitled the "North Texas MunicipalWater District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds"(hereinafter called the "Reserve Fund"). The Reserve Fund shall be used solely for the purpose offinally retiring the last of the outstanding Parity Bonds and Additional Bonds, or for paying principalof and interest on any outstanding Parity Bonds and Additional Bonds, when and to the extent theamount in the Bond Fund is insufficient for such purpose.

Section 13. DEPOSITS OF PLEDGED REVENUES. The Pledged Revenues shall bedeposited into the Bond Fund and the Reserve Fund when and as required by this Resolution.

Section 14. INVESTMENTS. Money in any Fund established pursuant to this Resolutionmay, at the option of the Issuer be invested in any or all of the authorized investments described inthe Public Funds Investment Act, Chapter 2256, Texas Government Code (or any successor statute),in which the Issuer may purchase, sell and invest its funds and funds under its control; provided thatall such deposits and investments shall be made in such manner that the money required to beexpended from any Fund will be available at the proper time or times. Such investments shall bevalued in terms of current market value as of the 15th day of January of each year. Interest andincome derived from such deposits and investments shall be credited to the Fund from which thedeposit or investment was made. Such investments shall be sold promptly when necessary toprevent any default in connection with the Bonds or Additional Bonds. No investment of any Fundshall be made in any way which would violate any provision of this Resolution.

Section 15. FUNDS SECURED. Money in all Funds described in this Resolution, to theextent not invested, shall be secured in the manner prescribed by law, including particularly, the

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Public Funds Collateral Act, Chapter 2257, Texas Government Code, as amended, for securingfunds of the Issuer.

Section 16. DEBT SERVICE REQUIREMENTS. The Issuer shall transfer from thePledged Revenues and deposit to the credit of the Bond Fund the amounts, at the times, as follows:

(1) such amounts, deposited in approximately equal monthly installments on orbefore the 25th day of each month hereafter as will be sufficient, together with otheramounts, if any, then on hand in the Bond Fund and available for such purpose, to pay theinterest scheduled to accrue and come due on the Parity Bonds and any Additional Bondson the next succeeding interest payment date; and

(2) such amounts, deposited in approximately equal monthly installments on orbefore the 25th day of each month hereafter as will be sufficient, together with otheramounts, if any, then on hand in the Bond Fund and available for such purpose, to pay theprincipal scheduled to mature and come due, and/or mandatorily required to be redeemedprior to maturity, on the Parity Bonds and any Additional Bonds on the next succeedingprincipal payment date or mandatory redemption date, if any.

Section 17. RESERVE REQUIREMENTS. Out of proceeds of the Bonds, there shall bedeposited to the credit of the Reserve Fund an amount of money, if any, sufficient to cause theReserve Fund to contain money and/or investments in market value equal to the average annualprincipal and interest requirements on all Parity Bonds which will be outstanding immediately afterissuance of the Bonds. So long as the money and investments in the Reserve Fund are at least equalto the average annual principal and interest requirements on all then outstanding Parity Bonds andAdditional Bonds (the "Required Amount"), no deposits shall be made to the credit of the ReserveFund; but when and if the Reserve Fund at any time contains less than said Required Amount inmarket value, then, subject and subordinate to making the required deposits to the credit of the BondFund, the Issuer shall transfer from Pledged Revenues and deposit to the credit of the Reserve Fund,on or before the 25th day of each month, a sum equal to 1/60th of the average annual principal andinterest requirements of all then outstanding Parity Bonds, until the Reserve Fund is restored to saidRequired Amount. So long as the Reserve Fund contains said Required Amount, all amounts inexcess of such Required Amount shall, on or before the 10th day prior to each interest payment date,be deposited to the credit of the Bond Fund; and otherwise any earnings from the deposit andinvestment of the Reserve Fund shall be retained in the Reserve Fund.

Section 18. DEFICIENCIES. If on any occasion there shall not be sufficient PledgedRevenues to make the required deposits into the Bond Fund and the Reserve Fund, then suchdeficiency shall be made up as soon as possible from the next available Pledged Revenues, or fromany other sources available for such purpose.

Section 19. EXCESS PLEDGED REVENUES. Subject to making the required deposits tothe credit of the Bond Fund and the Reserve Fund, when and as required by this Resolution, or anyResolution authorizing the issuance of Additional Bonds, the excess Pledged Revenues first shall

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be used to pay the Operation and Maintenance Expenses of the System, and then, subject to payingsuch Operation and Maintenance Expenses of the System, may be used for any other lawful purpose.

Section 20. PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS. On or beforethe last day of each May and of each November hereafter while any of the Parity Bonds orAdditional Bonds are outstanding and unpaid, the Issuer shall make available to the paying agentstherefor, out of the Bond Fund or the Reserve Fund, if necessary, money sufficient to pay suchinterest on and such principal of the Parity Bonds and Additional Bonds as will accrue or mature onthe June 1 or December 1 immediately following.

Section 21. FINAL DEPOSITS. At such times as the aggregate amount of money andinvestments in the Bond Fund and the Reserve Fund are at least equal in market value to (1) theaggregate principal amount of all unpaid (unmatured and matured) outstanding Parity Bonds andAdditional Bonds, plus (2) the aggregate amount of all unpaid interest, including all unpaid(unmatured and matured) outstanding interest coupons, appertaining to such Parity Bonds andAdditional Bonds, no further deposits need be made into the Bond Fund or the Reserve Fund. Indetermining the amount of such Parity Bonds and Additional Bonds, and unpaid interestappertaining thereto, outstanding at any time, there shall be subtracted and excluded the amount ofany such Parity Bonds and Additional Bonds, and unpaid interest appertaining thereto, which shallhave been duly called for redemption and for which funds shall have been deposited with the payingagents therefor sufficient for such redemption.

Section 22. ADDITIONAL BONDS. (a) The Issuer shall have the right and power at anytime and from time to time, and in one or more Series or issues, to authorize, issue, and deliveradditional parity revenue bonds (herein called "Additional Bonds"), in any amounts, for any lawfulpurpose of relating to the System, including the refunding of any Parity Bonds or Additional Bonds. Such Additional Bonds, if and when authorized, issued, and delivered in accordance with thisResolution, shall be secured by and made payable equally and ratably on a parity with the ParityBonds, and all other outstanding Additional Bonds, from a first lien on and pledge of the PledgedRevenues.

(b) The Bond Fund and the Reserve Fund shall secure and be used to pay all AdditionalBonds as well as the Parity Bonds. However, each Resolution under which Additional Bonds areissued shall provide and require that, in addition to the amounts required by the provisions of thisResolution and the provisions of any other Resolution or Resolutions authorizing Additional Bondsto be deposited to the credit of the Bond Fund, the Issuer shall deposit to the credit of the Bond Fundat least such amounts as are required for the payment of all principal of and interest on saidAdditional Bonds then being issued, as the same come due; and that the aggregate amount to beaccumulated and maintained in the Reserve Fund shall be increased (if and to the extent necessary)to an amount not less than the average annual principal and interest requirements of all Parity Bondsand Additional Bonds which will be outstanding after the issuance and delivery of the then proposedAdditional Bonds; and that the required additional amount shall be so accumulated by the depositin the Reserve Fund of all or any part of said required additional amount in cash immediately afterthe delivery of the then proposed Additional Bonds, or, at the option of the Issuer, by the deposit ofsaid required additional amount (or any balance of said required additional amount not depositedin cash as permitted above) in monthly installments, made on or before the 25th day of each month

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following the adoption of the Resolution authorizing the issuance of the then proposed AdditionalBonds, of not less than 1/60th of said required additional amount (or 1/60th of the balance of saidrequired additional amount not deposited in cash as permitted above).

(c) All calculations of average annual principal and interest requirements made pursuantto this Section shall be made as of and from the date of the Additional Bonds then proposed to beissued.

(d) The principal of all Additional Bonds must be scheduled to be paid or mature on June1 of the years in which such principal is scheduled to be paid or mature; and all interest thereon mustbe payable on June 1 and December 1.

Section 23. FURTHER REQUIREMENTS FOR ADDITIONAL BONDS. AdditionalBonds shall be issued only in accordance with this Resolution, but notwithstanding any provisionsof this Resolution to the contrary, no installment, series, or issue of Additional Bonds shall be issuedor delivered unless the President and the Secretary of the Board sign a written certificate to the effectthat the Issuer is not in default as to any covenant, condition, or obligation in connection with alloutstanding Parity Bonds and Additional Bonds, and the Resolutions authorizing same, and that theBond Fund and the Reserve Fund each contains the amount then required to be therein.

Section 24. GENERAL COVENANTS. The Issuer further covenants and agrees that:

(a) PERFORMANCE. It will faithfully perform at all times any and all covenants,undertakings, stipulations, and provisions contained in this Resolution and each resolutionauthorizing the issuance of Additional Bonds, and in each and every Parity Bond and AdditionalBond; that it will promptly pay or cause to be paid the principal of and interest on every Bond andAdditional Bond, on the dates and in the places and manner prescribed in such resolutions and ParityBonds or Additional Bonds; and that it will, at the times and in the manner prescribed, deposit orcause to be deposited the amounts required to be deposited into the Bond Fund and the ReserveFund; and any holder of the Parity Bonds or Additional Bonds may require the Issuer, its Board, andits officials and employees, to carry out, respect, or enforce the covenants and obligations of thisResolution or any resolution authorizing the issuance of Additional Bonds, by all legal and equitablemeans, including specifically, but without limitation, the use and filing of mandamus proceedings,in any court of competent jurisdiction, against the Issuer, its Board, and its officials and employees.

(b) ISSUER'S LEGAL AUTHORITY. The Issuer is a duly created and existingconservation and reclamation district of the State of Texas pursuant to Article 16, Section 59 of theTexas Constitution, and Chapter 62, Acts of the 52nd Legislature of Texas, Regular Session, 1951,as amended (originally compiled as Vernon's Ann. Tex. Civ. St. Article 8280-141), and is dulyauthorized under the laws of the State of Texas to create and issue the Parity Bonds; that all actionon its part for the creation and issuance of the Parity Bonds has been duly and effectively taken, andthat the Parity Bonds in the hands of the holders and owners thereof are and will be valid andenforceable special obligations of the Issuer in accordance with their terms.

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(c) TITLE. It has or will obtain lawful title to, or the lawful right to use and operate, thelands, buildings, and facilities constituting the System, that it warrants that it will defend, the titleto or lawful right to use and operate, all the aforesaid lands, buildings, and facilities, and every partthereof, for the benefit of the holders and owners of the Parity Bonds and Additional Bonds againstthe claims and demands of all persons whomsoever, that it is lawfully qualified to pledge thePledged Revenues to the payment of the Parity Bonds and Additional Bonds in the mannerprescribed herein, and has lawfully exercised such rights.

(d) LIENS. It will from time to time and before the same become delinquent pay anddischarge all taxes, assessments, and governmental charges, if any, which shall be lawfully imposedupon it, or the System, that it will pay all lawful claims for rents, royalties, labor, materials, andsupplies which if unpaid might by law become a lien or charge thereon, the lien of which would beprior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall befully preserved in the manner provided herein, and that it will not create or suffer to be created anymechanic's, laborer's, materialman's, or other lien or charge which might or could be prior to theliens hereof, or do or suffer any matter or thing whereby the liens hereof might or could be impaired;provided, however, that no such tax, assessment, or charge, and that no such claims which might beused as the basis of a mechanic's, laborer's, materialman's, or other lien or charge, shall be requiredto be paid so long as the validity of the same shall be contested in good faith by the Board.

(e) OPERATION OF SYSTEM. While the Parity Bonds or any Additional Bonds areoutstanding and unpaid it will cause the System to be continuously and efficiently operated andmaintained in good condition, repair, and working order, and at a reasonable cost.

(f) FURTHER ENCUMBRANCE. While the Parity Bonds or any Additional Bonds areoutstanding and unpaid, the Issuer shall not additionally encumber the Pledged Revenues in anymanner, except as permitted in this Resolution in connection with Additional Bonds, unless saidencumbrance is made junior and subordinate in all respects to the liens, pledges, covenants, andagreements of this Resolution and any resolution authorizing the issuance of Additional Bonds; butthe right of the Issuer and the Board to issue revenue bonds payable from a subordinate lien on thePledged Revenues is specifically recognized and retained.

(g) SALE OF PROPERTY. While the Parity Bonds or any Additional Bonds areoutstanding and unpaid, the Issuer will maintain its current legal corporate status as a conservationand reclamation district, and the Issuer shall not sell, convey, mortgage, or in any manner transfertitle to, or lease, or otherwise dispose of the entire System, or any significant or substantial partthereof; provided that whenever the Issuer deems it necessary to dispose of any machinery, fixtures,and equipment, it may sell or otherwise dispose of such machinery, fixtures, and equipment whenit has made arrangements to replace the same or provide substitutes therefor, unless it is determinedby the Issuer that no such replacement or substitute is necessary.

(h) INSURANCE. (1) It will cause to be insured (including self-insurance) such partsof the System as would usually be insured by corporations operating like properties, with aresponsible insurance company or companies, against risks, accidents, or casualties against whichand to the extent insurance is usually carried by corporations operating like properties, including fire

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and extended coverage insurance. Public liability and property damage insurance shall also becarried unless the general counsel for Issuer, or the Attorney General of Texas, gives a writtenopinion to the effect that the Issuer, the Board, and its officers and employees, are not liable forclaims which would be protected by such insurance. At any time while any contractor engaged inconstruction work shall be fully responsible therefor, the Issuer shall not be required to carryinsurance on the works being constructed, but the contractor shall be required to carry appropriateinsurance. All such policies shall be open to the inspection of the Bondholders and theirrepresentatives at all reasonable times.

(2) Upon the happening of any loss or damage covered by insurance from one or moreof said causes, the Issuer shall make due proof of loss and shall do all things necessary or desirableto cause the insuring companies to make payment in full directly to the Issuer. The proceeds ofinsurance covering such property, together with any other funds necessary and available for suchpurpose, shall be used forthwith by the Issuer for repairing the property damaged or replacing theproperty destroyed; provided, however, that if said insurance proceeds and other funds areinsufficient for such purpose, then said insurance proceeds pertaining to the System shall be usedpromptly as follows:

(a) for the redemption prior to maturity of the Parity Bonds and AdditionalBonds, if any, ratably in the proportion that the outstanding principal of each Series or issueof Parity Bonds or Additional Bonds bears to the total outstanding principal of all ParityBonds and Additional Bonds; provided that if on any such occasion the principal of any suchSeries or issue is not subject to redemption, it shall not be regarded as outstanding in makingthe foregoing computation; or

(b) if none of the outstanding Parity Bonds or Additional Bonds is subject toredemption, then for the purchase on the open market and retirement of said Parity Bondsand Additional Bonds, in the same proportion as prescribed in the foregoing clause (a), tothe extent practicable; provided that the purchase price for any such Parity Bond orAdditional Bonds shall not exceed the redemption price of such Parity Bond or AdditionalBond on the first date upon which it becomes subject to redemption; or

(c) to the extent that the foregoing clauses (a) and (b) cannot be complied withat the time, the insurance proceeds, or the remainder thereof, shall be deposited in a specialand separate trust fund, at an official depository of the Issuer, to be designated the InsuranceAccount. The Insurance Account shall be held until such time as the foregoing clauses (a)and/or (b) can be complied with, or until other funds become available which, together withthe Insurance Account, will be sufficient to make the repairs or replacements originallyrequired, whichever of said events occurs first.

(3) The annual audit hereinafter required shall contain a list of all such insurance policiescarried, together with a statement as to whether or not all insurance premiums upon such policieshave been paid.

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(i) RATE COVENANT. It will fix, establish, maintain, and collect such rentals, rates,charges, and fees for the use and availability of the System as are necessary to produce GrossRevenues of the System sufficient, together with any other Pledged Revenues, (a) to make allpayments and deposits required to be made into the Bond Fund, and to maintain the Reserve Fund,as required by the resolutions authorizing all Parity Bonds and Additional Bonds, and (b) to pay allOperation and Maintenance Expenses of the System.

(j) RECORDS. Proper books of record and account will be kept in which full, true, andcorrect entries will be made of all dealings, activities, and transactions relating to the System, thePledged Revenues, and all Funds described in this Resolution; and all books, documents, andvouchers relating thereto shall at all reasonable times be made available for inspection upon requestof any bondholder.

(k) AUDITS. Each year while any of the Parity Bonds or Additional Bonds areoutstanding, an audit will be made of its books and accounts relating to the System and the PledgedRevenues by an independent certified public accountant or an independent firm of certified publicaccountants.

(l) GOVERNMENTAL AGENCIES. It will comply with all of the terms and conditionsof any and all agreements applicable to the System and the Parity Bonds or Additional Bondsentered into between the Issuer and any governmental agency, and the Issuer will take all actionnecessary to enforce said terms and conditions; and the Issuer will obtain and keep in full force andeffect all franchises, permits, and other requirements necessary with respect to the acquisition,construction, operation, and maintenance of the System.

(m) CONTRACTS WITH PARTICIPANTS. It will comply with the terms andconditions of the Contract, including any contracts with Additional Participants, and will cause theParticipants to comply with all of their obligations thereunder by all lawful means; and the Issueragrees to prepare an annual budget as required by the Contract.

Section 25. AMENDMENT OF RESOLUTION. (a) The holders or owners of Parity Bondsand Additional Bonds aggregating 51% in principal amount of the aggregate principal amount ofthen outstanding Parity Bonds and Additional Bonds shall have the right from time to time toapprove any amendment to this Resolution or any resolution authorizing the issuance of AdditionalBonds, which may be deemed necessary or desirable by the Issuer, provided, however, that nothingherein contained shall permit or be construed to permit the amendment of the terms and conditionsin said resolutions or in the Parity Bonds or Additional Bonds so as to:

(1) Make any change in the maturity of the outstanding Parity Bonds or AdditionalBonds;

(2) Reduce the rate of interest borne by any of the outstanding Parity Bonds orAdditional Bonds;

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(3) Reduce the amount of the principal payable on the outstanding Parity Bonds orAdditional Bonds;

(4) Modify the terms of payment of principal of or interest on the outstanding ParityBonds or Additional Bonds, or impose any conditions with respect to such payment;

(5) Affect the rights of the holders of less than all of the Parity Bonds and AdditionalBonds then outstanding;

(6) Change the minimum percentage of the principal amount of Parity Bonds andAdditional Bonds necessary for consent to such amendment.

(b) If at any time the Issuer shall desire to amend a resolution under this Section, theIssuer shall cause notice of the proposed amendment to be published in a financial newspaper orjournal published in the City of New York, New York, or in the City of Austin, Texas, once duringeach calendar week for at least two successive calendar weeks. Such notice shall briefly set forththe nature of the proposed amendment and shall state that a copy thereof is on file at the principaloffice of each Paying Agent for each Series of Parity Bonds and Additional Bonds for inspectionby all holders of Parity Bonds and Additional Bonds. Such publication is not required, however,if notice in writing is given to each holder of Parity Bonds and Additional Bonds.

(c) Whenever at any time not less than thirty days, and within one year, from the dateof the first publication of notice or other service of written notice the Issuer shall receive aninstrument or instruments executed by the holders or owners of at least 51% in aggregate principalamount of all Parity Bonds and Additional Bonds then outstanding, which instrument or instrumentsshall refer to the proposed amendment described in said notice and which specifically consent to andapprove such amendment in substantially the form of the copy thereof on file as aforesaid, the Issuermay adopt the amendatory resolution in substantially the same form.

(d) Upon the adoption of any amendatory resolution pursuant to the provisions of thisSection, the resolution being amended shall be deemed to be amended in accordance with theamendatory resolution, and the respective rights, duties, and obligations of the Issuer and all theholders or owners of then outstanding Parity Bonds and Additional Bonds and all future AdditionalBonds shall thereafter be determined, exercised, and enforced hereunder, subject in all respects tosuch amendment.

(e) Any consent given by the holder or owner of a Parity Bond or Additional Bondpursuant to the provisions of this Section shall be irrevocable for a period of six months from thedate of the first publication of the notice provided for in this Section, and shall be conclusive andbinding upon all future holders or owners of the same Parity Bond or Additional Bond during suchperiod. Such consent may be revoked at any time after six months from the date of the firstpublication of such notice by the holder or owner who gave such consent, or by a successor in title,by filing notice thereof with each Paying Agent for each Series of Parity Bonds and AdditionalBonds, Texas, and the Issuer, but such revocation shall not be effective if the holders of 51% in

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aggregate principal amount of the then outstanding Parity Bonds and Additional Bonds as in thisSection defined have, prior to the attempted revocation, consented to and approved the amendment.

(f) For the purpose of this Section, the fact of the holding of Parity Bonds or AdditionalBonds in bearer, coupon form by any holder thereof and the amount and numbers of such ParityBonds and Additional Bonds, and the date of their holding same, may be provided by the affidavitof the person claiming to be such holder, or by a certificate executed by any trust company, bank,banker, or any other depository wherever situated showing that at the date therein mentioned suchperson had on deposit with such trust company, bank, banker, or other depository, the Parity Bondsor Additional Bonds described in such certificate. The ownership of all registered Parity Bonds andAdditional Bonds shall be ascertained by the registration books pertaining thereto kept by theregistrar. The Issuer may conclusively assume that such holding or ownership continues untilwritten notice to the contrary is served upon the Issuer.

Section 26. DEFEASANCE OF BONDS. (a) Each of the Bonds, including the Initial Bondand each of the other Bonds (as hereinbefore defined), and the interest thereon shall be deemed tobe paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of thisResolution, except to the extent provided in subsection (d) of this Section, when payment of theprincipal of such Bond, plus interest thereon to the due date (whether such due date be by reason ofmaturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made inaccordance with the terms thereof (including the giving of any required notice of redemption), or(ii) shall have been provided for on or before such due date by irrevocably depositing with ormaking available to the Paying Agent/Registrar for such payment (1) lawful money of the UnitedStates of America sufficient to make such payment or (2) Government Obligations which matureas to principal and interest in such amounts and at such times as will insure the availability, withoutreinvestment, of sufficient money to provide for such payment, and when proper arrangements havebeen made by the Issuer with the Paying Agent/Registrar for the payment of its services until allDefeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to bea Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer besecured by, payable from, or entitled to the benefits of, the Pledged Revenues as provided in thisResolution, and such principal and interest shall be payable solely from such money or GovernmentObligations.

(b) Any moneys so deposited with the Paying Agent/Registrar may at the writtendirection of the Issuer also be invested in Government Obligations, maturing in the amounts andtimes as hereinbefore set forth, and all income from such Government Obligations received by thePaying Agent/Registrar which is not required for the payment of the Bonds and interest thereon,with respect to which such money has been so deposited, shall be turned over to the Issuer, ordeposited as directed in writing by the Issuer.

(c) The term "Government Obligations" as used in this Section shall mean the followingobligations, which may or may not be in book-entry form, (i) direct, noncallable obligations of theUnited States of America, including obligations that are unconditionally guaranteed by the UnitedStates of America, and (ii) noncallable obligations of an agency or instrumentality of the UnitedStates of America, including obligations that are unconditionally guaranteed or insured by the

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agency or instrumentality and that, on the date the Board of Directors adopts or approvesproceedings authorizing the issuance of refunding bonds or otherwise provide for the funding of anescrow to effect the defeasance of the Bonds, are rated as to investment quality by a nationallyrecognized investment rating firm not less than "AAA" or its equivalent.

(d) Until all Defeased Bonds shall have become due and payable, the PayingAgent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds thesame as if they had not been defeased, and the Issuer shall make proper arrangements to provide andpay for such services as required by this Resolution.

Section 27. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. In the event any outstanding Bonds or Bond authorized by this Resolutionis damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to beprinted, executed, and delivered, a new bond of the same principal amount, maturity, and interestrate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in themanner hereinafter provided.

(b) Application for Replacement Bonds. Application for replacement of damaged,mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to thePaying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered ownerapplying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar suchsecurity or indemnity as may be required by them to save each of them harmless from any loss ordamage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, theregistered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to theirsatisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case ofdamage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrarfor cancellation the Bond so damaged or mutilated.

(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, inthe event any such Bond shall have matured, and no default has occurred which is then continuingin the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuermay authorize the payment of the same (without surrender thereof except in the case of a damagedor mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity isfurnished as above provided in this Section.

(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacementbond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal,printing, and other expenses in connection therewith. Every replacement bond issued pursuant tothe provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shallconstitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bondshall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits ofthis Resolution equally and proportionately with any and all other Bonds duly issued under thisResolution.

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(e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1201, TexasGovernment Code, this Section of this Resolution shall constitute authority for the issuance of anysuch replacement bond without necessity of further action by the governing body of the Issuer orany other body or person, and the duty of the replacement of such bonds is hereby authorized andimposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate anddeliver such Bonds in the form and manner and with the effect, as provided in Section 6(d) of thisResolution for Bonds issued in conversion and exchange for other Bonds.

Section 28. COVENANTS REGARDING TAX-EXEMPTION. (a) Covenants. The Issuercovenants to refrain from any action which would adversely affect, or to take such action to assure,the treatment of the Bonds as obligations described in section 103 of the Code, the interest on whichis not includable in the "gross income" of the holder for purposes of federal income taxation. Infurtherance thereof, the Issuer covenants as follows:

(1) to take any action to assure that no more than 10 percent of theproceeds of the Bonds or the projects financed therewith (less amounts deposited intoa reserve fund, if any) are used for any "private business use," as defined in section141(b)(6) of the Code, or if more than 10 percent of the proceeds or the projectsfinanced therewith are so used, such amounts, whether or not received by the Issuer,with respect to such private business use, do not, under the terms of this Resolutionor any underlying arrangement, directly or indirectly, secure or provide for thepayment of more than 10 percent of the debt service on the Bonds, in contraventionof section 141(b)(2) of the Code;

(2) to take any action to assure that in the event that the "private businessuse" described in subsection (a) hereof exceeds five percent of the proceeds of theBonds or the projects financed therewith (less amounts deposited into a reserve fund,if any) then the amount in excess of five percent is used for a "private business use"which is "related" and not "disproportionate," within the meaning of section141(b)(3) of the Code, to the governmental use;

(3) to take any action to assure that no amount which is greater than thelesser of $5,000,000, or five percent of the proceeds of the Bonds (less amountsdeposited into a reserve fund, if any) is, directly or indirectly, used to finance loansto persons, other than state or local governmental units, in contravention of section141(c) of the Code;

(4) to refrain from taking any action that would otherwise result in theBonds being treated as "private activity bonds" within the meaning of section 141(b)of the Code;

(5) to refrain from taking any action that would result in the Bonds being"federally guaranteed" within the meaning of section 149(b) of the Code;

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(6) to refrain from using any portion of the proceeds of the Bonds,directly or indirectly, to acquire or to replace funds which were used, directly orindirectly, to acquire investment property (as defined in section 148(b)(2) of theCode) which produces a materially higher yield over the term of the Bonds, otherthan investment property acquired with --

(A) proceeds of the Bonds invested for a reasonable temporaryperiod of 3 years or less or, in the case of a refunding bond, for a period of90 days or less until such proceeds are needed for the purpose for which theBonds are issued,

(B) amounts invested in a bona fide debt service fund, within themeaning of section 1.148-1(b) of the Treasury Regulations, and

(C) amounts deposited in any reasonably required reserve orreplacement fund to the extent such amounts do not exceed 10 percent of thestated principal amount (or, in the case of a discount, the issue price) of theBonds;

(7) to otherwise restrict the use of the proceeds of the Bonds or amountstreated as proceeds of the Bonds, as may be necessary, so that the Bonds do nototherwise contravene the requirements of section 148 of the Code (relating toarbitrage), or section 149(g) of the Code (relating to hedge bonds); and

(8) to refrain form using the proceeds of the Bonds or proceeds of anyprior bonds to pay debt service on another issue more than 90 days after the date ofissue of the Bonds in contravention of the requirements of section 149(d) of the Code(relating to advance refundings); and

(9) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at leastequal to 90 percent of the "Excess Earnings," within the meaning of section 148(f)of the Code and to pay to the United States of America, not later than 60 days afterthe Bonds have been paid in full, 100 percent of the amount then required to be paidas a result of Excess Earnings under section 148(f) of the Code.

For purposes of the foregoing, the Issuer understands that the term "proceeds" includes"disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds,transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date ofissuance of the Bonds.

(b) Compliance with Code. It is the understanding of the Issuer that the covenantscontained herein are intended to assure compliance with the Code and any regulations or rulingspromulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulationsor rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable

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to the Bonds, the Issuer will not be required to comply with any covenant contained herein to theextent that such failure to comply, in the opinion of nationally-recognized bond counsel, will notadversely affect the exemption from federal income taxation of interest on the Bonds under section103 of the Code. In the event that regulations or rulings are hereafter promulgated which imposeadditional requirements which are applicable to the Bonds, the Issuer agrees to comply with theadditional requirements to the extent necessary, in the opinion of nationally-recognized bondcounsel, to preserve the exemption from federal income taxation of interest on the Bonds undersection 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directsits President, the President of the Board of Directors, the Executive Director, the Deputy Director -Administrative Services, and Deputy Director - Finance to execute any documents, certificates orreports required by the Code and to make such elections, on behalf of the Issuer, which may bepermitted by the Code as are consistent with the purpose for the issuance of the Bonds. The Issuercovenants to comply with the covenants contained in this section after defeasance of the Bonds.

(c) Rebate Fund. In order to facilitate compliance with the above covenant (a)(9), a"Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States ofAmerica, and such fund shall not be subject to the claim of any other person, including withoutlimitation, the bondholders. The Rebate Fund is established for the additional purpose ofcompliance with section 148 of the Code.

(d) Written Procedures. Unless superseded by another action of the Issuer toensure compliance with the covenants contained herein regarding private business use, remedialactions, arbitrage and rebate, the Issuer hereby adopts and establishes the instructions attachedhereto as Exhibit A as their written procedures applicable to Bonds issued pursuant to the Contract.

Section 29. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THEPROJECT. The Issuer covenants to account for the expenditure of Bond proceeds and investmentearnings to be used for the construction or acquisition of the property constituting the projectsfinanced or refinanced with proceeds of the sale of the Bonds on its books and records by allocatingproceeds to expenditures within 18 months of the later of the date that (1) the expenditure is madeor (2) such construction or acquisition is completed. The foregoing notwithstanding, the Issuer shallnot expend proceeds of the Bonds or investment earnings thereon more than 60 days after the earlierof (1) the fifth anniversary of the delivery of the Bonds or (2) the date the Bonds are retired, unlessthe Issuer obtains an opinion of nationally-recognized bond counsel that such expenditure will notadversely affect the tax-exempt status of the Bonds. For purposes hereof, the Issuer shall not beobligated to comply with this covenant if it obtains an opinion that such failure to comply will notadversely affect the excludability for federal income tax purposes from gross income of the intereston the Bonds.

Section 30. DISPOSITION OF PROJECT. The Issuer covenants that the propertyconstituting the projects financed or refinanced with proceeds of the Bond will not be sold orotherwise disposed in a transaction resulting in the receipt by the Issuer of cash or othercompensation, unless the Issuer obtains an opinion of nationally-recognized bond counsel that suchsale or other disposition will not adversely affect the tax-exempt status of the Bond. For purposesof the foregoing, the portion of the property comprising personal property and disposed in the

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ordinary course shall not be treated as a transaction resulting in the receipt of cash or othercompensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenantif it obtains an opinion that such failure to comply will not adversely affect the excludability forfederal income tax purposes from gross income of the interest on the Bonds.

Section 31. CUSTODY, APPROVAL, AND REGISTRATION OF INITIAL BOND;BOND COUNSEL'S OPINION, CUSIP NUMBERS, INSURANCE, AND PREAMBLE. ThePresident of the Board of Directors of the Issuer is hereby authorized to have control of the InitialBond issued hereunder and all necessary records and proceedings pertaining to the Initial Bondpending its delivery and its investigation, examination, and approval by the Attorney General of theState of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Initial Bond said Comptroller of Public Accounts (or a deputy designatedin writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificateon or attached to the Initial Bond, and the seal of said Comptroller shall be impressed, or placed infacsimile, on the Initial Bond. The approving legal opinion of the Issuer's Bond Counsel and theassigned CUSIP numbers may, at the option of the Issuer, be printed on the Initial Bond or on anyBonds issued and delivered in conversion of and exchange or replacement of any Bond, but neithershall have any legal effect, and shall be solely for the convenience and information of the registeredowners of the Bonds. If insurance is obtained on any of the Bonds, the Initial Bond and all insuredBonds shall bear an appropriate legend concerning insurance as provided by the insurer. Thepreamble to this Resolution is hereby adopted and made a part hereof for all purposes.

Section 32. SALE OF BONDS; PURCHASE AGREEMENT. Pursuant to theauthorizations in Section 3 hereof, as approved by the Authorized Officer, the Bonds may be soldeither pursuant to the taking of bids therefor or pursuant to a purchase agreement (the "PurchaseAgreement") with a purchaser or purchasers (collectively, the "Purchaser") to be approved by anAuthorized Officer, and any supplements thereto which may be necessary to accomplish theissuance of Bonds. Such Purchase Agreement is hereby authorized to be dated, executed anddelivered on behalf of the Issuer by an Authorized Officer, with such changes therein as shall beapproved by the Authorized Officer, the execution thereof by the Authorized Officer to constituteevidence of such approval. The delegation of authority to the Authorized Officer to approve thefinal terms of the Bonds as set forth in this Resolution is, and the decisions made by the AuthorizedOfficer pursuant to such delegated authority will be, in the best interests of the Issuer, and theAuthorized Officer is authorized to make a finding to such effect in the Approval Certificate.

Section 33. OFFICIAL STATEMENT. A Preliminary Official Statement relating to theBonds is hereby authorized to be approved by the Authorized Officer and distributed to prospectiveinvestors and other interested parties in connection with the underwriting and sale of the Bonds, withsuch changes therein as shall be approved by the Authorized Officer, including such changes as arenecessary for distribution as a final Official Statement. It is further officially found, determined, anddeclared that the statements and representations contained in said Preliminary Official Statementare true and correct in all material respects. The use and distribution by the Purchaser of the OfficialStatement relating to the Bonds, is hereby approved. For the purpose of review by the Purchaserprior to purchasing the Bonds, the Issuer deems said Preliminary Official Statement to have been"final as of its date" within the meaning of Securities and Exchange Commission Rule 15c2-12.

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Section 34. FURTHER PROCEDURES. The President and Secretary, respectively, of theBoard of Directors of the Issuer, the Executive Director of the Issuer, and all other officers,employees, and agents of the Issuer, and each of them, shall be and they are hereby expresslyauthorized, empowered, and directed from time to time and at any time to do and perform all suchacts and things and to execute, acknowledge, and deliver in the name and under the corporate sealand on behalf of the Issuer all such instruments, whether or not herein mentioned, as may benecessary or desirable in order to carry out the terms and provisions of this Bond Resolution, theBonds, the sale of the Bonds, and any Notice of Sale and/or Official Statement. In case any officerwhose signature shall appear on any Bond shall cease to be such officer before the delivery of suchBond, such signature shall nevertheless be valid and sufficient for all purposes the same as if suchofficer had remained in office until such delivery.

Section 35. DTC REGISTRATION. The Bonds initially shall be issued and delivered insuch manner that no physical distribution of the Bonds will be made to the public, and theDepository Trust Company ("DTC"), New York, New York, initially will act as depository for theBonds. DTC has represented that it is a limited purpose trust company incorporated under the lawsof the State of New York, a member of the Federal Reserve System, a "clearing corporation" withinthe meaning of the New York Uniform Commercial Code, and a "clearing agency" registered underSection 17A of the federal Securities Exchange Act of 1934, as amended, and the Issuer accepts, butin no way verifies, such representations. The Initial Bond authorized by this Resolution shall bedelivered to and registered in the name of the Purchaser. However, it is a condition of delivery andsale that the Purchaser, immediately after such delivery, shall cause the Paying Agent/Registrar, asprovided for in this Resolution, to cancel said Initial Bond and deliver in exchange therefor asubstitute Bond for each maturity of such Initial Bond, with each such substitute Bond to beregistered in the name of CEDE & CO., the nominee of DTC, and it shall be the duty of the PayingAgent/Registrar to take such action. It is expected that DTC will hold the Bonds on behalf of thePurchaser and/or the DTC Participants, as defined and described in the Official Statement referredto and approved in Section 33 hereof (the "DTC Participants"). So long as each Bond is registeredin the name of CEDE & CO., the Paying Agent/Registrar shall treat and deal with DTC in allrespects the same as if it were the actual and beneficial owner thereof. It is expected that DTC willmaintain a book entry system which will identify beneficial ownership of the Bonds by DTCParticipants in integral amounts of $5,000, with transfers of ownership being effected on the recordsof DTC and the DTC Participants pursuant to rules and regulations established by them, and that thesubstitute Bonds initially deposited with DTC shall be immobilized and not be further exchangedfor substitute Bonds except as hereinafter provided. The Issuer is not responsible or liable for anyfunctions of DTC, will not be responsible for paying any fees or charges with respect to its services,will not be responsible or liable for maintaining, supervising, or reviewing the records of DTC orthe DTC Participants, or protecting any interests or rights of the beneficial owners of the Bonds. It shall be the duty of the Purchaser and the DTC Participants to make all arrangements with DTCto establish this book-entry system, the beneficial ownership of the Bonds, and the method of payingthe fees and charges of DTC. The Issuer does not represent, nor does it in any way covenant thatthe initial book-entry system established with DTC will be maintained in the future. The Issuerreserves the right and option at any time in the future, in its sole discretion, to terminate the DTC(CEDE & CO.) book-entry only registration requirement described above, and to permit the Bonds

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to be registered in the name of any owner. If the Issuer exercises its right and option to terminatesuch requirement, it shall give written notice of such termination to the Paying Agent/ Registrar andto DTC, and thereafter the Paying Agent/Registrar shall, upon presentation and proper request,register any Bond in any name as provided for in this Resolution. Notwithstanding the initialestablishment of the foregoing book-entry system with DTC, if for any reason any of the originallydelivered substitute Bonds is duly filed with the Paying Agent/Registrar with proper request fortransfer and substitution, as provided for in this Resolution, substitute Bonds will be duly deliveredas provided in this Resolution, and there will be no assurance or representation that any book-entrysystem will be maintained for such Bonds.

Section 36. CONTINUING DISCLOSURE UNDERTAKING.

(a) Annual Reports.

The Issuer shall provide or cause to be provided annually to the MSRB, (1) within sixmonths after the end of each fiscal year ending in or after 2020, financial information and operatingdata of the general type included in the final Official Statement authorized by Section 33 of thisResolution, (i) with respect to the Issuer, in table number 1, and (ii) with respect to each SignificantObligated Persons in tables numbered 2 through 5 and (2) when and if available, audited financialstatements of each Significant Obligated Person. Any financial statements so to be provided shallbe prepared in accordance with generally accepted accounting principles or such other accountingprinciples as any such Significant Obligated Person may be required to employ from time to timepursuant to state law or regulation. If the audit of such financial statements of a SignificantObligated Person is not complete within 12 months after the respective fiscal year end, then theIssuer shall provide or cause to be provided by each Significant Obligated Person unauditedfinancial statements within such 12-month period and audited financial statements when and if theaudit report on such statements become available

If any such Significant Obligated Person changes its fiscal year, the Issuer will notify orcause the Significant Obligated Person to notify the MSRB of the change (and of the date of the newfiscal year end) prior to the next date by which any such Significant Obligated Person otherwisewould be required to provide financial information and operating data pursuant to this Section.

The financial information and operating date to be provided pursuant to this Section may beset forth in full in one or more documents or may be included by specific reference to any document(including an official statement or other offering document, if it is available from the MSRB) thattheretofore has been provided to the MSRB or filed with the SEC

(b) Event Notices.

The Issuer shall notify, or cause a Significant Obligated Person to notify, the MSRB, in atimely manner, of any of the following events with respect to the Bonds, not in excess of tenBusiness Days after occurrence of the event:

1. Principal and interest payment delinquencies;

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2. Non-payment related defaults, if material;

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, the issuance by the Internal Revenue Service ofproposed or final determinations of taxability, Notices of Proposed Issue (IRS Form5701-TEB) or other material notices or determinations with respect to the tax status of thesecurity, or other material events affecting the tax status of the security;

7. Modifications to the rights of security holders, if material;

8. Bond calls, if material, and tender offers;

9. Defeasances;

10. Release, substitution or sale of property securing repayment of the securities,if material;

11. Rating changes;

12. Bankruptcy, insolvency, receivership or similar event of the Issuer or aSignificant Obligated Person;

13. The consummation of a merger, consolidation, or acquisition involving theIssuer or a Significant Obligated Person or the sale of all or substantially all of the assets ofthe Issuer or a Significant Obligated Person, other than in the ordinary course of business,the entry into a definitive agreement to undertake such an action or the termination of adefinitive agreement relating to any such actions, other than pursuant to its terms, if material;and

14. Appointment of a successor or additional trustee or the change of name of atrustee, if material.

15. Incurrence of a Financial Obligation of the Issuer or a Significant ObligatedPerson, if material, or agreement to covenants, events of default, remedies, priority rights,or other similar terms of a Financial Obligation of the Issuer or a Significant ObligatedPerson, any of which affect security holders, if material; and

16. Default, event of acceleration, termination event, modification of terms, orother similar events under the terms of a Financial Obligation of the Issuer or a SignificantObligated Person, any of which reflect financial difficulties.

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For these purposes, (a) any event described in the immediately preceding paragraph(12) is considered to occur when any of the following occur: the appointment of a receiver,fiscal agent, or similar officer for the Issuer or a Significant Obligated Person in aproceeding under the United States Bankruptcy Code or in any other proceeding under stateor federal law in which a court or governmental authority has assumed jurisdiction oversubstantially all of the assets or business of the Issuer, or if such jurisdiction has beenassumed by leaving the existing governing body and officials or officers of the Issuer or aSignificant Obligated Person in possession but subject to the supervision and orders of acourt or governmental authority, or the entry of an order confirming a plan of reorganization,arrangement, or liquidation by a court or governmental authority having supervision orjurisdiction over substantially all of the assets or business of the Issuer or a SignificantObligated Person; (b) as used in clauses 14 and 15 above, the term "Financial Obligation"means: (i) a debt obligation; (ii) a derivative instrument entered into in connection with, orpledged as security or a source of payment for, an existing or planned debt obligation; or (iii)a guarantee of (i) or (ii). The term Financial Obligation shall not include MunicipalSecurities as to which a final official statement has been provided to the MSRB consistentwith the Rule; the term "Municipal Securities" means securities which are direct obligationsof, or obligations guaranteed as to principal or interest by, a state or any political subdivisionthereof, or any agency or instrumentality of a state or any political subdivision thereof, orany municipal corporate instrumentality of one or more states and any other MunicipalSecurities described by Section 3(a)(29) of the Securities Exchange Act of 1934, as the samemay be amended from time to time.

The Issuer shall notify or cause the appropriate Significant Obligated Person to notify, in anelectronic format as prescribed by the MSRB, the MSRB, in a timely manner, of any failure by theIssuer or any such Significant Obligated Person to provide financial information or operating datain accordance with Section 36(a) of this Resolution by the time required by such Section.

(c) Limitations, Disclaimers, and Amendments.

The Issuer shall be obligated to observe and perform or cause a Significant Obligated Personto observe and perform the covenants specified in this Section for so long as, but only for so longas, such Significant Obligated persons remains a "Significant Obligated Person" with respect to theBonds, except that the Issuer in any event will give notice of any deposit made in accordance withSection 26 hereof that causes Bonds no longer to be Outstanding.

The provisions of this Section are for the sole benefit of the Holders and beneficial ownersof the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal orequitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to provideor cause to be provided only the financial information, operating data, financial statements, andnotices which it has expressly agreed to provide pursuant to this Section and does not herebyundertake to provide or cause to be provided any other information that may be relevant or materialto a complete presentation of the Issuer's or any Significant Obligated Person's financial results,condition or prospects or hereby undertake to update any information provided in accordance with

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this Section or otherwise, except as expressly provided herein. The Issuer does not make anyrepresentation or warranty concerning such information or its usefulness to a decision to invest inor sell Bonds at any future date.

UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE HOLDEROR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT ORTORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BYTHE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANYCOVENANT SPECIFIED IN THIS SECTION, BUT VERY RIGHT AND REMEDY OF ANYSUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACHSHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIED PERFORMANCE.

No default by the Issuer in observing or performing its obligations under this Section shallcomprise a breach of or default under this Resolution for purposes of any other provision of thisResolution.

Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit theduties of the Issuer under federal and state securities laws.

The provisions of this Section may be changed prior to delivery of the Bonds in order toconform to the requirements of any amendments to the Rule which become applicable to the Bondsprior to the delivery thereof to the purchaser. Any such changes shall be approved by theAuthorized Officer as evidenced by the Approval Certificate.

The provisions of this Section may be amended by the Issuer from time to time after issuanceof the Bonds to adapt to changed circumstances that arise from a change in legal requirements, achange in law, or a change in the identify, nature, status, or type of operations of the Issuer or anySignificant Obligated Person, but only if (1) the provisions of this Section, as so amended, wouldhave permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds incompliance with the Rule, taking into account any amendments or interpretations of the Rule sincesuch offering as well s such changed circumstances and (2) either (a) the Holders of a majority inaggregate principal amount (or any greater amount required by any other provision of thisResolution that authorizes such an amendment) of the outstanding Bonds consent to suchamendment or (b) a Person that is unaffiliated with the Issuer (such as nationally recognized bondcounsel) determined that such amendment will not materially impair the interest of the Holders andbeneficial owners of the Bonds. If the Issuer so amends the provisions of this Section, it shallinclude with any amended financial information or operating data next provided in accordance withSubsection (a) hereof an explanation, in narrative form, of the reason for the amendment and of theimpact of any change in the type of financial information or operating data so provided. The Issuermay also amend or repeal the provisions of this continuing disclosure agreement if the SEC amendsor repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment thatsuch provisions of the Rule are invalid, but only if and to the extent that the provisions of thissentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primaryoffering of the Bonds.

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(d) Definitions.

As used in this Section, the following terms have the meanings ascribed to such terms below:

"MSRB" means the Municipal Securities Rulemaking Board.

"Rule" means SEC Rule 15c2-12, as amended from time to time.

"SEC" means the United States Securities and Exchange Commission and any successor toits duties.

"Significant Obligated Person" means, at any point in time, any Participant, AdditionalParticipant, or other party contracting with the Issuer, in any case whose payments to the Issuer forthe use of or service from the System in the calendar year preceding any such determination,exceeded 10% of the Gross Revenues of the System.

Section 37. ATTORNEY GENERAL FEES. The Issuer hereby authorizes and directspayment, from legally available funds of the Issuer, of the nonrefundable examination fee of theAttorney General of the State of Texas required by Section 1202.004, Texas Government Code, asamended.

Section 38. REPEAL OF CONFLICTING RESOLUTIONS. All resolutions and all partsof any resolutions which are in conflict or inconsistent with this Resolution are hereby repealed andshall be of no further force or effect to the extent of such conflict or inconsistency.

Section 39. SECURITY INTEREST. Chapter 1208, Government Code, applies to theissuance of the Bonds and the pledge of the Pledged Revenues granted by the Issuer under Section9 of this Resolution, and is therefore valid, effective, and perfected. If Texas law is amended at anytime while the Bonds are outstanding and unpaid such that the pledge of the Pledged Revenuesgranted by the Issuer under Section 9 of this Resolution is to be subject to the filing requirementsof Chapter 9, Business & Commerce Code, then in order to preserve to the registered owners of theBonds the perfection of the security interest in said pledge, the Issuer agrees to take such measuresas it determines are reasonable and necessary under Texas law to comply with the applicableprovisions of Chapter 9, Business & Commerce Code and enable a filing to perfect the securityinterest in said pledge to occur.

Section 40. EFFECTIVENESS. This Resolution shall be effective from and after the dateof adoption thereof by the Issuer.

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EXHIBIT "A"

WRITTEN PROCEDURES RELATING TO CONTINUINGCOMPLIANCE WITH FEDERAL TAX COVENANTS

A. Arbitrage. With respect to the investment and expenditure of the proceeds of theBonds and any Additional Bonds (the "Obligations") the Issuer's Executive Director and AssistantDirector - Finance (the "Responsible Persons") will :

For Obligations issued for newly acquired property or constructed property:

· instruct the appropriate person or persons that the construction, renovation oracquisition of the facilities must proceed with due diligence and that bindingcontracts for the expenditure of at least 5%of the proceeds of the Obligations will beentered into within 6 months of the date of delivery of the Obligations (the "IssueDate");

· monitor that at least 85% of the proceeds of the Obligations to be used for theconstruction, renovation or acquisition of any facilities are expended within 3 yearsof the Issue Date;

· restrict the yield of the investments (other than those in the Reserve Fund) to theyield on the Obligations after 3 years of the Issue Date;

· monitor all amounts deposited into a sinking fund or funds, e.g., the Interest andRedemption Fund and the Reserve Fund, to assure that the maximum amountinvested at a yield higher than the yield on the Obligations does not exceed anamount equal to the debt service on the Obligations in the succeeding 12 monthperiod plus a carryover amount equal to one-twelfth of the principal and interestpayable on the Obligations for the immediately preceding 12-month period;

· assure that no more than 50% of the proceeds of the Obligations are invested in aninvestment with a guaranteed yield for 4 years or more;

· assure that the maximum amount of the Reserve Fund invested at a yield higher thanthe yield on the Obligations will not exceed the lesser of (1) 10% of the originalprincipal amount of the Obligations, (2) 125% of the average annual debt service onthe Obligations measured as of the Issue Date, or (3) 100% of the maximum annualdebt service on the Obligations as of the Issue Date;

For Obligations issued for refunding purposes:

· monitor the actions of the escrow agent (to the extent an escrow is funded withproceeds) to assure compliance with the applicable provisions of the escrowagreement, including with respect to reinvestment of cash balances;

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For all Obligations:

· maintain any official action of the Issuer (such as a reimbursement resolution) statingits intent to reimburse itself or the City with the proceeds of the Obligations anyamount expended prior to the Issue Date for the acquisition, renovation orconstruction of the facilities;

· assure that the applicable information return (e.g., IRS Form 8038-G, 8038-GC, orany successor forms) is timely filed with the IRS;

· assure that, unless excepted from rebate and yield restriction under section 148(f) ofthe Code, excess investment earnings are computed and paid to the U.S. governmentat such time and in such manner as directed by the IRS (i) at least every 5 years afterthe Issue Date and (ii) within 30 days after the date the Obligations are retired.

B. Private Business Use. With respect to the use of the facilities financed or refinancedwith the proceeds of the Obligations the Responsible Persons will:

· monitor the date on which the facilities are substantially complete and available tobe used for the purpose intended;

· monitor whether, at any time the Obligations are outstanding, any person, other thanthe Issuer or the City, the employees of the Issuer or the City, the agents of the Issueror the City or members of the general public has any contractual right (such as alease, purchase, management or other service agreement) with respect to any portionof the facilities;

· monitor whether, at any time the Obligations are outstanding, any person, other thanthe Issuer or the City, the employees of the Issuer or the City, the agents of the Issueror the City or members of the general public has a right to use the output of thefacilities (e.g., water, gas, electricity);

· monitor whether, at any time the Obligations are outstanding, any person, other thanthe Issuer or the City, the employees of the Issuer or the City, the agents of the Issueror the City or members of the general public has a right to use the facilities toconduct or to direct the conduct of research;

· determine whether, at any time the Obligations are outstanding, any person, otherthan the Issuer or the City, has a naming right for the facilities or any othercontractual right granting an intangible benefit;

· determine whether, at any time the Obligations are outstanding, the facilities are soldor otherwise disposed of; and

· take such action as is necessary to remediate any failure to maintain compliance withthe covenants contained in the resolution authorizing the Obligations.

43

C. Record Retention. The Responsible Persons will maintain or cause to be maintainedall records relating to the investment and expenditure of the proceeds of the Obligations and the useof the facilities financed or refinanced thereby for a period ending three (3) years after the completeextinguishment of the Obligations. If any portion of the Obligations is refunded with the proceedsof another series of tax-exempt obligations, such records shall be maintained until the three (3) yearsafter the refunding obligations are completely extinguished. Such records can be maintained inpaper or electronic format.

D. Responsible Persons. Each Responsible Person shall receive appropriate trainingregarding the Issuer's accounting system, contract intake system, facilities management and othersystems necessary to track the investment and expenditure of the proceeds and the use of thefacilities financed with the proceeds of the Obligations. The foregoing notwithstanding, theResponsible Persons are authorized and instructed to retain such experienced advisors and agentsas may be necessary to carry out the purposes of these instructions.

B-1



APPOINTMENT OF AUDITORS FOR FY 2020

ACTION (What)

Authorize contract with Crowe, LLP, for external audit services.

PURPOSE (Why)

State law requires an independent annual audit. For the past 13 years, the District has received audit services from Weaver Tidwell. Best practices recommend a periodic change in audit firms to receive a new independent review of accounting practices and accounts.

RECOMMENDATION

The Finance/Audit Committee met on April 8, 2020, for discussions with NTMWD staff, and the Committee voted unanimously to recommend to the Board of Directors appointment of Crowe, LLP, for audit services for a five-year period starting in FY 2020 and subject to review for renewal annually. Contractor: Crowe, LLP Scope: Annual Audit Services Project: N/A Amount: $634,250 for the 5-Year Agreement Subject to Annual Renewal




BACKGROUND

• In March 2020, the NTMWD staff received proposals from eight CPA firms for external audit

services for a period of (5) five consecutive years subject to annual review.


• Staff ranked the proposals received and conducted interviews with three firms on April 1,2020. • After interviews were conducted, it was determined that Crowe, LLP, was the selected firm. • Appointment is subject to annual review and satisfactory negotiation of terms, including price,

acceptable to both NTMWD and the selected firm and is contingent upon Board approval. • Crowe references received from City of University Park, City of Richardson, and NTTA,

included the following statements: o “The firm has always been very responsive to Committee requests for updates and

presentations.” o “We must have the annual audit issued six months after fiscal year-end and we have not

missed that deadline.” o “Crowe has been an excellent firm for the City over the last five years, with strong,

knowledgeable staff and timely results.” o “Partners and senior managers have strong communication skills and can laymanize

complex topics.” o “Staffing provided from the auditors has been adequate for each part of the audit process

– if a team member leaves (new position elsewhere, illness, etc.), another team member quickly steps in to complete all work on time.”

• Other entities that Crowe currently has engagements with include:

Municipal City of Arlington; City of Dallas; City of Plano; City of Richardson; City of San Antonio; Dallas County

Special Districts DART; DFW Airport; Houston Metro Transportation Authority; NTTA; The Navajo Nation

State California State Teachers Retirement System; State of Illinois - various agencies; Texas Department of Transportation

Higher Education University of Arkansas for Medical Sciences; Southern Illinois University

School Districts Dallas Independent School District; Houston Independent School District

• The agreed upon fees, per the five-year proposal are as follows:

Year Quote 2020 $119,500 2021 $122,500 2022 $126,000 2023 $132,250 2024 $134,000 Total $634,250

• Based on discussions with staff on April 8, 2020, the Finance/Audit Committee recommends

the appointment of Crowe, LLP, for audit services for FY 2020.

NORTH TEXAS MUNICIPAL WATER DISTRICT APRIL 2020 ADMINISTRATIVE MEMORANDUM NO. 5550

REGIONAL WATER SYSTEM WYLIE WATER TREATMENT PLANT COMPLEX

WATER TREATMENT RESIDUALS REMOVAL AND DISPOSAL

FINAL SETTLEMENT AGREEMENT WITH SERVICE PROVIDER

ACTION (What)

Authorize final settlement agreement with service provider.

PURPOSE (Why) A proposed final settlement will be discussed with the Board of Directors at their regular meeting on April 23, 2020. NTMWD staff and Saunders Walsh & Beard recommend the Board authorizing final settlement agreement, which would result in a final resolution of outstanding matters.

RECOMMENDATION

A recommendation regarding a final settlement agreement will be presented to the Board of Directors for consideration at the April 23, 2020, Board of Directors meeting. Scope: Proposed final settlement agreement with Denali Water Solutions Project: Wylie Water Treatment Plant Water Treatment Residuals Removal and Disposal




BACKGROUND

• Denali Water Solutions (Denali) was awarded an initial contract in 2015 for the removal and

disposal of water treatment residuals (Residuals) generated during the treatment process from the four potable water treatment plants at the Wylie Water Treatment Plant Complex. The contract for removal and disposal was renewed annually four times after the initial year. The initial contract allowed for a total of five contract extensions and the fifth extension has not been executed.


• Funding for the annual removal and disposal of Residuals has been budgeted in the annual operating budget in recent years.

• During the summer of 2019, reports of inappropriate billing practices by Denali were received by NTMWD representatives. Staff began making inquiries into the allegations and engaged with senior Denali leadership. During the inquiries, NTMWD staff in conjunction with Denali senior leadership determined that local Denali employees had been falsifying contract billings and that NTMWD had overpaid for some removal and disposal services.

• After finding that overbilling took place by some employees, Denali senior leadership engaged a forensic auditor, Kroll Associates, Inc. (Kroll), to attempt to quantity the amount of fraud that took place. Upon request, NTMWD staff has been given access by Denali senior leadership to documents and documentation used by Kroll to evaluate the degree of fraud that took place as well as Kroll’s findings. Multiple meetings between NTMWD counsel and staff, Denali senior leadership, and Kroll have taken place over the ensuing months to discuss Kroll’s findings.

• NTMWD counsel and staff also engaged the Wylie Police Department (PD) and reported possible theft of NTMWD funds. Staff initially provided all the information that had been gathered and the Police opened an investigation. Wylie PD has reported that Denali senior leadership has been fully cooperating with the Police on the investigation and have provided Kroll’s findings along with contact information for ex-Denali employees who worked on the contract. The investigation is ongoing.

• NTMWD counsel and staff have been meeting throughout the internal investigation period with Denali senior leadership to discuss the amount of over-payment and to negotiate a resolution to the over-payment. The ongoing negotiations have resulted in a proposed settlement agreement that is being presented to the Board of Directors for approval. If approved by the Board of Directors, the proposed settlement agreement would generally result in a cash payment to NTMWD within thirty (30) days of a signed agreement in exchange for NTMWD’s release of all remaining claims against Denali and confidentiality, to the extent permitted by law. If approved, the settlement agreement would result in a final resolution of all claims and disputes between NTMWD and Denali which arise out of the Residuals contract.



REGIONAL WATER SYSTEM BOIS D’ARC LAKE RAW WATER PIPELINE

PROJECT NO. 101-0424-16 AND

TREATED WATER PIPELINE FROM LEONARD WATER TREATMENT PLANT TO MCKINNEY NO.4

PROJECT NO. 101-0425-16

AMENDMENT NO. 11 TO CONSTRUCTION MANAGER AT-RISK AGREEMENT

ACTION (What) Authorize an amendment to the Construction Manager At-Risk Agreement (CMAR) with Garney Companies, Inc., to credit the NTMWD for decreased scope of some work packages related to the Bois d’Arc Lake (BDL) Raw Water Pipeline (RWPL) and additional construction services for installation of the large diameter pipe and the cathodic protection system for the Treated Water Pipeline from the Leonard Water Treatment Plant to McKinney No. 4.

PURPOSE (Why)

This action takes a credit for decreased scope for some the work packages for the BDL RWPL. The action also will provide funding for the installation of large diameter pipe and a cathodic protection system. The cathodic protection system extends the service life of the treated water pipe by protecting it from corrosion either from the surrounding soil or from any stray currents.

RECOMMENDATION

The Executive Director, NTMWD staff and Freese and Nichols, Inc., (FNI) recommend the Board of Directors authorize the Executive Director to execute Amendment No. 11 to the Construction Manager At-Risk (CMAR) agreement, for Partial Guaranteed Maximum Price (GMP) No. 8 as follows: 1) Decrease the Bois d’Arc Lake RWPL by $4,823,672.39 due to a reduction in work package scope; and 2) Additional funding of $49,309,074.72 for installation of large diameter water pipeline and the cathodic protection system for the Treated Water Pipeline from Leonard Water Treatment Plant to McKinney No. 4.


CMAR: Garney Companies, Inc. (Garney) Scope: Construction services and construction funding Project: No. 101-0424-16, Bois d’Arc Lake Raw Water Pipeline

No. 101-0425-16, Treated Water Pipeline from Leonard Water Treatment Plant to McKinney No. 4

Amount: $44,485,402.33 This will be an item on the April 21, 2020, Water Committee meeting agenda.


☐ Regulatory Compliance ☒ Capacity ☐ Relocation or External Requests ☐ Safety

☐ Asset Condition ☐ Redundancy/Resiliency ☐ Operational Efficiency

PROJECT PURPOSE • Provide raw water transmission from Bois d’Arc Lake (BDL) to the terminal storage reservoir

on the Leonard Water Treatment Plant (WTP) site. • The raw water pipeline consists of approximately 35 miles of 90-inch diameter pipe and is

divided into three sections (Sections A, B and C). • Provide treated water transmission from the High Service Pump Station (HSPS) on the

Leonard Water Treatment Plant (WTP) site and connecting to NTMWD’s existing North Transmission System by Spring of 2022.

• The treated water pipeline will consist of a total of approximately 122,500 linear feet (LF) (23 miles) of 84-inch diameter pipe and will be divided into two segments (Sections D and E)

o Section D will be a 72,300 LF segment that connects the Leonard WTP HSPS to Section E, generally located at Collin County Road (CR) 500.

o Section E will be a 50,200 LF segment connecting from CR 500 to the existing NTMWD North McKinney Pipeline Phase III, generally located at the intersection of State Highway 5 and Laud Howell Parkway on the northeast side of McKinney.

PROJECT COMPONENTS • Construct approximately 35 miles of 90-inch diameter raw water pipeline, isolation valves and

other associated appurtenances as required. • Includes roadway, railway, utility, and creek crossings • Connections to the BDL Raw Water Pump Station (RWPS) discharge piping and the terminal

storage reservoir at the Leonard WTP site. • Approximately 122,500 LF of 84-inch diameter treated water pipeline, isolation valves and

associated appurtenances as required. • Includes roadway, railway, utility and creek crossings. • Connections to the Leonard WTP HSPS, connections of Segments D and E in the vicinity of

CR 500 and to the North McKinney Pipeline Phase III.


SCHEDULE • Authorization of Work Package (WP) Nos. 7.01 and 7.03 for large diameter pipeline

installation and cathodic protection system installation for the Treated Water Pipeline from the Leonard WTP to McKinney No. 4 (TWPL) is being requested at this time per the overall schedule associated with startup and commissioning of the treated water portion of the BDL system as follows: o April/May 2020 – Start TWPL construction with right-of-way (ROW) preparation and

tunnels o Mid-June 2020 – Begin pipe delivery and mobilization by the installation contractors o July/August 2020 – Commence TWPL installation o Fall 2021 – Complete pipe installation o Winter 2021 – Complete hydrostatic pressure testing of the treated water pipeline and

startup and commissioning of the Leonard WTP High Service Pump Station. o Spring of 2022 – Treated water pipeline placed in service

AMENDMENT NO. 11- ADDITIONAL CMAR SERVICES BDL Raw Water Pipeline • The CMAR obtained bid/proposals from pipe suppliers for large diameter steel pipe based on

60% complete plans. With the BDL RWPL plans now 100% complete, the project team has identified the changes between the 60% and 100% plans and recommends a decrease in the scope for the pipe material, which results in a credit to NTMWD for Work Package 1.01 in the amount of $3,008,933.64.

• The CMAR obtained bids/proposals from raw water pipeline installation contractors based on plans that had a number of places with obscured topography. The CMAR included allowances in the GMP to provide funding for locations where the actual ground conditions were substantially different once obscured areas were surveyed on the ground. The geotechnical information also was incomplete at the time CMAR received installation proposals due to wet conditions and property right of entry challenges. The CMAR included allowances in the GMP to provide funding for locations where the subsurface conditions were substantially different once the geotechnical investigation was complete. The topographic survey and the geotechnical investigation for BDL RWPL plans are now complete, and the project team has identified changes caused by obscured topography or incomplete geotechnical information and recommends a decrease of $1,316,235.00 for the reduced scope and decrease in bid quantities for WP 3.01.

• Design Progression is a time saving measure used by the project team (CMAR, Engineer and NTMWD staff) to ensure the project remains on schedule. The CMAR obtained bids/proposals from suppliers and installers based on 60% complete plans. With the BDL RWPL plans now 100% complete, the project team has identified the changes between the 60% and 100% plans and recommends a decrease in scope resulting in a credit for the unused Design Progression Allowance in the project of $135,000.00.

Treated Water Pipeline from Leonard WTP to McKinney No. 4 • Approval of these work packages authorizes the CMAR to award contracts for: 1) large

diameter pipeline installation for Sections D and E; 2) installation of an impressed current cathodic protection system to protect the BDL TWPL; and 3) allowances for materials testing, welding inspection, special permit conditions, special easement and easement restoration conditions, design progression for tunnel installation, and utility relocation and coordination. NTMWD staff will bring award of Work Package (WP) 7.02, fiber optic conduit and cable, and maintenance and repair of Collin County Roads to the Board for authorization in May 2020.


• Garney’s CMAR team received proposals from three installation contractors for WP 7.01, Large Diameter Pipe Installation; and two proposals from contractors for WP 7.03, Cathodic Protection System.

• Garney’s Construction team submitted a proposal and as such, the proposals for WP 7.01, Large Diameter Pipe Installation were evaluated and scored by NTMWD and FNI using criteria published in the bidding documents. The proposer that represented the best value for NTMWD was selected and recommended for award, which in this case was also the proposer with the lowest cost.

• In a similar manner, NTMWD and CMAR evaluated and scored the proposals for WP 7.03, cathodic protection system, using criteria published in the bidding documents. The evaluation team selected and recommended award to the proposer that represented the best value for NTMWD, which in this case was also the proposer with the lowest cost.

• Award of the Partial Guaranteed Maximum Price – GMP No. 8 for Work Packages No. 7.01 and 7.03 and Allowances included in this Amendment No. 11 is $49,309,074.72.

To determine the Partial Guaranteed Maximum Price No. 8, the tables below summarize the cost of all of the Work Packages, General Conditions, CMAR Contingency and CMAR Construction Services Fee (CMAR Fee) established in accordance with the CMAR agreement.

Scope of Work Description – BDL Raw Water Pipeline (RWPL) and Treated Water Pipeline (TWPL) from Leonard WTP to McKinney No. 4

Description Scope of Work Lump Sum Amount

RWPL Work Package (WP) 1.01- Material Purchase Packages Selection of Large Diameter Pipe (decrease) $(3,008,933.64)

RWPL Work Package (WP) 3.01- Large Diameter Pipe Installation (decrease) $(1,316,235.00)

RWPL Design Progression Allowance (decrease) $(135,000.00)

TWPL Work Package (WP) 07.01- Large Diameter Pipe Installation $42,026,950.00

TWPL WP 07.03- Cathodic Protection System $821,776.74

TWPL Allowance per Partial GMP No. 8 - Materials Testing, Certified Welding Inspection, Special Permit Conditions, Utility Relocations and Coordination, Tunnel Design Progression Allowance, and Special Easement and Easement Restoration Conditions

$2,744,500.00

Total Construction Cost (including allowances) $41,133,058.10 General Conditions @ 5.0% of Total Construction Cost (which include subcontract costs, self-performed work, materials and equipment costs and allowances)

$2,056,652.90

Total Cost of Work $43,189,711.00


CMAR Fees – CMAR Fees – RWPL & TWPL

Description Lump Sum Cost

Contingency (@ 1% of Total Cost of Work) $431,897.11 CMAR Construction Services Fee (@ 2% of Total Cost of Work) $863,794.22

Total CMAR Fees $1,295,691.33 Partial Guaranteed Maximum Price for GMP No.8 - Amendment No. 11 - BDL Raw Water Pipeline & BDL Treated Water Pipeline from Leonard WTP to McKinney No. 4 (Sum of Total Cost of Work and CMAR Fees) – Current Requested Amount

$44,485,402.33

The NTMWD Staff has briefed the Board on the total estimated construction program cost (Program Cost) of $1.59 billion. The Partial GMP No. 8 of $44,485,402.33 included in this administrative memorandum is a component of the total CMAR 5 estimated cost of $299,675,717.00 included in the Program Cost. The total amount of the project components authorized by the Board to date remains within the Program Cost of 1.59 billion. The Total Contract Price Summary for CMAR 5 is included in Attachment A. Attachment B includes the CMAR Contract Amendments Summary.

FUNDING

FUND(S): Funding in the amount of $44,485,402.33 is to be made available in the Regional Water System SWIFT Construction Funds contingent upon Texas Water Development Board approval of the contract and release of funding.


ATTACHMENT A

TOTAL CONTRACT PRICE SUMMARY The total contract price includes a summary of all construction costs, which is the sum of all construction work

(including materials), applicable pre-negotiated preconstruction and procurement services fees, general conditions, contingency, and CMAR construction services fee.

Total Contract Price- CMAR 5

TOTAL BDL RWPL PRJ No.101-0424-16

BDL TWPL ** PRJ No.101-0425-16

Preconstruction Services Fee $1,565,000.00 $813,800.00 $751,200.00

Additional Preconstruction Services $210,000.00 $150,000.00

$60,000.00

Procurement Services Fee

$250,000.00

$130,000.00 $120,000.00

Partial GMP No. 1 $88,171,760.50 $88,171,760.50

N/A

Partial GMP No. 2 $8,867,912.55 $8,867,912.55

N/A

Partial GMP No. 3 $77,539,015.27 $77,539,015.27

N/A

Partial GMP-No. 4 $42,299,445.92 N/A $42,299,445.92

Partial GMP No. 5 $3,092,819.32 $3,092,819.32

N/A

Partial GMP No. 6 $12,497,504.17 $(2,000,681.90) $14,498,186.07

Partial GMP No. 7 $14,996,101.29 N/A $14,996,101.29

Partial GMP No. 8 Current Request $44,485,402.33 $(4,823,672.39) $49,309,074.72

Total Contract Price $ 293,974,961.35

$171,940,953.35

$122,034,008.00

**The official title of Project No. 101-0425-16 is Treated Water Pipeline from Leonard Water Treatment Plant to McKinney No. 4. The table above shows a truncated version of this title.


ATTACHMENT B CONTRACT AMENDMENT SUMMARY

CMAR 5 Contract Price Summary Description Status Amount

Original Agreement - Preconstruction Services Fee Board approved $1,565,000.00 Amendment No. 1- (Texas Water Development Board language; no funding) Board approved $0.00 Amendment No. 2 - Additional Preconstruction Services to provide access to areas to facilitate geotechnical investigations

Board approved $210,000.00

Amendment No. 3 – Procurement Services Fee Board approved $250,000.00 Amendment No. 4 - Partial GMP No. 1 (Raw Water Material Purchase) Board approved $88,171,760.50

Amendment No. 5 - Partial GMP No. 2 (Raw Water Preparatory work) Board approved $8,867,912.55

Amendment No. 6 - Partial GMP No. 3 (Raw Water Pipeline Installation) Board approved $77,539,015.27

Amendment No. 7 - Partial GMP No. 4 (Treated Water Material Purchase) Board approved $42,299,445.92

Amendment No. 8 – Partial GMP No. 5 (Cathodic Protection System and Fiber Optic Conduit and Cable Installation for the Raw Water Pipeline)

Board approved $3,092,819.32

Amendment No. 9 - Partial GMP No. 6 (Raw Water Pipeline Credit for unused Design Progression Allowance funding / Additional funding for Treated Water Pipeline Preparatory Work, Tunneling and Large Diameter Valves)


Amendment No. 10 – Partial GMP No. 7 (East Fork Trinity River/DART Tunnel, ROW Clearing, Gate Valves and Air Release Valves)


Amendment No. 11 – Partial GMP No. 8 (Treated Water Pipeline Installation and Cathodic Protection System for the Treated Water Pipeline)

Current request $44,485,402.33

Amendment No. 12 – Final GMP Future request $2,528,496.38

CMAR 5 Current Contract Price (through Amendment No. 11) $293,974,961.35

CMAR 5 Current Estimated Contract Price (through Final GMP) $296,503,457.73

CMAR 5 Estimated Contract Price Included in the $1.59B Program Summary $299,675,717.00

Funding for the remainder of all CMAR services and Guaranteed Maximum Price will be presented to the Board for approval in future Board actions.

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Administrative Memorandum No. 5551


REGIONAL WATER SYSTEM WYLIE WATER TREATMENT PLANT IV

70 MGD EXPANSION TO 210 MGD PROJECT NO. 101-0387-15

INSPECTION SERVICES AGREEMENT

ADDITIONAL SERVICES

ACTION (What)

Authorize additional services for specialty inspection of electrical, instrumentation, and control and monitoring elements for the referenced project.

PURPOSE (Why) Additional inspection services are required to cover additional contract time extended to the contractor due to changes to the contract scope and extended contractor overtime associated with weather or operational conflict delays.

RECOMMENDATION

The Executive Director and NTMWD staff recommend the Board of Directors authorize additional services as follows: Consultant: Mbroh Engineering, Inc. Scope: Electrical and Instrumentation Inspection Services Project: No. 101-0387-15, Wylie Water Treatment Plant IV 70 MGD Expansion to

210 MGD Amount: $180,000 This will be an item on the April 21, 2020, Water Committee meeting agenda.


☐ Regulatory Compliance ☒ Capacity ☐ Relocation or External Requests ☐ Safety ☐ Policy

☐ Asset Condition ☐ Redundancy/Resiliency ☒ Operational Efficiency ☐ Administrative ☐ Other


PROJECT PURPOSE • Expand Wylie Water Treatment Plant IV from 140 million gallons per day (MGD) to 210 MGD. ADDITIONAL SERVICES • Mbroh has provided skilled electrical inspectors throughout construction to observe and

enforce the electrical and instrumentation work components. • CMAR Change Orders involving additional contract time have totaled 273 days to-date, with

69 days more pending recommendation. o Change Order No. 1 authorized 187 days – time related to evaluation of sub-surface

conditions, coordination between Engineer and CMAR, development of revised construction details, and extended construction effort when excavated subgrade conditions were found to be significantly different than reasonable design assumptions.

o Change Order Nos. 3 and 4, authorized 86 days – time related to changes to large valve configuration, side stream pump size change, air piping material change, large valves supports exposed piping thermal expansion loops, and changes to 24-inch Washwater piping.

o NTMWD staff is currently evaluating an additional proposed Change Order item, which includes a request for 69 associated contract days. All but 14 days of this request appear highly justifiable at this point.

• Periodically, weather events created wet or muddy conditions whereby trenching and other related duct bank and conduit installation were halted for extended periods. These periods were utilized by electrical inspectors to review submittals, change proposals, and other productive project-related review work. The contractors’ active construction delays must still be made up, requiring additional coverage by the inspectors.

• With the volume of ongoing intensive construction at the WTP, there are frequent work area conflicts due to contractor overlap with Water Operations work initiatives. These conflicts, while individually minor in nature, often create a collateral need for the contractor to work extended shifts and extra weekend days. It is recommended that an additional inspection coverage allotment to round out to approximately one man-year is a reasonable contingency.

• It is recommended that an additional 2,000 hours of contracted electrical inspection services are warranted to compensate for the services rendered beyond the initial authorization allowance.

INSPECTION SERVICES FEE

DESCRIPTION AMOUNT

Original Inspection Services Agreement – Administrative Memorandum No. 4860 $285,120

Prior Additional Services $0

Proposed Additional Services $180,000

Revised Agreement Amount $465,120

FUNDING FUND(S): Regional Water System 2016 Construction Fund


REGIONAL WATER SYSTEM KAUFMAN 20-INCH WATERLINE ASSESSMENT PHASE II

PROJECT NO. 101-0427-16

TABULATION OF BIDS AND AWARD OF CONTRACT

ACTION (What)

Execute a construction contract to replace seven localized pipeline segments on the Forney to Kaufman 20-inch Pipeline that were identified as having distressed segments during the Phase I pipeline condition assessment. The scope also includes installation of necessary access points to allow assessment of the remaining line.

PURPOSE (Why)

Seven locations have been identified as having distressed bar wrapped concrete cylinder pipe; six due to breaks in the bar wraps and pipe wall loss, and one due to an active leak. Proactive replacement of these potential trouble areas will greatly reduce the likelihood of service interruption and allow work to be conducted in a planned non-emergency mode.

RECOMMENDATION

The Executive Director, NTMWD staff and Kimley-Horn and Associates, Inc. recommend the Board of Directors authorize the award of a contract as follows:

Contractor: Mountain Cascade of Texas, LLC

Scope:

Project:

Amount:

Construction

No. 101-0427-16, Kaufman 20-inch Waterline Assessment Phase II

$1,215,500

This will be an item on the April 21, 2020, Water Committee meeting agenda.




☒ Asset Condition ☐ Redundancy/Resiliency ☐ Operational Efficiency ☐ Administrative ☐ Other ______________

BACKGROUND

PROJECT PURPOSE • The Kaufman 20-inch waterline was originally constructed in 1974, with an overall length of

79,000 linear feet (15 miles) of bar wrapped concrete cylinder pipe. It is the sole source of treated water supply for the City of Kaufman.

• Project No. 101-0427-16 Phase I, completed in April 2018, facilitated the replacement of combination air valves along the Kaufman 20-inch waterline to meet current NTMWD and Texas Commission on Environmental Quality (TCEQ) standards. In addition, Pure Technologies U.S., Inc. (Pure) inspected approximately 55,000 linear feet (10.4 miles) of the pipeline. Six pipe locations were identified as having damage and one location with a leak.

• Of the 1,656 pipe segment evaluated, 25 (1.5%) indicated the likely presence of at least one broken bar wrap. Of the total pipe segments evaluated, 16 (1%) show cylinder wall loss. Eight pipe segments were identified for needing immediate repair with either high number of broken bar wraps or the combination of both bar breaks and cylinder wall loss. Three of these pipe segments were in the same location. The pipe repairs are in six separate locations.

• The pipe assessment for leaks identified two active leaks; one of which NTMWD maintenance had repaired and the second of which requires full replacement included in this proposed construction contract.

• Administrative Memorandum No. 5407 approved in May 2019, authorized an Engineering Services Agreement to Kimley-Horn and Associates, Inc. to design the replacement of the damaged pipe segments. The services also included design of access and isolation to allow insertion of inspection tools for assessment of the remaining 20-inch pipeline.

PROJECT COMPONENTS • Replacement of 20-inch bar wrapped concrete cylinder pipe segments and fittings in seven

locations. • Installation of six access points with installation of gate valves for isolation. These locations

provide access for inspection tools in performing condition assessment of the remaining 24,000 linear feet (4.6 miles) of pipeline.


TABULATION OF BIDS

Sealed bids for construction of Phase II were received at 2:00 p.m. on Tuesday, March 24, 2020 as tabulated below:

Bidder Total Bid Recommendation

Mountain Cascade of Texas, LLC $1,215,500.00 Lowest responsible bid Recommended for Award

WillCo Underground, LLC $1,499,000.00

McKee Utility Contractors, Inc. $1,753,000.00

ENGINEER’S OPINION OF PROBABLE COST $1,250,000.00

LOWEST RESPONSIBLE BIDDER HISTORY Mountain Cascade of Texas, LLC, has successfully completed or is currently in construction on several similar projects for the NTMWD:

• Project No. 101-0467-17, South System Air Valve Improvements, Phase I (currently in construction)

• Project No. 101-0427-16, Kaufman 20-inch Waterline Assessment, Phase I (completed in 2018)

• Project No. 101-0266-11, 42-inch and 24-inch Water line Relocations along Stacy Road from State Highway 5 to Farm-to-Market Road (FM) 1378 (completed in 2015)

• Project No. 101-0283-12, 20-inch and 60-inch Water Line Relocations along Country Club Road and FM 2514 (completed in 2013)

Based on their standing as lowest responsible bidder, the information provided, reports by the supplied references, and history of successful project completions, the NTMWD staff and Kimley-Horn and Associates, Inc. recommend award of the contract to Mountain Cascade of Texas, LLC.

FUNDING FUND(S): Regional Water System 2019A Construction Fund

Helms T

rail

ROSE HILL SUD

TALTY WSC

GASTONIA SCURRY SUD

CITY OF CRANDALL

CITY OF FORNEYCITY OF TERRELL

HIGH POINT WSC

CITY OF KAUFMAN

HIGH POINT WSC

COMBINE WSC

NORTH KAUFMAN WSC

Kaufman

Forney No. 1

Forney No. 2

College Mound WSC

Gastonia- Scurry WSC

Rose Hill 1 Billing Meter Site

City ofTerrell

Kaufman 20" Water Line Assessment Phase II Project No. 101-0427-16

Administrative Memorandum No. 5553 Ü

Kaufman 20'' Waterline

Legend!( Delivery Point

Waterline

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FILING FOR A TEMPORARY WATER USE PERMIT REGARDING LAVON LAKE


ACTION (What)

Authorize the Executive Director to execute and prosecute an application for a temporary water use permit authorizing the overdraft of Lavon Lake for a three-year period.

PURPOSE (Why)

Due to delays in permitting and construction, Bois d’Arc Lake may not be available to address unmet water supply needs after 2021 when NTMWD projects a shortfall of water supplies. NTMWD has an existing Temporary Water Use Permit for the overdraft of Lavon Lake, but it expires July 3, 2021. Consequently, NTMWD needs an additional temporary water use permit to address water shortfalls between the time the current Temporary Water Use Permit terminates and Bois d’Arc Lake is operational.

RECOMMENDATION

The Executive Director, NTMWD staff, and Lloyd Gosselink Rochelle & Townsend, P.C., recommend that the Board of Directors adopt Resolution No. 20-17, A Resolution Authorizing Filing of a Temporary Water Use Permit Application, which authorizes the Executive Director to execute and prosecute an application for a temporary water use permit authorizing overdraft of Lavon Lake for a three-year period. This will be an item on the regular agenda of the April 2020 Board meeting. Contracting Parties: N/A Purpose: Ensure Adequate Raw Water Supply Project: N/A Amount: $0 This will be an item on the April 21, 2020, Water Committee meeting agenda.




☐ Asset Condition ☐ Redundancy/Resiliency ☐ Operational Efficiency ☐ Administrative ☐ Other ______________

BACKGROUND

NTMWD has pursued the development of Bois d’Arc Lake (formerly known as Lower Bois d’Arc Creek Reservoir) to address the projected shortfall of water supplies to serve its future and existing members and customers. Bois d’Arc Lake is needed on-line to address these shortfalls by 2022. Bois d’Arc Lake construction delays associated with weather conditions and unexpected scope increase in archeological work could likely result in supplies from Bois d’Arc Lake not being available until sometime after they are needed. NTMWD currently has a Temporary Water Use Permit to address the shortfall in water supplies it suffered over the past few years due to substantial growth in its service area, record drought over the last decade, unforeseen delays in new water supplies, and an inability to access all of its contractual water supplies. But, the current Temporary Water Use Permit will terminate on July 3, 2021 and cannot be renewed. This could result in NTMWD having insufficient supplies to meet the needs of its future and existing member cities and customers until Bois d’Arc Lake is operational. In order to address NTMWD’s need for additional water supplies to serve its existing and future member cities and customers, and in light of the uncertainties as to whether Bois d’Arc Lake will be available before the current Temporary Water Right Permit terminates, it is recommended that the Board authorize the Executive Director to execute and prosecute an application for a temporary water use permit to overdraft Lavon Lake for a three year period.

FUNDING FUND(S): None Required



A RESOLUTION AUTHORIZING THE FILING OF A TEMPORARY WATER USE PERMIT APPLICATION

WHEREAS, the North Texas Municipal Water District (the “District”) provides wholesale

treated water to member cities and customers in its service area covering all or parts of Collin, Dallas, Denton, Fannin, Grayson, Hopkins, Hunt, Kaufman, Rains, Rockwall, and Van Zandt Counties in North Central Texas; and,

WHEREAS, the District has a statutory obligation to plan and secure adequate water

supplies for existing and future member cities and customers; and, WHEREAS, due to sustained growth by the existing and future member cities and

customers of the District development of additional water supplies is necessary; and, WHEREAS, in order to address the need for additional water supplies the District has

pursued the development of Bois d’Arc Lake (formerly known as Lower Bois d'Arc Creek Reservoir); and,

WHEREAS, Bois d’Arc Lake is needed on-line to address the additional water supply

needs of the District by 2022; and, WHEREAS, the construction of Bois d’Arc Lake is currently delayed due to unforeseen

circumstances and may not be completed by 2022; and WHEREAS, the District currently has a Temporary Water Use Permit to address the

shortfall in water supplies it suffered over the past few years due to substantial growth in its service area, record drought over the last decade, unforeseen delays in new water supplies, and an inability to access all of its contractual water supplies; and

WHEREAS, the District’s current Temporary Water Use Permit will expire on July 3, 2021;

and WHEREAS, construction delays may cause Bois d’Arc Lake to not be complete and

operational before the Temporary Water Use Permit expires; and WHEREAS, in order to address the unmet water needs that may exist between the date

the Temporary Water Use Permit terminates and the date Bois d’Arc Lake is completed, the District proposes to file an application (the “Application”) with the Texas Commission on Environmental Quality (the “Commission”) to seek a temporary water use permit for three (3) years to divert and use water for municipal purposes by overdrafting the firm yield of Lavon Lake; and,

RESOLUTION NO. 20-17 PAGE 2

WHEREAS, 30 TAC § 295.14 of the Commission's Rules requires that an application for a water right be executed by a duly authorized official of the District. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE NORTH TEXAS MUNICIPAL WATER DISTRICT, THAT:

1. The Executive Director of the District is hereby authorized on behalf of the Board of Directors to execute the Application and any other applications or documents as are necessary for authorization to overdraft Lavon Lake while Bois d’Arc Lake is delayed in coming on-line to afford adequate supplies of water for the District's use in addressing the needs of its current and future member cities and customers; and,

2. The Executive Director of the District is hereby authorized and directed on behalf of the Board of Directors to file the Application and to appear and arrange for the appearances of persons representing the District at the hearings and other proceedings on the Application before the Commission, and otherwise direct the prosecution, settlement, and compromise of the Application on behalf of the Board of Directors, as appropriate.

THIS RESOLUTION ADOPTED BY THE NTMWD BOARD OF DIRECTORS IN A REGULAR MEETING ON APRIL 23, 2020 IN THE ADMINISTRATIVE OFFICES OF THE DISTRICT, WYLIE, TEXAS. _______________________________ ________________________________ DARRELL GROOMS, Secretary DON GORDON, President (SEAL)


PANTHER CREEK WASTEWATER TREATMENT PLANT SYSTEM

PANTHER CREEK WASTEWATER TREATMENT PLANT EXPANSION TO 15 MGD

PROJECT NO. 307-0493-18

ENGINEERING SERVICES AGREEMENT

ACTION (What)

Authorize an engineering services agreement for preliminary and final design of the Panther Creek Wastewater Treatment Plant (WWTP) Expansion to 15 million gallons per day (MGD) project.

PURPOSE (Why)

Coordination efforts with the City of Frisco identified the need to expand Panther Creek WWTP from the current 10 MGD to 15 MGD annual average daily flow (AADF) capacity to support the city’s growth and population projections. The design includes a preliminary engineering evaluation to recommend improvements to increase the peak flow capacity from 30 MGD to 52.5 MGD based on historic flows.

RECOMMENDATION

The Executive Director and NTMWD staff recommend the Board of Directors authorize the Executive Director to execute an engineering services agreement (ESA) as follows: Consultant: HDR Engineering, Inc. Scope: Preliminary and Final Engineering Design Project: No. 307-0493-18, Panther Creek WWTP Expansion to 15 MGD Amount: $5,364,255 This will be an item on the April 22, 2020, Wastewater Committee meeting agenda.





BACKGROUND

The Panther Creek Wastewater Treatment Plant serves a portion of the City of Frisco and was constructed in two phases in 2006 and 2009. The WWTP currently has a permitted discharge capacity of 10 MGD AADF and 30 MDG peak two-hour flow. Panther Creek WWTP is a typical activated sludge treatment plant with biological nutrient removal capability. Reuse water is provided to an on-site lift station operated by the City of Frisco.

PROJECT PURPOSE • Expand the annual average daily flow treatment capacity of the Panther Creek WWTP to 15

MGD due to population growth projections from the City of Frisco indicating an expansion to the wastewater treatment plant will be needed in order to treat the resulting increase in wastewater flows.

• Evaluate and recommend improvements to expand the peak two-hour flow capacity of the plant from 30 MGD to 52.5 MGD based on historic peaking factors observed at the plant and recommendations from the permitting assistance engineering evaluation.

• Expand the existing administration building to include additional functionality and provide a new storage/maintenance building with shared space with the City of Frisco.

• The planning level estimated construction cost is $62,500,000. PROJECT COMPONENTS • New influent pump station, headworks, and potential addition of a flow equalization basin. • New primary clarifier • New secondary treatment facilities including aeration basins, secondary clarifiers, and

potential addition of a fermenter to enhance biological nutrient removal (BNR). • New primary sludge pumping station, return activated and waste activated sludge (RAS/WAS)

pumping station, and blower building • Expansion of the tertiary filtration capacity with potential retrofit of the traveling bridge filters

with a higher-capacity technology. • Expansion of the ultraviolet (UV) disinfection capacity. • Increased solids dewatering capacity with either a second belt filter press (BFP) or screw

presses. • Optimization of existing sludge storage facilities to improve mixing and odor control. • Plant drain system improvements evaluation • Associated site work, yard piping, instrumentation and controls to support the expansion. • Electrical feed and distribution loop including back-up power generation for the plant. • Aesthetics improvements, including odor control and landscaping. • A new storage/maintenance building with shared space with the City of Frisco. • Expansion of existing administration building to include a control room, larger locker room,

and a training room.


BASIC SERVICES • Preliminary engineering design • Equipment preselection for filtration equipment and UV disinfection equipment • 60%, 90%, and 100% design submittals • Final design • Bid documents • Advertise/bid phase services

SPECIAL SERVICES • Topographic survey • Geotechnical investigation • Permitting fee allowance • Frisco collection system Odor Control study

ENGINEERING SERVICES FEE

DESCRIPTION AMOUNT

Basic Services $5,126,384.

Special Services $237,871

Requested Amount $5,364,255

FUNDING FUND(S): Funding in the amount of $5,364,255 for this project is to be made available in the Panther Creek Wastewater Treatment Plant 2020 Construction Fund contingent upon issuance of the Panther Creek Wastewater Treatment Plant 2020 Bonds planned for April 23, 2020.

New WAS Holding Tank

New Headworks(Screens, Grit Removal)

New Primary Clarifier

Potential FlowEqualization Basin

New InfluentPump Station

123Potential Fermentors

New Primary Sludge Holding Tank

New RAS/WAS Pump Station

New Secondary Clarifier

New Blower Building

New Aeration Basin

New Effluent Flow Meter

New Maintenanceand Storage Building

New SludgePump Station

New Primary Sludge Pump Station

Filter Expansion

New UV Facility

ÜPanther Creek WWTP Expansion to 15 MGD

Project No. 307-0493-18Administrative Memorandum No. 5555

^


MUSTANG CREEK INTERCEPTOR SYSTEM FORNEY MUSTANG CREEK LIFT STATION PHASE II

AND FORNEY FORCE MAIN IMPROVEMENTS

PROJECT NO. 509-0561-20

ENGINEERING SERVICES AGREEMENT

ACTION (What)

Authorize an engineering services agreement for the final design of the Forney Mustang Creek Lift Station Phase II and the Forney Force Main Improvements.

PURPOSE (Why)

The existing 24-inch force main is limiting the capacity of Forney Mustang Creek Lift Station to 12 million gallons per day (MGD). A new force main and expansion of the lift station to 30 MGD are needed to meet the growth projections of the City of Forney.

RECOMMENDATION

The Executive Director and NTMWD staff recommend the Board of Directors authorize the Executive Director to execute an engineering services agreement (ESA) as follows: Consultant: Hazen and Sawyer Scope: Final engineering design Project: No. 509-0561-20, Forney Mustang Creek Lift Station Phase II and

Forney Force Main Improvements Amount: $1,331,400 This will be an item on the April 22, 2020, Wastewater Committee meeting agenda.





BACKGROUND

The Forney Mustang Creek Lift Station, Phase I is currently under construction with a firm capacity of 12 MGD. The lift station capacity is limited to 12 MGD due to the size of the existing discharge force main that conveys flow to the South Mesquite Regional Wastewater Treatment Plant (RWWTP). The existing Forney Lift Station remains in service to provide 4 MGD capacity to meet current flow demands. Additional capacity beyond 16 MGD in the Mustang Creek Interceptor System is projected to be needed by the year 2022. PROJECT PURPOSE • The City of Forney has requested to increase the capacity of the Forney Mustang Creek Lift

Station to 30 MGD to meet projected flows beyond 2030 due to growth in the service area. • A new force main from the Forney Mustang Creek Lift Station to the Buffalo Creek Lift Station

is necessary to increase the conveyance capacity in the Forney Mustang Creek system to 30 MGD. A separate project, 507-0549-19 Buffalo Creek Force Main Parallel, is evaluating options to convey flow from Buffalo Creek Lift Station to South Mesquite RWWTP.

• The planning level estimated cost for the force main and lift station improvements is $14,700,000.

PROJECT COMPONENTS • 17,000 linear feet of 36-inch force main with air relief valves • Two additional pumps, motors, and adjustable frequency drives • Modifications to mechanical piping and equipment • Electrical and controls associated with the new pumps • Improvements to heating, ventilating, and air conditioning (HVAC) system

BASIC SERVICES • Preliminary design • Final design • Bid-phase services • Construction phase services SPECIAL SERVICES • Topographic alignment survey • Easement documents • Geotechnical investigation • NEPA clearance • Pipeline transient modeling • Odor modeling and odor control system design


ENGINEERING SERVICES FEE

DESCRIPTION AMOUNT

Basic Services $902,500

Special Services $428,900

Requested Amount $1,331,400

FUNDING FUND(S): Funding in the amount of $1,331,400.00 to Hazen and Sawyer will be made available as assigned below:

AMOUNT FUNDING SOURCE

$315,000.00 Forney Mustang Creek Interceptor System Capital Improvement Fund

$560,400.00 Forney Mustang Creek Interceptor System 2019 Construction Fund

$456,000.00

Forney Mustang Creek Interceptor System 2020 Construction Fund Contingent upon issuance of the Forney Mustang Creek Interceptor System 2020 Bonds planned for April 23, 2020.

$1,331,400.00

")

")

")")")

South Mesquite CreekRWWTP

Forney Mustang Creek LS

Buffalo Creek LS

Forney LS

Proposed Force Main

Existing Force Main

Buffalo Creek Force Main(By Others)

ÜForney Mustang Creek Lift Station, Ph II and

Forney Force Main Improvements Project No. 509-0561-20

Administrative Memorandum No. 5556


UPPER EAST FORK INTERCEPTOR SYSTEM BECK BRANCH PARALLEL INTERCEPTOR IMPROVEMENTS

PROJECT NO. 501-0439-16

TABULATION OF BIDS AND AWARD OF CONTRACT BECK BRANCH PARALLEL INTERCEPTOR PHASE II

AND PLANO SPRING CREEK FORCE MAIN PARALLEL

ACTION (What)

Authorize award of a construction contract for the Beck Branch Parallel Interceptor Phase II and Plano Spring Creek Force Main Parallel portions of the Beck Branch Parallel Interceptor Improvements project.

PURPOSE (Why)

Increase conveyance capacity from the Plano Spring Creek Lift Station No. 2 to the Rowlett Creek Regional Wastewater Treatment Plant to meet projected 2035 flow conditions due to population growth, inflow and infiltration in the cities of Plano and Richardson. Phase 1 of the Beck Branch Parallel Interceptor is currently under construction. This action will award construction of the final segments of the interceptor and force main to the lift station.

RECOMMENDATION

The Executive Director, NTMWD staff and Lockwood, Andrews & Newman, Inc. (LAN) recommend the Board of Directors authorize the award of a contract as follows: Contractor: ARK Contracting Services, LLC. (ARK) Scope: Construction Project: No. 501-0439-16, Beck Branch Parallel Interceptor Improvements,

Beck Branch Parallel Interceptor Phase II and Plano Spring Creek Force Main Parallel

Amount: $21,014,584.00 This will be an item on the April 22, 2020, Wastewater Committee meeting agenda.





PROJECT PURPOSE • The 2015 Upper East Fork Interceptor Evaluation identified the need for additional capacity in

the Beck Branch Interceptor to meet projected 2035 flow conditions due to population growth, inflow and infiltration in the cities of Plano and Richardson.

• Provide a new parallel gravity interceptor from the Beck Branch interconnection south of the intersection of Los Rios Boulevard and East Plano Parkway to Rowlett Creek Regional Wastewater Treatment Plant (RWWTP). This portion of the project is currently under construction.

• Provide a new Plano Spring Creek Force Main Parallel from the Plano Spring Creek Lift Station No. 2 to the junction box east of K Avenue and a new Beck Branch Parallel Interceptor from the junction box east of K Avenue to the interconnection south of the intersection of Los Rios Boulevard and East Plano Parkway.

PROJECT COMPONENTS • Provide approximately 4,900 linear feet of 42-inch force main from the Plano Spring Creek Lift

Station No. 2 to the junction box east of K Avenue, and associated combination air release valves (CAV).

• Provide approximately 13,100 linear feet of 42-inch gravity interceptor between the junction box east of K Avenue to the gravity interconnection located near the intersection of Los Rios Boulevard and Plano Parkway.

• Provide extension/reconnection of the Renner Road Force Main • Abandonment of 33-inch force main and an existing junction structure • Installation and replacement of nine CAVs with access manholes and assemblies on the

existing 36-in Plano Spring Creek Force Main.


TABULATION OF BIDS

Sealed bids for construction were received at 2:00 p.m. on Thursday, March 19, 2020, as tabulated below. Total Bid includes Base Bid Amount and Total Allowances Amount.

Bidder Base Bid Total Allowances Total Bid Recommendation

ARK Contracting Services, LLC $20,869,584.00 $145,000.00 $21,014,584.00

Lowest responsible bid Recommended for Award

McKee Utility Contractors, Inc. $25,805,000.00 $145,000.00 $25,950,000.00

Thalle Construction Company $26,607,935.00 $145,000.00 $26,752,935.00

S.J. Louis Construction of Texas, Ltd.

$28,224,017.00 $145,000.00 $28,369,017.00

Mountain Cascade of Texas, LLC $29,692,580.00 $145,000.00 $29,837,580.00

BELT Construction, Inc. $35,399,359.00 $145,000.00 $35,544,359.00

ENGINEER’S OPINION OF PROBABLE COST

$17,312,000.00

The price differences amongst bidders is based on the contractors’ estimates of labor and risk associated with the job. The following items contributed to ARK’s bid being substantially lower than the other bids: • This project is a labor-intensive job and ARK being a local contractor should account for a 10-

15 percent cost savings compared to non-local bidders. • ARK primarily performs work within the Dallas/Fort-Worth Metroplex and, therefore, ARK

states that if the job delays or slowdowns due to unforeseen events, the crews can easily be moved to another local project with little loss of revenue.

• ARK received final pipe quotes within the hour of turning in their bids resulting in a more accurate/lower price than the other competitors.

• ARK bid the pipeline installation by open cut within Plano Parkway, which is less costly than tunneling the work, as bid by some of the other contractors.

The substantial difference between the Engineer’s Opinion of Probable Cost and the bids is mainly due to an increase in labor associated with the work site restrictions necessary to protect traffic, adjacent utilities, and roadway pavement along Plano Parkway. The restrictions include reduced working hours to limit lane closures during rush hour traffic. The contractor proposes to work night shifts to maintain productivity and meet project schedule. The allowances include a City of Plano tree mitigation fee, removal and restoration of Oncor lighting within the Plano Parkway median, and removal and restoration of Parcel 29 trees and

ADMINISTRATIVE MEMORANDUM NO. 5557 PAGE 4 landscaping. The Executive Director, NTMWD staff, and Lockwood, Andrews & Newnam, Inc. recommend acceptance of the lowest bid and allowances resulting in a total award amount of $21,014,584.00.

LOWEST RESPONSIBLE BIDDER HISTORY

ARK Contracting Services, LLC. has neither completed nor does ARK currently have projects in construction with NTMWD. ARK Contracting Services, LLC. has successfully completed or is currently in construction on similar projects for other agencies that are local to the Dallas-Fort Worth Metroplex:

Project Name Classification Owner Value Start Date

Dallas WWTR Misc. Pipe 18-021/18-023 Pipeline (up to 36") City of Dallas $13,377,700.00 04/2018

Dallas WWTR Misc. Pipe 17-003 / 17-004 Pipeline (up to 52") City of Dallas $13,377,380.00 04/2017

Dallas WWTR Misc. Pipe 16-013 / 16-014 Pipeline (up to 36") City of Dallas $10,443,584.00 11/2016

IH30/SH360 Interchange Pipeline (up to 30") TxDOT $6,326,000.00 04/2016

Trinity River Authority, Pump Sta. 14 Pipeline Trinity River

Authority of Texas $5,175,000.00 11/2013

Fort Worth Contract 9 Pipeline (up to 12") City of Fort Worth $4,100,000.00 01/2018

Village Creek Bar Screen #3 Pipeline (up to 96") City of Fort Worth $575,000.00 05/2013

The collective experience listed herein resulted in ARK Contracting Services, LLC meeting the minimum experience qualifications specified for this project. Based on their standing as lowest responsible bidder, the information provided, and reports by the supplied references, and history of successful project completions, the NTMWD staff and Lockwood, Andrews & Newnam, Inc., recommend award of the contract to ARK Contracting Services, LLC.

FUNDING FUND(S): Upper East Fork Interceptor System 2019 Construction Fund

k

ä

SH 190

US 75

N. Pla

no Rd Renner Rd

E. Plano Pkwy

Shiloh

Rd

Los Rio

s Blvd

InterconnectionProposed 42-in Beck Branch Parallel Interceptor

Phase II

Existing Beck Branch Gravity InterceptorProposed 42-in Plano

Spring Creek ForceMain Parallel

54-in Beck BranchParallel Interceptor

(Under Construction)

Beck Branch Parallel Interceptor ImprovementsBeck Branch Parallel Interceptor Phase II and Plano Spring Creek Force Main Parallel

Project No. 501-0439-16Administrative Memorandum No. 5557

Rowlett Creek Regional WWTP

Plano SpringCreek LiftStation #2


APRIL 2020 APPENDIX

BOARD OF DIRECTORS MEETING LIST OF APPENDICES

MONTHLY REPORTS A. Glossary of NTMWD Terms B. Board Policies Manual Section IX Board of Directors Meeting Agenda Policy C. Water Consumption Report D. Water Quality Reports

1. Bonham Water Treatment Plant 2. Tawakoni Water Treatment Plant 3. Wylie Water Treatment Plant

E. Wastewater Flow Report F. Wastewater Treatment Plant Capacity Report G. Wastewater Quality Report H. Solid Waste Tonnage Report I. NTMWD Financial Reports

1. NTMWD Investment Summary for the Six Months Ended March 31, 2020 2. NTMWD Employees Retirement Fund for the Three Months Ended March 31,

2020 3. NTMWD Retiree Health Insurance Fund for the Six Months Ended March 31,

2020 4. Monthly Financial Statements for the Month ended March 31, 2020

J. Engineering Activity Report K. Construction Progress Report L. Bois d’Arc Lake Report

OTHER DOCUMENTS M. Preliminary Official Statement - $5,200,000 +/- Panther Creek Regional Wastewater

System Revenue Bonds, Series 2020 (Please refer to Administrative Memorandum No. 5547)

N. Preliminary Official Statement - $4,215,000 +/- Mustang Creek Interceptor System

Contract Revenue Bonds, Series 2020 (Please refer to Administrative Memorandum No. 5548)

AWWA American Water Works AssociationBDL Bois d'Arc LakeBOD Board of DirectorsC/O Change OrderCAFR Comprehensive Annual Financial ReportCCN Certificate of Convenience and NecessityCMAR Construction Manager At-RiskCMOM Capacity, Management, Operation, and MaintenanceCSP Competitive Sealed ProposalDART Dallas Area Rapid TransitEIS Environmental Impact StatementEPA Environmental Protection AgencyESA Engineering Services AgreementFCEC Fannin County Electric CooperativeFEC Farmers Electric CooperativeFRP Fiberglass reinforced pipeGIS Geographic Information SystemGMP Guaranteed maximum priceGPCD Gallons Per Capita Per DayHSPS High Service Pump Station

ILAInterlocal Agreement - a written contract between two governmental entities.

K ThousandM Million MGD Million Gallons Per DayMOU Memorandum of UnderstandingMSPS Main Stem Pump StationNTMWD North Texas Municipal Water DistrictNWC National Waterways ConferenceNWRA National Water Resources AssociationO&M Operations and MaintenanceOPCC Opinion of Probable Construction CostPFIA Public Funds Investment ActPUC Public Utility CommissionRCEC Rayburn Country Electric CooperativeRDF Regional Disposal FacilityROW Right-of-WayRWPS Raw Water Pump StationRWRRF Regional Water Resource Recovery FacilityRWS Regional Water SystemRWWS Regional Wastewater SystemRWWTP Regional Wastewater Treatment PlantSCADA Supervisory Control and Data AcquisitonSEP Supplemental Environmental ProjectSUD Special Utility District

Glossary of NTMWD Terms

TCEQ Texas Commission on Environmental QualityTCOS Transmission Cost of ServiceTS Transfer StationTWCA Texas Water Conservation AssociationTWDB Texas Water Development BoardUEFIS Upper East Fork Interceptor SystemUSACE US Army Corps of EngineersWEF Water Environment FederationWTP Water Treatment PlantWWTP Wastewater Treatment Plant

FA

SECTION IX. BOARD OF DIRECTORS MEETING AGENDA

9. 1 Purpose

This policy establishes guidelines for the inclusion of items on the consent agenda and as actionitems on the Board of Directors regular agenda. Items for expenditures and award of contracts for

goods and services funded in NTMWD' s annual operating budget are not required to be placed onthe agenda. For expenditure items and award of contracts for projects, which are not funded in

NTMWD' s annual operating budget, the dollar thresholds in 9. 3 apply.

9. 2 Agendas

The order of business of each Board meeting shall be contained in a written agenda prepared bythe ED /GM and /or the President and posted in accordance with applicable state law. Written

agendas for regular Board meetings shall be delivered to each member at least 72 hours prior to

the date of said meeting. Written agendas for special or emergency Board meetings shall bedelivered to each member as soon as reasonably possible prior to the commencement of themeeting. Additionally, each Board agenda shall include an item that will allow a Board memberto request that an item be placed on a future agenda for consideration by the Board; no substantivediscussion of that item will take place at that time. The Board may not deliberate or vote on anyitem not included on its written agenda and public notice.

9. 3 Changes to Construction Contracts and Agreements

Consideration of changes to contract* components shall be according to the following table:

ED Limits

Cumulative changes below

100,000 or changes that do not

exceed 15 percent of the original

contract or Board authorization

will be included in the MonthlyEngineering Activity Report.

The report shall be included in

each Board Packet.

To include:

Consent Agenda

100, 000 - $ 500, 000 or

changes that exceed 15

percent of the original

contract or Board

Authorization and shall be

included in the MonthlyConstruction Report.

Construction contract change orders

Construction Manager At -Risk Preconstruction

Services

Engineering Services AgreementsRight -of -way acquisitionsInspection Services Agreements

Legal Services

22

Items for Individual

Consideration

All cumulative

changes above

500,000 or above

25 percent over

original contract or

Board authorization,

and resolutions to

allow the use of

eminent domain.

and Procurement

B. Notwithstanding the above requirements, the ED shall provide a report to the Boardregarding all matters involving litigation not less than every 6 months.

9. 4 Consent Agenda Items

Consent Agenda Items shall include cumulative change orders between $ 100, 000 and $ 500,000.

These items shall be included in the Monthly Construction Report.

Board Members and the ED /GM may use their discretion to move items from the Consent Agendato Items for Individual Consideration.

A. Miscellaneous

1. Interlocal Agreements between NTMWD and another governmental entityinvolving amounts less than $ 500, 000 and with a term of less than one year.

2. Contracts for professional or contractual services, legal services, or the construction

of improvements to real property in amounts less than $ 500, 000.

3. Sale of surplus personal property provided the value of a single item is less than500,000.

4. Miscellaneous items not involving an expenditure of funds or that are ministerialin nature.

5. Contract extensions of 5 years or less with Customers in any System that includeno material changes other than the Term.

23

NTMWD WASTEWATER FLOW SUMMARY BY SYSTEM

FISCAL YEAR 2020(Flows are Reported in 1000 Gallons)

OCT SEPJULAPR MAY JUNMARFEBJANDECNOV AUG FYTD FYTD % Contribution

Regional Wastewater System Member CitiesMember Cities

237,859 244,273 285,152 288,803241,616 362,294 1,659,996 9.36%Allen74,840 114,688 165,048 157,282136,756 181,411 830,025 4.68%Forney

121,392 126,430 140,598 133,705130,842 161,732 814,699 4.60%Frisco50,203 52,828 58,973 63,71753,783 74,531 354,034 2.00%Heath

452,969 461,928 539,612 530,522461,635 683,793 3,130,460 17.66%Mckinney24,758 27,375 30,083 29,93626,007 48,046 186,204 1.05%Melissa*

381,211 322,001 329,395 342,318302,244 466,757 2,143,927 12.09%Mesquite825,225 793,730 879,067 900,328782,830 1,160,547 5,341,727 30.13%Plano28,663 29,786 35,837 37,08527,226 49,723 208,320 1.18%Princeton29,461 31,948 37,839 36,41028,108 50,421 214,187 1.21%Prosper

309,701 299,348 361,367 375,703304,817 481,507 2,132,444 12.03%Richardson71,033 67,333 94,061 89,34677,685 127,908 527,367 2.97%Rockwall29,095 27,735 31,449 33,24828,600 35,249 185,376 1.05%Seagoville*

Totals 2,636,411 2,599,402 2,602,150 17,728,7662,988,483 3,018,402 3,883,919 100.00%

Upper East Fork Interceptor System (UEFIS) System Member Cities(UEFIS) System Member Cities

237,859 244,273 285,152 288,803241,616 362,294 1,659,996 12.58%Allen121,392 126,430 140,598 133,705130,842 161,732 814,699 6.17%Frisco452,969 461,928 539,612 530,522461,635 683,793 3,130,460 23.72%Mckinney24,758 27,375 30,083 29,93626,007 48,046 186,204 1.41%Melissa*

825,225 793,730 879,067 900,328782,830 1,160,547 5,341,727 40.47%Plano28,663 29,786 35,837 37,08527,226 49,723 208,320 1.58%Princeton29,461 31,948 37,839 36,41028,108 50,421 214,187 1.62%Prosper*

250,314 238,478 278,946 283,068244,553 348,415 1,643,774 12.45%RichardsonTotals 1,970,641 1,953,948 1,942,817 13,199,3682,227,135 2,239,857 2,864,971 100.00%

Regional Wastewater System and (UEFIS) Customer Cities(UEFIS) Customer Cities

17,719 35,384 38,442 42,26428,675 49,390 211,875Anna14,488 16,329 17,085 17,53314,886 19,651 99,972Fairview

667 645 484 470403 767 3,437Lucas4,969 7,014 8,229 8,3876,822 8,332 43,754Parker

Totals 37,844 59,373 50,786 359,03864,240 68,654 78,140

4/3/2020Page 1 of 3

Numbers shown are rounded to the nearest thousand gallons*Annual Requirement not exceeded, actual flow reported**Annual Requirement not exceeded, metering currently not in place




Sewer System InterceptorsBuffalo Creek Interceptor

4,916 50,223 88,527 74,77876,362 82,098 376,904 29.95%Forney50,203 52,828 58,973 63,71753,783 74,531 354,034 28.14%Heath71,033 67,333 94,061 89,34677,685 127,908 527,367 41.91%Rockwall

Totals 126,152 170,383 207,831 1,258,305241,562 227,841 284,536 100.00%Forney Interceptor

42,823 42,012 45,914 54,99636,418 51,337 273,499Forney

Forney-Mustang Creek Interceptor

27,101 22,454 30,607 27,50823,976 47,976 179,622Forney

Lower East Fork Interceptor

20,076 20,273 24,378 26,28620,955 28,818 140,785 43.16%Mesquite*29,095 27,735 31,449 33,24828,600 35,249 185,376 56.84%Seagoville*49,171 48,008 55,827 59,53449,555 64,067 326,161 100.00%Totals

McKinney Interceptor

27,186 27,202 29,226 28,12727,534 31,543 170,818 23.53%Frisco82,387 83,615 95,945 93,52382,308 117,507 555,284 76.47%Mckinney

109,573 110,817 125,171 121,650109,842 149,050 726,103 100.00%Totals

Muddy Creek Interceptor

57,480 58,767 69,701 73,28258,799 93,865 411,894 28.37%Murphy*137,694 144,047 178,100 184,480146,534 249,020 1,039,875 71.63%Wylie**195,174 202,814 247,801 257,762205,332 342,886 1,451,769 100.00%Totals

Parker Creek Interceptor

15,617 16,880 16,640 17,49416,972 20,479 104,083 100.00%Fate*Royse City**

15,617 16,880 16,640 17,49416,972 20,479 104,083 100.00%Totals

Parker Creek Parallel Interceptor

10,122 8,842 10,595 9,2329,780 11,076 59,647Fate

Sabine Creek Interceptor

24,033 20,909 31,745 36,88521,151 48,920 183,644Royse City*

4/3/2020Page 2 of 3





Sewer System Treatment PlantsFarmersville WWTP

9,045 9,475 15,613 20,1739,682 31,773 95,761Farmersville ‐ A.S.Farmersville ‐ T.F.

Totals 9,045 9,475 9,682 95,76115,613 20,173 31,773Frisco (Cottonwood Creek) WWTP

Frisco

Lavon (Bear Creek) WWTP

5,246 5,728 6,374 6,6395,769 7,610 37,366Lavon

Muddy Creek WWTP

57,480 58,767 69,701 73,28258,799 93,865 411,894 28.37%Murphy137,694 144,047 178,100 184,480146,534 249,020 1,039,875 71.63%Wylie195,174 202,814 247,801 257,762205,332 342,886 1,451,769 100.00%Totals

North Rockwall (Squabble Creek) WWTP

17,176 22,271 12,968 13,24722,031 11,369 99,063Rockwall

Panther Creek WWTP

167,582 170,786 183,560 181,873166,584 197,186 1,067,571Frisco

Royse City WWTP

Royse City

Sabine Creek WWTP

25,739 25,722 27,235 26,72626,752 31,555 163,730 47.13%Fate*24,033 20,909 31,745 36,88521,151 48,920 183,644 52.87%Royse City*49,773 46,632 58,980 63,61147,903 80,475 347,373 100.00%Totals

Seis Lagos WWTP

3,918 4,537 5,403 5,3274,649 6,999 30,833Seis Lagos

South Rockwall (Buffalo Creek) WWTP

41,261 37,031 33,184 44,56927,921 46,956 230,922Rockwall

Stewart Creek West WWTP

129,801 126,428 141,900 140,600122,856 179,144 840,729Frisco

Wylie WWTP

Wylie

4/3/2020Page 3 of 3


WASTEWATER TREATMENT PLANT CAPACITY REPORTMarch FY 2020

NTMWD

Wastewater Treatment Plant Permitted Peak 2 Hour MGD

Actual Monthly Peak 2 Hour MGD

Actual AADF MGD

Permitted AADF MGD

(Current Design Capacity)

Monthly Total FlowMG

% Capacity (AADF/Permitted AADF)

Monthly Average Daily Flow

MGD

FYTD Peak2 hour MGD

Regional Wastewater SystemFloyd Branch 133.091 4.750 2.813 9.999 11.429 59.2%4.293 11.429Rowlett Creek 849.850 24.000 20.488 60.048 60.462 85.4%27.415 68.680South Mesquite 885.855 33.000 22.792 82.501 87.685 69.1%28.576 87.685Wilson Creek 2,220.161 56.000 53.796 204.002 152.634 96.1%71.618 152.634

Sewer System > 1 MGDBuffalo Creek 46.956 2.250 1.344 8.227 2.922 59.7%1.515 4.030Muddy Creek 342.886 10.000 7.766 30.000 29.210 77.7%11.061 29.687Panther Creek 197.186 10.000 5.891 30.000 13.342 58.9%6.361 15.599Sabine Creek 80.475 3.000 1.879 9.000 4.939 62.6%2.596 6.402Squabble Creek 11.369 1.200 0.566 3.000 2.176 47.2%0.367 2.176Stewart Creek 179.144 5.000 4.466 12.501 12.959 89.3%5.779 12.959Wylie 0.000 2.000 5.0000.000

Wastewater Treatment Plant Monthly Total FlowMG

Permitted AADF MGD

(Current Design Capacity)

Permitted Peak 2 Hour MGD

ActualAADF MGD

Actual Monthly Peak 2 Hour MGD

% Capacity (AADF/Permitted AADF)

Monthly Average Daily Flow

MGD

FYTD Peak2 hour MGD

Sewer System < 1 MGDBear Creek 7.610 0.250 0.194 0.667 0.542 77.5%0.246 0.695Cottonwood Creek 0.000 0.300 0.000 0.590 0.000 0.0%0.000 0.000Farmersville ‐ A.S. 31.773 0.530 0.494 1.590 3.487 93.1%1.025 3.487Farmersville ‐ T.F. 0.000 0.225 0.6750.000Royse City 0.000 0.500 2.0000.000Seis Lagos 6.999 0.250 0.149 0.720 1.161 59.6%0.226 1.250

4/3/2020Page 1 of 1Numbers shown are rounded to the nearest thousand gallons *Annual Requirement not exceeded, actual flow reported**Annual Requirement not exceeded, metering currently not in place


WASTEWATER QUALITY REPORT

March 2020

CARB. BIOCHEMICAL OXYGEN DEMAND TOTAL SUSPENDED SOLIDS

RAWINFLUENT

(mg/L)

FINALEFFLUENT

(mg/L)

TCEQLIMIT(mg/L)

%REMOVAL

RAWINFLUENT

(mg/L)

FINALEFFLUENT

(mg/L)

TCEQLIMIT(mg/L)

%REMOVAL

REGIONAL SYSTEM

FLOYD BRANCH 162.2 3.2 10.0 98.0 101.3 3.5 15.0 96.5

ROWLETT CREEK 102.9 2.3 7.0 97.8 88.5 2.9 12.0 96.8

SOUTH MESQUITE 233.8 2.2 7.0 99.1 164.7 0.8 15.0 99.5

WILSON CREEK 188.2 2.2 5.0 98.8 234.8 1.6 5.0 99.3

SEWER SYSTEM

BEAR CREEK 175.2 2.3 5.0 98.7 145.8 1.5 5.0 98.9

BUFFALO CREEK 133.5 2.4 10.0 98.2 172.2 3.9 15.0 97.7

COTTONWOOD CREEK * 10.0 15.0

FARMERSVILLE NO. 1 0.0 0.0 10.0 0.0 0.0 0.0 15.0 0.0

FARMERSVILLE NO. 2 78.3 2.2 10.0 0.0 104.3 1.4 15.0 98.7

MUDDY CREEK 120.0 2.2 7.0 98.2 116.6 2.9 15.0 97.5

PANTHER CREEK 180.0 2.2 7.0 98.8 190.3 1.2 12.0 99.4

ROYSE CITY 0.0 0.0 10.0 0.0 0.0 0.0 15.0 0.0

SABINE CREEK 188.6 2.2 10.0 98.8 286.9 2.3 15.0 99.2

SEIS LAGOS 207.0 2.7 7.0 98.7 279.3 4.0 15.0 98.6

SQUABBLE CREEK 122.8 2.4 5.0 98.1 130.4 1.7 12.0 98.7

STEWART CREEK WEST 163.6 2.2 7.0 98.6 174.2 2.8 15.0 98.4

WYLIE 0.0 0.0 10.0 0.0 0.0 0.0 15.0 0.0

* Final Effluent Reported as BOD5

AMMONIA-NITROGEN TOTAL PHOSPHORUS

RAWINFLUENT

(mg/L)

FINALEFFLUENT

(mg/L)

TCEQLIMIT(mg/L)

%REMOVAL

RAWINFLUENT

(mg/L)

FINALEFFLUENT

(mg/L)

TCEQLIMIT(mg/L)

%REMOVAL

BEAR CREEK 36.3 0.70 2.0 98.1

BUFFALO CREEK 18.9 0.08 2.0 99.6

FARMERSVILLE NO. 1 0.0 0.00 3.0 0.0

FARMERSVILLE NO. 2 14.5 0.05 3.0 99.7

FLOYD BRANCH 13.4 0.37 2.0 97.2

MUDDY CREEK 17.4 0.11 2.0 99.4 3.24 1.01 2.4 68.9

PANTHER CREEK 24.8 0.42 4.0 98.3 4.77 0.28 1.0 94.1

ROWLETT CREEK 22.7 0.81 2.0 96.4 2.65 0.32 1.0 88.0

ROYSE CITY 0.0 0.00 3.0 0.0

SABINE CREEK 17.8 0.26 2.0 98.6

SEIS LAGOS 21.9 0.05 2.0 99.8

SOUTH MESQUITE 23.0 0.85 3.0 96.3

SQUABBLE CREEK 25.5 0.06 2.0 99.8

STEWART CREEK WEST 22.3 1.55 2.0 93.1 4.01 0.43 1.5 89.2

WILSON CREEK 22.5 0.35 2.0 98.5 4.24 0.19 0.5 95.4

WYLIE 0.0 0.00 2.0 0.0

NORTH TEXAS MUNICIPAL WATER DISTRICTREGIONAL SOLID WASTE SYSTEM

TONNAGE REPORT

March 2020

March FY/YEAR-TO-DATE March FY/YEAR-TO-DATE2020 2019-2020 2019 2018-2019

CUSTER 27,512.44 159,163.91 24,967.77 149,994.38

PARKWAY 10,040.91 57,425.34 9,248.50 63,133.55

LOOKOUT 15,779.69 90,659.88 14,034.39 82,245.85

121 RDF 27,176.48 173,831.55 33,918.78 187,019.58

TOTAL 80,509.52 481,080.68 82,169.44 482,393.36

SOURCE

ALLEN 6,159.11 35,787.65 5,715.64 35,109.99

FRISCO 10,005.61 60,156.81 10,031.89 60,642.84

MCKINNEY 13,109.23 77,827.99 12,797.63 76,202.61

PLANO 19,274.11 114,192.54 18,489.27 113,749.19

RICHARDSON 9,346.01 56,436.88 9,152.30 53,877.94

OTHERS 22,615.45 136,678.81 25,982.71 142,810.79

TOTAL 80,509.52 481,080.68 82,169.44 482,393.36


INVESTMENT SUMMARY

FOR THE QUARTER ENDED

3/31/2020

OVERVIEW 1 - 3

INVESTMENTS PURCHASED 4

INVESTMENTS SOLD 5

PORTFOLIO VALUE AT MARKET (BEGINNING) 6-7

PORTFOLIO VALUE AT MARKET (ENDING) 8

STATE POOL ACTIVITY 9-12

TABLE OF CONTENTS

Change in Investment Position by Fund

Market Value

Balance at Change Balance at12/31/19 1/1/20-3/31/20 3/31/20

Operating 84,525,791$ 7,761,159$ 92,286,951$ Construction 1,554,732,329$ (133,663,490)$ 1,421,068,839$ Interest & Sinking 97,002,025$ 17,661,078$ 114,663,102$ Reserve 198,082,158$ 3,524,541$ 201,606,699$

Total 1,934,342,303$ (104,716,711)$ 1,829,625,592$

Book Value



Total 1,932,872,541$ (112,792,221)$ 1,820,080,319$

Par Value



Total 1,929,871,911$ (112,241,820)$ 1,817,630,091$

12/31/19 Change 3/31/20Accrued Interest 2,151,712$ 559,655$ 2,711,367$

OverviewTotal Portfolio

This report presents an overview of the District's investment portfolio. It indicates how the portfolio is structured and how it performed for the quarter ended March 31, 2020

Interest Accrued In The Period Ending

1

Change in Investment Position by Type (Par Value)

Investment Balance at Purchases Maturities Balance atType 12/31/19 1/1/20-3/31/20 1/1/20-3/31/20 3/31/20

Treasuries:T Bills -$ -$ -$ -$ T Notes 582,000,000$ 36,705,000$ 105,000,000$ 513,705,000$

Total 582,000,000$ 36,705,000$ 105,000,000$ 513,705,000$

Agencies:Bond Discount -$ 32,000,000$ -$ 32,000,000$ Note 239,930,000$ 69,795,000$ 125,430,000$ 184,295,000$

Total 239,930,000$ 101,795,000$ 125,430,000$ 216,295,000$

State Pools: *Logic 597,430,523$ 70,005,325$ 142,706,268$ 524,729,581$ Texas CLASS 462,136,815$ 295,725,845$ 275,800,613$ 482,062,047$ Texpool 48,374,572$ 130,325,479$ 97,861,588$ 80,838,463$

Total 1,107,941,911$ 496,056,649$ 516,368,469$ 1,087,630,091$

Total 1,929,871,911$ 634,556,649$ 746,798,469$ 1,817,630,091$

Investment Maturity Schedule at 3/31/20

Maturity Par Value

0 - 3 Months * 1,125,130,091$

3 - 6 Months 119,705,000$

6 - 12 Months 266,000,000$

1 - 3 Years 294,645,000$

3 - 5 Years 12,150,000$

1,817,630,091$

* Includes TWDB Unreleased Construction Escrow Funds held at Logic in a Trustee Account. Upon TWDB Authorized Release, Funds will be invested in accordance with the investment strategies set forth in Section I of the North Texas Municipal Water District's Administration and Finance Policies Manual.

Treasuries28%

Agencies12%

State Pools * 60%

Investment Allocation at 3/31/20 (Par Value)

0 - 3 Months *

62%

3 - 6 Months

6%

6 - 12 Months

15%

1 - 3 Years16%

3 - 5 Years

1%

2

Portfolio Yield (1/1/20 through 3/31/20)

Yield Earnings

Treasuries:T-Bills 0.0000% -$ T-Notes 1.7656% 2,424,765$

Agencies: Bond Discount 1.5398% 54,086$ Note 1.9802% 1,180,267$

State PoolsLogic 1.6693% 2,504,574$ Texas CLASS 1.6977% 1,739,939$ Texpool 1.3609% 158,939$

Total 1.7352% 8,062,571$

Compliance with Investment Strategies

Compliance with Texas Government Code Ann., Section 2256, Subchapter A

Alternate Investment Officer Drew Farris, Finance Manager

Alternate Investment Officer Erik Felthous, Assistant Deputy - Finance

The North Texas Municipal Water District's investment portfolio is invested in accordance with the investment strategies set forth in Section I of the North Texas Municipal Water District's Administration and Finance Policies Manual. This policy has been adopted by the NTMWD Board of Directors, as required by statute and is reviewed on an annual basis.

The District's investment portfolio is invested in accordance with the provisions of all applicable legislation, including Section 2256, Subchapter A. The District does not invest in any investments which are prohibited by this statute or which are deemed inappropriate by the NTMWD Board of Directors.

3

Run Date: 04/08/20Run Time: 08:48:25

Page 1 of 1Investments Purchased

NTMWDEffective Interest - Actual Life

Receipts in Period01/01/20 - 03/31/20

CUSIP Invest Security Order Purchase SafeKeep Issuing Purchase Call Basis Yield Yield Beginning Beginning Beginning Premium Purchased Commission TotalNumber Description Type Institut Institut Institut Date Date Matur Call Unit Cost Par Val/Shares Unamor Val/Cost Discount Interest Fees Cost

Agency Bond Discount313384G29 20-0025 FHLB D.N. 0.00 09/16/20 BUY 37 1 None 02/21/20 Open Act/360 1.5266 1.5266 0.991391 32,000,000.00 31,724,515.52 275,484.48 0.00 0.00 31,724,515.52Agency Bond Discount Total 1.5266 1.5266 0.991391 32,000,000.00 31,724,515.52 275,484.48 0.00 0.00 31,724,515.52Agency Note3133ELJD7 20-0021 FFCB NOTE 1.62 04/22/21 BUY 38 1 None 01/29/20 07/22/20 30/360 1.6173 1.6148 1.000040 7,645,000.00 7,645,305.80 -305.80 2,408.18 0.00 7,647,713.983134GU6H8 20-0022 FHLMC NOTE 1.73 04/21/23 BUY 38 1 None 01/29/20 07/21/20 30/360 1.7303 1.7293 1.000000 12,150,000.00 12,150,000.00 0.00 583.88 0.00 12,150,583.883130AEWA4 20-0023 FHLB NOTE 2.625 10/01/20 BUY 37 1 None 01/29/20 Open 30/360 1.5600 1.5600 1.007083 14,000,000.00 14,099,158.50 -99,158.50 120,458.33 0.00 14,219,616.833130AHZL0 20-0024 FHLB NOTE 1.54 07/22/21 BUY 38 1 None 01/29/20 04/22/20 30/360 1.5400 1.5400 1.000000 21,000,000.00 21,000,000.00 0.00 0.00 0.00 21,000,000.003134GVHX9 20-0028 FHLMC NOTE 1.00 09/24/21 BUY 37 1 None 03/30/20 06/24/20 30/360 1.0000 1.0000 1.000000 15,000,000.00 15,000,000.00 0.00 0.00 0.00 15,000,000.00Agency Note Total 1.5954 1.5948 1.001425 69,795,000.00 69,894,464.30 -99,464.30 123,450.39 0.00 70,017,914.69Treasury Note912828L99 20-0026 Treasury Note 1.375 10/31/20 BUY 37 1 None 02/21/20 Open Act/Act 1.5227 1.5227 0.998984 21,000,000.00 20,978,671.88 21,328.12 89,639.42 0.00 21,068,311.309128284W7 20-0027 Treasury Note 2.75 08/15/21 BUY 37 1 None 02/21/20 Open Act/Act 1.4280 1.4280 1.019336 7,000,000.00 7,135,351.56 -135,351.56 3,173.08 0.00 7,138,524.649128282V1 20-0020 Treasury Note 1.375 09/15/20 BUY 39 1 None 01/29/20 Open Act/Act 1.5492 1.5492 0.998913 8,705,000.00 8,695,538.54 9,461.46 44,720.74 0.00 8,740,259.28Treasury Note Total 1.5152 1.5152 1.002849 36,705,000.00 36,809,561.98 -104,561.98 137,533.24 0.00 36,947,095.22 Investment Total 1.5608 1.5605 0.999484 138,500,000.00 138,428,541.80 71,458.20 260,983.63 0.00 138,689,525.43

4

Run Date: 04/08/20Run Time: 08:48:53

Page 1 of 1Investments Sold



CUSIP Invest Security Order Sale Purchase Sale Yield Unit Par Val/Shares Beginning Int Received Premium Amortize Unamor Ending Sale Commission Gain/Number Description Type Institut Date Date Sale Sale Price Sold Unamor Val/Cost On Sale Discount Sale Date Prem/Dscnt Amor Val/Cost Price Fees Loss

Agency Note3133EH6L2 19-0016-01 FFCB NOTE 1.95 01/10/20 MAT None 01/31/19 01/10/20 2.6034 1.000000 3,000,000.00 2,981,875.89 29,250.00 18,124.11 18,124.11 0.00 3,000,000.00 3,000,000.00 0.00 0.003133EH6L2 19-0017-01 FFCB NOTE 1.95 01/10/20 MAT None 01/31/19 01/10/20 2.6034 1.000000 3,000,000.00 2,981,875.89 29,250.00 18,124.11 18,124.11 0.00 3,000,000.00 3,000,000.00 0.00 0.003133EH6L2 19-0018-01 FFCB NOTE 1.95 01/10/20 MAT None 01/31/19 01/10/20 2.6034 1.000000 10,000,000.00 9,939,586.31 97,500.00 60,413.69 60,413.69 0.00 10,000,000.00 10,000,000.00 0.00 0.003136G4KE2 17-0007-01 FNMA NOTE 1.94 04/28/21 CAL None 12/28/16 01/28/20 1.9400 1.000000 22,000,000.00 22,000,000.00 106,700.00 0.00 0.00 0.00 22,000,000.00 22,000,000.00 0.00 0.003130AG3N3 19-0030-01 FHLB NOTE 2.50 03/18/20 MAT None 03/28/19 03/18/20 2.3921 1.000000 27,280,000.00 27,308,131.14 341,000.00 -28,131.14 -28,131.14 0.00 27,280,000.00 27,280,000.00 0.00 0.003130AG3N3 19-0031-01 FHLB NOTE 2.50 03/18/20 MAT None 03/28/19 03/18/20 2.4024 1.000000 14,150,000.00 14,163,191.84 176,875.00 -13,191.84 -13,191.84 0.00 14,150,000.00 14,150,000.00 0.00 0.003134GBEB4 17-0012-01 FHLMC NOTE 1.70 03/27/20 MAT None 03/31/17 03/27/20 1.6800 1.000000 16,000,000.00 16,009,307.97 136,000.00 -9,307.97 -9,307.97 0.00 16,000,000.00 16,000,000.00 0.00 0.003134GBL83 17-0026-01 FHLMC NOTE 1.60 03/27/20 MAT None 09/27/17 03/27/20 1.5919 1.000000 15,000,000.00 15,002,964.82 120,000.00 -2,964.82 -2,964.82 0.00 15,000,000.00 15,000,000.00 0.00 0.003130AH3V3 19-0049-01 FHLB NOTE 1.975 06/16/20 CAL None 09/20/19 03/16/20 1.9353 1.000000 15,000,000.00 15,002,885.55 74,062.50 -2,885.55 -1,963.63 -921.92 15,000,921.92 15,000,000.00 0.00 -921.92Agency Note Total 2.0355 1.000000 125,430,000.00 125,389,819.41 1,110,637.50 40,180.59 41,102.51 -921.92 125,430,921.92 125,430,000.00 0.00 -921.92Treasury Note912828W22 19-0045-01 Treasury Note 1.375 02/15/20 MAT None 07/31/19 02/15/20 2.0806 1.000000 30,000,000.00 29,884,257.00 206,250.00 115,743.00 115,743.00 0.00 30,000,000.00 30,000,000.00 0.00 0.00912828V31 19-0044-01 Treasury Note 1.375 01/15/20 MAT None 06/27/19 01/15/20 2.0306 1.000000 21,000,000.00 20,923,526.40 144,375.00 76,473.60 76,473.60 0.00 21,000,000.00 21,000,000.00 0.00 0.00912828J50 19-0019-01 Treasury Note 1.375 02/29/20 MAT None 01/31/19 02/29/20 2.5831 1.000000 6,000,000.00 5,923,125.00 41,250.00 76,875.00 76,875.00 0.00 6,000,000.00 6,000,000.00 0.00 0.00912828J50 19-0020-01 Treasury Note 1.375 02/29/20 MAT None 01/31/19 02/29/20 2.5831 1.000000 10,000,000.00 9,871,875.00 68,750.00 128,125.00 128,125.00 0.00 10,000,000.00 10,000,000.00 0.00 0.00912828W63 19-0023-01 Treasury Note 1.625 03/15/20 MAT None 02/21/19 03/15/20 2.5115 1.000000 17,000,000.00 16,842,240.00 138,125.00 157,760.00 157,760.00 0.00 17,000,000.00 17,000,000.00 0.00 0.00912828W22 19-0043-01 Treasury Note 1.375 02/15/20 MAT None 05/31/19 02/15/20 2.3426 1.000000 21,000,000.00 20,856,465.00 144,375.00 143,535.00 143,535.00 0.00 21,000,000.00 21,000,000.00 0.00 0.00Treasury Note Total 2.3412 1.000000 105,000,000.00 104,301,488.40 743,125.00 698,511.60 698,511.60 0.00 105,000,000.00 105,000,000.00 0.00 0.00 Investment Total 2.1512 1.000000 230,430,000.00 229,691,307.81 1,853,762.50 738,692.19 739,614.11 -921.92 230,430,921.92 230,430,000.00 0.00 -921.92

5

Run Date: 04/08/20Run Time: 08:49:27

Page 1 of 2Portfolio Value at Market


Receipts in Period12/31/19

CUSIP Comments Invest Security Purchase Yield End Mkt Fund Ending Ending Ending Ending Gain/ AmortizationNumber Description Date Amort Yield Number Unit Price Par Val/Shares Market Val Amor Val/Cost Loss Purch/Date

3133EH6L2 CONSTRUCTION 19-0016 FFCB NOTE 1.95 01/10/20 01/31/19 2.6029 1.5753 Total 1.000090 3,000,000.00 3,000,270.00 2,999,516.60 753.40 17,640.713133EH6L2 CONSTRUCTION 19-0017 FFCB NOTE 1.95 01/10/20 01/31/19 2.6029 1.5753 Total 1.000090 3,000,000.00 3,000,270.00 2,999,516.60 753.40 17,640.713133EH6L2 CONSTRUCTION 19-0018 FFCB NOTE 1.95 01/10/20 01/31/19 2.6029 1.5753 Total 1.000090 10,000,000.00 10,000,900.00 9,998,388.67 2,511.33 58,802.36912828V31 CONSTRUCTION 19-0044 Treasury Note 1.375 01/15/20 06/27/19 2.0440 1.6103 Total 0.999900 21,000,000.00 20,997,900.00 20,994,709.55 3,190.45 71,183.15912828W22 CONSTRUCTION 19-0043 Treasury Note 1.375 02/15/20 05/31/19 2.3501 1.6471 Total 0.999650 21,000,000.00 20,992,650.00 20,975,252.10 17,397.90 118,787.10912828W22 CONSTRUCTION 19-0045 Treasury Note 1.375 02/15/20 07/31/19 2.0948 1.6471 Total 0.999650 30,000,000.00 29,989,500.00 29,973,866.83 15,633.17 89,609.83912828J50 CONSTRUCTION 19-0019 Treasury Note 1.375 02/29/20 01/31/19 2.5880 1.6472 Total 0.999540 6,000,000.00 5,997,240.00 5,988,353.47 8,886.53 65,228.47912828J50 CONSTRUCTION 19-0020 Treasury Note 1.375 02/29/20 01/31/19 2.5880 1.6472 Total 0.999540 10,000,000.00 9,995,400.00 9,980,589.12 14,810.88 108,714.12912828W63 CONSTRUCTION 19-0023 Treasury Note 1.625 03/15/20 02/21/19 2.5165 1.6560 Total 0.999920 17,000,000.00 16,998,640.00 16,969,571.14 29,068.86 127,331.143130AG3N3 CONSTRUCTION 19-0030 FHLB NOTE 2.50 03/18/20 03/28/19 2.3917 1.6623 Total 1.001760 27,280,000.00 27,328,012.80 27,286,247.07 41,765.73 -21,884.073130AG3N3 CONSTRUCTION 19-0031 FHLB NOTE 2.50 03/18/20 03/28/19 2.4020 1.6623 Total 1.001760 14,150,000.00 14,174,904.00 14,152,930.80 21,973.20 -10,261.043134GBEB4 RESERVE 17-0012 FHLMC NOTE 1.70 03/27/20 03/31/17 1.6800 1.4917 Total 1.000480 16,000,000.00 16,007,680.00 16,000,759.02 6,920.98 -8,548.953134GBL83 RESERVE 17-0026 FHLMC NOTE 1.60 03/27/20 09/27/17 1.5919 1.6394 Total 0.999890 15,000,000.00 14,998,350.00 15,000,287.81 -1,937.81 -2,677.01912828X21 CONSTRUCTION 19-0032 Treasury Note 1.50 04/15/20 03/28/19 2.3553 1.5886 Total 0.999730 6,500,000.00 6,498,245.00 6,484,236.44 14,008.56 41,557.73912828VA5 CONSTRUCTION 19-0024 Treasury Note 1.125 04/30/20 02/21/19 2.5015 1.6422 Total 0.998280 16,000,000.00 15,972,480.00 15,928,289.92 44,190.08 184,609.92912828ND8 CONSTRUCTION 19-0048 Treasury Note 3.50 05/15/20 09/20/19 1.8830 1.6933 Total 1.006680 15,000,000.00 15,100,200.00 15,089,117.69 11,082.31 -67,108.213130AH3V3 CONSTRUCTION 19-0049 FHLB NOTE 1.975 06/16/20 09/20/19 1.9502 1.8107 Total 1.000740 15,000,000.00 15,011,100.00 15,001,690.19 9,409.81 -1,195.36912828VP2 CONSTRUCTION 19-0050 Treasury Note 2.00 07/31/20 09/20/19 1.8887 1.6415 Total 1.002070 16,000,000.00 16,033,120.00 16,010,216.98 22,903.02 -4,783.029128282Q2 CONSTRUCTION 20-0013 Treasury Note 1.50 08/15/20 12/23/19 1.5887 1.6250 Total 0.999220 28,000,000.00 27,978,160.00 27,984,530.00 -6,370.00 628.60912828L32 CONSTRUCTION 20-0016 Treasury Note 1.375 08/31/20 12/20/19 1.6237 1.6292 Total 0.998320 35,000,000.00 34,941,200.00 34,942,713.68 -1,513.68 2,869.933130AEWA4 CONSTRUCTION 20-0001 FHLB NOTE 2.625 10/01/20 11/21/19 1.6057 1.6506 Total 1.007220 13,000,000.00 13,093,860.00 13,098,267.93 -4,407.93 -14,463.329128285Q9 CONSTRUCTION 20-0002 Treasury Note 2.75 11/30/20 11/21/19 1.6227 1.6570 Total 1.009880 13,000,000.00 13,128,440.00 13,132,176.61 -3,736.61 -16,104.649128285S5 CONSTRUCTION 20-0017 Treasury Note 2.50 12/31/20 12/20/19 1.6433 1.6536 Total 1.008360 42,000,000.00 42,351,120.00 42,354,472.32 -3,352.32 -11,387.06912828N48 CONSTRUCTION 20-0003 Treasury Note 1.75 12/31/20 11/21/19 1.6388 1.6548 Total 1.000940 10,000,000.00 10,009,400.00 10,010,956.67 -1,556.67 -1,152.719128283Q1 CONSTRUCTION 20-0018 Treasury Note 2.00 01/15/21 12/23/19 1.6198 1.6387 Total 1.003710 40,000,000.00 40,148,400.00 40,155,801.12 -7,401.12 -3,573.889128285X4 CONSTRUCTION 20-0004 Treasury Note 2.50 01/31/21 11/21/19 1.6325 1.6416 Total 1.009180 8,000,000.00 8,073,440.00 8,074,053.55 -613.55 -7,508.959128283X6 CONSTRUCTION 20-0006 Treasury Note 2.25 02/15/21 11/22/19 1.6312 1.6439 Total 1.006720 42,000,000.00 42,282,240.00 42,287,593.59 -5,353.59 -27,406.419128283X6 RESERVE 20-0005 Treasury Note 2.25 02/15/21 11/21/19 1.6061 1.6439 Total 1.006720 11,000,000.00 11,073,920.00 11,078,390.53 -4,470.53 -7,661.489128284B3 CONSTRUCTION 20-0007 Treasury Note 2.375 03/15/21 11/22/19 1.6255 1.6417 Total 1.008710 43,000,000.00 43,374,530.00 43,382,128.67 -7,598.67 -34,448.883133EHEC3 RESERVE 17-0013 FFCB NOTE 1.80 03/30/21 03/31/17 1.8025 1.5612 Total 1.002930 9,000,000.00 9,026,370.00 8,999,726.97 26,643.03 583.243136G4KE2 RESERVE 17-0007 FNMA NOTE 1.94 04/28/21 12/28/16 1.9400 1.9307 Total 1.000110 22,000,000.00 22,002,420.00 22,000,000.00 2,420.00 0.00912828WG1 RESERVE 18-0040 Treasury Note 2.25 04/30/21 05/17/18 2.7343 1.6065 Total 1.008440 10,000,000.00 10,084,400.00 9,937,217.28 147,182.72 73,814.28912828WG1 CONSTRUCTION 20-0009 Treasury Note 2.25 04/30/21 11/25/19 1.6431 1.6065 Total 1.008440 21,000,000.00 21,177,240.00 21,166,839.15 10,400.85 -12,621.81912828WG1 CONSTRUCTION 20-0008 Treasury Note 2.25 04/30/21 11/25/19 1.6445 1.6065 Total 1.008440 21,000,000.00 21,177,240.00 21,166,445.71 10,794.29 -12,591.899128284P2 CONSTRUCTION 20-0010 Treasury Note 2.625 05/15/21 11/25/19 1.6541 1.6082 Total 1.013750 42,000,000.00 42,577,500.00 42,550,260.43 27,239.57 -40,422.119128284T4 CONSTRUCTION 20-0019 Treasury Note 2.625 06/15/21 12/23/19 1.6445 1.6112 Total 1.014530 44,000,000.00 44,639,320.00 44,616,996.14 22,323.86 -10,347.613133ELES9 RESERVE 20-0011 FFCB NOTE 1.70 12/20/21 12/20/19 1.7255 1.6983 Total 1.000030 14,500,000.00 14,500,435.00 14,492,859.34 7,575.66 109.34912828G87 RESERVE 20-0012 Treasury Note 2.125 12/31/21 12/20/19 1.6461 1.5890 Total 1.010510 13,500,000.00 13,641,885.00 13,626,519.04 15,365.96 -2,000.963135G0S38 RESERVE 17-0014 FNMA NOTE 2.00 01/05/22 03/31/17 1.9700 1.6088 Total 1.007710 16,000,000.00 16,123,360.00 16,009,418.96 113,941.04 -12,116.053130A1B80 RESERVE 18-0032 FHLB NOTE 2.625 03/11/22 04/09/18 2.6201 1.5703 Total 1.022650 14,000,000.00 14,317,100.00 14,001,456.29 315,643.71 -933.513130AE6S4 RESERVE 18-0041 FHLB NOTE 2.75 03/11/22 05/17/18 2.8880 1.6293 Total 1.024050 20,000,000.00 20,481,000.00 19,941,739.57 539,260.43 40,631.57313381BR5 RESERVE 20-0014 FHLB NOTE 1.875 12/09/22 12/23/19 1.6660 1.6348 Total 1.006860 14,500,000.00 14,599,470.00 14,586,525.74 12,944.26 -639.013130AHRV7 RESERVE 20-0015 FHLB NOTE 1.82 12/23/22 12/23/19 1.8200 1.8172 Total 1.000080 13,500,000.00 13,501,080.00 13,500,000.00 1,080.00 0.00

6

Run Date: 04/08/20Run Time: 08:49:27





Investment Total 1.8919 1.6441 1.005439 821,930,000.00 826,400,391.80 824,930,629.29 1,469,762.51 687,904.26

7

Run Date: 04/08/20Run Time: 08:49:50





912828X21 CONSTRUCTION 19-0032 Treasury Note 1.50 04/15/20 03/28/19 2.3553 0.1811 Total 1.000540 6,500,000.00 6,503,510.00 6,497,898.19 5,611.81 55,219.48912828VA5 CONSTRUCTION 19-0024 Treasury Note 1.125 04/30/20 02/21/19 2.5015 0.1173 Total 1.000830 16,000,000.00 16,013,280.00 15,982,670.06 30,609.94 238,990.06912828ND8 CONSTRUCTION 19-0048 Treasury Note 3.50 05/15/20 09/20/19 1.8830 0.1645 Total 1.004120 15,000,000.00 15,061,800.00 15,029,045.77 32,754.23 -127,180.13912828VP2 CONSTRUCTION 19-0050 Treasury Note 2.00 07/31/20 09/20/19 1.8887 -0.0049 Total 1.006720 16,000,000.00 16,107,520.00 16,005,866.42 101,653.58 -9,133.589128282Q2 CONSTRUCTION 20-0013 Treasury Note 1.50 08/15/20 12/23/19 1.5887 -0.0565 Total 1.005860 28,000,000.00 28,164,080.00 27,990,788.61 173,291.39 6,887.21912828L32 CONSTRUCTION 20-0016 Treasury Note 1.375 08/31/20 12/20/19 1.6237 0.0972 Total 1.005310 35,000,000.00 35,185,850.00 34,964,333.00 221,517.00 24,489.259128282V1 RESERVE 20-0020 Treasury Note 1.375 09/15/20 01/29/20 1.5492 0.0995 Total 1.005820 8,705,000.00 8,755,663.10 8,698,170.19 57,492.91 2,631.65313384G29 CONSTRUCTION 20-0025 FHLB D.N. 0.00 09/16/20 02/21/20 1.5266 0.1322 Total 0.999390 32,000,000.00 31,980,480.00 31,778,601.78 201,878.22 54,086.263130AEWA4 CONSTRUCTION 20-0001 FHLB NOTE 2.625 10/01/20 11/21/19 1.6057 0.3213 Total 1.011500 13,000,000.00 13,149,500.00 13,065,725.45 83,774.55 -47,005.803130AEWA4 CONSTRUCTION 20-0023 FHLB NOTE 2.625 10/01/20 01/29/20 1.5600 0.3213 Total 1.011500 14,000,000.00 14,161,000.00 14,073,972.96 87,027.04 -25,185.54912828L99 CONSTRUCTION 20-0026 Treasury Note 1.375 10/31/20 02/21/20 1.5227 0.1395 Total 1.007190 21,000,000.00 21,150,990.00 20,982,112.17 168,877.83 3,440.299128285Q9 CONSTRUCTION 20-0002 Treasury Note 2.75 11/30/20 11/21/19 1.6227 0.1171 Total 1.017540 13,000,000.00 13,228,020.00 13,096,323.80 131,696.20 -51,957.459128285S5 CONSTRUCTION 20-0017 Treasury Note 2.50 12/31/20 12/20/19 1.6433 0.0617 Total 1.018280 42,000,000.00 42,767,760.00 42,265,974.68 501,785.32 -99,884.70912828N48 CONSTRUCTION 20-0003 Treasury Note 1.75 12/31/20 11/21/19 1.6388 0.0521 Total 1.012730 10,000,000.00 10,127,300.00 10,008,221.19 119,078.81 -3,888.199128283Q1 CONSTRUCTION 20-0018 Treasury Note 2.00 01/15/21 12/23/19 1.6198 0.0641 Total 1.015310 40,000,000.00 40,612,400.00 40,118,588.03 493,811.97 -40,786.979128285X4 CONSTRUCTION 20-0004 Treasury Note 2.50 01/31/21 11/21/19 1.6325 0.1224 Total 1.019840 8,000,000.00 8,158,720.00 8,057,116.58 101,603.42 -24,445.929128283X6 CONSTRUCTION 20-0006 Treasury Note 2.25 02/15/21 11/22/19 1.6312 0.0830 Total 1.018980 42,000,000.00 42,797,160.00 42,224,445.30 572,714.70 -90,554.709128283X6 RESERVE 20-0005 Treasury Note 2.25 02/15/21 11/21/19 1.6061 0.0830 Total 1.018980 11,000,000.00 11,208,780.00 11,061,173.12 147,606.88 -24,878.899128284B3 CONSTRUCTION 20-0007 Treasury Note 2.375 03/15/21 11/22/19 1.6255 0.0861 Total 1.021880 43,000,000.00 43,940,840.00 43,303,749.17 637,090.83 -112,828.383133EHEC3 RESERVE 17-0013 FFCB NOTE 1.80 03/30/21 03/31/17 1.8025 0.3701 Total 1.014220 9,000,000.00 9,127,980.00 8,999,781.11 128,198.89 637.383133ELJD7 RESERVE 20-0021 FFCB NOTE 1.62 04/22/21 01/29/20 1.6173 1.3155 Total 1.003190 7,645,000.00 7,669,387.55 7,645,231.23 24,156.32 -74.57912828WG1 CONSTRUCTION 20-0008 Treasury Note 2.25 04/30/21 11/25/19 1.6445 0.1048 Total 1.023200 21,000,000.00 21,487,200.00 21,135,476.48 351,723.52 -43,561.12912828WG1 RESERVE 18-0040 Treasury Note 2.25 04/30/21 05/17/18 2.7343 0.1048 Total 1.023200 10,000,000.00 10,232,000.00 9,948,841.37 283,158.63 85,438.37912828WG1 CONSTRUCTION 20-0009 Treasury Note 2.25 04/30/21 11/25/19 1.6431 0.1048 Total 1.023200 21,000,000.00 21,487,200.00 21,135,796.31 351,403.69 -43,664.659128284P2 CONSTRUCTION 20-0010 Treasury Note 2.625 05/15/21 11/25/19 1.6541 0.1295 Total 1.028010 42,000,000.00 43,176,420.00 42,450,843.89 725,576.11 -139,838.659128284T4 CONSTRUCTION 20-0019 Treasury Note 2.625 06/15/21 12/23/19 1.6445 0.1281 Total 1.030120 44,000,000.00 45,325,280.00 44,512,370.28 812,909.72 -114,973.473130AHZL0 CONSTRUCTION 20-0024 FHLB NOTE 1.54 07/22/21 01/29/20 1.5400 1.4846 Total 1.000710 21,000,000.00 21,014,910.00 21,000,000.00 14,910.00 0.009128284W7 CONSTRUCTION 20-0027 Treasury Note 2.75 08/15/21 02/21/20 1.4280 0.1745 Total 1.035390 7,000,000.00 7,247,730.00 7,125,398.44 122,331.56 -9,953.123134GVHX9 CONSTRUCTION 20-0028 FHLMC NOTE 1.00 09/24/21 03/30/20 1.0000 1.0516 Total 0.999245 15,000,000.00 14,988,675.00 15,000,000.00 -11,325.00 0.003133ELES9 RESERVE 20-0011 FFCB NOTE 1.70 12/20/21 12/20/19 1.7255 1.6983 Total 1.000020 14,500,000.00 14,500,290.00 14,493,753.95 6,536.05 1,003.95912828G87 RESERVE 20-0012 Treasury Note 2.125 12/31/21 12/20/19 1.6461 0.2253 Total 1.033160 13,500,000.00 13,947,660.00 13,610,876.85 336,783.15 -17,643.153135G0S38 RESERVE 17-0014 FNMA NOTE 2.00 01/05/22 03/31/17 1.9700 0.3663 Total 1.028650 16,000,000.00 16,458,400.00 16,008,265.60 450,134.40 -13,269.413130AE6S4 RESERVE 18-0041 FHLB NOTE 2.75 03/11/22 05/17/18 2.8880 0.4161 Total 1.045150 20,000,000.00 20,903,000.00 19,948,183.05 954,816.95 47,075.053130A1B80 RESERVE 18-0032 FHLB NOTE 2.625 03/11/22 04/09/18 2.6201 0.3574 Total 1.043900 14,000,000.00 14,614,600.00 14,001,294.79 613,305.21 -1,095.01313381BR5 RESERVE 20-0014 FHLB NOTE 1.875 12/09/22 12/23/19 1.6660 0.5568 Total 1.035130 14,500,000.00 15,009,385.00 14,579,336.94 430,048.06 -7,827.813130AHRV7 RESERVE 20-0015 FHLB NOTE 1.82 12/23/22 12/23/19 1.8200 1.7096 Total 1.002920 13,500,000.00 13,539,420.00 13,500,000.00 39,420.00 0.003134GU6H8 RESERVE 20-0022 FHLMC NOTE 1.73 04/21/23 01/29/20 1.7303 1.6156 Total 1.003400 12,150,000.00 12,191,310.00 12,150,001.49 41,308.51 1.49Investment Total 1.7252 0.2971 1.016432 730,000,000.00 741,995,500.65 732,450,228.25 9,545,272.40 -529,730.77

8

Run Date: 04/08/20Run Time: 08:50:21

Page 1 of 4Account Register Activity



Invest Account Transact Coupon Comments Beginning Deposit Withdrawal EndingNumber ID Date Rate Unamor Val/Cost Amount Amount Unamor Val/Cost

Investment Number - AR-0001AR-0001 TXPL - 01- REV 01/23/20 0.000000 TR TO LGC-USGN, TR TO LGC-USGN, J 40,649,884.47 0.00 204,884.00 40,445,000.47AR-0001 TXPL - 01- REV 01/23/20 0.000000 TR TO TXCL-ESC, TR TO TXCL-ESC, J 40,445,000.47 0.00 360,929.00 40,084,071.47AR-0001 TXPL - 01- REV 01/23/20 0.000000 TR TO LGC-I&S, TR TO LGC-I/S, JAN 40,084,071.47 0.00 21,922,266.33 18,161,805.14AR-0001 TXPL - 01- REV 01/23/20 0.000000 TD ONLY 18,161,805.14 36,995.42 36,995.42 18,161,805.14AR-0001 TXPL - 01- REV 01/30/20 0.000000 TR FR INB 18,161,805.14 23,965,253.85 187,535.28 41,939,523.71AR-0001 TXPL - 01- REV 01/31/20 0.000000 TR FR INB 41,939,523.71 3,419,054.00 0.00 45,358,577.71AR-0001 TXPL - 01- REV 01/31/20 0.000000 IntPay AR-1 45,358,577.71 48,448.37 0.00 45,407,026.08AR-0001 TXPL - 01- REV 02/01/20 0.000000 TR TO INB 45,407,026.08 0.00 14,838.73 45,392,187.35AR-0001 TXPL - 01- REV 02/25/20 0.000000 TR TO LGC-USGN, DST USGN, FEB 45,392,187.35 0.00 204,884.00 45,187,303.35AR-0001 TXPL - 01- REV 02/25/20 0.000000 TR TO TXCL-ESC, DST ESCROW, FEB 45,187,303.35 0.00 360,929.00 44,826,374.35AR-0001 TXPL - 01- REV 02/25/20 0.000000 TR TO LGC-I&S, DST I/S, FEB 44,826,374.35 0.00 21,922,266.33 22,904,108.02AR-0001 TXPL - 01- REV 02/25/20 0.000000 TD ONLY 22,904,108.02 6,278.90 6,278.90 22,904,108.02AR-0001 TXPL - 01- REV 02/28/20 0.000000 TR FR INB 22,904,108.02 24,240,637.76 99,055.41 47,045,690.37AR-0001 TXPL - 01- REV 02/29/20 0.000000 IntPay AR-1 47,045,690.37 54,572.39 0.00 47,100,262.76AR-0001 TXPL - 01- REV 03/25/20 0.000000 TR TO LGC-USGN, DST USGN, MAR 47,100,262.76 0.00 204,884.00 46,895,378.76AR-0001 TXPL - 01- REV 03/25/20 0.000000 TR TO TXCL-ESC, DST ESCROW, MAR 46,895,378.76 0.00 360,929.00 46,534,449.76AR-0001 TXPL - 01- REV 03/25/20 0.000000 TR TO LGC-I&S, DST I/S, MAR 46,534,449.76 0.00 21,922,266.33 24,612,183.43AR-0001 TXPL - 01- REV 03/25/20 0.000000 TD ONLY 24,612,183.43 12,195.15 12,195.15 24,612,183.43AR-0001 TXPL - 01- REV 03/27/20 0.000000 TR FR INB 24,612,183.43 21,819,605.36 1,486,346.36 44,945,442.43AR-0001 TXPL - 01- REV 03/31/20 0.000000 TR FR INB 44,945,442.43 2,420,472.38 15,548.01 47,350,366.80AR-0001 TXPL - 01- REV 03/31/20 0.000000 IntPay AR-1 47,350,366.80 39,272.48 0.00 47,389,639.28Investment Number - AR-0001 Total 0.000000 40,649,884.47 76,062,786.06 69,323,031.25 47,389,639.28Investment Number - AR-0014AR-0014 TXPL - 06 - RSRV 01/06/20 0.000000 TR FR BNY 7,724,688.00 160,000.00 0.00 7,884,688.00AR-0014 TXPL - 06 - RSRV 01/28/20 0.000000 TR FR BNY 7,884,688.00 22,106,700.00 0.00 29,991,388.00AR-0014 TXPL - 06 - RSRV 01/29/20 0.000000 TR TO BNY 29,991,388.00 0.00 28,538,557.14 1,452,830.86AR-0014 TXPL - 06 - RSRV 01/31/20 0.000000 IntPay AR-14 1,452,830.86 10,744.74 0.00 1,463,575.60AR-0014 TXPL - 06 - RSRV 02/18/20 0.000000 TR FR BNY 1,463,575.60 123,750.00 0.00 1,587,325.60AR-0014 TXPL - 06 - RSRV 02/29/20 0.000000 IntPay AR-14 1,587,325.60 1,914.49 0.00 1,589,240.09AR-0014 TXPL - 06 - RSRV 03/11/20 0.000000 TR FR BNY 1,589,240.09 458,750.00 0.00 2,047,990.09AR-0014 TXPL - 06 - RSRV 03/16/20 0.000000 TR FR BNY 2,047,990.09 59,846.88 0.00 2,107,836.97AR-0014 TXPL - 06 - RSRV 03/27/20 0.000000 TR FR BNY 2,107,836.97 31,256,000.00 0.00 33,363,836.97AR-0014 TXPL - 06 - RSRV 03/30/20 0.000000 TR FR BNY 33,363,836.97 81,000.00 0.00 33,444,836.97AR-0014 TXPL - 06 - RSRV 03/31/20 0.000000 IntPay AR-14 33,444,836.97 3,986.77 0.00 33,448,823.74Investment Number - AR-0014 Total 0.000000 7,724,688.00 54,262,692.88 28,538,557.14 33,448,823.74Investment Number - AR-0020AR-0020 LGC - 05 - I&S 01/17/20 0.000000 TR FR INB, FINAL ACCTNG SERIES 20 96,655,819.57 34,403.36 0.00 96,690,222.93AR-0020 LGC - 05 - I&S 01/21/20 0.000000 TR FR INB, HTS FINAL ACCTNG 96,690,222.93 18,843.34 0.00 96,709,066.27AR-0020 LGC - 05 - I&S 01/22/20 0.000000 TR FR INB, HTS FINAL ACCTG 96,709,066.27 31,688.48 0.00 96,740,754.75AR-0020 LGC - 05 - I&S 01/23/20 0.000000 TR FR TXPL-REV, I/S - DST JAN 96,740,754.75 21,922,266.33 0.00 118,663,021.08AR-0020 LGC - 05 - I&S 01/31/20 0.000000 IntPay AR-20 118,663,021.08 157,251.54 0.00 118,820,272.62AR-0020 LGC - 05 - I&S 02/05/20 0.000000 TR FR INB, FINAL ACCTG, BUF CRK 2 118,820,272.62 12,209.56 0.00 118,832,482.18

9

Run Date: 04/08/20Run Time: 08:50:21





AR-0020 LGC - 05 - I&S 02/19/20 0.000000 TR FR INB, 2010A SUBSIDY 118,832,482.18 1,008,997.32 0.00 119,841,479.50AR-0020 LGC - 05 - I&S 02/19/20 0.000000 TR FR INB, FINAL ACCTNG, RWS REV 119,841,479.50 13,157.94 0.00 119,854,637.44AR-0020 LGC - 05 - I&S 02/25/20 0.000000 TR FR TXPL-REV, DST I/S, FEB 119,854,637.44 21,922,266.33 0.00 141,776,903.77AR-0020 LGC - 05 - I&S 02/29/20 0.000000 IntPay AR-20 141,776,903.77 172,151.35 0.00 141,949,055.12AR-0020 LGC - 05 - I&S 03/02/20 0.000000 TR TO BNY, DEBT SERV PMT 141,949,055.12 0.00 50,289,412.27 91,659,642.85AR-0020 LGC - 05 - I&S 03/25/20 0.000000 TR FR TXPL-REV, DST I/S, MAR 91,659,642.85 21,922,266.33 0.00 113,581,909.18AR-0020 LGC - 05 - I&S 03/26/20 0.000000 TR TO TXCL-I&S 113,581,909.18 0.00 91,659,542.85 21,922,366.33AR-0020 LGC - 05 - I&S 03/31/20 0.000000 IntPay AR-20 21,922,366.33 99,495.01 0.00 22,021,861.34Investment Number - AR-0020 Total 0.000000 96,655,819.57 67,314,996.89 141,948,955.12 22,021,861.34Investment Number - AR-0022AR-0022 LGC - 08 - USGN 01/23/20 0.000000 TR FR TXPL-REV, USGN - JAN DST 346,204.93 204,884.00 0.00 551,088.93AR-0022 LGC - 08 - USGN 01/31/20 0.000000 IntPay AR-22 551,088.93 618.51 0.00 551,707.44AR-0022 LGC - 08 - USGN 02/25/20 0.000000 TR FR TXPL-REV, DST USGN, FEB 551,707.44 204,884.00 0.00 756,591.44AR-0022 LGC - 08 - USGN 02/29/20 0.000000 IntPay AR-22 756,591.44 821.58 0.00 757,413.02AR-0022 LGC - 08 - USGN 03/25/20 0.000000 TR FR TXPL-REV, DST USGN, MAR 757,413.02 204,884.00 0.00 962,297.02AR-0022 LGC - 08 - USGN 03/26/20 0.000000 TR TO TXCL-USGN 962,297.02 0.00 757,313.02 204,984.00AR-0022 LGC - 08 - USGN 03/31/20 0.000000 IntPay AR-22 204,984.00 808.13 0.00 205,792.13Investment Number - AR-0022 Total 0.000000 346,204.93 616,900.22 757,313.02 205,792.13Investment Number - AR-0025AR-0025 LGC - 003 - Cnstr/Esc 01/31/20 0.000000 IntPay AR-25 183,126,584.68 279,598.74 0.00 183,406,183.42AR-0025 LGC - 003 - Cnstr/Esc 02/29/20 0.000000 IntPay AR-25 183,406,183.42 256,716.04 0.00 183,662,899.46AR-0025 LGC - 003 - Cnstr/Esc 03/31/20 0.000000 IntPay AR-25 183,662,899.46 222,434.69 0.00 183,885,334.15Investment Number - AR-0025 Total 0.000000 183,126,584.68 758,749.47 0.00 183,885,334.15Investment Number - AR-0026AR-0026 LGC - 004 - Cnstr/Esc 01/31/20 0.000000 IntPay AR-26 216,054,289.10 329,872.94 0.00 216,384,162.04AR-0026 LGC - 004 - Cnstr/Esc 02/29/20 0.000000 IntPay AR-26 216,384,162.04 302,875.73 0.00 216,687,037.77AR-0026 LGC - 004 - Cnstr/Esc 03/31/20 0.000000 IntPay AR-26 216,687,037.77 262,430.30 0.00 216,949,468.07Investment Number - AR-0026 Total 0.000000 216,054,289.10 895,178.97 0.00 216,949,468.07Investment Number - AR-0029AR-0029 TXCLASS - 02 - ESC 01/23/20 0.000000 TR FR TXPL-REV, ESC - JAN DST 42,610,204.32 360,929.00 0.00 42,971,133.32AR-0029 TXCLASS - 02 - ESC 01/31/20 0.000000 IntPay AR-29 42,971,133.32 67,274.20 0.00 43,038,407.52AR-0029 TXCLASS - 02 - ESC 02/25/20 0.000000 TR FR TXPL-REV, DST ESC, FEB 43,038,407.52 360,929.00 0.00 43,399,336.52AR-0029 TXCLASS - 02 - ESC 02/29/20 0.000000 IntPay AR-29 43,399,336.52 60,519.82 0.00 43,459,856.34AR-0029 TXCLASS - 02 - ESC 03/25/20 0.000000 TR FR TXPL-REV, DST ESC, MAR 43,459,856.34 360,929.00 0.00 43,820,785.34AR-0029 TXCLASS - 02 - ESC 03/31/20 0.000000 IntPay AR-29 43,820,785.34 54,110.63 0.00 43,874,895.97Investment Number - AR-0029 Total 0.000000 42,610,204.32 1,264,691.65 0.00 43,874,895.97Investment Number - AR-0030AR-0030 TXCLASS - 03 - USGN 03/26/20 0.000000 TR FR LGC-USGN 0.00 757,313.02 0.00 757,313.02AR-0030 TXCLASS - 03 - USGN 03/31/20 0.000000 IntPay AR-30 757,313.02 152.36 0.00 757,465.38Investment Number - AR-0030 Total 0.000000 0.00 757,465.38 0.00 757,465.38Investment Number - AR-0031AR-0031 TXCLASS - 04 - IH 01/06/20 0.000000 TR TO BCBS 1,265,702.56 0.00 203,642.51 1,062,060.05AR-0031 TXCLASS - 04 - IH 01/13/20 0.000000 TR TO BCBS 1,062,060.05 0.00 224,347.59 837,712.46

10

Run Date: 04/08/20Run Time: 08:50:21





AR-0031 TXCLASS - 04 - IH 01/21/20 0.000000 TR TO BCBS 837,712.46 0.00 229,561.50 608,150.96AR-0031 TXCLASS - 04 - IH 01/27/20 0.000000 TR TO BCBS 608,150.96 0.00 166,791.28 441,359.68AR-0031 TXCLASS - 04 - IH 01/30/20 0.000000 TR FR INB 441,359.68 1,107,416.35 0.00 1,548,776.03AR-0031 TXCLASS - 04 - IH 01/31/20 0.000000 IntPay AR-31 1,548,776.03 1,453.27 0.00 1,550,229.30AR-0031 TXCLASS - 04 - IH 02/03/20 0.000000 TR TO BCBS 1,550,229.30 0.00 224,349.21 1,325,880.09AR-0031 TXCLASS - 04 - IH 02/10/20 0.000000 TR TO BCBS 1,325,880.09 0.00 286,271.99 1,039,608.10AR-0031 TXCLASS - 04 - IH 02/18/20 0.000000 TR TO BCBS 1,039,608.10 0.00 306,777.00 732,831.10AR-0031 TXCLASS - 04 - IH 02/21/20 0.000000 TR FR INB 732,831.10 914,346.44 0.00 1,647,177.54AR-0031 TXCLASS - 04 - IH 02/24/20 0.000000 TR TO BCBS 1,647,177.54 0.00 239,700.23 1,407,477.31AR-0031 TXCLASS - 04 - IH 02/29/20 0.000000 IntPay AR-31 1,407,477.31 1,756.95 0.00 1,409,234.26AR-0031 TXCLASS - 04 - IH 03/02/20 0.000000 TR TO BCBS 1,409,234.26 0.00 249,458.56 1,159,775.70AR-0031 TXCLASS - 04 - IH 03/09/20 0.000000 TR TO BCBS 1,159,775.70 0.00 383,284.57 776,491.13AR-0031 TXCLASS - 04 - IH 03/16/20 0.000000 TR TO BCBS 776,491.13 0.00 299,736.67 476,754.46AR-0031 TXCLASS - 04 - IH 03/20/20 0.000000 TR FR INB 476,754.46 1,195,991.99 0.00 1,672,746.45AR-0031 TXCLASS - 04 - IH 03/23/20 0.000000 TR TO BCBS 1,672,746.45 0.00 471,652.00 1,201,094.45AR-0031 TXCLASS - 04 - IH 03/27/20 0.000000 TR FR INB 1,201,094.45 106,250.00 0.00 1,307,344.45AR-0031 TXCLASS - 04 - IH 03/30/20 0.000000 TR TO BCBS 1,307,344.45 0.00 286,231.13 1,021,113.32AR-0031 TXCLASS - 04 - IH 03/31/20 0.000000 IntPay AR-31 1,021,113.32 1,302.02 0.00 1,022,415.34Investment Number - AR-0031 Total 0.000000 1,265,702.56 3,328,517.02 3,571,804.24 1,022,415.34Investment Number - AR-0032AR-0032 TXCLASS - 05 - I&S 03/26/20 0.000000 TR FR LGC-I&S 0.00 91,659,542.85 0.00 91,659,542.85AR-0032 TXCLASS - 05 - I&S 03/31/20 0.000000 IntPay AR-32 91,659,542.85 18,440.52 0.00 91,677,983.37Investment Number - AR-0032 Total 0.000000 0.00 91,677,983.37 0.00 91,677,983.37Investment Number - AR-0034AR-0034 TXCLASS - 07 - Cnstr 01/02/20 0.000000 TR TO INB 418,260,908.46 0.00 2,984,609.07 415,276,299.39AR-0034 TXCLASS - 07 - Cnstr 01/03/20 0.000000 TR FR BNY 415,276,299.39 3,481.51 0.00 415,279,780.90AR-0034 TXCLASS - 07 - Cnstr 01/09/20 0.000000 TR TO INB 415,279,780.90 59.99 3,342,437.72 411,937,403.17AR-0034 TXCLASS - 07 - Cnstr 01/10/20 0.000000 TR TO BNY 411,937,403.17 16,156,000.00 0.00 428,093,403.17AR-0034 TXCLASS - 07 - Cnstr 01/10/20 0.000000 TR TO INB 428,093,403.17 0.00 46,487,907.67 381,605,495.50AR-0034 TXCLASS - 07 - Cnstr 01/10/20 0.000000 SWFT18 RCLS 381,605,495.50 6,267,346.15 6,267,346.15 381,605,495.50AR-0034 TXCLASS - 07 - Cnstr 01/15/20 0.000000 TR FR BNY 381,605,495.50 21,544,375.00 0.00 403,149,870.50AR-0034 TXCLASS - 07 - Cnstr 01/17/20 0.000000 TR TO INB 403,149,870.50 0.00 1,271,425.34 401,878,445.16AR-0034 TXCLASS - 07 - Cnstr 01/21/20 0.000000 TR FR INB 401,878,445.16 449,935.00 0.00 402,328,380.16AR-0034 TXCLASS - 07 - Cnstr 01/23/20 0.000000 TR FR INB, TR FR INB - CAP IMP, J 402,328,380.16 3,075,335.00 0.00 405,403,715.16AR-0034 TXCLASS - 07 - Cnstr 01/29/20 0.000000 TR TO BNY 405,403,715.16 0.00 35,219,616.83 370,184,098.33AR-0034 TXCLASS - 07 - Cnstr 01/30/20 0.000000 TR TO INB 370,184,098.33 0.00 8,939,440.67 361,244,657.66AR-0034 TXCLASS - 07 - Cnstr 01/31/20 0.000000 TR FR BNY 361,244,657.66 260,000.00 0.00 361,504,657.66AR-0034 TXCLASS - 07 - Cnstr 01/31/20 0.000000 IntPay AR-34 361,504,657.66 629,648.72 0.00 362,134,306.38AR-0034 TXCLASS - 07 - Cnstr 02/04/20 0.000000 TR TO INB 362,134,306.38 0.00 1,001,288.69 361,133,017.69AR-0034 TXCLASS - 07 - Cnstr 02/10/20 0.000000 TR TO INB 361,133,017.69 0.00 25,865,024.08 335,267,993.61AR-0034 TXCLASS - 07 - Cnstr 02/12/20 0.000000 TR FR INB 335,267,993.61 39,393.93 0.00 335,307,387.54AR-0034 TXCLASS - 07 - Cnstr 02/18/20 0.000000 TR FR INB 335,307,387.54 161,207.00 0.00 335,468,594.54AR-0034 TXCLASS - 07 - Cnstr 02/18/20 0.000000 TR FR BNY 335,468,594.54 52,033,125.00 0.00 387,501,719.54

11

Run Date: 04/08/20Run Time: 08:50:21





AR-0034 TXCLASS - 07 - Cnstr 02/21/20 0.000000 TR TO BNY 387,501,719.54 0.00 59,931,351.46 327,570,368.08AR-0034 TXCLASS - 07 - Cnstr 02/25/20 0.000000 TR FR INB, DST CAP IMP, FEB 327,570,368.08 3,075,335.00 0.00 330,645,703.08AR-0034 TXCLASS - 07 - Cnstr 02/27/20 0.000000 TR TO INB 330,645,703.08 0.00 17,510,562.39 313,135,140.69AR-0034 TXCLASS - 07 - Cnstr 02/29/20 0.000000 IntPay AR-34 313,135,140.69 484,835.56 0.00 313,619,976.25AR-0034 TXCLASS - 07 - Cnstr 03/02/20 0.000000 TR FR BNY 313,619,976.25 16,350,625.00 0.00 329,970,601.25AR-0034 TXCLASS - 07 - Cnstr 03/09/20 0.000000 TR TO INB 329,970,601.25 17.37 30,641,874.10 299,328,744.52AR-0034 TXCLASS - 07 - Cnstr 03/16/20 0.000000 TR FR BNY 299,328,744.52 32,722,812.50 0.00 332,051,557.02AR-0034 TXCLASS - 07 - Cnstr 03/18/20 0.000000 TR FR BNY 332,051,557.02 41,947,875.00 0.00 373,999,432.02AR-0034 TXCLASS - 07 - Cnstr 03/25/20 0.000000 TR FR INB, DST CAP IMP, MAR 373,999,432.02 3,075,335.00 0.00 377,074,767.02AR-0034 TXCLASS - 07 - Cnstr 03/27/20 0.000000 TR TO INB 377,074,767.02 0.00 17,765,924.36 359,308,842.66AR-0034 TXCLASS - 07 - Cnstr 03/31/20 0.000000 TR TO BNY 359,308,842.66 0.00 15,000,000.00 344,308,842.66AR-0034 TXCLASS - 07 - Cnstr 03/31/20 0.000000 IntPay AR-34 344,308,842.66 420,444.51 0.00 344,729,287.17Investment Number - AR-0034 Total 0.000000 418,260,908.46 198,697,187.24 272,228,808.53 344,729,287.17Investment Number - AR-0035AR-0035 LGC - 005 - Cnstr/Esc 01/31/20 0.000000 IntPay AR-35 101,247,625.19 154,585.47 0.00 101,402,210.66AR-0035 LGC - 005 - Cnstr/Esc 02/29/20 0.000000 IntPay AR-35 101,402,210.66 141,934.01 0.00 101,544,144.67AR-0035 LGC - 005 - Cnstr/Esc 03/31/20 0.000000 IntPay AR-35 101,544,144.67 122,980.43 0.00 101,667,125.10Investment Number - AR-0035 Total 0.000000 101,247,625.19 419,499.91 0.00 101,667,125.10 Investment Total 0.000000 1,107,941,911.28 496,056,649.06 516,368,469.30 1,087,630,091.04

12


EMPLOYEES' RETIREMENT FUND

FOR THE THREE MONTHS ENDED

MARCH 31, 2020

TABLE OFCONTENTS

STATEMENT OFCHANGES INNET ASSETS1

STATEMENT OFCASH RECEIPTS AND DISBURSEMENTS2

COMPLIANCE STATEMENT3


EMPLOYEES' RETIREMENT FUND

STATEMENT OF CHANGES IN NET ASSETS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

WESTWOOD

COMMON

AETNATRUSTBROWN RUTHTOTAL

ADDITIONS:

Contributions$ 1,265,360.97$ 110,000.00$ 110,000.00$ 1,485,360.97

InvestmentIncome:

AppreciationinFairValue - ( 7,551,019.36) ( 8,276,822.31) ( 15,827,841.67)

Interest 4,187.06 - - 4,187.06

Dividends - 1,416.20 405,023.38 406,439.58

CapitalGains - ( 655,553.19) - ( 655,553.19)

TotalInvestmentIncome 4,187.06 ( 8,205,156.35) ( 7,871,798.93) ( 16,072,768.22)

InvestmentExpense ( 6,704.04) ( 64,047.55) ( 24,792.08) ( 95,543.67)

TotalAdditions 1,262,843.99 ( 8,159,203.90) ( 7,786,591.01) ( 14,682,950.92)

DEDUCTIONS:

BenefitPayments 1,213,063.10 - - 1,213,063.10

TOTALINCREASE 49,780.89 ( 8,159,203.90) ( 7,786,591.01) ( 15,896,014.02)

NETASSETS:

Balance, January1 927,926.30 47,537,755.41 49,584,161.38 98,049,843.09

Balance, March31$ 977,707.19$ 39,378,551.51$ 41,797,570.37$ 82,153,829.07

1

NORTHTEXASMUNICIPALWATERDISTRICT

EMPLOYEE'SRETIREMENTFUND

STATEMENTOFCASHRECEIPTSANDDISBURSEMENTS

JANUARY1 - MARCH31, 2020

04/13/202014:49

WESTWOODBROWN RUTH

COMMONAMERICAN

AETNATRUSTFUNDSTOTAL

BeginningBalance 927,926.30 38,869,248.48 41,312,531.43 81,109,706.21

Receipts

Contributions 1,265,360.97 110,000.00 110,000.00 1,485,360.97

InterestIncome 4,187.06 - - 4,187.06

DividendIncome - 1,416.20 405,023.38 406,439.58

CapitalGains - ( 655,553.19) - ( 655,553.19)

TotalReceipts 1,269,548.03 ( 544,136.99) 515,023.38 1,240,434.42

Disbursements

ParticipationBenefits 1,213,063.10 - - 1,213,063.10

ServiceFees 6,704.04 64,047.55 24,792.08 95,543.67

TransfersOut - - - -

TotalDisbursements 1,219,767.14 64,047.55 24,792.08 1,308,606.77

EndingBalance 977,707.19 38,261,063.94 41,802,762.73 81,041,533.86

UnrealizedGain/Loss - 1,117,487.57 ( 5,192.36) 1,112,295.21

MarketValue 977,707.19 39,378,551.51 41,797,570.37 82,153,829.07

2

Compliance with Investment Policy

The North Texas Municipal Water District'sEmployees' Retirement Fund investment

portfolio isinvested inaccordance with theDistrict Policy No. 25 - NTMWD Employee

Retirement Fund Investment Policy. The District does not invest inany investments

which areprohibited bythispolicy.

Alternate Investment Officer

Drew Farris, Finance Manager

Alternate Investment Officer

Erik Felthous, Assistant Deputy (Finance)

3

MARCH 31, 2020


RETIREE HEALTH INSURANCE FUND

FOR THE SIX MONTHS ENDED

STATEMENT OF CHANGES IN NET ASSETS 1

STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS 2

COMPLIANCE STATEMENT 3

TABLE OF CONTENTS

WESTWOODCOMMON

TRUST

ADDITIONS: Contributions -$

Investment Income: Appreciation in Fair Value (1,080,382.80) Interest - Dividends 194,228.22 Capital Gains (114,150.32) Total Investment Income (1,000,304.90)

Investment Expense (23,384.89)

Total Additions (1,023,689.79)

DEDUCTIONS: Benefit Payments -

TOTAL INCREASE (1,023,689.79)

NET ASSETS: Balance, October 1 8,219,829.18

Balance, March 31 7,196,139.39$

NORTH TEXAS MUNICIPAL WATER DISTRICTRETIREE HEALTH INSURANCE FUNDSTATEMENT OF CHANGES IN NET ASSETS

FOR THE SIX MONTHS ENDED MARCH 31, 2020

1

NORTH TEXAS MUNICIPAL WATER DISTRICTRETIREE HEALTH INSURANCE FUNDSTATEMENT OF CASH RECEIPTS AND DISBURSEMENTSOCTOBER 1 - MARCH 31, 202004/08/2020 8:45

WESTWOODCOMMON

TRUST

Beginning Balance 7,285,719.06

Receipts Contributions - Interest Income - Dividend Income 194,228.22 Capital Gains (114,150.32) Total Receipts 80,077.90

Disbursements Participation Benefits - Service Fees 23,384.89 Transfers Out - Total Disbursements 23,384.89

Ending Balance 7,342,412.07

Unrealized Gain/Loss (146,272.68)

Market Value 7,196,139.39

2

Compliance with Investment Policy

The North Texas Municipal Water District's Employees' Retirement Fund investment

portfolio is invested in accordance with Section II of the North Texas Municipal Water

District's Administration and Finance Policies Manual. The District does not invest

in any investments which are prohibited by this policy.

Alternate Investment Officer Drew Farris, Finance Manager

Alternate Investment Officer Erik Felthous, Assistant Deputy (Finance)

3


FINANCIAL STATEMENTS

FOR THE MONTH ENDED

3/31/2020

UNAUDITED

Regional Service Through Unity…Meeting Our Region’s Needs Today and Tomorrow

501 E. Brown Street, P.O. Box 2408, Wylie, Texas 75098-2408 | Phone: 972-442-5405 | Fax: 972-295-6440 | www.ntmwd.com

April 15, 2020 Mr. Thomas W. Kula Executive Director / General Manager P.O. Box 2408 Wylie, Texas 75098 Re: 2019-20 ALL SYSTEMS FINANCIAL STATEMENTS AS OF MARCH 31, 2020 Dear Mr. Kula: Submitted herewith are the financial statements for the North Texas Municipal Water District for the month ended March 31, 2020. All systems currently have revenues equal to or exceeding expenses with the exception of the following: Terrell WTF, Seis Lagos and Farmersville Wastewater Treatment Plants, which have variances between revenues and expenses due to timing. The North Rockwall WWTP has had additional expenses due to rotor and press repairs. During the period, the District's total operating revenues for all systems were $276,033,959 or 50.0% of the original budget. Total expenditures for all systems were $253,482,189 or 45.9% of the original budget. As of March 31, 2020 the District’s cash and investment balance was $1,827,705,558. Interest earnings during the month were $2,414,204 and the yield on the investments was 1.57%. Overall, the attached financial statements reflect favorable results as the District continues to provide cost effective services to its member and customer cities.

Sincerely,

ERIK FELTHOUS

Assistant Deputy - Finance EF/DF

http://www.ntmwd.com/

TABLE OF CONTENTS

Page

BUDGET SUMMARYAll Systems - Revenues and Expenditures…………………………………………………………………1Support Fund……………………………………………………………………………………………… 2Regional Water System…………………………………………………………………………………… 3Regional Wastewater System………………………………………………………………………………4Regional Solid Waste System………………………………………………………………………………5Upper East Fork Interceptor System…………………………………………………………………………6Sewer System………………………………………………………………………………………………7All Systems - By System……………………………………………………………………………………8-11

SUPPORT FUND:Comparative Statement of Net Position………………………………………………………………...… 12Statement of Revenues, Expenses, and Changes in Net Position……………………………………..……13Statement of Cash Flows……………………………………….……………………………………………14

REGIONAL WATER SYSTEM FUND:Comparative Statement of Net Position………………………………………………………………...… 15Statement of Revenues, Expenses, and Changes in Net Position……………………………………..……16Statement of Cash Flows……………………………………….……………………………………………17

REGIONAL WASTEWATER SYSTEM FUND:Comparative Statement of Net Position………………………………………………………………...… 18Statement of Revenues, Expenses, and Changes in Net Position……………………………………..……19Statement of Cash Flows………………………………………..………………………………………… 20

REGIONAL SOLID WASTE SYSTEM FUND:Comparative Statement of Net Position………………………………………………………………...… 21Statement of Revenues, Expenses, and Changes in Net Position……………………………………..……22Statement of Cash Flows……………………………………..…………………………………………… 23

UPPER EAST FORK INTERCEPTOR SYSTEM:Comparative Statement of Net Position………………………………………………………………...… 24Statement of Revenues, Expenses, and Changes in Net Position……………………………………..……25Statement of Cash Flows…………………………………..……………………………………………… 26

SEWER SYSTEM:Comparative Statement of Net Position………………………………………………………………...… 27Statement of Revenues, Expenses, and Changes in Net Position……………………………………..……28Statement of Cash Flows……………………………….……………………………………………………29

SCHEDULES OF CASH AND INVESTMENTS……………………………………………….………………30-34

-1-

Original YTD % Of RemainingBudget Actual Budget Budget

Revenues:

Sales: Water 354,655,576$ 177,328,798$ 50.0% 177,326,778$ Wastewater 76,059,575 37,618,305 49.5% 38,441,270 Interceptor 38,373,090 18,894,869 49.2% 19,478,221 Solid Waste 32,435,175 16,116,886 49.7% 16,318,289 Sewer 40,039,455 20,019,806 50.0% 20,019,649 Total 541,562,871 269,978,665 49.9% 271,584,206

Other Charges 8,930,674 5,692,712 63.7% 3,237,962

Interest Income 1,233,385 362,583 29.4% 870,802

Total 551,726,930$ 276,033,959$ 50.0% 275,692,971$

Expenditures:

Personnel 91,125,735$ 43,655,192$ 47.9% 47,470,543$

Supplies: Fuel 3,303,620 1,322,073 40.0% 1,981,547 Chemicals 41,587,180 16,161,469 38.9% 25,425,711 Other 15,869,010 7,780,455 49.0% 8,088,555 Total 60,759,810 25,263,997 41.6% 35,495,813

Services: Consulting 8,796,095 1,321,518 15.0% 7,474,577 Insurance 1,720,150 1,487,086 86.5% 233,064 Landfill Service Fees 5,590,055 2,129,390 38.1% 3,460,665 Maintenance 18,886,465 3,549,636 18.8% 15,336,829 Power 25,005,740 9,958,234 39.8% 15,047,506 Support 57,808,485 28,743,318 49.7% 29,065,167 Water Purchases 7,577,685 3,400,383 44.9% 4,177,302 Other 16,332,420 5,210,663 31.9% 11,121,757 Support Allocation (60,926,985) (28,862,300) 47.4% (32,064,685) Total 80,790,110 26,937,927 33.3% 53,852,183

Capital Outlay 12,357,175 3,657,631 29.6% 8,699,544

Escrow 4,281,045 2,140,477 50.0% 2,140,568

Capital Improvement Fund 36,904,000 18,782,991 50.9% 18,121,009

Debt Service 266,103,925 133,036,975 50.0% 133,066,950

Special Projects 140,000 7,000 5.0% 133,000

Total 552,461,800$ 253,482,189$ 45.9% 298,979,611$

Revenues Over / (Under) Expenditures (734,870) 22,551,770

All SystemsBudget Summary - Revenues and Expenditures

March 31, 2020

-2-


Revenues: Indirect Cost Allocation 55,536,250$ 27,681,954$ 49.8% 27,854,296$ Facilities Maintenance Services 775,310 335,396 43.3% 439,914 Inspectors 3,118,500 1,622,228 52.0% 1,496,272 IT Services 238,455 33,060 13.9% 205,395 Technical Services 1,258,470 691,475 54.9% 566,995 Total 60,926,985 30,364,114 49.8% 30,562,871 Other Charges: Other - 97,015 - (97,015) Total - 97,015 - (97,015) Interest Income - 6,436 - (6,436) Total 60,926,985$ 30,467,565$ 50.0% 30,459,420$

Expenditures:

Personnel 44,009,095$ 21,623,463$ 49.1% 22,385,632$

Supplies: Fuel 491,065 169,397 34.5% 321,668 Chemicals 26,995 735 2.7% 26,260 Other 4,761,810 3,210,923 67.4% 1,550,887 Total 5,279,870 3,381,056 64.0% 1,898,814

Services: Consulting 2,724,485 529,646 19.4% 2,194,839 Insurance 618,175 341,105 55.2% 277,070 Maintenance 2,105,365 996,737 47.3% 1,108,628 Power 115,800 51,518 44.5% 64,282 Support 8,000 - 0.0% 8,000 Other 4,113,195 815,715 19.8% 3,297,480 Total 9,685,020 2,734,721 28.2% 6,950,299

Capital Outlay 1,878,000 1,116,061 59.4% 761,940

Escrow - - - -

Capital Improvement Fund - - - -

Debt Service - - - -

Special Projects 75,000 7,000 9.3% 68,000

Total 60,926,985$ 28,862,300$ 47.4% 32,064,685$

Revenues Over / (Under) Expenditures - 1,605,265

Support FundBudget Summary - Revenues and Expenditures

March 31, 2020

-3-


Revenues: Water Sales: Members 292,468,946$ 146,234,432$ 50.0% 146,234,514$ Customers 62,166,175 31,082,971 50.0% 31,083,204 Retail Customers 20,000 11,135 55.7% 8,865 Raw Water Sales 455 259 57.0% 196 Total 354,655,576 177,328,798 50.0% 177,326,778 Other Charges: Other 459,244 1,683,082 366.5% (1,223,838) Total 459,244 1,683,082 366.5% (1,223,838) Interest Income 763,030 191,934 25.2% 571,096 Total 355,877,850$ 179,203,814$ 50.4% 176,674,036$

Expenditures:

Personnel 12,885,735$ 5,579,073$ 43.3% 7,306,662$

Supplies: Fuel 73,730 21,938 29.8% 51,792 Chemicals 31,318,175 12,423,944 39.7% 18,894,231 Other 2,763,075 1,110,795 40.2% 1,652,280 Total 34,154,980 13,556,677 39.7% 20,598,303

Services: Consulting 3,838,250 461,181 12.0% 3,377,069 Insurance 520,555 652,017 125.3% (131,462) Maintenance 9,748,095 1,520,602 15.6% 8,227,493 Power 17,905,825 7,188,322 40.1% 10,717,503 Support 41,689,415 20,854,540 50.0% 20,834,875 Water Purchases 7,577,685 3,400,383 44.9% 4,177,302 Other 4,157,445 1,019,892 24.5% 3,137,553 Total 85,437,270 35,096,937 41.1% 50,340,333

Capital Outlay 1,367,500 285,963 20.9% 1,081,537

Escrow 50,000 25,002 50.0% 24,998

Capital Improvement Fund 35,170,000 17,915,997 50.9% 17,254,003

Debt Service 187,547,235 93,767,567 50.0% 93,779,668

Special Projects - - - -

Total 356,612,720$ 166,227,216$ 46.6% 190,385,504$

Revenues Over / (Under) Expenditures (734,870) 12,976,598

Regional Water SystemBudget Summary - Revenues and Expenditures

March 31, 2020

-4-


Revenues: Wastewater Sales: Members 73,686,695$ 36,910,875$ 50.1% 36,775,820$ Customers 2,372,880 707,430 29.8% 1,665,450 Total 76,059,575 37,618,305 49.5% 38,441,270 Other Charges: Other 543,960 298,297 54.8% 245,663 Total 543,960 298,297 54.8% 245,663 Interest Income 138,730 60,347 43.5% 78,383 Total 76,742,265$ 37,976,949$ 49.5% 38,765,316$

Expenditures:

Personnel 13,253,725$ 6,525,676$ 49.2% 6,728,049$

Supplies: Fuel 535,645 226,638 42.3% 309,007 Chemicals 5,172,055 1,887,867 36.5% 3,284,188 Other 3,478,110 1,608,352 46.2% 1,869,758 Total 9,185,810 3,722,857 40.5% 5,462,953

Services: Consulting 464,930 81,011 17.4% 383,919 Insurance 229,105 184,132 80.4% 44,973 Landfill Service Fees 4,483,015 1,765,403 39.4% 2,717,612 Maintenance 1,695,510 410,930 24.2% 1,284,580 Power 3,284,100 1,348,060 41.0% 1,936,040 Support 7,750,650 3,659,353 47.2% 4,091,297 Other 2,154,240 1,079,874 50.1% 1,074,366 Total 20,061,550 8,528,764 42.5% 11,532,786

Capital Outlay 1,721,300 888,892 51.6% 832,408

Escrow 550,000 274,996 50.0% 275,004

Capital Improvement Fund 300,000 150,000 50.0% 150,000

Debt Service 31,669,880 15,837,080 50.0% 15,832,800


Total 76,742,265$ 35,928,264$ 46.8% 40,814,001$


Regional Wastewater SystemBudget Summary - Revenues and Expenditures

March 31, 2020

-5-


Revenues: Solid Waste Sales: Members 26,676,750$ 13,338,390$ 50.0% 13,338,360$ Customers 5,758,425 2,778,496 48.3% 2,979,929 Total 32,435,175 16,116,886 49.7% 16,318,289 Other Charges: Sludge Disposal 3,350,880 1,602,512 47.8% 1,748,368 Composting 565,840 248,954 44.0% 316,886 Gas Royalties 1,200,000 573,623 47.8% 626,377 Other 640,070 243,982 38.1% 396,088 Total 5,756,790 2,669,070 46.4% 3,087,720 Interest Income 97,660 35,085 35.9% 62,575 Total 38,289,625$ 18,821,041$ 49.2% 19,468,584$

Expenditures:

Personnel 11,775,580$ 5,608,849$ 47.6% 6,166,731$

Supplies: Fuel 2,073,250 859,247 41.4% 1,214,003 Chemicals 189,400 52,466 27.7% 136,934 Other 2,418,095 991,224 41.0% 1,426,871 Total 4,680,745 1,902,938 40.7% 2,777,807

Services: Consulting 787,080 153,233 19.5% 633,847 Insurance 223,875 187,199 83.6% 36,676 Maintenance 1,250,345 360,135 28.8% 890,210 Power 167,100 69,947 41.9% 97,153 Support 1,969,475 1,037,997 52.7% 931,478 Other 3,083,575 1,404,554 45.5% 1,679,021 Total 7,481,450 3,213,065 42.9% 4,268,385

Capital Outlay 6,293,900 1,101,373 17.5% 5,192,527

Escrow 2,445,000 1,222,494 50.0% 1,222,506

Capital Improvement Fund 1,084,000 541,996 50.0% 542,004

Debt Service 4,488,950 2,244,583 50.0% 2,244,367

Special Projects 40,000 - 0.0% 40,000

Total 38,289,625$ 15,835,297$ 41.4% 22,454,328$


Regional Solid Waste SystemBudget Summary - Revenues and Expenditures

March 31, 2020

-6-


Revenues: Wastewater Sales: Members 36,722,070$ 18,407,920$ 50.1% 18,314,150$ Customers 1,651,020 486,949 29.5% 1,164,071 Total 38,373,090 18,894,869 49.2% 19,478,221 Transfer from PM Escrow - - - - Other Charges: 415,565 209,317 50.4% 206,248 Total 415,565 209,317 50.4% 206,248 Interest Income 70,475 33,719 47.8% 36,756 Total 38,859,130$ 19,137,906$ 49.2% 19,721,224$

Expenditures:

Personnel 2,331,625$ 1,056,936$ 45.3% 1,274,689$

Supplies: Fuel 76,210 23,318 30.6% 52,892 Chemicals 2,581,045 927,533 35.9% 1,653,512 Other 716,700 241,554 33.7% 475,146 Total 3,373,955 1,192,406 35.3% 2,181,549

Services: Consulting 471,500 54,379 11.5% 417,121 Insurance 65,345 68,813 105.3% (3,468) Landfill Service Fees 5,000 - 0.0% 5,000 Maintenance 2,843,070 85,448 3.0% 2,757,622 Power 1,480,000 522,997 35.3% 957,003 Support 2,775,760 1,307,477 47.1% 1,468,283 Other 343,405 97,921 28.5% 245,484 Total 7,984,080 2,137,035 26.8% 5,847,045

Capital Outlay 240,950 49,012 20.3% 191,938

Escrow 58,030 29,014 50.0% 29,016

Capital Improvement Fund 350,000 174,998 50.0% 175,002

Debt Service 24,520,490 12,260,648 50.0% 12,259,842


Total 38,859,130$ 16,900,049$ 43.5% 21,959,081$


Upper East Fork Interceptor SystemBudget Summary - Revenues and Expenditures

March 31, 2020

-7-


Revenues: Wastewater Sales: Sewer / Interceptor Facilities 38,457,680$ 19,228,914$ 50.0% 19,228,766$ Water Facilities 1,581,775 790,892 50.0% 790,883 Total 40,039,455 20,019,806 50.0% 20,019,649 Other Charges: Pretreatment 1,189,445 594,750 50.0% 594,695 Debt Acquistion 344,830 172,414 50.0% 172,416 Other Charges: 220,840 65,781 29.8% 155,059 Total 1,755,115 832,945 47.5% 922,170 Interest Income 163,490 41,498 25.4% 121,992 Total 41,958,060$ 20,894,249$ 49.8% 21,063,811$

Expenditures:

Personnel 6,869,975$ 3,261,196$ 47.5% 3,608,779$

Supplies: Fuel 53,720 21,535 40.1% 32,185 Chemicals 2,299,510 868,922 37.8% 1,430,588 Other 1,731,220 617,606 35.7% 1,113,614 Total 4,084,450 1,508,063 36.9% 2,576,387

Services: Consulting 509,850 42,068 8.3% 467,782 Insurance 63,095 53,820 85.3% 9,275 Landfill Service Fees 1,102,040 363,987 33.0% 738,053 Maintenance 1,244,080 175,783 14.1% 1,068,298 Power 2,052,915 777,391 37.9% 1,275,524 Support 3,615,185 1,883,949 52.1% 1,731,236 Other 2,480,560 792,708 32.0% 1,687,852 Total 11,067,725 4,089,706 37.0% 6,978,019

Capital Outlay 855,525 216,330 25.3% 639,195

Escrow 1,178,015 588,971 50.0% 589,044

Capital Improvement Fund - - - -

Debt Service 17,877,370 8,927,097 49.9% 8,950,273

Special Projects 25,000 - 0.0% 25,000

Total 41,958,060$ 18,591,363$ 44.3% 23,366,697$


Sewer SystemBudget Summary - Revenues and Expenditures

March 31, 2020


Regional Water System Revenues 355,877,850$ 179,203,814$ 50.4% 176,674,036$ Expenditures 356,612,720 166,227,216 46.6% 190,385,504 Revenues Over / (Under) Expenditures (734,870) 12,976,598

Regional Wastewater System Revenues 76,742,265 37,976,949 49.5% 38,765,316 Expenditures 76,742,265 35,928,264 46.8% 40,814,001 Revenues Over / (Under) Expenditures - 2,048,685

Regional Solid Waste System Revenues 38,289,625 18,821,041 49.2% 19,468,584 Expenditures 38,289,625 15,835,297 41.4% 22,454,328 Revenues Over / (Under) Expenditures - 2,985,744

Upper East Fork Interceptor System Revenues 38,859,130 19,137,906 49.2% 19,721,224 Expenditures 38,859,130 16,900,049 43.5% 21,959,081 Revenues Over / (Under) Expenditures - 2,237,856

Sewer System - Total Revenues 41,958,060 20,894,249 49.8% 21,063,811 Expenditures 41,958,060 18,591,363 44.3% 23,366,697 Revenues Over / (Under) Expenditures - 2,302,886

Support System Revenues 60,926,985 30,467,565 50.0% 30,459,420 Expenditures 60,926,985 28,862,300 47.4% 32,064,685 Revenues Over / (Under) Expenditures - 1,605,265

Little Elm Wtr Trans Fac Revenues 397,005 198,320 50.0% 198,685 Expenditures 397,005 196,628 49.5% 200,377 Revenues Over / (Under) Expenditures - 1,692

Plano Wtr Trans Fac Revenues 4,160 2,017 48.5% 2,143 Expenditures 4,160 82 2.0% 4,078 Revenues Over / (Under) Expenditures - 1,935

Kaufman 4-1 Wtr Dist Fac Revenues 69,755 34,793 49.9% 34,962 Expenditures 69,755 30,189 43.3% 39,566 Revenues Over / (Under) Expenditures - 4,603

Rockwall-Heath Wt Str Fac Revenues 226,565 113,151 49.9% 113,414 Expenditures 226,565$ 112,281$ 49.6% 114,284$ Revenues Over / (Under) Expenditures - 871

All SystemsBudget Summary - By System

March 31, 2020

-8-



March 31, 2020

Terrell Wtr Trans Fac Revenues 719,545$ 359,538$ 50.0% 360,007$ Expenditures 719,545 359,706 50.0% 359,839 Revenues Over / (Under) Expenditures - (168)

Rockwall Wtr Pump St Fac Revenues 168,555 84,191 49.9% 84,364 Expenditures 168,555 83,280 49.4% 85,275 Revenues Over / (Under) Expenditures - 910

Wylie WWTP Revenues 34,975 17,504 50.0% 17,471 Expenditures 34,975 16,768 47.9% 18,207 Revenues Over / (Under) Expenditures - 736

South Rockwall WWTP Revenues 1,809,325 891,804 49.3% 917,521 Expenditures 1,809,325 661,507 36.6% 1,147,818 Revenues Over / (Under) Expenditures - 230,296

North Rockwall WWTP Revenues 606,765 304,418 50.2% 302,347 Expenditures 606,765 328,720 54.2% 278,045 Revenues Over / (Under) Expenditures - (24,301)

Panther Creek Reg WW Sys Revenues 7,945,045 3,979,347 50.1% 3,965,698 Expenditures 7,945,045 3,675,714 46.3% 4,269,331 Revenues Over / (Under) Expenditures - 303,633

Sabine Creek Reg WW Sys Revenues 2,674,905 1,336,988 50.0% 1,337,917 Expenditures 2,674,905 1,256,777 47.0% 1,418,128 Revenues Over / (Under) Expenditures - 80,211

Stewart Crk Reg WW Sys Revenues 9,341,650 4,677,951 50.1% 4,663,699 Expenditures 9,341,650 3,817,745 40.9% 5,523,905 Revenues Over / (Under) Expenditures - 860,206

Muddy Creek Reg WW Sys Revenues 7,430,605 3,719,138 50.1% 3,711,467 Expenditures 7,430,605 3,348,037 45.1% 4,082,568 Revenues Over / (Under) Expenditures - 371,101

Seis Lagos WWTP Revenues 216,140 107,951 49.9% 108,189 Expenditures 216,140 113,420 52.5% 102,720 Revenues Over / (Under) Expenditures - (5,469)

Royse City WWTP Revenues 26,675 13,360 50.1% 13,315 Expenditures 26,675$ 5,769$ 21.6% 20,906$ Revenues Over / (Under) Expenditures - 7,590

-9-



March 31, 2020

Farmersville WWTP Revenues 480,815$ 240,725$ 50.1% 240,090$ Expenditures 480,815 249,275 51.8% 231,540 Revenues Over / (Under) Expenditures - (8,551)

Frisco Cottonwood Cr WWTP Revenues - 14,839 - (14,839) Expenditures - - - - Revenues Over / (Under) Expenditures - 14,839

Lavon WWTP Revenues 363,105 181,558 50.0% 181,547 Expenditures 363,105 175,835 48.4% 187,270 Revenues Over / (Under) Expenditures - 5,723

Forney Int Sys Revenues 519,430 260,562 50.2% 258,868 Expenditures 519,430 189,633 36.5% 329,797 Revenues Over / (Under) Expenditures - 70,929

Lower East Fork Int Sys Revenues 1,860,195 929,015 49.9% 931,180 Expenditures 1,860,195 825,157 44.4% 1,035,038 Revenues Over / (Under) Expenditures - 103,858

Muddy Creek Int Sys Revenues 476,780 239,064 50.1% 237,716 Expenditures 476,780 206,232 43.3% 270,548 Revenues Over / (Under) Expenditures - 32,833

Parker Creek Int Sys Revenues 469,585 234,610 50.0% 234,975 Expenditures 469,585 216,863 46.2% 252,722 Revenues Over / (Under) Expenditures - 17,747

Sabine Creek Int Sys Revenues 306,425 152,964 49.9% 153,461 Expenditures 306,425 136,344 44.5% 170,081 Revenues Over / (Under) Expenditures - 16,620

Buffalo Creek Int Sys Revenues 2,586,110 1,291,290 49.9% 1,294,820 Expenditures 2,586,110 1,193,266 46.1% 1,392,844 Revenues Over / (Under) Expenditures - 98,024

McKinney Int Sys Revenues 400,675 100,781 25.2% 299,894 Expenditures 400,675$ 72,609$ 18.1% 328,066$ Revenues Over / (Under) Expenditures - 28,172

-10-



March 31, 2020

Mustang Creek Int Sys Revenues 1,516,375$ 755,480$ 49.8% 760,895$ Expenditures 1,516,375 740,391 48.8% 775,984 Revenues Over / (Under) Expenditures - 15,089

Parker Creek Parallel Int Sys Revenues 112,300 56,091 49.9% 56,209 Expenditures 112,300 51,200 45.6% 61,100 Revenues Over / (Under) Expenditures - 4,891

Small Sewer Plants Revenues - - - - Expenditures - - - - Revenues Over / (Under) Expenditures - -

WW Pretreatment Prog Revenues 1,194,595 596,802 50.0% 597,793 Expenditures 1,194,595 527,935 44.2% 666,660 Revenues Over / (Under) Expenditures - 68,867

Total - All Systems Revenues 551,726,930 276,033,959 50.0% 275,692,971 Expenditures 552,461,800$ 253,482,189$ 45.9% 298,979,611$ Revenues Over / (Under) Expenditures (734,870) 22,551,770

-11-

NORTHTEXASMUNICIPALWATERDISTRICTSUPPORTCOMPARATIVESTATEMENTOFNETPOSITIONMARCH31, 2020

March31September30Increase20202019( Decrease)

ASSETS: CURRENTASSETS: UnrestrictedAssets:

Cashandcashequivalents$ 5,120,328$ - $ 5,120,328Investments - - - Interestreceivable - - - Accountsreceivable - - - Duefromotherfunds 417,154 - 417,154Prepaidexpenses 20,289 - 20,289Unbilledreceivables - - -

Totalunrestrictedassets 5,557,771 - 5,557,771

RestrictedAssets: Cashandcashequivalents - - - Investments - - - Contractsreceivable - - - Interestreceivable - - - Accountsreceivable - - - Duefromotherfunds 171,450 - 171,450

Totalrestrictedassets 171,450 - 171,450

LONG-TERMASSETS: Netcapitalassets 28,515,697 - 28,515,697

TOTALASSETS 34,244,918 - 34,244,918

DEFERREDOUTFLOWSOFRESOURCESDeferredpensionoutflow 12,066,578 - 12,066,578Deferredlossonrefunding - - - DeferredOPEBoutflow 638,249 - 638,249

TOTALDEFERREDOUTFLOWSOFRESOURCES 12,704,827 - 12,704,827

TOTALASSETSANDDEFERREDOUTFLOWSOFRESOURCES 46,949,745 - 46,949,745

LIABILITIES: CURRENTLIABILITIES: PayablefromUnrestrictedAssets:

Accountspayableandotherliabilities 6,133,130 - 6,133,130Duetootherfunds 8,127 - 8,127Customeradvancepayments - - - Duetocities - - - Accruedinterest - notes - - - Currentportionofnotes - - -

Totalpayablefromunrestrictedassets 6,141,257 - 6,141,257

PayablefromRestrictedAssets: Accountspayable - - - Duetootherfunds - - - Accruedinterest - revenuebonds - - - Currentportionofrevenuebonds - - -

Totalpayablefromrestrictedassets - - -

LONG-TERMLIABILITIESAccruedvacationandsick - lesscurrentportion 2,569,744 - 2,569,744Netpensionliability 16,663,796 - 16,663,796NetOPEBliability 1,865,039 - 1,865,039Deferredcompensation - - - Long-termdebt - lesscurrentportion 240,000 - 240,000

Totallong-termliabilities 21,338,579 - 21,338,579

TOTALLIABILITIES 27,479,836 - 27,479,836

DEFERREDINFLOWSOFRESOURCESDeferredpensioninflow 4,501,571 - 4,501,571DeferredOPEBinflow 1,506,829 - 1,506,829Deferredinsuranceproceeds - - -

TOTALDEFERREDINFLOWSOFRESOURCES 6,008,400 - 6,008,400

TOTALLIABILITIESANDDEFERREDINFLOWSOFRESOURCES 33,488,236 - 33,488,236

NETPOSITION: Netinvestmentincapitalassets 28,447,147 - 28,447,147Restrictedfordebtservice - - - Unrestricted ( 14,985,638) - ( 14,985,638)

TOTALNETPOSITION 13,461,509$ - $ 13,461,509

12-

NORTHTEXASMUNICIPALWATERDISTRICTSUPPORTSTATEMENTOFREVENUES, EXPENSES, ANDCHANGESINNETPOSITIONFORTHESIXMONTHSENDEDMARCH31, 2020

CurrentYear toMonthDate

OPERATING REVENUES: Watersales$ -$ - Deferredchargesforservices - - Otheroperating revenues 96,008 97,015

Totaloperatingrevenues 96,008 97,015

OPERATING EXPENSES: Personnel 3,363,885 21,623,463Electricpower 8,396 51,518Chemicals - 735Otheroperatingsuppliesandservices ( 4,120,835) ( 8,321,751)

Totaloperatingexpensesexcludingdepreciation ( 748,554) 13,353,965

EXCESSOFREVENUES OVEREXPENSESBEFOREDEPRECIATION 844,562 ( 13,256,950)

Depreciation expense 228,455 1,342,735Totaldepreciation 228,455 1,342,735

OPERATING INCOME (LOSS) 616,107 ( 14,599,685)

NONOPERATING REVENUES (EXPENSES): Investment income 1,664 6,436Miscellaneous revenue/expense ( 558,412) ( 649,944) Federalprogramsrevenues - - Gain (loss) onsaleofcapitalassets - 28,742,372Interestexpenses - longtermdebt - -

Totalnonoperating revenues (expenses) ( 556,748) 28,098,864

CHANGEINNETPOSITION 59,359 13,499,179

NETPOSITION, BEGINNING BALANCE 13,402,150 ( 37,670)

NETPOSITION, ENDINGBALANCE$ 13,461,509$ 13,461,509

Beginning Balancefor102and103

13-

NORTH TEXAS MUNICIPAL WATER DISTRICTSUPPORTSTATEMENT OF CASH FLOWSFOR THE SIX MONTHS ENDED MARCH 31, 2020

CurrentYeartoMonthDate

CASHFLOWSFROMOPERATINGACTIVITIES: Cashreceivedfromcustomers$ -$ - Cashreceivedfromotherfunds 4,719,044 28,434,473Cashreceivedfrom (paidto) others 283,486 1,588,577Cashpaidtosuppliersforgoodsandservices ( 2,101,172) ( 8,635,208) Cashpaidforemployeesservices ( 2,308,421) ( 15,125,623) Cashpaidtootherfunds ( 5,250) ( 32,266)

Netcashprovidedbyoperatingactivities 587,687 6,229,953

CASHFLOWSFROMCAPITALANDRELATEDFINANCINGACTIVITIES: Proceedsfrom (for) theissuanceofbonds - - Cashpaidforcapitalassets ( 243,997) ( 1,116,061) Interestpaidonlong-termdebt - - InterestpaidonU.S. governmentcontracts - - Principalpaymentsonlong-termdebt - - PaymentsonU.S. governmentcontracts - - Paymentsfrom (for) bondissuecosts - - Federalprogramrevenues - - Netcashusedforcapitalandrelatedfinancingactivities ( 243,997) ( 1,116,061)

CASHFLOWSFROMINVESTINGACTIVITIES: Saleandmaturityofinvestments - - Purchaseofinvestments - - Interestreceived 1,664 6,436Netcashprovidedby (usedfor) investingactivities 1,664 6,436

NETINCREASE (DECREASE) INCASHANDCASHEQUIVALENTS 345,354 5,120,328

CASHANDCASHEQUIVALENTS - Beginningofyear 4,774,974 - CASHANDCASHEQUIVALENTS - Endofyear$ 5,120,328$ 5,120,328

RECONCILIATIONOFTOTALCASHTOTHESTATEMENTOFNETPOSITIONUnrestrictedcashandcashequivalents 5,120,328 5,120,328Restrictedcashandcashequivalents - -

RECONCILIATIONOFOPERATINGINCOMETONETCASHPROVIDEDBYOPERATINGACTIVITIES: Operatingincome 616,107 ( 14,599,685) Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities: Depreciation 228,455 1,342,735Changeinoperatingassetsandliabilities: Accountsreceivableanddeferredbillings 136 - Prepaidexpenses - ( 20,289) Netpensionliability - 9,098,789NetOPEBliability - 2,733,619Dueto/fromotherfunds ( 197,100) ( 580,477) Accountspayable, accruedliabilitiesanddevelopers' deposit ( 59,911) 5,685,517AccruedvacationandAccruedsick - 2,569,744AccruedOPEB - - Customeradvancepayments - - Totaladjustments ( 28,420) 20,829,638

NETCASHPROVIDEDBYOPERATINGACTIVITIES$ 587,687 $ 6,229,953

NONCASHTRANSACTIONDISCLOSURESGainondisposalofcapitalassets - - Interestcapitalizedonconstruction - - Amortizationofbond-relateditems - - Changeinfairvalueofinvestments - - Changeinactuarialvalueofnetpensionassets - - Refundingbondsissued - - Refundingproceedsdepositedinescrow - -

14-

NORTHTEXASMUNICIPALWATERDISTRICTWATERSYSTEMCOMPARATIVESTATEMENTOFNETPOSITIONMARCH31, 2020



Cashandcashequivalents$ 51,903,630$ 42,685,455$ 9,218,175Investments 142,815,000 152,996,119 ( 10,181,119) Interestreceivable - - - Accountsreceivable 27,430,941 27,206,443 224,498Contractsreceivable 26,400 26,400 - Duefromotherfunds - 421,622 ( 421,622) Prepaidexpenses 2,289,684 3,134,504 ( 844,820) Unbilledreceivables 164,574 164,574 -

Totalunrestrictedassets 224,630,229 226,635,117 ( 2,004,888)

RestrictedAssets: Cashandcashequivalents 825,512,575 691,366,115 134,146,460Investments 430,516,390 518,171,460 ( 87,655,070) Contractsreceivable - - - Interestreceivable 2,239,511 2,118,026 121,485Accountsreceivable - - - Duefromotherfunds - 138,833 ( 138,833)

Totalrestrictedassets 1,258,268,476 1,211,794,434 46,474,042

LONG-TERMASSETS: Netcapitalassets 2,772,816,358 2,603,603,567 169,212,791

TOTALASSETS 4,255,715,063 4,042,033,118 213,681,945

DEFERREDOUTFLOWSOFRESOURCESDeferredpensionoutflow 3,281,629 15,348,207 ( 12,066,578) Deferredlossonrefunding 17,759,172 18,506,212 ( 747,040) DeferredOPEBoutflow 120,425 758,674 ( 638,249)

TOTALDEFERREDOUTFLOWSOFRESOURCES 21,161,226 34,613,093 ( 13,451,867)

TOTALASSETSANDDEFERREDOUTFLOWSOFRESOURCES 4,276,876,289 4,076,646,211 200,230,078


Accountspayableandotherliabilities 4,019,886 23,011,378 ( 18,991,492) Duetootherfunds 59,623 100,359 ( 40,736) Customeradvancepayments - - - Accruedinterest - notes 340,250 701,635 ( 361,385) Currentportionofnotes 1,647,494 1,597,613 49,881

Totalpayablefromunrestrictedassets 6,067,253 25,410,985 ( 19,343,732)

PayablefromRestrictedAssets: Accountspayable 33,020,596 88,649,589 ( 55,628,993) Duetootherfunds - 50,292 ( 50,292) Accruedinterest - revenuebonds 8,395,290 7,869,432 525,858Currentportionofrevenuebonds 92,545,000 85,955,000 6,590,000

Totalpayablefromrestrictedassets 133,960,886 182,524,313 ( 48,563,427)

LONG-TERMLIABILITIESAccruedvacationandsick - lesscurrentportion 913,252 3,482,996 ( 2,569,744) Netpensionliability 5,112,591 21,776,387 ( 16,663,796) NetOPEBliability 459,014 2,324,053 ( 1,865,039) Deferredcompensation - 255,000 ( 255,000) Long-termdebt - lesscurrentportion 2,865,484,353 2,633,106,361 232,377,992

Totallong-termliabilities 2,871,969,210 2,660,944,797 211,024,413

TOTALLIABILITIES 3,011,997,349 2,868,880,095 143,117,254

DEFERREDINFLOWSOFRESOURCESDeferredpensioninflow 1,294,040 5,795,611 ( 4,501,571) DeferredOPEBinflow 339,122 1,845,951 ( 1,506,829) Deferredinsuranceproceeds - 426,426 ( 426,426)

TOTALDEFERREDINFLOWSOFRESOURCES 1,633,162 8,067,988 ( 6,434,826)

TOTALLIABILITIESANDDEFERREDINFLOWSOFRESOURCES 3,013,630,511 2,876,948,083 136,682,428

NETPOSITION: Netinvestmentincapitalassets 847,018,947 868,154,047 ( 21,135,100) Restrictedfordebtservice 201,695,584 150,564,821 51,130,763Unrestricted 214,531,247 180,979,260 33,551,987

TOTALNETPOSITION 1,263,245,778$ 1,199,698,128$ 63,547,650

15-

NORTHTEXASMUNICIPALWATERDISTRICTWATERSYSTEMSTATEMENTOFREVENUES, EXPENSES, ANDCHANGESINNETPOSITIONFORTHESIXMONTHSENDEDMARCH31, 2020


OPERATING REVENUES: Watersales$ 29,554,979$ 177,328,798Deferredchargesforservices - - Otheroperating revenues 49,668 564,857

Totaloperatingrevenues 29,604,647 177,893,655

OPERATING EXPENSES: Personnel 855,495 5,579,073Electricpower 933,031 7,188,322Chemicals 2,396,456 12,423,944Otheroperatingsuppliesandservices 4,153,468 14,288,749

Totaloperatingexpensesexcludingdepreciation 8,338,450 39,480,088

EXCESSOFREVENUES OVEREXPENSESBEFOREDEPRECIATION 21,266,197 138,413,567

Depreciation expense 3,797,642 22,494,805Totaldepreciation 3,797,642 22,494,805

OPERATING INCOME (LOSS) 17,468,555 115,918,762

NONOPERATING REVENUES (EXPENSES): Investment income 5,688,545 20,074,529Miscellaneous revenue/expense 41,247 247,480GrantIncome - 880Federalprogramsrevenues - 1,008,997Gain (loss) onsaleofcapitalassets - ( 28,742,372) Interestexpenses - longtermdebt ( 7,597,956) ( 44,998,296)

Totalnonoperating revenues (expenses) ( 1,868,164) ( 52,408,782)

CHANGEINNETPOSITION 15,600,391 63,509,980

NETPOSITION, BEGINNING BALANCE 1,247,645,387 1,199,735,798

NETPOSITION, ENDINGBALANCE$ 1,263,245,778$ 1,263,245,778

16-

NORTH TEXAS MUNICIPAL WATER DISTRICTWATER SYSTEMSTATEMENT OFCASH FLOWSFOR THE SIXMONTHS ENDED MARCH 31, 2020


CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers$ 30,254,526$ 177,241,607Cash received fromother funds - 315,735Cash received from (paid to) others 4,654 94,542Cash paid tosuppliers forgoods andservices ( 2,996,770) ( 44,191,083) Cash paid foremployees services ( 569,923) ( 3,843,952) Cash paid toother funds ( 3,453,292) ( 20,692,052)

Netcashprovided byoperating activities 23,239,195 108,924,797

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from (for) theissuance ofbonds - 248,098,404Cashpaid forcapital assets ( 39,793,910) ( 279,661,854) Interest paidonlong-termdebt ( 49,207,572) ( 49,207,572) Interest paidonU.S. government contracts - ( 775,209) Principal payments onlong-termdebt - - Payments onU.S. government contracts - ( 1,544,421) Payments from (for) bond issue costs - ( 1,392,632) Grant Income - 880Federal program revenues - 1,008,997Netcashused forcapital andrelated financing activities ( 89,001,482) ( 83,473,407)

CASH FLOWS FROM INVESTING ACTIVITIES: Saleandmaturity ofinvestments 93,655,080 581,864,521Purchase ofinvestments ( 12,000,000) ( 480,755,129) Interest received 2,343,988 16,803,853Netcashprovided by (used for) investing activities 83,999,068 117,913,245

NET INCREASE (DECREASE) INCASH AND CASH EQUIVALENTS 18,236,781 143,364,635

CASH AND CASH EQUIVALENTS - Beginning ofyear 859,179,424 734,051,570CASH AND CASH EQUIVALENTS - Endofyear$ 877,416,205$ 877,416,205

RECONCILIATION OFTOTAL CASH TOTHESTATEMENT OFNETPOSITIONUnrestricted cashandcashequivalents 51,903,630 51,903,630Restricted cashandcashequivalents 825,512,575 825,512,575

RECONCILIATION OFOPERATING INCOME TONETCASHPROVIDED BYOPERATING ACTIVITIES:

Operating income 17,468,555 115,918,762Adjustments toreconcile netincome tonetcashprovided byoperating activities: Depreciation 3,797,642 22,494,805Change inoperating assets andliabilities:

Accounts receivable anddeferred billings 1,511,546 ( 345,983) Prepaid expenses 1,484 844,820Netpension liability - ( 9,098,789) NetOPEB liability - ( 2,733,619) Dueto/fromother funds 36,594 611,159Accounts payable, accrued liabilities anddevelopers' deposit 423,374 ( 16,196,614) Accrued vacation andAccrued sick - ( 2,569,744) Accrued OPEB - - Customer advance payments - - Total adjustments 5,770,640 ( 6,993,965)

NETCASH PROVIDED BYOPERATING ACTIVITIES$ 23,239,195$ 108,924,797

NONCASH TRANSACTION DISCLOSURESGainondisposal ofcapital assets - - Interest capitalized onconstruction - - Amortization ofbond-related items ( 906,173) ( 5,396,438) Change infairvalueofinvestments ( 3,774,464) ( 6,101,495) Change inactuarial valueofnetpension assets - - Refunding bonds issued - - Refunding proceeds deposited inescrow - -

17-

NORTH TEXAS MUNICIPAL WATER DISTRICTREGIONAL WASTEWATER SYSTEMCOMPARATIVE STATEMENT OFNET POSITIONMARCH 31, 2020

March 31September 30Increase20202019( Decrease)

ASSETS: CURRENT ASSETS:

Unrestricted Assets: Cash and cash equivalents$ 9,636,472$ 8,838,136$ 798,336Investments - - - Accounts receivable 3,464,339 1,510,724 1,953,615Due from other funds - 47,297 ( 47,297) Prepaid expenses 293,767 512,931 ( 219,164) Unbilled receivables 1,225,286 1,225,286 -

Total unrestricted assets 14,619,864 12,134,374 2,485,490

Restricted Assets: Cash and cash equivalents 72,408,105 51,486,734 20,921,371Investments 48,991,291 95,155,149 ( 46,163,858) Interest receivable 165,716 303,147 ( 137,431) Due from other funds - - -

Total restricted assets 121,565,112 146,945,030 ( 25,379,918)

LONG-TERM ASSETS: Net capital assets 417,547,581 389,083,918 28,463,663

TOTAL ASSETS 553,732,557 548,163,322 5,569,235

DEFERRED OUTFLOWS OF RESOURCESDeferred pension outflow 4,124,149 4,124,149 - Deferred loss onrefunding 2,498,286 2,693,793 ( 195,507) Deferred OPEB outflow 171,580 171,580 -

TOTAL DEFERRED OUTFLOWS OF RESOURCES 6,794,015 6,989,522 ( 195,507)

TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 560,526,572 555,152,844 5,373,728

LIABILITIES: CURRENT LIABILITIES:

Payable from Unrestricted Assets: Accounts payable and accrued liabilities 2,250,425 3,595,508 ( 1,345,083) Due toother funds 134,420 417,019 ( 282,599) Customer advance payments 6,143,089 3,642,839 2,500,250Due tocities 2,048,685 - 2,048,685

Total payable from unrestricted assets 10,576,619 7,655,366 2,921,253

Payable from Restricted Assets: Accounts payable 10,618,616 14,850,368 ( 4,231,752) Due toother funds - 33,238 ( 33,238) Accrued interest - revenue bonds 4,921,676 4,924,686 ( 3,010) Current portion ofrevenue bonds 14,690,000 14,690,000 -

Total payable from restricted assets 30,230,292 34,498,292 ( 4,268,000)

LONG-TERM LIABILITIES: Accrued vacation and sick - less current portion 980,153 980,153 - Net pension liability 6,133,298 6,133,298 - Net OPEB liability 553,412 553,412 - Long-term debt - less current portion 366,214,318 367,403,506 ( 1,189,188)

Total long-term liabilities 373,881,181 375,070,369 ( 1,189,188)

TOTAL LIABILITIES 414,688,092 417,224,027 ( 2,535,935)

DEFERRED INFLOWS OF RESOURCESDeferred pension inflow 1,554,146 1,554,146 - Deferred OPEB inflow 422,184 422,184 -

TOTAL DEFERRED INFLOWS OF RESOURCES 1,976,330 1,976,330 -

TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 416,664,422419,200,357 ( 2,535,935)

NET POSITION: Net investment incapital assets 111,300,858 111,999,738 ( 698,880) Restricted fordebt service 33,865,511 24,821,251 9,044,260Unrestricted ( 1,304,219) ( 868,502) ( 435,717)

TOTAL NET POSITION 143,862,150$ 135,952,487$ 7,909,663

18 -

NORTHTEXASMUNICIPALWATERDISTRICTREGIONALWASTEWATERSYSTEMSTATEMENTOFREVENUES, EXPENSES, ANDCHANGESINNETPOSITIONFORTHESIXMONTHSENDEDMARCH31, 2020


OPERATING REVENUES: Chargesforservices$ 6,328,891$ 37,618,304Deferredchargesforservices ( 397,329) ( 2,048,685) OtherOperating revenues 46,770 107,417

Totaloperating revenue 5,978,332 35,677,036

OPERATING EXPENSES: Personnel 1,026,481 6,525,676Electricpower 251,004 1,348,060Chemicals 399,731 1,887,867Otheroperatingsuppliesandservices 1,532,514 9,133,412





NONOPERATING REVENUES (EXPENSES): Investment income 462,762 1,832,523Miscellaneous revenue/expense - - Federalprogramsrevenues - - Gain (loss) onsaleofcapitalassets - 6,569Interestexpense - longtermdebt ( 1,064,805) ( 6,390,340)

Totalnonoperating revenue (expenses) ( 602,043) ( 4,551,248)


NETPOSITION, BEGINNING BALANCE 142,418,282 135,952,487


19-

NORTH TEXAS MUNICIPAL WATER DISTRICTREGIONAL WASTEWATER SYSTEMSTATEMENT OF CASH FLOWSFOR THE SIX MONTHS ENDED MARCH 31, 2020


CASHFLOWSFROMOPERATINGACTIVITIES: Cashreceivedfromcustomers$ 2,962,843$ 38,164,427Cashreceivedfromotherfunds 34,653 231,186Cashreceivedfrom (paidto) others 3,390 14,780Cashpaidtosuppliersforgoodsandservices ( 1,349,533) ( 10,539,632) Cashpaidforemployeeservices ( 673,097) ( 4,381,016) Cashpaidtootherfunds ( 832,353) ( 5,338,566)


CASHFLOWSFROMCAPITALANDRELATEDFINANCINGACTIVITIES: Proceedsfromtheissuanceofbonds - - Cashpaidforcapitalassets ( 4,460,971) ( 37,062,563) Interestpaidonlong-termdebt - ( 7,387,029) Principalpaymentsonlong-termdebt - - Paymentsforbondissuecosts - - FederalprogramRevenues - - Netcashusedforcapitalandrelatedfinancingactivities ( 4,460,971) ( 44,449,592)

CASHFLOWSFROMINVESTINGACTIVITIES: Saleandmaturityofinvestments 8,005,416 75,253,215Purchaseofinvestments - ( 28,933,176) Interestreceived 166,755 1,698,081Netcashprovidedby (usedfor) investingactivities 8,172,171 48,018,120

NETINCREASE (DECREASE) INCASHANDCASHEQUIVALENTS 3,857,103 21,719,707

CASHANDCASHEQUIVALENTS - Beginningofyear 78,187,474 60,324,870CASHANDCASHEQUIVALENTS - Endofyear$ 82,044,577$ 82,044,577

RECONCILIATIONOFTOTALCASHTOTHESTATEMENTOFNETPOSITIONUnrestrictedcashandcashequivalents 9,636,472 9,636,472Restrictedcashandcashequivalents 72,408,105 72,408,105

RECONCILIATIONOFOPERATINGINCOMETONETCASHPROVIDEDBYOPERATINGACTIVITIES: Operatingincome$ 2,045,911$ 12,460,911Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities: Depreciation 722,691 4,321,110Changeinoperatingassetsandliabilities: Accountsreceivableanddeferredbillings ( 3,241,487) ( 1,816,184) Prepaidexpense - 219,164Netpensionliability - - NetOPEBliability - - Dueto/fromotherfunds 61,073 ( 235,302) Accountspayable, accruedliabilitiesanddevelopers' deposits 160,386 ( 1,347,455) AccruedvacationandAccruedsick - - AccruedOPEB - - Customersadvancepayments - 2,500,250Dueto/fromCities 397,329 2,048,685Totaladjustments ( 1,900,008) 5,690,268Netcashprovidedbyoperatingactivities$ 145,903 $ 18,151,179

NONCASHTRANSACTIONDISCLOSURESGain (loss) ondisposalofcapitalassets - - Interestcapitalizedonconstruction - - Amortizationofbond-relateditems ( 165,614) ( 993,679) Changeinfairvalueofinvestments ( 289,245) ( 460,125) Change inactuarial value ofnet pension assets - - Refundingbondsissued - - Refundingproceedsdepositedinescrow - -

20-

NORTHTEXASMUNICIPALWATERDISTRICTREGIONALSOLIDWASTESYSTEMCOMPARATIVESTATEMENTOFNETPOSITIONMARCH31, 2020



Cashandcashequivalents$ 9,607,759 $ 6,876,722 $ 2,731,037Investments 6,064,780 5,997,662 67,118Accountsreceivable 1,009,418 248,743 760,675Duefromotherfunds 54,366 347,598 ( 293,232) Prepaidexpenses 6,967 269,189 ( 262,222) Unbilledreceivables 1,084,956 838,268 246,688

Totalunrestrictedassets 17,828,246 14,578,182 3,250,064

RestrictedAssets: Cashandcashequivalents 15,855,091 17,690,966 ( 1,835,875) Investments 4,928,517 4,307,657 620,860Interestreceivable 13,607 14,000 ( 393) Duefromotherfunds - - - Unbilledreceivables 6,194,441 6,194,441 -

Totalrestrictedassets 26,991,656 28,207,064 ( 1,215,408)

LONG-TERMASSETS: Netcapitalassets 118,935,196 117,047,996 1,887,200

TOTALASSETS 163,755,098 159,833,242 3,921,856

DEFERREDOUTFLOWSOFRESOURCESDeferredpensionoutflow 3,928,343 3,928,343 - Deferredlossonrefundings 1,641,396 1,778,192 ( 136,796) DeferredOPEBoutflow 139,914 139,914 -

TOTALDEFERREDOUTFLOWSOFRESOURCES 5,709,653 5,846,449 ( 136,796)

TOTALASSETSANDDEFERREDOUTFLOWSOFRESOURCES 169,464,751 165,679,691 3,785,060


Accountspayableandotherliabilities 1,657,754 2,539,286 ( 881,532) Duetootherfunds 32,952 15,782 17,170Customeradvancepayments 2,223,035 1,887,351 335,684DuetoCities 2,985,744 - 2,985,744

Totalpayablefromunrestrictedassets 6,899,485 4,442,419 2,457,066

PayablefromRestrictedAssets: Accountspayable 12,117,906 11,391,600 726,306Duetootherfunds - 4,209 ( 4,209) Accruedlandfillclosureandpost-closurecarecost 5,113,521 5,113,521 - Accruedinterestpayableonrevenuebonds 180,307 180,307 - Currentportionofrevenuebonds 3,010,000 3,010,000 -

Totalpayablefromrestrictedassets 20,421,734 19,699,637 722,097

LONG-TERMLIABILITIES: Accruedlandfillclosurecosts 1,080,920 1,080,920 - Accruedvacationandsick - lesscurrentportion 959,230 959,230 - NetPensionliability 5,360,004 5,360,004 - NetOPEBliability 451,031 451,031 - Long-termdebt - lesscurrentportion 52,912,938 53,161,534 ( 248,596)

Totallong-termliabilities 60,764,123 61,012,719 ( 248,596)

TOTALLIABILITIES 88,085,342 85,154,775 2,930,567

DEFERREDINFLOWSOFRESOURCESDeferredpensioninflow 1,402,701 1,402,701 - DeferredOPEBinflow 339,212 339,212 -

TOTALDEFERREDINFLOWSOFRESOURCES 1,741,913 1,741,913 -

TOTALLIABILITIESANDDEFERREDINFLOWSOFRESOURCES 89,827,255 86,896,688 2,930,567

NETPOSITION: Netinvestmentincapitalassets 67,250,454 68,448,580 ( 1,198,126) Restrictedfordebtservice 5,902,202 4,642,583 1,259,619Unrestricted 6,484,840 5,691,840 793,000

TOTALNETPOSITION 79,637,496 $ 78,783,003 $ 854,493

21-

NORTHTEXASMUNICIPALWATERDISTRICTREGIONALSOLIDWASTESYSTEMSTATEMENTOFREVENUES, EXPENSES, ANDCHANGESINNETPOSITIONFORTHESIXMONTHSENDEDMARCH31, 2020


OPERATING REVENUES: Chargesforservices$ 2,957,374$ 17,966,087Deferredchargesforservices ( 719,035) ( 2,985,744) Otheroperating revenues 226,740 928,584


OPERATING EXPENSES: Personnel 935,438 5,608,849Electricpower 12,311 69,947Chemicals 29,964 52,466Otheroperatingsuppliesandservices 1,028,509 6,085,196


EXCESSOFREVENUES OVEREXPENSESBEFOREDEPRECIATION 458,857 4,092,469


OPERATING INCOME (LOSS) 28,305 1,490,548

NONOPERATING REVENUES (EXPENSES): Investment income 97,807 333,985Miscellaneous revenue/expense - - Federalprogramrevenues - - Gain (loss) onsaleofcapitalassets - - Interestexpense - longtermdebt ( 161,674) ( 970,040)

Totalnonoperating revenue (expenses) 63,867) ( 636,055)

CHANGEINNETPOSITION ( 35,562) 854,493


NETPOSITION, ENDINGBALANCE 79,637,496$ 79,637,496

22-

NORTH TEXAS MUNICIPAL WATER DISTRICTREGIONAL SOLID WASTE SYSTEMSTATEMENT OF CASH FLOWSFOR THE SIX MONTHS ENDED MARCH 31, 2020


CASHFLOWSFROMOPERATINGACTIVITIES: Cashreceivedfromcustomers$ 1,891,139$ 15,978,049Cashreceivedfromotherfunds 309,252 2,031,001Cashreceivedfrom (paidto) others 110,348 589,313Cashpaidtosuppliersforgoodsandservices ( 1,091,034) ( 7,687,222) Cashpaidforemployeeservices ( 620,741) ( 3,763,246) Cashpaidtootherfunds ( 171,191) ( 1,049,873)


CASHFLOWSFROMCAPITALANDRELATEDFINANCINGACTIVITIES: Proceedsfrom (for) theissuanceofbonds - - Cashpaidforcapitalassets 60,627 ( 3,862,928) Interestpaidonlong-termdebt ( 1,081,841) ( 1,081,841) Principalpaymentsonlong-termdebt - - Paymentsfrom (for) bondissuecosts - - FederalprogramRevenues - - Net cash used for capital and related financing activities ( 1,021,214) ( 4,944,769)

CASHFLOWSFROMINVESTINGACTIVITIES: Saleandmaturityofinvestments 1,500,483 7,237,518Purchasesofinvestments - ( 7,879,748) Interestreceived 45,083 384,139Netcashprovidedby (usedfor) investingactivities 1,545,566 ( 258,091)

NETINCREASE (DECREASE) INCASHANDCASHEQUIVALENTS 952,125 895,162

CASHANDCASHEQUIVALENTS - Beginningofyear 24,510,725 24,567,688CASHANDCASHEQUIVALENTS - Endofyear$ 25,462,850$ 25,462,850

RECONCILIATIONOFTOTALCASHTOTHESTATEMENTOFNETPOSITIONUnrestrictedcashandcashequivalents 9,607,759 9,607,759Restrictedcashandcashequivalents 15,855,091 15,855,091

RECONCILIATIONOFOPERATINGINCOMETONETCASHPROVIDEDBYOPERATINGACTIVITIES: Operatingincome$ 28,305 $ 1,490,548Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities: Depreciation 430,552 2,601,921Changeinoperatingassetsandliabilities: Accountsreceivableanddeferredbillings ( 839,062) ( 1,006,970) Prepaidexpense - 262,222Netpensionliability - - NetOPEBliability - - Dueto/fromotherfunds 14,961 310,403Accountspayable, accruedliabilitiesanddevelopers' deposits 73,982 ( 881,530) AccruedvacationandAccruedsick - - AccruedOPEB - - Landfillliability - - Customersadvancepayments - 335,684DuetoCities 719,035 2,985,744Totaladjustments 399,468 4,607,474Netcashprovidedbyoperatingactivities$ 427,773 $ 6,098,022

NONCASHTRANSACTIONDISCLOSURESChangeinlandfillliability - - Gain (loss) ondisposalofcapitalassets - - Interestcapitalizedonconstruction - - Amortizationofbond-relateditems ( 18,633) ( 111,801) Changeinfairvalueofinvestments ( 67,793) ( 111,594) Changeinactuarialvalueofnetpensionassets - - Refundingbondsissued - - Refundingproceedsdepositedinescrow - -

23-

NORTH TEXAS MUNICIPAL WATER DISTRICTUPPER EAST FORK INTERCEPTOR SYSTEMCOMPARATIVE STATEMENT OFNET POSITIONMARCH 31, 2020


ASSETS: CURRENT ASSETS: Current Assets:

Cash and cash equivalents$ 9,736,173$ 8,894,745$ 841,428Investments - - - Accounts receivable 1,277,179 267,679 1,009,500Due from other funds 5,465 73 5,392Prepaid expenses 11,523 47,308 ( 35,785) Unbilled receivables 139,238 139,238 -


Restricted Assets: Cash and cash equivalents 47,209,142 43,533,980 3,675,162Investments 83,791,817 97,531,433 ( 13,739,616) Interest receivable 444,649 267,332 177,317Due from other funds - - -

Total restricted assets 131,445,608 141,332,745 ( 9,887,137)

LONG-TERM ASSETS: Net capital assets 297,493,610 285,064,127 12,429,483

TOTAL ASSETS 440,108,796 435,745,915 4,362,881

DEFERRED OUTFLOWS OF RESOURCESDeferred pension inflow 473,736 473,736 - Deferred loss on refundings 2,159,312 2,306,061 ( 146,749) Deferred OPEB inflow 30,018 30,018 -




Payable from Unrestricted Assets: Accounts payable and other liabilities 1,504,761 2,674,607 ( 1,169,846) Due toother funds 58,518 67,263 ( 8,745) Customer advance payments 3,061,936 2,440,907 621,029Due tocities 2,237,856 - 2,237,856


Payable from Restricted Assets: Accounts payable 4,262,549 7,679,794 ( 3,417,245) Due toother funds - 33,097 ( 33,097) Accrued interest - revenue bonds 3,766,371 3,488,494 277,877Current portion ofrevenue bonds 13,835,000 13,835,001 ( 1)


LONG-TERM LIABILITIES: Accrued vacation and sick - less current portion 132,695 132,695 - Net pension liability 756,102 756,102 - Net OPEB liability 89,027 89,027 - Long-term debt - less current portion 281,898,183 283,230,865 ( 1,332,682)

Total long-term liabilities 282,876,007 284,208,689 ( 1,332,682)

TOTAL LIABILITIES 311,602,998 314,427,852 ( 2,824,854)

DEFERRED INFLOWS OF RESOURCESDeferred pension inflow 140,039 140,039 - Deferred OPEB inflow 69,181 69,181 -

TOTAL DEFERRED INFLOWS OF RESOURCES 209,220 209,220 -

TOTAL LIABILITIES AND DEFERRED INFLOWS OFRESOURCES 311,812,218 314,637,072 ( 2,824,854)

NET POSITION: Net investment incapital assets 101,344,417 101,615,836 ( 271,419) Restricted for debt service 25,992,010 18,819,847 7,172,163Unrestricted 3,623,217 3,482,975 140,242


24-

NORTHTEXASMUNICIPALWATERDISTRICTUPPEREASTFORKINTERCEPTORSYSTEMSTATEMENTOFREVENUES, EXPENSES, ANDCHANGESINNETPOSITIONFORTHESIXMONTHSENDEDMARCH31, 2020




OPERATING EXPENSES: Personnel 162,201 1,056,936Electricpower 112,573 522,996Chemicals 127,256 927,533Otheroperatingsuppliesandservices 376,248 1,728,302

Totaloperatingexpensesexcludingdepreciation 778,278 4,235,767




NONOPERATING REVENUES (EXPENSES): Investment income 749,164 2,274,917Miscellaneous revenue/expense - - Federalprogramrevenues - - Gain (loss) onsaleofcapitalassets - - Interestexpense - longtermdebt ( 743,938) ( 4,324,686)

Totalnonoperating revenue (expenses) 5,226 ( 2,049,769)




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NORTH TEXAS MUNICIPAL WATER DISTRICTUPPER EAST FORK INTERCEPTOR SYSTEMSTATEMENT OFCASH FLOWSFOR THE SIXMONTHS ENDED MARCH 31, 2020


CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers$ 1,981,756$ 18,506,400Cash received from other funds 7,811 30,440Cash received from (paid to) others - 9,751Cash paid tosuppliers forgoods andservices ( 243,913) ( 3,637,050) Cash paid foremployee services ( 112,109) ( 738,208) Cash paid toother funds ( 186,430) ( 1,185,096)

Netcash provided byoperating activities 1,447,115 12,986,237

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from issuance ofbonds - ( 18,714) Cash paid forcapital assets ( 2,408,585) ( 19,274,386) Interest paid onlong-term debt - ( 5,232,742) Principal payments onlong-term debt - - Payments forbond issue costs - 18,714Federal program revenues - - Netcash used forcapital and related financing activities ( 2,408,585) ( 24,507,128)

CASH FLOWS FROM INVESTING ACTIVITIES: Sale andmaturity ofinvestments 10,390,665 86,750,768Purchases ofinvestments - ( 72,357,585) Interest received 257,119 1,644,298Netcash provided by (used for) investing activities 10,647,784 16,037,481

NET INCREASE ( DECREASE) INCASH AND CASH EQUIVALENTS 9,686,314 4,516,590


RECONCILIATION OFTOTAL CASH TOTHE STATEMENT OFNET POSITIONUnrestricted cash andcash equivalents 9,736,173 9,736,173Restricted cash andcash equivalents 47,209,142 47,209,142

RECONCILIATION OFOPERATING INCOME TONET CASHPROVIDED BYOPERATING ACTIVITIES:

Operating income$ 1,490,393$ 9,090,755Adjustments toreconcile net income tonetcashprovided byoperating activities: Depreciation 576,769 3,368,252Change inoperating assets and liabilities:

Accounts receivable anddeferred billings ( 1,154,300) ( 1,186,817) Prepaid expense - 35,785Netpension liability - - NetOPEB liability - - Due to/from other funds 44,462 ( 14,136) Accts payable, accrued lialilities and developers' deposits 138,539 ( 1,166,487) Accrued vacation andAccrued sick - - Accrued OPEB - - Customers advance payments - 621,029DuetoCities 351,252 2,237,856Total adjustments ( 43,278) 3,895,482Netcash provided byoperating activities$ 1,447,115$ 12,986,237

NONCASH TRANSACTION DISCLOSURESGain (loss) ondisposal ofcapital assets - - Interest capitalized onconstruction - - Amortization ofbond-related items ( 197,655) ( 1,185,933) Change infairvalue ofinvestments ( 563,139) ( 941,414) Change inactuarial value ofnetpension assets - - Refunding bonds issued - - Refunding proceeds deposited inescrow - -

26-

NORTH TEXAS MUNICIPAL WATER DISTRICTSEWER SYSTEMCOMPARATIVE STATEMENT OFNET POSITIONMARCH 31, 2020


ASSETS: CURRENT ASSETS:

Unrestricted Assets: Cash and cash equivalents$ 9,534,545$ 7,171,545$ 2,363,000Investments - - - Accounts receivable 1,753,270 779,807 973,463Due from other funds 13,071 55,835 ( 42,764) Prepaid expenses 236,070 328,947 ( 92,877) Unbilled receivables 439,473 439,473 -


Restricted Assets: Cash and cash equivalents 38,203,608 24,621,172 13,582,436Investments 24,887,706 30,425,518 ( 5,537,812) Interest receivable 78,693 79,126 ( 433) Due from other funds - - -

Total restricted assets 63,170,007 55,125,816 8,044,191

LONG-TERM ASSETS: Net capital assets 216,482,736 215,559,405 923,331

TOTAL ASSETS 291,629,172 279,460,828 12,168,344

DEFERRED OUTFLOWS OF RESOURCESDeferred pension outflow 1,609,753 1,609,753 - Deferred loss onrefunding 1,732,008 1,851,442 ( 119,434) Deferred OPEB outflow 85,606 85,606 -




Payable from Unrestricted Assets: Accounts payable and other liabilities 3,407,714 3,980,012 ( 572,298) Due toother funds 90,423 240,302 ( 149,879) Customer advance payments 3,448,946 1,396,893 2,052,053Due tocities 2,302,887 - 2,302,887


Payable from Restricted Assets: Accounts payable 4,380,834 7,264,560 ( 2,883,726) Due toother funds - 49,697 ( 49,697) Accrued interest - revenue bonds 2,388,886 2,294,617 94,269Current portion ofrevenue bonds 12,990,000 12,720,000 270,000


LONG-TERM LIABILITIES: Accrued vacation and sick - less current portion 315,657 315,657 - Net pension liability 2,409,473 2,409,473 - Net OPEB liability 264,899 264,899 - Long-term debt - less current portion 177,795,222 170,469,297 7,325,925

Total long-term liabilities 180,785,251 173,459,326 7,325,925

TOTAL LIABILITIES 209,794,941 201,405,407 8,389,534

DEFERRED INFLOWS OF RESOURCESDeferred pension inflow 561,459 561,459 - Deferred OPEB inflow 210,338 210,338 -

TOTAL DEFERRED INFLOWS OF RESOURCES 771,797 771,797 -

TOTAL LIABILITIES AND DEFERRED INFLOWS OFRESOURCES 210,566,738 202,177,204 8,389,534

NET POSITION: Net investments incapital assets 55,018,200 56,648,258 ( 1,630,058) Restricted for debt service 28,811,609 23,048,596 5,763,013Unrestricted 659,992 1,133,571 ( 473,579)


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NORTHTEXASMUNICIPALWATERDISTRICTSEWERSYSTEMSTATEMENTOFREVENUES, EXPENSES, ANDCHANGESINNETPOSITIONFORTHESIXMONTHSENDEDMARCH31, 2020




OPERATING EXPENSES: Personnel 509,632 3,261,196Electricpower 156,522 777,391Chemicals 215,564 868,922Otheroperatingsuppliesandservices 755,827 4,973,628




OPERATING INCOME (LOSS) 986,660 5,695,731

NONOPERATING REVENUES (EXPENSES): Investment income 230,862 885,753Contributions inaidofconstruction - - Miscellaneous revenue/expense - - Federalprogramrevenues - - Gain (loss) onsaleofcapitalassets - - Interestexpense - longtermdebt ( 501,019) ( 2,922,108)

Totalnonoperating revenue (expenses) ( 270,157) ( 2,036,355)

CHANGEINNETPOSITION 716,503 3,659,376



28-

NORTH TEXAS MUNICIPAL WATER DISTRICTSEWER SYSTEMSTATEMENT OFCASH FLOWSFOR THE SIXMONTHS ENDED MARCH 31, 2020


CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers$ 1,698,913$ 20,959,805Cash received from other funds - - Cash received from (paid to) others - 23,100Cash paid tosuppliers forgoods andservices ( 473,574) ( 7,100,766) Cash paid foremployee services ( 336,252) ( 2,193,639) Cash paid toother funds ( 422,246) ( 2,742,409)

Netcash provided byoperating activities 466,841 8,946,091

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from (for) the issuance ofbonds - 8,552,145Cash paid forcapital assets ( 1,901,711) ( 4,499,212) Interest paid onlong-term debt - ( 3,244,122) Principal payments onlong-term debt - - Payments from (for) bond issue costs - ( 259,303) Federal program revenues - - Netcash used forcapital and related financing activities ( 1,901,711) 549,508

CASH FLOWS FROM INVESTING ACTIVITIES: Sale andmaturity ofinvestments 3,572,077 23,578,873Purchase ofinvestments - ( 17,909,161) Interest received 92,603 780,125Netcash provided by (used for) investing activities 3,664,680 6,449,837

NET INCREASE ( DECREASE) INCASH AND CASH EQUIVALENTS 2,229,810 15,945,436


RECONCILIATION OFTOTAL CASH TOTHE STATEMENT OFNET POSITIONUnrestricted cash andcash equivalents 9,534,545 9,534,545Restricted cash andcash equivalents 38,203,608 38,203,608

RECONCILIATION OFOPERATING INCOME TONET CASHPROVIDED BYOPERATING ACTIVITIES:

Operating income$ 986,660 5,695,731Adjustments toreconcile net income tonetcashprovided byoperating activities: Depreciation 492,143 2,958,254Change inoperating assets and liabilities:

Accounts receivable anddeferred billings ( 1,624,833) ( 1,416,099) Prepaid expense - 92,877Netpension liability - - NetOPEB liability - - Due to/from other funds 46,041 ( 138,817) Accts payable, accrued liabilities anddevelopers deposits 207,090 ( 2,286,712) Accrued vacation andAccrued sick - - Accrued OPEB - - Customers advance payments ( 6,975) 1,737,970DuetoCities 366,715 2,302,887Total adjustments ( 519,819) 3,250,360Netcash provided byoperating activities$ 466,841$ 8,946,091

NONCASH TRANSACTION DISCLOSURESGain (loss) ondisposal ofcapital assets - - Interest capitalized onconstruction - - Amortization ofbond-related items ( 96,202) ( 577,484) Change infairvalue ofinvestments ( 141,035) ( 261,149) Change inactuarial value ofnetpension assets - - Refunding bonds issued - - Refunding proceeds deposited inescrow - -

29-

-30-

NORTH TEXAS MUNICIPAL WATER DISTRICTSCHEDULE OF CASH AND INVESTMENTS

INVESTMENTSFUND CASH AT COST TOTALCONSTRUCTION FUNDS:## Regional Water System - Capital Improvement Fund -$ 163,923,074.26$ 163,923,074.26$ ## Regional Water System - 2015 - 2,474,899.39 2,474,899.39 ## Regional Water System - 2016 - 40,713,342.33 40,713,342.33 ## Regional Water System - 2017 SWIFT - LBCR - 4,258,527.44 4,258,527.44 ## Regional Water System - 2017 SWIFT - TRT & DIST - 5,480,671.05 5,480,671.05 ## Regional Water System - 2018 SWIFT - LBCR - 92,696,529.75 92,696,529.75 ## Regional Water System - 2018 SWIFT - TRT & DIST - 3,372,856.88 3,372,856.88 ## Regional Water System - 2018A SWIFT - LBCR - 55,148,574.89 55,148,574.89 ## Regional Water System - 2018A SWIFT - TRT & DIST - 121,917,545.80 121,917,545.80 ## Regional Water System - 2018 SWIFT - CNST/ESC - 183,885,334.15 183,885,334.15 ## Regional Water System - 2018A SWIFT - CNST/ESC - 216,949,468.07 216,949,468.07 ## Regional Water System - 2019 SWIFT - CNST/ESC - 101,667,125.10 101,667,125.10 ## Regional Water System - 2019 - 141,286,904.61 141,286,904.61 ## Regional Water System - 2018 SWIFT - WORKING CAPITAL - 33,808,489.54 33,808,489.54 ## Regional Water System - 2018A SWIFT - WORKING CAPITAL - 15,265,469.15 15,265,469.15 ## Regional Wastewater System - Capital Improvement Fund ## - 3,267,752.54 3,267,752.54 ## Regional Wastewater System - 2015 - 3,672,934.72 3,672,934.72 ## Regional Wastewater System - 2016 - 15,732,130.41 15,732,130.41 ## Regional Wastewater System - 2017 - 4,559,394.55 4,559,394.55 ## Regional Wastewater System - 2018 - 14,878,194.07 14,878,194.07 ## Regional Wastewater System - 2019 - 41,178,206.09 41,178,206.09 ## Regional Solid Waste System - Capital Improvement Fund ## - 9,652,210.67 9,652,210.67 ## Regional Solid Waste System - 2015 - 268,771.85 268,771.85 ## Regional Solid Waste System - 2016 - 326,432.54 326,432.54 ## Regional Solid Waste System - 2017 - 2,923,317.93 2,923,317.93 ## Upper East Fork Interceptor System - Capital Improvement Fund ## - 4,173,810.52 4,173,810.52 ## Upper East Fork Interceptor System - 2015 - 1,635,172.18 1,635,172.18 ## Upper East Fork Interceptor System - 2016 - 2,002,822.90 2,002,822.90 ## Upper East Fork Interceptor System - 2017 - 7,730,319.38 7,730,319.38 ## Upper East Fork Interceptor System - 2018 - 36,134,327.96 36,134,327.96 ## Upper East Fork Interceptor System - 2019 - 51,612,087.96 51,612,087.96 ## Buffalo Creek Interceptor - Capital Improvement Fund ## - 912,187.64 912,187.64 ## Buffalo Creek Interceptor - 2019 - 5,955,027.32 5,955,027.32 ## Muddy Creek WWTP - Capital Improvement Fund ## - 8,362.24 8,362.24 ## Muddy Creek WWTP - 2019 ## - 3,878,301.05 3,878,301.05 ## Mustang Creek Interceptor - Capital Improvement Fund ## - 3,252,301.84 3,252,301.84 ## Mustang Creek Interceptor - 2019 - 12,325,657.82 12,325,657.82 ## Panther Creek Wastewater Treatment Plant - Capital Improvement Fund - 538,668.18 538,668.18 ## Parker Creek WW Interceptor System - Capital Improvement Fund - 688,646.79 688,646.79 ## Parker Creek Parallel WW Interceptor System - Capital Improvement Fund - 16,131.94 16,131.94 ## Parker Creek Parallel WW Interceptor System - 2016 - 95,668.64 95,668.64 ## Sabine Creek Wastewater Treatment Plant - Capital Improvement Fund - 165,312.18 165,312.18 ## Sabine Creek Wastewater Treatment Plant - 2016 - 161,144.70 161,144.70 ## Sabine Creek WW Interceptor System - Capital Improvement Fund - 343,702.24 343,702.24 ## Stewart Creek West Wastewater Treatment Plant - Capital Improvement Fund ## - 2,645,770.76 2,645,770.76 ## Stewart Creek West Wastewater Treatment Plant - 2015 - 2,054,852.58 2,054,852.58

TOTAL -$ 1,415,638,434.60$ 1,415,638,434.60$ blank

March 31, 2020

-31-


INVESTMENTSFUND CASH AT COST TOTAL

March 31, 2020

INTEREST AND SINKING FUNDS:## Regional Water System -$ 63,231,605.65$ 63,231,605.65$ ## Regional Water System - U S Government Notes - 963,257.51 963,257.51 ## Regional Wastewater System - 18,817,170.22 18,817,170.22 ## Regional Solid Waste System - 1,624,329.24 1,624,329.24 ## Upper East Fork Interceptor System - 16,438,087.77 16,438,087.77 ## Buffalo Creek Interceptor - 2,219,361.47 2,219,361.47 ## Little Elm Water Transmission Facilities - 318,488.14 318,488.14 ## Lower East Fork Interceptor - 928,482.72 928,482.72 ## Muddy Creek Interceptor - 188,184.96 188,184.96 ## Muddy Creek Wastewater Treatment Plant - 1,731,404.53 1,731,404.53 ## Mustang Creek Interceptor System - 963,658.42 963,658.42 ## Panther Creek Wastewater Treatment Plant - 2,123,174.72 2,123,174.72 ## Parker Creek Interceptor - 160,353.45 160,353.45 ## Parker Creek Parallel Interceptor - 178,137.23 178,137.23 ## Rockwall - Heath Water Storage Facilities - 166,374.78 166,374.78 ## Rockwall South (Buffalo) Wastewater Treatment Plant - 2008 - 154,719.37 154,719.37 ## Rockwall Water Pump Station Facilities - 119,108.47 119,108.47 ## Sabine Creek Interceptor - 128,708.24 128,708.24 ## Sabine Creek Wastewater Treatment Plant - 1,005,539.85 1,005,539.85 ## Stewart Creek West Wastewater Treatment Plant - 2015 - 2,749,559.41 2,749,559.41 ## Terrell Water Transmission Facilities - 453,396.07 453,396.07

TOTAL -$ 114,663,102.22$ 114,663,102.22$ blank

DEBT SERVICE RESERVE FUNDS:## Regional Water System -$ 143,762,562.21$ 143,762,562.21$ ## Regional Wastewater System - 19,484,145.75 19,484,145.75 ## Regional Solid Waste System - 4,391,801.32 4,391,801.32 ## Upper East Fork Interceptor System - 13,032,925.62 13,032,925.62 ## Buffalo Creek Interceptor - 1,139,645.24 1,139,645.24 ## Little Elm Water Transmission Facilities - 415,083.21 415,083.21 ## Lower East Fork Interceptor - 1,341,266.64 1,341,266.64 ## Muddy Creek Interceptor - 272,443.24 272,443.24 ## Muddy Creek Wastewater Treatment Plant - 1,224,748.35 1,224,748.35 ## Mustang Creek Interceptor System - 1,597,777.82 1,597,777.82 ## Panther Creek Wastewater Treatment Plant - 3,275,564.94 3,275,564.94 ## Parker Creek Interceptor - 235,187.98 235,187.98 ## Parker Creek Parallel Interceptor - 205,008.98 205,008.98 ## Rockwall - Heath Water Storage Facilities - 238,196.97 238,196.97 ## Rockwall South (Buffalo) Wastewater Treatment Plant - 2008 - 262,790.44 262,790.44 ## Rockwall Water Pump Station Facilities - 175,887.63 175,887.63 ## Sabine Creek Interceptor - 190,611.46 190,611.46 ## Sabine Creek Wastewater Treatment Plant - 969,134.18 969,134.18 ## Stewart Creek West Wastewater Treatment Plant - 2015 - 5,038,558.57 5,038,558.57 ## Terrell Water Transmission Facilities - 768,393.83 768,393.83

TOTAL -$ 198,021,734.38$ 198,021,734.38$

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March 31, 2020

RESERVE FOR MAINTENANCE ESCROW FUNDS:## Regional Water System - Chapman -$ 299,963.12$ 299,963.12$ ## Regional Water System - Contingency - 24,122,907.38 24,122,907.38 ## Regional Wastewater System - 2,203,211.72 2,203,211.72 ## Regional Solid Waste System - 1,266,183.11 1,266,183.11 ## Upper East Fork Interceptor System - 1,474,920.14 1,474,920.14 ## Buffalo Creek Interceptor - 161,809.33 161,809.33 ## Farmersville Wastewater Treatment Plant - 6,143.15 6,143.15 ## Forney Interceptor - 18,324.29 18,324.29 ## Kaufman Four-One Water Distribution Facilities - 47,134.56 47,134.56 ## Lavon Wastewater Treatment Plant - 10,880.57 10,880.57 ## Little Elm Water Transmission Facilities - 49,073.52 49,073.52 ## Lower East Fork Interceptor - 25,422.49 25,422.49 ## McKinney Interceptor - 15,565.10 15,565.10 ## Muddy Creek Interceptor - 23,732.95 23,732.95 ## Muddy Creek Wastewater Treatment Plant - 14,389.25 14,389.25 ## Mustang Creek Interceptor - 10,639.34 10,639.34 ## Panther Creek Wastewater Treatment Plant - 27,717.00 27,717.00 ## Parker Creek Interceptor - 4,218.96 4,218.96 ## Parker Creek Parallel Interceptor - 30,635.92 30,635.92 ## Plano Water Transmission Facilities - 73,933.99 73,933.99 ## Rockwall North (Squabble) Wastewater Treatment Plant - 4,438.27 4,438.27 ## Rockwall South (Buffalo) Wastewater Treatment Plant - 42,568.39 42,568.39 ## Royse City Wastewater Treatment Plant - 10,546.54 10,546.54 ## Sabine Creek Interceptor - 5,455.94 5,455.94 ## Sabine Creek Wastewater Treatment Plant - 53,446.89 53,446.89 ## Seis Lagos Wastewater Treatment Plant - 15,998.56 15,998.56 ## Stewart Creek West Wastewater Treatment Plant - 98,801.96 98,801.96

TOTAL -$ 30,118,062.44$ 30,118,062.44$

EQUIPMENT REPLACEMENT ESCROW FUNDS:## Regional Solid Waste System -$ 9,912,693.35$ 9,912,693.35$ ## Wylie Wastewater Treatment Plant - 24,991.29 24,991.29

TOTAL -$ 9,937,684.64$ 9,937,684.64$

PREVENTATIVE MAINTENANCE ESCROW FUNDS:## Regional Wastewater System -$ 329,741.46$ 329,741.46$ ## Upper East Fork Interceptor System - 1,052,458.96 1,052,458.96 ## Buffalo Creek Interceptor - 362,409.09 362,409.09 ## Forney Interceptor - 174,046.87 174,046.87 ## Lavon Wastewater Treatment Plant - 4,199.38 4,199.38 ## Lower East Fork Interceptor - 336,447.86 336,447.86 ## McKinney Interceptor - 261,457.35 261,457.35 ## Muddy Creek Interceptor - 259,766.07 259,766.07 ## Muddy Creek Wastewater Treatment Plant - 8,449.85 8,449.85 ## Mustang Creek Interceptor - 218,123.11 218,123.11 ## Panther Creek Wastewater Treatment Plant - 32,423.91 32,423.91 ## Parker Creek Interceptor - 292,479.58 292,479.58 ## Parker Creek Parallel Interceptor - 24,570.61 24,570.61 ## Rockwall South (Buffalo) Wastewater Treatment Plant - 261,234.03 261,234.03 ## Sabine Creek Interceptor - 163,699.60 163,699.60 ## Sabine Creek Wastewater Treatment Plant - 14,659.46 14,659.46 ## Stewart Creek West Wastewater Treatment Plant - 22,981.70 22,981.70

TOTAL -$ 3,819,148.89$ 3,819,148.89$

TOTAL ESCROW FUNDS: -$ 43,874,895.97$ 43,874,895.97$

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March 31, 2020

OPERATING FUNDS:## Support Services 1,326,729.82$ 2,722,395.63$ 4,049,125.45$ ## Regional Water System 1,331,221.80 27,230,226.79 28,561,448.59 ## Regional Wastewater System 1,327,156.39 4,916,865.40 6,244,021.79 ## Regional Solid Waste System 1,337,843.70 4,639,702.80 5,977,546.50 ## Upper East Fork Interceptor System 1,327,331.59 3,182,571.44 4,509,903.03 ## Buffalo Creek Interceptor 6.17 165,789.45 165,795.62 ## Farmersville Wastewater Treatment Plant 24.78 14,722.31 14,747.09 ## Forney Interceptor - 82,416.76 82,416.76 ## Kaufman Four-One Water Distribution Facilities - 2,390.23 2,390.23 ## Lavon Wastewater Treatment Plant 24.78 21,014.85 21,039.63 ## Little Elm Water Transmission Facilities 2.66 34,696.07 34,698.73 ## Lower East Fork Interceptor - 112,608.19 112,608.19 ## McKinney Interceptor - 33,334.83 33,334.83 ## Muddy Creek Interceptor - 37,576.78 37,576.78 ## Muddy Creek Wastewater Treatment Plant - 495,166.06 495,166.06 ## Mustang Creek Interceptor System - 16,671.65 16,671.65 ## Panther Creek Wastewater Treatment Plant - 1,163,388.46 1,163,388.46 ## Parker Creek Interceptor 5.19 55,890.08 55,895.27 ## Parker Creek Parallel Interceptor 1.49 14,166.98 14,168.47 ## Plano Water Transmission Facilities - 21,450.01 21,450.01 ## Rockwall - Heath Water Storage Facilities (11,823.88) 4.47 (11,819.41) ## Rockwall North (Squabble) Wastewater Treatment Plant 24.77 18,824.84 18,849.61 ## Rockwall South (Buffalo) Wastewater Treatment Plant 24.77 257,953.19 257,977.96 ## Rockwall Water Pump Station Facilities - 1,026.28 1,026.28 ## Royse City Wastewater Treatment Plant - 8,295.46 8,295.46 ## Sabine Creek Interceptor - 16,608.67 16,608.67 ## Sabine Creek Wastewater Treatment Plant 34.00 215,845.82 215,879.82 ## Seis Lagos Wastewater Treatment Plant 24.78 7,803.95 7,828.73 ## Stewart Creek West Wastewater Treatment Plant - 1,767,234.26 1,767,234.26 ## Terrell Water Transmission Facilities (214.74) 40.01 (174.73) ## Wylie Wastewater Treatment Plant - 2,989.87 2,989.87 ## Small Wastewater Treatment Plants 408,129.86 - 408,129.86 ## Wastewater Pretreatment Program - 129,967.69 129,967.69

INS Insurance INS 48,788.10 1,022,415.34 1,071,203.44 TOTTOTAL 7,095,336.03$ 48,412,054.62$ 55,507,390.65$

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GRA GRAND TOTAL 7,095,336.03$ 1,820,610,221.79$ 1,827,705,557.82$

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE OF CASH AND INVESTMENTS - CONSTRUCTION FUNDS

TOTAL FUTURE FY20 ESTIMATED FY20CASH AND ENCUMBERED UNENCUMBERED FUTURE FY20 CONTRACT UNENCUMBERED

INVESTMENTS BALANCES BALANCE TRANSFERS IN (2) AWARDS BALANCE(A) (B) (C) = (A)-(B) (D) (E) (F) = (C)+(D)-(E)

Regional Water System - Capital Improvement Fund ### 163,923,074 99,101,967 (1) 64,821,107 18,294,152 (6) 46,852,552 (3) 36,262,707 (8)Regional Water System - 2015 ### 2,474,899 2,297,030 (1) 177,869 - - 177,869 Regional Water System - 2016 ### 40,713,342 37,546,259 (1) 3,167,083 - - 3,167,083 Regional Water System - 2017 SWIFT 9,739,198 8,732,443 (1) 1,006,755 - - 1,006,755

# Regional Water System - 2018 SWIFT 129,877,876 302,940,972 (1) (173,063,096) 169,381,978 (4) (13,540,661) (7) 9,859,544 Regional Water System - 2018 SWIFT - TWDB Escrow 183,885,334 - (1) 183,885,334 (169,381,978) (4) - 14,503,356

# Regional Water System - 2018A SWIFT 192,331,590 366,130,765 (1) (173,799,175) 199,712,123 (5) 18,369,822 (7) 7,543,127 Regional Water System - 2018A SWIFT - TWDB Escrow 216,949,468 - (1) 216,949,468 (199,712,123) (5) 9,000,000 (3) 8,237,345 Regional Water System - 2019 SWIFT - TWDB Escrow 101,667,125 - (1) 101,667,125 - 91,852,186 (3) 9,814,939 Regional Water System - 2019A ### 141,286,905 25,000 (1) 141,261,905 - 140,509,000 (3) 752,905 Regional Wastewater System - Capital Improvement Fund ### 3,267,753 2,588,486 (1) 679,267 150,000 - 829,267 Regional Wastewater System - 2015 ### 3,672,935 3,668,543 (1) 4,392 - - 4,392 Regional Wastewater System - 2016 ### 15,732,130 15,611,142 (1) 120,988 - - 120,988 Regional Wastewater System - 2017 ### 4,559,395 4,501,845 (1) 57,550 - - 57,550 Regional Wastewater System - 2018 ### 14,878,194 14,618,689 (1) 259,505 - - 259,505 Regional Wastewater System - 2019 ### 41,178,206 31,113,577 (1) 10,064,629 - 9,700,000 (3) 364,629

# Regional Solid Waste System - Capital Improvement Fund ### 9,652,211 2,907,315 (1) 6,744,895 542,004 3,362,000 (3) 3,924,899 Regional Solid Waste System - 2015 ### 268,772 148,864 (1) 119,908 - - 119,908 Regional Solid Waste System - 2016 ### 326,433 299,310 (1) 27,123 - - 27,123 Regional Solid Waste System - 2017 ### 2,923,318 2,867,850 (1) 55,468 - - 55,468 Upper East Fork Interceptor System - Capital Improvement Fund ### 4,173,811 955,792 (1) 3,218,019 9,208,002 (9) 9,033,000 (3) 3,393,021 Upper East Fork Interceptor System - 2015 ### 1,635,172 1,491,447 (1) 143,725 - - 143,725 Upper East Fork Interceptor System - 2016 ### 2,002,823 1,984,912 (1) 17,911 - - 17,911 Upper East Fork Interceptor System - 2017 ### 7,730,319 7,612,871 (1) 117,448 - - 117,448 Upper East Fork Interceptor System - 2018 ### 36,134,328 35,766,081 (1) 368,247 - - 368,247 Upper East Fork Interceptor System - 2019 ### 51,612,088 22,118,891 (1) 29,493,197 - 29,240,000 (3) 253,197

# Muddy Creek Wastewater Treatment Plant - Capital Improvement Fund ### 8,362 6,800 (1) 1,562 - - 1,562 Muddy Creek Wastewater Treatment Plant - 2019 ### 3,878,301 2,938,485 (1) 939,816 - - 939,816

# Mustang Creek Interceptor System - Capital Improvement Fund ### 3,252,302 2,716,712 (1) 535,590 - 514,000 (3) 21,590 Mustang Creek Interceptor System - 2019 ### 12,325,658 10,472,824 (1) 1,852,834 - 560,000 (3) 1,292,834 Panther Creek Wastewater Treatment Plant - Capital Improvement Fund ### 538,668 296 (1) 538,373 - - 538,373

# Parker Creek WW Interceptor System - Capital Improvement Fund ### 688,647 686,187 (1) 2,460 - - 2,460 Parker Creek Parallel WW Interceptor System - Capital Improvement Fund ### 16,132 - (1) 16,132 - - 16,132 Parker Creek Parallel WW Interceptor System - 2016 ### 95,669 - (1) 95,669 - - 95,669 Sabine Creek Interceptor - Capital Improvement Fund ### 343,702 343,164 (1) 538 - - 538 Sabine Creek Wastewater Treatment Plant - Capital Improvement Fund ### 165,312 161,207 (1) 4,105 - - 4,105 Sabine Creek Wastewater Treatment Plant - 2016 ### 161,145 158,792 (1) 2,353 - - 2,353 Buffalo Creek Interceptor System - Capital Improvement Fund ### 912,188 850,759 (1) 61,429 - - 61,429 Buffalo Creek Interceptor System - 2019 ### 5,955,027 2,734,169 (1) 3,220,858 - 3,062,000 (3) 158,858

# Stewart Creek Wastewater Treatment Plant - Capital Improvement Fund ### 2,645,771 2,090,186 (1) 555,585 - - 555,585 Stewart Creek Wastewater Treatment Plant - 2015 ### 2,054,853 2,000,015 (1) 54,837 - - 54,837 TOTAL 1,415,638,435 990,189,646 425,448,788 28,194,158 348,513,899 105,129,048

(1) Reflects Remaining Payments to be Made on Board Awarded Contracts and Agreements. (6) Reflects Transfers from Operating and Funds to be Provided by GTUA ($709,147.90; Dec17; AM#5057).(2) Current Fiscal Year Transfers from Operating Unless Otherwise Noted. (7) SWIFT Funded Contracts Pending Reclass due to TWDB Funding Requirements.(3) Contracts to be Funded by Bonds or FY20 Capital Improvement. (8) FY20 Budget Estimate Ending Balance was $13,903,003; Unencumbered Balance due to CIP Projects Rescheduled to FY21.(4) Contracts to be Funded by Bonds and Funds to be Released to RWS 2018 SWIFT Contingent upon TWDB Approval. (9) Reflects Transfers from Operating and Funds to be Provided by the cities of Allen and Fairview ($9,033,000 Project #521).(5) Contracts to be Funded by Bonds and Funds to be Released to RWS 2018A SWIFT Contingent upon TWDB Approval.

March 31, 2020

‐34‐

NORTH TEXAS MUNICIPAL WATER DISTRICT MARCH 2020

ENGINEERING ACTIVITY REPORT

I. CHANGE ORDERS TO CONSTRUCTION ONLY: The following changes are in accordance with Board Policies Manual Section 9.3.A, which authorizes the Executive Director to approve changes up to $100,000.

WATER SYSTEM a. Project No. 101-0352-14, Wylie Water Treatment Plant Water System Operations

Center, Change Order No. 3

Description Amount Days Original Contract Amount $11,963,090.00 455 Prior Change Order(s) Total $12,952.11 0 Change Order No. 3 WP-1 outlets $1,272.85 Tilt panel grade beam sealant $1,768.74 Crane rental for deeper piers $18,600.00 Additional depth of pier - 1008 feet (ft) at $50/ft $50,400.00 Change Order No. 3 Increase $72,041.59 0 Revised Contract Amounts $12,048,083.70 455

Original Completion Dates: Substantial – October 10, 2020; Final – November 9, 2020 Revised Completion Dates: Substantial – No change; Final – No change Funding in the amount of $72,041.59 for Change Order No. 3 to MYCON General Contractors, Inc., is available in the Regional Water System Capital Improvement Fund.

b. Project No. 101-0375-14, Wylie Water Treatment Plant I Rapid Mix and Sedimentation Improvements, Change Order No. 6

Description Amount Days

Original Contract Amount $21,032,000.00 755 Prior Change Order(s) Total $10,323.37 19 Change Order No. 6 PCM No. 15 – Replacement phone line $3,402.16 2 Change Order No. 6 Increase $3,402.16 2 Revised Contract Amounts $21,045,725.53 776

ENGINEERING ACTIVITY REPORT PAGE 2 Original Completion Dates: Substantial – December 15, 2019; Final – April 13, 2020 Revised Completion Dates: Substantial – January 5, 2020; Final – May 4, 2020. Funding in the amount of $3,402.16 for Change Order No. 6 to Eagle Contracting, LP is available in the Regional Water System 2016 Construction Fund.

c. Project No.101-0414-16, High Service Pump Station 2-1 2016 Electrical Improvements, Phase IIA, Change Order No. 1.


Original Contract Amount $620,000.00 230 Prior Change Order(s) Total $0.00 0 Change Order No. 1 Relocation of designed aerial lines (credit) ($14,286.75) 87 Change Order No. 1 Decrease ($14,286.75) 87 Revised Contract Amounts $605,713.25 317

Original Completion Dates: Substantial – November 9, 2019; Final – December 9, 2019 Revised Completion Dates: Substantial – February 4, 2020; Final – March 5, 2020 Funding in the amount of ($14,286.74) for Change Order No. 1 to Clark Electric, Inc., will be credited back to the Regional Water System 2016 Construction Fund

d. Project No.101-0467-17, South System Air Valve Improvements, Phase I, Change Order No. 3.


Original Contract Amount $2,267,334.00 240 Prior Change Order(s) Total $36,145.19 194 Change Order No. 3 Air valve and Manhole adjustments on Line H in Plano and Line N in Rockwall County $59,128.15 11 Additional contract time for pending Line B shutdown due to Oncor and AT&T delay $0.00 45 Change Order No. 3 Increase $59,128.15 56 Revised Contract Amounts $2,362,607.34 490

Original Completion Dates: Substantial – July 31, 2019; Final – August 30, 2019 Revised Completion Dates: Substantial – April 6, 2020; Final – May 6, 2020 Funding in the amount of $59,128.15 for Change Order No. 3 to Mountain Cascade of Texas, LLC, is available in the Regional Water System Capital Improvement Fund

ENGINEERING ACTIVITY REPORT PAGE 3

e. Project No.101-0469-17, 72-inch Texoma Pipeline Improvements, Change Order No. 5.


Original Contract Amount $5,987,657.00 800 Prior Change Order(s) Total $125,698.70 0 Change Order No. 5 Isolation valve repair at Air Release Valve $17,936.75 7 Additional contract time in response to COVID-19 restrictions to complete work on aerial piping at the Wylie Water Treatment Plant complex $0.00 14 Clarify definition of Final completion as 30 days after Substantial Completion $0.00 30 Change Order No. 3 Increase $17,936.75 51 Revised Contract Amounts $6,131,292.45 851

Original Completion Dates: Substantial – March 13, 2020; Final – undefined by Contract Revised Completion Dates: Substantial – April 3, 2020; Final – May 3, 2020 Funding in the amount of $17,936.75 for Change Order No. 5 to Garney Companies, Inc., is available in the Regional Water System 2016 Construction Fund

f. Project No.101-0534-19, Wylie Water Treatment Plants (WTPs) III and IV Filter Performance Improvements, Change Order No. 3.


Original Contract Amount $3,575,305.00 485 Prior Change Order(s) Total $34,793.72 0 Change Order No. 3 Water Treatment Plant (WTP) IV basins concrete and grout repairs $22,265.25 0 WTP IV basin 4 concrete launder wall height increase $10,379.25 0 Change Order No. 3 Increase $32,644.50 0 Revised Contract Amounts $3,642,743.22 485

Original Completion Dates: Substantial – October 26, 2020; Final – November 25, 2020 Revised Completion Dates: Substantial – No change; Final – No change Funding in the amount of $32,644.50 for Change Order No. 3 to Prime-Controls, LP, is available in the Regional Water System Capital Improvement Fund.

WASTEWATER SYSTEM


a. Project No. 301-0369-14, South Mesquite Creek Regional Wastewater Treatment Plant (RWWTP) Filter and Ultraviolet (UV) Disinfection Improvements, Change Order No. 8.


Original Contract Amount $9,955,608.00 586 Prior Change Order(s) Total $308,969.05 34 Change Order No. 8 Provide six 6-inch diameter UV sample locations $6,394.72 0 Change Order No. 8 Increase $6,394.72 0 Revised Contract Amounts $10,270,971.77 620

Original Completion Dates: Substantial – November 27, 2018; Final – January 26, 2019 Revised Completion Dates: Substantial – December 31, 2018; Final – March 1, 2019 Funding in the amount of $6,394.72 for Change Order No. 8 to Archer Western Construction, LLC, is available in the Regional Wastewater System 2019 Construction Fund

b. Project No. 501-0319-13, Lower Rowlett Creek and Lower Cottonwood Creek Lift Station Improvements, Change Order No. 5

Description Amount Days Original Contract Amount $3,012,500.00 1095 Prior Change Order(s) Total $4,219.00 3 Proposed Change Order No. 5

Provide a credit for modifications to the foundation of the biotrickling filter pad at the Lower Cottonwood Creek Lift Station ($8,868.00) 0

Proposed Change Order No.5 Decrease ($8,868.00) 0 Revised Contract Amounts $3,007,851.00 1098

Original Completion Dates: Substantial – January 26, 2020; Final – March 26, 2020 Revised Completion Dates: Substantial – January 29, 2020; Final – March 29, 2020 Funding in the amount of ($8,868.00) for Change Order No. 5 to Pepper Lawson Waterworks, LLC, will be credited back to the Upper East Fork Interceptor System 2016 Construction Fund.

c. Project No. 309-0252-11, Stewart Creek West Wastewater Treatment Plant Expansion to 10 MGD, Change Order No. 29


Original Contract Amount $60,429,000.00 790 Prior Change Order(s) Amount $2,321,134.00 955 Proposed Change Order No. 29

ENGINEERING ACTIVITY REPORT PAGE 5 Modifications to dumpster rail stoppers at Headworks and Solids Building $19,122.00 4 Installation of slide gates sealing for odor control at Headworks and Aeration Basins Splitter Structure $8,769.00 2 Time extension due to weather delays on the installation of coatings at the aeration basins. $0.00 17 Proposed Change Order No. 29 Increase $27,891.00 23 Revised Contract Amounts $62,778,025.00 1,768

Original Completion Dates: Substantial – October 19, 2017; Final – December 18, 2017 Revised Completion Dates: Substantial – June 23, 2020; Final – August 22, 2020 Funding in the amount of $27,891.00 for Change Order No. 29 to MWH Constructors, Inc., is available in the Stewart Creek West Wastewater Treatment Plant 2015 Construction Fund.

d. Project No. 501-0439-16, Beck Branch Parallel Interceptor, Change Order No. 2

Description Amount Days Original Contract Amount $5,555,196.00 360 Prior Change Order(s) Amount $17,833.46 107 Change Order No. 2

Relocation of Odor Control Unit associated with the Beck Branch Parallel Interceptor $13,707.90 5

Change Order No. 2 Increase $13,707.90 5 Revised Contract Amounts $5,586,737.36 472

Original Completion Dates: Substantial – December 24, 2019; Final – February 22, 2020 Revised Completion Dates: Substantial – April 14, 2020; Final – June 13, 2020 Funding in the amount of $13,707.90 for Change Order No. 2 to Belt Construction, Inc., is available in the Upper East Fork Interceptor System 2018 Construction Fund.

e. Project No. 310-0450-17, Muddy Creek Wastewater Treatment Plant Aeration Basin, Odor Control, and Backup Power Improvements, Change Order No. 3.

Description Amount Days Original Contract Amount $6,134,000.00 426 Prior Change Order(s) Total $109,420.73 50 Change Order No. 3

Deletion of paving (Credit) ($5,013.04) 0 Encasement of existing duct bank $2,775.07 0

Change Order No. 3 Decrease ($2,237.97) 0 Revised Contract Amounts $6,241,182.76 476

ENGINEERING ACTIVITY REPORT PAGE 6 Original Completion Dates: Substantial – May 31, 2020; Final – June 30, 2020 Revised Completion Dates: July 20, 2020; Final – August 19, 2020 Funding in the amount of ($2,237.97) for Change Order No. 3 to Eagle Contracting, L.P., will be credited back to the Muddy Creek Wastewater Treatment Plant 2019 Construction Fund.

f. Project No. 301-0443-16 South Mesquite Creek Regional Wastewater Treatment Plant Influent Flow Handling and Secondary Clarifier Improvements, Change Order Nos. 6 and 7


Original Contract Amount $8,263,000.00 480 Prior Change Order(s) Total $220,258.40 20 Change Order No. 6

Grit concentrator modifications $38,374.00 6 Damages from grit basin overflow from excessive rain $7,905.00 3 Emergency assistance for 48-inch pipe leak $25,626.00 7

Change Order No. 7 Grit basin cover modifications $3,660.00 3 Change Order Nos. 6 and 7 Increase $75,565.00 19 Revised Contract Amounts $8,558,823.40 519

Original Completion Dates: Substantial – August 21, 2019; Final – September 30, 2019 Revised Completion Dates: Substantial – September 29, 2019; Final – November 8, 2019 Funding in the amount of $75,565.00 for Change Order Nos. 6 and 7 to Crescent Constructors, Inc., is available in the Regional Wastewater System 2019 Construction Fund.


II. AMENDMENTS TO ENGINEERING, INSPECTION AND/OR LEGAL SERVICES ONLY:

The following projects are being amended in accordance with NTMWD’s Board Policies Manual Section 9.3.B – up to $100,000.

WATER SYSTEM a. Project No.101-0422-16, Wylie Water Treatment Plant IV Filter Gallery Wall Structural

Evaluation

DESCRIPTION AMOUNT

Original ESA $554,431.00


Prior Additional Services ($47,128.00)

Additional Services $75,881.00 Engagement of Construction Manager At-Risk (CMAR), coordination meeting with the CMAR, and additional design for underdrain blocks

Revised ESA Amount $583,184.00 Funding in the amount of $75,881.00 to JQ Infrastructure, LLC, is available in the Regional Water System Capital Improvement Fund

WASTEWATER SYSTEM a. Project No. 507-0549-19, Buffalo Creek Force Main Parallel

DESCRIPTION AMOUNT

Original ESA – Preliminary Engineering $256,761.00

Prior Additional Services $0.00

Additional Services $15,297.00 Prepare Project Information Form for Texas Water Development Board (TWDB) Funding

Revised ESA Amount – Preliminary Engineering $272,058.00 Funding in the amount of $15,297.00 to Gresham Smith, is available in the Buffalo Creek Interceptor System 2019 Construction Fund

b. Project No. 501-0521-18, Sloan Creek Lift Station

DESCRIPTION AMOUNT

Original ESA $905,613.20

Prior Additional Services $0.00

Additional Services $16,000.00 Additional survey to confirm lift station site plan as proposed by property owners

Revised ESA Amount $921,613.20 Funding in the amount of $16,000.00 to Cobb, Fendley & Associates, Inc., is available in the Upper East Fork Interceptor System 2018 Construction Fund


Construction Progress Report

March 2020

Water

Project Name: 0269 - Trinity River Main Stem Pump Station and RWP (CMAR) Contractor: Garney Companies, Inc. Consultant: Freese & Nichols, Inc.

Contract Date: 1/26/2012

Original Contract: $102,796,737.00 Notice to Proceed: 5/29/2015 Change Order: $ 0.00

Original Completion: 6/3/2019 % of Increase: 0.0% Revised Completion: TBD Current Contract: $102,796,737.00

Days Extended: Earned to Date: $95,118,124.24 Remarks: Main Stem Pump Station: 1) Tee screen installation and intake structure construction is on hold until the Trinity River lowers to a safe, workable elevation. 2) Elevator installed. 3) Contractors satisfying punch list items. Raw Water Pipeline: 1) Punch list items complete. Conveyance Pump Station: 1) Contractors satisfying punch list items. Project Name: 0332 - Rockwall to Royse City PL No.2 & East System GST Contractor: Thalle Construction Company, Inc. Consultant: Alan Plummer Associates, Inc.



Original Completion: 2/24/2019 % of Increase: 0.0% Revised Completion: Current Contract: $6,030,262.00

Days Extended: Earned to Date: $5,701,897.32 Remarks: The ground storage tank passed hydrostatic testing during the month of March. The contractor continues to work on remaining items. Project Name: 0338A - Meter Vault Standardization, Phase II, Set Point Control Contractor: Crescent Constructors, Inc. Consultant: Freese & Nichols, Inc.


Original Contract: $5,541,000.00 Notice to Proceed: 11/1/2017 Change Order: $206,468.00

Original Completion: 4/25/2019 % of Increase: 3.7% Revised Completion: 7/12/2019 Current Contract: $5,747,468.00

Days Extended: 78 Earned to Date: $5,410,280.63 Remarks: Mesquite 3 - Identified AT&T as cable owners on existing power pole to be removed. AT&T has been notified as of 1st week of March 2020. Contractor preparing for disinfection of 36" Pipeline and bringing vault into service. Project Name: 0338B - Meter Vault Standardization, Set Point Control Implementation, Phase II Contractor: MELA Contracting, Inc. Consultant: Huitt-Zollars, Inc.




Days Extended: Earned to Date: $4,411,173.01

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Remarks: Frisco No. 1 - Contractor backfilled around MHs and new vault. Contractor installed sleeves and appurtenances inside vault. Contractor installing formwork for electrical building roof. Wylie Interconnect - Contractor finishing work on the 60" connection (denso wax taping, flowable fill, backfilling). Contractor is painting the inside of the electrical buildiing. Contractor excavating and shoring for the 78" PL connection (over 25' deep). Plano No. 5 - Coordination meetings with CIty of Plano; city fiber optic contractor crossing district pipelines at 18' deep. Contractor provided temporary fencing around work zone and has begun transferring power and SCADA to temporary area. McKinney No. 2 - Contractor working on yard piping and appurtenances and have been disinfecting and testing pipeline. Project Name: 0340 - Plano No. 2 Delivery Point Meter Station Upgrade Contractor: Archer Western Construction, LLC Consultant: Birkhoff, Hendricks, & Carter, LLP




Days Extended: 657 Earned to Date: $1,935,589.16 Remarks: The new meter, meter vault, and electrical/SCADA are in service. The contractor continues to work on punch list items. Project Name: 0352 - Wylie WTP Water System Operations Center Contractor: MYCON General Contractors, Inc. Consultant: Halff Associates, Inc.




Days Extended: Earned to Date: $4,682,799.01 Remarks: Contractor will recast one of the Operations Center wall panels due to defects in original casting. Contractor continues installation of overhead plumbing, electrical, decking and framing. Contractor has poured grade beams for the generator building and continues to coordinate with oncor to relocate electrical utilities. Construction of the new Lynda Lane roadway has been completed, approved by City of Wylie and opened to the public on March 3, 2020 . Project Name: 0368A - Wylie WTP Power System Improvements, Phase I Contractor: Brandt Industrial Consultant: Freese & Nichols, Inc.




Days Extended: 204 Earned to Date: $3,071,814.32 Remarks: South Substation No. 1 placed in service without any issue. NTMWD Technical Services currently monitoring responsiveness of new substation components and protective equipment to varying operational loads. All major items of construction have been completed. Contractor is currently working on punchlist items.

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Project Name: 0368B - Wylie WTP Power System Improvements, Phase II Contractor: Brandt Industrial Consultant: Freese & Nichols, Inc.




Days Extended: Earned to Date: $1,100,331.76 Remarks: NTMWD staff and Freese & Nichols continue to review design options to cross the water treatment plant III railroad spur with new electrical feeders from the north substation no. 2. Project Name: 0375 - Wylie WTP Rapid Mix and Sedimentation Improvements Contractor: Eagle Contracting, LP Consultant: Carollo Engineers, Inc.




Days Extended: 38 Earned to Date: $20,385,724.06 Remarks: The electricians are pulling wire to equipment and conduit in the electrical building and duct banks. Testing for the controls has been initiated. Backfill of clariflocculators is ongoing. The 48” tee in the old meter vault was coated. Chemical trenches 116 and 123 have been completed. The contractor is grouting the troughs in the walls of the sedimentation basins and has connected the new waterline and prepared it for testing. The sludge collection system manufacturer hooked up the cable system. Project Name: 0387 - Wylie WTP IV Expansion (CMAR) Contractor: Archer Western Construction, LLC Consultant: Carollo Engineers, Inc.


Original Contract: $576,731.00 Notice to Proceed: 12/8/2016 Change Order: $86,749,436.99


Days Extended: 273 Earned to Date: $73,253,861.99 Remarks: The contractor is continually working on final backfill around structures and road construction. Cleaning and punchlist items have been addressed at the Ozone contactor and filter control structure. Concrete has been poured for chemical trenches. The 96-inch plugs at each end of the effluent pipe have been removed. Anthracite has been installed in Filters 21, 22, 24, 26, and 29. Installation of the ammonia injection point and chemical trench is ongoing. Roadways are being prepped and concrete is being poured throughout the site. Electrical work continues throughout the site. Mixers have been installed on the flocculation basins. Project Name: 0414 - HSPS 2-1 Electrical Improvements, Phase I Contractor: Facilities Solutions Group Consultant: Gupta & Associates, Inc.

Contract Date: 8/24/2017 Original Contract: $7,400,700.00 Notice to Proceed: 9/14/2017 Change Order: $56,699.00

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Original Completion: 10/14/2019

% of Increase: 0.8% Revised Completion: 4/11/2020 Current Contract: $7,457,399.00

Days Extended: 180 Earned to Date: $6,653,386.56 Remarks: Various electrical circuits that power reduntant or nondedicated equipment in Plant II and HSPS 2-1 are being transferred to the new electrical building gear west of the Rockwall/Farmersville pump station. Remaining circuits that power dedicated equipment will be transferred over to the new gear during short mini shut-downs coordinated with plant operations. Project Name: 0414A - HSPS 2-1 Electrical Improvements, Phase IIA Contractor: Clark Electric, Inc. Consultant: Gupta & Associates, Inc.


Original Contract: $620,000.00 Notice to Proceed: 4/23/2019 Change Order: $-14,286.75

Original Completion: 12/9/2019 % of Increase: -2.3% Revised Completion: 3/5/2020 Current Contract: $605,713.25

Days Extended: 87 Earned to Date: $604,913.25 Remarks: All major work items have been completed. Contractor is working on punch list items. Project Name: 0417 - Lake Chapman Pump Station No. 2 Pump Repair Contractor: Odessa Pumps Consultant: No Consultant Firm Utilized; Ad Memo 4567


Original Contract: $208,349.00 Notice to Proceed: 2/25/2016 Change Order: $151,300.00

Original Completion: 2/26/2020 % of Increase: 72.6% Revised Completion: Current Contract: $359,649.00

Days Extended: Earned to Date: $359,649.00 Remarks: Project closed. Project Name: 0434 - Wylie WTP II Filter Underdrain Improvements and Conversion to Biologically Active

Filters Contractor: Archer Western Construction, LLC Consultant: Carollo Engineers, Inc.




Days Extended: 40 Earned to Date: $14,821,086.76 Remarks: Influent gallery work continues. Influent and washwater drain valves have been installed on filters 21-40. Tees have been installed and welded up to filter 38. The high pressure air system is being installed in the influent gallery. Pour-backs at the settled water flume penetrations have been completed. The settled water flume from Filter 21 to Filter 31 is expected to be available in the first week of April. The rest of the settled water flume should be available the following week.

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Project Name: 0442 - North System Air Valve Improvements, Phase I Contractor: Canary Construction, Inc. Consultant: Freese & Nichols, Inc.




Days Extended: Earned to Date: $1,435,570.00 Remarks: Contractor to perform likely final shutdown of the season in April to improve two air valves on the 20" Wylie-McKinney water line. Contractor continues to finalize air valve locations already tied-in or not needing tie-in. Construction on track to be completed by substantial completion date of 7/17/20. Project Name: 0445A - Maintenance Facilities Central Region, Phase I Contractor: Drive Construction, LLC Consultant: Merriman Anderson Architects, Inc.




Days Extended: 236 Earned to Date: $2,214,413.96 Remarks: All major work items have been completed. Building passed the ADA inspection. A preliminary walkthrough inspection is scheduled for April 1st. Project Name: 0457 - Replace Ozone Generators at Bonham Water Treatment Plant Contractor: Archer Western Construction, LLC Consultant: CDM Smith, Inc.




Days Extended: Earned to Date: $1,575,676.52 Remarks: Punchlist items have been completed. Project Name: 0461 - Wylie WTP Emergency Notfication System Contractor: Johnson Controls Security Solutions, LLC Consultant: Chiang, Patel & Yerby (CP&Y)




Days Extended: Earned to Date: $880,614.20 Remarks: The contractor submitted a plan for repairing the installed equipment. This plan was approved by the engineer, and the contractor will begin work Monday, April 6th.

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Project Name: 0462 - Renner Road to Plano Delivery Point 2 Pipeline Contractor: McKee Utility Contractors Consultant: Alan Plummer Associates, Inc.


Original Contract: $6,279,290.00 Notice to Proceed: 7/29/2019 Change Order: $-468,000.00

Original Completion: 8/26/2020 % of Increase: -7.5% Revised Completion: Current Contract: $5,811,290.00

Days Extended: Earned to Date: $4,016,030.40 Remarks: Contractor completed connection with 48" pipeline at Renner Rd / Shiloh Rd intersection on 3/24. Contractor installed carrier pipe in Renner Rd tunnel. Contractor installed air valves and blow off valves with their associated appurtenances. Project Name: 0467 - South System Air Valve Improvements, Phase I Contractor: Mountain Cascade of TX, LLC Consultant: Chiang, Patel & Yerby (CP&Y)




Days Extended: 194 Earned to Date: $1,994,489.69 Remarks: Contractor has installed CAV assembly and MHs at Custer Rd and PGBT in Plano. Project Name: 0467A - South System Air Valve Improvements, Phase II Contractor: Canary Construction, Inc. Consultant: CP&Y, Inc.




Days Extended: Earned to Date: $981,256.40 Remarks: Contractor has completed CAV installations on Line K in Dallas south of 635 to Ferguson (K21-K29). Contractor has also completed CAV installation on Line F in Garland (F-1). Contractor had completed two CAV replacements on Line Q (Q1 and Q3). Contractor continues to place MHs and other appurtenances associated with the CAV replacements. Contractor excavating locations for K20 and K27 where existing ARVs are not found. Project Name: 0469 - 72" Texoma Pipeline Improvements Contractor: Garney Companies, Inc. Consultant: Freese & Nichols, Inc.




Days Extended: Earned to Date: $5,750,453.72 Remarks:

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Contractor has installed new thrust harness on north piping and welded the harness to the pipeline. The welds have been inspected and tested. The contractor's subcontractor has sandblasted the immediate area in preparation of applying paint. Project Name: 0480 - HSPS 3-1 Improvements Contractor: Eagle Contracting, LP Consultant: AECOM Technical Services, Inc.




Days Extended: Earned to Date: $4,357,564.90 Remarks: Contractor is finalizing work on meter vault (for 72-inch meter and manway), on pumps 1 through 5 (west side of pump station), and electrical and SCADA. Two pumps (3 and 5) from the west side are back on line and operational. Proposed shutdown for installation of 96-inch isolation valve moved to October 2020, start of shutdown season. Project Name: 0481 - Wylie WTP III SCADA Improvements Contractor: Prime Controls Consultant: Tetra Tech, Inc.




Days Extended: Earned to Date: $1,424,842.13 Remarks: Contractor is preparing to install additional server and workstations in WTP III control room, upgrade workstation operator screen graphics and install a redundant programmable logic controller (PLC) inside motor-control-center 300 during shutdown scheduled for April 8 to April 27. Project Name: 0485 - Wylie WTP Chlorine System Improvements Contractor: Archer Western Construction, LLC Consultant: HDR Engineering, Inc.




Days Extended: 55 Earned to Date: $9,462,420.65 Remarks: The piping inside the railcar building at WTP II and IV has been replaced and tested, and the systems are back in operation. The chlorine scrubber duct at WTP II was rerouted and replaced. Work at WTP III continues. The new evaporators and chlorinators have been installed. The piping for this equipment is being installed now. Fire system tie ins were completed and tested at WTP III and IV. Project Name: 0494 - Princeton No. 2A Delivery Point Contractor: City of Princeton Consultant: Kimley-Horn and Associates, Inc.

Contract Date: 7/25/2019 Original Contract: $1,262,500.00 Notice to Proceed: 8/13/2019 Change Order: $ 0.00

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Original Completion:

% of Increase: 0.0% Revised Completion: Current Contract: $1,262,500.00

Days Extended: Earned to Date: $1,262,500.00 Remarks: Installation of the NTMWD portion of water line began in the final week of February. Location of tie-in between old and new waterlines is confirmed. No installation of water line occurred during March due to rain and residual mud. Work to continue as weather/conditions permit. Project Name: 0519B - North Garland Condition Assessment - Pipelines Repairs Contractor: Garney Companies, Inc. Consultant: Halff Associates, Inc.




Days Extended: Earned to Date: $180,000.00 Remarks: Contractor completed leak repair at location No. 2 in parking lot near Shiloh Pump Station. Contractor removed leaking corporation stop and installed plug and grout. Contractor removed concrete at north interconnect at Shiloh Pump Station in preparation for upcoming shutdown. Also excavated in preparation for work at the north interconnect at Shiloh, the south interconnect at Apollo, and at the proposed manway at location no. 3. Project Name: 0534 - Wylie WTP III & IV Filter Performance Improvements Contractor: Prime Controls Consultant: Gupta & Associates, Inc.




Days Extended: Earned to Date: $2,439,071.55 Remarks: The Contractor finished recoating the steel troughs in Basin 4 at WTP IV. The installation of FRP weir plates on Basin 4 troughs is near completion. The installation of WTP IV Combined Filter Effluent (CFE) turbidity monitor sample pump is complete. The Filter Control Structure has been tested for disinfection and is ready to be back in service. The hardware of WTP IV PLC-10 for backwash water supply pumps and RIO-10 for plant water pumps have been removed and has been replaced by the new fiber optic cable between the PLC-10 and the RIO-10. The Contractor has installed the control program and is conducting verification testing.

Wastewater Project Name: 0252 - Stewart Creek WWTP Expansion to 10 MGD Contractor: MWH Constructors, Inc. Consultant: Carollo Engineers, Inc.


Original Contract: $60,429,000.00 Notice to Proceed: 10/20/2015 Change Order: $2,321,134.00


Days Extended: 955 Earned to Date: $62,204,236.02

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Remarks: General work: Continued hauling off extra backfill at the site. Insufficient Concrete Cover Issue: Coating at aeration basins walls (five walls) was repaired and re-tested (Holiday testing); testing passed but test reports submittal is pending Engineer’s review and approval. Power washed IPS wetwells in preparation for top slab (underslab) GPR and coating inspection. Paving Repairs: Completed paving repairs west of RAS-WAS Pump Station. All paving repairs have been completed. Re-grading at Primary Sludge Pump Station is pending. Project Name: 0319 - Lower Rowlett & Lower Cottonwood Creek Lift Station Improvements Contractor: Pepper Lawson Waterworks Consultant: CH2M Hill




Days Extended: 3 Earned to Date: $2,536,380.35 Remarks: Lower Cottonwood: Worked on concrete pipe supports and on installation of discharge piping and valves. Lower Cottonwood Electrical Building: Installed electrical building. Worked on equipment pads. Biotrickling filter: Continued working on slab. Lower Cottonwood: Electrical subcontractor worked on installation of 45 ft of duct banks from electrical building to the lift station. Project Name: 0328 - Rowlett Creek RWWTP Peak Flow Improvements, Phase 1 Contractor: Pepper Lawson Waterworks Consultant: CH2M Hill




Days Extended: 90 Earned to Date: $35,127,512.18 Remarks: MBR: Worked on installing 12-in and 24-in air pipes. Continued installation of membrane permeate piping. Continued assembling screenings washer compactor for fine screens. Continued installation of WAS pumps. Electrical: Installed conductors from generator to MBR Building ATS. Installed conductors running between MBR power distribution equipment, main switchboards, switchboards, ATS, manual transfer switch, and Oncor transformers. Completed duct banks from Oncor transformers to Headworks Electrical Building. Installed wiring from Step Screen control panels 1 &3 and Level Control panel to their field devices at the Headworks structure. Installed light fixtures and receptacles in MBR control, electrical, and blowerrooms. Project Name: 0343 - Wilson Creek RWWTP Electrical Improvements, Phase 1 Contractor: Facilities Solutions Group Consultant: Mbroh Engineering, Inc.




Days Extended: 443 Earned to Date: $5,816,935.13 Remarks: The walkthrough to inspect electrical gear has been rescheduled for April 2020. Completion of the access road to the new

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primary sludge pump staton electrical buildings is dependent on a yard piping installation included in the plant expansion project. The yard piping installation has been rescheduled to April 2020. Project Name: 0346 - Wilson Creek Advanced Treatment and Headworks Improvements Contractor: Archer Western Construction, LLC Consultant: CH2M Hill




Days Extended: 201 Earned to Date: $43,380,449.45 Remarks: Finished installation of fire alarm system and alarm panels for the new side of the headworks. Performed dry weather and wet weather testing, and placed the existing high rate clarifier back in service. The electrical subcontractor installed conduit and wire at headworks, secondary sludge pump stations, high rate clarifiers, and high rate clarifier electrical buildings. Project Name: 0369 - SMC RWWTP Filter & Ultraviolet Disinfection Improvements Contractor: Archer Western Construction, LLC Consultant: Black & Veatch




Days Extended: 34 Earned to Date: $9,613,725.79 Remarks: Performance testing by the vendor was completed on the UV. The functional demonstration testing was completed for the new disc filters, UV system and non-potable water system. The UV system was placed online for the 30-day functional test on March 12, 2020. Project Name: 0381 - Lower White Rock Lift Station Improvements Contractor: Archer Western Construction, LLC Consultant: Cobb, Fendley & Associates




Days Extended: 440 Earned to Date: $6,756,424.98 Remarks: Finished seeding the yard and installed drain piping. Project Name: 0391- Preston Road Lift Station Improvements Contractor: Archer Western Construction, LLC Consultant: Cobb, Fendley & Associates


Original Contract: $675,000.00 Notice to Proceed: 10/30/2017 Change Order: $ 0.00

Original Completion: 12/29/2018 % of Increase: 0.0% Revised Completion: 3/13/2020 Current Contract: $675,000.00

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Days Extended: 440 Earned to Date: $255,647.93 Remarks: Excavated the 121 Force main. Installed shoring for excavation. Executed shutdown for the 121 Force Main. Installed pre-cast concrete vault. Set the flow meter and 24" valve in place. Project Name: 0392 - Beck Branch Interceptor Improvements, Phase II Contractor: IPR South Central, LLC Consultant: Lockwood, Andrews & Newnam, Inc.




Days Extended: 63 Earned to Date: $6,278,826.96 Remarks: Work continues on the odor control unit at the lift station Project Name: 0401 - Princeton Lift Station Improvements Contractor: Crescent Constructors, Inc. Consultant: Parsons Environment & Infrastructure, Inc.




Days Extended: 484 Earned to Date: $8,228,089.00 Remarks: Contractor replaced failing flow meter. Contractor and District coordinating on final programming and repairing known issues such as odor control drain line and repairing leaking lift station roof. Project Name: 0405 - North McKinney Interceptor Improvements Phase II Contractor: Insituform Technologies, LLC Consultant: Dal-Tech Engineering



Original Completion: 10/31/2018 % of Increase: -5.4% Revised Completion: 8/9/2019 Current Contract: $5,278,396.19

Days Extended: 282 Earned to Date: $5,257,986.19 Remarks: Project closeout was approved by the Board at the March Board meeting. Project Name: 0432 - Floyd Branch Regional WWTP Process Optimization Improvements Contractor: Eagle Contracting, LP Consultant: Arcadis Inc.




Days Extended: Earned to Date: $1,421,655.54 Remarks:

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Contractor is getting submittals approved. Poured wall sections 3, 4, 5, and 6 for the BIOMAG building basement level. Poured base slab and walls for the filter bypass structure. The electrical subcontractor installed conduit at solids building and activated sludge pump station, ductbank to solids building, ductbanks by the aeration basins, and set four manholes. Project Name: 0433 - Princeton Parallel Force Main Contractor: Wildstone Construction, LLC Consultant: Parsons Environment & Infrastructure, Inc.




Days Extended: 205 Earned to Date: $4,338,073.94 Remarks: Contractor, engineer, and manufacturer coordinating with District on air valve replacements. Project Name: 0437 - Wilson Creek RWWTP Expansion to 64 MGD (CMAR) Contractor: Sundt Construction, Inc. Consultant: Carollo Engineers, Inc.


Original Contract: $376,000.00 Notice to Proceed: 10/17/2017 Change Order: $53,955,301.03


Days Extended: 197 Earned to Date: $54,300,761.76 Remarks: Project was substantialy complete on March 2, 2020. Contractor is working on punch list items. Project Name: 0439 - Beck Branch Parallel Interceptor FM Contractor: Belt Construction, Inc. Consultant: Lockwood, Andrews & Newnam, Inc.




Days Extended: 107 Earned to Date: $4,183,044.65 Remarks: 54-in Pipeline: Installed approximately 600 LF of this line; with this work the pipeline installation completed is 2,813 LF. No grouting this month (to date a total of 1,340 ft have been grouted). Testing continued for a total of 2,162 LF of pipe tested. 42-in Pipeline: Hand tunneling under East Plano Parkway has been completed. Carrier pipe installation started with a total of 60 LF installed to date. Two manholes were installed. Project Name: 0443 - SMC RWWTP Influent Flow Handling and Secondary Clarifier Imprvmnts Contractor: Crescent Constructors, Inc. Consultant: CDM Smith, Inc.





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Remarks: At secondary clarifier, the contractor continues to install the walls and launders of the clarifier. Of the eight wall sections, six are completed to date. Of the eight launder slab sections, two are completed to date. The contractor has been unable to work in the grit basin the entire month due to weather. Project Name: 0450 - Muddy Creek WWTP Aeration Basin, Odor Control, and Backup Improvements Contractor: Eagle Contracting, LP Consultant: Gupta & Associates, Inc.




Days Extended: 50 Earned to Date: $4,234,627.57 Remarks: The new bio-trickling filter has passed pressure testing. Generators have passed load bank testing. Contractor is preparing subgrade to construct concrete service roads to the new generators in April 2020. Project Name: 0453 - Indian Creek Lift Station No. 2 Contractor: Red River Construction Consultant: AECOM Technical Services, Inc.




Days Extended: 70 Earned to Date: $4,249,296.71 Remarks: Contractor finished the installation of CMU blocks for the electrical building and started laying the bricks. Once the bricks are laid, concrete panels will be installed on the roof of the electrical building. Contractor still continuing work inside the drywell on pipes and pipe supports. Force main installation along Mckamy Trail is ongoing. Contractor also worked on the installation of the 36-inch PVC gravity line and manhole that connect the wetwell and the splitter box. The weather impacted work production at the site for most of March. Project Name: 0454 - Indian Creek Force Main No. 2 Contractor: Excel Trenching, LLC Consultant: HDR Engineering, Inc.




Days Extended: 83 Earned to Date: $9,458,568.57 Remarks: Contractor poured annular space grouting on the legacy-hedgcoxe bore. Contractor worked on lowering the pipe on the east side of Dallas North Tollway on Spring Creek Parkway. This work was approved via a change order. Contractor is also working on installing the isolation plug valves.

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Project Name: 0455 - Forney Mustang Creek Lift Station, Phase I Contractor: Crescent Constructors, Inc. Consultant: CP&Y, Inc.




Days Extended: 120 Earned to Date: $5,439,124.92 Remarks: Set the forms, placed rebar, and poured the second level interior wet well wall. Set the forms, placed rebar, and poured the NW corner, the NE corner, and the North Center Section of the third level of the wet well wall. Project Name: 0468 - Wilson Creek RWWTP Electrical Improvements, Phase II Contractor: Facilities Solutions Group Consultant: Mbroh Engineering, Inc.




Days Extended: 30 Earned to Date: $12,566,695.99 Remarks: The new electrical building envelope is scheduled for completion in early April. Installation of the new paralleling switchgear wiil begin once the electrical building is ready. Installation of the new overhead power distribution continues on schedule. Project Name: 0499 - Wilson Creek RWWTP Maintenance Facility & Solids Operations Facility Contractor: Mart, Inc. Consultant: Halff Associates, Inc.




Days Extended: Earned to Date: $763,628.83 Remarks: Continue working on electrical duct banks sanitary sewer, and water tie-in. Project Name: 0502 - McKinney Lift Station Improvements Contractor: Archer Western Construction, LLC Consultant: HDR Engineering, Inc.




Days Extended: Earned to Date: $8,842,344.70 Remarks: Contractor is getting submittals approved. Poured the second lift of the north west, north east, and south west corner walls and north center wall for the lift station. Poured the walls and top slab for the plant drain junction box. Poured the top slab for the junction box. Installed 34 LF of 42-inch forcemain west and 84 LF of 72-inch raw sewer line. The electrical

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subcontractor installed one manhole. Project Name: 0522 - UEFIS Parking and Storage Facilities at Wilson Creek RWWTP Contractor: Mart, Inc. Consultant: Halff Associates, Inc.




Days Extended: Earned to Date: $474,522.81 Remarks: Contractor continue working on sanitary sewer, water utilities and duct banks

Solid Waste Project Name: 0440 - 121 RDF Concrete Pavement Improvements Contractor: Mario Sinacola & Sons, Inc. Consultant: KSA Engineers




Days Extended: 317 Earned to Date: $4,598,609.76 Remarks: Contractor has submitted all closeout documents and should receive final payment in April. Project Name: 0465 - Custer Road Transfer Station Compost Office Contractor: Advanced Transol Consultants, LLC Consultant: Huitt-Zollars, Inc.


Original Contract: $502,000.00 Notice to Proceed: 5/25/2018 Change Order: $59,839.39

Original Completion: 11/30/2018 % of Increase: 11.9% Revised Completion: 5/15/2019 Current Contract: $561,839.39

Days Extended: 166 Earned to Date: $556,528.11 Remarks: NTMWD technical services has completed work to remove the deep sink in the utility closet and repair bent gutter on the north side of the new building. New flooring and doors are on order and expected to be installed in June. Once the new building is complete and City of Plano staff move in, and the Contractor will demolish the old building to complete the project. Project Name: 0482B - 121 RDF Cell 5B-B, 5C, and 5D Excavation Contractor: DelHur Industries, Inc. Consultant: Biggs & Mathews Environmental





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Remarks: The Contractor has 1 excavator, 2 dozers, 6 hauling trucks, 1 water trucks, and 1 lube truck on site. The Contractor has been working on rearranging the stockpile per agreed upon drawings. Two weeks of straight rain has delayed the completion of the stockpile work, but it is expected to be completed mid-April. Project Name: 0527 - 121 RDF Bypass Lane Improvements Contractor: New World Contracting, LLC Consultant: Biggs & Mathews Environmental



Original Completion: 11/16/2019 % of Increase: -3.1% Revised Completion: 3/7/2020 Current Contract: $1,737,825.63

Days Extended: 112 Earned to Date: $1,624,899.98 Remarks: All computer workstation items for the new scale have been received and configured. Installation and testing of the computer hardware is scheduled for the first weekend in April. The contractor and consultant continue to work on repairs to the overhead signs for inbound lanes at the scale house. Remaining work includes placement of additional sod along the south shoulder of the landfill entrance road and vertical adjustment of a manhole ring and cover north of the scale house. Project Name: 0537 - McKinney Landfill 2019 Landfill Gas System Upgrades Contractor: Tri Con Works, LLC Consultant: Weaver Consultants Group, LLC


Original Contract: $173,905.00 Notice to Proceed: 9/16/2019 Change Order: $ 0.00

Original Completion: 1/14/2020 % of Increase: 0.0% Revised Completion: Current Contract: $173,905.00

Days Extended: Earned to Date: $170,319.55 Remarks: The Consultant and Contractor continue to coordinate with Oncor to adjust line voltage to the new air compressor and start it up safely. A startup was scheduled for March 25, but the voltage was too high for max equipment tolerance so the startup was not attempted. NTMWD staff has informed Oncor find a resolution to the high voltage issue. This is the only work remaining to satisfy the contract.

Total Value – All Projects: $728,062,707.12 Total Earned – All Projects: $589,889,555.78

% Difference: 81.02%

BOIS D’ARC LAKE

PROGRAM SUMMARY.

April 2020

B O I S D ’ A R C L A K E P R O G R A M S U M M A R Y

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PROGRAM MAPS AND STATUS SUMMARY

① RIVERBY AND UPPER MITIGATION SITES (FSP – RES)

Design/Construction Budget: Est. - $148M; Authorized Amount – $148M; Spent

Amount - $70.4M

Status: See construction report sheet later in report. Schedule: See construction report sheet later in report.

② DAM AND RESERVOIR (CMAR 1 – Archer Western)

Design/Construction Budget: Est. - $182M; Authorized Amount – $182M; Spent

Amount - $99.8M

Status: See construction report sheet later in report.

Schedule: See construction report sheet later in report.

③ RAW WATER PUMP STATION (CMAR 3 – Garney)

Design/Construction Budget: Est. - $97.1M; Authorized Amount – $97.1M; Spent

Amount - $44.6M



④ FM 897 AND COUNTY ROADS (CMAR 4 – Austin Bridge and Road)

Design/Construction Budget: Est. - $55.6M; Authorized Amount – $55.6M; Spent

Amount - $40.3M



⑤ & ⑥ RECREATION AREAS, BOAT RAMPS, LAKE OFFICE (CMAR 4 –

Austin Bridge and Road) and DAM MAINTENANCE BUILDING (CMAR 3 –

Garney)

Design/Construction Budget: Est. - $29M; Authorized Amount – $26M; Spent Amount -

$5.7M




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PROGRAM MAPS AND STATUS SUMMARY

⑦ 90-INCH RAW WATER PIPELINE (CMAR 5 – Garney)

Design/Construction Budget: Est. - $191.3M; Authorized Amount – $185.4M; Spent Amount - $109.2M



⑧ LEONARD WATER TREATMENT PLANT (CMAR 3 – Garney)




⑨ HIGH SERVICE PUMP STATION (CMAR 3 – Garney)




⑩ TERMINAL STORAGE RESERVOIR (CMAR 1 – Archer Western)




⑪ 84-INCH TREATED WATER PIPELINE (CMAR 5 – Garney) Design/Construction Budget: Est. - $125M; Authorized Amount – $64M; Spent Amount - $19.7M

Status: Continued with final design. Continued to support land acquisition.

Schedule: Design Complete in 4th QTR 2019; Construction Complete in 1st QTR 2022


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CONSTRUCTION PROGRESS PHOTOS


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CMAR 3 – Garney – HSPS mud slabs and 42” 90-degree joints installed.


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APRIL 2020 FINANCIAL STATUS (BASELINE ESTIMATE)


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APRIL 2020 FINANCIAL STATUS

*Finance Contingency is Savings from Cost of Issuance


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APRIL 2020 FINANCIAL STATUS (BY COMPONENT)


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APRIL 2020 OVERALL PROGRAM FINANCIAL STATUS (FINANCE TABLE)

APRIL 2020 FINANCIAL STATUS (REMAINING CONTINGENCY AND ALLOWANCES)

Construction QAProgram Admin

& Permitting

Conflicts Around

Reservoir

Property

Acquisition

Dam, Reservoir

& TSR (CMAR 1 -

AW)

Mitigation (FSP -

RES)

WTP, Pump

Stations, Dam

Maint (CMAR 3 -

Garney

Roads, Boat

Ramps and Lake

Ops (CMAR 4 -

ABR)

Pipelines

(CMAR 5 -

Garney)

Program

ContingencyTOTALS

Baseline

Estimate$39,040,000 $51,239,000 $54,647,000 $136,435,000 $211,761,000 $213,482,000 $422,872,000 $83,050,000 $316,097,000 $60,000,000 $1,588,624,000

Current

Estimated

Commitment

$42,350,000 $60,576,000 $68,449,000 $164,156,000 $229,049,000 $147,238,000 $482,512,000 $81,820,000 $312,002,000 $473,000 $1,588,624,000

Expenditures $12,720,000 $39,082,000 $50,171,000 $151,193,000 $122,818,000 $70,424,000 $211,201,000 $46,107,000 $130,742,000 - $834,458,000

CMAR 1 FSP CMAR 3 CMAR 4 CMAR 5 TOTALSBoard

Authorized

Unused CMAR

Contingency $5,426,347.31 $0.00 $3,252,356.93 $2,006,507.99 $2,135,640.33 $12,820,852.56 Yes

Unused CMAR

Allowances$2,446,499.01 $0.00 $6,469,273.12 $6,464,849.29 $4,426,560.71 $19,807,182.13 Yes

Program

Contingency $473,000.00 No

Finance

Contingency $11,301,000.00 No

$32,628,034.69

$11,774,000.00

$44,402,034.69

TOTAL CMAR (AUTHORIZED)

TOTAL PRGM (UNAUTHORIZED)

TOTAL


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PROGRAM CONTINGENCY TRACKER

*Finance Contingency is Savings from Cost of Issuance

April 2020 - Bois d’Arc Lake Program Construction Status Summary

Overall Program Summary: Progress continued in March for the Bois d’Arc Program despite a wetter start to the month and the necessary response to the COVID-19 Pandemic. March was a busy and hectic month at the dam. It started with the plugging of Bois d’Arc Creek and diversion of water through the intake structure. It was a good milestone for the project but was followed up with 12 days of rain totaling near 6 inches. The contractor made the decision to cut down the plug elevation some to allow water to go back through the creek until the weather pattern passed. The remainder of March was spent cleaning up the site from the rains, repairing access roads, repairing the care of water berms, etc. All slurry trench construction except for the “notch” was completed. Concrete work continued on spillway footings, spillway walls and the intake structure walls. Mitigation work continued at Riverby. Crews continued work on stream restoration, pond construction and other activities. Tree plantings for this planting season are complete with well over 1 million trees planted this year. In total they have about 3M trees planted. Work on all LWTP structures moved forward with structural concrete. Yard piping and electrical work around the site continued. Several pours are conducted weekly at the RWPS to continue the push towards completion of the major structural concrete work for the pump house. Beam installation continued with approximately half of the roof beams having been installed. Work at the HSPS focused on rock anchor installation and preparation for the slab construction. Work on the TSR continued with crews starting to install liner and soil cement in March. Bridge substructure work on FM 897 was completed in March. Superstructure work continued with deck panel placements, deck pours and rail construction. County road work is available at all sites. Sites 12, 27 and 23 are complete. Sites 2 and 3 are near completion and will be reviewed by County Officials in April. County road closures continued. Site 4 and 5 are complete. Site 32 is scheduled to begin in April. Lake Operations Center crews worked on structural steel installation. Columns are set and beams and joist installation has started. Crews also continued on-site grading and on-site utilities for the various structures onsite. Boat ramps crews continued work when able at the 3 boat ramp locations. Due to weather onsite not much production work was conducted in March. Raw Water Pipeline work continued. All 3 segments continued pipe deliveries and installation work. Treated Water Pipeline work will start in the field in April/May.

*Curve data utilizes actual numbers and schedules when available and estimated amounts/dates for projects still pending procurement. Schedule and curve follow the earliest start and latest completion for that particular CMAR/FSP.

Impoundment

Fall 2020

Treatment

Spring 2022

Mitigation

Monitoring/Maintenance

continues through

approximately 2042. Not

shown for clarity.

Auth. Budget

Projected

Actual

Program Authorized Budget vs. Actual/Projected Cost Curve


Archer Western - CMAR 1 Summary for the Dam, Reservoir Clearing and TSR: March was a busy and hectic month at the dam. It started with the plugging of Bois d’Arc Creek and diversion of water through the intake structure. It was a good milestone for the project but was followed up with 12 days of rain totaling near 6 inches. The contractor made the decision to cut down the plug elevation some to allow water to go back through the creek until the weather pattern passed. The remainder of March was spent cleaning up the site from the rains, repairing access roads, repairing the care of water berms, etc. All slurry trench construction except for the “notch” was completed. Crews have demobilized until the notch is up to the 505/515 elevation for construction of the trench there. Concrete work continued on spillway footings, spillway walls and the intake structure walls.

CMAR 1 Schedule and Cost Summaries:

Impoundment

Fall 2020

Treatment

Spring 2022

Auth. Budget

Projected

Actual

CMAR 1 Authorized Budget vs. Actual/Projected Cost Curve


RES - FSP Summary for the Environmental Mitigation Projects: RES continued work on all sections. Crews continued work on stream restoration, pond construction, cover crop maintenance and other activities continued. Tree plantings for this planting season are complete with well over 1 million trees planted this year. In total they have about 3M trees planted. RES crews from Mexico returned for the warmer season and have started walking fence lines looking for any needed repairs or invasive species removal. FSP Schedule and Cost Summaries:

FSP Mitigation

Original Construction Contract Duration 1665

Approved Changes to Contract Duration 0

Original Construction Start Date 08/08/18

Original Construction Substantial Completion Date 02/28/23

Revised Construction Substantial Completion Date 02/28/23

Days Charged to the Project to Date* 602

Days Remaining in Contract** 1063

Days Ahead/Behind Schedule On Schedule

*Days charged from NTP to 4/1/20

**Maintenance/Monitoring will continue for up to 20 years.

Main Construction

Effort Complete

Early 2023

Auth. Budget

Projected

Actual

Mitigation FSP Authorized Budget vs. Actual/Projected Cost Curve

CMAR (CLOSED) FSP Mitigation Total Amount

Preconstruction

Procurement and Early

Packages

$3,311,089.00 $0.00 $3,311,089.00

GMP Amounts $0.00 $135,997,990.00 $135,997,990.00

Approved Change

Orders$0.00 ($409,503.00) ($409,503.00)

Current Cost $3,311,089.00 $135,588,487.00 $138,899,576.00

Amount Paid to Date $3,311,089.00 $60,430,154.07 $63,741,243.07

Percent Paid to Date 100.00% 44.57% 45.89%

*Costs are for construction authorizations only. Totals exclude engineering costs, ROW costs, etc.


Garney – CMAR 3 Summary for the Leonard Water Treatment Plant, Raw Water Pump Station, High Service Pump Station and Dam Maintenance Facility: Leonard Water Treatment Plant work continued on all structures onsite even with the wet start to the month. Structural concrete work continued to be the focus on all major components. Walls and structural steel are starting to become more and more visible onsite at the various structures. Yard piping, electrical work and grading continued around the entire site. The Raw Water Pump Station progress on structural concrete continues at a fast pace. Multiple pours weekly have kept the project on schedule. Backfill continued around the pump room. Beam installation for the roof structure continued with half of the beams being installed and roof decking construction starting. The HSPS continued preparations for the structural foundation work by working on sub slab activities and rock anchor install. Preparations for the major slab pour are being made. The dam maintenance facility has not started construction yet and has been postponed until next year to avoid conflicts at the dam site. CMAR 3 Schedule and Cost Summaries:

LWTP HSPS RWPSDam

Maintenance

Original Contract Duration to Substantial 1055 747 811 TBD

Approved Changes to Contract Duration 46 46 56 0

Original Construction Start Date (NTP) 11/05/18 09/09/19 12/10/18 TBD

Original Substantial Completion Date 09/25/21 09/25/21 02/28/21 TBD

Revised Substantial Completion Date 11/10/21 11/10/21 04/25/21 TBD

Days Charged to the Project to Date* 513 205 478 0

Days Remaining in Contract to Substantial588 588 333 0

Anticipated Final Completion Date 04/30/22 04/30/22 07/24/21 TBD

Days Ahead/Behind Schedule 29 Days

Behind**

29 Days

Behind** 5 Days Behind TBD

* Days charged to project from NTP to 4/1/20

** CMAR is evaluating impacts of slab work at HSPS that is driving the critical path of the schedule to be

delayed. Recovery is possible and options for work sequencing will be discussed with the NTMWD/FNI

Impoundment

Fall 2020

Treatment

Spring 2022

Auth. Budget

Projected

Actual


LWTP HSPS RWPSDam

MaintenanceTotal Amount

Preconstruction

Procurement $1,743,688.00 $513,167.00 $563,163.00 $80,000.00 $2,900,018.00

GMP Amounts $257,430,491.68 $64,517,402.22 $91,392,043.93 $0.00 $413,339,937.83

Approved Change

Orders$0.00 $0.00 $0.00 $0.00 $0.00

Current Cost $259,174,179.68 $65,030,569.22 $91,955,206.93 $80,000.00 $416,239,955.83

Amount Paid to Date $117,752,429.23 $4,971,493.58 $40,898,557.16 $35,000.00 $163,657,479.96

Percent Paid to Date 45.43% 7.64% 44.48% 43.75% 39.32%



Austin Bridge and Road – CMAR 4 Summary for FM 897, Fannin County Roads, Boat Ramps and Lake Operations Center: FM 897 and Fannin County Road construction work continued. Substructure work was completed in March. Superstructure work continued with deck panel placements, deck pours and rail construction. The road section switched traffic off of the detour and onto the new FM 897 in early March to allow for completion of grading work in the ROW. County road work is available at all sites. Sites 12, 27 and 23 are complete. Sites 2 and 3 are near completion and will be reviewed by County Officials in April. County road closures continued. Sites 4 and 5 are complete. Site 32 is scheduled to begin in April. CMAR 4 Schedule and Cost Summaries:

*Schedule bars for CMAR 4 indicate a longer final completion due to the floating boat house construction needing impounded water to complete installation.

FM 897County

Roads

Lake

OperationsBoat Ramps Boat House

Original Contract Duration to Substantial 795 794 430 430 722

Approved Changes to Contract Duration 0 0 0 0 0

Original Construction Start Date (NTP) 04/27/18 04/27/18 09/03/19 09/03/19 09/03/19

Original Substantial Completion Date 06/30/20 06/29/20 11/06/20 11/06/20 08/25/21

Revised Substantial Completion Date 06/30/20 06/29/20 11/06/20 11/06/20 08/25/21

Days Charged to the Project to Date* 705 705 211 211 211

Days Remaining in Contract to Substantial90 89 219 219 511

Anticipated Final Completion Date 07/31/20 07/30/20 12/06/20 12/06/20 09/24/21

Days Ahead/Behind Schedule 38 Days

Behind

52 Days

Behind

On

Schedule

On

Schedule

On

Schedule

*Days charged to project from NTP to 4/1/20

**Time extension for 30 days for abnormal weather will be incorporated in next

Impoundment

Fall 2020

Treatment

Spring 2022

Auth. Budget

Projected

Actual


FM 897 County RoadsBoat Ramps &

Lake OperationsTotal Amount

Preconstruction

Procurement $446,100.00 $167,525.00 $272,375.00 $886,000.00

GMP Amounts $35,287,420.06 $13,154,189.53 $24,440,814.38 $72,882,423.97

Approved Change

Orders$47,470.38 $20,699.86 $0.00 $68,170.24

Current Cost $35,780,990.44 $13,342,414.39 $24,713,189.38 $73,836,594.21

Amount Paid to Date $26,297,865.25 $8,544,596.38 $4,376,053.86 $39,218,515.49

Percent Paid to Date 73.50% 64.04% 17.71% 53.12%



Garney – CMAR 5 Summary for Raw and Treated Water Pipelines: Installation crews on all segments of the RWPL continued work. A total of 5 installation crews are working on RWPL segments. No work will begin on the TWPL until April 2020. It is anticipated that there will be 3 installation crews and one dedicated tunnel crew. CMAR 5 Schedule and Cost Summaries:

*Cost and schedule for TWPL are either estimated or will be included once finalized.

RWPL TWPL

Original Contract Duration to Substantial 748 TBD

Approved Changes to Contract Duration 0 0

Original Construction Start Date (NTP) 03/30/19 TBD

Original Substantial Completion Date 04/21/21 TBD

Revised Substantial Completion Date 04/21/21 TBD

Days Charged to the Project to Date* 368 0

Days Remaining in Contract to Substantial 380 TBD

Contract Final Completion Date 8/21/21 0

Days Ahead/Behind Schedule On Schedule TBD

*Days charged to project from NTP to 4/1/20

Impoundment

Fall 2020

Treatment

Spring 2022

Auth. Budget

Projected

Actual


PRELIMINARY OFFICIAL STATEMENT Rating: S&P: "AA-" (See "Continuing Disclosure of Information" herein) Dated April 13, 2020 (See "OTHER INFORMATION - NEW ISSUE - Book-Entry-Only Rating" herein) In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for purposes of federal income taxation under statutes, regulations, published rulings and court decisions existing on the date of such opinion, subject to the matters described under "Tax Matters" herein.

$5,200,000*

NORTH TEXAS MUNICIPAL WATER DISTRICT PANTHER CREEK REGIONAL WASTEWATER SYSTEM

REVENUE BONDS, SERIES 2020 Dated Date: April 15, 2020 Due: June 1, as shown below Interest Accrues: Delivery Date (defined below) PAYMENT TERMS . . . Interest on the $5,200,000* North Texas Municipal Water District Panther Creek Regional Wastewater System Revenue Bonds, Series 2020, (the "Bonds") will accrue from the date of initial delivery thereof, will be payable on June 1 and December 1 of each year until maturity or prior redemption, commencing December 1, 2020, 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 ("DTC") pursuant to the Book-Entry-Only System described herein. 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 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 beneficial owners of the Bonds. See "THE BONDS - Book-Entry-Only System" herein. The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, National Association, currently in Dallas, Texas (see "THE BONDS - Paying Agent/Registrar"). SECURITY AND SOURCE OF PAYMENT . . . The Bonds are special obligations of the North Texas Municipal Water District (the “District”), secured by and payable from a first lien on and pledge of the "Pledged Revenues" as defined in the Resolution authorizing the Bonds, including the Gross Revenues of the Panther Creek Regional Wastewater System, and including specifically certain payments to be received by the District from the City of Frisco, Texas (the "Participant"), and any future Additional Participants pursuant to the contracts with the Participant and any Additional Participants. The Bonds are on parity in all respects with the outstanding Panther Creek Regional Wastewater System Contract Revenue Bonds (the “Outstanding Bonds”) and any Additional Bonds (as defined herein) which are also secured by and payable from the Pledged Revenues. The District has not covenanted or obligated itself to pay the Bonds from monies raised or to be raised from taxation or any other source of funds other than the “Pledged Revenues”. See “THE BONDS – Authority for Issuance” and “THE BONDS – Security and Source of Payment.” PURPOSE . . . Proceeds from the sale of the Bonds will be used for the purpose of providing funds for (i) design of Panther Creek WWTP Expansion to 15 MGD, (ii) funding a deposit to the Reserve Fund to the extent necessary, and (iii) paying the costs incident to the issuance and delivery of the Bonds. MATURITY SCHEDULE* CUSIP Prefix: 66283A (1)

Principal Maturity CUSIP Principal Maturity CUSIPAmount June 1 Rate Yield Suffix (1) Amount June 1 Rate Yield Suffix (1)

180,000$ 2021 265,000$ 2031190,000 2022 275,000 2032195,000 2023 280,000 2033205,000 2024 290,000 2034210,000 2025 300,000 2035220,000 2026 305,000 2036230,000 2027 315,000 2037235,000 2028 325,000 2038245,000 2029 335,000 2039255,000 2030 345,000 2040

_______________ (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Global Market Intelligence on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. CUSIP numbers are provided for convenience of reference only. Neither the District, the Initial Purchaser, nor the Financial Advisor is responsible for the selection or correctness of the CUSIP numbers set forth herein. REDEMPTION OPTION . . . The District reserves the right, at its option, to redeem Bonds having stated maturities on and after June 1, 2030, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof, on June 1, 2029, or any date thereafter, at a price equal to the principal amount thereof plus accrued interest to the date of redemption (see "THE BONDS - Optional Redemption"). LEGALITY . . . The Bonds are offered for delivery when, as and if issued and received by the Initial Purchaser and subject to the approving opinion of the Attorney General of Texas and the opinion of McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel (see Appendix C - "Form of Bond Counsel's Opinion"). DELIVERY . . . It is expected that the Bonds will be available for delivery through The Depository Trust Company on May 27, 2020.

BIDS DUE THURSDAY, APRIL 23, 2020, AT 10:30 AM, CDT __________________ * Preliminary, subject to change. See "Adjustment of Principal Amount and/or Types of Bids" in the Notice of Sale and Bidding Instructions.

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For purposes of compliance with Rule 15c2-12 of the United States Securities and Exchange Commission (the "Rule"), this document constitutes an Official Statement of the District with respect to the Bonds that has been "deemed final" by the District as of its date except for the omission of no more than the information permitted by the Rule. 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 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. Certain information set forth herein has been obtained from the District and other sources believed by the District to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the Financial Advisor or the Underwriters. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the financial conditions or operations of the District or other matters described herein since the date hereof. See “ Continuing Disclosure of Information” for a description of the undertakings of the District and the Significant Obligated Persons (defined herein), respectively, to provide certain information on a continuing basis. Neither the District nor the Financial Advisor make any representation or warranty regarding the information in this Official Statement describing DTC or the DTC Book-Entry-Only System. THIS OFFICIAL STATEMENT CONTAINS "FORWARD-LOOKING" STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS TO BE DIFFERENT FROM FUTURE RESULTS, PERFORMANCE AND ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED THAT THE ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS. THE BONDS ARE EXEMPT FROM REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND CONSEQUENTLY HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION, OR EXEMPTION OF THE BONDS IN ACCORDANCE WITH APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THE BONDS HAVE BEEN REGISTERED, QUALIFIED, OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Bonds or passed upon the adequacy or accuracy of this document. Any representation to the contrary is a criminal offense.

TABLE OF CONTENTS

PRELIMINARY OFFICIAL STATEMENT SUMMARY ....... 3

DISTRICT OFFICIALS, STAFF AND CONSULTANTS ....... 4 BOARD OF DIRECTORS ......................................................... 4 MANAGEMENT & STAFF ....................................................... 4 CONSULTANTS AND ADVISORS ............................................. 4

INTRODUCTION ........................................................................ 5

THE NORTH TEXAS MUNICIPAL WATER DISTRICT ..... 6

THE PANTHER CREEK REGIONAL WASTEWATER SYSTEM ............................................................................ 7

PLAN OF FINANCING .............................................................. 7

THE BONDS ................................................................................ 8

HISTORICAL OPERATING INFORMATION ..................... 13 TABLE 1 - PANTHER CREEK REGIONAL WASTEWATER

SYSTEM SCHEDULE OF REVENUES AND EXPENSES .. 13

DEBT INFORMATION ............................................................ 14 TABLE 2 - DEBT SERVICE REQUIREMENTS ......................... 14

SELECTED PROVISIONS OF THE BOND RESOLUTION15

SUMMARY OF CERTAIN PROVISIONS OF THE CONTRACT .................................................................... 24

INVESTMENTS ......................................................................... 29 TABLE 3 - CURRENT INVESTMENTS .................................... 30

TAX MATTERS......................................................................... 31

OTHER INFORMATION ........................................................ 33 RATINGS ............................................................................ 33 LITIGATION ........................................................................ 33 REGISTRATION AND QUALIFICATION OF BONDS FOR SALE 33 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC

FUNDS IN TEXAS ..................................................... 33 LEGAL MATTERS ............................................................... 33 AUTHENTICITY OF FINANCIAL DATA AND OTHER

INFORMATION ......................................................... 33 CONTINUING DISCLOSURE OF INFORMATION ..................... 34 FINANCIAL ADVISOR .......................................................... 35 INITIAL PURCHASER OF THE BONDS ................................... 35 FORWARD LOOKING STATEMENTS DISCLAIMER ................ 35 MISCELLANEOUS ............................................................... 36 CERTIFICATION OF THE OFFICIAL STATEMENT .................. 36

APPENDICES EXCERPTS FROM THE CITY OF FRISCO, TEXAS ANNUAL

FINANCIAL REPORT .................................................... A GENERAL INFORMATION ON MAJOR CUSTOMERS OF

THE DISTRICT ............................................................. B FORM OF BOND COUNSEL'S OPINION ................................ C The cover page hereof, this page, the appendices included herein and any addenda, supplement or amendment hereto, are part of the Official Statement.

3

PRELIMINARY OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE DISTRICT ................................... North Texas Municipal Water District (the "District") is a conservation and reclamation district and political

subdivision of the State of Texas, created and functioning under Article 16, Section 59, of the Texas Constitution, pursuant to Chapter 62, Acts of the 52nd Legislature of Texas, Regular Session, 1951, as amended (the "District Act").

THE BONDS ........................................ The Bonds are issued as $5,200,000* Panther Creek Regional Wastewater System Revenue Bonds, Series

2020, (the "Bonds"). The Bonds mature on June 1 in each of the years and in the amounts shown on the cover page hereof (see "THE BONDS – Description of the Bonds").

PAYMENT OF INTEREST .................... Interest on the Bonds accrues from the date of initial delivery thereof (the "Delivery Date"), at the rates

shown on the cover hereof, and is payable on December 1, 2020, and each December 1 and June 1 thereafter until maturity or prior redemption (see "THE BONDS - Description of the Bonds" and "THE BONDS – Optional Redemption").

RESERVE FUND REQUIREMENT ........ The District is required to accumulate and maintain, and currently has on deposit, in the Reserve Fund (as

defined herein) an aggregate amount of money and/or investments equal in market value to the average annual principal and interest requirements (the "Reserve Required Amount") on all outstanding Parity Bonds (hereinafter defined).

AUTHORITY FOR ISSUANCE .............. The Bonds are issued pursuant to the District Act, Chapter 1371, Texas Government Code, as amended, and

other applicable laws, and pursuant to a bond resolution (the "Bond Resolution") adopted by the Board of Directors of the District. In the Bond Resolution, the Board has delegated the authority to a designated officer of the District to establish the terms and details of the Bonds and to effect the sale of the Bonds pursuant to an "Approval Certificate" (the Bond Resolution and the Approval Certificate are jointly referred to as the "Resolution") (see "THE BONDS - Authority for Issuance").

SECURITY FOR THE BONDS ............... The Bonds are special obligations of the District payable both as to principal and interest solely from and

secured by a first lien on and pledge of the “Pledged Revenues” as defined in the Resolution authorizing the Bonds, including the "Gross Revenues" to be received by the District from the City of Frisco, Texas (the "Participant") and any future Additional Participants (collectively, the "Participants") pursuant to the North Texas Municipal Water District Panther Creek Regional Wastewater System Contract dated September 23, 2004, and any similar contracts with Additional Participants (collectively, the “Contract”), as more fully described herein (see "THE BONDS - Security and Source of Payment"). Payments under the Contract shall be made from the gross revenues of the Participants’ respective combined waterworks and sewer systems. The Bonds will be on a parity in all respects with the remaining outstanding bonds of those issues of North Texas Municipal Water District Panther Creek Regional Wastewater System Contract Revenue Refunding Bonds, Series 2014 and North Texas Municipal Water District Panther Creek Regional Wastewater System Contract Revenue Refunding Bonds, Series 2017 (collectively, the "Outstanding Bonds") and any Additional Bonds (as defined herein). See “THE BONDS – Security and Source of Payment.”

OPTIONAL REDEMPTION .................. The District reserves the right, at its option, to redeem Bonds having stated maturities on and after June 1,

2030, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on June 1, 2029, or any date thereafter, at a price equal to the principal amount thereof plus accrued interest to the date of redemption (see "THE BONDS - Optional Redemption").

TAX EXEMPTION ............................... In the opinion of Bond Counsel, the interest on the Bonds will be excludable from gross income for

federal income tax purposes under existing law, subject to the matters described under the caption "TAX MATTERS" herein, including the alternative minimum tax on corporations.

USE OF PROCEEDS ............................. Proceeds from the sale of the Bonds will be used for the purpose of providing funds for (i) design of

Panther Creek WWTP Expansion to 15 MGD, (ii) funding a deposit to the Reserve Fund to the extent necessary, and (iii) paying the costs incident to the issuance and delivery of the Bonds.

RATINGS ............................................ The Bonds and the Outstanding Bonds for the Panther Creek Regional Wastewater System are rated "AA-"

by S&P Global Ratings, a business unit of Standard & Poor's Financial Services LLC ("S&P"). As of January 1, 2020 Moody's Investors Service, Inc. ("Moody's") also rates the Outstanding Bonds “Aa3” (see "OTHER INFORMATION - Ratings").

BOOK-ENTRY-ONLY SYSTEM ........... The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of DTC

pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof within a maturity. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal 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 beneficial owners of the Bonds (see "THE BONDS - Book-Entry-Only System").

PAYMENT RECORD ............................ The District has never defaulted in payment of its bonds including the Outstanding Bonds. __________________ * Preliminary, subject to change.

4

NORTH TEXAS MUNICIPAL WATER DISTRICT DISTRICT OFFICIALS, STAFF AND CONSULTANTS

BOARD OF DIRECTORS

Don Gordon, Garland, PresidentLarry Parks, Rockwall, Vice President

Darrell Grooms, Forney, Secretary

ALLEN FARMERSVILLE FORNEY FRISCOJoe Farmer George Crump John Carr Richard PeasleyJames Kerr Lynn Shuyler

GARLAND McKINNEY MESQUITE PLANOJack May Joe Joplin Terry Sam Anderson Phil Dyer

Charles McKissick Brenda Jean Patrick James R. Hogan

RICHARDSON ROCKWALL ROYSE CITY WYLIEJohn Murphy Chip Imrie David Hollifield Marvin FullerJohn Sweeden Blair Johnson Keith Stephens

PRINCETONPending

MANAGEMENT & STAFF

Executive Director/General Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thomas W. Kula

Deputy Director - Administrative Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rodney Rhoades

Assistant Deputy - Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Erik Felthous

Deputy Director of Engineering & CIP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cesar Baptista

Deputy Director of Operations & Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mike Rickman CONSULTANTS AND ADVISORS General Counsel ..................................................................................................................................................... Saunders, Walsh & Beard

McKinney, Texas Bond Counsel .......................................................................................................................................... McCall, Parkhurst & Horton L.L.P

Dallas, Texas

Financial Advisor ................................................................................................................................................ Hilltop Securities Inc. Fort Worth, Texas For additional information regarding the District, please contact:

Mr. Rodney Rhoades Mr. David K. MedanichMr. Erik Felthous Mr. Nick BulaichNorth Texas Municipal Water District or Hilltop Securities Inc.P.O. Box 2408 777 Main Street, Suite 1200Wylie, Texas 75098 Fort Worth, TX 76102(972) 442-5405 (817) 332-9710

5

PRELIMINARY OFFICIAL STATEMENT

RELATING TO

$5,200,000* NORTH TEXAS MUNICIPAL WATER DISTRICT

PANTHER CREEK REGIONAL WASTEWATER SYSTEM REVENUE BONDS, SERIES 2020

INTRODUCTION

This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $5,200,000* North Texas Municipal Water District Panther Creek Regional Wastewater System Revenue Bonds, Series 2020 (the "Bonds"). Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the Resolution authorizing the Bonds (the ""Resolution") which will authorize the issuance of the Bonds, and the Approval Certificate of the District approving certain terms of the Bonds (the “Approval Certificates” and together with the Resolution, the “Bond Resolution”). There follows in this Official Statement descriptions of the Bonds and certain information regarding the North Texas Municipal Water District (the "District") and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the District's Financial Advisor, Hilltop Securities Inc. ("HilltopSecurities"), Fort Worth, Texas. INFECTIOUS DISEASE OUTLOOK (COVID-19) . . . The World Health Organization has declared a pandemic following the outbreak of COVID-19, a respiratory disease caused by a new strain of coronavirus (the “Pandemic”), which is currently affecting many parts of the world, including the United States and Texas. On January 31, 2020, the Secretary of the United States Health and Human Services Department declared a public health emergency for the United States in connection with COVID-19. On March 13, 2020, the President of the United States (the “President”) declared the Pandemic a national emergency and the Texas Governor (the “Governor”) declared COVID-19 an imminent threat of disaster for all counties in Texas (collectively, the “disaster declarations”). On March 25, 2020, in response to a request from the Governor, the President issued a Major Disaster Declaration for the State of Texas. Pursuant to Chapter 418 of the Texas Government Code, the Governor has broad authority to respond to disasters, including suspending any regulatory statute prescribing the procedures for conducting state business or any order or rule of a state agency that would in any way prevent, hinder, or delay necessary action in coping with this disaster and issuing executive orders that have the force and effect of law. The Governor has issued a number of executive orders relating to COVID-19 preparedness and mitigation. These include, for example, the issuance of Executive Order which, among other things, prohibits social gatherings of more than 10 people through April 30, 2020, and orders the closure of schools throughout the state through May 4, 2020, unless otherwise extended, modified, rescinded, or superseded by the Governor. In addition, certain of the counties in the District’s service area have issued “shelter in place” or “stay home” orders for most citizens except when engaged in specified essential businesses and government functions. Many of the federal, state and local actions and policies under the aforementioned disaster declarations are focused on limiting instances where the public can congregate or interact with each other, which affects economic growth within Texas. Since the disaster declarations were made, the Pandemic has negatively affected travel, commerce, and financial markets locally and globally, and is widely expected to continue negatively affecting economic growth and financial markets worldwide and within Texas. Stock values and crude oil prices, in the U.S. and globally, have seen significant declines attributed to COVID-19 concerns. Texas may be particularly at risk from any global slowdown, given the prevalence of international trade in the state and the risk of contraction in the oil and gas industry and spillover effects into other industries. The Participant expects that its revenues and cash flow could be adversely affected during the continuance of the Pandemic as a result of a Governor’s directive that prevents utilities from charging late fees and disconnect fees and from disconnecting customers during such time. The Participant may also experience a reduction in water and sewer sales as customers delay payments. While the potential impact of the Pandemic on the Participant cannot be quantified at this time, the continued outbreak of COVID-19 could have an adverse effect on the Participant’s operations and financial condition, and therefore impair the ability to pay debt service on the Bonds. The District continues to monitor the spread of COVID-19 and is working with local, state, and national agencies to address the potential impact of COVID-19 upon the District. The financial and operating data contained herein are the latest available, but are as of dates and for periods prior to the economic impact of the Pandemic and measures instituted to slow it. Accordingly, they are not indicative of the economic impact of the Pandemic on the Participant’s financial condition. _________________ * Preliminary, subject to change.

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THE NORTH TEXAS MUNICIPAL WATER DISTRICT

The District is a conservation and reclamation district and political subdivision of the State of Texas, created and functioning under Article 16, Section 59, of the Texas Constitution pursuant to Chapter 62, Acts of 1951, 52nd Legislature of Texas, Regular Session, 1951, as amended (the "District Act"). The District was created for the purpose of providing a source of water supply for municipal, domestic and industrial use and for the treatment, processing and transportation of such water to its thirteen District Member Cities (as defined below) and other customers located in North Central Texas. Under the Texas Constitution and laws of the State of Texas, including the District Act, the District has broad powers to effectuate flood control and the conservation and use, for all beneficial purposes, of storm and floodwaters and unappropriated flow waters and, as a necessary aid to these purposes, the specific authority to construct, own and operate water supply, treatment and distribution facilities and sewage gathering, transmission and disposal facilities, and to collect, transport, treat, dispose of, and control all municipal, domestic, industrial, or communal waste, whether in fluid, solid or composite state. The District currently serves a 2,200 square-mile area located in nine counties in the State of Texas and comprises all of the territory of its current Member Cities, viz., Garland, Princeton, Plano, Mesquite, Wylie, Rockwall, Farmersville, McKinney, Richardson, Allen, Forney, Frisco, and Royse City (together with any cities which subsequently become member cities of the District, the "District Member Cities"). The District's Administrative Office is located at 505 East Brown Street, Wylie, Texas. The District is governed by a 25-member Board of Directors. Each District Member City having a population of 5,000 or more is represented by two members on the Board of Directors and each District Member City of less than 5,000 is represented by one member on the Board of Directors. Members of the Board of Directors are appointed by the governing bodies of the respective District Member Cities for two-year terms. In addition to its Panther Creek Regional Wastewater System (herein after defined), the District, in cooperation with certain area cities, has established and implemented the Water System, the Regional Wastewater System, the Upper East Fork Wastewater Interceptor System, the Stewart Creek Regional Wastewater System, Muddy Creek Regional Wastewater System, Sabine Creek Regional Wastewater System, Lower East Fork Wastewater Interceptor System and the Trinity East Fork Solid Waste Disposal System wherein the District, pursuant to contracts and other agreements, has accepted the responsibility to design, acquire, construct, complete, operate, maintain, and from time to time enlarge, improve and expand the systems to provide facilities to adequately receive, transport, treat and dispose of wastewater and solid waste of such cities and future additional cities. These Regional Systems were created, exist and operate as completely separate and independent Regional Systems, and except for moderate cost-sharing enterprises, the financial transactions and other activities associated with the operation and maintenance of each system are kept separate and apart, and are not in any manner commingled or connected with any of the other systems. While all District Member Cities are contracting partners for the Water System, not all District Member Cities participate in the District's other Regional Systems. Revenues from the Water System, Regional Wastewater System, the Upper East Fork Wastewater Interceptor System, the Stewart Creek Regional Wastewater System, Muddy Creek Regional Wastewater System, Sabine Creek Regional Wastewater System, the Lower East Fork Wastewater Interceptor System, and the Trinity East Fork Solid Waste Disposal System are not pledged to the payment of the Bonds.

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THE PANTHER CREEK REGIONAL WASTEWATER SYSTEM Pursuant to terms and conditions of the Panther Creek Regional Wastewater System Contract dated as of September 23, 2004 between the District and the City of Frisco, Texas (the "Participant" and, together with any Additional Participants as permitted therein, collectively the "Participants"), together with all similar contracts which may be executed in the future between the District and Additional Participants, the District has accepted the responsibility to design, acquire, construct, complete, own, operate and maintain a Regional Wastewater System to receive, transport, treat and dispose of wastewater in order to control water pollution, and protect, improve and enhance the water quality of Panther Creek and the Trinity River.

PLAN OF FINANCING PURPOSE . . . Proceeds from the sale of the Bonds will be used for the purpose of providing funds for (i) design of Panther Creek WWTP Expansion to 15 MGD, (ii) funding a deposit to the Reserve Fund to the extent necessary, and (iii) paying the costs incident to the issuance and delivery of the Bonds. ESTIMATED USE OF PROCEEDS . . . The proceeds from the sale of the Bonds and contributions from the District, if any, will be applied approximately as follows:

Sources of FundsPrincipal Amount of Bonds -$ Net Premium - Total Sources of Funds -$

Uses of FundsDeposit to Construction Fund -$ Estimated Costs of Issuance - Total Uses of Funds -$

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THE BONDS

DESCRIPTION OF THE BONDS . . . The Bonds are dated April 15, 2020, and mature on June 1 in each of the years and in the amounts shown on the cover page hereof. Interest will accrue from the date of initial delivery thereof (the "Delivery Date"), at the rated shown on the cover hereof, to the Initial Purchaser (herein defined), and will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable on June 1 and December 1 of each year, commencing December 1, 2020 until maturity or prior redemption. The definitive Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC"), New York, New York, pursuant to the Book-Entry-Only System described herein. No physical delivery of the Bonds will be made to the owners thereof. Principal of and interest on the Bonds will be payable by the Paying Agent/Registrar (herein after defined) 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 "Book-Entry-Only System" herein. AUTHORITY FOR ISSUANCE . . . The Bonds are being issued pursuant to the provisions and authority provided by the District Act, Chapter 1371, Texas Government Code, as amended, and other applicable laws. Under the Texas Constitution and laws of the State of Texas, including the District Act, the District has broad powers to (1) impound, control, store, preserve, treat, transmit and use storm and floodwater, the water of rivers and streams, and underground water, for irrigation, power, and all other useful purposes, and to supply water for municipal, domestic, power, industrial and commercial uses and purposes, and all other beneficial uses and purposes; (2) collect, transport, process, treat, dispose of, and control, all municipal, domestic, industrial, or commercial waste whether in fluid, solid, or composite state, including specifically the control, abatement, or reduction of all types of pollution, and (3) to refund obligations issued for the foregoing purposes. SECURITY AND SOURCE OF PAYMENT . . . The Bonds are special obligations of the District, secured by and payable from a first lien on and pledge of the "Pledged Revenues" as defined in the Bond Resolution, together with the Outstanding Bonds (hereinafter defined) and any additional parity bonds ("Additional Bonds") which may be issued in the future as defined in the Bond Resolution, including the Gross Revenues of the District's Panther Creek Regional Wastewater System, and including specifically certain payments to be received by the District from the Participants (currently the City of Frisco, Texas) pursuant to the North Texas Municipal Water District Panther Creek Regional Wastewater System Contract (the “Contract”) dated September 23, 2004, and any future Additional Participants, under the Contract and all similar contracts with any Additional Participants. Each Participant represents and covenants in the Contract that all payments made by it under the Contract shall constitute reasonable and necessary "expenses of operation and maintenance" of its combined waterworks and sewer system, as defined in Section 1502.056, Texas Government Code, and that all such payments will be made from the gross revenues of its combined waterworks and sewer system, with the effect that the obligation to make such payments from revenues of such combined water and sewer system shall have priority over any obligation to make any payments from such revenues of principal, interest, or otherwise, with respect to all bonds or other obligations heretofore or hereafter issued by such Participant. The Bonds are on a parity in all respects with the remaining outstanding Series 2014 Bonds and Series 2017 Bonds (collectively the "Outstanding Bonds") and any Additional Bonds. The District is obligated to pay the principal of and interest on the Bonds solely from and to the extent of the payments to be received from the Participants pursuant to the Contract. No other entity, including the State of Texas, any political subdivision thereof (other than the Participants), or any other public or private body, is obligated, directly, indirectly, contingently, or in any other manner, to pay such principal or interest from any other source whatsoever. The owners of the Bonds shall never have the right to demand payment of the Bonds out of any other funds of the District except the Pledged Revenues. No part of the physical property of any Participant of the System is encumbered by any lien or security interest for the benefit of the owners of the Bonds. The District has Outstanding Bonds, as follows:

OriginalDated Issue OutstandingDate Amount Debt (1) Issue Description

10/1/2014 19,940,000$ 14,785,000$ Panther Creek Regional Wastewater System Contract Revenue Refunding Bonds, Series 201412/1/2017 11,050,000 11,050,000 Panther Creek Regional Wastewater System Contract Revenue Refunding Bonds, Series 2017

25,835,000$

The Outstanding Bonds and the Bonds are referred to herein, collectively, as the “Parity Bonds”. ____________ (1) As of January 31, 2020. Excludes the Bonds. RESERVE FUND REQUIREMENT . . . The District shall maintain to the credit of the Reserve Fund an amount, if any, which will cause the Reserve Fund to contain an amount equal to the average annual principal and interest requirements of all Bonds to be outstanding after delivery of the Bonds. When and so long as the money and investments in the Reserve Fund are at least equal to a required amount in market value equal to the average annual principal and interest requirements of all then outstanding Parity Bonds and Additional Bonds (the "Required Amount"), no deposits shall be made to the credit of the Reserve Fund; but when and if the Reserve Fund at any time contains less than said Required Amount in market value, then, subject and subordinate to making the required deposits to the credit of the Interest and Redemption Fund, the District shall transfer from Pledged Revenues and deposit to the credit of the Reserve Fund, on or before the 25th day of each month, a sum equal to 1/60th of the average annual principal and interest requirements of all then outstanding Bonds, until the Reserve Fund is restored to said Required Amount. So long as the Reserve Fund contains said Required Amount, all amounts in excess of such Required Amount shall, on or before the 10th day prior to each interest payment date, be deposited to the credit of the Bond Fund; and otherwise any earnings from the deposit and investment of the Reserve Fund shall be retained in the Reserve Fund.

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ADDITIONAL BONDS . . . The District may issue additional parity revenue bonds (the "Additional Bonds") payable from the Pledged Revenues from the Contract, which together with the Outstanding Bonds and the Bonds, shall be equally and ratably secured by an irrevocable first lien on and pledge of the Pledged Revenues from the Contract, subject, however, to complying with certain conditions in the Resolution. (See “SELECTED PROVISIONS OF THE BOND RESOLUTION - Additional Bonds" herein.) OPTIONAL REDEMPTION . . . The District reserves the right, at its option, to redeem Bonds having stated maturities on and after June 1, 2030, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on June 1, 2029, or any date thereafter, at a price equal to the principal amount thereof plus accrued interest to the date of redemption. If fewer than all of the Bonds are to be redeemed, the District may select the maturities and amounts of Bonds to be redeemed. If fewer than all the Bonds within a maturity are to be redeemed, the Bonds, or portions thereof, to be redeemed shall be selected by lot or other customary method of random selection (or by DTC in accordance with the procedures while the Bonds are in the Book-Entry-Only System). If a Bond (or any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been given, such Bond (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. NOTICE OF REDEMPTION . . . Not less than 30 days prior to a redemption date for the Bonds, the District shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bonds to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE BONDS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY BOND OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH BOND OR PORTION THEREOF SHALL CEASE TO ACCRUE. DEFEASANCE . . . The Resolution provides for the defeasance of Bonds when the payment of the principal of such Bonds, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, redemption, or otherwise), is provided by irrevocably depositing with a paying agent or other authorized entity, in trust (1) money sufficient to make such payment and/or (2) Government Obligations which mature as to principal and interest in such amounts and at such times to ensure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation and expenses of the Paying Agent/Registrar for the Bonds. The Resolution provides that "Government Obligations" means (a) direct obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America and (b) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the Board of Directors adopts or approves proceedings authorizing the issuance of refunding bonds or otherwise provide for the funding of an escrow to effect the defeasance of the Bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent. Upon such deposit as described above, such Bonds shall no longer be regarded to be outstanding or unpaid. Provided, however, the District has the option, to be exercised at the time of the defeasance of the Bonds, to call for redemption, at an earlier date, those Bonds which have been defeased to their maturity date, if the District (i) in the proceedings providing the firm banking and financial arrangements, expressly reserves the right to call the Bonds for redemption: (ii) gives notice of the reservation of that right to the owners of the Bonds immediately following the making of the firm banking and financial arrangements; and (iii) directs that notice of the reservation be included in any redemption notices that it authorizes. AMENDMENTS . . . The District may, with the written consent of the holders of a majority in aggregate principal amount of the Bonds then outstanding, amend the provisions of the Resolution; except that, without consent of the registered owners of all of the Bonds then outstanding, no such amendment, addition or rescission may (1) make any change in the maturity of the outstanding Parity Bonds or Additional Bonds; (2) reduce the rate of interest borne by any of the outstanding Parity Bonds or Additional Bonds; (3) reduce the amount of the principal payable on the outstanding Parity Bonds or Additional Bonds; (4) modify the terms of payment of principal of or interest on the outstanding Parity Bonds or Additional Bonds, or impose any conditions with respect to such payment; (5) affect the rights of the holders of less than all of the Parity Bonds and Additional Bonds then outstanding; (6) change the minimum percentage of the principal amount of Parity Bonds and Additional Bonds necessary for consent to such amendment.

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BOOK-ENTRY-ONLY SYSTEM . . . This section describes how ownership of the Bonds is to be transferred and how the principal of, premium, if any, and interest on the Bonds are to be paid to and accredited by DTC while the Bonds are registered in its nominee 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. The District and the Underwriter consider the source of such information to be reliable, but take no responsibility for the accuracy or completeness thereof. The District and the Underwriter cannot and do 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. DTC, New York, New York, 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 security certificate for each maturity will be issued for the Bonds in the aggregate principal amount thereof and will be deposited with DTC. DTC, the world’s largest securities 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 and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 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"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. 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"). Direct Participants and Indirect Participants are referred to collectively as the "Participants". DTC has a S&P rating of "AA+". 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 turn to be recorded on the Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Participant through which the Beneficial Owners entered into the transaction. Transfers of ownership interest in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds 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 Participant to whose account such Bonds are credited, which may or may not be a Beneficial Owner. The 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. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

http://www.dtcc.com/

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All 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 District or the Paying Agent/Registrar on payable dates 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 in 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, the Paying Agent/Registrar or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and principal and interest to DTC is the responsibility of the District or the Paying Agent/Registrar, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the District and the Paying Agent/Registrar. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered. Use of Certain Terms in Other Sections of this Official Statement. 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 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 above, notices that are to be given to registered owners under the Resolution will be given only to DTC. Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the District, the Financial Advisors or the Underwriter of the Bonds. Effect of Termination of Book-Entry-Only System. In the event the Book-Entry-Only System with respect to the Bonds is discontinued by DTC, or the use of the Book-Entry-Only System with respect to the Bonds is discontinued by the District, printed securities certificates will be issued to the holders of the affected Bonds, and the applicable Bonds will be subject to transfer, exchange, and registration provisions as set forth in the Resolution, summarized under "THE BONDS - Transfer, Exchange, and Registration" below. PAYING AGENT/REGISTRAR . . . The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, N.A. (the "Paying Agent/Registrar"), currently in Dallas, Texas. In the Resolution, the District retains the right to replace the Paying Agent/Registrar. The District covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds are duly paid and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Bonds. Upon any change in the Paying Agent/Registrar for the Bonds, the District agrees to promptly cause a written notice thereof to be sent to each registered owner of the Bonds by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. TRANSFER, EXCHANGE AND REGISTRATION . . . In the event the Book-Entry-Only System should be discontinued, the Bonds may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender to the Paying Agent/Registrar and such transfer or exchange shall 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. Bonds may be assigned by the execution of an assignment form on the respective Bonds or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Bonds will be delivered by the Paying Agent/Registrar, in lieu of the Bonds being transferred or exchanged, at the designated office of the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Bonds to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. New Bonds registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the Bonds surrendered for exchange or transfer. See "THE BONDS - Book-Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Bonds. Neither the District nor the Paying Agent/Registrar shall be required to transfer or exchange any Bond called for redemption (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or by (ii) with respect to any Bond or portion thereof called for redemption within 45 days prior to its redemption date. RECORD DATE FOR INTEREST PAYMENT . . . The record date ("Record Date") for the interest payable on the Bonds on any interest payment date means the close of business on the 15th day of the preceding month.

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BONDHOLDERS’ REMEDIES . . . The Resolution does not establish specific events of default with respect to the Bonds. Under State law and the Resolution, there is no right to the acceleration of maturity of the Bonds upon the failure of the District to observe any covenant under the Resolution. No assurance can be given that a mandamus or other legal action to enforce a remedy under the Resolution would be successful. The enforcement of any such remedy may be difficult and time consuming. The Resolution does not provide for the appointment of a trustee to represent the interests of the bondholders upon any failure of the District to perform in accordance with the terms of the Resolution, or upon any other condition. On June 30, 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006), that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in “clear and unambiguous” language. Because it is unclear whether the Texas legislature has effectively waived the District’s sovereign immunity from a suit for money damages, registered owners may not be able to bring such a suit against the District for breach of the Bonds or Resolution covenants in the absence of District action. Chapter 1371, Texas Government Code as amended, (“Chapter 1371”), which pertains to the issuance of public securities by issuers such as the District, permits the District to waive sovereign immunity in the proceedings authorizing its bonds. Notwithstanding its reliance upon the provisions of Chapter 1371 in connection with the issuance of the Bonds (as further described under the caption “THE BONDS – Authority for Issuance”), the District has not waived the defense of sovereign immunity with respect thereto. Even if a judgment against the District could be obtained, it could not be enforced by direct levy and execution against the District’s property. Furthermore, the District is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code. Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of contract revenues of a bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or bondholders of an entity which has sought protection under Chapter 9. Therefore, should the District avail itself of Chapter 9 protection from creditors, the ability to enforce the remedies under the Resolution would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state courts); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The District may not be placed into bankruptcy involuntarily. The opinion of Bond Counsel will note that all opinions relative to the enforceability of the Resolution and the Bonds are qualified with respect to the customary rights of debtors relative to their creditors.

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HISTORICAL OPERATING INFORMATION The following table presents financial information for the Panther Creek Regional Wastewater System of the District for each fiscal year ended September 30, 2015 through September 30, 2019. Excluded from this data are revenues and expenses of the District not related to the Panther Creek Regional Wastewater System. This selected information has been prepared to summarize the revenues, expenses and amount available to pay debt service historically generated from the Panther Creek Regional Wastewater System. TABLE 1 - PANTHER CREEK REGIONAL WASTEWATER SYSTEM SCHEDULE OF REVENUES AND EXPENSES

Fiscal Year Ended September 30,Revenues 2019 2018 2017 2016 2015 Panther Creek Service Fees 8,837,378$ 8,586,479$ 8,890,602$ 8,258,803$ 7,140,095$ Interest Income 195,172 59,477 41,216 28,939 50,678 Other 23,744 18,671 28,154 25,408 13,321 Total Gross Revenues 9,056,294$ 8,664,627$ 8,959,972$ 8,313,150$ 7,204,094$

Operating Expenses (1) 4,598,051 4,647,982 4,629,674 3,938,232 3,517,459

Net Income 4,458,243$ 4,016,645$ 4,330,298$ 4,374,918$ 3,686,635$

_____________ (1) Does not include depreciation and amortization. Panther Creek Regional Wastewater System Revenue Bonds Outstanding (as of 1-31-20) 31,035,000$ (1)

Average Annual Principal and Interest Requirements, 2020-2040 1,864,958$ (1)

Coverage of Average Annual Principal and Interest Requirements by 9-30-19 Gross Revenues 4.86 times

Maximum Annual Principal and Interest Requirements, 2021 4,334,882$ (1)

Coverage of Maximum Annual Principal and Interest Requirements by 9-30-19 Gross Revenues 2.09 times

Interest and Sinking Fund (as of 1-31-20) 1,668,451$ Reserve Fund (as of 3-31-20) 3,255,161$ _______________ (1) Includes the Bonds. Preliminary, subject to change.

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DEBT INFORMATION TABLE 2 - DEBT SERVICE REQUIREMENTS FiscalYear Total Percent ofEnded Outstanding Debt The Bonds (1) Outstanding Principal9/30 Principal Interest Total Principal Interest Total Debt Retired2020 2,715,000$ 1,269,300$ 3,984,300$ -$ -$ -$ 3,984,300$ 2021 2,835,000 1,142,400 3,977,400 180,000 177,482 357,482 4,334,8822022 2,975,000 1,000,650 3,975,650 190,000 168,331 358,331 4,333,9812023 3,120,000 851,900 3,971,900 195,000 160,731 355,731 4,327,6312024 3,275,000 695,900 3,970,900 205,000 152,931 357,931 4,328,831 50.56%2025 3,430,000 532,150 3,962,150 210,000 144,731 354,731 4,316,8812026 3,590,000 360,650 3,950,650 220,000 136,331 356,331 4,306,9812027 1,235,000 181,150 1,416,150 230,000 127,531 357,531 1,773,6812028 1,300,000 119,400 1,419,400 235,000 118,331 353,331 1,772,7312029 1,360,000 54,400 1,414,400 245,000 108,931 353,931 1,768,331 89.40%2030 - - - 255,000 99,131 354,131 354,1312031 - - - 265,000 91,481 356,481 356,4812032 - - - 275,000 83,531 358,531 358,5312033 - - - 280,000 75,281 355,281 355,2812034 - - - 290,000 66,881 356,881 356,881 93.80%2035 - - - 300,000 58,181 358,181 358,1812036 - - - 305,000 49,181 354,181 354,1812037 - - - 315,000 40,031 355,031 355,0312038 - - - 325,000 30,581 355,581 355,5812039 - - - 335,000 20,831 355,831 355,831 98.89%2040 - - - 345,000 10,781 355,781 355,781 100.00%

25,835,000$ 6,207,900$ 32,042,900$ 5,200,000$ 1,921,226$ 7,121,226$ 39,164,126$

_______________ (1) Average life of the issue – 11.616 Years. Interest on the Bonds has been calculated at 2.70% for the purposes of illustration. Preliminary, subject to change. ANTICIPATED ISSUANCE OF DEBT . . . The District anticipates issuing additional Panther Creek Regional Wastewater System Contract Revenue Bonds in the approximate amount of $60 million in the Spring of 2021.

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SELECTED PROVISIONS OF THE BOND RESOLUTION The following statements summarize certain portions of the Bond Resolution to be adopted by the Board of Directors authorizing the issuance, sale and delivery of the Bonds and do not purport to be comprehensive or definitive and are qualified in their entirety by reference to the Resolution. As used in this Summary, the term "Issuer" refers to the District as otherwise defined herein. ADDITIONAL DEFINITIONS. As used in this Resolution the following terms shall have the meanings set forth below, unless the text hereof specifically indicates otherwise: The term "Additional Bonds" shall mean the additional parity revenue bonds permitted to be authorized in the future in this Resolution. The term "Additional Participants" shall mean a city or cities in addition to the City of Frisco, Texas with which the District enters into a contract for receiving, transporting, treating, and/or disposing of Wastewater (as defined in the Contract) through the System. The term "Board" shall mean the Board of Directors of the Issuer, being the governing body of the Issuer, and it is further resolved that the declarations and covenants of the Issuer contained in this Resolution are made by, and for and on behalf of the Board and the Issuer, and are binding upon the Board and the Issuer for all purposes. The terms "Bond Resolution" and "Resolution" shall mean this resolution authorizing the Bonds. The term "Bonds" shall mean collectively the Initial Bond as described and defined in Section 1 of this Resolution, and all substitute bonds exchanged therefor as well as all other substitute and replacement bonds issued pursuant to this Resolution. The term "Contract" shall mean collectively the Panther Creek Regional Wastewater Contract, dated as of September 23, 2004, between the Issuer and the Participant, together with all similar contracts which may be executed in the future between the Issuer and Additional Participants, as defined and permitted in the aforesaid contract. The terms "District" and "Issuer" shall mean North Texas Municipal Water District. The terms "District's System", "Issuer's System", and "System" shall mean all of the Issuer's facilities acquired, constructed, used, or operated by the Issuer for receiving, transporting, treating, and disposing of Wastewater (as defined in the Contract) of and for the Participants, pursuant to the Contract, including the contracts with Additional Participants (but excluding any facilities acquired or constructed with Special Facilities Bonds, and excluding any facilities required to transport Wastewater to any Point of Entry (as defined in the Contract) of the System), together with any improvements, enlargements, or additions to said System facilities and any extensions, repairs, or replacements of said System facilities acquired, constructed, used, operated, or otherwise incorporated into or made a part of said System facilities in the future by the Issuer. Said terms shall include only those facilities which are acquired, constructed, used, or operated by the Issuer to provide service to Participants pursuant to the Contract, including any contracts with Additional Participants, and which, as determined by the Issuer, can economically and efficiently provide service to Participants. The term "fiscal year" shall mean the 12 month period beginning each October 1, or such other 12 month period hereafter established by the Issuer as a fiscal year for the purposes of this Resolution. The term "Gross Revenues of the System" shall mean all of the revenues, income, rentals, rates, fees, and charges of every nature derived by the Board or the Issuer from the operation and/or ownership of the System, including specifically all payments constituting the "Annual Requirement" (consisting of the "Operation and Maintenance Component" and the "Bond Service Component"), and all other payments and amounts received by the Board or the Issuer from the Participants pursuant to the Contract, including any contracts with Additional Participants. The term "Net Revenues of the System" shall mean the Gross Revenues of the System less the Operation and Maintenance Expense of the System. The term "Operation and Maintenance Expense" shall mean all costs of operation and maintenance of the Issuer's System including, but not limited to, repairs and replacements, the cost of utilities, supervision, engineering, accounting, auditing, legal services, insurance premiums, and any other supplies, services, administrative costs, and equipment necessary for proper operation and maintenance of the Issuer's System, any payments required to be made under the Contract into the Contingency Fund (as defined in the Contract), payments made for the use or operation of any property, payments of fines, and payments made by Issuer in satisfaction of judgments or other liabilities resulting from claims not covered by Issuer's insurance or not paid by one particular Participant arising in connection with the operation and maintenance of the Issuer's System. Depreciation shall not be considered an item of Operation and Maintenance Expense.

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The term "Parity Bonds" shall mean, collectively, (i) the Bonds, (ii) the outstanding Series 2014 Bonds, and (iii) the outstanding Series 2017 Bonds. The term "Participant" shall mean the City of Frisco, in Collin and Denton Counties, Texas. The term "Participants" shall mean the Participant, together with all Additional Participants. The term "Pledged Revenues" shall mean: (a) the Gross Revenues of the System and (b) any additional revenues, income, receipts, or other resources, including, without limitation, any grants, donations, or income received or to be received from the United States Government, or any other public or private source, whether pursuant to an agreement or otherwise, which in the future may, at the option of the Issuer, be pledged to the payment of the Bonds or the Additional Bonds. The term "Series 2014 Bond Resolution" shall mean the resolution adopted by the Board of Directors of the Issuer on October 23, 2014, authorizing the Series 2014 Bonds. The term "Series 2014 Bonds" shall mean the unpaid and unrefunded North Texas Municipal Water District Panther Creek Regional Wastewater System Contract Revenue Refunding Bonds, Series 2014, dated October 1, 2014, that will be outstanding after the issuance and delivery of the Bonds. The term “Series 2017 Bond Resolution” shall mean the resolution adopted by the Board of Directors of the Issuer on November 29, 2017, authorizing the Series 2017 Bonds. The term “Series 2017 Bonds” shall mean the unpaid and unrefunded North Texas Municipal Water District Panther Creek Regional Wastewater System Contract Revenue Refunding Bonds, Series 2017, dates December 1, 2017, that will be outstanding after the issuance and delivery of the Bonds. The term "Special Facilities Bonds" shall mean revenue obligations of the Issuer which are not secured by or payable from Annual Payments under the Contract, but which are payable solely from other sources; but Special Facilities Bonds may be made payable from payments from any person, including any Participant, under a separate contract whereunder the facilities to be acquired or constructed are declared not to be part of the system and are not made payable from the Annual Payments as defined in the Contract. PLEDGE. The Bonds authorized by this Resolution are hereby designated, and shall be "Additional Bonds" as permitted by Sections 22 and 23 of the Series 2014 Bond Resolution and the Series 2017 Bond Resolution, and it is hereby determined, declared, and resolved, that all of the Bonds collectively, as defined above, are and shall be secured and payable equally and ratably on a parity, and that Sections 8 through 25 of this Resolution are supplemental to and cumulative of Sections 8 through 25 of the Series 2014 Bond Resolution and the Series 2017 Bond Resolution, with Sections 8 through 25 of this Resolution being equally applicable to all of the Parity Bonds. The Parity Bonds and any Additional Bonds, and the interest thereon, are and shall be secured by and payable from a first lien on and pledge of the Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the Bond Fund and the Reserve Fund as provided in this Resolution. REVENUE FUND. There has been created and established and shall be maintained at an official depository of the Issuer (which must be a member of the Federal Deposit Insurance Corporation) a separate fund entitled the "North Texas Municipal Water District Panther Creek Regional Wastewater System Revenue Bonds Revenue Bonds Revenue Fund" (hereafter called the "Revenue Fund"). All Gross Revenues of the System shall be credited to the Revenue Fund immediately upon receipt. BOND FUND. For the sole purpose of paying the principal of and interest on all outstanding Parity Bonds and any Additional Bonds, as the same come due, there has been created and established and shall be maintained at The Bank of New York Mellon Trust Company, National Association, a separate fund entitled the "North Texas Municipal Water District Panther Creek Regional Wastewater System Revenue Bonds Bond Fund" (hereinafter called the "Bond Fund"). RESERVE FUND. There has been created and established and shall be maintained at The Bank of New York Mellon Trust Company, National Association, a separate fund entitled the "North Texas Municipal Water District Panther Creek Regional Wastewater System Revenue Bonds Reserve Fund" (hereinafter called the "Reserve Fund"). The Reserve Fund shall be used solely for the purpose of finally retiring the last of the outstanding Parity Bonds and Additional Bonds, or for paying principal of and interest on any outstanding Parity Bonds and Additional Bonds, when and to the extent the amount in the Bond Fund is insufficient for such purpose. DEPOSITS OF PLEDGED REVENUES. The Pledged Revenues shall be deposited into the Bond Fund and the Reserve Fund when and as required by this Resolution. INVESTMENTS. Money in any Fund established pursuant to this Resolution may, at the option of the Issuer, be invested in any or all of the authorized investments described in the Public Funds Investment Act, Chapter 2256, Texas Government Code (or any successor statute), in which the Issuer may purchase, sell and invest its funds and funds under its control; provided that all

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such deposits and investments shall be made in such manner that the money required to be expended from any Fund will be available at the proper time or times. Such investments shall be valued in terms of current market value as of the 15th day of January of each year. Interest and income derived from such deposits and investments shall be credited to the Fund from which the deposit or investment was made. Such investments shall be sold promptly when necessary to prevent any default in connection with the Parity Bonds or Additional Bonds. No investment of any Fund shall be made in any way which would violate any provision of this Resolution. FUNDS SECURED. Money in all Funds described in this Resolution, to the extent not invested, shall be secured in the manner prescribed by law, including particularly, the Public Funds Collateral Act, Chapter 2257, Texas Government Code for securing funds of the Issuer. DEBT SERVICE REQUIREMENTS. (a) Immediately after the delivery of the Initial Bond the Issuer shall deposit to the credit of the Bond Fund, from the proceeds received from the sale and delivery of the Initial Bond, all accrued interest, if any. (b) The Issuer shall transfer from the Pledged Revenues and deposit to the credit of the Bond Fund the amounts, at the times, as follows:

(1) such amounts, deposited in approximately equal monthly installments on or before the 25th day of each month as will be sufficient, together with other amounts, if any, then on hand in the Bond Fund and available for such purpose, to pay the interest scheduled to accrue and come due on the Parity Bonds and any Additional Bonds on the next succeeding interest payment date; and

(2) such amounts, deposited in approximately equal monthly installments on or before the 25th day of each month as will be sufficient, together with other amounts, if any, then on hand in the Bond Fund and available for such purpose, to pay the principal scheduled to mature and come due, and/or mandatorily required to be redeemed prior to maturity, on the Parity Bonds and any Additional Bonds on the next succeeding principal payment date or mandatory redemption date.

RESERVE REQUIREMENTS. Simultaneously with the delivery of the Bonds to the initial purchasers thereof, the Issuer shall cause to be deposited to the credit of the Reserve Fund, out of proceeds of the Parity Bonds, an amount of money, if any, sufficient to cause the Reserve Fund to contain together with any other money and/or investments on hand therein, an amount of money and/or investment equal in market value to the average annual principal and interest requirements on all the Bonds. So long as the money and investments in the Reserve Fund are at least equal to the average annual principal and interest requirements on all Parity Bonds and Additional Bonds then outstanding (the "Required Amount"), no deposits need be made to the credit of the Reserve Fund; but when and if the Reserve Fund at any time contains less than said Required Amount in market value, then, subject and subordinate to making the required deposits to the credit of the Bond Fund, the Issuer shall transfer from Pledged Revenues and deposit to the credit of the Reserve Fund, on or before the 25th day of each month, a sum equal to 1/60th of the average annual principal and interest requirements of all then outstanding Parity Bonds and Additional Bonds, until the Reserve Fund is restored to said Required Amount. So long as the Reserve Fund contains said Required Amount, all amounts in excess of such Required Amount shall, on or before the 10th day prior to each interest payment date, be deposited to the credit of the Bond Fund; and otherwise any earnings from the deposit and investment of the Reserve Fund shall be retained in the Reserve Fund. DEFICIENCIES. If on any occasion there shall not be sufficient Pledged Revenues to make the required deposits into the Bond Fund and the Reserve Fund, then such deficiency shall be made up as soon as possible from the next available Pledged Revenues, or from any other sources available for such purpose. EXCESS PLEDGED REVENUES. Subject to making the required deposits to the credit of the Bond Fund and the Reserve Fund, when and as required by this Resolution, or any Resolution authorizing the issuance of Additional Bonds, subject to any credits required by the Contract, the excess Pledged Revenues first shall be used to pay the Operation and Maintenance Expenses of the System, and then, subject to paying such Operation and Maintenance Expenses of the System, may be used for any other lawful purpose. PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS. Semiannually on or before the last day of each May and November while any of the Parity Bonds or Additional Bonds are outstanding and unpaid, the Issuer shall make available to the paying agents therefor, out of the Bond Fund or the Reserve Fund, if necessary, money sufficient to pay such interest on and such principal of the Parity Bonds and Additional Bonds as will accrue or mature on the June 1 or December 1 immediately following. FINAL DEPOSITS. At such times as the aggregate amount of money and investments in the Bond Fund and the Reserve Fund are at least equal in market value to (1) the aggregate principal amount of all unpaid (unmatured and matured) outstanding Parity Bonds and Additional Bonds, plus (2) the aggregate amount of all unpaid interest, including all unpaid (unmatured and matured) outstanding interest coupons, appertaining to such Parity Bonds and Additional Bonds, no further deposits need be made into the Bond Fund or the Reserve Fund. In determining the amount of such Parity Bonds and Additional Bonds, and unpaid interest appertaining thereto, outstanding at any time, there shall be subtracted and excluded the amount of any such Parity Bonds and Additional Bonds, and unpaid interest appertaining thereto, which shall have been duly called for redemption and for which funds shall have been deposited with the paying agents therefor sufficient for such redemption.

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ADDITIONAL BONDS. (a) The Issuer shall have the right and power at any time and from time to time, and in one or more Series or issues, to authorize, issue, and deliver additional parity revenue bonds (herein called "Additional Bonds"), in any amounts, for any lawful purpose of relating to the System, including the refunding of any Parity Bonds or Additional Bonds. Such Additional Bonds, if and when authorized, issued, and delivered in accordance with this Resolution, shall be secured by and made payable equally and ratably on a parity with the Parity Bonds, and all other outstanding Additional Bonds, from a first lien on and pledge of the Pledged Revenues. (b) The Bond Fund and the Reserve Fund, established by this Resolution shall secure and be used to pay all Additional Bonds as well as the Parity Bonds. However, each Resolution under which Additional Bonds are issued shall provide and require that, in addition to the amounts required by the provisions of this Resolution and the provisions of any other Resolution or Resolutions authorizing Additional Bonds to be deposited to the credit of the Bond Fund, the Issuer shall deposit to the credit of the Bond Fund at least such amounts as are required for the payment of all principal of and interest on said Additional Bonds then being issued, as the same come due; and that the aggregate amount to be accumulated and maintained in the Reserve Fund shall be increased (if and to the extent necessary) to an amount not less than the average annual principal and interest requirements of all Parity Bonds and Additional Bonds which will be outstanding after the issuance and delivery of the then proposed Additional Bonds; and that the required additional amount shall be so accumulated by the deposit in the Reserve Fund of all or any part of said required additional amount in cash immediately after the delivery of the then proposed Additional Bonds, or, at the option of the Issuer, by the deposit of said required additional amount (or any balance of said required additional amount not deposited in cash as permitted above) in monthly installments, made on or before the 25th day of each month following the adoption of the Resolution authorizing the issuance of the then proposed Additional Bonds, of not less than 1/60th of said required additional amount (or 1/60th of the balance of said required additional amount not deposited in cash as permitted above). (c) All calculations of average annual principal and interest requirements made pursuant to this Section shall be made as of and from the date of the Additional Bonds then proposed to be issued. (d) The principal of all Additional Bonds must be scheduled to be paid or mature on June 1 of the years in which such principal is scheduled to be paid or mature; and all interest thereon must be payable on June 1 and December 1. FURTHER REQUIREMENTS FOR ADDITIONAL BONDS. Additional Bonds shall be issued only in accordance with this Resolution, but notwithstanding any provisions of this Resolution to the contrary, no installment, Series, or issue of Additional Bonds shall be issued or delivered unless the President and the Secretary of the Board sign a written certificate to the effect that the Issuer is not in default as to any covenant, condition, or obligation in connection with all outstanding Parity Bonds and Additional Bonds, and the Resolutions authorizing same, and that the Bond Fund and the Reserve Fund each contains the amount then required to be therein. GENERAL COVENANTS. The Issuer further covenants and agrees that: (a) PERFORMANCE. It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Resolution and each resolution authorizing the issuance of Additional Bonds, and in each and every Parity Bond and Additional Bond; that it will promptly pay or cause to be paid the principal of and interest on every Parity Bond and Additional Bond, on the dates and in the places and manner prescribed in such resolutions and Parity Bonds or Additional Bonds; and that it will, at the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the Bond Fund and the Reserve Fund; and any holder of the Parity Bonds or Additional Bonds may require the Issuer, its Board, and its officials and employees, to carry out, respect, or enforce the covenants and obligations of the Series 2006 Bond Resolution, this Resolution or any resolution authorizing the issuance of Additional Bonds, by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings, in any court of competent jurisdiction, against the Issuer, its Board, and its officials and employees. (b) ISSUER'S LEGAL AUTHORITY. The Issuer is a duly created and existing conservation and reclamation district of the State of Texas pursuant to Article 16, Section 59 of the Texas Constitution, and Chapter 62, Acts of 1951, 52nd Legislature of Texas, Regular Session, as amended (originally compiled as Vernon's Ann. Tex. Civ. St. Article 8280-141), and is duly authorized under the laws of the State of Texas to create and issue the Parity Bonds; that all action on its part for the creation and issuance of the Bonds has been duly and effectively taken, and that the Parity Bonds in the hands of the holders and owners thereof are and will be valid and enforceable special obligations of the Issuer in accordance with their terms. (c) TITLE. It has or will obtain lawful title to, or the lawful right to use and operate, the lands, buildings, and facilities constituting the System, that it warrants that it will defend, the title to or lawful right to use and operate, all the aforesaid lands, buildings, and facilities, and every part thereof, for the benefit of the holders and owners of the Parity Bonds and Additional Bonds against the claims and demands of all persons whomsoever, that it is lawfully qualified to pledge the Pledged Revenues to the payment of the Parity Bonds and Additional Bonds in the manner prescribed herein, and has lawfully exercised such rights.

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(d) LIENS. It will from time to time and before the same become delinquent pay and discharge all taxes, assessments, and governmental charges, if any, which shall be lawfully imposed upon it, or the System, that it will pay all lawful claims for rents, royalties, labor, materials, and supplies which if unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner provided herein, and that it will not create or suffer to be created any mechanic's, laborer's, materialman's, or other lien or charge which might or could be prior to the liens hereof, or do or suffer any matter or thing whereby the liens hereof might or could be impaired; provided, however, that no such tax, assessment, or charge, and that no such claims which might be used as the basis of a mechanic's, laborer's, materialman's, or other lien or charge, shall be required to be paid so long as the validity of the same shall be contested in good faith by the Board. (e) OPERATION OF SYSTEM. While the Parity Bonds or any Additional Bonds are outstanding and unpaid it will cause the System to be continuously and efficiently operated and maintained in accordance with accepted good business and engineering practices. (f) FURTHER ENCUMBRANCE. While the Parity Bonds or any Additional Bonds are outstanding and unpaid, the Issuer shall not additionally encumber the Pledged Revenues in any manner, except as permitted in this Resolution in connection with Additional Bonds, unless said encumbrance is made junior and subordinate in all respects to the liens, pledges, covenants, and agreements of this Resolution and any resolution authorizing the issuance of Additional Bonds; but the right of the Issuer and the Board to issue revenue bonds payable from a subordinate lien on the Pledged Revenues is specifically recognized and retained. (g) SALE OF PROPERTY. While the Parity Bonds or any Additional Bonds are outstanding and unpaid, the Issuer will maintain its current legal corporate status as a conservation and reclamation district, and the Issuer shall not sell, convey, mortgage, or in any manner transfer title to, or lease, or otherwise dispose of the entire System, or any significant or substantial part thereof; provided that whenever the Issuer deems it necessary to dispose of any machinery, fixtures, and equipment, it may sell or otherwise dispose of such machinery, fixtures, and equipment when it has made arrangements to replace the same or provide substitutes therefor, unless it is determined by the Issuer that no such replacement or substitute is necessary. (h) INSURANCE. (1) It will cause to be insured (including self-insurance) such parts of the System as would usually be insured by corporations operating like properties, with a responsible insurance company or companies, against risks, accidents, or casualties against which and to the extent insurance is usually carried by corporations operating like properties, including fire and extended coverage insurance. Public liability and property damage insurance shall also be carried unless the general counsel for Issuer, or the Attorney General of Texas, gives a written opinion to the effect that the Issuer, the Board, and its officers and employees, are not liable for claims which would be protected by such insurance. At any time while any contractor engaged in construction work shall be fully responsible therefor, the Issuer shall not be required to carry insurance on the works being constructed, but the contractor shall be required to carry appropriate insurance. All such policies shall be open to the inspection of the Bondholders and their representatives at all reasonable times.

(2) Upon the happening of any loss or damage covered by insurance from one or more of said causes, the Issuer shall make due proof of loss and shall do all things necessary or desirable to cause the insuring companies to make payment in full directly to the Issuer. The proceeds of insurance covering such property, together with any other funds necessary and available for such purpose, shall be used forthwith by the Issuer for repairing the property damaged or replacing the property destroyed; provided, however, that if said insurance proceeds and other funds are insufficient for such purpose, then said insurance proceeds pertaining to the System shall be used promptly as follows:

(a) for the redemption prior to maturity of the Parity Bonds and Additional Bonds, if any, ratably in the proportion that the outstanding principal of each series or issue of Parity Bonds or Additional Bonds bears to the total outstanding principal of all Parity Bonds and Additional Bonds; provided that if on any such occasion the principal of any such series or issue is not subject to redemption, it shall not be regarded as outstanding in making the foregoing computation; or

(b) if none of the outstanding Parity Bonds or Additional Bonds is subject to redemption, then for the purchase on the open market and retirement of said Bonds and Additional Bonds, in the same proportion as prescribed in the foregoing clause (a), to the extent practicable; provided that the purchase price for any such Parity Bond or Additional Bonds shall not exceed the redemption price of such parity Bond or Additional Bond on the first date upon which it becomes subject to redemption; or

(c) to the extent that the foregoing clauses (a) and (b) cannot be complied with at the time, the insurance proceeds, or the remainder thereof, shall be deposited in a special and separate trust fund, at an official depository of the Issuer, to be designated the Insurance Account. The Insurance Account shall be held until such time as the foregoing clauses (a) and/or (b) can be complied with, or until other funds become available which, together with the Insurance Account, will be sufficient to make the repairs or replacements originally required, whichever of said events occurs first.

(3) The annual audit hereinafter required shall contain a list of all such insurance policies carried, together with a statement

as to whether or not all insurance premiums upon such policies have been paid.

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(i) RATE COVENANT. It will fix, establish, maintain, and collect such rentals, rates, charges, and fees for the use and availability of the System as are necessary to produce Gross Revenues of the System sufficient, together with any other Pledged Revenues, (a) to make all payments and deposits required to be made into the Bond Fund, and to maintain the Reserve Fund, as required by the resolutions authorizing all Parity Bonds and Additional Bonds, and (b) to pay all Operation and Maintenance Expenses of the System. (j) RECORDS. Proper books of record and account will be kept in which full, true, and correct entries will be made of all dealings, activities, and transactions relating to the System, the Pledged Revenues, and all Funds described in this Resolution; and all books, documents, and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of any bondholder. (k) AUDITS. Each year while any of the Parity Bonds or Additional Bonds are outstanding, an audit will be made of its books and accounts relating to the System and the Pledged Revenues by an independent certified public accountant or an independent firm of certified public accountants. (l) GOVERNMENTAL AGENCIES. It will comply with all of the terms and conditions of any and all agreements applicable to the System and the Parity Bonds or Additional Bonds entered into between the Issuer and any governmental agency, and the Issuer will take all action necessary to enforce said terms and conditions; and the Issuer will obtain and keep in full force and effect all franchises, permits, and other requirements necessary with respect to the acquisition, construction, operation, and maintenance of the System. (m) CONTRACTS WITH PARTICIPANTS. It will comply with the terms and conditions of the Contract, including any contracts with Additional Participants, and will cause the Participants to comply with all of their obligations thereunder by all lawful means; and the Issuer agrees to prepare an annual budget as required by the Contract. AMENDMENT OF RESOLUTION. (a) The holders or owners of Parity Bonds and Additional Bonds aggregating 51% in principal amount of the aggregate principal amount of then outstanding Parity Bonds and Additional Bonds shall have the right from time to time to approve any amendment to this Resolution or any resolution authorizing the issuance of Additional Bonds, which may be deemed necessary or desirable by the Issuer, provided, however, that nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in said resolutions or in the Parity Bonds or Additional Bonds so as to:

(1) Make any change in the maturity of the outstanding Parity Bonds or Additional Bonds; (2) Reduce the rate of interest borne by any of the outstanding Parity Bonds or Additional Bonds; (3) Reduce the amount of the principal payable on the outstanding Parity Bonds or Additional Bonds; (4) Modify the terms of payment of principal of or interest on the outstanding Parity Bonds or Additional Bonds, or

impose any conditions with respect to such payment; (5) Affect the rights of the holders of less than all of the Parity Bonds and Additional Bonds then outstanding; (6) Change the minimum percentage of the principal amount of Parity Bonds and Additional Bonds necessary for consent

to such amendment. (b) If at any time the Issuer shall desire to amend a resolution under this Section, the Issuer shall cause notice of the proposed amendment to be published in a financial newspaper or journal published in the City of New York, New York, or in the City of Austin, Texas, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of each Paying Agent for each series of Parity Bonds and Additional Bonds for inspection by all holders of Parity Bonds and Additional Bonds. Such publication is not required, however, if notice in writing is given to each holder of Parity Bonds and Additional Bonds. (c) Whenever at any time not less than thirty days, and within one year, from the date of the first publication of notice or other service of written notice the Issuer shall receive an instrument or instruments executed by the holders or owners of at least 51% in aggregate principal amount of all Parity Bonds and Additional Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file as aforesaid, the Issuer may adopt the amendatory resolution in substantially the same form. (d) Upon the adoption of any amendatory resolution pursuant to the provisions of this Section, the resolution being amended shall be deemed to be amended in accordance with the amendatory resolution, and the respective rights, duties, and obligations of the Issuer and all the holders or owners of then outstanding Parity Bonds and Additional Bonds and all future Additional Bonds shall thereafter be determined, exercised, and enforced hereunder, subject in all respects to such amendment.

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(e) Any consent given by the holder or owner of a Parity Bond or Additional Bond pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders or owners of the same Parity Bond or Additional Bond during such period. Such consent may be revoked at any time after six months from the date of the first publication of such notice by the holder or owner who gave such consent, or by a successor in title, by filing notice thereof with each Paying Agent for each series of Parity Bonds and Additional Bonds, Texas, and the Issuer, but such revocation shall not be effective if the holders of 51% in aggregate principal amount of the then outstanding Parity Bonds and Additional Bonds as in this Section defined have, prior to the attempted revocation, consented to and approved the amendment. (f) For the purpose of this Section, the ownership of all Parity Bonds and Additional Bonds shall be ascertained by the registration books pertaining thereto kept by the registrar. The Issuer may conclusively assume that such holding or ownership continues until written notice to the contrary is served upon the Issuer. DEFEASANCE OF BONDS. (a) Each of the Bonds, including the Initial Bond and each of the other Bonds (as hereinbefore defined), and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of this Resolution, except to the extent provided in subsection (d) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption), or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the Pledged Revenues as provided in this Resolution, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the Issuer also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. (c) The term "Government Obligations" as used in this Section shall mean (i) direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and which may be in book-entry form and (ii) noncallable obligations of an agency or instrumentality of the United States, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the issuer 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. (d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Resolution. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. In the event any outstanding Bonds or Bond authorized by this Resolution is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for Replacement Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section.

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(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Resolution equally and proportionately with any and all other Bonds duly issued under this Resolution. (e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1206, Texas Government Code, this Section of this Resolution shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 6(d) of this Resolution for Bonds issued in conversion and exchange for other Bonds. COVENANTS REGARDING TAX-EXEMPTION. The Issuer covenants to refrain from any action which would adversely affect, or to take such action to assure, the treatment of the Bonds as obligations described in section 103 of the Internal Revenue Code of 1986 (the "Code"), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows:

(1) to take any action to assure that no more than 10 percent of the proceeds of the Series 2014 Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) of the Code, or if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Resolution or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code;

(2) to take any action to assure that in the event that the "private business use" described in subsection (a) hereof exceeds

five percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of five percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental use;

(3) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or five percent of the

proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is, directly or indirectly, used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code;

(4) to refrain from taking any action that would otherwise result in the Bonds being treated as "private activity bonds"

within the meaning of section 141(b) of the Code; (5) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of

section 149(b) of the Code; (6) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds

which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with –

(A) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less or, in the case of a refunding

bond, for a period of 90 days or less until such proceeds are needed for the purpose for which the Bonds are issued,

(B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1(b) of the Treasury

Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not

exceed 10 percent of the stated principal amount (or, in the case of a discount, the issue price) of the Bonds;

(7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage), or section 149(g) of the Code (relating to hedge bonds); and

(8) to refrain from using the proceeds of the Bonds or proceeds of any prior bonds to pay debt service on another issue more

than 90 days after the date of issue of the Bonds in contravention of the requirements of section 149(d) of the Code (relating to advance refundings); and

(9) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of

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the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code.

(b) Compliance with Code. For purposes of the foregoing, the Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally-recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally-recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs its President, the President of the Board of Directors, the Executive Director, the Deputy Director Administrative Services, and the Assistant Director-Finance to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. The Issuer covenants to comply with the covenants contained in this Section after defeasance of the Bonds. (c) Rebate Fund. In order to facilitate compliance with the above covenant (a)(9), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other person, including without limitation, the bondholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (d) Written Procedures. Unless superseded by another action of the Issuer to ensure compliance with the covenants contained herein regarding private business use, remedial actions, arbitrage and rebate, the Issuer hereby adopts and establishes the instructions attached hereto as Exhibit A as their written procedures applicable to Bonds issued pursuant to the Contract. DISPOSITION OF PROPERTY. The Issuer covenants that the property refinanced with the proceeds of the Bonds (the "Project") will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless any action taken in connection with such disposition will not adversely affect the tax-exempt status of the Bonds. For purpose of the foregoing, the Issuer may rely on an opinion of nationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings on its books and records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed. The foregoing notwithstanding, the Issuer shall not expend sale proceeds or investment earnings thereon more than 60 days after the later of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds are retired. The Issuer agrees to obtain the advice of nationally-recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Bonds. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest.

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SUMMARY OF CERTAIN PROVISIONS OF THE CONTRACT The District entered into contracts, dated September 23, 2004 (together with any similar contracts with Additional Participants, collectively the "Contract"), with the City of Frisco, Texas (together with any Additional Participants, the "Participants"), which provide for the acquisition, construction, improvement, operation and maintenance, of a Regional Wastewater System. Pursuant thereto the District has accepted the responsibility of providing facilities to adequately receive, transport, treat and dispose of the Participants’ wastewater. Pertinent provisions of the Contract are as follows: Facilities and Initial Contract. In order to provide services for receiving, transporting, treating, and disposing of Wastewater for Participants, the District will use its best efforts to design, acquire, construct, and complete the System, as generally described in the Engineering Report with respect to Frisco, and as generally described in appropriate additional engineering reports hereafter to be obtained with respect to any Participant and will own, operate, and maintain the System, and from time to time enlarge, improve, repair, replace, and/or extend the System to provide service to the Participants. The District shall obtain and hold in its name all required discharge permits from the appropriate Federal and State agencies, and each Participant shall assist the District in obtaining same. The District shall provide, manage, operate, and maintain the System in such manner as it determines is necessary for providing adequate, efficient, and economical service to Participants, and shall have the right to provide single plants, multiplants, or combine two or more plants, and to use or discontinue the use of any facilities of the System as the District deems necessary. Discharge. In consideration of the payments to be made under its respective contract with the District, each of the Participants have and shall have the right to discharge such Wastewater into the District's System as is generally described in the Engineering Report and Wastewater from such other areas as is consented to by the District (acting through its General Manager), provided that such Wastewater meets the requirements for quantity and quality as set forth in its respective Contract with the District; and further provided that, the District is able to obtain permits for the treatment and discharge of such quantity and quality of Wastewater and that discharge of such Wastewater to the System may be made only after notice by the District that it is ready to receive the same pursuant to this Contract. Points of Entry. Each Participant may discharge Wastewater generated from such Participant's sewer system only into the designated Point or Points of Entry for such Participant. Conveyance to Point of Entry. It shall be the sole responsibility of each Participant to transport, or cause to be transported, at no cost to the other Participants, its Wastewater to its Point or Points of Entry. Quantity at Points of Entry. (a) The quantity of Wastewater conveyed to the Point or Points of Entry shall be metered by the District and the total annual contributing flow of Wastewater received during any Fiscal Year shall be used to determine each Participant's Annual Payment for service as set forth in Article V. (b) The maximum discharge rate is defined as a rate in million gallons per day (MGD), exceeded for a period of sixty minutes, which, if continued over a period of 24 hours, would be equal to 3.50 times the Participant's average daily flow during that Fiscal Year. (c) Any Participant exceeding the maximum discharge rate shall have a surcharge applied to the next Fiscal Year's Annual Payment equal to l% of the Annual Payment in that Fiscal Year for each l/10th that the ratio of the maximum discharge to the average daily flow exceeds 3.50. Quality. Each Participant agrees to limit discharge into the District's System to Wastewater that complies with quality requirements the District finds it necessary from time to time to establish in order to meet standards imposed by regulatory agencies having appropriate jurisdiction or to protect the water quality for water supply purposes. No discharge shall be made into the System which would cause the District to violate any permit granted, or any rule or regulation promulgated, by any State or Federal agency having jurisdiction over the District. Each Participant specifically covenants that it will enact and enforce procedures which will prohibit or prevent customers of its sewer system from making any discharge which would cause such Participant to violate the provisions of this contract or any applicable State or Federal permit, law, rule, or regulation. To enable the highest degree of treatment in the most economical manner possible, certain solids, liquids, and gases have been and are hereby prohibited from entering the System, either absolutely or in excess of established standards, and the prohibited discharges will be listed and furnished to all Participants, with a minimum of sixty days of notice before the effective date thereof. Financing. The District will issue its Bonds, in amounts and at times as determined by the District, to provide the System. The proceeds from the sale of the Bonds will be used for the payment of all of the District's costs and expenses in connection with the design, acquisition, and construction of the System and the Bonds, including, without limitation, all financing, legal, printing, administrative overhead, and other expenses and costs incurred in issuing its Bonds and to fund a debt service reserve and other funds if required by any Bond Resolution. Each Bond Resolution of the District shall specify the exact principal amount of the Bonds initially issued, which shall mature not more than 40 years from the date of such Bonds, and shall bear interest at not to exceed the maximum legal rates, and the Bond Resolution may create and provide for the maintenance of a revenue fund, an interest and sinking fund, a debt service reserve fund, and other funds and accounts, all in the manner and amounts as provided in

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such Bond Resolution. Prior to the sale of any such Bonds, the District shall provide to the Participants a copy of the Preliminary Official Statement relating to such Bonds, which shall include, among other things, proposed maturity schedule and optional and mandatory redemption provisions. The Participants agree that if such Bonds are actually issued and delivered to the purchaser thereof, the Bond Resolution authorizing the Bonds shall for all purposes be deemed to be in compliance with this Contract in all respects, and the Bonds issued thereunder will constitute Bonds as defined in this Contract. Annual Requirement. It is acknowledged and agreed that payments to be made under this Contract will be the only source available to the District to provide the Annual Requirement; and that the District has a statutory duty to establish and from time to time to revise the charges for services to be rendered and made available to Participants hereunder so that the Annual Requirement shall at all times be not less than an amount sufficient to pay or provide for the payment of:

(a) An "Operation and Maintenance Component" equal to the amount paid or payable for all Operation and Maintenance Expense; and

(b) A "Bond Service Component" equal to:

(l) the principal of, redemption premium, if any, and interest on, its Bonds, as such principal,

redemption premium, if any, and interest become due, less interest to be paid out of Bond proceeds if permitted by any Bond Resolution; and

(2) during each Fiscal Year, the proportionate part of any special or reserve funds required to be

established and/or maintained by the provisions of any Bond Resolution; and

(3) an amount in addition thereto sufficient to restore any deficiency in any of such funds required to be accumulated and maintained by the provisions of any Bond Resolution; and

(4) the charges of paying agents and registrars for paying principal of, redemption premium, if

any, and interest on, all Bonds, and for registering and transferring Bonds. Payments By Participants. (a) For services to be rendered to each Participant by the District under this Contract and other similar contracts, if any, each Participant has agreed to pay, at the time and in the manner hereinafter provided, its proportionate share of the Annual Requirement, which shall be determined as hereafter described and shall constitute a Participant's Annual Payment or Adjusted Annual Payment. For the Fiscal Year beginning on October 1, 2004, and for each Fiscal Year thereafter each Participant's proportionate share of the Annual Requirement shall, subject to the subsequent provisions hereof, be a percentage obtained by dividing such Participant's estimated contributing flow to the System for the next succeeding Fiscal Year or portion thereof by the total estimated contributing flow to the System by all Participants during such Fiscal Year or portion thereof. The calculation of each Annual Payment as determined herein, and each Adjusted Annual Payment, shall be determined as provided in this Section. The terms "contributing flow to the System" and "contributing flow" as used in this Contract with respect to any Fiscal Year, commencing with the Fiscal Year beginning October 1, 2004, shall mean the greater of (i) the actual metered contributing flow of a Participant or (ii) the minimum annual contributing flow for which a Participant has agreed to pay, which minimum annual contributing flow for Frisco is as follows:

Frisco 500,000 gallons per day The above minimum annual contributing flows may be adjusted by the District and the Participants to include minimum annual contributing flows of Additional Participants should Additional Participants be approved for connection to the System in accordance with Section 8.02 hereof. Each Participant's Annual Payment shall be calculated by the District by multiplying such Participant's estimated percentage of the estimated total contributing flow times the Annual Requirement. Each Participant's Annual Payment shall be made to the District in monthly installments, on or before the twentieth (20th) day of each month, for its required part of the Annual Requirement for each Fiscal Year, commencing with the Fiscal Year or portion thereof beginning October 1, 2004. Such payments shall be made in accordance with a Schedule of Payments for each Fiscal Year which will be supplied to each Participant. At the close of the Fiscal Year or portion thereof which commenced on October 1, 2004, and for each Fiscal Year thereafter, the District shall redetermine each Participant's percentage by dividing each Participant's contributing flow to the System by the total contributing flow of all Participants. Each Participant's Adjusted Annual Payment shall be calculated by multiplying each Participant's redetermined percentage times the Annual Requirement. The difference between the Adjusted Annual Payment and the Annual Payment, if any, when determined, shall be applied as a credit or a debit to each Participant's account with the District and shall be credited or debited to such Participant's next subsequent monthly payment or payments. (b) If a Participant fails to pay its monthly charge on or before the twentieth (20th) day of any month, it shall incur and pay a penalty of ten percent of the amount due together with any legal or other costs incurred by the District in collecting the amount due. The District is authorized to discontinue service to any Participant which fails to make any monthly payment, and which, after written notice, does not make such payment.

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(c) If, during any Fiscal Year, the District begins providing services to an Additional Participant, each Participant's Annual Payment for such Fiscal Year shall be redetermined consistent with the provisions of this contract. (d) Each Participant's Annual Payment also shall be adjusted and redetermined for the balance of any applicable Fiscal Year, consistent with the provisions of this contract, and initially based on estimated contributing flow, at any time during any Fiscal Year if:

(i) Additions, enlargements, repairs, extensions, or improvements to the System are placed in service by the District which require an increase and redetermination of the Annual Requirement; or

(ii) Unusual or extraordinary expenditures for operation and maintenance of the System are required which

are not provided for in the Annual Budget or in a Bond Resolution; or

(iii) A Participant's contributing flow to the System, after the beginning of the Fiscal Year, is estimated to be substantially different from that on which Annual Payments are based as determined by the District, to the extent that such difference in flow will substantially affect such Participant's Budget, and consequently such Participant's Annual Payment to the District; or

(iv) The District issues additional Bonds, the payments in connection with which require an increase and

redetermination of the Annual Requirement; or

(v) The District receives significantly more or significantly less revenue or other amounts than those contemplated.

(vi) It appears to the District that for any other reason it will not receive the full amount of the Annual

Requirement unless such adjustment and redetermination are made. (e) During each Annual Payment Period all revenues received by the District from providing services of the System to parties which are not Participants, shall (i) first be credited to the Operation and Maintenance Component of the Annual Requirement, and (ii) then any remainder credited to the Bond Service Component of the Annual Requirement, with the results that such credits under (i) and (ii), respectively, shall reduce, to the extent of such credits, the amounts of such Components, respectively, which otherwise would be payable by the Participants pursuant to the method prescribed in (a) above. The District may estimate all such credits which it expects to make during each Annual Payment Period in calculating each Annual Payment. (f) The District shall give all Participants at least 21 days written notice prior to consideration by the Board of Directors of the District of making any Adjusted Annual Payment for any Participant during any Fiscal Year. (g) The Annual Payment set forth in this section shall be considered the Basic Charge for service hereunder, and each Participant shall pay a surcharge for excess BOD and/or TSS as provided in Section 4.02, and for excessive discharge in the manner set forth in Section 3.04(c). (h) The District may establish and maintain a separate fund entitled the "Panther Creek Regional Wastewater System Contingency Fund" (the "Contingency Fund"). The Contingency Fund shall be used solely for the purpose of paying unexpected or extraordinary Operation and Maintenance Expenses of the System for which funds are not otherwise available under this Contract. The Contingency Fund shall initially be funded, and any subsequent deficiency shall be restored, with amounts included as Operation and Maintenance Expenses in the Annual Budget. (i) The facilities and services of the System to be provided to each Participant pursuant to this Contract are and will be essential and necessary to the operation of such Participant's combined waterworks and sanitary sewer system, and all payments to be made hereunder by each Participant will constitute reasonable and necessary "operating expenses" of such Participant's combined waterworks and sanitary sewer system, within the meaning of Section 30.030, Texas Water Code, as amended, and Section 1502.056, Texas Government Code, and the provisions of all ordinances authorizing the issuance of all waterworks and sanitary sewer system revenue bond issues of such Participant, with the effect that such Participant's obligation to make payments from its waterworks and sanitary sewer system revenues under this Contract shall have priority over its obligations to make payments of the principal of and interest on any and all of its waterworks and sanitary sewer system revenue bonds. Each Participant agrees to fix and collect such rates and charges for waterworks and sanitary sewer system services to be supplied by its waterworks and sanitary sewer system as will make possible the prompt payment of all expenses of operating and maintaining its entire waterworks and sanitary sewer system, including all payments, obligations, and indemnities contracted hereunder, and the prompt payment of the principal of and interest on its bonds payable from the net revenues of its waterworks and sanitary sewer system. The District shall never have the right to demand payment of the amounts due hereunder from funds raised or to be raised from taxation by a Participant. Each Participant's payments hereunder shall be made pursuant to the authority granted by Section 30.030, Texas Water Code, as amended, and Section 1502.056, Texas Government Code. Recognizing the fact that the Participants urgently require the facilities and services covered by this Contract, and that such facilities and services are necessary for actual use and for stand-by purposes; and further recognizing that the District will use the payments received from

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the Participants hereunder to pay, secure, and finance the issuance of its Bonds, it is hereby agreed that the Participants shall be obligated unconditionally, and without offset or counterclaim, to make the payments designated as the "Bond Service Component" of the Annual Requirement, in the manner provided in this Contract, regardless of whether or not the District actually provides such facilities and services, or whether or not any Participant actually receives or uses such facilities and services, and regardless of the validity or performance of the other parts of this or any other contract, and such "Bond Service Component" shall in all events be applied and used for providing debt service and other requirements of the Bonds, and the holders of the Bonds shall be entitled to rely on the foregoing agreement and representation, regardless of any other agreement between the District and the Participants. Each Participant further agrees that it shall be obligated to make the payments designated as the "Operation and Maintenance Component" of the Annual Requirement as described in Section 5.02 of this Contract, so long as the District is willing and able to provide the facilities and services contemplated hereunder to any Participant. (j) As soon as practicable after issuance of the Bonds, the District shall furnish each Participant with a schedule of monthly payments to be made for the balance of the Fiscal Year commencing October 1, 2004. On or before August l of each year, commencing August 1, 2005, the District will furnish each Participant with a tentative budget and an estimated schedule of monthly payments to be made by such Participant for the ensuing Fiscal Year. On July l of each year, commencing July 1, 2005, the District shall be in a position to furnish any Participant an estimate of the Participants's annual requirement. On or before October l of each year, commencing October 1, 2005, the District shall furnish such Participant with a finalized schedule of the monthly payments to be made by such Participant to the District for the ensuing Fiscal Year. Each Participant agrees that it will make such payments to the District on or before the twentieth (20th) day of each month of such Fiscal Year. If any Participant shall dispute the Annual Budget, and proceed as provided in Article VII, such Participant nevertheless promptly shall make the payment or payments determined by the District, and if it is subsequently determined by agreement that such disputed payments made by such Participant should have been less, the District shall promptly revise, reallocate, and readjust the charges among all Participants then being served by the District in such manner that such Participant will recover its overpayment. In the event any Participant is assessed a surcharge for excess BOD and/or TSS, the District will bill such Participant for such surcharge on or before the tenth (10th) day of the month following the determination of the surcharge and such Participant shall pay such surcharge on or before the twentieth (20th) day of the month of receipt of any such bill. Any such surcharge collected by the District shall be applied by the District against the total cost of Operation and Maintenance Expense of the System. (k) If any Participant's Annual Payment is redetermined as is herein provided, the District will promptly furnish such Participant with an updated schedule of monthly payments reflecting such redetermination. (l) All interest income earned by the investment of any Funds created pursuant to any Bond Resolution shall be credited towards the payment of the Bond Service Component and taken into account in determining the Annual Requirement; except that as to any Acquisition or Construction Fund created from any Bond proceeds all interest income earned by the investment thereof may, at the option of the District, be credited to such Acquisition or Construction Fund and used for the System purposes for which the Bonds are issued, or be credited towards the payment of the Bond Service Component. Filing with Participant (a) Not less than sixty (60) days before the commencement of each Fiscal Year while this Contract, is in effect, the District shall cause its tentative budget for operation and maintenance of the System for the ensuing Fiscal Year to be prepared and a copy thereof filed with each Participant. If no protest or request for a hearing on such tentative budget is presented to the District within thirty (30) days after such filing of the tentative budget by one or more Participants, the tentative budget for the System, when adopted by the District's Board of Directors, shall be considered for all purposes as the "Annual Budget" for the ensuing Fiscal Year. But if a protest or request for a hearing is duly filed, it shall be the duty of the District to fix the date and time for a hearing on the tentative budget. The Board of Directors of the District shall consider the testimony and showings made in such hearing. The Board of Directors of the District may adopt the budget or make such amendments thereof as to it may seem proper. The budget thus approved by the Board of Directors of the District shall be the Annual Budget for the next ensuing Fiscal Year. (b) The Annual Budget may be amended to provide for transfers of budgeted funds between expenditure accounts, provided however that said transfers do not result in an overall increase in budgeted funds as provided in the Annual Budget. The Annual Budget may be amended and increased through formal action by the Board of Directors of the District, if required. Certified copies of any amended Annual Budget and the resolution authorizing same shall be filed immediately by the District with each Participant. Annual Audit of System. The District shall, at the close of each Fiscal Year, commencing with the fiscal year beginning October 1, 2004, cause an annual audit of the System to be prepared. Other Contracts between the District and the Participant. Nothing contained in this Contract shall in any way affect any payments to the District by a Participant or rates charged by the District to such Participant for the providing of water, wastewater or other services or facilities pursuant to other contractual relationships between the District and such Participant.

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District Contracts with Additional Participants. (a) The District reserves the right, with the consent of Frisco, to contract with subsequent Additional Participants to provide the services of the System to such Additional Participants; provided that the terms and provisions of such contracts with Additional Participants shall be, to the extent practicable and applicable, the same as the terms and provisions of this Contract except that with respect to any Local Wastewater Facilities of such Additional Participant which are to be acquired, operated, or used by the District as a part of the System as a result of such contract, the District and the Additional Participant may agree in such contract for mutually acceptable payments in connection therewith from Bond proceeds or as an Operation and Maintenance Expense of the System (provided that in any formula used for determining such payments, the value attributed to such Local Wastewater Facilities shall not exceed a sum equal to the principal amount of all then outstanding bonds or other obligations issued by the Additional Participant to acquire and construct such Local Wastewater Facilities), and except that such contract shall provide for payments calculated on the basis of adequate minimum flows as hereinafter provided. The District shall not enter into contracts for any services by the System except with persons which become Additional Participants, or as otherwise provided in Section 8.03 of this Contract. (b) A Person may become an Additional Participant in the following manner and under the following conditions;

(i) A formal request must be submitted to the District furnishing information on the area to be served, a description of existing facilities, and the latest annual audit of such proposed Additional Participant's waterworks and/or sewer systems, if any.

(ii) Such proposed Additional Participant must provide funds for any necessary engineering studies if funds are not

available from the appropriate Federal or State agencies. The preliminary studies must determine or estimate, for the ensuing five year period, the size and type of any proposed facilities, their estimated cost, and estimated flows of Wastewater, so as to enable the District to ascertain or estimate the requirements of the proposed Additional Participant for the ensuing five year period.

(c) Each Additional Participant must agree to make minimum payments under its contract, on the basis of estimated annual minimum flows, that would provide amounts annually at least sufficient, as determined by the District, to pay such Additional Participant's proportionate share of the Annual Requirement. (d) The provisions of this Section and the payments to be made under an Additional Participant's contract are further subject to the provisions of Section 5.03 of this Contract. Additional Capacity and Facilities. As the responsible agency for the establishment, administration, management, operation, and maintenance of the System, the District will, from time to time, determine when and to what extent it is necessary to provide additions, enlargements, improvements, repairs, and extensions to the System to receive, transport, treat, and dispose of Wastewater of any Participants, including all Additional Participants, and to issue its Bonds to accomplish such purposes, and all Participants, including Additional Participants, shall be obligated to pay both the Operation and Maintenance Component and the Bond Service Component included in the Annual Requirement with respect to the entire System, as expanded, as provided in Section 5.03; provided that this Section shall not be construed so as to reduce or alter the requirements of Sections 5.03 and 8.02 with respect to minimum payments. Term of Contract. This Contract shall continue in force from the effective date hereof at least until all Bonds, including any Bonds issued to refund same, shall have been paid in full; and shall also remain in force thereafter throughout the useful life of the System.

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INVESTMENTS

The District invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the Board of Directors of the District. Both State law and the District’s investment policies are subject to change. LEGAL INVESTMENTS . . . Under Texas law, the District is authorized to invest in (1) obligations of the United States or its agencies and instrumentalities, including letters of credit; (2) direct obligations of the State of Texas 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 and interest of which is guaranteed or insured by or backed by the full faith and credit of, the State of Texas 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 meeting the requirements of the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended, (i) that are issued by an institution that has its main office or a branch office in the State of Texas and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in clauses (1) through (6) or in any other manner and amount provided by law for District deposits or (ii) where (a) the funds are invested by the District through a depository institution that has a main office or branch office in the State and that is selected by the District; (b) the depository institution selected by the District arranges for the deposit of funds in one or more federally insured depository institutions, wherever located, for the account of the District; (c) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States; (d) the depository institution acts as a custodian for the District 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 District receives deposits from customers of other federally insured depository institutions, wherever located, that is equal to or greater than the funds invested by the District 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), and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9) 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) above, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm at not less than A or its equivalent or (c) cash invested in obligations described in clauses (1) through (6) above, clauses (11) through (13) below, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the District, held in the District's name and deposited at the time the investment is made with the District or a third party designated by the District; (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 of Texas; and (iv) the agreement to lend securities has a term of one year or less, (10) 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, (11) commercial paper with a stated maturity of 270 days or less that is rated at least A-1 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 U.S. or state bank, (12) no-load money market mutual funds registered with and 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, and (13) no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invest exclusively in obligations described in this paragraph, 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. In addition, bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations, including letters of credit, of the United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract, other than the prohibited obligations described in the next succeeding paragraph. The District 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 AAAm or an equivalent by at least one nationally recognized rating service. The District 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 Texas law, the District 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 list of authorized investments for District funds, maximum allowable stated maturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All District funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds’ investment. Each Investment Strategy Statement will describe its objectives concerning: (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.

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Under Texas law, District 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 District shall submit an investment report detailing: (1) the investment position of the District, (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 listed 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 District funds without express written authority from the Board of Directors. ADDITIONAL PROVISIONS . . . Under State law, the District is additionally required to: (1) annually review its adopted policies and strategies; (2) adopt a rule, order, ordinance or Resolution stating that it has reviewed its investment policy and investment strategies and records any changes made to either its investment policy or investment strategy in the respective rule, order, ordinance 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 District Board of Directors; (4) require the qualified representative of firms offering to engage in an investment transaction with the District to: (a) receive and review the District’s investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the District and the business organization that are not authorized by the District’s investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the District’s entire portfolio or requires an interpretation of subjective investment standards), and (c) deliver a written statement in a form acceptable to the District and the business organization attesting to these requirements; (5) perform an annual audit of the management controls on investments and adherence to the District’s investment policy; (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 purchase agreement; (8) restrict the investment in no-load mutual funds in the aggregate to no more than 15% of the District’s monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; (9) require local 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 District.

TABLE 3 - CURRENT INVESTMENTS As of January 31, 2020, investable funds of the District’s Panther Creek Regional Wastewater System were invested as follows:

Market BookDescription Percent (1) Value Value

State Pools 66.47% 4,362,113$ 4,362,113$ FFCB Note 33.53% 2,211,440 2,199,938

100.00% 6,573,553$ 6,562,050$

_______________ (1) Based Upon Market Value.

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TAX MATTERS OPINION . . . On the date of initial delivery of the Bonds, McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel to the District, will render its opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof ("Existing Law"), (1) interest on the Bonds for federal income tax purposes will be excludable from the "gross income" of the holders thereof and (2) the Bonds will not be treated as "specified private activity bonds" the interest on which would be included as an alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). Except as stated above, Bond Counsel to the District will express no opinion as to any other federal, state or local tax consequences of the purchase, ownership or disposition of the Bonds. See Appendix C -- Forms of Bond Counsel’s Opinions. In rendering its opinion, Bond Counsel to the District will rely upon (a) the District's federal tax certificate, and (b) covenants of the District with respect to arbitrage, the application of the proceeds to be received from the issuance and sale of the Bonds and certain other matters. Failure of the District to comply with these representations or covenants could cause the interest on the Bonds to become includable in gross income retroactively to the date of issuance of the Bonds. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the issuance of the Bonds in order for interest on the Bonds to be, and to remain, excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Bonds to be included in gross income retroactively to the date of issuance of the Bonds. The opinion of Bond Counsel to the District is conditioned on compliance by the District with the covenants and the requirements described in the preceding paragraph, and Bond Counsel to the District has not been retained to monitor compliance with these requirements subsequent to the issuance of the Bonds. Bond Counsel's opinion represents its legal judgment based upon its review of Existing Law and the reliance on the aforementioned information, representations and covenants. Bond Counsel's opinion is not a guarantee of a result. The Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that such Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Bonds. A ruling was not sought from the Internal Revenue Service by the District with respect to the Bonds or the property financed or refinanced with proceeds of the Bonds. No assurances can be given as to whether or not the Internal Revenue Service will commence an audit of the Bonds, or as to whether the Internal Revenue Service would agree with the opinion of Bond Counsel. If an audit is commenced, under current procedures the Internal Revenue Service is likely to treat the District as the taxpayer and the Bondholders may have no right to participate in such procedure. No additional interest will be paid upon any determination of taxability. FEDERAL INCOME TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT . . . The initial public offering price to be paid for one or more maturities of the Bonds may be less than the principal amount thereof or one or more periods for the payment of interest on the Bonds may not be equal to the accrual period or be in excess of one year (the "Original Issue Discount Bonds"). In such event, the difference between (i) the "stated redemption price at maturity" of each Original Issue Discount Bond, and (ii) the initial offering price to the public of such Original Issue Discount Bond would constitute original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the Bonds less the amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods (or during any unequal period if it is the initial or final period) and which are made during accrual periods which do not exceed one year. Under Existing Law, any owner who has purchased such Original Issue Discount Bond in the initial public offering is entitled to exclude from gross income (as defined in section 61 of the Code) an amount of income with respect to such Original Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the accrual period. For a discussion of certain collateral federal tax consequences, see discussion set forth below. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Bond was held by such initial owner) is includable in gross income. Under Existing Law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Bonds and ratably within each such six-month period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Bond for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Original Issue Discount Bond.

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The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds. COLLATERAL FEDERAL INCOME TAX CONSEQUENCES . . . The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Bonds. This discussion is based on existing statutes, regulations, published rulings and court decisions, all of which are subject to change or modification, retroactively. The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as financial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social Security or Railroad Retirement benefits, individuals allowed an earned income credit, certain S corporations with Subchapter C earnings and profits, foreign corporations subject to the branch profits tax, taxpayers qualifying for the health insurance premium assistance credit, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligations. THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE. INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE OBLIGATIONS. Under section 6012 of the Code, holders of tax-exempt obligations, such as the Bonds, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt obligation, such as the Bonds, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to, or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the accrued market discount of such Bonds; although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the "revised issue price" (i.e., the issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. STATE, LOCAL AND FOREIGN TAXES . . . Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Bonds under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. INFORMATION REPORTING AND BACKUP WITHHOLDING . . . Subject to certain exceptions, information reports describing interest income, including original issue discount, with respect to the Bonds will be sent to each registered holder and to the IRS. Payments of interest and principal may be subject to backup withholding under section 3406 of the Code if a recipient of the payments fails to furnish to the payor such owner's social security number or other taxpayer identification number ("TIN"), furnishes an incorrect TIN, or otherwise fails to establish an exemption from the backup withholding tax. Any amounts so withheld would be allowed as a credit against the recipient’s federal income tax. Special rules apply to partnerships, estates and trusts, and in certain circumstances, and in respect of Non-U.S. Holders, certifications as to foreign status and other matters may be required to be provided by partners and beneficiaries thereof. FUTURE AND PROPOSED LEGISLATION . . . Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, may adversely affect the tax-exempt status of interest on the Bonds under Federal or state law and could affect the market price or marketability of the Bonds. As of the date hereof, legislation has been introduced in the United States Congress that, if enacted, would make significant changes to the Code, including, among other provisions, changes to the federal income tax rates for individuals and corporations Any such proposal could limit the value of certain deductions and exclusions, including the exclusion for tax-exempt interest. The likelihood of any such proposal being enacted cannot be predicted. Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters.

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OTHER INFORMATION RATINGS The Bonds and Outstanding Bonds for the Panther Creek Regional Wastewater System are rated "AA-" by S&P Global Ratings, a business unit of Standard & Poor's Financial Services LLC. As of January 1, 2020 Moody's Investors Service Inc. also rates the Outstanding Bonds “Aa3”. An explanation of the significance of such rating may be obtained from the company furnishing the rating. The rating reflects only the respective view of such organization and the District 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 such rating company, if in the judgment of such company, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds. LITIGATION At the time of the initial delivery of the Bonds, the District will provide the Initial Purchaser with a certificate to the effect that no litigation of any nature has been filed or is then pending challenging the issuance of the Bonds or that affects the payment and security of the Bonds or in any other manner questioning the issuance, sale or delivery of said Bonds. REGISTRATION AND QUALIFICATION OF 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 jurisdiction. The District 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. This disclaimer of responsibility for qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201.041, Texas Government Code, provides that the Bonds are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political subdivisions or public agencies of the State of Texas. With respect to investment in the Bonds by municipalities or other political subdivisions or public agencies of the State of Texas, the Public Funds Investment Act, Chapter 2256, Texas Government Code, requires that the Bonds be assigned a rating of "A" or its equivalent as to investment quality by a national rating agency. See "OTHER INFORMATION - Ratings" above. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Bonds are legal investments for state banks, savings banks, trust companies with a capital of one million dollars or more, and savings and loan associations. The Public Funds Collateral Act, Chapter 2257, Texas Government Code, provides that the Bonds are eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the District has been made of the laws in other states to determine whether the Bonds are legal investments for various institutions in those states. LEGAL MATTERS The District will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Bonds, including the unqualified approving legal opinion of the Attorney General of Texas as to the Bonds to the effect that the Bonds are valid and legally binding obligations of the District, and based upon examination of such transcript of proceedings, the approving legal opinion of Bond Counsel, a copy of which opinion is attached to this Official Statement as Appendix C. The customary closing papers, including a certificate to the effect that no litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Bonds which would affect the provision made for their payment or security, or in any manner questioning the validity of said Bonds will also be furnished. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Notice of Sale and Bidding Instructions, the Official Bid Form and the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained herein, except that, in its capacity as Bond Counsel, such firm has reviewed the information describing the Bonds in the Official Statement to verify that such description conforms to the provisions of the Bond Resolution. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the Bonds is contingent upon the sale and delivery of the Bonds. The legal opinion will accompany the Bonds deposited with DTC or will be printed on the Bonds in the event of the discontinuance of the Book-Entry-Only System. In connection with the issuance of the Bonds, Bond Counsel has been engaged by, and only represents, the District. AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from District and Contracting Parties records, audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects.

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CONTINUING DISCLOSURE OF INFORMATION In the Bond Resolution, the District has made the following agreements for the benefit of the holders and beneficial owners of the Bonds. Under the agreement the District has agreed to provide or cause to be provided with respect to itself and each Significant Obligated Person certain updated financial information and operating data annually and the District will be obligated to provide timely notice of certain events. For purposes of such agreement, the "Significant Obligated Person" means any Participant, or Additional Participant, or other party contracting with the District whose payments to the District for use of or service from the System in the calendar year preceding any such determination exceeded 10% of the Gross Revenues of the System. The District is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the agreement, the District will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified events, to the Municipal Securities Rulemaking Board (the "MSRB") through the Electronic Municipal Market Access ("EMMA") system. ANNUAL REPORTS . . . The District will provide or cause each Significant Obligated Person to provide certain updated financial information and operating data annually to the MSRB. The information to be updated includes all quantitative financial information and operating data with respect to the District of the general type included in this Official Statement under tables numbered 1 through 3 and all quantitative financial information and operating data with respect to each Significant Obligated Person of the general type included in Appendix B to this Official Statement. The District will provide, or cause each Significant Obligation Person to provide, this information within 6 months after the end of each fiscal year ending in and after 2020. The District will additionally provide or cause to be provided audited financial statements for each Significant Obligated Person when and if available, and unaudited financial statements within 12 months after fiscal year end. Any such financial statements will be prepared in accordance with general accepted accounting principles or such other accounting principles or the Significant Obligated Persons may be required to employ from time to time pursuant to State law or regulation. The District or a Significant Obligated Person may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by Rule 15c2-12 (the “Rule”) of the United States Securities and Exchange Commission (the "SEC"). The District’s and each Significant Obligated Person's current fiscal year end is September 30. Accordingly, audited financial statements and updated information included in the above-referenced tables and Appendix B must be provided by March 31 in each year, unless the District or a Significant Obligated Person changes its respective fiscal year. If such Significant Obligated Person changes its fiscal year, the District will notify or cause such Significant Obligated Person to notify the MSRB of the change. NOTICE OF CERTAIN EVENTS . . . The District will also provide, or cause a Significant Obligated Person to provide, timely notices of certain events to the MSRB. The District will provide notice (not in excess of ten (10) business days after the occurrence of the event) 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, if material; (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, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (7) Modifications to the rights of security holders, if material; (8) Bond calls, if material, and tender offers; (9) Defeasances; (10) Release, substitution or sale of property securing repayment of the securities, if material; (11) Rating changes; (12) Bankruptcy, insolvency, receivership or similar event of the District, or a Significant Obligated Person; (13) The consummation of a merger, consolidation, or acquisition involving the District, or a Significant Obligated Person, or the sale of all or substantially all of the assets of the District, or a Significant Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material. Neither the Bonds nor the Bond Resolution make any provision for credit enhancement, or enhancement liquidity, (15) Incurrence of a Financial Obligation of the a Significant Obligated Person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the a Significant Obligated Person, an of which affect security holder, if material; and (16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of a Significant Obligated Person, any of which reflect financial difficulties. In purposes of (15) and (16) above, the term “Financial Obligation” means a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that “Financial Obligation” shall not include municipal securities as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. In addition, the District will provide, or cause a Significant Obligated Person to provide timely notice of any failure by the District or a Significant Obligated Person to provide, information, data, or financial statements in accordance with its agreement described above under “Annual Reports.” AVAILABILITY OF INFORMATION . . . The District and each Significant Obligated Person have agreed to provide the foregoing information to the MSRB. Investors will be able to access continuing disclosure information filed with the MSRB at www.emma.msrb.org. LIMITATIONS AND AMENDMENTS . . . The District has agreed to update, or cause each Significant Obligated Person to update, information and to provide or cause the Significant Obligated Person to provide notices of events only as described above. The District has not agreed to provide other information that may be relevant or material to a complete presentation of its or any Significant Obligated Person's financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The District 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 District 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 District to comply with its agreement.

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The District may amend its continuing disclosure agreement from time to time 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 respective Significant Obligated Person, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the Parity Bonds consent to the amendment or (b) any person unaffiliated with the District or the Significant Obligated Person (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds. If the District so amends the agreement, the District has agreed to include or cause the Significant Obligated Person to 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 financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS . . . During the last five years, the District believes it has complied in all material respects with its previous continuing disclosure undertakings, entered into pursuant to the Rule, except as follows: Due to an administrative oversight, the current investments table was not included in the 2012-2015 filings for the District’s Water Transmission Facilities Contract Revenue Refunding Bonds (City of Plano Project), Series 2009. The investments table due in 2016 was timely filed, but the District believes it is neither reasonably feasible nor material to create such Tables for prior years. The District has implemented procedures to ensure timely filing of all future information. The ratings on municipal bond insurers have been downgraded with frequency at various times in recent years. Information about the downgrades of municipal bond insurers has been publicly reported. During the previous five years, the District and Significant Obligated Persons have filed notices of downgrades of municipal bond insurers that insured the District or Significant Obligated Person’s outstanding obligations, but no assurances can be made that all the filings have been made or made in a timely manner. On August 4, 2015, Moody’s downgraded from "Aa3" to "A1" the District’s Water Facilities Installment Sale Contract Revenue Bonds (City of Rockwall Pump Station Project), Series 2006 and the District’s City of Rockwall 2007 Sewage Treatment and Disposal Service Contract (Buffalo Creek Plant) Revenue Bonds, Series 2008, and an event notice was not timely filed. The event notice has now been filed, including a notice of late filing. FINANCIAL ADVISOR HilltopSecurities serves as Financial Advisor to the District in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. HilltopSecurities, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. In the normal course of business, the Financial Advisor may from time to time sell investment securities to the District for the investment of bond proceeds or other funds of the District upon the request of the District. The Financial Advisor to the District has provided the following sentence for inclusion in this Official Statement. The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibility to the District and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information. INITIAL PURCHASER OF THE BONDS

After requesting competitive bids for the Bonds, the District accepted the bid of ________________________(the "Initial Purchaser") to purchase the Bonds at the interest rates shown on the cover page of the Official Statement at a price of par plus cash premium (if any) of $_______________. The Initial Purchaser of the Bonds can give no assurance that any trading market will be developed for the Bonds after their sale by the District to the Initial Purchaser of the Bonds. The District has no control over the price at which the Bonds are subsequently sold and the initial yield at which the Bonds will be priced and reoffered will be established by and will be the sole responsibility of the Initial Purchaser. FORWARD LOOKING STATEMENTS DISCLAIMER The statements contained in this Official Statement, and in any other information provided by the District, that are not purely historical, are forward-looking statements, including statements regarding the District’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 District to the date hereof, and the District assumes no obligation to update any such forward-looking statements. The District’s actual results could differ materially from those discussed in such forward-looking statements.

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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 judgment 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 District. Any of such assumptions 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 The financial data and other information contained herein have been obtained from the District's records, audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. The Resolution authorizing the issuance of the Bonds also approves the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorizes its further use in the reoffering of the Bonds by the Underwriter. CERTIFICATION OF THE OFFICIAL STATEMENT At the time of payment for and delivery of the Bonds, the Purchaser will be furnished a certificate, executed by proper officers, acting in their official capacity, to the effect that to the best of their knowledge and belief: (a) the descriptions and statements of or pertaining to the District contained in this Official Statement, and any addenda, supplement or amendment thereto, on the date of such Official Statement, on the date of sale of said Bonds and the acceptance of the best bid therefor, and on the date of the delivery, were and are true and correct in all material respects; (b) insofar as the District and its affairs, including its financial affairs, are concerned, such Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, of or pertaining to entities, other than the District, and their activities contained in such Official Statement are concerned, such statements and data have been obtained from sources which the District believes to be reliable and the District has no reason to believe that they are untrue in any material respect; and (d) there has been no material adverse change in the financial condition of the District since the date of the last audited financial statements of the District. The Resolution authorizing the issuance of the Bonds will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Bonds by the Initial Purchaser.


/s/ Thomas W. Kula

Executive Director

APPENDIX A

EXCERPTS FROM THE

CITY OF FRISCO

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Year Ended September 30, 2019

The information contained in this Appendix consists of excerpts from the City of Frisco Comprehensive Annual Financial Report for the Year Ended September 30, 2019, and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further information.

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Austin | Conroe | Dallas | Fort Worth | Houston Los Angeles | Midland | New York City | San Antonio

Weaver and Tidwell, L.L.P. 2300 North Field Street, Suite 1000 | Dallas, Texas 75201

Main: 972.490.1970 | Fax: 972.702.8321 CPAs AND ADVISORS | WEAVER.COM

Independent Auditor’s Report

To the Honorable Mayor and Members of City Council City of Frisco, Texas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of City of Frisco, Texas (the City) as of and for the year ended September 30, 2019, and the related notes to basic financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements The City’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions 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 States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

The Honorable Mayor and Members of City Council City of Frisco, Texas

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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City, as of September 30, 2019, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund and TIRZ #1 Fund, for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis; Schedule of Changes in Net Pension Liability and Related Ratios; Schedule of Contributions; Notes to the Schedule of Contributions; and Schedule of Changes in OPEB Liability and Related Ratios; on pages 5 through 16 and 80 through 83 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual fund statements and schedules and other information such as the introductory section and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and schedules, as listed in the table of contents, is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

The Honorable Mayor and Members of City Council City of Frisco, Texas

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated February 24, 2020, on our consideration of the City’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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

WEAVER AND TIDWELL, L.L.P.

Dallas, Texas February 24, 2020

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Management’s Discussion and Analysis As management of the City of Frisco, (the City), we offer this narrative overview and analysis of the financial activities and financial position of the City for the fiscal year ended September 30, 2019. In the broadest context, the financial well-being of a government lies in the underlying wealth and willingness of its citizens and property owners to pay adequate taxes combined with the vision of the government’s elected and appointed leadership to spend those taxes strategically so the City’s tax base, service levels, City assets and the City’s desirability will be maintained; not just for the current year, but well into the future. Financial reporting is limited in its ability to provide this “big picture”, but rather focuses on financial position and changes in said financial position. In other words, are revenues and or expenses/expenditures higher or lower than the previous year? Has net position (containing both short and long-term assets and liabilities) or fund balances (the current “spendable” assets less current liabilities) of the government been maintained? We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal (pages vii-xiv of this report) and the statistical section (pages 122-152), as well as information on the City Council’s Strategic Goals, the Annual Budget and other community information found on the City’s website at www.friscotexas.gov. It should be noted that the Independent Auditor’s Report describes the auditor’s association with the various sections of this report and that all the additional information from the website and other City sources is unaudited and has not been updated for events that may have occurred subsequent to the issuance of the respective report. FINANCIAL HIGHLIGHTS

• The assets of the City of Frisco exceeded its liabilities at the close of the most recent fiscal year by $1,875,702,979 (net position). The majority of the City’s assets are invested in capital assets or restricted for specific purposes. The remaining $114,522,006 is unrestricted and may be used to meet the government’s ongoing obligations to citizens and creditors in accordance with the City’s fiscal policies.

• The City’s net position for governmental activities increased by $112,092,315 as a result of this year’s operations. Net position of the City’s business-type activities increased as a result of this year’s operations by $30,223,479.

• As of the close of the current fiscal year, the City of Frisco’s governmental funds reported a combined ending fund balance of $413,331,681. Approximately 18% of this total is available for spending at the City’s discretion (unassigned).

• At the end of the current fiscal year, unassigned fund balance for the general fund was $72,539,025 or 45% of total general fund expenditures.

• The deferred outflows of the City increased by $11,625,021, or 40.57% during the fiscal year. This change is due to the change in the OPEB and Pension liability.

• The deferred inflows of the City decreased by $4,388,027 or (65.84)% during the fiscal year. This change is due to actuarial assumptions.

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• The City of Frisco’s total debt increased by $65,226,277, 8% during the current fiscal year. This change was due to four (4) new bond issues during the year being higher than bond debt maturities.

• The ad valorem rate for the City was $.4466 for fiscal year 2019. This tax rate supports debt service, operations and maintenance, and bond programs to construct infrastructure and city facilities. The homestead exemption for residential properties was 10% for fiscal year 2019 tax statements.

OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City of Frisco’s basic financial statements. The City of Frisco’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains required and other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of Frisco finances, in a manner similar to a private-sector business. The government-wide financial statements are prepared utilizing the economic resources measurement focus and the accrual basis of accounting. The statement of net position presents information on all the City of Frisco’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Frisco is improving or deteriorating. Other non-financial factors should also be taken into consideration, such as changes in the City’s property tax base and the condition of the City’s infrastructure (i.e. roads, drainage improvements, storm and sewer lines, etc.), to assess the overall health or financial condition of the City. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All the revenues and expenses are considered as soon as the underlying event giving rise to the item occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes, pension contributions and earned but unused vacation leave). In the statement of net position and the statement of activities, the City is divided into three kinds of activities: • Governmental activities – Most of the City’s basic services are reported here, including

police, fire, library, planning and development, traffic engineering, parks and recreation, public works, information technology services, finance, human resources and general administration. Property taxes, sales taxes, franchise taxes, charges for services and intergovernmental revenue finance most of these activities.

• Business-type activities – Includes services for which the City charges a fee to customers to cover all or most of the cost of providing such services. The City’s water and sewer system operations, stormwater operations and environmental services are reported as business-type activities.

• Component units – The City includes three separate legal entities in its report – the Frisco Economic Development Corporation, the Frisco Community Development Corporation and

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the City of Frisco Charitable Foundation. Although legally separate, these “component units” are included because the City is financially accountable for them.

Reporting the City’s Most Significant Funds Fund financial statements. The fund financial statements provide detailed information about the most significant funds – not the City as a whole. Some funds are required to be established by state law and by bond covenants. However, the City Council establishes many other funds to help it control and manage money for certain purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other monies. The City’s two kinds of funds – governmental and proprietary – utilize different accounting approaches. • Governmental funds – The majority of the City’s basic services are reported in governmental

funds, which focus on how money flows into and out of the funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method identified as the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. By comparing information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements, readers may better understand the long-term impact of the government’s near-term financing decisions. The relationships or differences between governmental activities (reported in the statement of net position and the statement of activities) and governmental funds is detailed in a reconciliation following each of the governmental fund financial statements.

The City of Frisco maintains fifteen individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the general fund, tax increment refinancing zone fund (TIRZ #1), capital projects fund, and the debt service fund, all of which are considered to be major funds. Data from the other eleven governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements starting on page 92 of this report.

• Proprietary funds – The City charges customers directly for certain services it provides.

These services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the statement of net position and the statement of activities. In fact, the City’s enterprise funds (a component of proprietary funds) are identical to the business-type activities that are reported in the government-wide statements, but enterprise fund financial statements provide more detail and additional information, such as cash flows.

The City of Frisco maintains three individual enterprise funds. The City uses enterprise funds to account for its water and sewer, storm drainage and environmental services activities. Only the water and sewer fund is considered to be a major fund of the City.

Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

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Other information. In addition to the basic financial statements and accompanying notes, this report presents certain required supplementary information concerning the City’s progress in funding its obligation to provide pension benefits and other post employment benefits to the employees. THE CITY AS A WHOLE – GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position and assets by category may serve over time as a useful indicator of the government’s financial position. In the case of the City of Frisco, assets exceeded liabilities by $1,875,702,979 as of September 30, 2019. By far the largest portion of the City’s net position (88%) reflects its investment in capital assets (e.g., land, infrastructure, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, the assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

City of Frisco Net Position September 30, 2019

2019 2018 2019 2018 2019 2018

Current and other assets 489,956,529$ 397,853,190$ 154,621,653$ 147,546,103$ 644,578,182$ 545,399,293$ Capital assets 1,778,403,096 1,686,948,609 440,313,817 420,160,035 2,218,716,913 2,107,108,644

Total assets 2,268,359,625 2,084,801,799 594,935,470 567,706,138 2,863,295,095 2,652,507,937

Deferred outflow of resources 33,635,645 23,422,018 6,641,314 5,229,920 40,276,959 28,651,938

Other liabilities 114,630,880 113,045,939 25,147,379 25,940,877 139,778,259 138,986,816 Long term liabilities 737,917,142 654,061,780 147,897,283 148,059,676 885,814,425 802,121,456

Total liabilities 852,548,022 767,107,719 173,044,662 174,000,553 1,025,592,684 941,108,272

Deferred inflow of resources 1,951,192 5,712,357 325,199 952,061 2,276,391 6,664,418

Net investment in capital assets 1,315,371,557 1,215,381,073 330,734,056 306,888,683 1,646,105,613 1,522,269,756

Restricted 77,158,120 71,803,680 37,917,240 32,201,559 115,075,360 104,005,239 Unrestricted 54,966,379 48,218,988 59,555,627 58,893,202 114,522,006 107,112,190

Total net position 1,447,496,056$ 1,335,403,741$ 428,206,923$ 397,983,444$ 1,875,702,979$ 1,733,387,185$

Governmental Activities Business Type ActivitiesTotal PrimaryGovernment

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An additional portion of the City’s net position (6%) represents resources that are subject to external restrictions on how they may be used, including bond covenants. The remaining balance of unrestricted net position $114,522,006 may be used to meet the government’s ongoing obligations to citizens and creditors in accordance with the City’s fund designation and fiscal policies. As of September 30, 2019, the City can report positive balances in all three categories, both for the government, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal years. Analysis of the City’s Operations – Overall the City had an increase in net position of $142,315,794. Governmental activities: Governmental activities increased the total net position by $112,092,315 or 79% of the total growth. Net investment in capital assets increased by $99,990,484 due to increases in capital investment (or projects completed during the year), net of increases in debt. Unrestricted net position showed an increase of $6,747,391. Restricted net position increased by $5,354,440, primarily due to increases in capital projects and restricted fees to fund the projects. Total revenues for governmental activities increased when compared to the prior year by $30,256,227. General revenue had a decrease of $4,146,884, while program revenues had an increase of $34,403,111. These were primarily due to the following factors:

General revenues: Property tax revenue includes an increase of $11.5 million and is due to a combination of the increased value in existing property and the value generated by new improvements and annexations. Sales taxes increased $1.3 million due to an increase in retail sales for the entire year. Franchise taxes and other taxes also had a net slight increase. Intergovernmental revenues decreased $21.9 million due to decreases in contributions from the component units for projects within the City. Program revenues: Charges for services increased during the year. Grants and contributions also increased this fiscal year due to additional public safety and public works grants. Capital contributions also increased during the year, for public works projects.

FY 19 Governmental Revenues

33%

11%5% 8% 3% 9%

3%

28%

Charges for Service Operating Grants Capital Grants Ad Valorem TaxSales Tax Other Tax Intergovernmental Investment Earnings

10

Total expenses for governmental activities increased $21.4 million or 8 percent. This increase is attributed to increases to provide services to the growing population. General government expenses include a payment of $17.5 million to Frisco Independent School District as part of the agreement with the TIRZ to provide property tax revenue generated in the TIRZ for school district construction expenses. Incurred expenses of $92.2 million were to provide public safety to the citizens of Frisco. These expenses were somewhat offset by the collection of revenues from various sources, including grant income and charges for services. Public works is a significant expense and provides roadway repairs and traffic control/signals for the citizens and expenses of $51.3 million were incurred. These expenses include depreciation for City infrastructure. Total salaries and benefits for the governmental activities totaled approximately $116.9 million or 41% of the total, while depreciation expense totaled $75.2 million or 26%.

FY 19 Governmental Expenses

29%

32%

18%

14%7%

General Govt Public Safety Public Works Culture & Recreation Interest on LTD

Business-type activities: Net position from business-type activities increased by $30,223,479 accounting for the remaining total growth. Program revenues of the City’s business-type activities were $151,542,111 for the fiscal year. Operating expenses totaled $120,834,623. The increase is affected by several factors, including the following:

The City’s water and sewer system recorded charges for services of $95,978,738 and impact fees and contributions of $33,909,304. Revenues showed a decrease during the year primarily due to decreased capital contributions. Total operating expenses were $101,466,829. The most significant expenses of the water and sewer fund were $31,661,764 to purchase water, $22,948,207 for the cost of sewage treatment, $17,054,509 for depreciation and $16,127,050 for salaries and benefits.

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City of Frisco’s Changes in Net Position For the year ended September 30, 2019

2019 2018 2019 2018 2019 2018Revenues

Program revenuesCharges for services 35,654,706$ 32,769,833$ 117,603,307$ 116,823,641$ 153,258,013$ 149,593,474$ Operating grants and contributions 10,992,363 7,374,981 29,500 - 11,021,863 7,374,981 Capital grants and contributions 110,727,397 82,826,541 33,909,304 40,895,889 144,636,701 123,722,430

Total program revenues 157,374,466 122,971,355 151,542,111 157,719,530 308,916,577 280,690,885

General revenuesAd valorem tax 131,952,480 120,389,122 - - 131,952,480 120,389,122 Sales tax 44,647,320 43,363,487 - - 44,647,320 43,363,487 Franchise tax 10,899,394 11,007,612 - - 10,899,394 11,007,612 Other tax 7,733,104 7,212,592 - - 7,733,104 7,212,592 Intergovernmental 32,894,962 54,774,029 114,960 169,584 33,009,922 54,943,613 Investment earnings 9,907,059 5,434,361 2,986,218 1,696,952 12,893,277 7,131,313

Total general revenues 238,034,319 242,181,203 3,101,178 1,866,536 241,135,497 244,047,739

Total revenues 395,408,785 365,152,558 154,643,289 159,586,066 550,052,074 524,738,624

ExpensesGeneral government 81,789,316 75,995,523 - - 81,789,316 75,995,523 Public safety 92,202,109 82,425,573 - - 92,202,109 82,425,573 Public works 51,333,497 49,265,749 - - 51,333,497 49,265,749 Culture and recreation 40,449,835 39,046,786 - - 40,449,835 39,046,786 Interest 21,126,900 18,785,636 - - 21,126,900 18,785,636 Water and sewer - - 101,466,829 93,666,630 101,466,829 93,666,630 Other enterprise funds - - 19,367,794 17,221,827 19,367,794 17,221,827

Total expenses 286,901,657 265,519,267 120,834,623 110,888,457 407,736,280 376,407,724

Increase in net position before transfers 108,507,128 99,633,291 33,808,666 48,697,609 142,315,794 148,330,900 Transfers 3,585,187 2,261,440 (3,585,187) (2,261,440) - -

Increase in net position 112,092,315 101,894,731 30,223,479 46,436,169 142,315,794 148,330,900

Net position, October 1 1,335,403,741 1,237,908,051 397,983,444 352,280,447 1,733,387,185 1,590,188,498 Cumulative effect of a

change in accountingprincipal – GASB 75 - (4,399,041) - (733,172) - (5,132,213)

Net position, beginning restated 1,335,403,741 1,233,509,010 397,983,444 351,547,275 1,733,387,185 1,585,056,285

Net position, September 30 1,447,496,056$ 1,335,403,741$ 428,206,923$ 397,983,444$ 1,875,702,979$ 1,733,387,185$

GovernmentalActivities

Business-typeActivities

Total PrimaryGovernment

THE CITY’S FUNDS Governmental funds - The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. Unassigned fund balance may serve as a useful measure of a government’s net resources available for spending in the next fiscal year.

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At the close of the City’s fiscal year on September 30, 2019, the governmental funds of the City reported a combined fund balance of $413,331,681, an increase of $99,088,034 in comparison with the prior year, primarily as a result of proceeds from issuing new bonds. Unassigned fund balance, which is available for spending at the government’s discretion, constitutes $72,539,025 of this balance. The remainder of fund balance is non-spendable, restricted, committed or assigned. 1) Non-spendable fund balances $2,708,253 includes prepaids and inventories held by the government, 2) Restricted balances includes bond proceeds restricted for capital projects $237,832,339, reserves to pay debt service $5,594,173, impact fee revenues restricted for capital project funding $65,554,649, TIRZ #1 balances for other purposes $6,572,023, and other special revenues restricted for a specific purpose $3,082,748, 3) Committed funds included commitments made by resolution by the governing body for insurance reserves and other post employment benefits (OPEB) $10,967,630, workforce housing programs $446,761 and the capital reserve fund $8,034,080. The general fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the general fund was $72,539,025, while total fund balance reached $93,281,641. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 45% of total general fund expenditures, while total fund balance represents 58% of that same amount. The fund balance of the City’s general fund increased $12,826,298 during the current fiscal year attributed mainly to increases in actual revenues collected for sales tax, property tax and investment earnings, while expenditures for most functional areas were less than originally budgeted. The TIRZ #1 fund has a total fund balance of $6,572,023. This amount is restricted for future projects within the zone. The changes in the fund balance are attributed to increased property tax, intergovernmental revenue and rent collections. The capital projects fund has a total fund balance of $238,887,081, $1,054,742 non-spendable for prepaid expenses and inventories. The fund balance represents unspent bond proceeds and intergovernmental revenue for roads, facilities and parks that have been received but not yet spent or recognized on specific capital projects. The increase in fund balance is due to proceeds from new debt being issued for capital projects during the fiscal year. The revenue recognized is for interest earnings on bond proceeds, intergovernmental/developer agreements for shared costs projects and charges for services. The debt service fund has a total fund balance of $5,594,173, all restricted for retirement of City debt. Proprietary Funds – The City of Frisco’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted Net Position of the enterprise funds at September 30, 2019 totaled $59,555,627. Other factors concerning the finances of these funds have already been addressed in the discussion of the business-type activities. General Fund Budgetary Highlights For FY 2019, the City Council approved a final appropriation in September 2019 with the total amount of the appropriation equaling $177.1 million including transfers out to other City funds. Amendments were made to reallocate funds appropriated to more accurately account for estimated revenues and expenditures.

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With the budget amendments made during the fiscal year, the actual expenditures on a budgetary basis were $158.9 million compared to the re-estimated (revised) budget amount of $176.4 million. The $17.5 million variance in total expenditures (excluding transfers out) is attributed to savings in the general fund for operational dollars budgeted but not required or expended by September 30. The actual (on a budgetary basis excluding transfers in) revenues were $170.7 million as compared to the re-estimated (revised) budget amount of $170.2 million excluding transfers. The $.5 million variance in total revenues is attributed to increases over projections in property tax, sales tax, rents, interest earnings and charges for services collections, with decreases under projections in licenses and permits and franchise tax collections. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital assets. At the end of the year, the City had $3,141,135,242 invested in a broad range of capital assets, including land, buildings, park facilities, roads, bridges, water & sewer lines, police and fire equipment, and public works operating equipment and machinery. This amount represents a net increase (including additions and deductions) of $200,840,856 over the prior fiscal year. Total accumulated depreciation for September 30, 2019, was $922,418,329 for net capital assets of $2,218,716,913.

Capital Assets for the Year Ended September 30, 2019

2019 2018 2019 2018 2019 2018

Land 346,239,015$ 285,568,207$ 10,543,522$ 10,543,522$ 356,782,537$ 296,111,729$ Building & improvements 687,533,603 682,700,719 10,178,723 10,123,598 697,712,326 692,824,317 Machinery & equipment 81,528,189 73,302,791 10,760,469 10,315,487 92,288,658 83,618,278 Construction-in-progress 109,937,918 83,982,099 33,013,780 57,834,717 142,951,698 141,816,816 Improvements other than buildings 1,276,246,181 1,211,988,565 575,153,842 513,934,681 1,851,400,023 1,725,923,246 Total capital assets 2,501,484,906 2,337,542,381 639,650,336 602,752,005 3,141,135,242 2,940,294,386 Less: Accumulated depreciation (723,081,810) (650,593,772) (199,336,519) (182,591,970) (922,418,329) (833,185,742) Total 1,778,403,096$ 1,686,948,609$ 440,313,817$ 420,160,035$ 2,218,716,913$ 2,107,108,644$

GovernmentalActivities

Business-typeActivities

Total PrimaryGovernment

Land purchased included park land along with various right-of-ways for roads and utilities. Improvements other than buildings include park construction projects and the developer contributions for road construction throughout the City, as well as traffic signals and lighting projects. Vehicles, machinery and some equipment were added during the year based on our equipment replacement schedule. The City’s 2020 Capital Project Multi-Year Budget calls for a continuation of the Capital Project Plan. Funding for several major roadway projects, Grand Park and other community parks, fire equipment, facility expansions and new construction and utility system infrastructure are included in the 2020 Plan.

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Additional information regarding capital assets can be found in Note 6. Debt administration. At year-end, the City had $890,300,552 in debt outstanding as compared to $825,074,275 at the end of the prior fiscal year, an increase of 8% – as shown below.

Outstanding Debt, September 30, 2019

2019 2018 2019 2018 2019 2018General obligation

bonds 515,948,510$ 491,948,330$ 52,846,584$ 61,370,686$ 568,795,094$ 553,319,016$ Certificates of

obligation bonds 222,128,248 178,133,394 99,377,210 93,621,865 321,505,458 271,755,259

Totals 738,076,758$ 670,081,724$ 152,223,794$ 154,992,551$ 890,300,552$ 825,074,275$

Governmental Business-type Total PrimaryActivities Activities Government

In February 2019, the City issued Combination Tax and Revenue Certificates of Obligation, Series 2019, in the amount of $35,000,000 with a net premium of $170,775. Proceeds from the sale of bonds will be used for constructing golf courses, a clubhouse, public hike and bike trails, public parking areas and to pay the costs of issuance associated with the sale of the bonds. In June 2019, the City issued General Obligation Bonds, Series 2019, in the amount of $63,790,000 with a net premium of $5,542,855. Proceeds from the sale of bonds will be used for constructing and improving streets and roads, bridges and intersections; constructing, improving and equipping public safety facilities, including fire department facilities and the acquisition of fire trucks and equipment; the public works facility, municipal library and municipal center and to pay the costs of issuance associated with the sale of the bonds. In June 2019, the City issued Combination Tax and Surplus Revenue Certificates of Obligation, Series 2019A, in the amount of $9,595,000 with a net premium of $566,891. Proceeds from the sale of the certificates are to be used for water, sewer and water reuse infrastructure improvements, and to pay the costs associated with the issuance of the certificates. In June 2019, the City of Frisco issued Combination Tax and Surplus Revenue Certificates of Obligation, Series 2019B, in the amount of $16,535,000, with a net premium of $144,926. Proceeds from the sale of the 2019B Certificates will be used for acquiring, constructing and equipping a public conference center, meeting and exhibit center, and paying the costs associated with the issuance of the 2019B Certificates. Additional information regarding the City’s outstanding debt can be found in Note 8. The City’s assigned ratings for general obligation bonds and certificates of obligation bonds were as follows during FY 2019:

Standard & Poor’s Corporation

Moody’s Investor Services

General Obligation Bonds AAA Aaa Certificates of Obligation Bonds AAA Aaa

This rating has been assigned to the City’s tax-supported debt. The City is permitted by state law and provisions to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services including the payment of principal and interest on general obligation

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long-term debt. The current ratio of general obligation debt to assessed value of all taxable property is 1.87%. In January 2019, the City’s assigned ratings for general obligation bonds and certificates of obligation bonds were affirmed by Moody’s at Aaa and increased by Standard & Poor’s to AAA. Authorized bonds remain unissued from the 2006 Election, the 2015 Election and the 2019 Election.

Authorized but Unissued Debt September 30, 2019

Issued FY2019

Branch Library (Prop. 5) 8,000,000$ -$ -$ 8,000,000$ Senior Center (Prop. 7) 2,500,000 - - 2,500,000$ Community Cultural Arts (Prop. 8) 5,000,000 3,000,000 - 2,000,000$ Grand Park (Prop.12) 22,500,000 12,000,000 - 10,500,000

Remaining 38,000,000 15,000,000 - 23,000,000

Election May 9, 2015Public Safety (Prop. 1) 41,500,000 41,500,000 - - Street Improvements (Prop.2) 125,000,000 125,000,000 - - City Hall Expansion (Prop. 4) 37,000,000 5,000,000 10,000,000 22,000,000 Parks, Trails and Rec Facilities (Prop. 6) 32,000,000 32,000,000 - - Grand Park (Prop. 7) 10,000,000 - - 10,000,000 Community Cultural Arts (Prop. 8) 10,000,000 - - 10,000,000

Remaining 255,500,000 203,500,000 10,000,000 42,000,000

Election May 4, 2019Public Safety (Prop. A) 62,500,000 - 18,000,000 44,500,000 Street Improvements (Prop. B) 155,000,000 - 30,000,000 125,000,000 Public Works & Technology (Prop. C) 12,000,000 - 4,000,000 8,000,000 Library (Prop. D) 62,000,000 - 7,000,000 55,000,000 Parks, Trails and Rec Facilities (Prop. E) 53,500,000 - - 53,500,000

Remaining 345,000,000 - 59,000,000 286,000,000

Total Authorized/Unissued Bonds 638,500,000$ 218,500,000$ 69,000,000$ 351,000,000$

Election May 13, 2006 Voted BondsIssued Prior

YearsUnissued Balance

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City’s elected and appointed officials considered many factors when setting the fiscal year 2020 budget appropriation, tax rates, and fees that will be charged for the business-type activities. Current economic indicators were considered when adopting the general fund budget. The combined budget appropriation totaled $175 million. This represents an increase of $1.7 million from the FY 2019 revised budgets.

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The general fund’s largest revenue source is property tax receipts. Ad valorem tax revenue is determined by two major factors: the total assessed value established by the Central Appraisal District of Collin County and Central Appraisal District of Denton County and the tax rate established by the Frisco City Council. For the new fiscal year, we saw gains in new improvements of 5.68%, and a gain on existing property of 2.16%. According to final figures received from the CAD’s, the total certified assessed property value for FY 2020 is $29.4 billion. Council approved a tax rate of $0.4466 per $100 of valuation the same as the FY 2019 tax rate of $0.4466. Council maintained the homestead tax exemption for FY 2020 for a total of 10.0%. As for the City’s business-type activities, City projections indicate that the water and sewer fund unassigned net position will be approximately $47 million. A fee increase for water sales and sewer services was approved and effective in January 2020. Appropriations are to be used for capital projects in the utility construction projects fund, operating expenses, and bond interest and fiscal charges. Texas Senate Bill 2 which was passed during the 2019 Legislative Session in order to limit property tax growth to 3.5% is effective for the FY 2021 budget. However, the City of Frisco included the effects of this Bill a year early with the development and approval of the FY 2020 Budget. For the first time in many years, the City only added seven total new positions to the workforce, four police officers and three environmental services employees. Replacement capital was funded, but no new programs or capital were funded in the FY 2020 budget. Staff will do what is necessary to provide the citizens and visitors with all the services required of our City. CONTACTING THE CITY’S FINANCIAL MANAGEMENT STAFF This financial report is designed to provide our residents, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City’s Finance Department at 6101 Frisco Square Boulevard, 4th Floor Finance Office, Frisco, Texas 75034. The Finance Department also presents the Citizen’s Annual Financial Report, a condensed version of the financial position presented in the CAFR, online at the City’s website www.friscotexas.gov.

http://www.friscotexas.gov/

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BASIC FINANCIAL STATEMENTS

The notes to the basic financial statements are an integral part of this statement.

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Primary Government

Governmental Business-type ComponentActivities Activities Total Units198,010,942$ 26,389,177$ 224,400,119$ 30,176,961$ 242,799,428 33,414,909 276,214,337 36,671,569

20,394,073 13,973,217 34,367,290 8,014,271 1,855,291 823,187 2,678,478 -

852,962 134,798 987,760 47,481 2,780,000 - 2,780,000 350,000

- 35,915,811 35,915,811 3,005,877 - 43,970,554 43,970,554 5,600,000

23,263,833 - 23,263,833 120,000 - - - 78,551,958

City of Frisco Statement of Net PositionFor the Year Ended September 30, 2019

ASSETSCash and cash equivalentsInvestmentsReceivables (net of allowance for uncollectibles) InventoriesPrepaidsNotes receivableRestricted assets:

Cash and cash equivalentsInvestments

Notes receivable - noncurrentLand held for resaleCapital assets:

Land 346,239,015 10,543,522 356,782,537 85,954,615 Buildings and improvements 687,533,603 10,178,723 697,712,326 10,289,256 Improvements other than buildings 1,276,246,181 575,153,842 1,851,400,023 18,603,502 Machinery and equipment 81,528,189 10,760,469 92,288,658 347,608 Construction in progress 109,937,918 33,013,780 142,951,698 215,053 Accumulated depreciation (723,081,810) (199,336,519) (922,418,329) (25,627,421)

Total assets 2,268,359,625 594,935,470 2,863,295,095 252,320,730

DEFERRED OUTFLOWS OF RESOURCESPension contributions and investment experience 21,061,180 3,510,195 24,571,375 501,458 OPEB contributions 896,585 149,432 1,046,017 21,348 Deferred charge on bond refunding 11,677,880 2,981,687 14,659,567 744,580

Total deferred outflows of resources 33,635,645 6,641,314 40,276,959 1,267,386

LIABILITIESAccounts and retainage payable 25,385,541 4,342,935 29,728,476 1,607,872 Accrued liabilities 1,907,906 765,341 2,673,247 95,853 Accrued interest payable 3,978,376 774,811 4,753,187 620,237 Customer deposits - 4,605,350 4,605,350 76,118 Unearned revenue 3,567,554 - 3,567,554 5,000 Monies held in escrow 14,792,773 94,986 14,887,759 - Non-current liabilities:

Due within one year:Compensated absences 7,759,357 1,098,826 8,858,183 126,251 Notes payable - - - 4,047,664 Bonds payable 57,239,373 13,465,130 70,704,503 5,410,551

Due in more than one year:Compensated absences 5,429,087 530,177 5,959,264 71,963 Pension 45,977,739 7,662,956 53,640,695 1,094,708 OPEB 5,672,931 945,486 6,618,417 135,070 Notes payable - - - 31,830,260 Bonds payable 680,837,385 138,758,664 819,596,049 96,292,009

Total liabilities 852,548,022 173,044,662 1,025,592,684 141,413,556

DEFERRED INFLOWS OF RESOURCESPension actuarial experience 1,144,534 190,757 1,335,291 27,250 OPEB actuarial experience 806,658 134,442 941,100 19,206

Total deferred inflows of resources 1,951,192 325,199 2,276,391 46,456

NET POSITIONNet investment in capital assets 1,315,371,557 330,734,056 1,646,105,613 31,941,233 Restricted for:

Capital projects 65,554,649 37,917,240 103,471,889 - Tax increment reinvestment zone 6,572,023 - 6,572,023 - Other purposes 3,082,748 - 3,082,748 - Debt service 1,948,700 - 1,948,700 7,985,640

Unrestricted 54,966,379 59,555,627 114,522,006 72,201,231

Total net position 1,447,496,056$ 428,206,923$ 1,875,702,979$ 112,128,104$

City of Frisco Statement of Activities For the Year Ended September 30, 2019


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Program Revenues

Operating CapitalCharges for Grants and Grants and

Function/Programs Expenses Services Contributions ContributionsPrimary GovernmentGovernmental activities:

General government 81,789,316$ 25,060,656$ 452,767$ 2,610$ Public safety 92,202,109 4,513,162 4,636,513 132,053Public works 51,333,497 239,853 4,180,228 105,189,361Culture and recreation 40,449,835 5,841,035 1,722,855 5,403,373Interest on long-term debt 21,126,900 - - -

Total governmental activities 286,901,657 35,654,706 10,992,363 110,727,397

Business-type activities:Water and sewer 101,466,829 95,978,738 29,500 33,909,304 Non-major enterprise funds 19,367,794 21,624,569 - -

Total business-type activities 120,834,623 117,603,307 29,500 33,909,304

Total primary government 407,736,280$ 153,258,013$ 11,021,863$ 144,636,701$

Component unit:Community development 10,986,780$ 3,187,173$ -$ 290,735$ Economic development 15,058,561 - 203,775 19,292,510 Charitable foundation 14,631 - 15,477 -

Total component units 26,059,972$ 3,187,173$ 219,252$ 19,583,245$

General revenues: Ad valorem taxes Sales taxes Franchise taxes Other taxes Ad valorem tax for TIRZ funds, intergovernmental revenues Investment earningsTransfers Total general revenues

Change in net position

Net position, beginning

Net position, ending

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Governmental Business-type Component Activities Activities Total Units

(56,273,283)$ -$ (56,273,283)$ (82,920,381) - (82,920,381) 58,275,945 - 58,275,945

(27,482,572) - (27,482,572) (21,126,900) - (21,126,900)

(129,527,191) - (129,527,191)

- 28,450,713 28,450,713 - 2,256,775 2,256,775

- 30,707,488 30,707,488

(129,527,191) 30,707,488 (98,819,703)

(7,508,872)$ 4,437,724

846

(3,070,302)

131,952,480 - 131,952,480 - 44,647,320 - 44,647,320 44,647,32010,899,394 - 10,899,394 - 7,733,104 - 7,733,104 -

32,894,962 114,960 33,009,922 2,790,2559,907,059 2,986,218 12,893,277 2,158,8553,585,187 (3,585,187) - -

241,619,506 (484,009) 241,135,497 49,596,430

112,092,315 30,223,479 142,315,794 46,526,128

1,335,403,741 397,983,444 1,733,387,185 65,601,976

1,447,496,056$ 428,206,923$ 1,875,702,979$ 112,128,104$

Net (Expense) Revenue and Changes in Net PositionPrimary Government

City of Frisco Balance Sheet Governmental Funds September 30, 2019


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General TIRZ #1Capital Projects Debt Service

Other Governmental

Funds

Total Governmental

FundsASSETS

Cash and cash equivalents 40,850,229$ 10,255,677$ 124,098,202$ 1,203,075$ 21,603,759$ 198,010,942$ Investments 53,068,351 - 138,875,178 4,301,176 46,554,723 242,799,428 Receivables (net of

allowance for uncollectibles):Property taxes 719,803 - - 408,336 - 1,128,139 Sales taxes 7,835,467 - - - - 7,835,467 Franchise taxes 5,371,359 - - - 82,099 5,453,458 Occupancy tax - - - - 550,436 550,436 Grants - - - - 735,898 735,898 Assessments - - - - 1,850,935 1,850,935 Other 1,710,334 41,250 678,915 14,489 245,390 2,690,378

Due from other funds 1,733,126 - - - - 1,733,126 Inventories 800,549 - 1,054,742 - - 1,855,291 Prepaids 493,596 - - - 359,366 852,962 Notes receivable 135,833 - 373,000 - - 508,833

Total assets 112,718,647$ 10,296,927$ 265,080,037$ 5,927,076$ 71,982,606$ 466,005,293$

LIABILITIES, DEFERRED INFLOWS, FUND BALANCESLiabilities:

Accounts payable 12,103,710 1,418,602 8,769,725 - 211,246 22,503,283 Retainage payable - - 2,882,258 - - 2,882,258 Accrued liabilities 1,833,555 - - - 74,351 1,907,906 Unearned revenue 868,241 1,963,415 - - 735,898 3,567,554 Monies held in escrow 51,441 342,887 14,167,223 - 231,222 14,792,773 Due to other funds - - - - 1,733,126 1,733,126

Total liabilities 14,856,947 3,724,904 25,819,206 - 2,985,843 47,386,900

Deferred inflows of resources:Unavailable revenue 4,580,059 - 373,750 332,903 - 5,286,712

FUND BALANCESNonspendable 1,294,145 - 1,054,742 - 359,366 2,708,253 Restricted for:

Debt service - - - 5,594,173 - 5,594,173 Capital projects for future construction - - 237,832,339 - 65,554,649 303,386,988 Special revenue for future commitments - 6,572,023 - - 3,082,748 9,654,771

Committed to:Insurance 10,967,630 - - - - 10,967,630 Workforce housing 446,761 - - - - 446,761 Capital projects for future construction 8,034,080 - - - - 8,034,080

Unassigned 72,539,025 - - - - 72,539,025

Total fund balances 93,281,641 6,572,023 238,887,081 5,594,173 68,996,763 413,331,681

Total liabilities, deferred inflow of resources, and fund balances 112,718,647$ 10,296,927$ 265,080,037$ 5,927,076$ 71,982,606$ 466,005,293$

City of Frisco Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position September 30, 2019


23

Amounts reported for governmental activities in the statement of net positionare different because:

Total fund balances per balance sheet 413,331,681$

Capital assets used in governmental activities are not financial resources and, therefore, are not reported at the fund level. 1,778,403,096

Deferred outflow of resources are not financial resourcesand, therefore, are not reported at the fund level. 33,635,645

Other long-term assets are not available to pay for current-period expenditures,and, therefore, are unavailable at the fund level. 5,286,712

Other assets are not available to pay for current-period expenditures,and, therefore, are not included at the fund level. 25,684,362

Long-term liabilities, including bonds payable, pension liabilities, OPEB, compensated absences, and accrued interest payable are not due and payable in the current period and, therefore, are not reported at the fund level. (806,894,248)

Deferred inflow of resources are not financial resourcesand, therefore, are not reported at the fund level. (1,951,192)

NET POSITION OF GOVERNMENTAL ACTIVITIES 1,447,496,056$

City of Frisco Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended September 30, 2019


24

General TIRZ #1Capital Projects Debt Service

Other Governmental

Funds

Total Governmental

FundsREVENUES

Taxes:Property 81,862,254$ 7,068,700$ - 42,459,806$ 864,501$ 132,255,261$ Sales 44,452,378 - - - 194,942 44,647,320 Franchise 10,571,889 - - - 327,505 10,899,394 Hotel/motel - - - - 6,585,178 6,585,178 Other 1,147,926 - - - - 1,147,926

Licenses and permits 11,845,079 - - - - 11,845,079 Intergovernmental 2,931,555 26,366,982 1,281,232 - 925,607 31,505,376 Charges for services 9,351,713 - 3,014,552 - 74,405 12,440,670 Fines 2,511,949 - - - 278,349 2,790,298 Special assessments - - - - 12,269,748 12,269,748 Rents 2,939,406 4,918,832 - - 10,000 7,868,238 Investment earnings 2,565,103 170,736 5,079,941 343,494 1,764,667 9,923,941 Contributions, donations and grants 124,627 48,460 2,853,688 - 7,100,442 10,127,217 Payments from component units 60,000 3,759,819 725,745 1,982,417 - 6,527,981 Miscellaneous 317,466 - 72,751 - 25,678 415,895

Total revenues 170,681,345 42,333,529 13,027,909 44,785,717 30,421,022 301,249,522

EXPENDITURES Current:

General government 38,848,884 22,280,204 - - 527,116 61,656,204 Public safety 79,620,854 - - - 2,550,438 82,171,292 Public works 13,733,701 - - - 50,978 13,784,679 Culture and recreation 20,429,353 - - - 6,010,184 26,439,537

Capital outlay (includes $1,247,764 not capitalized) 6,877,854 - 67,386,322 - 425,126 74,689,302

Debt service:Principal retirement - - - 42,870,000 - 42,870,000 Interest and fiscal charges - - 827,336 25,700,370 - 26,527,706

Total expenditures 159,510,646 22,280,204 68,213,658 68,570,370 9,563,842 328,138,720

Excess (Deficiency) of revenuesover (under) expenditures 11,170,699 20,053,325 (55,185,749) (23,784,653) 20,857,180 (26,889,198)

OTHER FINANCING SOURCES (USES)Issuance of debt - - 115,325,000 - - 115,325,000 Premium on bonds issued - - 5,881,139 - - 5,881,139 Discount on bonds issued - - (22,583) - - (22,583) Proceeds from sale of assets 1,208,489 - - - - 1,208,489 Transfers in 1,045,312 1,421,513 14,325,624 23,197,022 598,202 40,587,673 Transfers out (598,202) (20,582,246) - - (15,822,038) (37,002,486) Total other financing sources and uses 1,655,599 (19,160,733) 135,509,180 23,197,022 (15,223,836) 125,977,232

Net change in fund balances 12,826,298 892,592 80,323,431 (587,631) 5,633,344 99,088,034

Fund balances, beginning 80,455,343 5,679,431 158,563,650 6,181,804 63,363,419 314,243,647

Fund balances, ending 93,281,641$ 6,572,023$ 238,887,081$ 5,594,173$ 68,996,763$ 413,331,681$

City of Frisco 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, 2019


25

Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balance - total governmental funds 99,088,034$

Governmental funds report capital outlays as expenditures. However, in the statement ofactivities the cost of those assets is allocated over their estimated useful lives and reportedas depreciation expense. This is the amount by which capital outlay and developer's contributions exceeded depreciation in the current period. 91,454,487

Revenues in the statement of activities that do not provide current financialresources are not reported as revenues in the funds. (325,937)

The issuance of long-term debt (e.g., bonds) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment (72,523,335) of long-term debt and related items.

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (5,600,934)

CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES112,092,315$

City of Frisco General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual For the Fiscal Year Ended September 30, 2019


26

Variance with Actual on a Adjustments- Actual on a Final Budget -

GAAP Budgetary Budgetary PositiveOriginal Final Basis Basis Basis (Negative)

REVENUESTaxes:

Property 82,538,430$ 82,538,430$ 81,862,254$ -$ 81,862,254$ (676,176)$ Sales 46,785,104 43,785,104 44,452,378 - 44,452,378 667,274 Franchise 10,649,743 10,649,743 10,571,889 - 10,571,889 (77,854) Other 1,027,530 1,027,530 1,147,926 - 1,147,926 120,396

Licenses and permits 12,677,795 13,012,795 11,845,079 - 11,845,079 (1,167,716) Intergovernmental 2,166,413 2,166,413 2,931,555 - 2,931,555 765,142 Charges for services 9,126,357 9,281,357 9,351,713 - 9,351,713 70,356 Fines 2,243,745 2,375,745 2,511,949 - 2,511,949 136,204 Rents 2,506,863 2,836,165 2,939,406 - 2,939,406 103,241 Investment earnings 967,900 2,236,688 2,565,103 - 2,565,103 328,415 Contributions, donations and grants 144,960 135,960 124,627 - 124,627 (11,333) Payments from component units 50,000 60,000 60,000 - 60,000 - Miscellaneous 694,617 89,617 317,466 - 317,466 227,849

Total revenues 171,579,457 170,195,547 170,681,345 - 170,681,345 485,798


General government 46,971,984 50,544,113 38,848,884 164,133 39,013,017 11,531,096 Public safety 82,605,298 81,677,209 79,620,854 (73,729) 79,547,125 2,130,084 Public works 14,338,331 14,809,216 13,733,701 73,352 13,807,053 1,002,163 Culture and recreation 21,618,429 21,538,912 20,429,353 (75,609) 20,353,744 1,185,168

Capital outlay 7,369,936 7,854,910 6,877,854 (687,327) 6,190,527 1,664,383

Total expenditures 172,903,978 176,424,360 159,510,646 (599,180) 158,911,466 17,512,894

Excess (Deficiency) of revenuesover (under) expenditures (1,324,521) (6,228,813) 11,170,699 599,180 11,769,879 17,998,692

OTHER FINANCING SOURCES (USES)Proceeds from sale of assets - 515,000 1,208,489 - 1,208,489 693,489 Transfers in 1,045,312 1,045,312 1,045,312 - 1,045,312 - Transfers out (150,000) (653,329) (598,202) - (598,202) 55,127

Total other financing sources and uses 895,312 906,983 1,655,599 - 1,655,599 748,616

Net change in fund balances (429,209) (5,321,830) 12,826,298 599,180 13,425,478 18,747,308

Fund balances, beginning 67,597,718 80,455,343 80,455,343 (2,751,046) 77,704,297 (2,751,046)

Fund balances, ending 67,168,509$ 75,133,513$ 93,281,641$ (2,151,866)$ 91,129,775$ 15,996,262$

Budgeted Amounts

Adjustments to Revenues, Expenditures and Other Financing Sources and Uses from GAAP Basis to Budgetary Basis For the Fiscal Year Ended September 30, 2019

Net Changein Fund Balance

GAAP basis 12,826,298$

Expenditures:Increase due to encumbrances from prior year 2,751,046 Decrease due to encumbrances for current year (2,151,866)

Budgetary basis 13,425,478$

City of Frisco TIRZ #1 Fund Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual For the Fiscal Year Ended September 30, 2019


27

Variance with Actual on a Adjustments- Actual on a Final Budget -

GAAP Budgetary Budgetary PositiveOriginal Final Basis Basis Basis (Negative)

REVENUESTaxes:

Property 7,076,619 7,068,700 7,068,700 - 7,068,700 - Intergovernmental 26,836,118 26,366,982 26,366,982 - 26,366,982 -

Rents 4,967,060 4,967,061 4,918,832 - 4,918,832 (48,229) Investment earnings 66,600 150,113 170,736 - 170,736 20,623 Contributions, donations and grants - - 48,460 - 48,460 48,460 Payments from component units 3,735,669 3,759,819 3,759,819 - 3,759,819 -

Total revenues 42,682,066 42,312,675 42,333,529 - 42,333,529 20,854


General government 21,710,241 22,280,204 22,280,204 - 22,280,204 -

Total expenditures 21,710,241 22,280,204 22,280,204 - 22,280,204 -

Excess (Deficiency) of revenuesover (under) expenditures 20,971,825 20,032,471 20,053,325 - 20,053,325 20,854

OTHER FINANCING SOURCES (USES)Transfers in 1,447,200 1,421,513 1,421,513 - 1,421,513 - Transfers out (20,635,017) (20,582,246) (20,582,246) - (20,582,246) -

Total other financing sources and uses (19,187,817) (19,160,733) (19,160,733) - (19,160,733) -

Net change in fund balances 1,784,008 871,738 892,592 - 892,592 20,854

Fund balances, beginning 5,070,629 5,679,431 5,679,431 - 5,679,431 -

Fund balances, ending 6,854,637$ 6,551,169$ 6,572,023$ -$ 6,572,023$ 20,854$

Budgeted Amounts

City of Frisco Statement of Net Position Proprietary Funds September 30, 2019


28

OtherWater and Enterprise

Sewer Funds TotalASSETS

Current assets:Cash and cash equivalents 19,772,153$ 6,617,024$ 26,389,177$ Investments 27,621,224 5,793,685 33,414,909 Receivables (net of allowances for uncollectibles)

Utility bills 12,648,961 496,524 13,145,485 Other 827,732 - 827,732

Inventories 823,187 - 823,187 Prepaids 134,798 - 134,798 Restricted cash and cash equivalents 35,915,811 - 35,915,811 Restricted investments 43,970,554 - 43,970,554

Total current assets 141,714,420 12,907,233 154,621,653

Non-current assets:Capital assets:

Land 10,543,522 - 10,543,522 Buildings and improvements 10,030,981 147,742 10,178,723 Improvements other than buildings 575,061,652 92,190 575,153,842 Machinery and equipment 8,910,974 1,849,495 10,760,469 Construction in progress 33,013,780 - 33,013,780 Accumulated depreciation (198,096,240) (1,240,279) (199,336,519)

Total capital assets (net of accumulated depreciation) 439,464,669 849,148 440,313,817

Total non-current assets 439,464,669 849,148 440,313,817

Total assets 581,179,089 13,756,381 594,935,470

DEFERRED OUTFLOWS OF RESOURCESPension contributions and investment experience 3,008,739 501,456 3,510,195 OPEB 128,084 21,348 149,432Deferred charge on bond refunding 2,981,687 - 2,981,687

Total deferred outflows of resources 6,118,510 522,804 6,641,314

Business-type ActivitiesEnterprise Funds

29


Sewer Funds TotalLIABILITIES

Current liabilities:Accounts payable 3,235,534$ 1,107,401$ 4,342,935$ Accrued liabilities 643,689 121,652 765,341Accrued interest payable 774,811 - 774,811 Customer deposits payable 4,605,350 - 4,605,350 Monies held in escrow - 94,986 94,986 Liability for compensated absences 904,850 193,976 1,098,826 Bonds payable 13,465,130 - 13,465,130

Total current liabilities 23,629,364 1,518,015 25,147,379

Non-current liabilities:Liability for compensated absences 423,088 107,089 530,177 Pension 6,568,248 1,094,708 7,662,956 OPEB 810,418 135,068 945,486 Bonds payable 138,758,664 - 138,758,664

Total noncurrent liabilities 146,560,418 1,336,865 147,897,283

Total liabilities 170,189,782 2,854,880 173,044,662

DEFERRED INFLOWS OF RESOURCESPension assumptions and investment earnings 163,505 27,252 190,757OPEB 115,236 19,206 134,442

Total deferred inflows of resources 278,741 46,458 325,199

NET POSITIONNet investment in capital assets 329,884,908 849,148 330,734,056Restricted for:

Capital projects 37,917,240 - 37,917,240Unrestricted 49,026,928 10,528,699 59,555,627

Total net position 416,829,076$ 11,377,847$ 428,206,923$

Enterprise FundsBusiness-type Activities

City of Frisco Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended September 30, 2019


31


Sewer Funds TotalOPERATING REVENUES

Charges for sales and services:Water 51,399,837$ -$ 51,399,837$ Sewer charges 37,980,934 - 37,980,934 Service charges 2,022,502 - 2,022,502 Sanitation charges - 17,603,749 17,603,749 Water and sewer connections 1,465,530 - 1,465,530 Inspection fees 2,972,285 - 2,972,285 Stormwater drainage fees - 3,965,159 3,965,159 Miscellaneous 43,722 41,210 84,932

Total operating revenues 95,884,810 21,610,118 117,494,928

OPERATING EXPENSESCost of sales and services 54,663,717 15,101,570 69,765,287 Administration 25,908,035 4,043,693 29,951,728 Depreciation 17,054,509 222,531 17,277,040 Amortization 522,261 - 522,261

Total operating expenses 98,148,522 19,367,794 117,516,316

Operating income (loss) (2,263,712) 2,242,324 (21,388)

NONOPERATING REVENUES (EXPENSES)Interest revenue 2,779,110 207,108 2,986,218 Intergovernmental contribution 114,960 - 114,960 Reimbursements 29,500 - 29,500 Gain on sale of equipment 93,928 14,451 108,379 Interest expense (3,318,307) - (3,318,307)

Total non-operating revenues (expenses) (300,809) 221,559 (79,250)

Income (loss) before capital contributions (2,564,521) 2,463,883 (100,638)

CAPITAL CONTRIBUTIONSCapital contributions 33,909,304 - 33,909,304

Income before transfers 31,344,783 2,463,883 33,808,666

TRANSFERSTransfers in 345,530 - 345,530 Transfers out (1,997,336) (1,933,381) (3,930,717)

Total transfers (1,651,806) (1,933,381) (3,585,187)

Change in net position 29,692,977 530,502 30,223,479

Net position, beginning 387,136,099 10,847,345 397,983,444 Net position, ending 416,829,076$ 11,377,847$ 428,206,923$


City of Frisco Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended September 30, 2019


32


Sewer Funds TotalCASH FLOWS FROM OPERATING ACTIVITIES

Cash received from customers 93,973,936$ 21,568,908$ 115,542,844$ Cash payments to suppliers for goods and services (63,652,606) (16,592,053) (80,244,659) Cash payments to employees for services (15,561,472) (2,672,354) (18,233,826) Other receipts 43,722 41,210 84,932

Net cash provided/(used) by operating activities 14,803,580 2,345,711 17,149,291

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESTransfers received from other funds 345,530 - 345,530 Transfers made to other funds - (1,148,754) (1,148,754) Contributions 144,460 - 144,460

Net cash provided/(used) by noncapital financing activities 489,990 (1,148,754) (658,764)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESAcquisition and construction of capital assets (12,577,522) (287,155) (12,864,677) Proceeds from sale or transfer of equipment 174,510 14,451 188,961 Principal paid on long-term debt (11,005,000) - (11,005,000) Interest and fees paid on long-term debt (6,167,859) - (6,167,859) Bond proceeds net of issuance costs 10,161,891 - 10,161,891 Intergovernmental payments for capital construction (1,997,336) (784,627) (2,781,963) Developers contributions 8,936,060 - 8,936,060

Net cash provided/(used) in capital and related financing activities (12,475,256) (1,057,331) (13,532,587)

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of investment securities (71,591,778) (5,793,685) (77,385,463) Proceeds from sale and maturities of investment securities 66,456,289 5,789,325 72,245,614 Interest on investments 2,596,177 195,096 2,791,273

Net cash provided/(used) by investing activities (2,539,312) 190,736 (2,348,576)

Net increase in cash and cash equivalents 279,002 330,362 609,364

Cash and cash equivalents, beginning 55,408,962 6,286,662 61,695,624

Cash and cash equivalents, ending 55,687,964$ 6,617,024$ 62,304,988$

CLASSIFIED ASCurrent assets 19,772,153$ 6,617,024$ 26,389,177$ Restricted assets 35,915,811 - 35,915,811

Total cash and cash equivalents 55,687,964$ 6,617,024$ 62,304,988$



33


Sewer Funds TotalRECONCILIATION OF OPERATING INCOME TO NET CASH

PROVIDED BY OPERATING ACTIVITIES

Operating income (2,263,712)$ 2,242,324$ (21,388)$

Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation 17,054,509 222,531 17,277,040 Amortization 522,261 - 522,261

Change in assets and liabilities:(Increase) decrease in-

Receivables - utility bills (2,066,150) - (2,066,150) Receivables - other 1,432,224 (459,051) 973,173 Prepaid expenses and other assets (73,435) 775 (72,660) Inventories 34,244 - 34,244

Increase (decrease) in-Accounts payable (600,935) 184,787 (416,148) Accrued liabilities 39,220 27,343 66,563 Liability for compensated absences 1,389 39,506 40,895 Net pension liability 435,606 72,602 508,208 OPEB 89,361 14,894 104,255 Deposits and escrows 198,998 - 198,998

Total adjustments 17,067,292 103,387 17,170,679

Net cash provided by operating activities 14,803,580$ 2,345,711$ 17,149,291$

SCHEDULE OF NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES

During the year, various developers made non-cash contributions of water and sewer infrastructure to the City valued at $24,973,244.


City of Frisco Combining Statement of Net Position Component Units September 30, 2019


35

Community Economic CharitableDevelopment Development Foundation Total

ASSETSCurrent:

Cash and cash equivalents 16,222,696$ 13,940,984$ 13,281$ 30,176,961$ Investments 18,975,983 17,695,586 - 36,671,569 Receivables:

Sales tax 3,917,734 3,917,734 - 7,835,468 Other 119,778 59,025 - 178,803

Prepaid expenses - 47,481 - 47,481 Notes receivable - 350,000 - 350,000

Total current assets 39,236,191 36,010,810 13,281 75,260,282

Non-current:Notes receivable 120,000 - - 120,000 Land held for resale 33,316,565 45,235,393 - 78,551,958

Capital assets:Land 69,816,814 16,137,801 - 85,954,615 Buildings and improvements 10,228,293 60,963 - 10,289,256 Improvements other than buildings 18,603,502 - - 18,603,502Machinery and equipment 118,213 229,395 - 347,608 Construction in progress 215,053 - - 215,053 Accumulated depreciation (25,382,754) (244,667) - (25,627,421)

Restricted assets:Cash and cash equivalents 1,709,035 1,296,842 - 3,005,877 Investments 1,900,000 3,700,000 - 5,600,000

Total non-current assets 110,644,721 66,415,727 - 177,060,448

Total assets 149,880,912 102,426,537 13,281 252,320,730

DEFERRED OUTFLOWS OF RESOURCESPension contributions and investment experience - 501,458 - 501,458 OPEB - 21,348 - 21,348 Deferred charge on bond refunding 744,580 - - 744,580

Total deferred outflows of resources 744,580 522,806 - 1,267,386

LIABILITIESCurrent:

Accounts payable 490,949 1,116,923 - 1,607,872 Accrued liabilities 10,704 85,149 - 95,853 Liability for compensated absences 15,054 111,197 - 126,251 Accrued interest payable 435,567 184,670 - 620,237 Deposits 76,118 - - 76,118 Unearned revenue 5,000 - - 5,000 Notes payable 4,047,664 - - 4,047,664 Bonds payable 3,079,376 2,331,175 - 5,410,551

Total current liabilities 8,160,432 3,829,114 - 11,989,546

Non-current:Liability for compensated absences 4,745 67,218 - 71,963 Pension - 1,094,708 - 1,094,708 OPEB - 135,070 - 135,070 Notes payable 31,830,260 - - 31,830,260 Bonds payable 57,507,009 38,785,000 - 96,292,009

Total noncurrent liabilities 89,342,014 40,081,996 - 129,424,010

Total liabilities 97,502,446 43,911,110 - 141,413,556

DEFERRED INFLOWS OF RESOURCESPension assumptions and investment earnings - 27,250 - 27,250 OPEB - 19,206 - 19,206

Total deferred inflows of resources - 46,456 - 46,456

NET POSITIONNet investment in capital assets 11,638,523 20,302,710 - 31,941,233 Restricted for debt service reserve 3,173,468 4,812,172 - 7,985,640 Unrestricted 38,311,055 33,876,895 13,281 72,201,231

Total net position 53,123,046$ 58,991,777$ 13,281$ 112,128,104$

City of Frisco Combining Statement of Activities Component Units For the Fiscal Year Ended September 30, 2019


36

Operating CapitalCharges for Grants and Grants and

Expenses Service Contributions ContributionsFunctions/Programs:

Component units:Community Development 10,986,780$ 3,187,173$ -$ 290,735$ Economic Development 15,058,561 - 203,775 19,292,510 Charitable Foundation 14,631 - 15,477 -

Total component units 26,059,972 3,187,173 219,252 19,583,245

General revenues:Sales taxesIntergovernmentalInvestment income

Total general revenues


Net position, beginning

Net position, ending

Program Revenues


37

Community Economic CharitableDevelopment Development Foundation Total

(7,508,872)$ -$ -$ (7,508,872)$ - 4,437,724 - 4,437,724 - - 846 846

(7,508,872) 4,437,724 846 (3,070,302)

22,323,660 22,323,660 - 44,647,320 2,790,255 - - 2,790,255

988,312 1,170,543 - 2,158,855

26,102,227 23,494,203 - 49,596,430

18,593,355 27,931,927 846 46,526,128

34,529,691 31,059,850 12,435 65,601,976

53,123,046$ 58,991,777$ 13,281$ 112,128,104$

Net (Expense) Revenue and Changes in Net PositionComponent Units

City of Frisco Notes to the Basic Financial Statements

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Note 1. Summary of Significant Accounting Policies The City of Frisco, Texas (City) was originally incorporated in 1908 and chartered on April 4, 1987, and is a municipal corporation incorporated under provisions of H.B. 901 of the Texas Legislature. The City operates under a Council-Manager form of government and provides such services as authorized by its charter to advance the welfare, health, comfort, safety, and convenience of the City and its residents. The financial statements of the City have been prepared to conform with accounting principles generally accepted in the United States of America (GAAP) as applicable to state and local governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting and reporting policies and practices used by the City are described below. A. Financial Statement Presentation The basic financial statements are prepared in conformity with GASB Statement 34, which requires government-wide financial statements to be prepared using the accrual basis of accounting and the economic resources measurement focus. Government-wide financial statements do not provide information by fund, but distinguish between the City’s governmental activities, business-type activities and activities of its discretely presented component units on the statement of net position and statement of activities. Significantly, the City’s statement of net position includes both non-current assets and non-current liabilities of the City. The government-wide statement of activities reflects depreciation expense on the City’s capital assets, including infrastructure. In addition to the government-wide financial statements, the City has prepared fund financial statements. Governmental fund financial statements use the modified accrual basis of accounting and the current financial resources measurement focus. The proprietary fund type financial statements are prepared using the accrual basis of accounting. Statement No. 34 requires supplementary information in Management’s Discussion and Analysis, which includes an analytical overview of the City’s financial activities. Also, a budgetary comparison statement is presented that compares the adopted and revised budgets for the general fund and its major special revenue fund (TIRZ #1) with actual results. B. Reporting Entity The City is governed by an elected mayor and a six-member council. As required by GAAP, these financial statements present the City (the primary government) and the entities for which the City is considered to be financially accountable (component units). Discretely presented component units are reported in a separate column in the basic financial statements in order to emphasize that they are legally separate from the City. The Frisco Economic Development Corporation (FEDC) serves all citizens of the City. Although legally separate from the City, the City Council appoints all members of its governing board. The FEDC provides marketing and economic development services to the City, and the City provides for custody and investment of FEDC assets, various administrative/personnel/legal services, and the majority of funding for the FEDC budget. The FEDC is presented as a discretely presented component unit.


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The Frisco Community Development Corporation (FCDC) serves all citizens of the City. Although legally separate from the City, the City Council appoints all members of its governing board. The primary government can impose its will with the potential for financial benefit to the FCDC. The FCDC benefits the City and its citizens by developing resources to address recreational, cultural arts, senior citizen, and other related community development needs and the City provides for custody and investment of FCDC assets, various administrative services, and the majority of funding for the FCDC budget. The FCDC is presented as a discretely presented component unit. The City of Frisco Charitable Foundation (CFCF) serves all citizens of the City. Although legally separate from the City, the City Council appoints all members of its governing board. The primary government can impose its will and the potential for financial benefit to the CFCF. The CFCF benefits the City and its citizens by developing resources to address recreational, cultural arts, senior citizen, and other related community development needs. The Foundation was established during fiscal year 2006 and is presented as a discretely presented component unit. The FEDC, FCDC, and CFCF do not prepare separate financial statements. The financial statements of the City are formatted to allow the user to clearly distinguish between the primary government and it’s discretely presented component units. C. Government-wide and Fund Financial Statements The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements. The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all activities of the primary government and its component units. For the most part, the effect of any interfund activity has been removed from these statements. Interfund services provided and used are not eliminated in the process of consolidation. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The government-wide statement of activities demonstrates the degree to which the direct expenses of a functional category (General Government, Public Safety, Public Works, and Culture/Recreation) are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, 2) grants and contributions that are restricted to meeting the operational requirements of a particular function or segment, and 3) grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. The net cost (by function or business-type activity) is normally covered by general revenue (property taxes, sales taxes, franchise taxes, intergovernmental revenues, and interest income). Separate fund-based financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. GASB Statement No. 34 sets forth minimum criteria (percentage of assets, liabilities, revenues or expenditures/expenses of applicable fund category and for the governmental and enterprise combined) for the determination of major funds. The non-major funds are combined in a separate column in the applicable fund financial statements.


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D. Measurement Focus and Basis of Accounting The government-wide financial statements and the proprietary fund statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related 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 have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when the obligation has matured and is due and payable shortly after year end. GASB Interpretation 6 clarifies the application of modified accrual recognition of certain liabilities and expenditures in the governmental fund financial statements. Specifically, GASB Interpretation 6 indicates that liabilities for debt, compensated absences, claims and judgments, and special termination benefits are normally expected to be liquidated with expendable available financial resources and should be recognized as governmental fund liabilities and expenditures only to the extent that they mature each period. The most significant accounting and reporting policies of the City are described in the following notes to the financial statements. Ad valorem, franchise, sales tax revenues and fines and forfeitures recorded in the General Fund and ad valorem tax revenues recorded in the Debt Service Fund and Tax Increment Reinvestment Zone #1 are recognized under the susceptible to accrual concept. Licenses and permits, charges for services, contributions, and miscellaneous revenues are recorded as revenues when received in cash, as the resulting receivable is not measurable and available until cash is received. Investment earnings are recorded as earned since they are measurable and available. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. Intergovernmental grant revenues are recognized when all eligibility requirements have been met and amounts are considered measurable and available. Funds received in advance for which all eligibility requirements have not been met are considered unearned revenue. Receivables for which amounts are not considered measurable and available are considered deferred inflows of resources. Proprietary fund statements of revenues, expenses, and changes in fund net position present increases (e.g., revenues) and decreases (e.g., expenses) in net position. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s Water and Sewer, Environmental Services and Stormwater funds are charges to customers for sales and services. Operating expenses for the proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The City of Frisco does not utilize internal service funds, which traditionally provide service primarily to other funds of the government. Nor does the City of Frisco have fiduciary funds.


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The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The focus of the fund financial statements is on the major individual funds of the governmental and business-type categories. Each presentation provides valuable information that can be analyzed and compared to enhance the usefulness of the information. The following are the funds used by the City: 1. Governmental Funds:

The focus of Governmental Fund measurement (in the Fund Financial Statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. The following is a description of the major Governmental Funds of the City: a. General Fund accounts for several of the City’s primary services (Public Safety, Public Works,

Culture & Recreation, General Government) and is the primary operating fund unit of the City. b. Tax Increment Reinvestment Zone Fund #1 accounts for revenue sources that are legally held

for special purposes within the zone. The revenue sources consist of property tax collections within the zone and lease payments for facilities.

c. Capital Projects Fund accounts for the acquisition of capital assets or construction of major capital projects not being financed by proprietary funds.

d. Debt Service Fund accounts for the accumulation of resources and payment of general obligation and certificate of obligation bond principal and interest from governmental resources.

e. Other Governmental Funds is a summarization of the non-major governmental funds. 2. Proprietary Funds:

The focus of Proprietary Fund measurement is upon determination of operating income, changes in net position, and cash flows, which is similar to private-sector businesses. The following is a description of the major Proprietary Funds of the City: a. Water and Sewer Fund accounts for the operation of the City’s water and sewer utility.

Activities of the Fund include administration, operation and maintenance of the water and sewer system, and billing and collection activities. The Fund also accounts for the accumulation of resources for, and the payment of, long-term debt principal and interest for contractual obligation bonds when due throughout the year. All costs are financed through charges made to utility customers with rates reviewed regularly and adjusted, if necessary, to ensure integrity of the Fund.

b. Other Proprietary Funds is a summarization of the non-major proprietary funds including the stormwater drainage program and the environmental services fund.

E. Cash, Cash Equivalents and Investments Cash and cash equivalents include cash on hand, demand deposits, and short-term investments with a maturity date within three months of the date acquired by the government. Cash in all funds, excluding the City’s payroll account, lockbox operations, police seizure accounts and Charitable Foundation account, is combined into one bank account in order to maximize investment opportunities. Although individual funds may experience temporary overdraft liabilities, a positive balance is maintained in combined cash. All investments are recorded at fair value based on market prices. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties.


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F. Inventories and Prepaid Items Inventories of supplies are maintained at the City. These inventories are valued at cost using the first in/first out (FIFO) inventory method. The cost of inventories is recorded as expenditures/expenses when consumed rather than when purchased. Prepaid items are payments made by the City in the current fiscal year to provide services occurring in the subsequent fiscal year. Inventories and prepaid items are recognized as non-spendable in the governmental funds in the fund level financial statements to signify that a portion of fund balance is not available for other subsequent expenditures. G. Interfund Transactions and Receivables and Payables Short-term advances between funds are accounted for in the appropriate interfund receivable and payable accounts. All legally authorized transfers are appropriately treated as transfers and are included in the changes in fund balance/net position of both governmental and proprietary funds. H. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements and in proprietary fund financial statements. All purchased capital assets are valued at cost where historical records are available or at an estimated cost where no historical records exist. In the case of the initial capitalization of infrastructure assets (i.e., those reported by governmental activities), the City chose to include all such items regardless of their acquisition date or amount. The City was able to estimate the historical costs of these assets through back trending (i.e., estimating the current replacement costs of the infrastructure to be capitalized and using an appropriate price-level index to deflate the costs to the acquisition year or estimated acquisition year). Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value rather than fair value. The City considers the asset as received when all requirements have been met by the developer including providing the City with affidavits of value. Public domain (infrastructure) assets consisting of roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems have been recorded at estimated historical cost. The City defines capital assets as assets with an initial individual cost of $5,000 or more and an estimated useful life greater than one year. Outlays for capital assets and improvements are capitalized as the projects are constructed. Capital assets of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives:

Buildings 20-25 yearsImprovements other than buildings 15-30 yearsVehicles 3-15 yearsMachinery & equipment 3-20 years

The costs of normal maintenance and repairs that do not materially add to the value of the asset or significantly extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related assets, as applicable.


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I. Compensated Absences The City allows employees to accumulate earned but unused vacation benefits to a maximum of 240 hours. Fire Department personnel have a maximum of 360 hours. Vested or accumulated vacation leave of proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees. In accordance with the provisions of GASB Statement No. 16, Accounting for Compensated Absences, no liability is recorded for nonvesting accumulating rights. Upon termination, the City pays to employees with over one year of service, up to a maximum of 240 hours of vacation, and up to 240 hours of sick leave. Fire Department personnel are paid up to a maximum of 360 hours for vacation and 360 hours for sick leave. Vacation and sick leave in excess of the 240 (360 for Fire Department personnel) hour maximum is not paid upon termination. All compensated absences are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured and typically, in prior years the general fund has liquidated the liability. J. Federal and State Grants Grants and shared revenues are generally accounted for within the Grants Fund or Community Development Block Grants Funds if funding is for a governmental fund type. Federal grants include several police, fire and transportation related grants which are accounted for within the Grants Fund. Community Development Block Grants are accounted for within that fund. Various state grants are also included in the Grants Fund. Proprietary fund grants are accounted for within the applicable fund. K. Long-term Debt General Obligation Bonds and Certificate of Obligation Bonds issued for general government capital projects that are to be repaid from tax revenues of the City are recorded in the government-wide statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method in the proprietary fund and the government-wide financial statements. Bond issuance costs are expensed. Bonds payable are reported net of the applicable bond premium or discount. In the governmental fund financial statements, issuance costs, as well as bond premiums and discounts, are recognized when incurred. Certificate of Obligation Bonds have been issued to fund capital projects of the Proprietary Funds. Such bonds are to be repaid from the net revenues of the applicable Proprietary Fund. Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Bond issuance costs are expensed. L. Deferred Inflow and Deferred Outflow of Resources Deferred inflows of resources are an acquisition of net position by the City that is applicable to a future reporting period. Deferred inflows have a negative effect on net position, similar to liabilities. The City of Frisco reports deferred inflows of resources as the offset account to assets received, but not yet available or earned. Outflows of resources are defined as a consumption of net position by the government that is applicable to a future reporting period. Deferred outflows of resources increase net position, similar to assets. For current refundings and advance refundings resulting in defeasance of debt, the difference between the reacquisition price and the net carrying amount of the old debt that results in a refunding loss, is reported as a deferred outflow of resources. The deferred outflows of resources are recognized as a component of interest expense in a systematic and rational manner over the remaining life of the old debt or the life of the new debt, whichever is shorter. For pensions, deferred outflow of resources are recognized for pension contributions made after the plan year reporting date and for investment experience amortization. Deferred inflows of resources for the


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pensions are the difference between actuarial experience and actual experience. The City of Frisco deferred outflows of resources and deferred inflows of resources changes for the year are detailed below:

Balance 9/30/2018 Additions Deletions

Balance 9/30/2019

Deferred outflowsGovernmental activities 23,422,018$ 11,601,928$ 1,388,301$ 33,635,645$ Business-type activities 5,229,920 1,933,655 522,261 6,641,314 Component units 1,127,920 276,238 136,772 1,267,386

Total 29,779,858$ 13,811,821$ 2,047,334$ 41,544,345$

Deferred inflowsGovernmental activities (5,712,357)$ (692,271)$ 4,453,436$ (1,951,192)$ Business-type activities (952,061) (115,377) 742,239 (325,199) Component units (136,004) (16,483) 106,031 (46,456)

Total (6,800,422)$ (824,131)$ 5,301,706$ (2,322,847)$

M. Retirement Plans For purposes of measuring the net pension liability, pension related deferred outflows and inflows of resources, and pension expense, City specific information about its Fiduciary Net Position in the Texas Municipal Retirement System (TMRS) and additions to/deductions from the City’s Fiduciary Net Position have been determined on the same basis as they are reported by TMRS. For this purpose, plan contributions are recognized in the period that compensation is reported for the employee, which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Information regarding the City’s Total Pension Liability is obtained from TMRS through a report prepared for the City by TMRS consulting actuary, Gabriel Roeder Smith & Company, in compliance with Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. N. OPEB For purposes of measuring the total OPEB liability, OPEB related deferred outflows and inflows of resources, and OPEB expense, City specific information about its total OPEB liability in the TMRS Supplemental Death Benefits Fund (SDBF) and Retiree health insurance and additions to/deductions from the City’s total OPEB liability have been determined on the same basis as they are reported by TMRS and Lockton Companies. For this purpose, plan contributions are recognized in the period that compensation is reported for the employee, which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Information regarding the City’s SDBF Total OPEB Liability is obtained from TMRS through a report prepared for the City by TMRS consulting actuary, Gabriel Roeder Smith & Company. Information regarding the City’s Retiree Health Insurance Total OPEB Liability is obtained through a report prepared for the City by Lockton Companies consulting actuaries. Both reports are prepared in compliance with GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions.


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O. Fund Equity In order to comply with the GASB Statement No. 54, Fund Balance Reporting and Government Fund Type Definitions, the fund balance section of the balance sheets of the governmental funds include the following items:

• Nonspendable fund balance include the: o Portion of net resources that cannot be spent because of their form, o Portion of net resources that cannot be spent because they must be maintained intact.

• Restricted fund balance (externally enforceable limitations on use) include amounts subject to: o Limitations imposed by creditors, grantors, contributors, or laws and regulations of other

governments o Limitations imposed by law through constitutional provision or enabling legislation.

• Committed fund balance (self-imposed limitations set in place prior to the end of the period): o Limitation imposed at the highest level of decision making (an approved resolution) that

requires formal action at the same level to remove. For the City, the City Council is the highest level of decision making and approves any commitments by resolution of the Council, which is considered the most binding constraint for fund balance classification purposes.

• Assigned fund balance consists of amounts where the: o Intended use is established by the body designated for that purpose (City Council), o Intended use is established by official designated for that purpose. The City Manager,

Assistant City Manager and Director of Financial Services are the designated officials set by ordinance.

• Unassigned fund balance is the total fund balance in the general fund in excess of nonspendable, restricted, committed and assigned.

For the classification of governmental fund balances, the City considers an expenditure to be made from the most restrictive first when more than one classification is available. For example, when an expenditure is incurred, the flow assumption in determining the applicable order of using fund balance resources available is first by Committed (such as for encumbrances), then by Assigned (for the established, official intended uses), and finally by Unassigned fund balance. Net position restricted for impact fee collections in the Water and Sewer fund is a reserve required by the fee ordinance. P. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, deferred outflows of resources, deferred inflows of resources and contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. Q. Restricted Resources When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as required.


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R. Encumbrances Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting—under which purchase orders, contracts, and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation—is utilized in the governmental fund types. Encumbrances outstanding at year-end are reported as an adjustment-budgetary basis on the Statement of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual. The commitments will be honored during the subsequent year. S. New Accounting Pronouncements In the current year the City implemented the following GASB pronouncements: GASB Statement No. 83, Certain Asset Retirement Obligations, is effective for periods beginning after June 15, 2018. The objective of this Statement is to address accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets will recognize a liability based on the guidance in this Statement. GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, is effective for periods beginning after June 15, 2018. The objective of this Statement is to improve the information that is disclosed in notes to governmental financial statements related to debt, including direct borrowings and direct placements and clarifies which liabilities governments should disclose. The required additional disclosure has been included in Note 7. The GASB has issued the following statements which will be effective in future years as described below. The impact on the City’s financial statements of implementation has not yet been determined for the following: GASB Statement No. 84, Fiduciary Activities, is effective for periods beginning after December 15, 2018. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. GASB Statement No. 87, Leases, is effective for periods beginning after December 15, 2019. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments through increasing the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, is effective for periods beginning after December 15, 2019. The objectives of this Statement are (1) to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and (2) to simplify accounting for interest cost incurred before the end of a construction period. Interest cost incurred before the end of a construction period will be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund.


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GASB Statement No. 90, Majority Equity Interests – an amendment of GASB Statements No. 14 and No. 61, is effective for periods beginning after December 15, 2018. The primary objectives of this Statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. It defines a majority equity interest and specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government’s holding of the equity interest meets the definition of an investment. A majority equity interest in a legally separate organization, should be reported as a legally separate organization as a component unit, and the government or fund that holds the equity interest establishes that ownership of a majority equity interest in a legally separate organization results in the government being financially accountable for the legally separate organization and, therefore, the government should report that organization as a component unit. GASB Statement No. 91, Conduit Debt Obligations, is effective for periods beginning after December 15, 2020. This Statement requires issuers to disclose general information about their conduit debt obligations, organized by type of commitment, including the aggregate outstanding principal amount of the issuers’ conduit debt obligations and a description of each type of commitment. Note 2. Reconciliation of Government-Wide and Fund Financial Statements A. Explanation of certain differences between the governmental fund balance sheet and the

government-wide statement of net position The governmental fund balance sheet includes reconciliation between fund balance – total governmental funds and net position – governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains the “long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.” The details of this $806,894,248 difference are as follows:

Bonds and certificates of obligation payable 702,205,000$ Bond discount (to be amortized as interest expense) (827,823) Bond premiums (to be amortized over the life of the bonds) 36,699,581 Accrued interest payable 3,978,376 Compensated absences 13,188,444 Net pension liability 45,977,739 Total OPEB liability 5,672,931

Net adjustment to reduce fund balance – totalgovernmental funds to arrive at net position –governmental activities 806,894,248$


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B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities

The governmental fund statement of revenues, expenditures, and changes in fund balances includes reconciliation between net changes in fund balances – total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains, “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.” The details of the $91,454,487 difference are as follows:

Capital outlay 73,441,538$ Developers’ contributions 94,190,674 Book value of capital assets disposed/retired (913,954) Depreciation expense (75,263,771)

Net adjustment to increase net changes in fund balance– total governmental funds to arrive at changes in net position of governmental activities 91,454,487$

Another element of that reconciliation states that “the issuance of long-term debt (e.g., bonds) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities.” The details of this $72,523,335 difference are as follows:

Debt issued or incurred:Premium amortization 7,244,156$ Discount amortization (65,634) Amortization on loss of refunding of debt (1,388,301) Bonds issued (115,325,000) Bond premium issued (5,881,139) Bond discount issued 22,583

Principal repayments:Bonds 42,870,000

Net adjustment to decrease net changes in fund balances– total governmental funds to arrive at changes in netposition of governmental activities (72,523,335)$


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Another element of that reconciliation states, “Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.” The details of this $5,600,934 difference are as follows:

Increase in accrued interest on bonds (389,415)$ Increase in compensated absences (1,536,736) Increase in pension expense (3,049,243) Increase in OPEB expense (625,540)

Net adjustment to decrease net changes in fund balances– total governmental funds to arrive at changes in net position of governmental activities (5,600,934)$

Note 3. Legal Compliance – Budgets Budgetary Information Annual appropriated budgets are legally adopted for the General Fund, Debt Service Fund, Capital Projects Funds, and Special Revenue Funds. The legal level of authority is at the fund level. The annual budget is adopted using the budgetary basis of accounting. The budgetary basis of accounting differs from accounting principles generally accepted in the United States in that encumbrances are recorded as expenditures in the period encumbered and not when incurred. All annual appropriations lapse at fiscal year-end. Project length financial plans are adopted for certain Capital Projects Funds. The City follows these procedures in establishing the budgetary data reflected in the financial statements.

1. Prior to August 15, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October 1.

2. Public hearings are conducted to obtain taxpayer comments. 3. Prior to September 30, the budget is legally enacted through the passage of an ordinance. 4. The City Manager is authorized to transfer budgeted amounts between departments within any

fund; however, any revisions that alter the total expenditures of any fund must be approved by the City Council.

5. Formal budgetary review is employed as a management control device during the year for the General Fund, Debt Service Fund, and Capital Projects Funds. Supplemental appropriations were made during the fiscal year, during the revised budget process.

6. The budget approved for the discretely presented component units follow similar approval procedures.

7. The budget approved for the Utility Fund follows similar approval procedures but departs from generally accepted accounting principles by not including depreciation or compensated absence expenses in the approved budget.


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Note 4. Deposits and Investments Deposits – State statutes require that all deposits in financial institutions be fully collateralized by U.S. government obligations or obligations of Texas and its agencies that have a market value of not less than the principal amount of the deposits. The City’s deposits were insured up to $250,000 or collateralized as required by State statutes at September 30, 2019. At year-end, the carrying amount of the City’s demand deposits was a balance of $4,261,598 - bank balance, $5,136,534. The carrying amount of the component unit’s pooled cash was $(238,560), - bank balance, $0. The cash on hand carrying amount totaled $32,860. The bank balance for the primary government and the component unit’s deposits was covered by collateral with a fair value of $5,351,946 and $70,154. The collateral is held in the City’s name by the Bank of New York Mellon and JP Morgan National Collateral Management Group, agents of the City’s financial institutions. Investments – State statutes, city policies, and city resolutions authorize the City’s investments. The Director of Financial Services and the Assistant Director of Financial Services are authorized by the City Council to invest all available funds consistent with the investment policy. The City is authorized to invest in United States obligations or its agencies and instrumentalities, direct obligations of the State of Texas or its agencies and instrumentalities, other obligations backed by the full faith and credit of the State of Texas or the United States or their respective agencies and instrumentalities, obligations of states, agencies, counties, cities, and other political subdivisions of any State having an investment rating of not less than “A” or its equivalent, fully collateralized repurchase agreements, certificates of deposit issued by a depository institution that has its main office or branch office in the State of Texas, money market mutual funds regulated by the Securities and Exchange Commission with a dollar weighted average portfolio maturity of 90 days or less, and local government investment pools organized and operating in compliance with the Inter-local Cooperation Act.


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As of September 30, 2019, the City had the following investments:

Investment Type Fair ValueWeighted Average

Maturity DaysPrimary GovernmentGeneral Fund Federal Agency Notes 53,068,350$ 120 TexPool 13,937,958 34 TexStar 29,723,036 18CIP Funds Federal Agency Notes 153,869,446 79 TexPool 8,075,691 34 TexStar 145,260,265 18Other Funds Federal Agency Notes 113,247,094 109 TexPool 52,184,775 34 TexStar 6,872,610 18

Total Primary Government 576,239,225$ 43

Component UnitsCommunity Development Federal Agency Notes 20,875,984 136 TexPool 17,101,782 34 TexStar 998,483 18Economic Development Federal Agency Notes 21,395,586 105 TexPool 10,672,727 34 TexStar 4,648,405 18

Total Component Units 75,692,967$ 345

Total Government 651,932,192$ 388

The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. GASB Statement No. 72, Fair Value Measurement and Application provides a framework for measuring fair value which establishes a three-level fair value hierarchy that describes the inputs that are used to measure assets and liabilities.

• Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date.

• Level 2 inputs are inputs-other than quoted prices included within Level 1-that are observable for an asset or liability, either directly or indirectly.

• Level 3 inputs are unobservable inputs for an asset or liability. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. If a price for an identical asset or liability is not observable, a government should measure fair value using another valuation technique that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. If the fair value of an asset or a liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement.


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The City has recurring fair value measurements as presented in the table below. Investment balances of such investments are as follows:

Primary Government September 30,

Quoted Prices in Active

Markets for Identical Assets

Significant Other Observable

Inputs

Significant Unobservable

Inputs 2019 (Level 1) (Level 2) (Level 3)

Cash and cash equivalents:Bank deposits 4,261,598$ -$ -$ -$

Total cash and cash equivalents 4,261,598 - - -

Investments measured at amortized costs:Investment pools:

Texpool 74,198,424 - - - Investments measured at net asset value (NAV), fair value: Investment pools: TexStar 181,855,911 - - - Investments by fair value level:

U.S. government agency securities: Federal Home Loan Bank 85,549,733 - 85,549,733 - Federal Farm Credit Bank 35,946,904 - 35,946,904 - Federal Home Loan Mortgage Corp 1,994,142 - 1,994,142 - Federal National Mortgage Assn 7,788,604 - 7,788,604 - US Treasury Notes 188,905,507 - 188,905,507 -

Total Investments 576,239,225 - 320,184,890 -

Total cash and investments 580,500,823$ -$ 320,184,890$ -$

Fair Value Measurements Using


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The component unit investment balances of such investments are as follows:

Component Units September 30,

Quoted Prices in Active

Markets for Identical Assets

Significant Other Observable

Inputs

Significant Unobservable

Inputs2019 (Level 1) (Level 2) (Level 3)

Cash and cash equivalents:Bank deposits (238,560)$ -$ -$ -$

Total cash and cash equivalents (238,560) - - -

Investments measured at amortized costs:Investment pools:

Texpool 27,774,509 - - - Investments measured at net asset

value (NAV), fair value:Investment pools:

TexStar 5,646,889 - - - Investments by fair value level:

U.S. government agency securities: Federal Home Loan Bank 14,962,819 - 14,962,819 - Federal Farm Credit Bank 3,800,746 - 3,800,746 - Federal National Mortgage Assn 23,508,004 - 23,508,004 -

Total investments 75,692,967 - 42,271,569 -

Total cash and investments 75,454,407$ -$ 42,271,569$ -$

Fair Value Measurements Using

Investment Pools are measured at amortized costs or net asset value (NAV) and are exempt from fair value reporting. U.S. Government Agency Securities and U.S. Treasury Bonds and Notes classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices.


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The Texpool investment pool is an external investment pool measured at amortized cost. In order to meet the criteria to be recorded at amortized cost, the investment pool must transact at a stable net asset value per share and maintain certain maturity, quality, liquidity and diversification requirements within the investment pool The investment pool transacts at a net asset value of $1.00 per share, has weighted average maturities of 60 days or less and weighted average lives of 120 days or less, investments held are highly rated by nationally recognized statistical rating organizations, have no more than 5% of portfolio with one issuer (excluding U.S. government securities), and can meet reasonable foreseeable redemptions. Texpool has a redemption notice period of one day and may redeem daily. The investment pool’s authority may only impose restrictions on redemptions in the event of a general suspension of trading on major securities markets, general banking moratorium or national state of emergency that affects the pool’s liquidity.

The TexStar investment pool is an external investment pool measured at NAV. The strategy is to seek preservation of principal, liquidity and current income through investment in a diversified portfolio of short term marketable securities. The City has no unfunded commitments related to the pools. TexStar has a redemption notice period of one day and may redeem daily. The investment pool’s authority may only impose restrictions on redemptions in the event of a general suspension of trading on major securities markets, general banking moratorium or national state of emergency that affects the pool’s liquidity.

Texpool is not registered with the Securities and Exchange Commission. The Texas Local Government Investment Pools (the “Texpool Portfolios”) have been organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. The Comptroller of Public Accounts maintains oversight.

TexStar is not registered with the Securities and Exchange Commission. TexStar operates in compliance with Public Funds Investment Act of the Texas Government Code. The oversight body for TexStar is the TexStar Governing Board.

Interest Rate Risk – In order to minimize risk of loss due to interest rate fluctuations, the City’s Investment Policy states investment maturities will not exceed the anticipated cash flow requirement of the funds as follows:

• Operating Funds – The dollar weighted average maturity of 365 days or less will be calculatedusing the stated final maturity dates of each security and the maximum allowable maturity shallbe two years.

• Bond Proceeds – The maximum maturity for all bond proceeds shall be three years.• Bond Reserve Funds – Maturity limitation shall generally not exceed the call provision of the

Bond Ordinance and shall not exceed the final maturity of the bond issue.• Other Funds – Maximum maturity shall not exceed five years and each fund’s weighted average

life shall not exceed three years.

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Governmental Activities General TIRZ #1


Credit Risk – In compliance with the City’s Investment Policy, and in conjunction with state law, as of September 30, 2019, the City minimized credit risk losses by limiting investment to the safest types of securities, pre-qualifying investments through our asset management company, and diversifying the investment portfolio so that potential losses on individual securities were minimized. The City also invested in certificates of deposits at local banks as applicable. The City’s investments in U.S. Agency securities (FHLB, FHLMC, FFCB and FNMA) are rated AAA by Standard & Poor’s and Aaa by Moody’s Investors Services. The City’s investments in local government investment pools (TexPool and TexStar) are in compliance with the Public Funds Investment Act and rated AAAm by Standard & Poor’s. More than five percent of the City’s investments are in Federal Farm Credit Bank (FFCB), U.S. Treasury Notes, and Federal Home Loan Bank (FHLB). These investments are 6.10%, 32.58%, and 15.42% respectively, of the total investments.

Concentration of Credit Risk – The City’s formal investment policy does not address limitations to one particular issuer.

Note 5. Receivables

Receivables at September 30, 2019, for the government’s individual major funds and non-major funds in the aggregate, including the applicable allowances for uncollectible accounts, are all considered to be collected within one year and consist of the following:

Receivables September 30, 2019

Capital Projects Debt Services Other Funds Total

Property tax 757,687$ -$ -$ 429,827$ -$ 1,187,514$ Sales tax 7,835,467 - - - - 7,835,467 Franchise tax 5,371,359 - - - 82,099 5,453,458 Occupancy tax - - - - 550,436 550,436 Mixed beverage 279,757 - - - - 279,757 Accrued interest 281,678 - 492,241 - 238,205 1,012,124 Grants - - - - 1,850,935 1,850,935 Assessments - - - - 735,898 735,898 Other 2,496,365 41,250 186,674 163,851 7,185 2,895,325

Gross receivables 17,022,313 41,250 678,915 593,678 3,464,758 21,800,914 Less: allowance (1,385,350) - - (21,491) - (1,406,841)

Net receivables 15,636,963$ 41,250$ 678,915$ 572,187$ 3,464,758$ 20,394,073$

Water and Sewer Other Funds Total

15,075,111$ -$ 15,075,111$ 417,641 30,865 448,506 410,091 465,659 875,750

15,902,843 496,524 16,399,367 (2,426,150) - (2,426,150)

13,476,693$ 496,524$ 13,973,217$ Net receivables

Business-type Activities

Utility BillsAccrued interestOther

Gross receivablesLess: allowance


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Community Development Corporation

Economic Development Corporation Total

3,917,734$ 3,917,734$ 7,835,468$ 71,783 59,025 130,808 47,995 - 47,995

4,037,512$ 3,976,759$ 8,014,271$

Component Units

Sales taxAccrued interestOther

Net receivables

The Proprietary Fund accounts receivable includes unbilled charges for services rendered at September 30, 2019. Property taxes are levied on October 1 and are payable until February 1 without penalty. Property taxes attach as an enforceable lien on property as of February 1. No discounts are allowed for early payment. Penalty and interest are calculated after February 1 up to the date collected by the City at the rate of 6% for the first month and increased by 1% per month up to a total of 12%. Under state law, property taxes on real property constitute a lien on the property and cannot be forgiven without specific approval of the State Legislature. The lien expires at the end of 20 years. Taxes applicable to personal property may be deemed uncollectible by the City. The City’s current policy is to write off uncollectible personal property taxes after four years. Notes Receivable City The City periodically issues bonds on behalf of the Frisco Community Development Corporation and Frisco Economic Development Corporation to fund various projects of these entities. Each component unit has an agreement with the City to fund the principal and interest payments of the bonds; therefore, a note receivable is reported in the government wide financial statements of the City from each component unit equal to the face amount of the bonds outstanding. At September 30, 2019, the balance of the note receivable from the Frisco Community Development Corporation was $25,535,000. The City has note receivables with clients in the targeted down payment assistance program totaling $135,833. Additionally, the City has one developer agreement in the CIP Fund for $373,000 which is classified as a note receivable. This $508,833 total note receivable is recorded at the fund level in the financial statements. Notes Receivable Component Units In June 2011, the Frisco Community Development Corporation executed a Performance Agreement and Promissory Note with a developer for $400,000 for building improvements to a public facility being leased by the developer. The loan interest rate is 0.00%, and if the developer satisfies annual performance criteria, the loan will be forgiven over a period of ten years, ending in July 2022. This note is only recognized at the government-wide level. The loan balance as of September 30, 2019 was $120,000. In April 2010, the Frisco Economic Development Corporation entered into an Agreement and Promissory Note for $500,000 with 5% interest due by April 26, 2011. The note was extended and modified in April 2011, for an additional year. In April 2012, the Note was amended, and the due date was extended to April 2013. On April 26, 2013, the Note was extended to October 26, 2014 and the Performance Agreement was modified to forgive the loan if certain requirements are met by October 26, 2014. On October 15, 2014 the note was extended to October 26, 2016. The note was extended to October 26, 2017 on November 17, 2016. The note’s maturity date was extended to July 31, 2020 on September 20, 2018. The balance of the loan at September 30, 2019 was $350,000.


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Note 6. Capital Assets The following is a summary of changes in the capital assets during the fiscal year:

Governmental ActivitiesBalance

9/30/2018 Additions TransfersRetirements/Other

DeductionsBalance

9/30/2019Capital assets, not being depreciated:

Land 285,568,207$ 61,214,581$ -$ (543,773)$ 346,239,015$ Construction-in-progress 83,982,099 56,998,205 (30,936,909) (105,477) 109,937,918

Total capital asset, not being depreciated 369,550,306 118,212,786 (30,936,909) (649,250) 456,176,933

Capital assets, being depreciated:Machinery and equipment 73,302,791 10,370,183 653,178 (2,797,963) 81,528,189 Buildings and improvements 682,700,719 67,220 4,945,108 (179,444) 687,533,603 Improvements other than buildings 1,211,988,565 38,982,023 25,338,623 (63,030) 1,276,246,181

Total capital assets being depreciated 1,967,992,075 49,419,426 30,936,909 (3,040,437) 2,045,307,973

Less accumulated depreciation:Machinery and equipment (46,603,076) (6,461,390) - 2,754,393 (50,310,073) Buildings and improvements (181,773,408) (25,084,650) - - (206,858,058) Improvements other than buildings (422,217,288) (43,717,731) - 21,340 (465,913,679)

Total accumulated depreciation (650,593,772) (75,263,771) - 2,775,733 (723,081,810)

Total capital assets, being depreciated, net 1,317,398,303 (25,844,345) 30,936,909 (264,704) 1,322,226,163

Governmental activities capital assets, net 1,686,948,609$ 92,368,441$ -$ (913,954)$ 1,778,403,096$

Business-type ActivitiesBalance

9/30/2018 Additions TransfersRetirements/Other

DeductionsBalance


Land 10,543,522$ -$ -$ -$ 10,543,522$ Construction-in-progress 57,834,717 11,503,208 (36,245,915) (78,230) 33,013,780

Total capital asset, not being depreciated 68,378,239 11,503,208 (36,245,915) (78,230) 43,557,302

Capital assets, being depreciated:Machinery and equipment 10,315,487 979,828 - (534,846) 10,760,469 Buildings and improvements 10,123,598 55,125 - - 10,178,723 Improvements other than buildings 513,934,681 24,973,246 36,245,915 - 575,153,842

Total capital assets being depreciated 534,373,766 26,008,199 36,245,915 (534,846) 596,093,034

Less accumulated depreciation:Machinery and equipment (6,809,733) (1,054,408) - 532,491 (7,331,650) Buildings and improvements (6,548,444) (448,032) - - (6,996,476) Improvements other than buildings (169,233,793) (15,774,600) - - (185,008,393)

Total accumulated depreciation (182,591,970) (17,277,040) - 532,491 (199,336,519)

Total capital assets, being depreciated, net 351,781,796 8,731,159 36,245,915 (2,355) 396,756,515

Business-type activities capital assets, net 420,160,035$ 20,234,367$ -$ (80,585)$ 440,313,817$

For the Business-type Activities, interest costs for the period charged to expense totaled $3,318,307. Capitalized interest costs recorded during the period totaled $896,233.


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Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activitiesGeneral government 19,125,688$ Public safety 6,572,402 Public works 36,862,860 Culture and recreation 12,702,821

Total depreciation expense governmental activities 75,263,771$

Business-type activitiesWater & sewer 17,054,509$ Stormwater drainage 147,365 Environmental services 75,166

Total depreciation expense business-type activities 17,277,040$

Frisco Community Development Corporation

Balance9/30/2018 Additions Transfers

Retirements/ Other

DeductionsBalance


Land 50,547,071$ 19,269,743$ -$ -$ 69,816,814$ Construction-in-progress 215,053 - - - 215,053

Total capital assets not being depreciated 50,762,124 19,269,743 - - 70,031,867

Capital assets, being depreciated:Machinery and equipment 112,763 5,450 - - 118,213 Buildings and improvements 10,201,099 27,194 - - 10,228,293 Improvements other than buildings 18,603,502 - - - 18,603,502

Total capital assets being depreciated 28,917,364 32,644 - - 28,950,008

Less: accumulated depreciation (24,767,758) (614,996) - - (25,382,754) Total capital assets, being depreciated, net 4,149,606 (582,352) - - 3,567,254

FCDC capital assets, net 54,911,730$ 18,687,391$ -$ -$ 73,599,121$

Frisco Economic Development Corporation

Balance9/30/2018 Additions Transfers

Retirements/ Other

DeductionsBalance


Land 16,137,801$ -$ -$ -$ 16,137,801$ Total capital assets not being depreciated 16,137,801 - - - 16,137,801

Capital assets, being depreciated:Machinery and equipment 229,395 - - - 229,395 Buildings and improvements 60,963 - - - 60,963

Total capital assets being depreciated 290,358 - - - 290,358

Less: accumulated depreciation (237,342) (7,325) - - (244,667) Total capital assets, being depreciated, net 53,016 (7,325) - - 45,691

FEDC capital assets, net 16,190,817$ (7,325)$ -$ -$ 16,183,492$


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In addition to construction in progress, the City had commitments or binding contracts as of September 30, 2019. The construction commitments or binding contracts totaled $51,341,691 for the governmental capital projects fund; and $18,144,839 for the business-type activities capital projects fund. Other funds also had outstanding encumbrances totaling $4,381,339.

Governmental activitiesGeneral fund 2,151,866$ Capital projects fund 51,341,691 Non-major funds 323,182

Total outstanding commitments 53,816,739$

Business-type activitiesUtility fund 1,553,581$ Utility fund construction 18,144,839 Non-major funds 352,710

Total outstanding commitments 20,051,130$

Note 7. Notes Payable

The following schedule summarizes notes payable as of September 30, 2019:

Frisco CommunityDevelopment Corporation

Balance9/30/2018 Additions Deletions

Balance9/30/2019

Amounts Due within one year

Note payable to City 28,675,000$ -$ 3,140,000$ 25,535,000$ 2,780,000$ Note payable to bank 10,302,089 - 1,030,209 9,271,880 927,188 Premium 1,144,972 - 16,747 1,128,225 346,408 Discount (63,113) - (5,932) (57,181) (5,932)

Total 40,058,948$ -$ 4,181,024$ 35,877,924$ 4,059,528$

Frisco Economic Development Corporation

Balance9/30/2018 Additions Deletions

Balance9/30/2019

Amounts Due within one year

Note payable to bank 32,887,031$ -$ 32,887,031$ -$ -$

Total 32,887,031$ -$ 32,887,031$ -$ -$

The City periodically issues bonds on behalf of the Community Development Corporation and Economic Development Corporation to fund various projects of these entities. These entities are component units of the City. Each component unit has an agreement with the City to fund the principal and interest payments of the bonds; therefore, a note payable is reported in the government wide financial statements of the component units to the City equal to the face amount of the bonds outstanding plus any bond premiums, discounts, and deferred loss from advance refunding of debt. The City is in compliance with related bond covenants.

At September 30, 2019, the balance of the note payable to the City from the Community Development Corporation was $26,606,044. This includes $25,535,000 in the note balance, and a net premium/discount of $1,071,044.

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The Frisco Community Development Corporation also holds a direct bank loan, obtained on May 7, 2015 for the purchase of approximately 182 acres of land. The original Promissory Note was in the amount of $13,770,000, maturing on May 7, 2022. The Frisco Community Development Corporation pays principal annually at 10% of the outstanding balance, and interest is payable quarterly. The principal of the note is secured by the land through a Deed of Trust which will either be released by payment of the note in full, or by conveyance of the land in the case of foreclosure. The balance of the note at September 30, 2019 was $9,271,880.

Note 8. Long-term Debt

General obligation bonds and certificates of obligation mature annually in varying amounts through 2041. The interest for the bonds is payable semi-annually with interest rates ranging from 1.255% - 5.200%. The City is in compliance with related bond covenants.

In February 2019, the City of Frisco issued Combination Tax and Revenue Certificates of Obligation, in the amount of $35,000,000 with a net premium of $170,775. Proceeds from the sale of the Bonds will be used for (i) acquiring, installing, constructing and equipping two eighteen-hole golf courses, one nine-hole golf course, golf related development practice areas, clubhouse, public hike and bike trails, and public parking areas; (ii) legal, fiscal and engineering fees in connection with such projects and (iii) to pay the costs of issuance associated with the sale of the Certificates.

In June 2019, the City of Frisco issued General Obligation Bonds, Series 2019, in the amount of $63,790,000 with a net premium of $5,542,855. Proceeds from the sale of the Bonds will be used for constructing, improving and equipping: (i) public safety facilities and purchasing public safety equipment; (ii) streets and roads; (iii) the public works facility, including equipment and technology; (iv) municipal libraries; and (v) the George A. Purefoy Municipal Center and (vi) to pay the costs of issuance associated with the sale of the Bonds.

In June 2019, the City of Frisco issued Combination Tax and Surplus Revenue Certificates of Obligation, Series 2019A, in the amount of $9,595,000, with a net premium of $566,891. Proceeds from the sale of the Certificates are to be used (i) to pay contractual obligations to be incurred by the City for water, sewer and water reuse infrastructure improvements; and (ii) to pay the costs associated with the issuance of the 2019A Certificates.

In June 2019, the City of Frisco issued Combination Tax and Surplus Revenue Certificates of Obligation, Series 2019B, in the amount of $16,535,000, with a net premium of $144,926. Proceeds from the sale of the 2019B Certificates will be used for (i) acquiring, constructing, equipping a public conference center, meeting and exhibit center; and (ii) paying the costs associated with the issuance of the 2019B Certificates.

The liability for compensated absences attributable to governmental activities have typically been liquidated in prior years by the General Fund and the Hotel/Motel Special Revenue Fund.


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During the year, the following changes occurred in the long-term liabilities:

Governmental ActivitiesBalance

9/30/2018 Increases DecreasesBalance

9/30/2019Amounts due

within one year

Compensated absences 11,651,708$ 10,011,009$ 8,474,273$ 13,188,444$ 7,759,357$ Pension 27,658,942 18,318,797 - 45,977,739 - OPEB 4,953,852 719,079 - 5,672,931 - General obligation bonds 454,740,000 63,790,000 38,260,000 480,270,000 40,760,000 Certificates of obligation 178,150,000 51,535,000 7,750,000 221,935,000 9,290,000 Premiums 38,062,598 5,881,139 7,244,156 36,699,581 7,255,248 Discounts (870,874) (22,583) (65,634) (827,823) (65,875)

Total governmental activities 714,346,226$ 150,232,441$ 61,662,795$ 802,915,872$ 64,998,730$

Business-type ActivitiesBalance



within one year

Compensated absences 1,588,108$ 1,177,166$ 1,136,271$ 1,629,003$ 1,098,826$ Pension 4,609,823 3,053,133 - 7,662,956 - OPEB 825,638 119,848 - 945,486 - General obligation bonds 56,710,000 - 7,315,000 49,395,000 7,570,000 Certificates of obligation 89,530,000 9,595,000 3,690,000 95,435,000 4,200,000 Premiums 9,189,741 566,891 1,958,192 7,798,440 1,727,674 Discounts (437,190) - (32,544) (404,646) (32,544)

Total business-type activities 162,016,120 14,512,038 14,066,919 162,461,239 14,563,956

Total primary government 876,362,346$ 164,744,479$ 75,729,714$ 965,377,111$ 79,562,686$

Component UnitBalance



within one year

Compensated absences 194,275$ 113,660$ 109,721$ 198,214$ 126,251$ Pension 658,546 436,162 - 1,094,708 - OPEB 117,949 17,121 - 135,070 - Sales tax revenue bonds 113,175,000 - 12,945,000 100,230,000 5,115,000 Notes payable – bank 43,189,120 - 33,917,240 9,271,880 927,188 Notes payable – City 28,675,000 - 3,140,000 25,535,000 2,780,000 Premiums 2,995,044 - 325,550 2,669,494 647,502 Discounts (144,175) - (18,285) (125,890) (11,475)

Total component units 188,860,759$ 566,943$ 50,419,226$ 139,008,476$ 9,584,466$

Debt service requirements of the general obligation bonds and certificates of obligation for the governmental activities for the years subsequent to September 30, 2019, are as follows:

Fiscal Year Ending September 30

Principal Requirements

Interest Requirements

Total Requirements

2020 50,050,000$ 29,349,122$ 79,399,122$ 2021 53,035,000 26,387,879 79,422,879 2022 52,885,000 24,108,807 76,993,807 2023 55,290,000 21,701,065 76,991,065 2024 43,660,000 19,392,160 63,052,160 2025-2029 173,435,000 70,991,353 244,426,353 2030-2034 165,525,000 36,527,970 202,052,970 2035-2039 105,870,000 8,146,791 114,016,791 2040-2041 2,455,000 86,713 2,541,713

Total 702,205,000 236,691,860 938,896,860 Plus: Unamortized bond premium 36,699,581 - 36,699,581 Less: Unamortized bond discount (827,823) - (827,823)

Net debt service requirements 738,076,758$ 236,691,860$ 974,768,618$


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Debt service requirements of the general obligation bonds and certificates of obligation for the business-type activities for the years subsequent to September 30, 2019, are as follows:




Total Requirements

2020 11,770,000$ 5,791,483$ 17,561,483$ 2021 12,320,000 5,236,950 17,556,950 2022 11,675,000 4,709,850 16,384,850 2023 12,175,000 4,192,375 16,367,375 2024 11,055,000 3,671,969 14,726,969 2025-2029 40,840,000 11,895,560 52,735,560 2030-2034 31,870,000 5,101,931 36,971,931 2035-2039 13,125,000 761,028 13,886,028



Debt service requirements of the revenue bonds and notes payable for the Community Development Corporation component unit for the years subsequent to September 30, 2019, are as follows:




Total Requirements

2020 6,497,188$ 3,734,887$ 10,232,075$ 2021 6,619,469 3,482,620 10,102,089 2022 13,535,223 3,084,267 16,619,490 2023 6,275,000 2,624,162 8,899,162 2024 6,460,000 2,369,183 8,829,183 2025-2029 24,350,000 8,582,374 32,932,374 2030-2034 22,165,000 3,603,349 25,768,349 2035-2037 8,025,000 495,338 8,520,338




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Debt service requirements of the revenue bonds and notes payable for the Economic Development Corporation component unit for the years subsequent to September 30, 2019, are as follows:




Total Requirements

2020 2,325,000$ 1,415,337$ 3,740,337$ 2021 2,390,000 1,355,357 3,745,357 2022 2,465,000 1,291,119 3,756,119 2023 2,550,000 1,219,067 3,769,067 2024 2,635,000 1,140,420 3,775,420 2025-2029 14,760,000 4,254,965 19,014,965 2030-2034 13,985,000 1,236,455 15,221,455

Total 41,110,000 11,912,720 53,022,720 Plus: Unamortized bond premium 6,175 - 6,175 Less: Unamortized bond discount - - -


Note 9. Tax Abatements The City enters into economic development agreements designed to promote development and redevelopment within the City, stimulate commercial activity, generate additional sales tax and enhance the property tax base and economic vitality of Frisco. This program rebates property and sales & use taxes and is authorized under Chapter 380 of the Texas Local Government Code. The various agreements are detailed below that rebate a percentage of property and/or sales & use taxes. Agreements for rebate of property taxes generally call for rebates of 50% of taxes on incremental values for usually up to 10 years. The agreements for sales & use taxes provides for a rebate of .50% to .85% of the City 1% taxes on incremental values for usually up to 10 years, with the maximum being 25 years. For fiscal year 2019, the City rebated property taxes of $207,933. Sales and use taxes rebated totaled $4,270,706. Retail Development Agreements To promote economic development and diversity, increase employment, reduce unemployment and underemployment, expand commerce, and stimulate business and commercial activity in the State of Texas, Collin County, Denton County and the City of Frisco, Texas, the City agreed to pay sales tax grants to certain developers. These grants require the construction of minimum square feet of retail space and obtaining certificates of occupancy for certain major retailers within a specified time period, all of which have been met during the 2019 fiscal year. A retail agreement was executed in January 2011 for approximately 140,000 square feet of retail space which opened October 2011. The City pays one half of one percent (0.5%) of retail sales generated for a period of ten years. The City paid $354,801 during the current year of this grant. An agreement was executed in May 2013 for a retail sales center. The City pays eighty-five percent of one percent (.85%) of all retail sales generated for a period of twenty-five years. The City paid $2,432,831 during the current year of this grant. An agreement was executed in May 2012 in which the City pays a rebate of incremental property taxes on improvements. This agreement is for five years. The City paid $4,378 during the current year of this grant.


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An agreement was executed with the owner of an entertainment venue in April 2013. This agreement includes a 50% rebate of property taxes for 10 years and one-half of one percent of sales and use taxes (0.50%) for five years. The City paid $22,716 during the current year of the grant. An agreement was executed in June 2014 with a residential builder for a ten-year period. Payments will be calculated based on eighty percent (.80%) of the City’s one percent of use tax levied on housing materials purchased. The City paid $149,399 during the current year of this grant. An agreement was executed in April 2015 with a residential builder for a ten-year period. Payments will be calculated based on eighty percent (.80%) of the City’s one percent of use tax levied on housing materials purchased. The City paid $38,647 during the current year of this grant. An agreement was executed in August 2015 with a residential builder for a ten-year period. Payments will be calculated based on eighty percent (.80%) of the City’s one percent of use tax levied on housing materials purchased. The City paid $61,121 during the current year of this grant. An agreement was executed with a residential homebuilder in October 2015. The agreement is for a ten-year period. Payments are calculated based on eighty percent (.80%) of the City’s one percent of use tax levied on housing materials. The City paid $24,292 during the current year of the grant. An agreement was executed in August 2017 for a retail sales center. The City pays seventy-five percent of one percent (.75%) of all retail sales over a certain dollar amount generated for a period of twenty-five years. The City paid $623,275 for the current year of this grant. An agreement was executed in October 2016 for a retail sales center. The City pays one half percent (0.5%) of retail sales generated for a period of ten years. The City paid $125,828 during the current year of this grant. Planned Development Mixed Use Agreement The City has an agreement for the development of thirty-six (36) acres into an urban mixed-use community consisting of residential units, a 4-star hotel and a class A high rise office building. The developer will receive rebates of incremental City property taxes paid on the improvements. The maximum grant amount of rebates for the improvements has a principal balance of $3,000,000 bearing an interest rate of 4.75%, being repayable in three (3) annual installments of interest only and twenty-two (22) successive amortized annual installments of principal and interest. During the year ended September 30, 2019, the City rebated a total of $197,414 for the property tax increment payment for 2018. The cumulative amount rebated through September 30 was $1,553,807. Note 10. Deferred Compensation Plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan is administered by the International City Management Association Retirement Corporation (ICMARC). All assets and income are held in trust for the exclusive benefit of participants and their beneficiaries, and the City does have limited fiduciary responsibilities over the plan offerings and design; this plan is not reported in the financial statements of the City. The plan, available to all full-time City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency.


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Note 11. Defined Benefit Pension Plan Plan Description The City of Frisco participates as one of 887 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six-member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS’s defined benefit pension plan is a tax-qualified plan under Section 401(a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the City are required to participate in TMRS. Benefits Provided TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. At retirement, the benefit is calculated as if the sum of the employee’s contributions, with interest and the city-financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payment options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member’s deposits and interest. Members can retire at ages 60 and above with five or more years of service or with 20 years of service regardless of age. A member is vested after five years. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. A summary of plan provisions for the City are as follows:

Employee deposit rate: 7% Matching ratio (City to employee): 2 to 1

Years required for vesting: 5 Service retirement eligibility: 60/5, 0/20

Updated Service Credit: 100% Annuity Increase to retirees: 70% of CPI Repeating

Employees Covered by Benefits Terms At the December 31, 2018 valuation and measurement date, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefits 188 Inactive employees entitled to but not yet receiving benefits 478 Active employees 1,205

Total 1,871


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Contributions The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, and the city matching percentages are either 100%, 150% or 200%, both as adopted by the governing body of the City. Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarial determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees for the City of Frisco were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution rates for the City were 14.26% and 14.34% in calendar years 2018 and 2019, respectively. The City’s contributions to TMRS for the year ended September 30, 2019 were $13,445,761 and were equal to the required contributions. Net Pension Liability The City’s Net Pension Liability (NPL) was measured as of December 31, 2018, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The Total Pension Liability in the December 31, 2018 actuarial valuation was determined using the following actuarial assumptions: Inflation 2.5% per year Overall payroll growth 3% per year Investment rate of return 6.75%, net of pension plan investment

expense, including inflation Salary increases were based on a service-related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment, with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used, with male rates multiplied by 109% and female rates multiplied by 103% with a 3-year set-forward for both males and females. In addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who become disabled. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements subject to the 3% floor. The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2010 to December 31, 2014. They were adopted in 2015 and first used in the December 31, 2015 actuarial valuation. The post-retirement mortality assumption for healthy annuitants and Annuity Purchase Rate (APRs) are based on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. In conjunction with these changes first used in the December 31, 2013 valuation, the System adopted the Entry Age Normal actuarial cost method and a one-time change to the amortization policy. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term and long-term funding needs of TMRS.


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The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimates ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. In determining their best estimate of a recommended investment return assumption under the various alternative asset allocation portfolios, GRS focused on the area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative) with an adjustment for time (aggressive). At its meeting on July 30, 2015, the TMRS Board approved a new portfolio target allocation. The target allocation and best estimates of real rates of return for each major asset class are summarized in the following table:

Asset Class Target Allocation

Long-Term Expected Real Rate of Return

(Arithmetic) Domestic Equity 17.50% 4.30% International Equity 17.50% 6.10% Core Fixed Income 10.00% 1.00% Non-Core Fixed Income 20.00% 3.39% Real Return 10.00% 3.78% Real Estate 10.00% 4.44% Absolute Return 10.00% 3.56% Private Equity 5.00% 7.75%

100% Discount Rate The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to determine the discount rate was assumed that employee contributions and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan’s Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payment to determine the total pension liability.


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Changes in Net Pension Liability

Increase (Decrease) Total Pension Liability

(a)

Plan Fiduciary Net Position

(b)

Net Pension Liability (a) - (b)

Balance as of 12/31/2017 243,927,969$ 211,000,657$ 32,927,312$ Changes for the year:

Service cost 16,288,615 - 16,288,615 Interest 16,872,785 - 16,872,785 Difference between expected

and actual experience 1,087,595 - 1,087,595 Change in assumptions - - - Contributions-employer - 12,628,932 (12,628,932) Contributions-employee - 6,272,474 (6,272,474) Net investment income - (6,331,968) 6,331,968 Benefit payments, including refunds

of employee contributions (4,210,187) (4,210,187) - Administrative expense - (122,154) 122,154 Other changes - (6,380) 6,380

Net changes 30,038,808 8,230,717 21,808,091

Balance as of 12/31/2018 273,966,777$ 219,231,374$ 54,735,403$

Changes in Net Pension Liability Primary Government & Component Units

Primary

GovernmentComponent

Units Totals

Balance as of 12/31/2017 32,268,766$ 658,546$ 32,927,312$ Changes for the year:

Service cost 15,962,843 325,772 16,288,615 Interest 16,535,329 337,456 16,872,785 Change in benefit terms - - - Difference between expected

and actual experience 1,065,843 21,752 1,087,595 Change in assumptions - - - Contributions-employer (12,376,353) (252,579) (12,628,932) Contributions-employee (6,147,025) (125,449) (6,272,474) Net investment income 6,205,329 126,639 6,331,968 Benefit payments, including

refunds of employee contributions - - - Administrative expense 119,711 2,443 122,154 Other changes 6,252 128 6,380

Net changes 21,371,929 436,162 21,808,091

Balance as of 12/31/2018 53,640,695$ 1,094,708$ 54,735,403$


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Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City, calculated using the discount rate of 6.75%, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.75%) or 1 percentage point higher (7.75%) than the current rate:

1% Decrease in Discount Rate

Current Discount Rate

1% Increase in Discount Rate

City's NPL 103,813,384$ 54,735,403$ 15,350,155$

Pension Plan Fiduciary Net Position Detailed information about the pension plan’s Fiduciary Net Position is available in a separately issued TMRS financial report. The report may be obtained online at www.tmrs.com. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2019, the City recognized pension expense of $16,977,728; $16,638,173 for the primary government and $339,555 for the component units. The City reported deferred outflows and inflows of resources related to pensions from the following sources:

Deferred Outflows and Inflows Primary Government

Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual experience 4,146,268$ 679,162$ Changes in actuarial assumptions used - 656,129 Difference between projected and actual investments earnings 10,717,490 - Contributions subsequent to the measurement date 9,707,617 -

Total 24,571,375$ 1,335,291$

Deferred Outflows and Inflows Component Units

Deferred

Outflows of Resources


Differences between expected and actual experience 84,618$ 13,860$ Changes in actuarial assumptions used - 13,390 Difference between projected and actual investments earnings 218,724 - Contributions subsequent to the measurement date 198,116 -

Total 501,458$ 27,250$


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Deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date of $9,707,617, with $198,116 contributed for the component units, will be recognized as a reduction of the net pension liability for measurement year ending December 31, 2019 (i.e. recognized in the City’s financial statements September 30, 2020). Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows:

Measurement Year

Primary Government

Component Units At December 31

2019 3,815,980$ 77,877$ 3,893,857$ 2020 1,966,464 40,132 2,006,596 2021 2,032,101 41,471 2,073,572 2022 4,723,098 96,390 4,819,488 2023 676,768 13,812 690,580

Thereafter 314,056 6,410 320,466

Total 13,528,467$ 276,092$ 13,804,559$

Note 12. Other Postemployment Benefits Plan Description The City does not provide post-retirement health or dental care benefits to retirees. We do provide a plan that retirees can purchase through age 65, but they are responsible for 100% of the premium costs and this plan is not part of the City’s active employee plan. The City incurs no cost for providing these benefits, as retirees are included in a separate risk pool, there is an implicit rate subsidy and the City has a measurable OPEB liability. The City of Frisco participates in a defined benefit group-term life insurance plan known as the Supplemental Death Benefits Fund (SDBF) administered by the Texas Municipal Retirement System (TMRS). The City has elected, by ordinance, to participate in this program and provide group-term life insurance coverage for their active members and retirees. As the SDBF covers both active and retiree participants, with no segregation of assets, the SDBF is considered to be a single-employer unfunded OPEB plan. Since only the retiree participants qualifies as an OPEB, the SDBF is administered through a non‐qualifying trust per paragraph 4, item (b), of the Governmental Accounting Standards Board (GASB) Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions”. GASB Statement No. 75. Benefits The City offers its retired employees and their spouses under age 65 health insurance coverage under the separate plan from the active employees. Employees can retire and receive benefits upon reaching age 60 with five years of service or with 20 years of service. Only pre-Medicare benefits are provided. Spouses receive benefits based on their Medicare eligibility age. TMRS provides death benefits for active employees providing a lump-sum payment approximately equal to the employee’s annual salary (calculated based on the employee’s actual earnings, for the 12–month period preceding the month of death). The death benefit for retirees is considered other postemployment benefit (OPEB) and is a fixed amount of $7,500.


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Employees Covered by Benefit Terms For retiree health insurance at the October 1, 2017 valuation and September 30, 2019 measurement date, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefits 4 Active employees 1,123

Total 1,127

For TMRS supplemental death at the December 31, 2018 valuation and measurement date, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefits 146 Inactive employees entitled to but not yet receiving benefits 122 Active employees 1,205

Total 1,473

Contributions For retiree health insurance, retirees and their spouses currently receiving benefits are required to contribute specified amounts monthly toward the cost of health insurance premiums. Monthly retiree contribution rates are as follows:

Retiree Premiums Retiree Retiree + Spouse

EPO High Deductible 901$ 1,759$ EPO Low Deductible 1,036$ 1,981$

Total OPEB Liability The City of Frisco retiree health insurance total OPEB liability of $5,164,749 was measured as of September 30, 2019 and was determined by an actuarial valuation as of October 1, 2017. The City of Frisco TMRS supplemental death total OPEB liability of $1,588,738 was measured as of December 31, 2018 and was determined by an actuarial valuation as of that date. Actuarial Assumptions The retiree health insurance total OPEB liability in the October 1, 2017 actuarial valuation was determined using the following actuarial assumptions:

Discount rate as of measurement date 2.66%Discount rate for OPEB expense 4.24%Mortality table RPH 2006 total dataset mortality

table, with generational projectionsaccording to Scale MP-2018

Salary scale Based on years of services; 10.5% inyear 1, trending down to 3.5% after 24 years of service

Inflation 2.20%Plan participation rates 20% pre-Medicare eligible


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The discount rate was selected by City of Frisco based on the Bond Buyer 20-Bond General Obligation Index to reflect yields on long-term municipal bonds as of the measurement date. The TMRS supplemental death total OPEB liability in the December 31, 2018 actuarial valuation was determined using the following actuarial assumptions:

Inflation 2.50%Salary increases 3.50% to 10.5% including inflationDiscount rate* 3.71%Retirees’ share of benefit-related costs $0Administrative expense All administrative expenses are paid

through the Pension Trust andaccounted for under reportingrequirements under GASB StatementNo. 68.

Mortality rates – service retirees RP2000 Combined Mortality Tablewith Blue Collar Adjustment with malerates multiplied by 109% and femalerates multiplied by 103% andprojected on a fully generational basiswith scale BB.

Mortality rates – disabled retirees RP2000 Combined Mortality Tablewith Blue Collar Adjustment with malerates multiplied by 109% and femalerates multiplied by 103% with a 3year set-forward for both males andfemales. The rates are projected on afully generational basis with scale BBto account for future mortalityimprovements subject to the 3% floor.

The discount rate was based on the Fidelity index’s “20-Year Municipal GO AA Index” rate as of December 31, 2018.

Changes in Total OPEB Liability Retiree Health Insurance

Primary Government

Component Units Totals

Balance at September 30, 2018 4,374,782$ 89,281$ 4,464,063$ Changes for the year:

Service cost 329,962 6,734 336,696 Interest on the total OPEB liability 199,861 4,079 203,940 Difference between expected and actual experience (819,222) (16,719) (835,941) Changes in assumptions or other inputs 957,946 19,550 977,496 Benefit payments 18,125 370 18,495 Net changes 686,672 14,014 700,686

Balance at September 30, 2019 5,061,454$ 103,295$ 5,164,749$


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Changes in Total OPEB Liability TMRS Supplemental Death

Primary Government

Component Units Totals

Balance at December 31, 2017 1,404,708$ 28,668$ 1,433,376$ Changes for the year:

Service cost 131,201 2,678 133,879 Interest on the total OPEB liability 48,523 990 49,513 Difference between expected and actual experience 110,821 2,262 113,083 Changes in assumptions or other inputs (129,544) (2,644) (132,188) Benefit payments ** (8,746) (179) (8,925) Net changes 152,255 3,107 155,362

Balance at December 31, 2018 1,556,963$ 31,775$ 1,588,738$

**Due to the SDBF being considered an unfunded OPEB plan under GASB 75, benefit payments are treated as being equal to the employer’s yearly contributions for retirees. Sensitivity of the Total OPEB Liability to changes in the discount rate. The following presents the total OPEB liability of the City’s retiree health insurance calculated using the discount rate of 2.66%, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower (1.66%) or 1 percentage point higher (3.66%) than the current discount rate:

1% Decrease in Discount Rate

Current Discount Rate


City's OPEB 5,912,154$ 5,164,749$ 4,514,569$

The following presents the total OPEB liability of the City’s TMRS supplemental plan calculated using the discount rate of 3.71%, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower (2.71%) or 1 percentage point higher (4.71%) than the current discount rate:

1% Decrease in Discount Rate Current Discount


City's OPEB 1,950,680$ 1,588,738$ 1,316,843$

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rate. The following presents the total OPEB liability of the City retiree health insurance, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage point lower or 1 percentage point higher than the current healthcare cost trend rate.

1% Decrease in Discount Rate Current Discount


City's OPEB 3,857,435$ 5,164,749$ 6,789,647$


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OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended September 30, 2019, the City recognized OPEB expense of $735,585. At September 30, 2019, the City reported deferred outflows and inflows of resources related to OPEB from the following resources: Retiree Health Insurance




Differences between expected and actual experience 833,050$ 712,414$ Changes in actuarial assumptions used - 113,473 Difference between projected and actual investments earnings - - Contributions subsequent to the measurement date - -

Total 833,050$ 825,887$


Deferred Outflows

of ResourcesDeferred Inflows

of Resources

Differences between expected and actual experience 17,002$ 14,538$ Changes in actuarial assumptions used - 2,317 Difference between projected and actual investments earnings - - Contributions subsequent to the measurement date - -

Total 17,002$ 16,855$

TMRS Supplemental Death




Differences between expected and actual experience 98,563$ 115,213$ Changes in actuarial assumptions used 107,635 - Difference between projected and actual investments earnings - - Contributions subsequent to the measurement date 6,769 -

Total 212,967$ 115,213$


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Differences between expected and actual experience 2,011$ -$ Changes in actuarial assumptions used 2,196 2,351 Difference between projected and actual investments earnings - - Contributions subsequent to the measurement date 139 -

Total 4,346$ 2,351$

Deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date of $6,908 will be recognized as a reduction of the total OPEB liability in the City’s financial statements September 30, 2020. Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in pension expense as follows: Retiree Health Insurance

Measurement YearPrimary

GovernmentComponent

Units At September 30

2020 (1,890)$ (39)$ (1,929)$ 2021 (1,890) (39) (1,929) 2022 (1,890) (39) (1,929) 2023 (1,890) (39) (1,929) 2024 (1,890) (39) (1,929)

Thereafter 16,613 342 16,955

Total 7,163$ 147$ 7,310$

TMRS Supplemental Death

Measurement YearPrimary

GovernmentComponent

Units At December 31

2019 13,217$ 270$ 13,487$ 2020 13,217 270 13,487 2021 13,217 270 13,487 2022 13,217 270 13,487 2023 13,217 270 13,487

Thereafter 24,900 506 25,406

Total 90,985$ 1,856$ 92,841$


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Note 13. Risk Management The City is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets, errors and omissions, injuries to employees, and natural disasters. The City is a participant in the Texas Municipal League Workers’ Compensation Joint Insurance Fund (WC Fund) and the Texas Municipal League Joint Self-Insurance Fund (Property-Liability Fund), a public entity risk pool operated by the Texas Municipal League Board for the benefit of individual governmental units located within Texas. The government pays an annual premium to the Funds for its workers’ compensation and property and liability insurance coverage. The WC Fund and Property-Liability Fund are considered self-sustaining risk pools that provide coverage for its members for up to $1,000,000 per event, and $2,000,000 in aggregate. There were no significant reductions in insurance coverage from the previous year. Settled claims for risk have not exceeded insurance coverage for the past three years. During FY 2019, the City participated in a modified self-insurance program for Employee Benefits. Group medical benefits were administered by a third-party insurance provider. The City offers two plans with payroll deductions set aside to cover the monthly claims. The annually negotiated stop loss provision for 2019 was $200,000 per occurrence and 125% cap of claims. The liabilities for insurance claims reported are based on GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. These liabilities include an estimate for incurred but not reported claims. The estimated claims incurred but not reported as of September 30, 2019 totaled $2,500,000, which are recorded as a liability in the General Fund accounts payable. Changes in the liability for the past three years:

Claim Year

Liability Beginning of

Year

Current Year Claims and Changes

in EstimatesClaim

Payments

Liability End of Year

2017 - Health Insurance 1,976,896 12,984,072 12,693,804 2,267,164 2018 - Health Insurance 2,267,164 16,211,461 15,878,625 2,600,000 2019 - Health Insurance 2,600,000 17,164,972 17,264,972 2,500,000

Note 14. Interfund Receivables and Payables All interfund receivables and payable are considered short-term and, at September 30, 2019, consisted of the following:

Due toNon-major

Governmental Total

General Fund 1,733,126$ 1,733,126$

Total 1,733,126$ 1,733,126$

Due From


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All balances resulted from the time lag between the dates that transactions are recorded in the accounting system and that payments between funds are made. The City reports interfund transfers between many of its funds. The sum of all transfers presented in the table agrees with the sum of interfund transfers presented in the governmental and proprietary fund financial statements.

Transfers to General Fund TIRZ #1 Non-major

Governmental

Proprietary and Non-major

Proprietary Total

General Fund -$ -$ 84,000$ 961,312$ 1,045,312$ TIRZ #1 - - 1,421,513 - 1,421,513 Capital projects - - 11,701,749 2,623,875 14,325,624 Debt service - 20,582,246 2,614,776 - 23,197,022 Non-major governmental 598,202 - - - 598,202 Utility Fund - - - 345,530 345,530

Total 598,202$ 20,582,246$ 15,822,038$ 3,930,717$ 40,933,203$

Transfers From

Transfer from fund Transfer to fund AmountGeneral Fund:

Grant matching funds Non-major Governmental Funds - Grants 598,202$ TIRZ #1 Fund:

Debt service funding requirements Debt Service 20,582,246 Non-Major Governmental Funds:

Debt service funding requirements TIRZ #1 1,421,513 Debt service funding requirements Debt Service 2,614,776 Court warrant officer funding General Fund 84,000 Capital outlay funding Capital Projects 11,701,749

Proprietary Funds:G&A for Environmental Services General Fund 861,312 G&A for Stormwater Drainage General Fund 100,000 G&A Stormwater Drainage Utility Fund 58,088 G&A Environmental Services Utility Fund 287,442 Capital outlay funding Capital Projects 2,623,875

Total 40,933,203$


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Note 15. Operating Lease Commitments The City entered into rental agreements in excess of one year during prior fiscal years. During fiscal year 2019, the City entered into additional agreements in excess of one year. The following commitments remain:

FY At September 30

2019 166,707$ 2020 156,491 2021 77,976

Rent paid under operating leases was approximately $208,381 for the year ended September 30, 2019. Note 16. Contingent Liabilities The City has participated in state and federally assisted grant programs. These programs are subject to program compliance audits and adjustments by the grantor agencies or their representatives. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. Any liability for reimbursement which may arise as the result of these audits is not believed to be material. In June 2006, the North Texas Municipal Water District issued $35,235,000 in revenue bonds, series 2006. This bond issue is for the purpose of constructing the Panther Creek Wastewater System benefiting the City of Frisco. In March 2009, an additional $20,210,000 in revenue bonds, series 2009 was issued for expansion of the system. In 2014, an additional bond issue refunded a portion of the 2006 revenue bonds. In 2017, an additional bond issue refunded a portion of the 2009 revenue bond. The outstanding principal of the revenue bonds at September 30, 2019 is $25,835,000. In 2015, the North Texas Municipal Water District issued bonds for the purpose of constructing the Stewart Creek West Regional Wastewater System. The outstanding principal of these bonds at September 30, 2019 is $55,690,000. The City’s contractual minimum payment is required to cover the full cost of service including the principal and interest payments incurred related to this debt. The City of Frisco is in full compliance with this agreement at September 30, 2019. Note 17. Litigation The City is party to several legal actions arising in the ordinary course of business. In the opinion of the City’s management, the City has adequate legal defense and/or insurance coverage regarding each of these actions and does not believe that they will materially affect the City’s operations or financial position. Note 18. Component Unit Remediation Obligations During FY 2019, all escrowed funds were used by the Component Units to purchase the remediated land surrounding a local manufacturing plant which is now closed. The purchase was completed upon execution of an amended Master Settlement Agreement. Environmental consulting services costs were encumbered during FY 2019, with no additional remediation costs anticipated regarding this land purchase.

79

REQUIRED SUPPLEMENTARY INFORMATION

City of Frisco Schedule of Changes in Net Pension Liability and Related Ratios Texas Municipal Retirement System Last 5 Years

80

Measurement Year

Measurement Year

Measurement Year

Measurement Year

Measurement Year

2014 2015 2016 2017 2018Total pension liability:

Service cost 9,985,109$ 12,146,969$ 13,533,172$ 14,945,284$ 16,288,615$ Interest 10,863,498 12,134,224 13,102,946 14,856,079 16,872,785 Difference between expected and

actual experience (1,557,705) (320,688) 1,645,340 3,176,149 1,087,595 Change in assumptions - (1,452,583) - - - Benefit payments, including refunds of

employee contributions (2,274,946) (2,162,276) (2,696,424) (3,333,927) (4,210,187)

Net change in total pension liability 17,015,956 20,345,646 25,585,034 29,643,585 30,038,808

Total pension liability - beginning 151,337,748 168,353,704 188,699,350 214,284,384 243,927,969

Total pension liability - ending (a) 168,353,704 188,699,350 214,284,384 243,927,969 273,966,777

Plan fiduciary net position:Contributions - employer 7,982,625 9,779,163 10,375,914 11,609,557 12,628,932 Contributions - employee 4,173,145 4,790,759 5,187,963 5,739,055 6,272,474 Net investment income 6,923,943 203,262 10,161,230 24,019,515 (6,331,968) Benefit payments, including refunds of

employee contributions (2,274,946) (2,162,276) (2,696,424) (3,333,927) (4,210,187) Administrative expense (72,257) (123,767) (114,632) (124,330) (122,154) Other (5,941) (6,113) (6,176) (6,302) (6,380)

Net change in plan fiduciary net position 16,726,569 12,481,028 22,907,875 37,903,568 8,230,717

Plan fiduciary net position - beginning 120,981,617 137,708,186 150,189,214 173,097,089 211,000,657

Plan fiduciary net position - ending (b) 137,708,186 150,189,214 173,097,089 211,000,657 219,231,374

Net pension liability - ending (a) - (b) 30,645,518$ 38,510,136$ 41,187,295$ 32,927,312$ 54,735,403$

Plan fiduciary net position as a percentage of total pension liability 81.80% 79.59% 80.78% 86.50% 80.02%

Covered payroll 59,616,360$ 68,433,626$ 74,113,757$ 81,936,863$ 89,252,684$

Net pension liability as a percentage of covered payroll 51.40% 56.27% 55.57% 40.19% 61.33%

Notes to Schedule: Historical data not available - GASB 68 implemented in FY 2015.

City of Frisco Schedule of Contributions Texas Municipal Retirement System Last 5 Fiscal Years

81

2015 2016 2017 2018 2019

Actuarially determined contribution 9,034,646$ 10,290,995$ 11,367,240$ 12,458,770$ 13,445,761$

Contributions in relation to the actuarially determined contribution 9,034,646 10,290,995 11,367,240 12,458,770 13,445,761

Contribution deficiency/(excess) -$ -$ -$ -$ -$

Covered payroll 63,590,086$ 64,421,645$ 79,650,345$ 87,320,494$ 93,902,520$

Contributions as a percentage ofcovered payroll 14.21% 15.97% 14.27% 14.27% 14.32%

Notes to Schedule of Contributions

Valuation Date:Notes Actuarially determined contribution rates are calculated

as of December 31 and become effective in January13 months later.

Methods and assumptions used to determine contribution rates:

Actuarial cost method Entry age normalAmortization method Level percentage of payroll, closedRemaining amortization period 27 yearsAsset valuation method 10 Year smoothed market; 15% soft corridorInflation 2.5%Salary increases 3.50% to 10.5% including inflationInvestment rate of return 6.75%Retirement Age Experience-based table of rates that are specific to

the City's plan of benefits. Last updated for the 2015 valuation pursuant to an experience study of the period 2010 - 2014

Mortality RP 2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% and projected on a fully generational basis with scale BB

Other information:Notes There were no benefit changes during the year.


City of Frisco Schedule of Changes in OPEB Liability and Related Ratios TMRS Supplemental Death Last 2 Years

82

Measurement Year

Measurement Year

2017 2018

Total OPEB liability:Service cost 106,518$ 133,879$ Interest 45,281 49,513 Differences between expected and actual experience - 113,083 Change in assumptions 141,034 (132,188) Benefit payments, including refunds of employee contributions (8,194) (8,925)

Net change in total OPEB liability 284,639 155,362

Total OPEB liability - beginning 1,148,737 1,433,376

Total OPEB liability - ending 1,433,376$ 1,588,738$

Covered payroll 81,936,863$ 89,252,684$

Total OPEB liability as a percentage of covered payroll 1.75% 1.78%

Valuation Date:Actuarial valuation date December 31, 2018Measurement date December 31, 2018Last experience study date Period December 31, 2010 to December 31, 2014

Methods and assumptions used to determine contribution rates:Inflation 2.5%Salary increases 3.50% to 10.5% including inflationDiscount rate as of measurement date 3.71%Retirees' share of benefit-related costs $0Adminstrative expenses All administrative expenses are paid through the

Pension Trust and accounted for under reporting requirements under GASB Statement No. 68

Mortality rates - service retirees RP 2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% and projected on a fully generational basis with scale BB

Mortality rates - service retirees RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% with a 3 year set-forward for both males and females. The rates are projected on a fully generational basis with scale BB to account for future mortality improvements subject to the 3% floor.

Other Information: Notes There were no benefit changes during the year.


City of Frisco Schedule of Changes in OPEB Liability and Related Ratios Retiree Health Insurance Last 2 Years

83

Measurement Year

Measurement Year

2018 2019Total OPEB liability:

Service cost 344,784$ 336,696$ Interest 161,496 203,940 Differences between expected and actual experience - (835,941) Change in assumptions (156,560) 977,496 Benefit payments, including refunds of employee contributions 20,225 18,495

Net change in total OPEB liability 369,945 700,686

Total OPEB liability - beginning 4,094,118 4,464,063

Total OPEB liability - ending 4,464,063$ 5,164,749$

Covered payroll 89,564,242$ 96,215,258$

Total OPEB liability as a percentage of covered payroll 4.98% 5.37%

Valuation Date:Actuarial valuation date October 1, 2017Measurement date September 20, 2019Last experience study date December 2017

Methods and assumptions used to determine contribution rates:

Discount rate as of measurement date 2.66%Discount rate for OPEB expense 4.24%Mortality table

RP 2006 total dataset mortality table, with generational projection according to Scale MP-2018

Salary scaleBased on years of service; 10.5% in year 1, trending down to 3.5% after 24 years of service

Inflation 2.20%Plan participation rates 20% pre-Medicare eligible

Healthcare trend rate:Current rate 0.00%Ultimate rate 5.00%Year ultimate rate is reached 2028

Other Information:Notes There were no benefit changes during the year


APPENDIX B

NORTH TEXAS MUNICIPAL WATER DISTRICT PANTHER CREEK REGIONAL WASTEWATER SYSTEM

FINANCIAL DATA (1)

FOR THE PARTICIPANT (CITY OF FRISCO)

_______________ (1) The following condensed operating statements in this Appendix B have been compiled using accounting principles customarily

employed in the determination of net revenues available for debt service, and in all instances exclude depreciation, transfers,debt service payments and expenditures identified as capital.

B - 1

CITY OF FRISCO

WATERWORKS AND SEWER SYSTEM CONDENSED STATEMENT OF OPERATIONS (1)

Fiscal Year Ended September 30,2019 2018 2016 2015 2014

Revenues 98,808,380$ 98,512,115$ 85,665,950$ 70,632,561$ 56,697,442$ Expenses 80,571,752 73,520,771 70,436,029 50,816,353 44,812,192 Net Income 18,236,628$ 24,991,344$ 15,229,921$ 19,816,208$ 11,885,250$

Water Customers 59,172 57,661 54,261 49,740 47,039 Sewer Customers 55,842 53,547 50,212 46,763 44,312

_______________ (1) The above stated condensed statements have been compiled using principles customarily employed in the determination ofnet revenues available for payment of debt service, and in all instance exclude depreciation, transfers, debt service payments andexpenditures identified as capital. The City has no outstanding Waterworks and Sewer System Revenue Bonds.

MONTHLY WATER RATES - (EFFECTIVE JANUARY 1, 2019)

Inside City Limits Outside City LimitsFirst 2,000 Gallons $18.04 (Minimum) First 2,000 Gallons $27.06 (Minimum)Next 2,001 - 15,000 Gallons $3.92/M Gallons Next 2,001 - 15,000 Gallons $5.88/M GallonsNext 15,000 - 25,000 Gallons $4.56/M Gallons Next 15,000 - 25,000 Gallons $6.84/M GallonsNext 25,001 - 40,000 Gallons $4.88/M Gallons Next 25,001 - 40,000 Gallons $7.32/M GallonsNext 40,000 - 80,000 Gallons $5.65/M Gallons Next 40,000 - 80,000 Gallons $8.48/M GallonsOver 80,001 Gallons $6.78/M Gallons Over 80,001 Gallons $10.17/M Gallons

MONTHLY SEWER RATES - (EFFECTIVE JANUARY 1, 2019)

First 2,000 Gallons $ 25.44 (Minimum)Over 2,000 Gallons $ 5.36/ M GallonsNo maximum

APPENDIX C

FORM OF BOND COUNSEL'S OPINION

May 27, 2020

NORTH TEXAS MUNICIPAL WATER DISTRICTPANTHER CREEK REGIONAL WASTEWATER SYSTEM

CONTRACT REVENUE BONDS, SERIES 2020,

DATED APRIL 15, 2020$__________

AS BOND COUNSEL for the North Texas Municipal Water District (the "Issuer"), inconnection with the issuance of the Panther Creek Wastewater System Contract Revenue Bonds,Series 2020 (the "Bonds"), we have examined into the legality and validity of the Bonds, which bearinterest from the dates and mature on the dates, and are subject to redemption, in accordance withthe terms and conditions stated in the text of the Bonds. Terms used herein and not otherwisedefined shall have the meaning given in the Resolution of the Issuer authorizing the issuance and saleof the Bonds (the "Resolution").

WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and lawsof the State of Texas, and a transcript of certified proceedings of the Issuer, and other pertinentinstruments relating to the authorization of the Bond to be initially delivered (the "Initial Bond") andthe Bonds to be delivered in substitution therefor (the "Definitive Bonds") and the issuance anddelivery of the Initial Bond, including the executed Initial Bond and a printed form for the DefinitiveBonds initially made available by the Issuer for conversion of and exchange for the Initial Bond.

BASED ON SAID EXAMINATION, IT IS OUR OPINION that the Initial Bond andDefinitive Bonds have been duly authorized and the Initial Bond has been duly issued and delivered,all in accordance with law, and that, except as may be limited by laws relating to sovereign immunityand to bankruptcy, reorganization, and other similar matters affecting creditors' rights, (i) thecovenants and agreements in the Bond Resolution constitute valid and binding obligations of theIssuer, and the Initial Bond constitutes and Definitive Bonds will constitute valid and legally bindingspecial obligations of the Issuer, which, are secured by and payable from a first lien on and pledgeof the "Pledged Revenues" as defined in the Bond Resolution, including the Gross Revenues of theIssuer's Panther Creek Regional Wastewater System, and including specifically certain payments tobe received by the Issuer from the City of Frisco, Texas (the "Participant"), under the "Panther CreekRegional Wastewater System Contract", dated September 23, 2004 (the "Contract"), among theParticipant and the Issuer, and any payments to be received by the Issuer under all similar contractswith any Additional Participants as defined and permitted in the Contract, and (ii) the Contract isauthorized by law, has been duly executed, is valid, and is legally binding upon and enforceable bythe parties thereto in accordance with their respective terms and provisions.

THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Resolution,to issue additional parity revenue bonds which also may be secured by and made payable from a firstlien on and pledge of the aforesaid Pledged Revenues.

THE ISSUER also has reserved the right, subject to the restrictions stated in the BondResolution, to amend the Bond Resolution with the approval of the holders or owners of fifty-onepercent in principal amount of all outstanding bonds which are secured by and payable from a firstlien on and pledge of the aforesaid Pledged Revenues.

THE REGISTERED OWNERS of the Bonds shall never have the right to demand paymentof the principal thereof or interest thereon out of any funds raised or to be raised by taxation, or fromany source whatsoever other than specified in the Bond Resolution.

IN OUR OPINION, except as discussed below, the interest on the Bonds is excludable fromthe gross income of the owners for federal income tax purposes under the statutes, regulations,published rulings, and court decisions existing on the date of this opinion. We are further of theopinion that the Bonds are not "specified private activity bonds" and that, accordingly, interest onthe Bonds will not be included as an alternative minimum tax preference item under section 57(a)(5)of the Internal Revenue Code of 1986, as amended (the "Code"). In expressing the aforementionedopinions, we have relied on, certain representations, the accuracy of which we have notindependently verified, and assume compliance with certain covenants regarding the use andinvestment of the proceeds of the Bonds and the use of the property financed therewith. We callyour attention to the fact that if such representations are determined to be inaccurate or if the Issuerfails to comply with such covenants, interest on the Bonds may become includable in gross incomeretroactively to the date of issuance of the Bonds.

OUR OPINIONS ARE BASED ON EXISTING LAW, which is subject to change. Suchopinions are further based on our knowledge of facts as of the date hereof. We assume no duty toupdate or supplement our opinions to reflect any facts or circumstances that may thereafter come toour attention or to reflect any changes in any law that may thereafter occur or become effective.Moreover, our opinions are not a guarantee of result and are not binding on the Internal RevenueService (the "Service"); rather, such opinions represent our legal judgment based upon our reviewof existing law and in reliance upon the representations and covenants referenced above that wedeem relevant to such opinions. The Service has an ongoing audit program to determine compliancewith rules that relate to whether interest on state or local obligations is includable in gross incomefor federal income tax purposes. No assurance can be given whether or not the Service willcommence an audit of the Bonds. If an audit is commenced, in accordance with its current publishedprocedures the Service is likely to treat the Issuer as the taxpayer. We observe that the Issuer hascovenanted not to take any action, or omit to take any action within its control, that if taken oromitted, respectively, may result in the treatment of interest on the Bonds as includable in grossincome for federal income tax purposes.

EXCEPT AS STATED ABOVE, we express no opinion as to any other federal, state, or localtax consequences of acquiring, carrying, owning, or disposing of the Bonds, including the amount,accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisorsregarding the applicability of any collateral tax consequences of owning the Bonds.

OUR SOLE ENGAGEMENT in connection with the issuance of the Bonds is as BondCounsel for the Issuer, and, in that capacity, we have been engaged by the Issuer for the sole purposeof rendering our opinions with respect to the legality and validity of the Bonds under the Constitutionand laws of the State of Texas, and with respect to the exclusion from gross income of the intereston the Bonds for federal income tax purposes, and for no other reason or purpose. We have not beenrequested to investigate or verify, and have not independently investigated or verified, any records,data, or other material relating to the financial condition or capabilities of the Issuer or the MemberCities, or the adequacy of the Pledged Revenues, and have not assumed any responsibility withrespect thereto. We express no opinion and make no comment with respect to the marketability ofthe Bonds. Our role in connection with the Issuer's Official Statement prepared for use in connectionwith the sale of the Bonds has been limited as described therein

THE FOREGOING OPINIONS represent our legal judgment based upon a review of existinglegal authorities that we deem relevant to render such opinions and are not a guarantee of a result.

Respectfully,

Financial Advisory ServicesProvided By

PRELIMINARY OFFICIAL STATEMENT Rating: (See "Continuing Disclosure of Information" herein) S&P: "A+"

Dated April 13, 2020 (See “Bond Insurance and "Other Information -

Ratings" herein) NEW ISSUE - Book-Entry-Only In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under statutes, regulations, published rulings and court decisions existing on the date thereof, subject to the matters described under "TAX MATTERS" herein.

THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS.



Dated Date: April 15, 2020 Due: June 1, as shown below Interest Accrues: Delivery Date (defined below) PAYMENT TERMS . . . Interest on the $4,215,000* North Texas Municipal Water District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds, Series 2020 (the "Bonds") will accrue from the date of initial delivery thereof (the “Delivery Date”) to the initial purchaser there of (the “Initial Purchaser”), and will be payable on June 1 and December 1 of each year until maturity or prior redemption, commencing June 1, 2021, 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 ("DTC") pursuant to the Book-Entry-Only System described herein. 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 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 beneficial owners of the Bonds. See "THE BONDS - Book-Entry-Only System" herein. The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, National Association, currently in Dallas, Texas (see "THE BONDS - Paying Agent/Registrar"). SECURITY AND SOURCE OF PAYMENT . . . The Bonds are being issued pursuant to Chapter 62, Acts of the 52nd Legislature, Regular Session, 1951, as amended (the “District Act”), Chapter 30, Texas Water Code, as amended, and other applicable laws, and a resolution (the “Resolution”) approved by the Board of Directors of the District. The Bonds are special obligations of North Texas Municipal Water District (the “District”) secured by and payable, both as to principal and interest, solely from payments to be received by the District from the City of Forney (the “City”) from the gross revenues of the City’s Waterworks and Sewer System, to the extent required and provided in the North Texas Municipal Water District – Mustang Creek Wastewater Interceptor System Contract (the “Contract”), duly executed between the District and City of Forney (see Appendix A, attached) and from payments from future Additional Participants, if any, as permitted by the Contract. PURPOSE . . . Proceeds from the sale of the Bonds will be used (i) for the acquisition, construction and improvement of the Mustang Creek Wastewater Interceptor System, Lift Station and other System improvements; (ii) to fund a debt service reserve fund; (iii) and to pay costs associated with the issuance of the Bonds. BOND INSURANCE . . . The District has submitted applications to municipal bond insurance companies to have the payment of the principal and interest on the Bonds insured by a municipal bond insurance policy. In the event the Bonds are qualified for municipal bond insurance, the Initial Purchaser may elect to purchase, at its sole expense, municipal bond insurance to insure the Bonds. (See "Bond Insurance" and "Bond Insurance - Bond Insurance Risk Factors" herein.) MATURITY SCHEDULE CUSIP Prefix: 66286P (1)

Principal Maturity Price/ CUSIP Principal Maturity Price/ CUSIPAmount June 1 Rate Yield Suffix (1) Amount June 1 Rate Yield Suffix (1)

90,000$ 2021 140,000$ 203690,000 2022 140,000 203795,000 2023 145,000 203895,000 2024 150,000 2039

100,000 2025 155,000 2040100,000 2026 160,000 2041105,000 2027 165,000 2042110,000 2028 170,000 2043110,000 2029 175,000 2044115,000 2030 180,000 2045120,000 2031 185,000 2046120,000 2032 195,000 2047125,000 2033 200,000 2048130,000 2034 205,000 2049135,000 2035 210,000 2050

_______________ (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Global Market Intelligence on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. CUSIP numbers are provided for convenience of reference only. None of the District, the Financial Advisor, or the Initial Purchaser is responsible for the selection or correctness of the CUSIP numbers set forth herein. REDEMPTION OPTION. . . The District reserves the right, at its option, to redeem Bonds having stated maturities on and after June 1, 2030, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on June 1, 2029, or any date thereafter, at a price equal to the principal amount thereof plus accrued interest to the date of redemption (see "THE BONDS - Optional Redemption") LEGALITY . . . The Bonds are offered for delivery when, as and if issued and received by the Initial Purchaser and subject to the approving opinion of the Attorney General of Texas and the opinion of McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel (see Appendix D, "Form of Bond Counsel's Opinion"). DELIVERY. . . It is expected that the Bonds will be available for delivery through the facilities of DTC on June 3, 2020.

BIDS DUE THURSDAY, APRIL 23, 2020, AT 10:00 AM, CDT _________________ * Preliminary, subject to change. See place and Time of Bid Opening and Adjustment of Principal Amount and/or Types of Bids in the Notice of Sale and Bidding Instructions.

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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 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. For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission (the "Rule"), this document constitutes an Official Statement of the District with respect to the Bonds that has been "deemed final" by the District as of its date except for the omission of no more than the information permitted by the Rule. The information set forth herein has been obtained from the District 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 the representation, promise, or guarantee of the Financial Advisor. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. Any information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District or other matters described herein since the date hereof. See "Continuing Disclosure of Information" for a description of the District's undertaking to provide certain information on a continuing basis. Neither the District nor its Financial Advisor make any representation as to the accuracy, completeness, or adequacy of the information supplied by The Depository Trust Company for use in this Official Statement. The cover page for each series of Bonds contains certain information for general reference only and is not intended as a summary of the respective offering. Investors should read the entire Official Statement, including all schedules and appendices hereto, to obtain information essential to making an informed investment decision. The agreements of the District and others related to the Bonds are contained solely in the contracts described herein. Neither this Official Statement nor any other statement made in connection with the offer or sale of the Bonds is to be construed as constituting an agreement with the purchaser of the Bonds. INVESTORS SHOULD READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING ALL SCHEDULES AND APPENDICES ATTACHED HERETO, TO OBTAIN INFORMATION ESSENTIAL TO MAKING AN INFORMED INVESTMENT DECISION. This Official Statement contains "Forward-Looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, and achievements to be different from future results, performance, and achievements expressed or implied by such forward-looking statements. Investors are cautioned that the actual results could differ materially from those set forth in the forward-looking statements. The Bonds are exempt from registration with the Securities and Exchange Commission and consequently have not been registered therewith. The registration, qualification, or exemption of the Bonds in accordance with applicable securities law provisions of the jurisdiction in which the Bonds have been registered, qualified or exempted should not be regarded as a recommendation thereof.

TABLE OF CONTENTS

OFFICIAL STATEMENT SUMMARY .............................. 3

DISTRICT OFFICIALS, STAFF AND CONSULTANTS.. 4 BOARD OF DIRECTORS ................................................... 4 MANAGEMENT & STAFF ................................................. 4 CONSULTANTS AND ADVISORS ...................................... 4

INTRODUCTION .................................................................. 6

THE NORTH TEXAS MUNICIPAL WATER DISTRICT 7

THE BONDS .......................................................................... 7

BOND INSURANCE ........................................................... 12

DEBT INFORMATION ...................................................... 13 TABLE 1 - DEBT SERVICE REQUIREMENTS ................... 13

SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION ........................................................... 14

CITY OF FORNEY, TEXAS .............................................. 24 TABLE 2 – WATERWORKS AND SEWER SYSTEM

CONDENSED STATEMENT OF OPERATIONS ......... 24 TABLE 3 – MONTHLY WATER RATES ........................... 24 TABLE 4 – MONTHLY SEWER RATES ............................ 24 TABLE 5 – SPECIAL MONTHLY WATER RATES ............. 24

TAX MATTERS ................................................................... 25

OTHER INFORMATION ...................................................27 RATINGS .......................................................................27 LITIGATION ...................................................................27 REGISTRATION AND QUALIFICATION OF BONDS FOR

SALE ...................................................................27 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE

PUBLIC FUNDS IN TEXAS ....................................27 LEGAL MATTERS ..........................................................27 AUTHENTICITY OF FINANCIAL DATA AND OTHER

INFORMATION .....................................................28 CONTINUING DISCLOSURE OF INFORMATION ...............28 FINANCIAL ADVISOR ....................................................29 INITIAL PURCHASER OF THE BONDS .............................30 FORWARD-LOOKING STATEMENTS DISCLAIMER ..........30 MISCELLANEOUS ..........................................................30

APPENDICES MUSTANG CREEK WASTEWATER INTERCEPTOR

SYSTEM CONTRACT ................................................... A CITY MISCELLANEOUS STATISTICAL DATA ....................... B EXCERPTS FROM THE CITY OF FORNEY, TEXAS ANNUAL

FINANCIAL REPORT ................................................... C FORM OF BOND COUNSEL'S OPINION ................................ D The cover page hereof, this page, the appendices included herein and any addenda, supplement or amendment hereto, are part of the Official Statement.

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OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE DISTRICT .............................. North Texas Municipal Water District (the "District") is a conservation and reclamation district

and political subdivision of the State of Texas, created and functioning under Article 16, Section 59, of the Texas Constitution, pursuant to Chapter 62, Acts of the 52nd Legislature of Texas, Regular Session, 1951, as amended (the "District Act").

THE BONDS .................................. The Bonds are issued as $4,215,000* Mustang Creek Wastewater Interceptor System Contract

Revenue Bonds, Series 2020. The Bonds mature on June 1 in each of the years and in the amounts shown on the cover hereof (see "THE BONDS - Description of the Bonds").

PAYMENT OF INTEREST ............... Interest on the Bonds accrues from the date of initial delivery thereof (the “Delivery Date”),

and is payable on June 1, 2021, and each June 1 and December 1 thereafter until maturity or prior redemption (see "THE BONDS - Description of the Bonds" and "THE BONDS – Optional Redemption").

RESERVE FUND REQUIREMENT ... The District is required to accumulate and maintain in a Reserve Fund an aggregate amount of

money and/or investments equal in market value to the average annual principal and interest requirements on all outstanding parity bonds (the "Reserve Required Amount"). A portion of the Reserve Fund will be funded with proceeds of the Bonds.

AUTHORITY FOR ISSUANCE .......... The Bonds are issued pursuant to the District Act, Chapter 30, Texas Water Code, as amended,

and other applicable laws (see "THE BONDS - Authority for Issuance"). SECURITY FOR THE BONDS .......... The Bonds are special obligations of the District payable, both as to principal and interest,

solely from payments to be received by the District from the City of Forney (the “City”) from gross revenues of the City’s Wastewater System and, pursuant to terms and conditions of the Contract and Resolution (as such terms are defined herein) as more fully described herein and payments from future Additional Participants, if any, as permitted by the Contract, (see “The Bonds – Security and Source of Payment” and Appendix A, attached).The Bonds are on a parity in all respects with the $28,530,000 currently outstanding amount of Mustang Creek Wastewater Interceptor System Contract Revenue Bonds (the “Outstanding Bonds”) and any Additional Bonds (hereinafter defined) issued on a parity with the Parity Bonds (hereinafter defined) under the Resolution.

OPTIONAL REDEMPTION ............. The District reserves the right, at its option, to redeem Bonds having stated maturities on and

after June 1, 2030, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on June 1, 2029, or any date thereafter, at a price equal to the principal amount thereof plus accrued interest to the date of redemption (see "THE BONDS - Optional Redemption").

TAX EXEMPTION.......................... In the opinion of Bond Counsel, the interest on the Bonds will be excludable from gross

income for federal income tax purposes under existing law, subject to the matters described under the caption "TAX MATTERS" herein, including the alternative minimum tax on corporations.

USE OF PROCEEDS ....................... Proceeds from the sale of the Bonds will be used (i) for the acquisition, construction and

improvement of the Mustang Creek Wastewater Interceptor System, Lift Station and other System improvements; (ii) to fund a debt service reserve fund; (iii) and to pay costs associated with the issuance of the Bonds.

MUNICIPAL BOND INSURANCE AND RATINGS .............................. Applications have been made for a commitment for municipal bond guaranty insurance on the

Bonds. The purchase of such insurance, if available, and payment of all associated costs, including the premium charged by the insurer, and fees charged by any rating companies, other than S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC (“S&P”) as a result of such insurance, will be paid by the Initial Purchaser. The Bonds and the Outstanding Bonds are rated "A+" by S&P (see “BOND INSURANCE” and "Other Information - Ratings"). Additionally, the Outstanding Bonds are rated by Moody’s Investors Service, Inc. (“Moody’s”).

BOOK-ENTRY-ONLY SYSTEM ...... The definitive Bonds will be initially registered and delivered only to Cede & Co., the

nominee of DTC pursuant to the Book-Entry-Only System described herein. 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 beneficial owners thereof. Principal 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 beneficial owners of the Bonds (see "THE BONDS - Book-Entry-Only System").

PAYMENT RECORD ...................... The Bonds are the third series of obligations payable from payments under the Contract. The

City has never defaulted in payment of its own obligations. _________________ * Preliminary, subject to change.

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NORTH TEXAS MUNICIPAL WATER DISTRICT DISTRICT OFFICIALS, STAFF AND CONSULTANTS

BOARD OF DIRECTORS

Don Gordon, Garland, PresidentLarry Parks, Rockwall, Vice President

Darrell Grooms, Forney, Secretary

ALLEN FARMERSVILLE FORNEY FRISCOJoe Farmer George Crump John Carr Richard PeasleyJames Kerr Lynn Shuyler

GARLAND McKINNEY MESQUITE PLANOJack May Joe Joplin Terry Sam Anderson Phil Dyer

Charles McKissick Brenda Jean Patrick James R. Hogan

RICHARDSON ROCKWALL ROYSE CITY WYLIEJohn Murphy Chip Imrie David Hollifield Marvin FullerJohn Sweeden Blair Johnson Keith Stephens

PRINCETONPending

MANAGEMENT & STAFF

Executive Director/General Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thomas W. Kula

Deputy Director - Administrative Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rodney Rhoades

Assistant Deputy - Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Erik Felthous

Deputy Director of Engineering & CIP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cesar Baptista

Deputy Director of Operations & Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mike Rickman

CONSULTANTS AND ADVISORS

General Counsel ..................................................................................................................................................... Saunders, Walsh & Beard McKinney, Texas Bond Counsel .......................................................................................................................................... McCall, Parkhurst & Horton L.L.P

Dallas, Texas Financial Advisor ......................................................................................................................................................... Hilltop Securities, Inc.

Fort Worth, Texas

For additional information regarding the District, please contract:

Mr. Rodney Rhoades Mr. David K. MedanichMr. Erik Felthous Mr. Nick BulaichNorth Texas Municipal Water District or Hilltop Securities Inc.P.O. Box 2408 777 Main Street, Suite 1200Wylie, Texas 75098 Fort Worth, TX 76102(972) 442-5405 (817) 332-9710

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6

PRELIMINARY OFFICIAL STATEMENT

RELATING TO



INTRODUCTION

This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $4,215,000* North Texas Municipal Water District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds, Series 2020. Capitalized terms used in this Official Statement have the same meanings assigned to such terms in the resolution (the "Resolution" or the "Bond Resolution") to be adopted on the date of sale of the Bonds which will authorize the issuance of the Bonds, except as otherwise indicated herein. There follows in this Official Statement descriptions of the Bonds and certain information regarding the District and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the District's Financial Advisor, Hilltop Securities Inc. ("HilltopSecurities"), Fort Worth, Texas. INFECTIOUS DISEASE OUTLOOK (COVID-19) . . . The World Health Organization has declared a pandemic following the outbreak of COVID-19, a respiratory disease caused by a new strain of coronavirus (the “Pandemic”), which is currently affecting many parts of the world, including the United States and Texas. On January 31, 2020, the Secretary of the United States Health and Human Services Department declared a public health emergency for the United States in connection with COVID-19. On March 13, 2020, the President of the United States (the “President”) declared the Pandemic a national emergency and the Texas Governor (the “Governor”) declared COVID-19 an imminent threat of disaster for all counties in Texas (collectively, the “disaster declarations”). On March 25, 2020, in response to a request from the Governor, the President issued a Major Disaster Declaration for the State of Texas. Pursuant to Chapter 418 of the Texas Government Code, the Governor has broad authority to respond to disasters, including suspending any regulatory statute prescribing the procedures for conducting state business or any order or rule of a state agency that would in any way prevent, hinder, or delay necessary action in coping with this disaster and issuing executive orders that have the force and effect of law. The Governor has issued a number of executive orders relating to COVID-19 preparedness and mitigation. These include, for example, the issuance of Executive Order which, among other things, prohibits social gatherings of more than 10 people through April 30, 2020, and orders the closure of schools throughout the state through May 4, 2020, unless otherwise extended, modified, rescinded, or superseded by the Governor. In addition, certain of the counties in the District’s service area have issued “shelter in place” or “stay home” orders for most citizens except when engaged in specified essential businesses and government functions. Many of the federal, state and local actions and policies under the aforementioned disaster declarations are focused on limiting instances where the public can congregate or interact with each other, which affects economic growth within Texas. Since the disaster declarations were made, the Pandemic has negatively affected travel, commerce, and financial markets locally and globally, and is widely expected to continue negatively affecting economic growth and financial markets worldwide and within Texas. Stock values and crude oil prices, in the U.S. and globally, have seen significant declines attributed to COVID-19 concerns. Texas may be particularly at risk from any global slowdown, given the prevalence of international trade in the state and the risk of contraction in the oil and gas industry and spillover effects into other industries. The City expects that its revenues and cash flow could be adversely affected during the continuance of the Pandemic as a result of a Governor’s directive that prevents utilities from charging late fees and disconnect fees and from disconnecting customers during such time. The City may also experience a reduction in water and sewer sales as customers delay payments. While the potential impact of the Pandemic on the City cannot be quantified at this time, the continued outbreak of COVID-19 could have an adverse effect on the City’s operations and financial condition, and therefore impair the ability to pay debt service on the Bonds. The District continues to monitor the spread of COVID-19 and is working with local, state, and national agencies to address the potential impact of COVID-19 upon the District. The financial and operating data contained herein are the latest available, but are as of dates and for periods prior to the economic impact of the Pandemic and measures instituted to slow it. Accordingly, they are not indicative of the economic impact of the Pandemic on the City’s financial condition. _________________ * Preliminary, subject to change.

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THE NORTH TEXAS MUNICIPAL WATER DISTRICT The North Texas Municipal Water District (the "District") is a conservation and reclamation district and political subdivision of the State of Texas, created and functioning under Article 16, Section 59, of the Texas Constitution pursuant to Chapter 62, Acts of 1951, 52nd Legislature of Texas, Regular Session, 1951, as amended (the "District Act"). The District was created for the purpose of providing a source of water supply for municipal, domestic and industrial use and for the treatment, processing and transportation of such water to its thirteen Member Cities (as defined below) and other customers located in North Central Texas. Under the Texas Constitution and statutes and the District Act, the District has broad powers to effectuate flood control and the conservation and use, for all beneficial purposes, of storm and floodwaters and unappropriated flow waters and, as a necessary aid to these purposes, the specific authority to construct, own and operate water supply, treatment and distribution facilities and sewage gathering, transmission and disposal facilities, and to collect, transport, treat, dispose of, and control all municipal, domestic, industrial, or communal waste, whether in fluid, solid or composite state. The District currently serves a 1,985 square-mile area located in nine counties in the State of Texas and comprises all of the territory of its current District Member Cities, viz., Garland, Princeton, Plano, Mesquite, Wylie, Rockwall, Farmersville, McKinney, Richardson, Allen, Forney, Frisco, and Royse City (together with any cities which subsequently become District Member Cities, the "District Member Cities"). The District's Administrative Office is located at 505 East Brown Street, Wylie, Texas. The District is governed by a 25-member Board of Directors. Each District Member City having a population of 5,000 or more is represented by two members on the Board of Directors and each District Member City of less than 5,000 is represented by one member on the Board of Directors. Members of the Board of Directors are appointed by the governing bodies of the respective District Member Cities for two-year terms. In addition to its Mustang Creek Wastewater Interceptor System, the District, in cooperation with certain area cities, has established and implemented the Regional Water System, the Trinity East Fork Regional Wastewater System, the Upper East Fork Wastewater Interceptor System, the Stewart Creek Regional Wastewater System, Muddy Creek Regional Wastewater System, Sabine Creek Regional Wastewater System, Panther Creek Regional Wastewater System, Lower East Fork Wastewater Interceptor System and the Trinity East Fork Solid Waste Disposal System wherein the District, pursuant to contracts and other agreements, has accepted the responsibility to design, acquire, construct, complete, operate, maintain, and from time to time enlarge, improve and expand the systems to provide facilities to adequately receive, transport, treat and dispose of wastewater and solid waste of such cities and future additional cities. These Regional Systems were created, exist and operate as completely separate and independent Regional Systems, and except for moderate cost-sharing enterprises, the financial transactions and other activities associated with the operation and maintenance of each system are kept separate and apart, and are not in any manner commingled or connected with any of the other systems. While all District Member Cities are contracting partners for the Water System, not all District Member Cities participate in the District's other Regional Systems. Revenues from the Water System, the Trinity East fork Regional Wastewater System, the Upper East Fork Wastewater Interceptor System, the Stewart Creek Regional Wastewater System, Muddy Creek Regional Wastewater System, Sabine Creek Regional Wastewater System, Panther Creek Regional Wastewater System, the Lower East Fork Wastewater Interceptor System, and the Trinity East Fork Solid Waste Disposal System are not pledged to the payment of the Bonds. The Mustang Creek Wastewater Interceptor System facilities to be provided by the District with proceeds of the Bonds pursuant to the Contract are not part of any of the District’s regional systems as noted above. The Bonds are payable solely from revenues derived from the City, pursuant to terms and conditions of the Contract.

THE BONDS DESCRIPTION OF THE BONDS . . . The Bonds are dated April 15, 2020, and mature, subject to optional redemption prior to maturity, on June 1 in each of the years and in the amounts shown on the cover page hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Interest on the bonds will accrue from the date of initial delivery thereof (the “Delivery Date”) and will be payable on June 1 and December 1, commencing June 1, 2021, of each year until maturity or prior redemption. The Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. No physical delivery of the Bonds will be made to the owners thereof. Principal and interest on the Bonds will be payable by the Paying Agent/Registrar (hereinafter defined) to Cede & Co., which will make distribution of the amounts so paid to the beneficial owners of the Bonds. See "Book-Entry-Only System" herein. AUTHORITY FOR ISSUANCE . . . The Bonds are being issued pursuant to Chapter 62, Acts of the 52nd Legislature, Regular Session, 1951, as amended (the “District Act”), Chapter 30, Texas Water Code, as amended, and other applicable laws and the Resolution. Under the Constitution and statutes, the District has broad powers to (1) impound, control , store, preserve, treat, transmit and use storm and floodwater, the water of rivers and streams, and underground water, for irrigation, power, and all other useful purposes, and to supply water for municipal, domestic, power, industrial and commercial uses and purposes, and all other beneficial uses and purposes; and (2) collect, transport, process, treat, dispose of, and control, all municipal, domestic, industrial, or commercial waste whether in fluid, solid, or composite state, including specifically the control, abatement, or reduction of all types of pollution. PURPOSE . . . Proceeds from the sale of the Bonds will be used (i) for the acquisition, construction and improvement of the Mustang Creek Wastewater Interceptor System, Lift Station and other System improvements (the “Project”); (ii) to fund a debt service reserve fund; (iii) and to pay costs associated with the issuance of the Bonds.

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SECURITY AND SOURCE OF PAYMENT . . . The District has entered into a Mustang Creek Wastewater Interceptor System Contract with the City of Forney, Texas (the “City”), dated March 24, 2011 (the “Contract”), to enable it to acquire and construct facilities for the benefit of the City. The District has previously issued its North Texas Municipal Water District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds, Series 2012, in the original principal payment amount of $10,620,000 (the “Series 2012 Bonds”), and its Mustang Creek Wastewater Interceptor System Contract Revenue Bonds, Series 2019, in the original principal par amount of $19,620,000 (the “Series 2019 Bonds”, and, together with the 2012 Bonds and the Bonds, the “Parity Bonds”) payable from payments under the Contract. The Contract and the Resolution permit the issuance of additional parity revenue bonds (“Additional Bonds”) thereunder (See “Summary of Certain Provisions of the Bond Resolution – Additional Bonds”). The Parity Bonds are, and any Additional Bonds will be, in all respects on a parity with respect to the lien on and pledge of the payments made by the City pursuant to the Contract. The City, represents and covenants that all payments made by it under the Contract shall constitute reasonable and necessary “operating expenses” of its combined waterworks and sewer system, as defined in Section 1502.056 Texas Government Code and Section 30.030, Texas Water Code and that all such payments will be made from the revenues of its combined waterworks and sewer system. The City represents and has determined that the services to be provided by the Project are essential to the operation of its combined water and sewer system and, accordingly, all payments required by the Contract to be made by the City shall constitute reasonable and necessary operating expenses of its combined water and sewer system as described above, with the effect that the obligation to make such payments from revenues of such combined water and sewer system shall have priority over any obligation to make any payments from such revenues of principal, interest, or otherwise, with respect to all bonds or other obligations heretofore or hereafter issued by the City. The District is obligated to pay the principal of and interest on the Parity Bonds and any Additional Bonds solely from and to the extent of the payments to be received from the City pursuant to the Contract (the “Gross Revenues”) and from future Additional Participants (as defined in the Contract), if any, as permitted by the Contract. No other entity, including the State of Texas, any political subdivision thereof (other than the City), or any other public or private body, is obligated, directly, indirectly, contingently, or in any other manner, to pay such principal or interest from any other source whatsoever. The owners of the Bonds shall never have the right to demand payment of the Bonds out of any other funds of the District except the Gross Revenues. No part of the physical property of the City or the District is encumbered by any lien or security interest for the benefit of the owners of the Bonds. RESERVE FUND REQUIREMENT . . . The Bond Resolution provides that, the District shall maintain in the Reserve Fund an amount equal to the average annual principal and interest requirements on the Parity Bonds and Additional Bonds, if any, (the “Reserve Required Amount”); and no deposits shall need to be made into the Reserve Fund as long as the money and investments in the fund are at least equal in market value to the required amount. OPTIONAL REDEMPTION . . . The District reserves the right, at its option, to redeem Bonds having stated maturities on and after June 1, 2030, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on June 1, 2029, or any date thereafter, at a price equal to the principal amount thereof plus accrued interest to the date of redemption. If less than all of the Bonds are to be redeemed, the District may select the maturities and amounts of Bonds to be redeemed. If less than all the Bonds within a maturity are to be redeemed, the Bonds, or portion thereof, to be redeemed shall be selected by lot or other customary method of random selection (or by DTC in accordance with the procedures while the Bonds are in the Book-Entry-Only System). If a Bond (or any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been given, such Bond (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. MANDATORY SINKING FUND REDEMPTION . . . In addition to being subject to optional redemption as provided above, should the Initial Purchaser select a combination of Serial Bonds and Term Bonds, the Term Bonds will be subject to mandatory sinking fund redemption prior to maturity at a price of par plus accrued interest to the redemption date from amounts required to be deposited in the Interest and Sinking Fund. NOTICE OF REDEMPTION . . . Not less than 30 days prior to a redemption date for the Bonds, the District shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bonds to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying Agent/Registrar at its address as it appeared on the Registration Books on the 45th day prior to the redemption date. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE BONDS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY BOND OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH BOND OR PORTION THEREOF SHALL CEASE TO ACCRUE. DEFEASANCE . . . The Resolution provides for the defeasance of the Bonds when the payment of the principal of and premium, if any, on the Bonds, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, redemption, or otherwise), is provided by irrevocably depositing with a paying agent or authorized escrow agent, in trust (1) money sufficient to make such payment or (2) Government Obligations which, mature as to principal and interest in such amounts and at such times to insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation and expenses of the paying agent for the Bonds. The Resolution provides that "Government Obligations" means (a) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (b) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that are rated as to

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investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (c) 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 are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. Upon such deposit as described above, such Bonds shall no longer be regarded to be outstanding or unpaid. BOOK-ENTRY-ONLY SYSTEM . . . This section 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 the Depository Trust Company ("DTC") while the Bonds are registered in its nominee 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. The District believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The District 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 United States Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. The Depository Trust Company ("DTC"), New York, New York, 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 security certificate will be issued for the Bonds in the aggregate principal amount thereof 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 and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 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"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. 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 a S&P Global Ratings rating of "AA+". 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.

http://www.dtcc.com/

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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 turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owners entered into the transaction. Transfers of ownership interest in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds 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 Participant to whose account such Bonds are credited, which may or may not be the Beneficial Owners. The 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. 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. will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments on the Bonds will be made to DTC. DTC’s practice is to credit Direct Participants’ accounts, upon DTC’s receipt of funds and corresponding detail information from the District or the Paying Agent/Registrar on payable dates 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 in 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, the Paying Agent or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment to DTC is the responsibility of the District, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the District and the Paying Agent/Registrar. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered. Use of Certain Terms in Other Sections of this Official Statement. 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 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 above, notices that are to be given to registered owners under the Resolution will be given only to DTC. Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the District, the Financial Advisor or the Initial Purchaser. Effect of Termination of Book-Entry-Only System. In the event the Book-Entry-Only System with respect to the Bonds is discontinued by DTC, or the use of the Book-Entry-Only System with respect to the Bonds is discontinued by the District, printed bond certificates will be issued to the respective holders of the Bonds, as the case may be, and the respective Bonds will be subject to transfer, exchange, and registration provisions as set forth in the Resolution, summarized under "Transfer, Exchange, and Registration" below.

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PAYING AGENT/REGISTRAR . . . The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, National Association, Dallas, Texas (the “Paying Agent/Registrar”). In the Resolution, the District retains the right to replace the Paying Agent/Registrar. The District covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds are duly paid and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Bonds. Upon any change in the Paying Agent/Registrar for the Bonds, the District agrees to promptly cause a written notice thereof to be sent to each registered owner of the Bonds by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. TRANSFER, EXCHANGE AND REGISTRATION . . . In the event the Book-Entry-Only System should be discontinued, the Bonds may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender to the Paying Agent/Registrar and such transfer or exchange shall 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. Bonds may be assigned by the execution of an assignment form on the respective Bonds or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Bonds will be delivered by the Paying Agent/Registrar, in lieu of the Bonds being transferred or exchanged, at the designated office of the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Bonds to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. New Bonds registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the Bonds surrendered for exchange or transfer. See "Book-Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Bonds. Neither the District nor the Paying Agent/Registrar shall be required to transfer or exchange any Bond called for redemption (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or by (ii) with respect to any Bond or portion thereof called for redemption within 45 days prior to its redemption date. RECORD DATE FOR INTEREST PAYMENT . . . The record date ("Record Date") for the interest payable on the Bonds on any interest payment date means the close of business on the 15th day of the preceding month. BONDHOLDERS’ REMEDIES . . . The Resolution does not establish specific events of default with respect to the Bonds. Under State law and the Resolution, there is no right to the acceleration of maturity of the Bonds upon the failure of the District to observe any covenant under the Resolution. No assurance can be given that a mandamus or other legal action to enforce a remedy under the Resolution would be successful. The enforcement of any such remedy may be difficult and time consuming. The Resolution does not provide for the appointment of a trustee to represent the interests of the bondholders upon any failure of the District to perform in accordance with the terms of the Resolution, or upon any other condition. Furthermore, the District is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code. Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of contract revenues of a bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or bondholders of an entity which has sought protection under Chapter 9. Therefore, should the District avail itself of Chapter 9 protection from creditors, the ability to enforce the remedies under the Resolution would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state courts); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The District may not be placed into bankruptcy involuntarily. The opinion of Bond Counsel will note that all opinions relative to the enforceability of the Resolution and the Bonds are qualified with respect to the customary rights of debtors relative to their creditors. In addition, based on Texas Court decisions, it is unclear whether statutory language authorizing local governments such as the District to sue and be sued has effectively waived the local governments immunity from suits for money damages. Further, while such decisions also could affect the ability of a registered owner to seek specific performance of a covenant made by a Participant under the Contract or by the District in the Resolution or other bond document, the remedy of mandamus has not been at issue in these cases. The opinion of Bond Counsel would note that all opinions with respect to enforceability of the Resolution of the Bonds are also qualified with respect to principles of sovereign immunity.

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BOND INSURANCE

GENERAL . . . The District has submitted applications to municipal bond insurance companies to have the payment of the principal of and interest on the Bonds insured by a municipal bond insurance policy. In the event the Bonds are qualified for municipal bond insurance, and the Initial Purchaser desires to purchase such insurance, the cost will be paid by the Initial Purchaser. Any fees to be paid to S&P as a result of said insurance will be paid by the District. It will be the responsibility of the Underwriters to disclose the existence of insurance, its terms, and the effect thereof with respect to the reoffering of the Bonds. If the District obtains a commitment from a bond insurance company (the "Insurer") to provide a municipal bond insurance policy relating to the Bonds (the "Policy"), the final Official Statement shall disclose certain information relating to the Insurer and the Policy. BOND INSURANCE RISK FACTORS . . . In the event of default of the scheduled payment of principal of or interest on the Bonds when all or a portion thereof becomes due, any owner of the Bonds shall have a claim under the Policy for such payments. The payment of principal and interest in connection with mandatory or optional prepayment of the Bonds by the District which is recovered by the District from the bond owner as a voidable preference under applicable bankruptcy law is covered by the Policy; however, such payments will be made by the Insurer at such time and in such amounts as would have been due absent such prepayment by the District (unless the Insurer chooses to pay such amounts at an earlier date). Payment of principal of and interest on the Bonds is not subject to acceleration, but other legal remedies upon the occurrence of non-payment do exist. The Insurer may reserve the right to direct the pursuit of available remedies, and, in addition, may reserve the right to consent to any remedies available to and requested by the owners. In the event the Insurer is unable to make payment of principal and interest as such payments become due under the Policy, the Bonds are payable solely from the sources of funds pledged to the payment of the Bonds (see "The Bonds – Security and Source of Payment"). In the event the Insurer becomes obligated to make payments with respect to the Bonds, no assurance is given that such event will not adversely affect the market price or the marketability (liquidity) of the Bonds. If a Policy is acquired, the long-term ratings on the Bonds will be dependent in part on the financial strength of the Insurer and its claims-paying ability. The Insurer’s financial strength and claims-paying ability are predicated upon a number of factors which could change over time. No assurance can be given that the long-term ratings of the Insurer and of the ratings on Bonds, whether or not subject to a Policy, will not be subject to downgrade and such event could adversely affect the market price or the marketability (liquidity) for the Bonds. The obligations of the Insurer under a Policy are general obligations of the Insurer and in an event of default by the Insurer, the remedies available may be limited by applicable bankruptcy law. None of the District, the Financial Advisor or the Underwriters have made independent investigation into the claims-paying ability of any potential Insurer and no assurance or representation regarding the financial strength or projected financial strength of any potential Insurer is given. CLAIMS-PAYING ABILITY AND FINANCIAL STRENGTH OF MUNICIPAL BOND INSURERS . . . Moody’s Investor Services, Inc. (“Moody’s”), S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC (“S&P”), and Fitch Ratings (collectively, the "Rating Agencies") have downgraded and/or placed on negative watch the claims-paying ability and financial strength of most providers of municipal bond insurance. Additional downgrades or negative changes in the rating outlook for all bond insurers is possible. In addition, recent events in the credit markets have had substantial negative effects on the bond insurance business. These developments could be viewed as having a material adverse effect on the claims-paying ability of such bond insurers, including any bond insurer of the Bonds. Thus, when making an investment decision, potential investors should carefully consider the ability of any such bond insurer to pay principal and interest on the Bonds and the claims paying ability of any such bond insurer, particularly over the life of the Bonds.

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DEBT INFORMATION TABLE 1 - DEBT SERVICE REQUIREMENTS

FiscalYear Total Percent ofEnded Outstanding Debt The Bonds (1) Outstanding Principal9/30 Principal Interest Total Principal Interest Total Debt Retired2020 580,000$ 1,041,538$ 1,621,538$ -$ -$ -$ 1,621,538$ 2021 610,000 1,012,538 1,622,538 90,000 130,334 220,334 1,842,8722022 640,000 986,738 1,626,738 90,000 128,363 218,363 1,845,1002023 675,000 959,638 1,634,638 95,000 125,663 220,663 1,855,3002024 705,000 925,563 1,630,563 95,000 122,813 217,813 1,848,375 10.93%2025 740,000 889,975 1,629,975 100,000 119,963 219,963 1,849,9382026 780,000 852,619 1,632,619 100,000 116,963 216,963 1,849,5812027 810,000 822,844 1,632,844 105,000 113,963 218,963 1,851,8062028 850,000 788,644 1,638,644 110,000 110,813 220,813 1,859,4562029 890,000 752,744 1,642,744 110,000 107,513 217,513 1,860,256 24.97%2030 930,000 720,594 1,650,594 115,000 104,213 219,213 1,869,8062031 970,000 687,044 1,657,044 120,000 100,763 220,763 1,877,8062032 1,010,000 651,094 1,661,094 120,000 97,163 217,163 1,878,2562033 1,055,000 613,694 1,668,694 125,000 93,563 218,563 1,887,2562034 1,100,000 574,119 1,674,119 130,000 89,813 219,813 1,893,931 42.30%2035 1,145,000 539,469 1,684,469 135,000 85,913 220,913 1,905,3812036 1,185,000 503,375 1,688,375 140,000 81,863 221,863 1,910,2382037 1,235,000 465,400 1,700,400 140,000 77,663 217,663 1,918,0632038 1,280,000 425,800 1,705,800 145,000 73,463 218,463 1,924,2632039 1,335,000 383,794 1,718,794 150,000 69,113 219,113 1,937,906 63.34%2040 1,380,000 339,250 1,719,250 155,000 64,613 219,613 1,938,8632041 1,440,000 292,188 1,732,188 160,000 59,963 219,963 1,952,1502042 1,495,000 243,063 1,738,063 165,000 54,763 219,763 1,957,8252043 870,000 192,038 1,062,038 170,000 49,400 219,400 1,281,4382044 900,000 162,675 1,062,675 175,000 43,875 218,875 1,281,550 84.44%2045 930,000 132,300 1,062,300 180,000 38,188 218,188 1,280,4882046 965,000 100,913 1,065,913 185,000 32,338 217,338 1,283,2502047 995,000 68,344 1,063,344 195,000 26,325 221,325 1,284,6692048 1,030,000 34,763 1,064,763 200,000 19,988 219,988 1,284,7502049 - - - 205,000 13,488 218,488 218,488 99.36%2050 - - - 210,000 6,825 216,825 216,825 100.00%

28,530,000$ 16,162,750$ 44,692,750$ 4,215,000$ 2,359,672$ 6,574,672$ 51,267,422$

(1) Average life of the issue – 17.722 Years. Interest on the Bonds has been calculated at the average rate of 3.15% for purposes of illustration. Preliminary, subject to change. ANTICIPATED ISSUANCE OF DEBT . . . The District anticipates the issuance of $17 million of additional debt within the next 12-month period, secured by and payable solely from revenues to be received from the City of Forney.

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SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION The following statements summarize certain portions of the Bond Resolution to be adopted by the Board of Directors authorizing the issuance, sale and delivery of the North Texas Municipal Water District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds, Series 2020, and do not purport to be comprehensive or definitive and are qualified in their entirety by reference to the Resolution ADDITIONAL DEFINITIONS. As used in this Resolution the following terms shall have the meanings set forth below, unless the text hereof specifically indicates otherwise: The term "Additional Participants" shall mean a city or cities in addition to the City of Forney, Texas with which the District makes a contract for receiving and transporting Wastewater (as defined in the Contract) through the System. The term "Board" shall mean the Board of Directors of the Issuer, being the governing body of the Issuer, and it is further resolved that the declarations and covenants of the Issuer contained in this Resolution are made by, and for and on behalf of the Board and the Issuer, and are binding upon the Board and the Issuer for all purposes. The terms "Bond Resolution" and "Resolution" mean this resolution authorizing the Bonds. The term "Bonds" means collectively the Initial Bond as described and defined in Sections 1 and 2 of this Resolution, and all substitute bonds exchanged therefor as well as all other substitute and replacement bonds issued pursuant to this Resolution. The term "Contract" shall mean collectively the Mustang Creek Interceptor System Contract, dated as of March 24, 2011, between the Issuer and the Participant, together with all similar contracts which may be executed in the future between the Issuer and Additional Participants, as defined and permitted in the aforesaid contracts. The terms "District" and "Issuer" shall mean North Texas Municipal Water District. The terms "District's System", "Issuer's System", and "System" shall mean all of the Issuer's facilities acquired, constructed, used, or operated by the Issuer for receiving, transporting, treating, and disposing of Wastewater (as defined in the Contract) of and for the Participants, pursuant to the Contract, including the contracts with Additional Participants (but excluding any facilities acquired or constructed with Special Facilities Bonds, and excluding any facilities required to transport Wastewater to any Point of Entry (as defined in the Contract) of the System), together with any improvements, enlargements, or additions to said System facilities and any extensions, repairs, or replacements of said System facilities acquired, constructed, used, operated, or otherwise incorporated into or made a part of said System facilities in the future by the Issuer. Said terms shall include only those facilities which are acquired, constructed, used, or operated by the Issuer to provide service to Participants pursuant to the Contract, including any contracts with Additional Participants, and which, as determined by the Issuer, can economically and efficiently provide service to Participants. The term "fiscal year" shall mean the 12 month period beginning each October 1, or such other 12 month period hereafter established by the Issuer as a fiscal year for the purposes of this Resolution. The term "Gross Revenues of the System" shall mean all of the revenues, income, rentals, rates, fees, and charges of every nature derived by the Board or the Issuer from the operation and/or ownership of the System, including specifically all payments constituting the "Annual Requirement" (as defined in the Contract) (consisting of the "Operation and Maintenance Component" and the "Bond Service Component", as such terms are defined in the Contract), and all other payments and amounts received by the Board or the Issuer from the Participants pursuant to the Contract, including any contracts with Additional Participants. The term "Net Revenues of the System" shall mean the Gross Revenues of the System less the Operation and Maintenance Expense of the System. The term "Operation and Maintenance Expense" shall mean all costs of operation and maintenance of the Issuer's System including, but not limited to, repairs and replacements, the cost of utilities, supervision, engineering, accounting, auditing, legal services, insurance premiums, and any other supplies, services, administrative costs, and equipment necessary for proper operation and maintenance of the Issuer's System, any payments required to be made under the Contract into the Contingency Fund (as defined in the Contract), payments made for the use or operation of any property, payments of fines, and payments made by Issuer in satisfaction of judgments or other liabilities resulting from claims not covered by Issuer's insurance or not paid by one particular Participant arising in connection with the operation and maintenance of the Issuer's System. Depreciation shall not be considered an item of Operation and Maintenance Expense. The term "Parity Bonds" shall mean collectively (i) the Bonds, (ii) the outstanding "North Texas Municipal Water District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds, Series 2012," in the original principal amount of $10,620,0000, authorized by a resolution of the Issuer on August 23, 2012 (the "2012 Bond Resolution") (iii) the outstanding “North Texas Municipal Water District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds, Series 2019,” in the original principal amount of $19,620,000 authorized by a resolution of the Issuer on March 28, 2019 (the “2019 Bond Resolution”).

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The terms "Participant" or "Participants" shall mean the City of Forney, Texas in Kaufman County, Texas, together with all Additional Participants. The term "Pledged Revenues" shall mean: (a) the Gross Revenues of the System and (b) any additional revenues, income, receipts, or other resources, including, without limitation, any grants, donations, or income received or to be received from the United States Government, or any other public or private source, whether pursuant to an agreement or otherwise, which in the future may, at the option of the Issuer, be pledged to the payment of the Bonds or the Additional Bonds. The term "Special Facilities Bonds" shall mean revenue obligations of the District which are not secured by or payable from Annual Payments under the Contract, but which are payable solely from other sources; but Special Facilities Bonds may be made payable from payments from any person, including any Participant, under a separate contract whereunder the facilities to be acquired or constructed are declared not to be part of the system and are not made payable from the Annual Payments as defined in the Contract. PLEDGE. (a) The Bonds authorized by this Resolution are hereby designated as, and shall be, "Additional Bonds" as permitted by Section 22 of the 2012 Bond Resolution and the 2019 Bond Resolution, and it is hereby determined, declared, and resolved that all of the Parity Bonds, including the Bonds authorized by this Resolution, are and shall be secured and payable equally and ratably on a parity, and that Sections 9 through 25 of this Resolution substantially restate and are supplemental to and cumulative of the applicable and pertinent provisions of the resolution authorizing the issuance of the previously issued Parity Bonds, with Sections 9 through 25 of this Resolution being equally applicable to all of the Parity Bonds, including the Bonds. (b) The Parity Bonds and any Additional Bonds, and the interest thereon, are and shall be secured by and payable from a first lien on and pledge of the Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the Bond Fund and the Reserve Fund as provided in this Resolution. REVENUE FUND. There has been created and established and there shall be maintained at an official depository of the Issuer (which must be a member of the Federal Deposit Insurance Corporation) a separate fund to be entitled the "North Texas Municipal Water District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds Revenue Fund" (hereafter called the "Revenue Fund"). All Gross Revenues of the System shall be credited to the Revenue Fund immediately upon receipt. BOND FUND. For the sole purpose of paying the principal of and interest on all outstanding Parity Bonds and any Additional Bonds, as the same come due, there has been created and established and shall be maintained at the Paying Agent/Registrar, a separate fund to be entitled the "North Texas Municipal Water District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds" (hereinafter called the "Bond Fund"). RESERVE FUND. There has been created and established, and there shall be maintained at the Paying Agent Registrar, a separate fund to be entitled the "North Texas Municipal Water District Mustang Creek Wastewater Interceptor System Contract Revenue Bonds" (hereinafter called the "Reserve Fund"). The Reserve Fund shall be used solely for the purpose of finally retiring the last of the outstanding Parity Bonds and Additional Bonds, or for paying principal of and interest on any outstanding Parity Bonds and Additional Bonds, when and to the extent the amount in the Bond Fund is insufficient for such purpose. DEPOSITS OF PLEDGED REVENUES. The Pledged Revenues shall be deposited into the Bond Fund and the Reserve Fund when and as required by this Resolution. INVESTMENTS. Money in any Fund established pursuant to this Resolution may, at the option of the Issuer be invested in any or all of the authorized investments described in the Public Funds Investment Act, Chapter 2256, Texas Government Code (or any successor statute), in which the Issuer may purchase, sell and invest its funds and funds under its control; provided that all such deposits and investments shall be made in such manner that the money required to be expended from any Fund will be available at the proper time or times. Such investments shall be valued in terms of current market value as of the 15th day of January of each year. Interest and income derived from such deposits and investments shall be credited to the Fund from which the deposit or investment was made. Such investments shall be sold promptly when necessary to prevent any default in connection with the Bonds or Additional Bonds. No investment of any Fund shall be made in any way which would violate any provision of this Resolution. FUNDS SECURED. Money in all Funds described in this Resolution, to the extent not invested, shall be secured in the manner prescribed by law, including particularly, the Public Funds Collateral Act, Chapter 2257, Texas Government Code, as amended, for securing funds of the Issuer.

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DEBT SERVICE REQUIREMENTS. The Issuer shall transfer from the Pledged Revenues and deposit to the credit of the Bond Fund the amounts, at the times, as follows:

(1) such amounts, deposited in approximately equal monthly installments on or before the 25th day of each month hereafter as will be sufficient, together with other amounts, if any, then on hand in the Bond Fund and available for such purpose, to pay the interest scheduled to accrue and come due on the Parity Bonds and any Additional Bonds on the next succeeding interest payment date; and

(2) such amounts, deposited in approximately equal monthly installments on or before the 25th day of each month hereafter as will be sufficient, together with other amounts, if any, then on hand in the Bond Fund and available for such purpose, to pay the principal scheduled to mature and come due, and/or mandatorily required to be redeemed prior to maturity, on the Parity Bonds and any Additional Bonds on the next succeeding principal payment date or mandatory redemption date, if any.

RESERVE REQUIREMENTS. Out of proceeds of the Bonds, there shall be deposited to the credit of the Reserve Fund an amount of money, if any, sufficient to cause the Reserve Fund to contain money and/or investments in market value equal to the average annual principal and interest requirements on all Parity Bonds which will be outstanding immediately after issuance of the Bonds. So long as the money and investments in the Reserve Fund are at least equal to the average annual principal and interest requirements on all then outstanding Parity Bonds and Additional Bonds (the "Required Amount"), no deposits shall be made to the credit of the Reserve Fund; but when and if the Reserve Fund at any time contains less than said Required Amount in market value, then, subject and subordinate to making the required deposits to the credit of the Bond Fund, the Issuer shall transfer from Pledged Revenues and deposit to the credit of the Reserve Fund, on or before the 25th day of each month, a sum equal to 1/60th of the average annual principal and interest requirements of all then outstanding Parity Bonds, until the Reserve Fund is restored to said Required Amount. So long as the Reserve Fund contains said Required Amount, all amounts in excess of such Required Amount shall, on or before the 10th day prior to each interest payment date, be deposited to the credit of the Bond Fund; and otherwise any earnings from the deposit and investment of the Reserve Fund shall be retained in the Reserve Fund. DEFICIENCIES. If on any occasion there shall not be sufficient Pledged Revenues to make the required deposits into the Bond Fund and the Reserve Fund, then such deficiency shall be made up as soon as possible from the next available Pledged Revenues, or from any other sources available for such purpose. EXCESS PLEDGED REVENUES. Subject to making the required deposits to the credit of the Bond Fund and the Reserve Fund, when and as required by this Resolution, or any Resolution authorizing the issuance of Additional Bonds, the excess Pledged Revenues first shall be used to pay the Operation and Maintenance Expenses of the System, and then, subject to paying such Operation and Maintenance Expenses of the System, may be used for any other lawful purpose. PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS. On or before the last day of each May and of each November hereafter while any of the Parity Bonds or Additional Bonds are outstanding and unpaid, the Issuer shall make available to the paying agents therefor, out of the Bond Fund or the Reserve Fund, if necessary, money sufficient to pay such interest on and such principal of the Parity Bonds and Additional Bonds as will accrue or mature on the June 1 or December 1 immediately following. FINAL DEPOSITS. At such times as the aggregate amount of money and investments in the Bond Fund and the Reserve Fund are at least equal in market value to (1) the aggregate principal amount of all unpaid (unmatured and matured) outstanding Parity Bonds and Additional Bonds, plus (2) the aggregate amount of all unpaid interest, including all unpaid (unmatured and matured) outstanding interest coupons, appertaining to such Parity Bonds and Additional Bonds, no further deposits need be made into the Bond Fund or the Reserve Fund. In determining the amount of such Parity Bonds and Additional Bonds, and unpaid interest appertaining thereto, outstanding at any time, there shall be subtracted and excluded the amount of any such Parity Bonds and Additional Bonds, and unpaid interest appertaining thereto, which shall have been duly called for redemption and for which funds shall have been deposited with the paying agents therefor sufficient for such redemption. ADDITIONAL BONDS. (a) The Issuer shall have the right and power at any time and from time to time, and in one or more Series or issues, to authorize, issue, and deliver additional parity revenue bonds (herein called "Additional Bonds"), in any amounts, for any lawful purpose of relating to the System, including the refunding of any Parity Bonds or Additional Bonds. Such Additional Bonds, if and when authorized, issued, and delivered in accordance with this Resolution, shall be secured by and made payable equally and ratably on a parity with the Parity Bonds, and all other outstanding Additional Bonds, from a first lien on and pledge of the Pledged Revenues. (b) The Bond Fund and the Reserve Fund shall secure and be used to pay all Additional Bonds as well as the Parity Bonds. However, each Resolution under which Additional Bonds are issued shall provide and require that, in addition to the amounts required by the provisions of this Resolution and the provisions of any other Resolution or Resolutions authorizing Additional Bonds to be deposited to the credit of the Bond Fund, the Issuer shall deposit to the credit of the Bond Fund at least such

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amounts as are required for the payment of all principal of and interest on said Additional Bonds then being issued, as the same come due; and that the aggregate amount to be accumulated and maintained in the Reserve Fund shall be increased (if and to the extent necessary) to an amount not less than the average annual principal and interest requirements of all Parity Bonds and Additional Bonds which will be outstanding after the issuance and delivery of the then proposed Additional Bonds; and that the required additional amount shall be so accumulated by the deposit in the Reserve Fund of all or any part of said required additional amount in cash immediately after the delivery of the then proposed Additional Bonds, or, at the option of the Issuer, by the deposit of said required additional amount (or any balance of said required additional amount not deposited in cash as permitted above) in monthly installments, made on or before the 25th day of each month following the adoption of the Resolution authorizing the issuance of the then proposed Additional Bonds, of not less than 1/60th of said required additional amount (or 1/60th of the balance of said required additional amount not deposited in cash as permitted above). (c) All calculations of average annual principal and interest requirements made pursuant to this Section shall be made as of and from the date of the Additional Bonds then proposed to be issued. (d) The principal of all Additional Bonds must be scheduled to be paid or mature on June 1 of the years in which such principal is scheduled to be paid or mature; and all interest thereon must be payable on June 1 and December 1. FURTHER REQUIREMENTS FOR ADDITIONAL BONDS. Additional Bonds shall be issued only in accordance with this Resolution, but notwithstanding any provisions of this Resolution to the contrary, no installment, series, or issue of Additional Bonds shall be issued or delivered unless the President and the Secretary of the Board sign a written certificate to the effect that the Issuer is not in default as to any covenant, condition, or obligation in connection with all outstanding Parity Bonds and Additional Bonds, and the Resolutions authorizing same, and that the Bond Fund and the Reserve Fund each contains the amount then required to be therein. GENERAL COVENANTS. The Issuer further covenants and agrees that: (a) PERFORMANCE. It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Resolution and each resolution authorizing the issuance of Additional Bonds, and in each and every Parity Bond and Additional Bond; that it will promptly pay or cause to be paid the principal of and interest on every Bond and Additional Bond, on the dates and in the places and manner prescribed in such resolutions and Parity Bonds or Additional Bonds; and that it will, at the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the Bond Fund and the Reserve Fund; and any holder of the Parity Bonds or Additional Bonds may require the Issuer, its Board, and its officials and employees, to carry out, respect, or enforce the covenants and obligations of this Resolution or any resolution authorizing the issuance of Additional Bonds, by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings, in any court of competent jurisdiction, against the Issuer, its Board, and its officials and employees. (b) ISSUER'S LEGAL AUTHORITY. The Issuer is a duly created and existing conservation and reclamation district of the State of Texas pursuant to Article 16, Section 59 of the Texas Constitution, and Chapter 62, Acts of the 52nd Legislature of Texas, Regular Session, 1951, as amended (originally compiled as Vernon's Ann. Tex. Civ. St. Article 8280-141), and is duly authorized under the laws of the State of Texas to create and issue the Parity Bonds; that all action on its part for the creation and issuance of the Parity Bonds has been duly and effectively taken, and that the Parity Bonds in the hands of the holders and owners thereof are and will be valid and enforceable special obligations of the Issuer in accordance with their terms. (c) TITLE. It has or will obtain lawful title to, or the lawful right to use and operate, the lands, buildings, and facilities constituting the System, that it warrants that it will defend, the title to or lawful right to use and operate, all the aforesaid lands, buildings, and facilities, and every part thereof, for the benefit of the holders and owners of the Parity Bonds and Additional Bonds against the claims and demands of all persons whomsoever, that it is lawfully qualified to pledge the Pledged Revenues to the payment of the Parity Bonds and Additional Bonds in the manner prescribed herein, and has lawfully exercised such rights. (d) LIENS. It will from time to time and before the same become delinquent pay and discharge all taxes, assessments, and governmental charges, if any, which shall be lawfully imposed upon it, or the System, that it will pay all lawful claims for rents, royalties, labor, materials, and supplies which if unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner provided herein, and that it will not create or suffer to be created any mechanic's, laborer's, materialman's, or other lien or charge which might or could be prior to the liens hereof, or do or suffer any matter or thing whereby the liens hereof might or could be impaired; provided, however, that no such tax, assessment, or charge, and that no such claims which might be used as the basis of a mechanic's, laborer's, materialman's, or other lien or charge, shall be required to be paid so long as the validity of the same shall be contested in good faith by the Board.

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(e) OPERATION OF SYSTEM. While the Parity Bonds or any Additional Bonds are outstanding and unpaid it will cause the System to be continuously and efficiently operated and maintained in good condition, repair, and working order, and at a reasonable cost. (f) FURTHER ENCUMBRANCE. While the Parity Bonds or any Additional Bonds are outstanding and unpaid, the Issuer shall not additionally encumber the Pledged Revenues in any manner, except as permitted in this Resolution in connection with Additional Bonds, unless said encumbrance is made junior and subordinate in all respects to the liens, pledges, covenants, and agreements of this Resolution and any resolution authorizing the issuance of Additional Bonds; but the right of the Issuer and the Board to issue revenue bonds payable from a subordinate lien on the Pledged Revenues is specifically recognized and retained. (g) SALE OF PROPERTY. While the Parity Bonds or any Additional Bonds are outstanding and unpaid, the Issuer will maintain its current legal corporate status as a conservation and reclamation district, and the Issuer shall not sell, convey, mortgage, or in any manner transfer title to, or lease, or otherwise dispose of the entire System, or any significant or substantial part thereof; provided that whenever the Issuer deems it necessary to dispose of any machinery, fixtures, and equipment, it may sell or otherwise dispose of such machinery, fixtures, and equipment when it has made arrangements to replace the same or provide substitutes therefor, unless it is determined by the Issuer that no such replacement or substitute is necessary. (h) INSURANCE. (1) It will cause to be insured (including self-insurance) such parts of the System as would usually be insured by corporations operating like properties, with a responsible insurance company or companies, against risks, accidents, or casualties against which and to the extent insurance is usually carried by corporations operating like properties, including fire and extended coverage insurance. Public liability and property damage insurance shall also be carried unless the general counsel for Issuer, or the Attorney General of Texas, gives a written opinion to the effect that the Issuer, the Board, and its officers and employees, are not liable for claims which would be protected by such insurance. At any time while any contractor engaged in construction work shall be fully responsible therefor, the Issuer shall not be required to carry insurance on the works being constructed, but the contractor shall be required to carry appropriate insurance. All such policies shall be open to the inspection of the Bondholders and their representatives at all reasonable times.

(2) Upon the happening of any loss or damage covered by insurance from one or more of said causes, the Issuer shall make due proof of loss and shall do all things necessary or desirable to cause the insuring companies to make payment in full directly to the Issuer. The proceeds of insurance covering such property, together with any other funds necessary and available for such purpose, shall be used forthwith by the Issuer for repairing the property damaged or replacing the property destroyed; provided, however, that if said insurance proceeds and other funds are insufficient for such purpose, then said insurance proceeds pertaining to the System shall be used promptly as follows:

(a) for the redemption prior to maturity of the Parity Bonds and Additional Bonds, if any, ratably in the proportion that the outstanding principal of each Series or issue of Parity Bonds or Additional Bonds bears to the total outstanding principal of all Parity Bonds and Additional Bonds; provided that if on any such occasion the principal of any such Series or issue is not subject to redemption, it shall not be regarded as outstanding in making the foregoing computation; or (b) if none of the outstanding Parity Bonds or Additional Bonds is subject to redemption, then for the purchase on the open market and retirement of said Parity Bonds and Additional Bonds, in the same proportion as prescribed in the foregoing clause (a), to the extent practicable; provided that the purchase price for any such Parity Bond or Additional Bonds shall not exceed the redemption price of such Parity Bond or Additional Bond on the first date upon which it becomes subject to redemption; or (c) to the extent that the foregoing clauses (a) and (b) cannot be complied with at the time, the insurance proceeds, or the remainder thereof, shall be deposited in a special and separate trust fund, at an official depository of the Issuer, to be designated the Insurance Account. The Insurance Account shall be held until such time as the foregoing clauses (a) and/or (b) can be complied with, or until other funds become available which, together with the Insurance Account, will be sufficient to make the repairs or replacements originally required, whichever of said events occurs first.

(3) The annual audit hereinafter required shall contain a list of all such insurance policies carried, together with a statement as to whether or not all insurance premiums upon such policies have been paid.

(i) RATE COVENANT. It will fix, establish, maintain, and collect such rentals, rates, charges, and fees for the use and availability of the System as are necessary to produce Gross Revenues of the System sufficient, together with any other Pledged Revenues, (a) to make all payments and deposits required to be made into the Bond Fund, and to maintain the Reserve Fund, as required by the resolutions authorizing all Parity Bonds and Additional Bonds, and (b) to pay all Operation and Maintenance Expenses of the System.

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(j) RECORDS. Proper books of record and account will be kept in which full, true, and correct entries will be made of all dealings, activities, and transactions relating to the System, the Pledged Revenues, and all Funds described in this Resolution; and all books, documents, and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of any bondholder. (k) AUDITS. Each year while any of the Parity Bonds or Additional Bonds are outstanding, an audit will be made of its books and accounts relating to the System and the Pledged Revenues by an independent certified public accountant or an independent firm of certified public accountants. (l) GOVERNMENTAL AGENCIES. It will comply with all of the terms and conditions of any and all agreements applicable to the System and the Parity Bonds or Additional Bonds entered into between the Issuer and any governmental agency, and the Issuer will take all action necessary to enforce said terms and conditions; and the Issuer will obtain and keep in full force and effect all franchises, permits, and other requirements necessary with respect to the acquisition, construction, operation, and maintenance of the System. (m) CONTRACTS WITH PARTICIPANTS. It will comply with the terms and conditions of the Contract, including any contracts with Additional Participants, and will cause the Participants to comply with all of their obligations thereunder by all lawful means; and the Issuer agrees to prepare an annual budget as required by the Contract. AMENDMENT OF RESOLUTION. (a) The holders or owners of Parity Bonds and Additional Bonds aggregating 51% in principal amount of the aggregate principal amount of then outstanding Parity Bonds and Additional Bonds shall have the right from time to time to approve any amendment to this Resolution or any resolution authorizing the issuance of Additional Bonds, which may be deemed necessary or desirable by the Issuer, provided, however, that nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in said resolutions or in the Parity Bonds or Additional Bonds so as to:

(1) Make any change in the maturity of the outstanding Parity Bonds or Additional Bonds;

(2) Reduce the rate of interest borne by any of the outstanding Parity Bonds or Additional Bonds;

(3) Reduce the amount of the principal payable on the outstanding Parity Bonds or Additional Bonds;

(4) Modify the terms of payment of principal of or interest on the outstanding Parity Bonds or Additional Bonds, or impose any conditions with respect to such payment;

(5) Affect the rights of the holders of less than all of the Parity Bonds and Additional Bonds then outstanding;

(6) Change the minimum percentage of the principal amount of Parity Bonds and Additional Bonds necessary for consent to such amendment.

(b) If at any time the Issuer shall desire to amend a resolution under this Section, the Issuer shall cause notice of the proposed amendment to be published in a financial newspaper or journal published in the City of New York, New York, or in the City of Austin, Texas, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of each Paying Agent for each Series of Parity Bonds and Additional Bonds for inspection by all holders of Parity Bonds and Additional Bonds. Such publication is not required, however, if notice in writing is given to each holder of Parity Bonds and Additional Bonds. (c) Whenever at any time not less than thirty days, and within one year, from the date of the first publication of notice or other service of written notice the Issuer shall receive an instrument or instruments executed by the holders or owners of at least 51% in aggregate principal amount of all Parity Bonds and Additional Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file as aforesaid, the Issuer may adopt the amendatory resolution in substantially the same form. (d) Upon the adoption of any amendatory resolution pursuant to the provisions of this Section, the resolution being amended shall be deemed to be amended in accordance with the amendatory resolution, and the respective rights, duties, and obligations of the Issuer and all the holders or owners of then outstanding Parity Bonds and Additional Bonds and all future Additional Bonds shall thereafter be determined, exercised, and enforced hereunder, subject in all respects to such amendment. (e) Any consent given by the holder or owner of a Parity Bond or Additional Bond pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders or owners of the same Parity Bond or Additional Bond

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during such period. Such consent may be revoked at any time after six months from the date of the first publication of such notice by the holder or owner who gave such consent, or by a successor in title, by filing notice thereof with each Paying Agent for each Series of Parity Bonds and Additional Bonds, Texas, and the Issuer, but such revocation shall not be effective if the holders of 51% in aggregate principal amount of the then outstanding Parity Bonds and Additional Bonds as in this Section defined have, prior to the attempted revocation, consented to and approved the amendment. (f) For the purpose of this Section, the fact of the holding of Parity Bonds or Additional Bonds in bearer, coupon form by any holder thereof and the amount and numbers of such Parity Bonds and Additional Bonds, and the date of their holding same, may be provided by the affidavit of the person claiming to be such holder, or by a certificate executed by any trust company, bank, banker, or any other depository wherever situated showing that at the date therein mentioned such person had on deposit with such trust company, bank, banker, or other depository, the Parity Bonds or Additional Bonds described in such certificate. The ownership of all registered Parity Bonds and Additional Bonds shall be ascertained by the registration books pertaining thereto kept by the registrar. The Issuer may conclusively assume that such holding or ownership continues until written notice to the contrary is served upon the Issuer. DEFEASANCE OF BONDS. (a) Each of the Bonds, including the Initial Bond and each of the other Bonds (as hereinbefore defined), and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of this Resolution, except to the extent provided in subsection (d) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption), or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the Pledged Revenues as provided in this Resolution, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the Issuer also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. (c) The term "Government Obligations" as used in this Section shall mean the following obligations, which may or may not be in book-entry form, (i) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, and (ii) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the Board of Directors adopts or approves proceedings authorizing the issuance of refunding bonds or otherwise provide for the funding of an escrow to effect the defeasance of the Bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent. (d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Resolution. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. In the event any outstanding Bonds or Bond authorized by this Resolution is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for Replacement Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated.

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(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Resolution equally and proportionately with any and all other Bonds duly issued under this Resolution. (e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1201, Texas Government Code, this Section of this Resolution shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 6(d) of this Resolution for Bonds issued in conversion and exchange for other Bonds. COVENANTS REGARDING TAX-EXEMPTION. (a) Covenants. The Issuer covenants to refrain from any action which would adversely affect, or to take such action to assure, the treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows:

(1) to take any action to assure that no more than 10 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) of the Code, or if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Resolution or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code;

(2) to take any action to assure that in the event that the "private business use" described in subsection (a) hereof exceeds five percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of five percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental use;

(3) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or five percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is, directly or indirectly, used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code;

(4) to refrain from taking any action that would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code;

(5) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code;

(6) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with --

(A) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less or, in the case of a refunding bond, for a period of 90 days or less until such proceeds are needed for the purpose for which the Bonds are issued, (B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1(b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the stated principal amount (or, in the case of a discount, the issue price) of the Bonds;

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(7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage), or section 149(g) of the Code (relating to hedge bonds); and

(8) to refrain form using the proceeds of the Bonds or proceeds of any prior bonds to pay debt service on another issue more than 90 days after the date of issue of the Bonds in contravention of the requirements of section 149(d) of the Code (relating to advance refundings); and

(9) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code.

For purposes of the foregoing, the Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. (b) Compliance with Code. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally-recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally-recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs its President, the President of the Board of Directors, the Executive Director, the Deputy Director - Administrative Services, and Assistant Deputy - Finance to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. The Issuer covenants to comply with the covenants contained in this section after defeasance of the Bonds. (c) Rebate Fund. In order to facilitate compliance with the above covenant (a)(9), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other person, including without limitation, the bondholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (d) Written Procedures. Unless superseded by another action of the Issuer to ensure compliance with the covenants contained herein regarding private business use, remedial actions, arbitrage and rebate, the Issuer hereby adopts and establishes the instructions attached hereto as Exhibit A as their written procedures applicable to Bonds issued pursuant to the Contract. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT. The Issuer covenants to account for the expenditure of Bond proceeds and investment earnings to be used for the construction or acquisition of the property constituting the projects financed or refinanced with proceeds of the sale of the Bonds on its books and records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made or (2) such construction or acquisition is completed. The foregoing notwithstanding, the Issuer shall not expend proceeds of the Bonds or investment earnings thereon more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds or (2) the date the Bonds are retired, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such expenditure will not adversely affect the tax-exempt status of the Bonds. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest on the Bonds. DISPOSITION OF PROJECT. The Issuer covenants that the property constituting the projects financed or refinanced with proceeds of the Bond will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bond. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest on the Bonds.

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CUSTODY, APPROVAL, AND REGISTRATION OF INITIAL BOND; BOND COUNSEL'S OPINION, CUSIP NUMBERS, INSURANCE, AND PREAMBLE. The President of the Board of Directors of the Issuer is hereby authorized to have control of the Initial Bond issued hereunder and all necessary records and proceedings pertaining to the Initial Bond pending its delivery and its investigation, examination, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Initial Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on or attached to the Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on the Initial Bond. The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Initial Bond or on any Bonds issued and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds. If insurance is obtained on any of the Bonds, the Initial Bond and all insured Bonds shall bear an appropriate legend concerning insurance as provided by the insurer. The preamble to this Resolution is hereby adopted and made a part hereof for all purposes. SALE OF BONDS; PURCHASE AGREEMENT. Pursuant to the authorizations in Section 3 hereof, as approved by the Authorized Officer, the Bonds may be sold either pursuant to the taking of bids therefor or pursuant to a purchase agreement (the "Purchase Agreement") with a purchaser or purchasers (collectively, the "Purchaser") to be approved by an Authorized Officer, and any supplements thereto which may be necessary to accomplish the issuance of Bonds. Such Purchase Agreement is hereby authorized to be dated, executed and delivered on behalf of the Issuer by an Authorized Officer, with such changes therein as shall be approved by the Authorized Officer, the execution thereof by the Authorized Officer to constitute evidence of such approval. The delegation of authority to the Authorized Officer to approve the final terms of the Bonds as set forth in this Resolution is, and the decisions made by the Authorized Officer pursuant to such delegated authority will be, in the best interests of the Issuer, and the Authorized Officer is authorized to make a finding to such effect in the Approval Certificate. OFFICIAL STATEMENT. A Preliminary Official Statement relating to the Bonds is hereby authorized to be approved by the Authorized Officer and distributed to prospective investors and other interested parties in connection with the underwriting and sale of the Bonds, with such changes therein as shall be approved by the Authorized Officer, including such changes as are necessary for distribution as a final Official Statement. It is further officially found, determined, and declared that the statements and representations contained in said Preliminary Official Statement are true and correct in all material respects. The use and distribution by the Purchaser of the Official Statement relating to the Bonds, is hereby approved. For the purpose of review by the Purchaser prior to purchasing the Bonds, the Issuer deems said Preliminary Official Statement to have been "final as of its date" within the meaning of Securities and Exchange Commission Rule 15c2-12. FURTHER PROCEDURES. The President and Secretary, respectively, of the Board of Directors of the Issuer, the Executive Director of the Issuer, and all other officers, employees, and agents of the Issuer, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalf of the Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Bond Resolution, the Bonds, the sale of the Bonds, and any Notice of Sale and/or Official Statement. In case any officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery.

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CITY OF FORNEY, TEXAS TABLE 2 – WATERWORKS AND SEWER SYSTEM CONDENSED STATEMENT OF OPERATIONS

Fiscal Year Ended September 30,

Revenues 2019 2019 (2) 2017 2016 201520,350,674$ 26,802,499$ 17,366,542$ 14,196,347$ 13,958,229$

ExpendituresOperating Expenses (1) 16,201,373$ 12,731,425$ 12,726,800$ 10,808,915$ 9,883,212$

Net Income 4,149,301$ 14,071,074$ 4,639,742$ 3,387,432$ 4,075,017$

Water Customers 6,567 6,431 6,060 5,667 5,725Sewer Customers 6,199 6,013 5,658 5,520 5,676

______________ (1) Excludes depreciation and bonded debt amortization. (2) Includes one-time Intergovernmental Revenue of $7,458,792. The City currently has no Waterworks and Sewer System Revenue Bonds outstanding. TABLE 3 – MONTHLY WATER RATES (EFFECTIVE OCTOBER 1, 2019)

First 2,000 gallons $17.14 (MinimumOver 2,000 gallons $5.47 per 1,000 gallonsOver 15,000 gallons $6.84 per 1,000 gallons

All Customers

TABLE 4 – MONTHLY SEWER RATES (EFFECTIVE OCTOBER 1, 2019)

CommercialResidential

$16.00 Sewer Service Charge$9.58 Monthly Charge plus $6.97 per 1,000 gallons$9.58 Monthly Charge plus $6.97 per 1,000 gallons

$ 22.57 Minimum - With Sewer Averaging $ 22.57 Minimum - No Averaging

$16.00 Sewer Service Charge

TABLE 5 – SPECIAL MONTHLY WATER RATES (EFFECTIVE OCTOBER 1, 2019)

$ 4.76/M gallons

4.76/M gallons4.76/M gallons2.92/M gallons + $201,571 per year3.53/M gallons

Corrugated Services, Inc.Kaufman County Fresh Water Supply District

Markout Water Supply DistrictHighpoint Water District

Talty Water Supply Corporation

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TAX MATTERS OPINION . . . On the date of initial delivery of the Bonds, McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel, will render their opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof, ("Existing Law") (1) interest on the Bonds for federal income tax purposes will be excludable from the "gross income" of the holders thereof and (2) the Bonds will not be treated as "specified private activity bonds" the interest on which would be included as an alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). Except as stated above, Bond Counsel will express no opinion as to any other federal, state or local tax consequences of the purchase, ownership or disposition of the Bonds. See Appendix D - Form of Bond Counsel's Opinion. In rendering its opinion, Bond Counsel will rely upon (a) the District's federal tax certificate and (b) covenants of the District with respect to arbitrage, the use of the proceeds to be received from the issuance and sale of the Bonds and property financed therewith and certain other matters. Failure of the District to comply with these representations or covenants could cause the interest on the Bonds to become includable in gross income retroactively to the date of issuance of the Bonds. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the issuance of the Bonds in order for interest on the Bonds to be, and to remain, excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Bonds to be included in gross income retroactively to the date of issuance of the Bonds. The opinion of Bond Counsel is conditioned on compliance by the District with such requirements, and Bond Counsel has not been retained to monitor compliance with these requirements subsequent to the issuance of the Bonds. Bond Counsel’s opinion represents its legal judgment based upon its review of Existing Law and the reliance on the aforementioned representations and covenants. Bond Counsel’s opinion is not a guarantee of a result. Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Bonds. A ruling was not sought from the Internal Revenue Service by the District with respect to the Bonds or the property financed with proceeds of the Bonds. No assurances can be given as to whether or not the Internal Revenue Service will commence an audit of the Bonds, or as to whether the Internal Revenue Service would agree with the opinion of Bond Counsel. If an audit is commenced, under current procedures the Internal Revenue Service is likely to treat the Issuer as the taxpayer and the Bondholders may have no right to participate in such procedure. No additional interest will be paid upon any determination of taxability. FEDERAL INCOME TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT. . . The initial public offering price to be paid for one or more maturities of the Bonds may be less than the principal amount thereof or one or more periods for the payment of interest on the bonds may not be equal to the accrual period or be in excess of one year (the "Original Issue Discount Bonds"). In such event, the difference between (i) the "stated redemption price at maturity" of each Original Issue Discount Bond, and (ii) the initial offering price to the public of such Original Issue Discount Bond would constitute original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the bonds less the amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods (or during any unequal period if it is the initial or final period) and which are made during accrual periods which do not exceed one year. Under Existing Law, any owner who has purchased such Original Issue Discount Bond in the initial public offering is entitled to exclude from gross income (as defined in section 61 of the Code) an amount of income with respect to such Original Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the accrual period. For a discussion of certain collateral federal tax consequences, see discussion set forth below. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Bond was held by such initial owner) is includable in gross income. Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Bonds and ratably within each such six-month period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Bond for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Original Issue Discount Bond.

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The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds. COLLATERAL FEDERAL INCOME TAX CONSEQUENCES. . . The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Bonds. This discussion is based on existing statutes, regulations, published rulings and court decisions, all of which are subject to change or modification, retroactively. The discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as financial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social Security or Railroad Retirement benefits, individuals allowed earned income credit, certain S corporations with accumulated earnings and profits and excess passive investment income, foreign corporations subject to the branch profits tax, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligations. THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE. INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE BONDS. Under section 6012 of the Code, holders of tax-exempt obligations, such as the Bonds, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt obligation, such as the Bonds, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the accrued market discount of such bonds, although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the "revised issue price" (i.e., the issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. STATE, LOCAL AND FOREIGN TAXES. . . Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Bonds under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. INFORMATION REPORTING AND BACKUP WITHHOLDING. . . Subject to certain exceptions, information reports describing interest income, including original issue discount, with respect to the Bonds will be sent to each registered holder and to the Internal Revenue Service. Payments of interest and principal may be subject to backup withholding under section 3406 of the Code if a recipient of the payments fails to furnish to the payor such owner’s social security number or other taxpayer identification number (“TIN”), furnishes an incorrect TIN, or otherwise fails to establish an exemption from the backup withholding tax. Special rules apply to partnerships, estates and trusts, and in certain circumstances, and in respect of Non-U.S. Holders, certifications as to foreign status and other matters may be required to be provided by partners and beneficiaries thereof.

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OTHER INFORMATION RATINGS The Bonds and the Outstanding Bonds are rated "A+" by S&P Global Ratings, a business unit of Standard & Poor's Financial Services LLC. Additionally, the Outstanding Bonds are rated by Moody’s. An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect only the respective views of such organizations and the District makes no representation as to the appropriateness of the ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of the Bonds (See “Bond Insurance – Claims Paying Ability and Financial Strength of Municipal Bond Insurers” and “ – Bond Insurance Risk Factors” for a description of the current state of the financial guaranty insurance industry and information regarding downgrading and negative changes to the rating outlook of multiple financial guaranty insurers). LITIGATION The District is not a party to any litigation or other proceeding pending, or to its knowledge threatened, in or before any court, agency or other administrative body (either state or federal) which, if decided adversely to the District, would have a material adverse effect on the Bonds. The City is not a party to any litigation or other proceeding pending, or to its knowledge threatened, in or before any court, agency or other administrative body (either state or federal) which, if decided adversely to the City would have a material adverse effect on the Bonds or the financial condition of the City. At the time of the initial delivery of the Bonds, the District will provide the Initial Purchaser with a certificate to the effect that no litigation of any nature has been filed or is then pending challenging the issuance of the Bonds or that affects the payment and security of the Bonds or in any other manner questioning the issuance, sale or delivery of said Bonds. REGISTRATION AND QUALIFICATION OF 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 jurisdiction. The District 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. This disclaimer of responsibility for qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201.041 Texas Government Code, provides that the Bonds are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political subdivisions or public agencies of the State of Texas. With respect to investment in the Bonds by municipalities or other political subdivisions or public agencies of the State of Texas, the Public Funds Investment Act, Chapter 2256, Texas Government Code, requires that the Bonds be assigned a rating of "A" or its equivalent as to investment quality by a national rating agency. See "OTHER INFORMATION - Ratings" above. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Bonds are legal investments for state banks, savings banks, trust companies with a capital of one million dollars or more, and savings and loan associations. The Public Funds Collateral Act, Chapter 2257, Texas Government Code, provides that the Bonds are eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the District has been made of the laws in other states to determine whether the Bonds are legal investments for various institutions in those states. LEGAL MATTERS The District will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Bonds, including the unqualified approving opinion of the Attorney General of Texas as to the Bonds to the effect that the Bonds are valid and legally binding obligations of the District, and based upon examination of such transcript of proceedings, the approving legal opinion of Bond Counsel, to like effect and to the effect that interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law and the Bonds are not private activity bonds, subject to the matters described under “Tax Matters” herein. A form of such opinion is attached hereto as Exhibit D. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Official Statement and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information described the Bonds in the Official Statement under the captions “The Bonds” (except for the subcaptions “Book-Entry-Only System” and “Bondholders Remedies”), “Provisions of the Bond Resolution” and “Tax Matters” and the subcaptions “Continuing Disclosure of Information” (except the subcaption “Compliance with Prior Undertakings”), “Legal Investments and Eligibility to Secure Public Funds in Texas” and “Legal

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Matters” under the caption “Other Information” and is of the opinion that the information relating to the Bonds and the Resolution contained therein is a fair and accurate description of the laws and legal issues addressed therein, and with respect to the Bonds, such information conforms to the Resolution. The legal fees to be paid to Bond Counsel for services rendered in connection with the issuance of the Bonds are contingent on the sale and delivery of the Bonds. The legal opinion will accompany the Bonds deposited with DTC or will be printed on the Bonds in the event of the discontinuance of the Book-Entry-Only System. The 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. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from District and Contracting Party’s records, audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. CONTINUING DISCLOSURE OF INFORMATION In the Bond Resolution, the District has made the following agreements for the benefit of the holders and beneficial owners of the Bonds. Under the agreement the District has agreed to provide or cause to be provided with respect to itself and each Significant Obligated Person certain updated financial information and operating data annually and the District will be obligated to provide timely notice of specified events. For purposes of such agreement, the "Significant Obligated Person" means any Participant, or Additional Participant, or other party contracting with the District whose payments to the District for use of or service from the System in the calendar year preceding any such determination exceeded 10% of the Gross Revenues of the System. Currently, the City is the only Significant Obligated Person. The District is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the agreement, the District will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified events, to the Municipal Securities Rulemaking Board (the "MSRB") through the Electronic Municipal Market Access ("EMMA") system. ANNUAL REPORTS. . . The District will provide or cause each Significant Obligated Person to provide certain updated financial information and operating data annually to the MSRB. The information to be updated includes all quantitative financial information and operating data with respect to the District of the general type included in this Official Statement under table number 1 and with respect to each Significant Obligated Person in tables numbered 2 through 5. The District will provide, or cause each Significant Obligation Person to provide, this information within 6 months after the end of each fiscal year ending in and after 2020. The District will additionally provide or cause to be provided audited financial statements for each Significant Obligated Person when and if available, and unaudited financial statements within 12 months after fiscal year end, unless audited financial statements have been provided sooner. Any such financial statements will be prepared in accordance with general accepted accounting principles or such other accounting principles as the Significant Obligated Persons may be required to employ from time to time pursuant to State law or regulation. The Significant Obligated Person may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by Rule 15c2-12 (the “Rule”) of the United States Securities and Exchange Commission (the "SEC"). The Significant Obligated Person's current fiscal year end is September 30. Accordingly, updated information must be provided by March 31 in each year, unless a Significant Obligated Person changes its fiscal year. If a Significant Obligated Person changes its fiscal year, the District will notify, or cause the Significant Obligated Person to notify, the MSRB of the change. If the District or Significant Obligated Person fails to provide updated information as described above, the District will provide, or cause the Significant Obligated Person to provide timely notice of the failure to the MSRB. NOTICE OF CERTAIN EVENTS . . . The District will also provide, or cause a Significant Obligated Person to provide, timely notices of certain events to the MSRB. The District will provide notice (not in excess of ten (10) business days after the occurrence of the event) 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, if material; (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, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (7) Modifications to the rights of security holders, if material; (8) Bond calls, if material, and tender offers; (9) Defeasances; (10) Release, substitution or sale of property securing repayment of the securities, if material; (11) Rating changes; (12) Bankruptcy, insolvency, receivership or similar event of the District, or a Significant Obligated Person; (13) the consummation of a merger, consolidation, or acquisition involving the District, or a Significant Obligated Person, or the sale of all or substantially all of the assets of the District, or a Significant Obligated Person, other than in the ordinary course of

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business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. Neither the Bonds nor the Bond Resolution make any provision for credit enhancement, or enhancement liquidity; (15) Incurrence of a financial obligation (as defined by the Rule) of a Significant Obligated Person (which includes certain debt, debt-like, and debt-related obligations), if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of any such financial obligation of a Significant Obligated Person any of which affect security holders, if material; and (16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of any such financial obligation of a Significant Obligated Person, any of which reflect financial difficulties. AVAILABILITY OF INFORMATION . . . The District and the Significant Obligated Person have agreed to provide the foregoing information to the MSRB. Investors will be able to access continuing disclosure information filed with the MSRB at www.emma.msrb.org. LIMITATIONS AND AMENDMENTS. . . The District has agreed to update, or cause each Significant Obligated Person to update, information and to provide or cause the Significant Obligated Person to provide notices of specified events only as described above. The District 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 is provided, except as described above. The District 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 District 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 District to comply with its agreement. The District may amend its continuing disclosure agreement from time to time 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 respective Significant Obligated Person, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the Parity Bonds consent to the amendment or (b) any person unaffiliated with the District or the Significant Obligated Person (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds. If the District so amends the agreement, the District has agreed to include or cause the Significant Obligated Person to 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 financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS. . . During the last five years, the District believes it has complied in all material respects with its previous continuing disclosure undertakings, entered into pursuant to the Rule, except as follows: Due to an administrative oversight, the current investments table was not included in the 2012-2015 filings for the District’s Water Transmission Facilities Contract Revenue Refunding Bonds (City of Plano Project), Series 2009. The investments table due in 2016 was timely filed, but the District believes it is neither reasonably feasible nor material to create such Tables for prior years. The District has implemented procedures to ensure timely filing of all future information. The ratings on municipal bond insurers have been downgraded with frequency at various times in recent years. Information about the downgrades of municipal bond insurers has been publicly reported. During the previous five years, the District and Significant Obligated Persons have filed notices of downgrades of municipal bond insurers that insured the District or Significant Obligated Person’s outstanding obligations, but no assurances can be made that all the filings have been made or made in a timely manner. On August 4, 2015, Moody’s downgraded from "Aa3" to "A1" the District’s Water Facilities Installment Sale Contract Revenue Bonds (City of Rockwall Pump Station Project), Series 2006 and the District’s City of Rockwall 2007 Sewage Treatment and Disposal Service Contract (Buffalo Creek Plant) Revenue Bonds, Series 2008, and an event notice was not timely filed. The event notice has now been filed, including a notice of late filing. FINANCIAL ADVISOR HilltopSecurities serves as Financial Advisor to the District in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. HilltopSecurities, in its capacity as Financial Advisor, has relied on the opinion of Bond Counsel and has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. In the normal course of business, the Financial Advisor may from time to time sell investment securities to the District for the investment of bond proceeds or other funds of the District upon the request of the District. The Financial Advisor to the District has provided the following sentence for inclusion in this Official Statement. The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibility to the District and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information.

http://www.emma.msrb.org/

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INITIAL PURCHASER OF THE BONDS After requesting competitive bids for the Bonds, the District accepted the bid of ________________________(the "Initial Purchaser of the Bonds") to purchase the Bonds at the interest rates shown on the cover page of the Official Statement at a price of par plus a cash premium (if any) of $_______________. The Initial Purchaser of the Bonds can give no assurance that any trading market will be developed for the Bonds after their sale by the District to the Initial Purchaser of the Bonds. The District has no control over the price at which the Bonds are subsequently sold and the initial yield at which the Bonds will be priced and reoffered will be established by and will be the sole responsibility of the Initial Purchaser of the Bonds. FORWARD-LOOKING STATEMENTS DISCLAIMER The statements contained in this Official Statement, and in any other information provided by the District, that are not purely historical, are forward-looking statements, including statements regarding the District'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 District on the date hereof, and the District assumes no obligation to update any such forward-looking statements. The District's actual results could differ materially from those discussed 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 District. Any of such assumptions 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 The Resolution authorizing the issuance of the Bonds will approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Bonds by the Initial Purchaser.


/s/___________________________________ THOMAS W. KULA

Executive Director/General Manager

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APPENDIX A


MUSTANG CREEK WASTEWATER INTERCEPTOR SYSTEM CONTRACT

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NORTH TEXAS MUNICIPAL WATER DISTRICT MUSTANG CREEK WASTEWATER INTERCEPTOR SYSTEM CONTRACT

WHEREAS, North Texas Municipal Water District (the "District") is a conservation and reclamation district created and functioning under Article 16, Section 59 of the Texas Constitution, pursuant to Chapter 62, Acts of the 52nd Legislature of the State of Texas, Regular Session, 1951, as amended, (the "District Act"), with the authority to provide and develop regional systems for wastewater treatment; and WHEREAS, pursuant to a Trinity East Fork Regional Wastewater System Contract (the "Regional Contract"), the District has acquired and constructed a regional Wastewater treatment system to serve various parties to such Regional Contract (the "Regional Wastewater System"); and WHEREAS, the Regional Contract requires that each of the parties thereto must arrange to provide for the transportation of its Wastewater to its Point or Points of entry into the District's Regional Wastewater System; and WHEREAS, the District and the City of Forney, Texas (the "City" or "Forney") hereafter collectively referred to as "the parties," hereto wish to provide for the acquisition, construction, improvement, operation and maintenance of a wastewater interceptor system (as further defined herein, the "Interceptor System") for the purpose of providing facilities to adequately transport Wastewater (hereinafter defined) from the Participants (hereinafter defined) to the District's Regional Wastewater System; and WHEREAS, there has been prepared for and filed with the District the report entitled "City of Forney Supplemental Report to Evaluation of Projected Growth and Recommended Improvements to Mustang Creek Interceptor System," dated August, 2009, prepared by Freeman Millican Inc., Consulting Engineers, February 2010 (the "Initial Engineering Report") with respect to the Interceptor System; and WHEREAS, the parties hereto are entering into this contract in order to control water pollution, and protect, improve, and enhance the water quality of the Mustang Creek and the Mustang River and the water supplies impounded therein; and WHEREAS, Forney presently owns, operates, and maintains its combined waterworks and sanitary sewer systems; and WHEREAS, Forney has deemed it necessary and desirable to contract with the District to provide for the design, acquisition, construction, improvement, operation and maintenance of the Interceptor Facilities (hereinafter defined) to achieve efficiencies of cost and operation; and WHEREAS, the District has been and is willing to accept the responsibility of providing improved waste treatment in the service area to protect water quality and develop reuse potential; and WHEREAS, the District and Forney are authorized to make and enter into this Contract under the District Act, Chapter 30, Texas Water Code, as amended, and other applicable laws; and WHEREAS, the parties hereto recognize these facts:

(a) That the District will use the payments to be received under this Contract and similar contracts, if any, for the payment of Operation and Maintenance Expense of the Interceptor System and for the payment of the principal of, redemption premium, if any, and interest on its Bonds, and to establish and maintain debt service reserves and other funds if and as provided in any Bond Resolution; and that the revenues under such contracts will be pledged to such purposes; and

(b) That contracts similar to this instrument may be executed between the District and subsequent Additional Participants; and

(c) That the District will issue Bonds from time to time in the future to design, acquire and construct the Interceptor System.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the District and Forney hereby contract and agree as follows:

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ARTICLE I DEFINITIONS Section l.01. DEFINITION OF TERMS. In addition to the definitions stated in the preamble hereof, the terms and expressions as hereinafter used in this contract, unless the context clearly shows otherwise, shall have the following meanings: (a) "Additional Participants" means any Person or Persons in addition to Forney with which the District makes a contract for receiving and transporting Wastewater through the Interceptor System. (b) "Adjusted Annual Payment" means the Annual Payment, as adjusted in accordance with Section 5.03 of this Contract, during or after each Fiscal Year. (c) "Annual Payment" means the amount of money estimated as provided in Section 5.03 of this Contract to be paid to the District by Participants as their proportionate shares of the Annual Requirement. (d) "Annual Requirement" means the total amount of money required for the District to pay all Operation and Maintenance Expense of the Interceptor System, with the exception of any surcharges paid directly by Participants under Sections 4.02 and 3.04(c) hereof, and to pay the principal of, and redemption premium, if any, and interest on its Bonds, including all charges and expenses of the paying agents and registrars for its Bonds, and to pay any amounts required to be deposited in any special or reserve funds, including a debt service reserve fund and a repair and replacement fund, as required to be established and/or maintained by the provisions of any Bond Resolution. (e) "Bond Resolution" means any resolution of the Board of Directors of the District authorizing the issuance of Bonds and providing for their security and payment, as such resolution(s) may be amended from time to time as therein permitted. (f) "Bonds" means any bonds, notes, or other obligations to be issued by the District pursuant to this Contract for the design, acquisition, construction, enlargement, improvement, extension, repair, or replacement of the Interceptor System or any part thereof, whether in one or several issues, or any Bonds issued by the District to refund any or all of same or to refund any such refunding bonds. (g) "Construction Fund" means the fund by that name established in Section 2.03 hereof. (h) "Contingency Fund" means the fund by that name established in Section 5.03(g) hereof. (i) "Contract", or "this contract", means this contract between Forney and the District and all similar contracts, if any, executed between the District and Additional Participants. (j) "Engineering Report" means, collectively, the Initial Engineering Report and any additions, supplements, amendments or modifications thereto, including, without limitation, any additional engineering studies made pursuant to Section 8.02 hereof. (k) "Fiscal Year" means the twelve (12)-month period beginning each October l and ending the following September 30, or such other twelve (12)-month period as may be established in the future to constitute the District's Fiscal Year. (l) "Interceptor System" means, collectively, the Wastewater transportation facilities generally as described in the Engineering Report, and all improvements and additions to and extensions, enlargements, and replacements of such facilities which are acquired and constructed by the District in order to receive and transport Wastewater of the Participants to their respective Points of Entry into the Regional Wastewater System. However, and notwithstanding the foregoing, said term includes only those facilities which are acquired or constructed with proceeds from the sale of Bonds issued, or payments made, pursuant to this Contract and any similar contracts with Additional Participants. Said term does not include any part of the Regional Wastewater System or any facilities acquired or constructed by the District with the proceeds from the issuance of "Special Facilities Bonds," which are hereby defined as being revenue obligations of the District which are not secured by or payable from Annual Payments made under this Contract and similar contracts with Additional Participants, and which are payable solely from other sources. (m) "Local Wastewater Facilities" means the waste collection and treatment facilities owned and operated by the Participants.

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(n) "Operation and Maintenance Expense" means all costs of operation and maintenance of the Interceptor System including, but not limited to, repairs and replacements for which no special fund is created in a Bond Resolution, the cost of utilities, supervision, engineering, accounting, auditing, legal services, insurance premiums, and any other supplies, services, administrative costs, and equipment necessary for proper operation and maintenance of the Interceptor System, any payments required to be made hereunder into the Contingency Fund, payments made for the use of operation of any property, payments of fines, and payments made by the District in satisfaction of judgments or other liabilities resulting from claims not covered by the District's insurance or not paid by one particular Participant arising in connection with the operation and maintenance of the Interceptor System. Depreciation shall not be considered an item of Operation and Maintenance Expense. (o) "Participants" means Forney and all Additional Participants. (p) "Participant" means any of the Participants. (q) "Person" shall have the meaning set forth in the Texas Code Construction Act, Chapter 311, Texas government Code, as amended. (r) "Point of Entry" means any point or points at which Wastewater enters the Interceptor System as such point or points shall be agreed upon between the District and the applicable Participant. (s) "Regional Wastewater System", "District's System", "Regional System", or "System" means all of the District's facilities acquired, constructed, used, or operated by the District for treating and disposing of Wastewater of and for the Participants pursuant to the Regional Contract, together with any improvements, enlargements, or additions to the Regional Wastewater System facilities and any extensions, repairs, or replacements of the System facilities acquired, constructed, used, operated, or otherwise incorporated into or made a part of the Regional Wastewater System facilities in the future by the District. Said terms do not include the Interceptor System. (t) "Service Commencement Date" means the first date upon which the Interceptor System is available to receive and transport Wastewater from the Participants. (u) "Wastewater" means Sewage, Industrial Waste, Municipal Waste, Recreational Waste, and Agricultural Waste, as defined in the Texas Water Code, together with properly shredded garbage, and such infiltration water that may be present. ARTICLE II PROVIDING OF INTERCEPTOR SYSTEM BY THE DISTRICT Section 2.01. INTERCEPTOR SYSTEM AND INITIAL CONTRACT. In order to provide services for receiving and transporting Wastewater for the Participants, the District will use its best efforts to design, acquire, construct, and complete the Interceptor System and will own, operate and maintain the Interceptor System, and from time to time enlarge, improve, repair, replace, and/or extend the Interceptor System to provide service to the Participants. The District shall obtain and hold in its name all required permits from the appropriate Federal and State agencies, and each Participant shall assist the District in obtaining same. The District shall provide, manage, operate, and maintain the Interceptor System in such manner as it determines is necessary for providing adequate, efficient, and economical service to Participants. Section 2.02. CONSULTING ENGINEER; DESIGN COSTS. The District and Forney agree that Freeman Millican Inc., Consulting Engineers, shall constitute and be defined as the "Consulting Engineers" for the Interceptor System. However, the District reserves the right to enter into any such contracts with other engineers deemed necessary to provide engineering services to design the Interceptor System. Engineering fees and expenses, if any, paid by the District shall be reimbursed from proceeds of the Bonds as a cost of acquisition and construction of the Interceptor System. The District and Forney agree that Forney, and no other Participant unless otherwise agreed to in writing, will pay for design costs incurred by the District for and directly related to the Interceptor System. "Design costs" include, but shall not be limited to, the costs of surveying, easement preparation, permitting, engineering design, bidding, fees and related expenses, prior to the issuance of the Bonds, in the approximate amount of $1,220,000.00. The parties will document actual costs for inclusion in the sale of the Bonds, and the District shall reimburse Forney for all design costs from proceeds of the Bonds as a cost of the design, acquisition and construction of the Interceptor System. The parties acknowledge and agree that Forney's financial obligation to advance funds under this Contract for the design, acquisition and construction of the Interceptor System is limited to the terms and conditions set forth in this Section 2.02.

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Section 2.03. ACQUISITION AND CONSTRUCTION CONTRACTS. The District will enter into such contracts as are necessary to provide for acquiring and constructing the Interceptor System, and said contracts shall be executed as required by the laws applicable to the District. The District shall cause the amounts due under such contracts to be paid from the proceeds from the sale of its Bonds. The District shall deposit the proceeds from the sale of its Bonds into a special Mustang Creek Wastewater Interceptor System Construction Fund (the "Construction Fund"). The Construction Fund shall be used for paying the District’s costs and expenses incident to the Bonds and the Interceptor System, and to pay the costs of acquiring, by purchase and construction, the Interceptor System. Pending use as required by this Contract, the amounts in the Construction Fund may be invested in accordance with law, provided that all investment earnings therefrom (excepting any which may be required to be rebated to the federal government to prevent the Bonds from becoming "arbitrage bonds" under the Internal Revenue Code of 1986, as amended) shall be deposited in and become a part of the Construction Fund. If, after final completion of all facilities constituting the Interceptor System, any surplus remains on hand in the Construction Fund, such surplus shall be deposited into the interest and sinking fund for the Bonds. Any proceeds from the sale of its Bonds remaining after completion of the Interceptor System shall be used to pay principal and interest on the Bonds, and reduce to that extent the Annual Payments required to be made by the Participants under this Contract. Section 2.04. ACQUISITION AND CONSTRUCTION. The District agrees to proceed promptly with the design, acquisition and construction of the Interceptor System. The District does not anticipate any delays in commencing or completing the Interceptor System, but the District shall not be liable for any damages occasioned by, or arising out of, the construction or completion of the Interceptor System, any delays in completion of the Interceptor System, or the performance of the Interceptor System for its intended purpose. Section 2.05. CONDITIONS PRECEDENT. The obligation on the part of the District to acquire and construct the Interceptor System shall be conditioned upon the following: (a) sale of Bonds in an amount sufficient to assure the acquisition and construction of the Interceptor System; and (b) the District's ability, or the ability of the contractors, to obtain all permits, material, labor, and equipment necessary for the acquisition and construction of the Interceptor System.

Section 2.06. USE OF PUBLIC PROPERTY. By these presents, the Participants authorize use by the District of any and all real property, streets, alleys, public ways and places, and general utility or sewer easements of the Participants determined by the Participants and the District to be necessary for acquiring and constructing the Interceptor System. ARTICLE III DISCHARGE OF WASTEWATER AND METERING Section 3.01. DISCHARGE. In consideration of the payments to be made under its respective contract with the District, each of the Participants have and shall have the right to discharge into the Interceptor System such Wastewater from its respective sewer system as is required or permitted to be discharged into the District's Regional Wastewater System by such Participant under the Regional Contract; provided that such Wastewater meets the requirements for quantity and quality as set forth in this Contract and in the Regional Contract. Section 3.02. POINT OF ENTRY. Each Participant may discharge all such Wastewater generated from such Participant's sewer system into the designated Point or Points of Entry for such Participant. Section 3.03. CONVEYANCE TO POINT OF ENTRY. It shall be the sole responsibility of each Participant to transport, or cause to be transported, at no cost to the District or the other Participants, its Wastewater to its Point or Points of Entry. Section 3.04. QUANTITY OF WASTEWATER DELIVERED. (a) The quantity of Wastewater delivered hereunder by each Participant shall be metered by the District and the total annual contributing flow of Wastewater received during any Fiscal Year, as determined by such metering, shall be used to determine each Participant's Annual Payment as set forth in Article V. (b) The maximum discharge rate is defined as a rate in million gallons per day (MGD), exceeded for a period of sixty minutes, which, if continued over a period of 24 hours, would be equal to 3.50 times the Participant's average daily flow during that Fiscal Year. The total quantity of Wastewater discharged into the Interceptor System shall never exceed the amount which the Interceptor System and the Regional Wastewater System are capable of receiving, treating, and disposing, unless approved by the District, subject to terms and conditions to be established by the District. Notwithstanding the foregoing, no Participant shall ever make any discharge into the Interceptor System or the Regional Wastewater System which would cause them to be overloaded or be in violation of its permits from the State of Texas and/or the United States of America.

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(c) Any Participant exceeding the maximum discharge rate shall have a surcharge applied to its next Fiscal Year's Annual Payment equal to l% of the Annual Payment in that Fiscal Year for each l/10th that the ratio of the maximum discharge to the average daily flow exceeds 3.50. Section 3.05. LIABILITY FOR DAMAGES AND RESPONSIBILITY FOR TREATMENT AND DISPOSAL OF WASTEWATER. Liability for damages arising from the reception and transportation of all Wastewater discharged shall remain in each Participant to Points of Entry, and upon passing through the Points of Entry, liability for such damages shall pass to the District. As between the District and each Participant, each party agrees, to the full extent permitted by law, to indemnify and to save and hold the other party harmless from any and all claims, demands, causes of action, damages, losses, costs, fines, and expenses, including reasonable attorney's fees, which may arise or be asserted by anyone at any time on account of the reception and transportation while Wastewater is in the control of such responsible party, or on account of a prohibited discharge by a Participant. The District has the responsibility as between the parties for the proper reception and transportation of all Wastewater, but not for prohibited discharges passing through any Point of Entry. Section 3.06. METERING. The District will furnish, install, operate and maintain as part of the Interceptor System the necessary equipment and devices for measuring properly all Wastewater to be discharged into the Interceptor System by each Participant. The location of the meter for each Participant shall be agreed upon between the District and each Participant. Such meters and other equipment shall remain the property of the District. Each Participant shall have access to such metering equipment at all reasonable times for inspection and examination, but the reading, calibration, and adjustment thereof shall be done only by employees or agents of the District in the presence of a representative of the Participant if requested by such Participant. All readings of meters will be entered upon proper books of record maintained by the District. Upon written request the Participant may have access to said record books during reasonable business hours. Not more than three times in each year of operation, the District shall calibrate its meters, if requested in writing by a Participant to do so, in the presence of a representative of such Participant, and those parties shall jointly observe any adjustments which are made to the meters in case any adjustment is found to be necessary. If, for any reason, any meters are out of service or out of repair, or if, upon any test, the percentage of inaccuracy of any meter is found to be in excess of five (5%) per cent, registration thereof shall be corrected for a period of time extending back to the time when such inaccuracy began, if such time is ascertainable, and if such time is not ascertainable, then for a period extending back one-half (l/2) of the time elapsed since the date of the last calibration, but in no event further back than a period of six (6) months. Each Participant may, at its option and its own expense, install and operate a check meter to check each meter installed by the District, but the measurement for the purpose of this agreement shall be solely by the District's meters. Section 3.07. UNIT OF MEASUREMENT. The unit of measurement for Wastewater delivered hereunder shall be 1,000 gallons, U. S. Standard Liquid Measure. ARTICLE IV QUALITY Section 4.01. GENERAL. Each Participant agrees to limit discharge into the Interceptor System to Wastewater that complies with quality requirements of the Regional Contract for discharge into the Regional Wastewater System. No discharge shall be made into the Interceptor System which would cause the District to violate any permit granted, or any rule or regulation promulgated, by any State or Federal agency having jurisdiction over the District. Each Participant specifically covenants that it will enact and enforce procedures which will prohibit or prevent customers of its sewer system from making any discharge which would cause such Participant to violate the provisions of this contract or any applicable State or Federal permit, law, rule, or regulation. Section 4.02. SURCHARGE. With approval of the District, Wastewater with concentrations of Biological Oxygen Demand ("BOD") and Total Suspended Solids ("TSS") greater than that permitted by the Regional Contract may be discharged by a Participant into the Interceptor System with the payment of a surcharge, which shall be in addition to such Participant's proportionate share of the Annual Payment as outlined in Article V of this Contract, and this surcharge shall be sufficient to cover and pay for the additional cost of services hereunder.

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ARTICLE V

PAYMENTS Section 5.01. FINANCING. The District will use its best efforts to issue its Bonds, in amounts and at times as determined by the District, to provide the Interceptor System. The proceeds from the sale of the Bonds will be used for the payment of all of the District's costs and expenses in connection with the design, acquisition, and construction of the Interceptor System and the Bonds, including, without limitation, all financing, legal, printing, administrative overhead, and other expenses and costs incurred in issuing its Bonds and to fund a debt service reserve and other funds if required by any Bond Resolution. Each Bond Resolution of the District shall specify the exact principal amount of the Bonds initially issued, which shall mature not more than 40 years from the date of such Bonds, and shall bear interest at not to exceed the maximum legal rates, and the Bond Resolution may create and provide for the maintenance of a revenue fund, an interest and sinking fund, a debt service reserve fund, and other funds and accounts, all in the manner and amounts as provided in such Bond Resolution. Prior to the sale of any such Bonds, the District shall provide to the Participants a copy of the Preliminary Official Statement relating to such Bonds, which shall include, among other things, proposed maturity schedule and optional and mandatory redemption provisions. The Participants agree that if such Bonds are actually issued and delivered to the purchaser thereof, the Bond Resolution authorizing the Bonds shall for all purposes be deemed to be in compliance with this Contract in all respects, and the Bonds issued thereunder will constitute Bonds as defined in this Contract. Section 5.02. ANNUAL REQUIREMENT. It is acknowledged and agreed that payments to be made under this Contract will be the only source available to the District to provide the Annual Requirement; and that the District has a statutory duty to establish and from time to time to revise the charges for services to be rendered and made available to Participants hereunder so that the Annual Requirement shall at all times be not less than an amount sufficient to pay or provide for the payment of: (a) An "Operation and Maintenance Component" equal to the amount paid or payable for all Operation and Maintenance Expense; and (b) A "Bond Service Component" equal to: (l) the principal of, redemption premium, if any, and interest on, its Bonds, as such principal, redemption premium, if any, and interest become due (by maturity, redemption, or otherwise), less interest to be paid out of Bond proceeds if permitted by any Bond Resolution; and (2) during each Fiscal Year, the proportionate part of any special or reserve funds required to be established and/or maintained by the provisions of any Bond Resolution; and (3) an amount in addition thereto sufficient to restore any deficiency in any of such funds required to be accumulated and maintained by the provisions of any Bond Resolution; and (4) the charges of paying agents and registrars for paying principal of, redemption premium, if any, and interest on, all Bonds, and for registering and transferring Bonds. Section 5.03. PAYMENTS BY PARTICIPANTS. (a) For services to be rendered to each Participant by the District under this Contract and other similar contracts, if any, each Participant has agreed to pay, at the time and in the manner hereinafter provided, its proportionate share of the Annual Requirement, which shall be determined as hereafter described and shall constitute a Participant's Annual Payment or Adjusted Annual Payment. For the Fiscal Year beginning on October 1, 2010, and for each Fiscal Year thereafter each Participant's proportionate share of the Annual Requirement shall, subject to the subsequent provisions hereof, be a percentage obtained by dividing such Participant's estimated contributing flow to the Interceptor System for the next succeeding Fiscal Year or portion thereof by the total estimated contributing flow to the Interceptor System by all Participants during such Fiscal Year or portion thereof. The calculation of each Annual Payment as determined herein, and each Adjusted Annual Payment, shall be determined as provided in this Section. The terms "contributing flow to the Interceptor System" and "contributing flow" as used in this Contract with respect to any Fiscal Year, commencing with the Fiscal Year beginning October 1, 2010, shall mean the greater of (i) the actual metered contributing flow of a Participant or (ii) the minimum annual contributing flow for which a Participant has agreed to pay (regardless of whether such amount was actually discharged into the Interceptor System), which minimum annual contributing flow for Forney is as follows:

Forney 3,415,000 gallons per day

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The above minimum annual contributing flow may be adjusted by the District and Forney to include minimum annual contributing flows of Additional Participants should Additional Participants become parties to this Contract, in accordance with Section 8.02 hereof. Each Participant's Annual Payment shall be calculated by the District by multiplying such Participant's estimated percentage of the estimated total contributing flow times the Annual Requirement. Each Participant's Annual Payment shall be made to the District in monthly installments, on or before the twentieth (20th) day of each month, for its required part of the Annual Requirement for each Fiscal Year, commencing with the Fiscal Year beginning October 1, 2010. Such payments shall be made in accordance with a Schedule of Payments for each Fiscal Year which will be supplied to each Participant. At the close of the Fiscal Year which commenced on October 1, 2010, and for each Fiscal Year thereafter, the District shall redetermine each Participant's percentage by dividing each Participant's contributing flow to the Interceptor System by the total contributing flow of all Participants. Each Participant's Adjusted Annual Payment shall be calculated by multiplying each Participant's redetermined percentage times the Annual Requirement. The difference between the Adjusted Annual Payment and the Annual Payment, if any, when determined, shall be applied as a credit or a debit to each Participant's account with the District and shall be credited or debited to such Participant's next subsequent monthly payment or payments. (b) If a Participant fails to pay its monthly charge on or before the twentieth (20th) day of any month, it shall incur and pay a penalty of ten percent of the amount due together with any legal or other costs incurred by the District in collecting the amount due. The District is authorized to discontinue service to any Participant which fails to make any monthly payment, and which, after written notice, does not make such payment. (c) If, during any Fiscal Year, the District begins providing services to an Additional Participant, each Participant's Annual Payment for such Fiscal Year shall be redetermined consistent with the provisions of this Contract. (d) Each Participant's Annual Payment also shall be adjusted and redetermined for the balance of any applicable Fiscal Year, consistent with the provisions of this Contract, and initially based on estimated contributing flow, at any time during any Fiscal Year if:

(i) Additions, enlargements, repairs, extensions, or improvements to the Interceptor System are placed in service by the District which require an increase and redetermination of the Annual Requirement; or

(ii) Unusual or extraordinary expenditures for operation and maintenance of the Interceptor System are required

which are not provided for in the Annual Budget or in a Bond Resolution; or (iii) A Participant's contributing flow to the Interceptor System, after the beginning of the Fiscal Year, is

estimated to be substantially different from that on which Annual Payments are based as determined by the District, to the extent that such difference in flow will substantially affect such Participant's Budget, and consequently such Participant's Annual Payment to the District; or

(iv) The District issues additional Bonds, the payments in connection with which require an increase and

redetermination of the Annual Requirement; or

(v) The District receives significantly more or significantly less revenues or other amounts than those contemplated; or

(vi) It appears to the District that for any other reason it will not receive the full amount of the Annual

Requirement unless such adjustment and redetermination are made. (e) During each Annual Payment Period all revenues received by the District from providing services of the Interceptor System to parties which are not Participants, shall (i) first be credited to the Operation and Maintenance Component of the Annual Requirement, and (ii) then any remainder credited to the Bond Service Component of the Annual Requirement, with the results that such credits under (i) and (ii), respectively, shall reduce, to the extent of such credits, the amounts of such Components, respectively, which otherwise would be payable by the Contracting parties pursuant to the method prescribed in (a) above. The District may estimate all such credits which it expects to make during each Annual Payment Period in calculating each Annual Payment. (f) The District shall give all Participants at least 21 days written notice prior to consideration by the Board of Directors of the District of making any Adjusted Annual Payment for any Participant during any Fiscal Year. (g) The Annual Payment set forth in this section shall be considered the basic charge for service hereunder, and each Participant shall pay a surcharge in addition to the Annual Payment for excess BOD and/or TSS as provided in Section 4.02, and for excessive discharge in the manner set forth in Section 3.04(c). (h) The District may establish and maintain a separate fund entitled the "Mustang Creek Wastewater Interceptor System Contingency Fund" (the "Contingency Fund"). The Contingency Fund shall be used solely for the purpose of paying unexpected or extraordinary Operation and Maintenance Expenses of the Interceptor System for which funds are not otherwise available under this Contract. The Contingency Fund shall initially be funded, and any subsequent deficiency shall be restored, with amounts included as Operation and Maintenance Expenses in the Annual Budget.

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(i) The facilities and services of the Interceptor System to be provided to each Participant pursuant to this Contract are and will be essential and necessary to the operation of such Participant's combined waterworks and sanitary sewer system, and all payments to be made hereunder by each Participant will constitute reasonable and necessary "operating expenses" of such Participant's combined waterworks and sanitary sewer system, within the meaning of Section 30.030, Texas Water Code, as amended, and Section 1502.056, Texas Government Code, and the provisions of all ordinances authorizing the issuance of all waterworks and sanitary sewer system revenue bond issues of such Participant, with the effect that such Participant's obligation to make payments from its waterworks and sanitary sewer system revenues under this Contract shall have priority over its obligations to make payments of the principal of and interest on any and all of its waterworks and sanitary sewer system revenue bonds. Each Participant agrees to fix and collect such rates and charges for waterworks and sanitary sewer system services to be supplied by its waterworks and sanitary sewer system as will make possible the prompt payment of all expenses of operating and maintaining its entire waterworks and sanitary sewer system, including all payments, obligations, and indemnities contracted hereunder, and the prompt payment of the principal of and interest on its bonds payable from the net revenues of its waterworks and sanitary sewer system. The District shall never have the right to demand payment of the amounts due hereunder from funds raised or to be raised from taxation by a Participant. Each Participant's payments hereunder shall be made pursuant to the authority granted by Section 30.030, Texas Water Code, as amended, and Section 1502.056, Texas Government Code. Recognizing the fact that the Participants urgently require the facilities and services covered by this Contract, and that such facilities and services are necessary for actual use and for stand-by purposes; and further recognizing that the District will use the payments received from the Participants hereunder to pay, secure, and finance the issuance of its Bonds, it is hereby agreed that the Participants shall be obligated unconditionally, and without offset or counterclaim, to make the payments designated as the "Bond Service Component" of the Annual Requirement, in the manner provided in this Contract, regardless of whether or not the District actually provides such facilities and services, or whether or not any Participant actually receives or uses such facilities and services, and regardless of the validity or performance of the other parts of this or any other contract, and such "Bond Service Component" shall in all events be applied and used for providing debt service and other requirements of the Bonds, and the holders of the Bonds shall be entitled to rely on the foregoing agreement and representation, regardless of any other agreement between the District and the Participants. Each Participant further agrees that it shall be obligated to make the payments designated as the "Operation and Maintenance Component" of the Annual Requirement as described in Section 5.02 of this Contract, so long as the District is willing and able to provide the facilities and services contemplated hereunder to any Participant.(j) As soon as practicable after issuance of the initial series of Bonds, the District shall furnish each Participant with a schedule of monthly payments to be made for the balance of its Fiscal Year commencing October 1, 2010. On or before August l of each year, commencing August 1, 2011, the District will furnish each Participant with a tentative budget and an estimated schedule of monthly payments to be made by such Participant for the ensuing Fiscal Year. On July l of each year, commencing July 1, 2011, the District shall be in a position to furnish any Participant an estimate of the Participant's annual requirement. On or before October l of each year, commencing October 1, 2011, the District shall furnish such Participant with a finalized schedule of the monthly payments to be made by such Participant to the District for the ensuing Fiscal Year. Each Participant agrees that it will make such payments to the District on or before the twentieth (20th) day of each month of such Fiscal Year. If any Participant shall dispute the Annual Budget, and proceed as provided in Article VII, such Participant nevertheless promptly shall make the payment or payments determined by the District, and if it is subsequently determined by agreement that such disputed payments made by such Participant should have been less, the District shall promptly revise, reallocate, and readjust the charges among all Participants then being served by the District in such manner that such Participant will recover its overpayment. In the event any Participant is assessed a surcharge for excess BOD and/or TSS pursuant to Section 4.02 hereof, the District will bill such Participant for such surcharge on or before the tenth (10th) day of the month following the determination of the surcharge and such Participant shall pay such surcharge on or before the twentieth (20th) day of the month of receipt of any such bill. Any such surcharge collected by the District shall be applied by the District against the total cost of Operation and Maintenance Expense of the Interceptor System. (k) If any Participant's Annual Payment is redetermined as is herein provided, the District will promptly furnish such Participant with an updated schedule of monthly payments reflecting such redetermination. (l) All interest income earned by the investment of any Funds created pursuant to any Bond Resolution shall be credited towards the payment of the Bond Service Component and taken into account in determining the Annual Requirement; except that as to any Acquisition or Construction Fund created from any Bond proceeds all interest income earned by the investment thereof may, at the option of the District, be credited to such Acquisition or Construction Fund and used for the Interceptor System purposes for which the Bonds are issued, or be credited towards the payment of the Bond Service Component. Section 5.04. ADDITIONAL CAPACITY AND FACILITIES. As the responsible agency for the establishment, administration, management, operation, and maintenance of the Interceptor System, the District will, from time to time, determine when and to what extent it is necessary to provide additions, enlargements, improvements, repairs, and extensions to the Interceptor System to receive and transport Wastewater of any Participant, including all Additional Participants, and to issue its Bonds to accomplish such purposes, and all Participants, including Additional Participants, shall be obligated to pay both the Operation and Maintenance Components and the Bond Service Component included in the Annual Requirements with respect to the entire Interceptor System, as expanded, as provided in Section 5.03; provided that this Section shall not be construed so as to reduce or alter the requirements of Sections 5.03 or 8.02 with respect to minimum payments.

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ARTICLE VI GENERAL PROVISIONS Section 6.01. FORCE MAJEURE. In case by reason of "Force Majeure" the District or any Participant shall be rendered unable wholly or in part to carry out its obligations under this agreement, then if such party shall give notice and full particulars of such "Force Majeure" in writing to the other parties within a reasonable time after occurrence of the event or cause relied on, the obligation of the party giving such notice, so far as it is affected by such Force Majeure (with the exception of the obligation of each Participant to make the payments required in Section 5.03 of this Contract, which in all events shall be made as provided therein) shall be suspended during the continuance of the inability then claimed, but for no longer periods, and any such party shall endeavor to remove or overcome such inability with all reasonable dispatch. The term "Force Majeure" as employed herein, shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of public enemy, orders of any kind of the Government of the United States or the State of Texas or any civil or military authority, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms, floods, washouts, droughts, arrests, restraint of government and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines or canals, partial or entire failure of water supply, and inability on the part of a Participant to provide water necessary for operation of its water and Local Wastewater Facilities hereunder, or of the District to receive or transport Wastewater on account of any other causes not reasonably within the control of the party claiming such inability. It is understood and agreed that the settlement of strikes and lockouts shall be entirely within the discretion of the party having the difficulty, and that the above requirement that any Force Majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes and lockouts by acceding to the demands of the opposing party or parties when such settlement is unfavorable to it in the judgment of the party having the difficulty. Section 6.02. INSURANCE. The District will carry insurance (including self-insurance) for such purposes and in such amounts as are determined by the District to be necessary or advisable. Section 6.03. REGULATORY BODIES. This Contract shall be subject to all valid rules, regulations and laws applicable hereto passed or promulgated by the United States of America, the State of Texas, or any authorized representative or agency of any of them. Section 6.04. ANNUAL AUDIT OF SYSTEM. The District shall, at the close of each Fiscal Year, commencing with the Fiscal Year beginning October 1, 2011, cause an annual audit of the Interceptor System to be prepared. Section 6.05. PUBLICATIONS, REFERENCE WORKS, GOVERNMENTAL REGULATIONS. In each instance herein where reference is made to a publication, reference work or Federal or State regulation, it is the intention of the parties that at any given time the then current edition of any such publication of reference work or Federal or State regulation shall apply. If a publication or reference work is discontinued or ceases to be the generally accepted work in its field or if conditions change or new methods or processes are implemented by the District, new standards shall be adopted which are in compliance with State and Federal laws and any valid rules and regulations issued pursuant thereto.

Section 6.06. OPERATION OF THE INTERCEPTOR SYSTEM. The District covenants that it will operate and maintain the Interceptor System in accordance with accepted good business and engineering practices. ARTICLE VII DISTRICT ANNUAL BUDGET Section 7.01. FILING WITH PARTICIPANT. (a) Not less than sixty (60) days before the commencement of each Fiscal Year while this Contract is in effect, the District shall cause its tentative budget for operation and maintenance of the Interceptor System for the ensuing Fiscal Year to be prepared and a copy thereof filed with each Participant. If no protest or request for a hearing on such tentative budget is presented to the District within thirty (30) days after such filing of the tentative budget by one or more Participants, the tentative budget for the Interceptor System, when adopted by the District's Board of Directors, shall be considered for all purposes as the "Annual Budget" for the Interceptor System ensuing Fiscal Year. But if a protest or request for a hearing is duly filed, it shall be the duty of the District to fix the date and time for a hearing on the tentative budget. The Board of Directors of the District shall consider the testimony and showings made in such hearing. The Board of Directors of the District may adopt the budget or make such amendments thereof as to it may seem proper. The budget thus approved by the Board of Directors of the District shall be the Annual Budget for the next ensuing Fiscal Year. (b) The Annual Budget may be amended to provide for transfers of budgeted funds between expenditure accounts, provided however that said transfers do not result in an overall increase in budgeted funds as provided in the Annual Budget. The Annual Budget may be amended and increased through formal action by the Board of Directors of the District, if required. Certified copies of any amended Annual Budget and the resolution authorizing same shall be filed immediately by the District with each Participant.

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ARTICLE VIII OTHER CONTRACTS Section 8.01. OTHER CONTRACTS BETWEEN THE DISTRICT AND THE PARTICIPANTS. Nothing contained in this Contract shall in any way affect any payments to the District by a Participant or rates charged by the District to such Participant for the providing of water, wastewater or other services or facilities pursuant to other contractual relationships between the District and such Participant, including particularly, but not by way of limitation, the Regional Contract. Section 8.02. DISTRICT CONTRACTS WITH ADDITIONAL PARTICIPANTS. (a) The District reserves the right to contract with subsequent Additional Participants to provide the services of the Interceptor System to such Additional Participants; provided that the terms and provisions of such contracts with Additional Participants shall be, to the extent practicable and applicable, the same as the terms and provisions of this Contract except that such contract shall provide for payments calculated on the basis of adequate minimum flows as hereinafter provided and further provided that, prior to or concurrently with becoming an Additional Participant, such party shall have become a party to the Treatment Contract. The District shall not obligate itself to receive Wastewater into the Interceptor System from any future Additional Participant, in the judgment and discretion of the District, such obligation would jeopardize the District's ability to meet its obligation to receive and transport Wastewater discharged into the Interceptor System by prior Participants. (b) A Person may become an Additional Participant in the following manner and under the following conditions:

(i) A formal request must be submitted to the District furnishing information on the area to be served, a description of existing facilities, and the latest annual audit of such proposed Additional Participant's waterworks and/or sewer systems, if any.

(ii) Such proposed Additional Participant must provide funds for any necessary engineering studies if funds are

not available from the appropriate Federal or State agencies. The preliminary studies must determine or estimate, for the ensuing five year period, the size and type of any proposed improvements, enlargements, or extensions of the Interceptor System to serve such Additional Participant, their estimated cost, and estimated flows of Wastewater, so as to enable the District to ascertain or estimate the requirements of the proposed Additional Participant for the ensuing five year period.

(c) Each Additional Participant must agree to make minimum payments under its contract, on the basis of estimated annual minimum flows, that would provide amounts annually at least sufficient, as determined by the District, to pay such Additional Participant’s proportionate share of the Annual Requirement. (d) The provisions of this Section and the payments to be made under an Additional Participant’s contract are further subject to the provisions of Section 5.03 of this Contract. Section 8.03. USE OF EXCESS CAPACITY. Notwithstanding any other provisions of this Contract, the District may provide any excess available capacity or service of the Interceptor System to any Person; provided that such service does not interfere with or impair the rights of any Participant under this Contract, and any such service shall in all events be subordinate and subject to such rights; and provided further that the District must charge for such service in amounts at least sufficient to pay all Operation and Maintenance Expense attributable thereto plus an amount which will produce an estimated reasonable allocation as determined by the District to be credited to the Bond Service Component of the Annual Requirement, plus an additional amount of not less than 20% of the foregoing to cover prior incurred costs. The District is not authorized to issue Bonds, as defined in this Contract, to provide the services of the Interceptor System to any persons other than Participants (including Additional Participants).

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ARTICLE IX REMEDIES Section 9.01. LEGAL AND EQUITABLE. Any party to this Contract, and any holder of the District's Bonds, may require any party hereto, and its officials and employees, to carry out, respect, and enforce the covenants and obligations of this Contract, by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings, in any court of competent jurisdiction, against such party, and its officials and employees. ARTICLE X CONTINUING DISCLOSURE OF INFORMATION Section 10.01. PARTICIPANTS TO COMPLY. The Participants shall comply or, upon request of the District, shall provide to the District such information as will enable the District to comply, with any continuing disclosure requirements with respect to the Bonds imposed by Securities and Exchange Commission Rule 15c2-12. ARTICLE XI EFFECTIVE DATE AND TERM Section 11.01. EFFECTIVE DATE. This Contract shall become effective as of the date of execution hereof. Section 11.02. TERM OF CONTRACT. This Contract shall continue in force from the effective date hereof at least until all Bonds, including any Bonds issued to refund same, shall have been paid in full; and shall also remain in force thereafter throughout the useful life of the Interceptor System. ARTICLE XII NOTICES Section 12.01. NOTICES. Any notice, request or other communication under this Contract shall be given in writing and shall be deemed to have been given by either party to the other party at the addresses shown below upon any of the following dates:

(a) The date of notice by email, facsimile transmission, or similar telecommunications, which is confirmed promptly in writing;

(b) Three business days after the date of the mailing thereof, as shown by the post office receipt if mailed to the other party hereto by registered or certified mail;

(c) The date of actual receipt thereof by such other party if not given pursuant to (a) or (b) above.

The address for notice for each of the parties shall be as follows:

North Texas Municipal Water District 505 East Brown Street Wylie, Texas 75098 Attention: Executive Director Fax #: (972) 442-5405

City of Forney, Texas 101 East Main Forney, Texas 75126 Attention: City Manager Fax #: (972) 564-7349

or the latest address specified by such other party in writing.

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ARTICLE XIII

SEVERABILITY Section 13.01. SEVERABILITY. If any clause, provision or Section of this Contract should be held illegal or invalid by any court, the invalidity of such clause, provision or Section shall not affect any of the remaining clauses, provisions or Sections hereof and this Contract shall be construed and enforced as if such illegal or invalid clause, provision or Section had not been contained herein. In case any agreement or obligation contained in this Contract should be held to be in violation of law, then such agreement or obligation shall be deemed to be the agreement or obligation of the Participants or the District, as the case may be, to the full extent permitted by law. ARTICLE XIV MODIFICATION Section 14.01. MODIFICATION. This Contract may be changed or modified only with the consent of the governing bodies of the District and the affected Participant or Participants. No such change or modification may be made which will affect adversely the prompt payment when due of all moneys required to be paid by the Participants under the terms of this Contract. ARTICLE XV VENUE Section 15.01. VENUE. All amounts due under this Contract, including, but not limited to, payments due under this Contract or damages for the breach of this Contract, shall be paid and be due in Collin County, Texas, which is the County in which the principal administrative offices of the District are located. It is specifically agreed among the parties to this Contract that Collin County, Texas, is the place of performance of this Contract; and in the event that any legal proceeding is brought to enforce this Contract or any provision hereof, the same shall be brought in Collin County, Texas. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

IN WITNESS WHEREOF, the parties hereto acting under authority of their respective governing bodies have caused this Contract to be duly executed in several counterparts, each of which shall constitute an original, all as of the ____ day of __________, 2011, which is the date of this Contract.


By: __________________________________ President, Board of Directors

ATTEST: _____________________________ Secretary, Board of Directors (SEAL)

CITY OF FORNEY, TEXAS

By: ______________________________ Mayor

ATTEST: ____________________________ City Secretary (SEAL)

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APPENDIX B


MISCELLANEOUS STATISTICAL DATA

FISCAL YEAR ENDED SEPTEMBER 30, 2019

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LOCATION AND HISTORY . . . The City of Forney (the "City") is a farm-to-market center located in northwest Kaufman County, encompassing approximately 14.03 square miles. The City is approximately 21 miles east of downtown Dallas. It is a part of the North Central Texas (the "Metroplex"), which includes the cities of Dallas and Fort Worth with a total population exceeding 3.78 million. The City was incorporated in 1910 under the general laws of the State of Texas and adopted its home-rule charter in 1997. The City Council is composed of a mayor and six councilmembers elected at large. All City residents vote for all six places. The members are elected for two year staggered terms and elections are held annually in May. Policy-making and oversight functions are the responsibility of, and are vested in, the City Council. The City Council is required by the charter to appoint a City Manager to serve as the chief administrative and executive officer of the City. The duties of the City Manager include the appointment of City department heads and the daily conduct of City affairs. POPULATION . . . The City has experienced manageable growth since its incorporation. Population history is as follows:

Year Poulation Year Poulation1960 1,544 2013 16,0301970 1,745 2014 16,8001980 2,483 2015 17,4801990 4,070 2016 17,4802000 5,800 2017 18,4182010 14,661 2018 20,2802011 15,060 2019 20,3362012 15,450

ECONOMICS . . . The City's location in the Metroplex gives local businesses access to approximately 4 million people, the sixth largest market in the United States. The City has become best known for its extensive antique industry and has been recognized by the Texas Senate as "The Antique Capital of Texas." Primary manufactures within the City produce corrugated materials and furniture. EDUCATION . . . Education for the citizens of the City is provided by the Forney Independent School District (the "District") which has an enrollment of approximately 11,714 students. The District conducts programs for K-12 and is fully accredited by the Texas Education Agency. The District's physical facilities include:

9 elementary schools 4 middle/intermediate schools 2 high schools

Additionally, within a radius of 60 miles, there are a number of colleges and universities including Dallas Baptist University, Dallas County Community College District, East Texas State University, Southwestern Christian College, Southwestern Medical Center, Southern Methodist University, Tarrant County Community College District, Texas Christian University, Texas Wesleyan University, Women's University, Trinity Valley Community College, University of Dallas, University of North Texas, University of Texas at Arlington and University of Texas at Dallas TRANSPORTATION . . . The City has prime positioning for easy access to major local, regional and national markets. Located only twenty-one miles from the Dallas/Fort Worth Metroplex Area. Interstate Highway 30, the east/west highway located 12 miles north of the City, provides access directly in the Dallas and Fort Worth central business district. Additionally, Interstate Highway 635 (the loop surrounding the City of Dallas) is located approximately 12 miles west of the City. Air Service for the City is provided by a local private airport. The nearest commercial air service, located approximately 35 miles from the City, is available at Dallas Love Field, northeast of downtown Dallas. The Dallas/Fort Worth International Airport is located approximately 40 miles northwest of the City, and lies between the cities of Dallas and Fort Worth. Union Pacific Railroad provides rail service and Greyhound Bus Lines provides bus transportation services. Several motor freight carriers service the City including East Texas Motor Freight, Central Freight, Tex-Pac Express, Yellow-Freight and Campbell 66.

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MAJOR EMPLOYERS IN THE CITY

EstimatedNumber of

Company Type of Business EmployeesForney Independent School District Education 1,394Wal-Mart Retail 360Smurfit Kappa Paper Mill 260Steve Silver Company Import/Export 220Kroger MarketPlace Grocery/Retail 208IntexElectric Electrical Contractor 175City of Forney Local Government 135ABOX Packaging Custom Packaging 130Lowe's Home Improvement Home Improvement Center 120Ridgecrest Healthcare & Rehab Rehabilitative Services 110

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APPENDIX C

EXCERPTS FROM THE


ANNUAL FINANCIAL REPORT

For the Year Ended September 30, 2019

The information contained in this Appendix consists of excerpts from the City of Forney’s Annual Financial Report for the Year Ended September 30, 2019, and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further information.

INDEPENDENT AUDITOR’S REPORT

Honorable Mayor and Members of the City Council City of Forney, Texas

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Forney, Texas, as of and for the year ended September 30, 2019, and the related

notes to the financial statements, which collectively comprise the City of Forney, Texas’ basic financial

statements as listed in the table of contents. Management’s Responsibility for the Financial Statements

City of Forney, Texas’ Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of

America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility

Our responsibility is to express opinions 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 States. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures

in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as

well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Forney, Texas, as of September 30, 2019, and the respective changes in financial position, and, where applicable, cash flows thereof, for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the

management’s discussion and required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational,

economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient

evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Forney, Texas’ basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical section 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 and schedules are the responsibility

of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to

prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in

the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated February 11, 2020 on our consideration of the City of Forney, Texas’ 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Forney, Texas’ internal control over financial reporting and compliance.

Waco, Texas February 11, 2020

MANAGEMENT’S DISCUSSION AND ANALYSIS

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Management’s Discussion and Analysis

As management of the City of Forney (the “City”), we offer readers of the City’s financial statements this

narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2019. We encourage readers to read the information presented here in conjunction with additional information that we have furnished in the City’s financial statements, which follow this narrative. FINANCIAL HIGHLIGHTS

• The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $95,346,337 (net position). Of this amount, $25,889,340 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors.

• The City’s total net position increased by $5,025,781. The increase from operations was due

to an increase in governmental activities net position largely due to an increase in property

taxes revenue and sales taxes revenue, and business-type activities net position due to an increase in charges for services revenue.

• At the end of the current fiscal year, the City’s governmental funds reported combined fund balances of $20,817,823, a decrease of $4,973,276 or 19%, in comparison with the prior year. The majority of this decrease is due to an increase in capital outlays related to

construction in progress. • The City’s total bonded debt decreased by $6,595,000, or 12%, during the current fiscal year.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The basic financial statements present

two different views of the City through the use of government-wide statements and fund financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Basic Financial Statements The first two statements (pages 11-16) in the basic financial statements are the government-wide financial statements. They provide both short and long-term information about the City’s financial status. The next statements (pages 17-26) are fund financial statements. These statements focus on the activities of

the individual parts of the City’s government. These statements provide more detail than the government-wide statements. There are three parts to the fund financial statements: 1) the governmental funds statements; 2) the proprietary fund statements; and 3) the fiduciary fund statements. The next section of the basic financial statements is the notes. The notes to the financial statements explain in detail some of the data contained in those statements. After the notes, required supplemental information is

provided to show details about the City’s budgetary information and pension plan and OPEB plans.

Government-wide financial statements — The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The government-wide statements provide short and long-term information about the City’s financial status as a whole.

The statement of net position presents information on all of the City’s assets, liabilities, and deferred outflows/inflows of resources, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating.

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The statement of activities presents information showing how the City’s net position changed during the fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this

statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and

earned but unused compensated absences). Both the government-wide financial statements include not only the City itself (known as the primary government), but also a legally separate economic development corporation for which the City is financially accountable. Financial information for this component unit is reported separately from the financial information presented for the primary government itself.

The government-wide financial statements are divided into three categories: 1) governmental activities; 2) business-type activities; and 3) component units. The governmental activities include most of the City’s basic services such as public safety, parks and recreation, and general administration. Property taxes, sales tax and state and federal grant funds finance most of these activities. The business-type activities are those that the City charges customers to provide. These include the utility services offered by the City. The final category is the component unit.

The government-wide financial statements are on pages 11-16 of this report. Fund financial statements — The fund financial statements provide a more detailed look at the City’s most significant activities. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal

requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. The fund financial statements for governmental funds, proprietary funds, and fiduciary funds can be found in the financial section of this report. Governmental funds — Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on current sources and uses of spendable

resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Most of the City’s basic services are accounted for in governmental funds. These funds focus on how assets can readily be converted into cash flow in and out, and what monies are left at year-end that will be available for spending in the next year. Governmental funds are reported using an accounting method called modified

accrual accounting which provides a short-term spending focus. As a result, the governmental fund financial statements give the reader a detailed short-term view that helps him or her determine if there are more or less financial resources available to finance the City’s programs. The relationship between government activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is described in a reconciliation that is a part of the fund financial statements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it

is useful to compare the information presented for governmental funds with similar information presented for governmental activities in government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financial decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains six individual governmental funds. Information is presented separately in the governmental

fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Debt Service Fund, Capital Projects Fund, and Roadway Impact Fund, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements in the supplementary information. The governmental fund financial statements can be found on pages 17-22 of this report.

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The City adopts an annual budget for its General Fund, as required by the General Statutes. The budget is a legally adopted document that incorporates input from the citizens of the City, the management of the City, and the decisions of the City Council about which services to provide and how to pay for them. It also authorizes the

City to obtain funds from identified sources to finance these current period activities. The budgetary statement

provided for the General Fund demonstrates how well the City complied with the budget ordinance and whether or not the City succeeded in providing the services as planned when the budget was adopted. The budgetary comparison statement uses the budgetary basis of accounting and is presented using the same format, language, and classifications as the legal budget document. The statement shows four columns: 1) the original budget; 2) the final budget as amended by the Council; 3) the actual resources, charges to appropriations, and ending balances in the General Fund; and 4) the difference or variance between the final budget and the actual resources and charges.

Proprietary funds — The City of Forney has one type of proprietary fund which is the Utility Fund. The City charges customers for the services it provides, whether to outside customers or to other units within the City. These services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the statement of net position and the statement of activities.

Proprietary funds provide the same type of information as the government-wide financial statements, only in

more detail. The proprietary fund financial statements provide separate information for the Utility Fund. The basic proprietary fund financial statements can be found on pages 23-25 of this report. Fiduciary funds — Fiduciary funds are used to account for amounts held on behalf of others by the City as a trustee, or fiduciary. The City is the trustee, or fiduciary, for certain amounts held on behalf of developers. All of the City’s fiduciary activities are reported in a separate Statements of Fiduciary Assets and Liabilities. The

activities of this fund are excluded from the City’s other financial statements because the City cannot use these assets to finance its’ operations. The City is responsible for ensuring that the assets reported in this fund are used for their intended purpose. The fiduciary funds financial statement can be found on page 26. Notes to the financial statements — The notes provide additional information that is essential to a full

understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements are on pages 27-55 of this report.

Other Information — In addition to the basic financial statements and accompanying notes, this report includes certain required supplementary information concerning the City’s budgetary information and progress in funding its obligation to provide pension benefits and OPEB benefits to its employees and retirees.

The combining statements referred to earlier in connection with the non-major governmental funds are presented immediately following the required supplementary information. Combining statements and individual fund statements can be found on pages 64-69 of this report.

CITY OF FORNEY’S NET POSITION

2019 2018 2019 2018 2019 2018

Current and other assets 36,126,206$ 43,952,884$ 25,160,363$ 30,733,371$ 61,286,569$ 74,686,255$

Capital assets 62,259,815 57,814,342 30,161,858 22,008,099 92,421,673 79,822,441

Total assets 98,386,021 101,767,226 55,322,221 52,741,470 153,708,242 154,508,696

Deferred outflows of resources 3,075,473 1,698,409 285,279 164,822 3,360,752 1,863,231

Long-term liabilities

outstanding 52,435,560 56,919,861 4,421,673 4,847,935 56,857,233 61,767,796

Other liabilities 2,361,504 1,292,260 1,925,371 1,772,503 4,286,875 3,064,763

Total liabilities 54,797,064 58,212,121 6,347,044 6,620,438 61,144,108 64,832,559

Deferred inflows of resources 526,715 1,096,645 51,834 122,167 578,549 1,218,812

Net position:

Net investment,

in capital assets 16,969,844 9,091,396 26,259,404 17,536,902 43,229,248 26,628,298

Restricted 24,717,558 29,818,164 1,510,191 6,111,159 26,227,749 35,929,323

Unrestricted 4,450,313 5,247,309 21,439,027 22,515,626 25,889,340 27,762,935

Total net position 46,137,715$ 44,156,869$ 49,208,622$ 46,163,687$ 95,346,337$ 90,320,556$

Governmental Activities Business-type Activities Totals

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As noted earlier, net position may serve over time as one useful indicator of a government’s financial condition. The assets and deferred outflows of resources of the City of Forney exceeded the liabilities and deferred inflows of resources by $95,346,337 as of September 30, 2019. The City’s net position increased by

$5,025,781 for fiscal year ended September 30, 2019.

Net Investment in Capital Assets – The largest portion of the City’s net position, 45%, reflects the City’s net investment in capital assets (e.g., land, buildings, machinery and equipment) less any related debt still outstanding that was issued to acquire those items. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of the outstanding related debt, the resources needed to repay that debt must be provided by other sources, since the capital assets cannot be used to liquidate these liabilities.

Restricted Net Position – The restricted net position of $26,227,749, or 28% of total net position represents resources that are subject to external restrictions or their use, or by enabling legislation. Restricted net position is comprised of state imposed restrictions; namely 11% for impact fees, 29% for courts fees restricted for use within the municipal court, tourism related to the collection hotel occupancy taxes, and capital projects and 60% contractual obligations for debt from property taxes.

Unrestricted Net Position – Unrestricted net position of $25,889,340 is available to fund City programs to citizens and obligations to creditors.

CHANGES IN NET POSITION

2019 2018 2019 2018 2019 2018

Revenues:

Program revenues:

Charges for services 4,305,767$ 4,701,667$ 20,313,579$ 19,212,584$ 24,619,346$ 23,914,251$

Operating grants

and contributions 226,959 222,298 1,693,133 7,458,792 1,920,092 7,681,090

Capital grants

and contributions 4,648 361,254 - - 4,648 361,254

General revenues:

Property taxes 10,470,757 9,707,103 - - 10,470,757 9,707,103

Franchise taxes 3,418,342 3,538,039 - - 3,418,342 3,538,039

Sales taxes 6,351,122 5,749,249 - - 6,351,122 5,749,249

Other taxes 185,150 191,948 - - 185,150 191,948

Investment income 540,886)( 497,765 549,479)( 126,441 1,090,365)( 624,206

Gain on disposal of capital assets 21,578 - 6,383 - - -

Miscellaneous 77,082 93,206 37,095 4,682 114,177 97,888

Total revenues 24,520,519 25,062,529 21,500,711 26,802,499 45,993,269 51,865,028

Expenses:

General government 5,735,228 4,537,043 - - 5,735,228 4,537,043

Public safety 10,351,567 9,595,555 - - 10,351,567 9,595,555

Public works 3,241,666 2,254,535 - - 3,241,666 2,254,535

Public services and operations 1,023,882 1,615,487 - - 1,023,882 1,615,487

Parks and recreation 2,635,064 2,494,562 - - 2,635,064 2,494,562

Interest on long-term debt 1,662,180 1,875,357 - - 1,662,180 1,875,357

Utilities - - 16,345,862 13,558,970 16,345,862 13,558,970

Total expenses 24,649,587 22,372,539 16,345,862 13,558,970 40,995,449 35,931,509

Increases in net position before transfers

and extraordinary item (expense) 129,068)( 2,689,990 5,154,849 13,243,529 5,025,781 15,933,519

Transfers 2,109,914 1,031,984 2,109,914)( 1,031,984)( - -

Increase (decrease) in net position 1,980,846 3,721,974 3,044,935 12,211,545 5,025,781 15,933,519

Net position, beginning 44,156,869 40,550,328 46,163,687 33,965,002 90,320,556 74,515,330

Prior period adjustments - 115,433)( - 12,860)( - 128,293)(

Net position, beginning, as restated 44,156,869 40,434,895 46,163,687 33,952,142 90,320,556 74,387,037

Net position, ending 46,137,715$ 44,156,869$ 49,208,622$ 46,163,687$ 95,346,337$ 90,320,556$


Governmental activities increase in net position before transfers and extraordinary expense decreased by

$2,819,058, primarily due to a decrease in investment income.

7

Business-type activities increase in net position before transfers and extraordinary expense decreased by $8,088,680. This is due to a decrease in investment income and a decrease in operating grants and contributions. Also, due to the increase in expenses, the percentage of revenues over expenses decreased

33% compared to the prior year.

Governmental-type activities – Governmental-type activities, increased the City’s net position by $1,980,846. A key element of this increase is as follows: Property tax revenue increased due to an increase in appraised values. Additionally, governmental activity expenses remained overall consistent with the prior period with slight increases in general government and public safety expenses and slight decreases in public services and operations and interest on long-term debt.

42%

1%

-1%

25%

14%17%

Revenues - Governmental ActivitiesFiscal Year 2019 (excludes transfers)

Property Tax

Grants/Contributions

Miscellaneous

Sales Tax

Franchise Tax

Charges for Services

23%

42%

4%

11%

13%7%

Primary Government Functional Expenes for

Governmental Activities - Fiscal Year 2019

General Government

Public Safety

Public Services and Operations

Parks and Recreation

Public Works

Interest and Fiscal Agent Fees

Business-type activities – Business type activities increased the City of Forney’s net position by $3,044,935

8

FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City of Forney uses fund accounting to ensure and demonstrate compliance with finance

related legal requirements.

Governmental funds – The focus of the City of Forney’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. Specifically, unassigned fund balance may serve as a useful measure of the city’s net resources available for discretionary use as they represent the portion of fund balance which has not been limited to use for a particular purpose by either an external party, the city itself, or a group or individual authorized by the governing body to assign resources for a particular purpose.

At the close of the current fiscal year, the governmental funds reported combined ending fund balances of $20,817,823, a decrease of $4,973,276, or 19% in comparison with the prior year. The components of total fund balances are as follows: Restricted fund balances of $13,730,816 consist of amounts with constraints put on their use by externally

imposed creditors, grantors, contributions, laws, regulations or enabling legislation. Obligations for bonded

debt is $3,048,330, or 23%, and debt proceeds for capital expenditures of $8,802,955, or 64%, account for the majority of restricted fund balances. Restrictions imposed by legislation amounts to $1,879,531 or 14%. Committed fund balance of $32,756 is for the police department as imposed by City Council for specific purposes.

Assigned fund balance of $7,054,251 is for special projects and use in the subsequent year’s budget as imposed by City Council or City Management for specific purposes. As a measure of the General Fund’s liquidity, it is useful to compare fund balance to total General Fund expenditures. Total fund balance equates to 37% of total General Fund expenditures. Significant changes in fund balances of major funds are as follows:

The General Fund’s fund balance decreased by $846,899 or 11%, due to the increase transfers to the CIP Fund.

The Debt Service Fund’s fund balance decreased by $592,862, or 16%, due to principal and interest expenditures for two bond issues being paid from fund balance.

The Roadway Impact Fund’s fund balance increased by $1,202,826, or 1208%, due to an increase in impact fees received. The Capital Projects Fund’s fund balance decreased by $4,948,094, or 36%, largely due to a $4,895,104 increase in capital outlay expenditures.

Proprietary Funds The City of Forney’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position of the proprietary funds at the end of the fiscal year amounted to $21,439,027.

General Fund Budgetary Highlights

During the fiscal year, the City revised the budget on several occasions. Generally, budget amendments fall into one of three categories: (1) amendments made to adjust the estimates that are used to prepare the original budget ordinance once exact information is available; (2) amendments made to recognize new funding amounts from external sources, such as federal and state grants; and (3) increases in appropriations that become necessary to maintain services.

Revenues were more than the budgeted amounts mainly in the areas of property tax, sales tax, franchise tax, and license and permit revenues. Expenditures were significantly less than budgeted amounts in public safety due to salary savings from vacant positions.

9

CAPITAL ASSETS AND DEBT ADMINISTRATION Capital assets—The City’s investment in capital assets for its governmental and business-type activities as of

September 30, 2019, amounted to $92,421,673 (net of accumulated depreciation). These assets include land,

buildings, improvements, machinery and equipment, vehicles and construction in progress. This amount represents a net increase (including additions and deductions) or $12,599,232 (net of accumulated depreciation) from the prior fiscal year. Major capital asset transactions during the year include the following additions (there were no significant demolitions or disposals):

• Roadway improvements • Water and sewer line improvements

CITY OF FORNEY’S CAPITAL ASSETS AT YEAR-END

2019 2018 2019 2018 2019 2018

Land $5,017,448 $5,017,448 $703,953 $703,953 $5,721,401 $5,721,401

Infrastructure 27,625,572 27,625,572 16,745,797 13,735,685 44,371,369 41,361,257

Buildings and

improvements 12,499,890 12,499,890 - - 12,499,890 12,499,890

Machinery and

equipment 3,003,058 3,003,058 537,029 205,240 3,540,087 3,208,298

Construction in progress 14,113,847 9,668,374 12,175,079 7,363,221 26,288,926 17,031,595

Total 62,259,815$ 57,814,342$ 30,161,858$ 22,008,099$ 92,421,673$ 79,822,441$


More detailed information about capital assets is presented on pages 38-39 in the notes to the financial statements.

CITY OF FORNEY’S OUTSTANDING BONDS AND NOTES PAYABLE AT YEAR-END

2019 2018 2019 2018 2019 2018

General obligation bonds

and certificates of

obligation 28,285,000$ 30,725,000$ 3,910,000$ 4,480,000$ 32,195,000$ 35,205,000$

Pass-through toll revenue

and limited tax bonds 14,980,000 18,565,000 - - 14,980,000 18,565,000

Tax Notes 1,505,000 1,780,000 - - 1,505,000 1,780,000

Notes payable 356,031 445,729 - - 356,031 445,729

Total 45,126,031$ 51,515,729$ 3,910,000$ 4,480,000$ 49,036,031$ 55,995,729$


The City’s long term debt decreased by $6,959,698 due to payments made throughout the year. More detailed information about the long-term obligations is presented on pages 40-43 in the notes to the financial statements. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

Although the economy is the primary factor, the City’s elected and appointed officials considered many factors

when setting the fiscal year 2020 budget, tax rates, and fees that will be charged for the business-type activities. The financial forecast presented to the City Council projects an increase in the General Fund revenues of $2,646,050 or 13.8%. This increase is primarily due to increased property tax and sales tax revenues. Significant increases are also expected in permit and inspections and interest revenues.

Assessed property values grew approximately 16.72% for 2019 which will increase property tax revenue in the upcoming budget for secured and unsecured property taxes to be collected in FY 2020. The property tax rate for fiscal year 2020 decreased from $0.621111 to $0.58 per $100 assessed value; however, tax revenue will increase approximately $622,197. The FY 2020 budget includes a 7.7% increase in General Fund expenditures. This increase is primarily the result of increased salary and benefits related costs. There were two new positions and one part time position

added for FY 2020 as well as a 5% salary increase for all employees.

10

North Texas Municipal Water District has indicated that it will impose a 2.4% increase in water purchase cost and a 20% increase in sewage treatment. The Council voted to increase residential and commercial water rates 2.4% and sewer rates 10% as well as increasing garbage rates 5% to cover a portion of the increased

cost.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT The financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the City’s finances. If you have questions about this report or need additional information, contact the Finance Division, City of Forney, P.O. Box 826, Forney, Texas 75126-0826.

BASIC FINANCIAL STATEMENTS


STATEMENT OF NET POSITION

SEPTEMBER 30, 2019

Governmental Business-typeActivities Activities

ASSETSCash and investments 18,226,509$ 18,255,820$ Receivables (net of allowances for uncollectibles)Taxes receivable 1,462,560 - Accounts receivable 146,299 2,059,602 Intergovernmental receivable 12,920,915 - Due from primary government - -

Internal balances 2,135,504)( 2,135,504 Restricted assets: Cash and investments 5,505,427 2,709,437 Capital assets, not being depreciated 14,195,727 12,879,032

Capital assets, being depreciated, net 48,064,088 17,282,826

Total assets 98,386,021 55,322,221

DEFERRED OUTFLOWS OF RESOURCESDeferred loss on bond refunding 503,289 32,150 Deferred outflow related to pension 2,559,590 251,890 Deferred outflow related to other post-employment benefit 12,594 1,239

Total deferred outflows of resources 3,075,473 285,279

LIABILITIESAccounts payable 1,514,684 1,387,491

Accrued liabilities 549,936 26,202

Due to other governments 40,552 8,656 Unearned revenue - 52,924

Accrued interest payable 209,611 16,794 Due to component unit 46,721 - Customer deposits - 433,304

Noncurrent liabilities:Due within one year:

Long-term debt 4,537,078 590,000

Compensated absences 119,517 4,212

Due in more than one year:Long-term debt 42,642,226 3,344,604

Compensated absences 358,550 12,635

Net pension liability 4,624,480 455,096

Net other post-employment benefit liability 153,709 15,126

Total liabilities 54,797,064 6,347,044

DEFERRED INFLOWS OF RESOURCESDeferred resource inflow related to pension 511,350 50,322 Deferred resource inflow related to other post-employment benefit 15,365 1,512

Total deferred inflows of resources 526,715$ 51,834$

Primary Government

The accompanying notes are an integral

part of these financial statements. 11

Primary Government Component Unit

Total Forney EDC

36,482,329$ 3,804,555$

1,462,560 401,062 2,205,901 150

12,920,915 - - 46,721 - -

8,214,864 6,768 27,074,759 1,918,574 65,346,914 844,068

153,708,242 7,021,898

535,439 - 2,811,480 54,160

13,833 266 3,360,752 54,426

2,902,175 411 576,138 6,185 49,208 - 52,924 -

226,405 10,097 46,721 -

433,304 -

5,127,078 100,000

123,729 1,785

45,986,830 1,630,000

371,185 5,354

5,079,576 97,853

168,835 3,252

61,144,108 1,854,937

561,672 10,820 16,877 325

578,549$ 11,145$

12



SEPTEMBER 30, 2019

Governmental Business-typeActivities Activities

NET POSITIONNet investment in capital assets 16,969,844$ 26,259,404$

Restricted: Use of impact fees 1,302,367 1,510,191

Debt service 15,863,203 -

Municipal court use 77,089 -

Capital improvements 7,416,911 -

Tourism 57,988 -

Unrestricted 4,450,313 21,439,027

Total net position 46,137,715$ 49,208,622$

Primary Government



Primary Government Component Unit

Total Forney EDC

43,229,248$ 1,690,052$

2,812,558 - 15,863,203 -

77,089 - 7,416,911 -

57,988 - 25,889,340 3,520,190

95,346,337$ 5,210,242$

14


STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED SEPTEMBER 30, 2019

OperatingCharges for Grants and

Expenses Services ContributionsFunction/Program ActivitiesPrimary Government

Governmental activities:General government 5,735,228$ 110,018$ -$ Public safety 10,351,567 1,036,729 223,509 Public services and operations 1,023,882 - - Parks and recreation 2,635,064 120,984 3,450

Public works 3,241,666 3,038,036 - Interest and charges on long-term debt 1,662,180 - -

Total governmental activities 24,649,587 4,305,767 226,959

Business-type activities:Utility fund 16,345,862 20,313,579 1,693,133

Total Business-type activities 16,345,862 20,313,579 1,693,133

Total primary government 40,995,449 24,619,346 1,920,092

Component unit:Economic Development Corporation 1,103,584 96,427 -

Total Component unit 1,103,584$ 96,427$ -$

General revenues:Property taxesSales taxesFranchise taxesOther taxesMiscellaneousInvestment income

Gain on sale of capital assetsTransfers

Total general revenues and transfers


Net position -- beginning

Prior Period Adjustment

Net position -- ending

Program Revenue



Program Revenue

Capital Component Unit Grants and Governmental Business-Type

Contributions Activities Activities Total Forney EDC

-$ 5,625,210)$( -$ 5,625,210)$( -$ - 9,091,329)( - 9,091,329)( - - 1,023,882)( - 1,023,882)( - - 2,510,630)( - 2,510,630)( -

4,648 198,982)( - 198,982)( - - 1,662,180)( - 1,662,180)( -

4,648 20,112,213)( - 20,112,213)( -

- - 5,660,850 5,660,850 -

- - 5,660,850 5,660,850 -

4,648 20,112,213)( 5,660,850 14,451,363)( -

- 1,007,157)(

-$ 1,007,157)$(

10,470,757 - 10,470,757 - 6,351,122 - 6,351,122 2,117,041 3,418,342 - 3,418,342 -

185,150 - 185,150 - 77,082 37,095 114,177 29

540,886)( 549,479)( 1,090,365)( 30,947 21,578 6,383 27,961 -

2,109,914 2,109,914)( - -

22,093,059 2,615,915)( 19,477,144 2,148,017

1,980,846 3,044,935 5,025,781 1,140,860

44,156,869 46,163,687 90,320,556 3,923,789

- - - 145,593

46,137,715$ 49,208,622$ 95,346,337$ 5,210,242$

Primary Government

Net (Expense) Revenueand Changes in Net Position

16


BALANCE SHEET

GOVERNMENTAL FUNDS

SEPTEMBER 30, 2019

General Debt Service RoadwayFund Fund Impact Fund

ASSETSCash and investments 9,658,250$ -$ -$

Restricted cash and investments 75,191 3,031,135 1,302,367 Taxes receivable, net 1,341,796 120,764 - Due from other governments - 12,920,915 - Accounts receivable 146,299 - - Due from other funds - - -

Total assets 11,221,536 16,072,814 1,302,367

LIABILITIES

Accounts payable 367,867 - - Accrued salaries and wages 549,936 - - Due to other funds 2,920,358 - - Due to component unit 46,721 - - Due to other governments 40,552 - -

Total liabilities 3,925,434 - -

DEFERRED INFLOWS OF RESOURCESUnavailable revenue 132,006 13,024,484 -

Total deferred inflows of resources 132,006 13,024,484 -

FUND BALANCESRestricted for:

Debt service - 3,048,330 - Use of impact fees - - 1,302,367 Capital improvements - - - Municipal court use 77,089 - - Tourism - - - Public Improvement District - - -

Committed for:Police 32,756 - -

Assigned for:General reserve 4,250,707 - - Subsequent year's budget 2,803,544 - -

Total fund balances 7,164,096 3,048,330 1,302,367

Total liabilities, deferred inflows, and

fund balances 11,221,536$ 16,072,814$ 1,302,367$

The accompanying notes are an integral part of these

financial statements. 17

Total Total

Capital Nonmajor GovernmentalProjects Fund Funds Funds

8,407,525$ 160,734$ 18,226,509$ 756,883 339,851 5,505,427

- - 1,462,560 - - 12,920,915 - - 146,299

784,854 - 784,854 9,949,262 500,585 39,046,564

1,146,307 510 1,514,684 - - 549,936 - - 2,920,358 - - 46,721 - - 40,552

1,146,307 510 5,072,251

- - 13,156,490 - - 13,156,490

- - 3,048,330 - - 1,302,367

8,802,955 - 8,802,955 - - 77,089 - 57,988 57,988 - 442,087 442,087

- - 32,756

- - 4,250,707 - - 2,803,544

8,802,955 500,075 20,817,823

9,949,262$ 500,585$ 39,046,564$

18


RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE GOVERNMENTAL ACTIVITIES STATEMENT OF NET POSITION


Amounts reported for governmental activities in the statement of net position are different because:

Total fund balances - governmental funds

Capital assets used in governmental activities are not financial

resources and, therefore, are not reported in the funds.

Revenue reported as unavailable revenue in the governmental fund

financial statements was recorded as revenue in the government-wide

financial statements Property taxes 107,021

Property tax penalties and interest 91,400 Court fines and fees 37,154

Pass-through toll grant 12,920,915

Interest is accrued on outstanding debt in the government-wide

financial statements, whereas in the governmental fund financial

statements, an expenditure is reported when due.

Certain long-term liabilities are not due and payable in the current

period and therefore are not reported in the funds. Also, the loss on

refunding of bonds, the premium on issuance of bonds and deferred

resource outflows (inflows) related to the net pension liability are not

reported in the funds.

Bonds payable 43,265,000)(

Premiums and discounts on bonds payable 2,053,274)(

Notes payable 1,861,030)(

Compensated absences 478,067)(

Net pension liability 4,624,480)(

Net other post-employment benefit liability 153,709)(

Deferred loss on bond refunding 503,289

Deferred outflows and inflows related to pension 2,048,240

Deferred outflows and inflows related to other post-

employment benefit 2,771)(

Net position of governmental activities

20,817,823$

62,259,815

13,156,490

209,611)(

49,886,802)(

46,137,715$




STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS


General Debt Service RoadwayFund Fund Impact Fund

REVENUESProperty taxes 6,118,063$ 3,559,526$ -$

Sales taxes 6,351,122 - -

Hotel/motel taxes - - - Franchise taxes 3,418,342 - -

Beverage taxes 56,171 - -

Licenses and permits 1,471,601 - -

Intergovernmental revenues 325,379 4,019,140 -

Charges for services 1,213,491 - -

Impact fees - - 1,161,161

Fines and forfeitures 260,477 - -

Investments earnings 652,769)( 29,382 41,665

Contributions and donations 4,648 - -

Miscellaneous 106,101 - -

Total revenues 18,672,626 7,608,048 1,202,826

EXPENDITURESCurrent:

General government 5,361,134 - -

Public safety 9,416,004 - -

Public works 1,892,571 - -

Public services and operations 990,379 - -

Culture and recreation 1,797,128 - -

Debt service:Principal - 6,389,699 -

Interest - 1,912,612 -

Capital outlay - - -

Total expenditures 19,457,216 8,302,311 -

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 784,590)( 694,263)( 1,202,826

OTHER FINANCING SOURCES (USES)

Transfers in 2,551,682 101,401 -

Transfers out 2,634,078)( - -

Sale of capital assets 20,087 - -

Insurance recoveries - - -

Total other financing sources (uses) 62,309)( 101,401 -

NET CHANGE IN FUND BALANCE 846,899)( 592,862)( 1,202,826

FUND BALANCE - BEGINNING 8,010,995 3,641,192 99,541

FUND BALANCE - ENDING 7,164,096$ 3,048,330$ 1,302,367$



Total Total

Capital Nonmajor GovernmentalProjects Fund Funds Funds

362,941$ 394,443$ 10,434,973$ - - 6,351,122 - 128,979 128,979 - - 3,418,342 - - 56,171 - - 1,471,601 - - 4,344,519

60,000 - 1,273,491 - - 1,161,161

- - 260,477 33,867 6,969 540,886)(

- - 4,648 - - 106,101

456,808 530,391 28,470,699

50 277,638 5,638,822 - - 9,416,004

901,606 - 2,794,177 - - 990,379 - - 1,797,128

- - 6,389,699 - - 1,912,612

6,661,455 - 6,661,455 7,563,111 277,638 35,600,276

7,106,303)( 252,753 7,129,577)(

3,865,047 - 6,518,130 1,733,138)( 41,000)( 4,408,216)(

- - 20,087 26,300 - 26,300

2,158,209 41,000)( 2,156,301

4,948,094)( 211,753 4,973,276)(

13,751,049 288,322 25,791,099

8,802,955$ 500,075$ 20,817,823$

21


RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES


Net change in fund balances - total governmental funds: 4,973,276)$(

Amounts reported for governmental activities in the Statement of Activities

are different because:

Governmental funds report capital outlays as expenditures. However, in the

statement of activities, the cost of these assets is allocated over their

estimated useful lives and reported as depreciation expense. This is the

amount of capital outlays for the fiscal year. 6,867,946

Depreciation expense on capital assets is reported in the government-wide

statement of activities and changes in net position but they do not require the

use of current financial resources. Therefore, depreciation expense is not

reported as expenditures in the governmental funds.2,399,710)(

Current year long-term debt principal payments on contractual obligations,

bonds payable and capital leases are expenditures in the fund financial

statements but are shown as reductions in long-term debt in the government-

wide financial statements. 6,389,699

In governmental fund financial statements, the proceeds from sale of asset is

shown as an increase in financial resources. In government-wide financial

statements, the gain or loss is calculated and reported. 22,763)(

Current year changes in accrued interest payable do not require the use of

current financial resources; therefore, they are not reported as expenditures

in governmental funds. 51,158

Premiums, discounts and deferred losses on refunding are recognized in the

fund financial statements as other and shown as an increase in financial

resources. In the government-wide financial statements, the gain or loss is

calculated and reported. 199,274

Current year changes in long-term liabilities for compensated absences do not

require the use of current financial resources; therefore, they are not reported

as expenditures in governmental funds. 82,849

Revenues in the statement of activities that do not provide current financial

resources are not reported as revenue in the fund financial statements.3,973,804)(

Certain pension and other post-employment (OPEB) expenditures are not

expended in the government-wide financial statements and recorded as

deferred resource outflows and inflows. These items relate to contributions

made after the measurement date. Additionally, a portion of the City’s

unrecognized deferred resource outflows and inflows related to the pension

and OPEB liabilities were amortized. 240,527)(

Change in net position - statement of activities 1,980,846$





PROPRIETARY FUNDS

SEPTEMBER 30, 2019

Business-Type Activities

Utility

FundASSETSCurrent assets:

Cash and cash equivalents 8,239,008$ Investments 10,016,812 Restricted cash and cash equivalents 2,709,437 Accounts receivable, net 2,059,602 Due from other funds 2,135,504

Total current assets 25,160,363

Noncurrent assets:

Capital assets not being depreciated 12,879,032 Capital assets (net of accumulated depreciation) 17,282,826

Total noncurrent assets 30,161,858

Total assets 55,322,221

DEFERRED OUTFLOWS OF RESOURCES

Deferred loss on bond refunding 32,150 Deferred outflow related to pensions 251,890 Deferred outflow related to other post-employment benefit 1,239

Total deferred outflows of resources 285,279

LIABILITIESCurrent liabilities:

Accounts payable 1,387,491 Accrued liabilities 26,202 Accrued interest payable 16,794 Unearned revenue 52,924 Bonds and notes payable- current 590,000 Compensated absences - current 4,212 Due to other governments 8,656 Customer deposits 433,304

Total current liabilities 2,519,583

Noncurrent liabilities:Bonds payable 3,344,604 Compensated absences 12,635

Net pension liability 455,096 Net other post-employment benefit liability 15,126

Total noncurrent liabilities 3,827,461

Total liabilities 6,347,044

DEFERRED INFLOWS OF RESOURCES

Deferred resource inflow related to pension 50,322

Deferred resource inflow related to other post-employment benefit 1,512

Total deferred inflows of resources 51,834

NET POSITIONNet investment in capital assets 26,259,404

Restricted for user impact fees 1,510,191 Unrestricted 21,439,027

Total net position 49,208,622$




STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

PROPRIETARY FUNDS



UtilityFund

OPERATING REVENUESCharges for services:

Water and sewer sales 18,012,793$ Refuse collection 862,545 Impact fees 1,438,241 Miscellaneous revenue 37,095

Total operating revenues 20,350,674

OPERATING EXPENSES

Personnel services 1,274,208 Supplies and materials 103,863 Maintenance and repair 1,540,764 Contracted services 578,854 Water purchases 9,294,879 Interceptor fees 1,947,711 Refuse collection 715,548 Depreciation 745,546

Total operating expenses 16,201,373

OPERATING INCOME 4,149,301

NON-OPERATING REVENUES (EXPENSES)

Intergovernmental revenue 1,693,133 Investment earnings 549,479)( Gain on disposal of capital assets 6,383 Interest expense 144,489)(

Total nonoperating revenues (expenses) 1,005,548

INCOME BEFORE TRANSFERS 5,154,849

Transfers in 352,034 Transfers out 2,461,948)(

CHANGE IN NET POSITION 3,044,935

TOTAL NET POSITION - BEGINNING 46,163,687

TOTAL NET POSITION - ENDING 49,208,622$




STATEMNET OF CASH FLOWS

PROPRIETARY FUNDS



UtilityFund

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers 22,486,462$

Payments to suppliers and service providers 13,823,994)(

Payments to employees for salaries and benefits 1,511,292)(

Net cash provided by (used for) operating activities 7,151,176

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESOperating grants 1,693,133

Transfers in from other funds 352,034

Transfers to other funds 2,461,948)(

Net cash provided by (used for) noncapital financing activities 416,781)(

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Acquisition and construction of capital assets 8,899,305)( Proceeds from the disposal of capital assets 6,383

Payments on long-term debt 570,000)(

Interest paid on capital debt 145,920)(

Net cash provided by (used for) capital and related financing activities 9,608,842)(

CASH FLOWS FROM INVESTING ACTIVITIESInterest on investments 549,479)(

Proceeds from sale of investments 717,460

Net cash provided by (used for) investing activities 167,981

NET INCREASE (DECREASE) IN CASH

AND CASH EQUIVALENTS 2,706,466)(

CASH AND CASH EQUIVALENTS - BEGINNING 13,654,911

CASH AND CASH EQUIVALENTS - ENDING 10,948,445

Reconciliation of operating income (loss) to net cash provided (used for)

operating activities:

Operating income (loss) 4,149,301

Adjustments to reconcile operating income (loss) to net cash provided by (used

for) operating activities:

Depreciation expense 745,546

(Increase) decrease in accounts receivable 18,415)(

(Increase) decrease in interfund receivables 2,167,497

Increase (decrease) in accounts payable 142,615

Increase (decrease) in accrued liabilities 2,325

Increase (decrease) in other liabilities 728

Increase (decrease) in customer deposits 23,910

Increase (decrease) in unearned revenues 14,022)(

Increase (decrease) in net pension liability 9,196)(

Increase (decrease) in net OPEB liability 491

Increase (decrease) in compensated absences 39,604)(

Total adjustments 3,001,875

Net cash provided by (used for) operating activities 7,151,176$





FIDUCIARY FUNDS

SEPTEMBER 30, 2019

Agency

Developers

ASSETS Escrow

Cash and investments 1,191,187$

Total assets 1,191,187

LIABILITIESDeveloper's Escrow 1,191,187

Total liabilities 1,191,187$



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NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The City of Forney (“City”) was originally incorporated in 1910 and operates under a home rule charter

adopted in an election held November 4, 1997 and a Council/Manager form of government with a City Council comprised of the Mayor and six Council members. Some of the services provided are: public safety (police and fire protection), municipal court, streets, engineering, water distribution, sewer collection, recreation, and general administrative services. The accounting and reporting policies of the City relating to the funds included in the accompanying

basic financial statements conform to accounting principles generally accepted in the United States of

America (“GAAP”) applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the Governmental Accounting Standards Board (“GASB”), the American Institute of Certified Public Accounts in the publication entitled State and Local Governments-Audit and Accounting Guide and by the Financial Accounting Standards Board when applicable. The more significant accounting policies of the City are described below:

A. Reporting Entity

The City is a municipal corporation governed by an elected Mayor and six-member council and has the authority to make decisions, appoint administrators and managers, and significantly influence operations. It also has the primary accountability for fiscal matters. Therefore, the City is a financial reporting entity as defined by GASB in its Statement No. 14, “The Financial Reporting Entity,” as amended by GASB Statement No. 39 “Determining Whether Certain Organizations are

Component Units.” Under GASB 14, component units are organizations for which the City is financially accountable

and all other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Financial accountability exists if the City appoints a voting majority of an

organization’s governing board and is either able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the City. The City may be financially accountable for governmental organizations with a separately elected governing board, a governing board appointed by another government, or a jointly appointed board that is fiscally dependent on the City. The financial statements of the component unit may be discretely presented in a separate column from the primary government or blended with the financial statements of primary government. GASB 39 added clarification to

GASB 14 by including entities which meet all three of the following requirements.

1. The economic resources received or held by the separate organization are entirely for the direct benefit of the primary government, its component units, or its constituents.

2. The primary government, or its component units, is entitled to, or has the ability to otherwise access a majority of the economic resources received or held by the separate

organization.

3. The economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to other access, are significant to the primary government.

The financial statements of the following component unit have been “discretely presented” in the accompanying report because (i) their governing boards are not substantially the same as the

governing body of the City, or (ii) the component unit provides services entirely or almost entirely to the citizenry and not the City.

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Discretely Presented Component Unit

The City has one component unit, Forney Economic Development Corporation (“EDC”). The EDC was incorporated September 15, 1994 and is governed by a seven-member board appointed by

and serving at the pleasure of the City Council. Thus, the EDC is legally separate, but due to the City appointing the voting majority of the EDC board, it is classified as a discretely presented component unit. The funding for the EDC occurs by the City transferring ¼ of City sales tax collections to the EDC. Adding the creation of the EDC to the resources currently available will more than double the current ability to assist economic development prospects. All of the EDC funding can be used for direct assistance to business prospects and continued development of infrastructure. The nature and significance of the relationship between the primary government

and the organization is such that exclusion would cause the City’s financial statements to be misleading or incomplete.

In addition, GASB Statement No. 61 considers an organization that does not meet the financial accountability criteria may be included as a component unit if management’s professional judgment determines it to be necessary and misleading if omitted. This evaluation includes

consideration of whether a financial benefit or burden exists in the relationship between the

entities. Management has not identified any additional organizations that fit this criteria.

B. Government-wide and Fund Financial Statements The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements. The government-wide financial statements (i.e., the statement of net

position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable.

The government-wide statement of activities demonstrates the degree to which the direct expenses of a functional category (Public Safety, Public Works, etc.) or segment are offset by program

revenues. Direct expenses are those that are clearly identifiable with specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and (2) grants

and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. The net cost (by function or business-type activity) is normally covered by general revenue (property and sales taxes, franchise fees, and interest income).

Separate fund based financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. GASB Statement No. 34 sets forth minimum criteria (percentage of assets, liabilities, revenues or expenditures/expenses of either fund category for the governmental and enterprise combined) for the determination of major

funds. The nonmajor funds are combined in a separate column in the fund financial statements.

The nonmajor funds are detailed in the combining section of the statements.

The City’s fiduciary funds are presented in the fund financial statements by type. Since by definition these assets are being held for the benefit of a third party (other local governments, individuals, pension participants, etc.) and cannot be used to address activities or obligations of the City, these funds are not incorporated into the government-wide statements.

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The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The focus of the fund

financial statements is on the major individual funds of the governmental and business-type categories, as well as the fiduciary funds (by category) and the component units. Each

presentation provides valuable information that can be analyzed and compared to enhance the usefulness of the information.

C. Measurement Focus, Basis of Accounting and Financial Statement Presentation

Measurement focus refers to what is being measured; basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of

accounting related to the timing of the measurement made, regardless of the measurement applied. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements and fiduciary fund statements. The economic resources measurement focus means all assets, deferred outflows/inflows of resources, and liabilities (whether current or noncurrent) are included on the statement of net position and the operating statements present increases

(revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting,

revenues are recognized when earned, including unbilled water and sewer services which are accrued. Expenses are recognized at the time the liability is incurred. Governmental fund level financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when

they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. In applying the susceptible to accrual concept to intergovernmental revenue, the legal and contractual requirements of the numerous individual programs are used as guidance. Generally, monies must be expended on a specific purpose or project before any amounts will be paid to the City; therefore, revenues are recognized based upon the expenditures recorded. Ad valorem taxes are recognized as revenues in the year

for which they are levied. Sales taxes, franchise taxes, hotel occupancy taxes, charges for services and fines are recognized as revenue as earned, when measurable and available. Licenses, permits, and miscellaneous revenues (except earnings on investments) are recorded as revenues when

received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned since they are measurable and available.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s water and sewer are charges to customers for sales and services. Operating expenses for the enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

Governmental Funds

The focus of governmental fund measurement (in the fund financial statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. The following is a description of the major

governmental funds of the City:

The City reports the following major governmental funds:

The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. All general tax revenues and other receipts that are not restricted by law or contractual

agreement to some other fund are accounted for in this fund. General operating expenditures, fixed charges and capital improvements costs that are not paid through other funds are paid from this fund.

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The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs.

The Roadway Impact Fund special revenue fund accounts for the resources

accumulated in the form of roadway impact fees for maintenance and operations of infrastructure and future projects. The Capital Projects Fund accounts for the acquisition or construction of infrastructure and building projects being financed from bond proceeds, grants, and transfers from other funds.

Proprietary Funds The focus of proprietary fund measurement is upon determination of operating income, changes in net position, financial position, and cash flows, which is similar to businesses. The following is a description of the major proprietary funds of the City:

The Utility Fund accounts for the operation of the City’s water and sanitary sewer

utility and trash collection which are self-supporting activities rendering services on a user-charge basis.

Agency Funds Agency funds account for amounts held on behalf of others by the City as a trustee, or fiduciary.

All of the City’s fiduciary activities are reported in a separate Statement of Fiduciary Net Position. The activities of these funds are excluded from the City’s other financial statements because the City cannot use them to finance its operations. The City is responsible for ensuring that the assets reported as used for their intended purpose. The following is a description of the fiduciary fund of the City.

The Developers Escrow Fund is used to account for assets held by the City in an

agency capacity for developers. This fiduciary fund records only assets and liabilities and therefore has no measurement focus.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s governmental and business-type activities. Eliminations of these charges would distort the direct costs and

program revenues reported for the various functions concerned.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use the restricted resources first, and then use the unrestricted resources as needed.

D. Assets, Deferred Outflows/Inflows of Resources, Liabilities, and Fund Balance or Net

Position

1. Cash and Investments

Cash of all funds is pooled into a common interest-bearing bank account in order to maximize investment opportunities. Each fund whose monies are deposited in the pooled cash has equity therein, and interest earned on these monies is allocated based upon

relative equity at each month end.

The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments for the City are reported at fair value, except for the position in investment pools. The City’s investment in pools and are reported at the net asset value per share (which approximates fair value) even though it is calculated using the amortized cost

method. For purposes of the statement of cash flows, proprietary funds consider all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents.

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2. Prepaid Items

Prepaid balances are for payments made by the City for which benefits extend beyond the fiscal year, and the reserve for prepaid items has been recognized to signify that a portion of

the fund balance is not available for other subsequent expenditures. Prepaid items are recorded using the consumption method. The City does not have any prepaid items in the current fiscal year.

3. Interfund Transactions, Receivables and Payables Short-term advances between funds are accounted for in the appropriate interfund

receivable and payable accounts, and are reported as “due to/from other funds.”

4. Property Taxes and Other Receivables

Property Taxes

The City’s property tax is levied each October 1, on the assessed value listed as of the prior

January 1 for all real property located in the City. Assessed value represents the appraisal value less applicable exemptions authorized by the City Council. The Appraisal Board of Review established appraised values at 100% for estimated market value. A tax lien attaches to the property on January 1 of each year, to secure the payment of all taxes, penalties, and interest ultimately imposed for the year on that property, whether or not the taxes are imposed in the year the lien attaches.

Taxes are due October 1 immediately following the levy date and are delinquent after the following January 31st. Revenues are recognized as the related ad valorem taxes are collected. Additional delinquent property taxes estimated to be collectible within 60 days following the close of the fiscal year have been recognized as a revenue at the fund level. In Texas, county-wide central appraisal districts required under the Property Tax Code to

assess all property within the appraisal district on the basis of 100% of its market value and are prohibited from applying any assessment ratios. The value of property within the appraisal district must be reviewed every five years; however, the City may, at its own

expense, require annual reviews of appraisal values. The City may challenge appraised values established by the appraisal district through various appeals, and, if necessary, take legal action. Under this legislation, the City continues to set tax rates on City property.

However, of the effective tax rate, including tax rates for bonds and other contractual obligations, adjusted for new improvements, exceed the rate of the previous year by more than 8%, qualified voters of the City may petition for an election to determine whether to limit the tax rate to no more than 8% above the tax rate of the previous year. The statutes of the State of Texas do not prescribe a legal debt limit. However, Article XI, Section 5 of the Texas Constitution applicable to cities of more than 5,000 population limits

the ad valorem tax rate to $2.50 per $100 assessed value. The City’s property tax rate for the current fiscal year is $0.621111 per $100 assessed value. Allowances for Uncollectible Accounts Governmental trade and property tax receivables are shown net of an allowance for

uncollectibles. All other allowances for uncollectible accounts are based on historical

collection rates. The property tax receivable allowance is based on the average collection rate of delinquent taxes over the last 20 years. The allowance for uncollectible accounts for utility billing in the enterprise fund is estimated based on a percentage of aged balances outstanding.

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5. Restricted Assets

Assets are reported as restricted when limitations on their use change the nature of normal understanding of the availability of the asset. Such constraints are either externally imposed

by creditors, contributors, grantors or laws of the other governments, or are imposed by law through constitutional provisions or enabling legislation. Restricted assets in the proprietary fund represent cash and cash equivalents and investments set aside for repayment of customer’s water/sewer deposits, impact fees, specific capital additions and various bond covenants. Impact fees are the capital recovery fees that are, by law, restricted to the projects these

funds may be used to support. Customer deposits received for water and wastewater services are, by law, to be considered restricted assets. These activities are included in the Utility Fund.

6. Capital Assets

Capital assets, which include land, buildings, equipment, and improvements, purchased or acquired, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements and proprietary fund financial statements. The City defines capital assets as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical if historical cost is not available. Donated capital assets are recorded at

acquisition cost, which is the price that would be paid to acquire an asset with equivalent service potential at the acquisition date. Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expenses.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Net interest incurred during the construction phase of capital assets of

business-like activities is included as part of the capitalized value of the assets constructed. No interest was capitalized during the current year.

Management elected not to retroactively report infrastructure assets within the scope of GASB 34.

Capital assets are being depreciated using the straight-line method over the following estimated useful lives:

Assets Years

Infrastructure 10-40

Buildings 20-50

Building Improvements 10-25

Vehicles 5

Office Equipment 5

Machinery and Equipment 5-10

7. Compensated Absences

It is the City’s policy to permit employees to accumulate earned but unused vacation, compensatory time, and sick pay benefits. All vacation and comp time is accrued at the close of the fiscal year end in the government-wide and proprietary fund financial statements.

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8. Long-term Debt

In the government-wide financial statements, and proprietary funds in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the

applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. The City has compared this method to the effective interest method and found the difference between the two methods to be immaterial. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed in the year they are incurred.

In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds, are reported as debt service expenditures.

9. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources

(expense/expenditure) until then. The City has three types of items, which arise only under a full accrual basis of accounting that qualify for reporting in this category. Accordingly, the items deferred loss on bond refunding and deferred resource outflows related to the City’s pension and other post-employment benefit plans are reported in the statement of net position. These amounts are deferred and recognized as an outflow of resources in the period that the amounts become available.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of a net position that applies to that

time. The City has one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds

report unavailable revenue from property taxes and notes receivable from TX DOT. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. Additionally, the City has two types of deferred inflow of resources that are required to be reported under the full accrual basis of accounting. These items, deferred resource inflows related to the City’s pension and other post-employment benefit plans, are reported in the statement of net position.

10. Net Position Flow Assumption Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted-net position and unrestricted-net position in the government-wide and proprietary fund financial statements, a flow assumption must be

made about the order in which the resources are considered to be applied. It is the City’s

policy to consider restricted-net position to have been depleted before unrestricted-net position is applied.

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11. Fund Balance Policies

Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The City Council can

establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance).

• Nonspendable: This classification includes amounts that cannot be spent

because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. Nonspendable items are not expected to be converted to cash within the next year.

• Restricted: This classification includes amounts for which constraints have

been placed on the use of the resources either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation.

• Committed: This classification includes amounts that can be used only for

specific purposes pursuant to constraints imposed by ordinance of the City Council. These amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those

contractual requirements.

• Assigned: This classification includes amounts that are constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the City Council or City Manager per the City’s Fund Balance Policy.

• Unassigned: This classification includes the residual fund balance for the General Fund. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by

offsetting of assigned fund balance amounts.

It is the City’s goal to achieve and maintain an unassigned fund balance in the General Fund

equal to 5% of yearly expenditures. The City considers a balance of less than 5% to be cause for concern, barring unusual or deliberate circumstances. In the event that the unassigned fund balance is calculated to be less than the policy stipulates, the City shall plan to adjust budget resources in subsequent fiscal years to restore the balance. The City had no unassigned fund balance at the end of the current fiscal year.

12. Fund Balance Flow Assumption

Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned and unassigned fund balance in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s

policy to consider restricted fund balance to have been depleted before using any of the

components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.

13. Comparative Data/Reclassification

Comparative total data for the current year to budget have been presented in the supplementary section of the financial statements in order to provide an understanding of budgeted to actual results. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year’s presentation.

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14. Use of Estimates

The preparation of financial statements in conformity with GAAP requires the use of management’s estimates.

15. Program Expenses

Certain indirect costs such as administrative costs are included in the program expense reported for individual functional activities.

16. Pensions

For purposes of measuring the net pension liability, pension related deferred outflows and inflows of resources, and pension expense, City specific information about its Fiduciary Net Position in the Texas Municipal Retirement System (TMRS) and additions to/deductions from TMRS’s Fiduciary Net Position have been determined on the same basis as they are reported by TMRS. For this purpose, plan contributions are recognized in the period that compensation

is reported for the employee, which is when contributions are legally due. Benefit payments

and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

17. Other Post-Employment Benefits TMRS Supplemental Death Benefits Fund. The City participates in the Texas Municipal

Retirement System Supplemental Death Benefit Fund (TMRS SDBF), which is an optional single-employer defined benefit life insurance plan that is administered by TMRS. It provides death benefits to active and, if elected, retired employees of participating employers. Contribution rates are determined annually for each participating municipality as a percentage of that City’s covered payroll. The death benefit for retirees is considered an other postemployment benefit (OPEB). The OPEB program is an unfunded trust because the SDBF trust covers both actives and retirees and is not segregated. The Total OPEB Liability

of the plan has been determined using the flow of economic resources measurement focus and full accrual basis of accounting. This includes for purposes of measuring the Total OPEB Liability, deferred inflows and outflows of resources, and OPEB expense. Benefit payments

are recognized when due and payable in accordance with the benefit terms.

II. DEFICIT EQUITY BALANCES

There were no funds with a deficit equity balance.

III. BUDGETS AND BUDGETARY ACCOUNTING

The City’s Home Rule Charter provides for the submission of the budget to the City Council by the City Manager. The City’s fiscal year runs October 1 through September 30.

The following procedures are followed in establishing the budgetary data:

• No later than August 1st, the City management submits to the City Council a proposed

operating budget for the fiscal year commencing October 1. The operating budget includes proposed expenditures and the means of financing them.

• Public hearings are conducted to obtain taxpayer comments.

• Prior to September 30, the budget is legally enacted through passage of an ordinance.

• The level of control (the level at which expenditures may not exceed budget) is the department level. The City Manager or Director of Finance are authorized to approve a

transfer of budgeted amounts within departments; however, any revisions that alter the total of any fund must be approved by the City Council.

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• Budgets for the General Fund, Debt Service Fund, Roadway Impact Fund, Capital Projects Fund, and Hotel/Motel Tax Fund are legally adopted on a basis consistent with

generally accepted accounting principles. The City does not legally adopt a budget for

the Fox Hollow PID Fund. The majority of the City’s Capital Projects Funds are budgeted on an annual basis. For budgeted capital projects not expended during the fiscal year, the City will roll those balances into the following year’s budget.

• According to the City Charter, total estimated expenditures of the General Fund are to be budgeted.

• For the year ended September 30, 2019, expenditures exceeded appropriations in administration and public information, municipal court, police, fire, and planning and development departments of the General Fund by $15,341, $2,465, $68,146, $76,873, and $43,719, respectively. These overages were funded by existing fund balance. Principal and interest expenditures exceeded appropriations in the debt

service fund by $89,699 and $14,518, respectively. These overages were funded with existing fund balance. Public works expenditures exceeded appropriations in the

capital projects fund by $50. These overages were funded with existing fund balance.

IV. CASH AND INVESTMENTS

The City’s funds are required to be deposited and invested under the terms of a depository contract. The depository bank deposits for safekeeping and trust with the City’s agent bank approved pledged securities in an amount sufficient to protect City funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank’s dollar amount of Federal Deposit Insurance Corporation (“FDIC”) insurance. The City categorizes its fair value measurements within the fair value hierarchy established by

generally accepted accounting principles. GASB Statement No. 72, Fair Value Measurement and Application provides a framework for measuring fair value which establishes a three-level fair value hierarchy that describes the inputs that are used to measure assets and liabilities.

• Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date.

• Level 2 inputs are inputs—other than quoted prices included within Level 1—that are

observable for an asset or liability, either directly or indirectly.

• Level 3 inputs are unobservable inputs for an asset or liability.

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. If a price for an identical asset or liability is not observable, a government should measure fair value using another valuation technique that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. If the fair value of an asset or a liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement.

37

As of September 30, 2019, the City had the following cash and investments:

Weighted

Average

Maturity

9/30/2019 (Level 1) (Level 2) (Level 3) (Days)

Primary government

Cash and cash equivalents

Cash deposits - City 1,356,632$

Certificates of deposit 1,582,677

Total cash and cash equivalents 2,939,309

Investment pools:

TexPool 7,223,312 34

TexStar 4,943,328 22

Total investment pools 12,166,640

Investments by fair value level:

Debt securities:

Federal Farm Credit Bank Bonds 7,012,354$ -$ 7,012,354$ -$ 199

Federal Home Loan Bank Bonds 13,513,629 2,020,362 11,493,267 - 271

Federal National Mortgage Association 2,161,648 - 2,161,648 - 173

Federal Agricultural Mortgage Corporation 2,000,050 - 2,000,050 - 107

Federal Home Loan Mortgage Corporation 5,096,859 499,883 4,596,976 - 320

U.S. Treasury Note 997,891 997,891 - - 138

Total debt securities 30,782,431 3,518,136 27,264,295 -

Total cash and investments of

the primary government 45,888,380$ 3,518,136$ 27,264,295$ -$

Portfolio weighted average maturity (days) 181

Component unit

Cash deposits 3,606,760$

Investment pools:

TexPool 204,563 34

Total cash and investments

of the component unit 3,811,323

Total cash and investments

of the reporting entity 49,699,703$

Fair Value Measurement Using

U.S. Agency Bonds and U.S. Treasury Bonds of $3,518,136 were valued using a documented trade history in exact security pricing model (Level 1 input). U.S. Agency Bonds of $11,334,180 were valued

using a documented trade history in exact security pricing model (Level 2 input). U.S. GSE of $10,926,277 were valued using an option-adjusted discounted cash flow pricing model (Level 2 input). U.S. GSE of $5,003,838 were valued using a present value of expected future cash flow pricing model. The City invests in external investment pools with a credit rating of AAAm. Analysis of Specific Deposit and Investment Risks

Credit Risk – Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The ratings of securities by nationally recognized rating agencies are designed to give an indication of credit risk. At year-end, the City was not significantly exposed to credit risk.

Custodial Credit Risk – Deposits are exposed to custodial credit risk if they are not covered

by depository insurance and the deposits are uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with securities held by the pledging financial institution's trust department or agent but not in the City's name.

38

As of September 30, 2019, the City’s deposit balances were fully collateralized by securities held by the financial institution in the City’s name or by Federal Deposit Insurance

Corporation ("FDIC") insurance.

Interest Rate Risk – This is the risk that changes in interest rates will adversely affect the fair value of an investment. At year end, the City was not exposed to interest rate risk.

Foreign Currency Risk – This is the risk that exchange rates will adversely affect the fair value of an investment. At year-end, the City was not exposed to foreign currency risk.

V. RECEIVABLES

Receivables as of year-end for the City’s individual major funds and nonmajor funds, including the applicable allowances for uncollectible accounts, are as follows:

Proprietary

General Debt Service Utility Total

Accounts 294,912$ -$ 2,370,896$ 2,665,808$

Taxes 1,397,503 174,789 - 1,572,292

Intergovernmental - 12,920,915 - 12,920,915

Gross Receivables 1,692,415 13,095,704 2,370,896 17,159,015

Less: Allowance

for uncollectibles 204,320)( 54,025)( 311,294)( 569,639)(

Net receivables 1,488,095$ 13,041,679$ 2,059,602$ 16,589,376$

Governmental Funds

VI. CAPITAL ASSETS

Capital asset activity for the year ended September 30, 2019, was as follows:

Beginning Adjustments/ Ending

Governmental activities: Balance Additions Retirements Transfers Balance

Capital assets, not being depreciated:

Land 5,017,448$ -$ -$ -$ 5,017,448$

Construction in progress 9,668,374 4,061,543 - 4,551,638)( 9,178,279

Total assets not being depreciated 14,685,822 4,061,543 - 4,551,638)( 14,195,727

Capital assets, being depreciated:

Buildings and improvements 17,467,618 - - 4,487,805 21,955,423

Machinery and equipment 6,890,751 2,831,952 203,458)( - 9,519,245

Infrastructure 41,000,905 - - 63,833 41,064,738

Total capital assets being depreciated 65,359,274 2,831,952 203,458)( 4,551,638 72,539,406

Less accumulated depreciation:

Buildings and improvements 4,967,728)( 443,072)( - - 5,410,800)(

Machinery and equipment 13,375,333)( 1,100,156)( - 881,443 13,594,046)(

Infrastructure 3,887,693)( 856,482)( 155,146 881,443)( 5,470,472)(

Total accumulated depreciation 22,230,754)( 2,399,710)( 155,146 - 24,475,318)(

Total capital assets being

depreciated, net 43,128,520 432,242 48,312)( 4,551,638 48,064,088

Governmental activities capital

assets, net 57,814,342$ 4,493,785$ 48,312)$( -$ 62,259,815$

39

Beginning Ending

Business-type activities: Balance Additions Retirements Transfers Balance


Land 703,953$ -$ -$ -$ 703,953$

Construction in progress 7,363,221 8,383,146 - 3,571,288)( 12,175,079

Total assets not being depreciated 8,067,174 8,383,146 - 3,571,288)( 12,879,032


Sewer plant & infrastructure 7,975,691 - - 3,571,288 11,546,979

Water plant & infrastructure 15,270,826 - - - 15,270,826

Machinery and equipment 1,545,777 516,159 - - 2,061,936

Total capital assets being depreciated 24,792,294 516,159 - 3,571,288 28,879,741


Sewer plant & infrastructure 2,869,443)( 164,353)( - - 3,033,796)(

Water plant & infrastructure 6,641,389)( 396,823)( - - 7,038,212)(

Machinery and equipment 1,340,537)( 184,370)( - - 1,524,907)(

Total accumulated depreciation 10,851,369)( 745,546)( - - 11,596,915)(


depreciated, net 13,940,925 229,387)( - 3,571,288 17,282,826

Business-type activities capital

assets, net 22,008,099$ 8,153,759$ -$ -$ 30,161,858$

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activities:

General government 45,168$

Public safety 795,448

Public works 701,731

Public services and operations 26,330

Culture and recreation 831,033

Total depreciation expense - governmental activities 2,399,710$

Business-type activities:

Utility 745,546$

Total depreciation expense - business-type activities 745,546$ Capital asset activity for the discretely presented component unit, Forney EDC, as of September 30, 2019, is as follows:

Beginning Ending

Component Unit - Forney EDC Balance Additions Retirements Transfers Balance


Land 323,120$ -$ -$ -$ 323,120$

Construction in progress 1,514,311 81,143 - - 1,595,454

Total assets not being depreciated 1,837,431 81,143 - - 1,918,574


Buildings and improvements 1,115,543 - 12,500)( - 1,103,043

Machinery, furniture and equipment 13,381 - - - 13,381

Total capital assets being depreciated 1,128,924 - 12,500)( - 1,116,424


Buildings and improvements 231,549)( 39,926)( 12,500 - 258,975)(

Machinery, furniture and equipment 13,377)( 4)( - - 13,381)(

Total accumulated depreciation 244,926)( 39,930)( 12,500 - 272,356)(


depreciated, net 883,998 39,930)( - - 844,068

Business-type activities capital

assets, net 2,721,429$ 41,213$ -$ -$ 2,762,642$

40

VII. CONSTRUCTION COMMITMENTS

The City has several active construction projects as of September 30, 2019. The projects include street infrastructure, water/sewer infrastructure improvements, park improvements, and building

improvements. A summary of these projects as of September 30, 2019 included the following:

Remaining

Project Commitment

Street improvements 3,260,756$

Parks improvements 42,724

Other community projects 616,010

Water/sewer line infrastructure projects 9,303,315

Total 13,222,805$

VIII. LONG-TERM OBLIGATIONS

A summary of long-term debt transactions, including the current portion, for the year ended September 30, 2019, is as follows:

Beginning Ending Due Within

Governmental activities: Balance Increases Reductions Balance One Year

General obligation bonds and

certificates of obligation 30,725,000$ -$ 2,440,000)$( 28,285,000$ 2,500,000$

Pass-through toll revenue

and limited tax bond 18,565,000 - 3,585,000)( 14,980,000 1,660,000

Tax Notes 1,780,000 275,000)( 1,505,000 285,000

Plus:

Issuance premiums 2,613,460 - 276,809)( 2,336,651 -

Less:

Issuance discounts 308,639)( - 25,261 283,378)( -

Notes payable 445,729 - 89,698)( 356,031 92,078

Total long-term debt 53,820,550 - 6,641,246)( 47,179,304 4,537,078

Compensated absences 560,916 533,087 615,936)( 478,067 119,517

Total governmental

long-term liabilities 54,381,466$ 533,087$ 7,257,182)$( 47,657,371$ 4,656,595$


Business-type activities: Balance Increases Reductions Balance One Year

Utility Fund:

General obligation and

certificate of obligation 4,480,000$ -$ 570,000)$( 3,910,000$ 590,000$

Plus:

Issuance premiums 28,705 - 4,101)( 24,604 -

Total long-term debt 4,508,705 - 574,101)( 3,934,604 590,000


Total business-type

long-term liabilities 4,565,156$ 28,133$ 641,838)$( 3,951,451$ 594,212$

The liability for compensated absences is liquidated by the General fund with an estimated 86% and the Utility Fund is responsible for the remaining 14%. The City’s notes payable contains a provision that in an event of default, outstanding amounts become immediately due. The City’s general obligation bonds, certificates of obligation, and tax notes contain a provision that in an event of default, creditors may seek a writ of mandamus to compel City officials to carry out their legally imposed duties with respect to debt. As outstanding debt does not become immediately due, the

remedy of mandamus may have to be relied up on from year to year.

41

Governmental Long-Term Debt

Amounts

Outstanding

Interest Amounts September 30,

Description Rates Issued 2019

Pass-through Toll Revenue & Limited

Tax Bonds, Series 2008 3.75 - 5.25% 39,605,000$ 5,100,000$

General Obligation Bonds, Series 2011 4.0% - 4.25% 2,295,000 2,295,000

Certificates of Obligation, Series 2011 2.0% - 4.125% 3,685,000 2,760,000

Certificates of Obligation, Series 2012 1.0% - 3.0% 1,030,000 740,000

General Obligation Bonds, Series 2012 .4% - 1.9% 2,235,000 825,000






Pass-through Toll Revenue & Limited

Tax Refunding Bonds, Series 2017 3.0% - 5.0% 11,465,000 9,880,000

Total Bonds Payable 86,715,000$ 43,265,000$

Debt service requirements are as follows:

Year Ending

September 30, Principal Interest Total

2020 4,165,000$ 1,600,717$ 5,765,717$

2021 4,265,000 1,448,349 5,713,349

2022 4,425,000 1,289,737 5,714,737

2023 4,090,000 1,118,904 5,208,904

2024 3,150,000 976,350 4,126,350

2025-2029 13,725,000 3,133,227 16,858,227

2030-2034 9,120,000 1,002,644 10,122,644

2035-2036 325,000 9,825 334,825

Total 43,265,000$ 10,579,753$ 53,844,753$

Governmental Activities

A brief discussion of each bond issuance follows: $39,605,000 Series 2008 Pass-through toll revenue and limited tax revenue bonds issued July 1, 2008 for the purpose of improvement to certain state highway facilities and roadways.

$2,295,000 Series 2011 General Obligation Refunding bonds issued August 2, 2011 for the purpose of refinancing portions of the 2005 CO, 2007 CO and 2008 Pass Through Toll Revenues Bonds. $3,685,000 Series 2011 Certificate of Obligations bonds issued August 2, 2011 for the purpose of improvements to infrastructure for streets and parks and design of new fire station.

$2,235,000 Series 2012 General Obligation bonds issued November 6, 2012 for the purpose of refinancing the 2000B CO portions of the 2003 CO. $1,030,000 Series 2012 Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificate of Obligations issued November 6, 2012 for the purpose of land acquisition.

$4,945,000 Series 2014 Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificate of Obligations issued November 4, 2014 for the purpose of constructing and equipping a new fire station and an animal shelter. $3,440,000 Series 2014 General Obligation Refunding Bonds issued November 1, 2014 for the purpose of refinancing portions of the 2005A Certificates of Obligations.

$8,585,000 Series 2015 General Obligation Refunding Bonds issued June 1, 2015 for the purpose of refinancing portions of the 2007 General Obligation Bonds. $8,220,000 Series 2016 General Obligation Refunding Bonds issued August 2, 2016 for the purpose of refinancing portions of the 2007 General Obligation Bonds.

42

$2,500,000 Series 2016 Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation issued for the purpose of improvement to certain roadways.

$11,465,000 Series 2017 Subordinate Lien Pass-through Toll Revenue and Limited Tax Refunding

Bonds issued August 15, 2017 for the purpose of refinancing portions of the 2008 Pass-through Toll Revenue and Limited Tax Revenue Bonds. Tax Notes Payable The City issued Series 2017 Tax Notes with BNY Mellon in the amount of $2,055,000 for the purpose of acquisition of public safety equipment on August 15, 2017.

Debt service requirements for this tax note are as follows:

Year Ending


2020 285,000$ 39,450$ 324,450$

2021 290,000 32,250 322,250

2022 300,000 23,400 323,400

2023 310,000 14,250 324,250

2024 320,000 4,800 324,800

Total 1,505,000$ 114,150$ 1,619,150$

Governmental Activities

Note Payable The City incurred a note payable with Government Capital Corporation in the amount of $440,702 for the purchase of a pumper fire truck on April 6, 2009. This note is to be repaid over a period of 10

years with annual payments of $50,293. The Kaufman County Fire District has agreed to reimburse the City 50% of each payment. The City also purchased land in FY 18 and incurred a note payable in the amount of $406,000. Debt service requirements for this note payable are as follows:

Year Ending


2020 92,078$ 9,322$ 101,400$

2021 44,229 6,879 51,108

2022 45,493 5,615 51,108

2023 46,794 4,314 51,108

2024 48,131 2,977 51,108

2025-2026 79,306 1,884 81,190

Totals 356,031$ 30,991$ 387,022$

Business-type Long-term Debt

Amounts

Interest Outstanding

Rate Amounts September 30,

Description Payable Issued 2019

General Obligation Bonds, Series 2011A 3.00% 1,635,000$ 200,000$

Certificates of Obligation, Series 2011 3.00% 2,990,000 2,040,000

General Obligation Bonds, Series 2014 2.25%-3.5% 1,290,000 820,000

General Obligation Bonds, Series 2014A 2.25%-3.5% 1,350,000 850,000

Total Long Term Obligations 7,265,000$ 3,910,000$

43

Debt service requirements are as follows:

Year Ending


2020 590,000$ 128,976$ 718,976$

2021 405,000 109,676 514,676

2022 415,000 96,938 511,938

2023 440,000 83,606 523,606

2024 455,000 69,119 524,119

2025-2029 1,195,000 181,306 1,376,306

2030-2031 410,000 17,094 427,094

Total 3,910,000$ 686,715$ 4,596,715$

Business-type Activities

A brief discussion of each bond issuance follows: $1,635,000 Series 2011A General Obligation Refunding bonds issued August 2, 2011 for the purpose

of refinancing the 2000A CO and a portion of the 2005A CO.

$2,990,000 Series 2011 Combination Tax and Revenue Certificates of Obligation bonds issued August 2, 2011 for the purpose of infrastructure improvements to the water system. $1,290,000 Series 2014 General Obligation Refunding Bonds issued November 1, 2014 for the

purpose of refinancing portions of the 2005A Certificates of Obligations. $1,350,000 Series 2014A General Obligation Refunding Bonds issued November 1, 2014 for the purpose of refinancing portions of the 2005B Certificates of Obligations. Component Unit Long-term Debt

On September 19, 2013, the Forney EDC issued $2,000,000 of Sales Tax Revenue Bonds, Series 2013. These bonds were issued for the acquisition, improvement and equipment of land, buildings, and facilities to lease or sell to businesses in downtown Forney. Interest rates on the debt are set at 4.25% and final maturity will be in fiscal year 2032.


Component Unit - Forney EDC: Balance Increases Reductions Balance One Year

Series 2013 Sales Tax

Revenue Bond 1,825,000$ -$ 95,000)$( 1,730,000$ 100,000$

Notes payable 145,593 - 145,593)( - -

Total long-term debt 1,970,593 - 240,593)( 1,730,000 100,000


Total business-type

long-term liabilities 1,983,540$ 10,762$ 257,163)$( 1,737,139$ 101,785$ Debt service requirements are as follows:

Year Ending


2020 100,000$ 80,778$ 180,778$

2021 100,000 76,528 176,528

2022 110,000 72,278 182,278

2023 115,000 67,603 182,603

2024 120,000 62,715 182,715

2025-2029 685,000 228,313 913,313

2030-2032 500,000 51,605 551,605

Total 1,730,000$ 639,820$ 2,369,820$

Component Unit - Forney EDC

44

IX. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS

The composition of interfund balances as of September 30, 2019, is as follows:

Due to/from other funds

Due to

Capital Projects Utility

Fund Fund

General fund 784,854$ 2,135,504$

Total 784,854$ 2,135,504$

Due from

Interfund balances for all of the funds are created by short-term deficiencies in cash position in the individual fund. It is anticipated that the balances will be repaid in one year or less. Similar transactions such as this also exist between the primary government and the City’s discretely presented component unit. The balances due to and due from component unit and primary

government at September 30, 2019 consisted of the following:

Due from Due to

General

Fund

Forney EDC 46,721$

Total 46,721$

Interfund Transfers

The primary purpose of interfund transfers is the transfer of funds from one fund to support expenditures of another fund in accordance with the authority established for the individual fund.

A summary of interfund transfers by fund type is as follows:

Transfers in

Capital Non

General Projects Major Utility Total

General -$ 1,682,030$ 41,000$ 828,652$ 2,551,682$

Utility 352,034 - - - 352,034

Debt service 50,293 51,108 - - 101,401

Capital Project 2,231,751 - - 1,633,296 3,865,047

Total 2,634,078$ 1,733,138$ 41,000$ 2,461,948$ 6,870,164$

Transfers out

Transfers from the various funds to the capital projects fund are made in order to fund capital projects or other capital purchases. Transfers made from the non-major governmental funds to the General Fund were made to cover the costs of special projects included in the General Fund. Additionally, funds were transferred from the General Fund to the Debt Service Fund to cover the costs related to the principal and interest for the notes payable reported by the governmental activities.

45

X. DEFINED BENEFIT PENSION POLICIES

Plan Descriptions

The City of Forney participates as one of 887 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six-member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of

Texas. TMRS’s defined benefit pension plan is a tax-qualified plan under Section 401 (a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the city are required to participate in TMRS.

Benefits Provided

TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the city, within the options available in the state statutes governing TMRS. At retirement, the benefit is calculated as if the sum of the employee’s contributions, with interest, and the City-financed monetary credits with interest were used to purchase an annuity. Members may

choose to receive their retirement benefit in one of seven payments options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member’s deposits and interest. A summary of plan provisions for the City are as follows:

Employee deposit rate 7%

Matching ratio (City to employee) 2 to 1

Years required for vesting 5

Service retirement eligibility 20 years to any age,

5 years at age 60 and above

Updated service credit 100% Repeating

Annuity increase to retirees 70% of CPI, repeating Employees covered by benefit terms

At the December 31, 2018 valuation and measurement date, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefits 25

Inactive employees entitled to but not yet receiving benefits 51

Active employees 153

229

Contributions The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, and the city matching percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the city. Under the state law governing TMRS, the contribution rate for each city is

determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees for the City of Forney were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution rates for the City of Forney were 13.23% and 13.47% in calendar years 2018 and 2019, respectively. The city’s contributions to TMRS for the year ended September 30,

2019, were $1,478,423, and were equal to the required contributions.

46

Net Pension Liability

The City’s Net Pension Liability (NPL) was measured as of December 31, 2018, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as

of that date. Actuarial assumptions:

The Total Pension Liability in the December 31, 2018 actuarial valuation was determined using the following actuarial assumptions:

Inflation 2.5% per year

Overall payroll growth 3.0% per year

Investment Rate of Return 6.75%, net of pension plan investment expense, including inflation

Salary increases were based on a service-related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment, with male rates multiplied by 109% and female rates multiplied by 103%. The

rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used with males rates multiplied by 109% and female rates multiplied by 103% with a 3-year set-forward for both males and females. In addition, a 3% minimum

mortality rate is applied to reflect the impairment for younger members who become disabled. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements subject to the 3% floor. The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2010 to December 31, 2014. They were adopted in 2015 and first used in the December 31, 2015 actuarial valuation. The post-retirement

mortality assumption for healthy annuitants and Annuity Purchase Rate (APRs) are based on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. In conjunction with these changes first used in the December 31, 2013 valuation, the System adopted the Entry Age Normal actuarial cost method and a one-time change to the amortization policy. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as

the production of income, in order to satisfy the short-term and long-term funding needs of TMRS.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. In determining their best estimate of a recommended investment return assumption under the various

alternative asset allocation portfolios, GRS focused on the area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative) and (2) the geometric mean (conservative) with an adjustment for time (aggressive). The target allocation and best estimates of real rates of return for each major asset class in fiscal year 2018 are summarized in the following table:

47

Asset Class Target Allocation Long-Term Expected Real Rate of Return (Arithmetic)

Domestic Equity 17.5% 4.30%

International Equity 17.5% 6.10%

Core Fixed Income 10.0% 1.00%

Non-Core Fixed Income 20.0% 3.39%

Real Return 10.0% 3.78%

Real Estate 10.0% 4.44%

Absolute Return 10.0% 3.56%

Private Equity 5.0% 7.75%

Total 100.0% Discount Rate

The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows

used to determine the discount rate assumed that employee and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan’s Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. Changes in the Net Pension Liability

Total Pension Plan Fiduciary Net Pension

Liability Net Position Liability

Primary Government: (a) (b) (a) - (b)

Balance at 12/31/2017 21,716,072$ 19,058,008$ 2,658,064$

Changes for the year:

Service cost 1,781,835 - 1,781,835

Interest 1,508,321 - 1,508,321

Difference between expected and

actual experience 539,173 - 539,173

Contributions - employer - 1,302,584 1,302,584)(

Contributions - employee - 688,726 688,726)(

Net investment income - 571,884)( 571,884

Benefit payments, including refunds

of employee contributions 522,985)( 522,985)( -

Administrative expense - 11,033)( 11,033

Other changes - 576)( 576

Net changes 3,306,344 884,832 2,421,512

Balance at 12/31/2018 25,022,416$ 19,942,840$ 5,079,576$

Increase (Decrease)

48

Total Pension Plan Fiduciary Net Pension

Liability Net Position Liability

Component Unit - Forney EDC (a) (b) (a) - (b)

Balance at 12/31/2017 418,340$ 367,135$ 51,205$


Service cost 34,325 - 34,325

Interest 29,056 - 29,056

Difference between expected and

actual experience 10,387 - 10,387

Contributions - employer - 25,093 25,093)(

Contributions - employee - 13,268 13,268)(

Net investment income - 11,017)( 11,017

Benefit payments, including refunds

of employee contributions 10,075)( 10,075)( -

Administrative expense - 213)( 213

Other changes - 11)( 11

Net changes 63,693 17,045 46,648

Balance at 12/31/2018 482,033$ 384,180$ 97,853$

Increase (Decrease)

The following presents the net pension liability of the City and EDC, calculated using the discount rate of 6.75%, as well as what the City and EDC’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.75%) or 1-percentage-point higher (7.75%) than the

current rate:

1% Decrease Current Single 1% Increase

in Discount Discount Rate in Discount

Rate (5.75%) (6.75%) Rate (7.75%)

City's net

pension liability 9,731,531$ 5,079,576$ 1,385,752$

1% Decrease Current Single 1% Increase


Rate (5.75%) (6.75%) Rate (7.75%)

EDC's net

pension liability 187,469$ 97,853$ 26,695$

Pension Plan Fiduciary Net Position

Detailed information about the pension plan’s Fiduciary Net Position is available in a separately-issued TMRS financial report. The report may be obtained on the Internet at www.tmrs.com.

49

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

For the year ended September 30, 2019 the city and EDC recognized pension expense of $1,690,935.

At September 30, 2019 the city and EDC reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Primary Government: Deferred Deferred

Outflows of Resources Inflows of Resources

Differences between expected

and actual economic experience702,974$ 532,259$

Changes in actuarial assumptions- 29,413

Difference between projected

and actual investment earnings 981,121 -

Contributions subsequent to the

measurement date 1,127,385 -

Total 2,811,480$ 561,672$

Component Unit - Forney EDC: Deferred Deferred


Differences between expected and

actual economic experience 13,542$ 10,253$

Changes in actuarial assumptions - 567

Difference between projected and

actual investment earnings 18,900 -

Contributions subsequent to the

measurement date 21,718 -

Total 54,160$ 10,820$

$1,127,385 and $21,718 reported as deferred outflows of resources related to pension resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2019 for the City and EDC, respectively. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expenses as follows:

Primary Government:

Year ended September 30,

2020 304,181$

2021 131,072

2022 131,503

2023 349,374

2024 51,501

Thereafter 154,792

Total 1,122,423$

50

Component Unit - Forney EDC:

Year ended September 30,

2020 5,860$

2021 2,525

2022 2,533

2023 6,730

2024 992

Thereafter 2,982

Total 21,622$

Health Care Coverage During the year ended September 30, 2019, employees of the City were covered by a health insurance plan (“Plan”). The City contributed $511 per month per employee and 25% of the cost for dependent’s coverage. The City Manager received 50% of the cost for dependents as agreed in his contract. Employees, at their option, authorized payroll withholdings to pay contributions for their

dependents. All contributions were paid to Blue Cross Blue Shield. The Plan was authorized by Article 3.51-2, Texas Insurance code, and is documented by contractual agreement. Insurance Coverage In accordance with state statue, the City was protected against unanticipated catastrophic individual or aggregate loss by stop-loss coverage carried through Texas Municipal League, a commercial insurer

licensed or eligible to do business in Texas, in accordance with the Texas Insurance code. Stop-loss coverage was in effect for individual claims exceeding $125,000 and for aggregate loss. According to the latest actuarial opinion dated October 1, 2013, the unfunded claim benefit obligation included no reported claims that were unpaid and no estimated claims incurred, but not reported.

XI. DEFINED OTHER POST-EMPLOYMENT BENEFIT PLANS

TMRS Supplemental Death Benefits Fund

Plan Description. The City voluntarily participates in a single-employer other postemployment benefit (OPEB) plan administered by TMRS. The Plan is a group-term life insurance plan known as the Supplemental Death Benefits Fund (SDBF). The Plan is established and administered in accordance

with the TMRS Act identically to the City’s pension plan. SDBF includes coverage for both active and retired members, and assets are commingled for the payment of such benefits. Therefore, the Plan does not qualify as an OPEB Trust in accordance with paragraph 4 of GASB Statement No. 75. Benefits Provided. The SDBF provides group-term life insurance to City employees who are active members in TMRS, including or not including retirees. The City Council opted into this program via an ordinance, and may terminate coverage under, and discontinue participation in, the SDBF by adopting

an ordinance before November 1 of any year to be effective the following January 1. Payments from this fund are similar to group-term life insurance benefits, and are paid to the designated beneficiaries upon the receipt of an approved application for payment. The death benefit for active employees provides a lump-sum payment approximately equal to the employee’s annual

salary (calculated based on the employee’s actual earnings for the 12-month period preceding the month of death). The death benefit for retirees is considered an other employment benefit and is a

fixed amount of $7,500. The number of employees currently covered by the benefit terms is as follows:

Inactive employees or beneficiaries currently receiving benefits 21

Inactive employees entitled to but not yet receiving benefits 14

Active employees 153

Total 188

51

Contributions. The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation, which was 0.13% for 2019 and 0.12% for 2018, of which 0.01% and

0.01%, respectively, represented the retiree-only portion for each year, as a percentage of annual covered payroll. The rate is equal to the cost of providing one-year term life insurance. The funding

policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to prefund retiree term life insurance during employees’ entire careers. The City’s contributions to the SDBF for the years ended September 30, 2019 and 2018 were $14,326 and $12,424, respectively, representing contributions for both active and retiree coverage, which equaled the required contributions each year. Actuarial Assumptions. The Total OPEB Liability in the December 31, 2018 actuarial valuation was

determined using the following actuarial assumptions:

Inflation rate 2.50% per annum

Projected salary increases 3.50% to 10.5% including inflation

Discount rate 3.71% Administrative expenses for the SDBF are paid through the TMRS Pension Trust Fund and are wholly

accounted for under the provisions of GASB Statement No. 68. Salary increases were based on a service-related table.

Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment, with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used with male rates

multiplied by 109% and female rates multiplied by 103% with a 3-year set-forward for both males and females. In addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who became disabled. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements subject to the 3% floor. The actuarial assumptions used in the December 31, 2017 valuation were based on the results of an actuarial experience study for the period December 31, 2010 to December 31, 2014.

Discount Rate. The SDBF program is treated as an unfunded OPEB plan because the SDBF trust covers both actives and retirees and the assets are not segregated for these groups. As such, a single discount rate of 3.71% was used to measure the Total OPEB Liability. Because the plan is essentially a “pay-as-you-go” plan, the single discount rate is equal to the prevailing municipal bond rate. The source of the municipal bond rate was fixed-income municipal bonds with 20 years to maturity that include only federally tax-exempt municipal bonds as reported in Fidelity Index’s “20-year Municipal

GO AA Index” as of December 31, 2018. Discount Rate Sensitivity Analysis. The following schedule shows the impact of the Total OPEB Liability if the discount rate used was 1% less than and 1% greater than the discount rate that was used (3.71%) in measuring the Total OPEB Liability.

Primary Government 1% Decrease Current Single 1% Increase


Rate (2.71%) (3.71%) Rate (4.71%)

Total OPEB Liability 212,630$ 168,835$ 136,294$

EDC 1% Decrease Current Single 1% Increase


Rate (2.71%) (3.71%) Rate (4.71%)

Total OPEB Liability 4,096$ 3,252$ 2,626$

52

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources Related to OPEBs. At September 30, 2019, the City and EDC reported a liability of $172,087 for its Total OPEB Liability. The

Total OPEB Liability was determined by an actuarial valuation as of December 31, 2018. For the year ended September 30, 2019, the City and EDC recognized OPEB expense of $24,638. There were no

changes of benefit terms that affected measurement of the Total OPEB Liability during the measurement period. Changes in the Total OPEB Liability

Primary Government: Total OPEB

Liability

Balance at 12/31/2017 164,261$


Service cost 18,694

Interest 5,731

Difference between expected and actual

experience 2,763)(

Changes of assumptions 16,104)(

Benefit payments 984)(

Net changes 4,574

Balance at 12/31/2018 168,835$

EDC: Total OPEB

Liability

Balance at 12/31/2017 3,164$


Service cost 360

Interest 110

Difference between expected and actual

experience 53)(

Changes of assumptions 310)(

Benefit payments 19)(

Net changes 88

Balance at 12/31/2018 3,252$

53

At September 30, 2019, the City and EDC reported deferred outflows of resources and deferred inflows of resources related to other post-employment benefits from the following sources:

Primary Government: Deferred Deferred


Differences between expected and actual economic experience -$ 2,471$

Changes in actuarial assumptions 12,996 14,406

Contributions subsequent to the measurement date 837 -

Totals 13,833$ 16,877$

EDC: Deferred Deferred


Differences between expected and actual economic experience -$ 48$

Changes in actuarial assumptions 250 277

Contributions subsequent to the measurement date 16 -

Totals 266$ 325$

$837 and $16 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date will be recognized as a reduction of the Total OPEB Liability for the year ending September 30, 2020 for the City and EDC, respectively. Other amounts of the reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows:

For the Year

Ended September 30,

2020 252)$(

2021 252)(

2022 252)(

2023 252)(

2024 252)(

Thereafter 2,621)(

For the Year

Ended September 30,

2020 5)$(

2021 5)(

2022 5)(

2023 5)(

2024 5)(

Thereafter 50)( XII. RISK MANAGEMENT

The City of Forney is exposed to various risks of loss related to tort liability, theft of and damage to property and destruction of assets; public officials’ errors and omissions; bodily injury and property

damage; injury to employees and natural disasters. The City has general liability coverage at a cost that is considered to be economically justifiable by joining together with other governmental entities in the State as a member of the Texas Municipal League Intergovernmental Risk Pool (“TML”). TML is a self-funded pool operating as a common risk management and insurance program. The City pays an annual

premium for TML for its above insurance coverage. The agreement for the formation of TML provides that TML will be self-sustaining through member premiums and will reinsure through commercial companies for claims in excess of acceptable risk levels; however, each category has its own level of reinsurance. The City continued to carry commercial insurance for other risks of loss. There were no significant reductions in commercial insurance coverage in the past fiscal year and settled claims resulting from these risks have not exceeded coverage in any of the past three fiscal years.

54

XIII. COMMITMENTS AND CONTINGENCIES

The City is a defendant in several pending lawsuits. City management estimates, based on the advice of legal counsel, that the potential claims against the City, in excess of insurance coverage, would not

materially affect the basic financial statements of the City. The City participates in a number of federal and state grant programs. These programs are subject to program compliance audits by the grantors or their representatives. Any liability that may arise as the result of these audits is not believed to be estimable or probable.

XIV. TXDOT RECEIVABLE

The Texas Department of Transportation has entered into a contract with the City of Forney to pay the City an annual amount of no less than $2,009,570 annually beginning in the year 2013 and ending in the year 2031. This payment is to reimburse the City for a portion of the costs associated with the construction of highway improvements to FM 740, FM 741 and US 80/FM 548 Interchange.

The City received a payment from TxDOT in the amount of $4,019,140 during the current fiscal year. XV. ADDITIONAL WATER AND SEWER INFORMATION

The following information is included at the request of the Texas Water Development Board for the

year under audit. Water Accountability Report:

Gallons Pumped 2,043,000,000

Gallons Billed 1,861,695,729

The City of Forney secures its water supply and sewer services from the North Texas Municipal Water District (“District”), a district authorized by the Texas Constitution, Article XVI, Section 59; created by the Texas Legislature, Article 8280-141; and authorized to act by the confirming vote of the majority

of the qualified voters in each of the cities comprising the District. The District has police, taxation and eminent domain powers and is authorized to issue revenue and/or tax bonds upon approval by the

Attorney General of the State of Texas and functions as a political subdivision of the State of Texas independent of the City. The District is governed by a 17-member board (“Board”). The Board has full power and discretion to establish its budget and to set the rates for the services it provides by contract with its member cities and customers. The Board is empowered by statue and contract, or otherwise permitted by laws, to discontinue a facility or service in order to prevent an abuse or to

enforce payment of an unpaid charge, fee or rental due to the District. Because of the factors mentioned above, the District is not included in the City’s basic financial statements. The City purchases its water from the North Texas Municipal Water District (“NTMWD”). Each year, NTMWD calculates the cost of water based upon the previous year’s usage. The City currently pays $2.78 per thousand gallons for water with total cost for this current fiscal year being $5,707,237.

The City entered into a contract for wastewater treatment services with the District. The District has been designated by the Texas Water Quality Board as the regional agency to provide and develop a Regional System for Wastewater Treatment in the general are of the East Fork of the Trinity River, which includes the City of Forney and other cities located in Collin, Dallas, Kaufman and Rockwall

Counties, Texas. Relative thereto, the City of Forney and other cities have entered into wastewater system contracts with the District, which provide for the establishment, operation and maintenance of

a Regional Wastewater System for the purpose of providing facilities to adequately receive, transport, treat and dispose of wastewater for the cities. In order to provide said service, the contract provides that (a) the District will acquire, design, construct and complete the system, repair, replace and/or extend the system to provide service to the cities; (b) in consideration of payments to be made under the contract, each of the cities shall have the right to discharge all of its wastewater from its sewage system into the District’s system, subject to certain quality requirements set forth in the contract; (c) the District will issue its bonds, in amounts and at times determined by the District, to provide for the

wastewater treatment facilities; (d) each city agrees to pay its proportionate share of the annual requirement sufficient to pay or provide for the payment of an “Operation and Maintenance Component” and a “Bond Service Component.”

55

Each city’s proportionate share of the annual requirement shall be a percentage obtained by dividing such city’s estimated contributing flow to the system by the total estimated contributing flow to the

system by all cities during such fiscal year. No city will exercise oversight responsibility for the District and no city is liable for the District’s debt. The City of Forney’s payment for the current fiscal period

was $2,187,306.

XVI. PRIOR PERIOD ADJUSTMENT During prior fiscal year, the EDC retired notes payable, but did not remove the liability from the financials. As such, beginning net position was restated to reduce EDC long-term debt by $145,593.

XVII. TAX ABATEMENTS

The City negotiates property tax abatement agreements and direct sales tax reimbursement agreements on an individual basis. The City has tax abatement agreements with two entities as of September 30, 2019:

Percentage Amount of

of Taxes Taxes Abated

Abated during during the

Purpose the Fiscal Year Fiscal Year

Company desires to purchase and

use new building materials within

the City that will generate

additional economic development

and use tax revenue for the City 80% 29,912$

Developer will construct an

assisted living center creating an

agreed upon number of full and

part-time employment positions 67% 14,792

REQUIRED SUPPLEMENTARY INFORMATION


SCHEDULE OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCE - BUDGET AND ACTUAL

GENERAL FUND


Original Final

REVENUES

Property taxes 6,052,791$ 6,100,000$

Sales taxes 5,686,732 6,239,790 Franchise taxes 3,290,000 3,290,000

Beverage taxes 46,600 56,171

Licenses and permits 1,261,000 1,291,500

Intergovernmental revenues 328,140 223,509

Charges for services 1,076,771 1,193,718

Fines and forfeitures 172,860 236,710

Investments earnings 225,000 580,673

Contributions and donations - 3,673

Miscellaneous 75,647 92,823

Total revenues 18,215,541 19,308,567

EXPENDITURES

Current:

General government:

Administration and public information 4,603,909 5,014,098

Municipal court 322,344 329,230

Public safety:

Police 4,867,565 4,829,745

Fire 4,555,503 4,441,240

Public works:

Streets 1,547,412 1,446,773

Planning and development 445,694 451,282

Public services and operations 1,024,696 1,104,703

Animal control 271,690 277,756

Culture and recreation:

Parks 1,873,227 1,910,140

Capital outlay 50,293 50,293

Total expenditures 19,562,333 19,855,260

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES 1,346,792)( 546,693)(

OTHER FINANCING SOURCES (USES)

Transfers in 1,545,876 2,789,375

Transfers out 2,606,636)( 2,634,078)(

Sale of capital assets - 18,793

Total other financing sources (uses) 1,060,760)( 174,090

NET CHANGE IN FUND BALANCE 2,407,552)( 372,603)(

FUND BALANCE - BEGINNING 8,010,995 8,010,995

FUND BALANCE - ENDING 5,603,443$ 7,638,392$

Budgeted Amounts



Actual Variance withAmounts Final Budget

6,118,063$ 18,063$ 6,351,122 111,332 3,418,342 128,342

56,171 - 1,471,601 180,101

325,379 101,870

1,213,491 19,773

260,477 23,767

652,769)( 1,233,442)(

4,648 975 106,101 13,278

18,672,626 635,941)(

5,029,439 15,341)(

331,695 2,465)(

4,897,891 68,146)(

4,518,113 76,873)(

1,397,570 49,203

495,001 43,719)(

721,735 382,968

268,644 9,112

1,797,128 113,012

- 50,293

19,457,216 398,044

784,590)( 237,897)(

2,551,682 237,693)(

2,634,078)( - 20,087 1,294

62,309)( 236,399)(

846,899)( 474,296)(

8,010,995 -

7,164,096$ 474,296)$(

57


SCHEDULE OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCE - BUDGET AND ACTUAL

ROADWAY IMPACT FUND


Variance WithOriginal Final Actual Final Budget

REVENUESImpact fees 815,000$ 1,150,000$ 1,161,161$ 11,161$

Investment earnings 15,000 45,000 41,665 3,335)(

Total revenues 830,000 1,195,000 1,202,826 7,826

EXPENDITURESCurrent:

Public works 35,000 - - -

Total expenditures 35,000 - - -

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES 795,000 1,195,000 1,202,826 7,826

FUND BALANCE - BEGINNING 99,541 99,541 99,541 -

FUND BALANCE - ENDING 894,541$ 1,294,541$ 1,302,367$ 7,826$

Budgeted Amounts



C - 5

APPENDIX D

FORM OF BOND COUNSEL'S OPINION

May 27, 2020

NORTH TEXAS MUNICIPAL WATER DISTRICTMUSTANG CREEK WASTEWATER INTERCEPTOR SYSTEM

CONTRACT REVENUE BONDS, SERIES 2020,

DATED APRIL 15, 2020$__________

AS BOND COUNSEL for the North Texas Municipal Water District (the "Issuer"), inconnection with the issuance of the Mustang Creek Wastewater Interceptor System ContractRevenue Bonds, Series 2020 (the "Bonds"), we have examined into the legality and validity of theBonds, which bear interest from the dates and mature on the dates, and are subject to redemption,in accordance with the terms and conditions stated in the text of the Bonds. Terms used herein andnot otherwise defined shall have the meaning given in the Resolution of the Issuer authorizing theissuance and sale of the Bonds (the "Resolution").

WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and lawsof the State of Texas, and a transcript of certified proceedings of the Issuer, and other pertinentinstruments relating to the authorization of the Bond to be initially delivered (the "Initial Bond") andthe Bonds to be delivered in substitution therefor (the "Definitive Bonds") and the issuance anddelivery of the Initial Bond, including the executed Initial Bond and a printed form for the DefinitiveBonds initially made available by the Issuer for conversion of and exchange for the Initial Bond.

BASED ON SAID EXAMINATION, IT IS OUR OPINION that the Initial Bond andDefinitive Bonds have been duly authorized and the Initial Bond has been duly issued and delivered,all in accordance with law, and that, except as may be limited by laws relating to sovereign immunityand to bankruptcy, reorganization, and other similar matters affecting creditors' rights, (i) thecovenants and agreements in the Bond Resolution constitute valid and binding obligations of theIssuer, and the Initial Bond constitutes and Definitive Bonds will constitute valid and legally bindingspecial obligations of the Issuer, which, are secured by and payable from a first lien on and pledgeof the "Pledged Revenues" as defined in the Bond Resolution, including the Gross Revenues of theIssuer's Mustang Creek Interceptor System, and including specifically certain payments to bereceived by the Issuer from the City of Forney, Texas (the "Participant"), under the "Mustang CreekWastewater Interceptor System Contract", dated March 24, 2011 (the "Contract"), among theParticipant and the Issuer, and any payments to be received by the Issuer under all similar contractswith any Additional Participants as defined and permitted in the Contract, and (ii) the Contract isauthorized by law, has been duly executed, is valid, and is legally binding upon and enforceable bythe parties thereto in accordance with their respective terms and provisions.

THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Resolution,to issue additional parity revenue bonds which also may be secured by and made payable from a firstlien on and pledge of the aforesaid Pledged Revenues.

THE ISSUER also has reserved the right, subject to the restrictions stated in the BondResolution, to amend the Bond Resolution with the approval of the holders or owners of fifty-onepercent in principal amount of all outstanding bonds which are secured by and payable from a firstlien on and pledge of the aforesaid Pledged Revenues.

THE REGISTERED OWNERS of the Bonds shall never have the right to demand paymentof the principal thereof or interest thereon out of any funds raised or to be raised by taxation, or fromany source whatsoever other than specified in the Bond Resolution.

IN OUR OPINION, except as discussed below, the interest on the Bonds is excludable fromthe gross income of the owners for federal income tax purposes under the statutes, regulations,published rulings, and court decisions existing on the date of this opinion. We are further of theopinion that the Bonds are not "specified private activity bonds" and that, accordingly, interest onthe Bonds will not be included as an alternative minimum tax preference item under section 57(a)(5)of the Internal Revenue Code of 1986, as amended (the "Code"). In expressing the aforementionedopinions, we have relied on, certain representations, the accuracy of which we have notindependently verified, and assume compliance with certain covenants regarding the use andinvestment of the proceeds of the Bonds and the use of the property financed therewith. We callyour attention to the fact that if such representations are determined to be inaccurate or if the Issuerfails to comply with such covenants, interest on the Bonds may become includable in gross incomeretroactively to the date of issuance of the Bonds.

OUR OPINIONS ARE BASED ON EXISTING LAW, which is subject to change. Suchopinions are further based on our knowledge of facts as of the date hereof. We assume no duty toupdate or supplement our opinions to reflect any facts or circumstances that may thereafter come toour attention or to reflect any changes in any law that may thereafter occur or become effective.Moreover, our opinions are not a guarantee of result and are not binding on the Internal RevenueService (the "Service"); rather, such opinions represent our legal judgment based upon our reviewof existing law and in reliance upon the representations and covenants referenced above that wedeem relevant to such opinions. The Service has an ongoing audit program to determine compliancewith rules that relate to whether interest on state or local obligations is includable in gross incomefor federal income tax purposes. No assurance can be given whether or not the Service willcommence an audit of the Bonds. If an audit is commenced, in accordance with its current publishedprocedures the Service is likely to treat the Issuer as the taxpayer. We observe that the Issuer hascovenanted not to take any action, or omit to take any action within its control, that if taken oromitted, respectively, may result in the treatment of interest on the Bonds as includable in grossincome for federal income tax purposes.

EXCEPT AS STATED ABOVE, we express no opinion as to any other federal, state, or localtax consequences of acquiring, carrying, owning, or disposing of the Bonds, including the amount,accrual or receipt of interest on, the Bonds. Owners of the Bonds should consult their tax advisorsregarding the applicability of any collateral tax consequences of owning the Bonds.

OUR SOLE ENGAGEMENT in connection with the issuance of the Bonds is as BondCounsel for the Issuer, and, in that capacity, we have been engaged by the Issuer for the sole purposeof rendering our opinions with respect to the legality and validity of the Bonds under the Constitutionand laws of the State of Texas, and with respect to the exclusion from gross income of the intereston the Bonds for federal income tax purposes, and for no other reason or purpose. We have not beenrequested to investigate or verify, and have not independently investigated or verified, any records,data, or other material relating to the financial condition or capabilities of the Issuer or the MemberCities, or the adequacy of the Pledged Revenues, and have not assumed any responsibility withrespect thereto. We express no opinion and make no comment with respect to the marketability ofthe Bonds. Our role in connection with the Issuer's Official Statement prepared for use in connectionwith the sale of the Bonds has been limited as described therein

THE FOREGOING OPINIONS represent our legal judgment based upon a review of existinglegal authorities that we deem relevant to render such opinions and are not a guarantee of a result.

Respectfully,

Financial Advisory ServicesProvided By

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