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01-36 RESOLUTION NO. 01-36 A RESOLUTION AUTHORIZING THE NEGOTIATED SALE OF NOT TO EXCEED $12,000,000 CITY OF CLEARWATER, FLORIDA, IMPROVEMENT REVENUE BONDS, SERIES 2001 ; AWARDING THE SALE THEREOF TO WILLIAM R. HOUGH & CO. ON BEHALF OF ITSELF AND THE CO- MANAGER SELECTED BY THE CITY, SUBJECT TO THE TERMS AND CONDITIONS OF A PURCHASE CONTRACT; PROVIDING FOR THE ISSUANCE OF THE SERIES 2001 BONDS IN BOOK-ENTRY-ONLY FORM; AUTHORIZING THE DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT AND AN OFFICIAL STATEMENT IN CONNECTION WITH THE DELIVERY OF THE BONDS; PROVIDING FOR COMPLIANCE WITH A CONTINUING DISCLOSURE CERTIFICATE; APPOINTING A PAYING AGENT AND REGISTRAR; PROVIDING FOR AN ESCROW DEPOSIT AGREEMENT AND APPOINTING AN ESCROW AGENT; AUTHORIZING THE PURCHASE OF MUNICIPAL BOND INSURANCE; PROVIDING CERTAIN OTHER MATTERS IN CONNECTION WITH THE ISSUANCE AND DELIVERY OF SUCH BONDS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on October 4,2001, the City Commission ofthe City of Clearwater, Florida (the "City" or the "Issuer") enacted Ordinance No. 6876-01 (the "Bond Ordinance") to provide for the issuance of Improvement Revenue Bonds, Series [to be determined] (the "Series 2001 Bonds") payable from City's Public Service Tax (as defined in the Bond Ordinance); and WHEREAS, the City has presently outstanding its Public Service Tax and Bridge Revenue Bonds, Series 1985 and its Improvement Revenue Bonds, Series 1995 (collectively, the "Refunded Bonds"), and enacted through this Resolution intends on issuing its Series 2001 Bonds to refund the outstanding principal amount ofthe Refunded Bonds; and WHEREAS, it is in the best interest of the City to provide for the negotiated sale of not to exceed $12,000,000 of Series 2001 Bonds; and WHEREAS, the Issuer intends on negotiating a sale ofthe Series 2001 Bonds with William R. Hough & Co. on behalf of itself and as representative ofthe co-manager Salomon Smith Barney, Inc. (collectively, the "Underwriters") subject to the terms and conditions contained herein and set forth in a Purchase Contract, a copy of which is attached hereto as Exhibit "A" (the "Purchase Contract") and authorizing its Mayor-Commissioner, or in his absence the Vice Mayor, and City Manager to execute such Purchase Contract upon the approval of the terms thereof by the City Manager and City Financial Services Administrator; and Res. No. 01-36 1 ~i WHEREAS, the Issuer now desires to approve the issuance of its Series 2001 Bonds, to sell its Series 2001 Bonds pursuant to the Purchase Contract, to authorize the distribution of a Prelimi- nary Official Statement and an Official Statement in connection with the issuance ofthe Series 2001 Bonds and to take certain other actions in connection with the issuance and sale of the Series 2001 Bonds; and WHEREAS, the Issuer will be provided all applicable disclosure information by the Underwriters as required by Section 218.385, Florida Statutes, prior to the execution ofthe Purchase Contract, a copy of which disclosure is to be attached to the Purchase Contract; and WHEREAS, this resolution shall constitute a supplemental resolution under the terms ofthe Bond Ordinance, and all capitalized undefined terms used herein shall have the meanings set forth in the Bond Ordinance; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF CLEARWATER, FLORIDA: SECTION 1. The initial series of the Improvement Revenue Bonds, Series [to be determined] authorized by the Bond Ordinance are hereby authorized to be issued in a principal amount of not to exceed $12,000,000 pursuant to this resolution, with such bonds hereby designated as Series 2001 Bonds (the "Series 2001 Bonds"). The issuance of not to exceed $12,000,000 ofthe Series 2001 Bonds by the City is hereby approved upon the terms and conditions set forth in the Bond Ordinance and this Resolution. SECTION 2. It is in the best interest ofthe Issuer and the residents and inhabitants thereof that the Series 2001 Bonds be issued utilizing a pure book-entry system of registration. For so long as the Series 2001 Bonds remain in such book entry only system of registration, in the event of a conflict between the provisions of the Bond Ordinance and the provisions of the Blanket Letter of Representations between the City and Depository Trust Company as previously executed and delivered, the terms and provisions of the Blanket Letter of Representations shall prevail. SECTION 3. (a) Due to the willingness of the Underwriters to purchase not to exceed $12,000,000 in aggregate principal amount ofthe Series 2001 Bonds at favorable interest costs and the importance oftiming in the marketing of such obligations, it is hereby determined that it is in the best interest ofthe public and the Issuer to sell the Series 2001 Bonds at a negotiated sale and such sale to the Underwriters pursuant to the terms and conditions contained in the Purchase Contract and herein is hereby authorized and approved, subject to the satisfaction of the conditions set forth in Section 3(b) below. (b) The Financial Services Administrator is hereby authorized to receive the offer to purchase the Series 2001 Bonds from the Underwriters in the form of an executed Purchase Contract in the form approved herein. The City Manager and the Financial Services Administrator are hereby authorized to award the sale ofthe Series 2001 Bonds on their determination that the offer submitted by the Underwriters for the purchase of all of the Series 2001 Bonds are within the following Res. No. 01-36 2 (.](1 parameters: (1) in the case of the Series 2001 Bonds, the true interest cost rate shall not exceed 5.5%, (2) the refunding of the Refunded Bonds to be refunded by the Series 2001 Bonds shall provide the City with a net present value savings of not less than 4.0% of the par amount of such Refunded Bonds with an Underwriters' Discount not in excess of$7 .50 per $1,000 principal amount thereof, and (3) the actual principal amount of Series 2001 Bonds shall be limited to the lesser of $12,000,000 or the actual sum ofthe amounts required to (i) pay the cost of issuance ofthe Series 2001 Bonds, (ii) pay the premium on the Municipal Bond Insurance Policy, (iii) pay the costs of any deposit to the Reserve Fund or the premium or any debt service reserve fund surety policy or similar instrument, if any, and (iv) retire the Refunded Bonds in full on the date as shall be determined by the City Manager and the Financial Services Administrator to be in the best interest of the City, including any premium and accrued interest thereon to the date of redemption. The City Manager and the Financial Services Administrator are hereby authorized to award the sale ofthe Series 2001 Bonds as set forth above or to reject the offer from the Underwriters for the Series 2001 Bonds. Such award shall be final. The acceptance of the offer to purchase the Series 2001 Bonds, to the extent a portion of the proceeds thereof are used to refund the Refunded Bonds shall constitute a decision to refund the Refunded Bonds in accordance with the Bond Ordinance. SECTION 4. The Series 2001 Bonds shall be sold to the Underwriters, upon the terms and conditions set forth in the Purchase Contract attached hereto as Exhibit "A" and incorporated by reference, upon the satisfaction of the conditions set forth in Section 3(b) hereof. The Mayor- Commissioner, or in his absence the Vice Mayor, the City Manager and the City Clerk are hereby authorized to execute such Purchase Contract in substantially the form attached as Exhibit "A" upon the approval of the City Attorney as to form and legal sufficiency, with such additional changes, insertions and omissions therein as do not change the substance thereof and as may be approved by the said officers of the Issuer executing the same, such execution to be conclusive evidence of such approval. SECTION 5. The Series 2001 Bonds shall be dated, shall bear interest payable at the times, shall mature and shall be subject to redemption as provided in the Purchase Contract. The use ofthe proceeds of the Series 2001 Bonds, shall be as provided in the Official Statement relating to the Series 2001 Bonds. SECTION 6. The Series 2001 Bonds shall be issued under and secured by the Bond Ordinance and shall be executed and delivered by the Mayor-Commissioner, the City Manager and the City Clerk upon the approval of the City Attorney as to form and legal sufficiency, in substantially the form set forth in the Bond Ordinance, with such additional changes and insertions therein as conform to the provisions ofthe Purchase Contract and such execution and delivery shall be conclusive evidence ofthe approval thereof by such officers. SECTION 7. The Financial Services Administrator is hereby authorized to solicit offers from financial institutions to serve as Paying Agent and Registrar for the Series 2001 Bonds, and the Financial Services Administrator is hereby authorized to select the firm with the lowest bid to serve in such capacity. Res. No. 01-36 3 ;r<1 SECTION 8. The form of Escrow Deposit Agreement to be used in connection with the refunding and redemption of the Refunded Bonds attached hereto as Exhibit "D" and incorporated herein by reference is hereby approved. The Mayor-Commissioner, or in his absence the Vice Mayor, the City Manager and the City Clerk are hereby authorized to execute such Escrow Deposit Agreement in substantially the form attached as Exhibit "D" upon the approval ofthe City Attorney as to form and legal sufficiency, with such additional changes, insertions and omissions therein as do not change the substance thereof and as may be approved by the said officers of the Issuer executing the same, such execution to be conclusive evidence of such approval. The Financial Services Administrator is hereby authorized to solicit offers from financial institutions to serve as Escrow Agent under the Escrow Deposit Agreement for the Series 2001 Bonds, and the Financial Services Administrator is hereby authorized to select the firm with the lowest bid to serve in such capacity. SECTION 9. On the date of issuance of the Series 2001 Bonds, the Issuer may transfer the funds on hand in the various funds and accounts established for the Refunded Bonds in such manner as may be approved by a certificate of the Financial Services Administrator executed prior to or simultaneously with the issuance of the Series 2001 Bonds. SECTION 10. The distribution by the Underwriters ofthe Preliminary Official Statement is hereby approved, confirmed and ratified. The distribution of a final Official Statement ofthe Issuer relating to the issuance ofthe Series 2001 Bonds is hereby approved, such final Official Statement to be in substantially the form attached hereto as Exhibit "B", with such additional changes, insertions and omissions as may be made and approved by officers of the Issuer executing the same, such execution to be conclusive evidence of any such approval. The Mayor-Commissioner, or in his absence the Vice Mayor, and the City Manager are hereby authorized to execute such Official State- ment in substantially the form attached hereto as Exhibit "B". The execution of such Official Statement by such officers is hereby approved with such additional changes, insertions and omissions as may be made and approved by such officers. For purposes of Rule 15c2-12 of the United States Securities and Exchange Commission (the "Rule"), the Preliminary Official Statement in the form attached hereto as Exhibit "B" is hereby deemed "final". SECTION 11. The City hereby covenants and agrees that, in order to provide for compliance by the City with the secondary market disclosure requirements ofthe 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 "C", to be executed by the City and dated the date of issuance and delivery of the Series 2001 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 ofthe City to comply with such Continuing Disclosure Certificate shall not be considered an event of default; however, any holder of Series 2001 Bonds 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 and the Continuing Disclosure Certificate. The Mayor-Commissioner, or in his absence the Vice Mayor, the City Manager and the City Clerk are hereby authorized to execute such Continuing Disclosure Certificate Res. No. 01-36 4 11,0 upon the approval ofthe City Attorney as to form and legal sufficiency, in substantially the form attached as Exhibit "C", with such additional changes, insertions and omissions therein as do not change the substance thereof and as may be approved by the said officers ofthe Issuer executing the same, such execution to be conclusive evidence of such approval. SECTION 12. (a) The City Manager and the Financial Services Administrator are hereby authorized to solicit offers from municipal bond insurance firms to provide municipal bond insurance (the "Municipal Bond Insurance Policy") for the Series 2001 Bonds to irrevocably guarantee the payment of principal and interest on the Series 2001 Bonds. The purchase of such Municipal Bond Insurance Policy is hereby authorized, and payment for such Municipal Bond Insurance Policy from proceeds of the Series 2001 Bonds is hereby authorized. The City, by subsequent resolution, shall accept the terms, conditions and agreements relating to the Municipal Bond Insurance Policy in accordance with the Commitment for Municipal Bond Insurance received by the Financial Services Administrator. A statement of insurance is hereby authorized to be printed on or attached to the Series 2001 Bonds for the benefit and information of the holders ofthe Series 2001 Bonds. (b) In addition to the covenants and agreements ofthe City previously contained in the Bond Ordinance regarding the rights ofthe provider ofthe Municipal Bond Insurance Policy (the "Bond Insurer"), the City hereby covenants and agrees for the benefit ofthe Bond Insurer and the holders of the Series 2001 Bonds while the Municipal Bond Insurance Policy insuring the Series 2001 Bonds is in full force and effect, to provide the Bond Insurer with copies of any notices to be given to any party pursuant to the Bond Ordinance, and to provide prior notice to the Bond Insurer of any amendments to the Bond Ordinance. (c) The City Manager and Financial Services Administrator are hereby authorized and directed to determine, with input from the City's financial advisor, whether the purchase of a debt service reserve fund surety policy or bond or similar instrument (a "Reserve Surety") would be in the best interest of the City rather than funding any increase in the debt service reserve fund for the Series 2001 Bonds with proceeds of the Series 2001 Bonds or other legally available funds of the City. In the event the City Manager and the Financial Services Administrator determine that it would be in the best interest of the City to purchase a Reserve Surety, they shall select the Reserve Surety offered by the lowest bidder whose Reserve Surety is in a form acceptable to the Bond Insurer. The determination ofthe City Manager and Financial Services Administrator shall be final. In the event the City Manager and Financial Services Administrator determine to use a Reserve Surety, then the City by subsequent resolution shall include the provisions set forth in the commitment for such Reserve Surety, including, but not limited to, a financial guaranty or similar instrument, and the Mayor-Commissioner, or in his absence the Vice Mayor, and City Manager are authorized to execute and the Clerk is authorized to attest upon the approval thereof as to from and legal sufficiency by the City Attorney, a financial guaranty agreement or similar agreement, with such changes, insertions and omissions as may be approved by such officers. For purposes hereof, the Reserve Requirement (as defined in the Bond Ordinance) for the Series 2001 Bonds shall be the amount equal to the lesser of (i) the Maximum Bond Service Requirement of the Series 2001 Bonds, Res. No. 01-36 5 /'t4 (ii) 125% ofthe average annual Bond Service Requirement of the Series 2001 Bonds, or (iii) 10% of the net proceeds of the Series 2001 Bonds. SECTION 13. All prior resolutions of the Issuer inconsistent with the provisions of this resolution are hereby modified, supplemented and amended to conform with the provisions herein contained and except as otherwise modified, supplemented and amended hereby shall remain in full force and effect. SECTION 14. The Mayor-Commissioner, or in his absence the Vice Mayor, the City Manager, the Financial Services Administrator, the City Attorney and the City Clerk or any other appropriate officers of the Issuer are hereby authorized and directed to execute any and all certifications or other instruments or documents required by the Resolution, the Purchase Contract, the Escrow Deposit Agreement or any other document referred to above as a prerequisite or pre- condition to the issuance of the Series 2001 Bonds and any such representation made therein shall be deemed to be made on behalf of the Issuer. In the event both the Mayor-Commissioner and the Vice Mayor are unable to execute the documents related to the Series 2001 Bonds, then any other member of the City Commission shall be authorized to execute such documents with the full force and effect as ifthe Mayor-Commissioner or the Vice Mayor had executed same. All action taken to date by the officers of the Issuer in furtherance of the issuance of the Series 2001 Bonds is hereby approved, confirmed and ratified. SECTION 15. This resolution shall become effective immediately upon its adoption. PASSED AND ADOPTED this 4th day of October ,2001. Bri.i~t~ Mayor-Co missioner Approved as to form: p!d 11n Attest: City Attorney Res. No. 01-36 ;'Y.1 EXHIBIT A PURCHASE CONTRACT Res. No. 01-36 CITY OF CLEARWATER, FLORIDA $12,000,000 Improvement Revenue Refunding Bonds Series 2001 BOND PURCHASE CONTRACT [Sale Date] City Commission of the City of Clearwater, Florida Clearwater, Florida Dear Commission Members: William R. Hough & Co. (the "Senior Manager"), on behalf of itself and Salomon Smith Barney, Inc. (collectively with the Senior Manager, the "UndeIWriters") offers to enter into the following agreement with you (the "City") which, upon your acceptance of this offer, will be binding upon the City and upon the Underwriters. This offer is made subject to your acceptance on or before 11:59 p.m., E.D.T., on the date hereof, and if not so accepted, will be subject to withdrawal by the Underwriters upon notice to the City at any time prior to the acceptance hereof by you. All capitalized terms not otherwise defmed herein shall have the meanings set forth in the Official Statement (as hereinafter defined). 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements set forth herein, the Underwriters hereby agree to purchase from the City for offering to the public and the City hereby agrees to sell and deliver to the Underwriters for such purpose, all (but not less than all) of the City's $12,000,000 Improvement Revenue Refunding Bonds, Series 2001 (the "Series 2001 Bonds"). The Series 2001 Bonds shall be dated as of [Sale Date], shall be issued in such principal amounts and bear such rates of interest as set forth in Exhibit A attached hereto. Interest on the Series 2001 Bonds shall be payable on February 1, 2002, and on each August 1 and February 1 thereafter to maturity. The aggregate purchase price of the Series 2001 Bonds shall be [Purchase Price] (par less original issue discount of [OlD] and less underwriters' discount of [Discount]), plus accrued interest on the Series 2001 Bonds from October 1, 2001 to the date of Closing (as hereinafter defmed). The Series 2001 Bonds initially shall be offered to the public at such prices or yields (including discounts and premiums) as indicated on Exhibit A attached hereto. The Series 2001 Bonds are issued pursuant to the authority of, and in full compliance with, the Constitution of the State of Florida, and other applicable provisions oflaw, particularly Chapter 166, Part II, Florida Statutes, as amended and supplemented, the City Charter, as amended and supplemented, the Ordinance, and other applicable provisions of law. The Series 2001 Bonds are limited obligations of the City payable solely from and secured by a lien upon and a pledge of: (i) the Public Service Tax and (ii) tultil applied in accordance with the provisions of the Ordinance, all moneys, including investments thereof, in the funds and accounts established under the Ordinance, other than the Rebate Fund (collectively, the "Pledged Revenues"). The Series 2001 Bonds are being issued to: (i) provide a portion of the funds necessary to defease the City's Outstanding Florida Public Service Tax and Bridge Revenue Bonds, Series 1985 (the "Series 1985 Bonds") and Improvement Revenue Bonds, Series 1995 (the "Series 1995 Bonds") (collectively, the 1985 Bonds and the 1995 Bonds are hereinafter referred to as the "Refunded Bonds"), (ii) make deposit to the Reserve Fund to satisfy the Reserve Fund Requirement with respect to the Bonds, and (iii) pay expenses related to the issuance and sale of the Series 2001 Bonds, including the premium for municipal bond insurance. The Underwriter is duly authorized to execute this Bond Purchase Contract. 2. Good Faith Deposit. Delivered to you herewith, as a good faith deposit, is a corporate check of the Underwriters payable to the order of the City in the amount of [Good Faith Amount] as security for the performance by the Underwriters of their obligations to accept and pay for the Series 2001 Bonds at Closing (as defined herein) in accordance with the provisions hereof. In the event that you accept this offer, said check shall be held uncashed by the City as a good faith deposit. At the Closing, the check will be returned to the Underwriters. In the event you do not accept this offer, the check shall be immediately returned to the Underwriters. If the Underwriters fail (other than for a reason permitted hereunder) to accept and pay for the Series 2001 Bonds at the Closing as provided herein, the check may be cashed by you and the proceeds retained by the City as and for full liquidated damages for such failure and for any and all defaults hereunder on the part of the Underwriters, and the retention of such amounts shall constitute a full release and discharge of all claims and damages for such failure and for any and all such defaults hereunder on the part of the Underwriters. In the event that the City fails to deliver the Series 2001 Bonds at the Closing, or ifthe City is unable at or prior to the date of Closing to satisfy or cause to be satisfied the conditions to the obligations of the Underwriters contained in this Bond Purchase Contract, or if the obligations of the Underwriters contained herein shall be cancelled or terminated for any reason permitted by this Bond Purchase Contract, the City shall be obligated to immediately return the check to the Underwriters and the return of such check shall constitute a full release and discharge of all claims and damages for such failure and for any and all such defaults hereunder on the part of the City. 3. Offering. It shall be a condition of your obligation to sell and deliver the Series 2001 Bonds to the Underwriters, and the obligation of the Underwriters to purchase and accept delivery of the Series 2001 Bonds, that the entire aggregate principal amount of the Series 2001 Bonds shall be sold and delivered by you and accepted and paid for by the Underwriters at the Closing. 2 The Underwriters agree to make a public offering of all of the Series 2001 Bonds at the initial offering prices set forth in Exhibit A attached hereto; provided, however, the Underwriters reserve the right to make concessions to dealers and to change such initial offering prices as the Underwriters shall deem necessary in connection with the marketing of the Series 2001 Bonds. 4. Preliminary Official Statement and Official Statement. The City hereby confirms that it has heretofore made available to the Underwriters a Preliminary Official Statement of the City relating to the Series 2001 Bonds, dated [September, 2001] (which, together with the cover page and appendices contained therein, is herein called the "Preliminary Official Statement"), and authorizes and ratifies the use and distribution thereof to prospective purchasers and investors. Within seven business days of the acceptance hereofby the City, the City shall cause to be delivered the final Official Statement, dated the date hereof (which, together with the cover page and appendices contained therein, is herein called the "Official Statement"), executed on behalf of the City by its Mayor-Commissioner and by its City Manager and such reasonable numbers of conformed copies as the Underwriters shall request, which shall be sufficient in number to comply with paragraph (b)(3) of Rule 15c2-12 of the Securities and Exchange Commission (17 CFR g240.15c2-12) under the Securities Exchange Act of 1934 and with Rule G-32 and all other applicable rules of the Municipal Securities Rulemaking Board. The City, by its acceptance hereof, ratifies and approves the Preliminary Official Statement and ratifies and approves and authorizes the Underwriters to use the Official Statement and all documents described therein in connection with the public offering and the sale of the Series 2001 Bonds. The City hereby deems the Preliminary Official Statement "final" as of its date for purposes ofSEC Rule 15c2-12(b)(I). In accordance with Section 218.385, Florida Statutes, the Underwriters hereby discloses the information required by such Section, including a truth-in-bonding statement, as provided in Exhibit B attached hereto. 5. Use of Documents. You hereby authorize the use by the Underwriters of (a) the Ordinance, (b) the Preliminary Official Statement, (c) the Official Statement (including any supplements or amendments thereto), (d) the Escrqw Deposit Agreement, dated as of September I, 200 I (the "Escrow Deposit Agreement"), between the City and [Paying Agent, Registrar and Escrow Agent], as Escrow Agent, relating to the refunding of the Refunded Bonds, (e) the Continuing Disclosure Certificate, of the City, dated as of October I, 2001 (the "Continuing Disclosure Certificate"); and (t) any other documents related to the transactions contemplated in the Official Statement in connection with the public offering, sale and distribution ofthe Series 2001 Bonds. 6. Representations, Warranties and Agreements. The City hereby represents, warrants and agrees as follows: (a) As of the date of the Official Statement and at the time of Closing, the statements and information contained in the Official Statement will be true, correct and complete in all material respects and the Official Statement will not omit any statement or information which should be included therein for the purposes for which the Official Statement is to be used or which is necessary to make the statements or information contained therein, in light of the circumstances under which they were made, not misleading. 3 (b) Between the date of this Bond Purchase Contract and the time of Closing, the City will not execute any bonds, notes or obligations for borrowed money (other than the Series 2001 Bonds which pledge either the full faith and credit of the City or any portion of the Pledged Revenues, without giving prior written notice thereof to the Underwriters. (c) The City is, and will be at the date of Closing, duly organized and validly existing as a municipal corporation of the State of Florida, with the powers and authority set forth in the Act. (d) The City has full legal right, power and authority to: (i) enter into this Bond Purchase Contract, the Continuing Disclosure Certificate and the Escrow Deposit Agreement, (ii) adopt the Ordinance, (iii) sell, issue and deliver the Series 2001 Bonds to the Underwriters as provided herein, and (iv) carry out and consummate the transactions contemplated by this Bond Purchase Contract, the Continuing Disclosure Certificate, the Escrow Deposit Agreement, the Ordinance and the Official Statement and the City has complied, and at the Closing will be in compliance, in all respects, with the terms of the Act and with the obligations on its part in connection with the issuance of the Series 2001 Bonds contained in the Ordinance, the Series 2001 Bonds, the Escrow Deposit Agreement, the Continuing Disclosure Certificate and this Bond Purchase Contract. (e) By all necessary official action, the City has duly adopted the Ordinance, has duly authorized and approved the Official Statement, has duly authorized and approved the execution and delivery of, and the performance by the City, of this Bond Purchase Contract, the Escrow Deposit Agreement, the Continuing Disclosure Certificate and all other obligations on its part in connection with the issuance of the Series 2001 Bonds and the consummation by it of all other transactions contemplated by this Bond Purchase Contract in connection with the issuance of the Series 2001 Bonds; upon delivery of the Series 2001 Bonds, each of the Ordinance, the Continuing Disclosure Certificate and the Escrow Deposit Agreement will each constitute a legal, valid and binding obligation of the City, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, and similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity. (t) When delivered to and paid for by the Underwriters at the Closing in accordance with the provisions of this Bond Purchase Contract, the Series 2001 Bonds will have been duly authorized, executed, issued and delivered and will constitute valid and binding obligations of the City in conformity with the Act and the Ordinance, and shall be entitled to the benefits of the Ordinance, including a prior pledge of and lien upon the Pledged Revenues in accordance with the provisions of the Ordinance, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity. (g) The adoption of the Ordinance and the authorization, execution and delivery ofthis Bond Purchase Contract, the Continuing Disclosure Certificate, the Escrow Deposit Agreement and the Series 200 1 Bonds, and compliance with the provisions hereofand thereof, will not conflict with, or constitute a breach of or default under any law, administrative regulation, consent decree, ordinance, resolution or any agreement or other instrument to which the City was or is subject, nor will such enactment, adoption, execution, delivery, authorization or compliance result in the creation 4 or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City, or under the terms of any law, administrative regulation, ordinance, resolution or instrument, except as expressly provided by the Ordinance or the Series 200 I Bonds. (h) At the time of Closing, the City will be in compliance in all respects with the covenants and agreements contained in the Act and the Ordinance and no event of default and no event which, with the lapse oftime or giving of notice, or both, would constitute an event of default under the Ordinance will have occurred or be continuing. (i) Except as provided in the Official Statement, all approvals, consents, authorizations and orders of any governmental authority or agency having jurisdiction in any matter which would constitute a condition precedent to the performance by the City of its obligations hereunder and under the Ordinance, the Continuing Disclosure Certificate or the Escrow Deposit Agreement have been obtained and are in full force and effect. (j) The City is lawfully empowered to pledge and grant a lien upon the Pledged Revenues for payment of the principal of and interest on the Series 2001 Bonds. (k) Except as disclosed in the Official Statement, to the best knowledge of the City, as of the date hereof, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened against the City, affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Seri~ 2001 Bonds or the pledge of and lien on the Pledged Revenues created by the Ordinance or contesting or affecting as to the City the validity or enforceability in any respect relating to the Series 200 I Bonds, the Ordinance, the Continuing Disclosure Certificate, the Escrow Deposit Agreement or this Bond Purchase Contract, or contesting the tax-exempt status of interest on the Series 2001 Bonds, or contesting the completeness or accuracy of the Official Statement or any supplement or amendment thereto, or contesting the powers of the City or the City Cornmission, or any authority for the issuance of the Series 2001 Bonds, the aqoption of the Ordinance or the execution and delivery by the City of this Bond Purchase Contract, the Continuing Disclosure Certificate or the Escrow Deposit Agreement. (1) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriters as the Underwriters may reasonably request in order to (i) qualify the Series 2001 Bonds for offer and sale under the "blue sky" or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriters may designate, and (ii) determine the eligibility of the Series 200 I Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Series 2001 Bonds; provided, however, that the City shall not be required to execute a general or special consent to service of process or qualifY to do business in connection with any such qualification or determination in any jurisdiction or expend its own funds with respect to the foregoing. 5 (m) The City will not take or omit to take any action which action or omission will in any way cause the proceeds from the sale of the Series 2001 Bonds to be applied in a manner contrary to that provided for in the Ordinance and as described in the Official Statement. (n) Except as expressly disclosed in the Official Statement, the City neither is nor has been in default any time after December 31, 1975, as to payment of principal or interest with respect to an obligation issued or guaranteed by the City (except with respect to bonds for which it has acted solely as a "conduit issuer"). (0) The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. (p) As of its date, the Preliminary Official Statement is hereby deemed "final" by the City for purposes ofSEC Rule 15c2-12(b)(l), except for "permitted omissions" as defined in such Rule. (q) If, after the date of this Bond Purchase Contract and until the earlier of (i) 90 days from the end of the "underwriting period" (as defmed in SEC Rule 15c2,..12) or (ii) the time when the Official Statement is available to any person from a nationally recognized repository, but in no case less than 25 days following the end of the underwriting period, any event shall occur which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City shaH notify the Underwriters thereof, and, if in the opinion of the Underwriters such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at its own expense forthwith prepare and furnish to the Underwriters a sufficient number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to Counsel to the Underwriters) which will supplement or amend the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at such time, not misleading. The Underwriters shall notify the City in writing of the date on which the "underwriting period" ends. (r) The City shall undertake, pursuant to the Ordinance, to comply with the Continuing Disclosure Certificate. 7. Closing. At 1:00 p.m., E.D.T., on [Closing Date], or at such time on such earlier or later date as shall be agreed upon, you will deliver to the Underwriters, at the location and place to be agreed upon by you and the Underwriters, the Series 2001 Bonds in definitive form, duly executed, together with the other documents herein mentioned; and the Underwriters will accept such delivery and pay at such location as may be agreed upon by you and the Underwriters the purchase price of the Series 2001 Bonds as set forth in Section 1 hereof, plus accrued interest on the Series 2001 Bonds from [Sale Date], by immediately available funds, payable to the order of the City. This delivery and payment is herein called the "Closing." The Series 2001 Bonds shall be made available to the Underwriters at least one business day before the Closing for purposes of 6 inspecting and packaging. The Series 200 I Bonds shall be prepared and delivered as fully registered Bonds. 8. Closing Conditions. The Underwriters have entered into this Bond Purchase Contract in reliance upon the representations and warranties of the City herein contained and the performance by the City of its obligations hereunder, both as of the date hereof and as of the time of Closing. The obligations of the Underwriters under this Bond Purchase Contract are and shall be subject to the following conditions: (a) The representations, warranties and agreements ofthe City contained herein shall be true and correct and complied with as of the date hereof and as of the date of the Closing, as ifmade on the date of the Closing. (b) At the time of the Closing, the Ordinance shall be in full force and effect in accordance with its terms and shall not have been amended, modified or supplemented except as amended, modified or supplemented by a resolution incorporating the terms and conditions contained in the municipal bond insurance commitment of the Insurer (as defined herein), and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Underwriters. (c) At the time of Closing, a resolution of the City shall have incorporated the terms and conditions contained in the municipal bond insurance commitment of the Insurer into the Ordinance. (d) At the time of the Closing, all official action ofthe City relating to this Bond Purchase Contract, the Continuing Disclosure Certificate, the Escrow Deposit Agreement and the Series 200 I Bonds shall be in full force and effect in accordance with their respective terms and shall not have been amended, modified or supplemented in any material respect, except in each case as may have been agreed to by the Underwriters. (e) The Underwriters shall have the right to cancel the agreement contained herein to purchase, to accept delivery of and to pay for the Series 200 I Bonds by notifying you in writing of their intention to do so if: (i) between the date hereof and the Closing, legislation shall have been enacted by the Congress of the United States, or recommended to the Congress for passage by the President of the United States, or favorably reported for passage to either House of Congress by any Committee of such House, or passed by either House of Congress, or a decision shall have been rendered by a court of the United States or the United States Tax Court, or a ruling shall have been made or a regulation shall have been proposed or made by the Treasury Department of the United States or the Internal Revenue Service, with respect to the federal taxation of interest received on obligations of the general character of the Series 200 I Bonds, which, in the opinion of Counsel for the Underwriters has, or will have, the effect of making such interest subject to inclusion in gross income for purposes of federal income taxation, except to the extent such interest shall be includable in gross income on the date hereof, or 7 (ii) between the date hereof and the Closing, legislation shall be enacted or any action shall be taken by the Securities and Exchange Commission which, in the opinion of Counsel for the Underwriters, has the effect of requiring the contemplated issuance or distribution of the Series 2001 Bonds to be registered under the Securities Act of 1933, as amended, or of requiring the Ordinance to be qualified under the Trust Indenture Act of 1939, as amended, or (iii) an event described in paragraph (s) of Section 6 hereof shall have occurred which requires an amendment or supplement to the Official Statement and which, in the reasonable opinion of the Underwriters, materially adversely affects the marketability ofthe Series 200 I Bonds or the market price thereof, or (iv) in the opinion of the Underwriters, payment for and delivery of the Series 200 I Bonds is rendered impracticable or inadvisable because (A) trading in securities generally shall have been suspended on the New York Stock Exchange, Inc., or (B) a general banking moratorium shall have been established by Federal, N ew York orFlorida authorities, or (C) the engagement of the United States in a war or other hostilities or the threat of war or other hostilities, or (v) an order, decree or injunction of any court of competent jurisdiction, or any order, ruling, regulation or administrative proceeding by any governmental body or board, shall have been issued or commenced, or any legislation enacted, with the purpose or effect of prohibiting the issuance, offering or sale of the Series 200 I Bonds as contemplated hereby or by the Official Statement or prohibiting the adoption of the Ordinance or the performance thereof, or (vi) between the date hereof and the Closing, the City has, without the prior written consent of the Underwriters, offered or issued any bonds, notes or other obligations for borrowed money, or incurred any material liabilities, direct or contingent, other than as described in the Official Statement, in either case payable from the full faith and credit of the City or any portion of the Pledged Revenues, or (vii) the President ofthe United States, the office of Management and Budget, the Department of Treasury, the Internal Revenue Service or any other governmental body, department, agency or commission of the United States or the State of Florida shall take or propose to take any action or implement or propose regulations, rules or legislation which, in the reasonable judgment of the Underwriters, materially adversely affects the market price of the Series 200 1 Bonds or causes any material information in the Official Statement, in light of the circumstances under which it appears, to be misleading in any material respect, or (viii) any executive order shall be announced, or any legislation, ordinance, rule or regulation shall be proposed by or introduced in, or be enacted by any governmental body, department, agency or commission of the United States or the State of Florida or the State of New York, having jurisdiction over the subject matter, or a decision by any court of 8 competent jurisdiction within the United States or within the State of Florida or the State of New York shall be rendered which, in the reasonable judgment of the Underwriters, materially adversely affects the market price of the Series 200 I Bonds or causes any information in the Official Statement to be misleading in any material respect, or (ix) prior to Closing, either (A) Moody's Investors Service or Fitch Investors Service shall inform the City or the Underwriters that the Series 200 I Bonds will not be rated at least AAA and Aaa, respectively or (B) NIBIA (the "Insurer") shall inform the Underwriters or the City that it shall not deliver its municipal bond insurance policy (the "Policy") at the time of Closing, or (x) the rating of any class of security of the City shall have been downgraded or withdrawn by a national credit rating service. (t) At or prior to the date of the Closing, the Underwriters shall receive the following documents: (i) The Ordinance certified by the Clerk of the City under seal as having been duly enacted, adopted or executed, as the case may be, by the City and as being in effect, with only such supplements, modifications or amendments as may have been agreed to by the Underwriters. (ii) Fully executed counterparts of (A) the Escrow Deposit Agreement (B) the Continuing Disclosure Certificate, and (C) the Official Statement and copies of conformed Official Statements sufficient to satisfy the requirements of Section 4 hereof. (iii) A final approving opinion of Bryant, Miller and Olive, P.A., Bond Counsel to the City, addressed to you, dated the date of the Closing, in substantially the form included in the Official Statement as Appendix D. (iv) A letter of Bryant, Miller and Olive, P.A., addressed to the Underwriters, and dated the date of Closing, to the effect that their fmal approving opinion referred to in Section 8(t)(iii) hereof may be relied upon by the Underwriters and the Insurer to the same extent as if such opinion were addressed to the Underwriters and the Insurer. (v) A supplemental opinion of Bryant, Miller and Olive, P.A., addressed to you and the Underwriters, and dated the date of Closing, to the effect that, (A) the information set forth in the Official Statement under the headings, "INTRODUCTION," "PURPOSE OF THE SERIES 2001 BONDS," "DESCRIPTION OF THE SERIES 2001 BONDS," "SECURITY FOR THE SERIES 2001 BONDS," and "REFUNDING PROGRAM" (other than the fmancial and statistical information included therein as to which no opinion need be expressed), insofar as such information purports to be descriptions or summaries of the Act, the Ordinance and the Series 2001 Bonds, constitute correct summaries of the matters set forth or the documents referred to therein, and the information under the heading "TAX EXEMPTION" is correct, and (B) the Series 2001 Bonds are not required to be registered 9 under the Securities Act of 1933, as amended, and it is not necessary to qualify the Ordinance under the Trust Indenture Act of 1939, as amended. (vi) An opinion of Pamela K. Akin, Esquire, City Attorney, addressed to you, the Insurer and the Underwriters, and dated the date of the Closing, to the effect that, (A) the City is a municipal corporation, duly created and validly existing and has fu111egal right, power and authority to adopt the Ordinance and perform its obligations under the Ordinance, and to authorize, execute and deliver and to perform its obligations under this Bond Purchase Contract, the Continuing Disclosure Certificate and the Escrow Deposit Agreement, (B) the City has duly adopted the Ordinance and has duly authorized, executed and delivered this Bond Purchase Contract, the Continuing Disclosure Certificate and the Escrow Deposit Agreement, and assuming the due authorization, execution and delivery of this Bond Purchase Contract, the Continuing Disclosure Certificate and the Escrow Deposit Agreement by the other parties thereto, each such instrument constitutes the legal, binding and valid obligation of the City, enforceable in accordance with its respective terms; provided, however, the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity and the Series 200 I Bonds have been properly executed by the proper officers of the City, (C) the information in the Official Statement as to legal matters relating to the City, the Act, the Series 2001 Bonds and the Ordinance is correct in all material respects and does not omit any statement, which in her opinion, should be included or referred to therein, and in addition, with respect to the information in the Official Statement and based upon her review ofthe Official Statement as City Attorney and without having undertaken to determine independently the accuracy or completeness of the contents of the Official Statement, she has no reason to believe that the Official Statement (except for the financial and statistical data contained therein and the information relating to the Insurer and the Policy, as to which no view need be expressed) contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading, (D) the use of the Preliminary Official Statement by the Underwriters for the purpose of offering the Series 200 I Bonds for sale has been duly authorized and ratified by the City, (E) the Official Statement has been duly authorized, executed and delivered by the City, and the City has consented to the use thereof by the Underwriters, (F) to the best of her knowledge, the adoption of the Ordinance, and the authorization, execution and delivery of this Bond Purchase Contract, the Escrow Deposit Agreement, the Continuing Disclosure Certificate and the Series 2001 Bonds, and compliance with the provisions hereof and thereof, will not conflict with, or constitute a breach of or default under, any law, administrative regulation, consent decree, ordinance, resolution or any agreement or other instrument to which the City was or is subject, as the case may be, nor will such enactment, adoption, execution, delivery, authorization or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City, or under the terms of any law, administrative regulation, ordinance, resolution or instrument, except as expressly provided by the Ordinance, (G) to the best of her knowledge, all approvals, consents, authorizations and orders of any governmental authority or agency 10 having jurisdiction in any matter which would constitute a condition precedent to the performance by the City, of its obligations hereunder and under the Ordinance have been obtained and are in full force and effect, (H) the City is lawfully empowered to pledge, and grant a prior lien on, the Pledged Revenues for payment of the principal of and interest on the Series 2001 Bonds as the same becomes due and payable, and (I) except as disclosed in the Official Statement, to the best of her knowledge, as of the date of such opinion, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened against the City, affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Series 2001 Bonds, or the pledge of and lien on the Pledged Revenues, or contesting or affecting the validity or enforceability in any respect of the Series 2001 Bonds, the Ordinance, the Escrow Deposit Agreement, the Continuing Disclosure Certificate or this Bond Purchase Contract, or contesting the tax-exempt status of interest on the Series 2001 Bonds, or contesting the completeness or accuracy of the Official Statement or any supplement or amendment thereto, or contesting the powers of the City or the City Commission, or any authority for the issuance of the Series 2001 Bonds, the adoption of the Ordinance or the execution and delivery by the City of this Bond Purchase Contract, the Continuing Disclosure Certificate and the Escrow Deposit Agreement. (vii) A certificate, which shall be true and correct at the time of Closing, signed by the Finance Director/City Treasurer of the City, or such other officials satisfactory to the Underwriters, and in form and substance satisfactory to the Underwriters, to the effect that, to the best of their knowledge and belief (A) the representations, warranties and covenants of the City contained herein are true and correct in all material respects and are complied with as of the time of Closing, (B) the information appearing in the Official Statement under the caption "HISTORlCAL PUBLIC SERVICE TAX RECEIPTS BY CATEGORY," "ESTIMATED SOURCES AND USES OF FUNDS," and "DEBT SERVICE SCHEDULE" has been provided by the City specifically for inclusion therein and is true, correct and complete as of its date, (C) except as described under the caption referred to in (B) above, since the date of the audited financial statements contained in the Official Statement, there has been no material adverse change in the financial condition of the City, and (0) the Official Statement did not as of its date, and does not as of the date of Closing, contain any untrue statement of a material fact or omit to state a material fact which should be included therein for the purposes for which the Official Statement is to be used, or which is necessary in order to make the statements contained therein, in light of the circumstances in which they were made, not misleading (provided, that no opinion need be expressed regarding the information contained therein relating to the Insurer or the Policy). (viii) A certificate of an authorized representative of [Registrar, Paying Agent and Escrow Agent], [Paying Agent Location] (the "Bank"), as Registrar and Paying Agent to the effect that (A) the Bank is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America and is duly authorized to exercise trust powers in the State of Florida, (B) the Bank has all requisite authority, power, licenses, permits and franchises, and has full corporate power and legal authority to execute and perform its functions under the Ordinance, (C) the performance by the Bank of its 11 functions under the Ordinance will not result in any violation of the Articles of Association or Bylaws of the Bank, any court order to which the Bank is subject or any agreement, indenture or other obligation or instrument to which the Bank is a party or by which the Bank is bound, and no approval or other action by any governmental authority or agency having supervisory authority over the Bank is required to be obtained by the Bank in order to perfonn its functions under the Ordinance, and (D) to the best of such representative's knowledge, there is no action, suit, proceeding or investigation at law or in equity before any court, public board or body pending or, to his or her knowledge, threatened against or affecting the Bank wherein an unfavorable decision, ruling or finding on an issue raised by any party thereto is likely to materially and adversely affect the ability of the Bank to perfonn its obligations under the Ordinance. (viii) A certificate of an authorized representative of [Paying Agent, Registrar and Escrow Agent] (the "Escrow Agent"), as Escrow Agent to the effect that (A) the Escrow Agent is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America and is duly authorized to exercise trust powers in the State of Florida, (B) the Escrow Agent has all requisite authority, power, licenses, pennits and franchises, and has full corporate power and legal authority to execute and perfonn its functions under the Escrow Deposit Agreement, (C) the perfonnance by the Escrow Agent of its functions under the Escrow Deposit Agreement will not result in any violation of the Articles of Association or Bylaws of the Escrow Agent, any court order to which the Escrow Agent is subject or any agreement, indenture or other obligation or instrument to which the Escrow Agent is a party or by which the Escrow Agent is bound, and no approval or other action by any governmental authority or agency having supervisory authority over the Escrow Agent is required to be obtained by the Escrow Agent in order to perfonn its functions under the Escrow Deposit Agreement, (0) the Escrow Deposit Agreement constitutes a valid and binding obligation of the Escrow Agent in accordance with its tenns, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity and (E) to the 'pest of such representative's knowledge, there is no action, suit, proceeding or investigation at law or in equity before any court, public board or body pending or, to his or her knowledge, threatened against or affecting the Escrow Agent wherein an unfavorable decision, ruling or fmding on an issue raised by any party thereto is likely to materially and adversely affect the ability of the Escrow Agent to perfonn its obligations under the Escrow Deposit Agreement. (x) An executed copy of the Escrow Deposit Agreement. (xi) An executed copy of the verification report of [Verification Agent), as described in the Official Statement under the heading "VERIFICATION OF MATHEMATICAL COMPUTATIONS." (xii) The Policy issued by the Insurer. 12 (xiii) An opinion of general counsel to the Insurer or a certificate of an officer of the Insurer dated the date of the Closing and addressed to the Underwriters, concerning the Insurer, the Policy, and the information relating to the Insurer and the Policy contained in the Official Statement, in form and substance satisfactory to Bond Counsel, the Underwriters and Counsel to the Underwriters. (xiv) A certificate of the Mayor deeming the Preliminary Official Statement "final" as of its date for purposes of Rule 15c2-l2; (xv) A certification as a part of the general certificate of certain officials of the City to the effect that: (i) the audited financial statements of the City included in the Official Statement have been prepared in accordance with generally accepted governmental accounting principles consistently applied; (ii) nothing has come to the attention of such officials as of the date hereof which would lead such officials to believe that any material change to such unaudited financial statements of the City has been, or will be, proposed by the auditors; and (iii) such officials are not aware of any material adverse changes in the financial status or results of operations of the City from that set forth in such unaudited financial statements; (xvi) A letter of Moody's Investors Service, to the effect that the Series 2001 Bonds have been assigned a rating no less favorable than" ," a letter of Fitch Investors Service to the effect that the Series 2001 Bonds have been assigned a rating no less favorable than" " and a letter of Moody's Investors Service to the effect that the Series 2001 Bonds ha',(e been assigned a rating no less favorable than" ," each of which ratings shall be in effect as of the date of Closing. (xvii) Such additional legal opinions, certificates, instruments and other documents as the Underwriters may reasonably request to evidence the truth and accuracy, as ofthe date hereof and as of the date of the Closing, of the City's representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the City on or prior to the date of Closing of all the agreements then to be performed and conditions then to be satisfied by it. If the City shall be unable to satisfy the conditions to the obligations of the Underwriters to purchase, to accept delivery of and to pay for the Series 2001 Bonds contained in this Bond Purchase Contract and the Underwriters does not waive such inability in writing, or if the obligations of the Underwriters to purchase, to accept delivery of and to pay for the Series 2001 Bonds shall be terminated for any reason permitted by this Bond Purchase Contract, this Bond Purchase Contract shall terminate, the good faith deposit described in Section 2 hereof shall be returned to the Underwriters and neither the Underwriters nor the City shall be under any further obligation hereunder, except that the respective obligations of the City and the Underwriters set forth in Section 9 hereof shall continue in full force and effect. 9. Expenses. The Underwriters shall be under no obligation to pay, and the City shall pay, any expense incident to the performance of the City's obligations hereunder including, but not 13 limited to: (a) the cost of preparation, printing and delivery of the Ordinance; (b) the cost of preparation and printing of the Series 2001 Bonds; (c) the fees and disbursements of Bond Counsel and Disclosure Counsel; (d) the fees and disbursements of the City's certified public accountants; (e) the fees and disbursements of any experts, consultants or advisors retained by the City; (f) fees for bond ratings; (g) the fees and expenses of the Registrar, the Paying Agent, Escrow Agent, Verification Agent and of their respective counsel; and (h) the costs of preparing, printing and delivering the Preliminary Official Statement and the Official Statement and any supplements or amendments thereto. The Underwriters shall pay: (a) the cost of preparing, printing and delivery of this Bond Purchase Contract; (b) all advertising expenses; and (c) all other expenses incurred by them or any of them in connection with the public offering of the Series 2001 Bonds. In the event that either party shall have paid obligations of the other as set forth in this Section 9, adjustment shall be made at the time of the Closing. 10. Notices. Any notice or other communication to be given to you under this Bond Purchase Contract may be given by mailing the same to City of Clearwater, Florida, 100 South Myrtle Ave., Clearwater, Florida 34616-5520, to the attention of Finance Director/ City Treasurer, and any such notice or other communication to be given to the Underwriters may be mailed to William R. Hough & Co., 100 Second Avenue South, Suite 800, St. Petersburg, Florida 33701. 11. Parties in Interest. This Bond Purchase Contract is made solely for the benefit of the City and the Underwriters and no other party or person shall acquire or have any right hereunder or by virtue hereof. All your representations, warranties and agreements in this Bond Purchase Contract shall remain operative and in full force and effect and shall survive the delivery of the Series 2001 Bonds. 12. Waiver. Notwithstanding any provision herein to the contrary, the performance of any and all obligations of the City hereunder and the performance of any and all conditions contained herein for the benefit of the Underwriters may be waived by the Underwriters, in their sole discretion, and the approval of the Underwriters when required hereunder or the determination of their satisfaction as to any document referred to herein shall be in writing, signed by an appropriate officer or officers of the Underwriters and delivered to you. 13. No Liability. Neither the City Commission, nor any of the members thereof, nor any officer, agent or employee thereof, shall be charged personally by the Underwriters with any liability, or held liable to the Underwriters under any term or provision of this Bond Purchase Contract because of its execution or attempted execution, or because of any breach or attempted or alleged breach thereof. 14 14. Governing Law. This Bond Purchase Contract, and the terms and conditions herein, shall constitute the full and complete agreement between the City and the Undetwriters with respect to the purchase and sale of the Series 2001 Bonds. This Bond Purchase Contract shall be governed by and construed in accordance with the laws of the State of Florida. Very truly yours, WILLIAM R. HOUGH & CO., AS SENIOR MANAGER ON BEHALF OF THE UNDERWRITERS BY: Title: Senior Vice President Accepted this day of October, 2001. CITY OF CLEARWATER, FLORIDA ATTEST: Mayor City Clerk City Manager Approved as to form: City Attorney 15 EXHIBIT A SERIES 2001 BONDS MATURITY SCHEDULE Maturity (Seotember I) Principal Amount Interest Rate Yield Redemption Provisions Optional Redemption The Series 2001 Bonds maturing February 1, to February, are not callable prior to their maturity dates. The Series 2001 Bonds maturing after February, are subject to optional redemption by the City, on and after February, as a whole at any time, or in part on any Interest Payment Date thereafter, from the maturities selected by the City, and by lot within a maturity ifless than 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: A-I Redemotion Period Price February, February, February, through January 31, through January 31, and thereafter Mandatory Redemption The Series 2001 Bonds maturing on February, will be subject to mandatory redemption prior to maturity, by lot, in such manner as the Registrar may deem appropriate, at a redemption price equal to the Compound Accreted Value thereof on the redemption date, on February, , and on each February thereafter, in the following principal amounts in the years specified: Year Amortization Installment Year Amortization Installment '"Final maturity " The Series 2001 Bonds maturing on February, will be subject to mandatory redemption prior to maturi ty, by lot, in such manner as the Registrar may deem appropriate, at a redemption price equal to the Compound Accreted Value thereof on the redemption date, on February, , and on each February thereafter, in the following principal amounts in the years specified: Year Amortization Installment Year Amortization Installment '"Final maturity A-2 EXHIBIT B DISCLOSURE STATEMENT AND TRUTH-IN-BONDING STATEMENT February, 2001 City Commission of the City of Clearwater, Florida Clearwater, Florida Re: $12,000,000 City of Clearwater, Florida Improvement Revenue Refunding Bonds, Series 2001 Dear Commission Members: In connection with the proposed issuance by the City of Clearwater, Florida (the "City") of $12,000,000 Improvement Revenue Refunding Bonds, Series 2001 (the "Series 2001 Bonds"), William R. Hough & Co. and Salomon Smith Barney, Inc. (the "Underwriters") is underwriting 'a public offering of the Series 2001 Bonds. The purpose of the following seven paragraphs of this letter is to furnish, pursuant to the provisions of Section 218.3 8S( 6), Florida Statutes, as amended, certain information in respect of the arrangements contemplated for the purchase and sale of the Series 2001 Bonds, as follows: (a) The nature and estimated amount of expenses to be incurred by the Underwriters in connection with the purchase and re-offering of the Series 2001 Bonds are set forth in Schedule I attached hereto. (b) There are no "finders," as defined in Section 218.386, Florida Statutes, as amended, connected with the sale and purchase of the Series 2001 Bonds. (c) The combined underwriting spread, the difference between the price at which the Series 2001 Bonds will be initially offered to the public by the Underwriters and the price to be paid to the City for the Series 2001 Bonds, exclusive of accrued interest, will be approximately $ per $1,000 of Series 2001 Bonds issued. The underwriting spread for the Series 2001 A Bonds will be approximately $ ; the underwriting spread for the Series 2001B Bonds will be approximately $ (d) As part of the estimated underwriting spread set forth in paragraph (c) above, the Underwriters will charge a management fee of$ per $1,000 of Series 2001 Bonds issued. B-1 (e) No other fee, bonus or other compensation is estimated to be paid by the Underwriters in connection with the issuance of the Series 2001 Bonds to any person not regularly employed or retained by the Underwriters (including any "finder" as defined in Section 218.386(l)(a), Florida Statutes), except as specifically enumerated as expenses to be incurred by the Underwriters, as set forth in paragraph (a) above. (f) The names and addresses of the Underwriters are: William R. Hough & Co. 100 Second Avenue South, Suite 800 St. Petersburg, Florida 33701 The purpose of the following two paragraphs is to furnish, pursuant to the provisions of Sections 218.385(2) and (3), Florida Statutes, as amended, the truth-in-bonding statement required thereby, as follows: (a) The City is proposing to issue the Series 2001 Bonds to (i) advance refund the Series 1994 Bonds; (ii) fund the Reserve Requirement for the Series 200 1 Bonds; and (iii) pay the costs of issuance of the Series 2001 Bonds. The obligations are expected to be repaid over a period of approximately 25 years. At the interest rates set forth on Exhibit A to the Bond Purchase Contract to which this is attached, total interest paid over the life of the obligation will be approximately $ (b) The source of repayment or security of the Series 2001 Bonds is the Pledged Revenues. Authorizing this debt will result in an average of approximately $ of such Pledged Revenues not being available to finance other services ofthe City each year for the term of the issue. The foregoing is provided for information purposes only and shall not affect or control the actual terms and conditions of the Series 200 I Bonds. Very truly yours, WILLIAM R. HOUGH & CO. SALOMON SMITH BARNEY, INC. By: William R. Hough & Co., as representative of the Underwriters Title: Senior Vice President B-2 SCHEDULE I UNDERWRITERS'S ESTIMATED EXPENSES (Per $1,000 of Series 2001 Bonds) Per Bond Travel, Closing, Newspaper Advertising Postage/FaxIPhone/Courier DTC/CUSIP/Dalnet/PSA Day Loan Total 1-1 Amount EXHIBIT B PRELIMINARY OFFICIAL STATEMENT Res. No. 01-36 ,- ~:..., ~ - :~.::_"'- ~ a ~ - ~ "~ ~ '-' ~j~ - ~ '" ~~ - - .~ ~. ;; ~ 2 .~ --'~ ~ ~ - .~ ~ .:_~-~~, ~ .~ - ~ -' ~ .2 -.; ~ .2 ::: ~ c:5 ~ ~~l " - ,~~:i ~ ~~ ~.~ ~ ~~ ~::-~ ~ i;; _c... ~ ~ ~ ~ - -;1 :::: ..: ~~ ~' E~ .~ .;,.. :::: .~ ~ ~ ~ " -~2 -:::: ;: " ... ~~ :; :5 .::; '-' ~ ~ .~ ~ .~:s ~ ~'S "':I":::" I~'l '-' ,E ~ ~ ~ '~ ;. ~ .~ ~ ~ ~ ~ ,~ .:: ~ ~ -- l ~~_~ --,~._", - - ~_l ;. '-' ~...c ,~ c:: ~ ~~~~ ~. - .:: '~:::' ::; ':::~ ~ =: -==.:::.., ] ~ '~~" ~ "S ~._. o::~:;~ ,~ .~ ~ ~ r::~2~ Preliminary OJ/ieia/ Slalemelll Dali.:d Seplell1/xr . ]IJIJ/ ~ NE W ISSU E - Book Entrv 0 nlv Ratings: Moody's: S&P: Fitch: ([Insurer] Insured) '- I '" In the opinion of Bond COllllul. au"m;ng cOlllinuing compliance by 'lre City wilh cutain covenants 10 comply with provisions of tire Internal Revu.ut! Code of 196(j, liS amended, interest on the Series 2001 BondI is excluded from gross income for purposes of feduGl income taxation (HId is not an ium of lax preference for purposes of tire fedual a/tufI/ltivt minimu", tflX itrrpos~d 011 ;lIdividuals find corporations under t:cisring statutn, r~gllllJtions IInd judicial J~ci.J;ons: lIi/hollgh iI shouid bt no/~d thai in tht case of corporations (as d~fin~dfor federal ;ncom t /ax purposes), such in/~ru/ is takl!n UIlO IJccounl Ut dl!urmining ddjust~d cUrr~nl ~ll".ings lor purposu 0/ such IJllI!rnaliv~ minimum tax. Furthamore, ;11 tlt~ opillion of Bond Counsel, tlt~ Suws 2001 Bonds rind th~ income thut/rom art exempt from IJII pusent inlangible pa,fonalproperlY taxes imposed by Ch/Jpur 199, Florida Stallllt!S and documenlary lIamp hUes imposed by Chapt~r 101, Florida Stalll~s, as lltrrenJed See "TAX EXE.~I PTIO/V" 'un;n for further informa/ion, $12,000,000* CITY OF CLEARWATER, FLORIDA Improvement Revenue Refunding Bonds, Series 2001 Dated: October 1,2001 Due: February 1, as shown on the inside cover The S 12,000,000' Improvement Revenue Refunding Bonds, Series 200 I (the "S eries 100 I Bonds .') are being issued by the C ily of Clearwater, Florida (the" City"), as fully _regi:>lered bonds, without coupons, and when issued, will be registered in the name afCede & Co.. as nominee of The D~pository Trust Company, New York. New York l"OTC"). OTC will act as securities depository for the Series 200 I Bonds. Individual purchases of the Series 200 I BonJs will b~ made in book-~ntry form only, in the denominations of S5,000 each and inte~r.ll multiples thereof. Interest on the Series 2001 Bonds (first payment due February 1,2002 and semiannually thereafter an each August I and F~bruary I) will be payable by check or draft of[Paying A gent and Registrar]. [Pay;ng Agen t location I. as Registrar and Paying A gen l. made payable and ma il~d to the p~rson in whos~ name the Series 2001 Band is registered. as shown on the registration books kept by !be Registrar aU he close of business on !be fifteenth day of the calendar month (whether or not a business day) nex.t preceding the Interes~ Payment Date. Payments of princlJal of and interest on the Series 2001 Bonds are to be made to purchasers by OTe through the Participants. Purchasers wi II not rec~ive physical delivery of the S~ries 200 I Bonds. Principal of the Series 200 I Bonds is payable to the registered ow ner upon presentation and surrender of the S~ries 200 I Bonds at the corporate trust office of the Paying Agent. See "DESCRIPTION OF THE SERIES 2001 BONDS" herein. All capitalized terms used on this cov~r page not otherwise lie fined are defined herein or in lhe Resolution. The Series 2001 Boods Ire Dot subject to optional redemptlou prior to their Jtated maturities. See "'DESCRIPTION OF THE SERIES 2001 BONDS" herein. The Series 2001 Bands are being issued to (i) finance, or reimburse the City for expenditures incurred for, the acquisition, construction or reconstruction or certain capital improvements to the City, including, but not limited to, a portion of the COSL1 of constructing various capital improvements relating to road and bridge projects and a new main public ~ibrary, as more particularly described herein under the caption "THE SERIES 200 I PROJEC TS," (ii) make a deposit to the Debt Service Reserve Fund to satisfy the Reserve Fund Requirement with n:spect to the Bonds, and (iii) pay ex.penses relative to the issuance and sale of the Series 200 I Bonds, including the p~mium for municipal bond insurance. The Series 200 I Bonds and the interest thereon are payab Ie so 1~ly from and secured by a lie n upon the pledge 0 f (i) the Public Service Tax and (ii) until applied in accordanc e with the provisions of the Ordinance, all moneys, including investments thereof. in the funds and accounts established under the Ordinance, other than the Rebate Fund (coDectiv~ly, the "Pledged Revenues"). S.. .SECURITY FOR THE SERIES 2001 BONDS" herein. The Serlcs 2001 Boads aud tile laterest thereoa do Dotcouritute a ceoeral indebtedness or the City or a pledge oflts faUh aad credit. but are payable solely from tbe Pledged Revenues In tbe manner provided In the Rcsolutloo. No bolder of any Series 2001 Bond shall ever bave the rigbt to compel tbe uerche oCthe ad valorem taxing power of the City to pay such Series 2001 Boud, Interest thereea or be entitled to payment or sucb Series 2001 Bood, tbe Interest tbereOD from any moncys or the City except the Pledged Revenues, The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the Bonds by [Insurer Name] For a discussion of the terms and provisions of such policy, including the limitations thereof, see "MUNICIPAL BOND INSURANCEn berein. [INSURER LOGO] Th~ S~ries 2001 BOllds "r~ offered Hlh~", n and ifissued tlnd accepred by th~ Un4~rwriter s"bj~ct 10 the approv,,1 oflegalily by Bryant. M'jJler and Olive. P.A., Ta{{ahlJSu~, Florida, Bond COllnu/. Certain olher legal trrdll~rs will b~ passed upon lor th~ City by Pamd. K. ,-(kin, Esquire. City ."'"orlley, and by Nabors, Giblin & Nickerson, P.A.., Tampa, Flor;da, Disclosure Couns~1 to th~ City. B tlnc of A mer;ca Suuri/in L LC, C/~4r..,"tu, F toriJA ;s Jl!rv;IIg lIS Fi"ancial Advisor 10 th~ City. It is exp~ct~d that the Ser~s 1001 Bonds, in d~fin;till~ boolc-~ltlry for"" ..,,.,1 b~ "vailab/~ for ddiVf!ry throNgh DTe in .V~W Y ork, .v~w York on or about St:pumb~,. ,1001. WILLIAM R. HOUGH & CO, Salomon Smith Barney, Ine September ,200 I . Preliminary, subject to chang~. CITY OF CLEARWATER, FLORIDA ELECTED OFFICIALS MAYOR - COMMISSIONER Brian J. Aungst, Sf. COMMISSIONERS Ed Hart Hoyt Hamilton Whitney Gray Bill Jonson APPOINTED OFFICIALS William B. Home, II, Interim City Manager Pamela K. Akin, Esq., City Attorney Margaret L. Simmons, CPA, Financial Services Administrator BOND COUNSEL Bryant, Miller and Olive, P.A. Tallahassee, Florida FINANCIAL ADVISOR Banc of America Securities LLC Clearwater, Florida REGISTRAR AND PAYING AGENT [Registrar and Paying Agent] [Paying Agent Location] No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations in connection with the Series 200 I Bonds other than as contained in this Official Statement, and, if given or made, such information or representations must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2001 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 obtained from the City, the Bond Insurer and other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the City with respect to any information provided by others. The information and expressions of opinion stated herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall create, under any circumstances, any implication that there has been no change in the matters described herein since the date hereof. Other than with respect to information concerning [Insurer Name] (" [Insurer] ") contained under the caption "MUNICIPAL BOND INSURANCE" and Appendix G "Specimen Bond Insurance Policy" herein, none of the information in this Official Statement has been supplied or verified by [Insurer] and [Insurer] makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of such information; (ii) the validity of the Series 2001 Bonds; or (iii) the tax exempt status of the interest on the Series 2001 Bonds. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERMA Y OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2001 BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH ST ABIUZING, IF COMMENCED, MAY BE DISCONTINUED AT ANYTIME. . All summaries herein of documents and agreements are qualified in their entirety by reference to such documents and agreements, and all summaries herein of the Series 2001 Bonds are qualified in their entirety by reference to the form thereof included in the aforesaid documents and agreements. NO REGISTRATIONST A TEMENT RELATING TO THE SERIES 2001 BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR WITH ANY STATE SECURITIES COMMISSION. IN MAKING ANY INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATIONS OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SERIES 200 I BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. [Remainder of page intentionally left blank] TABLE OF CONTENTS Contents Pa!!e INTRODUCTION ............................................................. 1 PURPOSE OF THE SERIES 2001 BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 DESCRIPTION OF THE SERIES 2001 BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Book-Entry Only System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Mandatory Redemption ........... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 SECURITY FOR THE SERIES 2001 BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Pledged Revenues ....................................................... 6 Public Service Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Historical Public Service Tax Receipts by Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Repeal of Public Service Tax on Telecommunications Services. . . . . . . . . . . . . . . . . . . . 9 Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Additional Parity Obligations ............................................. 14 Covenants of the City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Flow of Funds ......................................................... 15 REFUNDING PROGRAM .......................................... . . . . . . . . . . . 19 ESTIMATED SOURCES AND USES OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 DEBT SERVICE SCHEDULE ..................................................21 HISTORICAL AND PROJECTED DEBT SERVICE COVERAGE. . . . . . . .'. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 MUNICIPAL BOND INSURANCE ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 TAX EXEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Federal Income Tax Matters ..............................................22 Tax Treatment of Original Issue Discount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Tax Treatment of Bond Premium .........................................; 24 Florida Tax Matters ..................................................... 25 AUDITED GENERAL PURPOSE FINANCIAL STATEMENTS...................... 25 INVESTMENT POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 11 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 RATINGS .................................................................. 26 LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 ENFORCEABILITY OF REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 FINANCIAL ADVISOR ......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 VERIFICATION OF MATHEMATICAL COMPUTATIONS......................... 27 UNDERWRITIN"G.. .... .. . . .... . . .. . ... .. . . . .. . .. . . . . . . . . . . . .. .. . . . . . . . .... ..27 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS............... 28 ADVISORS AND CONSULTANTS............................................. 29 CONTIN"UIN"G DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 CERTIFICATE CONCERNING OFFICIAL STATEMENT........................... 29 MISCELLANEOUS .......................................................... 30 APPENDICES APPENDIX A APPENDIX B APPENDIX C General Information Relating to the City of Clearwater, Florida Form of Ordinance Audited General Purpose Financial Statements of Clearwater, Florida for the Fiscal Year Ended September 30, 2000 Form of Bond Counsel Opinion Form of Continuing Disclosure Certificate Specimen Bond Insurance Policy APPENDIX D APPENDIX E APPENDIX F 111 OFFICIAL STATEMENT . relating to $12,000,000" CITY OF CLEARWATER, FLORIDA Improvement Revenue Refunding Bonds, Series 2001 INTRODUCTION The purpose of this Official Statement, which includes the cover page and the appendices attached hereto, is to furnish information with respect to the issuance by the City of Clearwater, Florida (the "City") of its $12,000,000* aggregate principal amount of its Improvement Revenue Refunding Bonds, Series 2001 (the "Series 200 I Bonds") pursuant to Ordinance No. [ ], adopted by the City Commission on October [ ], 2001, as supplemented by Resolution No. [ ], adopted by the City Commission on October [ ], 2001 (the Ordinance, as so amended and supplemented is hereinafter referred to as the "Ordinance"). The Series 2001 Bonds are limited obligations of the City payable solely from and secured by a lien upon and a pledge of: (i) the Public Service Tax and (ii) until applied in accordance with the provisions of the Ordinance, all moneys, including investments thereof, in the funds and accounts established under the Ordinance, other than the Rebate Fund (collectively, the "Pledged Revenues"). The Series 2001 Bonds are subject to optional redemption and mandatory sinking fund redemption as described below under the caption "DESCRIPTION OF THE SERIES 2001 BONDS." .. Payment of the principal of and interest on the Series 2001 Bonds when due will be insured by a municipal bond insurance policy to be issued by [Insurer Name] (the "Bond Insurer") simultaneously with the delivery of the Series 2001 Bonds as described herein. For a discussion of the terms and provisions of such policy, including the limitations thereof, see "MUNICIPAL BOND INSURANCE" herein. Capitalized terms used but not defined herein have the same meaning ascribed thereto in the Ordinance unless the context would clearly indicate otherwise. Complete descriptions of the terms and conditions of the Series 2001 Bonds are set forth in the Ordinance, a copy of which is attached as Appendix C to this Official Statement. The description of the Series 2001 Bonds, the documents authorizing and securing the same, and the information from various reports and statements contained herein are not comprehensive or definitive. All references herein to such documents, reports and statements are qualified by the entire, actual content of such documents. Reports and statements referred to herein that are not included in their entirety in this Official Statement may be obtained from the City. . Preliminary, subject to change. 1 PURPOSE OF THE SERIES 2001 BONDS The Series 2001 Bonds are being issued to: (i) provide a portion of the funds necessary to defease the City's Outstanding Florida Public Service Tax and Bridge Revenue Bonds, Series 1985 (the "Series 1985 Bonds") and Improvement Revenue Bonds, Series 1995 (the "Series 1995 Bonds") (collectively, the 1985 Bonds and the 1995 Bonds are hereinafter referred to as the "Refunded Bonds"), (ii) make deposit to the Reserve Fund to satisfy the Reserve Fund Requirement with respect to the Bonds, and (Hi) pay expenses related to the issuance and sale of the Series 2001 Bonds, including the premium for municipal bond insurance. DESCRIPTION OF THE SERIES 2001 BONDS General The Series 2001 Bonds are being issued in fully registered form, without coupons, in the denominations of$5,000 each or integral multiples thereof, will be dated and will bear interest at the rates and mature on February 1 of the years and in the amounts as shown on the cover page of this Official Statement. Interest on the Series 2001 Bonds will be payable on each August 1 and February 1, commencing August 1,2002. The Series 2001 Bonds will be initially issued in the form of a single fully registered Bond for each maturity ofthe Series 2001 Bonds. Upon initial issuance, the ownership of each such Series. 2001 Bonds will be registered in the registration books kept by the Bond Registrar, [Registrar and Paying Agent], [Paying Agent Location], in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). While held in book-entry form, all payments of principal and interest on the Series 2001 Bonds will be made to DTC or the DTC Nominee as the sole registered owner of the Series 2001 Bonds and payments to Beneficial Owners will be the responsibility ofDTC and the DTC Participants as described below. See "Book-Entry Only System." With respect to Series 2001 Bonds registered in the name of Cede & Co., as nominee of DTC, 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 limiting the immediately preceding sentence, 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 of DTC or any DTC Participant with respect to any ownership interest in the Series 2001 Bonds; (ii) the delivery to any DTC Participant or any other person other than a registered owner, as shown in the registration books kept by the Bond Registrar, of any notice with respect to the Series 2001 Bonds, including any notice of redemption; or (iii) the payment to any DTC Participant or any other person, other than a registered owner, as shown in the registration books kept by the Bond Registrar, of any amount with respect to principal of or interest on the Series 2001 Bonds. The City, the Bond Registrar and the Paying Agent may treat and consider the person in whose name each Series 2001 Bonds is registered in the registration books kept by the Bond Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal of and interest with respect to such Bond, for the purpose of giving notices of redemption and other 2 matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Paying Agent will pay all principal of and interest on the Series 200 I 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 and interest on the Series 2001 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 and interest on the Series 200 I Bonds pursuant to the provisions of the Ordinance. Book-Entry Only System The Series 200 I Bonds will be available in book-entry form only, in denominations of$5,000 or any integral multiple thereof. Purchasers of the Series 200 I Bonds will not receive certificates representing their interests in the Series 200 I Bonds purchased. The Underwriter is to confirm original issuance purchases with statements containing certain terms of the Series 200 I 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 200 I Bonds will be held by DTC as securities depository. The ownership of one fully registered Series 200 I 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 under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities 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 in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of which own DTC either directly or through their representatives. 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 200 I Bonds may 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 200 I Bonds as nominees will not receive certificated bonds, but each DTC Participant will receive a credit balance in the records of DTC in the amount of such DTC Participant's interest in the Series 200 I 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 3 provide Beneficial Owners with a written confirmation of their purchase containing details of the acquired Series 2001 Bonds. Transfers of ownership interests in the Series 2001 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 and interest on the Series 2001 Bonds to DTC or its nominee, Cede & Co., as registered owner of the Series 2001 Bonds. The current practice of DTC is to credit the accounts of the DTC Participants immediately upon receipt of moneys in accordance with their respective holdings as shown on the records ofDTe. 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 ofDTC Participants and not the responsibility of DTC, the Paying Agent or the City subject to any statutory or regulatory requirements as may 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 2001 Bonds called for redemption or of any other action premised on such notice. Redemption of portions of any maturity of the Series 2001 Bonds will reduce the outstanding principal amount of such maturity held by DTe. In such event, DTC may implement, through its book-entry system, a redemption of Series 2001 Bonds held for the account of DTC Participants in accordance with its own rules or other agreements with DTC Participants, and then DTC Participants may implement a redemption of Series 2001 Bonds for the Beneficial Owners. NEITHER THE CITY NOR THE BOND REGISTRAR OR THE PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC P ARTICIP ANTS OR THE PERSONS FOR WHOM DTC P ARTIOP ANTS ACT AS NOMINEES WITH RESPECT TO THE SERIES 2001 BONDS OR THE PROVIDING OF NOTICE OR PAYMENT TO DTC PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF SERIES 2001 BONDS FOR REDEMPTION. In the event of an insolvency ofDTC, ifDTC has insufficient securities in the fungible 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 DIC to protect DIC against losses and liabilities; (ii) the proceeds of insurance maintained by DIC and/or DIC Participants; or(iii) other resources, to obtain securities necessary to eliminate the insufficiency, DIC Participants may not be able to obtain all of their deposited securities. Ihe City, the Bond Registrar and the Paying Agent cannot give any assurances that DIC, DTC Participants or others will distribute payments of principal of and interest on the Series 2001 Bonds paid to DIC 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 DIC will serve or act in a manner described in this Official Statement. 4 DTC may determine to discontinue providing its services with respect to the Series 200 I 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 2001 Bonds. In the event that the book-entry only system is discontinued, the following provisions will govern the transfer and exchange of Series 2001 Bonds. The Series 200 I 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 2001 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 instrument 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 2001 Bonds, along with the social security number 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 200 1 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 may be imposed in relation thereto. Such charges and expenses shall be paid before any such new Series 2001 Bonds shall be delivered. Neither the City nor the Bond Registrar shall be required to register the transfer or exchange of any Series 200 I 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 200 I Bonds, after such Series 200 I Bonds or any portion thereof has been selected for redemption. .' Optional Redemption The Series 2001 Bonds maturing February 1, to February, are not callable prior to their maturity dates. The Series 2001 Bonds maturing after February, are subject to optional redemption by the City, on and after February, . as a whole at any time, or in part on any Interest Payment Date thereafter, from the maturities selected by the City, and by lot within a maturity ifless than 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 February, February, February, through January 31, through January 31, and thereafter 5 Mandatory Redemption The Series 2001 Bonds maturing on February, will be subject to mandatory redemption priorto maturity, by lot, in such manner as the Registrar maydeem appropriate, at a redemption price equal to the Compound Accreted Value thereof on the redemption date, on February, , and on each February thereafter, in the following principal amounts in the years specified: Year Amortization Installment Year Amortization Installment .Final maturity The Series 2001 Bonds maturing on February, will be subject to mandatory redemption prior to maturity, by lot, in such manner as the Registrar may deem appropriate, at a redemption price equal to the Compound Accreted Value thereof on the redemption date, on February, , and on each February thereafter, in the following principal amounts in the years specified: Year Amortization Installment Year Amortization Installment .Final maturity As long as the book-entry-only system is used for determining beneficial ownership of the Series 2001 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 below under the 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 200 1 Bonds. 6 SECURITY FOR THE SERIES 2001 BONDS Pledged Revenues The Series 2001 Bonds are limited obligations of the City payable solely from and secured by a lien upon and a pledge of (i) the Public Service Tax and (ii), except for testing the amount of Pledged Revenues in connection with the issuance of Additional Bonds in accordance with the Ordinance, until applied in accordance with the provisions of this Ordinance, all moneys, including investments thereof, in the funds and accounts established hereunder, other than the Rebate Fund (collectively, the "Pledged Revenues"). The Series 2001 Bonds and the interest thereon do not constitute a general indebtedness ofthe City or a pledge of its faith and credit, but are payable solely from the Pledged Revenues in the manner provided in the Ordinance. No Holder of any of the Series 2001 Bonds shall ever have the right to compel the exercise of the ad valorem ta.~ing power of the City to pay the Series 2001 Bonds or interest thereon or be entitled to payment of the Series 2001 Bonds or interest thereon from any moneys of the City except the Pledged Revenues. Public Service Tax General Section 166.231, Florida Statutes, as amended, authorizes any Florida municipality to levy a tax on the purchase within such municipality of electricity, metered or bottled gas (natural, liquid petroleum gas, or manufactured), water service, as well as other services defined by ordinance competitive with those specifically enumerated above. Currently, the tax on the foregoing services may not exceed ten percent (1 0%) of the payments received by the sellers of such utilities service from purchasers (except in the case of fuel oil for which the maximum tax is four cents per gallon). In addition, municipalities may levy a tax on purchases within the municipality of telecommunications service which originate and terminate in the State of Florida, at a rate of not to exceed seven percent (7%) of the total amount charged. "Telecommunications servic'e" includes telephone, telegram or telegraph, pagers, "beepers," and any other form of mobile communication. The purchase of gas or fuel oil by a utility for resale or for use as a fuel in the generation of electricity or the purchase of fuel oil or kerosene for use in aircraft or internal combustion engines are exempt from the levy of such utilities tax, as are fuel adjustment charges and purchases by any recognized church in Florida for use exclusively for church purposes. A municipality may exempt from the public service tax up to the first 500 kilowatts of electricity per month purchased for residential use. In addition, a municipality may exempt 50% of the purchases subject to the public service tax for businesses located within an enterprise zone. A municipality may also exempt purchases by the United States 7 Government, the State, or other public bodies from the levy of such tax as well as certain nonprofit corporations, cooperative associations and churches. Public service taxes must be collected by the seller of the utilities service from purchasers at the time of sale and remitted to the taxing municipality as prescribed by ordinance of the municipality. Municipalities levying public service taxes must provide written notification to the respective utility companies of any change in the boundaries of the municipality or the rate of taxation levied on such utilities services. As used in the Bond Ordinance and herein, the term "Public Service Tax" means the taxes imposed and levied by the City as authorized by Section 166.231, Florida Statutes. The City has covenanted in the Bond Ordinance that it will take all action permitted by law to collect the Public Service Tax proceeds in the amount necessary to meet the requirements under the Bond Ordinance. Article III entitled "Public Service Tax" is found at Chapter 29 in the City's Code of Ordinances, as amended (the "City Code"). This article contains the terms of the City's levy of its Public Service Tax. The City currently levies the Public Service Tax at the rate often percent (10%) of payment received by seller on sales of electricity, gas, and water service, four cents per gallon of every gallon on the sale of fuel oil, and seven percent (7%) on sales of telecommunication services within the City. Exempted from the City's Public Service Tax are: (a) Federal, state and local governments, agencies thereof and churches, (b) purchase of telecommunication service for hire or resale, ( c) purchases of fuel oil for aircraft; and (4) various other miscellaneous exemptions listed in Section 29.76 of the City Code. The City Commission is solely responsible for setting or revising the Public Service Tax it levies within the limits of Section 166.231, Florida Statutes, which it accomplishes through the ordinances relating to the Public Service Tax. HISTORICAL PUBLIC SERVICE TAX RECEIPTS BY CATEGORY (Unaudited) ~ Telecommunications ill !i!! ~ !2!!! 1993 $ 6,264,393 $ 2,726,069 $ 525,306 $ 1,224,848 $ 10,740,616 1994 6,898,861 3,120,017 548.617 1.264,070 11,831,565 1995 7,359.147 3,567,656 553,098 1,256,381 12,736,282 1996 7,848,826 3,608,054 513,371 1,381,363 13,351,613 1997 7,668,482 3.936,764 519,848 1,432,263 13,557.358 1998 8,124,584 4,547,192 543,527 1,414,816 14,630,119 1999 8,187,061 5,013,904 513,716 1,523,475 15,238,156 2000 · 8,095,782 5,034,322 578,402 1,534,088 15,242,594 · 2000 Total does not equal the City's Comprehensive Annual Financial Report due to a late reversal. (1) See "Repeal of Utilities Service Tax or Telecommunications Services" below. 8 Repeal of Public Service Tax on Telecommunications Services In its regular 2000 legislative session, the Florida Legislature passed the "Communications Services Simplified Tax Act", Chapter 2000-260, Laws of Florida (the "CST Statute"), reforming the collection of local taxes on telecommunications and cable services. Among its provisions, the CST Statute repeals, effective October I, 200 I, subsection (9) ofthe UST Statute, which authorizes a local public service tax on telecommunications. The legislation creates a new simplified tax structure for communications services which is codified in a new Chapter 202, Florida Statutes. It combines seven different state and local taxes or fees (including fees imposed upon providers of communications services by municipalities and counties for granting permission to use or occupy roads or rights of way for the placement of poles, wires and other fixtures) and replaces these revenues with a two tiered tax composed of a state tax and a local option tax on communications services. The new tax structure became effective October I, 2001. Those portions of the Public Service Tax which are derived from telecommunications services are impacted by the CST Statute. The new local option tax on communication services provided for in the CST Statute (the "New Communications Tax") is intended to replace those and other revenues presently received by governmental entities from the imposition of taxes and fees on telecommunication and cable services. Section 54 of the CST Statute specifically states "Revenue received by a taxing authority under this act shall be deemed to replace any taxes or fees previously imposed but repealed by this act without any further action on the part of such taxing authority." Because of the adoption of the CST Statute, the definition of Public Service Tax has been amended in the Ordinance to include the following additional provisions: "To the extent that the Public Service Tax receipts derived by the City pursuant to Section 166.231(9), Florida Statutes, is eliminated as a result of the provisions of Chapter 2000-260, Laws of Florida, all of the revenues received by the City pursuant to the provisions of Chapter 2000-260, Laws of Florida, shall be deemed to replace the Public Service Tax receipts so eliminated and shall be included within the defmition of "Public Service Tax" in the Ordinance and will be subject to the lien on and pledge of the Pledged Revenues granted in the Ordinance without any further action on the part of the City." The following outlines certain provisions of the CST Statute. As noted above, the CST Statute is extensive and the following descriptions are not, and are not intended to be, comprehensive or exhaustive. The full text of the CST Statute is available on the Florida Legislature's website which can be accessed through hUll ://www.le2.state.il.us/by reviewing the 2000 Digest of General Laws contained therein and accessing Chapter 2000-206. Tax Base. The New Communications Tax is imposed on a broad base of telecommunications and cable services and does not discriminate between services or providers. The definition of "communications services" references the transmission of voice, data, audio, video, or any other information or signals, including cable services, by or through any medium or method currently in 9 - existence or hereafter devised, including electronic, radio, satellite, cable, optical, and microwave. Section 202.11(3), Florida Statutes. The definition excludes: "information services" (which is separately defined); the installation or maintenance of wiring or equipment on a customer's premises; the sale or rental of tangible personal property; the sale of advertising; bad check and late payment charges; billing and collection services; and Internet access and related on-line services. Section 202.11 (3), Florida Statutes. New Communications Tax. Effective October 1, 2001, the New Communications Tax automatically became effective at rates developed by using local govemment and industry data from 1999. (The revenues being replaced by the New Communications Tax are referred to as the "replaced revenue sources"). While calendar year 1999 data is being used to establish rates to be implemented in 2001, local governments are not expected (although there is no assurance) to experience any decrease in revenues because the rates developed will be applied to taxable transactions occurring in the year 2001. After 2001, while the rate being applied is based on information from 1999, the amount of revenues generated is not limited to the amount ofrevenue generated in 1999. Thereafter, municipalities will have the authority to alter by ordinance the rates of the New Communications Tax up to a maximum tax rate which duplicates their maximum revenue raising capacity under current law. Municipalities will have a uniform maximum tax rate. Section 202.19, Florida Statutes. A municipality will not have a lower or different maximum tax rate if it has not actually exercised its maximum revenue raising capacity. So, under the CST Statute, a municipality need not take any action to increase or preserve its maximum tax rate authority. F or municipalities, the replaced revenue sources consist of: the municipal public service tax on telecommunications, including pre-paid calling arrangements; franchise fees on cable and telecommunications service providers; and permit fees relating to placing or maintaining facilities in rights-of-way collected from providers of certain telecommunications services. Sections 202.19, 202.20 (4), Florida Statutes. The tax imposed by a municipality will apply to communications services that originate or terminate in Florida and are charged to a service address in the municipality. As noted above, that portion of the Public Service Tax which is derived from telecommunications services will be considered replaced by the revenue received by the City under and in accordance with the CST Statute. - Tax Rates. The CST Statute establishes a Revenue Estimating Conference (the "REC") that was tasked with determining several new tax rates at the state and local government levels. The REC was required by the CST Statute to make rate recommendations to the Legislature before December 31, 2000, for consideration during the 2001 Regular Session, which recommendations were made in March 2001. At the local level, the REC was required to develop two tax rates: (1) an individual conversion or "initial" rate for each municipality; and (2) a maximum or "revenue capacity" rate that will be the same for all municipalities. The conversion or "initial" rate will vary for each municipality based on the amount of revenues to be replaced and the tax base within each individual municipality. The conversion or "initial" rate, for each municipality is designed to accomplish two main goals. First, such rate is supposed to permit a smooth transition at the local level by eliminating the necessity to re-enact or adopt various new tax rates due to the changes created by the Legislature. Second, such rate is supposed to account for varying consumption patterns in some 10 jurisdictions. It is possible that the conversion rate in certain jurisdictions will exceed the maximum rate established by the Legislature. Conversion or "initial" rates will become effective automatically on October 1, 2001. Section 202.20( 1), Florida Statutes. The REC was required by the CST Statute to calculate maximum or "revenue capacity" rates for local governments. The maximum rates will duplicate the current "capacity" of the replaced revenue sources, so that jurisdictions which currently levy taxes and fees at less than the legal maximums will not experience a reduction in revenue raising authority. On or before September 30, 2000, each municipality was required to provide specific information for each replaced revenue source to the Department of Revenue. Pursuant to the CST Statute, this information was to be compiled and presented to the REC for use in making proposed tax rates to the Legislature. Communications services providers were also required to provide specified information to the Department of Revenue to determine the new tax base. Additionally, these companies were required to provide this information in a format that recognized individual local government boundaries. Section 202.20, Florida Statutes. The replaced revenue sources for municipalities are: the municipal public service tax on telecommunications as authorized by Section 166.231 (9), Florida Statutes; franchise fees on cable service providers; the municipal public service tax on prepaid calling arrangements; franchise fees on communications services providers which use the public roads or rights-of-way, up to the limits set forth in section 337.401, Florida Statutes; and permit fees collected from providers of long distance, cable, and mobile communications services unless the municipality or charter county elects the option to charge permit fees. Section 202.20(4), Florida Statutes. Rate recommendations by the REC, in the form of proposed legislation, were approved by the Florida Legislature during its regular 200 I legislative session in the form of Enrolled CS/CS/SB 1878 (the "Amended CST Statute"). The Governor has signed this legislation. The rate (i.e., the rate applicable between October 1,2001 and September 30, 2002) for the City under the Amended CST Statute is 5.28% and the ongoing rate (i.e., the rate applicable from and after October I, 2002) for the City is 5.0%. Since the City elected not to charge permit fees related to the installation and maintenance of wires on its rights-of-way, pursuant to the Amended CST Statute these rates will be increased by 0.12% effective October I, 2001. The City may also exceed the maximum rate if necessary in order for the City to maintain its collection of the same annual dollar amount from and after October 1, 2001, that it received for the fiscal period ending September 30, 2001. Emergency Rates. Realizing that the data for the conversion or "initial" rates may not be accurate for each jurisdiction or certain unique consumption patterns may exist, the CST Statute authorizes a municipality to exercise emergency taxing authority by ordinance if needed to replace any revenues. If during any calendar quarter beginning with December 31, 2001, and ending with September 30,2002, any local taxing jurisdiction receives less revenues than the revenues received from the replaced revenue sources for the corresponding 2000-2001 period, the local governing authority may adjust the rate upward. An upward adjustment can also be made for the reasonably anticipated growth in revenues over the preceding one-year period based on the average growth of such revenues over the immediately preceding five-year period. Rates set by emergency ordinance may even exceed the maximum rate if the standards for the emergency rate are met. The emergency 11 ordinance implementing a rate change must specify the effective date for the adjusted rate, which can be no less than 90 days after the date of adoption of the ordinance. The CST Statute also requires a reduction in rates once any lost revenues are recouped. Section 202.20(1)( c), Florida Statutes. Internet Services. In the CST Statute, the Legislature continued its non-tax policy regarding internet access services and awaits action by Congress to lift such restrictions. However, the existing policy to tax all communications services sold together or "bundled", including Internet services, will be applied under the New Communications Tax. This policy is identified in section 202.11 (14 )(b)7., Florida Statutes. Assignment of Customers for Local Taxes. One of the features regarding the local communications services tax is the concept of "situsing" or identifying taxable transactions within a particular municipality or unincorporated area. Local govenunents must work wi th the Department of Revenue to properly identify service addresses to each municipality and county. Ifmunicipalities fail to provide the Department of Revenue with accurate service address information, the municipality or county risks losing tax proceeds that it should properly receive. To the knowledge of the City, it has as of the date of this Official Statement provided the Department of Revenue with all information that the Department of Revenue has requested. Compensation of Providers. Providers filing timely returns will retain an allowance of. 7 5 percent of collections, except that it will be .25 percent for providers who do not employ an enhanced zip code database or a database that is either supplied or certified by the Department ef Revenue for assigning customers for local tax purposes. Sections 202.22(6), 202.28, Florida Statutes. Registration and Resale Certificates. Effective October 1, 2001, each provider of communications services must be registered with the Department. Some contents ofthe application are specified in the bill, others may be added by Department of Revenue rule. The Department of Revenue will issue a certificate of registration, and also an annual resale certificate (similar to the current sales tax mechanism). Section 202.17, 'Florida Statutes. The CST Statute allows the Department of Revenue rulemaking authority regarding registration. Section 202.26(3)(h), Florida Statutes. Department Rulemaking. Throughout the CST Statute there are provisions authorizing rulemaking by the Department of Revenue. Emergency rulemaking (which occurs on an expedited basis) is also authorized. Section 202.26(4), Florida Statutes. Potential Challenl!es to the CST Statute. It is the City's understanding that certain Florida local governments may be considering challenging the legality of the CST Statute as it applies to local govemments within the State. Because no formal legal actions have been filed to date, no predictions or determinations can be made regarding whether any legal challenges will be filed or as to the possible outcome of any legal challenges, if initiated. If the CST Statute were not to become effective due to such a legal challenge, or if it were to be held invalid by a court, it is likely that the existing UST Statute would remain in effect with respect to the tax on telecommunications services, and the language of the CST Statute expressly provides that such would be the case. 12 Factors Affecting Public Service Tax. The amount of Public Service Tax collected by the City may fluctuate as the price of gas and electricity fluctuates. Historically, the City has experienced decreases in collections of taxes associated wj.th the sale of gas and electricity as costs of such items increase. A sustained increase in the costs of gas or electricity may have a materially adverse effect on the amount of Public Service Tax collected. The amount of Public Service Tax collected by the City may also be affected by changes in the electric utility industry. The electric utility industry in general has been, or in the future may be, affected by a number of factors which could have a materially adverse impact upon the financial condition of an electric utility. Such factors include, among others: (i) effects of inflation on the operating and maintenance costs of an electric utility and its facilities, (ii) changes from projected future load requirements, (iii) increases in costs and uncertain availability of capital, (iv) shifts in the availability and relative costs of different fuels, (v) effects of compliance with rapidly changing environmental, safety, licensing and regulatory requirements, (vi) changes resulting from conservation and demand side management programs on the timing and use of electric energy, (vii) changes that might result from a national energy policy and (viii) effects of open retail competition from other suppliers of electricity through de-regulation. Any of these factors could have a material adverse effect on the financial condition of any electric utility and likely would affect individual utilities in different ways. In turn these factors could reduce the amount of Public Service Tax collected based upon a reduction in the use of electric energy and/or a reduction in electric energy charges. Reserve Fund The Ordinance provides for the Reserve Fund for the Bonds to be funded in an amount equal to the Reserve Requirement, which is defined to mean the lesser of: (i) the Maximum Bond Service Requirement; (ii) 125% of the Average Bond Service Requirement, or (iii) the largest amount as shall not adversely affect the exclusion of interest on the Series 2001 Bonds from gross income for federal income tax purposes. Amounts on deposit in the Reserve Fund will be used only for payment of principal of and interest on the Bonds when other moneys in the Debt Service Fund are insufficient therefor. Any withdrawals from the Reserve Fund will be restored from the first moneys available in the Revenue Fund after all required payments to the Debt Service Fund (including all deficiencies in prior required payments therefrom) have been made in full. Additional Parity Obligations No Additional Parity Obligations will be issued unless the following conditions are complied with: (1) There has 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 Public Service Tax Revenues portion of the Pledged Revenues have been reviewed; (b) setting forth the amount of the Public Service Tax Revenues portion of the Pledged Revenues derived for any consecutive twelve (12) months out of the preceding twenty-four (24) months preceding the date of issuance of the 13 proposed Additional Parity Obligations adjusted as described below; (c) that the aggregate amount of such Public Service Tax Revenues portion of the Pledged Revenues, is equal to not less than 120% (or such other percentage as may be set forth in a subsequent resolution of the City adopted prior to the issuance of the Series 2001 Bonds) of the Maximum Bond Service Requirement becoming due in any Bond Year thereafter on (i) all Bonds issued under the Ordinance then Outstanding, and (ii) on the Additional Parity Obligations with respect to which such certificate is made. (2) Upon recommendations of the Finance Director and to the extent adopted in a subsequent resolution of the City, if there is an estimated increase in Public Service Tax Revenues portion of the Pledged Revenues to be received by the City as a result of a change in law to provide for additional Public Service Tax Revenues to be levied and collected by the City, then the Public Service Tax Revenues portion of Pledged Revenues certified as described above will be increased by the projected increase in Public Service Tax Revenues to be distributed as if such excess Public Service Tax Revenues were in fact available to the City during the applicable twelve month period. (3) Additional Parity Obligations will be deemed to have been issued pursuant to the Ordinance the same as the Outstanding Bonds, and all of the other covenants and other provisions of the Ordinance (except as to details of such Additional Parity Obligations inconsistent therewith) will be for the equal benefit, protection and security of the Holder of all Bonds issued pursuant to the Ordinance. Except as described under this subcaption, all Bonds, regardless of the time or times of their issuance, will rank equally with respect to their lien on the Pledged Revenues and their sources and security for payment therefrom without preference of any Bonds over any other. (4) In the event that the total amount of Bonds herein authorized to be issued are not issued simultaneously, such Bonds which are subsequently issued will be subject to the conditions described under this subcaption. (5) The City need not comply with the provisions of para graph 1 above if and to the extent the Additional Parity Obligations to be issued are refunding bonds, and if the City causes to be delivered a certificate of the Finance Director setting forth the annual debt service (i) for the Bonds then Outstanding and (ii) for all Bonds to be immediately Outstanding after the issuance of such Additional Parity Obligations and stating that the Bond Service Requirement in any year pursuant to (ii) above is not greater than the Bond Service Requirement in the corresponding year set forth pursuant to (i) above. (6) The City will not be in default in the carrying out of any of the obligations assumed under the Ordinance and no event of default will have occurred under the Ordinance and will be continuing, and all payments required by the Ordinance to be made into the funds and accounts established hereunder will have been made to the full extent required. (7) The resolution authorizing the issuance of the Additional Parity Obligations will recite that all of the covenants described above will be applicable to such Additional Parity Obligations. 14 Covenants of the City The City covenants in the Ordinance to do all things necessary on its part to continue the levy and collection of the Public Service Tax (the definition of which includes the Communication Services Tax) at the rate permitted by and in compliance with Section 166.231, Florida Statutes, and Article III, Chapter 44, Code of Ordinances of the Issuer, and any successor provision of law. All such Pledged Revenues shall, as collected, be held in trust to be applied as herein provided. Flow of Funds All revenues in the Revenue Fund, shall be disposed of monthly, but not later than the twenty-fifth (25th) day of each month commencing in the month immediately following the delivery of the initial series of Bonds, for so long as any Bonds remain Outstanding, only in the following manner and the following order of priority: (1) The City shall first deposit into the Bond Service Fund and credit to the following accounts, in the following order (except that payments in the Principal Account and the Redemption Account shall be on a parity with each other), the following identified sums: (a) Interest Account: Such sum as will be sufficient to pay one-sixth (1/6th) (or such higher monthly amount on a prorated basis) of all interest coming due on all Outstanding Bonds on the next interest payment date, together with any fees and charges of the Paying Agent and Registrar therefor; provided, however, that monthly deposits of interest, or portions thereof, shall not be required to be made to the extent that money on deposit within such Interest Account is sufficient for such purpose. In the event the City has issued Variable Rate Bonds pursuant to the provisions of the Ordinance, Public Service Tax Revenues shall be deposited at such other or additional times and amounts as necessary to pay any interest coming due on such Variable Rate Bonds on the next interest payment date, all in the manner provided in a supplemental resolution of the City. Any monthly payment out of Public Service Tax Revenues to be deposited as set forth above, for the purpose of meeting interest payments for any Series' of Bonds, shall be adjusted, as appropriate, to reflect the frequency of interest payment dates applicable to such Series. Moneys in the Interest Account may be used only for the purposes set forth in this paragraph. (b) Principal Account: Such sum as will be sufficient to pay one-twelfth (l/12th) (or such higher monthly amount on a prorated basis) of the principal amount of the Outstanding Bonds which will mature and become due on such annual maturity dates beginning in the month which is twelve (12) months prior to the first principal maturity date; provided, however, that monthly deposits for principal, or portions thereof, shall not be required to be made to the extent that money on deposit within such Principal Account is sufficient for such purpose. Any monthly payment out of Public Service Tax Revenues to be deposited as set forth above, for the purpose of meeting principal payments for any Series of Bonds, shall be adjusted, as appropriate, to reflect the frequency of principal payment dates applicable to such Series. Moneys in the Principal Account may be used only for the purposes set forth in this paragraph. 15 (c) Redemption Account: Such sum as will be sufficient to pay one- twelfth (1/ 12th) (or such higher amount on a prorated basis) of any Amortization Installment established for the mandatory redemption of Outstanding Bonds on such annual maturity date beginning in the month which is twelve (12) months prior to the first Amortization Installment date; provided, however, that monthly deposits into the Redemption Account, or portions thereof, shall not be required to be made to the extent that money on deposit in the Redemption Account is sufficient for such purpose. Any monthly payment out of Public Service Tax Revenues to be deposited as set forth above, for the purpose of meeting Amortization Installments for any Series of Bonds, shall be adjusted, as appropriate, to reflect the frequency of dates established for Amortization Installments applicable to such Series. The moneys in the Redemption Account shall be used solely for the purchase or redemption of the Term Bonds payable therefrom. The City may at any time purchase any of said Term Bonds at prices not greater than the then redemption price of said Term Bonds. If the Term Bonds are not then redeemable prior to maturity, the City may purchase said Term Bonds at prices not greater than the redemption price of such Term Bonds on the next ensuing redemption date. If Term Bonds are so purchased by the City, the City shall credit the account of such purchased Term Bonds against any current Amortization Installment to be paid by the City. If the City shall purchase or call for redemption in any year Term Bonds in excess of the Amortization Installment requirement for such year, such excess of Term Bonds so purchased or redeemed shall be credited in such manner and at such times as the City shall determine. Moneys in the Redemption Account in the Debt Service Fund may be used only for the purposes set forth in this paragraph. (2) The City shall next deposit from moneys remaining in the Revenue Fund an amount required by the resolution of the City authorizing each Series of Bonds into the Reserve Fund. Any withdrawals from the Reserve Fund shall be subsequently restored from the first moneys available in the Revenue Fund, after all current applications and allocations to the Bond Service Fund, including all deficiencies for prior payments have been made in full. Notwithstanding the foregoing, in case of withdrawal from the Reserve Fund, in no event shall the City be required to deposit into the Reserve Fund an amount greater than that amount necessary to ensure that the difference between the Reserve Requirement and the amounts on deposit in the Reserve Fund on the date of calculation shall be restored not later than sixty (60) months after the date of such deficiency (assuming equal monthly payments into the Reserve Fund for such sixty (60) month period). The City may provide that the difference between the amounts on deposit in the Reserve Fund and the Reserve Requirement shall be an amount covered by obtaining bond insurance issued by a reputable and recognized municipal bond insurer, by a letter of credit rated in one of the two highest categories by one of two nationally recognized rating agencies, by a surety bond acceptable to any company issuing a policy of municipal bond insurance guaranteeing the payment of principal and interest on such Series of Bonds, or any combination thereof. Moneys in the Reserve Fund shall be used only for the purpose of the payment of Amortization Installments, principal of, or interest on the Outstanding Bonds when the other moneys allocated to the Bond Service Fund are insufficient therefor, and for no other purpose. Securities in the Reserve Fund shall be valued annually at market rate. Deficiencies in the amounts on deposit in the Reserve Fund resulting from a decline in market value shall be restored no later than the succeeding interest payment date. In the event of the refunding of any 16 Series of Bonds, the City may withdraw from the Reserve Fund, all or any portion of the amounts accumulated tin the Ordinance with respect to the Bonds being refunded and deposit such amounts as required by the resolution authorizing the refunding of such Series of Bonds; provided that such withdrawal shall not be made unless (a) immediately thereafter the Bonds being refunded shall be deemed to have been paid pursuant to the provisions of the Ordinance and (b) the amount remaining in the Reserve Fund after giving effect to the issuance of such refunding obligations and the disposition of the proceeds thereof shall not be less than the Reserve Requirement for any Bonds then Outstanding. (3) From the moneys remaining in the Revenue Fund, the City shall next deposit into the Subordinated Debt Service Fund, if any, an amount required to be paid as provided in the resolution of the City authorizing such Subordinated Indebtedness for principal, interest, mandatory redemption payments, if any, and debt service reserve payments, if any, on Subordinated Indebtedness, but for no other purposes. (4) The balance of any moneys remaining in the Revenue Fund after the above required payments have been made may be used for any lawful purpose; provided, however, that none of said money shall be used for any purposes other than those in the Ordinance specified above unless all current payments, including any deficiencies for prior payments, have been made in full and unless the City shall have complied fully with all the covenants and provisions ofthe Ordinance. (5) The Bond Service Fund (including the accounts in the Ordinance), the Reserve Fund, the Revenue Fund, and any other special funds in the Ordinance established and created sh~l be deemed to be held in trust for the purposes provided in the Ordinance for such funds. The money in all such funds shall be continuously secured in the same manner as state and municipal deposits are authorized to be secured by the laws of the State of Florida in Permitted Investments. Except as otherwise permitted by the resolution authorizing any Series of Bonds, moneys in any fund or account created under the Ordinance (with the exception ofthe Reserve Fund) may be invested and reinvested in Permitted Investments which mature not later than the dates on which the moneys on deposit tin the Ordinance wifl be needed for the purpose of such fund. Except as otherwise permitted by the resolution authorizing any Series of Bonds, moneys in the Reserve Fund may be invested and reinvested in Permitted Investments maturing not later than five (5) years after deposit into such Reserve Fund by the City. All income on such investments, except as otherwise provided, shall be deposited in the respective funds and accounts from which such investments were made and be used for the purposes thereof unless and until the maximum required amount (or, with respect to the Construction Fund, the amount required to acquire, construct and erect the Project) is on deposit tin the Ordinance, and thereafter shall be deposited in the Revenue Fund. (6) In determining the amount of any of the payments required to be made pursuant to this Section, credit may be given for all investment income accruing to the respective funds and accounts described in the Ordinance, except as otherwise provided. (7) The cash required to be accounted for in each of the funds and accounts described in this Section may be deposited in a single bank account, provided that adequate 17 accounting records are maintained to reflect and control the restricted allocation of the cash on deposit tin the Ordinance for the various purposes of such funds and accounts as in the Ordinance provided. The designation and establishment ofthe various funds in and by the Ordinance shall not be construed to require the establishment of any completely independent, self-balancing funds as such term is commonly defined and used in governmental accounting, but rather is intended solely to constitute an earmarking of certain revenues and assets ofthe Project for certain purposes and to establish certain priorities for application of such revenues and assets as provided in the Ordinance. REFUNDING PROGRAM In August, 1985, the City issued $7,155,000 Public SeIVice Tax and Bridge Revenue Bonds, Series 1985 (the" 1985 Bonds") to finance the cost of refunding $3,290,000 Utilities Tax Bonds, Series 1977 and $6,060,000 Utilities Tax and Bridge Revenue Bonds, Series, 1977, and to provide funds for land acquisition and construction of a City-owned and operated parking garage. In February, 1995, the City issued $10,720,000 Improvement Revenue Bonds, Series 1995, to finance the construction of a new police headquarters building and relating parking facilities (the "1995 Bonds"). A portion of the net proceeds of the Series 2001 Bonds will be used to currently refund the 1985 Bonds, which are currently outstanding in the aggregate principal amount of [ ] and advance refund the 1995 Bonds, which are currently outstanding in the aggregate principal amount of [ ] (as previously defined, the" 1985 Bonds" and the" 1995 Bonds" are referred to collectively, as the "Refunded Bonds"). To effect the refunding of the Refunded Bonds, the City will enter into an escrow deposit agreement (the "Escrow Agreement") with [Escrow Agent], [Escrow Agent Location], Florida, as escrow agent (the "Escrow Agent"). Pursuant to the terms of the Escrow Agreement, the City will deposit with the Escrow Agent a portion of the proceeds of the Series 2001 Bonds, as well as other available moneys of the City. Such moneys, other than beginning cash balances, will be applied on the date of delivery of the Series 2001 Bonds to the purchase of direct obligations of the United States of America (the "United States Obligations"). The United States Obligations shall mature at such times and in such amounts as shall be sufficient to pay the principal of, redemption premium, if any, and interest on the Refunded Bonds as the same become due and payable or are redeemed prior to maturity. The Refunded 1985 Bonds will be redeemed on or before [ ] at the redemption price of [ ] and the Refunded 1995 Bonds will be redeemed on or before [ ] at the redemption price of [ ]. Upon deposit of such moneys into the special escrow deposit trust account (the "Escrow Account") as provided in the Escrow Agreement, in the opinion of Bond Counsel, based upon the verification report provided in connection with such issue, the lien of the Refunded Bonds on the Public Service Tax will be discharged. 18 ESTIMATED SOURCES AND USES OF FUNDS Sources of Funds: Principal Amount of Series 2001 Bonds Accrued Interest Total Sources Uses of Funds: Deposit to Escrow Fund Deposit to Interest Account Costs ofIssuance (1) Total Uses (1) Includes underwriting discount, premiums for municipal bond insurance and other expenses relating to the issuance of the Series 2001 Bonds. [Remainder of page intentionally left blank] 19 DEBT SERVICE SCHEDULE Total Date Princinal Interest Debt Service . (1) Inclusive of accrued interest on the Series 2001 Bonds. 20 HISTORICAL AND PROJECTED DEBT SERVICE COVERAGE Fiscal Years Ending September 30, 1996 ( audited) 1997 ( audited) Historical 1998 (audited) 1999 (audited) 2000 ( audited) Public Service Tax Annual Debt Service Debt Service Coverage 2001 Projected 2002 2003 2004 2005 Estimated Public Service Tax Estimated Annual Debt Service Estimated Debt Service Coverage MUNICIPAL BOND INSURANCE [TO COME] TAX EXEMPTION Federal Income Tax Matters 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 2001 Bonds in order that interest on the Series 2001 Bonds be and remain excluded from gross income for purposes of federal income taxation. Non-compliance may cause interest on the Series 2001 Bonds to be included in federal gross income retroactive to the date of issuance of the Series 2001 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 2001 Bonds and the other amounts are to be invested and require that certain investment earnings on the foregoing must be rebated on a periodic basis to the Treasury Department of the United States. The City has covenanted in the Ordinance to comply with such requirements 21 in order to maintain the exclusion from federal gross income of the interest on the Series 2001 Bonds. In the opinion of Bond Counsel, assuming compliance with the aforementioned covenants, under existing laws, regulations, judicial decisions and rulings, interest on the Series 2001 Bonds is excluded from gross income for purposes offederal income taxation. Interest on the Series 2001 Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals or corporations; however, interest on the Series 2001 Bonds may be subject to the alternative minimum tax when any Series 2001 Bond is held by a corporation. The alternative minimum taxable income of a corporation must be increased by 75% of the excess of such corporation's adjusted current earnings over its alternative minimum taxable income (before this adjustment and the alternative tax net operating loss deduction). "Adjusted Current Earnings" will include interest on the Series 2001 Bonds. Except as described above, Bond Counsel 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 200 I Bonds. Prospective purchasers of Series 200 I Bonds should be aware that the ownership of Series 200 I 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 200 I Bonds, (ii) the reduction ofthe loss reserve deduction for property and casualty insurance companies by 15% of certain items, including interest on the Series 200 I Bonds, (iii) the inclusion of interest on the Series 2001 Bonds in earnings of certain foreign corporations doing business in the United States for purposes of a branch profits tax, (iv) the inclusion of interest qn Series 2001 Bonds in passive income subject to federal income taxation of certain S corporations with Subchapter C earnings and profits at the close of the taxable year, and (v) the inclusion of interest on the Series 2001 Bonds in "modified adjusted gross income" by recipients of certain Social Security and Railroad Retirement benefits for purposes of determining whether such benefits are included in gross income for federal income tax purposes. PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE SERIES 2001 BONDS AND THE RECEIPT OR ACCRUAL OF THE INTEREST THEREON MA Y HA VE ADVERSE FEDERAL TAX CONSEQUENCES FOR CERTAIN INDIVIDUAL AND CORPORATE REGISTERED OWNERS. PROSPECTIVE SERIES 2001 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 2001 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 2001 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 2001 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 2001 Bonds. 22 Tax Treatmen.t of Original Issue Discount Under the Code, the difference between the maturity amount of the Discount Bonds maturing in the years through (the "Discount Bonds") and the initial offering price to the public, excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers, at which price a substantial amount of Discount Bonds of the same maturity was sold is "original issue discount." Original issue discount will accrue over the term of such Discount Bonds at a constant interest rate compounded periodically. A purchaser who acquires such Discount Bonds in the initial offering at a price equal to the initial offering price thereofto the public will be treated as receiving an amount of interest excludable from gross income for federal income tax purposes equal to the original issue discount accruing during the period he holds such Discount Bonds, and will increase his adjusted basis in such Discount Bonds by the amount of such accruing discount for purposes of determining taxable gain or loss on the sale or other disposition of such Discount Bonds. The federal income tax consequences of the purchase, ownership and redemption, sale or other disposition of the Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those above. Owners of such Discount Bonds should consult their own tax advisors with respect to the precise determination for federal income tax purposes of interest accrued upon sale, redemption or other disposition of Discount Bonds and with respect to the state and local tax consequences of owning and disposing of such Discount Bonds. Tax Treatment of Bond Premium It is anticipated that the Series 2001 Bonds maturing in years _ through _ will be offered at prices in excess of the principal amount thereof to achieve a yield based upon the call date rather than the maturity date (the "Premium Bonds"). Under the Code, the excess of the cost basis of a Premium Bond over the amount payable at the maturity date of the Premium Bond that minimizes the yield to a purchaser of a Premium Bond (other than for a bondholder who holds a bond as inventory, stock in trade, or for sale to customers in the ordinary course of business) is generally characterized as "bond premium." For federal income tax. purposes, bond premium is amortized over the period to the maturity date of a Premium Bond that is not subject to early redemption. A bondholder will therefore be required to decrease his basis in the Premium Bond by the amount of the amortizable bond premium attributable to each taxable year he holds such Premium Bond. The amount of the amortizable bond premium attributable to each taxable year is determined on an actuarial basis at a constant interest rate compounded on each interest payment date. The amortizable bond premium attributable to a taxable year is not deductible for federal income tax. purposes. Holders of the Series 2001 Bonds maturing in years _ through _ should consult their own tax. advisors with respect to the precise determination for federal income tax purposes of the treatment of bond premium upon sale, redemption, or other disposition of such Premium Bonds. 23 Florida Tax Matters On the date of delivery of the Series 200 1 Bonds, Bond Counsel will issue an opinion to the effect that under existing statutes, regulations and judicial decisions, the Series 2001 Bonds and the income therefrom are exempt from all present intangible personal property taxes imposed by Chapter 199, Florida Statutes and documentary stamp taxes imposed by Chapter 201, Florida Statutes, as amended. AUDITED GENERAL PURPOSE FINANCIAL STATEMENTS The Audited General Purpose Financial Statements of the City for the fiscal year ended September 30, 2000 and report thereon of the Independent Certified Public Accountants is attached hereto as APPENDIX D. Such financial statements are presented for general informational purposes only. INVESTMENT POLICY Pursuant to the requirements of Section 218.45, Florida Statutes, the City adopted a written investment policy which applies to all funds held by or for the benefit of the City Commission (except for proceeds of bond issues which are deposited in escrow and debt service funds and governed by their bond documents) and funds of Constitutional Officers and other component uni~s of the City. The objectives of the investment policy, listed in order in order of importance, are: I. Safety of principal 2. Provision of sufficient liquidity 3. Optimization of return within the c,onstraints 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 of loss 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 accounts established under the Ordinance may be invested only in Permitted Investments, as described in the Ordinance. 24 LITIGATION There is no pending or threatened litigation restraining or enjoining the issuance or delivery of the Series 2001 Bonds or the pledge of the Pledged Revenues or questioning or affecting the validity of the Series 2001 Bonds or the pledge of the Pledged Revenues or the proceedings and authority under which the Series 2001 Bonds are issued and the Pledged Revenues are pledged. Neither the creation, organization or existence, nor the title of the present members of the City Commission of the City or other officers of the City to their respective offices is being contested. The City experiences routine litigation and claims incidental to the conduct of its affairs. Counsel to the City is of the opinion that no case either pending or threatened against the City will materially adversely affect the ability of the City to meet its obligations to pay the Series 2001 Bonds or will materially adversely affect the operations or financial condition of the City. RATINGS Moody's Investors Service ("Moody's"), Fitch, Inc. and Standard & Poor's Ratings Services ("S&P") are expected to assign municipal bond ratings of" "and" ," respectively, to the Series 2001 Bonds with the understanding that, upon delivery of the Series 2001 Bonds, a policy insuring the payment when due of the principal of and interest on the Series 2001 Bonds will be issued by the Bond Insurer. Such ratings reflect the views of the respective rating agencies and an explanation of the significance of such ratings may be obtained only from the rating agencies at the following addresses: Moody's Investors Service, 99 Church Street, New York, New York 10007, and Standard & Poor's Rating Service, 25 Broadway, New York, New York 10004. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agency concerned, if, in the judgment of such agency, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect upon the market price ofthe Series 2001 Bonds. LEGAL OPINIONS Legal matters incident to the authorization, issuance and sale of the Series 200 I Bonds are subject to the approval of Bryant, Miller and Olive, P .A., Tallahassee, Florida, Bond Counsel, whose approving opinion will be printed on the Series 2001 Bonds and will be in substantially the form set forth in APPENDIX E. 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. 25 ENFORCEABILITY OF REMEDIES The remedies available to the Holders of the Series 2001 Bonds upon an Event of Default under 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, the remedies specified by the Ordinance may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2001 Bonds will be qualified, as to the enforceability of the various legal instruments, by limitations imposed by bank- ruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. The remedies granted to the Bondholders under the Ordinance do not include the power to accelerate the principal of the Series 200 1 Bonds. FINANCIAL ADVISOR The Financial Advisor for the City is Bane of America Securities LLC, with offices located at 1640 Gulf-to-Bay Boulevard, Cleazwater, Florida 33755. VERIFICATION OF MATHEMATICAL COMPUTATIONS The accuracy of the arithmetic computations of the adequacy of the maturing princip,al amount of the United States Obligations to pay, when due, the principal of and interest on the Refunded Bonds will be verified by [Verification Agent], a firm of independent certified public accountants. Such verification of arithmetic accuracy and mathematical computations shall be based upon information and assumptions supplied by the City regarding the maturities and interest rates on the Refunded Bonds and by the Underwriter regarding the United States Obligations purchased to pay, when due, the principal of, redemption premium, if any, and interest on the Refunded Bonds. UNDERWRITING The Series 2001 Bonds are being purchased by the Underwriters from the City at an aggregate purchase price of $ (par less underwriters' discount of $ ), plus accrued interest on the Series 2001 Bonds. The Underwriters are obligated to purchase all the Series 2001 Bonds if any are purchased. Following the initial public offering, the public offering prices may be changed from time to time by the Underwriters. The Series 2001 Bonds may be offered and sold to certain dealers (including underwriters and other dealers depositing such Bonds into investment trusts) and others at prices lower than the public offering prices set forth on the cover page of this Official Statement. 26 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS Section 517.051, Florida Statutes, as amended, and the regulations promulgated thereunder (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 Cityis not and has not since December31, 1975 been in default as to principal and interest on its bonds or other debt obligations (see, however, disclosure which is being made in the next paragraph related to conduit indebtedness). The City hereby makes the following disclosure regarding a default on an issue of industrial development bonds not related to any direct indebtedness ofthe 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 undertaken an independent review or investigation of such bonds or other debt obligations. 27 ADVISORS AND CONSULTANTS The City has retained advisors and consultants in connection with the issuance of the Series 200 I Bonds. These advisors and consultants are compensated from a portion of the proceeds of the Series 200 I Bonds, identified as "Costs of Issuance" under 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 Bane of America Securities LLC, Clearwater, Florida, as financial advisor (the "Financial Advisor") in connection with the preparation ofthe City's plan of financing and with respect to the authorization and issuance of the Series 2001 Bonds. The fees of the Financial Advisor will be paid from proceeds of the Series 2001 Bonds and such payment is contingent upon the issuance of the Series 200 I Bonds. Bond Counsel. Bryant, Miller and Olive, P.A., Tallahassee, Florida represents the City as Bond Counsel. 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 Counsel. The fees of Disclosure Counsel will be paid from proceeds ofthe 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 200 I Bonds to provide certain financial information and operating data relating to the City by not later than June 30 in each year commencing June 30, 2002 (the "Annual Report"), and to provide notices of the occurrence of certain enumerated 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 with the State of Florida 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 contained in the Annual Report or the notices of material events appears in "APPENDIX F - 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 undertakings with regard to said Rule to provide annual reports or notices of material events. CERTIFICATE CONCERNING OFFICIAL STATEMENT Concurrently with the delivery of the Series 200 I Bonds, the City will furnish its certificate, executed by the Mayor-Commissioner or Vice-Mayor of the City, to the effect that, to the best of his or her knowledge, this Official Statement, as of its date and as of the date of delivery of the Series 28 2001 Bonds, does not contain any untrue statements of material fact and does not omit to state a material fact which should be included herein for the purpose for which this Official Statement is to be used, or which is necessary to make the statements contained herein, in the light of the circumstances under which they were made, not misleading. MISCELLANEOUS The references, excerpts and summaries of all documents, resolutions and/or ordinances referred to herein do not purport to be complete statements of the provisions of such documents, resolutions and/or ordinances and reference is directed to all such documents, resolutions and/or ordinances for full and complete statements of all matters of fact relating to the Series 2001 Bonds, the security for and the repayment of the Series 200 I Bonds and the rights and obligations of the Holders thereof. Copies of such documents, resolutions and ordinances may be obtained from the City Clerk's Office. So far as any statements made in this Official Statement involve matters of opinion or of estimates, whether or not expressly stated, they are set forth as such and not as representations of fact. No representation is made that any of such statements will be realized. Neither this Official Statement nor any statement which may have been orally or in writing is to be construed as a contract with the Holders ofthe Series 2001 Bonds. The execution and delivery of this Official Statement by the Mayor-Commissioner of the City has been duly authorized by the City Commission. . CITY OF CLEARWATER, FLORIDA Brian J. Aungst, Sr., Mayor-Commissioner William B. Home, II, City Manager 29 III_III APPENDIX A GENERAL INFORMATION REGARDING CLEARWATER APPENDIX A GENERAL IN FORl\1A TION RELATING TO THE CITY OF CLEARWATER, FLORIDA Location The City of Clearwater (the "City"), the county seat of Pinellas COllllty (the fifth most populous county 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 26.5 square miles ofland and 8.61 square miles of waterways and lakes. Clearwater Beach, a corporate 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 Panfile de Narvaez, a Spanish explorer who encountered a large tribe of Indians, which his army drove out. The India?-s recaptured their territory and held it until the Seminole Wars of 1835-42. 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 around the time of the Seminole Wars. After the wars ended, the territory was opened by the Federal government for homesteading under the Armed Occupation Act. The first land title was granted in 1842. The early settlement, named "Clear Water Harbor," was incorporated in 1897. "Clear Water" later became one word and "Harbor" was dropped in 1906 when Pinellas County was created by an act of the State Legislature. In May 1911, Clearwater became the County 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 attorney. All other administrative and professional positions are appointed by the city manager in accordance with the City's Civil Service System. The City has approximately 1,736 employees, substantially all of which covered by the Ci ty's Civil Service law relating to recruitment, promotion, evaluation and discipline based on merit A-I 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 County and Clearwater are served by three major causeways and bridges overTampa Bay, by U.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 International Airport, located approximately twenty miles from downtown Clearwater, provides air travel access with approximate ly 260 national and international flights daily. Limousine and taxi service to and from the airport is available from Clearwater and throughout Pinellas County. St. Petersburg/Clearwater International Airport, 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 South America. The Executive Airpark, which is slightly over a mile from the downtown business section, provides service and maintenance for private plane owners. The airport 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 Airport, and a search and sea rescue cutt~r station on Clearwater Harbor opposite Sand Key. Gulf Coast Motor Lines provides service daily between Clearwater, St. Petersburg and Tampa and makes connections with Greyhound 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 Suncoast Transit System maintains 54 routes in 19 municipalities in Pinellas County. 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 County Water System (approximately 75-80%). Total daily average is approximately 29 million gallons per day. The wastewater collection program provides for the transmission of wastewater through the City's underground sewer mains, collectors and interceptor lines and for the maintenance, repair and replacement of 323 miles of sanitary sewer lines. The Department of Public Works maintains 304 miles of paved streets, 11 miles of unpaved streets, approximately 123 miles of storm sewer mains, and approximately 323 miles of sanitary sewer mains. A-2 Electric power is provided by Florida Power Corporation and telephone service is provided by Verizon of Florida, Inc. Time Warner and Verizon provide cable television service under franchises with the City. Local editions of the daily St. Petersburg Times and The Tampa Tribune, plus weekly newspapers from adjacent Dunedin, 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, playgrounds, 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 stadium 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 fast pitch softball team. Tourism The State of Florida reported 58.9 million tourists came to Florida during 1999, an increase of 20.9% over the 48.7 million reported in 1998. More than 4.5 million visitors vacationed in Pinellas County in 1999, and 4.7 in the year 2000, a 3.5% increase. Tourism is a $2.5 billion industry annually to the County. Pinellas County is ranked eighth of the top ten destinations in Florida and totaled 3.9% of Florida's domestic tourism. Clearwater's Fun 'N Sun Festival each spring attracts thousands of visitors. Education The Pinellas County 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 County. During the 2000-2001 school year, Pinellas County Schools expects enrollment of more than 15,978 compared to 14,551 during the 1999-2000 school year with students attending 82 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 educationlleaming centers, two technical education centers and one secondary vocational center. Private schools and academies are also located within or near the City limits. In addition, St. Petersburg Junior College has a Clearwater campus. Eckerd College in St. Petersburg, Beacon College in Largo, Stetson University College of Law in Gulfport, 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 Airpark (Executive Airport) and to the CSX Transportation Company. There is also a privately owned, 35 acre industrial park. Large industries located near Clearwater include Honeywell, General Electric, UNISYS, Concept and Hercules A-3 Defense Electronics Systems, Inc. During the 1999 fiscal year IMRglobal Corp. ("IMR") occupied its new world headquarters in downtown Clearwater with a projected employment of 700. 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 Plan are self-administered by the City. City contributions for fiscal year ending 1999 were $3,904,950 to the Employees' Plan and $1,003,758 to the Fireman's Plan, and were in accordance with actuarially determined funding requirements. In addition, supplemental pensions exist for certified Police Officers and Firefighters, funded solely 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 Age Enrollment Rate (%) 1991 99,612 22,059 42.1 11,572 6.1 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 102,472 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 Source: City of Clearwater, Florida Comprehensive Annual Financial Report for period ending September 30,2000. (a) 1991-1999, University of Florida, Bureau of Economic and Business Research; 2000 City of Clearwater, Florida Comprehensive Annual Financial Report for period ending September 3,0, 2000. (b) Data is for Pinellas County, but should also approximate Clearwater levels. 1991-1994, Florida Trend Magazine; 1995-2000, University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract. (c) Pinellas County data, but should also approximate ClearwaterIevels. 1991-1992, U.S. Bureau of the Census; 1993, St. Petersburg Times'Research Bureau; 1994, Sales and Marketing Manal!ement, Survey of Buying Power; 1995-2000, University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract. (d) Clearwater Planning Department population pro rata estimate of Pine lIas County School Board County level data for public schools; 1991-1999, Pinellas County School Board, 2000, Pine lIas County School District enrollment for schools located in Clearwater City limits.. (e) Data is for TampalSt. Petersburg MSA. 1991-1999 source of data is the Florida Bureau of Labor Market Information; 2000, University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract. NOTE: Data is for an unspecified point in each year, not specifically September 30. A-5 > Property Values, Construction, and Bank Deposits I Last Ten Fiscal Years 0\ Commercial Construction Residential Construction Miscellaneous Construction<a) Fiscal Year Number of Number of Number of Total Assessed Bank Deposits<c) Year fmni!! Value Permits Value Permits Value Pronertv ~(b) ilil OOO's) 1991 626 $24,250,916 1,260 $34,937,357 5,906 $17,452,664 $5,356,661,219 $15,285,415 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 1999 1,690 48,849,409 5,544 95,713,246 307 7,506,580 6,349,561,534 13,137.180 2000 2,698 176,010,021 5,573 30,814,807 35 229,870 6,555,350,175 13,296,319 Source: City of Clearwater, Florida Comprehensive Annual Financial Report for period ending September 30, 1999. (a) Includes institutions, churches, seawalls, pools and non-valued building permits. (b) Pinellas County Property Appraiser, values listed are for years of collections. (c) Includes balances in commercial, savings, savings and loan, and building 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 I Assessed and Estimated Actual property Valuations -....l Last Ten Fiscal years Assessed Valuations (a) Percentages Assessed Values to Collection Non-Exempt Personal Other Total Total Total Estimated Yearly Increases Year _ Real Estate Property Property(b ) Taxable Exempt( c) All Market Taxable Total 1991 $3,745,222,768 $378,841,070 $500,188 $4,124,564,026 $1 ,232,097, 193 $5,356,661,219 100.0 6.9% 6.1% 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.J 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.,73 I 4,186,107,811 1,455,095,094 5,641,202,905 100.0 0.1 1.2 1996 3,820,217,710 43 I ,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 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 Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30, 1999. (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. > I 00 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 Year Tax Levy Collections(a) Collected Collections Collections Levy Taxes - Levy 1991 $21,336,807 $21,145,636 99.10% $ 95,735 $21,241,371 99.55% $1,280,545 6.00% 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 6.12 1994 21,281,744 21,154,946 99.40 603,226 21,758,112 102.24 946,874 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 99.78 914,383 4.08 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 Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30,2000. (a) Collections are reported at the gross amount before any discount allowances. ProJiWrty Tax Rates - All Direct and Overlapping Governments I (Per $1,000 of Assessed Value) \0 Last Ten Fiscal Years Downtown County Emergency Fiscal Deve1op- School Transit Medical Year City ment<a) Board County District Services Other Total 1991 5.2037 1. 000 8.7660 5.234 .5743 .700 1.0964 22.5744 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 1998 5.1158 1.000 9.1330 5.538 .6697 .713 1.6561 23.8256 1999 5.1158 1.000 9.11 00 5.538 .6501 .713 1.6561 23.7830 2000 5.5032 1.000 8.6660 5.854 .6501 .647 1.6572(b) 23.9775 Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30, 2000. <a) A separate taxing district established by referendum which affects only downtown properties. (b) Other includes Pinellas County Planning Council (.0225); Juvenile Welfare Board (.8117); SW Florida Water Management District (.4220); Pinellas Anclote River Basin (.4010). City of Clearwater, Florida Principal Taxpayers* Year Ended September 30, 2000 Percentage to Total Assessed Assessed Taxpayers Type of Business Value* Value Bellwether Prop. LP Ltd. Shopping Center $ 83,872,700 1.93% Excel Realty Trust, Inc. Shopping Center 29,223,200 0.67 Grand Reserve at Park Apartment Complex 25,002,300 0.57 Taylor, John S. III Landowner 22,578,600 0.52 Clearwater Land Co. Adult Congregate Facility 21,473,800 0.49 Branch Sunset Association Shopping Center 20,742,300 0.48 ZOM Bayside Arbors Ltd. Apartment Complex 19,499,100 0.45 Sand Key Association Ltd. Hotel 19,304,400 0.44 Northwood Plaza Shopping Center 18,245,200 0.42 Walmart Stores, Inc. Shopping Center 17.635.600 0.41 Subtotal 277,577,200 6.38 All Others 4.075.916.320 93.62 Total $4.353.493.520 100.00% * Based on non-exempt real property assessed taxable values. Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30, 2000; Pinellas County Property Appraiser, 1999 tax rolls for 2000 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 Year Pooulation (000)( I) Debt(2) Value Per Caoita 1991 99,612 $4,124,564 $567,950 .01 $5.70 1992 99,856 4,179,582 452,779 .01 4.53 1993 100,768 4,188, I 05 348,478 .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 102,4 72 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 Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30, 2000. (1) Values listed are for year of collections. (2) Gross general bonded debt less amounts on deposit in sinking funds or debt service funds. [Remainder of page intentionally left blank] A-ll City of Clearwater, Florida Computation of Legal Debt Margin September 30, 2000 Assessed Valuation of Non-Exempt Real Estate(a) Times: Twenty Percent Limitation per City Charter Equals Legal Indebtedness Limitation $4,353,493,520 x .20 $ 870.698.704 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 Notes, Mortgages and Contracts Totals Legal Indebtedness Margin Source: Gross Debt Less Sinking Fund Assets $ 485,000 47,608,954 29,520,000 9,950,000 8,525,000 13,335,000 7,960,000 7,500,000 10.284.654 $135.168.608 $ 169,396 4,436,709 8,654,333 120,000 6,667 39,167 2,500 95,455 $13.524.227 Net Debt Subject to Limitation $ 315,604 43,172,245 20,865,667 9,830,000 8,518,333 13,295,833 7,957,500 7,404,545 10.284.654 $121.644.381 $749.054.323 City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30,2000. (a) Valuation listed is from 1999 tax year for 2000 collections. A-12 City of Clearwater, Florida Computation of Direct and Overlapping Debt September 30, 2000 Governmental Unit Net Debt Outstanding Percent Amount City of Clearwater $ 100% $ Pinellas County School Board $45,643,454 14% $6,390,084 (a) Applicable Net Debt Percentage is based on ratio of City to County Taxable values for 1999 collections ($4,353,493,520/$32,049,129,680). A-13 APPENDIX B FORM OF ORDINANCE C-14 APPENDIX C AUDITED GENERAL PURPOSE FINANCIAL STATEMENTS OF CLEARWATER, FLORIDA FISCAL YEAR ENDED SEPTEMBER 30, 2000 INCLUDED ARE THE AUDITED GENERAL PURPOSE FINANCIAL STATEMENTS AND THE STATEMENTS FOR THE GENERAL FUND AND SPECIAL REVENUE FUNDS. COPIES OF THE COMPLETE AUDITED FINANCIAL STATEMENTS ARE A V AILABLE FROM THE CITY UPON REQUEST BY CONTACTING THE FOLLOWING: Margaret Simmons, CPA Financial Services Administrator City of Clearwater Municipal Services Building 100 S. Myrtle Avenue Clearwater, Florida 33756-5520 Tel: (727) 562-4538 Fax: (727) 562-4535 E-Mail: msimmons@clearwater-fl.com APPENDIX D FORL'1 OF OPINION OF BOND COUNSEL APPENDIX E FORM OF FORM OF CONTINUING DISCLOSURE CERTIFICATE '. 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 $12,000,000 Improvement Revenue Refunding Bonds, Series 2001 (the "Series 2001 Bonds"). The Series 2001 Bonds are being issued pursuant to Ordinance No. [ ], adopted by the City Commission on October [ ],2001, as supplemented by Resolution No. [ ], adopted by the City Commission on October [ ],2001 (the Ordinance, as so supplemented is hereinafter referred to as 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 2001 Bondholders and in order to assist the original underwriters of the Series 2001 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 INFORJ.'VIATION. Except as otherwise provided herein, the Issuer shall provide to all of the nationally recognized municipal securities information repositories described in Section 4 hereof(the "NRMSIRs"), and to any state information depository that is established within the State of Florida (the "SID"), on or before June 30 of each year, commencing June 30, 2002, 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 June 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.Y ear (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 Accounting Principles, as modified by applicable State of Florida requirements and the governmental accounting standards promulgated by the Government Accounting Standards Board; provided, however, ifthe 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 2001 Bonds (as amended, the "Official Statement"), as set forth below: 1. Updates of the financial information set forth in the Official Statement in the Table labeled "SECURITY FOR THE SERIES 2001 BONDS - Public Service Tax - Historical Public Service Tax Receipts by Category and under the caption "HISTORICAL AND PROJECTED DEBT SERVICE COVERAGE" ( but only to the extent of historical, not projected, data). 2. Description of any additional indebtedness payable in whole or in part from the Pledged Revenues (as defined in the Ordinance). E-1 3. Any other financial information or operating data of the type in~luded in the Official Statement which would be material to a holder or prospective holders of the Series 2001 Bonds. For purposes 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 NRl\1SIRs 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 2001 Bonds or the Issuer's ability to satisfy its payment obligations with respect to the Series 2001 Bonds: (A) Principal and interest payment delinquencies; (B) Non-payment related defaults; (C) Unscheduled draws on the debt service reserve fund reflecting financial 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 2001 Bonds; .. (G) Modifications to rights of Series 2001 Bondholders; (H) Redemptions; (I) Defeasances; (J) Release, substitution, or sale of property securing repayment of the Series 2001 Bonds; (K) Rating changes; and (L) Notice of any failure on the part ofthe Issuer or any other Obligated Person (as defined herein) to meet the requirements of Section 2 hereof. 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 2001 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 knowledge of the occurrence of a significant event described in this Section 3, the Issuer shall as soon as possible determine if such event would be material under applicable federal securities E-2 law to holders of Series 2001 Bonds, orovided, 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 information described in Sections 2 and 3 above, to the extent required, shall be the following organizations, their successors and assigns: Bloomberg Municipal Repositories P.O. Box 840 Princeton, N.J. 08542-0840 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 Interactive Data Attn: Repository 100 Williams Street New York, NY 10038 Phone: (212) 771-6899 Fax: (212) 771-7390 Email: NRMSIR@interactivedata.com 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: nrmsicrepository@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 number 0206. E-3 SECTION 5. NO EVENT OF 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 under the Ordinance; provided, however, any Series 2001 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 hereunder. For purposes of this Disclosure Certificate, "Series 2001 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 2001 Bonds (including persons holding Series 2001 Bonds through nominees, depositories or other intermediaries), or (B) is treated as the owner of any Series 2001 Bond for federal income tax purposes. SECTION 6. INCORPORATION BY REFERENCE. Any or all of the information required herein to be disclosed may be incorporated by reference from other documents, 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 final official statement, it must be available from the MSRB. The Issuer shall clearly identify each document incorporated by reference. SECTION 7. DISSEMINATION AGENTS. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor disseminating agent. SECTION 8. TEAAIINATION. The Issuer's obligations under this Disclosure Certificate shall terminate upon (A) the legal defeasance, prior redemption or payment in full of all of the Series 2001 Bonds, or (B) the termination of the continuing disclosure requirements of the Rule by legislative, judicial or administrative action. 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 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 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. Ifthe 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 under this Disclosure Certificate to update such information or include it in its future annual information or notice of occurrence of a significant event. E-4 SECTION 11. OBLIGATED PERSONS. If any person, other than the Issuer, becomes an Obligated Person (as defined in the Rule) relating to the Series 2001 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 October , 2001 ATTEST: CITY OF CLEARWATER, FLORIDA City Clerk By: Mayor-Commissioner E-5 APPENDIX F SPECIMEN BOND INSURANCE POLICY EXHIBIT C CONTINUING DISCLOSURE CERTIFICATE Res. No. 01-36 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 $12,000,000 Improvement Revenue Refunding Bonds, Series 2001 (the "Series 2001 Bonds"). The Series 2001 Bonds are being issued pursuant to Ordinance No. [ ], adopted by the City Commission on October [ ],2001, as supplemented by Resolution No. [ ], adopted by the City Commission on October [ ],2001 (the Ordinance, as so supplemented is hereinafter referred to as 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 2001 Bondholders and in order to assist the original underwriters ofthe Series 2001 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 INFORJ.'VlATION. Except as otherwise provided herein, the Issuer shall provide to all of the nationally recognized municipal securities information repositories described in Section 4 hereof (the "NRMSIRs"), and to any state information depository that is established within the State of Florida (the "SID"), on or before June 30 of each year, commencing June 30, 2002, 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 June 30 of any year, the Issuer shall provide such infonnation when it becomes available, but no later than one year following the end of the Issuer's Fiscal Year. CA) 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 ear prepared in accordance with Generally Accepted Accounting Principles, as modified by applicable State of Florida requirements and the governmental accounting standards promulgated by the Government Accounting Standards Board; provided, however, if the audited financial statements ofthe 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 [mancial 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 2001 Bonds (as amended, the "Official Statement"), as set forth below: 1. Updates of the financial information set forth in the Official Statement in the Table labeled "SECURITY FOR THE SERIES 2001 BONDS - Public Service Tax - Historical Public Service Tax Receipts by Category and under the caption "HISTORICAL AND PROJECTED DEBT SERVICE COVERAGE" (but only to the extent of historical, not projected, data). 2. Description of any additional indebtedness payable in whole or in part from the Pledged Revenues (as defined in the Ordinance). E-1 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 2001 Bonds. For purposes 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 NIUvISIRs or the Municipal Securities Rulemaking Board (the "MSRB") and to the SID, on a timely basis, notice of any ofthe following events, if such event is material with respect to the Series 2001 Bonds or the Issuer's ability to satisfy its payment obligations with respect to the Series 2001 Bonds: (A) Principal and interest payment delinquencies; (B) Non-payment related defaults; (C) Unscheduled draws on the debt service reserve fund reflecting financial 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 2001 Bonds; (G) Modifications to rights of Series 2001 Bondholders; (H) Redemptions; (I) Defeasances; (1) Release, substitution, or sale of property securing repayment of the Series 2001 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. 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 2001 Bonds, but the Issuer does not specifically undertake to commit to provide any such additional notice ofthe occurrence of any material event 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 if such event would be material under applicable federal securities E-2 law to holders of Series 2001 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 information described in Sections 2 and 3 above, to the extent required, shall be the following organizations, their successors and assigns: Bloomberg Municipal Repositories P.O. Box 840 Princeton, N.J. 08542-0840 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 Interactive Data Attn: Repository 100 Williams Street New York, NY 10038 Phone: (212) 771-6899 Fax: (212) 771-7390 Email: NRMSIR@interactivedata.com Standard & Poor's J. 1. Kenny Repository, 55 Water Street 45th Floor New York, NY 10041 Phone: (212) 438-4595 Fax: (212) 438-3975 Email: nrmsicrepository@sandp.com (F) Any NRMSIRs that are established subsequently and approved by the SEe. (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 number 0206. E-3 SECTION 5. NO EVENT OF 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 under the Ordinance; provided, however, any Series 2001 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 hereunder. For purposes of this Disclosure Certificate, "Series 2001 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 2001 Bonds (including persons holding Series 2001 Bonds through nominees, depositories or other intermediaries), or (B) is treated as the owner of any Series 2001 Bond for federal income tax purposes. SECTION 6. INCORPORATION BY REFERENCE. Any or all of the information required herein to be disclosed may be incorporated by reference from other documents, 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 SEC. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The Issuer shall clearly identify each document incorporated by reference. SECTION 7. DISSEi\UNATION AGENTS. The Issuer may, from time to time, appointor engage a dissemination agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor disseminating agent. SECTION 8. TERL'1INATION. The Issuer's obligations under this Disclosure Certificate shall terminate upon (A) the legal defeasance, prior redemption or payment in full of all of the Series 2001 Bonds, or (B) the termination of the continuing disclosure requirements of the Rule by legislative, judicial or administrative action. 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 offederal 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 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 under this Disclosure Certificate to update such information or include it in its future annual information or notice of occurrence of a significant event. E-4 SECTION 11. OBLIGATED PERSONS. If any person, other than the Issuer, becomes an Obligated Person (as defined in the Rule) relating to the Series 2001 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 October , 2001 ATTEST: CITY OF CLEARWATER, FLORIDA City Clerk By: Mayor-Commissioner E-5 EXHIBIT D FORl\1 OF ESCROW DEPOSIT AGREEMENT Res. No. 01-36 ESCROW DEPOSIT AGREEMENT This ESCROW DEPOSIT AGREEMENT, dated as of ,2001, by and between the CITY OF CLEARWATER, FLORIDA, a municipal corporation ofthe State of Florida (the "Issuer"), and , a [national] banking association organized under the laws of the United States of America, as Escrow Holder (the "Escrow Holder"); WITNESSETH: WHEREAS, the Issuer has previously authorized and issued obligations of the Issuer as hereinafter set forth defined as the "Refunded Bonds", as to which the Aggregate Debt Service (as hereinafter defined) is set forth on Schedule A; and WHEREAS, the Issuer has determined to provide for payment of the Aggregate Debt Service ofthe Refunded Bonds by depositing with the Escrow Holder pursuant to the provisions hereof, cash and Federal Securities (as defined herein), the principal of and interest on which will be at least equal to the Aggregate Debt Service; and WHEREAS, in order to obtain the funds needed for such purpose, the Issuer has authorized and is, concurrently with the delivery of this Agreement, issuing the Series 2001 Bonds more ~lly described herein; and . WHEREAS, the Issuer has determined that the amount to be on deposit from time to time in the Escrow Account, as defined herein, will be sufficient to pay the Aggregate Debt Service; NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Issuer and the Escrow Holder agree as follows (provided however that the Escrow Holder in agreeing to the foregoing shall not be held or deemed responsible in any manner whatsoever for the recitals made herein or in the Ordinance, or the adequacy or sufficiency of the Escrow Requirement): Section 1. Definitions. As used herein, the following terms mean: (a) "Aggregate Debt Service" means, as of any date, the sum of all present and future Annual Debt Service payments then remaining unpaid with respect to the Refunded Bonds. (b) "Agreement" means this Escrow Deposit Agreement. (c) "Annual Debt Service" means, with respect to the redemption date for the Refunded Bonds, the principal of, premium, and interest on the Refunded Bonds coming due on the redemption date as shown on Schedule A attached hereto. (d) "Bonds" or "Series 2001 Bonds" means the Imrpovement Revenue Bonds, Series 2001 of the Issuer, authorized by the Ordinance, as herein defined. (e) "Call Date" shall have the meaning set forth in the Issuer's Irrevocable Instruction and Authorization to Redeem Bonds. (f) "Escrow Account" means the account established and held by the Escrow Holder pursuant to this Agreement, in which cash and investments will be held for payment ofthe Refunded Bonds. (g) "Escrow Holder" means association organized under the laws of the United States of America. , a [national] banking (h) "Escrow Requirement" means, as of any date of calculation, the sum of an amount in cash and principal amount of Federal Securities in the Escrow Account which, together with the interest due on the Federal Securities, will be sufficient to pay, as the installments thereof become due, the Aggregate Debt Service. (i) "Federal Securities" means direct obligations of the United States of America and obligations the principal of or interest on which are fully guaranteed by the United States of America, none of which permit redemption prior to maturity at the option of the obligor. (j) "Irrevocable Instruction and Authorization to Redeem Bonds" means a certific,ate executed by the Issuer which provides for redemption of certain ofthe Refunded Bonds on the Call Date, irrevocably instructs the Escrow Holder to give notice of such redemption and directs the paying agent for the Refunded Bonds to pay the Refunded Bonds and the interest thereon upon surrender thereof at maturity or on their Call Date, whichever is earlier. (k) "Issuer" means the City of Clearwater, Florida. (1) "Ordinance" means Ordinance No: 6873-01, duly enacted by the governing body of the Issuer on October 4,2001, authorizing the Series 2001 Bonds. (m) "Paying Agent" shall mean the Paying Agent for the Refunded Bonds. (n) "Refunded Bonds" shall mean collectively, the City's Public Service Tax and Bridge Revenue Bonds, Seris 1985 and the City's Improvement Revenue Bonds, Series 1995. Section 2. Deposit of Funds. The Issuer hereby deposits $ with the Escrow Holder in immediately available funds, to be held in irrevocable escrow by the Escrow Holder and applied solely as provided in this Agreement. The Issuer represents that: (a) Such funds are all derived as follows: (1) $ from the net proceeds of the Bonds, 2 (2) $ Refunded Bonds; and transferred from the funds held for the payment of the (3) $ from the Debt Service Reserve Fund, representing excess amounts on deposit in the fund as a result of the refunding. (b) Such funds, when applied pursuant to Section 3 below, will at least equal the Escrow Requirement as of the date hereof. Section 3. Use and Investment of Funds. The Escrow Holder acknowledges receipt of $ and agrees: (a) to hold the funds in irrevocable escrow during the term of this Agreement, (b) to deposit the sum of$ in the Escrow Account, in cash from the amount received by the Issuer (c) to immediately invest $ of such funds by the purchase ofthe Federal Securities set forth on Schedule B-1 attached hereto, and to immediately invest $ of such funds by the purchase of the Federal Securities set forth on Schedule B-2, (d) to reinvest, upon receipt thereof, any maturing principal and interest of such Federal Securities required to be reinvested pursuant to Schedule C, (e) to deposit in the Escrow Account, as received, the receipts of maturing principal of and interest on the Federal Securities in the Escrow Account. (f) on the date hereof, the Issuer is also depository an additional $ of other funds in the event the Federal Securities are not delivered. Such funds, when added to the deposit described in Section 2 hereof, will be sufficient to retire the Refunded Bonds in full on , 2001. In the event the Federal Securities are delivered to the Escrow Holder, the Escrow Holder shall immediately return such excess deposit to the Issuer. Section 4. Payment of Refunded Bonds. (a) Refunded Bonds. On the redemption date for the Refunded Bonds, the Escrow Holder shall pay to the Paying Agent for the Refunded Bonds, from the cash on hand in the Escrow Account, a sum sufficient to pay the Annual Debt Service for the Refunded Bonds coming due on such date, as shown on Schedule A. (b) Surplus. On the redemption date for the Refunded Bonds, after making the payments from the Escrow Account described in Subsection 4(a), the Escrow Holder shall pay to the Issuer any remaining cash in the Escrow Account in excess of the Escrow Requirement, to be used for any lawful purpose of the Issuer. 3 (c) Priority ofPavments. The holders ofthe Refunded Bonds shall have an express first lien on the funds and Federal Securities in the Escrow Account until such funds and Federal Securities are used and applied as provided in this Agreement. If the cash on hand in the Escrow Account is ever insufficient to make the payments required under Subsection 4(a), all of th~ payments required under Subsection 4(a) shall be made when due before any payments shaH be made under Subsections 4(b). Section 5. Reinvestment. (a) Except as provided in Section 3 hereof, and in this Section, the Escrow Holder shall have no power or duty to invest any funds held under this Agreement or to sell, transfer or otherwise dispose of or make substitutions of the Federal Securities held hereunder. (b) At the written request of the Issuer and upon compliance with the conditions hereinafter stated, the Escrow Holder shall sell, transfer, otherwise dispose of or request the redemption of any of the Federal Securities acquired hereunder and shall either apply the proceeds thereof to the full discharge and satisfaction of the Refunded Bonds or substitute other Federal Securities for such Federal Securities. The Issuer will not request the Escrow Holder to exercise any ofthe powers described in the preceding sentence in any manner which would cause any Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code of 1986, as amended, and the Regulations thereunder. The transactions may be effected only if (i) an independent certified public accountant shall certify to the Escrow Holder that the cash and principal amount of Federal Securities remaining on hand after the transactions are completed, together with the interest due thereon, will be not less than the Escrow Requirement, and (ii) the Escrow Holder shall receive an unqualified opinion from a nationally recognized bond counselor tax counsel to the effect that the transactions will not cause such Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code of 1986, as amended, and the regulations thereunder in effect on the date of the transactions and applicable to transactions undertaken on such date. Section 6. No Redemption or Acceleration of Maturity. Except as provided in the Irrevocable Instruction and Authorization to Redeem Bonds, the Issuer will not accelerate the maturity or due date of the Refunded Bonds. Section 7. Responsibilities of Escrow Holder. The Escrow Holder and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, contract, or otherwise, in connection with the execution and delivery of this Agreement, the establishment ofthe Escrow Account, the acceptance of the funds deposited therein, the purchase of the Federal Securities, the retention ofthe Federal Securities or the proceeds thereof or any payment, transfer or other application of money or securities by the Escrow Holder in any non-negligent act, non-negligent omission or non-negligent error of the Escrow Holder made in good faith in the conduct of its duties. The Escrow Holder shall, however, be liable to the Issuer for its negligent or willful acts, omissions or errors which violate or fail to comply with the terms of this Agreement. The duties and obligations of the Escrow Holder shall be determined by the express provisions of this Agreement. The Escrow Holder may consult with counsel, who mayor may not be counsel to the Issuer, and in reliance upon the opinion of such counsel shall have full and complete 4 authorization and protection in respect of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Holder shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering or omitting any action under this Agreement, such matter may be deemed to be conclusively established by a certificate signed by an authorized officer of the Issuer. The Escrow Holder has no duty to determine or inquire into the happening or occurrence of any event or contingency where the performance or the failure of performance of the Issuer with respect to arrangements or contracts with others, the Escrow Holder's sole duty and responsibility hereunder being to safeguard the Escrow Account and dispose of and deliver the same strictly in accordance with this Agreement. Section 8. Resignation of Escrow Holder. The Escrow Holder may resign and thereby become discharged from the duties and obligations hereby created, by notice in writing given to the Issuer and published once in a newspaper of general circulation published in the territorial limits of the Issuer, and in a daily newspaper of general circulation or a financial journal published or circulated in the Borough of Manhattan, City and State of New York, not less than sixty (60) days before such resignation shall take effect. Such resignation shall take effect immediately upon the appointment of a successor Escrow Holder hereunder and payments of all amounts due the resigning Escrow Holder. Section 9. Removal of Escrow Holder. (a) The Escrow Holder may be removed at any time by an instrument or concurrent instruments in writing, executed by the holders of not less than fifty-one per centum (51 %) in aggregate principal amount of each series of Refunded Bonds then outstanding, such instruments to be filed with the Issuer, and notice in writing given by such holders to all ofthe registered holders of each series of the Refunded Bonds and published once in a newspaper of general circulation published in the territorial limits of the Issuer, and in a daily newspaper of general circulation or a financial journal published or circulated in the Borough of Manhattan , City and State of New York, not less than sixty (60) days before such removaf is to take effect as stated in such instrument or instruments. A photographic copy of any instrument filed with the Issuer under the provisions of this paragraph shall be delivered by the Issuer to the Escrow Holder. (b) The Escrow Holder may also be removed at any time for any breach of trust or for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provisions of this Agreement with respect to the duties and obligations ofthe Escrow Holder, by the Issuer or by the holders of not less than twenty-five per centum (25%) in aggregate principal amount of each series of the Refunded Bonds then outstanding. (c) No such removal shall take effect until a successor Escrow Holder shall be appointed hereunder. Section 10. Successor Escrow Holder. 5 (a) Ifat any time hereafter the Escrow Holder shall resign, be removed, be dissolved or otherwise become incapable of acting, or shall be taken over by any governmental official, agency, department or board, the position of Escrow Holder shall thereupon become vacant. Ifthe position of Escrow Holder shall become vacant for any of the foregoing reasons or for any other reason, the Issuer shall appoint a successor Escrow Holder to fulfill the duties of Escrow Holder hereunder. The Issuer shall publish notice of any such appointment once in each week for four (4) successive weeks in a newspaper of general circulation published in the territorial limits of the Issuer and in a daily newspaper of general circulation or a financial journal published or circulated in the Borough of Manhattan, City and State of New York, and, before the second publication ofsuch notice shall mail a copy thereof to the original purchaser or purchasers of the Refunded Bonds. (b) At any time within one year after such vacancy shall have occurred, the holders of a majority in principal amount of each series of Refunded Bonds then outstanding, by an instrument or concurrent instruments in writing, executed by all such bondholders and filed with the governing body of the Issuer, may appoint a successor Escrow Holder, which shall supersede any Escrow Holder theretofore appointed by the Issuer. Photographic copies of each such instrument shall be delivered promptly by the Issuer, to the predecessor Escrow Holder and to the Escrow Holder so appointed by the bondholders. (c) If no appointment of a successor Escrow Holder shall be made pursuant to the foregoing provisions of this section, the holder of any Refunded Bonds then outstanding, or any retiring Escrow Holder may apply to any court of competent jurisdiction to appoint a successor Escrow Holder. Such court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Escrow Holder. . Section 11. Term. This Agreement shall commence upon its execution and delivery and shall terminate when the Refunded Bonds have been paid and discharged in accordance herewith, and all amounts held by the Escrow Holder hereunder have been applied in accordance herewith. Section 12. Severability. If anyone or more ofthe covenants or agreements provided in this Agreement on the part of the Issuer or the Escrow Holder to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreements herein contained shall be null and void and shall be severed from the remaining covenants and agreements and shall in no way affect the validity of the remaining provisions of this Agreement. Section 13. Counterparts. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as duplicate originals and shall constitute and be but one and the same instrument. Section 14. Governing Law. This Agreement shall be construed under the laws of the State of Florida. Section 15. Security for Accounts and Funds. All accounts and funds maintained or held pursuant to this Agreement shall be continuously secured in the same manner as other deposits of municipal funds are required to be secured by the laws of Florida. 6 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers and their official seals to be hereunto affixed as ofthe date first above wri tten. THE CITY OF CLEARWATER, FLORIDA (SEAL) Mayor-Commissioner ATTEST: City Clerk City Manager Approved as to Form, Sufficiency and Correctness: City Attorney 7 (SEAL) as Escrow Holder By: 8 Its: r Schedule A (Aggregate Debt Service; Semi-Annual Debt Service; Annual Debt Service; Description of Refunded Bonds) Schedule B-1 (Federal Securities for Investment) Maturity Bond Type Principal Coupon Yield Purchase Price - ---- ( Schedule B-2 (Federal Securities for Investment) Maturity Bond Type Principal Coupon Yield Purchase Price ( Schedule C (Federal Securities to be Reinvested) NONE -