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02-29 RESOLUTION NO. 02-29 A RESOLUTION PROVIDING FOR THE SALE OF NOT TO EXCEED $26,000,000 STORMW A TER SYSTEM REVENUE BONDS, SERIES 2002; SETTING FORTH THE FORM OF THE NOTICE OF BOND SALE AND SUMMARY NOTICE OF BOND SALE RELATING TO THE SALE OF SUCH BONDS; DIRECTING PUBLICATION OF THE SUMMARY NOTICE OF SALE RELATING TO SUCH BONDS; PROVIDING FOR THE OPENING OF BIDS RELATING TO THE SALE OF THE BONDS; SETTING FORTH THE OFFICIAL NOTICE OF SALE AND BID FORMS; PROVIDING THAT SUCH BONDS SHALL BE ISSUED IN FULL BOOK ENTRY FORM; APPROVING THE FORM OF A PRELIMINARY OFFICIAL STATEMENT; PROVIDING FOR COMPLIANCE WITH A CONTINUING DISCLOSURE CERTIFICATE; DESIGNATING A REGISTRAR AND PAYING AGENT; AUTHORIZING THE PURCHASE OF MUNICIPAL BOND INSURANCE; PROVIDING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on July 18, 2002, the City Commission of the City of Clearwater, Florida (the "City" or the "Issuer") enacted Ordinance No. 6931-02, amending Ordinance No. 6378- 99 (collectively, the "Bond Ordinance") to provide for the issuance of City's Stormwater System Revenue Bonds, Series [to be determined], in one or more series from time to time payable from Pledged Revenues (as defined therein); and NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF CLEARWATER, FLORIDA, as follows: SECTION 1. AUTHORIZATION OF BONDS AND SERIES DESIGNATION. That portion of the Stormwater System Revenue Bonds, Series [to be determined] authorized by the Bond Ordinance being offered pursuant to this resolution is hereby designated as the not to exceed $26,000,000 City of Clearwater, Florida, Stormwater System Revenue Bonds, Series 2002 (the "Series 2002 Bonds"), which Series 2002 Bonds are hereby authorized to be issued. The proceeds of the Series 2002 Bonds shall be used to pay (i) a portion of the costs of the Series 2002 Project (as hereinafter identified), (ii) the costs of issuing the Series 2002 Bonds, (iii) the premium on the Bond Insurance Policy, and (iv) to make a deposit to the Reserve Fund. The proceeds of the Series 2002 Bonds not required to pay the amounts described in clauses (ii) through (iv) in the immediately preceding sentence shall be deposited into the subaccount in the Construction Fund (created by the Bond Ordinance) for the Series 2002 Project approved in the Bond Ordinance. SECTION 2. PUBLIC SALE. There is hereby authorized to be sold pursuant to a public sale not to exceed $26,000,000 City of Clearwater, Florida, Stormwater System Revenue Bonds, Series 2002. SECTION 3. SALE OF SERIES 2002 BONDS; REDEMPTION AND MATURITY PROVISIONS. The Finance Director is hereby directed to arrange for the sale of the Resolution 02-29 Series 2002 Bonds utilizing the electronic bid process of PARITY through the publication of the Summary Notice of Sale of the Bonds in a newspaper regularly distributed in the City of Clearwater and in The Bond Buyer, such publications to be on such date as shall be deemed by the Finance Director to be in the best interest of the Issuer and such publications to be not less than ten (10) calendar days prior to the date of sale as required by Section 218.385(1), Florida Statutes; and to publish such Notice in such other newspapers on such dates as may be deemed appropriate by the Finance Director. The Series 2002 Bonds shall be subject to optional redemption and shall bear maturities and sinking fund amortizations as shall be subsequently determined by the Finance Director, upon advice of the City's financial advisor and based on market conditions existing at the time, prior to the publication of the Summary Notice of Bond Sale hereinafter approved. Proposals for purchase of the Series 2002 Bonds will be received electronically via PARITY as provided in the Official Notice of Sale, from the time that the Notice of Bond Sale is published until 11 :00 a.m., Clearwater, Florida time, on such date and time as may be established by the Finance Director of the City or her designee, and if such date is subject to change, communicated through Thompson Municipal Market Monitor (TM3) not less than twenty-four (24) hours prior to the time bids are to be received for the purchase of the City of Clearwater, Florida, Stormwater System Revenue Bonds, Series 2002; provided that if the internet is not working on the designated bid date, the bid date shall be automatically changed to the next business day, and the City will communicate a confirmation of this change in bid date through Thompson Municipal Market Monitor (TM3), all as provided in the Notice of Sale (the "Bid Date"). SECTION 4. CREATION OF ACCOUNT IN THE CONSTRUCTION FUND AND USE OF FUNDS. There is hereby created with the Construction Fund a separate account, namely, the Series 2002 Project Account. Moneys held in the Series 2002 Project Account shall be used to pay the costs of issuing and delivering the Series 2002 Bonds and the costs of the Series 2002 Project. SECTION 5. DISPOSITION OF PROCEEDS OF SERIES 2002 BONDS. The proceeds from the sale of the Series 2002 Bonds shall be deposited as follows: (a) An amount equal to the accrued interest on the Series 2002 Bonds shall be deposited into the Interest Account in the Bond Service Fund; (b) An amount determined by the Finance Director to be necessary to pay the costs of issuing the Series 2002 Bonds, including the premium due to the Bond Insurer shall be used to pay such costs; (c) An amount, if any, determined by the Finance Director to be necessary to pay interest on the Series 2002 Bonds through December 1 , 2003 shall be deposited into the Series 2002 Project Account of the Construction Fund; Resolution 02.29 2 (d) An amount determined by the Finance Director to be necessary to increase the amount in the Reserve Fund so that the amount on deposit therein equals the Reserve Requirement; and (e) The remaining proceeds of the Series 2002 Bonds shall be deposited into the Series 2002 Project Account of the Construction Fund. SECTION 6. APPROVAL OF FORMS. The Notice of Bond Sale and Summary Notice of Sale of the Bonds to be submitted for purchase of the Series 2002 Bonds shall be in substantially the forms annexed hereto, as Exhibits A and B, respectively, together with such changes as shall be deemed necessary or desirable by the Finance Director depending on the bidding method selected in accordance with Section 3 hereof, incorporated herein by reference. The form of the Official Bid Form shall be provided by the internet auction website selected by the Finance Director, and shall be reasonably satisfactory to the Finance Director. SECTION 7. BOOK ENTRY ONLY BONDS. It is in the best interest of the City and the residents and inhabitants thereof that the Series 2002 Bonds be issued utilizing a pure book-entry system of registration. In furtherance thereof, the City has previously executed and delivered a Blanket Letter of Representations with the Depository Trust Company. For so long as the Series 2002 Bonds remain in such book entry only system of registration, in the event of a conflict between the provisions of the Bond Ordinance and of the Blanket Letter of Representations, the terms and provisions of the Blanket Letter of Representations shall prevail. SECTION 8. PRELIMINARY OFFICIAL STATEMENT AND OFFICIAL STATEMENT. The City Manager and Finance Director are authorized and directed to cause a Preliminary Official Statement to be prepared in substantially the form attached hereto as Exhibit C, with such changes, insertions and omissions as shall be approved by the City Manager and Finance Director, containing a copy of the attached Notice of Bond Sale and to furnish a copy of such Preliminary Official Statement to interested bidders. The City Manager and Finance Director are authorized to deem final the Preliminary Official Statement prepared pursuant to this Section for purposes of Rule 15c2-12 (the "Rule") of the Securities and Exchange Commission. Upon the award of the Series 2002 Bonds to the successful bidder, the City shall also make available a reasonable number of copies of the Preliminary Official Statement to such bidder, who may mail such Preliminary Official Statements to prospective purchasers at the bidder's expense. Following the award of the Series 2002 Bonds, the City Manager and the Finance Director shall cause to be prepared a final Official Statement dated as of the Bid Date, reflecting such changes in the Preliminary Official Statement as may be necessary to reflect the purchaser's bid. The Mayor-Commissioner and City Manager are hereby authorized to execute and deliver such final Official Statement, with such changes, insertions and omissions as may be approved by such officers. Resolution 02-29 3 SECTION 9. CONTINUING DISCLOSURE. The City hereby covenants and agrees that, in order to provide for compliance by the City with the secondary market disclosure requirements of the Rule, that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate in substantially the form attached hereto as Exhibit D, to be executed by the City and dated the date of issuance and delivery of the Series 2002 Bonds, as it may be amended from time to time in accordance with the terms thereof (the "Continuing Disclosure Certificate"). Notwithstanding any other provision of this Resolution, failure of the City to comply with such Continuing Disclosure Certificate shall not be considered an event of default; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Section. SECTION 10. REGISTRAR AND PAYING AGENT. Wells Fargo Bank Minneapolis, N.A., through its designated office in Jacksonville, Florida, is hereby appointed as Registrar and Paying Agent for the Series 2002 Bonds. SECTION 11. MUNICIPAL BOND INSURANCE POLICIES. Pursuant to the Bond Ordinance, MBIA Insurance Corporation ("MBIA") has been selected to provide its Municipal Bond Insurance Policy (the "Policy") as the Bond Insurance Policy (as defined in the Bond Ordinance) as additional security for payment of principal and interest on the Series 2002 Bonds. Selection of MBIA as the Bond Insurer (as defined in the Bond Ordinance) is hereby ratified and confirmed and payment for such Bond Insurance Policy from proceeds of the Series 2002 Bonds is hereby authorized. The Issuer hereby accepts the terms, conditions and agreements relating to the Bond Insurance Policy and the Reserve Policy in accordance with the Municipal Bond Insurance Commitment attached hereto as Exhibit E and incorporated herein. A statement of insurance is hereby authorized to be printed on or attached to the Series 2002 Bonds for the benefit and information of the holders of the Series 2002 Bonds. In addition to the covenants and agreements of the City previously contained in the Bond Ordinance regarding the rights of the Bond Insurer, which are hereby incorporated herein, the City hereby makes the following additional covenants and agreements for the benefit of the Bond Insurer and the Holders of the Series 2002 Bonds while the Bond Insurance Policy insuring the Series 2002 Bonds and the Reserve Policy are in full force and effect: (a) Any notice that is required to be given to a holder of the Bonds or to the Paying Agent pursuant to the Bond Ordinance shall also be provided to the Insurer. All notices required to be given to the Insurer under the Resolution shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention: Insured Portfolio Management. (b) The Insurer shall receive notice of any amendments to the Bond Ordinance or this Resolution prior to the adoption of such amendments by the City. Resolution 02-29 4 (c) The City shall provide copies of all amendments to the Bond Ordinance or this Resolution which required the consent of the Bond Insurer to Standard & Poors. SECTION 12. AWARD OF BIDS. The Finance Director is hereby authorized to accept the bids for the Series 2002 Bonds. The City Manager and the Finance Director are hereby authorized to award the sale of the Series 2002 Bonds on their determination of the best bid submitted in accordance with the terms of the Notice of Bond Sale provided for herein so long as the true interest cost rate shall not exceed 6.0% on the Series 2002 Bonds. The City Manager and the Finance Director are hereby authorized to award the sale of the Series 2002 Bonds as set forth above or to reject all bids for the Series 2002 Bonds. Such award shall be final. SECTION 13. PRIOR RESOLUTIONS. To the extent the provisions of this Resolution are inconsistent with the provisions of prior resolutions regarding the Series 2002 Project or the Series 2002 Bonds, provisions of this Resolution shall control and supercede the inconsistent provisions of such Resolutions. SECTION 14. EFFECTIVE DATE. This resolution shall take effect immediately upon adoption. PASSED AND ADOPTED this 8th day of August, 2002. CITY OF CLEARWATER, FLORIDA Approved as to form: JJ[ Pamela K. Akin City Attorney Attest: ~ .. .. .. .. ~ . Resolution 02-29 5 EXHIBIT A FORM OF OFFICIAL NOTICE OF BOND SALE $ * CITY OF CLEARWATER, FLORIDA STORMWATER SYSTEM REVENUE BONDS, SERIES 2002 NOTICE IS HEREBY GIVEN that electronic (as explained below) proposals will be received electronically via PARITY in the manner described below, until 11 :00 a.m., Clearwater Florida Time, on (date) Bids must be submitted electronically via PARITYin accordance with this Notice of Bond Sale, until 11 :00 a.m., Clearwater, Florida Time, but no bid will be received after the time for receiving bids specified above. To the extent any instructions or directions set forth in PARITY conflict with this Notice of Bond Sale, the terms of this Notice of Bond Sale shall control. For further information about PARITY, potential bidders may contact the financial advisor to the City, Banc of America Securities LLC, 1640 Gulf-to-Bay Boulevard, Clearwater, Florida 33755 Atten: David Thornton, telephone (727) 462-5804, or Dalcomp at 395 Hudson Street, New York, NY 10014, telephone (212) 404-8102. In the event of a malfunction in the electronic bidding process, the bid date will automatically change to the next business day as confirmed in a communication through Thompson Municipal Market Monitor (TM3). Form of Series 2002 Bonds The Series 2002 Bonds will be issued in book entry only form, without coupons, in denominations of $5,000 or any integral multiples thereof, and shall be dated September 1 , 2002. Principal of the Series 2002 Bonds shall be paid to the registered owners at the designated corporate trust office of Wells Fargo Bank Minneapolis, N.A. (the "Paying Agent" and "Registrar"), upon presentment and surrender of the Series 2002 Bonds. Interest on the Series 2002 Bonds shall be paid to the registered owners as shown on the registration books maintained by the Registrar, by check or draft mailed to each such owner's address as shown on the registration books maintained by the Registrar as of the fifteenth (15th) day of the calendar month preceding such interest payment date. Interest will be payable each May 1 and November 1, commencing November 1 , 2002. Interest will be calculated on the basis of a 360-day year of twelve 30-day months. For so long as The Depository Trust Company, New York, New York, or its nominee, Cede & Co. (collectively, "DTC") is the registered owner of the Series 2002 Bonds, payments of principal of, redemption premium, if any, and interest on the Series 2002 Bonds will be made directly to DTC. Disbursements of such payments to the DTC participants is the responsibility of DTC and further disbursement of such payments from the DTC participants to the beneficial owners of the Series 2002 Bonds is the responsibility of the DTC participants. * Preliminary, subject to change A-I Initially one bond will be issued for each maturity of the Series 2002 Bonds in the aggregate principal amount of each such maturity and registered in the name of DTC. DTC, an automated clearing house for securities transactions, will act as securities depository for the Series 2002 Bonds. Purchases of the Series 2002 Bonds will be made in book-entry-only form (without certification). It shall be the responsibility of the Successful Bidder (as hereinafter defined) for the Series 2002 Bonds to furnish to DTC an underwriters' questionnaire and to the City the CUSIP numbers of the Series 2002 Bonds not less than seven (7) days prior to the Closing Date (as hereinafter defined). Maturitv Schedule The Series 2002 Bonds will mature on November 1 of the following years in the following principal amounts: Series 2002 Bonds Principal Maturity Amount* Maturitv Principal Amount* Maturity Principal Amount* Mandatorv Redemption Provisions If the Successful Bidder designates any Series 2002 Bonds as term bonds as described under "Designation of Term Bonds," the following mandatory redemption provisions shall apply with respect to such designated term bonds: The Series 2002 Bonds maturing on November 1, 20_ will be subject to mandatory redemption prior to maturity, selected by lot, or in such manner as the Registrar may deem appropriate, at a redemption price equal to the principal amount thereof on the redemption date, on November 1, 20_, and each November 1 thereafter, from amounts deposited in the Redemption Account in the Bond Service Fund established by the Ordinance, in the following years and amounts as follows: Year Amortization Amortization Year Installment Installment * Preliminary, subject to change A-2 Optional Redemption Provisions The Series 2002 Bonds maturing on or before November 1, _ are not callable prior to their maturity dates. The Series 2002 Bonds maturing after November 1 , _ are subject to optional redemption by the City, on and after November 1, _ as a whole, or in part, at any time, an entire maturity is redeemed, at the redemption prices (expressed as percentages of principal amount) set forth below, together with accrued interest to the date of redemption. Redemption Period Price November 1, _ through October 31 , _ November 1, _ and thereafter Adiustment of Principal Amount After final computation of the bids, to achieve desired debt service levels, the City reserves the right either to increase or decrease any Principal Amount of the Series 2002 Bonds (or any Amortization Installment in the case of a Term Bond) shown on the schedule of Principal Amounts set forth above (the "Maturity Schedule"), by an amount not to exceed five percent (5%) of the stated amount of each such Principal Amount on the Maturity Schedule and correspondingly adjust the issue size, all calculations to be rounded to the nearest $5,000. In the event of any such adjustment in the Series 2002 Bonds, no rebidding or recalculation of the bid submitted with respect to such Series 2002 Bonds will be required or permitted. If necessary, the total purchase price of the Series 2002 Bonds will be increased or decreased in direct proportion to the ratio that the adjustment bears to the aggregate principal amount of the Series 2002 Bonds specified herein; and the Series 2002 Bonds of each maturity, as adjusted, will bear interest at the same rate and must have the same initial reoffering yields as specified in the bid of the Successful Bidder. However, the award will be made to the bidder whose bid produces the lowest true interest cost, calculated as specified below, solely on the basis of the bid for the Series 2002 Bonds offered pursuant to the Bid Maturity Schedule of the relevant series of Series 2002 Bonds, without taking into account any adjustment in the amount of Series 2002 Bonds set forth in the Bid Maturity Schedule. Desianation of Term Bonds Bidders may specify that the annual Principal Amounts of the Series 2002 Bonds coming due in any two or more consecutive years may be combined to form one or more maturities of Series 2002 Term Bonds scheduled to mature in the last of such years with the preceding annual Principal Amounts for such years constituting mandatory Amortization Installments of Series 2002 Bonds to be selected by lot and redeemed at a price of par plus accrued interest in accordance with the Resolution. A-3 Basis of Award Proposals must be unconditional and only for all the Series 2002 Bonds. The purchase price bid for the Series 2002 Bonds may include a discount (including underwriters' discount and original issue discount) not to exceed two percent (2%) of the principal amount of the Series 2002 Bonds and shall specify how much of the discount is original issue discount. The purchase price bid may also include an original issue premium (including underwriter's discount and original issue premium) not to exceed two percent (2%) of the principal amount of the Series 2002 Bonds and shall specify how much of such purchase price is original issue premium. The Series 2002 Bonds will be insured by MBIA Insurance Corporation and the City will pay the bond insurance premium from Bond proceeds. The purchase price bid for the Series 2002 Bonds will not deduct the insurance premium. Only the final bid submitted by any bidder through Parity will be considered. The City reserves the right to determine the Successful Bidder for the Series 2002 Bonds, to reject any or all bids and to waive any irregularity or informality in any bid. The Series 2002 Bonds will be awarded to the bidder (herein referred to as the "Successful Bidder" as to the Series 2002 Bonds) offering such interest rate or rates and purchase price which will produce the lowest true interest cost to the City over the life of the Series 2002 Bonds. True interest cost for the Series 2002 Bonds (expressed as an annual interest rate) will be that annual interest rate being twice that factor of discount rate, compounded semiannually, which when applied against each semiannual debt service payment (interest, or principal and interest, as due) for the Series 2002 Bonds will equate the sum of such discounted semiannual payments to the bid price (inclusive of accrued interest). Such semiannual debt service payments begin on December 1, 2002. The true interest cost shall be calculated from , 2002, the expected closing date of the Series 2002 Bonds (the "Closing Date") and shall be based upon the principal amounts of each serial maturity set forth in this Notice of Bond Sale and the bid price set forth in the Proposal for the Series 2002 Bonds submitted in accordance with the Notice of Bond Sale. In case of a tie, the City may select the Successful Bidder by lot. It is requested that each Proposal for the Series 2002 Bonds be accompanied by a computation of such true interest cost to the City under the term of the Proposal for Bonds, but such computation is not to be considered as part of the Proposal for Bonds. Interest Rates Permitted The Series 2002 Bonds shall bear interest expressed in multiples of one-eighth (1/8) or one-twentieth (1/20) of one percent. No difference greater than 2% will be permitted between the highest and lowest rates of coupon interest specified. Should an interest rate be specified which results in annual interest payments not being equally divisible between the semiannual payments in cents the first semiannual payment will be reduced to the next lower cent and the second semiannual payment will be raised to the next higher cent. A-4 It shall not be necessary that all Series 2002 Bonds bear the same rate of interest, provided that all Series 2002 Bonds maturing on the same date shall bear the same rate of interest. A rate of interest based upon the use of split or supplemental interest payments or a zero rate of interest will not be considered. Payina Aaent and Reaistrar The Paying Agent and Registrar for the Series 2002 Bonds is Wells Fargo Bank Minneapolis, N.A. through its designated office in Jacksonville, Florida. Security Principal of and interest on the Series 2002 Bonds to be issued pursuant to Ordinance No. 6931-02, as supplemented, and all required sinking fund, reserve and other payments shall be payable solely from the Net Revenues of the City's Stormwater System, together with the earnings thereon derived from the investment thereof in the Funds and Accounts established in the Ordinance and as more fully described in the Preliminary Official Statement. The Series 2002 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional, statutory or charter provision or limitation, and no Bondholder shall ever have the right to require or compel the exercise of the ad valorem taxing power of the City or taxation of any real or personal property therein for the payment of the principal of and interest on the Series 2002 Bonds or the making of any debt service fund, reserve or other payments provided for in the Resolution. Purpose Pursuant to the Ordinance, the Series 2002 Bonds are being issued to pay a portion of the costs of the Projects, the costs of issuing the Series 2002 Bonds and to purchase a municipal bond insurance policy and to make a deposit to the Debt Service Reserve Fund. Issuance of Series 2002 Bonds The Series 2002 Bonds will be issued and sold by the City of Clearwater, Florida, a municipal corporation organized and existing under the laws of the State of Florida. The Series 2002 Bonds are being issued pursuant to Ordinance No. 6931-02 enacted ,2002, as supplemented by resolutions (collectively, the "Bond Ordinance") by the City of Clearwater, Florida (the "City") and pursuant to the provisions of Chapter 166, Florida Statutes, and other applicable provisions of law. Municipal Bond Insurance Policy A commitment to issue a municipal bond insurance policy guaranteeing payment of principal and interest on the Series 2002 Bonds has been obtained from MBIA Insurance Corporation. A-5 Proposals Proposals for the Series 2002 Bonds are desired on forms which will be furnished by PARITY, on behalf of the City, and be submitted electronically via PARITY. Each bidder for the Series 2002 Bonds must have arranged for a good faith deposit in the amount of $ , in the form of a Financial Surety Bond from any insurance company licensed to issue such a Surety Bond in the State of Florida and approved by the City (as of the date hereof only Financial Security Assurance Corporation has been so approved) prior to the bid deadline. The Successful Bidder's good faith deposit shall be delivered by wire transfer to the City by 3:00 p.m. on the next business day. If the Successful Bidder shall fail to comply promptly with the terms of its Proposal, the amount of such wire will be forfeited to said payee as liquidated damages. The proceeds of the good faith deposit of the Successful Bidder will be applied to the payment of the purchase price of the Series 2002 Bonds. Prior to the delivery of the Series 2002 Bonds, the City may invest the proceeds from the good faith deposit. No interest will be paid to any bidder upon any good faith deposit. Deliverv and Payment It is anticipated that the Series 2002 Bonds in book entry only form will be available for delivery on , 2002, in New York, New York, at The Depository Trust Company, or some other date and place to be mutually agreed upon by the Successful Bidder and the City against the payment of the purchase price therefor including accrued interest calculated on a 360-day year basis, less the amount of the good faith check, in immediately available Federal Reserve funds without cost to the City. Closina Documents The City will furnish to the Successful Bidder upon delivery of the Series 2002 Bonds the following closing documents in a form satisfactory to Bond Counsel: (1) signature and no-litigation certificate; (2) federal tax certificate; (3) certificate regarding information in the Official Statement; and (4) seller's receipt as to payment. A copy of the transcript of the proceedings authorizing the Series 2002 Bonds will be delivered to the Successful Bidder of the Series 2002 Bonds upon request. Copies of the form of such closing papers and certificates may be obtained from the City. Information Statement Section 218.38(1 )(b)1, Florida Statutes requires that the City file, within 120 days after delivery of the Series 2002 Bonds, an information statement with the Division of Bond Finance of the State of Florida (the "Division") containing the following information: (a) the name and address of the managing underwriter, if any, connected with the Series 2002 Bonds; (b) the name and address of any attorney or financial consultant who advised the City with respect to the Series 2002 Bonds; and (c) any fee, bonus, or gratuity paid, in connection with the bond issue, by an underwriter or financial consultant to any person not regularly employed or engaged by such underwriter or consultant and (d) any other fee A-6 paid by the City with respect to the Series 2002 Bonds, including any fee paid to attorneys or financial consultants. The Successful Bidder will be required to deliver to the City at or prior to the time of delivery of the Series 2002 Bonds, a statement signed by an authorized officer containing the same information mentioned in (a) and (c) above. The Successful Bidder shall also be required, at or prior to the delivery of the Series 2002 Bonds, to furnish the City with such information concerning the initial prices at which a substantial amount of the Series 2002 Bonds of each maturity were sold to the public as the City shall reasonably request. Pursuant to Section 218.385(2) and (3) of the Florida Statutes, as amended, a truth- in-bonding statement will be required from each bidder as to the Series 2002 Bonds as part of their bid in the following form: "The City of Clearwater, Florida, is proposing to issue $ original aggregate principal amount of Stormwater System Revenue Bonds, Series 2002, for the purpose of paying (i) a portion of the costs of the Projects, (ii) the costs of issuing the Series 2002 Bonds, (Hi) the premium on the Bond Insurance Policy, if any and (iv) the premium for the debt service reserve fund insurance or to make a deposit to the Reserve Fund, all as further described in Ordinance No. 6931-02. The final maturity date of the Series 2002 Bonds is December 1, 20_, and the Series 2002 Bonds are expected to be repaid over a period of thirty (30) years. At a forecasted average interest rate of _ % per annum, total interest paid over the life of the Series 2002 Bonds will be $ . The source of repayment or security for this proposal is the City's Stormwater System Net Revenues (as defined in the Ordinance) and moneys and investments held in the funds created under the said Ordinance. Authorizing the Series 2002 Bonds will result in $ not being available to finance the other capital projects of the City. This truth-in-bonding statement prepared pursuant to Section 218.385(2) and (3) of the Florida Statutes, as amended, is for informational purposes only and shall not affect or control the actual terms and conditions of the Series 2002 Bonds." Leaal Opinion The Successful Bidder will be furnished, without cost, with the approving opinion of Bryant, Miller and Olive, P.A., Tallahassee, Florida, to the effect that based on existing law, and assuming compliance by the City with certain covenants and requirements of the Internal Revenue Code of 1986, as amended (the "Code"), regarding use, expenditures, investment of proceeds and the timely payment of certain investment earnings to the United States Treasury, the interest on the Series 2002 Bonds is not includable in the gross income of individuals, however, interest on the Series 2002 Bonds will be included in the calculation of the alternative minimum tax liabilities of corporations. The Code contains other provisions that could result in tax consequences, upon which Bond Counsel renders no opinion, as a result of ownership of the Series 2002 Bonds or the inclusion in certain computations (including, without limitation, those related to the corporate alternative minimum tax and environmental tax) of interest that is excluded from gross income. A-7 Official Statement The Preliminary Official Statement, copies of which may be obtained as described below, is in a form "deemed final" by the City for purposes of SEC Rule 15c2-12(b)(1) (except for certain permitted omissions as described in such rule) but is subject to revision, amendment and completion in a final Official Statement. Upon the sale of the Series 2002 Bonds, the City will publish a final Official Statement in substantially the same form as the Preliminary Official Statement. Copies of the final Official Statement will be provided, at the City's expense, on a timely basis in such quantities as may be necessary for the Successful Bidder's regulatory compliance. It is not the intention or the expectation of the City to print the name(s) of the Successful Bidder as to the Series 2002 Bonds on the cover of the Official Statement. Continuina Disclosure The City has covenanted to provide ongoing disclosure in accordance with Rule 15c2-12 of the Securities and Exchange Commission. See "Appendix D -- Form of Continuing Disclosure Certificate" attached to the Preliminary Official Statement. CUSIP Number It is anticipated that CUSIP identification numbers will be printed on the Series 2002 Bonds, but neither the failure to print such number on any Series 2002 Bonds nor any error with respect thereto shall constitute cause for failure or refusal by the Successful Bidder to accept delivery of and pay for the Series 2002 Bonds in accordance with its agreement to purchase the Series 2002 Bonds. All expenses in relation to the printing of CUSIP numbers on the Series 2002 Bonds shall be paid for by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of said number shall be the responsibility of and shall be paid for by the Successful Bidder. Copies of Documents Copies of the Preliminary Official Statement, this Official Notice of Bond Sale and the Official Bid Form and further information which may be desired, may be obtained from the City's Financial Advisor, Banc of America Securities LLC, 1640 Gulf-to-Bay Boulevard, Clearwater, Florida 33755, Attn: David Thornton, telephone (727) 462-5804. Amendment and Notices Amendments hereto and notices, if any, pertaining to this offering shall be made through Thompson Municipal Market Monitor (TM3) or similar information distribution service. CITY OF CLEARWATER, FLORIDA A-8 /s/ Brian J. Aungst Mayor-Commissioner A-9 EXHIBIT B FORM OF SUMMARY NOTICE OF SALE CITY OF CLEARWATER, FLORIDA Stormwater System Revenue Bonds Series 2002 NOTICE IS HEREBY GIVEN, that bids will be received by the City Manager and the Finance Director of the City of Clearwater, Florida, electronically through PARITY, subject to the provisions of the Official Notice of Bond Sale. Sale Date: , 2002 Time: 11 :00 a.m., Clearwater, Florida Bonds Dated: 1, 2002 Maturities: Payable November 1 in the years and amounts as follows: Series 2002 Bonds Principal Maturitv Amount* Matu ritv Principal Amount* Maturity Principal Amount* Interest Payment Dates: Payable May 1 and November 1 , commencing November 1, 2002. Legal Opinion: Bryant, Miller and Olive, P.A., Tallahassee, Florida For copies of the Official Notice of Bond Sale and the Preliminary Official Statement of the City of Clearwater, Florida, please contact the City's Financial Advisor, Banc of America Securities, LLC, 1640 Gulf-to-Bay Boulevard, Clearwater, Florida 33755, Attn: David Thornton, telephone (727) 462-5804. The Proposed Form is to be provided by PARITY. B-1 EXHIBIT C FORM OF PRELIMINARY OFFICIAL STATEMENT C-l ~ ~ ~;S .~ ~ ~ ~ ~ ~ ~ ~ ~~, .~ ~' ~~ d ~ 't ':l <:l ;:: ~ 1oOio '-.. ~~"ti 9 -~ ~ ::-- ==....,:: ~ \:S Ol ~ ~ ~ - $ 5' ~ .s.. ...c ',t:t ~ c .s .~ ;; :g .~ ~oe ~~~ ~~~ a ~ ~ ~-~ ~ ~ ~ .15 -2 ~ ;.", :... .~ Q~'a ~<:l~ '::l :: '_' ~ ~ ~ ~ .2 :::!: ].~ ~ ~ 1;) C r:: .0_. ~ 8 "i~~ ~ ~ .~ .~ .'d ~ '2as ~]s . ,g,'0:: ~C5''; ~ c.~ ~ .~ ~ ~ ~ ~ "<:s ~ ~ sd::~ r:: ;:: ..g ~ ~ :::... i:: 8 .~ ~ ~ ~ ~'] " :... ~ '~ ~ ~ :~Q '" - ~ ~ ~ ~ e] t~ '~ ~ ~ ~ ~ ~ ';:>.- ~ ,_ ~ '-J ~..~ ~ --..;) ;:: ~ ... ~ .5 f: '" ,g 0 :t: -';:::,;: 8 ~ .5 .~ ~ r:: ~ .5 ,g Ii:: "<:s .::1 :... ~ '"<:: -g, ~ .~ .::: ~ .:1 i::, {j ;:: f:l .~ ~. l .,.". .S ~ - l; ~ ~ -2 C ~all:l ~]% ..... t..l C""'l .::1 ~ tl ::1 Cl '0:: ~ ~~ t::.5 ~ ~ .s ;, '_ ~ c .~ ct ~ ~ ~ s ct ~ ~" ,"'" ~ ~ ~ .~ ); Preliminary Official Statement Dated August ,2002 NEW ISSUE - FULL BOOK-ENTRY Ratings: Moody's: S&P: Fitch: (see "RATINGS" herein) In the opinion of Bond Counsel, assuming continuing compliance by the City with various covenants in the Series 2002 Ordinance, under existing statutes, regulations and judicial decisions, the interest on the Series 2002 Bonds will be excludedfrom gross income for federal income tax purposes to the owners thereof The Series 2002 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 owners of the Series 2002 Bonds. $24,725,000 * CITY OF CLEARWATER, FLORIDA Stormwater Revenue Bonds Series 2002 Dated: Due: November I, as shown below August I, 2002 The Stormwater Revenue Bonds, Series 2002 (the "Series 2002 Bonds") of the City of Clearwater, Florida (the "City") are being issued in fully registered form and, when initially issued, will be registered to Cede & Co., as nominee of The Depository Trust Company, New York, New York. Wells Fargo Bank, Minneapolis, NA, is acting as the Paying Agent and Bond Registrar for the Series 2002 Bonds. The Series 2002 Bonds will be purchased in book-entry foon only, in the denonination of $5,000 or any integral multiple thereof. There will be no physical delivery of bond certificates to individual Bondholders. Interest on the Series 2002 Bonds will be payable semi-annually beginning on November I, 2002 and on each May I and November I thereafter. Principal of and premiwn, if any, on the Series 2002 Bonds will be payable at maturity or upon redemption prior to maturity. The Series 2002 Bonds are subject to redemption prior to maturity as described herein. The Series 2002 Bonds are being issued pursuant to the authority of and in full compliance with the charter of the City, the Constitution and the laws of the State of Florida, particularly Chapter 166, Part II, Florida Statutes, and other applicable provisions of law, and Ordinance No. 6378-99 enacted by the City on April IS, 1999, as amended and supplemented by Ordinance No. 6931-02, enacted by the City on July 2002, as further amended and supplemented (the "Ordinance") foc the purpose of (i) paying the costs of capital improvements (as more particularly described herein under the caption 'TIlE SERIES 2002 PROJECT'~ to the City's stonnwater management system (as more particularly described herein, the "System"); (ii) making a deposit to subaccount established in the Reserve Fund for the Series 2002 Bonds in the amount of the Reserve Requirement for the Series 2002 Bonds; and (iii) paying certain costs of issuance of the Series 2002 Bonds, including the municipal bond insurance premiwn. The Series 2002 Bonds and the interest thereon are payable solely from the Pledged Revenues, which consist of Net Revenues derived from the operation of the System and with respect to each Series of Bonds, the moneys on deposit in the various funds and accounts created pursuant to the Ordinance allocable to such Series of Bonds, with the exception of the Rebate Fund. The Ordinance pennits the issuance of Additional Parity Obligations payable from the Net Revenues upon the conditions described herein under the caption "SECURITY FOR THE SERIES 2002 BONDS - Additional Parity Obligations." A oommilment has been issued by MBIA Insurance Corporation ("MBIA ") to issue a municipal bond insurance policy guaranteeing the timely payment of the principal of, and interest on, the Series 2002 Bonds, when due. For a discussion of the terms and provisions of such policy, including the limitations thereof, see "MUNICIPAL BOND INSURANCE" herein. .NIBIA MATURITY SCHEDULE (See enclosed Notice of Sale) (Accrued Interest to be added) ELEcrR.ONIC BIDS FOR THE SERIES 2002 BONDS WILL BE ACCEPTED IN ACCORDANCE WITH THE OFFICIAL NOTICE OF SALE. The Series 2002 Bonds are offered when, as and if issued and a<<epted by the Underwriter subject to the approval of legality by Bryant, Miller and Olive, P.A., TaUahassee, Florida, Bond CounseL Certain other legal matters will be passed upon for the City by Pamela K. Akin, Esquire, City Attorney, and by Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Disclosure Counsel to the City. Banc of America Securities LLC, St. Petersburg, Florida is serving as Financial Advisor to tlte City. It is expected that the Series 2002 Bonds, in definitive book-entry form, will be available for delivery through DTC in New York, New York on or about August ,2002. August , 2002 . Preliminary, subject to change. CITY OF CLEARWATER, FLORIDA ELECTED OFFICIALS MAYOR - COMMISSIONER Brian 1. Aungst, Sr. COMMISSIONERS Frank Hibbard Hoyt Hamilton Whitney Gray Bill Jonson APPOINTED OFFICIALS William B. Horne, n, City Manager Pamela K. Akin, Esq., City Attorney Margaret L. Simmons, CPA, Finance Director BOND COUNSEL Bryant, Miller and Olive, P.A. Tallahassee, Florida FINANCIAL ADVISOR Bane of America Securities LLC Clearwater, Florida REGISTRAR AND PAYING AGENT Wells Fargo Bank, Minneapolis, NA Minneapolis, Minnesota No dealer, broker, salesman or other person has been authorized to give any information or to make any representations, other than those contained in this Official Statement, in connection with the offering of the Series 2002 Bonds described herein, and if given or made, such information or representations must not be relied upon as having been authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell the Series 2002 Bonds or a solicitation of an offer to buy nor shall there be any sale of the Series 2002 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been furnished by the City and by other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation or contract, by the Underwriter. The information and expressions of opinion herein are subject to change without notice and neither the delivery of the Official Statement nor any sale made hereWlder shall, Wlder any circwnstances, 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 OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE Series 2002 BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. The Series 2002 Bonds have not been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended, nor has the Ordinance been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such acts. The registration or qualification of the Series 2002 Bonds in accordance with applicable provisions of the securities laws of the States, if any, in which the Series 2002 Bonds have been registered or qualified and the exemption from registration or qualification in certain other states cannot be regarded as a recommendation thereof. Neither these States nor any of their agencies have passed upon the merits of the Series 2002 Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. TABLE OF CONTENTS Page INTRODUCTORY STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 THE SERIES 2002 PROJECTS ................................................... 3 DESCRIPTION OF THE SERIES 2002 BONDS ..................................... 3 General ....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Notice of Redemption ........................................................ 5 Book-Entry Only System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 SECURITY FOR THE SERIES 2002 BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Series 2002 Bonds Not a Debt of the City. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Outstanding Parity Obligations ................................................. 11 MUNICIPAL BOND INSURANCE .............................................. 11 Rights Granted Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 DEBT SERVICE REQUIREMENTS .............................................. 13 SOURCES AND USES OF FUNDS .............................................. 14 THE STORMW ATER MANAGEMENT SYSTEM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 FINANCU\LSTATEMENTS .. .... ....... ..................... ..... ............ 18 INVESTMENT POLICY OF THE CITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 LEGALITY FOR INVESTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 TAXEXEMPTION ........................................................... 19 Tax Treatment of Original Issue DisCOlUlt ......................................... 20 RATINGS................................................................... 20 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 ADVISORS AND CONSULTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 CONTTINlJINGDIScLOStntE .......................... .......... ............. .22 ENFORCEABILITY OF REMEDIES ............................................. 23 CERTAIN" LEGAL MATfERS ...................................................23 DISCLOStntE REQUIRED BY FLORIDA BLUE SKY REGULATIONS .. . . . . . . . . . . . . . . . 23 FINANCIAL ADVISOR ....................................................... 23 ............................................................................ 24 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Appendices: Appendix A General Description of the City and Selected Statistics Appendix B Excerpts from the City's Comprehensive Annual Financial Report for the Fiscal Year Ended September 30,2001 Appendix C Form of the Ordinance Appendix D Form of Continuing Disclosure Agreement Appendix E Form of Bond Counsel Opinion Appendix F Form of Municipal Bond Insurance Policy n OFFICIAL STATEMENT $24,725,000. CITY OF CLEARWATER, FLORIDA STORMW A TER REVENUE BONDS, SERIES 2002 ENTRODUCTORYSTATEMENT The purpose of this Official Statement, which includes the cover page and the Appendices, is to provide information concerning the City of Clearwater, Florida (the "City") and the City's $24,725,000* Stormwater Revenue Bonds, Series 2002 (the "Series 2002 Bonds"). The Series 2002 Bonds are issued pursuant to the authority of and in full compliance with (a) the charter of the City, (b) the Constitution and the laws of the State of Florida, particularly Chapter 166, Part II, Florida Statutes, and other applicable provisions of law, and (c) Ordinance No. 6378-99 enacted by the City on April 15, 1999 (the "Ordinance"), as amended by Ordinance No. 6931-02, enacted by the City on [ ], as supplemented. The Series 2002 Bonds are being issued for the purpose of (i) paying the costs of capital improvements (as more particularly described herein under the caption "THE SERIES 2002 PROJECTS," the "Series 2002 Projects") to the City's stormwater management system (as more particularly described herein, the "System"); (ii) making a deposit equal to the subaccount established in the Reserve Fund for the Series 2002 Bonds in the amount of the Reserve Requirement attributable to the Series 2002 Bonds; and (iii) paying certain costs of issuance of the Series 2002 Bonds, including the municipal bond insurance premium. The Series 2002 Bonds and the interest thereon are payable solely from the Pledged Revenues, whichare comprised of Net Revenues derived from the operation of the System and withrespectto such Series of Bonds, the moneys on deposit in the various funds and accounts created pursuant to the Ordinance allocable to each Series of Bonds, with the exception of the Rebate Fund. The Series 2002 Bonds are the second Series of Bonds issued which are payable from Net Revenues of the System. The Cityhaspreviously issued $7,500,000 of its Stormwater System Revenue Bonds, Series, 1999 (the "Series 1999 Bonds"), which are currently Outstanding in the aggregate principal amount of $7,275,000, which will rank on a parity with the Series 2002 Bonds as to the pledge of the Net Revenues. The scheduled payment of principal of and interest on the Series 2002 Bonds will be insured by a municipal bond insurance policy to be issued simultaneously with the delivery of the Bonds by MBIA Insurance Corporation("MBIA"), as described herein. For a discussion of the terms and provisions of such policy, including the limitations thereof, see "MUNICIPAL BOND INSURANCE" herein · Preliminary, subject to change. 1 Neither the Series 2002 Bonds nor the interest thereon constitute a general obligation or indebtedness of the Citywithin the meaning of any constitutional, statutory or charter provision or limitation No owner or owners of any Series 2002 Bonds shall ever have the right to compel the exercise of the ad valorem taxing power of the City, or any other taxing power in any form on any real or personal property of the City, to pay the Series 2002 Bonds or the interest thereon. The City shall not be obligated to pay the Series 2002 Bonds or any interest thereon except from the Pledged Revenues, in the manner provided in the Ordinance referred to herein. A Reserve Fund has been established for the benefit of the Series 2002 Bonds. From the proceeds of the Series 2002 Bonds, the City will make a deposit into a subaccount in the the Reserve Fund established for the Series 2002 Bonds equal to the Reserve Fund Requirement applicable to the Series 2002 Bonds, which is equal to the lesser of (i) the Maximum Bond Service Requirement for the Series 2002 Bonds, (ii) 125% of the Average AnnualBond Service Requirement of the Series 2002 Bonds, or (ill) the largest amount as shall not adversely affect the exclusion of interest on the Series 2002 Bonds from gross income for Federal income tax purposes (see "SECURITY FOR THE SERIES 2002 BONDS - Reserve Account"). The City covenants in the Ordinance to fix, establish and maintain such rates, and collect such fees, rentals and other charges for the services and facilities of the System (as herein defined) which will always provide Net Revenues in each year sufficient to pay one hundred fifteen percent (115%) of the Bond Service Requirement becoming due in such year on the Outstanding Bonds. The City rnay issue Additional Parity Obligations, payable on a parity from the Net Revenues with the Series 2002 Bonds, for the purpose of refunding a part of the Outstanding Bonds, or financing the cost of extensions, additions and improvements to the System and for the acquisition and construction of, and extensions and improvements to stormwater management systems which are to be consolidated with the System and operated as a single combined utility, provided that, among other requirements, certain earnings tests relating historical Net Revenues to the MaximnnBond Service Requirement of all Bonds Outstanding after the issuance of such Additional Parity Obligations can be met. Such historical Net Revenues rnay be adjusted by the Consulting Engineer as provided in the Ordinance. Definitions of certain words and terms having initial capitals used herein and in the Ordinance (as defined below in "Authority For Issuance") are contained in the "Summmy of Certain Provisions of the Ordinance" in Appendix C hereto. The references, excerpts and swnmaries 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 for full and complete statements of all matters offact relating to the Series 2002 Bonds, the security for the payment of the Series 2002 Bonds, and the rights and obligations of holders thereof. The information contained in this Official Statement involving matters of opinion 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 2 the estimates will be realized. Neither this Official Statement nor any statement which rnay have been made verbally or in writing is to be constmed as a contract with the holders of the Series 2002 Bonds. 3 THE SERIES 2002 PROJECTS The City has identified a need for approximately $72.4 millionin capital projects forthe storm water system from 2002 through 2006, calling for funding from bond proceeds in 2002 of approximately $22,687,000 in projects, in 2004 of approximately $22,226,000 in projects and in2006 ofapproxirnately $7,979,000 in projects. The following is a list of the Series 2002 Projects anticipated to be financed from the Series 2002 Bonds: Town Lake Kapok Flood Resolution Myrtle Avenue Drainage hnprovements Sharkey Road Drainage hnprovements Stevensons Creek hnplementation Projects Tropic Hills Drainage Improvements FDEP Compliance Storm Pipe System Improvements $ 2,528,300 12,538,080 255,000 900,000 3,255,000 550,000 968,000 1.692.620 Total $22,687,000 4 DESCRIPTION OF THE SERIES 2002 BONDS General The Series 2002 Bonds will be dated August 1, 2002. The Series 2002 Bonds will bear interest at the rates and mature on November 1 in the amounts and at the times set forth on the cover page of this Official Statement. The Series 2002 Bonds are to be issued as fully registered bonds in denominations of $5,000 or integral multiples thereof. Interest on the Series 2002 Bonds will be payable semiannually on May 1 and November 1 of each year, commencing November 1, 2002, by check or draft mailed to the registered owners, at their addresses as they appear on the registration books of the City maintained by the Bond Registrar, as of the 15th day (whether or not a business day) of the month preceding the interest payment date (the "Record Date"). Owners of$l ,000,000 or more in aggregate principal amount of Series 2002 Bonds may receive interest by wire transfer, at the Owner's expense, to a bank account designated in writing by the Owner not later than the Record Date. Principal of, and premium if any, are payable at maturity, or upon redemption prior to maturity, upon presentation and surrender thereof at the corporate trust office of the Paying Agent. Wells Fargo Bank, Minneapolis, NA, Minneapolis, Minnesota, is acting as Paying Agent and Bond Registrar for the Series 2002 Bonds. The Series 2002 Bonds will be initially issued in the form of a single fully registered Bond for each maturity of the Series 2002 Bonds. Upon initial issuance, the ownership of each such Series 2002 Bonds will be registered in the registration books kept by the Bond Registrar, in the name of Cede & Co., as nominee of The DepositoryTrustCompany, New York, New York ("DTC"). While held in book-entry fonn, aU payments of principal, interest and premium, if any, on the Series 2002 Bonds will be made to DTC or the DTC Nominee as the sole registered owner of the Series 2002 Bonds and payments to Beneficial Owners will be the responsibility of DTC and the DTC Participants as described below. See "Book-Entry Only System." With respect to Series 2002 Bonds registered in the name of Cede & Co., as nominee ofDTC, neither the City, nor the Paying Agent will have any responsibility or obligation to any DTC Participant or to any indirect DTC Participant. See "Book-Entry Only System" for the definition of "DTC Participant." Without limitingthe immediatelyprecedingsentence, neither the City nor the Bond Registrar and the Paying Agent will have any responsibility or obligation with respect to: (i) the accuracy of the records ofDTC or any DTC Participant with respect to any ownership interest in the Series 2002 Bonds; (ii) the delivery to any DTC Participant or any other person other thana registered owner, as shown in the registration books kept by the Bond Registrar, of any notice with respect to the Series 2002 Bonds, including any notice of redemption; or (ill) the payment to any DTC Participant or any other person, other thana registered owner, as shown in the registration books kept by the Bond Registrar, of any amount with respect to principal of, premium, if any, or interest on the Series 2002 Bonds. The City, the Bond Registrar and the Paying Agent may treat and consider the person in whose name each Series 2002 Bonds is registered in the registration books kept by the Bond Registrar as tre holder and absolute owner of such Bond for the purpose of 5 payment of principal of, premium, if any, and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other pUlposes whatsoever. The Paying Agent will pay all principal of, premium, if any, and interest on the Series 2002 Bonds only to or upon the order of the respective registered owners, as shown in the registration books kept by the Bond Registrar, or their respective attorneys duly authorized in writing, as provided in the Ordinance, and all such payments will be valid and effectual to satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, and interest on the Series 2002 Bonds to the extent of the sums so paid. No person other than a registered owner, as shown in the registration books kept by the Bond Registrar, will receive a certificated Bond evidencing the obligation of the City to make payments of principal of, premium, if any, and interest on the Series 2002 Bonds pursuant to the provisions of the Ordinance. Optional Redemption The Series 2002 Bonds maturing on or before November 1, are not callable prior to their maturity dates. The Series 2002 Bonds maturing after November 1, are subject to optional redemption by the City, on and after November I, ,as a whole or in part at any time thereafter, from the rnaturities selected by the City, and by lot within a maturity if less than an entire matwity is redeemed, at the redemption prices (expressed as percentages of principal amount) set forthbelow, together with accrued interest to the date of redemption: Redemption Period ~ November 1, November 1, through October 31, and thereafter 101% 100 Mandatory Redemption The Series 2002 Bonds maturing on November 1, will be subject to mandatory redemption prior to maturity, by lot, in such manner as the Registrar rnay deem appropriate, at a redemptionprice equal to the principal amount thereof plus interest accroed to the redemption date, on November 1, , and on each November 1 thereafter, in the following principal amounts in the years specified: Year Amortization Installment Year Amortization Installment *Final maturity 6 As long as the book-entry-only system is used for determining beneficial ownership of the Series 2002 Bonds, notice of redemption will only be sent to Cede & Co. Cede & Co. will be responsible for notifYing the DTC Participants, who will in turn be responsible for notifying the Beneficial Owners (as such terms are described belowWlderthe heading "Book-Entry Only System"). Any failure of Cede & Co. to notifY any DTC Participant, or of any DTC Participant to notifY the Beneficial Owner of any such notice, will not affect the validity of the redemption of the Series 2002 Bonds. Notice of Redemption Not less than 30 days prior to the expected redemption date, notice of such redemption shall be filed with the Paying Agent and shall be mailed, postage prepaid to all registered owners of the Series 2002 Bonds to be redeemed at their addresses as they appear on the registration books. Failure to give such notice by mailing to any registered owner, or any defect therein, shall not affect the validity of any proceeding for the redemption of other Series 2002 Bonds. Interest shall cease to accrue on any Series 2002 Bonds duly called for prior redemption, after the redemption date, if payment thereofhas been duly provided. Book-Entry Only System The Series 2002 Bonds will be available in book-entryformonly, in denominations of $5,000 or any integral multiple thereof Purchasers of the Series 2002 Bonds will not receive certificates representing their interests in the Series 2002 Bonds purchased. The Underwriter is to confirm original issuance purchases with statements containing certain terms of the Series 2002 Bonds purchased. The following information regarding The Depository Trust Company, New York, New York ("DTC") and the book-entry only system of registration has been obtained by the City from DTC. No representation is made by the City as to its accuracy or correctness. The Series 2002 Bonds will be held by DTC as securities depository. The ownership of one fully registered Series 2002 Bonds for each maturity, as set forth on the cover page hereof, will be registered in the name of Cede & Co., as nominee for DTC. DTC is a limited-purpose trust company organized Wlder the N ew York Banking Law, a ''banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Secwities Exchange Act of 1934, as amended. DTC was created to hold securities of its participants ("DTC Participants") and to facilitate the settlement of securities transactions among DTC Participants in such securities through electronic computerized book-entry changes inaccoWlts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. Direct Participants include secwities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of which own DTC either directly or through their representatives. 7 Access to the DTC system is also available to other entities such as security brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a DTC Participant. Purchases of the Series 2002 Bonds rnay be made by or through brokers and dealers who are, or act through, DTC Participants. Such DTC Participants and the persons for whom they acquire interests in the Series 2002 Bonds as nominees will not receive certificated bonds, but each DTC Participant will receive a credit balance in the records ofDTC in the amount of such DTC Participant's interest in the Series 2002 Bonds, which will be confirmed in accordance with DTC's standard procedures. The ownership interest of the actual purchaser of each Bond (the "Beneficial Owner") will be recorded in the records of the DTC Participant. DTC Participants are required to provide Beneficial Owners with a written confinnation of their purchase containing details of the acquired Series 2002 Bonds. Transfers of ownership interests in the Series 2002 Bonds will be accomplished by book entry made by DTC and by the DTC Participants who act on behalf of the Beneficial Owners. The Paying Agent will make payments of principal of, redemption premium, if any, and interest on the Series 2002 Bonds to DTC or its nominee, Cede & Co., as registered owner of the Series 2002 Bonds. The current practice ofDTC is to credit the accounts of the DTC Participants immediately upon receipt of moneys in accordance withtheir respective holdings as shown on the records ofDTC. Payments by DTC Participants to Beneficial Owners will be in accordance with standing instructions and customary practices such as those which are now in effect for municipal securities held by DTC Participants in bearer form or registered in "street name" for the accounts of customers, and will be the responsibility of DTC Participants and not the responsibility of DTC, the Paying Agent or the City subject to any statutory or regulatory requirements as rnay be in effect from time to time. The Bond Registrar, the Paying Agent and the City will send any notice of redemption or other notice only to DTC. Any failure of DTC to advise any DTC Participant, or of any DTC Participant to notify the Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of the Series 2002 Bonds called for redemption or of any other action premised on such notice. Redemption of portions of any maturity of the Series 2002 Bonds will reduce the outstanding principal amount of such maturity held by DTC. In such event, DTC may implement, through its book-entry system, a redemption of Series 2002 Bonds held for the account oIDTC Participants in accordance with its own rules or other agreements withDTC Participants, and thenDTC Participants mayirnplement a redemption of Series 2002 Bonds for the Beneficial Owners. NEITHER THE CITY NOR THE BOND REGISTRAR OR THE PAYING AGENT WILLHA VEANYRESPONSmILITYOR OBLIGATION TODTC PARTICIPANTS OR THE PERSONS FOR WHOM DTC PARTICIPANTS ACT AS NOMINEES WITH RESPECT TO THE SERIES 2002 BONDS OR THE PROVIDING OF NOTICE OR PAYMENT TO DTC PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF SERIES 2002 BONDS FOR REDEMPTION. 8 In the event of an insolvency of DTC, if DTC has insufficient securities in the fimgible bulk of securities in its custody (e.g., due to theft or loss) to satisfy the claims of DTC Participants with respect to deposited securities and is unable by application of (i) cash deposits and securities pledged to DTC to protect DTC against losses and liabilities; (ii) the proceeds of insurance maintained by DTC and/or DTC Participants; or (ill) other resources, to obtain securities necessary to eliminate the insufficiency, DTC Participants may not be able to obtain all of their deposited securities. The City, the Bond Registrar and the Paying Agent cannot give any assurances that DTC, DTC Participants or others will distribute payments of principal of, premium, if any, and interest on the Series 2002 Bonds paid to DTC or its nominee, or any redemption or other notices to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve or act in a manner described in this Official Statement. DTC may determine to discontinue providing its services with respect to the Series 2002 Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. In addition, the City may determine to discontinue the use of book -entry transfers through DTC (or any successor securities depository). Under such circumstances, the City and the Bond Registrar will authenticate and deliver certificated Series 2002 Bonds. In the event that the 1x>ok-entry only system is discontinued, the following provisions will govem the transfer and exchange of Series 2002 Bonds. The Series 2002 Bonds will be exchanged for an equal aggregate principal amount of corresponding bonds in other authorized denominations and of the same series and maturity, upon surrender thereof at the principal corporate trust office of the Bond Registrar. The transfer of any Series 2002 Bonds will be registered on the books maintained by the Bond Registrar for such purpose only upon the surrender thereof to the Bond Registrar with a duly executed written instnnnent of transfer in form and with guaranty of signatures satisfactory to the Bond Registrar, containing written instructions as to the details of transfer of such Series 2002 Bonds, along with the social security mnnber or federal employer identification number of such transferee. The City and the Bond Registrar may charge the registered owners a sum sufficient to reimburse them for any expenses incurred in making any exchange or transfer after the first such exchange or transfer following the delivery of the Series 2002 Bonds. The Bond Registrar or the City may also require payment from the registered owners or their transferees, as the case may be, of a sum sufficient to cover any tax, fee or other governmental charge that maybe imposed in relation thereto. Such charges and expenses shall be paid before any such new Series 2002 Bonds shall be delivered. Neither the City nor the Bond Registrar shall be required to register the transfer or exchange of any Series 2002 Bonds during the period commencing on the fifteenth day (whether or not a business day) of the month next preceding an interest payment date and ending on such interest payment date or, in the case of any proposed redemption of a Series 2002 Bonds, after such Series 2002 Bonds or any portion thereofhas been selected for redemption. 9 SECURITY FOR THE SERIES 2002 BONDS Net Revenues. The principal of and premiwn, if any, and interest on the Series 2002 Bonds are payable solely from and secured by an irrevocable first lien upon and pledge of the Net Revenues (as hereinafter defined) derived and collected by the City from the operation of the storm water management system of the City (the "System"). ''Net Revenues" are defined by the Ordinance to include all income or earnings, including any income from the investment of funds, derived by the City from the operation of the System after deduction of current expenses, either paid or accrued, for the operation, maintenance and repair of the System, but not including reserves for renewals and replacements, for extraordinary repairs or any allowance for depreciation. The Series 2002 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional, statutory or charter provision or limitation. The principal of and interest on the Series 2002 Bonds and all required reserve and other payments shall be made solely fromthe Net Revenues. The City shall never be required to levy ad valorem taxes on any property therein to pay the principal of and interest on the Series 2002 Bonds or to make any of the required debt service, reserve or other payments, and any failure to pay the Series 2002 Bonds shall not give rise to a lien upon any property of or in the City, except the Net Revenues. Rate Covenant. In the Ordinance, the City has covenanted to fix, establish, revise from time to time whenever necessary, maintain and collect always such fees, rates, rentals and other charges for the use of the products, services and facilities of the System which will always provide Net Revenues in each year sufficient to pay one hundred fifteen percent (115%) of the Bond Service Requirement coming due in such year on the Outstanding Bonds. Such rates, fees, rentals or other charges may not be reduced so as to render them insufficient to provide revenues for the purposes provided therefor by the Ordinance. Reserve Fund. The Ordinance creates a separate account in the Reserve Fund to be funded, or into which there shall be deposited a reserve fund surety policy providing coverage, in an amount equal to the Reserve Requirement applicable to each Series of Bonds issued pursuant to the Ordinance. The "Reserve Requirement" will be funded from the proceeds of the Series 2002 Bonds in an amount equal to the lesser of (i) the Maximum Bond Service Requirement for the Series 2002 Bonds, (ii) 125% of the Average Annual Bond Service Requirement of the Series 2002 Bonds, or (iii) the largest amount as shall not adversely affect the exclusion of interest on the Series 2002 Bonds from gross income for Federal income tax purposes. Additional Parity Obligations. Additional Parity Obligations, payable on a parity from the Net Revenues with the Series 2002 Bonds, may be issued for the purpose of refimding a part of the outstanding Bonds or financing the cost of extensions, additions and improvements to the Systemand forthe acquisition and construction of, and extensions, additions and improvements to stormwater management systems which 10 are to be consolidated with the System and operated as a single combined utility. Additional Parity Obligations, other than for refunding purposes, will be issued only upon compliance with all of the conditions set forth in the Ordinance, including the following: (1) There shall have been obtained and filed with the Clerk a certificate of the Finance Director stating: (a) that the books and records of the City relative to the System and the Net Revenues have been reviewed by an independent certified public accountant; and (b) the amount of the Net Revenues derived for any consecutive twelve (12) months out of the preceding twenty-four (24) months preceding the date of issuance of the proposed Additional Parity Obligations as adjusted pursuant to paragraphs 2, 3,4 and/or 5 below, is equal to not less than 120% of the Maximum Bond Service Requirement becoming due in any Fiscal Year thereafter on (i) all Bonds issued under the Ordinance, if any, then Outstanding, and (ii) on the Additional Parity Obligations with respect to which such certificate is made. (2) Upon recommendation of the Consulting Engineers, the Net Revenues certified pursuant to paragraph 1 (b) above may be adjusted by including: ( a) 100% of the additional Net Revenues which in the opinion of the Consulting Engineer would have been derived by the City from rate increases adopted before the Additional Parity Obligations are issued, if such rate increases had been implemented during the test period described in paragraph 1(b) above, and (b) 100% of the additional Net Revenues estimated by the Consulting Engineer to be derived dming the first full twelve month period after the facil- ities of the System are extended, enlarged, improved or added to withthe proceeds of the Additional Parity Obligations with respect to which such certificate is made. (3) Upon recommendation of the Consulting Engineers if the Additional Parity Obligations are to be issued for the purpose of acquiring an existing stormwater system and/or any other utility system, the Net Revenues certified pursuant to paragraph l(b) above may be adjusted by including: 80% of the additional estimated Net Revenues which in the written opinion of the Consulting Engineers will be derived from the acquired facility during the first full 12-month period after the issuance of such Additional Parity Obligations (the Consulting Engineers' report shall be based on the actual operating revenues of the acquired utility for a recent 12-month period adjusted to reflect the City's ownership and the City's rate structure in effect with respect to the System at the time of the issuance of the Additional Parity Obligations). (4) Upon recommendation of the Consulting Engineer, if the City shall have entered into a contract, which contract shall be for a duration of not less than the final maturity of the proposed Additional Parity Obligations, with any public body, whereby the City shan have agreed to finnish any services creating Gross Revenues, then the Net Revenues certified pursuant to paragraph 1 (b) above may be increased (to the extent such amounts were not otherwise reflected in such Net Revenues) by the rnininun amount which the public body shall guarantee to pay in anyone year for the finnishing of services by the City, after deducting from such payment the estimated Cost of Operation and Maintenance attributable in such year to such services. 11 (5) Upon recommendations of the Consulting Engineers, if there is an estimated increase in Net Revenues to be received by the City as a result of additions, extensions or improvements to the System during the period of three (3) years following the completion of such additions, extensions or improvements financed with the proceeds of Bonds or Additional Parity Obligations, then the Net Revenues certified pursuant to paragraph 1 (b) above shaI1 be increased by fifty percent (50%) of the average annual additional Net Revenues calculated for such three year period. (6) The City need not comply with the provisions of paragraph 1 above if and to the extent the Bonds to be issued are refunding bonds, and if the City shall cause to be delivered a certificate of the Finance Director setting forth the Bond Service Requirements (i) for the Bonds then Outstanding and (ii) for all Series of Bonds to be immediately Outstanding thereafter and stating that the Bond Service Requirements in any particular year pursuant to (ii) above is not greater than the Bond Service Requirements in the corresponding year set forth pursuant to (i) above. (7) The City need not comply with the provisions of paragraph I above if and to the extent the Bonds to be issued are for the pwpose of providing any necessary additional funds required for completion of any improvements to the System ("Completion Bonds") if originally financed with the proceeds of Bonds; provided that such Completion Bonds for which the City need not comply with the provision of such paragraph (1) above may not exceed 10% of the total principal amount of Bonds estimated to be required for such improvements to the System at the time of issuance of the initial Series of Bonds to finance such improvements. (8) The City shall not be in default in the canying out of any of the obligations assumed under this Ordinance and no event of default shall have occurred under this Ordinance and shall be continuing, and all payments required by this Ordinance to be made into the funds and accounts established hereunder shall have been made to the full extent required. (9) The ordinance or resolution authorizing the issuance of the Additional Parity Obligations shallrecite that all of the covenants contained herein will be applicable to suchAdditionalParity Obligations. See Appendix C, "Swnmary of Certain Provisions of the Ordinance - Covenants of the Issuer- Issuance of Additional Parity Obligations." Series 2002 Bonds Not a Debt of the City The Series 2002 Bonds shall not constitute a general obligation or indebtedness of the Citywithin the meaning of any constitutional, statutory or charter provision or limitation, and no Bondholder shall ever have the right to compel the exercise of the ad valorem taxing power of the City or taxation in any form of real or personal property therein for the payment of the principal of and interest on the Series 2002 Bonds or to compel the City to pay such principal and interest from any other funds of the City except the Pledged 12 Revenues. The Series 2002 Bonds shall not constitute a lien upon any property of or in the City, but shall constitute a lien only on the Pledged Revenues all in the manner provided in the Ordinance. Outstanding Parity Obligations InNovember, 1999, the City issued $7,500,000 ofits StormwaterSystemRevenue Bonds, Series, 1999 (the "Series 1999 Bonds"), which are currently Outstanding in the aggregate principal amount of $7,275,000, which will rank on a parity with the Series 2002 Bonds as to the pledged of the Net Revenues. As set forth under the caption "THE SERIES 2002 PROJECTS," it is anticipated that the City will issue Additional Parity Obligations in 2004 and 2006 to fimd additional capital improvements to the stormwater system. MUNICIPAL BOND INSURANCE The following informationhas been furnished by MBIA Insurance Corporation ("MBIA") for use in this Official Statement. Reference is made to Appendix "F" for a specimen ofMBIA's policy. MBIA's policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the City to the Paying Agent or its successor of an amount equal to (i) the principal of( either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fimd payment) and interest on, the Series 2002 Bonds as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fimd payment, the payments guaranteed by MBIA's policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (iI) the reimbursement of any such payment which is subsequently recovered from any owner of the Series 2002 Bonds pursuant to a finaljudgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law (a "Preference"). MBIA's policy does not insure against loss of any prepayment premiwn which rnay at any time be payable with respect to any Series 2002 Bond. MBIA's policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fimd redemptions); (ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of Series 2002 Bonds upon tender by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. MBIA's policy also does not insure against nonpayment of principal of or interest on the Series 2002 Bonds resulting from the insolvency, negligence or any other act or omission of the Paying Agent or any other paying agent for the Series 2002 Bonds. 13 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by MBIA from the Paying Agent or any Owner of a Bond the payment of an insured amount for which is then due, that such required payment has not been made, MBIA on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with State Street Bank and Trust Company, N.A, in New York, New York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of suchSeries 2002 Bonds or presentment of such other proof of ownership of the Series 2002 Bonds, together with any appropriate instnnnents of assignment to evidence the assignment of the insured amounts due on the Series 2002 Bonds as are paid by MBIA, and appropriate instruments to effect the appointment ofMBIA as agent for such owners of the Series 2002 Bonds in any legal proceeding related to payment of insured amounts on the Series 2002 Bonds, such instnnnents being in a form satisfactory to State Street Bank and Trust Company, N.A, State Street Bank and Trust Company, N.A shall disbW'Se to such owners or the Paying Agent payment of the insured amounts due on suchSeries 2002 Bonds, less any amount held by the Paying Agent for the payment of such insured amounts and legally available therefor. MBIA MBIA Insurance Corporation (''MBIA'') is the principal operating subsidiary of MBIA Inc., a New York Stock Exchange listed company (the "Company"). The Company is not obligated to pay the debts of or claims against MBIA. MBIA is domiciled in the State of New York and licensed to do business in and subject to regulation under the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United States and the Territory of Guam. MBIA has three branches, one in the Republic of France, one in the Republic of Singapore and one in the Kingdom of Spain. New York has laws prescribing minimum capital requirements, limiting classes and concentrations of investments and requiringthe approval of policy rates and forms. State laws also regulate the amount of both the aggregate and individual risks that rnay be insured, the payment of dividends by MBIA, changes in control and transactions among affiliates. Additionally, MBIA is required to maintain contingency reserves on its liabilities in certain amounts and for certain periods of time. MBIA does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrorn, other than with respect to the accuracy of the information regarding the policy and MBIA set forth under this principal caption "MUNICIPAL BOND INSURANCE." Additionally, MBIAmakes no representation regarding the Series 2002 Bonds or the advisability of investing in the Series 2002 Bonds. The Financial Guarantee Insurance Policies are not covered by the Property/Casualty Insurance Security Fund specified in Article 76 of the New York Insurance Law. 14 MBIA Information The following documents filed by the Company with the Securities and Exchange Commission (the "SEC") are incorporated herein by reference: (1) The Company's Annual Report on Form 10-K for the year ended December 31, 2001; and (2) The Company's Quarterly Report on Form lO-Q for the quarter ended March 31, 2002. Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as amended, after the date of this Official Statement and prior to the tennination of the offering of the Series 2002 Bonds offered hereby shall be deemed to be incorporated by reference in this Official Statement and to be a part hereof. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this Official Statement, shall be deemed to be modified or superseded for purposes of this Official Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Official Statement. The Company files annual, quarterly and special reports, information statements and other informationwiththe SEC under File No. 1-9583. Copies ofthe SEe filing.<; (including (1) the Company's Annual Report onForm 10-K for the year ended December 31, 2001, and (2) the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002), are available (i) over the Internet at the SEe's web site at http://www.sec.gov, (iI) at the SEC's public reference room in Washington D.C.; (iii) over the Internet at the Company's web site at http://www.mbia.com; and (iv) at no cost, upon request to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504. The telephone number ofMBIA is (914) 273-4545. As of December 31, 2001, MBIA had admitted assets of $8.5 billion (audited), total liabilities of $5.6 billion (audited), and total capitaland swplus of$2.9 billion(audited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As ofMarch31, 2002, MBIA had admitted assets of$8.6 billion(unaudited), totalliabilitiesof$5.7 billion(unaudited), and total capital and swplus of$2.9 billion (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. Financial Strength Ratings of MBIA Moody's Investors Service, Inc. rates the financial strength ofMBIA "Aaa." Standard & Poor's, a divisionofThe McGraw-Hill Companies, Inc. rates the financial strength of MBIA "AAA." 15 Fitch, Inc. rates the financial strength of:MBIA "AAA" Each rating of:MBIA should be evaluated independently. The ratings retlectthe respective rating agency's current assessment of the creditworthiness of:MBIA and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings rnay be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the Series 2002 Bonds, and such ratings rnay be subject to revision or withdrawal at anytime by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of the Series 2002 Bonds. :MBIA does not guaranty the market price of the Series 2002 Bonds nor does it guaranty that the ratings on the Series 2002 Bonds will not be revised or withdrawn. The insurance provided by this policy is not covered by the Florida Insurance Guaranty Association created under chapter 631, Florida Statutes. Rights Granted Insurer Generally, in coIUlection with its insurance of an issue of municipal securities, the Insurer requires, among other things, (i) that it be granted the power to exercise any rights granted to the holders of such secwities upon the occurrence of an event of default, without the consent of such holders, and that such holders may not exercise such rights without the Insurer's consent, in each case so long as the Insurer has not failed to comply with its payment obligations under its insurance policy; and (ii) that any amendment or supplement to or other modification of the principal legal documents be subject to the Insurer's consent. The specific rights, if any, granted to the Insurer in cOIUlection with its insurance of the Bonds are set forth in "APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE ORDINANCE." 16 DEBT SERVICE REQUIREMENTS Bond Year Series 1999 Series 2002 Series 2002 Ending Bonds Bonds Bonds November 1 Debt Service Principal Interest Total 2002 $ 517,692.50 2003 517,505.00 2004 516,980.00 2005 516,107.50 2006 514,877.50 2007 518,280.00 2008 516,072.50 2009 518,472.50 2010 515,185.00 2011 516,435.00 2012 517,185.00 2013 517,240.00 2014 516,580.00 2015 515,292.50 2016 518,198.76 2017 519,998.76 2018 520,973.76 2019 516,123.76 2020 520,373.76 2021 518,498.76 2022 520,780.00 2023 516,685.00 2024 516,735.00 2025 515,645.00 2026 518,415.00 2027 519,760.00 2028 519,680.00 2029 518.175.00 Totals $14,493,947.56 17 SOURCES AND USES OF FUNDS SOURCES Principal AmOWlt of Series 2002 Bonds Accrued Interest Total Sources :usES. Deposit to Construction FWld Deposit to Interest AccoWlt Costs of Issuance including Underwriter's DiscoWlt and Bond Insurance Premiwn Total Uses * Preliminary, subject to change. THE STORMW A TER MANAGEMENT SYSTEM Physical Description The City of Clearwater was created in 1923 by Chapter 9710, Special Laws of Florida, with all governmental, cOIporate and proprietary powers to enable it to conduct municipal government, perform municipalfimctions and render municipal services, and to exercise any power formunicipalpUIposes except where expressly prohibited by law. A major municipal fimction of the City of Clearwater is the efficient, economic, and safe operation of the City stormwater infrastructure for the health, safety, and general welfare of the public. The management of stormwater in the City was established in 1991 as a city utility enteIprise in accordance with Florida Statutes and funded by a stormwater utility fee for stormwater management service, levied against all developed property within the City to provide planning, design, construction, operation, maintenance, regulation, smveying, and inspection of the stormwater management facilities within the City. Those services provide system management for approximately 120 miles of storm sewers, 9 square miles of open water, and more than 14,400 structures (e.g. culverts, tlwnes, weirs, catch basins, etc.) to manage drainage for the City, having a population of approximately 104,000 permanent residents and 20,000 winter residents. Management 18 The City has a Commission-Manager form of municipal government. The Mayor-Commissioner and Commissioners are elected by the City voters on an at-large basis. All have voting power at Commission meetings whichare chaired by the Mayor-Commissioner. The City Commission appoints the City Manager and the City Manager is responsible for appointing all officers and employees in the administrative service of the City, including the Public Works Administrator. Public Works Administration is administered by the Public Works Administrator who reports to the City Manager through the Deputy City Manager. The stormwater system is one of seven utilities (Water, Sewer, Reclaimed Water, Gas, Solid Waste, Recycling, and Stormwater) billed on a consolidated basis by the Clearwater Utility Customer Service Department. Mahshid D. Arasteh, P.E. serves as the Public Works Administrator. She received her Bachelor of Science Degree in Civil Engineering from the University of Pennsylvania in 1980 and her Masters of Science Degree in Civil and Mechanical Engineering in 1982. She is a member of the Florida Engineering Society and the Institute of Traffic Engineers, and has been a registered Professional Engineer in the state of Florida since 1987. Michael D. Quillen, P.E. serves as the Director of the Engineering Department and reports to the Public Works Administrator. He received his Bachelor of Science Degree in Civil Engineering from Purdue University in 1977. He is a member of the Florida Engineering Society and has been a registered Professional Engineer in the state of Florida since 1983. Gary A. Johnson serves as the Public Service Director. He received his Bachelor of Building Construction degree in 1977 from the University of Florida and in 1979, obtained his General Contractor License from the State of Florida. He continues to serve on the Pinellas COWlty Public Works Academy Board of Trustees, a position he has held since 1989. Rates, Fees and Charges The City uses a measurement of one equivalent residential unit or ERU as the basis for the stormwater management utility fee. The rate per ERU was WlChanged from the inception of the utility on January 1, 1991 Wltil1998 when annual increases were adopted for five fiscal years beginning October 1, 1998. In November, 2001, additional increases were adopted including a change to the increase previously adopted to be effective on October 1, 2002. The monthly rates at inception and as adopted in 1998 and are: 19 Effective Date January 1, 1991 October 1, 1998 October 1, 1999 October 1, 2000 October 1, 2001 January 1,2002 October 1, 2002 October 1, 2003 October 1, 2004 October I, 2005 Rate Per ERU $3.00 4.00 4.17 4.35 4.54 6.13 7.16 8.01 8.65 9.35 Single-family homes, 11U1ltifumilyunits, condominiwn units, apartments and mobile homes are rated as one ERU per dwelling unit. Nonresidential property is charged at the rate of 1,830 square feet of impervious area per ERU 20 Historical Net Revenues 1997 1998 (1) 1999 (2) 2000 2001 Net Operating Revenues (Excluding Depreciation) 928,937 325,376 1,361,656 1,622,157 1,433,541 Interest Income and other Non- Operating Revenues (Expenses) 130,103 125,815 46,209 132,921 281,471 Total Net Revenues 1,059,040 451,191 1,407,865 1,755,078 1,715,012 Projected Maximum Annual Debt Service 2,150,000 2,150,000 2,150,000 2,150,000 2,150,000 (1) Coverage .49 .21 .65 .82 .80 (1) Actual debt service on the Series 1999 Bonds and assumes 30 year level debt service amortization with a par amount of $24,725,000 and a true interest cost of 5.01 %. (2) From 1994 to 1998 total annual operating revenues have only increased from $3.40 to $3.46 million while total operating expenses(excluding depreciation) have increased from $1.68 to $3.13 million. With little undeveloped property in the City and no rate increase from the Utility's inception in 1991 unti11999, revenues remained flat while expenses such as personnel services, professional fees, interfund charges and repairs and maintenance have increased significantly. Rate increases of33.3% for 1999 and 4.3% for each subsequent year through 2003 were approved in August, 1998. In November, 2001, to fund significant increases in the stormwater system capital improvement program, rate increases to $6.13 effective January 1, 2002 to $7.16, effective October 1,2002, to $8.01, effective October 1, 2003, to $8.65, effective October 1, 2004 and to $9.35, effective October 1, 2005 were approved. 21 FINANCIAL STATEMENTS The combined financial statements and Stormwater enterprise fimd financial statements of the City at September 30, 2001 and for the Fiscal Year then ended, appended hereto as Appendix B, have been exceIpted from the financial statements contained in the City's Comprehensive Annual Financial Reports for the Fiscal Year ending September 30, 2001. INVESTMENT POLICY OF THE CITY Pursuant to the requirements of Section 218.45, Florida Statutes, the City adopted a written investment policy which applies to all fimds held by or for the benefit of the City Commission (except for proceeds ofbond issues which are deposited in escrow and debt service fimds and governed by their bond dOCWllents) and fimds of Constitutional Officers and other component units of the City. The objectives of the investment policy, listed in order in order of importance, are: 1. Safety of principal 2. Provision of sufficient liquidity 3. Optimization of return within the constraints of safety and liquidity The investment policy limits the securities eligible for inclusion in the City's portfolio. The City will attempt to maintain a weighted average maturity of its investments at or below three years; however, the average maturity of investments may not exceed four years. To enhance safety, the investment policy requires the diversification of the portfolio to reduce the risk ofloss resulting from over-concentration of assets in a specific class of security. The investment policy also requires the preparation of periodic reports for the City Commission of all outstanding securities by class or type, book value, income earned and market value as of the report date. Notwithstanding the foregoing, moneys held in the funds and acCOWlts established Wlder the Ordinance may be invested only in Permitted Investments, as described in the Ordinance. LEGALITY FOR INVESTMENT The Series 2002 Bonds constitute legal investments in the State of Florida for state, COWlty, municipal and all other public fimds and for banks, savings banks, insurance companies, executors, administrators, trustees and all other fiduciaries, and also constitute securities eligible as collateral security for all state, COWlty, municipal and other public fimds. 22 TAX EXEMPTION The Internal Revenue Code of 1986, as amended (the "Code") establishes certain requirements which must be met subsequent to the issuance and delivery of the Series 2002 Bonds in order that interest on the Series 2002 Bonds be and remain excluded from gross income for pUIposes of federal income taxation. Non-compliance may cause interest on the Series 2002 Bonds to be included in federal gross income retroactive to the date of issuance of the Series 2002 Bonds regardless of the date on which such non-compliance occurs or is ascertained. These requirements include, but are not limited to, provisions which prescribe yield and other limits within which the proceeds of the Series 2002 Bonds and the other amoWlts 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. The City has covenanted in the Ordinance to comply with such requirements in order to maintain the exclusion from federal gross income of the interest on the Series 2002 Bonds. In the opinion of Bond COWlSel, asswning compliance with the aforementioned covenants, Wlder existing laws, regulations, judicial decisions and rulings, interest on the Series 2002 Bonds is excluded from gross income for pwposes of federal income taxation. Interest on the Series 2002 Bonds is not an item of tax preference for pUIposes of the federal alternative minirrnm tax imposed on individuals or corporations; however, interest on the Series 2002 Bonds maybe subject to the alternative mininunn tax when any Series 2002 Bond is held by a corporation. The alternative minimwn taxable income of a cOIporation must be increased by 75% of the excess of such coIpOration's adjusted current earnings over its alternative mininunn taxable income (before this adjustment and the alternative tax net operating loss deduction). "Adjusted Current Earnings" willinclude interest on the Series 2002 Bonds. The Series 2002 Bonds are exempt from all present intangible personal property taxes imposed pursuant to Chapter 199, Florida Statutes. Except as described above, Bond COWlSel will express no opinion regarding the federal income tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of Series 2002 Bonds. Prospective purchasers of Series 2002 Bonds should be aware that the ownership of Series 2002 Bonds may result in collateral federal income tax consequences, including (i) the denial of a deduction for interest on indebtedness incurred or continued to purchase or carry Series 2002 Bonds, (ii) the reduction of the loss reserve deduction for property and casualty insurance companies by 15% of certain items, including interest on the Series 2002 Bonds, (iii) the inclusion of interest on the Series 2002 Bonds in earnings of certain foreign COIpOrations doing business in the United States for pUIposes of a branch profits tax, (iv) the inclusion of interest on Series 2002 Bonds in passive income subject to federal income taxation of certain S coIpOrations with Subchapter C earnings and profits at the close of the taxable year, and (v) the inclusion of interest on the Series 2002 Bonds in "IIKXlified adjusted gross income" by recipients of certain Social Security and Railroad Retirement benefits for pUIpOses of determining whether such benefits are included in gross income for federal income tax pwposes. PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE SERIES 2002 BONDS AND THE RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY HAVE ADVERSE 23 FEDERAL TAX CONSEQUENCES FOR CERTAIN INDIVIDUAL AND CORPORATE REGISTERED OWNERS. PROSPECTIVE SERIES 2002 REGISTERED OWNERS SHOULD CONSULT WITH THEIR TAX SPECIALISTS 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 resulting from the ownership of obligations that are similar to the Series 2002 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 of obligations similar to the Series 2002 Bonds. From time to time, legislative proposals are pending which could have an effect on both the federal tax consequences resulting from ownership of Series 2002 Bonds and their market value. No assurance can be given that legislative proposals will not be introduced or enacted that would or might apply to, or have an adverse effect upon, the Series 2002 Bonds. Tax Treatment of Original Issue Discount Under the Code, the difference between the maturity amoWlt of the Series 2002 Bonds maturing in the years through (the "DiscoWlt Bonds") and the initial offering price to the public, excluding bond houses, brokers or similar persons or organizations acting in the capacity of Wlderwriters or wholesalers, at which price a substantial amoWlt of Series 2002 Bonds of the same maturity was sold is "original issue discoWlt." Original issue discoWlt will accrue over the term of such Series 2002 Bonds at a constant interest rate compoWlded periodically. A purchaser who acquires such Series 2002 Bonds in the initial offering at a price equal to the initial offering price thereof to the public will be treated as receiving an amoWlt of interest excludable from gross income for federal income tax pUIposes equal to the original issue discoWlt accruing during the period he holds such Series 2002 Bonds, and will increase his adjusted basis in such Series 2002 Bonds by the amoWlt of such accruing discoWlt for pUIposes of determining taxable gain or loss on the sale or other disposition of such Series 2002 Bonds. The federal income tax consequences of the purchase, ownership and redemption, sale or other disposition of the Series 2002 Bonds which are not purchased in the initW. offering at the initial offering price may be determined according to rules which differ fromthose above. Owners of such Series 2002 Bonds should consult their own tax advisors with respect to the precise determination for federal income tax pUIposes of interest accrued upon sale, redemption or other disposition of Series 2002 Bonds and with respect to the state and local tax consequences of owning and disposing of such Series 2002 Bonds. RATINGS Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") and FitchffiCA, Inc. ("Fitch") would be expected to issue theirrntings of"Aaa," "AAA" and "AAA," respectively, with respect to the Series 2002 Bonds, based on the issuance of the Policy by MBIA. The ratings retlect the view of Moody's, S&P and Fitch and any explanation of the 24 significance of such ratings may be obtained only from Moody's, S&P and Fitch. There is no assurance that such ratings will remain in effect for any given period of time or that such ratings may not be lowered or withdrawn entirely by the rating agencies, ifin their opinion or judgment, circumstances so warrant. Any downward revision or withdrawal of the ratings may have an adverse effect on the market price and marketability of the Series 2002 Bonds. LmGATION Except as described below, in the opinion of the City Attomey there is no litigation now pending or threatened (i) to restrain or enjoin the issuance or sale of the Series 2002 Bonds or (ii) questioning or affecting the validity of the Series 2002 Bonds, the Ordinance or the pledge of the Net Revenues by the City or the proceedings for the authorization, sale, execution or delivery of the Series 2002 Bonds. The City is involved in certain litigation and disputes incidental to its operations. Upon the basis of information presently available, the City Attorney believes that there are substantial defenses to such litigation and disputes and that, in any event, any ultimate liability, in excess of applicable insurance coverage, resulting therefrom will not materially adversely affect the financial position or results of operations of the City. The PinellasCOWltySchoolBoardand St. Petersburg Junior College, as the only public educational institutions in the City, filed suit against the City in the Circuit Court ofPinellas COWlty seeking a declaration that, as public educational institutions, they are statutorily exempted from payment of the stormwater utility fees. The City settled the litigation with St. Petersburg Junior College by paying $1 00,000 and agreeing not to assess the stormwater fees against it until there is a final appellate court opinion or Florida Supreme Court opinion determining that the fees are a utility user fee. The litigation between the Pinellas COWlty School Board and the City is ongoing. The City has not collected stormwater utility fees from the Pinellas COWlty School Board for over three years; however, the School Board has demanded refunds of Stormwater utility fees paid prior to that time. Any such damages would be payable from Net Revenues and it is not possible at this time to predict the exact amoWlt of such potential damages; however, the City is of the opinion that the payment of any such damages would not have a material adverse effect on the operation of the System or the payment of Debt Service on the Series 2002 Bonds. The issues raised in the suit do not pose a general challenge to the validity of the stormwater utility fees or the collection thereof, which issues were validated as described below, but only challenge the applicability of such fees Wlder certain circwnstances to plaintiffs as public educational institutions. 25 VALIDATION The Series 2002 Bonds were validated and confirmed by a final judgment of the Circuit Court of the Sixth Judicial Circuit of the State ofFlorida in and for Pinellas COWlty, Florida on August 24, 1999 and the time for taking an appeal from such judgment has expired, with no appeal having been taken. ADVISORS AND CONSULTANTS The City has retained advisors and consultants in connection with the issuance of the Series 2002 Bonds. These advisors and consultants are compensated from a portion of the proceeds of the Series 2002 Bonds, identified as "Costs of Issuance" Wlder the heading "ESTIMATED SOURCES AND USES OF FUNDS" herein; and such compensation, is, in some instances, contingent upon the issuance of the Bonds and the receipt of the proceeds thereof. Financial Advisor. The City has retained Banc of America Securities LLC, Clearwater, Florida, as financial advisor (the "Financial Advisor") in connection with the preparation of the City's plan of financing and with respect to the authorization and issuance of the Series 2002 Bonds. The fees of the Financial Advisor will be paid from proceeds of the Series 2002 Bonds and such payment is contingent upon the issuance of the Series 2002 Bonds. Bond Counsel. Bryant, Miller and Olive, P .A., Tallahassee, Florida represents the City as Bond COWlSel. The fees of Bond Counsel will be paid from proceeds of the Bonds, and such payment is contingent upon the issuance of the Bonds. Disclosure Counsel. Nabors, Giblin & Nickerson, P .A., Tampa, Florida represents the City as Disclosure COWlSel. The fees of Disclosure Counsel will be paid from proceeds of the Bonds, and such payment is contingent upon the issuance of the Bonds. CONTINUING DISCLOSURE The City has covenanted for the benefit of the holders and beneficial owners of the Series 2002 Bonds to provide certain financial informatiooand operating data relating to the City by not later than JWle 30 in each year commencing June 30, 2003 (the "Annual Report"), and to provide notices of the occurrence of certain enwnerated events, if deemed by the City to be material. The Annual Report will be filed by the City with each Nationally Recognized Municipal Securities Information Repository (''NRMSIR''), and withthe State ofFlorida Repository, if and when created. The notices of material events will be filed by the City with the NRMSIR and with the State of Florida Repository, if and when created. The form of Continuing Disclosure Certificate containing the specific nature of the information to be 26 contained in the Annual Report or the notices of material events appears in "APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). The City has never failed to comply in all material respects with any previous WldertakingS with regard to said Rule to provide annual reports or notices of material events. ENFORCEABILITY OF REMEDIES The remedies available to the registered owners of the Series 2002 Bonds upon an event of default Wlder the Ordinance are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically Title II of the United States Code, the remedies specified by the federal bankruptcy code, the Ordinance and the Series 2002 Bonds may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2002 Bonds (including Bond Counsel's approving opinion) will be qualified, as to the enforceability of the various legal instnnnents, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. CERTAIN LEGAL MATTERS Certain legal matters in connection with the issuance of the Series 2002 Bonds are subject to the approval of Bryant, Miller and Olive, P .A., Tallahassee, Florida, Bond Counsel, whose approving opinion will be available at the time of delivery of the Series 2002 Bonds and will be printed on such Bonds. The proposed form of Bond Counsel opinion is attached hereto as Appendix E and reference is made to such form of opinion for the complete text thereof Certain legal matters will be passed upon for the City by Pamela K. Akin, Esquire, City Attorney and by Nabors, GIblin & Nickerson, P.A., Tampa, Florida, disclosure counsel to the City. DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS Section 517.051, Florida Statutes, and the regulations promulgated thereWlder (the "Disclosure Act") require that the City make a full and fair disclosure of any bonds or other debt obligations that it has issued or guaranteed and that are or have been in default as to principal or interest at any time after December 31, 1975 (including bonds or other debt obligations for which it has served only as a conduit issuer such as industrial development or private activity bonds issued on behalf of private businesses). The City is not, and has not since December 31, 1975, been in default as to principal and interest on bonds or other debt obligations for which ad valorem or non-ad valorem revenues of the City are pledged. 27 The City hereby makes the following disclosure regarding a default on an issue of industrial development bonds not related to any direct indebtedness of the City, as it is aware of a prior default in 1990 with respect to an issue of industrial revenue bonds for which the City served only as a conduit issuer. The City was not liable to pay the principal of or interest on such bonds except from payments made to it by the private company on whose behalf such bonds were issued and no funds of the City were used to pay such bonds or the interest thereon. Although the City is not aware of any other defaults with respect to bonds or other debt obligations as to which it has served only as a conduit issuer, it has not Wldertaken an independent review or investigation of such bonds or other debt obligations. FINANCIAL ADVISOR The Financial Advisor for the City is Banc of America Securities LLC, with offices located at 1640 Gulf-to-Bay Boulevard, Clearwater, Florida 33755. MISCELLANEOUS The references, excetpts and swnmaries of all docwnents referred to herein do not pUIport to be complete statements of the provisions of such docwnents, and reference is directed to all such docwnents for full and complete statements of all matters offact relating to the Series 2002 Bonds, the security for the payment of the Series 2002 Bonds, and the rights and obligations of holders thereof. The information contained in this Official Statement involving matters of opinion 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 realized. Neither this 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 Series 2002 Bonds. 28 The execution and delivery of this Official Statement by its Mayor and its City Manager has been duly authorized by the City Commission. Attest: . .......... CITY OF CLEARWATER, FLORIDA ~ .'13.M.-: William B. Horne, II, City Manager :.u.' 29 APPENDIX A GENERAL DESCRIPTION OF THE CITY AND SELECTED STATISTICS APPENDIX A GENERAL INFORMATION RELATING TO THE CITY OF CLEARWATER, FLORIDA Location The City of Clearwater (the "City"), the COWltyseat of Pin ell as COWlty (the fifthmostpopulous COWlty in Florida), is geographically located in the middle of the west coast of Florida on the Gulf of Mexico. It is situated approximately 22 miles west of Tampa and 16 miles north ofSt. Petersburg. Standing on the highest coastal elevation of the State, the City limits comprise approximately 26.66 square miles of land and 8.61 square miles ofwateIWays and lakes. Clearwater Beach, a cOIporate part of the City, is a beach community connected to the mainland by Memorial Causeway, a four-lane, toll-free drive stretching almost two miles across the Intracoastal Waterway. Business on Clearwater Beach is mainly tourist oriented, with hotels, motels and gift shops. Many fine homes, apartments and condominiums offer pleasant, semi-tropical island accommodations to permanent residents and winter and summer visitors. History The area now known as Clearwater was first explored in 1528 by Panille de Narvaez, a Spanish explorer who encoWltered a large tribe ofIndians, whichhis army drove out. The Indians recaptured their territory and held it Wltil the Seminole Wars of 183542. The Indians who inhabited this area are said to have called it "Pocotopaug, "meaning "clear water," for the many springs of clear, fresh water that bubbled along the shore and even below the waterline at low tide. Settlers began moving into the area aroWld the time of the Seminole Wars. After the wars ended, the territory was opened by the Federal government for homesteading Wlder the Armed Occupation Act. The first land title was granted in 1842. The early settlement, named "Clear Water Harbor," was incoIporated in 1897. "Clear Water" later became one word and "Harbor" was dropped in 1906 when Pinellas COWlty was created by an act of the State Legislature. In May 1911, Clearwater became the COWlty Seat and Clearwater was chartered as a municipality on May 27, 1915. Government and Administration Clearwater has a commission-city manager form of government. Four commissioners and a mayor- commissioner are elected at large to serve overlapping three-year terms. They appoint the city manager and the city attomey. All other administrative and professional positions are appointed by the city manager in accordance with the City's Civil Service System. A-I The City has approximately 1,796 employees, covered by the City's Civil Service law relating to recruitment, promotion, evaluation and discipline based on merit principles. Four employee unions represent the City's civil labor force: two units of the Fraternal Order of Police; one of the International Association of Fire Fighters; and one from the Communications Workers of America. Transportation Pinellas COWlty and Clearwater are served by three major causeways and bridges over Tampa Bay, byU.S. 19 and 1-275 to the north and south, by 1-4 and U.S. 60 to the east. State Roads 590 and 686 also afford access to the City. Tampa IntemationalAiIport, located approximatelytwentymiles from downtown Clearwater, provides air travel access with approximately 260 national and international flights daily. Limousine and taxi service to and from the airport is available from Clearwater and throughout Pinellas COWlty. St. Petersburg/Clearwater International AiIport, five miles from downtown Clearwater, offers regularly scheduled passenger service and charter and special group flights, on a more limited basis to both domestic and foreign destinations, particularly to Canada, Mexico, and Central and SouthAmerica. The Executive AiIpark, which is slightly over a mile from the downtown business section, provides service and maintenance for private plane owners. The aitport has one 3,000 foot hard-surface runway and facilities for visiting and locally based planes. The Port of Tampa (22 miles to the east) is the closest deep water port. The port is serviced by a variety of steamship agents and operators. The United States Coast Guard maintains an air station at the St. Petersburg/Clearwater International AiIport, and a search and sea rescue cutter station on Clearwater Harbor opposite Sand Key. Gulf Coast Motor Lines provides service daily between Clearwater, St. Petersburg and Tampa and makes connections with GreyhoWld and Trailways Bus Lines in Tampa. Scenic tours are available via Gray Line out of Clearwater and St. Petersburg, and both Gray Line and Gulf Coast have buses for charter. Pinellas SWlcoast Transit System maintains 54 routes in 19 municipalities in Pinellas COWlty. Utilities, Public Service and Community Facilities The City owns and operates its own water and wastewater collection systems. Water is obtained from 17 deep wells owned and operated by the City (approximately 20-25%) and from wholesale purchases from the Pinellas COWlty Water System (approximately 75-80%). Total daily average is approximately 29 milliongallons per day. The wastewater collection program provides for the transmission of wastewater through the City's Wlderground sewer mains, collectors and interceptor lines and for the maintenance, repair and replacement of 322 miles of sanitary sewer lines. The Department of Public Works maintains 304 miles of paved streets, 10.5 miles ofWlpaved streets, approximately 123 miles of storm sewer mains, and approximately 322 miles of sanitary sewer mains. A-2 Electric power is provided by Florida Power COIporation and telephone service is provided by Verizon of Florida, Inc. Time Wamer and Verizon provide cable television service Wlder franchises with the City. Local editions of the daily St. Petersbmg Times and The Tampa TribWle, plus weekly newspapers from adjacent DWledin, Largo, Seminole and Clearwater Beach are widely distributed. The Clearwater Public Library System consists of a main library and four branches which are spread evenly throughout the community for easy access. The City offers over 42 acres of public beach front, parks, playgroWlds, athletic courts and fields, pools, a 6,917 seat baseball and softball stadium, golf course, civic and recreational centers, 7.4 miles of recreational paths, boat ramps and a 209 slip yacht basin and marina. The Philadelphia Phillies conduct spring training at the municipal baseball stadiwn and have a long- term contract for farm club training on Clearwater's specially constructed facilities during the Winter Instructional League Program. Clearwater is the home of the Clearwater Bombers, a national amateur fastpitch softball team. Tourism The State of Florida reported 62.3 milliontourists came to Florida during the year 2001. This was a slight decrease of 4% below the 69.8 million visitor estimate for the year 2000. More than 4.72 million visitors vacationed in Pinellas COWlty in2000, and 4.71 in the year 2001, registering only a slight decrease. Tourism is a $2.5 billionindu.stly annually to the CoWlty. Pinellas COWlty is ranked seventh of the top ten destinations in Florida and totaled 14.8% of Florida's domestic tourism. Clearwater's FWl 'N SWl Festival each spring attracts thousands of visitors. Education The Pinellas COWlty School District is the seventh largest in the State and operates a total of 142 schools comprising elementary through high schooL exceptional, alternative and vocational schools within the COWlty and serves more than 110,000 students. During the 2001-2002 school year, Pinellas COWlty Schools expects enrollment of more than 16,293 compared to 15,978 during the 2000-2001 school year with students attending 80 elementary, 23 middle and 16 high schools along with five exceptional education centers and two discipline centers. The district also operates three community schools, three adult education/leaming centers, two technical education centers and two secondary vocational center. Private schools and academies are also located within or near the City limits. In addition, St. Petersburg College has a Clearwater campus. Eckerd College in St. Petersbmg, Beacon College in Largo, Stetson University College of Law in Gulfi>ort, the University of South Florida and the University of Tampa in Tampa offer nearby college and post-graduate education. Industry, Commerce and Labor Light, clean industry is encouraged in Clearwater. In 1957, the City of Clearwater developed a 100 acre industrial park adjacent to the Clearwater AiIpark (Executive AiIport) and to the CSX Transportation A-3 Company. There is also a privately owned, 35 acre industrial park. Large industries located near Clearwater include Honeywell, General Electric, UNISYS, Concept and Hercules Defense Electronics Systems, Inc. During the 1999 fiscal year IMRglobal COIp. ("IMR") occupied its new world headquarters in downtown Clearwater. IMR represents an important step in revitalizing downtown Clearwater and attracting technology companies to the area. Pension Plan The Employees' Pension Plan and the Fireman's Pension Planare self-administered by the City. City contributions for fiscal year ending 2001 were $4,255,485 to the Employees' Plan and $1,098,990 to the Fireman's Plan, and were in accordance with actuaria1ly determined fimding requirements. Inaddition, supplemental pensions exist for certitiedPolice Officers and Firefighters, fimdedsolely from excise taxes on certain insurance premiums covering property in Clearwater, collected by the State and remitted to the City. Both plans require benefits to be adjusted to equal funds assets provided by the defined contributions. [Remainder of page intentionally left blank] A-4 Demographic Information Last Ten Fiscal Years (a) (b) (c) (d) (e) Permanent Per Capita Median School Unemployment Year Population Income ~ Enrollment ~(%) 1992 99,856 22,958 42.3 11,921 5.4 1993 100,768 24,470 42.3 11 ,584 6.1 1994 100,604 Not avail. 42.9 10,043 5.5 1995 101,162 22,789 42.2 10,284 4.8 1996 101,867 24,696 42.1 11,906 4.2 1997 102,4 72 26,050 43.3 15,264 3.7 1998 102,874 27,311 43.6 13,714 2.9 1999 104,281 28,367 43.9 14,551 3.0 2000 104,454 30,633 44.2 15,978 2.7 2001 108,787 31,658 43.0 16,293 2.6 Source: City of Clearwater, Florida Comprehensive Annual Financial Report for period ending September 30,2001. (a) 1992-2000, University of Florida, Bureau of Economic and Business Research; 2001 Bureau of the Census. (b) Data is for Pinellas COWlty, but should also approximate Clearwater levels. 1992-1994, Florida Trend Magazine; 1995-2001, University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract. (c) Pinellas COWlty data, but should also approximate Clearwater levels. 1992, US. Bureau of the Census; 1993, St. Petersburg Times Research Bureau; 1994, ~ md. Marketing Management, Survey of Buying Power; 1995-2001, University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract. (d) Clearwater Planning Department population pro rata estimate of Pinellas COWlty School Board COWlty level data for public schools; 1992-2000, Pinellas COWlty School District. (e) Data is for Tampa/St. Petersburg MSA. 1992-1999 source of data is the Florida Bureau of Labor Market Information; 2000-2001, University ofFlorida, Bureau ofEconomic and Business Research, Florida Statistical Abstract. NOTE: Data is for an WlSpecified point in each year, not specifically September 30. A-5 Property Values, Construction, and Bank Deposits Last Ten Fiscal Years Commercial Construction Residential Construction Miscellaneous Construction(a) Fiscal Year Number of Number of Number of Total Assessed Bank Deposits(c) ~ ~ Value ~ Value ~ ~ Prooertv Value(b) !in QQQ:li 1992 557 32,765,807 1,137 25,956,314 5,940 18,020,294 5,475,721,772 14,360,597 1993 1,693 42,051,081 3,885 29,296,168 6,799 20,113,175 5,505,360,476 13,853,289 1994 1,831 37,164,437 3,882 49,950,413 6,063 17,922,023 5,572,851,512 13,274,660 1995 1,775 77,486,099 3,747 53,614,754 6,827 28,843,480 5,641,202,905 13,362,164 1996 1,898 42,360,262 4,224 26,854,040 6,825 24,898,425 5,733,193,387 12,786,549 1997 1,702 49,385,937 4,172 75,997,890 6,739 27,351,853 5,884,592,007 12,522,122 1998 1,455 54,732,371 4,978 47,045,558 5,266 17,820,469 6,049,571,226 13,293,565 :> I 1999 1,690 48,849,409 5,544 95,713,246 307 7,506,580 6,349,561,534 13,137.180 0'\ 2000 2,698 176,010,021 5,573 30,814,807 35 229,870 6,555,350,175 13,296,319 2001 2,267 152,059,409 5,390 34,084,137 324 15,763,545 7,108,110,272 13,314,203 Source: City of Clearwater, Florida Comprehensive Annual Financial Report for period ending September 30,2001. (a) Includes institutions, churches, seawalls, pools and non-valued building permits. (b) Pinellas County Property Appraiser, values listed are for year of collections. (c) Includes balances in commercial, savings, savings and loan banking institutions for Pine lias County. Data from the Florida Bankers Association Branch Deposit Report of Florida Bank and Thrift Institutions. City of Clearwater, Florida Assessed and Estimated Actual property Valuations Last Ten Fiscal years Assessed Valuations (a) Percenta&es Assessed Values to Collection Non-Exempt Personal Other Total Total Total Estimated ~ Increases ~ &:W~ Property Propertv(b ) Taxable Exempt( c) All Market Taxable Total 1992 3,799,734,064 379,338,740 509,202 4,179,582,006 1,296,139,766 5,475,721,772 100.0 1.3 2.2 1993 3,800,740,889 386,831,160 532,486 4,188,104,535 1,317,255,941 5,505,360,476 100.0 0.2 0.5 1994 3,789,902,836 390,841,880 569,338 4,181,314,054 1,391,537,458 5,572,851,512 100.0 (0.2) 1.2 1995 3,782,134,930 403,392,150 580.,731 4,186,107,811 1,455,095,094 5,641,202,905 100.0 0.1 1.2 1996 3,820,217,710 431,622,230 592,909 4,252,432,849 1,480,760,538 5,733,193,387 100.0 1.6 1.6 1997 3,918,747,480 457,182,870 628,698 4,376,559,048 1,508,032,959 5,884,592,007 100.0 2.9 2.6 :> 1998 3,999,483,300 493,824,770 1,026,819 4,494,262,759 1,555,308,467 6,049,571,226 100.0 2.7 2.8 I -...l 1999 4,153,719,690 537,808,800 870,404 4,692,398,894 1,657,162,640 6,349,561,534 100.0 4.4 5.0 2000 4,353,493,520 549,051,160 934,183 4,903,478,863 1,751,871,312 6,655,350,175 100.0 4.5 4.8 2001 4,657,074,110 550,845,380 867,947 5,208,787,437 1,899,322,835 7,108,110,272 100.0 6.2 6.8 Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30,2001. (a) Pinellas County Property Appraiser (b) Railroad and Telegraph Companies (c) Includes governmental, educational, qualified religious, literary, scientific, and health care properties and special exemptions for individual property owners. Qualified property owners are entitled to a $25,000 Homestead Exemption based on residency requirement. Property Tax Levies and Collections Last Ten Fiscal Years Percent Percent of of Total Delinquent Current Percent of Delinquent Collections Outstanding Taxes to Fiscal Total Tax Levy Tax Total Tax To Current Delinquent Current Ym :W~ Collectionsla) Collected Collections Collections l&u Taxes l&u 1992 21,369,980 21,075,554 98.62 109,316 21,184,870 99.13 1,387,456 6.49 1993 21,408,489 20,947,194 97.85 199,638 21,146,832 98.78 1,438,116 6.72 1994 21,281,744 21,154,946 99.40 603,226 21,758,172 102.24 946,874 4.45 1995 21,458,160 21,388,692 99.68 159,918 21,548,610 100.42 856,443 3.99 1996 21,761,730 21,675,311 99.60 73,731 21,749,042 99.94 868,209 3.99 > 1997 22,410,181 22,281,502 99.43 80,253 22,361,755 99.78 I 914,383 4.08 00 1998 23,008,214 22,856,951 99.34 129,690 22,986,640 99.91 935,957 4.07 1999 23,951,878 23,854,396 99.59 226,812 24,081,208 100.54 806,626 3.37 2000 26,998,318 26,876,461 99.55 106,800 26,983,261 99.94 821,683 3.04 2001 28,664,112 28,567,429 99.66 77,716 28,645,145 99.93 840,651 2.93 Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30,2001. (a) Collections are reported at the gross amount before any discount allowances. Property Tax Rates - All Direct and Overlapping Governments (per $1,000 of Assessed Value) Last Ten Fiscal Years Downtown COWlty Emergency Fiscal Develop- School Transit Medical ~ City ~ BQaW CoWlty District Services Q1:W Iillal 1992 5.1158 1.000 8.6260 5.495 .5893 .700 1.1560 22.6821 1993 5.1158 1.000 9.0000 5.417 .5893 .850 1.1820 23.1541 1994 5.1158 1.000 9.0820 5.429 .6697 .872 1.4221 23.5906 1995 5.1158 1.000 9.3590 5.585 .6697 .806 1.6308 24.1663 1996 5.1158 1.000 9.3290 5.140 .6697 .752 1.6561 24.0366 1997 5.1158 1.000 9.1760 5.510 .697 .741 1.6561 23.8686 > 5.1158 1.000 9.1330 5.538 .6697 .713 1.6561 23.8256 I 1998 \0 1999 5.1158 1.000 9.1100 5.538 .6501 .713 1.6561 23.7830 2000 5.5032 1.000 8.6660 5.854 .6501 .647 1.6572 23.9775 2001 5.5032 1.000 8.4330 6.0040 .6501 .747 1.6562(b) 23.9935 Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30,2001. (a) A separate taxing district established by referendwn which affects only downtown properties. (b) Other includes Pinellas CoWlty Planning CoWlcil (.0225); Juvenile Welfare Board (.8117); SW Florida Water Management District (.4220); Pinellas Anclote River Basin (.4000). City of Clearwater, Florida Principal Taxpayers* Year Ended September 30, 2001 Percentage to Total Assessed Assessed Taxpayers ~ mBusiness Value* Value Bellwether Prop. LP Ltd. Shopping Center $ 86,861,400 1.87% Grand Reserve at Park Apartment Complex 25,528,600 0.55 Excel Realty Trust, Inc. Shopping Center 24,834,100 0.53 Taylor, John S. III Landowner 24,352,900 0.52 Branch SWlset Association Shopping Center 23,147,800 0.50 Clearwater Land Co. Adult Congregate Facility 31,486,700 0.68 Sand Key Association Ltd. Hotel 21,774,500 0.47 Northwood Plaza Shopping Center 19,966,500 0.43 20M Bayside Arbors Ltd. Apartment Complex 19,032,900 0.41 Walmart Stores, Inc. Shopping Center 16.865.100 QJ.Q Subtotal 293,850,500 6.31 All Others 4.363.223.610 23M Total $4.657.074.110 100.00% * Based on non-exempt real property assessed taxable values. Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30,2001; Pinellas COWlty Property Appraiser, 2000 tax rolls for 2001 collections. A-I0 City of Clearwater, Florida Ratio of Net General Bonded Debt to Taxable Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years Ratio of Net Net Taxable Net General General Assessed General Bonded Debt Bonded Fiscal Value Bonded To Assessed Debt ~ Population (000)(1 ) ~ ~ fsa: Qwili! 1992 99,856 4,179,582 452,779 .01 4.53 1993 100,768 4,188,105 348,478 .01 3.46 1994 100,604 4,181,314 242,700 .01 2.39 1995 101,162 4,186,108 133,597 .00 1.30 1996 101,867 4,252,433 21,598 .00 0.21 1997 102,472 4,376,559 165,000 .00 1.61 1998 102,874 4,494,262 33,750 .00 0.33 1999 104,281 4,692,398 0 .00 0.00 2000 104,454 4,903,478 0 .00 0.00 2001 108,787 5,208,787 0 .00 0.00 Source: CityofClearwater, Florida, Comprehensive Annual Financial Report for period ending September 30,2001. (1) Values listed are for year of collections. [Remainder of page intentionally left blank] A-II City of Clearwater, Florida Computation of Legal Debt Margin September 30, 2001 Assessed Valuation of Non-Exempt Real Estate(a) Times: Twenty Percent Limitation per City Charter Equals Legal Indebtedness Limitation $4,657,074,110 x .20 $ 931.414.822 Debt Subject to Indebtedness Limitation: Revenue Bonds: 1985 Public Service Tax and Bridge Revenue Bonds 1998 Water and Sewer Revenue Bonds 1993 Water and Sewer Revenue Bonds 1995 Improvement Revenue Bonds 1996A Gas System Revenue Bonds 1997 Gas System Revenue Bonds 1998 Gas System Revenue Bonds 1999 Stormwater System Revenue Bonds 2001 Infrastructure Sales Tax Revenue Bonds Notes, Mortgages and Contracts Totals Legal Indebtedness Margin Gross Debt $ 415,000 49,900,001 24,600,000 9,770,000 8,445,000 12,865,000 7,930,000 7,395,000 46,445,000 14.095.211 $181.860.212 Less Sinking FWld Assets $ 171,947 4,439,422 9,037,666 126,667 7,083 40,833 2,917 95,455 o Q $13.921.990 Net Debt Subject to Limitation $ 243,053 45,460,579 15,562,334 9,643,333 8,437,917 12,824,167 7,927,083 7,299,545 46,445,000 14.095.211 $167.938.222 $763.476.600 Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30,2001. (a) Valuation listed is from 2000 tax year for 2001 collections. A-12 City of Clearwater, Florida Computation of Direct and Overlapping Debt September 30, 2001 Governmental Unit Net Debt Outstanding Percent AmOWlt City of Clearwater $ 100% $ Pinellas COWlty School Board $46,960,000 14% $6,574,400 (a) Applicable Net Debt Percentage is based on ratio of City to COWlty Taxable values for 2001 collections ($4,657,074,110/$34,363,584,750). A-13 APPENDIX B EXCERPTS FROM THE CITY'S COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2001 APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE ORDINANCE APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Clearwater, Florida (the "Issuer") in connection with the issuance of its $24,725,000 Storm water Revenue Bonds, Series 2002 (the "Series 2002 Bonds"). The Series 2002 Bonds are being issued pursuant to Ordinance No. 6378-99, enacted by the City on April 15, as amended by Ordinance No. 6931-02, enacted by the City on [ ], as supplemented (the "Ordinance"). The Issuer covenants and agrees as follows: SECTION 1. PURPOSE OF DISCLOSURE CERTIFICATE. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Series 2002 Bondholders and in order to assist the original Wlderwriters of the Series 2002 Bonds in complying with Rule 15c2- 12(b)(5) promulgated by the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934 (the "Rule"). SECTION 2. PROVISION OF ANNUAL INFORMATION. Exceptasotherwise provided herein, the Issuer shall provide to all of the nationally recognized municipal securities information repositories described in Section4 hereof(the "NRMSIRs"), and to any state information depositoI)' that is established within the State of Florida (the "SID"), on or before JWle 30 of each year, commencing JWle 30, 2003, the information set forth below in this Section 2. Notwithstanding the immediately preceding sentence, to the extent any such information does not become available to the Issuer before JWle 30 of any year, the Issuer shall provide such information when it becomes available, but no later than one year following the end of the Issuer's Fiscal Year. (A) the Issuer's Comprehensive Annual Financial Report for the immediately preceding Fiscal Year (the "CAFR"), which shall include the audited financial statements of the Issuer for the immediately preceding Fiscal Y earprepared in accordance with Generally Accepted AccoWlting Principles, as modified by applicable State of Florida requirements and the governmental accoWlting standards promulgated by the Government AccoWlting Standards Board; provided, however, if the audited financial statements of the Issuer are not completed prior to April 30 of any year, the Issuer shall provide unaudited financial statements on such date and shall provide the audited financial statements as soon as practicable following their completion; and (B) to the extent not set forth in the CAFR, additional financial information and operating data of the type included with respect to the Issuer in the final official statement prepared in connection with the sale and issuance of the Series 2002 Bonds (as amended, the "Official Statement"), as set forth below: 1. Updates of the financial information set forth in the Official Statement Wlder the subcaptions "Rates, Fees and Charges" and "Historical Net Revenues"Wlderthe principal captions "THE STORMW A TER MANAGEMENT SYSTEM" ( in the case of the material Wlder the caption ''Historical Net Revenues," for the then-immediately preceding five fiscal years). 2. Descriptionofany additional indebtedness payable in whole or in part from the Net Revenues (as defined in the Ordinance). 3. Any other financialinfonnation or operating data of the type included in the Official Statement which would be material to a holder or prospective holders of the Series 2002 Bonds. For pUIposes of this Disclosure Certificate, "Fiscal Year" means the period commencing on October 1 and ending on September 30 of the next succeeding year, or such other period of time provided by applicable law. SECTION 3. REPORTING SIGNIFICANT EVENTS. The Issuer shall provide to the NRMSIRs or the Municipal Securities Rulemaking Board (the "MSRB") and to the SID, on a timely basis, notice of any of the following events, if such event is material with respect to the Series 2002 Bonds or the Issuer's ability to satisfy its payment obligations with respect to the Series 2002 Bonds: (A) Principal and interest payment delinquencies; (B) Non-payment related defaults; (C) Unscheduled draws on the debt service reserve fimd retlecting financial difficulties; (0) Unscheduled draws on credit enhancement reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions or events affecting the tax-exempt status of the Series 2002 Bonds; (G) Modifications to rights of Series 2002 Bondholders; (H) Redemptions; (I) Defeasances; (1) Release, substitution, or sale of property securing repayment of the Series 2002 Bonds; (K) Rating changes; and (L) Notice of any failure on the part of the Issuer or any other Obligated Person (as defined herein) to meet the requirements of Section 2 hereof. D-2 The Issuer may from time to time, in its discretion, choose to provide notice of the occurrence of certain other events, in addition to those listed in this Section 3, if; in the judgment of the Issuer, such other events are material with respect to the Series 2002 Bonds, but the Issuer does not specifically Wldertake to commit to provide any such additional notice of the occurrence of any materialevent except those events listed above. Whenever the Issuer obtains knowledge of the occurrence of a significant event described in this Section 3, the Issuer shall as soon as possible determine ifsuchevent would be material Wlder applicable federal securities law to holders of Series 2002 Bonds, provided, that any event Wlder clauses (D), (E), (F), (K) or (L) above will always be deemed to be material. SECTION 4. NRMSIRs. The NRMSIRs to which the Issuer shall provide the informationdescribed in Sections 2 and 3 above, to the extent required, shall be the following organizations, their successors and assigns: Bloomberg Municipal Repository 100 Business Park Drive Skillman, New Jersey 08558 Phone: (609) 279-3225 Fax: (609) 279-5962 Email: Munis@Bloomberg.com DPC Data Inc. One Executive Drive Fort Lee, NJ 07024sPhone: (201) 346-0701 Fax: (201) 947-0107 Email: nrmsir@dpcdata.com Ff Interactive Data Attn: NRMSIR 100 William Street New York, New York 10038 Phone: (212) 771-6999 Fax: (212) 771-7390 (Secondary Market Information) (212) 771-7391 (Primary Market Information) Email: NRMSIR@FTID.com D-3 Standard & Poor's 1. 1. Kenny Repository 55 Water Street 45th Floor New York, NY 10041 Phone: (212) 438-4595 Fax: (212) 438-3975 Email: nrmsir_repository@sandp.com (F) Any NRMSIRs that are established subsequently and approved by the SEC. (G) A list of the names and addresses of all designated NRMSIRs as of any date may currently be obtained by calling the SEC's Fax on Demand Service at 202/942-8088 and requesting document nwnber 0206. SECTION 5. NOEVENTOFDEFAULT. Notwithstandinganyotherprovisioninthe Ordinance to the contrary, failure of the Issuer to comply with the provisions of this Disclosure Certificate shall not be considered an event of default Wlder the Ordinance; provided, however, any Series 2002 Bondholder may take such actions as may be necessary and appropriate, including pursuing an action for mandamus or specific performance, as applicable, by court order, to cause the Issuer to comply with its obligations hereWlder. ForpUIpOses of this Disclosure Certificate, "Series 2002 Bondholder" shall mean any person who (A) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2002 Bonds (including persons holding Series 2002 Bonds through nominees, depositories or other intermediaries), or (B) is treated as the owner of any Series 2002 Bond for federal income tax pUIposes. SECTION 6. INCORPORATION BY REFERENCE. Any or all of the information required herein to be disclosed may be incoIporated by reference from other docwnents, including official statements or debt issues of the Issuer of related public entities, which have been submitted to each of the NRMSIRs and the SID, if any, or the SEe. If the docwnent inCOIpOrated by reference is a final official statement, it must be available from the MSRB. The Issuer shall clearly identifY each docwnent incoIporated by reference. SECTION 7. DISSEMINATION AGENTS. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in canying out its obligations Wlder this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor disseminating agent. SECTION 8. TERMINATION. The Issuer's obligations under this Disclosure Certificate shall tenninate upon (A) the legal defeasance, prior redemption or payment in full of all of the Series 2002 Bonds, or (B) the termination of the continuing disclosure requirements of the Rule by legislative, judicial or administrative action. D-4 SECTION 9. AMENDMENTS. Notwithstanding any other provision of this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision may be waived, if such amendment or waiver is supported by an opinion of counsel that is nationally recognized in the area of federal securities laws, to the effect that such amendment or waiver would not, in and of itself, cause the WldertakingS herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into accoWlt any subsequent change in or official inteIpretation of the Rule. SECTION 10. ADDITIONAL INFORMATION. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in its annual information described in Section 2 hereof or notice of occurrence of a significant event described in Section 3 hereof, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in its annual information or notice of occurrence of a significant event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation Wlder this Disclosure Certificate to update such information or include it in its future annual information or notice of occurrence of a significant event. SECTION 11. OBLIGATED PERSONS. If any person, other than the Issuer, becomes an Obligated Person (as defined in the Rule) relating to the Series 2002 Bonds, the Issuer shall use its best efforts to require such Obligated Person to comply with all provisions of the Rule applicable to such Obligated Person. Dated as of August , 2002 ATTEST: CITY OF CLEARWATER, FLORIDA By: Mayor City Clerk D-5 APPENDIX E FORM OF BOND COUNSEL OPINION D-6 APPENDIX F FORM OF MUNICIPAL BOND INSURANCE POLICY D-7 FINANCIAL GUARANTY INSURANCE POLICY MBIA Insurance Corporation Annonk, New York 10504 Policy No. [NUMBER] MBIA Insurance Corporation (the "Insurer"), in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf ofthe Issuer to [INSERT NAME OF PAYING AGENT] or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant toa mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a fmal judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $ CITY OF CLEARWATER, FLORIDA Stormwater Revenue Bonds Series 2002 Upon receipt of by regislmd cr that soch requited ~.. ~, ~'M any . (Illcrpresentnm of soch odx:rpoof of owrDllhip of the 00igaticm, 1Dgeduwith any ~ inslrunms of assignnmtoeviden:ethe assignnmofthe Insured Amoun1s due on the ~ as are paid by the Insurer, and apprq>riale imlrumtns to eficttheappoiJdnbltofthe Insurer as ~ fursoch owners of the Obligations in any 1ega1 ptooeeding reIared 10 JB)'IIleIIt of Insured Annm1s 00 the 00iglIlicm, soch iINnJnmIs being in a finn satistiK:by to Slate Slreet Bank and Trust Ccmpany, N.A., State SlreetBankand Trust Ccmpany, NA shall di!hn: b web own::rs, crthe Paying Ag:mplylD:J1t of the InsuredAnumls due en such Obligaticn;, less any amounl held by the ~ ~ ir the JlIYIIlf11l of web Insured ArrwnIs and 1egal1y availalie thfrefur. This po1icy Wa; rot iIBlre agaitN loss of any prqnymD pRmium \Wich may at any time be plylIbIe with respect 10 any Obli~ As used herein, the tenn "OWID" shall mm the regisbed owruof any ~ as indicalOO in the l:xrlG II..nJllWnl by the Paying Agmt, the kur, or any designee of the kur fur Sld1 JUIXH:. The tmn owru shall o:t ir1u:ie the Is.ur cr any JDtY wlnie agJa'fJQIt with the Is.ur lXINituk:s the unWiying security fur the ~ Any serna: ofpnxx:$ 00 the Insurer may be made to the InsurerlK ilsoffices IocaIed at 113 I<q Stn:d, Ammk, New Y <lk 10504 and web serna: of ~ Dl1 be wlid and ~ F-l This policy is ncnoIDleIIable ir any rea9JIl. The premium al 1his policy is not refuOOable fur any reason irw;:luding the ~ prier 10 maturity of the ~ The irsJrarx:e provided by 1his policy is not CCMRlli by the F1aida Inuarre Guaranly ~ crealOO under chaptl;r 631, fuida S1alutes. IN W11'NFSS WHEREOF, the Immr has C3ll'lfd 1his policy 10 be exewtW in m.imi1e al its behalf by its duly lIlIIIxxi2J:d officers, 1his [DAY] day of [MONTH, YEAR]. MBIA .burance CoqJoration COUNfERSIGNED: RtSdent I..nmed Awn President Attest: city, Sta1e Assistant Secretary STD-RCS-FL-6 4/95 F-2 EXHIBIT D CONTINUING DISCLOSURE CERTIFICATE D-l CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Clearwater, Florida (the "Issuer") in connectIOn with the issuance of its $24,725,000 Stormwater Revenue Bonds, Series 2002 (the "Series 2002 Bonds"). The Series 2002 Bonds are being issued pursuant to Ordinance No. 6378-99, enacted by the City on April 15, as amended by Ordinance No. 6931-02, enacted by the City on [ ], as supplemented (the "Ordinance"). The Issuer covenants and agrees as follows: SECTION 1. PURPOSE OF DISCLOSURE CERTIFICATE. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Series 2002 Bondholders and in order to assist the originallUlderwriters of the Series 2002 Bonds in complying with Rule 15c2- 12(b)(5) promulgated by the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934 (the "Rule"). SECTION 2. PROVISION OF ANNUAL INFORMATION. Except as othelWise provided herein, the Issuer shall provide to all of the nationally recognized municipal securities infonnation repositories described in Section 4 hereof(the "NRMSIRs"), and to any state mfonnation depository thal is established within the State of Florida (the "SID"), on or before JWle 30 of each year, commencing JlUle 30,2003, the information set forth below in this Section 2. Notwithstanding the munediately preceding sentence, to the extent any suchinforrnationdoes not become available to the Issuer before JlUle 30 of any year, the Issuer shall provide such information when it becomes available, but no later than one year following the end of the Issuer's Fiscal Year. (A) the Issuer's Comprehensive AnnualFinancial Report for the immediately preceding Fiscal Year (the "CAFR"), which shall include the audited financial statements of the Issuer for the immediately preceding Fiscal Y ear prepared in accordance with Generally Accepted AccolUlting Principles, as modified by applicable State of Florida requirements and the governmental accolUlting standards promulgated by the Government ACCOlUlting Standards Board; provided, however, if the audited finanCIal statements of the Issuer are not completed prior to April 30 of any year, the Issuer shall provide tmaudited financial statements on such date and shall provide the audited financial statements as soon as practicable following their completion; and (B) to the extent not set forth in the CAFR, additional financial information and operating data of the type included with respect to the Issuer in the final official statement prepared in cormection with the sale and issuance of the Series 2002 Bonds (as amended, the "Official Statement"), as set forth below: I. Updates of the financial information set forth in the Official Statement Wlder the subcaptions "Rates, Fees and Charges" and "Historical Net Revenues"lUlderthe principalcaptions "THE STORMW A TER MANAGEMENT SYSTEM" ( in the case of the material under the caption "Historical Net Revenues," for the then-immediately preceding five fiscal years). 2. Descriptionofany additional indebtedness payable in whole or in part from the Net Revenues (as defmed in the Ordinance). 3. Any other financial information or operating data of the type included in the Official Statement which would be material to a holder or prospective holders of the Series 2002 Bonds. F or purposes of this Disclosure Certificate, "Fiscal Year" means the period commencing on October I and ending on September 30 of the next succeeding year, or such other period of time provided by applicable law. SECTION 3. REPORTING SIGNIFICANT EVENTS. The Issuer shall provide to the NRMSIRs or the MWlicipal Securities Rulemaking Board (the "MSRB") and to the SID, on a tImely basis, notice of any of the following events, if such event is material with respect to the Series 2002 Bonds or the Issuer's ability to satisfY its payment obligations with respect to the Series 2002 Bonds: (A) Principal and interest payment delinquencies; (B) Non-payment related defaults; (C) Unscheduled draws on the debt seIVice reseIVe fund reflecting fmancial difficulties; (D) Unscheduled draws on credit enhancement reflecting financial difficulties; (E) Substitution of credit or liquidity providers, or their failure to perform; (F) Adverse tax opinions or events affecting the tax-exempt status of the Series 2002 Bonds; (G) Modifications to rights of Series 2002 Bondholders; (H) Redemptions; (I) Defeasances; (1) Release, substitution, or sale of property securing repayment of the Series 2002 Bonds; (K) Rating changes; and (L) Notice of any failure on the part of the Issuer or any other Obligated Person (as defined herein) to meet the requirements of Section 2 hereof. 0- 2 The Issuer may from time to time, in its discretion, choose to provide notice of the occurrence of certain other events, in addition to those listed in this Section 3, if, in the judgment of the Issuer, such other events are material with respect to the Series 2002 Bonds, but the Issuer does not specifically undertake to commit to provide any such additional notice of the occurrence of any material event except those events listed above. Whenever the Issuer obtains lmowledge of the occurrence of a significant event described in this Section 3, the Issuer shall as soon as possible determine ifsuchevent would be material under applicable federal securities law to holders of Series 2002 Bonds, provided, that any event under clauses (D), (E), (F), (K) or (L) above will always be deemed to be material. SECTION 4. NRMSIRs. The NRMSIRs to which the Issuer shall provide the informationdescribed in Sections 2 and 3 above, to the extent required, shall be the following organizations, their successors and assigns: Bloomberg Municipal Repository 100 Business Park Drive Skillman, New Jersey 08558 Phone: (609) 279-3225 Fax: (609) 279-5962 Email: Munis@Bloomberg.com DPC Data Inc. One Executive Drive Fort Lee, NJ 07024 Phone: (201) 346-0701 Fax: (201) 947-0107 Email: nrmsir@dpcdata.com FT Interactive Data Attn: NRMSIR 100 William Street New York, New York 10038 Phone: (212) 771-6999 Fax: (212) 771-7390 (Secondary Market Information) (212) 771-7391 (Primary Market Information) Email: NRMSIR@FTID.com 0-3 Standard & Poor's 1. 1. Kenny Repository 55 Water Street 45th Floor New York, NY 10041 Phone: (212) 438-4595 Fax: (212) 438-3975 Email: nnnsicrepository@sandp.com (F) Any NRMSIRs that are established subsequently and approved by the SEe. (G) A list of the names and addresses o fall designated NRMSIRs as ofany date may currently be obtained by calling the SEC's Fax on Demand Service at 202/942-8088 and requesting document number 0206. SECTION 5. NO EVENTOF DEF AUL T. Notwithstanding any other provision in the Ordinance to the contrary, failure of the Issuer to comply with the provisions of this Disclosure Certificate shall not be considered an event of default tmder the Ordinance; provided, however, any Series 2002 Bondholder may take such actions as may be necessary and appropriate, including pursuing an action for mandamus or specific performance, as applicable, by court order, to cause the Issuer to comply with its obligations herelUlder. For purposes of this Disclosure Certificate, "Series 2002 Bondholder" shall mean any person who (A) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2002 Bonds (including persons holding Series 2002 Bonds through nominees, depositories or other intermediaries), or (B) is treated as the owner of any Series 2002 Bond for federal income tax purposes. SECTION 6. INCORPORATION BY REFERENCE. Any or all of the information required herein to be disclosed may be incoIporated by reference from other docwnents, including official statements or debt issues of the Issuer of related public entities, which have been submitted to each of the NRMSIRs and the SID, if any, or the SEe. If the document incorporated by reference is a fmal official statement, it must be available from the MSRB. The Issuer shall clearly identify each docwnent incorporated by reference. SECTION 7. DISSEMINATION AGENTS. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in canying out its obligations wlder this Disclusure Certificate, and may discharge any such agent, with or without appointing a successor disseminating agent. SECTION 8. TERMINA TION. The Issuer's obligations under this Disclosure Certificate shall tenninate upon (A) the legal defeasance, prior redemption or payment in full of all of the Series 2002 Bonds, or (B) the tennination of the continuing disclosure requirements of the Rule by legislative, judicial or administrative action. D-4 SECTION 9. AMENDMENTS. Notwithstanding any other provislOn of this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision may be waived, ifsuch amendment or waiver is supported by an opinion of cOlmsel that is nationally recognized in the area of federal securities laws, to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule. SECTION 10. ADDITIONAL INFO RMA TI 0 N. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means 0 f dissemination set forth in this Disclosure Certificate or any other means of cOllllmmication, or including any other information in its annual infonnation described in Section 2 hereof or notice of occurrence of a significant event described in Section 3 hereof, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in its annual information or notice of occurrence of a significant event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation Wlder this Disclosure Certificate to update such information or include it in its future annual information or notice of occurrence of a significant event. SECTION 11. OBLIGATED PERSONS. If any person, other than the Issuer, becomes an Obligated Person (as defined in the Rule) relating to the Series 2002 Bonds, the Issuer shall use its best efforts to require such Obligated Person to comply with all provisions of the Rule applicable to such Obligated Person. Dated as of August , 2002 ATTEST: CITY OF CLEARWATER, FLORIDA ~. ~a . ~. ... . -- , -. . ~u r By: rity e .'> ... ~ Mayor D-5 EXHIBIT E COMMITMENTS FOR MUNICIPAL BOND INSURANCE POLICY AND RESERVE POLICY F-l JMBIA COMMITMENT TO ISSUE A FINANCIAL GUARANTY INSURANCE POLICY Application No.: 2002-00512-01 Sale Date: July 2002 (T) Program Type: Competitive-DP Re: $24,725,000 (est.) City of Clearwater, Florida, Stormwater Revenue Bonds, Series 2002 (the "Obligations") This commitment to issue a financial guaranty insurance policy (the "Commitment") dated July 3, 2002, constitutes an agreement between CITY OF CLEARWATER, FLORIDA (the "Applicant") and MBIA Insurance Corporation (the "Insurer"), a stock insurance company incorporated under the laws of the State of New York. Based on an approved application dated July 3,2002, the Insurer agrees, upon satisfaction of the conditions herein, to issue on the earlier of (i) 120 days of said approval date or (ii) on the date of delivery of and payment for the Obligations, a financial guaranty insurance policy (the "Policy") for the Obligations, insuring the payment of principal of and interest on the Obligations when due. The issuance of the Policy shall be subject to the following terms and conditions: 1. Payment by the Applicant, or by the Trustee on behalf of the Applicant, on the date of delivery of and payment for the Obligations, of a nomefundable premium in the amount of 0.2550% of total debt service, premium rounded to the nearest thousand. The premium set out in this paragraph shall be the total premium required to be paid on the Policy issued pursuant to this Commitment. 2. The Obligations shall have received the unqualified opinion of bond counsel with respect to the tax-exempt status of interest on the Obligations. 3. There shall have been no material adverse change in the Obligations or the Resolution, Bond Ordinance, Trust Indenture or other official document authorizing the issuance of the Obligations or in the final official statement or other similar document, including the financial statements included therein. 4. There shall have been no material adverse change in any information submitted to the Insurer as a part of the application or subsequently submitted to be a part ofthe application to the Insurer. 5. No event shall have occurred which would allow any underwriter or any other purchaser of the Obligations not to be required to purchase the Obligations at closing. 6. A Statement of Insurance satisfactory to the Insurer shall be printed on the Obligations. 7. Prior to the delivery of and payment for the Obligations, none of the information or documents submitted as a part of the application to the Insurer shall be determined to contain any untrue or misleading statement of a material fact or fail to state a material fact required to be stated therein or necessary in order to make the statements contained therein not misleading. 8. No material adverse change affecting any security for the Obligations shall have occurred prior to the delivery of and payment for the Obligations. 9. This Commitment may be signed in counterpart by the parties hereto. MBIA 10. Compliance with the Insurer's General Document Provisions (see attached). 11. Compliance with the Insurer's List of Permissible Investments for Indentrued Bonds (see attached). Dated this 3rd day of July, 2002. MBIA Insurance Corporation B~~ As~ant Secreta CITY OF CLEARWATER, FLORIDA By: ~ 'lI.~ Title: ~'I\~ "D\(",~ JMBIA GENERAL DOCUMENT PROVISIONS A. Notice to the Insurer The basic legal documents must provide that any notices required to be given by any party should also be given to the Insurer, Attn: Insured Portfolio Management. B. Amendments. In the basic legal document, there are usually two methods of amendment. The first, which typically does not require the consent of the bondholders, is for amendments which will cure ambiguities, correct formal defects or add to the security of the financing. The second, in which bondholder consent is a prerequisite, covers the more substantive types of amendments. For all financings, the Insurer must be given notice of any amendments that are of the first type and the Insurer's consent must be required for all amendments of the second type. All documents must contain a provision which requires copies of any amendments to such documents which are consented to by the Insurer tobe sent to Standard & Poor's. C. Su?plemental Legal Document. If the basic legal document provides for a supplemental legal document to be issued for reasons other than (1) a refunding to obtain savings; or (2) the issuance of additional bonds pursuant to an additional bonds test, there must be a requirement that the Insurer's consent also be obtained prior to the issuance of any additional bonds and/or execution of such supplemental legal document. D. Events of Default and Remedies. All documents normally contain provisions which define the events of default and which prescribe the remedies that may be exercised upon the occurrence of an event of default. At a minimum, events of default will be defined as follows: 1. the issuer/obligor fails to pay principal when due; 2. the issuer/obligor fails to pay interest when due; 3. the issuer/obligor fails to observe any other covenant or condition of the document and such failure continues for 30 days and 4. the issuer/obligor declares bankruptcy. The Insurer, acting alone, shall have the right to direct all remedies in the event of a default. The Insurer shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures, the Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of the governing documents. Other than the usual redemption provisions, any acceleration of principal payments must be subject to the Insurer's prior written consent. E. Defeasance requires the deposit of: 1. Cash 2. U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series -- II SLGs") NaBlA 3. Direct obligations of the Treasury which have been stripped by the Treasury itself, CATS, TIGRS and similar securities 4. Resolution Funding Corp. (REFCORP) Only the interest component of REF CORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable. 5. Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If however, the issue is only rated by S&P (i.e., there is no Moody's rating), then the pre- refunded bonds must have been pre-refunded with cash, direct US. or US. guaranteed obligations, or AAA rated pre-refunded municipals to satisfy this condition. 6. Obligations issued by the following agencies which are backed by the full faith and credit of the U.S.: a. US. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership b. Farmers Home Administration (FmHA) Certificates of beneficial ownership c. Federal Financing Bank d. General Services Administration Participation certificates e. US. Maritime Administration Guaranteed Title XI financing f. US. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - US. government guaranteed debentures US. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds F. Agents: 1. In transactions where there is an agent/enhancer (other than the Insurer), the trustee, tender agent (if any), and paying agent (if any) must be commercial banks with trust powers. 2. The remarketing agent must have trust powers if they are responsible for holding moneys or receiving bonds. As an alternative, the documents may provide that if the remarketing agent is removed, resigns or is unable to perform its duties, the trustee must assume the responsibilities of remarketing agent until a substitute acceptable to the Insurer is appointed. iMBIA LIST OF PERMISSIBLE INVESTMENTS FOR INDENTURED FUNDS A. Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FmHA) Certificates of beneficial ownership 3. Federal Financing Bank 4. Federal Housing Administration Debentures (FHA) 5. General Services Administration Participation certificates 6. Government National Mortgage Association (GNMA or "Ginnie Mae") GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations (not acceptable for certain cash-flow sensitive issues.) 7. US. Maritime Administration Guaranteed Title XI financing 8. US. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - US. government guaranteed debentures US. Public Housing Notes and Bonds - US. government guaranteed public housing notes and bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit US. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): I. Federal Home Loan Bank System Senior debt obligations A1BIA 2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Participation Certificates Senior debt obligations 3. Federal National Mortgage Association (FNMA or "Fannie Mae") Mortgage-backed securities and senior debt obligations 4. Student Loan Marketing Association (SLMA or "Sallie Mae") Senior debt obligations 5. Resolution Funding Corp. (REFCORP) obligations 6. Farm Credit System Consolidated systemwide bonds and notes D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAA-m; or AA-m and if rated by Moody's rated Aaa, Aal or Aa2. E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF. G. Investment Agreements, including GIC's, Forward Purchase Agreements and Reserve Fund Put Agreements acceptable to MBIA (Investment Agreement criteria is available upon request). H. Commercial paper rated, at the time of purchase, "Prime - I" by Moody's and "A-I" or better by S&P. 1. Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the two highest rating categories assigned by such agencies. J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime - I" or "A3" or better by Moody's and "A-I" or "A" or better by S&P. K. Repurchase Agreements for 30 days or less must follow the following criteria. Repurchase Agreements which exceed 30 days must be acceptable to MBIA (criteria available upon request) Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (sellerlborrower) to a municipal entity (buyerllender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank NlBIA or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. I. Repos must be between the municipal entity and a dealer bank or securities firm a. Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by Standard & Poor's Corporation and Moody's Investor Services, or b. Banks rated "A" or above by Standard & Poor's Corporation and Moody's Investor Services. 2. The written repo contract must include the following: a. Securities which are acceptable for transfer are: (1) Direct U.S. governments, or (2) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC) b. The term of the repo may be up to 30 days c. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). d. Valuation of Collateral (1) The securities must be valued weekly. marked-to-market at current market price plus accrued interest (a) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by municipality, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%. 3. Legal opinion which must be delivered to the municipal entity: a. Repo meets guidelines under state law for legal investment of public funds. Additional Notes MBIA (i) There is no list of permitted investments for non-indentured funds. Your own credit judgment and the relevant circumstances (e.g., amount of investment and timing of investment) should dictate what is permissible. (ii) Any state administered pool investment fund in which the issuer is statutorily permitted or required to invest will be deemed a permitted investment. (iii) DSRF investments should be valued at fair market value and marked to market at least once per year. DSRF investments may not have maturities extending beyond 5 years, except for Investment Agreements approved by the Insurer. STANDARD FORM FOR MBIA DISCLOSURE [GENERAL AND S-I] [The section entitled "The MBIA Insurance COIporation Insurance Policy" is for use in public finance transactions] [The MBIA Insurance Corporation Insurance Policy The following information has been furnished by MBIA Insurance COIporation ("MBIA") for use in this Official Statement. Reference is made to Appendix for a specimen ofMBIA's policy. MBIA's policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the Issuer to the Paying Agent or its successor of an amount equal to (i) the principal of (either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the [Bonds/Securities] as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by MBIA's policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner of the [Bonds/Securities] pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law (a "Preference"). MBIA's policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any [Bonds/Securities]. MBIA's policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of [Bonds/Securities] upon tender by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. MBIA's policy also does not insure against nonpayment of principal of or interest on the [Bonds/Securities] resulting from the insolvency, negligence or any other act or omission of the Paying Agent or any other paying agent for the [Bonds/Securities]. Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by MBIA from the Paying Agent or any owner of a [Bond/Security] the payment of an insured amount for which is then due, that such required payment has not been made, MBIA on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such [Bonds/Securities] or presentment of such other proof of ownership of the [Bonds/Securities], together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the [Bonds/Securities] as are paid by MBIA, and appropriate instruments to effect the appointment of MBIA as agent for such owners of the [Bonds/Securities] in any legal proceeding related to payment of insured amounts on the [Bonds/Securities], such instruments being in a form satisfactory to State Street Bank and Trust Company, N.A., State Street Bank and Trust Company, N.A. shall disburse to such owners or the Paying Agent payment of the insured amounts due on such [Bonds/Securities], less any amount held by the Paying Agent for the payment of such insured amounts and legally available therefor.] MBIA MBIA Insurance Corporation ("MBIA") is the principal operating subsidiary of MBIA Inc., a New York Stock Exchange listed company (the "Company"). The Company is not obligated to pay the debts of or claims against MBIA. MBIA is domiciled in the State of New York and licensed to do business in and subject to regulation under the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United States and the Territory of Guam. MBIA has three branches, one in the Republic of France, one in the Republic of Singapore and one in the Kingdom of Spain. New York has laws prescribing minimum capital requirements, limiting classes and concentrations of investments and requiring the approval of policy rates and forms. State laws also regulate the amount of both the aggregate and individual risks that may be insured, the payment of dividends by MBIA, changes in control and transactions among affiliates. Additionally, MBIA is required to maintain contingency reserves on its liabilities in certain amounts and for certain periods of time. MBIA does not accept any responsibility for the accuracy or completeness of this [Prospectus/Private Placement Memorandum/Official Statement] or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the policy and MBIA set forth under the heading [" "]. Additionally, MBIA makes no representation regarding the [Bonds/Securities] or the advisability of investing in the [Bonds/Securities] . The Financial Guarantee Insurance Policies are not covered by the Property/Casualty Insurance Security Fund specified in Article 76 of the New York Insurance Law. MBIA Information The following documents filed by the Company with the Securities and Exchange Commission (the "SEC") are incoIporated herein by reference: (1) The Company's Annual Report on Form 10-K for the year ended December 31,2000; (2) The Company's Quarterly Report on Form lO-Q for the quarter ended September 30,2001; and (3) The report on Form 8-K filed by the Company on January 30,2001. Any documents filed by the Company pursuant to Sections 13 (a), 13 (c), 14 or 15(d) of the Exchange Act of 1934, as amended, after the date of this [Prospectus/Private Placement Memorandum/Official Statement] and prior to the termination of the offering of the [Bonds/Securities] offered hereby shall be deemed to be incoIporated by reference in this [Prospectus/Private Placement Memorandum/Official Statement] and to be a part hereof. Any statement contained in a document incorporated or deemed to be incoIporated by reference herein, or contained in this [Prospectus/Private Placement Memorandum/Official Statement], shall be deemed to be modified or superseded for purposes of this [Prospectus/Private Placement Memorandum/Official Statement] to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this [Prospectus/Private Placement Memorandum/Official Statement]. The Company files annual, quarterly and special reports, information statements and other information with the SEC under File No. 1-9583. Copies of the SEC filings (including (1) the Company's Annual Report on Form lO-K for the year ended December 31,2000, (2) the Company's Quarterly Report on Form lO-Q for the quarter ended September 30, 2001, and (3) the report on Form 8-K filed by the Company on January 30, 2001) are available (i) over the Internet at the SEC's web site at http://www.sec.gov; (ii) at the SEC's public reference room in Washington D.C.; (iii) over the Internet at the Company's web site at http://www.mbia.com; and (iv) at no cost, upon request to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504. The telephone number ofMBIA is (914) 273- 4545. As of December 31,2000, MBIA had admitted assets of $7.6 billion (audited), total liabilities of $5.2 billion (audited), and total capital and sUIplus of $2.4 billion (audited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of September 30,2001, MBIA had admitted assets of $8.4 billion (unaudited), total liabilities of $6.0 billion (unaudited), and total capital and surplus of $2.4 billion (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. Financial Strength Ratings of MBIA Moody's Investors Service, Inc. rates the financial strength ofMBIA "Aaa." Standard & Poor's, a division of The McGraw-Hill Companies, Inc. rates the financial strength of MBIA "AAA." Fitch, Inc. rates the financial strength ofMBIA "AAA." Each rating ofMBIA should be evaluated independently. The ratings reflect the respective rating agency's current assessment of the creditworthiness of MBIA and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the [Bonds/Securities], and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of the [Bonds/Securities]. MBIA does not guaranty the market price of the [Bonds/Securities] nor does it guaranty that the ratings on the [Bonds/Securities] will not be revised or withdrawn. The insurance provided by this policy is not covered by the Florida Insurance Guaranty Association created under chapter 631, Florida Statutes. STD-FL hlBIA FINANCIAL GUARANTY INSURANCE POLICY MBIA Insurance Corporation Armonk, New York 10504 Policy No. MBIA Insurance Corporation (the "fusurer"), in consideration of the payment of the premium and subject to the tenns of this policy, hereby llllConditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following descnbed obligations, the full and complete payment ~~rore~de~moore~m~~ro or its successor (the "Paying Agent") of an amOlmt equal ro (i) the principal of (either at ~ stated maturity or by any advancement of ~turity pursuant to a mandarory sinking fimd payryrnt) and interest on, the Obligations (as that term is defined relow) as such payments shall become due but shall not re so paid (except that in ~ event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant ro a mandatory sinking fimd payment, the payments guaranteed hereby shall re ~de in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant ro a final judgment by a court of competent jmisdiction that such payryrnt constitutes an avoidable preference ro such owner within the meaning of any applicable bankruptcy law. 'The amounts referred ro in clauses (i) and (ii) of~ preceding sentence shall re referred ro herein collectively as the "Insured AmOlmts." "Obligations" shall mean: Upon receipt of telephonic or telegraphic notice, such notice subsequently confirrnxi in writing by registered or certified mail, m upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation ~ payment of an Insured AmOlmt for which is then due, that such required payment has not been made, the Insurer on ~ due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of fimds, in an accmmt with State Street Bank and Trust Company, NA., in New Y oIk., New Y oIk., or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and smrender of such Obligations or presentment of such other proof of ownership of the Obligations, rogether with any appropriate instruments of assignment to evidence the assignment of the Insured AmOlmts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related ro payrrent of Insured AmOlmts on the Obligations, such instnnnents reing in a form satisfacrory to State Street Bank and Trust Company, NA., State Street Bank and Trust Company, NA. shall disburse to such owners, or the Paying Agent payment of the Insured AmOlmts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time re payable with respect ro any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such pwpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying sectnity for the Obligations. Any service of process on the Insurer may re made ro the Insurer at its offices located at 113 King Street, Annonk, New York 10504 and such service of process shall re valid and binding. This policy is non-cancellable for any reason. 'The premium on this policy is not refimdable for any reason including the payrrent prior to maturity of the Obligations. The insurance provided by this policy is not covered by the Florida Insmance Guaranty Association created under chapter 631, Florida Statutes. IN WTINESS WHEREOF, the Insurer has caused this policy ro re executed in facsimile on its re~by its duly authorized officers, this dayof Attest: COUNTERSIGNED: Resident Licensed Agent City, State STD-RCS-FL-6 4/95 STATEMENT OF INSURANCE MBIA Insurance Corporation (the "Insurer") has issued a policy containing the following provisions, such policy being on file at rINSERT NAME OF TRUSTEE OR PAYING AGENT. INCLUDING CITY, ST A TEl. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to rINSERT NAME OF TRUSTEE OR PAYING AGENTl or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a fmal judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: [INSERT LEGAL TITLE OF BONDS. CENTERED AS FOLLOWS:l r$ PAR AMOUNTl nSSUERl rDESCRIPTION OF BONDSl Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to State Street Bank and Trust Company, N.A., State Street Bank and Trust Company, N.A. shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. The insurance provided by this policy is not covered by the Florida Insurance Guaranty Association created under chapter 631, Florida Statutes. MBIA INSURANCE CORPORATION STD-R-FL-l