Runway-Montgomery Co BONDS CO Ser 2012

7/31/2019 Runway-Montgomery Co BONDS CO Ser 2012

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OFFICIAL STATEMENTDated February 29, 2012

In the opinion of Bond Counsel, interest on the Obligations is excludable from gross income for federal income tax purposes

under existing law, subject to the matters described under TAX MATTERS herein, and is not includable in the federal

alternative minimum taxable income of individuals. See TAX MATTERS for a discussion of the opinion of Bond Counsel,

including the alternative minimum tax consequences for corporations.

NEW ISSUE: BOOK-ENTRY-ONLY Ratings: S&P ...................................................................... AAMoodys .............................................................Aa1

$14,925,000MONTGOMERY COUNTY, TEXAS

Certificates of ObligationSeries 2012


Limited Tax Refunding Bonds,Series 2012

Dated: March 1, 2012 Due: March 1, as shown on the inside cover page hereof

The $14,925,000 Montgomery County, Texas, Certificates of Obligation, Series 2012 (the Certificates) and the $30,885,000Montgomery County, Texas, Limited Tax Refunding Bonds, Series 2012 (the Bonds, and together with the Certificates, theObligations), are being issued by the Commissioners Court of Montgomery County (the County) pursuant to the terms oftwo separate orders adopted by the Commissioners Court of the County in which the Commissioners Court delegated pricing ofthe Obligations and certain other matters to a Pricing Officer who approved and executed a Pricing Certificate with respect toeach series of the Obligations which completed their sale. The Certificates are payable from an annual ad valorem tax levied onall taxable property in the County, within the limits prescribed by law, and by a pledge of a subordinate lien on the net revenuesof the Countys park system. The Bonds are payable from an annual ad valorem tax levied on all taxable property in the County,within the limits prescribed by law. See THE OBLIGATIONS Source of Payment and TAXING PROCEDURES ANDTAX BASE ANALYSIS Tax Rate Limitations.

Interest on the Obligations will accrue from March 1, 2012, and will be payable March 1 and September 1 of each year,commencing September 1, 2012. The Obligations will initially be registered and delivered only to Cede & Co., the nominee ofThe Depository Trust Company (DTC) pursuant to the Book-Entry-Only System described herein. Beneficial ownership of theObligations may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Obligationswill be made to the beneficial owners thereof. Principal of and interest on the Obligations will be payable by Regions Bank,Houston, Texas (the Paying Agent/Registrar) to Cede & Co., which will make distribution of the amounts so paid to thebeneficial owners of the Obligations. See THE OBLIGATIONS - Book-Entry-Only System herein. Interest on theObligations is payable to the registered owners (initially Cede & Co.) appearing on the registration books of the PayingAgent/Registrar on the 15th day of the month preceding each interest payment date (the Record Date). See THEOBLIGATIONS - General.

The Obligations maturing on March 1, 2022 and thereafter are subject to optional redemption by the County in whole, or from

time to time in part, on March 1, 2021 or any date thereafter at a price of par plus accrued interest to the date of redemption. SeeTHE OBLIGATIONS - Optional Redemption.

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

Proceeds from the sale of the Certificates will be used for (1) renovation and remodeling of the County Courthouse;(2) renovations, remodeling and improvements and the purchase of furniture, fixtures and equipment for various countybuildings, facilities and parks, including Precinct 2 and Precinct 4 offices, Precinct 2 and Precinct 4 Community Centers, SpringCreek Greenway, a Precinct 4 concession stand, the County Animal Shelter, the County Jury Assembly Room and a Countylibrary; (3) construction and renovation of runway, taxiway and water and sewer improvements at Lone Star Executive Airport;(4) the purchase of land and buildings for a forensic services facility to be located at 201 Hilbig Road, Conroe, Texas andrenovations, remodeling and improvements and the purchase of furniture, fixtures and equipment related thereto; (5) energy-related renovations, remodeling and improvements and the purchase of energy-related furniture, fixtures and equipment atvarious County buildings; (6) the purchase of land and buildings for County offices to be located 115 Business Park Drive,Willis, Texas; (7) renovations, remodeling and improvements and the purchase of furniture, fixtures and equipment for theCounty Jail; and (8) for professional services in connection with the above listed projects and costs of issuance of the Certificates.Proceeds from the sale of the Bonds will be used to refund and defease certain outstanding obligations as described on Schedule I- Schedule of Refunded Obligations (the Refunded Obligations) and to pay costs of issuance of the Bonds. See THEOBLIGATIONS Sources and Uses of Funds. See PLAN OF FINANCE Purpose.

The Obligations are offered when, as and if issued by the County and accepted by the Underwriters, subject to the approvingopinion of the Attorney General of the State of Texas and the opinion of Fulbright & Jaworski L.L.P., Houston, Texas, BondCounsel. Certain legal matters 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, Counsel for theUnderwriters. It is expected that the Obligations will be delivered through the facilities of DTC on or about March 27, 2012.

FirstSouthwestWells Fargo Securities Jefferies & Company


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PRINCIPAL AMOUNTS, MATURITIES, INTEREST RATES AND PRICES

MONTGOMERY COUNTY, TEXAS

$14,925,000 Certificates of Obligation, Series 2012

Maturity(March 1)

PrincipalAmount

InterestRate (%)

InitialYield (%)(b)

CUSIP(c)Nos.

613681

2013 $ 505,000 2.000 0.330 L782014 505,000 2.000 0.460 L862015 520,000 3.000 0.640 L942016 525,000 3.000 0.780 M282017 550,000 2.000 0.980 M362018 555,000 2.000 1.280 M442019 570,000 2.000 1.580 M512020 230,000 2.125 1.930 M692021 255,000 2.375 2.140 M772022(a) 910,000 3.000 2.300 M852023(a) 945,000 3.000 2.560 M932024(a) 970,000 3.000 2.670 N272025(a) 1,030,000 5.000 2.620 N352026(a) 1,080,000 5.000 2.730 N432027(a) 745,000 3.000 3.120 N502028(a) 990,000 3.000 3.190 N682029(a) 945,000 3.125 3.270 N762030(a) 985,000 3.125 3.340 N842031(a) 1,040,000 4.000 3.380 N922032(a) 1,070,000 4.000 3.460 P25

____________________________(a) The Certificates maturing on March 1, 2022, and thereafter are subject to optional redemption by the County in whole, or

from time to time in part, on March 1, 2021, or any date thereafter at a price of par plus accrued interest to the date ofredemption. See THE OBLIGATIONS - Optional Redemption.

(b) The initial reoffering yields of the Certificates are furnished by the Underwriters (as defined herein) and represent the initialoffering yields to the public, which may be changed by the Underwriters at any time.

(c) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP GlobalService, managed by Standard and Poors Financial Services LLC on behalf of the American Bankers Association. Thisdata is not intended to create a database and does not serve in any way as a substitute for the CUSIP services Neither theCounty, the Financial Advisor, nor the Underwriters are responsible for the selection or correctness of the CUSIP numbersset forth herein.


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$30,885,000Limited Tax Refunding Bonds, Series 2012

Maturity

(March 1)

Principal

Amount

Interest

Rate (%)

Initial

Yield (%)(b)

CUSIP(c)Nos.

6136812013 $ 485,000 2.000 0.330 P332014 1,600,000 3.000 0.460 P412015 1,835,000 4.000 0.640 P582016 1,910,000 4.000 0.780 P662017 1,345,000 4.000 0.980 P742018 1,305,000 4.000 1.280 P822019 1,760,000 5.000 1.580 P902020 1,815,000 5.000 1.930 Q242021(a)(d) 1,270,000 5.000 2.140 Q322021(a)(d) 500,000 3.000 2.140 Q992022(a) 1,815,000 5.000 2.300 Q402023(a) 625,000 3.000 2.560 Q572024(a) 645,000 3.000 2.670 Q652025(a) 6,815,000 5.000 2.620 Q732026(a) 7,160,000 5.000 2.730 Q81

_____________________________(a) The Bonds maturing on March 1, 2022, and thereafter are subject to optional redemption by the County in whole, or from

time to time in part, on March 1, 2021, or any date thereafter at a price of par plus accrued interest to the date ofredemption. See THE OBLIGATIONS - Optional Redemption.

(b) The initial reoffering yields of the Bonds are furnished by the Underwriters (as defined herein) and represent the initialoffering yields to the public, which may be changed by the Underwriters at any time.

(c) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP GlobalService, managed by Standard and Poors Financial Services LLC on behalf of the American Bankers Association. Thisdata is not intended to create a database and does not serve in any way as a substitute for the CUSIP services Neither theCounty, the Financial Advisor, nor the Underwriters are responsible for the selection or correctness of the CUSIP numbers

set forth herein.(d) Indicates a bifurcated maturity.


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COUNTY OFFICIALS

Elected Officials

Commissioner PositionYearsServed

Terms ExpireDecember 31

Alan B. Sadler County Judge 22 2014Mike Meador Commissioner, Precinct 1 18 2012Craig Doyal Commissioner, Precinct 2 9 2014Ernest E. Chance Commissioner, Precinct 3 25 2012Ed Rinehart Commissioner, Precinct 4 12 2014

Other Elected and Appointed Officials

Name Position

J. R. Moore, Jr. Tax Assessor CollectorMartha N. Gustavsen County TreasurerPhyllis L. Martin County AuditorDavid Walker County AttorneyMark Turnbull County Clerk

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 ..........................................................................................................................BOSC, Inc.Houston, 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 to

do so or to any person to whom it is unlawful to make such offer or solicitation.

NEITHER THE COUNTY, ITS FINANCIAL ADVISOR NOR THE UNDERWRITERS MAKE ANYREPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION CONTAINED IN THISOFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY (DTC) OR ITS BOOK-ENTRY-ONLY SYSTEM.

THE OBLIGATIONS ARE EXEMPT FROM REGISTRATION WITH THE SECURITIES AND EXCHANGECOMMISSION AND CONSEQUENTLY HAVE NOT BEEN REGISTERED THEREWITH. THEREGISTRATION, QUALIFICATION, OR EXEMPTION OF THE OBLIGATIONS IN ACCORDANCE WITHAPPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THESE SECURITIESHAVE BEEN REGISTERED, QUALIFIED, OR EXEMPTED SHOULD NOT BE REGARDED AS ARECOMMENDATION THEREOF.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECTTRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OBLIGATIONS AT ALEVEL ABOVE THAT WHICH MIGHT PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IFCOMMENCED, 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 the

Underwriters do not guarantee the accuracy or completeness of such information.


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TABLE OF CONTENTS

Page Page

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

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

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

Purpose ...................................................................... 6Refunded Obligations................................................ 6Sources and Uses of Funds ....................................... 7

THE OBLIGATIONS..................................................... 7General....................................................................... 7Record Date for Interest Payment............................. 8Optional Redemption ................................................ 8Book-Entry-Only System.......................................... 8

Authority for Issuance............................................. 11Source of Payment of the Obligations .................... 11Paying Agent/Registrar ........................................... 11Transfer, Exchange and Registration...................... 12Amendments............................................................ 12Defeasance of Obligations ...................................... 12Obligation-holders Remedies ................................ 12Future Borrowing.................................................... 13Legal Investments.................................................... 13Investment Policies.................................................. 14

DEBT SERVICE REQUIREMENTS.......................... 16COUNTY DEBT........................................................... 17

General..................................................................... 17

Indebtedness ............................................................ 17Estimated Overlapping Debt Statement.................. 17Other Obligations.................................................... 20

TAXING PROCEDURES AND TAX BASEANALYSIS............................................................. 20General..................................................................... 20Property Tax Code and County-Wide Appraisal

District ............................................................... 20Property Subject to Taxation by the County........... 21Residential Homestead Exemptions ....................... 21Freeport Goods and Goods-in-Transit Exemption . 21Tax Abatement ........................................................ 21Tax Increment Reinvestment Zone......................... 22Pollution Control ..................................................... 22

Valuation of Property for Taxation......................... 22

County and Taxpayer Remedies ............................. 23Levy and Collection of Taxes................................. 23Countys Rights in the Event of Tax Delinquencies23Tax Rate Limitations............................................... 24Historical Analysis of Tax Collection..................... 25Delinquent Tax Collection Procedures................... 26Top Ten Principal Taxpayers.................................. 27Tax Adequacy.......................................................... 27

SELECTED FINANCIAL DATA................................ 28Historical Operations of the Countys General

Fund................................................................... 28Special Revenue Funds ........................................... 29Debt Service Funds ................................................. 30Pension Fund ........................................................... 30

THE COUNTY ............................................................. 31Administration of the County ................................. 31Commissioners Court............................................. 31Consultants .............................................................. 31

TAX MATTERS........................................................... 31Tax Exemption ........................................................ 31Tax Accounting Treatment of Discount and

Premium on Certain Obligations ...................... 32CONTINUING DISCLOSURE OF INFORMATION 33

Annual Reports........................................................ 34Material Event Notices............................................ 34Limitations and Amendments ................................. 35Compliance with Prior Undertakings ..................... 35

OTHER CONSIDERATIONS ..................................... 36Environmental Regulations..................................... 36Air Quality............................................................... 36Groundwater Conservation District ........................ 36

GENERAL CONSIDERATIONS................................ 37Sources and Compilation of Information................ 37Updating of Official Statement ............................... 37

OTHER INFORMATION............................................ 37Litigation ................................................................. 37Registration and Qualification of Obligations for

Sale..................................................................... 37Legal Investments and Eligibility To Secure Public

Funds in Texas................................................... 37Legal Opinions ........................................................ 38Financial Advisor .................................................... 38Forward-Looking Statements Disclaimer............... 38Miscellaneous.......................................................... 39Concluding Statement ............................................. 39

Schedule I - Schedule of Refunded ObligationsAppendix A - Economic and Demographic InformationAppendix B - Excerpts from Comprehensive Annual Financial Report of Montgomery County, Texas for the Fiscal Year

Ended September 30, 2010Appendix C - Form of Legal Opinions


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INTRODUCTION

This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuanceof $14,925,000 Montgomery County, Texas, Certificates of Obligation, Series 2012 (the Certificates) and the$30,885,000 Montgomery County, Texas, Limited Tax Refunding Bonds, Series 2012 (the Bonds, and togetherwith the Certificates, the Obligations). Capitalized terms used in this Official Statement have the same meaningsassigned to such terms in the orders authorizing the issuance of the Obligations, except as otherwise indicated

herein. There follows in this Official Statement descriptions of the Obligations and certain information regarding theCounty and its finances. All descriptions of documents contained herein are only summaries and are qualified intheir entirety by reference to each such document. Copies of such documents may be obtained from the CountysFinancial Advisor, BOSC, Inc., 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 Obligations to the Underwriters and thereafter only as specified in GENERAL CONSIDERATIONS Updating of Official Statement and CONTINUING DISCLOSURE OF INFORMATION.

SALE AND DISTRIBUTION OF THE OBLIGATIONS

Sale of the Obligations

First Southwest Company, Wells Fargo Bank, N.A. and Jefferies & Company (collectively, the Underwriters)have agreed to purchase the Certificates from the County pursuant to a purchase agreement with the County for aprice of $15,521,736.85 (representing the par amount of the Certificates, plus a net premium of $686,286.85, andless an Underwriters discount of $89,550.00) plus accrued interest on the Certificates to the date of delivery. TheUnderwriters obligation is to purchase all of the Certificates if any are purchased.

The Underwriters have agreed to purchase the Bonds from the County pursuant to a purchase agreement with theCounty for a price of $35,723,134.90 (representing the par amount of the Bonds, plus a premium of $5,023,444.90,less an Underwriters discount of $185,310.00) plus accrued interest on the Bonds to the date of delivery. TheUnderwriters obligation is to purchase all of the Bonds if any are purchased.

Prices and Marketability

The delivery of the Obligations is conditioned upon the receipt by the County of a certificate executed and deliveredby the Underwriters on or before the date of delivery of the Obligations stating the prices at which a substantialamount of the Obligations of each maturity have been sold to the public. For this purpose, the term public shallnot include any person who is a bondhouse, broker or similar person acting in the capacity of underwriter orwholesaler. The County has no control over trading of the Obligations after a bona fide offering of the Obligationsis made by the Underwriters at the yields specified on the inside cover page hereof. Information concerningreoffering yields or prices is the responsibility of the Underwriters.

The prices and other terms respecting the offering and sale of the Obligations may be changed from time to time bythe Underwriters after the Obligations are released for sale, and the Obligations may be offered and sold at pricesother than the initial offering prices, including sales to dealers who may sell the Obligations into investmentaccounts. IN CONNECTION WITH THE OFFERING OF THE OBLIGATIONS, THE UNDERWRITERS MAYOVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICEOF THE OBLIGATIONS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE

OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

Securities Laws

No registration statement relating to the Obligations has been filed with the Securities and Exchange Commissionunder the Securities Act of 1933, as amended, in reliance upon the exemptions provided thereunder. TheObligations have not been registered or qualified under the Securities Act of Texas in reliance upon variousexemptions contained therein; nor have the Obligations been registered or qualified under the securities laws of anyother jurisdiction. The County assumes no responsibility for registration or qualification of the Obligations underthe securities laws of any other jurisdiction in which the Obligations may be offered, sold or otherwise transferred.


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This disclaimer of responsibility for registration or qualification for sale or other disposition of the Obligations shallnot be construed as an interpretation of any kind with regard to the availability of any exemption from securitiesregistration or qualification provisions in such other jurisdictions.

Ratings

In connection with the sale of the Obligations, the County has made application to Moodys Investors Service, Inc.(Moodys) and Standard & Poors Ratings Group, A Division of the McGraw-Hill Companies, Inc. (S&P) forratings on the Obligations, and the ratings of Aa1 and AA respectively, have been assigned to the Obligations.An explanation of the significance of such ratings may be obtained from Moodys and S&P. The ratings reflect onlythe view of Moodys and S&P, and the County makes no representation as to the appropriateness of 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 theObligations.


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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 (the County), a political subdivision of

the State of Texas. See THE COUNTY.The Certificates .......... ........... ........... ........... .. $14,925,000 Montgomery County, Texas Certificates of Obligation,

Series 2012 (the Certificates) are dated March 1, 2012 and matureMarch 1 in each of the years 2013 through 2032, inclusive. See THEOBLIGATIONS General.

The Bonds......... ........... ........... .......... ........... .. $30,885,000 Montgomery County, Texas, Limited Tax RefundingBonds, Series 2012 (the Bonds, and together with the Certificates, theObligations) are dated March 1, 2012 and mature March 1 in each ofthe years 2013 through 2026, inclusive, See THE OBLIGATIONS General

Payment of Interest........................................ Interest on the Obligations accrues from March 1, 2012, and is payableSeptember 1, 2012, and each March 1 and September 1 thereafter until

maturity or upon prior redemption. See THE OBLIGATIONS General.

Optional Redemption..................................... The Obligations maturing on March 1, 2022 and thereafter are subjectto optional redemption in whole, or from time to time in part, on March1, 2021, or any date thereafter at the price of par plus accrued interestto the date of redemption. See THE OBLIGATIONS OptionalRedemption.

Source of Payment.................. ........... ........... . Principal of and interest on the Certificates are payable from theproceeds of a continuing, direct annual ad valorem tax levied, withinthe limits prescribed by law, against all taxable property in the Countyand from the pledge of a subordinate lien on the net revenues of theCountys park system. Principal of and interest on the Bonds are

payable from the proceeds of a continuing, direct annual ad valorem taxlevied, within the limits prescribed by law against all taxable propertyin the County. See THE OBLIGATIONS Source of Payment andTAXING PROCEDURES AND TAX BASE ANALYSIS Tax RateLimitations.

Authorization of the Obligations ........... ........ The Certificates are being issued pursuant to Chapter 271, Texas LocalGovernment Code, as amended, Chapter 1371, Texas GovernmentCode, as amended, and an order passed by the Commissioners Courtof the County, in which the Commissioners Court delegated pricing ofthe Certificates and certain other matters to a Pricing Officer whoapproved and executed a Pricing Certificate which completed the saleof the Certificates (the order authorizing the Certificates and the PricingCertificate related thereto are jointly referred to as the Certificate

Order).

The Bonds are being issued pursuant to Chapter 1207, TexasGovernment Code, as amended, and an order passed by theCommissioners Court of the County, in which the CommissionersCourt delegated pricing of the Bonds and certain other matters to aPricing Officer who approved and executed a Pricing Certificatewhich completed the sale of the Bonds (the order authorizing the Bondsand the Pricing Certificate related thereto are jointly referred to as theBond Order). See THE OBLIGATIONS Authority for Issuance.


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Use of Proceeds ........... ........... ........... ........... . Proceeds of the sale of the Certificates will be used for (1) renovationand remodeling of the County Courthouse; (2) renovations, remodelingand improvements and the purchase of furniture, fixtures andequipment for various county buildings, facilities and parks, includingPrecinct 2 and Precinct 4 offices, Precinct 2 and Precinct 4 CommunityCenters, Spring Creek Greenway, a Precinct 4 concession stand, theCounty Animal Shelter, the County Jury Assembly Room and a Countylibrary; (3) construction and renovation of runway, taxiway and waterand sewer improvements at Lone Star Executive Airport; (4) thepurchase of land and buildings for a forensic services facility to belocated at 201 Hilbig Road, Conroe, Texas and renovations, remodelingand improvements and the purchase of furniture, fixtures andequipment related thereto; (5) energy-related renovations, remodelingand improvements and the purchase of energy-related furniture, fixturesand equipment at various County buildings; (6) the purchase of landand buildings for County offices to be located 115 Business Park Drive,Willis, Texas; (7) renovations, remodeling and improvements and thepurchase of furniture, fixtures and equipment for the County Jail; and(8) for professional services in connection with the above listedprojects and costs of issuance of the Certificates. Proceeds from the

sale of the Bonds will be used to refund and defease certain outstandingobligations and to pay costs of issuance of the Bonds. See PLAN OFFINANCE Purpose.

Tax Exemption ........... ........... ........... ........... .. In the opinion of Bond Counsel, subject to the matters described inTAX MATTERS herein, interest on the Obligations is excludablefrom gross income for federal income tax purposes under existing lawand is not includable in the computation of alternative minimumtaxable income for individuals. See TAX MATTERS herein for adiscussion of the opinion of Bond Counsel, including the alternativeminimum tax consequences for corporations.

Book-Entry-Only System ............ ........... ....... The definitive Obligations will be initially registered and deliveredonly to Cede & Co., the nominee of DTC pursuant to the Book-Entry-

Only System described herein. Beneficial ownership of the Obligationsmay be acquired in denominations of $5,000 or integral multiplesthereof. No physical delivery of the Obligations will be made to thebeneficial owners thereof. See THE OBLIGATIONS 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 on the Obligations .......... ........... ....... Moodys Investors Service, Inc. ............. ........... ........... ........... ...Aa1Standard & Poors Ratings Services ............................................AA

[Remainder of page intentionally left blank]


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SELECTED FINANCIAL INFORMATION

(Unaudited)

2011 Certified Taxable Assessed Valuation $ 35,119,747,375(a)

(100% of Market Value as of January 1, 2011)

See TAXING PROCEDURES AND TAX BASE ANALYSIS

Direct Debt:Outstanding Direct Debt (as of January 1, 2012) $ 456,800,000(b)

Plus: The Certificates 14,925,000Plus: The Bonds 30,885,000

Less: The Refunded Obligations 34,330,000

Total Direct Debt $ 468,280,000

Estimated Overlapping Debt $ 2,595,425,076Total Direct and Estimated Overlapping Debt $ 3,063,705,076

Interest & Sinking Fund Balance (as of December 31,2011) $28,242,694Ratio of Direct Debt to..: 2011 Certified Taxable Assessed Valuation ($35,119,747,375) 1.333%

First Quarter 2012 Estimated Population (462,144)(c) $ 1,013.28Ratio of Direct and Estimated

Overlapping Debt to: 2011 Certified Taxable Assessed Valuation ($35,119,747,375) 8.724%First Quarter 2012 Estimated Population (462,144)(c) $ 6,629.33

Estimated Annual Debt

Service Requirements: Average (2012-2039) $ 25,438,123(d)

Maximum (2013) $ 38,928,998(d)

_____________________________(a) Certified by the Montgomery Central Appraisal District (the Appraisal District).(b) The County anticipates that it will use the funds it receives pursuant to a Pass-Through Toll Agreement with the

Texas Department of Transportation to make debt service payments on the Countys $34,705,000 Unlimited TaxAdjustable Rate Road Bonds, Series 2008B, $56,190,000 Pass-Through Toll Revenue and Limited Tax Bonds,Series 2009 and $31,390,000 Limited Tax and Pass-Through Toll Revenue Bonds, Series 2010. However, suchfunds are not pledged to and do not secure the repayment of such bonds and the County is under no obligation touse such funds to pay debt service thereon . Additionally, the Pass-Through Toll Agreement revenues are subjectto annual appropriation by the State of Texas.

(c) Conroe Chamber of Commerce.(d) Assumes receipt of the Federal Subsidy of 35% on the Countys Certificates of Obligation, Taxable Series 2010B

(Direct Subsidy Build America Bond) (Mental Health Treatment Facility) and deposit of such Federal Subsidy

into the debt service fund.



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PRELIMINARYOFFICIAL STATEMENT

Relating to


Certificates of ObligationSeries 2012


Limited Tax Refunding Bonds,Series 2012

PLAN OF FINANCE

Purpose

Proceeds of the sale of the Certificates will be used for (1) renovation and remodeling of the County Courthouse; (2)renovations, remodeling and improvements and the purchase of furniture, fixtures and equipment for various countybuildings, facilities and parks, including Precinct 2 and Precinct 4 offices, Precinct 2 and Precinct 4 CommunityCenters, Spring Creek Greenway, a Precinct 4 concession stand, the County Animal Shelter, the County JuryAssembly Room and a County library; (3) construction and renovation of runway, taxiway and water and sewerimprovements at Lone Star Executive Airport; (4) the purchase of land and buildings for a forensic services facilityto be located at 201 Hilbig Road, Conroe, Texas and renovations, remodeling and improvements and the purchase of

furniture, fixtures and equipment related thereto; (5) energy-related renovations, remodeling and improvements andthe purchase of energy-related furniture, fixtures and equipment at various County buildings; (6) the purchase ofland and buildings for County offices to be located 115 Business Park Drive, Willis, Texas; (7) renovations,remodeling and improvements and the purchase of furniture, fixtures and equipment for the County Jail; and (8) forprofessional services in connection with the above listed projects and costs of issuance of the Certificates. Proceedsfrom the sale of the Bonds will be used to refund and defease certain outstanding obligations as described inSchedule I - Schedule of Refunded Obligations (the Refunded Obligations) and to pay costs of issuance of theBonds.

Refunded Obligations

The Refunded Obligations and interest due thereon are to be paid on the scheduled interest payment, call or maturitydates of each series of such obligations, as the case may be, from funds to be deposited with Regions Bank,Houston, Texas, authorized to do business in the State of Texas (the Escrow Agent), to the escrow fund (theEscrow Fund) created under the escrow agreement relating to the Refunded Obligations to be entered into by theCounty and the Escrow Agent (the Escrow Agreement).

The Bond Order (as hereinafter defined) provides that from the proceeds of the sale of the Bonds to theUnderwriters, the County will deposit with the Escrow Agent the amount necessary to accomplish the discharge andfinal payment of the Refunded Obligations. Such funds will be held by the Escrow Agent in the Escrow Fund andwill be used to purchase a portfolio of securities authorized by Section 1207.062, Texas Government Code, whichauthorized securities include direct noncallable obligations of the United States and noncallable obligations of anagency or instrumentality of the United States rated as to investment quality by a nationally recognized investmentrating firm not less than AAA or its equivalent and guaranteed by the full faith and credit of the United States ofAmerica (the Federal Securities). The Escrow Fund is irrevocably pledged to the payment of the principal of andinterest on the Refunded Obligations.

The County has covenanted to make timely deposits into the Escrow Fund, from lawfully available funds, of

additional funds in the amounts required to pay the principal of and interest on the Refunded Obligations should, forany reason, the cash balances on deposit or scheduled to be on deposit in the Escrow Fund be insufficient to makesuch payments.

Grant Thornton, LLP (the Verification Agent) will verify at the time of delivery the Bonds to the Underwritersthat the Federal Securities will mature and pay interest in such amounts which, together with uninvested funds, ifany, in the Escrow Fund will be sufficient to pay, when due, the principal of and interest on the RefundedObligations. Such maturing principal of and interest on the Federal Securities will not be available to pay theBonds. See VERIFICATION OF MATHEMATICAL COMPUTATIONS.


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In the opinion of Bond Counsel, by making the escrow deposits required by the Bond Order and the EscrowAgreement, the County will have made firm banking and financial arrangements for the discharge and final paymentand/or defeasance of the Refunded Obligations pursuant to the provisions of Chapter 1207, Texas GovernmentCode, as amended. Thereafter, the Refunded Obligations will be deemed to be fully paid and no longer outstanding,except for the purpose of being paid from the funds provided therefore pursuant to the Escrow Agreement.

Sources and Uses of Funds

The Certificates

Sources of FundsPar Amount $ 14,925,000.00Net Reoffering Premium 686,286.85Accrued Interest 34,883.78

Total Sources $ 15,646,170.63

Uses of FundsDeposit to Construction Fund $ 15,395,000.00Underwriters Discount 89,550.00Costs of Issuance 126,000.00Deposit to Interest and Sinking Fund 34,883.78

Rounding Amount 736.85Total Uses $ 15,646,170.63

The Bonds

Sources of FundsPar Amount $ 30,885,000.00Reoffering Premium 5,023,444.90Issuer Contribution 220,000.00Accrued Interest 100,991.94

Total Sources $ 36,229,436.84

Uses of Funds

Deposit to Escrow Fund $ 35,739,474.63Underwriters Discount 185,310.00Costs of Issuance 202,500.00Deposit to Interest and Sinking Fund 100,991.94Rounding Amount 1,160.27

Total Uses $ 36,229,436.84

THE OBLIGATIONS

General

The Obligations are dated March 1, 2012, and mature on March 1 in each of the years and in the amounts shown onthe inside cover page hereof. The Obligations will bear interest at the respective rates shown on the inside cover

page of this Official Statement, which interest will be computed on the basis of a 360-day year of twelve 30-daymonths, and will be payable on March 1 and September 1 (each an Interest Payment Date), commencingSeptember 1, 2012. The definitive Obligations will be issued only in fully registered form in any integral multipleof $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of TheDepository Trust Company (DTC) pursuant to the Book-Entry-Only System described herein. No physicaldelivery of the Obligations will be made to the beneficial owners thereof. Principal of and interest on theObligations will be payable by Regions Bank, Houston, Texas (the Paying Agent/Registrar) to Cede & Co., whichwill make distribution of the amounts so paid to the participating members of DTC for subsequent payment to thebeneficial owners of the Obligations. See Book-Entry-Only System herein.


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In the event the Book-Entry-Only-System is discontinued, the Obligations may be transferred and exchanged on thebond register kept by the Paying Agent/Registrar upon surrender and reissuance. The Obligations are exchangeablefor an equal principal amount of Obligations of the same maturity in any authorized denomination upon surrender ofthe Obligations to be exchanged at the principal payment office of the Paying Agent/Registrar. No service chargewill be made for any transfer, but the County may require payment of a sum sufficient to cover any tax orgovernmental charge payable in connection therewith.

Record Date for Interest Payment

The record date (Record Date) for the interest payable on the Obligations on any interest payment date means theclose of business on the fifteenth day of the preceding month.

In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record datefor such interest payment (a Special Record Date) will be established by the Paying Agent/Registrar, if and whenfunds for the payment of such interest have been received from the County. Notice of the Special Record Date andof the scheduled payment date of the past due interest (Special Payment Date, which shall be 15 days after theSpecial Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail,first class postage prepaid, to the address of each holder of a Obligation (Obligation-holder) appearing on theregistration books of the Paying Agent/Registrar at the close of business on the last business day next preceding thedate of mailing of such notice.

Optional Redemption

The County reserves the right, at its option, to redeem Obligations having stated maturities on or after March 1,2022 in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on March 1, 2021 or anydate thereafter at the par value thereof plus accrued interest to the date of redemption. If less than all of theCertificates or the Bonds are to be redeemed, the County shall determine the principal amount and maturities to beredeemed and shall direct the Paying Agent/Registrar to select by lot or other customary method that results in arandom selection, the Certificates or Bonds, as applicable, or portions thereof within a maturity, to be redeemed.

Not less than 30 days prior to a redemption date for the Obligations, the County shall cause a notice of redemptionto be sent by United States mail, first class, postage prepaid, to the registered owners of the Obligations to beredeemed, in whole or in part, at the address of the registered owner appearing on the registration books of thePaying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice.ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN,WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO

GIVEN, THE BONDS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THESPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY OBLIGATION OR PORTIONTHEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH OBLIGATION ORPORTION THEREOF SHALL CEASE TO ACCRUE.

The Paying Agent/Registrar and the County, so long as a Book-Entry-Only System is used for the Obligations, willsend any notice of redemption, notice of proposed amendment to the Orders or other notices with respect to theObligations only to DTC. Any failure by DTC to advise any DTC participant, or of any DTC participant or indirectparticipant to notify the beneficial owner, shall not affect the validity of the redemption of the Obligations called forredemption or any other action premised on any such notice. Redemption of portions of the Obligations by theCounty will reduce the outstanding principal amount of such Obligations held by DTC.

Book-Entry-Only System

This section describes how ownership of the Obligations is to be transferred and how the principal of, premium, if

any, and interest on the Obligations are to be paid to and credited by The Depository Trust Company (DTC),

New York, New York, while the Obligations are registered in its nominees name. The information in this section

concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such

as this Official Statement. The 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

Obligations, 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 Obligations), 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


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manner described in this Official Statement. The current rules applicable to DTC are on file with the Securities and

Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on

file with DTC.

DTC will act as securities depository for the Obligations. The Obligations will be issued as fully-registeredsecurities registered in the name of Cede & Co. (DTCs partnership nominee) or such other name as may berequested by an authorized representative of DTC. One fully registered certificate will be issued for each maturity of

the Obligations, in the aggregate principal amount of each such maturity, and will be deposited with DTC.

DTC, the worlds largest securities depository, is a limited-purpose trust company organized under the New YorkBanking 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 book-entry 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,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 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 rating of AA+. The DTC Rules applicable to its Participants are on filewith the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Obligations under the DTC system must be made by or through Direct Participants, which will receivea credit for the Obligations on DTCs records. The ownership interest of each actual purchaser of each Bond(Beneficial Owner) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Ownerswill not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected toreceive written confirmations 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 ofownership interests in the Obligations are to be accomplished by entries made on the books of Direct and IndirectParticipants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing theirownership interests in the Obligations, except in the event that use of the book-entry system for the Obligations isdiscontinued.

To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are registered in thename of DTCs partnership nominee, Cede & Co., or such other name as may be requested by an authorizedrepresentative of DTC. The deposit of Obligations with DTC and their registration in the name of Cede & Co. orsuch other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actualBeneficial Owners of the Obligations; DTCs records reflect only the identity of the Direct Participants to whoseaccounts such Obligations are credited, which may or may not be the Beneficial Owners. The Direct and IndirectParticipants 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 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 Obligations may wish to take certain steps to augment the transmission to them of notices ofsignificant events with respect to the Obligations, such as redemptions, tenders, defaults, and proposed amendmentsto the Bond documents. For example, Beneficial Owners of Obligations may wish to ascertain that the nomineeholding the Obligations for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In thealternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent/Registrar andrequest that copies of notices be provided directly to them.


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Redemption notices shall be sent to DTC. If less than all of the Obligations within an issue are being redeemed,DTCs practice is to determine by lot the amount of the interest of each Direct Participant in such issue to beredeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Obligationsunless authorized by a Direct Participant in accordance with DTCs MMI Procedures. Under its usual procedures,DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assignsCede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Obligations are creditedon the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds and principal and interest payments on the Obligations will be made to Cede & Co., or suchother nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit DirectParticipants accounts upon DTCs receipt of funds and corresponding detail information from the District or thePaying Agent/Registrar, on payable dates 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 in 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, the Paying Agent or the District, subject to anystatutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds andprincipal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of

DTC) is the responsibility of the District or the Paying Agent/Registrar, disbursement of such payments to DirectParticipants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will bethe responsibility of Direct and Indirect Participants.

A Beneficial Owner shall give notice to elect to have its Obligations purchased or tendered, through its Participant,to the Tender Agent, and shall effect delivery of such Obligations by causing the Direct Participant to transfer theParticipants interest in the Obligations, on DTCs records, to the Tender Agent. The requirement for physicaldelivery of Obligations in connection with an optional tender or a mandatory purchase will be deemed satisfiedwhen the ownership rights in the Obligations are transferred by Direct Participants on DTCs records and followedby a book-entry credit of tendered Obligations to the Tender Agents DTC account.

DTC may discontinue providing its services as depository with respect to the Obligations at any time by givingreasonable notice to the District or the Paying Agent/Registrar. Under such circumstances, in the event that a

successor depository is not obtained, Bond certificates are required to be printed and delivered.

The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successorsecurities depository). In that event, Bond certificates will be printed and delivered.

The information in this section concerning DTC and DTCs book-entry system has been obtained from sources thatthe District believes to be reliable, but the District takes not responsibility for the accuracy thereof.

Use of Certain Terms in Other Sections of this Official Statement

In reading this Official Statement it should be understood that while the Obligations are in the Book-Entry-OnlySystem, references in other sections of this Official Statement to registered owners should be read to include theperson for which the Participant acquires an interest in the Obligations, but (i) all rights of ownership must beexercised through DTC and the Book-Entry-Only System, and (ii) except as described above, notices that are to be

given to registered owners under the 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 Obligations will be issued to the registeredowners and the Obligations will be subject to transfer, exchange and registration provisions as set forth in the Orderand summarized under Transfer, Exchange and Registration below.


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Authority for Issuance

The Certificates are being issued pursuant to Chapter 271, Texas Local Government Code, as amended, Chapter1371, Texas Government Code, as amended, and an order passed by the Commissioners Court of the County, inwhich the Commissioners Court delegated pricing of the Certificates and certain other matters to a PricingOfficer who approved and executed a Pricing Certificate which completed the sale of the Certificates (the orderauthorizing the Certificates and the Pricing Certificate related thereto are jointly referred to as the Certificate

Order). The Bonds are being issued pursuant to Chapter 1207, Texas Government Code, as amended, and an orderpassed by the Commissioners Court of the County, in which the Commissioners Court delegated pricing of theBonds and certain other matters to a Pricing Officer who approved and executed a Pricing Certificate whichcompleted the sale of the Bonds (the order authorizing the Bonds and the Pricing Certificate related thereto arejointly referred to as the Bond Order). The Certificate Order and the Bond Order are collectively referred toherein as the Orders.

Source of Payment of the Obligations

The Obligations are payable from the proceeds of a continuing, direct annual ad valorem tax levied, within the limitsprescribed by law, against taxable property located within the County. Article VIII, Section 9 of the TexasConstitution imposes a limit of $0.80 per $100 assessed valuation for all purposes of a countys General Fund,Permanent Improvement Fund, Road and Bridge Fund and Jury Fund including debt service on certain bonds,warrants, certificates of obligation or other debt issued against such funds. Administratively, the Attorney General

of Texas will not approve limited tax obligations in an amount which produces debt service requirements exceedingthat which can be paid from $0.40 of such $0.80 maximum tax rate calculated at 90% collection. The Obligationsare limited tax obligations payable from this constitutional tax. The issuance of the Obligation will not exceed theconstitutionally authorized taxable rate stated above. See also, TAXING PROCEDURES AND TAX BASEANALYSIS - Tax Rate Limitations.

The Certificates are further payable from a pledge of a subordinate lien on the revenues of the Countys park systemafter payment of all operation and maintenance expenses thereof (the Net Revenues). The lien on such NetRevenues is junior and subordinate in all respects to the pledge of Net Revenues to the payment of any obligation ofthe County heretofore or hereafter issued by the County and designated as having a pledge senior to the pledge ofthe Net Revenues of the Certificates. The County anticipates paying the principal and interest on the Certificatesfrom ad valorem taxes as described above and the County makes no assurances that there will be any Net Revenuesof the park system available to pay debt service on the Certificates. In the Certificate Order authorizing the issuanceof the Certificates, the County reserves the right to issue additional obligations payable in whole or in part from the

Net Revenues.

Paying Agent/Registrar

The initial Paying Agent/Registrar is Regions Bank, Houston, Texas. In the Orders, the County retains the right toreplace the Paying Agent/Registrar. The County covenants to maintain and provide a Paying Agent/Registrar at alltimes until the Obligations are duly paid and any successor Paying Agent/Registrar shall be a commercial bank ortrust company organized under the laws of the State or other entity duly qualified and legally authorized to serve asand perform the duties and services of Paying Agent/Registrar for the Obligations. Upon any change in the PayingAgent/Registrar for the Obligations, the County agrees to promptly cause a written notice thereof to be sent to eachregistered owner of the Obligations by United States mail, first class, postage prepaid, which notice shall also givethe address of the new Paying Agent/Registrar.

Principal of the Obligations is payable to the registered holder (the Registered Owner) at the designated corporatetrust office of the Paying Agent/Registrar upon surrender of the Obligations for payment at maturity or prior

redemption. Interest on the Obligations is payable by check or draft, dated as of the interest payment date, andmailed by the Paying Agent/Registrar to the Registered Owners as shown on the records of the PayingAgent/Registrar at the close of business on the Record Date (identified below) or by such other arrangementacceptable to the Paying Agent/Registrar requested by and at the expense and risk of the Registered Owner. If thedate for the payment of the principal of or interest on the Obligations shall be a Saturday, Sunday, a legal holiday, ora day when banking institutions in the city where the designated corporate office of the Paying Agent/Registrar isnot such a Saturday, Sunday, legal holiday, or day when banking institutions are authorized to close; and paymenton such date shall have the same force and effect as if made on the original date payment was due.


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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 Obligations may be transferred and exchanged on the registration books of thePaying Agent/Registrar only upon presentation and surrender to the Paying Agent/Registrar and such transfer orexchange shall be without expense or service charge to the registered owner, except for any tax or othergovernmental charges required to be paid with respect to such registration, exchange and transfer. Obligations may

be assigned by the execution of an assignment form on the respective Obligations or by other instrument of transferand assignment acceptable to the Paying Agent/Registrar. See Book-Entry-Only System herein for a descriptionof the system to be utilized initially in regard to ownership and transferability of the Obligations.

Amendments

The County may, without the consent of or notice to any Obligations-holders, from time to time and at any time,amend the Orders in any manner not detrimental to the interests of the Obligations-holders, including the curing ofany ambiguity, inconsistency, or formal defect or omission herein. In addition, the County may, with the consent ofObligation-holders holding a majority in aggregate principal amount of the Obligations then Outstanding, amend,add to, or rescind any of the provisions of the Orders; provided that, without the consent of all Obligation-holders ofOutstanding Obligations, no such amendment, addition, or rescission shall (1) extend the time or times of paymentof the principal of, premium, if any, and interest on the Obligations, reduce the principal amount thereof, theredemption price or the rate of interest thereon, or in any other way modify the terms of payment of the principal of,

premium, if any, or interest on the Obligations, (2) give any preference to any Obligation over any other Obligation,or (3) reduce the aggregate principal amount of Obligations required to be held by Obligation-holders for consent toany such amendment, addition, or rescission.

Defeasance of Obligations

The Orders provide that the County may defease the provisions thereof and discharge its obligation to theObligation-holders of any or all of the Obligations to pay principal, interest and redemption premium, if any, thereonin any manner now or hereafter permitted by law, including by depositing with the Registrar, or if authorized byTexas law with any national bank having trust powers and having combined capital and surplus of at least $50million or with the State Treasurer of the State either: (i) cash in an amount equal to the principal amount andredemption premium, if any, of such Obligations plus interest thereon to the 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 andinterest on which are guaranteed by, or, to the extent permitted by law, secured by the pledge of direct obligationsof, the United States of America, in principal amounts and maturities and bearing interest at rates sufficient toprovide for the timely payment of the principal amount and redemption premium, if any, of such Obligations plusinterest thereon to the date of maturity or redemption; provided, however, that if any of such Obligations are to beredeemed prior to their respective dates of stated maturity, provision must have been made for giving notice ofredemption as provided in the Orders. Upon such deposit, such Obligations shall no longer be regarded to beoutstanding or unpaid. Any surplus amounts not required to accomplish such defeasance shall be returned to theCounty.

Obligation-holders Remedies

The Orders do not provide for the appointment of a trustee to represent the interests of the Obligation-holders uponany failure of the County to perform in accordance with the terms of the Orders or upon any other condition and, inthe event of any such failure to perform, the Obligations-holders would be responsible for the initiation and cost ofany legal action to enforce performance of the Orders. Furthermore, the Orders do not establish specific events ofdefault with respect to the Obligations and, under State law, there is no right to the acceleration of maturity of the

Obligations upon the failure of the County to observe any covenant under the Orders. An Obligations-holder ofObligations could seek a judgment against the County if a default occurred in the payment of principal of or intereston any such Obligations; however, such judgment could not be satisfied by execution against any property of theCounty and a suit for monetary damages could be vulnerable to the defense of sovereign immunity. An Obligation-holders only practical remedy, if a default occurs, is a mandamus or mandatory injunction proceeding to compel theCounty to levy, assess and collect an annual ad valorem tax sufficient to pay principal of and interest on theObligations as it becomes due or perform other material terms and covenants contained in the respective Order. Ingeneral, Texas courts have held that a writ of mandamus may be issued to require a public official to perform legallyimposed ministerial duties necessary for the performance of a valid contract, and Texas law provides that, following


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their approval by the Attorney General and issuance, the Obligations are valid and binding obligations for allpurposes according to their terms. However, the enforcement of any such remedy may be difficult and timeconsuming and an Obligation-holder could be required to enforce such remedy on a periodic basis.

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 support of a general obligation of a bankrupt entity is not specifically

recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that wouldprohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or Obligation-holders of an entity which has sought protection under Chapter 9. Therefore, should the County avail itself ofChapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court(which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and theBankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceedingbrought before it. The opinion of Bond Counsel will note that all opinions relative to the enforceability of the Orderand the Obligations are qualified with respect to the customary rights of debtors relative to their creditors, includingrights afforded to creditors under the Bankruptcy Code.

Future Borrowing

Depending on the rate of development within the County, changes in assessed valuation and the amounts, interestrates, maturities and time of issuance of additional bonds or certificates, increases in the Countys annual ad valorem

tax rate may be required to provide for the payment of the principal of and interest on the Countys outstanding debt,including the Obligations and any future bonds or certificates of obligation the County may issue.

INVESTMENT AUTHORITY AND INVESTMENT OBJECTIVES OF THE COUNTY

The County invests its investable funds in investments authorized by Texas law in accordance with investmentpolicies approved by the Commissioners Court of the County. Both State law and the Countys investment policiesare subject to change from time to time.

Legal Investments

Under State law, the County is authorized to invest in (1) obligations of the United States or its agencies andinstrumentalities, including letters of credit; (2) direct obligations of the State or its agencies and instrumentalities;(3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States,the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other

obligations, the principal and interest of which is guaranteed or insured by or backed by the full faith and credit of,the State or the United States or their respective agencies and instrumentalities; (5) obligations of states, agencies,counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognizedinvestment rating firm not less than A or its equivalent; (6) bonds issued, assumed or guaranteed by the State ofIsrael; (7) (a) certificates of deposit and share certificates issued by a depository institution that has its main office ora branch office in the State of Texas, that are (i) guaranteed or insured by the Federal Deposit Insurance Corporationor the National Credit Union Share Insurance Fund or their respective successors, or are secured as to principal byobligations described in clauses (1) through (6) above or in any other manner and amount provided by law forCounty deposits, and (b) certificates of deposit or share certificates issued by a depository institution that has itsmain office or a branch office in the State of Texas that participate in the Certificate of Account Registry Service;(8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligationsdescribed in clause (1), and are placed through a primary government securities dealer or a financial institutiondoing business in the State, (9) securities lending programs if (i) the securities loaned under the program are 100%collateralized, a loan made under the program allows for termination at any time and a loan made under the program

is either secured by (a) obligations that are described in clauses (1) through (6) above, (b) irrevocable letters ofcredit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firmat not less than A or its equivalent or (c) cash invested in obligations described in clauses (1) through (6) above,clauses (11) through (13) below, or an authorized investment pool; (ii) securities held as collateral under a loan arepledged to the County, held in the Countys name and deposited at the time the investment is made with the Countyor a third party designated by the County; (iii) a loan made under the program is placed through either a primarygovernment securities dealer or a financial institution doing business in the State; and (iv) the agreement to lendsecurities has a term of one year or less, (10) certain bankers acceptances with the remaining term of 270 days orless, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by


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at least one nationally recognized credit rating agency, (11) commercial paper with a stated maturity of 270 days orless that is rated at least A-1 or P-1 or the equivalent by either (a) two nationally recognized credit rating agencies or(b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of creditissued by a U.S. or state bank, (12) no-load money market mutual funds registered with and regulated by theSecurities and Exchange Commission that have a dollar weighted average stated maturity of 90 days or less andinclude in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (13) no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturityof less than two years, invest exclusively in obligations described in the this paragraph, and are continuously rated asto investment quality by at least one nationally recognized investment rating firm of not less than AAA or itsequivalent. In addition, bond proceeds may be invested in guaranteed investment contracts that have a definedtermination date and are secured by obligations, including letters of credit, of the United States or its agencies andinstrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract, other thanthe prohibited obligations described in the next succeeding paragraph.

The County may invest in such obligations directly or through government investment pools that invest solely insuch obligations provided that the pools are rated no lower than AAA or AAA-m or an equivalent by at least onenationally recognized rating service. The County may also contract with an investment management firm registeredunder the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board toprovide for the investment and management of its public funds or other funds under its control for a term up to twoyears, but the County retains ultimate responsibility as fiduciary of its assets. In order to renew or extend such a

contract, the County must do so by order, ordinance, or resolution. The County is specifically prohibited frominvesting in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance ofthe underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment representsthe principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3)collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralizedmortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in amarket index.

Investment Policies

Under Texas law, the County is required to invest its funds under written investment policies that primarilyemphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the qualityand capability of investment management; and that include a list of authorized investments for County funds, themaximum allowable stated maturity of any individual investment, the maximum dollar-weighted average maturityallowed for pooled fund groups and methods to monitor the market price of such authorized investments. AllCounty funds must be invested consistent with a formally adopted Investment Strategy Statement that specificallyaddresses each funds investment. Each Investment Strategy Statement is required to describe its objectivesconcerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketabilityof each investment, (5) diversification of the portfolio, and (6) yield.

Under Texas law, County investments must be made with judgment and care, under prevailing circumstances, thata person of prudence, discretion, and intelligence would exercise in the management of the persons own affairs, notfor speculation, but for investment, considering the probable safety of capital and the probable income to bederived. At least quarterly, the investment officers of the County are required to submit an investment reportdetailing: (1) the investment position of the County, (2) the beginning market value, any additions and changes tomarket value and the ending value for each pooled fund group, (3) the book value and market value of eachseparately invested asset at the beginning and end of the reporting period, by the type of asset and fund type, (4) thematurity date of each separately invested asset having a maturity date, (5) the account or fund or pooled fund group

for which each individual investment was acquired, and (6) the compliance of the investment portfolio as it relatedto: (a) adopted investment strategy statements and (b) the provisions of Chapter 2256, Texas Government Code, asamended. No person may invest County funds without express written authority from the Commissioners Court ofthe County.

Under State law, the County is additionally required to: (1) annually review its adopted policies and strategies, (2)require any investment officers with personal business relationships or family relationships with firms seeking to sellsecurities to the County to disclose the relationship and file a statement with the Texas Ethics Commission and theCounty, (3) require the registered principal of firms seeking to sell securities to the County to: (a) receive and reviewthe Countys investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to


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preclude imprudent investment activities, and (c) deliver a written statement attesting to these requirements; (4) inconjunction with its annual financial audit, perform a compliance audit of the management controls on investmentsand adherence to the Countys investment policy, (5) restrict reverse repurchase agreements to not more than 90days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverserepurchase agreement, (6) restrict the investment in non-money market mutual funds in the aggregate to no morethan 15% of the Countys monthly average fund balance, excluding bond proceeds and reserves and other funds heldfor debt service, (7) require local government investment pools to conform to the new disclosure, rating, net assetvalue, yield calculation, and advisory board requirements and (8) provide specific investment training for theTreasurer, the chief financial officer (if not the Treasurer) and the investment officer.

The County has adopted an investment policy in accordance with State law. Under the current County investmentpolicy, the following instruments are the only authorized investments for County funds: Time Deposits; Certificatesof Deposit; Money Market Investment Accounts; Negotiable Order of Withdrawal (NOW) Accounts; United StatesTreasury Bills; United States Government Securities, as defined in Section 2256.009, Texas Government Code, asamended; fully collateralized direct repurchase agreements as defined in as defined in Section 2256.011, TexasGovernment Code, as amended; Discount Government Agencies, excluding Federal Home Loan MortgageCorporation (Freddie Mac); and, any Public Funds Pool authorized by State law. No funds of the County will beinvested in securities such as reverse repurchase agreements and the County will not trade in options or futurescontracts.

The Countys investment balances on December 31, 2011 were as follows:

Carrying Amount Market ValueU. S. Treasuries $ 18,050,853 $ 18,050,853

Government Agencies 5,086,810 5,086,810

State Treasurers Investment Pool (TEXPOOL) 10,595,246 10,595,246

Local Government Investment Pool (LONE-STAR) 11,883,716 11,883,716

Local Government Investment Pool (TexSTAR) 11,638,137 11,638,137

Money Market Mutual Fund (ICT) 26,421,736 26,421,736

Money Market Mutual Fund (AIM) 28,430,068 28,430,068

Money Market Mutual Fund (BPIF) 16,730,986 16,730,986

Total Investments $ 128,837,552 $ 128,837,552



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COUNTY DEBT

General

The following tables and calculations relate to the Obligations and to all other debt of the County. The County andvarious other political subdivisions of government which overlap all or a portion of the County are empowered to

incur debt to be paid from revenues raised or to be raised by taxation against all or a portion of the property withinthe County.

Indebtedness

2011 Certified Taxable Assessed Valuation..................................................................................... $ 35,119,747,375(100% of Market Value as of January 1, 2011)See TAXING PROCEDURES AND TAX BASE ANALYSIS

Direct Debt:Outstanding Direct Debt (as of January 1, 2012) $ 456,800,000(a)

Plus: Certificates 14,925,000Plus: Bonds 30,885,000Less: The Refunded Obligations 34,330,000

Total Direct Debt $ 468,280,000

Interest & Sinking Fund Balance (as of December 31, 2011) .......................................................... $ $28,242,694

______________________________(a) The County anticipates that it will use the funds it receives pursuant to a Pass-Through Toll Agreement with the

Texas Department of Transportation to make debt service payments on the Countys $34,705,000 Unlimited TaxAdjustable Rate Road Bonds, Series 2008B, $56,190,000 Pass-Through Toll Revenue and Limited Tax Bonds,Series 2009 and $31,390,000 Limited Tax and Pass-Through Toll Revenue Bonds, Series 2010. However suchfunds are not pledged to and do not secure the repayment of the such bonds and the County is under no obligationto use such funds to pay debt service thereon . Additionally, the Pass-Through Toll Agreement revenues aresubject to annual appropriation.

Estimated Overlapping Debt Statement

Other governmental entities whose boundaries overlap the County have outstanding bonds or other debt payablefrom ad valorem taxes levied against property within the County. The following statement of direct and estimatedoverlapping ad valorem tax debt was developed from information contained in Texas Municipal Reports,published by the Municipal Advisory Council of Texas. Except for the amounts relating to the County, the Countyhas not independently verified the accuracy or completeness of such information, and no person is entitled to relyupon such information as being accurate or complete. Furthermore, certain of the entities listed below may haveissued additional debt since the dates stated in this table, and such entities may have programs requiring the issuanceof substantial amounts of additional debt, the amount of which cannot be determined. Political subdivisionsoverlapping with the boundaries of the County are authorized by Texas law to levy and collect ad valorem taxes foroperation, maintenance and/or general revenue purposes in addition to taxes for payment of their debt, and some arepresently levying and collecting such taxes.

Gross Debt OverlappingTaxing Jurisdiction February 1, 2012 Percent Amount

Cleveland ISD $ 39,010,792 1.74% $ 678,788

Cleveland, City of 10,570,000 0.14% 14,798

Clovercreek MUD 1,435,000 100.00% 1,435,000

Conroe ISD 903,470,000 100.00% 903,470,000

Conroe, City of 105,360,000 100.00% 105,360,000

Corinthian Point MUD #2 505,000 100.00% 505,000


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Gross Debt Overlapping

Taxing Jurisdiction February 1, 2012 Percent Amount

E. Montgomery Co MUD #3 7,385,000 100.00% 7,385,000

East Plantation UD 3,135,000 100.00% 3,135,000

Far Hills UD 2,520,000 100.00% 2,520,000

Grand Oaks MUD 1,895,000 100.00% 1,895,000

Harris-Montgomery Co MUD # 386 71,405,000 13.14% 9,382,617

Houston, City of 3,188,440,000 0.22% 7,014,568

Kings Manor MUD 16,135,000 67.58% 10,904,033

Lazy River Improvement Dist 910,000 100.00% 910,000

Lone Star College System 523,190,000 25.21% 131,896,199

Magnolia ISD 162,575,459 100.00% 162,575,459

Magnolia, City of 1,995,000 100.00% 1,995,000

Montgomery Co DD # 10 9,170,000 100.00% 9,170,000

Montgomery Co MUD # 7 6,545,000 100.00% 6,545,000




Montgomery Co MUD # 24 105,000 100.00% 105,000





















Montgomery Co UD # 2 6,355,000 100.00% 6,355,000

Montgomery Co UD # 3 560,000 100.00% 560,000

Montgomery Co UD # 4 6,550,000 100.00% 6,550,000

Montgomery WC&ID # 1 11,435,000 100.00% 11,435,000

Montgomery ISD 137,028,671 100.00% 137,028,671

Montgomery, City of 3,750,000 100.00% 3,750,000

New Caney ISD 202,079,257 97.60% 197,229,355

New Caney MUD 19,220,000 100.00% 19,220,000

Oak Ridge N, City of 6,060,000 100.00% 6,060,000

Panorama Village, City of 3,650,000 100.00% 3,650,000

Point Aquarius MUD 11,125,000 100.00% 11,125,000


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Runway-Montgomery Co BONDS CO Ser 2012

Documents

Transcript of Runway-Montgomery Co BONDS CO Ser 2012