05-16
RESOLUTION NO. 05-16
A RESOLUTION AUTHORIZING THE SALE OF NOT TO EXCEED $8,000,000
CITY OF CLEARWATER, FLORIDA, GAS SYSTEM REVENUE REFUNDING
BONDS, SERIES 2005; SETTING FORTH THE FORM OF THE NOTICE OF BOND
SALE AND SUMMARY NOTICE OF BOND SALE RELATING TO THE SALE OF
SUCH BONDS; DIRECTING PUBLICATION OF THE SUMMARY NOTICE OF
SALE RELATING TO SUCH BONDS; PROVIDING FOR THE OPENING OF BIDS
RELATING TO THE SALE OF THE BONDS; SETTING FORTH THE OFFICIAL
NOTICE OF SALE AND BID FORMSPROVIDING FOR THE ISSUANCE OF THE
SERIES 2005 BONDS IN BOOK-ENTRY-ONLY FORM; AUTHORIZING THE
DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT AND AN
OFFICIAL STATEMENT IN CONNECTION WITH THE DELIVERY OF THE
BONDS; PROVIDING FOR COMPLIANCE WITH A CONTINUING DISCLOSURE
CERTIFICATE; APPOINTING A PAYING AGENT AND REGISTRAR;
APPOINTING AN ESCROW AGENT; AUTHORIZING THE PURCHASE OF
MUNICIPAL BOND INSURANCE; PROVIDING CERTAIN OTHER MA TIERS IN
CONNECTION WITH THE ISSUANCE AND DELIVERY OF SUCH BONDS; AND
PROVIDING AN EFFECTIVE DATE.
WHEREAS, on August 15, 1991, the City Council of the City of Clearwater, Florida (the
"City" or the "Issuer") enacted Ordinance No. 5118-91 (the "Original Ordinance") to provide for the
issuance of bonds payable from Net Revenues of the Gas System (as defined therein); and
WHEREAS, on April-1 2005, the City enacted Ordinance No. 7423-05 (the "2005 Refunding
Ordinance", and together with the Original Ordinance, collectively, the "Bond Ordinance") which
authorized the issuance of the City of Clearwater, Florida, Gas System Revenue [Refunding] Bonds,
Series [to be determined], as Additional Parity Obligations under the Original Ordinance; and
WHEREAS, the City by this Resolution intends to provide for the issuance of not to exceed
$8,000,000 City of Clearwater, Florida Gas System Revenue Refunding Bonds, Series 2005 (the
"Series 2005 Bonds") as Additional Parity Bonds to advance refund a portion of the City's
Outstanding Gas System Revenue Bonds, Series 1997 A (the "1997 Refunding Bonds"); and
WHEREAS, it is in the best interest of the City to provide for the public sale of the Series
2005; and
WHEREAS, the Issuer now desires to approve the issuance of its Series 2005 Bonds, to sell
its Series 2005 Bonds pursuant to a public sale, to authorize the distribution of a Preliminary Official
Statement and an Official Statement in connection with the issuance of the Series 2005 Bonds and to
take certain other actions in connection with the issuance and sale of the Series 2005 Bonds; and
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Resolution No. 05-16
WHEREAS, this resolution shall constitute a supplemental resolution under the terms of the
Bond Ordinance and all capitalized undefined terms used herein shall have the meanings set forth
in the Bond Ordinance;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CLEARWATER, FLORIDA:
SECTION 1. AUTHORIZATION OF BONDS AND SERIES DESIGNATION. The not
to exceed $8,000,000 of the Gas System Revenue Refunding Bonds, Series 2005 authorized by the
2005 Ordinance being offered pursuant to this resolution are hereby designated as Series 2005
Bonds (the "Series 2005 Bonds"). The issuance of not to exceed $8,000,000 of the Series 2005 Bonds,
by the City is hereby approved upon the terms and conditions set forth in the Bond Ordinance and
this Resolution.
SECTION 2. PUBLIC SALE. There is hereby authorized to be sold pursuant to a public
sale not to exceed $8,000,000 City of Clearwater, Florida, Gas System Revenue Refunding Bonds,
Series 2005.
SECTION 3. SALE OF SERIES 2005 BONDS; REDEMPTION AND MATURITY
PROVISIONS. The Finance Director is hereby directed to arrange for the sale of the Series 2005
Bonds utilizing the electronic bid process of PARITY through the publication of the Summary
Notice of Sale of the Bonds in The Bond Buyer, 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 March be deemed appropriate by
the Finance Director.
The Series 2005 Bonds shall be subject to optional redemption and shall bear maturities and
sinking fund amortizations as shall be subsequently determined by the Finance Director, upon
advice of the City's financial advisor and based on market conditions existing at the time, prior to
the publication of the Summary Notice of Bond Sale hereinafter approved.
Proposals for purchase of the Series 2005 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, Gas System
Revenue Refunding Bonds, Series 2005; 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").
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Resolution No. 05-16
SECTION 4. DISPOSITION OF PROCEEDS OF SERIES 2005 BONDS. The proceeds
from the sale of the Series 2005 Bonds shall be deposited as follows:
(a) An amount equal to the accrued interest on the Series 2005 Bonds shall be deposited
into the Interest Account in the Bond Service Fund;
(b) An amount determined by the Finance Director to be necessary to pay the costs of
issuing the Series 2005 Bonds, including the premium due to the Bond Insurer shall be used to pay
such costs;
(c) 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
(d) The remaining proceeds of the Series 2005 Bonds shall be deposited into the Escrow
Account with the Escrow Holder (hereinafter identified).
SECTION 5. APPROVAL OF FORMS. The Notice of Bond Sale and Summary Notice of
Sale of the Bonds to be submitted for purchase of the Series 2005 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 6. BOOK ENTRY ONLY BONDS. It is in the best interest of the City and the
residents and inhabitants thereof that the Series 2005 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
2005 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 7. PRELIMINARY OFFICIAL STATEMENT AND OFFICIAL STATEMENT.
The City Manager and Finance Director are authorized and directed to cause a Preliminary Official
Statement to be prepared in substantially the form attached hereto as Exhibit C, with such changes,
insertions and omissions as shall be approved by the City Manager and Finance Director, containing
a copy of the attached Notice of Bond Sale and to furnish a copy of such Preliminary Official
Statement to interested bidders. The City Manager and Finance Director are authorized to deem
final the Preliminary Official Statement prepared pursuant to this Section for purposes of Rule 15c2-
12 (the "Rule") of the Securities and Exchange Commission. Upon the award of the Series 2005
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
2005 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
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Resolution No. 05-16
may be necessary to reflect the purchaser's bid. The Mayor 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 8. CONTINUING DISCLOSURE. The City hereby covenants and agrees that,
in order to provide for compliance by the City with the secondary market disclosure requirements
of the Rule, that it will comply with and carry out all of the provisions of that certain Continuing
Disclosure Certificate in substantially the form attached hereto as Exhibit D, to be executed by the
City and dated the date of issuance and delivery of the Series 2005 Bonds, as it March 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 March take such actions as March 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 9. REGISTRAR AND PAYING AGENT. Wells Fargo Bank, N.A., through its
designated office in Jacksonville, Florida, is hereby appointed as Registrar and Paying Agent for the
Series 2005 Bonds.
SECTION 10. ESCROW AGENT. Wells Fargo Bank, N.A., through its designated office in
Jacksonville, Florida, is hereby appointed as Escrow Agent for the Series 2005 Bonds under the
respective Escrow Deposit Agreement, a form of which is attached as Exhibit A to the 2005
Ordinance.
SECTION 11. FINANCIAL GUARANTY INSURANCE POLICIES. Pursuant to the Bond
Ordinance, Ambac Assurance Corporation ("AMBAC") has been selected to provide its Financial
Guaranty 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 2005 Bonds.
Selection of Ambac 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 2005 Bonds is
hereby authorized. The Issuer hereby accepts the terms, conditions and agreements relating to the
Bond Insurance Policy in accordance with the Financial Guaranty 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 2005 Bonds for the benefit and information of the holders of the
Series 2005 Bonds.
For so long as the Bond Insurance Policy is applicable to the Series 2005 Bonds, the
additional provisions set forth on Exhibit F attached hereto shall be applicable to the Series 2005
Bonds. In addition to the covenants and agreements of the Issuer previously contained in the Bond
Resolution regarding the rights of the Bond Insurer which are incorporated herein, the Issuer
hereby covenants and agrees for the benefit of the Bond Insurer and the holders of the Series 2005
Bonds while the Bond Insurance Policy insuring the Series 2005 Bonds is in full force and effect, to
provide the Bond Insurer with copies of any notices to be given to any party pursuant to the Bond
Resolution or this Resolution, and to provide prior notice to the Bond Insurer of any amendments to
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Resolution No. 05-16
the Bond Resolution or this Resolution.
(a) Any notice that is required to be given to a holder of the Bonds or to the Paying
Agent pursuant to the Bond Ordinance shall also be provided to the Bond Insurer. All notices
required to be given to the Bond Insurer under the Resolution shall be in writing and shall be sent
by registered or certified mail addressed to Ambac Assurance Corporation, One State Street Plaza,
New York, New York 10004 Attention: Surveillance Department.
(b) The Insurer shall receive notice of any amendments to the Bond Ordinance or this
Resolution prior to the adoption of such amendments by the City.
(c) The City shall provide copies of all amendments to the Bond Ordinance or this
Resolution which required the consent of the Bond Insurer to Standard & Poors.
SECTION 11. AWARD OF BIDS. The Finance Director is hereby authorized to accept the
bids for the Series 2005 Bonds. The City Manager and the Finance Director are hereby authorized to
award the sale of the Series 2005 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 5.5% on the Series 2005 Bonds. The City Manager and the Finance
Director are hereby authorized to award the sale of the Series 2005 Bonds as set forth above or to
reject all bids for the Series 2005 Bonds. Such award shall be final.
SECTION 12. PRIOR RESOLUTIONS. To the extent the provisions of this Resolution are
inconsistent with the provisions of prior resolutions regarding the Series 2005 Bonds, provisions of
this Resolution shall control and supercede the inconsistent provisions of such Resolutions.
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Resolution No. 05-16
SECTION 13. EFFECTIVE DATE. This resolution shall take effect immediately upon
adoption.
PASSED AND ADOPTED this 21stday of April ,2005.
CITY OF CLEARWATER, FLORIDA
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Mayor
Approved as to form:
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Pamela K. Akin
City Attorney
Attest:
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Resolution No. 05-16
EXHIBIT A
FORM OF
OFFICIAL NOTICE OF BOND SALE
$7,185,000*
CITY OF CLEARWATER, FLORIDA
GAS SYSTEM REVENUE REFUNDING BONDS, SERIES 2005
NOTICE IS HEREBY GIVEN that electronic (as explained below) proposals will be received
electronically via PARITY in the manner described below, until 11:00 a.m., Clearwater, Florida time,
on ,2005.
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, RBC
Dain Rauscher Inc., 100 Second A venue 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 2005 Bonds
The Series 2005 Bonds will be issued in book entry only form, without coupons, in
denominations of $5,000 or any integral multiples thereof, and shall be the date of delivery.
Principal of the Series 2005 Bonds shall be paid to the registered owners at the designated corporate
trust office of Wells Fargo Bank, N.A., Jacksonville, Florida (the "Paying Agent" and "Registrar"),
upon presentment and surrender of the Series 2005 Bonds. Interest on the Series 2005 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 March 1 and September I, commencing September I,
20_. 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 2005 Bonds, payments of principal of,
redemption premium, if any, and interest on the Series 2005 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
2005 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 2005 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 2005 Bonds.
Purchases of the Series 2005 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 2005 Bonds
to furnish to DTC an underwriters' questionnaire and to the City the CUSIP numbers of the Series
2005 Bonds not less than seven (7) days prior to the Closing Date (as hereinafter defined).
Maturity Schedule
The Series 2005 Bonds will mature on September 1 of the following years in the following
principal amounts:
Series 2005 Bonds
Principal Principal Principal
Maturity Amount Maturity Amount Maturity Amount
09/01/2005 $ 15,000 09/01/2013 $250,000 09/01/2021 $275,000
09/01/2006 40,000 09/01/2014 205,000 09/01/2022 280,000
09/01/2007 205,000 09/01/2015 220,000 09/01/2023 300,000
09/01/2008 220,000 09/01/2016 220,000 09/01/2024 310,000
09/01/2009 225,000 09/01/2017 235,000 09/01/2025 330,000
09/01/2010 225,000 09/01/2018 240,000 09/01/2026 340,000
09/01/2011 235,000 09/01/2019 250,000 09/01/2027 2,060,000
09/01/2012 240,000 09/01/2020 265,000
Mandatory Redemption Provisions
If the Successful Bidder designates any Series 2005 Bonds as term bonds as described under
"Designation of Term Bonds," the following mandatory redemption provisions shall apply with
respect to such designated term bonds:
The Series 2005 Bonds maturing on 1, 20_ will be subject to mandatory
redemption prior to maturity, selected by lot, or in such manner as the Registrar may deem
appropriate, at a redemption price equal to par plus accrued interest to the redemption date, on
1, 20--.J and each 1 thereafter, from amounts deposited in the Redemption
Account in the Bond Service Fund established by the Ordinance, in the following years and
amounts as follows:
Year
Amount
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Optional Redemption Provisions
The Series 2005 Bonds maturing on or before September I, 2014 are not callable prior to their
maturity dates. The Series 2005 Bonds maturing after September I, 2014 are subject to optional
redemption by the City, on and after September I, 2014 as a whole or in part at any time, from the
maturities selected by the City, . and by lot within a maturity if less than an entire maturity is
redeemed, at the redemption prices (expressed as percentages of principal amount) set forth below,
together with accrued interest to the date of redemption:
Redemption Period
Price
September 1,2014 and thereafter
100%
Adjustment of Principal Amount
After final computation of the bids, to achieve desired debt service levels, the City reserves
the right either to increase or decrease any Principal Amount of the Series 2005 Bonds (or any
Amortization Installment in the case of a Term Bond) shown on the schedule of Principal Amounts
set forth above (the "Maturity Schedule"), by an amount not to exceed ten percent (10%) 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 2005 Bonds, no rebidding or recalculation
of the bid submitted with respect to such Series 2005 Bonds will be required or permitted. If
necessary, the total purchase price of the Series 2005 Bonds will be increased or decreased in direct
proportion to the ratio that the adjustment bears to the aggregate principal amount of the Series
2005 Bonds specified herein; and the Series 2005 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
2005 Bonds offered pursuant to the Bid Maturity Schedule of the relevant series of Series 2005
Bonds, without taking into account any adjustment in the amount of Series 2005 Bonds set forth in
the Bid Maturity Schedule.
Designation of Term Bonds
Bidders may specify that the annual Principal Amounts of the Series 2005 Bonds coming due
in any two or more consecutive years may be combined to form one or more maturities of Series
2005 Term Bonds scheduled to mature in the last of such years with the preceding annual Principal
Amounts for such years constituting mandatory Amortization Installments of Series 2005 Bonds to
be selected by lot and redeemed at a price of par plus accrued interest in accordance with the
Resolution.
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Basis of Award
Proposals must be unconditional and only for all the Series 2005 Bonds. The purchase price
bid for the Series 2005 Bonds may include a discount (including underwriters' discount and original
issue discount) not to exceed three percent (3%) of the principal amount of the Series 2005 Bonds
and shall specify how much of the discount is original issue discount. The purchase price bid may
also include an original issue premium not to exceed three percent (3%) and shall specify how
much of such purchase price is original issue premium. The Series 2005 Bonds will be insured by
Ambac Assurance Corporation and the City will pay the bond insurance premium from Bond
proceeds. The purchase price bid for the Series 2005 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 2005 Bonds, to reject any or all bids and to
waive any irregularity or informality in any bid.
The Series 2005 Bonds will be awarded to the bidder (herein referred to as the "Successful
Bidder" as to the Series 2005 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 2005 Bonds. True
interest cost for the Series 2005 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 2005 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 September 1,
20_. The true interest cost shall be calculated from the expected closing date of the Series 2005
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 2005
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 2005 Bonds be
accompanied by a computation of such true interest cost to the City under the term of the Proposal
for Bonds, but such computation is not to be considered as part of the Proposal for Bonds.
Interest Rates Permitted
The Series 2005 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 2005
Bonds may be less than one percent (1.0%) or more than six percent (6.0%). 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 2005 Bonds bear the same rate of interest, provided
that all Series 2005 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.
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Paying Agent and Registrar
The Paying Agent and Registrar for the Series 2005 Bonds is Wells Fargo Bank, N.A.,
through its designated office in Jacksonville, Florida.
Security
Principal of and interest on the Series 2005 Bonds to be issued pursuant to Ordinance No.
5118-91, as supplemented by Ordinance No. 7423-05, as supplemented, and all required sinking
fund, reserve and other payments shall be payable solely from the Net Revenues of Gas 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 2005 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 2005 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 2005 Bonds are being issued to refund the City's Gas
System Revenue Bonds, Series 1997 A maturing in the years 2007 through 2027 (Series 1997 A Bonds
maturing in 2005 and 2006 will not be refunded), and pay the costs of issuing the Series 2005 Bonds
and to purchase a municipal bond insurance policy.
Issuance of Series 2005 Bonds
The Series 2005 Bonds will be issued and sold by the City of Clearwater, Florida, a municipal
corporation organized and existing under the laws of the State of Florida. The Series 2005 Bonds
are being issued pursuant to Ordinance No. 5118-91, enacted August IS, 1991, as amended and
supplemented pursuant to Ordinance 7423-05, enacted April 21, 2005 as supplemented by
resolutions (collectively, the "Bond Ordinance") by the City of Clearwater, Florida (the "City") and
pursuant to the provisions of Chapter 166, Florida Statutes, and other applicable provisions of law.
Municipal Bond Insurance Policy
Ambac Assurance Corporation ("Ambac Assurance") has issued a commitment for a
financial guaranty insurance policy relating to the Bonds. All bids may be conditioned upon the
issuance, effective as of the date on which the Bonds are issued, of a policy of insurance by Ambac
Assurance, insuring the payment when due of principal of and interest on the Bonds. Each Bond
will bear a legend referring to the insurance. The purchaser, holder or owner is not authorized to
make any statements concerning the insurance beyond those set out here and in the Bond Legend
without the approval of Ambac Assurance.
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Proposals
Proposals for the Series 2005 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 $50,000 (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
thanll:00 a.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 wire transfer 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 2005 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 2005 Bonds. Any interest earned on the good faith deposit will be
retained by and inure to the benefit of the City. If the Series 2005 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 2005 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 2005 Bonds in book entry only form will be available for
delivery on .2005, 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 deposit, in immediately available Federal Reserve funds
without cost to the City.
Closing Documents
The City will furnish to the Successful Bidder upon delivery of the Series 2005 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 2005 Bonds will be delivered to the Successful Bidder of the Series 2005 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)l, Florida Statutes requires that the City file, within 120 days after
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delivery of the Series 2005 Bonds, an information statement with the Division of Bond Finance of the
State of Florida (the "Division") containing the following information: (a) the name and address of
the managing underwriter, if any, connected with the Series 2005 Bonds; (b) the name and address
of any attorney or financial consultant who advised the City with respect to the Series 2005 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 2005 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 2005 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 2005 Bonds, to furnish the City
with such information concerning the initial prices at which a substantial amount of the Series 2005
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 2005 Bonds as part of their bid
in the following form:
"The City of Clearwater, Florida, is proposing to issue $ original
aggregate principal amount of Gas System Revenue Refunding Bonds, Series 2005,
for the purpose of paying (i) the costs of refunding a portion of the City's Gas
System Revenue Bonds, Series 1997 A, (ii) the costs of issuing the Series 2005 Bonds,
and (iii) the premium on the Bond Insurance Policy, all as further described in
Ordinance No. 7423-05. The final maturity date of the Series 2005 Bonds is
September I, 2027, and the Series 2005 Bonds are expected to be repaid over a period
of twenty-two (2) years. At a forecasted average interest rate of _ % per annum,
total interest paid over the life of the Series 2005 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 2005 Bonds will result in $ not
being available to finance the other capital projects of the City. This truth-in-
bonding statement prepared pursuant to Section 218.385(2) and (3) of the Florida
Statutes, as amended, is for informational purposes only and shall not affect or
control the actual terms and conditions of the Series 2005 Bonds."
A-7
Legal 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 2005
Bonds is not includable in the gross income of individuals, however, interest on the Series 2005
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 2005 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 2005 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 2005 Bonds on the cover of the Official Statement.
Continuing 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 2005 Bonds,
but neither the failure to print such number on any Series 2005 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 2005 Bonds in accordance with its agreement to purchase the Series 2005 Bonds.
All expenses in relation to the printing of CUSIP numbers on the Series 2005 Bonds shall be paid for
by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of said
number shall be the responsibility of and shall be paid for by the Successful Bidder.
Copies of Documents
Copies of the Preliminary Official Statement, this Official Notice of Bond Sale and the
A-8
Official Bid Form and further information which may be desired, may be obtained from the City's
Financial Advisor, RBC Dain Rauscher Inc., 100 Second Avenue South, Suite 800, St. Petersburg,
Florida 33701, Attn: Kevin Conitz: (727) 895 8853.
The Preliminary Official Statement will be available electronically from i-Deal LLC at
www.i-dealprospectus.com. which may be contacted at (212) 404-8104 for assistance in resolving
downloading problems; however, the printed version of the Preliminary Official Statement is the
only official version.
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/ Frank Hibbard
Mayor
A-9
EXHIBIT B
FORM OF
SUMMARY NOTICE OF SALE
$ *
CITY OF CLEARWATER, FLORIDA
Gas System Revenue Refunding Bonds
Series 2005
NOTICE IS HEREBY GIVEN, thatbids 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:
Time:
,2005
11:00 a.m., Clearwater, Florida Time
Bonds Dated: Date of delivery
Maturities: Payable September 1 in the years and amounts as follows:
Maturity
09/01/2005
09/01/2006
09/01/2007
09/01/2008
09/01/2009
09/01/2010
09/01/2011
09/01/2012
Interest
Payment Dates:
Legal Opinion:
Series 2005 Bonds*
Principal Principal Principal
Amount Maturity Amount Maturity Amount
$ 15,000 09/01/2013 $250,000 09/01/2021 $275,000
40,000 09/01/2014 205,000 09/01/2022 280,000
205,000 09/01/2015 220,000 09/01/2023 300,000
220,000 09/01/2016 220,000 09/01/2024 310,000
225,000 09/01/2017 235,000 09/01/2025 330,000
225,000 09/01/2018 240,000 09/01/2026 340,000
235,000 09/01/2019 250,000 09/01/2027 2,060,000
240,000 09/01/2020 265,000
Payable March 1 and September 1, commencing September I, 2005.
Bryant Miller & Olive P.A.,
Tallahassee, Florida
For copies of the Official Notice of Bond Sale and the Preliminary Official Statement of the City
of Clearwater, Florida, please contact the City's Financial Advisor, RBC Dain Rauscher Inc., 100
Second Avenue South, Suite 800, St. Petersburg, Florida 33701, Attn: Kevin M. Conitz, telephone
(727) 895-8853. The Proposed Form is to be provided by PARITY.
B-2
The Preliminary Official Statement will be available electronically from i-Deal LLC at
www.i-dealprospectus.com. which may be contacted at (212) 404-8104 for assistance in resolving
downloading problems; however, the printed version of the Preliminary Official Statement is the
only official version.
B-3
EXHIBIT C
FORM OF PRELIMINARY OFFICIAL STATEMENT
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Preliminary Official Statement Dated March ,2005
NEW ISSUE
Ratin!!'s: Moody's: "Aaa" (Insured)
"A2" (Underlying)
Fitch: "AAA"(lnsured)
Ambac Indemnity Insured
(See "Ratings" herein)
BOOK-ENTRY ONLY
In the opinion of Bond Counsel under existing laws, regulations and judicial decisions interest on the Series 2005 Bonds is excluded from gross income
for purposes of federal income taxation and the Series 2005 Bonds are exempt from all present intangible personal property taxes imposed pursuant to Chapter
199, Florida Statutes. See, however "TAX EXEMPTION" herein for a description of certain federal minimum and other special taxes that may affect the tax
treatment of interest on the Series 2005 Bonds.
CITY OF CLEARWATER, FLORIDA
$7,185,000*
Gas System Revenue Refunding Bonds
Series 2005
Dated: Date of Delivery
Due: September 1, as shown below
The City of Clearwater, Florida, Gas System Revenue Refunding Bonds, Series 2005 (the "Series 2005 Bonds") are being issued in the form of fully
registered bonds and will be initially issued to and registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York
("DTC"), which will act as securities depository for the Series 2005 Bonds. The Series 2005 Bonds will be available to purchasers in principal denominations of
$5,000 and integral multiples thereof under the book-entry system maintained by DTC through brokers and dealers who are, or act through, DTC Participants.
Purchasers will not receive physical delivery of the Series 2005 Bonds. For so long as any purchaser is the beneficial owner of a Series 2005 Bond, he must
maintain an account with a broker or dealer who is, or acts through, a DTC Participant in order to receive payment of principal of and interest on such Series
2005 Bond. For so long as the book-entry system is in effect any reference to a Bondholder or Bondholders shall be deemed to be Cede & Co. and not the
beneficial owners of the Series 2005 Bonds. See "Book-Entry Only System" under "DESCRIPTION OF THE Series 2005 BONDS." Interest on the Series 2005
Bonds is payable semi-annually, commencing September 1, 2005, and each March 1 and September 1 thereafter. Wells Fargo Bank, N.A., Jacksonville, Florida,
will act as Paying Agent with respect to the Series 2005 Bonds.
The Series 2005 Bonds are subject to optional and mandatory sinking fund redemption prior to their stated maturity under the terms
and conditions described herein.
The Series 2005 Bonds will be issued by the City of Clearwater, Florida (the "City") (i) together with other funds provided by the City, to advance
refund $6,710,000 of the City's Gas System Revenue Bonds, Series 1997A (the "Series 1997A Bonds"), which are currently Outstanding in the aggregate
principal amount of $7,025,000;(ii) to purchase a municipal bond insurance policy and a reserve fund surety to satisfy the Reserve Requirement for the Series
2005 Bonds; and (iii) to pay the costs of issuance ofthe Series 2005 Bonds.
The Series 2005 Bonds are limited obligations of the City, payable solely from the Net Revenues derived from the operation of the System, as provided
in Ordinance No. 5118.91 enacted by the City Council of the City (the "Council") on August 15, 1991 (the "Original Ordinance"), which authorized the issuance
of Gas System Revenue Bonds, Series 1991 (the "Series 1991 Bonds"), as amended and supplemented, as further supplemented by Ordinance No. 7191.03,
enacted on October 2, 2003, as further supplemented by Ordinance No. 7423-05, enacted on April 21, 2005 and as further supplemented (as so supplemented, the
"Authorizing Ordinance") (the Original Ordinance and the Authorizing Ordinance are collectively referred to as the "Ordinance"). The Series 2005 Bonds and
the interest thereon shall not be and shall not constitute an indebtedness of the City or of the State of Florida or any political subdivision thereof within the
meaning of any Constitutional, statutory, charter or other limitation of indebtedness, and neither the full faith and credit nor the taxing powers of the State of
Florida or the City are pledged as security for the payment of the principal of, redemption premium, if any, or interest on the Series 2005 Bonds and no holder or
holders of any Series 2005 Bonds shall ever have the right to compel the exercise of the ad valorem taxing powers of the City, or taxation in any form of any real
property therein to pay the Series 2005 Bonds or the interest thereon.
The Series 2005 Bonds will be on a parity and rank equally, as to lien on and source and security for payment from the Net Revenues and in all other
respects, with the unrefunded portion of the Series 1997 A Bonds, the City's Gas System Revenue Bonds, Series 1997B, the City's Gas System Revenue
Refunding Bonds, Series 1998 and the City's Gas System Revenue Refunding Bonds, Series 2004 , as more particularly described herein.
Payment of the principal of and interest on the Bonds when due will be insured by a financial guaranty insurance policy to be issued by Ambac
Assurance Corporation simultaneously with the delivery ofthe Bonds. See the material under the heading "FINANCIAL GUARANTY INSURANCE" herein.
Ambac
MATURITY SCHEDULE
(See enclosed Notice of Sale)
(Accrued interest to be added)
ELECTRONIC BIDS FOR THE SERIES 2005 BONDS WILL BE ACCEPTED IN ACCORDANCE WITH THE OFFICIAL NOTICE OF
SALE.
This cover page contains certain information for quick reference only. It is not a summary of the issue. Investors must read the entire Official
Statement to obtain information essential to making an informed investment decision.
The Series 2005 Bonds will be offered when, as and if issued and delivered to the Underwriter, subject to approval of Bryant. Miller and Olive, P.A.,
Tallahassee, Florida, Bond Counsel to the City, and certain other conditions. Certain legal matters will be passed on for the City by its City Attorney, Pamela K.
Akin, Esquire, and its disclosure counsel, Nabors, Giblin & Nickerson, P.A., Tampa, Florida. It is expected that the Series 2005 Bonds in definitive book-entry
only form will be available for delivery through the facilities of the Depository Trust Company, on or about May ,2005.
Dated: April ,2005
* Preliminary, subject to change
CITY OF CLEARWATER, FLORIDA
ELECTED OFFICIALS
MAYOR
Frank Hibbard
VICE MAYOR
Bill Jonson
CITY COUNCIL
Hoyt Hamilton
Carlen A. Petersen
John Doran
APPOINTED OFFICIALS
William B. Horne, II, City Manager
Pamela K. Akin, Esq., City Attorney
Margaret L. Simmons, CPA, Finance Director
BOND COUNSEL
Bryant Miller & Olive P.A.
Tallahassee, Florida
FINANCIAL ADVISOR
RBC Dain Rauscher Inc.
St. Petersburg, Florida
REGISTRAR AND PAYING AGENT
Wells Fargo Bank, N.A.
Jacksonville, Florida
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 2005 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 2005 Bonds or a solicitation of an offer to buy
nor shall there be any sale of the Series 2005 Bonds by any person in any jurisdiction in
which it is unlawful for such person to make such offer, solicitation or sale. The
information set forth herein has been furnished by the City and by other sources which
are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and
is not to be construed as a representation or contract, by the Underwriter. The
information and expressions of opinion herein are subject to change without notice and
neither the delivery of the Official Statement nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the affairs
of the City since the date hereof.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE SERIES 2005 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 2005 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 2005 Bonds in accordance with
applicable provisions of the securities laws of the States, if any, in which the
Series 2005 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 2005 Bonds or the accuracy or
completeness of this Official Statement. Any representation to the contrary
may be a criminal offense.
1
TABLE OF CONTENTS
Page
INTRODUCTION...................................... ............................................................................ 1
PURPOSE OF SERIES 2005 BONDS ................................................................................. 2
THE REFUNDING PROGRAM ...........................................................................................2
ESTIMATED SOURCES AND USES OF FUNDS ............................................................. 4
DESCRIPTION OF THE SERIES 2005 BONDS................................................................ 5
General....................................................................................................................... 5
Book- Entry Only System........ ................................................................................... 5
Redemption Provisions .............................. ................................................................ 9
Notice of Redemption........................ ......... ................................................................ 9
SOURCE OF PAYMENT AND SECURITY FOR THE SERIES 2005 BONDS.............. 10
General....................................................;................................................................ 10
Debt Service Reserve Account........................ .................... .... ................... .............. 11
FLOW OF FUNDS.............................................................................................................. 12
Establishment of Funds and Accounts .............................. ..................................... 12
Priority of Flow of Funds......................................................................................... 12
COVENANTS.......................................... .... ........................................................................ 15
Rate Covenant.......................................... ................................................................ 15
Additional Parity Obligations ............................................... ..................... ............. 15
Operation and Maintenance............................ ........................................................ 16
Operating Budget.................................... ...................................... .......................... 16
Annual Audit............................................................................................................ 16
No Mortgage or Sale ofthe System ........................................................................16
No Free Service ........................................ ................................................................ 18
Enforcement of Collections...................................................................................... 18
No Competing System.......................................................................................;..... 18
Unlawful Connection Prohibited.. ..... ............. .................... ................. .... ............... 19
Amendment of the Ordinance................................................................................. 19
THE SySTEM....................................................... .............................................................. 19
Physical Description........... ..................................................................................... 19
Management............ .... .... ........... ..... ... ..... .... ............................................................. 22
Gas Supply..................................... .......................................................................... 24
Rates, Fees and Charges............. ...... ...................... ............ .................................... 25
Service Area............................................................................................................. 25
Pasco County Territorial Dispute...... ............. ................... ..................................... 27
Environmental Remediation Costs......................................................................... 28
FINANCIAL GUARANTY INSURANCE ...................... .... ...................... .......................... 28
Payment Pursuant to Financial Guaranty Insurance Policy................................ 29
11
Ambac Assurance Surety Bond............................................................................... 30
Ambac Assurance Corporation................................................................................ 31
Available Information.............................................................................................. 32
Incorporation of Certain Documents by Reference................................................ 32
Rights Granted Insurer........................................................................................... 33
COMBINED DEBT SERVICE REQUIREMENTS ........................................................... 34
HISTORICAL COVERAGE OF DEBT SERVICE BY THE SYSTEM NET REVENUES
..............................................................................................................................................35
RATINGS................... ................................................ ........... ............................................... 35
LEGALITY........................................................................................................................... 36
TAX EXEMPTION. ............................................................................................................. 36
VERIFI CA TI ON OF MATHEMATICAL COMPUTATIONS...... ............................. ........ 39
INVESTMENT POLICY OF THE CITY..................... ................................ ....................... 39
ENFORCEABILITY OF REMEDIES .................... ........ .... .............................. ..................40
LITIGATION............................................. ...;............... ....................................................... 40
GENERAL PURPOSE FINANCIAL STATEMENTS....................................................... 40
FINANCIAL ADVISOR............................ .......................................................................... 41
ADVISORS AND CONSULTANTS ....................................... ............................................41
CONTINUING DISCLOSURE........................................................................................... 42
MISCELLANEOUS............................................................................................................ 42
AUTHORIZATION OF AND CERTIFICATION CONCERNING OFFICIAL
STATEMENT............................................................................................. ......................... 43
APPENDIX A - GENERAL INFORMATION RELATING TO THE CITY OF
CLEARWATER, FLORIDA
APPENDIXB - EXCERPTS FROM THE CITY OF CLEARWATER, FLORIDA
GENERAL PURPOSE FINANCIAL STATEMENTS AND OTHER
INFORMATION FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
2004
APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE ORDINANCE
APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX E - FORM OF BOND COUNSEL OPINION
APPENDIX F - SPECIMEN BOND INSURANCE POLICY
APPENDIX G - SCHEDULES OF RATES
ill
OFFICIAL STATEMENT
$7,185,000*
Gas System Revenue Refunding Bonds
Series 2005
INTRODUCTION
The purpose of this Official Statement, which includes its cover page and certain
enclosed Appendices, is to furnish information with respect to the issuance by the City of
Clearwater, Florida (the "City") of its $7,185,000* Gas System Revenue Refunding Bonds,
Series 2005 (the "Series 2005 Bonds").
The Series 2005 Bonds are being issued under the authority of and in full
compliance with the Constitution and laws of the State of Florida, including Chapter 166,
Part II, Florida Statutes, as amended and supplemented, the City Charter, as amended and
supplemented, and other applicable provisions of law. The Series 2005 Bonds are being
issued more specifically pursuant to Ordinance No. 5118-91 enacted by the City Council of
the City (the "Council") on August 15, 1991 (the "Original Ordinance"), which authorized
the issuance of Gas System Revenue Bonds, Series 1991 (the "Series 1991 Bonds"), as
amended and supplemented, as further supplemented by Ordinance No. 7191-03, enacted
on October 2, 2003, as further supplemented by Ordinance No. 7423-05, enacted on April
21, 2005 and as further supplemented (as so supplemented, the "Authorizing Ordinance")
(the Original Ordinance and the Authorizing Ordinance are collectively referred to as the
"Ordinance ").
The Series 2005 Bonds will be issued by the City of Clearwater, Florida (the "City")
(i) together with other funds provided by the City, to advance refund $6,710,000 of the
City's Gas System Revenue Bonds, Series 1997A (the "Series 1997A Bonds"), which are
currently Outstanding in the aggregate principal amount of $7,025,000;(ii) to purchase a
municipal bond insurance policy; and (iii) to pay the costs of issuance of the Series 2005
Bonds. There is on deposit in the Reserve Account a reserve fund surety policy which is in
an amount sufficient to satisfy the Reserve Requirement applicable to the Series 2005
Bonds.
The Series 2005 Bonds are special, limited obligations of the City payable solely
from the Net Revenues derived from the operation of the System, as provided in the
Ordinance on a parity with the unrefunded portion of the Series 1997A Bonds, the City's
. Preliminary, subject to change.
1
Gas System Revenue Refunding Bonds, Series 1997B (the "Series 1997B Bonds"), which are
currently Outstanding in the aggregate principal amount of $4,320,000, the City's Gas
System Revenue Refunding Bonds, Series 1998 (the "Series 1998 Bonds"), which are
currently Outstanding in the aggregate principal amount of $7,825,000 and $8,890,000 Gas
System Revenue Refunding Bonds, Series 2004 (the "Series 2004 Bonds"), which are
currently Outstanding in the aggregate principal amount of $8,870,000 (the Series 1997 A
Bonds, the Series 1997B Bonds and the Series 1998 Bonds are hereinafter being referred to
collectively as the "Parity Bonds"), all as further described under the heading "Additional
Parity Obligations" herein.
Capitalized terms not otherwise defined in this Official Statement shall have the
same meanings assigned to such terms in the Summary of the Ordinance, which is set forth
in APPENDIX C. The description of the Series 2005 Bonds, the Ordinance, and certain
statutory provisions as well as the information from various reports and statements
contained in this Official Statement are not comprehensive or definitive. All references to
such documents, reports and statements are qualified by the actual content of such
documents, reports and statements, copies of which may be obtained by contacting the
Finance Director, City of Clearwater, Florida, 100 South Myrtle Avenue, Clearwater,
Florida 33756.
PURPOSE OF SERIES 2005 BONDS
The Series 2005 Bonds will be issued by the City of Clearwater, Florida (the "City")
(i) together with other funds provided by the City, to advance refund $6,710,000 of the
Series 1997A Bonds, which are currently Outstanding in the aggregate principal amount of
$7,025,000; (ii) to purchase a municipal bond insurance policy; and (iii) to pay the costs of
issuance of the Series 2005 Bonds.
THE REFUNDING PROGRAM
Proceeds of the Series 2005 Bonds will be deposited into an escrow account (the
"Escrow Account") established with Wells Fargo Bank, N.A., Jacksonville, Florida, as
escrow agent (the "Escrow Agent") and invested in cash and/or direct obligations of the
United States in order to provide sufficient funds on September 1, 2006, to pay and
redeem $6,710,000 of the Series 1997A Bonds (the "Refunded Bonds"), at the
redemption price of 101% of the principal amount thereof, together with accrued and
unpaid interest thereon. Series 1997A Bonds coming due prior to September 1, 2006 in
the aggregate principal amount of $315,000.00 are not callable and are not being
refunded as a part of the refunding program.
2
Upon issuance of the Series 2005 Bonds and based upon the deposit into the
Escrow Fund of the cash and/or direct obligations into the Escrow Fund as described
above and the verification of the mathematical accuracy of the sufficiency thereof to pay
and redeem the Refunded Bonds as described above by a firm of independent certified
public accountants, Bond Counsel will deliver and opinion to the effect that the
Refunded Bonds will no longer be outstanding for purposes of the resolution under
which they were issued and the pledge of and lien on the Pledged Funds created by or
pursuant to said Resolution with respect to such Refunded Bonds will cease, terminate
and be discharged.
3
ESTIMATED SOURCES AND USES OF FUNDS
The proceeds to be received from the sale of the Series 2005 Bonds are expected to be
applied as follows:
Sources of Funds
Par Amount
Less: Net Original Issue Discount
Funds on Deposit for Refunded Bonds
Accrued Interest
Total Sources of Funds
Uses of Funds
Deposit to Escrow Fund
Deposit to Debt Service Fund
Underwriter's Discount and
Costs of Issuance (1)
Total Uses of Funds
(l)Includes the premiums for the Municipal Bond Insurance Policy. No premium is
reflected for the Reserve Fund Surety policy as Ambac Indemnity has not required that a
new policy be issued and the existing policy is sufficient to satisfy the Reserve Requirement
applicable to the Series 2005 Bonds.
4
DESCRIPTION OF THE SERIES 2005 BONDS
General
The Series 2005 Bonds will be issued in fully registered book-entry only form in
authorized denominations of $5,000 and integral multiples thereof and will be dated dated
of delivery, will bear interest (payable semi-annually on March 1 and September 1 of each
year commencing September 1, 2005) at the rates per annum and will mature on the dates
and in the amounts, all as set forth on the cover page of this Official Statement. Wells
Fargo Bank, N.A., Jacksonville, Florida, will act as Paying Agent and Registrar with
respect to the Series 2005 Bonds.
Book-Entry Only System
THE INFORMATION IN THIS SECTION CONCERNING DTC AND DTC'S
BOOK-ENTRY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE
CITY BELIEVES TO BE RELIABLE, BUT THE CITY TAKES NO
RESPONSIBILITY FOR THE ACCURACY THEREOF.
The Series 2005 Bonds will be available in book-entry form only, in denominations of
$5,000 or any integral multiple thereof. Purchasers of the Series 2005 Bonds will not
receive certificates representing their interests in the Series 2005 Bonds purchased. The
Underwriter is to confirm original issuance purchases with statements containing certain
terms of the Series 2005 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 ("DTC"), New York, New York, will act as securities
depository for the Series 2005 Bonds. The Series 2005 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 of DTC. One fully-
registered Series 2005 Bond will be issued for each maturity of the Series 2005 Bonds, as
set forth on the inside cover page hereof, and will be deposited with DTC.
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 17 A of the Securities Exchange Act of 1934.
DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity
issues, corporate and municipal debt issues, and money market instruments from over 85
5
countries that DTC's participants ("Direct Participants") deposit with DTC. 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 U.S. and non-U.S.
securities brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing
Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC
and Members of the National Securities Clearing Corporation, Government 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-U.S. securities brokers and dealers, banks, trust companies, and
clearing corporations that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard &
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
2005 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 2005 Bonds
will not receive certificates representing their beneficial interests in the Series 2005 Bonds
purchased. Each Underwriter is to confirm original issuance purchases of beneficial
interests with statements containing certain terms of the Series 2005 Bonds in which such
beneficial interests are purchased.
Purchases of Series 2005 Bonds under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Series 2005 Bonds on DTC's records,
The ownership interest of each actual purchaser of each Series 2005 Bonds ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their purchase.
Beneficial Owners are, however, expected to receive written confrrmations 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 2005 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 2005 Bonds, except in the event that use ofthe book-entry system for the
Series 2005 Bonds is discontinued.
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To facilitate subsequent transfers, all Series 2005 Bonds deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee, Cede &
Co., or such other name as may be requested by an authorized representative of DTC. The
deposit of Series 2005 Bonds with DTC and their registration in the name of Cede & Co. or
such other DTC nominee do not effect any change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Series 2005 Bonds; DTC's records reflect
only the identity of the Direct Participants to whose accounts such Series 2005 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.
The Paying Agent will make payments of principal of, premium, if any, and interest
on the Series 2005 Bonds to DTC or such other nominee, as may be requested by an
authorized representative or DTC, as registered owner of the Series 2005 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 form or
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. If less than all
of the Series 2005 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 2005 Bonds unless authorized by a Direct Participant in accordance with
DTC'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 & Coo's
consenting or voting rights to those Direct Participants to whose accounts Series 2005
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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 2005 BONDS FOR THE ACCURACY OF RECORDS OF DTC, CEDE & CO.
OR ANY DTC PARTICIPANT WITH RESPECT TO THE SERIES 2005 BONDS OR THE
PROVIDING OF NOTICE OR PAYMENT OF PRINCIPAL, OR INTEREST, OR ANY
PREMIUM ON THE SERIES 2005 BONDS, TO DTC PARTICIPANTS OR BENEFICIAL
OWNERS, OR THE SELECTION OF SERIES 2005 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 2005 Bonds paid to DTC or its nominee, or any redemption or other
notices, to the Beneficial Owners, or that they will do so on a timely basis or that DTC will
serve or act in a manner described in this Official Statement.
For every transfer and exchange of beneficial interests in the Series 2005 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
2005 Bonds at any time by giving notice to the City and the Paying Agent and discharging
its responsibilities with respect thereto under applicable law. Under such circumstances, in
the event that a successor depository is not obtained, Series 2005 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
circumstances, certificated Series 2005 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 2005 Bonds. The Series 2005
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 2005 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
2005 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
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exchange or transfer after the first such exchange or transfer following the delivery of the
Series 2005 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 2005 Bonds shall be
delivered. Neither the City nor the Bond Registrar shall be required to register the transfer
or exchange of any Series 2005 Bonds during the period commencing on the fifteenth day
(whether or not a business day) of the month next preceding an interest payment date and
ending on such interest payment date or, in the case of any proposed redemption of a Series
2005 Bonds, after such Series 2005 Bonds or any portion thereof has been selected for
redemption.
Redemption Provisions
Optional Redemption. [TO BE ADDED]
Notice of Redemption
As long as the book-entry only system is used for determining beneficial ownership
of the Series 2005 Bonds, notice of redemption will only be sent to Cede & Co. Cede & Co.
will be responsible for notifying the DTC Participants, who will in turn be responsible for
notifying the Beneficial Owners. Any failure of Cede & Co. to notify any DTC Participant,
or of any DTC Participant to notify the Beneficial Owner of any such notice, will not affect
the validity of the redemption of the Series 2005 Bonds. See "DESCRIPTION OF THE
SERIES 2005 BONDS -Book-Entry Only System" for a description of DTC Participants and
Beneficial Owners.
In the event of the discontinuance of the book-entry only system, notice of
redemption will be given by the Registrar (who shall be the Paying Agent for the Series
2005 Bonds, or such other person, firm or corporation as may from time to time be
designated by the City as Registrar for the Series 2005 Bonds) by mailing a copy of the
redemption notice by first-class mail (postage prepaid) not more than thirty (30) days and
not less than fifteen (15) days prior to the date fixed for redemption to the Registered
Owner of each Series 2005 Bond to be redeemed in whole or in part at the address shown on
the registration books. Failure to give such notice by mailing to any Registered Owner of
Bonds, or any defect therein, shall not affect the validity of any proceeding for the
redemption of other Bonds. All Series 2005 Bonds or portions thereof so called for
redemption will cease to bear interest after the specified redemption date provided funds
for their redemption are on deposit at the place of payment at that time.
Upon surrender of any Series 2005 Bond for redemption in part only, the City shall
issue and deliver to the Registered Owner thereof, the costs of which shall be paid by the
Registered Owner, a new Series 2005 Bond or Series 2005 Bonds of authorized
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denominations In aggregate principal amount equal to the unredeemed portion
surrendered.
SOURCE OF PAYMENT AND SECURITY FOR THE SERIES 2005 BONDS
General
The principal of, redemption premium, if any, and interest on the Series 2005 Bonds
are payable from the Net Revenues equally and ratably with each other and the Parity
Bonds. The Series 2005 Bonds and the Parity Bonds are secured by a first and prior lien on
the Net Revenues derived from the operation of the System deposited in the Sinking Fund
created and established under the Ordinance and from monies and investments deposited
in certain funds and accounts established by the Ordinance and earnings thereon.
The Series 2005 Bonds shall not constitute an indebtedness, liability,
general or moral obligation, or a pledge of the faith, credit or taxing power of the
City, the State, or any political subdivision thereof, within the meaning of any
constitutional, statutory or charter provisions. Neither the State of Florida, nor
any political subdivision thereof, nor the City shall be obligated (1) to levy ad
valorem taxes on any property to pay the principal of the Series 2005 Bonds, the
interest thereon, or other costs incidental thereto or (2) to pay the same from any
other funds of the City except from the Net Revenues, in the manner provided in
the Ordinance.
The Series 2005 Bonds shall not constitute a lien upon the System, or any part
thereof, or on any other property of the City, but shall constitute a first and prior lien only
on the Net Revenues in the manner provided in the Ordinance.
"Net Revenues" is defined in the Ordinance to mean Gross Revenues less the Cost of
Operation and Maintenance. "Gross Revenues" means all monies received from rates, fees,
rentals or other charges or income derived from the investment of funds, unless otherwise
provided in the Ordinance, by the City or accruing to it in the operation of the System, all
calculated in accordance with sound accounting practice. "Cost of Operation and
Maintenance" of the System means all current expenses, paid or accrued, for the operation,
maintenance and repair of all facilities of the System, as calculated in accordance with
sound accounting practice and includes, without limiting the generality of the foregoing,
insurance premiums, administrative expenses of the City related solely to the System,
labor, cost of materials and supplies used for current operation and charges for the
accumulation of appropriate reserves for current expenses not annually recurrent but
which are such as may reasonably be expected to be incurred in accordance with sound
accounting practice, but excluding any reserve for renewals or replacements, for
10
extraordinary repairs or any allowance for depreciation. The Bonds are further secured by
a prior lien on and pledge of the monies and investments deposited in the Funds and
Accounts established by the Ordinance except for monies and investments deposited in the
Operation and Maintenance Fund and the Rebate Fund.
Debt Service Reserve Account
The Ordinance requires the establishment of a Reserve Account for the Series 2005
Bonds in an amount equal to the Reserve Account Requirement for the Series 2005 Bonds.
The Ordinance authorizes the City to obtain the Surety Bond in place of fully funding the
Reserve Account. Accordingly, application has been made to Ambac Indemnity for the
issuance of a Surety Bond for the purpose of funding the Reserve Account for the Series
2005 Bonds. The Series 2005 Bonds will only be delivered upon the issuance of the Surety
Bond. The premium on the Surety Bond is to be fully paid at or prior to the issuance and
delivery of the Series 2005 Bonds.
Pursuant to the terms of the Surety Bond, Surety Bond Coverage is automatically
reduced to the extent of each payment made by Ambac Indemnity under the terms of the
Surety Bond and the City is required to reimburse Ambac Indemnity for any draws under
the Surety Bond with interest at a market rate. Upon such reimbursement, the respective
Surety Bond is reinstated to the extent of each principal reimbursement up to but not
exceeding the Surety Bond Coverage. The reimbursement obligation of the City is
subordinate to the Issuer's obligations with respect to the Series 2005 Bonds.
In the event the amount on deposit in the Sinking Fund, plus all amounts on
deposit in and credited to the Reserve Account for the benefit of the Series 2005 Bonds,
therein, in addition to the amount available under the Surety Bond, includes amounts
available under a letter of credit, insurance policy, surety bond or other such funding
instrument (the "Additional Funding Instrument"), draws on the Surety Bond and the
Additional Funding Instrument shall be made on a pro rata basis to fund the insufficiency
for the Series 2005 Bonds. The Ordinance provides that the Reserve Account for the Series
2005 Bonds shall be replenished in the following priority: (i) principal and interest on the
Surety Bond and on the Additional Funding Instruments shall be paid from first available
Revenues on a pro rata basis; (ii) after all such amounts are paid in full, amounts necessary
to fund the Reserve Account for the benefit of the Series 2005 Bonds to the required level,
after taking into account the amounts available under the Surety Bond and the Additional
Funding Instruments, if any, shall be deposited from next available Revenues.
The Surety Bond does not insure against nonpayment caused by the insolvency or
negligence of the Paying Agent.
Notwithstanding any provision of the Ordinance to the contrary, moneys in the
Reserve Account for the Series 2005 Bonds may be used only for the purpose of the payment
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of maturing principal of or interest or making Amortization Installments on the Series 2005
Bonds when the other moneys in the Sinking Fund are insufficient therefor, and for no
other purpose including the payment of any other series of Bonds.
FLOW OF FUNDS
Establishment of Funds and Accounts
The following Funds and Accounts have been established pursuant to the Ordinance:
Revenue Fund
Operation and Maintenance Fund
Construction Fund
Sinking Fund
Interest Account
Principal Account
Reserve Account
Bond Amortization Account
Renewal and Replacement Fund
A separate subaccount is required to be maintained in the Reserve Account for the
Series 2005 Bonds.
Priority of Flow of Funds
The entire Gross Revenues, except the income from investments (hereinafter
discussed), derived from the operation of the System must be deposited in the Revenue
Fund. The Revenue Fund constitutes a trust fund for the purpose provided in the
Ordinance, and must be kept separate and distinct from all other funds of the City and
used only for the purposes and in the manner provided in the Ordinance.
All revenues at any time remaining on deposit in the Revenue Fund must be
disposed of on or before the fifteenth (15th) day of each month only in the following manner
and in the following order or priority:
1. Revenues must first be used to deposit in the Operation and Maintenance
Fund, such sums as are necessary for the Cost of Operation and Maintenance for the next
ensuing month.
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2. Revenues must next be used for deposit into the Interest Account, such sums
as will be sufficient to pay one-sixth (1/6) of all interest becoming due on the Series 2005
Bonds and the Parity Bonds on the next semi-annual interest payment date.
3. Revenues must next be used for deposit into the Principal Account, in any
bond year in which a Serial Bond matures, such sums as will be sufficient to pay one-
twelfth (1/12) of the principal maturing on Serial Bonds in such year.
4. Revenues must next be used for deposit into the Bond Amortization Account
in any bond year in which an Amortization Installment is due, such sums as will be
sufficient to pay one-twelfth (1/12) of the Amortization Installment required to be made in
such year. Such payment will be credited to a separate special account for each series of
Term Bonds outstanding, and if there is more than one stated maturity for Term Bonds of a
series, then into a separate special account in the Bond Amortization Account for each such
separate maturity of Term Bonds. The funds and investments in each such separate
account are pledged solely to the payment of principal of the Term Bonds of the series or
maturity within a series for which it is established and will not be available for payment,
purchase or redemption of Term Bonds of any other series or within a series, or for transfer
to any other account in the Sinking Fund to make up any deficiencies in required payments
therein.
Moneys on deposit in each of the separate special accounts in the Bond Amortization
Account are required to be used for the open market purchase or the redemption of Term
bonds, pursuant to the Ordinance, of the series or maturity of Term Bonds within a series
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 required deposits to the Principal Account, Interest Account and Bond
Amortization Account are required to be adjusted in order to take into account the amount
of money currently on deposit therein.
5. Revenues must next be applied by the City to maintain in each subaccount in
the Reserve Account a sum equal to the Reserve Requirement, if any, for any subsequent
year on each series of Bonds, which sum will initially be deposited therein from the
proceeds of the sale of the Series 2005 Bonds and other funds of the City. To the extent the
City determines pursuant to a subsequent resolution to fund a subaccount within the
Reserve Account for a respective series of Bonds, the City may provide that the difference
between the amounts on deposit in such subaccount and the Reserve Requirement for such
series of Bonds shall be an amount covered by obtaining bond insurance issued by a
reputable and recognized municipal bond insurer, by a surety bond, by a letter of credit or
any combination thereof or by such other form of credit enhancement as shall be approved
by a resolution of the City adopted prior to the issuance of the series of Bonds for which
such subaccount is established. Such resolution may also provide for the substitution of
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such credit enhancement. Bond insurance, a surety bond, a letter of credit or any
combination thereof or such other form of credit enhancement may in the future be
deposited in the subaccount in the Reserve Account for any Series of Bonds as may be
approved by subsequent resolution of the City, provided that the provider of such credit
enhancement is then rated in one of the two highest rating categories (without regard to
gradation) by Fitch IBCA, Inc. and Moody's Investors Service, Inc.
Any withdrawals from the Reserve Account are required to be subsequently restored
from the first moneys available in the Revenue Fund on a pro rata basis as to all
subaccounts in the Reserve Account after all required current payments for the Operation
and Maintenance Fund and Sinking Fund (including all deficiencies in prior payments to
those Funds) have been made in full.
Notwithstanding any provision of the Ordinance to the contrary, moneys in each
subaccount in the Reserve Account may be used only for the purpose of the payment of
maturing principal of or interest or making Amortization Installments on the Bonds for
which such subaccount was established when the other moneys in the Sinking Fund are
insufficient therefor, and for no other purpose including the payment of any other series of
Bonds.
In the event of the refunding of any series of Bonds, the City may withdraw from the
subaccount within the Reserve Account for such series of Bonds, all or any portion of the
amounts accumulated therein with respect to the Bonds being refunded and deposit such
amounts as required by the resolution authorizing the refunding of such series of Bonds.
6. The City must next deposit into the Renewal and Replacement Fund an
amount equal to one-twelfth (1/12) of an amount equal to 5% of prior year's Gross
Revenues; provided, however, that so long as there shall be on deposit in such Renewal and
Replacement Fund a balance of at least $300,000, no additional deposits in such Fund are
required. The moneys in the Renewal and Replacement Fund may be used only for the
purpose of paying the cost of extensions, enlargements or additions to, or the replacement of
capital assets of the System and emergency repairs thereto. Such moneys on deposit in
such Fund are also required to be used to supplement the Reserve Account if necessary, in
order to prevent a default in the payment of the principal or Amortization Installments of
and interest on the Bonds.
7. The balance of any moneys remaining in the Revenue Fund after the above
required payments have been made may be used by the City for any lawful purpose.
8. The Operation and Maintenance Fund, the Sinking Fund, the Renewal and
Replacement Fund, the Revenue Fund, and all accounts therein and any other special funds
established and created under the Ordinance constitute trust funds for the purposes
provided in the Ordinance for such funds. All such funds shall be continuously secured in
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the same manner as City deposits are authorized to be secured by the laws of the State of
Florida.
COVENANTS
Rate Covenant
In and by the Ordinance, the City has covenanted that it will fix, establish, revise
from time to time whenever necessary, maintain and collect always, such fees, rates,
rentals and other charges 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, 100% of the Cost of Operation and Maintenance of the System in such year and all
reserve and other payments provided for in the Ordinance and 125% of the Bond Service
Requirement due in such year on all outstanding Bonds. The City has covenanted that
such rates, fees, rentals, or other charges shall not be reduced so as to be insufficient to
provide Revenues for such purposes.
Additional Parity Obligations
Additional Parity Obligations, payable on a parity from Net Revenues of the System
with the Series 2005 Bonds and the Parity Bonds, may be issued after the issuance of the
Series 2005 Bonds, for construction and acquisition of additions, extensions and
improvements to the System or for refunding purposes and upon the following conditions:
1. The Net Revenues derived or which would have been derived, if adjusted as
set forth below, from the System, either during the immediately preceding Fiscal Year,
during any twelve (12) consecutive calendar months of the eighteen (18) calendar months
immediately preceding the sale of the proposed Additional Parity Obligations or during the
last twelve (12) month period for which the City has audited financial statements for the
System, at the option of the City, shall have been not less than 125% of the Maximum Bond
Service Requirement which will become due in any calendar year thereafter on (a) the
Series 2005 Bonds then Outstanding, (b) any Additional Parity Obligations issued and then
Outstanding (including the Parity Bonds), and (c) the Additional Parity Obligations then
proposed to be issued.
In determining the amount of Net Revenues for the purposes of paragraph (1) above,
the Consulting Engineers may adjust the Net Revenues by adding thereto the following:
a. The Net Revenues (computed for such utility on the same basis as net
revenues are computed for the System) of any gas utility which the City shall have
acquired prior to the issuance of such Additional Parity Obligations or which the
City shall be acquiring from proceeds of such Additional Parity Obligations; and
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b. In the event a change has been made in the rate schedules for services from
the System prior to the issuance of the proposed Additional Parity Obligations for a
part of such 12 month period referred to in (1) above, and such change has resulted
in an increase in Net Revenues, such amount of additional Net Revenues which the
consulting Engineers estimated would have been received by the City during such 12
month period if such change in such rate schedule had been in effect during the
entire 12 month period; and in the event a change has been made in the rate
schedules for services from the System prior to the issuance of the proposed
Additional Parity Obligations for a part of such 12 month period referred to in (1)
above, and such change has resulted in a decrease in Net Revenues, by subtracting
therefrom such amount of the Net Revenues which the Consulting Engineers
estimate would not have been received by the City during such 12 month period
referred to in (1) above, if such change in such rate schedule had been in effect
during the entire 12 month period.
2. Each resolution or ordinance authorizing the issuance of Additional Parity
Obligations will recite that all of the covenants contained in the Ordinance will be
applicable to such Additional Parity Obligations.
3. The City shall not be in default in performing any of the covenants and
obligations of the Ordinance, if all payments required to have been made into the accounts
and funds, as provided in the Ordinance, shall have been made to the full extent required.
Operation and Maintenance
The City covenants it will maintain the System and all parts thereof in good
condition and will operate the same in an efficient and economical manner making such
expenditures for equipment and for renewals, repairs and replacements as may be proper
for the economical operation and maintenance thereof.
Operating Budget
The City covenants to annually prepare and adopt prior to the beginning of each of
its Fiscal Years, a detailed budget or budgets of the estimated expenditures for the
operation and maintenance ofthe System during such next succeeding Fiscal Year.
Annual Audit
At least once a year, within six months after the close of its Fiscal Year, the City
covenants to cause the books, records and accounts relating to the System to be properly
audited by a recognized independent firm of certified public accountants.
No Mortgage or Sale of the System
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The City has covenanted not to sell, lease, mortgage, pledge or otherwise encumber
the System, or any substantial part thereof, or any revenues to be derived therefrom, except
as described below.
Notwithstanding the foregoing, the City has reserved the right to sell, lease or
otherwise dispose of any of the property comprising a part of the System which the City
hereafter determines, in the manner provided in the Ordinance, to be no longer necessary,
useful or profitable in the operation of the System. Prior to any such sale, lease or other
disposition of said property, if the amount to be received therefor is not in excess of $50,000,
the City Manager of the City or other duly authorized officer in charge thereof is required to
make a finding in writing determining that such property comprising a part of the System
is no longer necessary, useful or profitable in the operation thereof.
If the amount to be received from such sale, lease or other disposition of said
property is in excess of $50,000 but not in excess of $100,000 such City Manager or other
officer is required to first make a finding in writing determining that such property
comprising a part of the System is no longer necessary, useful or profitable in the operation
thereof, and the governing body of the City must, by resolution or ordinance duly adopted,
approve and concur in the finding of such City Manager or other officer, and authorize such
sale, lease or other disposition of said property.
If the amount to be received frbm such sale, lease or other disposition of said
property is in excess of $100,000 but not in excess of 10% of the value of fixed assets of the
System according to the most recent annual audit report, such City Manager or other
officer must first make a finding in writing determining that such property comprising a
part of the System is no longer necessary, useful or profitable in the operation thereof, and
the Consulting Engineer must make a finding that it is in the best interest of the System
that such property be disposed of, and the governing body of the City must by resolution or
ordinance, duly adopted, approve and concur in the findings of such City Manager or other
officer and of the Consulting Engineer, and authorize such sale, lease or other disposition of
said property.
Anything in this section to the contrary notwithstanding, nothing restricts the
governing body of the City or, to the extent such authority has been vested in the City
Manager by such governing body, the City Manager in exercising discretion, from
authorizing the sale or other disposition of any of the property comprising a part of the
System, if the Consulting Engineer certifies that the Net Revenues of the System will not
be materially adversely affected by reason of such sale or disposition.
Such proceeds must be placed in the Renewal and Replacement Fund or used for the
retirement of outstanding Bonds, in such proportions to be determined by the governing
body of the City upon the recommendations of the City Manager. The payment of such
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proceeds into the Renewal and Replacement Fund does not reduce the amounts required to
be paid into such Fund by other provisions of the Ordinance.
Anything in this section to the contrary notwithstanding, nothing prohibits the City
from transferring ownership of the System to another governmental entity in accordance
with the Ordinance without complying with the provisions described in this section.
No Free Service
The City has covenanted in the Original Ordinance that it will not render or cause to
be rendered any free services of any nature by the System, nor will any preferential rates
be established for users of the same class. Whenever the City, including its departments,
agencies and instrumentalities, avails itself of the product, facilities or services provided by
the System, or any part thereof, the same rates, fees or charges applicable to other
customers receiving like services under similar circumstances must be charged to the City
and any such department, agency or instrumentality. Such charges must be paid as they
accrue, and the City shall transfer from its general funds to the Revenue Fund sufficient
sums to pay such charges. The revenues so received will be deemed to be Revenues derived
from the operation of the System, and will be deposited and accounted for in the same
manner as other Revenues derived from such operation of the System.
Consistent with the foregoing, to the extent that certain marketing and sales
programs may involve incentives to customers (other than free energy service), expenses of
such incentives are paid by charges against appropriate marketing and sales expenses of
the System.
Enforcement of Collections
The City has covenanted to enforce and collect the rates, fees and other charges for
the services and facilities of the System pledged under the Ordinance; to take all steps,
actions and proceedings for the enforcement and collection of such rates, charges and fees
as shall become delinquent to the full extent permitted or authorized by law; and to
maintain accurate records with respect thereof. All such fees, rates, charges and revenues
pledged pursuant to the Ordinance will, as collected, be held in trust to be applied as
provided in the Ordinance.
The City will, under reasonable rules and regulations, to the full extent permitted by
law, shut off the connection of any users of the System for non-payment of fees, rentals and
other charges for the services of the System and will not furnish him or permit him to
receive from the System further service until all obligations owed by him to the City on
account of services have been paid in full.
No Competing System
18
To the full extent permitted by law, the City has covenanted not to hereafter grant,
or cause, consent to, or allow the granting of, any franchise or permit to any person, firm,
corporation or body, or agency or instrumentality whatsoever, for the furnishing of
competing gas services to or within the boundaries of the service area of the City; provided,
however, that if the Gas System Manager renders an opinion that it would not be feasible
for the City to provide such services to any specific area within the three years succeeding a
request to provide such service, the City may authorize or allow the granting of such
franchise or permit for such area upon such terms and conditions as it may approve.
Unlawful Connection Prohibited
The City has enacted an ordinance making it unlawful for any person or persons to
tamper with, change or make any connection with the System without the written consent
of the City, or to make any reconnection with the System when service has been
discontinued for delinquent charges, until such delinquent charges have been paid in full,
including interest, reasonable penalties and reconnection charges. The City will diligently,
to the full extent permitted by law, enforce this covenant and prosecute any person
violating the provisions of this covenant or any penal ordinance relating to the same.
Amendment of the Ordinance
In the Ordinance, the City has reserved the right to amend or supplement the
Ordinance for certain purposes without the consent of Bondholders if the amendment or
supplement does not adversely affect the rights of Bondholders. Otherwise, no material
modification or amendment of the Ordinance may be made without the consent in writing
of the Holders of fifty-one percent or more of the principal amount of the Bonds of each
Series so affected and then outstanding. For purposes of the foregoing, to the extent that
Bonds of any Series are secured by a Credit Facility and such Bonds are then rated in one
of the two highest rating categories (without regard to gradation) by either Fitch IBCA, Inc.
or Moody's Investors Service, Inc., or successors and assigns, then the consent of the Credit
Facility issuer will be deemed to constitute the consent of the Bondholders of such Series
and in such case no consent of the Bondholders of such Series is required. Notwithstanding
the foregoing, no modification or amendment of the Ordinance may permit a change in the
maturity of such Bonds or a reduction in the rate of interest thereon or in the amount of the
principal obligation thereof or affecting the promise of the City to pay the principal of and
interest on the Bonds as the same become due from the Net Revenues of the System or
reduce the percentage of the Bondholders required to consent to any material modification
or amendment of the Ordinance without the consent of the Bondholders of all such
obligations.
THE SYSTEM
Physical Description
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The Clearwater Gas System (the "System") began operations in the mid-1920's with
the production, distribution and sale of manufactured gas. The System was converted to
natural gas in 1959 when Florida Gas Transmission (FGT) extended pipelines into Florida.
The System also provides propane (LP) service in areas where natural gas mains have not
yet been extended. The System currently serves 16,792 customers in a 298 square mile
service territory through 669 miles of underground gas mains and has 90,000 gallons of
propane (LP) storage. The following table sets forth the service areas of the System and the
respective terms of the franchise agreements. Utility taxes and franchise fees are collected
by the respective municipality in addition to the rates, fees and charges imposed by the
System.
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MUNICIPALITIES SERVED BY THE CLEARWATER GAS SYSTEM
UTILITY FRANCHISE FRANCHISE
CITIES (18 TOTAL) TAX RATE FEE RATE EFFECTIVE DATES
BELLEAIR None 5.0%(1)(3) 6/14/90.6/13/20
BELLEAIR BEACH 10.0% 6.0% 10/1/03-9/30/18
BELLEAIR BLUFFS None 6.0% 8/01/02.7/31/17
BELLEAIR SHORE None None(8) 4/03/97.4/02/27
CLEARWATER 10.0% 6.0%(4) None/Ordinance
DUNEDIN 10.0% (5) 5.0% 5/01/90.4/30/20
INDIAN ROCKS BEACH None 4.5%(2) 7/07/88-7/06/18
INDIAN SHORES 10.0%(3) 1/1/05 5.0%(11) 6/18/98-6/17/28
LARGO 10.0% 6.0% 6/01/01-5/31/16
NEW PORT RICHEY 10.0% (5) 6.0% 1/01/96-12/31/25
NORTH REDINGTON
BEACH None 5.0%(9) 7/16/98-7/15/28
OLDSMAR 9.0% (6) 4.5% (12) 9/01/84-8/31/14
Pinellas Park (LP Only) 10.0% (3) None Not Applicable
PORT RICHEY 10.0% 5.0% 4/20/95-4/19/25
REDINGTON BEACH None 5.0% 7/16/98-7/15/28
REDINGTON SHORES None 6.0% (10) 1115/98-11/4/28
SAFETY HARBOR 10.0% (5) 6.0%(3) 8/01/91-7/31/01
TARPON SPRINGS 10.0% 5.0% (2) 5/01/84-4/30/14
Notes:
(1)
(2)
(3)
(4)
4.5% for 1st 10 years, 5.0% for 2nd 10 years, and 5.5% for 3rd 10 years.
4.0% for 1st 10 years, 4.5% for 2nd 10 years, and 5.0% for 3rd 10 years.
exempts industrial customer revenues. Continuing on monthly basis.
exempts interruptible customer revenues, and contract rates were billed @ 2% 4/1/99-
9/30/99,4% 10/1/99-9/30/00, & 6% beginning 10/1/00.
does not tax fuel oil
only taxes fuel oil @ 3.6~/gal. vs. 4~/gal. as authorized by FL statute.
Pinellas & Pasco Counties do not impose utility taxes or franchise fees.
Belleair Shore provides for the right to bill up to a 5.0% franchise but has elected not to bill a
franchise to their customers at present.
North Redington Beach reduced the franchise for new contracts after 7/8/99 as follows: 0%
for 7/9/99-9/30/00, 2% for 10/1/00-9/30/01, 4% for 10/1/01-9/30/02, & 5% for 10/1/02 &
thereafter.
(5)
(6)
(7)
(8)
(9)
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(10) Redington Shores reduced the franchise for new contracts after 7/13/99 as follows: 0% for
7/14/99-9/30/00,2% for 10/1/00-9/30/01, 4% for 10/1/01-9/30/02, & 6% for 10/1/02 & thereafter.
(11) Indian Shores reduced the franchise for new contracts after 9/30/99 as follows: 0% for
10/1/99-9/30/00,2% for 10/1/00-9/30/01, 4% for 10/1/01-9/30/02, & 5% for 10/1/02 & thereafter
subject to a review in 10/00.
(12) 4.0% for 1st 10 years & 4.5% for last 20 years.
Management
The City has a Council-Manager form of municipal government. The Mayor-Council
Member and Council Members are elected by the City's voters on an at-large basis. All
have voting power at Council meetings which are chaired by the Mayor-Council Member.
The City Council appoints the City Manager and the City Manager is responsible for
appointing all officers and employees in the administrative service of the City, including the
Managing Director & Executive Officer of the Clearwater Gas System.
The Clearwater Gas System is administered by the Gas System Managing Director
& Executive Officer who reports to the Assistant City Manager. The System is one of seven
utilities (Water, Reclaimed Water, Sewer, Gas, Solid Waste, Recycling, and Stormwater)
billed on a consolidated basis by the Clearwater Customer Service.
Charles S. Warrington, Jr. currently serves as Managing Director & Executive
Officer of the Clearwater Gas System. He received his Bachelor of Electrical Engineering
degree from the Georgia Institute of Technology in 1971 and is a 1982 graduate of the
University of Michigan Public Utility Executive Program. He has been a registered
Professional Engineer in the State of Florida since 1976.
Prior to joining the City of Clearwater in February 1992, Mr. Warrington served as
Director of Customer Services for Florida Power & Light Company (FPL), the largest
electric utility in the State of Florida. Mr. Warrington was responsible for corporate-wide
customer service policies, procedures, systems, training and regulatory interface. Prior to
this position, he had served as a District General Manager for two (2) of the largest FPL
districts (Miami and Coral Gables). In total, Mr. Warrington has over 32 years of public
utility experience of increasing responsibility.
Mr.. Warrington is Past Chairman of the Board of Directors of the American Public
Gas Association, serves as President of the Florida Municipal Natural Gas Association,
serves as Vice President and member of the Board of Directors of the Florida Natural Gas
Association, serves as Vice Chairman and member of the Board of Directors of the APGA
Research Foundation, Serves on the Board of Directors of the Southern Gas Association,
serves as Regional Vice President and member of the Board of Directors of The Florida
Engineering Society, serves on the Board of Directors and as Past President of the Florida
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Engineering Society, Pinellas Chapter, and serves on the Board of Directors of the United
Way of Tampa Bay.
Brian Langille has served as the Gas Supply & Technology Engineer for Clearwater
Gas System since May 1999. He is responsible for purchasing the natural gas supply,
working with key customer accounts and maintaining all regulatory licenses for Clearwater
Gas System. Mr. Langille attended the University of South Florida where he received a
Bachelor of Science degree in Mechanical Engineering (BSME). He currently serves on the
Board of Directors and Executive Committee for Florida Gas Utility (FGU), which is the
buying group that manages the securing of Clearwater's gas supply and its daily delivery
and balancing.
James K. Geary joined the City of Clearwater in September 1998, and has served as
the Director of Customer Service and Marketing since September 2000. He is responsible
for marketing and sales activities of Clearwater Gas System as well as consolidated
customer service operations for all of the City's seven utilities. He was previously with
Florida Power & Light Company for 21 years, where he held a number of management
positions in customer service, marketing, and information systems. He has also served in
business development and management positions with organizations in the not-for-profit
sector. Mr. Geary earned an undergraduate degree from the University of Florida and a
holds a Masters degree from the University of Central Florida.
ThomasK. Sewell joined the City of Clearwater and Clearwater Gas System in
January 1997, and has served as the Assistant Director of Operations since February, 1998.
He is responsible for all Clearwater Gas Operations of this full service natural and propane
gas utility. Prior to joining Clearwater Gas System he served in the United States Army
for 30 years retiring in February, 1996 as a Colonel. Immediately prior to retirement, Mr.
Sewell served as the Chief of Staff, United States Army Japan at Camp Zama, Japan from
November, 1991 to September 1995. Mr. Sewell graduated from the United States Army
War College, has a Bachelor of Science degree, Business Administration, from Park College
Kansas City, Missouri and a Masters degree, Public Administration, from Shippensburg
University,. Shippensburg, Pennsylvania.
Mike Deegan has served as both the South Area Gas Services Manager since
November of 2001. Prior to that, he served as North Area Services manager from 1998 to
2001, Gas Distribution Supervisor from 1995 to 1998, and as the Lead Distribution
Construction Inspector from 1992 to 1995, and as a Gas Distribution Pipefitter from 1985 to
1992, all with the Clearwater Gas System. Mr. Deegan also holds an active State of Florida
Registered Plumbing Contractors License and a Plumbing License in Hillsborough County,
Natural Gas Specialty Contractors License with Pinellas County Construction Licensing
Board, Pasco County and Hillsborough County, a 601 Master Qualifiers LP License from
the Department of Agriculture, and holds other licenses and certificates related to both
23
Natural, Propane Gas and Plumbing. Mr. Deegan is an active seated member of the
Pinellas County- Gas Board of Examining, Adjustments and Appeals.
He is the instructor for the Federally Mandated Operator Qualification Program and
additionally conducts special and weekly training. He is an active member in many
recognized Gas Industry and Plumbing Associations such as American Gas Association,
Southern Gas Association, Florida Natural Gas Association, Florida Propane Gas
Association, Plumbing Heating Cooling Contractors and the United Association of
Plumbers/ Pipe Fitters.
Robert Bublitz has served as Controller for the Clearwater Gas System since
October 1994. Mr. Bublitz served as the Finance Director and Director of Administrative
Services with the City of Tarpon Springs, Florida, for 15 years prior to joining the
Clearwater Gas System as Controller. In total, Mr. Bublitz has 28 years of Municipal
experience. He received his Bachelor of Business Administration degree in 1965 from
Spencerian Business College in Milwaukee, Wisconsin.
Gas Supply
The City has two firm transportation service agreements (FTS-1 & FTS-2) with
Florida Gas Transmission (FGT) in order to deliver natural gas to the Cities four gate
stations. Both these agreements provide Clearwater with a maximum daily quantity of
12,000 Dekatherms (Dth) of natural gas during the months of November to March; 9,000
Dth's during the month of April; 6,000 Dth's during the months of May to September; and
6,846 Dth's during the month of October. The total annual entitlement is 3,212,226 Dth's of
natural gas transportation. At the present time FGT is equally owned by Cross Country
Energy Corp, a newly formed holding company that holds Enron Corp interests, and
Southern Natural, an EI Paso Corporation Affiliate.
The City purchases its gas supply through Florida Gas Utility (FGU). The City
joined FGU in October 2000 by Resolution 00-35. An updated All Requirements Gas Service
Agreement, which was approved by Resolution 02-02 in January 2002, required the City to
purchase 100% of its supply through FGU. In December 2004, Clearwater approved
Resolution 04-34, which authorized the execution of Public Gas Partners (PGP) Gas Supply
Agreement between Clearwater and FGU. Public Gas Partners, Inc. (PGP), a Georgia non-
profit corporation, is the parent company that consists of eight (8) municipal agencies
located generally in the southeast region of the United States. FGU became a member of
PGP in November 2004. The objective of PGP is to acquire and have a working interest in
gas wells selected throughout the United States. Clearwater will purchase long-term
natural gas supplies from FGU under the provisions of the PGP agreement, which are
projected to be at a discounted price relative to the daily gas market and allow for better
control of gas supply costs.
24
FGU was formed through an Interlocal Agreement among its members. The
Interlocal Agreement became effective on September 1, 1989 and consisted of five municipal
utilities. Over the next several years, additional electric and gas distribution utilities joined
FGU, bringing its total membership in 2005 to 23.
Rates, Fees and Charges
The City Council has established a schedule of rates and charges by ordinance,
which includes a purchased gas cost adjustment provision allowing the City to pass-through
to customers any increase or decrease in the purchased price of gas. The City is not subject
to regulation by any State agency in establishing or revising its rates. Where competitive
fuel sources or transportation service are available to the customer, the City Council has
authorized the City Manager to enter into contract gas service rates at special rates and/or
conditions as required to obtain/retain the customer load. Such contract service must meet
the normal construction feasibility formula to insure profitable payback to the City. As of
September 30, [ ], not including interruptible accounts, contract rates applied to [ ]
customer accounts and impacted less than [ ]% of total revenues.
The rates currently charged by the System have been effective since May 1, 2002.
On March 21, 2005, the City Council enacted Ordinance number 7368-05, which imposed
the rates set forth in APPENDIX G hereto, which will become applicable to all gas bill and
services after April 1, 2005.
Service Area
The System is owned and operated as an enterprise utility by the City of Clearwater.
The System operates over 730 miles of underground gas main and handles the supply and
distribution of both natural and propane (LP) gas throughout northern Pinellas County and
western Pasco County. As a "full service" gas utility, the System provides gas appliance
sales, service and repair (both commercial and residential), installation of customer gas
piping, construction and maintenance of underground gas mains and service lines, and 24-
hour response to any gas emergency call within the service area. The System is regulated
for safety by the Florida Public Service Commission and the Federal Department of
Transportation.
The System has been serving customers in the Clearwater area for over 80 years
(since 1923) when operations were begun with a manufactured gas plant operation from
coal and coke. In 1959, when natural gas transmission lines were finally extended to the
Florida peninsula, the System discontinued manufacturing gas and began receiving piped
natural gas from Florida Gas Transmission.
The System serves over 18,500 customers in a 330 square mile service territory,
which includes 17 municipalities as well as the unincorporated areas of northern Pinellas
25
County and western Pasco County. The Pinellas County service territory is 158 square
miles and extends generally from Ulmerton and Walsingham Roads on the South to the
Pasco County line on the North and from the Gulf of Mexico on the West to just west of 1-75
in the Land O'Lakes area. This includes all of the Pinellas beach communities south to
Redington Beach. The Pasco County service territory is 172 square miles and extends from
the Gulf of Mexico on the WeElt of 1-75 in the Land O'Lakes area to just west of 1-75 along
the right of way of Ehren Cut Off and from the Pinellas and Hillsborough County lines on
the South to generally State Road 52 on the North. The CGS service territory extends 42.3
miles from the southwestern most to the northwestern most points. Residential customers
make up over 87.9% of the System's customer base.
As of September 30, 2004, the System's active natural gas customers were located as
shown in the following table:
Location Meters Percentaa-e
BelIeair 367 2.23%
BelIeair Beach 118 0.72%
Belleair Bluffs 20 0.12%
BelIeair Shores 20 0.12%
Clearwater 7,165 43.55%
Dunedin 1,035 6.29%
Indian Rocks Beach 67 0.41%
Indian Shores 53 0.32%
Largo 1,022 6.21%
New Port Richey 305 1.85%
North Redington Beach 9 0.05%
Oldsmar 54 0.33%
Port Richey 14 0.09%
Redington Beach 7 0.04%
Redington Shores 9 0.05%
Safety Harbor 598 3.63%
Tarpon Springs 1,315 7.99%
Unincorporated Areas Pasco 1,650 10.03%
Unincorporated Areas 2,624 15.95%
Pine lIas
Total 16,452 100.00%
The following table shows the five largest interruptible customers by peak monthly
consumption and the percent of the System's revenues derived from such customers during
the 12 months ending September 30, 2004:
26
Peak % of
Monthly Gross
Customer Name Therms Revenues
Angelica Textile
Service 97,425 2.47%
Metal Industries
84,998 2.09%
Morton Plant
Hospital 86,720 1.74%
Mease Hospital
68,816 1.12%
HCA Columbia
Hospital 24,906 0.96%
The following table shows the breakdown of the System's customers by category as
well as the volume of gas sold and the sales revenues generated by each category for the
fiscal year ending September 30, 2004:
Average No.
Customers
Gas
Volume
Gas
Sales
Interruptible
14
21.41%
11.53%
Residential
14,324
16.01 %
24.19%
Commercial
2,114
62.58%
64.28%
Pasco County Territorial Dispute
On June 21, 1994, Peoples Gas System, Inc., petitioned the Florida Public Service
Commission (FPSC) to resolve a territorial dispute between Peoples Gas System ("PGS")
and the Clearwater Gas System relating to the Pasco County service territory. PGS asked
the FPSC to deny the System the Pasco County territory and to certify the area for PGS.
The dispute was settled in the spring of 1995, with the settlement providing the System
with 117 square miles of expanded service territory in southwestern Pasco County.
However, the settlement also precludes the System from expanding to the north and east in
Pasco County, which service areas were assigned to PGS.
27
On November 24, 1999 PGS and CGS filed a joint petition to the FPSC for a
territorial boundary agreement in Pinellas County. This agreement specifically defined our
Pinellas County boundaries between PGS and CGS. The following beach communities are
now included within CGS' territory: Indian Rocks Beach, Indian Shores, Redington Shores,
North Redington Beach and Redington Beach. The agreement fully defines this
southernmost boundary as well Pinellas County's territorial boundaries between PGS and
CGS. This will resolve any future territorial issues.
Environmental Remediation Costs
In December 1993, the Florida Department of Environmental Protection ("FDEP")
informed the City that it intended to pursue an investigation of the City of Clearwater
Manufactured Gas Plant (the "Former Plant") site which was located from the 1920's
through about 1960 at the current site of the System's Administrative Offices and Pinellas
Operations Center. The main components of the Former Plant were removed between 1960
and 1985 and the site is currently paved. An initial investigation by the Federal
Environmental Protection Agency in the late 1980's determined that no serious health
hazards existed at this site but referred it to the FDEP for future monitoring.
Environmental Consulting & Technology, Inc. (ECT) of Tampa, Florida, has been
retained as the System's environmental consultant. During 1995 ECT, with the assistance
of the System's crews, drilled holes and excavated a small segment of the Former Plant site
in order to prepare the Contamination Assessment Plan (CAP). ECT submitted a revised
CAP to FDEP on November 2, 1995 and was approved. After installing all the necessary
monitoring wells and collecting soil samples, ECT submitted the Contamination
Assessment Report (CAR) in December 1999 to FDEP. After reviewing the CAR, FDEP
requested additional monitoring wells be installed to better determine the contamination
boundary in certain areas of the property. Additional wells were installed and analyzed in
early 2001. FDEP reviewed the results and once again required additional well
installations for additional groundwater and soil data. Additional wells were installed in
June 2002 and in early 2003. As of July 2003, FDEP has not approved the revised CAR.
Therefore additional fieldwork will continue into the foreseeable future.
The cost of the investigation and possible remediation of the site is funded through
an Environmental Imposition Adjustment (EIA) applicable to all firm standard natural gas
therm rates and standard propane (LP) gallon rates. The EIA permits the System to
recover the cost of environmental costs imposed on the System by federal, state and local
regulatory agencies. Through September, 2004, $782,758.10 has been expended out of the
$864,521.92 total revenue collected through insurance settlements and rate recovery.
Currently the City is not charging EIA to its customers.
FINANCIAL GUARANTY INSURANCE
28
Payment Pursuant to Financial Guaranty Insurance Policy
Ambac Assurance has made a commitment to issue a financial guaranty
insurance policy (the "Financial Guaranty Insurance Policy") relating to the Series 2005
Bonds effective as of the date of issuance of the Series 2005 Bonds. Under the terms of
the Financial Guaranty Insurance Policy, Ambac Assurance will pay to The Bank of
New York, New York, New York or any successor thereto (the "Insurance Trustee") that
portion of the principal of and interest on the Series 2005 Bonds which shall become
Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor (as such
terms are defined in the Financial Guaranty Insurance Policy). Ambac Assurance will
make such payments to the Insurance Trustee on the later of the date on which such
principal and interest becomes Due for Payment or within one business day following
the date on which Ambac Assurance shall have received notice of Nonpayment from the
Paying Agent. The insurance will extend for the term of the Obligations and, once
issued, cannot be canceled by Ambac Assurance.
The Financial Guaranty Insurance Policy will insure payment only on stated
maturity dates and on mandatory sinking fund installment dates, in the case of
principal, and on stated dates for payment, in the case of interest. If the Series 2005
Bonds become subject to mandatory redemption and insufficient funds are available for
redemption of all outstanding Series 2005 Bonds, Ambac Assurance will remain
obligated to pay principal of and interest on outstanding Series 2005 Bonds on the
originally scheduled interest and principal payment dates including mandatory sinking
fund redemption dates. In the event of any acceleration of the principal of the Series
2005 Bonds, the insured payments will be made at such times and in such amounts as
would have been made had there not been an acceleration.
In the event the Paying Agent has notice that any payment of principal of or
interest on an Series 2005 Bond which has become Due for Payment and which is made
to a Holder by or on behalf of the Obligor has been deemed a preferential transfer and
theretofore recovered from its registered owner pursuant to the United States
Bankruptcy Code in accordance with a final, nonappealable order of a court of
competent jurisdiction, such registered owner will be entitled to payment from Ambac
Assurance to the extent of such recovery if sufficient funds are not otherwise available.
The Financial Guaranty Insurance Policy does not insure any risk other than
Nonpayment, as defined in the Policy. Specifically, the Financial Guaranty Insurance
Policy does not cover:
1. payment on acceleration, as a result of a call for redemption (other than
mandatory sinking fund redemption) or as a result of any other advancement of
maturity.
29
2. payment of any redemption, prepayment or acceleration premium.
3. nonpayment of principal or interest caused by the insolvency or
negligence of any Trustee, Paying Agent or Bond Registrar, if any.
If it becomes necessary to call upon the Financial Guaranty Insurance Policy,
payment of principal requires surrender of Series 2005 Bonds to the Insurance Trustee
together with an appropriate instrument of assignment so as to permit ownership of
such Series 2005 Bonds to be registered in the name of Ambac Assurance to the extent
of the payment under the Financial Guaranty Insurance Policy. Payment of interest
pursuant to the Financial Guaranty Insurance Policy requires proof of Holder
entitlement to interest payments and an appropriate assignment of the Holder's right
to payment to Ambac Assurance.
Upon payment of the insurance benefits, Ambac Assurance will become the
owner of the Series 2005 Bond, appurtenant coupon, if any, or right to payment of
principal or interest on such Series 2005 Bond and will be fully subrogated to the
surrendering Holder's rights to payment.
Ambac Assurance Surety Bond
The Ordinance requires the establishment of a Debt Service Reserve Fund in an
amount equal to the Reserve Requirement. The Ordinance authorizes the Obligor to
obtain a Surety Bond in place of fully funding the Reserve Requirement applicable to
the Series 2005 Bonds. Ambac Assurance has previously issued a Surety Bond for the
purpose of funding the Reserve Account in an amount which satisfies the Reserve
Requirement applicable to the Series 2005 (see the "Ordinance" herein). The Series
2005 Bonds will only be delivered upon the issuance of such Surety Bond. The premium
on the Surety Bond is to be fully paid at or prior to the issuance and delivery of the
Series 2005 Bonds. The Surety Bond provides that upon the later of (i) one (1) day after
receipt by Ambac Assurance of a demand for payment executed by the Paying Agent
certifying that provision for the payment of principal of or interest on the Series 2005
Bonds when due has not been made or (ii) the interest payment date specified in the
Demand for Payment submitted to Ambac Assurance, Ambac Assurance will promptly
deposit funds with the Paying Agent sufficient to enable the Paying Agent to make such
payments due on the Series 2005 Bonds, but in no event exceeding the Surety Bond
Coverage, as defined in the Surety Bond.
Pursuant to the terms of the Surety Bond, the Surety Bond Coverage is
automatically reduced to the extent of each payment made by Ambac Assurance under
the terms of the Surety Bond and the Obligor is required to reimburse Ambac
Assurance for any draws under the Surety Bond with interest at a market rate. Upon
30
such reimbursement, the Surety Bond is reinstated to the extent of each principal
reimbursement up to but not exceeding the Surety Bond Coverage. The reimbursement
obligation of the Obligor is subordinate to the Obligor's obligations with respect to the
Series 2005 Bonds.
In the event the amount on deposit, or credited to the Debt Service Reserve
Fund, exceeds the amount of the Surety Bond, any draw on the Surety Bond shall be
made only after all the funds in the Debt Service Reserve Fund have been expended. In
the event that the amount on deposit in, or credited to, the Reserve Account, in addition
to the amount available under the Surety Bond, includes amounts available under a
letter of credit, insurance policy, Surety Bond or other such funding instrument (the
"Additional Funding Instrument"), draws on the Surety Bond and the Additional
Funding Instrument shall be made on a pro rata basis to fund the insufficiency. The
Ordinance provides that the Reserve Account shall be replenished in the following
priority: (i) principal and interest on the Surety Bond shall be paid from first available
Revenues; (ii) after all such amounts are paid in full, amounts necessary to fund the
Reserve Account to the required level, after taking into account the amounts available
under the Surety Bond shall be deposited from next available Revenues.
The Surety Bond does not insure against nonpayment caused by the insolvency
or negligence of the Trustee or the Paying Agent.
The insurance provided by the Surety Bond IS not covered by the Florida
Insurance Guaranty Association.
Ambac Assurance Corporation
Ambac Assurance is a Wisconsin-domiciled stock insurance corporation
regulated by the Office of the Commissioner of Insurance of the State of Wisconsin and
licensed to do business in 50 states, the District of Columbia, the Territory of Guam,
the Commonwealth of Puerto Rico and the U.S. Virgin Islands, with admitted assets of
approximately $8,329,000,000 (unaudited) and statutory capital of $5,224,000~000
(unaudited) as of December 31, 2004. Statutory capital consists of Ambac Assurance's
policyholders' surplus and statutory contingency reserve. Standard & Poor's Credit
Markets Services, a Division of The McGraw-Hill Companies, Moody's Investors Service
and Fitch Ratings have each assigned a triple-A financial strength rating to Ambac
Assurance.
Ambac Assurance has obtained a ruling from the Internal Revenue Service to
the effect that the insuring of an obligation by Ambac Assurance will not affect the
treatment for federal income tax purposes of interest on such obligation and that
insurance proceeds representing maturing interest paid by Ambac Assurance under
31
policy provisions substantially identical to those contained in its Financial Guaranty
insurance policy shall be treated for federal income tax purposes in the same manner as
if such payments were made by the Obligor of the Series 2005 Bonds.
Ambac Assurance makes no representation regarding the Series 2005 Bonds or
the advisability of investing in the Series 2005 Bonds and makes no representation
regarding, nor has it participated in the preparation of, the Official Statement other
than the information supplied by Ambac Assurance and presented under this heading.
Available Information
The parent company of Ambac Assurance, Ambac Financial Group, Inc. (the
"Company"), is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEe"). These reports, proxy statements and other information can be
read and copied at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. The SEC maintains an internet site at
http://www.sec.gov that contains reports, proxy and information statements and other
information regarding companies that file electronically with the SEC, including the
Company. These reports, proxy statements and other information can also be read at
the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New
York, New York 10005.
Copies of Ambac Assurance's financial statements prepared in accordance with
statutory accounting standards are available from Ambac Assurance. The address of
Ambac Assurance's administrative offices and its telephone number are One State
Street Plaza, 19th Floor, New York, New York, 10004 and (212) 668 0340.
Incorporation of Certain Documents by Reference
The following documents filed by the Company with the SEC (File No. 1-10777)
are incorporated by reference in this Official Statement:
1. The Company's Annual Report on Form lO-K for the fiscal year ended
December 31,2003 and filed on March 15, 2004;
2. The Company's Current Report on Form 8-K dated April 21, 2004 and
filed on April 22, 2004;
32
3. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly
period ended March 31,2004 and filed on May 10, 2004;
4. The Company's Current Report on Form 8-K dated July 21,2004 and filed
on July 22,2004;
5. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly
period ended June 30, 2004 and filed on August 9, 2004;
6. The Company's Current Report on Form 8-K dated August 19, 2004 and
filed on August 20, 2004;
7. The Company's Current Report on Form 8-K dated October 20, 2004 and
filed on October 20, 2004;
8. The Company's Quarterly Report on Form 10-Q for the fiscal quarterly
period ended September 30,2004 and filed on November 9,2004;
9. The Company's Current Report on Form 8-K dated November 12, 2004
and filed on November 12, 2004; and
10. The Company's Current Report on Form 8-K dated January 26,2005 and
filed on January 26, 2005.
All documents subsequently filed by the Company pursuant to the requirements
of the Exchange Act after the date of this Official Statement will be available for
inspection in the same manner as described above in "Available Information".
Rights Granted Insurer
Generally, in connection with its insurance of an issue of municipal securities, the
Insurer requires, among other things, (i) that it be granted the power to exercise any rights
granted to the holders of such securities upon the occurrence of an event of default, without
the consent of such holders, and that such holders may not exercise such rights without the
Insurer's consent, in each case so long as the Insurer has not failed to comply with its
payment obligations under its insurance policy; and (ii) that any amendment or supplement
to or other modification of the principal legal documents be subject to the Insurer's consent.
The specific rights, if any, granted to the Insurer in connection with its insurance of the
Bonds are set forth in "APPENDIX C - SUMMARY OF CERTAIN PROVISIONS OF THE
ORDINANCE."
33
COMBINED DEBT SERVICE REQUIREMENTS
Set forth below are the amounts of principal and interest on the Parity Bonds and
the Series 2005 Bonds and the combined debt service of each in the bond years indicated.
Bond Year
Ending
Sept. 1
Paritv Bonds
Total
De bt Service
Series 2005 Bonds
Principal
Interest
Total
Aggregate
De bt Service
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
Totals
34
HISTORICAL COVERAGE OF DEBT SERVICE
BY THE SYSTEM NET REVENUES (1)
Fiscal Year Ending
Gross Revenues (2)
Cost of Operation
and Maintenance (3)
Net Revenues
Annual Debt Service
Coverage of Annual
Debt Service by Net
Revenues
Coverage of Maximum
Annual Debt Service
by Net Revenues (4)
(1)
(2)
(3)
2003
2004
(Unaudited)
$33,228,829
$30.371,749
23.730.268
6,641,481
$2,101,929
26.320.481
6,908,348
2,050,000
3.16
3.37
3.05
3.17
Source: City of Clearwater, Annual Financial Reports.
Includes interest earnings and gross revenues from System.
Excludes depreciation (and similar noncash expenses)" amortization of bond
discount and issuance costs, bond interest and reserve adjustments.
(4)
As of Fiscal Year 2002, Maximum Annual Debt Service on all Outstanding
Gas System Bonds was $2,176,810.
RATINGS
It is anticipated that Moody's Investors Service, Inc. and Fitch Ratings will assign
the Series 2005 Bonds ratings of "Aaa" and "AAA", respectively, with the understanding
that an insurance policy insuring the payment when due of the principal of and interest on
the Series 2005 Bonds will be issued by the Insurer. In addition, Moody's Investors Service,
Inc. has assigned the Series 2005 Bonds a rating of "A2" without regard to the issuance of
the insurance policy. Such ratings reflect the views of the rating agencies and an
explanation of the significance of such ratings may be obtained only from the rating
agencies furnishing the same. There is no assurance that such ratings may be continued
35
for any given period of time or that they will not be revised downward or withdrawn
entirely by such rating agencies, if in its judgment, circumstances so warrant. Any such
downward revisions or withdrawal of such ratings may have an adverse effect on the
market price of the Series 2005 Bonds. For any additional description of ratings and their
meanings, Moody's Investors Service, Inc. and Fitch Ratings should be contacted.
LEGALITY
Certain legal matters in connection with the issuance of the Series 2005 Bonds are
subject to the approval of Bryant Miller and Olive P.A., Tallahassee, Florida, Bond Counsel,
whose Bond Counsel opinion will be available at the time of delivery of the Series 2005
Bonds. The proposed form of such opinion of Bond Counsel is attached to this Official
Statement as APPENDIX E. Certain legal matters will be passed upon for the City by
Pamela K. Akin, Esquire, City Attorney and by its disclosure counsel, Nabors, Giblin &
Nickerson, P.A., Tampa, Florida.
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 purposes 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 purposes of federal income
taxation. Interest on the Bonds is not an item of tax preference for purposes of the federal
alternative minimum tax imposed on individuals or corporations; however, interest on the
Bonds may be subject to the alternative minimum tax when any Bond is held by a
36
corporation. The alternative minimum taxable income of a corporation must be increased
by 75% of the excess of such corporation's adjusted current earnings over its alternative
minimum taxable income (before this adjustment and the alternative tax net operating loss
deduction). "Adjusted Current Earnings" will include interest on the 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, (iii) the
inclusion of interest on the Bonds in earnings of certain foreign corporations doing business
in the United States for purposes of a branch profits tax, (iv) the inclusion of interest 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 purposes of determining whether such
benefits are included in gross income for federal income tax purposes.
PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE BONDS AND THE
RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY HAVE ADVERSE
FEDERAL TAX CONSEQUENCES FOR CERTAIN INDIVIDUAL AND CORPORATE
REGISTERED OWNERS. PROSPECTIVE REGISTERED OWNERS SHOULD CONSULT
WITH THEIR TAX SPECIALISTS FOR INFORMATION IN THAT REGARD.
During recent years legislative proposals have been introduced in Congress, and in
some cases enacted that altered certain federal tax consequences resulting from the
ownership of obligations that are similar to the Bonds. In some cases these proposals have
contained provisions that altered these consequences on a retroactive basis. Such
alteration of federal tax consequences may have affected the market value of obligations
similar to the 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.
Tax Treatment of Original Issue Discount
Under the Code, the difference between the maturity amount of the Series 2005
Bonds maturing in the years 2008 through and including 2010, in 2012 through and
including 2017 and in 2019 through and including 2026 (the "Discount Bonds") and the
initial offering price to the public, excluding bond houses, brokers or similar persons or
37
organizations acting in the capacity of underwriters or wholesalers, at which price a
substantial amount of Series 2005 Bonds of the same maturity was sold is "original issue
discount." Original issue discount will accrue over the term of such Series 2005 Bonds at a
constant interest rate compounded periodically. A purchaser who acquires such Series
2005 Bonds in the initial offering at a price equal to the initial offering price thereof to the
public will be treated as receiving an amount of interest excludable from gross income for
federal income tax purposes equal to the original issue discount accruing during the period
he holds such Series 2005 Bonds, and will increase his adjusted basis in such Series 2005
Bonds by the amount of such accruing discount for purposes of determining taxable gain or
loss on the sale or other disposition of such Series 2005 Bonds. The federal income tax
consequences of the purchase, ownership and redemption, sale or other disposition of the
Series 2005 Bonds which are not purchased in the initial offering at the initial offering
price may be determined according to rules which differ from those above. Holders of such
Series 2005 Bonds should consult their own tax advisors with respect to the precise
determination for federal income tax purposes of interest accrued upon sale, redemption or
other disposition of Series 2005 Bonds and with respect to the state and local tax
consequences of owning and disposing of such Series 2005 Bonds.
Tax Treatment of Bond Premium
The difference between the principal amount of the Series 2005 Bonds maturing in
the years 2004 through and including 2007 and in 2011 (the "Premium Bonds") and the
initial offering price to the public (excluding bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters or wholesalers) at which price a
substantial amount of such Premium Bonds of the same maturity was sold constitutes to an
initial purchaser amortizable bond premium which is not deductible from gross income for
Federal income tax purposes. The amount of amortizable bond premium for a taxable year
is determined actuarially on a constant interest rate basis over the term of each of the
Premium Bonds which term ends on the earlier of the maturity or call date for each of the
Premium Bonds which minimizes the yield on said Bonds to the purchaser. For purposes of
determining gain or loss on the sale or other disposition of a Premium Bond, an initial
purchaser who acquires such obligation in the initial offering to the public at the initial
offering price is required to decrease such purchaser's adjusted basis in such Premium
Bond annually by the amount of amortizable bond premium for the taxable year. The
amortization of bond premium may be taken into account as a reduction in the amount of
tax-exempt income for purposes of determining various other tax consequences of owning
such Bonds. Owners of the Premium Bonds are advised that they should consult with their
own advisors with respect to the state and local tax consequences of owning such Premium
Bonds.
Florida Tax Matters
38
On the date of delivery of the Bonds, Bond Counsel will issue an opinion to the effect
that under existing statutes, regulations and judicial decisions, the Bonds and the income
therefrom are exempt from taxation under 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.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
The arithmetical accuracy of certain computations included in the schedules
provided by RBC Dain Rauscher Inc. on behalf of the City relating to (a) computation of
forecasted receipts of principal and interest on the Federal Securities and the forecasted
payments of principal and interest to redeem the Refunded Bonds, and (b) computation of
the yields on the Refunding Bonds and the Federal Securities was examined by McGladrey
& Pullen, LLP, Minneapolis, Minnesota. Such computations were based solely upon
assumptions and information supplied by RBC Dain Rauscher Inc. on behalf of the City.
McGladrey & Pullen, LLP has restricted its procedures to examining the arithmetical
accuracy of certain computations and has not made any study or evaluation of the
assumptions and information upon which the computations are based and, accordingly, has
not expressed an opinion on the data used, the reasonableness of the assumptions, or the
achievability of the forecasted outcome.
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 funds held by or for the benefit of the City
Council (except for proceeds of bond issues which are deposited in escrow and debt service
funds and governed by their bond documents) and funds of Constitutional Officers and
other component units of the City.
The objectives of the investment policy, listed in order in order of importance, are:
1. Safety of principal
2. Provision of sufficient liquidity
3. Optimization of return within the constraints of safety and liquidity
The investment policy limits the securities eligible for inclusion in the City's
portfolio. The City will attempt to maintain a weighted average maturity of its investments
at or below three years; however, the average maturity of investments may not exceed four
years.
To enhance safety, the investment policy requires the diversification of the portfolio
to reduce the risk of loss resulting from over-concentration of assets in a specific class of
39
security. The investment policy also requires the preparation of periodic reports for the
City Council of all outstanding securities by class or type, book value, income earned and
market value as of the report date.
Notwithstanding the foregoing, moneys held in the funds and accounts established
under the Ordinance may be invested only in Permitted Investments, as described in the
Ordinance.
ENFORCEABILITY OF REMEDIES
The remedies available to the owners of the Series 2005 Bonds under the Ordinance
(and the policy of municipal bond insurance referred to herein) are in many respects
dependent upon judicial actions which are often subject to discretion and delay. Under
existing constitutional and statutory law and judicial decisions, including specifically Title
11 of the United States Code, the remedies specified by the Federal Bankruptcy Code, the
Ordinance and any policy of municipal bond insurance referred to herein may not be readily
available or may be limited. The various legal opinions to be delivered concurrently with
the delivery of the Series 2005 Bonds (including Bond Counsel's approving opinion) will be
qualified, as to the enforceability of the various legal instruments, by limitations imposed
by bankruptcy, reorganization, insolvency, or other similar laws affecting the rights of
creditors or by such principles of equity as the court having jurisdiction may impose with
respect to certain remedies which require or may require enforcement by a court of equity.
LITIGATION
There is no litigation or controversy of any nature now pending or threatened (i) to
restrain or enjoin the issuance, sale, execution or delivery of the Series 2005 Bonds or (ii) in
any way questioning or affecting the validity of the Series 2005 Bonds, the Ordinance, any
proceedings of the City taken with respect to the authorization, sale or issuance of the
Series 2005 Bonds or the pledge or application of any moneys provided for the payment of
the Series 2005 Bonds, including the Net Revenues of the System.
The City is a party from time to time in various law suits involving the City
generally, and believes that none of the actions currently pending will have a material
effect upon the finances of the City or of the System.
GENERAL PURPOSE FINANCIAL STATEMENTS
The excerpts from the General Purpose Financial Statements and other information
of the City for the fiscal year ended September 30,2002, are included in APPENDIX B to
this Official Statement. Such excerpts from the City's Comprehensive Annual Financial
Report, including the auditor's report thereon, have been included in this Official
40
Statement as public documents and consent from the auditors was not requested. The
auditors have not performed any services relating to, and are therefore not associated with,
the issuance of the Series 2005 Bonds.
FINANCIAL ADVISOR
RBC Dain Rauscher Inc. served as independent financial advisor to the City with
respect to the issuance and sale of the Series 2005 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 2005 Bonds. RBC Dain Rauscher Inc. did not engage
in any underwriting activities with regard to the issuance and sale of the Series 2005
Bonds. The Financial Advisor is not obligated to undertake and has not undertaken to
make an independent verification or to assume responsibility for the accuracy,
completeness or fairness of the information contained in this Official Statement and is not
obligated to review or ensure compliance with the undertaking by the City to provide
continuing secondary market disclosure. RBC Dain Rauscher Inc. may assist the City in
bidding certain investments on behalf of the City which may result in additional fees being
paid to RBC Dain Rauscher Inc.
ADVISORS AND CONSULTANTS
The City has retained advisors and consultants in connection with the issuance of
the Series 2005 Bonds. These advisors and consultants are compensated from a portion of
the proceeds of the Series 2005 Bonds, identified as "Costs of Issuance" under the heading
"ESTIMATED SOURCES AND USES OF FUNDS" herein; and other compensation, is, in
some instances, contingent upon the issuance of the Bonds and the receipt of the proceeds
thereof.
Financial Advisor. The City has retained RBC Dain Rauscher Inc., St.
Petersburg, Florida, as Financial Advisor. The fees of the Financial Advisor will be paid
from proceeds of the Series 2005 Bonds and such payment is contingent upon the issuance
of the Series 2005 Bonds.
Bond Counsel. Bryant Miller and Olive P.A., Tallahassee, Florida represents the
City as Bond Counsel. The fees of Bond Counsel will be paid from proceeds of the Bonds,
and such payment is contingent upon the issuance of the Bonds.
Disclosure Counsel. Nabors, Giblin & Nickerson, P .A., Tampa, Florida represents
the City as Disclosure Counsel. The fees of Disclosure Counsel will be paid from proceeds of
the Bonds, and such payment is contingent upon the issuance of the Bonds.
41
CONTINUING DISCLOSURE
The City has covenanted for the benefit of the holders and beneficial owners of the
Series 2005 Bonds to provide certain financial information and operating data relating to
the City by not later than June 1 in each year commencing June 1, 2004 (the "Annual
Report"), arid to provide notices of the occurrence of certain enumerated events, if deemed
by the City to be material. The Annual Report will be filed by the City with each
Nationally Recognized Municipal Securities Information Repository ("NRMSIR"), and with
the State of Florida Repository, if and when created. The notices of material events will be
filed by the City with the NRMSIR and with the State of Florida Repository, if and when
created. The specific nature of the information to be contained in the Annual Report or the
notices of material events is summarized below under the caption "APPENDIX D - FORM
OF CONTINUING DISCLOSURE CERTIFICATE." These covenants have been made in
order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). The City has
never failed to comply in all material respects with any previous undertakings with regard
to said Rule to provide annual reports or notices of material events.
MISCELLANEOUS
All information included herein has been provided by the City, except where
attributed to other sources. The summaries of and references to all documents, statutes,
reports and other instruments referred to herein do not purport to be complete,
comprehensive or definitive, and each such reference or summary is qualified in its entirety
by reference to each such document, statute, report or other instrument. Copies of all such
documents referred to herein are on file with the City Clerk of the City at 112 South
Osceola Avenue, Clearwater, Florida 34616. The information herein has been compiled
from official and other sources and, while not guaranteed by the City, is believed to be
correct. As far as any statements made in this Official Statement and the appendices
attached hereto involve matters of opinion or of estimates, whether or not expressly stated,
they are set forth as such and not as representations of fact and no representation is made
that any of the estimates will be realized.
42
AUTHORIZATION OF AND CERTIFICATION CONCERNING OFFICIAL
STATEMENT
The delivery of this Official Statement has been authorized by the City Council.
Concurrently with the delivery of the Series 2005 Bonds, the undersigned will furnish their
certificate to the effect that, to the best of their know ledge, this Official Statement did not
as of its date, and does not as of the date of delivery of the Series 2005 Bonds, contain any
untrue statement of a material fact or omit to state a material fact which should be
included therein for the purpose for which this Official Statement is to be used, or which is
necessary in order to make the statements contained therein, in the light of the
circumstances in which they were made, not misleading.
CITY OF CLEARWATER, FLORIDA
By:
Mayor-Council Member
By:
City Manager
43
APPENDIX A
GENERAL INFORMATION RELATING TO
THE CITY OF CLEARWATER, FLORIDA
44
GENERAL INFORMATION
RELATING TO THE CITY OF CLEARWATER, FLORIDA
Location
The City of Clearwater (the "City"), the county seat of Pinellas 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 of land and 8.6l
square miles of waterways and lakes.
Clearwater Beach, a corporate part of the City, is a beach community connected to
the mainland by Memorial Causeway, a four-lane, toll-free drive stretching almost two
miles across the Intracoastal Waterway. Business on Clearwater Beach is mainly tourist
oriented, with hotels, motels and gift shops. Many fine homes, apartments and
condominiums offer pleasant, semi-tropical island accommodations to permanent
residents and winter and summer visitors.
History
The area now known as Clearwater was first explored in l528 by Panfile de
Narvaez, a Spanish explorer who encountered a large tribe of Indians, which his 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 "clear water," for the many springs of clear, fresh water that bubbled along the
shore and even below the waterline at low tide.
Settlers began moving into the area around the time of the Seminole Wars. After
the wars ended, the territory was opened by the Federal government for homesteading
under the Armed Occupation Act. The first land title was granted in 1842. The early
settlement, named "Clear Water Harbor," was incorporated in l897. "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 19l1, Clearwater became the County Seat and
Clearwater was chartered as a municipality on May 27, 19l5.
Government and Administration
Clearwater has a council-city manager form of government. Four council members
and a mayor 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 1,85l employees, covered by the City's Civil Service
law relating to recruitment, promotion, evaluation and discipline based on merit
principles. Four employee unions represent the City's civil labor force: two units of the
Fraternal Order of Police; two of the International Association of Fire Fighters; and one
from the Communications Workers of America.
Transportation
Pine lIas County and Clearwater are served by three major causeways and bridges
over Tampa Bay, by U.S. 19 and 1-275 to the north and south, by 1-4 and U.S. 60 to the
east. State Roads 590 and 686 also afford access to the City.
Tampa International Airport, located approximately seventeen 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, approximately ten miles from downtown Clearwater, offers regularly scheduled
passenger service and charter and special group flights, on a more limited basis to both
domestic and foreign destinations, particularly to Canada, Mexico, and Central and South
America. The Executive Airpark, which is slightly over a mile from the downtown
business section, provides service and maintenance for private plane owners. The airport
has one 3,000 foot hard-surface runway and facilities for visiting and locally based
planes.
The Port of Tampa (22 miles to the east) is the closest deep water port. The port is
serviced by a variety of steamship agents and operators. The United States Coast Guard
maintains an air station at the St. Petersburg/Clearwater International Airport, and a
search and sea rescue 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. Pine lIas Suncoast Transit System
maintains 54 routes in 19 municipalities in Pinellas County.
Utilities, Public Service and Community Facilities
The City owns and operates its own water and wastewater collection systems.
Water is obtained from 17 deep wells owned and operated by the City (approximately 20-
25%) and from wholesale purchases from the Pinellas County Water System
(approximately 75-80%). Total daily average is approximately 29 million gallons per
day. The wastewater collection program provides for the transmission of wastewater
A-2
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, lO.5 miles of unpaved
streets, approximately l47miles of storm sewer mains, and approximately 559 miles of
water mains.
Electric power is provided by Progress Energy and telephone service is provided
by Verizon of Florida, Inc. Bright House Networks and Knology 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, l, 130 acres of parks, 3l playgrounds, numerous athletic
courts and fields, five swimming pools, a 6,9l7 seat baseball and softball stadium, golf
course, civic and recreational centers, 7.4 miles of recreational paths, boat ramps and a
209 slip yacht basin and marina. The Philadelphia Phillies conduct spring training at the
municipal baseball stadium and have a long-term contract for farm club training on
Clearwater's specially constructed facilities during the Winter Instructional League
Program. Clearwater is the home of the Clearwater Bombers, a national amateur fastpitch
softball team.
Tourism
The State of Florida reported 74.5 million tourists came to Florida during the year
2003, an increase of 0.9% over 2002. Domestic visitors to the State in 2003 are estimated
to constitute 92% of total visitors, followed by 6% from overseas countries and 2% from
Canada. There was a decrease of 4.9% in the number of overseas visitors and 0.1%
Canadian visitors to Florida in 2003. Tourism is a $5.2 billion industry annually to the
County. Pinellas County is ranked seventh of the top ten destinations in Florida and
generated approximately 5 million overnight guests and 7.5 million day visitors in 2003.
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 l44 schools comprising elementary through high school, exceptional,
alternative and vocational schools within the County and serves more than 1l3,000
students. During the 2003-2004 school year, Pinellas County Schools expects enrollment
of more than l6,295 compared to l7,047 during the 2002-2003 school year with students
attending 82 elementary, 24 middle and l6 high schools along with five exceptional
A-3
education centers, four alternative schools, four partnership schools and three 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 lOO acre industrial park adjacent to the Clearwater Airpark (Executive
Airport) and to the CSX Transportation Company. There is also a privately owned, 35
acre industrial park. Large industries located near Clearwater include Honeywell, General
Electric, UNISYS, Concept and Hercules Defense Electronics Systems, Inc. During the
1999 fiscal year IMRglobal Corp. ("IMR") occupied its new world headquarters in
downtown Clearwater.
Pension Plan
The Employees' Pension Plan and the Fireman's Pension Plan are self-
administered by the City. City contributions for fiscal year ending 2003 were $4,649,642
to the Employees' Plan and $1,211,210 to the Fireman's Plan, and were in accordance
with actuarially determined funding requirements.
In addition, supplemental pensions exist for certified Police Officers and
Firefighters, funded solely from excise taxes on certain insurance premiums covering
property in Clearwater, collected by the State and remitted to the City. Both plans require
benefits to be adjusted to equal funds assets provided by the defined contributions.
[Remainder of page intentionally left blank]
A-4
Demographic Information
Last Ten Fiscal Years
(a) (b) (c) (d) (e)
Permanent Per Capita Median School Unemployment
Year Population Income Age Enrollment Rate (%)
1994 lOO,604 22, l48 42.9 lO,043 5.5%
1995 101,162 23,4l2 42.2 10,284 4.8
1996 101,867 23,768 42.1 11,906 4.2
1997 1 02,4 72 25,111 43.3 15,264 3.7
1998 l02,874 26,287 43.6 13,7l4 2.9
1999 l04,28l 27,704 43.9 l4,55l 3.0
2000 l04,454 29,041 44.2 15,978 2.7
200l l08,787 29,8l8 43.0 l6,293 2.7
2002 109,231 3l,406 43.0 17,047 3.9
2003 109,7l9 32,408 43.9 l6,295 4.9
Source: City of Clearwater, Florida Comprehensive Annual Financial Report for period
ending September 30, 2003.
(a) University of Florida, Bureau of Economic and Business Research, Florida Statistical
Abstract 2003.
(b) Data is for Pinellas County. Source is the University of Florida, Bureau of Economic
and Business Research, Florida Statistical Abstract 2003.
(c) University of Florida, Bureau of Economic and Business Research, Florida Statistical
Abstract 2003.
(d) Pinellas County School District.
(e) University of Florida, Bureau of Economic and Business Research, Florida Statistical
Abstract 2003, as of December 3l 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
Number Number Total Assessed
Fiscal of of Property Value
Year Permits Value Permits Value (a)
1994 l,077 $ 66,558,783 4,662 $2l,l5l,330 $5,572,851,5l2
1995 l,39l l20,1l6,220 5832 27,l99,3l8 5,64l,202,905
1996 l,860 43,299,453 6527 32,039,292 5,733,l93,387
1997 1,762 94,445,784 6605 36,259,408 5,884,592,007
1998 l,392 52,983,592 7253 50,906,470 6,049,571,226
1999 l,82l 90,77,005 5624 37,677,855 6,349,56l,534
2000 2,667 l77,569,8l2 5485 30,376,636 6,555,350,175
200l 2,312 l64,70l,l45 5512 34, l82,620 7,l08,l10,272
2002 2,196 l08,939,096 5448 37,498,7l9 7,858,986,677
2003 1,834 193,90 1 ,304 6084 54,304,855 8,556,134,526
Source: City of Clearwater, Florida Comprehensive Annual Financial Report for period ending September 30,
2003.
(a) Pinellas County Property Appraiser, values listed are for years of collections.
A-6
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City of Clearwater, Florida
Principal Taxpayers*
September 30, 2003
Percentage
to Total
Assessed Assessed
Taxpayers . Type of Business Value* Value
Bellwether Prop. LP Ltd. Shopping Center $ 91,974,300 1.65%
California State Teachers Apartment Complex 27,600,000 0.49
Taylor, John S. III Landowner 27,401,700 0.49
Weingarten Nostat Inc. Shopping Center 24,939,600 0.45
Sand Key Association Ltd. Hotel 24,000,000 0.43
Clearwater Land Co. Adult Congregate Facility 23,848,700 0.43
St. Joe Co. Office Building 23,549,300 0.42
Northwood Plaza Shopping Center 22,309,100 0.40
ZOM Bayside Arbors Ltd. Apartment Complex 19,268,000 0.35
Furnary, Stephen 1. Apartment Complex 19,200,000 0.34
Subtotal 304,090,700 5.45
All Others 5,276,066,950 94.55
Total $5,580,157,650 .100.00%
* Based on non-exempt real property assessed taxable values.
Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period
ending September 30, 2003; Pinellas County Property Appraiser, 2002 tax rolls
for 2003 collections.
A-lO
City of Clearwater, Florida
Ratio of Net General Bonded Debt to Taxable Assessed Value
and Net Bonded Debt Per Capita
Last Ten Fiscal Years
Ration 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
1993 100,768 $4,188,105 348,478 0.008% 3.46
1994 100,604 4,l81,3l4 242,700 0.006 2.4l
1995 lO 1,162 4,186,l08 133,597 0.003 1.32
1996 l01,867 4,252,433 21,598 O.OOl 0.21
1997 1 02,472 4,376,559 l65,000 0.004 1.6l
1998 102,874 4,494,262 33,750 O.OOl 0.33
1999 l04,28l 4,692,398 n/a 0.00
2000 l04,454 4,903,478 n/a 0.00
200l l08,787 5,208,787 n/a 0.00
2002 l09,231 5,688,426 n/a 0.00
2003 l09,7l9 6,l05,078 n/a 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-ll
City of Clearwater, Florida
Computation of Legal Debt Margin
September 30, 2003
Assessed Valuation of Non-Exempt Real Estate(a) ..................................... $5,580, l57,650
Times: Twenty Percent Limitation per City Charter....................................x .20
Equals Legal Indebtedness Limitation ......................................................... $l J l6.03 1.530
Debt Subject to Indebtedness Limitation:
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
Legal Indebtedness Margin
Gross Debt
$8,270,000
11,870,000
7,860,000
14,005,000
51,924,771
58,680,000
7,150,000
24,685,000
41,345,000
11,005,000
14,645,000
13.746.259
$265.186.030
Less Sinking
Fund Assets
7,917
43,750
2,917
9,496,000
1,561,045
4,268,135
119,167
403,333
4,391,667
1,105,310
268,333
o
$21.667.574
Net Debt
Subject to
Limitation
8,262,083
11,826,250
7,857,083
4,509,000
50,363,726
54,411,865
7,030,833
24,281,667
36,953,333
9,899,690
14,376,667
13.746.259
$243.518.456
$872513.074
Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending
September 30,2002.
(a) Valuation listed is from 2002 tax year for 2003 collections.
A-12
City of Clearwater, Florida
Computation of Direct and Overlapping Debt
September 30, 2003
Net General
Obligation Debt
Governmental Unit Outstanding
Percent
City of Clearwater $
lOO.O%
Pinellas County School Board $66,895,235
13.6%
Amount
$
$9,097,752
(a) Applicable Net Debt Percentage is based on ratio of City to County Taxable values
for 2003 collections ($5,580,l57,650 / $4l,l67,093,480 = 13.6%).
A-13
APPENDIX B
EXCERPTS FROM THE CITY OF CLEARWATER, FLORIDA
GENERAL PURPOSE FINANCIAL STATEMENTS
AND OTHER INFORMATION FOR
THE FISCAL YEAR ENDED SEPTEMBER 30, 2003
APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE ORDINANCE
APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed
and delivered by the City of Clearwater, Florida (the "Issuer") in connection with the
issuance of its $7,185,000* Gas System Revenue Refunding Bonds, Series 2005 (the
"Series 2005 Bonds"). The Series 2005 Bonds are being issued pursuant to Ordinance
No. 5118-91 enacted by the City Council of the City (the "Council") on August 15,1991
(the "Original Ordinance"), which authorized the issuance of Gas System Revenue
Bonds, Series 1991 (the "Series 1991 Bonds"), as amended and supplemented, as
further supplemented by Ordinance No. 7191-03, enacted on October 2, 2003, as
further supplemented by Ordinance No. 7423-05, enacted on April 21, 2005 and as
further supplemented (as so supplemented, the "Authorizing Ordinance") (the Original
Ordinance and the Authorizing Ordinance are collectively referred to as the
"Ordinance"). The Issuer covenants and agrees as follows:
SECTION 1. PURPOSE OF DISCLOSURE CERTIFICATE. This
Disclosure Certificate is being executed and delivered by the Issuer for the benefit of
the Series 2005 Bondholders and in order to assist the original underwriters of the
Series 2005 Bonds in complying with Rule 15c2-12(b)(5) promulgated by the Securities
and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934
(the "Rule").
SECTION 2. PROVISION OF ANNUAL INFORMATION. Except as
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,
2006, 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 with Generally Accepted Accounting Principles, as modified by applicable
State of Florida requirements and the governmental accounting standards
promulgated by the Government Accounting Standards Board; provided, however, if
the audited financial statements 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
1
(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 2005 Bonds
(as amended, the "Official Statement"), as set forth below:
1. Updates of the historical financial information set forth in the
Official Statement under the subheadings "Rates, Fees and Charges" and
"Service Area" under the principal caption "THE SYSTEM" and "HISTORICAL
COVERAGE OF MAXIMUM ANNUAL DEBT SERVICE BY THE SYSTEM
NET REVENUES" (for the then-immediately preceding five fiscal years.
2. Description of any additional indebtedness payable in whole or in
part from the System Net Revenues (as defined in the Ordinance).
3. Any other financial information or operating data of the type
included in the Official Statement which would be material to a holder or
prospective holders of the Series 2005 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 2005 Bonds or the Issuer's ability to satisfy its
payment obligations with respect to the Series 2005 Bonds:
(A)
Principal and interest payment delinquencies;
(B)
(C)
difficulties;
Non-payment related defaults;
Unscheduled draws on the debt service reserve fund reflecting financial
(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 2005 Bonds;
2
(G) Modifications to rights of Series 2005 Bondholders;
(H) Redemptions;
(1) Defeasances;
(J) Release, substitution, or sale of property securing repayment ofthe Series
2005 Bonds;
(K) Rating changes; and
(L) Notice of any failure on the part of the Issuer or any other Obligated
Person (as defined herein) tomeet the requirements of Section 2 hereof.
The Issuer may from time to time, in its discretion, choose to provide notice of
the occurrence of certain other events, in addition to those listed in this Section 3, if, in
the judgment of the Issuer, such other events are material with respect to the Series
2005 Bonds, but the Issuer does not specifically undertake to commit to provide any
such additional notice ofthe occurrence of any material event except those events listed
above.
Whenever the Issuer obtains knowledge ofthe 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 2005
Bonds, provided, that any event under clauses (D), (E), (F), (K) or (L) above will always
be deemed to be material.
SECTION 4. NRMSIRs. The NRMSIRs to which the Issuer shall
provide the information described in Sections 2 and 3 above, to the extent required,
shall be the following organizations, their successors and assigns:
Bloomberg Municipal Repository
100 Business Park Drive
Skillman, New Jersey 08558
Phone: (609) 279 3225
Fax: (609) 279 5962
http://www.bloomberg.com/markets/muni_contactinfo.html
Email: Munis@Bloomberg.com
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
3
Phone: (201) 346 0701
Fax: (201) 947 0107
http://www.dpcdata.com
Email: nrmsir@dpcdata.com
FT Interactive Data
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)
http://www.interactivedata.com
Email: NRMSIR@FTID.com
Standard & Poor's Securities Evaluations, Inc.
55 Water Street
45th Floor
New York, NY 10041
Phone: (212) 438-4595
Fax: (212) 438-3975
www.jjkenny.com/jjkenny/pser_descrip_data_rep.html
Email: nrmsir_repository@sandp.com
A list of the names and addresses of all designated NRMSIRs as of any date may
currently be obtained by calling the SEC's Fax on Demand Service at 202/942-8088 and
requesting document number 0206 or by visiting the SEC's web site at
www.sec.gov/info/municipallnrmsir.
In lieu of filing with the NRMSIRs and SIDs, the Dissemination Agent may
provide the required information to:
Disclosure USA.org
P.O. Box 684667
Austin, Texas 78768-4667
http://www .disclosureusa.org
Fax: (512) 476-6403
or any other designated central post office hereafter approved by the SEC until such
time as the SEC has withdrawn such interpretive approval.
SECTION 5. NO EVENT OF DEFAULT. Notwithstanding any other
provision in the Ordinance to the contrary, failure of the Issuer to comply with the
4
provisions of this Disclosure Certificate shall not be considered an event of default
under the Ordinance; provided, however, any Series 2005 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 2005 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
2005 Bonds (including persons holding Series 2005 Bonds through nominees,
depositories or other intermediaries), or (B) is treated as the owner of any Series 2005
Bond for federal income tax purposes.
SECTION 6. INCORPORATION BY REFERENCE. Any or all of the
information required herein to be disclosed may be incorporated by reference from
other documents, including official statements or debt issues of the Issuer of related
public entities, which have been submitted to each of the NRMSIRs and the SID, if
any, or the SEC. If the document incorporated by reference is a final official statement,
it must be available from the MSRB. The Issuer shall clearly identify each document
incorporated by reference.
SECTION 7. DISSEMINATION AGENTS. The Issuer may, from time to
time, appoint or engage a dissemination agent to assist it in carrying out its obligations
under this Disclosure Certificate, and may discharge any such agent, with or without
appointing a successor disseminating agent.
SECTION 8. 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 2005 Bonds, or (B) the termination of the
continuing disclosure requirements of the Rule by legislative, judicial or administrative
action.
SECTION 9. AMENDMENTS. Notwithstanding any other
provision of this Disclosure Certificate, the Issuer may amend this Disclosure
Certificate, and any provision may be waived, if such amendment or waiver is
supported by an opinion of counsel that is nationally recognized in the area of federal
securities laws, to the effect that such amendment or waiver would not, in and of itself,
cause the undertakings herein to violate the Rule if such amendment or waiver had
been effective on the date hereof but taking into account any subsequent change in or
official interpretation of the Rule.
SECTION 10. ADDITIONAL INFORMATION. Nothing in this
Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any
other information, using the means of dissemination set forth in this Disclosure
Certificate or any other means of communication, or including any other information in
5
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
itsfuture 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
2005 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
,2005
ATTEST:
CITY OF CLEARWATER, FLORIDA
By:
By:
Mayor
City Clerk
6
APPENDIX E
FORM OF BOND COUNSEL OPINION
APPENDIX F
SPECIMEN BOND INSURANCE POLICY
Ambac
Ambac Assurance Corporation
One State Street Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 668-0340
Financial Guaranty Insurance Policy
Obligor:
Policy Number:
Obligations:
Premium:
Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in consideration of the pa
premium and subject to the terms of this Policy, hereby agrees to pay to The Bank of New York. as trustee, or its u essor (the
"Insurance Trustee"), for the benefit of the Holders, that portion of the principal of and interest on the above-describe 0 igations
(the "Obligations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment b e Obligo
Ambac will make such payments to the Insurance Trustee within one (1) business day following wr' en tI' tio
Nonpayment. Upon a Holder's presentation and surrender to the Insurance Trustee of such unpai gati s r r d c
uncanceled and in bearer form and free of any adverse claim. the Insurance Trustee will d' u to the d the a t f
principal and interest which is then Due for Payment but is unpaid. Upon such disburse e , mbac 11 be the owner of
the surrendered Obligations and/or coupons and shall be fully subrogated to all of th Ho er rig t reon.
In cases where the Obligations are issued in registered form. the Insurance Trustee
presentation and surrender to the Insurance Trustee of the unpaid Obligation, unca
with an instrument of assignment, in form satisfactory to Ambac and t nsurance
Holder's duly authorized representative, so as to permit ownership of s h . ation
nominee. The Insurance Trustee shall disburse interest to a er 0 a red
Insurance Trustee of proof that the claimant is the person entitle 0 he p
Insurance Trustee of an instrument of assignment, in form satisfac to A b
Holder or such Holder's duly authorized representa', rrin t Am c 11 ri under such Obligation to receive the
interest in respect of which the insurance disburs t was ade. c sH 1 e subrogated to all of the Holders' rights to
payment on registered Obligations to the extent 0 y insurance disbu nts made.
In the event that a trustee or paying a or t e Obligations noti that any payment of principal of or interest on an
Obligation which has become Due ~ ent an ich is mad t a Holder by or on behalf of the Obligor has been deemed a
preferential transfer and theretofo r vered fr m t lder nt to the United States Bankruptcy Code in accordance with
a final, nonappealable order of a u of co t jur' . ctlOn, Holder will be entitled to payment from Ambac to the extent
of such recovery if sufficie nds re 0 rwise availab e.
As used herein, the 0 er than (i) the Obligor or (ii) any person whose obligations constitute the
underlying secur' gations who, at the time of Nonpayment, is the owner of an Obligation or of
a coupon relating ein, "Due for Payment", when referring to the principal of Obligations, is when
the sche tu 't e mandato Clemption date for the application of a required sinking fund installment has been
reach not fer: any earlier date on which payment is due by reason of call for redemption (other than by application
of r q red sinking fu stallments), acceleration or other advancement of maturity: and, when referring to interest on the
Ob g tions' e e h uled date for payment of interest has been reached. As used herein, "Nonpayment" means the failure
of t i /ole ro d sufficient funds to the trustee or paying agent for payment in full of all principal of and interest
on the igations ch are Due for Payment.
celable. The premium on this Policy is not refundable for any reason, including payment of the Obligati6ns
prior to m '. This Policy does not insure against loss of any prepayment or other acceleration payment which at any time
may become due in respect of any Obligation, other than at the sole option of Ambac, nor against any risk other than Nonpayment.
In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the
countersignature of its duly authorized representative.
fJj~
President
.-'-
.~~. ~~
"- ~~,Oa"TiT~"";.~.o'
,'-" , ......
,;1 _ '.Y..'
,~I '-of
,~' SEAL it'
I . ,
\1 i /I
t, _ II
. ' I
".~~,,~./,'
L -....-.-.- .
'""'..-
~~.~
Secretary
Effective Date:
Authorized Representative
~T=~
THE BANK OF NEW YORK acknowledges that it has agreed
to perform the duties of Insurance Trustee under this Policy.
Form No.: 2B-0012 (1/01)
A-
APPENDIX G
SCHEDULES OF RATES
EXHIBIT D
CONTINUING DISCLOSURE CERTIFICATE
D-1
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 $7,185,000* Gas System Revenue Refunding Bonds, Series 2005 (the
"Series 2005 Bonds"). The Series 2005 Bonds are being issued pursuant to Ordinance
No. 5118-91 enacted by the City Council ofthe City (the "Council") on August 15,1991
(the "Original Ordinance"), which authorized the issuance of Gas System Revenue
Bonds, Series 1991 (the "Series 1991 Bonds"), as amended and supplemented, as
further supplemented by Ordinance No. 7191-03, enacted on October 2, 2003, as
further supplemented by Ordinance No. 7423-05, enacted on April 21, 2005 and as
further supplemented (as so supplemented, the "Authorizing Ordinance") (the Original
Ordinance and the Authorizing Ordinance are collectively referred to as the
"Ordinance"). The Issuer covenants and agrees as follows:
SECTION 1. PURPOSE OF DISCLOSURE CERTIFICATE. This
Disclosure Certificate is being executed and delivered by the Issuer for the benefit of
the Series 2005 Bondholders and in order to assist the original underwriters of the
Series 2005 Bonds in complying with Rule 15c2-12(b)(5) promulgated by the Securities
and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934
(the "Rule").
SECTION 2. PROVISION OF ANNUAL INFORMATION. Except as
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,
2006, 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 with Generally Accepted Accounting Principles, as modified by applicable
State of Florida requirements and the governmental accounting standards
promulgated by the Government Accounting Standards Board; provided, however, if
the audited financial statements 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
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(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 2005 Bonds
(as amended, the "Official Statement"), as set forth below:
1. Updates of the historical financial information set forth in the
Official Statement under the subheadings "Rates, Fees and Charges" and
"Service Area" under the principal caption "THE SYSTEM" and "HISTORICAL
COVERAGE OF MAXIMUM ANNUAL DEBT SERVICE BY THE SYSTEM
NET REVENUES" (for the then-immediately preceding five fiscal years.
2. Description of any additional indebtedness payable in whole or in
part from the System Net Revenues (as defined in the Ordinance).
3. Any other financial information or operating data of the type
included in the Official Statement which would be material to a holder or
prospective holders of the Series 2005 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 2005 Bonds or the Issuer's ability to satisfy its
payment obligations with respect to the Series 2005 Bonds:
(A)
Principal and interest payment delinquencies;
(B)
Non-payment related defaults;
(C)
difficulties;
Unscheduled draws on the debt service reserve fund reflecting financial
(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 2005 Bonds;
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(G) Modifications to rights of Series 2005 Bondholders;
(H) Redemptions;
(I) Defeasances;
(J) Release, substitution, or sale of property securing repayment of the Series
2005 Bonds;
(K) Rating changes; and
(L) Notice of any failure on the part of the Issuer or any other Obligated
Person (as defined herein) to meet the requirements of Section 2 hereof.
The Issuer may from time to time, in its discretion, choose to provide notice of
the occurrence of certain other events, in addition to those listed in this Section 3, if, in
the judgment of the Issuer, such other events are material with respect to the Series
2005 Bonds, but the Issuer does not specifically undertake to commit to provide any
such additional notice of the occurrence of any material event except those events listed
above.
Whenever the Issuer obtains knowledge of the occurrence of a significant event
described in this Section 3, the Issuer shall as soon as possible determine if such event
would be material under applicable federal securities law to holders of Series 2005
Bonds, provided, that any event under clauses (D), (E), (F), (K) or (L) above will always
be deemed to be material.
SECTION 4. NRMSIRs. The NRMSIRs to which the Issuer shall
provide the information described in Sections 2 and 3 above, to the extent required,
shall be the following organizations, their successors and assigns:
Bloomberg Municipal Repository
100 Business Park Drive
Skillman, New Jersey 08558
Phone: (609) 279 3225
Fax: (609) 279 5962
http://www.bloomberg.com/markets/m uni_contactinfo.html
Email: Munis@Bloomberg.com
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
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Phone: (201) 346 0701
Fax: (201) 947 0107
http://www.dpcdata.com
Email: nrmsir@dpcdata.com
FT Interactive Data
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)
http://www.interactivedata.com
Email: NRMSIR@FTID.com
Standard & Poor's Securities Evaluations, Inc.
55 Water Street
45th Floor
New York, NY 10041
Phone: (212) 438-4595
Fax: (212) 438-3975
www.jjkenny.com/jjkenny/pser_descrip_data_rep .html
Email: nrmsir_repository@sandp.com
A list of the names and addresses of all designated NRMSIRs as of any date may
currently be obtained by calling the SEC's Fax on Demand Service at 202/942-8088 and
requesting document number 0206 or by visiting the SEC's web site at
www.sec.gov/info/municipal/nrmsir.
In lieu of filing with the NRMSIRs and SIDs, the Dissemination Agent may
provide the required information to:
Disclosure USA.org
P.O. Box 684667
Austin, Texas 78768-4667
http://www .disclosureusa.org
Fax: (512) 476-6403
or any other designated central post office hereafter approved by the SEC until such
time as the SEC has withdrawn such interpretive approval.
SECTION 5. NO EVENT OF DEFAULT. Notwithstanding any other
provision in the Ordinance to the contrary, failure of the Issuer to comply with the
4
provisions of this Disclosure Certificate shall not be considered an event of default
under the Ordinance; provided, however, any Series 2005 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 2005 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
2005 Bonds (including persons holding Series 2005 Bonds through nominees,
depositories or other intermediaries), or (B) is treated as the owner of any Series 2005
Bond for federal income tax purposes.
SECTION 6. INCORPORATION BY REFERENCE. Any or all of the
information required herein to be disclosed may be incorporated by reference from
other documents, including official statements or debt issues of the Issuer of related
public entities, which have been submitted to each of the NRMSIRs and the SID, if
any, or the SEC. If the document incorporated by reference is a final official statement,
it must be available from the MSRB. The Issuer shall clearly identify each document
incorporated by reference.
SECTION 7. DISSEMINATION AGENTS. The Issuer may, from time to
time, appoint or engage a dissemination agent to assist it in carrying out its obligations
under this Disclosure Certificate, and may discharge any such agent, with or without
appointing a successor disseminating agent.
SECTION 8. 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 2005 Bonds, or (B) the termination of the
continuing disclosure requirements ofthe Rule by legislative, judicial or administrative
action.
SECTION 9. AMENDMENTS. Notwithstanding any other
provision of this Disclosure Certificate, the Issuer may amend this Disclosure
Certificate, and any provision may be waived, if such amendment or waiver is
supported by an opinion of counsel that is nationally recognized in the area of federal
securities laws, to the effect that such amendment or waiver would not, in and of itself,
cause the undertakings herein to violate the Rule if such amendment or waiver had
been effective on the date hereof but taking into account any subsequent change in or
official interpretation of the Rule.
SECTION 10. ADDITIONAL INFORMATION. Nothing in this
Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any
other information, using the means of dissemination set forth in this Disclosure
Certificate or any other means of communication, or including any other information in
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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
2005 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
,2005
ATTEST:
CITY OF CLEARWATER, FLORIDA
By:
By:
City Clerk
Mayor
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EXHIBIT E
COMMITMENTS FOR FINANCIAL GUARANTY INSURANCE POLICY
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Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
212.668.0340
A member of Ambac Financial Group, Inc.
COMMITMENT FOR FINANCIAL GUARANTY INSURANCE _
Obligor:
CITY OF CLEARWATER, FLORIDA
Commitment Number: 28111
Commitment Date: March 3, 2005
Expiration Date: June 3, 2005
Obligations: $7,265,000. Gas System Revenue Refunding Bonds, Series 2005, dated their Date of Delivery
maturing on September 1 in the years 2005 through 2027, both inclusive.
Insurance premium: $42,600.00 (Fitch, Inc., Moody's Investors Service and Standard & Poor's Credit
Markets Services assess separate rating fees which are payable directly to them. Each rating agency will
bill separately and all questions regarding the payment of such fees must be addressed to the applicable
agency.)
Ambac Assurance Corporation ("Ambac"), a Wisconsin Stock Insurance Corporation,
hereby commits to issue a Financial Guaranty Insurance Policy (the "Policy") relating to the above-described
debt obligations (the "Obligations"), substantially in the form imprinted in this Commitment, subject to the
terms and conditions contained herein or added hereto (see conditions set forth herein).
To keep this Commitment in effect after the expiration date set forth above, a request for renewal must be
submitted to Ambac prior to such expiration date. Ambac reserves the right to refuse wholly or in part to grant
a renewal.
The Financial Guaranty 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 Obligations
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 purchaser of the Obligations, otherwise required, not to be
required to purchase the Obligations on the date scheduled for the issuance and delivery thereof.
3. There shall be no material change in or affecting the Obligations (including, without limitation, the security
for the Obligations or the proposed debt service structure for the Obligations) or the financing documents
or the official statement (or any similar disclosure document) to be executed and delivered in connection
with the issuance and sale of the Obligations from the descriptions or schedules thereof heretofore provided
to Ambac.
4. The Obligations shall contain no reference to Ambac, the Policy, or the fmancial guaranty insurance
evidenced thereby except as may be approved by Ambac.
* Subject to change, with Arnbac's approval.
5. Ambac shall be provided with:
(a) Executed copies of all financing documents, the official statement (or any similar disclosure document)
and the various legal opinions delivered in connection with the issuance and sale of the Obligations,
including, without limitation, the unqualified approving opinion of bond counsel rendered by a law
firm acceptable to Ambac. The form of Bond Counsel's approving opinion shall also indicate, if
applicable, that the Obligations are exempt from federal income taxation, that the Obligor must comply
with certain covenants under and pursuant to the new tax law and that the Obligor has the legal power
to comply with such covenants. Such opinion of bond counsel shall be addressed to Ambac or, in lieu
thereof, a letter shall be provided to Ambac to the effect that Ambac may rely on such opinion as if it
were addressed to Ambac.
(b) Evidence of a wire transfer in an amount equal to the insurance premium at the time of the issuance and
delivery of the Obligations.
6. Unless expressly waived in whole or in part by Ambac, the financing documents and the Official Statement
shall contain (a) the terms and provisions provided in Ambac's STANDARD PACKAGE transmitted
herewith, and (b) any additional oral or written provisions or comments submitted by Ambac.
7. Ambac shall receive a copy of any insurance policy, surety bond, guaranty or indemnification or any other
policy, contract or agreement which provides for payment of all or any portion of the debt, the costs of
reconstruction, the loss of business income or in any way secures, ensures or enhances the income stream
anticipated to pay the Obligations.
8. Any provisions or requirements of the Purchase. Contract or Bond Purchase Agreement referencing Ambac
must be sent to the attention of Danielle Packer not less than five (5) business days prior to closing. If such
provisions or requirements are not received within that time, compliance may not be possible.
9. Review and approval by Ambac at least 5 days prior to the closing of the Escrow Agreement for the
defeasance of the applicable Obligations (the "Prior Obligations").
10. Prior to closing, Ambac must receive certification by an accounting firm acceptable to Ambac that the
securities invested are sufficient to. pay the Prior Obligations. Upon receipt of this commitment Ambac
should be notified which firm will be providing certification.
11. Receipt of an acceptable opinion of counsel addressed to Ambac that the Prior Obligations have been
legally defeased.
12. Receipt of an acceptable opinion of counsel addressed to Ambac with regard to the validity and
enforceability of the Escrow Agreement.
13. If a forward supply contract is used:
(a) Securities delivered to the escrow agreement must be non-callable U.S. Government obligations,
which do not mature later than the date needed to pay debt service on the refunded Obligations.
(b) The CPA verification must be in form and substance satisfactory to Ambac and must opine that the
escrow is sufficient to defease the refund~d Obligations whether or not the forward supply contract
provider delivers securities to the escrow.
(c) The forward supply contract must specify that (i) the purchase price of the securities delivered to the
escrow must not exceed the amount of cash received from maturing securities in the escrow, as
specified in the verification, and (ii) the maturity value of the securities delivered to the escrow must
not be less than the purchase price paid for such securities.
(d) The forward supply contract provider shall have no recourse to the escrow upon any failure of the
Obligor or escrow agent to perform its obligations under the forward supply contract. Other than the
payment of the purchase price for the securities to be delivered pursuant to the forward supply
contract, no payments of any other kind may be made from the escrow in respect of the forward
supply contract. .
(e) The forward supply contract provider must be rated at least A by a nationally recognized rating
agency.
(f) The forward supply contractshall be in form and substance satisfactory to Ambac.
EXHIBIT F
AMBAC ADDITIONAL PROVISIONS
Definitions
The following definitions shall be applicable to this Resolution:
"Ambac Assurance" shall mean Ambac Assurance Corporation, a Wisconsin-domiciled
stock insurance company.
"Financial Guaranty Insurance Policy" shall mean the financial guaranty insurance policy
issued by Ambac Assurance insuring the payment when due of the principal of and interest on the
Series 2005 Bonds as provided therein.
Covenants Regarding Ambac Assurance Consent Rights
Consent of Ambac Assurance.
Any provision of the Bond Resolution or this Resolution (collectively, the "Series 2005
Authorizing Documents") expressly recognizing or granting rights in or to Ambac Assurance may
not be amended in any manner which affects the rights of Ambac Assurance hereunder without the
prior written consent of Ambac Assurance. Ambac Assurance reserves the right to charge the Issuer
a fee for any consent or amendment to the Financing Documents while the Financial Guaranty
Insurance Policy is outstanding.
Consent of Ambac Assurance in Addition to Holder Consent.
Unless otherwise provided in the Series 2005 Authorizing Documents and so long as there is
not event of default occurring or continuing under the Financial Guarantee Insurance Policy or the
Reserve Surety and no insolvency of Ambac Assurance, Ambac Assurance's consent shall be
required in addition to Holder consent, when required, for the following purposes: (i) execution
and delivery of any supplemental Ordinance or Resolution which seeks to amend the Series 2005
Authorizing Documents as such apply to the Series 2005 Bonds and (ii) initiation or approval of any
action not described above which requires Holder consent.
Consent of Ambac Assurance in the Event of Insolvency
Any reorganization or liquidation plan with respect to the Issuer must be acceptable to
Ambac Assurance. In the event of any reorganization or liquidation, Ambac Assurance shall have
the right to vote on behalf of all Holders who hold Ambac Assurance-insured Series 2005 Bonds
absent the insolvency of Ambac Assurance or a default by Ambac Assurance under the applicable
Financial Guaranty Insurance Policy insuring such Series 2005 Bonds.
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D. Consent of Ambac Assurance Upon Default.
Anything in the Series 2005 Authorizing Documents to the contrary notwithstanding, upon
the occurrence and continuance of an event of default as defined herein, so long as Ambac
Assurance is not insolvent and absent a default under the Financial Guaranty Insurance Policy or
Reserve Surety, Ambac Assurance shall be entitled to control and direct the enforcement of all rights
and remedies granted to the Holders under the Series 2005 Authorizing Documents.
Notices/Information To Be Given To Ambac Assurance
Notices to be sent to the attention of the SURVEILLANCE DEPARTMENT:
A. While the Financial Guaranty Insurance Policy is in effect, the Issuer shall furnish to
Ambac Assurance, upon request, the following:
(a) a copy of any financial statement, audit and/or annual report of the Issuer
such additional information it may reasonably request.
Upon request, such information shall be delivered at the Issuer's expense to the attention of
the Surveillance Department, unless otherwise indicated.
B. a copy of any notice to be given to the registered owners of the Series 2005 Bonds,
including, without limitation, notice of any redemption of or defeasance of Series 2005 Bonds, and
any certificate rendered pursuant to the Series 2005 Authorizing Document relating to the security
for the Series 2005 Bonds.
C. To the extent that the Issuer has entered into a continuing disclosure agreement with
respect to the Series 2005 Bonds, Ambac Assurance shall be included as party to be notified.
Notices to be sent to the attention of the GENERAL COUNSEL OFFICE:
A. The Issuer shall notify Ambac Assurance of any failure of the Issuer to provide
relevant notices, certificates, etc.
B. Notwithstanding any other provision of the Series 2005 Authorizing Document, the
Issuer shall immediately notify Ambac Assurance if at any time there are insufficient moneys to
make any payments of principal and/or interest as required and immediately upon the occurrence
of any event of default hereunder.
Other Information to be given to Ambac Assurance:
The Issuer will permit Ambac Assurance to discuss the affairs, finances and accounts of the
Issuer or any information Ambac Assurance may reasonably request regarding the security for the
Series 2005 Bonds with appropriate officers of the Issuer. The Issuer will permit Ambac Assurance
to have access to and to make copies of all books and records relating to the Series 2005 Bonds at
any reasonable time.
F-2
Payment Procedure Pursuant to the Financial Guaranty Insurance Policy
As long as the Financial Guaranty Insurance Policy for the Series 2005 Bonds insurance shall
be in full force and effect, the Issuer and any Paying Agent agree to comply with the following
provisions:
(a) At least one (1) day prior to all Interest Payment Dates the Paying Agent will
determine whether there will be sufficient funds in the Funds and Accounts to pay
the principal of or interest on the Series 2005 Bonds on such Interest Payment Date.
If the Paying Agent determines that there will be insufficient funds in such Funds or
Accounts, or Paying Agent, if any, shall so notify Ambac Assurance. Such notice
shall specify the amount of the anticipated deficiency, the Series 2005 Bonds to
which such deficiency is applicable and whether such Series 2005 Bonds will be
deficient as to principal or interest, or both. If the Paying Agent has not so notified
Ambac Assurance at least one (1) day prior to an Interest Payment Date, Ambac
Assurance will make payments of principal or interest due on the Series 2005 Bonds
on or before the first (1st) day next following the date on which Ambac Assurance
shall have received notice of nonpayment from the Paying Agent.
(b) the Paying Agent shall, after giving notice to Ambac Assurance as provided
in (a) above, make available to Ambac Assurance and, at Ambac Assurance's
direction, to The Bank of New York, in New York, New York, as insurance trustee
for Ambac Assurance or any successor insurance trustee (the "Insurance Trustee"),
the registration books of the Issuer and all records relating to the Funds and
Accounts maintained under the Series 2005 Authorizing Document.
(c) the Paying Agent shall provide Ambac Assurance and the Insurance Trustee
with a list of registered owners of Series 2005 Bonds entitled to receive principal or
interest payments from Ambac Assurance under the terms of the Financial Guaranty
Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail
checks or drafts to the registered owners of Series 2005 Bonds entitled to receive full
or partial interest payments from Ambac Assurance and (ii) to pay principal upon
Series 2005 Bonds surrendered to the Insurance Trustee by the registered owners of
Series 2005 Bonds entitled to receive full or partial principal payments from Ambac
Assurance.
(d) the Paying Agent shall, at the time it provides notice to Ambac Assurance
pursuant to (a) above, notify registered owners of Series 2005 Bonds entitled to
receive the payment of principal or interest thereon from Ambac Assurance (i) as to
the fact of such entitlement, (ii) that Ambac Assurance will remit to them all or a part
of the interest payments next coming due upon proof of Holder entitlement to
interest payments and delivery to the Insurance Trustee, in form satisfactory to the
Insurance Trustee, of an appropriate assignment of the registered owner's right to
payment, (iii) that should they be entitled to receive full payment of principal from
Ambac Assurance, they must surrender their Series 2005 Bonds (along with an
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appropriate instrument of assignment in form satisfactory to the Insurance Trustee
to permit ownership of such Series 2005 Bonds to be registered in the name of
Ambac Assurance) for payment to the Insurance Trustee, and not the Paying Agent
and (iv) that should they be entitled to receive partial payment of principal from
Ambac Assurance, they must surrender their Series 2005 Bonds for payment thereon
first to the Paying Agent who shall note on such Series 2005 Bonds the portion of the
principal paid by the Paying Agent and then, along with an appropriate instrument
of assignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee,
which will then pay the unpaid portion of principal.
(e) in the event that the Paying Agent has notice that any payment of principal
of or interest on the Series 2005 Bonds which has become Due for Payment and
which is made to a Holder by or on behalf of the Issuer has been deemed a
preferential transfer and theretofore recovered from its registered owner pursuant to
the United States Bankruptcy Code by a trustee in bankruptcy in accordance with
the final, nonappealable order of a court having competent jurisdiction, the Paying
Agent shall, at the time Ambac Assurance is notified pursuant to (a) above, notify all
registered owners that in the event that any registered owner's payment is so
recovered, such registered owner will be entitled to payment from Ambac
Assurance to the extent of such recovery if sufficient funds are not otherwise
available, and the Paying Agent shall furnish to Ambac Assurance its records
evidencing the payments of principal of and interest on the Series 2005 Bonds which
have been made by the Paying Agent and subsequently recovered from registered
owners and the dates on which such payments were made.
(f) in addition to those rights granted Ambac Assurance under the Series 2005
Authorizing Document, Ambac Assurance shall, to the extent it makes payment of
principal of or interest on Series 2005 Bonds, become subrogated to the rights of the
recipients of such payments in accordance with the terms of the Financial Guaranty
Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as
to claims for past due interest, the Paying Agent shall note Ambac Assurance's
rights as subrogee on the registration books of the Issuer maintained by the Paying
Agent upon receipt from Ambac Assurance of proof of the payment of interest
thereon to the registered owners of the Series 2005 Bonds, and (ii) in the case of
subrogation as to claims for past due principal, the Paying Agent shall note Ambac
Assurance's rights as subrogee on the registration books of the Issuer maintained by
the Paying Agent upon surrender of the Series 2005 Bonds by the registered owners
thereof together with proof of the payment of principal thereof.
F-4
Interested Parties
Ambac As Third Party Beneficiary.
To the extent that the Series 2005 Authorizing Document confers upon or gives or grants to
Ambac any right, remedy or claim under or by reason of the Series 2005 Authorizing Document,
Ambac is hereby explicitly recognized as being a third-party beneficiary hereunder and may enforce
any such right remedy or claim conferred, given or granted hereunder.
Parties Interested Herein.
Nothing in the Series 2005 Authorizing Document expressed or implied is intended or shall
be construed to confer upon, or to give or grant to, any person or entity, other than the Issuer, the
Trustee, Ambac Assurance, the Paying Agent, if any, and the registered owners of the Series 2005
Bonds, any right, remedy or claim under or by reason of the Series 2005 Authorizing Document or
any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and
agreements in the Series 2005 Authorizing Document contained by and on behalf of the Issuer shall
be for the sole and exclusive benefit of the Issuer, the Trustee, Ambac Assurance, the
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