Montgomery County Road Bonds Series 2008B

8/9/2019 Montgomery County Road Bonds Series 2008B

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OFFICIAL STATEMENT DATED AUGUST 11, 2008

The delivery of the Bonds is subject to the opinion of Bond Counsel to the effect that, assuming continuing compliance by the County after

the date of such opinion with certain covenants described herein, interest on the Bonds during the Initial Rate Period is excludable fromgross income for federal income tax purposes under existing law and is not includable in the computation of alternative minimum taxableincome for individuals. See TAX MATTERS herein for a discussion of the opinion of Bond Counsel, including the alternative minimumtax consequences for corporations.

NEW ISSUE: BOOK-ENTRY-ONLY Ratings: Standard & Poors Ratings Services AA/A-1+

Moodys Investors Service Aa3/VMIG 1

$34,705,000

MONTGOMERY COUNTY, TEXAS

Unlimited Tax Adjustable Rate Road BondsSeries 2008BDated: August 1, 2008 Due: March 1, as shown on inside cover pageInterest to Accrue from Date of Delivery Initial Rate Period End: September 1, 2009

The $34,705,000 Montgomery County, Texas, Unlimited Tax Adjustable Rate Road Bonds, Series 2008B (the Bonds), are being issuedby the Commissioners Court of Montgomery County, Texas (the County) pursuant to the terms of an order adopted by theCommissioners Court of the County. The Bonds are initially offered in various Initial Rate Period and bear interest at their respectiveInitial Rates as indicated on the inside cover page hereof. See THE BONDS Determination of Interest Rates; Rate Mode Changes.During the Initial Rate Period, interest on the Bonds will be paid on each March 1 and September 1, commencing September 1, 2008. SeeTHE BONDS Summary of Certain Provisions of the Bonds. The Bonds are issued only in fully registered form. The Bonds are issuedin denominations of $5,000 of principal amount or any integral multiple thereof.

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. No physical delivery of the Bonds will be made to the beneficialowners thereof. Principal of and interest on the Bonds will be payable by Regions Bank, Houston, Texas, the initial paying agent/registrar

(the Paying Agent/Registrar) to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTCfor subsequent payment to the beneficial owners of the Bonds. See THE BONDS Book-Entry-Only System herein. Interest on theBonds during the Initial Rate Period is payable to the registered owners (initially Cede & Co.) appearing on the registration books of thePaying Agent/Registrar on the business day next preceding each interest payment date. See THE BONDS Record Date.

The Bonds are subject to optional and mandatory redemption prior to maturity, in whole or from time to time in part, as described herein.See THE BONDS Optional Redemption and Special Mandatory Redemption.

The Bonds are subject to mandatory tender upon on the first Business Day following the final day of the Initial Rate Period, andBondholders do not have the right to elect to retain their Bonds. After the Initial Rate Period, the Bonds are further subject to certainmandatory and optional tender provisions as described herein. See THE BONDS Optional Tender and Tender Provisions. Alltenders are required to be made to the Tender Agent (the Tender Agent), initially Regions Bank, Houston, Texas. Tendered Bonds may

be remarketed and remain outstanding. Bonds tendered for purchase will be paid first from the proceeds of remarketing, if any, and secondfrom money furnished pursuant to a Standby Bond Purchase Agreement (the Liquidity Agreement) between the County and Bank ofAmerica, N.A. (the Bank). See STANDBY BOND PURCHASE AGREEMENT and APPENDIX E Material Provisions of StandbyBond Purchase Agreement.

The Liquidity Agreement does not constitute security or credit enhancement for the Bonds, but serves as a source of liquidity to

pay the purchase price of tendered Bonds only. Under certain circumstances, the obligation of the Bank to purchase Bonds may be

terminated without notice. See STANDBY BOND PURCHASE AGREEMENT and APPENDIX E Material Provisions of

Standby Bond Purchase Agreement Events of Default.

See Principal Amounts, Maturities, Interest Rates, and Prices on the Inside Cover Page

The Bonds are payable from an annual ad valorem tax levied on all taxable property in the County, without legal limit as to rate or amount.See THE BONDS Source of Payment of the Bonds and TAXING PROCEDURES AND TAX BASE ANALYSIS Tax RateLimitations. Proceeds from the sale of the Bonds will be used for certain road improvements within the County and payment of the costsof issuance of the Bonds. See PLAN OF FINANCE Purpose.

The Bonds are offered when, as and if issued by the County and accepted by the Underwriters, subject to the approving opinion of theAttorney General of the State of Texas and the opinion of Fulbright & Jaworski L.L.P., Houston, Texas, Bond Counsel. Certain legalmatters will be passed upon for the County by Andrews Kurth LLP, Houston, Texas, Disclosure Counsel. Certain legal matters will be

passed upon for the Underwriters by Allen Boone Humphries Robinson LLP, Houston, Texas, Counsel for the Underwriters. It is expectedthat the Bonds will be delivered through the facilities of DTC on or about August 18, 2008.

FIRST SOUTHWEST COMPANY

MORGAN STANLEY GOLDMAN,SACHS &CO.


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PRINCIPAL AMOUNTS, MATURITIES, INTEREST RATES AND PRICES


UNLIMITED TAX ADJUSTABLE RATE ROAD BONDS, SERIES 2008B

(Initial Rate Period Ending September 1, 2009)

$34,705,000 Term Bonds Due March 1, 2032, Interest Rate 3.00%, Price 101.225%, CUSIP 613681 H32(a)(b)(c)(d)

______________________________

(a) Prior to conversion to a fixed rate, the Bonds are subject to redemption at par, at the option of the County,as described herein. See THE BONDS Optional Redemption. The Bonds are also subject tomandatory redemption by lot or other customary random selection method on March 1, 2031, in theamount of $17,090,000. See THE BONDS Mandatory Redemption.

(b) The Bonds will initially bear interest at the Initial Rates from the date of delivery for the Initial Rate Periodending September 1, 2009. Thereafter, the Bonds will bear interest at a Term Rate determined by theRemarketing Agent; provided, however, that the interest rate mode on the Bonds may be changed fromtime to time to (a) a Weekly or Monthly Rate or back to a Term Rate (each an Adjustable Rate) or (b) aFixed Rate until maturity (as such terms are defined and described herein). Each Adjustable Rate after theInitial Rate Period will be determined by the Remarketing Agent, initially First Southwest Company. Inno event will the interest rate borne by the Bonds exceed the lesser of (i) 6% per annum, or (ii) themaximum net effective interest rate permitted under Chapter 1204, Texas Government Code, as amended.See THE BONDS Determination of Interest Rates; Rate Mode Changes.

(c) Initial yield represents the initial reoffering yield to the public to the end of the Initial Rate Period. Suchyields have been established by the Underwriters for public offerings and subsequently may be changedfrom time to time in the sole discretion of the Underwriters.

(d) CUSIP numbers have been assigned to the Bonds by Standard and Poors CUSIP Service Bureau, ADivision of the McGraw-Hill Companies, Inc., and are included solely for the convenience of theregistered owners of the Bonds. Neither the County, the Financial Advisor, nor the Underwriters areresponsible for the selection or correctness of the CUSIP numbers set forth herein.


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HOU:2831731.4

COUNTY OFFICIALS

Elected Officials

Commissioners Court

Alan B. Sadler County Judge

Mike Meador Commissioner, Precinct 1

Craig Doyal Commissioner, Precinct 2

Ernest E. Chance Commissioner, Precinct 3

Ed Rinehart Commissioner, Precinct 4

Other Elected and Appointed Officials

Name Position

J. R. Moore, Jr. Tax Assessor - Collector

Martha N. Gustavsen County Treasurer

Phyllis L. Martin County Auditor

David Walker County Attorney

Consultants and Advisors

Auditors............................................................................... Hereford, Lynch, Sellars, & Kirkham, PC, CPAConroe, Texas

Bond Counsel .....................................................................................................Fulbright & Jaworski L.L.P.Houston, Texas

Disclosure Counsel......................................................................................................... Andrews Kurth LLPHouston, Texas

Financial Advisor ..................................................................................... RBC Capital Markets CorporationHouston, Texas


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No dealer, broker, salesman or other person has been authorized by the County or the Underwriters to give anyinformation or to make any representation, other than those contained in this Official Statement, and, if given ormade, such other information or representations must not be relied upon as having been authorized by the County orthe Underwriters.

This Official Statement is not to be used in an offer to sell or the solicitation of an offer to buy in any state in whichsuch offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified todo so or to any person to whom it is unlawful to make such offer or solicitation.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITERS MAY OVER-ALLOT OREFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS ATA LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCHSTABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

Any information and expressions of opinion herein contained are subject to change without notice, and neither thedelivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create anyimplication that there has been no change in the affairs of the County or other matters described herein since the datehereof.

The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwritershave reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities toinvestors under the federal securities laws as applied to the facts and circumstances of this transaction, but theUnderwriters do not guarantee the accuracy or completeness of such information.

TABLE OF CONTENTS

Page Page

INTRODUCTION........................................................... 1SALE AND DISTRIBUTION OF THE BONDS.......... 1

Sale of the Bonds....................................................... 1Prices and Marketability............................................ 1Securities Laws.......................................................... 1Ratings....................................................................... 2

OFFICIAL STATEMENT SUMMARY ....................... 3SELECTED FINANCIAL INFORMATION ................ 5PLAN OF FINANCE...................................................... 6

Purpose ...................................................................... 6Use of Proceeds ......................................................... 6

THE BONDS................................................................... 6General....................................................................... 6Interest Rate Modes................................................... 8Determination of Interest Rates; Rate Mode

Changes ............................................................... 8Tender Provisions...................................................... 9Summary of Certain Provisions of the Bonds ........ 10Conversion to Fixed Rate........................................ 13Record Date............................................................. 13Optional Redemption .............................................. 13Mandatory Redemption........................................... 14Special Mandatory Redemption.............................. 14Book-Entry-Only System........................................ 14Source of Payment of the Bonds............................. 16Paying Agent/Registrar and Tender Agent............. 16Transfer, Exchange and Registration...................... 16Amendments............................................................ 17Defeasance of Bonds............................................... 17Bondholders Remedies .......................................... 17Future Borrowing.................................................... 18

THE AGREEMENT..................................................... 18Background.............................................................. 18Reimbursement by TxDOT..................................... 18

Potential Availability of Funds for Repayment ofthe Bonds ........................................................... 19

STANDBY BOND PURCHASE AGREEMENT....... 19General..................................................................... 19

CERTAIN INFORMATION CONCERNING THEBANK...................................................................... 19

INVESTMENT AUTHORITY AND INVESTMENTOBJECTIVES OF THE COUNTY........................ 20Legal Investments.................................................... 20Investment Policies.................................................. 21

DEBT SERVICE REQUIREMENTS.......................... 23COUNTY DEBT........................................................... 24

General..................................................................... 24Indebtedness ............................................................ 24Estimated Overlapping Debt Statement.................. 24Debt Ratios .............................................................. 26Other Obligations.................................................... 26

TAXING PROCEDURES AND TAX BASEANALYSIS............................................................. 27General..................................................................... 27Property Tax Code and County-Wide Appraisal

District ............................................................... 27Property Subject to Taxation by the County........... 27Residential Homestead Exemptions ....................... 28Freeport Goods and Goods-in-Transit Exemption . 28Tax Abatement ........................................................ 28Pollution Control ..................................................... 28Valuation of Property for Taxation......................... 28County and Taxpayer Remedies ............................. 29Levy and Collection of Taxes................................. 29Countys Rights in the Event of Tax Delinquencies30Tax Rate Limitations............................................... 30Historical Analysis of Tax Collection..................... 31Delinquent Tax Collection Procedures................... 32


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Tax Rate Distribution.............................................. 32Analysis of Tax Base............................................... 32Top Ten Principal Taxpayers.................................. 33Tax Adequacy.......................................................... 33

SELECTED FINANCIAL DATA................................ 34Historical Operations of the Countys General

Fund................................................................... 34Special Revenue Funds ........................................... 35Debt Service Funds ................................................. 36Pension Fund ........................................................... 36

THE COUNTY ............................................................. 37Administration of the County ................................. 37Commissioners Court............................................. 37Consultants .............................................................. 37

TAX MATTERS........................................................... 37Tax Exemption ........................................................ 37Tax Accounting Treatment of Premium on Certain

Bonds................................................................. 38CONTINUING DISCLOSURE OF INFORMATION 38

Annual Reports........................................................ 39Material Event Notices............................................ 39

Availability of Information from NRMSIR andSID..................................................................... 40

Limitations and Amendments ................................. 40Compliance with Prior Undertakings ..................... 40

OTHER CONSIDERATIONS ..................................... 41Environmental Regulations..................................... 41Air Quality............................................................... 41

GENERAL CONSIDERATIONS................................ 41Sources and Compilation of Information................ 41Updating of Official Statement ............................... 41

OTHER INFORMATION............................................ 42Litigation ................................................................. 42Registration and Qualification of Bonds for Sale... 42Legal Investments and Eligibility To Secure Public

Funds in Texas................................................... 42Legal Opinions ........................................................ 42Financial Advisor .................................................... 43Forward-Looking Statements Disclaimer............... 43Miscellaneous.......................................................... 43Concluding Statement ............................................. 43

Appendix A - Economic and Demographic InformationAppendix B - Excerpts from Comprehensive Annual Financial Report of Montgomery County, Texas for the

Fiscal Year Ended September 30, 2007Appendix C - Form of Legal OpinionAppendix D - Material Provisions of Standby Bond Purchase AgreementAppendix E - Pass-Through Toll Agreement


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INTRODUCTION

This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuanceof $34,705,000 Montgomery County, Texas, Unlimited Tax Adjustable Rate Road Bonds, Series 2008B (theBonds). Capitalized terms used in this Official Statement have the same meanings assigned to such terms in theorder authorizing the issuance of the Bonds (the Bond Order), except as otherwise indicated herein. There followsin this Official Statement descriptions of the Bonds and certain information regarding the County and its finances.

All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference toeach such document. Copies of such documents may be obtained from the Countys Financial Advisor, RBC CapitalMarkets Corporation, Houston, Texas.

This Official Statement contains, in part, estimates, assumptions and matters of opinion which are not intended asstatements of fact, and no representation is made as to the correctness of such estimates, assumptions or matters ofopinion, or as to the likelihood that they will be realized. However, the County has agreed to keep this OfficialStatement current by amendment or sticker to reflect material changes in the affairs of the County and to the extentthat information actually comes to its attention, the other matters described in this Official Statement until deliveryof the Bonds to the Underwriters and thereafter only as specified in GENERAL CONSIDERATIONS - Updatingof Official Statement and CONTINUING DISCLOSURE OF INFORMATION.

SALE AND DISTRIBUTION OF THE BONDS

Sale of the Bonds

First Southwest Company, Morgan Stanley and Goldman, Sachs & Co. (collectively, the Underwriters) haveagreed to purchase the Bonds from the County pursuant to a bond purchase agreement with the County for a price of$35,026,021.25 (representing the par amount of the Bonds, plus a premium of $425,136.25, and less anUnderwriters discount of $104,115.00). The Underwriters obligation is to purchase all of the Bonds if any arepurchased.

Prices and Marketability

The delivery of the Bonds is conditioned upon the receipt by the County of a certificate executed and delivered bythe Underwriters on or before the date of delivery of the Bonds stating the prices at which a substantial amount ofthe Bonds of each maturity have been sold to the public. For this purpose, the term public shall not include anyperson who is a bondhouse, broker or similar person acting in the capacity of underwriter or wholesaler. TheCounty has no control over trading of the Bonds after a bona fide offering of the Bonds is made by the Underwriters

at the yields specified on the inside cover page hereof. Information concerning reoffering yields or prices is theresponsibility of the Underwriters.

The prices and other terms respecting the offering and sale of the Bonds may be changed from time to time by theUnderwriters after the Bonds are released for sale, and the Bonds may be offered and sold at prices other than theinitial offering prices, including sales to dealers who may sell the Bonds into investment accounts. INCONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITERS MAY OVER-ALLOT OREFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS ATA LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCHSTABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

Securities Laws

No registration statement relating to the Bonds has been filed with the Securities and Exchange Commission underthe Securities Act of 1933, as amended, in reliance upon the exemptions provided therein. The Bonds have not been

registered or qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; norhave the Bonds been registered or qualified under the securities laws of any other jurisdiction. The County assumesno responsibility for registration or qualification of the Bonds under the securities laws of any other jurisdiction inwhich the Bonds may be offered, sold or otherwise transferred. This disclaimer of responsibility for registration orqualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind withregard to the availability of any exemption from securities registration or qualification provisions in such otherjurisdictions.


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Ratings

In connection with the sale of the Bonds, the County has made application to Moodys Investors Service, Inc.(Moodys) and Standard & Poors Rating Services, A Division of The McGraw-Hill Companies, Inc. (S&P) forunderlying long term ratings on the Bonds, and the ratings of Aa3 and AA, respectively, will be assigned to theBonds. Additionally, the District has applied for short term ratings on the Bonds, and the Bonds will be ratedVMIG 1 by Moodys and A-1+ by S&P, based on the commitment of the Bank pursuant to the Liquidity

Agreement. An explanation of the significance of such ratings may be obtained from Moodys and S&P. Theratings reflect only the view of Moodys and S&P, and the County makes no representation as to the appropriatenessof such ratings.

There is no assurance that such ratings will continue for any period of time or that they will not be reviseddownward or withdrawn entirely if, in the judgment of Moodys or S&P, circumstances so warrant. Any suchdownward revision or withdrawal of any of the ratings may have an adverse effect on the market price of the Bonds.

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OFFICIAL STATEMENT SUMMARY

The following material is a summary of certain information contained herein and is qualified in its entirety by thedetailed information and financial statements appearing elsewhere in this Official Statement. The reader shouldrefer particularly to sections that are indicated for more complete information.

The Issuer ...................................................... Montgomery County, Texas, a political subdivision of the State ofTexas. See THE COUNTY.

The Bonds...................................................... $34,705,000 Montgomery County, Texas, Unlimited Tax AdjustableRate Road Bonds, Series 2008B. The Bonds are dated August 1, 2008,accrue interest from their date of initial delivery and are issued as termbonds maturing on March 1, 2032. See THE BONDS General.

Payment of Interest........................................ During the Initial Rate Period ending on September 1, 2009, interest onthe Bonds will be paid on each March 1 and September 1, commencingSeptember 1, 2008. Thereafter, the interest rates on the Bonds may beadjusted from time to time as described herein. See THE BONDS Determination of Interest Rates; Rate Mode Changes and Summaryof Certain Provisions of the Bonds.

Optional Redemption..................................... Prior to conversion to a fixed rate, the Bonds are subject to redemptionat par, at the option of the County, as described herein. See THEBONDS Optional Redemption.

Mandatory Redemption ................................. The Bonds are also subject to mandatory sinking fund redemption bylot or other customary random selection method on March 1, 2031, inthe amount of 17,090,000. See THE BONDS MandatoryRedemption.

Special Mandatory Redemption .................... Under certain circumstances, Bonds held by the Bank may be subjectto special mandatory redemption as described herein. See THEBONDS Special Mandatory Redemption.

Liquidity Agreement...................................... In order to provide for the payment of the purchase price of tendered

Bonds, the County has entered into the Liquidity Agreement with theBank. Subject to the conditions set forth in the Liquidity Agreement,the Bank has agreed to purchase Bonds which are tendered to theTender Agent pursuant to the Bond Order (as defined herein) and arenot remarketed by the Remarketing Agent at a purchase price equal tothe principal amount thereof plus interest accrued thereon to the TenderDate (the Purchase Price). See STANDBY BOND PURCHASEAGREEMENT and APPENDIX D Material Provisions of StandbyBond Purchase Agreement.

Paying Agent and Tender Agent.................... The initial Paying Agent/Registrar and Tender Agent is Regions Bank,Houston, Texas. See THE BONDS Paying Agent/RegistrarAgreement and Tender Agent.

Source of Payment......................................... Principal of and interest on the Bonds are payable from the proceeds ofa continuing, direct annual ad valorem tax levied, without legal limit asto rate or amount, against all taxable property in the County. See THEBONDS Source of Payment of the Bonds and TAXINGPROCEDURES AND TAX BASE ANALYSIS Tax RateLimitations.

Authorization of the Bonds............................ The Bonds are being issued pursuant to an order authorizing issuanceof the Bonds adopted by the Montgomery County CommissionersCourt (the Bond Order) and the Texas Constitution and laws of theState of Texas, including particularly Article III, Section 52 of the


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Texas Constitution Chapters 1471, Texas Government Code, asamended, and an election held in the County on September 10, 2005.See THE BONDS Source of Payment of the Bonds.

Use of Proceeds ............................................. Proceeds from the sale of the Bonds will be used for certain Countyroad improvements and to pay the costs of issuance of the Bonds. SeePLAN OF FINANCE Purpose.

Tax Exemption .............................................. In the opinion of Bond Counsel, interest on the Bonds during the InitialRate Period is excludable from gross income for federal income taxpurposes under existing law prior to the respective first dates on whichthere is a change of interest rate for which an opinion of nationallyrecognized bond counsel is required under the Bond Order and is notincluded in computing the alternative taxable income of individuals.See TAX MATTERS Tax Exemption herein, including theinformation regarding alternative minimum tax on corporations and therequirement for an opinion of nationally recognized bond counsel in theevent of certain changes in interest rate modes.

Book-Entry-Only System .............................. The definitive Bonds will be initially registered and delivered only toCede & Co., the nominee of DTC pursuant to the Book-Entry-Only

System described herein. Beneficial ownership of the Bonds may beacquired in denominations of $5,000 or integral multiples thereof. Nophysical delivery of the Bonds will be made to the beneficial ownersthereof. See THE BONDS Book-Entry-Only System.

Payment Record............................................. The County has never defaulted on the timely payment of principal ofand interest on any of its outstanding debt.

Ratings........................................................... Moodys Investors Service, Inc. (Underlying) ............................Aa3Standard & Poors Ratings Services (Underlying) .......................AA

Moodys Investors Service, Inc. (Short-Term) ..................... VMIG 1Standard & Poors Ratings Services (Short-Term).................... A-1+


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SELECTED FINANCIAL INFORMATION

(Unaudited)

2008 Preliminary Taxable Assessed Valuation.................................................................................................. $ 29,248,713,355(a)(100% of Market Value as of January 1, 2008)See TAXING PROCEDURES AND TAX BASE ANALYSIS

2007 Certified Taxable Assessed Valuation ...................................................................................................... $ 26,760,697,964(b)(100% of Market Value as of January 1, 2007)See TAXING PROCEDURES AND TAX BASE ANALYSIS

Direct Debt:Outstanding Direct Debt (as of August 15, 2008) .............................................................................. $ 324,171,529Plus: The Bonds ................................................................................................................................ 34,705,000

Total Direct Debt ............................................................................................................................................... $ 358,876,529

Estimated Overlapping Debt.............................................................................................................................. $ 2,013,697,874

Total Direct and Estimated Overlapping Debt ................................................................................................... $ 2,372,574,403

Interest & Sinking Fund Balance (as of June 30, 2008)..................................................................................... $ $11,529,661

Ratio of Direct Debt to..: 2008 Preliminary Taxable Assessed Valuation ($29,248,713,355) .................. 1.23%2007 Certified Taxable Assessed Valuation ($26,760,697,964)... .. .. .. ... .. .. .. .. .. . 1.34%2007 Estimated Population (412,638) .............................................................. $ 869.71

Ratio of Direct and EstimatedOverlapping Debt to: 2008 Preliminary Taxable Assessed Valuation ($29,248,713,355).. .. .. .. .. .. .. .. .. 8.11%

2007 Certified Taxable Assessed Valuation ($26,760,697,964)... .. .. .. ... .. .. .. .. .. . 8.87%2007 Estimated Population (412,638) .............................................................. $ 5,749.77

Annual DebtService Requirements: Average (2008-2032) ....................................................................................... $ 24,331,755

Maximum (2022) ............................................................................................. $ 25,593,333

______________________________

(a) No taxes will be levied on this preliminary value. The value will be certified by the Montgomery CountyAppraisal Review Board and taxes will be levied on this certified value. The preliminary value is an estimate oftaxable assessed value and is subject to taxpayer protest.

(b) Certified by the Montgomery Central Appraisal District (the Appraisal District).


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OFFICIAL STATEMENT

Relating to

$34,705,000


UNLIMITED TAX ADJUSTABLE RATE ROAD BONDS

SERIES 2008B

PLAN OF FINANCE

Purpose

The County has entered into a Pass-Through Toll Agreement (the Agreement) with The Texas Department ofTransportation (the TxDOT) relating to the construction of improvements to four existing highways and theconstruction and potential operation of a direct connector between two existing highways (collectively, theProject). A copy of the Agreement is attached hereto as Appendix E. The Agreement provides, among otherthings, for certain reimbursements by TxDOT to the County for the construction and operation of each portion of theProject if such improvements are substantially completed in accordance with the Agreement and are open to thepublic. See THE AGREEMENT. Payments from TxDOT to the County under the Agreement are not pledged tothe payment of the Bonds. Proceeds from the sale of the Bonds will be used to finance a portion of the Project andto pay the costs of issuance of the Bonds.

Use of Proceeds

Sources of FundsPar Amount $34,705,000.00Net Reoffering Premium 425,136.25

Total Sources $35,130,136.25

Uses of FundsDeposit to Construction Fund $34,800,000.00Underwriters Discount 104,115.00Costs of Issuance 226,021.25

Total Uses $35,130,136.25

THE BONDS

General

The following is a description of some of the terms and conditions of the Bonds, and is qualified in its entirety byreference to the form of the Bonds contained in the Bond Order. A copy of the Bond Order may be obtained uponrequest to the County.

During the Initial Rate Period, interest on the Bonds will be paid on each March 1 and September 1, commencingSeptember 1, 2008. Thereafter, the interest rates on the Bonds may be adjusted from time to time as describedherein. See THE BONDS Determination of Interest Rates; Rate Mode Changes. Interest on the Bonds accruesfrom the date of delivery and is payable as described herein. See THE BONDS Summary of Certain Provisionsof the Bonds.

The Bonds will be initially registered and delivered only to The Depository Trust Company, New York, New York(DTC) in its nominee name of Cede & Co., pursuant to the book-entry system described herein. No physicaldelivery of the Bonds will be made to the beneficial owners thereof. Initially, principal of and interest on the Bondswill be payable by the Paying Agent/Registrar to Cede & Co., as registered owner. DTC will make distribution ofamounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds.See THE BONDS Book-Entry-Only System. Interest on the Bonds during the Initial Rate Period is payable tothe registered owners (initially Cede & Co.) appearing on the registration books of the Paying Agent/Registrar onthe business day next preceding each interest payment date. See THE BONDS Record Date.


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In the event the Book-Entry-Only-System is discontinued, the Bonds may be transferred and exchanged on the bondregister kept by the Paying Agent/Registrar upon surrender and reissuance. The Bonds are exchangeable for an equalprincipal amount of Bonds of the same maturity in any authorized denomination upon surrender of the Bonds to beexchanged at the principal payment office of the Paying Agent/Registrar. No service charge will be made for anytransfer, but the County may require payment of a sum sufficient to cover any tax or governmental charge payable inconnection therewith.

Authorized Denominations. The Bonds are issued in denominations of $5,000 and integral multiples thereof;provided, however that if the Bonds are in the Weekly Rate Period or the Monthly Rate Period, the minimumdenomination will be $100,000.

Calculation of Interest. Interest on the Bonds will be calculated on the basis of a 365-day or 366-day year, asapplicable, for the actual number of days elapsed while the Bonds bear interest at a Weekly Rate or Monthly Rate.Interest will be calculated on the basis of a 360-day year of twelve 30-day months while the Bonds bear interest atthe Initial Rate or a Term Rate or Fixed Rate.

Interest Payment Methods. While the Bonds bear interest at a Weekly Rate or Monthly Rate, interest will be paid(a) by check mailed to the registered owners, (b) at the written election of a registered owner delivered to the PayingAgent/Registrar, by federal funds wire transfer within the continental United States or (c) by such other methodacceptable to the Paying Agent/Registrar requested by and at the risk and expense of the registered owner. Whilethe Bonds bear interest at the Initial Rate or a Term Rate or Fixed Rate, interest will be paid by check mailed to the

owner of record or by such other method acceptable to the Paying Agent/Registrar requested by and at the risk andexpense of the registered owner.

Interest Payment Dates. Interest on the Bonds will be paid as indicated in the table below under the headingSummary of Certain Provisions of the Bonds. During the Initial Rate Period, interest on the Bonds will be paid oneach March 1 and September 1, commencing September 1, 2008. While Bonds bear interest at a Weekly Rate orMonthly Rate, interest will be paid on the first Business Day of each calendar month in an amount equal to theinterest accrued from and including the last Interest Payment Date to and including the day immediately precedingthe next following Interest Payment Date. While Bonds bear interest at the Term Rate, interest will be paid onMarch 1 and September 1, commencing on the first such date occurring after the Term Rate Conversion Date.While the Bonds bear interest at the Fixed Rate, interest will be paid on each March 1 and September 1, beginningon the first such date occurring after the Fixed Rate Conversion Date.

Tender Agent. Regions Bank, Houston, Texas, will serve as Tender Agent for the Bonds. All notices andcertificates required to be delivered to the Tender Agent shall be delivered to Regions Bank, Houston, Texas, 1717St. James Place, Suite 500, Houston, Texas 77056 Attn: Corporate Trust Department. In the event that the Book-Entry-Only System herein is discontinued and registered Bonds are issued, all notices and Bonds are required to bedelivered to Regions Bank, Houston, Texas, 1717 St. James Place, Suite 500, Houston, Texas 77056 Attn:Corporate Trust Department..

Remarketing Agent. First Southwest Company has been appointed to serve as the initial remarketing agent (theRemarketing Agent) for the Bonds. First Southwest Company may be removed as Remarketing Agent at theCountys discretion and a successor may be appointed in accordance with the Bond Order.

The Remarketing Agreement can terminate its obligation to remarket the Bonds under certain conditions, including:(i) the Countys failure to comply with the covenants and agreements contained in the Remarketing Agreement or tocomply with its continuing disclosure obligations, (ii) failure to provide notice of redemption for Bonds to beremarketed, (iii) there has occurred an Event of Default (as such term is defined in the Remarketing Agreement),(iv) the occurrence of any of the following (as more fully described in the Remarketing Agreement) that would

prevent the remarketing of the Bonds: (A) administrative actions, (B) force majeure, (C) failure of the County toupdate required disclosure materials, (D) failure by the Bank to provide liquidity as required, (E) a determinationthat the Bonds are taxable under federal law (F) and certain ratings downgrades. For a more complete description ofthe obligations of the Remarketing Agent with respect to the remarketing of the Bonds, contact the County Auditorsoffice or the Countys Financial Advisor, RBC Capital Market Corporation, First City Tower, Suite 1200, 1001Fannin, Houston, Texas 77002.


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Interest Rate Modes

Subsequent to the Initial Rate Period and prior to conversion of the interest rate on the Bonds to a Fixed Rate, theBonds may bear interest at an Adjustable Rate effective for periods selected or approved by the County(Adjustable Rate Periods). The rate of interest to be borne by the Bonds during any particular Rate Period will bedetermined by the Remarketing Agent as described below under Determination of Interest Rates; Rate ModeChanges. The Bonds may bear interest as follows:

Adjustable Rate Modes. The Bonds may bear interest at an Adjustable Rate to be determined by the RemarketingAgent, in accordance with the Bond Order, or at a Weekly Rate, a Monthly Rate, or a Term Rate as follows:

Weekly Rate. While the Bonds bear interest at a Weekly Rate, the interest rate on the Bonds will be determinedweekly each Wednesday, which rate will be effective for a seven-day period commencing on the immediatelyfollowing Thursday; provided, however that upon a conversion from a Weekly Rate to a different Rate Period, thelast Weekly Rate period shall end on the last day prior to such conversion.

Monthly Rate. While the Bonds bear interest at a Monthly Rate, the interest rate on the Bonds will be determinedmonthly, on the Business Day immediately preceding the commencement date of the Monthly Rate Period and suchrate will be effective for a one-month period commencing on the first Business Day of a calendar month.

Term Rate. While the Bonds bear interest at a Term Rate, the interest rate will be determined not less than five (5)Business Days prior to the commencement of each Term Rate Period. Such rate shall be effective for the duration of

the Term Rate Period (one year or more, terminating on a designated September 1 or at the maturity date of theBonds).

The interest rate mode selected by the County will remain in effect until changed by the County by notice to thePaying Agent/Registrar, the Tender Agent and the Remarketing Agent in accordance with the Bond Order. Noticeof changes in interest rate modes will be given as described below. See - Determination of Interest Rates; RateMode Change.

Determination of Interest Rates; Rate Mode Changes

Initial Rates. The Bonds will bear interest at the Initial Rate for the Initial Rate Period, beginning on the date ofinitial authentication and delivery thereof and ending on the dates indicated on the inside cover page hereof (theInitial Rate Period). Interest on the Bonds during the Initial Rate Period will accrue and be payable in the samemanner as Bonds in a Term Rate Period. Following the Initial Rate Period, the Bonds will bear interest at a TermRate or Term Rates as determined by the Remarketing Agent, unless the mode is changed prior to conversion to

another Adjustable Rate or a Fixed Rate, in the manner described below.

Rate Mode Changes after Initial Rate Period. While the Bonds bear interest at an Adjustable Rate, the PayingAgent/Registrar is required to give notice to the registered owners of Bonds of the conversion from one interest ratemode to another at the times described below in the table under the caption Summary of Certain Provisions of theBonds. Each notice of a change between interest rate modes will be sent by first class mail or other customarymethod to each registered owners address as it appears in the registration books of the Paying Agent/Registrar andwill state: (a) the proposed Conversion Date and the Rate Period to which the conversion will be made; (b) the datesby which the Remarketing Agent will determine and the Paying Agent/Registrar will notify the Owners of theAdjustable Rate for the Adjustable Rate Period commencing on the Conversion Date; (c) in the case of a Fixed RateConversion, the matters required to be stated by the Bond Order in the event of a Fixed Rate Conversion;(d) whether the Bonds to be converted will be subject to mandatory tender for purchase on the Conversion Date andthe time at which the Bonds are to be tendered for purchase; (e) the date and time by which any notice of a tender orof an election to retain Bonds must be received; and (f) if appropriate, the matters required to be stated in notices of

election to retain Bonds.

Any conversion (a) from a Weekly Rate Period or Monthly Rate Period to a Term Rate Period; (b) from a Term RatePeriod to a Weekly Rate Period or Monthly Rate Period; (c) from a Term Rate Period of one year to a differentTerm Rate Period; (d) from the Initial Rate Period to any Adjustable Rate Period; or (e) from any Adjustable Rate(including the Initial Rate) to a Fixed Rate will be conditioned on delivery of an opinion of nationally recognizedBond Counsel to the effect that the conversion will not adversely affect the excludability of interest on the Bondsfrom gross income of the owners thereof for federal income tax purposes. Conversion of interest rate modes musttake place only on an interest payment date for the interest rate mode then in effect. While in a Term Rate mode,Bonds may be converted to a different interest rate mode only at the expiration of a Term Rate Period.


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Any registered owner of Bonds who may be unable to take timely action on any notice as described above or

otherwise herein and in the Bond Order should consider whether to make arrangements for another person

to act in his or her stead.

Determination of Interest Rates. During each Rate Period after the Initial Rate Period, the rate of interest on theBonds will be the rate that the Remarketing Agent determines, under prevailing market conditions on the date ofsuch determination, would allow the Remarketing Agent to sell the Bonds at par.

The determination by the Remarketing Agent of the rates to be borne by the Bonds will be conclusive and bindingon the holders of the Bonds, the County, the Paying Agent/Registrar, the Tender Agent, and the Bank. Failure bythe Paying Agent/Registrar to give notice to the Bond Holders, or any defect therein, will not affect the interest rateborne by the Bonds or the rights of the owners thereof. In the event that the Remarketing Agent fails to determinethe rates for any reason, the rates will continue to be such rate or rates in effect for the then current Interest RatePeriod. In no event will the interest rate borne by the Bonds exceed the lesser of (i) 6% per annum, or (ii) themaximum net effective interest rate permitted under Chapter 1204, Texas Government Code, as amended.

Notice of Rates. Registered owners will be notified by first-class mail or other customary method of the AdjustableRate applicable to the Bonds at the times described below in the table under the subcaption Summary of CertainProvisions of the Bonds.

Tender Provisions

In order to provide for the payment of the Purchase Price (as defined below) of tendered Bonds, the County hasentered into a Standby Bond Purchase Agreement (the Liquidity Agreement), with Bank of America, N.A. (theBank). Subject to the conditions set forth in the Liquidity Agreement, the Bank has agreed to purchase Bondswhich are tendered to the Tender Agent pursuant to the Bond Order and are not remarketed by the RemarketingAgent at a purchase price equal to the principal amount thereof plus interest accrued thereon to the Tender Date (thePurchase Price). See STANDBY BOND PURCHASE AGREEMENT and APPENDIX D MaterialProvisions of Standby Bond Purchase Agreement.

THE OBLIGATION OF THE BANK TO PURCHASE TENDERED BONDS MAY BE TERMINATEDWITHOUT NOTICE. See APPENDIX D Material Provisions of Standby Bond Purchase Agreement.

Optional Tender. So long as the Bank is obligated to purchase Bonds pursuant to the Liquidity Agreement, whilethe Bonds bear interest at a Weekly Rate or a Monthly Rate, the registered owners of the Bonds may tender theirBonds to the Tender Agent for purchase at the Purchase Price as summarized below in the table under the caption

Summary of Certain Provisions of the Bonds. The Bonds are not subject to optional tender during the Initial RatePeriod.

Payment of the Purchase Price of Bonds to be purchased upon optional tender as described herein will be made bythe Tender Agent at its designated office or by bank wire transfer in immediately available funds.

Interest on any Bond that the registered owner thereof has elected to tender for purchase and that is not tendered onthe tender date, but for which there has been irrevocably deposited with the Tender Agent an amount sufficient topay the Purchase Price thereof, will cease to accrue interest on the tender date. The registered owner of suchuntendered Bond will not be entitled to any payment other than the Purchase Price for such Bond, and suchuntendered Bond will no longer be outstanding or entitled to the benefits of the Bond Order, except for the paymentof the Purchase Price thereof from money held by the Tender Agent for such payment. On the optional tender date,the Tender Agent is required to authenticate and deliver substitute Bonds in lieu of such untendered Bonds.

Mandatory Tender. The Bonds are required to be tendered on the first Business Day following the final day of the

Initial Rate Period and of each Term Rate Period. Registered owners have no right to retain their Bonds on suchmandatory tender dates.

In addition, the Bonds are required to be tendered on the effective date of any change between interest rate modes,subject, however, to the right of registered owners to elect to retain their Bonds as described below in the table underthe subcaption Summary of Certain Provisions of the Bonds. Any registered owner electing to retain Bonds willhave no right to tender such Bonds prior to the effective date of the change to a different interest rate mode, and suchelection to retain will be irrevocable and binding upon the registered owner and all subsequent registered owners ofsuch Bonds.


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The Bonds are also required to be tendered for purchase to the Tender Agent on the Fixed Rate Conversion Date asdescribed below under Conversion to Fixed Rate or upon the occurrence of an event of default under the LiquidityAgreement. Owners of Bonds do not have the right to elect to retain their Bonds on the Fixed Rate Conversion Dateor upon the occurrence of an event of default under the Liquidity Agreement.

So long as the Bank is obligated to purchase Bonds pursuant to the Liquidity Agreement, subsequent to the InitialRate Period and at all times prior to conversion to a Fixed Rate while the Bonds bear interest at an Adjustable Rate,

the Bonds will be subject to mandatory purchase at the Purchase Price on the last Business Day prior to (a) theexpiration of the Liquidity Agreement on August 15, 2010, or such other date as set forth in a renewal or extensionthereof or (b) the substitution of a new Bank; provided, however, that the registered owners may elect to retain theirBonds as described in the next paragraph; and provided further that no such tender and purchase will be required ifprior to the date of the tender notice described in the next paragraph the Liquidity Agreement is renewed or thePaying Agent/Registrar has received confirmation from Standard & Poors or Moodys to the effect that the ratingsassigned by any of such agencies to the Bonds will not be lowered, suspended or withdrawn as a result of thesubstitution of a new Bank. In the event that no mandatory tender is required as provided in the preceding sentence,the Paying Agent/Registrar must, upon receipt of the written confirmation required from Moodys or S&P, promptlymail a written notice to the Owners of the Bonds, which notice shall specify (i) the effective date of the SubstituteLiquidity Facility and (ii) the identity of the provider under the Substitute Liquidity Facility.

The Paying Agent/Registrar is required to give notice of mandatory tender to the registered owners of the Bonds thatare subject to mandatory tender as a result of the substitution of a new Bank. Such notice is required to be mailed

not less than 30 calendar days prior to the mandatory tender date. Any registered owner may elect to retain hisBonds by delivering written notice thereof to the Tender Agent not less than 15 calendar days prior to the mandatorytender date in accordance with the Bond Order which, among other things, requires that the registered owner statethat he is aware of the fact that after substitution of the Liquidity Agreement that, the rating or ratings assigned tothe Bonds may be lowered, suspended or withdrawn. See - Summary of Certain Provisions of the Bonds.

PURSUANT TO THE TERMS OF THE LIQUIDITY AGREEMENT, UPON THE OCCURRENCE ANDCONTINUATION OF AN EVENT OF TERMINATION UNDER THE LIQUIDITY AGREEMENT, THEOBLIGATION OF THE BANK TO PURCHASE TENDERED BONDS SHALL AUTOMATICALLYTERMINATE WITHOUT NOTICE AND OWNERS SHALL NOT THEREAFTER HAVE THE RIGHT TOTENDER BONDS FOR PURCHASE BY THE TENDER AGENT. See APPENDIX D Material Provisions ofStandby Bond Purchase Agreement.

Payment of the Purchase Price of Bonds to be purchased upon mandatory tender as described herein will be made to

the Tender Agent by the Bank at its designated office or by wire transfer in immediately available funds.

Interest on any Bond that the registered owner has not elected to continue to own after a mandatory tender date andthat is not tendered on the mandatory tender date, but for which there has been irrevocably deposited with theTender Agent an amount sufficient to pay the Purchase Price thereof, will cease to accrue interest on the mandatorytender date. Thereafter, the registered owner of such Bond will not be entitled to any payment other than thePurchase Price for such Bond from money held by the Tender Agent for such payment, and such Bond will nototherwise be outstanding or entitled to the benefits of the Bond Order. On the mandatory tender date, the TenderAgent will authenticate and deliver substitute Bonds in lieu of such untendered Bonds.

Remarketing and Purchase. In the event a Bond Holder exercises its right to optionally tender its Bonds, or if anyBonds become subject to mandatory tender, the Remarketing Agent is required to use its best efforts to sell suchBonds at a price equal to 100% of the principal amount thereof plus accrued interest, if any, on the forthcomingoptional or mandatory tender date.

The Purchase Price of Bonds tendered for purchase is required to be paid by the Tender Agent from the followingsources in the order of priority indicated: (a) first, from money derived from the remarketing of such Bonds by theRemarketing Agent; and (b) second, from money derived from the Liquidity Agreement. If sufficient funds are notavailable for the purchase of all tendered Bonds, no purchase will be consummated.

Summary of Certain Provisions of the Bonds

The table below summarizes the following information with respect to Bonds bearing interest at a Weekly, Monthly,or Term Rate:

1. the dates on which interest will be paid (the Interest Payment Dates),


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2. the date each interest rate will be determined (the Rate Determination Date),

3. the date each interest rate will become effective (the Effective Date of Rate),

4. the period of time each interest rate will be in effect (the Rate Period),

5. the requirements for notice to registered owners of interest rate adjustments (the Written Notice of Rate),

6. the dates on which registered owners may tender their Bonds for purchase to the Tender Agent and the noticerequirements therefor (the Optional Tender Dates; Owners Notice of Optional Tender),

7. the requirements for physical delivery of tendered Bonds and payment provision therefor (Physical Delivery ofand Payment for Bonds Subject to Optional and Mandatory Tender),

8. the notice requirements in order to change from one interest rate mode to a different interest rate mode (WrittenNotice of Rate Mode Change),

9. the date on which Bonds are subject to mandatory tender for purchase in the event of a change from one interestrate mode to a different interest rate mode (Mandatory Tender Date Upon Rate Mode Change), and

10. the provisions relating to each registered owners right to elect to retain his or her Bonds in the event the Bondsare subject to mandatory tender as described above (the Owners Election to Retain Bonds Upon Rate ModeChange upon Conversion).

All times shown are New York City time. A Business Day is defined in the Bond Order to be a day on whichbanks located in New York, New York and Houston, Texas are not required or authorized by law or executive orderto close for business and a day on which the New York Stock Exchange is not closed. Any payments required to bemade on any day which is not a Business Day may be made instead on the next succeeding Business Day, and nointerest shall accrue on such payments in the interim.

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Weekly Rate* Monthly Rate* Term Rate*

Interest Payment Dates First Business Day of eachcalendar month.

First Business Day of eachcalendar month.

March 1 and September 1commencing on the first tooccur.

Rate Determination Date By 12:00 Noon Wednesday,or if Wednesday is not a

Business Day, the BusinessDay immediately precedingthe Effective Date of Rate.

Monthly Rate determined by12:00 Noon on Business Day

immediately precedingEffective Date of Rate.

Term Rate determined by12:00 Noon not less than 5

days immediately precedingEffective Date of Rate.

Effective Date of Rate; RatePeriod/Rate Period

Thursday following each RateDetermination Date; WeeklyRate effective throughWednesday of next week.

First Business Day of eachcalendar month; Monthly Rateeffective until first BusinessDay of next calendar month.

First calendar day of eachTerm Rate Period; Term Rateeffective until designatedSeptember 1 (one or morewhole years).

Written Notice of Rate Paying Agent/Registrar tomail owner monthlyconfirmation statement within7 Business Days after InterestPayment Date.

Paying Agent/Registrar tomail owner notice of MonthlyRate promptly after RateDetermination Date.

Not applicable (Bonds subjectto mandatory tender on firstBusiness Day following thefinal day of the Initial RatePeriod and of each Term RatePeriod no right to retain).

Optional Tender Dates;

Owners Notice of OptionalTender

On any Business Day not later

than the last day of theWeekly Rate Period; writtennotice to Tender Agent byowner at or prior to 3:00 p.m.on any Business Day not lessthan 7 days prior to optionaltender date.

Any Interest Payment Date;

written notice to TenderAgent by owner at or prior to3:00 p.m. on any BusinessDay at least 7 Business Days

prior to optional tender date.

Not applicable (Bonds subject

to mandatory tender on firstBusiness Day following thefinal day of the Initial RatePeriod and of each Term RatePeriod no right to retain).

Physical Delivery of andPayment of Bonds Subject toOptional Tender

To Tender Agent by 5:00 p.m.on Business Day prior todesignated purchase date;

payment by 2:00 p.m. ondesignated purchase date.

To Tender Agent by 5:00 p.m.on Business Day prior todesignated purchase date;

payment by 2:00 p.m. ondesignated purchase date.

Not applicable (Bonds subjectto mandatory tender on firstBusiness Day following thefinal day of the Initial RatePeriod and of each Term RatePeriod no right to retain).

Physical Delivery of andPayment of Bonds Subject to

Mandatory Tender

To Tender Agent by 5:00 p.m.on Business Day prior to

designated purchase date;payment by 2:00 p.m. ondesignated purchase date.





Written Notice of Rate ModeChange

If change to Monthly orlonger rate, PayingAgent/Registrar to mailowners notice at least 20 days

prior to Effective Date of RateMode Change.

Paying Agent/Registrar tomail notice to owners at least20 days prior to EffectiveDate of Rate Mode Change.

Paying Agent/Registrar tomail notice to owners at least20 days prior to EffectiveDate of Rate Mode Change.

Mandatory Tender Date uponRate Mode Change

Effective Date of Rate ModeChange.



Owners Election to Retainupon Rate Mode Change uponConversion

Change to Weekly fromMonthly or longer rate: ownermay elect to retain Bonds

upon written notice deliveredto Tender Agent no later than3:00 p.m. on Business Day atleast 15 days prior toEffective Date of Rate.

Change to Monthly from anymode: owner may elect toretain Bonds upon written

notice delivered to TenderAgent no later than 3:00 p.m.on Business Day at least 15days prior to Effective Date ofRate.

Change to Term from anymode: owner may elect toretain Bonds upon written

notice delivered to TenderAgent no later than 3:00 p.m.on Business Day at least 15days prior to Effective Date ofRate.

Owners Right to Retain uponFixed Rate Conversion

None. None. None.

* All times referenced or shown are New York City times.


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Conversion to Fixed Rate

The Bond Order provides that the County has the right to convert one or more Stated Maturities of the thenoutstanding Bonds to a Fixed Rate or Rates. In determining the Fixed Rates on the Bonds to be converted on theFixed Rate Conversion Date, the Remarketing Agent shall determine the rates for such converted Bonds which willcause such Bonds to have a market value, net of costs of issuance and remarketing fees, equal to the principalamount of said Bonds.

To exercise its option, the County must deliver to the Paying Agent/Registrar, the Remarketing Agent, the TenderAgent and the Bank written notice not less than 30 calendar days prior to the Interest Payment Date on which theFixed Rate Mode is to become effective (the Fixed Rate Conversion Date). Subject to the followingqualifications, the County will determine the redemption provisions and the serial or term maturity dates which shallapply to the Bonds following the Fixed Rate Conversion Date and give notice of such terms to the PayingAgent/Registrar. The maturities will be determined on the basis of providing approximately level debt servicepayments on the Bonds. In addition, the County must deliver to the Paying Agent/Registrar prior to the Fixed RateMode Conversion Date an opinion of nationally recognized Bond Counsel to the effect that the conversion to theFixed Rate Mode is authorized under the provisions of the Bond Order and will not adversely affect the exclusion ofinterest on the Bonds from gross income of the owners thereof for federal income tax purposes.

The Paying Agent/Registrar is required to give notice by mail to all registered owners of the conversion to a FixedRate Mode not less than 15 calendar days prior to the Fixed Rate Conversion Date. Such notice is required to

(a) specify the Fixed Rate Conversion Date and the dates by which the County will determine and the PayingAgent/Registrar will notify the registered owners of the Fixed Rate and (b) state that the Bonds will be subject tomandatory tender for purchase on the Fixed Rate Conversion Date without the right of the Owners to retain theirBonds.

On or before 12:00 noon, New York City time, on the Business Day preceding the Fixed Rate Conversion Date, theRemarketing Agent will, in consultation with and subject to the approval of the County, determine the Fixed Rate orRates and give notice thereof to the Paying Agent/Registrar. The Paying Agent/Registrar will then give notice ofsuch Fixed Rate or Rates by first class mail to the Tender Agent and the registered owners of the Bonds.

After the Fixed Rate Conversion Date, the registered owners will have no right to tender their Bonds for

purchase.

Record Date

The Record date for registered owners means (i) with respect to Bonds bearing interest at a Weekly or MonthlyRate, and during the Initial Rate Period, the close of business on the Business Day immediately preceding an InterestPayment Date, (ii) with respect to Bonds bearing interest at a Term Rate (other than the Initial Rate Period), theclose of business on the 15th calendar day of the month immediately preceding an Interest Payment Date, and (iii)with respect to Bonds bearing interest at a Fixed Rate, the last Business Day of the month preceding an InterestPayment Date.

Optional Redemption

Bonds bearing interest at a Weekly Rate or a Monthly Rate are subject to redemption at the option of the County onany Interest Payment Date, in whole or in part, at a redemption price equal to the principal amount thereof, plusaccrued interest to the redemption date. Bonds bearing interest at the Initial Rate or a Term Rate are subject toredemption at the option of the County on the last day of the Initial Rate Period or the Term Rate Period, in whole orin part, at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date.After conversion to a Fixed Rate, the Bonds are subject to redemption at the option of the County, in whole or in

part, on the dates and at the redemption prices determined by the County on the Fixed Rate Conversion Date.

The Paying Agent/Registrar is required to cause notice of any redemption of Bonds to be mailed to each registeredowner of Bonds to be redeemed at the respective addresses appearing in the registration books for the Bonds.Notice of redemption is required to (i) be mailed at least 10 days prior to the redemption date with respect to Bondsbearing interest at Weekly or Monthly Rates and at least 30 calendar days prior to the redemption date with respectto Bonds bearing interest at Term Rates or at a Fixed Rate; (ii) identify the Bonds to be redeemed (specifying thenumbers assigned to the Bonds); (iii) specify the redemption date and the redemption price; and (iv) state that (a) onthe redemption date the Bonds called for redemption will be payable at the designated office of the PayingAgent/Registrar, (b) such redemption will only occur if on the redemption date, funds are available to pay the


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redemption price, and (c) on and after the redemption date interest will cease to accrue. If notice of redemption isgiven as described above and if due provision for the payment of the redemption price is made, then the Bonds thatare to be redeemed thereby will automatically be deemed to have been redeemed prior to their scheduled maturities,and will not bear interest after the redemption date, nor will they be regarded as being outstanding except for theright of the registered owner thereof to receive the redemption price from the Paying Agent/Registrar.

Mandatory Redemption

Bonds maturing on March 1, 2032, are subject to mandatory redemption prior to maturity in the principal amountsand on the redemption dates set out below, at a price equal to such principal amounts plus accrued interest from themost recent interest payment date to such redemption dates:

Redemption Date(March 1)

PrincipalAmount

2031 $17,090,0002032 (Maturity) 17,615,000

Such Bonds to be redeemed shall be selected by lot from and among the Bonds of such maturity then subject toredemption. The County, at its option, may credit against any mandatory sinking fund redemption requirementBonds of the maturity then subject to redemption which have been purchased and canceled by the County or havebeen redeemed and theretofore applied as a credit against any mandatory sinking fund redemption requirement.

Special Mandatory Redemption

Pursuant to the Bond Order, under certain circumstances Bonds held by the Bank may be subject to specialmandatory redemption. Such Purchased Bonds shall be redeemed in equal semiannual installments of principal dueand payable on each Amortization Payment Date together with the interest then accrued through the 7thanniversaryof the Amortization Start Date.

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 credited by The Depository Trust Company(DTC), New York,

New York, while the Bonds are registered in its nominees name. The information in this section concerning DTCand the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this Official

Statement. The County and the Underwriters believe the source of such information to be reliable, but take no

responsibility for the accuracy or completeness thereof.

The County 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 Participant, (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 andExchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on

file with DTC.

DTC will act initially as securities depository for the Bonds. The Bonds will be issued as fully-registered securitiesregistered in the name of Cede & Co. (DTCs partnership nominee) or such other name as may be requested by anauthorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds inthe aggregate principal amount of such maturity, and will be deposited with DTC.

DTC, the worlds 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 theFederal 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 of1934. 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 DTCsparticipants (Direct Participants) deposit with DTC. DTC also facilitates the post-trade settlement among DirectParticipants of sales and other securities transactions in deposited securities, through electronic computerized bookentry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movementof securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,


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trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of TheDepository Trust & Clearing Corporation (DTCC). DTCC is the holding company for DTC, National SecuritiesClearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCCis owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as bothU.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clearthrough or maintain a custodial relationship with a Direct Participant, either directly or indirectly (IndirectParticipants). DTC has Standard & Poors highest rating: AAA. The DTC Rules applicable to its Participants are onfile with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.comand www.dtc.org.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive acredit for the Bonds on DTCs records. The ownership interest of each actual purchaser of each Bond (BeneficialOwner) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receivewritten confirmation from DTC of their purchase.

Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, aswell as periodic statements of their holdings, from the Direct or Indirect Participant through which the BeneficialOwner entered into the transaction.

Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct orIndirect 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 theBonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name ofDTCs partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative ofDTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co., or such other DTCnominee, do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Ownersof the Bonds; DTCs records reflect only the identity of the Direct Participants to whose accounts such Bonds arecredited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keepingaccount of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to IndirectParticipants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed byarrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices ofsignificant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to theBond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding theBonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, BeneficialOwners may wish to provide their names and addresses to the Paying Agent/Registrar and request that copies ofnotices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTCspractice 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. (nor any other DTC nominee) will consent or vote with respect to the Bonds unlessauthorized by a Direct Participant in accordance with DTCs Procedures. Under its usual procedures, DTC mails anOmnibus Proxy to the County as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.sconsenting 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).

Principal, premium, if any, redemption proceeds and interest payments on the Bonds will be made to Cede & Co., orsuch other nominee as may be requested by an authorized representative of DTC. DTCs practice is to credit DirectParticipants accounts upon DTCs receipt of funds and corresponding detail information from the County or thePaying Agent/Registrar, on payable date in accordance with their respective holdings shown on DTCs records.Payments by Participants to Beneficial Owners will be governed 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, andwill be the responsibility of such Participant and not of DTC nor its nominee, the Paying Agent/Registrar, or theCounty, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment ofprincipal, premium, if any, redemption proceeds and interest payments to Cede & Co. (or such other nominee as


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may be requested by an authorized representative of DTC) is the responsibility of the County or the PayingAgent/Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, anddisbursement of such payments to the Beneficial Owners will be the responsibility of Direct and IndirectParticipants.

DTC may discontinue providing its services as depository with respect to the Bonds at any time by givingreasonable notice to the County. Under such circumstances, in the event that a successor securities depository is not

obtained, Bonds are required to be printed and delivered.

The County may decide to discontinue use of the system of book-entry transfers through DTC (or a successorsecurities depository). In that event, Bonds will be printed and delivered in accordance with the Order. In readingthis Official Statement it should be understood that while the Bonds are in the Book-Entry-Only System, referencesin other sections of this Official Statement to registered owners should be read to include the person for which theParticipant acquires an interest in the Bonds, but (i) all rights of ownership must be exercised through DTC and theBook-Entry-Only System, and (ii) except as described above, notices that are to be given to registered owners underthe Order will be given only to DTC.

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 forwhich 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 registeredowners under the Order will be given only to DTC.

Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteedas to accuracy or completeness by, and is not to be construed as a representation by, the County or the Underwriters.

Effect of Termination of Book-Entry-Only System

In the event that the Book-Entry-Only System is discontinued printed Bonds will be issued to the registered ownersand the Bonds will be subject to transfer, exchange and registration provisions as set forth in the Order andsummarized under Transfer, Exchange and Registration below.

Source of Payment of the Bonds

The Bonds are payable from the proceeds of a continuing, direct annual ad valorem tax levied, without legal limit as

to rate or amount, on all taxable property in the County. The County is authorized to issue county road bondspursuant to the Constitution and the laws of the State of Texas, including particularly Article III, Section 52 of theTexas Constitution and Chapter 1471, Texas Government Code, as amended, and the Order passed by theCommissioners Court of the County, authorizing the issuance of the Bonds.

The Bonds constitute the fourth and final installment to be issued out of $160,000,000 in bonds authorized at anelection held for that purpose on September 10, 2005 (the Election).

The following table illustrates the unlimited tax bonds authorized, issued and remaining authorized after the sale ofthe Bonds:

Amount Authorized Issued to Date The Bonds Authorized but Unissued

$160,000,000 $125,200,000 $34,800,000* $0_______________________* Includes $95,000 of premium generated on the sale of the Bonds and applied against voted authorization.

Paying Agent/Registrar and Tender Agent

Regions Bank, Houston, Texas, will serve as Paying Agent/Registrar and Tender Agent and may resign at any timeand may be replaced in accordance with the Bond Order; provided, however, that any such resignation will not takeeffect until a successor is appointed.

Transfer, Exchange and Registration

In the event the Book-Entry-Only System should be discontinued, printed certificates shall be delivered to theregistered owner and thereafter the Bonds may be transferred and exchanged on the registration books of the PayingAgent/Registrar only upon presentation and surrender to the Paying Agent/Registrar and such transfer or exchange


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shall be without expense or service charge to the registered owner, except for any tax or other governmental chargesrequired to be paid with respect to such registration, exchange and transfer. Bonds may be assigned by the executionof an assignment form on the respective Bonds or by other instrument of transfer and assignment acceptable to thePaying Agent/Registrar. See Book-Entry-Only System herein for a description of the system to be utilizedinitially in regard to ownership and transferability of the Bonds.

Amendments

The County may, without the consent of or notice to any Bondholders, from time to time and at any time, amend theBond Order in any manner not detrimental to the interests of the Bondholders, including the curing of anyambiguity, inconsistency, or formal defect or omission herein or the amend the definition of the term MaximumInterest Rate by increasing the Maximum Interest Rate for Bonds other than Bank Bonds in accordance with theterms of the Bond Order. In addition, the County may, with the consent of Bondholders holding a majority inaggregate principal amount of the Bonds then Outstanding, amend, add to, or rescind any of the provisions of theBond Order; provided that, without the consent of all Bondholders of Outstanding Bonds, no such amendment,addition, or rescission shall (1) extend the time or times of payment of the principal of and interest on the Bonds,reduce the principal amount thereof, the redemption price or the rate of interest thereon, or in any other way modifythe terms of payment of the principal of or interest on the Bonds, (2) give any preference to any Bond over any otherBond, or (3) reduce the aggregate principal amount of Bonds required to be held by Bondholders for consent to anysuch amendment, addition, or rescission.

Defeasance of BondsOn and after the Conversion of the Bonds to a Fixed Rate, the Bond Order provides that the County may defease theprovisions thereof and discharge its obligation to the registered owners of any or all of the Bonds to pay principal,interest and redemption premium, if any, thereon in any manner permitted by law, including by depositing with thePaying Agent/Registrar, or if authorized by Texas law with any national bank having trust powers and havingcombined capital and surplus of at least $50 million or with the State Treasurer of the State of Texas either: (i) cashin an amount equal to the principal amount and redemption premium, if any, of such Bonds plus interest thereon tothe date of maturity or redemption, or (ii) pursuant to an escrow or trust agreement, cash and/or direct obligations of,or obligations the principal of and interest on which are guaranteed by, or, to the extent permitted by law, secured bythe pledge of direct obligations of, the United States of America, in principal amounts and maturities and bearinginterest at rates sufficient to provide for the timely payment of the principal amount and redemption premium, ifany, of such Bonds plus interest thereon to the date of maturity or redemption; provided, however, that if any of suchBonds are to be redeemed prior to their respective dates of Stated Maturity, provision must have been made for

giving notice of redemption as provided in the Bond Order. Upon such deposit, such Bonds shall no longer beregarded to be outstanding or unpaid. Any surplus amounts not required to accomplish such defeasance shall bereturned to the County.

Bondholders Remedies

The Order does not provide for the appointment of a trustee to represent the interests of the Bondholders upon anyfailure of the County to perform in accordance with the terms of the Order or upon any other condition and, in theevent of any such failure to perform, the registered owners would be responsible for the initiation and cost of anylegal action to enforce performance of the Order. Furthermore, the Order does not establish specific events ofdefault with respect to the Bonds and, under State law, there is no right to the acceleration of maturity of the Bondsupon the failure of the County to observe any covenant under the Order. A registered owner of Bonds could seek ajudgment against the County if a default occurred in the payment of principal of or interest on any such Bonds;however, such judgment could not be satisfied by execution against any property of the County and a suit for

monetary damages could be vulnerable to the defense of sovereign immunity. A registered owners only practicalremedy, if a default occurs, is a mandamus or mandatory injunction proceeding to compel the County to levy, assessand collect an annual ad valorem tax sufficient to pay principal of and interest on the Bonds as it becomes due orperform other material terms and covenants contained in the Order. In general, Texas courts have held that a writ ofmandamus may be issued to require a public official to perform legally imposed ministerial duties necessary for theperformance of a valid contract, and Texas law provides that, following their approval by the Attorney General andissuance, the Bonds are valid and binding obligations for all purposes according to their terms. However, theenforcement of any such remedy may be difficult and time consuming and a registered owner could be required toenforce such remedy on a periodic basis.


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The County is also eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code (Chapter9). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledgedsource of revenues, the pledge of taxes in

Montgomery County Road Bonds Series 2008B

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Transcript of Montgomery County Road Bonds Series 2008B