03-35 (2)
RESOLUTION NO. 03-35
A RESOLUTION PROVIDING FOR THE AUTHORIZATION OF NOT TO
EXCEED $9,500,000 WATER AND SEWER REVENUE REFUNDING BONDS,
SERIES 2003; PROVIDING FOR THE PUBLIC SALE OF SAID BONDS;
SETTING FORTH THE FORM OF THE NOTICE OF BOND SALE AND
SUMMARY NOTICE OF BOND SALE RELATING TO THE SALE OF SUCH
BONDS; DIRECTING PUBLICATION OF THE SUMMARY NOTICE OF SALE
RELATING TO SUCH BONDS; PROVIDING FOR THE OPENING OF BIDS
RELATING TO THE SALE OF THE BONDS; SETTING FORTH THE FORM OF
OFFICIAL NOTICE OF SALE AND BID FORMS; PROVIDING THAT SUCH
BONDS SHALL BE ISSUED IN FULL BOOK ENTRY FORM; APPROVING THE
FORM OF A PRELIMINARY OFFICIAL STATEMENT; PROVIDING FOR
COMPLIANCE WITH A CONTINUING DISCLOSURE CERTIFICATE;
DESIGNATING A REGISTRAR AND PAYING AGENT; PROVIDING FORAN
ESCROW DEPOSIT AGREEMENT AND APPOINTING AN ESCROW AGENT;
AUTHORIZING THE PURCHASE OF MUNICIPAL BOND INSURANCE;
PROVIDING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH;
AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Clearwater, Florida (the "Issuer") has by Ordinance No. 3674-84
enacted by the Issuer on August 2, 1984, as amended and supplemented in Ordinance 5355-93,
enacted on April 15, 1993, as amended and supplemented in Ordinance 6311-98, enacted November
5, 1998 and as further amended and supplemented in Ordinance 6915-01, enacted November 15,
2001 (collectively, the "Bond Ordinance") authorized the issuance of City of Clearwater, Florida,
Water and Sewer Revenue Bonds, Series [to be determined] in one or more series from time to time;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY
OF CLEARWATER, FLORIDA, as follows:
SECTION 1. AUTHORIZATION OF BONDS AND SERIES DESIGNATION. The
Water and Sewer Revenue Refunding Bonds, Series 2003 being offered pursuant to the Bond
Ordinance and this resolution are hereby designated as the not to exceed $9,500,000 City of
Clearwater, Florida, Water and Sewer Revenue Bonds, Series 2003 (the "Series 2003 Bonds"), which
Series 2003 Bonds are hereby authorized to be issued. The proceeds ofthe Series 2003 Bonds shall
be used to refund the Issuer's outstanding Water and Sewer Refunding Revenue Bonds, Series 1993
maturing on and after December 1,2004 (the "Refunded Bonds"), pay the cost of issuing the 2003
Bonds, including any municipal bond insurance, and to fund a debt service reserve fund.
SECTION 2. PUBLIC SALE. There is hereby authorized to be sold pursuant to a public
sale not to exceed $9,500,000 City of Clearwater, Florida, Water and Sewer Revenue Refunding
Bonds, Series 2003.
Resolution No. 03-35
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SECTION 3. SALE OF SERIES 2003 BONDS; REDEMPTION AND MATURITY
PROVISIONS. The Finance Director is hereby directed to arrange for the sale ofthe Series 2003
Bonds utilizing the electronic bid process of PARITY through the publication of the Summary
Notice of Sale of the Bonds in The Bond Buyer, such publications to be on such date as shall be
deemed by the Finance Director to be in the best interest of the Issuer and such publications to be not
less than ten (10) calendar days prior to the date of sale as required by Section 218.385(1), Florida
Statutes; and to publish such Notice in such other newspapers on such dates as may be deemed
appropriate by the Finance Director.
The Series 2003 Bonds shall be subj ect to optional redemption and shall bear maturities and
sinking fund amortizations as shall be subsequently determined by the Financial Director, upon
advice ofthe City's financial advisor and based on market conditions existing at the time, prior to the
publication of the Summary Notice of Sale as hereinafter approved.
Proposals for purchase ofthe Series 2003 Bonds will be received electronically via PARITY
as provided in the Official Notice of Sale, from the time that the Notice of Bond Sale is published
until 11 :00 a.m., Clearwater, Florida time, on such date and time as may be established by the
Finance Director of the City or her designee, and if such date is subj ect to change, communicated
through Thompson Municipal Market Monitor (TM3) not less than twenty-four (24) hours prior to
the time bids are to be received for the purchase ofthe City of Clearwater, Florida, Water and Sewer
Revenue Bonds, Series 2003; provided that ifthe internet is not working on the designated bid date,
the bid date shall be automatically changed to the next business day, and the City will communicate a
confirmation ofthis change in bid date through Thompson Municipal Market Monitor (TM3), all as
provided in the Notice of Sale (the "Bid Date").
SECTION 4. CREATION OF ACCOUNT IN THE CONSTRUCTION FUND AND
USE OF FUNDS. There is hereby created with the Construction Fund separate sub accounts namely,
the Series 2003 Cost oflssuance Account. Moneys held in the Series 2003 Cost oflssuance Account
shall be used to pay the costs of issuing and delivering the Series 2003 Bonds.
SECTION 5. DISPOSITION OF PROCEEDS OF SERIES 2003 BONDS. The
proceeds from the sale of the Series 2003 Bonds shall be deposited as follows:
(a) An amount equal to the accrued interest on the Series 2003 Bonds shall be deposited into
the Interest Account in the Bond Service Funds;
(b) An amount determined by the Finance Director to be necessary to pay the costs of issuing
the Series 2003 Bonds, including the premium due to the Bond Insurer, shall be deposited into the
Series 2003 Cost of Issuance Account in the Construction Fund to pay such costs;
(c) An amount determined by the Finance Director in consultation with the City's Financial
Advisor to be deposited under the Escrow Deposit Agreement (hereinafter approved), which together
with certain funds currently held by the Issuer in the Sinking Fund for the Refunded Bonds, will
provide sufficient funds to defease the Refunded Bonds;
Resolution No. 03-35
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(d) An amount determined by the Finance Director to be necessary to increase the amount in
the Reserve Fund so that the amount on deposit therein equals the Reserve Requirement; and
(e) The remaining proceeds of the Series 2003 Bonds representing a rounding amount shall
be deposited into the Bond Service Fund for the Series 2003 Bonds.
SECTION 6. APPROVAL OF FORMS. The Notice of Bond Sale and Summary Notice of
Sale ofthe Bonds to be submitted for purchase ofthe Series 2003 Bonds shall be in substantially the
forms annexed hereto, as Exhibits A and B, respectively, together with such changes as shall be
deemed necessary or desirable by the Finance Director depending on the bidding method selected in
accordance with Section 3 hereof, incorporated herein by reference. The form of the Official Bid
Form shall be provided by the internet auction website selected by the Finance Director, and shall be
reasonably satisfactory to the Finance Director.
SECTION 7. BOOK ENTRY ONLY BONDS. It is in the best interest of the City and the
residents and inhabitants thereof that the Series 2003 Bonds be issued utilizing a pure book-entry
system of registration. In furtherance thereof, the City has previously executed and delivered a
Blanket Letter of Representations with the Depository Trust Company. For so long as the Series
2003 Bonds remain in such book entry only system of registration, in the event of a conflict between
the provisions of the Bond Ordinance and of the Blanket Letter of Representations, the terms and
provisions of the Blanket Letter of Representations shall prevail.
SECTION 8. ESCROW DEPOSIT AGREEMENT The form of Escrow Deposit
Agreement to be used in connection with the defeasance and redemption of the Refunded Bonds
attached hereto as Exhibit "F" 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
"F" 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.
The Finance Director is hereby authorized to solicit offers from financial institutions to serve
as Escrow Agent under the Escrow Deposit Agreement for the Refunded Bonds, and the Finance
Director is hereby authorized to select the firm with the lowest bid to serve in such capacity.
SECTION 9. PRELIMINARY OFFICIAL STATEMENT AND OFFICIAL
STATEMENT. The City Manager and Finance Director are authorized and directed to cause a
Preliminary Official Statement to be prepared in substantially the form attached hereto as Exhibit C,
with such changes, insertions and omissions as shall be approved by the City Manager and Finance
Director, containing a copy of the attached Notice of Bond Sale and to furnish a copy of such
Preliminary Official Statement to interested bidders. The City Manager and Finance Director are
authorized to deem final the Preliminary Official Statement prepared pursuant to this Section for
Resolution No. 03-35
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purposes of Rule 15c2-12 (the "Rule") ofthe Securities and Exchange Commission. Upon the award
of the Series 2003 Bonds to the successful bidder, the City shall also make available a reasonable
number of copies of the Preliminary Official Statement to such bidder, who may mail such
Preliminary Official Statements to prospective purchasers at the bidder's expense. Following the
award of the Series 2003 Bonds, the City Manager and the Finance Director shall cause to be
prepared a final Official Statement dated as of the Bid Date, reflecting such changes in the
Preliminary Official Statement as may be necessary to reflect the purchaser's bid. The Mayor-
Commissioner and City Manager are hereby authorized to execute and delivery such final Official
Statement, with such changes, insertions and omissions as may be approved by such officers.
SECTION 10. CONTINUING DISCLOSURE. The City hereby covenants and agrees
that, in order to provide for compliance by the City with the secondary market disclosure
requirements of the Rule, that it will comply with and carry out all of the provisions of that certain
Continuing Disclosure Certificate in substantially the form attached hereto as Exhibit D, to be
executed by the City and dated the date of issuance and delivery ofthe Series 2003 Bonds, as it may
be amended from time to time in accordance with the terms thereof (the "Continuing Disclosure
Certificate"). Notwithstanding any other provision ofthis Resolution, failure ofthe City to comply
with such Continuing Disclosure Certificate shall not be considered an event of default; however,
any Bondholder may take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the City to comply with its obligations
under this Section.
SECTION 11. REGISTRAR AND PAYING AGENT. Wells Fargo Bank, N.A.,
Minneapolis, Minnesota is hereby appointed as Registrar and Paying Agent for the Series 2003
Bonds.
SECTION 12. MUNICIPAL BOND INSURANCE POLICIES. Pursuant to the Bond
Ordinance, Financial Security Assurance Inc. ("FSA") has been selected to provide its Municipal
Bond Insurance Policy (the "Policy") as the Bond Insurance Policy (as defined in the Bond
Ordinance) as additional security for payment of principal and interest on the Series 2003 Bonds.
Selection of Financial Security Assurance Inc., a New York domiciled insurance company as the
Bond Insurer (as defined in the Bond Ordinance) is hereby ratified and confirmed and payment for
such Bond Insurance Policy from proceeds of the Series 2003 Bonds is hereby authorized. The
Issuer hereby accepts the terms, conditions and agreements relating to the Bond Insurance Policy in
accordance with the Municipal Bond Insurance Commitment attached hereto as Exhibit E and
incorporated herein. A statement of insurance is hereby authorized to be printed on or attached to the
Series 2003 Bonds for the benefit and information ofthe holders of the Series 2003 Bonds.
In addition to the covenants and agreements of the City previously contained in the Bond
Ordinance regarding the rights of the Bond Insurer, which are hereby incorporated herein, the City
hereby makes the additional covenants and agreements substantially in the form attached hereto as
Exhibit "G" for the benefit of the Bond Insurer and the Holders ofthe Series 2003 Bonds while the
Bond Insurance Policy insuring the Series 2003 Bonds are in full force and effect.
Resolution No. 03-35
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SECTION 13. AWARD OF BIDS. The Finance Director is hereby authorized to accept the
bids for the Series 2003 Bonds. The City Manager and the Finance Director are hereby authorized to
award the sale of the Series 2003 Bonds on their determination of the best bid submitted in
accordance with the terms ofthe Notice of Bond Sale provided for herein so long as the true interest
cost rate shall not exceed 4.0% on the Series 2003 Bonds and a net present value savings on
refunding the Refunded Bonds of not less than 2%. The City Manager and the Finance Director are
hereby authorized to award the sale ofthe Series 2003 Bonds as set forth above or to reject all bids
for the Series 2003 Bonds. Such award shall be final.
SECTION 14. PRIOR RESOLUTIONS. To the extent the provisions ofthis Resolution
are inconsistent with the provisions of Resolution No. 02-30, adopted by the City Commission ofthe
City on June 20, 2002 with respect to the Series 2002 Bonds, Resolution No. 98-54, adopted by the
City Commission of the City on November 5, 1998, with respect to the Series 1998 Bonds and
Resolution No. 93-26, adopted by the City Commission ofthe City on April 15, 1993, with respect to
the Series 1993 Bonds, provisions of this Resolution shall control and supercede the inconsistent
provisions of such Resolutions.
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Resolution No. 03-35
SECTION 15. EFFECTIVE DATE. This resolution shall take effect immediately upon
adoption.
Passed and adopted by the City Commission of the City of Clearwater, Florida, this '.!JL day
of September, 2003.
CITY OF CLEARWATER, FLORIDA
Bri
IsslOner
Approved as to form:
JJU
Pamela K. Akin, City Attorney
Attest:
Resolution No. 03-35
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EXHIBIT A
FORM OF
OFFICIAL NOTICE OF BOND SALE
$ *
CITY OF CLEARWATER, FLORIDA
WATER AND SEWER REVENUE REFUNDING BONDS, SERIES 2003
NOTICE IS HEREBY GIVEN that electronic (as explained below) proposals will be
received electronically via PARITY in the manner described below, until 11 :00 a.m., Eastern
Daylight Savings Time, on October 1, 2003.
Bids must be submitted electronically via PARITY in accordance with this Notice of Bond
Sale, until 11 :00 a.m., Clearwater, Florida time, but no bid will be received after the time for
receiving bids specified above. To the extent any instructions or directions set forth in PARITY
conflict with this Notice of Bond Sale, the terms of this Notice of Bond Sale shall control. For
further information about PARITY, potential bidders may contact the financial advisor to the City,
William R. Hough & Co., 100 Second Avenue South, Suite 800, St. Petersburg, Florida 33701,
Attn: Kevin Conitz: (727) 895 8853, or PARITY at 40 West 23rd Street, 5th Floor, New York, New
York 10010, telephone (212) 404-8102. In the event of a malfunction in the electronic bidding
process, the bid date will automatically change to the next business day as confirmed in a
communication through Thompson Municipal Market Monitor (TM3).
Form of Series 2003 Bonds
The Series 2003 Bonds will be issued in book entry only form, without coupons, in
denominations of $5,000 or any integral multiples thereof, and shall be dated October 1, 2003.
Principal ofthe Series 2003 Bonds shall be paid to the registered owners at the designated corporate
trust office of Wells Fargo Bank, N.A. (the "Paying Agent" and "Registrar"), upon presentment and
surrender ofthe Series 2003 Bonds. Interest on the Series 2003 Bonds shall be paid to the registered
owners as shown on the registration books maintained by the Registrar, by check or draft mailed to
each such owner's address as shown on the registration books maintained by the Registrar as of the
fifteenth (15th) day of the calendar month preceding such interest payment date. Interest will be
payable each June 1 and December 1, commencing June 1,2004. Interest will be calculated on the
basis of a 360-day year of twelve 30-day months. For so long as The Depository Trust Company,
New York, New York, or its nominee, Cede & Co. (collectively, "DTC") is the registered owner of
the Series 2003 Bonds, payments of principal of, redemption premium, if any, and interest on the
Series 2003 Bonds will be made directly to DTC. Disbursements of such payments to the DTC
participants is the responsibility ofDTC and further disbursement of such payments from the DTC
participants to the beneficial owners of the Series 2003 Bonds is the responsibility of the DTC
participants.
* Preliminary, subject to change
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Initially one bond will be issued for each maturity ofthe Series 2003 Bonds in the aggregate
principal amount of each such maturity and registered in the name of DTC. DTC, an automated
clearing house for securities transactions, will act as securities depository for the Series 2003 Bonds.
Purchases ofthe Series 2003 Bonds will be made in book-entry-only form (without certification). It
shall be the responsibility ofthe Successful Bidder (as hereinafter defined) for the Series 2003 Bonds
to furnish to DTC an underwriters' questionnaire and to the City the CUSIP numbers of the Series
2003 Bonds not less than seven (7) days prior to the Closing Date (as hereinafter defined).
Maturity Schedule
The Series 2003 Bonds will mature on December 1 ofthe following years in the following
principal amounts:
Series 2003 Bonds
Maturity
Principal
Amount*
2004
2005
2006
2007
2008
2009
2010
5,490,000.00
165,000.00
165,000.00
170,000.00
170,000.00
185,000.00
195,000.00
*Preliminary, subject to change
Maturity
Principal
Amount*
2011
2012
2013
2014
2015
2016
2017
2018
195,000.00
210,000.00
220,000.00
230,000.00
240,000.00
250,000.00
260,000.00
270,000.00
The Series 2003 Bonds will be sold as serial bonds. Bidders will not be allowed to designate
any maturities as one or more term bonds. The Series 2003 Bonds will not be subject to optional
redemption prior to their respective maturity dates.
Adjustment of Principal Amount
After final computation ofthe bids, to achieve desired debt service levels, the City reserves
the right either to increase or decrease any Principal Amount ofthe Series 2003 Bonds shown on the
schedule of Principal Amounts set forth above (the "Maturity Schedule"), by an amount not to
exceed five percent (5%) of the stated amount of each such Principal Amount on the Maturity
Schedule and correspondingly adjust the issue size, all calculations to be rounded to the nearest
$5,000.
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In the event of any such adjustment in the Series 2003 Bonds, no rebidding or recalculation of
the bid submitted with respect to such Series 2003 Bonds will be required or permitted. If necessary,
the total purchase price ofthe Series 2003 Bonds will be increased or decreased in direct proportion
to the ratio that the adjustment bears to the aggregate principal amount of the Series 2003 Bonds
specified herein; and the Series 2003 Bonds of each maturity, as adjusted, will bear interest at the
same rate and must have the same initial reoffering yields as specified in the bid of the Successful
Bidder. However, the award will be made to the bidder whose bid produces the lowest true interest
cost, calculated as specified below, solely on the basis ofthe bid for the Series 2003 Bonds offered
pursuant to the Bid Maturity Schedule of the relevant series of Series 2003 Bonds, without taking
into account any adjustment in the .amount of Series 2003 Bonds set forth in the Bid Maturity
Schedule.
Basis of Award
Proposals must be unconditional and only for all the Series2003 Bonds. The purchase price
bid for the Series 2003 Bonds may include a discount (including underwriters' discount and original
issue discount) not to exceed two percent (2%) ofthe principal amount ofthe Series 2003 Bonds and
shall specify how much of the discount is original issue discount. The purchase price bid may also
include an original issue premium and shall specify how much of such purchase price is original
issue premium. The Series 2003 Bonds will be insured by Financial Security Assurance. Inc. and the
City will pay the bond insurance premium from Bond proceeds. The purchase price bid for the
Series 2003 Bonds will not deduct the insurance premium. Only the final bid submitted by any
bidder through Parity will be considered. The City reserves the right to determine the Successful
Bidder for the Series 2003 Bonds, to reject any or all bids and to waive any irregularity or informality
in any bid.
The Series 2003 Bonds will be awarded to the bidder (herein referred to as the "Successful
Bidder" as to the Series 2003 Bonds) offering such interest rate or rates and purchase price which
will produce the lowest true interest cost to the City over the life of the Series 2003 Bonds. True
interest cost for the Series 2003 Bonds (expressed as an annual interest rate) will be that annual
interest rate being twice that factor of discount rate, compounded semiannually, which when applied
against each semiannual debt service payment (interest, or principal and interest, as due) for the
Series 2003 Bonds will equate the sum of such discounted semiannual payments to the bid price
(inclusive of accrued interest). Such semiannual debt service payments begin on June 1,2004. The
true interest cost shall be calculated from October 15,2003, the expected closing date ofthe Series
2003 Bonds (the "Closing Date") and shall be based upon the principal amounts of each serial
maturity set forth in this Notice of Bond Sale and the bid price set forth in the Proposal for the Series
2003 Bonds submitted in accordance with the Notice of Bond Sale. In case of a tie, the City may
select the Successful Bidder by lot. It is requested that each Proposal for the Series 2003 Bonds be
accompanied by a computation of such true interest cost to the City under the term of the Proposal
for Bonds, but such computation is not to be considered as part of the Proposal for Bonds.
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Interest Rates Permitted
The Series 2003 Bonds shall bear interest expressed in multiples of one-eighth (1/8) or one-
twentieth (1/20) of one percent. No coupon interest rate specified for any maturity ofthe Series 2003
Bonds maybe less than one percent (1.0%) or more than five percent (5.0%). Should an interest rate
be specified which results in annual interest payments not being equally divisible between the
semiannual payments in cents the first semiannual payment will be reduced to the next lower cent
and the second semiannual payment will be raised to the next higher cent.
It shall not be necessary that all Series 2003 Bonds bear the same rate of interest, provided
that all Series 2003 Bonds maturing on the same date shall bear the same rate of interest. A rate of
interest based upon the use of split or supplemental interest payments or a zero rate of interest will
not be considered.
Pavine: Ae:ent and Ree:istrar
The Paying Agent and Registrar for the Series 2003 Bonds is Wells Fargo Bank, N.A.,
through its designated office in Minneapolis, Minnesota.
Security
Principal of and interest on the Series 2003 Bonds to be issued pursuant to Ordinance No.
6915-01, as supplemented, and all required sinking fund, reserve and other payments shall be
payable solely from the Net Revenues of Water and Sewer System of the City, together with the
earnings thereon derived from the investment thereof in the Funds and Accounts established in the
Ordinance and as more fully described in the Preliminary Official Statement.
The Series 2003 Bonds do not constitute a general indebtedness of the City within the
meaning of any constitutional, statutory or charter provision or limitation, and no Bondholder shall
ever have the right to require or compel the exercise of the ad valorem taxing power ofthe City or
taxation of any real or personal property therein for the payment ofthe principal of and interest on
the Series 2003 Bonds or the making of any debt service fund, reserve or other payments provided
for in the Resolution.
Purpose
Pursuant to the Ordinance, the Series 2003 Bonds are being issued to finance the refunding of
the City's Water and Sewer Refunding Revenue Bonds, Series 1993, and pay the costs of issuing the
Series 2003 Bonds, including the premium for a municipal bond insurance policy and to fund the
reserve fund.
Issuance of Series 2003 Bonds
The Series 2003 Bonds will be issued and sold by the City of Clearwater, Florida, a
municipal corporation organized and existing under the laws ofthe State of Florida. The Series 2003
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Bonds are being issued pursuant to Ordinance No. 6915-01 enacted November 15, 2001 as
supplemented by resolutions (collectively, the "Bond Ordinance") by the City of Clearwater, Florida
(the "City") and pursuant to the provisions of Chapter 166, Florida Statutes, and other applicable
provisions oflaw.
Municipal Bond Insurance Policy
A commitment to issue a municipal bond insurance policy guaranteeing payment of principal
and interest on the Series 2003 Bonds has been obtained from Financial Security Assurance Inc.
Proposals
Proposals for the Series 2003 Bonds are desired on forms which will be furnished by
PARITY, on behalf of the City, and be submitted electronically via PARITY.
All bidders must submit a "Good Faith Deposit" in the amount of$1 00,000 (the "Deposit") in
the form of a financial surety bond of Financial Security Assurance, Inc. (the "Financial Surety
Bond"). Such Financial Surety Bond must be submitted to the City prior to the sale. The Financial
Surety Bond must identify the Bidder whose Deposit is guaranteed by such Financial Surety Bond.
The successful bidder is required to submit its good faith deposit by wire transfer not later than 2:00
p.m. eastern time, on the next business day following the award, as instructed by the City's Financial
Advisor. If such deposit is not received by that time, the City shall make a claim under the Financial
Surety Bond to satisfy the good faith deposit requirement. The check of the successful bidder or
proceeds of a claim under the Financial Surety Bond, as applicable, will be deposited by the City in
an interest-bearing account and be retained and applied towards the purchase price ofthe Series 2003
Bonds pending full performance by the successful bidder, or will be forfeited to the City and applied
as full liquidated damages upon failure of the successful bidder to take up and pay for the Series
2003 Bonds. Any interest earned on the good faith deposit will be retained by and inure to the
benefit of the City. If the Series 2003 Bonds are not delivered to the successful bidder within 30
calendar days from the date of sale, without fault upon the part of the successful bidder, such
successful bidder shall not thereafter be obligated to take delivery of and pay for the Series 2003
Bonds and the good faith deposit amount will be promptly paid to the successful bidder or Financial
Security Assurance, Inc., as applicable.
Delivery and Payment
It is anticipated that the Series 2003 Bonds in book entry only form will be available for
delivery on October 15, 2003, in New York, New York, at The Depository Trust Company, or some
other date and place to be mutually agreed upon by the Successful Bidder and the City against the
payment ofthe purchase price therefor including accrued interest calculated on a 360-day year basis,
less the amount of the good faith check, in immediately available Federal Reserve funds without cost
to the City.
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Closine: Documents
The City will furnish to the Successful Bidder upon delivery of the Series 2003 Bonds the
following closing documents in a form satisfactory to Bond Counsel: (1) signature and no-litigation
certificate; (2) federal tax certificate; (3) certificate regarding information in the Official Statement;
and (4) seller's receipt as to payment. A copy of the transcript of the proceedings authorizing the
Series 2003 Bonds will be delivered to the Successful Bidder of the Series 2003 Bonds upon request.
Copies of the form of such closing papers and certificates may be obtained from the City.
Information Statement
Section 218.38(1)(b)I, Florida Statutes requires that the City file, within 120 days after
delivery of the Series 2003 Bonds, aninformation statement with the Division of Bond Finance of
the State of Florida (the "Division") containing the following information: (a) the name and address
ofthe managing underwriter, if any, connected with the Series 2003 Bonds; (b) the name and address
of any attorney or financial consultant who advised the City with respect to the Series 2003 Bonds;
and (c) any fee, bonus, or gratuity paid, in connection with the bond issue, by an underwriter or
financial consultant to any person not regularly employed or engaged by such underwriter or
consultant and (d) any other fee paid by the City with respect to the Series 2003 Bonds, including any
fee paid to attorneys or financial consultants. The Successful Bidder will be required to deliver to
the City at or prior to the time of delivery of the Series 2003 Bonds, a statement signed by an
authorized officer containing the same information mentioned in (a) and (c) above. The Successful
Bidder shall also be required, at or prior to the delivery of the Series 2003 Bonds, to furnish the City
with such information concerning the initial prices at which a substantial amount ofthe Series 2003
Bonds of each maturity were sold to the public as the City shall reasonably request.
Pursuant to Section 218.385(2) and (3) of the Florida Statutes, as amended, a truth-in-
bonding statement will be required from each bidder as to the Series 2003 Bonds as part oftheir bid
in the following form:
"The City of Clearwater, Florida, is proposing to issue $ original
aggregate principal amount of Water and Sewer Revenue Refunding Bonds, Series
2003, for the purpose of paying (i) the costs of refunding the City's Water and Sewer
Refunding Revenue Bonds, Series 1993, (ii) the costs of issuing the Series 2003
Bonds, and (iii) the premium on the Bond Insurance Policy, all as further described in
Ordinance No. 6915-01. The final maturity date of the Series 2003 Bonds is
December 1,2018, and the Series 2003 Bonds are expected to be repaid over a period
of fifteen (15) years. At a forecasted average interest rate of _ % per annum, total
interest paid over the life of the Series 2003 Bonds will be $ . The
source of repayment or security for this proposal is the Net Revenues (as defined in
the Ordinance) and moneys and investments held in the funds created under the said
Ordinance. Authorizing the Series 2003 Bonds will result in $ not
being available to finance the other capital projects ofthe City. This truth-in-bonding
statement prepared pursuant to Section 218.385(2) and (3) ofthe Florida Statutes, as
amended, is for informational purposes only and shall not affect or control the actual
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terms and conditions of the Series 2003 Bonds."
Leeal Opinion
The Successful Bidder will be furnished, without cost, with the approving opinion of Bryant
Miller & Olive P.A., Tallahassee, Florida, to the effect that based on existing law, and assuming
compliance by the City with certain covenants and requirements of the Internal Revenue Code of
1986, as amended (the "Code"), regarding use, expenditures, investment of proceeds and the timely
payment of certain investment earnings to the United States Treasury, the interest on the Series 2003
Bonds is not includable in the gross income of individuals, however, interest on the Series 2003
Bonds will be included in the calculation of the alternative minimum tax liabilities of corporations.
The Code contains other provisions that could result in tax consequences, upon which Bond Counsel
renders no opinion, as a result of ownership of the Series 2003 Bonds or the inclusion in certain
computations (including, without limitation, those related to the corporate alternative minimum tax
and environmental tax) of interest that is excluded from gross income.
Official Statement
The Preliminary Official Statement, copies of which may be obtained as described below, is
in a form "deemed final" by the City for purposes of SEC Rule 15c2-12(b)(1) (except for certain
permitted omissions as described in such rule) but is subject to revision, amendment and completion
in a final Official Statement. Upon the sale of the Series 2003 Bonds, the City will publish a final
Official Statement in substantially the same form as the Preliminary Official Statement. Copies of
the final Official Statement will be provided, at the City's expense, on a timely basis in such
quantities as may be necessary for the Successful Bidder's regulatory compliance.
It is not the intention or the expectation of the City to print the name(s) of the Successful
Bidder as to the Series 2003 Bonds on the cover of the Official Statement.
Continuine Disclosure
The City has covenanted to provide ongoing disclosure in accordance with Rule 15c2-12 of
the Securities and Exchange Commission. See "Appendix D -- Form of Continuing Disclosure
Certificate" attached to the Preliminary Official Statement.
CUSIP Number
It is anticipated that CUSIP identification numbers will be printed on the Series 2003 Bonds,
but neither the failure to print such number on any Series 2003 Bonds nor any error with respect
thereto shall constitute cause for failure or refusal by the Successful Bidder to accept delivery of and
pay for the Series 2003 Bonds in accordance with its agreement to purchase the Series 2003 Bonds.
All expenses in relation to the printing of CUSIP numbers on the Series 2003 Bonds shall be paid for
by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of said
number shall be the responsibility of and shall be paid for by the Successful Bidder.
A-7
Copies of Documents
Copies of the Preliminary Official Statement, this Official Notice of Bond Sale and the
Official Bid Form and further information which may be desired, may be obtained from the City's
Financial Advisor, William R. Hough & Co., 100 Second Avenue South, Suite 800, St. Petersburg,
Florida 33701, Attn: Kevin Conitz: (727) 895 8853.
Amendment and Notices
Amendments hereto and notices, if any, pertaining to this offering shall be made through
Thompson Municipal Market Monitor (TM3) or similar information distribution service.
CITY OF CLEARWATER, FLORIDA
/s/ Brian J. Aungst
Mayor-Commissioner
A-8
EXHIBIT B
FORM OF
SUMMARY NOTICE OF SALE
CITY OF CLEARWATER, FLORIDA
Water and Sewer Revenue Refunding Bonds
Series 2003
NOTICE IS HEREBY GIVEN, that bids will be received by the City Manager and the
Finance Director ofthe City of Clearwater, Florida, electronically through PARITY, subject to the
provisions of the Official Notice of Bond Sale.
Sale Date:
Time:
Bonds Dated:
Maturities:
Maturity
2004
2005
2006
2007
2008
2009
2010
October 1, 2003
11:00 a.m., E.D.S.T.
October 1, 2003
Payable December 1 in the years and amounts as follows:
Series 2003 Bonds
Principal
Amount*
5,490,000.00
165,000.00
165,000.00
170,000.00
170,000.00
185,000.00
195,000.00
*Preliminary, subject to change
Interest Payment Dates:
Legal Opinion:
Maturity
Principal
Amount*
2011
2012
2013
2014
2015
2016
2017
2018
195,000.00
210,000.00
220,000.00
230,000.00
240,000.00
250,000.00
260,000.00
270,000.00
Payable June 1 and December 1, commencing June 1,2004.
Bryant Miller & Olive P.A.,
Tallahassee, Florida
For copies ofthe Official Notice of Bond Sale and the Preliminary Official Statement of the
City of Clearwater, Florida, please contact the City's Financial Advisor, William R. Hough & Co.,
100 Second Avenue South, Suite 800, St. Petersburg, Florida 33701, Attn: Kevin Conitz: (727) 895
8853. The Preliminary Official Statement may be obtained after September 22,2003 electronically
through hnage Master Financial Publishing Inc. at www.munios.com.
B-1
EXHIBIT C
FORM OF PRELIMINARY OFFICIAL STATEMENT
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Preliminary OjJicial Statement Dated September , 2003
NEW ISSUE - FULL BOOK-ENTRY Ratings: Fitch: "AAA" (Insured)
"A" (Underlying)
Moody's: "Aaa" (Insured)
"A-2" (Underlying)
(See "RATINGS," herein)
In the opinion of Bond Counsel, assuming continuing compliance by the City with various covenants in the Ordinance (herein defined), under existing
statutes, regulations and judicial decisions, the interest on the Series 2003 Bonds will be excluded from gross income for federal income tax purposes to the
owners thereof The Series 2003 Bonds are, under existing laws and regulations, also exempt from intangible taxes imposed pursuant to Chapter I 99, Florida
Statutes. See "Tax Exemption" hereinfor a description of alternative minimum tax treatment and certain other tax consequences to owners of the Series 2003
Bonds.
$8,415,000 *
CITY OF CLEARWATER, FLORIDA
Water and Sewer Revenue Refunding Bonds
Series 2003
Dated: October 1, 2003
Due: December 1, as shown below
The Water and Sewer Revenue Refunding Bonds, Series 2003 (the "Series 2003 Bonds") of the City of Clearwater, Florida (the "City") are being issued
in fully registered form and, when initially issued, will be registered to Cede & Co.,'" nomineeofThe Depository Trust Company, New York, New York. Wells
Fargo Bank, National Association, Minneapolis, Minnesota, is acting as the Paying Agent and Bond Registrar for the Series 2003 Bonds. The Series 2003 Bonds
will be purchased in book-entry form only, in the denomination of $5,000 or any integral multiple thereof There will be no physical delivery ofbond certificates
to individual Bondholders. Interest on the Series 2003 Bonds will be payable semi-annually beginning on June I, 2004 and on each June I and December I
thereafter. Principal of and premium, if any, on the Series 2003 Bonds will be payable at maturity or upon redemption prior to maturity.
The Series 2003 Bonds are not subject to redemption prior to maturity.
The Series 2003 Bonds are being issued for the purposeof(i) refunding and redeeming on December I, 2003, all of the Outstanding principal amount
of the City's Water and Sewer Refunding Revenue Bonds, Series 1993, maturing after December 1,2003 (the "Refunded Bonds"), (ii) funding a deposit to the
Debt Service Reserve Account for the benefit of the Series 2003 Bonds and all Outstanding Parity Bonds, (iii) paying certain costs of issuance of the Series 2003
Bonds, including the municipal bond insurance premium. The Series 2003 Bonds and the interest thereon are payable solely from the Net Revenues derived from
the operation of the System, as further described herein. The lien of the Series 2003 Bonds on the Net Revenues is on a parity with the holders of the City's
Outstanding Water and Sewer Revenue Refunding Bonds, Series 1998 and the City's Outstanding Water and Sewer Revenue Bonds, Series 2002 (the "Parity
Bonds"), as further described herein.
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 FINANCIAL SECURITY ASSURANCE INC. For a discussion of the terms and provisions of such policy, including the limitations
thereof, see "MUNICIPAL BOND INSURANCE" herein.
IrFSA<<.
PRINCIPAL AMOUNTS, INTEREST RATES, MATURITIES, PRICES & YIELDS
$8,415,000' Serial Bonds
Maturing Maturing
December 1 Principal December 1 Principal
of the Year Amount CouDon Yield CUSIP of the Year Amount CouDon Yield CUSIP
2004 $5,490,000 2012 $210,000
2005 165,000 2013 220,000
2006 165,000 2014 230,000
2007 170,000 2015 240,000
2008 170,000 2016 250,000
2009 185,000 2017 260,000
2010 195,000 2018 270,000
2011 195,000
(Accrued interest to be added)
ELECTRONIC BIDS FOR THE SERIES 2003 BONDS WILL BE ACCEPTED
IN ACCORDANCE WITH THE OFFICIAL NOTICE OF SALE.
The Series 2003 Bonds are offered when, as and if issued and accepted by the Underwriter subject to the approval of legality
by Bryant Miller & Olive, P.A., Tallahassee, Florida, Bond CounseL Certain other legal matters will be passed upon for the City by
Pamela K. Akin, Esquire, City Attorney, and by Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Disclosure Counsel to the City.
William R. Hough & Co., St. Petersburg, Florida is serving as Financial Advisor to the City. It is expected that the Series 2003 Bonds,
in definitive book-entry form, will be available for delivery through DTC in New York, New York on or about October 15, 2003.
October , 2003
... Preliminary, subject to change.
CITY OF CLEARWATER, FLORIDA
ELECTED OFFICIALS
MAYOR - COMMISSIONER
Brian 1. AWlgst, Sr.
COMMISSIONERS
Frank Hibbard
Hoyt Hamilton
Whitney Gray
Bill Jonson
APPOINTED OFFICIALS
William B. Home, II, City Manager
Pamela K. Akin, Esq., City Attorney
Margaret L. Simmons, CPA, Financial Services Administrator
BOND COUNSEL
Bryant Miller & Olive, P.A.
Tallahassee, Florida
FINANCIAL ADVISOR
William R Hough & Co.
St. Petersburg, Florida
REGISTRAR AND PAYING AGENT
Wells Fargo Bank, National Association
Minneapolis, Minnesota
No dealer, broker, salesman or other person has been authorized to give any information or to make
any representations, other than those contained in this Official Statement, in connection with the offering
of the Series 2003 Bonds described herein, and if given or made, such information or representations must
not be relied upon as having been authorized by the City or the Underwriter. This Official Statement does
not constitute an offer to sell the Series 2003 Bonds or a solicitation of an offer to buy nor shall there be
any sale of the Series 2003 Bonds by any person in any jurisdiction in which it is unlawful for such person
to make such offer, solicitation or sale. The information set forth herein has been furnished by the City and
by other sources whichare believed to be reliable, but it is not guaranteed as to accuracy or completeness,
and is not to be construed as a representation or contract, by the Underwriter. The information and
expressions of opinion herein are subject to change without notice and neither the delivery of the Official
Statement nor any sale made hereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of the City since the date hereof.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERMA Y OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SERIES 1998 BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED,
MAY BE DISCONTINUED AT ANY TIME.
The Series 2003 Bonds have not been registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, nor has the Ordinance been qualified
under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in
such acts. The registration or qualification of the Series 2003 Bonds in accordance with
applicable provisions of the securities laws of the States, if any, in which the Series 2003 Bonds
have been registered or qualified and the exemption from registration or qualification in certain
other states cannot be regarded as a recommendation thereof. Neither these States nor any of
their agencies have passed upon the merits of the Series 2003 Bonds or the accuracy or
completeness of this Official Statement. Any representation to the contrary may be a criminal
offense.
TABLE OF CONTENTS
Page
INTRODUCTORY STATEMENT. . . . . . .. 1
PLAN OF REFUNDING . . . . . . . . . . . . . . . 2
FUTURE FINANCING OF THE W ATERAND
SEWER SYSTEM .................... 3
DESCRIPTION OF THE SERIES 2003 BONDS
....................................3
General . . . . . . . . . . . . . . . . . . . . . . . . .. 3
Book-Entry Only System. . . . . . . . . . . . . 4
SECURITY FOR THE
SERIES 2003 BONDS .............. 8
Series 2003 Bonds
Not a Debt of the City. . . . . . . . . . .. 9
Parity Bonds ..................... 10
MUNICIPAL BOND INSURANCE 10
DEBT SERVICE REQUIREMENTS ..... 12
SOURCES AND USES OF FUNDS ..... 13
THE WATER AND SEWER SYSTEM ... 13
Water System .................... 13
Sewer System . . . . . . . . . . . . . . . . . . .. 15
Water and Sewer
Capital hnprovements . . . . . . . . . . . . .. 17
RATES, FEES AND CHARGES........ 18
FINANCIAL STATEMENTS .......... 20
INVESTMENT POLICY OF THE CITY .. 20
LITIGATION. . . . . . . . . . . . . . . . . . . . . .. 21
RATINGS. . . . . . . . . . . . . . . . . . . . . . . . .. 21
TAX EXEMPTION .................. 22
Federal Income Tax Matters ......... 22
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . 23
ENFORCEABILITY OF REMEDIES .... 23
FINANCIAL ADVISOR .............. 23
VERIFICATION OF MATHEMATICAL
COMPUTATIONS................... 24
DISCLOSURE REQUIRED BY FLORIDA
BLUE SKY REGULATIONS. . . . . . . . . .. 24
ADVISORS AND CONSULTANTS. . . .. 24
CONTINUING DISCLOSURE . . . . . . . . . 26
CERTIFICATE CONCERNING OFFICIAL
STATEMENT. . . . . . . . . . . . . . . . . . . . . . . 26
MISCELLANEOUS . . . . . . . . . . . . . . . . . . 26
Appendices
AppendixA General Description of the City and
Selected Statistics
Appendix B Excerpts from the City's
Comprehensive Annual Financial
Report for the Fiscal Year Ended
September 30, 2002
Appendix C Form of Ordinance 6915-01 and
Resolution 03-35
Appendix D Form of Continuing Disclosure
Agreement
Appendix E Form of Bond Counsel Opinion
Appendix F Form of Municipal Bond Insurance
Policy
OFFICIAL STATEMENT
$8,415,000*
CITY OF CLEARWATER, FLORIDA
WATER AND SEWER REVENUE REFUNDING BONDS, SERIES 2003
fflTRODUCTORYSTATEMENT
The purpose of this Official Statement, which includes the cover page, the Summary Statement and
the Appendices, is to provide information concerning the City of Clearwater, Florida (the "City") and the
City's $8,415,000* Water and Sewer Revenue RefimdingBonds, Series 2003 (the "Series 2003 Bonds").
The Series 2003 Bonds are being issued for the purpose of (i) refunding and redeeming on
December 1,2003, all of the Outstanding principal amount of the City's Water and Sewer Refunding
Revenue Bonds, Series 1993, maturing after December 1,2003 (the "Refimded Bonds")" (ii) funding a
deposit to the Debt Service Reserve Account for the benefit of the Series 2003 Bonds and all Outstanding
Parity Bonds, (iii) paying certain costs of issuance of the Series 2003 Bonds, including the municipal bond
insurance premium. The Refunded Bonds (or Bonds refunded by the Refunded Bonds) funded the capital
costs of the City's water and sewer system (the "System"). The Series 2003 Bonds and the interest thereon
are payable solely from the Net Revenues derived from the operation of the System, as further described
herein. After giving effect to the refimding of the Refunded Bonds, the lien of the Series 2003 Bonds on
the Net Revenues is on a parity with the holders of the City's Outstanding Water and Sewer Revenue
Refimding Bonds, Series 1998 (the "Parity Bonds"), as further described herein. The scheduled payment
of principal of and interest on the Series 2003 Bonds when due will be guaranteed under an insurance
policy to be issued concurrently with the delivery of the Series 2003 Bonds by Financial Security
Assurance Inc., as described herein. For a discussion of the terms and provisions of such policy, including
the limitations thereof, see "MUNICIPAL BOND INSURANCE" herein.
The Series 2002 Bonds will be issued pursuant to the authority of and in full compliance with (a)
the charter of the City, (b) the Constitution and the laws of the State of Florida, particularly Chapter 166,
Part II, Florida Statutes, and other applicable provisions of law, and (c) Ordinance No. 3674-84 enacted
by the Issuer on August 2, 1984, as amended and supplemented in Ordinance 5355-93, enacted on April
15, 1993, as amended and supplemented in Ordinance 6311-98, enacted November 5, 1998 and as
further amended and supplemented in Ordinance 6915-0 1, enacted November 15,2001 (the "Ordinance")
and as further supplemented by Resolution 03-35, adopted by the City on September 18, 2003 (the
"Series 2003 Resolution").
Neither the Series 2003 Bonds nor the interest thereon constitute a general obligation or
indebtedness of the City within the meaning of any constitutional, statutory or charter provision or limitation
No owner or owners of any Series 2003 Bonds shall ever have the right to compel the exercise of the ad
valorem taxing power of the City, or any other taxing power in any form on any real or personal property
of the City, to pay the Series 2003 Bonds or the interest thereon. The City shall not be obligated to pay
· Preliminary, subject to change.
1
the Series 2003 Bonds or any interest thereon except from the Net Revenues, in the manner provided in
the Ordinance.
A Reserve ACCOl.Ult has been established for the benefit of the Series 2003 Bonds and the
outstanding Parity Bonds (as herein defined). Upon issuance of the Series 2003 Bonds, the Reserve
ACCOl.Ult will be fimded in an amount equal to the Reserve Account Requirement for Series 2003 Bonds
and the Outstanding Parity Bonds.
The City covenants in the Ordinance to fix, establish and maintain such rates, and collect such fees,
rentals and other charges for the services and facilities of the System (as herein defined) and revisethe same
from time to time whenever necessary as will always provide Gross Revenues in each Fiscal Year sufficient
to pay (i) the Cost of Operation and Maintenance of the System in such Fiscal Year, (ii) 115% of the Bond
Service Requirement for such Fiscal Year on the Outstanding Series 2003 Bonds and on all Outstanding
Additional Bonds and Parity Bonds, plus (iii) 100% of all reserve and other payments required to be made
pursuant to the Ordinance.
The City may issue AdditionalBonds, payable on a parity from the Net Revenues with the Series
2003 Bonds and the Parity Bonds, for the purpose of refunding a part of the Outstanding Bonds, or
financing the cost of extensions, additions and improvements to the System and for the acquisition and
construction of, and extensions and improvements to, sewer and/or water systems which are to be
consolidated with the System and operated as a single combined utility, provided that, among other
requirements, certain earnings tests relating historical Net Revenues to the Maximwn Bond. Service
Requirement of all Bonds outstanding after the issuance of such Additional Bonds can be met. Such
historical Net Revenues may be adjusted by the Consulting Engineer as provided in the Ordinance.
Definitions of certain words and terms having initial capitals used herein and in the Ordinance are
contained in the "Conformed Copy of the Ordinance and Amendatory Ordinance" in Appendix C hereto.
The references, excerpts and summaries of all docwnents referred to herein do not purport to be
complete statements of the provisions ofsuchdocwnents, and reference is directed to all such docwnents
for full and complete statements of all matters of fact relating to the Series 2003 Bonds, the security for the
payment of the Series 2003 Bonds, and the rights and obligations of holders thereof. The information
contained in this Official Statement involving matters of opinion or of estimates, whether or not so expressly
stated, are set forth as such and not as representations of fact, and no representation is made that any of
the estimates will be realized. Neither this Official Statement nor any statement which may have been made
verbally or in writing is to be construed as a contract with the holders of the Series 2003 Bonds.
PLAN OF REFUNDING
In order to achieve debt service savings, from the proceeds of the Series 2003 Bonds, together
with other moneys provided by the City, the City will deposit into an irrevocable escrow account (the
"Escrow Fund") with Wells Fargo Bank, National Association, Minneapolis, Minnesota, as Escrow Agent,
anammmt sufficient to pay and redeem on December 1, 2003, all of the Outstanding principal amount of
the City's Water and Sewer Refunding Revenue Bonds, Series 1993, maturing after December 1, 2003
2
(the "Refimded Bonds"), together with premium and accrued interest, which Refimded Bonds are currently
Outstanding in the aggregate principal amount of $8,290,000.
FUTURE FINANCING OF THE WATER AND SEWER SYSTEM
Burton& Associates, Jacksonville, Florida (the "Rate Consultant") conducted a rate study in 200 1
(the "Rate Study"), which consisted of a revenue sufficiency analysis for the period FY 2001 through FY
2006 (the "Forecast Period") to determine the projected costs of capital improvements to the System and
to determine the adequacy of then-current rates to fund the System's projected costs during the Forecast
Period. The Rate Study identified a need for approximately $158 million in capital projects for the System
for fiscal years 2001 through 2006 to be fimded with approximately $5.5 million of available operating
revenues after fimding debt service, $22.4 million of Renewal and Replacement Fund revenue and $130.1
millionofrevenue bond proceeds. Proceeds of the Series 2002 Bonds funded approximately $54 million
of these capital projects and it is anticipated that the City will issue Bonds in 2004 to fund approximately
$35,245,213 in additional projects and $41 million for additional projects in 2006. ~ee also,
"SECURITY FOR THE SERIES 2003 BONDS - Parity Bonds").
DESCRIPTION OF THE SERIES 2003 BONDS
General
The Series 2003 Bonds will be dated October 1, 2003. The Series 2003 Bonds will bear interest
at the rates and mature on December 1 in the amounts and at the times set forth on the cover page of this
Official Statement. The Series 2003 Bonds are to be issued as fully registered bonds indenominations of
$5,000 or integral multiples thereof. Interest on the Series 2003 Bonds will be payable on June 1, 2004
and semiannually thereafter on June 1 and December 1 of each year, by check or draft mailed to the
registered owners, at their addresses as they appear on the registration books of the City maintained by
the Bond Registrar, as of the 15th day (whether or not a business day) of the month preceding the interest
payment date (the "Record Date"). Owners of$1 ,000,000 or more in aggregate principal amount of Series
2003 Bonds may receive interest by wire transfer, at the Owner's expense, to a bank account designated
in writing by the Owner not later than the Record Date. Principal of, and premium if any, are payable at
maturity, or upon redemption prior to maturity, upon presentation and surrender thereof at the cOIporate
trust office of the Paying Agent. Wells Fargo Bank, National Association, Minneapolis, Minnesota, is
acting as Paying Agent and Bond Registrar for the Series 2003 Bonds.
The Series 2003 Bonds will be initially issued in the form of a single fully registered Bond for each
maturity of the Series 2003 Bonds. Upon initial issuance, the ownership of each such Series 2003 Bonds
will be registered in the registration books kept by the Bond Registrar, in the name of Cede & Co., as
nominee of The Depository Trust Company, New York, New York ("DTC"). While held in book-entry
fonn, all payments of principal, interest and premium, if any, on the Series 2003 Bonds will be
made to DTC or the DTC Nominee as the sole registered owner of the Series 2003 Bonds and
payments to Beneficial Owners will be the responsibility of DTC and the DTC Participants as
described below. See "Book-Entry Only System."
3
With respect to Series 2003 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 2003 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 2003 Bonds, including any notice of
redemption; or (ill) the payment to any DTC Participant or any other person, other thana registered owner,
as shown in the registration books kept by the Bond Registrar, of any amount with respect to principal of,
premium, if any, or interest on the Series 2003 Bonds. The City, the Bond Registrar and the Paying Agent
may treat and consider the person in whose name each Series 2003 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, premium, if any, and interest with respect to such Bond, for the purpose of giving
notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers
with respect to such Bond, and for all other purposes whatsoever. The Paying Agent will pay all principal
of, premium, ifany, and interest on the Series 2003 Bonds only to or upon the order of the respective
registered owners, as shown in the registration books kept by the Bond Registrar, or their respective
attorneys duly authorized in writing, as provided in the Ordinance, and all such payments will be valid and
effectual to satisfy and discharge the City's obligations with respect to payment of principal of, premium,
if any, and interest on the Series 2003 Bonds to the extent of the sums so paid. No person other than a
registered owner, as shown in the registration books kept by the Bond Registrar, will receive a certificated
Bond evidencing the obligation of the City to make payments of principal of, premium, if any, and interest
on the Series 2003 Bonds pursuant to the provisions of the Ordinance.
Series 2003 Bonds Not Subject to Redemption
The Series 2003 Bonds are not subject to redemption prior to maturity.
Book-Entry Only System
The Series 2003 Bonds will be available in book-entry form only, in denominations of $5,000 or
any integral multiple thereof. Purchasers of the Series 2003 Bonds will not receive certificates representing
their interests in the Series 2003 Bonds purchased. The Underwriter is to confirm original issuance
purchases with statements containing certain terms of the Series 2003 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 Depository Trust Company (t1DTCtI), New York, New York, will act as securities depository
for the Series 2003 Bonds. The Series 2003 Bonds will be issued as fully-registered securities registered
in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an
authorized representative ofDTC. One fully-registered Series 2003 Bond will be issued for each maturity
of the Series 2003 Bonds, as set forth on the inside cover page hereof, and will be deposited with DTC.
4
DTC, the world's largest depository, is a limited-purpose trust company organized under the New
York Banking Law, a ''banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 1 7 A of the
Securities Exchange Act of1934. DTC holds and provides asset servicing for over 2 million issues of US.
and non-US. equity issues, corporate and mwricipaldebt issues, and money market instruments from over
85 countries that DTC's participants ("Direct Participants") deposit withDTC. DTC also facilities the post-
trade settlement among Direct Participants of sales and other securities transactions in deposited securities,
through electronic computerized book -entry transfers and pledges between Direct Participants' accounts.
This eliminates the need for physical movement of securities certificates. Direct Participants include both
US. and non-US. securities brokers and dealers, banks, trust companies, clearing corporations, and
certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing
Corporation ("DTCC"). DTCC, in turn, is owned by a nwnber of Direct Participants of DTC and
Members of the National Securities Clearing Corporation, Govenunent Securities Clearing Corporation,
MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and
EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American
Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system
is also available to others such as both U.S. and non-US. securities brokers and dealers, banks, trust
companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating:
AAA. The DTC Rules applicable to its Participants area on file with the Securities and Exchange
Commission. More information about DTC can be found at www.dtcc.com.
So long as the book-entry only system is in effect, beneficial interests in the Series 2003 Bonds will
be available in book-entry form only, in the principal amount of $5,000 or any integral multiple thereof
Purchasers of beneficial interests in the Series 2003 Bonds will not receive certificates representing their
beneficial interests in the Series 2003 Bonds purchased. Each Underwriter is to confirm original issuance
purchases ofbeneficial interests with statements containing certain terms of the Series 2003 Bonds in which
such beneficial interests are purchased.
Purchases of Series 2003 Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Series 2003 Bonds on DTC's records. The ownership
interest of each actual purchaser of each Series 2003 Bonds ("Beneficial Owner") is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation
fromDTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their holdings, from the Direct or
Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Series 2003 Bonds are to be accomplished by entries made on the books of
Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Series 2003 Bonds, except in the event that use of the
book-entry system for the Series 2003 Bonds is discontinued.
To facilitate subsequent transfers, all Series 2003 Bonds deposited by Direct Participants withDTC
are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative ofDTC. The deposit of Series 2003 Bonds with DTC and their
registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial
5
ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2003 Bonds; DTC's
records reflect only the identity of the Direct Participants to whose accounts such Series 2003 Bonds are
credited, which mayor may not be the Beneficial Owners. The Direct and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
ThePaying Agent will make payments of principal of, premiwn, if any, and interest on the Series
2003 Bonds to DTC or such othernominee, as may be requested by an authorized representative or DTC,
as registered owner of the Series 2003 Bonds. DTC's practice is to credit Direct Participants' accounts
upon DTC's receipt of funds and corresponding detail information from the City and the Paying Agent, on
payable date in accordance with their respective holdings shown on DTC's records. Payments by
Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer formor registered in "street name," and
will be the responsibility of such Participant and not of DTC nor its nominee, the Paying Agent subject to
any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption
proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be
requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent,
disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
The City and the Paying Agent will send redemption notices to DTC. Ifless than all ofthe Series
2003 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of
interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Series 2003 Bonds unless authorized byaDirectParticipant inaccordancewithDTC's Procedures. Under
its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts Series 2003 Bonds are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
THE CITY AND THE PAYING AGENT WILL HAVE NO RESPONSIBILITY OR
OBLIGATION TO THE BENEFICIAL OWNERS, DTC PARTICIPANTS OR THE PERSONS FOR
WHOM DTC PARTICIPANTS ACT AS NOMINEES WITH RESPECT TO THE SERIES 2003
BONDS FOR THE ACCURACY OF RECORDS OF DTC, CEDE & CO. OR ANY DTC
PARTICIPANT WITH RESPECT TO THE SERIES 2003 BONDS OR THE PROVIDING OF
NOTICEORPA YMENTOF PRINCIPAL, OR INTEREST, OR ANY PREMIUM ON THE SERIES
2003 BONDS, TO DTC PARTICIPANTS OR BENEFICIAL OWNERS, OR THE SELECTION OF
SERIES 2003 BONDS FOR REDEMPTION.
The City and the Paying Agent cannot give any assurances that DTC, DTC Participants or others
will distribute payments of principal of, premium, if any, and interest on the Series 2003 Bonds paid to DTC
6
or its nominee, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a
timely basis or that DTC will serve or act in a manner described in this Official Statement.
For every transfer and exchange of beneficial interests in the Series 2003 Bonds, the Beneficial
Owner may be charged a sum sufficient to cover any tax, fee or other government charge that may be
imposed in relation thereto.
DTC may determine to discontinue providing its services with respect to the Series 2003 Bonds
at any time by giving notice to the City and the Paying Agent and discharging its responsibilities withrespect
thereto under applicable law. Under such circwnstances, in the event that a successor depository is not
obtained, Series 2003 Bonds are required to be printed and delivered. In addition, the City may determine
to discontinue the use of book-entry transfers through DTC (or any successor securities depository).
Under such circmnstances, certificated Series 2003 Bonds are required to be delivered as described
below.
In the event that the book-entry only system is discontinued, the following provisions will govern
the transfer and exchange of Series 2003 Bonds. The Series 2003 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 2003 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 2003 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 2003
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
2003 Bonds shall be delivered. Neither the City nor the Bond Registrar shall be required to register the
transfer or exchange of any Series 2003 Bonds duringthe 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 2003 Bonds, after such Series 2003
Bonds or any portion thereof has been selected for redemption.
7
SECURITY FOR THE SERIES 2003 BONDS
Net Revenues. The principal of and premimn, ifany, and interest on the Series 2003 Bonds are
payable solely from and secured by an irrevocable first lien upon and pledge of the Net Revenues (as
hereinafter defined) derived and collected by the City from the operation of the water and sewer system
of the City (the "System"), on a parity with the Parity Bonds. ''Net Revenues" are defined by the Ordinance
to include all income or earnings, including any income from the investment of fimds, derived by the City
from the operation of the System after deduction of current expenses, either paid or accrued, for the
operation, maintenance and repair of the System, but not including reserves for renewals and replacements,
for extraordinary repairs or any allowance for depreciation.
The Series 2003 Bonds do not constitute a general indebtedness of the City within the meaning of
any constitutional, statutory or charter provision or limitation. The principal of and interest on the Series
2003 Bonds and all required reserve and other payments shall be made solely fromthe Net Revenues. The
City shall never be required to levy ad valorem taxes on any property therein to pay the principal of and
interest on the Series 2003 Bonds or to make any of the required debt service, reserve or other payments,
and any failure to pay the Series 2003 Bonds shall not give rise to a lien upon any property of or in the City,
except the Net Revenues.
Rate Covenant. In the Ordinance, the City has covenanted to fix, establish and maintain such
rates and collect such fees, rentals and other charges for the services and facilities of the System and revise
the same from time to time whenever necessary, as will always provide Gross Revenues in each Fiscal Year
sufficient to pay the Cost of Operation and Maintenance of the System in such Fiscal Year, one hundred
fifteen per centum (115%) of the Bond Service Requirement becoming due in such Fiscal Year on the
Outstanding Parity Bonds, on the outstanding Bonds and on all outstanding Additional Bonds, plus one
hundred per centum (100%) of all reserve and other payments required to be made pursuant to this
Ordinance and the Original Ordinance. Such rates, fees, rentals and other charges shall not be reduced
so as to be insufficient to provide Gross Revenues for such purposes.
Reserve Account. The Ordinance creates a Reserve Account in a swn equal to and sufficient
to pay the Maximwn Bond Service Requirement on all outstanding Bonds becoming due in any ensuing
Fiscal Year. The Reserve Account will be fully fimded after the issuance of the Series 2003 Bonds. No
further payments will be required to be made into such Reserve Account as long as there shall remain on
deposit therein a sum equal to the MaximmnBond Service Requirement on all outstanding Bonds becoming
due in any ensuing Fiscal Year.
Moneys in the Reserve Account shall be used only forthe purpose of payment of maturing principal
of or interest on the Bonds when the moneys in the Sinking Fund are insufficient therefor. Interest earnings
on fimds held in the Reserve Account will be transferred to the Revenue Fund. In lieu of or in substitution
for all or any part of the required deposits to the Reserve AccoWlt, the City may provide for the deposit
of a surety bond or insurance policy from a reputable insurer in accordance with the provisions of the
Ordinance.
8
Any withdrawals from the Reserve Account will be subsequently restored from the first moneys
available in the Revenue Fund after all required current payments into the Sinking Fund and into the
Reserve Account, including all deficiencies for prior payments, have been made in full.
Additional Bonds. Additional Bonds, payable on a parity from the Net Revenues with the Series
2003 Bonds and the Parity Bonds, may be issued for the purposes of refimding a part of the outstanding
Bonds or financing the cost of extensions, additions and improvements to the System and for the acquisition
and construction of, and extensions, additions and improvements to, sewer and/or water systems whichare
to be consolidated with the System and operated as a single combined utility. Additional Bonds, other than
for refimding purposes, will be issued only upon compliance with all of the conditions set forth in the
Ordinance, including the following:
(1) There shall have been obtained and filed with the CleIk a certificate of the Finance Director
stating: (a) that the books and records of the City relative to the System have been audited by qualified and
recognized firm of independent certified public accountants; (b) based on such audited financial statement,
that the amount of the adjusted Net Revenues derived for the Fiscal Year preceding the date of issuance
of the proposed Additional Bonds or for any twelve (12) consecutive months during the eighteen (18)
months immediately preceding the date of issuance of the Additional Bonds with respect to which such
certificate is made, adjusted as herein below provided; and (c) based on such audited financial statement,
that the aggregate amount of such Net Revenues, as adjusted, for the period for which such Net Revenues
are being certified is equal to not less than 120% of the Maxi-mwn Bond Service Requirement becoming
due in any Fiscal Year there-after on (i) all Parity Bonds and the Bonds issued under the Ordinance, if any,
then Outstanding, and (ii) on the Additional Bonds with respect to which such certificate is made.
(2) Upon recommendation of the Consulting Engineers, the Net Revenues certified pursuant to (b)
in the previous paragraph may be adjusted by including: (a) 100% of the additional Net Revenues which
in the opinion of the Consulting Engineer would have been derived by the City from rate increases adopted
before the Additional Bonds are issued, if such rate increases had been implemented before the
commencement of the period for which such Net Revenues are being certified, and (b) 100% of the
additional Net Revenues estimated by the Consulting Engineer to be derived during the first full twelve
month period after the facilities of the System are extended, enlarged, improved or added to with the
proceeds of the Additional Bonds with respect to which such certificate is made. The adjustments
described in (b) of this paragraph may only be made if the Net Revenues as adjusted under (a) of the prior
paragraph for the period for which such Net Revenues are being certified equals at least 1.00 times the
Maximwn Bond Service Requirement becoming due in any Fiscal Year thereafter on (i) all Bonds then
outstanding; and (ii) on the Additional Bonds with respect to which such certificate is made.
See Appendix C, "Conformed Copy of the Ordinance and Amendatory Ordinance." See also
"Parity Bonds" below under this principal caption.
Series 2003 Bonds Not a Debt of the City
The Series 2003 Bonds shall not constitute a general obligation or indebtedness of the
City within the meaning of any constitutional, statutory or charter provision or limitation, and no
Bondholder shaU ever have the right to compel the exercise of the ad valorem taxing power of
the City or taxation in any form of real or pers onal property therein for the payment of the
9
principal of and interest on the Series 2003 Bonds or to compel the City to pay such principal and
interest from any otherfunds of the City except the Net Revenues. The Series 2003 Bonds shall
not constitute a lien upon any property of or in the City, but shall constitute a lien only on the Net
Revenues all in the manner provided in the Ordinance.
Parity Bonds
After giving effectto the refunding of the Refunded Bonds (see "PLAN 0 F REFUNDING"), there
will remain Outstanding llilder the Resolution, the City's Water and Sewer Revenue Bonds, Series 1998
(the "Series 1998 Bonds") ofwhich$55,254,825.30 Compollild Accreted Value will remain outstanding
as of December 1,2003 and the City's Water and Sewer Revenue Bonds, Series 2002 (the "Series 2002
Bonds") of which $57,820,000 will remain Outstanding as of December I, 2003. The Series 1998 Bonds
and the Series 2002 Bonds rank on a parity with the Series 2003 Bonds as to the lien and pledge of the
Net Revenues and hereinafter referred to collectively as the "Parity Bonds"). See also the information
appearing llilder the caption "FUTURE FINANCING OF THE WATER AND SEWER SYSTEM"
concerning the anticipated issuance of additional parity Bonds in 2004 and 2006 to finance additional
capital projects.
MUNICIPAL BOND INSURANCE
Bond Insurance Policy
Concurrently with the issuance of the Bonds, Financial Security Assurance Inc. ("Financial
Security") will issue its Municipal Bond Insurance Policy for the Series 2003 Bonds (the "Policy"). The
Policy guarantees the scheduled payment of principal of and interest on the Series 2003 Bonds when due
as set forth in the form of the Policy included as an exhibit to this Official Statement.
The Policy is not covered by any insurance security or guaranty fimd established llilder N ew York,
California, Connecticut or Florida insurance law.
Financial Security Assurance Inc.
Financial Security is aNew York domiciled insurance company and a wholly owned subsidiary
of Financial Security Assurance Holdings Ltd ("Holdings"). Holdings is an indirect subsidiary ofDexia,
S.A., a publicly held Belgiancorporation. Dexia, SA., through its bank subsidiaries, is primarily engaged
in the business of public finance in France, Belgimn and other European cOlliltries. No shareholder of
Holdings or Financial Security is liable for the obligations of Financial Security.
At Jllile 30, 2003, Financial Security's total policyholders' surplus and contingency reserves were
approximately $1 ,986,068,000 and its totalllilearned premium reserve was approximately $1,195,179,000
in accordance with statutory accollilting practices. At Jllile 30, 2003, Financial Security's total
shareholders' equity was approximately $2,152,547,000 and its total net llilearned premium reserve was
approximately $1,010,472,000 in accordance with generally accepted accollilting principles.
10
The financial statements included as exhibits to the annual and quarterly reports filed by Holdings
with the Securities and Exchange Commission are hereby incorporated herein by reference. Also
incorporated herein by reference are any such financial statements so filed from the date of this Official
Statement until the termination of the offering of the Series 2003 Bonds. Copies ofrnaterials incorporated
by reference will be provided uponrequest to Financial Security Assurance Inc.: 350 Park Avenue, New
York, New York 10022, Attention: Communications Department (telephone (212) 826-0100).
The Policy does not protect investors against changes in market value of the Series 2003 Bonds,
whichrnarket value may be impaired as a result of changes in prevailing interest rates, changes in applicable
ratings or other causes. Financial Security makes no representation regarding the Series 2003 Bonds or
the advisabilityofinvestinginthe Series 2003 Bonds. Financial Security makes no representation regarding
the Official Statement, nor has it participated in the preparation thereof, except that Financial Security has
provided to the Issuer the information presented under this caption for inclusion in the Official Statement.
11
Fiscal Year
Ending
September 30
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Totals
Parity Bonds
$3,547,151.26
4,146,438.76
9,472,557.51
9,532,701.26
9,455,301.26
9,530,313.76
9,496,482.51
9,492,851.26
9,546,651.26
9,518,751.26
9,483,148.76
9,452,896.26
9,502,552.51
9,506,918.76
9,505,916.26
9,470,375.63
3,695,035.00
3,698,692.50
3,700,956.25
3,706,000.00
3,709,125.00
3,716,250.00
3,722,000.00
3,726,125.00
3,733,250.00
3,742,875.00
3,754,500.00
3,762,750.00
3,772,250.00
3.787.375.00
$192,888,192.03
DEBT SERVICE REQUIREMENTS
Series 2003 Bonds
Principal Interest Total
12
Parity and
Series 2003
Bonds Total
Debt Service
Requirements
SOURCES AND USES OF FUNDS
SOURCES
Principal Amount of Series 2003 Bonds
Accrued Interest
$8,415,000*
Total Sources
USES
Deposit to Escrow Fund for Refi.mded Bonds
Deposit to Reserve Account
Deposit to Interest Account
Costs of Issuance including Underwriter's
Discount and Bond Insurance Premimn
Total Uses
*
Preliminary, subject to change.
THE WATER AND SEWER SYSTEM
Water System
Water Supply. Water supply for the area served by the System is currently derived from existing
City wellfields and by the purchase of water from Pinellas County. The City has a bulk water purchase
agreement with Pinellas County that supplies up to 80 percent of the service area's water needs on an as
needed basis. The City currently has fifteen (15) production wells scattered throughout the service area,
each equipped with automatic control systems. The City water system and the Pinellas County water
system are interconnected at seven (7) locations.
Under the City's contract with Pinellas County, Pinellas County agrees to supply the City with
sufficient water for the designated service area, based on a formula set forth therein, and the City agrees
to purchase a minimumofl,460,000,000 gallons of water fromPinellas County within each calendar year.
The current contract rate is approximately $1.79 per thousand gallons. The rate is set by the Board of
County Commissioners and is based on a prorated share of revenue cost requirements of the Pinellas
County water system including production and transmission costs required for the supply of water to the
Pinellas County water users. Pinellas County obtains approximately 70 million gallons per day or 100%
of its water supply from Tampa Bay Water, a Regional Water Supply Authority ("Tampa Bay Water") (the
successor to West Coast Regional Water Supply Authority). It is entitled under contract to obtain 100%
of its water needs per day from Tampa Bay Water. The City currently acquires approximately 10.5 to
11.0 million gallons per day from Pinellas County.
13
The City's water distribution system consists of approximately 515 miles of water mains ranging
up to 20 inches in diameter. The distribution system contains numerous interconnections between piping,
making larger size mains unnecessary for existing flow conditions. City water storage within the distribution
system consists of a series of grOl.Uld-level water storage pumping systems and elevated tank water storage.
The City currently has four 5-million gallon ground-level water storage reservoirs and three I-million gallon
elevated water storage tanks. The City's elevated storage tanks are all steel vessels designed to ride on
the distribution system. They provide immediate response to pressure and flow demands in the local areas.
Raw water within the City of Clearwater has historically been of adequate quality to meet minimum
regulatory requirements and has received treatment only in the form of disinfection via chlorination with a
limited amount of aeration for sulfide control. Additional treatment has been added in the form of corrosion
control (polyphosphate). This type of treatment to date has been compatible with the quality of bulk water
purchased from the County. Continual use of the City's wells has led to increasing mineralization of the City
supply, but there has been no danger to public health.
The following chart shows the average daily water flow on an annualized basis over the past six
years:
Source and Volume of Water Pumped
(in million gallons per day, averaged over the Fiscal Year)
FY
1997
1998
1999a2000
2001
2002
City Wells
3.448
3.140
3.070
3.047
3.067
2.258
County
10.412
11.540
12.094
11.528
11.260
11.739
Total
13.860
14.680
15.164
14.575
14.327
13.997
The table below illustrates the growth in number of customers over the past five years.
14
Historical Growth in Number of Water Customers
(aU figures are as of September ofthe year indicated)
Year Water Customers
1997 38,294
1998 38,440
1999 39,931
2000 39,562
2001 40,167
2002 40,340
The ten largest water customers and their 2002 water use including water revenues received are
shown in the table below:
Ten Largest Water Customers
Fiscal Year Ending September 30, 2002
Name of User
1. Church of Scientology
2. PineUas County Schools
3. Morton Plant Hospital
4. Clearwater Housing Authority
5. Sheraton Sand Key
6. AGH Leasing LIP
7. Ultimar II Condo Assoc, Inc.
8. Lewis Real Estate, Inc.
9. Lane Clearwater LIP
10. Countryside MaU
Water Used
(in 100 Cubic Feet)
113,261
71,831
53,959
51,761
51,365
41,040
39,385
29,387
29,216
21.650
Total
508,855
Source: City of Clearwater
15
Revenues
Produced
$318,322
236,754
222,366
134,251
121,877
98,969
95,363
83,282
75,551
71.074
$1,457,809
Sewer System
The City's sanitary sewage collection system is composed of slightly more than 321 miles of
connector mains, utilizing 79 lift stations. Three treatment plants with a combined design capacity of28.5
mgd (million gallons per day) are on line and operational. These three plants are the Marshall Street
Facility, the Northeast Facility and the East Facility.
The wastewater pollution control plants, Marshall Street, constructed in the 1950's, East,
constructed in the 1960's and Northeast, constructed in the 1970's, have been expanded several times to
their current design capacities of ten million, five million and thirteen and one-half million gallons per day
respectively. All three plants utilize Advanced Wastewater Treatment processes. Their current systems
include nitrogen and phosphorous removal, anaerobic digestion, sludge thickening and provide highly
treated reclaimed water for private, commercial and municipal use. The Marshall Street and Northeast
plants also provide for sludge dewatering.
The Northeast Biosolids Management Facility was constructed in 1994. It is designed to process
thirty-three dry tons per day of sludge that meets EP A and Florida Department of Environmental Protection
sludge criteria.
16
years:
The following chart shows the average daily sewage flow on an annualized basis over the past five
Fiscal Year
1998
1999
2000
2001
2002
Average Sewage Flow
Annual A vg. Daily Flow
In MGD
17.9
16.5
15.4
14.4
14.3
The following table illustrates the growth in number of customers over the past five years.
Historical Growth in Number of Sewer Customers*
Sewer
Year Customers
1998 33,174
1999 33,383
2000 33,075
2001 32,933
2002 33,215
* All figures are as of September 30 of the year indicated.
17
The ten largest sewer customers and their 2001 water use including sewer revenues received are
shown in the table below:
Ten Largest Sewer Customers
Fiscal Year Ending September 30, 2002
Name of User
1. Church of Scientology
2. Pinellas County Schools
3. Morton Plant Mease Hospital
4. United Dominion Realty Trust
5. Clearwater Housing Authority
6. AGH Leasing LIP
7. Sheraton Sand Key
8. Lewis Real Estate, Inc.
9. Lane Clearwater LIP
10. Bay Aristocrat Village
Sewer Used
(in 100 Cubic Feet)
89,648
49,291
67,535
51,365
50,332
41,040
32,799
29,387
27,538
24.253
Total
463,188
Source: City of Clearwater
Water and Sewer Capital Improvements
Revenues
Produced
$ 270,190
263,643
241,242
148,558
143,880
11 7,400
95,663
83,710
79,054
68.908
$1,512,248
For the next five years the primary objectives of the capital improvement program are expansion
of the reclaimed water program, continued renewal and replacement as needed of the water, wastewater
collection and water pollution control systems and upgrading the water pollution control system to meet
regulatory requirements. The budgeted funding for fiscal years 2001 through 2006 to meet the capital
improvement program objectives over that period is $157,610,000.
18
RATES, FEES AND CHARGES
Current Rates, Fees and Charges
The City uses a three-tiered rate structure for water and sewer usage. The base rate includes a
minimum usage for residential and nonresidential water rates. Any usage over the minimum is billed at one
rate per 100 cubic feet up to a designated level and at a second rate for usage over that level. For
irrigation, there is a base rate, with no minimum, and a charge per 100 cubic feet of water usage up to a
designated level and a higher charge for usage over that amount. The sewer base rate includes a minimum
usage and a fixed charge per 100cubic feet of water usage over the basic allowance. The minimum usage
and second tier usage level vary with the size of the meters. For Fiscal Year 2002 there were no changes
to the three-tiered rate structure for water or sewer usage. Effective October 1, 2000 the basis for billing
was converted from cubic feet to gallons. The following rates reflect an increase of7% effective April 1,
2002. for water and sewer services.
Residential and October 1, October 1, October 1, October 1 Octoberl 1
Nonresidential Water Rates (1) 1998(2) 1999 (2) 2000 (3) 2001 ill 2002 (3)
Size of Meter
Under 1 inch 7.08 7.08 7.53 8.07 8.64
1 inch 15.93 15.93 17.57 18.83 20.16
1.5 inch 237.39 237.39 251.00 269.00 288.00
2 inch 550.47 550.47 584.83 626.77 671.04
3 or 2 inch manifold 849.60 849.60 901.09 965.71 1,033.92
4 inch 1,635.48 1,635.48 1,734.41 1,858.79 1,990.08.
6 inch 4,200.21 4,200.21 4,455.25 4,774.75 5,112.00
8 inch 7,080.00 7,080.00 7530.00 8,070.00 8,640.00
(1) Rates in table are minimum monthly charges per meter size as of the date indicated
(2) Cubic Feet
(3) Gallons
Any usage over the minimum is billed at one rate per 1,000 gallons up to a designated level and
at a second rate for usage over that level.
19
Rates for Irrigation (Lawn) Meters (1)
October 1,
1998 (2)
October 1,
1999 ill
October 1,
2000 (3)
October 1,
2001 (3)
April 1,
2002 (3)
Size of Meter
Under 1 inch
1 inch
1.5 inch
2 inch
3 or 2 inch manifold
4 inch
6 inch
2.52 2.52 2.69 2.88 3.08
7.57 7.57 8.07 8.64 9.24
37.85 37.85 40.35 43.20 46.20
105.99 105.99 112.99 120.96 129.36
209.45 209.45 223.27 239.04 255.64
403.76 403.76 430.41 460.80 492.80
1,218.85 1,218.85 1,299.29 1,391.04 1,487.64
(1) Rates in table are base rates with no minimum
(2) Cubic feet
(3) Gallons
Since there is no minimwn associated with the base rate, there is a charge per 1,000 gallons up to a designated
level which starts immediately. There is a higher charge for usage above that amount.
Sewer Rates (1) October 1, October 1, October 1, October 1, October 1,
1998 (2) 1999 (2) 2000 (3) 2001 (3) 2002 (3)
Size of Meter
Under 1 inch 9.44 9.72 10.38 11.10 11.88
1 inch 21.24 21.87 24.22 25.90 27.72
1.5 inch 316.24 325.62 346.00 370.00 396.00
2 inch 733.96 755.73 806.18 862.10 922.68
3 or 2 inch manifold 1,132.80 1,166.40 1,242.14 1,328.30 1,421.64
4 inch 2,180.64 2,245.32 2,239.86 2,556.70 2,736.36
6 inch 5,600.28 5,766.39 6,141.5 6,567.50 7,029.00
8 inch 9,440.00 9,720.00 10,380.00 11,100.00 11,880.00
Per 1,000 gallons of
water used over that 2.36 2.43 3.46 3.70 3.96
allowed in minimum
(1) Rates in table are minimwn monthly charge per meter size as of date indicated
(2) Cubic Feet
(3) Gallons
20
Debt Service Coverage By Historical Net Revenues
Fiscal Years Ended September 30
Net Revenues Available for Debt Service (1)
1998 1999 2000 2001 2002
$11,702,739 $11,044,714 $11,523,950 $12,149,447 $10,900,123
Annual Debt Service
7,174,738 6,583,179 6,286,403
6,278,690 6,282,880
Coverage
1.63 1.68 1.83
1.94 1.73
(1) Revenues used in calculation include interest earnings and exclude extraordinary gain and contributed revenues. Expenses used
exclude depreciation (and similar non-cash expenses), amortization of bond discount and issue costs, bond interest, sinking fund and
reserve requirements and extraordinary loss.
Source: City of Clearwater.
Rate Study and Rate Increases
As a result of the Rate Study (see "FUTURE FINANCING OF THE WATER AND SEWER
SYSTEM" above), the City enacted Ordinance No. 6695-01 on March 1, 2001 (the "Rate Ordinance"),
which increased water and sewer rates by 7% on each of July 1,2001, April 1, 2002, January 1,2003,
October 1, 2003 and October 1, 2004. Following the enactment of the Rate Ordinance the information
in the analysis contained in the Rate Study was updated in a report dated July, 2001 (the Rate Study as so
updated is herein referred to as the "Rate Study"). The Rate Study concludes that:
"The analysis demonstrates that the 7% rate increases adopted by the City through FY
2005 are sufficient to provide fimding for all system requirements. In addition, an increase
of approximately 7.25% will be required at the beginning ofFY 2006 to fimd expected
costs during that year."
FINANCIAL STATEMENTS
The combined financial statements and Water and Sewer enterprise fimd financial statements of
the Cityat September 30, 2002 and for the Fiscal Year then ended, appended hereto as Appendix B, have
been excerpted from the financial statements contained in the City's Comprehensive Annual Financial
Reports for the Fiscal Year ending September 30, 2002.
INVESTMENT POLICY OF THE CITY
Pursuant to the requirements of Section 218.45, Florida Statutes, the City adopted a written
investment policy which applies to all fimds held by or for the benefit of the City Commission (except for
proceeds ofbond issues which are deposited in escrow and debt service fimds and governed by their bond
documents) and fimds of Constitutional Officers and other component units of the City.
21
The objectives of the investment policy, listed in order in order of importance, are:
1. Safety of principal
2. Provision of sufficient liquidity
3. Optimization of return within the constraints of safety and liquidity
The investment policy limits the securities eliglble 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 Authorized Investments, as described in the Ordinance.
LmGATION
In the opinion of the City Attorney, no legal proceedings are pending or threatened that materially
affect the City's ability to perform its obligations to the holders of the Series 2003 Bonds or that materially
affect the Pledged Revenues.
In the opinion of the City Attorney, there is no litigation or controversy of any nature now pending
or, to the City's knowledge, threatened to restrain or enjoin the issuance, sale, execution or delivery of the
Series 2003 Bonds or in any way contesting the validity of the Series 2003 Bonds or any proceedings of
the City taken with respect to the authorization, sale or issuance of the Series 2003 Bonds or the pledge
or application of any moneys provided for the payment of the Series 2003 Bonds.
RATINGS
Moody's Investors Service and Fitch Ratings have assigned ratings of "A" and "A-2,"respectively,
to the Series 2003 Bonds without regard to the municipal bond insurance policy. It is anticipated that
Moody's Investors Service and Fitch Ratings will assign ratings of"Aaa," and "AAA," respectively, to the
Series 2003 Bonds, with the Wlderstanding that, upon delivery of the Series 2003 Bonds, the municipal
bond insurance policy will be issued by Financial Security. Such ratings reflect only the views of such
organizations and any desired explanation of the significance of such ratings should be obtained from the
respective rating agency. Genernlly, 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 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 agencies, if in the judgment of such rating agencies, circumstances so warrant. Any
such downward revision or withdrawal of such ratings may have an adverse effect on the market price of
the Series 2003 Bonds.
22
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 Bonds in order that interest on the Bonds
be and remain excluded from gross income for pwposes of federal income taxation. Non-compliance may
cause interest on the Bonds to be included in federal gross income retroactive to the date of issuance of
the 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 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 County has covenanted in the Resolution to comply with such requirements in order to maintain
the exclusion from federal gross income of the interest on the Bonds.
In the opinion of Bond Counsel, assuming compliance with the aforementioned covenants, under
existing laws, regulations, judicial decisions and rulings, interest on the Bonds is excluded from gross income
of the holders thereof for pwposes of federal income taxation. Interest on the Bonds is not an item of tax
preference for pwposes of the federal alternative minimum tax imposed on individuals or corporations;
however, interest on the Bonds may be subject to the alternative minimum tax when any Bond is held by
a corporation. The alternative minimum taxable income ofa corporation must be increased by75% of the
excess of such corporation's adjusted current earnings over its altemative minimum taxable income (before
this adjustment and the alternative tax net operating loss deduction). "Adjusted Current Earnings" will
include interest on the 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 Bonds.
Prospective purchasers of Bonds should be aware that the ownership of 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 Bonds, (ii) the reduction of the loss reserve deduction for
property and casualty insurance companies by 15% of certain items, including interest on the Bonds, (ill)
the inclusion of interest on the Bonds in earnings of certain foreign corporations doing business in the United
States for pwposes of a branch profits tax, (iv) the inclusion of interest on 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 Bonds in "modified adjusted gross income" by
recipients of certain Social Security and Railroad Retirement benefits for pwposes of detennining whether
such benefits are included in gross income for federal income tax pwposes.
PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE BONDS AND THE
RECEIPTORACCRUALOF THEINTERESTTHEREONMA YHA VEADVERSEFEDERAL TAX
CONSEQUENCES FOR CERTAIN INDIVIDUAL AND CORPORA TEREGISTERED OWNERS.
PROSPECTIVE REGISTERED OWNERS SHOULD CONSUL T 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 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
23
market value of obligations similar to the Bonds. From time to time, legislative proposals are pending which
could have an effect on both the federal tax consequences resulting from ownership of 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 Bonds.
Florida Tax Matters
On the date of delivery of the Bonds, Bond Counsel will issue an opinion to the effect that Wlder
existing statutes, regulations and judicial decisions, the Bonds and the income therefrom are exempt from
taxation Wlder the laws of the State of Florida, except as to Florida estate taxes imposed by Chapter 198,
Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida
Statutes, as amended.
LEGAL OPINIONS
Legal matters incident to the authorization, issuance and sale of the Series 2003 Bonds are subject
to the approval of Bryant Miller & Olive, P.A., Tallahassee, Florida, Bond Counsel, whose approving
opinion will be printed on the Series 2003 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.
ENFORCEABILITY OF REMEDIES
The remedies available to the Holders of the Series 2003 Bonds upon an Event of Default Wlder
the Ordinance are in many respects dependent upon judicial actions whichare 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 2003 Bonds will be qualified, as to the enforceability of the
various legal instnunents, by limitations imposed by banlauptcy, reorganization, insolvency or other similar
laws affecting the rights of creditors enacted before or after such delivery. The remedies granted to the
Bondholders Wlder the Ordinance do not include the power to accelerate the principal of the Series 2003
Bonds.
FINANCIAL ADVISOR
William R Hough & Co. served as independent financial advisor to the City with respect to the
issuance and sale of the Series 2003 Bonds. The Financial Advisor assisted in the preparation of this
Official Statement and in other matters relating to the planning, structuring and issuance of the Series 2003
Bonds. William R Hough & Co. did not engage in any Wlderwriting activities with regard to the issuance
and sale of the Series 2003 Bonds. The Financial Advisor is not obligated to Wldertake and has not
undertaken to make an independent verification or to assume responsibility for the accuracy, completeness
or fairness of the infonnation contained in this Official Statement and is not obligated to review or ensure
compliance with the Wldertaking by the City to provide continuing secondary market disclosure. William
R Hough & Co. may assist the City in bidding certain investments on behalf of the City which may result
in additional fees being paid to William R Hough & Co.
24
VERIFICATION OF MATHEMATICAL COMPUTATIONS
At the time of the delivery of the Series 2003, Bonds, Causey Demgen & Moore, Inc., Denver,
Colorado, a firm of independent certified public accountants, will deliver a report on the mathematical
accuracy of the computations contained in schedules provided to them and prepared by the Financial
Advisor on behalf of the City relating to (1) the sufficiency of the anticipated cash and maturing principal
amounts and interest on the Federal Securities to pay, when due, the principal, whether at maturity or upon
prior redemption, interest and call premium requirements of the Refunded Bonds and (2) the "yield" on the
Series 2003 Bonds and on the Federal Securities considered by Bond Counsel in connection with their
opinion that the Series 2003 Bonds are not "arbitrage bonds" within the meaning of Section 148 of the
Internal Revenue Code of 1986, as amended.
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 fuir disclosure of any bonds or other debt obligations
that it has issued or guaranteed' and that are or have been in default as to principal or interest at any time
after December 31, 1975 (including bonds or other debt obligations for which it has served only as a
conduit issuer such as industrial development or private activity bonds issued on behalf of private
businesses). The City is not and has not since December 31, 1975 been in default as to principal and
interest on 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 of the City, as it is aware of a prior default in
1990 with respect to an issue of industrial revenue bonds for which the City served only as a conduit issuer.
The City was not liable to pay the principal of or interest on such bonds except from payments made to it
by the private company on whose behalf such bonds were issued and no funds of the City were used to
pay such bonds or the interest thereon. Although the City is not aware of any other defaults with respect
to bonds or other debt obligations as to which it has served only as a conduit issuer, it has not undertaken
an independent review or investigation of such bonds or other debt obligations.
25
ADVISORS AND CONSULTANTS
The City has retained advisors and consultants in connection with the issuance of the Series 2003
Bonds. These advisors and consultants are compensated from a portion of the proceeds of the Series
2003 Bonds, identified as "Costs ofIssuance" 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.
26
Financial Advisor. The City has retained William R Hough & Co., St. Petersburg, Florida, as
Financial Advisor. The fees of the Financial Advisor will be paid from proceeds of the Series 2003 Bonds
and such payment is contingent upon the issuance of the Series 2003 Bonds.
Bond Counsel. Bryant Miller & 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 of the Bonds, and such
payment is contingent upon the issuance of the Bonds.
CONTINUING DISCLOSURE
The City has covenanted for the benefit of the holders and beneficial owners of the Series 2003
Bonds to provide certain financial information and operating data relating to the City by not laterthanJillle
30 in each year commencing Jillle 30, 2004 (the "Annual Report"), and to provide notices of the
occurrence of certain enwnerated events, if deemed by the City to be material. The Annual Report will be
filed by the City with each Nationally Recognized Municipal Securities Information Repository
("NRMSIR"), and with the State of Florida Repository, if and when created. The notices of material events
will be filed by the City with the NRMSIRand withthe 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 illldertakingS 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 2003 Bonds, the City will furnish its certificate,
executed by the Mayor or Vice-Mayor of the City, to the effect that, to the best ofhis or her knowledge,
this Official Statement, as of its date and as of the date of delivery of the Series 2003 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 circwnstances under which they were made, not
misleading.
MISCELLANEOUS
The references, excerpts and summaries of all docwnents, resolutions and/or ordinances referred
to herein do not purport to be complete statements of the provisions of such docwnents, resolutions and/or
ordinances and reference is directed to all such docwnents, resolutions and/or ordinances for full and
complete statements of all matters of fact relating to the Series 2003 Bonds, the security for and the
27
repayment of the Series 2003 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 of the
Series 2003 Bonds.
The execution and delivery of this Official Statement by the Mayor-Commissioner of the City has
been dilly authorized by the City Commission.
CITY OF CLEARWATER, FLORIDA
Brian 1. AWlgst, Sr., Mayor-Commissioner
William B. Horne, II, City Manager
28
APPENDIX A
GENERAL INFORMATION REGARDING THE CITY
APPENDIX A
GENERAL INFORMATION
RELATING TO THE CITY OF CLEARWATER, FLORIDA
Location
The City of Clearwater (the "City"), the county seat of Pine11as County (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 of St. Petersburg.
Standing on the highest coastal elevation of the State, the City limits comprise approximately 26.66 square
miles ofland and 8.61 square miles of waterways and lakes.
Clearwater Beach, a corporate part of the City, is a beach corrnnunity 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 accorrnnodations 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, whichhis army drove out. The Indians 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 "clearwater," 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-citymanager formofgovernment. 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.
A-I
The City has approximately 1,835 employees, covered by the City's Civil Service law relating to
recruitment, promotion, evaluation and discipline based on merit principles. Four employee wrions
represent the City's civil labor force: two writs of the Fraternal Order of Police; one of the International
Association of Fire Fighters; and one from the Commwrications Workers of America.
Transportation
Pinellas County and Clearwater are served by three major causeways and bridges over Tampa
Bay, byU.S. 19 and 1-275 to the north and south, by 1-4 and U.S. 60 to the east. State Roads 590 and
686 also afford access to the City.
Tampa International Airport, located approximately twenty miles from downtown Clearwater,
provides air travel access with approximately 260 national and international flights daily. Limousine and
taxi service to and from the airport is available from Clearwater and throughout Pinellas 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 SouthAmerica. 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 nmway 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 cutter station on Clearwater
Harbor opposite Sand Key.
Gulf Coast Motor Lines provides service daily between Clearwater, St. Petersburg and Tampa
and makes connections with 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 mwricipalities 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 363 miles of sanitary sewer lines. The Department of Public
Works maintains 304 miles of paved streets, 10.5 miles of unpaved streets, approximately 147 miles of
storm sewer mains, and approximately 559 miles of water mains.
A-2
Electric power is provided by Florida Power Corporation and telephone service is provided by
Verizon of Florida, Inc. Time Wamer 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, 1,130 acres of parks, 31 playgrounds, munerous athletic courts and fields, five swimming pools, a
6,917 seat baseball and softball stadium, golf course, civic and recreational centers, 7.4 miles of
recreational paths, boat ramps and a 209 slip yacht basin and marina. The Philadelphia Phillies conduct
spring training at the municipal baseball stadiwn and have a long-term contract for fann club training on
Clearwater's specially constructed facilities during the Winter Instructional League Program. Clearwater
is the home of the Clearwater Bombers, a national amateur fastpitch softball team.
Tourism
The State of Florida reported 75.5 million tourists came to Florida during the year 2002. This was
an increase of8% ahead of the 69.8 million visitors for the year 2001 and nearly 4% better than the
previous record 72.8 million visitors in 2000. Tourism is a $5.2 billion industry ammally to the County.
Pinellas County is ranked seventh of the top ten destinations in Florida and generated 5 million overnight
guests and 7.5 million day visitors in2002. 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 143
schools comprising elementary through high school, exceptional, alternative and vocational schools within
the County and serves more than 110,000 students. During the 2001-2002 school year, Pinellas County
Schools expects enrollment of more than 16,293 compared to 15,978 during the 2000-200 I school year
with students attending 80 elementary, 23 middle and 16 high schools along with five exceptional education
centers, two alternative schools and four charter schools. The district also operates three community
schools, three adult education/learning 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 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
A-3
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 Defense
Electronics Systems, Inc. During the 1999 fiscal year IMRglobal Corp. ("IMR") occupied its new world
headquarters in downtown Clearwater. IMR represents an important step in revitalizing downtown
Clearwater and attracting technology companies to the area.
Pension Plan
The Employees' Pension Plan and the Fireman's Pension Plan are self-administered by the City.
City contributions for fiscal year ending 2002 were $4,439,829 to the Employees' Plan and $1,153,732
to the Fireman's Plan, and were in accordance with actuarially determined fimding requirements.
In addition, supplemental pensions exist for certified Police Officers and Firefighters, fimded 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 fimds assets provided by the
defined contributions.
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Demographic Information
Last Ten Fiscal Years
(a) (b) (c) (d) (e)
Permanent Per Capita Median School Unemployment
Year Population Income ~ Enrollment Rate (%)
1993 100,768 24,470 42.3 11,584 6.1
1994 100,604 Not avail. 42.9 10,043 5.5
1995 101,162 22,789 42.2 10,284 4.8
1996 101,867 24,696 42.1 11,906 4.2
1997 102,4 72 26,050 43.3 15,264 3.7
1998 102,874 27,311 43.6 13,714 2.9
1999 104,281 28,367 43.9 14,551 3.0
2000 104,454 30,633 44.2 15,978 2.7
2001 108,787 31,658 43.0 16,293 2.6
2002 109,231 27,704 43.0 17,047 3.9
Source: City of Clearwater, Florida Comprehensive Annual Financial Report for period ending
September 30, 2002.
(a) University of Florida, Bureau ofEconomic and Business Research, Florida Statistical Abstract 2002.
(b) Data is for Pinellas County. Source is the University of Florida, Bureau of Economic and Business
Research, Florida Statistical Abstract 2002.
(c) University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract 2002.
(d) Pinellas County School District.
(e) University of Florida, Bureau ofEconomic and Business Research, Florida Statistical Abstract 2002,
as of December 31 of the current fiscal year.
NOTE: Data is for an unspecified point in each year, not specifically September 30.
A-5
Property Values and Construction
Last Ten Fiscal Years
Commercial Construction Residential Construction Miscellaneous Construction(a)
Fiscal Year Number of Number of Number of Total Assessed
Year Permits Value Permits Value Permits Value Prooertv Value(b
1993 1,693 42,051,081 3,885 29,296,168 6,799 20,113,175 5,505,360,4 76
1994 1,831 37,164,437 3,882 49,950,413 6,063 17,922,023 5,572,851,512
1995 1,775 77,486,099 3,747 53,614,754 6,827 28,843,480 5,641,202,905
1996 1,898 42,360,262 4,224 26,854,040 6,825 24,898,425 5,733,193,387
1997 1,702 49,385,937 4,172 75,997,890 6,739 27,351,853 5,884,592,007
1998 1,455 54,732,371 4,978 47,045,558 5,266 17,820,469 6,049,571,226
1999 1,690 48,849,409 5,544 95,713,246 307 7,506,580 6,349,561,534
:>
I 2000 2,698 176,0 I 0,021 5,573 30,814,807 35 229,870 6,555,350,175
0"1
2001 2,267 152,059,409 5,390 34,084,137 324 15,763,545 7, I 08, 110,272
2002 2,129 106,306,523 5,418 36,614,757 191 4,634,345 7,858,986,677
Source: City of Clearwater, Florida Comprehensive Annual Financial Report for period ending September 30, 2002.
(a) Includes institutions, churches, seawalls, pools and non-valued building permits.
(b) Pinellas County Property Appraiser, values listed are for year of collections.
(c) Includes balances in commercial, savings, savings and loan banking institutions for Pinellas County. Data from the Florida Bankers Association Branch Deposit
Report of Florida Bank and Thrift Institutions.
City of Clearwater, Florida
Assessed and Estimated Actual property Valuations
Last Ten Fiscal years
Assessed Valuations (a) 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
1993 3,800,740,889 386,831,160 532,486 4,188,104,535 1,317,255,941 5,505,360,476 100.0 0.2 0.5
1994 3,789,902,836 390,841,880 569,338 4,181,314,054 1,391,537,458 5,572,851,512 100.0 (0.2) 1.2
1995 3,782,134,930 403,392,150 580.,731 4,186,107,811 1,455,095,094 5,641,202,905 100.0 0.1 1.2
1996 3,820,217,710 431,622,230 592,909 4,252,432,849 1,480,760,538 5,733,193,387 100.0 1.6 1.6
1997 3,918,747,480 457,182,870 628,698 4,376,559,048 1,508,032,959 5,884,592,007 100.0 2.9 2.6
1998 3,999,483,300 493,824,770 1,026,819 4,494,262,759 1,555,308,467 6,049,571,226 100.0 2.7 2.8
)-
I 1999 4,153,719,690 537,808,800 870,404 4,692,398,894 1,657,162,640 6,349,561,534 100.0 4.4 5.0
-..]
2000 4,353,493,520 549,051,160 934,183 4,903,478,863 1,751,871,312 6,655,350,175 100.0 4.5 4.8
2001 4,657,074,110 550,845,380 867,947 5,208,787,437 1,899,322,835 7,108,110,272 100.0 6.2 6.8
2002 5,130,069,970 557,588,870 767,087 5,688,425,927 2,170,560,750 7,858,986,677 100.0 9.2 10.6
Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30, 2001.
(a) Pinellas County Property Appraiser
(b) Railroad and Telegraph Companies
(c) Includes governmental, educational, qualified religious, literary, scientific, and health care properties and special exemptions for individual property owners. Qualified
property owners are entitled to a $25,000 Homestead Exemption based on residency requirement.
Property Tax Levies and Collections
Last Ten Fiscal Years
Percent Percent of
of Total Delinquent
Current Percent of Delinquent Collections Outstanding Taxes to
Fiscal Total Tax Levy Tax Total Tax To Current Delinquent Current
Year Tax Levv Collections( a) Collected Collections Collections Levy Taxes Levv
1993 21,408,489 20,947,194 97.85 199,638 21,146,832 98.78 1,438,116 6.72
1994 21,281,744 21,154,946 99.40 603,226 21,758,172 102.24 946,874 4.45
1995 21,458,160 21,388,692 99.68 159,918 21,548,610 100.42 856,443 3.99
1996 21,761,730 21,675,311 99.60 73,731 21,749,042 99.94 868,209 3.99
> 1997 22,410,181 22,281,502 99.43 80,253 22,361,755 99.78 914,383 4.08
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00 1998 23,008,214 22,856,951 99.34 129,690 22,986,640 99.91 935,957 4.07
1999 23,951,878 23,854,396 99.59 226,812 24,081,208 100.54 806,626 3.37
2000 26,998,318 26,876,461 99.55 106,800 26,983,261 99.94 821,683 3.04
2001 28,664,112 28,567,429 99.66 77,716 28,645,145 99.93 840,651 2.93
2002 31,303,900 31,204,025 99.68 130,632 31,334,657 100.10 809,894 2.59
Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30,2002.
(a) Collections are reported at the gross amount before any discount allowances.
Property Tax Rates - All Direct and Overlapping Governments
(Per $1,000 of Assessed Value)
Last Ten Fiscal Years
Downtown County Emergency
Fiscal Develop- School Trnnsit Medical
Year Cfu' ment(a) Board County District Services Other Total
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
>
I 1998 5.1158 1.000 9.1330 5.538 .6697 .713 1.6561 23.8256
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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 23.9775
2001 5.5032 1. 000 8.4330 6.0040 .6501 .747 1.6562(b) 23.9935
2002 5.5032 1.000 8.4870 6.1410 0.6501 0.6600 1.6562 24.0975
Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30, 2002.
(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 (.4000).
City of Clearwater, Florida
Principal Taxpayers*
Year Ended September 30, 2001
Percentage
to Total
Assessed Assessed
Taxpayers Type of Business Value* V alue
Bellwether Prop. LP Ltd. Shopping Center $ 89,035,400 1.74%
California State Teachers Apartment Complex 27,543,800 0.54
Taylor, John S. III Landowner 26,993,400 0.53
Excel Realty Trust, Inc. Shopping Center 25,084,500 0.49
Branch Sunset Association Shopping Center 24,959,200 0.49
Clearwater Land Co. Adult Congregate Facility 23,813,600 0.46
Sand Key Association Ltd. Hotel 23,485,800 0.46
Northwood Plaza Shopping Center 23,325,100 0.45
ZOM Bayside Arbors Ltd. Apartment Complex 22,685,800 0.44
Walmart Stores, Inc. Shopping Center 19.140.700 0.37
Subtotal 306,067,300 5.97
All Others 4.824.002.670 94.03
Total $5.130.069.970 100.00%
* Based on non-exempt real property assessed taxable values.
Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending
September30, 2002; Pinellas County Property Appraiser, 2001 tax rolls for2002 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 Population (000)(1) Debt Value Per Capita
1992 99,856 4,179,582 452,779 .01 4.53
1993 100,768 4,188,105 348,478 .01 3.46
1994 100,604 4,181,314 242,700 .01 2.39
1995 101,162 4,186,108 133,597 .00 1.30
1996 101,867 4,252,433 21,598 .00 0.21
1997 102,472 4,376,559 165,000 .00 1.61
1998 102,874 4,494,262 33,750 .00 0.33
1999 104,281 4,692,398 0 .00 0.00
2000 104,454 4,903,478 0 .00 0.00
2001 108,787 5,208,787 0 .00 0.00
2002 109,231 5,688,426 0 .00 0.00
Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending
September 30,2002.
(1) Values listed are for year of collections.
[Remainder of page intentionally left blank]
A-II
City of Clearwater, Florida
Computation of Legal Debt Margin
September 30, 2002
Assessed Valuation of Non-Exempt Real Estate(a)
Times: Twenty Percent Limitation per City Charter
Equals Legal Indebtedness Limitation
$5,130,069,970
x .20
$ 1.026.013.994
Debt Subject to Indebtedness Limitation:
Gross Debt
Revenue Bonds:
1996A Gas System Revenue Bonds
1997 Gas System Revenue Bonds
1998 Gas System Revenue Bonds
1993 Water and Sewer Revenue Bonds
1998 Water and Sewer Revenue Bonds
2002 Water and Sewer Revenue Bonds
1999 Stormwater System Revenue Bonds
2002 Stormwater System Revenue Bonds
2001 Infrastructure Sales Tax Revenue Bonds
2001 Improvement Revenue Refunding Bonds
2002 Spring Training Revenue Bonds
Notes, Mortgages and Contracts
Totals
$8,360,000
12,375,000
7,895,000
19,435,000
52,301,781
58,680,000
7,275,000
24,685,000
46,445,000
11,360,000
14,810,000
14.031.247
$277.653.028
Legal Indebtedness Margin
Source:
Less Sinking
Fund Assets
7,500
42,083
2,917
9,258,500
4,454,185
3,551,469
110,000
4,250,000
1,103,427
o
$22.780.080
Net Debt
Subject to
Limitation
8,352,500
12,332,917
7,892,083
10,176,500
47,847,596
55,128,531
7,165,000
24,685,000
42,195,000
10,256,573
14,810,000
14.031.247
$254.872.948
$771.141.046
City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending
September 30, 2002.
(a) Valuation listed is from 2000 tax year for 2001 collections.
A-12
City of Clearwater, Florida
Computation of Direct and Overlapping Debt
September 30, 2001
Governmental Unit
Net Debt
Outstanding
Percent
Amount
City of Clearwater
$
100%
$
Pinellas County School Board
$70,894,996
14%
$9,925,299
(a) Applicable Net Debt Percentage is based on ratio of City to County Taxable values for 2002
collections ($5,130,069,970/$37,671,431,940 = 13.62%).
A-13
APPENDIX B
EXCERPTS FROM THE CITY'S COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2002
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Grant Thornton.
\ ; Accountants and Manalement Consultants
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ReDart of Independent Certified Public Accountants
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Honorable Mayor-Commissioner,
City Commissioners and City Manager
City of Clearwater, Florida
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We have audited the accompanying financial statements of the governmental activities, the business-
type activities, each major fund, and the aggregate remaining fund information of the City of Clearwater,
Florida (the City), as of and for the year ended September 30, 2002, which collectively comprise the
City's basic financial statements as listed in the table of contents. We have also audited the financial
statements of each of the City's nonmajor governmental, non major enterprise, internal service and
fiduciary funds presented as supplementary information in the accompanying combining and individual
fund financial statements as of and for the year ended September 30, 2002, as listed in the table of
contents. We did not audit the financial statements of the Clearwater Downtown Development Board, a
component unit. Those financial statements were audited by other auditors whose report thereOn has
been furnished to us, and our opinion, insofar as it relates to the amounts included for the Clearwater
Downtown Development Board, is based solely on the report of the other auditors. These financial
statements are the responsibility of the City's management. Our responsibility is to express an opinIon
on these financial statements based on our audit.
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We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the ComptrOller General of the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the basic financial statements
are free of material misstatement An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the. accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit and the report of other auditors provide a
reasonable basis for our opinions.
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In our opinion, based on our audit and the report of other auditors, the financial statements referred to
above present fairly, in all material respects, the respective financial position of the governmental
activities, the business-type activities, the discretely presented component unit, each major fund, and the
aggregate remaining fund information of the City of Clearwater, Florida as of September 30,2002, and
the respective changes in financial position and cash flows, where applicable, thereof for the year then
ended in conformity with accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of each nonmajor governmental, nonmajor enterprise, intemal service,
and fiduciary fund of the City of Clearwater, Florida as of September 30, 2002" and the respective
changes in financial position and cash flows, where applicable, thereof for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the basic fUlancial statements, effective October 1, 2001, the City adopted
Governmental Accounting Standards Board Statement (GASB) No. 34, Basic Financial Statements. and
Management's Discussion and Analysis - for State and Local Governments, GASB Statement No. 37,
Basic Financial Statements - and Management's Discussion and Analysis - for State and Local
Governments: Omnibus, and GASB Statement No. 38, Certain Financial Statement Note Disclosures.
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Suite 3850
, ; 101 E. Kennedy Blvd
- Tampa, Fl 33602.5152
; ,. T 813.229.7201
, . F 813.223.3015
W www.grantthomton.com
Grant Thornton lLP
US Member of Grant Thornton international
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In accordance with Government Auditing standards, we have also issued a report dated January 10,
2003 on our consideration of the City's internal control over fmancial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral
part of an audit performed in accordance with Government Auditing standards and should be read in
conjunction with this report in considering the results of our audit
The Managemenfs Discussion and Analysis and the pension plan required supplementary information
on pages 3 and 73, respectively, are not a required part of the basic financial statements but are
supplementary information required by the Governmental Accounting Standards Board. We have
applied certain limited procedures, which consisted principally of inquiries of management regarding the
methods of measurement and presentation of the supplementary information. However, we did not audit
the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City's basic financial statements: The introductory section and statistical tables are
presented for purposes of additional analysis and are not a required part of the basic financial
statements. The introductory section and statistical tables have not been subjected to the auditing
procedures applied in the audit of the basic financial statement, and accordingly, we express no opinion
on them.
The accompanying schedule of federal and state financial assistance for the year ended September 30,
2002 is presented for purposes of additional analysis as required by U.S. Office of Management and
BUdget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, Section
215.97, Florida Statutes and Chapter 10.550 rules of the Auditor General, and is not a required part of
the basic financial statements. Such information has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects,in
relation to the basic financial statements taken as a whole.
C-st ~ LLfJ
Tampa, Florida
January 10, 2003
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Managemenfs Discussion and Analysis
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Management's Discussion and Analysis provides the reader with a narrative overview and analysis of
the City's financial activities for the fiscal year ended September 30. 2002. The Managemenrs
Discussion and Analysis (MD & A) should be read in conjunction with the City's Transmittal Letter,
which begins on page vii of this report.
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This is the first year the City of Clearwater has presented its basic financial statements under the new
financial reporting model required by the Governmental Accounting Standards Board (GASB)
Statement Number 34. Because this new reporting model changes . significantly not only the
presentation of financial data, but also the manner in which the information is recorded, prior year
comparative Information for this reporting period's MO&A has not been Included. This deficiency is a
transition Issue and prior year comparative information will be provided in the future, effective with the
fiscal year 2003 MO&A.
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Financial Highlights
The City's assets exceeded its liabilities at the close of fiscal year 2002 by $410.8 million (net assets).
Of this amount, $160.9 million (unrestricted net assets) may be used to meet the government's
ongoing obligations to citizens and creditors.
The City's total net assets increased by $33.7 million (or 8.9%). The governmental net assets
increased by $20.2 million (or 12.6%) while the business-type net assets increased by $13.6 million
(or 6.2%).
A significant factor in the increase in governmental net assets was current year grants and donations
related to major construction projects of approximately $8.5 million as detailed in the Government-
wide Financial Analysis that follows.
The increase in business-type net assets is primarily due to rate increases for Stormwater and Water
& Sewer utilities, along with contributions and grants from other governments and developers, as
discussed In the following analysis of business-type activities.
At September 30, 2002, the City's governmental funds reported combined ending fund balances of
$102.9 million, an increase of $17.6 million (or 20.6%) in comparison with the prior year. Of this
amount, $49.3 million (or 48.(010) Is available for spending at the governmenfs discretion (unreserved
fund balance). .
At September 30, 2002, unreserved fund balance for the General Fund was $12.7 million, or 15.8%
of total general fund expenditures.
Total actual revenues for the General Fund exceeded ffnal budgeted revenues by $0.8 million, total
actual expenditures were less than budgeted expenditures' by $2.1 million, for a combined savings of
$2.9 million.
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Overview of the Financial Statements
This discussion and analysis (MO&A) is intended to serve as an introduction to the City of
Clearwater's basic "nancial statements. The City's basic financial statements are comprised of three
components: 1) government-wide "nancial statements, 2) fund "nancial statements, and 3) notes to
the financial statements. This report also contains other supplementary information In addition to the
basic financial statements themselves.
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Government-Wide Financial Statements
The government-wide financial statements are the statement of net assets and the statement of
activities. These statements report information .about the City as a whole using accounting methods
similar to those used by private-sector businesses. Emphasis is placed on the net assets of
governmental activities and business-type activities, and the change in net assets. Governmental
activities are principafly supported by taxes and Intergovemmental revenues. Governmental activities
include most of the City's basic services, including police, fire, public works, parks and recreation,
and general administration. Business.type activities are intended to recover all or a significant
portion of their costs through user fees and charges. The City's water and sewer system, stormwater
system, gas system, solid waste, recycling, marine, aviation, convention center, and parking system
operations are reported as business-type activities.
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· The statement of net assets presents information on all of the City's assets and liabilities,
with the difference between the two reported as' net assets. Over time, increases or
decreases in net assets may serve as a useful Indicator as to whether the financial position of
the City Is Improving or deteriorating. Net assets are reported in three major categories: 1)
Invested in capital assets, net of related debt; 2) restricted; and 3) unrestricted.
· The statement of activities presents information showing how the CIty's net assets changed
as a result of the year's activities. All changes in net assets are recorded in the period In
which the underlying event takes place, which may differ from the period in which cash is
received or disbursed. The Statement of Activities displays the expense of the City's various
programs net of related revenues, as well as a separate presentation of revenues available
for general purposes.
The government-wide financial statements include not only the City of Clearwater itself (known as the
primary governmen~, but also the legally separate Downtown Development Board (DDB). The DDS,
though legally separate, is included as a component unit because it was created by City ordinance
and the City is thereby able to impose its will on the organization. In addition it is the opinion of the
City's management that exclusion of the DDS from the City's financial statements would cause the
financial statements to be Incomplete. The Clearwater Redevelopment Agency (CRA), though also
legally separate, is reported as part of the primary government due to the City Commission serving as
the CRA's governing board.
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Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have
been segregated for specific activities or Objectives. The fund financial statements provide detailed
information about the City's major funds - not the City as a whole. Fund accounting helps to ensure
and demonstrate compliance with finance-related legal requirements. Based on restrictions on the
use of monies, the City has established many funds that account for the multitude of services
provided to residents. These fund financial statements focus on the City's most significant funds:
governmental, proprietary, and fiduciary.
Governmental funds
Governmental funds are used to report most of the City's basic services. These funds are used to
account for essentially the same functions reported as governmental activities in the govemment-
wide financial statements. The funds focus on the inflows and outflows of current resources and the
balances of spendable resources available at the end of the fiscal year. Such information may be
useful in evaluating a governmenfs near-term financing requirements.
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Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities In the government-wide financial statements. By
doing so. readers may better understand the long-term impact of the govemmenfs near-term
financing decisions. Both the govemmentaJ fund balance sheet and the governmental fund statement
of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities.
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The City maintains fourteen Individual governmental funds. Information is presented separately in the
governmental funds balance sheet and in the governmental funds statement of revenues.
expenditures, and changes in fund balances for the General. Special Development. and Capital
Improvement funds, which are considered to be major funds. Data from the other eleven
governmental funds are combined into a single aggregated presentation. Individual fund data for
each of these nonmajor governmental funds is provided in the form of combining statements in the
supplementary information section of this report.
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The City adopts annual appropriated budgets for the General, Special Development, and Community
Redevelopment Agency funds. A budgetary comparison statement has been provided for these
funds to demonstrate budgetary compliance.
Proprietary funds
The City maintains two different types of proprietary funds. Enterprise funds are used to report the
same functions presented as business-type activities in the government-wide financial statements.
The City uses enterprise funds to account for the fiscal activities related to water and sewer. gas,
solid waste and stormwater utilities, along with recycling, marine, aviation, parking system. and
convention center operations. Internal service funds are an accounting device used to accumulate
and allocate costs internally among the City's various functions. Internal service funds that
predominantly benefit governmental activities are the General Services and Central Insurance funds.
These funds account for the City's building maintenance, custodial services, self-insurance program,
risk management program, and employee group insurance, and have been aggregated and included
within the governmental activities in the govemment-wide financial statements. Internal service funds
that predominantly benefit business-type activities (or enterprise funds) are the Garage and
Administrative Services funds. These funds account for the City's vehicle acquisition and
maintenance, and various support activities including data processing, legal, telecommunications.
postal, and printing services. They have been aggregated and included within the business-type
activities In the government-wide financial statements.
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Proprietary funds provide the same type of Infonnation as the government-wide financial statements.
only In more detail. The proprietary fund financial statements provide separate Information for the
Water and Sewer Utility, Gas Utility. Solid Waste Utility, and Stormwater Utility enterprise funds,
which are considered to be major funds of the City. The remaining five non-major enterprise funds
are combined into a single aggregated presentation in the proprietary fund financial statements.
Similarly,governmentaJ activity internal service funds are aggregated into a single presentation, as
are business-type activity internal service funds. Individual fund data for the non-major enterprise
funds and the internal service funds is proVided in the fonn of combining statements in the
supplementary information section of this report.
Fiduciary funds
Fiduciary funds are used to account for resources held for the benefit of parties outside the
govemment Aduclary funds are not reflected in the government-wide financial statements because
the resources of the fiduciary funds are not available to support the City's own programs. The
accounting used for fiduciary funds Is similar to proprietary funds.
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Notes to the Financial Statements
The notes to the financial statements provide additional Information that is essential for a full
understanding of the information provided In the govemment.wlde and fund financial statements.
The notes also present certain required supplementary Information concerning the City's progress in
funding Its obligation to provide pension benefits to its employees_
Other Information
In addition to the basic financial statements and accompanying notes, this report also presents
certain required supplementary information concerning the City's progress In funding its obligation to
provide pension benefits to its employees.
The combining statements referred to earlier In connection with non.major governmental funds, non.
major enterprise funds, and internal service funds, are presented immediately following the required
supplementary information.
Government-Wide Financial Analysis
Because this Is the first year to report under the new standard (GASB Statement 34), comparison to
the prior year Is not feasible. In subsequent years, this section will discuss and analyze significant
differences.
As noted earlier, net assets may serve over time as a useful indicator of a govemmenfs financial
position. In the case of the City, assets exceeded liabilities by $410.8 million at the close of the fiscal
year ended September 30, 2002. The City is able to report positive balances in all three categories of
net assets, both for the government as a whole, as well as for its separate governmental and
business.type activities.
City of Clearwater, Florida
Net Assets
as of September 30, 2002
Primary Government Component Unit
Clearwater
Downtown
Governmental Business-type Development
Activltles ActIvities Total Board
Assets
Current and other assets $184,776,262 $150,759,253 $ 335.537,515 $ 349,061
Capital assets 130,450.254 287,720,791 418,171.045 .
Total assets 315.228,516 438.480.044 753,708,560 349.061
Liabilities
Current and other liabilities 52,132,626 10,311.507 62.444,133 206,289
Long-term debt outstanding:
Due within one year 7,486,413 10,319,570 17,805,983
Due in more than one year 75,474,516 187.211,953 262,686,469 .94.179
TotalllabilitJes 135.093,555 207.843,030 342.936,585 300,466
Net assets:
Invested In capital assets.
net of related debt 53.954,081 93,694,326 147.648,407
Restricted 62,452,451 39,724,619 102.177,070
Unrestricted 63,728,429 97~18.069 160.946.498 48,593
Total net assets $ 180.134,961 $ 230. 37,0"4 $410,711,975 $ 48.693
A large portion of the City's net assets (35.9%) reflects its investment in capital assets (e.g., land,
land improvements, buildings, and equipment), less any related outstanding debt used to acquire
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those assets. The City uses these capital assets to provide services to citizens, and consequently
these assets are not available for future spending. Although the City's investment in capital assets is
reported net of related debt, it should be noted that the resources needed to repay this debt must be
provided from other resources. since the capital assets themselves will not be used to liquidate these
liabilities.
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An additional portion of the City's. net assets (24.9%) represents resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net assets
($160.9 million) may be used to meet the government's ongoing obligations to citizens and creditors.
Changes in Net Assets
The following table reflects the changes in net assets for the year ended September 30, 2002. Since
this is the first year the City has prepared financial statements following the GASB Statement 34
implementation, revenue and expense comparisons to 2001 are not available. In future years. when
prior-year information is available. a comparative analysis of government-wide data will be presented.
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Changes In Net Assets
For the Year Ended September 30, 2002
Component
Primary Government Unit
ClealWater
Downtown
Govermental Business-type Development
Activites Activities Total Board
Revenues
Program revenues
Charges for services $ 17,973,384 $ 98,504,808 $ 116,478,192 $
Operating grants and contributions 6,111.789 6.111,789 2,882
Capital grants and contributions 9,787,351 4,300.651 14,088,002
General revenues:
Property taxes 30,322,411 30,322,411 172,045
Sales taxes 14,663,969 14,663,969
Franchise fees and utility taxes 25,359.362 25,359.362
Other taxes 9,153,976 9,153,976
Other 5.184,077 3,083,160 8,267.237 68,322
Total revenues 118,556,319 105,888,619 224.444,938 243,249
Expenses
General Government 11,646,741 11,646,741
Public Safety 45,135,649 45.135,649
Physical Environment 2,886,504 2.886,504
Transportation 10,120,224 10,120,224
Economic Environment 3,230.524 3,230,524
Human Services 555,395 555,395
Culture and Recreation 22.230,715 22,230,715
Interest on Long-term Debt 2,962.849 2,962,849
Water and Sewer Utility 37,470,508 37,470,508
Gas Utility 23.573.611 23,573,611
Solid Waste Utility 14,397,892 14,397,892
Stormwater Utility 5,458,556 5,458,556
Other 11,057,400 11,057,400 191,277
Total expenses 98,768,601 91,957,967 190,726,568 191,277
Increase in net assets before transfers 19,787,718 13,930,652 33,718,370 51,972
Transfers 375,677 (375,677)
Increase in net assets 20, 163,395 13,554,975 33,718.370 51,972
Net assets - beginning 159,971.566 217,082,039 377,053,605 J3,379)
Net assets - ending $180.134,961 $ 230,637,014 $ 410,771.975 $ 8,593
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Governmental Activities
The increase in governmental activities net assets totaled $20.2 million, or 60% of the total increase
in net assets for the City. Key elements of this increase are as follows:
· Contribution from Pinellas County of $5 million towards construction of the new Memorial
Causeway Bridge.
· Increase of approximately $3.8 million in the net pension asset due to legally required (per
ordinance governing the plan) Employees' Pension Plan contributions in excess of actuarially
required contributions.
· Donations and grants for construction of the new Main & North Greenwood branch libraries of
$2.4 million.
· Contributions from Pinel/as County and the State of Florida of $0.6 and $0.5 million,
respectively, towards the constru~tion of a new community sports complex to include a spring
training stadium for the Philadelphia Phillies major league baseball organization.
The cost of all Governmental activities this year was $98.7 million. However, as shown on the
Statement of Activities, the amount that the City's taxpayers ultimately financed for these activities
through taxes was only $64.8 million because some of the cost was paid for by those who directly
benefited from the programs ($18.0 million) or by other governments and organizations that
subsidized certain programs with grants and contributions ($15.9 million).
II Expenses
. Revenues
Expenses and Program Revenues. Governmental Activities
For the Year Ended September 30, 2002
$50,000,000
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10.000,000
$5,000.000
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Revenues by Sources - Governmental Activities
For the Year Ended September 30, 2002
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Franchise fees and
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Net assets for business-type activities increased from $217,082,039 to $230,637,014. This increase
totaled $13.5 million, reflecting a 6.2% increase in business-type activities net assets and 4()Oh> of the
total increase in net assets for the City.
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A major component of this increase was capital grants and contributions received from other
governments and developers in the amounts of $2.3 million and $1.5 million for the water and sewer
and stormwater utilities, respectively. These contributions must be used for capital purposes.
Also contributing to the increase in business-type activities net assets was a $3.2 million increase in
operating income over the previous year for the business-type activities of the major proprietary
funds. Additional information regarding this increase in operating income is provided in the
proprietary fund discussion that follows.
9
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
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For the Year Ended September 3D, 2002
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Financial Analysis of the City's Funds
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As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental Funds
The focus of the City's governmental funds is to provide information on near-term inflows, outflows,
and balances of spendable resources. Such information is useful in assessing the City's financing
requirements. In particular, unreserved fund balance may serve as a useful measure of a
government's net resources available for spending at the end of the fiscal year. The City reports the
General Fund, Special Development Fund, and Capital Improvement Fund as major governmental
funds.
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The City's governmental funds for the year ended September 30, 2002, reflect a combined fund
balance of $102.9 million, an increase 01$17.6 million in comparison with the prior year. A total of
$53.5 million, or 52%, of this represents unreserved fund balance, which is available for spending at
the governmenfs discretion. The remainder of the fund balance is reserved to indicate that it is not
available for new spending because it has already been committed 1) to liquidate construction
contracts and purchase orders of the prior period ($35.0 million); 2) to pay debt service ($6.1 million);
3) for advances due from other funds ($2.0 million); or 4) for specific program purposes per grant
restrictions ($6.2 million).
The General Fund is the chief operating fund of the City. At September 30, 2002, unreserved fund
balance of the General Fund totaled $12.7 million, with the remainder of the $15.7 million in fund
balance reserved to Indicate it has already been committed for purchase orders of the prior period
($1.0 million) and for advances due from other funds ($2.0 million). As a measure of the general
fund's liquidity it Is useful to compare unreserved fund balance to total fund expenditures.
Unreserved fund balance represents 15.7% of total general fund expenditures (before transfers) for
the current fiscal year.
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The fund balance of the City's General Fund Increased by $2.8 million during the current fiscal year.
This increase was the composite result of actual revenues for the General Fund exceeding final
budgeted revenues by $0.8 million and total actual expenditures less than budgeted expenditures by
$2.1 million. The favorable results were spread across numerous revenue and expenditure
categories.
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The fund balance of the Special Development Fund decreased from $8.2 million to $6.9 million during
the current fiscal year. A key factor in the decrease was a decrease in interest earnings on
investments of approximately $1.2 million. This decrease was a result of a significant decrease in
interest rates during the current fiscal year, as well as a decrease in cash balances in the Special
Development Fund.
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The Capital Improvement Fund has a total fund balance of approximately $34.6 million. The fund had
a minimal current year Increase in fund balance of $0.1 million
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Proprietary Funds
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The City's proprietary funds provide the same "type of information found in the government-wide
financial statements, but in more detail. The City reports the Water and Sewer Utility Fund, the Gas
Utility Fund. the Solid Waste Utility Fund. and the Stormwater Utility fund as major funds.
The Water and Sewer Utility Fund realized a $2.4 million Increase in net assets. Operating revenues
Increased 5.9% over the previous year, partially offset by a 3.8% increase In operating expenses. A
rate increase effective October 1. 2001 contributed to the increase in operating revenues. A
significant contribution to the Increase in net assets was receipt of $2.3 million in capital grants and
contributions that must be used for capital purposes.
The Gas Utllity Fund realized a $2.6 million Increase in net assets. Operating revenues actually
decreased by 12.2% over the prior year due to depressed gas prices. but a 16.0% decrease in
operating expenses resulted in a $0.5 million Improvement in operating incorn~ over the prior year.
The Solid Waste Utility Fund realized a $1.5 million increase in net assets. Operating revenues
Increased by 2.0% while operating expenses decreased by 0.2%.
The Stormwater Utility Fund realized an Increase in net assets of approximately $4.1 million.
Operating revenues increased by 33.9% as a result of a 4.4% rate increase effective October 1.
2001, and an additional 35.0% rate increase effective January 1, 2002. The Increase in operating
revenues was partially offset by a 5.4% increase in operating expenses.
Unrestricted net assets and changes in net assets 9f the proprietary funds for the current fiscal year
follow:
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Fund
Water and Sewer Utility
Gas Utility
Solid Waste Utility
Stormwater Utility
Other funds
Totals
Unrestricted
Net Assets
$19,788.491
9.498.817
6,426.639
7,888.733
10,873,333
$54,476,013
Change in
Net Assets
$ 2,401,311
2,623,123
1,517.507
4,066,075
2,352,206
$12,960,222
General Fund Budgetary Highlights
Differences between the original budget for General Fund expenditures and the final amended
budget were relatively minor ($149,500 decrease). Key elements of this decrease are as follows:
· $102,612 increase in general government budgeted expenditures, primarily due to an
Increase in outside legal counsel fees.
· $214.830 decrease In public safety budgeted expenditures, primarily due to approximately
$200.000 of Fire Department budget that was moved to the interfund transfer out category.
this budget transfer was made to provide capital improvement project funding for the
purchase of land for a proposed fire station.
· Total actual revenues for the General Fund exceeded final budgeted revenues by $0.8 million
and total actual expenditures were less than Budgeted expenditures by $2.1 million. The
budget savings occurred over numerous revenue and expenditure categories.
12
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Capital Asset and Debt Administration
Caphal Assets
Capital assets Include land, buildings and building Improvements, improvements other than buildings, ,
and machinery and equipment. Capital assets also include Infrastructure assets added during the
current fIScal year only. Infrastructure assets acquired prior to fISCal 2002 will be added when the City
retroactively Implements the Infrastructure portion of the new financial reporting model in fiscal 2006.
The infrastructure asset category includes long.llved capital assets, typically stationary In nature,
such as roads, sidewalks, and bridges. At September 30. 2002, the City had Investments In capital
assets totaling $418,171.045 (net of accumulated depreciation).
City of Clearwater, Florida
Capital Assets.
September 30, 2002
Land
Buildings
Improvements Other than Buildings
Machinery and Equipment
Infrastructure
Construction In progress
Total
· Net of accumulated depreciation
Governmental
Activities
$ 40,913,067
27.638,084
37,443,985
11,828.096
1,076,247
11 ;550, n5
$ 130,450,254
Business.type
Activities
$ 19,878,550
15,967,876
188,580,263
16,088,995
47,205,107
$ 287,720,791
Total
$ 60,791,617
43.605,960
226,024,248
27,917,091
1,076,247
58,755,882
$ 418,171,045
Net capital assets for the City's governmental activities increased from $116.7 million to $130.5
million, reflecting an Increase of $13.8 mflllon for the current fiscal year. Key components of this
increase Include:
· Acquisition of land in the amount of $3.9 mil/Ion for a new community sports complex to
Include a spring training stadium for the Philadelphia Phillies major league baseball
organization.
· expenditures of $3.5 million towards construction of a new North Greenwood recreation
center and aquatics complex, currently classified as construction in progress.
· Expenditures of $3.7 million towards construction of a new main library, currently classified
as construction in progress.
· A total of $1.2 million In construction in progress expenditures towards the construCtion of a
new Sand Key fire station.
· A total of $1.0 million In construction in progress expenditures towards completion of a new
North Greenwood branch library.
Net capital assets for the CIty's business~type actMtles Increased by $33.1 million from $254.6 million
to $287.7 million during the current fiscal year. A key component was an increase of $21.8 million in
water and sewer system construction in progress, primarily due to system improvements funded from
the Water and Sewer Revenue Bonds, Series 2002. These improvements include expansIon of the
reclaimed water program; continued renewal and replacement as needed of the water, wastewater
13
collection, and water pollution control systems; and upgrading of the water pollution control system to
meet regulatory requirements.
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Additional information on the City's capital assets can be found in Note III.C on pages 51-53 of this
report.
Long-term debt
The City's total long-term debt increased by $98.2 million, from $193.7 million to $291.9 million, or an
increase of 51 % for the current fiscal year. Key factors In this increase included:
· Current year issuance of $58,680,000 Water and Sewer Revenue Bonds, Series 2002, to pay
for the costs of expansion of the City's water and sewer system.
· Issuance during the current year of $24,685,000 Stormwater Revenue Bonds, Series 2002,
to pay for the costs of capital Improvements to the CIty's stormwater management system.
· Current year issuance of $14,810,000 Spring Training Facility Revenue Bonds, Series 2002,
to finance a portion of the cost of the acquisition, construction, rehabilitation, and equipping of
a community sports complex and spring training facility to be used by the Philadelphia
Phillles major league baseball team.
"
The City's bonded debt as of September 30, 2002, consists entirely of revenue bonds (secured solely
by specified revenue sources) with no general obligation debt or special assessment debt
outstanding. Govemmental activities revenue bonds totaled $73.2 million while business-type
activities totaled $185.7 million.
During the current fiscal year the City issued Improvement Revenue Refunding Bonds, Series 2001,
to refinance previously outstanding special revenue bonds that primarily financed governmental
activities. The result is expected to be a decrease in future debt service payments of $958,000.
All revenue bond issues of the City have been rated either AAA by Standard & Poor's or Fitch, or Aaa
by Moody's.
The City's Charter limits legal indebtedness to twenty .percent of the assessed valuation of non-
exempt real estate. The current debt limitation is in excess of $1.0 billion, which is significantly in
excess of the City's legal indebtedness at September 30, 2002.
Additional information on the City's long-term debt can be found in Note III (F) on pages 57-61 of this
report.
Economic Factors And Year 2003 Budgets and Rates
Factors considered in preparing the City of Clearwater's budget for fIScal year 2003 Included:
· The unemployment rate for the Tampa Bay metropolitan area for September 2002 was 4.4%,
an increase of 0.4% from the 4.00-'" rate for September 2001. The national rate for
September 2002 was 5.6% versus 4.9% for September 2001.
· Total taxable assessed values for the City of Clearwater increased 9.2% for fiscal 2002.
· A Florida Power Company rate decrease of 9% effective May 2002 will result In an estimated
$1 million decrease In City franchise fee and utility tax revenues for fiscal 2003.
14
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· Health insurance cost increases for City employees are expected to Impact the fiscal 2003
budget by over $1.5 million, of which approximately $741,000 Impacts the General Fund.
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The fiscal 2003 City property tax millage was increased from 5.5032 mills to 5.753 mills, an increase
of .2498 mills or 4.5%. This increase will generate an estimated $1.3 million In additional property tax
revenues for fiscal 2003, which will assist In offsetting the anticipated loss in franchise fees and utility
tax revenues discussed previously. Budgeted Water and Sewer utility revenues for 2003 reflect a 7%
rate increase effective January 1, 2003, while fiscal 2003 budgeted Stormwater utility revenues reflect
a 17% rate increase effective October 1, 2002.
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Contacting the City's Financial Management
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This financial report is designed to provide a general overview of the CIty's finances for all those with
an interest in its finances and to show the CIty's accountability for the money it receives. Questions
concerning any of the information provided in this report or requests for additional financial
information should be addressed to The City of Clearwater, Finance Department, 100 S. Myrtle
Avenue, Clearwater, Florida 33756-5520.
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Basic Financial Statements
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City of ClealW8ter, Florida : i
Balance Sheet
Governmental Funds ~ .~
September 30, 2002
:... :;.
Special Capital Other Totals
General Development Improvement Governmental Governmental ~ 1
Fund Fund Fund Funds Funds
ASSETS l J
Cash on hand and in banks $ 20.680 $ $ $ 100 $ 20,780
Equity In pooled cash and investments 11,238,047 5,270,645 63.341,349 37,747,027 117,597,068 f .~
Receivables (net where appncable, of allowances 6 j
for estimated unCollectible amounts):
Accounts and contracts 306.523 306,523 q
Mortgages, notes and other loans 10,000 .8,905,947 8,915,947 ~
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Improvement liens 86,801 86,801
RehabiUtation advances 82,626 82.626 ~ r
Property taxes 31,548,425 2,013,000 33,561,425
Other 1,454,648 180.000 109,202 1,743,850 1 J
Due from other funds (deficit in pooled cash) 264,514 264,514
Due from other govemmental entitles 2,337,360 2, 125,137 769,956 5,232,453 r 1
Investments 864,499 864,499 ; j
Land held for resale 998,342 998,342
Inventories, at cost 17,430 17,430 ",' "
Advances to other funds 2,000,000 2,000,000
T ota! assets $ 48,923,113 $ 9,418,782 $ 63,872,664 $ 49,4n,699 $ 171,692.258
LIABILIllES
Accounts and contracts payable $ 162,454 $ $ 1,186.463 $ 1,657,907 $ 3,006,844 \.. i
Accrued payroll 1,121.359 26,911 1,148,270
Accrued Interest payable 28,032 28,032
Due to other funds 24,925 28,016,807 134,966 28,176,698
Due to other funds (deficit in pooled cash) 264,514 264,514
Due to other governmental entities 3,663 522,548 372 526,583
Deposits 5,342 5,342
Construction escrows 1,093,924 1,093,924
Deferred revenue 31,852,141 2,013,000 95,223 33,980,364
Deferred assessment Dens 86,801 86,801
Advances from other funds 49,850 492,524 542,374
T o1alllabilitles 33,219,734 2,535,548 29,290,091 3,794,373 68,839,746
FUND BALANCES
Reserved for:
Encumbrances 1,019,607 14,369,954 19,576,986 34,966,547
Debt service requirements 6,074,104 6,074,104
Advances and notes 2,000,000 10,000 8,481,986 10,491,986
Grant programs 2,016,840 2,016,840
Unreserved, reported in:
General fund 12,683,772 12,683,772
Special revenue funds 6,873,234 4,462,750 11,335,984
Debt service funds 1,802,529 1,802.529
CapItal projects funds 20,212,619 3,268,131 23,480,750
Total fund balances 15,703,379 6,883,234 34,582,573 45,683,326 102,852,512
Total Habililies and fund balances $ 48,923,113 $ 9,418,782 $ 63,872,664 $ 49,4n.699 $ 171,692,258
The notes to the flllancial statements are an integral part of this statement.
20
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City 01 Clearwater, Aorlda
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement 01 Net Assets
September 30, 2002
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Total fund balances of governmental funds
Capital assets used In governmental activities are not financlal resources, therefore,
are not reported In the funds. The cost of the assets Is $177,284,898, and the
accumulated depreciation Is $46,834,644.
Total capital assets for governmental activities
Less: Land Included in governmental funds as "Land Held for Resale"
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The net pension asset related to governmental activities does not represent financial
resources and is not reported in the funds.
Accrued general long-term debt interest expenses are not financial uses and, therefore,
are not reported In the funds.
Special assessment liens receivable are not financial resources In the current period
and. therefore, are reported as deferred revenues In the funds.
The assets and liabilities of the General SeNices and Central Insurance Intemal
seNice funds (funds used to charge the costs of certain activities to Individual
funds) are Included in the governmental activities in the statement of net assets.
Net assets of General SeNlces and Central Insurance Internal service funds
Less: Capital assets included In total governmental capital assets above
Less: Net pension asset included in total governmental net pension asset above
Add: Capital lease purchases payable Included in total govemmental below
Add: Compensated absences Included In total governmental below
Add: Adjustment to reflect the consolidation of internal service fund activities
related to enterprise funds
interest revenues are not recognized in the current period because the resources are
not available. therefore. are not reported In the funds.
Long-term liabilities, including bonds payable, are not due and payable in the current
period and accordingly are not reported In the funds.
Long-term liabilities at year-end consist of:
Bonds payable
Less: Deferred charge on refunding (to be amortized as interest expense)
Less: Deferred charge for Issuance costs (to be amortized over life of debt)
Less: Issuance discount (to be amortized as interest expense)
Add: Issuance premium (to be amortized as a reduction of Interest expense)
Capital lease purchases payable
Compensated absences
Total net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
21
$ 130,450,254
(998,342)
15,437.496
(177,618)
(394,351 )
25,682
97,313
676,453
{72,51 0,958)
414,162
644,901
46,321
(1,151,450)
(3,939,169)
(5,819,855)
$102,652,512
129,451,912
15,125.562
(744.771)
86,801
15,666,975
11,998
(82,316,028)
$160,134,961
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City of Clearwater, Aorida
Reconciliation of the Statement of Revenues, Expenditures, and
Changes In Fund Balances of Governmental Funds
to the Statement of Activities
For the Year Ended September 30, 2002
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I ~ Net change in fund balances - total governmental funds
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Amounts reported for governmental activIties In the Statement of Activities are different because:
Governmental funds report capital outlays as expenditures while governmental activities report
depreciation expense to aUocate those costs over the life of the assets. This Is the amount by
which capital outlays exceeded depreciation In the current period.
Expenditures for capital assets
Less current year depreciation
In the Statement of Activities the loss on disposition of capital assets Is reported. The loss Is not
a use of current resources and thus Is not reported in the funds.
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Loan proceeds provide current financial resources to governmental funds; however Issuing debt
Increases long-tenn liabilities in the Statement of Net Assets. In the current year these amounts are:
Revenue bond proceeds
Capital/ease proceeds
Some expenditures and other financing sources (uses) of the govenvnentaI funds are deferred
and amortized io relation to the related debt in the Statement of ActIvItIes:
Net discount (premium) on revenue bonds Issued during current year
Issuance costs for revenue bonds Issued during current year
Loss on current year refunding
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Repayment of long term debt princIpal Is an expenditure In the governmentallunds, however the
repayment reduces long-tenn liabilities in the Statement of Net Assets. Current year amounts are:
Revenue bond principal payments
Capital lease principal payments
Principal portion of payment to escrow agent for refunding of bonds
Net pension asset is not a current financial resources and consequenUy Is not reported In the
funds. However It Is an asset In the Statement of Net Assets.
Current year change in the net pension asset
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Some expenses reported In the Statement of ActIvities do not require the use of current financial
resources and therefore are not reported as expernltures in the governmental funds.
Current year change in compensated absences
Amortization of deferred charge on refunding
Amortization of Issuance costs
Amortization of bond discounts and premiums
Accrued Interest expense
Special assessment revenues are deterred until collected in the govenvnental funds. The
revenues collected in the current year were prior year revenues in the Statement of ActivitIes.
Interest revenues will not be coDected for several months after the fiscal year and are not
accrued In the governmental funds.
The net revenues of Internal service funds (funds used to charge the costs of certain activities
to individual fundS) for govemmental activities are reported in the Statement of Activities but not
In the governmental funds.
Total net assets of governmental activities
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The notes to the financial statements are an Integral part of this statement
23
$17,553,027
$ 20,717,080
(5,833,254) 14,883,826
(926,029)
(26,155,499)
(553,418) (26,708,917)
(480,884)
358,996
442,426 320,538
446,768
1,304,501
9,679,761
(270,983)
(28,244)
(90,494)
169,252
(642,659)
11,431,030
3,794,596
(863,128)
(18,098)
11,998
684,552
$20,163,395
City of Clearwater, Florida , ,
Statement of Revenues. expenditures, and Changes In Fund Balances -
Budget and Actual (Non-GAAP Budgetary Basis)
General Fund
For the Year Ended September 30, 2002
Variance with ~ i
BUdgeted Amounts Final Budget
Actual Positive ''; l
Original Final Amounts (Negative)
REVENUES ,
Taxes $ 45,n2,600 $ 46,078.360 $ 45,909,106 $ (169,254)
Licenses, pennits, and fees 3,182,360 3,132,360 3,283,304 150,944 ,." '~
; ;
Intergovernmental 21,549,590 21.628,240 22,456,903 828,663 ,
; ..
Charges for services 9,739,320 9,676,760 9,852,250 175,490 ~ i
Fines and forfeitures 1,595,880 1.741,640 1.763.054 21,414
Interest income 882,760 882,760 783.919 (118,841) 1 ~
MIscellaneous 891.340 956.470 828.978 1127.492\
Total revenues 83.613.850 84.096,590 84,857.514 . 760.924 . ;
EXPENDITURES
Current: n
. l'
General government . ~
City Commission 267.400 250,780 217,879 32,901 i .~
City Manager 683,380 683,380 641,122 42.258
Legal 1,259,130 1.437,120 1,421,575 15,545 7 r
City Clerk 1,155,280 1.125.280 932,979 192.301
Public Communications and Marketing 885,600 880,850 752,687 128.163 ::. ~
Finance 1.923,780 1.883.780 1,787.562 96,218
Human R$Sources 1,096.250 1,163,530 1.114.726 48.804
Non-Departmental 1.305.280 1.305,200 1,293.975 11.225 : ~
Public Works Administration 71,475 71,547 69,341 2,206 ! ~
Planning 1 ;043,070 998,070 897,683 100,387 ~ i
Internal Audit 122,880 114,600 101,484 13.116
OffIce of Management & Budget 267.020 269.020 272,114 (3,094)
Total general government 10,080,545 10,183,157 9,503.127 680,030 ' ,
: t
Public safety . I
, j
Police 26.973,660 26,973,480 26,424,346 549,134
Fire 14,378.900 14,164,250 13,973,671 190,579
Development Services 2.686.287 2.686.287 2,596.272 90,015 ; 1
Total public safety 44,038,847 43,824.017 42,994,289 829.728 : i
: j
Physical environment
Public Works AdminIstration 1,929,817 1.931,747 1 ,872.179 59.568
Total physical environment 1.929,817 1,931,747 1,872,179 59.568
Transportation
Pubfic Works AdminIstration 6.046.257 6,052.306 5.Be5,674 186,632
TotEd transportation 6,046,257 6,052.306 5,865,674 186.632
Economic environment
EconomIc Development 1,476,470 1,394,110 1,340,806 53,304
Development Services 160.734 160,733 155.348 5.385
Total eCOllomlc environment 1.637 .204 1 ,554,843 1 ,496,154 58,689
Human services
Human relations 488.430 488,430 448.703 39.727
Total human services 488.430 488.430 448,703 39.727
C~lture and recreation
Parks and Recreation 14.126,020 14,158.120 13,968.172 189,948
Library 3.891,890 3,891,890 3,809,106 82,784
MarIne 492,390 497.390 500.500 (3,110)
Total culture and recreation 18.510,300 18,547.400 18.2n,778 269,622
Total expenditures (budgetary basis) 82,731,400 82,581,900 80.457,904 2,123,996 ; j
Excess of revenues over expenditures (budgelary basis) 882,450 1.514,690 4,399.610 2.884.920
OTHER FINANCING SOURCES (USeS)
Transfers in 4,382,790 4,442,390 4,628,931 186,541 ,
Transfers out (5,578.240) (6,335.850) (6,163,998) 171,852 ' ,
; ,
Total other financing sources (uses) (budgetary basis) (1.195,450) (1,893.460) (1,535,067) 358,393 L 1
Excess (deficiency) of revenues and other financing sources
over expenditures and other financing uses (budgetary basis) (313,000) (378,nO) 2.864,543 3.243.313
Encumbered purchase orders, beginning of year (1.052,477) (1,052,477)
Encumbered purchase orders, end of year 1,019,607 1,019.607
Excess (deficiency) of revenues and other f1nancin~ sources
over expenditures and other financing uses (GAA basis)' (313,000) (378,nO) 2,831,673 3.210,443
Fund balances - beginning. as restated (see Note II . C) 12,871,706 12,871.706 12.871,706 , i
Fund balances. ending $ 12.558.706 $ 12,492.936 $ 15.703,379 $ 3,210,443
The notes to the financial statements are an integral part of this statement
24
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City of Clearwater, Florida
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Budget and Actual (GAAP Basis)
Special Development Fund
For the Year Ended September 30, 2002
Variance with
Budgeted Amounts Final Budget
Actual PosIDve
Orighlal Final Amounts (Negative)
REVENUES
Taxes $ 1,881,620 $ 1,881,620 $ 1,902,325 $ 20,705
Ucenses, permits, and fees 698,830 908,830 704,659 (204,171)
Intergovernmental 10,679.810 10,679,810 9,883,629 (796,181 )
Interest income 300,000 300,000 1,297,822 997.822
Total revenues 13,560,260 13,nO,260 13,788,435 18,175 '
EXPENDITURES
Total expenditures
Excess of revenues over expenditures 13,560,260 13,770,260 13,788.435 18,175
OTHER FINANCING SOURCES (USES)
Debt proceeds
Transfers in 100,000 100,000
Transfers out (18,646,110) (20,295,395) (15.216,358) 5,079,037
Total other ffnancing sources (uses) (18,646,110) (20,295,395) (15,116.358) 5,179,037
Deficiency of revenues and other sources
over expenditures and other uses (5,085,850) (6,525.135) (1,327,923) 5.197,212
Fund balances. beginning. as restated (see Note II- C) 7,446,380 7,446.380 8.211,157 764.n7
Fund balances - ending $ 2,360,530 $ 921,245 $ 6,883,234 $ 5,961.989
The notes to the financial statements are an integral part of this statemenl
25
City ot Clearwater, Aorida
Statement of Net Assets
Proprietary Funds
September 30, 2002
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Business-type .". -.,
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Gas Solid Waste rll
Utility Utility i
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1,761,901 6,733,830 ;
1,143,782 827,902 ,
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1,014,800 648,670 . 1
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2; 158.582 1,476,572
(81,759) (39,813)
2,076,823 1,436,759
5,733,792 1,685,872
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495,601 ,
, i
10,068,817 9,856,661
1,644,280 764.321
ASSETS
Current assets:
Cash on hand and In banks
Equity In pooled oash and investments
Accounts and contracts receivable:
Billed
Unbllled charges estimated
Water
and Sewer
Utility
$ 400 $
10,734,957
2,084,139
1,400,100
3,484,239
(242,238)
3,242,001
2,537,004
432,097
533,521
4,891
17,484,871
Less: Allowance for uncollectable accounts
Total receivables, net
Due from other funds
Due from other govemmental entities
Inventories, at cost
Prepaid expenses and other assets
Total current assets
Noncurrent assets:
Restricted:
Equity In pooled oash and investments
Interest receivable
Due from other funds
Investments
Other
Deferred charges
Advanoes to other funds
Net pension asset
Capital assets:
Land and other nondepreclable assets
Capital assets, net of accumulated depreciation
Total noncurrent assets
Total assets
59,121,612
3,547.576
2,916,713
86,196
981.123
1,921,307
41,310,216
138,118,555
248,003,298
265,488,169
The notes to the flllanoiaJ statements are an Integral part of this statement
26
311,888
1,044,652
1,113,370
327,285
33,988,n2
37,316,8n
47,385,694
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1,041,913
2,459,795
5.379,399
15,236,060
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27
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City of Clearwater, Florida
Statement of Net Assets (Continued)
Proprietary Funds
September 30, 2002 ~ "1
Business-type
Enterprise . "
Water
and Sewer Gas Solid Waste
UtIlity Utility Utility
LIABILITIES
Current liabilities:
Accounts and contracts payable 1,024,376 832,581 354,560
Accrued payroll 152,440 80,672 89,349
Accrued interest payable 56,703 34,680
Accrued compensated absences 455,817 298,343 370,647
Due to other funds 82,474
Deposits
Deferred revenue and liens
Current portion of long-term liabDltles:
Revenue bonds 905,000 5n,500
Notes, loan pool agreement and acquisition contracts 112,468 39,371
Total current f18bilities (payable from current assets) 2,706,804 1,823,776 936,401
Current liabilities (payable from restricted assels):
Construction contracts payable 918,656
Accrued Interest payable 835,616 122,661 22,383
Notes, loan pool agreement and acquisition contracts
Current portion of long-term liabilities, revenue bonds 4,525,000 52,500
Customer deposits 1,888,655 1,169,119 764,321
Total current liabilities payable from restricted assets 8,167,927 1,344,280 786,704
Total current liabilities 10,874,731 3,168,056 1,723,105
Noncurrent Ilabllltles:
Revenue bonds (net of unamortized discounls and
deferred amount on refunding) 121,559,184 26,463,537
Notes, loan pool agreement and acquisition contracts 362,580 46,826
Advances from other funds 824,737
Claims payable
Total non-current liabilities 121,921,764 26,463,537 871,563
TotalllabUltles 132,796,495 29,631,593 2,594,668
Net assets:
Invested in capital assets (net of related debt) 79,572,957 6,910,632 3,415,511
Restricted for:
Revenue bond debt service and sinking fund requirements 12,739,153
Revenue bond renewal and replacement requirements 14,218,247 300,000
Capital projects 1,685,872
Water and sewer Impact fees 4,451,519
Employees' pension benefits 1,921,307 1,044,652 1,113,370
Unrestricted 19,788,491 9.498,817 6,426,639
Total net assets $ 132,691,674 $ 17,754,101 $ 12,641,392
Adjustment to reflect. the consolidation of Internal service fund activities related to enterprise funds.
Net assets of business-type activities
The notes to the fananclal statements are an Integral part at this statement
28
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29
The note& to the financial statements are an Integral part of this statement.
30
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31
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City of Clearwater, Florida
Statement of Revenues, Expenses. and Changes In Fund Net Assets (Continued)
Proprietary Funds
For the Year Ended September 30, 2002
Water
and Sewer
UtIlity
Nonoperating revenues (expenses):
Eamings on investments
Interest expense
Amortization of bond discount and Issue costs
Gain Qoss) on exchange of assets
Other
Total nonoperating revenue (expenses)
Income before contributions and transfers
1,713,005
(3,576,551)
(282,822)
(45,669)
89,423 .
(2, 1 02,614)
2,059,400
2,311,690
Capital grants and contributions
Transfers In
Transfers out
(1,969,779)
341,911
2,401,311
Changes in net assets
Total net assets. beglMing, as previously reported,
before adjustment for GASB 34 implementation
Adjustment for implementation of GASB 34 - elimination
of contributed capital
Adjustment for change in accounting pl'lnclple - change
In capitalization 1I1resho1ds
Total net assets - beginning, as restated
Total net assets. ending
56,135,028
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Enterprise
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Utility
Solid Waste
Utlllty
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327,827
(1.473.183)
(121,886)
(19,041)
366,635
(919,648)
3,680,961
349,693
(78,621)
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(229,288)
167,671
209,455
2,177,847
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(1,057,838) (660,340)
(1,057,838) (660,340)
2,623,123 1,517,507
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14,800,787 12,026,840
.,
74,424,378 691,537 220,454
(269,043) (361 ,346) (1,123,409)
130,290,363 15,130,978 11,123,885
$ 132,691,674 $ 17,754,101 $ 12,641,392
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Adjustment to reflect the consolidation of Internal servIce fund activltles related to enterprise funds.
Change In net assets of business-type a~tles (page 19)
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32
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AcUvlUes
Funds
[ ]
Stonnwater
UUDty
$
Other
Funds
Total
6.516,n4 $ 10,nS,203 $ 96,795,149 $
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(453,927)
(1,636,282)
(1,883,129)
15,801
2,559,237
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1,591,060
(513,847)
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(258,805)
(561,756)
(15,847,271)
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24,472,641
(346,678)
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22,667
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$ 18,498,012 $
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$ $
3,607,652
14,890,360
$ 18,498,012 $
(5,406.911)
(2,453.476)
(1,817,341)
552,863
1,650,338
1,747,346
(233,470)
(24)
4,679,115
(8,496,758)
(2,303.791)
(200.258)
(48,744)
(667,878)
4,031
13,442
(899,407)
410,002
410,002
(1,142,858)
5,543,510
(41,714,684)
(20,488,398)
(17,583.789)
1,192,393
18,200,671
3,338,406
(4,480,942)
(24)
4.679,115
(11,411,976)
(7,875,421)
(6,331,228)
(3,788.197)
(39,470,337)
4,031
83,047,619
(869,906)
3.957,819
22,667
270.340
38,842,808
3,287,703
3,287,703
50,455.561
53,205,304
Governmental
Activities -
Internal Service
Funds
14,530,532
(12,273,025)
(1,900,920)
(203,485)
153,102
155,710
(105,683)
8n,065
(2,239,681 )
(1,312,589)
(6,648)
259
25,682
19,293
1,085,579
1,085,579
(54,615)
4,400,652 $ 103,660,865 $ 20,378,387 $
20,433,002
22,967 $
4.361,312
16,373
24,287 $ $
27,199,652 20,378,387
76,436,948
4,400,652 $ 103,660,865 $ 20,378,387 $
35
BualnesHype
ActIvities .
Internal Service
Funds
$
15,981,253
(6,225,283)
(5,449,457)
(882.071 )
182.430
3,606,892
910,693
167,646
(sn ,572)
700,767
(273,518)
(362.075)
(4,205,378)
269,578
889,629
(3,681,764)
203,129
203,129
829,024
3,978,120
4,807,144
1,900
4,805,244
4,807.144
(continued)
The notes to the financial statements are an integral part of this statement
36
fl
! I Activities
Funds Governmental Business-type
Activities - ActlvlUes -
fl Stormwster Other Internal Service Internsl ServIce
UtIlity Funda Total Funds Funds
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$ 1,816,021 $ (74,840) $ 12,472,196 $ (1,311,974) $ 662,537
fI
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977,183 1,304,825 8,715,530 19,021 3.620,735
f1 138,499 138,499
U 30,362 (1,209) 246,061
(472,161)
r r 300
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(156,961)
r i (10,423) (85,886) (109,910)
t l (227) (422,890)
42,898 (62,848) (1,973,125) 1,986,092 (434,175)
f I (11,461) 124,235
,
i . 12,632 (749,084)
l.i (112,001) (140,001) (1,346,814) (106,962) (35 1,683)
(1 22,990 6,372 135.401 (10,185) 36.882
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[1 743,216 1,725,178 5.728.475 1,465.076 2,944,355
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f 1 $ 2,559,237 $ 1,650,338 $ 18,200,671 $ 153.102 $ 3,606,892
f r
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11 $ (67,039) $ 62.316 $ (69,433) $ $ (134,n1)
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$ $ (43) S (142.071) $ $
11 $ 11 ,250 $ S 11 ,250 $ $
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37
City of Clearwater, Florida
Statement of Fiduciary Net Assets
Flduolary Funds
September 30, 2002
The notes to the financial statements are an integral part of this statement
-i,.
38
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city of Clearwater, Florida
Statement Changes In Fiduciary Net Assets
Fiduciary Funds
For the Year Ended September 30, 2002
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ADDITIONS
Contributions:
Contributions from employer
Contributions from employees
State of Florida
Total contributions
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Investment Income (loss):
Net appreciation (depreolatlon) in fair value of investments
Interest
Dividends
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Less investment expenses:
Investment management loustodlan fees
Net Investment Income (loss)
Total additions (reductions)
DEDUCTIONS
Benefits and withdrawal payments:
Benefits
Withdrawal payments
Total benefits and withdrawal payments
Income (loss) before administrative expenses
Administrative expenses
Net Increase (decrease)
Net assets held In trust for pension benefits:
Beginning of year
End of year
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The notes 10 the financial statements 8re an Integral part of Ihls statement
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Pen8lon
Trust
Funds
$ 5,593,561
5,069,687
1,377 ,299
12,040,547
(40,705,797)
10,578,980
1,689,384
(28,437,433)
1,921,382
(30,358,815)
(18,318,268)
14,086,011
549,742
14,635,753
(32,954,021 )
333,842
(33,287,863) .
435,933,960
$ 402,646,097
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
Note I - Summary of Significant Accounting Policies
The · City of Clearwater, Florida (the City) was incorporated in 1923 per Chapter 9710, Special Laws of Florida, as
amended. The City is a Florida municipal corporation governed by a five member City Commission including a
mayor-commissioner. The City has an estimated population of 109,000" and is located in the four-county Tampa-St.
Petersburg-Clearwater Metropolitan Statistical Area (MSA), which has an estimated population of 2,414,900.
The financial statements of the City of Clearwater, Florida reporting entity (City) have been prepared in accordance
with generally accepted accounting prinCiples (GAAP) as applied to governmental units. The Governmental
Accounting Standards Board (GAS B) is the standard-setting body for governmental accounting and . financial
reporting. Pronouncements of the Financial Accounting Standards Board (FASS) issued after November 30, 1989,
are not applied in the preparation of the financial statements of the proprietary fund types In accordance with GASS
Statement Number 20. The GASB periodically updates Its codification of the existing Governmental Accounting and
Financial Reporting standards which, along with subsequent GASB pronouncements (Statements and
Interpretations), constitutes GAAP for governmental units. The City's more signifICant accounting policies are
described below.
In June 1999, the GASSunanimously approved "Basic Financial Statements and Management Discussion and
Analysis for State and Local Governments" (Statement #34). This statement results in the most significant change in
governmental financial reporting in over twenty years and is scheduled for a phased implementation (based on the
size of the government) starting with fiscal years ending 2002. As part of this Statement, there are new reporting
requirements for governments' infrastructure (roads, bridges, etc). This requirement permits an optional four-year
delay for retroactive implementation of the infrastructure reporting requirements to fiscal 2006. The City has elected
to implement the basic model for fiscal year 2002 and will defer implementation of the retroactive infrastructure
reporting to fiscal year 2006.
A. Financial Reporting Entity
In evaluating the City as a reporting entity, management has Included in the accompanying financial statements the
City of Clearwater (the primary government) and its component units, entities for which the government is considered
to be financially accountable. The City has adhered to the standards set forth In GASB Statement No. 14 in reporting
the primary government (including blended component units), discretely presented component units, the reporting
entity, and related organizations.
Blended Component Units - Component units that meet the criteria for blended presentation in accordance with
GASB Statement Number 14 are reported in a manner similar to that of the primary government Itself. Accordingly,
throughout this report, data presented for the primary government includes data of the following blended component
unit. The Clearwater Redevelopment Agency (CRA), created by authority of Florida Statute Chapter 163, Part III, and
City of Clearwater Resolution 81-68, although it is legally separate, is reported as if it were part of the City (blended
component unit) due to the City Commission serving as the governing board of the CRA. Separate financial
statements for the CRA are not available. However fll1anclal statements for the CRA are included in the City's
comprehensive annual financial report as a governmental special revenue fund.
Discretely Presented Component Units - Component units that meet the criteria for discrete presentation in
accordance with GASS Statement Number 14 are presented in a separate component units column in the
government-wide financial statements in order to clearly distinguish the balances and transactions of the component
unit from those of the primary government. The discretely presented component unit listed below Is reported
separately In the financial statements and in the related notes and required supplementary Information. The
Clearwater Downtown Development Board (DDB) was created by authority of Florida Statutes 70-635 and n..a37,
and City Ordinance 5347-93, but is legally separate from the City and governed by a separate board. The DDS was
created by City ordinance and the City is thereby able to Impose its wUl on the organization. Additionally the exclusion
of the DDB's activities from the City's financial statements would, in the opinion of the City's management, cause the
financial statements to be incomplete. Consequently the DDS is reported In a separate column in the government-
wide financial statements as a discretely presented component unit of the financial reporting entity, In accordance
with GASS Statement No. 14. The DDS's financial statements have been incorporated into the City's comprehensive
annual financial report as a governmental discretely presented component unit. Separate financial statements for the
DDS can be obtained from the City's Finance Department located at 100 S. Myrtle Avenue, Clearwater, Florida.
40
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
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B. Basic Financial Statements Under the New Financial Reporting Model
During the fiscal year ended September 30, 2002 the City Implemented the new financial reporting model as of result
of the following Statements of the Governmental Accounting Standards Board (GASB): GASB Statement No. 34,
Basic Financial Statement-and Management's Discussion and Analysis-for State and Local Governments; GASB
Statement No. 36, Recipient Reporting for Certain Shared Nonexchange - Revenues, an amendment of GASB .
Statement No. 33: GASB Statement No. 37, Basic Financial Statements-and Managemenfs Discussion and
Analysis-for State and Local Governments: Omnibus, an amendment of GASS Statements No. 21 and No. 34; and
GASB Statement No. 38, Certain Financial Statement Note Disclosures.
The City's Basic Financial Statements contain three components: government-wide financial statements, fund
financial statements, and notes to the financial statements.
1. Government-wide financial statements. The government-wide financial statements report Information on all of
the nonflduclary actlvltles of the primary government and its component units using the accrual basis of accounting,
which is similar to the accounting used by private-sector businesses. For the most part, the effect of interfund activity
has been removed from these statements. Govemmental activities, which normally are supported. by taxes and
intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent
on fees and charges for support. likewise, the primary govemment is reported separately from the legally separate
component unit for which the primary government Is financially accountable.
The statement of net assets presents information on all of the assets and liabilities of the City. The difference
between assets and liabilities is reported as net assets. Changes in net assets may serve as an Indicator of whether
the financial position of the City is improving or deteriorating.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are
offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or
segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit
from. goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or segment. The operating grants
include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects
capital-specific grants. Taxes and other items not properly Included among program revenues are reported instead
as general revenues. All revenues and expenses are reported as soon as the underlying transaction has occurred,
regardless of when cash is received or paid.
As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements.
Exceptions to this general rule are payments-ln-Iieu of taxes and other quasi-external charges between enterprise
funds and various other functions of the govemment. Elimination of these charges would distort the direct costs and
program revenues reported for the various functions concemed.
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2. Fund financtal statements. Separate financial statements are provided for gowrnmental funds, proprietary
funds, and fiduciary funds. even- though the latter are excluded from the government-wide financial statements. The
fund financial statements are, in substance, very similar to the financial statements presented In the previous financial
reporting model. A new emphasis is on the major funds in either the govemmental or business-type categories.
Major Individual governmental funds and major IndMdual enterprise funds are reported as separate columns in the
fund financial statements. Non-major funds (by category) are summarized into a single column.
The City reports the following major governmental funds:
The General Fund is the governmenfs primary operating fund. It accounts for all financial resources of the general
government, except those required to be accounted for In another fund.
The Special Development fund is a special revenue fund used to account for impact fees, property taxes for road
improvements. local option gas taxes, infrastructure taxes, and other revenues which are restricted legally or by City
Commission policy to be used for specific capital Improvement projects.
j
41
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
The Capital Improvement Fund is used to provide combined accounting presentation for all City capital improvement
projects except those financed from proprietary funds or bond proceeds where bond ordinance provisions require the
segregation of bond proceeds in separate funds.
The City reports the following major proprietary funds:
The Water and Sewer Utility enterprise fund is used to account for the financing, construction, operation, and"
maintenance of the water and sewer services of the City from charges made to users of the service.
The Gas Utility enterprise fund is used to account for the financing, construction, operation, and maintenance of the
gas service of the City from charges made to the users of the service.
The Solid Waste Utility enterprise fund is used to account for the financing, construction, operation, and maintenance
of the solid waste service of the City from charges made to the users of the service.
The Stormwater Utility enterprise fund Is used to account for the financing, construction, operation, and maintenance
of the stormwater management system of the City from charges assessed against each developed property.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with the
proprietary fund's principal ongoing operations. Operating expenses for proprietary funds include the cost of sales
and service, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting
this definition are reported as nonoperating revenues and expenses.
Additionally, the City reports the following fund types:
Internal service funds account for fleet management, information technology, telephone, graphics, employee
relations, facilities management, radio communications, insurance, and risk management services provided to other
City departments on a cost reimbursement basis. The Garage and Administrative Services internal service funds
primarily benefit enterprise funds and are therefore included as business-type activities in the government-wide
financial statements. The remaining internal service funds, the General Services and Central Insurance. funds,
primarily benefit governmental funds and are consequenUy included as governmental activities. Pension trust funds
account for the financial operation and condition of the Employees' Pension Plan, the Firemen's Relief and Pension
Plan,. the Police Supplemental Pension Plan, and the Firefighters Supplemental Pension Plan.
The Treasurer's Escrow Agency Fund accounts for the receipt, custody, and expenditure of monies held temporarily
in an ag~ncy capacity for other parties.
The pension trust funds and the agency fund are fiduciary funds used to account for resources held for the benefit of
parties outside the government. Fiduciary funds are not included in the government-wide financial statements
because the resources of these funds are not available to support the City's own programs.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash
flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are
recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using Ule current financial resources measurement focus and
the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon enough
thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they
are collected within 90 days of the end of the current fiscal year.. Expenditures generally are recorded when a liability
is Incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to
compensated absences and claims and judgments, are recorded only when payment Is due.
42
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered
susceptible to accrual and so have been recognized as revenues of the current fiscal period for the govemmental
funds. All other revenue items are considered to be measurable and available only when cash is received by the
government. '
D. Assets, liabilities, and Net Assets or Equity
1. Deposits, pooled cash, and Investments
Investments with original maturities of three months or less are considered to meet the definition of cash equivalents.
The majority of the investments in which the City's fiJnds have equity are held by the City's consolidated pool of cash and
investments. The City utilizes the consolidated cash pool to account for cash and investments of all City funds other than
those that are required by ordinance to be physically segregated. The consolidated cash pool concept allows each
participating fund to benefit from the economies of scale and improved yield that are inherent to a larger Investment pool.
Formal accounting records detail the individual equities of the participating funds. The cash pool utilizes a single
checking account for all City receipts and disbursements.
Since fund equities In this cash management pool have the general characteristics of demand deposits in that additional
funds may be deposited at any time and also funds may be withdrawn at any time without prior notice or penalty, each
fund's equity account is considered a cash equivalent regardless of the maturities of investments held by the pool.
All individual fund cash equity in a deficit (overdraft) position with respect to the consolidated cash pool is reclassified
at year-end to short-term interfund payables to the Capital Improvement Fund. The Capital Improvement Fund is the
fund selected by management to reflect the offsetting interfund receivables In such cases.
The City has an agreement with Its depository bank to provide that all excess cash is swept daily and automatically
into an overnight money market account which pays interest at 14 basis points (0.14%) less than the daily federal
funds rate (1.75% at September 30, 2002), with no requirement for a minimum compensating balance. This account
is collateralized through the State of Florida Public Deposits Program.
Under City Charter and the current Investment Policy, adopted by the City Commission on September 7, 1995,
consolidated cash pool investments are limited to the following: United States Government Securities, Certificates of
Deposit in Local Banks, Repurchase Agreements, Savings Account in Local Banks, Federal Government Agency
Securities, Municipal Bonds (other than City of Clearwater issues), State of Florida Bonds, and Municipal Bonds
issue!:! by counties In Florida.
The City utilizes a very conservative investment philosophy when it invests its pooled cash funds In that the return of the
principal is more important than the return Qll the principal. The City does not actively trade its portfolio and generally
holds investments until maturity. Through the use of a Iaddered approach to maturities and by timing maturities to cash
needs, the City does not anticipate selling Investments to meet cash flow requirements.
Under the City's Investment Policy, a perfonnance measure standard has been established. The performance measure
chosen Is a weighted average of: the overnight interest rate; and three month, six month. one year, and three year
Treasury rates respectively. For the fiscal year ended September 30, 2002, the performance measure weighted average
is 2.20%. . The actual pooled cash earnings performance, before bank charges, was 4.85%.
Investments being held outside of the consolidated cash pool include escrowed debt service investments and
employee retirement Investments. Permissible escrowed debt service Investments are speciflOally defined In each
Individual debt Instrument, but generally follow the same limitations which apply to consolidated cash pool
investments. The City maintains four different employee retirement programs, and each one has its own list of
permitted investments. Generally, each plan allows the same type of investments as the consolidated cash pool, but
additionally allows some portion of its assets to be invested in stocks, bonds, and notes of corporations listed on one
or more of the recognized national stock exchanges.
43
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
2. Receivables andpayables
Activity between funds that are representative of lendinglborrowing arrangements outstanding at the end of the fiscal
year are referred to as either "due tolfrom other funds" (l.e. the current portion of interfund loans) or "advances
tolfrom other funds" (i.e. the non-current portion of lnterfund loans). All other outstanding balances between funds
are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities
and business-type activities are reported in the government-wide financial statements as "internal balances".
Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account
In applicable governmental funds to Indicate that they are not available for appropriation and are not expendable
available financial resources.
All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade. accounts receivable
less than 60 days are included In the trade accounts receivable allowance for uncollectibles at the five-year average
loss experience rate of 4.000k. Trade accounts receivable in excess of 60 days are reserved at 40%. The property
tax receivable allowance for uncollectibles is 10% of the current year portion of the receivable, and 30%,50%. 70%,
90%. and 95% for the receivable portions attributable to the prior five years respectively (f1SC8l2001 thru 1997), and
100% of the receivable attributable to fiscal years 1996 and prior.
Property tax revenue is recognized in the fiscal year for which the taxes are levied. provided the availability test is
met. In conformance with NCGA Interpretation No.3. Property taxes for the following fiscal year are levied by
commission action in September of each year.~ This levy is apportioned to property owners based on the previous
January 1 assessed values. Tax bills are mailed out on or about November 1, and the collection period rUns from
November 1 through March 31. On April 1, unpaid property taxes are considered delinquent and become a lien. Tax
certificates are sold in June for real property with delinquent taxes.
Since taxes are not collected prior to November 1, the City does not record revenue for advance collections.
Uncollected taxes receivable at year-end are recorded, with an appropriate allowance for estimated uncollectible
amounts. The net amount deemed to be collectible but not current (not expected to be collected within sixty days
after the close of the fiscal year) is shown as a deferred revenue in the appropriate fund. Additionally, taxes assessed
for the following fiscal year are recorded as a receivable and a deferred revenue In accordance with Governmental
Accounting Standards Board Statement No. 33.
All delinquent property taxes, except those levied specifically for the restricted purposes of financing activities
accounted for in the SpeCial Development Fund. are recorded In the General Fund. Property tax revenues are
recognized In the General Fund and the required transfers to the appropriate debt service or pension fund. are
recorded as operating transfers from the General Fund.
The City is permltted by State law to levy ten mills without referendum. Additional millage not SUbject to the ten mill
limitation Is authorized if approved by referendum. The tax rate of 5.5032 mills for the year ended September 30,
2002 was unchanged from the September 30, 2001 rate.
3. Inventories and prepaid items
Inventories of proprietary funds are stated at cost and valued on the first-in first-out (FIFO) basis. In governmental funds,
the maJority of Inventory items are accounted for under the purchases method. which provides that expenditures are
recognized when the inventory item is purchased. The only governmental fund inventory that is accounted for under the
consumption method is the General Fund inventory of Items for resale at the fishing pier. Under the consumption
method, the expenditure is recognized when the inventory item is sold (or consumed).
Certain payments to vendors reflect costs applicable to Mure accounting periods and are recorded as prepaid Items in
both government-wide and fund financial statements. .
44
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
4. Resbicted assets
Certain resources of the City's enterprise funds are classified as restricted assets. Restriqted assets include: Water and
Sewer improvement charges restricted by the authorizing OIdinances to the construction of additions and Improvements
to the water and sewer systems, and assets of the Water & Sewer Utility, Gas Utility, Stormwater UtDity, and Parking
System funds restricted under the provisions of authorizing ordinances for revenue bonds to the payment of future
revenue bond debt service, system construction, and renewals and replacements.
5, Capital assets
Capital assets, which Include properly, plant, equipment, and certain infrastructure assets, (e.g. roads, bridges, and
similar items) are reported in the applicable governmental or business-type activities columns in the government-wide
financial statements. However infrastructure assets are only reported for the current fiscal year. The City has chosen to
defer Implementation of retroactive infrastructure reporting to fiscal year 2005/2006 per the current year Implementation
of GASB Statement #34. Capital assets are defined by 1I1e City as assets with an initial individual cost 6f more than
$5,000 (amount not rounded) and an estimated useful life in excess of five years. Individual assets that cost less than
$5,000, but that operate as part of a network system, will be capitalized in the aggregate, using the group method, If
the estimated average useful life of the IndMdual asset is five years or more. Additionally, higher thresholds for
capitalization apply tQ the following categories: land Improvements, $50,000; buildings, building Improvements, and
utility systems, $100,000; and Infrastructure, $500,000. Capital assets are recorded at historical cost or estimated
historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the
date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend asset lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest Incurred
during the construction phase of capital assets of business-type activities is Included as part of the capitalized value of
the assets constructed. The total Interest expense Incurred by the City during the current fiscal year was $6,448,996.
Of this - amount, $160,073, $769,723, and $60,471 were included as part of the cost of capital assets under
construction in connection with stormwater, water & sewer, and gas system projects, respectively.
Property, plant, and equipment of the primary government, as well -as the component units, as applicable, are
depreciated using the straight-line method over the following estimated useful lives:
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Buildings & building improvements
Public domain Infrastructure
Utility system Infrastructure
Land improvements
Machinery & equipment
Vehicles
1 0-40
20-40
25-40
5-50
5-33
5-10
6. Compensated absences
It is the City's polley to permit employees to accumulate earned but unused vacation and sick pay benefits. Generally
employees may accumulate vacation time not exceeding 360 hours and sick leave not exceeding 1,560 hours. Upon
retirement from City service a qualified employee is paid for all vacation time not exceeding 360 hours and onE~..half of
accumulated unused sick leave not exceeding 1,560 hours (i.e. maximum pay-out of 780 hours). The City accrues for all
earned but unused vacation pay up to the "cap" of 360 hours, and the portion of unused sick leave est/mated to be
payable upon retirement. The current portion of compensated absences is the amount estimated to be used In the
following year.
7. Long-term obligations
In the government-wide fmancial statements, and proprietary fund types In the fund financial statements, long-term debt
and other long-term obligations are reported as nabiUties In the applicable governmental actMtles, business-type
45
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City of Clearwater, Florida
Notes to the Financial Statements r
September 30, 2002
activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are ~
deferred and amortized over the fife of the bonds using the straight-line method. Bonds payable are reported net of the
applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the
term of the related debt
In the fund financial statements, governmental fund types recognize bond premiums and. discounts, as well as bond
issuance costs, during the current period. The face amount of debt issued Is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt Issuances are .
reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures.
8. Fund equity
In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not
available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund
balance represent tentative management plans that are subject to change.
Note II - StewardShip, Compliance, and Accountability
A. Budgets and budgetary accounting
Annual budgets are legally adopted for the City's General Fund, the Special Development Special Revenue Fund, and
the Community Redevelopment Agency Special Revenue Fund.
The City of Clearwater observed the following procedures in establishing the budgetary data for the General Fund and
Special Development Fund, as reflected in the financial statements:
On June 15, 2001, the City Manager submitted to the Clearwater City Commission proposed budgets for the fiscal year
commencing October 1, 2001 and ending September 30, 2002. Public Hearings were held on September 6. 2001, and
September 20, 2001, at the Clearwater Commission Chambers to obtain cItlzen comments. On September 20, 2001,
official budgets were legally adopted by Ordinance No. 6842-01. Subsequent quarterly budget amendments were
adopted on April 4, 2002, (Ordinance 6956-02) and July 18,2002 (Ordinance 6995-(2). The flnal amended budget was
adopted October 3, 2002 (Ordinance 7009-02). The budget for. the Special Development Fund is adopted on a basis
consistent with GAAP, and appropriations lapse at year-end. Appropriations for open encumbered purchase orders at
year-end in the General Fund do not lapse, but rather continue until liquidated or otherwise cancelled by City
Commission action. On the General Fund budgetary comparison statements, actual expenditures have been adjusted to
include end-of-year encumbrances and to exclude beglnnlng-of-year encumbrances to provide for a meaningful
comparison. Except for the treatment of encumbrances and certain transactions relating to Interfund loans, the General
Fund Budget is adopted on a basis consistent with GAAP, and all non-encumbered appropriations lapse at year-end.
The level of budgetary control established by the legislative body, the level on which expenditures may- not legally
exceed appropriations, is the indMdual fund. In accordance with provisions of Ordinance 5025-90 and with Section
2.519(4) of the Clearwater Code, the City Manager may transfer part or all of any unencumbered appropriation
balance among programs within an operating fund, provided such action does not result in the discontinuance of a
program. Such transfers must be included In the next budget review presented to the City Commission. Upon
detailed written request by the City Manager, the City Commission may by ordinance transfer part or all of any
unencumbered appropriation balance from one fund to another.
As established by adminlstra~ve policy, department directors may transfer money from one operating code to another
within a program without a formal written amendment. Formal requests for budget amendments from department-directors are required for transfers in capital expenditures, transfers, and reserves. Thus, certain object classifications
within departmental and/or program budget appropriations are subject to administratively imposed controls, In
addition to the legal controls imposed by City Commission action described above.
The annual budget for the Community Redevelopment Agency Is adopted by the trustees of that agency in accordance
with state law. The current year budget was offICially adopted on June 18, 2001. The budget Is adopted on a basis
consistent with GAAP, the level of budgetary control Is the total fund, and appropriations lapse at year-end.
46
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
Budget. amounts presented in the accompanying financial stat~ments reflect all amendments adopted by the City
Commission and the govemlng boards of component units. All amendments were adopted In conformance with legal
requirements. Individual amendments, as well as the net effects of all amendments during the fiscal year, were not
material In relation to the original appropriations for the governmen~ funds in the aggregate. - -
The Clearwater City Commission also adopts budgets for the Enterprise Funds, aU Internal Service Funds, the Capital
Projects Funds, the Special Programs Fund, and the Local Housing Assistance Trust Fund. Budgetary comparisons for
the Enterprise and Internal Service funds are not required by NCGA Statement No. 1 for the general purpose financial .
statements and are not Included in this report. Budgets for the Capital Projects Funqs, the Special Programs Fund, and
the Local Housing Assistance Trust Fund are adopted on a multi-year completed program basis, where budgetary
appropriations do not lapse at year-end, but may extend across two or more fiscal years. A comparison of annual results
with these budgets would not be meaningful and is therefore not included In this report.
All City Commission adopted bUdgets are integrated into the formal accounting system to allow for monthly
comparison of projected and actual experience in all funds for which budgets are adopted.
The annual budget for the Clearwater Downtown Development Board (DOB), a discretely presented component unit
of the City, Is adopted by the members of that board in accordance with state law. The current year budget was
officially adopted on September 13, 2001. Separate financial statements for the DDB can be obtained from the City's
Finance Department located at 100 S. Myrtle Avenue, Clearwater, Florida.
B. Excess of expenditures over appropriations
The Community Redevelopment Agency Special Revenue Fund had interfund "transfers out" in excess of appropriations
in the amount of $210,939 due to un budgeted transfers to capital projects funds.
C, Re-statement of prior year balances
The following require restatement of prior year balances. AU restatement amounts are detailed In the table below.
1 r
I i 1. Elimination of contributed capital category
The implementation of Governmental Accounting Standards Board Statement No. 34 (GASB 34) required the
elimination of the contributed capital equity category and the reclassification of prior contributed capital balances as
net assets.
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2. Adjustment to fixed asset balances due to new capitalization policy
Effective October 1, 2001, the City implemented a new capitalization policy that included increased thresholds for
capitalization of fixed assets. This required a prior period restatement to reflect a decrease in general government
capital assets and proprietary fund net assets for the previously capitalized assets that do not meet the revised
capitalization thresholds.
! ; 3. Adjustments to general fixed asset balances per GASB 34 Implementation
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The City's current year Implementation of GASa 34 resulted in a comprehensive reconciliation of fixed asset activity
for prior years. this reconciliation process identified buildlngs and Improvements other than buildings that
erroneously remained In the fixed asset balances though the assets were previously disposed of. The balances have
been adjusted to reflect the deletion of these fixed assets.
4. Elimination of expendable trust fund
The implementation of GASB 34 eliminated the fiduciary fund category expendable trust funds. In prior years the City
reported an expendable trust fund, the Rehabilitation Loan Fund. The City has merged the Rehabilitation Loan Fund
net assets with the Special Programs Special Revenue Fund for current year reporting in compliance with the GASS
34 requirements.
47
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
Note III - Detailed Notes on All Funds
A. Deposits and Investments
Investments with original maturities of three months or less are considered to meet the definition of cash equivalents.
The majority of the Investments in which the City's proprietary funds have equity are held by the City's consolidated pool
of cash and Investments. Since fund equftles In this cash management pool have the general characteristics of demand
deposits In that additional funds may be deposited at any time and also funds may be withdrawn at any time without prior
notice or penalty, each fund's equity account Is considered a cash equivalent regardless of the maturities of investments
held by the pool. Funds which have deficit (overdraft) positions within the consolidated pool report the deficits as
Interfund payables to the City's Capital Improvement Fund.
Governmental Accounting Standards Board (GASB) Statement Number 3 requires certain disclosures for deposits and
investments, Including managemenfs determination of custodial credit risk, defined as follows:
For deposits, the bank balance must be categorized as follows:
Category 1: Insured or COllateralized with securities held by the City or Its agent in the City's name.
Category 2: Collateralized with securities held by the pledging financial institution's trust department or agent in
the City's name.
Category 3: Uncollateralized.
For investments other than deposits, the following categories apply:
Category 1: Insured or registered, or held by the City or its agent in the City's name.
Category 2: Uninsured and unregistered, held by the counterparty's (purchasing agenfs) trust department or
. agent in the City's name. .
Category 3: Uninsured and unregistered, held by the counterparty, its trust department, or agent, but not in the
City's name.
As described above, the City's depository banking agreement provides for the investment of all excess cash daily into
a collateralized repurchase agreement, whereby all deposits deemed to be collected are automatically deposited.
City deposits consist of relatively small cash balances held by Debt Service Trustees and Employee Retirement
Custodians. The bank balances equal the carrying amount for these deposits, and managernenfs classlflcatlon of
custodial credit risk is indicated in the table below. Because these amounts are part of the trustee's and custodian's
composite account, they are c1asslfled along with investments on the balance sheet.
Managed mutual funds and guaranteed investment contracts are not susceptible to classification by risk category and
are disclosed but not categorized pursuant to GASB Statement 3. Management has classified all other investments
into Category 1, with the exception of certain employee retirement investments that are being held by the financial
institution also serving as investment manager, and certain escrowed debt service investments that are being held by
the financial institution from which they were purchased. The carrying value for all Investments is fair value in
accordance with GASB Statement 31.
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49
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
Summary of deposits and investments, including managemenf~ assessment of custodial credit risk, follows:
Investment
Credit
Risk Category
Cash On Hand and In Banks
Consolidated Cash Pool and Component
Unit Deposits and Investments:
Cash in Banks
U.S. Treasury Notes and Bills
U.S. Agency Securities
Money Market Mutual Fund
Accrued Interest on Investments
Less OutstandIng Checks at 9130/02
Total Cash Pool and Component Unit Equity ..
(includes Fiduciary funds cash pool assets)
III. Construction and Debt Service Deposits
and Investments:
U.S. Treasury Notes and Bills
Corporate Bonds
I.
II.
IV. Employee Retirement Deposits and Investments:
Money Market Accounts
Domestic Equity Securities
U.S. Government Bonds
Domestic Corporate Bonds
Mortgage Backed Bonds
Asset Backed Bonds
International Equity Mutual Fund
Stock Mutual Fund
Total Employee Retirement Investments
Total Deposits and Investments, All Funds
$
Fair Deposit Credit
Value Risk Category
48,847 1
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bank balance was $3,328,032. The carrying amount of the component unit's deposits totaled $143,104, while 1he
bank balance was $152,392.
B. Receivables
3,480,424
25,516,841
203,937,574
20,099,804
2,260,040
Jti,355,OOl )
,939,682
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Receivables as of year end for the City's indMdual major funds and nonmajor, intemal service. and fiduciary funds in the
aggregate, including the applicable allowances for uncollectible accounts, are segregated on the fund financial
statements. The Mortgages, Notes, and Other Loans amount of $8.915,947 reported on the Governmental Funds
balance'sheet includes $8,491 ,986 of Iong-tenn loans receivable that are not expected to be collected in the next year.
2.916,713
873,986
3,790,699
17,926,696 1
136,428,021
119.758,246
40,368,959
11,302,973
9,453,117
29,449,239
32,227,992
396.915,243
:Ii 651,694,471
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City of Clearwater, Florida
rr Notes to the Financial Statements
I i September 30, 2002
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Governmental Activities:
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I , Land $ .36,766,859 $ 4,319,194 $ 172.986 $ 40,913,067
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< ) . Construction in progress 759,064 10,791,711 11,550,775
,. r Total capital assets. not being depreciated 37,525,923 . 15,110,905 172,986 52,463.842
~ Capital assets, being depreciated:
,
l ; Buildings 38,519,374 1.751,332 2,154.461 38,116,245
Improvements other than buildings 52,055,559 399,627 52,455,386
! 1 MaChinery and equipment 31,925,006 2,385,417 1,137,245 33,173,178
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Total capital assets, being depreciated 122,499,939 5,612,823 3,291,706 124,821.056
f ~ Less accumulated depreoiation for:
t ~ Buildings (10.692,981 ) (1,244,155) (1,458,975) (10,478,161 )
Improvements other than buildings (12,402,412) (2,608,989) (15,011,401 )
f 1 Machinery and equipment (20,252,653) (1,999,131) (906,702) (21,345;082)
, Infrastructure
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I' Total capital assets, being depreciated, net 79,151,893 (239,452) 926,029 77,986,412
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Balance Increases Decreases Balance
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~ r Construction in progress 21,800,312 27,703,743 2,298,948 47,205,107
, , T otel capital assets, not being depreciated 32.783.234 36,828.659 2,528,236 67,083,657
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Buildings 23,047,480 387.760 23.435.240
r f Improvements other than buildings 287,953,866 6,201,491 10,388 294,144,969
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Total capital assets, being depreciated 356,884,620 11,784,927 5,855,253 362,814.294
( 1 Less accumulated depreciation for:
~ ! Buildings (6,470,739) (7,467.364)
L,l Improvements other than buildings (98,191,373) (105,564,706)
Machinery and equipment ~30,392,045l (29, 145,090~
f I Total accumulated depreciation ( 35,054,157 (142,177,160
t i Total capital assets, being depreciated, net 221,830,463 220,637,134
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51
City of Clearwater, Florida
Notes to the Financial Statements
September 30, '2002
Depreciation expense was charged to functions I programs of the primary government as follows:
Governmental activities:
General government
Public safety
Physical environment
Transportation, Including depreciation of general infrastructure assets
Culture and recreation
Capital assets held by the government's governmental internal service funds are
charged to the various functions based on their usage of the assets
Total depreciation expense - governmental activities
$ 888,286
1,173,888
43,645
2,200,955
1,526,479
19,021
$ 5,852,274
Business-type activities:
Water and sewer utility
Gas utility
SoUd waste utility
Stormwater utility
Other
Capital assets held by the government's business-type intemal service funds are
charged to the various activities based on their usage of the assets
Total depreciation expense - business-type activities
Construction commitments
At September 30, 2002, material outstanding construction commitments were as follows:
f.r9im<t Fund
Community sports complex Capltallmprovements
Community sports complex Spring Training Facirlly Revenue Bonds Construction
New main library Capital projects
New main library 2001 Sales Tax Revenue Bonds Construction
Water treatment facilities 2002 Water and Sewer Revenue Bonds Construction
Sewer system pump station replacements 2002 Water and Sewer Revenue Bonds Construction
Town Lake 2002 Stonnwater Revenue Bonds Construction
Kapok flood resolution 2002 Stonnwater Revenue Bonds Construction
Rre aerial equipment Capital Improvements
Traffic calming Capital Improvements
Beach streetscape Capital Improvements
North Greenwood corridor enhancements Capital Improvements
Long Center expansion Capital Improvements
Water system renewal & replacement Capltallmprovements
Total Construction Commitments
52
$ 4,935,681
1,2n,342
220,499
9n,.183
1,304,825
3,620,735
$ 12,336,265
Construction
Commltments
Outstandill9
$ 6,290,950
11 ,209,050
8,209,395
7,527.000
4,813.133
1.663.684
1,635,948
1.596,613
879,011
554,969
990,579
789,an
989,600
744.756
$ 47 894 565
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
Contributed Property: As of September 30,2002, water lines having an estimated cost of $5,141,044, sanitary sewer
lines having an estimated cost of $7,754,629, storm sewers having an estimated cost of $3,919,827, and land (for water
quality and habitat restoration) having an estimated cost of $922,900 are reflected in the balances of the proprietary fixed .
assets.
Assets Recorded Under Capital Leases: Assets recorded under capital leases and the accumulated amortization
thereon (for proprietary fund assets) have been included under the appropriate categories in the summaries and
schedules presented previously in this note in combination with similar Information for owned assets.
D. Interfund receivables, payables, and transfers
1. Interfund Balances
As mentioned In Note (1 C), Individual fund deficits in the consolidated cash pool have been reclassified as of
September 30, 2002, as Interfund loans from the Capital Improvement Fund, which was selected by management for
this purpose. This reclassification results In a corresponding reduction in the cash equity in the Capltallmprovemenl
Fund, offset by an increase in interfund receivables.
The amounts of the reclassified cash pool deficits, as well as other individual fund intertund payable and receivable
balances (current), at September 30, 2002, were as follows:
Fund
General Fund
Special Revenue Fund:
Community Redevelopment Agency
Capital Project Fund:
Capital Improvement
Enterprise Funds:
Water and Sewer Utility
Gas Utility
Solid Waste Utility
Recycling Utility
Stormwater Utility
Marine and Aviation
Parking System
Internal ~ervlce t-unas:
Garage
Administrative Services
General Services
Central Insurance
Deficit in
Pooled Cash
$
Other
Receivables
$
264,514
$
6,084,580
5,733,792
1,685,872
1 ,007,072
2,536,612
989,073
9,114,166
179,526
295,321
304,507
627,593
28,618,774
$
264,514
53
Deficit in
Pooled Cash
$
264,514
$ 264,514
Other
Payables
$ 24,925
134,966
28,016.807
82,474
59,602
300,000
$ 28,618,774
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
Indlvlduallnterfund advances (long-term) at September 30, 2002, follow:
Advances to Advances from
Fund Other Funds Other Funds
General Fund $ 2,000,000 $ 49,850
Special Revenue Fund:
Community Redevelopment Agency 492,524
Enterprise Funds:
Solid Waste Utility 824,737
Marine and Aviation 119,204
Parking System 4,000,000
Internal Service Funds:
Administrative Services 271,070
Central Insurance 3,757,385
$ 5,757,385 $ 5.757,385
Descriptions of long-term interf~nd loans:
An lnterfund loan at the cash pool interest rate from the Central Insurance Fund to the Community Redevelopment
Agency Fund for the purchase of a land parcel for resale to a developer. The initial loan amount was $1 ,171,328 and
commenced during the fiscal year ended September 30, 2000.
An internal twenty year loan from the Central Insurance Fund to the Solid Waste Utility Fund for the construction of
administrative. container maintenance, and truck wash facilities, in addition to a paved yard for use by all cost centers of
the Solid Waste Fund. The loan provides for 20 annual payments of $82,474 together with interest at the cash-pool rate,
due on September 30 of each year, commencing September 30, 1994. The cost of the construction was $1,686,759.
An internal five-year construction loan in the amount of $298,011 from the Central Insurance Fund to the Marine and
Aviation Fund for construction of two aircraft T -hangars and one corporate hangar at Clearwater Airpark. The loan
provides for payments due on September 30 of each year, bearing interest at the cash-pool interest rate and
commencing September 30, 2001.
Internal loans of $2,000,000 each from the General Fund and the Central Insurance Fund, at the cash-pool interest
rate, to the Parking Fund to fund a contingency reserve per the terms of a development agreement. The Parking
Fund is contributing an additional $2,000,000 to fund a total contingency of $6.000,000 for the repurchase of.a land
parcel if the proposed development does not occur by March 2006. The loans commenced on September 30, 2002. .
An internal five-year loan from the Central InSurance Fund to the Administrative Services Fund for the purchase and
installation of a new Utility Customer Service system. The loan provides for fIVe annual payments of $300,000 plus
Interest at the cash-pool rate, due on September 30 of each year. The loan commenced on September 30, 2000.
54
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
2, Interfund transfers
Interfund transfers for the year ended September 30, 2002, conslsted of the following:
Transfers to General Fund from:
Capital Improvements Fund $ 41,199
Water & Sewer Utility Enterprise Fund 1,557,250
Gas Utility Enterprise Fund 1,016,354
Solid Waste Utility Enterprise Fund 660,340
Stormwater Utnity Enterprise Fund 216,240
Nonmajor governmental funds 906,060
Nonmajor enterprise funds 231 ,490
Total 4,628,933
Transfers to Special Development Fund from: 100,000
Capital Improvements Fund
Transfers to Capital Improvements Fund from:
General Fund 2,618,810
Special Development Fund 11,071,705
Nonmajor governmental funds 214,905
Total 13,905,420
Transfers to Nonmajor governmental funds from:
General Fund 3,152,117
Special Development Fund 1,060,593
Capital Improvements Fund 132,330
Gas Utility Enterprise Fund 4,709
Nonmajor governmental funds 259,668
Internal service funds 80,000
Total 4,689,417
Transfers to Stonnwater System Enterprise Fund from:
Special Development Fund 1,584,060
Nonmajor Q9vemrnental funds 7,000
Total 1,591,060
Transfers to Nonmajor enterprise funds from:
General Fund 178,670
Special Development Fund 1,500,000
Total 1,678,670
Transfers to Internal service funds from:
General Fund 214,401
Capital Improvements Fund 138,811
Water & Sewer Utility Enterprise Fund 412,529
Gas Utility Enterprise Fund 36,775
Stormwater Utility Enterprise Fund 231,677
Intemal service funds 25,683
Total , ,059,876
T alai Intertund transfers $ 27,653,376
Transfers are primarily used to 1) transfer revenues that have been collected In the required fund per state law to the
funds and activities that state law allows for expenditures; 2) transfer of "payment In lieu of taxes- contributions from the
utility funds to the General Fund; 3) transfer funding from governmental funds to debt service and capltallmprovemeilts
funds; and 4) transfer matching funds from the General Fund to various grant programs.
55
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
E. Leases
The City purchases various equipment for governmental and business-type activities under lease purchase agreements. .
Obligations under lease purchase agreements are recorded at the present value of their future minimum lease payments
as of date of inception.
Leased equipment which has been capitalized as of September 30, 2002:
Governmental Business-type
Activities Actlvltles
Equipment
Less: Accumulated Depreciation
Total
$ 6,218,052
(1,981,773)
$ 4,236,279
$ 16,246.635
(5.428,206)
$ 10,818.429
The future minimum lease payments under capital lease purchase agreements are as follows as of September 30, 2002:
Govenvnental Business-type
year EndIng Sept 30 Activities Activities
2003 $ 1,473,548 $ 3,428,772
2004 1,371,457 2,901,837
2005 906,510 2,431,294
2006 414,246 1,481,610
2007 69,765 601,116
2008 1,326 31,025
4,236,852 10,875,654
Deduction of the amount of ir11Med interest necessary to
reduce net minimum lease payments to present value (297,683) (783.576)
$ 3,939,169 $ 10,092,078
The City also leases personal computers under a three-year operating lease that is cancelable on an annual basis. Total
lease payments for fIScal year ended September 30, 2002, totaled $134,109.
56
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
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1. Revenue Bonds
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$46,445,000 Infrastructure Sales Tax Revenue Bonds, Series 2001, with $5,100,000 of
principal due December 1, 2002, to $6,620,000 due December 1, 2009; interest at
4.00% to 5.00%.
$11,470,000 Improvement Revenue Refunding Bonds. Series 2001, due in annual
installments of $355,000 due February 1, 2003, to $820,000 due February 1, 2026;
interest at. 3.00% to 5.25%. $104,042 of the bonds outstanding as of September 30,
2002, are reported in the Parking System Enterprise Fund per the financing of parking
system assets. Please reference the revenue bonds for business-type activities below.
$14,810,000 Spring Training Facility Revenue Bonds, Series 2002, due in annual
Installments of $165,000 due March 1, 2003, to $470,000 due March 1, 2031, with a
maximum principal of $845,000 due March 1, 2021; interest at 2.00% to 5.38%.
Total revenue bonds for govemmental actMtIes
$53,445,000 Water and Sewer Refunding Revenue Bonds, Series 1993; due in annual
installments of $5,430,000 due December 1, 2002, to $295,000 due December 1, 2018,
with a maximum principal of $5,715,000 due December 1, 2003; interest at 5.00% to
5.63%.
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$43,642,690 Water and Sewer Refunding Revenue Bonds, Series 1998, capital
appreciation bonds with total maturity amount of $81,765,000; $460,000 of capital
appreciation serial bonds due December 1, 2004, to $5,780,000 due December 1, 2018,
with a maximum principal of $5,875,000 due December 1, 2011; Interest at 4.20% to
5.22%. The balance outstanding as of September 30, 2002, includes capital appreciation
bond accreted Interest of $8,659,091.
$58,680,000 Water and Sewer Revenue. Bonds, Series 2002, due in annual installments
of $860,000 due December 1, 2003, to $3,695,000 due December 1, 2032; Interest at
3.25% to 5.00%.
$8,815,000 Gas System Revenue Bonds, Series 1996A, due In annual installments of
$90,000 due September 1, 2003, to $395,000 due September 1, 2021; Interest at
4.90% to 5.80%.
$14,605,000 Gas System Revenue Bonds and Gas System Revenue Refunding Bonds,
Series 1997 A & Series 19978, due In annual installments of $505,000 due September 1,
2003, to $2,065,000 due September 1, 2027; interest at 4.20% to 5.30%.
$8,020,000 Gas System Revenue Refunding Bonds, Series 1998; due In annual
Installments of $35,()()() due September 1, 2003, to $50,000 due September 1, 2013;
interest at 3.65% to 4.700k: additional annual installments of $595,000 due September 1,
2014, to $920,000 due September 1,2023; interest at 4.70% to 5.00%.
$7,500,000 Stormwater System Revenue Bonds, Series 1999, with $125,000 of
principal due November 1, 2002, to $490,000 due November 1, 2029; interest at 4.00% to
5.75%.
$24,685,000 Stormwater Revenue Bonds, Series 2002, due in annual Installments of
$440,000 due November 1, 2003, to $1,530,000 due November 1, 2032; interest at
3.00% to 5.00%.
$11,470,000 Improvement Revenue Refunding Bonds, Series 2001, due in annual
installments of $110,000 due February 1, 2002, to $820,000 due February 1, 2026;
interest at 3.00% to 5.25%. A total of $11.255,958 of the bonds has been allocated to the
general government actMties per above.
57
$ 46,445,000
11,255,958
14.810.000
72.510.958
19,435,000
52,301,781
58,680,000
8,360,000
12,375,000
7,895,000
7,275,000
24,685,000
104.042
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
Total revenue bonds for business-type activities
Total revenue bonds
191.110.823
5263.621.781
2. . Restrictive covenants and collateral requirements
The Infrastructure Sales Tax Revenue Bonds are limited obligations of the City payable solely from and secured by a .
'ien upon and a pledge of the City's share of the proceeds derived by Pinellas County from the levy and collection of
the one~cent discretionary Infrastructure sales tax pursuant to Section 212.055(2), Florida Statutes, as amended (the
Sales Tax Revenues) and, until applied in accordance with the provisions of the Ordinance, all moneys, including
Investments thereof, in the funds and accounts established by the Ordinance, other than the Rebate Fund (collectively
the "Pledged Revenues"). The pledge of the Sales Tax Revenues does not constitute a lien upon any properly of the
City. The.covenants of the ordinance authorizing the bonds Include, among other things, an obligation of the City to
do all things necessary on Its part to continue the levy and collection of the Sales Tax Revenues .at the maximum rate
permitted by and in compliance with Chapter 166, Part II, Aorida statutes, as amended, Chapter 212, Part I, Florida
Statutes, as amended, and other applicable provisions of law (the -Act"), and any successor provision of the law. The
City further covenants to proceed diligently to perform legally and effectively all steps required on Its part In the levy
and collection of the Sa/es Tax Revenues and shall exercise all legally available remedies to enforce such collections
now or hereafter available under State law.
The Improvement Revenue Refunding Bonds are limited obligations of the City payable solely from and secured by a
lien upon and a pledge of the Public Service Tax as authorized by Section 166.231, Florida Statutes, as amended.
The pledge of the Public Service Tax does not constitute a lien upon any property of the City. The covenants of the
ordinance authorizing the bonds include, among other things, an obligation of the City to do all things necessary on its
part to continue the levy and collection of the Public Service 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. The Public Service tax is a revenue of the General Fund.
The Spring Training Facility Revenue Bonds are special, limited obligations of the City, payable solely from and
secured by a lien upon and pledge of the (i) payments received by the City from the State of Florida pursuant to
Section 212.20, Florida Statutes (State Payments); and (Ii) payments received by the City from Pinellas County,
Florida pursuant to the Interlocal Agreement dated December 1, 2000 (County payments). . The pledge of the State
Payments and County Payments does not constitute a lien upon any properly of the City. Furthennore, neither the
City, Pinellas County, the State of Florida, nor any political subdMsion thereof has pledged its faith or credit or taxing
power to the payment of the bonds.
The Water and Sewer Refunding Revenue Bonds, Series 1993 and Series 1998, and the Water and Sewer Revenue
Bonds, Series 2002, are limited obligations of the City payable solely from and secured by a lien upon and pledge of
the net revenues of the City's water and sewer system (System). The pledge of the System's net revenues does not
constitute a lien upon any properly of the City. The covenants of the ordinances authorizlng the bonds include,
among other things, an obligation of the City to fIX and maintain such rates, and collect such fees. rentals and other
charges for the services and facilities of the System and revise the same from time to time whenever necessary which
will provide gross revenues In each fiscal year sufficient to pay the cost of operation and maintenance of the system;
one hundred fifteen percent (115%) of the bond service requirement becoming due in such fiscal year on the
outstanding bonds; plus one hundred percent (100%) of all reserve and other payments required to be made
pursuant to the ordinances authorizing the bonds. The City further covenants that such rates, fees, rentals and other
charges will not be reduced so as to render them insufficient to provide gross revenues for such purpose.
The Gas System Revenue Bonds, Series 1996A; Gas System Revenue Bonds Series 1997 A; Gas System Revenue
Refunding Bonds, Series 1997B; and Gas System Revenue Refunding Bonds, Series 1998;'are limited obligations of
the City payable solely from and secured by a lien upon and pledge of the net revenues of the City's gas system
(System). The pledge of the System's net revenues does not constitute a lien upon any properly of the City. The
covenants of the ordinances auUlorizing the bonds Include, among other things, an obligation of the City to fix,
establish, revise from time to time whenever necessary, maintain and collect always, such fees, rates, renta/sand
other charges for the use of the product. services and facilities of the System which will always provide revenues in
each year sufficient to pay. and out of such funds pay, 1000k of the cost of operations and maintenance of the system
58
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City of Clearwater, Florida
Notes to the Flnancial.Statements
September 30, 2002
in such year and all reserve and other payments provided for in the ordinances authorizing the bonds, along with one
hundred twenty five percent (125%) of the bond service requirement due In such year on all outstanding bonds.
The Stormwater System Revenue Bonds, Series 1999; and the Stormwater Revenue Bonds, Series 2002; are limited
obligations of the City payable solely from and secured by a lien upon and pledge of the net revenues of the City's
stormwater management system (System). The pledge of the System's net revenues does not constitute a lien upon
any property of the City. The covenants of the ordinances authorizing the bonds include, among other things, an
obligation of the City to fix. revise from time to time whenever necessary, and maintain and collect always such fees,
rates, rentals and other charges for use of the products, services, and facnities which will always provide net revenues
in each year sufficient to pay one hundred fifteen percent (115%) of the bond service requirement becoming due In
such fiscal year on the outstanding bonds. The City further covenants that such rates, fees, rentals and other
charges will not be reduced so as to render them Insufficient to provide revenues for such purpose. .
Annual debt service requirements to maturity for revenue bonds are as follows:
Revenue Bonds
Govammental Activities Business-type Activities
Principal Interest P~jncipal Interest
$ 5,596,132 $ 3,019,735 $ 3,690,878 $ 8.430,983
6,065,179 2,796,166 5,185,012 8,798,192
6,273,477 2,534,986 5,400,129 8,546,648
6,491,170 2,235,993 5,661,286 8,242,209
6,685.000 1,945,793 5,908,385 8,019,911
23,520,000 6,033,086 33,329,833 36,197,155
5,355,000 3,936,689 41,952,497 27,589,244
6,195,000 2,482,086 33,642,803 17,656,493
4,580,000 1,083,244 27,365,000 11.161,214
1,750,000 194,038 23,750,000 4,279,460
5,225,000 128,713
$72,510,958 $26,261,816 $191,110,823 $139.050,222
Year Ending
September 30
2003
2004
2005
2006
2007
2008-2012
2013-2017
2018-2022
2023-2027
2028-2032
2033-2037
Totals
3. Advance refunding of bonds
On October 15, 2001, the City issued $11.47 million In Improvement Revenue Refunding Bonds, Series 2001 with an
average interest rate of 4.9 percent to advance refund $415,000 of outstanding PUblic Service Tax and Bridge Revenue
Bonds, Series 1985, with an average interest rate of 9.1 percent; and to advance refund $9.77 million of outstanding
Improvement Revenue Bonds, Series 1995. with an average interest rate of 5.9 percent. The net proceeds of $10.8
million, (after payment of $233,000 in underwriting fees, insurance, and other issuance costs and $867,000 deposited to
the Reserve Fund) plus an additional $395,000 of debt service reserve transfers from refunded bonds, were deposited
in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1985 and 1995 Series
bonds. As a result, the Public Service Tax and Bridge Revenue Bonds, Series 1985, and the Improvement Revenue
Bonds, Series 1995, are considered to be defeased and the liability for the bonds has been removed from the
government-wide statement of net assets.
The reacquisition price exceeded the net carrying amount of the old debt by $445,844. This. difference, reported In the
accompanying financial statements as a deduction from bonds payable,ls being charged to. operations through the year
2025 using the effective-interest method. The City completed the advance refunding to reduce its total debt service
payments over the next 24 years by $958,000 and to obtain an economic gain (difference between the present values
of the old and new debt service payments) of $460,000.
In prior fiscal years, the City entered into various advance-refunding transactions related to certain of its bonded debt.
A portion of the proceeds of the refunding bond Issues was placed in trust and used to purchase securities of the United
States Government and related agencies at various interest rates and maturilies sufficient to meet all debt service
requirements of the refunded debt, of which $64,040,000 was outstanding at September 30. 2002. These assets are
administered by trustees and are restricted to use for retirement of the refunded debt. The liability for the refunded
bonds and the related securities and escrow accounts are not Included In the accompanying financial statements as the
City defeased its obligation for payment of the refunded bonded debt upon completion of the refunding transactions.
59
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
~ -~
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The following schedule reflects the outstanding principal on refunded bonds as of September 30:
New debt issues during the current fiscal year, other than debt refundings described above, are described below.
On July 1, 2002, the City Issued $58.680,000 Water and Sewer Revenue Bonds, Series 2002, to pay for the costs of
expansion of the City's water and sewer system. These bonds were issued at an average interest rate of 4.67% with a
final maturity of December 1, 2032.
On September 1, 2002, the City Issued $24,685,000 Stonnwater Revenue Bonds, Series 2002, to pay for the costs of
capital improvements to the City's stormwater management system. The bonds were Issued at an average rate 4.32%
with a final maturity of November 1, 2032.
On September 1, 2002, the City issued $14,810,000 Spring Training Facility Revenue Bonds, Series 2002. to finance a
portion of the cost of the acquisition, construction, rehabilitation, and equipping of a spring training facility to be used by
the Philadelphia Phillies major league baseball team. The bonds were issued at an average rate of 4.49% with a final
maturity of March 1. 2031.
Governmental Activities:
Utility Revenue Certificates, 1975
Utilities Tax and Bridge Revenue Bonds, Series 19n
Utilities Tax Bonds, Series 1977
Special Obligation bonds, Series, 1978A
Utility Revenue Bonds, 1978
Public Service Tax and Bridge Revenue Bonds, Series 1985
Community Redevelopment Agency Bonds, Series 1986
Improvement Revenue Bonds, Series 1995
Total Governmental Activities
Business-type Activities:
Public Service Tax and Bridge Revenue Bonds, Serles 1985
Water and Sewer Revenue Bonds, Serles 1988A
Water and Sewer Revenue Bonds, Series 1988B
Gas System Revenue Bonds 1991A
Gas System Revenue Bonds 1994A
Total Business-type Activities
Total
4. New debt issues
60
$ 1,200.000 ; !
1,370.000 . .
2,380,000
20,000 ~~ ~
13,490,000
521,600
1,030,000 ! ,
9,580,000
29,591,600 i 1
793,400 ~ ~
15,320,000 .\ J
4,705,000
5,520,000 . ,
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8.110,000 < j
34.448,400
$ 64,040,000 I
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
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G. Segment Information
Generally accepted accounting principles. require segment disclosure for nonmajor enterprise funds with revenue bonds
outstanding. The following condensed statements are presented for the Parking System enterprise fund to satisfy this
disclosure requirement.
Condensed Statement of Net Assets
Assets:
CUrrent assets
Due from other funds
Restricted assets
Net pensJon asset
Capital assets
Total assets
Liabilities:
Current liabilities
Currentliabllities payable from restricted assets
Noncurrent liabilities
Revenue bonds payable
Notes, loan pool agreement and acquisition contracts
Advances from other funds .
Total noncurrent liabilities
Total liabilities
Net assets:
Invested in capital assets (net of related debt)
Restricted assets
Unrestricted
Total net assets
Parking
System
2,467,698
1,614,166
7,525,860
143,086
3,552,786
15,303,596
255,199
16,437
76,163
411,401
4,000,000
4.487.564
4,759,200
3,065,222
152,494
7,326,680
$ 10,544,396
Condensed Statement of
Revenues, Expenses, and Changes
in Net Assets
Operating revenues
Depreciation expense
Other operating expenses
. Operating Income
Nonoperating revenues (expenses):
Eamings on Investments
Interest expense
Other
Transfers in from other funds
Change in net assets
Beginning net assets, as restated
Ending net assets
Parking
System
$ 4,052,060
(785,050)
(2,241,976)
1,025,034
239,651
(31,597)
41,193
1,500,000
2,n4,281
7,nO,115
$ 10,544,396
$
Condensed Statement of Cash Flows
Net cash provided (used) by:
Operating activities $
Noncapital financing activities
Capital and related financing activities
InveSting activities
Net Increase (decrease)
Beginning cash and cash equivalents
Ending cash and cash equivalents $
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(2,155,655)
(311,975)
239,651
(859,959)
3,240,532
2,380,573
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
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H. Restricted assets
1, Water and Sewer Utility Fund
Assets in the Water and Sewer Utility Fund restricted for construction include:
Water Improvement charges, the use of which is restricted by the authorizing ordinance to the
construction of additions and improvements to the water system; assets remaining at
September 30, 2002, are:
Equity in Pooled Cash and Investments
Due from Other Funds
Sewer Improvement charges, the use of which is restricted by the authorizing ordinance to the
construction of additions and improvements to the sewer system; assets remaining at
September 30, 2002, are:
Equity In Pooled Cash and Investments
Due from Other Funds
Assets of the Water and Sewer Utility Fund restricted under the provisions of the ordinances
authorizing the issuance of Water and Sewer Revenue Bonds consisted of the following at
September 30, 2002:
Water and Sewer Revenue Bonds Debt Service:
Equity in Pooled Cash and Investments
Investments (U;S. Government Securities)
Accrued Interest Receivable on Investments
Water and Sewer Revenue Bonds Renewals and Replacements:
Equity in Pooled Cash and Investments
Due from Other Funds
Water and Sewer Revenue Bonds Construction:
Equity In Pooled Cash and Investments
Assets of the Water and Sewer Utility Fund restricted by agreement with other governmental entities
for improvements to the water system:
Due from Other Funds
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$ 931,637
513,135
3,519,883
601,827
15,557,592
2,916,713
86,196
8,224,696
2,428,013
28,999,149
4,601
Assets of the Water and Sewer Utility Fund representing Customers' Deposits and therefore
restricted, consisting entirely of Equity in Pooled Cash and Investments 1.888.655
Total restricted assets - Water and Sewer Utility Fund SS5.672 097
2. Gas Utility Fund
Assets in the Gas UtIlity Fund restricted under the provisions of the ordinance authorizing the issuance of revenue bonds
consisted of the following at September 30, 2002:
Gas SYStem Revenue Bonds
Debt Service:
Equity in Pooled Cash and Investments
Renewals and Replacements:
Equity in Pooled Cash and Investments
$175,161
300.000
S475.161
Assets of the Gas Utility Fund representing Customers' Deposits and therefore restricted, amounted to $1,169,119 at
September 30, 2002, consisting entirely of Equity in Pooled Cash and Invesbnents.
3. Solid Waste Utility Fund
Restricted assets in the Solid Waste Utility Fund designated for construction represent customer deposits in the amount of
$764,321 at September 30, 2002, and consisted entirely of Equity in Pooled Cash and Investments.
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63
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
4. Stormwater Utility Fund
Assets in the Stormwater UtIlity Fund restricted under the provisions of the ordinances for the
issuance of revenue bonds consisted of the following at September 30, 2002:
Stormwater Svstem Revenue Bonds - Series 1999
Debt Service: Equity in Pooled Cash and Investments
Construction: Equity in Pooled Cash and Investments
Stormwater Revenue Bonps - Series 2002
Debt Service: Equity In Pooled Cash and Investments
Construction: Equity in Pooled Cash and Investments
Contributions from the Special Development Fund of proceeds from the Local Option Sales Tax,
designated as Penny for Pinellas, restricted by voter referendum and terms of interlocal
agreements between Pinellas County and the municipalities receiving tax proceeds to the
construction of specific infrastructure capital improvements; assets remaining at September 30,
2002. are:
Due From Other Funds
Contributions from the Special Development Fund include proceeds restricted by City Commission
pOlicy for improvements to the stormwater drainage system within the City; assets remaining at
September 3D, 2002, are:
Due From Other Funds
5. Parking System
Assets in the Parking System restricted under the provisions of the ordinance authorizing the
Issuance of the Public Service Tax and Bridge Revenue Bonds as of September 30, 2002. consists
of:
Equity in Pooled Cash and Investments
Investments
Assets in the Parking System restricted under the provisions of a. development agreement between
Clearwater Seashell Resort lC and the City of Clearwater as of September 30, 2002, consist of:
Due From Other Funds
Contributions from the Special Development Fund include proceeds restricted by City Commission
polley for Improvements to the stormwater drainage system within the City; assets remaining at
September 30, 2002, are:
Due From Other Funds
Total restricted assets - Parking System Fund
Note IV - Other Information
$ 278,205
2,576,989
220,294
11,814,872
1,379,206
84.060
$16353626
$ 16,373
9,487
6,000,000
1.500.000
S 7.525 860
A. Risk management
The City Is self-Insured within certain parameters for losses arising from claims for general liability, auto liability, police
professlonalllabllity, publiC official's liability, property damage, and workers' compensation. Insurance coverage has
been maintained by the City to pay for or Indemnify the City for losses In excess of certain specific retentions and up to
specified maximum limits in the case of claims for liability, property damage, and workers' compensation. The liability
and workers compensation excess coverage is $7,000,000 per occurrence (no aggregate applicable) with self-Insured
retention of $500,000. The property damage excess coverage is $240,000,000 at ninety percent of totallnsurable value
with a $500,000 self-insured retention. Settled claims have not exceeded excess coverage in any of the past three
years.
64
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Notes to the Financial Statements
September 30, 2002
The transactions, relating to the self-insurance program are accounted for In the Central Insurance Fund, an Internal
Service Fund. The billings by the Central Insurance Fund to the various operating funds (the interfund premiums) are
based on actuarial estimates of the amounts needed to pay prior and current year claims. The claims liability reported
at September 30, 2002, Is based on the requirements of Governmental Accounting Standards Board Statement No. 10.
which requires that a liability for claims be reported if information prior to the Issuance of the financial statements
indicates that it Is probable that a liability has been incurred at the date of the financial statements and the amount of the
loss can be reasonably estimated.
Changes In the claims liability amounts in fiscal years 2001 and 2002 were:
Self
Insurance
$ 10,883,393
Balance at October 1, 2000
Current year claims and changes
In estimates
Claim payments
Balance at September 30, 2001
Current year claims and changes
in estimates
Claim payments
Balance at September 30, 2002
629.391
(2,175,488)
9,337,296
B. Statements of cash flows
For purposes of the statements of cash flows, Investments with original maturities of three months or less are considered to
meet the definition of cash equivalents. The majority of the Investments in which the CIty's proprietary funds have equity
are held by the City's consolidated pool of cash and Investments. Since fund equities In this cash management pool have
the general characteristics of demand deposits In that additional funds may be deposited at any time and also funds may
be withdrawn at any time without prior notice or penalty, each fund's equity aocount is considered a cash equivalent
regardless of the maturities of investments held by the pool. Funds with deficit (overdraft) positions within the consolidated
pool report the deficits as intertund payables to the City's Capital Improvement Fund.
C, Capitalization of Interest
Interest costs incurred in enterprise funds during construction are capitalized, net of interest income from the proceeds
of related tax-exempt debt if applicable, as part of the cost of the related assets of the respective enterprise funds.
Interest costs on long-term debt incurred and capitalized during the year ended September 30, were as follows:
Total Interest Interest Costs Net Interest
Costs Incurred Capitalized Expense
$ 4,346,274 $ 769,723 $ 3,576,551
1,533,654 60,471 1,473,183
78,621 78,621
569,068 160,073 408,995
43,831 . 43.831
$ 6,571,448 $ 990,267 $ 5.581,181
Business-type Activities:
Water & Sewer Utility Fund
Gas Utility Fund
Solid Waste Utility Fund
Stormwater Utility Fund
Non-major Enterprise Funds
Total business-type activities
D. Use of estimates
The preparation of financial statements in conformity with generally accepted aocounting principles requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from the estimates.
65
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
E. Employee retirement systems and pension plans
1. Defined benefit pension plans
The City contributes to two separate single-employer, self-administered defined benefit pension plans covering
approximately three-fourths of all City employees. The Employees' Pension Plan covers all permanent, full-time City
employees who successfully pass the required physical examination, except for firefighters employed prior to July 1, 1963.
and certain nonclassified (primarily managerial) employees. The Rremen's Relief and Pension Plan covered eligible
firefighters hired prior to July " 1963, and Is closed to new entrants. Neither of these plans Issues a stand-alone financial
report. As indicated. both plans are self-administered, and the costs of administering the plans are paid from the respective
plan assets.
The Employees' Pension Plan is authorized by and operates under the provisions of Sections 2.391 through 2.411 of the
Municipal Code of the City of Clearwater. Plan. provisions have been duly approved as required by the voters in
referendums. the most recent of which was held on March 14, 2000. The plan provisions were changed effective January
" 2000 to provide a 1.5% cost of living increase, an addItional nonnal retirement age of 65 with 10 years of service, plus
additional eligibilities and benefits for police and firefighters. The normal retirement benefit Is a monthly benefit equal to 2.
3/4% of average monthly compensation for the final 5 years of service multiplied by the number of years of service to date
of retirement. The minimum benefit under the plan is $300 per month. Eligibility for normal retirement occurs upon
completion of at least 10 years of service and the attainment of age 65, or completion of at least 20 years of service and the
attainment of age 55, or completion of 30 years of service, for employees engaged in non-hazardous duty. For those
engaged in hazardous duty, eligibility occurs upon completion of 20 years of service. The normal monthly benefits are
payable for the life of the participant and continue, after the participanfs death, to be paid at the same amount for 5 years to
eligible surviving beneficiaries; after 5 years, the survivor annuity is reduced to fifty percent (50%) of the original amount.
The plan provides for an annual cost of living increase of up to one and one-half percent (1-1f20k).The plan also provides
for disability and death benefits, vesting after completion of 10 years of service and the refund of employee contributions in
case of a non-vested termination. There are seven other benefit payment options that are computed to be the actuarial
equivalent of the normal benefit. Covered employees contribute 8% of their compensation. It is the city's obligation to
provide a sufficient additional contribution to maintain the actuarial soundness of the fund but, in any event, not less than
7% of participating employee's compensation per the ordinance governing the plan.
The Firemen's Relief and Pension Plan is authorized and operated under the provisions of SUbpart B, Article I (Laws of
Florida. Chapter 30658, 1955 and amendments), Sections 1 through 27 of the Municipal Charter and Related Law of
the City of Clearwater and Chapter 26, Article III, Sections 26.50 through 26.52 of the Municipal Code of the City of
Clearwater. The normal retirement benefit ls a monthly benefit in the amount of 50% of the prevailing wage at the date
of retirement of the lowest rank held by the participant during the three years immediately preceding retirement plus 2%
of such prevailing wage for each year of service in excess of 20 years up to a maximum of 60%. Participants retiring at
the age of 65 years are entitled to a benefit of 60% of the prevailing wage of the lowest rank held by the particIpant
during the three years Immediately preceding retirement. The ending rate of pay specified above may not exceed the
highest rate of pay for the rank of Captain. Eligibility for normal retirement occurs upon completion of 20 years of
service or attainment of age 65. The monthly benefits are payable for the life of the participant and continue, after the
participant's death, to be paid to certain eligible surviving beneficiaries at an amount that Is one-half of the amount
received by the participant. Benefits are also provided for children of the deceased participant who are less than 18
years of. age SUbject to certain limitations as to amount. The plan also provides for disability and death benefits and for
vesting upon completion of at least 12 years of service. The plan provides for post retirement cost of living increases
equal to the increase in the prevailing wage for the rank at which the participant retired with a limitation for those retiring
on or after January 1, 1972, of 100% of the initial pension benefit for total cost of IMng Increases. ParticIpating
employees are required to contribute 6% of their salaries up to the equivalent of the salary of a fireman holding the rank
of Captain. The City ls required to contribute a sufficient additional amount to maintain the actuarial soundness of the
plan for a period of 35 years commencing January 1, 1972; thls contribution is based upon, but not limited to, the
amount of property tax that a levy of 0.6 mills would produce.
66
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
r'1
As of the January 1, 2001, actuary valuation date (upon which the current fiscal year funding is based), the membership
of the plans is as follows:
Retirees and beneficiaries currently receMng benefits
Terminated employees entitled to benefits but not yet receMng them
Active employees:
Fully vested
Nonvested
Total number of participants
Employees'
Pension Plan
533
40
Firemen's Relief
Pension Plan
48
711
827
2,111
48
For the fiscal year ended September 30, 2002, the covered payroll for the Employees' Pension Fund is $61,154,840. The
City's total payroll for the same period is $71,987,553. Annual pension cost and contributions information for the last three
fiscal years follows:
Employees' Pension Fund
~ ~~OO ~
Ended Required Employer Percent Pension
Sept 30 Contribution Contributions Contributed Asset
2000 $ 0 $ 4,419,723 N1A $ 12,442,354
2001 $ 174,377 $ 4,255,484 24400k $ 15,845,929
2002 $ 0 $ 4,439,829 (b) N1A $ 21,445,982
(a) The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2002, are based
on actuarial valuations as of January 1, 2001. Since the City's contributions are made during its fiscal year (which
commences nine months after the date of the actuarial valuation), the City, with approval of State regulatory
authorities, is following the practice of adding Interest to its required contnbutions at the assumed rate of return on
investments for a period of one year.
(b) Actual contributions for fiscal 2002 totaled $4,439,829, as required by the ordinance governing the pension plan. See Note E
Firemen's Relief Pension Fund
Year
Ended
Sept 30
2000
2001
2002
Annual (a)
Required
Contribution
$ 1,046,856
$ 1,098,990
$ 1,153,732
Employer
Contributions
$ 1,046,856
$ 1,098,990
$ 1,153,732
Percent
Contributed
100010
100%
100%
a) The actuarlally determined contribution requirements for the City's fiscal year ended September 30, 2002, are based
on actuarial valuations as of January 1, 2001. Since the City's contributions are made during its fiscal year (which
commences nine months after the date of the actuarial valuation), the City, with approval of State regulatory
authorities. is following the practice of adding Interest to its required contributions at the assumed rate of return on
investments for a period of one year.
The net pension asset at transition (October 1, 1997) was determined in accordance with GASB Statement No. 27,
NAccounting for Pensions by State and Local Governmental Employees". The amount of the penSion asset at transition
was $3,503,365.
67
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
The Employees' Pension Fund net pension asset at September 30, 2002 totaled $21,445,982. It was comprised of the
following components: r ,
AMUal required contributions (ARC)
Interest on the net pension asset
Adjustment to annual contribution
Annual pension cost
Fiscal 2002 employer contributions
Increase In net pension asset
Net pension asset begInning of year
Net pension asset end of year
$ (1,932,864)
(1,109,215)
1,881,855
(1,160,224)
4,439.829
5,600,053
16,845.929
$ 21,445.982
Each pension fund is accounted for as a pension trust fund; therefore each is accounted for in substantially the same
manner as proprietary funds with a "capital maintenance" measurement focus and the accrual basis of accounting. Fund
assets, primarily investments, are valued at fair value for balance sheet purposes, In accordance with. GASS No. 25.
Investment values are determined using the estimated fair value determined by averaging estimated fair values
obtained from three or more nationally recognIzed brokers.
As of September 30. 2002, neither the Employees' Pension Fund nor the Firemen's Relief and Pension fund held
investments (other than U.S. Govemment or U.S. Government guaranteed obligations) In any one organization
comprising 5% or more of the net assets available for benefits.
Significant actuarial assumptions utilized in the actuarial valuations as of January 1, 2001, <,ire as follows:
Employees' Pension Plan
(1) Assumed rate of return on investments of 7.0% per annum.
(2) Projected salary increase at a rate of 5% per year, including both cost-of-livlng adjustments of 3% and merit
or seniority Increases at 2%.
(3) Mortality based on the 1983 Group Annuity Mortality Table for males with females ages set back six (6) years.
(4) Pre--retirement withdrawals assumed to occur per standard scales of moderate turnover rates (Scale 255) for
males and heavy turnover rates (Scale 355) for femaJes.
(5) Pre-retirement Incidence of disability Is asst.med to occur in accordance with a standard scale of moderate
disability rates (Class 1, 1952 Inter-Company); rates for females assumed to be twice that for males.
Firemen's Relief and Pension Plan
(1) Assumed rate of return on Investments of 5.5% compounded annually.
(2) Assumed benefits grow at an annually compounded rate of 2%.
(3) Mortality based on the 1983 Group Annuity Mortafdy Table for retired participants; assumed disabled
partlclpants wlll experience mortality according to PBGC Tables 3 and 4 for males and females, respectively.
(4) Assumed no withdrawals wID occur.
(5) Assumed probability of an active participant becoming disabled is zero (no active participants).
(6) Assumed value of one mill of ad valorem tax will Increase at rate of 5% per year.
As a result of a voter referendum on March 14, 2000, the Employees Pension Plan was mod'lfled to provide for a 1.5%
cost of living increase, an additional retirement age of 65 with 10 years of service, plus additional eligibility and benefits
for police and firefighters effective Janu~ry 1, 2000.
There were no changes in assumptions affecting.the January 1, 2001 actuarial valuation for either the Employees' . 1
Pension Plan or the Firemen's Rellef and Pension Plan. . 1
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City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
fr
It [s the City's policy to fund pension costs accrued as determined on an actuarial basis. Annual required contributions
(ARC) for the Employees' Pension Fund are calculated using the Entry Age Normal with Frozen Initial liability method.
The initial unfunded actuarial accrued liability determined at July 1, 1963, is being amortized over a 40-year period;
changes made in 1979 and subsequent years Which have had the , effect of either increasing or decreasing the actuarial
liability are being amortized over a 30-year period from their effective dates In accordance with State law. Annual
required contributions (ARC) for the Firemen's Relief and Pension Fund are based on a variation of the aggregate
actuarial cost method, under which the unfunded portion of the present value 'of the projected benefits is allocated over '
the present value of a 6.0% per year Increasing annuity for the remaining years in the 3S.year funding period which
began January 1, 1972, pursuant to an agreement between the City and the Plan participants. For this purpose, the
unfunded actuarial liability is determined after consideration of the available assets at the valuation date. The
increasing fixed schedule produced by this method was established in 1988 and will be modified in the future only to the
extent that a current valuation Indicates a higher required cost level, or if the resulting cost level exceeds 60% of a mill
in a current year. Under the non-standard cost method used for this plan (due to the fact that there are no longer any
active employees), all liabilities are unfunded actuarial liabilities and are being amortized according to the cost method.
The net pension asset for the Employees' Pension Plan. representing excess contributions as calculated per GASa 27
requirements, is identical In amount to the plan "credit baJance" as disclosed In prior years. A total of $14,731,211 of
the current net pension asset balance is attributable to governmental funds and therefore is not reflected in the
governmental fund financial statements in accordance with the modified accrual basis of accounting. The remaining
$6,714,771 attributable to proprietary funds is reflected In the proprietary fund financial statements on the accrual basis
of accounting.
Governmental Accounting Standards Board Statement Nos. 25 and 27 require the presentation, as supplementary
information, of certain a-year historical trend Information. These disclosures are presented on pages 73-75 of this report.
2. Police Supplemental Pension Fund
A supplemental defined contribution pension plan exists for all eligible policemen which is funded by earmarked
revenues received from the State and Is administered by the City. The revenues received from the State are allocated
among eligible police officers on the basis of days employed as Clearwater Police Officers. These revenues, which,
comprise the plan contributions, amount to $770,578 in the year ended September 30, 2002, and are obtained from an
eighty-five one hundredths of one percent (.85)% excise tax on the gross receipts from premiums collected on casualty
insurance policies covering property within the City's corporate limits. The current year contributions represent 5.2% of
current year covered payroll. The fair value of investments at September 30, 2002, totaled $9,329,372.
The Pollee Supplemental Pension Fund is authorized by and operates under the provisions of Sections 2.471 through
2.480 of the Municipal Code of the City of Clearwater and Chapter 185 of Florida Statutes. Under the plan provisions, the
total monies received during each fiscal year, after payment or provision for all costs and expenses of management and
operation of the plan, are allocated to participants on the basis of the total number of shares to which each participant is
entitled. Each participant Is entitled to one share In the fund for each day of service as a police officer of the City.
All police offICers, as defined In Section 26.70(g) of the Code of Ordinances of the City of Clearwater, who are elected,
appointed, or employed full-time by the City are eligible to participate in the plan. There are no employee contributions
to the supplemental plan. Benefits are fully vested for a lump sum distribution after twenty years from the date of hire,
with provision for partial vesting after ten or more years under the plan. Accumulated benefits are payable In full in case
of death while employed by the City or in case of total and permanent job-related disability. Non-vested participants'
account values upon termination of employment during any fISCal year are added to the monies received during that
fiscal year for allocation to the remaining participants In the plan on the basis of total days worked.
For the fiscal year ended September 30, 2002, the payroll of the covered officers' was $14,850,669; the City's total payroll
for the same period was $71,987,553.
Since the entitlement to benefits is based entirely upon the aDocation of monies received by the plan to the participants'
share accounts, there Is no actuarial liability on the part of either the State or the City.
69
City of Clearwater, Florida
Notes to the Financial Statements
'September 30, 2002
3. Firefighters Supplemental Pension Fund
A supplemental defined contribution pension plan exists for all eligible firemen, which istunded by earmarked revenues
received from the State and is administered by the City. The revenues received from the State are allocated among
eligible firemen on the basis of days worked during the previous year. These revenues, which comprise the plan
contributions, amounted to. $594,442 in the year ended September 30, 2002, and are obtained from a one and eighty-five
one hundredths percent (1.85%) excise tax on the gross receipts from premiums collected on property Insurance policies
covering property within the City's corporate limits. The contributions represent 6.79% of current year covered payroll. The
fair value of investments at September 30,2002, totaled $8,470,023.
As the plan is described as a money purchase pension plan. whereby contributions are allocated based on the number
of days worked during the fIScal year ended September 30, and interest earnings allocated based on the beginning
balances in each participanfs account, there is no actuarial liability on the part of the State or City.
The Firefighters Supplemental Pension Fund is authorized by and operates under the provisions of Sections 2.441
through 2.450 of the Municipal Code of the City of Clearwater and Chapter 175 of Florida Statutes. Eligibility requires
two years of credited calendar year service as a firefighter with concurrent participation in the Employees' Pension Plan.
.There is no employee contribution to the supplemental plan. and benefits are vested for a lump sum distribution at ten
years unless there Is early retirement. disability or death. Non-vested partlcipants' account values upon termination of
employ~ent are reallocated among the remaining participants on the basis of days worked during the previous year.
For the fiscal year ended September 30, 2002, the covered payroll was $8,757,987 the City's total payroll for the same
period was $71,987,553.
4. 401(8) Defined Contribution Plan
For all management employees not covered under either of the defined benefit pension plans, the City provides pension
benefits through a 401 (a) defined contribution plan. In a defllled contribution plan, benefits depend solely on amounts
contributed to the plan plus investment earnings. Employees are participants from the date of employment and are fully
vested upon enrollment The plan is totally contributory on the part of the City in an amount equal to 15% of
compensation on behalf of the City Manager and the City Attorney; 12% of compensation on behalf of the Chief of
Police; and 6% of compensation on behalf of all other management contract employees and assistant city attorneys.
The City makes bl-weekly contributions to the Trust throughout the plan year to meet its funding obligations under the
plan.
The International City Management Association Retirement Corporation (ICMA-RC), the trustee for the defined annuity,
offers participants a variety of investment options.
The City's total payroll for the fiscal year ended September 30. 2002. was $71,987,553. The Plan members' payroll for
the same period totaled $3,458.985. The City's contribution, using the above referenced formula, totaled $247,410.
The assets of the trust, at market value, totaled $1,164,818 at September 30, 2002.
5. Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section
457. The plan, available to all City employees, pennits . them to defer a portion of their salary until future years.
Participation in the plan Is optional. The deferred compensation is not available to employees until termination, retirement,
death, or unforeseeable emergency.
Effective January 1, 1997, Federal legislation converted the Section 457 deferred compensation assets from City assets to
employee assets. As a result of these changes, plan assets are no longer subject to the claims of the City's general
creditors.
The City has previously reported the assets and associated liabilities of the deferred compensation plan in the City's
financial statements as an agency fund. Effective with the change in legislation these assets are no longer City assets and
the fiduciary responsibUity has been transferred to the third party plan administrator. Consequently, effective with fiscal
1997, . these assets are no longer reported In the accompanying financial statements, in compliance with Governmental
Accounting Standards Board Statement No. 32.
70
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City of Clearwater, Florida
Notes to the Financial Statements
Septernber30,2002
F. Contingencies and Commitments
;'
PACT. Inc.
PACT, Inc. is a nonprofit corporation formed in 1978, for the purpose of financing, constructing, and operating a
performing arts center. Per a Guaranty Agre$ment dated May 18, 2001, the City guaranteed $1,000,0000 on"a
$5,000,000 mortgage note for PACT, Inc., used to refinance a previous mortgage with a similar City guarantee. City
management does not consider it probable that this guarantee will be called, and, accordingly, no amounts have yet
been accrued or otherwise recorded in the accompanying financial statements to reflect this possibility.
Contingent Loan Guarantee
On March 30. 1992, the City Commission approved a contingent loan guarantee of $1,000,000 on a $2,500,000 note for
the Chi Chi Rodriguez Youth Foundation, Inc. The proceeds of the note were used to refinance existing foundation debt
incurred to construct a golf course on a parcel of City owned land. Subsequently, the note was refinanced with Variable
Rate Demand Revenue Bonds (Chi Chi Rodriquez Youth Foundation ProJect), Series 1998, on August 1,1998.
In the event of default, the City is obligated to contribute $1,000,000 out of legally available non-ad valorem revenues.
In addition, the City has the option to retire the entire unpaid balance and assume ownership and operation of the golf
course facility. At the present time, management expects the foundation to meet all debt service payments and does not
consider it likely that the City's guarantee will be invoked.
Soil and groundwater contamination site
The City owns a property, currently used by the City Gas Division as its administrative offices and operating facility, that
has been identified as having soil and groundwater impacts in a June 1990 report prepared by a United States
Environmental Protection Agency contractor. The contamination allegedly resulted from the prior operation of a
manufactured gas plant Contamination assessment activities by the City were initiated during 1995 and a draft
Contamination Assessment Report was submitted to the Florida Department of Environmental Protection (FDEP) on
December 29,1999. On March 20, 2000, FDEP requested further assessment be undertaken. On July 25, 2000, FDEP
approved the City's proposed scope of work for adcfrtional on and off-site assessment activities. Additional field
activities were initiated in December 2000. As of this date, all additional work has been completed. The supplemental
contamination assessment results were submitted to FOEP as part of the May 2001 and July 2001 site status reports.
The cost of this additional work, Including preparation and submittal of the May and July 2001 site status reports, was
approximately $39,462.
On May 16, 2002, the City received a letter from FDEP requiring additional fieldwork to better define the soil and
groundwater contamination on the site. In September 2002, Clearwater Gas met with FDEP to discuss their May 1 ff'
letter and the future of the gas plant site. In that meeting, it was agreed the City would Install seven (7) new monitoring
wells arid drill twelve (12) soil samples around the perimeter of the site. This additional work will be performed in early
2003, at an estimated cost of $70,000.
Approximately $487,500 has been recovered from City insurance policies to be applied to any required remediation.
Letter of Credit Guarantee - soil contaJTlination sites
The City has provided a standby letter of credit In the amount of $463,040 to the Florida Department of Environmental
Protection (FDEP). The Letter of Credit is required by FDEP for the City's approximate 41% share of the remediation
costs for three City-owned petroleum contamination sites under FDEP's "Pre-approved Advance Cleanup (PAC)
program. The PAC program awards state funds to assist with remediation of petroleum contaminated sites. The City
has available fUnds set aside to fully fund the City's commitment of $463,040 under the PAC agreements.
71
City of Clearwater, Florida
Notes to the Financial Statements
September 30, 2002
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Contractual Commitment - Water and Sewer Utmty
Under the terms of a 30-year contract between the City and Pine lias County, which is effective through September 30,
2005. the City is required to purchase a minimum of 4 million gallons of water per day on an annual average basis from
the County within each calendar year. with a maximum amount of water available to the City of 10 million gal[ons per
day on an annual average basis. Effective October 1, 1995, the rate, which is set by the PineJIas County Board of
County Commissioners (SOCC), was $1.7902 per 1,000 gallons. including a $.60 per 1,000 gallon surcharge for
funding capital projects. On November 19. 2002, the BOCC approved the following rate increases: $1.9334 effective
January 1, 2003; $2.0881 effective October 1. 2003; $2.2969 effective October 1, 2004; $2.5266 effective October 1,
2005; and $2.7792 effective October 1,2006. The cost of water purchased from the County during fiscal years 2001
and 2002 was $7.305.983 and $7,516,678, respectively.
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Contractual Commitment - Parking System
Under the terms of a development agreement, the City has committed to repurchase a beach land parcel at the
appraised amount not to exceed $6.000,000, if the developer is unable to proceed with the development project by
March 2006. A contingency reserve has been established In the Parking System fund In the amount of $6.000.000 as
of September 30, 2002.
,
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i. Grant Revenues
During fiscal year 2002 and prior fiscal years, the City received revenues and contributions related to grants from the
Southwest Water Management District. the State of Florida. and the federal government These grants are for specific
purposes and are subject to review and audit by the grantor agencies. Such audits could result In requests for
, reimbursement for expenditures disallowed under the terms of the grants. Based upon prior experience. City management
believes such disallowances, if any, will not be significant. . .
\ ','
G. Pending Litigation
In the normal course of operations the City Is a defendant in various legal actions, the ultimate resolution of which is not
expected to have a material effect on the financial statements. other than for amounts which have been reserved and
recorded as liabilities in the Central Insurance Fund.
H: Conduit debt
The City has one issue of conduit debt outstanding as follows:
Original
Issue
Description I Pul:pOS8 Amount
Drew Gardens Refunding Bonds I Residential rental facility $ 3,425.000
Amount Amount
Outstanding Outstanding . i
at 9130/01 at 9J3(}f(Yl
$ 3.090.000 $ 3,040.000
The bonds do not constitute a debt, liability, or obligation of the City of Clearwater, the State of Florida, or any political
subdivision thereof and accordingly have not been reported in the accompanying financial statements.
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City of Clearwater. Florida
Defined Benefit Pension Plans
Required Supplementary Information. Unaudited
Page 1 of 3
Schedules of Funding Progress:
Employees Pension Fund
Actuarial Actuarial Actuarial Unfunded AAL
Valuation Value of Accrued UabDity Unfunded Funded Covered as a Percentage
Date Assets (AAL) . Entry Age AAL Ratio Payroll · of Covered Payroll
(a) (b) (boa) (aIb) (e) ((b-a) Ie)
111/1997 $ 272.346.200 $ 297.892,502 $ 25.546,302 91% $ 44,955,345 57%
1/1/1998 $ 308,596,133 $ 333,250,492 $ 24,654.359 93% $ 47,281,198 52%
1/1/1999 $ 354,088,751 $ 377.788,731 $ 23,699.980 94% $ 49.666,523 48%
1/1/2000 $ 414,826.422 $ 490,426,940 $ 75,600,518 85% $ 50,937,403 148%
1/1/2001 $ 461,724,610 $ 535,672,208 $ 73,947.598 86% $ 54.864.584 135%
1/1/2002 $ 491,859.015 $ 533,191.487 $ 41.332.472 92% $ 58,929,582 70%
Firefighters Relief and Pension Fund
Actuarial Actuarial Actuarial Unfunded AAL
Valuation Value of Accrued Liability Unfunded Funded Covered as a Percentage
Date Assets (AAL) - Entry Age AAL Ratio Payroll · of Covered Payroll
(a) (b) (b-a) (aIb) (c) ((b-a) Ie)
1/111997 $ 3,407,925 $ 11,014,979 $ 7,607,054 31% $ 49,044 15511%
1/1/1998 $ 3.626.850 $ 10,565.127 $ 6,938,2n 34% $ 50,573 13719%
1/111999 $ 3,963,395 $ 10,473,888 $ 6.510.493 38% $ 15,605 41721%
1/1/2000 $ 4,092,298 $ 9,746.671 $ 5.654,373 42% $ N/A
1/112001 $ 4.668,572 $ 9,527 ,303 $ 4,858,731 49% $ N/A
11112002 $ 5,213,993 $ 8,907,427 $ 3,693,434 59% $ N/A
· Covered payroll is for the calendar year period used for the actuarial valuation.
73
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Page 2 of 3
'. ;
City of Clearwater, Florida
Defined Benefit Pension Plans
Required Supplementary Information - Unaudited
II
Schedules of Employer Contributions:
Employees' Pension Fund
Year Annual (a)
Ended Required Percent
Sept. 30, Contribution Contributed
1997 $ 4.398,790 76%
1998 $ 3.080,802 119%
1999 $ 840,558 464%
2000 $ N/A
2001 $ 174,377 2440%
2002 $ N/A
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(c)
(a) The actuarlally determined contribution requirements for the City's fiscal year ended September 30, 2002
are based on actuarial valuations as of January 1, 2001. Since the City's contributions are made during Its
fiscal year, which commences nine months after the date of the actuarial valuations, the City, with approval
of State regulatory authorities, is following the practice of adding interest to its required contributions at the
assumed rate of return on Investments for a period of one year.
,
. ,
(b) The contribution is less than the annual required contribution due to contributions In excess of required prior
to fiscal 1997.
(0) Actual contribution for fiscal 2002 was $4,439,829, as required by City pension ordinance. See Note E (1) .
Firemen's Relief Pension Fund
Year
Ended
Sept. 30,
1997
1998
1999
2000
2001
2002
$
$
$
$
$
$
Annual (a)
Required
Contribution
910,559
955,920
1,003,758
1,046,856
1,098,990
1,153,732
Percent
Contributed
100%
100%
100%
100%
100%
100%
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(a) The actuarlaliy determined contribution requirements for the City's fiscal year ended September 30, 2002
are based on actuarial valuations as of January 1, 2001. Since the City's contributions are made during its
fiscal year, which commences nine months after the date of the actuarial valuations, the City, with approval
of State regulatory authorities, is following the practlce of adding Interest to Its required contributions at the
assumed rate of return on investments for a period of nine months.
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Page 3 of 3
City of ClealWater, Florida
Defined BenefIt Pension Plans
Required Supplementary Information - UnaUdhed
Notes To Schedules Of Required Pension Supplementary Information'
Annual required contributions for the Employees' Pension Fund are calculated using the Entry Age Nonna! with Frozen
Inltlaf UabDity method. The Inltlaf unfunded actuarial accrued liabDity detennined at July 1, 1963 Is being amortized over
a 4O-year period; changes made in 1979 and subsequent years which have had the effect of either Increasing or
decreasing the actuarial liability are being amortized over a 3O-year period from their effective dates In accordance with
State law. '
Annual required contributions for the Firemen's Relief and Pension Fund are based on the aggregate actuarial cost
method, under which the unfunded portion of the present value of the projected benefits is allocated over the present
value of a 6.0% per year increasing annuity for the remaining years In the 35-year funding period which begin January 1,
1972, pursuant to an agreement between the City and the Plan participants. For this purpose, the unfunded actuarial
liability is detennined after consideration of the available assets at the vafuatlon date. The Increasing fixed schedule
produced by this method was established in 1988 and will be mod"lfied In the future only to the extent that a current
valuation indicates a higher required cost level, or if the resulting cost level exceeds 60% of a mill In a current year.
The actuarially determined contribution requirements for the City's fiscal year ended September 30, 2002, are based on
actuarial valuations as of January 1, 2001. Since the City's contributions are made during Its fiscal year, which
commences nine months after the date of the actuarial valuations, the City, with approval of State regulatory authorities,
is following the practice of adding interest to Its required contnbutions at the assumed rate of retum on investments for a
period of one year in the case of the Employees' Pension Fund and for nine months in the case of the Firemen's Relief
and Pension Fund.
Significant actuarial assumptions utilized In the. actuarial valuations as of January 1, 2001, in the determination of the
annual required contribution are as follows:
Employees' Pension Fund
(1) Assumed rate of return on investments of 7.oo,{, per annum.
(2) Projected salaJy Increase at a rate of 5% per year, Including cost.of.livlng adjustments of 3% and merit or
seniority Increases at 2%.
(3) Mortality based on the 1983 Group Annuity Morta1ityTable for Males with female ages set back 6 years.
(4) Pre-retirement withdrawals assumed to occur in accordance with standard scales of moderate turnover rates
(Scale 255) for males and heavy turnover rates (Scale 355) for females.
(5) Pre-retirement Incidence of disability assumed to occur In accordance with a standard scale of moderate dlsabiDty
rates (Class 1, 1952 Inter.Company); rates for females assumed to be twice that for males.
(6) Assumed inflation rate of 3%
FIremen's Relief and Pension Fund
(1) Assumed rate of return on investments of 5.5% compounded annually.
(2) Assumed benefits grow at annually compounded rate of 2% related to cost of living adjustments only.
(3) Mortality based on the 1983 Group Annuity Mortality Table for both active and retired; assumed disabled
participants will experience mortality according to PSGe Tables 3 & 4 for males and females, respectively.
(4) Assumed no withdrawals will occur.
(5) No active participants
(6) Assumed value of one mill of ad vaforem tax wiD increase at rate of 5% per year.
(7) Assumed inflation rate of 3%
Significant changes affecting the presented 6-yeartrend Infonnatlon Include:
(1) The actuarial valuation of the Aremen's Relief and Pension Fund as of January 1, 1999 reflected several changes
in actuarial assumptions. An Investment yield of 5.5% for both pre and post retirement was assumed whereas the
prior valuation assumed 6.5%. AddiUonally, benefit Increases of 2.0% were assumed while the previous
assumption was 4.0%. The Impact of these changes increased the unfunded actuarial accrued Habillty by
$212,878.
75
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Nonmajor Governmental Funds
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Special Revenue Funds
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Special revenue funds are used to account for specifIC revenues that are legally restricted to expenditures for
particular purposes.
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Special Programs Furid - to account for grants and contributions, the use of which is restricted for certain
programs.
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I.! increment funds associated with related redevelopment projects.
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Local Housing Assistance Trust Fund - to account for monies aJJocated to the City under the Local Housing
Assistance grant program.
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Debt Service Funds
Debt service funds provide separate accountIng . records for all debt interest, principal, and reserve
requirements for general government long-term. Debt of proprietary funds is serviced through restricted
accounts maintained within the individual enterprise or Internal service fund associated with the debt
Improvement Revenue Bonds Debt Service Fund - to account for the advance monthly accumulation of
resources by transfer of Public Service Tax revenues from the General Fund and the payment of currently
maturing Installments of principal and interest during eaCh fiscal year.
Improvement Revenue Refunding Bonds Debt Service Fund - to account for the advance monthly
accumulation of resources by transfer of public service tax and communications services tax revenues
from the General Fund and the payment of currenUy maturing installments of principal and interest during
each fiscal year.
Infrastructure Sales Tax Revenue Bonds Debt Service Fund - to account for the advance monthly
accumulation of resources by transfer of sales tax revenues from the Special Development Special
Revenue Fund and the payment of currently maturing installments of principal and Interest during each
fiscal year.
Public Service Tax & Bridge Revenue Bonds Debt Service Fund - to account for the advance monthly
accumulation of resources by transfer of public service tax revenues from the General Fund and the payment
of currently maturing installments of principal and Interest during each fiscal year.
Notes and Mortgages Debt Service Fund - to account for the advance monthly accumulation of resources
by transfer of General Revenues from the General and Special Revenue Funds and the payment of currently
maturing installments of principal and interest on the various note and mortgage obligations of the
governmental funds during each fISCal year.
Spring Training Facility Revenue Bonds Debt Service Fund - to account for the advance monthly
accumulation of resources by transfer of sales tax revenues from the Special Development Special Revenue
Fund and the payment of currently maturing installments of principal and Interest during each fiscal year.
78
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Capital Projects Funds
Capital projects funds are used to account for resources to be used for the acquisition or construction of.
major capital improvement projects, other than those financed by proprietary funds. A major capital
improvement project Is a property acquisition, a major construction undertaking, or a major improvement to
an existing facility or property, with a cost greater than $25,000 and a minimum useful life of at least five
years.
Sales Tax Revenue Construction Fund - to provide separate accounting records for the financing and
construction of the entryway and roundabout at Clearwater Beach, a new Main Ubrary, and a new Memorial
Causeway Bridge.
Community Sports Complex Construction Fund - to provide separate accounting records for the financing
and construction of a new community sports complex including a new spring training facility to be used by the
Philadelphia Phlllies major league baseball organization.
79
The notes to the financial statements are an integral part of this statement
80
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City of Clearwater, Ronda , ,
Combining Statement of Revenues, ExpendItUres, end Changes In Fund Balances
Nonmajor Governmental Funds f'-1
For the Year Ended September 30, 2002
:.. i
Special Revenue Funds ~ j
Community Local Houslng Improvement j .i
Special Redevelopment Assistance Improvement Revenue
Programs Agency Trust Total Revenue Bonds Refunding Bonds '.' "
j
REVENUES ~ j
Intergovernmental $ 3,210.310 $ 373,583 $ 1,188,126 $ 4,772,019 $ $ $
Charges for services 576,714 576,714 ')
Fines and forfeitures 500,987 500,987 i
Interest Income 233,730 50,123 78,176 362,029 1,209 50,672 . i
Miscellaneous 1 ,660.880 234,348 1.895.228
Total revenuea: 8,182,821 858,064 1 ,266,302 8,106,977 1 ,209 50,672 1 1
EXPENDITURES ,
; i
Current
General govemrnent 159,515 159,515 ( I
Public safety 2,472,483 2,472,483 I
Physical envirOMlent 927,341 927,341 ; J
Economic environment 1,021,787 309,160 315.763- 1,646,730
Human services 126,936 126,936 - \
Culture and recreation 1,432,848 1,432,848
Debt service: I
.'
Prlnclpal 283,487 89.542
Interest & fiscal charges 2,925 382, 129
Bond issuance costs 147,065
Capital outlay 417,168 417,168
Total e)(pendltures 6,658.078 309,160 315.783 7,183,021 286,412 618.736
Excess (deficiency) of revenues
over I (under) expenditures (375,457) 348,894 950,519 923,956 (285,203) (566,064)
OTHER FINANCING SOURCES (USES)
Transfers in 1,012,587 334,783 1,347,370 64.545 705,251
Transfers out (569.643) (664,253) (100,125) (1,334,021 )
Long term debt Issued
Proceeds of refunding bonds 11,345,499
Premium (discount) on revenue bonds Issued (49,129)
Payment to refunded bond escrow agent (10,270,682)
Tot~ other financing sources (uses) 442,944 (329,470) (100.125l 13,349 64,545 1.730.939
Net change In tund balances 87,487 19,424 850,394 937,305 (220,668) 1,162,875
Fund balances - beginning, as restated 9,623.446 2.313 4,420.249 14,046.008 220.668
Fund balances. ending $ 9,690.933 $ 21,737 $ 5,270,643 $ 14,983,313 $ $ 1,162,875 $ ,
I.
The notes to the Ilnancial statements are an Integral pan of this statement.
82
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( ~ Debt Service Funds Capital Project Funds
I
I Total
l Infrastructure PublleJ ServIce Notes Spring Training Community NonmaJor
58les Tax Tax" BrIdge end FacIlity SlIIes Tax Sports Governmental
{ ! Revenue Bonds Revenue Bonds Mortgages Revenue Bonds Total Revenue Complex Total Funds
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5,000,000 $ $ $ 1,087,664 $ 6,087,654 $ $ $ $ 10,659,673
576,714
600,987
176,280 2,010 60,271 290,442 1.065,005 1,065.005 1,717,476
4,000 4,000 1,899,228
6,176,280 2,010 1,147,926 6.378,096 1,069,005 1,069,005 16,654,078
169,615
2,472,483
927,341
1.646,730
i '/ 126.936
I . 16.913 18,913 1,461,761
"\.....;
73,739 1,304,501 1,751,269 1,751,269
1,873.483 1,340 201,321 2,481,198 2,461,198
3.186 208,746 :358,996 368.996
- 3.401.374 4,117,620 7.518,994 7,936,162
1 ,876,668 76,079 1,506,822 208,748 4.671 ,463 3,401,374 4,136,5:33 7,s:g,907 19,292,391
1
i 3,299,612 (73,069) (1,505,822) 939,179 1,806,633 (2,332,369) (4,136,533) (6,468,902) (3,738,313)
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1.060,693 6,836 1,605,622 3,342,047 4.689.417
(53,612) (53,612) (1,387,633)
216,438 215,438 14,694,662 14,694,662 14,810,000
11,345,499 11,345,499
(49,129) 530,013 630.013 480,884
. (10,270,682) (10,270,682)
I
\ ; 1,060,693 (47,n6) 1,505,822 216,438 4.529,661 15,124,575 15,124,575 19,667,485
r ' 4,360,205 (120,846) 1,164,617 6,338,194 (2.332,369) 10,988,042 8,666,673 15,929,172
L.. 651,024 120.645 647,912 1.540,439 14.167,707 14,167,707 29,754,164
4,911 ,229 $ $ $ 1 ,802,629 $ 7,876,633 $ 11,836,338 $ 10,988,042 $ 22,823,380 $ 45,683,326
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City of Clearwater, Florida
Schedule of Revenues, Expendltu~, and Changes In Fund Balances -
Budget and Actual (GAAP Basis)
Community Redevelopment Agency
For the Year Ended September 30, 2002
Variance with
Budgeted Amounts Final Budget
Actual Positive
OrIginal Final Amounts (Negative)
REVENUES
Intergovernmental $ 332,520 $ 373,583 $ 373,583 $
Interest income 15,000 15,000 50,123 35,123
Miscellaneous 112,911 118,362 234,348 115,986
Total revenues 460,431 506,945 658.054 151,109
EXPENDITURES
Current. Economic environment 236,393 388,414 309,160 79,254
Total expenditures 236,393 388,414 309,160 79,254
Excess of revenues over expenditures 224,038 118,531 348,894 230,363
OTHER FINANCING SOURCES (USES)
Transfers In 304,784 334,783 334,783
Transfers out (528,822) (453,314) (664,253) (210,939)
Total other financing sources (uses) (224,038) (118,531) (329,470) (210,939)
Excess of revenues and other sources
over expenditures and other uses 19,424 19,424
Fund balances. beginning, as restated (see Note II . C) 2,313 2,313 2,313
Fund balances . ending $ 2,313 $ 2,313 $ 21,737 $ 19,424
The notes to the financial statements are an Integral part of this statement
85
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86
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NonmaJor Enterprise Funds
Enterprise funds are used to account for the fmancing, acquisition, operation, and maintenance of
governmental facilities that are supported primarily by user charges.
Recycling Utility Fund -' to account for the flJ1anclng, processing, operation and maintenance of the City's
recycling service from charges made to users of the services and funds received from the sale of recyclable
commodities processed to meet market requirements. The service area extends beyond the City limits
Marine & Aviation Fund ~ to account for the financing, operation and maintenance of the City marina and
associated real property on Clearwater Beach from rents collected from users; and to account for the City's
airpark operations.
Parking System Fund - to account for the financing, constructlon, operation and maintenance of the City's
parking system, including on- and off-street parking on Clearwater Beach and Downtown Clearwater, from
parking charges.
Harborview Center Fund - to account for the operation of the City's convention center and related facilities.
87
City of Clearwater, Florida
Combining Statement of Net Assets
NonmaJorEnbHpr~eFunds f1
September 30, 2002
, .
Recycling Marine & Partdng Harbontlew
Utility Aviation System Center Total .r---;
ASSETS ~. J
Current assels:
Cash on hand and in banks $ $ 817 $ 22,050 $ 100 $ 22,967 !/ 1:
Equity in pooled cash and Investments 1.4a9,611 471,487 2,342, 150 108,064 4,361,312
Accounts and contracts receivable: . ,
Billed 68,653 196,257 264,910
Unbllled charges estimated 134,325 134,325 t 1
202,978 196,257 399,235
Less: Allowance for uncolleClable accounts (3,780) (3,780) . ,
Total receivables, net 199,198 196,257 395,455
.
Due from other funds 1,067,672 989,073 1.614.166 3.670,911
Due from other governmental entities 103,498 103,498 ,
~. j
Inventories, at cost 26,409 26,409
Total current assets 2,706,481 1,487,786 4.081,864 304,421 8,580,552 ? ,
Noncurrent assets:
Restricted:
Equity in pooled cash and Investments 16.373 16,373
Investments 9,487 9.487 "f ,
Due from olher funds 7,500.000 7.500,000 !
i/, j
Net p8nslonassel 221.364 148,975 143.086 511.416
Capital assets:
land and other nondepreciable assets 1.106,482 928,000 2,032,482
Capital assets. net of accurrwlated depreciation 1.182,031 1,991.844 2,448.304 9.868.786 15,486,765
Total noncurrent assets 1.403,385 2,138,619 11,221,732 10.792,788 25,556,522
Total assets 4.109,866 3,626,405 15.303.696 11,097 ,207 34,137,074
LIABILITIES
Current liabilities:
Accounts and contracts payable 18.835 42,266 36.710 619,561 717.372
Accrued payroll 16,879 15,085 15,720 47,684
Accrued compenseted absences 63.797 48,753 37,303 137,853
Due to oll1er funds 59,802 59,602
Deposits 18,813 2,063 105,163 126,039
Deferred revenue and liens 2,892 12,500 15,392
Current portion of long-term liabilities:
Revenue bonds 7,956 7,956
Noles, loan pool agreement and acquisition contracts 162,655 152,556
Total currenlllabilltles (payable from currenl assets) 89,5t 1 182,519 256,199 737,224 1 ,264,453
Current Ilablllties (payable from restricted assets):
Accrued interest payable 526 525
Notes, loan pool agreement and acquisition contracts 3,636 3,636
Current portion of long-lerm liabilities, revenue bonds 15,912 15,912
Total current tiabi6tles payable from restricted assets 3,636 16,437 20,073
Total currentllabnlties 93, 147 182.519 271.636 737.224 1,284,626
NoncurrentllabUities:
Revenue bonds (net of unamortized dlscounl8 and
deferred amount on refunding) 76,163 76,163
Notes, loan pool agreement and acquisltion contracts 9,806 411,401 421,207
Advances from olherfunds 119,204 4,000.000 4,119,204
Total non-currentllabilities 9.806 119,204 4,487 ,564 4.616,574 j j
T otalliabilities 102,953 301,723 4,759,200 737,224 5,901,100
Net assets:
Invested in Clapllal assets (net of related debt) 1,168.689 1,991.644 2,888,799 10,792,786 16,841.818
Restricted for.
Revenue bond debt service and sinking fund requirements 9,408 9.408
Employees' pension benellts 221,364 146,976 143,086 511,415
Unrestricted 2,618,970 1,186,063 7,503,103 (432,803) 10,873,333
T olal ne1 assets $ 4,006,913 $ 3,324,682 $ 10,544.396 $ 10,359.983 $ 28,236,974
The notes to the financial statements are an integral part of this statement 88
f" City of Clearwater, Florida
j Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets
Nonmajor Enterprise Funds
For the Year Ended September 30, 2002
(' 1
1 i Recycling Marine Be Parking Harborvlew
t : Utility Aviation System Center Totals
Operating revenues:
,.0" Sales to customers $ 743,826 $ 1,523,778 $ $ $ 2.267,604
I '
I ! Service charges to customers 9,844 175,300 185,144
. J
User charges to customers 1,417,480 55,704 3,865,335 5,338,519
Rentals 1,167,188 11 ,425 1,871,730 3,050,343
! Total operating revenues 2, 171,150 2,746,670 4,052,060 1,871,730 10,841,610
~ .
Operating expenses:
{ Personal services 808,586 745,183 766,078 2,319,847
I Purchases for resale 187,317 1,135,044 887,337 2.209,698
i
.
l; Operating materials and supplies 49,595 186,504 163,745 29,968 429,812
Transportation 253,440 6,476 58,665 26,047 344,628
( . Utility service 6,882 146,467 39,741 128,439 321,529
I
Dumping charges 0
DeprecIation 226,158 295,782 229,709 553,176 1,304,825
r' Intertund administrative charges 439,860 262,990 785,050 16,900 1,504,800
Olher current charges:
Professional fees 61,557 740,373 875,723 1,677,653
Advertising 367 18,895 1,290 14,933 35,485
Communications 7,059 25,322 14,190 27,908 74,479
Printing and binding 1,799 870 4,001 6,670
Insurance 39,150 43,380 22,380 20,870 125,780
f " Repairs and maintenance 5,701 105,678 16,120 74,255 201,754
i
i : Rentals 2,054 1.154 160,097 1,072 164,377
, .:
Miscellaneous 10,422 42,120 198 14,809 67,549
Data processing charges 27,980 29,070 28,520 85,570
Taxes 236 18,209 18,445
Provision for estimated uncollectable accounts 4,298 19,251 23,549
Total other current charges 97,031 329,211 984,038 1 ,071,031 2,481,311
f Total operating expenses 2,068,869 3,107,657 3,027,026 2,712,898 10,916,450
j
I. .! Operating income (loss) 102,281 (360,987) 1,025,034 (841,168) (74,840)
\ : Nonoperating revenues (expenses):
, . Earnings on Investments 94,786 43,905 239,651 31,860 410,002
! ,
I j Interest expense (493) (11,717) (31 ,597) (24) (43,831)
Amortization of bond discount and Issue costs (1,484) (1,484)
,', Gain (loss) on exchange of assets (4,380) 68,676 (1,980) 62,316
,
~ i" Olher 508,043 44,657 163 552,863
t ~
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Lj Total nonoperating revenue (expenses) 89,913 608,907 249,247 31,799 979,866
Income (loss) before transfers 192,194 247,920 1,274,281 (809,369) 905,026
( ;
, Transfers In 1,500,000 178,670 1,618,670
i !.
i.., Transfers out (115,490) (116,000) (231,490)
f" 1 Changes In net assets 76,704 131,920 2,774,281 (630,699) 2,352,206
! Total net assets. beginning, as previously reported,
I
i....,:, before adjustment for GASe 34 implementation 3,810,361 2,224,970 6,647,249 (3,056,705) 9,625,875
Adjustment for Implementallon of GASB 34 - elimination
of contributed capital 251,057 1,533,095 1,135,005 14,134,472 17,053,629
Adjustment for change In accounting principle - change
In capitalization thresholds (131 ,209) (565.303) (12,139) (87,085) (795,736)
Total net assets. begInning, as restated 3,930,209 3,192,762 7,770,115 10,990,682 25,883,768
Total net assets. ending $ 4,006,913 $ 3,324,682 $ 10,544,396 $ 10,359,983 $ 28.235,974
The notes to the financial statements are an Integral part of this statement.
89
City of Clearwater, Florida
Combining Statement of Cash Flows
NORmaJor Enterprise Funds
For the Year Ended September 30. 2002 "-1
Recycling Marine & Parking Harborvlew .J ;:
Utility Aviation System center Totals
.n
CASH FLOWS FROM OPERATING " j
ACTMTIES
Cash received lrom customers $ 2, 134,982 $ 2,747,082 $ 4,052,311 $ 1,840.828 $ 10,715,203
Cash received from other fund&
Cash payments to suppliers (326,957) (2,151,644) (1,015.797) (1,912,513) (5,406,911 )
Cash payments to employees (864,118) (714,825) (814.533) (2,453,476)
Cash payments to oltler funds (739,509) (106,047) (898,618) (73,167) (1,817,341) ,.
Olher revenues 508,043 44,657 163 552,863
Net cash provlcled (used) by operating activities 204,396 222,609 1,368.020 (144,689) 1,650,338
CASH FLOWS FROM NONCAPITAL ,.
FINANCING ACTIVITIES
Operating transfers In 68,676 1,500,000 178,670 1,747,346
Operating transfers out (115,490) (116,000) (1,980) (233,470) ~
Interest paid (24) (24) ,
Receipt of cash on loans tolfrom other funds 357,746 4,321,369 4,679,115
Payment of cash on loans tolfrom other funds (521,714) (7,975,044) (6,496,758)
Net cash provided (used) by
noncapltal financing activities 242,256 (569,038) (2,155,655) 178,646 (2,303,791)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal payments on debt (1,902) (198,356) (200,258)
lnlerest pald (493) (11,718) (36,533) (48,744)
AcquIsition of ftxed assets (512,687) (68,676) (79,066) (7,549) (667,878)
Sale of fixed assels 2,051 1,980 4,031
Proceeds from Issuance of debt 13,442 13,442
Net cash (used) for capital and
related financing activities (497,587) (82,298) (311,975) (7,549) (899.407)
CASH FLOWS FROM INVESTING
ACTIVITIES
Interest on Investments 94,786 43,905 239,651 31,660 410,002
Net cash provided by Investing activities 94,786 43,905 239,651 31,660 410,002
Net Increase (decrease) In cash and ca$h equlvalBllls 43,853 (364,820) (859,959) 58,068 (1,142,858)
Cash and cash eqUivalents at beginning 01 year 1.395,758 857,124 3,240,532 50,096 5,543,510
Cash and cash equivalents at end of year $ 1,439,611 $ 472,304 $ 2,380,573 $ 108,164 $ 4,400,652
Cash and cash equivalents classified as:
Cash on hand and in banks $ $ 817 $ 22,050 $ 100 $ 22,967
Equity In pooled cash and investments 1 ,439,611 471,487 2,342, 150 108,064 4,361,312
Restricted equity in pooled cash and inveslmBl1ts 16,373 16.373
Total cash and cash equivalents $ 1,439,611 $ 472,304 $ 2,380,573 $ 108,164 $ 4,400,652
The notes 10 the flnanclaI statements are an integral part of this statement.
90
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City of Clearwater, Florida
Combining Statement of Cash Flows
NonmaJor Enterprise Funds
For the Year Ended September 30, 2002
Recyollng
Utility
Marine "
Aviation
Parking
System
Harborvlew
Center
Totals
ReconGlltatlon of operating Income to net
Gash provided by operating activities:
OpEll8Ung Income $ 102,281 $ (360,987) $ 1,026,034 $ (841,168) $ (74,840)
Adjustments to Reconcile Operating Income
to Net Cash Provided by Operating Aclivl1les:
Other Revenue from Nonoperating
Section of Income Statement 508,043 44,657 163 552,863
Depreciation 226,158 295,782 229,709 553,176 1,304.825
Non-cash land rental expense 136,499 136,499
Prov.leion for uncollectible accounts (1,209) (1,209)
Change In assets and UablDtlIl$:
(Increase) In accounts receivable (30.661 ) (31.410) (62,071)
(Increase) In Inventory (10,423) (10,423)
Increase (decrease) in accounts and contracts payable (38,639) (160,576) (19,675) 174,042 (62.848)
Increase (decraase) in deposil& 412 119 (11,992) (11.461)
Increase in deferred revenue 132 12,600 12.632
(Increase) in net pension asset (61,041) (38.640) (40,320) (140.001)
Increase (decrease) In accrued payroll 5,509 8,996 (8.1 S5) 6,372
Total adjustments 102,117 583,596 342.986 696.479 1.725,178
Net cash proVided by operating activities $ 204,398 $ 222,609 $ 1.368,020 $ (144,689) $ 1,650,338
Noncash Investing, capital and financing activities:
Galn (loss) on exchange of assets $ (4,380) $ 68,676 $ (1,980) $ $ 62,316
Change In fair value of Investments $ $ $ (43) $ $ (43)
The notes to the financial statements are an integral pari of this 8laIemenl
91
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92
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Internal Service Funds
Internal service funds are used to account for services and commoalties furnished by a designated
department to other departments within the City or to other governments on a cost reimbursement basis.
Garage Fund - to account for the cost of automotive and other motorized equipment of the City. The
acquisition cost of new or upgraded equipment is financed through user departments and the asset valueis
simultaneously contributed to the Garage Fund. The cost of replacement of existing equipment is financed
by the Garage Fund.
Administrative Services Fund - to account for various support activities including information technology,
printing, mailing, and telephone services. The cost for these services is charged to user departments based
on the cost of providing units of service.
General Services Fund - to account for various support activities including building maintenance and
custodial services for all City departments and facUities. The cost for these services is charged to user
departments based on the cost of providing units of service.
Central Insurance Fund - to account for the City's limited self-insurance program wherein all funds are
assessed charges based on damage claims incurred and on managemenfs assessment of individual funds'
risk exposure. All claims and premiums are paid out of this fund, together with other costs necessary to
administer the program. Medical insurance premiums are also paid from this fund.
93
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f'j City of Clearwater, Florida
Combining Statement of Revenue, Expenses, and Changes In Fund Net Assets
Internal Service Funds
For the Year Ended September 30, 2002
GovemmentlII Buslness-type
n General Central Actlvllles Gange Administrative Activities
i i Operating revenues ServIces Insurance Total Fund Services Total
Billings to departments $ 2,946,166 $ 11.584,366 $ 14,530,532 $ 8,3n,343 $ 7,603,910 $ 15,981,253
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! Operating expenses:
l Personal services 1,383.785 399.989 1.783,n4 1,788,597 3,346,059 5,134,656
Purchases for resale 1,966.455 1.1l66,455
r: Operating materials and supplies 202,411 3,238 205,649 86,274 190,321 276,595
Transportation 90,296 6,783 97,059 6,266 80,588 86,854
I '
,; Utllily service 353.016 353,016 86,058 4,925 90,983
Depreciation 12.452 6,569 19,021 3,095,639 525,096 3,620.735
r '\ Interfund administrative charges 229,800 27,760 257 ,560
!
, Other current charges:
l
Professional fees 57,055 57,055 174,313 18~.029 362,342
Advertising 150 150 525 525
Communications 38,737 11,997 50,734 26,059 1,289,746 1,315.805
Printing and binding 435 1,581 2,016 652 41,496 42.148
Insurance
Premiums 23.050 8.188,704 8,211,754 273.990 42,430 316.420
Claims Incurred 4,361,086 4,361,086 607.544 607,544
Repalrs and maintenance 575.933 11,199 587,132 593,841 593,841
Rentals 5,680 1,176 6,856 1.584 144,259 145,843
, Miscellaneous 50.044 22,038 113,944 135,982
j 20,123 29,921
, , Data processing charges 40,540 16,620 57,160 124,260 233,920 358,180
Taxes 6,248 6,248
r Total other current charges 704,498 12.679.489 13.383,987 1 .236.688 2.648.190 3,884,878
i Total operating expenses 2,746,458 13.096.048 15.842,506 8,495,777 6.822.939 15,318,716
!
\,
Operating Income (loss) 199.708 (1,511.682) (1,311.974) (118,434) 7BO,971 662,537
r Nonoperating revenues (expenses)
! Eamings on Investments 34.332 1,051,246 1,085,578 139,906 63,223 203.129
(
Interesl expense (290,131) (71,944) (362.075)
Gain (loss) on exchange of assets 196,On (330,848) (134.771)
Other 259 259 182,426 3 182.429
Total nonoperating revenue (expenses) 34.591 1,051,246 1,085,837 228.278 (339.566) (111.288)
Income (loss) before transfers 234.299 (460,436) (226.137) 109,844 441.405 551,249
Transfers in 155,710 155.710 881,553 22,613 904.166
Transfers out (25.683) (80.000) (105.683)
(25.683) 75,710 50,027 881.553 22.613 904,166
Change In net assets 208.616 (384.726) (176,110) 991,397 464.018 1,455.415
Tolal net assets - beginning, as prevloualy reported,
before adjustment for GASB 34 Implementation 1,1 to.640 13,819,509 14,930,149 5,278,518 2,267,284 7.545.802
Acljustment for Implementation of GABS 34 - elimination
of contributed capital 8,415 728,449 734.864 3,764.841 49,722 3,804,563
Adiustment for change in accounUng principle. change
in capltaUzalion thresholds (40,787) (10,620) {51.4On (404,383) 220.098 (184,265)
Total net assets. beginning. as restated 1.078,268 14,537,338 15,613,608 8,628.998 2,537,104 11,166,100
Total net assets. ending $ 1.284.884 $ 14.152.812 $ 15,437.496 $ 9,820.393 $ 3.001.122 $ 12,621 ,515
The notes to the financial statements are an integral part of this statement
95
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City of Clearwater, Florida
Combining Statement of Cash Flows -('1
Internal Service Funds
For the Year Ended September 30, 2002 ., i
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Governmental Buslness.type :! ~
General central ActIVIties Garage Administrative AcIlvlttes
Services Insurance Total Fund Services Total ~ J
CASH FLOWS FROM OPERATING
ACTIVITIeS 1t
Cash recelvecHlOm other funds $ 2,946,166 $ 11,584,366 $ 14,530,632 $ 8,377,343 $ 7,603,910 $ 15,981.253
Cash payments to suppners (1.206.796) (11.067,229) (12,27~,025) (3,897,665) (2,327,698) (6.225,263) .i )
Qash payments to employees (1,460,434) (440,488) (1,900.920) (1,882,871 ) (3,566.586) (5,449,467)
cash payments 10 other funds (160,762) (42.723) (203,485) (263.636) (618.435> (882,071 ) r--..
;
Other revenues 182.427 3 182.430
Net cash provided by operating activities 119,174 33,928 153.102 2.515.698 1,091.194 3,606,892 ( j
CASH FLOWS FROM NONCAPITAL ' ,
FINANCING ACTIVITIES
Operating transfera in 165,710 165,710 888,080 22,613 910,693
Operating transfers out (25.683) (80,000) (105,683)
Receipt of cash on loans toIfrom other funds 877.065 877,066 167,646 167,646
Payment of cash on loans toIfrom other funds (239,681) (2.000,000) (2,239,681) (377,672) (377 ,572)
Net cash provided (used) by
noncapital financing activities (265.364) (1,047,225) (1,312,589) 1,055,726 (354.959) 700.767
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal payments on debt (273.518) (273,518)
Interest paid (290.131) (71,944) (362,075)
Acquisition of fixed assets (6,648) (6,648) (3,674,464) (530,914) (4,205,378)
Sale of fixed assets 259 259 269.578 269.678
Proceeds from Issuance of debt 25,682 25,682 671,164 218,465 889,629
Net cash provided (used) for capital and
related financing activities 19,293 19,293 (3,023,853) (667 ,911 ) (Mal ,764)
CASH FLOWS FROM INVESTING
ACTIVITIES
Interest on investments 34,332 1,051.247 1,085,579 139,906 63,223 203,129
Net cash provided by Investing activities 34.332 1.051,247 1.085,679 139.906 63.223 203,129
Net increase (decrease) In cash and cash equivalents (92,566) 31.950 (54,815) B87,4n 141,547 829,024
Cash and cash equivalents at beginning of year 747,078 19,686,924 20,433,002 3,186.897 791,223 3.978.120
Cash and cash equivalents at end of year $ 654.513 $ 19,723,874 $ 20.378.387 $ 3,874.374 $ 932,770$ 4,807,144
Cash and cash equivalents classified as: . !
, I
Cash on hand and In banks $ $ $ $ $ 1.900 $ 1,900
Equity in pooled cash and Investments 654.613 19.723,874 20,378.387 3,874,374 930.870 4.805,244
Total cash and cash equivalents $ 654,613 $ 19,723.674 $ 20,378,387 $ 3,874.374 $ 932.770$ 4,807.144 ,
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The notes to the financial statements llI8 an Integral part of this statement
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City of Clearwater, Florida
Combining Statement of Cash Flows
Internal Service Funds
For the Year Ended September 3D, 2002
Govemmenlal BuslneaSoIype
General Cen1ral Acttvltles Garage Admlnlstretlve Activities
Services Insurance Total Fund services Tolal
Reconciliation of operaUng Income 'to net
cash provided by operating acUvlUes:
Operating income (loss) $ 199,708 $ (1,611,882) $ (1.311,974) $ (118,434) $ 780.971 $ 662,537
Adjus~nts to reconcile op8raling income
to net cash provided by operating aclIvilIes:
Other revenue from nonoperating
seelion of Income statement 182,427 3 182,430
Depreciation 12,452 6.669 19.021 3,095.639 525,096 3,620,735
Change in assets and liablnlies:
Decrease in accounts receivable 76 76
(Increase) In invenfory ()09,910) (109,910)
(Increase) decrease In prepaid elCpBn&es 142 (423,032) (422,890)
Increase (decrease) In accounts and contracts payable (16,478) 2,002,670 1,986.092 (439,750) 5,575 (434,175)
(Increase) in net pension asset (81,761) (25;201 ) (106,962) (117,801) (234.082) (361,683)
Increase (decrease) In accrued payroU 5,111 (15.296) (10,185) 23.327 13,565 36,882
Total adjustments (80,534) 1,545,610 1.465.076 2,634.132 310,223 2.944,355
Net cash provided by operating activities $ 119,174 $ 33,928 $ 163,102 $ 2,515.698 $ 1,091.194 $ 3,606,692
Noncash Investing, capital and financing actlvltlas:
Gain (loss) on exchange of assels $ $ $ $ 196,077 $ (330,848) $ (134,771)
The notes to the flllanclal statements are an integral part of this statement.
97
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Fiduciary Funds
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Fiduciary Funds are used to account for resources that are managed In a trustee capacity or as an agent for
other parties or funds.
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Employees' Pension Fund . to account for the financial operation and condition of the major employee
retirement system.
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Firemen's Relief and Pension Fund . to account for the financial operation and condition of the Firemen's
Relief and Pension Fund. closed to new members in 1962, containing 48 retired members and no active
members.
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Police Supplemental Pension Fund - to account for the financial operation and concfrnon of a supplemental
pension plan funded by the State for sworn police officers.
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Firefighters Supplemental Pension Fund - to account for the financial operation and condition of a
supplemental pension plan funded by the State for firefighters.
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Treasurer's Escrow Agency Fund . to account for the receipt. custody, and expenditure of funds held
temporarily in trust for other parties.
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ASSETS
Cash on hand and in banks
Equity in pooled cash and Investments
Managed investment accounts, at fair value
Receivables:
Interest and dividends
Due from others
Tolal receivables
Tolal assets
L1ABIUTI ES
Accounts payable
Totalllabllilies
NET ASSETS
Net assels held In trust for pension benefits
(a schedule of funding progress for
each plan Is presented on page 73)
City of Clearwater, Aorida
Combining statement of Fiduciary Net Assets
Fiduciary Funds
September 30, 2002
Defined Benefit
Pension Trust Funds
Defined Contribution
Pension Trust Funds
Police Firefighters
Supplemental Supplemental
Totals
EmplOYees' Aremen's
$ $ $ 17,948 $ $ 17,948
697,627 3,397.492 4,095,119
877,817,701 1,280,143 9,329,872 8,470,023 396,897,295
1.907.068 50,761 43,266 2,001,094
41,643 41,643
1.907,068 60,761 84.908 2,042.737
380,422,452 4.677,635 9.398,081 8,554.931 403,053,099
407,002 407.002
407,002 407,002
$ 380,016,450 $ 4.677.635 $
9,398.081 $ 8.654,931 $
402,646,097
The noles 10 the financial statements are an Integral part at this statement
100
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The notes to the financial statemen13 are an integral part of this statement.
101
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City of ClearWater, RorJda
Statement of Changes In Assets and liabilities
Agency Fund
For the Year Ended September 30, 2002
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Balance Balance
Octob.1, September 30,
2001 Additions Deductions 2002
TREASURER'S ESCROW FUND
ASSETS
Equity In pooled cash and investments $ 180,536 278,548 174,922 $ 284,162
UABILiTIES
Deposits:
Property owners $ 21,944 $ 21,944
Developers 15,558 100,000 115,558
Other miscellaneous payables:
Special purpose funds 8.097 1,275 1,450 7,922
Other 134,937 177,273 173,472 138,738
Total Uabilities $ 180,536 278,548 174.922 $ 284,162
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The notes to the fU18nc:iaJ statements are an integral part of thJs statement
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102
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Capital Assets
Used in the Operation
of Governmental Funds
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City of Clearwater, Florida
Capital Assets Used In the Operation of Governmental Funds
Comparative Schedules By Source 1
September 30, 2002 and 2001
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2002
2001 as restated Z
Schedule of Gene....1 Filferl A....e....
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Land
Buildings
Improvements Other Than Buildings
Equipment
Infrastructure
Construotion In Progress
$
39,914,725 $ 85,596,531
37,933,951 38,337,080
62,466,386 52,055,659
33,070,403 31,828.879
1,076,247
11.650.nS 759.064
176.001,487 $ 158.576.113
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$
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SomeRA of InvestmAntA In GAneml Fbced AsIA..t,..
General Fund Revenue $ 124,200,861 $ 114,631,019
General Obligation Bonds 6,2ff7,870 6,297,870
Revenue Bonds 13,111,669 6,685,490
Notes. Mortgages and Other Obligations 4.910,150 4,496,562
Special Assessmenls 2,012,192 2,012,192
Federal and Stale Granls 10.435,417 9,530,732
Gifts 6,414,522 6,303,643
Contributions from Developers 7.639,144 7,539,143
Undetermined Inveslments Prior to July 1, 1954 1,079,462 1 ,079.462
$ 176.001.487 $ 158.576,113
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1, This schedule presents only the oapital 88set balances related to govemmentallunds. Aocordlngly, the oapltal assets
reported in lntemal service fund8 are excluded from the above amounts.
2 EffecUve October 1,2001, the City Implemented a new capitalization poley that resulted in a prior period adjustment
to record a wrltedown of fixed assets. See Note II-C on page 47.
The notes to the financial statements are an integral part of this statement
105,
City of Clearwater. Florida T1
Capital Assets Used In the Operation of Governmental Funds ,"; ,
Schedule By Functlon and ActMty 1 .: ~
SephNnber30,2002
Function Improvements Machinery
and Other Than and
Activity Total Land Buildings Buildings Equipment Infrastruoture
Fixed Assets Unallocated by Function $ 16,144.222 $ 9.958.088 $ 7,938,114 $ $ 248.020 $
General Government .2
Legislative 3,531 3,531
Executive 481,500 1,528 479,972
RnanclaJ & Administrative 935,649 9,679 925,970
Legal 144,794 2.106 142,686
Planning 6,285 6,285 ,j
. Comprehensive Planning 4,165 4.165
Other Genera/ Government 25,556,599 6.404.795 16.169.786 131,761 2.850,257
'0.132.523 6,404.795 16,183.099 131,761 4.412,666 ,
;
PubUc Safety:
Law Enforcement 8,565,028 588,945 200,257 7,775,826
Fire Control 4,956,823 95,448 4,861,375
Protective Inspections 180,565 11,432 169,133
Emergency and DIsaster Relief 403,868 88,482 315,386
Ambulance and Rescue S9fVlces 1.359,806 12,254 1,347,552
15,466,090 588,945 207,616 200,257 14,469.'02
Physical Environment
Solid Waste I Recyling 15.940 15,940
Conservation and Resource Management 90,541 76,210 14,331
Other Physical Environment 394.908 340,686 54.222
501 ,389 416,896 84.493
Transportation:
Road and Street Facilities 57,074,460 9,604,6n 4.311,791 41,384,499 697,246 1,076.247
Airports
Parking 35.988 35,988
Other Transportation Service 502,091 1,200 171.262 148,000 181,629
57,612,539 9.641.865 4,483.053 41 ,532.499 878,875 1.076,247
Economic Environment
Industry Development 1 ,428,828 1,396,655 16,901 15,270
Housing and Urban pevelopment 698,747 329.835 293.682 75,230
Other Economic Envlroment 33,125 33,125
2,160,696 1,759.615 310,583 90.500
Human Services:
Other Human Services 23.3n 23.3n
Culture and Recreation:
Ubrarles 13,556,327 118,053 756,735 133,859 12.547,680
Parks & Recreation 24,174,314 7,502.955 7,376,210 9,033,979 261,170
Cultural Centers 28,508 993 27,515
Special Recreation Faalilles 5,650.725 3.940,409 en,548 1,006,135 26,633
43,409.874 11.561,417 8,811.486 10,173,973 12,862.998
Total General Fixed Assets Allocated to Functions 148,306,490 29.956,637 29.995,837 52.455,386 32.822,363 1.076,2.47
164,450,712 $ 39,914.725 $ 37,933,951 $ 52.455,388 $ 33,070.403 $ 1.076,247
Construction In Progress 11,550,n5
Tota/General Fixed Assets $ 17s.o01,487
I This schedule presents only the capital asset balances related 10 governmental funds. Accordlngly, the capital assets reported In Inlamal S8lVlce funds ;,
are excluded from the above amounts.
The notes 10 the financial statements are an Integral part of this 8lalement.
t..
106
r1 City of Clearwater, florida
I
Capital Assets Used In the Operation of Governmental Funds
Schedule of Changes By Function and Activity ,
For the Year Ended September 30, 2002
Restated ~
General PrIor General General
Fixed Assets PertocI fixed Assets Fixed Assets
1 Function and Actlvlty 10101/01 Restatement 10101101 Additions Deductions 9130102
1
FIXed Assets Unallocated By Function $ 34.3.25.399 $ (16,181,1m $ 18.144.222 $ $, $ 18,144.222
r ! General Govemment
Legislative 25,166 (21,635) 3,531 3,531
I Executive 640,801 (165,554) 475,247 18,021 (11.768) 481,500
\ Rnanelal & Admlnlstrative 1.179,515 (62,021) 1,117,494 14,474 (196.319) 935,649
Legal 256,966 (90,802) 166,164 (21.370) 144,794
( Planning 6,285 6,285 8.285
j , Oomprehell5ive Planning 22,435 (11,949) 10,486 (6,321) 4,165
II Other General Government 28,812,085 11 ,054,237) 25,757,828 175,025 /376,254} 25,556.599
28,943.233 11,406.198) 27,537,035 207,520 (612,032) 27.132.523
Pu b1ic Safely:
Law Enforcement 12.960.341 (4,839,360) 6,120,981 529.883 (65,838) 8,565,028
Are Oontrol 6,652,368 (2,561 ,534) 4,090,834 880,335 (14,346) 4,956,823
Protective Inspections 245,265 (57,164) 188,101 9.319 (16,855) 160,565
Emergency and Disaster Relief 400.005 (46,137) 403.868 403,868
Ambulance and Rescue Services 1,481,835 (144,571) 1 .337.064 22,742 1.359.806
21.789.614 {7.848.786l 14,140,848 1,442,279 (117,037) 15.466,090
Physical Environment
Solid Waste I Recyling 59,445 (43,505) 15,940 15,940
ConseNation and Resource Management 105.155 (14.614) 90,541 90,541
Other Physical Environment 589.218 ~~:~:~ 392.357 2,551 394,908
733;818 498.838 2,551 501 .389
Transportation:
Road and Street Facilities 71,604,842 (15,982,604) 55,622,238 1,460,572 (8,350) 57,074,460
Airports 531,092 (351,623) 179.469 (179.469)
Parking 1.394.945 (1.358,957) 35,988 35,988
, Olliernan~orta~nSeN~e 792,160 (247,420) 544,740 1,200 (43 849~ 502.091
.l.... ,~ 74.323.039 (17,940.604) 56.382.435 '1.461,n2 l231:668 57,612.539
Economic Environment
r ! Employment Opportunity and Development 14,629 (14,629)
Industry Development 2,089.530 (660,704) 1.428,826 1,428,826
Housing and Urban Development 1.322,207 (623.460) 698,747 698,747
Other Economic Environment 34,738 11.613) 33.125 33,125
3,481,104 11,300,4061 2.160.698 2.160,698
Human Services;
Other Human Services 62,379 (39.002) 23.m 23.3n
\ I
Culture and Recreation:
Libraries 14.801,054 219,983 15,021,037 861,751 (2,326,461) 13.556,327
! ! Parks & Recreation 25,317 :JST (3.147,522) 22,169,735 2,009,087 (4,508) 24.174.314
f i Oultural Services 1,704 (1.704)
t t
l; Cultural Oenters 58.997 (28,489) 28,508 28,508
Special Recreation Facilities 1.911,740 (201.424) 1.710,316 3,940,409 5.650,725
r; 42.088.752 (3.159,156) 38,929.596 6,811,247 (2,330.989) 43.409,874
\ \ Total 205,727,338 (47,910,289) 157,817,049 9.925.369 (3,291,706) 164.450.712
l I.
Construction In Progress 759.064 759,064 10.791,711 l',550,nS
J :; $ 206,486.402 $ (47 .91 0,289) $ 158,576,113 $20.717,080 $ (3.291 ,706) $ 176,001,487
L'
1 ThIs schedule presents only the capital asset balances related to goverMJentaJ funds. Accordingly, lie capital assets reported In Intemal
; service funds are excluded from \he above amounts.
'i
t. .i 2 Effective October " 2001 lie citY Implemented a new capIlaIzaIion policy th&t resulted in a prior period restatement to record a wriledown
of fixed assets. See Note n-c on page 47.
f ~
The notes 10 the financial statements are an integral part of Ihis statement.
L.
- ,
1...!
r ~
107
APPENDIX C
FORM OF ORDINANCE 6915-01 AND RESOLUTION 03-35
ORDINANCE NO. 6915-01
AN ORDINANCE PROVIDING FOR WATER AND SEWER
REVENUE BONDS, SERIES [TO BE DETERMINED] OF THE CITY
OF CLEARWATER, FLORIDA, TO BE ISSUED IN ONE OR MORE
SERIES OVER ONE OR MORE YEARS; TO FINANCE OR
REFINANCE THE COST OF DESIGN, ACQUISITION,
CONSTRUCTION ORRECONSTRUCfION OF IMPROVEMENTS
TO THE CITY'S WATER AND SEWER SYSTEM; PROVIDING
FOR THE PAYMENT OF THE BONDS FROM THE NET
REVENUES OF THE CITY'S W ATERAND SEWER SYSTEM AND
CERTAIN OTHER MONEYS PLEDGED THEREFOR; PROVIDING
FOR THE RIGHTS OF THE HOLDERS OF SUCH BONDS;
AMENDINGORDINANCENO. 3674-84, ORDINANCENO. 5355-
93 AND ORDINANCE NO. 6311-98 WHICH AUTHORIZED THE
PARITY BONDS TO ALLOW DELIVERY OF ADDITIONAL
BONDS PARITY CERTIFICATE BY FINANCIAL SERVICES
ADMINISTRA TOR; MAKING CERTAIN OTHER COVENANTS
AND AGREEMENTS IN CONNECTION THEREWITH; PRO-
VIDING CERTAIN OTHER MATIERS IN CONNECTION
THEREWITH; AND PROVIDING AN EFFECTIVE DATE.
BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF CLEARWATER,
FLORIDA:
SECTION 1. AUTHORITY FOR TillS ORDINANCE. This Ordinance is enacted pursuant
to Chapter 166, Part II, Florida Statutes, and other applicable provisions of law and pursuant to Section
16R of Ordinance No. 3674-84, as amended and supplemented (the "Original Ordinance") and is
supplemental to the Original Ordinance.
SECTION 2. DEFINITIONS. The following terms shall have the following meanings herein,
unless the text otherwise expressly requires. Words importing singular nwnber shall include the plural
nwnber in each case and vice versa, and words importing persons shall include firms and corporations.
"Accreted Value" shall mean, as of any date of computation with respect to any Capital
Appreciation Bond, an amoilllt equal to the principalamoilllt of such Capital Appreciation Bond (the princi-
pal amoilllt at its initial offering) plus the interest accrued on such Capital Appreciation Bond from the date
of delivery to the original purchasers thereof to the Interest Payment Date next preceding the date of
computation or the date of computation if an Interest Payment Date, such interest to accrue at a rate not
1
exceeding the legal rate, compounded semi-annually, plus, with respect to matters related to the payment
upon redemption or acceleration of the Capital Appreciation Bonds, if such date of computation shall not
be an Interest Payment Date, a portion of the difference between the Accreted Value as of the immediately
preceding Interest Payment Date and the Accreted Value as of the immediately succeeding Interest
Payment Date, calculated based on the asswnption that Accreted Value accrues dwing any semi-annual
period in equal daily amounts on the basis of a 360 day year consisting of 12 months of 30 days each.
"Act" shall mean Chapter 166, Part II, Florida Statutes, and other applicable provisions of law.
"Additional Bonds" shall mean Bonds issued incompliance with the terms, conditions and limitations
contained herein and in Section 16R of the Original Ordinance, which (i) shall have a lien on the Pledged
Revenues equal to that of the Bonds, (ii) shall be payable from the Pledged Revenues on a parity with the
Bonds, and (iii) rank equally in all other respects with the Bonds.
"Amortization Installments" with respect to any Tenn Bonds ofa Series, shall mean an amount or
amounts so designated which is or are established for the Term Bonds of such Series by subsequent
resolution of the Issuer and established with respect to such Term Bonds, provided that (i) each such
installment shall be deemed to be due on such interest or principal maturity date of each applicable year
as is fIxed by subsequent resolution of the Issuer and shall be a multiple of$5,000 principal amount (or
$5,000 Maturity Amount, inthe case of Capital Appreciation Term Bonds), and (ii) the aggregate of such
installments for such series shall equal the aggregate principal amount (or Maturity Amount, in the case of
Capital Appreciation Term Bonds) of Term Bonds of such Series authenticated and delivered on original
ISSuance.
"Authorized Investments" shall mean, with respect to a Series of Bonds, any of the following if and
to the extent the same are at the time legal for investment of municipal funds:
(1) Bonds or other obligations which as to principal and interest constitute direct obligations of,
or are unconditionally guaranteed by, the United States of America, including any of the federal agencies
and federally sponsored entities set forth in clause (3) hereinafter to the extent guaranteed by the United
States of America. In the event these securities are used for defeasance, they shall be non-callable and
non-prepayable;
(2) Obligations of any of the following federal agencies or federally sponsored entities which
obligations represent the full faith and credit (guaranteed obligations) of the United States of America, in
the event these securities are used for defeasance, they shall be non-callable and non-prepayable, (including
but not limited to) the following:
a. Export-Import Bank;
b. Farm Credit System Financial Assistance Corporation;
2
c. Rural Economic Community Development Administration (formerly the Fanners Home
Administration);
d. General Services Administration;
e. U.S. Maritime Administration;
f Small Business Administration;
g. Govenunent National Mortgage Association (GNMA);
h. U.S. Department of Housing & Urban Development (PHA's);
L Federal Housing Administration; and
J. Federal Financing Bank
(3) Direct obligations of any of the following federal agencies or federally sponsored entities
which are not fully guaranteed by the full faithand credit of the United States of America, inthe event these
securities are used for defeasance, they shall be non-callable and non-prepayable:
a. Federal National Mortgage Association (FNMA);
b. Federal Home Loan Mortgage COlporation (FHLMC);
c. Resolution Funding COlporation (REFCORP);
d. Student Loan Marketing Association (SLMA);
e. Federal Home Loan Bank Systems (FHLB); and
f Obligations of other Government Sponsored Agencies (approved by the Insurer).
The following obligations may be used as Permitted Investments for aU purposes other than defeasance
investments in refunding escrow accounts.
(4) Commercial paper which is rated at the time of purchase in the highest classification
(without regard to qualifier), "A-l"byS&P and "P-l" by Moody's and which matures not more than 270
days after the date of purchase.
(5) Investment agreements the provider of which is rated in one of the two highest rating
categories, without regard to qualifiers, by two Rating Agencies under which the provider agrees to
periodically deliver, on a delivery versus payment basis, such securities as are described in clauses (1-4)
above,
(6) Investment agreements the provider of which is rated in one of the two highest rating
categories, without regard to qualifiers, by two Rating Agencies and which are continuously and fully
secured by such securities as are described in clauses (1-3) above, which securities shall have a market
value at all times at least equal to 102% of the principal amount invested under the investment agreement
(marked to market at least weekly).
3
(7) The pooled investment program of the State of Florida administered by the State Board
of Administration, known as the Local Government SUlplus Funds Trust Fund, established pursuant to
Chapter 218, Part IV, Florida Statutes, as amended.
(8) Other forms of investments (including repurchase agreements) approved in writing by the
Bond Insurer with notice to Standard & Poor's.
With respect to any Series of Bonds issued hereunder, such additional investments as are approved by
subsequent resolution of the Issuer adopted prior to the issuance of such Series of Bonds.
"Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by a
Bond Insurer that guarantees payment of principal of and interest on the Bonds or any Additional Parity
Bonds.
"Bond Insurer" shall mean the provider of a Bond Insurance Policy for a Series of Bonds so
designated in a supplemental resolution of the Issuer.
"Bondholder" shall mean a registered owner of a Bond as shown on the registration books of the
Registrar.
"Bond Service Requirement" for any Fiscal Year, as applied to the Bonds of any series, shall mean
the SlUTI of:
(1) the amount required to pay the interest becoming due on the Bonds of such series
during the Fiscal Year, except to the extent that such interest shall have been provided by payments
into the Sinking Fund out of bond proceeds for a specific period of time or by payments of
investment income into the Sinking Fund from the Bond Service Account or any sub accounts
therein. Whenever such income is applied in calculating a Bond Service Requirement for any
purpose, such income shall also be excluded in the computation of Gross Revenues for such
purpose.
(2) the amount required to pay the principal of Serial Bonds of such series mattrring in such
Fiscal Year.
(3) the Amortization Installments for Term Bonds of such series for such Fiscal Year.
(4) in the event the Issuer has purchased or entered into an agreement to purchase Federal
Securities or Authorized Investments from moneys in the Bond Service Account, then the income
received or to be received on such Federal Securities or Authorized Investments from the date of
acquisition thereof to the date of maturity thereof, unless otherwise designated for other purposes,
shall be taken into consideration in calculating the payments which will be required to be made into
4
the Sinking FlUld and the Bond Service AccolUlt therein. Whenever such income is applied in
calculating a Bond Service Requirement for any purpose, such income shall also be excluded in the
computation of Gross Revenues for such purpose.
"Bonds" shall mean the Parity Bonds, Series 200 1 Bonds, and any Additional Bonds pennitted to
be issued herelUlder from time to time in accordance with the provisions hereof.
"Capital Appreciation Bonds" shall mean Bonds the interest on which is payable only at maturity
or redemption, as determined by subsequent resolution.
"Capital Appreciation Term Bonds" shall mean Capital Appreciation Bonds of a series all of which
shall be stated to mature on one date, which shall be subject to retirement by operation of the Bond
Amortization AccolUlt, and the interest on which is payable only at maturity or redemption.
"City Manager" shall mean the City Manager of the Issuer.
"Clerk" shall mean the City Clerk of the Issuer.
"Consulting Engineers" shall mean such qualified and recognized consulting engineers, having a
favorable repute for skill and experience in the construction and operation of such facilities as the ,System,
at the time retained by the Issuer to perform the acts and cany out the duties as herein provided for
Consulting Engineers.
"Cost of Operation and Maintenance" of the System shall mean the current expenses, paid or
accrued, of operation, maintenance and repair of the System as calculated in accordance with sOlUld
accolUlting practice, but shall not include any reserves for renewals and replacements, for extraordinary
repairs or any allowance for depreciation or amortization.
"COlUlty" shall mean Pinellas COlUlty,Florida, a political subdivision of the State.
"Federal Securities" shall mean only direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States of America.
"Finance Director" shall mean the Financial Services Administrator of the Issuer or her designee.
"Fiscal Year" shall mean the period commencing on October 1 of each year and ending on the
succeeding September 30, or such other period as is at the time prescribed by law.
"Gross Revenues" shall mean all income or earnings, including any income from the investment of
fimds as herein provided, derived by the Issuer from the operation of the System.
5
"Increased Capacity Requirements" means any increased demand upon or usage of the capital
facilities of the System resulting from additional connections thereto, or from substantial changes to or in
the use of properties connected thereto.
"Issuer" or the "City" shall mean the City of Clearwater, Florida.
"Maturity AmOlmt" means the alTIOlmt payable upon the stated maturity of a Capital Appreciation
Bond equal to the original principal amOlmt thereof plus all accrued interest thereon from the date of issue
to the date of maturity.
''Maxinnnn Bond Service Requirement" shall mean, as of any particular date of calculation, the
greatest amooot of aggregate Bond Service Requirement for the then current or any future Fiscal Year.
"Mayor-Commissioner" shall mean the Mayor-Commissioner or the Vice Mayor of the City
Commission of the Issuer, or such other person as may be duly authorized by the Mayor-Commissioner
to act on his or her behalf
"Net Revenues" of the System shall mean the Gross Revenues after deduction of the Cost of
Operation and Maintenance.
"Original Ordinance" shall mean Ordinance No. 3674-84, as amended and supplemented, of the
Issuer, authorizing the Parity Bonds.
"Parity Bonds" shall mean the Issuer's outstanding Water and Sewer Refunding Revenue Bonds,
Series 1993 and Water and Sewer Refunding Revenue Bonds, Series 1998.
"Paying Agent" shall mean any paying agent for Bonds appointed by or pursuant to a supplemental
resolution and its successors or assigns, and any other Person which may at any time be substituted in its
place pursuant to a supplemental resolution.
"Payment Date" shall mean, with respect to payment to the Bondholders of principal or interest on
the Bonds, or with respect to the mandatory amortization of Term Bonds, the date upon which payment
of such principal, interest or Amortization Installment is required to be made to the Paying Agent.
"Person" shall mean an individual, a corporation, a partnership, an association, a joint stock
company, a trust, any unincorporated organization or governmental entity.
"Pledged Revenues" shall mean the Net Revenues.
"Project Costs" shall mean all costs authorized to be paid from the Construction Food pursuant to
Section 17 hereof to the extent permitted ooder the laws of the State. It is intended that this definition be
6
broadly construed to encompass all costs, expenses and liabilities of the Issuer related to the Project which
on the date of this Ordinance or in the future shall be permitted to be fimded with the proceeds of any
Series of Bonds pursuant to the laws of the State.
"Projects" shall meanthe design, acquisition, construction or reconstructionofcapitalimprovements
to the System undertaken by the City from time to time, all as may be designated by subsequent resolution
of the Issuer adopted with respect to any Series of Bonds.
"Put Bonds" shall mean the Term Bonds so designated by resolution or ordinance of the Issuer at
or prior to the time the Bonds of any series are sold.
"Registrar" shall mean any registrar for the Bonds appointed by or pursuant to supplemental
resolution and its successors and assigns, and any other Person which may at any time be substituted in its
place pursuant to supplemental resolution.
"Reserve Requirement" shall be such amount as determined by subsequent Resolution of the Issuer
relating to a specific Series of Bonds adopted prior to the issuance of such Bonds, which may not exceed
the lesser of (i) the Maximwn Bond Service Requirement, (ii) 125% of the average annual Bond Service
Requirement or (iii) the largest amoWlt as shall not adversely affect the exclusion of interest on the Bonds
from gross income for Federal income tax purposes.
"Serial Bonds" shall mean any Bonds for the payment of the principal of which, at the maturity
thereof, no Amortization Installments are required to be made prior to the stated date of maturity of such
Serial Bonds.
"Series" or "Series of Bonds" or "Bonds ofa Series" shall mean all Bonds designated as being of
the same Series issued and delivered on original issuance in a simultaneous transaction, and any Bonds
thereafter delivered in lieu thereof or in substitution therefor pursuant to this Ordinance.
"System" shall mean the complete combined and consolidated water system and sanitary sewer
system of the Issuer now owned by the Issuer, or hereafter constructed or acquired by the Issuer, together
with all lands or interests therein, including plants, buildings, machinery, franchises, pipes, mains, fixtures,
equipment and all property, real or personal, tangible or intangible, now or hereafter owned or used in
connection therewith, and including any Wldivided or partial ownership interests therein.
"Term Bonds" shall mean the Bonds of a series all of which shall be stated to mature on one date
and which shall be subject to retirement by operation of the Bond Amortization ACCOWlt.
"200 I Bonds" shall mean the Series of Bonds initially issued Wlder this Ordinance and designated
as Series 2001 Bonds.
7
"2001 Project" shall mean the Project or Projects authorized to be financed with the proceeds of
the Series 2001 Bonds as identified by subsequent resolution of the Issuer adopted prior to the issuance
of the Series 2001 Bonds, consisting of design, acquisition, construction or reconstruction of capital
improvements to the System Wldertaken by the City from time to time, a portion of the cost of which are
to be paid from the proceeds of the Series 2001 Bonds
SECTION 3. FINDINGS. It is hereby ascertained, determined and declared that:
A. The Issuer now owns, operates and maintains the System and is empowered to maintain,
operate, improve and extend such system and regulate and fix reasonable rates and charges for the services
furnished thereby.
B. The Issuer derives Gross Revenues from rates, fees and charges made and collected for the
services and facilities of the System supplying water and sanitary sewerage services and the Gross
Revenues are not pledged or encumbered in any manner, except for payment of the Parity Bonds.
C. Any Series of Bonds and the project to be funded with the proceeds of such Series of Bonds,
shall be issued and such projects shall be Wldertaken upon approval by subsequent resolution of the Issuer
as provided by law. The proceeds of any Series of Bonds shall be applied as provided in a supplemental
ordinance or resolution.
D. Section 16R of the Original Ordinance provides for the issuance of Additional Bonds Wlder the
terms, limitations and conditions provided therein.
E. The Issuer has complied, or will comply prior to the delivery of the Bonds, with all the terms,
conditions and restrictions contained in Section 16R of the Original Ordinance. The Issuer is therefore
legally entitled to issue the Bonds as Additional Bonds within the authorization contained in the Original
Ordinance and the covenants in the Original Ordinance shall apply to the Bonds.
F. The Bonds herein authorized shall be ona parity and rank equally, as to lien on and source and
security for payment from the Pledged Revenues and in all other respects, with the Parity Bonds.
G. The estimated Pledged Revenues will be sufficient to pay all of the principal of and interest on
the Bonds, as the same become due, and to make all required sinking fund, reserve and other payments
required Wlder this Ordinance and the Original Ordinance.
H. The principal of and interest on the Bonds and all required sinking fund, reserve and other
payments shall be made solely from the Pledged Revenues as herein provided. The Issuer shall never be
required to levy ad valorem taxes on any property therein to pay the principal of and interest on the Bonds
or to make any of the required sinking fund, reserve or other payments, and any failure to pay the Bonds
shall not give rise to a lien upon any property of or in the Issuer, except the Pledged Revenues.
8
1. The total indebtedness of the Issuer, within the meaning of the Issuer's charter, does not exceed
twenty per centum (20%) of the current assessed valuation of all real property located in the Issuer, and
will not exceed such amount after issuance of the Bonds.
SECTION 4. AUTHORIZATION OF SERIES 2001 BONDS. There is hereby authorized
the issuance of the initial Series of Bonds hereunder to be designated the Series 200 I Bonds, in a principal
amount of not to exceed $62,000,000, subject to such terms and conditions as set forth herein and in
subsequent Resolutions of the Issuer adopted prior to the issuance of the 200 I Bonds. The proceeds of
which shall be used to pay the costs of capital improvements to the System, the costs of issuing the 200 I
Bonds, including any municipal bond insurance, and to fimd a debt seIVice reseIVe fimd.
SECTION 5. ORDINANCE TO CONSTITUTE CONTRACT. In consideration of the
acceptance of the Bonds by the Bondholders fromtime to time, this Ordinance shall be deemed to be and
shall constitute a contract betweenthe Issuer and such Bondholders. The covenants and agreements herein
set forth to be performed by the Issuer shall be for the equal benefit, protection and security of the legal
Bondholders of any and all of such Bonds, all of which shall be of equal rank and without preference,
priority or distinction of any of the Bonds over any other thereof, except as expressly provided therein and
herein.
SECTION 6. AUTHORIZATION OF BONDS. Subject and pursuant to the provisions hereof
and as shall be described in subsequent resolutions of the Issuer to be adopted prior to the issuance of any
Series of Bonds, obligations of the Issuer to be known as "Water and Sewer [Refimding] Revenue Bonds,
Series [fo Be Determined]" are authorized to be issued in one or more series (including Additional Bonds)
from time to time. The aggregate principal amount of the Bonds which may be executed and delivered
under this Ordinance is not limited except as is or may hereafter be provided in Section 17T hereof or as
limited by the Act, by law or Section 16R of the Original Ordinance.
SECTION 7. DESCRIPTION OF BONDS. The Bonds shall be issued in fully registered form;
may be Capital Appreciation Bonds, Capital Appreciation Term Bonds, Variable Rate Bonds, Serial
Bonds or Term Bonds; shall be dated; shall be numbered consecutively from one upward in order of
maturity preceded by the letter "R"; shall be in the denomination of $5,000 each, or integral multiples
thereof for the Serial Bonds and in $5,000 Maturity Amounts for the Capital Appreciation Bonds or in
$5,000 multiples thereof, or such other denominations as shall be approved by the Issuer ina supplemental
resolution prior to the delivery of a Series of Bonds; shall have such Paying Agent' and Registrar; shall bear
interest at such rate or rates not exceeding the maximum rate allowed by State law, the actual rate or rates
to be approved by the governing body of the Issuer prior to or upon the sale of the Bonds; such interest
to be payable at such times as are fixed by supplemental resolution of the Issuer and shall mature annually
on such date in such years and in such amounts as will be fixed by supplemental resolution of the Issuer
prior to or upon the sale of any series of Bonds; and may be issued with variable, adjustable, convertible
or other rates with original issue discounts and/or original issue premiU111; all as the Issuer shall provide
herein or hereafter by supplemental resolution.
9
Each Series of Bond shall bear interest from the interest payment date next preceding the date on
whichit is authenticated, unless authenticated on an interest payment date, in which case it shall bear interest
from such interest payment date, or, unless authenticated prior to the first interest payment date, in which
case it shall bear interest from its date; provided, however, that if at the time of authentication payment of
any interest which is due and payable has not been made, such Series of Bond shall bear interest from the
date to which interest shall have been paid.
The Capital Appreciation Bonds shall bear interest only at maturity or upon redemption prior to
maturity in the amoWlt determined by reference to the Accreted Value of such Bonds.
The principal of and the interest redemption premimn, if any, on the Bonds shall be payable in any
coin or currency of the United States of America which on the respective dates of payment thereofis legal
tender for the payment of public and private debts. The interest on any Bonds (other than Capital
Appreciation Bonds) shall be payable by the Paying Agent on each interest payment date to the person
appearing on the registration books of the Issuer hereinafter provided for as the registered Holder thereof,
by check or draft mailed to such registered Holder at his address as it appears on such registration books
or by wire transfer to Holders of $1 ,000,000 or more in principal amoWlt of the Bonds. Payment of the
principal of all Bonds and the Accreted Value with respect to the Capital Appreciation Bonds shall be
made upon the presentation and surrender of such Bonds as the same shall become due and payable.
Notwithstanding any other provisions of this section, the Issuer may, at its option, prior to the date
of issuance of any Series of Bonds, elect to use an immobilization system or pure book-entry system with
respect to issuance of such Series of Bonds, provided adequate records will be kept with respect to the
ownership of such Series of Bonds issued in book-entry form or the beneficial ownership ofbonds issued
in the name of a nominee. As long as any Bonds are outstanding in book-entry form the provisions of this
Ordinance inconsistent with such system of book -entry registration shall not be applicable to such Bonds.
The details of any alternative system of issuance, as described in this paragraph, shall be set forth in a
resolution of the Issuer duly adopted at or prior to the sale of such Series of Bonds.
SECTION 8. EXECUTION OF BONDS. The Bonds shall be executed in the name of the
Issuer by the Mayor-Commissioner and City Manager and attested by the City Clerk, and approved as
to form, sufficiency and correctness by the City Attorney, either manually or with his or her facsimile
signature, and the official seal of the Issuer or a facsimile thereof shall be affixed thereto or reproduced
thereon. The facsimile signature of such officers may be imprinted or reproduced on the Bonds. The
Certificate of Authentication of the Bond Registrar shall appear on the Bonds, and no bond shall be valid
or obligatory for any purpose or be entitled to any security or benefit Wlder this Ordinance unless such
certificate shall have been duly executed on such Bond. The authorized signature for the Bond Registrar
shall be either manual or facsimile; provided, however, that at least one of the signatures appearing on the
Bonds shall at all times be a manual signature. In case any officer whose signature shall appear on any
Bonds shall cease to be such officer before the delivery of such Bonds, such signature or facsimile shall
nevertheless be valid and sufficient for all purposes the same as if he had remained in officeWltil such
10
delivery. Any Bond may be signed and sealed on behalf of the Issuer by such person who at the actual time
of the execution of such Bonds shall hold the proper office with the Issuer, although at the date of enactment
of this Ordinance such person may not have held such office or may not have been so authorized.
SECTION 9. AUTHENTICATION OF BONDS. Only such of the Bonds as shall have
endorsed thereon a certificate of authentication substantially in the form hereinbelow set forth, duly executed
by the Registrar, as authenticating agent, shall be entitled to any benefit or security under this Ordinance.
No Bond shall be valid or obligatory for any purpose unless and until such certificate of authentication shall
have been duly executed by the Registrar, and such certificate of the Registrar upon any such Bond shall
be conclusive evidence that such Bond has been duly authenticated and delivered under this Ordinance.
The Registrar's certificate of authentication on any Bond shall be deemed to have been duly executed if
signed by an authorized officer of the Registrar, but it shall not be necessary that the same officer sign the
certificate of authentication of all of the Bonds that may be issued hereunder at anyone time.
SECTION 10. NEGOTIABILITY. Subject to the provisions hereofrespectingregistrationand
transfer, the Bonds shall be and shall have all the qualities and incidents of negotiable instrwnents under the
laws of the State of Florida, and each successive holder, in accepting any of the Bonds, shall be
conclusively deemed to have agreed that the Bonds shall be and have all of such qualities and incidents of
negotiable instrwnents under the Uniform Commercial Code - Investment Securities of the State of Florida.
SECTION 11. REGISTRATION, EXCHANGE AND TRANSFER. ThereshallbeaBond
Registrar for the Bonds which may be the Issuer or a designated bank or trust company located within or
without the State of Florida. The Bond Registrar shall maintain the registration books of the Issuer and be
responsible for the transfer and exchange of the Bonds. The Issuer shall, prior to the proposed date of
delivery of the Bonds, by resolution designate the Bond Registrar and Paying Agent. The Bond Registrar
shall maintain the books for the registration of the transfer and exchange of the Bonds in compliance with
the Florida Registered Public Obligations Act and the system of registration as established by the Issuer
pursuant thereto.
Bonds may be transferred uponthe registration books, upon delivery to the Registrar, together with
written instructions as to the details of the transfer of such Bonds, along with the social security number or
federal employer identification number of such transferee and, if such transferee is a trust, the name and
social security or federal employer identification numbers of the settlor and beneficiaries of the trust, the
date of the trust and the name of the trustee. No transfer of any Bond shall be effective until entered on the
registration books maintained by the Bond Registrar.
Upon surrender for transfer or exchange of any Bond, the Issuer shall execute and the Bond
Registrar shall authenticate and deliver in the name of the registered owner or the transferee or transferees,
as the case may be, a new fully registered Bond or Bonds of authorized denominations of the same matmity
and interest rate for the aggregate principal amount which the registered owner is entitled to receive at the
earliest practicable time in accordance with the provisions of this Ordinance. The Issuer or the Bond
11
Registrar may charge the owner of such Bond for every such transfer or exchange an amount sufficient to
reimburse them for their reasonable fees and for any tax, fee, or other governmental charge required to be
paid with respect to such transfer, and may require that such charge be paid before any such new Bond
shall be delivered.
All Bonds presented for transfer, exchange, redemption or payment (if so required by the Bond
Registrar), shan be accompanied by a written instrument or instrwnents of transfer or authorization for
exchange, in form and with guaranty of signature satisfactory to the Bond Registrar, duly executed by the
registered holder or by his dilly authorized attorney in fact or legal representative.
All Bonds delivered upon transfer or exchange shall bear interest from the preceding interest
payment date so that neither gain nor loss in interest shall result from the transfer or exchange. New Bonds
delivered upon any transfer or exchange shall be valid obligations of the Issuer, evidencing the same debt
as the Bond surrendered, shall be secured by this Ordinance and shall be entitled to all of the security and
the benefits hereof to the same extent as the Bonds surrendered.
The Issuer and the Bond Registrar may treat the registered owner of any Bond as the absolute
owner thereof for all purposes, whether or not such Bonds shall be overdue, and shall not be bound by any
notice to the contrary.
Notwithstanding the foregoing provisions of this section, the Issuer reserves the right, on or prior
to the delivery of the Bonds to amend or modify the foregoing provisions relating to the registration of the
Bonds by resolution or ordinance in order to comply with all applicable laws, rules, and regulations of the
United States and/or the State of Florida relating thereto. In addition, pursuant to a resolution adopted
prior to the issuance ofa Series of Bonds, the Issuer may establish a book-entry-only system of registration
for such Series Bonds, the provisions of which shall be deemed to modify any inconsistent provisions of
this Ordinance.
SECTION 12. BONDS MUTILATED, DESTROYED, STOLEN OR LOST. In case any
Bond shall become mutilated, or be destroyed, stolen or lost, the Issuer may in its discretion issue and
deliver a new Bond of like tenor as the Bond so mutilated, destroyed, stolen or lost, in exchange and
substitution for such mutilated Bond upon surrender and cancellation of such mutilated Bond or in lieu of
and substitution for the Bond destroyed, stolen or lost, and upon the holder furnishing the Issuer proof of
his ownership thereof and satisfactory indemnity and complying with such other reasonable regulations and
conditions as the Issuer may prescribe and paying such expenses as the Issuer may incur. All Bonds so
surrendered shall be canceled by the Registrar for the Bonds. If any of the Bonds shall have matured or
be about to mature, instead of issuing a substitute Bond, the Issuer may pay the same, upon being
indemnified as aforesaid, and if such Bonds be lost, stolen or destroyed, without surrender thereof
Any such duplicate Bonds issued pursuant to this section shall constitute original, additional
contractual obligations on the part of the Issuer whether or not the lost, stolen or destroyed Bonds be at
12
any time fOWld by anyone, and such duplicate Bonds shall be entitled to equal and proportionate benefits
and rights as to lien on the source and security for payment from the funds, as hereinafter pledged, to the
same extent as all other Bonds issued hereWlder.
SECTION 13. PROVISIONS FOR REDEMPTION. Each Series of Bonds shall be
redeemable as provided by subsequent resolution of the Issuer applicable to each such Series of Bonds.
Bonds in denominations greater than an authorized denomination (or authorized Maturity AmOWlt
in the case of Capital Appreciation Bonds) shall be deemed to be an equivalent number of Bonds in the
denomination of an authorized denomination or Maturity AmOWlt. If a Bond is of a denomination or
Maturity AmOWlt larger than an authorized denomination or Maturity AmOWlt, a portion of such Bond may
be redeemed, in the amoWlt of an authorized denomination or Maturity AmOWlt or integralmultiples thereof
Notice of such redemption, identifying the Bonds or portions thereofcalled forredemption(i) shall
be filed with the paying agents and any Registrar; and (ii) shall be mailed by the Registrar, first-class mail,
postage prepaid, to all registered owners of the Bonds to be redeemed not more than sixty (60) days and
not less than thirty (30) days prior to the date fixed for redemption at their addresses as they appear on the
registration books to be maintained in accordance with the provisions hereof Failure to give such notice
by mailing to any owner of Bonds, or any defect therein, shall not affect the validity of any proceeding for
the redemption of other Bonds.
Notice having been mailed and filed in the manner and Wlder the conditions hereinabove provided,
the Bonds or portions of Bonds so called for redemption shall, on the redemption date designated in such
notice, become and be due and payable at the redemption price provided for redemption of such Bonds
or portions of Bonds on such date. On the date so designated for redemption, notice having been mailed
and filed and moneys for payment of the redemption price being held in separate acCOWlts in trust for the
holders of the Bonds or portions thereof to be redeemed, all as provided in this Ordinance, interest on the
Bonds or portions of Bonds so called for redemption shall cease to accrue, such Bonds and portions of
Bonds shall cease to be entitled to any lien, benefit or security Wlder this Ordinance, and the holders or
Registered Owners of such Bonds or portions of Bonds, shall have no rights in respect thereof, except the
right to receive payment of the redemption price thereof
Upon surrender of any Bond for redemption in part only, the Issuer shall issue and deliver to the
registered owner thereof, the costs of which shall be paid by the registered owner, a new Bond or Bonds
of authorized denominations or Maturity AmOWlts in aggregate principal amoWlt equal to the unredeemed
portion surrendered.
In addition to the foregoing notice, further notice may be given by the Issuer as set out below
(provided such additional notice is not required as a condition to redeeming Bonds), but no defect in said
further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the
effectiveness of a call for redemption if notice thereof is given as above prescribed.
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(1) Each further notice ofredemptiongivenhereWlder shall contain the information required
above for an official notice of redemption plus (i) the CUSIP numbers of all Bonds being
redeemed; (ii) the date of issue of the Bonds as originally issued; (iii) the rate of interest borne by
each Bond being redeemed; (iv) the maturity date of each Bond being redeemed; and (v) any other
descriptive information needed to identify accurately the Bonds being redeemed.
(2) Each further notice of redemption shall be sent at least 35 days before the redemption
date by registered or certified mail or overnight delivery service to all registered securities deposi-
tories then in the business of holding substantial amoWlts of obligations of types similar to the type
of which the Bonds consist (such depositories now being Depository Trust Company of New
York, New York, Midwest Securities Trust Company of Chicago, Illinois, Pacific Securities
Depository Trust Company of San Francisco, California, and Philadelphia Depository Trust
Company of Philadelphia, Pennsylvania) and to one or more national information services that
disseminates notices of redemption of obligations such as the Bonds.
(3) Each such further notice shall be published one time in the Bond Buyer ofN ew York,
New York or, if such publication is impractical or tmlikely to reach a substantial number of the
Holders of the Bonds, in some other financial newspaper or journal which regularly carries notices
of redemption of obligations similar to the Bonds, such publication to be made at least 30 days
prior to the date fixed for redemption.
SECTION 14. FORM OF BONDS. The text of the Bonds shall be in substantially the form
attached hereto as Exhibit B, with such omissiom, insertions and variations as may be necessary and
desirable and authorized and permitted by this Ordinance or by any subsequent ordinance or resolution
adopted prior to the issuance thereof, or as may be necessary if the Bonds or a potion thereof are issued
as Capital Appreciation Bonds, Capital Appreciation Term Bonds, Variable Rate Bonds or as may be
necessary to comply with applicable laws, rules and regulations of the United States and of the State in
effect upon the issuance thereof. 'The text of any Series of Bonds, other than the Bonds shall be as
determined by supplemental ordinance or resolution of the Issuer.
SECTION 15. BONDS NOT DEBT OF ISSUER. The Bonds shall not be or constitute
general indebtedness of the Issuer within the meaning of any constitutional or statutory provision or
limitation, but shall be payable solely from and secured by a prior lien upon and pledge of the Pledged
Revenues herein provided. No Bondholder shall ever have the right to compel the exercise of the ad
valorem taxing power of the Issuer or taxation in any form of any real property therein to pay the Bonds
or the interest thereon or be entitled to payment of such principal and interest from any other fimds of the
Issuer except from the Pledged Revenues in the manner provided herein.
SECTION 16. PLEDGED REVENUES. Until payment has been provided for as herein
permitted, the payment of the principal of and interest on the Bonds shall be secured forthwith equally and
ratably by an irrevocable lien on the Pledged Revenues prior and superior to all other liens or
14
encumbrances on such Pledged Revenues and the Issuer does hereby irrevocably pledge such Pledged
Revenues to the payment of the principal of and interest on the Bonds, the reserves therefor, and for all
other required payments. The Pledged Revenues shall immediately be subject to the lien of this pledge
without any physical delivery thereof or further act, and the lien of this pledge shall be valid and binding as
against all parties having claims of any kind in tort, contract or otherwise against the Issuer. All fimds and
accounts created pursuant hereto shall be held by the Finance Director (or such other officer of the Issuer
as shall be approved by the City Commission) as trust fimds for payment of the Bonds.
SECTION 17. COVENANTS OF THE ISSUER. Until all principal of and interest on the
Bonds shall have been paid or provided for as herein permitted, the Issuer covenants with the Bondholders
as follows:
A REVENUE FUND. The entire Gross Revenues shall upon receipt thereof be deposited in
the Revenue Fund created and established by the Original Ordinance. Such Revenue Fund shall constitute
a trust fimd for the purposes herein provided and shall be kept separate and distinct from all other fimds
of the Issuer and used only for the pwposes and in the manner herein provided.
B. CONSTRUCTION FUND. The Construction Fund to beheld by the Issuer and to the credit
of which deposits shall be made as required by Section 17 hereofis hereby created. Within such fimd there
shall be maintained separate accounts for each Series of Bonds and furthermore be maintained separate
accounts for capitalized interest fimded from the proceeds of any Series of Bonds.
C. DISBURSEMENTS FROM CONSTRUCTION FUND. Moneys on deposit from time
to time in the Construction Fund shall be used to payor reimburse the following Project Costs:
(1) Costs incurred directly or indirectly for or in connection with a Project or a proposed
or future Project including, but not limited to, those for preliminazy planning and studies, archi-
tectural, legal, financial, engineering and supervisory services, labor, services, materials, equipment,
acquisitions, land, rights-of-way, improvements and installation;
(2) Premiwns attributable to all insurance required to be taken out and maintained during
the period of construction with respect to a Project to be acquired or constructed, the premium on
each surety bond, if any, required with respect to work on such facilities, and taxes, assessments
and other charges hereof that may become payable during the period of construction with respect
to such a Project;
(3) Costs incurred directly or indirectly in seeking to enforce any remedy against a
contractor or subcontractor in respect of any default under a contract relating to a Project or costs
incurred directly or indirectly in defending any claim by a contractor or subcontractor with respect
to a Project;
15
(4) Financial, legal, accOlUlting, appraisals, title evidence and printing and engraving fees,
charges and expenses, and all other such fees, charges and expenses incurred in connection with
the authorization, sale, issuance and delivery of such Series of Bonds;
(5) Interest ftmded fromBond proceeds, ifany, for a reasonable period of time, which shall
be deposited in the Construction Fl.llld and shall be used as provided in a supplemental resolution
of the Issuer;
(6) Any other incidental and necessary costs including without limitationanyexpenses, fees
and charges relating to the acquisition, construction or installation of a Project, and the making of
extraordinary repairs, renewals and replacements, decommissioning or retirement of any portion
of , including the cost of temporary employees of the Issuer retained to carry out duties in
connection with the acquisition, construction or erection of a Project;
(7) Costs inctured directly or indirectly in placing any Project in operation in order that
completion of such Project may occur;
(8) Any other costs authorized pursuant to a supplemental resolution of the Issuer and
permitted l.lllder the laws of the State; and
(9) Reimbursements to the Issuer for any of the above items theretofore paid by or on
behalf of the Issuer.
D. DISPOSITION OF REVENUES. All fimds at any time remaining on deposit inthe Revenue
Fl.llld shall be disposed of on or before the twentieth day of each month, commencing in the month immedi-
ately following the delivery of the 2001 Bonds, for so long as any Bonds remain Outstanding, only in the
following manner and in the following order of priority:
(1) Fl.lllds shall first be used for deposit into the Operation and Maintenance Fl.llld, which
was established by the Original Ordinance, of such sums as are necessary for the Cost of
Operation and Maintenance, for the next ensuing month.
(2) A smn as shall be determined by supplemental resolution of the Issuer shall be
deposited into the Construction Fl.llld and used for the purpose of paying Project Costs.
(3) From the moneys remaining in the Revenue Fl.llld, the Issuer shall next deposit into the
Sinking Fund created by the Original Ordinance, such sums as will be sufficient to pay ( a) one-sixth
(1/6) of all interest becoming due on the Bonds on the next semi-annual interest payment date; (b)
commencing in the first month which is twelve (12) months or six (6) months prior to the first annual
or semi-annual maturity date, respectively, of any Serial Bonds, one-twelfth (1/12) or one-sixth
(1/6), respectively, of the amount of Serial Bonds which will become due and payable on the next
16
annual or semiannual principal maturity date, respectively, and (c) one-twelfth (1/12) of the
Amortization Installment required to be made on the next annual payment date or one-sixth (1/6)
of the Amortization Installment required to be made on the next semi-annual payment date into a
"Bond Amortization Account", created and established in the Sinking Fund by the Original
Ordinance. Such payments shall be credited to a separate special account for each series of Term
Bonds outstanding, and if there shall be more than one stated maturity for Term Bonds of a series,
then into a separate special account in the Sinking Fund for each such separate maturity of Term
Bonds. The funds and investments in each such separate account shall be pledged solely to the
payment of principal of the Term Bonds of the series or maturity within a series for which it is
established and shall not be available for payment, purchase or redemption of Term Bonds of any
other series or within a series, or for transfer to the Sinking Fund to make up any deficiencies in
required payments therein. The Amortization Installments may be due either annually or
semiannually, but in any event, the required payments as set forth above shall be made monthly
commencing in the first month which is six (6) months or twelve (12) months, as the case may be,
prior to the date on which the Amortization Installment is required to be made pursuant to (c)
above.
Upon the sale of any series of Term Bonds, the Issuer shall by resolution, establish the
amounts and matwities of such Amortization Installments for each series, and ifthere shall be more
thanone maturity of Term Bonds within a series, the AmortizationInstallments for the TermBonds
of each maturity. In the event the moneys deposited for retirement of a matwity of Term Bonds
are required to be invested, in the manner provided below, the Amortization Installments may be
stated in tenns of either the principal amount of the investments to be purchased on, or the
cumulative amounts of the principal amount of investments required to have been purchased by,
the payment date of such Amortization Instalhnent.
Moneys on deposit in each of the separate special accounts in the Bond Amortization
Account shall be used for the open market purchase or the redemption of Term Bonds of the series
or maturity of Term Bonds within a series for which such separate special account is established
or may remain in said separate special account and be invested until the stated date of maturity of
the Term Bonds. The resolution establishing the Amortization Installments for any series or matwity
of Term Bonds may limit the use of moneys to anyone or more of the uses set forth in the
preceding sentence and may specifY the type or types of investments pennitted hereunder to be
purchased.
(4) Moneys remaining in the Revenue Fund shall next be applied by the Issuer to maintain
a ReseIVe Account, which Reserve Account was created and established by the Original
Ordinance, in a swn equal to the Reserve Requirement, all or a portion of which swn may be
initially provided from the proceeds of the sale of the Bonds and/or other moneys of the Issuer.
The Issuer shall thereafter deposit into said Reserve Account an amount equal to one-twelfth (1/12)
of twenty per cent (20%) of the difference between the amount, if any, so deposited upon the deli-
17
very of the Bonds and the am01.U1t of the Reserve Requirement on all outstanding Bonds. No
further payments shall be required to be made into such Reserve ACC01.U1t when there has been
deposited therein and as long as there shall remain on deposit therein a swn equal to the Maxirmun
Bond Service Requirement on all outstanding Bonds becoming due in any ensuing Fiscal Year.
Any withdrawals from the Reserve Acco1.U1t shall be subsequently restored from the first
moneys available in the Revenue F1.U1d after all required current payments into the Sinking F1.U1d and
into the Reserve Acco1.U1t, including all deficiencies for prior payments, have been made in full.
Moneys in the Reserve Acco1.U1t shall be used only for the purpose of the payment of
maturing principal (including Amortization Installments) of or interest on the Bonds when the
moneys in the Sinking F1.U1d are insufficient therefor, and for no other purpose. Upon the issuance
by the Issuer of any Additional Bonds 1.U1der the terms, limitations and conditions provided in this
Ordinance and the Original Ordinance, the payments into the Reserve Acco1.U1t shall be increased
so that the amount on deposit therein shall be equal to the Maximum Bond Service Requirement
on all Bonds outstanding and to be outstanding.
Whenever the am01.U1t on deposit in the Reserve Account exceeds the Reserve
Requirement on all Bonds then outstanding, the excess may be withdrawn and deposited into the
Sinking Fund.
The Issuer shall not be required to make any further payments into the Sinking F1.U1d or into
the Reserve Account when the aggregate amount of moneys inthe Sinking Fund and the Reserve
Account are at least equal to the aggregate principal amount of Bonds then outstanding, plus the
amount of interest then due or thereafter to become due on the Bonds then outstanding.
Notwithstanding the foregoing provisions, in lieu of the required deposits of Revenues into
the Reserve Account, the Issuer may cause to be deposited into the Reserve Acco1.U1t a surety
bond or an insurance policy issued by a reputable and recognized insurer for the benefit of the
Bondholders in an amo1.U1t equal to the difference between the Maximum Bond Service
Requirement and the swns then on deposit in the Reserve Account, if any, which surety bond or
insurance policy shall be payable (upon the giving of notice as required thereunder) on any interest
payment date on which a deficiency exists which cannot be cured by fimds in any other account
held pursuant to this Ordinance and the Original Ordinance and available for such purpose. The
insurer providing such surety bond or insurance policy shall be an insurer whose municipal bond
insurance policies insuring the payment, when due, of the principal of and interest on municipal
bond issues results in such issues being rated in the highest rating category by Standard & Poor's
Corporation or Moody's Investors Service, Inc., or their successors. If a disbursement is made
from a surety bond or an insurance policy provided pursuant to this paragraph, the Issuer shall be
obligated to either reinstate the maximum limits of such surety bond or insurance policy immediately
following such disbursement or to deposit into the Reserve Account, as herein provided' in this
18
paragraph for restoration of withdrawals from the Reserve AccOlUlt, fimds in the amount of the
disbursement made under such policy, or a combination of such alternatives.
(5) The Issuer shall next apply and deposit the moneys in the Revenue Fund into the
Renewal and Replacement Fund created by the Original Ordinance. The Issuer shall deposit into
such Renewal and Replacement Fund an amount equal to one-twelfth (1/12) of five per centum
(5%) of the Gross Revenues of the System for the previous Fiscal Year, or such other amount as
is certified as necessary for the purposes of the Renewal and Replacement Fund by the Consulting
Engineer and as approved by the City Commission. The moneys in said Renewal and Replacement
Fund shall be used only for the purpose of paying the cost of extensions, enlargements or additions
to or the replacement of capital assets of the System and emergency repairs thereto. Such moneys
on deposit in such Fund shall also be used to supplement the Reserve Account ifnecessary in order
to prevent a default in the payment of the principal of and interest on the Bonds.
(6) To the extent junior lien bonds are issued and outstanding (which subordinated bonds
the Issuer reserves the right to issue), the Issuer shall next apply moneys in the Revenue Fund to
the payment of principal of, redemption premiwn, if any, and interest on such subordinated debt
of the Issuer.
(7) The balance of any moneys remaining in the Revenue Fund after the above required
payments have been made may either be deposited into either the Renewal and Replacement Fund
or the Sinking Fund, or may be used for the purchase or redemption of Bonds, or may be used by
the Issuer for any lawful purpose of the Issuer.
E. INVESTMENT OF FUNDS. The Operation and Maintenance Fund, the Sinking Fund, the
Reserve Account, the Renewal and Replacement Fund, the Revenue Fund, the Construction Fund, and
any other special fimds herein and in the Original Ordinance established and created shall constitute trust
fimds for the purposes provided herein for such fimds. All such fimds shall be continuously secured in the
same manner as state and municipal deposits are required to be secured by the laws of the State of Florida.
Moneys on deposit in any of such fimds and accounts may be invested and reinvested in Authorized
Investments.
Investments made with moneys in the Construction Fund, the Revenue Fund, the Operation and
Maintenance Fund, and the Sinking Fund (except the Bond Amortization Account therein), must mature
not later than the date that such moneys will be needed. Investments made with moneys in the accounts
inthe Bond AmortizationAccount, in the Reserve Account and in the Renewaland Replacement Fund must
mature, in the case of the accounts in the Bond Amortization Account not later than the stated date of
maturity of each respective AmortizationInstallmentofthe Term Bonds to be retired from the sub-accounts
in the Bond AmortizationAccount from which the investment is made, in the case of the Reserve Account
not later than the final maturity of any Bonds then outstanding, and in the case of the Renewal and
Replacement Fund, not later than such date as shall be detennined by the Issuer. Any and all income
19
received by the Issuer from all such investments shall be deposited into the Revenue Fund, except however,
that investment income earned in the Bond AmortizationAccount may be retained therein or deposited into
the Sinking Flmd and used to pay maturing principal of and interest on the Bonds, at the option of the
Issuer.
The cash required to be accounted for in each of the foregoing fimds and accounts established
herein may be deposited in a single bank account, and fimds allocated to the various accounts established
herein may be invested in a common investment pooL provided that adequate accounting records are
maintained to reflect and control the restricted allocation of the cash on deposit therein and such
investments for the various pwposes of such fimds and accounts as herein provided.
The designation and establishment of the various fimds in and by this Ordinance shall not be
construed to require the establishment of any completely independent, self-balancing fimds 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 of the System for certain purposes and to establish certain
priorities for application of such revenues and assets as herein provided.
F. OPERATION AND MAINTENANCE. The Issuer will maintain the System and all parts
thereof in good condition and will operate the same in an efficient and economical manner, making such
expenditures for equipment and for renewals, repairs and replacements as may be proper for the
economical operation and maintenance thereof
G. RATE ORDINANCE. The Issuer has enacted or will enact a rate ordinance and thereby
will fix, establish and maintain such rates and will collect such fees, rentals and other charges for the services
and facilities of the System and revise the same from time to time whenever necessary, as will always
provide Gross Revenues in each Fiscal Year sufficient to pay the Cost of Operation and Maintenance of
the System in such Fiscal Year, one hundred fifteen per centwn (115%) of the Bond Service Requirement
becoming due in such Fiscal Year on the outstanding Parity Bonds, on the outstanding Bonds and on all
outstanding Additional Bonds, plus one hundred per centwn (100%) of all reserve and other payments
required to be made pursuant to this Ordinance and the Original Ordinance. Such rates, fees, rentals and
other charges shall not be reduced so as to be insufficient to provide Gross Revenues for such pwposes.
H. BOOKS AND RECORDS. The Issuer shall keep books and records of the System, which
books and records shall be kept separate and apart from all other books, records and accounts of the
Issuer, and Bondholders shall have the right at all reasonable times to inspect all records, accounts and data
of the Issuer relating thereto.
I. ANNUAL AUDIT. The Issuer shall also, at least once a year, cause the books, records and
accounts relating to the System to be properly audited by a recognized independent firm of certified public
accountants and shall make generally available the report of such audits to any Bondholder.
20
J. NO MORTGAGE OR SALE OF THE SYSTEM. The Issuer irrevocably covenants, binds
and obligates itself not to sell, lease, encumber or in any manner dispose of the System as a whole ootil all
of the Bonds shall have been paid in full as to both principal and interest, or payment shall have been duly
provided for ooder this Ordinance.
The foregoing provision notwithstanding, the Issuer may sell or dispose of, for fair market value,
any properties or parts of the Systemwhichthe Consulting Engineer shall certifY in writing are not necessary
for the continued operation of the System and that the sale or disposal of which will not adversely affect
the Gross Revenues to be derived from the System to such an extent that the Issuer will fuil to comply with
the covenants contained herein, including Section 17(G) of this Ordinance and the Original Ordinance.
The proceeds derived from any sale or disposal of any properties or parts of the System as
provided for in the above paragraph shall, in the discretion of the Issuer, be (1) deposited in the Renewal
and Replacement Food and used exclusively for the purpose of paying the cost of extensions, enlargements
or additions to, or the replacement of capital assets of the System and for oousua1 or extraordinary repairs
thereto, or for the construction or acquisition of additions, extensions and improvements to the System, or
(2) for the purchase or retirement of the Bonds then outstanding. However, if the Consulting Engineer
certifies that proceeds are necessary for the purposes stated in part (1) above, such proceeds shall remain
in the Renewal and Replacement Food until such certified requirements are satisfied, and the proceeds shall
not be used for any other purpose allowed by this Ordinance or the Original Ordinance.
K. INSURANCE. The Issuer will make adequate provision to maintain fire and windstorm
insurance on all buildings and structures and properties of the System which are subject to loss through fire
or windstorm, public liability insurance, and other insurance of such types and in such amooots as are
normally carried in the operationofsimilarpublic and private utility systems within the State of Florida. Any
such insurance shall be placed with nationally recognized and reputable insurors or ooder State approved
and authorized self insurance programs or any combination of both and shall be carried for the benefit of
the Bondholders. All monies received for losses ooder any such insurance, except public liability, are
hereby pledged by the Issuer as security for the Bonds, ootil and unless such proceeds are used to remedy
the loss or damage for which such proceeds are received, either by repairing the property damaged or
replacing the property destroyed within ninety (90) days from the receipt of such proceeds.
L. NO FREE SERVICE. 1be Issuer will not render or cause to be rendered any free services
of any nature by its System, nor will any preferential rates be established for users of the same class. This
covenant shall not prevent individual contracts with other governmental entities for the wholesale delivery
of services of the System. The Issuer, including its departments, agencies and instnunentalities, shall avail
itself of the facilities or services provided by the System or any part thereof, and the same rates, fees or
charges applicable to other customers receiving like services ooder similar circlUllStances shall be charged
to the Issuer and any such department, agency or instrumentality. Such charges shall be paid as they
accrue, and the Issuer shall transfer from its general fimds sufficient sums to pay such charges. The reve-
nues so received shall be deemed to be Gross Revenues derived from the operation of the System and shall
21
be deposited and accounted for in the same manner as other Gross Revenues derived from such operation
of the System.
M. MANDATORY CONNECTION. To the full extent permitted by law the Issuer will adopt
and keep in force and effect an ordinance requiring that all improved premises with respect to which water
or sewer services from the System are available shall connect such premises to the System and shall obtain
available water and sewer services only from the System.
N. ENFORCEMENT OF COLLECTIONS. The Issuer will diligently enforce and collect all
fees, rentals or other charges for the services and facilities of the System and take all steps, actions and
proceedings for the enforcement and collection of such fees, rentals or other charges which shall become
delinquent to the full extent permitted or authorized by the Act and by the laws of the State of Florida.
The Issuer will, under reasonable rules and regulations, shut off and discontinue the supplying of
the water service and the sewer service of the System for the nonpayment of fees, rentals or other charges
for said water service or said sewer service, or either of them, and will not restore said water service or
sewer service, or either of them, until all delinquent charges for both water service and sewer service,
together with interest and reasonable penalties, have been paid in full.
O. REMEDIES. Any Bondholder, or any trustee acting for the Bondholders may, either at law
or in equity, by suit, action, mandamus or other proceedings in any court of competent jurisdiction, protect
and enforce any and all rights, including the right to the appointment of a receiver, existing under the laws
of the State of Florida, or granted and contained herein, and may enforce and compel the performance of
all duties herein required or by any applicable statutes to be performed by the Issuer or by any officer
thereof
Nothing herein, however, shall be construed to grant to any Bondholders any lien on any real
property of the Issuer.
P. CONSULTING ENGINEERS. The Issuer will retain an independent consulting engineer
or engineering firm having a favorable reputation for skill and experience for the design, construction and
operation of systems of comparable size and character as the System, for the purpose of providing the
Issuer competent engineering counsel in connection with the making of the capital improvements. The
Issuer may, however, employ additional engineers at any time with relation to specific engineering and
operation problems arising in connection with the System.
Q. CITY MANAGER REPORTS. On an annual basis, within 45 days of the receipt of the
annual audit of the System provided for above, the Issuer shall cause to be prepared by the City Manager
a report or survey of the System with respect to the management of the properties thereof, the sufficiency
of the rates and charges for services, the proper maintenance of the properties of the System and the
necessity for capital improvements and recommendations therefor. Such a report or survey shall also show
22
any failure of the Issuer to perform or comply with the covenants herein contained, including those
contained in subsection I above.
In the event that such annual report reflects that the rates and charges for services are insufficient
to protect the rights of the Bondholders, then the Issuer shall take such steps as are required by law to raise
the rates and charges for services. In the event that the annual report indicated that the rates and charges
for services should be increased substantially pro rata as to all classes of service, then, to the full extent
permitted by law, the Issuer shall raise the rates and charges for services without the necessity for notice
or public 'hearing.
R. NO COMPETING SYSTEM. To the full extent permitted by law the Issuer will not grant
or cause, consent to, or allow the granting of any franchise or permit to any person, firm, corporation or
body or agency or instrumentality whatsoever for the furnishing of water or sanitary sewerage services to
or within the service area of the System, if determined by the Consulting Engineers to be materially
competitive with the System and adversely affecting the Gross Revenues derived from the operation
thereof.
S. ISSUANCE OF OTHER OBLIGATIONS. The Issuer shall issue no bonds or obligations
of any kind or nature payable from or enjoying a lien on the Pledged Revenues if such obligations have
priority over the Bonds with respect to payment or lien, nor shall the Issuer create or cause or permit to
be created any debt, lien, pledge, assignment, encwnbrance or other charge on a parity with the lien of the
Bonds upon said Pledged Revenues. Notwithstanding any other provision in this Section, the Issuer may
issue Additional Bonds under the conditions and in the manner provided herein. Any obligations of the
Issuer, other than the Bonds, which are payable from the Pledged Revenues shall contain an express
statement that such obligations are junior and subordinate in all respects to the Bonds as to lien on and
source and security for payment from such Pledged Revenues.
T. ISSUANCE OF ADDITIONAL BONDS. Additional Bonds, payable ona parityfromthe
Pledged Revenues with the Parity Bonds and the Bonds, shall be issued only for the purposes of refunding
a part of the outstanding Bonds or financing the cost of extensions, additions and improvements to the
System and for the acquisition and construction of, and extensions, additions and improvements to, sewer
and/or water systems which are to be consolidated with the System and operated as a single combined
utility. Additional Bonds, other than for refunding pmposes, shall be issued only upon compliance with all
of the following conditions:
(1) There shall have been obtained and filed with the Clerk a certificate of the Finance
Director stating: (a) that the books and records of the Issuer relative to the System have been audited by
qualified and recognized firm of independent certified public accountants; (b) based on such audited
financial statement, that the amount of the adjusted Net Revenues derived for the Fiscal Year preceding
the date of issuance of the proposed Additional Bonds or for any twelve (12) consecutive months during
the eighteen (18) months immediately preceding the date of issuance of the Additional Bonds with respect
23
to which such certificate is made, adjusted as herein below provided; and (c) based on such audited
financial statement, that the aggregate amotmt of such Net Revenues, as adjusted, for the period for which
such Net Revenues are being certified is equal to not less than 120% of the Maximum Bond Service
Requirement becoming due in any Fiscal Year thereafter on (i) all Parity Bonds and the Bonds issued Wlder
this Ordinance, if any, then Outstanding, and (ii) on the Additional Bonds with respect to which such
certificate is made.
(2) Upon recommendation of the Consulting Engineers, the Net Revenues certified
pursuant to (b) in the previous paragraph may be adjusted for purposes of this Subsection by including:
(a) 100% of the additional Net Revenues which in the opinion of the Consulting Engineer would have been
derived by the Issuer from rate increases adopted before the Additional Bonds are issued, if such rate
increases had been implemented before the commencement of the period for which such Net Revenues
are being certified, and (b) 100% of the additional Net Revenues estimated by the Consulting Engineer to
be derived dwing the first full twelve month period after the facilities of the System are extended, enlarged,
improved or added to with the proceeds of the Additional Bonds with respect to which such certificate is
made. The adjustments described in Section 17(T)(2)(b) may only be made if the Net Revenues as
adjusted Wlder Section 17(T)(2)(a) for the period for which such Net Revenues are being certified equals
at least 1.00 times the Maximum Bond Service Requirement becoming due in any Fiscal Year thereafter
on (i) all Bonds then outstanding; and (ii) on the Additional Bonds with respect to which such certificate
is made.
(3) Additional Bonds shall be deemed to have been issued pursuant to this Ordinance
the same as the Outstanding Bonds, and all of the other covenants and other provisions of this Ordinance
and the Original Ordinance (except as to details of such Additional Bonds inconsistent therewith) shall be
for the equal benefit, protection and security of the Holder of all Bonds issued pursuant to this Ordinance
and the OriginalOrdinance. Except as provided in Section 17(T) hereof, all Bonds, regardless of the time
or times of their issuance, shall 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 totalamOlUlt of Bonds herein authorized to be issued are not
issued simultaneously, such Bonds which are subsequently issued shall be subject to the conditions of
Section 17(T) hereof
(5) 1be Issuer need not comply with the provisions of paragraph 1 of this Section
17(T) if and to the extent the Additional Bonds to be issued are refunding bonds, and if the Issuer shall
cause 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 Series omonds to be immediately Outstanding thereafter 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.
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(6) The Issuer sha1l not be in default in the canying out of any of the obligations
assumed under this Ordinance and no event of default shall have occurred under this Ordinance and shall
be continuing, and all payments required by this Ordinance to be made into the funds and accounts
established hereunder shall have been made to the full extent required.
(7) The resolution authorizing the issuance of a Series of Additional Bonds shall recite
that all of the covenants contained herein will be applicable to such Additional Bonds.
U. MAINTENANCE OF SYSTEM. The Issuer willmaintainthe System in good condition and
continuously operate the same in an efficient manner and at a reasonable cost.
SECTION 18. TAX COMPLIANCE.
A. In General. The Issuer at all times while the Bonds and the interest thereon are outstanding
will comply with all applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code")
and any valid and applicable rules and regulations promulgated thereunder (the "Regulations") in order to
ensure that the interest on the Bonds will be excluded from gross income for federal income tax purposes.
B. Rebate. (1) The Issuer sha1l either make or cause an independent firm of certified public
accountants or tax compliance fIrm to make and promptly provide to the Issuer the rebate
calculations required by the Code and Regulations, on which the Issuer may conclusively rely in
taking action under this Section. The Issuer shall make deposits to and disbursements from
separate accounts to the extent required by the Code and Regulations and sha1l otherwise maintain
full and complete accounting records of receipts and disbursements of, and investment purchases
and sales allocated to, the "gross proceeds" subject to the rebate requirements of the Code and
Regulations. The requirements of this Subsection 18B may be superseded or amended by new
calculations accompanied by an opinion of bond counsel addressed to the Issuer to the effect that
the use of the new calculations are in compliance with the Code and Regulations and will not cause
the interest on the Bonds to become included in gross income for Federal income tax purposes.
(2) The Issuer sha1l either make or cause an independent firm of certified public
accountants or tax compliance firm to annually make and promptly forward to the Issuer after the
end of the Bond Year and within the time required by the Code and the Regulations the
computation of the rebate deposit required by the Code, on which the Issuer may conclusively rely
in taking action under this Subsection B. Records of the determinations required by this Subsection
B and the Code and Regulations shall be retained by the Issuer until six (6) years after the Bonds
are no longer outstanding.
(3) Within the time required by the Code and Regulations following the end of the :fifth
Bond Year, as defined in the Code, and every fIve (5) years thereafter, the Issuer shall pay to the
United States of America ninety percent (90%) of the rebate amounts calculated as of such
25
payment date, as shown by the computations of the Issuer or the certified public accountants or
tax compliance firm, and one hundred percent (100%) of the earnings on such rebate amounts as
of such payment date. Not later than sixty (60) days after the final retirement of each applicable
series of Bonds, the Issuer shall pay to the United States of America one hundred percent (100%)
of the balance remaining of the rebate amount and the earnings thereon. Each payment required
to be paid to the United States of America pursuant to this Subsection B shall be filed with the
Internal Revenue Service Center, Ogden, Utah 84201. Each payment shall be accompanied by
a copy of the Form 8038 originally filed with respect to each applicable series of Bonds and a
statement swnmarizing the determination of the amount to be paid to the United States of America.
SECTION 19. DEFAULTS; EVENTS OF DEFAULT AND REMEDIES. Except as
provided below, if any of the following events occur it is hereby defined as and declared to be and to
constitute an "Event of Default":
(A) Default in the due and punctual payment of any interest on the Bonds;
(B) Default in the due and punctual payment of the principal of and prerruwn, if any, or
Accreted Value on any Bond, at the stated maturity thereof, or upon proceedings for redemption thereof;
(C) Default in the performance or observance of any other of the covenants, agreements or
conditions on the part of the Issuer contained in this Ordinance or in the Bonds and the continuance thereof
for a period of thirty (30) days after written notice to the Issuer given by the Holders of not less than
twenty-five percent (25%) of aggregate principal amount of Bonds then Outstanding (provided, however,
that with respect to any obligation, covenant, agreement orconditionwhichrequires performance by a date
certain, if the Issuer perfonns such obligation, covenant, agreement or condition within thirty (30) days of
written notice as provided above, the default shall be deemed to be cured);
(D) Failure by the Issuer promptly to remove any execution, garnishment or attachment of such
consequence as will materially impair its ability to cany out its obligations hereunder;
(E) Any act ofbankruptcy or the rearrangement, adjustment or readjustment of the obligations
of the Issuer under the provisions of any bankruptcy or moratoriwn laws or similar laws relating to or
affecting creditors' rights.
The term "default" shall mean default by the Issuer in the performance or observance of any of the
covenants, agreements or conditions on its part contained in this Ordinance, any supplemental resolution
or in the Bonds, exclusive of any period of grace required to constitute a default or an "Event of Default"
as hereinabove provided.
For purposes of Section 19(A) and (B) hereof, no effect shall be given to any payments made
under any Bond Insurance Policy.
26
Any Holder of Bonds issued under the provisions hereof or any trustee acting for the Holders of
such Bonds, may either at law or inequity, by suit, action, mandamus or other proceedings in any court of
competent jurisdiction, protect and enforce any and all rights, including the right to the appointment of a
receiver, existing under State or federal law, or granted and contained herein, and may enforce and compel
the performance of all duties required herein or by any applicable law to be performed by the Issuer or by
any officer thereof.
Nothing herein, however, shall be construed to grant to any Holder of the Bonds any lien on any
property of the Issuer, except the Pledged Revenues.
The foregoing notwithstanding:
(i) No remedy conferred upon or reserved to the Bondholders is intended to be exclusive
of any other remedy, but each remedy shall be cwnulative and shall be in addition to any other remedy
given to the Bondholders hereunder.
(ii) No delay or omission to exercise any right or power accruing upon any default or Event
of Default shall impair any such right or power or shall be construed to be a waiver of any such default or
acquiescence therein, and every such right and power may be exercised as often as may be deemed
expedient.
(iii) No waiver of any default or Event ofDefault hereunder by the Bondholders shall extend
to or shall affect any subsequent default or Event of Default or shall impair any rights or remedies
consequent thereon.
(iv) Acceleration of the payment of principal of and interest on the Bonds shall not be a
remedy hereunder in the case of an Event of Default.
Upon the occurrence of an Event of Default, and upon the filing of a suit or other conunencement
of judicial proceedings to enforce the rights of the Bondholders under this Ordinance, the Bondholders shall
be entitled, as a matter of right, to the appointment of a receiver or receivers of the Project and the funds
pending such proceedings, with such powers as the court making such appointment shall confer.
Notwithstanding any provision of this Ordinance to the contrary, for all purposes of this Section
21, except the giving of notice of any Event of Default to the Holder of the Bonds, the Bond Insurer shall
be deemed to be the Holder of the Bonds it has insured.
On the occurrence of an Event of Default, to the extent such rights may then lawfully be waived,
neither the Issuer nor anyone claiming through or under it, shall set up, claim or seek to take advantage of
any stay, extension or redemption laws now or hereafter in force, in order to prevent or hinder the
enforcement of this Ordinance, and the Issuer, for itself and all who may claim through or under it, hereby
27
waives, to the extent it may lawfully do so, the benefit of all such laws and all right of redemption to which
it may be entitled.
Within 30 days of knowledge thereof, both the Issuer and the Paying Agent shall provide notice
to the Bond Insurer of the occurrence of any Event of Default.
The Bond Insurer shall be included as a party in interest and as a party entitled to (i) notify the
Issuer or any Paying Agent of the occurrence of an Event of Default and (ii) request the Issuer or any
Paying Agent to intervene in judicial proceedings that affect the Bonds or the security therefor. The Issuer
and any Paying Agent are required to accept notice of default from the Bond InsW'er.
Anything in this Ordinance to the contraIy notwithstanding, upon the occurrence and continuance
of an Event of Default, the Bond Insurer, if any for a Series of Bonds shall be entitled to control and direct
the enforcement of all rights and remedies granted to the Bondholders Wlder this Ordinance for such Series
of Bonds and the Bond Insurer shall also be entitled to approve all waivers of events of default.
SECTION 20. AMENDING AND SUPPLEMENTING OF ORDINANCE WITHOUT
CONSENT OF HOLDERS OF BONDS. The Issuer, from time to time and at any time and without
the consent or concurrence of any Holder of any Bonds, may enact an ordinance amendatory hereof or
supplemental hereto, if the provisions of such supplemental ordinance shall not adversely affect the rights
of the Holders of the Bonds then Outstanding, for anyone or more of the following pmposes:
(A) To make any changes or corrections in this Ordinance as to whichthe Issuer shall have been
advised by counsel that are required for the pmpose of curing or correcting any ambiguity or defective or
inconsistent provisions or omission or mistake or manifest error contained in this Ordinance, or to insert
in this Ordinance such provisions clarifying matters or questions arising Wlder this Ordinance as are
necessary or desirable;
(B) To add additional covenants and agreements of the Issuer for the pmpose offurther securing
the payments of the Bonds;
(C) To surrender any right, power or privilege reserved to or conferred upon the Issuer by the
terms of this Ordinance;
(D) To confirm. as further assurance any lien, pledge or charge or the subjection to any lien,
pledge or charge, created or to be created by the provisions of this Ordinance;
(E) To grant to or confer upon the Holders any additional right, remedies, powers, authority
or security that lawfully may be granted to or conferred upon them;
(F) To assure compliance with federal "arbitrage" provisions in effect from time to time;
28
(G) To provide such changes as maybe necessary in order to adjust the terms hereof so as to
facilitate the issuance of Variable Rate Bonds or Option Bonds; and
(H) To modify any of the provisions of this Ordinance in any other aspects provided that such
modifications shall not be effective until after the Bonds Outstanding at the time such supplemental
ordinance is adopted shall cease to be Outstanding, or until the holders thereof consent thereto pursuant
to Section 21 hereof, and any Bonds issued subsequent to any such modification shall contain a specific
reference to the modifications contained in such supplemental ordinance.
Except for supplemental resolutions providing for the issuance of a Series of Bonds pursuant
hereto, the Issuer shall not enact any supplemental ordinance authorized by the foregoing provisions of this
Section unless in the opinion of Bond Counsel the enactment of such supplemental ordinance is permitted
by the foregoing provisions of this section.
SECTION 21. AMENDMENT OF ORDINANCE WITH CONSENT OF HOLDERS OF
BONDS. Except as provided in Section 20 hereof, no material modification or amendment of this
Ordinance or of any resolution supplemental hereto shall be made without the consent in writing of the
Holders of fifty-one percent or more in the principal amount of the Bonds of each Series so affected and
then Outstanding. For purposes of this Section, to the extent any Bonds are insured by a policy of
municipal bond insurance or are secured by a letter of credit and such Bonds are then rated in as high a
rating category as the rating category in which such Bonds were rated at the time of initial issuance and
delivery thereof by either Standard & Poor's Corporation or Moody's Investors Service, or successors
and assigns, then the consent of the issuer of such municipal bond insurance policy or the issuer of such
letter of credit shall be deemed to constitute the consent of the Holder of such Bonds. No modification or
amendment shall permit a change in the maturity of such Bonds or a reduction in the rate ofinterestthereon
or in the amount of the principal obligation thereof or affecting the promise of the Issuer to pay the principal
of and interest on the Bonds as the same shall become due from the Pledged Revenues or reduce the
percentage of the Holders of the Bonds required to consent to any material modification or amendment
hereof without the consent of the Holder or Holders of all such obligations. For purposes of the
immediately preceding sentence, the issuer of a municipal bond insurance policy or a letter of credit shall
not consent on behalf of the Holders of the Bonds. No amendment or supplement pursuant to this Section
21 (but not including Section 20 hereof) shall be made without the consent of the Bond Insurer, if any.
SECTION 22. DEFEASANCE. The covenants and obligations of the Issuer shall be defeased
and discharged under terms of this Ordinance as follows:
(A) If the Issuer shall payor cause to be paid, or there shall otherwise be paid, to the Holders
of all Bonds the principal, redemption premium, if any, and interest due or to become due thereon, at the
times and in the manner stipulated herein, then the pledge of the Pledged Revenues and all covenants,
agreements and other obligations of the Issuer to the Bondholders, shall thereupon cease, terminate and
become void and be discharged and satisfied. If the Issuer shall payor cause to be paid, or there shall
29
otherwise be paid, to the Holders of any Outstanding Bonds the principal or redemption premium, if any,
and interest due or to become due thereon, at the times and in the manner stipulated herein, such Bonds
shall cease to be entitled to any lien, benefit or securityunder this Ordinance, and all covenants, agreements
and obligations of the Issuer to the Holders of such Bonds shall thereupon cease, terminate and become
void and be discharged and satisfied.
(B) The Bonds, redemption premirun if any, and interest due or to become due for the payment
or redemption of which moneys shall have been set aside and shall be held in trust (through deposit by the
Issuer of funds for such payment or redemption or otherwise) at the maturity or redemption date thereof
shall be deemed to have been paid within the meaning and with the effect expressed in paragraph (A) of
this Section 22. Subject to the provisions of paragraph (C) and (D) of this Section 22, any Outstanding
Bonds shall prior to the maturity or redemption date thereof be deemed to have been paid within the
meaning and with the effect expressed in paragraph (A) of this Sectionif(i) in case any of said Bonds are
to be redeemed on any date prior to their maturity, the Issuer shall have given to the escrow agent
instructions accepted in writing by the escrow agent to notifY Holders of Outstanding Bonds in the manner
required herein of the redemption of such Bonds on said date and (ii)there shall have been deposited with
the escrow agent either moneys in an amount which shall be sufficient, or Federal Securities (including any
Federal Securities issued or held in book-entry form on the books of the Department of the Treasury of
the United States) the principal of and the interest on which when due will provide moneys which, together
with the moneys, if any, deposited with the escrow agent at the same time, shall be sufficient, to pay when
due the principal of or premirun, if any, and interest due and to become due on said Bonds on or prior to
the redemption date or maturity date thereof, as the case may be.
(C) For purposes of determining whether Variable Rate Bonds shall be deemed to have been
paid prior to the maturity or redemption date thereof, as the case may be, by the deposit of moneys, or
Acquired Obligations and moneys, if any, in accordance with paragraph B of this Section 22, the interest
to come due on such Variable Rate Bonds on or prior to the maturity date or redemption date thereof, as
the case may be, shall be calculated at the maxinnnn rate pennitted by the terms thereof; provided,
however, that ifonany date, as a result of such Variable Rate Bonds having borne interest at less than such
maximrun rate for any period, the total amount of moneys and Acquired Obligations on deposit with the
escrow agent for the payment of interest on such Variable Rate Bonds is in excess of the total amoilllt
which would have been required to be deposited with the escrow agent on such date in respect of such
Variable Rate Bonds in order to satisfy the second sentence of paragraph (B) of this Section 22, the
escrow agent shall, if requested by the Issuer, pay the amount of such excess to the Issuer free and clear
of any trust, lien, pledge or assignment securing the Bonds or otherwise existing under this Ordinance.
(D) Option Bonds shall be deemed to have been paid in accordance with the second sentence
of paragraph (B) of this Section 22 only if, in addition to satisfying the requirements of clauses (i) and (ii)
of such sentence, there shall have been deposited with the escrow agent moneys in an amount which shall
be sufficient to pay when due the maximum amount of principal of and redemption premium, if any, and
interest on such Bonds which could become payable to the Holders of such Bonds upon the exercise of
30
any options provided to the Holders of such Bonds; provided, however, that if; at the time a deposit is
made with the escrow agent pursuant to paragraph (B) of this Section, the options originally exercisable
by the Holder of an Option Bond are no longer exercisable, such Bond shall not be considered an Option
Bond for purposes of this paragraph (D). If any portion of the moneys deposited with the escrow agent
for the payment of the principal of and redemption premiwn, if any, and interest on Option Bonds is not
required for such purpose, the escrow agent shall, ifrequested by the Issuer, pay the amOlUlt of such excess
to the Issuer free and clear of any trust, lien, security interest, pledge or assignment securing said Bonds
or otherwise existing under the Resolution.
SECTION 23. SALE OF THE BONDS. The Bonds shall be issued and sold at public or
negotiated sale at one time or in installments from time to time and at such price or prices as shall be
consistent with the provisions of the requirements of this Ordinance and other applicable provisions oflaw
as set forth in a supplemental resolution of the Issuer adopted before the issuance of any Series of Bonds.
SECTION 24. CAPITAL APPRECIATION BONDS. For the purposes of (i) receiving
payment of the redemption price ifa Capital Appreciation Bond is redeemed prior to maturity, (ii) receiving
payment of a Capital Appreciation Bond if the principal of all Bonds is declared immediately due and
payable under the provisions of the Ordinance, (ill) computing the amOlUlt of the Maximum Bond Service
Requirement, and (iv) computing the percentage of Bonds held by the registered owner of a Capital
Appreciation Bond in giving to the Issuer or the Trustee any notice, consent, request or demand pursuant
to the Ordinance for any purpose whatsoever, the principal amount of a Capital Appreciation Bond shall
be deemed to be its Accreted Value.
SECTION 25. AMENDING PRIOR ORDINANCES. In accordance with Section 21 of
Ordinance No. 3674-84, which permits amendments and modifications of such Ordinance which are not
material modifications or amendments thereof, but with the consent of the respective Bond Insurer for the
Parity Bonds, Section 16R of Ordinance No. 3674-84, Ordinance No. 5355-93 and Ordinance No.
6311-98 is hereby amended by deleting in its entirety paragraph (1) thereof and replacing such paragraph
with the following new paragraph (1):
(1) There shall have been obtained and filed with the Clerk a certificate of the
Finance Director stating: ( a) that the books and records of the Issuer relative to the System
have been audited by qualified and recognized firm of independent certified public
accountants; (b) based on such audited financial statement, that the amount of the adjusted
Net Revenues derived for the Fiscal Year preceding the date of issuance of the proposed
Additional Bonds or for any twelve (12) consecutive months during the eighteen (18)
months immediately preceding the date of issuance of the Additional Bonds with respect
to which such certificate is made, adjusted as herein below provided; and (c) based on
such audited financial statement, that the aggregate amount of such Net Revenues, as
adjusted, for the period for which such Net Revenues are being certified is equalto not less
than 120% of the MaximumBond Service Requirement becoming due in any Fiscal Year
31
thereafter on (i) all Parity Bonds and the Bonds issued lUlder this Ordinance, if any, then
Outstanding, and (ii) on the Additional Bonds with respect to which such certificate is
made
SECTION 26. SEVERABILITY OF INVALID PROVISIONS. Ifanyone or more of the
covenants, agreements or provisions herein contained shall be held contrary to any express provisions of
law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or
shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall be null
and void and shall be deemed separable from the remaining covenants, agreements or provisions and shall
in no way affect the validity of any of the other provisions hereof or of the Bonds issued herelUlder.
SECTION 27. REPEALING CLAUSE. All ordinances or resolutions or parts thereof of the
Issuer in conflict with the provisions herein contained are, to the extent of such conflict, hereby superseded
and repealed.
SECTION 28. EFFECTIVE DATE. This Ordinance shall take effect immediately upon its
passage.
SECTION 29. PUBLIC NOTICE. Notice of the proposed enactment of this Ordinance has
been properly advertised in a newspaper of general circulation in accordance with Chapter 166.041,
Florida Statutes.
PASSED ON FIRST READING
,2001
PASSED ON SECOND READING
AND FINAL READING AND
ADOPTED AS AMENDED.
,2001
Mayor-Commissioner
Attest:
City Clerk
Approved as to Form,
Sufficiency and Correctness:
City Attorney
32
RESOLUTION NO. 03-35
A RESOLUTION PROVIDING FOR THE AUTHORIZATION OF NOT TO
EXCEED $9,500,000 WATER AND SEWER REVENUE REFUNDING BONDS,
SERIES 2003; PROVIDING FOR THE PUBLIC SALE OF SAID BONDS; SEITING
FORTH THE FORM OF THE NOTICE OF BOND SALE AND SUMMARY
NOTICE OF BOND SALE RELATING TO THE SALE OF SUCH BONDS;
DIRECTING PUBLICATION OF THE SUMMARY NOTICE OF SALEREIATING
TO SUCH BONDS; PROVIDING FOR THE OPENING OF BIDS RELATING TO
THE SALE OF THE BONDS; SETTING FORTH THE FORM OF OFFICIAL
NOTICE OF SALE AND BID FORMS; PROVIDING THAT SUCH BONDS SHALL
BE ISSUED IN FULL BOOK ENTRY FORM; APPROVING THE FORM OF A
PRELIMINARY OFFICIAL STATEMENT; PROVIDING FOR COMPLIANCE
WITH A CONTINUING DISCLOSURE CERTIFICATE; DESIGNATING A
REGISTRAR AND PAYING AGENT; PROVIDING FOR AN ESCROW DEPOSIT
AGREEMENT AND APPOINTING AN ESCROW AGENT; AUTHORIZING THE
PURCHASE OF MUNICIPAL BOND INSURANCE; PROVIDING CERTAIN
OTHER MATTERS IN CONNECTION THEREWITH; AND PROVIDING AN
EFFECTIVE DATE.
WHEREAS, the City of Clearwater, Florida (the "Issuer") has by Ordinance No. 3674- 84 enacted
by the Issuer on August 2, 1984, as amended and supplemented in Ordinance 5355-93, enacted on April
15, 1993, as amended and supplemented in Ordinance 6311-98, enacted November 5, 1998 and as
further amended and supplemented in Ordinance 6915-01, enacted November 15, 2001 (collectively, the
"Bond Ordinance") authorized the issuance of City of Clearwater, Florida, Water and Sewer Revenue
Bonds, Series [to be determined] in one or more series from time to time;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF
CLEARWATER, FLORIDA, as follows:
SECTION 1. AUTHORIZATION OF BONDS AND SERIES DESIGNATION. The
Water and Sewer Revenue Refimding Bonds, Series 2003 being offered pursuant to the Bond Ordinance
and this resolution are hereby designated as the not to exceed $9,500,000 City of Clearwater, Florida,
Water and Sewer Revenue Bonds, Series 2003 (the "Series 2003 Bonds"), which Series 2003 Bonds are
hereby authorized to be issued. The proceeds of the Series 2003 Bonds shall be used to refimd the Issuer's
outstanding Water and Sewer Refimding Revenue Bonds, Series 1993 maturing on and after December 1,
2004 (the "Refimded Bonds''), pay the cost of issuing the 2003 Bonds, including any municipal bond
insurance, and to fimd a debt service reserve fund.
SECTION 2. PUBLIC SALE. There is hereby authorized to be sold pursuant to a public sale
not to exceed $ 9 ,500,000 City of Clearwater, Florida, Water and Sewer Revenue Refimding Bonds, Series
2003.
Resolution No. 03-35
1
SECTION 3. SALE OF SERIES 2003 BONDS; REDEMPTION AND MATURITY
PROVISIONS. The Finance Director is hereby directed to arrange for the sale of the Series 2003 Bonds
utilizing the electronic bid process ofP ARITY through the publication of the Summary Notice of Sale of the
Bonds in a newspaper regularly distributed in the City of Clearwater and in The Bond Buyer, such
publications to be on such date as shall be deemed by the Finance Director to be in the best interest of the
Issuer and such publications to be not less than ten (10) calendar days prior to the date of sale as required
by Section 218.385(1), Florida Statutes; and to publish such Notice in such other newspapers on such
dates as may be deemed appropriate by the Finance Director.
The Series 2003 Bonds shall be subject to optional redemption and shall bear maturities and sinking
fund amortizations as shall be subsequently determined by the Financial Director, upon advice of the City's
financial advisor and based on market conditions existing at the 1ime, prior to the publication of the
Summary Notice of Sale as hereinafter approved.
Proposals for purchase of the Series 2003 Bonds will be received electronically via PARITY as
provided in the Official Notice of Sale, from the time that the Notice of Bond Sale is published until 11:00
a.m., Clearwater, Florida time, on such date and time as may be established by the Finance Director of the
City or her designee, and if such date is subject to change, communicated through Thompson Municipal
Market Monitor (TM3) not less than twenty- four (24) hours prior to the time bids are to be received for the
purchase of the City of Clearwater, Florida, Water and Sewer Revenue Bonds, Series 2003; provided that
if the internet is not working on the designated bid date, the bid date shall be automatically changed to the
next business day, and the City will communicate a confirmation of this change in bid date through
Thompson Municipal Market Monitor (TM3), all as provided in the Notice of Sale (the "Bid Date").
SECTION 4. CREATION OF ACCOUNT IN THE CONSTRUCTION FUND AND USE
OF FUNDS. There is hereby created with the Construction Fund separate subaccounts namely, the Series
2003 Cost ofIssuance Account. Moneys held in the Series 2003 Cost ofIssuance Account shall be usedto
pay the costs of issuing and delivering the Series 2003 Bonds.
SECTION 5. DISPOSITION OF PROCEEDS OF SERIES 2003 BONDS. The proceeds
from the sale of the Series 2003 Bonds shall be deposited as follows:
(a) An amount equal to the accrued interest on the Series 2003 Bonds shall be deposited into the
Interest Account in the Bond Service Funds;
(b) An amount determined by the Finance Director to be necessary to pay the costs of issuing the
Series 2003 Bonds, including the premiwn due to the Bond Insurer, shall be deposited into the Series 2003
Cost of Issuance Account in the Construction Fund to pay such costs;
(c) An amount determined by the Finance Director in consultation with the City's Financial Advisor
to be deposited under the Escrow Deposit Agreement (hereinafter approved), which together with certain
Resolution No. 03-35
2
funds currently held by the Issuer in the Sinking Fund for the Refunded Bonds, will provide sufficient funds
to defease the Refunded Bonds;
(d) An amount determined by the Finance Director to be necessary to increase the amount in the
Reserve Fund so that the amount on deposit therein equals the Reserve Requirement; and
(e) The remaining proceeds of the Series 2003 Bonds representing a rounding amount shall be
deposited into the Bond Service Fund for the Series 2003 Bonds.
SECTION 6. APPROVAL OF FORMS. The Notice of Bond Sale and Summary Notice of
Sale of the Bonds to be submitted for purchase of the Series 2003 Bonds shall be in substantially the forms
annexed hereto, as Exhibits A and B, respectively, together with such changes as shall be deemed necessary
or desirable by the Finance Director depending on the bidding method selected in accordance with Section
3 hereof, incorporated herein by reference. The form of the Official Bid Form shall be provided by the
internet auction website selected by the Finance Director, and shall be reasonably satisfactory to the
Finance Director.
SECTION 7. BOOK ENTRY ONLY BONDS. It is in the best interest of the City and the
residents and inhabitaIts thereof that the Series 2003 Bonds be issued utilizing a pure book-entry system of
registration. In furtherance thereof, the City has previously executed and delivered a Blanket Letter of
Representations with the Depository Trust Company. For so long as the Series 2003 Bonds remain in such
book entry only system of registration, in the event of a conflict between the provisions of the Bond
Ordinance and of the Blanket Letter of Representations, the terms and provisions of the Blanket Letter of
Representations shall prevail.
SECTION 8. ESCROW DEPOSIT AGREEMENT The form of Escrow Deposit Agreement
to be used in connection with the defeasance and redemption of the Refunded Bonds attached hereto as
Exhibit "F" and incorporated herein by reference is hereby approved. The Mayor-Conunissioner, 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 "F" 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 evideoce of such approval.
The Finance Director is hereby authorized to solicit offers from financial institutions to serve as
Escrow Agent under the Escrow Deposit Agreement for the Refunded Bonds, and the Finance Director is
hereby authorized to select the firm with the lowest bid to serve in such capacity.
SECTION 9. PRELIMINARY OFFICIAL STATEMENT AND OFFICIAL
STATEMENT. The City Manager and Finance Director are authorized and directed to cause a
Preliminary Official Statement to be prepared in substantially the form attached hereto as Exhibit C, with
such changes, insertions and omissions as shall be approved by the City Manager and Finance Director,
Resolution No, 03-35
3
containing a copy of the attached Notice of Bond Sale and to furnish a copy of such Preliminary Official
Statement to interested bidders. The City Manager and Finance Director are authorized to deem final the
Preliminary Official Statement prepared pursuant to this Section for purposes of Rule 15c2-12 (the "Rule")
of the Securities and Exchange Commission. Upon the award of the Series 2003 Bonds to the successful
bidder, the City shall also make available a reasonable nwnber of copies of the Preliminary Official
Statement to such bidder, who may mail such Preliminary Official Statements to prospective purchasers at
the bidder's expense. Following the award of the Series 2003 Bonds, the City Manager and the Finance
Director shall cause to be prepared a final Official Statement dated as of the Bid Date, reflecting such
changes in the Preliminary Official Statement as may be necessary to reflect the purchaser's bid. The
Mayor-Commissioner and City Manager are hereby authorized to execute and delivery such final Official
Statement, with such changes, insertions and omissions as may be approved by such officers.
SECTION 10. CONTINUING DISCLOSURE. The City hereby covenants and agrees that, in
order to provide for compliance by the City with the secondary market disclosure requirements of the Rule,
that it will comply with and cany out all of the provisions of that certain Continuing Disclosure Certificate in
substantially the form attached hereto as Exhibit D, to be executed by the City and dated the date of
issuance and delivery of the Series 2003 Bonds, as it may be amended from time to time in accordance with
the terms thereof (the "Continuing Disclosure Certificate"). Notwithstanding any other provision of this
Resolution, failure of the City to comply with such Continuing Disclosure Certificate shall not be considered
an event of default; however, any Bondholder may take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the City to comply with its
obligations under this Section.
SECTION 11. REGISTRAR AND PAYING AGENT. Wells Fargo Bank, N.A.,
Minneapolis, Minnesota is hereby appointed as Registrar and Paying Agent for the Series 2003 Bonds.
SECTION 12. MUNICIPAL BOND INSURANCE POLICIES. Pursuant to the Bond
Ordinance, Financial Security Assurance Inc. ("FSA") has been selected to provide its Municipal Bond
Insurance Policy (the "Policy") as the Bond Insurance Policy (as defined in the Bond Ordinance) as
additional security for payment of principal and interest on the Series 2003 Bonds. Selection ofFinancial
Security Assurance Inc., a New York domiciled insurance company as the Bond Insurer (as defined in the Bond Ordinance) is hereby ratified and confirmed and payment for such Bond Insurance Policy from
proceeds of the Series 2003 Bonds is hereby authorized. The Issuer hereby accepts the terms, conditions
and agreements relating to the Bond Insurance Policy in accordance with the Municipal Bond Insurance
Commitment attached hereto as Exhibit E and incorporated herein. A statement of insurance is hereby
authorized to be printed on or attached to the Series 2003 Bonds for the benefit and information of the
holders of the Series 2003 Bonds.
In addition to the covenants and agreements of the City previously contained in the Bond Ordinance
regarding the rights of the Bond Insurer, which are hereby incorporated herein, the City hereby makes the
additional covenants and agreements substantially in the form attached hereto as Exhibit "G" for the benefit
Resolution No. 03-35
4
of the Bond Insurer and the Holders of the Series 2003 Bonds while the Bond Insurance Policy insuring the
Series 2003 Bonds are in full force and effect:
SECTION 13. A WARD OF BIDS. The Finance Director is hereby authorized to accept the
bids for the Series 2003 Bonds. The City Manager and the Finance Director are hereby authorized to
award the sale of the Series 2003 Bonds on their determination of the best bid submitted in accordance with
the terms of the Notice of Bond Sale provided for herein so long as the true interest cost rate shall not
exceed 4.0% on the Series 2003 Bonds and a net present value savings on refunding the Refunded Bonds
of not less than 2 %. The City Manager and the Finance Director are hereby authorized to award the sale of
the Series 2003 Bonds as set forth above or to reject all bids for the Series 2003 Bonds. Such award shall
be final.
SECTION 14. PRIOR RESOLUTIONS. To the extent the provisions of this Resolution are
inconsistent with the provisions of Resolution No. 02-30, adopted by the City Commission of the City on
June 20, 2002 with respect to the Series 2002 Bonds, Resolution No. 98-54, adopted by the City
Commission of the City on November 5, 1998, with respect to the Series 1998 Bonds and Resolution No.
93-26, adopted by the City Commission of the City on April 15, 1993, with respect to the Series 1993
Bonds, provisions of this Resolution shall control and supercede the inconsistent provisions of such
Resolutions.
Resolution No. 03-35
5
SECTION 15. EFFECTIVE DATE. This resolution shall take effect immediately upon
adoption.
Passed and adopted by the City Commission of the City of Clearwater, Florida, this _ day of
,2003.
CITY OF CLEARWATER, FLORIDA
Brian 1. Aungst, Mayor-Commissioner
Approved as to form:
Attest:
Pamela K. Akin, City Attorney
Cynthia E. Goudeau, City Clerk
Resolution No. 03-35
6
EXHIBIT A
FORM OF
OFFICIAL NOTICE OF BOND SALE
$ *
CITY OF CLEARWATER, FLORIDA
WATER AND SEWER REVENUE REFUNDING BONDS, SERIES 2003
NOTICE IS HEREBY GIVEN that electronic (as explained below) proposals will be received
electronically viaP ARITY in the manner described below, Wltilll :00 a.m., Eastern Daylight Savings Time,
on October 1, 2003.
Bids must be submitted electronically via PARITY in accordance with this Notice of Bond Sale,
Wltil 11 :00 a.m., Clearwater, Florida time, but no bid will be received after the time for receiving bids
specified above. To the extent any instructions or directions set forth in PARITY conflict with this Notice
of Bond Sale, the terms of this Notice of Bond Sale shall control. For further information aboutP ARITY,
potential bidders may contact the financial advisor to the City, William R. Hough & Co., 100 Second
Avenue South, Suite 800, St. Petersburg, Florida 33701, Attn: Kevin Conitz: (727) 895 8853, or
PARITY at 40 West 23rd Street, 5th Floor, New York, New York 10010, telephone (212)404-8102. In
the event of a malfunction in the electronic bidding process, the bid date will automatically change to the next
business day as confirmed in a communication through Thompson Municipal Market Monitor (TM3).
Form of Series 2003 Bonds
The Series 2003 Bonds will be issued in book entry only fonn, without coupons, in denominations
of $5,000 or any integral multiples thereof, and shall re dated October 1,2003. Principal of the Series
2003 Bonds shall be paid to the registered owners at the designated corporate trust office of Wells Fargo
Bank, N.A. (the "Paying Agent" and "Registrar"), upon presentment and surrender of the Series 2003
Bonds. Interest on the Series 2003 Bonds shall be paid to the registered owners as shown on the
registration books maintained by the Registrar, by check or draft mailed to each such owner's address as
shown on the registration books maintained by the Registrar as of the fifteenth (15th) day of the calendar
month preceding such interest payment date. Interest will be payable each JWle 1 and December 1,
commencing JWle 1, 2004. Interest will be calculated on the basis of a 360-day year of twelve 30-day
months. For so long as The Depository Trust Company, New York, New York, or its nominee, Cede &
Co. (collectively, "DTC") is the registered owner of the Series 2003 Bonds, payments of principal of,
redemption premium, if any, and interest on the Series 2003 Bonds will be made directly to DTC.
Disbursements of such payments to the DTC participants is the responsibility of DTC and further
disbursement of such payments from the DTC participants to the beneficial owners of the Series 2003
Bonds is the responsibility of the DTC participants.
* Preliminary, subject to change
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Initially one bond will be issued for each maturity of the Series 2003 Bonds in the aggregate
principal amount of each such maturity and registered in the name of DTC. DTC, an automated clearing
house for securities transactions, will act as securities depository for the Series 2003 Bonds. Purchases of
the Series 2003 Bonds will be made in book-entry-only form (without certification). It shall be the
responsibility of the Successful Bidder (as hereinafter defined) for the Series 2003 Bonds to fiunish to DTC
an underwriters' questionnaire and to the City the CUSIP munbers of the Series 2003 Bonds not less than
seven (7) days prior to the Closing Date (as hereinafter defined).
Maturity Schedule
The Series 2003 Bonds will mature on December 1 of the following years in the following principal
amounts:
Series 2003 Bonds
Maturity
2004
2005
2006
2007
2008
2009
2010
Principal
Amount*
Maturity
2011
2012
2013
2014
2015
2016
2017
2018
Principal
Amount*
*Preliminary, subject to change
The Series 2003 Bonds will be sold as serial bonds. Bidders will not be allowed to designate any
maturities as one or more term bonds.
Adjustment of Principal Amount
After:final computation of the bids, to achieve desired debt seIVice levels, the City rescrves the right
either to increase or decrease any Principal Amount of the Series 2003 Bonds shown on the schedule of
Principal Amounts set forth above (the "Maturity Schedule"), by an amount not to exceed five percent (5%)
of the stated amount of each such Principal Amount on the Maturity Schedule and correspondingly adjust
the issue size, all calculations to be rounded to the nearest $5,000.
In the event of any such adjustment in the Series 2003 Bonds, no rebidding or recalculation of the
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bid submitted with respectto such Series 2003 Bonds will be required or permitted. If necessary, the total
purchase price of the Series 2003 Bonds will be increased or decreased in direct proportion to the ratio that
the adjustment bears to the aggregate principal amoWlt of the Series 2003 Bonds specified herein; and the
Series 2003 Bonds of each maturity, as adjusted, will bear interest at the same rate and must have the same
initial reoffering yields as specified in the bid of the Successful Bidder. However, the award will be made to
the bidder whose bid produces the lowest true interest cost, calculated as specified below, solely on the
basis of the bid for the Series 2003 Bonds offered pursuant to the Bid Maturity Schedule of the relevant
series of Series 2003 Bonds, without taking into accoWlt any adjustment in the amoWlt of Series 2003
Bonds set forth in the Bid Maturity Schedule.
Basis of Award
Proposals must be Wlconclitional and only for all the Series 2003 Bonds. The purchase price bid fur
the Series 2003 Bonds may include a disCOWlt (including Wlderwriters' discOWlt and original issue diSCOWlt)
not to exceed two percent (2%) of the principal amoWlt of the Series 2003 Bonds and shall specify how
much of the diSCOWlt is original issue disCOWlt. The purchase price bid may also include an original issue
premium and shall specifY how much of such purchase price is original issue premium. The Series 2003
Bonds will be insured by Financial Security Assurance. Inc. and the City will pay the bond insurance
premium from Bond proceeds. The purchase price bid for the Series 2003 Bonds will not deduct the
insurance premium. Only the final bid submitted by any bidder through Parity will be considered. The City
reserves the right to determine the Successful Bidder for the Series 2003 Bonds, to reject any or all bids
and to waive any irregularity or informality in any bid.
The Series 2003 Bonds will be awarded to the bidder (herein referred to as the "Successful Bidder"
as to the Series 2003 Bonds) 0 ffering such interest rate or rates and purchase price which will produce the
lowest true interest cost to the City over the life of the Series 2003 Bonds. True interest cost for the Series
2003 Bonds (expressed as an annual interest rate) will be that annual interest rate being twice that factor of
diSCOWlt rate, compoWlded semiannually, which when applied against each semiannual debt service payment
(interest, or principal and interest, as due) for the Series 2003 Bonds will equate the sum of such discounted
semiannual payments to the bid price (inclusive of accrued interest). Such semiannual debt service
payments begin on JWle 1,2004. The true interest cost shall be calculated from October 15, 2003, the
expected closing date of the Series 2003 Bonds (the "Closing Date") and shall be based upon the principal
amoWlts of each serial maturity set forth in this Notice of Bond Sale and the bid price set forth in the
Proposal for the Series 2003 Bonds submitted in accordance with the Notice of Bond Sale. In case of a
tie, the City may select the Successful Bidder by lot. It is requested that each Proposal for the Series 2003
Bonds be accompanied by a computation of such true interest cost to the City Wlder the term of the
Proposal for Bonds, but such computation is not to be considered as part of the Proposal for Bonds.
Interest Rates Permitted
The Series 2003 Bonds shall bear interest expressed in multiples of one-eighth (1/8) or one-
twentieth (1/20) of one percent. No coupon interest rate specified for any maturity of the Series 2003
Bonds may be less than one percent (1.0%) or more than five percent (5.0%). Should an interest rate be
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specified which results in annual interest payments not being equally divisible between the semiannual
payments in cents the first semiannual payment will be reduced to the next lower cent and the second
semiannual payment will be raised to the next higher cent.
It shall not be necessary that all Series 2003 Bonds bear the same rate of interest, provided that all
Series 2003 Bonds maturing on the same date shall bear the same rate of interest. A rate of interest based
upon the use of split or supplemental interest payments or a zero rate of interest will not be considered.
Pavinsz Aszent and Reszistrar
The Paying Agent and Registrar for the Series 2003 Bonds is Wells Fargo Bank, N.A., through its
designated office in Minneapolis, Minnesota.
Security
Principal of and interest on the Series 2003 Bonds to be issued pursuant to Ordinance No. 6915-
01, as supplemented, and all required sinking fund, reserve and other payments shall be payable solely from
the Net Revenues of Water and Sewer System of the City, together with the earnings thereon derived from
the investment thereof in the FWIds and ACCOWIts established in the Ordinance and as more fully described
in the Preliminary Official Statement.
The Series 2003 Bonds do not constitute a general indebtedness of the City within the meaning of
any constitutional, statutory or charter provision or limitation, and no Bondholder shall ever have the right to
require or compel the exercise of the ad valorem taxing power of the City or taxation of any real or personal
property therein for the payment of the principal of and interest on the Series 2003 Bonds or the making of
any debt service fund, reserve or other payments provided for in the Resolution.
Purpose
Pursuant to the Ordinance, the Series 2003 Bonds are being issued to finance the refunding of the
City's Water and Sewer Refunding Revenue Bonds, Series 1993, and pay the costs of issuing the Series
2003 Bonds, including the premil.UU for a municipal bond insurance policy and to fund the reserve fund.
Issuance of Series 2003 Bonds
The Series 2003 Bonds will be issued and sold by the City of Clearwater, Florida, a municipal
corporation organized and existing WIder the laws of the State of Florida. The Series 2003 Bonds are being
issued pursuant to Ordinance No. 6915-01 enacted November 15, 2001 as supplemented by resolutions
(collectively, the "Bond Ordinance") by the City of Oearwater, Florida (the "City") and pursuant to the
provisions of Chapter 166, Florida Statutes, and other applicable provisions of law.
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Municipal Bond Insurance Policy
A commitment to issue a mwricipal bond insurance policy guaranteeing payment of principal and
interest on the Series 2003 Bonds has been obtained from Financial Security Assurance Inc.
Proposals
Proposals for the Series 2003 Bonds are desired on forms which will be furnished by PARITY, on
behalf of the City, and be submitted electronically via PARITY.
All bidders must submit a "Good Faith Deposit" in the amount of $100,000 (the "Deposit") in the
form of a financial surety bond of Financial Security Assurance, Inc. (the "Financial Surety Bond"). Such
Financial Surety Bond must be submitted to the City prior to the sale. The Financial Surety Bond must
identify the Bidder whose Deposit is guaranteed by such Financial Surety Bond. The successful bidder is
required to submit its good faith deposit by wire transfer not later than 2:00 p.m. eastern time, on the next
business day following the award, as instructed by the City's Financial Advisor. If such deposit is not
received by that time, the City shall make a claim under the Financial Surety Bond to satisfy the good faith
deposit requirement. The check of the successful bidder or proceeds of a claim under the Financial Surety
Bond, as applicable, will be deposited by the City in an interest-bearing account and be retained and
applied towards the purchase price of the Series 2003 Bonds pending full performance by the successful
bidder, or will be forfeited to the City and applied as full liquidated damages upon failure of the successful
bidder to take up and pay for the Series 2003 Bonds. Any interest earned on the good faith deposit will be
retained by and inure to the benefit of the City. If the Series 2003 Bonds are not delivered to the successful
bidder within 30 calendar days from the date of sale, without fault upon the part of the successful bidder,
such successful bidder shall not thereafter be obligated to take delivery of and pay for the Series 2003
Bonds and the good faith deposit amount will be promptly paid to the successful bidder or Financial
Security Assurance, Inc., as applicable.
Delivery and Pavrnent
It is anticipated that the Series 2003 Bonds in book entry only form will be available for delivery on
October 15, 2003, in New York, New York, at The Depository Trust Company, or some other date and
place to be mutually agreed upon by the Successful Bidder and the City against the payment of the purchase
price therefor including accrued interest calculated on a 360-day year basis, less the amount of the good
faith check, in immediately available Federal Reserve funds without cost to the City.
Closine Documents
The City will furnish to the Successful Bidder upon delivery of the Series 2003 Bonds the following
closing documents in a form satisfactory to Bond Counsel: (1) signature and no-litigation certificate; (2)
federal tax certificate; (3) certificate regarding information in the Official Statement; and (4) seller's receipt
as to payment. A copy of the transcript of the proceedings authorizing the Series 2003 Bonds will be
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delivered to the Successful Bidder of the Series 2003 Bonds upon request. Copies of the form of such
closing papers and certificates may be obtained from the City.
Information Statement
Section 218.38(1)(b) 1, Florida Statutes requires that the City file, within 120 days after delivery of
the Series 2003 Bonds, an information statement with the Division of Bond Finance of the State of Florida
(the "Division") containing the following information: (a) the name and address of the managing l.UldeIWriter,
if any, connected with the Series 2003 Bonds; (b) the name and address of any attorney or fmanda1
consultant who advised the City with respect to the Series 2003 Bonds; and (c) any fee, bonus, or gratuity
paid, in connection with the bond issue, by an l.Ulderwriter or financial consultant to any person not regularly
employed or engaged by such l.Ulderwriter or consultant and (d) any other fee paid by the City with respect
to the Series 2003 Bonds, including any fee paid to attorneys or financial consultants. The Successful
Bidder will be required to deliver to the City at or prior to the time of delivery 0 f the Series 2003 Bonds, a
statement signed by an authorized officer containing the same information mentioned in (a) and (c) above.
The Successful Bidder shall also be required, at or prior to the delivery of the Series 2003 Bonds, to furnish
the City with such information concerning the initial prices at which a substantial amOl.Ult of the Series 2003
Bonds of each maturity were sold to the public as the City shall reasonably request.
Pursuant to Section 218.385(2) and (3) of the Florida Statutes, as amended, a truth-in-bonding
statement will be required from each bidder as to the Series 2003 Bonds as part of their bid in the following
form:
"The City of Clearwater, Florida, is proposing to issue $ original aggregate
principal amOl.Ult of Water and Sewer Revenue Refunding Bonds, Series 2003, ror the
purpose of paying (i) the costs of refunding the City' s Water and Sewer Refunding Revenue
Bonds, Series 1993, (ii) the costs of issuing the Series 2003 Bonds, and (iii) the premium
on the Bond Insurance Policy, all as further described in Ordinance No. 6915- 01. The final
maturity date of the Series 2003 Bonds is December 1, 2018, and the Series 2003 Bonds
are expected to be repaid over a period of fifteen (15) years. At a forecasted average
interest rate of _ % per annum, total interest paid over the life of the Series 2003 Bonds
will be $ . The source of repayment or security for this proposal is the Net
Revenues (as defined in the Ordinance) and moneys and investments held in the funds
created l.Ulder the said Ordinance. Authorizing the Series 2003 Bonds will result in
$ not being available to finance the other capital projects of the City. This
truth-in-bonding statement prepared pursuant to Section 218.385(2) and (3) of the Fbrida
Statutes, as amended, is for informational purposes only and shall not affect or control the
actual tenns and conditions of the Series 2003 Bonds."
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Lee:al Opinion
The Successful Bidder will be furnished, without cost, with the approving opinion of Bryant Mih&
Olive PA., Tallahassee, Florida, to the effect that based on existing law, and asswning compliance by the
City with certain covenants and requirements of the Internal Revenue Code of 1986, as amended (the
"Code"), regarding use, expenditures, investment of proceeds and the timely payment of certain investment
earnings to the United States Treasmy, the interest on the Series 2003 Bonds is not includable in the gross
income of individuals, however, interest on the Series 2003 Bonds will be included in the calculation of the
alternative minimwn tax liabilities of coq>orations. The Code contains other provisions that could result in
tax consequences, upon which Bond COWlSel renders no opinion, as a result of ownership of the Series
2003 Bonds cr the inclusion in certain computations (including, without limitation, those related to the
coq>orate alternative minimwn tax and environmental tax) of interest that is excluded from gross income.
Official Statement
The Preliminary Official Statement, copies of which may be obtained as described below, is in a
form "deemed final" by the City for pwposes of SEC Rule 15c2-12(b)(1 ) (except for certain permitted
omissions as described in such rule) but is subject to revision, amendment and completion in a:final Official
Statement. Upon the sale of the Series 2003 Bonds, the City will publish a final Official Statement in
substantially the same form as the Preliminary Official Statement. Copies of the final Official Statement will
be provided, at the City's expense, on a timely basis in such quantities as may be necessary for the
Successful Bidder's regulatory compliance.
It is not the intention or the expectation of the City to print the name(s) of the Successful Bidder as
to the Series 2003 Bonds on the cover of the Official Statement.
Continuine: Disclosure
The City has covenanted to provide ongoing disclosure in accordance with Rule 15c2-12 of the
Securities and Exchange Commission. See "Appendix D -- Form of Continuing Disclosure Certificate"
attached to the Preliminary Official Statement.
CUSIP Number
It is anticipated that CUSIP identification nwnbers will be printed on the Series 2003 Bonds, but
neither the failure to print such nwnber on any Series 2003 Bonds nor any error with respect thereto shall
constitute cause for failure or refusal by the Successful Bidder to accept delivery of and pay for the Series
2003 Bonds in accordance with its agreement to purchase the Series 2003 Bonds. All expenses in relation
to the printing of CUSIP nwnbers on the Series 2003 Bonds shall be paid for by the City; provided,
however, that the CUSIP Service Bureau charge for the assignment of said nwnber shall be the
responsibility of and shall be paid for by the Successful Bidder.
A-7
Copies of Documents
Copies of the Preliminary Official Statement, this Official Notice of Bond Sale and the Official Bid
Form and further information which may be desired, may be obtained from the City's Financial Advisor,
William R. Hough & Co., 100 Second Avenue South, Suite 800, S1. Petersburg, Florida 33701, Attn:
Kevin Conitz: (727) 8958853.
Amendment and Notices
Amendments hereto and notices, if any, pertaining to this offering shall be made through Thompson
Municipal Market Monitor (TM3) or similar information distribution service.
CITY OF CLEARWATER, FLORIDA
Is! Brian 1. Aungst
Mayor-Commissioner
A-8
EXHIBIT B
FORM OF
SUMMARY NOTICE OF SALE
CITY OF CLEARWATER, FLORIDA
Water and Sewer Revenue Refunding Bonds
Series 2003
NOTICE IS HEREBY GIVEN, that bids will be received by the City Manager and the Finance
Director of the City of Clearwater, Florida, electronically through PARITY, subject to the provisions of the
Official Notice of Bond Sale.
Sale Date:
October 1, 2003
Time:
11 :00 a.m., E.D.S.T.
Bonds Dated:
October 1, 2003
Maturities:
Payable December 1 in the years and amounts as follows:
Series 2003 Bonds
Maturity
2004
2005
2006
2007
2008
2009
2010
Principal
Amount*
Maturity
2011
2012
2013
2014
2015
2016
2017
2018
Principal
Amount*
*Preliminary, subject to change
Interest Payment Dates:
Payable June 1 and December 1, commencing June 1, 2004.
Legal Opinion: Bryant Miller & Olive P.A.,
Tallahassee, Florida
For copies of the Official Notice of Bond Sale and the Prelimiruny Official Statement of the City of
Clearwater, Florida, please contact the City's Financial Advisor, William R. Hough & Co., 100 Second
Avenue South, Suite 800, St. Petersburg, Florida 33701, Attn: Kevin Conitz: (727) 895 8853. The
PreliminaIy Official Statement may be obtained after September 22, 2003 electronically through Image
B-1
Master Financial Publishing Inc. at www.munios.com.
B-2
EXHIBIT C
FORM OF PRELIMINARY OFFICIAL STATEMENT
C-l
EXHIBIT D
CONTINUING DISCLOSURE CERTIFICATE
D-I
EXHIBIT E
COMMITMENT FOR MUNICIPAL BOND INSURANCE POLICY
E-l
EXHIBIT F
ESCROW DEPOSIT AGREEMENT
F-l
EXlllBIT G
ADDITIONAL COVENANTS WITH BOND INSURER
(a) "Insurance Policy" shall be defined as follows: "the insurance policy issued by the Insurer
guaranteeing the scheduled payment of principal of and interest on the Bonds when due". "Insurer"
shall be defined as follows: "Financial Security Assurance Inc., a New York stock insurance
company, or any successor thereto or assignee thereof'.
(b) For transactions with a debt service reserve fund, the prior written consent of the Insurer shall be a
condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into
the Debt Service Reserve Fund. Notwithstanding anything to the contrary set firth in the
Resolution, amounts on deposit in the Debt Service Reserve Fund shall be applied solely to the
payment of debt service on the Bonds.
(c) The Insurer shall be deemed to be the sole holder of the Insured Bonds for the purpose of
exercising any voting right or privilege or giving any consent or direction or taking any other action
that the holders of the Bonds insured by it are entitled to take pursuant to the section or the article
of the Resolution pertaining to defaults and remedies. Remedies of the Bondholders to include
mandamus.
(d) If acceleration is permitted under the Resolution, the maturity of Bonds insured by the Insurer shall
not be accelerated without the consent of the Insurer and in the event the maturity of the Bonds is
accelerated, the Insurer may elect, in its sole discretion, to pay accelerated principal and interest
accrued, on such principal to the date of acceleration (to the extent unpaid by the Issuer). Upon
payment of such accelerated principal and interest accrued to the acceleration date as provided
above, the Insurer's obligations under the Insurance Policy with respect to such Bonds shall be fully
discharged.
(e) No grace period for a covenant default shall exceed 30 days, nor be extended for more than 60
days, without the prior written consent of the Insurer. No grace period shall be permitted for
payment defaults.
(f) The Insurer shall be included as a third party beneficial)' to Resolution No. 03-35 and the Bond
Ordinance with respect to the Series 2003 Bonds.
(g) Upon the occurrence of an extraordinary optional or special or extraordinary mandatory
redemption in part, the selection of Bonds to be redeemed shall be subject to the approval of the
Insurer. The exercise of any provision of the Resolution which permits the purchase of Bonds in lieu
of redemption shall require approval of the Insurer wherein any Bond so purchased is not
extinguished.
(h) No modification or amendment to Resolution 03-35 and the Bond Ordinance with respect to the
Series 2003 Bonds or any other transaction document including any underlying security agreement
G-l
(each a "Related Document") may become effective except upon obtaining the prior written consent
of the Insurer. Copies of any modification or amendment to such Resolution and Bond Ordinanceor
any other Related Document shall be sent to Standard & Poor's Credit Market Services ("S&P")
and Moody's Investors Service, Inc. ("Moody's") at least 10 days prior to the effective date
thereof
(i) The rights granted to the Insurer lUlder Resolution No 03 - 35 and the Bond Ordinance with respect
to the Series 2003 Bonds or any other Related Document to request, consent to or direct any
action are rights granted to the Insurer in consideration of its issuance of the Insurance Policy. Any
exercise by the Insurer of such rights is merely an exercise of the Insurer's contractual rights and
shall not be GOnstrued or deemed to be taken for the benefit or on behalf of the Bondholders nor
does such action evidence any position of the Insurer, positive or negative, as to whether
Bondholder consent is required in addition to consent of the Insurer.
G) Only (1) cash, (2) non-callable direct obligations of the United States of America ("Treasuries"),
(3) evidences of ownership of proportionate interests in future interest and principal payments on
Treasuries held by a bank or trust company as custodian, lUlder which the owner of the investment
is the real party in interest and has the right to proceed directly and individually against the obligor
and the lUlderlying Treasuries are not available to any person claiming through the custodian or to
whom the custodian may be obligated, (4) pre-refunded mtmicipal obligations rated "AAA" and
"Aaa" by S&P and Moody's, respectively or (5) securities eligible for "AAA" defeasance lUlder
then existing criteria of S & P or any combination thereof, shall be authorized to be used to effect
defeasance of the Bonds unless the Insurer otherwise approves.
To accomplish defeasance the Issuer shall cause to be delivered (i) a report of an independent firm
of nationally recognized certified public acCOlUltants or such other accolUltant as shall be acceptable to the
Insurer ("AccolUltant") verifYing the sufficiency of the escrow established to pay the Bonds in full on the
maturity or redemption date (''Verification''), (ii) an Escrow Deposit Agreement (which shall be acceptable
in form and substance to the Insurer), and (iii) an opinion of nationally recognized bond counsel to the effect
that the Bonds are no longer "Outstanding" lUlder the Resolution; each Verification and defeasance opinion
shall be acceptable in form and substance, and addressed, to the Issuer and the Insurer. The Insurer shall be
provided with final drafts of the above- referenced documentation not less than five business days prior to
the funding of the escrow.
Bonds shall be deemed "Outstanding" lUlder the Bond Ordinance unless and lUltil they are in fact
paid and retired or the above criteria are met.
(k) AmOlUlts paid by the Insurer lUlder the Insurance Policy shall not be deemed paid for purposes of
the Resolution and shall remain Outstanding and continue to be due and owing lUltil paid by the
Issuer in accordance with the Resolution. The Resolution shall not be discharged unless all amolUlts
due or to become due to the Insurer have been paid in full or duly provided for.
(I) The Issuer to covenant and agree to take such action (including, as applicable, filing of UCC
financing statements and continuations thereof) as is necessary from time to time otherwise preserve
the priority of the pledge of Trust Estate lUlder applicable law.
(m) Claims Upon the Insurance Policy and Payments by and to the Insurer.
G-2
If, on the third Business Day prior to the related scheduled interest payment date or principal
payment date ("Payment Date") there is not on deposit with the Paying Agent, after making all transfers and
deposits required under the Resolution, moneys sufficient to pay the principal of and interest on the Bonds
due on such Payment Date, the Paying Agent shall give notice to the Bond Insurer and to its designated
agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the amount of such deficiency by
12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the
related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and
interest on the Bonds due on such Payment Date, the Paying Agent shall make a claim under the Insurance
Policy and give notice to the Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount of
such deficiency, and the allocation of such deficiency between the amount required to pay interest on the
Bonds and the amount required to pay principal of the Bonds, confirmed in writing to the Insurer and the
Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the
form of Notice of Claim and Certificate delivered with the Insurance Policy.
In the event the claim to be made is for a mandatory sinking fund redemption installment, upon
receipt of the moneys due, the Paying Agent shall authenticate and deliver to affected Bondholders who
surrender their Bonds a new Bond or Bonds in an aggregate principal amount equal to the unredeemed
portion of the Bond surrendered. The Paying Agent shall designate any portion of payment of principal on
Bonds paid by the Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other
advancement of maturity, on its books as a reduction in the principal amount of Bonds registered to the then
current Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the
Insurer, registered in the name of Financial Security Assurance Inc., in a principal amount equal to the
amount of principal so paid (without regard to authorized denominations); provided that the Paying Agent's
failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of
principal or interest payable by the Issuer on any Bond or the subrogation rights of the Insurer.
The Paying Agent shall keep a complete and accurate record of all funds deposited by the Insurer
into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on
and principal paid in respect of any Bond. The Insurer shall have the right to inspect such records at
reasonable times upon reasonable notice to the Paying Agent.
Upon payment of a claim under the Insurance Policy the Paying Agent shall establish a separate
special purpose trust account for the benefit of Bondholders referred to herein as the "Policy Payments
Account" and over which the Paying Agent shall have exclusive control and sole right of withdrawal. The
Paying Agent shall receive any amount paid under the Insurnnce Policy in trust on behalf of Bondholders
and shall deposit any such amount in the Policy Payments Account and distribute such amount only for
purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the
Paying Agent to Bondholders in the same manner as principal and interest payments are to be made with
respect to the Bonds under the sections hereof regarding payment of Bonds. It shall not be necessary for
such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay
debt service with other funds available to make such payments. Notwithstanding anything to the contrary
otherwise set forth in the Resolution and to the extent permitted by law, in the event amounts paid under the
Insurance Policy are applied to claims for payment of principal of or interest on the Bonds, interest on such
principal of and interest on such Bonds shall accrue and be payable from the date of such payment at the
G-3
greater of (i) the per annum rate of interest, publicly annOlmced from time to time by JP Morgan Chase
Bank or its successor at its principal office in the City of New York, as its prime or base lending rate plus
3%, and (ii) the then applicable rate of interest on the Bonds provided that in no event shall such rate
exceed the maximum rate permissible under applicable USUI)' or similar laws limiting interest rates.
Funds held in the Policy Payments Account shall not be invested by the Paying Agent and may not
be applied to satisfY any costs, expenses or liabilities of the Paying Agent. Any funds remaining in the Policy
Payments Account following a Bond payment date shall promptly be remitted to the Insurer.
(n) The Insurer shall, to the extent it makes any payment of principal of (or, in the case of Capital
Appreciation Bonds, accreted value) or interest on the Bonds, become subrogated to the rights of
the recipients of such payments in accordance with the tenns of the Insurance Policy. The
obligations to the Insurer shall survive discharge or termination of the Related Documents.
(0) The Issuer shall payor reimburse the Insurer any and all charges, fees, costs and expenses which
the Insurer may reasonably payor incur in connection with (i) the administration, enforcement,
defense or preservation of any rights or security in any Related Document; (ii) the pursuit of any
remedies under the Resolution or any other Related Document or otheIWise afforded by law or
equity, (iii) any amendment, waiver or other action with respect to, or related to, the Resolution or
any other Related Document whether or not executed or completed, (iv).the violation by the Issuer
of any law, rule or regulation, or any judgment, order or decree applicable to it or (v) any litigation
or other dispute in connection with the Resolution or any other Related Document or the
transactions contemplated thereby, other than amounts resulting from the failure of the Insurer to
honor its obligations under the Insurance Policy. The Insurer reserves the right to charge a
reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect
of the Resolution or any other Related Document.
(P) The application offunds realized upon default shall be applied to payment of expenses of the Issuer
or rebate only after the payment of debt service due and past due on the Bonds, together with
replenishment of the Debt Service Reserve Fund.
(q) The Insurer shall be entitled to pay principal (or, in the case of Capital Appreciation Bonds,
accreted value) or interest on the Bonds that shall become Due for Payment but shall be unpaid by
reason of Nonpayment by the Issuer (as such tenns are defined in the Insurance Policy) and any
amounts due on the Bonds as a result of acceleration of the maturity thereof in accordance with the
Resolution, whether or not the Insurer has received a Notice of Nonpayment (as such tenns are
defined in the Insurance Policy) or a claim upon the Insurance Policy.
(r) The notice address of the Insurer is: Financial Security Assurance Inc., 350 Park Avenue, New
York, New York 10022-6022, Attention: Managing Director-Surveillance, Re: Policy No.
, Telephone: (212) 826-0100; Telecopier: (212) 339-3556. In each case in which notice or
other communication refers to an Event of Default, then a copy of such notice or other
communication shall also be sent to the attention of the General Counsel and shall be marked to
indicate "URGENT MATERIAL ENCLOSED."
(s) The Insurer shall be provided with the following information:
G-4
(i) Annual audited financial statements within 150 days after the end of the Issuer's
fiscal year (together with a certification of the Issuer that it is not aware of any default or Event of
Default l.Ulder the Resolution), and the Issuer's annual budget within 30 days after the approval
thereof together with such other information, data or reports as the Insurer shall reasonably request
from time to time;
(ii) Notice of any draw upon the Debt Service Reserve Fl.Uld within two Business Days
after knowledge thereof other than (i) withdrawals of amol.Ults in excess of the Debt Service
Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds;
(iii) Notice of any default known to the Issuer within five Business Days after
knowledge thereof;
(iv) Prior notice of the advance refunding or redemption of any of the Bonds, including
the principal amol.Ult, maturities and CUSIP nwnbers thereof;
(v) Notice of the resignation or removal of the Paying Agent and Bond Registrar and
the appointment of, and acceptance of duties by, any successor thereto;
(vi) Notice of the commencement of any proceeding by or against the Issuer
commenced l.Ulder the United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding");
(vii) Notice of the making of any claim in connection with any Insolvency Proceeding
seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the
Bonds;
(viii) A full original transcript of all proceedings relating to the execution of any
amendment or supplement to the Related Docwnents; and
(ix) All reports, notices and correspondence to be delivered to Bondholders l.Ulder the
terms of the Related Documents.
(t) Notwithstanding satisfaction of other conditions to the issuance of Additional Bonds contained in
the Resolution, no such issuance may occur (1) should any Event of Default (or any event which,
once all notice or grace periods have passed, would constitute an Event of Default) have occurred
and be continuing unless such default shall be cured upon such issuance and (2) unless the Debt
Service Reserve Fl.Uld is fully funded at its requirement (including the new issue) upon the issuance
of such Additional Bonds, in either case unless otherwise pennitted by the Insurer.
(u) No contract shall be entered into nor any action taken by which the rights of the Insurer or security
for or sources of payment of the Bonds may be impaired or prejudiced in any material respect
except upon obtaining the prior written consent of the Insurer.
(v) If the JI"Oceeds of the Bonds include a refunding there shall be delivered an opinion of Bond
Counsel addressed to the Insurer (or a reliance letter relating thereto) or a certificate of discharge of
the trustee for the Refunded Bonds to the effect that, upon the making of the required deposit to the
escrow, the legal defeasance of the Refunded Bonds shall have occurred.
G-5
APPENDIX D
FORM OF CONTINUING DISCLOSURE AGREEMENT
CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by
the City of Clearwater, Florida (the "Issuer") in connection with the issuance of its $[Bond Amount] Water
and Sewer System Revenue Bonds, Series 2003 (the "Series 2003 Bonds"). The Series 2002 Bonds are
being issued pursuant to Ordinance No. 3674-84 enacted by the Issuer on August 2, 1984, as amended
and supplemented in Ordinance 5355-93, enacted on April 15, 1993, as amended and supplemented in
Ordinance 6311-98, enacted November 5, 1998 and as further amended and supplemented in Ordinance
6915-01, enacted November 15, 2001 (the "Ordinance") and as further supplemented by Resolution
03-35, adopted by the City on September 18, 2003 (the "Series 2003 Resolution"). 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 2003 Bondholders and in order
to assist the original underwriters of the Series 2003 Bonds in complying with Rule l5c2-l2(b)(5)
promulgated by the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act
of 1934 (the "Rule").
SECTION 2. PROVISION OF ANNUAL INFORMATION. Except as 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, 2004, 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
Year (the "CAFR"), which shall include the audited financial statements of the Issuer for the immediately
preceding Fiscal Year prepared in accordance withGenerally 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 of the
Issuer are not completed prior to April 30 of any year, the Issuer shall provide unaudited fmancial
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 2003 Bonds (as amended, the "Official Statement"), as set forth below:
1
1. Updates of the historical financial information set forth in the Official Statement
under the principal captions "THE W A TERAND SEWER SYSTEM" and "RATES, FEES AND
CHARGES" for the then-immediately preceding five fiscal years.
2. Description of any additional indebtedness payable in whole or in part from the Net
Revenues (as defined in the Ordinance).
3. Any other financial information or operating data of the type includedinthe Official
Statement which would be material to a holder or prospective holders of the Series 2003 Bonds.
For pwposes of this Disclosure Certificate, "Fiscal Year" means the period commencing on
October 1 and ending on September 30 of the next succeeding year, or such other period of time provided
by applicable law.
SECTION 3. REPORTING SIGNIFICANT EVENTS. The Issuer shall provide to the
NRMSIRs or the Municipal Securities Rulemaking Board (the "MSRB") and to the SID, on a timely basis,
notice of any of the following events, if such event is material with respect to the Series 2003 Bonds or the
Issuer's ability to satisfy its payment obligations with respect to the Series 2003 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 2003 Bonds;
(G) Modifications to rights of Series 2003 Bondholders;
(H) Redemptions;
(I) Defeasances;
(J) Release, substitution, or sale of property securing repayment of the Series 2003 Bonds;
(K) Rating changes; and
2
(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, it; in the judgment of the Issuer, such other
events are material with respect to the Series 2003 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 illlder applicable
federal securities law to holders of Series 2003 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:
(A)
Bloomberg Municipal Repository
100 Business Park Drive
Skillman, New Jersey 08558
Phone: (609) 279-3225
Fax: (609) 279-5962
Email: Munis@Bloomberg.com
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
Phone: (201) 346-0701
Fax: (201) 947-0107
Email: nrmsir@dpcdata.com
FT Interactive Data
Attn: NRMSIR
100 William Street
New York, New York 10038
Phone: (212) 771-6999
Fax: (212) 771-7390 (Secondary Market Information)
(212) 771-7391 (Primary Market Information)
Email: NRMSIR@FTID.com
3
Standard & Poor's J. J. Kenny Repository
55 Water Street
45th Floor
New York, NY 10041
Phone: (212) 438-4595
Fax: (212) 438-3975
Emai1: nrmsirJepository@sandp.com
(B) Any NRMSIRs that are established subsequently and approved by the SEe.
(C) A list of the names and addresses of aD 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 docwnent
nwnber 0206 or by visiting the SEC's website at "www.sec.gov/info/municipal/nrmsir.".
SECTION 5. NO EVENT OF DEFAULT. 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 2003
Bondholder may take such actions as may be necesscuy and appropriate, including pursuing an action for
mandamus or specific perfonnance, as applicable, by court order, to cause the Issuer to comply with its
obligations hereunder. For purposes of this Disclosure Certificate, "Series 2003 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 2003 Bonds (including persons holding Series 2003 Bonds through nominees,
depositories or other intermediaries), or (B) is treated as the owner of any Series 2003 Bond for federal
income tax purposes.
SECTION 6. INCORPORATION BYREFERENCE. Any oraD of the information required
herein to be disclosed may be incorporated by reference fromother docwnents, including official statements
or debt issues of the Issuer of related public entities, which have been submitted to each of the NRMSIRs
and the SID, if any, or the SEC. If the docwnent incorporated by reference is a :final official statement, it
must be available from the MSRB. The Issuer shall clearly identifY each docwnent incorporated by
reference.
SECTION 7. DISSEMINATION AGENTS. The Issuer may, from time to time, appointor
engage a dissemination agent to assist it in canying out its obligations under this Disclosure Certificate, and
may discharge any such agent, with or without appointing a successor disseminating agent.
SECTION 8. TERMINATION. The Issuer's obligations under this Disclosure Certiiicate shall
tenninate upon (A) the legal defeasance, prior redemption or payment in full of all of the Series 2003
Bonds, or (B) the termination of the continuing disclosure requirements of the Rule by legislative, judicial
or administrative action.
4
SECTION 9. AMENDMENTS. Notwithstanding any other provision of this Disclosure
Certificate, the Issuer may amend this Disclosure Certificate, and any provision may be waived, if such
amendment or waiver is supported by an opinion of cOWlSel 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. 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.
SECTION 11. OBLIGATED PERSONS. If any person, other than the Issuer, becomes an
Obligated Person (as defined in the Rule) relating to the Series 2003 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 [
], 2003
ATTEST:
CITY OF CLEARWATER, FLORIDA
By:
Mayor
City Clerk
5
APPENDIX E
FORM OF BOND COUNSEL OPINION
APPENDIX F
FORM OF MUNICIPAL BOND INSURANCE POLICY
EXHffiIT D
CONTINUING DISCLOSURE CERTIFICATE
D-l
CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by
the City of Clearwater, Florida (the "Issuer") in connection with the issuance of its $[Bond Amount] Water
and Sewer System Revenue Bonds, Series 2003 (the "Series 2003 Bonds"). The Series 2002 Bonds are
being issued pursuant to Ordinance No. 3674-84 enacted by the Issuer on August 2, 1984, as amended
and supplemented in Ordinance 5355-93, enacted on April 15, 1993, as amended and supplemented in
Ordinance 6311-98, enacted November 5, 1998 and as fwther amended and supplemented in Ordinance
6915-01, enacted November 15,2001 (the "Ontinance") and as further supplemented by Resolution
03-35, adopted by the City on September 18, 2003 (the "Series 2003 Resolution"). 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 2003 Bondholders and in order
to assist the original underwriters of the Series 2003 Bonds in complying with Rille 15c2-12(b)(5)
promulgated by the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act
of 1934 (the "Rule").
SECTION 2. PROVISION OF ANNUAL INFORMATION. Except as 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
30,2004, the information set forth below in this Section 2. Notwithstanding the immediately preceding
sentence, to the extent any such infonnation 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 AnnualFinancial Report for the immediately preceding Fiscal
Year (the "CAFR"), which shall include the audited financial statements of the Issuer for the immediately
preceding Fiscal Year prepared inaccordancewithGenera1ly 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 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 2003 Bonds (as amended, the "Official Statement"), as set forth below:
1
1. Updates of the historical financial information set forth in the Official Statement
under the principal captions "TIIE W A TERAND SEWER SYSTEM" and "RATES, FEES AND
CHARGES" for the then-immediately preceding five fiscal years.
2. Description of any additional indebtedness payable in whole or in part from the Net
Revenues (as defined in the Ordinance).
3. Any other financial information or operating data of the type includedinthe Official
Statement which would be material to a holder or prospective holders of the Series 2003 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
NRMSIRs or the Municipal Securities Rulemaking Board (the ''MSRB'') and to the SID, on a timely basis,
notice of any of the following events, if such event is material with respect to the Series 2003 Bonds or the
Issuer's ability to satisfy its payment obligations with respect to the Series 2003 Bonds:
(A) Principal and interest payment delinquencies;
(B) Non-payment related defaults;
(C) Unscheduled draws on the debt service reserve fimd 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 2003 Bonds;
(G) Modifications to rights of Series 2003 Bondholders;
(H) Redemptions;
(I) Defeasances;
(1) Release, substitution, or sale of property securing repayment of the Series 2003 Bonds;
(K) Rating changes; and
2
(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, it; in the judgment of the Issuer, such other
events are material with respect to the Series 2003 Bonds, but the Issuer does not specifically undertake
to commit to provide any suchadditionalnotice 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 law to holders of Series 2003 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:
(A)
Bloomberg Municipal Repository
100 Business Park Drive
Skillman, New Jersey 08558
Phone: (609) 279-3225
Fax: (609) 279-5962
Email: Munis@Bloomberg.com
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
Phone: (201) 346-0701
Fax: (201) 947-0107
Email: nrmsir@dpcdata.com
FT Interactive Data Attn: NRMSIR
100 William Street
New York, New York 10038
Phone: (212) 771-6999
Fax: (212) 771-7390 (Secondary Market Information)
(212) 771-7391 (Primary Market Information)
Email: NRMSIR@FTID.com
3
Standard & Poor's 1. 1. Kenny Repository
55 Water Street
45th Floor
New York, NY 10041
Phone: (212) 438-4595
Fax: (212) 438-3975
Emai1: nnnsicrepository@sandp.com
(B) Any NRMSIRs that are established subsequently and approved by the SEe.
(C) A Iistofthe names and addresses ofalldesignatedNRMSIRs 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 or by visiting the SEC's website at "www.sec.gov/info/municipal/nnnsir.".
SECTION 5. NO EVENT OF DEFAULT. 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 2003
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 2003 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 2003 Bonds (including persons holding Series 2003 Bonds through nominees,
depositories or other intermediaries), or (B) is treated as the owner of any Series 2003 Bond for federal
income tax purposes.
SECTION 6. INCORPORATION BYREFERENCE. Anyoralloftheinforrnationrequired
herein to be disclosed may be incorporated byreference 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, appointor
engage a dissemination agent to assist it in canying out its obligations under this Disclosure Certificate, and
may discharge any such agent, with or without appointing a successor disseminating agent.
SECTION 8. TERMINATION. The Issuer's obligations under this Disclosure Certificate shall
terminate upon (A) the legal defeasance, prior redemption or payment in full of all of the Series 2003
Bonds, or (B) the termination of the continuing disclosure requirements of the Rule by legislative, judicial
or administrative action.
4
SECTION 9. AMENDMENTS. Notwithstanding any other provision of this Disclosure
Certificate, the Issuer may amend this Disclosure Certificate, and any provision may be waived, if such
amendment or waiver is supported by an opinion of counsel that is nationally recognized in the area of
federal securities laws, to the effect that such amendment or waiver would not, in and of itself, cause the
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 otherinformatioIl, using the means of dissemination
set forth in this Disclosure Certificate or any other means of commmrication, 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 infonnation or notice of occurrence of a significant event.
SECTION 11. OBLIGATED PERSONS. If any person, other than the Issuer, becomes an
Obligated Person (as defined in the Rule) relating to the Series 2003 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 [
], 2003
AlTEST:
CITY OF CLEARWATER, FLORIDA
By:
Mayor
City Clerk
5
APPENDIX E
FORM OF BOND COUNSEL OPINION
APPENDIX F
FORM OF MUNICIPAL BOND INSURANCE POLICY
EXHIBIT E
COMMITMENT FOR MUNICIPAL BOND INSURANCE POLICY
E-l
PFSA
MUNICIPAL BOND INSURANCE COMMITMENT
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security" or "FSA") hereby commits to issue its Municipal Bond
Insurance Policy (the "Policy") relating to whole maturities of the debt obligations described in Exhibit A attached hereto (the
"Bonds"), subject to the terms and conditions set forth in this Commitment, of which Commitment Exhibit A is an integrated
part, or added hereto (the "Commitment"). To keep this Commitment in effect after the Expiration Date set forth in Exhibit A
attached hereto, a request for renewal must be submitted to Financial Security prior to such Expiration Date. Financial
Security reserves the right to refuse wholly or in part to grant a renewal.
THE MUNICIPAL BOND INSURANCE POLICY SHALL BE ISSUED IF THE FOLLOWING CONDITIONS ARE SATISFIED:
1, The documents to be executed and delivered in connection with the issuance and sale of the Bonds shall not
contain any untrue or misleading statement of a material fact and shall not fail to state a material fact necessary in order to
make the information contained therein not misleading.
2. No event shall occur which would permit any underwriter or purchaser of the Bonds, otherwise required, not to be
required to underwrite or purchase the Bonds on the date scheduled for the issuance and delivery thereof ("Closing Date").
3. There shall be no material change in or affecting the Bonds (including, without limitation, the security for the Bonds)
or the financing documents or the Official Statement (or any similar disclosure documents) to be executed and delivered in
connection with the issuance and sale of the Bonds from the descriptions or forms thereof approved by Financial Security,
4. The Bonds shall contain no reference to Financial Security, the Policy or the insurance evidenced thereby except as
may be approved by Financial Security. BOND PROOFS SHALL HAVE BEEN APPROVED BY FINANCIAL SECURITY
PRIOR TO PRINTING. The Bonds shall bear a Statement of Insurance in the form provided by Financial Security.
5. Financial Security shall be provided with:
(a) Executed copies of all financing documents, any disclosure document (the "Official Statement") and the
various legal opinions delivered in connection with the issuance and sale of the Bonds (which shall be dated the Closing
Date and which, except for the opinions of counsel relating to the adequacy of disclosure, shall be addressed to Financial
Security or accompanied by a letter of such counsel permitting Financial Security to rely on such opinion as if such opinion
were addressed to Financial Security), including, without limitation, the approving opinion of bond counsel. Each of the
foregoing shall be in form and substance acceptable to Financial Security. Copies of all drafts of such documents prepared
subsequent to the date of the Commitment /blacklined to reflect all revisions from oreviouslv reviewed drafts) shall be
furnished to Financial Security for review and approval. Final drafts of such documents shall be provided to Financial
Security at least three (3) business days prior to the issuance of the Policy, unless Financial Security shall agree to some
shorter period.
(b) Evidence of wire transfer in federal funds of an amount equal to the insurance premium, unless alternative
arrangements for the payment of such amount accepta ble to Financial Security have been made prior to the delivery date of
the Bonds.
(c) Standard & Poor's Credit Market Services, Moody's Investors Service Inc, and Fitch IBCA, Inc. will
separately present bills for their respective fees relating to the Bonds. Payment of such bills should be made directly to such
rating agency. Payment of the rating fee is not a condition to release of the Policy by Financial Security.
6. Promptly after the closing of the Bonds, Financial Security shall receive three com pleted sets of executed documents
(one original and either (i) two photocopies (each unbound) or (ii) three compact discs).
7. The Official Statement shall contain the language provided by Financial Security and only such other references to
Financial Security or otherwise as Financial Security shall supply or approve. FINANCIAL SECURITY SHALL BE
PROVIDED WITH SIX PRINTED COPIES OF THE OFFICIAL STATEMENT.
EXHIBIT A
MUNICIPAL BOND INSURANCE COMMITMENT
TERM SHEET
Issuer:
City of Clearwater, Florida
Name of Bonds Insured:
Water and Sewer Revenue Refunding Bonds, Series 2003
Principal Amount of Bonds Insured: Not to Exceed $8,530,000
Date of Commitment:
August 27,2003
Expiration Date: Friday, October 31,2003*
Premium:
.204% of total debt service on the Bonds Insured
Additional Conditions:
1. The amortization schedule for, and final maturity date of, the Bonds shall be acceptable to Financial
Security.
2, Receipt and satisfactory review of original bond ordinances and all amendments.
3. See attached Exhibits B-C.
Terms used in this Commitment and not otherwise defined shall have the meanings ascribed to them in the document
authorizing the issuance of and setting forth the terms for the Bonds described above (the "Resolution").
FINANCIAL SECURITY ASSURANCE INC.
rJ
,:]
L/4"-1
Authorized Officer
*To keep the Commitment in effect to the Expiration Date set forth above, Financial Security must receive a duplicate
of this Exhibit A executed by an authorized officer by the earlier of the date on which the Official Statement containing
disclosure language about Financial Security is circulated and ten days from the date of this Commitment.
The undersigned agrees that if the Bonds are insured by a policy of municipal bond insurance, such insurance shall
be provided by Financial Security in accordance with the terms of the Commitment.
CITY OF CLEARWATER, FLORIDA
Authorized Officer
L:\LEGAL\MUN ISlSTATES\FL\35062_ Codoc
EXHIBIT B
Page 1 of 1
OPINION REQUIREMENTS
1. Each of the Resolution, the Bonds and the other transaction documents (the "Related Documents") is a legal,
valid and binding obligation of the parties thereto, has been duly authorized, executed and delivered and is
enforceable in accordance with its terms.
2. There does not exist any action, suit, proceeding or investigation pending, or to the best of such counsel's
knowledge, threatened which if adversely determined, could (i) materially adversely affect (a) the financial
condition of the Issuer, (b) the ability of the Issuer to perform its obligations under the Related Documents, (c)
the security for the Bonds, or (d) the transactions contemplated by the Related Documents or (ii) impair the
ability of the Issuer to maintain and operate the System.
3. Nothing has come to the attention of disclosure counsel which would cause them to believe that the final
Official Statement (excluding information provided by Financial Security), as of its date and the date of
issuance of the Policy, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
4. The Bonds are secured by a valid lien and security interest in the Net Revenues of the Issuer on a parity with
all additional parity bonds issued pursuant to the Resolution.
L: \LEGALIMUN ISlSTA TESIF LI35062_ Codoc
EXHIBIT C
Page 1 of 5
RESOLUTION REQUIREMENTS
The Resolution shall incorporate the following requirements either in one section or article entitled "Provisions Relating to
Bond Insurance" (or the like), the provisions of which section or article shall be stated in the Resolution to aovern.
notwithstandina anvthina to the contrarY set forth in the Resolution. or individually in the appropriate sections:
(a) "Insurance Policy" shall be defined as follows: "the insurance policy issued by the Insurer guaranteeing the
scheduled payment of principal of and interest on the Bonds when due". "Insurer" shall be defined as follows:
"Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or assignee
thereof' .
(b) For transactions with a debt service reserve fund, the prior written consent of the Insurer shall be a condition
precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the DebtService
Reserve Fund. Notwithstanding anything to the contrary set forth in the Resolution, amounts on deposit in the
Debt Service Reserve Fund shall be applied solely to the payment of debt service on the Bonds.
(c) The Insurer shall be deemed to be the sole holder of the Insured Bonds for the purpose of exercising any voting
right or privilege or giving any consent or direction or taking any other action that the holders of the Bonds
insured by it are entitled to take pursuant to the section or the article of the Resolution pertaining to defaults and
remedies. Remedies of the Bondholders to include mandamus.
(d) If acceleration is permitted under the Resolution, the maturity of Bonds insured by the Insurer shall not be
accelerated without the consent of the Insurer and in the event the maturity of the Bonds is accelerated, the
Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued [or accreted, as
applicable], on such principal to the date of acceleration (to the extent unpaid by the Issuer). Upon payment of
such accelerated principal and interest accrued [or accreted, as applicable] to the acceleration date as provided
above, the Insurer's obligations under the Insurance Policy with respect to such Bonds shall be fully discharged.
(e) No grace period for a covenant default shall exceed 30 days, nor be extended for more than 60 days, without
the prior written consent of the Insurer. No grace period shall be permitted for payment defaults.
(f) The Insurer shall be included as a third party beneficiary to the Resolution.
(g) Upon the occurrence of an extraordinary optional or special or extraordinary mandatory redemption in part, the
selection of Bonds to be redeemed shall be subject to the approval of the Insurer. The exercise of any provision
of the Resolution which permits the purchase of Bonds in lieu of redemption shall require approval of the Insurer
wherein any Bond so purchased is not extinguished.
(h) No modification or amendment to the Resolution or any other transaction document including any underlying
security agreement (each a "Related Document") may become effective except upon obtaining the prior written
consent of the Insurer. Copies of any modification or amendment to the Resolution or any other Related
Document shall be sent to Standard & Poor's Credit Market Services and Moody's Investors Service, Inc. at
least 10 days prior to the effective date thereof.
(i) The rights granted to the Insurer under the Resolution or any other Related Document to request, consent to or
direct any action are rights granted to the Insurer in consideration of its issuance of the Insurance Policy. Any
exercise by the Insurer of such rights is merely an exercise of the Insurer's contractual rights and shall not be
construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does such action evidence
any position of the Insurer, positive or negative, as to whether Bondholder consent is required in addition to
consent of the Insurer.
(j) Only (1) cash, (2) non-callable direct obligations of the United States of America ("Treasuries"), (3) evidences of
ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or
trust company as custodian, under which the owner of the investment is the real party in interest and has the
right to proceed directly and individually against the obligor and the underlying Treasuries are not available to
any person claiming through the custodian or to whom the custodian may be obligated, (4) pre-refunded
municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively or (5) securities eligible for
"AAA" defeasance under then existing criteria of S & P or any combination thereof, shall be authorized to be
used to effect defeasance of the Bonds unless the Insurer otherwise approves.
To accomplish defeasance the Issuer shall cause to be delivered (i) a report of an independent firm of nationally
recognized certified public accountants or such other accountant as shall be acceptable to the Insurer
("Accountant") verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or
L:ILEGALIMUN I 51ST A TESIFLI35062_ C.doc
EXHIBIT C
Page 2 of5
redemption date ("Verification"), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and
substance to the Insurer), and (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds
are no longer "Outstanding" under the Resolution; each Verification and defeasance opinion shall be acceptable
in form and substance, and addressed, to the Issuer and the Insurer. The Insurer shall be provided with final
drafts of the above-referenced documentation not less than five business days prior to the funding of the
escrow.
Bonds shall be deemed "Outstanding" under the Resolution unless and until they are in fact paid and retired or
the above criteria are met.
(k) Amounts paid by the Insurer under the Insurance Policy shall not be deemed paid for purposes of the
Resolution and shall remain Outstanding and continue to be due and owing until paid by the Issuer in
accordance with the Resolution. The Resolution shall not be discharged unless all amounts due or to become
due to the Insurer have been paid in full or duly provided for.
(I) The Issuer to covenant and agree to take such action (including, as applicable, filing of UCC financing
statements and continuations thereof) as is necessary from time to time otherwise preserve the priority of the
pledge of Trust Estate under applicable law.
(m) Claims Upon the Insurance Policy and Payments by and to the Insurer.
If, on the third Business Day prior to the related scheduled interest payment date or principal payment date
("Payment Date") there is not on deposit with the Paying Agent, after making all transfers and deposits required
under the Resolution, moneys sufficient to pay the principal of and interest on the Bonds due on such Payment
Date, the Paying Agent shall give notice to the Bond Insurer and to its designated agent (if any) (the "Insurer's
Fiscal Agent") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on
such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a
deficiency in the amount available to pay the principal of and interest on the Bonds due on such Payment Date,
the Paying Agent shall make a claim under the Insurance Policy and give notice to the Insurer and the Insurer's
Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency
between the amount required to pay interest on the Bonds and the amount required to pay principal of the
Bonds, confirmed in writing to the Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on
such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Insurance
Policy.
In the event the claim to be made is for a mandatory sinking fund redemption installment, upon receipt of the
moneys due, the Paying Agent shall authenticate and deliver to affected Bondholders who surrender their
Bonds a new Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond
surrendered. The Paying Agent shall designate any portion of payment of principal on Bonds paid by the
Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on
its books as a reduction in the principal amount of Bonds registered to the then current Bondholder, whether
DTC or its nominee or otherwise, and shall issue a replacement Bond to the Insurer, registered in the name of
Financial Security Assurance Inc., in a principal amount equal to the amount of principal so paid (without regard
to authorized denominations); provided that the Paying Agent's failure to so designate any payment or issue any
replacement Bond shall have no effect on the amount of principal or interest payable by the Issuer on any Bond
or the subrogation rights of the Insurer.
The Paying Agent shall keep a complete and accurate record of all funds deposited by the Insurer into the
Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and
principal paid in respect of any Bond. The Insurer shall have the right to inspect such records at reasonable
times upon reasonable notice to the Paying Agent.
Upon payment of a claim under the hsurance Policy the Paying Agent shall establish a separate special
purpose trust account for the benefit of Bondholders referred to herein as the "Policy Payments Account" and
over which the /Paying Agent shall have exclusive control and sole right of withdrawal. The Paying Agent shall
receive any amount paid under the Insurance Policy in trust on behalf of Bondholders and shall deposit any
such amount in the Policy Payments Account and distribute such amount only for purposes of making the
payments for which a claim was made. Such amounts shall be disbursed by the Paying Agent to Bondholders
in the same manner as principal and interest payments are to be made with respect to the Bonds under the
sections hereof regarding payment of Bonds. It shall not be necessary for such payments to be made by checks
or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to
make such payments. Notwithstanding anything to the contrary otherwise set forth in the Resolution, and to the
extent permitted by law, in the event amounts paid under the Insurance Policy are applied to claims for payment
of principal of or interest on the Bonds, interest on such principal of and interest on such Bonds shall accrue and
L:ILEGALIM UN I5ISTATESIFLI35062_ C.doc
EXHIBIT C
Page 3 of5
be payable from the date of such payment at the greater of (i) the per annum rate of interest, publicly
announced from time to time by JPMorgan Chase Bank or its successor at its principal office in the City of New
York, as its prime or base lending rate plus 3%, and (ii) the then applicable rate of interest on the Bonds
provided that in no event shall such rate exceed the maximum rate permissible under applicable usury or similar
laws limiting interest rates.
Funds held in the Policy Payments Account shall not be invested by the Paying Agent and may not be applied
to satisfy any costs, expenses or liabilities of the Paying Agent. Any funds remaining in the Policy Payments
Account following a Bond payment date shall promptly be remitted to the Insurer.
(n) The Insurer shall, to the extent it makes any payment of principal of (or, in the case of Capital Appreciation
Bonds, accreted value) or interest on the Bonds, become subrogated to the rights of the recipients of such
payments in accordance with the terms of the Insurance Policy. The obligations to the Insurer shall survive
discharge or termination of the Related Documents.
(0) The Issuer shall payor reimburse the Insurer any and all charges, fees, costs and expenses which the Insurer
may reasonably payor incur in connection with (i) the administration, enforcement, defense or preservation of
any rights or security in any Related Document; (ii) the pursuit of any remedies under the Resolution or any
other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with
respect to, or related to, the Resolution or any other Related Document whether or not executed or completed,
(iv) the violation by the Issuer of any law, rule or regulation, or any judgment, order or decree applicable to it or
(v) any litigation or other dispute in connection with the Resolution or any other Related Document or the
transactions contemplated thereby, other than amounts resulting from the failure of the Insurer to honor its
obligations under the Insurance Policy. The Insurer reserves the right to charge a reasonable fee as a condition
to executing any amendment, waiver or consent proposed in respect of the Resolution or any other Related
Document.
(p) The application of funds realized upon default shall be applied to payment of expenses of the Issuer or rebate
only after the payment of debt service due and past due on the Bonds, together with replenishment of the Debt
Service Reserve Fund.
(q) The Insurer shall be entitled to pay principal (or, in the case of Capital Appreciation Bonds, accreted value) or
interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the
Issuer (as such terms are defined in the Insurance Policy) and any amounts due on the Bonds as a result of
acceleration of the maturity thereof in accordance with the Resolution, whether or not the Insurer has received a
Notice of Nonpayment (as such terms are defined in the Insurance Policy) or a claim upon the Insurance Policy.
(r) The notice address of the Insurer is: Fi nancial Security Assurance Inc., 350 Park Avenue, New York, New York
10022-6022, Attention: Managing Director- Surveillance, Re: Policy No. _, Telephone: (212) 826-0100;
Telecopier: (212) 339-3556. In each case in which notice or other communication refers to an Event of Default,
then a copy of such notice or other communication shall also be sent to the attention of the General Counsel
and shall be marked to indicate "URGENT MATERIAL ENCLOSED."
(s) The Insurer shall be provided with the following information:
(i) Annual audited financial statements within 150 days after the end of the Issuer's fiscal
year (together with a certification of the Issuer that it is not aware of any default or Event
of Default under the Resolution), and the Issuer's annual budget within 30 days after the
approval thereof together with such other information, data or reports as the Insurer shall
reasonably request from time to time;
(ii) Notice of any draw upon the Debt Service Reserve Fund within two Business Days after
knowledge thereof other than (i) withdrawals of amounts in excess of the Debt Service
Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds;
(iii) Notice of any default known to the Issuer within five Business Days after knowledge
thereof;
(iv) Prior notice of the advance refunding or redemption of any of the Bonds, including the
principal amount, maturities and CUSIP numbers thereof;
(v) Notice of the resignation or removal of the Paying Agent and Bond Registrar and the
appointment of, and acceptance of duties by, any successor thereto;
L:ILEGALIM UNI5ISTATESIFLI35062_ C.doc
EXHIBIT C
Page 4 of5
(vi) Notice of the commencement of any proceeding by or against the Issuer commenced
under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency,
receivership, rehabilitation or similar law (an "Insolvency Proceeding");
(vii) Notice of the making of any claim in connection with any Insolvency Proceeding seeking
the avoidance as a preferential transfer of any payment of principal of, or interest on, the
Bonds;
(viii) A full original transcript of all proceedings relating to the execution of any amendment or
supplement to the Related Documents; and
(Ix) All reports, notices and correspondence to be delivered to Bondholders under the terms
of the Related Documents.
(t) Notwithstanding satisfaction of other conditions to the issuance of Additional Bonds contained in the Resolution,
no such issuance may occur (1) should any Event of Default (or any event which, once all notice or grace
periods have passed, would constitute an Event of Default) have occurred and be continuing unless such
default shall be cured upon such issuance and (2) unless the Debt Service Reserve Fund is fully funded at its
requirement (including the new issue) upon the issuance of such Additional Bonds, in either case unless
otherwise permitted by the Insurer.
(u) No contract shall be entered into nor any action taken by which the rights of the Insurer or security for or
sources of payment of the Bonds may be impaired or prejudiced in any material respect except upon obtaining
the prior written consent of the Insurer.
(v) If the proceeds of the Bonds include a refunding there shall be delivered an opinion of Bond Counsel addressed
to the Insurer (or a reliance letter relating thereto) or a certificate of discharge of the trustee for the Refunded
Bonds to the effect that, upon the making of the required deposit to the escrow, the legal defeasance of the
Refunded Bonds shall have occurred.
L:ILEGALIM UN I5ISTA TESIFLI35062_ C.doc
PROCEDURES FOR PREMIUM PAYMENT TO
FINANCIAL SECURITY ASSURANCE INC.
Financial Security's issuance of its municipal bond insurance policy at bond closing is
contingent upon payment and receipt of the premium. NO POLICY MAY BE RELEASED UNTIL
PAYMENT OF SUCH AMOUNT HAS BEEN CONFIRMED. Set forth below are the procedures
to be followed for confirming the amount of the premium to be paid and for paying such amount:
Confirmation of
Amount to be Paid:
Upon determination of the final debt service
schedule, fax such schedule to Financial Security
Attention: Pam Peters, Director
Phone No. (212) 339-3553
Fax No. (212) 339-3450
Confirm with the individual in our underwriting department that you are in agreement
with respect to par and premium on the transaction prior to the closing date.
Payment Date:
Date of Delivery of the insured bonds.
Method of Payment:
Wire transfer of Federal Funds.
Wire Transfer Instructions:
Bank:
ABA#:
Accl. Name:
Account No.:
Policy No.:
The Bank of New York
021 000 018
Financial Security Assurance Inc.
8900297263
[To Be Assigned]
CONFIRMATION OF PREMIUM WIRE NUMBER AT CLOSING
Financial Security will accept as confirmation of the premium payment a wire transfer number and the
name of the sending bank, to be communicated on the closing date to Vanessa Edwards-EI, Paralegal
Documentation and Closing Coordinator, (212) 339-0864.
EXHIBIT F
ESCROW DEPOSIT AGREEMENT
F-l
ESCROW DEPOSIT AGREEMENT
This ESCROW DEPOSIT AGREEMENT, dated as of October 1, 2003, by and between
the CITY OF CLEARWATER, FLORIDA, a municipal corporation of the State of Florida (the
"Issuer"), and [BANK], 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 of the 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 2003
Bonds more fully 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 respective Series of 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 respective Series of the Refunded
Bonds coming due on the redemption date as shown on Schedule A attached hereto.
(d) "Bonds" or "Series 2003 Bonds" means the Gas System Revenue Refunding
Bonds, Series 2003 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 of the
Refunded Bonds.
(g) "Escrow Holder" means [BANK], [CITY], [STATE], a national banking
association organized under the laws of the United States of America.
(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 certificate
executed by the Issuer which provides for redemption of certain of the 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. 5118-91 enacted by the Issuer on August 15,
1991, as amended and supplemented in Ordinance 7191-03, enacted on
2003, as amended and supplemented.
(m) "Paying Agent" shall mean the Paying Agent for the Refunded Bonds.
(n) "Refunded Bonds" shall mean the Series 1996A Bonds maturing on and after
September 1, 2004.
(0) "Series 1996A Bonds" shall mean the Issuer's Gas System Revenue Bonds, Series
1996A, dated July 1, 1996.
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:
2
(a) Such funds are all derived as follows:
(1)
(2) $
payment of the Refunded Bonds.
$
from the net proceeds of the Bonds; and
transferred from the Sinking Fund held for the
(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 $ , representing the $
of funds from the Sinking Fund for the Refunded Bonds and $ from the
proceeds of the Bonds, in cash from the amount received by the Issuer in the Escrow Account,
and, hold such funds in cash until the December 1, 2003 redemption date of the outstanding
Series 1993 Bonds,
(c) to immediately invest $ of such funds derived from the
proceeds of the Bonds by the purchase of the 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, and
(d) to deposit in the Escrow Account, as received, the receipts of maturing principal
of and interest on the Federal Securities in the Escrow Account.
Section 4. Payment of Refunded Bonds.
(a) Refunded Bonds. On the redemption date for each respective series of 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
respective series of Refunded Bonds corning due on such date, as shown on Schedule A and as
demonstrated on Exhibit C hereto.
(b) Surplus. On the last 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.
(c) Priority of Payments. The holders of the Refunded Bonds shall have an express
first lien on the funds and Federal Securities in the Escrow Account until such funds and Federal
3
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 the
payments required under Subsection 4(a) shall be made when due before any payments shall be
made under Subsections 4(b).
(d) Fees and Expenses of Escrow Holder. On the date hereof, the Escrow Holder
acknowledges receipt of its fees to serve as Escrow Holder in the amount of $500, and agrees to
invoice the Issuer for reimbursement of any out of pocket expenses incurred by the Escrow
Holder in performing its services hereunder, and further acknowledges that the Escrow Holder
does not have a lien on or claim against any funds held hereunder for reimbursement of such
expenses.
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 of the 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 counsel
or 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 of the Escrow Account, the acceptance of the funds deposited therein, the purchase
of the Federal Securities, the retention of the Federal Securities or the proceeds thereof or any
payment, transfer or other application of money or securities by the Escrow Holder in any non-
4
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 may
or may not be counsel to the Issuer, and in reliance upon the opinion of such counsel shall have
full and complete 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 of the 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 removal 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 of the 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.
5
(c) No such removal shall take effect until a successor Escrow Holder shall be appointed
hereunder.
Section 10. Successor Escrow Holder.
(a) If at 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. If
the 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 of such 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 of the 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.
6
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.
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 of the date first
above written.
THE CITY OF CLEARWATER, FLORIDA
(SEAL)
Mayor-Commissioner
ATTEST:
City Clerk
City Manager
Approved as to Form,
Sufficiency and Correctness:
City Attorney
7
(SEAL)
[BANK],
as Escrow Holder
By:
Its:
8
Schedule A
(Aggregate Debt Service; Semi-Annual Debt Service;
Annual Debt Service; Description of Refunded Bonds)
Series 1996A Bonds
Payment Date Principal Premium Interest Total Debt Service
September 1, 2004 $ $ $ $
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
Escrow Cash Plow
Date Principal Rate Interest Transfer Receipts Disbursements Cash
Balance
EXHIBIT G
ADDITIONAL COVENANTS WITH BOND INSURER
(a) "Insurance Policy" shall be defined as follows: "the insurance policy issued by the Insurer
guaranteeing the scheduled payment of principal of and interest on the Bonds when due".
"Insurer" shall be defined as follows: "Financial Security Assurance Inc., a New York stock
insurance company, or any successor thereto or assignee thereof'.
(b) F or transactions with a debt service reserve fund, the prior written consent ofthe Insurer shall
be a condition precedent to the deposit of any credit instrument provided in lieu of a cash
deposit into the Debt Service Reserve Fund. Notwithstanding anything to the contrary set
forth in the Resolution, amounts on deposit in the Debt Service Reserve Fund shall be
applied solely to the payment of debt service on the Bonds.
(c) The Insurer shall be deemed to be the sole holder of the Insured Bonds for the purpose of
exercising any voting right or privilege or giving any consent or direction or taking any other
action that the holders ofthe Bonds insured by it are entitled to take pursuant to the section
or the article of the Resolution pertaining to defaults and remedies. Remedies of the
Bondholders to include mandamus.
(d) If acceleration is permitted under the Resolution, the maturity of Bonds insured by the
Insurer shall not be accelerated without the consent of the Insurer and in the event the
maturity of the Bonds is accelerated, the Insurer may elect, in its sole discretion, to pay
accelerated principal and interest accrued, on such principal to the date of acceleration (to the
extent unpaid by the Issuer). Upon payment of such accelerated principal and interest accrued
to the acceleration date as provided above, the Insurer's obligations under the Insurance
Policy with respect to such Bonds shall be fully discharged.
(e) No grace period for a covenant default shall exceed 30 days, nor be extended for more than
60 days, without the prior written consent ofthe Insurer. No grace period shall be permitted
for payment defaults.
(f) The Insurer shall be included as a third party beneficiary to Resolution No. 03-35 and the
Bond Ordinance with respect to the Series 2003 Bonds.
(g) Upon the occurrence of an extraordinary optional or special or extraordinary mandatory
redemption in part, the selection of Bonds to be redeemed shall be subject to the approval of
the Insurer. The exercise of any provision of the Resolution which permits the purchase of
Bonds in lieu of redemption shall require approval of the Insurer wherein any Bond so
purchased is not extinguished.
(h) No modification or amendment to Resolution 03-35 and the Bond Ordinance with respect to
the Series 2003 Bonds or any other transaction document including any underlying security
agreement (each a "Related Document") may become effective except upon obtaining the
prior written consent of the Insurer. Copies of any modification or amendment to such
G-l
Resolution and Bond Ordinance or any other Related Document shall be sent to Standard &
Poor's Credit Market Services ("S&P") and Moody's Investors Service, Inc. ("Moody's") at
least 1 0 days prior to the effective date thereof.
(i) The rights granted to the Insurer under Resolution No 03-35 and the Bond Ordinance with
respect to the Series 2003 Bonds or any other Related Document to request, consent to or
direct any action are rights granted to the Insurer in consideration of its issuance of the
Insurance Policy. Any exercise by the Insurer of such rights is merely an exercise of the
Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit
or on behalf of the Bondholders nor does such action evidence any position of the Insurer,
positive or negative, as to whether Bondholder consent is required in addition to consent of
the Insurer.
(j) Only (1) cash, (2) non-callable direct obligations of the United States of America
("Treasuries"), (3) evidences of ownership of proportionate interests in future interest and
principal payments on Treasuries held by a bank or trust company as custodian, under which
the owner ofthe investment is the real party in interest and has the right to proceed directly
and individually against the obligor and the underlying Treasuries are not available to any
person claiming through the custodian or to whom the custodian may be obligated, (4) pre-
refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively
or (5) securities eligible for "AAA" defeasance under then existing criteria ofS & P or any
combination thereof, shall be authorized to be used to effect defeasance ofthe Bonds unless
the Insurer otherwise approves.
To accomplish defeasance the Issuer shall cause to be delivered (i) a report of an independent
firm of nationally recognized certified public accountants or such other accountant as shall be
acceptable to the Insurer ("Accountant") verifying the sufficiency ofthe escrow established to pay
the Bonds in full on the maturity or redemption date ("Verification"), (ii) an Escrow Deposit
Agreement (which shall be acceptable in form and substance to the Insurer), and (iii) an opinion of
nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding" under
the Resolution; each Verification and defeasance opinion shall be acceptable in form and substance,
and addressed, to the Issuer and the Insurer. The Insurer shall be provided with final drafts of the
above-referenced documentation not less than five business days prior to the funding ofthe escrow.
Bonds shall be deemed "Outstanding" under the Bond Ordinance unless and until they are in
fact paid and retired or the above criteria are met.
(k) Amounts paid by the Insurer under the Insurance Policy shall not be deemed paid for
purposes of the Resolution and shall remain Outstanding and continue to be due and owing
until paid by the Issuer in accordance with the Resolution. The Resolution shall not be
discharged unless all amounts due or to become due to the Insurer have been paid in full or
duly provided for.
(1) The Issuer to covenant and agree to take such action (including, as applicable, filing ofUCC
financing statements and continuations thereof) as is necessary from time to time otherwise
preserve the priority of the pledge of Trust Estate under applicable law.
(m), Claims Upon the Insurance Policy and Payments by and to the Insurer.
If, on the third Business Day prior to the related scheduled interest payment date or principal
G-2
payment date ("Payment Date") there is not on deposit with the Paying Agent, after making all
transfers and deposits required under the Resolution, moneys sufficient to pay the principal of and
interest on the Bonds due on such Payment Date, the Paying Agent shall give notice to the Bond
Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone ortelecopyof
the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the
second Business Day prior to the related Payment Date, there continues to be a deficiency in the
amount available to pay the principal of and interest on the Bonds due on such Payment Date, the
Paying Agent shall make a claim under the Insurance Policy and give notice to the Insurer and the
Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of
such deficiency between the amount required to pay interest on the Bonds and the amount required to
pay principal of the Bonds, confirmed in writing to the Insurer and the Insurer's Fiscal Agent by
12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of
Claim and Certificate delivered with the Insurance Policy.
In the event the claim to be made is for a mandatory sinking fund redemption installment,
upon receipt of the moneys due, the Paying Agent shall authenticate and deliver to affected
Bondholders who surrender their Bonds a new Bond or Bonds in an aggregate principal amount
equal to the unredeemed portion of the Bond surrendered. The Paying Agent shall designate any
portion of payment of principal on Bonds paid by the Insurer, whether by virtue of mandatory
sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in
the principal amount of Bonds registered to the then current Bondholder, whether DTC or its
nominee or otherwise, and shall issue a replacement Bond to the Insurer, registered in the name of
Financial Security Assurance Inc., in a principal amount equal to the amount of principal so paid
(without regard to authorized denominations); provided that the Paying Agent's failure to so
designate any payment or issue any replacement Bond shall have no effect on the amount of principal
or interest payable by the Issuer on any Bond or the subrogation rights of the Insurer.
The Paying Agent shall keep a complete and accurate record of all funds deposited by the
Insurer into the Policy Payments Account (defined below) and the allocation of such funds to
payment of interest on and principal paid in respect of any Bond. The Insurer shall have the right to
inspect such records at reasonable times upon reasonable notice to the Paying Agent.
Upon payment of a claim under the Insurance Policy the Paying Agent shall establish a
separate special purpose trust account for the benefit of Bondholders referred to herein as the "Policy
Payments Account" and over which the Paying Agent shall have exclusive control and sole right of
withdrawal. The Paying Agent shall receive any amount paid under the Insurance Policy in trust on
behalf of Bondholders and shall deposit any such amount in the Policy Payments Account and
distribute such amount only for purposes of making the payments for which a claim was made. Such
amounts shall be disbursed by the Paying Agent to Bondholders in the same manner as principal and
interest payments are to be made with respect to the Bonds under the sections hereof regarding
payment of Bonds. It shall not be necessary for such payments to be made by checks or wire transfers
separate from the check or wire transfer used to pay debt service with other funds available to make
such payments. Notwithstanding anything to the contrary otherwise set forth in the Resolution and to
the extent permitted by law, in the event amounts paid under the Insurance Policy are applied to
claims for payment of principal of or interest on the Bonds, interest on such principal of and interest
on such Bonds shall accrue and be payable from the date of such payment at the greater of (i) the per
annum rate of interest, publicly announced from time to time by JP Morgan Chase Bank or its
G-3
successor at its principal office in the City of New York, as its prime or base lending rate plus 3%,
and (ii) the then applicable rate of interest on the Bonds provided that in no event shall such rate
exceed the maximum rate permissible under applicable usury or similar laws limiting interest rates.
Funds held in the Policy Payments Account shall not be invested by the Paying Agent and
may not be applied to satisfy any costs, expenses or liabilities of the Paying Agent. Any funds
remaining in the Policy Payments Account following a Bond payment date shall promptly be
remitted to the Insurer.
(n) The Insurer shall, to the extent it makes any payment of principal of (or, in the case of
Capital Appreciation Bonds, accreted value) or interest on the Bonds, become subrogated to
the rights of the recipients of such payments in accordance with the terms of the Insurance
Policy. The obligations to the Insurer shall survive discharge or termination of the Related
Documents.
(0) The Issuer shall payor reimburse the Insurer any and all charges, fees, costs and expenses
which the Insurer may reasonably payor incur in connection with (i) the administration,
enforcement, defense or preservation of any rights or security in any Related Document; (ii)
the pursuit of any remedies under the Resolution or any other Related Document or otherwise
afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or
related to, the Resolution or any other Related Document whether or not executed or
completed, (iv).the violation by the Issuer of any law, rule or regulation, or any judgment,
order or decree applicable to it or (v) any litigation or other dispute in connection with the
Resolution or any other Related Document or the transactions contemplated thereby, other
than amounts resulting from the failure of the Insurer to honor its obligations under the
Insurance Policy. The Insurer reserves the right to charge a reasonable fee as a condition to
executing any amendment, waiver or consent proposed in respect of the Resolution or any
other Related Document.
(P) The application of funds realized upon default shall be applied to payment of expenses ofthe
Issuer or rebate only after the payment of debt service due and past due on the Bonds,
together with replenishment of the Debt Service Reserve Fund.
(q) The Insurer shall be entitled to pay principal (or, in the case of Capital Appreciation Bonds,
accreted value) or interest on the Bonds that shall become Due for Payment but shall be
unpaid by reason of Nonpayment by the Issuer (as such terms are defined in the Insurance
Policy) and any amounts due on the Bonds as a result of acceleration of the maturity thereof
in accordance with the Resolution, whether or not the Insurer has received a Notice of
Nonpayment (as such terms are defined in the Insurance Policy) or a claim upon the
Insurance Policy.
(r) The notice address of the Insurer is: Financial Security Assurance Inc., 350 Park Avenue,
New York, New York 10022-6022, Attention: Managing Director-Surveillance, Re: Policy
No. , Telephone: (212) 826-0100; Telecopier: (212) 339-3556. In each case in which
notice or other communication refers to an Event of Default, then a copy of such notice or
other communication shall also be sent to the attention ofthe General Counsel and shall be
marked to indicate "URGENT MATERIAL ENCLOSED."
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(8) The Insurer shall be provided with the following information:
(i) Annual audited financial statements within 150 days after the end of the
Issuer's fiscal year (together with a certification of the Issuer that it is not aware of any
default or Event of Default under the Resolution), and the Issuer's annual budget within 30
days after the approval thereof together with such other information, data or reports as the
Insurer shall reasonably request from time to time;
(ii) Notice of any draw upon the Debt Service Reserve Fund within two Business
Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Debt
Service Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds;
(iii) Notice of any default known to the Issuer within five Business Days after
knowledge thereof;
(iv) Prior notice of the advance refunding or redemption of any of the Bonds,
including the principal amount, maturities and CUSIP numbers thereof;
(v) Notice ofthe resignation or removal ofthe Paying Agent and Bond Registrar
and the appointment of, and acceptance of duties by, any successor thereto;
(vi) Notice of the commencement of any proceeding by or against the Issuer
commenced under the United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding");
(vii) Notice of the making of any claim in connection with any Insolvency
Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or
interest on, the Bonds;
(viii) A full original transcript of all proceedings relating to the execution of any
amendment or supplement to the Related Documents; and
(ix) All reports, notices and correspondence to be delivered to Bondholders under
the terms of the Related Documents.
(t) Notwithstanding satisfaction of other conditions to the issuance of Additional Bonds
contained in the Resolution, no such issuance may occur (1) should any Event of Default (or
any event which, once all notice or grace periods have passed, would constitute an Event of
Default) have occurred and be continuing unless such default shall be cured upon such
issuance and (2) unless the Debt Service Reserve Fund is fully funded at its requirement
(including the new issue) upon the issuance of such Additional Bonds, in either case unless
otherwise permitted by the Insurer.
(u) No contract shall be entered into nor any action taken by which the rights of the Insurer or
security for or sources of payment of the Bonds may be impaired or prejudiced in any
material respect except upon obtaining the prior written consent of the Insurer.
(v) Ifthe proceeds ofthe Bonds include a refunding there shall be delivered an opinion of Bond
Counsel addressed to the Insurer (or a reliance letter relating thereto) or a certificate of
discharge of the trustee for the Refunded Bonds to the effect that, upon the making of the
required deposit to the escrow, the legal defeasance of the Refunded Bonds shall have
occurred.
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