Montgomery County Texas Road Bonds Ser2006B

REMARKETING MEMORANDUM DATED AUGUST 19, 2009
Upon the original date of delivery of the Bonds, Bond Counsel delivered its opinions to the effect that, assuming continuing compliance by the County after the
date of such opinions with certain covenants described herein, interest on each of the Series 2008B Bonds and the Series 2006B Bonds during their respective
Initial Rate Periods (1) will be excludable from gross income of the owners thereof pursuant to section 103 of the Internal Revenue Code of 1986, as amended,
to the respective dates of delivery of the Bonds, and (2) would not be included in computing the alternative minimum taxable income of individuals, or, except
as described herein, corporations. The respective deliveries of the Bonds upon their remarketing are subject to the delivery by Bond Counsel of respective
opinions that conversion of each series of Bonds will not adversely affect the excludability of interest on the Bonds for federal income tax purposes and that
conversion of each series of the Bonds occurred in accordance with the terms of the respective Bond Orders. Bond Counsel has not been asked to and has not
rendered any current opinion as to the current excludability of interest on the Bonds pursuant to the Code. See TAX MATTERS herein.
NOT A NEW ISSUE: BOOK-ENTRY-ONLY
Ratings Series 2008B Bonds: S&P AA

Moodys Aa3
Ratings Series 2006B Bonds: S&P (FSA) AAA (negative outlook); Underlying AA
Moodys (FSA) Aa3 (on watch for possible downgrade); Underlying Aa3
MONTGOMERY COUNTY, TEXAS
Dated:
$34,705,000
Unlimited Tax Adjustable Rate Road Bonds
Series 2008B
August 1, 2008 (Series 2008B Bonds)
July 15, 2006 (Series 2006B Bonds)
Interest to Accrue from September 1, 2009
$20,195,000
Unlimited Tax Adjustable Rate Road Bonds
Series 2006B (2028 maturity)
Due: March 1, as shown on inside cover page
The Montgomery County, Texas, Unlimited Tax Adjustable Rate Road Bonds, Series 2008B (the Series 2008B Bonds), were initially issued by the
Commissioners Court of Montgomery County, Texas (the County) pursuant to the terms of an order adopted by the Commissioners Court of the
County in the original principal amount of $34,705,000. The Montgomery County, Texas, Unlimited Tax Adjustable Rate Road Bonds, Series
2006B (the Series 2006B Bonds), were initially issued by the Commissioners Court of the County pursuant to the terms of an order adopted by the
Commissioners Court of the County in the original principal amount of $63,750,000. The 2032 maturity of the Series 2008B Bonds (the Converted
2008B Bonds) in the amount of $34,705,000, representing the entire aggregate principal amount of the Series 2008B Bonds outstanding, is currently
outstanding in a Term Rate and will be converted to a Fixed Rate or Rates and remarketed on September 1, 2009 (the Conversion Date). The 2028
maturity of the Series 2006B Bonds (the Converted 2006B Bonds, and together with the Converted 2008B Bonds, the Bonds), in the principal
amount of $20,195,000, are currently outstanding in a Term Rate and will be converted to a Fixed Rate or Rates and remarketed on the Conversion
Date. On the Conversion Date, the Bonds bearing interest at the Term Rate shall be subject to mandatory tender, without right of retention by the
Registered Owners thereof. The principal amount and serial maturities of the Bonds following their conversion to a Fixed Rate are shown on the
inside cover of this Remarketing Memorandum. Upon conversion to a Fixed Rate, interest on the Bonds accrues from September 1, 2009 and is
payable on March 1, 2010 and on each September 1 and March 1 thereafter until maturity or prior redemption. Upon conversion to a Fixed Rate, the
Bonds will be issued only in fully registered form and in 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 beneficial owners thereof. Principal of
and interest on the Bonds will be payable with respect to the Series 2008B Bonds, by Regions Bank, Houston, Texas, and with respect to the Series
2006B Bonds, The Bank of New York Mellon Trust Company, N.A., Houston, Texas, the initial paying agent/registrars for the respective series of
Bonds (collectively, the Paying Agent/Registrar) to Cede & Co., which will make distribution of the amounts so paid to the participating members
of DTC for subsequent payment to the beneficial owners of the Bonds. See THE BONDS Book-Entry-Only System herein. Interest on the
Bonds upon conversion to a Fixed Rate or Rates is payable to the registered owners (initially Cede & Co.) appearing on the registration books of the
Paying Agent/Registrar on the business day next preceding each interest payment date. See THE BONDS Record Date.
The Bonds are subject to optional redemption prior to maturity, in whole or from time to time in part, as described herein. See THE BONDS
Optional Redemption.
The scheduled payment of principal of and interest on the Series 2006B Bonds when due is guaranteed under an
insurance policy issued concurrently with the delivery of the Series 2006B Bonds by FINANCIAL SECURITY
ASSURANCE INC. The Series 2008B Bonds are not insured.
See Principal Amounts, Maturities, Interest Rates, and Prices on the Inside Cover Page
The Bonds were initially issued pursuant to two separate orders authorizing issuance the Series 2008B Bonds and the Series 2006B Bonds adopted by
the Montgomery County Commissioners Court (collectively, the Bond Orders) and the Texas Constitution and laws of the State of Texas,
including particularly Article III, Section 52 of the Texas Constitution, Chapter 1471, Texas Government Code, as amended, and an election held in
the County on September 10, 2005. The Bonds are payable from a direct 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 Rate Limitations. Proceeds from the sale of the Bonds were used for certain road improvements within the County and payment
of the costs of issuance of the Bonds. See PLAN OF FINANCE Purpose.
The Bonds, when issued, were approved as to legality by the Attorney General of Texas and Fulbright & Jaworski L.L.P., Houston, Texas, Bond
Counsel (Bond Counsel) The conversion of the Bonds to a Fixed Rate is subject to the delivery on or before the Conversion Date of an opinion of
Bond Counsel that the conversion of the interest rate on the Bonds described herein will not have an adverse effect on the exclusion from federal
income tax of the interest on the Series 2008B Bonds or the Series 2006B Bonds and that conversion of each series of Bonds occurred in accordance
with the terms of the respective Bond Orders. See APPENDIX C FORM OF OPINION PROVIDED UPON REMARKETING OF THE BONDS.
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, Houston, Texas, Counsel for the Underwriter. Conversion of the Bonds
to a Fixed Rate is expected to occur on September 1, 2009.
WELLS FARGO BROKERAGE SERVICES, LLC

FIRST SOUTHWEST COMPANY
HOU:2950034.2
JEFFERIES & COMPANY, INC.
PRINCIPAL AMOUNTS, MATURITIES, INTEREST RATES AND PRICES

CONVERSION TO A FIXED RATE OF:
Montgomery County, Texas
Unlimited Tax Adjustable Rate Road Bonds, Series 2008B
Maturity
(March 1)(a)
2031
2032
Principal
Amount
$17,090,000
17,615,000
Interest
Rate
5.125%
5.250
Initial
Reoffering
Yield(b)
4.960%
4.980
CUSIP
Number(c)
613681
H99
J22
(Interest accrues from September 1, 2009)

Unlimited Tax Adjustable Rate Road Bonds, Series 2006B
Maturity
(March 1)(a)
2028
Principal
Amount
$20,195,000
Interest
Rate
4.750%
Initial
Reoffering
Yield(b)
4.750%
CUSIP
Number(c)
613681
H81
(Interest accrues from September 1, 2009)

______________________________
(a)
Upon conversion of the Bonds to a Fixed Rate, the County reserves the right, at its option, to redeem the
Bonds having stated maturities on or after March 1, 2020 in whole or in part in principal amounts of
$5,000 or any integral multiple thereof, on March 1, 2019 or any date thereafter, at the par value thereof
plus accrued interest to the date of redemption. See THE BONDS Optional Redemption.
(b)
Initial yield represents the initial reoffering yield for offers to the public. Such yields have been
established by the Underwriters for public offerings and subsequently may be changed from time to time in
the sole discretion of the Underwriters.
(c)
CUSIP numbers have been assigned to the Bonds by Standard and Poors CUSIP Service Bureau, A
Division of the McGraw-Hill Companies, Inc., and are included solely for the convenience of the
registered owners of the Bonds. Neither the County, the Financial Advisor, nor the Underwriters are
responsible for the selection or correctness of the CUSIP numbers set forth herein.
HOU:2950034.2
COUNTY OFFICIALS
Elected Officials
Commissioners Court
Alan B. Sadler
Mike Meador
Craig Doyal
Ernest E. Chance
Ed Rinehart
County Judge
Commissioner, Precinct 1
Other Elected and Appointed Officials
Name
Position
J. R. Moore, Jr.
Martha N. Gustavsen
Phyllis L. Martin
David Walker
Mark Turnbull
Tax Assessor Collector

County Treasurer
County Auditor
County Attorney
County Clerk
Consultants and Advisors
Auditors ................................................................................ Hereford, Lynch, Sellars, & Kirkham, PC, CPA

Conroe, Texas
Bond Counsel....................................................................................................... Fulbright & Jaworski L.L.P.
Houston, Texas
Disclosure Counsel .......................................................................................................... Andrews Kurth LLP
Houston, Texas
Financial Advisor....................................................................................... RBC Capital Markets Corporation
Houston, Texas
HOU:2950034.2
No dealer, broker, salesman, or other person has been authorized to give any information, or to make any
representation other than those contained in this Remarketing Memorandum, and, if given or made, such other
information or representations must not be relied upon as having been authorized by the County. This Remarketing
Memorandum is not to be used in connection with an offer to sell or the solicitation of an offer to buy in any state in
which 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. Any information or expression of opinion herein contained are subject to change without notice, and
neither the delivery of this Remarketing Memorandum nor any sale made hereunder shall, under any circumstances,
create an implication that there has been no change in the affairs of the County or other matters described herein
since the date hereof.
NEITHER THE COUNTY, ITS FINANCIAL ADVISOR NOR THE UNDERWRITERS MAKE ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION CONTAINED IN THIS
REMARKETING MEMORANDUM REGARDING THE DEPOSITORY TRUST COMPANY (DTC) OR ITS
BOOK-ENTRY-ONLY SYSTEM.
THE BONDS ARE EXEMPT FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE
COMMISSION AND CONSEQUENTLY HAVE NOT BEEN REGISTERED THEREWITH.
THE
REGISTRATION, QUALIFICATION, OR EXEMPTION OF THE BONDS IN ACCORDANCE WITH
APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THESE SECURITIES
HAVE BEEN REGISTERED, QUALIFIED, OR EXEMPTED SHOULD NOT BE REGARDED AS A
RECOMMENDATION THEREOF.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL
ABOVE THAT WHICH MIGHT PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The Underwriters have provided the following sentence for inclusion in this Remarketing Memorandum. The
Underwriters have reviewed the information in this Remarketing Memorandum in accordance with, and as part of,
its respective responsibilities to investors under the federal securities laws as applied to the facts and circumstances
of this transaction, but do not guarantee the accuracy or the completeness of such information.
Financial Security Assurance Inc. (Financial Security) makes no representation regarding the Series 2006B Bonds
or the advisability of investing in the Series 2006B Bonds. In addition, Financial Security has not independently
verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness
of this Remarketing Memorandum or any information or disclosure contained herein, or omitted herefrom, other
than with respect to the accuracy of the information regarding Financial Security supplied by Financial Security and
presented under the heading BOND INSURANCE FOR SERIES 2006B BONDS and Appendix F Form of
Municipal Bond Insurance Policy.
TABLE OF CONTENTS
Page
INTRODUCTION........................................................... 1
SALE AND DISTRIBUTION OF THE BONDS.......... 1
Sale of the Bonds....................................................... 1
Prices and Marketability............................................ 1
Securities Laws.......................................................... 2
Ratings ....................................................................... 2
BOND INSURANCE FOR SERIES 2006B BONDS ... 2
Bond Insurance Policy .............................................. 2
Financial Security Assurance Inc.............................. 2
BOND INSURANCE RISK FACTORS........................ 4
General....................................................................... 4
Claims Paying Ability Of Municipal Bond Insurers 5
REMARKETING MEMORANDUM SUMMARY ..... 6
SELECTED FINANCIAL INFORMATION ................ 8
THE BONDS................................................................... 9
Purpose ...................................................................... 9
General....................................................................... 9
Record Date ............................................................. 11
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HOU:2950034.2
Page
Optional Redemption .............................................. 11
Book-Entry-Only System........................................ 11
Source of Payment of the Bonds............................. 13
Paying Agent/Registrar and Tender Agent............. 13
Transfer, Exchange and Registration...................... 13
Amendments............................................................ 14
Defeasance of Bonds............................................... 14
Bondholders Remedies .......................................... 14
Future Borrowing .................................................... 15
THE AGREEMENT ..................................................... 15
Background.............................................................. 15
Reimbursement by TxDOT..................................... 16
Potential Availability of Funds for Repayment of
the Bonds ........................................................... 16
INVESTMENT AUTHORITY AND INVESTMENT
OBJECTIVES OF THE COUNTY ........................ 16
Legal Investments.................................................... 16
Investment Policies.................................................. 17
DEBT SERVICE REQUIREMENTS .......................... 19

COUNTY DEBT........................................................... 20
General..................................................................... 20
Indebtedness ............................................................ 20
Estimated Overlapping Debt Statement.................. 20
Debt Ratios .............................................................. 22
Other Obligations .................................................... 22
TAXING PROCEDURES AND TAX BASE
ANALYSIS ............................................................. 23
General..................................................................... 23
Property Tax Code and County-Wide Appraisal
District ............................................................... 23
Property Subject to Taxation by the County........... 23
Residential Homestead Exemptions ....................... 24
Freeport Goods and Goods-in-Transit Exemption . 24
Tax Abatement ........................................................ 24
Pollution Control ..................................................... 24
Valuation of Property for Taxation......................... 24
County and Taxpayer Remedies ............................. 25
Levy and Collection of Taxes ................................. 25
Countys Rights in the Event of Tax Delinquencies26
Tax Rate Limitations............................................... 26
Historical Analysis of Tax Collection..................... 27
Delinquent Tax Collection Procedures ................... 28
Tax Rate Distribution .............................................. 28
Analysis of Tax Base............................................... 28
Top Ten Principal Taxpayers.................................. 29
Tax Adequacy.......................................................... 29
SELECTED FINANCIAL DATA................................ 30
Historical Operations of the Countys General
Fund ................................................................... 30
Special Revenue Funds ........................................... 31

Debt Service Funds ................................................. 32
Pension Fund ........................................................... 32
THE COUNTY ............................................................. 33
Administration of the County.................................. 33
Commissioners Court............................................. 33
Consultants .............................................................. 33
TAX MATTERS........................................................... 33
Tax Exemption ........................................................ 33
CONTINUING DISCLOSURE OF INFORMATION 34
Annual Reports........................................................ 35
Material Event Notices............................................ 36
Availability of Information from NRMSIR and
SID..................................................................... 36
Limitations and Amendments ................................. 36
Compliance with Prior Undertakings ..................... 36
OTHER CONSIDERATIONS ..................................... 37
Environmental Regulations..................................... 37
Air Quality............................................................... 37
GENERAL CONSIDERATIONS................................ 37
Sources and Compilation of Information................ 37
Updating of Remarketing Memorandum................ 37
OTHER INFORMATION ............................................ 38
Litigation.................................................................. 38
Registration and Qualification of Bonds for Sale... 38
Legal Investments and Eligibility To Secure Public
Funds in Texas................................................... 38
Forward-Looking Statements Disclaimer............... 38
Miscellaneous .......................................................... 38
Financial Advisor .................................................... 39
Concluding Statement ............................................. 39
Appendix A - Economic and Demographic Information

Appendix B - Excerpts from Comprehensive Annual Financial Report of Montgomery County, Texas for the
Fiscal Year Ended September 30, 2008
Appendix C - Form of Legal Opinions Provided Upon Remarketing of the Bonds
Appendix D - Form of Legal Opinions Provided Upon Original Issuance of the Bonds
Appendix E - Pass-Through Toll Agreement
Appendix F - Form of Municipal Bond Insurance Policy
iii
HOU:2950034.2
INTRODUCTION
This Remarketing Memorandum, which includes the Appendices hereto, provides certain information regarding the
remarketing by Montgomery County, Texas (the County) of certain of its $34,705,000 Unlimited Tax Adjustable
Rate Road Bonds, Series 2008B (the Series 2008B Bonds) and its $63,750,000 Unlimited Tax Adjustable Rate
Road Bonds, Series 2006B (the Series 2006B Bonds). Specifically, the County is remarketing the entire
outstanding principal amount of the $34,705,000 Series 2008B Bonds (the Converted 2008B Bonds) and the 2028
maturity, in the principal amount of $20,195,000, of the Series 2006B Bonds (the Converted 2006B Bonds, and
collectively with the Converted 2008B Bonds, the Bonds). Capitalized terms used in this Remarketing
Memorandum have the same meanings assigned to such terms in the respective orders authorizing the issuance of
the Series 2008B Bonds (the 2008B Bond Order) and the Series 2006B Bonds (the 2006B Bond Order, and
collectively with the 2008B Bond Order, the Bond Orders) except as otherwise indicated herein. There follows in
this Remarketing Memorandum 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 to each such document. Copies of such documents may be obtained from the Countys Financial Advisor,
RBC Capital Markets Corporation, Houston, Texas.
This Remarketing Memorandum contains, in part, estimates, assumptions and matters of opinion which are not
intended as statements of fact, and no representation is made as to the correctness of such estimates, assumptions or
matters of opinion, or as to the likelihood that they will be realized. However, the County has agreed to keep this
Remarketing Memorandum current by amendment or sticker to reflect material changes in the affairs of the County
and to the extent that information actually comes to its attention, the other matters described in this Remarketing
Memorandum until delivery of the Bonds to the Underwriters and thereafter only as specified in GENERAL
CONSIDERATIONS Updating of Remarketing Memorandum and CONTINUING DISCLOSURE OF
INFORMATION.
SALE AND DISTRIBUTION OF THE BONDS
Sale of the Bonds
Wells Fargo Brokerage Services, LLC, First Southwest Company and Jefferies & Company, Inc. (the
Underwriters) have agreed to purchase the Converted 2008B Bonds from the County pursuant to a Firm
Remarketing Agreement with the County for a price of $35,008,996.75 (representing the par amount of the
Converted 2008B Bonds, plus a premium of $567,754.75, and less an Underwriters discount of $263,758.00). The
Underwriters obligation is to purchase all of the Converted 2008B Bonds if any of the Converted 2008B Bonds are
purchased.
The Underwriters have agreed to purchase the Converted 2006B Bonds from the County pursuant to a Firm
Remarketing Agreement with the County for a price of $20,195,000 (representing the par amount of the Converted
2006B Bonds). The Underwriters obligation is to purchase all of the Converted 2006B Bonds if any of the
Converted 2006B Bonds are purchased.
In connection with the sale of the Bonds, the County has agreed to pay the Underwriters a remarketing fee of
$263,758.00.
Prices and Marketability
The delivery of the Bonds is conditioned upon the receipt by the County of a certificate executed and delivered by
the Underwriters on or before the date of delivery of the Bonds stating the prices at which a substantial amount of
the Bonds of each maturity have been sold to the public. For this purpose, the term public shall not include any
person who is a bondhouse, broker or similar person acting in the capacity of underwriter or wholesaler. The
County 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 the
responsibility of the Underwriters.
The prices and other terms respecting the offering and sale of the Bonds may be changed from time to time by the
Underwriters after the Bonds are released for sale, and the Bonds may be offered and sold at prices other than the
initial offering prices, including sales to dealers who may sell the Bonds into investment accounts. IN
CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT
1
HOU:2950034.2
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
SUCH
Securities Laws
No registration statement relating to the Bonds has been filed with the Securities and Exchange Commission under
the 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; nor
have the Bonds been registered or qualified under the securities laws of any other jurisdiction. The County assumes
no responsibility for registration or qualification of the Bonds under the securities laws of any other jurisdiction in
which the Bonds may be offered, sold or otherwise transferred. This disclaimer of responsibility for registration or
qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with
regard to the availability of any exemption from securities registration or qualification provisions in such other
jurisdictions.
Ratings
In connection with the conversion and remarketing of the Series 2008B Bonds, the County made application to
Moodys Investors Service, Inc. (Moodys) and Standard & Poors Rating Services, A Division of The McGrawHill Companies, Inc. (S&P) for long term ratings on the Series 2008B Bonds, and the ratings of Aa3 and AA,
respectively, have been assigned to the Series 2008B Bonds. In connection with the conversion and remarketing of
the Series 2006B Bonds, the County made application to Moodys and S&P for long term ratings on the Series
2006B Bonds, and the ratings of Aa3 (on watch for possible downgrade) and AAA (negative outlook),
respectively, have been assigned to the Bonds based on a municipal bond insurance policy issued simultaneously
with the issuance of the Series 2006B Bonds.
An explanation of the significance of such ratings may be obtained from Moodys and S&P. The ratings reflect only
the 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 revised
downward or withdrawn entirely if, in the judgment of Moodys or S&P, circumstances so warrant. Any such
downward revision or withdrawal of any of the ratings may have an adverse effect on the market price of the Bonds.
BOND INSURANCE FOR SERIES 2006B BONDS
Bond Insurance Policy
Concurrently with the issuance of the Series 2006B Bonds, Financial Security Assurance Inc. (Financial Security)
issued its Municipal Bond Insurance Policy for the Series 2006B Bonds (the Policy). The Policy guarantees the
scheduled payment of principal of and interest on the Series 2006B Bonds when due as set forth in the form of the
Policy included as an exhibit to this Remarketing Memorandum. The Series 2008B Bonds are not guaranteed by the
Policy. The Policy is not covered by any insurance security or guaranty fund established under New York,
California, Connecticut or Florida insurance law.
Financial Security Assurance Inc.
Financial Security is a New York domiciled financial guaranty insurance company and a wholly owned subsidiary
of Financial Security Assurance Holdings Ltd. ("Holdings"). Holdings is an indirect subsidiary of Assured Guaranty
Ltd. (AGL), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York
Stock Exchange under the symbol AGO. AGL, through its operating subsidiaries, provides credit enhancement
products to the U.S. and global public finance, structured finance and mortgage markets. No shareholder of AGL,
Holdings or Financial Security is liable for the obligations of Financial Security.
On July 1, 2009, AGL acquired the financial guaranty operations of Holdings from Dexia S.A. (Dexia). In
connection with such acquisition, Holdings financial products operations were separated from its financial guaranty
operations and retained by Dexia. For more information regarding the acquisition by AGL of the financial guaranty
operations of Holdings, see Item 1.01 of the Current Report on Form 8-K filed by AGL with the Securities and
Exchange Commission (the SEC) on July 8, 2009.
Financial Securitys financial strength is rated AAA (negative outlook) by Standard & Poors, a division of The
McGraw-Hill Companies, Inc. (S&P), Aa3 (on review for possible downgrade) by Moodys Investors Service,
Inc. (Moodys) and AA+ (Ratings Watch Negative) by Fitch, Inc. (Fitch). Each rating of Financial Security
should be evaluated independently. An explanation of the significance of the above ratings may be obtained from
2
HOU:2950034.2
the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such
ratings are subject to revision or withdrawal at any time by the rating agencies. Any downward revision or
withdrawal of any of the above ratings may have an adverse effect on the market price of any security guaranteed by
Financial Security. Financial Security does not guaranty the market price of the securities it guarantees, nor does it
guaranty that the ratings on such securities will not be revised or withdrawn.
Recent Developments
Ratings
On July 1, 2009, S&P published a Research Update in which it affirmed its AAA counterparty credit and financial
strength ratings on Financial Security. At the same time, S&P continued its negative outlook on Financial Security.
Reference is made to the Research Update, a copy of which is available at www.standardandpoors.com, for the
complete text of S&Ps comments.
On May 20, 2009, Moodys issued a press release stating that it had placed the Aa3 insurance financial strength
rating of Financial Security on review for possible downgrade. Subsequently, in an announcement dated July 24,
2009 entitled Moodys Comments on Assureds Announcement to Guarantee and Delist FSA Debt, Moodys
announced that it expects to conclude its review by mid-August 2009. Reference is made to the press release and
the announcement, copies of which are available at www.moodys.com, for the complete text of Moodys comments.
In a press release dated May 11, 2009, Fitch announced that it had downgraded the insurer financial strength rating
of Financial Security to AA+ from AAA and placed such rating on Ratings Watch Negative. Reference is made
to the press release, a copy of which is available at www.fitchratings.com, for the complete text of Fitchs
comments.
There can be no assurance as to the outcome of Moodys review, or as to the further action that Fitch or S&P may
take with respect to Financial Security.
For more information regarding Financial Securitys financial strength ratings and the risks relating thereto, see
Holdings Annual Report on Form 10-K for the fiscal year ended December 31, 2008, which was filed by Holdings
with the SEC on March 19, 2009, Holdings Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2009, which was filed by Holdings with the SEC on May 20, 2009, and AGLs Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2009, which was filed by AGL with the SEC on August 10, 2009. Effective
July 31, 2009, Holdings is no longer subject to the reporting requirements of the Securities and Exchange Act of
1934, as amended (the Exchange Act).
Capitalization of Financial Security
At June 30, 2009, Financial Security's consolidated policyholders' surplus and contingency reserves were
approximately $1,964,241,223 and its total net unearned premium reserve was approximately $2,454,208,373 in
accordance with statutory accounting principles.
Incorporation of Certain Documents by Reference
Portions of the following documents filed by Holdings with the SEC that relate to Financial Security are
incorporated by reference into this Remarketing Memorandum and shall be deemed to be a part hereof:
(i)
Annual Report of Holdings on Form 10-K for the fiscal year ended December 31, 2008 (which
was filed by Holdings with the SEC on March 19, 2009);
(ii)
Quarterly Report of Holdings on Form 10-Q for the quarterly period ended March 31, 2009
(which was filed by Holdings with the SEC on May 20, 2009);
(iii)
the Current Reports on Form 8-K filed by Holdings with the SEC on May 21, 2009, June 10,
2009, and July 8, 2009;
(iv)
Quarterly Report of AGL on Form 10-Q for the quarterly period ended June 30, 2009 (which was
filed by AGL with the SEC on August 10, 2009); and
(v)
the Current Report on Form 8-K filed by AGL with the SEC on July 8, 2009.
All information relating to Financial Security included in, or as exhibits to, documents filed by AGL pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the filing of the last document referred to above and
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HOU:2950034.2
before the termination of the offering of the Series 2006B Bonds shall be deemed incorporated by reference into this
Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials
incorporated by reference are available over the internet at the SECs website at http://www.sec.gov, at Holdings
website at http://www.fsa.com, at AGLs website at http://www.assuredguaranty.com, or will be provided upon
request to Financial Security Assurance Inc.: 31 West 52nd Street, New York, New York 10019, Attention:
Communications Department (telephone (212) 826-0100).
Any information regarding Financial Security included herein under the caption BOND INSURANCE FOR
SERIES 2006B BONDS Financial Security Assurance Inc. or included in a document incorporated by reference
herein (collectively, the Financial Security Information) shall be modified or superseded to the extent that any
subsequently included Financial Security Information (either directly or through incorporation by reference)
modifies or supersedes such previously included Financial Security Information. Any Financial Security
Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or
superseded.
Financial Security makes no representation regarding the Series 2006B Bonds or the advisability of investing in the
Series 2006B Bonds. In addition, Financial Security has not independently verified, makes no representation
regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any
information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the
information regarding Financial Security supplied by Financial Security and presented under the heading BOND
INSURANCE FOR SERIES 2006B BONDS.
BOND INSURANCE RISK FACTORS
General
In the event of default of the payment of principal or interest with respect to the Series 2006B Bonds when all or
some becomes due, the Paying Agent of the Series 2006B Bonds shall have a claim under the Policy for such
payments on behalf of the owners of the Series 2006B Bonds. However, in the event of any acceleration of the due
date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or
otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments are
to be made in such amounts and at such times as such payments would have been due had there not been any such
acceleration. The Policy will not insure against redemption premium, if any. The payment of principal and interest
in connection with mandatory or optional prepayment of the Series 2006B Bonds by the County which is recovered
by the issuer from the bond owner as a voidable preference under applicable bankruptcy law is covered by the
insurance policy, however, such payments will be made by Financial Security at such time and in such amounts as
would have been due absence such prepayment by the County unless Financial Security chooses to pay such
amounts at an earlier date.
Under most circumstances, default of payment of principal and interest does not obligate acceleration of the
obligations of Financial Security without appropriate consent. In the event Financial Security is unable to make
payment of scheduled principal and interest as such payments become due under the Policy, the Series 2006B Bonds
would be payable solely from the moneys received by the Paying Agent/Registrar pursuant to the Bond Orders. In
the event Financial Security becomes obligated to make payments with respect to the Series 2006B Bonds, no
assurance is given that such event will not adversely affect the market price of the Series 2006B Bonds or the
marketability for the Series 2006B Bonds.
The long-term ratings on the Series 2006B Bonds are dependent in part on the financial strength of Financial
Security and its claim paying ability. Financial Securitys financial strength and claims paying ability are predicated
upon a number of factors which could change over time. No assurance is given that the long-term ratings of
Financial Security and of the ratings on the Series 2006B Bonds insured by Financial Security will not be subject to
downgrade and such event could adversely affect the market price of the Series 2006B Bonds or the marketability
for the Series 2006B Bonds. See SALE AND DISTRIBUTION OF THE BONDS Ratings herein.
The obligations of Financial Security are unsecured obligations of Financial Security and in an event of default by
Financial Security, the remedies available may be limited by applicable bankruptcy law or other similar laws related
to insolvency. Neither the District nor the Underwriters have made independent investigation into the claims paying
ability of Financial Security and no assurance or representation regarding the financial strength or projected
financial strength of Financial Security is given. Thus, when making an investment decision, potential investors
should carefully consider the ability of the District to pay principal and interest on the Series 2006B Bonds and the
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HOU:2950034.2
claims paying ability of Financial Security, particularly over the life of the investment. See BOND INSURANCE
FOR SERIES 2006B BONDS herein for further information provided by Financial Security and the Policy, which
includes further instructions for obtaining current financial information concerning Financial Security.
Claims Paying Ability Of Municipal Bond Insurers
Moodys Investor Services, Standard and Poors, a division of McGraw-Hill Companies, Inc and Fitch Ratings (the
Rating Agencies) have, in recent months, downgraded the claims-paying ability and financial strength of most
providers of municipal bond insurance. Additional downgrades or negative change in the rating outlook for these
bond insurers is possible. In addition, recent events in the credit markets have had substantial negative effect on the
bond insurance business. These developments could be viewed as having a material adverse effect on the claims
paying ability of such bond insurers, including the insurer of the Series 2006B Bonds. Thus, when making an
investment decision, potential investors should carefully consider the ability of any such bond insurer to pay
principal and interest on the Series 2006B Bonds and the claims paying ability of any such bond insurer, particularly
over the life of the investment.
[Remainder of page intentionally left blank]
5
HOU:2950034.2
REMARKETING MEMORANDUM SUMMARY

The following material is a summary of certain information contained herein and is qualified in its entirety by the
detailed information and financial statements appearing elsewhere in this Remarketing Memorandum. The reader
should refer 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 Bonds...................................................... Montgomery County, Texas, has previously issued its $34,705,000
Unlimited Tax Adjustable Rate Road Bonds, Series 2008B (the Series
2008B Bonds) and its $67,750,000 Unlimited Tax Adjustable Rate
Road Bonds, Series 2006B (the Series 2006B Bonds). The 2032
maturity of the Series 2008B Bonds (the Converted 2008B Bonds) in
the amount of $34,705,000, representing the entire aggregate principal
amount of the Series 2008B Bonds outstanding, is currently
outstanding in a Term Rate and will be converted to a Fixed Rate or
Rates and remarketed on September 1, 2009 (the Conversion Date).
The 2028 maturity of the Series 2006B Bonds (the Converted 2006B
Bonds, and together with the Converted 2008B Bonds, the Bonds),
in the principal amount of $20,195,000, are currently outstanding in a
Term Rate and will be converted to a Fixed Rate or Rates and
remarketed on the Conversion Date. See THE BONDS General.
Payment of Interest........................................ Upon conversion to a Fixed Rate, interest on the Bonds accrues from
September 1, 2009 and is payable on March 1, 2010 and on each
September 1 and March 1 thereafter until maturity or prior redemption.
See THE BONDS Optional Redemption.
Optional Redemption..................................... Upon conversion of the Bonds to a Fixed Rate, the County reserves the
right, at its option, to redeem the Bonds having stated maturities on or
after March 1, 2020 in whole or in part in principal amounts of $5,000
or any integral multiple thereof, on March 1, 2019 or any date
thereafter, at the par value thereof plus accrued interest to the date of
redemption. See THE BONDS Optional Redemption.
Paying Agent and Tender Agent.................... The Paying Agent/Registrar and Tender Agent for the Series 2008B
Bonds is Regions Bank, Houston, Texas. The Paying Agent/Registrar
and Tender Agent for the Series 2008B Bonds is The Bank of New
York Mellon Trust Company, N.A., Houston, Texas. See THE
BONDS Paying Agent/Registrar Agreement and Tender Agent.
Source of Payment......................................... Principal of and interest on the Bonds are payable from the proceeds of
a continuing, direct annual ad valorem tax levied, without legal limit as
to rate or amount, against all taxable property in the County. See THE
BONDS Source of Payment of the Bonds and TAXING
PROCEDURES AND TAX BASE ANALYSIS Tax Rate
Limitations.
Authorization of the Bonds............................ The Bonds were initially issued pursuant to the Texas Constitution and
laws of the State of Texas, including particularly Article III, Section 52
of the Texas Constitution, Chapters 1471, Texas Government Code, as
amended, an election held in the County on September 10, 2005, an
order authorizing issuance of the Series 2008B Bonds (the 2008B
Bond Order) and an order authorizing the issuance of the Series
2006B Bonds (the 2006B Bond Order, and together with the 2008B
Bond Order, the Bond Orders) adopted by the Montgomery County
Commissioners Court. See THE BONDS Source of Payment of the
Bonds. Conversion of the Bonds to a Fixed Rate is authorized
pursuant to the Bond Orders.
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HOU:2950034.2
Use of Proceeds ............................................. Proceeds from the sale of the Series 2008B Bonds and the Series
2006B Bonds were used for certain County road improvements and to
pay the costs of issuance of the Bonds. See THE BONDS Purpose.
Tax Exemption .............................................. Upon the original dates of delivery of the Bonds, Bond Counsel
delivered its opinions to the effect that, assuming continuing
compliance by the County after the date of such opinions with certain
covenants described herein, interest on each of the Series 2008B Bonds
and the Series 2006B Bonds during their respective Initial Rate Periods
(1) will be excludable from gross income of the owners thereof
pursuant to section 103 of the Internal Revenue Code of 1986, as
amended, to the respective dates of delivery of the Bonds, and (2)
would not be included in computing the alternative minimum taxable
income of individuals, or, except as described herein, corporations.
The respective deliveries of the Bonds upon their remarketing are
subject to the delivery by Bond Counsel of respective opinions that
conversion of each series of Bonds will not adversely affect the
excludability of interest on the Bonds for federal income tax purposes
and that conversion of each series of the Bonds occurred in accordance
with the terms of the respective Bond Orders. See TAX MATTERS
herein.
Book-Entry-Only System .............................. The definitive Bonds will be registered and delivered only to Cede &
Co., the nominee of DTC pursuant to the Book-Entry-Only System
described herein. Upon conversion to a Fixed Rate, beneficial
ownership of the Bonds may be acquired in denominations of $5,000 or
integral multiples thereof. No physical delivery of the Bonds will be
made to the beneficial owners thereof. See THE BONDS BookEntry-Only System.
Payment Record............................................. The County has never defaulted on the timely payment of principal of
and interest on any of its outstanding debt.
Series 2008B Bonds Ratings ......................... Moodys....................................................................................... Aa3
S&P ..............................................................................................AA
Series 2006B Bonds Ratings ......................... Moodys (FSA) ...................Aa3 (on watch for possible downgrade)
S&P (FSA)...................................................AAA (negative outlook)
Moodys (Underlying) ................................................................ Aa3
S&P (Underlying).........................................................................AA
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HOU:2950034.2
SELECTED FINANCIAL INFORMATION

(Unaudited)
2009 Certified Taxable Assessed Valuation ...................................................................................................... $ 32,636,549,238(a)
(100% of Market Value as of January 1, 2009)
See TAXING PROCEDURES AND TAX BASE ANALYSIS
2008 Certified Taxable Assessed Valuation ...................................................................................................... $ 30,281,923,572(a)
Direct Debt:
Outstanding Direct Debt (as of July 1, 2009)..................................................................................... $
Plus: The 2009 Pass-Through Toll Revenue and Limited Tax Bonds...............................................
353,395,000(b)
56,190,000(c)
Total Direct Debt ............................................................................................................................................... $
409,585,000
Estimated Overlapping Debt.............................................................................................................................. $
2,292,020,051
Total Direct and Estimated Overlapping Debt................................................................................................... $
2,701,605,051
Interest & Sinking Fund Balance (as of June 30, 2009)..................................................................................... $
14,581,869
Ratio of Direct Debt to..:
2009 Certified Taxable Assessed Valuation ($32,636,549,238)........................

First Quarter 2009 Estimated Population (435,403) .......................................... $
1.26%
1.35%
940.70
Ratio of Direct and Estimated

Overlapping Debt to: 2009 Certified Taxable Assessed Valuation ($32,636,549,238)........................
First Quarter 2009 Estimated Population (435,403) .......................................... $
8.28%
8.82%
6,204.84
Annual Debt
Service Requirements:
Average (2009-2032) ....................................................................................... $

Maximum (2016) ............................................................................................. $
28,683,081
32,428,154
______________________________
(a)
Certified by the Appraisal District.
(b)
Includes the Bonds.
(c)
The County will deliver its Pass-Through Toll Revenue and Limited Tax Bonds, Series 2009 on August 25,
2009.
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HOU:2950034.2
REMARKETING MEMORANDUM
Relating to conversion to a Fixed Rate of:
$34,705,000
UNLIMITED TAX ADJUSTABLE RATE ROAD BONDS, SERIES 2008B
$20,195,000
UNLIMITED TAX ADJUSTABLE RATE ROAD BONDS, SERIES 2006B
THE BONDS
Purpose
Proceeds from the sale of the Series 2008B Bonds and the Series 2006B Bonds were used for construction of
improvements to four existing highways and the construction and operation of a direct connector between two
existing highways (collectively, the Project) and to pay the costs of issuance of the Bonds. The County has entered
into a Pass-Through Toll Agreement (the Agreement) with The Texas Department of Transportation (the
TxDOT) relating to the construction of the Project. A copy of the Agreement is attached hereto as Appendix E.
The Agreement provides, among other things, for certain reimbursements by TxDOT to the County for the
construction and operation of each portion of the Project if such improvements are substantially completed in
accordance with the Agreement and are open to the public. See THE AGREEMENT. Payments from TxDOT
to the County under the Agreement are not pledged to the payment of the Bonds. See THE BONDS Source
of Payment of the Bonds.
General
The following is a description of some of the terms and conditions of the Bonds upon conversion to a Fixed Rate,
and is qualified in its entirety by reference to the form of the Bonds contained in the Bond Orders. A copy of the
Bond Orders may be obtained upon request to the County.
The Bonds will be 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 physical delivery of the
Bonds will be made to the beneficial owners thereof. Initially, principal of and interest on the Bonds will be payable
by the Paying Agent/Registrar to Cede & Co., as registered owner. DTC will make distribution of amounts 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 upon conversion to a Fixed Rate is payable to the
registered owners (initially Cede & Co.) appearing on the registration books of the Paying Agent/Registrar on the
business day next preceding each interest payment date. See THE BONDS Record Date.
In the event the Book-Entry-Only-System is discontinued, the Bonds may be transferred and exchanged on the bond
register kept by the Paying Agent/Registrar upon surrender and reissuance. The Bonds are exchangeable for an equal
principal amount of Bonds of the same maturity in any authorized denomination upon surrender of the Bonds to be
exchanged at the principal payment office of the Paying Agent/Registrar. No service charge will be made for any
transfer, but the County may require payment of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
Authorized Denominations. Upon conversion to a Fixed Rate, the Bonds will be issued in denominations of $5,000
and integral multiples thereof.
Calculation of Interest. Interest on the Bonds will be calculated on the basis of a 360-day year of twelve 30-day
months while the Bonds bear interest at a Fixed Rate.
Interest Payment Methods. While the Bonds bear interest at a 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
and expense of the registered owner.
Interest Payment Dates. While the Bonds bear interest at the Fixed Rate, interest will be paid on each March 1 and
September 1, beginning on the first such date occurring after the Fixed Rate Conversion Date, March 1, 2010.
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HOU:2950034.2
Paying Agent/Registrar and Tender Agent. Regions Bank, Houston, Texas, serves as Paying Agent/Registrar and
Tender Agent for the Series 2008B Bonds. All notices and certificates required to be delivered to the Paying
Agent/Registrar and the Tender Agent shall be delivered to Regions Bank, Houston, Texas, 1717 St. 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 Series 2008B Bonds are issued, all notices and Series 2008B Bonds are
required to be delivered to Regions Bank, Houston, Texas, 1717 St. James Place, Suite 500, Houston, Texas 77056
Attn: Corporate Trust Department.
The Bank of New York Mellon Trust Company, N.A., Houston, Texas, serves as Paying Agent/Registrar and
Tender Agent for the Series 2006B Bonds. All notices and certificates required to be delivered to the Paying
Agent/Registrar and the Tender Agent shall be delivered to The Bank of New York Mellon Trust Company, N.A.,
601 Travis Street, 16th Floor, Houston, Texas 77002 Attn: Global Corporate Debt. In the event that the BookEntry-Only System herein is discontinued and registered Series 2006B Bonds are issued, all notices and Series
2006B Bonds are required to be delivered to The Bank of New York Mellon Trust Company, N.A., 601 Travis
Street, 16th Floor, Houston, Texas 77002 Attn: Global Corporate Debt.
Rate Mode Changes. Any conversion from any Adjustable Rate (including the Initial Rate) to a Fixed Rate is
conditioned on delivery of an opinion of nationally recognized Bond Counsel to the effect that the conversion of
each of the Series 2008B Bonds and the Series 2006B Bonds occurred in accordance with the terms of the respective
Bond Orders. Conversion of interest rate modes must take 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. The Series 2008B Bonds are currently outstanding in the Initial Rate and
the Converted 2006B Bonds are currently outstanding in a Term Rate.
Mandatory Tender. The Bond Orders provide that the County has the right to convert one or more Stated Maturities
of the then outstanding Bonds to a Fixed Rate or Rates. In determining the Fixed Rates on the Series 2008B Bonds
to be converted on the Fixed Rate Conversion Date, the Remarketing Agent shall determine the rates for such
converted Bonds which will cause such Bonds to have a market value, net of costs of issuance and remarketing fees,
equal to the principal amount of said Bonds. In determining the Fixed Rates on the Series 2006B Bonds to be
converted on the Fixed Rate Conversion Date, the Remarketing Agent shall determine the rates for such converted
Bonds which will cause such Bonds to have a market value equal to the principal amount of said Bonds.
To exercise its option, the County must deliver to the Paying Agent/Registrar, the Remarketing Agent, the Tender
Agent and the Bank (as defined in the Bond Orders) written notice not less than 30 calendar days prior to the Interest
Payment Date on which the Fixed Rate Mode is to become effective (the Fixed Rate Conversion Date). Subject to
the following qualifications, the County will determine the redemption provisions and the serial or term maturity
dates which shall apply to the Bonds following the Fixed Rate Conversion Date and give notice of such terms to the
Paying Agent/Registrar. The maturities will be determined on the basis of providing approximately level debt
service payments on the Bonds. In addition, the County must deliver to the Paying Agent/Registrar prior to the
Fixed Rate Mode Conversion Date an opinion of nationally recognized Bond Counsel to the effect that the
conversion to the Fixed Rate Mode is authorized under the provisions of the Bond Orders.
The Paying Agent/Registrar is required to give notice by mail to all registered owners of the conversion to a Fixed
Rate 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 Paying
Agent/Registrar will notify the registered owners of the Fixed Rate and (b) state that the Bonds will be subject to
mandatory tender for purchase on the Fixed Rate Conversion Date without the right of the Owners to retain their
Bonds.
On or before 12:00 noon, New York City time, on the Business Day preceding the Fixed Rate Conversion Date, the
Remarketing Agent will, in consultation with and subject to the approval of the County, determine the Fixed Rate or
Rates and give notice thereof to the Paying Agent/Registrar. The Paying Agent/Registrar will then give notice of
such 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.
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HOU:2950034.2
Record Date
The Record date for registered owners means with respect to Bonds bearing interest at a Fixed Rate, the last
Business Day of the month preceding an Interest Payment Date.
Optional Redemption
Upon conversion of the Bonds to a Fixed Rate, the County reserves the right, at its option, to redeem the Bonds
having stated maturities on or after March 1, 2020 in whole or in part in principal amounts of $5,000 or any integral
multiple thereof, on March 1, 2019 or any date thereafter, at the par value thereof plus accrued interest to the date of
redemption.
The Paying Agent/Registrar is required to cause notice of any redemption of Bonds to be mailed to each registered
owner 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 30 calendar days prior to the redemption date with respect
to Bonds bearing interest at a Fixed Rate; (ii) identify the Bonds to be redeemed (specifying the numbers assigned to
the Bonds); (iii) specify the redemption date and the redemption price; and (iv) state that (a) on the redemption date
the Bonds called for redemption will be payable at the designated office of the Paying Agent/Registrar, (b) such
redemption will only occur if on the redemption date, funds are available to pay the redemption price, and (c) on and
after the redemption date interest will cease to accrue. If notice of redemption is given as described above and if due
provision for the payment of the redemption price is made, then the Bonds that are 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 the right of the registered owner
thereof to receive the redemption price from the Paying Agent/Registrar.
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 DTC
and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this
Remarketing Memorandum. 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 Remarketing Memorandum. 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 initially as securities depository for the Bonds. The Bonds will be issued as fully-registered securities
registered in the name of Cede & Co. (DTCs partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds in
the 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 the
Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code,
and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTCs
participants (Direct Participants) deposit with DTC. DTC also facilitates the post-trade settlement among Direct
Participants of sales and other securities transactions in deposited securities, through electronic computerized book
entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement
of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The
Depository Trust & Clearing Corporation (DTCC). DTCC is the holding company for DTC, National Securities
Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC
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HOU:2950034.2
is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both
U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear
through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (Indirect
Participants). DTC has Standard & Poors highest rating: AAA. The DTC Rules applicable to its Participants are on
file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com
and www.dtc.org.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a
credit for the Bonds 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 Owners will not receive
written confirmation from DTC of their purchase.
Beneficial Owners are, however, expected to receive 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 of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct or
Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the
Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of
DTCs partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of
DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co., or such other DTC
nominee, do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners
of the Bonds; DTCs records reflect only the identity of the Direct Participants to whose accounts such Bonds are
credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of
significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the
Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the
Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial
Owners may wish to provide their names and addresses to the Paying Agent/Registrar and request that copies of
notices 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, DTCs
practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless
authorized by a Direct Participant in accordance with DTCs Procedures. Under its usual procedures, DTC mails an
Omnibus Proxy to the County as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.s
consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, redemption proceeds and interest payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTCs practice is to credit Direct
Participants accounts upon DTCs receipt of funds and corresponding detail information from the County or the
Paying 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, and
will be the responsibility of such Participant and not of DTC nor its nominee, the Paying Agent/Registrar, or the
County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of
principal, premium, if any, redemption proceeds and interest payments to Cede & Co. (or such other nominee as
may be requested by an authorized representative of DTC) is the responsibility of the County or the Paying
Agent/Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and
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HOU:2950034.2
disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving
reasonable 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 successor
securities depository). In that event, Bonds will be printed and delivered in accordance with the Bond Orders. In
reading this Remarketing Memorandum it should be understood that while the Bonds are in the Book-Entry-Only
System, references in other sections of this Remarketing Memorandum to registered owners should be read to
include the person for which the Participant acquires an interest in the Bonds, but (i) all rights of ownership must be
exercised through DTC and the Book-Entry-Only System, and (ii) except as described above, notices that are to be
given to registered owners under the Bond Orders will be given only to DTC.
Use of Certain Terms in Other Sections of this Remarketing Memorandum
In reading this Remarketing Memorandum it should be understood that while the Bonds are in the Book-Entry-Only
System, references in other sections of this Remarketing Memorandum to registered owners should be read to
include the person for which the Participant acquires an interest in the Bonds, but (i) all rights of ownership must be
exercised through DTC and the Book-Entry-Only System, and (ii) except as described above, notices that are to be
given to registered owners under the Bond Orders will be given only to DTC.
Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed
as to accuracy or completeness by, and is not to be construed as a representation by, the 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 owners
and the Bonds will be subject to transfer, exchange and registration provisions as set forth in the Bond Orders and
summarized 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 bonds
pursuant to the Constitution and the laws of the State of Texas, including particularly Article III, Section 52 of the
Texas Constitution and Chapter 1471, Texas Government Code, as amended, and the respective Bond Orders passed
by the Commissioners Court of the County, authorizing the each series of the Bonds.
See THE AGREEMENT herein for a description of payments to be received by the County from TxDOT pursuant
to the Agreement. The County may, at its discretion, use some portion of TxDOTs payments pursuant to the
Agreement to pay debt service on the Bonds. However, such funds are not pledged to and do not secure the
repayment of the Bonds and the County is under no obligation to use such funds to pay debt service on the
Bonds.
Paying Agent/Registrar and Tender Agent
Regions Bank, Houston, Texas, will serve as Paying Agent/Registrar and Tender Agent for the Series 2008B Bonds
and may resign at any time and may be replaced in accordance with the 2008B Bond Order; provided, however, that
any such resignation will not take effect until a successor is appointed.
The Bank of New York Mellon Trust Company, N.A., Houston, Texas, will serve as Paying Agent/Registrar and
Tender Agent for the Series 2006B Bonds and may resign at any time and may be replaced in accordance with the
2006B Bond Order; provided, however, that any such resignation will not take effect 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 the
registered owner and thereafter the Bonds may be transferred and exchanged on the registration books of the Paying
Agent/Registrar only upon presentation and surrender to the Paying Agent/Registrar and such transfer or exchange
shall be without expense or service charge to the registered owner, except for any tax or other governmental charges
required to be paid with respect to such registration, exchange and transfer. Bonds may be assigned by the execution
13
HOU:2950034.2
of an assignment form on the respective Bonds or by other instrument of transfer and assignment acceptable to the
Paying Agent/Registrar. See Book-Entry-Only System herein for a description of the system to be utilized
initially in regard to ownership and transferability of the Bonds.
Amendments
The County may, without the consent of or notice to any Bondholders, from time to time and at any time, amend the
Bond Orders in any manner not detrimental to the interests of the Bondholders, including the curing of any
ambiguity, inconsistency, or formal defect or omission herein or the amend the definition of the term Maximum
Interest Rate by increasing the Maximum Interest Rate for Bonds other than Bank Bonds in accordance with the
terms of the Bond Orders. In addition, the County may, with the consent of Bondholders holding a majority in
aggregate principal amount of the Series 2006B Bonds or Series 2008B Bonds then Outstanding, amend, add to, or
rescind any of the provisions of either Bond Order; provided that, with respect to each series of Bonds, without the
consent of all Bondholders of such series 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 such series of Bonds, reduce the
principal amount thereof, the redemption price or the rate of interest thereon, or in any other way modify the terms
of payment of the principal of or interest on such series of Bonds, (2) give any preference to any Bond over any
other Bond, or (3) reduce the aggregate principal amount of such series of Bonds required to be held by Bondholders
for consent to any such amendment, addition, or rescission.
Defeasance of Bonds
On and after the Conversion of the Bonds to a Fixed Rate, the Bond Orders provide that the County may defease the
provisions 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 the
Paying Agent/Registrar, or if authorized by Texas law with any national bank having trust powers and having
combined capital and surplus of at least $50 million or with the State Treasurer of the State of Texas either: (i) cash
in an amount equal to the principal amount and redemption premium, if any, of such Bonds 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 and interest on which are guaranteed by, or, to the extent permitted by law, secured by
the pledge of direct obligations of, the United States of America, in principal amounts and maturities and bearing
interest at rates sufficient to provide for the timely payment of the principal amount and redemption premium, if
any, of such Bonds plus interest thereon to the date of maturity or redemption; provided, however, that if any of such
Bonds 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 Orders. Upon such deposit, such Bonds shall no longer be
regarded to be outstanding or unpaid. Any surplus amounts not required to accomplish such defeasance shall be
returned to the County.
Bondholders Remedies
The Bond Orders do not provide for the appointment of a trustee to represent the interests of the Bondholders upon
any failure of the County to perform in accordance with the terms of the Bond Orders or upon any other condition
and, in the event of any such failure to perform, the registered owners would be responsible for the initiation and
cost of any legal action to enforce performance of the Bond Orders. Furthermore, the Bond Orders do not establish
specific events of default with respect to the Bonds and, under State law, there is no right to the acceleration of
maturity of the Bonds upon the failure of the County to observe any covenant under the Bond Orders. A registered
owner of Bonds could seek a judgment 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 practical remedy, if a default occurs, is a mandamus or mandatory injunction proceeding to compel the
County to levy, assess and collect an annual ad valorem tax sufficient to pay principal of and interest on the Bonds
as it becomes due or perform other material terms and covenants contained in the Bond Orders. In general, Texas
courts have held that a writ of mandamus may be issued to require a public official to perform legally imposed
ministerial duties necessary for the performance of a valid contract, and Texas law provides that, following their
approval by the Attorney General and issuance, the Bonds are valid and binding obligations for all purposes
according to their terms. However, the enforcement of any such remedy may be difficult and time consuming and a
registered owner could be required to enforce such remedy on a periodic basis.
14
HOU:2950034.2
The County is also eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code (Chapter
9). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged
source 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 would
prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or Bondholders
of an entity which has sought protection under Chapter 9. Therefore, should the County avail itself of Chapter 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 the
Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding
brought before it. The original opinions of Bond Counsel with respect to each series of Bonds noted that all
opinions relative to the enforceability of the Bond Orders and the Bonds are qualified with respect to the customary
rights of debtors relative to their creditors, including rights afforded to creditors under the Bankruptcy Code.
Future Borrowing
The County will deliver its Pass-Through Toll Revenue and Limited Tax Bonds, Series 2009 (the Series 2009
Bonds) in the principal amount of $56,190,000, on August 25, 2009. The Series 2009 Bonds are secured by a
senior lien on the Pass-Through Toll Revenues received pursuant to the Agreement (the Pledged Revenues) and,
to the extent that such revenues are insufficient to make debt service payments on the Series 2009 Bonds, a pledge
of an ad valorem tax, within the limits prescribed by law, upon all taxable property within the County in accordance
with Section 1479.002(b)(2), Texas Government Code, as amended. Pursuant to the order authorizing the issuance
of the Series 2009 Bonds, the County has reserved the right to issue, on a parity basis, further obligations (the
Additional Parity Obligations) payable from the Pledged Revenues to the extent contemplated by the order
authorizing the issuance of the Series 2009 Bonds. The County has also reserved the right to issue non-parity
obligations payable from the Pledged Revenues. The County currently anticipates issuing Additional Parity
Obligations in the approximate principal amount of $38,530,000 in calendar year 2010. The County expects that the
issuance of such Additional Parity Obligations in 2010 will be sufficient to fund the completion of the Projects.
The County presently has no unlimited tax bonds authorized and unissued, but may seek additional voted
authorization in an election. The amount of such a bond election, if held, is currently undetermined.
The Commissioners Court has created the Montgomery County Toll Road Authority (the Authority). The
Authority was created with the intended primary function of oversight of County toll roads. In addition, the
Authority is authorized to and may issue debt in the future for the construction and maintenance of certain toll roads
in the County. Pursuant to its articles of formation and relevant State law, the Authority is able to charge toll
revenues for the payment of its bonds. In addition, the Authority would be able to use tax revenues for the payment
of Authority bonds, but only after the imposition of a tax has been approved by voters in the County. The County
and the Authority currently have no plans to request County voters approve the imposition of such a tax. To date,
the Authority has not issued any debt.
In addition to the Additional Parity Obligation to be issued in 2010, the County may issue additional certificates of
obligation secured, in part, by the Countys ad valorem tax debt in the next 12 months. Depending on the rate of
development within the County, changes in assessed valuation and the amounts, interest rates, 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 Bonds and
any future bonds or certificates of obligation the County may issue.
THE AGREEMENT
Background
The County has entered into a Pass-Through Toll Agreement (the Agreement) with the Texas Department of
Transportation (TxDOT) relating to the construction of improvements to four existing highways and the
construction and operation of a direct connector between two existing highways (collectively, the Project). A
copy of the Agreement is attached hereto as Appendix E. Proceeds of the Bonds were used to finance a portion of
the Project and to pay the costs of issuance of the Bonds.
15
HOU:2950034.2
Reimbursement by TxDOT
Pursuant to Article 11 of the Agreement, TxDOT will reimburse the County for the construction and operation of
each portion of the Project if such improvements are substantially completed in accordance with the Agreement and
open to the public. Reimbursement will be made in annual installments, with the first annual installment to be made
within sixty days of the first anniversary of the date on which the first highway improvement is substantially
complete and open to the public.
Beginning with the first annual installment and continuing until the entire Project is substantially complete and open
to the public, the Agreement provides that TxDOT will reimburse the County by paying an annual amount equal to
$0.07 for each vehicle-mile traveled on the portion of the Project that was substantially complete and open to the
public at any time during the previous year. Once the entire Project is substantially complete and open to the public,
TxDOT will reimburse the County by paying an annual amount equal to $0.07 for each vehicle-mile traveled on the
Project during the previous year. The total amount of monies to be reimbursement by TxDOT is described in more
detail in the Agreement.
TxDOT will make annual payments directly to the County until the total amount of annual payments pursuant to
Article 11 of the Agreement equals $98 million. Payments in excess of $98 million shall be paid into an escrow
account to be maintained in the name of and under the sole control of TxDOT as part of the state highway fund.
TxDOT and the County will, by mutual written agreement, disburse funds from the escrow account for any highway
improvement that meets the requirements outlined in the Agreement, which may include highway improvements
other than the Project.
Potential Availability of Funds for Repayment of the Bonds
As described above under Reimbursement by TxDOT, as the County completes portions of the Project in
compliance with the terms of the Agreement, the County will be eligible to be reimbursed for its costs up to a
maximum of $174,473,000. However, the Countys expectations are based on information available to the County
on the date hereof and actual results could differ materially from the Countys current projections. See OTHER
INFORMATION Forward Looking Statements Disclaimer. The total amount of monies to be reimbursement by
TxDOT is described in more detail in the Agreement.
The County may, at its discretion and subject to the provisions of the Ordinance authorizing the issuance of the
Series 2009 Bonds, use some portion of TxDOTs payments pursuant to the Agreement to pay debt service on the
Bonds. However, such funds are not pledged to and do not secure the repayment of the Bonds and the
County is under no obligation to use such funds to pay debt service on the Bonds.
Furthermore, the County is issuing additional bonds to finance the completion of the Project. Such additional bonds
are contract revenue bonds secured by a pledge of and payable from TxDOT payments described above. See THE
BONDS Future Borrowing.
INVESTMENT AUTHORITY AND INVESTMENT OBJECTIVES OF THE COUNTY
The County invests its investable funds in investments authorized by Texas law in accordance with investment
policies approved by the Commissioners Court of the County. Both state law and the Countys investment policies
are 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 and
instrumentalities, 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 recognized
investment rating firm not less than A or its equivalent; (6) bonds issued, assumed or guaranteed by the State of
Israel; (7) (a) certificates of deposit and share certificates issued by a depository institution that has its main office or
a branch office in the State of Texas, that are (i) guaranteed or insured by the Federal Deposit Insurance Corporation
or the National Credit Union Share Insurance Fund or their respective successors, or are secured as to principal by
obligations described in clauses (1) through (6) above or in any other manner and amount provided by law for
County deposits, and (b) certificates of deposit or share certificates issued by a depository institution that has its
16
HOU:2950034.2
main 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 obligations
described in clause (1), and are placed through a primary government securities dealer or a financial institution
doing 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 of
credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm
at not less than A or its equivalent or (c) cash invested in obligations described in clauses (1) through (6) above,
clauses (11) through (13) below, or an authorized investment pool; (ii) securities held as collateral under a loan are
pledged to the County, held in the Countys name and deposited at the time the investment is made with the County
or a third party designated by the County; (iii) a loan made under the program is placed through either a primary
government securities dealer or a financial institution doing business in the State; and (iv) the agreement to lend
securities has a term of one year or less, (10) certain bankers acceptances with the remaining term of 270 days or
less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by
at least one nationally recognized credit rating agency, (11) commercial paper with a stated maturity of 270 days or
less that is rated at least A-1 or P-1 or the equivalent by either (a) two nationally recognized credit rating agencies or
(b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit
issued by a U.S. or state bank, (12) no-load money market mutual funds registered with and regulated by the
Securities and Exchange Commission that have a dollar weighted average stated maturity of 90 days or less and
include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (13) noload mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity
of less than two years, invest exclusively in obligations described in the this paragraph, and are continuously rated as
to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its
equivalent. In addition, bond proceeds may be invested in guaranteed investment contracts that have a defined
termination date and are secured by obligations, including letters of credit, of the United States or its agencies and
instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract, other than
the prohibited obligations described in the next succeeding paragraph.
The County may invest in such obligations directly or through government investment pools that invest solely in
such obligations provided that the pools are rated no lower than AAA or AAA-m or an equivalent by at least one
nationally recognized rating service. The County may also contract with an investment management firm registered
under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board to
provide for the investment and management of its public funds or other funds under its control for a term up to two
years, 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 from
investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of
the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents
the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3)
collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized
mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a
market index.
Investment Policies
Under Texas law, the County is required to invest its funds under written investment policies that primarily
emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality
and capability of investment management; and that include a list of authorized investments for County funds, the
maximum allowable stated maturity of any individual investment, the maximum dollar-weighted average maturity
allowed for pooled fund groups and methods to monitor the market price of such authorized investments. All
County funds must be invested consistent with a formally adopted Investment Strategy Statement that specifically
addresses each funds investment. Each Investment Strategy Statement is required to describe its objectives
concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability
of each investment, (5) diversification of the portfolio, and (6) yield.
Under Texas law, County investments must be made with judgment and care, under prevailing circumstances, that
a person of prudence, discretion, and intelligence would exercise in the management of the persons own affairs, not
for speculation, but for investment, considering the probable safety of capital and the probable income to be
derived. At least quarterly, the investment officers of the County are required to submit an investment report
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HOU:2950034.2
detailing: (1) the investment position of the County, (2) the beginning market value, any additions and changes to
market value and the ending value for each pooled fund group, (3) the book value and market value of each
separately invested asset at the beginning and end of the reporting period, by the type of asset and fund type, (4) the
maturity 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 related
to: (a) adopted investment strategy statements and (b) the provisions of Chapter 2256, Texas Government Code, as
amended. No person may invest County funds without express written authority from the Commissioners Court of
the 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 sell
securities to the County to disclose the relationship and file a statement with the Texas Ethics Commission and the
County, (3) require the registered principal of firms seeking to sell securities to the County to: (a) receive and review
the Countys investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to
preclude imprudent investment activities, and (c) deliver a written statement attesting to these requirements; (4) in
conjunction with its annual financial audit, perform a compliance audit of the management controls on investments
and adherence to the Countys investment policy, (5) restrict reverse repurchase agreements to not more than 90
days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse
repurchase agreement, (6) restrict the investment in non-money market mutual funds in the aggregate to no more
than 15% of the Countys monthly average fund balance, excluding bond proceeds and reserves and other funds held
for debt service, (7) require local government investment pools to conform to the new disclosure, rating, net asset
value, yield calculation, and advisory board requirements and (8) provide specific investment training for the
Treasurer, 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 investment
policy, the following instruments are the only authorized investments for County funds: Time Deposits; Certificates
of Deposit; Money Market Investment Accounts; Negotiable Order of Withdrawal (NOW) Accounts; United States
Treasury Bills; United States Government Securities, as defined in Section 2256.009, Texas Government Code, as
amended; fully collateralized direct repurchase agreements as defined in as defined in Section 2256.011, Texas
Government Code, as amended; Discount Government Agencies, excluding Federal Home Loan Mortgage
Corporation (Freddie Mac); and, any Public Funds Pool authorized by state law. No funds of the County will be
invested in securities such as reverse repurchase agreements and the County will not trade in options or futures
contracts.
The Countys investment balances on June 30, 2009 were as follows:
U. S. Agency Securities
State Treasurers Investment Pool (TEXPOOL)
Lone Star Investment Pool
Money Market Mutual Fund (ICT)
Money Market Mutual Fund (AIM)
Money Market Mutual Fund (BPIF)
Total Investments
Carrying Amount
$25,448,519
11,028,254
15,831,287
60,575,342
26,214,834
11,748,784
$150,847,020
18
HOU:2950034.2
Market Value
$25,448,519
11,028,254
15,831,287
60,575,342
26,214,834
11,748,784
$150,847,020
DEBT SERVICE REQUIREMENTS

The following schedule sets forth the current total debt service requirements of the County plus the debt service
requirements of the Bonds and the Countys Pass-Through Toll Revenue and Limited Tax Bonds, Series 2009.
Fiscal
Year
9/30
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Total
Current
Series 2008B
Series 2006B
Pass-Through Toll Rev.
Total
Debt
Bonds
Bonds(b)
Bonds, Series 2009(c)
Debt
Service(a)
Principal
Interest
Principal
Interest
Principal
Interest
Service
$18,190,721
-$1,041,150
-$2,783,600
--22,015,471
18,384,788
-1,800,650
-3,137,013
-$2,738,978
26,061,428
21,347,338
-1,800,650
-3,137,013
-2,528,288
28,813,288
21,338,621
-1,800,650
-3,137,013 $2,520,000
2,477,888
31,274,171
21,338,290
-1,800,650
-3,137,013
3,770,000
2,370,938
32,416,890
21,340,013
-1,800,650
-3,137,013
3,925,000
2,216,263
32,418,938
21,345,423
-1,800,650
-3,137,013
4,095,000
2,047,563
32,425,648
21,350,254
-1,800,650
-3,137,013
4,270,000
1,870,238
32,428,154
21,342,521
-1,800,650
-3,137,013
4,490,000
1,651,238
32,421,421
21,342,318
-1,800,650
-3,137,013
4,720,000
1,420,988
32,420,968
21,344,671
-1,800,650
-3,137,013
4,940,000
1,204,188
32,426,521
21,347,486
-1,800,650
-3,137,013
5,165,000
976,263
32,426,411
21,345,436
-1,800,650
-3,137,013
1,180,000
817,638
28,280,736
21,364,184
-1,800,650
-3,137,013
1,235,000
763,438
28,300,284
21,358,306
-1,800,650
-3,137,013
1,285,000
712,234
28,293,203
21,363,231
-1,800,650
-3,137,013
1,340,000
657,256
28,298,150
21,339,675
-1,800,650
-3,137,013
1,400,000
598,156
28,275,494
21,344,428
-1,800,650
-3,137,013
1,465,000
534,569
28,281,659
21,343,609
-1,800,650
-3,137,013
1,535,000
467,069
28,283,341
762,113
-1,800,650 $20,195,000
2,657,381
1,605,000
395,416
27,415,559
765,888
-1,800,650 21,235,000
1,646,875
1,680,000
318,400
27,446,813
763,625
-1,800,650 22,320,000
558,000
1,765,000
234,375
27,441,650
-- $17,090,000
1,362,719
-1,855,000
143,875
20,451,594
-17,615,000
462,394
-1,950,000
48,750
20,076,144
$ 401,762,938 $ 34,705,000 $ 40,679,913 $ 63,750,000 $ 64,112,081 $56,190,000 $27,194,003 $ 688,393,935
Average Annual Requirements (2009-2032) ........................................................................

Maximum Annual Requirement (2016)................................................................................
$28,683,081
$32,428,154
___________________
(a)
Excludes the Bonds and the 2029 and 2030 maturities of the Series 2006B Bonds.
(b)
Includes the 2029 and 2030 maturities of the Series 2006B Bonds in the principal amount of $43,555,000,
currently outstanding in an Initial Rate until September 1, 2010. Interest on the 2029 and 2030 maturities of the
Series 2006B Bonds is shown at the Initial Rate of 5.00% until September 1, 2010, and thereafter is estimated at
market rates as if such Series 2006B Bonds were bearing interest at a Fixed Rate.
(c)
2009.
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HOU:2950034.2
COUNTY DEBT
General
The following tables and calculations relate to the Bonds and to all other debt of the County. The County and
various 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 within
the County.
Indebtedness
2009 Certified Taxable Assessed Valuation ..................................................................................... $32,636,549,238(a)
2008 Certified Taxable Assessed Valuation ..................................................................................... $30,281,923,572(a)
Direct Debt:
Outstanding Direct Debt (as of July 1, 2009)..................................................................... $
Plus: The Pass-Through Toll Revenue and Limited Tax Bonds, Series 2009...................
353,395,000(b)
56,190,000(c)
Total Direct Debt.............................................................................................................................. $
409,585,000
Interest & Sinking Fund Balance (as of June 30, 2009) ................................................................... $
14,581,869
______________________________
(a)
Certified by the Appraisal District.
(b)
Includes the Bonds.
(c)
2009.
Estimated Overlapping Debt Statement
Other governmental entities whose boundaries overlap the County have outstanding bonds or other debt payable
from ad valorem taxes levied against property within the County. The following statement of direct and estimated
overlapping 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 County
has not independently verified the accuracy or completeness of such information, and no person is entitled to rely
upon such information as being accurate or complete. Furthermore, certain of the entities listed below may have
issued additional debt since the dates stated in this table, and such entities may have programs requiring the issuance
of substantial amounts of additional debt, the amount of which cannot be determined. Political subdivisions
overlapping with the boundaries of the County are authorized by Texas law to levy and collect ad valorem taxes for
operation, maintenance and/or general revenue purposes in addition to taxes for payment of their debt, and some are
presently levying and collecting such taxes.
Taxing Jurisdiction
Cleveland ISD
Clovercreek MUD
Conroe ISD
Conroe, City of
Corinthian Point MUD #2
E. Montgomery Co MUD #3
East Plantation UD
Far Hills UD
Grand Oaks MUD
Houston, City of
Gross Debt
July 1, 2009
$42,015,884
1,625,000
843,260,000
75,770,000
1,115,000
5,475,000
3,665,000
2,645,000
2,015,000
2,887,121,125
20
HOU:2950034.2
Overlapping
Percent
Amount
1.19%
$499,989
100.00%
1,625,000
100.00%
843,260,000
100.00%
75,770,000
100.00%
1,115,000
100.00%
5,475,000
100.00%
3,665,000
100.00%
2,645,000
100.00%
2,015,000
0.37%
10,682,348
Taxing Jurisdiction
Kings Manor MUD
Lazy River Improvement Dist
Lone Star College System
Magnolia ISD
Magnolia, City of
Montgomery Co DD # 6
Montgomery Co DD # 10
Montgomery Co MUD # 7
Montgomery Co UD # 2
Montgomery WC&ID # 1
Montgomery ISD
Montgomery, City of
New Caney ISD
New Caney MUD
Oak Ridge N, City of
Panorama Village, City of
Point Aquarius MUD
Porter MUD
Rayford Rd MUD
Richards ISD
River Plantation MUD
Roman Forest Cons MUD
Roman Forest PUD # 4
Shenandoah, City of
Southern Montg Co MUD
Splendora ISD
Splendora, City of
Spring Creek UD
Gross Debt
July 1, 2009
16,930,000
1,025,000
286,955,000
175,884,784
2,190,000
1,004,990
9,775,000
8,280,000
3,939,391
3,610,000
26,145,000
290,000
18,630,206
3,915,000
1,690,000
112,230,000
39,335,000
2,466,854
25,940,000
21,200,000
15,900,000
2,800,000
28,815,000
5,755,000
24,215,000
2,745,000
6,620,000
805,000
2,310,000
3,495,000
144,115,958
3,920,000
170,165,453
19,765,000
3,615,000
2,285,000
11,360,000
12,950,000
29,785,000
140,000
395,000
1,905,000
765,000
19,625,000
10,750,000
46,670,131
2,295,000
25,065,000
21
HOU:2950034.2
Overlapping
Percent
Amount
69.81%
11,818,833
100.00%
1,025,000
23.42%
67,204,861
100.00%
175,884,784
100.00%
2,190,000
100.00%
1,004,990
100.00%
9,775,000
100.00%
8,280,000
100.00%
3,939,391
100.00%
3,610,000
100.00%
26,145,000
100.00%
290,000
100.00%
18,630,206
100.00%
3,915,000
100.00%
1,690,000
100.00%
112,230,000
100.00%
39,335,000
100.00%
2,466,854
100.00%
25,940,000
100.00%
21,200,000
100.00%
15,900,000
100.00%
2,800,000
100.00%
28,815,000
100.00%
5,755,000
100.00%
24,215,000
100.00%
2,745,000
100.00%
6,620,000
100.00%
805,000
100.00%
2,310,000
100.00%
3,495,000
100.00%
144,115,958
100.00%
3,920,000
100.00%
170,165,453
100.00%
19,765,000
100.00%
3,615,000
100.00%
2,285,000
100.00%
11,360,000
100.00%
12,950,000
100.00%
29,785,000
31.69%
44,366
100.00%
395,000
100.00%
1,905,000
100.00%
765,000
100.00%
19,625,000
100.00%
10,750,000
100.00%
46,670,131
100.00%
2,295,000
100.00%
25,065,000
Taxing Jurisdiction
Stanley Lake MUD
Texas National MUD
The Woodlands Metro Ctr MUD
The Woodlands MUD # 2
The Woodlands RUD # 1
Tomball ISD
Tomball, City of
Valley Ranch MUD #1
Willis ISD
Willis, City of
Woodbranch Village, City
Woodloch, Town of
Gross Debt
July 1, 2009
6,030,000
985,000
20,190,000
1,425,000
60,095,000
259,630,000
23,355,000
4,750,000
87,495,826
5,985,000
218,000
43,715
Overlapping
Percent
Amount
100.00%
6,030,000
100.00%
985,000
100.00%
20,190,000
100.00%
1,425,000
100.00%
60,095,000
9.06%
23,522,478
1.41%
329,306
100.00%
4,750,000
98.50%
86,183,389
100.00%
5,985,000
100.00%
218,000
100.00%
43,715
Total Estimated Overlapping Debt

Montgomery County Direct Debt(a)
Total Direct and Estimated Overlapping Debt
$2,292,020,051
409,585,000
$2,701,605,051
_______________________
(a)
Includes the Bonds and the Countys Pass-Through Toll and Limited Tax Bonds, Series 2009.
Debt Ratios
2009 Certified Taxable Assessed Valuation ($32,636,549,238)

2008 Certified Taxable Assessed Valuation ($30,281,923,572)
Per Capita First Quarter 2009 Estimated Population (435,403)
Direct Debt
1.26%
1.35%
$940.70
Direct and
Estimated
Overlapping
Debt
8.28%
8.92%
$6,204.84
Other Obligations
The County has entered into various lease-purchase agreements for the purchase of heavy road equipment, police
vehicles, animal control vehicles, a community building, and a countywide communication system consisting of
infrastructure and equipment to effectively upgrade towers and radios for all first responders in the County.
Fiscal Year
Ending
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
General
Fund
$24,475
2,826,389
2,770,972
1,976,476
1,866,959
1,866,959
1,771,416
1,771,416
1,771,416
1,771,416
1,771,416
$20,189,310
Special
Revenue Funds
$496,563
749,485
651,480
616,657
530.303
-0-0-0-0-0-0$3,044,488
Total
All Funds
$521,038
3,575,874
3,422,452
2,593,133
2,397,262
1,866,959
1,771,416
1,771,416
1,771,416
1,771,416
1,771,416
$23,233,798
In addition, in September of 2006, the Montgomery County Jail Financing Corporation (the Corporation) was
created by the County to facilitate the construction of a jail facility. The Corporation issued $44.8 million Lease
22
HOU:2950034.2
Revenue Bonds in June of 2007. The jail facility was completed in June of 2008. The County has entered into a
lease-purchase agreement with the Corporation to purchase the jail facility and the County will make such lease
payments in part from anticipated revenues paid to the County under a federal inmate housing contract between the
County and the U.S. Marshal Service. The lease payments received by the Corporation will be used to pay debt
service on the Corporations bonds. The lease payments will be paid over a twenty year term as set forth below:
Fiscal Year
Ending
2009
2010
2011
2012
2013
2014-2028
Total
General
Fund
$1,721,740
3,443,480
3,443,480
3,443,480
3,443,480
49,930,460
$65,426,120
TAXING PROCEDURES AND TAX BASE ANALYSIS

General
One of the Countys principal sources of operational revenue and its principal source of funds for debt service
payments is the receipts from ad valorem taxation. See COUNTY DEBT and SELECTED FINANCIAL
DATA. The following is a recapitulation of (a) the Texas Property Tax Code, including methodology, limitations,
remedies and procedures; (b) historical analysis of collection and trends of County tax receipts and provisions for
delinquencies; (c) an analysis of the County tax base, including relative property composition, principal taxpayers
and adequacy of the County tax base to service debt requirements; and, (d) taxation that may add to the County
taxpayers tax costs.
Property Tax Code and County-Wide Appraisal District
The Texas Property Tax Code (the Property Tax Code) specifies the taxing procedures of all political subdivisions
of the State, including the County. Provisions of the Property Tax Code are complex and are not fully summarized
here.
The Property Tax Code requires, among other matters, county-wide appraisal and equalization of taxable property
values and establishes in each county of the State an appraisal district with the responsibility for recording and
appraising property for all taxing units within a county and an appraisal review board with responsibility for
reviewing and equalizing the values established by the appraisal district. The Montgomery Central Appraisal
District (the Appraisal District) has the responsibility for appraising property for all taxing units within
Montgomery County, including the County. Such appraisal values are subject to review, change and approval by
the Montgomery Central Appraisal Districts Appraisal Review Board (the Appraisal Review Board).
Property Subject to Taxation by the County
Except for certain exemptions provided by Texas law, all real property, tangible personal property held or used for
the production of income, mobile homes and certain categories of intangible personal property with a tax situs in the
County are subject to taxation by the County. Principal categories of exempt property include, but are not limited
to: property owned by the State or its political subdivisions if the property is used for public purposes; property
exempt from ad valorem taxation by federal law; certain household goods, family supplies, and personal effects;
certain goods, wares and merchandise in transit; farm products owned by the producer; certain real property and
tangible personal property owned by a nonprofit community business organization or a charitable organization;
designated historical sites; and, most individually owned automobiles. In addition, the County may, by its own
action, or shall, if required by voters at an election, exempt residential homesteads of persons sixty-five (65) years or
older and of certain disabled persons to the extent deemed advisable by the Commissioners Court. The County is
authorized by statute to disregard exemptions for the disabled and elderly if granting the exemption would impair
the Countys obligation to pay tax supported debt incurred prior to adoption of the exemption by the County.
Furthermore, the County must grant exemptions to disabled veterans or certain surviving dependents of disabled
veterans, but only to the maximum extent of $12,000 of taxable valuation. Effective January 1, 2010, the County
23
HOU:2950034.2
must grant a complete exemption for the residential homestead of disabled veterans determined to be 100% disabled
by the U.S. Department of Veterans Affairs. Such disabled veterans exemptions resulted in a loss of approximately
$18,625,260 of the 2008 assessed value.
Residential Homestead Exemptions
The Property Tax Code authorizes the governing body of each political subdivision in the State to exempt up to
twenty percent (20%) of the market value of residential homesteads from ad valorem taxation. Where ad valorem
taxes have previously been pledged for the payment of debt, the governing body of a political subdivision may
continue to levy and collect taxes against the exempt value of the homesteads until the debt is discharged, if the
cessation of the levy would impair the obligations of the contract by which the debt was created. The adoption of a
homestead exemption may be considered each year, but must be adopted by May 1. The County, in addition to the
aforementioned mandatory veterans exemption, does give a flat $35,000 reduction to the appraised market value on
residential homesteads of persons 65 years and older. Such homestead exemptions resulted in a loss of
approximately $760,959,133 of the 2008 assessed value. The County does not grant any other exemptions to
residential property.
Freeport Goods and Goods-in-Transit Exemption
Article VIII, Section 1-j of the Texas Constitution provides that goods, wares, merchandise, other tangible property
and ores, other than oil, natural gas and other petroleum products, which have been acquired or brought into the
State for assembling, storing, manufacturing, processing or fabricating and shipped out of the State within 175 days
(freeport goods) are exempt from taxation unless action to tax was taken by the governing body of the political
subdivision prior to April 1, 1990. Decisions to tax may be reversed in the future while decisions to exempt freeport
property are not subject to reversal. Such freeport exemptions resulted in a loss of approximately $204,853,996 of
the 2008 assessed value.
Effective January 1, 2008, a Goods-in-Transit Exemption may apply to certain tangible personal property that is
acquired in or imported into Texas for assembling, storing, manufacturing or fabricating purposes which are
destined to be forwarded to another location in Texas not later than 175 days after acquisition or importation, so
long as the location where said goods are detained is not directly or indirectly owned by the owner of the goods.
The County, prior to January 1, 2008 (or in any year thereafter) may take action to allow taxation of goods-in-transit
in which event the exemption would not be available. On September 10, 2007, the Commissioners Court adopted a
resolution allowing the taxation of goods-in-transit and denying the Goods-in-Transit Exemption.
Tax Abatement
The County and other tax entities may enter into tax abatements by creating tax reinvestment zones to encourage
economic development. Prior to entering into a tax abatement agreement, each entity must adopt guidelines and
criteria for establishing tax abatement, which each entity will follow in granting tax abatement to owners of
property. The tax abatement agreements may exempt from ad valorem taxation by each of the applicable taxing
jurisdictions, including the County, for a period of up to ten (10) years, all or any part of any increase in the assessed
valuation of property covered by the agreement over its assessed valuation in the year in which the agreement is
executed, on the condition that the property owner make specified improvements or repairs to the property in
conformity with the terms of the tax abatement. As of September 30, 2005, each taxing jurisdiction has discretion to
determine terms for its tax abatement agreements without regard to the terms approved by other taxing jurisdictions.
The County currently has entered into 26 tax abatement agreements with various companies covering a total of
$557,543,715 of abated assessed value.
Pollution Control
The Property Code also provides for an exemption from ad valorem taxation for certain pollution control property.
In 2008, the County lost approximately $34,134,346 of assessed value as a result of such exemption.
Valuation of Property for Taxation
Generally, property in the County must be appraised by the Appraisal District at market value as of January 1 of
each year. Once an appraisal roll is prepared and finally approved by the Appraisal Review Board, it is used by the
County in establishing its tax rolls and tax rate. Appraisals under the Property Tax Code are to be based on one
hundred percent (100%) of market value, as such is defined in the Property Tax Code.
24
HOU:2950034.2
The Property Tax Code permits land designated for agricultural use, open space or timberland to be appraised at its
value based on the lands capacity to produce agricultural or timber products rather than at its fair market value. The
Property Tax Code permits under certain circumstances that residential real property inventory held by a person in
the trade or business be valued at the price all such property would bring if sold as a unit to a purchaser who would
continue the business. Landowners wishing to avail themselves of the agricultural use, open space or timberland
designation or residential real property inventory designation must apply for the designation and the appraiser is
required by the Property Tax Code to act on each claimants right to the designation individually. A claimant may
waive the special valuation as to taxation by some political subdivisions while claiming its valuation as to another.
If a claimant receives the agricultural use designation and later loses it by changing the use of the property or selling
it to an unqualified owner, the County can collect taxes based on the new use, including taxes for the previous three
(3) years for agricultural use and taxes for the previous five (5) years for open space land and timberland. As of
June 19, 2009, the Appraisal District lists the total loss in value due to grants of agricultural use and open-space land
appraisal from the 2008 tax roll as approximately $1,070,906,616.
The Property Tax Code requires the Appraisal District to implement a plan for periodic reappraisal of property to
update appraisal values. The plan must provide for appraisal of all real property in the Appraisal District at least
once every three (3) years. It is not known what frequency of reappraisal will be utilized by the Appraisal District or
whether reappraisals will be conducted on a zone or county-wide basis. The County does receive yearly a
preliminary estimate of values to be used in its budget process, which provides both the value of new improvements
as well as value of increase of current property. While such yearly estimates of appraised values may serve to
indicate the rate and extent of growth of taxable values within the County, they cannot be used for establishing a tax
rate within the County until such time as the Appraisal District formally by certification includes such values on its
appraisal roll.
County and Taxpayer Remedies
Under certain circumstances taxpayers and taxing units (such as the County) may appeal the orders of the Appraisal
Review Board by filing a petition for review in State district court. In such event, the value of the property in
question will be determined by the court or by a jury if requested by any party. Additionally, taxing units may bring
suit against the Appraisal District to compel compliance with the Property Tax Code.
The Property Tax Code sets forth notice and hearing procedures for certain tax rate increases which could result in
the repeal of certain tax increases. The Property Tax Code also establishes a procedure for notice to property
owners of reappraisals reflecting increased property value, appraisals which are higher than renditions, and
appraisals of property not previously on an appraisal roll.
Levy and Collection of Taxes
The County is responsible for the collection of its taxes, unless it elects to transfer such functions to another
governmental entity. Before the later of September 30 or the 60th day after the date the certified appraisal roll is
received by the County, the rate of taxation is set by the Commissioners Court based upon the valuation of property
within the County as of the preceding January 1 and the amount required to be raised for debt service, maintenance
purposes and authorized contractual obligations.
The Commissioners Court may under certain circumstances be required to advertise and hold a public hearing
within the County on a proposed tax rate before the Commissioners Court can hold a public meeting to vote on the
tax rate. If the tax rate adopted exceeds by more than 8% the rate needed to pay debt service and certain contractual
obligations and to produce, when applied to the property which was on the prior years roll, the prior years total
taxes levied for purposes other than debt service and such contractual obligations (the rollback rate), such excess
portion of the levy may, subject to constitutional restrictions on the impairment of existing obligations, be repealed
at an election within the County held upon petition of 10% of the Countys qualified voters and the tax rate adopted
for the current year be reduced to the rollback rate.
The County is prohibited from adopting a tax rate that exceeds the lower of the rollback tax rate or the effective tax
rate until it has held a public hearing on the proposed tax rate and has otherwise complied with the Property Tax
Code. Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad
valorem taxes and the calculation of the various defined tax rates.
25
HOU:2950034.2
Taxes are due on receipt of the tax bill, and become delinquent after January 31 of the following year, or on the first
day of the calendar month next following the expiration of twenty one (21) days after mailing of the tax bills,
whichever occurs later. A delinquent tax account incurs an initial penalty of six percent (6%) of the amount of the
tax and accrues an additional penalty of one percent (1%) per month up to July 1, at which time the total penalty
becomes twelve percent (12%). In addition, delinquent taxes accrue interest at one percent (1%) per month. If the
tax is not paid by July 1, an additional penalty of up to twenty percent (20%) may under certain circumstances be
imposed by the County. The Property Tax Code also makes provision for the split payment of taxes, discounts for
early payments, partial payments of taxes and the postponement of the delinquency date of taxes under certain
circumstances. The County does not permit such payments, except for those property owners who are over the age
of 65 as provided in the Property Tax Code.
Countys Rights in the Event of Tax Delinquencies
Taxes levied by the County are a personal obligation of the owner of the property. On January 1 of each year, a tax
lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed for the year on
the property. The lien exists in favor of the State and each taxing unit, including the County, having power to tax
the property. The Countys tax lien is on a parity with tax liens of such other taxing units. See COUNTY DEBT
Estimated Overlapping Debt Statement. A tax lien on real property takes priority over the claim of most creditors
and other holders of liens on the property encumbered by the tax lien, whether or not the debt or lien existed before
the attachment of the tax lien, however, whether a lien of the United States is on a parity with or takes priority over a
tax lien of the County is determined by applicable federal law. Personal property under certain circumstances is
subject to seizure and sale for the payment of delinquent taxes, penalty, and interest.
At any time after taxes on property become delinquent, the County may file suit to foreclose the lien securing
payment of the tax, to enforce personal liability for the tax, or both. In filing a suit to foreclose a tax lien on real
property, the County must join other taxing units that have claims for delinquent taxes against all or part of the same
property. Collection of delinquent taxes may be adversely affected by the amount of taxes owed to other taxing
units, by the effects of market conditions on the foreclosure sale price, by taxpayer redemption right (a taxpayer may
redeem property within six months for non-homestead property and within two years of foreclosure for homestead)
or by bankruptcy proceedings which restrict the collection of taxpayer debts.
Tax Rate Limitations
General Operation; Limited Tax Bonds, Time Warrants and Certificates of Obligation . . . The Texas Constitution
(Article VIII, Section 9) 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 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 exceeding
that which can be paid from $0.40 of the foregoing $0.80 maximum tax rate calculated at 90% collection. The
Countys Pass-Through Toll Revenue and Limited Tax Bonds, Series 2009 are limited tax bonds payable from this
Constitutional tax.
Road Bonds . . . Unlimited tax rate authorized for debt service by Article III, Section 52 of the Texas Constitution;
however, total debt cannot exceed 25% of assessed valuation. The Bonds are unlimited tax road bonds.
Road Maintenance (Special Road and Bridge Tax) . . . Tax rate imposed by Article VIII, Section 9 of the Texas
Constitution and by statute as $0.15 per $100 assessed valuation, no part of which may be used for debt service.
The County currently does not levy a tax under this provision.
Farm-To-Market and Flood Control Purposes . . . Tax rate imposed by Article VIII, Section 1-a of the Texas
Constitution and by statute as $0.30 per $100 assessed valuation after the mandatory $3,000 homestead exemption,
no allocation prescribed by statutes between debt service and maintenance. The County currently does not levy a
tax under this provision.
26
HOU:2950034.2
Historical Analysis of Tax Collection

Source: For Tax Years 1998 through 2008, Montgomery County, Texas Comprehensive Annual Financial Report Fiscal Year Ended September 30, 2008. For
Tax Year 2009, unaudited estimates provided by the County. For tax years 1997 thorough and including 1999, includes the South Montgomery County Road
District No. 1, a blended component unit of the County.
Tax
Year
Adjusted
Taxable Assessed
Valuation
1998 $10,190,624,566
1999 11,201,772,490
2000 12,536,525,138
2001 14,282,028,148
2002 16,289,381,371
2003 17,592,455,375
2004 18,968,230,832
2005 20,994,710,745
2006 23,371,824,109
2007 26,780,335,911
2008 30,291,455,468(b)
Tax Rate
Per $100 of
Assessed
Valuation
Total
Tax Levy
Current Tax
Collections(a)
Percent
of Levy
Collected
$0.4897
0.4747
0.4747
0.4710
0.4710
0.4828
0.4963
0.4963
0.4913
0.4888
0.4838
$50,889,079
54,051,832
59,831,094
67,447,935
77,043,931
85,764,910
94,513,506
104,074,236
114,138,148
129,601,440
144,971,850
$49,887,250
52,810,108
58,384,869
65,714,723
75,232,037
83,960,577
92,527,246
102,113,249
112,640,155
127,903,113
142,169,018
98.0%
97.7
97.6
97.4
97.6
97.9
97.9
98.1
98.7
98.7
98.1(c)
Delinquent
Tax
Collections
$1,247,664
1,244,737
1,547,076
1,608,717
1,784,876
1,839,076
1,856,421
1,788,843
1,771,160
1,840,224
1,774,974
Total Tax
Collections
$51,134,914
54,054,845
59,931,945
67,323,440
77,016,913
85,799,653
94,383,667
103,902,092
114,411,315
129,743,337
143,943,992
Percent of
Total Tax
Collections
to Tax Levy
100.5%
100.0
100.2
99.8
100.0
100.0
99.9
99.8
100.2
100.1
99.3(c)
Outstanding
Delinquent
Taxes
$6,175,378
6,501,501
6,232,148
6,471,525
6,587,183
6,109,116
6,043,917
5,840,603
5,578,532
6,054,333
7,921,545(c)
Percent of
Delinquent
Taxes to
Tax Levy
12.1%
12.0
10.4
9.6
8.5
7.1
6.4
5.6
4.9
4.7
5.5(c)
______________________________
(a)
Taxes levied in any year which are collected from October 1 through June 30 are shown as current collections. Such amounts include collections of
the current levy after February 1, which is the date taxes become legally delinquent.
(b)
Value may differ from that shown in the Countys financial statements and elsewhere in this Remarketing Memorandum due to subsequent adjustments.
(c)
Partial year collections through June 30, 2009.
27
HOU:2950034.2
Fiscal
Year
Ending
9-30
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009(c)
Delinquent Tax Collection Procedures

In addition to the legal procedures and penalties described under Countys Rights in the Event of Tax
Delinquencies, the County has retained a Delinquent Tax Attorney on a contract basis to file suit to collect
delinquent taxes due the County. The fees due such attorney for acting as Delinquent Tax Attorney are payable
from an additional penalty imposed upon the delinquent taxpayer, not to exceed 20% of the tax due.
Tax Rate Distribution
Tax Years
2008
General Fund
Special Revenue Fund
Debt Service Fund
$0.3566
0.0495
0.0777
$0.4838
2007
2006
2005
2004
$0.3630
0.0478
0.0780
$0.4888
$0.3611
0.0478
0.0824
$0.4913
$0.3896
0.0528
0.0566
$0.4963
$0.3822
0.0528
0.0613
$0.4963
2006 Tax Roll

Amount
Analysis of Tax Base

- Tax Base Distribution -
Type of Property
Residential
Acreage, Lots & Tracts
Farm & Ranch
Industrial & Commercial
Oil, Gas, Minerals
Utilities
Business Personal
Special Inventory
Other Personal
Exempt Property
Total Assessed Value
Less Exemption
Total Taxable Value(a)
2008 Tax Roll

Amount
$23,133,786,163
3,062,122,517
431,285,935
3,696,804,690
165,649,220
537,889,365
2,774,904,432
113,504,841
126,464,243
2,054,208,451
$36,096,619,857
5,814,696,285
$30,281,923,572
2007 Tax Roll

Amount
64.09%
8.48%
1.19%
10.24%
0.46%
1.49%
7.69%
0.31%
0.35%
5.69%
100.00%
$20,002,401,228
2,897,760,042
385,524,998
3,339,918,343
135,564,900
515,272,732
2,499,564,739
155,086,099
114,540,671
1,979,670,539
$32,025,304,291
5,261,539,081
$26,763,765,210
62.46%
9.05%
1.20%
10.43%
0.42%
1.61%
7.80%
0.48%
0.36%
6.18%
100.00%
$16,974,339,420
1,964,951,334
289,669,855
3,087,128,919
135,030,690
473,369,926
2,259,745,590
255,167,840
106,437,782
1,763,270,974
$27,309,112,330
3,961,595,292
$23,347,517,038
%
62.16%
7.20%
1.06%
11.30%
0.49%
1.73%
8.27%
0.93%
0.39%
6.46%
100.00%
______________________________
(a)
Represents values initially certified by the Montgomery Central Appraisal District; may have been
subsequently adjusted.
28
HOU:2950034.2
Top Ten Principal Taxpayers

Provided by the Montgomery Central Appraisal District. Certain of the top ten principal taxpayers may own
additional property that is not included in the assessed value figures shown in this table as a result of the way such
property is accounted for on the Appraisal District tax rolls.
2008
2007
2006
Taxpayer
Type of Property
Tax Roll
Tax Roll
Tax Roll
Wal-Mart Real Estate Trust/Sams Club
Gulf States Utilities Company
The Woodlands Land Development L.P.
Columbia Conroe Regional Medical
Center/Kingwood Medical Plaza
Consolidated Communications of Texas Co.
Huntsman Petrochemical Corp.
The Woodlands Mall Associates
Devon Energy Operating Company
Southwestern Bell Telephone Co.
Inland American Lodging Woodlands L.P.
McKesson Corporation
Retail
Electric Utility
Land Development
Medical
Communications/Utility
Industrial
Retail
Oil/Gas Exploration
Telephone Utility
Hotel/Conference Center
Manufacturing
Total
$198,577,178
181,314,335
126,191,731
$189,878,210
176,514,177
121,923,947
$162,253,877
156,313,994
74,704,986
120,493,084
77,999,490
63,440,790
62,029,770
58,871,620
54,430,440
52,097,680
(a)
122,408,109
84,646,310
67,397,526
62,156,387
58,638,020
57,132,520
(a)
51,017,953
129,463,950
77,863,640
61,142,144
61,042,740
63,607,700
50,705,039
(a)
50,989,578
$995,446,118
$991,713,159
$888,087,648
Percentage of Respective Certified Assessed Valuation
3.29%
3.70%
______________________________
(a) Not a top ten principal taxpayer in such tax year according to the Montgomery Central Appraisal District.
Tax Adequacy
Average Annual Debt Service Requirements (2009-2032) ...................................................
$0.0926 Tax Rate on the 2009 Certified Taxable Assessed Valuation @
95% collection produces..............................................................................................
Maximum Annual Debt Service Requirement (2016) ...........................................................
29
HOU:2950034.2
$28,683,081
$28,710,372
$28,710,292
$32,428,154
$32,430,939
$32,450,109
3.80%
SELECTED FINANCIAL DATA

Historical Operations of the Countys General Fund
The following is a condensed statement of revenues and expenditures of the Countys General Fund for the past five
fiscal years. The inclusion of the following table is not intended to imply that any revenues of the County, other
than receipts from ad valorem taxes provided in the Bond Ordres, are pledged to pay principal and interest on the
Bonds.
REVENUES:
Taxes
Licenses and Permits
Fees
Intergovernmental
Charges for Services
Interest
Contract Reimbursements
Inmate Housing
Fines and Forfeitures
Miscellaneous
Total Revenues
EXPENDITURES:
Current:
General Administration
Judicial
Legal Services
Elections
Financial Administration
Public Facilities
Public Safety
Health and Welfare
Conservation
Miscellaneous
Total Expenditures
Excess/(Deficiency) Revenues
OTHER FINANCING
SOURCES (USES)
Transfers In
Transfers Out
Capital Lease Financing
Total Other Financing
Sources (Uses)
Over Expenditures
Net Changes in Fund Balance

Fund Balance, October 1
Change in Accounting Principle
Fund Balance, September 30
2007
2005
2004
98,955,742
1,375,221
13,376,504
5,533,821
449,802
2,149,826
10,968,433
3,566,886
125,152
1,390,327
137,891,714
$86,721,116
1,363,580
14,529,676
4,052,777
282,712
2,293,789
10,237,033
1,607,241
100,719
1,420,777
122,609,420
$83,559,237
1,381,107
13,595,913
6,132,239
215,307
1,577,838
8,975,993
1,356,977
144,680
1,335,673
118,274,964
$74,921,693
1,261,058
10,954,243
4,943,706
223,454
842,272
7,898,265
50,430
208,906
1,441,802
102,745,829
$66,469,117
1,204,171
10,089,462
2,080,502
177,528
346,544
7,483,946
118,818
110,109
1,007,959
89,088,156
12,905,900
12,020,750
1,985,918
1,606,046
5,251,827
25,448,843
61,944,932
6,369,418
481,849
1,070,696
129,086,179
12,178,369
10,958,487
1,864,419
1,373,213
4,966,523
22,477,341
43,108,422
4,755,954
449,468
2,846,822
104,979,018
12,140,648
10,554,612
1,802,081
3,144,556
4,751,654
20,439,889
39,835,125
4,972,143
449,853
3,009,024
101,099,585
11,853,571
9,329,190
1,550,243
650,970
4,359,609
15,795,553
37,682,264
4,468,792
400,034
4,519,314
90,609,540
9,483,349
8,580,548
1,442,898
730,253
3,737,425
6,376,545
40,101,489
3,881,998
365,571
7,234,220
81,934,296
8,805,535
17,630,402
17,175,379
12,136,289
7,153,860
1,032,407
(17,281,134)
16,515,427
7,653,868
(21,940,546)
567,596
2,488,663
(12,739,072)
108,758
2,394,165
(10,761,411)
1,264,452
3,976,481
(9,482,449)
-
266,700
(13,719,082)
(10,141,651)
(7,102,794)
(5,505,968)
9,072,235
20,763,060
(3,987,663)
3,911,320
16,851,740
-
7,033,728
9,818,012
-
5,033,495
4,784,517
-
1,647,892
3,136,625
-
25,847,632
_______________________________
Source: The Countys audited financial statements.
30
HOU:2950034.2
Fiscal Year Ended September 30,

2006
2008
20,763,060
16,851,740
9,818,012
4,784,517
Special Revenue Funds

The Special Revenue Funds are the funding source for annual road and bridge construction and maintenance. The
County is divided into four precincts, each of which is provided with a separate, annual Road and Bridge Fund
Budget. Each precinct Road and Bridge Budget is administered by the County Commissioner elected from that
precinct, subject to approval of the Commissioners Court. The primary sources of revenues for the Special
Revenue Funds include ad valorem taxes and auto registration licenses and grants. The table below summarizes the
revenues and expenditures of the Special Revenue Funds for the past five fiscal years, including the Road and
Bridge Fund, as reported in the Countys Annual Financial Reports. The Special Revenue Funds are not available to
pay debt service on the Bonds.
REVENUES:
Taxes
Fees
Intergovernmental
Interest
Miscellaneous
Total Revenues
EXPENDITURES:
Current Operating
Judicial
Legal Services
Public Safety
Health and Welfare
Culture and Recreation
Conservation
Public Transportation
Revenues Over (Under)
Expenditures
OTHER FINANCING
SOURCES (USES)
Transfers In
Transfers Out
Sources
Excess (Deficiency) of Revenues
& Other Sources Over
Expenditures & Other Uses
Fund Balance, October 1
Fund Balance, September 30
2007
$13,013,191
6,438,708
1,326,060
19,643,062
1,478,107
242,843
169,827
1,901,412
2,187,468
46,400,678
$11,471,034
6,539,568
389,963
12,229,811
1,400,351
159,366
148,852
1,832,655
664,126
34,835,726
$11,279,476
6,324,084
369,937
6,526,440
1,263,797
158,654
129,703
1,865,356
635,722
28,553,169
$10,272,809
5,829,066
291,010
4,809,944
985,150
83,706
127,838
2,129,271
772,139
25,300,933
$9,495,794
6,187,767
265,805
5,700,275
981,489
38,091
103,139
2,311,145
548,841
25,632,346
626,519
6,483,955
411,911
2,539,767
11,482,218
7,314,312
321,959
18,991,837
48,172,478
108,590
6,067,142
311,692
3,932,060
2,024,746
6,948,700
196,349
17,390,668
36,979,947
102,903
5,204,608
270,554
2,308,455
2,510,329
6,102,610
307,650
16,857,418
33,664,527
173,568
5,555,158
269,427
2,195,397
2,544,020
4,473,911
390,282
18,210,470
33,812,233
(1,771,800)
115,045
6,221,345
363,820
2,076,202
4,127,271
7,812,017
296,299
17,161,732
38,173,731
(3,338,005)
(8,426,778)
(8,363,594)
(8,179,887)
16,969,998
(2,758,501)
83,594
21,890,020
(21,543,946)
3,386,301
12,738,216
(1,080,836)
153,771
11,217,213
(2,381,676)
-
10,476,632
(3,554,081)
581,915
14,295,091
3,732,375
11,811,151
8,835,537
7,504,466
12,523,291
6,158,762
3,987,663
$22,669,716
394,370
5,764,392
$6,158,762
3,384,373
2,380,019
$5,764,392
471,943
1,908,076
$2,380,019
(675,421)
2,583,497
$1,908,076
__________________________
31
HOU:2950034.2

2006
2008
2005
2004
Debt Service Funds

The Debt Service Funds are the funding source for annual payments of principal and interest on the Countys
outstanding debt. The primary source of revenue for the Debt Service Funds is ad valorem taxes. The table below
summarizes the revenues and expenditures of the Debt Service Funds, as reported in the year-end financial
statements for the past five years.
2008
REVENUES:
Taxes
Interest
Total Revenue
EXPENDITURES:
Debt Service:
Principal Retirement
Interest and Fiscal Charges
Issuance Costs
Total Expenditures
Revenues Over (Under)
Expenditures
OTHER FINANCING
SOURCES (USES)
Transfers In
Issuance of Refunding Bonds
Premium on Debt Issuance
Payment to Refunded Bond
Escrow Agent
Discount on Debt Issuance
Sources (Uses)
Excess (Deficiency) Revenues
& Other Sources Over
Expenditures & Other Uses
Fund Balances, October 1
Fund Balances, September 30
2007

2006
2005
2004
$20,683,280
96,163
20,779,443
$19,111,318
44,437
$19,155,755
$11,895,634
159,996
$12,055,630
$11,687,384
318,995
$12,006,379
$12,034,785
62,985
$12,097,770
4,598,741
16,021,976
214,338
20,835,055
5,305,000
13,989,627
593,627
19,888,254
3,830,069
8,285,966
12,116,035
3,034,930
8,087,980
618,647
11,741,557
3,237,591
8,831,163
12,068,754
(55,612)
(732,499)
(60,405)
264,822
29,016
1,939,219
9,855,000
400,427
510,395
41,495,000
940,880
164,474
-
45,850,000
3,772,220
86,064
1,318
(10,211,444)
-
(41,706,307)
(120,633)
(49,904,606)
-
1,983,202
1,119,335
164,474
(282,386)
87,382
1,927,590
2,633,600
$4,561,190
386,836
2,246,764
$2,633,600
104,069
2,142,695
$2,246,764
(17,564)
2,160,259
$2,142,695
116,398
2,043,861
$2,160,259
________________________
Pension Fund
The County provides pension, disability and death benefits for all of its full-time and part time regular employees
through a non traditional, joint contributory, defined benefit plan in the statewide Texas County and District
Retirement System (TCDRS).
Under the State law governing TCDRS, the contribution rate of the County is adopted annually based on an
actuarially determined rate. The contribution rates for the County were 9.94% for the final three months of calendar
2007, and 9.65% for the first nine months of calendar year 2008. For the accounting year ended September 30,
2008, both the pension cost of the TCDRS plan and the Countys actual contributions to the plan were $7,582,703.
The deposit rate payable by employee members was 6.0% for the calendar year 2008. For more information refer to
Note 13 of Appendix B Excerpts from Montgomery Countys Audited Financial Statements for the Fiscal Year
ended September 30, 2008.
32
HOU:2950034.2
THE COUNTY
Administration of the County
The officials having responsibility for the administration of the County are the County Judge and the four County
Commissioners who comprise the Commissioners Court. Among its duties as the governing body of the County,
Commissioners Court approves the Countys budget, determines the Countys tax rates, approves contracts, calls
elections, and determines when to issue bonds or other obligations. Each Commissioner represents one of the four
precincts into which the County is divided and is elected by the voters of such precinct for a four-year term.
The County Judge is the presiding officer of the Commissioners Court and is elected for a four-year term by the
voters of the County. Judge Alan B. Sadler has served as County Judge since 1990.
Other officials having responsibility for the financial administration of the County are the County Tax AssessorCollector, County Treasurer and County Auditor.
The County Tax Assessor/Collector, J. R. Moore, Jr., was appointed County Tax Assessor/Collector in April 1987,
and elected to such post in 1988, 1992, 1996, 2000, 2004 and again in 2008 to serve a four-year term. Mr. Moore
attended North Texas State University and the University of Houston, majoring in Political Science/Government.
Mr. Moore received his state certification as a Professional Tax-Assessor Collector in 1991.
The County Treasurer, Martha N. Gustavsen, was elected County Treasurer in 2007 to serve a four-year term. Ms.
Gustavsen has served as County Treasurer since 1987. She attended Alvin Junior College, majoring in Accounting.
The County Auditor, Phyllis L. Martin, was appointed County Auditor on January 1, 2007, after serving as an
assistant county auditor since 2003. She has subsequently been reappointed to an additional two-year term. Ms.
Martin earned a B.B.A. in Accounting and a Masters in Accountancy from the University of Houston.
Commissioners Court
Commissioner
Alan B. Sadler
Mike Meador
Craig Doyal
Ernest E. Chance
Ed Rinehart
Position
Years
Served
Terms Expire
December 31
County Judge
Commissioner - Precinct 1
19
15
6
22
9
2010
2012
2010
2012
2010
Consultants
Bond Counsel ........................................................................................... Fulbright & Jaworski L.L.P.
Houston, Texas
Financial Advisor ............................................................................RBC Capital Markets Corporation
Houston, Texas
Auditors (Certified Public Accountants) ............................. Hereford, Lynch, Sellars, & Kirkham, PC
Conroe, Texas
Disclosure Counsel................................................................................................Andrews Kurth LLP
Houston, Texas
TAX MATTERS
Tax Exemption
The initial delivery of each of the Series 2008B Bonds and the Series 2006B Bonds was subject to the opinion of
Bond Counsel to the effect that interest on the Bonds for federal income tax purposes (1) is excludable from gross
income, as defined in section 61 of the Internal Revenue Code of 1986, as amended to the date of such opinion (the
Code), pursuant to section 103 of the Code and existing regulations, published rulings, and court decisions, and
(2) is not be included in computing the alternative minimum taxable income of the owners thereof who are
individuals or, except as hereinafter described, corporations. A copy of the original opinions of Bond Counsel are
reproduced as APPENDIX D. The statute, regulations, rulings, and court decisions on which such opinions are
based is subject to change. Delivery of the Bonds is subject to the receipt of the opinion of Bond Counsel to the
33
HOU:2950034.2
effect that the remarketing of the Bonds pursuant to the respective Bond Orders does not in and of itself adversely
affect the exclusion from gross income for federal income tax purposes of interest on any Bond under existing law.
The opinions noted that interest on all tax-exempt obligations, including the Bonds, owned by a corporation will be
included in such corporations adjusted current earnings, for purposes of calculating the alternative minimum
taxable income of such corporation, other than an S corporation, a qualified mutual fund, a real estate investment
trust, real estate mortgage investment conduit, or a financial asset securitization investment trust (FASIT). A
corporations alternative minimum taxable income is the basis on which the alternative minimum tax imposed by
Section 55 of the Code will be computed.
In rendering the foregoing opinions, Bond Counsel relied upon representations and certifications of the County
made in certificates dated the date of delivery of each series of Bonds pertaining to the use, expenditure, and
investment of the proceeds of each series of Bonds and will assume continuing compliance by the County with the
provisions of the respective Bonds Order subsequent to the issuance of each series of Bonds. The Bond Orders
contain covenants by the County with respect to, among other matters, the use of the proceeds of each series of
Bonds and the facilities financed therewith by persons other than state or local governmental units, the manner in
which the proceeds of each series of Bonds are to be invested, and the reporting of certain information to the United
States Treasury. Failure to comply with any of these covenants, or if the foregoing representations should be
determined to be inaccurate or incomplete, interest on either or both series of Bonds may be includable in the gross
income of the owners thereof, regardless of the date on which the event causing such taxability occurs.
The respective deliveries of the Bonds upon their remarketing are subject to the delivery by Bond Counsel of
respective opinions that conversion of each series of Bonds will not adversely affect the excludability of interest on
the Bonds for federal income tax purposes and that conversion of each series of the Bonds occurred in accordance
with the terms of the respective Bond Orders. Bond Counsel has not been asked to undertake and is not undertaking
any review or investigation of and has not been asked to express and does not express any opinion concerning the
continuing treatment of the interest on the bonds as excludable from gross income for federal income tax purposes.
Bond Counsels opinions are not a guarantee of a result, but represents its legal judgment based upon its review of
existing statutes, regulations, published rulings and court decisions and the representations and covenants of the
County described above. No ruling has been sought from the Internal Revenue Service (the Service) with respect
to the matters addressed in the opinions of Bond Counsel, and Bond Counsels opinions are not binding on the
Service. The Service has an ongoing program of auditing the tax-exempt status of the interest on tax-exempt
obligations. If an audit of either or both series of Bonds is commenced, under current procedures the Service is
likely to treat the County as the taxpayer, and the Owners would have no right to participate in the audit process.
In responding to or defending an audit of the tax-exempt status of the interest on either or both series of Bonds, the
County may have different or conflicting interests from the Owners. Public awareness of any future audit of the
Bonds could adversely affect the value and liquidity of the Bonds during the pendency of the audit, regardless of its
ultimate outcome.
Except as described above, Bond Counsel expresses no other opinion with respect to any other federal, state or local
tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on, or
the acquisition or disposition of, the Bonds. Prospective purchasers of the Bonds should be aware that the ownership
of tax-exempt obligations such as the Bonds may result in collateral federal tax consequences to, among others,
financial institutions, life insurance companies, property and casualty insurance companies, certain foreign
corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual
recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income
tax credit, owners of an interest in a FASIT and taxpayers who may be deemed to have incurred or continued
indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt
obligations. Prospective purchasers should consult their own tax advisors as to the applicability of these
consequences to their particular circumstances.
CONTINUING DISCLOSURE OF INFORMATION
In each of the Bond Orders, the County made the following agreements for the benefit of the holders and beneficial
owners of the Bonds. The County is required to observe the agreement with respect to each series of Bonds for so
long as it remains obligated to advance funds to pay such series of Bonds. Under each agreement, the County will
be obligated to provide certain updated financial information and operating data annually, and timely notice of
specified material events, to certain information vendors. Subject to the information described under Annual
34
HOU:2950034.2
Reports below, this information will be available to securities brokers and others who subscribe to receive the
information from the vendors.
In order to provide certain continuing disclosure with respect to the Bonds in accordance with Rule 15c2-12 of the
United States Securities and Exchange Commission (the SEC) under the Securities Exchange Act of 1934, as the
same may be amended from time to time (Rule 15c2-12), the County has entered into a Disclosure Dissemination
Agent Agreement (Disclosure Dissemination Agreement) for the benefit of the Holders of the Bonds with Digital
Assurance Certification, L.L.C. (DAC), under which the County has designated DAC as Disclosure Dissemination
Agent.
The Disclosure Dissemination Agent has only the duties specifically set forth in the Disclosure Dissemination
Agreement. The Disclosure Dissemination Agents obligation to deliver the information at the times and with the
contents described in the Disclosure Dissemination Agreement is limited to the extent the County has provided such
information to the Disclosure Dissemination Agent as required by this Disclosure Dissemination Agreement. The
Disclosure Dissemination Agent has no duty with respect to the content of any disclosures or notice made pursuant
to the terms of the Disclosure Dissemination Agreement. The Disclosure Dissemination Agent has no duty or
obligation to review or verify any information in the Annual Report, Audited Financial Statements, notice of Notice
Event or Voluntary Report, or any other information, disclosures or notices provided to it by the County and shall
not be deemed to be acting in any fiduciary capacity for the County, the Holders of the Bonds or any other party.
The Disclosure Dissemination Agent has no responsibility for the Countys failure to report to the Disclosure
Dissemination Agent a Notice Event or a duty to determine the materiality thereof. The Disclosure Dissemination
Agent shall have no duty to determine or liability for failing to determine whether the County has complied with the
Disclosure Dissemination Agreement. The Disclosure Dissemination Agent may conclusively rely upon
certifications of the County at all times.
Annual Reports
The County will annually provide certain updated financial information and operating data to all NRMSIRs and any
SID as defined below. The information to be updated includes all quantitative financial information and operating
data with respect to the County as follows: (i) annual audited financial statements of the County set forth in
APPENDIX B of this Remarketing Memorandum and (ii) information of the general type included in this
Remarketing Memorandum under the headings INVESTMENT AUTHORITY AND INVESTMENT
OBJECTIVES OF THE COUNTY, DEBT SERVICE REQUIREMENTS, COUNTY DEBT (except
Estimated Overlapping Debt Statement), TAXING PROCEDURES AND TAX BASE ANALYSIS and
SELECTED FINANCIAL DATA. The County will update and provide this information within six months after
the end of each fiscal year. The County will provide the updated information to each nationally recognized
municipal securities information repository (NRMSIR) and to the Texas Municipal Advisory Council, the state
information depository (SID) designated by the State of Texas and approved by the staff of the SEC.
Notwithstanding anything else described under the heading CONTINUING DISCLOSURE OF INFORMATION
to the contrary, the SEC has designated the Municipal Securities Rulemaking Board (MSRB) as the sole NRMSIR
with respect to the disclosure obligations of the County described under such heading. The County will provide
each notice described under this heading to the MSRB in an electronic format as prescribed by the MSRB.
Information provided to the MSRB as described herein will be available free of charge from the MSRB via the
Electronic Municipal Market Access (EMMA) system at www.emma.msrb.org.
The County may provide updated information in full text or may incorporate by reference certain other publicly
available documents, as permitted by SEC Rule 15c2-12 (the Rule). The updated information will include audited
financial statements, if the County commissions an audit and it is completed by the required time. If audited
financial statements are not available by the required time, the County will provide unaudited financial statements
by the required time, and will provide audited financial statements when and if the audit report becomes available.
Any such financial statements will be prepared in accordance with the accounting principles described in Appendix
B or such other accounting principles as the County may be required to employ from time to time pursuant to state
law or regulation.
The Countys current fiscal year end is September 30. Accordingly, it must provide updated information by
March 31, 2009 and March 31 of each year thereafter, unless the County changes its fiscal year. If the County
changes its fiscal year, it will notify each NRMSIR and any SID of the change.
35
HOU:2950034.2
Material Event Notices

The County will also provide timely notices of certain events to certain information vendors. The County will
provide notice of any of the following events with respect to the Bonds, if such event is material to a decision to
purchase or sell Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3)
unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit
enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to
perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (7) modifications to rights
of the holder of the Bonds; (8) bond calls; (9) defeasances; (10) release, substitution or sale of property securing
repayment of the Bonds; and (11) rating changes. In addition, the County will provide timely notice of any failure
by the County to provide information, data or financial statements in accordance with its agreement described above
under - Annual Reports. The County will provide each notice described in this paragraph to any SID and to the
MSRB.
Availability of Information from NRMSIR and SID
The County has agreed to provide the foregoing information only to the NRMSIR and the SID. The information
will be available to holders of Bonds only if the holders comply with the procedures and pay the charges established
by such information vendors or obtain the information through securities brokers who have done so.
With respect to the Countys obligation to file with a SID, the County will provide information to the Municipal
Advisory Council of Texas. The address of the Municipal Advisory Council of Texas is 600 West 8th Street, P.O.
Box 2177, Austin, Texas 78768-2177, and its telephone number is (512) 476-6947. The County may utilize
DisclosureUSA for the filing of information relating to the Bonds.
Limitations and Amendments
The County has agreed to update information and to provide notices of material events only as described above.
The County has not agreed to provide other information that may be relevant or material to a complete presentation
of its financial results of operations, condition or prospects or agreed to update any information that is provided,
except as described above. The County makes no representation or warranty concerning such information or
concerning its usefulness to a decision to invest in or sell Bonds at any future date. The County disclaims any
contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure
agreement or from any statement made pursuant to its agreement, although holders of Bonds may seek a writ of
mandamus to compel the County to comply with its agreement.
The continuing disclosure agreement may be amended by the County from time to time to adapt to changed
circumstances that arise from a change in legal requirements, a change in law or a change in the identity, nature,
status or type of operations of the County, but only if (1) the provisions, as so amended, would have permitted an
underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into
account any amendments or interpretations of the Rule since such offering as well as such changed circumstances
and (2) either (a) the holders of a majority in aggregate principal amount (or any greater amount required by any
other provision of the Bond Order that authorizes such an amendment) of the outstanding Bonds consent to such
amendment or (b) a person that is unaffiliated with the County (such as nationally recognized bond counsel)
determines that such amendment will not materially impair the interest of the holders and beneficial owners of the
Bonds. The County may also amend or repeal the provisions of its continuing disclosure agreement if the SEC
amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such
provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent
an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. If the County
amends its agreement, it must include with the next financial information and operating data provided in accordance
with its agreement described above under Annual Reports an explanation, in narrative form, of the reasons for the
amendment and of the impact of any change in the type of information and operating data provided.
Compliance with Prior Undertakings
The County has complied in all material respects with its previous continuing disclosure agreements made in
accordance with the Rule, except that the County filed its report due March 31, 2002 on May 9, 2002, filed a notice
of material event (upgrade in rating which occurred in December 2000) on May 9, 2002 and filed a notice of
material event (refunding of certain obligations which occurred on July 20, 2005) on June 16, 2006. The County has
implemented procedures to insure timely filing of future reports.
36
HOU:2950034.2
OTHER CONSIDERATIONS
Environmental Regulations
The County is subject to the environmental regulations of the State and the United States. These regulations are
subject to change, and the County may be required to expend substantial funds to meet the requirements of such
regulatory authorities.
Air Quality
Air quality control measures required by the United States Environmental Protection Agency (the EPA) and the
Texas Commission on Environmental Quality (TCEQ) may impact new industrial, commercial and residential
development in Houston and adjacent areas. Under the Clean Air Act (CAA) Amendments of 1990, the eightcounty Houston-Galveston area (HGB area) Harris, Galveston, Brazoria, Chambers, Fort Bend, Waller,
Montgomery and Liberty counties was designated by the EPA as a moderate ozone nonattainment area. Such areas
are required to demonstrate progress in reducing ozone concentrations each year until the EPA eight hour ozone
standards are met. Compliance with EPAs 8-hour standard for ozone must be achieved by June 15, 2010 for areas
designated as moderate. However, on June 15, 2007, the Governor requested the EPA to reclassify the HGB area
since attainment by 2010 was impracticable. If this request is granted, the HGB area will be designated a severe
nonattainment area with a new attainment date of June 15, 2019.
To provide for reductions in ozone concentrations, the EPA and the TCEQ have imposed increasingly stringent
limits on sources of air emissions and require any new source of significant air emissions to provide for a net
reduction of air emissions. If the HGB area fails to demonstrate progress in reducing ozone concentrations or fails to
meet EPAs standards, EPA may impose a moratorium on the awarding of federal highway construction grants and
other federal grants for certain public works construction projects, as well as severe emissions offset requirements
on new major sources of air emissions for which construction has not already commenced.
In order to comply with the EPAs standards for the HGB area, the TCEQ has established a state implementation
plan (SIP) setting emission control requirements, some of which regulate the inspection and use of automobiles.
These types of measures could impact how people travel, what distances people are willing to travel, where people
choose to live and work, and what jobs are available in the HGB area. In response to the 8 hour non-attainment
designations, the TCEQ adopted a SIP revision plan on May 23, 2007 that sought to implement additional controls
in order to reduce NOx and VOCs. This means that additional control strategies will need to be implemented in
order to achieve attainment. It is still uncertain as to whether or when the EPA will approve the SIP revision package
and the reclassification request, and it is possible that these additional controls or rejection of the SIP could have a
negative impact on the HGB areas economic growth and development.
GENERAL CONSIDERATIONS
Sources and Compilation of Information
The information contained in this Remarketing Memorandum has been obtained primarily from the County and
from other sources believed to be reliable. No representation is made as to the accuracy or completeness of the
information derived from sources other than the County. The summaries of the statutes, orders, policies, and other
related documents are included herein subject to all of the provisions of such documents. These summaries do not
purport to be complete statements of such provisions and reference is made to such documents for further
information.
Updating of Remarketing Memorandum
The County will keep the Remarketing Memorandum current by amendment or sticker to reflect material changes in
the affairs of the County and, to the extent that information comes to its attention, to the other matters described in
the Remarketing Memorandum, until the delivery of the Bonds to the Underwriters. All changes in the affairs of the
County and other matters described in the Remarketing Memorandum subsequent to the delivery of the Bonds to the
Underwriters and all information with respect to the resale of the Bonds shall be the responsibility of the
Underwriters except as described herein under CONTINUING DISCLOSURE OF INFORMATION.
This Remarketing Memorandum was duly authorized and approved by the Commissioners Court of Montgomery
County, as of the date specified on the first page hereof.
37
HOU:2950034.2
OTHER INFORMATION
Litigation
According to the County, there are currently a number of lawsuits pending against the County, but none of such
actions are expected to result in recovery against the County for an amount outside the applicable insurance policy
limits and County-held reserves. The County believes that none of the currently outstanding lawsuits, if decided
adversely to the County, would have a material adverse effect on the financial condition of the County.
Registration and Qualification of Bonds for Sale
The remarketing and sale of the Bonds has not been registered under the Federal Securities Act of 1933, as
amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Bonds have not been
qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the
Bonds been qualified under the securities acts of any jurisdiction. The County assumes no responsibility for
qualification of the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned,
pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other
disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any
exemption from securities registration provisions.
Legal Investments and Eligibility To Secure Public Funds in Texas
Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the
Bonds are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and
authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities
or other political subdivisions or public agencies of the State of Texas. With respect to investment in the Bonds by
municipalities or other political subdivisions or public agencies of the State of Texas, the Public Funds Investment
Act, Chapter 2256, Texas Government Code, requires that the Bonds be assigned a rating of A or its equivalent as
to investment quality by a national rating agency. See SALE AND DISTRIBUTION OF THE BONDS Ratings
herein. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor
standard, the Bonds are legal investments for state banks, savings banks, trust companies with a capital of one
million dollars or more, and savings and loan associations. The Bonds are eligible to secure deposits of any public
funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of
their market value. No review by the County has been made of the laws in other states to determine whether the
Bonds are legal investments for various institutions in those states.
Forward-Looking Statements Disclaimer
The statements contained in this Remarketing Memorandum and in any other information provided by the County
that are not purely historical are forward-looking statements, including statements regarding the Countys
expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on
forward-looking statements. All forward-looking statements included in this Remarketing Memorandum are based
on information available to the County on the date hereof, and the County assumes no obligation to update any such
forward-looking statements. The Countys actual results could differ materially from those discussed in such
forward-looking statements. The forward-looking statements included herein are necessarily based on various
assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and
uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or
developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions
and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and
competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions related to the
foregoing involve judgments with respect to, among other things, future economic, competitive, and market
conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of
which are beyond the control of the County. Any of such assumptions could be inaccurate and, therefore, there can
be no assurance that the forward-looking statements included in this Remarketing Memorandum will prove to be
accurate.
Miscellaneous
The financial data and other information contained herein have been obtained from the Countys records, audited
financial statements and other sources which are believed to be reliable. There is no guarantee that any of the
assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and
38
HOU:2950034.2
orders contained in this Remarketing Memorandum are made subject to all of the provisions of such statutes,
documents and orders. These summaries do not purport to be complete statements of such provisions and reference
is made to such documents for further information. Reference is made to original documents in all respects. The
Bond Orders authorizing the issuance of the Bonds has also approved the form and content of this Remarketing
Memorandum and any addenda, supplement or amendment thereto and authorized its further use in the reoffering of
the Bonds by the Underwriters.
Financial Advisor
RBC Capital Markets Corporation is employed as Financial Advisor to the County in connection with the
remarketing of the Bonds. The Financial Advisors fee for services rendered with respect to the remarketing of the
Bonds is contingent upon the delivery of the Bonds. The Financial Advisor is not obligated to undertake, and has
not undertaken to make, an independent verification of to assume responsibility for the accuracy, completeness, or
fairness of the information in this Remarketing Memorandum.
Concluding Statement
To the extent that any statements made in this Remarketing Memorandum involve matters of opinion or estimates,
whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty and
no representation is made that any of these statements have been or will be realized. Information in this
Remarketing Memorandum has been derived by the County from official and other sources and is believed by the
County to be accurate and reliable. Information other than that obtained from official records of the County has not
been independently confirmed or verified by the County and its accuracy is not guaranteed.
Neither this Remarketing Memorandum nor any statement that may have been made orally or in writing is
to be construed as or as part of a contract with the purchasers or subsequent owners of the Bonds.
County Judge
ATTEST:
County Clerk
39
HOU:2950034.2
APPENDIX A
ECONOMIC AND DEMOGRAPHIC INFORMATION
The following information has been derived from various sources, including Texas Municipal Reports, the South
Montgomery County Woodlands Economic Development Partnership, U.S. Census data, Greater Conroe Economic
Development Council, Conroe Chamber of Commerce, and City and County officials. While such sources are
believed to be reliable, no representation is made as to the accuracy thereof.
- General Montgomery County, Texas (the County), a component of the Houston Metropolitan Area, has an economy based
on mineral production (oil, gas, sand, and gravel), agriculture (horses, ratite bird, cattle, hay, swine, greenhouse
nurseries, and also blueberries and peaches), and lumbering (timber products). The County was created and
organized in 1837 and consists of approximately 1,044 square miles of rolling, densely forested land. Many
residents of the County work in the City of Houston.
According to the U.S. Census Bureau, the County had a population in 1970 of 49,479, in 1980 of 127,722, in 1990
of 182,201, and in 2000 of 293,768, representing an increase of 61.2% from 1990 to 2000.
Cities within the County are Chateau Woods, Conroe, Cut n Shoot, Magnolia, Montgomery, New Caney, Oak
Ridge North, Panorama Village, Patton Village, Pinehurst, Porter, Porter Heights, Roman Forest, Shenandoah,
Splendora, Stagecoach, Willis, Woodbranch Village, Woodloch and the planned residential and business community
called The Woodlands.
School districts within the County are Conroe ISD, Magnolia ISD, Montgomery ISD, New Caney ISD, Splendora
ISD and Willis ISD. The largest school district is Conroe ISD, comprising approximately 333 square miles, located
in south central Montgomery County adjacent to the northern boundary of Harris County, and includes such
communities as the City of Conroe, The Woodlands, Timber Lakes, Cut and Shoot, Woodloch, Chateau Woods, and
Oak Ridge North. Conroe ISD operates five high schools (Grades 9-12), two 9th grade school, six junior high
schools (Grades 7-8), eleven intermediate schools (Grades 5-6) and twenty-nine elementary schools (Grades K-4),
and has a 2008-2009 school year enrollment of approximately 47,996 students. A satellite campus of North Harris
Montgomery County College (the College) is located in Montgomery County.
The County owns and operates the Lone Star Executive Airport which is a full-service facility located four miles
from Conroe. Houstons Intercontinental Airport, located nearby in Harris County, offers international travel for
passengers and cargo.
The following is a list of some of the firms in Montgomery County with a total number of employees in excess of
500. Such industry and employment data was provided by the South Montgomery County Woodlands Economic
Development Partnership, the Greater Conroe Economic Development Council and the Conroe Chamber of
Commerce.
EMPLOYERS OF 500-599
Name
Name
Bearden Wallpapering
Chevron Phillips Chemical Co.
Hughes & Christenson
Inkjet
Lexicon Genetics, inc.
Maersk Sealand
Peet Junior High School

Memorial Hermann, The Woodlands Hospital
Wal-Mart Supercenter
Wiesner Buick GMC Pontiac
Woodlands Resort and Conference Center
EMPLOYERS OF 1,000+
Name
Name
Anadarko Energy Services Corporation

Anadarko Petroleum Corporation
Conroe Regional Medical Center

Hewitt Associates, LLC
A-1
HOU:2950034.2
CITY OF CONROE
The City of Conroe (the City), the county seat of Montgomery County, is located in southeast Texas and is
approximately 35 miles north of Houston. Conroe is serviced by Interstate 45, Texas 75 (north-south), Texas 105
(east-west) and Loop 336 which encircles Greater Conroe. The City is the principal center of commerce in
Montgomery County. The Citys population has increased from 27,610 in 1990 to 36,811 in 2000 representing a
33% growth rate.
In 1973, Lake Conroe was completed, forming a 21,000 acre reservoir which is owned by the San Jacinto River
Authority and the City of Houston. The recreational and development opportunities afforded by the lake have had
economic impact on the Conroe and Montgomery County economies.
THE WOODLANDS
The Woodlands is a community being developed approximately 27-32 miles north of downtown Houston. Located
within a 28,000-acre tract of densely forested land, the community is generally situated adjacent to and west of
Interstate Highway 45, south of FM 1488, and north of Spring Creek, the boundary line between Montgomery and
Harris Counties. Additional acreage, known as The Woodlands Trade Center (Trade Center), is adjacent to and
east of Interstate Highway 45 between Texas State Highway 242 and FM 1488.
The Woodlands is located in a market sector of the greater Houston metropolitan area containing approximately 150
residential developments. Residential developments located in the market sector offer a variety of housing ranging
in price generally from $70,000 to in excess of $2 million. The majority of these subdivisions offer some
recreational facilities (e.g., swimming pools and clubhouses) and a few provide golf and tennis facilities. In some
cases, schools are located within the subdivisions.
Formal opening of The Woodlands occurred in October, 1974. Substantial development, as more fully described
herein, has occurred in the Village of Grogan's Mill, the Village of Panther Creek, the Village of Cochran's
Crossing, the Village of Indian Springs, the Village of Alden Bridge, Carlton Woods, the Village of Sterling Ridge,
and College Park, which are eight of the nine residential villages planned for The Woodlands; parts of the Town
Center, Research Forest, College Park; and the Trade Center. The ninth residential village, Creekside Park, is
undergoing its initial phase of development with lots available in Carlton Woods Creekside Park. These areas
currently have a population of approximately 88,460 people, and 1,551 employers provide employment for
approximately 43,200 people.
ECONOMIC AND GROWTH INDICATORS
U.S. Census of Population (a)
1930
1940
1950
1960
1970
1980
1990
2000
Montgomery County
Number
% Change
14,588
-15.84
23,055
+58.04
24,504
+6.28
26,839
+9.53
49,479
+84.35
127,722
+158.04
182,201
+42.65
293,768
+61.23
City of Conroe, TX
Number
% Change
2,457
+32.24
4,624
+88.20
7,298
+57.83
9,192
+25.95
11,969
+30.21
20,447
+70.83
27,610
+35.03
36,811
+33.32
______________________________
(a)
2000 Census of Population and Housing, U.S. Dept. of Commerce, Bureau of the Census.
A-2
HOU:2950034.2
Summary of Montgomery County Building Permit Activity

Fiscal
Year
Commercial
Permits
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
212
219
179
248
273
491
376
395
373
495
437
507
291
300
353
512
Estimated
Value (000)
$80,822
81,625
61,863
67,209
85,628
159,956
66,170
920,414
194,996
207,333
508,691
242,667
242,817
212,823
279,659
522,554
______________________________
Source: Montgomery County Engineers Office.
A-3
HOU:2950034.2
Residential
Permits
2,136
2,551
2,645
3,967
3,745
4,902
3,925
3,209
3,419
4,252
5,132
6,062
5,274
6,292
4,951
3,738
Estimated
Value (000)
$229,973
228,930
255,858
389,573
411,856
580,483
440,938
483,754
501,635
610,797
774,983
906,083
845,354
1,064,136
923,000
736,966
APPENDIX B
EXCERPTS FROM COMPREHENSIVE ANNUAL FINANCIAL REPORT OF

MONTGOMERY COUNTY, TEXAS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008
B-1
HOU:2940412.4

COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 2008
Prepared by
THE MONTGOMERY COUNTY AUDITOR'S OFFICE
Phyllis L. Martin
County Auditor

Comprehensive Annual Financial Report
Table of Contents
Year Ended September 30, 2008
PAGE
INTRODUCTORY SECTION
County Auditors Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GFOA Certificate of Achievement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Directory of Elected and Appointed Officials . . . . . . . . . . . . . . . . . . . . . . .
1
5
6
7
FINANCIAL SECTION
Independent Auditors Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managements Discussion and Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statement of Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fund Financial Statements:
Balance Sheet Governmental Funds . . . . . . . . . . . . . . . . . . . . . .
Reconciliation of the Balance Sheet of the Governmental
Funds to the Statement of Net Assets.. . . . . . . . . . . . . . . . . . . .
Statement of Revenues, Expenditures, and Changes in
Fund Balances Governmental Funds. . . . . . . . . . . . . . . . . .
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of the Governmental
Funds to the Statement of Activities . . . . . . . . . . . . . . . . . . . .
Statement of Revenues, Expenditures, and Changes in
Fund Balances Budget (GAAP Basis) and Actual
Major Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . .
Statement of Assets and Liabilities Fiduciary Funds. . . . . . . . .
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Supplementary Information:
Schedule of Revenues and Other Financing Sources Budget
(GAAP Basis) and Actual General Fund . . . . . . . . . . . . . . . . . .
Schedule of Expenditures and Other Financing Uses Budget
(GAAP Basis) and Actual General Fund . . . . . . . . . . . . . . . . . .
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet Nonmajor Governmental Funds . . . . . .
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances Nonmajor Governmental Funds. . . . . . . . . .
Combining Balance Sheet Nonmajor Special Revenue Funds. . . .
Combining Statement of Revenues, Expenditures, and Changes
in Fund Balances Nonmajor Special Revenue Funds . . . . . . . .
9
11
EXHIBIT
I
II
28
29
III
30
33
IV
34
37
V
VI
38
41
43
SCHEDULE
A-1
68
A-2
70
B-1
82
B-2
C-1
83
86
C-2
90

Table of Contents
Schedule of Revenues, Expenditures, and Changes in Fund
Balance Budget (GAAP Basis) and Actual Attorney
Administration Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual
Forfeitures Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual Civic
Center Complex Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual FEMA
Disaster Grants Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual Jury Fund. . . . . . .
Balance Budget (GAAP Basis) and Actual Sheriff
Commissary Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual Memorial
Library Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Community Development Fund. . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual Animal
Shelter Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual Law
Library Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Historical Commission Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternate Dispute Resolution Fund . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual Juvenile
Probation Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual Records
Management and Preservation Fund . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual Child
Welfare Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual Airport
Maintenance Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
SCHEDULE
PAGE
C-3
94
C-4
95
C-5
96
C-6
97
C-7
98
C-8
99
C-9
100
C-10
101
C-11
102
C-12
103
C-13
104
C-14
105
C-15
106
C-16
107
C-17
108
C-18
109

Table of Contents
Combining Balance Sheet Nonmajor Debt Service Funds . . . . . . .
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances Nonmajor Capital
Project Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
alance Budget (GAAP Basis) and Actual Debt Service
Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Budget (GAAP Basis) and Actual Jail Financing
Corporation Debt Service Fund . . . . . . . . . . . . . . . . . . . . . . . . . .
Combining Balance Sheet Nonmajor Capital Project Funds . . . . . . .
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances Nonmajor Capital
Project Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Combining Statement of Assets and Liabilities Agency
Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Combining Statement of Changes in Assets and Liabilities
Agency Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Assets Used in the Operation of Governmental Funds:
Schedule by Source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule by Function and Activity . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule of Changes by Function and Activity . . . . . . . . . . . . . . . . . .
SCHEDULE
PAGE
D-1
112
D-2
113
D-3
114
D-4
E-1
115
118
E-2
120
F-1
124
F-2
125
G-1
G-2
G-3
127
128
130
STATISTICAL SECTION
TABLE
Financial Trends:
Net Assets by Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Governmental Fund Balances Last Ten Fiscal Years. . . . . . . . . . . . .
Changes in Fund Balances, Governmental Funds Last
Ten Fiscal Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revenue Capacity:
Taxable Assessed Value and Actual Value of Property Last
Ten Fiscal Years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property Tax Rates Direct and Overlapping Governments
Last Ten Fiscal Years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Taxpayers Current Year and Nine Years Ago . . . . . . . . . .
Property Tax Levies and Collections Last Ten Fiscal Years. . . . . . .
Debt Capacity:
Ratios of Outstanding Debt by Type Last Ten Fiscal Years. . . . . . .
Ratios of Net General Bonded Debt Outstanding Last
Ten Fiscal Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
I
II
III
135
136
138
IV
140
143
VI
VII
VIII
144
152
153
IX
154
155

Table of Contents
TABLE
Legal Debt Margin Last Ten Fiscal Years. . . . . . . . . . . . . . . . . . . . .
Direct and Overlapping Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pledged-Revenue Coverage Last Ten Fiscal Years. . . . . . . . . . . . . .
Economic and Demographic Indicators:
Demographic and Economic Statistics Last Ten Fiscal Years. . . . . .
Principal Employers Current Year and Nine Years Ago . . . . . . . . . .
Operating Information:
County Employees by Function Last Ten Fiscal Years. . . . . . . . . . .
Operating Indicators by Function Last Ten Fiscal Years . . . . . . . . .
Capital Asset and Infrastructure Statistics by Function
Last Ten Fiscal Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iv
XI
XII
XIII
156
158
161
XIV
XV
162
163
XVI
XVII
165
166
XVIII
169

Office of the County Auditor
301 North Thompson, Suite 202, Conroe, Texas 77301
P. O. Box 539, Conroe, Texas 77305
Phyllis L. Martin
County Auditor
Peggie Rushing
st
1 Assistant County Auditor
March 23, 2009
The Board of District Judges

The Commissioners Court
Honorable Judges and Commissioners:
The Comprehensive Annual Financial Report of Montgomery
September 30, 2008, is submitted herewith. This report was
accordance with generally accepted accounting principles as
Accounting Standards Board, and is in compliance with Chapter
Local Government Code.
County, Texas, for the year ended

prepared by the County Auditor in
promulgated by the Governmental
114.025 and Chapter 115.045 of the
Responsibility for both the accuracy of the presented data and the completeness and fairness of the
presentation, including all disclosures, rests with the County. To provide a reasonable basis for making
this representation, Montgomery County management has established a comprehensive internal control
framework designed both to protect governmental assets from loss, theft, or misuse, and to compile
sufficient reliable information for the preparation of the countys financial statements in conformity with
Generally Accepted Accounting Principles (GAAP). Montgomery Countys comprehensive framework,
because the cost of internal controls should not outweigh their benefits, has been designed to provide
reasonable, rather than absolute, assurance that the financial statements will be free from material
misstatement. We believe the data as presented is accurate in all material aspects; that it is presented in a
manner designed to fairly set forth the financial position and results of operations of Montgomery County
as measured by the financial activity of its various funds; and that all disclosures necessary to enable the
reader to gain the maximum understanding of the Countys financial activity have been included.
Montgomery Countys financial statements have been audited by Hereford, Lynch, Sellars & Kirkham,
P.C., a firm of licensed certified public accountants. The goal of the independent audit was to provide
reasonable assurance that the financial statements of the County for the fiscal year ended September 30,
2008 are free of material misstatement. The independent audit involved examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements; assessing the accounting
principles used and significant estimates made by management; and evaluating the overall financial
presentation. The independent auditor concluded, based on the audit, that there was a reasonable basis for
rendering an unqualified opinion that the financial statements of Montgomery County for the year ended
September 30, 2008 are fairly presented in conformity with GAAP. The independent auditors report is
presented as the first component of the financial section of this report.
The independent audit of the financial statements of Montgomery County was a part of a broader,
federally mandated Single Audit designed to meet the special needs of federal grantor agencies. The
Tele: (936) 539-7820Fax (936) 788-8390Email: Phyllis.Martin@mctx.org
1
standards governing Single Audit engagements require the independent auditor to report not only on the
fair presentation of the financial statements, but also on the governments internal controls and
compliance with legal requirements. Specific emphasis was placed on internal controls and compliance
with laws and regulations involving the administration of federal awards. This Single Audit Report is
available as a separate report from Montgomery County.
GAAP require that management provide a narrative introduction, overview, and analysis to accompany
the basic financial statements in the form of Managements Discussion and Analysis (MD&A). This
letter of transmittal is designed to compliment MD&A and should be read in conjunction with it.
Montgomery Countys MD&A can be found immediately following the report of the independent
auditors.
Profile of Montgomery County
Montgomery County was created in 1837, and is located on the southern edge of the Big Thicket,
approximately forty miles north of metropolitan Houston. The County provides a full range of services,
including police protection, legal and judicial services, construction and maintenance of roads and
bridges, public health service, and facilities for recreational and cultural use. The County operates a full
service airport as a reliever to nearby Bush Intercontinental Airport. Three major rail lines intersect in the
county seat of Conroe. The Lone Star College System offers both 2- and 4-year degree plans in
partnership with several universities throughout the state. Scenic Lake Conroe sits among some 1,090
square miles of rolling hills and grassy meadows to create an atmosphere of rural America nestled
securely beside its urban neighbors.
The County operates as specified under the Constitution of The State of Texas, and in accordance with the
provisions of the State Statutes of Texas, which provide for a Commissioners Court consisting of the
County Judge and four Commissioners, each of whom is elected from four geographical precincts. The
County Judge is elected for a four-year term, and the Commissioners for four-year staggered terms.
The U.S. Census Bureau reported the 1990 population for Montgomery County to be 180,394, and the
year 2000 population to be 293,768. At September 30, 2008 the reported population was 430,768. This
47% growth in nine years was evident in the increased demand for service at the county level.
Montgomery County maintains strict budgetary controls to ensure compliance with legal provisions in the
annual appropriated budget approved by the governing body. Activities of the General Fund, the Special
Revenue Funds, and the Debt Service Funds are included in the annual appropriated budget. Budget to
actual comparisons are provided in this report for all funds for which an annual appropriated budget is
adopted. According to the budget laws of the State of Texas, expenditures may not exceed the amount
appropriated for each fund. The County Auditor is responsible for compiling and presenting a budget to
Commissioners Court for their consideration and approval, adhering to a calendar established by the
statutes of the State of Texas. In keeping with those statutes, the ad valorem tax levy cannot be
established until the budget is adopted. In Montgomery County, the budget is adopted by September 1 of
each year. Once adopted, the budget is enforced by the County Auditor, as provided by statute.
Factors Affecting Financial Condition
The information presented in the financial statements of Montgomery County is best understood when it
is considered from the broader perspective of the specific environment within which Montgomery County
operates.
Local economy- The Countys economy has historically been based on mineral production (oil, gas,
sand, and gravel), agriculture (horses, cattle, greenhouse nurseries), and lumbering (timber products).
Commercial construction has continued to increase as a result of several large shopping centers being
developed along the Interstate 45 corridor. Investments made in Texas highways recently have assisted in
attracting new and diverse businesses to the County. The Woodlands, a planned community in south

2
Montgomery County, is home to energy, biomedical, and technology businesses, causing continued
growth in the southern part of the County.
Long-term financial planning- The Commissioners Court continues to be very active in infrastructure
development, specifically road improvements, to help insure economic growth. In the second half of
calendar year 2005, the County executed an agreement with the Texas Department of Transportation that
is facilitating the improvement of five separate state-owned roads. This pass-thru toll agreement
provides for the County to pledge local funds to improve these roads, with a partial reimbursement from
highway funds at a later date. The County pledged $100 million of the Series 2006 $160 million voterapproved road bonds, as well as an additional $88 million of future bonds to leverage the federal funds for
the projects in the hopes of gaining an estimated $232 million in improvements for the citizens of
Montgomery County.
As part of this future planning, the Commissioners Court created the Montgomery County Toll Road
Authority (MCTRA) in August 2006. The MCTRA will be charged with the task of collecting tolls
from vehicles traveling on that portion of State Highway 242 which connects with Interstate 45 in
southern Montgomery County. This project will improve one of the specific roads listed in the agreement
with the Texas Department of Transportation, and is expected to be completed in early 2010. Revenues
generated by the authority are anticipated to be used to either retire a portion of the debt related to the
construction or to fund future improvements.
Recognizing the immediate as well as future need for more bed space in the county jail, Commissioners'
Court created the Jail Financing Corporation in September 2006. The primary purpose of the new entity
was to raise the funds necessary to construct a 1,100-bed detention facility adjacent to the existing jail.
The Corporation issued $45 million in lease-revenue bonds during 2007, and construction has been
completed. The facility is being leased to the County by the Corporation to initially house federal inmates
under the terms of an intergovernmental agreement (IGA) with the federal government. Revenues
received from housing the federal inmates are, in turn, being used to retire the outstanding bonds. The
County has freed additional bed space by transferring federal inmates from the existing jail to the new
facility.
In an effort to combat the increasing inflationary cost on medical claims and to control utilization of plan
benefits by participants, the County will open an employee/retiree health clinic, which will allow the
County to pay for minor medical services at substantially reduced pricing. The clinic will also be
modeled to offer Health Risk Assessments (HRA) which will allow for identification and education for
the prevention of medical conditions by the employee/retiree population. With proper maintenance of
certain medical conditions, the employer sponsored medical plan will be less apt to incur large claims.
In addition to traditional medical claims, the Clinic will offer immediate medical services for Workers
Compensation injuries. A large percentage of workers compensation claims could be resolved at the clinic
and the employee would be released to back to work. This method of service would allow for a reduction
of workers compensation claim cost and workers compensation indemnity payments for the County.
If all components of the medical clinic are implemented, including a pharmacy, the County should
achieve substantial savings now and in the future.
Cash management policies and practices- The Countys investment function operates within the
guidelines of a written policy as required by the Public Funds Investment Act. An investment committee
comprised of the County Treasurer, Tax Assessor-Collector, District Clerk, and a member of
Commissioners Court oversees the investment activities for the County. The County Auditor and
County Attorney are advisors to the committee. Commissioners Court has designated the County
Treasurer the investment officer for the County.
Specific investment strategies have been identified for each group of funds. Strategies emphasize safety
of principal as well as liquidity. Demand deposits are covered by pledged collateral maintained in joint

3
safekeeping accounts at Compass Bank. Special attention is paid to timing maturities to be consistent
with construction project draws and regular operating expenditures.
Risk Management- The County retains various levels of risk, and accounts for the associated
expenditures in the General Fund. The portions of risk that are not transferred to third party coverage are
self-funded by the County under formal arrangements. Additional information concerning the Countys
risk management activities is included in the notes to the financial statements.
Pension and other post-employment benefits- The County provides retirement, disability, and death
benefits for all of its full-time regular employees through a nontraditional defined benefit pension plan in
the statewide Texas County and District Retirement System (TCDRS). Detailed information on the
retirement plan and other post-employment benefits can be found in the notes to the financial statements.
Awards and Acknowledgments
At the annual conference of the National Purchasing Institute (NPI), Montgomery County was awarded
an Achievement of Excellence in Procurement for demonstrating extraordinary innovation,
professionalism, productivity, and leadership attributes in the Purchasing Department. This was the sixth
consecutive year that the County has achieved this award.
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to Montgomery County for its
Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30, 2007. This was
the twentieth consecutive year that the County has achieved this prestigious award. In order to be
awarded a Certificate of Achievement, a government must publish an easily readable and efficiently
organized comprehensive annual financial report. This report must satisfy both generally accepted
accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement Programs
requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.
The preparation of this report would not have been possible without the efficient and dedicated services of
all County departments. I want to express my appreciation to the entire staff of the Office of County
Auditor for their continued efforts. I also wish to commend the members of the Commissioners Court
for conducting the financial operations of Montgomery County in a responsible manner, while meeting
the increasing demands for public service.
Respectfully submitted,
Phyllis L. Martin
Montgomery County Auditor
/s

4
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Montgomery County
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2007
A Certificate of Achievement for Excellence in Financial
R"porting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
President
Executive Director
MONTGOMERY COUNTY, TEXAS ORGANIZATION CHART

VOTERS
SHERIFF
COUNTY
ATTORNEY
DISTRICT
ATTORNEY
JUSTICES OF
THE
PEACE (5)
TAX ASSESSOR
COLLECTOR
CONSTABLES
(5)
COUNTY
CLERK
DISTRICT
CLERK
COMMISSIONERS
(4)
COUNTY JUDGE
COUNTY
TREASURER
COUNTY COURT
JUDGES (4)
DISTRICT
JUDGES (6)
ADULT
PROBATION
COMMISSIONERS' COURT
ANIMAL CONTROL
& SHELTER
BUILDING
MAINTENANCE
COLLECTIONS
INFORMATION
TECHNOLOGY
COUNTY
AUDITOR
DIRECTOR OF INFRASTRUCTURE
INTERGOVERNMENTAL:
AIRPORT
MAINTENANCE
COUNTY
ENGINEER
CUSTODIAL
SERVICES
ELECTIONS
CHILD WELFARE
CRIME STOPPERS
DISPUTE RESOLUTION
D.P.S. SECRETARY POOL
EXTENSION AGENTS
LAW LIBRARY
EMERGENCY
MANAGEMENT
CIVIC
CENTER
FIRE
MARSHAL
HUMAN
RESOURCES
LIBRARY
RISK
MANAGEMENT
COMMUNITY
DEVELOPMENT
JUVENILE BOARD
ENVIRONMENTAL
HEALTH
VETERAN
SERVICES
COUNTY
JUDGE
COUNTY COURT
JUDGES (4)
PARKS
JUVENILE
PROBATION
PURCHASING
DISTRICT
JUDGES (5)

DIRECTORY OF OFFICIALS
SEPTEMBER 30, 2008
COMMISSIONERS COURT:
Alan B. Sadler
Mike Meador
Craig Doyal
Ernest E. Chance
Ed Rinehart
County Judge
Commissioner, Precinct #1
DISTRICT COURT:
Fred Edwards
Suzanne Stovall
Cara Wood
Kathleen Hamilton
K. Michael Mayes
Michael T. Seiler
Michael McDougal
Barbara G. Adamick
Judge, 9th Judicial District

Judge, 221st Judicial District
District Attorney
District Clerk
COUNTY COURT AT LAW:

Dennis Watson
Luther J. Winfree
Patrice McDonald
Mary Ann Turner
David Walker
Mark Turnbull
Judge, County Court at Law #1

County Attorney
County Clerk
JUSTICE COURT:
Lanny Moriarty
Grady Trey Spikes
Mary E. Connelly
James Metts
Matthew Masden
Justice of Peace, Precinct #1

LAW ENFORCEMENT:
Tommy Gage
Donnie O. Chumley
Gene DeForest
Tim Holifield
Travis L. Bishop
David H. Hill
Sheriff
Constable, Precinct #1
FINANCIAL ADMINISTRATION:
J.R. Moore, Jr.
Martha N. Gustavsen
Phyllis L. Martin
Carolyn Hooper
Tax Assessor-Collector
County Treasurer
County Auditor*
Purchasing Agent*
* Designates appointed official. All others are elected.

7
MANAGEMENTS DISCUSSION AND ANALYSIS

This discussion and analysis provides readers of the financial statements of Montgomery County, Texas
(the County) with a narrative overview and analysis of the Countys financial activities for the fiscal year
ended September 30, 2008. The intent of this discussion and analysis is to evaluate the current activities,
resulting changes, and currently known facts of the County as a whole. Readers of this discussion and
analysis should consider the information presented here in conjunction with additional information that is
furnished in the accompanying letter of transmittal, which can be found on pages 1-4 of this report. This
discussion should also be read in conjunction with the basic financial statements and the notes to those
financial statements (which immediately follow this discussion). The discussion and analysis includes
comparative data for the prior year.
FINANCIAL HIGHLIGHTS
The assets of the County exceeded its liabilities at the close of the fiscal year by $345,753,360
(net assets). Of this amount, $7,656,130 is restricted for specific purposes. With the presentation
of the investment in capital assets, unrestricted net assets becomes a negative $61,641,311.
Analysis of the negative unrestricted net assets reveals that a large portion of debt was used to
purchase land for road expansion projects that are a joint undertaking with the State. In these
instances of expansion of State-owned roads, the County will report the debt at this time, but not
the asset.
The revenues of the Countys government-wide activities were $261,537,623 and expenses were
$232,751,031.
Rapid growth in the county brought about uncommon infrastructure
contributions, adding to an increase in net assets of $28,786,592.
At September 30, 2008, the Countys governmental funds reported combined ending fund
balances of $162,094,633, an increase of $13,471,268 in comparison with the prior year. From
the ending fund balance, $114,640,573 is reserved for specific purposes. Approximately 29% of
the ending balance, $47,454,060, is available for spending at the governments discretion.
At September 30, 2008, unreserved, undesignated fund balance for the General Fund was
$25,332,415, or 19.6% of total General Fund expenditures.
The Countys total net bonded debt increased by $74,546,835 (22.7%) during the current fiscal
year. This increase was brought about by the issuance of $46,835,000 in general obligation
bonds, $9,855,000 in refunding bonds and $33,050,000 in certificates of obligation. The
refunding issue contributed to an increase of outstanding general obligation bonds by $1,760,308,
while instrumentally affecting a decrease in outstanding certificates of obligation by $4,455,000.
OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to Montgomery Countys basic
financial statements, which are comprised of three components: 1) government-wide financial
statements, 2) fund financial statements, and 3) notes to the financial statements. This report also
contains additional supplementary information to the financial statements themselves.
Government-Wide Financial Statements
The Statement of Net Assets and the Statement of Activities, the two government-wide financial
statements, are designed to provide readers with a broad overview of Montgomery Countys finances,
similar to the financial statements of a private-sector business. Both of these statements are presented
using the full accrual basis of accounting; therefore, revenues are reported when they are earned and
expenses are reported when the goods and services are received, regardless of the timing of cash being
received or disbursed. These statements include capital assets of the County (including infrastructure
added since implementing GASB 34 in fiscal year 2003 and the portion of GASB 34 as it pertains to
retroactive infrastructure reporting) as well as all liabilities (including long-term debt). Additionally,
11
certain eliminations have occurred as prescribed by GASB 34 in regards to interfund activity, payables
and receivables.
The Statement of Net Assets presents information on all of Montgomery Countys assets and liabilities,
with the difference between the two being reported as net assets. This statement is similar to that of the
balance sheet of a private-sector business (with primary sections in a business balance sheet being assets,
liabilities, and equity). The GASB believes that, over time, increases or decreases in the net assets may
serve as a useful indicator of whether the financial position of the County is improving or deteriorating.
The Statement of Activities presents the Countys revenues and expenses for the year, with the difference
between the two resulting in the change in net assets for the fiscal year ended September 30, 2008. All
changes in net assets are reported as soon as the underlying event giving rise to the change occurs,
regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement
for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and
earned but unused vacation leave). Because the statement of activities separates program revenue
(revenue generated by specific programs through fees, fines, forfeitures, charges for services, or grants
received) from general revenue (revenue provided by taxes and other sources not tied to a particular
program), it shows to what extent each function has to rely on general revenues for funding. The
governmental functions of the County include general administration, judicial, legal services, elections,
financial administration, public facilities, public safety, health and welfare, culture and recreation,
conservation, public transportation, miscellaneous, and debt service.
Government-wide financial statements include not only the activities of the County itself (known as the
primary government), but also those of a legally separate component unit: the Montgomery County Jail
Financing Corporation. The County Commissioners Court acts as the Board of Directors for the
component unit whose activities are blended with those of the primary government because they function
as part of the County government.
The government-wide financial statements can be found on pages 28-29 of this report.
Fund Financial Statements
The fund financial statements focus on the Countys most significant funds (major funds) rather than fund
types, or the County as a whole. A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. Montgomery County, like
other state and local governments, uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements. All of the funds of the County can be divided into two categories:
governmental funds and fiduciary funds.
1)
2)
Governmental funds are maintained to account for the governments operating and financing
activities. The measurement focus is on available resources.
Fiduciary funds are used to account for resources that are held by the government as a trustee
or agent for parties outside of the government. The resources of fiduciary funds cannot be
used to support the governments own programs.
Governmental funds are used to account for those functions reported as governmental activities in the
government-wide financial statements. As mentioned earlier, government-wide financial statements are
reported using full accrual accounting; governmental fund financial statements focus on near-term inflows
and outflows of expendable resources, as well as balances of available resources. In other words, revenue
is reported when earned, provided it is collectible within the reporting period or soon enough afterward to
be used to pay liabilities of the current period. Likewise, liabilities are recognized as expenditures only
when payment is due since they must be liquidated with available cash. Such information is useful in
comparing a governments near-term financing requirements to near-term resources available.
12
The focus of governmental funds is narrower than that of the government-wide financial statements;
therefore it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers should better understand the results and long-term impact of the governments near-term
financing decisions. The user is assisted in this comparison between the two bases of accounting by way
of a reconciliation statement between the governmental fund balance sheet and the government-wide
statement of net assets, as well as a reconciliation statement between the governmental fund statement of
revenues, expenditures, and changes in fund balances and the government-wide statement of activities.
Montgomery County maintained 33 individual governmental funds during the fiscal year ended
September 30, 2008. Information is presented separately in the governmental fund balance sheet and in
the governmental fund statement of revenues, expenditures, and changes in fund balances for the General
Fund, the Road and Bridge Fund, the Capital Projects Road Bonds Series 2006B Fund, and the Capital
Projects Road Bonds Series 2008B Fund, all of which are considered to be major funds. Data from the
remaining governmental funds (i.e., nonmajor funds) is combined into a single, aggregated presentation.
Individual fund data for each nonmajor governmental fund is provided in the form of combining
schedules, which are included in the Other Supplementary Information section following the notes to the
financial statements.
Montgomery County utilizes and maintains budgetary controls over its operating funds. Budgetary
controls are used to ensure compliance with legal provisions required under state statute governing the
annual appropriated budget. Budgets for governmental funds are established in accordance with state law
and are adopted at the department level for the General Fund, all Special Revenue Funds, and the Debt
Service Fund using the primary categories of salaries, benefits, supplies, services, and capital outlay. A
budgetary comparison statement is provided in the financial section for the General Fund and the Road
and Bridge Special Revenue Fund. Budgetary comparison schedules for the Debt Service Fund and all
nonmajor special revenue funds are provided as supplementary information. These budgetary
comparisons can be used to demonstrate compliance with the budget both in its original and final forms.
The basic governmental fund financial statements can be found on pages 30-40 of this report.
Fiduciary funds are used to account for resources held for the benefit of parties other than the County
itself. Agency funds are the only fiduciary fund type used by Montgomery County, and they are not
reflected in the government-wide financial statements because the resources of those funds are not
available to support the programs and expenses of the County. The basis of accounting used for fiduciary
funds is the full accrual basis, much like that of the government-wide statements.
The basic fiduciary fund financial statements can be found on page 41 of this report.
Notes to the financial statements provide additional information that is essential to a full understanding
of the data provided in the government-wide and fund financial statements. As such, the notes are an
integral part of the basic financial statements. They focus on the primary governments governmental
activities, major funds, and nonmajor funds in the aggregate.
The notes to the financial statements can be found on pages 43-66 of this report.
Additional supplementary information is comprised of the General Fund final budget versus actual at
the department level. This comparative data can be found on pages 68-80 of this report.
Other supplementary information includes combining financial statements for nonmajor governmental
and fiduciary funds. These funds are totaled by fund type and presented in a single column in the basic
financial statements. They are not reported individually, as with major funds, on the governmental fund
financial statements.
Other supplementary information can be found on pages 82-131 of this report.
13
GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, the GASB believes that net assets may serve over time as a useful indicator of a
governments financial position. Montgomery Countys assets exceeded liabilities by $345,753,360 at
September 30, 2008, as shown in the table below. This amount represents an increase through
governmental activities of $28,786,592 from the net assets at September 30, 2008.
Net Assets - Governmental Activities
Current and other assets
FY 2008
FY 2007
$ 230,963,963
$ 205,233,607
Capital assets
590,403,599
487,246,734
Total assets
821,367,562
692,480,341
439,396,902
347,275,198
Long-term liabilities outstanding

Other liabilities
Total liabilities
Net assets:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets
36,217,300
28,238,375
475,614,202
375,513,573
399,738,541
368,993,046
7,656,130
7,070,714
(61,641,311)
(59,096,992)
$ 345,753,360
$ 316,966,768
The Countys total assets of $821,367,562 are largely comprised of investments of $165,318,997, or
20.2%, and capital assets net of accumulated depreciation of $590,403,599, or 71.9%. The capital assets
of the County include land, buildings, improvements other than buildings, equipment, and infrastructure
(roads, bridges, signs, etc.) Capital assets are non-liquid assets that provide services to citizens; as a
result, these assets cannot be utilized to satisfy County obligations.
As in last year, long-term debt of $439,396,902 comprises the largest portion of the Countys total
liabilities of $475,614,202, at 92.4%. Of total long-term liabilities, $13,003,414 is due within one year,
with the remainder of $426,393,488 being due over a period of time greater than one year. A more indepth discussion of long-term debt can be found in the notes to the financial statements.
The Countys assets exceeded its liabilities by $345,753,360 (net assets) on September 30, 2008.
Roughly 2.3%, or $7,656,130, of the Countys net assets represents restricted net assets. These resources
are subject to external restrictions on how they may be used. Restrictions include statutory requirements,
bond covenants, and granting conditions. Of those restricted net assets, $38,463 is restricted for capital
projects and $7,617,667 is restricted for debt service of compensated absences and arbitrage rebate. The
most significant portion ($399,738,541) of the Countys net assets reflects its investment in capital assets,
net of related debt. Although unrestricted net assets is negative for government-wide net assets, it should
be noted that the Countys fund financial statements continue to reflect positive unreserved fund balances.
14
Montgomery Countys governmental activities increased net assets by $28,786,592. The key components
of this increase are as follows:
Governmental Activities
FY 2008
Revenues:
Program revenues:
Fees, fines, forfeitures, and charges for services $
Federal grants and contributions
State grants and contributions
Other grants and contributions
General revenues:
Property taxes
Other taxes
Other general revenues
Total revenues
Expenses:
General administration
Judicial
Legal services
Elections
Financial administration
Public facilities
Public safety
Health and welfare
Culture and recreation
Conservation
Public transportation
Miscellaneous
Debt service interest and fiscal charges
Total expenses
Change in net assets
Net assets - beginning
Net assets - ending
45,404,012
18,752,348
4,485,971
52,567,749
FY 2007
42,109,442
11,964,706
2,761,919
58,884,598
131,600,844
1,610,605
7,116,094
261,537,623
115,740,129
1,381,764
8,862,425
241,704,983
16,822,168
15,894,641
2,445,787
1,947,963
5,088,713
19,887,748
51,558,472
16,301,079
8,697,389
825,476
76,212,732
1,070,696
15,998,167
232,751,031
28,786,592
316,966,768
11,780,620
17,042,393
2,233,072
1,466,229
4,981,536
20,208,449
44,725,170
7,637,646
8,460,806
760,370
69,455,834
2,846,822
11,701,725
203,300,672
38,404,311
278,562,457
345,753,360
316,966,768
The Countys total revenues of $261,537,623 were all from governmental activities. Property tax revenue
accounts for $131,600,844, or 50.3%; program revenues of fees, fines, forfeitures, and charges for
services comprise $45,404,012, or 17.4%; and grants and contributions encompass $75,806,068, or 29.0%
of total government-wide revenues.
Expenses for the year totaled $232,751,031. The public transportation function accounted for
$76,212,732, or 32.8% of this total. The increase in spending in the public transportation function
continues to be due to the several large road construction projects the County has undertaken. These
projects are primarily for the widening and improvement of State-owned roads, creating inflated
expenditures in the public transportation function, with no offsetting asset capitalization. The public
safety ($51,558,472), public facilities ($19,887,748), and general administration ($16,822,168) functions
represent 22.2%, 8.6%, and 7.2% of total government-wide expenses, respectively. These three functions
show marked interdependent increases. Expenses of the County jail and law enforcement agencies are
reported in the public facilities and public safety functions, respectively. These two functions operate
with the clerks of the court (County and District), which are housed in the general administration
function.
15
The governments ending net assets of $345,753,360 represent an increase of $28,786,592 from the prior
years $316,966,768 in net assets. The Countys change in net assets is summarized by the following
chart:
Change in Net Assets
FY 2008
Governmental funds activity:
Total revenues
$ 208,706,577
Total expenditures
293,231,315
Excess (Deficiency) of revenues over expenditures
(84,524,738)
Capital lease financing
16,599,021
Issuance of certificates of obligation
33,050,000
Issuance of general obligation bonds
56,690,000
Payment to refunded bond escrow agent
(10,211,444)
Premiums on obligations, net
1,868,429
Net change in fund balance
13,471,268
Government-wide activity:
Difference between current year's capital outlay
expenditures and depreciation expense
52,373,421
Net effect of capital asset sales, donations, trade-ins, etc.
50,783,445
Revenues not reported in funds because they do not
provide current-period financial resources
2,047,598
Long-term debt not reported in funds because it does
not affect the current period
(87,864,370)
Expenses not reported in the funds because they do not
use current-period financial resources
(2,024,770)
Total change in net assets
$ 28,786,592
FY 2007
$ 183,339,792
233,438,076
(50,098,284)
3,953,897
86,329,989
(41,706,307)
820,247
(700,458)
20,155,851
57,517,135
848,056
( 37,805,657)
(1,610,616)
$ 38,404,311
This change in net assets begins with the current years differences between governmental revenues and
expenditures ($84,524,738), along with other financing sources and uses ($97,996,006). Differences
between capital assets added during the year and the depreciation related to all capital assets recorded,
along with the effect of various capital assets transactions, such as dispositions and donations
($103,156,866) also affect this change.
Other factors influencing the change in net assets are those revenues and expenses that do not provide or
require the use of current financial resources ($22,828). GASB 34 dictates that the County record an
allowance for accounts that are unlikely to be collected. These allowances for doubtful accounts combine
with items, such as deferrals of long-term balances not being paid in the current year, to constitute further
changes in net assets. Additionally, long-term debt, whether being issued or retired, has an effect on the
change in net assets ($87,864,370). During the fiscal year, the County issued new debt and paid off a
portion of its existing debt. These financings represent further changes in the net assets of the County.
The overall financial position of the County has improved over the last year. As mentioned earlier, there
is an increase in net assets of $28,786,592. Additionally, the increase of $9,870,269 in the combined fund
balance of Montgomery Countys two major operating funds would indicate an improvement in overall
financial position. However, total operating fund balance is neither where management desires nor
intends for it to be. As part of long-range planning, management has pledged to continue increasing the
level of the operating funds fund balances until such time as they represent between 20 and 25 percent of
annual operating costs.
16
The following chart depicts expenses and program revenues for the fiscal year ending September 30, 2008
for governmental activities.
Expenses and Program Revenues - Governmental Activities
$32
$30
$28
$26
$24
$22
$20
$18
$16
$14
$12
$10
$8
$6
$4
$2
$0
nd
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sa
H
ea
lth
* Public safety expenses and revenues have each been decreased by $19million;
public transportation expenses and revenues have each been decreased $49million
for the purpose of a more easily read chart. No other expenses or revenues have
been altered in any way and are accurate as shown.
* See note below
io
re
y
fe
t
s
Pu
bl
ic
fa
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ie
ra
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ia
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* See note below
Expense
Revenue
Key elements of the analysis of government-wide program revenues and expenses as they relate to each
function reflect the following:
Program revenues of $121,210,080 are comprised in large part (55.3%) of public transportations
revenues of $67,035,732 and public safetys revenues of $19,715,813 (16.3%). The health and
welfare function comprises 9.1% of program revenues with $11,049,260, the judicial function
makes up 7.7% of program revenues with $9,342,159 and, the general administration function
covers 4.8% of program revenues with $5,799,253. The expenses of these functions account for
32.7%, 22.20%, 4.0%, 6.8%, and 7.3%, respectively. As expected, general revenues provided the
required support and coverage in areas where expenses exceeded revenues.
The public transportation function experienced an increase in expenses of $6,756,898 while
realizing a decrease in revenues of $5,079,162. The increase in expenses is the result of an
aggressive effort on the part of commissioners to improve and expand roads, many of which are
state-owned, located in the County. These roads, because they are not owned by the County,
cannot be shown as capital assets in the government-wide analysis; this creates a large expense,
with no corresponding asset.
On September 13, 2008, Hurricane Ike slammed into the Houston metropolitan area, leaving a
wide swathe of destruction in its wake. After a Presidentially-declared disaster, the Federal
Emergency Management Agency (FEMA) moved into the area to provide cleanup and debris
removal assistance. During a long and difficult recovery hampered by power outages, the County
provided assistance to citizens at many levels. The public safety, public facilities, general
administration, public transportation and health and welfare functions experienced increased
expenses while coping with an influx of citizens and officials. The County provided varied
services such as debris removal and disposal, staging areas for utility companies to coordinate
restoration of power to homes and businesses and housing of FEMA officials.
17
The following chart depicts revenues of the governmental activities for the fiscal year ended September
30, 2008.
Revenues by Source - Governmental Activities
Fees, fines, forfeitures, and

charges for services
17.4%
Property taxes
50.3%
Other grants and contributions

20.1%
State grants and contributions

1.7%
Federal grants and contributions
7.2%
Other general revenues

2.7%
Other taxes
0.6%
GOVERNMENTAL FUND FINANCIAL ANALYSIS

Montgomery County uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements.
Governmental funds are a means of providing information on near-term inflows, outflows, and balances
of usable resources. Such information is useful in assessing Montgomery Countys financing
requirements. In particular, unreserved, undesignated fund balance may serve as a useful measure of a
governments net resources available for spending at the end of the fiscal year.
As of September 30, 2008, the Countys governmental funds reported combined ending unreserved,
undesignated fund balances of $47,153,272, an increase of $28,354,859 in comparison with the prior year.
This unreserved, undesignated fund balance is available for spending at the Countys discretion. The
remainder of fund balance is reserved or designated to indicate that it is not available for new spending
because it has already been committed. These commitments can be to fund capital projects
($109,016,095), pay debt service ($4,561,190), reflect inventories ($67,641), and reflect prepaid items
($995,647). Commitments also come in the form of designations that will fund encumbrances from the
prior year ($300,788). On September 30, 2008, the total fund balance of the General Fund (the chief
operating fund of the County) was $25,847,632. Of that amount, $25,332,415 was available for spending
at the Countys discretion, $289,129 was designated for encumbrances, and $226,088 was reserved for
prepaid items.
Total assets in the General Fund amounted to $62,874,678, accounting for 27.4% of total governmental
fund assets. The total assets of other major funds include Road and Bridge Special Revenue Fund
($7,825,701), Capital Projects Road Bonds Series 2006B Fund ($25,738,010), and Capital Projects Road
18
Bonds Series 2008B Fund ($34,932,888). Together, all major funds account for $131,371,248 (57.3%) of
the Countys $229,345,175 in total assets.
The fund balance of the Countys General Fund grew by $5,084,572 during the current fiscal year. Key
factors in this growth are as follows:
The Commissioners Court, as part of long-range planning, budgeted a $2,000,000 fund balance
increase.
An increase in the appraised value of real and personal property boosted ad valorem tax revenues
$11,971,628.
The County has multiple contracts with outside entities for security services through the offices of
the Sheriff and the Constables. Increases in the number of contracts generated larger than
expected reimbursements from these organizations, resulting in an increase to contract
reimbursements of $731,399 over the past year.
The Road and Bridge Special Revenue Fund has a total fund balance of $6,006,863 which is reported as
$67,641 reserved for inventory, $3,202 designated for encumbrances and $5,935,863 unreserved,
undesignated. The unreserved, undesignated portion of the fund balance increased $5,540,350 during the
current year due to focus by the Commissioners for various capital projects funds to help finance road
construction contracts that were paid through the capital projects funds. Additionally, permitting
difficulties for utility relocation involved with the building of a precinct barn necessitated the delay of its
construction.
The Capital Projects Road Bonds Series 2006B Fund has a fund balance of $21,573,561 at the end of the
fiscal year. The decrease of $18,535,175 is due to the swift progress in road construction projects
throughout the County.
At year end, the $33,736,679 fund balance of the Capital Projects Road Bonds Series 2006B was reserved
for capital projects to illustrate the Countys commitment to rapid road expansion and its pioneering
implementation of the State of Texas pass-through toll program.
GENERAL FUND BUDGETARY HIGHLIGHTS
The published budget of Montgomery County for the fiscal 2008 was prepared on a modified accrual
basis, and includes all elements required by Texas Local Government Code Section 111.063, applicable
to counties of population more than 125,000 that have appointed a County Budget Officer. The original
adopted budget of the General Fund includes revenues of $120,771,453 and expenditures of
$108,496,003. The General Funds final budget, as amended, contains revenues of $136,861,463 and
expenditures of $148,262,777.
19
The following table presents the changes between the original adopted budget and the final budget for the
General Fund as of September 30, 2008.
General Fund
Budget Variances
Original Budget
Revenues:
Taxes
Fees
Intergovernmental
Interest
Inmate Housing
Miscellaneous
Total Revenues
Expenditures:
Judicial
Legal Services
Elections
Public Facilities
Public Safety
Health and Welfare
Conservation
Miscellaneous
Total Expenditures
Excess Revenues Over Expenditures
Other Financing Sources/(Uses):
Transfers In
Transfers Out
Total Other Financing Sources/(Uses)
Net Change in Fund Balances
Fund Balance - Beginning
Fund Balance - Ending
97,679,584
1,342,015
12,004,306
683,896
255,000
1,340,750
5,556,002
1,200,000
73,500
636,400
120,771,453
Final Budget
$
15,325,670
12,149,494
1,779,377
1,351,519
5,573,006
22,992,398
39,750,735
3,998,600
461,065
5,114,139
108,496,003
12,275,450
12,275,450
20,763,060
$
33,038,510
98,470,862
1,393,108
11,846,368
7,879,050
437,704
1,392,950
10,794,861
3,542,602
73,500
1,030,458
136,861,463
Variance with
Original Budget
Positive (Negative)
$
791,278
51,093
(157,938)
7,195,154
182,704
52,200
5,238,859
2,342,602
394,058
16,090,010
17,758,987
12,467,487
2,086,222
1,862,664
5,680,038
26,548,614
68,924,001
6,435,672
501,487
5,997,605
148,262,777
(11,401,314)
(2,443,317)
(317,993)
(306,845)
(511,145)
(107,032)
(3,556,216)
(29,173,266)
(2,437,072)
(40,422)
(883,466)
(39,766,774)
(23,676,764)
1,032,407
(1,920,487)
16,515,427
15,627,347
4,226,033
20,763,060
1,032,407
(1,920,487)
16,515,427
15,627,347
(8,049,417)
-
24,989,093
(8,049,417)
Final budgeted revenues were higher than originally planned by $16,090,010. The final amended budget
for taxes increased $791,278 over the original budget due to an aggressive collection effort, which
resulted in higher than originally expected collections of current and delinquent taxes, along with the
penalties and interest associated with those delinquent taxes. Intergovernmental revenue contained
$7,195,154 more in the final budget than in the original budget. This increase is largely due to the
anticipated receipt of several large federal and state grants during the year that were not foreseen at the
time the original budget was adopted. The final budget for contract reimbursements was $5,238,859 more
than the original budget. The increase in the anticipated revenue was primarily due to a $4,844,630
budgeted contract reimbursement for the Community Supervision and Corrections Departments salary
and fringe benefits. During the original budget process, Commissioners Court does not budget for funds
that are not at the discretion of the County to spend. Since this contract reimbursement is earmarked for
specific purposes, it is not included in the original budget. During the course of the fiscal year, the
20
County entered into several contracts for law enforcement services with local agencies. These contracts
were also contributing factors to the increase in the budget. An increase of $2,342,602 in the final budget
for inmate housing was due to the Joe Corley Detention Facility opening earlier and at a higher capacity,
allowing for more federal inmates to be housed at the facility.
The originally unanticipated revenue partially offset the expenditure differences of $39,766,774 between
the original budget and the final amended budget. The general administration function had a final
expenditure budget that is $2,433,317 higher than the original budget. This increase was due in large part
to employee health coverage in the Countys self-insured benefit plan. Estimated reserves are required
for self-insurance programs, which are recorded as they become available. At the time of the original
budget process, these amounts were not readily identifiable.
The public facilities function had a final budget $3,556,216 higher than the original budget. As discussed
earlier, the Joe Corley Detention Facility opened earlier than anticipated, resulting in a need to budget
additional operating expenses.
Funds that were originally scheduled in prior fiscal years were not included in the original budget for
fiscal year 2008. This practice reflects the Countys policy of letting encumbrances lapse at year-end and
re-appropriating them in the current year. This policy created increases in the amended budget for
carryovers from the prior year in the general administration, elections, public facilities, health and
welfare, public safety, and miscellaneous functions.
A $29,173,266 increase in the final budget over the original budget for expenditures in the public safety
function was the result of several factors, including encumbrance carryovers as mentioned above.
Included in the public safety function is the Community Supervision and Corrections Department
(CSCD), which is not a County department. However, the County has entered into a contract with the
CSCD that enables those employees to participate in the Countys employee benefit plan. CSCD
reimburses the County 100% of the costs associated with said participation. Management believes
inclusion of 100% reimbursed contracts in the original budget would unnecessarily inflate revenues and
expenditures because the revenues will always be sufficient to cover the expenditures. The County has
elected not to include these amounts in the original, adopted budget each year.
Also contributing to the budgeted variances for the public safety function is the Countys participation in
several contracts with local agencies for law enforcement services. During the course of the fiscal year,
additional interlocal agreements were created with local agencies for the performance of security services.
These additional contracts created increased expenditures for the County, but also created an increase in
the revenue line supporting the associated expenditure.
During the fiscal year, the County entered into a contract with Motorola, Incorporated to provide
infrastructure and subscriber equipment (Montgomery County Radio System). This radio system is part
of a Regional Radio System that incorporates Galveston, Harris, Fort Bend, Brazoria, Walker, Wharton,
Matagorda, Liberty and Montgomery Counties and provides interoperable communication between all of
these agencies with more than 38,000 users. Five Radio Consoles were purchased and are housed in the
Communication Division of the Sheriffs Office and include computer and radio equipment. As part of
the contract with Motorola, Incorporated, Montgomery County purchased P25 compliant digital radios for
the County and other law enforcement agencies in the County.
The health and welfare function had final budgeted expenditures $2,437,072 higher than the original
budget for expenditures. This function includes two grants that are managed by the University of Texas
Medical Branch for the County. Both grants are pass-through in nature, ultimately resulting in a
corresponding revenue for the expense incurred. To prevent any increase in taxes for the constituents of
the County for this grant-funded cost, the expense is not budgeted until the revenue is budgeted, which
was after the original budget process.
21
The increase of expenditures in the final amended budget over the original budget that was not covered by
the revenues increase was reported as a decrease in the final amended budgeted net change in fund
balances. This amount was reduced by $8,049,417.
The following table presents the differences between the final amended budget and actual expenditures
for the General Fund as of September 30, 2008.
General Fund
Budget Variances
Final Budget
Revenues:
Taxes
$ 98,470,862
1,393,108
Fees
11,846,368
Intergovernmental
7,879,050
437,704
Interest
1,392,950
10,794,861
Inmate Housing
3,542,602
73,500
Miscellaneous
1,030,458
Total Revenues
136,861,463
Expenditures:
17,758,987
Judicial
12,467,487
Legal Services
2,086,222
Elections
1,862,664
5,680,038
Public Facilities
26,548,614
Public Safety
68,924,001
Health and Welfare
6,435,672
Conservation
501,487
Miscellaneous
5,997,605
Total Expenditures
148,262,777
Excess Revenues Over Expenditures
(11,401,314)
Other Financing Sources/(Uses):
Transfers In
1,032,407
Transfers Out
(1,920,487)
16,515,427
Total Other Financing Sources/(Uses)
15,627,347
4,226,033
Fund Balance - Beginning
20,763,060
Fund Balance - Ending
24,989,093
Actual
$
98,955,742
1,375,221
13,376,504
5,533,821
449,802
2,149,826
10,968,433
3,566,886
125,152
1,390,327
137,891,714
Variance with Final

Budget Positive
(Negative)
$
484,880
(17,887)
1,530,136
(2,345,229)
12,098
756,876
173,572
24,284
51,652
359,869
1,030,251
12,905,900
12,020,750
1,985,918
1,606,046
5,251,827
25,448,843
61,944,932
6,369,418
481,849
1,070,696
129,086,179
8,805,535
4,853,087
446,737
100,304
256,618
428,211
1,099,771
6,979,069
66,254
19,638
4,926,909
19,176,598
20,206,849
1,032,407
(17,281,134)
16,515,427
266,700
9,072,235
20,763,060
(3,987,663)
(15,360,647)
(15,360,647)
4,846,202
(3,987,663)
$ 25,847,932
858,539
Actual revenues exceeded budgeted revenues by $1,030,251. Fee increases approved by the state
legislature comprise a share of the increase ($1,530,136) and serve to offset the shortfall in
intergovernmental revenues. The Countys policy for multiple year grants is to budget the entire grant in
the year in which it is received. In the case of Homeland Security grants, which span multiple County
fiscal years, $2,695,385 was budgeted, of which $891,643 was spent during the fiscal year.
Actual expenditures were $19,176,598 lower than final budgeted expenditures.
The general
administration function contributed $4,853,087 toward that amount. The risk management department of
the County is charged with recording costs of various liability and property claims and settlements.
22
During the fiscal year, costs of those claims were significantly lower than had been anticipated at the time
of the budget process.
The public facilities function had expenditures that were $1,099,771 less than was approved in the final
amended budget. The early opening of the new Joe Corley Detention Facility to house federal inmates
freed bed space at the Countys own Jail and allowed for cost savings.
All departments in the public safety function of the General Fund expended less than was approved in the
final amended budget by $6,979,069. The difference is primarily due to the Sheriffs department
experiencing difficulty in retaining qualified staff. In fiscal year 2009 the Sheriffs department
implemented a structured salary plan to attract and retain qualified staff. In addition, grants that span
multiple County fiscal years or are awarded late in the fiscal year contain monies that are spent in
subsequent years.
The miscellaneous function showed actual expenditures less than the final budget by $4,926,909. As
discussed in the original to final budget comparisons, this was due in large part to the funding of
anticipated salary increases. At the time an increase is approved, the funds are transferred to the
appropriate department or function. Therefore, actual expenditures in the miscellaneous function were far
less than originally budgeted.
The actual net change in fund balance was $4,846,202 greater than anticipated with the final budget. This
is the result of both an increase in actual revenues and a reduction in actual expenditures that included
sufficient amounts to cover transfers to other funds. The Jury Special Revenue Fund and the Memorial
Library Special Revenue Fund each received $7,269,478 and $7,125,000 more than shown in the final
budget. In all of these funds, the emphasis is on providing a service. In the case of the Jury Special
Revenue Fund, that service is in the form of a court system. The Memorial Library Special Revenue
Funds emphasis is on culture and recreation. These funds are not expected in any year to provide enough
revenues to adequately fund their own services. Therefore, it is anticipated that the General Fund will
service the expenditures of those funds every year. Transfers in and out simply provide a mechanism to
move funds from one self-balancing set of accounts (a fund) to another self-balancing set of accounts.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
Montgomery Countys investment in capital assets for its governmental activities as of September 30,
2008 amounted to $590,403,599 (net of accumulated depreciation). This investment in capital assets
includes land, buildings, improvements, equipment, infrastructure that was purchased, completed or
donated since the fiscal year ending September 30, 1981, and construction in progress.
Major capital asset events during the current fiscal year included the following:
Additions to land totaled $1,712,285 and included a purchase of land for the Spring Creek
Greenway.
Purchases in the buildings category of $39,615,766 included a building that will be remodeled in
the future to accommodate County growth.
Vehicles, vehicle modifications, and other various equipment items were purchased at a cost of
$19,513,726. To support the Countys commitment to law enforcement, 1,556 radios were
purchased at a cost of $14,263,857.
A variety of projects for both new infrastructure construction and for expansion or updating of
existing infrastructure were ongoing during the year. Infrastructure projects begun and completed
in 2008 amounted to $17,989,738.
23
Montgomery County is the 25th fastest growing county in the United States1. This brisk growth
brings with it a need for vast improvements to a rural infrastructure system. Development
frequently comes with donations in the form of roads. Infrastructure donations for the year
totaled $51,217,202.
Projects that were capitalized from ongoing construction throughout the year, including a
detention facility, totaled $44,492,871. Additional expenditures of $52,454,254 were incurred for
construction that was in progress throughout the year.
Increases in assets were offset by depreciation expense of $42,415,613.
Capital Assets
(net of depreciation)
September 30, 2008
with Comparative Totals for September 30, 2007
Value of Capital Asset Net of
Accumulated Depreciation
FY 2008
FY 2007
Land
$ 11,891,395
$ 10,179,111
Buildings
121,968,821
84,902,379
Improvements
8,939,070
4,895,280
Equipment
30,915,808
17,308,832
Infrastructure
392,947,448
354,181,457
Construction in Progress
23,741,057
15,779,675
Total
$590,403,599
$ 487,246,734
Increase
(Decrease)
1,712,284
37,066,442
4,043,790
13,606,976
38,765,991
7,961,382
$ 103,156,865
In a continued effort to improve services to citizens, the County purchased radios, at a cost of
$14,263,857, in order to implement an interoperability agreement with various law enforcement agencies
in the County. The County is in the process of constructing a new building for Justice of the Peace,
Precinct 2 in the central part of the County. By September 30, 2008, $1,580,800 had been spent on the
new Justice of the Peace building.
Efforts to assist constituents in obtaining services and the Countys obligation to provide those services in
a rapidly growing county come with many challenges. In 2008, the Commissioners Court has met some
of those challenges by beginning construction on a new administration building and an accompanying
parking garage. The new administration building will house the Commissioners Court Room and
County Judges offices as well as various general administration and financial administration offices. The
new administration building will also house Montgomery County Community Development, the County
Engineer and Environmental Health. By September 30, 2008, $7,352,802 had been spent and the
building and parking garage are scheduled for completion late in fiscal year 2009.
The County has committed to multiple road construction projects in fiscal year 2008. In 2005, the voters
of Montgomery County approved $160,000,000 in road bonds to fund road improvements throughout the
county. The bonds will be issued in phases to fund road construction as the need arises. The remainder
of the authorized road bonds were issued in the second half of fiscal year 2008.
Additional information on the Countys capital assets can be found in Note 7 starting on page 55 of this
report.
Long-Term Debt
At September 30, 2008, Montgomery County had total bonded debt outstanding of $403,660,690
(inclusive of the accreted portion of various capital appreciation bonds). Commissioners Court continues
http://www.census.gov
24
to keep maturity dates confined to no more than 22 years. The Countys underlying rating was upgraded
by Standard and Poors Corporation during current fiscal year to AA.
The County issues three types of debt; general obligation bonds are approved by the voters of the County
while lease-revenue bonds and certificates of obligation are approved by Commissioners Court. Of the
Countys total debt, $285,396,527 corresponds to general obligation debt, $44,834,989 is in the form of
lease revenue bonds and $73,180,000 represents certificates of obligation. Montgomery Countys total
bonded debt had a net increase of $74,546,835 during 2008. The following table represents the entire
long-term debt of the County at September 30, 2008 on a comparative basis.
Outstanding Long-Term Debt
FY 2008
General obligation bonds
$ 285,396,527
Lease revenue bonds
44,834,989
Certificates of obligation
73,180,000
Accreted interest
249,174
Capital Leases
19,053,887
Premiums, net of discounts
9,064,658
Compensated absences
7,262,318
Arbitrage rebate
355,349
Total
$ 439,396,902
FY 2007
$ 234,277,478
44,834,989
46,660,000
3,341,388
3,452,124
7,715,713
6,855,903
137,603
$ 347,275,198
Debt activity in 2008 included an issue of $9,855,000 in refunding bonds. This issue refunded two series
of general obligation and certificates of obligation and resulted in an economic gain of $493,572. In
addition, County issued $33,050,000 in certificates of obligation and $46,835,000 in general obligation
bonds. The County retired $7,690,955 in debt through scheduled principal payments made during the
year.
The County is authorized under Article III, Section 52 of the State Constitution to issue bonds payable
from ad valorem taxes for the construction and maintenance of roads. There is no constitutional or
statutory limit as to rate on bonds issued pursuant to such constitutional provision. However, the amount
of bonds that may be issued is limited to 25% of the assessed valuation of real property in the County.
The current debt limitation for the County is $5,517,355,611, which is significantly in excess of the
Countys outstanding debt obligation, despite the increases in debt issuance during 2008.
Additional information on Montgomery Countys long-term debt can be found in Note 9 beginning on
page 56 of this report.
ECONOMIC FACTORS AND NEXT YEARS BUDGET AND RATES
The unemployment rate for the County is currently 4.7%2, which is an increase from a rate of
3.9% a year ago. This compares favorably to the States average unemployment rate of 5.2%3
and the national average rate of 6.2%4.
Commissioners Court approved allocating a 3% cost of living adjustment and a 3% merit
increase in salary in fiscal year 2009.
Increased demand for law enforcement services propelled Commissioners Court to bring the
annualized budget in the Sheriffs department to $61,836,349 in fiscal year 2009.
The estimated debt service obligation increased by $2.2 million in fiscal year 2009 to
$23,022,850.
The Work Source. http://www.wrksolutions.com/employer/lmi/unemploymentrates/LAUSHISTORY.pdf.

The Work Source. http://www.wrksolutions.com/employer/lmi/unemploymentrates/LAUSHISTORY.pdf.
4
U.S. Department of Labor, Bureau of Labor Statistics. http://data.bls.gov/PDQ/servlet/SurveyOutputServlet.
3
25
Commissioners Court has made a commitment to increase the Countys fund balance by
$2,000,000 during the next fiscal year, as well as increase the fund balance by at least $2,000,000
in subsequent years. This commitment is intended to provide the County with a strong equity
base.
All of these factors were considered in preparing the Adopted Budget of Montgomery County, Texas for
the fiscal year ending September 30, 2009.
REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of Montgomery Countys finances for all
those with an interest in the governments finances. Questions concerning any of the information
provided in this report or requests for additional financial information should be addressed to the
Montgomery County Auditor, P. O. Box 539, Conroe, Texas 77305-0539.
26
BASIC FINANCIAL STATEMENTS
27

Statement of Net Assets
September 30, 2008
EXHIBIT I
ASSETS:
Cash
Investments, at Fair Value
Cash, Restricted
Cash, Restricted for Retainage
Receivables:
Taxes (net)
Accounts (net)
Accrued Interest
Due from Other Governments
Inventory, at Cost
Deferred Charges
Prepaid Items
Capital Assets, net of accumulated depreciation
Land
Buildings
Improvements
Equipment
Infrastructure
Total Assets
LIABILITIES:
Accounts Payable
Retainage Payable
Accrued Interest Payable
Due to Other Governments
Unearned Revenue
Noncurrent Liabilities:
Due within one year
Due in more than one year
Total Liabilities
NET ASSETS:
Invested in Capital Assets, net of related debt
Restricted for:
Capital Projects
Debt Service
Unrestricted
Total Net Assets
See accompanying notes to the financial statements.
28
$
9,894,470
165,318,997
818,701
1,456,266
5,933,245
17,529,454
16,700
13,570,556
67,641
15,362,286
995,647
11,891,395
121,968,821
8,939,070
30,915,808
392,947,448
23,741,057
821,367,562
28,344,077
2,477,566
3,050,429
1,240,933
1,104,295
13,003,414
426,393,488
475,614,202
399,738,541
38,463
7,617,667
(61,641,311)
345,753,360

Statement of Activities
EXHIBIT II
Program Revenues
Functions/Programs
Expenses
Primary Government:
Governmental Activities:
Current:
$ 16,822,168
Judicial
15,894,641
Legal Services
2,445,787
Elections
1,947,963
5,088,713
Public Facilities
19,887,748
Public Safety
51,558,472
Health and Welfare
16,301,079
8,697,389
Conservation
825,476
76,212,732
Miscellaneous
1,070,696
Debt Service Interest and
15,998,167
Fiscal Charges
Total Governmental Activities $ 232,751,031
Fees, Fines,
Forfeitures,
and Charges
for Services
Operating
Capital
Grants and
Grants and
Contributions Contributions
$ 5,797,753
8,712,572
483,018
2,081
2,101,194
4,548,064
14,255,517
1,495,403
294,045
7,714,365
-
$45,404,012
$15,376,235
629,587
698,910
4,491,912
9,281,939
119,973
11,945
141,969
-
General Revenues:
Property Taxes
Other Taxes
Mixed Beverage Taxes
Bingo Taxes
Vehicle Weight Tax
Insurance Reimbursements
Unrestricted Investment Earnings
Gain on Sale of Capital Assets
Total General Revenues
Change in Net Assets
Net Assets - Beginning
Net Assets - Ending

29
Net (Expense)
Revenue and
Changes in
Net Assets
1,500
2,266
6,367
968,384
271,918
59,179,398
-
$ (11,022,915)
(6,552,482)
(1,962,769)
(1,244,706)
(2,987,519)
(15,333,317)
(31,842,659)
(5,251,819)
(8,283,371)
(813,531)
(9,177,000)
(1,070,696)
$ 60,429,833
(15,998,167)
(111,540,951)
131,600,844
144,649
1,146,155
148,407
171,394
199,183
5,680,817
1,236,094
140,327,543
28,786,592
316,966,768
$ 345,753,360

Balance Sheet
Governmental Funds
September 30, 2008
EXHIBIT III
Road
and Bridge
General
ASSETS:
Cash
Cash, Restricted
Cash, Restricted for Retainage
Receivables:
Taxes (net)
Accounts (net)
Accrued Interest
Due from Other Funds
Due from Other Governments
Inventory, at Cost
Prepaid Items
TOTAL ASSETS
LIABILITIES AND FUND BALANCES:

Liabilities:
Accounts Payable
$
Retainage Payable
Due to Other Funds
Deferred Revenue
Total liabilities
Fund Balances:
Reserved for:
Prepaid Items
Capital Projects
Inventory
Debt Service
Unreserved, designated for encumbrances, reported in :
General Fund
Unreserved, undesignated, reported in:
General Fund
Total Fund Balances
TOTAL LIABILITIES AND
FUND BALANCES
$
30
3,477,678
43,253,298
4,398,410
2,733,807
3,063,204
5,722,164
226,088
62,874,649
12,052,116
19,150,347
1,240,933
4,583,621
37,027,017
1,206,700
4,048,553
226,286
579,782
34,234
1,416,936
245,569
67,641
7,825,701
949,950
226,286
47,995
594,764
1,818,995
226,088
-
67,641
-
289,129
-
3,202
25,332,415
25,847,632
5,935,863
6,006,706
62,874,649
7,825,701
Road Bonds
Series 2006B
$
24,622,229
130
16,618
1,099,033
25,738,010
4,116,100
7,349
41,000
4,164,449
Road Bonds
Series 2008B
$
21,573,561
-
33,129
34,932,888
1,196,209
1,196,209
21,573,561
25,738,010
21,421
34,878,338
-
33,736,679
-
Other
Governmental Funds
33,736,679
$
34,932,888
31
5,188,671
58,516,579
818,701
1,229,850
955,053
135,682
16,700
22,740,309
7,602,823
769,559
97,973,927
10,029,702
2,243,931
9,080,140
1,690,099
23,043,872
Total
Governmental Funds
$
9,894,470
165,318,997
818,701
1,456,266
5,933,245
2,953,470
16,700
28,319,482
13,570,556
67,641
995,647
229,345,175
28,344,077
2,477,566
28,319,482
1,240,933
6,868,484
67,250,542
769,559
53,705,855
4,561,190
995,647
109,016,095
67,641
4,561,190
8,457
289,129
11,659
15,884,994
74,930,055
25,332,415
21,820,857
162,094,633
97,973,927
229,345,175
32

Reconciliation of the Balance Sheet of the Governmental Funds
to the Statement of Net Assets
Total fund balances - governmental funds (page 31)
162,094,633
Amounts reported for governmental activities in

the statement of net assets are different because:
Bond issuance costs are expenditures in the funds
but are amortized over the life of the bonds in
government-wide statements.
15,362,286
Capital assets used in governmental activities are

not financial resources and therefore are not reported in
the funds. These capital assets (net of accumulated
depreciation) consist of:
Land
Buildings
Improvements
Equipment
Infrastructure
11,891,395
121,968,821
8,939,070
30,915,808
392,947,448
23,741,057
Total Capital Assets
590,403,599
Other long term assets that were not available to

pay for current-period expenditures were deferred in the
funds. These assets consist of fines and fees receivable,
net of allowance.
14,575,984
Property taxes earned that are not available to pay for

current-period expenditures are deferred in the funds.
Some liabilities are not due and payable in the current
period and therefore are not reported in the funds. Those
liabilities consist of:
Interest payable
Bonds and capital leases payable
Arbitrage payable
Compensated absences
Total future period liabilities
Net assets of governmental activities
5,764,190
(3,050,430)
(431,779,235)
(355,349)
(7,262,318)
(442,447,332)
$
33
345,753,360

Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
EXHIBIT IV
REVENUES:
Taxes
Fees
Intergovernmental
Interest
Inmate Housing
Miscellaneous
TOTAL REVENUES
EXPENDITURES:
Current:
Judicial
Legal Services
Elections
Public Facilities
Public Safety
Health and Welfare
Conservation
Miscellaneous
Capital Projects
Debt Service:
Principal Retirement
Interest and Fiscal Charges
Issuance Costs
TOTAL EXPENDITURES
Excess (Deficiency) Revenues
Over Expenditures
OTHER FINANCING SOURCES/(USES):
Transfers In
Transfers Out
Issuance of General Obligation Debt
Issuance of Refunding Bonds
Issuance of Certificates of Obligation
Premium on Debt Issuance
Payment to Refunded Bond Escrow Agent
Discounts on Debt Issuance
TOTAL OTHER FINANCING
SOURCES/(USES)
321,959
18,623,895
-
129,086,179
18,945,854
8,805,535
3,980,584
918,150
(196,631)
83,594
-
266,700
805,113
9,072,235
20,763,060
(3,987,663)
$

34
Road
and Bridge
13,013,191
6,285,623
106,707
313,657
150,334
972,168
2,084,758
22,926,438
12,905,900
12,020,750
1,985,918
1,606,046
5,251,827
25,448,843
61,944,932
6,369,418
481,849
1,070,696
-
1,032,407
(17,281,134)
16,515,427
-

Fund Balances at Beginning of Year
FUND BALANCES AT END OF YEAR
General
98,955,742
1,375,221
13,376,504
5,533,821
449,802
2,149,826
10,968,433
3,566,886
125,152
1,390,327
137,891,714
25,847,632
4,785,697
1,221,009
$
6,006,706
Road Bonds
Series 2006B
$
1,082,129
225,000
1,307,129
Road Bonds
Series 2008B
$
82,470
82,470
Other
Governmental
Funds
20,683,280
153,085
1,219,353
19,329,405
1,478,107
2,433,815
169,827
929,244
102,710
46,498,826
Total
Governmental
Funds
132,652,213
7,813,929
14,702,564
25,176,883
1,927,909
5,898,574
11,138,260
3,566,886
2,026,564
3,802,795
208,706,577
19,801,304
1,161,453
626,519
6,483,955
411,911
2,539,767
11,482,218
7,314,312
367,942
72,943,445
13,532,419
18,504,705
2,397,829
1,606,046
5,251,827
25,448,843
64,484,699
17,851,636
7,314,312
803,808
18,991,837
1,070,696
93,906,202
19,801,304
314,474
1,475,927
4,598,741
16,024,292
1,128,949
123,922,051
4,598,741
16,024,292
1,443,423
293,231,315
(18,494,175)
(1,393,457)
(77,423,225)
(84,524,738)
(41,000)
-
34,705,000
425,136
-
19,713,129
(4,144,921)
12,130,000
9,855,000
33,050,000
1,629,343
(10,211,444)
(186,050)
21,663,686
(21,663,686)
16,599,021
46,835,000
9,855,000
33,050,000
2,054,479
(10,211,444)
(186,050)
(41,000)
35,130,136
61,835,057
97,996,006
(18,535,175)
40,108,736
-
33,736,679
-
(15,588,168)
86,530,560
3,987,663
13,471,268
148,623,365
-
21,573,561
33,736,679
35
74,930,055
162,094,633
36

Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of the Governmental Funds
to the Statement of Activities
Amounts reported for governmental activities in the statement of activities (page 29)
are different because:
Net change in fund balances - total governmental funds (page 35)
13,471,268
Governmental funds report capital outlays as expenditures.

However, in the statement of activities the cost of those assets is
allocated over their estimated useful lives and reported as depreciation
expense. This is the amount by which capital outlays exceeded
depreciation in the current period.
52,373,421
The net effect of various miscellaneous transactions involving

capital assets (i.e., sales, trade-ins, seizures, and donations) is to increase
net assets.
50,783,445
Revenues in the statement of activities that do not provide

current financial resources are not reported as revenues in the funds.
2,047,598
The issuance of long-term debt (e.g., bonds, leases) provides

current financial resources to governmental funds, while the repayment
of the principal of long-term debt consumes the current financial
resources of governmental funds. Neither transaction, however, has any
effect on net assets. Also, governmental funds report the effect of
issuance costs, premiums, discounts, and similar items when debt is first
issued, whereas these amounts are deferred and amortized in the
statement of activities. This amount is the net effect of these differences
in the treatment of long-term debt and related items.
(87,864,370)
Some expenses reported in the statement of activities do not

require the use of current financial resources and, therefore, are not
reported as expenditures in governmental funds.
Change in net assets of governmental activities (page 29)

37
(2,024,770)
$
28,786,592

Budget (GAAP Basis) and Actual
Major Governmental Funds
EXHIBIT V
Page 1 of 3
General Fund
REVENUES:
Taxes
Fees
Intergovernmental
Interest
Inmate Housing
Miscellaneous
TOTAL REVENUES
EXPENDITURES:
Current:
Judicial
Legal Services
Elections
Public Facilities
Public Safety
Health and Welfare
Conservation
Miscellaneous
TOTAL EXPENDITURES
Excess (Deficiency) Revenues Over
Expenditures
OTHER FINANCING SOURCES/
(USES):
Transfers In
Transfers Out
SOURCES
Variance with
Final Budget
Positive (Negative)
Original
Budget
Final
Budget
Actual
$ 97,679,584
1,342,015
12,004,306
683,896
255,000
1,340,750
5,556,002
1,200,000
73,500
636,400
120,771,453
$ 98,470,862
1,393,108
11,846,368
7,879,050
437,704
1,392,950
10,794,861
3,542,602
73,500
1,030,458
136,861,463
$ 98,955,742
1,375,221
13,376,504
5,533,821
449,802
2,149,826
10,968,433
3,566,886
125,152
1,390,327
137,891,714
15,325,670
12,149,494
1,779,377
1,351,519
5,573,006
22,992,398
39,750,735
3,998,600
461,065
5,114,139
108,496,003
17,758,987
12,467,487
2,086,222
1,862,664
5,680,038
26,548,614
68,924,001
6,435,672
501,487
5,997,605
148,262,777
12,905,900
12,020,750
1,985,918
1,606,046
5,251,827
25,448,843
61,944,932
6,369,418
481,849
1,070,696
129,086,179
4,853,087
446,737
100,304
256,618
428,211
1,099,771
6,979,069
66,254
19,638
4,926,909
19,176,598
12,275,450
(11,401,314)
8,805,535
20,206,849
1,032,407
(1,920,487)
16,515,427
1,032,407
(17,281,134)
16,515,427
(15,360,647)
-
15,627,347
12,275,450
20,763,060
$ 33,038,510

38
4,226,033
20,763,060
$ 24,989,093
266,700
9,072,235
20,763,060
(3,987,663)
$ 25,847,632
484,880
(17,887)
1,530,136
(2,345,229)
12,098
756,876
173,572
24,284
51,652
359,869
1,030,251
(15,360,647)
4,846,202
3,987,663
8,833,865

EXHIBIT V
Page 2 of 3
Road and Bridge Fund
REVENUES:
Taxes
Fees
Intergovernmental
Interest
Inmate Housing
Miscellaneous
TOTAL REVENUES
EXPENDITURES:
Current:
Judicial
Legal Services
Elections
Public Facilities
Public Safety
Health and Welfare
Conservation
Miscellaneous
TOTAL EXPENDITURES
Expenditures
(USES):
Transfers In
Transfers Out
SOURCES
Variance with
Final Budget
Positive (Negative)
Original
Budget
Final
Budget
Actual
$ 12,899,300
6,132,730
130,000
55,000
1,000,000
20,217,030
$ 12,899,300
6,132,730
114,157
259,361
55,000
1,000,000
1,975,291
22,435,839
$ 13,013,191
6,285,623
106,707
313,657
150,334
972,168
2,084,758
22,926,438
257,088
18,017,530
18,274,618
321,959
24,005,389
24,327,348
321,959
18,623,895
18,945,854
5,381,494
5,381,494
1,942,412
(1,891,509)
3,980,584
5,872,093
113,891
152,893
(7,450)
54,296
95,334
(27,832)
109,467
490,599
918,150
(177,635)
83,594
918,150
(196,631)
83,594
(18,996)
-
824,109
805,113
(18,996)
1,942,412
1,221,009
$ 3,163,421

39
(1,067,400)
1,221,009
$ 153,609
4,785,697
1,221,009
$ 6,006,706
5,853,097
5,853,097

EXHIBIT V
Page 3 of 3
Totals
REVENUES:
Taxes
Fees
Intergovernmental
Interest
Inmate Housing
Miscellaneous
TOTAL REVENUES
EXPENDITURES:
Current:
Judicial
Legal Services
Elections
Public Facilities
Public Safety
Health and Welfare
Conservation
Miscellaneous
TOTAL EXPENDITURES
Expenditures
Final
Budget
Actual
$ 110,578,884
7,474,745
12,004,306
813,896
255,000
1,395,750
5,556,002
1,200,000
1,073,500
636,400
140,988,483
$ 111,370,162
7,525,838
11,960,525
8,138,411
437,704
1,447,950
10,794,861
3,542,602
1,073,500
3,005,749
159,297,302
$111,968,933
7,660,844
13,483,211
5,847,478
449,802
2,300,160
10,968,433
3,566,886
1,097,320
3,475,085
160,818,152
15,325,670
12,149,494
1,779,377
1,351,519
5,573,006
22,992,398
39,750,735
3,998,600
718,153
18,017,530
5,114,139
126,770,621
17,758,987
12,467,487
2,086,222
1,862,664
5,680,038
26,548,614
68,924,001
6,435,672
823,446
24,005,389
5,997,605
172,590,125
12,905,900
12,020,750
1,985,918
1,606,046
5,251,827
25,448,843
61,944,932
6,369,418
803,808
18,623,895
1,070,696
148,032,033
4,853,087
446,737
100,304
256,618
428,211
1,099,771
6,979,069
66,254
19,638
5,381,494
4,926,909
24,558,092
14,217,862
(13,292,823)
12,786,119
26,078,942
1,950,557
(2,098,122)
16,599,021
1,950,557
(17,477,765)
16,599,021
(15,379,643)
-
16,451,456
1,071,813
(15,379,643)

(USES):
Transfers In
Transfers Out
SOURCES
Variance with
Final Budget
Positive (Negative)
Original
Budget
14,217,862
21,984,069
$ 36,201,931

40
3,158,633
21,984,069
$ 25,142,702
13,857,932
21,984,069
(3,987,663)
$ 31,854,338
598,771
135,006
1,522,686
(2,290,933)
12,098
852,210
173,572
24,284
23,820
469,336
1,520,850
10,699,299
3,987,663
14,686,962

Statement of Assets and Liabilities
Fiduciary Funds
September 30, 2008
EXHIBIT VI
Agency Funds
ASSETS:
Cash
Accounts Receivable
12,555,598
1,095,368
7,569
TOTAL ASSETS
13,658,535
LIABILITIES:
Accounts Payable
8,435,423
5,223,112
TOTAL LIABILITIES
13,658,535

41
APPENDIX C
FORM OF LEGAL OPINIONS PROVIDED UPON REMARKETING OF THE BONDS
C-1
HOU:2940412.4
Fulbright & Jaworski l.l.p.

A Registered Limited Liability Partnership
Fulbright Tower
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
www.fulbright.com
telephone:
(713) 651-5151
Regions Bank, as Paying Agent/Registrar

1717 St. James Place
Suite 500
Houston, Texas 77056
Re:
facsimile:
(713) 651-5246
Wells Fargo Brokerage Services LLC, as

Remarketing Agent
MAC# T5001-060
1000 Louisiana Street, Suite 600
Montgomery County, Texas, Unlimited Tax Adjustable Rate Road Bonds, Series 2008B
Ladies and Gentlemen:

In connection with the conversion of the interest rate of the above-described Bonds (the
Bonds) from an Adjustable Rate to a Fixed Rate on September 1, 2009, we are of the opinion
that such conversion is in accordance with the terms of the order authorizing the issuance of the
Bonds on June 16, 2008, and an order adopted on July 27, 2009 (together, the Order) and will
not have an adverse effect on the exclusion from federal income tax of the interest on the Bonds.
In rendering this opinion, we have made no investigation of, and except as expressly set forth
herein, we express no opinion with respect to, the current status of the interest on the Bonds
under section 103 of the Internal Revenue Code of 1986, as amended, or any other federal tax
matter.
Terms not otherwise defined herein shall have the meaning given in the Order.
The opinion expressed herein is subject to the following qualifications, limitations and
assumptions:
A.
The foregoing opinion is limited solely to the currently existing laws of the State
of Texas and applicable federal law. We express no opinion as to the applicability of the laws of
any other particular jurisdiction to the transactions described in this opinion.
B.
In rendering the foregoing opinion, we have made no investigation of, and
consequently express no opinion with respect to, the qualification of the Bonds as obligations
described in section 103 of the Internal Revenue Code of 1986, as amended (the Code), or the
60187719.2/10505457
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Munich New York Riyadh San Antonio St. Louis Washington DC
Page 2
present status of the interest on the Bonds under section 103 of the Code, or (except for the
matters specifically addressed above) any other federal tax matter.
C.
In rendering the foregoing opinion, we have made no independent investigation as
to the existence of any facts reflected in the factual assumptions we have made as described
hereinabove, nor have we made any investigation as to the accuracy or completeness of any
representations, warranties, data or other information, whether written or oral, that may have
been made by, or on behalf of, Montgomery County, Texas, and we assume, in rendering such
opinions, that none of such information, if any, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements made, in light of the
circumstances in which they were made, not misleading.
D.
There are no changes or modifications being made to any of the terms of the
Bonds, other than the change to a Fixed Rate as described herein and a change to the Order
allowing the Bonds to be remarketed at a premium.
This opinion is limited to the specific opinion expressly stated herein, and no other
opinion is to be implied or may be inferred beyond the specific opinion expressly stated herein.
Without limiting the foregoing, in rendering the opinion expressed herein, we express no opinion
regarding the applicability or effect of or compliance with any federal and state securities laws
and regulations or federal and state tax laws and regulations (except as specifically addressed
above).
This opinion is intended solely for your benefit and is not to be quoted in whole or in
part, disclosed, made available to, or relied upon by any other person, firm or entity without our
express prior written consent.
This opinion is based on existing law, which is subject to change. Such opinion is further
based on our knowledge of facts as of the date hereof. We assume no duty to update or
supplement our opinion to reflect any changes in any facts, circumstances or law that may
thereafter occur or become effective. Moreover, our opinion is not a guarantee of result and is
not binding on the Internal Revenue Service; rather, such opinion represents our legal judgment
based upon our review of existing law we deem relevant to such opinion and in reliance upon the
assumptions referenced above.
This opinion is furnished to the addressees solely for your benefit and no other party is
entitled to rely hereon.
Very truly yours,
60187719.2
Fulbright & Jaworski l.l.p.

A Registered Limited Liability Partnership
Fulbright Tower
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
www.fulbright.com
telephone:
(713) 651-5151
The Bank of New York Mellon Trust Company, N.A.,

as Paying Agent/Registrar
2001 Bryan Street, 11th Floor
Dallas, Texas 75201
Re:
facsimile:
(713) 651-5246
Wells Fargo Brokerage Services, LLC,

as Remarketing Agent
MAC# T5001-060
1000 Louisiana Street, Suite 600
Montgomery County, Texas, Unlimited Tax Adjustable Rate Road Bonds, Series 2006B
Ladies and Gentlemen:

In connection with the conversion of the interest rate of the March 1, 2028 maturity of the
above-described Bonds (the Bonds) from an Adjustable Rate to a Fixed Rate on September 1,
2009, we are of the opinion that such conversion is in accordance with the terms of the order
authorizing the issuance of the Bonds (the Order) and will not have an adverse effect on the
exclusion from federal income tax of the interest on the Bonds. In rendering this opinion, we
have made no investigation of, and except as expressly set forth herein, we express no opinion
with respect to, the current status of the interest on the Bonds under section 103 of the Internal
Revenue Code of 1986, as amended, or any other federal tax matter.
Terms not otherwise defined herein shall have the meaning given in the Order.
The opinion expressed herein is subject to the following qualifications, limitations and
assumptions:
A.
The foregoing opinion is limited solely to the currently existing laws of the State
of Texas and applicable federal law. We express no opinion as to the applicability of the laws of
any other particular jurisdiction to the transactions described in this opinion.
B.
In rendering the foregoing opinion, we have made no investigation of, and
consequently express no opinion with respect to, the qualification of the Bonds as obligations
described in section 103 of the Internal Revenue Code of 1986, as amended (the Code), or the
present status of the interest on the Bonds under section 103 of the Code, or (except for the
matters specifically addressed above) any other federal tax matter.
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C.
In rendering the foregoing opinion, we have made no independent investigation as
to the existence of any facts reflected in the factual assumptions we have made as described
hereinabove, nor have we made any investigation as to the accuracy or completeness of any
representations, warranties, data or other information, whether written or oral, that may have
been made by, or on behalf of, Montgomery County, Texas, and we assume, in rendering such
opinions, that none of such information, if any, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements made, in light of the
circumstances in which they were made, not misleading.
D.
There are no changes or modifications being made to any of the terms of the
Bonds, other than the change to a Fixed Rate as described herein.
This opinion is limited to the specific opinion expressly stated herein, and no other
opinion is to be implied or may be inferred beyond the specific opinion expressly stated herein.
Without limiting the foregoing, in rendering the opinion expressed herein, we express no opinion
regarding the applicability or effect of or compliance with any federal and state securities laws
and regulations or federal and state tax laws and regulations (except as specifically addressed
above).
This opinion is intended solely for your benefit and is not to be quoted in whole or in
part, disclosed, made available to, or relied upon by any other person, firm or entity without our
express prior written consent.
This opinion is based on existing law, which is subject to change. Such opinion is further
based on our knowledge of facts as of the date hereof. We assume no duty to update or
supplement our opinion to reflect any changes in any facts, circumstances or law that may
thereafter occur or become effective. Moreover, our opinion is not a guarantee of result and is
not binding on the Internal Revenue Service; rather, such opinion represents our legal judgment
based upon our review of existing law we deem relevant to such opinion and in reliance upon the
assumptions referenced above.
This opinion is furnished to the addressees solely for your benefit and no other party is
entitled to rely hereon.
Very truly yours,
60184964.1
APPENDIX D
FORM OF LEGAL OPINIONS PROVIDED UPON ORIGINAL ISSUANCE OF THE BONDS
D-1
HOU:2940412.4
APPENDIX E
PASS-THROUGH TOLL AGREEMENT
E-1
HOU:2940412.4
APPENDIX F
FORM OF MUNICIPAL BOND INSURANCE POLICY
F-1
HOU:2940412.4
FINANCIAL
SECURITY
ASSURANCE
ISSUER:
BONDS:
MUNICIPAL BOND
INSURANCE POLICY
Policy No.: -N
Effective Date:
Premium: $
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for consideration received,

hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or
paying agent (the "Paying Agent") (as set forth in the documentation providing for the issuance of and
securing the Bonds) for the Bonds, for the benefit of the Owners or, at the election of Financial
Security, directly to each Owner, subject only to the terms of this Policy (which includes each
endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due
for Payment but shall be unpaid by reason of Nonpayment by the Issuer.
On the later of the day on which such principal and interest becomes Due for Payment or the
Business Day next following the Business Day on which Financial Security shall have received Notice of
Nonpayment, Financial Security will disburse to or for the benefit of each Owner of a Bond the face
amount of principal of and interest on the Bond that is then Due for Payment but is then unpaid by
reason of Nonpayment by the Issuer, but only upon receipt by Financial Security, in a form reasonably
satisfactory to it, of (a) evidence of the Owner's right to receive payment of the principal or interest then
Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the
Owner's rights with respect to payment of such principal or interest that is Due for Payment shall
thereupon vest in Financial Security. A Notice of Nonpayment will be deemed received on a given
Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will
be deemed received on the next Business Day. If any Notice of Nonpayment received by Financial
Security is incomplete, it shall be deemed not to have been received by Financial Security for purposes
of the preceding sentence and Financial Security shall promptly so advise the Trustee, Paying Agent or
Owner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement in
respect of a Bond, Financial Security shall become the owner of the Bond, any appurtenant coupon to
the Bond or right to receipt of payment of principal of or interest on the Bond and shall be fully
subrogated to the rights of the Owner, including the Owner's right to receive payments under the Bond,
to the extent of any payment by Financial Security hereunder. Payment by Financial Security to the
Trustee or Paying Agent for the benefit of the Owners shall, to the extent thereof, discharge the
obligation of Financial Security under this Policy.
Except to the extent expressly modified by an endorsement hereto, the following terms shall have
the meanings specified for all purposes of this Policy. "Business Day" means any day other than (a) a
Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer's
Fiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment"
means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the
date on which the same shall have been duly called for mandatory sinking fund redemption and does
not refer to any earlier date on which payment is due by reason of call for redemption (other than by
mandatory sinking fund redemption), acceleration or other advancement of maturity unless Financial
Security shall elect, in its sole discretion, to pay such principal due upon such acceleration together with
any accrued interest to the date of acceleration and (b) when referring to interest on a Bond, payable on
the stated date for payment of interest. "Nonpayment" means, in respect of a Bond, the failure of the
Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for
payment in full of all principal and interest that is Due for Payment on such Bond. "Nonpayment" shall
also include, in respect of a Bond, any payment of principal or interest that is Due for Payment
Page 2 of 2
Policy No. -N
made to an Owner by or on behalf of the Issuer which has been recovered from such Owner pursuant to
the United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable
order of a court having competent jurisdiction. "Notice" means telephonic or telecopied notice,
subsequently confirmed in a signed writing, or written notice by registered or certified mail, from an Owner,
the Trustee or the Paying Agent to Financial Security which notice shall specify (a) the person or entity
making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount
became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of
Nonpayment, is entitled under the terms of such Bond to payment thereof, except that "Owner" shall not
include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying
security for the Bonds.
Financial Security may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy
by giving written notice to the Trustee and the Paying Agent specifying the name and notice address of the
Insurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying
Agent, (a) copies of all notices required to be delivered to Financial Security pursuant to this Policy shall be
simultaneously delivered to the Insurer's Fiscal Agent and to Financial Security and shall not be deemed
received until received by both and (b) all payments required to be made by Financial Security under this
Policy may be made directly by Financial Security or by the Insurer's Fiscal Agent on behalf of Financial
Security. The Insurer's Fiscal Agent is the agent of Financial Security only and the Insurer's Fiscal Agent
shall in no event be liable to any Owner for any act of the Insurer's Fiscal Agent or any failure of Financial
Security to deposit or cause to be deposited sufficient funds to make payments due under this Policy.
To the fullest extent permitted by applicable law, Financial Security agrees not to assert, and hereby
waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and
defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment
or otherwise, to the extent that such rights and defenses may be available to Financial Security to avoid
payment of its obligations under this Policy in accordance with the express provisions of this Policy.
This Policy sets forth in full the undertaking of Financial Security, and shall not be modified, altered or
affected by any other agreement or instrument, including any modification or amendment thereto. Except
to the extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy
is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of
the Bonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOT
COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76
OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this Policy to be executed
on its behalf by its Authorized Officer.
[Countersignature]
FINANCIAL SECURITY ASSURANCE INC.
By
By
Authorized Officer
A subsidiary of Financial Security Assurance Holdings Ltd.

31 West 52nd Street, New York, N.Y. 10019
Form 500NY (5/90)
(212) 826-0100

Montgomery County Texas Road Bonds Ser2006B

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REMARKETING MEMORANDUM DATED AUGUST 19, 2009

NOT A NEW ISSUE: BOOK-ENTRY-ONLY

Ratings Series 2008B Bonds: S&P AA

MONTGOMERY COUNTY, TEXAS

WELLS FARGO BROKERAGE SERVICES, LLC

JEFFERIES & COMPANY, INC.

PRINCIPAL AMOUNTS, MATURITIES, INTEREST RATES AND PRICES

(Interest accrues from September 1, 2009)

(Interest accrues from September 1, 2009)

Other Elected and Appointed Officials

Tax Assessor Collector

Consultants and Advisors

Auditors ................................................................................ Hereford, Lynch, Sellars, & Kirkham, PC, CPA

DEBT SERVICE REQUIREMENTS .......................... 19

Special Revenue Funds ........................................... 31

Appendix A - Economic and Demographic Information

REMARKETING MEMORANDUM SUMMARY

SELECTED FINANCIAL INFORMATION

Total Direct Debt ............................................................................................................................................... $

Estimated Overlapping Debt.............................................................................................................................. $

Total Direct and Estimated Overlapping Debt................................................................................................... $

Interest & Sinking Fund Balance (as of June 30, 2009)..................................................................................... $

Ratio of Direct Debt to..:

2009 Certified Taxable Assessed Valuation ($32,636,549,238)........................

Ratio of Direct and Estimated

Average (2009-2032) ....................................................................................... $

[Remainder of page intentionally left blank]

DEBT SERVICE REQUIREMENTS

Average Annual Requirements (2009-2032) ........................................................................

Total Direct Debt.............................................................................................................................. $

Total Estimated Overlapping Debt

2009 Certified Taxable Assessed Valuation ($32,636,549,238)

TAXING PROCEDURES AND TAX BASE ANALYSIS

[Remainder of page intentionally left blank]

Historical Analysis of Tax Collection

Partial year collections through June 30, 2009.

Delinquent Tax Collection Procedures

2006 Tax Roll

Analysis of Tax Base

2008 Tax Roll

2007 Tax Roll

Top Ten Principal Taxpayers

Percentage of Respective Certified Assessed Valuation

SELECTED FINANCIAL DATA

Net Changes in Fund Balance

Fiscal Year Ended September 30,

Special Revenue Funds

Fiscal Year Ended September 30,

Debt Service Funds

Fiscal Year Ended September 30,

Material Event Notices

Peet Junior High School

Anadarko Energy Services Corporation

Conroe Regional Medical Center

Summary of Montgomery County Building Permit Activity

EXCERPTS FROM COMPREHENSIVE ANNUAL FINANCIAL REPORT OF

MONTGOMERY COUNTY, TEXAS

MONTGOMERY COUNTY, TEXAS

MONTGOMERY COUNTY, TEXAS

MONTGOMERY COUNTY, TEXAS

MONTGOMERY COUNTY, TEXAS

Montgomery County, Texas

March 23, 2009