CITY OF ROCK HILL, SOUTH CAROLINA Combined Utility System Revenue Bond Anticipation ...

166 Pages·2011·8.92 MB·English

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This Preliminary Official form. Under no circumstaregistration or qualificatio GREENVILLE 294555v5
CITY OF ROCK HILL, SOUTH CAROLINA
City Hall
155 Johnston Street
Rock Hill, SC 29730
803.329.7000
CITY COUNCIL
A. Douglas Echols, Jr., Mayor
Susie B. Hinton, Mayor Pro Tempore
John A. Black, III
Kathy S. Pender
James C. Reno, Jr.
Osbey Roddey
Kevin Sutton
CITY MANAGER
David B. Vehaun
ASSISTANT CITY MANAGERS
Gerald E. Schapiro
James G. Bagley, Jr.
CHIEF FINANCIAL OFFICER/MUNICIPAL CLERK
Anne H. Poag
CITY ATTORNEY
Spencer & Spencer, P.A.
BOND COUNSEL
McNair Law Firm, P.A.
Greenville, South Carolina
GREENVILLE 294555v5
TABLE OF CONTENTS
INTRODUCTION 1
Purpose of the Issue 1
Authorization 1
The Notes 1
Redem ption., 1
Security 1
Book-Entry Only System 3
THE CITY
Form of Government 6
Services Provided 7
Investment Policies 7
Fringe Benefits, Retirement and Health Insurance 8
GASB Accounting for Other Post Employment Benefits 8
Liability Insurance 8
THE COMBINED UTILITY SYSTEM
Water System 9
Water Service Rates and Fees 10
Ten Major Users — Water System 12
Wastewater System 13
Wastewater Service Rates and Fees 15
Ten Major Users — Wastewater System 17
Electric System 17
Electric Services Rates and Fees 19
Ten Major Users — Electric System 21
Capital Improvements to the System 22
Summary of Recent Rate History 22
Billing and Collection Procedures of the Combined Utility System 23
Future Bond Anticipation Notes and Combined Utility System Revenue Bonds 23
Transfer Policy 23
Historical Operating Results and Debt Service Coverage 24
TAX INFORMATION
Property Taxation and Assessment 25
Budget and Tax Collection Procedure 26
Assessed Value of Taxable Property 27
Exempt Manufacturing Property 27
Tax Rates 28
Tax Collections for Last Ten Years 28
Ten Largest Taxpayers in the City 28
Sales Tax Referenda 29
Local Accommodations and Hospitality Taxes 29
DEBT STRUCTURE
General Obligation Debt Limitations 30
Miscellaneous Debt Information 30
Future Debt Plans 30
Financial Statements 31
Five-Year Summary of General Fund Operations 31
Table of Five-Year Summary 32
General Fund Budget for 2011-2012 Fiscal Year 33
ECONOMIC CHARACTERISTICS AND DATA
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Demographic Characteristics 34
Per Capita Income 34
Major Manufacturing Employers 34
Unemployment Rates 35
Average Annual Unemployment Rate 36
County's Labor Force 36
Retail Sales 36
Capital Investments 36
Construction Activity 36
Facilities Located within the County 37
TAX EXEMPTION AND OTHER TAX MATTERS
Internal Revenue Code of 1986 38
Original Issue Premium 38
Designation as Qualified Tax-Exempt Obligations 39
State Law Tax Matters 39
LEGAL MATTERS
Litigation 39
Opinion of Bond Counsel 40
United States Bankruptcy Code 40
CONTINUING DISCLOSURE 40
MISCELLANEOUS
Certificate Concerning Official Statement 41
Ratings 41
Underwriting 41
Concluding Statements 42
APPENDIX A - AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE
FISCAL YEAR ENDED JUNE 30, 2010
APPENDIX B - FORM OF APPROVING OPINION OF BOND COUNSEL
APPENDIX C - FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX D- FORM OF CERTIFICATE AS TO ISSUE PRICE
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INTRODUCTION
This Official Statement is provided for the purpose of furnishing certain information in connection with the
public invitation for bids for the purchase of $13,075,000 Combined Utility System Revenue Bond Anticipation Notes,
Series 2011 (the "Notes"), of the City of Rock Hill, South Carolina (the "City"). This Ofifcial Statement has been
prepared under the supervision of Anne H. Poag, Chief Financial Officer/Municipal Clerk of the City. All information
included herein has been provided by the City except where attributed to other sources. The summaries and references
to all documents, statutes, reports and other instruments referred to herein do not purport to be complete,
comprehensive or defmitive, and each such reference or summary is qualified in its entirety by reference to each such
document, statute, report or other instrument.
Purpose of the Issue
The Notes are being issued to (i) currently refund the outstanding principal of the City's $13,000,000 original
principal amount Combined Utility System Revenue Bond Anticipation Notes, Series 2010 (the "2010 BANs"); and (ii)
pay the costs of issuance of the Notes. The 2010 BANs were issued by the City to: (i) defray the costs of certain
improvements, extensions and enlargements to the City's combined utility system (the "System"), including any one or
more of the following projects: (a) relocation of electrical poles and lines along South Cherry Road, Mt. Gallant Road
and Albright Road; (b) installation of electric feeders downtown area; (c) construction and installation of water lines
along Neely Church Road; (d) acquisition, construction and equipment of a portion of a new Operations Center to be
located on South Anderson Road at Cowan Farm Road which will house certain aspects of the City's Utility
Department; and (e) any other matters with respect to the above improvements nad such other improvements as may be
necessary or incidental to the System; and (ii) pay the costs of issuance of the 2010 BANs.
Authorization
The Notes are issued in accordance with the provisions of (i) the City's Ordinance No. 88-11 enacted on May
5, 1988, as amended by Ordinance No. 91-33 enacted on November 22, 1991, Ordinance No. 00-41 enacted on June
26, 2000, and Ordinance No. 2003-002 enacted on January 13, 2003 and Ordinance No. 2009-36 enacted on
September 14, 2009 (collectively, the "Bond Ordinance of 1988, as amended"); and (ii) the City's Ordinance No.
enacted on November 28, 2011 (the "BAN Ordinance" and, together with the Bond Ordinance of 1988, as
amended, the "Ordinances").
The Notes
The Notes will be special obligations of the City; will be issuable in fully registered form in denominations
of $5,000 each or any integral multiple thereof; will be dated December 14, 2011; and will bear interest from the
date of delivery and will mature as to principal and interest on December 14, 2012. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
Redemption
The Notes are not subject to redemption prior to maturity.
Security
The Notes are payable solely from and secured equally and ratably by a pledge and lien upon the Net
Revenues of the System (as defined in the Ordinances). The pledge of and lien upon the Net Revenues of the
System securing the Notes will rank junior, subordinate and inferior to the pledge and lien securing the City's:
(1) $10,000,000 original principal amount Combined Utility System Revenue Bonds, Series 2000B,
dated July 20, 2000 and currently outstanding in the principal amount of $10,000,000;
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I
(2) $65,260,000 original principal amount Combined Utility System Revenue Improvement and
Refunding Bonds, Series 2003A, dated January 29, 2003 and currently outstanding in the principal
amount of $51,440,000;
(3) $10,000,000 original principal amount Combined Utility System Revenue Bonds, Series 2003B,
dated January 29, 2003 and currently outstanding in the principal amount of $10,000,000;
(4) $7,352,000 original principal amount Combined Utility System Refunding Revenue Bond (Junior
Lien), Series 2008A, dated April 2, 2008 and currently outstanding in the principal amount of
$6,263,000;
(5) $13,910,000 original principal amount Combined Utility System Revenue Bonds, Series 2009A,
dated September 30, 2009 nad currently outstanding in the principal amount of $13,365,000;
(6) $16,300,000 original principal amount Combined Utility System Revenue Bonds (Build America
Bonds — Taxable Series), Series 2009B, dated September 30, 2009 and currently outstanding in the
principal amount of $16,300,000;
(7) $14,390,000 original principal amount Combined Utility System Revenue Refunding Bonds,
Series 2009C, dated October 28, 2009 and currently outstanding in the principal amount of
$12,330,000;
(8) any Additional Bonds (as defined in the Bond Ordinance of 1988, as amended) hereafter issued
under the Bond Ordinance of 1988 as amended; and
(9) any Junior Bonds (as defined in the Bond Ordinance of 1988, as amended) hereafter issued by the
City.
The Notes are payable, both as to principal and interest, from the proceeds of the Revenue Bonds (as deifned in
the BAN Ordinance) and from the Net Revenues (as defined in the Bond Ordinance of 1988, as amended) derived by the
City from the operation of its System; provided the pledge of Net Revenues shall be junior, subordinate and inferior to
the pledge of Net Revenues for payment of the Senior Lien Bonds (as defined in the BAN Ordinnace). The City has
heretofore pledged the Net Revenues for payment of Tax Increment Bonds and SRF Loans (as such terms are deifned in
the BAN Ordinance). The pledge of Net Revenues for payment of the Tax Increment Bonds and SRF Loans is junior,
subordinate nad inferior to the pledge of Net Revenues for payment of the Notes.
The Tax Increment Bonds are comprised of
(1) $1,650,000 original principal amount Tax Increment Bond, Series 2007, dated March 22, 2007,
presently outstanding in the principal amount of $885,000;
(2) $10,500,000 original principal amount Tax Increment Bond (Red River Redevelopment Projects)
Series 2009, dated October 23, 2009, presently outstanding in the principal amount of $10,500,000;
(3) $3,500,000 original principal amount Tax Increment Bond (Textile Corridor Redevelopment Projects),
Series 2011A, dated March 24, 2011, presently outstanding in the principal amount of $3,500,000; and
(4) $3,000,000 original principal amount Tax Increment Bond (Textile Corridor Redevelopment Projects),
Series 2011B, dated March 30, 2011, presently outstanding in the principal amount of $3,000,000; and
(5) any other tax increment bonds hereinafter issued by the City.
The Tax Increment Bonds are secured by respective pledges of incremental taxes levied upon certain real
properties in certain redevelopment areas of the City, and to the extent the incremental taxes are insufficient to
provide for the payment of principal and interest thereon, the Tax Increment Bonds are futrher secured by a pledge
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of Net Revenues junior nad subordinate to the pledge securing the Senior Lien Bonds and the Notes. To date, no
debt service on any of the above described the Tax Increment Bonds has been paid from Net Revenues.
The SRF Loans are comprised of:
(1) $5,273,304 original principal amount Promissory Note, Series 2004, payable to the South Carolina
Water Quality Revolving Fund Authority dated December 30, 2004 and currently outstanding in the principal
amount of $4,166,849; and
(2) $2,850,000 original principal amount Promissory Note, Series 2005, payable to the South Carolina Water
Quality Revolving Fund Authority dated May 6, 2005 and currently outstanding in the principal amount of $2,231,806.
The SRF Loans were issued to finance improvements to the City's stormwater system (the "Stormwater
System") and are secured by a pledge of revenues derived by the City from the operation of the Stormwater System.
To the extent that revenues derived from the Stormwater System are insufifcient to make payments due on the SRF
Loans, the SRF Loans are further secured by a pledge of Net Revenues of the System junior and subordinate to the
pledge of Net Revenues securing the Senior Lien Bonds and the Notes. To date, no debt service on the above described
SRF Loans has been paid from Net Revenues.
THE NOTES ARE SPECIAL OBLIGATIONS OF THE CITY AND DO NOT CONSTITUTE AN
INDEBTEDNESS OF THE CITY WITHIN THE MEANING OF ANY PROVISIONLIMITATION OR
RESTRICTION OF THE CONSTITUTION OR THE LAWS OF THE STATE OF SOUTH CAROLINA, OTHER
THAN THOSE PROVISIONS AUTHORIZING INDEBTEDNESS PAYABLE SOLELY FROM A REVENUE-
PRODUCING PROJECT NOT INVOLVING REVENUES FROM ANY TAX OR LICENSETHE CITY IS NOT
OBLIGATED TO PAY ANY OF THE NOTES OR THE INTEREST THEREON EXCEPT FROM THE PROCEEDS
OF THE REVENUE BONDS AND NET REVENUES REMAINING AFTER PAYMENT OF THE SENIOR LIEN
BONDS AND, IF NECESSARY, THE TAX INCREMENT BONDS AND THE SRF LOANS OF THE CITY OR A
CHARGE AGAINST ITS GENERAL CREDIT OR TAXING POWER. THE FULL FAITH, CREDIT AND
TAXING POWER OF THE CITY ARE NOT PLEDGED TO THE PAYMENT OF THE NOTES.
Book-Entry Only System
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository the Note. The
Notes 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 Note
certificate will be issued for each series and maturity of the Notes as set forth on the inside front cover page hereof,
each in the aggregate principal amount of such series and maturity and will be depostied with DTC. If, however, the
aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each
$500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal
amount of such issue.
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 certiifcates. 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
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GREENVILLE 294555v5
through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on
ifle with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com .
Purchasers of Notes under the DTC system must be made by or through Direct Participants, which will
receive a credit for the Notes on DTC's records. The ownership interest of each actual purchaser of each Note
("Beneficial Owner") is in tunr to be recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to
receive written conifrmations providing details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Notes are to be accomplished by entries made on the books of Direct and Indirect
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Notes, except in the event that use of the book-entry system for the Notes is
discontinued.
To facilitate subsequent transfers, all Notes 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 Notes with DTC and their registration in the name of Cede & Co. or such
other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Notes. DTC's records relfect only the identify of the Direct Participants to whose accounts
such Notes are credited, which may or may not be the Beneficial Owners. The Direct and Indirect 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.
Beneficial Owners of Notes may wish to take cerain steps to augment the transmission to them of notices of
signiifcant events with respect to the Notes, such as redemptions, tenders, defaults, and proposed amendments to the
Note documents. For example, Beneficial Owners of Notes may wish to ascetrain that the nominee holding the
Notes for their beneift has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial
Owners may wish to provide their names and addresses to the registrar and request that copies of notices by
provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Notes 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. (nor any other DTC nominee) will consent or vote with respect to Notes
unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures,
DTC mails an Omibus Proxy to Issuer as soon as possible atfer the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments
on the Notes 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 City or Registrar and Paying Agent, on payable date in accordance with their
respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be govenred by
standing instructions and customary practices, as is 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,
Registrar and Paying Agent, or City, subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is the responsibility of City or Registrar and
Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and
disbursement of such payments to the Beneifcial Owners will be the responsibility of Direct and Indirect
Participants.
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GREENVILLE 294555v5
A Beneficial Owner shall give notice to elect to have its Notes purchased or tendered, through its
Participant, to Registrar and Paying Agent, and shall effect delivery of such Notes by causing the Direct Participants
to transfer the Participant's interest in the Notes, on DTC's records, to Registrar and Paying Agent. The requirement
for physical delivery of Notes in connection with an optional tender or a mandatory purchase will be deemed
satisfied when the ownership rights in the Notes are transferred by Direct Participants on DTC's records and
followed by a book-entry credit of tendered Notes to Registrar and Paying Agent's DTC account.
DTC may discontinue providing its services as depository with respect to the Notes at any time by giving
reasonable notice to the City or the Registrar and Paying Agent. Under such circumstances, in the event that a
successor depository is not obtained, Note certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book-entryonly transfers through DTC (or a
successor securities depository). In that event, Note certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC's book-entry system has been obtained from
sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.
[Remainder of page intentionally letf blank]
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GREENVILLE 294555v5
THE CITY
The City of Rock Hill, South Carolina (the "City"), founded in 1852 and incorporated in 1892, is located in
the eastern central area of York County (the "County"), South Carolina, 20 miles south of Charlotte, North Carolina,
and encompasses approximately 36.59 square miles. The U.S. Census Bureau 2010 population estimate for the City
was 66,154 with a total of 226,073 people living in York County. Based on the 2010 population estimate, the City is
the fitfh most populous city in the State.
Form of Government
The City operates under the Council-Manager form of government. The govenring body is composed of a
mayor elected at large, and six council members elected by ward, each for four-year staggered terms. The Council is
a legislative body establishing policies with recommendations by the City Manager who administers all departments
of the City. All department heads are appointed by the City Manager.
The present Mayor and members of the City Council, their occupations and their numbers of years on City
Council are as follows:
Number of
Name Occupation Years on Council
A. Douglas Echols, Jr., Mayor* Retired 21
Susie B. Hinton, Mayor Pro Tempore Community Activist 3
John A. Black, III Investment Consultant 2
Kathy S. Pender Civic Leader 7
James C. Reno, Jr. Banker 1 3
Osbey Roddey, Jr. Retired 2 1
Kevin H. Sutton Marketing and Sales 1 7
*Years of service include 8 years of previous service as a Council member.
Mayor. Mr. A. Douglas Echols, Jr., is serving his third consecutive four-year term as Mayor. He
previously served two non-consecutive terms as a member of the City Council. The Mayor is elected at large while
Council members are chosen through a single-member district plan first adopted in 1989 and revised in 1993. Mayor
Echols is a 1967 graduate of Mars Hill College with a BS in Biology and Physical Education; a 1970 graduate of
Westenr Carolina University with a Master's degree in Education Administration; and a 1976 graduate of Winthrop
University with an Education Specialist degree in Administration. Since 1989, Mayor Echols has served as the first
full-time Commissioner of the South Atlantic Conference. He has been actively involved in community affairs for
many years. Mayor Echols currently serves on the National League of Cities Advisory Council and recently served
on the Board of Directors.
City Manager. Mr. David B. Vehaun was appointed City Manager on October 18, 2010. Prior to being
appointed as City Manager, Mr. Vehaun served as Assistant City Manager of the City; as Management Services
Administrator of the City, and Finance Director of the City. He previously served as the City's Budget Officer
beginning in 1989. Mr. Vehaun received his Bachelor of Science degree in Govenrment and Public Service with an
emphasis in Business Administration from Winthrop University in 1986 and a Master's degree in Public
Administration from The University of North Carolina at Chapel Hill with an emphasis in Finance and Budget
Administration in 1989. Mr. Vehaun recently served on the Govenrment Finance Officers Association National
Executive Board.
Assistant City Manager. Mr. Gerald E. Schapiro was appointed Assistant City Manager in April, 1999. He
previously served as Finance Director and Municipal Clerk of the City from 1977 to 1999, and as Planning and
Management Director, Senior Planner, and Planner with the City, beginning in 1970. Mr. Schapiro received a
Bachelor of Arts degree in Economics from the University of Pittsburgh, in Pittsburgh, Pennsylvania, in 1967, and
an MBA Degree from Columbia University Graduate School of Business, in New York, New York, in 1968.
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