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91-31 EJ.l:~ '.,'''' "j .~ '..~l":~ .' .' , .. ...".. ..~ ,. . ". .., . +...,' -' ';"" ~'. 0\ -{....,...~r..:I"... (' .;~ ~~..', . ;" '--TT -... <, .. .. ~ :- ,,;..~; :.-<- ~~ -:- -:-:~ '.-'-"'-:;-''-;~~'"'''-''''''''''''''''-'''''''''''''''''''''_:;;;'~'''l''''' ...."r.....j~.. [ ", . ,.1 . ~ .---. I j <J.Co RESOLUTION NO. 91-31 A RESOLUTION AUTHORIZING THE NEGOTIATED SALE OF $7,680,000 CITY OF CLEARWATER, FLORIDA, GAS SYSTEM REVENUE BONDS, SERIES 1991; AWARDING THE SALE THEREOF TO SMITH BARNEY, HARRIS UPHAM & CO. INCORPORATED, SUBJECT TO THE TERMS AND CONDITIONS OF A PURCHASE CONTRACT; PROVIDING FOR THE ISSUANCE OF THE SERIES 1991 BONDS IN BOOK-ENTRY-ONLY FORM AND AUTHORIZING EXECUTION OF A LETTER OF REPRESENTATION WITH THE DEPOSITORY TRUST COMPANY IN CONNECTION THEREWITH; AUTHORIZING THE DISTRI- BUTION OF A PRELIMINARY OFFICIAL STATEMENT AND AN OFFICIAL STATEMENT IN CONNECTION WITH THE DELIVERY OF THE BONDS; APPOINTING A PAYING AGENT AND REGISTRAR; APPOINTING AN ESCROW AGENT; PROVIDING CERTAIN OTHER MATTERS IN CONNECTION WITH THE ISSUANCE AND DELIVERY OF SUCH BONDS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Clearwater, Florida (the "Issuer"), has by an ordinance enacted on August 15, 1991 (the "Ordinance"), authorized the issuance of not to exceed $9,000,000 City of Clearwater, Florida, Gas System Revenue Bonds, Series 1991 (the IIseries 1991 Bondsll); and WHEREAS, the proceeds of the Series 1991 Bonds are to be used to (i) provide funds necessary to refund the Issuer's outstanding Gas System Revenue Bonds, Series 1983 (the "Refunded Bonds") and (ii) pay certain costs of issuance of the Series 1991 Bonds; and WHEREAS, the Issuer has received an offer from smith Barney, Harris Upham & Co. Incorporated (the "Underwriterll) to purchase the Ser ies 1991 Bonds, subj ect to the terms and (~nd it ions contained herein and set forth in a Purchase Contract, a copy of which is attached hereto as Exhibit "A" (the "Purchase Contract") ; and WHEREAS, the Issuer now desires to issue its Series 1991 Bonds, to sell its Series 1991 Bonds pursuant to the Purchase contract, to authorize the distribution of a preliminary Official L/I - ;:1 / 'r't'CHC . ,J .. , r: ( i !. , " I statement and an Official statement in connection with the issuance of the Series 1991 Bonds and to take certain other actions in connection with the issuance and sale of the Series 1991 Bonds; and WHEREAS, the Issuer has been provided all applicable disclosure information required by section 218.385, Florida statutes, a copy of which is attached to the Purchase Contract; and WHEREAS, this resolution shall constitute a supplemental resolution under the terms of the Ordinance and all capitalized undefined terms used herein shall have the meanings set forth in the Ordinance; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF CLEARWATER, FLORIDA: SECTION 1. The issuance of $7,680,000 of the Series 1991 Bonds by the City is hereby approved upon the terms and conditions set forth in the Ordinance. JI t SECTION 2. It is in the best interest of the Issuer and the residents and inhabitants thereof that the Series 1991 Bonds be ~ 1-.,. issued utilizing a pure book-entry system of registration. In " furtherance thereof, the Issuer authorizes the execution and delivery of a Letter of Representation with The Depository Trust Company in substantially the form attached hereto as Exhibit ua" and the Mayor and the city Clerk are hereby authorized to execute ij' ~1 and deliver the Letter of Representation with such changes, insertions and omissions as shall be upproved by the officers of the Issuer executing the same. 2 qr-3( 0- r-'. ." SECTION 3. Due to the willingness of the Underwriter to purchase $7,680,000 in aggregate principal amount of the Series 1991 Bonds at favorable interest costs and the importance of timing in the marketing of such obligations it is hereby determined that it is in the best interest of the public and the Issuer to sell the Series 1991 Bonds at a negotiated sale and such sale to the Under- writer pursuant to the terms and conditions contained in the Purchase contract and herein is hereby 'authorized and approved. SECTION 4. The Series 1991 Bonds are hereby sold to the Underwriter, upon the terms and conditions set forth in the Pur- chase Contract attached hereto as Exhibit "A" and incorporated by reference. The Mayor and the city Clerk are hereby authorized to execute such Purchase contract in sUbstantially the form attached as Exhibit "Au, with such additional changes, insertions and omis- sions therein as do not change the substance thereof and as may be approved by the said officers of the Issuer executing the same, such execution to be conclusive evidence of such approval. SECTION 5. The Series 1991 Bonds shall be dated, shall bear interest payable at the times, shall mature and shall be subject to redemption as provided in the Purchase Contract. The use of the proceeds of the series 1991 Bonds, shall be as provided in the Official statement relating to the Series 1991 Bonds. SECTION 6. -- The Series 1991 Bonds shall be issued under and '" secured by the Ordinance and shall. be executed and delivered by the Mayor, the City Manager and the city Clerk in substantially the form set forth in the Ordinance, with such additional changes and J .' . ~ ~ ,.... ---, insertions therein as conform to the provisions of the Purchase Contract and such execution and delivery shall be conclusive evidence of the approval thereof by such officers. SECTION 7. First Union National Bank of Florida is hereby appointed Paying Agent and Registrar for the Series 1991 Bonds. SECTION 8. First Union National Bank of Florida is hereby appointed as Escrow Agent under the Escrow Deposit Agreement. SECTION 9. On the date of issuance of the Series 1991 Bonds, the Issuer may transfer the funds on hand in the various funds and accounts established for the Refunded Bonds in such manner as may be approved by a certificate of the Finance Director executed prior to or simultaneously with the issuance of the Series 1991 Bonds. SECTION 10. The distribution by the Underwriter of the Preliminary Official statement is hereby approved, confirmed and ratified. The distribution of a final Official statement of the Issuer relating to the issuance of the series 1991 Bonds is hereby approved, such final Official statement to be in substantially the form attached hereto as Exhibit c, with such additional changes, insertions and omissions as may be made and approved by officers of the Issuer executing the same, such execution to be conclusive evidence of any such approval. The Mayor and the city Manager are hereby authorized to execute such Official Statement in sUbs~an- tially the form attached to the Purchase Contract. The execution of such Official statement by such officers is hereby approved with such additional changes, insertions and omissions as may be made and approved by such officers. 4 (\ ~ SECTION 11. The purchase of municipal bond insurance from AMBAC Indemnity Corporation C"AMBACll) to irrevocably guarantee the payment of principal and interest on the Series 1991 Bonds is here- by authorized. SECTION 12. All prior resolutions of the Issuer inconsistent with the provisions of this resolution are hereby modified, supple- mented and amended to conform with the provisions herein contained and except as otherwise modified, supplemented and amended hereby shall remain in full force and effect. SECTION 13. The Mayor, the city Manager, the Finance Director I the city Attorney and the City Clerk or any other appropriate officers of the Issuer are hereby autho.cized and directed to execute any and all certifications or other instruments or documents required by the Resolution, the Purchase contract, the Escrow Depos it Agreement or any other document ref erred to above as a prerequisite or precondi ticn to the issuance of the Series 1991 Bonds and any such representation made therein shall be deemed to be made on behalf of the Issuer. All action taken to date by the officers of the Issuer in furtherance of the issuance of the Series 1991 Bonds is hereby approved, confirmed and ratified. SECTION 14. The Issuer designates the Bonds as "qualified tax-exempt obligationsU within the meaning of Section 265(b) (3) of the Internal Revenue Code of 1986, as amended (the "Code"). The Issuer and any' subordinate entities of the Issuer and any issuer of "tax-exempt" debt that issues "on behalf ofll the Issuer do not 5 - ~ . .' ,-.. I. .' - :~')', ;:::~:;Y;:J , , reasonably expect during calendar year 1991 to issue more than $10,000,000 of .'tax-exempt" obligations, exclusive of any private activity bonds, as defined ~n Section 14i(a) of the Code. SECTION 15. This resolution shall become effective immediately upon its adoption. Passed and adopted by the city commission of the City of Clearwater, Florida, this 15th day of August, 1991. (SEAL) By: . I t i I I . 1 '1 ~ 1 , . ~. Approved as to form and correctness: 'LA.U City Attorney ',) -.J . I -I )- ., (. 'c. 6 , I ! : l [ ! J ,,) ',' . II ) ttl- 3/ ", 'j., I I') " J.. :. ] - 'I' f ff f' I J ......., .' ~J.llf... ~ " '- 'oU-). ~ ,. ~ { I f. . . '~j , , '10 ~'- "..- r A .. $7,680,000 CITY OF CLEARWATER, FLORIDA GAS SYSTEM REVENUE BONDS SERIES 1991 August 15, 1991 PURCHASE CONTRACT Mayor and City Commission City of Clearwater 112 S. Osceola Avenue Clearwater, Florida 33518 Dear Ladies and Gentlemen: ~:" J 'I .1 i .' The undersigned, Smith Barney, Harris Upham & Co., Incorporated (the "Underwriter"), offers to enter into this Purchase Contract with the CIty of Clearwater, Florida (the "City'), which, upon acceptance of this offer by the City, wIn be binding upon the City and upon the Underwriter. This offer Is made subject to wrItten acceptance hereof by the City at or before 11:00 p.m., Eastern Daylight Savings Time, on the date hereof and, If not so accepted, w1l1 be subject to withdrawal by the Underwriter U(Nn notice delivered to the City at any time prior to the acceptance hereof by the City. 1. Purchase and Sale. Upon the terms and conditions and in reliance on the representations, warranties, covenants and agreements set forth herein, the Underwriter hereby agrees to purchase from the City, and the City hereby agrees to seli and deliver to the Underwriter, all (but not less than all) of the aggregate principal amount of $7,680,000 City of Clearwater, Florida, Gas System Revenue Bonds, Series 1991 (the "Bonds"). The Bonds shall be dated September 1, 1991. The purchase price for the Bonds shall be $7,367,259.35 (including original issue discount of $200,025.10) plus interest accrued on the Bonds from the dated date ($4,066.83) to the date of the closing referred to in Paragraph 7 of this Purchase Contract (the "Closing"). The Bonds shall be as described In and shall be issued and secured under the provIsions of Ordinance No. 5118-91, enacted on August 15, 1991, by the City Commission. The Bonds shall mature at the times and in the amounts and bear Interest at the rates set forth in Appendix I hereto and shall be subject to redemption as provided in Appendix II hereto. The Information requIred by Section 218.385(4), Florida Statutes, to be provided to the City by the Underwriter is set forth in Appendix III hereto. 2. Delivery of Official Statement and Other Documents. On or before the date of Closing, the City shall deliver, or cause to be delivered, to the Underwriter executed copies of the final Official Statement dated the date hereof relating to the Bonds (such final OfficIal Statement, Including all Appendices thereto, financial and statistical Information Included therein, being herein called the "Offlclal Statementll), signed on behalf of the City by the Mayor and CIty Manager. - I - BND/7260PCon/910815 71- 3( -, At Closing~ the CIty shall dellver, or cause to be dellvered, to the Underwriter copIes of the Ordlnance~ certifIed to by the CIty Clerk, all substantially In the form heretofore deUvered to the Underwriter, with only such changes therein as agreed upon by the Underwriter. . 3. Representation of the Underwriter as to Authorlt~. The Underwriter has been duly authorized to execute this Purchase Contract and has been duly authorized to act hereunder. 4. Publlc Offering. The Underwriter agrees to make an offering of all the Bonds at not In excess of the mitial publ1c offering prIces or yIelds set forth on the front page of the Official Statement. The Underwriter reserves the right to make concessions to dealers and to change such inItial public offering prIces as the Underwriter reasonably deems necessary in connection with the marketing of the Bonds. The City hereby authorizes the Underwriter to use the Official Statement and the informatIon contained therein in connection with the offering and sale of the Bonds and ratifies and confIrms Its authorization of the use by the Underwriter prior to the pricing of the Bonds ot the Preliminary Official Statement dated August 7, 1991 (the "PreUminary Official Statement") in connection with such offering and sale. The City represents the Preliminary Official Statement was compiete as of its date of delivery to the Underwriter and the City further ratifies and confirms that the Prellminary OfficIal Statement was "final" as of Its date for the purposes and within the meaning of Section 240.15c2-12 Code of Federal Regulations (the "SEC Rule") (except for omissions permlted by the SEC Rule). Pursuant to the SEC Rule, the City hereby covenants and agrees with the Underwriter that it wUl deliver or cause to be made available to the Underwriter copIes of the Official Statement In a form suitabie for delIvery to Potential Customers (hereinafter defined) within seven (7) business days from the date of the date of acceptance of thIs Purchase Contract by the City, whIch, in the opinion of the UnderwrIter, are in a quantity such that from the date of the delivery thereof untIl the first to occur of: (A) the End of the Underwriting Period (hereinafter detmed), and (B) the time the OffIcial Statement becomes available to any person from a nationally recognized municipal securities information repository, but In no case less than twenty- five (25) days following the End of the Underwriting Period, the Underwriter and any Participating Underwriter (hereinafter defined) may send to any Potential Customer on the next business day, by fIrst class mail or other equally prompt means, on request, a single copy of such Official Statement. The Underwriter has heretofore requested of the City a quantity of Official Statements sufficient, in its opinion, to satisfy the above requIrement. In the event that such quantity Is insufficient the Underwriter wlll so notify the City in writing and request such addItional caples as shall be necessary to satisfy such requIrement, with which request the City agrees to promptly comply. '>- The term "End of the UnderwrIting Period" Is defined by the SEC Rule to mean "... the later of such time as the (1) Issuer of municIpal securIties deJJvers the securities to the Participating Underwriters or (il) the PartiCipating Underwriter does not retaln, directly or as a member or an underwrItIng syndicate, an unsold balance of the securities for sale to the publIc." - 2 - Br~/7260PCon/9I0815 , . T ~ ......,. ..,#!.~~' ,- The term "PartIcipating Underwriter" Is defined by the SEC Rule to mean any broker, dealer, or munIcipal securities dealer who has purchased from an Issuer of municipal securities with a view to, or offers or sells for an issuer ot municipal securities In connection with, the offering of any municipal security, or participates or has a direct or indIrect participation In any such undertaking, or participates or has a participation In the dIrect or Indirect underwriting of any such undertaking (not Including a person whose interest is limited to a commission, concession, or allowance trom an underwriter, broker, dealer, or municipal securities dealer not In excess of the usual and customary distributors' or sellers' commission, concession, or allowance) in connection with a primary offering of municipal securities with an aggregate principal amount of $1,000,000 or more. The term "Potential Customer" is defined by the SEC Rule to mean "... (I) any person contacted by the Participating Underwriter concerning the purchase of municipal securities that are Intended to be offered or have been sold In an offering, (11) any person who has expressed an interest to the Participating Underwriter In possibly purchasing such municipal securities, and (iii) any person who has a customer account with the Participating Underwriter." ll. J If at anytime from the date hereof until the End of the Underwriting Period the City becomes aware of the occurrence of any event or circumstance which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a materIal fact or to omit to state a material fact necessary to make the statements therein, In the llght of the circumstances under which they were made, not misleading the City shall notify the Underwriter thereof and if, In the reasonable opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at Its expense supplement or amend the Official Statement or cause the Official Statement to be supplemented or amended In a form and in a manner approved by the UnderwrIter. 5. Security Deposit. The Underwriter has delivered to the City a check for $78,000 payable to the order of the City. In the event the City does not accept this offer, such check shall be returned immediately to the Underwriter. If the offer made hereby is accepted, the City agrees to hold the check uncashed until the Closing as security for the performance by the Underwriter of its obligation to accept and pay for the Bonds at the Closing. In the event of the failure by the City to deliver the Bonds at the Closing, or if the CIty shall be unable to satisfy or cause other parties to satisfy the conditions of th~ obligations contained herein, or If the obligations of the UnderwrIter shall be ter'minated for any reason permitted by this Purchase Contract, such check shall be immediately returned to the Underwriter and the acceptance of such return shall constitute a full release and discharge of all claims by the Underwriter arIsing out of the transactions contemplated hereby. In the event that the Underwriter fails (other than for a reason permitted hereunder) to accept and pay for the Bonds at the Closing (as hereinafter defined), such check shall be retained by the City as and for full llquidated damages for such failure and for any defaults hereunder on the part of the Underwriter, and such retentIon shall constitute a full release and dIscharge of all claims by the City against the UnderwrIter arising out of the transactions contemplated hereby. In the event that the Underwriter does not fail or default under the terms of this Purchase Contract, such check shall be returned to the Underwriter at the Closing. - 3 - BND/7260PCon/910BI5 .- c' \ 6. City's Representatlonst Warranties and Agreements. By Its acceptance hcreoft the City represents and warrants to and agrees with the Underwriter that, as of the date hereof: (a) The CIty Is duly and valIdly existing as a body corporate and politic and as a municipal corporation. 1 (b) The City has full legal right. power and authority to Issue and sell the Bonds as contemplated by the OrdInance and the OfficIal Statement. (c) The City has full legal right, power and authority to enter Into this Purchase Contract, the Escrow DeposIt Agreement to be dated as of SePtember 1, 1991 (the "Escrow Agreemene') between the City and the First UnIon NatIonal Bank of FlorIda as escrow agent (the "Escrow Agent") and to sell and deUver the Bonds tD the Underwriter as provided herein; by official action of the City taken prior to or concurrently with the acceptance hereof, the OrdInance has been duly enacted in accordance with the Constitution of FlorIda and the laws of the State of Florida. includIng the City Charter (collectively the" Act"); the Ordinance is in full force and has not been rescinded; this Purchase Contract and the Escrow Agreement when executed by the City w1ll be duly authorized and delivered and wlll constitute the legal, valid and bindIng obligations of the CIty enforceable in accordance with their terms, except as the enforcement thereof may be affected by bankruptcy, insolvency, or other laws or the application by a court of equitable principles generally affecting credItors' rights; and the City has duly authorIzed and approved the consummation by it of all other transactions contemplated by the Ordinance, the Official Statement and thIs Purchase Contract to have been performed or consummated at or prior to the Date of Closing. (d) The executIon and delIvery of the Bonds, this Purchase Contract, the Escrow Agreement and the adoptIon and Implementation of the Ordinance, and compliance with the oblIgations on the City's part contained herein and therein, wlll not conflIct wIth or constitute a materIal breach of or material default under the Act or any federal or FlorIda constitutional provision. law, administratIve regulatIon, judgmentt decree, loan agreement, indenture, bond, note, Ordinance, agreement or other instrument to which the City is a party or to which the City or any of its properties or other assets is otherwise subject, nor will any such execution, delivery, adoptIon, Implementation or compliance result In the creation or Imposition of any material lien, charge or other securIty Interest or encumbrance of any nature whatsoever upon any of the properties or other assets of the City under the terms of any such provision, lawt regulation. document or instrument, except as provIded or permitted by the Bonds and the Ordinance. (e) All approvals, consents and orders of any governmental authorIty, legislative body, board, agency or commission having jurisdiction which would constitute a condltlon precedent to or the absence of whIch would materially ~dverseiy affect the due performance by the City of its obligations under this Purchase Contract, the Ordlnancet the Escrow Agreement and the Bonds have beent or prior to the Closing will have beent duly obtained; provided, however, that this representation and warranty does not apply to such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state In connection wIth the offering and sale of the Bonds, or to such official action by the City which the Ordinance contemplates Is to be taken from time to time after the Closing. - 4 - BND/7260PCon/910B15 - .................. (f) The Bonds, when Issued, regIstered and delivered In accordance wIth the Ordinance and sold to the Underwriter as provided herein and In accordance with the provisions of the Ordlnance, wlll be valid and legally enforceable obligations of the City in accordance with their terms and the terms of the Ordinance; and the Ordinance w1ll provIde, for the benefIt of the holders from time to time of the Bonds, a legally valid and irrevocable llen upon and pledge of the Net Revenues as such term Is defined in the Ordinance. (g) The Information contained In the PrellmInary OffIcial Statement and the Official Statement pertalnIng to the City, the Bonds, the Ordinance and the Escrow Agreement was and is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact which Is necessary to make the statements thereIn, In the light of the circumstances under which they were made, not misleading. (h) Except as described in the Official Statement, there is no action, sult, proceeding, inquiry or investigation, at law or In equity before or by any court, governmental agency or public board or body, pending or, to the best knowledge of the City, threatened: (1) Which may affect the existence of the City or the titles of their officers to their respective offices; (2) WhIch may affect or which seeks to prohibit, restrain or enjoin the sale, Issuance or delivery of the Bonds, or the collection or disbursement of the Net Revenues to pay the principal of and interest on the Bonds and premiums, if any, and to make other payments under the Ordinance; (3) Which In any way contests or affects the validity or enforceabllltyof the Bonds, the Ordinance, the Escrow Agreement or p.ny of them; (4) Which would cause the Interest on the Bonds to be included in the federal gross Income of the holders of the Bonds; or (5) Which contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or whIch contests the powers of the City or any authority or proceedings for the issuance, sale or delivery of the Bonds, or the due adoption of the Ordinance or the execution and delivery of this Purchase Contract or the Escrow Agreement or any of them; 1 .' nor, to the best knowledge of the City, is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceabl11ty of the Bonds, the Ordinance, or any of them, or this Purchase Contract. (l) The City will furnish such information, execute such instruments and take such other action not Inconsistent with law in cooperation with the Underwriter as the Underwriter may reasonably request in order (I) to qualify the Bonds for otfer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdIctions of the United States as the Underwriter may designate, and (II) to determine the eligibillty of the Bonds for Investment under the laws of such states and other - 5 - BND/7260PCon/910815 .\ ,~ ( jurisdictions, and wlll use its best efforts to continue such qualifications in effect so long as required for the d1stributIon of the Bonds; provIded that the CIty shall not be oblIgated to qualify to do business or to take any action that would subject It to general servIce of process In any state where It Is not now so subject. 1 m If between the date of this Purchase Contract and the date of the Closing any event shall occur whIch would or might cause the information contained In the OfficIal Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact requIred to be stated therein or necessary to make the statements therein, In the light of the circumstances under which they were made, not mIsleading, the City shall notify the UnderwrIter thereof, and If In the reasonable opinIon of the Underwriter such event requires the preparation and publication of a supplement or amendment to the OffIcial Statement, the City shall cooperate with the Underwriter in supplementing or amending the Official Statement, the prIntIng of whIch will be at City expense, in such form and manner and at such time or times as may be reasonably called for by the Underwriter. If It Is necessary 10 the reasonable opinIon of the Underwriter to prepare and publish a supplement or amendment to the Official Statement as a result of information contained in the OffIcial Statement supplied by the Underwriter, the cost of printing such amendment or supplement shall toe bome by the Underwriter. (k) The City covenants to comply with the requirements of the Internal Revenue Code of 1986, as amended (the "Code") in order to maintain the exemptIon at the Interest on the Bonds from federal income taxation. These requIrements Include, but are not limited to, provisions which prescribe yield and other limits wIthin which the proceeds of the Bonds and other amounts are to be invested and requIre that certain investment earnings on the foregoing must be rebated on a perIodIc basIs to the Treasury Department of the United States. 7. The Closing. At 10:00 a.m., Eastern Dayllght Savings Time, on September 4, 1991 (such date herein called the "Date of Closlng"), or at such later tIme or on such later date as may be mutually agreed upon by the City and the Underwriter, the CIty shall, subject to the terms and conditions hereof, deHver the Bonds to the Underwriter in New York, New York in definItive form (all the Bonds to bear proper CUSIP numbers), duly executed and authentIcated, together with the other documents hereinafter mentIoned, and, subject to the terms and conditIons hereof, the Underwriter shall accept such delivery and pay the purchase price of the Bonds as set forth In Paragraph 1 hereof In Federal Funds to the order of the City (such delivery of and payment for the Bonds herein called the "Closing"). The uncashed check referred to in Paragraph 5 shall be returned to the Underwriter at the closing. The Closing shall occur at the offices of the CIty, 112 South Osceola Avenue, Clearwater, FlorIda, or such other place as shall have been mutually agreed upon by the City and the UnderwrIter. The Bonds shall be prepared and delivered as a separate, single certificated, fully registered Bond for each of the maturities of the Bonds registered in the name of Cede & Co. 8. Closing CondItions. The Underwriter is entering into this Purchase Contract in reliance upon the representations, warranties and agreements of the City contained herein, and in reliance upon the representations, warranties and agreements to be contaIned in the documents and instruments to be delivered at the Closing, and upon the performance of the covenants and agreements herein, as of the date hereof and as of the - 6 - BND/7260PCon/910815 ..- . \ date of the Closing. Accordingly, the Underwrlter's obligation under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be condltloned upon the performance of the covenants and agreements to be performed hereunder and under such other documents and instruments to be dellvered at or prior to the Closing, and shall also be subject to the following additional conditions: (a) The representatIons and warranties of the CIty contained herein shall be true, complete and correct on the date hereof and on and as of the Date of Closing, as If made on the Date of Closing. (b) At the date of execution hereof and at the Closing, the Orcllnance, and the Escrow Agreement shall have been duly approved and adopted by the CIty, shall be in full force and effect, and shall not have been amended, modifIed or supplemented, except to the extent to which the Underwriter shall have gIven Its prior written consent and there shall have been taken in connection therewIth and In connection with the issuance of the Bonds all such action as, in the opinion of Bryant, MUler and Olive, P.A., Bond Counsel, and Lawson, McWhirter, Grandoff & Reeves, Counsel for the Underwriter, shall be necessary and appropriate in connection wIth the transactions contemplated hereby. '>l> ,}) (c) At the Closing there wlll be no pendIng or threatened lltigatlon or proceedlng of any nature seeking to restrain or enjoin the Issuance, sale or delivery of the Bonds, or the pledge, collectIon or appllcation of the Net Revenues to pay the princIpal of and Interest on the Bonds or In any way contesting or affecting the validIty or enforceabilIty of the Bonds, the Ordinance, the Purchase Contract or the Escrow Agreement or contesting in any way the proceedings of the City taken with respect thereto, or contesting In any way the due existence or powers of the City or the title of any of the members of the City CommIssIon or officials of the City to their respective offices and the UnderwrIter will receive the certificate of the Mayor and Finance Director of the City to the foregoing effect or an opinion of M.A. Galbraith, Jr., Esquire City Attorney, that any such lItigation Is without merit. (d) There shall have been no materIal adverse change in the financial condltIon of the City's Gas System Enterprise Fund since September 30, 1990. (e) A t the Closing, the Underwriter shall receive the followIng documents, each dated as of the Closing: (1) An opinion of Bryant, Miller and Olive, P.A., Bond Counsel, substantially In the form attached to the Official Statement as Appendix "D"; (II) An opinIon of Bond Counsel, addressed to the Underwriter, stating that the Underwriter may rely upon the opinion referred to In (l) hereof as though addressed to It and to the effect that the informatIon contained In the OfficIal Statement under the headings "The 1991 BondS', "Security," "Flow of Funds," and IICovenants" (apart from any engineerIng, financial and statIstIcal data contained therein as to which no opInIon or bellef needs to be expressed), Insofar as such Information purports to be the descriptions or summarIes of the items addressed therein, Is correct as - 7 - BND/7260PCon/910815 " n r'" f J' to matters of law and, to the extent indIcated therein, constitutes accurate and fair statements or summaries of the matters set forth or documents referred to therein and further states that the information under the heading "Tax Exemption" Is correct. (Ul) An opinIon, dated the date of the closing and addressed to the Underwriter, of M.A. Galbraith, Esq., CIty Attorney to the effect that (l) this Purchase Contract has been duly authorized, \!xecuted and dellvered by the CIty and constitutes a legal, val1d, and bindIng agreement of the City In accordance with its terms except to the extent that the enforceablllty of the rights and remedies set forth herein may be l1mited by bankruptcy, insolvency or other laws affecting creditors' rIghts generally; (11) the CIty has authorIzed, executed and dellvered the OffIcial Statement; (111) the information in the OffIcial Statement as to legal matters relating to the CIty, the Bonds, the OrdInance and the Escrow Agreement Is correct In all material respects and does not omIt any statement whIch, In his opinIon, shouid be Included or referred to therein and, In addItion, such counsel shall state that, based upon his participation in the preparation of the OfficIal Statement as City Attorney and wIthout having undertaken to determine independently the accuracy, compieteness or fairness of the statements contained In the OffIcial Statement (except to the extent expressly set forth in this Subparagraph (111)), as of the date of the Closing nothing has come to his attention causing hIm to believe that (A) the Official Statement as of its date contained any untrue statement of a materlal fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the lIght of the cIrcumstances under which they were made, not misleadIng (except for the financial and statIstlcallnformatlon contained in the Official Statement as to all of which no vIew need be expressed), or (B) the Official Statement (as supplemented or amended pursuant to Paragraph U) of Sectlon 6 hereof, if appl1cable) as of the date of the Closing contains any untrue statement of a material fact or omIts to state a material fact required to be stated therein or necessary to make the statements therein, In the light of the cIrcumstances under whIch they were made, not mIsleadIng (except as aforesaid); (Iv) to the best of hIs knowledge the City Is not In material breach of or material default under any applicable constitutional provIsion, law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreement, indenture, bond, note, materIal Ordinance, material agreement or other materlalInstrument to which the City Is a party or to which the City or any of its property or assets is otherwise subject, and no event has occurred and is continuing that with the passage of time or the gIving of notice, or both, would constitute a default or event of default under any such instrument; and the execution and delivery of the Bonds, this Purchase Contract, the Escrow Agreement and the adoption of the OrdInance and compliance with the provIsIons on the Clty's part contained thereIn, wlll not conflict with or constitute a material breach of or default under, any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, Indenture, bond, note, OrdInance, agreement or other instrument to which the CIty Is a party or to which the City or any of Its property or assets is otherwise subject, and any such execution, delivery, adoption or compUance will not result In the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City under the terms of any such law, regulation or Instrument, except as expressly provided by the Bonds, the Ordinance or the Escrow Agreement; (v) the City has the right and power under the Act to adopt the OrdInance and the Ordinance has been duly and lawfully adopted by the - 8 - .' BND/7260PCon/910BI5 .- .....-....... City, Is in full force and effect and constitutes the legal, valid and binding oblIgation of the City, enforceable in accordance with its terms, subject to applIcable bankruptcy, insolvency and simIlar laws affE:ctlng' creditors' rIghts generally and subject, as to enforceabllIty, to general princIples of equIty (regardless of whether enforcement Is sought in a proceeding in equity or at law), and no other authorIzation Is requIred for the CIty to adopt the Ordinance; (vI) to the best of his knowledge, there Is no actIon, suit, proceeding, inquIry or investigation at law or in equity before or by any court, government agency, publIc board or body, pending or threatened against or affecting the City, nor Is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, rulIng or findIng would have a materially adverse effect upon the transactIons contemplated by the Official Statement or the validity of the Bonds, the Ordinance, the Escrow Agreement or this Purchase. Contract, except as descrIbed In the Official Statement; and (v11) all authorIzatIons, consents, approvals and revIews of governmental bodies or regulatory authorIties then requIred for the Clty's adoption, execution or performance of the Bonds, the Ordinance, the Escrow Agreement and thIs Purchase Contract have been obtained or effected and, to the best of his knowledge, he has no reason to belleve that the CIty wlll be unable to obtain or effect any such addItional authorIzation, consent, approval or review that may be required In the future for performance of any of them by the City; and, in addItion, he shall give his opinion to the same effect as set forth under the captIon" LitigatIon" In the Official Statement. ~t (Iv) A certificate, dated the Date of Closing, signed by the Mayor and Finance Director, or other approprIate offIcials satisfactory to the Underwriter, to the effect that, to the best knowledge of each of them: (1) the representations of the City herein are true and correct in all material respects as of the date of Closing; (11) the City has performed all oblIgations to be performed hereunder as of the date of Closing; . (Ill) except as disclosed in the Official Statement, there Is no lltIgatlon of which either of them have notice, and to the best knowledge of each of them no litigatIon Is pending or threatened (A) to restrain or enjoin the Issuance or delivery of any of the Bonds, (B) in any way contesting or affecting any authorIty for the Issuance of the Bonds or the validity of the Bonds, the Ordinance, the Escrow Agreement or thIs Purchase Contract, (C) in any way contesting the corporate existence or powers of the CIty, (D) to restrain or enjoin the collection of revenues pledged or to be pledged to pay the princIpal of, premIum~ if any, and interest on the Bonds, (E) whIch may result in any material adverse change in the business, properties, assets and the financIal condition of the City taken as a whole, or (F) asserting that the Official Statement contains any untrue statement of a material fact or omits any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (Iv) since September 30, 1990, no materIal adverse change has occurred in the financial position or results of operations of the City except as set forth in or contemplated by the Official Statement; (v) the City has not, since September 30, 1990, incurred any material llabUltIes other than in the ordinary course of busIness or as set forth in or contemplated by the Official Statement; and (vI) the OffIcial Statement did not as of Its date, and does not as of the Date of Closing contaIn any untrue statement of a material fact or omit to state a material fact required to be included therein or necessary in order to make the statements contained therein, in llght of the circumstances in which they were made, not misleading. - 9 - BND/7260PCon/910815 ---. (v) An opinion, dated the Date of Closing and addressed to the Underwriter, of Lawson, McWhirter, Grandoff & Reeves, Tampa, Florida, counsel tor the Underwriter, to the effect that (1) the Bonds are not subject to the registration requirements or the Securities Act of 1933, as amended, and the Ordinance is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; and (11) based upon their participation and their review of the otficml Statement as counsel for the Underwriter and without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, as of the date of the Closing nothing has come to the attention of such counsel causing them to belIeve that (A) the Official Statement as of its date contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the Ught of the circumstances under which they were made, not misleading (except for the financial and statistical Information contained in the Official Statement as to which no view need be expressed), or (B) the Official Statement (as supplemented or amended pursuant to Paragraph U> of Section 6 hereof, If applIcable) as of the date of the Closing contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, In the light of the circumstances under which they were made, not misleading (except as aforesaid). (vi) An opinion of Bryant, Mlller and Olive, P.A., Bond Counsel, addressed to the City, the Underwriter and Underwriter1s Counsel, to the effect that the Bonds are not "arbitrage lxmdS' wIthin the meaning of SectIon 148 of the Internal Revenue Code of 1986, as amended. (vll) Written verifIcation from Ernst & Young of the accuracy of (a) the arIthmetical computation of the adequacy of the maturing principal amounts and interest earnings thereon of the Federal Securities to be held under the Escrow Deposit Agreement and held in the Escrow Account to pay when due aU prinCipal of and all interest and redemption premiums on the Clty's Gas System Revenue Bonds, Series 1983 (the "1983 BondS') and (b) the computations ot actuarial yields supporting the concLusion that the 1991 Bonds are not "arbItrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. (vili) An opinIon, dated the Date of Closing, and addressed to the Underwriter from counsel for AMBAC Indemnity Corporation C'AMBAC"), to the effect that: (1) AMBAC is a stock insurance company, duly organized and valldly existing under the laws of the State of Wisconsin and duly qualified to conduct an insurance business In the State of Flor~Ja; (11) AMBAC has full corporate power and authorIty to execute and deliver the MunIcIpal Bond Insurance Policy (the "Polfcy") and the Polley has been duly authorized, executed and delivered by AMBA C and constitutes a legal, valId and binding obUgatIon ot AMBAC enforceable in accordance with its terms except to the extent that the enforceablllty (but not the valldlty) ot such obligation may be limited by any applicable bankruptcy, insolvency, liquidation, rehabilItation or other similar law or enactment now or hereafter enacted affecting the enforcement of cred1tors' rights; (Ill) the execution and delivery by AMBAC of the Polley wUl not, and the consummation of the transactions contemplated thereby and the satisfaction of the terms thereof will not, confIfct with or result In a breach of any of the terms, conditions or provisions of the - 10 - BND/7260PCon!910B15 ~ , Certificate of Incorporation or By-Laws of AMBAC, or any restriction contained In any contract, agreement or Instrument to which AMBAC is a party or by which it is bound or constitute 8 defauit under any of the foregoing; (tv) proceedings legally requIred for the Issuance of the Polley have been taken by AMBAC and lIcenses, orders, consents or other authorizations or approvals of any governmental boards or bodies legally requIred for the enforceablllty of the Polley have been obtained; any proceedings not taken and any licenses, authorizations or approvals not obtained are not material to the enforceablllty ot the PoUcy; (v) the statements contained In the Official Statement under the heading "Municipal Bond Insurance," insofar as such statements constitute summaries of the matters referred to therein, accurately reflect and fairly present the information purported to be shown and, insofar as such statements describe AMBAC, fairly and accurately describe AMBAC; and (vI) the form of Polley contained In Appendix "e" to the Official Statement Is a true and complete copy of the form of Policy. (Ix) An opinion, dated the Date of Closing and addressed to the City, Bond Counsel, the Underwriter, Underwriter's Counsel and AMBAC, of Foley & Lardner, counsel for the Escrow Agent, to the effect that (l) the Escrow Agreement has been duly authorized, executed and delIvered by the Escrow Agent, (ll) constitutes a legal, valid and binding obligation of the Escrow Agent enforceable in accordance with its terms (except as the enforcement thereof may be affected by bankruptcy, insolvency, or other laws or equitable principles generally affecting creditors rights) and (ill) the performance by the Escrow Agent of its obligations under the Escrow Agreement wlll not conflict wIth, or result in a breach of any provision of its Certificate of IncorporatIon or By- Laws. (x) Such additional legal opinions, certificates, Instruments and other documents as the UnderwrIter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Date of Closing, of the City's representations and warranties contaIned herein and of the statements and Information contained In the OffIcial Statement and the due performance or satisfaction by the City on or prior to the Date of ClosIng of a11 the agreements then to be performed and conditions then to be satisfied by it. (f) AMBAC shall have Issued Its polley to Insure the Bonds and Standard & Poor's Corporation and Moody's Investors Service, rnc. shall have assigned theIr municipal bond ratings of II AAA" and 11 Aaa," respectively, to the Bonds. (g) Evidence that First Union National Bank of Florida has been approved by the City as the Paying Agent and Bond Registrar for the Bonds. All of the evidence, opinions, letters, certifIcates, instruments and other documents, mentIoned above or elsewhere In this Purchase Contract shall be deemed to be in compUance with the provisions hereof 1ft but only If t they are In form and substance satisfactory to the Underwriter and the City. I Y.: "".\ 1.,"\ If the conditions to the obllgatIons of the UnderwrIter to purchase, to accept delivery of and to pay for the Bonds contained In this Purchase Contract are not satisfied, or If the obllgatlons of the Underwriter to purchase, to accept dellvery of and - 11 - BND/7260PCon/910815 ,~ to pay for the Bonds shall be terminated for any reason permitted by this Purchase Contract, thJs Purchase Contract shall tel'mInate and neither the Underwriter nor the City shall be under any further obligation hereunder, except that the respective obUgatlons of the City and the Underwriter set forth in Paragraph 11 hereof shall continue in full force and effect and the deposit specified In Paragraph 5 hereof shall 00 returned to the Underwriter. 9. indemnification. The Underwriter agrees to indemnify and hold harmless the CIty, Its officers and employees against any and aU losses, damages, Iiabllitles and expenses (including reasonable costs of investigation) caused by any untrue statement of a materIal fact contained In the Official Statement, or In any amendment or supplement thereto, or caused by an omission to state therein a material fact necessary to make the statements therein, In the Ught of the circumstances under which they were made, not misleading In any material respect, except Insofar as such losses, damages, liabllltIes or expenses are caused by any untrue statement or omission which is based upon information that Is (i) furnished In writing to the Underwriter by the City expressly for use In connection with the Offlciai Statement, or (iI) neither ascertainable from the publIc records of the City nor of which the general public has common knowledge. 10. Termination. The Underwriter may terminate this Purchase Contract by notice to the City In the event that between the date hereof and the Closing (a) legislation shall be enacted by the Congress of the United States or adopted by either House thereof or a decision by a court of the UnIted States or the Tax Court of the United States shall be rendered or a ruling, regulation or offIcial statement by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made, wIth respect to Federal taxatIon of revenues or other Income of the general character expected to be derIved under the Ordinance by the ctty or upon Interest receIved on securities of the general character of the Bonds or which would have the effect of changing, directly or indirectly, the federal Income tax consequences of receIpt of Interest on securities of the general character of the Bonds In the hands of the holders thereof t which In the reasonable opinIon of the Underwriter would materIally adversely affect the market price of the Bonds; (b) the United States shall become engaged in hostllities that have resulted in a declaratIon of war or a natIonal emergency; (c) there shall be In force a general suspension of trading on the New York Stock Exchange as the result of an event affecting the natIonal economy; (d) a general banking moratorIum shall have been established by federal, New York or FlorIda authorities; or (e) Emy event shall have occurred or shall exist which, In the reasonable opinIon of the Underwriter, would or might cause the information contained in the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated thereLn or necessary to make the statements therein, in the light of the circumstances under whIch they were made, not misleading as of such time and whIch would materially adversely affect the market prlce of the Bonds. r~ I. 11. Expenses. (a) Whether or not the Bonds are sold by the City to the Underwriter (unless such sale be prevented at Closing by the Underwriter's default), the City shall be - 12 - BND/7260PCon/910B15 ~ obligated to pay the following expenses: (1) the cost of preparing and printing or other reproduction of the Ordinance; (ll) the cost of preparing and printing the Bonds, the Preliminary Official Statement, the Official Statement, any Blue Sky and Legal Investment Surveys, and this Purchase Contract; (lll) the fees and disbursements of Bryant, Mlller and Olive, P.A. incurred in its capacity as Bond Counsel; (Iv) the fees and disbursements of the Paying Agent and RegIstrar; (v) costs of the escrow agent; (vI) the fees and disbursements of any other experts, accountants, consultants or advIsors retained by the City; and (vlJ} the cost of newspaper advertisements. (b) Whether or not the Bonds are sold by the CIty to the UnderwrIter (unless such sale be prevented at Closing by the CIty's default), the UnderwrIter shall be obligated to pay the following expenses and shall be permitted to pay such expenses from theIr dIscount: (1) all advertising expenses (except the cost of newspaper advertisements) in connection wIth the publfc offerIng of the Bonds; (H) the tees and disbursements of Lawson, McWhIrter, Grandoff & Reeves, Counsel to the Underwriter; and (Ul) all other expenses incurred by them in connection with the publIc offering ot the Bonds. 12. Notices. Any noUce or other communication to be gIven to the City under this Purchase Contract may be given by delivering the same in writing to the address set forth above and any notice or other communications to be gIven to the Underwriter under this Purchase Contract may be given by delivering the same in writing to SmIth Barney, Harris Upham & Co., Incorporated, Attn.: Worth T. Blackwell, 1 Tampa CIty Center, Suite 3500, Tampa, F L 33602. 13. Parties in Interest. ",\. (a) This Purchase Contract Is made solely for the benefit of the City and the Underwriter (including the successors or assigns of the UnderwrIter) and no other person shall acquire or have any rIght hereunder or by vIrtue hereof. All of the representations, warranties and agreements of the City contaIned in this Purchase Contract shall remain operatIve and In tuB force and effect, regardless of: (l) any investigations made by or on behalf of the UnderwrIter; ([1) dellvery of and payment for the Bonds pursuant to thIs Purchase Contract; or (Hi) any termination of this Purchase Contract, but only to the extent provided by the last paragraph of Section 8 hereof. (b) No covenant, stipulation, obligation or agreement contained in this Purchase Contract shall be deemed to be a covenant, stipulation, obligation or agreement of any member, agent or employee of the City Commission In his individual capacity and neIther the members of the CIty Commission nor any official executing. this Purchase Contract shall be liable personally under this Purchase Contract or be subject to any personal liablUty or accountablUty by reason of the execution hereof. 14. Effectiveness. ThIs Purchase Contract shall become effective upon the executIon of the acceptance hereof on behalf of the City by the Mayor and attestation by the City Clerk, all in accordance wIth the requirements set forth in the CIty Charter, and shalJ be valid and enforceable at the time of such acceptance. - 13 - BND/7260PCon/910815 o . . 15. Counterparts. ThIs Purchase Contract may be executed In several counterparts, whIch together shall constitute one and the same Instrument. 16. Florida Law Governs. The validity, Interpretation and performance of this Purchase Contract shall be governed by the laws of the State of Florida. 17. EntIre Agreement. This Purchase Contract when accepted by the City In writing as heretofore specifIed shall constitute the entire agreement between us. 18. Headings. The headings of the Sections af this Purchase Contract are inserted for convenience only and shall not be deemed ta be part hereof. Very truly yours, SMITH BARNEY, HARRIS UPHAM & CO., INCORPORATED . By: Vice President and Authorized Officer Accepted 85 of the date hereof: CITY ~F CLEARWATER, FLORIDA By: RIta J. Garvey, Mayor ATTEST: By: Cyndle Goudeau, City Clerk Approved as to form and legalIty: M.A. Galbraith, Jr., City Attorney - 14 - BND/7260PCon/910815 II '"", ;,:,"~...~~~~...t-""""',"'I..c.."l..\...~~~.,..... """-._........,....,..>'.... ~ /'~ . . Appendix 1 $7,680,000 CITY OF CLEARWATER, FLORIDA GAS SYSTEM REVENUE BONDS SERIES 1991 Due 09/01/95 09/01/96 09/01/97 09/01/98 09/01199 MA TURITY SCHEDULE $2,900,000 Serial Bonds Amount Coupon Price Due Amount Coupon Price 150,000 5.600% 100.000 09/01/2000 300,000 6.100% 99.317 240,000 5.750% 100.000 09/01/2001 320,000 6.200% 99.265 255,000 5.800% 99.500 09/01/2002 340,000 6.300% 99.218 270,000 5.900% 99.435 09/01/2003 360,000 6.400% 99.175 285,000 6.000% 99.374 09/01/2004 380,000 6.500% 99.135 $2,325,000 6.50% Term Bonds Due September 1, 2009 @ 96.912% $2,455,0006.50% Term Bonds Due September 1, 2013 fJ 95.506% , ; ~ ? ~ l ~ , , ", - 15 - BND/7260PCon/910815 ~ .-. Appendix II Mandatory Redemptlol!. The Term Bonds maturing on September 1, 2009 and September 1, 2013, respectively, are subject to mandatory redemption in part prIor to maturity by lot at the princIpal amount thereof (without premIum) plus accrued interest to the date of redemption, from funds which the City has covenanted to deposit in the Bo:J.d AmortIzation Account in the Sinking Fund in the amounts and upon the dates specifIed as follows: Term Bonds Due September 1,2009 Term Bonds Due September 1,2013 Date of Redemption September I, 2005 September 1, 2006 September 1, 2007 September I, 2008 September I, 2009 Amount Date of Redemption September 1, 2010 September 1, 2011 September 1, 2012 September 1, 2013 Amount $410,000 435,000 465,000 490,000 $525,000 $560,000 595,000 635,000 $665,000 Money held for the credit of the Bond Amortization Account Is required to be applied to the retirement of term obligations as follows: (1) Subject to the provisions of paragraph (3) below, the City may purchase Term Bonds then outstanding at the most advantageous price obtainable with reasonable d1ligence, such price not to exceed the principal of such Term Bonds plus the accrued interest to.the date of delIvery thereof. The City Is requIred to pay the interest accrued on such Term Bonds to the date of dellvery thereof from the Interest Account and the purchase price from the Bond Amortization Account, but no such purchase may be made by the City within the period of 45 days Immediately preceding any Interest payment date on which Term Bonds are suhject to call for redemption, except from money In excess of the aIL~unts set aside or deposited for the redemption of Term Bonds. k), I' I' ':: '. . , , ; i ! (2) Subject to the provIsions of paragraph (3) below, whenever suffIcIent money is on deposit in the Bond AmortizatIon Account to redeem $5,000 or more principal amount of Term Bonds, the CIty may call for redemption from money in the Bond Amortization Account such amount of Term Bonds then subject to redemption as, with the redemption premium, if any, wIll exhaust the money then held in the Bond Amortization Account as nearly as may be practicable. Prior to calling Term Bonds for redemptIon, the City is required to withdraw from the Interest Account and from the Bond AmortizatIon Account and set aside in separate accounts or deposit with the payIng agents the respective amounts requIred for paying the interest on and the principal of and redemption premium applicable to the Term Bonds so called for redemption. (3) Money In the Bond Amortization Account is required to be applied by the City in each fiscal year to, the retirement o( Term Bonds then outstanding in the (ollowlng order: - 16 ~ BND/7260PCon/910815 ,......... r (a) The Term Bonds of each series of Bondst to the e.ctent of the Amortization Installmentt if any, for such Fiscal Year for the Term Bonds of each such series then outstandlngt plus the appllcable premlumt if anYt andt if the amount avaIlable in such FIscal Year shall not be sufficient therefor, then in proportion to the Amortization Installmentt if any, for such Fiscal Year for the Term Bonds of each such serIes then outstanding, plus the applicable premium, if any; provided, however, that if the Term Bondili of any such series are not then subject to redemption from money In the Bond Amortization Account and if the City Is at any time unable to exhaust the money applicable to the Term Bonds of such series under the provisions of this clause or in the purchase of such Term Bonds under the provisions of paragraph 1 above, such money or the balance of such money, as the case may be, must be retained In the Bond Amortization Account andt as soon as it is feasible, applied to the Term Bonds of such series; and (b) Any balance then remaining, other than money retained as described In the first clause of this paragraph 3, is requIred to be applied to the retirement of such Term Bonds as the CIty In its sole discretion determines, but only, in the case of the redemption of Term Bonds of any series, In such amounts and on such terms as may be provided In the resolution or ordinance authorizing the Issuance of the obligations of such serIes. The City Is requIred to pay from the Sinking Fund all expenses in connection with any such purchase or redemptIon. Optional Redemption. The Bonds maturing in the years 1995 through 1999, inclusive,. shall not be redeemable prior to theIr stated dates of maturity. The Bonds maturing September 1, 2000 and thereafter, shall be redeemable prIor to theIr stated dates of maturity, at the option of the City, in whole or in part, and if In part, In Inverse order of maturity, on September 1, 1999 or on any Interest payment date thereafter, at the redemption prices (expressed as a percentage of the prIncipal amount to be redeemed) set forth below, together with accrued Interest to the date fixed for redemptIon: Redemption PerIod September It 1999 - August 31, 2000 September 1, 2000 - August j.~" 200 I September 1, 2001 and thereafter Redemption PrIce 102% 101% 100% I i . ~ ' , . ( ! - 17 - BND/7260PCon/910815 , . ~. . . ..._-..... .... ~-f.cJ'....~~'..,.,.5:~~~~.~.., ", . 0 ~ : ~ c'" . . . r; ,. . DISCLOSURE STATEMENT The undersIgned. as Underwriter, proposes to negotiate with the CIty of Clearwater. FlorIdat for the sale at $1.680,000 amount of its Gas System Revenue Bonds, Series 1991 (the "BondS'), to be completed on this date. Prior to the award of the Bonds, the following information Is hereby furnished to the City: 1. Set forth Is an itemized lIst of the nature and estImated amounts of expenses to be incurred by the UndelWrlter In connection wIth the Issuance of the Bonds: Clearance Underwriter's Counsel Fees and Expenses Computer Closing and travel expenses MSRB,PSA,CUSIP Federal Express, Telephone, Communications Duplicating, and Printing Advertising Day Loan Federal Funds (Per Bond) $1,152.110 0.15 15.360.00 2.00 0.00 0.00 0.00 0.00 580.80 0.08 1,536.00 0.20 7,065.60 0.92 230.40 0.03 $1.152.00 0.15 27,076.80 3.53 2. Set forth below are the names, addresses and estimated amounts of compensatIon of al1"flnders", as defined in Section 218.386. Florida Statutes: NONE I l' ( 3. The amount of the underwriting spread expected to be realized by the Underwriter Is $112,715.55. whIch Includes the foHowlng: Underwriter's expenses Management fee Underwriting fee Average take-down (Per Bond) 3.53 . 3.75 .25 7.15 ',\ t 4. The management fee to be cha~ged by the Underwriter Is $28,800.00 ($3.75 per Bond). 5. Set forth below are all other fees. bonuses and other compensation estimated to be paId by the UnderwrIter on behalf of the CIty from Bond proceeds In connection wIth the Bond issue to all persons not regularly employed or retained by them. - 18 - BND/7260PCon/910815 I. . ~' ., :' . . ~ ", ---::- -- ----. -~. .... . .... ~l....-:t""'";"",-,:"".rvr-l...-t~~,,...,v_~......._""""_'" ft. ~ ~ ./'l>_....~~.~~>>)4 41. . . n: 'II ..,...,f r-. ! " 6. follows: Underwriter's counsel fee and expenses $15,360.00 'The name and addless of the Underwriter. connected with the Bonds Is as . :.{~} 'r . . -t Smith Barney, Harris Upham & Co., Incorporated 1 Tampa City Center, Suite 3500 Tampa, F L 33602 IN WITNESS WHEREOF, the undersigned has executed this DIsclosure Statement on behalf of the Underwriter this 15th day of August, 1991. SMITH BARNEY, HARRIS UPHAM & CO., INCORPORATED By: VIce PresIdent and Authorized Officer , , "~I' '~~ '. f(. , , :, - 19 -. BND/7260PCon/910815 ; 1 , r ,. r I -'!:J. / ':4....'., ' r:J r EXHIBIT B "LETTER OF REPRESENTATION , 1991 The Depository Trust company 55 Water street New York, New York 10041 Attention: General counsel's Office Re: $7,680,000 City of Clearwater, Florida Gas system Revenue Bonds, Series 1991 Gentlemen: , t' t \ The purpose of this letter is to set out certain matters relatiug to the issuance by the city of Clearwater, Florida (the "Issuer") of $7,680,000 in aggregate principal amount of its city of Clearwater, Florida, Gas System Revenue Bonds, Series 1991 (the "Bonds"). First Union National Bank of Florida, St. Petersburg, Florida (the "Agent"), is acting as Paying Agent and Bond Registrar of the Issuer with respect to the Bonds pursuant to Ordinance No. 5118-91 of the Issuer authorizing the issuance of the Bonds enacted August 15, 1991, as amended and supplemented (collectively, the tlOocumenttl). Smith Barney, Harris Upham & Co. Incorporated (the tlUnderwri:terll) are distributing the Bonds through The Depository Trust company ("DTC"). To induce DTC to accept the Bonds as eligible for deposit at DTC and act in accordance with its Rules with respect to the Bonds, the Issuer and the Agent, if any, make the following representations to DTC: t 2. Subsequent to Closing on the Bonds on , 1991, the Issuer will cause the Underwriter to deposit with DTC one Bond certificate registered in the name of DTC t S nominee, CEDE & CO., for each stated maturity of the Bonds in the face amounts set forth on Schedule A here- to, the total of which represents 100% of the principal amount of such Bonds. In 'the event of any solicitati!:>n of consents from and voting by holders of the Bonds, the Issuer or Agent, shall establish a record date for such purposes and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. " 1. B-1 1/- 3 ( ~ "..-. 3. In the event of a redemption or any other similar trans- action resulting in retirement of all Bonds outstanding or a reduction in aggr~qate principal amount of Bonds outstanding ("full or partial redemption") or an advance refunding of all or part of the Bonds outstanding, the Issuer or Agent shall give DTC notice of such event not less than 30 days nor more than 60 days prior to the redemption date or, in the case of an advance refunding, the date the proceeds are deposited in escrow. 4. \' 'I , 5. ~;., I! '1 :1 ! , 6. In the event of a partial redemption or an advance refunding of part of the Bonds outstanding, the Issuer or Agent shall send DTC a notice specifying: (1) the amount of the rectsmption or refunding; (2) in the case of a refunding, the maturity date(s) established under the refunding; and (J) the date such notice is to be mailed to Bondholders or published ("Publication Date") . Such notice shall be sent to DTC by a secure means (e.g. legible facsimile transmission, registered or certified mail, overnight express delivery) in a timely manner designed to assure that such notice is in DTC's posses- sion no later than the close of business on the business day before the PUblication Date. The Agent will forward such notice either in a separate secure transmission for each CUSIP number or in a secure transmission for multi- ple CUSIP numbers which includes a manifest or list of each CUSIP submitted in that transmission. (The Issuer or Agent sending such notice shall have a method to verify subsequently the use of such means and timeliness of the notice.) The Publication Date shall not be less than 30 days nor more than 60 days prior to the redemp- tion date or, in the case of an advance refunding, the date the proceeds are deposited in escrow. In the event of an invitation to tender the Bonds, notice to Bondholders by the Issuer or Agent, specifying the terms of the tender and the date such notice is to be mailed to Bondholders or published ("Publication Datell) shall be sent to DTC by a secure means (e.g., legible facsimile transmission, registered or certified mail, overnight express delivery) in a timely manner designed to assure that such notice is in DTC' s possession no later than the close of business on the business day before the Publication Date. (The Issuer or Agent sending such notice shall have a method to verify subsequently the use of such means and timeliness of the notice. ) All notices and payment advices sent to DTC shall contain the CUSIP number of the Bonds. B-2 " J ,....., r" 7. Notices to DTC by facsimile transmission shall be sent to DTC's Call Notification Department at (516) 227-4039 or (516) 227-4190. Notices to DTC by mail or any other means shall be sent to: The Depository Trust Company Muni Reorganization Manager Call Notification Department 711 Stewart Avenue Garden City, New York 11530 8. Interest payments shall be received by CEDE & CO., as nominee of DTC, or its registered assigns in next day funds on each payment date (or the equivalent in accordance with existing arrangements between the Issuer or Agent and DTC). Such payments shall be made payable to the order of "CEDE & CO.II 9. Payments of principal shall be received by CEDE & CO., as nominee of DTC, or its registered assigns in next day funds on each payment date. Principal payments shall be made payable to the order of "CEDE & CO.," and shall be addressed as follows: The Depository Trust Company Muni Redemption Department 55 Water street - 50th Floor New York, New York 10041 Attention: Collection Supervisor 10. DTC may direct the Issuer or Agent to use any other telephone number for facsimile transmission, address, or department of DTC as the number, address or department to which payments of interest or principal or notices may be sent. \k a{r~ f 11. In the event of a redemption, acceleration or any other similar transaction (e.g., tenders made and accepted in response to the Issuer I s or Agent I s invitation) necessi- tating a reduction in aggregate principal amount of Bonds outstanding or an advance refunding of part of the Bonds outstanding, DTC, in its discretion, (a) may request the Agent to issue and authenticate a new Bond certificate or (b) shall make an appropriate notation on the Bond certificate indicating the date and amounts of such reduction in principal except in the case of final maturity, in which case the certificate must be presented to the Agent prior to payment. 1 I I 12. In the event the Issuer determines pursuant to the Document that beneficial owners of the Bonds shall be able to obtain certificated Bonds, the Issuer or Agent B-3 WJ" ."-;j . ~ ( . ~ r"-' i ,. shall notify DTC of the availability of Bond certifi- cates, and shall issue, transfer and exchange Bond certificates in appropriate amounts as required by DTC and others. 13. DTC may determine to discontinue providing its service as securities depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or Agent (at which time DTC will confirm with the Issuer or Agent the aggregate principal amount of the Bonds outstanding) and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, whenever DTC requests the Issuer and the Agent to do so, the Agent and the Issuer will cooperate with OTC in taking appro- priate action to make available one or more separate certificates evidencing the Bonds to any DTC Participant having Bonds credited to its DTC account. 14. Nothing herein shall be deemed to require the Agent to advance funds on behalf of the Issuer. Very truly yours, FIRST UNION NATIONAL BANK OF FLORIDA By: CITY OF CLEARWATER, FLORIDA By: Approved as to form and legality: Mayor ATTEST: Clerk city Attorney Received and Accepted: THE DEPOSITORY TRUST COMPANY BY: Authorized Officer co: Underwriter B-4 71 - ~ I f+i'4,,\ .~ ~"'., NEW~ BOOK-ENTRy-oNL Y $7,680,000 CITY OF CLEARWATER, PLORIDA Gas System Revenue Bonds, Series 1991 Dated: September 1, 1991 Due: September ), (as stxwm below) The City of Clearwater, FlorIda (the "CIty") Is issuing $7,680,000 Gas System Revenue Bonds, Series 1991 (the "1991 Boncfsl') (I) to provIde the funds necessary to advance refund the City's outstancUng Gas System Revenue Bonds, SerIes 1983 (the" 1983 Bonds") and (11) to pay certain costs ot Issuance of the 1991 Bonds. Certain of the net proceeds from the i991 Bonds wUl be used to purchase Pederal Securities, the prinCipal of and Interest on which, when due, will be used to pay princIpal, Interest and any redemption premiums on the 1983 Bonds. See "Purpose of the 1991 Bonds." The 1991 Bonds will be Issued under and pursuant to Chapter 166, Plorlda Statutes, as amended and other applIcable provisions of law, and Ordinance No. 5118-91 enacted by the CIty CommissIon on August 15, 1991, as supplemented (the "Ordinancell). The 1991 Bonds are secured by a prior lien and pledge at certain revenues derived by the City from the operation of Its gas system (the "System"), monies and investments deposited In certain funds and accounts established by the Ordinance and earnings thereon. The 1991 Bonds wlll be issued as registered bonds without coupons and wlll be initially registered only In the name of The Depository Trust Company, New York, New York (IIDTC") or its nominee, which will act as securities depository for the 1991 Bonds. The 1991 Bonds wl11 be available to purchas~rs in denominations of $5,000 or any integral multiple thereot> The 1991 Bonds are avallable only under the book-entry system maintained by DTC through brokers and dealers who are, or act through, DTC participants. Interest on the 1991 Bondi; wUl be payable semI-annually beginning on March i, 1992, and on each March 1 and September 1, thereafter. The 199 I Bonds wUl be subject to redemptIon prIor to maturity as more fuHy described herein under the caption liThe 1991 Bonds." The payment of the principal of and tri"cerest on the 1991 Bonds when due will be insured by a municipal bond Lnsurance polIcy to be issued by AMBAC IndemnIty Corporation simultaneously with the delivery of the 1991 Bonds. (INSERT AMBAC LOGO HERE) The 1991 BondR wil1 not coostitute a debt 01. the City 01' 8 pIedse d. tbe faith and credit d. the City wlthlo the meAnIng ct any coostItutkmal or stat.otocy provisioos 01" Umitatioos aDd the ~ c1 the 1991 BoodB will DOt directly 01' lDdlrectly ()[' contfnlently obllgate the City to pledge any ad vaIor'em tu.es wbateYer tberefor and the bolders f1 the 1991 RtwvtR will have DO recoo.a se to the power al ad VDIorem tuaticIL BND/Clearwater/9IOB15 7/ - $ / 1I~ -....- ('. ..-.. { In the op1n1on at Bond Counsel, assuming continuing compliance by the City with various covenants in the Ordinance, under existing statutes, regulations and JudIcial decisions, the Interest on the 1991 Bonds will be excluded from gross income far Federal income tax purposes of the holders thereof. The 1991 Bonds are, under existing laws and regulations, also exempt from Intangible taxes imposed pursuant to Chapter 199, Florida Statutes. See "Tax Exemption" herein for a description of alternative minImum tax treatment and certain other tax consequences to holders of the 1991 Bonds. AMOUNTS, MATURI'InS, RATES AND PRICES OR YIELOO Price or Price or Amount Maturity Rate YIeld A mount Maturity Rate Yield 150,000 1995 5.600 100.000 300,000 2000 6.100 99.311 240,000 1996 5.750 100.000 320,000 2001 6.200 99.265 255,000 1991 5.800 99.500 340,000 2002 6.300 99.218 270,000 1998 5.900 99.435 360,000 2003 6.400 99.175 285,000 1999 6.000 99.374 380,000 2004 6.500 99.135 ~.~,ooo 6.50, Term ~ €b! September 1, 2009, PrIce 96.912' $2,455,000 6..50, Term Rnrvk due September 1, 2013, Price 95.506' (plus Accrued Interest) I' The 1991 Bonds are offered when, as and it Issued and receIved by the Underwrlter, and subject to the opinion as to the legaIlty of the 1991 Bonds by Bryant, MlIler and OlIve, P.A., Tallahassee, FlorIda, Bond Counsel. Certaln legal matters will be passed upon for the City by M.A. Galbraith, Jr., Esquire, City Attorney. Certain legal matters wlU be passed upon for the Underwriter by Lawson, McWhirter, Grandoff & Reeves, P.A., Tampa, FlorIda, Counsel to the Underwriter. It Is expected that the 1991 Bonds In book- entry form will be available for delivery In New York, New York, on or about September 4, 1991. SMITH BARNEY, HARRlS UPHAM A CO.f INCORPORATED It ~ , , i ,; i \ The date of this Offlcial Statement is August 15, 1991 BND/ Clearwater/91 0815 C;I-~f .,..- r~ ....... I I No dealer, broker, salesman or other person has been authorized to make any representations, other than as contained in the OffIcial Statement, and, if gIven or made, such other 1n1'ormatlon or representations must not be relied upon. This Official Statement does not constitute an offer to sell or the solicItation of an offer to buy, nor shall there be any saJe at the 1991 Bonds by any person In any jurlsdlction In which It Is unlawful for such person to make such offer, solicItation or sale. The information contained In this Offlclal Statement has been obtained from public documents, records and other sources considered to be reliable and, whlle not guaranteed as to completeness or accuracy, Is believed to be correct. Any statements in this Official Statement involving estimates, assumptions and matters of opinion whether or not so expressly stated, are Intended as such and not as representations of fact, and the City expressly makes no representations that such estimates, assumptions and opinions wlll be realized or fulfilled. No Information, estImates, assumptions and matters at opinIon contained in this Official Statement, or any sale made hereunder, shall under any circumstances, create any implication that there has been no change in the affaIrs of the CIty since the date hereof. IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT SfABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH 1991 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH SfABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. Table of Cootents Page Sum mary Statement . . . . . . . . . . .. . . . . . . . . . . ... ,. . . . . . . . . . . . . III . . . . .. .. Iv Introd.uctlon .. . . . . . . . . . . . . . . . . . . .. . . . . . I- . .. . . . .. . . . '" .. .. . .. . . , . . . .. . . .. 1 AuthorIty for Issu.ance . '" .. . . .. .. , .. . .. .. .. .. .. .. .. .. .. .. .. .. .. . .. . .. .. . . .. . .. . .. '" . .. . .. . .. 1 Purpose of the 1991 Bonds.. .. . '" .. .. .. , . .. .. . '" .. '" . .. . '" .. .. . .. . . . .. . .. . . . .. . " .. '" .. .. .. 1 The Refunding Plan ............................... II 41 II . . . .. .. " '" It It .. '" I- , .. .. .. .. .. 1 Verification of Arithmetical Computations. . . . . . . . . . . . . . . . . . . . . . . . 2 The 1991 Bonds ........ II . .. .. . '" . , .. .. " '" .. .. '" '" .. .. " . .. , .. .. .. " .. .. .. .. .. .. .. .. .. .. '" '" .. . .. '" 2 BcKlk-Entry-Only-System.. . .. . .. .. .. .. .. .. .. .. . .. .. .. .. I- .. .. .. .. .. . . .. . . '" .. .. .. .. .. .. . . 2 Redemption Provisions .. . .. .. .. .. .. .. .. .. . .. .. .. .. '" . . . '" . '" . .. . '" . . . ,. .. '" II ... .. .. .. .. 4 5f!curl ty. .. .. .. .. .. .. .. .. . '" . .. .. . . '" ., .. .. " .. .. . .. . .. .. .. .. . .. .. .. . .. . .. . .. It .. .. , .. .. I- . . .. I- I- .. 6 Mu.nfcipal Bond Ir1surance ........................... '" , .. " .. " .. '" .. .. . . .. .. .. .. .. .. .. .. .. 7 Payment Pursuant to Municipal Bond Insurance Polley. . . . . . . . . . . . . . . . 7 AMBAC Indemnity Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 The City of Clearwater and Plnellas County. . . . . . . . . . . . . . . . . . . . . . . . . . 10 The Syste m .............. '" . . , .. . . .. . .. .. .. . .. .. .. .. .. .. .. " . '" .. .. . '" .. . .. .. . .. .. '" .. " " I- .. 11 PhysIcal Desc.rlptlon . . . , .. .. . .. .. .. .. .. .. . .. .. .. .. .. .. . .. . '" .. .. .. .. .. .. .. .. .. I- '" '" II- .. " 11 Management .......... '" .. " .. .. .. .. .. .. .. .. I- .. .. .. .. .. .. .. .. .. II .. '" '" . .. .. .. .. " ... . .. .. .. 11 Gas StIlJ1)ly . . .. . . " .. . ," . .. '" .. .. " , .. " .. .. .. .. I- .. .. .. .. . .. .. .. .. .. .. .. I- . .. .. ... . . . .. , .. 12 Rates, Fees and Cl1a.rges .. .. " . . " .. .. .. .. '" It I- .. .. .. .. .. .. .. .. .. .. .. . .. '" '" . .. II .. .. I- . I- 13 5f!rvlce Area .... . . '" .. . .. " . .. .. . .. " I- .. .. .. III .. .. I- .. .. .. .. .. .. .. .. '" . .. .. .. . .. .. . .. . .. 13 Irlte.ma.1 'L.oa.rJ. . . . . . . . . .. '" . .. . .. .. .. .. .. .. I- " .. .. .. .. '" .. .. .. .. .. '" .. '" .. .. .. I- . " .. . .. .. 15 ", "~- Consultant's Recommendation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Comparatlve Financial Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Debt 5f!rvice Amortization Schedule .... . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Coverage of Maximum Debt Service by Net Revenues. . . . . . . . . . . . . . . . . . . 18 ;5()urces and Uses ot Funds. . . .. .. .. . .. . .. . , . . , .. . .. , .. .. .. .. .. I- .. . .. '" .. . . '" .. .. " .. .. .. 18 F low of Funds '"".."."..... I- . .. .. . , .. . .. . I- I . .. '" . .. .. II- . . ... .. .. , . .. .. .. . .. " . .. .. I . " 19 Covenants .. '" .. . . . . '" .. .. . .. I- .. .. . -II . .. .. II- .. .. I- . .. .. . .. .. . .. . .. .. .. . .. '" . . .. .. . , " .. . " . 21 "1, "1' - I - 91 '6 , , "' ,'I.. ) I, . "", '" I. '> '" 'I J " "' , , ,/ I:~ . . , I . . ) .. ", ",-> ! I .,.. .- " -.. , I ...... ./ . I " " J / I if7.~;" '".'J."l<i~" ".-: r') (~ Table at Contents (Cont'd.) Page Governmental ReorganJzatlon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 UnderwrIting · · . . . . . .. . . . . . . . .. . . . . .. .. III . . .. . . " .. " . " . . . . . . . . . . . . III " " 25 CertaJn Legal "Matters ...................."....... III , . . . .. . . . . . . . . .. 25 Tax Exe mptlon . . . . . . .. . . . . . . . . . . . . . , . .. . " . . . . . II- .. .. . . . . . . . . . . . . . . 25 LJtlga.tJon .......................".."...... iii .. . " . . . . . . . . . . . " . . . .. . . . 27 Rat1n.gs. . . . . . . . . " . . . . . . . " . " . . . . . . , . . . . III .. III . .. . . . . . . . . . .. . " , . .. . . 27 Mlsc-ellaneous. .. . . . . . . . . . III . . III .. .. .. . .. " . . .. . II .. .. .. .. . " . . . . . . . . . . . II . . . .. 27 Authorization ot and Certification Concerning Official Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 . ; i ~ APPENDIX A - Excerpts from the City's Comprehensive Annual Financial Reports and related explanatory note APPENDIX B - Ordinance No. 5118-91, as amended APPENDIX C - Form of Municipal Bond Insurance Polley APPENDIX D - Form ot Bond Counsel Oplnlon " (,; " ;;'f -;j' i - 11- 71 .. 3/ (""\ CITY OF CLEARWATER, FLORIDA BOARD OF CITY COMMISSIONERS Rita J. Garvey Mayor-CommissIoner Richard Fitzgerald Sue Berfleld CITY MANAGBR Michael Wright ClTY ATTORNEY M.A. Galbraith, Jr. CITY CLBRK Cyndie Goudeau tmI.lTlES FINANCB MANAGBR Carole L. Greiner FINANCE DIRBCTOR Daniel J. Deignan, C.P.A. BOND COUlfiBL Bryant, Mlller and Ollve, P.A. Tallahassee, Florida Atlanta, Georgia FINANCIAL ADVJSOR Raymond James &: Associates, Inc. St. Petersburg, Florida -111- r:: ." ! . William Nunamaker Lee Regulskl ~,;t~ SUMMARY Sf A TRMENT This Summary Statement Is subject in all respects to more complete lntormatlon and to the det1nJtIons contained or incorporated in this Official Statement. The offering ot the i991 Bonds to potentIal Investors Is made only by means of this entire Official Statement. No person is authorized to detach this Summary Statement from the Official Statement or otherwise to use it without this entire Official Statement. Purpose r1 the 1991 I}oods The 1991 Bonds are being Issued (1) to provide tWlds for the advance refunding of the City's outstanding Gas System Revenue Bonds, Series 1983 in the original principal amount of $7,100,000, of which $6,710,000 in principal amount is currently outstandIng, and (11) to pay certaln costs of Issuance of the 1991 Bonds. Security toe tile 1991 IJo(1(k. The payment of the principal of and the Interest on the 1991 Bonds 15 secured equally and ratably by an irrevocable lien on the Net Revenues of the System prior and superior to all other liens or encumbrances on the Net Revenues. The Net Revenues are the Gross Revenues of the System, less Costs of Operation and Maintenance. Gross Revenues include all money received from rates, fees, rentals or other charges or income derived from the Investment of funds, unless otherwise provided In the OrdInance, by the City or accruing to It In the operation of the System. The Costs of Operation and Maintenance of the System include all current expenses, paid or accrued, for the operation, maintenance and repair of all facilities of the System, as calculated in accordance with sound accounting practice, and include without limiting the generality of the foregoing, Insurance premiums, admlnlstratlve expenses of the City related solely to the System, labor, costs of materials and suppUes used for current operation, and charges tor the accumulation of appropriate reserves ror current expenses not annually recurrent but which are such as may reasonably be expected to be Incurred in accordance with sound accounting practice, but excluding any reserve for renewals or replacements, for extraordinary repairs or any allowance for depreciation. The 1991 Bonds are further secured by a prior Hen and pledge on the monies and Investments deposited in the Funds and Accounts established by the Ordinance except for monIes and Investments depos1ted in the Operation and Maintenance Fun<1 The 1991 Bonds will not constitute a debt of the City or a pledge of Its faith and credlt within the meaning ot any constitutional or statutory provision or limitation. Nor wl1l the 1991 Bonds constitute a lien upon the System, or any part thereof, or on any other property of the City, other than the Net Revenues in the manner provided in the Ordinance. '1 Unnldpe.l Bood h-u~ AMBAC Indemnity Corporation C'AMBAC Indemnity') has Issued a Commitment for Municipal Bond Insurance (the "Commitment for MunicIpal Bond InsurancW') to Issue a bond Insurance policy (the "Municipal Bond Insurance Policy') relating to the 1991 Bonds etf ectlve as of the date of Issuance of the 1991 Bonds. Under the terms of the Municipal Bond Insurance Polley, AMBAC Indemnity will guarantee the payment of the principal of and Interest on the 1991 Bonds when due to the extent that sufficient funds (or such payment have not been provided. The text ot the MunicIpal Bond Insurance Polley Is set forth In Appendix C. The Insurance wlll extend for the term of the 1991 Bonds and once issued, cannot be cancelled by AMBAC IndemnIty. - Iv - 7/- ~I ,.. - Pro Forma Coverage of Maximum Annual Debt service by Net Revenues ~ Net Revenues 1988 Audi too 1989 1990 2,158,510 1,90 I ,892 2,122,152 Coverage of Maximum Debt servIce on 1991 Bonds ($721,030) 2.99x 2.63x 2.94x Rate Covenant. The City has covenanted that It will fix, establish, revise from time to time whenever necessary, maintain and collect always, such fees, rates, rentals and other charges tor the use of the product, services and facilities of the System which will always provide Gross Revenues In each year sufficIent to pay, and out of such funds pay, 100% of all Costs of Operation and Maintenance of the System In such year and all reserve and other payments provided for In the Ordinance and 125% of the Bond service Requirement due In such year on all outstanding 1991 Bonds. Addltlooal Parity Ob1Jptlms. Additional Parity Obligations may be issued provided that Net Revenues either during the Immediately preceding Fiscal Year, during any tweive (12) consecutive calendar months at the eighteen CI8) calendar months immediately preceding the sale of the proposed AddItional Parity Obllgatlons, or during the last twelve (12) month period for which the City has audited FinancIal Statements for the System, at the option ot the City, shall have been not less than 125' at the Maximum Bond Service Requirement which will become due In any calendar year thereafter on (l) the 1991 Bonds then outstanding, (2) any AddItional Parity Obligations issued and then outstanding and (3) the Additional Parity ObUgatloDS then proposed to be issued. Such Net Revenues, for this purpose, may be adjusted by the Consulting Engineer to reflect rate changes and/or acquisitions to the System, as provided in the Ordinance. The City 01 Clearwater. The City of Clearwater, the county seat of Plnellas County, Is located in the middle of the west coast of Florida on the Gulf of Mexico, 22 miles west at Tampa. The 1989 population of the City was estimated at 102,600. The economy of the City is based primarily on light manufacturing, tourism and related . services. - v - 1/-'Jy{ . .' . -- (""" OPPICIAL SfATEMENT $1,680,000 CITY OP CLEARWATER, PLORIDA GAS SYSTEM REVENUE BONDi, SERIES 1991 INTRODUCTION The purpose of this Official Statement, Including the cover page, summary statement and appendlces, Is to provide information concerning the CIty of Clearwater, Florida (the "City") and the $7,680,000 Gas System Revenue Bonds, Series 1991 (the "1991 Bondstl). Definitions of certain words and terms having inltfal capitals used herein and In the Ordinance are contained In the Ordinance In Appendix B hereto. The references, excerpts and summaries of all documents referred to herein do not purport to be complete statements of the provisions of such documents, and reference Is directed to all such documents tor full and complete statements of all matters of fact relating to the 1991 Bonds, the security for the payment of the 1991 Bonds. and the rights and oblIgations of holders thereof. The informatIon contained in this OftIclaJ Statement Involving matters of oplnJon or of estimates, whether or not so expressly stated. are set forth as such and not as representatIons of fact, and no representation Is made that any of the estImates will be reallzed. Neither th1s Official Statement nor any statement which may have been made verbally or In writing Is to be construed as a contract with the holders of the 199 I Bonds. AUTHORITY FOR mtJANCB The Bonds are being issued pursuant to the Constitution and Statutes of the State of Florida, Inclucl1ng partIcularly Chapter 166, Florida Statutes, and other applIcable provisions of law and Ordlnance No. 5118-91, enacted by the City on August 15, 1991, as supplemented (the "Ordlnance"). .~ PURPOSE OF THE 1991 IJON[.6 \ The Ref~ Plm. The City will use part of the proceeds of the 1991 Bonds to refund Its $7,100,000 Gas System Revenue Bonds, SerIes 1983, $6,710,000 of whIch are currently outstandIng (the" 1983 Bonds"). After paying certain costs of lssu!ng the 1991 Bonds, the CIty will deposit a portion of the 1991 Bond proceeds. with First Union National Bank d. FlorIda as escrow agent (the "Escrow Agent") pursuant to an Escrow Deposit Agreement (the "Escrow Deposit Agreement"). The Escrow Deposit Agreement requJres that the Escrow Agent use the amounts escrowed thereunder to purchase Federal Securities. Federal Securities are dIrect obllgations of the United States of America and obligations the princIpal of ana int"jrest on whIch are fully gun ran teed by the UnIted States of America and which obUgatlons are not redeemable prior to their maturity at the option of the United States and interest on oblIgations of the Resolution Funding Corporation. - 1 - 9/ / ~ I I f':';"\ In the opinIon of Bond Counsel, the lIen ot the OrdInance pursuant to wh1ch the 1991 Bonds were Issued will be released and d1scharged upon the issuance by the CIty of the 1991 Bonds, the simultaneous purchase of the Federal SecurIties requJred pursuant to the refunding plan and the pledging and setting aside pursuant to the Escrow Deposit Agreement at such money and obUgatIons tor the payment of the princIpal of, premIum, If any, and Interest on the 1983 Bonds, the expenses of the Paying Agent for the 1983 Bonds and the costs of the Escrow Agent. Verification c1 Arlthmetlcal ComputatJoos. Upon delivery ot the 1991 Bonds, Ernst & YOWlg, independent accoWltants, wUl deliver a report on the mathematical accuracy of certain computations contained in schedules provIded to tJlem by the UnderwrIter relating to (a) the adequacy of the maturing principal amounts of the Federal SecurIties held in the escrows for the 1983 Bonds to be refunded, interest earned thereon and certain other moneys to pay all of the principal or redemption price of and the interest on such 1983 Bonds as such principal or redemption prIce and interest become due and payable, and (b) the computations of yIeld used by Bond Counsel to support Its opInIon that the 1991 Bonds are not arbitrage bonds wIthin the meaning ot SectIon 148 ot the Internal Revenue Code. The report of Ernst & Young will Include the statement that the scope of their engagement was limited to verifying the mathematical accuracy of the computations contained In such schedules provided to them and that they had no obligation to update their reports because of events occurring or data or information coming to their attentIon subsequent to the date of such report. The monies and Federal SecurIties held in accordance with the Escrow Deposit Agreement, all Interest or other income thereon, and any proceeds from the disposItion thereot wlll be used only to pay the 1983 Bonds and will Dot be available tor payment of the debt service on the 1991 Bonds. THE 1991 BONL6 ,\. '~ Book-Entry-Qnly System. DTC, New York, New York will act as securities depository for the 1991 Bonds. Upon the issuance of the 1991 Bonds, one fully registered bond for each maturity will be registered in the name of Cede &: Co., as' nominee for DTC. So long as Cede &: Co. is the registered owner of the 1991 Bonds, as nominee of DTC, references herein to the owners of the 1991 Bonds shall mean DTC or its nominee, Cede &: Co., and. shall not mean the Beneficial Owners (hereinafter def InOO) of the 1991 Bonds. OTC Is a Umlted~purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agencyll registered pursuant to the provis1ons of Section 17 A of the Securities Exchange Act of 1934, as amended. DTe was created to hold securitIes of its partJcipants (the t1DTC PartIcipants") and to facilitate the clearance and settlement of securities transactions among DTC Participants in such securities through electronJc book-entry changes in accounts of the DTC PartJclpants, thereby eUmlnatlng the need of physical movement of securities certificates. DTC PartIcipants Include securltfes brokers and dealers, banks, trust companies, clearing corporations and certain other organizatIons, some of whom (and/or theIr representatIves) own DTC. Access to the DTC system Is also available to others such as banks, brokers, dealers and trust companies that clear through or malntaln a custodial relationshIp with a DTC Participant, either directly or Indlrectly (the "Indlrect Partlclpants"). - 2 - 1'1 ,- ~ I <j""-..t\ t Purchases of the 1991 Bonds under the book-entry system may be made only through brokers and dealers who are, or act through, DTC Participants. The DTC Participants shall receive a credIt balaq.c<<: In the records of DTC. The ownership Interest of each actual purchaser of each 1991 Bond (a "Beneficial Owner") will be recorded through the records ot the applicable DTC Participant. Beneficial Owners will receive from the appUcable DTC Participant or IndIrect Participant a written confirmation of their purchase providing details ot the 1991 Bond acquired. Transfers of ownership interests In the 1991 Bonds will be accomplished by book entries made by the DTC Participants who act on behalf of the Beneficial Owners and if necessary, in turn by DTC. No 1991 IJonds will be registered In the names aI. the 8eDef1cla1 Owners, except In the event particlpation In the book-entry system Is dJscontlnued as described below. The City w11l recognIze DTC or Its nominee as the owner of the 1991 Bonds for all purposes, including notices and voting. Conveyance of notices and other commwllcatlons by DTC to DTC Participants and by DTC Participants and Indlrect Participants to Beneficial Owners will be governed by arrangements among DTC, DTC Participants and indIrect Participants, subject to any statutory and regulatory requirements as may be In effect tram time to time. Beneficial Owners may desire to make arrangements with a DTC Participant or an Indirect Participant so that all notices of redemption or other communications to DTC whJch affect such Beneficial Owners, and notification of all interest payments, w11l be forwarded in writing by the DTC Participant. Any fallure of DTC to advise any DTC Participant, or of any DTC Participant or Indirect Participant to notify the Beneficial Owner, of any notice of redemption and Its content or effect wl11 not affect the validity of the redemption of the 1991 Bonds called for redemption or of any other actIon premised on such notice. ,J Payments of principal of and premium, If any, and interest on the 1991 Bonds wlll be made to DTC or its nominee, Cede & Co., as registered owner of the 1991 Bonds. Upon receipt of monies DTC's current practice is Immediately to credit the accounts of the DTC Participants In accordance with their respective holdings shown on the records of DTC. Payments by DTC Participants and Indirect Participants to Beneficial Owners will be governed by stand!ng Instructions and customary practices, as is now the case with municipal securIties held for the accounts of customers In bearer form or registered In "street name," and wlll be the responslblllty of such DTC Participant or Indirect ParticIpant and not of DTC, or the City, subject to any statutory and regulatory requIrements as may be In effect from time to time. The City cannot and does not give any assurances that DTC, DTC Participants, IndIrect Participants or others will distribute payments of principal of or interest or any premlum on the 1991 Bonds paid to DTC or Its nominee, as the registered owner, or any redemption or other notices, to the Beneficial Owners or that they wlll do so on a timely basis or wUl serve and act In a manner described in this ottlclal Statement. The City is not responsIble or liable for the faIlure of DTC, any DTC Participant or any Indlrect Participant to make any payment or give any notice to a Beneficial Owner In respect of the 1991 Bonds or any error or delay relating thereto. For every transfer of the 1991 Bonds, the Beneficial Owner may be charged 8 sum sufficient to co~er any tax or other governmental charge that may be Imposed in relation thereto. DTC may d1scontinue provldIng its services with respect to the 1991 Bonds at any time by giving notice to the City and dJscharging its responslbUlties with respect thereto under applicable law, or the City may terminate Its participation In the system of book- - 3 - 'f ~ "....... " 'If ,II ,~( '" ", j " I".., " , . "")', " ., " " . ;\ . b' , , I . I .. .1' 0, f >.. , r- d,: . " ..... (, '" .;......... I '~, ! f '.~ t . ',II" I. I, ....... -,"", _.....l, f entry transfers through DTC at any time. Upon receipt by the City of wrItten notice from OTC (1) to the effect that DTC has received written notice from the CIty or trom Participants having interests, as shown in the records at DTC, In an aggregate prfnclpal amount of not less than fIfty percent (50% )of the aggregate princIpal amount of the then outstanding 1991 Bonds to the effect that a continuation of the requIrement that all of the outstanding 1991 Bonds be registered tn the registration books kept by the Bond Registrar In the name of Cede, as nominee of DTC, Is not In the best Interest of the BenefIcial Owners of the 1991 Bonds or (1.1) to the effect that OTC Is unable or unwilling to dlscharge Its responslblllties and no substItute deposItory wUllng to undertake the functions of OTe hereunder can be found which ls wUllng and able to undertake such functions upon reasonable and customary terms, such 1991 Bonds will no longer be restricted to being registered In the registration books kept by the Bond Registrar In the name of Cede, as nominee of DTC, but may be registered in whatever name or names registered owners transferring or exchanging such 1991 Bonds shall des[gnate~ In accordance with the provisions of the OrdInance. In the event that such book-entry-only system is d1scont1nu~ the following provisions will apply: principal of the 1991 Bonds and redemptIon premIum, if any, thereon will be payable at the princIpal corporate trust office of First Union NatIonal Bank ot Florida In Jacksonville, Florida (the "Bond Registrar"). Interest on the 1991 Bonds will be payable by check or draft mailed to the respectIve addresses of the registered owners thereof as shown on the registratIon books maintained by the Bond Registrar at the close ot business on the 15th day of the month (whether or not a business day), next preceding the Interest payment date tor the 1991 Bonds (the "Record Date") IrrespectIve at any transfer of the 1991 Bonds subsequent to such Record Date and prior to such Interest payment date unless the City is in default In the payment of Interest due on such interest payment date. In the event of any such default, the defaulted Interest will be payable to the registered owners at the close of business on a special Record Date for the payment of defaulted Interest as established by notice maBed to the persons In whose names the 1991 Bonds are registered at the close of business on the 5th day preceding the date of mall1ng4 The 1991 Bouds will be issued only as registered bonds wIthout coupons in denominatIons at $5,000 or any Integral multiple thereof. The transfer of 1991 Bonds wUl be registrable at the principal corporate trust office of First Unton National Bank of FlorIda upon the payment ot the CIty's and Bond Reglstrar's reasonable tees and any tax, tee or other governmental charges required to be paid wIth respect to such transfer. Redemptioo ProvIsIoos. The Bonds maturing In the years 1995 through 1999, Inclusive, shall not be redeemable prior to their stated dates of maturity. The Bonds maturing September 1, 2000, and thereafter, shall be redeemable prior to theIr stated dates at maturity, at the option at the City, in whole or In part, and If in part, in inverse order at maturity, on September I, 1999, or on any interest payment date thereafter, at the redemptioo prices (expressed as a percentage of the principal amount to be redeemed) set forth below, together wIth accrued interest to the date fixed for redemption: - 4 - ... . .' . l .' . . ~ . : .. ..... " - . ,~ , .- Redemption Period September 1, 1999 through August 31, 2000 September I, 2000 through August 31, 2001 September '1, 200 I and thereafter. Redemption Price 102% 10 1% 100% Mandatory Redemptloo. The Term Bonds maturing on September I, 2009 and September 1, 2013, respectively, are subject to mandatory redemption in part prIor to maturity by lot at the prinCipal amount thereat (without premium) plus accrued Interest to the date at redemptJon, tram tunds whJch the CIty has covenanted to deposit In the Bond AmortizatIon Account in the SIn1dng Fund In the amounts and upon the dates sped! led as toHows: Term Bonds Due September 1 t 2009 Term Bonds Due September I, 2013 Date of RedemptIon September 1, 2005 September 1, 2006 September 1, 2007 September I, 2008 September I, 2009 Amount 410,000 435,000 465,000 490,000 525,000. Date ot RedemptIon September 1,2010 September 1, 2011 September I, 2012 September 1, 2013 Amount 560,000 595,000 635,000 665,000. Jl -Final Maturity Money held for the credlt of the Bond AmortizatIon Account Is required to be applied to the retirement of term obligatiOns as follows: (1) Subject to the provisions of paragraph (3) below, the CIty may purchase Term Bonds then outstandlng at the most advantageous price obtainable with reasonable dlligence, such price not to exceed the principal of such Term Bonds plus the accrued interest to the date ot delivery thereot. The CIty Is required to pay the interest accrued on such Term Bonds to the date of dellvery thereof from the Interest Account and the purchase price tram the Bond AmortIzatIon Account, but no such purchase may be made by the City within the period of 45 days immediately preceding any interest payment date on which Term Bonds are subject to call for redemption, except trom money In excess of the amounts set asIde or deposited for the redemption of Term Bonds. (2) SUbject to the provisions of paragraph (3) below, whenever sufficient money Is on deposit In the Bond Amortization Account to redeem $5,000 or more prinCipal amount of Term Bonds, the CIty may call for redemption from money in the Bond Amortization Account such amount of Term Bonds then subject to redemption as, wIth the redemptJon premIum, 11 any, will exhaust the money then held in the Bond Amortization Account as nearly as may be practicable. Prior to call1ng Term Bonds for redemptIon, the CIty Is requIred to withdraw from the Interest Account and from the Bond Amortization Account and set aside in separate accounts or deposit with the paying agents the respectIve amounts requIred (or paying the interest on and the principal of and redemption premium applicable to the Term Bonds SO called tor redemption. - 5 - c.r.....\ , t 'p,1o ..... . I i (3) Money in the Bond Amortization Account Is required to be applied by the City in each fiscal year to the retirement of Term Bonds then outstanding in the following order: ia) The Term Bonds of each series of Bonds, to the extent ot the Amortization Installment, If any, for such Fiscal Year for the Term Bonds at each such series then outstandlng, plus the appllcable premIum, If any, and. If the amount available In such Fiscal Year shall not be suffIcIent therefor, then In proportion to the AmortIzation Installment, If any, tor such Fiscal Year for the Term Bonds of each such serIes then outstanding, plus the appllcable premium, If any; provIded, however, that l! the Term Bonds ot any such series are not then subject to redemption from money In the Bond Amortization Account and If the CIty Is at any time unable to exhaust the money applicable to the Term Bonds at such series Wider the provisions at thls clause or In the purchase of such Term Bonds under the provisions ot paragraph I above, such money or the balance of such money, as the case may be, must be retained In the Bond AmortizatIon Account and, as soon as it is feasIble, applled to the Term Bonds of such series; and (b) Any balance then remalnlng, other than money retained under the first clause of this paragraph 3, Is requIred to be applied to the retirement of such Term Bonds as the City In Its sole discretion determines, but only, in the case of the redemption of Term Bonds of any series, In such amounts and on such terms as may be provIded in the resolutIon or ordinance authorizing the Issuance of the obligations of such series. The City is required to pay from the Slnklng Fund all expenses in connection with any such purchase or redemptIon. SECURITY The payment of the principal of and interest on the 1991 Bonds is secured equally and ratably by an Irrevocable lien upon and pledge of the Net Revenues derived by the CIty from the operation ot the System. "Net Revenues" Is defined Ln the Ordinance to mean Gross Revenues less the Cost of Operation and Maintenance. "Gross Revenues" means all monles received from rates, tees, rentals or other charges or Lncome derived from the Investment of fun~ unless otherwise provided in the Ordinance, by the City or accruing to It In the operation of the System, all calculated Ln accordance with sound accounting practice. "Cost of Operation and MaIntenance" of the System means all current expenses, paid or accrued, for the operatloo, maintenance and repair of all facUlties of the System, as calculated in accordance with so\Ul.d accounting practice and Lneludes, wIthout Um1tJng the generalIty of the foregoing, Insurance premiums, admlnlstratlve expenses of the CIty related solely to the System, labor, cost of materials and supplies ,used tor current operation and charges for the accumulation of appropriate reserves for current expenses not annually recurrent but whJch are such as may reasonably be expected to be incurred In accordance with sound accounting practice, but excluding any reserve tor renewals or replacements, tor extraordInary repaIrs or any alJowance for deprecIation. The 1991 Bonds are further secured by a prior lien on and pledge of the monies and Investments deposited In the Funds and Accounts established by the Ordinance except for monies and Investments deposited In the Operation and Maintenance Fund. - 6 - ~....l,.,':4'\ I A Reserve Account within the Sinking Fund has been established pursuant to the Ordinance. WIthln the Reserve Account, there will be established a separate subaccount tor each series of Bonds. Revenues must be applied by the City to maintain In each subaccount In the Reserve Account a sum equal to the Reserve Requirement.. If any, for any subsequent year on each serIes of Bonds, which sum willlnItially be deposIted therein trom the proceeds of the sale of the 1991 Bonds and other funds of the City. To the extent the City determines pursuant to a subsequent resolution to fund a subaccount within the Reserve Account for a respective series of Bonds, the City may provide that the dl!ference between the amounts on deposit in such subaccount and the Reserve RequIrement for such series at Bonds shall be an amount covered by obtainIng bond insurance Issued by a reputable and recognIzed municipal bond Insurer, by a surety bond, by a letter of credit or any combination thereof or by such other form of credit enhancement as shall be approved by 8 resolution of the City adopted prior to the issuance of the series of Bonds for which such subaccount Is establlshed. Such resolution may also provide for the substitution of such credit enhancement. For further information concerning the Reserve Account, please refer to the section entitled "Flow of FWlCls" contained herein. Notwithstanding any provisIon of the Resolution to the contrary, moneys In each subaccount In the Reserve Account may be used only for the purpose of the payment of maturing princIpal of or Interest or making Amortization Installments on the Bonds for whIch such subaccount was estabUshed when the other moneys In the SinkIng Fund are insuffIcIent therefor, and for no other purpose includIng the payment at any other series of Bonds. The Bonds do not constitute an Indebtedness, llablllty. general or moral oblIgation, or pledge at the faIth, credIt or taxing power of the City, the State of FlorIda, or any political subdivisIon thereot, within the meanIng of any constitutIonal, statutory or charter provisions. Neither the State of FlorIda. nor any political subdivisIon thereof, nor the City shall be obligated (l) to levy ad valorem taxes on any property to pay the principal of the Bonds, the Interest thereon, or other costs incIdent thereto or (Ll} to pay the same from any other funds of the City except the Net Revenues, In the manner provided In the Ordinance. MUNICIPAL BOND n-&JRANCE l Payment Puniu.ant to Ylmf~1pa1 DoDd Insurance PolIcy. AMBA C indemnIty has made a commitment to Issue a municipal bond Insurance polley (the "Municipal Bond Insurance Polley") relating to the Bonds effective as at the date of Issuance ot the Bonds. Under the terms of the MunicIpal Bond Insurance Polley, AMBAC Indemnity will pay to the United States Trust Company at New York, In New York, New York or any successor thereto (the "Insurance Trustee") that portion at the princIpal of and interest on the Bonds whIch shall become Due for Payment but shall be unpaid by reason of Nonpayment by the CIty (as such terms are defined In the MunicIpal Bond Insurance Polley). AMBAC Indemnity will make such payments to the Insurance Trustee on the later ot the date on which such pl'Inclpal and Interest becomes Due for Payment or withln one business day follOWing the date on whIch AMBAC Indemnity shall have received notice of Nonpayment trom the Bond Registrar. The Insurance will extend for the term of the Bonds and, once Issued, cannot be cancelled by AMBAC indemnity. - 7 - I ,'~ ; ,1""-. The MunIcipal Bond Insurance Polley will insure payment only on stated maturIty dates and on mandatory slnklng fund installment dates, in the case of principal, and on stated dates for payment, in the case of interest. It the Bonds become subject to mandatory redemption and insufficIent funds are available for redemption of all outstanding Boods, AMBAC IndemnIty wIll remain oblIgated to pay principal of and interest on outstanding Bonds on the orIginally scheduled Interest and principal payment dates includIng mandatory s1nk!ng fund redemption dates. In the event of any acceleration of the princIpal of the Bonds, the Insured payments wlll be made at such times and In such amounts as would have been made had there not been an acceleratIon. In the event the Bond Registrar has notice that any payment ot princIpal of or Interest on a Bond which has become Due for Payment and which is made to a Bondholder by or on behalf of the Issuer has been deemed a preferential transfer and theretofore recovered tram Its registered owner pursuant to the United States Bankruptcy Code In accordance with a final, nonappealable order of a court of competent Jurlsdlctlon, such registered owner will be entitled to payment from AMBAC Indem.n1ty to the extent of such recovery If sufficient funds are not oth~rwlse available. The MunicIpal Bond Insurance Polley does not Insure any risk other than Nonpayment, as defined In the Polley. Specifically, the Municipal Bond In.cmrance Policy does not cover: 1. payment on acceleration, as a result of a call for redemptIon (other than mandatory slnJdng fund redemption) or as a result of any other advancement of maturity. 2. payment of any redemption, prepayment or acceleration premium. 3. nonpayment of principal or Interest caused by the insolvency or negligence of any Trustee or Paying Agent, If any. If It becoces necessary to call upon the Municipal Bond lnsurance Polley. payment of principal requIres surrender of Bonds to the Insurance Trustee together with an appropriate instrument of assignment so as to permit owr:ershlp of such Bonds to be registered In the name of AMBAC Indemnity to the extent of the payment under the Mun1cipal Bond Insurance Polley. Payment of interest pursuant to the Municipal Bond Insurance PolIcy requires proof of Bondholder entitlement to Interest payments and an appropriate assignment of the Bondholder's right to payment to AMBAC Indemnity. \ Upon payment of the Insurance benefits, AMBAC Indemnity will become the owner of the Bond, appurtenant CQUlX)n, If any. or right to payment at principal or Interest on such Bond and will be fully subrogated to the surrendering Bondholder's rIghts to '~yment. i In cases where the Bonds are lssuable in book entry form. the Insurance Trustee shall disburse prlnc1pal and interest to 8 Bondholder only upon evIdence satisfactory to the Insurance Trustee and AMBAC Indemnity that the ownershIp interest of the Bondholder In the right to payment of such princIpal and interest has been effectively transferred to AMBAC Indemnity on the books maintained for such purpose. AMBAC lndemnlty shall be tully subrogated to all of the Bondholders' rights to payment to the extent of the Insurance disbursements so made. - B - ~.I.....~~ #..'^-.. \ I The insurance provided by the Municipal Bond Insurance Polley Is not covered by the Florida Insurance Guaranty AssocIation. AYBAC JDdemnlty Corporatioll. AMBAC Indemnity Is a W1sconsln-domlclled stock insurance corporation regulated by the Insurance Department of the State of Wisconsin and licensed to do buslnesss In 50 states and the DistrIct of Columbia, wIth admItted assets of approximately $1,259,700,000 (unaudited) and statutory capital of approximately $752,200,000 (unaudIted) as of March 31, 1991. Statutory capItal consists ot AMBAC Indemnlty's pollcyholders' surplus and statutory contingency reserve. AMBAC indemnIty was formerly a wholly-owned subsidlary of Clticorp Financial Guaranty Holdlngs, Inc. C'Holdlngsll) (formerly known as AMBAC, Inc.), a financial holding company and Itself a wholly-owned subsIdiary of Cltlbank, N.A. r'Cltibank"). On May 1, 1991, AMBAC Inc. r'AMBAC Inc."), a financial holding company recently formed by Hold1ngs, registered tor sale with the SecurItIes and Exchange CommissIon 17,600,000 shares of Its common stock. The registration statement with respect to such sale was declared effective on JUly 11, 1991. As a result ot the sale, CItIbank, through Its atfillate Holdings, owns approximately 49% of the total equity of AMBAC, Inc., with a right to cast 20% at the total number of votes of all shares ot outstandIng common stock of AMBAC Inc. until such time as Citibank, including its affiliates, reduces Its equIty ownership to less than 25% ot AMBAC Inc. (at which tIme the shares owned by It become non-voting). As of the date of the consummatIon of the sale of common stock, AMBAC Indemnity becomes a direct wholly owned subsIdiary at AMBAC Inc. The Wisconsin Insurance Department has stated that the sale of common stock described herein does not require Its prior approval. Both Moody's Investors Service, Inc. and Standard & Poor's CorporatIon have reaffirmed that the sale of the common stock of AMBAC Inc, does not affect AMBAC Indemnlty's triple-A clalms-paying ability rating. CopIes of AMBAC Indemnity's financial statements prepared in acordance wIth statutory accounting standards are avallable from AMBAC Indemnity. The address of AMBAC 'rndemnlty's administrative offIces and its telephone number are One State Street Plaza, 17th Floor, New York, New York, 10004 and (212) 668-0340. AMBAC IndemnIty has entered into pro rata reinsurance agreements under which a percentage of the insurance underwritten pursuant to certain municIpal bond insurance programs at AMBAC Indemnity has been and will be assumed by a number of foreign and domestic unaffiliated. reinsurers.. l ~ AMBAC indemnity has obtained a ruling from the Internal Revenue Service to the effect that the insuring at an obllgatfon by AMBAC IndemnIty will not affect tile treatment tor federal income tax purposes of Interest on such obllgatlon and that Insurance proceeds representing maturing Interest paid by AMBAC lndemnlty under pollcy provlsdoos substantially Identical to those contained in Its municipal oond Insurance polley shall be treated tor federal Lncome tax purposes In the same manner as If such payments were made by the issuer at the Bonds. AMBAC IndemnIty makes no representation regarding the Bonds or the advLsabillty of investing in the Bonds and makes no representation regardlng, nor has it participated In the preparaUon ot, the otfJcIaJ Statement other than the lnformatIon supplied by AMBAC indemnity and presented under the heading "Municipal Bond Insurance." - 9 - I;; . ., . ~~ .- { nm crrv OF CLEARWATER AND PINELLAS COUNTY The CIty of Clearwater, the County Seat of PlneUas County, Is geographIcally located In the mJddle of the west coast of Florida on the Gulf of Mexico. It Is sItuated approxImately 22 mUes west of Tampa and 16 miles north of St. Petersburg. Standing on the highest coastcl elevation of the State, the CIty limIts comprise approxImately 32-1/2 square mlles, including 8-1/2 square mlles of waterways and lakes. Clearwater Beach, a corporate part of the CIty, Is an active beach communJty and Is connected to the main part of the City by Memorlal Causeway, a four-lane, taU-free drive stretchIng almost two mUes across Clearwater Harbor. Business on Clearwater Beach Is mainly tourlst-orlented, with Its hotels, motels and gift shops. Many 11ne homes, apartments, and condomJnlums offer pleasant, semItropical accommodations to permanent residents and winter and summer visItors. The 1989 population ot the City ot Clearwater was estimated to be 102,600 persons, or approximately 12% of the estimated County population. The following chart shows the historical population of the CIty for the ten-year period 1980-1989. CITY OF CLEARWATER, FLORIDA HISTORICAL POPULATION 1980-1989 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 Population 85,528 87,859 89,707 91,879 93,648 95,330 97,882 99,124 100,900 102,600 Year Source of PopulatIon Figures: U.s. Census, 1980, U.s. Bureau of Census EstImates 1981 - 1989. f~.. The CIty of Clearwater and the other munJcipallties served by the System are located in Plnellas County, Florida. Plnellas County Is the second smallest county In the state ln'land mass, but Is the third most populated county In Florida and the most densely populated with nearly 825,000 residents. Major private employers in the County include an electric utWty balding company, the utility, a television merchand1ser, several hospItals, a newspaper publlsher, and n retaUer's corporate headquarters. Tourism Is the largest lndustry In the County employing over 37,000 people In hotels, shops, restaurants and other related businesses. Annual visitors exceed 3.6 mllllon people. - 10 - ~~ . ~ " . .I:' ~ ,I. , f:::~i, ~,,'1-ouo... , TIm SYSrEM Plrysfcal Descrlptlon. The Clty's Gas System began In the 1920's and lncluded production, distribution and sale of manufactured gas. The System was converted to natural gas in 1959. In addltlon to serving the City ot Clearwater, the System has expanded. into. and has franchise agreements with. the cities at BeUealr, Bellealr Bluffs. Dunedin, Indian Rocks Beach, Largo, Oldsmar, Safety Harbor, and Tarpon Springs. The franchise agreements expire respectively In 2020,2002,2020, 2018, 2001, 2014, 2001 and 2013. which In some instances Is prior to the maturity of the J 991 Bonds. It Is anticipated that such franchise agreements will be renewed upon their expiration, however, there can be no assurance ot such renewals. Each tranchlse agreement authorizes the respective municipality to terminate the franchIse agreement in the ev""nt the City falls to furnish gas as required by the agreement tor causes within the control of the City for a period of 72 hours. In addition, the franchise agreements with Dunedin, Bellealr Bluffs, Largo and Safety Harbor authorize the municipalIty to purchase from the City the property used with respect to each franch1se at the expiration of the franchise. The franchise agreements with o Ids mar and Tarpon Springs authorize Oldsmar and Tarpon Springs to purchase such property during the term of the franchJse as well as at expiration. The System also services the unincorporated area between these cities. The System currently serves approximately 11,650 customers and is comprised of 403 mUes of gas main. ~ment. The City Is a commission manager municipal government. The Mayor and CommIssIoners are elected by the Clty's voters on an at-large basIs. All have voting power at Commission meetings which are chaired by the Mayor. The CIty Commission appoints the Manager and the Manager Is responsible for appointing all offIcers and employees in the Administrative Service of the City, includJng the Gas System Manager. The Clearwater Gas System is administered by the Gas System Manager reporting dlrectly to the City Manager and Is one of fIve utllltJes bllled by the Clearwater Utilltles Department (Water, Sewer, Gas, SanItation, Storm water). Charles A. Hunsicker currently serves as Assistant City Manager and Interim Gas System Manager rer:>rtlng dtrectly to the CIty Manager. He received his Bachelor of ScIence degree in Rural SocIology from the UnlversIty of Wisconsin - Madison in 1975 and Masters degree In Urban and Regional Planning from Florida State UnIversity in 1982. He has served as interim Gas System Manager since March 4, 1991. Mr. Hunsicker had no experience with natural gas systems prior to assuming his current responsibllltles with the City as AssIstant CIty Manager. Prior to jolnlng the CIty of Clearwater In 1989. Mr. Hunsicker served as Acting Director, Dlvfs100 of M1n1ng Regulation (1987-1989), Deputy Director, Public Works Department (1986-1969), and Acting Assistant County Administrator (1985-1986) all with Manatee County, Florida. "I c, - 11 - e' ...'" Terry Neenan t1as served as Gas Superintendent of the System since 1986. Prior to that he served as Assistant Superfntendent tram 1982 to 1986, Service Supervisor from 1979 to 1982, UtWties Serviceman n from 1970 to 1979 and Utllltles Serviceman I from J968-1970 all with the City at Clearwater. He holds 8 Master Gas Contractor LIcense with Plnellas County and Master Gas Fitter License with Plnellas County and the CIty, and holds other llcenses and cert1tlcates related to natural gas. Mr. Neenan graduated tram Largo Senior High School in 1960 and has attended St. Petersburg Junior College and the Florida Gas TransmJsslon Schoolln Sanford, FlorIda. He has served as Secretary and Treasurer and currently serves as Vice Chairman of the Operating Section at the Florida Natural Gas Association. Gas Supply. The City purchases Its supply of Datural gas from the Florida Gas Transmission Company rIFO,..'). The present supply of gas is based on service agreements between the City and FGT effective as at November I, 1989. These agreements provide a maximum dally quantity at approximately 110,000 therms of gas during the months of November through April, 46,500 therms during the months of May through September and 49,000 therms in October not to exceed a yearly entitlement of 19,499,000 therms at gas. The service agreements provide that FGT does not have and, notwithstanding FGT's good faIth efforts, may not have in the future, suffIcient gas suppUes to supply the City with the quantities of gas specified in the service agreements. The servIce agreements further provide that the CIty may not hold FGT liable In damages or otherwise for any volumes at gas the City Is not permItted to receIve as a result of curtaUment of dellverles by FGT pursuant to PGT's General Terms and Condltions on fUe with the Federal Energy Regulatory Commission ("FERC"), except to the extent such curtaIlment is shown to be the result of PGTts neglfgence, bad faith, fault or willful misconduct. The service agreements expire in November, 1994. i Natural gas is supplied to the City by FGT pursuant to certificates as amended in the FERC Docket No. RP89-50.000, et al. FGT Is a natural gas company within the meaning of the Natural Gas Act and ls engaged in, among other things, the transportation at natural gas for others and the sale and delivery at natural gas for resale and for ultimate use. At the present time FGT Is a wholly-owned subsldJary of Citrus Corporation which is owned equally by Enron Corporation and Sonat, Inc. Enron Corporation, through Its subsIdiaries operates or has interest In approximately 37,000 ruUes of transmission pIpeline from Texas to the Canadian border and from CallfomIa to Florida. Sanat, lnc., although considered an industrial company by the financial community, through Its subsidiaries, owns and has interest In natural gas transportation (acUities that provide service in the states of Florida. Georgia, Alabama, South Carolina. Tennessee, MlsslssJppl, and Texas as well as the Federal Offshore Domain In and around the State of LoulsIana. PGT is consIdering constructing an additlonaJ gas pipeline along the west coast of Florida which would increase the supplies ot gas avallable to the CIty. FGT has solicited reservatIon depae.lts trom gas purchasers to determine the demand tor such increased supply. The CIty has paId PGT reservation charges for additional quantities of gas to be deUvered In approximately 1994 which would bring the City's maximum winter dally quantity to 132,000 therms. Whlle FGT ls conslderlng constructing the add! tlonal pipeline. it is not obUgated to do so nor Is it obligated to furnish the City with any I ' - 12 - . ,~ additional suppUes of gas. If FGT doeS not construct the pipeline. the City Is entitled to the return of lts reservation depOSit. The system's customers are divided into twO groups; interruptible customers and general customers. Although the service agreements caU for deUvering the abOve qUlllltltles of gas. If needed by the City. FGT baS a supplY restrlctlon plan in ellect. Should FGT be unable to deUver sul!lclent qUlllltltleS of gas. FGT Is required to give the City 4 bOurs prior notice 01 anY curtaUment. The City In turn may cut ofl the interruptible customers upon 2 hours notice. TIle City baS not experienced any curtaUment 01 services to interruptible customers since the ",Inter of 1976-1977. General customers 01 the SyStem have never experienced curtaument of gas service. TIle ....,o.mum dally US8lle lor bOth customer groups during the past !lve years ",as 102.740 therms and occurred December 23. 1989. In August. 1990. the PGT pipeline ",as declared an open access pipeline by the Federal Energy Regulatory CommIsSion. As such. PGT ",m !lo", their 0"'" gas and the gas of others on the pipeline under transportation agreements between other suppUers. the City and FGT. RateS. Pees aDd CJuIIFll- TIle purchaS8 prlce lor natural gas Is adjuSted In accordance ",Ith PGT's PurchaS8 Gas Adjustment per PGT's General Terms and Conditions on tne ",Ith PERC. TIle City commtsslon baS established a schedule of rateS and charges by ord\nllIlce. wblch Includes a purchaS8 CQ6t adjuStment provision allOw\DIl the City to pass-through to customers any Increase or decrease In the purchaS8 price of gas. TIle City Is not subject to regulation by B1IY state "geney In establ\shlnl! or revlslnll lts rates. In the last !lve years the general and Interruptible rates have ranIled lrom lOWS of 53.380t and 35.307t per therm In August. 1986 to bIg\1S 01 70.778t and 51.658t per therm In pehruary. 1991 respectivelY. TIle current rates and charges are as 10UoWS: ~ate per ther~ Rate Schedul~ - 66.682t 47.663t General In tetTUptlble SerVice Area. TIle SyStem's present service area covers central and northern Plnellas County. an area of approximatelY 135 square mUes. TIle service area Is bOunded by Ulmerton Road on the SOUth. the Gulf of MexiCO on the west. the Pasco county line on the north and the H\lIsbOrougb. County line on the east. In addition to the City of Clea,.."ater. the service area includeS the cities 01 Beuealr. BeUeo1r Blufls. Dunedin. Ind\8ll ROCks Be8ch. L8rJlO. Oldsmar. Sa! ety HarbOr and Tarpon Springs. as weU as portions 01 the un\1WOrporated areas of PlneUas county. AS of PebruarY. 19117. the latest date as 01 wblch the tnlormatlon Is readily available. the SyStem's customers were located as sho..... In the foUoWlng table: - 13 - . . ,......, f Location Number of Meters Percentalte Bellealr Bellea1r Bluffs Clearwater Dunedin Largo Oldsmar Safety Harbor Tarpon Springs Unincorporated Areas Total 167 12 6,913 1,102 1,138 16 378 81 1,283 , 11,090 1.5% 0.1 62.3 9.9 10.3 0.2 3.4 0.7 11.6 100.0% The City provIdes service to non-Interruptible and Interruptible classes of customers. The System derIves less than one percent of Its revenues from the largest non-Interruptible customer. The fOllowing table shows the five largest interruptible customers by peak montllly consumptIon and the percent of the System's revenues derived from such customers during the 12 months ending June 30, 1991: Interruptible Metal Industries, Inc. 1 Morton F. Plant HospItal ARA Hea1thcare Textile ServIces, Inc. Aubrey T. Moorefield Paving Contractors, Inc. Plasti-Kraft Corp. Peak Monthly Therms 62,950 56,900 55,630 36,570 24,850 % of Gross Revenues 4.0 3.0 4.0 2.0 1.0 1 currently using an alternative fuel service The CIty's consumers have grown from 8,914 10 1985 to 11,650 In 1990. The Clty's 11,650 connections represent a market penetratIon of approxImately 6% . The following table shows the breakdown of the City's customers by category as well as the volume of gas sold to each category and the sales revenues generated by each category: No. Customers Gas Volume Gas Sales Interruptible Residential Commercial 11 9,777 1,862 20% 22% 58% 13% 26% 61% il! Uh / - 14 - ~ ~ of'I""" , :~ .:..0-.....:.--.. ......1.1,. ,"".:.:. .. ~..:'''~'}'':d: ',., ........"..I;~..t.-.::,....~:>..:.,. . ..., .': ~.l c~:.:~... .",,'~".~ ~.:~;~~:.~_::;- ...,:"...._.....10.....'.... ....... ,;,;,~ ............".:.~. ....~..:-..-...:;':.......::.:.....,.....';,.?~...n.;.;:f'I..,.\-'. ~"'l....~\. .~ ~ (....<: 1Dtema1 LomL Prior to 1980. the CIty funded a portIon at the System's capItal Improvements through an Internal loan from other Enterprise Fwu!s. This non-Interest bearing internal loan was historically classifIed on the balance sheet as the current Ilabll1ty "Deficit In Pooled Cash and Investments.1t As detaIled in Appendix A, the remaining balance on this Internal loan was reclassifIed as "Due to other Punds" In the City's financial statements as of September 30, 1990 (and netted wIth other amounts due to or from other funds). ~ltant's Recommendatkm. The City recently engaged a national firm of accountants and management consultants to prepare a business plan tor the System. The consultants IdentifIed the strategic goals and objectives the City should seek to achIeve. First. to reta.In current System customers and obtain new connections. the consultant recommended the City Improve Its level of service to System customers by, among other ~ providing additional tralnlng of System employees, adding staff to meet customer demand, providing service more promptly and Improving customer relations. Second, to preserve the System's development potential, the consultant also recommended the City expand the System north Into Pasco County. The City Is Implementing plans de~lgned to accomplish both recommendations. -,; \\ ~~ tnt :f II I < i . - 15 - .", ". ~ r-: CITY OP CLRARWATBR, FLORIDA UTILITY SYSTEM - GAS DIVISION COMPARATIVE FINANCIAL srA~l) Flsca1 Year 1988 1989 1990 GROSS REVENUES: Sales to Customers $8.993.905 $8,715,030 $9,026,884 Service Charges 326.814 272.091 322,993 Earnings on Investments 146,385 180,972 210,076 Other 517 2,187 6.206 -----------------------.-------------------------------~-~--~ Total Gross Revenues $9,467,621 $9,170,280 $9,566,159 cosr OF OPERATION AND MAINTENANCE Personal Services $1 ,418.352 $1,561,460 $1 ,600,482 Purchases for Resale 4.073,384 3,873,581 3,933,459 Oper. Materlalsl SuppUes 139,128 80,195 85,225 Transportation 290,007 287,117 222,952 Utlllty Service 27,328 28,069 39,488 Repairs & Maintenance 142,178 192,179 256,671 lnterfund Admin. Charge 540,838 486,222 484,820 Taxes 227,741 212,797 239,903 Other 450,155 546,768 581 ,007 Total Cost ot Operation I and Maintenance $7,309,111 $7,268,388 $7,444,007 Net Revenues $2,158,510 $1,90 1.892 $2,122,152 =..=..=~===~=.=S==2===aa2:~===========~=~=~====== Source: City ot Clearwater, Annual Financial S~tements. ( 1) Excludes Depreciation - 16- r", f' DEBT SERVICE AMORTIZATION SCHEDULE YEAR PRINCIPAL INTEREST TOTAL 1992 $488,020.00 $488,020.00 1993 488,020.00 488,020.00 1994 488,020.00 488,020.00 1995 150,000.00 488,020.00 638,020.00 1996 240,000.00 479,620.00 719,620.00 1997 255,000.00 465,820.00 720,820.00 1998 270,000.00 451,030.00 721,030.00 1999 285,000.00 435,100.00 720,100.00 2000 300,000.00 418,000.00 718,000.00 2001 320,000.00 399,700.00 719,700.00 2002 340,000.00 379,860.00 719,860.00 2003 360,000.00 358,440.00 718,440.00 2004 380,000.00 335,400.00 715,400.00 2005 410,000.00 310,700.00 720,700.00 2006 435,000.00 284,050.00 719,050.00 2007 465,000.00 255,775.00 720,775.00 2008 490,000.00 225,550.00 715,550.00 2009 525,000.00 193,700.00 718,700.00 2010 560,000.00 159,575.00 719,575.00 '" 2011 595,000.00 123,175.00 718,175.00, 2012 635,000.00 84,500.00 719,500.00 2013 665,000.00 43,225.00 708,225.00 Total $7,680,000.00 $7,335,300.00 $15,035,300.00 ~t . i ':1 w 17 - , .......' !I;'", ",.. h~. . ,..:. .,,".. >:f~~ J ~~.!>~\. :. . .--::~:"1:' .. >~~'-:'I:,"~...(:~t;t;..II-i'-: ~'i~~..;~~";"Y~~.~ ~:~~.'"i.';\"r.~t h .'. ~~ ;'.:<< ~i H:, r i. t ! '; "':'. > . ~...." ,,~..,....., ..,.......J ._"'':'':~"'>''~''''~~~ t..~. ~ , , j , I \ , , , ; i ; COVERAGB OF MAXIMUM DEBT SERVICE BY NET R~ F fscal Year Ending 19BB 1989 1990 Gross Revenues (1) $9,467,621 $9,170,280 $9,566,159 Cost ot Operation (1) 7,309,111 7 ,268}388 7 ,444,007 and Maintenance Net Revenues $2,158,510 $1,901,892 $2,122,152 Maximum Annual Debt Service $721,030 $721,030 $721,030 Coverage at Maximum Annual Debt Service by Net Revenues 2.99x 2.63x 2.94x (1) CIty of Clearwater, Annual Flnanclal Reports (AudJted) SOURCFS AND USES OF PUN'OO Sources of Funds Par Amount of Bonds Accrued Interest ExistIng Reserve Account Moneys Total Sources of Funds $7,680,000.00 4,066.83 735,675.00 $8.419,741.83 Uses of Funds Deposit Pursuant to Escrow Deposit Agreement Sinking Fund: Interest Account Reserve Account Original Issue D~YFt Issuance Expenses Total Uses of Punds $7,242,784.96 4,066.83 721,030.00 200,025.10 251,834.94 $8,419,741.83 (1) Includes underwriting dlscount, Insurance premIum, other issuance costs and Issue size rounding. \ - 18 - - ~ r.~t...... \ FLOW OF FUNDS J!stPhIltJlment 01. PUDds and Accounts. The following Funds and Accounts have been establlshed pursuant to the Ordinance: Revenue Fund OperatIon and MaIntenance Fund Sinking Fund Interest Account Principal Account Reserve Account Bond AmortIzation Account Renewal and Replacement Fund A separate subaccount 15 required to be maintained in the Reserve Account tor each serIes of Bonds. PrIority of. Flow at. Funds. The entire GrOGS Revenues, except the Income from Investments (hereinafter d1scussed), derived from the operation of the System must be deposited in the Revenue Fund.. The Revenue Pund constitutes a trust tund tor the purposes provided in the Ordinance, and must be kept separate and dlstlnct from all other funds at the City and used onJy for the purposes and In the manner provided In the Ordinance. All revenues at any time remaInIng on deposJt In the Revenue Fund must be disposed of on or before the fifteenth (15th) day of each month, commencIng In the month immediately following the dellvery of the 1991 Bonds only In the following manner and In the following order of priority: I. Revenues must first be used to deposit In the Operation and Maintenance Fund, such sums as are necessary for the Cost of Operation and Maintenance tor the next ensuing month. 2. Revenues must next be used for deposit Into the Interest Account. such sums as will be suffIcient to ?BY one-sbcth 0/6) at aU interest becomlng due on the 1991 Bonds on the next seml-annua11nterest payment date. 3. Revenues must next be used tor dep06it into the PrincIpal Account, In any bond year in which a Serfal Bond matures, such sums as will be sufficient to pay one- tweltth (1/12) of the prlnctpal maturlng on Serial Bonds in such year. NI "1 4. Revenues must next be used tor deposit Into the Bond AmortizatIon Account. in any bond year in which an AmortIzation Installment Is due. such sums as wlll be sufficient to pay one-twelfth (/12) of the Amortization Installment required to be made in such year. SUch payment will ba credlted to a separate specfaJ account tor each series of Term Bonds outstandlng. and f1 there Is more than ODe stated maturity for Term Bonds at 8 series. then Into 8 separate specIal account In the Bond AmortIzation Account for each such separate maturity of Term Bonds. The funds and Investments In each such separate account are pledged solely to the payment of principal of the Term Bonds of the series or maturity wlUdn a series tor whJch It is established and will not be available for - 19 ~ ~ . payment~ purchase or redemption of Term Bonds oC any other serIes or within a series, or for transter to any other account in the SInking Fund to make up any deficiencIes In requIred payments therein. Moneys OD deposit in each of the separate special accounts In the Bond Amortization Account are required to be used tor the open market purchase or the redemption of Term Bonds, pursuant to the OrdInance of the series or maturIty of Term Bonds within a series tor whIch such separate special account is established or may remain in said separate specIal account and be invested until the stated date ot maturity of the Term Bonds. The required deposits to the Princlpal Account, Interest Account and Bond Amortization Account are required to be adjusted In order to take into account the amount of money currently on deposit therein. 5. Revenues must next be appUed by the CIty to maintain in each subaccount In the Reserve Account a sum equal to the Reserve Requ1rement~ it any, for any subsequent year on each series of Bonds, which sum will 1n1ttally be deposited therein tram the proceeds of the sale ot the 1991 Bonds and other funds of the City. To the extent the City determines pursuant to a subsequent resolution to fund a subaccount within the Reserve Account for a respective series of Bonds, the City may provide that the difference between the amounts on deposit in such subaccount and the Reserve Requirement for such series at Bonds shall be an amount covered by obtaining boIld insurance Issued by a reputable and recogn.lzed municipal bond insurer. by a surety bood, by a letter at credit or any combination thereof or by such other form d. credit enhancement as shall be approved by a resolution of the City adopted prior to the Issuance of the series of Bonds tor which such SUbaCCOW1t Is establlshed. SUch resolutIon may also provide for the substitutIon of. such credit enhancement. Bond Insurance, a surety bond., a letter of credit or any combination thereof or such other form of credit enhancement may in the future be deposited In the subaccount in the Reserve Account for the 1991 Bonds as may be approved by subsequent resolutIon of the City, provided that the provider of such credit enhancement Is then rated In one of the two highest rating categories (without regard to gradatIon) by Standard and Poor's Corporation and Moody's Investors Service, Inc. . Any wIthdrawals from any subaccount in the Reserve ACCOWlt are required to be subsequently restored from the f1est moneys available In the Revenue Fund on 8 prorata basts as to aU subaccounts In the Reserve Account after all required current payments tor the Operation and Maintenance Fund and SinkIng Fund (lncludlng all detlciencles in prior payments to those Funds) have been made In full. Notwithstanding any provlslon of the Resolution to the contrary. moneys in each subacCOWlt In the Reserve Account may be used only for the pu.rpose of the payment at maturing principal of or Interest or making Amortization Installments on the Bonds tor which such subaccount was established when the other moneys In the Sinking Fund are InsuffIcIent therefor, and tor no other purpose Including the payment of any other series of Bonds. In the event of the refunding of any series of Bonds~ the City may withdraw from the subaccount wlthln the Reserve Account for such series ot Bonds. aU or any - 20 - n ~~:~ portion of the amounts accumulated therein with respect to the Bonds being refunded and deposit such amounts as required by the resolution authorizing the refunding of such series of Bonds. 6. The City must next deposit Into the Renewal and Replacement Fund an amount equal to one-twelfth (1/12) of an amoWlt equal to 5% of prior year's Gross Revenues; provided, however, that so long as there shall be on deposit In such Renewal and Replacement Fund a balance of at least $300,000, no additional deposits In such Fund are required. The moneys In the Renewal and Replacement Fund may be used only for the purpose of paying the cost of extensions, enlargements or additions to, or the replacement of capital assets of the System and emergency repaIrs thereto. Such moneys on deposit In such Fund are also required to be used to supplement the Reserve ACCOlUlt If necessary, In order to prevent a default In the payment of the principal or Amortization Installments of and Interest on the Bonds. 7. The balance of any moneys remaining In the Revenue Fund after the above required payments have been made may be used by the City for any lawful purpose. 8. The Operation and Maintenance Fund, the Sinking Fund, the Renewal and Replacement Fund, the Revenue FWld, and all accounts therein and any other special funds established and created under the Ordinance constitute trust funds for the purposes provided herein for such funds. All such funds shall be continuously secured In the same manner as City deposits are authorized to be secured by the laws of the State of Florida. COVHNANTS Rate Covenant. In and by the Ordinance, the City has covenanted that It wlll fix, establlsh, revise from time to time whenever necessary, maintain and <;ollect always, such fees, rates, rentals and other charges for the use of the prcx1uct, services and facUlties of the System which will always provide Revenues In each year sufficient to pay, and out ot such funds pay, 100% of the Cost of Operation and Maintenance of the System In such year and aU reserve and other payments provided for in the Ordinance and 125% of the Bond Service Requirement due In such year on all outstanding Bonds. The City has covenanted that such rates, fees, rentals, or other charges shall not be reduced so as to be insuffIcient to provide Revenues for such purposes. k I AddltIooaJ Parity ObUptkJos. Additional Parity Obligations, payable on a parity from Net Revenues of the System with the 1991 Bonds, may be Issued after the Issuance of any 1991 Bonds, tor construction and acquisition of addItions, extensions and improvements to the System or for refunding purposes and upon the following conditions: I. The Net Revenues derived or whIch would have been deriv~ if adjusted as set forth below, trom the System. either during the 1m mediately preceding F lscal Year I during any twelve (12) consecutive calendar months of the eighteen (18) calendar months ImmedIately preceding the sale of the proposed Additional Parity Obligations or during the last twelve (12) month period for which the City has audited financial statements tor the System, at the option of the City, shaH have been not less than 125% of the MaxImum Bond Service Requirement whIch will become due In any calendar year thereafter on (8) the 1991 Bonds then outstanding, (b) any Additional Parity Obligations Issued and then outstanding, and (c) the Additional Parity Obligations then proposed to be issued. - 21 - . ...a' ,,:,,.,\ ~ " \ In determlnlng the amount of Net Revenues for the purposes at paragraph (I) above, the Consulting Engineers may adjust the Net Revenues by addlng thereto the following: a.. The Net Revenues (computed for such utility on the same basis as net revenues are computed for the System) of any gas utlllty whIch the CIty shall have acquired prior to the Issuance of such Additional Parity ObligatIons or which the City shall be acquiring from proceeds of such Additional Parity Obligations; and b. In the event a change has been made in the rate schedules for services from the System prior to the Lssuance of the proposed Addltlooal Parity Obligations tor 8 part of such L2 month period referred to in (1) above, and such change has resuLted in an Increase In Net Revenues, such amount at additional Net Revenues which the Consulting Engineers estimate would have been received by the City during such 12 mo'nth perIod if such change in such rate schedUle had been In effect during the entire 12 month period; and in the event a change has been made in the rate schedules for servIces from the System prior to the Issuance ot the proposed AddItional Parity ObUgatlons for a part of such 12 month perIod referred to In (1) above, and such change has resulted In a decrease In Net Revenues, by subtracting therefrom such amount at the Net Revenues whIch the Consulting Engineers estimate would not have been receIved by the City during such 12 month period referred to In (1) above, if such change in such rate schedule had been in effect during the entire 12 menth period. 2. Each resolution or ordInance authorizing the Issuance of AddItIonal Parity Obligations will recite that all of the covenants contained in the Ordinance will be applIcable to such Additional ParIty Obllgatlons. 3. The City shall not be In defauJt In performing any of the covenants and obligations of the Ordinance, and all payments required to have been made into the accounts and funds. as provided In the Ordinance, shall have been made to the full extent requIred. ' I, I Operatkm and Malntl"'ll81l1CP- The City covenants It will maintain the System and all parts thereof in good condition and will operate the same in an efficient and economical manner making such expendltures for equIpment and for renewals. repairs and replacements as may be proper tor the economical operatIon and maintenance thereof. 0perat1n& Budpt. The City covenants to annually prepare and adopt prior to the beginning of each at its Flscal Years, a detailed budget or budgets of the estimated expendJtures for the operation and maintenance at the System during such next succeedIng FJsca1 Year. \ .~ i ~ ~ Annwd Audit. At least once a year, within six months after the close of Its Fiscal Year. the CIty covenants to cause the books, rerords and accounts relating to the System to be properly audited by 8 recognIzed Independent flrm ot certLfled publlc accountants. No Mortpge 01' SBle 01 the System. The City has covenanted not to sell, lease. mortgage. pledge' or otherwise encumber the System, or any substantial part thereof, or any revenues to be derived therefrom, except as described below. - 22 - #~ NotwIthstanding the foregoing, the CIty has reserved the rIght to sell, lease or otherwise dIspose of any ot the property comprising a part ot the System which the CIty hereafter determines, in the manner provIded In the Ordinance, to be no longer necessary, useful or profitable In the operation at the System. Prior to any such sale, lease or other dispositIon of said property, tf the amount to be received therefor Is Dot In excess ot $50,000, the City Manager of the Issuer or other duly authorIzed officer In charge thereof Is required to make a finding In writing determlnlng that such property comprising a part o( the System Is no longer necessary, useful or profitable In the operation thereof. [f the amount to be received from such sale, lease or other disposition of said property is in excess of $50,000 but not in excp.ss of $100,000 such CIty Manager or other officer is required to fLrst make a finding in writing determining that such property comprising a part at the System is no longer necessary, useful or profItable In the operation thereof, and the governing body of the Issuer must, by resolution or ordlnance duly adopted, approve and concur In the finding of such CIty Manager or other officer, and authorize such sale, lease or other disposition of sald property. If the amount to be received from such sale, lease or other dispositIon ot saId property is In excess of $100,000 but not In excess ot 10% of the value of fixed assets of the System accordIng to the most recent annual audit report, such CIty Manager or other officer must first make a finding in wrIting determlnlng that such property comprising a part of the System 15 no longer necessary, useful or profitable in the operatIon thereof, and the Consulting Engineer must make a findIng that It Is In the best Interest of the System that such property be disposed of, and the governing body of the CIty must by resolution or ordinance, duly adopted, approve and concur In the findings of such CIty Manager or other officer and ot the Consulting Engineer, and authorize such sale, lease or other disposition of said property. Anything in this section to the contrary notwIthstanding, nothing restricts the governing body of the CIty or, to the extent such authority has been vested in him by such governing body, the CIty Manager Ln the exercise of his discretion, from authorizing the sale or other disposition of ooy of the property comprising a part of the System, it the Consulttng Engineer certifies that the Net Revenues of the System will not be materially adversely affected by reason at such sale or disposition. Such proceeds must be placed in the Renewal and Replacement Fund or used tor the retirement of outstanding 1991 Bonds, in such proportions to be determined by the governing body of the City upon the recommendatk,;ns of the City Manager. The payment at such proceeds Into the Renewal and Replacement Fund do not reduce the amounts required to be paid Into such Fund by other provisions ot the Ordinance. AnythInc in this section to the contrary notwIthstanding, nothing proh1bits the Clty tram transferring ownership of the System to another governmental entity In accordance with the Ordlnance without complying with the provisions described in this sectlon. See "Governmental Reorganization" herein. 1 No Pree Serrice. The CIty has covenanted not to render or cause to be rendered any free services of any nature by Its System, nor will any preferential rates be established tor users ot the same class. Whenever the City, including Its departments, - 23 - f', .-. agencLes and lnstrumental1tIes, shall avail Itself of the product, faclUtles or services provIded by the System, or any part thereof, the same rates, fees or charges appUcable to other customers receiving lIke services under simIlar circumstances shall be charged to the City and any such department, agency or fnstrumentallty. Such charges shall be pald as they accrue, and the City Is required to transfer from its general funds to the Revenue Fund sufficient sums to pay such charges. 111e revenues so received wUl be deemed to be Revenues derived from the operatlon of the System, and be deposited and accounted for In the same manner as other Revenues derived from such operatIon of the System. BDforcemeot d. CoI.lect:Joos. The City has covenanted to enforce and collect the rates, fees and other charges for the services and facUlties of the System hereIn pledged; to take all steps, actions and proceedIngs for the enforcement and collection of such rates, charges and fees as shall become delinquent to the full extent permitted or authorized by law; and to maintaIn accurate records wIth respect thereof. All such fees, rates, charges and revenues pledged pursuant to the Ordinance wUl, as collected, be held in trust to be applied as provided In the Ordlnance. The City will, under reasonable roles and regulations, to the full extent permitted by law, shut off the connection of any users of the System for non-payment of fees, rentals and other charges for the services at the System and will not fumJsh hlm or permit hlm to receive trom the System further service until all obligations owed by him to the City on account of services have been paid In full. NO COm.petiDs System. To the full extent permitted by law, the City has covenanted not to hereafter grant, or cause, consent to, or allow the granting of, any tranchJse or permIt to any person, for the tumlshlng of competing gas services to or within the boundaries of the service area of the City; provIded.. however, that if the Gas System Manager renders an oplnlon that it would not be feasible for the City to provide such services to any specltlc area within the three years succeeding a request to provide such servIce, the City may authorIze or allow the granting of such franchise or permlt for such area upon such terms and conditions as it may approve. Unlawful Coonectioo ProhJblted. The City has enacted an ordinance making it unlawful for any person or persons to tamper with, change or make any connection with the System without the wrItten consent of the City, or to make any reconnectlon wLth the System when service has been discontinued for deUnquent charges, untll such delinquent charges have been paId in full, including interest, reasonable penalties and reconnectlon charges. The City wlll diligently, to the full extent permUted by law, enforce this covenant and prosecute any person violating the provisions of this covenant or any penal ordinance relatJng to the same. Am~t ~ tile 0rdlDaDce. In the Ordinance, the CIty has reserved the right to amend or supplement the Ordinance for certain purposes without the, consent of Bondholders it the amendment or supplement does not adversely affect the rights of Bondholders. Otherwise, DO material modification or amendment of the Ordinance may be made without the consent In writing of the Bondholders of flfty-one percent or more of the principal amount of the 1991 Bonds of each Series so affected and then outstanding; provided, however, that no mc:x1lfIcatIon or amendment may permit a change In the maturity of such 1991 Bonds or a reduction In the rate of interest thereon or In the - 24 - r ~ amount of the principal obligation thereot or affecting the promIse ot the City to pay the principal of and Interest on the 1991 Bonds as the same become due trom the Net Revenues of the System or reduce the percentage of the Bondholders required to consent to any material modJflcation or amendment of the Ordlnance without the consent ot the Bondholders d. all such obllgatlons. For purposes of thJs paragraph, to the extent that any 1991 Bonds are secured by a Credit Faclllty and such 1991 BoDds are then rated in one at the two highest rating categories (without regard to gradation) by either Standard & Poor's Corporation or Moody's Investors Service, Inc., Of successors and assigns, then the consent of the Credit Faclllty Issuer will be deemed to constitute the consent of the Bondholders and in such case no consent of the Bondholders Is required. GOVERNMENTAL REORGANIZATION In the future the City may determine It Is In the best Interest of the City or the System to reorganize the governmental structure of the City, including merging or consolidating the City with another public body or transferring the System to another public body. Nothing In the Ordinance prohibIts such actIon, provided that any reorganization which affects the System or any transfer of the System must provide that the System shall be continued as a single enterprIse and that any public body which succeeds to the ownership and operation of the System Is required to also assume all rights, power, obligations, duties and llabllltles of the City under the Ordinance and pertaining to all Bonds. UNDERWRITING The 1991 Bonds are being purchased by the Underwriter, Smith Barney, Harris Upham & Co. Incorporated. The Underwriter has agreed to purchase the 1991 BoDds at an aggregate purchase price of $7,367,259.35, plus accrued interest from the dated date to the date of delivery. The lnltlal public offering prices set forth on the cover of this Official Statement may be changed by the Underwriter, and the Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prIces. CERTAIN LBGAL UA'ITBRS Certain legal matters In connection with the lsswmce of the 1991 Bonds are subject to the approval of Bryant, Mlller and Olive, P.A., Tallahassee, Plorida, Bond Counsel whose approving oplnJon wlll be available at the time of delivery at the 1991 Bonds. Certain legal matters will be passed upon for the Underwriter by its counsel, Lawson, McWhirter, Grandaff & Reeves, P.A., Tampa, Florida. Certain legal matters will be passed upon for the City by M.A. GalbraIth, Jr., Esquire, CIty Attorney. TAX EXEMPTION l The Internal Revenue Code of 1986, as amended (the "Code") establishes certain requirements whJch must be met subsequent to the issuance and delivery of the 1991 Bonds in order that Interest on the 1991 Bonds be and remain excluded from gross Income tor purposes of Federal income taxation. Non-compllance may cause interest on the 1991 Bonds to be Included In Federal gross Income retroactive to the date of Issuance of the 1991 Bonds, regardless of the date on which such non-compllance occurs or Is - 25 - r.'" ascertained. These requlrements IncJude, but are not Umited to, provisions which prescribe yield and other limits within which the proceeds of the 1991 Bonds and the other amounts are to be Invested and require that certain Investment eamlngs on the foregoing must be rebated on a periodic basis to the Treasury Department of the United States. The City has covenanted in the Ordinance to comply with such requirements in order to maintain the exclusions from Federal gross income of the interest on the 1991 Bonds. In the opinion at bond cowtseJ, assuming compliance with the aforementioned covenants, Wlder exlstlng laws, regulations, judicial decisIons and rulings, Interest on the 1991 Bonds is excluded from gross Income tor purposes or Federal income ta.xatfon. Interest on the 1991 Bonds ls not an item of tax preference for purposes of the Federal alternative minimum tax imposed on individuals or corporatIons; however, interest on the 1991 Bonds may be subject to the alternative minimum tax when any 1991 Bond is held by a corporation. The alternative minimum ta.xable Income of a corporatIon must be increased by 75% of the excess of such corporatIon's adjusted current earnings over its alternative minImum taxable income (belore this adjustment and the alternative tax net operating loss deductIon). "Adjusted Current EarnIngs" will include Interest on the 1991 Bonds. The 1991 Bonds are exempt from aU present lntang1bIe personal property taxes imposed pursuant to Chapter 199, Florida Statutes. Except as descrIbed above, Bond Counsel will express no oplnlon regarding the Federal income tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of 1991 Bonds. ProspectIve purchasers of 1991 Bonds should be aware that the ownership of 1991 Bonds may result In collateral Federal income tax consequences, including (1) the denial of 8 deduction for Interest on indebtedness Incurred or continued to purchase or carry 1991 Bon~ (U) the reduction of the loss reserve deduction tor property and casualty Insurance compan1es by 15% of certain items, Including Interest on the 1991 Bonds, (111) for taxable years beginning before 1996, the Inclusion of Interest on 1991 Bonds In "mod1fled alternative m1n1mum taxable Income" for purposes of the environmental tax Imposed on corporatIons, (Iv) the inclusion of interest on the 1991 Bonds In earnIngs at certain toreign corporations doing business in the United States for purposes of a branch pronts tax, (v) the inclusIon of interest on 1991 Bonds In passive income subject to Federal Income taxation of certain SUbchapter S corporatJons wIth Subchapter C earnings and profIts at the close of the taxable year, and (vI) the inclusIon of Interest on the 1991 Bonds in "moclltIed adjusted gross income" by recipIents of certain Social Security and Railroad Retirement benefits for purposes of determining whether such benefIts are Included In gross income for Federallncome tax purposes. PURCHASE, OWNERSl-DP, SALE OR DISPOSITION OF THE 1991 BONDS AND THE RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY HAVE ADVERSE FEDERAL TAX CONSEQUENCES FOR CERTAIN lNDMDUAL AND. CORPORATE BONDHOLDERS. PROSPECTIVE 1991 BONDHOLDERS SHOULD CONSULT WITH THEIR TAX SPECIALISI'S FOR INFORMATION IN THAT REGARD. During recent years legislative proposals have been Introduced in Congress, and in some cases enacted, that altered certain Federal tax consequences resuJtlng from the ownership of obligations that are simU8r to the 1991 Bonds. In some cases these proposals have contained provisions that altered these consequences on a retroactive basis. Such alteration of Federal tax consequences may have affected the market value - 26 - ~ ,-.. {' " of obligations similar to the 1991 Bonds. From time to time, legislative proposals are pending which could have an effect on both the Federal tax consequences resulting from ownershJp at 1991 Bonds and their market value. No assurance can be given that legislative p~ls will not be Introduced or enacted that would or might apply to, or have an adverse effect upon, the 1991 Bonds. LITIGATION There is no litigation pending or threatened that seeks to restrain or enjoin the issuance or delivery of the 1991 Bonds or the proceedlngs or the authority under which they are to be Issued. Neither the creation, organization or existence of the City is contested. There Is no litigation pendIng which In any manner questions the right of the City to pledge the Net Revenues of the Gas System to the payment of the 1991 Bonds and the interest thereon. The City experiences routine litigation and claIms incidental to the conduct of Its affairs. In the opinion of the City Attorney, there are no actions presently pending or threatened, the adverse outcome of which would impair the Clty's ability to perform its obligations to the holders of the 1991 Bonds. RATINGS Standard &: Poor's Corporation and Moody's Investors ServIce, Inc. have assigned their muniCipal bond ratings of "AAAlt and "Aaa," respectively, to the 1991 Bonds with the understandIng that upon delivery of the 1991 Bonds. 8 polley insuring the payment when due of the principal of and interest on the 1991 Bonds will be Issued by AMBAC lndemnlty Corporation. The ratings reflect only the vIews at the respective rating agencies and are based on current information :um1shed by the City or obtained from other sources consIdered rellable by each rating agency. Any explanation of the significance of the ratings may be obtained from the respective rating agency. A securities rating is not a recommendation to buy, sell or hold securities. There can be no assurance that a rating wlll remain In effect tor any given perIod of time or that It will not be revised downward or withdrawn entirely by a rating agency, It In Its judgment, circumstances so warrant. Any such downward revisions or withdrawal of a rating may have an adverse eftect on the market price of the 1991 Bonds. MISCH L LANHOUi The information In the foregoing pages Is presented for the information of prospective purchasers of the 1991 Bonds described herein. The lnformatlon has been compiled from official and other sources and, while not guarant~ by the City, is believed to be corract. So far as any statements made In thJs Official Statement and the Appendices hereto Involve matters of oplnlon or estimates, whether or not so expressly stated, they are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be reallzed. "1 - 27 - .JI~' ,". , . . . ~ f: \. ~ AU1HORlZATION OF AND CBRTlFICATION CONCBRNING THE OFFICIAL srATHMENT The OftlcJa1 Statement has been authorized by the City of Clearwater, Florida. Concurrently wIth the dellvery of the 1991 Bonds, the undersIgned will furnish thelr certificate to the effect that, to the best of their knowledge, this Official Statement did not as at Its date, and does not as of the date of the delivery of the 1991 Bonds, contaIn any untrue statement of a material fact or omit to state 8 material fact whIch should be Included therein tor the purposes tor whJch this OffIcial Statement Is to be ~ or whJch Is necessary In order to make the statements therein, In the llght of the circumstances In whIch they were made, not misleading. CITY OF CLEARWATER, FLORIDA Mayor City Manager .\ - 28- ff - S I