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RESOLUTION NUMBER 03-35�}� _ �! ` �" �� =37 RESOLUTION NO. 03-35 A RESOLUTION PROVIDING FOR THE AUTHORIZATION OF NOT TO EXCEED $9,500,000 WATER AND SEWER REVENUE REFUNDING BONDS, SERIES 2003; PROVIDING FOR THE PUBLIC SALE OF SAID BONDS; SETTING FORTH THE FORM OF THE NOTICE OF BOND SALE AND SUMMARY NOTICE OF BOND SALE RELATING TO THE SALE OF SUCH BONDS; DIRECTING PUBLICATION OF THE SUMMARY NOTICE OF SALE RELATING TO SUCH BONDS; PROVIDING FOR THE OPENIlVG OF BIDS RELATING TO THE SALE OF THE BONDS; SETTING FORTH THE FORM OF OFFICIAL NOTICE OF SALE AND BID FORMS; PROVIDING THAT SUCH BONDS SHALL BE ISSUED IN FULL BOOK ENTRY FORM; APPROVING THE FORM OF A PRELIMINARY OFFICIAL STATEMENT; PROVIDING FOR COMPLIANCE WITH A CONTINUING DISCLOSURE CERTIFICATE; DESIGNATING A REGISTRAR AND PAYING AGENT; PROVIDING FOR AN ESCROW DEPOSIT AGREEMENT AND APPOINTING AN ESCROW AGENT; AUTHORIZING THE PURCHASE OF MUNICIPAL BOND INSUR.ANCE; PROVIDING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH; AND PROVIDING AN EFFECTNE DATE. WHEREAS, the City of Clearwater, Florida (the "Issuer") has by Ordinance No. 3674-84 enacted by the Issuer on August 2, 1984, as amended and supplemented in Ordinance 5355-93, enacted on April 15, 1993, as amended and supplemented in Ordinance 6311-98, enacted November 5, 1998 and as further amended and supplemented in Ordinance 6915-01, enacted November 15, 2001 (collectively, the "Bond Ordinance") authorized the issuance of City of Clearwater, Florida, Water and Sewer Revenue Bonds, Series [to be determined] in one or more series from time to time; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF CLEARWATER, FLORIDA, as follows: SECTION 1. AUTHORIZATION OF BONDS AND SERIES DESIGNATION. The Water and Sewer Revenue Refunding Bonds, Series 2003 being offered pursuant to the Bond Ordinance and this resolution are hereby designated as the not to exceed $9,500,000 City of Clearwater, Florida, Water and Sewer Revenue Bonds, Series 2003 (the "Series 2003 Bonds"), which Series 2003 Bonds are hereby authorized to be issued. The proceeds of the Series 2003 Bonds shall be used to refund the Issuer's outstanding Water and Sewer Refunding Revenue Bonds, Series 1993 maturing on and after December 1, 2004 (the "Refunded Bonds"), pay the cost of issuing the 2003 Bonds, including any municipal bond insurance, and to fund a debt service reserve fund. SECTION 2. PUBLIC SALE. There is hereby authorized to be sold pursuant to a public sale not to exceed $9,500,000 City of Clearwater, Florida, Water and Sewer Revenue Refunding Bonds, Series 2003. Resolution No. 03-35 SECTION 3. SALE OF SERIES 2003 BONDS; REDEMPTION AND MATURITY PROVISIONS. The Finance Director is hereby directed to arrange for the sale of the Series 2003 Bonds utilizing the electronic bid process of PARITY through the publication of the Summary Notice of Sale of the Bonds in The Bond Buver, such publications to be on such date as shall be deemed by the Finance Director to be in the best interest of the Issuer and such publications to be not less than ten (10) calendar days prior to the date of sale as required by Section 218.385(1), Florida Statutes; and to publish such Notice in such other newspapers on such dates as may be deemed appropriate by the Finance Director. The Series 2003 Bonds shall be subject to optional redemption and shall bear maturities and sinking fund amortizations as shall be subsequently determined by the Financial Director, upon advice of the City's financial advisor and based on market conditions existing at the time, prior to the publication of the Summary Notice of Sale as hereinafter approved. Proposals forpurchase ofthe Series 2003 Bonds will be received electronicallyviaPARITY as provided in the Official Notice of Sale, from the time that the Notice of Bond Sale is published until 11:00 a.m., Clearwater, Florida time, on such date and time as may be established by the Finance Director of the City or her designee, and if such date is subject to change, communicated through Thompson Municipal Market Monitor (TM3) not less than twenty-four (24) hours prior to the time bids are to be received for the purchase of the City of Clearwater, Florida, Water and Sewer Revenue Bonds, Series 2003; provided that if the internet is not working on the designated bid date, the bid date shall be automatically changed to the next business day, and the City will communicate a confirmation of this change in bid date through Thompson Municipal Market Monitor (TM3), all as provided in the Notice of Sale (the "Bid Date"). SECTION 4. CREATION OF ACCOUNT IN THE CONSTRUCTION FUND AND USE OF FUNDS. There is hereby created with the Construction Fund separate subaccounts namely, the Series 2003 Cost of Issuance Account. Moneys held in the Series 2003 Cost of Issuance Account shall be used to pay the costs of issuing and delivering the Series 2003 Bonds. SECTION 5. DISPOSITION OF PROCEEDS OF SERIES 2003 BONDS. The proceeds from the sale of the Series 2003 Bonds shall be deposited as follows: (a) An amount equal to the accrued interest on the Series 2003 Bonds shall be deposited into the Interest Account in the Bond Service Funds; (b) An amount determined by the Finance Director to be necessary to pay the costs of issuing the Series 2003 Bonds, including the premium due to the Bond Insurer, shall be deposited into the Series 2003 Cost of Issuance Account in the Construction Fund to pay such costs; (c) An amount determined by the Finance Director in consultation with the City's Financial Eldvisor to be deposited under the Escrow Deposit Agreement (hereinafter approved), which together with certain funds currently held by the Issuer in the Sinking Fund for the Refunded Bonds, will provide sufficient funds to defease the Refunded Bonds; Resolution No. 03-35 2 (d) An amount determined by the Finance Director to be necessary to increase the amount in the Reserve Fund so that the amount on deposit therein equals the Reserve Requirement; and (e) The remaining proceeds of the Series 2003 Bonds representing a rounding amount shall be deposited into the Bond Service Fund for the Series 2003 Bonds. SECTION 6. APPROVAL OF FORMS. The Notice of Bond Sale and Summary Notice of Sale of the Bonds to be submitted for purchase of the Series 2003 Bonds shall be in substantially the forms annexed hereto, as Exhibits A and B, respectively, together with such changes as shall be deemed necessary or desirable by the Finance Director depending on the bidding method selected in accordance with Section 3 hereof, incorporated herein by reference. The form of the Official Bid Form shall be provided by the internet auction website selected by the Finance Director, and shall be reasonably satisfactory to the Finance Director. SECTION 7. BOOK ENTRY ONLY BONDS. It is in the best interest of the City and the residents and inhabitants thereof that the Series 2003 Bonds be issued utilizing a pure book-entry system of registration. In furtherance thereof, the City has previously executed and delivered a Blanket Letter of Representations with the Depository Trust Company. For so long as the Series 2003 Bonds remain in such book entry only system of registration, in the event of a conflict between the provisions of the Bond Ordinance and of the Blanket Letter of Representations, the terms and provisions of the Blanket Letter of Representations shall prevail. SECTION 8. ESCROW DEPOSIT AGREEMENT The form of Escrow Deposit Ageement to be used in connection with the defeasance and redemption of the Refunded Bonds attached hereto as Exhibit "F" and incorporated herein by reference is hereby approved. The Mayor- Commissioner, ar in his absence the Vice Mayor, the City Manager and the City Clerk are hereby authorized to execute such Escrow Deposit Agreement in substantially the form attached as Exhibit "F" upon the approval of the City Attorney as to form and legal sufficiency, with such additional changes, insertions and omissions therein as do not change the substance thereof and as may be approved by the said officers of the Issuer executing the same, such execution to be conclusive evidence of such approval. The Finance Director is hereby authorized to solicit offers from financial institutions to serve as Escrow Agent under the Escrow Deposit Agreement for the Refunded Bonds, and the Finance Director is hereby authorized to select the firm with the lowest bid to serve in such capacity. SEC'�'ION 9. PRELIMINARY OFFICIAL STATEMENT AND OFFICIAL STATEMENTe The City Manager and Finance Director are authorized and directed to cause a Preliminary Official Statement to be prepared in substantially the form attached hereto as Exhibit C, with such changes, insertions and omissions as shall be approved by the City Manager and Finance Director, containing a copy of the attached Notice of Bond Sale and to furnish a copy of such Preliminary Official Statement to interested bidders. The City Manager and Finance Director are authorized to deem final the Preliminary Official Statement prepared pursuant to this Section for Resolution No. 03-35 3 purposes of Rule 15c2-12 (the "Rule") of the Securities and Exchange Commission. Upon the award of the Series 2003 Bonds to the successful bidder, the City shall also make available a reasonable number of copies of the Preliminary Official Statement to such bidder, who may mail such Preliminary Official Statements to prospective purchasers at the bidder's expense. Following the award of the Series 2003 Bonds, the City Manager and the Finance Director shall cause to be prepared a final Official Statement dated as of the Bid Date, reflecting such changes in the Preliminary Official Statement as may be necessary to reflect the purchaser's bid. The Mayor- Commissioner and City Manager are hereby authorized to execute and delivery such final Official Statement, with such changes, insertions and omissions as may be approved by such officers. SECTION 10. CONTINUING DISCLO5URE. 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 2003 Bonds, as it may be amended from time to time in accordance with the terms thereof (the "Continuing Disclosure Certificate"). Notwithstanding any other provision of this Resolution, failure of the City to comply with such Continuing Disclosure Certificate shall not be considered an event of default; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Section. SECTION 11. REGISTRAR AND PAYING AGENT. Wells Fargo Bank, N.A., Minneapolis, Minnesota is hereby appointed as Registrar and Paying Agent for the Series 2003 Bonds. SECTION 12. MUNICIPAL BOND INSURANCE POLICIES. Pursuant to the Bond Ordinance, Financial Security Assurance Inc. ("FSA") has been selected to provide its Municipal Bond Insurance Policy (the "Policy") as the Bond Insurance Policy (as defined in the Bond Ordinance) as additional security for payment of principal and interest on the Series 2003 Bonds. Selection of Financial Security Assurance Inc., a New York domiciled insurance company as the Bond Insurer (as defined in the Bond Ordinance) is hereby ratified and confirmed and payment for such Bond Insurance Policy from proceeds of the Series 2003 Bonds is hereby authorized: The Issuer hereby accepts the terms, conditions and agreements relating to the Bond Insurance Policy in accordance with the Municipal Bond Insurance Commitment attached hereto as Exhibit E and incorporated herein. A statement of insurance is hereby authorized to be printed on or attached to the Series 2003 Bonds for the benefit and information of the holders of the Series 2003 Bonds. In addition to the covenants and agreements of the City previously contained in the Bond Ordinance regarding the rights of the Bond Insurer, which are hereby incorporated herein, the City hereby makes the additional covenants and agreements substantially in the form attached hereto as Exhibit "G" for the benefit of the Bond Insurer and the Holders of the Series 2003 Bonds while the Bond Insurance Policy insuring the Series 2003 Bonds are in full force and effect. �.r+ Resolution No. 03-35 � SECTION 13. AWARD OF BIDS. The Finance Director is hereby authorized to accept the bids for the Series 2003 Bonds. The City Manager and the Finance Director are hereby authorized to award the sale of the Series 2003 Bonds on their determination of the best bid submitted in accordance with the terms of the Notice of Bond Sale provided for herein so long as the true interest cost rate shall not exceed 4.0% on the Series 2003 Bonds and a net present value savings on refunding the Refunded Bonds of not less than 2%. The City Manager and the Finance Director are hereby authorized to award the sale of the Series 2003 Bonds as set forth above or to reject all bids for the Series 2003 Bonds. Such award shall be final. SECTION 14. PRIOR RESQLUTI4NS. To the extent�he provisions uf this Resolution are inconsistent with the provisions of Resolution No. 02-30, adopted by the City Commission of the City on June 20, 2002 with respect to the Series 2002 Bonds, Resolution No. 98-54, adopted by the City Commission of the City on November 5, 1998, with respect to the Series 1998 Bonds and Resolution No. 93-26, adopted by the City Commission of the City on Apri115, 1993, with respect to the Series 1993 Bonds, provisions of this Resolution shall control and supercede the inconsistent provisions of such Resolutions. Resolution No. 03-35 � � SECTION 15. EFFECTIVE DATE. This resolution shall take effect immediately upon adoption. Passed and adopted by the City Commission of the City of Clearwater, Florida, this day of , 2003. — Approved as to form: CITY OF CLEARWATER, FLORIDA Brian J. Aungst, Mayor-Commissioner Attest: Pamela K. Akin, City Attorney Cynthia E. Goudeau, City Clerk Resolution No. 03-35 0 EXHIBIT A FORM OF OFFICIAL NOTICE OF BOND SALE $ * CITY OF CLEAR TWA ER, FLORIDA WATER AND SEWER REVENUE REFUNDING BONDS, SERIES 2003 NOTICE IS HEREBy GIVEN that electronic (as explained below) proposals will be received electronically via PARITY in the manner described below, until 11:00 a.m., Eastern Daylight Savings Time, on October 1, 2003. Bids must be submitted electronically via PARITYin accordance with this Notice of Bond Sale, until 11:00 a.m., Clearwater, Florida time, but no bid will be received after the time for receiving bids specified above. To the extent any instructions or directions set forth in PARITY conflict with this Notice of Bond Sale, the terms of this Notice of Bond Sale shall control. For further information about PARITY, potential bidders may contact the financial advisor to the City, William R. Hough & Co., 100 Second Avenue South, Suite 800, St. Petersburg, Florida 33701, Attn: Kevin Conitz: (727) g95 8853, or PARITy at 40 West 23�d Street, 5�' Floor, New York, New York 10010, telephone (212) 404-8102. In the event of a malfunction in the electronic biddin process, the bid date will automatically change to the next business day as confirmed in a communication through Thompson Municipal Market Monitor (TM3). Form of Series 2003 Bonds The Series 2003 Bonds will be issued in book entry only form, without coupons, in denominations of $5,000 or any integral multiples thereof, and shall be dated October l, 2003. Principal of the Series 2003 Bonds shall be paid to the registered�owners at the designated corporate hust office of Wells Fargo Bank, N.A. (the "Paying Agent and Registrar"), upon presentment and surrender of the Series 2003 Bonds. Interest on the Series 2003 Bonds shall be paid to the registered owners as shown on the registration books maintained by the Registrar, by check or draft mailed to each such owner's address as shown on the registration books maintained by the Registrar as of the fi$eenth (15th) day of the calendar month preceding such interest payment date. Interest will be payable each June 1 and December l, commencing June 1, 2004. Interest will be calculated on the basis of a 360-day year of twelve 30-day months. For so long as The Depository Trust Com an New York, New York, or its nominee, Cede & Co. (collectively, "DTC") is the registered owner of the Series 2003 Bonds, payments of principal of, redemption premium, if any, and interest on the Series 2003 Bonds will be made directly to DTC. Disbursements of such payments to the DTC participants is the responsibility of DTC and further disbursement of such payments from the DTC participants to the beneficial owners of the Series 2003 Bonds is the responsibility of the DTC participants. � * Preliminary, subject to change A-1 Initially one bond will be issued for each maturity of the Series 2003 Bonds in the aggregate principal amount of each such maturity and registered in the name of DTC. DTC, an automated clearing house for securities transactions, will act as securities depository for the Series 2003 Bonds. Purchases of the Series 2003 Bonds will be made in book-entry-only form (without certification). It shall be the responsibility of the Successful Bidder (as hereinafter defined) for the Series 2003 Bonds to furnish to DTC an underwriters' questionnaire and to the City the CUSIP numbers of the Series 2003 Bonds not less than seven (7) days prior to the Closing Date (as hereinafter defined). Maturity Schedule The Series 2003 Bonds will mature on December 1 of the following years in the following principal amounts: Ma� 2004 2005 2006 2007 2008 2009 2010 Series 2003 Bonds Principal Amount* 5,490,000.00 165,000.00 165,000.00 170,000.00 170,000.00 185,000.00 195,000.00 *Preliminary, subject to change Maturitv 2011 2012 2013 2014 2015 2016 2017 2018 Principal Amount* 195,000.00 210,000.00 220,000.00 230,000.00 240,000.00 250,000.00 260,000.00 270,000.00 The Series 2003 Bonds will be sold as serial bonds. Bidders will not be allowed to designate any maturities as one or more term bonds. The Series 2003 Bonds will not be subject to optional redemption prior to their respective maturity dates. Adjustment of Principal Amount After final computation 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 2003 Bonds shown on the schedule of Principal Amounts set forth above (the Maturity Schedule"), by an arnount not to exceed five percent (5%) of the stated amount of each such Principal Amount on the Maturity Schedule and correspondingly adjust the issue size, all calculations to be rounded to the nearest $5,000. ; � A-2 In the event of any such adjustment in the Series 2003 Bonds, no rebidding or recalculation of the bid submitted with respect to such Series 2003 Bonds will be required orpermitted. Ifnecessary, the total purchase price of the Series 2003 Bonds will be increased or decreased in direct proportion to the ratio that the adjustment bears to the aggregate principal amount of the Series 2003 Bonds specified herein; and the Series 2003 Bonds of each maturity, as adjusted, will bear interest at the same rate and must have the same initial reoffering yields as specified in the bid of the Successful Bidder. However, the award will be made to the bidder whose bid produces the lowest true interest cost, calculated as specified below, solely on the basis of the bid for the Series 2003 Bonds offered pursuant to the Bid Maturity Schedule of the relevant series of Series 2003 Bonds, without taking into account any adjustment in the amount of Series 2003 Bonds set forth in the Bid Maturity Schedule. Basis of Award Proposals must be unconditional and only for all the Series 2003 Bonds. The purchase price bid for the Series 2003 Bonds may include a discount (including underwriters' discount and original issue discount) not to exceed two percent (2%) of the principal amount of the Series 2003 Bonds and shall specify how much of the discount is original issue discount. The purchase price bid may also include an original issue premium and shall specify how much of such purchase price is original issue premium. The Series 2003 Bonds will be insured by Financial Security Assurance. Inc. and the City will pay the bond insurance premium from Bond proceeds. The purchase price bid for the Series 2003 Bonds will not deduct the insurance premium. Only the final bid submitted by any bidder through Parity will be considered. The City reserves the right to determine the Successful Bidder for the Series 2003 Bonds, to rej ect any or all bids and to waive any irregularity or informality in any bid. The Series 2003 Bonds will be awarded to the bidder (herein referred to as the "Successful Bidder" as to the Series 2003 Bonds) offering such interest rate or rates and purchase price which will produce the lowest true interest cost to the City over the life of the Series 2003 Bonds. True interest cost for the Series 2003 Bonds (expressed as an annual interest rate) will be that annual interest rate being twice that factor of discount rate, compounded semiannually, which when applied against each semiannual debt service payment (interest, or principal and interest, as due) for the Series 2003 Bonds will equate the sum of such discounted semiannual payments to the bid price (inclusive of accrued interest). Such semiannual debt service payments begin on June 1, 2004. The true interest cost shall be calculated from October 15, 2003, the expected closing date of the Series 2003 Bonds (the "Closing Date") and shall be based upon the principal amounts of each serial maturity set forth in this Notice of Bond Sale and the bid price set forth in the Proposal for the Series 2003 Bonds submitted in accordance with the Notice of Bond Sale. In case of a tie, the City may select the Successful Bidder by lot. It is requested that each Proposal for the Series 2003 Bonds be accompanied by a computation of such true interest cost to the City under the term of the Proposal for Bonds, but such computation is not to be considered as part of the Proposal for Bonds. A-3 Interest Rates Permitted The Series 2003 Bonds shall bear interest expressed in multiples of one-eighth (1/8) or one- twentieth (1/20) of one percent. No coupon interest rate specified for any maturity of the Series 2003 Bonds may be less than one percent (1.0%) or more than five percent (5.0%). Should an interest rate be specified which results in annual interest payments not being equally divisible between the semiannual payments in cents the first semiannual payment will be reduced to the next lower cent and the second semiannual payment will be raised to the next higher cent. It shall not be necessary that all Series 2003 Bonds bear the same rate of interest, provided that all Series 2003 Bonds maturing on the same date shall bear the same rate of interest. A rate of interest based upon the use of split or supplemental interest payments or a zero rate of interest will not be considered. Pavin� A�ent and Re�istrar The Paying Agent and Registrar for the Series 2003 Bonds is Wells Fargo Bank, N.A., through its designated office in Minneapolis, Minnesota. Securitv Principal of and interest on the Series 2003 Bonds to be issued pursuant to Ordinance No. 6915-01, as supplemented, and all required sinking fund, reserve and other payments shall be payable solely from the Net Revenues of Water and Sewer System of the City, together with the earnings thereon derived from the investment thereof in the Funds and Accounts established in the Ordinance and as more fully described in the Preliminary Official Statement. The Series 2003 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional, statutory or charter provision or limitation, and no Bondholder shall ever have the right to require or compel the exercise of the ad valorem t�ing power of the City or taxation of any real or personal property therein for the payment of the principal of and interest on the Series 2003 Bonds or the making of any debt service fund, reserve or other payments provided for in the Resolution. Pur ose Pursuant to the Ordinance, the Series 2003 Bonds are being issued to finance the refunding of the City's Water and Sewer Refunding Revenue Bonds, Series 1993, and pay the costs of issuing the Series 2003 Bonds, including the premium for a municipal bond insurance policy and to fund the reserve fund. Issuance of Series 2003 Bonds The Series 2003 Bonds will be issued and sold by the City of Clearwater, Florida, a municipal corporation organized and existing under the laws ofthe State ofFlorida. The Series 2003 � A-4 Bonds are being issued pursuant to Ordinance No. 6915-01 � enacted November 15, 2001 as supplemented by resolutions (collectively, the "Bond Ordinance ) by the City of Clearwater, Florida (the "City") and pursuant to the provisions of Chapter 166, Florida Statutes, and other applicable provisions of law. Municival Bond Insurance Policv A commitment to issue a municipal bond insurance policy guaranteein a and interest on the Series 2003 Bonds has been obtained from Financial Security Assurance � pal Proposals Proposals for the Series 2003 Bonds are desired on forms which will be furnished by PARITY, on behalf of the City, and be submitted electronically via PARITy. All bidders must submit a"Good Faith Deposit" in the amount of $100,000 (the "Deposit") in the form of a financial surety bond of Financial Security Assurance, Inc. (the "Financial Surety Bond"). Such Financial Surety Bond must be submitted to the City prior to the sale. The Financial Surety Bond must identify the Bidder whose Deposit is guaranteed by such Financial Surety Bond. The successful bidder is required to submit its good faith deposit by wire transfer not later than 2:00 p.m. eastern time, on the next business day following the award, as instructed by the City's Financial Advisor. If such deposit is not received by that time, the City shall make a claim under the Financial Surety Bond to satisfy the good faith deposit requirement. The check of the successful bidder or proceeds of a claim under the Financial Surety Bond, as applicable, will be deposited by the City in an interest-bearing account and be retained and applied towards the purchase price of the Series 2003 Bonds pending full performance by the successful bidder, or will be forfeited to the City and applied as full liquidated damages upon failure of the successful bidder to take up and pay for the Series 2003 Bonds. Any interest earned on the good faith deposit will be retained by and inure to the benefit of the City. If the Series 2003 Bonds are not delivered to the successful bidder within 30 calendar days from the date of sale, without fault upon the part of the successful bidder, such successful bidder shall not thereafter be obligated to take delivery of and pay for the Series 2003 Bonds and the good faith deposit amount will be promptly paid to the successful bidder or Financial Security Assurance, Inc., as applicable. Deliverv and Payment It is anticipated that the Series 2003 Bonds in book entry only form will be available for delivery on October 15, 2003, in New York, New York, at The Depository Trust Company, or some other date and place to be mutually agreed upon by the Successful Bidder and the City against the payment of the purchase price therefor including accrued interest calculated on a 360-day year basis, less the amount of the good faith check, in immediately available Federal Reserve funds without cost to the City. � � A-5 Closing Documents The City will furnish to the Successful Bidder upon delivery of the Series 2003 Bonds the following closing documents in a form satisfactory to Bond Counsel: (1) si�ature and no-litigation certificate; (2) federal tax certificate; (3) certificate regarding information in the Official Statement; and (4) seller's receipt as to payment. A copy of the transcript of the proceedings authorizing the Series 2003 Bonds will be delivered to the Successful Bidder of the Series 2003 Bonds upon request. Copies of the form of such closing papers and certificates may be obtained from the City. Information Statement Section 218.38(1)(b)1, Florida Statutes requires that the City file, within 120 days after delivery of the Series 2003 Bonds, an information statement with the Division of Bond Finance of the State of Florida (the "Division") containing the following informationo (a) the name and address of the managing underwriter, if any, connected with the Series 2003 Bonds; (b) the name and address of any attorney or financial consultant who advised the City with respect to the Series 2003 Bonds; and (c) any fee, bonus, or gratuity paid, in connection with the bond issue, by an underwriter or financial consultant to any person not regularly employed or engaged by such underwriter or consultant and (d) any other fee paid by the City with respect to the Series 2003 Bonds, including any fee paid to attorneys or financial consultants. The Successful Bidder will be required to deliver to the City at or prior to the time of delivery of the Series 2003 Bonds, a statement signed by an authorized officer containing the same information mentioned in (a) and (c) above. The Successful Bidder shall also be required, at or prior to the delivery of the Series 2003 Bonds, to furnish the City with such information concerning the initial prices at which a substantial amount of the Series 2003 Bonds of each maturity were sold to the public as the City shall reasonably request. Pursuant to Section 218.385(2) and (3) of the Florida Statutes, as amended, a truth-in- bonding statement will be required from each bidder as to the Series 2003 Bonds as part of their bid in the following form: "The City of Clearwater, Florida, is proposing to issue $ original aggregate principal amount of Water and Sewer Revenue Refunding Bonds, Series 2003, for the purpose of paying (i) the costs of refunding the City's Water and Sewer Refunding Revenue Bonds, Series 1993, (ii) the costs of issuing the Series 2003 Bonds, and (iii) the premium on the Bond Insurance Policy, all as further described in Ordinance No. 6915-01. The final maturity date of the Series 2003 Bonds is December 1, 2018, and the Series 2003 Bonds are expected to be repaid over a period of fifteen (15) years. At a forecasted average interest rate of % per annum, total interest paid over the life of the Series 2003 Bonds will be $ . The source of repayment or security for this proposal is the Net Revenues (as defined in the Ordinance) and moneys and investments held in the funds created under the said Ordinance. Authorizing the Series 2003 Bonds will result in $ not being available to finance the other capital projects 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 2003 Bonds." 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 2003 Bonds is not includable in the gross income of individuals, however, interest on the Series 2003 Bonds will be included in the calculation of the alternative minimum tax liabilities of corporations. The Code contains other provisions that could result in tax consequences, upon which Bond Counsel renders no opinion, as a result of ownership of the Series 2003 Bonds or the inclusion in certain computations (including, without limitation, those related to the corporate alternative minimum tax and environmental tax) of interest that is excluded from gross income. Official Statement The Preliminary Official Statement, copies of which may be obtained as described below, is in a form "deemed final" by the City for purposes of SEC Rule 15c2-12(b)(1) (except forcertain permitted omissions as described in such rule) but is subject to revision, amendment and completion in a final Official Statement. Upon the sale of the Series 2003 Bonds, the City will publish a final Official Statement in substantially the same form as the Preliminary Official Statement. Copies of the final Official Statement will be provided, at the City's expense, on a timely basis in such quantities as may be necessary for the Successful Bidder's regulatory compliance. It is not the intention or the expectation of the City to print the name(s) of the Successful Bidder as to the Series 2003 Bonds on the cover of the Official Statement. ContinuinE Disclosure The City has covenanted to provide ongoing disclosure in accordance with Rule 15c2-12 of the Securities and Exchange Commission. See "Appendix D-- Form of Continuing Disclosure Certificate" attached to the Preliminary Official Statement. CUSIP Number It is anticipated that CUSIP identification numbers will be printed on the Series 2003 Bonds, but neither the failure to print such number on any Series 2003 Bonds nor any error with respect thereto shall constitute cause for failure or refusal by the Successful Bidder to accept delivery of and pay for the Series 2003 Bonds in accordance with its agreement to purchase the Series 2003 Bonds. All expenses in relation to the printing of CUSIP numbers on the Series 2003 Bonds shall be paid for by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of said number shall be the responsibility of and shall be paid for by the Successful Bidder. A-7 Couies of Documents Copies of the Preliminary Official Statement, this Official Notice of Bond Sale and the Official Bid Form and further information which may be desired, may be obtained from the City's Financial Advisor, William R. Hough & Co., 100 Second Avenue South, Suite 800, St. Petersburg, Florida 33701, Attn: Kevin Conitz: (727) 895 8853. Amendment and Notices Amendments hereto and notices, if any, pertaining to this offering shall be made through Thompson Municipal Maxket Monitor (TM3) or similar information distribution service. CITY OF CLEARWATER, FLORIDA /s/ Brian J. Aun st Mayor-Commissioner � EXHIBIT B FORM OF SUMMARY NOTICE OF SALE CITY OF CLEARWATER, FLORIDA Water and Sewer Revenue Refunding Bonds Series 2003 NOTICE IS HEREBY GNEN, that bids will be received by the City Manager and the Finance Director of the City of Clearwater, Florida, electronically through PARITy, subject to the provisions of the Official Notice of Bond Sale. Sale Date: Time: Bonds Dated Maturities: Maturitv 2004 2005 2006 2007 2008 2009 2010 October 1, 2003 11:00 a.m., E.D.S.T. October 1, 2003 Payable December 1 in the years and amounts as follows: Series 2003 Bonds Principal Amount* 5,490,000.00 165,000.00 165,000.00 170,000.00 170,000.00 185,000.00 195,000.00 *Preliminary, subject to change Interest Payment Dates Legal Opinion: Maturitv 2011 2012 2013 2014 2015 2016 2017 2018 Principal Amount* 195,000.00 210,000.00 220,000.00 230,000.00 240,000.00 250,000.00 260,000.00 270,000.00 Payable June 1 and December 1, commencing June 1, 2004. Bryant Miller & Olive P.A., Tallahassee, Florida For copies 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, William R. Hough & Co., 100 Second Avenue South, Suite 800, St. Petersburg, Florida 33701, Attn: Kevin Conitz: (727) 895 8853. The Preliminary Official Statement may be obtained after September 22, 2003 electronically through Image Master Financial Publishing Inc. at www.munios.com. � : EXHIBIT C FORM OF PRELIMINARy OFFICIAL STATEMENT C-1 Preliminory U�cial Statemc=nt Dated Septernber , 2003 NFW ISSUE - FULL BOOK-ENTRY Ratings: Fitch: "AAA" (Insured) "A" (Underlying) Moody's: "Aaa" (Insured) "A-2" (Underlying) (See "RATINGS," herein) In the opinion of Bond Counse[, assuming continuing compliance by the City with various covenants in the Ordinance (herein defined), uuder existing sta[utes, regulations and judicia[ decisians, the interest on the Series 1003 Bonds will be excluded jrom gross income jor jederal income taY purPoses to the owners [hereof. The Series 2003 Bonds are, under existing laws and regu/ations, alsa exempt jrom inlangible tares imposed pursuan! lo Chapter 199, Florrda Statutes. See "Taz Exemption" herein jor a description oJalternatrve minimum tas treatment and certain other !ax consequences to owners of lhe Series 2003 Bonds. Dated: October 1, 2003 $8,415,000 � CITY OF CLEARWATER, FLORIDA Water and Sewer Revenue Refunding Bonds Series 2003 Due: December 1, as shown below The Water and Sewer Revenue Refunding Bonds, Series 2003 (the "Series 2003 Bonds") of the City of Clearwater, Florida (the "City") aze being issued in fully registered fortn and, when initially issued, will be registered to Cede & Co., as nominee ofThe Depository Trust Company, New York, New York. Wells Fazgo Bank, National Association, Minneapolis, Minnesota, is acting as the Paying Agent and Bond Registrar for the Series 2003 Bonds. The Series 2003 Bonds will be purchased in book-entry form only, in the denomination of 55,000 or any integcal multiple thereo£ There will be no physical delivery ofbond cettificates to individual Bondholders. Interest on the Series 2003 Bonds will be payable semi-annually beginning on June 1, 2004 and on each ]une 1 and December 1 thereafter. Principal of and premium, if any, on the Series 2003 Bonds will be payable at maturity or upon redemption prior to mahuity. The Seriea 2003 Bonds are not subject to redemption prior to maturity. The Series 2003 Bonds are being issued for the pu�poseof(i) refunding and redeeming on December 1, 2003, all of Ihe Outstanding principal amount of the City's Water and Sewer Refunding Revenue Bonds, Series 1993, maturing afier December 1, 2003 (the "Refunded Bonds"), (ii) funding a deposit to the Debt Service Reserve Account for the benefit of the Series 2003 Bonds azd all Outstanding Parity Bonds, (iii) paying certain costs of issuance of the Series 2003 Bonds, including the municipal bond insurance premium. The Series 2003 Bonds and the interest thereon are payable solely from the Net Itevenues derived from the opecation of the System, as fw[her described herein. The lien of the Series 2003 Bonds on the Ne[ Revenues is on a parity with the holders of the City's Outstanding Water and Sewer Revenue Refunding Bonds, Series 1998 and the City's Outstanding Water and Sewer Revenue Bonds, Seties 2002 (the "Parity Bonds"), as further described herein. The scheduled payment of principal ofand interest on the Bonds when due will be guaranteed under an insurance policy to be isswed concuerently with the delivery ofthe Bonds by FINANCIAL SECURITY ASSURANCE INC. For a discussion ofthe terms and provisions ofsuch policy, including the limitations thereof, see "MLTNICIPAL BOND INSURANCE" herein. � ��x• PRINCIPAL AMOUNTS, INTEREST RATES, MATURITIES, PRICES & YIELDS Maturing December l Principal ot the Year Amount Cou on Yfeld 2004 $5,490,000 2005 165,000 2006 165,000 2007 170,000 2008 170,000 2009 185,000 2010 195,000 2011 195,000 58,415,OOOi Serial Bonds Maturing December 1 CUSIP ot the Year 2012 2013 2014 2015 2016 2017 2018 Principal Amount Couaon Yield $210,000 220,000 230,000 240,000 250,000 260,000 270,000 (Accrued interest to be added) ELECTROIVIC BIDS FOR THE SERIES 2003 BONDS WILL BE ACCEPTED IN ACCORDANCE WITH THE OFFICIAL NOTICE OF SALE. CUSIP The Series 2003 Bonds are offered when, os and if issued and accepted by the Underwriter subject to the approva! of lega[ity by Bryant Miller & O[ive, P.A., Tallahassee, Florida, Bond CounseL Certain otker lega! matters wi!! be passed upon for the City by Pamela K. Akin, Esquire, City Attorney, and by Nabors, Ciblin & Nickerson, P.A., Tampa, F[orida, Disclosure Counsel to the City. William R. Hough & Co., St. Petersburg, F[orida is serving as Financia! Advisor to the City. It is expectedthat theSeries 2003 Bonds, in definitive book-entry form, wi[l be available for delivery through DTC in New York, New York on or about October 1 S, 2003. October , 2003 * Preliminary, subjet� to change. CITY OF CLEARWATER, FLORIDA ELECTED OFFICIALS MAYOR - CONIMISSIONER Brian J. Aungst, Sr. COMMISSIONER5 Frank Hibbard Hoyt Hamilton Whitney Gray Bill Jonson APPOINTED OFFICIALS William B. Horne, II, City Manager Pamela K. Akin, Esq., City Attorney Margaret L. Simmons, CPA, Financial Services Adininistrator BOND COUNSEL Bryant Miller & Olive, P.A. Tallahassee, Florida FINANCIAL ADVISOR William R Hough & Co. St. Petersburg, Florida REGISTRAR AND PAYING AGENT Wells Fargo Bank, National Association Minneapolis, Minnesota No dealer, broker, salesman or other person has been authorized to give any information or to make any representations, other than those contained in this Official Statement, in connection with the offering ofthe Series 2003 Bonds described herein, and if given or made, such infom�ationor representations must not be relied upon as hauing been authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell the Series 2003 Bonds or a solicitation of an offer to buy nor shall there be any sale ofthe Series 2003 Bonds by any person in any jurisdiction in which it is ur�lawful for such person to make such offer, solicitation or sale. The informarion set forth herein has been fiunished by the City and by other sources whichare believed to be reliable, but it is not guaruiteed as to accuracy or completeness, and is not to be constnied 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 sha11, 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, TI� UNDERWRITERMAY OVER-ALLOTOR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN TI� MARKET PRICE OF THE SERIES 1998 BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. T'he Series 2003 Bonds have not been registered with the Securities and Exchange Commission underthe Securities Act of 1933, as amended, nor has the Ordinance been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions contained in such acts. The registration or qualification of the Series 2003 Bonds in accordance with applicable provisions of the securities laws of the States, if any, in whichthe 5eries 2003 Bonds have been registered or qualifiedand the exemption from registration or qualification in certain other states cannot be regarded as a recommendation thereof. Neither these States nor any of their agencies have passed upon the merits of the Series 2003 Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. TABLE OF CONTENTS Page INTRODUCTORY STATEMENT . . . . . . . . 1 PLAN OF REFUNDING . . . . . . . . . . . . . . . 2 FUTURE FINANCING OF TI� WATER AND SEWER SYSTEM . . . . . . . . . . . . . . . . . . . . 3 DESCRIPTION OF TT-� SERIES 2003 BONDS .................................... 3 General .......................... 3 Book-Entry Only System . . . . . . . . . . . . . 4 SECURITY FOR THE SERIES 2003 BONDS . . . . . . . . . . . . . . 8 Series 2003 Bonds Not a Debt of the City . . . . . . . . . . . . 9 Parity Bonds . . . . . . . . . . . . . . . . . . . . . 10 MLTNICIPAL BOND INSURANCE . . . . . 10 DEBT SERVICE REQUIREMENTS . . . . . 12 SOURCES AND USES OF FUNDS ..... 13 TI� WATER AND SEWER SYSTEM ... 13 Water System . . . . . . . . . . . . . . . . . . . . 13 Sewer System . . . . . . . . . . . . . . . . . . . . 15 Water and Sewer Capital Improvements . . . . . . . . . . . . . . 17 RATES, FEES AND CHARGES . . . . . . . . 18 FINANCIAL STATEMENTS . . . . . . . . . . 20 INVESTMENT POLICY OF THE CITY .. 20 LITIGATION ....................... 21 RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 21 TAX EXEMPTION . . . . . . . . . . . . . . . . . . 22 Federal Income Tax Matters . . . . . . . . . 22 LEGAL OPINIONS . . . . . . . . . . . . . . . . . . 23 ENFORCEABILITY OF REMEDIES . . . . 23 FINANCIAL ADVISOR . . . . . . . . . . . . . . 23 VERIFICATION OF MATHEMATICAL COMPUTATIONS . . . . . . . . . . . . . . . . . . . 24 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS . . . . . . . . . . . 24 ADVISORS AND CONSULTANTS . . . . . 24 CONTINUING DISCLOSURE . . . . . . . . . 26 CERTIFICATE CONCERNING OFFICIAL STATEMENT . . . . . . . . . . . . . . . . . . . . . . . 26 MISCELLANEOUS . . . . . . . . . . . . . . . . . . 26 Appendices Appendix A General Description of the City and Selected Statistics Appendix B Excerpts from the City's Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2002 Appendix C Form of Ordinance 6915-01 and Resolution 03-35 Appendix D Form of Continuing Disclosure A�nent Appendix E Form of Bond Counsel Opinion Appendix F FormofMunicipalBond Insurance Policy OFFICIAL STATEMENT $8,415,000` CITY OF CLEARWATER, F'�ORIDA WATER AND SEWER REVENUE REFUNDING BONDS, SERIES 2003 INTRODUCTORY STATEMENT The purpose of�is O�icial Statement, whichincludes the cover page, the SummaryStatement and the Appendices, is to provide information concerning the City of Clearwater, Florida (the "City") and the City's $8,415,000* Water and Sewer Revenue Refunding Bonds, Series 2003 (the "Series 2003 Bonds"). The Series 2003 Bonds are being issued for the purpose of (i) refunding and redeeming on December 1, 2003, all of the Outstanding principal amount of the City's Water and Sewer Refunding Revenue Bonds, Series 1993, maturing after December 1, 2003 (the "Refunded Bonds")„ (u) funding a deposit to the Debt Service Reserve Account for the benefit ofthe Series 2003 Bonds and a11 Outstanding Parity Bonds, (ui) paying certain costs of issuance of the Series 2003 Bonds, including the municipal bond insurance premium. The Refunded Bonds (or Bonds refunded by the Refunded Bonds) funded the capital costs ofthe City's water and sewer system(the "System"). The Series 2003 Bonds and the interest thereon are payable solely from the Net Revenues derived from the operation of the System, as further described herein. After giving effect to the refunding of the Refunded Bonds, the lien of the Series 2003 Bonds on the Net Revenues is on a parity with the holders of the City's Outstanding Water and Sewer Revenue Refunding Bonds, Series 1998 (the "Parity Bonds"), as further described herein. 'The scheduled payment of principal of and interest on the Series 2003 Bonds when due will be guaranteed under an insurance policy to be issued concturently with the delivery of the Series 2003 Bonds by Financial Security Assurance Inc., as described herein. For a discussion of the terms and provisions of such policy, including the limitations thereof, see "MUNICIPAL BOND INSURANCE" herein. The Series 2002 Bonds will be issued pursuant to the authority of and in full compliance with (a) the charter ofthe City, (b) the Constitution and the laws of the State of Florida, particulazly Chapter 166, Part II, Florida Statutes, and other applicable provisions of law, and (c) Ordinance No. 3674-84 enacted by the Issuer on August 2, 1984, as amended and supplemented in Ordinance 53 5 5-93, enacted on April 15, 1993, as amended and supplemented 'm Ordinance 6311-98, enacted November 5, 1998 and as further amended and supplemented 'mOrdinance 6915-01, enactedNovember 15, 2001(the "Ordinance") and as further supplemented by Resolution 03-35, adopted by the City on September 18, 2003 (the "Series 2003 Resolution"). Neither the Series 2003 Bonds nor the interest thereon constitute a general obligation or indebtedness ofthe City within the meaning ofany constitutional, statutory or charter provision or limitation. No owner or owners of any Series 2003 Bonds shall ever have the right to compel the exercise of the ad valorem taxing power of the City, or any other taxing power m any form on any real or personal property of the City, to pay the Series 2003 Bonds or the interest thereon. The City shall not be obligated to pay ` Preliminary, subject to change. 1 the Series 2003 Bonds or any interest thereon except from the Net Revenues, in the maruier provided in the Ordinance. A Reserve Account has been established for the benefit of the Series 2003 Bonds and the outstanding Parity Bonds (as herein defined). Upon issuance of the Series 2003 Bonds, the Reserve Account will be funded in an amount equal to the Reserve Account Requirement for Series 2003 Bonds and the Outstanding Parity Bonds. The City covenants in the Ordinance to fix, establish and maintain such rates, and collect such fees, rentals and other charges for the services and facilities ofthe System (as herein defined) and revisethe same fromtime to time whenever necessary as will always provide Gross Revenues in each Fiscal Year sufficient to pay (i) the Cost ofOperation and Maintenance ofthe System in such Fiscal Year, (u) 115% of the Bond Service Requirement for such Fiscal Year on the Outstanding Series 2003 Bonds and on all Outstanding Additional Bonds and Parity Bonds, plus (iii)100% of all reserve and other payments required to be made pursuant to the Ordinance. The City may issue Additional Bonds, payable on a parity from the Net Revenues with the Series 2003 Bonds and the Parity Bonds, for the purpose of refunding a part of the Outstanding Bonds, or financing the cost of extensions, additions and improvements to the System and for the acquisition and construction of, and extensions and improvements to, sewer and/or water systems which are to be consolidated with the System and operated as a single combined utility, provided that, among other requirements, certain earnings tests relating historical Net Revenues to the Maximum Bond Service Requirement of all Bonds outstanding after the issuance of such Additional Bonds can be met. Such historical Net Revenues may be adjusted by the Consulting Engineer as provided in the Ordinance. Definitions of certain words and tem�s having initial capitals used herein and in the Ordinance are contained in the "Conformed Copy of the Ordinance and Amendatory Ordinance" in Appendix C hereto. The references, excerpts and summaries of all documents referred to herein do not purport to be complete sta.tements of the provisions of such documents, and reference is directed to all such documents for full and complete statements of all matters of fact relating to the Series 2003 Bonds, the security for the payment of the Series 2003 Bonds, and the rights and obligations of holders thereof. The information contained 'm this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the holders of the Series 2003 Bonds. PLAN OF REFUNDING In order to achieve debt service savings, from the proceeds of the Series 2003 Bonds, together with other moneys provided by the City, the City will deposit into an irrevocable escrow account (the "EscrowFund") withWells Fargo Banlc, NationalAssociation, Minneapolis, Minnesota, as Escrow Agent, an amount sufficient to pay and redeem on December 1, 2003, all of the Outstanding principal amount of the City's Water and Sewer Refunding Revenue Bonds, Series 1993, maturing after December 1, 2003 � (the "Refunded Bonds"), together withpremium and accrued interest, which Refunded Bonds are currently Outstanding in the aggregate principal amount of $8,290,000. FUTURE FINANCING OF THE WATER AND SEWER SYSTEM Burton& Associates, Jacksonville, Florida (the "Rate Consultant") conducted a rate study in 2001 (the "Ra,te Study"), which consisted of a revenue sufficiency analysis for the period FY 2001 through FY 2006 (the "Forecast Period") to deteimine the projected costs of capital improvements to the System and to determine the adequacy of then-current rates to fund the System's projected costs during the Forecast Period. T'he Rate Study identified a need for approximately $158 million in capital projects for the System for fiscal years 2001 through 2006 to be funded with approximately $5.5 million of available operating revenues after funding debt service, $22.4 millionofRenewal and Replacement Fund revenue and $130.1 millionofrevenue bond proceeds. Proceeds of the Series 2002 Bonds funded approximately $54 million of these capital projects and it is anticipated that the City will issue Bonds in 2004 to fund approximately $35,245,213 in additional projects and $41 million for additional projects in 2006. (See also, "SECURITY FOR TI-� SERIES 2003 BONDS - Parity Bonds"). DE5CRIPTION OF THE SERIES 2003 BONDS General The Series 2003 Bonds will be dated October 1, 2003. The Series 2003 Bonds will bear interest at the rates and mature on December 1 in the amounts and at the times set forth on the cover page of this Official Sta.tement. The Series 2003 Bonds are to be issued as fully registered bonds in denominations of $5,000 or integral multiples thereof. Interest on the Series 2003 Bonds will bepayable onJune 1, 2004 and s�►�„nually thereafter on June 1 and December 1 of each year, by check or ciraft mailed to the registered owners, at their addresses as they appeaz on the registration books of the City maintained by the Bond Registrar, as of the 15th day (whether or not a business day) of the month preceding the interest payment date (the "Record Date"). Owners of $1,000,000 or more in aggregate principal amount of Series 2003 Bonds may receive interest by wire tra,nsfer, at the Owner's expense, to a bank account designated in writing by the Owner not later than the Record Date. Principal of, and premium if any, are payable at maturity, or upon redemption prior to maturity, upon presentation and sutrender thereof at the corporate mxst office of the Paying Agent. Wells Fargo Bank, National Association, Minneapolis, Minnesota, is acting as Paying Agent and Bond Registrar for the Series 2003 Bonds. The Series 2003 Bonds willbe initially issued in the form of a single fully registered Bond for each maturity ofthe Series 2003 Bonds. Upon initial issuance, the ownership of each such Series 2003 Bonds will be registered in the registration books kept by die Bond Registrar, in the name of Cede & Co., as nominee ofThe Depository Trust Company, New York, New York ("DTC"). While held in book-entry form, all payments of principal, interest and premium, if any, on the Series 2003 Bonds will be made to DTC or the DTC Nominee as the sole registered owner of the Series 2003 Bonds and payments to Beneficial Owners will be the responsibility of DTC and the DTC Participants as described below. See "Book-Entry Only System." With respect to Series 2003 Bonds registered in the name of Cede & Co., as nominee of DTC, neither the City, nor the Paying Agent will have any responsibilityor obligationto any DTC Participant ar to any indirect DTC Participant. See "Book-Entry Only System" for the defuution of "DTC Participant." Without lnruti�ng the irr�mediately preceding sentence, neither the City nor the Bond Registrar and the Paying Agent will have any responsibility or obligationwithrespect to: (i) the accuracy of the records of DTC ar any DTC Participant with respect to any ownership interest in the Series 2003 Bonds; (u) the delivery to any DTC Participant or any other person other than a registered owner, as shown m the registration books kept by the Bond Registrar, of any notice with respect to the Series 2003 Bonds, including any notice of redemption; or (iii) the payment to any DTC Participant or any other person, other thana registered owner, as shown inthe registrationbooks kept by the Bond Regishar, of any amount with respect to principal of, premium, ifany, or interest on the Series 2003 Bonds. The City, the Bond Regishar and the Paying Agent may treat and consider the person in whose name each Series 2003 Bonds is registered in the registration books kept by the Bond Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal of, premium, if any, and interest with respect to such Bond, for the purpose of giving notices ofredemptionand other matters with respect to suchBond, forthe purpose ofregistering transfers withrespect to such Bond, and for all other purposes whatsoever. The Paying Agent will pay all principal of, premium, if any, and interest on the Series 2003 Bonds only to or upon the order of the respective registered owners, as shown in the registration books kept by the Bond Registrar, or their respective attorneys duly authorized in writing, as provided in the Ordinance, and all such payrnents will be valid and effectual to satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, and interest on the Series 2003 Bonds to the extent of the sums so paid. No person other than a registered owner, as shown in the registration books kept by the Bond Registrar, will receive a certificated Bond evidencing the obligation of the City to make payments of principal of, premium, if any, and interest on the Series 2003 Bonds pursuant to the provisions of the Ordinance. Series 2003 Bonds Not Subject to Redemption The Series 2003 Bonds are not subject to redemption prior to maturity. Book-Entry Only System The Series 2003 Bonds will be available in book-entry form only, in denominations of $5,000 or any integral muttiple thereof. Purchasers of the Series 2003 Bonds will not receive certificates representing their interests m the Series 2003 Bonds purchased. The Underwriter is to confirm original issuance purchases with statements containing certain teimS of the Series 2003 Bonds purchased. The following infom�ation 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 Tiust Company ("DTC"), New York, New York, will act as securities depository for the Series 2003 Bonds. The Series 2003 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative ofDTC. One fully-registered Series 2003 Bond will be issued for each maturity of the Series 2003 Bonds, as set forth on the inside cover page hereof, and will be deposited with DTC. � DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banlong Law, a'banking organization"wii�m the meaning ofthe 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 17A 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 instn�ments from over 85 counh-ies 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 m 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 EmergingMarkets Clearing Corparation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American StockExchange LLC, and the NationalAssociationofSecurities 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 m the Series 2003 Bonds will be available in book-entry form only, in the principal amount of $5,000 or any integral multiple thereof. Purchasers of beneficial interests in the Series 2003 Bonds will not receive certificates representing their beneficial interests in the Series 2003 Bonds purchased. Each Undeiwriter is to confirm original issuance purchases ofbeneficialinterests withstatements containing certain teims ofthe Series2003 Bonds inwhich such beneficial interests are purchased. Purchases of Series 2003 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2003 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2003 Bonds ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation fromDTC oftheir purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant thnough which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2003 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2003 Bonds, except in the event that use ofthe book-enhy system for the Series 2003 Bonds is discontinued. To facilitate subsequent transfers, all Series 2003 Bonds deposited by Direct Patticipants withDTC are registered 'm the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative ofDTC. The deposit of Series 2003 Bonds with DTC and their registration m the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial 5 ownership. DTC has no lrnowledge of the actual Beneficial Owners of the Series 2003 Bonds; DTC's records reflect only the identityofthe DirectParticipants to whose accounts such Series 2003 Bonds are credited, whichmay or 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, subj ect to any statutory or regulatory requirements as may be in effect from time to time. ThePaying Agent will make payments of principal of, premium, if any, and interest on the Series 2003 Bonds to DTC or suchothernominee, as maybe requested by an authorized representative or DTC, as registered owner of the Series 2003 Bonds. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of fiznds and corresponding detail infoimationfromthe Cityand 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 ofcustomers m bearer formor registered in "street name,"and will be the responsibility of such Participant and not of DTC nor its nominee, the Paying Agent subject to any statutory or regulatory requirements as may be in ef�'ect from ti� to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. The City and the Paying Agent will send redemption notices to DTC. Ifless thanall ofthe Series 2003 Bonds within an issue are being redeemed, DTC's practice is to detemune by lot the amount of interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2003 Bonds unless authorizedbyaDirectParticipant maccordancewithDTC's Procedures. Under its usual procedures, DTC mails an Omnibus Pro�cy to the City as soon as possible after the record date. The Omnibus Pro�ry assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Series 2003 Bonds are credited on the record date (identified 'm a listing attached to the Oinrubus Proxy). THE CITY AND TI-IE PAYING AGENT WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO THEBENEFICIAL OWNERS, DTC PARTICIPANTS OR THE PERSONS FOR WHOM DTC PARTICIPANTS ACT AS NOMINEES WITH RESPECT TO THE SERIES 2003 BONDS FOR Tf� ACCURACY OF RECORDS OF DTC, CEDE & CO. OR ANY DTC PARTICIPANT WITH RESPECT TO TI� SERIES 2003 BONDS OR THE PROVIDING OF NOTICEORPAYMENTOF PRINCIPAL, ORINTEREST, ORANYPREMIUM ON TI� SERIES 2003 BONDS, TO DTC PARTICIPANTS ORBENEFICIAL OWNERS, OR TI� SELECTION OF SERIES 2003 BONDS FOR REDEMPTION. The City and the Paying Agent cannot give any assurances that DTC, DTC Participants or others willdistributepayments ofprincipalof, premium, ifany, and interest onthe Series 2003 Bonds paidto DTC 0 or its nominee, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis or that DTC will serve or act in a manner described in this Official Statement. For every transfer and exchange of beneficial interests in the Series 2003 Bonds, the Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other goveminent charge that may be imposed in relation thereto. DTC may determine to discontinue providing its services with respect to the Series 2003 Bonds at any time by giving notice to the City and the Paying Agent and discharging its responsibilities withrespect thereto under applicable law. Under such circuxnstances, in the event that a successor depository is not obtained, Series 2003 Bonds are required to be printed and delivered. In addition, the City may detemzine to disamtinue the use of book-entry transfers through DTC (or any successor securities depository). Under such circumstances, certificated Series 2003 Bonds aze required to be delivered as described below. In the event that the book-entry only system is discontinued, the following provisions will govern the transfer and exchange of Series 2003 Bonds. The Series 2003 Bonds will be exchanged for an equal aggregate principal amount of corresponding bonds in other authorized denominations and of the same series and mahuity, upon surrender thereof at the principal corporate tnast office of the Bond Registrar. The transfer of any Series 2003 Bonds will be registered on the books maintained by the Bond Registrar for such purpose only upon the surrender theraof to the Bond Registrar with a duly executed written instri.unent of transfer in form and with guaranty of signatures satisfactory to the Bond Registrar, containing written instructions as to the details of transfer of such Series 2003 Bonds, along with the social security number or federal employer identificationnumber of such transferee. The City and the Bond Registrar may charge the registered owners a sum suf�cient to reimburse them for any expenses incurred in making any exchange or transfer after the first such exchange or transfer following the delivery of the Series 2003 Bonds. The Bond Registrar or the City may aLso require payment from the registered owners or their transferees, as the case ma.ybe, ofa sum sufficient to cover any tax, fee or other governmentalcharge that may be imposed in relation thereto. Suchcharges and expenses shall be paid before any such new Series 2003 Bonds shall be delivered. Neither the City nor the Bond Registzar shall be required to register the transfer or exchange of any Series 2003 Bonds during�e period commencing on the fifteenth day (whether or not a business day) of the month next preceding an interest payment date and ending on such interest payment date or, in the case of any proposed redemption of a Series 2003 Bonds, after such Series 2003 Bonds or any portion thereof has been selected for redemption. 7 SECURITY FOR THE 5ERIE5 2003 BONDS Net Revenues. The principalofand premium, ifany, and interest on the Series 2003 Bonds are payable solely from and secured by an irrevocable first lien upon and pledge of the Net Revenues (as hereinafter defined) derived and collected by the City from the operation of the water and sewer system of the City (the "System"), on a parity with the Parity Bonds. 'Net Revenues" are defined by the Ordinance to include all income or eamings, including any income from the investment of funds, derived by the City from the operation of the System after deduction of current expenses, either paid or accrued, for the operation, maintenance and repair ofthe System, but not inch�ding reserves forrenewals and replacements, for extraordinary repairs or any allowance for depreciation. The Series 2003 Bonds do not constitute a general indebtedness ofthe City within the meaning of any constitutional, statutory or charter provision or limitation. The principal of and interest on the Series 2003 Bonds and all required reserve and other payments shall be made solely fromthe Net Revenues. The City shall never be required to levy ad valorem taxes on any property therein to pay the principal of and interest on the Series 2003 Bonds or to make any of the required debt service, reserve or other payments, and any failure to pay the Series 2003 Bonds shall not give rise to a lien upon any property of or in the City, except the Net Revenues. Rate Covenant. In the Ordinance, the City has covenanted to fix, establish and maintain such rates and collect such fees, rentals and other charges for the services and facilities of the System and revise the same from time to time whenever necessary, as will always provide Gross Revenues in each Fiscal Year sufficient to pay the Cost of Operation and Maintenance of the System in such Fiscal Year, one hundred fifteen per centum (115%) of the Bond Service Requirement becoming due in such Fiscal Year on the Outstanding Parity Bonds, on the outstanding Bonds and on all outstanding Additional Bonds, plus one hundred per centum (100%) of all reserve and other payments required to be made pursuant to this Ordinance and the Original Ordinance. Such rates, fees, rentals and other charges shall not be reduced so as to be insufficient to provide Gross Revenues for such purposes. Reserve Account. T'he Ordinance creates a Reserve Account in a sum equal to and sufficient to pay the Maximum Bond Service Reqtrirement on all outstanding Bonds becoming due in any ens�ting Fiscal Year. The Reserve Account will be fully funded after the issuance of the Series 2003 Bonds. No further payments will be required to be made into such Reserve Account as long as there shall remain on deposit therein a sum equal to the Maximum Bond Service Requirement on all outstanding Bonds becoming due in any ensuing Fiscal Year. Moneys in the Reserve Account shall be used only forthe purpose ofpayment ofmat�aring principal of or interest on the Bonds whenthe moneys inthe Sinldng Fund are insufficient therefor. Interest earnings on funds held in the Reserve Account will be transferred to the Revenue Fund In lieu of or in substitution for a11 or any part of the required deposits to the Reserve Account, the City may provide for the deposit of a surety bond or insurance policy from a reputable insurer in accordance with the provisions of the Ordinance. 3 Any withdrawals from the Reserve Account will be subsequently restored from the first moneys available m the Revenue Fund after all required current payments into the Sinkmg Fund and into the Reserve Account, including all deficiencies for prior payments, have been made in full. Additional Bonds. Additional Bonds, payable on a parity from the Net Revenues with the Series 2003 Bonds and the Parity Bonds, may be issued for the purposes of refunding a part of the outstanding Bonds or financing the cost of extensions, additions and improvements to the System and for the acquisition and construction of, and e�ctensions, additions and impmvements to, sewer and/or water systems which are to be consolidated withthe System and operated as a single combined utility. Additional Bonds, other than for refunding purposes, will be issued only upon compliance with all of the conditions set forth in the Ordinance, including the following: (1) There shall ha.ve been obtained and filed with the Clerk a certificate of the Finance Director stating: (a) that the books and records ofthe Cityrelative to the Systemhave been audited by qualified and recognized fumof independent certified public accountants; (b) based on such audited financial sfatement, that the amount of the adjusted Net Revenues derived for the Fiscal Year preceding the date of issuance of the proposed Additional Bonds or for any twelve (12) consecutive months during the eighteen (18) months immediately preceding the date of issuance of the Additional Bonds with respect to which such certificate is made, adjusted as herein below provided; and (c) based on such audited financial statement, that the aggregate amount ofsuchNet Revenues, as adjusted, for the period for whichsuchNet Revenues are being certified is equal to not less than 120% of the Ma�ci-mum Bond Service Requirement becoming due in any Fiscal Year there-after on (i) all Parity Bonds and the Bonds issued under the Ordinance, if any, then Outstanding, and (u) on the Additional Bonds with respect to which such certificate is made. (2) Upon recommendation of the Consulting Engincers, the Net Revenues certified pursuant to (b) in the previous paragraph may be adjusted by including: (a) 100% of the additionalNet Revenues which in the opinion ofthe Consulting Engineer would have been derived by the City from rate increases adopted before the Additional Bonds are issued, if such rate increases had been implemented before the commencement of the period for which such Net Revenues are being certified, and (b) 100% of the additional Net Revenues estimated by the Consulting Engineer to be derived during the first full twelve month period after the facilities of the System are extended, enlarged, improved or added to with the proceeds of the Additional Bonds with respect to which such certificate is made. The adjustments described 'm (b) ofthis paragraph may only be made ifthe Net Revenues as adjusted under (a) of the prior paragraph for the period for which such Net Revenues are being certified equals at least 1.00 times the 1Vlaximum Bond Service Requirement becoming due in any Fiscal Year thereafter on (i) all Bonds then outstanding; and (u) on the Additional Bonds with respect to which such certificate is made. See Appendix C, "Conformed Copy of the Ordinance and Amendatory Ordinance." See also "Parity Bonds" below under this principal caption. Series 2003 Bonds Not a Debt of the City The Series 2003 Bonds shall not constitute a general obligation or indebtedness of the City within the meaning of any constitutional, statutory or charter provision or limitation, and no Bondholder shall ever have the right to compel the exercise of the ad valorem taxing power of the City or taxation in any form of real or personal property therein for the payment of the 0 principal of and interest on the Series 2003 Bonds or to compel the City to pay such principal and interest from any otherfunds of the City except the Net Revenues. The Series 2003 Bonds shall not constitute a lien upon any property of or in the City, but shall constitute a lien only on the Net Revenues all in the manner provided in the Ordinance. Parity Bonds After giving effect to the refunding ofthe Refunded Bonds (see 'PLAN OF REFiJNDING"), there will remain Outstanding under the Resolution, the City's Water and Sewer Revenue Bonds, Series 1998 (the "Series 1998 Bonds") ofwhich$55,254,825.30 Compound Accreted Value will remain outstariding as of December 1, 2003 and the City's Water and Sewer Revenue Bonds, Series 2002 (the "Series 2002 Bonds") ofwhich$57,820,000 willremain Outstanding as ofDecember 1, 2003. The Series 1998 Bonds and the Series 2002 Bonds rank on a parity with the Series 2003 Bonds as to the lien and pledge of the Net Revenues and hereinafter referred to collectively as the "Parity Bonds"). See also the information appearing under the caption "FLTTCTRE FINANCING OF Tf� WATER AND SEWER SYSTEM" conceming the anticipated issuance of additional parity Bonds in 2004 and 2006 to fmance additional capital projects. MLTNICIPAL BOND INSURANCE Bond Insurance Policy Concurrently with the issuance of the Bonds, Financial Security Assurance Inc. ("Financial Security") will issue its Municipal Bond Insura,nce Policy for the Series 2003 Bonds (the "Policy"). The Policy guarantees the scheduled payment of principal of and interest on the Series 2003 Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. Financial Security Assurance Inc. Financial Security is a New York domiciled insurance company and a wholly owned subsidiary of Financial Security Assurance Holdings Ltd. ("Holdings"). Holdings is an indirect subsidiary of Dexia, S.A., a publicly held Belgian corporation. Dexia, S.A., through its bank subsidiaries, is primarily engaged in the business of public finance in France, Belgium and other European countries. No shareholder of Holdings or Financial Security is liable for the obligations of Financial Security. At June 30, 2003, Financial Security's total policyholders' sutplus and contingencyreserves were approximately $1,986,068,000 and its total unearnedpremiumreserve was approximately $1,195,179,000 in accordance with statutory accounting practices. At June 30, 2003, Financial Security's total shareholders' equity was approximately $2,152,547,000 and its total net unearned premium reserve was approximately $1,010,472,000 in accordance with generally accepted accounting principles. 10 The financial statements included as exhibits to the annual and quarterly reports filed by Holdings with the Securities and Exchange Commission are hereby incorporated herein by reference. Also incorporated herein by reference are any such financial statements so filed from the date of this Of�'icial Statement Lmtilthe tertninationofthe offering of the Series 2003 Bonds. Copies ofmaterials incorporated by reference will be provided uponrequest to Financial Security Assurance Inc.: 350 Park Avenue, New York, New York 10022, Attention: Communications Department (telephone (212) 826-0100). The Policydoes not protect investors against changes in market value of the Series 2003 Bonds, whichmarket value maybe impaired as a result ofchanges mprevailing interest rates, changes mapplicable ratings or other causes. Financial Security makes no representation regarding the Series 2003 Bonds or the advisabilityofinvesting inthe Series 2003 Bonds. Financial Security malces no representation regarding the Official Statement, nor has it participated inthe preparationthereof, except that Financial Security has provided to the Issuer the information presented under this caption for inclusion in the Official Statement. 11 DEBT SERVICE REQUIREMENTS Fiscal Year Ending September 30 Pari , Bonds 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Totals $3,547,151.26 4,146,438.76 9,472,557.51 9,532,701.26 9,455,301.26 9,530,313.76 9,496,482.51 9,492,851.26 9,546,651.26 9,518,751.26 9,483,148.76 9,452,896.26 9,502,552.51 9,506,918.76 9,505,916.26 9,470,375.63 3,695,035.00 3,698,692.50 3,700,956.25 3,706,000.00 3,709,125.00 3,716,250.00 3,722,000.00 3,726,125.00 3,733,250.00 3,742,875.00 3,754,500.00 3,762,750.00 3,772,250.00 3�7,375.00 $192,888,192.03 Series 2003 Bonds Principal Interest Total 12 Parity and Series 2003 Bonds Total Debt Service R�, Lureinents SOURCES AND USES OF FUNDS SOURCES Principal Amount of Series 2003 Bonds $8,415,000* Accrued Interest Total Sources USES Deposit to Escrow Fund for Refunded Bonds Deposit to Reserve Account Deposit to Interest Account Costs of Issuance including Undervvrite�s Discount and Bond Insurance Premium Total Uses Prelimu�ary, subject to change. THE WATER AND SEWER SYSTEM Water System Water Su�lv. Water supply for the area served by the System is currently derived from existing City wellfields and by the purchase of water from Pinellas County. The City has a bulk water purchase agreement with Pinellas County that supplies up to 80 percent of the service area's water needs on an as needed basis. The City currently has fifteen (15) production wells scattered throughout the service area, each equipped with automatic control systems. The City water system and the Pinellas County water system are interconnected at seven (7) locations. Under the City's contract with Pinellas County, Pinellas County agrees to supply the City with sufficient water for the designated service area, based on a formula set forth therein, and the City agrees to purchase a minirrnam of 1,460,000,000 gallons ofwater from Pinellas County within each calendar year. The current contract rate is approximately $1.79 per thousand gallons. The rate is set by the Board of County Conunissioners and is based on a prorated share of revenue cost requirements of the Pinellas County water system including production and transmission costs required for the supply of water to the Pinellas County water users. Pinellas County obtains appmximately 70 million gallons per day or 100% of its water supply from Tampa Bay Water, a Regional Water Supply Authority ("Tampa Bay Water") (the successor to West Coast Regional Water Supply Authority). It is entitled under contract to obtain 100% of its water needs per day from Tampa Bay Water. The City currently acquires approximately 10.5 to 11.0 million ga.11ons per day from Pinellas County. 13 The City's water distribution system consists of approximately 515 miles of water mains ranging up to 20 inches in diameter. The distribution system contains numerous interconnections betweenpiping, making larger size mains unnecessary forexisting flow conditions. City water storage within the distribution system consists of a series of ground-level water storage pumping systems and elevatedtank water storage. The City currently has four 5-million gallon ground-level water storage reservoirs and three 1-million gallon elevated water storage tanks. T'he City's elevated storage tanks are all steel vessels designed to ride on the distribution system. They provide unmediate response to pressure and flow demands in the local areas. Raw water within the City of Clearwater has historically been of adequate quality to meet minunum regulatory requirements and has received treatment only in the form of disinfection via chlorination with a lunited amount ofaerationfor sulfide control. Additional treatment has been added in the form of corrosion control (polyphosphate). This type of treatment to date has been compatible with the quality of bulk water purchased from the County. Continual use of the City's wells has led to increasing mineralization of the City supply, but there has been no danger to public health. years: The following chart shows the average daily water flow on an annualized basis over the past six Source and Volume of Water Pumped (in million gallons per day, averaged over the Fiscal Year) FY 1997 1998 1999 2000 2001 2002 Gi We 3.448 3.140 3.070 3.047 3.067 2.258 Coun 10.412 11.540 12.094 11.528 11.260 11.739 Total 13.860 14.680 15.164 14.575 14.327 13.997 The table below illustrates the growth in number of customers over the past five years. 14 Historical Growth in Number of Water Customers (all figures are as of September of the year indicated) Year 1997 1998 1999 2000 2001 2002 Water Customers 38,294 38,440 39,931 39,562 40,167 40,340 The ten largest water customers and their 2002 water use including water revenues received are shown in the table below: Ten Largest Water Customers Fiscal Year Ending September 30, 2002 Name of User 1. Church of Scientology 2. Pinellas County Schools 3. Morton Plant Hospital 4. Clearwater Housing Authority 5. Sheraton Sand Key 6. AGH Leasing L/P 7. Ultimar II Condo Assoc, Inc. 8. Lewis Real Estate, Inc. 9. Lane Clearwater L/P 10. Countryside Mall Total Source: City of Clearwater 15 Water Used (in 100 Cubic Feet� 113,261 71,831 53,959 51,761 51,365 41,040 39,385 29,387 29,216 21,650 Revenues Produced $318,322 236,754 222,366 134,251 121,877 98,969 95,363 83,282 75,551 71,074 508,855 $1,457,809 Sewer System The City's sanitary sewage collection system is composed of slightly more than 321 miles of connector mau�s, utilizuig 791ift stations. Three treatment plants with a combined design capacity of 28.5 mgd (million gallons per day) are on line and operational. These three plants are the Marshall Street Facility, the Northeast Facility and the East Facility. The wastewater pollution control plants, Marshall Street, constructed in the 1950's, East, constructed 'm the 1960's and Northeast, constructed in the 1970's, have been expanded several times to their current design capacities of ten million, five million and thirteen and one-half millian gallons per day respectively. All tluee plants utilize Advanced Wastewater Treatment processes. Their current systems include nitrogen and phosphorous removal, anaerobic digestion, sludge thickening and provide highly treated reclaimed water for private, commercial and municipal use. The Marshall Street and Northeast plants also provide for sludge dewatering. The Northeast Biosolids Management Facility was constructed m 1994. It is designed to process thirty-three dry tons per day of sludge that meets EPA and Florida Department of Environmental protection sludge criteria. 16 years: The following chart shows the average daily sewage flow on an annualized basis over the past five Average Sewage Flow Fiscal Year 1998 1999 2000 2001 2002 Annual Avg. Daily Flow In MGD 17.9 16.5 15.4 14.4 14.3 The following table illustrates the growth in number of customers over the past five years. Historical Growth in Number of Sewer Customers* Year 1998 1999 2000 2001 2002 *All figures are as of September 30 of the year indicated. 1% Sewer Customers 33,174 33,383 33,075 32,933 33,215 The ten largest sewer customers and their 2001 water use including sewer revenues received are shown in the table below: Ten Largest Sewer Customers Fiscal Year Ending September 30, 2002 Name of User l. Church of Scientology 2. Pinellas County Schools 3. Morton Plant Mease Hospital 4. United Dominion Realty Tn�st 5. Cleaa,iwwater Housing Authority 6. AGH Leasing L/P 7. Sheraton Sand Key 8. Lewis Real Estate, Inc. 9. Lane Clearwater L/P 10. Bay Aristocrat Village Tota,l Source: City of Clearwater Water and Sewer Capital Improvements Sewer Used (in 100 Cubic Feet� 89,648 49,291 67,535 51,365 50,332 41,040 32,799 29,387 27,538 24.253 463,188 Revenues Produced $ 270,190 263,643 241,242 148,558 143,880 117,400 95,663 83,710 79,054 68,908 $1,512,248 Far the next five years the primaiy objectives of the capital improvement program are expansion ofthe reclaimed water prograln, continued renewal and replacement as needed of the water, wastewater collection and water pollution control systems and upgrading the water pollution control system to meet regulatory requirements. The budgeted funding for fiscal years 2001 through 2006 to meet the capital improvement program objectives over that period is $157,610,000. 18 RATE5, FEES AND CHARGES Current Rates, Fees and Charges The City uses a three-tiered rate structure for water and sewer usage. The base rate includes a ininiinum usage for residential and nonresidential water rates. Any usage over the minimum is billed at one rate per 100 cubic feet up to a designated level and at a second rate for usage over that level. For irrigation, there is a base ra.te, with no miniinurn, and a charge per 100 cubic feet of water usage up to a designated level and a higher charge for usage over that amount. The sewer base rate includes a nununtun usage and a fixed charge per l 00cubic feet of water usage over the basic allowance. The minunum usage and second tier usage level vary with the size of the meters. For Fiscal Year 2002 there were no changes to the three-tiered rate structure for water or sewer usage. Effective October 1, 2000 the basis for billing was converted from cubic feet to gallons. The following rates reflect an increase of 7% effective April 1, 2002 for water and sewer services. Residential and Nonresidential Water Rates (1) Size of Meter Under 1 inch 1 inch I.5 inch 2 inch 3 or 2 inch marufold 4 inch 6 inch 8 inch October 1, October I, October 1, 1998(21 1999 (2) 2000 (3) 7.08 15.93 237.39 550.47 849.60 1,635.48 4,200.21 7,080.00 7.08 15.93 237.39 550.47 849.60 1,635.48 4,200.21 7,080.00 7.53 17.57 251.00 584.83 901.09 1,734.41 4,455.25 7530.00 (1) Rates in table are minimum monthly charges per meter size as of the date indicated (2) Cubic Feet (3) Gallons October 1 Octoberl 1 2001 f3� 2002 f31 8.07 18.83 269.00 626.77 965.71 1,858.79 4,774.75 8,070.00 8.64 20.16 288.00 671.04 1,033.92 1,990.08. 5,112.00 8,640.00 flny usage over the mn�rnnn is billed at one rate per 1,000 gallons up to a designated level and at a second rate for usage over that level. 19 Rates for Irrigation (Lawn) Meters (1) October 1, October 1, October 1, October 1, April 1, 1998 (2) 1999 � 2000 (3) 2001 (3) 2002 (31 Size of Meter Under 1 inch 1 inch 1.5 inch 2 inch 3 or 2 inch manifold 4 inch 6 inch 2.52 7.57 37.85 105.99 209.45 403.76 1,218.85 (1) Rates in table are base rates with no minimum (2) Cubic feet (3) Gallons 2.52 7.57 37.85 105.99 209.45 403.76 1,218.85 2.69 8.07 4035 112.99 223.27 430.41 1,299.29 2.88 8.64 43.20 120.96 239.04 460.80 ],391.04 3.08 9.24 46.20 129.36 255.64 492.80 1,487.64 Since there is no minimum associated with the base rate, there is a charge per 1,000 gallons up to a designated level which starts immediately. There is a higher charge for usage above that amount. Sewer Rates (1) October 1, October 1, October 1, October 1, October 1, 1998 (21 1999 (2) 2000 (3l 2001 (3) 2002 (3) Size of Meter Under 1 inch 9.44 9.72 10.38 1 inch 21.24 21.87 24.22 1.5 inch 316.24 325.62 346.00 2 inch 733.96 755.73 806.18 3 or 2 inch manifold 1,132.80 1,166.40 1,242.14 4 inch 2,180.64 2,24532 2,239.86 6 inch 5,600.28 5,76639 6,141.5 8 inch 9,440.00 9,720.00 10,380.00 Per 1,000 gallons of water used over that allowed in minimum 2.36 2.43 3.46 (1) Rates in table are minimum monthly chazge per meter size as of date indicated (2) Cubic Feet (3) Gallons 20 11.10 25.90 370.00 862.10 1,32830 2,556.70 6,567.50 11,100.00 3.70 ] 1.88 27.72 396.00 922.68 1,421.64 2,73636 7,029.00 11,880.00 3.96 Debt Service Coverage By Historical Net Revenues Fiscal Years Ended September 30 1998 1999 2000 2001 2002 Net Revenues Available for Debt Service (1) $] 1,702,739 $I 1,044,714 $11,523,950 $12,149,447 $10,900,123 Annual Debt Service 7,174,738 6,583,1'79 6,286,403 6,278,690 6,282,880 Coverage ].63 1.68 1.83 ].94 1.73 (1) Revenues used in calculation include interest earnings and exclude extraordinary gain and contributed revenues. Expenses used exclude depreciation (and similar non-cash expenses), amortization of bond discount and issue costs, bond interest, sinkingfund and reserve requirements and exVaordinary loss. Source: City of Clearwater. Rate Study and Rate Increases As a result of the Rate Study (see "FUTLTRE FINANCING OF THE WATER AND SEWER SYSTEM" above), the City enacted Ordinance No. 6695-01 on March l, 2001 (the "Rate Ordinance"), which increased water and sewer rates by 7% on each of July 1, 2001, April 1, 2002, January l, 2003, October 1, 2003 and October 1, 2004. Following the enactment ofthe Rate Ordinance the information in the analysis contained in the Rate Study was updated 'ni a report dated July, 2001 (the Rate Study as so updated is herein referred to as the "Rate Study"). The Rate Study concludes that: "The analysis demonstrates that the 7% rate increases adopted by the City through FY 2005 are sufficient to provide fiuzding for a11 system requirements. In addition, an increase of approximately 7.25% will be required at the beginning of FY 2006 to fund expected costs during that year." FINANCIAL STATEMENTS The combined financial statements and Water and Sewer enterprise fund financial statements of the Cityat September 3 0, 2002 and for the Fiscal Year then ended, appended hereto as Appendix B, have been excerpted from the financial statements contained 'm the City's Comprehensive Annual Financial Reports for the Fiscal Year ending September 30, 2002. INVESTIVIENT POLICY OF THE CIT'Y Pursuant to the requirements of Section 218.45, Florida Statutes, the City adopted a written investment policy which applies to all funds held by or for the benefit of the City Commission (except for proceeds ofbond issues whichare deposited 'm escrow and debt service funds and governed by their bond documents) and funds of Constitutional Officers and other component units of the City. 21 The objectives of the investment policy, listed in order in order of importance, are: Safety of principal 2. Provision of suf�cient liquidity 3• Optimization of retum witlun the constraints of safety and liquidity The inveshnent policy limits the securities eligible for inclusion in the City's portfolio. The City will attempt to maintain a weighted average mahxrity of its investments at or below three years; however, the average maturity of investments may not exceed four years. To enhance safety, the investrnent policyrequires the diversification of the portfolio to reduce the risk of loss resulting from over-concentration of assets m a specific class of security. The investment policy also requires the preparation of periodic reports for the City Commission of all outstanding securities by class or type, book value, income earned and market value as of the report date. Notwithstanding the foregoing, moneys held 'm the fwids and accounts established under the Ordinance may be invested only in Authorized Investments, as described in the prdinance. LTTIGATION In the opinion of the City Attorney, no legalproceedings are pending or threatened that materially af�'ect the City's ability to perform its obligations to the holders of the Series 2003 Bonds or that materially affect the Pledged Revenues. In the opinion of the CityAttorney, there is no litigationor controversy of any nature now pending or, to the City's knowledge, tlueatened to restrain or enjoin the issuance, sale, execution or delivery ofthe Series 2003 Bonds or in any way contesting the validity ofthe Series 2003 Bonds or any proceedings of the City taken with respect to the authorization, sale or issuance of the Series 2003 Bonds or the pledge or application of any moneys provided for the payment of the Series 2003 Bonds. RATINGS Moody's Investors Service and Fitch Ratings have assigned ratings of "A" and "A-2,"respectively, to the Series 2003 Bonds without regard to the municipal bond insurance policy. It is anticipated that Mooc�y's Investors Service and Fitch Ratings will assign ratings of "Aaa," and "AAA," respectively, to the Series 2003 Bonds, with the understanding that, upon delivery of the Series 2003 Bonds, the municipal bond insurance policy will be issued by Financial Security. Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings should be obtained from the respective rating agency. Generally, a rating agency bases its rating on the infoimation and materials funushed to it and on investigations, studies and assinnptions of its own. There is no assurance such ratings will continue for any given period oftime or that such ratings will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Series 2003 Bonds. 22 TAX EXEMPTION Federal Income Tax Matters The Internal Revenue Code of 1986, as amended (the "Code") establishes certain requirements which must be met subsequent to the issuance and delivery of the Bonds m order that interest on the Bonds be and remain excluded from gross income for purposes of federal income taxation. Non-compliance ma.y 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 aze 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 existuig laws, regulations, judicial decisions and n�lings, interest onthe Bonds is excluded from gross inwme 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 altemative mu�imum tax imposed on individuals or corporations; however, interest on the Bonds may be subject to the altemative minimum tax when any Bond is held by a corporation. The alternative minimum taxable income ofa corporation must be increased by 75% ofthe excess of such corporation's adjusted ciurent eamings over its alternative mu�nnum taxable income (before this adjustment and the alternative tax net operating loss deduction). "Adjusted Cuirent Earnings" will include interest on the Bonds_ Except as described above, Bond Counsel will eacpress no opinion regarding the federal income tax consequences resulting from the ownership of, receipt or accnial ofinterest on, or disposition ofBonds. Prospective purchasers of Bonds should be aware that the ownership of Bonds may r�esult in collateral federal income tax consequences, including (i) the denial of a deduction for interest on indebtedness inctured or continued to purchase or caary 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 forpurposes of a bra.nch profits tax, (iv) the inclusionofinterest onBonds inpassive income subject to federal income taxation of certain S corporations with Subchapter C eamings 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 ta�c purposes. PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE BONDS AND THE RECEIPTORACCRUALOF Tf�INTEREST'THEREONMAYHAVEADVERSEFEDERALTAX CONSEQUENCES FOR CERTAIlV INDIVIDUAL ANDCORPORATE REGISTERED OWNERS. PROSPECTIVE REGISTERED OWNERS SHOLTLD CONSULT WITH THEIRTAX SPECIALISTS FOR INFORMATION IN THAT REGARD. During recent years legislative proposals have been introduced in Congress, and 'm some cases enacted that altered certain federal tax consequences resulting from the ownership of obligations that are similar to the Bonds. In some cases these proposals have contained provisions that altered these consequences on a retroactive basis. Such alteration of federal tax consequences may have affected the 23 market value ofobligations similaz to the Bonds. From time to time, legislative proposals are pending which could have an effect on both the federal tax consequences resulting from ownership of Bonds and their market value. No assurance can be given that legislative proposals will not be introduced or enacted that would or might apply to, or have an adverse effect upon, the Bonds. Florida Tax Matters On the date of delivery of the Bonds, Bond Counsel will issue an opinion to the effect that 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. LEGAL OPINIONS Legalmatters incident to the authorization, issuance and sale ofthe Series 2003 Bonds are subject to the approval of Bryant Miller & Olive, P.A., Tallahassee, Florida, Bond Counsel, whose approving opinion will be printed on the Series 2003 Bonds and will be m substantially the form set forth in APPENDIX E. Certain other legal ma.tters will be passed upon far the City by Pamela K Akin, Esquire, City Attomey and by Nabors, Giblin & Nickerson, P.A., Tampa, Florida, Disclosure Counsel to the City. ENFORCEABILITY OF REMEDIES The remedies available to the Holders of the Series 2003 Bonds upon an Event of Default under the Ordinance are in many respects dependent upon judicial actions whichare often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, the remedies specified by the Ordinance may not be readily available or may be limited. The various legal opinions to be delivered concuirently with the delivery of the Series 2003 Bonds 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 enacted before or after such delivery. The remedies granted to the Bondholders under the Ordinance do not include the power to accelerate the principal ofthe Series 2003 Bonds. FINANCIAL ADVISOR William R Hough & Co. served as independent financial advisor to the City with respect to the issuance and sale of the Series 2003 Bonds. The Financial Advisor assisted in the preparation of this Official Statement and in other matters relating to the planning, shuctuting and issuance of the Series 2003 Bonds. William R. Hough & Co. did not engage in any underwriting activities with regard to the issuance and sale of the Series 2003 Bonds. The Financial Advisor is not obligated to undertalce and has not undertalcen 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 undertaldng by the City to provide continuing secondary market disclosure. William R. Hough & Co. ma.y assist the City in bidding certain investments on behalf of the City which may result in additional fees being paid to William R Hough & Co. 24 VERIFICATION OF MATHEMATICAL COMPUTATIONS At the time of the delivery of the Series 2003, Bonds, Causey Demgen & Moore, Inc., Denver, Colorado, a firm of independerrt certified public accountants, will deliver a report on the mathematical accuracy of the computations contained in schedules provided to them and prepared by the Financial Advisor on behalf of the City relating to (1) the suf�ciency of the anticipated cash and maturing principal amounts and interest on the Federal Securities to pay, when due, the principal, whether at maturity or upon prior redemption, interest and ca11 premium requirements of the Refunded Bonds and (2) the "yield" on the Series 2003 Bonds and on the Federal Securities considered by Bond Counsel m connection with their opinion that the Series 2003 Bonds are not "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended. DISCLOSURE REQUIRED gy FLORIDA BLUE SKY REGULATIONS Section 517.051, Florida Statutes, as amended, and the regulations promulgated thereunder (the "Disclosure Act") require that the City make a fuIl and fair disclosure ofany bonds or other debt obligations that it has issued or guaranteed and that are or have been in default as to principal or interest at any time after December 31, 1975 (including bonds or other debt obligations for which it has served only as a conduit issuer such as industrial development or private activity bonds issued on behalf of private businesses). The City is not and has not since December 31, 1975 been in default as to principal and interest on its bonds or other debt obligations (see, however, disclosure which is being made in the next paragraph related to conduit indebtedness). The City hereby makes the following disclosure regarding a default on an issue of industrial development bonds not related to any direct indebtedness of the City, as it is aware of a prior default in 1990 withrespect to an issue ofindustrialrevenue bonds for whichthe City served only as a conduit issuer. The City was not liable to pay the principal of or interest on such bonds except from payments made to it by the private company on whose behalf such bonds were issued and no funds of the City were used to pay such bonds or the interest thereon. Although the City is not aware of any other defaults with respect to bonds or other debt oblig•ations as to which rt has served only as a conduit issuer, it has not undertaken an independent review or investigation of such bonds or other debt obligations. 25 ADVISORS AND CONSULTANTS The City has retained advisors and consultants m connection withthe issuance of the Series 2003 Bonds. These advisors and consultants are compensated from a portion of the proceeds of the Series 2003 Bonds, identified as "Costs ofIssuance" under the heading "ESTIlVIATED SOURCES AND USES OF FLINDS" herein; and such compensation, is, in some instances, contingent upon the issuance of the Bonds and the receipt of the proceeds thereof. 26 Financial Advisor. The City has retained William R Hough & Co., St. Petersburg, Florida, as Financial Advisor. The fees of the Financial Advisor will be paid from proceeds of the Series 2003 Bonds and such payment is contingent upon the issuance of the Series 2003 Bonds. Bond Counsel. Bryant Miller & Olive, P.A., Tallahassee, Florida represents the City as Bond Counsel. The fees of Bond Counsel will be paid from proceeds of the Bonds, and such payment is contingent upon the issuance of the Bonds. Disclosure Counsel. Nabors, Giblin & Nickerson, P.A., Tampa, Florida represents the City as Disclosure Counsel. The fees of Disclosure Counsel will be paid from proceeds of the Bonds, and such payment is contingent upon the issuance of the Bonds. CONTINUING DISCLOSURE The City has covenanted for the benefit of the holders and beneficial owners of the Series 2003 Bonds to provide certain financial information and operating data relating to the City by not later than June 30 in each year commencing June 30, 2004 (the "Annual Report"), and to provide notices of the occurrence ofcertain enumerated events, ifdeemed by the City to be material. The Annual Report will be filed by the City with each Nationally Recognized Municipal Securities Information Repository ("NRMSIR"), and withthe State ofFlorida Repository, ifand whencreated. Thenotices ofma.terial events will be filed by the City with the NRMSIR and with the State of Florida Repository, if and when created. The form of Continuing Disclosure Certificate containing the specific nature of the information to be contained in the Annual Report or the notices of material events appears in "APPENDIX F- FORM OF CONTINUING DISCLOSURE CERTIFICATE." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). The Cityhas never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events. CERTIFICATE CONCERNING OFFICIAL STATEMENT Concurrently with the delivery of the Series 2003 Bonds, the City will furnish its certificate, executed by the Mayor or Vice-Mayor of the City, to the effect that, to the best ofhis or her lrnowledge, this Official Statement, as of its date and as of the date of delivery of the Series 2003 Bonds, does not contain any untrue statements of material fact and does not omit to state a material fact which should be included herein for the purpose for which this Official Statement is to be used, or which is necessary to make the statements contained herein, in the light of the circumstances under which they were made, not misleading. MISCELLANEOUS The references, excerpts and sununaries of all docutnents, resolutions andJor ordinances referred to herein do not purport to be complete statements ofthe provisions of such documents, resolutions and/or ordinances and reference is directed to all such documents, resolutions and/or ordinances for full and complete statements of all matters of fact relating to the Series 2003 Bonds, the security for and the 27 repayment of the Series 2003 Bonds and the rights and obligations ofthe Holders thereof. Copies of such documents, resolutions and ordinances may be obtained from the City Clerk's Office. So far as any statements made in this Of�icial Statement involve matters of opinion or of estimates, whether or not expressly stated, they are set forth as such and not as representations of fact. No representa.tion is made that any of such statements will be realized. Neither this Official Statement nor any statement which may have been orally or in writing is to be construed as a contract withthe Holders of the Series 2003 Bonds. The executi� and delivery of this Official Statement by the Mayor-Commissioner ofthe City has been duly authorized by the City Commission. CITY OF CLEARWATER, FLpItIDA Brian J. Aungst, Sr., Mayor-Cominissioner William B. Home, II, City Manager 28 APPENDIX A GENERAL INFORMATION REGARDING THE CITY GENERAI. INFORMATION RELATING TO THE CITY OF CLEARWATER, FLORIDA Location APPENDIX A The City of Clearwater (the "City"), the county seat of Pinellas County (the fifth most populous county in Florida), is geographically located m the middle of the west coast of Floricla on the Gulf of Mexico. It is situated approxirnately 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 8.61 square miles of waterways and lakes. Clearwater Beach, a corporate part ofthe 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, aparhments and condominiums offer pleasant, semi-tropical island accommodations to permanent residents and winter and summer visitors. History The area now lrnown as Clearwater was first explored in 1528 by Panfile de Narvaez, a Spanish explorer who encountered a large tribe ofIndians, whichhis anny 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 rt"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 arowid the time of the Seminole Wars. After the wars ended, the territory was opened by the Federal govemment for homesteading under the Armed Occupation Act. The first land title was granted in 1842. The eazly settlement, named "Clear Water Harbor," was incoiporated in 1897. "Clear Water" later became one word and "Harbor" was dropped in 1906 when Pinellas County was created by an act of the State Legislature. In May 1911, Clearwater became the County Seat and Clearwater was chartered as a municipality on May 27, 1915. Government and Administration Clearwater has a comtnission-city manager formofgovernment. Four commissioners and a mayor- commissioner are elected at large to serve overlapping three-year terms. They appoint the city manager and the city attomey. All other administrative and professional positions are appointed by the city manager in accordance with the City's Civil Service System. A-1 The City has approximately 1,835 employees, covered by the City's Civil Service law relating to recnutment, promotion, evaluation and discipline based on merit principles. Four employee unions represent the City's civil labor force: two units of the Fraternal Order of Police; one of the International Association of Fire Fighters; and one from the Communications Workers of America. Transportation Pinellas County and Clearwater are served by three major causeways and bridges over Tampa Bay, by U. S. 19 and I-275 to the north and south, by I-4 and U.S. 60 to the east. State Roads 590 and 686 also afford access to the City. Tampa International Airport, located approximately twenty miles from downtown Clearwater, provides air travel access with approximately 260 national and intemational flights daily. Limousine and taxi seivice to and from the airport is availa.ble from Clearwater and throughout Pinellas County. St. Petersburg/Clearwater International Airport, five miles from downtown Clearwater, offers regularly scheduled passenger service and charter and special group flights, on a more limitedbasis to both domestic and foreign destinations, particulazly to Canada, Me�cico, and Central and SouthAmerica The Executive Airpark, which is slightly over a mile from the downtown business section, provides service and maintenance for private plane owners. The airport has one 3,000 foot hard-surface 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. Pinellas Suncoast Transit System maintains 54 routes in 19 municipalities in Pinellas County. Utilities, Public Service and Community Facilities The City owns and operates its own water and wastewater collection systems. Water is obtained from 17 deep wells owned and operated by the City (approximately 20-25%) and from wholesale purchases from the Pinellas County Water System (approximately 75-80%). Total daily average is approximately 29 milliongallons per day. The wastewater collection prograin provides for the transmission of wastewater through the City's underground sewer mains, collectors and interceptor lines and for the maintenance, repair and replacement of 363 miles of sanitary sewer lines. The Department of Public Works maintains 304 miles of paved streets, 10.5 miles of unpaved streets, approximately 147 miles of storm sewer mau�s, and approximately 559 miles of water mains. A-2 Electric power is provided by Florida Power Corporation and telephone service is provided by Verizon of Florida, Inc. Time Warner and Verizonprovide cable television service under franchises with the City. Loca1 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 far easy access. The City offers over 42 acres of public beach front, 1,130 acres of parks, 31 playgrounds, numerous athletic courts and fields, five swunmuig pools, a 6,917 seat baseball and softball stadium, golf course, civic and recreational centers, 7.4 miles of recreational paths, boat ramps and a 209 slip yacht basin and marina. The Philadelphia Phillies conduct spring tiaining at the municipal baseball stadium and have a long-term contract for fann club t►aining on Clearwater's specially constructed facilities during the Winter Instructiona.l League Prograln. Clearwater is the home of the Clearwater Bombers, a na.tional amateur fastpitch softball team. Tourism The State ofFlorida reported 75.5 milliontourists came to Florida. during the year 2002. This was an increase of 8% ahead of the 69.8 million visrtors for the year 2001 and nearly 4% better than the previous record 72.8 million visitors in 2000. Tourism is a$5.2 billion industry annually to the County. Pinellas County is ranked seventh of the top ten destinations in Florida and generated 5 million ovemight guests and 7. 5 million day visitors m 2002. Clearwate�s Fun N Sun Festival each spring attracts thousands of visitors. Educafion The Pinellas County School District is the seventh largest in the State and operates a total of 143 schools comprising elementary through high school, exceptional, alternarive and vocational schools within the County and serves more than 110,000 students. During the 2001-2002 school year, Pinellas County Schools expects enrollment ofmore than 16,293 compared to 15,978 during the 2000-2001 school year with students attending 80 elementary, 23 middle and 16 high schools along with five exceptional education centers, two alternative schools and four charter schools. The district also operates three community schools, three adult education/learning centers, two techrucal education centers and one secondary vocational center. Private schools and academies are also located within or near the City limits. In addition, St. Petersburg College has a Clearwater campus. Eckerd College in St. Petersburg, Beacon College in Largo, Stetson University College of Law in Gulfport, the University of South Florida and the University of Tampa in Tampa offer nearby college and post-graduate education. Industry, Commerce and Labor Light, clean industry is encouraged in Clearwater. In 1957, the City of Clearwater developed a 100 acre industrial park adjacent to the Clearwater Airpark (Executive Airport) and to the CSX A-3 Transportation Company. There is also a privately owned, 35 acre industrial park. Large industries located near Clearwater include Honeywell, General Electric, Ur1ISYS, Concept and Hercules Defense Electronics Systems, Inc. During the 1999 fiscal year Il1�IRglobal Corp. ("IMR") occupied its new world headquarters m downtown Clearwater. IMR represents an important step in revitalizing downtowri Clearwater and attracting technology companies to the area. Pension Plan The Employees' Pension Plan and the Fireman's Pension Plan are self-administered by the City. City contributions for fiscal year ending 2002 were $4,439,829 to the Employees' Plan and $1,153,732 to the Fireman's Plan, and were in accordance with actuarially deternuned funding requirements. In addition, supplemental pensions exist for certified Police Officers and Firefighters, funded solely from excise ta��es on certa.in 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 Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 (a) Pem�anent Population 100,768 100,604 101,162 101,867 102,472 102,874 104,281 104,454 108,787 109,231 Demographic Information Last Ten Fiscal Years (b) Per Capita Income 24,470 Not avail. 22,789 24,696 26,050 27,311 28,367 30,633 31,658 27,704 (c) Median A� 42.3 42.9 42.2 42.1 43.3 43.6 43.9 44.2 43.0 43.0 (d) School Enrollment 11,584 10,043 10,284 11,906 15,264 13,714 14,551 15,978 16,293 17,047 (e) Unemployment Rate %�. 6.1 5.5 4.8 4.2 3.7 2.9 3.0 2.7 2.6 3.9 Source: City of Clearwater, Florida Comprehensive Annual Financial Report for period ending September 30, 2002. (a) UniversityofFlorida, Bureau ofEconomic and Business Research, Florida StatisticalAbstract 2002. (b) Data is for Pinellas County. Source is the University of Florida, Bureau of Economic and Business Research, Florida Statistical Abstract 2002. (c) UniversityofFlorida, BureauofEconomic and Business Research, Florida StatisticalAbstract 2002. (d) Pinellas County School District. (e) University of Florida, Bureau ofEconomic and Business Research, Florida Statistical Abstract 2002, as of December 31 of the current fiscal year. NOTE: Data is for an unspecified point in each year, not specifically September 30. 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LP Ltd. California State Teachers Taylor, John S. III Excel Realty Tnist, Inc. Branch Sunset Association Clearwater Land Co. Sand Key Association Ltd. Northwood Plaza ZOM Bayside Arbors Ltd. Walmart Stores, Inc. Subtotal All Others Total City of Clearwater, Florida Principal Taxpayers* Year Ended September 30, 2001 T,y�e of Business Shopping Center Apartment Complex Landowner Shopping Center Shopping Center Adult Congregate Facility Hotel Shopping Center Apartment Complex Shopping Center Assessed Value* $ 89,035,400 27,543,800 26,993,400 25,084,500 24,959,200 23,813,600 23,485,800 23,325,100 22,685,800 19.140,700 306,067,300 4.824.002.670 $5.130.069.970 Percentage to Total Assessed Value 1.74% 0.54 0.53 0.49 0.49 0.46 0.46 0.45 0.44 0.37 5.97 94.03 100.00% * Based on non-exempt real properly assessed taxable values. Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September30, 2002; Pinellas CountyPropertyAppraiser, 2001 taxrolls for2002 collections. A-10 City of Clearwater, Florida Ratio of Net General Bonded Debt to Taxable Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years Ratio of Net Net. Taxable Net General General Assessed General Bonded Debt Bonded Fiscal Value Bonded To Assessed Debt Year Po ati n 000 1 Debt V u Per Ca�ita 1992 99,856 4,179,582 452,779 .O1 4.53 1993 100,768 4,188,105 348,478 .O1 3.46 1994 100,604 4,181,314 242,700 .O1 2.39 1995 101,162 4,186,108 133,597 .00 1.30 1996 101,867 4,252,433 21,598 .00 0.21 1997 102,472 4,376,559 165,000 .00 1.61 1998 102,874 4,494,262 33,750 .00 0.33 1999 104,281 4,692,398 0 .00 0.00 2000 104,454 4,903,478 0 .00 0.00 2001 108,787 5,208,787 0 .00 0.00 2002 109,231 5,688,426 0 .00 0.00 Source: City of Clearwater, Florida, Comprehensive Annual Financial Report for period ending September 30, 2002. (1) Values listed are for year of collections. [Reinainder of page intentionally left blank] A-11 City of Clearwater, Florida Computation of Legal Debt Margin September 30, 2002 Assessed Valuation of Non-Exempt Real Estate(a) Times: Twenty Percent Limitation per City Charter Equals Legal Indebtedness Limitation 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 Gross Debt $8,360,000 12,375,000 7,895,000 19,435,000 52,301,781 58,680,000 7,275,000 24,685,000 46,445,000 11,360,000 14,810,000 14.031,247 $277.653.028 $5,130,069,970 x .20 $ 1.026.013,994 Less Sinking Fund Assets 7,500 42,083 2,917 9,258,500 4,454,185 3,551,469 110,000 4,250,000 1,103,427 0 $22.780,080 Net Debt Subject to Limitation 8,352,500 12,332,917 7,892,083 10,176,500 47,847;596 55,128,531 7,165,000 24,685,000 42,195,000 10,256,573 14,810,000 14.031;247 $254.872:948 Legal Indebtedness Margin $771,141.046 Source: City of Clearwater, Florida., Comprehensive Annual Financial Report for period ending September 30, 2002. (a) Valuation listed is from 2000 tax year for 2001 collections. A-12 City of Clearwater, Florida Computation of Direct and Overlapping Debt September 30, 2001 Govemmental Unit City of Clearwater Pinellas County School Board Net Debt OutstandinQ $ $70,894,996 Percent 100% 14% Amount E� $9,925,299 (a) Applicable Net Debt Percentage is based on ratio of City to County Taxable values for 2002 collections ($5,130,069,970/$37,671,431,940 = 13.62%). A-13 APPENDIX B EXCERPTS FROM THE CITY'S COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2002 � Grant Thornton T � Aecouatants and Management Consultants Re ort of Inde nde t Certified PuEilic Accountants Honorable Mayor-Commissioner, �� City Commissioners and City Manager , � City of Clearwater. �lorida !', We have audited the accompanying financ9al statements of tfie governmental activi6es, the business- type activities, each major fund, and the aggregate remaining fund information of the City of Clearwater, � Florida (the City), as of and for the year ended September 30, 2002. which coilectively comprise the ,: Cit�s basic financial statements as listed in the table of contents. We have also audited the fnancial statements of each of the Cit�s nonmajor govemmental, nonmajor enterprise, internal service and � fiduciary funds presented as supplementary informa6on in the accompanying combining and individual fund financaal statemenis as of and for the year ended September 30, 2002, as listed in the table of contents. We did not audit the financial statements of the Ciearwater powntown Development Baard. a component un'st. Those financial statements were audited by other auditors whose report #hereon has '� been furnished to us, and our opinion, insofar as it relates to the amounts included for the Clearwater Downtown Development Board, is based solely on the repor# of the other auditors. These financial statements are the responsibility of the Ciiy's management Our responsibility is to express an opinion • on these financiai statements based an our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards appticable to financial audiis containecf in Govemment Auditing Standards, issued by the Comptroller General of the United States of America. Those standards require that we pfan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement An audif indudes examining, on a test basis, evidence supporting the amounts and disclosures in tt�e financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as wett as evaluating the overall financial statement presentation. We believe that our audii and the report of other auditors provide a reasonabte basis for our opinions. _ In our opinion, based on our audit and tFre report of other auditors, the financial statements referred to above present fairly, in all maEerial respects, the respecfive financial position of the gove�nmerttal i� activities, the business-type activit'tes, the discretety presenfed component unit, each major fund, and the aggregate remaining fund informatian of ti�e City of Clearwater, Florida as of September 30, 2002, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, ;: the �espective financia! position of each nonmajor govemmental, nonmajor enterprise, intemal senrice, and fiduciary fund of #he City of Clearwater, Florida as of September 30, 2002„ and the respective � a changes in financial position and cash flows. where appiicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 to the basic financial statements. effective October 1, 2001, the City adopted Govemmental Accounting Standards Board Statement (GASB) No. 34, Basic Financial Sfafemenfs - and ManagemenYs Discussion and Analysis - for State and Local Govemments, GASB Statement No. 37, 8asic Financial Statements - and Managemenf's Discussion and Analysis - for State and Local Governments: Omnibus, and GASB Statement No. 38, Certain Financial Statement Note Disclosu�es. Suite 3850 {: 101 E. Kennedy Bfvd Tampa, FL 33602-5152 � : T 813.229.720] � F 8I3.223.3015 W www.grantthomton.com Grant ThornMn LLP US Member of Grant Thornton Mternaifonal Ir� accordance with Government Auditing Sfandards, we have aiso issued a report dated January 10, � 2003 on our consideration oi the City's intema) cont�ol over financial repo�ting and our tests of ifs compliance with certain provisions of laws, regulations, contracts and grants. That repo�t is an integral parE of an audit perfomted in accordance wifh Govemment Auditing Sfandards and should be read in •� canjunction with this report in considering the results of our audi� The ManagemenYs Discussion and Analysis and the pe�sion plan required supplementary information on pages 3 and 73, respectively, are not a required part of the basic financial statements but a�e ' supplementary informatior� requi�eii by the Govemmental Accounting Sfandards Board. We have � ,. applied certain limited proceduras, which consisted principally of inquiries of management regarding the methods of ineasuremertt and presentation of the supplementary informa#ion. However, we did not audit -� the ir�formatior� and express no opinion on it. Our audit was cflr�ducted for the purpose of forming opinions on the financial statements that collectively comprise the Cit�s basic financial statements. The introductory section and statistical tables are �� presented #or purposes of additional anatysis and are not a required part of the basic financial statements. The introductory section and stafistical tables have not been subjected to the auditing procedures applled in the audit af the basic financial statement, and accordingiy, we express no opinion � j on them. The accompanying schedule of federal and state financial assisiance for the year ended September 30, 2002 is presentecf for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A 133, Audifs of Sfates, Lacal Govemments, and Non—Pr�frt Organizations, Secfion 215.97, Florida Statutes and Chapter 10.550 rules of the Auditor General, and is not a required pa�t of the basic financial statements. Such information has been subjected to the audiang procedures applied in the audit of the basic financiaE statements and, in our opinion, is fairly stated, in a(I material respects,.in reia#ion to the basic financial statements taken as a whole. Tampa, �torida January 90, 2003 /��"i"v� L_.C�/ 2 % E ., .y :, „ L i ; i s � E ( i ! i � ! i � J c � i � : t i. i r . I � Management's Discussion and Analysis � i Management's Discusslon and Anafysis provides the reader with a narrative overview and anafysis of the City's financial activities for the fiscal year ended September 30, 2002. The Managemeni's ! i Discussion and AnaJysls (MD & A) should be read in conjunction with the Cit}�s Transmittal Letter, i� which begins on page vii of this repori. �. � This is the first year the City of Clearwater has presented its basic �rnancfal siatements under the new I; financial reporting mode! required by ti�e Govemmental Accounting Standards Board (GASB) 1 i Statement Number 34.. 8ecause this new reporting model changes significarttiy not only the presenEation of financial data, but aEso the manner in wiiich the information is recorded, prior year f�� comparative information for this reporting period's M�8�A has not been included. This deficiency is a �' transition issue and prior year compa�ati�e in#ormaiion wilf be provided in the future� efiect[ve with the � 1 fiscal year 20Q3 MD&A. � _, ` Financia! Highlights ; �. The Cit�s assets exceeded its Uabilities at the close of fiscal year 2002 by $4i 0.8 million (net assets). s r Of this amount, $160.9 million (unrestrided net assefs} may. be used to meet the governmenYs € j; ongoing obligations to citizens and creditors. The City's total net assets increased by $33.? milfion (or 8.9%). The governmentai net assets �° increased by $20.2 million (or 12.f►%) whfle the business-rype net assets increased by $13.6 milqon t , (or 6.2%). A significant factor in #he increase in govemmental net assets was current year grants and donations �; re[ated to major construction projects of approximateiy $8.5 millfon as detailed ir� the Government- ;� wide Financial Analysis that fo!lows. �b The increase in business-type net assets is primarily due to rate increases for Stormwater and Water �� & Sewer utilities, along with corrtributions and grants from other govemments and devefopers, as i: discussed in the following anatysis oi business-type actitities. At September 30, 2002, the City's govemmental funds reported combined ending fund balances of �f $102.9 miltion, an increase of $'17.6 miliion (or 20.6°k) in comparison with the prior year. Of this � amount, $49.3 miAion (or 48.0°�) is avalleble for spending at the govemmenYs discretior� (unreserved fund balance). �� At September 30, 2002, unreserved fund balance for the Generai Fund was $i2,7 millton, or 15.8°k � of total generaf fund expenditures. Total actual revenues for the General Fund exceeded final bucfgeted revenues by $0.8 miilion, iotal �� actual expenditures were less than budgeted expenditures by $2.1 million� for a combined savings of 2 $2.9 miUion. ._ ; �. � Overview of the Financial Statements Thfs discussion and analysis (MD&A) is intended to serve as an introdiiction to the City oi Clearwate�'s basic financial statements. The City's basic iinancia! statements are comprised of three components: 1) govemment-wide financial statemenis, 2) fund �nancial statements, and 3) notes to the financia! stafements. This report also contains other supplementary information in addition #o the basic financia4 sta#ements themselves. �3 Government-Wide Financial Statements The government-wide financial statements are the statement of net assets and the statement of acifvitiss. These statements report information about the City as a whole using accounting methods similar to thosa used by private-sector businesses. Emphasis is placed on the net assets of governmenfa! activities and business-type activitles, and the change in net assets. Governmental activit�es are principally supported by taxes and €ntergovemmental revenues. Govemmental activities include most of the City's basic services, including police� fire, public works, parks and recreation, and general adminlsiration. Business-type activities are in#ended to recover all or a signiflcant portion of their costs fhrough user fees and charges. The Cit�is water and sewer system, stormwater system, gas system, solid waste, recycling, marine, aviatlon, convention cen#er, and parking system operatians are reported as business-type activities. • The staiement of nef assets presenis informaiion on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over dme, increases or decreases in net assets may serve as a useful ind�ator as to whether the financial position of the City is improving or deterlorating. Net assets are reported in three major categories: 1} i�vested in capita! assets, net of related debt; 2) restricted; and 3) unrestrtcted. • The siatement of activitfes presents information showir�g how the City's net assets changed as a result of the year's activi�es. Ali changes i� net assets are recorded in the period in which the unde�iying event takes place, which may differ irom the period in which cash is received or disbursed. The Sta#ement o# Activities displays the expense of the Cit�s various programs net of retated revenues. as well as a separate presentation of revenues available ior general purposes. The government-wide financial sta#ements include not only the City oi Clearwater itself (known as the primarygovernmen�, but also the legally separate Downtown Development Board {DDB). The DDB, though legally separate, is included as a componeni unit because it was created by City ordinance and the City is ihereby able to impose Its will on #he organization. ln addition it is the opinion of the Cit�is management that exclusion of the DDB f�om the Cit�s financial statements would cause the financial statements to be incomplete. The Clearwater Redevelopmsnt Agency (CRA), though alsa legatly separate, is reported as part of the pr3marygovemmentdue to the Cfty Commission serving as the CRA's goveming board. �und Financial Statements A fund is a grouping of related accounts that is used to malntain control over resources that have been segregated for specific activi�es or objecttves. The fund financial statements provide detailed information about the City's major funds — not the Ctty as a whole. Fund arxounting helps to ensu�e and demonstrate compliance wifh finance-related legal requirements. Based on restrlctlons on the use of monies, the Ciry has established many funds that account .for the mulfitude of services p�ovided to residents. These fund financial statements focus on the Cit�s mosi significant funds: governmental, proprietary, and fiduciary. Governmental funds Govemmenia! funds are used to report most of the City's basic services. These funds are used to account for essentially the same functlons reported as governmental activitles in the govemment- wide financial statements. The funds focus on the inflows and outflows of currenf resources and the balances vf spendable resources available ai the end of the fiscal yea�. Such informaUon may be useful in evaluating a government's near-term financing requirements. !. �� i. r. � � � T� i.� � .� 1 �� ii ,� 'S �, _� � FS ,, ;i i i 1 � ;{ ;t 1i .� _ .� �! i. � � �� q i. I i-. << Because the focus of govemmental funds is narrower than that of the govemment-wide #inancial i-� statements, it is useful to compare the information presenied for govsmmenta! funds with similar ;; information presented for governmental activities In the govemment-wide financial statements. By doing so, readers may better understand the long-term impact of the govemmenYs near-term �; financing decisions. Both the govemmental fund balance sheet and the govemmental fund statement ;� of revenues, expenditures, and char3ges in fund balances provide a reconciliatlon to facititate this i� comparison between govemmental funds and govemmental activities. :' The Cfty maintains fourteen individual govemmental funds. Information is presented separately in the i: governmental funds balance sheet and in the govemmental funds statement of revenues, �, expenditures, and chartges in fund balances for the General� Spscial Developmenf, and Capitai lmprovement funds, which are considered to be major funds. Data from the other eleven �f� governmentai funds are combined into a stngle aggregatec! presentation. Indivldual fund data for : each of these nonmajor govemmental funds is provided in the form of combining statements in the supplementary informa#ion section of this report. �� t 7he City adopts annual appropriated budgets for the General. Special Development, and Community `' Redevelopment Agency funds. A budgetary comparison statement has been provided for these ,, f�nds to demonstrate budgetary compliance. �: F ' �: �� t; t: f t � it ,; i: Proprietary funds The C'riy maintains two different types of proprietary funds. Enferprise funds are used to repart the same functions presented as business-type actfvities in the govemment-wide financial statements. 7he C[ty uses enterprise funds to account for the flscal activities related to water and sewer, gas, solid waste and stormwater utilitiea, abng with recycling. marine, aviatfon, parking system, and conventton center operations. lntemal service funds are an accounting device used to accumulate and allocate costs intemally among the City's various functions. fniemal service funds that predominantEy benefit govemmental activities are the General Services and Central Insurance funds. These funds account ior the City's building maintenance, custodial servicas, self-insurance program, risk rnanagement program, anc! emptoyee group insurance, and have been aggregated and included within the governmenfal activities in ti3e government-wide financial statements. intema! servlce funds thai predominantly benefit business-type activities (or enterprise funds} are the Garage and Administrative Services funds. These funds account for the Cit�is vehfcle acquuition and maintenance, and various support activities including data processing, legal, telecommunications, postal, and printing services. They have been aggregated and included wiihin the business-type activities in the govemment-wide financial statemenis. Proprietary funds provide the same type of information as the govemment-wide financia) statements, only in mo�e detail. The proprietary fund financial statements provide separate information for the Water and Sewer Utility, Gas Utility, Solid Waste Utility, and Stormwater Utility enterprise funds, which are considered to be major tunds of the City. The remaining five non-mafor enterprise funds are combined into a single aggregated presentafion in ihe proprietary fund financia! statements. Similarty, governmental activity intemal servfce funds are aggregated into a single presentation, as are business-type activity intemal service funds. lr�dividual fund data for the non-major enterprise funds and the internal service funds is provided in the form of combining sfatements in the supplementary irtformation section of this repart. f; i : Fiduciary funds � .; Fiduclary funds are used to account for resources held for the beneid of parties outside the government. Fiduciary funds are not reflected in the govemment-wide financial statements because the resources of the fiduciary funds are not available to support the City's own programs. The `° accounting used for fiduciary funds is similar to proprietary funds. r; �: t. 5 Nates to the Financial Statements The notes to the financla! statemenfs provide additlonal information that is essential for a fult understanding of the inforrnation provided in the govemment-wlde and fund financiai statements. The notes also present certain required supplementary information conceming the Clty's progress in funding Its obligatlon to provide pension benefits to its employees. Other Information In addition to the basic financial statements and accompanying notes, this report a(so presents certain requlred supplemeniary information conceming the City's progress in iunding its obligatior� ta provide pension benefits to its empfoyees. The combining statements ref.erred to ea�lier in connection with non-major govemmen#al funds, non- major enterp�ise funds. and intemal service fu�ds, are presented immedfately following the required supplementary inforrnation. Government-Wide Financial Analysis Because this is the first year to �eport under the new standard (GASB Statement 34), comparison to the prior year is not feasible. I� subsequent years, this section will discuss ar�d analyze significant differences. As noted earlier, net assets may senre over time as a useful indicator o# a govemment's financiat position. In the case of the City, assets exceeded liabifi�es Dy $410.8 miilion at the close of the fiscal year ended September 30, 2UO2. The City is able to report posiWe bafances i� ali three categories of net asseis, both for the govemment as a whole, as we11 as for its separate govemmental and business-type activities. Assets Current and other assets Capital assets Total assets Liabillties Current and other liabilities Long-term debt outstanding: Due within one year Due in more than one year Total IlabiEities Net assets: fnvested in capital assets, net of related debt Restricted Unrest�cted Total net assets City of Cl,eacwater, Flo�ida Net Assets as of September 30, 2002 Primary Qovemment Com onent Unit earwa er Oowntown Governmental Business-type Developmenf Activities Adlvities Total Board $184,778,262 $150�759,253 $ 335,537,515 $ 349,061 130 450 2� 28�� 4��,� 9, - 3 , 2 , 52,432,626 10.311,507 62,444,133 206,289 7,486,413 10,319,570 17,805,983 - 75 474 516 _187'21��1,953 2�$$86b,�. $� �7� 53,854,081 93,694,326 147,648,407 62,452,451 39,724,&19 102,177,070 63 728 429 97 218,069 160 946 498 �'3�i;$8i-' '�$i36.'�T,diT , � :� „., s' i i L , 3 ' i $� ; .; r� _� -� _� � �: >� ,� _� .� :; ,� ,� f J „ ;; 48,593 ; � , A Iarge portion of the Ctty's net assets (35.99'a) reflects its investment in capital assets (e.g., land, land improvements, buildings, and equipment}, less any related ouistanding debt used to acquire � �.i ,, ,; g ii � T � 1 i � I 1 � f i! .� (`ti i; t: �� !i those assets. The City uses these capital assets io provide services to citizens, and consequently these assets are not available for fuiure spending. Although the City's investment in capital assets is reported nei of related debt, it should be noted that the resources needed to repay this debt must be provided from other resources, since the capiial assels themseives will not be used to liquidate these IiabElities. An additionaf portion of the Cit�s � net assefs (24.9%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($160.9 million) may be used to meet the govemmenYs ongoing obligations to citizens and creditors. Changes in Net Assets The following table reflects the changes in net assets for the year ended September 30, 2002. Since this is the first year the City has prepared financial statements following the GASB Statement 34 ��; implemeniation, revenue and expense comparis�ns to 200i are not available. In future years, when prior-year intormation is available, a comparative analysis of government-wide data witl be presented. rr f , �_ � � r = F E� f L! Changes !n Net Assets For the Year Ended September 30, 2002 Revenues Program revenues Charges for services Operating granFS and contribuiions Capital grants and contributians General revenues: Property taxes Sales iaxes Franchise fees and utility taxes Othertaxes Other Totai revenues Expenses General Government Public Safety Physical Environment Transportation Economic Environmeni Human Servic:es Culture and Recreation {nterest on Long-term Debt Water and Sewer Utility Gas Uiility Solid Waste Utility Stormwater Utility Other Total expenses lncrease in net assets before transfers 7ransters Increase in nef assets Net assets - beginning Nei assets - ending Component Primary Government Unit eZ`T aiwate � Downtown Govermental Business-type Developme�t Activites Activities Total Board $ 17,973,384 $ 98,504,808 $ 116,478,192 $ - 6,111,789 - 6, i 11.789 2,882 9,787,351 4,300,651 i4,088,002 - 30,322,411 - 30,322,411 172,045 14,663,969 - 14,863,969 - 25,359,362 - 25,359,362 - 9,153,976 - 9,953,976 - 5,184,077 3 083,160 8,287,237 68,322 1, �, 105,888, 1 4, , 38 2� 11,646,74t - 11,646,741 - 45,135,649 - 45,135,649 - 2,888,504. - 2,886.504 � - 10.120,224 - 10,120,224 - 3,230,524 - 3,230,524 - 555,395 - 555,395 - 22,230,715 - 22,230,715 - 2,962,848 - 2,962,849 - - 37,470,508 37,470,508 - - 23,573,611 23,573,611 - - 14,397,892 14,397,892 - - 5,458,556 5,458,556 - 11,057 400 11,057 400 191,277 ,7 8,601 1,9 .9 7 190, ,568 191.277 19,787,71 S 13,930,652 33,718,370 51,972 375,677 375,677 - - 0, 63,395 13, ,975 33, 8,370 —`3 ,9 159 971 566 217,082,039 377,053,605 �3,�J379) , , ��'3b.8�7�i"d- , . �� 4._. 7 Governmental Activities The increase in governmenta! activities nef assets totaled $20.2 million, or 60% of the total increase in net assets for the City. Key elements of this increase are as follows; • Contribution from Pinel[as County of $5 milGon towards construction of the new Memorial Causeway Bridge. • Increase of approximately $3.8 million in the net pe�sion asset due to legally required (per ordinance governing the plan) Employees' Pension Pfan contributions in excess of actuarially required contributions. • Donations and grants for construction of the new Main & North Gresnwood branch fibraries of $2.4 million. • Contributions from Pinellas Counfy and the State of Fbrida of $0.6 and $0.5 million, respectively, towards the construction of a new community sports complex to include a spring training siadium for the Philadelphia Phillies major league baseball organization. The cost of all Governmental activities this year was $98.7 million. However, as shown on tiie Statement of Activities, the amount that the City's taxpayers ultimately financed for these activities through taxes was only $64.8 million because some of the cost was paid for by those who directly benefited from the programs ($18.0 million) or by other governments arid a+ganizations that subsidized certain programs with grants and contribudons ($15.9 miflion). � Expenses Expenses and Program Revenaes - Governmental Activities ■ Revenues For the Year Ended S eptember 30, 2002 $50,000,000 $45,000,000 $40,000,000 $35,000,000 V�IWV�vW `�rVW�WV $2UsUUU, WU $15,0�,000 $i0,000,000 $5,000,000 $0 i�~ 0'C� ��' �pC` �'� O �t c�°,0��o'O��G�� os`�c� y�� o�``�� `F C�OCg`0 Q r�� ,�C��. �J� `g�a °�� Q �cP Go'`� �g�� c�� _, �3 ,r .., u: ,rt .; ;� , , :1 .i _; � 4 � . � :, f : 1 rt '; ti ..� �: i..: ;� .� �, ;; 8 ._ rx ! �� T (� �--. �� .i ; f -1 �� i i. ., fi I� � _. i t I ; [ i r� I; � a: t: f ' i �: r� r; c: i. 2, I: r r � : I' d < t 1 T .a F' 't i , � . [ .• �- i: �, �. : ,. i: �; �_, f ! Revenues by Sources - Governmentai Activities For tt�e Year Ended September 30, 2002 Property taxes 27°k Capital granLs an contributlons 8% Sales taxes 12% Operating grants and contrfbuGons 5% BUS1�iQS5-fi/� ACtIVIt1@S Charges (or Services ,� Franchise fees and utpiry taxes 21% hertaxes 8°� Net asseis for business-type activitfes increased from $217,082,039 to $230�637,Of4. This increase totated $13.5 millfon, reflecting a 6.2% increase in business-iype ac�vities net assets and 40% of the total increase in net assets for the City. A rrtajor component of this increase was capital granis and contributions received from other governments and developers in the amounts of $2.3 million and $1.5 million for the water and sewer and stormwater utifities, respectivefy. These contributions must be used for capital purposes. Also contributing to the increase in business-type activities net assets was a$3.2 million increase in operating income over the previous year for the business-type activities of the major proprietary funds. Additionat information regarding this increase in operaUng income is provided in the proprietary funtl discussion that folbws. - �i $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $1 o,00a,aoo $5,000,000 � _.. Expenses and Program Revenue - Business-type Activities For the Year Ended September 30, 2002 Water and Gas Utility Solid Waste Stormwater Other Sewer Utility Utilily Utility Revenues by Source - Business-type Activities For the Year Ended September 30, 2002 Charges far 59NIC23 �% 10 � Expenses I ■ Revenues Capitai grants and coniributions 4% Other 3% ,� ,� .> :; .. ai ±s � ;: J „ � .� .i �t � ; t1 ! S : t i �i .l .s i ,. _� i 'i +f !t ; ! i :i e. 3 � � � ,, ;; ,, ,: Financiai Analysis of the City's Funds As noted earlier, the Ciry uses fund accoundng to ensure and ciemonstrate compliance with finance- relaied lega! requirements. Governmenial Funds The focus of the City's govemmerrtal ftrnds is to provide information on near-term inflows, outflows, and t�alances of spendable resources. Such information is useful in assessing the City's financing requirements. In particufar, unreserved fund balance may serve as a usefui measure of a gavernment's net resources availai>le fo� spending at the end of the iisca! year. The City reports the General �und, Speciaf Development Fund, and Capital Improvement Fund as maJor govemmental funds. The City's governmental funds for the year ended September 30, 2002, reflect a combined fund balance of $102.9 million, an increase of $i7.6 milfion in canparison with the prior year. A iotal of $53.5 miltion, or 52°/a, of this represents unreserved fund ba/ance, which is available for spending at the govemment's discretion. The remainder of the iund baiance is reserved to indicate that it is not ava[table for new spending because it has alr�ady been commifted 1) to liquidate construction coMracts and purchase orders of the prior period ($35.0 million); 2) to pay debt service ($6.1 miflionj; 3) for advances due from other funds ($2.p million}; or 4) for specific program purposes per grant rastrictions ($62 million). The General Fund is the chief operating fund of ihe City. At September 30, 2002, unreserved fund balance of the General Fund totafed $i2.7 million� with the remainder of the $15.7 million in fund balance reserved to indicate it has already been committed for purchase orders of fhe prior period ($'E.0 million) and for advances due from other funds ($2.0 million). As a measure of the generat fund's Eiquidity it is useful. to compare unreserved fund balance to total fund expenditures. Unreserved fund balance represents 15.7°k of toial general funcf expenditures (before transfers) for the current fiscai year. Tf�e fund balance of the Cit�s Generaf Fund increased by $2.8 million during the current fisca! year. This increase was the composite result of actual revenues for the General Fund exceeding final budgeted revenues by $0.8 millfon and total actual expenditures less than budgeted expenditures by $2.1 million. The favarable resu[ES were spread across numerous revenue and expendi#ure categories. The fund balance of the Special Development Fund decreased from $8.2 million to $6.9 million during the current fiscal year. A key factor in the decrease was a decrease in interest eamings on invesirnents of approxfmately $12 million. This decrease was a result of a signiiicant decrease in interest rates during the cu�rent fiscal year, as well as a decrease in cash balances in the Special Development Fund. "fhe Capital Improvement Fund has a total fund balance of approximately $34.6 miUion. The fund had a minimal current year increase in fund balance of $0.1 mitlion 11 Proprietary Funds The City's proprietary funds provide the same type of information found in the government-wide financlal statements, but in more detail. The City reports the Water and Sewe� Utility Fund, the Gas Utility Fund, the Solid W aste Utility Fund, an8 the Stormwater Utility fund as major funds. . The Water and Sewer Utility Fund realized a$2.4 miltion increase in net assets. Operating revenues increased 5.9% ove� the previous year, partlally offsei hy a 3.8% increase in operating expenses. A rate increase efifective October 1, 2Q01 coniributed to the increase in operating revenues. A significant contributlon to the increase in net asse#s was receipt of $2.3 mitlion in capital grants and contributions that must be used for capitai purposas. The Gas Utility Fund realized a$2.6 miilion increase in net assets. Operating revenues actualiy decreased by 12.2% over the prior year due #o depressed gas prices, but a i6.0°� decrease in operating expenses resufted in a$0.5 million improvement in operating income over the prior year. The Solid Waste Utility Fund realized a$1.5 miUion increase in net assets. Operating revenues increased by 2.0% while operating expenses decreased by 0.2°/a. The Stormwaier Utility Fund realized an increase in net assets of approximately $4.1 million. Opera�ng revenues i�creased by 33.9% as a resutt of a 4.4% rate increase effective October 1, 2001� and an additional 35.0% rate increase effective January 1, 2002. The increase in opera�ng revenues was partially offset by a 5.49G increase in operating expenses. Unrestricted net assets and changes in net assets pf the proprietary funds for the current fiscal year foilow: Unrestricted Fund Net Assets Water and Sewer Utility $19,788,491 Gas Utility 9,498,8i7 Solid Waste Utility 6,426,639 Storrnwater Utility 7,888,733 Other funds 7 0,873,333 Totals 54,476,013 General Fund Budgetary Highiights Change in Net Assets 2.401,311 2�623,123 1,517,507 4,066,075 2,352,206 $12,960,222 Differences between the original budget for General Fund expenditures and the finai amended budget were relatively minor ($149,500 decrease). Key elements of this decrease are as follows: •$102,612 inc�ease in generai govemment budgeted expenditures, primarily due to an increase in outside legal co�se! fees. •$214,830 decrease in public saiety budgeied expenditures, prlmarify due to approximately $200,000 of Fire Department buciget that was moved to the intertund transfer out categvry. This budget transfer was made to provide capital improvement project fund&�g for the purchase of land for a proposed fire station. • Total actuai revenues for fhe Gene�al Ftmd exceeded final budgeted revenues by $0.8 million and tota! acival expenditures were less than budgeted expenditures by $2.1 million. The budget savings occurred over numerous revenue and expenditure categories. .� ., ;; .; ., ; :� ;, 12 -� � � � S' ; .� � ,-, l: � � Capital Asse# and Deb# Administration Capitai Assets Capfta! assets fnc{ude land, buildings and building improvements, improvements other than buildings, and machinery and equipment. Capital assets also include infrastructure assets added during the curren# fiscal year only. Infrastructure assets ac�uired prior to �scal 2002 will be added when the City retroactively lmpiements the Infras#ructure portion of the new financial repo�ting mode! in fiscaE 2006. The infrastructure asset category includes long-ttved capitai assets, typicafly stationary in nature, such as roads, sidewalks, and bridges. At September 30, 2002, the City had investments in capital assets totaiing $4.i 8.171,045 {net of accumulated �preciation). City of Clearwater, Florida Capitat Assets' September 30, 2002 Land , , Buifdings ; improvements Other than Buii�ings i � Machinery and Equipment Infrastructure C ` Construction in progress � ; Totat t; '` Net of accumuiated depreclation Govemmenta! Activities $ 40,9i 3,067 27,638.084 37,443,985 11.828,096 1.076,247 1i;550,775 130. 0,254 Business-type Activities 19,878,550 15,96i,876 188,580�263 16,088,995 47 205,107 287,720,791 Total $ 60,791,617' 43,605,960 226,024,248 27,917,09i 1,076,247 58,755,882 418,171,045 Net capifa) assets for the City's govemmenta/ aciivities increased from $116.7 million to $i30.5 �-,. million, reflecting an increase of $13.8 mUtlon for the current fiscal ysar. Key components of this � increase include: t. t t i i i.l • Acquis�tion of land in the amourrt of $3.9 millfon for a new community spo�ts complex to include a spring training stadium #or the Philadelphia Phiflies major Ieague baseball organization. • Expenditures of $3.5 mflllon towards construction of a new Norih Greenwood recreation center and aquaiics complex. currently classffied as construction in progress. • Expenditures of $3.7 mlllion towards consiruction of a new main library, currently classified as constr�tion in progress. • A total of $l.2 miflion in construction in progress expenditures towards #he construction of a new Sand Key fire station. • A tofal of $1.0 mitlion in canstruction in progress expenditures towards complefion of a new North Greenwood branch library. Net capital assets for the Cityr's business-fype activitles Increased by $33.1 million from $254.6 million to $287.7 million during the current %scal year. A key component was an increase of $21.8 milfion in water and sewer system construction in progress. primarily due to system improvements funded from the 1Nater and Sewer Revenue Bonds, Series 2002. These improvements include expansfon of the recla�med water program; continued renewal and replacement as needed of the wa#er, wastewater 13 collec#ion, and water polluiion control systetns; and upgrading of the water polfution control system to meei regulatory requirements. Additional informat�on on the Cit�s capital assets can be found in Note III.0 on pages 51-53 of this report. Long-term debt The City's tota) iong-term debt increased by $98.2 million, from $193.7 million to $291.9 million, or an increase of 51 °� for the current fiscal year. Key factors in this increase included: • Current year issuance of $58,680,000 Water and Sewer Revenue Bonds. Series 2002, to pay for the costs of expansion of the City's uvater and sewer system. ,• Issuance during the current year of $24,685,000 Stormwater Revenue Bonds, Series 2002, to pay for the costs of capital improvements to the Cit�s stormwater management system. • Current year issuance of $14,810,000 Spring Training �acility Revenue Bonds, Series 2002, to finance a portion of the cost of the acquisition, construction, rehabilitation, and equipping of a community sports complex and spring training facility to be used by the Philadelphia Phillies major league baseball team. The City's bonded debt as of September 30, 2002, consists e�tirely of revenue bonds {secu�ed solely 8y specified revenue sources} with no general obtigation debt o� specia! assessment debt outstar�ding. Governmental act�vlties revenue bonds totaied $732 million while business-#ype activities totaled $185.7 million. During the current fiscal year the Ciry issued improvement Revenue Refunding Bonds, Series 2001, to refinance previously ouistanding special revenue bonds that primarily financed governmental activities. The result is expected to be a decrease in fuiure debt service payments of $958,000. All revenue bond issues of the City have been rated either AAA by Standard & Poor's or Fitch, or Aaa by Moody's. The City's Charter limits legal indebtedness to twenty percent of tl�e assessed valuation of non- exempt rea! estate. The current debt iimitation is in excess of $1.0 billion, which is significantly in excess of the Cityr's lsgal indebtedness at September 30, 2002. Additionaf infarmation on the City's long-term deb# can be found in Note I!I (� on pages 57-61 of this report. Economic Factors And Year 2003 Budgets and Rates Factors considered in preparing the City of Clearwater's budget for %scal year 2003 included: • The unemployment rate for the Tampa Bay met�opol'�tau� area for September 2002 was 4.4%, an increase of 0.4% ftom the 4.0% rate fo� September 2001. The naiional rate for September 2002 was 5.6% versus 4.9% for September 2001. • Totat taxable assessed vaiues for the Ciry oi Clearvvater increased 9.2% for %scal 2002. • A Florida Power Company rate decrease of 9% effective May 2002 will resuft in an estimated $1 mitlion clecrease in City franchise fee and utility tax revenues for fiscal 2003. f� •, �, , ., :; i E ,.. 3 ; :� ; :: :; ,� :7 :: ;! ; ,� 14 '} (" 1 � ; � . 1� • Healih insurance cost increases for City emptoyees are expected to impact the fiscat 20d3 f-? budget by over $1.5 million, of which approximatefy $741,000 impacts the General Fund. l; The fisca! 2003 City property tax miilage was increased from 5.5032 milis to 5.753 miUs, an increase � 1 of 2498 mills or 4.5%. This increase wilt generaie an estimated $1.3 miHion in additional property tax �; revenues for fiscat 2003, which wiU assist in offsetting the an�cipated loss in franchise fees and utility tax revenues discussed previously. Budgeted Water and Sewer utility revenues for 2003 reflect a 7% 1 rate increase effective January 1, 2003� white fiscal 2003 budgeted Stormwater utiliry revenues reflect �; a 17% rate increase effecttve Oc#ober 1, 2002. t; �� Contacting the City's Financial Managernent �-. ( f ! R SI E. t i`:. �: �� 1 F if ' i� �; This financiai report Es designed to provide a general overvisw of the City's finances tor all those with an interest in its finances and to show the Clty's accountabitity for the money it receives. �uestions concerning any of the information provided in this repon or requests for additionat financial information should be addressed to The Ciry of Clearwater, FPnance Department, 100 S. Myrtle Avenue, Clearwater, Florida 3375&5520. 15 . f i h ` � I . t � I This Page Intentionally Left Blank �; _� � ., ; .� ,, ; :� ., ., ; ;f -, :; .; _� :� .; :; i! .i � � �i ;� 1� �� ; ;, �� ,, , �: _; Basic Financiai Statements 17 ASSETS Cash and cash equlvalents Restricted cash and i�vestments lnvestments Tota! receivables (netj Internal balances Due f�om other governments Prepaid items Inventories Deferred charges Nef pension asset Restricted assets: Cash ar�d cash equivalents lnvestments lnternai balances Other Capital assets: l.and Buildings Improvements other than buildings Machinery and equlpment Infrastructure Construction in progress Total assets LIASILITIES Accounis payable and other curren# IiabillUes Accrued Gabilities Accrued interest payable Due to other governments Deposits ' Deferred revenue and liens Payable from restricted assets: Constructian contracts payable Accrued interest payable Customers deposits (Von-cu�rent liabiliaes due wiiE�in one year. Compensated absences Loens and leases payable Revenue bonds payable Long-term debt and Ilabilities: Comper�sated absences Loans and leases payable Revenue bonds payable Claims payable Total liabilities NET ASSEi'S Invested !n capital assets (net of related debt) Restricted for: Capital projects Debt service Renewat and replacement Employees° pension benefits Other purposes , Unrestrlcted Total net assets Clty ot Ctearwater, Florida StatemeM of Net Assets September 30, 2002 Primary Qovernment Govemme�tai Business-type Activities_ Activities 7otal $ '137,996,235 $ 864,499 44,709,170 (21.351,074) 5,232,453 1.539,086 17,4� 644,901 15.125,562 ao,ais,os� 27.638.084 37,443.985 11.828,096 1,076,247 11,550,775 315,228,516 4,243,455 1,183.801 772,803 526,583 5,342 33.960,364 � 575,8B9 1,314,392 5.596,132 5,243,966 2.624.777 67,605,773 11,440278 135.093,555 53,954,081 32,03i,063 $ 6,090,652 8,080,242 8,840,232 535,595 4,891 1,241,106 1,739,727 6,320,420 70,346,294 z,s2s,2oo 12,510,842 91,989 19,878,550 15,967,876 188.580,263 16,088,895 47,205,107 438,480,044 3,122,335 507,475 91,383 f 28,039 15,392 1,394,554 1232234 3,822,095 174,684 3,076,018 7,068,868 �,ssa,sa� 7,016,060 178,605,246 _ 207,843.030 93,694,326 170,027,298 $ 6,090,652 864,499 52,789,4f 2 (12,510,842) 5,768,048 1,543,977 1,258,536 2,384,628 21,445,982 70,346.294 2,926,200 12,510,842 91,989 60,791,617 43,605,960 226,024,248 27�917,091 1,076,247 58,755,882 753.708.560 7,365,790 t.69i,276 864,186 526,583 131,38i 33,975,756 i,394,554 1,232,234 3,822,095 750,573 4,380,410 12.665,000 6.834,613 $.640,837 2as2�t,o�s 11,440.278 342,936,585 147,648,407 -, Componer�t llnit Clearwatgr ' � Downtown Development Board . . 143,104 205,957 . _ ,➢ _ � ;� - ,� . .i 349,06i 332 205,957 7,848 86,331 300,468 29,706,6'!4 6,137,39t 35,844,005 _ 6,074.104 i2,748,561 18,822,665 - 14,518,247 14,518,247 15.125.562 6,320.420 21.445,982 _ 11,546,171 - 11.546,17i __63,728,429 97,218,069 16U,946,498 Qg,�g3 $ 180.134.981 $ 23U,637,014 $ 410,771,975 $_ 48,593 --_ The notes to the tinancial statements are an integral part of this statement. i8 � :j :; i �, ei ' S : .i : i � 1 _; i .; � � �-, �� i�' �� i �; l� � � i i . / T. 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Receivables (net where applicable, oi ailowances for estimated uncolleclible amounts): Accounts and contracts Mortgages, notes and other loans Improvement pens Rehabilitadon advances Properry taxes Othet Oue from other tur�ds (deticit in pooled cash) Due from oti�er govemmental enfities Investments Land held for resale Inventodes, at cost Advances to olher iurxis Total assets LIABILITIES Accounts and conVacts payable Accrued payroll Axrued interest payatNe Due to other (unds Oue to olher funde (deficii in pooled cash) Due to other govemmental entities Deposiis Construction escrows DefeRed revenae Deferred assessment Uens Advances from other tunds Total liabilities FUND BALAPICES Reserved for. Eocumbrances Debt service requi�ements Advances and notes Grant programs Unreserved, reporled in: General fund Special revenue funds Oebt service funds Capltal projects funds Total fund balancea Total IiabiliGeY and fund batances City of Clearwater, Plorida Balance Sheet Govemmental Funds September 30, 2002 Special Capital Qeneral Oevelopment Improvement Fund Fu� Fund Other Govemmentel Funds $ 20,680 $ - $ - $ 100 $ 11,238,047 5,270,645 63,341,349 37,747,027 � Z "_"� :; ;� Totals Govemmental 3 , Funds . 20,78Q _, 117,597,068 ' ' �: 308,523 - - - 306,523 ? ? - 10,000 - 8,905,947 8,915,947 - - 88,Sd1 - 86,801 � j - - - 82.826 62.626 a , 31,548,425 2,013,000 - - 33,565,425 1,454,B48 • 180,000 109,202 1,743,850 ' � - - 264,5i4 - 264,514 2,337,360 2,125,137 - 769,956 5,232,453 � ' - - - 864,499 884,499 ; j 998,342 998,342 17,430 - - - 17,430 + , 2,OOO�Q00 - - - 2,OOQ�000 i $ 48.9� $ 9,418.782 $ 63,872.�4 $ 48,477,699 $ 171,692,258 � � �� $ 962,454 $ - $ 1,186,483 $ 1,657,907 $ 3,006,84�} 1,121,359 - - 26,811 1,148,270 , � - - - 28.032 28,OS2 , 24,925 - 28,018,807 934,966 28,176,698 • - - 254,$14 264,Si4 ° � 3,663 522,548 - 372 526,583 5,342 - - - 5,342 - - - 1,093,924 1,093,924 , 31,852,141 2,013,000 - 95,223 33,980,384 - - 86,801 - 86,801 • � 49,85U - - 492,524 542,374 33,219,734 2,535,548 29,290,091 3,794,373 68,839,746 ` 3 1,019,807 - 14,369,954 19,576,986 - - - 6,074, i 0�1 2.000,000 10,000 - 8,481,986 • - - 2,018,840 34,966,547 6,074,104 10,491,986 2,016,840 :1 ;, '� �2,sas,rr2 - - - �2,sas,n2 � - 8,873.234 - 4.462,750 1t,335�984 : i - - - 1,80't.529 1.802,529 - - - 20,2i2,679 3,268,131 23,480,750 . , 15,703,379 6.883.234 34,582.573 45.683.326 102,852,512 $ 48,923,i13 $ 9,418,782 $ 63,872,664 $ 49,477,699 $ 171,692,258 ' ' The notes fo the financial statementg are an integral part of tl�ls statement. .� ; :i ZQ .. J r- � r• � {: !: ,, i � t : i i City M Clearwater, Florfda �r ' Reconciliation ot the Betance Sheet of Governmental Funds �: i; . to the Statemer�t of Net Assets September 30, 2002 Total fund balarices ot govern►nental funds Capital assets used in govemmental activities are not finar�cial resourc:es, therefore, are not reported in the funds. The cost of the asseis is $177,284,898, and the accumulated depreciation is $46,834,644. Total capital assets for govemmental activitles Less: Land included in govemmental funds as °Land Hefd for Resale' The net pension asset related to govemmentel activi�es does not represent financFal resources and is not reported in the funds. Accrued general long-term debt i�terest expenses are not finanaat uses and, therefore, are not reported In the funds. Special assessment tlens receivable are not financial resources in the current period and, therefore, are reported as deferred revenues in the funds. The assets and liabiiities of the General Services end Central Insurance intemal service funds (funds used to charge the costs of certain activities to individual funds) are included in the governmental ac�Ivities in the statement of net assets. Net assets of General Services and Central Insurance fntemal service funds Less: Capital assets included in total governmental cepiial assets above Less: Net pension assei induded in totaf governmental net pension asset above Add: Capital lease pur�chases payable ineluded in Wtal govemmental below Add: Compensated absences lncluded in toial. govemmental below Add: Adjustment to. reflect the consolidation of intemal service fund activities related to enterprise funds Interest revenues are not recognized in the current pertod because the resources are not avaflable, therefore, are not reported in the funds. Long-term Ifabllities, including bonds payable, are noi due and payable in the current period and aocordingly are not reported in the funds. Long-term lfabilities at year-end consist of: Bonds payable Less: Deferred charge on refunJng (to be amoriized as interest expense) Less: Deferred charge for issuance costs (to be amortized over I'rfe of debt) Less: Issuance discount (to be amortized as interest expense) Add: Issuance premfum (to be amorti2ed as a reduction of Interest expense) Capital lease purchases payable Compensated absences � Total net assets of govemmental activlties The notes to the financial staiements are an integral part of this statement. 2i $102,852,512 $ i 30,450,254 (998,342) 929,451,912 15,725,562 (744,77i) 86,80Z 15,437,49B (177,618) (394�351) 25,68'L 97,313 678,453 15,666,975 11,998 (72,510,958) 4y 4,182 644,90i 46,321 (1,151,450) (3,939,169) (5,819,855} (82,316.028) $ i80,t34,961 Cfty ot Clearwater, FloNda Statement of Revenues, Expendttures� and Cbanges in Fund Balances Governmer�l Funds Por the Year Ended Sepiember 30, 2002 REVENUES Taxes: Aroperty taxes Franchise fees Utility taxes Licenses, permits, and fees Intergovemmental: Sales tax Communications seroices tax Other intargovemmerjtal Charges for services Fines and forfeitures Mterest income Misceltaneous Total revenues EXPENDITURES Currenk General government Public safety Physicai environment Transportation Economic environment Human serv(ces Cu�lure and recreation Debt service: Princi�al. Interest & fiscal charges 8ond issuence costs ri8j11tA� OUti9Y ToffiI expenditures .. Excess (defiaency) of revenues over / (urtder) expenditures OTHER FINANCIN� SOURCES (USES) Transfers in Transfers out Long term debi issued Proceeds of refunding bonds Pr�nium (discount) on �evenue bonds [ssued Payment to refunded bond escrow agent Total other financing sources (uses) Net change 1n fund balences Ger+eral Fund $ 28,420,0H6 a 7,086�842 f 0,402,�78 3�283,304 Speclal Capital Other Developme�t Imprvvement Gov�nmental Fund Fund Funds 1 �902,325 S - $ - 704,659 - - Talal Covernmentat � � Fuads $ 30,322,411 7.086,842 10,402,i 78 3,987,963 6,208.416 8.457,553 - - i4.663,969 7�870,342 - - - 7,870,342 8,380,145 1,428,076 1.008,291 10,859,673 21,674,185 9.852,25Q - - 576.714 10,428,9fi4 1,763,054 - - 500,987 2,264,04i 763,919 1,297,822 30,796 1,717,476 3,870,013 828.978 2,237.727 1.899,228 4.965,933 84.857.514 13,788,435 3.276.814 15,554,078 1t7,476,841 9,533,157 - 852,957 43�053�544 - 394,755 1�� - 42,721 5,857,424 - 3,OB3,324 1,477,983 - 143,475 438,732 - _ 18,260,390 - 1,027,862 i59,515 10,545,629 2,472�483 45.920.782 927,341 2,8�,608 - 8,940,748 1,8A6,730 3,268,188 128.938 566.888 3,451,761 20,740,013 - - - 1,751.269 1,751,268 - - - 2.461,198 2,461.198 " ' ' 358.996 358,996 - 11.658.112 7.938,162 i9�594 74 80,49�,776 - 17,203.208 19.282,391 176.986.373 4,366,738 13.788,435 (13,926,392) (3,738,313) �,468 4,628,933 100,000 13,905,420 4,689,4i7 23,323,770 (6,163,998) (15.216,358) (412,340) (1,387,633) (23,180,329) - - 553.417 14,810.�00 15,3fi3,417 ' - - 11,345,499 11.345,499 ' - - 480,884 480�884 ' - (10,270.682) (10,270.6821 (1,535,06� (15.116,358) 14,046.497 19,667.485 17.062,559 2,831.673 (1,327,923} 120.105 i5,929.172 17,553,027 e , -t .; .� ,i °ti � :; ,� ; � :i ,, i :J Fund balances - beginning, as restated (see Note If - C) 12.871.706 8.2i 1.157 34,462,468 29,754,184 85,299,485 ' Fund balances - eading $ i5.703.379 $ 6.883,234 $ 34.582.573 $ 45,683.328 $ 102,852,512 i i The notes io the financial statements are an integral part of this statement � i : �- � i ' r'Z �: �i � ,-, i i �: City of Clearwater, Florida Reconcitiaticn of the Statement of Revenues, Expenditures, a�d Changes in Fund Balanc:es of (�ovemmental Funds . to ths Statemerrt oi Ac�tivities For the Year Ended September 30, 2002 Net change in fund balances - tatal govemmentel funds Ainounts reported for govemmental acUviUes in the Statement of ActiviUes are diffarent because: Govemmenhdt iunds repwt capital outlays as expend'dures while �vemmentei acBvities report depreciation expense to aUocate those oosts ovsr Yie iiffe of the assefis. This fs the arratmt by which capital ouUays a�eeded depreciatton in the currerit period. Expend3tures for capital assets Less cuRent year depreciatlon In the Statement of Activitles the loss on disposiUon of capital assets is reported. The loss is not a use of current resources and thus Is not reported in the funds. Loan proceeds provide current financia! resources to govemmental funds; however issuing debt Increases Iong-term 1(abitities in ihe Stetement of Net Assets. In the curreM year these amounts are: Revenue bond proceeds CapRal lease proceeds Some expenditures and other finandng sources (uses) of ihe govemmerdal funds are deferred and amortized in relaiton to the related debt in the Statement of AcUvitles: i`' Net discount (premium) on revenue bonds issued during curreM year ; Issuance costs for revenue bonds �sued durhg current year `' Loss on current year refunding r �; i; Repayment of iong term debt prfncipat fs an expenditure in ihe govemmental funds, however the rapayment reduces tong-tertn liabilities in the Stetement of Net Assets. Current year amounts are: Revenue bwid principal payments Capital lease principal payments Principa! portion of payment to escrow agent for relundiog of bonds Net pension asse! is rrot a current financial resources and cansequently is not reported (n the funds. However R is en asset hi the Statement of tdei Assets. Current year change � the net pension esset Some expenses reported in the Statemerrt of Activities do not requfre the use of current financfal resources and iherefore are rwt reportecf as e�q►enc6itures in the govemmentet funds. CurreM year change in compensated absences Amortlzation of deietted charge on retunding Amortizatlon af tssuanoe oosts Amortlzation of bond discounts and premiums Acxrued iMerest exqnse Speciai assessment rwenues ere deferred until collected in the goverrvneirtal iunds, The revenues cflilected in � current year were pdor y�r revenues in the Statement of Activities_ Interest revenues w��t be coaected fos severel months after the fiscal year and are not accrued in the �mental funds. The net revenues of interna! 6ervke funds (funds used to charge the costs of ce►tain act(vities 4o individual iunds) for govemmenta( acdvfties are repor0ed in the Statement oi Activities but not in the govemmenta( funds. 7otal nat assets of govemmental activWes Ths notes to the iinancial siatements are ar� tntegral pert of this statement 23 $ 20,717,080 (5,833,254) $17,553,027 14,883,826 (926,029) (26.155,499) (553,418) (26,708,91� (ae0,8sa} �s,sss 442,426 320,'S38 446,768 1.304.501 8,679,761 1 i,431,030 3,794,596 (270,983j ��2�) (90,494) 169,252 (6�{2,659) (863,i28) (18,098) 11,998 684,552 $20,163,395 City of Ctearuvaier, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (No»-GAAP Budgetary Basis) General Fund Por the Year E�ded September 30, 2002 REVENUES Taxes Licenses, permits, and fees fntergovemmental Charges for seroices Fines and forfeitures Interest income M'�scellaneous Total revenues EXPENOITURES Current: General governrn�t City Corrnnission Ciry Manager Legal Ciry Clerk Pubiic Communications and Marketing Fuiance Human Resources Non-Departmental Public Works Administratlon Planning Internal Audit Office of Management & Budget Total genera! govemmeni Publlc safety Police Fre Development Services Tota) public safeiy Physical env.ironment Public Worfcs Adminisiration Total physical environment Transportatior� Public Works Administration Tota( transportation Economic ernlronment Economic Development �evelopm�t Serv�ces Total economic envi�onmer�t Human services Human reiations Total human services Culture and recreaUon Parks and Recreatton library Marine Total culture and recreation Total expen�tures (budgetary basis) Excess of revenues over e�end�ures (budgetary basis) OiHER �INANCtNG SOURCES (USES) Transfers in 'iransfers out Total other flnancing sources {uses) (budgetary basisj Excess (deflciency) of revenues ar�d ott►er flnancing soutces over expendiiures and other financing uses (budgetary basis) Encumbered purchase orders, beginning of year Encumbered purchase orders, end of year Excess (daflciency) of revenues and other flnancing sour+ces over expenditures and othsr financing uses (Gqqp basis) • Fund balances - beginning, as restated {see Note II - C) Fund balances - ending YaHance with Budgetad Amounts Final Budget Acival Positive O�i9inat Flnal Amounts (Negative) s as,n2,soo 3.182.360 Zi,549.590 9�739.320 1,585,880 882,760 891.340 83,613.850 ��/ 1,259,130 1.155,280 885,600 1,923.780 i �09B�250 1,305�280 71,475 1,043,070 122,880 287�020 10.080,545 26,973,660 t4,378,900 2,688,287 44.038.847 1.929.817 1,929,817 8,048.257 8.046,257 1,476,470 160.734 1.637204 488.430 488,430 S as,o�e,�so 3.132,360 21,628,240 9,676,760 1,741,640 882,760 958.470 84.098,590 ?J��%� 683,380 1,437,120 1,125.280 880,850 1,883,780 1,163�530 i,305,200 7i,547 988.U70 114,800 269.020 10. t 83,157 28.973�480 14,164,250 2.686287 43,824,017 1.931.747 1,931.7Q7 6.052,306 8,052.508 1.384,710 160,733 1,554.843 488.430 488.430 S a�.sos.los 3,283,3Q4 22�456.9Q3 9,852,250 1,763,054 763,919 828.978 84,857.514 217,879 841,122 1,421,575 9a2,979 752.687 f.787,562 1,114,726 1,293,975 69,341 897,883 i 01,484 272.114 9.50Ci.127 26,424,348 13,973.671 2.596,272 42,994,?89 1,872.179 1.872,i 79 5,885,674 5,885,674 i,340.808 155.348 1,496,i54 448,703 448,703 $ (�ss,a�a� 150,944 828,663 175.490 21,414 (i t8,841) f127.4921 76fl,924 32,801 42.258 i5,545 192,301 128,163 98,218 48,804 11.225 2,206 100,387 13,118 l3,094) 680.030 549,134 190,579 90.015 829,728 59,568 59,568 186.632 186.632 53,304 5.385 58.889 38.727 39.727 14,126,OQ0 14,158,120 13,968,172 i89.948 • 3.891.890 3.891,890 3,809,i06 82,784 492,390 497,390 500.500 (3,1101 18.510.3U0 18.547,d00 18.277.778 269,622 82.731.400 82,581.900 80.457,gpq 2,123.998 882.450 1.514.690 4,399.610 2,884.92p 4,382,790 4.442,390 4,628.901 (5,578.240) (6,335,850) (6.i63.998) (1.195,450) (1.89�i.460) (1.535.a67i (313,000) (378,T70) 2,884,543 - - (i,Q52,47� - - 1,019,607 q� �1 `; ,, : 4 ,; ;� � :l i :i � .� � i .i i � i „ ii 1 SB.54i ; 1 171�852 : 358.393 ! i 3,243,313 ' s (� �052.471� 1,019,607 - ` (313,000} (378,770) 2,831.873 3,210.443 : 12.871,7� 12.871.706 12.871y708 ; j $ 12,558.706 $ 12.492.838 $ 15.703,379 $ 3,210.443 The notes to the financiat statements are an integral pert of ii�is statement 24 r? .i ��T �� , lr � a; ( T ?' e� ;: f.. i �� l F �,' �� . Clty of Clearwater, Florida Statemer�t ot Revenaes, Expenditures, and Changes in fund Balances - Sudget and Actual (GAAP Basis) SpeNal Developmeni Funct For the Year Ended S�tember S0, 2002 REVENUES Taxes Licenses, permits, and fees Iniergovemmental Interesl income Total revenues EXPENDtTURES Total expenditures Excess of revenues over expen[Gtures OTFiER FINANCING SOURCES (USES) Debt proce�ds Transfers in Trans{ers out Total other ffnancfng sources (uses} Deficiency of revenues and other sourees over expenditures and othe� uses Variance with Budgeted Amounis Pina! Buclget Actwl Positfioe Original F[na[ Amounis (Negative) $ 1�881,620 $ 1,881,620 $ 1.902,325 $ 2Q.705 698,830 908,83Q 704,659 (204,171) 10.679,810 10,679.Si0 9�883,629 (796�181) 300.000 300,000 t,297,822 997,$22 13,560,260 13,770,260 i3.788,435 18,175 13,560,280 13,770,26� 13,788,435 18175 - - 100.000 t 00.000 (18,648,110) (20,295,395) (15,216,358) 5,079.037 (18.646.i 10) (20295.395� (15,116.358) 5.179,037 (5.085.850) (6,525,135) (1.327,923) 5.197.212 Fund balances - beginning, as restated (see Note II - C) 7,446,380 7,446,380 _ 8,211,157 764.TI7 � Fund balances - ending �; . ir ...: r; t t.1 $ 2.360,530 $ 921,245 $ 6,8$3,234 $ _ 5,961.989 The notes to the financial statements are an integral part of this statement 25 City of Clearwater, Florida Statement of Net Assets Proprietary Funds September 30. 2002 ASSEfS Current assets: Cash on hand and in banks Equity in pooled cash and investments Accounis and conVacts receivab(e: BiUed Unbilled charges esUmated Less: Ailowance for uncoilectable accounts Total receivabtes, net Due from other funds Due from other govemma�ta! enttties Inventories, at cost Prepaid expenses and other assets Tofsl current assets Noncurrent assets: Resuicted: Equity in pooled cash and invesUnents Irrterest receiva�e Due from other funds Investments Ofhet Deferred charges Advances io other tunds Net pension asset Capftal asseis: Land and other nondepreciable asssts Capital assats, net of accumulated depreciation Total noncurrent assets Totat assets Business-type . Enterprise wacer and Sewer Gas Solid Waste UtNity lJtllity lltiitty .r. -j : '4 . ) -� " �4 $ 400 $ 700 $ 200 10,734,957 1,761,901 6,733,830 . , 2,084,139 1,143.782 827,902 1,400,100 1,014.800 648,670 3,484,239 2,158,582 1,476,572 (242,238} (81,759) (39,813) 3,242,001 2,076,823 1,436,759 2,537.004 5,733,792 1,685,872 A32�097 - - 533,521 495,601 - 4,891 - - 17,484,871 10,068,817 9,856,661 59.121,612 1.644,280 764,321 3�547.575 - - 2,916,7t3 - . 86,1� - _ 981,123 311,888 - 1,921.307 1,044,852 t,113.370 41.31021B 327,285 1,041.913 138,1t8.555 33,988,772 2.458,795 248,003,298 37,316,877 5,379,399 265,488.169 47,385,694 15,236,060 The notes to the financial statements are an integrai part of thts statement � � � ' i �� .i ,, „ ;> : 4 �� .� :I ;{ � `i �; °l f tij :� � :i ;, =1 Activities Funds Govemmental Business-type �� A�� - Activities - Stormwat� Other h�temai Service Internal Service Utility Funds 7ota1 Funds Funds $ S 22,967 $ 24,267 $ - $ 1 �900 3,607,652 4.381,312 27.i99.652 2�,378,387 4,805,244 392,888 264,910 4,713,631 - . 557,600 i34.325 3.755,395 - - 950�398 399,235 8.469.026 - - (21.1941 13,780) (388.784) - - 929,204 395,4bb 8,080,242 - _ 1,073,346 3.670.911 14,700,925 932.160 474,&47 - t03,498 535,595 - . - 26.409 1,055,531 - 185.67b - 4,891 1,539,088 - 5,610,202 8,580,552 57,601,103 22,849,633 5,467,566 14,890,360 i6,373 76,436,946 - . � ' - 5,793 1.463,266 7,500,000 f2,510,842 - - - 9.487 ., 2.926�200 - - . - 86.196 - - 446.716 - 1,739,727 . . " ' - 3,757.385 . . 387,321 51f,4i5 4,978,065 394,351 1,342,355 21,675,080 2,032,482 66,386.976 - 696,68t 15,964.139 15,486,785 206,018.026 777,618 14,819,108 54,826.882 25,556,522 371,082,878 4,329.354 t6,663,937 60,437.084 34,137,074 422,684.081 27,178,987 22,131,5U3 (Continuedj 27 City oi Cleanivater, Florida Statement of Met Assets (Continued} Proprietary Funds September 30, 2002 llABltiilES Current IiaNlities: Accounts and contracts payable Accrued payroil Accrued interest payable Accrued compensated absences Due to other funds Deposits Defe�red revenue ar�d liena Current portion of long-term IiabiOtles: Re`ventee �ion�is '" NoFes, ban pooE agreG�+Rsnt �tx} acclulsi�on contracts ToEal current C�abfliUes (payabte f� ctirr,ent assets) Current IiabiliBes (payable from restdcted assets): ConstrucUon coriiracts payable Accrued interest payablg ►�lotes, loan poot agreement ana! acquisition contracts Current portion of long-term Ilabili6es, revenue bo�ds Cusfomer deposits � %tsl current liabi{lties payable from restricted assets %tal cunent liabilides NoncurrenY liabil�les: Revenue bonds (net of unamortized discounts and deierred amount on refunding) Notes, loan pool agreement and acquiaition contracts Advances from other funds Claims payable Total non-current IlabilfUes ToffiI Itabilitias Net assets: lnvested in capital assets (net of related debt) Resnicted for. Revenue bond d bt Business-type fnterprise Water �d �� Solid Waste ��Y Utillty Utillty 1,024,378 752,440 56,703 455,817 832,58i 80,672 34,680 298,343 354,560 89,349 j � " r'� 370,647 82,474 � ' � 805,000 - 577�500 - 112,468 _ "� � _ 39,371 2,708,8d4 1,823,778 938,4fi1 918,656 . _ 835,618 122,66! 22,383 a. _ _ .. `� -�, 4,525�000 52�500 - ..: �.aes,sss �,�sa.�is �sa,�� Br167,S27 1 �344,280 10,�.'4.731 3.188, 056 1,723,105 i21,559,184 �26,463,537 - 362.580 - 48,826 " - 824,737 _ _ � _ �_..� 121,821,764 �,4�,3��3i , r�,y� �:,� 132,796,495 29,631,593 2,594.688 j � :; „ _1 .� ;; , s ;� : i :; �� t 79,572,957 6,910,632 3,415,511 :I e serwce and sink�ng fund reqwrements 12.739,153 _ Revenue bond renewal and replacernent requlrements �q,218,247 �,�� _ Capiial projects , - - i,fi85,872 Water and sewer impact fees 4,451,519 - _ Employees' pension benefits 1,921,307 1,044,652 1,113,370 Unrestricted 19,788,497 9,498,817 6,426,639 Total netassets $ 132,891,674 $ 17,754,t01 $ i2,841,392 Adjustrnent to reflect the consol�atlon of Intema( servic� tund ar.�vifies related to ertterprise funds. Net assets of businsss-type activWes The notes to the financial statemer�ts are an Integral part of thls statement 28 .; .. 6 .; =J .1 „ � r� �. ,- i r 4 i' f. r�? �; �, `� i: t A f' i� Activities � Funds Gavernmenta! 8uslness-type Activities - Activities - Stormwater Other Interr�al Servfce IMema1 Service Utiiity Funds Total Funds Funds 42,898 32,276 118,395 717.372 47,684 137,853 59,602 128.039 15,392 2.971,787 402,421 91,383 9,382�055 i 42,076 726,039 15,392 142,687 35.531 97,313 150,548 105,054 383;276 30D,000 - 7.966 1,490,456 f� 174,369 152,655 478,763 4,511 2,688,109 i t": 3�,�3$ 1�264,453 7.100,3i2 280,042 3,527,987 476,898 - 1.394,554 - - 251,049 525 7.232,234 _ _ - 3,636 3,636 _ 125,000 15,912 4,718,412 - _ 3.822,095 ' - 851,947 20.073 14.170,931 - - i.220.885 1.284,528 18,271,303 280.042 3.527,987 � , 3t.366,3B1 78,163 178.465,245 - �; 479,027 421,207 1,309,640 21,171 5.7'10.931 ` � 4,118,204 4,943,941 - 27i,070 - - - ?1,440,278 }; 31,845,388 4,816,6l4 185,718.826 i1,46i,4.4.9 6,982.001 � �; 33.066.273 5.90t,100 203,990.129 11,741,481 8.509,988 19.094,757 16,841,818 125,835,675 15t,936 7,01b.749 - 9,408 12,748,561 - _ " - 14,518,247 - - ' 1,685,872 . . ' - 4,451,519 - . 387,32i 511,415 4.978,065 3gq.351 1�34��r3 7.888,733 10.873.333 54.476.013 14.891,209 4,283,411 $ 27,370.811 $ 28,235.974 218.693,952 S 15.437.496 $ 12,621.515 11.943.082 � 230,837,014 29 City of Clearwater, Florida StatemeM af Revenues, Expen�� 8 eges in Fund Net Assets For the Year Ended September 30, 2002 Operating revenues: $8I@S t0 CUSfOtri6�3 Service chargss to austomers iJser charges to customers 9tllings to deRartrnents Rentals Totel operadng revenues Operating expenses: Personal services Purchases for resale Operating materiais and suppties Transportation ilUliiy serv�ce Dumping charges Depreciatlon lnterfund administrative charges Other curcent charges: Pmfessional fees Advertising Communications Printlng and binding Insurance Repairs 8nd maintenance Rer�cals MisCellaneous Oata processing charges Taxes Provlsion for astimated uncdlectable accounis Total other current c�arges Total operating expensss Operating income (loss) eusiness-type Enterprise Water �d �� Gas SoIJd Waste Utllity Utility I,Jtillty . S 37.172.766 $ 25,028261 $ 15,818,099 476.818 1, 495, 353 103, 8'15 �� " - 37,649,584 26,523,614 15,92f.924 6,971,988 3,719,794 " 4,306,332 7.516,678 10,639,840 9,050 1,881.033 170,862 328.626 673.673 462,294 2,702,492 1,581,f41 70,503 58,i88 ' 45 4,881,48B 4.935.68i 1,277,342 220,499 4, 923. Q 10 1, 811, 020 1,162, 770 1.180.074 88.831 74.244 - 1,112.239 5,093 111.940 137,953 54,226 - 6,007 . 243.800 i 01,780 120,500 2,675.400 228,836 68,171 - 52,388 1.750 268.73U 100,800 38,426 384.900 297,880 129�580 - 1,543,544 . 139,522 10i,037 43.519 5.004.366 3, 177 ,305 475,509 33.48�.57� 21.923.005 13,953.532 4,162,014 4,600,609 1,968,392 The notes to ihe financieE statements are an Integral part of thls statement 30 - F i iJ � ,. .; ;� :� ,� �; �f ; 1 .i .� ;, � .; , � :i ,, . i '•f � :... 1 i ) i :; � (� t� (i i f � r� I:. r : Ci � � F; d, I �_ I �: Activities Funds Governmental Bustness-tyPe � a�Y� - Activities - Stotmwater Other Intemal Service internal Servlce Uttllty Funds Total Funds ��p� $ 6.719.843 $ 2,267,604 $ 87,006,673 $ _ $ . 30,838 185,744 2,291,978 _ . - 5,338,519 5,338,bi9 . _ " ' - 14.530,532 15.881,253 - 3,050,343 3.050�343 - . 6�750,781 1U,841,610 97,887,b13 14,530,532 t5.981,253 1,547,27i i 30,773 471,197 977,i 83 1,273,460 2,319,847 2,209,6'98 429,812 344,6'28 32i,529 i,304,826 1,504,800 18,865,232 20,375266 2.941.l06 a.ssazea 2,029,941 4.891,531 8,715,530 10,875,080 f ,783,774 2Q5.649 97,Q59 353,Q16 19.021 5,i34,656 1.966,455 276,b9b 86,854 90,983 3,620,735 257,560 148,473 1,677,653 3,1�,275 57,055 ggp,34P - 35,485 t,i52,817 1b0 $2g 17,688 74,479 386.284 5fl,734 1,316,806 - 8,67Q i2.677 2,Oi6 42.148 �,4U0 125,780 640,280 12.572,840 923,964 166�772 201.754 3,339,9�i 587.132 593,841 - 184,377 218,515 6.866 145,843 60,843 . 67.`,r19 536,348 b0�044 135�982 63,350 85.570 881.290 57.160 358�180� - 18.445 1.561.989 - 6.248 �� _ 23�549 337,979 - . 534.876 2,� 4�81,311 12,267.387 73,383,987 3,884,878 4.934,760 10,916,450 85,215,317 15,842,508 15,318,716 1,816,021 (7Q',gqp) 12,q72�igg (1,3i1,974) 662,537 31 ' t�� City of Clearwater, Florida Statement of Revenues, Expenses, and Changes in Fund Net Assets (Continued) Proprietary Funds For tha Year Ended September 30, 2002 Nonoperating rev�ues (expenses): Eamings on investments Interest expense Amortization of bond discouni and issue costs Gain poss) on exchange of assets Other Total nonoperating revenue (e�enses) Income before contributions and transfers Capita! grants and conhibu6ons Transfers in ifAf13f8fS OUt Changes in net assets Total net assets - beginning, as prevtous(y reported, before a�ustrnent for (3AS8 34 implementaUon Adjustment for implementaHon of (3A� 3M1 - elimination of contributed capital Adjustment tor change in ac�tmt�g pdnciple - change in capitalization thresFrolds Total net assets - beginning, as resfated Total net asseis - ending Business-type Enterprise water and Sewer Cias Sotld Waste 1Jt11itY _ UtllttY UflUty 1,713,005 (3.576.551) (282,822) (45,669) 88,423 - i2,�, ,o2'g,a� 2,059,40U 2,311,690 (1,989,T19� 341.911 2,401,311 327,827 (1,473.183) (121,886) (t9,041) +, 366'635 (919,648) 3,680,961 349,693 (78,621) (229,288} 167,67i 209,455 2,177,847 (1,057,838) (� ggp,3qp� (1,057,838) (660.340) 2�,623�1?3 1,517,507 56,135,028 14,800,787 74,424,378 691,537 12,026,840 220,454 �2��) (381,346) (1,123,403) 130,290.363 15,130,978 91,123.885 S 132 $ 17,754,101 $ 12,641,392 --„ Adjustrnent b reflect the cansoRdatbon af intemel service fund activiUes related to enierprise funds. Change in net assets of business-type activities (page 1 g) The notes !o the flnandal sffitements are an integral part of this sffitement. � a, �, :; <� i ; ,� � :.i �� .1 ., -1 ;� ; 'r :) ! ; i ! ' : i � i ; i � {..� l ! � �. .� t e. , � ' ;� i; �r �: Activitles Funds Goverrtmental Business-rype Activities - Activlties - Stormwater Other Intemal Service Intemal Servlce ��ftY Funds TotaE Funtls Funds �,.._ 78.504 410,002 2.880,031 1,085.578 203,129 (4U8.995) (43,831j (b,b8t,181) - (362,076) C��54� i1.484) (413�739) _ . (67,039) 82.316 (298,721) - (134,771) 16,801 552,883 1.192,393 259 182,429 (388,278) 979,866 (2,22121'n 1,085.837 (111.288) 1,427,745 905.02B 10,250.879 (226,137) 551,248 -"_ 1,495.187 _ 3 gpg�gn _ _ 1,591,060 1,678,670 3,269,730 155,710 904,166 (_ 447.91� {23f,490} (4,387,364) {705.683) - 2.638,330 1,447,18U 2,709,243 50.027 904.168 4,066.075 2,352,2pB 12.960,222 (176.110) f,455.41b 256,794 9,826,875 23,117, 504 17, 053,629 (69,5s2) Rss,r� 23,364,736 25,883,768 $ 27,370,811 $ 28,235,974 594,753 $ 13,554,97b 33 14,930,148 7,545,802 734,864 3.804,563 (51,4p7) (i 84,2fi5) 15,613,606 11,166,100 $ 15.437.486 $ 12,821,515 City of Clean�uater, Fbrida Statement of Cash Flows Proprtetary Funds For ihe Year Ended September 30. 20�2 CASH FLOWS FROAA OPEAATINO ACTIVFTIES Cash received from customers Cash received from other fwds Cash paymenta to suppliers Cash payments to employees Cash payments to other funds Otherrevenues Net cash provided by operating activities CA3H FLOWS FROM NONCAPITAL FINAPICING ACTIVITlES Qperating transfers in Operat}ng transfers out Interest paid Racefpt of cash on loans to/From oTher tunds PaY�� oi cesh on loans to/irom other tunds Nei cash provided (used� by noncapital finandng aalvities CASH FLOWS FROM CAPITAL AND RFLATED FINANqNG ACTiViTIES Prh�cipal payments on debt Interest paid AoquisWon ot fic� assets Sate of fixed assets Proceeds irom issuance of debt Payment of bond issue costs Capitsl contriput¢d by; Other govemmental enUties Property owners Developers Net cash Provided (used� tor capifa! and related 8narn�ng activiUes CASH Fl.OWS FROM IN1/E3TINp ACTIViT1ES IMerest on investments Net cash provided by Invesllng adiv�es Net increase (decxease) in cash and cash equivalents Cash and cash equivalents at be�ming of year Qash and cash equivalents at end of year Cash ar�d Cash eqt�ivaler�ts classifled as: Cash on hand and In banks E4�Y i� P��d cash end invesUnents Restricted equity in popled cash and investments Total cesh and cash equiva►erns Business-type En� terprlse Water arM Sewer Gas Solkl Waste _ Utllity litilih/ lJti6tyr 3 37�568�185 $ 25�863.698 $ 16.079�288 (16�694.239) i13�948.055) (5�211.552) (7,551.374) (4,262.768) (4,564,498) (6.789,751) (2,844,U00) (4,169,668j 89.423 368.635 167,671 8,842,244 5,055.b11 2,283,341 (2.015.448) (1,057.838) (860,339) (1,004.123) (89.979} (253.g5p) (3.018,571) (1,147.81� (814.189) (5,224,870j (810,000) (37,295) (�,ss�,eo� ��.as�.sa� {s2,�as� (2o.sa�,aas) (i.sat.2ss� ��as,a25> 58.581,536 - - (523,228) - - 2�� - - 270,3q0 - - 32,878,802 (4,069,242) (275,863} 2,038.106 927,827 349.693 2�036�106 327,827 349,693 38,337.581 186.279 1.452,982 31,518,388 3,240.602 6,045,369 � 69�856.968 S 3.406.881 $ 7.4�,351 _ � 3 400 3 70o S 200 10,734,957 1,761, 901 8.733.830 59,121,612 1.644,280 784,321 $ 69,856.989 $ 3�4_�� $ 7�498,35i The notes to the ftnancial statements are an integrat part of this statement 34 � ,� _: :, F i „ � t � :1 i .1 ; :.i ,� :i � .., � � �; (i �, � (I 1 ActivlUes ��5 Governmer�tal Beishress-type Activlties - ActivJtles - Sto►mwater Other intemal Service Intemal Servtce LlHilty Funds Total Funds FurwJs $ 6,516,774 $ 10,775,ZQ3 $ 86.785.149 a - $ - t ' - - - 14,530,532 15,96t,253 i : i [ (a�.s2� c�,aos,el�� af,��a.ssa� ��2,zr�,o2s� {s,22s.2s3� (1�63B�282) i2.459.47� (20�488.398) (1�900,920) (5.449. '457) (1,883,129) {1,817,341) (17,583,789) (203,485) (882,071) � ` 45,801 662.863 1,192.38:i - 182.430 � t 2,559,237 1.650,338 18,200.671 153.102 3,606,892 r � � '. � r: f� �: 1,59t,06U 1.747,346 3,338,406 155,7t0 910,693 (b13.847) (233.470) (4,480.942) {10.5,683) - _ �24� �4� . _ - 4.879,115 4,678.115 877,085 167,646 (1.567,2667 (8.486.758) (11.411,976) {2,239,681) (3T/,572) (490.053? (2.303.791) (7.675.421) (1,312,689) 700.767 (258.80� {200.258i (B.33f.228) - (273�518) �ss�,�ss) {as,�aa} �a,�ss,tsr� - {3s�,o��} (15,847,271) (667.878) (39,470,33� (6,648) (4,205,378) • 4.03t 4.031 259 269,578 24,472.$d1 13.442 83,047.619 25,682 889,629 (346,678} - (g6g�gpg) . . 1,927,520 - 3.957,619 - - 22.667 - 22,68T - . - - 270,340 - - 9.408.318 _ (899�AOn S8.B42�608 19�?�3 (3,681,764) 164.075 410.002 3,287,703 1.085,b79 203.129 164,075 470.002 3,287.703 1,085,b79 203,129 t�.aa�,sn ��.�a2.esa� so,a�.sa� �sa.a�s� azs,o2a $.856.435 5,543.51Q 53.205,304 20,433,OQ2 3,978,120 $ 18,498,012 $ 4,400.652 $ 1Q3,60D;866 $ 20;378;387 S 4,807,144 � � $ $ 22.967 3 24,267 S - $ 1,900 3.607,652 4.981,312 27.199,652 20,378.387 4,805,244 14.890.360 16.373 76.436.948 - - $ 18,498.012 $� $ 103,860.865 $ 2Q.378,387 $ 4.807.144 35 {cortUnued) C�iy oi Clearwater, FlorEda Statement of Cash Flows (Conttnue� Proprleiary Funds For the Year Ended September 30, 20p2 Reconcllietion ot operattng income to nei oash p�ovided by opuaNng activities: Opera�ng income (lass) �g Adjustments to �econclle operatlng income (loss) to nei cash provided bY �ff�9 �+es: Oiher revenue from nonoperaHng aectlon oi income stateme�rt DeprecfaUon Moa-cash land rental expense Prov(sfon for tmcc�ilecdbte accoW�s Capitalized laborand ir+terest Constntction in procsss recl8ssified as expensa Change in assets and ItablliUes: Susiness-type EMerpNse water ^•� and Sewe� Gas SolId Waste lJt1Uty lltilil�r _ Utllity 4,162,014 5 4,600,609 $ 1,968,392 89.423 �B,835 167,671 4,935.681 1,277,542 220,499 138.522 107.037 (29,841) (120.728) (351.433) . � - - (Increase) decreasein accounts reo�vable 55�335 q2�g55 �sp,p02 (Increase) in amount due Trom other govemmertts (15g,ggij _ _ (Increase) decrease in inverrtory (86,fi16) 1 i,353 - (increase) in prepaid expenses ��7� _ _ Intxease (decrease) in aa�ounts end Conhacts payable (1,916.883) (38.354) 2.062 Increase {decrease) in deposits 20,227 58,9A7 56,522 Increase (decrease) in detened revenue - p61,716) . (Increase) in net pension assei (514,645) (282,804) (2g7,363) tncrease (decvease) in aCCrued payroll 35,802 31,040 39,tg7 Total adjustments 2.480.230 454.802 324.949 Net cash provlded by operating ac4ivitles S� $ 5,055,6f 1$� � Noncaeh investing, capital and finartctng acUvities: Gdin (foss) on exCflange of assets S i�`�869) $ (19.04i) $ - Land cont�budon W general goventment assets $ - S - $ 229,288 cnar�e �n fa�� va�ue o� �ves�me� s��a2,o2e� a - $ - cornr�uted utlrrties rrom de+relopers $ - s • 3 - The �otes to the flnancta! statements are an irrtegral part o!` this statement 36 r� !; i ,! � , i �� i i �, ; i �1 _ i .I � =- i ;.; r �i (i rr �i I� �. �� i �f 1 iT �: �� ; t! �' l� � r i 1 l . �' f.i f' i: i .; i �.. . �i L1 �* f� � �.1 t: i� � .s �: � i .� • 1. n = 1 E,_t � : L..s � � i� � Activities Funds tiovemmeota! Susiness-type Activtties - Acilvities - Stormwater Otber tnternsl Servlce Intemal Servlce Utility Funds Total Funds Fu�ds S 7,8i6.021 $ (T4.840) $ 12.a�2,�ss g (1.311,974) $ 862,537 i5�8Q1 552.86:i 1�192.393 - 182,430 877.183 1,304,825 8.715,530 19.021 3,620.735 - 136,498 156,498 - - 30,362 (1,2U8) 246.0B1 - ,. - • (472.181) - . � � _ . ��4i�%� ��i�7�� .�6� ' %$ ' - (i5&,8B1) - . - (10,423) (85.666y - (109,910) " " (22� (422.890) - 42,898 (82,848) (1.973.12� 1,986,092 (434.i75) - {t1,461) 124,235 - - - i2,632 (749,084) - _ (112.001) (]40.00t) (1,346.814} (106.962) (351,683) 22,9� 6,372 135.401 (10,185) 36.882 743,218 1,725,178 5,728,475 1.465,076 2,944,356 $ 2,559,237 $ t,650,338 $ 18,200.67t S 1�53,1Q2 $ 3,508,892 $ cs�,oas� a a - a i - $ a ,,.2so 3 62.316 $ (69.q33) $ • $ 229�288 S (43) S (142.071) $ - $ � �.z5o a J7 $ $ $ s (t94,771) City ot C(earwater� Florida Stat�ment of Flduciary f�tet Assets �tduclary Funds 3eptember 30, 2002 ASSETS Cash on hand ar�d � banks Equiiy in pooled cash and tnvestments Managed investment accounts Interest and dividends recei�able Accounts receivable Tatal assets UABlUTIES Accaunts payable Deposits: Property owners Developers Total deposits Other miscellaneous payables: Special purpose funds Other Total miscelfaneous payables Total liabilities NET ASSETS Reserved for empbyee pension benefits Total net assets Pension 7rust Agency Funds Fund $ 17,948 $ - 4,095,119 284,162 396,897,295 - 2,OU1,094 - _ 4i�643 - 403,053,099 284,162 407,002 - - 21,944 - 115,558 - 137,502 - 7,922 - 138,738 - 146,660 407,002 284.162 402,646,097 - $ 402,648,097 $ - The notes w the Mandal staUements are an iategral part of �is statement 38 -; 9 :; ;; :, , � �; :, _; ,, :; :; ,t i : i � � ; } i � ;.� i � : .; _! r � � l ; � r r ,; �; ij i; f.' �; ;; r't t i (: � � City of Clearwates� Flortda Statement Chenges !n Fidaciaty Net Assets Fiduciary Fuhds For the Year Ended September 80� 2002 ADDITIONS Contributions: Contributions from empbyer Con#nbutions from employees State oi Fbrida Totat contributfons investment Income (loss); Net appreciation (depreciation) in fair value of investmenis lMerest Dividends Less investment expenses; Investmer�t managem�t / custodian fees Net tnvestment incorr�e (Ioss) Tatat additions (reductTo�es) DEQUCTlONS Benefits and withdrawal payments: 8enefits �#hdrawal payments Tota1 benefits and withdrawal payments lncome (loss) before administrattve expenses Administrative expenses . Net increase (decrease) Net assets held in trust for pension benefits: Begtnning of year End oi year The notes Fo the tinancial statements are an integral part of ihis siatement 39 Penslon Tnrst Funds $ 5,593,561 5,089,687 � ,377,299 t 2�040,547 (40,705,797) t 0,578,980 i 689 384 � � � 1,921,382 ( 03 ,358,81b) (i 8,318.268) 14,086,01 f 549.742 14,635,753 (32,554,021) 333.842 (33,287,863) 435�93:i�960 $ 402,646,097 � Cify of Clearwater, Florida Notes to the Financial Statements September 30, 2002 Note I— Summary of Signlficant Accaunting Policies The City ofi Cfearwater, Florida (the City) was incorporated in 1923 per Chap#er 9710, Specia! Laws of Fforida, as amended. The City is a Flo�ida municipal corporatior� gavemed by a five member City Commission including a mayar-commissioner. The City has an estimated population of 109,OOO�and is located in the four-cour�ry Tampa-St. Petersburg-Clearwater Metropolitan Statisticai Area (MSAj, which t�as an estimated population of 2,414,900. The financiat statements of the City of Clea�uwater, Flotida reporting entity (City) have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to govemmental units. The Governmental Accountir�g Standards Board (GASB) is the standard-setting body for govemmental accounting and financial reporting. Pronouncements of the Financia! Accou�ting Standards Board (FASB) issued after November 30, 1989, are not applied in the prepa�ation of the financial statemen#s of the proprietary fund types in accordance with GASB Statement Number 20. The GASB periodically updates its codification of the existing Govemmental Accounting and Financial Reporting standards whlch, along with subseguent GASB pronouncements (Statements and Interpretations), constitutes GAAP for govemmentat units. The Citys more signii'icant accounting policias are described below. In June i999, the GASB unanimously approved "Basic Financial Statements and Management Discussion and Analysis for State and Lvcal Govemments" (Statement #34). This statement results in the most significant change in governmental financial reporting in over tweoty years and is schectuled for a phased imptementation (based on the size af the govemment) starting with fiscal years ending 2002. As part of this Statement, there are new reporting requirements far governmen#s' infrastructurs (roads, bridges, etc�. This requirement permits an optiona! four-year delay #or retroactive implementation of the infrastructure reporting requirements to fiscal 2006. The Ciry has elected to implement the basic model for fiscal year 2002 and will defer implementation of #he retroactive infrastructure reporting to fiscal year 2006. A. Financial Reporting Entity �� A .i {, .i ;; ,� :a ., :; ' : 3 In evaluating the City as a reporting entity, management has included in ihe accompanying iinancial statements the City of Clearwater (the primary governmsnt) and iis component units, entities for which the govemment is considered `' to be fiRancially accountable. The City has adhered to the standards set forth in GASB Statement No. 14 in reporting the primary govemment (including blended component units)� discretely presented component units, the reporting entity, and relatsd organizations. . , 8lended Component Units — Component units that meet the criteria for blended presentation in accordance with GASB Statement Number 14 are reported in a manner similar to that oi the primary government itself. Accordingly, throughout this report, data presented for the primary government includes data of the following blended component unit. The Clearwater R�development Agency (CRA), created by authority of Florida Statute Chapter 183, Part III, and City of Clearwater Reso(ution 81-68, although it is fegalty separate, is reported as if it were part of the City (blended componer�t unit) due to the Ciiy Commission serving as fhe goveming board o# the CRA. Separate financial statements for the CRA are not available. However fi�ancia) statements for the CRA are included in the Cit�is comprehensfve annual tinancial report as a govemmenfa! special revenue fund. Discretely Presented Component Units — Component unds that meet the criteria for discrete presentation in accordance wl#h GASB Stateme�t Number 14 are presented in a separate component units column in the government-wide financial statemenis in order to clearly distinguish the balances arid transactions of the component unit #rom those of the pr�mary govemment. The dtscretely presented component unit llsted befow is reported separately in the financial statemen�s and in the refated notes and requi�ed supplementary information. Ths Ciearwater Dawntown Development Board (DD8) was created by authority of Florida Statutes 70-635 and 77-637, and City Ordinance 5347-93, but is legally separate from the City and govemed by a separate board. The DDB was created by City ordinance and ihe Clty is #tiereby able to impose its will on the organization. Additl�onally the exclusion of the DDB's activities from the Citys financial statements would, in the opinion of the Cit�s man�ement, cause the financial statements to be inoomplete. Consequently the DDB is reported in a separate column in the government- wide financial statements as a discretely presented component unit of the financial reporting entity, in accordance with GASB Statement No.14. The DDB's financial statements have been incorpotated into the City's comprehensive annual financial report as a governmental discretely presented component unit. Separate fir�ancial statements fo� the ODB can be obtained from the City's Finance Department located at 100 S. Myrtle Avenue, Clearwater, Florida. 40 -, ; i i ; fi -� -:. i ,� :i „ ! ,� „ i. \ � City of Clearwater, Florida �' Notes to the Financial Statements i: � � September 30, 2002 r; i� , B. Bastc Financiai Statements Under the New Financial ReporGng Moclel �� During the fiscal year ended Sep#ember 30, 2002 the City Implemented the new financial reporting modei as of result ►� of the foltowing Statements of the Govemmentaf Accourrting Standards Board (GA5B): GASB Statement Wo. 34, Basic Financial Stafement-and ManagemenYs Discussion and Analysis-for State and Local Govemments, GASB ! 7 Siatement No. 36, Recipient Reporting for Certain Shared Noneurchange Revenues, an amendment of GASB - L� 3tafemeni No. 33; GASB Statement No. 37. Bas1c Financlal Statements-and ManagemenYs Discusslon and Analysis-tor State and Local Govemments: Omnibus, an amendmeM of GASB Statemer►ts No. 2� and No. 34; and ,, GASB Statement No. 38, Certain �nancial Sfatemenf Note Disclasures. The City's Basic Financial Staiements contain three componerrts: govemment-wide financial statements, fund financ�al statements, and notes to the financial statements. 'I. Government-wide financial statements. The govemment-wide financia! statements report information on a!! of � the no�fiduciary activi�es of the primary govemment and iis component units using the acxrual basis of accounting, wliich is similar to the accounting used by private-sector businesses. For the most part� the effect ot intertund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and • intergovernmental revenues� are reported sepa�ately from business-type activfties, which rely to a signfficant extent on fees and charges for support. Likewise, the primary govemment is regorted separately from the legally separate component unit for whic� the primary govemment is financiaily accountabte. ' The statement of net assets presents information on all of the assets and iiabilities of the City. The difference between asset5 and IiabiEities fs reported as net assets. Changes in net assets may serve as an indicator of whether the fnancfal position oi the City is improving or deteriorating. The statement of activities demonstrates the degree to which the direct expenses of a given function or segmertt are offset by program revenues. Direct expenses are those that are clearly identifiabie with a specific function or segment. Program revenues inclucle 1) charges to customers or applicants wfio purchase. use, or directly beneflt from goods, services, or priviteges provided by a given function or segment and 2} grants and contributions ihat are restricted to meeting the operatbnal or capita! requirements of a particular function or segment. The operating grants include operating-specific and discretionary (elther operating or capitan grants while the capital grants column reffects capital-specifie grants. Taxes and other items not properiy included among program revenues are rsported instead as general revenues. AU revenues and expenses are reported as soon as ths underlying transaction has occurred� regardless of when casf� is received or paid. As a general rule the effect of intertund activity has been eliminated irom the govemment-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other quasi-exEemal charges between enterprise funds and various other functions of the govemment. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concemed. 2. Fund financial statements. Separate financial statements are provided for govemmerrtal funds, proprietary �' funds, and fiduciary funds, even though the latter are excluded fram fhe govemment-wide financial statements. The �� fund financial statements are, in substance, very similar to the �inancial statements presented [n the previous financial reporting model. A new emphasis is on the major iunds in either the govemmentaE or business-type categories. - Major individual governmenta! funds and major individuai errterprise funds are reported as separate columns in the f; fund financial statements: Non-major funds (by category) are summar'rzec! into a stngle column. � 4 o ' The City reports the folEowing major govemmentai funds: The Genera) Fund is the govemment's primary operating fund. It accounts for ail financial resources of the general govemment, except fhose required to be accounted for tn another #und. The Special Development fund is a special revenue fund used to account for impact fees. property taxes for road impravements, local option gas taxes, infrastructure taxes, and other revenues which are restricted legally or by C'rry Commission policy to be used for specific capital improvement projects. 41 City of Clearwafer, Florida Notes to the Financial Staiements September 30, 2002 The Capital Improvement Fund ls used io.pcovide �mbined acco�nting presentation for aIf City capital improvement prajects except those financed #rom p�oprietary funds o� bond proceeds where bond ordlnance provisions require the segregatio►� vf bond proceeds in separate funds. The City reports the foilowing major proprletary funds: The Water and Sewer Utiliry enterprise fund is used to account for the financing, construction, operation, and maintenance of the water and sewe� services of the City from charges made to users of the service. The Gas Utiiity enterprise fund is used to account for the financing, construc�on, operation, artd maintenance of the gas service of the City from charges made to the users of the service. The Solid Waste Utllity enterprise fund is usec! to accouM for the financing, construction, operation, and maintenance of the soiid waste service of the City from charges made to the users of the service. The Stormwater Utility enterprise fund is used to account for the financing, construction, operation, and maintenance of the stormwater management systern of the Ciiy from charges assessed against each devetoped property. Proprietary funds distingutsh operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services -a�nd producing and dellvering goods in connectlon with the pcoprietary fund`s principal ongoing operations. Operating e�enses fvr proprletary funds inc[ude the cost of sales and service, administrative expenses, and depreciation on capital assets. A(i revenues and expenses nat meeting this definition are reported as nonoperating revenues and expenses. Additionally, the City reports the following fund types: tnterna! service funds account for fleet management, information technology; telephone, graphics, employee relations. facilities management, radio communications, insurance, and risk rrtanagement services provided to other City departmenfs on a cost reimbursement basis. ihe Garage and Administrative Services internal service funds primarily benefit enterprise funds and are therefore included as business-type activities in the government-wide financiaf statements. The remaining lnternal service funds, the General Services and Central Ensurance funds, prlmarily benefit governmental funds and are consequerrtty included as govemmental activities. Pension trust funds account for the financial operation and condition of the Employees' Pension Plan, the Firemen's Relief and Pension ('lan, the Potice Supplemental Pension Plan, and the Firefighters Supplemental Pension Plan. The Treasure�'s Escrow Agency Fund accounts for the receipt, custody. and expen8iture of monles held temporariiy in an agency capacity fa� ofher parties. The pension tnast funds and the agency fu�d are fiduciary funds used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not included in the govemment-wide financial statements because the resources of these funds are not avaifable to support the Cit�s own programs. C. Measurement Focus, Basis oi Accountirtg, and Financial Statement Presentation The government-wlde financial statements are reported using the economic resources measuremeni focus and the accrual basis of accaunting, as are the proprietary fund ar�d fiduciary fund financial statements. Revenues are recorded when eamed and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes ate recognized as revenues in the year fo� which they are levied. Grants anc! similar items are recognized as revenue as soon as all eligib�lity requirements imposed by the provider have been met. GovernmentaE fund financial siatements are reported using the cunrent financial resources measurement focus and the modifled accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considerecf to be available when they are collectible within the current pe�iod or soon enough ihereafter to pay liabiliiles of the current period. For this purpose, the City considers revenues to be available if they are collected within 90 days of the end of the current flsca( year., Expendrtures generally are recorded when a liability is incurred, as under accrual accouniing_ However, debt senrice expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. 42 % 'S � ,� ;> :; �, ,� � i� ;y ,� : .1 :t .; , i ., ;; �. .t � ,� ; _- � `} i; „ ;; ii � r- �: Cifiy of Clearwater, Florida f' Notes to the Financial Statements � i September 30, 2002 i_E • i; • Property taxes� franchise taxes, licenses� and interest associated with the current fiscal period are all considered susceptible to accrual and so have been recognized as revenues of the current fiscal period for the goverr►mental �? funds. Ali other revenue items are considered to be measurable and availabie oniy when cash is received by the � � govemment. � � �' �; !; D. Assets, LQabilities, and Net Assets or Equtty 9. Deposits, pocied cash, and investrne�ts � f lnvestments with original maturities of three months or Iess are considered to meet the definition of cash equivalents. � i ihe majority of tEze investments in which the Cit�s funds have equity are held by the City's consolidated pool of cash and investments. The City utifizes the consolidated cash poot to aocouM for cash and inveshnents of atl Ciiy funds other than t� those that are required by ordinance to be physicalty segregated 'i'he consolidated cash pool concept allows each �: particfpating fund to benef�t from the economies of scale and improved y1eld that are inherent to a larger investment pool. Formal accoun�ng records detail the individuai equities of the pariicipating funds. The cash pool utpizes a single �- checking account for aU Ciiy r�eipts and disbursemerrts. Since fund equit[es in this cash management pool have tFte general characterist�s of demand depos9ts in that additianal funds may be deposited at any time and also funds may be withdravm at any tlme without prior noUce or penaliy, each fund's equiiy account is considered a cash equivaleM regardiess of the maturities of investmeMs held by the pool. All individual fund cash equity in a def�it (overdraft) positfon with respect to the consolidated cash pool is reclassified at year-erid to short-term inierfund payables to the Capital lmprovemer�t Fund. The Capitat Improvement Fund is the fund selected by management to reflect the offsetting interfund receivables in such cases. i. ; The Ciry has an agreement with its de�ository bank to provide that all excess cash is swept daily and automattcally into an ovemight money market account which pays interest at 14 basis points (0.14%) less than the daily federai �� funds rate (1.75°� ai September 30, 2002), with no requirement f�r a minimum compensating balance. This account � ls collateralized through the State of Florida Public Deposits Program. t: �y t aj 1; � _� � ,; Under City Charter and tt►e current lnvestment Poticy, aciopted by the City Commission on September 7, 1995, consolidated cash pool investments are limited to the following: United States Govemment SeCUrities, CettJficates ot Deposit in Loca� Banks, Repurchase Agreements, Savings Accow�t in Local Banks. Federal Govemment Agency Securities, Municipal Bonds (other than Cit�r of Clearwater issues)� State of Ftorida Bonds. and Municipal Bonds issued by counties in Florida. Tk�e City utilizes a very c;onservative investment philosophy when it invests its pooled c�st1 funds in that the reiurn of the princlpal is mora important than the retum � the principat. The Cfty does not actively trade its porifolio anci generally holds fnvestments until maiurity. Through the use of a laddered approach to maiurities and by �ming maturitiss to cash needs, the Ciiy does not anticipate selling �vesUnents to meet caslt ffow r�uirements. Under the City's Investment Pol'icy, a performance measure standard has been established. The perFormance measure chosen is a weighted average of: the ovemight iMerest rate; and three month, six month, one year, and three year Treasury rates res�edively. For the fiscal year ended September 30, 2002, the pertormance measure weighted average is 220%. The actual pooled psh eamings pertamance, before bank charges, was 4.85%. lnvestments being held outsEde of the consolidated cash pool indude escrowed debt service investments and employee retirement Investments. Permissible escrowed dei�t service investrnents are speeif'�cally defined in each individual debt (nstrument, but gener,afly follow the same 19mitations which appiy to consolidated cash pool investments. The Clty maintains four different emptoyee re�rement programs, and each one has its own list of permitted investments. Generally� each plan allows the same type of irnestments as the consolidated cash pool, but additionally allows some portion of its assets to be invested in stocks, bonds. and notes of corporations listed on one or more of the recognlzed national stock exchanges. Gk] City of Clearwater, Ftorida Notes #o the Flnancial S#atements September 30, 2002 2. Receivables and payables Activity between funds that are represantative of IendingNorrowing arrangements outstanding at the end of the flscal year are referred to as either "due talfrom other funds" (i.e. the current portion of inierfund loans) or "advances io/from other funds" (i.e. the non-current portion af interiund bans). AIE other outstanding balances between funds are repart� as "due to/from other funds.° A�y residuai I�alances outstanding befinreen the govemmentai activities and business-type activities are reported in the government-wide flnancial statements as "intemal balances". . Advances beiween funds, as reported in the fund financial statements, are offset by a fund balartce reserve aceount in applicable governmeMal funds to indicate that they are not avaiiable fo� appropriation and are not expendable available #inancial resources. All trade and properry tax receivabtes are st�own net of an allowance for uncopectibles. Trade accounts receJvable less than 60 days are included in the trade accounts �eceivable allowance for uncoAectibles at the five-year average loss experience rate of 4.89°�. Trade accounts receivable in excess of 60 days are reserved at 40%. The property tax recelvabte allowance ior uncoliectibles is 10% of the current year portion of the receivable, and 30%, 50%, 70�0, 90%, and 9b°� for the receivable po�tions attributabie #o the prior five years respectively (�isca12001 thru 1997), and 100% ofi the reoeivable attributable to fiscal years 1996 and prior. Property tax revenue is �ecognized in the flscal year for which the taxes are levied, provided the avaliability test is met, In conformance with NCGA Interpretation No. 3. Property taxes for #he following fiscal year are levied by commission action in September of each year. � This fevy is apportioned to property owners based on the previous Jar�uary 1 assessed values. Tax bills are mailed out on or about November 1, and the collectior� period ru�s from November 1 through March 3i. On April 1, unpaid property taxes are conside�ed delinquent and become a lien. Tax certificates are sold in June for real property with dellnqusnt taxes. Since iaxes are not collectecf prior to November 1, the City ctoes nat record reve�ue for advance collections. Uncollected taxes receivable at year-end are recorded, with an appropriate allowance for esfimated uncolEec#ible amounts. The net amount deemed to be coUectible but not current (noi expected to be collected wi#hin sixty days after the close of the fiscal year) is shown as a deferred revenue in the appropriate fund. Additionaily, taxes assessed for the following fiscal year are recorded as a receivabfe and a deferred revenue in accordance with Govemmental Accounting Standards Board Staiement No. 33. Alf delinquent property taues, except those levied speciflcaity fo� the restricied purposes of �nancing activities accounted for in the Special Development Fund, are recorded in the General Fund. Property tax revenues are recognized in the General Fund and the required transfers to the appropriate debt servlce or pension fund are recorded as operating transfers from the General Fund. The Ciry is permltted by State law to levy ten mills without refe�endum. Additional millage not subJect to the ten mil! limitation is authorized if approved by referendum. The tax rate of 5.5032 m1Ns for the year ended September 30, 2002 was unchanged from the September 30, 2001 rate. 3. Inventcries and prepaid items Inventories of proprietary funds are stated at cost and walued on the flrst-in first-out (F1F0) basis. In govemmental funds, the ma�ority of inventory items are accounted for under the purchases method, which provides that expend�tures are recognized when the �nventory item is purchased. The onty govemmental fund inventory that is aa�unted for un�r the consumption method is the Gener•al Fund inventory of items for resale at the fishing pier. Under the consumptlon meti�od, the expenditure is recognized when ihe inventory item is sold (or consumed). Certain payments to vendors reflect costs appl'►cable to future accounting periods and are recorded as prepaid items in both govemment-wide and fund financial statements. 44 t L � q � � � � �� ,� j F : ., 7 � i �j < J r� � ii .� :.y -� � i� �� :� :; � :; � � � , ., �+ 1 . City of Clearwaier, Florida �' Notes to the Financlal Statements I; � � September 30, 2002 4. Resiric�ted assets Certain resaurces of titie City�s enterprise funds are classi�ed as restricted assets. Restricted assets indude: Water and �, Sewer improvement charges restricteat by the authorizing or�nances to the consVuction of add�tions and (mprovements ! to the water and sewer systems, and assets of the Water & Sewer Utitity, Gas Utility, Stormwater Ub7ity, and Parking S�stem fur�ds restricted under the prov�ions of authori¢ing ordmances for revenue bonds to the payment of future revenus bond debt service. system construction, and renewals and replacements. �T i ` 5. Capital assets �? Capitat assets, which indude property, plarrt, equipment. and oertain infrastructure assets. {e.g. roads, bridges, and simiEar items) are reported in the appiicable govemmental or business-type activities columns in the gavemment-wide `` financiaf statements. However infrastructure asseb are onEy reported for the current fiscal year. The City has chosen to ,, defer implementatton of retroactive infrastn�cture reporting to fis�l year 2005/2006 per the cunent year Implemerrtation � of GASB Statement #34. Capital assets are defined by the Ciry as assets with an inftial indivitlual cost of more than ti� $5,U00 (amount not rounde� and an estlmated useful life in excess of five years. Individua! assets that cost less than $5,000, but that operate as part of a network system, wiil be capitalized in the aggregate� using the group method, if F' the estimated average useful life of the incfividual asset is five years or more. Additionally, higher thresholds for I; capitaliza#ion apply to the following categorles: land impravements, $5Q,000; buildings, building improvements, and utility systems, $100,000; and infrastructure� $500,000. Capital assets are recorded at historlcal cast or estimated �. historical cost if purchased or constructed. Donated capftal assets are recorcied at estimated fafr market value at the �; date of donatfon. The costs of normal matntenance and repairs that do not add to the value of the asset or materially 1� extend asset lives are not capitalized. {` Major outlays for capital assets and improvements are capitalized as projeats are constructed. Interest incurred ;.; during the construction phase of capital asse#s of business-type activities is included as part of the capitalized value of the assets construeted. The total interest expense incurred by the City during the current fiscat year was $6,448,996. ?� Of this � amaunt, $16Q,073, $769,723, and $60,471 were included as part of the cost of capital assets under �_ constr�ction in connection with stormwater. water � sewer, and gas system projects, respective�r. � r Property, plarit, and equipment of the primary govemment, as well as the component units, as applicable, are A; depreciated using the straight-line mefhod over the following estimated useful lives: :. . �� s e� � Years � ! � ' Buildings & building improvements 10-40 �'r Pubtic domain fnfrastructure 20-4Q � � Utility system infrastructure 25-40 Land improvements 5-5Q t � Machinery & equtpment 5-33 1/ehicles 5-1 p 6. Compensated absences �` It is the City's policy to pemutt employees to accurtwlate eamed but unused vacatlon and sick pay benefits. Generally �� employees may ac�umulate vacation time not exc�eding 360 hours and sick leave not exceeding 1,560 hours. Upon retkement from Clty service a qualified empioyeo is paid far all vacation Ume not exceeding 360 hours and one-half of f, accumulated unused sick leave not exceeding 1,560 hours (i.e. maximum pay-out of 780 hours). The City accrues for all _� earned but unused vacation pay up to the °cap' of 360 hours, and the portion of unused stck teave estlmated to be �. � payable upon retirement. The current portion of compensatecf absences is the amount estimated to be used In the following year. i. Long term obligations t; In the govemmerit-wide financial statemerits. and praprietary fund types in the fund financial statements, long-term debt and other long-terrn obllgations are �eported as liabilities in the applfcable governmental activities, business-type �4� City of Ciearwater, Fiorida Notes to the Flnancial Statements September 30, 2002 activities, or proprietary fund iype statement of net assets. Bor�d premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the strai�t-line me#hod. Bonds payable are reported net of the applicabfe bond premium o� discount. Bond issuance costs are reported as deferred charges and amortized aver the term of the related deb� In ihe fund financial statements, govemmental fund types recognize bond premiums and disoounts, as well as bond issuance costs, during the curreni period. The faca amount of debt issued is reported as other financing sources. Premiums received on debt issuances are raported as oiher financing sources while discounts on debt issuances are reported as other financing uses. lssuance costs, whether or not withheld from the actual debt proceeds racgived, are reported as debt service expenditures. 8. Fund equi#y In the fund financial statements, govemmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specfic purpose. Designations of fund balance represent tentative management plans that are subject to change. Note II — Stewardship, Compl"�ance, and Acxoun3abi{ity A. Budgets and budgetary accaunting Annual budgets are legally adopted for the City's Genera( Fund, the Special Development Speaal Revenue Fund, and the Community Redevelopment /�qency Special Revenue Fund. The City of Cleanrvater observed the following procedures in establishing the budgetary data for the General Fund and Special Devetopment Fund, as reflected in the financial statements: - On June 15, 2001, the Ciry Manager submitted fo the Ctearwater City Commission proposed budgets for the fiscat year cornmencing October 1, 2001 and er�ding September 30, 2002. PubUc Hearings were hetd on September 6, 2007, and September 20, 2001, at the Clearwater Commission Chambers to obtain cit�izen comments. On Septem6er 20, 2001, offic�al budgets were legal(y adopted by Ordinance No. 6842-01. Subsequent quarterly budget amenc�nents were adopted on April 4, 2002, (Ordinance 6956-02) and Jufy 18, 2002 (Ordmance 6995-02). The flnal amended budget was adopted October 3. 2002 (Ordinance 7009-02). The budget fa the Special Develo}�ment Fund is adopted on a basis cflnsistent with GAAP, and appropria#ions lapse at year-end. Apprapriations for open encumbered purchase orders at year-end in the General Fund do not lapse, but rather continue unti! liquidated or otherwise r.�ncelled by Ciry Commission action. On the General Fund budgetary �mparison statemerrts, actuat e�enditures have been a�usted ta include end-of-year encumbrances and to exdude beginning-of-year encumbrances to provide for a meaningiul cornparison. F�xcept for the treatment of encurnbrances �d oertain t�ansactions relatlng to irrtertund loans, the General Fund Budget is adop#ed on a basis cflnsistent with GAAP, and all non-encumbered appropriations iapse at year-end. The level of budgetary oontrol estab[ished by ti�e legislative body, the level on which expenditures may, not tegally exceed appropriatlons, is the individual fund. in accordance with provisions of Ordinance 8025-90 and with Section 2.519(4) of the Clearwater Code, the City Manager may transfer part or aA of any unencumbered appropriatlon balance among programs within an operating fund, provided such actlon does not result in the discontinuance of a program. Such transfers must be ir�cluded in ihe next budget review presented to the City Commission. Upon detailed written request by the City Manager, the City Commission may by ordinance transfer part or aU of any unencumbered appropriation balance from one fund to another. As established by administrative policy, departmerrt directors may transfer money f�om ons operating code to another wlthin a program without a formal written amendment. Formal requests for budget amendments from department directors are required for transfers in capital expendihires, Vansfers, and reserves. Thus, certain object classffkations within departmental and/or program budget approprlations are subject to administratively imposed controls, in addiiion to the legal coni�ols impQSed by City Commission action described above. The annual budget for the Community Redevelopmeni Agen�y is adopt�! by the trustees of that agency in accordance wfth state faw. the current year budget was off'�cially adopted on June 18, 2001. The budget is adapted on a basis consistent with GAAP, the tevel of budgetary control is the total fund, and appropriations lapse at year-end. �� :' ;-, :: �, � "; _3 .; :t ;; >. ,� _ .i �� s :z i : r � ,� :i ., ;; ...; i� f; ., ;� � ; T � i I a � . City of Clearwater, Florida �' Notes to the Financial Statements � � Sepi�mber 30, 2002 � !; F I �1 � ;; �. r s`'' �: � i � �' ! L i� Budgei. amounts presented in the accompanying financia! statemenis reftect atl amendments adopted by the City Commission and the governing boards of companent units. Ail amendments were adopted fi conformance with legal requirements. Individual amendmerits, as welt as the net effects of all amendments du�ing Ute fiscal year, were not material in relation to the originai appropriations for the governmental funds in the aggregate. � The Clearwater City Commission aiso adopts budgets for the Enterprise Funds, aU lntemal Service Funds, the Capital Projects Funds, the SpecEal Programs Fund, anci the Local Hausing Asststance Trust Fund. Budgetary comparisons for the Enierprise and Intemal Senrice funds are not required by NCGA Statement Ido. 1 for the general purpose financial staterrtents and aze not included in this report Budgets fw the Capitai Projects Funds, the Special Programs Fund, and � the �ocat Housing Assistance Trust FuncJ are adopted on a muld-year compleied program basfs, where budgetary appropriations do not lapse at year-end, but may extend acxoss two or more fiscaJ years. A comparison of annual results with these budgets would not be meaningful and is therefore not a�cluded in this report. All City Commission adopted budgets are integrated into the formal accounting system to allaw for monti�ly comparison of projected and actuat experience in al! funds for which budgets are adopted. The annuai buclget for the Cfearwater powntown Development Board (DDB), a dtscretely presented component unit of the Ciry, is adopted by the members of that board in accordance with state law. The current year budget was officfally adopted on September 13. 2001. Separate financiat stataments for the DDB can be obtained from the City's Finance Department located at 1 �0 S. Myrtle Avenue, Clearvvater. Florida. 6. Exc�ss ot expenditures over appropHatbrts The Communiry Redevelopment Agency Spec:iaal Revenue Fund had intertund °transfers out° in excess of appropriations in the amount of $210,939 due to unbudgeted transfers to capital projects funds. C. Re-statement of prior year balances The following requlre restatement of prior year balances. AI! restatement amounts are detailed in the fabfe below. 1. Elimination of contributed capital category 7he implementation of Govemmental Acxountfng Standards Board Statement No. 34 {GASB 34) required the eliminatian of the contri6uted capita! equity category and the redassificat(on of prtor contnbuteci capital balances as net assets. 2. Adjustment to fixed asset balances dae to new capitalization poticy Ef#ective October 1. 2001, the City implemeMed a new capftalization poficy.that included increased threshokfs for capftalization of fi�ced assets. This required a prior perlod restatement to reflect a decrease in general govemment capitai assets and proprietary fund net assets for the previousty capitatizec! assets that do not meet tha revised capitalization thresholds. 3. Adjustments to general fixed asset batancss per GASB 34 implementatlon ilie City's current year implemanta#ion of GASB 34 resulted in a comprehensive reconciliation of fixed asset activity ��. for prior years. This reconcfliation process identified buildfngs and Imp�ovemenis other than buildings that ?; erroneousty remained in the fixed assef balanc:es though the assets were previously disposed of. The balances have `� baen adjusted to refleci the deletion of these fixed assets. �� 4. Elimination af expendable trust fund �i The implementation of GASB 34 etiminated the fiduciary fund category expendable trust funds. In prior years the City � F reported an expendable trust fund, the Rehabifitation Loan Fund. The City has merged the Rehabilitation Loan Fund _; net assets with the Specfal Prograrns Special Revenue Fund for current year reporting in compliance with the GASB ' ` 34 requirements. ,. . 47 � City of Ctearwater, Florida Notes to the Financial Statements September 30, 2002 5. Sales iax revenue correciion - Special D�velopme�t Fund Due to #he timing of sales tax receipts, the prior year's Special Development Fund sales tax revenue included revenues for the months oi September 2000 thru August 2001. The fund balance has been restated to reflect the Sep#ember 2001 revenues and the current year revenues reflect October 2001 through September 2002 revenues. - - �siater�eti9[•ttf Prior��sv Balaac+es _. Fund / Net Asseis Restated �� Balance 9/30/2001 Adjus�nent 9/30/2001 Governmen#aI Activi#ies: Special Development Fund: Sales tax revenue correction Otrier Govemmental Funds Eiimination of expendable trust fund Internal Senrice Funds - Governmental Activities Elimination of conMbuted capital category Implementation of ca{inalization policy Genera! government capital assets Implementation of capitalization policy Adjustments to flxed asset balances Business-type Activities: Water and Sewer Utility Fund Elimination of contributed capltat category lmplementation of capitalizafion policy Gas Utiliry Fund Elimination of contributed capital category Im�lementation oi capitalizatlon policy Solid Waste Utility Fund Elimination of contributed capital category Implementat�on of capitalization policy Stormwatet Utility Fund Elimina#ion of contributed capital category Implementation oi capitalization policy Other Enterprise Funds Elimination of contributed capital category Implementation oi capitalizatlon policy Internal Service Funds - Business-type Activities Elimination of contributed ca�'ital category Implementation of capitalization policy Fiduciary Funds: � Ellmination of e�endabte trust fund 7,446,380 25,365,889 14.930.149 206,486,4Q2 56,135,028 i 4,800,787 12,026,840 256,754 9,625,875 7,545.802 440.322,225 48 764,777 4,388,265 734.864 {51,40� (40,060,378) (7,849,911) 74,424,378 (269,043) 691,537 (361,346) 220,454 (1,123,409) 23,117,504 (69,562) 17,053,629 (795.736) 3,804,563 (184.265} (4,388,265) 8,211,157 29,754,154 15,6i 3,606 158,576,113 130,290,363 15,13Q,978 11,123,885 23,304,736 25,883,768 11,166,100 435,933,960 s ;; �� i ,s �; il � �� ;; ,� � .1 � �'. i .; �, ;, ;; ;� '� ; ,� - � :i :� :; � ,, ;_i i f : � i.� � .. .i f_i i; i. ; City of Ciearwater, Florida �; Notes to the Financial Statements � September 30, 2002 � f'j i f � i [�. Note III — Detailed Nqtes on All Fnnds F I t: A. Deposits and investments Investments with original maturf�es of three months or fess are considered to meet the def'�nition of cash equivalents. %' The majority of the investments in which the Cifj�s proprietary funds havs equity are held by the City's consolidated pool �: of cash and fnvestments. Since fund equ�ies In this cash management pool have tt�e general charac#eristics of d�nand deposits in that additEonal funds may be deposited at any time and also funds may be withdrawn at any time witho�t prior �T notice or penatiy, each func!'s equity account is considered a cash equivafer�t regard[ess of the maturities of investrnents ; held by the pool. Funds which have defictt (overdra#t) positiorts within the consotidated poo! report the deficits as `' interfund payabtes io the City's Capital Improvement Fund. ;� Govemmental Accounting Standards Board (GASB) StatemeM Number 3 requires certaln �isclosures for depos�s and � investments, including managemenYs determination of custodial cred�t risk def�ed as folbws: Es � For deposits, the bank balance must be categorized as folbws: � � (' �� Category 1: Insured or copateralized with securiiies held by the City or its agent in the City's name. Category 2: Coflateralized with securities held by the pledying financial instihltion's trust department or agent in the Ciry's name. Category 3: Uncoilateratized. For investments other than deposits, the following categories apply: Category 1: Insu�ed or registered, or held by the Ciiy w its agent in the C'�s name. Category 2: Uninsured and u�registered, held by the counterparty's (purchasing agenYs) trust department or agent in the C'dy's name. Category 3: Uninsured and unregisfered, he[d by the counterparty, its irust department, or agent� but not in the Cit�s name. As described above, the Cit�s depository banking agreement provides for the investrnent of aEi excess cash daiiy lnto r� a collaterafized repurcMase agreemectit, whereby all deposits deemed to be collected are automatically deposited. i j • City deposits consist of relaUvely smatl cash balances held by Debt Service Trustees and Employes Retirement Custodians. The bank balances equal the carrying amount for these deposits, and managemenYs ciassiflcation of �, cusiodiai credit risk is indicated in the table below. Because these amounts are part of the trustee's and custoc8at�'s 3� composite account, they are cfassifed along with invastments on the balance sheet. E� Managed muivai funds and guaranteed investment contracts are not susceptible to classification by risk category and �� are disclosed but not categorized pursuant to GASB Sta#ement 3. Management has classified atl other investments t f into Category 1, with the exception of certain employee retirement investments that are being held by the finar�cial �= institution also serving as investment manager, and certain escrowed debt service investments that are being hetd by the financial instttutton frorn which they were purchaseci. The carrying value for a1l investments is fair value in ! i accordance with GASB Statement 31. �� Ci#y of Clearwater, Florida Notes to #he-Financial Statements September 30, 2002 Summary of deposits and investments, incluc�ng managemenYs assessment of custodial credft �isk, foAows: I. Cash On Hand and In Banks II. Consolidated Ca� Paof and Component Unit Deposits and Mrrestments: Cash in Banks U.S. Treasury IVai� and Bilfs U.S. Agency Seo�xibes Money Market Mt�ufU Fund Accrued irrterest an Investments Less Outstandiny Checks at 9/30/02 Total Cash Pool and Component Unit Equity • {includes Fduc�ary funds cash pool assets) III. Construction end bebt Service Deposi#s and Invest+�r�ts: U.S. Treaa�try Notes and Bilis Corpor�N► �lrtds IV. Employ+e� �lidrement Deposits and Investments: Money l�et�t Accflunts Dome�!#�uity Securities U.S. Qt�!Yl�rnment Bonds Dome� �'iorporate Bonds Mortgags 8�k� Bonds Asset Bade�d Bonds Intemat�onld Equity Me�#ual Fund Stoctc Mutual Fwd Tot� Empioyee Ret�ement Investments Total Deposlts and krvesiments, Afl Funds Investment Fair Deposit Credit Credit Value Risk Cate� o Rlsk Category 8,8 7 3,480,424 25,516,841 203,937.574 20,099,804 2,260,040 4,355,001 250,93 ,68 2,916,713 873,886 3,790,699 17,926,696 136�428,021 � � s,7s8,2as 40,368,959 1'1,3a2,973 9,453,117 29,449,239 32.227,992 �� b�-'�i'i� 1 i Na Na Na 1 1 1 1 1 n/a n/a ' At September 90, 2002, the carrying amount of the primary govemmenYs deposits totaled ($1,017,681) and the bank balance wN f 8,328,032. The canying amount of the component uni�s deposits totaled $143,104, while tt�e bank balance was ��@„392 B. Receivabies Receivables as of year end for the Citys indivtdual major funds and nonmajor, irrtemai service, and fiduciary funds in the aggregate, including the applicable allowances for unoollec�ibie aocounts, are segregated on the fund finanaat statements. The Mortgagea. Notes, and Other Loans amount of $8,915,947 reported on the Govemmentat Funds balance�sheet includes $8,491,986 of long-term loans receivabie that are not expected to be collected ln the next year. � T S i 7 � i� :� �i � , � :.: ,, f :� �� :} lj :1 ,� :i i� a� :� �i .� i� il :�l �� , �� City of Ctearwater, Fiorida (? Notes to the Financial Statements i � September 30, 2002 � (i �: i : r : �� t: � �r , i: �r 5 i 4 ' i R i � {,i C. Capital asseis Capita! asse# activiiy for the year ended Septemb�r 30, 2�2 was as fol[ows: Beginn�ng Ending - Bafance Increases Decreases Balance Governmental Activities; Capital assets, not being depreciaied: Land $ 36,766,859 $ 4,319.194 $ 172,986 $ 40,913,067 ConstrucGon in progress 759,064 10,791,711 - 11,550,775 Total capita! assets, noi being depreciated 37,525,923 15,1 i0,905 172,98s 52,463,842 Capital assets, being depreciated: Buildings 38,519,374 1,751,332 2,154,461 38,116,245 Improvements other than buildings 52,05b,5�9 399,827 - 52,455,386 Machinery and equipment 31,925,006 2,385,497 i,137,245 33,173,178 Ir�frastructure - 1�076,247 - 1,076,247 Tota! capital assets� being depreciated 122,499,939 5,612,823 3,291,706 124,821,056 Less accumufated depreciation for: Buildings (10,692,981) (1,244,155) (1,458,975) (10,478,ifi1) Improvements other than buiklings (12,402,412) (2,608,989) - (15.01 i,401} Machfnery and equfpment (20,252,653) (1�999,131) (906,702) (21,345;082) In�rastructure - - - - Totat accumulated depreciafion �� 5,852,27b 2,365, 7) 4,8 4,644� Total capitat assets, befng depreciated, net 79,151,893 (239,452) 926,029 77,986,412 Governmental activities capitat assets, net $ 116,677�816 $ 14,87i,453 $1,099,015 $ 130,450,254 ; � Business-type activities: '' Capital assets, not being depreciated: `� Land , , Construction in progress Total capital assets, not being depreciated �� Capital assets, being depreciated: Buildings � � Improvements other than buildings ' � Machinery and equipment ? 5 Total capital assets, being depreciated � ; l.ess accumulated deprecfation fo�: ; � Buildings � � Improvements other than buildings Machinery and ec{uipment i ' Total accumufated depreciation � k Total capital assets, being depreciated, net s� �._: Beginning Balarx:e Increases $ 10.98�2.922 $ 9,124,916 21.800,3i2 27,703,743 32,783,234 36.828,659 23,047�480 387,760 287�953.866 6.201 �491 45,883.274 5.195,676 , , �; 4,927 (6,470,739) (996,625) {98,191,373) (7,397,062) 30,392 045 4,082,473 12,476,160 221,830,463 (691,233) Business-type activities Capital assets, net $ 254,613.697 $ 36,137,426 51 Ending Decreases Balance $ 229�288 $ 19,878,550 2,298,948 47,205,107 2,528236 87,083,657 - 23.435,240 10,388 294,i44,969 5,844,865 45,234,085 5,855,253 362,814,294 - (7.467,364) (23.729) (105,564,706) 5,329 428 29,i45,090 5,353� 57 2, 77, 502,096 220,637,134 $ 3,030,332 $ 287,720,791 City of Clearuvater, Florida Notes to the Financial Statemenis September 30, 2002 Depreciation expense was charged to functions / programs of the p�imary govemment as follows: Govemmental activities: General govemmerrt Public safety Physical environment Transportation, including depreciation of general infrastructure assets Culture and recreation Capital assets held by the government's govemmental intemal senrice funds are charged to the various functlons based on their usage af the assets Tata! depreciation expense — govemmenta! activides Business-type activities: Water and sewer utility Gas utility Solid waste utility Stormwater utiliiy Other Capitat assets held by the govemmenYs business-type intemal service funds are charged to the various activitiss based on #heir usage of the assets Total depreciation expense - business-type activittes Construction commitments At September 30, 2002, material outstanding construction commitments were as iollows: o's Community sports complex Community sports comptex New main tibrary New mairt library Water treatment facilities Sewer system pump station replacemeMs Town Lake Kapok flood resol�tion Fre aerial equipme�t Traffic calming Beach streetscape North Greenwood cArridor enhancements Long CeNer e�ansion Water system renewal & replacement Total ConstrucUon Commitments F� Gapital Improvements Spdng Training Facifdy Revenue Bonds Construction Capiial Projects 2001 Sales Tax Revenue Bonds Constn�cfion 2002 Water and Sewer Revenue 8onds ConstrucLon 2002 Water and Sewe� Revenue 8onds Consbvc�on 2002 Stormwater Revenue Bonds ConsMx�ion 2002 Stormwater Revoen� Bonds Constnx#ion Capital lmprovements Capital Improvements Capital Improvements Cap�al Irr�provements Capuaal Icr�rovements Capital l�rovements 52 ,� i F ' S J 2 $ 888,286 1,173,888 � j ; 43,645 i j 2,200,955 1,526,479 , � ; 19,021 : 3 5,852,27 .P '� 1 � ; f 1 i $ 4,935,681 � � 1,277,342 ; f 220,499 : t 977,183 1,304,8?_5 ; 1 :# 3,620,735 - - ' 12,336,265 T � ;r :.s Construotion Commitments Outstandina $ 6,290,95U 11,208,050 8209,395 7,527,000 4,813,133 1.663�684 1.635,948 1,596,613 879,011 554,969 994,579 789,877 989,600 744.756 $ 47� � ,� i� ) 2 i� .� i� �I ;I :I � .� � ; ! l i City of Clearwater, Florida � 1 No#es to the Financial Statements i F September 30, 2002 �? �... r i � i. � � � � j, �: � �� ; ; €: Contributed Properlv: As � September 30, 2002, water I�nes having an estimated cost of $5,141,044. sanitary sewer lines having an esfimated oost of $7,754,629, storm sewers having an estlmated cost of $3,919.827� and land (for water quality and habitat restoration) having an estimated cost of $922�900.are reflected in the balances of the proprietary fixed assets. Assets Recorded Under CaQital Leases: Assets recarded �der capitai leases end the accumulated amortization thereon (for proprietary fund asssts) have been induded under the appropriate categories in the summaries and schedules presented previously in this note in combination with sim[lar informa�on for owned assets. D. Intertund receivables, payables, and transfers 1. interFund Balances As mentioned in Note (1 C)� irtdividual fund deficits in the consoiidateci cash pool have been reclassified as of September 30. 2002, as fntertund ioans from the Capital Improvement Fund, which was selected by management for this purpose. This reclassification results in a correspanding rectuction in the cash equity in the Capital Improvement Fund, offset by an increase in interfund receivables. The amounts of the reclassified cash poot deficits, as well as other individual fund interfund payabte and receivable balances (cur�ent)� ai September 30, 2002, were as follows: � ' � Deficit in Other � ' Fund Pooled Cash Receivables d ` eneral un Special Revenue Fund: � �° Community Redevelopment Agency CapRai ProJect Fund: ` ` Capiial lmprovement 264,514 EMerprise Funds: '� Water and Sewer Utility 6,084,580 i i Gas Utility 5,733,792 Sotid Waste Utility 1,685,g72 , , Recycling Utility 1,067.672 i : Stormwater Utility 2,536.612 �., Marine and Av�ation 989,073 Parking System g,114,166 mtemai serv�ce funus: ; `� Garage 179�526 � ; Administrative Services 295,32'1 Gene�al Services 304,567 � Cennallnsurance fi27,593 $ 264,514 $ 28,6'18,774 ri — o � t_ - 53 Deflcit in Other Pooled Cash Pa aE�les a,s 264,514 134,966 28,016,807 82,474 59,602 300,000 $ 264,514 $ 28,618,774 City of Clearwater, Florida Notes to the Financia! Statements Sep#ember 30, 2002 Individual i�terfund advances (long-term) at September 30, 2002, foltow: Advances to Advances from Fund Other Funds Other Funds General Fund $ 2,000,000 $ 49,850 Specia! Revenue Fund: Community Redevelopment Agency Enterprise Funds: Solid Waste UtiEity Marine and Avia#ion Paricing System Internai Senrice Furods: Administrative Senrioes Central tnsurance Descriptions o# long-term in#erfund loans• 492,524 824,737 119,204 4,000,000 271,070 3,757,385 $ 5,757,385 $ 5,757,385 An interfund loan at the cash poo! interest rate from the Central Insurance Fund to the Community Redevelopmeni Agency Fund for the purchase of a land parcei for resafe to a developer. The iniba! loan amount was $1,171,328 and commenced during the fiscal year ended September 30, 2000. An internal twenty year loan from the Cent�ai lnsu�ance �und to the Solid Waste Utility Fund for the c�nstrvction of administrative, coniainer maintenance, and truck wash faciliiies, in addiilvn to a paved yard for use by all cast cente�s of the Solid Waste Fund. The loan provides for 20 annual payments of $82,474 together wiih Enterest at the cash-pooi rate, due on September 30 of each year, commencing September 30,1994. The cost of the construction was $1,686,759. An intemal five-year construction loan in the amount of $298,011 from the Centra! Insurance Fund to the Marine and Aviation Fund for construction of two aircraft T-hangars and one corporate hangar at Clearwater Airpark. The loan provides for payments due on September 30 of each year� beating interest at the cash-pooi interest rate and commencing September 30, 2001. intemal loans of $2,000,000 each from the Generai Fund and the Central Insurance Fund, at the cash-pool interest rate, to the Parldng Fund to fund a contingency reserve pe� the terms of a development agreement. The Parking Fund is contributing an additional $2,OU0�000 to fund a totaf canfingency of $6,000,000 for the repurchase af.a land parcel if the proposed development does not occur by March 2006. The loans commenced on September 30, 2002. An intemal five-yeac loan from the Centraf Insurance Fund to the AdminisVative Services Fund for the purchase and instatlation of a new U�lity Customer Service system. The loan provides for iroe annual payments of $300,000 plus interest at the cash-pool rate, due on September 30 of each year. The loan commenced on Septembec 30. 2000. 54 1i 1 -; �, s �� ,� ;! {.. .� :; :; �; .# i; �-, � :; _� . f -� .� ,� �i i� ,; :. s il :.J � `I 1� li City of Cle�rwater, Florida ' Notes to the Financial S#atements ' September 30, 2002 li t _. t f . I T 1 ' I. . � fi li ii (� 1� e.s �; i; :..;. 2. Intertund transfers. Interfund transfers ior the y�r ended September 30, 2002� caisisted of the folbwing: Transfers to t3eneral Fund from: Capital Irr�rovemeMs Fund Water & Sewer Ub7ity Er�terprise Fund Gas Utility Enterprise �und SoEld Waste Ut�ity Ente►prise Fund Stormwater Utility Enterprtse Fund Nonmajor govemmental fvnds Nonmajor enterprise funds Tote! Transfers to Speaal Developrnent Fund from: Capital Improvements Fund 7ransfers to Capftaf Improvements Fund from: General Fund Speciat Devefopment Fund Nonmajor govemmental funds ro�► Transfers to Nonmajor govemmental funds trom: (3eneral Fund Spectal Development Fund � Cepital lmprovements Fund Gas U�lity Enterprise Fund Nonmajor govemmenta! funds Intemal seniic:e furtds Tota! Transfers to Stormwater System Enterprise Fund from: Special Development Fund Nonmajor governmental funds Total Transfers to Nonmajor enterprise funds fiom: General Fund Special Development Fund Total Transfers to intemal service iunds from: General Fund Capital Improvements Fund Water & Sewer Utility Enterprise Fund Cias U#Ilty Enterprise Fund Stormwater Utiliry Enterprise Fund Intemal service funds Total Total iniertund transfers $ 41,199 1,557,250 1,016,354 660,340 216,240 906,060 231,494 � I �oa,000 2,618,810 11,071,705 ��21�;�' 3.152,117 1,O60,b93 432,330 4,709 259,668 SO 000 4, 1,584,060 7 000 178.67Q 1 500 OOQ , ,7 214,40'1 i38,811 412,529 38,775 231,677 `��8�7� > Transfers are primariiy used to 1) transfer reven�s th�i have been collected in the requirect fund per state law to the funds and activities thaf siate law aElows for expe�res; 2) transfer of "payment tn Ileu of taxes" contribut[ons from the utility funds to the General Fund; 3) transfer funding from govemmental funds to cfebt serv[ce and cap[tal improvements funds; and 4) transfer matching funds from the General Fund to various grant programs. 55 City of Clea�rwater, Florida Notes to the Financtal Statements September 30, 2002 E. Leases 'fhe City purchases various equipment for govemmental and bttsiness-type activities under lease purchase agreements. ° Obiigations under lease purchase agreements are recorded at the present value o# ti�eir future minimum lease payments as of date of inveption. Leased equipment which has been capitalized as of Septerr�ber 30, 2002: Governmental Business-type �tivities A�t1Y� Equipment $ 6,218,d52 $ 16,246,635 E.ess: Accumutated Depreciation (1,981,773) (5,428,206) Total $ 4,236�279 $ 10,818,429 The future minimum lease paymerrts under capital lease purchase agreements are as follows as of September 30, 2002: - i � e,� : �•i �� - �� . �� Govemmerrtal Business-type 6�6d#i� � $ t,473,548 $ 3.428,772 1,371,457 2,901,83? 906,510 2,431,234 414,246 1�481,610 69,765 6p1,116 1,3'L6 31,025 4,236,8 10,875�654 Deductio� of the arnount of imputed ir�erest necessary to reduce net minimum lease payrr�erits to pres�rt value (297,683) (783,57g) $ 3,939,169 $ 10,092,078 The City also leases personal comput�ers under a th�ee-year operating lease that is cancelable on an annual basis. Tata[ lease payments for fiscal year ended September 30, 2002, tutaled $134.109. W r � a .t ;� :� �� ,� ;. �. � a, :� _; �1 i :i -� 1 :; x� ,, ; _.1 t� :, � ,� � ;. � `. 4 i ' F � i ti t `i 7 J.. f � { ( f L f � ..; City of Clearwater, Florida � i Notes to the Financial Statements September 30, 2002 F. Long-term debt 1. Revenue Bands $46,445,00p Infrastructure Sa�s Tax Revenue Borids, Seriss 2001, with $5,]00,000 of principal due December 1, 2002� ta $6,620,000 due December 1, 2009; interest at 4.00% to 5.00%. $1'1,470,000 Improvement Revenue Retunding Bonds, Series 2001, due in annual instailmertts of $355,p� due February 1. 2pQ3. to $820�000 due February 1� 2426; interast at 3.00% to 525%. $y04,0et2 of the bonds outstan�ng as of September 30� 2002. are reported in the Parking S�rsfem Enterprise Fund per the financ�ng of parking system assets. Piease reference tt�e revenue bonds for business_iype activities below. $14,810,000 Spring Training Facility Revenue Bonds, Series 2pp2, due in annual installmertits of $165,000 due March 1, 2003, to $470,000 due March 1, 2031, with a maximum principal of $845,000 due March 1� 202i; ir�terest at 200% to 5.38%. Totaf revenue borrds for govemmental actlnrities $53.445,000 Water and Sewer Refunciing Revenue Bonds, Series 1993; due in annual �� installments of $5,430,000 due December 1, 2a02. to $295�000 due December 1, 2018, wii(� a maximum principal of $5,715,000 due Dec;ember 1, 2003; interesi at 5.00°/, ta � ° 5.63%. �'� t $43,642,694 Wa#er and Sewer Refunding Rever�ue Bonds, Series 1998, capital �. appreciation bonds with tota! maturity amount of $81,785,000; $460,p00 of capital appreciation serial bonds due December 1, 2004, to $5,780�000 due December 1, 2018, f t with a maximum principal of $5,875,000 due December 1, 2011; Interest at 420% to 5.22%. The balance outstanding as of September 30, 2002� Encludes capital appreciation � 1 bo n d accre t e d I r rtereat of $ 8,65.q�pg1. �� $58,6�0,000 Water and Sewer Revenue. Bonds, Series 2002� due in annual insialMerits of $860,000 due December 1, 2003, to $3,695.000 due Deoember 1, 2032; Interest at ` 325% to 5.00%. T $8,815,00p Gas System Revenue Bonds, Series i g9gq� due in artnual installments of � $9U,000 due September 1, 2003. to $395.Opp due 4.80°� to 5.80%. �P��r 1, 2021; Interest at (i � ii � I ,..� $14,605,000 Gas System Revenue Bonds and Gas System Revenue Refunding Bonds. Series 1997A & Series 19978, due in annual installmenis of $505,000 due September 1, 2003, to $2,065,000 due September i� 2027; interest at 420°� to 5.30%. $8�020�000 Gas S�stem Revenue . Refunding Bonds, Series 1998; due in annua! instatlrr�ents of $35,000 due September 1, 2�3� to $5Q�000 due September 1, 20i3; interest at 3.65°� to 4.70°�; add�tional annual installrnents of $5g5,ppp due September 1� 2014� to $920,000 due September 1� 2023; interest at 4.7Q°� to 5.00%. $7,500,000 Stormwater 5ystem Revenue Bonds. Series 1999, with $125,000 of principal due November 1, 2002, to $490,�0 due November 1, 2029; interest at 4.00°�6 to 5.75%. $24,685,000 Stormwater Revenue Bonds� Series 2pp2, due in annual instailmeats of $440,U00 due November 1, 2003, to $1,530,000 due November 1, 2032; interest at 3.00% to 5.00%. $11,470,000 Improvement Revenue Aefunding Bonds, Series 2001, due in annual installments of $110,000 due February i, 2002, to $820,p00 due February 1, 2CY26; interest at 3.00% to 525%. A tota! of $1 t,255�958 of t�e bonds has been allocated to the general govemment activities pe� above. 57 $ 46,445,Q00 11,255,958 i4.$10 000 72.510.958 i 9.435,000 52,301,781 56,680.000 .•1 1 1 1 12.375�000 7,895,000 7,275,000 24,685,000 _ � Q4.042 Ciiy of Clearwater, Florida Notes to the Financial Statements September 30, 2002 7otal revenue bonds for business-fype aq�v�S Total revenue bonds i�i .110 823 $2�.— s�2i-781 2. Resirictive covenants and coliateral requlrements The (nfrastructure Safes Tax Rsvenue Bonds are Itmited obligations of the Ci lien upon and a pledge of the City's share of the proceeds derived by Pi�etlas Coun�! from ther� m�d Secured by a the one.-cent discretionary Infrastructure sales tax pursuant to Section 212.055{2), Flonda Statufes, as amended the. evy and collection af Sates Tax Revenues) and, unt11 applied fn a�ordance with the provisions of ifie Ordinance, all moneys, including investments thereof, in the funds and a�ounts established by the Ordinance, other than the Rebate Fund (colfec4vely the "Pledged Revenues"). The ptedge of the Sales Tax Revenues does not constitute a lien u n an City. The covenants of the ordinance auti�or�n the �� include, p° y�r�Ps�'h� of the do ail things necessary an its 9 among other things, an obGgation of the Cit�r ta permitted by and in compliance with C a�ter 66r Part IItlFl�on'dalStatutese as ame ded, Chaeter2t12 m�mum rate Statutes, as amended, and oiher applicable provisions of law (the "AcY'), and any successor provision of the Iaw.��The City further covenants to proceed dillgently to pertorm legally and effect'svefy all steps required on its part ln the levy and colfection of the Sales Tax Revenues and shap exercise a(t legally availabfe remedies to enforce such collections now or hereafter available under Staie Eaw. The Improvement Revenue Reiunding Bonds are limited obligabons of the C' lien upon and a pledge ot the Public Service Tax as authorized by Sect;on �6623 b'Fbn� �af �e �� ame ded. The pledge oi the publlc Service Tax does not constitute a lien upon any property of the City. The covenants of the ordinance authorizing the bonds include, amang ather things, an obligation of the City to do all things necessary on its part to continue the levy and collection of ths Public Service Tax at the rate Section 166.231, Florida Statutes, and qrNcfe NI, Chapter 44, Code af Ordinances of the I�ss er�, ar�d�anyl��or provision of (aw. The Public Service tax is a reyenue of the General Fund. The Spring Training Facility Revenue Bonds are special, timited obligaGons of the C secured by a lien upon and pledge oi the i �Y. PaY��e solely from and Section 212.2p, Florida Sta#utes (State Paym nts); a d��v�d by the Ciiy from the State of Florida pursuant to Florida pursuant to the Interlocal Agreement date�i Dece�e p1 �2p00 Coun � by �e C+ty from Pinellas County, Payrnents and County Payments does not constitute a llen upon an � ��ents). . The pledge of the State City, Pinetlas County, the State of Florida� nor any po�it�� subdivision thereof has p e g d its faith or cred't o taxfng power to the payment of the bonds. T he Water and Sewer Refunding Revenue Bonds, Series 1893 and Series 1998, and the Water and Sewer Revenue Bonds, Series 2Q02, are Iimlted obqgations of the C' the net revenues of the City's water and sewer s tem�y�1e ��e1y from and secured by a lien upon and pledge of constitute a fien upon any p�aperty of the Ciry�The cov�enan)ts of �e or�nances authorizingtthe bo ds�includet among other things, an obligabon of the City to fix and maintair� such rates, and collect such fees, rentais ar�d ather charges for the services and iacilities of the Systam and �evise the same from time to time whenever neces ' will provide gross revenues in each fiscai year st�Filcient to pay the cost of aperation and maintenance of the system; one hundred iifteer� sarY which percent (1159'0) of the bond service requirement becoming due in such fisc�l year or� the outstanding bonc�; plus one hundred percent (100%) of all resenre and other pursuant to the ordinances authorizing the bonds. The Ciiy further covenar�ts that su�ch rmatess fee,�sufe �Is d other charges will not be reduced so as to render them irtsuf�cient to provide gross revenues for such purpose, The Gas System Revenue Bonds, Series '! 996A; Gas System Revenue 9onds Series 1 gg7q; Gas System Revenue Refunding �� geri�s 1 gg�B� and Gas System Revenue Refunding Bonds. Serles 1998; �are limited obGgations of the City payable solely from and secured b a lien u (System). The pledge of the S y ��d p��9e af the net revenues of the City's gas system covenants of the ordinances authorizingethe bond j��o�gto j1er �ml�gsp°an btpr tio operty of the City. The establish, revise irom time to tJme whenever necessary, maintain and coflect always, such fees, rates, rentals and ga n of the Ciry to fix, other charges for the use of the product, servtces and facilities of the System which will aiwa ys p r o v i d e r e v e n u e s i n each year sufficient to pa y, and o u t o f s u c h f u n d s p a y, 1 0 0°/, o f t h e c o s t o f opera�ons and maintenance of the system 58 a ; -' 3 t; ,,,. :; ' > X .r :� ff _s '' � .i ii ;� _; �. � T; s; ' City of Clearwater, Florida Notes to the Financiai St�iements September 30, 2002 in such year and all reserve and other payments provided for in the ordinances authorizing the bonds. along with one hund�ed twenty five percent (i25°,6) of the bond service requirement due in such year on at! outstanding bonds. The Stormwater System Revenue Bonds, Series 1999; and the Storrnwater Revenue Bonds, Series 2042; are limited obligations of the City payable solefy from and secured by a lien upon and pledge of the net revenues of the City's stormwater management system (Sysiem). The pledge of the System's net revenues does not constitute a tien upon any property of the Cii�r. The covenants of fhe ordinances authorizing the bonds include, among other things, an obfigatfon of the City to f+x� revise from time to time whenever necessary� and maintain and coltect always such feas, rates, rentafs and other charges for use of the products, services, and faciliiies which will always provide net revenues in each year sufficient to pay one hundred fiiteen percent (115%) of ihe bond service requirement becom(ng due In such fiscal year on the outstanding bonds. The City further covenants that such rates, fees� rentals and other charges will not be reduced so as to render them insufficfent to prov'tde revenues for such purpose. � Annual debt service requirements to maturity tor revenua bonds are as follows: Year Ending September �n 2003 2004 2005 2006 2007 2008-2072 2013-2017 20i 8-2022 2023-2027 202&2032 2033-2037 Totals Revenue Bonds Gnvemmental Activities Busine�5-fyne Activitiea Princi� 1ut�f Prin �cinal �nterest $ 5,596.132 $ 3,019,735 $ 3,690,878 $ 8,430,983. 6,065,179 2�798,166 5.185,012 8,798,192 6,273,477 2,534,986 5.400,129 8,546,648 6,491,170 2�235,983 5,661,288 8,242,209 6,685,000 1,945,793 5.908,385 8,Oi9,911 23,520,000 6,033,086 33,329,833 36,197,155 5,355,000 3,936,689 41,952,497 27,589,244 6,t95,000 2,482,086 33,842,803 17,656.493 4,580,QOD 1,083�244 27.365,000 11,161,214 1,750,000 194,038 23,750,000 4,279,460 - - 5,225,000 i 28,713 72,510,958 28261,816 191�1 0,823 139,050,222 3. Advance refunding of bonds On October 15, 2001, the City issued $11.47 million in Improvement Revenue Refunding 8onds, Series 2001 with an ,� average interest rate oi 4.9 percent to advance refund $415,000 of outstandng Public Senrice Tax and Bridge Revenue Bonds. Series 1985. witF� an average interest rate of 9.1 pe�cent; and to advance refund $9.77 million of outstanding Improvement Revenue Bonds, Series 1995, with arr average irrterest rate of 5.9 percent. The net proceeds of $i0.8 � million, (after payment of $233,000 in underwriting fees, insurance, and other issuance costs and $867,000 deposifed to ttie Reserve Fund) plus an addfional $395,000 of debt servbce reserve transfers from refunded bonds. were deposited in an irrevocable trust with an escrow agent to provide fo� all future debt service payments on the 1985 and 1995 Series ;� bonds. As a resutt, the Public Service Tax and Bridge Revenue Bonds, Series 1985, and the Improvemer�t Revenue Bonds� Series 1995� are considered to be defeased and the Ifability for the bonds has been removed from the govemment-wide statement of net assets. The reacquisition price exceeded the net carrying amount of the old debt by $445,8d4. This. difference. reported in the accompanying financiat statements as a deductlon from bonds payable, is being charged to operations through the year 2025 using the effective-interest method. The City completed the advance refunding to reduce its total debt service payrnents over the next 24 years by $958.000 and to obtain an economic gain (difference between the present val�s of the old and new debt seniice payments) of $460�p00. In prior fiscal years, the City entered into va�ious advance-refunding transactions related to certain of its bonded debt. A portion of the proceeds of the refunding bond issues was plac�d in trust and used to purchase securities of the Un�ed Sta#es Govemment and related agencies at various interesi rates and maturities sufficient to meet al1 debt service requiretnents of the refunded debt. of which $64,040,000 was outstanding at September 30, 2002. These assets are administered by trustees and are restricted to use for retirement of the refunded debt_ The Iiability for the refunded bonds and the related securities and escrow accounts are not included in the accompanying financiat statements as the City defeased its obfigation for payment of the refunded bonded debt upon completion of the refunding transactions. 59 City of Clearwater, Florida Notes to the Flnanciai Statements September 30, 2002 The following schedufe reflects the outstan�ing principaf on refunded bonds as of September 30: Governmental Aciivities: Utiliry Revertue Cerrtifficates. 1875 Utilities Tax and Bridge Revenue Bonds� Sertes 1977 Utilities Tax Sonds, Series 1977 Specia! Obligation bonds, Series,1978A Utility Revenue Bonds,1978 Public Service Tax and Bridge Revenue Bonds, Series i 985 Community Redevefopment Agency Bonds, Series 1986 lmprovement Revenue Bonds, Series 1995 Total Govemmental Activfies Bus[ness-type Activitias: Public Senrice Tax and Bridge Revenue Bonds� Series 1985 Water and Sewer Revenue 8onds, Series 1988A Water and Sewer Revenue Bonds, Series i 988B Gas System Revenue 8onds 1991A Gas System Revenue Bonds i 994A Total Business-rype A�ctiviiies Tota! 4. New debt issues $ 1,200,000 1,370,000 2.380,000 20.000 13,490,000 521,600 1,030,000 9�580,000 29.591,600 793.400 y 5,320,000 4,705,000 5,520,000 8, i t Q,000 34�448,400 6 , ,000 � S ,, ; „ � 'i 'j ; ; New debt issues during the current fiscai year� other than debt refundings described above, are described befow. On Juiy 1, 2002, the City issued $58,8gp,ppp Water and Sewer Reven�e Bont[s, Series 2002, to pay for the costs of � eupansion of the City's water and sewer system. These bonds were issued at an average inte�est rate of 4.87% with a finai maturity of December 1, 2032. '' On September 1, 2002, the Ciry issued $24,685,000 Stormwater Revenue Bonds� Series 20Q2, to pay for the cos#s of capital improvements to the Cit�s stormwater management system. The bonds were issued at an average rate 4.32% with a final maturity of November 1, 2032. ' On September 1, 20Q2, the City issued $i4,810,000 Spring Training Facility Revenue Bonds, Series 2002, to finance a portion of the cost of the acquisition� construction, rehabilitation, and equippi�g of a spring training faciliiy to be used by the Philadetphia Phi(lies major league basebail team. The bonds were issued at an average rate of 4.49% with a final maturity of March 1, 2031. :� ;� :� 60 ' ' , i City of Clearwater, Florida r i Notes to the Financ➢al Statements + � September 30, 2002 I� i ;; � r 5. Changes in long-term tiabilittes �� r� �; !f: !: �, �° �: t' � � r Beginning Ending �ue Within �1�1]r@ Add1�191� Reductions J��p� One Year Governmental activities: Revenue bonds payabEe $ 56,48t,988 $26,i55,499 $(10;126,529) $ 72,510,958 $ 5,596,132 Add (subtract} deferred amounts: _ For issuance premiums (discounts) 793,497 480,884 {169,252} 1,10.5,129 - On refunding - (442,426) 28,244 (414,182) - Idet revenue bonds payable 57,275,485 26,y93,957 _�10,267,537) 73,201,905 5,596,i32 Leasepurchasecontracts 4,664,570 579�100 (i,304,501) 3,939,169 1,314,392 Compensated absences 5,5fi6,807 253,448 - 5,819,855 575,889 Claims payabie 9,337,296 6,464,068 (4.361,086) 11,440,278 - Govemmental activity Long-term liabilities $ 76,844,158 $33,490,173 $(15,933,124) $ 94,401,207 $ 7,486,413 Business-type activities: Revenue bonds payabte Less deferred amounts: For issuance discounts On refundir�g Net �evenue bonds payable Lease purchase contracts Compensated absences Business-type activity Long-term {iabilities $111,283,Oi2 $83,489�501 $ (3�66i,690) $191,110,823 $ 7,068,868 (816,452} (850,550) 75,940 (1.591,062) - (4.132,611Z (3,418) 290,382 {3,845,64� - 106,333,949 82,635,533 (3,295�368} 185,674,i 14 7,068,86� 9�328,613 3,679,995 (2,916,530) 10,092,078 3,076,018 1,242,907 522,424 - 1,765,331 174,684 $116,905,469 $86,837�952 $ (6,2i 1,89$) $197,531,523 $10,319,57Q 61 Ci#y of Ciearwater, Florida Notes to the Financiat S#atements September 30, 2002 G. Segmen# information Generally acoepted acxourrting prir�ciples require segment d'�sctosure for nonmajor enterprise funds with revenue bonds outstanding. The following oonder�ssd statements are presented for the Parldng System en#erprise fund to satisfy fhis disclosure requirement. Condensed Statement of Net Assets Assets: Current assets , Due from oifier funds Restricted assets Net pensfon asset Capita! assets Total assets Liabilities: Current liabilities Current liabll'rties payable from restricted assets Noncurrent liabilities Revenue bonds payable Notes, toan pool agreement and acquisition contracts Adva�ces from other funds � Totaf noncurrent liabilitles Total fiabilities Net assets: Investet! in capiia! assets (net of related debt) Restricted assets Unrestricted Total net assets Condensed Statement of Revenues, Expenses, and Changes in Net Assets Operating revenues Depreciation expense Oiher operating expenses � Operating tncome Nonopera�ng revenues (expenses): Earnings ori investments tnterest expense Other Trans€ers in from ather funds Char�ge in net assets Beginning net assets, as restated Ending het assets Parlcing System $ 4,052,060 (785,050) (2,241,976) 1 �025,034 239,651 (31,597) 41,193 1,500,000 2,774,281 7�T!'0,115 $ 10, 44,396 Parking Systern 2,467.698 1.614,166 7,525,860 143,086 3,552.786 15,303,596 255,199 16,437 7$,163 411,401 4,000,000 4,487,564 4,759,200 3,065,222 152,494 7,326,680 $ 10,544,396 :; , ; : i � Parki�g : , Condensed Statement of Cash Flows System Nei cash provided (use� by: Operating activities Noncapital flnancing activities Capital and related financing activities Investing activitles Net increase (decrease) Beginning cash and cash equivalents En�ing cash and cash equivalents 62 $ 1,368,020 (2,155,655) (311,975) 239,651 {859,959) 3,240,532 $ 2,380,573 ;; r, �` � �1 I City of Clearwater, Florida �� Notes to the Financial Statements � i� September 30, 2002 �i , ;. ft ►: t; � ,- � H. Restricted assets 1. Water and $ewer Utility Fund Assets in the Water and Sewer Utility Fund restricted for construction inctude: Water Improvemerrt charges, the use of which is restricted by the authorivng ordinance to the construction af addifions and improvements to the water system; assets remaining at September 30, 2002, are: Equiry in Pooted Cash ancf investrnents Due from Other Funcfs Sewer Improvement charges, the use of which is restricted by the authorizing ordinance ta the construction of additions and improvements to the sewer system; assets remaining at September 30, 2002. are: Equify in Pooled Cash and Investments Due ftom Other Funds Assets of the Water and Sewer Utility Fund restrictet! under the provisions of the ordinances authorizing the issuance of Water and Sewer Revenue Bonds consisted of the following at September 30, 2002: Water and Sewer Revenue Bonds Debt Service: [, Equity in Pooied Cash and tnvestr�ents � ' Investments (U:S. Govemment Securi�es} Accrued interest Receivable on Investments Water and Sewer Revenus Bonds Renewals and Re,placements: Equity in Pooled Cash and Investments Due from Other Funds Water and Sewer Revenue Bonds Construction: Equity En Poaled Cash and Investments Assets of the Water and Sewer Utiliiy Fund restricted by agreement with other govemmental entities for improvements to the water system: Due from Other Funds $ 931,637 513,135 3,519,883 601 �827 15,557,582 2,916,713 86,196 8,224,696 2,428,013 28,989.149 4,601 �; Assets of the Water and Sewer Utility Fund representing Customers' Deposits and therefore i; r.estricted, consistin entir of E u' 9 ely q rty in Poaled Cash and Investrnents 1.888.855 t "� �: ;_: Total restricted assets - Water and Sewer Utility Fund �,.. , � . 2. Gas Utility �und Assets in the Gas Ualiry Fund restricted under the provisions of the ordinance authorizing the issuance of revenus bonds consisied of the following at September 30, 2002 Gas .,�v t�m Revenue Bonds Debt Service: � Equity in Poofed Cash and investments Renewats and Replacements: Eguity in Pooled Cash and Investments $175,161 1�� t�� Assets of the Gas Utiliiy Fund representing Customers' Deposits and therefore restricted, amounted to $1,169,119 at September 30, 2002, consisting entirely oi Equtty in Pooled Cash and Investrnents. ` 3. Solid Waste Utility Fund ;, ; Restricted assets in the Solid Waste U41ity Fund designated for construction represent customer deposits in the amount of $764,321 at September 30, 2002. and consisted entirety of Equity in Pooled Cash and Investments. ,. �: 63 _. ... City of Clearwater, Florida IVotes to #he Financial Statements September 30, 2002 4. Stormwater Utility Fund Assets ln the Stormwater Utiliiy Fund restricted under the provisions of the ordinances for the issuance of revenue bonds consisted of the folbwing at September 30. 2002: Stormwater Sys#�,m Revenue Bonds - Series 1999 Debt Service: Equity in Pooled Cash and Investments Construction: Equity in Pooled Cash and Investments Storinwater Revenue Bonds - Series 2002 Debt Service: Equiry in Pooled Cash and Investments Consbvction: Equiry in Pooled Cash and lnvestments Cantributions from the Special Development Funcf of proceeds from the Local Option Sales Tax, deslgnated as Penny for Pinetlas, restricted by voter referendum and terms of interlocal agreements between PineAas County and the municipalities recelving tax proceeds io the construction of specific infrastructure capital improvements; assets remaining at September 30, 2002. are: Due From Othe� Funds Contribcttions from the Specia! Development Fund include p�ceeds restricted by Ciry Commission policy io� Improvements to the stormwater drainage system withln the City; assets remalning at September 30. 2002, are: � Due From Other Funds 5. Paricing System Assets 9n the Parldng System restricted under the provisions of the ordinance authorizing the lssuance of the Publ� Service Tax and Bridge Revenue Bonds as of September 30, 2�2, consists of: Equiry in I'ooled Cash and tnvestments lnvestments Assets in the Parking System resMcted under the provlsions of a.development agreement between Clearwater Seashell Resort LC and the City of Clearwater as of September 30, 2002, consist of: Due From Other Funds Contributions from ihe Special Development Fund include procescls restricied by Ciiy Commission policy for tmprovements to the stormwater drainage system within the City; assets remaining at September 30, 2002, are: Due From Other Funds Total restricted assets - Parking System Fund Note 1V - Other Information $ 278,205 2,576,989 22Q,294 11,814,872 1,379,206 -_'—.—,., ,; 'i :, 'i r, �i •, .i °i .; -, :� :� $ 16,373 i 9,A87 ;' 6,000,000 , ; 1.v00.000 � $ 7.525.860 ; i ,� A. Risk management The City is self-insured within certain parameters tor losses arising from claims for gene�al iiability, auto iiabiliry, police professional liabtlity, public offlcial's liability� property damage, and workers' compensation. Insurance coverage has been maintained by the City to pay for or indemnif�r the City for losses in excess of certain spedfic retentions and up to specified maximum limits in the case of clalms for liability, properry damage, and workers' compensation. The liability and workers compensation excess cove�age is $7,000,000 per occuRence {no aggregate applicable) with self-Insured retention of $500,000. The property damage excess coverage is $240,000,000 at nlnery percent of total insurab[e vafue with a$500,000 self-�nsured retention. Settled claims have not exceeded excess coverage in any of the past three years. � : J r, ; i� ii City of Cfearwater, Florlda f�` Notes to the Financial Sta�tements � i September 30, 2002 �r I� �: � f "? f: I; The transactions relating to the self-insurance program are accounied for in the Centrai lnsurance Fund, an Internal Service Fund. The billings by the Central Insurance Fund to ihe various operatfng funds (the interfund premiums) are based on actuarial estimates of the amounts needed to pay prior and current year claims. The claims lfability reported at Sepiember 30, 2002, is based on the requirements of Govemmental Accounting Standards Board Statement Na.10, which requires that a I€ability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred af the date of the ifnancial statements and the amount of the loss can be reasonably estimated. Changes in ths cfaims liability amounts in fiscal years 2001 and 2002 were: Batance at October l, 2000 Current year claims and changes in estimates Claim payments Balance at September 30, 2001 Current year claims and changes in estimates Claim payments Balance at September 30, 2002 Self fnsurance 10,883,393 629�391 (2, i 75,488) 9,337,296 6;464�068 4,361,086 11,440.278 B. Statements of cash ilows For purposes of the statements of cash flows, investments with o�iginal maturities of three months or less are consfdered to meet the deffnition of cash equivalents. The majority o# the investments in which the City's proprietary fun� have equity are held by the City's consolidated pool of cash and investrr�ts. Since fund equities in this cash man�qement pool have tNe general characteristics of demand deposits in that additiona! funds may be deposited at arty time and also funds may be withdrawn at any time without prior notice or penalty, each fund's equity account is considered a cash equ�valent regardless of the mattirtNes of investments held by the pool. F�ds with deficit {overdraft} positions within the c�onsolidaied pool report the deficits as interfund payables to the Cityrs Capitaf Improvement Fund. C. Cap'�tallzation of intereet Interest costs incuned in enterprise funds during constnxtfon are capihalized, net of iMerest income from the proceeds of related tax-exempt debt if applicable, as part of the cost of the related asse#s of the respective enterprise funds. Interest casts on Iong-term debt incurred and capitalized during the year ended September 30, were as fofiows: Total Interest �terest Costs Net Ir�terest Business-type Activities: Costs lncu�red Ca italized Expense Water � Sewer Utiliiy Fund $ 4,346,274 769.723 $ 3,57�,551 Gas Utifity Fund 1.533,654 6Q�471 1,473,i83 Solid Waste Utility Fund 78,621 � - 78,621 Stormwater Utitiiy Fund 569,068 160,073 408,995 Non-major Enierprise Funds 43,831 � - 43,831 Total business-type activities ,571,448 990,267 5,581,181 D. Use of estimates The preparation of financial statements in conform[ty with generalty aocepted acxounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual resutts couJd dfffer irom the estimates. 65 City of Ciearwater, Florida Notes to the Financial Statements Septernber 30, 2002 E. Employee re#irement syst�ns and p�sion pians i. Defined benef[i pension plarts The City contaibutes to iwo separate single-emptoyer, seif-administered defined benefit pension plans covering approximately ti�ree-fourths of all City employees. The Employees' Pertslon Plac� covers all permanent, fufl-time City employees who successfuliy pass the requirec! physical examinauon, except for �refighters employed prior to July 1, 1963, and certain nonclassified (primarily managerial) employees. The Flremen's Relief and Pension Plan covered eiigible firefighters hired prior to July 1, 1963, and � dosed to new entrants. Neither of these plans issues a stand-alone financial report As indicated, both plans are self-administered, and the oosts of administering the plans are paid from the respective plan assets. The Employees' Pension Plan is authorized by and operates under the provlslons of Sections 2.391 through 2.411 of the Municipai Code of the Ciiy o# Clearwater. Plan provisions have been duly approvec! as required by the voters in referendums, the most �ecent af which was het+d on March 14, 2000. The pEan provisions were changed effective January i, 2000 to provide a 1.59'a oost of living increase, an addltional normal retirement age of 65 with 10 years of service, plus additional elig9biifies and benefits for poiice and firefighters. The normal retirement benefit is a month�r beneflt equal to 2- 3/4% o# average mont�ly compensation for the final 5 years of senrice multiplled by the number of years of service to date of reti�ement. ihe minimum benefit under the plan is $300 per month. Eligibiliry for normal retinement oocurs upon completion of at least 10 years of service and the attainment of age 65, or completlon of at least 20 years of service and the attainment of age 55, o� completion of 30 years of servioe, for employees engaged in non-hazardous duty. For those engaged in hazardous duty, eligtbility occurs upon completion ai 20 years of seniice. The normal monihiy benefits are payabie for ths life of the participant and continue, after the �ipant's death, to be paid at the same amount for 5 years to eligible surviving bene�ciaries; after 5 years, the survivor annuit�r is reduced to fifty percent (509'0) of the original amount. The plan provides for an annua! cost of living increase of up to one and one-half pe�t (1-i/2%). The plan also provides for disability and death benefits, vesting after completian of 10 years of service and the refund of employee contributions in case oi a non-vested tertnination. �here are seven other benefit payment options that are computed to be the actuaria! equivatenf of the norma) benefit. Cavered employees contribute 8% of thei� compe�sation. It is the cit�s obligation to provide a sufficient additiona! contribution to rnaintain the actuarial soundness of the iund but� in any event, not less than 7% of participating employee's compensation per the ordinance goveming the plan. The Firemen's ReAef and Pension Plan is authorized and operated under the proWsions of Subpart 8, Articfe t(Laws of Florida, Chapter 30658, 1955 and amendmenisj, Sections 1 through 27 of the Municipal Charfer and Related !aw of the City of Clearwater and Chapter 26, Article III, Sections 26.50 through 26.52 of the Municipal Code of tiie City of Clearwater. The normal retirement benefit is a monthfy benefit in the amount of 50% of the prevailing wage at the date oi retirement of ti�e lowest rank hetd by the participant during the ttuee ysars immediately preceding retirement plus 2% of such prevailing wage for each year of service in excess of 20 years up to a maximum of 60°�. Participants re4ring at the age of 65 years are en6tled to a benefd of 6Q°� of the prevailing wage of the bwest rank held by the partictpant during the three years immediately preceding retirement. The endi�g rate of pay specified above may not exceed the highest rate of pay for the rank of Captain. Eligibility for normal retirement occ�rs upon completlon of 20 years oi service or attainment of age 65. The monthly benefits are payable for the life of the participant and continue, after the participant's death, to be paid to ceriain eligible surviving beneficiaries at an amount that fs one-half of the amount received by the par#icipant. Benefits are aiso provided for children of the deceased participant who are less than 18 years of age subject to certain limitations as to amount. The plan aiso provides for disability and death benefits and for vesting upon completion of at least 12 years of service. The plan provides for post retirement cost of (iving increases equal to the increase in the p�evailing wage for the rank at whlch the participant retired with a limitation fo� those retiring on or after January 1, 1972, of 100°k of the initial pension benefit for total cost of living increases, Participating employees are required to contribute 6°� of their salaries up to the equivalerrt of the salary of a fireman holding the rank of Captain. The City fs required to contribute a sufficient additional amount to maintain the actuarial soundness of the plan for a period oi 35 years commencing January 1, 1872; this contribution is based upon, but not fimited to, the amount of property tax that a levy of 0.6 m1Els would produce. 66 �s ,z j :, :, � _. ; „ :: =� � �! _ .� ,. � ; �- �,. City of Clearwater, Flortda Notes to the Financial Statements September 3Q, 2002 As of ff�e January 1� 2001, actuary vaivatfon date (upon which the current fiscal year iunding Is based), the membership of the plans is as folfows: Retirees and beneficiaries cur�ently receiving benef�s - Terminated emplayees entiiled to benefits bui not yet receiving them Active employees: � Fulty vested Nonvested Total number of participants Employees' Pension P1an 533 40 711 827 2�11 i Firemen's Relief Pension Plan 48 For the fiscal year ended September 30, 2002, the covered payroll for the Employees' Pension Fund is $61,154,840. The City's total payroll for the same period is $7i,987,553. Mnual pension cost and contributlons informa�on for the last three fiscal years follows: Emptoyees' Pension Fund Year . Annual (aj Net Ended Required Employer Psrcent Pension SePt 30 Contributlon Contriburions Cantributed Asset 2000 $ 0 $ 4,419,?23 N/A $ 12,442,354 2001 $ 174,377 $ 4,255,484 2440°k $ 15,��29 2002 $ 0 $ 4,439,829 (b) N/A $ 21,445,982 (a) The actuarially determined contribution requirements for the Cit�s fiscal year ended September 30� 2002, are based on actuarial valuations as of January 1, 200i. Since the City's coniributions are made during its iisca! year (which commences nine months after the date of the actuarial valuation)� the City, with approval of State regulatory autharities, is following the pracC�ce of adding interetist to its required contnbutions at the assumed rate oi retum on investments for a period of one yeaz. (b) Actuai contributions for fiscal 2002 totaled $4.439,829, as required by the ordinance governing the pension plan. See Note E Flremen's Relief Pension Fund Year Mnual (aj Ended Required Emp[oyer Percent Sept 30 Contribu4on CoMributions Contributed 2000 $ 1,046,856 $ 1,046,856 100% 2001 $ i,098,990 $ 1,098,990 100% 2002 $ 1,153,732 $ 1,153,732 100% a) The actuariaUy determined contribution requirements for the Ciry's iiscal ysar ended September 30, 2�2, are based ; on actuarial valuations as of January 1, 2001. Since the Cit�s contributions are made during its fiscal year (which �= commences nine moMhs after the date of the actuarial valuation), the City, with approvat of State regulatory authorities, is following the practice of adding fnterest to its required contributions at the assumed rate of retum on investrnents for a period of one yeaz, The net pension asset at transiiti�on (October 1, i 99� was determined in accordance with GASB Statement 1Vo. 27, "Ac�ounting for Pensions by State and Local Govemmental Empbyees". The amount of the pension asset at #ransition was $3,503,365. [� City o# Clearwater, Florida Notes #o the Financial Statements September 30, 2002 The Employees' Pension Fund net penslon asset at September 30, 2002 totaled $21,445,982. it was cornprised of the fotlowfng components: Annual required contributions (ARCj $ (1,932,864) Interest on the net pension asset (i,109,215) Adustmeni to annual contribution 1,881,855 Annual pension cost (1,160,224) FiscaE 2002 employer c�nt�utions 4,439,829 Increase in net pension asset 5,600,053 Nei pension asset beglnning of year 15,845,928 Net penslon asset end of yea� $ 21,445,982 ; J �' F ` i. �: �j ,, i. ; Each pension fund is aa:ounied for as a pension #rust fund; therefore each is acc�un#ed for in substantially the same manne� as proprietary funds with a"capital maintenance" measurement focus and the accrual basis of acoounting. Fund ,; assets, primarily investments, are valued at fair value for balar�ce sheet purposes, in aocordance with� GASB No. 25. - Investment va�ues are determined using the estimated fair value determtned by averaging es�matec! falr values obtained from three or more naiiona!!y recognized brokers. - ; As o1 September 30, 2002, neither the Employees' Pension Fund nor the Fremen's Relief and Pension fund held �' investments (other ihan U.S. Government or U.S. Govemment guaranteed obligations) i� any one organization comprising 5°� or more of the net assets available fo� benefits. . '' Significant actuarial assumptions utilized in ihe actuarial valuations as of January 1, 2001, are as follows: -• Employees' Pension Plan -, (1 j Assumed rate of retum on investments of 7.0% per annum. (2) Projected salary increase at a rate af 5°� per yea.r, including both cost-of-living adjustments of 3% and merit ' or seniority increases at 2%. {3j Mortality based on the 1983 Group.4nnuity Morhalify Table for mates with femalss ages set back six (6) years. � (4} Pre-retirement wiihdrawaEs assumed to occur pe� standard scales of moderate tumover rates (Scale 255) for -" males and heavy tumover rates (Scale 355) for fema)es. (5) P�e-retirement inader�ce of d�sability is assumed to oocur in accordance with a standard scale of moderate disability rates (Class 1, 1952 EMer-Comparry); rates for females assumed to � tvvice that for males. � t Fi�emen's Relief and Pension Plan ., (1 j Assumed rate of retum an investments of 5.5°� compo�ded annuafty. ; {2) Assumed benefits grow at an annuaily cornpounded rate of 2°/a. `` (3) Mortality based on the 19�83 Group Annuily Mortality Table for retired partictipants; assumed disabled particlpants will experience mortality aocording to PBGC Tables 3 and 4 for males and females, respec6veEy. (4) Assumed no withdrawals will oc�cur. (5) Assumed probability of an active participant b�►ing disabled is zero (no active pa�ticlpants). (6) Assumed va{ue of one mill of ad walorem tax will incxease at rate of 5% pe� year. ; As a result of a voter refe�endum on March 14, 2000, the Emptoyees Pension Plar� was madified to provide for a 1.5% cost of living increase, an additional retirement age of 65 with i0 years of service, plus aciditional eligibility and benefits fior police and fir�ghters effective January 1, 2000. There were no changes in assumptions affecting �the January 1. 20Q1 acfuarial valuation for either the Employees' ; Pension Plan or the Firemen's Rellef and Pension Plan. . i 0 Cfty of Clearwater, Florida ' Notes to the Financial Statements � : September 30, 2002 ,; It Is the Ciry's poficy to fund pension cosis aocrued as de#ermined on an act�ariat basis. Annual required contributions {ARQ) for the Employees' Pension Fund are cafculated using the Entry Age Normal wfth Frozen lnitlal Liabiliry method. f; The initial unfuncted actuarial accrued liability determined at Jufy 1, 1963, is being amortized over a 40-year period; i changes made in 1979 and subsequent years which have had the effect of either increasing or decreasing the actuarial i' liability are being amortized over a 30-year period from their effective dates in aocordance with State iaw. Annual required contributions (ARC) for the Fremen's Relief and Pensian Fund are based on a varEation of the aggregate �. actuarial cost mefhod, under whEch the uniunded portion of the present value of the projected beneiits is aliocated over ,, the present vatue of a 6.0% per year lncreasing annulty for the remaining years in the 35-year funding period which began January i, 1972, pursuant to an agreement between the Cfty and the Plan participants. For this purpose, the _� unfunded actuarfat liability is determined after constderation of the availabie assets at the valuation date. The �` increasfng fixed schedule produced by this rt�ethod was established in i988 and will be modified in fhe future only to the �� extent that a current vatuatfon fndicates a higher required cost level, or if the resufting cost level exceeds 6a% of a mill ,, in a current year. Under the non-standard cost method used for this plan (due to ihe fact that there are na fonger any ; active employees), all liabilities are unfunded actuariai tiabilitles and are being amortized according to the cast method. �: The net pension asset for the Employees' Pension Plan, representing excess contributions as calculatecf per GASB 27 �_ requirements, is identica! in amount to the plan "credit balance' as disclosed in prior years. A total of $14,731,211 of ` the current net pension asset balance is attributabie to governmeMal funds and therefore is not refls�#ed In the govemmental fund financial statements fn accordance with the modified accruaf basis of arxounting. The remaining $6,714,771 attributable to propr[etary funds is reflected in the proprietary fund financiat sta#emerrts on the accrual basis oi accounting. Governmental Accounting Standards Board Statement Nos. 25 and 27 require the presentation, as supplementary information, of certain 6-year historical trend informa�on. These disclosures are presented on pages 73-75 of this report. 2. Police Supplemental Pension Fund � A supplemental definer! contribution pension plan exists for all eligibls policemen which is funded by earmarked j revenues receivecJ from the State and fs administereci by the City. The �evenues received from the State are allocated ' among eligible police officers on the basis of days employed as Ctearwater Police Officers. These revenues, which comprise the pian contributions, amount to $770,578 in the year ended September 30, 2002, and are obtained from an �' eighty-five on� hundredths of one perceM (.85)°,6 excise tax on the gross receipts frorrt premiums cflBected on casualry -= insurance policies covering property within the City's corporate limits. The current year contributions represent 5.2% of current year covered payrofl. The fair value of inves#tnnents at September 30, 2002, totated $9,329,372. ;=, The Police Supplemental Pension Fu�d is a�ori¢ed by and operates under the provisions oi Seciions 2.471 through �,� 2.480 of the Municipal Code of the City of Clearvvater and Chapter 185 of Florida Statutes. Under the plan provisions, the total monies received during each flscal year� after payment or provision for all costs and e�enses uf management and �, operation of the plan� are allocated to participants on the basis of the totai number of shares to which each participant is i_, entitled. Each participani is errtitied to one share in the fund for each day of service as a police o�rcer of the City. All police officers, as defined in Section 26.70(g) of the Code o# Ordinances of the Ciry of Ctearwater, who are elected, i` appointed. or emptoyed fult-ttme by the City are eligible to participate in the plan. There are no empbyee contributions ;.: to the supplemental pEan. Benefits are fulty vested for a lur� sum distribution after twenty ysars from the ciate of hire, with provision for partial vestlng after ten or more years under the ptan. Accumulated beneiits are payable in full in case of death whiEe employed by the City or in case of toial and permanent job-retated disabil'ity. Non-vested participants' !. account values upon termination of employment during any iiscal year are added to the monfes recefved during that `' ` fiscal year for allocation to the remaining participanis in the plan on the basis of total days worked. ,. For the f"iscaf year ended September 30, 2002, the payroll of the covered officers' was $14,850,669; the City's total payrolt . ,� for the same perlod was $71,987,553. Since the entitlement to benefits is based en�rely upon the allocation of monies received by the plan to the participants' share acx�nts, there is no actuarial liability on the part of either the State or the City. 69 City of Clearwater, FEorida Notes to the Financial Statements �September 30, 2002 3. Firefighters Supplemental P�+slon Fund A supplementai clefined contribu�on pension plan exists for all elig�le firemen, which is funded by earmark,ed revenues received from the State and is administered by the City. The revenues received from the State are allocated among e[igible firemen on the basis of days worked during the previous year. These revenues, which comprise the plan contribuiions, amounted to $594,942 in the year ended September 30, 2002, and are obtalned from a one and eighty-five one hundredths percent (1.85°6) excise tax on the gross reoeipts irom premiums collecied on property insurancs policies covering properiy within the City's corporate Gmits. The coniribtrtions represent 6.79% of current year covered pay�oll. The fair vatue af investments at September 30. 2002, totaled $8,470,023. As #he plan is described as a money purchase pension ptan, whereby contributions are allocated based on the number of days worked during ti�e fiscal year ended September 30, and interesf eamings aqocated based on the 6eginning ` balances in each participant`s account, there is no actuarial fiability on the part of the State or Ciry. ;} The Firefighters Supplemental Pens€on Fund is authorized by and operates under the provisions of Sections 2.441 through 2.450 of the Municipal Code of the City of Clearwater and Chapter 175 of Florida Statutes. Eligibitiry requires two years of credited calendar year service as a firefighter with concu�rent participation in the Employees' Pension Plan, i i There is no employee contributior� to the supplemental plan, and benefi#s are vested for a lump sum distributio� at ten years unless the�e is early retirement, disability or death. Non-vested participants' account values upon termination of �, employment are reatlocated among the remaining patticipants on the basis of days worked during the previous year. '� • � For the fscai year ended September 30, 2002, the covered payroll was $8,757,987 the City's total payroU for the same period was $71,987,553. 4. 401(a) Defined Contribution Plan Far all management employees not covered unde� either of the defined benefit pension plans, the City provides pension benefits through a 401(a) defined contribution pian. in a defined contribution plan, benefits depend solely on amounts contributed to the plan pius investment eamings. Employees are participants from the date of empbyment and are fully vested upon enrollmen� The plan is totally contributory on the part of the City in an amount equal to 15% of compensation on behalf of the City Manager and the City Attorney; 12% of compensation on behalf of the Chief of Police; and 6% of compensation on behalf of al( other management contract emptoyees and assistant city aitomeys. ihe City makes bi-weekly contributions to the Trust througtaut the plan year to meet its funding obligations under the pian. >,, ; �: The International City Management Association Retirement Corporation (ICMA-RC), the trustee for the defined annuity, offers participants a variety of investment options. -� The Clty's totai payroll for the �scaJ year ended September 30, 2002. was $71,987,553. The Plan members' payroll for the same period to#aied $3,458,985. The City's contribution, using the above reterenced formula, totated $247,410. � The assets of the trust, at market value, totaled $1,184,818 at September 30, 2002. '�.� 5. Defened Compensation Plan � The City otfers its employees a deferred compensation plan created in accordance with Intemal Revenue Code Section •_ � 457. The ptan, available to all City employess, permits t#�em to defer a portion of their salary un�l future years. Partiapation i� the plan is optional. The deferred compensation is not available to employees un�l teRnination, reti�ement, '! death, or unforeseeable emergency. Effective January i, 1997, Federal {egislation converted the Secbon 457 deferred compensatron assets from Ciiy assets to employee assets. As a result of these changes, plan assets are no longer subJect to the claims of the City's general '; creditors, ` The Ciiy has previously reported the assets and assoclated IiabiliHes of the deferred compensation plan in the Cit�is financial statements as an agency fund. Effecdve with the change in iegislation these assets are no longer City assets and the fiduciary �esponsibiliry has been transferred to the third pany plan administrator. Consequently, eff�tive with i'iscal 1997, these asseis are no longer reported in the a000mpanying financial statements, in compliance with Govemmental Accounting Standards Board Statement No. 32. ti; 70 �. �� : ! j � � : �> ;� i: �� ;: r� , }: {. t City of Clearwater, Florida Notes to fhe Ffnancial Staiements September 30, 2002 F. Contingencies and Commitments PA T Inc. � PACT, Inc. is a nonprof'd corpora#ion formed in 1578, for the purpose of financing. constructing, and operating a perFoRning arts center. Per a Guaranty Agreement dated May 18, 2001, the City guaranteed $1,000,0000 on��a $5,000,000 mortgage note for PACT, inc., used to refinance a previous mortgage with a similar City guarantee. City management does not consider it probable that this guarantee wilE be called. and, accordingly� no amounts have yet been accrued or otherwise recorded fn the ac�ompanying finanaal statements to reflect this possibili#y. Contingent Loan Guararttee On March 30, 1992, the Ciry Commission approved a conti�gent foan guarantee of $1,000,000 on a$2,500,000 note for the Ci�i Chi Rodriguez Youth Foundation, Inc. The proceeds oi the note were used to refinance existing foundation debt incurred to construct a golf course on a parcel oi Ciry ownecf land. Subsequentiy, the note was ref[nanced wlth Variable Rate Demand Revenue Bonds (Chi Chi Rodriquez Youth Foundation ProJect), Series 1998, on August 1, i998. lrt the event of deiault, the City is obligated to contdbute $1 �000,000 out of Iegally available non-ad valarem reverwes. In addition� the Cfty has the option to retire the entire unpaid balance and assume ownership and operation of the golf course facility, At the present time, management expects tt�e foundation to meet all debt service paymenis arrd daes not consider it likely that ihe City's guarantee wilt be invoked. Soif and aroundwater contamination site r The Ciry owns a property, currently used by the City Gas Division as iis administrative offices and operating facility, that ; has been identified as having soil and groundwater impacts in a June 1990 report prepared by a United States `- Environmental Protection Agency contractor. The contamination allegedly resulted from the prior operation of a manufactured gas plant Contamination assessment activities by the City were initiated during i995 and a draft i Contamination Assessment Report was submitted to the Florida Department of Environmental Protection (FDEP) on .. . December 29,1999. On March 20. 2000, FDEP requested further assessment be undertaken. On July 25� 2000, FDEP approved the City's proposed scope of work for adddional on and off-site assessment activities. Additional field r' activities were initiated in December 2000. As of this clate. all additional work has been completed. The supplemental �; contarninaiion assessment resutts were submitted to FDEP as part of the May 2001 and Ju{y 2001 site status reports. � 7he cost of this adtlitional work, (ncluding preparation and submittal of the May and JuEy 2001 s�te status reports, was appro�omately $39�462. � On May 16, 2002, the City received a letter firom FDEP requiring addiiional #ieldwork to better defi�e the soi) and groundwater contaminatfon on the site. tn September 2002, Clearvvater Gas met witF� FDEP to discuss their May 16"' . letter and the future of the gas pfant site. In that meeting, it was agreecf the City would install seven (7) new monitoring weils arid drilt twelve (12) soil samples around the perimeter of the sfte. This additlonal work wil! be performed in early �� 2803, at an estimated cost of $70,000. Approximately $487,500 has been recovered from Ciiy insurance policies to be applied to any required remediation. Letter of Credit Guarantee - soil contamination sites The Cityr has provideci a standby letter of credit in the amount of $463,04Q to the Florida Department of Environmental Proiection (FDEP). The Letter of Credit is required by FDEP for the City's approximate 41 % share of the remediatlon costs for three City-owned pet�oleum contamination sites under FDEP's "Pre-approved Advance Cleanup (PAC) program. The PAC program awards state funds to assist with remediation of petrolsum contaminated sites. The City has available funds set aside to fully fund the Cii�s commitment of $463,040 under the PAC agreements. 71 City of Cte�trwater, Fiorida Notes to the Ftnancial Statements September 30, 2002 Contractual Commitme�t - Water and Sewer UtiEitv � Under the terms of a 30-year contract between fhe City and PineBas County, which is effeciive through September 30, 2005, the City is required to purchase a minimum of 4 mlllion gallons o# water per day on an annual average basis frorn the Courrty within each calendar year� with a maximum amount of water available to ihe City of i0 million gailons per day on an annual average basis. Eff�tive October 1, 1995, the rate, which is set by the Pinelfas Caunty Board of County Commissioners (BOCC), was $1.7902 par 1,000 gaAans, inciuding a$.60 per 1,000 gaAon surcharge for funding capital projects. On November 19, 2002. the BOCC approved the foAowing rate increases: $1.9334 effective January 1, 2003; $2.4881 effective October i, 2003; $2.2969 effective October 1, 2004; $2.5266 efFective Octobe� 1, 2005; and $2.7792 effective October 1, 2006. The cost of water purchased from the County during fiscal years 2001 and 2002 was $7,305�983 and $7,516,67'8, respectively. Contracfua! Commitment - Parkir� System Under the terms of a devefopment agreement, the City has committect to repurchase a beach land parcei at the appraised amount not to exceed $6,000,000, if the devetoper is unable to prooeed with the devebpment project by March 2006. A contingency reserve has been es#ablished in the Parking System fund in the amount of $6�OOa,000 as of Septembe� 3U, 2002. ` Grant Revenues During fiscal year 2002 and prior fiscat years, the Ciry received revenues and contributlons related to grants from tf�e Southwest Water Management Distr�, the State of Fbrida, and the federai govemment. These grants are for specific purposes and a�e subJect to review and audit by the grantor agendes. Such audits coe�td resuit in requesis for • �eimbursement for expen�itures disafiowed under the terms of the grants. Based upon prior experiertice, City management be[ieves such disallowances, if any, will not be sign�cant. G. Pending Litigation : I ,. [n the normal course of operations the City ls a defendant in various legai actions, the ultimate resolution of which is r�ot "? expected to have a material efFect on the financial statements, other than for amounfs which have been reserved and recorded as liabilities in the CenEral Insurance Fund. �� H: Conduit debt The City has one Issue of conduit debt outstanc6ng as fdlows: [� =. .�� . �,• � � �.,..,- Original Amount Amount I� Outstanding Outstanding Am�nt �t.9G�]. at,� Drew Gardens Refunding Bonds / Resider�tial rer�al faality $ 3�425,000 $ 3,090�000 $ 3,U40.000 The bonds do not constitute a debt, liability, or obllgatlon of the City oi Clearwater, the State of Ftorida; or any politicat subdivision thereof and accordingly have not been reported in the accompanying finar�cial statemerrts. 72 :� _; i � � ' � �; •� : i � „ � ( �: �: �: i �: I` �; �� Page 1 af 3 City of Clearwater, Florida - Defined Benefit Pension Plans Required Supplementary lnformation - Unaudited � � Schedulas of Funding Progress• Em I�oyees Aension Fund Actuarial Actuaria( Actuariat Unfunded AAL Valuation . Value of Accrued Liab7ity Unfunded Funded Covered as a Psrcentage Date Assets (AAL) - Enfry Age AAL Ratio Payroll ` of Covered Payroll (a) _ �b) (b-a) {a/b) (�) ((b-a)/c) 1 /1 /1997 1/1/1998 t/1�1999 1/1/2000 1/1/2001 1 /1 /2002 $ 272,346,200 $ 297,892,502 $ 308,596,133 $ 333,250,492 $ 354,088,751 $ 377,788,731 $ 414,826,422 $ 490,426,940 $ 461,724,610 $ 535,672,208 $ 499,859,015 $ 533,191,487 $ 25,546,302 $ 24,6.ri4,359 $ 23,699,980 $ 75,600,518 $ 73.947,598 $ 4i ,332,472 91% 93% 94% 85% $6% 92% c- i ! i = t- - :. � � - � • � � • $ 4Q�95b�345 $ 47,281,i98 $ 48,666,523 $ 50,937,403 $ 54,864,584 $ 58,929,582 57% 52% 48% 148% 135% 70% Actuarial Actuarial Actuariat Unfunded AAL Valuation Value of Accrued Liability Unfunded Funded Covered as a Percentage Date Assets {AAL) - Entry Age AAL Ratlo PayroU " of Covered Payroll (a) (b) (b-a) (a/b) (�) ((b-a)/c) 1 /1 /1997 1/1 /1998 1/1/1999 1/1 /2000 1 /1 /2001 1/1 /20Q2 $ $ $ $ $ $ 3,407,925 $ 3,626,$50 $ 3,963,395 $ 4,092,298 $ 4,668,572 $ 5,273,993 $ t 1,014,979 10.565,127 10,473,888 9,746,671 9,527,303 8,907,427 $ 7,607,054 $ 6,938,277 $ 6,510,493 $ 5,654,373 $ 4,858,731 $ 3,693,434 .'�1 % 34% 38°% 42% 49°�6 59% ' Covered payroll is for the caEendar year period used tor the acivarial valuation. 73 $ $ ffi $ $ $ 49,044 50,573 15,605 i55119�0 13719% 41721% WA N/A N/A Page 2 of 3 City of Clearvuater, Florlda De�ned Beneft Pension Plans Required Supplementary Informatlon - Unaudited � i � _ s_ � �' � � - • , / • , ' Year Ended Sept. 30, f 997 1998 1999 2000 2ao� 2002 ��f � -i�_ �� i� Annual (a) Required Contribution $ 4,398,790 $ 3,080,802 $ 840.558 $ - $ 174,377 $ - Percent Contributed 76°� (b} 119% 464% N/A 2440% N/A (c) {a) The actuarially determined contributlon requirements for the C�y's fisca� year ended September 30, 2002 are based on actuarial valuations as of January 1. 2001. Since the Ciry's contributions are made dudng its fiscat year, which commences nine months after lhe date of the actuarial valuatfons, the Ciry, with approval of 8tate regulatory auihorities, is fotlowing the praciice of adding interest to its requtred contributions at the assumed rate of retum on irnestments for a period of one year. (b) The contribution is less than the annual required contribution due to contributbns in excess of required prior. to fiscal 1997. (c) Actual contribution for fiscal 2002 was $4,439.829, as �equired by City pension ordinance. See Note E(1) . Year Ended Sept. 30, 1997 1998 1999 2000 2001 2002 -�i=� :- -, •, ,� Annual (a) Required Contribution $ 910,559 $ 955,920 $ 1,003,758 $ 1,046,856 $ 1,098,990 $ 1.153,732 Percent Contributed 100% 100% 100% i 009'0 100°/a 100% (a) The actuarially determined contribution requirements fw the City's fiscal year erxied September 30, 2002 are based on actuarial valuatiorts as of January 1, 2001. Since the City's contrlbutlo�s are made �ring its fiscal year, which commences nine months after the date of the actuaria! vatuations, the City, with app�oval of State re�latory authorities, is foilowing the practice of addng interest to lts required contributlor�s at the assumed rate o( retum on investments for a period of nine months. E� :; .; ., ; 74 . , r � ( ; �-, Page 3 of 3 City of Clearwater, Florida Deflned Benefit l�ension Plans Required Supplernentary Information — Ur�audfted Notes To Schedutes Ot Required Pension Supplemeirtary Informat%n �; Mnual required contribut�ns for the Employe�s' P�ston Fund are calculated using the Entry Age lVormal with Frozen fniQal Liab�it�► method. The in�fiaf onfunded actuarial accrued Nabi[ily deter+nined at July i, 1963 is be[ng amortized over a 40-year period; changes made in 1979 and subsequent years which have had the effect of either Increasing or ±' decreasing the actuarial liabilihr are being arnorttaed over a 30-year period from their effecttve dates in aawrdance with I ; State law. � Mnual required contnbutions for the Firemen's Relief and Pension Fund are based on the aggregate actuariai cost j':. method, under which the unfunded portion of the preseni value of the projected benefits is allocated over the present f; value of a 6.0°10 per year tncreasing aruiufly for the remaining years in the 3Syesr fun�ng period which begin January 1, 1972, pursuant to an agreement betweert the City and the Plen pariiapents. For this purpase, the unfe�nded actuaria! ,, liability is deiermined after cons(deratbn of tlie ava�able assets at the valuation date. The lncreasfng iixxed schedWe produced by this method was estabGshed in 1988 and will be rnod'�ied in the future only to the extent that a current ,_ valuatIon indicates a higher requfred cost level, or ff the resulting cost level exceeds 60°,6 of a mill in a cunent year. ; k: i r: The actuadally determined conMbu�on requtrements for the C�yJs fiscal year ended September 30, 2002, are based on actuarial valuations as of January 1, 2001. Since the Ctiys contribuHons are made during its f�cal year, which commences nine months after the date of the actuaria! va�aUorss. the City, with approval of State regufatory authoritles, is foAowing the practice of adding frrterest to its required cor�butiorrnss at the �ssumed rate of reRum on investments for a period of one year in the case of the Err�loyees' Pens(on Fund and for nine monti�s in the case of the Firemen's Relief and Pension Fund. Significant acwaria! essumptions uUAzed in the actuariaf valuaiions as of January 1, 2001, in the determinatfon of the annual required contributlon are as follows: Employees' Pension Fund (� ) �2) t3) {4) (5) (6) Assumed rate of return on investmeMs of 7.0°k per annum. Projected salary increase at a rate of 5� per year, {ncluding cost-of-iiving adjustments of 3% and merit or seNority increases at 2°�6. Mortality based on the 1983 Group Annuity Mortality Table for Males with iemafe ages set back 6 years. Pre-retlrement withdrawals assumed ro oxur in axordance v�nth standard scales of moderate tumover rates (Sca�e 255) for meles and heavy tumover rates (Scafe 355) for femaEes. Pre-retirement indd�ce ot disabiUry assumed to occur i� accordance with a standard scale of m�erate disabifity rates (Class 1,1952 tnter-Company); rates for females assumed to be � thai for males. Assumed inflstlon rate of 3% Flremen's Rellef and Pension �uad (1) Assumed rate oi retum ori investments of 5.5°� compounded annually. (2) Assumed beneiits grow at annually compounded rate of 2% related to cost of living adjustmenis ordy. (3) Mortafity based on tF►e 1983 Group MnNty Mortaldy Table for boih active and retirecf; assumed disabled partfcipants will e�erience mortality acoor�ng to PBGC Tabbes 3 8 4 for males and females, respectively. (4) Assumed no withdrawals v��l occur. (5) No active particlpants (6) Assumed value of one mill of ad valorem tax wiU increase at rate of 5% per year. (7) Assumed infla�on rate of 3% Significant changes affecting the presented 6-year trend Enfom�ation include: ... (1) The actuarial valuation ot the Flremen's Relief and Pension Fund as of Janaary 1, 1999 reflected several changes in actuarial assumptions. M investment yield of 5.5% for both pre and post retlrement was assumed whereas the prior valuation assumed 6.5%. AddiUonaUy, benefit increases ot 2.0°k were assumed while the previous assumption was 4.0°k. The impad of these changes increased the unfunded actuarial accxued liability by ` = $212,878. 75 This Page Intentionally Left Blank 76 �.. . i f ` � ; � . � !' � � Nonmajor Governmental Funds I , � i f 'i f ! i '. �: �. �. �: Special Revenue Funds �� _� Special revenus funds are used to account ior specif�c revenues that are legaily restricted to expenditures for r , particutar purposes. � �: Specia! Programs Fund — to account for grants and contribuutiaons, the use of which Is rest�icted for certain programs. � Community Redevelopment Agency Fund — to account for receipt, custody, and experiditu�e of property tax increment funds associated with related redevelopmerrt projects. Local Housing Assistance Trust Fund — to acxount for monies ailocated io the City under the Local Housing Assistance grant program. 77 Debt Service Funds Oebt servlce funds provide se}�arate accou�ting records ior ali debt interesi, p►incipal, and reserve requirements for general government long-term. Debt of proprietary funds is serv+ced through restricted accounts maintained within the individual enterprise or intemal service fund associated with the debt improvement Revenue Bonds Debt Service �und — to account for the advance month(y accumulation of resources by transfer of Public Service Tax revenues from the Geroeral Fund and the payment of cur�ently maturing lnstallments of principal and interest during each fiscal year. improvement Revenue Refuriding Bonds Debt Service Fund - to account for the advance monthiy accumulation of resources by transfer of public service tax and communications services tax revenues from the General �und and the payment of cu�rently maturing instaliments of principal and interest during each fiscal year. Infrastructure Sales Tax Revenue Bonds Debt Service Fund - to account for the advance monthly accumulation of �esaurces by transfer of sales tax revenues from the Special Oevelopment Special Revenue Fund and the payment of currently mai�u�ing instaNments of principal and interest during each fiscal year. Public Service Tax & Bridge Revenue Bonds Debt Service Fund - to aocount for the advance monthfy accumutatlon of resources by transfer of public service tax �evenues fran the General Fund and the payment of currenUy maturing installments of principal and interest during each fiscal year. Notes and MorEgages Debt Service Fund - to account for the acJvance month�y accumuiation of resources by transfer of General Revenues from the General and Special Revenue Funds and the payrnent of currenUy maturing installments of principal and interest on the various noie and mortgage obliga4ons of the govemmental funds during each fiscal year. Spring Training Facil'ity Revenue Bonds Debt Service Fund — to account for the advance monthly accumutation of resources by transfer of sales tax revenues f�om the Special Development Special Revenue fund and the payment of currently maturing instal(ments of principal and interest during each fiscal year. 78 � ., ,, .; ; :; :� �, ; _; , :.; , t�� : j�'� I; �; ,: i� �; � � f -, ,� �: �; f' � �. > �: �: ,, �. i s- :r � .; ,, i: t > i_� �: Capitat Projects Funds Capital projects funds are used to account for resources to be used for the acquisitiorr or construction oi major capital improvement projects. other than those financed by proprietary funds. A major capital improvement project is a property acquisiifon, a major constn�ction undertakfng, or a major improvemerrt to an existing facility or property� with a cost greater than $25,000 and a minimum useful life of at least five yea�. Sales Tax Revenue Construction Fund — to provide separate accaunting records for the �inancing and construction of the entryway and roundabout at Clearwater Beach, a new Main Ubrary, and a new Memaial Causeway Bridge. Community Sports Complex Construction Fund — to provide separate accounting records for the financ�r►g and construction of a new community sports complex including a new spring training facility to be used by Uie Philadelphia Phillfes major league baseball organization. %9 ASSEf3 Cash on hand and in banks Equity in poofed cash and investments Recelvables: Mortgage notes Rehab advances Other Investmants Due from other govemments - granis . land held ior resale Total assets UABILITIES Accounts and contracts payable Accrued interest purchased Accrued payroU Due to other governmental er►tities Construction escrows Due to other funds Due to other funds (deficit in pooled cash) Advances f�om other tunds Deferred revenue Total liab�7ifies FUND BALANCES Reserved for: Encumbrances Advances and notes Grant prograrns Debt service: Current requirements - principal CuRent requiremenls - interest Fuwre requiremerrts Unreserved, undesignated Total fu� baiances Total I'�abllities and fund balances City of Ctearwater, Florida Cambining Balance Sheet Nonmajor t3ovemmenta! Punds September 30, 2002 Speclal Aevenue Funds Community Local Housing � Spectal Rodeveiopment Assistance Programs Ag�cy Trust Toffii $ - $ 100 $ - $ 100 4,825,208 - 1,691,027 8,316,235 4,682,849 - 4,223,298 6,905,947 48,882 - 33,744 82.626 t5,023 94,178 - 109,202 656,591 - 113,365 7B9,956 84,709 913.841 - 998,342 $ 10,113,054 $ 1,007,920 $ 6 061 434 $ 17,182,4Q8 $ 81,509 $ - $ 9,152 $ 90,661 26,911 - - 2B,911 372 - - 372 312,371 - 781,553 t,093,924 - 134�966 - 134,966 - 264,514 - 284,614 - 492,524 - 492,524 958 94,179 88 95,223 422.121 986,183 790,791 2.199�095 - 21,737 - 21,737 4,258,688 - 4,223,298 8,481,986 2,016,840 - - 2,016,840 3,415,405 - 1,047,345 4,462,750 9,690,933 21,737 5,270,643 14,983,3i3 a 10,i13,054 � 1,007,920 $ $,081,434 $ 17.182,408 The notes to the financial statem�ts are an a+tegral part of ihis statement � : i . ti � :, .i � ' Y ; ; :.� ,� :.; ! i � C .. ; ., � .i � � :1 ;t � ,t ri i �,; I : � r ti 1 j i, �-t � •, �� Debt Service Funds Capltal Project Funds � i Improvement InfrastrucLtre 1 ,� Revenue Sales Tax Spring Training Community t` Refunding Revenue Faciliiy Sates Tex Sports �-� Bonds Bonds Revenue Bonds Total Revenue Complex Total �� $ - $ - $ - $ - $ - $ - $ - $ (' 298.376 4,911,229 1,880,248 7,089.853 13,150,686 11.190,253 24,340,939 ;+ i- c Total . Nonm�jor Governmental Funds 100 37,747.U27 ' - - - - - - - 8.905,947 - - - - - - - 82,626 f ; � - - - - - - - 109,202 . 884�499 - - 864,499 - - - 864,499 - - - - - - - 769,956 f � - - - - - • - 998,342 ;:$ 1,162,875 $ 4,911,229 $ 1,880.2A8 $ 7,854.352 S i3.150,B86 $ 11.190.253 $ 24,340.939 $ 49,477,698 ,. � ;' $ �: r• i' 'l .; �, i t... % - $ - � 49,887 $ 49.887 $ 1,315,348 $ 202,211 $ 1.517,559 $ 1,657,907 28,032 28,� - - � 28,Q32 . - - . - 2s,si� - - - - - 372 - - - - - 1.0�'5,924 - - - - 134,966 - - - - - 264,514 - - - - - 492,524 . - - 95,223 77,719 77,7t9 1,315,348 202,211 1,517,b59 3,794,373 - - 8,548,410 11,006,839 19,555,249 19,576,986 - - - - - 8,481,886 - - - - - z,ois,sao i- 220,755 4,250,000 - 4,470,755 - - - 4,47D,755 ; ; 84,788 661.229 - 745,997 - - - 745,997 i _, 857�352 - - 857,3a`2 - - - 857�352 - - 1.8U2.529 1,802.5'L8 3,286.928 (18.79� 3,268,131 9,533,410 j; 1,162,875 4.911,229 1.802,529 7,876,633 11,835,338 10.988.042 22,823,380 45,683,328 i 3 � $ 1,162,87b $ 4,911,229 $ 1.880,248 $ 7,954.352 $ 13,150,B86 $ 'l1.190,253 $ 24.340.839 $ 49,477,699 �� 81 ; '; �� City of Clearwater, FloNda , Combining Statement ot Revenues, Expencli6ures, and Changes in Fund Batar�ces � NonmaJor C�over��l Funds For the Year Ended September 30, 2002 r� :; Speclal iievenue Funds , 3 Cattunuaity Lo�l Housinq Improvement ' ' Spedal Red�vebpment Asslstanee Improyament Revenue Programa AgencY Trust Total Revenue Bonds Refunding Bonds REV�RIES {ntergovemmental Charge5 for serviceS Fines and forfeitures Interest3ncome MtsceUaneous Totel revenues: EXPENDITURES Currenk Oeneral govemment Public safety Physical ernr'uonment Economic environmern Human services Cullure and recreatlon Debt service: Principal Interest & f�scal charges 8ond issuance costs Capiial outlay Total expenditures Excesa (defictiency) of revenues over /(under) expend'dures OTiiER FINANCIN(i SOUHCE3 (USES) Transfers in Transters out l.ong term debl issued Proceeds of refunding bonds Premi� (d+scount) on reve�ue bonds issued Payment to refunded bond escrow agent Tota1 olher financirg sou�es (uses) Alet change in tund balances �und balances - beginning, as restated F�md balances - en�ng S 3,210,310 $ 373,583 S 1,188,126 S 4,772,018 S - $ - 576,714 - - 578.714 - . fi0Q,987 • - 600,887 - - Y33.T30 50,123 78,176 $82.029 1,209 b0,fi72 t.6�.88U 234.348 1.89b.228 6.182,821 858.054 1,288.302 8.106,977 1,209 50,672 1�,515 2,472,483 927,941 1.021,787 126.9:ifi 1.A32,848 - - 1b9,515 - - - 2,472,A83 - • - 927',341 - 309,180 315,783� 1,646,730 - - - 1�,838 - - - 1 �432.848 � - i dJ $ ;1 , t _4 '} j =S _� � :i - - - - 263,487 89,542 - - - - 2,925 382,129 � t - - - - - 147,065 417,i68 417,168 . 6.658,078 �9.160 31b.783 7,183,021 286.412 618.786 , (375.457) 948.894 9b0.519 923,958 (285.203) (568,084) 1,012,587 334.763 - 1,347,370 64,546 705,251 (`a69�643) (864,263) (100.125) (1.334,021) - • - - - - - ` ,; - - - - - 11,345,499 - - - - - (49,729) - . - �10270,BB2) 442.944 (329.470) (100.i2� 13.349 64.545 1.730.939 ; ; 87,487 19.4?A 850.394 937,305 (2a0.&58) 1,162,875 ' i 8.623.446 2.313 4,420249 14,046,008 2�,668 S_ 9,680.933 $ 21.T37 S��S 14.983.313 $ $ 1,162.875 $' i i The notes W the faiar�cial slatemenls are an ir►begral part ot th� statement_ � 'I � 1 ' 1` , M1 i , i; � ;' Debt S@rvice Funds CapNal Project Funds ,. �i Total �� Infrastructure Public 8ervtce Notes SpHng Tra4Nag Community NonmaJor Sales Tax Tax & Br[dge and FacU1ty Safes Tax Sports Govemmental 1:' Revenue Bonds Revenue Bonds Mortgages Revenue Bonds Tofal Revmwe Complex Tot� Funds � 5,OOU,000 S - 3 - $ 1,087,664 $ 6.OB7,654 $ - $ - $ - $ 10.869,673 � . - - - - - - - - b78,714 t - - - - - - - - 500.967 �- 179,280 2,010 - 60,271 280.442 1.065,Od5 - 1,O6S,005 1,717,476 ' - 4.000 4.000 1.899�228 b.176280 2,010 1.147,925 6,978.096 1,0�,006 1.089.006 ib,554,078 i. f ' ' " ' ' ' - - - 159,515 � . - - - - - - - - 2,472,A83 � : - • - - ' - - - 927,341 - - - - - . . . 1,648,730 ` ( - - - - - - - - 126,936 i . - - - • - - 16,813 t8,913 1,Ab1.761 - 73,739 1,304,bD1 - 1,751269 - - - 1,751269 E' 1,873,483 1.340 201,321 - 2,461,198 - - • 2,461,198 i, 3.786 - - 2�.746 356,896 - - - 368�886 ' • 3.401.374 4.117.620 7.518.994 7.996.182 i.876. �6,079 1,505.822 248.748 4.571,463 3.401.374 4,136,633 7.637.907 18,292.391 i � i � 3.299.612 (73.069� (1.505.822) 939.179 1.806.B33 (2.332.3�� (4.136.533) (6.468.8p2) (3.738,313) . 1.060.6�i b,836 1.bOb.822 - 3.342,047 - - - 4.689.417 - - (63�61� - - (59,612) - - - (1�387�633) ' ' - - 2i6,436 216,138 - 14,b94,b62 14,694,b62 14,810,000 - - - - 17.345,499 - - - 11,345,499 - - - - i49.129) - 530,013 530,013 480,864 ' " (10270,68� f 10,270.682� ' 7.060,b93 l47.778) 1.5Q5,B22 21b.438 4.629.661 15,124,b75 15,124,5/5 '19,687,485 4.360,20b (120,84b) • 1.1b4,617 6.336,194 (2.332.369) 10.988,042 8.666,673 16,929.172 561.024 120,845 847,912 1,540.438 14.167.707 14.167.707 29.754,i64 " 4,s„ z2s a a - a �.eoe.�s a� e� ea3 s,1'� s a,, o�see.oa� s�,s�.3so $ a5.se3.3zs 83 This Page Intentionally Lett Blank -, i� � ; �s .; ;� , ; :, .,, : j I 1 t` S � /� I V�. i .> City of Clesn+vater� Flotida Schedule of �tevenaes, Expendlturea, end Changes in Fund Balances - Budget and Actual (GAAP Basis) Community Redevelopment Agency Fw ihe Year Ended September 30, 2002 FIEVENUES Intergovemmerital Interest income Mfscellaneous Total revenues EXPFJVDlTURES CurreM - Economic envfronment Total expenditures Excess ot revenues over expenditures OTFfER FlNANCINCi SOURCES (tlSES) Transfers in Transfers ouE Total other financfng sources (uses) Excess of revenues and oiher sources over expendRures and other uses Fund balences - beginning, as restated {see Note II - C) Fund bafances - ending Varlance with Budgeted Amounts F(nal Sudget Actua! Positive Origiral Final Amounts (Negattve) $ 332,520 $ 373,683 $ 373,583 $ - 15�000 ib�000 50.i23 35,123 112,911 118,362 234.348 115.886 460�431 SpB,g4.5 668.054 151,109 236�39Ci 388,414 309,160 79,254 �� 3$8,414 309,160 79,254 _ 224.038 118,531 _ 348.894 230,363 304,784 334.783 334,783 _ (528.8�) (453.314) (684253) (210.938) (224,038) (118,53i) (329.470� (21a,939) ' - 19,424 19,424 2�313 2,313 2,313 . $ 2,313 $ 2,313 $ 21.737 $ 19,424 --__ The notes to the ftnancia! statements are an inte�al part of this sfatemer�t. 85 This Page Intentionally Left Blank ss I {. s; i, ;� i� � . ., ;: Nonmajor Enterprise Funds . �. i `' Enterprise funds are used to account for the financin , g acquisiiion, operation, and maintenance of r� governmentat facit�ies thai are supporied primarily by user charges. ; rN �� Recycling Utiiity Fund — to account for the financing, process3ng, operatlon and maintenance of the City's ;' recyciing ser�ice from charges made to users of the services and iunds received from the sale of recyclable � °� commodities processed to meet market requirements. The service area extends beyond the City limits ,: Marine & Aviation Fund - to account for the financing, operation and maintenance of the City marina and � associated real property on Clearwatet Beach from rents collected from users; and to account for the Cit�s f .; airpark operations. Parking System Fund - to account for the financing, construction, operation and maintenance of the City's parking system, including on- ar�d off-street parking on Clearwater Beach and Dawntown Clearwater. from parktng charges. Harborview Center Fund - to ac:�ount for tlze operation of the Cit�s convention center and related facitities. [� ASSETS Cument assets: Cash o� hand and tn banks Equity in pooted cash and investments Aa:ounts and con7acts rewivable: BiBed Unb3ffed charges eatimated Less: Allowance !or uncollectable accounts Total receivables, net Due from off� funds Dus from other govemrner�l entities Irnentories, at cosc Total current assets Noncurrent assets: AesGicted: Equity � pooled cash and Imieshnents Irnestments Oue from other funds Net peasion assst Capitai assets: Land and other nondepreciable assets CapHal assets, net of accumulated depreciation Total �oncurrerrt assets ToWI assats UABfLiT1ES Current liabilities: Accounts and coatracts payabfe Accrued payroA Accrued compensated absenc$s Due to ot�er funds Deposits Deferred revenue and liens Current portbn of tong-tertn IlabillUes: Revenue bonds Notes, loan pool agreement and aoquislUon conUacts Total current liabilitlea (payable from current assets) Current 6abilities (payable from restricted asseis): Accrued Interest payable Nates, Ioan pool agreemeni and acqulsitian conhacls Cunent portion oI long-ierm liabdiGes, revernre bonds Tolal alrrent GabiGdea payable from restriCted assets Total current liabpibes r�u�M r�unres: Reven� bonds (net of unamorGzed d'iscotmts and defertad amount o� refun�ng) Ndes, laan pool agreement snd acquisitlon contracts Advances from otlierfunds Total non�urrer�t UabiGUes Total IiabiGfies Net asaets: Irrvested in capital assets (�t of related debt) Restricted for. Revenue bond debt service and sinldng fund requirements Employees' pension benefits Unrestricted Totaf net asseb City of Ctearwater, FloNda Cornbintng Slatement ot Net Assets NonmaJor Enterprise Funds September 30, 2002 RecyWing Marine & Parking Harborvlew UUIlry Avlation SYStem Center Totat $ - S 817 $ 22,050 $ 100 $ 22,867 1.438.611 47i,487 2.342,i50 108.064 4.381,312 �� • - 196,257 264,910 134.326 134,326 202.978 - - 198,257 399,235 (3.780Z - (3�780) 199,198 - 196.257 395,455 1,087,872 989,073 1,614,166 - 3,670,911 - - ZQ3,498 • 1Q3,498 �.�8 26,409 2,708,481 1,487',786 4.081.864 304,421 8,580,552 :. ; - - i6,373 • 16,373 9�48'7 8.487 '' � i - - 7,500.000 - 7,500�000 � 1 227,354 146,975 143,086 - 51i.415 - - 1.106�482 928.000 2,032,482 � � _ 1,182,«i1 1,991.844 2.448.304 9.868,7� 1b.486,785 ; S 1.403,386 2,138,619 11.221,732 10,7927`86 25.558.522 4,109.866 3,626,406 i5.303.�6 11.087207 34.137.074 18,895 42,266 38,710 619,561 717,372 16,878 15,085 1b,720 - 47,684 b9.797 A6,7S3 37.803 - 137,853 - 59��2 - - 59.Ba2 - 18.813 2,063 105,163 126,039 - - 2.892 12,500 75,332 - - 7,956 - 7,956 - 152.555 i52,b55 89,b11 182,519 255.199 737.224 i,264,453 , � i ' - � - 525 3,�6 - - . 3.636 15,972 15,912 3,686 16,437 20,073 • + 93,147 182.b19 2�i.836 737224 1,284.526 � , ! - - 76,163 - 76,163 9.808 - 411,A01 - d21.207 . 118.204 4.000.000 4,119,204 8.806 119.204 4.487,b84 4,618.574 ; J 102,859 301.723 4,769.200 737,224 5,901,100 1,168,b89 i,991.844 2,888,799 10,792,786 18,841,818 - - 9,408 - 9,408 . 221.954 146,97b 143,086 - 511,415 2.616,970 1,186,063 7,503,103 (432.80:i1 10,873,333 + � E 4,006,979 $� $ 10.544,386 $ 10,369.883 $ 28,235,874 � 1 The notes to the financial statements are an integral paA of this statemen� 88 '• : , r ; ri�jl V� Ci�88iW8�T� �Of�� -' Combining Statement of Revenues, Expenses, and Changes in Fund iVet Asse#s NonmaJor Enterprise Funds �� For the Year Ended September 30, 2002 .. Recycling Marine & Parking liarborvlew UtiGty Avfation „ Systeon Center Totals Operattng revenues: ,' '; Sales to customers $ 743,826 $ 1,523,778 $ - $ - $ 2,267.604 �� Service charges to customers 9,844 - 175,300 - i85,t44 User charges to customers 1,417,480 55,704 3,865,335 - 5,338,bi8 �, Rentals - i,1fi7,188 11,425 1,87i,�30 3,050,343 �: Total operaBnq revenues 2,171,150 2,748,670 4,052,060 1,871,730 10,841,610 ; Operating expenses: �, Personai services 808,586 745,183 766,078 - 2,319,847 ! Purchasestorresale 187,357 1,t35,044 - 887,337 2,209,698 } �° Operating materials end supplies 49,595 186,504 163,745 29,968 429,812 Transpartation 253,440 6,476 58,865 26,047 344,628 �� Utflity service 6,882 i46,487 39,741 128,439 32t,529 _ Dumping charges - - - 0 Depreciation 22B,158 295,782 229,709 553,i76 t,304,825 !� Interfund administrative charges 439,860 262,990 785,050 18,900 1,504,800 � Other current charges: `` Professtonal fees - 61,557 740,3T3 875,723 i,677,853 Advertising 387 18,895 1,290 14,933 35,485 � Communications 7.059 25.322 14,190 27,908 74,479 .. Prfnting end bindfng - 1,799 870 4,OOi 6,670 Insurance 39,150 43,3� 22,380 20,870 125,780 RepaErs and matntenance 5,70i 105,678 16,120 74,255 201,754 Rentals 2,054 1,154 160,Q97 9,072 764,377 MEscellaneous 10,422 42,120 198 14,809 67,549 �. Data processing aharges 27,980 29,070 28,520 - 85,570 � Taxes - 238 - 18,209 18,445 �� Provisfon for esUmated unC011ectable accounts 4,298 - - 19,261 23,5A9 Total other currert Charges 97,031 329,211 984,038 1,07i,031 2,481,311 �� Total operating 8xpenses 2,068,869 3,107,657 3,027,026 2,712,898 10,916,450 � �� Opetating income (loss) 102,281 380,88 1,02fi,634 (641,168) (14,840) Nonoperating revenues (expenses): �' Eamings on investrnents 94,788 43,805 239,851 31,660 419,002 l � fnterestexpense (493) (11,7i� (31,597) (24) (43,831) AmoRizatfon of bond discourri and issue costs - - (1,484} - {i,484) -. Gain (loss) on exchange of essets (4,380) 68,676 (1,980) - 62,318 - Other - 508.043 44,657 1 E3 552,863 -- Totai nonoperating revenue (expenses) 89,913 608,907 248,247 31,799 979,866 Income (loss) before Vensfers 192,194 247,920 1,274,281 (809,369) 905,026 Transfers in - - 1,500,000 178,670 1,876,670 Transfers out (115,490) (116,000� - - (231 480} Changes in net assets 76,704 131,920 2,774,281 (630,699) 2,352,206 Total net assets - beginning, as previously reported, betore adjustrnent for QASB 34 implementatlon 3,810,361 2,224,970 6,647,249 (3,056,705) 9,625,875 AdjusUnent for anptemeniatfon of GASB 34 - elimination of contributed capita! 251,057 1,533.095 1,135,005 14,134,472 17,053,629 Adjustment for change in aa:ounting prindple - change In capitalizaUon threshotds (131,208) (58b.303Z (12.139} (87,085) (795,736) Total net assets - beglnning, as restated 3,8Ci0,2�9 3,192,762 7,770,115 10,990,892 25,883,768 Total net assets - ending $ 4,006,813 $ 3,3'L4,682 $ 10,544,396 $ 10,359,983 $ 28,235.974 ,; The notes to the financ(al statements are en integral part of ihis statemer�t. ' � 89 CASH FLOWS FROA� OPERATING ACTNiTIES Cash received tr�n customers Cash received irom other tunds Cash payments to suppliers Cash payments to employees Cash payments to other tunds dtherrevenues Net cash providsd (used) by operating activiti� CASN FLOWS FROM NONCAPtTAL FINANCINQ ACTIVITIES Operadng transfers ln Operating trensfers out IMerest pald Receipt of cash on loans to/from other tunds PaymeN ot cash on loans tolhom other t�nds Net cash provided (usedj by noncapHal finananp acUvities CASH FtOWS FROM CAPITAI. AND RELATED FINANCINQ ACTIVITIPS Prfrtcipal payments on debt IMerest paid Acqufs�ion of fixed assets Sele of flxed assets Prxeeds from issuance of debt Net cash (used) for capital and related financinQ activiiies CASH FLOWS FROM INVES7INQ ACTIVITiES Interest on irrveslments Net Cash provlded by frrvesting af�iviNe3 Net increase (decrease) in cash and cash equivale�ts City of Clearwater, Florida Combining Stafement of Cash Fbws IJonmajor finterp�ise Fuads For tfse Year Ended September 30, 2002 RecycUng Marfne & Parking Harborvtew UBlity Avlat[o� Sysiam Center Totats $ 2,134.982 S 2,747,082 $ 4.052,311 S 1,840,828 $ 10.775,203 (328,857} (2,151,644) (1,015.797) (1.912,513) (5,408,9i1) (884,118) (774,82� (814,535) - (2.459.476) (799.509j (106.047) (898,818) {73,�67) (1,817,341) - - 5p8.049 44,657 1&3 552.863 2p4,88g 222,609 1,368,020 (144,689) 1.650.338 - 68.678 1,500.00� 178.670 1,747,346 (115,490} (116,000} (1,980) - (233,470) - - - (24) �24) 357,746 - 4,321,369 - 4,679,1t5 - (521.714) (7,975.044) - (8,498.758) 2�.Z� �.�9.0�.'�� i�.6JJ} i%8.�6 (2g�%9�% - (1�902) i198�956) - (200,258) (483) (17 �718) i38.5S3) - i�.��) (572 68� (68.678) (79,066) (7.548} (867,878) 2.051 - 1.980 - 4.031 13,442 - - - 13,442 (487,587) (82,2961 (311.875) {7,549) (889,407) 94�786 43.805 299�651 81.660 410,OD2 g4,788 43.8p5 238.651 S1j88U 410,002 as.e� (3sa,s2o� �ass.sse) se,oss (�.�a2�858) Cash and cash equivaiertts at beginninp of year � 1,995,758 857,124 3,240,532 50,096 5.543,510 Cash and qsh equivalents at end ot year $ 1,499,611 $ 472,304 $ 2.380,573 3 108.�64 S 4�400�6�2` Cash and cash equh+ele�ts classified as: Cash on hand and in baNcs $ - i 817 $ 22,050 S 100 S 22,967 Equity In pooled cash and krvestments t,499,611 471,487 2,342.150 108.064 4.381,312 Aeshided equity in pooled Cash and imesUnents - - 1B,373 - 18.373 To�al cash snd cash equiveler�ts $ 1,439.811 S 472,304 S 2,3�.573 S 108.164 $ 4.400.652 �—m The notes to the tlnancial statemeMs are an integral part oi this staterr�ent :j�� f , a i F 1 ' i !. i :S . 7 : i r , i �� 1 ' �; r �; !, ! i i .'• � "i t ��.._ �i r `? i � �: i 1 :. c : �, � �.. : �. : : ! . �, i_� Et f t: f' �� ;; Ei t ;; �! � l t ( � i • ` �:. � � � i t..: Clty of Clearwater, Fforida Combining Statement ot Cash Flows Nonmajor Enterprise Funds For the Year Ended September 3Q, 2002 Recycltng Marine & Parking Harborview U81ity AvfaVoq System Center 7otats Reconcfltatlon of operating in�ort� to r►et cash provided by operating acUvitie� Operating income Adjustments W Reconcile Operat�ep Income to NBt Cash Provided by Operatirp Activiues: Other Revenue irom Nonoperati�p Section of Incorr� StatemeM Deprecial(on Non-cash land rental expense Praviaion for uncollecLble accourds change in assets and AabiGttes: Qncrease) in aoaounts ►ece(vable p�rease) fn irwenWry (ncrease (decrease) in axourris and contrects peyable Increase (decrease)in deposus Increase in defarred revenue (Increase) in net pension asset Incxease (decrease) in eocrued payroll Total ac�ustmenis Net cash provided by operating acwities Noncash investing, capital and ifnancing activities: c3aln (loss) on exchenge of assets Change in fa[r value ot irnreabr�enls $ 102.281 i (360,987) $ 1.026,OS4 a (841.168) $ (74.840) - 508.043 41r657 1fi3 652.863 226,158 295.782 �709 553.176 1.304.825 - - 1�f,469 - 138,499 (i.�) - - - (i,2os> (30.661) - - (91.41� (62,071) - (10.423) - - (10.423) i9B.899) i180�576) (1�A75) 174.042 {82.848) - 412 119 (11.992) (il.461) - - 1i2 12,600 12,832 (61.041) (98.640) (M�itO) - i140�001) 5,508 8.999 {R1� - 6,372 _—...�� 102,117 S8S,598 Z4lA�8 686.479 1,72b,778 $ 204.398 i _� S 1,8�0� S (144.689) $ 1.650,338 3 (4,380) S 66,676 S (1.Y�D) S - $ 62,316 S - S - $ �'� S - $ ��) The notes to the finar�cial statements are an integral parl oi lhta etatemenl 91 a y 3 } i { i ) This Page Intentionally Left Blank 7; :.t tiL ,. , � _ .r ., , :; t • i . ` � � r ' � ; t.J S � �_ 1 1 ; ; ; � �; I �-.; � � i : i t ( i l % � { �{ ` 7 : 1 : I{ ! i � �- , (; i: lnternal Service Funds �.� Intemal service funds are used to account for services and commod�ties #umished by a designated �' depariment to other departments within the City or to o3her govemments on a cost reimbursement basis. Garage Fund - to account for the cost of automotive and other motorized equipment of the City. The acquisition cost of new or upgraded equipment is iinanced through user departments and the asset value is simuftaneously contnbuted to the Garage Fund The cost of replacement of existing equfpmeni is financed by the Garage Fund. Administraiive Services Fund - to account for various support activities including information Fechnology, printfng, mailing, and telephone servfces. The cost for these services is charged to user rlepartments based on the cost af providing units o# service. Generai Services Fund - to accouni for various support activities including building maintenance and custodiaf senrices for all City departmerrts and facilities. The cost for these serv[ces is charged #o user departments based on the cest of providing units of service. CenVal Insurance Fund - to account for the Cit�is limited self-insurance program wherein all funds are r, assessed charges based or� damage claims incuRed and on management's assessment of individual funds' �, risk exposure. All claims and premiums are paid out of this fund� together with other costs necessary to administer the program. Medical insurance premiums are also paid from this fund. 93 ASSETS Current asse�s: Cash on hand and in banks Equily in pooled cssh ar�d irnestments Due (rom other iunds Inventories, at cost Prepald expensea end other assets ToTa! Cumer�t asseLs Noncurrent assets: Intarest receivable Advarnoesto otherfunds Net pension asset Capital asse�: Land and otlier nondep�eaable assets CapiFal assets, net of accumulated deprecfatlon Total noncurrent assets Total asseis LlA81UTIES Currenf liabilides: Accounts and Contracts pay&b1e Accrued payroll � Accrued compensated absences Due t0 Othef tur�de Current porflon af long-term IfaWliUes: Notes, loan pool agreemeni and ac�uisilion contracts Total curreM IiabiGtles (payable from cunent assets) Noricurcent IiabUftles: Nates, loan pool agreement arW acqutsition oontracts Advances irom other funds Claims payable Total noncurtent IiabBNfes Total liabilitles NET ASSETS Imested in capital assefs (net of related debt) Resbictad for ertp�oyees• pension benefds Unrestricted Total net assets CIty at Cleanaater, Flciida Combining Statement of Net Assets fnterna! Servtce Funds 9eptember 30, Z002 fiove►nmental Business-tYpe �� nf�( ActfWtles f3arage Administrative Activlties Servtoes Insurance Totaf Fund Sarvlces Total , $ - a - a - s - s ,,soo $ i.soo 854,513 19,723,874 20.378,387 3.874,374 930,870 4,806,244 904.567 827,693 832,l60 179,526 295.321 474,847 ' - - 185,b7b - i85,b7b 1.639.088 1,539� 959,08p 21.890.b53 22.849,633 4,2�.47b 1,228.091 5,467.566 - - - 8.793 - 5,793 - 3,757,385 3,75T,386 _ _ . 314,758 79,593 394,351 475,308 867.047 1,342,356 - - - 698,681 - 696,681 136.495 41.123 177.818 12,059.915 2.b69.193 14.619.108 4b7.2b3 9,878.101 4.329,354 13.237,697 3.426.240 16.663.937 1,410.333 25,788.654 27.178.98i _ 17,477,172 4.664.331 22.131.503 339 142,348 142,B87 117,446 28,658 8.873 95,531 35.996 72,770 24,543 87,313 107,939 �, �� a '? i ! � ..� , i 1 7 � ,� ; i :� � ' 1 :1 33,102 150,548 ' } 69,058 f05,054 275,937 383,278 ' ' �0,000 3QD,000 4.511 4,511 2.354.083 235,026 2,589,109 104.278 175.764 280.042 2,815,464 912.523 , 3,627,987 21�»� - 21,171 5,241,515 488,618 5,710,931 - - - - 271,070 27t,070 11.440.278 17 .440, 278 21.17i 11.440.278 11,481.449 5,241.31b 740.686 5.982,001 128.449 11,618,042 11.741.491 7.858,778 1.859,209 9.599,988 71Q,813 41,123 151,936 6,161,198 1,854,551 7,Oib,749 814,758 79,f�i 394.351 475.308 867.047 1,3A2,356 869.313 14,031.888 14,891209 3.983.887 279,524 4,263,411 $ 1,284.884 a_14,152,812 S 15,437.496 S 8.620.399 S 3.001.122 $ 12,621.515 -� The notes to the financial statements are an k�teqry part ot this stat�r�. sa `l i ;; .l ,i ij ; ti 1 i.l �� I i _J i I � !. i i � ;; � i i: �;. i. � (� ! - Opereting revenues BilGngs to QepartmeMa j� Operetfng expenses: � ; Persona[ services Purchases for resale f- � Operating materfals and suppliss ! ? Transportation - • Utiliry ServEce Depreciation � `: interfund administrative dtiarges i i Other currert charges: Pro(essional fees AdveAising r: � Communicatfons t. ; Prirrting end bfnd�ng Insurance � � Pramiums Claims incurred ` ' Aepairs and maintenance Aentals � � Miscellaneous :� ` Data processing charges Taxes � ; Total other curreM Chargea � Total operating expesses � , Operatfng income (Loss) City of Ctearwater, Florida Combining Siatere�ent of Revenue, Expenses, and Changes ire Func! Net Asset� internat Servtce Fnnds For the Year Ended S�tember 30� 2002 � ' Nonoperating revenues (expe�ses) � ; Eamings on investments ` ` Interest expense Gatn (toss) on exchange ot assets 1 _ � � : 7otal naioperating reve�ue (expenses) Inwme (loss) before trensfers r- ' Trartsfers in `t : Transfers out ` Change in net assets �� 7otal net assets - beginning, as prevfously repoAed, before adjustment for QASB 34 implementation ` AdjusUnent fw impJementation of GASB 34 - efimination � � of conUlbuted capFtal Adjustment for chan9e in accountfng princEple - change ? in capitalizaUon thresholds �; Total net assets - l�ginning, as restaRed Tot� net assets - eoding GS�ovemmeMal BusFness-type General Ce�ntral AcUvit[es (3arage Admin(strativa Activitfes ge�y(ces �surence Total Fund Servie�s Total $ 2,946.166 $ f 1,664,366 $ 14,530,532 3 8,377.343 $ 7,803.910 $ 15,98t,253 1;383,785 999.969 1,783,774 202,411 3,238 205,649 gp,2� 8,763 97.059 353,018 - 353.016 12,452 6.568 19,021 - 57.055 57.055 - 150 160 38,737 11,997 � 50,734 A35 1,561 2,016 1.788.'S97 3,346,059 5,134,656 1,966.455 - 1.966,455 86,274 190,321 276,595 6,266 80,588 86,854 86,058 4,925 9�,983 3,p95.g39 525.086 3,820.735 229,800 27,760 257,560 174,393 188,029 362,342 - 525 525 28,059 1,289,746 i,315,805 652 41,496 A2,148 23,050 8,188,704 8,211,754 273,990 42,430 316,420 • 4.361.066 4,361,086 607,54+1 - 607,544 575,833 11.189 567,132 • 593,84f 593.84i 5,680 1.178 6,858 1,584 144,259 145,843 20,123 29.921 50.OA4 22,038 113.944 t35.982 q0,540 16.620 57.160 124,260 233.920 358,180 _ _ �gqg 6.248 iO4.49A 12,879.488 13.383.987 12�36i688 _, 2,648,190 3,884,878 2.748�458 13.096.048 15,842,506 8.495,777 6,822,939 15.318,716 199,708 i1.511.662) (1.311,9741_ (118,434) 780,971__ 682.537 34,332 1,05i246 t,085,576 138.906 63,223 203,129 _ . . (290,131) (71,944} {362,0�5) . _ . �ss,on (a�o,aaa� �isa,r�i� 259 259 182,426 3 182s429 34.591 i,051,246 t.085.837 228.278 (339.5661 (11t.288) 234,299 (480.496) (226.137)_ 109,844 441,405 551.249 - 166,740 155,710 881,553 22,613 904,166 (25.683) f80.000) (105.683) (25,6831 75.710 50,�027 881.553 22.613 804.166 208.618 (384.72� (176.11U) 991,397 484.018 t,455,415 1,110,640 t3,8i9,508 14,930,149 5278,518 2,267,284 7,545,802 6.415 728.449 734.864 3,754,841 49,7YL 3,804,563 (40,787I I10�820) i51.40� (104.363? 220.098 {784,26� 1,076,268 14,537.338 15.813.608 8,828.�86 2,537.104 11.l66.100 $ 1�884 a 14.152,Si2 $ 15,437.498 $ 9.820,39Ct m$ 3.001.122 $ 12.621,515 The notes to ihe financlal statements are an integral paA of tttls statement � � 95 CASH FLOWS FROM OPERATING AC17V17'IES Cash received from othet funds Cash payments to suppliers Cash paymenb to employees Cash paymenls to other funda Other revenues Net casfi provlded by operaGng activities CASH FLOWS FROM NONCAPRAL flWANCINO ACTIVITIES OperatMg uansfers in �eratlng uanslers aut Aeceipt of cash on loans to/irom other (unds Payment ol cash on loans talhom other tunds Net cash provided (use� by noncapital flnanci�g ac6vities CASH F1,OWS FROM CAPITAL AND RELATED PINANClAIG ACTlVITIES Prindpai paymerds on debt Interest paid Acquisition of fixed assets Saie of fi�! assets Proceeds from issuance of debt Net cash provided (used) for capital and related financing adivities CASH FLOWS FROM INVESTINO ACTIVITlES Interest on Investmerffs ldet cash provfded by invesGng activ�ies Net increase (decxease) In cash and cash equivalerHg Cash and cash equivalents at beginning o( year Cash and cash equtvalents at end ot year Cash and Cash equivalents dassified as: Cash on hand and in banks E4uitY in Poded cash and Irnestrnents Total cash and cash equivafents City of Clearwaier� Florida Combining Stafemeot of Cash Flows Intemal Service Funds For the Year Endad Septanber 30, 2002 (iovemmental Buslness-type j , Ge^eral Central AcUvit�ea (iarage A�nistrative Aclivities Se�vtces insurance Totaf Fu�d Services Total ? j $ 2,946,168 $ 11.584,366 S 14,530,532 $ $,377,343 $ 7,603,910 $ 15,981;263 (1,2Q6,786) (11.067,728) (12,273,025) (3,897.66b) (2,327.698j (fi.225,263) i1.480.494) i�A88i (1.900�920I i1.8$2.871) (3�588.586I (5.449,457) (160,782) (42,723j (203,485) (263.636) (618,435) (882,071) - 182.427 3 182.430 119.174 33.928 153.102 2,615,698 1,091,994 3,608.892 - 1b5,710 155,710 888,080 22,813 910,693 (25�683) (80.000) (105.883) - - - 877,065 877,066 187,848 - 167,646 (239�661) (2.000�000) (2,239�681} - (377.572) (377�572} �265.984) (1.047,21� (1,912.689} 1,055.728 (3b4.959Z 700.767 - - - - (273.518) (273,618} ' - - i�.131) (71.9441 (382A75) (s,sae) - (g.sas) (s.s�a.asa� (�o.ata) (a.z�,��s� � - 259 269.578 - 269.678 z5�882 25.682 671,164 218.465 889.629 19,283 19.293 l3.023.853) (657�911) (3�fiB1,764) 34,332 7.051,247 1,p$5,579 138.806 83,223 243,129 34.332 1,05i�247 1.085.b79 139.906 83,223 2Q?.129 (92,586) 37,950 I54,81b) B87,477 141,547 829,024 747,078 19.686,924 20.q33.002 3.18H.897 791L223 3,878,120 i 654.519 5 19723874 S 20_� .9_ 7�S__ 3._8�s�$ 4��07,1� ,: } f ,� s ` 1 , j � �i a - s - a - a - s ,.soo $ ,,soo 654.513 19.729.874 20L978,987 3,874.374 93p.870 4�80b.244 � t $ 854,513 $ 19.723.874 S 20,378.987 S 3,874.374 S 932,770 $ 4.807,144 f The notes Yo ihe finandal statements are an integral part of ttes statemeM, � ;l ;� Ir �! �r � ;? ��. i: �' It 1 ` t ; ii � ...; i! t. f? �. i: I` i ..: �'. rt i ; 's �� i : t � � , rt� 7 � f; f ' l: , • 6 ; i ? 1_..'t � F , i� ReconcEliation oi operaAng I�ome to r� cash provided by opsraUng adtvfties: Operaling incorrre (I�s) Adjustments to reconale operating income to net cash provided by operating activities: Otherrevenuetrom nonoperatlng section of incorne stafemer�t Depreciation , Change in assets and Habilities: Decreasa In accounts receivable (increasey in invenlory (increase) decrease in prepaid e�enses Increase (decrease) in accounts and cwntra�ts payable (Encrease) in net peiuion asset Iricrease (decrease) in accrued payrol! Total adjustments Net psh pravided by operating activiBes NoncasFi investing. eapital and financi� ectEvities: Qain (loss) on exchange oi assets Giy of d�nnrater, Flortda Combfning Statoment of Cash Flows Internal S�vice Funds For the Year Ended Septamber 30, 2002 Govemmental Buainessdype Generel Centrsl Activtties Garage AdminlsVaUve Activkles Services lnsarance Tofal Fund Servk:es To�l $ 198,706 $ (1,611,882) s (1.311.974) $ (118.434� $ 780.971 $ 662,537 - - - 182,427 3 t82,430 12,Q52 8.589 19,021 3,096.839 525,096 3,620,735 - - - - 78 76 . . . (109,910) - (109,910) 142 (423.0ffi) (422,890) � . . . (18,478) 2,002,570 1,986,082 (439,750) 5.5T5 (434,175) (81.761) (26;201) (106,962) (117.801) (234.082) (351,6$3) 5,111 (15.296) (70.185� 23,327 13,566 86.882 (80,b94) 1,545,610 1,465,076 2,634,132 370,223 2,344,355 $__ 119,174 $ 3392Q $ 163,102 $ �515.698 $ 1.091.f94 $ 3.6Q8.892 $ - $ - S - S 196�07'7 $ (330.848) $ (134>77tj The notes to ttie financia! statemems are an irdegra! parl of Ihis statemenL 97 This Page Intentionally Left Blank 98 ., � T S j _ f ' � _ � : i :1 . � i_1 ;. f f ; " / : � � .J i �i � f I i � � i i i? t. �� .. l, i' �. {, i. ;� r� � : f i; E': � i> {�. I; f , f� � f: �. ; 6 i. ,: i f; i:. �,: st i. ; �, S ' t -' Fiduciary Funds Fid�ciary Funds are used to accaunt for resources that are managed in a trustee capacfiy or as an agent for other part�es or funds. Employees' Pension Fund - to account for the financial opera�on and condition of the major employee retirement system. Flremen's Relief and Pension Fund - to account for the financial operation and conditfon of the Fremen's Relief and Pension Fund, clesed to new members in t962, containing 48 retired members and no active members. ' Police Supplemental Perision Fund - to account for #he financial opera�on ancf condition of a supplemental pension pfan funded by the State for swom police offrc:ers. Fire#ighters Supptemental Pension Fund - to a000unt for the financial operation and condition of a supplemental pensbn plan funded by the State for fireftghters. T�easurer's Escrow Agericy Fund - to account for the receipt, custody, and expenditure af f�nds held temporar[ly in trust for other parties. � ASSETS Cash on hand and in banks Equily in pooled cash and irnestrnents Mat�aged investment accounts, at fair value R6C6iVable� Interest and dividends D,ue from others Tota! receivables Total assets LIABILiTIE3 Accounts payable Total liabilities NET ASSETS Net assets held in tru� %r pension benefits {a schedWe of iunding progress for each plan is presented on pege 7S} City of Clearwater, Flortda Cornbining Statement oi Fiduaiary Net Asseta Flduciary Funds September 30, 2a02 Defined Benefit Defined ContNbutbn Pen�ion Trust F�ds Penslon Trast Funds Poi�e Firefighter� Employees' Flremen's Supalementa! Suaalemental Totals $ • $ - $ 17,948 $ - $ 17,948 697,627 3.397,492 - - 4,095,119 377,817,757 1,280.id3 9,328,572 8.470,025 396,897,295 1,907,088 - 50,761 49,265 2,001,094 - - - 41.643 41.643 1,907,068 b0.76i 84.908 2,042.737 380,422,452 4,677,635 9,398,081 8,554,931 409,053,099 4Q7,002 - - - 407,002 407.UO2 - 407,Q02 S 580.01b,450 $ 4,677,635 $ 9,398,081 $ 8.654,931 $ 402,646,097 The notes to the finandal statements are an Mtegral pett of Uds sfatement -, � a� _; z � . : � S ,t �t ;; i f � :� ,� ;i „ ; ., `i r � `� ;, �i ;1 ; t.,i ; � :. .1 :. i i" j ' i. ! 100 . � ( ' � '. � � � I! i! c.: ADDRIONS 4'. } � Contributions: ° ` Contributions frorn employer ContribuUons irom empioyees � ` State of Florida 1 ; ToWI cantributions City of Cleerwater, Floride Corr�bining Statement of Changes tn FWucfery Net Asseis Fid�ciary Funds Fw the Year Ended September 30, 2002 � = Investment Income: s ; Net appreciation (depreciation) In � - fair vafue of investments Interest � ' DIvIdends i: Less investment expenses: r, Investment management / custod(an fees : �;. ` ` Net Investment fncome (loss) � ' Tota! additbns (reductions) Ci DEDUCTIONS fi Benefits and wfthdrawai payments: � = 8enefits Withdrawal payments �; Total benefits and withdrawtal payments �� i; Z: Income (loss) beiore administrative expenses Administrative expenses Net increase (decrease) ;' . Net assets held in trust for pension benefits: :.. � Detined Benefit Deflned Contribut(on Penston Trust Funds Penslon Trust �unds o re ig ters � Emplayees' Flremen's Supplemente) Supplemental Totals $ 4,439.829 $ 1,153,732 $ - $ - $ 5,593,56i 5,068.687 - - - 5,089,687 12,279 770,578 594,A42 i,377,299 9,52f,795 1,153,732 770,578 594,442 12,040,547 (38,646.780) 5,110 (814.244) (1249,883) (40.705,797) 8,950,728 279,213 156,330 182,709 10,5/8,980 i.604,202 - - _ 85,182 1,689.384 (27,091.850) 284.323 (657,914) (971,992) (28,437,433) 1,747,215 - 87,588 86,578 1,921,362 (28,839.065) 284,323 745.503) (1.058,570) (30,358.815) �18,317,270) 1.438.055 25.075 (464,128) (78.318.268) 12,029.344 940,706 623.846 492,015 14,086,011 549.742 - 549.742 12,579.086 940.706 623,9�6 492t015 14,635,753 (3i,896,356) 497.349 (598,871) (956.i43) (32,954,021) 313,118 3,515 7,143 i0,066 333,842 �3'2,209,474) 493,834 (606,014) _ (966,209) (33,287,863) �; Beginning of year 4t2,224,924 4,183,801 10,004,095 9,521,140 435,933,960 �i �` �` End of year $ 380,015,450 a 4,677,635 $ 9,398,081 $ 8,554,931 $ 402,646,097 r� :�; The notes to the financial statements are an inEegral part of this statemerit i...i r t �Q1 City of Clearwater, Florlda Statement o} Changes in Assets and Uabilitles Agency Fund For the Year Ended Sept�ber s�, 2002 :�i �� ASSETS Equiiy in pooled cash and investments UABIUTIES Deposits: Property owners Developers Other miscellaneous payables_ Speciaf purpose funds Otiier Total Liabilities Balance Balancs October 1, September 30, 2001 AddNions Deductions 20�2 $ 180.536 278,548 174,922 $ 284,162 $ 21,941 - - $ 21,944 15,558 10�,000 - i 15,558 8,097 1,275 1,450 7,922 � 34,937 177,273 173,472 138,738 $ i8U.536 278,548 174.522 � 284�162 The notes to the finanaa! statements are an integra! part of this sta0ament i02 :> ;°; ;; : i . .i ., i� �� „ , ,� - .i ; � !J .� i ; � � � ; �:1 ;� <� � ; i i 1 �i � S � ! 1 I ..f ,f , �� :� F ? 1 � �� 1 t i i F 1 � �.i i r � �.> s < i_: Capital Asse#s Used in the Operation of Governmental Funds 103 � :° -3 J } 1 : : { � � 3 � i � a.� This Page Inientionally Lefi Blank � r .; > D -i � , � < � '.i +. 1 :l ;,` i.a i- � ; 1 i . � � t /�,� : � 1 V`i -: j �- � f -; �; i? ;t il li �-. �; r= �: �� ( ;� L ! i? !' �: ;: ;: :i P ; 1 i- - t ' i._ : f` ; i ., r= �. _ i s � T ; J ' �: I ' �: :t r + �.. i �� LJ �r i1 ,, r' i_ � �_: Clty ot Ctesrwater� Florfda Capita! Assets Used in the Operatbn of OovernMentai Funds Comparattve Schedule� By Sourae' Septeml�er 30� 20a2 and 2001 r��= C',i=,r- �.= '=s Land Buildings Improvements Other Than Buil�r�ga Equipment InfrasUucbure Construcfron in Progrsss - � -_� �� _.� : �, � � <<: _� _ __ti Gene�al Fund Revenue General Obl(gatlon Bonds Revenue Bonds Notes, Mortgages and Ofher ObUgationa Specia{ Assessments Federaf and State Grants VIIW Contribulions from Q$vebpers Unde�ermined Investrnents prfor to July 1, 1964 20�2 2001asrestated� $ 39.914,72b $ 35,595,b31 37,933,9b1 98,997,060 szass.ses �,oss,ss� 39,070,403 31,828,878 1,076,247 - 11.550.776 7�.U64 176,001.487 $ 158.576.115 $ 124,200,861 : f 14,631,099 6,297.870 6,297,870 18,111,869 6,685,490 4,910,1 b0 4,496,562 2,012,182 2,012,192 10,435,4i7 8,690,732 6,414,b22 6,303,643 7,539.144 7,539,143 1.079,462 1,079,462 _ $ 176.001.487 $ 16H.676.113 ' This schedule presents only ihe oapifal asset balances related Ev gavemmenial (unds. Aaoordin9N. the a�piW �wats reportad in intemal servlce fimda are ex,chrded from �e a6ove amountB. 2 Eifective Ocmber t, 2001, the CXty hnplemented a new capiteGzatton poRcy that resulted fn a prior pedod adjuatment to record a writedown of fixed assets. See Note il-C on pege 47. The notas to the finandal statemenis are an integral part ot this sd�teme�t �Q'rJ , Cltjl O� �i @aT1AfB�B�� O�C�B Capital Assets Used In the Op�adon of �overnme�tal Funds Schedule By Functlon ar�d AciivRy i Septemb� 90, 2002 FuncUon ' lmprovements Macf�inery ehd Otl�er'i'han and Activity Total Land BuiWings Buildings Eguipm�t InPrastructure F'aed Assets Unalbcated by Fundion Genera[ Government Leglslative Execu6ve �nanciai & Administrative Legal Plenn�g Comprehensive Planning Other Generat (3ovemment Public Safety: Law ErKorcement Fre Control Protective Inspeations . Emergency and Disaster Re�ef Arr�utance and Rescue Services Physical Environment Solid Wasbe / Recyling Conservation and Resource Mar�qemer►t Olher Physiq! Environment Tf6flS(JOfhdflOfl: Road and Sheet FaciliUes A'uports Parking OtherYranspormtlon Service Economic Environment Industry Development liousing and Urban Developm�t OUier Ecorwmic Enviroment Human Services Ofher Human Services Culture and Recreadon: �� P.arks & Recteatlon CulWrat Centers Special RecreaBon Facilitles Tota! General Ff�oed Assets Alloca%ed to Functions Construcdon in Progress Total GeneraE Fbced Assets $ 18.t44222 $ 9.958,088 S 7,938,114 $ $ 248 020 $ 3,$39 - - - 9,531 - 481,500 - 1,528 - 479,972 - 835,849 - 9,679 - 825,870 - 144,794 - 2,108 - 142,888 - 6,285 - - - 8,285 - 4,165 - - - 4,165 - 25,556,599 6.404,795 16,169,786 131,761 2,850,257 27,132.523 8.404.795 16.189.099 131,781 4.412,868 '� � i � 8,565.028 588,945 - 200,257 7,775,826 - 4,856,823 - 95,448 • 4,881,375 - 180,565 - 11.432 - t&9,193 - � � 403,868 - 88,482 - 315,968 - ; E 1.35�.808 12,254 1.347.552 ' ; 15.468,090 588.845 207.616 200.257 14.469272 ;� : i5�940 • - - 15,840 - t i 90,541 - - 78,210 14.331 - 994.�8 340.686 54.222 501.389 - 418,89B 84.499 � , i 57,074,460 9,604.677 4,311,791 41,384,499 697,246 1,076,247 , 3 95,888 35.888 - - - - ' i 502.�1 1.200 171.262 148.000 181.629 ; 57.612,539 9.641.865 4.483,053 41.532.499 878.875 1.076,247 '� 1,428,826 1,396,655 16,901 - 15,270 - 898,747 929,835 293,682 - 75,290 - 33.725 93,125 2,1�,696 1,759,815 910,583 90,500 23,377 23,377 i3,556,327 118.053 756,735 133.859 12,547,680 24,174,314 7,502.855 T.378,214 9,033.878 261,170 28,508 - 993 - 27,515 5.650.725 3.940.4UA 677.548 1,006.135 28.833 43.409,874 11,581,417 8,811.486 70,173,979 12,862.898 � e tA6.306,490 28.956.637 29.995,837 52,455,386 32,822,3B3 1,07fi,247 164,450,712 ,e $ 99.9�14.725 $ 37.933,951. 52.455.386 $_ 33.070,403 1 07fi 247 11.550.775 $ 17� ' This schedule presents only it►e capila! esset balances related b govemmental (unds. AcoordGigly, fhe capifal assets reported in in0amal service (uods are exduded tram Ihe above artaunts. 'Ihe notes to the hnanciat s��emeots are an integral part oi �is statement 106 - i . , : j - ,: ,, , t i. i ;� i + i i _. i - ' i r .� � i i � i � r� �; � i� Functlon and Activ(iv Faed Assets Unallocat� gy Fwction �, General Goverr�ment ; LegidaBve � : Executive Flnandal & AdmfnisUative Legal ( ; Plsnning � ; Comprehenstve Planning . , Other General Govemrr�ent PublicSafely: Law Entorcerr�ent F1re Contro! Protectivelnspec6ons Emergency and Disaster Refief Arnbulance and Rescue Services Physicaf Environmenk Sotid Waste / qeoyling Conservatlon and Resource MenagemeM Other Physlcal Environment TransporFation: Road and Street FaciliGes P�rts Other�TransportaUon Service Economtc Environment Employment Opportunity and Development tndustry Development Nousing and Urban Development Other Economic Environment Fiuman Services; Oiher Human Services Culture and E�xeaBon: Ub►erfes Parks & Recreation CuUural Services Culdual Centers SPecis[ RecreeUon Faciiities Total Construc8onin Progress clry ot Ctearwater, FloNda Capiiaf Assets Used !n the Operatbn oP Qoverrimental Funda Schedule of Changes Sy FuncUon and AcUvity' For the Year Endecf S�tember 30, 2002 (ieneral Restated s Fixed Assets �� Qenar�i � F6ted Assets General 10/— �� ro� Restatemerq t0/Of/Of A�ditlons FbredAssets --.�_ Deducf�ons g/3Q�pp $--34'925'399 �ie,_ 1811771 3 18,144222 _3 - - �— ��_ $ tg tqq,2?2 ?5,186 (21�635� 8,53i 64U,801 (165,554) 475,247 18,021 3��1 �'�:5� i�A2i) 1.117.494 14.474 (198�319� `�1,500 6,� (so.eoz) tss.�sa - (21;37 ) sos,sas g��r ) T44,794 435 (» �) 10,486 6�� 26,812.065 _ h,�05423� 25,757828 �6.�2tj 4,165 ��3„ (1.406.188) �.�7.�5 175.025 _ (376.254) 25.5b6 589 207.520 _ (— g1p,p32j 27.132 523 �2,sea,sat �a,ess,�so) a tao,set s2s,esa 6 2A5,265 (2.561.?94) 4,090,834 880,335 (14,946) 4,856,823 aso,00s (s�,�sa) �ee,�o� s,31s �is,esry iao,sss �.ae� sss (ae,�3� aai,ass - - aas,ess ��aas�n �.�.osa rt.�a2 z— �.�es ata - t.a� aae —!�•� �s� 14.f40.848 _ 1•4q2,27g H 17.087) 15,4� 090 �''� i�,�5} 15,940 105,955 (i4,614) 80,54t " i5,940 588218 392.357 �73.�•8tg 234 80 498.838 2.551 ---�..._ 39�4.908 _ 2.551 - 507.389 71.BQ4,842 (15,582,604i 55,622,238 7,460,572 ss�.os2 (as�,s2s) t7s,ass i8.3so) s�,oi�,aso �'�'� (>>�` .�) 95 888 (179,469) . 792.iS0 (247420) 544.740 35988 7 9Z94. .099 — (17,gqp.gQq) 56.382.435 �'� — (43.8491 502.091 _1.461.772 — (23�,g�g� 576t2.5`a9 14,629 (14,629) 2.089,530 (66p.704) 1,428,826 " t.s22,2o� �s2s,a�� sss.�a� ' - �,a2a,aas �•7� (1.619) 33.1�r � - 698,747 _ 3�461104 — (�,9pp,qp�� 2.160.698 -------- 33.125 62.379 " 2.160 698 �(38•002) 23.�/7' -----�_._ 23.377 14,80i.054 218,989 15,p2t,Q37 861,751 i2�326,481) 13�556,327 25.317.257 (3,147,522) 22,189,785 2,009,087 �,� ��1 - . (a,sos) �t,��a,3�a 1911740 ��'�� '�8 ' . 28,508 _ (207.424) 1.710.316 _ _ 3.940.409 �•�� _(3 7� 1ss) 38�929.5g6 8.87 7.247 5•� � _ (2.930'968) 43'409•874 �,7�,� (47,810,289) 157,B1T,048 9,925,369 (3,291,70fi} f64,450,772 �� - 759.064 10._ 79�,71 � i 1.550 775 $�•� �(47,910289� $ 158.5761 f3 20 717 080 � 3 291 706 $ 17� ' This sd�edule presents only the capital asset batances relaied b governmenta! fund� Accord�glY. the capita! assets reported in lntemal service fimds are exduded from U�e ap�ve anpu�ts. 2 EffecWe October 1� 2001 �e Cfry ir�lemented a new capihdpzaUon policy that resulted in a Prior period resEalement to record a writedown of fGced assets. See Note II-C on page 47. The notes Oo the financia! sfaEements are an integral part oi ihis s�tement. 107 i� , I � APPENDIX C FORM OF ORDINANCE 6915-01 AND RESOLUTION 03-35 ORDINANCE NO. 6915-01 AN ORDINANCE PROVIDING FOR WATER AND SEWER REVENUEBONDS, SERIES [TO BEDETERMINED] OF TI�CITY OF CLEARWATER, FLORIDA, TO BEISSUED IN ONE OR MORE SERIES OVER ONE OR MORE YEARS; TO FINANCE OR REFINANCE THE COST OF DESIGN, ACQUISITION, CONSTRUCTION ORRECONSTRUCT'ION OF INIPROVEMENTS TO TI� CITY'S WATER AND SEWER SYSTEM; PROVIDING FOR TI� PAYMENT OF THE BONDS FROM THE NET REVENUES OF TI�CITY'S WATERAND SEWER SYSTEM AND CERTAIN OTHERMONEYS PLEDGED T'HEREFOR; PROVIDING FOR THE RIGHTS OF THE HOLDERS OF SUCH BONDS; AMENDINGORDINANCENO. 3674-84, ORDINANCENO. 5355- 93 AND ORDINANCE NO. 6311-98 WHICH AUTHORIZED THE PARITY BONDS TO ALLOW DELIVERY OF ADDITIONAL BONDS PARITY CERTIFICATE BY FINANCIAL SERVICES ADNIINISTRATOR; MAKING CERTAIN OTHER COVENANTS AND AGREEMENTS IN CONNECTION THEREWITH; PRO- VIDING CERTAIN OTI�R MATTERS IN CONNECTION THEREWITH; AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY TI� CITY COMMISSION OF THE CITY OF CLEARWATER, FLORIDA: SECTION 1. AUTHORITY FOR THIS ORDINANCE. This Ordinance is enacted pursuant to Chapter 166, Part II, Florida Statutes, and other applicable provisions of law and pursuant to Section 16R of Ordinance No. 3674-84, as amended and supplemented (the "Original Ordinance") and is supplemental to the Original Ordinance. SECTION 2. DEFINITIONS. The following tem�s shall have the following meanings herein, unless the text otheiwise expressly requires. Words importing singular number shall include the pluxal number in each case and vice versa, and words importing persons shall include firms and corporations. "Accreted Va1ue" shall mean, as of any date of computation with respect to any Capital Appreciation Bond, an amount equalto the principalamount of such Capital Appreciation Bond (the princi- pal amount at its initialoffering) plus the interest accrued on such Capital Appreciation Bond from the date of delivery to the original purchasers thereof to the Interest Payment Date next preceding the date of computation or the date of computation if an Interest Payment Date, such interest to accrue at a rate not exceeding the legal rate, compounded semi-annually, plus, with respect to matters related to the payment upon redemption or accelerationofthe CapitalAppreciation Bonds, if such date of computation shall not be anlnterest Payment Date, a portion ofthe difference betweenthe Accreted Value as ofthe unmediately preceding Interest Payment Date and the Accreted Value as of the unmediately succeeding Interest Payment Date, calculated based on the assumption that Accreted Value accrues during any semi-annual period in equal daily amounts on the basis of a 360 day yeaz consisting of 12 months of 30 days each. "Act" sha11 mean Chapter 166, Part II, Florida Sta.tutes, and other applicable provisions of law. "AdditionalBonds" shall meanBonds issued in compliance with the terms, conditions and limitations contained herein and in Section 16R of the Original Ordinance, which (i) shall have a lien on the Pledged Revenues equal to that of the Bonds, (u) shall be payable from the Pledged Revenues on a parity with the Bonds, and (iri) rank equally in a11 other respects with the Bonds. "Amortization Installments" with respect to any Term Bonds of a Series, shall mean an amount or amounts so designated which is or are established for the Term Bonds of such Series by subsequent resolution of the Issuer and established with respect to such Terni Bonds, provided that (i) each such installment shall be deemed to be due on such interest or principal maturity date of each applicable year as is fixed by subsequent resolution of the Issuer and shall be a multiple of $5,000 principal amount (or $5,000 MaturityAmount, mthe case of Capital Appreciation Term Bonds), and (u) the aggregate ofsuch installments for such series sha11 equal the aggregate principal amount (or Maturity Amount, in the case of Capital Appreciation Term Bonds) of Term Bonds of such Series authenticated and delivered on original issuance. "Authorized Investments" shall mean, with respect to a Series of Bonds, any of the following if and to the extent the same are at the tixne legal for investrnent of municipal funds: (1) Bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guarantced by, the United States of America, including any of the federal agencies and federally sponsored entities set forth m clause (3) hereinafter to the extent guaranteed by the United States of America. In the event these securities aze used for defeasance, they shall be non-callable and non-prepayable; (2) Obligations of any of the following federal agencies or federally sponsored entities which obligations represent the full faith and credit (guaranteed obligations) of the United States of America, in the event these securities are used for defeasance, they shall be non-callable and non-prepayable, (including but not limited to) the following: a. Export-Import Bank; b. Fann Credit System Financial Assistance Corporation; � c. Rura1 Economic Community Development Administration (formerly the Farmers Home Administration); d. General Services Administration; e. U.S. Maritime Administration; f. Sma11 Business Administration; g. Government National Mortgage Association (GNMA); h U.S. Department of Housing & Uifian Development (PHA's); i Federal Housing Administration; and j. Federal Financing Bank (3) Direct obligations of any of the following federal agencies or federally sponsored entities whichare not fully guaY-antced by the full faithand credit of�e United States ofAmerica, inthe event these securities are used for defeasance, they shall be non-callable and non-prepayable: a. Federal National Mortgage Association (FNMA); b. Federal Home Loan Mortgage Corporation (FHLMC); c. Resolution Funding Corporation (REFCORP); d. Student Loan Marketing Association (SLMA); e. Federal Home Loan Bank Systems (FHLB); and f. Obligations of other Government Sponsored Agencies (approved by the Insurer). The following obligations may be used as Permitted Inveshnents for all purposes other than defeasance investments in refunding escrow accounts. (4) Commercial paper which is rated at the time of purchase in the highest classification (without regard to qualifier), "A-1"by S&P and "P-1"by Moody's and which matures not more than 270 days after the date of purchase. (5) Inveshnent agreements the provider of which is rated in one of the two highest rating categories, without regard to qualifiers, by two Rating Agencies under which the provider agrees to periodically deliver, on a delivery versus payment basis, such securities as are described in clauses (1-4) above. (6) Investment agreements the provider of which is rated in one of the two highest rating categories, without regard to qualifiers, by two Rating Agencies and which are continuously and fully secured by such securities as are described in clauses (1-3) above, which securities sha11 have a market value at all times at least equal to 102% of the principal amount invested under the investment agreement (marked to market at least weekly). (7) The pooled investment programofthe State of Florida. administered by the State Board of Administration, lrnown as the Local Government Sutplus Funds Tnlst Fund, established pursuant to Chapter 218, Part IV, Florida Statutes, as amended. (8) Other forms ofinvestments (includingrepurchase agreements) approved in writing by the Bond Insurer with notice to Standard & Poor's. With respect to any Series of Bonds issued hereunder, such additional investnients as are approved by subsequent resolution of the Issuer adopted prior to the issuance of such Series of Bonds. "Bond Insurance Policy" shall mean the municipal bond new issue insurance policy issued by a Bond Insurer that guarantees payment of principal of and interest on the Bonds or any Additional Parity Bonds. "Bond Insurer" shall mean the provider of a Bond Insurance Policy for a Series of Bonds so designated in a supplemental resolution of the Issuer. "Bondholder" shall mean a registered owner of a Bond as shown on the registration books of the Registrar. "Bond Service Reqiurement" for any Fiscal Year, as applied to the Bonds of any series, shall mean the sum of: (1) the amount required to pay the interest becoming due on the Bonds of such series during the FiscalYear, except to the exter►t that such interest shall have been provided by payments into the Sinldng Fund out of bond proceeds for a specific period of time or by payments of investment income into the Sinking Fund from the Bond Service Account or any subaccounts therein. Whenever such income is applied in calculating a Bond Service Requirement for any purpose, such income shall also be excluded in the computation of Gross Revenues for such purpose. (2) the amount required to pay the principal of Serial Bonds of such series maturiug m such Fiscal Yeaz. (3) the Amortization Installments for Terni Bonds of such series for such Fiscal Year. (4) in the event the Issuer has purchased or entered into an agreement to purchase Federal Securiries or Authox�iz�i Invest�nents from moneys in the Bond Service Account, thenthe income received or to be received on such Federal Securities or Authorized Investments fromthe date of acquisitionthereofto the date of maturity thereof, unless otherwise designated for other purposes, shall be taken into consideration in calculating the payments which will be required to be made into 4 the Sinking Fund and the Bond Service Account therein. Whenever such income is applied in calculating a Bond Service Reqlureinent for any purpose, such income sha11 also be excluded 'm the computation of Gross Revenues for such purpose. "Bonds" shall mean the Parity Bonds, Series 2001 Bonds, and any Additional Bonds permitted to be issued hereunder from time to time in accordance with the provisions hereof. "Capital Appreciation Bonds" shall mean Bonds the interest on which is payable only at maturity or redemption, as deternuned by subsequent resolution. "Capital Appreciation Term Bonds" shall mean Capital Appreciation Bonds of a series all of which shall be stated to mature on one date, which shall be subject to retirement by opera.tion of the Bond Amortization Account, and the interest on which is payable only at maturity or redemption. "City Manager" shall mean the City Manager of the Issuer. "Clerk" shall mean the City Clerk of the Issuer. "Consulting Engineers" shall mean such qualified and recognized consulting engineers, having a favorable repute for skill and experience in the construction and operation of such facilities as the System, at the time retained by the Issuer to perform the acts and carry out the duties as herein provided for Consulting Engineers. "Cost of Operation and Maintenance" of the System shall mean the current expenses, paid or accrued, of operation, maintenance and repair of the System as calculated in accordance with sound accounting practice, but shall not include any reserves for renewals and replacements, for extraordinary repairs or any allowance for depreciation or amortization. "County" sha11 mean Pinellas County, Florida, a political subdivision of the State. "Federal Sectuities" shall mean only direct obligations of, or obligations fully guaranteed as to principal and interest by, the United States of America. "Finance Director" shall mean the Financial Services Administrator of the Issuer or her designee. "Fiscal Year" sha11 mean the period commencing on October 1 of each year and ending on the succeeding September 30, or such other period as is at the time prescribed by law. "Gross Revenues" shall mean all income or eamings, including any income from the inveshnent of funds as herein provided, derived by the Issuer from the operation of the System. 5 "Increased Capacity Requiremerits" means any increased deinand upon or usage of the capital facilities of the System resulting from additional connections thereto, or from substantial changes to or in the use of properties connected thereto. "Issuer" or the "City" shall mean the City of Clearwater, Florida. "Maturity Amount" means the amount payable uponthe stated maturity of a Capital Appreciation Bond equal to the original principal amount thereof plus all accrued interest thereon from the date of issue to the date of malurity. "Maximum Bond Service Requirement" shall mean, as of any particular date of calculation, the greatest amount of aggregate Bond Service Requirement for the then current or any future Fiscal Year. "Mayor-Corrunissioner" shall mean the Mayor-Commissioner or the Vice Mayor of the City Commission of the Issuer, or such other person as may be duly authorized by the Mayor-Commissioner to act on his or her behalf: 'Net Revenues" of the System sha11 mean the Gross Revenues after deduction of the Cost of Operation and Maintenance. "Original Ordinance" shall mean Ordinance No. 3674-84, as amended and supplemented, of the Issuer, authorizing the Parity Bonds. "Parity Bonds" shall mean the Issue�'s outstanding Water and Sewer Refunding Revenue Bonds, Series 1993 and Water and Sewer Refunding Revenue Bonds, Series 1998. "Paying Agent" shall mean any paying agent for Bonds appointed by or plu�suant to a supplemental resolution and its successors or assigns, and any other Person which may at any tune be substituted in its place pursuant to a supplemental resolution. "Payment Date" shall mean, withrespect to payment to the Bondholders of principal or interest on the Bonds, or with respect to the mandatory amortization of Term Bonds, the date upon which payment of such principal, interest or Amortization Installment is required to be made to the Paying Agent. "Person" sha11 mean an individual, a corporation, a partnership, an association, a joint stock company, a tn�st, any unincoiporated organization or govemmental entity. "Pledged Revenues" shall mean the Net Revenues. "Project Costs" shall mean all costs authorized to be paid from the Constxuction Fund puisuant to Section 17 hereof to the extent pernutted under the laws of the State. It is intended that this definition be � broadly construed to encompass all costs, expenses and liabilities ofthe Issuer related to the Project which on the date of this Ordinance or in the future shall be pemutted to be funded with the proceeds of any Series of Bonds pursuant to the laws of the State. "Projects"shall meanthe design, acquisition, cons�tructionorreconstructionofcapitalimprovements to the System undertaken by the City fromtime to time, all as may be designated by subsequent resolution of the Issuer adopted with respect to any Series of Bonds. "Put Bonds" shall mean the Term Bonds so designated by resolution or ordinance of the Issuer at or prior to the time the Bonds of any series are sold. "Registrar" shall mean any registrar for the Bonds appointed by or pursuant to supplemental resolution and its successors and assigns, and any other Person which may at any tune be substituted 'm its place pursuant to supplemental resolution. "Reserve Requirement"shallbe suchamount as determinedbysubsequent Resolutionofthe Issuer relating to a specific Series of Bonds adopted prior to d�►e issuance of such Bonds, which may not exceed the lesser of (i) the Maximum Bond Service Requirement, (u) 125% of the average annual Bond Service Requirement or (iu) the largest amount as shall not adversely affect the exclusion of interest on the Bonds from gross income for Federal income tax purposes. "Serial Bonds" shall mean any Bonds for the payment of the principal of which, at the maturity thereof, no Amortizationlnstallments are required to be made prior to the stated date of maturity of such Serial Bonds. "Series" or "Series of Bonds" or "Bonds of a Series" sha11 mean all Bonds designated as being of the same Series issued and delivered on original issuance in a simultaneous transaction, and any Bonds therea.fter delivered in lieu thereof or in substitution therefor pursuant to this Ordinance. "System" shall mean the complete combined and consolidated water system and sanitary sewer system ofthe Issuer now owned by the Issuer, or hereafter constructed or acquired by the Issuer, together with all lands or interests therein, including plants, buildings, machinery, franchises, pipes, mains, fixtures, equipment and all property, real or personal, tangible or intangible, now or hereafter owned or used in connection therewith, and including any undivided or partial ownership interests therein. "Term Bonds" shall mean the Bonds of a series a11 of which shall be stated to mature on one date and which shall be subject to retirement by operation of the Bond Amortization Account. "2001 Bonds" sha11 meanthe Series ofBonds initially issued under this Ordinance and designated as Series 2001 Bonds. 7 "2001 Project" sha11 mean the Project or Projects authorized to be financed with the proceeds of the Series 2001 Bonds as identified by subsequent resolution of the Issuer adopted prior to the issuance of the Series 2001 Bonds, consisting of design, acquisition, construction or reconstruction of capital improvements to the System undertaken by the City from time to tune, a portion of the cost of which are to be paid from the proceeds of the Series 2001 Bonds SECTION 3. FINDINGS. It is hereby ascertained, determined and declared that: A. The Issuer now owns, operates and maintains the System and is empowered to maintain, operate, nnprove and extend suchsystemand regulate and fix reasonable rates and charges for the services fi�rnished thereby. B. T'he Issuer derives Gross Revenues from rates, fees and charges made and collected for the services and facilities of the System supplyirig water and sanitary sewerage services and the Gross Revenues are not pledged or encumbered in any manner, except for payment of the Parity Bonds. C. Any Series of Bonds and the project to be funded withthe proceeds ofsuch Series ofBonds, shall be issued and such proj ects shall be undertaken upon approval by subsequent resolurion ofthe Issuer as provided by law. The proceeds of any Series of Bonds shall be applied as provided in a supplemental ordinance or resolution. D. Section 16R of the Original Ordinance provides for the issuance of Additional Bonds under the terms, limitations and conditions provided therein. E. The Issuer has complied, or will comply prior to the delivery of the Bonds, with a11 the terrns, conditions and restrictions contained in Section 16R of �e Original Ordinance. The Issuer is therefore legally entitled to issue the Bonds as Additional Bonds within the authorization contained 'm the Original Ordinance and the covenants in the Original Ordinance shall apply to the Bonds. F. The Bonds herein authorized sha11 be ona parity and rank equally, as to lienon and source and security for payment from the Pledged Revenues and in all other respects, with the Parity Bonds. G. The estimated Pledged Revenues will be sufficient to pay all of the principal of and interest on the Bonds, as the same become due, and to make all required sinking fund, reserve and other payments required under this Ordinance and the Original Ordinance. H. The principal of and interest on the Bonds and all required sinking fund, reserve and other payments shall be made solely from the Pledged Revenues as herein pmvided The Issuer shall never be required to levy ad valorem taxes on any property therein to pay the principal of and interest on the Bonds ar to make any of the required sinking fund, reserve or other payments, and any failure to pay the Bonds shall not give rise to a lien upon any property of or in the Issuer, except the Pledged Revenues. 0 I. The total indebtedness ofthe Issuer, widvnthe meaning ofthe Issuer's charter, does not exceed twenty per centum (20%) of the current assessed valuation of a11 real property located in the Issuer, and will not exceed such amount after issuance of the Bonds. SECTION 4. AUTHORIZATION OF SERIES 2001 BONDS. There is hereby authorized the issuance ofthe initial Series ofBonds hereunder to be designated the Series 2001 Bonds, in a principal amount of not to exceed $62,000,000, subject to such terms and conditions as set forth herein and 'm subsequent Resolutions of the Issuer adopted prior to the issuance of the 2001 Bonds. The proceeds of which shall be used to pay the costs ofcapital improvements to the System, the costs of issuing the 2001 Bonds, including any municipal bond insurance, and to fund a debt service reserve fund. SECTION 5. ORDINANCE TO CONSTITUTE CONTRACT. In consideration of the acceptance ofthe Bonds bythe Bondholders fromtime to time, this Ordinance shall be deemed to be and shall constitute a contract betweenthe Issuer and such Bondholders. The covenants and agreements herein set forth to be perFormed by the Issuer shall be for the equal benefit, protection and security of the legal Bondholders of any and all of such Bonds, all of which shall be of equal rank and without preference, priority or distinction of any ofthe Bonds over any other thereof, except as expressly provided therein and herein. 5ECTION 6. AUTHORIZATION OF BONDS. Subject and ptusuant to the provisions hereof and as sha11 be described 'm subsequent resolutions ofthe Issuer to be adopted prior to the issuance of any Series of Bonds, obligations ofthe Issuer to be lrnown as"Water and Sewer [Refunding] Revenue Bonds, Series [To Be Deternuned]" are authorized to be issued 'm one or more series (including Additional Bonds) from time to time. The aggregate principal amount of �e Bonds which may be executed and delivered under this Ordinance is not limited except as is or may hereafter be provided in Section 17T hereof or as limited by the Act, by law or Section 16R of the Original Ordinance. SECTION 7. DESCRIPTION OF BONDS. The Bonds shallbe issued in fiilty registered form; may be Capital Appreciation Bonds, Capital Appreciation Term Bonds, Variable Rate Bonds, Serial Bonds or Term Bonds; sha11 be dated; shall be numbered consecutively from one upward in order of maturity preceded by the letter 'R' ; shall be in the denomination of $5,000 each, or integral multiples thereof for the Seria1 Bonds and 'm $5,000 Maturity Amounts for the Capital Appreciation Bonds or m $ 5,000 multiples thereof, or such other denominations as shall be approved by the Issuer in a supplemental resolution prior to the deliveryofa Series ofBonds; shall have suchPaying Agent and Registrar; shall bear interest at such rate or rates not exceeding the maximum rate allowed by State law, the actual rate or rates to be approved by the governing body of the Issuer prior to or upon the sale of the Bonds; such interest to be payable at such times as are fixed by supplemental resolution of the Issuer and sha11 mature annually on such date in such years and in such amounts as will be fixed by supplemental resolution of the Issuer prior to or upon the sale of any series of Bonds; and may be issued with variable, adjustable, convertible or other rates with original issue discounts and/or original issue premitnn; a11 as the Issuer shall provide herein or hereafter by supplemental resolution. �7 Each Series ofBond s�hall bear interest from the interest payment date next preceding the date on which rt is authenticated, unless authenticated on an interest payment date, m which case rt sha11 bear interest from such interest payment date, or, unless authenticated prior to the first interest payment date, in which case it shall bear interest from its date; provided, however, that if at the time of authenticationpayment of any interest which is due and payable has not been made, such Series of Bond shall bear interest from the date to which interest shall have been paid. The Capita.l Appreciation Bonds shall bear interest only at maturity or upon redemption prior to maturity in the amount detennined by reference to the Accreted Value of such Bonds. 'The principal of and the interest redemptionpremium, if any, on the Bonds shall be payable in any coin or currency ofthe United States of America which on the respective dates ofpayment thereof is legal tender for the payment of public and private debts. The interest on any Bonds (other than Capital Appreciation Bonds) shall be payable by the Paying Agent on each interest payrnent date to the person appearing on the registration books of the Issuer hereinafter provided far as the registered Holder thereof, by check or draft mailed to such registered Holder at his address as it appears on such registration books or by wire transfer to Holders of $1,000,000 or more in principal amount of the Bonds. Payment of the principal of all Bonds and the Accreted Value with respect to d�e Capital Appreciation Bonds sha11 be made upon the presentation and surrender of such Bonds as the same shall become due and payable. Notwithstanding any other provisions ofthis section, the Issuer may, at its option, prior to the date ofissuance ofany Series of Bonds, elect to use an immobilization system or pure book-entry systemwith respect to issuance of such Series of Bonds, provided adequate records will be kept with respect to the ownership ofsuchSeries of Bonds issued in book-entry form or the beneficialowneiship ofbonds issued in the name of a nominee. As long as any Bonds are outstanding in book-entry foim the provisions of this Ordinance inconsistent with such system of book-entry regisiration shall not be applicable to such Bonds. The details of any altemative system of issuance, as described 'm ttvs paragraph, shall be set forth in a resolution of the Issuer duly adopted at or prior to the sale of such Series of Bonds. SECTION 8. EXECUTION OF BONDS. The Bonds shall be executed in the name of the Issuer by the Mayor-Commissioner and City Manager and attested by the City Clerk, and approved as to form, sufficiency and correctness by the City Attorney, either manually or with his or her facsimile signature, and the official seal of the Issuer or a facsimile thereof shall be af�uced thereto or reproduced thereon. The facsimile signature of such officers may be imprinted or reproduced on the Bonds. The Certificate of Authentication of the Bond Registraz shall appear on the Bonds, and no bond shall be valid or obligatory for any putpose or be entitled to any security or benefit under this Ordinance unless such certificate shall have been duly executed on such Bond. The authorized signature for the Bond Registrar shall be either manual or facsimile; provided, however, that at least one of the signatures appearing on the Bonds shall at all tunes be a manual signature. In case any ofi'icer whose signature sha11 appear on any Bonds shall cease to be such officer before the delivery of such Bonds, such signature or facsimile shall nevertheless be valid and sufficient for all purposes the same as if he had remained in ofi'ice until such 10 delivery. Any Bond may be signed and sealed on behalf of the Issuer by such person who at the actual time ofthe executionof suchBonds shall hold the proper office withthe Issuer, although at the date of enactment of this Ordinance such person may not have held such office or may not have been so authorized. SECTION 9. AUTHENTICATION OF BONDS. Only such of the Bonds as shall have endorsed thereona cedificate ofauthenticationsubstantially m the formhereinbelow set forth, duly executed by the Regist�rar, as authenticating agent, shall be entitled to any benefit or security under tliis Ordinance. No Bond sha,ll be valid or obligatory for any purpose unless and until such certificate of authentication shall have been duly executed by the Registrar, and such certificate of the Registrar upon any such Bond shall be conclusive evidence that such Bond has been duly authenticated and delivered under this Ordinance. The Registrar's certificate of authentication on any Bond shall be deemed to have been duly executed if signed by an authorized of�icer of the Registrar, but it shall not be necessary that the same officer sign the certificate of authentication of all of the Bonds that may be issued hereunder at any one time. SECTION 10. NEGOTIABILITY. Subject to the provisions hereofrespecting registrationand transfer, the Bonds shall be and shall ha.ve all the qualities and incidents of negotiable instruments under the laws of the State of Florida, and each successive holder, in accepting any of the Bonds, shall be conclusively deemed to have agreed that the Bonds shall be and have all of such qualities and incidents of negotiable instruments underthe Unifo�rnCommercialCode - Inveshnent Securitiesofthe State ofFlorida. SECTION 11. REGISTRATION, EXCHANGE AND TRANSFER There shallbe a Bond Registrar for the Bonds which may be the Issuer or a designated bank or trust company located vvithin or without the State of Florida. The Bond Registrar shall maintain the registration books of the Issuer and be responsible for the transfer and exchange of the Bonds. The Issuer shall, prior to the proposed date of delivery ofthe Bonds, by resolution designate the Bond Regist�ar and Paying Agent. The Bond Registrar shall maintain the books for the registration of the ttansfer and exchange of the Bonds in compliance with the Florida Registered Public Obligations Act and the system of registration as established by the Issuer pursuant thereto. Bonds maybe transferred uponthe registrationbooks, upondeliveryto the Registrar, together with written instructions as to the details of the transfer of such Bonds, along with the social security number or federal employer identification number of such transferee and, if such transferee is a trust, the name and social security or federal employer identification numbers of the settlor and beneficiaries of the t�ust, the date of the trust and the name of the trustee. No transfer of any Bond shall be effective until entered on the registration books maintained by the Bond Registrar. Upon surrender for transfer or exchange of any Bond, the Issuer shall execute and the Bond Registrar shall authenticate and deliver in the name ofthe registered owner or the transferee or trar►sferees, as the case may be, a new fi�lly registered Bond or Bonds of authorized denominations of the same maturity and interest rate for the aggregate principal amount which the registered owner is entitled to receive at the earliest practicable time m accordance with the provisions of �is Ordinance. The Issuer or the Bond 11 Registrar may charge the owner of such Bond for every such transfer or exchange an amount sufficient to reimburse them for their reasonable fees and for any tax, fee, or other govemmental charge required to be paid with respect to such transfer, and may require that such charge be paid before any such new Bond shall be delivered. All Bonds presented for transfer, exchange, redemption or payment (if so required by the Bond Registrar), shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in form and with guarauty of signature satisfactory to the Bond Registrar, duty executed by the registered holder or by his duly authorized attorney in fact or legal representative. All Bonds delivered upon transfer or exchange shall bear interest from the preceding interest payment date so that neither gain nor loss in interest shall result fromthe transfer or exchange. New Bonds delivered upon any transfer or exchange sha11 be valid obligations of the Issuer, evidencing the same debt as the Bond surrendered, shall be secured by this Ordinance and shall be entitled to a11 ofthe security and the benefits hereof to the same e�ent as the Bonds surrendered. The Issuer and the Bond Registrar may treat �e registered owner of any Bond as the absolute owner thereof for all purposes, whether or not such Bonds shall be overdue, and shall not be bound by any notice to the contrary. Notwithstanding the foregoing provisions of this section, the Issuer reserves the right, on or prior to the delivery of the Bonds to amend ar modify the foregoing pmvisions relating to the registration of the Bonds by resolution or ordinance in order to comply with a11 applicable laws, rules, and regulations of the United States and/or the State of Florida relating thereto. In addition, pursuant to a resolution adopted prior to the issuance of a Series ofBonds, the Issuer may establish a book-entry-only system ofregistration for such Series Bonds, the provisions of which shall be deemed to modify any inconsistent provisions of this Ordinance. SECTION 12. BONDS MUTILATED, DESTROYED, STOLEN OR LOST. In case any Bond shall become mutilated, or be destroyed, stolen or lost, the Issuer may in its discretion issue and deliver a new Bond of like tenor as the Bond so mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Bond u�on surrender and cancellation of such mutilated Bond or in lieu of and substitution for the Bond destroyed, stolen or lost, and upon the holder furnishing the Issuer proof of his owneiship thereof and satisfactory indemnity and complying with such other reasonable regulations and conditions as the Issuer ma.y prescribe and paying such expenses as the Issuer may incur. All Bonds so sutrendered shall be canceled by the Registrar for the Bonds. If any of the Bonds shall have matured ar be about to ma.ture, instead of issuing a substitute Bond, the Issuer may pay the same, upon being indemnified as aforesaid, and if such Bonds be lost, stolen or destroyed, without surrender thereof. Any such duplicate Bonds issued puisuant to this section shall constitute original, additional contractual obligations on the part of the Issuer whether or not the lost, stolen or destroyed Bonds be at 12 any time found by anyone, and such duplica.te Bonds shall be entitled to equal and proportionate benefits and rights as to lien on the source and security for payment from the funds, as hereinafter pledged, to the same extent as all other Bonds issued hereunder. SECTION 13. PROVISIONS FOR REDEMPTION. Each Series of Bonds shall be redeemable as provided by subsequent resolution of the Issuer applicable to each such Series of Bonds. Bonds in denominations greater than an authorized denomination (or authorized Maturity Amount in the case of Capital Appreciation Bonds) shall be deemed to be an equivalent number of Bonds in the denomination of an authorized denomination or Maturity Amount. If a Bond is of a denomination or Maturity Amount larger than an authorized denomination or MaturityAmount, a portion of such Bond may be redeemed, inthe amount ofanauthorizeddenominationorMaturityAmountorintegralmultiplesthereof. Notice of such redemption, identifying the Bonds or portions thereof called for redemption (i) sha11 be filed with the paying agents and any Registrar; and (ii) sha11 be mailed by the Registrar, first-class mail, postage prepaid, to a11 registered owners ofthe Bonds to be redeemed not more than sixty (60) days and not less than thirty (30) days prior to the date fixed for redemption at their addresses as they appear on the registration books to be maintained in accordance with the provisions hereof. Failure to give such notice by mailing to any owner of Bonds, or any defect therein, shall not affect the validity of any proceeding for the redemption of other Bonds. Notice having been mailed and filed 'm the manner and under the conditions hereinabove provided, the Bonds or portions ofBonds so called for redemption shall, on the redemption date designated in such notice, become and be due and payable at the redemption price provided for redemption of such Bonds or portions of Bonds on such date. On the date so designated for redemption, notice having been mailed and filed and moneys for payment ofthe redemption price being held in separate accounts in trust for the holders of the Bonds or portions thereof to be redeemed, all as provided in tivs Ordinance, interest on the Bonds or portions of Bonds so called for redemption sha11 cease to accrue, such Bonds and portions of Bonds shall cease to be entitled to any lien, benefit or security under this Ordinance, and the holders or Registered Owners of such Bonds or portions ofBonds, shall have no rights mrespect thereof, except the right to receive payment of the redemption price thereof. Upon surrender ofany Bond for redemption in part only, the Issuer sha11 issue and deliver to the registered owner thereof, the costs of which sha11 be paid by the registered owner, a new Bond or Bonds of authorized denominations or Maturity Amounts in aggregate principal amount equal to the unredeemed portion surrendered. In addition to the foregoing notice, fi,uther notice may be given by the Issuer as set out below (provided such additional notice is not required as a condition to redeeming Bonds), but no defect in said fiuther notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. 13 (1) Each further notice ofredemptiongivenhereunder shall containthe infom�ationrequired above for an official notice of redemption plus (i) the CUSIP numbers of all Bonds being redeemed; (u) the date of issue of the Bonds as originally issued; (iri) the rate of interest borne by each Bond being redeemed; (iv) the maturity date of each Bond being redeemed; and (v) any other descriptive information needed to identify accurately the Bonds being redeemed. (2) Each further notice ofredemption shall be sent at least 35 days before the redemption date by registered or certified mail or ovemight delivery service to all registered securities deposi- tories then in the business of holding substantial amounts of obligations of types similar to the type of which the Bonds consist (such depositories now being Depository Trust Company of New York, New York, Midwest Securities Tiust Company of Chica.go, Illinois, Pacific Securities Depository Tnist Company of San �rancisco, California, and Philadelphia Depository Tnist Company of Philadelphia, Pennsylvania) and to one or more national information services that disseminates notices of redemption of obligations such as the Bonds. (3) Each such further notice shall be published one time in the Bond Buver ofNew York, New York or, if such publication is impractical or unlikely to reach a substantial number of the Holders of�e Bonds, in some other financial newspaper or journalwhichregularly carries notices of redemption of obligations similar to the Bonds, such publication to be made at least 30 days prior to the date fixed for redemption. SECTION 14. FORM OF BONDS. The text of the Bonds shall be in substantially the form attached hereto as Exhibit B, with such omissiorn, insertions and variations as may be necessary and desirable and authorized and pernutted by this Ordinance or by any subsequent ordinance or resolution adopted prior to the issuance thereof, or as may be necessary if the Bonds or a potion thereof are issued as Capital Appreciation Bonds, Capital Appreciation Teml Bonds, Variable Rate Bonds or as may be necessary to comply with applicable laws, rules and regulations of the United States and of the State in effect upon the issuance thereof. The text of any Series of Bonds, other than the Bonds shall be as determined by supplemental ordinance or resolution of the Issuer. SECTION 15. BONDS NOT DEBT OF ISSUER. The Bonds shall not be or constitute general indebtedness of the Issuer within the meaiung of any constitutional or statutory provision or limitation, but shall be payable solely from and secured by a prior lien upon and pledge of the Pledged Revenues herein provided. No Bondholder sha11 ever have the right to compel the exercise of the ad valorem taxing power of the Issuer or taxation in any form of any real property therein to pay the Bonds or the interest thereon or be entitled to payment of such principal and interest from any other funds of the Issuer except from the Pledged Revenues in the mazuier provided herein. SECT'ION 16. PLEDGED REVENUES. Until paymerrt has been provided for as herein pernutted, the payment ofthe principal of and interest on the Bonds shall be secured forthwith equally and ratably by an urevocable lien on the Pledged Revenues prior and superior to all other liens or 14 encumbrances on such Pledged Revenues and the Issuer does hereby urevocably pledge such Pledged Revenues to the payment of the principal of and interest on the Bonds, the reserves therefor, and for all other required payments. The Pledged Revenues shall immediately be subject to the lien of this pledge without any physical delivery thereof or further act, and the lien of this pledge shall be valid and binding as against all parties having claims ofany Idnd in tort, contract or otherwise against the Issuer. All funds and accounts created pursuant hereto shall be held by the Finance Director (or such other officer of the Issuer as shall be approved by the City Commission) as tcust funds for payment of the Bonds. SECTION 17. COVENANTS OF THE ISSUER Uritil all principal of and interest on the Bonds shall have been paid or provided for as herein pemutted, the Issuer covenants withdie Bondholders as follows: A. REVENUE FIJND. The entire Gross Revenues shall upon receipt thereof be deposited in the Revenue Fund created and established by the Original Ordinance. Such Revenue Fund shall constitute a trust fund for the purposes herein provided and shall be kept separate and distinct from all other funds of the Issuer and used only for the purposes and in the manner herein provided. B. CONSTRUCTION FUND. T'he Constluction Fund to be held by the Issuer and to the credit of which deposits shall be made as required by Section 17 hereof is hereby created. Within such fi�d there shall be maintained separate accounts for each Series of Bonds and furthermore be maintained separate accounts for capitalized interest funded from the proceeds of any Series of Bonds. C. DISBURSEMENTS FROM CONSTRUCTION FUND. Moneys on deposit fromtime to time in the Const�uction Fund shall be used to pay or reimburse the following Project Costs: (1) Costs incutred directly or indirectly for or in connection with a Project or a proposed or future Project including, but not limited to, those for preliminary plaruung and studies, archi- tectural, legal, fix�ncial, engineering and supervisory services, labor, services, materials, equipment, acquisitions, land, rights-of-way, improvements and installation; (2) Premiums attributable to all inc��,-��ce required to be taken out and maintained during the period ofconstiuctionwithrespect to a Project to be acquired or constructed, the premium on each surety bond, if any, required with respect to work on such facilities, and taxes, assessments and other charges hereof that may become payable dtning the period of constructionwith respect to such a Project; (3) Costs incurred directly or indirectly in seeking to enforce any remedy against a contractor or subcontractor in respect ofany default under a contract relating to a Project or costs inctured directly or indirecdy in defending any claim by a contractor or subcontractor withrespect to a Project; 15 (4) Financial, legal, accounting, appraisals, tifle evidence and printing and engraving fees, charges and expenses, and a11 other such fees, charges and expenses incurred in connection with the authorization, sale, issuance and delivery of such Series of Bonds; (5) Interest funded fromBond proceeds, ifany, for a reasonable period oftime, which shall be deposited in the Construction Fund and shall be used as provided in a supplemental resolution of the Issuer; (6) Any other incidental and necessary costs including without limitationany expenses, fees and charges relating to the acquisition, constr�uction or installation of a Project, and the making of extxaordinuy repairs, renewals and replacements, decommissioning or retirement of any portion of , including the cost of temporary employees of the Issuer retained to carry out duties in connection with the acquisition, construction or erection of a Project; (7) Costs incurred directly or indirectly in placing any Project in operation in order that completion of such Project may occur; (8) Any other costs authorized pursuant to a supplemental resolution of the Issuer and pernutted under the laws of the State; and (9) Reimbursements to the Issuer for any of the above items theretofore paid by or on behalf of the Issuer. D. DISPOSITION OF REVENUE5. All funds at any time remaining ondeposit inthe Revenue Fund shall be disposed of on or before the twentieth day of each month, commencing in the month immedi- ately following the delivery of the 2001 Bonds, for so long as any Bonds remain Outstanding, only in the following manner and in the following order of priority: (1) Funds shall first be used for deposit into the Operation and Maintenance Fund, which was established by the Original Ordinance, of such sums as are necessary for the Cost of Operation and Maintenance, for the next ensuing month. (2) A sum as shall be deternuned by supplemental resolution of the Issuer shall be deposited into the Construction Fund and used for the purpose of paying Project Costs. (3) Fram the moneys remaining in the Revenue Fund, �e Issuer shall next deposit into the Sinking Fund created by the Original Ordinance, such sarr�s as will be sufficient to pay (a) one-sixth (1/6) of all interest becoming due on the Bonds on d�e next semi-annual interest payment date; (b) commencing m the first month which is twelve (12) months or six (6) months prior to the first annual or semi-annual maturity date, respectively, of any Serial Bonds, one-twelfth (1/12) or one-sixth (1/6), respectively, ofthe amount ofSerial Bonds which will become due and payable on the next 16 annual or semiannual principal maturity date, respectively, and (c) one-twelfth (1 / 12) of the Amortization Installment required to be made on the next annual payment date or one-sv�th (1/6) of the Amortization Installment required to be made on the next semi-annual payment date into a "Bond Amortization Account", created and established 'm the Sinking Fund by the Original Ordinance. Such payments shall be credited to a sepazate special account for each series of Term Bonds outstanding, and ifthere sha11 be more than one stated maturity for Term Bonds of a series, then into a separate special account in the Sinking Fund for each such separate maturity of Term Bonds. The funds and investments in each such separate account shall be pledged solely to the payment of principal of the Term Bonds of the series or maturity within a series for which it is established and sha11 not be available for payment, purchase or redemption of Term Bonds of any other series or within a series, or for transfer to the Sinldng Fund to make up any deficiencies in required payments therein. The Amortization Installments may be due either annually or semiannually, but in any event, the required payments as set forth above shall be made monthly commencing in the first month which is six (6) months or twelve (12) months, as the case maybe, prior to the date on which the Amortization Installment is required to be made pursuant to (c) above. Upon the sale of any series of Term Bonds, the Issuer shall by resolution, establish the amounts and mahxrities ofsuchAmortizationInstallments for each series, and ifthere shall be more than one maturity of Term Bonds within a series, the Amortization Installments for the Term Bonds of each maturity. In the event the moneys deposited for retirement of a maturity of Term Bonds are required to be invested, in the manner provided below, the Amortization Installments may be stated in terms of either the principal amount of the investments to be purchased on, or the cumularive amounts of the principal amount of investments required to have been purchased by, the payment date of such Amortization Installment. Moneys on deposit in each of the separate special accounts in the Bond Amortization Account shall be used for the open market purchase or d�e redemption of Term Bonds ofthe series or maturity of Teim 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 mahzrity of the Term Bonds. The resolution establishing the Amortization Installments for any series or matutity of Term Bonds may bmrt the use of moneys to any one or more of the uses set forth in t�e preceding sentence and may specify the type or types of investments pemutted hereunder to be purchased. (4) Moneys remaining in the Revenue Fund shall next be applied by the Issuer to maintain a Reserve Account, which Reserve Account was created and established by the Original Ordinance, in a sum equal to the Reserve Requirement, all or a portion of which sutn may be initially provided from the proceeds of the sale of the Bonds and/or other moneys of the Issuer. The Issuer shall thereafter deposit into said Reserve Account an amount equal to one-twelfth (1 / 12) of twenty per cent (20%) ofthe difference between�e amount, ifany, so deposited uponthe deli- 17 very of the Bonds and the amount of the Reserve Requirement on all outstanding Bonds. No fiuther payments shall be required to be made into such Reserve Account when there has been deposited therein and as long as there shall remain on deposit therein a sum equal to the Maximum Bond Service Requirement on all outstanding Bonds becoming due in any ensu.ing Fiscal Year. Any withdrawals from the Reserve Account shall be subsequently restored from the first moneys available mthe Revenue Fund after all required current payments into the Sinking Fund and into the Reserve Account, including a11 deficiencies for prior payments, have been made in full. Moneys in the Reserve Account shall be used only for the purpose of the payment of maharing principal (including Amortization Installments) of or interest on the Bonds when the moneys in the Sinking Fund are insufficient therefor, and for no other purpose. Upon the issuance by the Issuer of any Additional Bonds under the tenns, limitations and conditions provided in this Ordinance and the Original Ordinance, the payments into the Reserve Account shall be increased so that the amount on deposit therein shall be equal to the Maximum Bond Service Requirement on all Bonds outstanding and to be outstanding. Whenever the amount on deposit in the Reserve Account exceeds the Reserve Requirement on a11 Bonds then outstanding, the excess may be withdrawn and deposited into the Sinking Fund. The Issuer sha11 not be required to make any further payments into the Sinldng Fund or into the Reserve Account when the aggregate amount ofmoneys inthe Sinking Fund and the Reserve Account are at least equal to the aggregate principal amount of Bonds then outstanding, plus the amount of interest then due or thereafter to become due on the Bonds then outstanding. Notwithstanding the foregoing provisions, in lieu of the required deposits ofRevenues into the Reserve Account, the Issuer may cause to be deposited into the Reserve Account a surety bond or an insurance policy issued by a reputable and recognized insurer for the benefit of the Bondholders m an amount equal to the difference between the Maximum Bond Service Requirement and the sums then on deposit in the Reserve Account, if any, which surety bond or insurance policy shall be payable (upon the giving ofnotice as required thereunder) on any interest payment date on which a deficiency exists which cannot be cured by funds in any other account held pursuant to this Ordinance and the Original Ordinance and available for such purpose. The insurer providing such surety bond or insurance policy shall be an insurer whose municipal bond insurance policies ins�tring the payment, when due, of the principal of and interest on municipal bond issues results in such issues being rated in the highest rating category by Standard & Poor's Corporation or Moody's Investois Service, Inc., or their successors. If a disbursement is made from a surety bond or an insurance policy provided piusuant to �is paragraph, the Issuer shall be obligated to either reinstate the maxim�nn lunits of such surety bond or insurance policy immediately following such disbursement or to deposit into die Reserve Account, as herein provided in this 18 paragraph for restoration of withdrawals from �e Reserve Account, funds in the amount of the disbursement made under such policy, or a combination of such alternatives. (5) The Issuer shall next apply and deposit the moneys in the Revenue Fund into the Renewal and Replacement Fund created by the Original Ordinance. The Issuer shall deposit into such Renewal and Replacement Fund an amount equal to one-twelfth (1/12) of five per centum (5%) of the Gross Revenues ofthe System for the previous Fiscal Year, or such other amount as is certified as necessary for the purposes ofthe Renewal and Replacement Fund by the Consulting Engineer and as approved by the City Commission. The moneys in said Renewal and Replacement Fund shall be used only for the purpose ofpaying the cost ofe�ctensions, enlargements or additions to or the replacement of capital assets of the System and emergency repairs thereto. Such moneys ondeposit in such Fund shall also be used to supplement the Reserve Account ifnecessary in order to prevent a default in the payment of the principal of and interest on the Bonds. (6) To the extent junior lien bonds are issued and outstanding (whichsubordinated bonds the Issuer reserves the right to issue), the Issuer sha11 next apply moneys in the Revenue Fund to the payment of principal of, redemption premium, if any, and interest on such subordina,ted debt of the Issuer. (7) The balance of any moneys remaining in the Revenue Fund after the above required payments have been made may either be deposited into either the Renewal and Replacement Fund or the Sinlcing Fund, or may be used for the purchase or redemption ofBonds, or may be used by the Issuer for any lawful purpose of the Issuer. E. INVESTMENT OF FUNDS. The Operation and Maintenance Fund, the Sinking Fund, the Reserve Account, the Renewal and Replacement Fund, the Revenue Fund, the Construction Fund, and any other special funds herein and in the Original Ordinance established and created shall constitute tnist funds for the purposes provided herein for such funds. All such funds shall be continuously secured in the same manner as state and municipaldeposits are required to be secured by the laws ofthe State ofFlorida. Moneys on deposit in any of such funds and accounts may be invested and reinvested in Authorized Investments. Investments made with moneys in the Conshuction Fund, the Revenue Fund, the Operation and Maintenance Fund, and the Sinking Fund (except the Bond Amortization Account therein), must mature not later than the date that such moneys will be needed. Investments made with moneys in the accounts inthe Bond Amortization Account, m the Reserve Account and 'm the Renewaland Replacement Fund must mature, m the case of the accounts in the Bond Amortization Account not later than the stated date of maturity ofeach respective AmortizationIns�lllment ofthe Term Bonds to be retired fromthe sub-accounts inthe Bond AmortizationAccount fromwhichthe investment is made, in the case of the Reserve Account not later than the final maturity of any Bonds then outstanding, and in the case of the Renewal and Replacerr�rrt Fund, not later than such date as shall be determined by the Issuer. Any and all income � received bythe Issuer from all such inveshnents shall be deposited into the Revenue Fund, except however, that investment income earned m the Bond Amortization Account may be retained therein or deposited into the Sinking Fund and used to pay mahuing principal of and interest on the Bonds, at the option of the Issuer. The cash required to be accounted for in each of d�e foregoing funds and accounts established herein may be deposited in a single bank account, and funds allocated to the various accounts established herein ma.y be invested 'm a common inve.s�rnent pool, provided that adequate accounting records are maintained to reflect and control the restricted allocation of the cash on deposit therein and such investments for the various purposes of such funds and accounts as herein provided. The designation and establishment of the various funds in and by this Ordinance shall not be construed to require the establishment of any completely independent, self-balancing funds as such term is commonly defined and used m govemmental accounting, but ra,ther is intended solely to constitute an earmarking of certain revenues and assets of the System for certain purposes and to establish certain priorities for application of such revenues and assets as herein provided. F. OPERATION AND MAINTENANCE. The Issuer will maintain the System and all parts thereof in good condition and will operate the same in an egicient and economical maruier, making such expenditures for equipment and for renewals, repairs and replacements as may be proper for the economical operation and mainter�a,nce thereof G. RATE ORDINANCE. The Issuer has enacted or will enact a rate ordinance and thereby will fix, establishand maintain such rates and will collect such fees, rentals and other chazges for the services and facilifies of the System and revise the same fi-om tirr�e to time whenever necessary, as will always provide Gross Revenues in each Fiscal Year sufficient to pay the Cost of Opera#ion and Maintenance of the System in such Fiscal Year, one hundred fifteenper centum (115%) ofthe Bond Service Requirement becoming due in such Fiscal Year on the outstanding parity, gonds, on the outstanding Bonds and on all outstanding Additional Bonds, phas one hundred per cerih�m (100%) of all reserve and other payments required to be made pursuant to this Ordinance and the Originai Ordinance. Such rates, fees, rentals and other charges shall not be reduced so as to be insufficient to provide Gross Revenues for such purposes. H. BOOKS AND RECORDS. The Issuer shall keep books and records of the System, which books and records shall be kept separate and apart from all other books, records and accounts of the Issuer, and Bondholders sha11 have the right at all reasonable times to inspect all records, accounts and data of the Issuer relating thereto. I• ANNUAL AUDIT. The Issuer shall a1so, at least once a year, cause the books, records and accounts relating to the System to be properly audited by a recognized independent fumof certified public accountants and shall malce generally available the report of such audits to any Bondholder. ��;� � 1 � ; � 20 � � �mrl J. NO MORTGAGE OR SALE OF THE SYSTEM. The Issuer irrevocably covenants, binds and obligates itself not to sell, lease, encumber or in any manner dispose ofthe System as a whole until all of the Bonds sha11 have been paid in full as to both principal and interest, or payrnent shall have been duly provided for under this Ordinance. The foregoing provision notwithstanding, the Issuer may sell or dispose of, for fair market value, any properties or parts ofthe Systemwhichthe Consulting Engineer shall certify in vviiting are not necessary for the continued operation of the System and that the sale or disposal of which will not adversely affect the Gross Revenues to be derived from the System to such an e�ent that the Issuer will fail to comply with the covenants contained herein, including Section 17(G) of this Ordinance and the Original Ordinance. The proceeds derived from any sale or disposal of any properties or parts of the System as provided for in the above paragraph shall, in the discretion of the Issuer, be (1) deposited in the Renewal and Replacement Fund and used exclusively for the purpose ofpaying the cost ofextensions, enlargements or additions to, or the replacement of capital assets of the System and for unusual or extraordinary repairs thereto, or for the construction or acquisition of additions, extensions and improvements to the System, or (2) for the purchase or retirement of the Bonds then outstanding. However, if the Consulting Engineer certifies that proceeds are necessary for the putposes stated in part (1) above, such proceeds shall remain in the Renewal and Replacement Fund urrtil such certified requirements are satisfied, and the proceeds shall not be used for any other purpose allowed by this Ordinance or the Original Ordinance. K. INSURANCE. The Issuer will make adequate provision to maintain fire and windstorm insurance on all buildings and structures and properties ofthe System which are subject to loss through fire or windstoim, public liability inswance, and other ins�ance of such types and in such amounts as are nom�a.11y carried 'mthe operationofsimilarpublic and private utilitysystems withinthe State ofFlorida. Any such insurance shall be placed with nationally recognized and reputable insurors or under State approved and authorized self insurance programs or any combination of both and shall be carried for the benefit of the Bondholders. All monies received for losses under any such insurance, except public liability, are hereby pledged by the Issuer as security for the Bonds, until and unless such proceeds are used to remedy the loss or damage for which such proceeds are received, either by repa,iiing the property damaged or replacing the property destroyed within ninety (90) days from the receipt of such proceeds. L. NO FREE SERVICE. The Issuer will not render or cause to be rendered any free services of any nature by its System, nor will any preferential rates be established for users of the same class. This covenant shall not prevent individual contracts with other governmental entities for the wholesale delivery of services of the System. The Issuer, including its departments, agencies and insrtnunentalities, shall avail itself of the facilities or services provided by the System or any part thereof, and the same rates, fees or charges applicable to other customers receiving like services under similar circumstances shall be charged to the Issuer and any such department, agency or inslnunentality. Such charges shall be paid as they accrue, and the Issuer shall transfer from its general funds su�icient surns to pay such charges. The reve- nues so received shall be deemed to be Gross Revenues derived fmm the operation of the System and shall 21 be deposited and accounted for m the same muuier as other Gross Revenues derived from such operation of the System. M. MANDATORY CONNECTION. To the full extent pernutted by law the Issuer will adopt and keep m force and effect an ordinance requiring that all improved premises with respect to which water or sewer services fromthe Systemare available shall connect suchpremises to the Systemand shall obtain ava.ilable water and sewer services only frem tfi�e 3y�tem. N. ENFORCEMENT OF COLLECTIONS. The Issuer will diligently enforce and collect all fees, rentals or other charges for the services and facilities of the System and take all steps, actions and proceedings for the enforcement and collection of such fees, rentals or other charges which shall become delinquent to the full extent pernutted or authorized by the Act and by the laws of the State of Florida. The Issuer will, under reasonable rules and regulations, shut off and discentinue the supplying of the water service and the sewer service ofthe System for the nonpayment of fees, rentals or other charges for said water service or said sewer service, or either of them, and will not restore said water service or sewer service, or either of them, until all delinquent charges for both water service and sewer service, together with interest and reasonable penalties, have been paid in full. O. REMEDIES. Any Bondholder, or any tcustee acting far the Bondholders may, either at law or in equity, by suit, action, mandamus or other proceedings m any court of competent jurisdicrion; protect and enforce any and all rights, including the right to the appointment of a receiver, existing under the laws of the State ofFlorida, or granted and contained herein, and may enforce and compel the performa.nce of all duties herein required or by any applicable statutes to be performed by the Issuer or by any of�icer thereof. Nothing herein, however, shall be conshued to gtant to any Bondholders any lien on any real property of the Issuer. P. CONSULTING ENGINEERS. The Issuer will retain an independent consulting engineer or engineering fum having a favorable reputation for skill and experience for the design, consttuction and operation of systems of comparable siae and character as the System, for the purpose of providing the Issuer competent engineering counsel in connection with the making of the capital improvements. The Issuer may, however, employ additional engincers at any time with relation to specific engineering and operation problems arising in connection with the System. Q. CITY MANAGER REPORTS. On an annual basis, within 45 days of the receipt of the annual audit ofthe System provided for above, the Issuer shall cause to be prepared by the City Manager a report or survey of the System with respect to the management of the properties thereof, the sufficiency of the rates and charges for services, the proper maintenance of the properties of the System and the necessity for capital improvements and recommendations therefor. Such a report or survey shall also show 22 any faihare of the Issuer to perform ar comply with the covenants herein contained, including those contained in subsection I above. In the event that such annual report reflects that the rates and charges far services are insufficient to protect the rights ofthe Bondholders, then the Issuer shall take such steps as are required by law to raise the rates and charges for services. In the event that the annual report indicated that the rates and charges for services should be increased substantially pro rata as to all classes of service, then, to the full e�ent pemutted by law, the Issuer shall raise the rates and charges for services without the necessity for notice or public hearing. R. NO COMPETING SYSTEM. To the full extent pernutted by law the Issuer will not grant or cause, consent to, or a11ow the granting of any franchise or pernut to any person, fum, corporation or body or agency or instnunentality whatsoever for the furnishing of water or sanitary sewerage services to or within the service area of the System, if determined by the Consulting Engineers to be materially comp etitive with the System and adversely affecting the Gross Revenues derived from the operation thereof. S. ISSUANCE OF OTHER OBLIGATIONS. The Issuer sha11 issue no bonds or obligations of any land or nature payable from or enjoying a lien on the Pledged Revenues if such obligations have priority over the Bonds with respect to payment or lien, nor shall the Issuer create or cause or pernut to be created any debt, lien, pledge, assigrunent, encumbrance or other charge on a parity withthe lienofthe Bonds upon said Pledged Revenues. Notwithstanding any other provision in this Section, the Issuer may issue Additional Bonds under the conditions and in the manner provided herein. Any obligations of the Issuer, other than the Bonds, which are payable from the Pledged Revenues sha11 contain an express sta.tement that such obligations are junior and subordinate in all respects to the Bonds as to lien on and source and security for payment from such Pledged Revenues. T. ISSUANCE OF ADDITIONAL BONDS. Additional Bonds, payable on a parity fromthe Pledged Revenues with the Parity Bonds and the Bonds, shall be issued only for the purposes of refunding a part of the outstanding Bonds or finar�cing the cost of extensions, addirions and improvements to the System and for the acquisition and const�uction of, and extensions, additions and improvements to, sewer and/or water systems which are to be consolidated with the System and operated as a single combined utility. Additional Bonds, other than for refunding pucposes, shall be issued only upon compliance with all of the following conditions: (1) There shall have been obtained and filad with the Clerk a certificate ofthe Finance Director stating: (a) that the books and records of the Issuer relative to the System have been audited by qualified and recognized fum of independent certified public accountants; (b) based on such audited fmancial statement, that the amount of the adjusted Net Revenues derived for the Fiscal Year preceding the date of issuance of the proposed Additional Bonds or for any twelve (12) consecutive months during the eighteen (18) months imrnediatelypreceding the date ofissuance ofthe Additional Bonds with respect 23 to which such certificate is made, adjusted as herein below provided; and (c) based on such audited financial statement, that the aggregate amount ofsuchNet Revenues, as adjusted, forthe period for which such Net Revenues are being certified is equal to not less than 120% of the Maximum Bond Service Requirement becoming due m any Fiscal Year thereafter on (i) all Parity Bonds and the Bonds issued under tivs Ordinance, if any, then Outstanding, and (u) on the Additional Bonds with respect to which such certificate is made. (2) Upon recommendation of the Consulting Engineers, the Net Revenues certified pursuant to (b) in �e previous paragraph may be adjusted for purposes of this Subsection by including: (a)100% ofthe additionalNet Revenues whichinthe opinion of the Consulting Engineer would have been derived by the Issuer from rate increases adopted before the Additional Bonds are issued, if such rate increases had been implemented before the commencement of the period for which such Net Revenues are being certified, and (b) 100% of the additional Net Revenues estimated by the Consulting Engineer to be derived ciuring the first full twelve month period after the facilities ofthe System are extended, enlarged, improved or added to with the proceeds of the Additional Bonds with respect to which such certificate is made. The adjustr�ents described in Section 17(T)(2)(b) may only be made if the Net Revenues as adjusted under Section 17(T)(2)(a) for the period for which suchNet Revenues are being certified equals at least 1.00 times the Maxnnum Bond Service Requirement becoming due in any Fiscal Year thereafter on (i) all Bonds then outstanding; and (ri) on the Additional Bonds with respect to which such certificate is made. (3) Additional Bonds sha11 be deemed to have been issued pursuant to this Ordinance the same as the Outstanding Bonds, and all of the other covenants and other provisions of this Ordinance and the Original Ordinance (except as to details of such Additional Bonds inconsistent therewith) sha11 be for the equal benefit, protection and security of the Holder of a11 Bonds issued pursuant to this prdinance and the Original Ordinance. Except as provided in Section 17(T� hereof, all Bonds, regardless of the time or times of their issuance, sha11 rank equally with respect to their lien on the Pledged Revenues and their sources and security for payment therefrom without preference of any Bonds over any other. (4) In the event that the total amount of Bonds herein authorized to be issued are not issued simultaneously, such Bonds which are subsequently issued shall be subject to the conditions of Section 17(T� hereof. (5) The Issuer need not comply with the provisions of paragraph 1 of this Section 17(T) if and to the extent the Additional Bonds to be issued are refunding bonds, and if the Issuer shall cause to be delivered a certificate of the Finance Director set�ir►g forth the annuai debt service (i) far the Bonds thenOutstanding and (ii) for all Series ofBonds to be immediately Outstanding thereafter and stating that the Bond Service Requirement in any year pursuant to (ri) above is not greater thanthe Bond Service Requirement in the corresponding year set forth pursuant to (i) above. 24 (6) The Issuer shall not be in default in the carrying out of any of the obligations assumed under this Ordinance and no event of default shall have occurred under this Ordinance and shall be continuing, and all payments required by this Ordinance to be made into the funds and accounts established hereunder shall have been made to the full extent required. (7) The resolutionauthorizingthe issuance of a Series ofAdditionalBonds shallrecite that all of the covenants contained herein will be applicable to such Additional Bonds. U. MAINTENANCE OF SYSTEM. The Issuer willmaintainthe System in good condition and continuously operate the same in an efficient manner and at a reasonable cost. SECTION 18. TAX COMPLIANCE. A. In General. The Issuer at all times while the Bonds and the interest thereon are outstanding will comply with all applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code") and any valid and applicable rules and regulations promulgated thereunder (the "Regulations") in order to ensure that the interest on the Bonds will be excluded from gross income for federal income ta�c piuposes. B. Rebate. (1) The Issuer shall either make or cause an independent fum of certified public accountants or tax compliance firm to make and promptly provide to the Issuer the rebate calculations required by the Code and Regulations, on which the Issuer may conclusively rely m taking action under this Section. The Issuer shall make deposits to and disbursements from separate accounts to the extent required by the Code and Regulations and shall otherwise maintain full and complete accounting records of receipts and disbursements of, and investment purchases and sales allocated to, the "gross proceeds" subject to the rebate requirements of the Code and Regulations. T'he requirements of this Subsection 18B may be superseded or amended by new calculations accompanied by an opinion of bond counsel addressed to the Issuer to the effect that the use ofthe new calculations are in compliance withthe Code and Regulations and will not cause the interest on the Bonds to become included in gross income for Federal income tax purposes. (2) The Issuer shall either make or cause an independent fum of certified public accountants or tax compliance fum to annually make and promptly forward to the Issuer after the end of the Bond Year and within the time required by the Code and the Regulations the computation ofdie rebate deposit required by the Code, on whichthe Issuer may conclusively rely in taldng action under �is Subsection B. Records of the detemunations required by this Subsection B and the Code and Regulations shall be retained by the Issuer until six (6) years after the Bonds are no longer outstanding. (3) Within the time required by the Code and Regulations following the end of the fifth Bond Year, as defined in the Code, and every five (5) years thereafter, the Issuer shall pay to the United States of America ninety percent (90%) of the rebate amounts calculated as of such 25 payment date, as shown by the computations of the Issuer or the certified public accountant�s or tax compliance fum, and one hundred percent (100%) ofthe earnings on such rebate amounts as of such payment date. Not later than sixty (60) days after the final retirement of each applicable series ofBonds, the Issuer shall pay to the United States of America one hundred percent (100%) of the balance remauung of the rebate amount and the earnings thereon. Each payment required to be paid to the United States of America piusuant to this Subsection B sha.11 be filed with the Internal Revenue Service Center, Ogden, Utah 84201. Each payment shall be accompanied by a copy of the Form 8038 originally filed with respect to each applicable series of Bonds and a statement summarizingthe detenninationofthe amount to be paid to the United States ofAmerica. SECTION 19. DEFAULTS; EVENTS OF DEFAULT AND REMEDIES. Except as provided below, if any of the following events occur rt is hereby defined as and declared to be and to constitute an "Event of Default": (A) Default in the due and punctual payment of any interest on the Bonds; (B) Default in the due and punchaal payment of the principal of and premium, if any, or Accreted Value on any Bond, at the stated maturity thereof, or upon proceedings for redemption thereof; (C) Default in the performance or observance of any other of the covenants, agreements or conditions on the part ofthe Issuer contained in this Ordinance or in the Bonds and the continuance thereof for a period of thirty (30) days after written notice to the Issuer given by the Holders of not less than twenty-five percent (25%) of aggregate principal amount of Bonds then Outstanding (provided, however, that with respect to any obligation, covenant, agreement or conditionwhich requires performance by a date certain, if the Issuer performs such obligation, covenant, agreement or condition within t.hirty (30) days of written notice as provided above, the default shall be deemed to be cured); (D) Failure by the Issuer promptly to remove any execution, gamishment or attachment of such consecluence as wi11 materially impair its ability to carry out its obligations hereunder, (E) Any act ofbankruptcyorthe rearrangement, adjustment or readjustment ofthe obligations of the Issuer under the provisions of any banla�uptcy or moratorium laws or similar laws relating to or affecting creditors' rights. The teim "default" shall mean default by the Issuer in the performance or observance of any of the covenants, agreements or conditions on its part contained in this Ordinance, any supplemental resolution or in the Bonds, exclusive of any period of grace required to constitute a default or an'Bvent of Default" as hereinabove provided. For purposes of Section 19(A) and (B) hereof, no effect shall be given to any payments made under any Bond Insurance Policy. 26 Any Holder of Bonds issued under the provisions hereof or any fiastee acting for the Holders of such B onds, may either at law or m equity, by suit, action, mandamus or other proceedings in any court of competent jurisdiction, protect and enforce any and all rights, including the right to the appoinhnent of a receiver, existing under State or federal law, or granted and contained herein, and may enforce and compel the performauce of all duties required herein or by any applicable law to be performed by the Issuer or by any officer thereof. Nothing herein, however, shall be conshued to grant to any Holder of the Bonds any lien on any properly of the Issuer, except the Pledged Revenues. The foregoing notwithstanding: (i) No remedy conferred upon or reserved to the Bondholders is intended to be exclusive of any other remedy, but each remedy shall be c�unulative and shall be in addition to any other remedy given to the Bondholders hereunder. (u) No delay or omission to exercise any right or power accniing upon any default or Event of Default shall impair any such right or power or shall be const�ued to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised as often as may be deemed expedient. (iii) No waiver ofany default or Event ofDefault hereunder by the Bondholders sha11 extend to or shall affect any subsequent default or Event of Default or shall impair any rights ar remedies consequent thereon. (iv) Acceleration of the payment of principal of and interest on the Bonds shall not be a remedy hereunder in the case of an Event of Default. Upon the occurrence ofanEvent ofDefault, and upon the filing of a suit ar other commencement ofjudicialproceedings to enforce the rights oftl�e Bondholdersunder�is Ordinance, the Bondholders sha11 be entitled, as a matter of right, to the appointrnent of a receiver or receivers of the Project and the funds pending such proceedings, with such powers as the court malcing such appointment sha11 confer. Notwithstanding any provision of tivs Ordinance to the contraty, for all purposes of this Section 21, except the giving of notice of any Event ofDefault to the Holder of the Bonds, the Bond Insurer shall be deemed to be the Holder of the Bonds it has insured. On the occurrence of an Event of Default, to the extent such rights may then lawfully be waived, neither the Issuer nor anyone claiming tluough or under it, shall set up, claim or seek to take advantage of any stay, extension or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement ofdvs Ordinance, and the Issuer, for itself and a11 who may claim through or under it, hereby 27 waives, to the extent rt may lawfully do so, the benefit of all such laws and all right of redemption to which it may be entitled. Wid�in 30 days of lrnowledge thereof, both the Issuer and the Paying Agent shall provide notice to the Bond Insurer of the occurrence of any Event of Default. The Bond Insurer sha11 be included as a party m interest and as a parly entitled to (i) notify the Issuer or any Paying Agent of the occurrence of an Event of Default and (ii) request the Issuer or any Paying Agent to intervene in judicial proceedings that affect the Bonds or the securitytherefor. 'The Issuer and any Paying Agent are required to accept notice of default from the Bond Insurer. Anything in this Ordinance to the contrary notwithstanding, uponthe occurrence and continuance of an Event of Default, the Bond Insurer, ifany for a Series ofBonds shall be entitled to control and direct the enforcement of all rights and remedies granted to the Bondholders under this Ordinance for such Series of Bonds and the Bond Insurer shall also be entitled to approve all waivers of events of default. SECTION 20. AMENDING AND SUPPLEMENTING OF ORDINANCE WITHOUT CONSENT OF HOLDERS OF BONDS. The Issuer, from time to time and at any time and without the consent or conciurence of any Holder of any Bonds, may enact an ordinance amendatory hereof or supplemental hereto, if the provisions of such supplemental ordinance sha11 not adversely affect the rights of the Holders of the Bonds then Outstanding, for any one or more of the following purposes: (A) To make any changes or corrections m this Ordinance as to whichthe Issuer shall have been advised by counsel that are required for the purpose of curing or correcting any ambiguity or defective or inconsistent provisions or omission or mistake or manifest error contained in this Ordinance, or to insert m this Ordinance such provisions clarifying matters or questions arising under this Ordinance as are necessary or desirable; (B) To add additionalcovenants and agreements of�e Issuer for the purpose offurther securing the payments of the Bonds; (C) To surrender any right, power or privilege reserved to or conferred upon the Issuer by the tern�s of this Ordinance; (D) To confirni as further assurance any liea�, pledge or charge or the subjection to any lien, pledge or chazge, created or to be created by the provisions of this Ordinance; (E) To grant to or confer upon the Holders any additional right, remedies, powers, authority or security that lawfully may be granted to or confeired upon them; (F) To assure compliance with federal "arbihage" provisions in effect from time to time; � (G) To provide such changes as maybe necessary m order to adjust the terms hereof so as to facilitate the issuance of Variable Rate Bonds or Option Bonds; and (H) To modify any of the provisions of this Ordinance in any other aspects provided that such modifications shall not be ef%ctive until after the Bonds Outstanding at the time such supplemental ordinance is adopted shall cease to be Outstanding, or wml �e holders thereof consent thereto pursuant to Section 21 hereof, and any Bonds issued subsequent to any such modification shall contain a specific reference to the modifications contained in such supplemental ordinance. Except for supplemental resolutions providing for the issuance of a Series of Bonds pursuant hereto, the Issuer shall not enact any supplemental ordinance authorized by the foregoing pmvisions of this Section unless in the opinion of Bond Counsel the enactment of such supplemental ordinance is pemutted by the foregoing provisions of this section. SECTION 21. AIVIENDMENT OF ORDINANCE WITH CONSENT OF HOLDERS OF BONDS. Except as provided in Section 20 hereof, no material modification or amendment of this Ordinance or of any resolution supplemental hereto shall be made without the consent in writing of the Holders of fifly-one percent or more in the principal amount of the Bonds of each Series so affected and then Outsrtanding. For purposes of this Section, to the extent any Bonds are insured by a policy of municipal bond insurance or are secured by a letter of credit and such Bonds are then rated in as high a rating category as the rating category in which such Bonds were rated at the time of initial issuance and delivery thereof by either Standard & Poor's Corporation or Moody's Investors Service, or successors and assigns, then the consent of the issuer of such municipal bond insurance policy or the issuer of such letter of credit shall be deemed to constitute the consent ofthe Holder of such Bonds. No modification or amendment shall permit a change in the maturity of such Bonds or a reduction m the rate of interest thereon or inthe amount of the principal obligationthereofor affecting the promise ofthe Issuer to pay the principal of and interest on the Bonds as the same shall become due from the Pledged Revenues or reduce the percentage of the Holders of the Bonds required to consent to any material modification or amendment hereof without the consent of the Holder or Holders of all such obligations. For purposes of the unmediately preceding sentence, the issuer of a municipal bond insurance policy or a letter of credit shall not consent onbehalfofthe Holders ofthe Bonds. No amendment or supplement pursuant to this Section 21 (but not including Section 20 hereo fl sha11 be made without the consent of the Bond Insurer, if any. SECTION 22. DEFEASANCE. The covenants and obligations of the Issuer sha11 be defeased and discharged under terms of this Ordinance as follows: (A) If the Issuer shall pay or cause to be paid, or there sha11 otherwise be paid, to the Holders of all Bonds the principal, redemption premium, if any, and interest due or to become due thereon, at the times and 'm the maruier stipulated herein, then the pledge of the Pledged Revenues and all covenants, agreements and other obligations of the Issuer to the Bondholders, shall thereupon cease, temunate and become void and be discharged and satisfied. If the Issuer s�hall pay or cause to be paid, or there shall 29 otherwise be paid, to the Holders of any Outstanding Bonds the principal or redemption premium, if any, and interest due or to become due thereon, at the times and in the manner stipulated herein, such Bonds shall cease to be entitled to any lien, benefit or securityunder �is Ordinance, and all covenants, agreements and obligations of the Issuer to the Holders of such Bonds shall thereupon cease, terminate and become void and be discharged and satisfied. (B) The Bonds, redemption premium ifany, and interest due or to become due for the payment or redemption of which moneys sha11 have been set aside and shall be held in tnast (through deposit by the Issuer of funds for such payment or redemption or otheiwise) at the maturity or redemption date thereof sha11 be deemed to have been paid within the meaning and with d�e effect expressed in paragraph (A) of this Section 22. Subject to the provisions of paragraph (C) and (D) of this Section 22, any Outstanding Bonds shall prior to the maturity or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in paragraph (A) ofthis Sectionif(i) in case any of said Bonds are to be redeemed on any date prior to their mahmty, �e Issuer shall have given to the escrow agent insttuctions accepted in writing by the escrow agent to notify Holders of Outstanding Bonds m the manner required herein of the redemption of such Bonds on said date and (ii) there sha11 have been deposited with the escrow agent either moneys m an amount which sha11 be sufficient, or Federal Securities (including any Federal Securities issued or held 'm book-entry fornl on the books of the Department of the Treasury of the United States) the principal of and the interest on which when due will provide moneys which, together withthe moneys, ifany, deposited with the escrow agent at the same time, sha11 be sufficient, to paywhen due the principal of or premium, if any, and interest due and to become due on said Bonds on or prior to the redemption date or maturity date thereof, as the case may be. (C) For puYposes of determining whether Variable Rate Bonds shall be deemed to have been paid prior to the maturity or redemption da.te thereof, as the case may be, by the deposit of moneys, or Acquired Obligations and moneys, if any, in accordance with paragraph B of this Section 22, the interest to come due on such Variable Rate Bonds on or prior to the maturity date or redemption date thereof, as the case may be, shall be calculated at the rna�num rate pemutted by the terms thereof; provided, however, thai if on any date, as a result of such Vaziable Rate Bonds having bome interest at less than such maximum rate for any period, the total amount of moneys and Acquired Obligations on deposit with the escrow agent for the payment of interest on such Variable Rate Bonds is in excess of the total amount which would have been required to be deposited with the escrow agent on such date in respect of such Variable Rate Bonds m order to satisfy �e second sentence of paragraph (B) of this Section 22, the escrow agent shall, if requested by the Issuer, pay the amount of such excess to the Issuer free and clear of any tnist, lien, pledge or assignment securing the Bonds or otherwise existing under this Ordinance. (D) Option Bonds shall be deemed to have been paid m accordance with the second sentence of paragraph (B) of this Section 22 only if, in addition to satisfying the requirements of clauses (i) and (ii) of such sentence, there shall have been deposited with the escrow agent moneys in an amount which shall be sufficient to pay when due the maximum amount of principal of and redemption premium, if any, and interest on such Bonds which could become payable to the Holders of such Bonds upon the exercise of 30 any options provided to the Holders of such Bonds; provided, however, that if, at the time a deposit is made with the escrow agent pursuant to paragraph (B) of this Section, the options originally exercisable by the Holder of an Option Bond are no longer exercisable, such Bond shall not be considered an Option Bond for purposes of this paragraph (D). If any portion of the moneys deposited with the escrow agent for the payment of the principal of and redemption premium, if any, and interest on Option Bonds is not required for suchpurpose, the escrow agent sha11, ifrequested by the Issuer, pay the amount of such excess to the Issuer free and clear of any trust, lia�, security interest, pledge or assignment securing said Bonds or otherwise existing under the Resolution. SECTION 23. SALE OF THE BONDS. The Bonds shall be issued and sold at public or negotiated sale at one time or m installinents from tixne to time and at such price or prices as shall be consistent withthe provisions of the requirements of this Ordinance and other applicable provisions oflaw as set forth in a supplemental resolution of the Issuer adopted before the issuance of any Series ofBonds. SECTION 24. CAPITAL APPRECIAT'ION BONDS. For the purposes of (i) receiving payment ofthe redemptionprice ifa CapitalAppreciationBond is redeemedpriortomaturity, (ii) receiving payment of a Capital Appreciation Bond if the principal of a11 Bonds is declared 'unmediately due and payable under the provisions of the Ordinance, (iu) computing the amount ofthe Maximum Bond Service Requirement, and (iv) computing the percentage of Bonds held by the registered owner of a Capital Appreciation Bond in giving to the Issuer or the Tmstee any notice, consent, request or demand pursuant to the Ordinance for any purpose whatsoever, the principal amount of a Capital Appreciation Bond shall be deemed to be its Accreted Value. SECTION 25. AMENDING PRIOR ORDINANCE5. In accordance with Section 21 of Ordinance No. 3674-84, which pemiits amendments and modifica.tions of such Ordinance which are not material modifications or amendments thereof, buk withthe consent of the respective Bond Insurer for the Parity Bonds, Section 16R of Ordinance No. 3674-84, Ordinance No. 5355-93 and Ordinance No. 6311-98 is hereby amended by deleting in its entirety paragraph (1) thereof and replacing such paragraph with the following new paragraph (1): (1) There shall have been obtained and filed with the Clerk a certificate of the Finance Director stating: (a) that the books and records ofthe Issuer relative to the System have been audited by qualified and recognized fiim of independent certified public accountants; (b) based on such audited financial statement, that die amount ofthe adjusted Net Revenues derived for the Fiscal Year preceding the date of issuance ofthe proposed Additional Bonds or for any twelve (12) consecutive months during the eighteen (18) months immediately preceding the date of issuance of the Additional Bonds with respect to which such certificate is made, adjusted as herein below provided; and (c) based on such audited financial statement, that the aggregate amount of such Net Revenues, as adjusted, for the period for which suchNet Revenues are being certified is equalto not less than 120% of the Maximum Bond Service Requirement becoming due in any Fiscal Year 31 thereafter on (i) all Parity Bonds and the Bonds issued under this Ordinance, if any, then Outstanding, and (u) on the Additional Bonds with respect to which such certificate is made SECTION 26. SEVERABILITY OF INVALID PROVISIONS. Ifany one or more of the covenants, agreements or provisions herein contained shall be held contrary to any express provisions of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions sha11 be rnxll and void and shall be deemed separable from the rem�ning covenants, agreements or provisions and shall in no way affect the validity of any of the other provisions hereof or of the Bonds issued hereunder. SECTION 27. REPEALING CLAUSE. All ordinances or resolutions or parts thereof of the Issuer in conflict withthe provisions herein contained are, to the extent of such conflict, hereby superseded and repealed. SECT'ION 28. EFFECTIVE DAT'E. This Ordinance shall take effect immediately upon its passage. SECTION 29. PUBLIC NOTICE. Notice of the proposed enactment of this Ordinance has been properly advertised in a newspaper of general circulation in accordance with Chapter 166.041, Florida Statutes. PASSED ON FIRST READING PASSED ON SECOND READING AND FINAL READING AND ADOPTED AS AMENDED. Attest: City Clerk Approved as to Form, Sufficiency and Correcmess: City Attomey 32 Mayor-Commissioner 2001 , 2001 RESOLUTION NO. 03-35 A RESOLUTION PROVIDING FOR THE AUTHORIZATION OF NOT TO EXCEED $9,500,000 WATER AND SEWER REVENUE REFUNDING BONDS, SERIES 2003; PROVIDING FOR T'HE PUBLIC SALE OF SAID BONDS; SETTING FORTH THE FORM OF THE NOTICE OF BOND SALE AND SUMMARY NOTICE OF BOND SALE RELATING TO THE SALE OF SUCH BONDS; DIRECTING PUBLICATION OF THE SUMMARY NOTTCE OF S ALE RELATIl�IG TO SUCH BONDS; PROVIDING FOR THE OPENING OF BIDS RELATING TO THE SALE OF THE BONDS; SETTTNG FORTH THE FORM OF OFFICIAL NOTICE OF SALE AND BID FORMS; PROVIDING THAT SUCH BONDS SHALL BE ISSUED IN FULL BOOK ENTRY FORM; APPROVING THE FORM OF A PRELIMINARY OFFICIAL STATEMENT; PROVIDING FOR COMPLIANCE WITH A CONTINUING DISCLOSURE CERTIFICATE; DESIGNATING A REGISTRAR AND PAYING AGENT; PROVIDING FOR AN ESCROW DEPOSIT AGREEMENT AND APPOINTING AN ESCROW AGENT; AUTHORIZING THE PURCHASE OF MLJNICIPAL BOND INSURANCE; PROVIDING CERTAIN OTHER MATTERS IN CONNECTION 'THEREWITH; AND PROVIDING AN EFFECTTVE DATE. WHEREAS, the City of Clearwater, Florida (the "Issuer") has by Ordinance No. 3674- 84 �ad by the Issuer on August 2, 1984, as amended and supplemented in Ordinance 5355-93, enacted on April 15, 1993, as amended and supplemented in Ordinance 6311-98, enacted November 5, 1998 and as fiuther amended and supplemented in Ordinance 6915-01, enacted November 15, 2001 (collectively, the "Bond Ordinance") authorized the issuance of City of Clearwater, Florida, Water and Sewer Revenue Bonds, Series [to be detemuned] in one or more series from time to time; NOW, THEREFORE, BE IT RESOLVED BY THE CITY CONIIvIISSION OF THE CITY OF CLEARWATER, FLORIDA, as follows: SECTION 1. AUTHORIZATION OF BONDS AND SERIES DE5IGNATION. The Water and Sewer Revenue Refunding Bonds, Series 2003 being offered pursuant to the Bond Ordinance and this resolution are hereby designated as the not to exceed $9,500,000 City of Clearwater, Florida, Water and Sewer Revenue Bonds, Series 2003 (the "Series 2003 Bonds"), which Series 2003 Bonds are hereby authorized to be issued. The proceeds of the Series 2003 Bonds sha11 be used to refund the Issue�'s outstanding Water and Sewer Refunding Revenue Bonds, Series 1993 maturing on and after December 1, 2004 (the 'Refunded Bonds'�, pay the cost of issuing the 2003 Bonds, including any municipal bond insurance, and to fund a debt service reserve fund. SECTION 2. PUBLIC SALE. There is hereby authorized to be sold pursuant to a public sale not to exceed $9,500,000 City of Clearwater, Florida, Water and SewerRevenue Refunding Bonds, S�ies 2003. Resolution No. 03-35 SECTION 3. SALE OF SERIES 2003 BONDS; REDEMPTION AND MATURITY PROVISIONS. The Finance Director is hereby directed to arrange for the sale of the Series 2003 Bonds utilizing the electronic bid process of PARITY through the publication of the Surrunary Notice of Sa1e of the Bonds in a newspaper regularly distributed in the City of Cleaiwater and in The Bond Buver, such publications to be on such date as shall be deemed by the Finance Director to be in the best interest of the Issuer and such publications to be not less than ten (10) calendar days prior to the date of sale as required by Section 218.385(1), Florida Statutes; and to publish such Notice in such other newspapers on such dates as ma.y be deemed appropriate by the Finance Director. The Series 2003 Bonds shall be subject to optional redemption and shall bear maturities and sinking fund amortizations as sha11 be subsequently deternuned by the Financial 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 Sa1e as hereinafter approved. Proposals for purchase of the Series 2003 Bonds will be received electronically via PARITY as provided in the Oi�icial Notice of Sale, from the time that the Notice of Bond Sale is published unti111:00 a.m., Clearwater, Florida time, on such da.te and time as may be established by the Finance Director of the City or her designee, and if such date is subject to change, communicated through Thompson Municipal Market Monitor (TM3) not less than twenty- four (24) hours prior to the time bids are to be received for the purchase of the City of Clearwater, Florida, Water and Sewer Revenue Bonds, Series 2003; provided that if the internet is not worldng on the designated bid date, the bid date sha11 be automatically changed to the next business day, and the City will communicate a confiimation of this change in bid date through Thompson Municipal Market Monitor ('TM3), all as provided in the Notice of Sale (the "Bid Date"). SECTION 4. CREATION OF ACCOUNT IN THE CONSTRUCTION FUND AND USE OF FiJND5. There is hereby created with the Construction Fund separate subaccounts namely, the S�ies 2003 Cost of Issuance Account. Moneys held in the Series 2003 Cost of Issuance Account shall be usedto pay the costs of issuing and delivering the Series 2003 Bonds. SECTION 5. DISPOSITION OF PROCEEDS OF SERIES 2003 BONDS. The proceeds from the sale of the Series 2003 Bonds shall be deposited as follows: (a) An amount equal to the accrued interest on the Series 2003 Bonds sha11 be deposited into the Interest Account in the Bond Service Funds; (b) An amount determined by the Finance Director to be necessary to pay the costs of issuing the Series 2003 Bonds, including the premium due to the BondInsurer, shall be deposited into the Series 2003 Cost of Issuance Account in the Consttuction Fund to pay such costs; (c) An amount deternuned by the Finance Director in comultation with the City's Financial Advisor to be deposited under the Escrow Deposit Agreement (hereinafter approved), which together with certain Resolution No. 03-35 2 funds currently held by the Issuer in the Sinldng Fund for the Refunded Bonds, will provide sufficient funds to defease the Refunded Bonds; (d) An amount determined by the Finance Director to be necessary to increase the amount in the Reserve Fund so that the amount on deposit therein equals the Reserve Requirement; and (e) The remaining proceeds of the Series 2003 Bonds representing a rounding amount shall be deposited into the Bond Service Fund for the Series 2003 Bonds. SECTION 6. APPROVAL OF FORMS. The Notice of Bond Sale and Summary Notice of Sale of the Bonds to be submitted for purchase of the Series 2003 Bonds shall be in substantially the forms annexed hereto, as Exhibits A and B, respectively, together with such changes as shall be deemed necessary or desirable by the Finance Director depending on the bidding method selected in accordance with Section 3 hereof, incorporated herein by reference. The form of the Official Bid Form sha11 be provided by the internet auction website selected by the Finance Director, and shall be reasonably satisfactory to the Finance Director. SECTION 7. BOOK ENTRY ONLY BONDS. It is in the best interest of the City and the residents and inhabitarns thereof that the Series 2003 Bonds be issued utilizing a pure book-entry system of registration. In furtherance thereof, the City has previously executed and delivered a Blanket Letter of Representations with the Depository Trust Company. For so long as the Series 2003 Bonds remain in such book entry only system of registration, in the event of a conflict between the provisions of the Bond Ordinance and of the Blanket Letter of Representations, the ternis and provisions of the Blanket Letter of Representations shall prevail. SECTION 8. ESCROW DEPOSIT AGREEMENT The form of Escrow Deposit Agrcement to be used in connection with the defeasance and redemption of the Refunded Bonds attached hereto as Exhibit '�" and incorporated herein by reference is hereby approved. The Mayor-Commissioner, or in his absence the Vice Mayor, the City Manager and the City Clerk are hereby authorized to execute such Escrow Deposit Agreement in substantially the form attached as Exhibit "F" upon the approval ofthe City Attorney as to form and legal suf�ciency, with such additional changes, insertions and omissions therein as do not change the substance thereof and as may be approved by the said officers of the Issuer executing the same, such execution to be conclusive evidence of such approval. The Finance Director is hereby authorized to solicit offers from financial institutions to serve as Escrow Agent under the Escmw Deposit Agreement for the Refunded Bonds, and the Finance Director is hereby authorized to select the fum with the lowest bid to serve in such capacity. SECTION 9. PRELINIINARY 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 fonn attached hereto as Exhibit C, with such changes, insertions and omissions as shall be approved by the City Manager and Finance Director, Resolution No. 03-35 containing a copy of the attached Notice of Bond Sale and to furnish a copy of such Preliminary Of�icial Sta.tement to interested bidders. The City Manager and Finance Director are authorized to deem final the Preliminasy Official Statement prepared pursuant to this Section for puiposes of Rule 15c2-12 (the "Rule") of the Securities and Exchange Commission. Upon the award of the Series 2003 Bonds to the successful bidder, the City shall also make available a reasonable number of copies of the Prelinvnary Official Statement to such bidder, who may mail such Preliminary Official Statements to prospective purcha sers at the bidder's expense. Following the award of the Series 2003 Bonds, the City Manager and the Finance Director shall cause to be prepared a final Official Statement dated as of the Bid Date, reflecting such changes in the Prelitnu�ary OH'icial Statement as may be necessary to reflect the purchaser's bid. The Mayor-Comxnissioner and City Manager are hereby authorized to execute and delivery such final Official Statement, with such changes, insertions and omissions as may be approved by such officers. SECTION 10. CONTINUING DISCLOSURE. The City hereby covenants and agrees that, in order to provide for compliance by the City with the secondary market disclosure requirements of the Rule, that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Certificate in substantially the form attached hereto as Exhibit D, to be executed by the City and dated the date of issuance and delivery of the Series 2003 Bonds, as it may be amended from time to tune in accordance with the terms thereof (the "Continuing Disclosure Certificate"). Notwithstanding any other provision of this Resolution, failure of the City to comply with such Continuing Disclosure Certificate shall not be considered an event of default; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Section. SECTION 11. REGISTRAR AND PAYING AGENT. Wells Fargo Bank, N.A., Minneapolis, Minnesota. is hereby appointed as Registrar and Paying Agent for the Series 2003 Bonds. SECTION 12. MiJNICIPAL BOND INSURANCE POLICIES. Pursuant to the Bond Ordinance, Financial Security Assurance Ina (`�SA") has been selected to provide its Municipal Bond Insurance Policy (the "Policy") as the Bond Insurance Policy (as defined in the Bond Ordinance) as additional security for payment of principal and interest on the Series 2003 Bonds. Selection ofFinancial Security Assurance Inc., a New York domiciled insurance company as the Bond Insurer (as defined in the Bond Ordinance) is hereby ratified and confirmed and payment for such Bond Insurance Policy from proceeds of the Series 2003 Bonds is hereby authorized. The Issuer hereby accepts the terms, conditions and agreements relating to the Bond Insurance Policy in accordance with the Municipal Bond Insurance Commitment attached hereto as Exhibit E and incoiporated herein. A statement of insurance is hereby authorized to be printed on or attached to the Series 2003 Bonds for the benefit and infom�ation ofthe holders of the Series 2003 Bonds. In addition to the covenants and agncements of the City previously contained in the Bond Ordinance regarding the rights of the Bond Insurer, which are hereby incoiporated herein, the City hereby makes the additional covenants and agreements substantially in the form attached hereto as Exhibit "G" for the benefit Resolution No. 03-35 4 ofthe Bond Insurer and the Holders ofthe Series 2003 Bonds while the Bond Insurance Policy insuring the Series 2003 Bonds are in full force and effect: SECTION 13. AWARD OF BIDS. The Finance Director is hereby authorized to accept the bids for the Series 2003 Bonds. The City Manager and the Finance Director are hereby authorized to award the sale of the Series 2003 Bonds on their detennination of the best bid submitted in accordance with the terms of the Notice of Bond Sale provided for herein so long as the true interest cost rate shall not exceed 4.0% on the Series 2003 Bonds and a net present value savings on refunding the Refunded Bonds of not less than 2%. The City Manager and the Finance Director are hereby authorized to award the sale of the Series 2003 Bonds as set forth above or to reject all bids for the Series 2003 Bonds. Such award shall be fina1. SECTION 14. PRIOR RESOLUTIONS. To the extent the provisions of this Resolution are inconsistent with the provisions of Resolution No. 02-30, adopted by the City Commission of the City on June 20, 2002 with respect to the Series 2002 Bonds, Resolution No. 98-54, adopted by the City Commission of the City on November 5,1998, with respect to the Series 1998 Bonds and Resolution No. 93-26, adopted by the City Commission of the City on April 15, 1993, with respect to the Series 1993 Bonds, provisions of this Resolution sha11 control and supercede the inconsistent provisions of such Resolutions. Resolution No. 03-35 � SECTION 15. EFFECTTVE DA'TE, 'This r�olution sha11 take effect immediately upon adoption. Passed and adopted by the City Commission of the City of Clearwater, Florida, this _ day of —_, 2003. Approved as to form: Pamela K Akin, City Attorney 0 CITY OF CLEARWATER, FLORIDA Brian J. Aungst, Mayor-Commissioner Attest: Cynthia E. Goudeau, City Clerk Resolution No. 03-35 F _� 4 f � � 11: FORM OF OFFICIAL NOTICE OF BOND SALE $ * CITY OF CLEARWATER, FLORIDA WATER AND SEWER REVENUE REFUNDING BONDS, SERIES 2003 NOTICE IS HEREBY GIVEN that electronic (as explained below) proposals will be received electronically via.PARITY in the manner described below, unti111:00 a.m., Eastem Da.ylight Savings Time, on October 1, 2003. Bids must be submitted electronically via PARITY in accordance with this Notice of Bond Sale, until 11:00 am., 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 Sa1e shall control. For further inforniation aboutPARITY, potential bidders may contact the financial advisor to the City, William R. Hough & Co., 100 Second Avenue South, Suite 800, St. Petersburg, Florida 33701, Attn: Kevin Conitz: (727) 895 8853, or PARITY at 40 West 23`� Street, 5`h 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 confumed in a communication through Thompson Municipal Market Monitor (TM3). Form of Series 2003 Bonds The Series 2003 Bonds will be issued in book entry only foim, without coupons, in denominations of $5,000 or any integral multiples thereof, and shall be dated October 1, 2003. Principal of the Series 2003 Bonds shall be paid to the registered owners at the designated corporate trust office of Wells Fargo Bank, N.A. (the "Paying Agent" and "Registrar"), upon presentment and surrender of the Series 2003 Bonds. Interest on the Series 2003 Bonds sha11 be paid to the registered owners as shown on the registration books mauitained by the Registrar, by check or draft mailed to each such owner's address as shown on the regist�ation books maintained by the Registrar as of the fifteenth (15th) day of the calendar month preceding such interest payment date. Interest will be payable each June 1 and December 1, commencing June 1, 2004. Interest will be calculated on the basis of a 360-day year of twelve 30-day montl�s. For so long as The Depository Trust Company, New York, New York, or its nominee, Cede & Co. (collectively, "DTC") is the registered owner of the Series 2003 Bonds, payments of principal of, redemption premiutn, if any, and interest on the Series 2003 Bonds will be made directly to DTC. Disbursements of such payments to the DTC participants is the responsibility of DTC and further disbursement of such payments from the DTC participants to the beneficial owners of the Series 2003 Bonds is the responsibility of the DTC participants. * Preliminary, subject to change A 1 Initially one bond will be issued for each maturity of the Series 2003 Bonds in the aggregate principal amount of each such maturity and registered in the name of DTC. DTC, an automated clearing house for securities trar�sactions, will act as securities depository for the Series 2003 Bonds. Purchases of the Series 2003 Bonds will be made in book-entry-only form (without certification). It shall be the responsibility of the Successful Bidder (as hereinafter defined) for the Series 2003 Bonds to fuinish to DTC an underwriters' questionnaire and to the City the CUSIP numbers of the Series 2003 Bonds not less than seven (7) days prior to the Closing Date (as hereinafter defined). Maturity Schedule The Series 2003 Bonds will mature on December 1 of the following years in the following principal amounts: Maturitv 2004 2005 2006 2007 2008 2009 2010 Series 2003 Bonds Principal Amount* *Preliminary, subject to change � 2011 2012 2013 2014 2015 2016 2017 2018 Principal Amount* The Series 2003 Bonds will be sold as serial bonds. Bidders will not be allowed to designate any maturities as one or more term bonds. Adiustment of Principal Amount After final computation of the bids, to achieve desired debt service levels, the City reserves the right either to increase or decrease any Principal Amount of the Series 2003 Bonds shown on the schedule of Principal Amounts set forth above (the "Mahuity Schedule"), by an amount not to exceed five percent (5%) of the stated amount of each such Principal Amount on the Maturity Schedule and correspondingly adjust the issue size, all calculations to be rounded to the nearest $5,000. In the event of any such adjushnent in the Series 2003 Bonds, no rebidding or recalculation of the A-2 bid submitted with respect to such Series 2003 Bonds will be required or permitted. If necessary, the total purchase price of the Series 2003 Bonds will be increased or decreased in direct proportion to the ratio that the adjustment bears to the aggregate principal amount of the Series 2003 Bonds specified herein; and the Series 2003 Bonds of each maturity, as adjusted, will bear interest at the same rate and must have the same initial reoffering yields as specified in the bid of the Successful Bidder. However, the award will be ma.de to the bidder whose bid produces the lowest true interest cost, calculated as specified below, solely on the basis of the bid for the Series 2003 Bonds offered pursuant to the Bid Maturity Schedule of the relevant series of Series 2003 Bonds, without taltirig into account any adjustment in the amount of Series 2003 Bonds set forth in the Bid Maturity Schedule. Basis of Award Proposals must be unconditional and only for all the Series 2003 Bonds. The purchase price bid for the Series 2003 Bonds may include a discount (including undeiwriters' discount and original issue discount) not to exceed two percent (2%) of the principal amount of the Series 2003 Bonds and shall specify how much of the discount is original issue discount. The purchase price bid may also include an original issue premium and sha11 specify how much of such purchase price is original issue premium. The Series 2003 Bonds will be insured by Financial Security Assurance. Inc. and the City will pay the bond insurance premium from Bond proceeds. The purchase price bid for the Series 2003 Bonds will not deduct the insurance premium. Only the final bid submitted by any bidder through Parity will be considered. The City reserves the right to determine the S�cessful Bidder for the Series 2003 Bonds, to reject any or all bids and to waive any uregularity or infom�ality in any bid The Series 2003 Bonds will be awarded to the bidder (herein referred to as the "Successful Bidder" as to the Series 2003 Bonds) offering such interest rate or rates and purchase price which will produce the lowest true interest cost to the City over the life of the Series 2003 Bonds. True interest cost for the Series 2003 Bonds (expressed as an annual interest rate) will be that armual interest rate being twice that factor of discount rate, compounded semiannually, which when applied against each semiannual debt service payment (interest, or principal and interest, as due) for the Series 2003 Bonds will equate the sum of such discourrted semiannual payments to the bid price (inclusive of acccued interest). Such semiannual debt service payments begin on June 1, 2004. The true interest cost shall be calculated from October 15, 2003, the expected closing date of the Series 2003 Bonds (the "Closing Date") and sha11 be based upon the principal amounts of each serial maturity set forth in this Notice of Bond Sa1e and the bid price set forth in the Proposal for the Series 2003 Bonds submitted in accordance with the Notice of Bond Sale. In case of a tie, the City may select the Successful Bidder by lot. It is requested that each Proposal for the Series 2003 Bonds be accompanied by a computation of such t�ue 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 2003 Bonds sha11 bear interest expressed in multiples of one-eighth (1/8) or one- twentieth (1/20) of one percent. No coupon interest rate specified for any maturity of the Series 2003 Bonds may be less than one percent (1.0%) or more than five percent (5.0%). Should an interest rate be A-3 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 hi�gher cent. It shall not be necessary that a11 Series 2003 Bonds bear the same rate of interest, provided that all Series 2003 Bonds maturing on the same date sha11 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. Paying Agent and Re�istrar The Paying Agent and Registrar for the Series 2003 Bonds is Wells Fargo Bank, N.A., through its designated of�ice in Minneapolis, Minnesota. Securi Principal of and interest on the Series 2003 Bonds to be issued pursuant to Ordinance No. 6915- O 1, as supplemented, and all required sinking fund, reserve and other payments shall be payable solely from the Net Revenues of Water and Sewer System of the City, together with the earnings thereon derived from the investment thereof in the Funds and Accounts established in the Ordinance and as more fully described in the Preliminary Official Statement The Series 2003 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional, statutory or charter provision or limitation, and no Bondholder shall ever have the right to require or compel the exercise of the ad valorem taxing power of the City or taxation of any rea1 or personal property therein for the payment of the principal of and interest on the Series 2003 Bonds or the making of any debt service fund, reserve or other payments provided for in the Resolution. Purpose Pursuant to the Ordinance, the Series 2003 Bonds are being issued to finance the refunding of the City's Water and Sewer Refunding Revenue Bonds, Series 1993, and pay the costs of issuing the Series 2003 Bonds, including the premium for a municipal bond insurance policy and to fund the reserve fund. Issuance of Series 2003 Bonds The Series 2003 Bonds will be issued and sold by the City of Cleazwater, Florida, a municipal corporation organized and existing under the laws of the State of Florida. The Series 2003 Bonds are being issued pursuant to Ordinance No. 6915-01 enacted November 15, 2001 as supplemented by resolutions (collectively, the "Bond Ordinance") by the City of Clearwater, Florida (the "City") and pursuant to the provisions of Chapter 166, Florida Statutes, and other applicable provisions of law. A-4 Municipal Bond Insurance Policy A commitment to issue a municipal bond insurance policy guaranteeing payment of principal and interest on the Series 2003 Bonds has been obtained from Financial Security Assurance Inc. Proposals Proposals for the Series 2003 Bonds are desired on fornis which will be fuinished by PARIT'Y, on behalf of the City, and be submitted electronically via PARTTY. All bidders must submit a"Good Faith Deposit" in the amount of $100,000 (the "Deposit") in the form of a financial surety bond of Financial Security Ass�uance, 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 gua.ranteed by such Financial Surety Bond. The successful bidder is required to submit its good faith deposit by wire t�ansfer not later tha.n 2:00 p.m. eastern time, on the next business day following the award, as instructed by the City's Financial Advisor. If such deposit is not received by that time, the City shall ma,ke a claim under the Financial Surety Bond to satisfy the good faith deposit requirement. The check of the successful bidder or proceeds of a claim under the Financial Surety Bond, as applicable, will be deposited by the City in an interest-bearing account and be retained and applied towards the purchase price of the Series 2003 Bonds pending full perfoimance by the successful bidder, or will be forfeited to the City and applied as full liquidated damages upon failure of the successful bidder to take up and pay for the Series 2003 Bonds. Any interest eamed on the good faith deposit will be retained by and inure to the benefit of the City. If the Series 2003 Bonds are not delivered to the successful bidder within 30 calendar days from the date of sa1e, without fault upon the part of the successful bidder, such successful bidder shall not thereafter be obligated to take delivery of and pay for the Series 2003 Bonds and the good faith deposit amount will be promptly paid to the successful bidder or Financial Security Assurance, Inc., as applicable. Delivery and Payment It is anticipated that the Series 2003 Bonds in book entry only form will be available for delivery on October 15, 2003, in New York, New York, at The Depository Trust Company, or some other date and place to be mutually agreed upon by the Successful Bidder and the City against the payment of the purchase price therefor including accrued interest calculated on a 360-day year basis, less the amount of the good faith check, in immediately available Federal Reserve funds without cost to the City. Closin� Documents The City will fumish to the Successful Bidder upon delivery of the Series 2003 Bonds the following closing docutnents in a foim satisfactory to Bond Counsel: (1) signature and no-litigation certificate; (2) federal tax certificate; (3) certificate regarding infom�ation in the Official Statement; and (4) seller's receipt as to payment. A copy of the transcript of the proceedings authorizing the Series 2003 Bonds will be A-5 delivered to the Successful Bidder of the Series 2003 Bonds upon request. Copies of the form of such closing papers and certificates may be obtained from the City. Information Statement Section 21838(1)(b)1, Florida Statutes requires that the City file, within 120 days after delivery of the Series 2003 Bonds, an information statement with the Division of Bond Finance of the State of Florida. (the "Division") containing the following information: (a) the name and address of the managing undervvriter, if any, connected with the Series 2003 Bonds; (b) the name and address of any attorney or fuiancial consultant who advised the City with respect to the Series 2003 Bonds; and (c) any fee, bonus, or gratuity paid, in connection with the bond issue, by an undervvriter or financial consultant to any peison not regularly employed or engaged by such underwriter or consultant and (d) any other fee paid by the City with respect to the Series 2003 Bonds, including any fee paid to attomeys or financial consultants. The Successful Bidder will be required to deliver to the City at or prior to the time of delivery of the Series 2003 Bonds, a statement signed by an authorized officer containing the same information mentioned in (a) and (c) above. The Successful Bidder shall also be required, at or prior to the delivery of the Series 2003 Bonds, to fiunish the City wrth such information conceming the initial prices at which a substantial amount of the Series 2003 Bonds of each maturity were sold to the public as the City shall reasonably request. Pursuant to Section 218.385(2) and (3) of the Florida Statutes, as amended, a trutl�urbonding statement will be required from each bidder as to the Series 2003 Bonds as part of their bid in the following foim: "The City of Clearwater, Florida, is proposing to issue $ original aggregate principal amount of Water and 5ewer Revenue Refimding Bonds, Series 2003, for the purpose of paying (i) the costs of refunding the City's Water and Sewer Refunding Revenue Bonds, Series 1993, (ii) the costs of issuing the Series 2003 Bonds, and (iri) the premium on the Bond Insurance Policy, all as further described in Ordinance No. 6915-01. The final maturity date of the Series 2003 Bonds is December 1, 2018, and the Series 2003 Bonds are expected to be repaid over a period of fifteen (15) years. At a forecasted average interest rate of % per annum, total interest paid over the life of the Series 2003 Bonds will be$ . The source of repayment or security for this proposal is the Net Revenues (as defined in the Ordinance) and moneys and investments held in the funds created under the said Ordinance. Authorizing the Series 2003 Bonds will result in $ not being available to fmance the other capital projects of the City. This truth-irrbonding statement prepared pursuant to Section 218.385(2) and (3) of the Fbrida Statutes, as amended, is for infoimational putposes only and shall not affect or control the actual terms and conditions of the Series 2003 Bonds." A-6 Legal Ouinion The Successful Bidder will be furnished, without cost, with the approving opinion of Biyant Nfll�& 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 eamings to the United States Treasury, the interest on the Series 2003 Bonds is not includable in the gross income of individuals, however, interest on the Series 2003 Bonds will be included in the calculation of the altemative minimum tax liabilities of corporations. The Code contains other pmvisions that could result in tax consequences, upon which Bond Counsel renders no opinion, as a result of ownership of the Series 2003 Bonds a the inclusion in certain computations (including, without limitation, those related to the corporate alternative minimum tax and envirorunental tax) of interest that is excluded from gross income. Official Statement The Preliminary Of�cial 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 Of�cial Statement. Upon the sale of the Series 2003 Bonds, the City will publish a final O�cial Statement in substantially the same form as the Preliminary Official Statement. Copies of the final Official Statement will be provided, at the City's expense, on a timely basis in such quantities as may be necessary for the Successful Bidder's regulatory compliance. It is not the intention or the expectation of the City to print the name(s) of the Successful Bidder as to the Series 2003 Bonds on the cover of the Official Statement. Continuin� Disclosure The City has covenanted to provide ongoing disclosure in accordance with Rule 15c2-12 of the Securities and Exchange Commission. See "Appendix D-- Form of Continuing Disclosure Certificate" attached to the Preliminary Official Statement. CUSIP Number It is anticipated that CUSIP identification numbers will be printed on the Series 2003 Bonds, but neither the failure to print such number on any Series 2003 Bonds nor any error with respect thereto shall constitute cause for failure or refusal by the Successful Bidder to accept delivery of and pay for the Series 2003 Bonds in accordance with its agreement to purchase the Series 2003 Bonds. All expenses in relation to the printing of CUSIP numbers on the Series 2003 Bonds sha11 be paid for by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of said number shall be the responsibility of and shall be paid for by the Successful Bidder. A-7 Copies of Documents Copies ofthe Preliminary Official Statement, this Official Notice of Bond Sa1e and the Official Bid Fortn and further infom�ation which may be desired, may be obtained from the City's Financial Advisor, William R. Hough & Co., 100 Second Avenue South, Suite 800, St. Petersburg, Florida 33701, Attn: Kevin Conitz: (727) 895 8853. Amendment and Notices Amendments hereto and notices, if any, pertaining to this offering shall be made through Thompson Municipal Market Monitor (TM3) or similar information dishibution service. CITY OF CLEARWATER, FLORIDA /s/ Brian J. AunQSt Mayor-Cominissioner A-8 EXHIBIT B FORM OF SUMMARY NOTICE OF SALE CITY OF CLEARWATER, FLORIDA Water and SewerRevenue Refunding Bonds Series 2003 NOTICE IS HEREBY GIVEN, that bids will be received by the City Manager and the Finance Director of the City of Clearwater, Florida, electronically through PARITY, subject to the provisions of the Of�icial Notice of Bond Sale. Sale Date: Time: Bonds Dated: Maturities: Maturitv 2004 2005 2006 2007 2008 2009 2010 October 1, 2003 11:00 a.m., E.D.S.T. October 1, 2003 Payable December 1 in the years and amounts as follows: Series 2003 Bonds Principal Amount* *Prelnninary, subject to change � 2011 2012 2013 2014 2015 2016 2017 2018 Principal Amount* Interest Payment Dates: Payable June 1 and December 1, commencing June 1, 2004. Legal Opinion: Bryant Miller & Olive P.A., Tallahassee, Florida For copies of the Official Notice of Bond Sale and the Preluninary Of�cial Statement of the City of Cleatwater, Florida, please contact the City's Financial Advisor, William R. Hough & Co., 100 Second Avenue South, Suite 800, St. Petersburg, Florida 33701, Attn: Kevin Conitz: (727) 895 8853. The Preliminary Official Statement may be obtained after September 22, 2003 electronically through Image : Master Financial Publishing Inc. at www.munios.com. I� EXI-IIBIT C FORM OF PRELIMINARY OFFICIAL STATEMENT C-1 I .�,IIC � CONTINUING DISCLOSURE CERTIFICATE D-1 I .�.IIC COMMITMENT FOR MUNICIPAL BOND INSURANCE POLICY E-1 EXHIBIT F ESCROW DEPOSIT AGREEMENT F-1 EXHIBIT G ADDITIONAL COVENANTS WITH BOND INSURER (a) "Insurance Polic�' shall be defined as follows: "the insurance policy issued by the Insurer guaranteeing the s cheduled payment of principal of and interest on the Bonds when due". "Insure�" shall be defined as follows: "Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or assignee thereof'. (b) For transactions with a debt service reserve fund, the prior written consent of the Insurer shall be a condition precedent to the deposit of any credit instcument provided in lieu of a cash deposit into the Debt Service Reserve Fund. Notwithstanding anything to the contrary set firth in the Resolution, amounts on deposit in the Debt Service Reserve Fund shall be applied solely to the payment of debt service on the Bonds. (c) The Insurer sha11 be deemed to be the sole holder of the Insured Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the holders of the Bonds insured by it are entitled to take pursuant to the section or the article of the Resolution pertauung to defaults and remedies. Remedies of the Bondholders to include mandamus. (d) If accelerarion is pernutted under the Resolution, the maturity of Bonds insured by the Insurer shall not be accelerated without the consent of the Insurer and in the event the maturity of the Bonds is accelerated, the Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued, on such principal to the date of acceleration (to the extent unpaid by the Issuer). Upon payment of such accelerated principal and interest accrued to the acceleration da.te as provided above, the Insurer's obligations under the Insurance Policy with respect to such Bonds shall be fully discharged. (e) No grace period for a covenant default shall exceed 30 days, nor be extended for more than 60 days, without the prior written consent of the Insurer. No grace period shall be pemutted for payment defaults. (fl The Insurer shall be included as a third party beneficiary to ResolutionNo. 03-35 and the Bond Ordinance with respect to the Series 2003 Bonds. (g) Upon the occurrence of an extraordinary optional or special or extcaordinary mandatory redemption in part, the selection of Bonds to be redeemed shall be subject to the approval of the Insurer. The exercise of any provision of the Resolution which permits the pu�chase of Bonds in lieu of redemption shall require approval of the Insurer wherein any Bond so purchased is not extinguished. (h) No modification or amendment to Resolution 03-35 and the Bond Ordinance with respect to the Series 2003 Bonds or any other transaction document including any underlying security agreement G-1 (each a"Related Document") may become effective except upon obtaining the prior written consent of the Insurer. Copies of any modification or amendment to such Resolution and Bond Ordinaucear any other Related Document sha11 be sent to Standard & Poor's Credit Market Services ("S&P") and Moody's Investors Service, Inc. ("Moody's") at least 10 days prior to the effective date thereof. (i) The rights granted to the Insurer under Resolution No 03 -35 and the Bond Ordinance with respect to the Series 2003 Bonds or any other Related Document to request, consent to or direct any action are rights granted to the Insurer in consideration of its issuance of the Insurance Policy. Any exercise by the Insurer of such rights is merely an exercise of the Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does such action evidence any position of the Insurer, positive or negative, as to whether Bondholder consent is required in addition to consent of the Insurer. (j) Only (1) cash, (2) non callable direct obligations of the United States of America ("Treasuries"), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claimuig through the custodian or to whom the custodian may be obligated, (4) pre-refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively or (5) securities eligible for "AAA" defeasance under then existing criteria of S& P or any combination thereof, shall be authorized to be used to effect defeasance of the Bonds unless the Insurer otherwise approves. To accomplish defeasance the Issuer shall cause to be delivered (i) a report of an independent fum of nationally recognized certified public accountants or such other accountant as shall be acceptable to the Insurer ("Accountant") verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or redemption date ("Verification"), (u) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the Insurer), and (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding" under the Resolution; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the Issuer and the Insurer. The Insurer shall be provided with final drafts of the above-referenced documentation not less than five business days prior to the funding of the escrow. Bonds shall be deemed "Outstanding" under the Bond Ordinance unless and until they are in fact paid and retired or the above criteria are met. (k) Amounts paid by the Insurer under the Insurance Policy shall not be deemed paid for purposes of the Resolution and shall remain Outstanding and continue to be due and owing until paid by the Issuer in accordance with the Resolution. Tiie Resolution shall not be discharged unless all amounts due or to become due to the Insurer have been paid in full or duly provided for. (� The Issuer to covenant and agree to take such action (including, as applicable, filing of UCC financing statements and continuations thereo fl as is necessary from time to time otheiwise preserve the priority of the pledge of Tnast Estate under applicable law. (m) Claims Upon the Insurance Policy and Payments by and to the Insurer. G-2 If, on the third Business Day prior to the related scheduled interest payment date or principal payment date ("Payment Date") there is not on deposit with the Paying Agent, after making all transfers and deposits required under the Resolution, moneys sufficient to pay the principal of and interest on the Bonds due on such Payment Date, the Paying Agent shall give notice to the Bond Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficier�cy in the amount available to pay the principal of and interest on the Bonds due on such Payrnent Date, the Paying Agent shall make a claim under the Insurance Policy and give notice to the Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Bonds and the amount required to pay principal of the Bonds, confirmed in writing to the Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Insurance Policy. In the event the claim to be made is for a mandatory sinking fund redemption installment, upon receipt of the moneys due, the Paying Agent shall authenticate and deliver to affected Bondholders who surrender their Bonds a new Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered. The Paying Ager* shall designate any portion of payment of principal on Bonds paid by the Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Bonds registered to the then current Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the Insurer, registered in the name of Financial Security Assurance Inc., in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Paying AgenY s failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of principal or interest payable by the Issuer on any Bond or the subrogation rights of the Insurer. The Paying Agent shall keep a complete and accurate record of all funds deposited by the Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and principal paid in respect of any Bond. The Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Paying Agent. Upon payment of a claim under the Irnurance Policy the Paying Agent shall establish a separate special purpose trust account for the benefit of Bondholders referred to herein as the "Policy Payments Account" and over which the Paying Agent shall have exclusive con�ol and sole right of withdrawal. The Paying Agent shall receive any amount paid under the Insurance Policy in trust on behalf of Bondholders and sha11 deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of maldng the payments for which a claim was made. Such amounts shall be disbursed by the Paying Agent to Bondholders in the same manner as principal and interest payments are to be made with respect to the Bonds under the sections hereof regarding payment of Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check ar wire transfer used to pay debt service with other funds available to make such payments. Notwithstanding anything to the contraxy othervvise set forth in the Resolution and to the eutent pemutted by law, in the event amounts paid under the Insurance Policy are applied to claims for payment of principal of or interest on the Bonds, interest on such principal of and interest on such Bonds shall acciue and be payable from the date of such payment at the G-3 greater of (i) the per annum rate of interest, publicly atmounced from time to time by JP Morgan Chase Bank or its successor at its principal ofi'ice in the City of New York, as its prime or base lending rate plus 3%, and (ri) the then applicable rate of interest on the Bonds provided that in no event sha11 such rate exceed the maximum rate pemussible under applicable usury or similar la.ws limiting interest rates. Funds held in the Policy Payments Account shall not be invested by the Paying Agent and may not be applied to satisfy any costs, expenses or liabilities of the Paying Agent. Any funds remaining in the Policy Payments Account following a Bond payment date shall promptly be remitted to the Insurer. (n) 'The Insurer shall, to the extent it makes any payment of principal of (or, in the case of Capital Appreciation Bonds, accreted value) or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the tern�s of the Insurance Policy. The obligations to the Insurer shall survive discharge or tennination of the Related Documents. (o) The Issuer shall pay or reimburse the Insurer any and all charges, fees, costs and expenses which the Insurer may reasonably pay or incur in connection with (i) the admiiustration, enforcement, defense or preservation of any rights ar secuYity in any Related Document; (ii) the pursuit of any remedies under the Resolution or any other Related Document or otherwise afforded by law or equity, (ui) any amendment, waiver or other action with respect to, or related to, the Resolution or any other Related Document whether or not executed or completed, (iv).the violation by the Issuer of any law, rule or regulation, or any judgment, order or decree applicable to it or (v) any litigation or other dispute in connection with the Resolution or any other Related Document or the tiansactions contemplated thereby, other than amounts resulting from the failure of the Insurer to honor its obligations under the Insurance Policy. The Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Resolution or any other Related Document. (p) The application of funds realized upon default shall be applied to payment of expenses of the Issuer or rebate only after the payment of debt service due and past due on the Bonds, together with replenishment of the Debt Service Reserve Fund. (c� The Insurer shall be entitled to pay principal (or, in the case of Capital Appreciation Bonds, accreted value) or interest on the Bonds that shall become Due for Payment but sha11 be unpaid by reason of Nonpayment by the Issuer (as such terms are defined in the Insurance Policy) and any amounts due on the Bonds as a result of acceleration of the maturity thereof in accordance with the Resolution, whether or not the Insurer has received a Notice of Nonpayment (as such ternis are defined in the Insurance Policy) or a claim upon the Insurance Policy. (r) The notice address of the Insurer is: Financial Security Assurance Inc., 350 Park Avenue, New York, New York 10022-6022, Attention: Managing Director—Surveillance, Re: Policy No. , Telephone: (212) 826-0100; Telecopier: (212) 339-3556. In each case in which notice or other communication refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate "URGEN'I' MATERIpL ENCLOSED." (s) The Insurer shall be provided with the following inforn�ation: G-4 (i) Annual audited financial statements within 150 days after the end of the Issuer's fiscal year (together with a certification of the Issuer that it is not aware of any default or Event of Default under the Resolution), and the Issuer's annual budget within 30 days after the approval thereof together with such other information, data or reports as the Insurer shall reasonably request from time to time; (u) Notice of any draw upon the Debt Service Reserve Fund within two Business Days after lrnowledge thereof other than (i) withdrawals of amounts in excess of the Debt Service Reserve Requirement and (ri) withdrawals in connection with a refunding of Bonds; (iii) Notice of any default lrnown to the Issuer within five Business Days after lrnowledge thereof; (iv) Prior notice of the advance refunding or redemption of any of the Bonds, including the principal amount, maturities and CUSIl' numbers thereof; (v) Notice of the resignation or removal of the Paying Agent and Bond Registrar and the appointrnent of, and accepta.nce of duties by, any successor thereto; (vi) Notice of the commencement of any proceeding by or against the Issuer commenced under the United States Banlauptcy Code or any other applicable bankiuptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); (vii) Notice of the maldng of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential tcansfer of any payment of principal of, or interest on, the Bonds; (viii) A full original transciipt of all proccedings relating to the execution of any amendment or supplement to the Related Documents; and (ix) All reports, notices and correspondence to be delivered to Bondholders under the temis of the Related Documents. (t) Notwithsta.nding satisfaction of other conditions to the issuance of Additional Bonds contained in the Resolution, no such issuance may occur (1) should any Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) have occurred and be continuing unless such defautt shall be cured upon such issuance and (2) unless the Debt Service Reserve Fund is fully fimded at its requirement (including the new issue) upon the issuance of such Additional Bonds, in either case unless otherwise permitted by the Insurer. (u) No contract sha ll be entered into nor any action taken by which the rights of the Insurer or security for or sources of payment of the Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written comsent of the Insurer. (v) If the proceeds of the Bonds include a refunding there shall be delivered an opinion of Bond Counsel addressed to the Insurer (or a reliance letter relating thereto) or a certificate of discharge of the tiustee for the Refunded Bonds to the effect that, upon the making of the required deposit to the escrow, the legal defeasance of the Refunded Bonds shall have occurred. G-5 APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT CONTINUING DI5CLOSURE CERTIFICATE This Continuing Disclosure Certifica,te (the "Disclosure Certificate��) is eX�� and delivered by the CityofClearwater, Florida (the "Issuer��) in�o��on��e y�s�� ofits $[Bond Amount) Water and Sewer System Revenue Bonds, Series 2003 (the "Series 2003 Bonds"). The Series 2002 Bonds are being issued pursuant to Ordinance No. 3674-84 enacted bythe Issuer on August 2, 1984, as amerided and supplemented in Ordinance 5355-93, enacted on April 15, 1993, as amended and supplemented in Ordinance 6311-98, enacted November 5, 1998 and as further amended and supplemented in Ordinance 691 S-O 1, enacted November 15, 2001 (the "Ordinance") and as further supplemented by Resolution 03-35, adopted bythe Cityon September 18, 2003 (the "Series 2003 Resolution"). The Issuer covenants and agrees as follows: SECTION 1. PURPOSE OF DISCLOSURE CERTIFICA'TE, This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Series 2003 Bondholders and in order to assist the original underwriters of the Series 2003 Bonds in com 1 ui with Rule 15c2-12 b 5 promulgated by the Securities and Exchan e Commission "SEC" p y g �� of 1934 (the "Rule"). g � ) P��t to the Securities Exchange Act SECTION 2. PROVISION OF ANNUAL INFORMATION. Except as otherwise provided herein, the Issuer sha.11 provide to all ofthe natio repositories described m Section4 hereof (the 'NRMSIRs�� d t�any ��iond posit tha�t is established within �e State ofFlorida (the "SID"), on or before June 30 of each year, �om��g J�e 30, 2004, the infom�ation set forth below in this Section 2. Notwithstanding the immed�a�ly prec�g sentence, to the extent any such infom�ation does not become available to the Issuer before June 30 ofany Year, the Issuer shall provide such information when it becomes available, but no later than one year following the end of the Issuer's Fiscal Year. (A) the Issuer's Comprehensive AnnualFinancial Report for the immediatelypreceding Fiscal I'ear (the "CAFR"), which shall include the audited financial statements of the Issuer for the unmediately preceding Fiscal Year prepared maccordance withGenerallyAccepted Accountingprinciples, as modified by applicable State of Florida requirements and the governmental accounting Standa�.� promulgated by the Government �,ccounting Standa�.ds Board; provided, however, �the audited financial statements ofthe Issuer are not completed prior to April 30 of any year, tr�e Issuer sha11 provide unaudited financial statements on such date and shall provide the audited financial statements as soon as practicable following their completion; and (B) to the extent not set forth in the CAFR, addibo� �ci� �-o��on and operating data ofthe type included withrespect to the Issuer in the final of�cial statement prepared in connection withthe sale and issuance of the Series 2003 Bonds (as arnended, the "Official Statement"), as set forth below: ` � 1 � � � 1• Updates of the historical financial information set forth in the O�'icial Statement under the principal captions "THE WATER AND SEWER SYS'TEM" and "RATES, FEES AND CHARGES" far the then-immediately p��g five fiscai years, 2. Descriptionofanyadditionalindebtednesspayable mwhole ar inpart fi-omthe Net Revenues (as defined in the prdinance). j• Any other financial infom�ation or operating data of the type included inthe O�icial Statement which would be material to a holder or prospective holders ofthe Series 2003 Bonds. For purposes of this Disclosure Certificate, "Fiscal Year" means the period commencing on October 1 and ending on September 30 ofthe next succeeding year, or such otherperiod oftime provided by applicable law. SECTION 3. REpORTING SIGIVIFICANT EVENTS, The Issuer shall provide to the NRMSIRs or the Municipal Securities Rulemalang Boaz-d (the 'MSRg ) and to the SID, on a timely basis, notice of any of the following events, if'such event is material withrespect to the Series 2003 Bonds or the Issuer's ability to satisfy its payment obligations with respect to the Series 2003 Bonds: iA) Principal and interest payment delinquencies; (B) Non-payment related defaults; (C) Unscheduled draws on the debt service resen,e fund reflecting financial diffculties; (�) 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 ofthe Series 2003 Bonds; (G) Modifications to rights of Series 2003 Bondholders; (� Redemptions; (�) Defeasances; (� Release, substitution, or sale of property securing repayment of the Series 2003 Bonds; (K) Rating changes; and 2 � (L) Notice of any failure on the part of the Issuer or any other Obligated Person (as defined herein) to meet the requirements of Section 2 hereof. The Issuer ma.y from time to time, in its discretion, choose to provide notice of the occurrence of certain other events, in addition to those listed in �is Section 3, i� in the judgment ofthe Issuer, such other events are material with respect to the Series 2003 Bonds, but the Issuer does not specifically undertake to commit to provide any suchadditionalnotice ofthe occurrence ofany material event except those events listed above. Whenever the Issuer obtains lrnowledge of the occuirence of a significant event described in this Section 3, the Issuer sha11 as soon as possible determine if such event would be material under applicable federal securities law to holders of Series 2003 Bonds, ov'de , that any event under clauses D (F), (K) or (L) above will always be deemed to be material. ��' ��' SECTION 4. NRMSIRs. The NRMSIRs to v�,�ch the Issuer shall provide the information described in Sections 2 and 3 above, to the extent required, shall be the following organizations, their successors and assigns: �A) Bloomberg Municipal Repository 100 Business Park Drive Skillman, New Jersey 08558 Phone: (609) 279-3225 Fax: (609) 279-5962 Email: Munis@Bloomberg.com DPC Data Inc. One Executive Drive Fort Lee, NJ 07024 Phone: (201) 346-0701 Fax: (201) 947-0107 Email: nrn�sir@dpcdata.com F"I' Interactive Data Attn: NRMSIR 100 William Stieet New York, New York 10038 Phone: (212) 771-6999 Fax: (212) 771-7390 (Secondary Market Information) (212) 771-7391 (Prunary Market Information) Email: NRMSIR@FTID.com Standard & Poor's J. J. Kenny Repository 55 Water Street 45th Floor New York, NY 10041 Phone: (212) 438-4595 Fax: (212) 438-3975 Email: nrmsir repository�,sandP.com �� `�Y N�MSIRs that are established subsequently and approved by the SEC. (C) A list ofthe names and addresses ofall desi be obtained by calling the SEC's Fax on De�nand S e rv i c e�at 2 p 2/r942 8 0 8 g and request g do ument number 0206 or by visiting the SEC's website at "v�,R,�,�,.�.gov/info/municipaUnnnsir.��, SECTION 5. NO EVENT OF DEFAULT. Notwith,standing any o�eT pm�ion in the Ordinance to the conirary, failure ofthe Issuer to comply wit� �e pm�ions of this Disclosure Certificate sha11 not be considered an eyent of default under the Ordinance; provided, however, any Series 2003 Bondholder may take such actions as may be necess ary and appropriate, including pursuing an action for mandamus or specific performance, as applicable, by court order, to cause the Issuer to comply with its obligations hereunder. For purposes of this Disclosure Certificate, "Series 2003 Bondholder" sha11 mean any person who (A) has the power, directly or indi�y� to vote or consent with respect to, or to dispose ofownership of, any Series 2003 Bonds (includingperso� �I�g Series 2003 Bonds through nominees, depositories or other intermediaries), or (B) is treat� as�e o�er of any Series 2003 Bond for federal income tax pi.uposes. SECTION6. INCORPORATIONBYREFERENCE. Anyoralloftheinformationrequ�d herein to be disclosed maybe incorporatedbyreference fromotherdocuments, includingof�cialstatements or debt issues of the Issuer of related public entities, which have been submitted to each ofthe NRNISIRs and the SID, if any, or the SEC. Ifthe document inco must be available from the MSRB. The Issuer shall clear�lybd ntify each doc�umen�t ui'�c.os or�at dt, it reference. Ip bY SECTION 7. DISSEMINATION AGENTS. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in canying o� i� �li�� . ��sclosure 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 ternunate upon (A) the legal defeasance, prior redemption or payment in full of all of the Series 2003 Bonds, or (B) the termination of the continuing disclosure requirements of the Rule b 1 lative, judicial � ar administrative action. Y �s `:-� j:.� `�k ' �. : 4 � :'�;� �� SECTION 9. AMENDMENTS. Notwithstanding any other provision of this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision may be waived, if such amendment or waiver is supported by an opinion of counsel that is nationally recognized iri the area of federal securities laws, to the effect that such amendment or waiver would not, in and of itself, cause the undertalcings herein to violate the Rule if such amendment or waiver had been e�'ective on the date hereof but taking into ac��t any subsequent change in or official interpretation of the Rule. SECTION 10. ADDITIONAL INFORMATION. Nothing in this Disclosure Ceriificate shall be deemed to prevent the Issuer from diss��rninaring anY other infom�ation, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or includ�g any other inforn�ation in its annual information descri� ��on 2 hereof or notice of occiurence 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 infoimation in its annual information or notice of occurrence of a significant event in addition to that which is specifically r�q� by �s Disclosure Certifica.te, the Issuer sha11 have no obligation under this Disclosure Certificate to update such inforn�ation or include it in its future annual infom�ation or notice of occurrence of a significant event. SECTION 11. OBLIGATED PERSONS. If any person, other than tlie Issuer, becomes an Obligated Person (as defined in the Ru1e) rela.ting to the Series 2003 Bonds, the Issuer shall use its best efForts to require such Obligated Person to comply with all provisions of the Rule applicable to such Obligated Person. Dated as of [ ] 2003 � ATTEST: City Clerk CITY OF CLEARWA'TER, FI,O�A : Mayor � APPENDIX E FORM OF BOND COUNSEL OPIlVION � APPENDIX F FORM OF MUNICIpAi, gOND INSURANCE POLICY `:+ , ,; i `4. �t SECURI�I' � ASSURAN CE� ISSUER: BONDS: FINANCIAL SECURITY ASSI, hereby UNCONDITIONALLY AND IRRE agent (the "Paying Agent") (as set forfh the Bonds) for the Bonds, for the b fi each Owner, subject only to i te s portion of the principal of a mter t unpaid by reason of Nonp ent by t e On the lat of t e day on' h' Business Day n fo ow g the B n Nonpayment, nanci curi ill di amount of ncipal of int st on t of Nonpay nt by the I er, ut only to 1�'tif (al evirlcMrc e ......--'- - the this the to or 1 I that is :eipt by receive MtJNICIPAL INSURANC! Effectiv Date: re iu • i), r considera o re ed, t st he "Trus " or a ing i f th i uanc f an s ing i n f F cia ecurity, dir 1 to d ch e or ment h et , t at e u f r P yment b s all e s b m s u Pa nt r t e u s II hav recei N ice of h er of a B n th face ay t b then unp d eason �ty, a f reasonabl ticfarfnr.. r yme a (t�). evide c, i lu ' "'' "' """�P i r intere en Due for ghts w h r sp o p ent suc . nnc al o nnter ttt at st u fo � Y e shat thereupon� est in inancia S cu . A ice of No m t wi e d r ' ed a i Business Day if it is received r r t 1: 0 p (New Yor t e) n s ch in a; th se it will be deemed received on he n�ct Bu ne s If any N fi e o No ay t r c F ial Security is incomplete, it s be e me n t to e been ed y na i I S u, a d i ci I S c rit h II ro iY u ses of the preceding sentence Y p y s ad se e tee : yi ent or Owner, as appropriate, who y bmi an en d No ' e of N pa t. n rr►er�t in, respect of a Bond,, Financial S urity sh II become h ow er of the Bon , an�r rte pa nt of rincipal o int est on t Bond. an s I fully sub ogatedeto the righ sho.f he Ownerf includi th O�rvner's igh io ceive a ments un t ond, to the extent of any payment by Financial Securi e uncier. ay en by n I Securi to e Trustee or Paying Agent. for .the benefit of the Owners h I to t exte th for all , di n ge the bligation of Financial Securiry under this Policy. x ept o the ext nt.express mo '' by an endorsement hereto, the following terms shall have e mea n s s ecified f all purpo s of this Policy. "Business Day' means any day. other than (a) a rday Su ay or ( a day on hich banking institutions in the State of New York or the Insurer's sc Ag ar authariz d or re ed by law or executive order to remain closed: "Due for Payment'` �a (a hen referring Che ncipal of a Bond, payable on the steted maturity date thereof or the date � w ich h sa e shall v een duly called for mandatory sinking fund redemption and does not refer an e rli r d te on w payment is due by reason of call for redemption (other than by mandatory Eki g f n re mption), acceleration or other adv�cement of maturity unless Financial Security shall , in ts ol discretion, to pay such principal due upon such acceleration together with any accrued erest t e d te of acceleration and (b) when refemng to interest on a Bond, payable on the stated date pay en mtergst. "Nonpayment" means, in°�espect of a Bond, the failure of the Issuer to have >vid su icient funds to fhe Trustee or, if there is no Trustee, to the Paying Agent for payment in full of pri ipal and interest that is Due for Payment on such Bond: 'Nonpayment' shall also include, in �p t of a Bond, any payment of principal or interest that is Due for Payment made to an Owner by or on If of the Issuer which has been recovered from such Owner pursuant to the • United States Bankruptcy Code by a trustee in baniwptcy in accordance with fi of a court having competent jurisdiction. "Notice` means telephonic or t confirmed in a signed writing, or written nofice by registered or certified ail, o or the Paying Agent to Financial Security which notice shall speci (a the r o claim, (b) the Policy Number, (c) the claimed amount and (d) the s h cl i for Payment. "Owner" means, in respect of a Bond, the perso r e tiry ho, t is entitled under the terms of such Bond to payment ther f, exce t t at "O Issuer or any person or entiry whose direct or indirect o' io con it es th u ci Bonds. Financial Security may appoint a f' Polic b g 9e (th ' sure is al y y givin written notice to the Tru e a t P yi g y s �� 9� address of the Insurer's Fiscal Agent. Fro and aft r t d e f r e of u the Paying Agent, (a) copies of all n tice require to e li er t i nc I e' Policy shall be simultaneowsly del' d the Insu r' Fi a A n not be deemed received until eiv d both an o in n Security under this Policy be m e irect by 'n nci p ec nty e�t su behalf of Financial Secur' . The In ur r's Insurer's Fiscal Agetit sh I in no eve t e li le n Ow eh or n c f t e ns� any failure of Fina I S urity to de o t or a to b de o te u ci t f to under this Policy%� o the fulle t xte permitt d b applicat � wai s, only for h b efit of e h wner, all en s(inaludi , wit out ' it tio the de1 � nt or ot erwi e to h e th t such r iry o voi p ym n of i obli t ns nde is �li . is o cy e forth in II he nd a i ffe � by a y other r me t in � � E ep th e ent press m dif' d of f is icy i n nre ndable r a e� � for o Vment nf h R., ,�� .._:__ ___ _. ._ :Y IS N OV RED B THE� PF IN ARTI E 6 O TH YORK i wit wh eo IN �I SEC4 its ehaff by Authoriz O'cer_ ! Nage 2 Polic o. al, nonapp a le o dE d notice, u seque tli an Ow t e Tru n o ntity aking ount b ame D e e of No payme r all t i clu e t e i s c ity r th Y') fot pu es this the na nd tice ce by T ust e nd curi purs nt o his ci Securi an s all b made b Fi n��i '�°� 41 J n rees not t�rt, and i hts w e by nt r im, sebff r othervvise) f ra , w e a quired subrogation, � � se a av ' le to Financial olic i a a wi e press provisions of of � nc I Se u , and shall not be modified, e cl d ny modification or amendment n d rs hereto, (a) any premium paid in vha o , including payment, or provision being (b) hi olicy may not be canceled or revoked. �TY ASUALTY INSURANCE SECURITY FUND CE LAW. ASSURANCE INC. has caused this Policy to be FINANCIAL SECURITY ASSURANCE INC. By Authorized Officer A sub:s iary of Financial Security Assurance Holdings Ltd. 350 P rk Avenue, New York, N.Y. 10022-6022 i?� 2) 826-0100 500NY (5/9p) ,Yy*r ;3 i ° ��::, u,� �:: 'j, ■ S NANCIAL ASSURANCE� ISSUER: BONDS: Notwithstanding the terms d F insurance provided by this p icy is under part 11 of chapter 6, Florida Nothing herein II b construe� the�Policy. If f d c tr to th language. s whereof, I AN IAL S its beha►f b i A ho ' ENDORSEMENT MUNICIPAL B D INSURANCE OLI( (Florida I ance Guaran�� ocia�i nta e in hi P ic it by Flo d In ra e 'r,r ucoa nc le, th te f t i End 5SU N E N as By: A subs' iary of Financial Securify Assurance Holdings Ltd. 350 P k Avenue, New York, N.Y. 10022-6022 Form No, 553NY (FL 6/90j to be ITY ASSURANCE ING. Authorized Officer (212) 826-0100 ."� �"'� �=� a='t �. � .'� EXHIBIT D CONTINUING DISCLOSURE CERTIFICATE �� D-1 CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certifica,te (the "Disclosune Certificate�� the CityofClearwater, Florida (the ��Issuer�� ) ls executed and delivered by and Sewer System Revenue Bonds, Series 2003 (the tSeri 2 03 B rio ds� �f'�e SBond Amount] Water being issued pursuant to Ordinance No. 3674-84 enacted bythe Issuer on August 2� 1984oasBamended and supplemented in Ordinance 5355-93, enacted on April 15, 1993, as amended and supplemented in Ordina.nce 6311-98, enacted November 5, 1998 and as/further amended and supplemented in prclinance 6915-01, enacted November 15, 2001 (the Ordinance ) and as further supplemented by Resolution 03-35, adopted bythe Cityon September 18, 2003 (the "Series 2003 Resolution"). The Issuer covenants and agrees as follows: SECTION 1. PURPOSE OF DISCLOSURE CERTIFICATE, Th� �sclosure Certificate is being executed and delivered by the Issuer for the benefit of the Series 2003 Bondholders and in order to assist the original uriderwriters of the Series 2003 Bonds in com 1 ui with Rule 15c2-12 5 promulgated by the Securities and Exchange Commission "SEC" p y g ro�� of 1934 (the "Rule"). � ) P��nt to the Securities Exchange Act SECTION 2. PROVISION OF ANIVUAL INFORMATION. Except as otherwise provided herein, the Issuer shall provide to all ofthe natio repositories described m Section4 hereof (the 'NRMSIRs�� d o� �� o�s��d� °�hon is established within the State ofFlorida (the "SID"), on or before June 30 of each year, commen�ing �et. 30, 2004, the infom�ation set forth below in this Section 2. Notwithstanding the i��ately preceding sentence, to the extent any suchinfom�ationdoes not become ava,ilable to the Issuer before June 30 ofany Yeax', the Issuer shall provide such information when it becomes available, but no later than one yeaz following the end of the Issuer's Fiscal Year, (A) the Issuer's Comprehensive AnnualFinancial Report for the immediatelypreceding Fiscal Z'e�' ��e ��CAFR"), which shall include the audited finan�ia� ��ents of the Issuer far the unmediately preceding Fiscal Year prepared maccordance withGenerallyAccepted Accounhng pri�ciples, as modified by applicable State of Florida requ.irements and the governmental accounting standarc� promulgated by the Government Accoun�g 5�� Board; provided, however, ifthe audited financial statements ofthe Issuer are not completed prior to April 30 of any yeaz, �e Issuer sha11 provide unaudited financial statements on such date and shall pr��de the audited financial ��en� � S�n � p�ri�ble following their completion; and (B) to the extent not set forth in the CAFR, ��o� �cial information and operating data ofthe type included withrespect to the Issuer in the final official statement sale and issuance of the Series 2003 Bonds (as amended, the "Official Statement�"), asc Set o trth bel w�e ':?.� 1 :; ; , 1 -� � 1• Updates of the historical financial in�o�on set forth in the pfficiaj Statement under the principal captions "THE WATER AND SEWER SYSTEM" and "RATES, FEES AND CHARGES" for the then-immediately P�ding five fiscal years. 2• Descriptionofanyadditionali��btednesspayable mwhole or inpart fi-omthe Net Revenues (as defined in the Ordinan�e). s. Any other financialinfom�a�onor operating data ofthe type includedinthe Official Statement which would be material to a holder or prospective holders ofthe Series 2003 Bonds. For purposes of thi,s Disclosure Certificate, "Fiscal y�.�� me� �e period commencing on October 1 and ending on September 30 ofthe next succeeding yea�.� or such otherperiod oftime provided by applicable law. SECTION 3. REppRTING SIGNII+ICAIVZ' EVENTS. The Issuer shall provide to the NRMSIRs or the Municipal Securities Rule�n�ldng goa,�d ��e ��i,��„ notice of any of the following everits, if s�,�ch event is ) and to the SID, on a timeelj, basis, Issuer's ability to satis rts a �n� ��respect to the Series 2003 Bonds or the fY � p yment obligations with respect to the Series 2003 Bonds: (A) Principal and interest payment delinquencies; (B) Non-payment related defaults; (C) �) �) (F) (G) Unscheduled dravvs on the debt service reser�,e fund reflecting fu�ncial dif�iculhes; Unscheduled draws on credit enhancement reflecting financial difficulties; Substitution of credit or liquidity provideis, or their failure to perform; Adverse tax opinions or events a.f�'ecting t�e ��xempt statu� of�e Series 2003 Bonds• , M�ifications to rights of Series 2003 Bondholders; (H) Redemptions; (I) Defeasances; (� Release, substitution, or sale of property securing repayment of the Series 2003 Bonds; (K) Rating changes; and 2 : � (I-) Notice of any failure on the pa,rt 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 , i� inthe judgment ofthe Issuer, such other events are material with respect to the Series 2003 Bonds, but the Issuer does not specifically undertake to comtnit to provide any suchadditionalnotice ofthe occurrence ofany ma,terial 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 detemiine if such event would be material under applicable federal securities law to holders of Series 2003 Bonds, r v' ed, that any event under clauses D (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 m Sections 2 and 3 above, to the extent required, sha,ll be the following oIgani�ations, their successors and assigns: iA) Bloomberg Municipal Repository 100 Business Park Drive Skillman, New Jersey 08558 Phone: (609) 279-3225 Fax: (609) 279-5962 Email: Munis@Bloomberg.corn DPC Data Inc. One Executive Drive Fort Lee, NJ 07024 Phone: (201) 346-0701 Fax: (201) 947-0107 Email: nrmsir@dpcdata.com FT Interactive Data Attn: NRMSIR 100 William Street New York, New York 10038 Phone: (212) 771-6999 Fax: (212) 771-7390 (Secondary 1�Iarket Information) (212) 771-7391 (Primary IVlarket Infom�ation) Email: NRMSIR@FTID.com 3 � �� < ;; � Standard & Poor's J. J. Kenny Repository 55 Water Street 45th Floor New York,1VY 10041 Phone: (212) 438-4595 Fax: (212) 438-3975 Email: nimsir repository@sandp.com �� Y �MSIRs that are esta,blished subsequently and approved by the SEC. (C) A list ofthe names and addresses ofall designated NRMSIRs as ofany date maycurrently be obtained by c�lling the SEC's Fax on Demand Service at 202/942-8088 and requesting document number 0206 or by visiting the SEC's website at "wvvw,se�.go��in{'o�m�cipaUnnnsir,��, SECTION 5. NO EVENT OF DEFAITLT. Notwithstanding any oth�. P��ion in the Ordinance to the contrary, failure ofthe Issuer to comply with the provisions of this Disclosure Certificate sha11 not be considered an event of defauh under the Ordinance; provided, however, any Series 2003 Bondholdermaytake such actions as may be necess ary and appropriate, including pursuing ar� action for mandamus or specific performance, as applicable, by court order, to cause the Issuer to comply with lts obligations hereunder. For purposes of this Disclosure Certificate, "Series 2003 Bondholder" shall mean any person who (A) has the power, directly or iridirectly� to vote or consent with respect to, or to dispose ofownership of, any Series 2003 Bonds (includingpersons holding Series 2003 Bonds throughnominees, depositories or other intermediaries), or (B) is treated as the owner of any Series 2003 Bond for federal income tax purposes. SECTION 6. INCORPORATION BYREFERENCE. Any or all ofthe information required herein to be disclosed may be incorporated byreference fromother documents, including o�� statements or debt issues of the Issuer of related public entities, which have been submitted to each ofthe NRMSIRs and the SID, if any, or the SEC. Ifthe document inco must be available from the MSRB. The Issuer shall clear�lybdenh� each do �offiC �staor�ated bit reference. rp y SECTION 7. DISSEMINATION AGENTS. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obli may discharge any such agent, with or without �°� �der �is Disclosure Certificate, and aPPo��g a successor disseminating agent. SECTION 8. TERMINATION. The Issuei's obligations underthis Disclosune Certificate sha11 terminate upon (A) the legal defeasance, prior redemption or payment in full of all of the Series 2003 Bonds, or (B) the temiination of the continuing disclosure requirements of the Rule by legislative, judicial "`, or administrative action. 4 � SECTION 9. AMENDMENTS. Notwithstanding any other provision of this Disclosure Certificate, the Issuer may amerid this Disclosure Certificate, and any provision may be v�,ai�ed, if s�.�ch amendment or waiver is supported by an opinion of counsel that is nationally recognized i� �e area of federal securities laws, to the ef�'ect 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 ef%ctive on the date hereof but talcing into account any s�bsequent change in or of�'icial interpretahon of the Rule. SECTTON 10. ADDITIONAL INFORMATION. Nothing in this Disclosure Cerhificate sha11 be deemed to prevent the Issuer fromdisseminatin an g y other infom�ation, using the mean� of dissemination set forth in this Disclosure Certificate or any other means of comrnunication, or including any other information in its a.nnual informa,hon described in Section 2 hereof or notice of occLUrence of a sigiificant event described in Section 3 hereof, in addition to that which is the Issuer chooses to include any infom�ation in its annual informati�n or�not celo oc urrencetof a significant event in addition to that which is specifically r��.ed by this Disclosure Certificate, the Issuer shall have no obligation under this Disclosure Certificate to update such information or include rt in its futu� annual infom�ation or notice of occurrence of a significant event. SECTION 11. OBLIGATED PERSONS. If any person, other than the Issuer, becomes an Obligated Person (as defined in the Rule) relating to the Series 2003 Bonds, the Issuer shall use its best efforts to require such Obligated Person to comply with all provisions of the Rule applicable to such Obligated Person. Dated as of [ ] 2003 � ATTEST: CITY OF CLEARWATER, Fl,pitIDA City Clerk �'' Mayor 5 � st=; � APPENDIX E FORM OF BOND COUNSEL OPINION � � APPENDIX F FORM OF MITNICIpA�, gpND �JSjJ�JCE POLICY �. ,.�; '� � �.. �.�1 F.- �,. � FINANCIAL � � U RITY RANCE� ISSUER: BONDS: FINANCIAL SECURITY ASSURA E hereby UNCONDITIONALLY AND IRREV AB agent (the "Paying AgenY') (as set forth i e i the Bonds) for the Bonds, for the b fit f the each Owner, subject only to t te s f this portion of the principal of a inter t the unpaid by reason of Nonp ent by t e suef°1 On the 1at Business Day n fo Nonpayment, nanci� amount of rrcipal of of Nonpay nt by the to ' (a) evidence P yme a jb) evid ghts w h r sp o F inancia S cur . A received r r t 1: 0 � on he n xt Bu ne � s be e me n t tc ad i cilSc�ity y bmi an enc urity sh II become pa nt of rincipal includi th Owner's , Securi e uncfer. Owners I, to t ex� for all of t e day on' h' h ch �inc ow g the B n s y o�i wh cwri ill di bur e to or 1 int st on f B nd that is I s er, ut only on eceipt by e wner' r ht o receive � � � � �u � y propriate ent suc . rinc al o inte ice of No m t wi � (New Yo t e) n s h If any N ti e o No ay e been ed v .,� , of tfte BoncYany on t Bond ang Securi to e the lia� M�JNICIPAL INSURANC! "T� !IC o.. � Date: iu • re ed, or a ing I s ing dir 1 to of ��h �er of a B�n� th face ay t b then un� d �a��., °� � J �ry, a t reasonabl �isfactory y e o e i ip r intere en Due for t m nt a i n that of the Owner's t at s u fo y e s thereupon vest in d re i ed a, i Business Day if it is 1 a; th se it will be deemed received r c ve �al Security is incomplete, it � �; ty pu oses of the preceding sentence e.: y�. :: nt o.r Owiner, as appropriate, who me�C.in _ respect of a Bond, _ Fina�cial e oupon ta tf�e:Bpnd or right to receipt of fully subrogated to the rights: af the Owner, ond, to the extent of any payment by Financial Trustee or Parying Agent for .the benefit of the i of Financial Security under this Policy. x ept o the ext nt express mo�by an endorsement hereto, the following terms shall have nea n s s ecified f all purpo s of this Policy. "Business Day" means any day other than (a) a rday Su y or ( a day on hich banking institutions in the State of New York or the Insurer's Ag a autlioriz d or re ed by law or executive order to remain elosed: "Due for PeymenY` (a hen referring the ncipal of a Bond, payable on the stated maturity date thereof or the date ich h sa e shall v een duly called for mandatory sinking fund redemption and does not refer e rli r d te on w payment is due by reason of call for redempfion (other than by mandatory g f n re mption), acceleration or other adv�ncement of maturity unless Financial Security shall in ts ol discretion, to pay such principa! due upon such acceleration together with any accrued �st t e d te of acceleration and (b) when referring to interest on a Bond, payable on the stated date iy en mterest. "Nonpayment" means, in'respect of a Bond, the failure of the Issuer to have i su icient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of I ipal and interest that is Due for Payment on such Bond: 'Nonpayment" shall also include, in t of a Bond, any payment of principal or interest that is Due for Payment made to an Owner by or on f of the Issuer which has been recov�red from soch Owner pursuant to the � ��; :-., -:, United States Bankruptcy Code by a trustee in bankruptcy in accordance with fi of a court having competent jurisdiction. "Notice" means telephonic or t confirmed in a signed writing, or written notice by registered or certified ail, o or fhe Paying Ageht to Financial Securiry which notice shall speci (a the r o claim, (b) the Policy Number, (c) the claimed amaunt and (d) the s ch cl i for Payment. "Owner" means, in respect of a Bond, the perso r e tity who, t is entitled under the terms of such Bond to payment ther of, exce t t at " Issuer or any person or entity whose direet or indirect o' io con it es th u d Bonds. Financial Security may appoint a f' e Policy by giving written notice to the Tru e a gt �P i sure is al address of the Insurer's Fiscal Agent. Fro and aft r t d e 9 r e t of u� g n the Paying Agent, (a) copies of all n tic require to e li er t i nc I e� Policy shall be simultaneously del' d the Insu r Fi a A n not be deemed received until eiv d both an o in n Security ander this Polic � a� P m nt e ire y be m e irect by in nci l ec ity r t S behalf of Financial Secu '. The In ur rs s Insurer's Fiscal Agent sh I in no eve t e li le n Ow eh or ny c f t e ns� any failure of Fina I S urity to de c t or a to b de o te uf ci t f to under this Policy/� o the fulle t xte permitt d b applicat ► wai s, only for h be efit of e h wner, all en s(includi , wit owt ' it tio the def n ent or ot erwi e to h •ity to voi e t t such n p ym n of i obli t ns nde is oli . his o cy e forth in II he nd a � ffe e by a y other r m t in i � E ep th e ent press if' d of f is icy i n nre ndable r eas n for p vment �f x, o,. ,�„ __�__ _ .. � hi OLI Y IS N -- •-• "��' SPECI E IN ARTI E 6 O TH BE TYORK W�t wh reo INA �I SEC� executed its ehaff by Authoriz O'cer_ A subs iary of Financial Secu�ity A�urance Holdings Ltd. 350 P rk Avenue, New York, N.Y. 10022-6022 SOONY (5/90) Nage 2 Polic o. al, nonapp a. le o df d notice, u seque tl an O�ro t e Tru n o ntity aking d ount b ame D e e of No payme ° hail t i clu e t e S c ity r th t") fo� pu es this the na nd tice ce by T st e nd curi purs nt o his ci Securi an s all b made b Fi n'al u r's Fisca Ar, .,r ., � Q� � �i rees not t��, and � Sets f a by nt r im, setoff r otherwise) � W e a quired subrogation, ts n se a av ' le to Financial a�ic i ac da wi e press provisions of of i nc Se u, and shall not be modified, me , cl d ny modification or amendment n d rs hereto, (a) any premium paid in vha o , including payment, or provision being (b) hi olicy may not be canceled or revoked. TY ASUALTY INSURANCE SECURITY FUND CE LAW. ASSURANCE INC, has caused this Policy to be FINANCIAL SECURITY ASSURANCE INC. By Authorized Officer (212) 826-0100 ,�-�_. ; �;°` � A si 350 � � SE �CIAL ASSURANCE� ISSUER: BONDS: Notwithstanding the terms d insurance provided by this p icy isl under part 11 of chapter 6, Florida Nothing herein II b construe� the �Policy. if f d c tr to th language. s whereof, its behalf 1 � ENDORSEMENT MUNICIPAL B p INSURANCE OLIC (Florida�Il� ance Guaran i A� Ar�ia+i s conta e in hi P ic , it �r by Flo d In ra e e• �, r uc o a n c �uage, th te f t i End Y ASSU N E N as a ary"of Financial Securify qssurance Holdings Ltd. Avenue, New York, N.Y. 10022.6022 Form No, 553NY (FL 6/90j to be RITY ASSURANCE ING. Authorized Officer � (212) 826-0100 �, _3. � i u �,;.! � „�_ Y � t� I� EXHIBIT E COMMITMENT FOR MUNICIpAI, BpND I�S�p�NCE POLICY ..:� � ;� K 'e � z � E-1 � MUNICIPAL BOND INSURANCE COMMITMENT FINANCIAL SECURITY ASSURANCE INC. ("Financial Security" or "FSA") hereby commits to issue its Municipal Bond Insurance Policy (the "Policy") relating to whole maturities of the debt obligations described in Exhibit A attached hereto (the "Bonds"), subject to the terms and conditions set forth in this Commitment, of which Commitment Exhibit A is an integrated part, or added hereto (the "CommitmenY'). To keep this Commitment in effect after the Expiration Date set forth in Exhibit A attached hereto, a request for renewal must be submitted to Financial Security prior to such Expiration Date. Financial Security reserves the right to refuse wholly or in part to grant a renewal. THE MUNICIPAL BOND INSURANCE POLICY SHALL BE ISSUED IF THE FOLLOWING CONDITIONS ARE SATISFIED: 1. The documents to be executed and delivered in connection with the issuance and sale of the Bonds shall not contain any untrue or misleading statement of a material fact and shall not fail to state a material fact necessary in order to make the information contained therein not misleading. 2. No event shall occur which would permit any underwriter or purchaser of the Bonds, otherwise required, not to be required to underwrite or purchase the Bonds on the date scheduled for the issuance and delivery thereof ("Closing Date"). 3. There shall be no material change in or affecting the Bonds (including, without limitation, the security for the Bonds) or the financing documents or the Official Statement (or any similar disclosure documents) to be executed and delivered in connection with the issuance and sale of the Bonds from the descriptions or forms thereof approved by Financial Security. 4. The Bonds shall contain no reference to Financial Security, the Policy orthe insurance evidenced therebyexceptas may be approved by Financial Security. BOND PROOFS SHALL HAVE BEEN APPROVED BY FINANCIAL SECURITY PRIOR TO PRINTING. The Bonds shall bear a Statement of Insurance in the form provided by Financial Security. Financial Security shall be provided with: (a) Executed copies of all financing documents, any disclosure document (the "Official StatemenY') and the various legal opinions delivered in connection with the issuance and sale of the Bonds (which shall be dated the Closing Date and which, except for the opinions of counsel relating to the adequacy of disclosure, shall be addressed to Financial Security or accompanied by a letter of such counsel permitting Financial Security to rely on such opinion as if such opinion were addressed to Financial Security), including, without limitation, the approving opinion of bond counsel. Each of the foregoing shall be in form and substance acceptable to Financial Security. Copies of all drafts of such documents prepared subsequent to the date of the Commitment (blacklined to reflect all revisions from �reviouslv reviewed drafts) shall be furnished to Financial Security for review and approval. Final drafts of such documents shall be provided to Financial Security at least three (3) business days prior to the issuance of the Policy, unless Financial Security shall agree to some shorter period. (b) Evidence of wire transfer in federal funds of an amount equal to the insurance premium, unless alternative arrangements for the payment of such amount accepta ble to Financial Security have been made prior to the delivery date of the Bonds. (c) Standard & Poor's Credit Market Services, Moody's Investors Service Inc. and Fitch IBCA, Inc. will separately present bills for their respective fees relating to the Bonds. Payment of such bills should be made directly to such rating agency. Payment of the rating fee is not a condition to release of the Policy by Financial Security. 6. Promptly after the closing of the Bonds, Financial Security shall receive three com pleted sets of executed documents (one original and either (i) two photocopies (each unbound) or (ii) three compact discs). 7. The Official Statement shall contain the language provided by Financial Security and only such other references to Financial Security or otherwise as Financial Security shall supply or approve. FINANCIAL SECURITY SHALL BE PROVIDED WITH SIX PRINTED COPIES OF THE OFFICIAL STATEMENT. EXHIBIT A MUNICIPAL BOND INSURANCE COMMITMENT TERM SHEET Issuer: City of Clearwater, Florida Name of Bonds Insured: Water and Sewer Revenue Refunding Bonds, Series 2003 Principal Amount of Bonds Insured: Not to Exceed $8,530,000 Date of Commitment: August 27, 2003 Expiration Date: Friday, October 31, 2003" Premium: .204% of total debt service on the Bonds Insured Additional Conditions: The amortization schedule for, and final maturity date of, the Bonds shall be acceptable to Financial Securiry. 2. Receipt and satisfactory review of original bond ordinances and all amendments. 3. See attached Exhibits B-C. Terms used in this Commitment and not otherwise defined shall have the meanings ascribed to them in the document authorizing the issuance of and setting forth the terms for the Bonds described above (the "Resolution"). FINANCIAL SECURITY ASSURANCE INC. � f� . � �� ,/ ;J Authorized Officer "To keep the Commitment in effect to the Expiration Date set forth above, Financial Security must receive a duplicate of this Exhibit A executed by an authorized officer by the ea�lier of the date on which the Official Statement containing disclosure language about Financial Security is circulated and ten days from the date of this Commitment. The undersigned agrees that if the Bonds are insured by a policy of municipal bond insurance, such insurance shall be provided by Financial Security in accordance with the terms of the Commitment. CITY OF CLEARWATER, FLORIDA Authorized Officer L:\LEGAL\MUNIS�STATES\FL\35062 C.doc EXHIBIT B Page 1 of 1 OPINION REQUIREMENTS 1. Each of the Resolution, the Bonds and the other transaction documents (the "Related Documents") is a legal, valid and binding obligation of the parties thereto, has been duly authorized, executed and delivered and is enforceable in accordance with its terms. 2. There does not exist any action, suit, proceeding or investigation pending, or to the best of such counsel's knowledge, threatened which if adversely determined, could (i) materially adversely affect (a) the financial condition of the Issuer, (b) the ability of the Issuer to perform its obligations under the Related Documents, (c) the security for the Bonds, or (d) the transactions contemplated by the Related Documents or (ii) impair the ability of the Issuer to maintain and operate the System. 3. Nothing has come to the attention of disclosure counsel which would cause them to believe that the final Official Statement (excluding information provided by Financial Security), as of its date and the date of issuance of the Policy, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 4. The Bonds are secured by a valid lien and security interest in the Net Revenues of the Issuer on a parity with all additional parity bonds issued pursuant to the Resolution. L:\LEGAL\MUNIS\STATES\FL\35062 C.doc EXHIBIT C Page 1 of 5 RESOLUTION REQUIREMENTS The Resolution shall incorporate the foliowing requirements either in one section or article entitled "Provisions Relating to Bond Insurance" (or the like), the provisions of which section or article shall be stated in the Resolution to aovern. notwithstandina anvthins� to the contrarv set forth in the Resolutlon, or individually in the appropriate sections: (a) "Insurance Policy" shall be defined as follows: "the insurance policy issued by the Insurer guaranteeing the scheduled payment of principal of and interest on the Bonds when due". "Insurer" shall be defined as follows: "Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or assignee thereof'. (b) For transactions with a debt service reserve fund, the prior written consent of the Insurer shall be a condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the Debt Service Reserve Fund. Notwithstanding anything to the contrary set forth in the Resolution, amounts on deposit in the Debt Service Reserve Fund shall be applied solely to the payment of debt service on the Bonds. (c) The Insurer shall be deemed to be the sole holder of the Insured Bonds for the purpose of exercising anyvahing right or privilege or giving any consent or direction or taking any other action that the holders of the Bonds insured by it are entitled to take pursuant to the section or the article of the Resolution pertaining to defaults and remedies. Remedies of the Bondholders to include mandamus. (d) If acceleration is permitted under the Resolution, the maturity of Bonds insured by the Insurer shall not be accelerated without the consent of the Insurer and in the event the maturity of the Bonds is accelerated, the Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued [or accreted, as applicable), on such principal to the date of acceleration (to the extent unpaid by the Issuer). Upon payment of such accelerated principal and interest accrued [or accreted, as applicable] to the acceleration date as provided above, the Insurer's obligations under the Insurance Policy with respect to such Bonds shall be fully discharged. (e) No grace period for a covenant default shall exceed 30 days, nor be extended for more than 60 days, without the prior written consent of the Insurer. No grace period shall be permitted for payment defaults. (� The Insurer shall be included as a third party beneficiary to the Resolution. (g) Upon the occurrence of an extraordinary optional or special or extraordinary mandatory redemption in part, the selection of Bonds to be redeemed shall be subject to the approval of the Insurer. The exercise of any provision of the Resolution which permits the purchase of Bonds in lieu of redemption shall require approval of the Insurer wherein any Bond so purchased is not extinguished. (h) No modification or amendment to the Resolution or any other transaction document including any undertying security agreement (each a"Related DocumenY') may become effective except upon obtaining the prior written consent of the Insurer. Copies of any modification or amendment to the Resolution or any other Related Document shall be sent to Standard & Poor's Credit Market Services and Moody's Investors Service, Inc. at least 10 days prior to the effective date thereof. (i) The rights granted to the Insurer under the Resolution or any other Related Document to request, consent to or direct any action are rights granted to the Insurer in consideration of its issuance of the Insurance Policy. Any exercise by the Insurer of such rights is merely an exercise of the Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does such action evidence any position of the Insurer, positive or negative, as to whether Bondholder consent is required in addition to consent of the Insurer. (j) Only (1) cash, (2) non-callable direct obligations of the United States of America ('Treasuries"), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in i nterest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) pre-refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively or (5) securities eligible for "AAA" defeasance under then existing criteria of S& P or any combination thereof, shall be authorized to be used to effect defeasance of the Bonds unless the Insurer otherwise approves. To accomplish defeasance the Issuer shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to the Insurer ("AccountanY') verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or L:\LEGALIMUNIS\STATES\FL\35062 C.doc EXHIBIT C Page 2 of 5 redemption date ("Verification"), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the Insurer), and (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding" under the Resolution; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the Issuer and the Insurer. The Insurer shall be provided with final drafts of the above-referenced documentation not less than five business days prior to the funding of the escrow. . Bonds shall be deemed "Outstanding" under the Resolution unless and until they are in fact paid and retired or the above criteria are met. (k) Amounts paid by the Insurer under the Insurance Policy shall not be deemed paid for purposes of the Resolution and shall remain Outstanding and continue to be due and owing until paid by the Issuer in accordance with the Resolution. The Resolution shall not be discharged unless all amounts due orto become due to the Insurer have been paid in full or duly provided for. (I) The Issuer to covenant and agree to take such action (including, as applicable, filing of UCC financing statements and continuations thereof) as is necessary from time to time othervvise preserve the priority of the pledge of Trust Estate under applicable law. (m) Claims Upon the Insurance Policy and Payments by and to the Insurer. If, on the third Business Day prior to the related scheduled interest payment date or principal payment date ("Payment Date") there is not on deposit with the Paying Agent, after making all transfers and deposits required under the Resolution, moneys sufficient to pay the principal of and interest on the Bonds due on such Payment Date, the Paying Agent shall give notice to the Bond Insurer and to its designated agent (if any) (the "Insurer's Fiscal AgenY') by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the Bonds due on such Payment Date, the Paying Agent shall make a claim under the Insurance Policy and give notice to the Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Bonds and the amount required to pay principal of the Bonds, confirmed in writing to the Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Insurance Policy. In the event the claim to be made is for a mandatory sinking fund redemption installment, upon receipt of the moneys due, the Paying Agent shall authenticate and deliver to affected Bondholders who surrender their Bonds a new Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered. The Paying Agent shall designate any portion of payment of principal on Bonds paid by the Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Bonds registered to the then current Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the Insurer, registered in the name of Financial SecurityAssurance Inc., in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Paying AgenYs failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of principal or interest payable by the Issuer on any Bond or the subrogation rights of the Insurer. The Paying Agent shall keep a complete and accurate record of all funds deposited by the Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and principal paid in respect of any Bond. The Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Paying Agent. Upon payment of a claim under the hsurance Policy the Paying Agent shall establish a separate special purpose trust account for the benefit of Bondholders referred to herein as the "Policy Payments AccounY' and over which the /Paying Agent shall have exclusive control and sole right of withdrawal. The Paying Agent shall receive any amount paid under the Insurance Policy in trust on behalf of Bondholders and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Paying Agent to Bondholders in the same manner as principal and interest payments are to be made with respect to the Bonds under the sections hereof regarding payment of Bonds. It shall not be n ecessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Notwithstanding anything to the contrary otherwise set forth in the Resolution, andtothe extent permitted by law, in the event amounts paid under the Insurance Policy are applied to claims for payment of principal of or interest on the Bonds, interest on such principal of and interest on such Bonds shall accrue and L:1 LEGAL\M U N IS\STATES\F L\35062_C.doc EXHIBIT C Page 3 of 5 be payable from the date of such payment at the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank or its successor at its principal office in the City of New York, as ifs prime or base lending rate plus 3%, and (ii) the then applicable rate of interest on the Bonds provided that in no event shall such rate exceed the maximum rate permissible under applicable usury or similar laws limiting interest rates. Funds held in the Policy Payments Account shall not be invested by the Paying Agent and may not be applied to satisfy any costs, expenses or liabilities of the Paying Agent. Any funds remaining in the Policy Payments Account following a Bond payment date shall promptly be remitted to the Insurer. (n) The Insurer shall, to the extent it makes any payment of principal of (or, in the case of Capital Appreciation Bonds, accreted value) or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Insurance Policy. The obligations to the Insurer shall survive discharge or termination of the Related Documents. (o) The Issuer shall pay or reimburse the Insurer any and all charges, fees, costs and expenses which the Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Related Document; (ii) the pursuit of any remedies under the Resolution or any other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Resolution or any other Related Document whether or not executed or completed, (iv) the violation by the Issuer of any law, rule or regulation, or any judgment, order or decree applicable to it or (v) any litigation or other dispute in connection with the Resolution or any other Related Document or the transactions contemplated thereby, other than amounts resulting from the failure of the Insurer to honor its obligations under the Insurance Policy. The Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Resolution or any other Related Document. (p) The application of funds realized upon default shall be applied to payment of expenses of the Issuer or rebate only after the payment of debt service due and past due on the Bonds, together with replenishment of the Debt Service Reserve Fund. (q) The Insurer shall be entitled to pay principal (or, in the case of Capital Appreciation Bonds, accreted value) or interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer (as such terms are defined in the Insurance Policy) and any amounts due on the Bonds as a result of acceleration of the maturity thereof in accordance with the Resolution, whether or not the Insurer has received a Notice of Nonpayment (as such terms are defined in the Insurance Policy) or a claim upon the Insurance Policy. (r) The notice address of the Insurer is: Fi nancial Security Assurance Inc., 350 Park Avenue, New York, New York 10022-6022, Attention: Managing Director— Surveillance, Re: Policy No. , Telephone: (212) 826-0100; Telecopier: (212) 339-3556. In each case in which notice or other communication refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." (s) The Insurer shall be provided with the following information: (i) Annual audited financial statements within 150 days after the end of the Issuer's fiscal year (together with a certification of the Issuer that it is not aware of any default or Event of Default under the Resolution), and the Issuers annual budget within 30 days after the approval thereof together with such other information, data or reports as the Insurer shall reasonably request from time to time; (ii) Notice of any draw upon the Debt Service Reserve Fund within two Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Debt Service Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds; (iii) Notice of any default known to the Issuer within five Business Days after knowledge thereof; (iv) Prior notice of the advance refunding or redemption of any of the Bonds, including the principal amount, maturities and CUSIP numbers thereof; (v) Notice of the resignation or removal of the Paying Agent and Bond Registrar and the appointment of, and acceptance of duties by, any successor thereto; L:ILEGAL\MUNIS\STATES\FL135062 C.doc EXHIBIT C Page 4 of 5 (vi) Notice of the commencement of any proceeding by or against the Issuer commenced under the United States Bankruptcy Code or any other applicabie bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); (vii) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Bonds; (viii) A full original transcript of all proceedings relating to the execution of any amendment or supplement to the Related Documents; and (ix) All reports, notices and correspondence to be delivered to Bondholders under the terms of the Related Documents. (t) Notwithstanding satisfaction of other conditions to the issuance of Additional Bonds contained in the Resolufion, no such issuance may occur (1) should any Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) have occurred and be continuing unless such default shall be cured upon such issuance and (2) unless the Debt Service Reserve Fund is fully funded at its requirement (including the new issue) upon the issuance of such Additional Bonds, in either case unless otherwise permitted by the Insurer. (u) No contract shall be entered into nor any action taken by which the rights of the Insurer or security for or sources of payment of the Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the Insurer. (v) If the proceeds of the Bonds include a refunding there shall be delivered an opinion of Bond Counsel addressed to the Insurer (or a reliance letter relating thereto) or a certificate of discharge of the trustee for the Refunded Bonds to the effect that, upon the making of the required deposit to the escrow, the legal defeasance of the Refunded Bonds shall have occurred. L: \LEGALIM UN I S�STATES\F L\35062_C.doc PROCEDURES FOR PREMIUM PAYMENT TO FINANCIAL SECURITY ASSURANCE INC. Financial Security's issuance of its municipal bond insurance policy at bond closing is contingent upon payment and receipt of the premium. NO POLICY MAY BE RELEASED UNTIL PAYMENT OF SUCH AMOUNT HAS BEEN CONFIRMED. Set forth below are the procedures to be followed for confirming the amount of the premium to be paid and for paying such amount: Confirmation of Upon determination of the final debt service Amount to be Paid: schedule, fax such schedule to Financial Security Attention: Pam Peters, Director Phone No. (212) 339-3553 Fax No. (212) 339-3450 Confirm with the individual in our underwriting department that you are in agreement with respect to par and premium on the transaction prior to the closing date. Payment Date: Method of Payment: Date of Delivery of the insured bonds. Wire transfer of Federal Funds. Wire Transfer Instructions: Bank: The Bank of New York ABA#: 021 000 018 Acct. Name: Financial Security Assurance Inc. Account No.: 8900297263 Policy No.: [To Be Assigned] CONFIRMATION OF PREMIUM WIRE NUMBER AT CLOSING Financial Security will accept as confirmation of the premium payment a wire transfer number and the name of the sending bank, to be communicated on the closing date to Vanessa Edwards-EI, Paralegal Documentation and Closing Coordinator, (212) 339-0864. EXHIBIT F ESCROW DEPOSIT AGREEMENT F-1 ESCROW DEPOSIT AGREEMENT This ESCROW DEPOSIT AGREEMENT, dated as of October 1, 2003, by and between the CITY OF CLEARWATER, FLORIDA, a municipal corporation of the State of Florida (the "Issuer"), and [BANK], a[national banking association] organized under the laws of the United States of America, as Escrow Holder (the "Escrow Holder"); WITNESSETH: WHEREAS, the Issuer has previously authorized and issued obligations of the Issuer as hereinafter set forth defined as the "Refunded Bonds", as to which the Aggregate Debt Service (as hereinafter defined) is set forth on Schedule A; and WHEREAS, the Issuer has deternuned to provide for payment of the Aggregate Debt Service of the Refunded Bonds by depositing with the Escrow Holder pursuant to the provisions hereof, cash and Federal Securities (as defined herein), the principal of and interest on which will be at least equal to the Aggregate Debt Service; and WHEREAS, in order to obtain the funds needed for such purpose, the Issuer has authorized and is, concurrently with the delivery of this Agreement, issuing the Series 2003 Bonds more fully described herein; and WHEREAS, the Issuer has determined that the amount to be on deposit from time to time in the Escrow Account, as defined herein, will be sufficient to pay the Aggregate Debt Service; NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Issuer and the Escrow Holder agree as follows (provided however that the Escrow Holder in agreeing to the foregoing shall not be held or deemed responsible in any manner whatsoever for the recitals made herein or in the Ordinance, or the adequacy or sufficiency of the Escrow Requirement): Section 1. Definitions. As used herein, the following terms mean: (a) "Aggregate Debt Service" means, as of any date, the sum of all present and future Annual Debt Service payments then remaining unpaid with respect to the respective Series of the Refunded Bonds. (b) "Agreement" means this Escrow Deposit Agreement. (c) "Annual Debt Service" means, with respect to the redemption date for the Refunded Bonds, the principal of, premium, and interest on the respective Series of the Refunded Bonds coming due on the redemption date as shown on Schedule A attached hereto. (d) "Bonds" or "Series 2003 Bonds" means the Gas System Revenue Refunding Bonds, Series 2003 of the Issuer, authorized by the Ordinance, as herein defined. (e) "Call Date" shall have the meaning set forth in the Issuer's Irrevocable Instruction and Authorization to Redeem Bonds. (� "Escrow Account" means the account established and held by the Escrow Holder pursuant to this Agreement, in which cash and investments will be held for payment nf the Refunded Bonds. (g) "Escrow Holder" means [BANK], [CITY], [STATE], a national banking association organized under the laws of the United States of America. (h) "Escrow Requirement" means, as of any date of calculation, the sum of an amount in cash and principal amount of Federal Securities in the Escrow Account which, together with the interest due on the Federal Securities, will be sufficient to pay, as the installments thereof become due, the Aggregate Debt Service. (i) "Federal Securities" means direct obligations of the United States of America and obligations the principal of or interest on which are fully guaranteed by the United States of America, none of which permit redemption prior to maturity at the option of the obligor. (j) "Irrevocable Instruction and Authorization to Redeem Bonds" means a certificate executed by the Issuer which provides for redemption of certain of the Refunded Bonds on the Call Date, irrevocably instructs the Escrow Holder to give notice of such redemption and directs the paying agent for the Refunded Bonds to pay the Refunded Bonds and the interest thereon upon surrender thereof at maturity or on their Call Date, whichever is earlier. (k) "Issuer" means the City of Clearwater, Florida. (1) "Ordinance" means Ordinance No. 5118-91 enacted by the Issuer on August 15, 1991, as amended and supplemented in Ordinance 7191-03, enacted on , 2003, as amended and supplemented. (m) "Paying Agent" shall mean the Paying Agent for the Refunded Bonds. (n) "Refunded Bonds" shall mean the Series 1996A Bonds maturing on and after September 1, 2004. (o) "Series 1996A Bonds" shall mean the Issuer's Gas System Revenue Bonds, Series 1996A, dated July 1, 1996. Section 2. Deposit of Funds. The Issuer hereby deposits $ with the Escrow Holder in immediately available funds, to be held in irrevocable escrow by the Escrow Holder and applied solely as provided in this Agreement. The Issuer represents that: 2 (a) Such funds are all derived as follows: (1) $ from the net proceeds of the Bonds; and (2) $ transferred from the Sinking Fund held for the payment of the Refunded Bonds. (b) Such funds, when applied pursuant to Section 3 below, will at least equal the Escrow Requirement as of the date hereof. Section 3. Use and Investment of Funds. The Escrow Holder acknowledges receipt of $ and agrees: (a) to hold the funds in irrevocable escrow during the term of this Agreement, (b) to deposit the sum of $ , representing the $ of funds from the Sinking Fund for the Refunded Bonds and $ from the proceeds of the Bonds, in cash from the amount received by the Issuer in the Escrow Account, and, hold such funds in cash until the December 1, 2003 redemption date of the outstanding Series 1993 Bonds, (c) to immediately invest $ of such funds derived from the proceeds of the Bonds by the purchase of the Federal Securities set forth on Schedule B-1 attached hereto, and to immediately invest $ of such funds by the purchase of the Federal Securities set forth on Schedule B-2, and (d) to deposit in the Escrow Account, as received, the receipts of maturing principal of and interest on the Federal Securities in the Escrow Account. Section 4. Payment of Refunded Bonds. (a) Refunded Bonds. On the redemption date for each respective series of Refunded Bonds, the Escrow Holder shall pay to the Paying Agent for the Refunded Bonds, from the cash on hand in the Escrow Account, a sum sufficient to pay the Annual Debt Service for the respective series of Refunded Bonds coming due on such date, as shown on Schedule A and as demonstrated on Exhibit C hereto. (b) Surplus. On the last redemption date for the Refunded Bonds, after making the payments from the Escrow Account described in Subsection 4(a), the Escrow Holder shall pay to the Issuer any remaining cash in the Escrow Account in excess of the Escrow Requirement, to be used for any lawful purpose of the Issuer. (c) Priority of Payments. The holders of the Refunded Bonds shall have an express first lien on the funds and Federal Securities in the Escrow Account until such funds and Federal 3 Securities are used and applied as provided in this Agreement. If the cash on hand in the Escrow Account is ever insufficient to make the payments required under Subsection 4(a), all of the payments required under Subsection 4(a) shall be made when due before any payments shall be made under Subsections 4(b). ' (d) Fees and Expenses of Escrow Holder. On the date hereof, the Escrow Holder acknowledges receipt of its fees to serve as Escrow Holder in the amount of $500, and agrees to invoice the Issuer for reimbursement of any out of pocket expenses incuned by the Escrow Holder in perfornung its services hereunder, and further acknowledges that the Escrow Holder does not have a lien on or claim against any funds held hereunder for reimbursement of such expenses. Section 5. Reinvestment. (a) Except as provided in Section 3 hereof, and in this Section, the Escrow Holder shall have no power or duty to invest any funds held under this Agreement or to sell, transfer or otherwise dispose of or make substitutions of the Federal Securities held hereunder. (b) At the written request of the Issuer and upon compliance with the conditions hereinafter stated, the Escrow Holder shall sell, transfer, otherwise dispose of or request the redemption of any of the Federal Securities acquired hereunder and shall either apply the proceeds thereof to the full discharge and satisfaction of the Refunded Bonds or substitute other Federal Securities for such Federal Securities. The Issuer will not request the Escrow Holder to exercise any of the powers described in the preceding sentence in any manner which would cause any Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code of 1986, as amended, and the Regulations thereunder. The transactions may be effected only if (i) an independent certified public accountant shall certify to the Escrow Holder that the cash and principal amount of Federal Securities remaining on hand after the transactions are completed, together with the interest due thereon, will be not less than the Escrow Requirement, and (ii) the Escrow Holder shall receive an unqualified opinion from a nationally recognized bond counsel or tax counsel to the effect that the transactions will not cause such Bonds to be "arbitrage bonds" within the meaning of the Internal Revenue Code of 1986, as amended, and the regulations thereunder in effect on the date of the transactions and applicable to transactions undertaken on such date. Section 6. No Redemption or Acceleration of Maturitv. Except as provided in the Irrevocable Instruction and Authorization to Redeem Bonds, the Issuer will not accelerate the maturity or due date of the Refunded Bonds. Section 7. Responsibilities of Escrow Holder. The Escrow Holder and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, contract, or otherwise, in connection with the execution and delivery of this Agreement, the establishment of the Escrow Account, the acceptance of the funds deposited therein, the purchase of the Federal Securities, the retention of the Federal Securities or the proceeds thereof or any payment, transfer or other application of money or securities by the Escrow Holder in any non- 4 negligent act, non-negligent omission or non-negligent error of the Escrow Holder made in good faith in the conduct of its duties. Tne Escrow Holder shall, however, be liable to the Issuer fo� its negligent or willful acts, omissions or errors which violate or fail to comply with the terms of this Agreement. The duties and obligations of the Escrow Holder shall be determined by the express provisions of this Agreement. The Escrow Holder may consult with counsel, who r�ay or may not be counsel to the Issuer, and in reliance upon the opinion of such counsel shall have full and complete authorization and protection in respect of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Holder shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering or omitting any action under this Agreement, such matter may be deemed to be conclusively established by a certificate signed by an authorized officer of the Issuer. The Escrow Holder has no duty to determine or inquire into the happening or occurrence of any event or contingency where the performance or the failure of performance of the Issuer with respect to arrangements or contracts with others, the Escrow Holder's sole duty and responsibility hereunder being to safeguard the Escrow Account and dispose of and deliver the same strictly in accordance with this Agreement. Section 8. Resignation of Escrow Holder. The Escrow Holder may resign and thereby become discharged from the duties and obligations hereby created, by notice in writing given to the Issuer and published once in a newspaper of general circulation published in the territQrial limits of the Issuer, and in a daily newspaper of general circulation or a financial journal published or circulated in the Borough of Manhattan, City and State of New York, not less than sixty (60) days before such resignation shall take effect. Such resignation shall take effect immediately upon the appointment of a successor Escrow Holder hereunder and payments of all amounts due the resigning Escrow Holder. Section 9. Removal of Escrow Holder. (a) The Escrow Holder may be removed at any time by an instrument or concurrent instruments in writing, executed by the holders of not less than fifty-one per centum (51%) in aggregate principal amount of each series of Refunded Bonds then outstanding, such instruments to be filed with the Issuer, and notice in writing given by such holders to all of the registered holders of each series of the Refunded Bonds and published once in a newspaper of general circulation published in the territorial limits of the Issuer, and in a daily newspaper of general circulation or a financial journal published or circulated in the Borough of Manhattan, City and State of New York, not less than sixty (60) days before such removal is to take effect as stated in such instrument or instruments. A photographic copy of any instrument filed with the Issuer under the provisions of this paragraph shall be delivered by the Issuer to the Escrow Holder. (b) The Escrow Holder may also be removed at any time for any breach of trust or for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provisions of this Agreement with respect to the duties and obligations of the Escrow Holder, by the Issuer or by the holders of not less than twenty-five per centum (25%) in aggregate principal amount of each series of the Refunded Bonds then outstanding. G (c) No such removal shall take effect until a successor Escrow Holder shall be appointed hereunder. Section 10. Successor Escrow Holder. (a) If at any time hereafter the Escrow Holder shall resign, be removed, be dissolved or otherwise become incapable of acting, or shall be taken over by any governmental official, agency, department or board, the position of Escrow Holder shall thereupon become vacant. If the position of Escrow Holder shall become vacant for any of the foregoing reasons or for any other reason, the Issuer shall appoint a successor Escrow Holder to fulfill the duties of Escrow Holder hereunder. The Issuer shall publish notice of any such appointment once in each week for four (4) successive weeks in a newspaper of general circulation published in the territorial limits of the Issuer and in a daily newspaper of general circulation or a financial journal published or circulated in the Borough of Manhattan, City and State of New York, and, before the second publication of such notice shall mail a copy thereof to the original purchaser or purchasers of the Refunded Bonds. (b) At any time within one year after such vacancy shall have occurred, the holders of a majority in principal amount of each series of Refunded Bonds then outstanding, by an instrument or concurrent instruments in writing, executed by all such bondholders and filed with the governing body of the Issuer, may appoint a successor Escrow Holder, which shall supersede any Escrow Holder theretofore appointed by the Issuer. Photographic copies of each such instrument shall be delivered promptly by the Issuer, to the predecessor Escrow Holder and to the Escrow Holder so appointed by the bondholders. (c) If no appointment of a successor Escrow Holder shall be made pursuant to the foregoing provisions of this section, the holder of any Refunded Bonds then outstanding, or any retiring Escrow Holder may apply to any court of competent jurisdiction to appoint a successor Escrow Holder. Such court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Escrow Holder. Section 11. Term. This Agreement shall commence upon its execution and delivery and shall terminate when the Refunded Bonds have been paid and discharged in accordance herewith, and all amounts held by the Escrow Holder hereunder have been applied in accordance herewith. Section 12. Severabilitv. If any one or more of the covenants or agreements provided in this Agreement on the part of the Issuer or the Escrow Holder to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreements herein contained shall be null and void and shall be severed from the remaining covenants and agreements and sha11 in no way affect the validity of the remaining provisions of this Agreement. C� Section 13. Counterparts. This Agreement may be executed in several counterparts, all or any of which shall be regarded for all purposes as duplicate originals and shall constitute and be but one and the same instrument. Section 14. Governing Law. This Agreement shall be construed under the laws of the State of Florida. Section 15. Securi� for Accounts and Funds. All accounts and funds maintained or held pursuant to this Agreement shall be continuously secured in the same manner as other deposits of municipal funds are required to be secured by the laws of Florida. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers and their official seals to be hereunto affixed as of the date first above written. THE CITY OF CLEARWATER, FLORIDA (SEAL) AT"TEST: City Clerk Approved as to Form, Sufficiency and Correctness: City Attorney 7 Mayor-Commissioner City Manager [BANK], as Escrow Holder (SEAL) By: Its: Schedule A (Aggregate Debt Service; Semi-Annual Debt Service; Annual Debt Service; Description of Refunded Bonds) Series 1996A Bonds Payment Date Principal Premium Interest Total Debt Service September 1, 2004 $ $ $ $ Schedule B-1 (Federal Securities for Investment) Maturity Bond Type Principal Coupon Yield Purchase Price Schedule B-2 (Federal Securities for Investment) Maturity I Bond Type I Principal I Coupon I Yield I Purchase Price Schedule C F.c�rnw (�'ach Flnw Date Principal Rate Interest Transfer Receipts Disbursements Cash Balance EXHIBIT G ADDITIONAL COVENANTS WITH BOND INSURER (a) "Insurance Polic}�' shall be defined as follows: "the insurance policy issued by the Insurer guaranteeing the scheduled payment of principal of and interest on the Bonds when due". "Insurer" shall be defined as follows: "Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or assignee thereof'. (b) For transactions with a debt service reserve fund, the prior written consent of the Insurer shall be a condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the Debt Service Reserve Fund. Notwithstanding anything to the contrary set forth in the Resolution, amounts on deposit in the Debt Service Reserve Fund shall be applied solely to the payment of debt service on the Bonds. (c) The Insurer shall be deemed to be the sole holder of the Insured Bonds for the purpose of exercising any voting right or privilege or giving any consent or direction or taking any other action that the holders of the Bonds insured by it are entitled to take pursuant to the section or the article of the Resolution pertaining to defaults and remedies. Remedies of the Bondholders to include mandamus. (d) If acceleration is permitted under the Resolution, the maturity of Bonds insured by the Insurer shall not be accelera.ted without the consent of the Insurer and in the event the maturity of the Bonds is accelerated, the Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued, on such principal to the date of acceleration (to the extent unpaid by the Issuer). Upon payment of such accelerated principal and interest accrued to the acceleration date as provided above, the Insurer's obligations under the Insurance Policy with respect to such Bonds shall be fully discharged. (e) No grace period for a covenant default shall exceed 30 days, nor be extended for more than 60 days, without the prior written consent of the Insurer. No grace period shall be permitted for payment defaults. ( fl The Insurer shall be included as a third party beneficiary to Resolution No. 03-35 and the Bond Ordinance with respect to the Series 2003 Bonds. (g) Upon the occurrence of an extraordinary optional or special or extraordinary mandatory redemption in part, the selection of Bonds to be redeemed shall be subj ect to the approval of the Insurer. The exercise of any provision of the Resolution which permits the purchase of Bonds in lieu of redemption shall require approval of the Insurer wherein any Bond so purchased is not extinguished. (h) No modification or amendment to Resolution 03-35 and the Bond Ordinance with respect to the Series 2003 Bonds or any other transaction document including any underlying security agreement (each a"Related DocumenY') may become effective except upon obtaining the prior written consent of the Insurer. Copies of any modification or amendment to such G-1 Resolution and Bond Ordinance or any other Related Document shall be sent to Standard & Poor's Credit Market Services ("S&P") and Moody's Investors Service, Inc. ("Moody's") at least 10 days prior to the effective date thereof. (i) The rights granted to the Insurer under Resolution No 03-35 and the Bond Ordinance with respect to the Series 2003 Bonds or any other Related Document to request, consent to or direct any action are rights granted to the Insurer in consideration of its issuance of the Insurance Policy. Any exercise by the Insurer of such rights is merely an exercise of the Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the Bondholders nor does such action evidence any position of the Insurer, positive or negative, as to whether Bondholder consent is required in addition to consent of the Insurer. (j) Only (1) cash, (2) non-callable direct obligations of the United States of America ("Treasuries"), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) pre- refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively or (5) securities eligible for "AAA" defeasance under then existing criteria of S& P or any combination thereof, shall be authorized to be used to effect defeasance of the Bonds unless the Insurer otherwise approves. To accomplish defeasance the Issuer shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to the Insurer ("AccountanY') verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or redemption date ("Verification"), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the Insurer), and (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding" under the Resolution; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the Issuer and the Insurer. The Insurer shall be provided with final drafts of the above-referenced documentation not less than five business days prior to the funding of the escrow. Bonds shall be deemed "Outstanding" under the Bond Ordinance unless and until they are in fact paid and retired or the above criteria are met. (k) Amounts paid by the Insurer under the Insurance Policy shall not be deemed paid for purposes of the Resolution and shall remain Outstanding and continue to be due and owing until paid by the Issuer in accordance with the Resolution. The Resolution shall not be discharged unless all amounts due or to become due to the Insurer have been paid in full or duly provided for. (1) The Issuer to covenant and agree to take such action (including, as applicable, filing of UCC financing statements and continuations thereo fl as is necessary from time to time otherwise preserve the priority of the pledge of Trust Estate under applicable law. (m) • Claims Upon the Insurance Policy and Payments by and to the Insurer. If, on the third Business Day prior to the related scheduled interest payment date or principal G-2 payment date ("Payment Date") there is not on deposit with the Paying Agent, after making all transfers and deposits required under the Resolution, moneys sufficient to pay the principal of and interest on the Bonds due on such Payment Date, the Paying Agent shall give notice to the Bond Insurer and to its designated agent (if any) (the "Insurer's Fiscal AgenY') by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the Bonds due on such Payment Date, the Paying Agent shall make a claim under the Insurance Policy and give notice to the Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Bonds and the amount required to pay principal of the Bonds, confirmed in writing to the Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the Insurance Policy. In the event the claim to be made is for a mandatory sinking fund redemption installment, upon receipt of the moneys due, the Paying Agent shall authenticate and deliver to affected Bondholders who surrender their Bonds a new Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond sunendered. The Paying Agent shall designate any portion of payment of principal on Bonds paid by the Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Bonds registered to the then current Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Bond to the Insurer, registered in the name of Financial Security Assurance Inc., in a principal amount equal to the amount of principal so paid (without regard to authorized denominations); provided that the Paying Agent's failure to so designate any payment or issue any replacement Bond shall have no effect on the amount of principal or interest payable by the Issuer on any Bond or the subrogation rights of the Insurer. The Paying Agent shall keep a complete and accurate record of all funds deposited by the Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and principal paid in respect of any Bond. The Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Paying Agent. Upon payment of a claim under the Insurance Policy the Paying Agent shall establish a separate special purpose trust account for the benefit of Bondholders referred to herein as the "Policy Payments Account" and over which the Paying Agent shall have exclusive control and sole right of withdrawal. The Paying Agent shall receive any amount paid under the Insurance Policy in trust on behalf of Bondholders and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Paying Agent to Bondholders in the same manner as principal and interest payments are to be made with respect to the Bonds under the sections hereof regarding payment of Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Notwithstanding anything to the contrary otherwise set forth in the Resolution and to the extent permitted by law, in the event amounts paid under the Insurance Policy are applied to claims for payment of principal of or interest on the Bonds, interest on such principal of and interest on such Bonds shall accrue and be payable from the date of such payment at the greater of (i) the per annum rate of interest, publicly announced from time to time by JP Morgan Chase Bank or its G-3 successor at its principal office in the City of New York, as its prime or base lending rate plus 3%, and (ii) the then applicable rate of interest on the Bonds provided that in no event shall such rate exceed the maximum rate permissible under applicable usury or similar laws limiting interest rates. Funds held in the Policy Payments Account shall not be invested by the Paying Agent and may not be applied to satisfy any costs, expenses or liabilities of the Paying Agent. Any funds remaining in the Policy Payments Account following a Bond payment date shall promptly be remitted to the Insurer. (n) The Insurer shall, to the extent it makes any payment of principal of (or, in the case of Capital Appreciation Bonds, accreted value) or interest on the Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Insuranc� Policy. The obligations to the Insurer shall survive discharge or termination of the Related Documents. (o) The Issuer shall pay or reimburse the Insurer any and all charges, fees, costs and expenses which the Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Related Document; (ii) the pursuit of any remedies under the Resolution or any other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Resolution or any other Related Document whether or not executed or completed, (iv).the violation by the Issuer of any law, rule or regulation, or any judgment, order or decree applicable to it or (v) any litigation or other dispute in connection with the Resolution or any other Related Document or the transactions contemplated thereby, other than amounts resulting from the failure of the Insurer to honor its obligations under the Insurance Policy. The Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Resolution or any other Related Document. (p) The application of funds realized upon default shall be applied to payment of expenses ofthe Issuer or rebate only after the payment of debt service due and past due on the Bonds, together with replenishment of the Debt Service Reserve Fund. (q) The Insurer shall be entitled to pay principal (or, in the case of Capital Appreciation Bonds, accreted value) or interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer (as such terms are defined in the Insurance Policy) and any amounts due on the Bonds as a result of acceleration of the maturity thereof in accordance with the Resolution, whether or not the Insurer has received a Notice of Nonpayment (as such terms are defined in the Insurance Policy) or a claim upon the Insurance Policy. (r) The notice address of the Insurer is: Financial Security Assurance Inc., 350 Park Avenue, New York, New York 10022-6022, Attention: Managing Director—Surveillance, Re: Policy No. , Telephone: (212) 826-0100; Telecopier: (212) 339-3556. In each case in which notice or other communication refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." G-4 (s) The Insurer shall be provided with the following information: (i) Annual audited financial statements within 150 days after the end of the Issuer's fiscal year (together with a certification of the Issuer that it is not aware of any default or Event of Default under the Resolution), and the Issuer's annual budget within 30 days after the approval thereof together with such other information, data or reports as the Insurer shall reasonably request from time to time; (ii) Notice of any draw upon the Debt Service Reserve Fund within two Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Debt Service Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds; (iii) Notice of any default known to the Issuer within five Business Days after knowledge thereof; (iv) Prior notice of the advance refunding or redemption of any of the Bonds, including the principal amount, maturities and CUSIP numbers thereof; (v) Notice of the resignation or removal of the Paying Agent and Bond Registrar and the appointment of, and acceptance of duties by, any successor thereto; (vi) Notice of the commencement of any proceeding by or against the Issuer commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); (vii) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Bonds; (viii) A full original transcript of all proceedings relating to the execution of any amendment or supplement to the Related Documents; and (ix) All reports, notices and correspondence to be delivered to Bondholders under the terms of the Related Documents. (t) Notwithstanding satisfaction of other conditions to the issuance of Additional Bonds contained in the Resolution, no such issuance may occur (1) should any Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) have occurred and be continuing unless such default shall be cured upon such issuance and (2) unless the Debt Service Reserve Fund is fully funded at its requirement (including the new issue) upon the issuance of such Additional Bonds, in either case unless otherwise permitted by the Insurer. (u) No contract shall be entered into nor any action taken by which the rights of the Insurer or security for or sources of payment of the Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the Insurer. (v) If the proceeds of the Bonds include a refunding there shall be delivered an opinion of Bond Counsel addressed to the Insurer (or a reliance letter relating thereto) or a certificate of discharge of the trustee for the Refunded Bonds to the effect that, upon the making of the required deposit to the escrow, the legal defeasance of the Refunded Bonds shall have occurred. G-5