91-31 (2)� , s
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RESOLUTION NO. 91 -31
A RESOLUTION AUTHORIZING THE NEGOTIATED SALE OF
$7,680,000 CITY OF CLEARWATER, FLORIDA, GAS SYSTEM
REVENUE BONDS, SERIES 1991; AWARDING THE SALE THEREOF TO
SMITH BARNEY, HARRIS UPHAM & CO. INCORPORATED, SUBJECT
TO THE TERMS AND CONDITIONS OF A PURCHASE CONTRACT;
PROVIDING FOR THE ISSUANCE OF THE SERIES 1991 BONDS IN
BOOK- ENTRY -ONLY FORM AND AUTHORIZING EXECUTION OF A
LETTER OF REPRESENTATION WITH THE DEPOSITORY TRUST
COMPANY IN CONNECTION THEREWITH; AUTHORIZING THE DISTRI-
BUTION OF A PRELIMINARY OFFICIAL STATEMENT AND AN
OFFICIAL STATEMENT IN CONNECTION WITH THE DELIVERY OF THE
BONDS; APPOINTING A PAYING AGENT AND REGISTRAR;
APPOINTING AN ESCROW AGENT; PROVIDING CERTAIN OTHER
MATTERS IN CONNECTION WITH THE ISSUANCE AND DELIVERY OF
SUCH BONDS; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Clearwater, Florida (the "Issuer "), has
by an ordinance enacted on August 15, 1991 (the "Ordinance"),
authorized the issuance of not to exceed $9,000,000 City of
Clearwater, Florida, Gas System Revenue Bonds, Series 1991 (the
"Series 1991 Bonds "); and
WHEREAS, the proceeds of the Series 1991 Bonds are to be used
to (i) provide funds necessary to refund the Issuer's outstanding
Gas System Revenue Bonds, Series 1983 (the "Refunded Bonds ") and
(ii) pay certain costs of issuance of the Series 1991 Bonds; and
WHEREAS, the Issuer has received an offer from Smith Barney,
Harris Upham & Co. Incorporated (the "Underwriter ") to purchase
the Series 1991 Bonds, subject to the terms and conditions
contained herein and set forth in a Purchase Contract, a copy of
which is attached hereto as Exhibit "A" (the "Purchase Contract ") ;
and
WHEREAS, the Issuer now desires to issue its Series 1991
Bonds, to sell its Series 1991 Bonds pursuant to the Purchase
Contract, to authorize the distribution of a Preliminary Official
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Statement and an official Statement in connection with the issuance
of the Series 1991 Bonds and to take certain other actions in
connection with the issuance and sale of the Series 1991 Bonds; and
WHEREAS, the Issuer has been provided all applicable
disclosure information required by Section 218.385, Florida
Statutes, a copy of which is attached to the Purchase Contract;
and
WHEREAS, this resolution shall constitute a supplemental
resolution under the terms of the Ordinance and all capitalized
undefined terms used herein shall have the meanings set forth in
the Ordinance;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF CLEARWATER, FLORIDA:
SECTION I. The issuance of $7,680,000 of the Series 1991
Bonds by the City is hereby approved upon the terms and conditions
set forth in the Ordinance.
{ SECTION 2. It is in the best interest of the Issuer and the
residents and inhabitants thereof that the Series 1991 Bonds be
issued utilizing a pure book -entry system of registration. In
furtherance thereof, the Issuer authorizes the execiltion and
delivery of a Letter of Representation with The Depository Trust
Company in substantially the form attached hereto as Exhibit "B"
and the Mayor and the City Clerk are hereby authorized to execute
and deliver the Letter of Representation with such changes,
insertions and omissions as shall be approved by the officers of
the Issuer executing the same.
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SECTION 3. Due to the willingness of the Underwriter to
purchase $7,680,000 in aggregate principal amount of the Series
1991 Bonds at favorable interest costs and the importance of timing
in the marketing of such obligations it is hereby determined that
it is in the best interest of the public and the Issuer to sell the
Series 1991 Bonds at a negotiated sale and such sale to the Under-
writer pursuant to the terms and conditions contained in the
Purchase Contract and herein is hereby authorized and approved.
SECTION 4. The Series 1991 Bonds are hereby sold to the
Underwriter, upon the terms and conditions set forth in the Pur-
chase Contract attached hereto as Exhibit "A" and incorporated by
reference. The Mayor and the City Clerk are hereby authorized to
execute such Purchase Contract in substantially the form attached
as Exhibit "A ", with such additional changes,
insertions and omis-
sions therein as do not change the substance thereof and as may be
approved by the said officers of the Issuer executing the same,
such execution,.to be conclusive evidence of such approval.
SECTION 5. The Series 1991 Bonds shall be dated, shall bear
interest payable at the times, shall mature and shall be subject
to redemption as provided in the Purchase Contract. The use of
the proceeds of the Series 1991 Bonds, shall be as provided in the
Official Statement relating to the Series 1991 Bonds.
SECTION 6. The Series 1991 Bonds shall be issued under and
secured by the Ordinance and shall be executed and delivered by
the Mayor, the City Manager and the City Clerk in substantially the
form set forth in the Ordinance, with such additional changes and
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insertions therein as conform to the provisions of the Purchase
Contract and such execution and delivery shall be conclusive
evidence of the approval thereof by such officers.
SECTION 7. First Union National Bank of Florida is hereby
appointed Paying Agent and Registrar for the Series 1991 Bonds.
SECTION 8. First Union National Bank of Florida is hereby
appointed as Escrow Agent under the Escrow Deposit Agreement.
SECTION 9. On the date of issuance of the Series 1991 Bonds,
the Issuer may transfer the funds on hand in the various funds and
accounts established for the Refunded Bonds in such manner as may
be approved by a certificate of the Finance Director executed prior
to or simultaneously with the issuance of the Series 1991 Bonds.
SECTION 10. The distribution by the Underwriter of the
Preliminary Official Statement is hereby approved, confirmed and
ratified. The distribution of a final official Statement of the
Issuer relating to the issuance of the Series 1991 Bonds is hereby
approved, such final Official Statement to be in substantially the
form attached hereto as Exhibit C, with such additional changes,
insertions and omissions as may be made and approved by officers
of the Issuer executing the same, such execution to be conclusive
evidence of any such approval. The Mayor and the City Manager are
hereby authorized to execute such Official Statement in substan-
tially the form attached to the Purchase Contract. The execution
of such Official Statement by such officers is hereby approved with
such additional changes, insertions and omissions as may be made
and approved by such officers.
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SECTION il. The purchase of municipal bond insurance from
AMBAC Indemnity Corporation ( "AMBAC ") to irrevocably guarantee the
payment of principal and interest on the Series 1991 Bonds is here-
by authorized.
SECTION 12. All prior resolutions of the Issuer inconsistent
with the provisions of this resolution are hereby modified, supple-
mented and amended to conform with the provisions herein contained
and except as otherwise modified, supplemented and amended hereby
shall remain in full force and effect.
SECTION 13. The Mayor, the City Manager, the Finance
Director, the City Attorney and the City Clerk or any other
appropriate officers of the Issuer are hereby authorized and
directed to execute any and all certifications or other instruments
or documents required by the Resolution, the Purchase Contract,
the Escrow Deposit Agreement or any other document referred to
above as a prerequisite or precondition to the issuance of the
Series 1991 Bonds and any such representation made therein shall
be deemed to be made on behalf of the Issuer. All action taken to
date by the officers of the Issuer in furtherance of the issuance
of the Series 1991 Bonds is hereby approved, confirmed and
ratified.
SECTION 14. The Issuer designates the Bonds as "qualified
n the meaning of Section 265(b) (3) of
tax - exempt obligations" withi
the Internal Revenue Code of 1986, as amended (the "Code "). The
Issuer and any subordinate entities of the Issuer and any issuer
of "tax- exempt" debt that issues "on behalf of" the Issuer do not
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reasonably expect during calendar year 1991 to issue more than
$10,000,000 of "tax - exempt" obligations, exclusive of any private
activity bonds, as defined in Section 141(a) of the Code.
SECTION 15. This resolution shall become effective
immediately upon its adoption.
Passed and adopted by the City Commission of the City of
Clearwater, Florida, this 15th day of August, 1991.
(SEAL) By: —
Mayor
A y EST:
z
Ci Clerk
f Approved as to form and
f correctness:
City Attorney
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$7,680,000
CITY OF CLEARWATER, FLORIDA
GAS SYSTEM REVENUE BONDS
SERIES 1991
August 15, 1991
PURCHASE CONTRACT
Mayor and City Commission
City of Clearwater
112 S. Osceola Avenue
Clearwater, Florida 33518
Dear Ladies and Gentlemen:
The undersigned, Smith Barney, Harris Upham 8: Co., Incorporated (the
"Underwriter"), offers to enter into this Purchase Contract with the City of Clearwater,
Florida (the "City"), which, upon acceptance of this offer by the City, will be binding
upon the City and upon the Underwriter. This offer is made subject to written
acceptance hereof by the City at or before 11:00 p.m., Eastern Daylight Savings Time, on
the date hereof and, if not so accepted, will be subject to withdrawal by the Underwriter
upon notice delivered to the City at any time prior to the acceptance hereof by the City.
1. Purchase and Sale. Upon the terms and conditions and in reliance on the
representations, warranties, covenants and agreements set forth herein, the Underwriter
hereby agrees to purchase from the City, and the City hereby agrees to sell and deliver
to the Underwriter, all (but not less than all) of the aggregate principal amount of
$7,680,000 City of Clearwater, Florida, Gas System Revenue Bonds, Series 1991 (the
"Bonds "). The Bonds shall be dated September 1, 1991. The purchase price for the Bonds
shall be $7,367,259.35 (including original issue discount of $200,025.10) plus interest
accrued on the Bonds from the dated date ($4,066.83) to the date of the closing referred
to in Paragraph 7 of this Purchase Contract (the "Closing").
The Bonds shall be as described in and shall be issued and secured under the
provisions of Ordinance No. 5118 -91, enacted on August 15, 1991, by the City
Commission. The Bonds shall mature at the times and in the amounts and bear interest
at the rates set forth in Appendix I hereto and shall be subject to redemption as provided
in Appendix 13 hereto. The information required by Section 218.385(4), Florida Statutes,
to be provided to the City by the Underwriter is set forth in Appendix III hereto.
2. Delivery of Official Statement and Other Documents. On or before the date
of Closing, the City shall deliver, or cause to be delivered, to the Underwriter executed
copies of the final Official Statement dated the date hereof relating to the Bonds (such
final Official Statement, including all Appendices thereto, financial and statistical
information included therein, being herein called the "Official Statement "), signed on
behalf of the City by the Mayor and City Manager.
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At Closing, the City shall deliver, or cause to be delivered, to the Underwriter
copies of the Ordinance, certified to by the City Clerk, all substantially in the form
heretofore delivered to the Underwriter, with only such changes therein as agreed upon
by the Underwriter.
3. Representation of the Underwriter as to Authority. The Underwriter has
been duly authorized to execute this Purchase Contract and has been duly authorized to
act hereunder.
4. Public Offering. The Underwriter agrees to make an offering of all the
Bonds at not in excess of the initial public offering prices or yields set forth on the front
page of the Official Statement. The Underwriter reserves the right to make concessions
to dealers and to change such initial public offering prices as the Underwriter reasonably
deems necessary in connection with the marketing of the Bonds. The City hereby
authorizes the Underwriter to use the Official Statement and the information contained
therein in connection with the offering and sale of the Bonds and ratifies and confirms its
authorization of the use by the Underwriter prior to the pricing of the Bonds of the
Preliminary Official Statement dated August 7, 1991 (the "Preliminary Official
Statement") in connection with such offering and sale. The City represents the
Preliminary Official Statement was complete as of its date of delivery to the
Underwriter and the City further ratifies and confirms that the Preliminary Official
Statement was "final" as of its date for the purposes and within the meaning of Section
240.15c2 -12 Code of Federal Regulations (the "SEC Rule") (except for omissions
permited by the SEC Rule).
Pursuant to the SEC Rule, the City hereby covenants and agrees with the
Underwriter that it will deliver or cause to be made available to the Underwriter copies
of the Official Statement in a form suitable for delivery to Potential Customers
(hereinafter defined) within seven (7) business days from the date of the date of
acceptance of this Purchase Contract by the City, which, in the-opinion of the
Underwriter, are in a quantity such that from the date of the delivery thereof until the
first to occur of: (A) the End of the Underwriting Period (hereinafter defined), and (B)
the time the Official Statement becomes available to any person from a nationally
recognized municipal securities information repository, but in no case less than twenty -
five (25) days following the End of the Underwriting Period, the Underwriter and any
Participating Underwriter (hereinafter defined) may send to any Potential Customer on
the next business day, by first class mail or other equally prompt means, on request, a
single copy of such Official Statement. The Underwriter has heretofore requested of the
City a quantity of Official Statements sufficient, in its opinion, to satisfy the above
requirement. In the event that such quantity is Insufficient the Underwriter will so notify
the City in writing and request such additional copies as shall be necessary to satisfy
such requirement, with which request the City agrees to promptly comply.
The term "End of the Underwriting Period" is defined by the SEC Rule to mean "..
the later of such time as the (I) issuer of municipal securities delivers the securities to
the Participating Underwriters or (ii) the Participating Underwriter does not retain,
directly or as a member or an underwriting syndicate, an unsold balance of the securities
for sale to the public."
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The term "Participating Underwriter" Is defined by the SEC Rule to mean any
broker, dealer, or municipal securities dealer who has purchased from an issuer of
municipal securities with a view to, or offers or sells for an issuer of municipal securities
in connection with, the offering of any municipal security, or participates or has a direct
or indirect participation in any such undertaking, or participates or has a participation in
the direct or indirect underwriting of any such undertaking (not including a person whose
Interest is limited to a commission, concession, or allowance from an underwriter,
broker, dealer, or municipal securities dealer not in excess of the usual and customary
distributors' or sellers' commission, concession, or allowance) in connection with a
primary offering of municipal securities with an aggregate principal amount of
$1,000,000 or more.
The term "Potential Customer" Is defined by the SEC Rule to mean "... {i) any
person contacted by the Participating Underwriter concerning the purchase of municipal
securities that are intended to be offered or have been sold in an offering, (ii) any person
who has expressed an interest to the Participating Underwriter in possibly purchasing
such municipal securities, and (iii) any person who has a customer account with the
Participating Underwriter."
If at anytime from the date hereof until the End of the Underwriting Period the
City becomes aware of the occurrence of any event or circumstance which might or
would cause the Official Statement, as then supplemented or amended, to contain any
untrue statement of a material fact or to omit to state a material fact necessary- to
make the statements therein, in the light of the circumstances under which they were
made, not misleading the City shall notify the Underwriter thereof and if, in the
reasonable opinion of the Underwriter, such event requires the preparation and
publication of a supplement or amendment to the Official Statement, the City will at Its
expense supplement or amend the Official Statement or cause the Official Statement to
be supplemented or amended in a form and in a manner approved by the Underwriter.
5. Security Deposit. The Underwriter has delivered to the City a check for
$78,000 payable to the order of the City. In the event the City does not accept this offer,
such check shall be returned immediately to the Underwriter. If the offer made hereby
is accepted, the City agrees to hold the check uncashed until the Closing as security for
the performance by the Underwriter of its obligation to accept and pay for the Bonds at
the Closing. In the event of the failure by the City to deliver the Bonds at the Closing,
or if the City shall be unable to satisfy or cause other parties to satisfy the conditions of
the obligations contained herein, or if the obligations of the Underwriter shall be
terminated for any reason permitted by this Purchase Contract, such check shall be
immediately returned to the Underwriter and the acceptance of such return shall
constitute a full release and discharge of all claims by the Underwriter arising out of the
transactions contemplated hereby. In the event that the Underwriter fails (other than
for a reason permitted hereunder) to accept and pay for the Bonds at the Closing (as
hereinafter defined), such check shall be retained by the City as and for full liquidated
damages for such failure and for any defaults hereunder on the part of the Underwriter,
and such retention shall constitute a full release and discharge of all claims by the City
against the Underwriter arising out of the transactions contemplated hereby. In the event
that the Underwriter does not fail or default under the terms of this Purchase Contract,
such check shall be returned to the Underwriter at the Closing.
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6. City's Representations, Warranties and Agreements. By its acceptance
hereof, the City represents and warrants to and agrees with the Underwriter that, as of
the date hereof:
(a) The City is duly and validly existing as a body corporate and politic
and as a municipal corporation.
(b) The City has full legal right, power and authority to issue and sell the
Bonds as contemplated by the Ordinance and the Official Statement.
(c) The City has full legal right, power and authority to enter into this
Purchase Contract, the Escrow Deposit Agreement to be dated as of September 1, 1991
(the "Escrow Agreement") between the City and the First Union National Bank of Florida
as escrow agent (the "Escrow Agent ") and to sell and deliver the Bonds to the
Underwriter as provided herein; by official action of the City taken prior to or
concurrently with the acceptance hereof, the Ordinance has been duly enacted in
accordance with the Constitution of Florida and the laws of the State of Florida,
including the City Charter (collectively the "Act "); the Ordinance is in full force and has
not been rescinded; this Purchase Contract and the Escrow Agreement when executed by
the City will be duly authorized and delivered and will constitute the legal, valid and
binding obligations of the City enforceable in accordance with their terms, except as the
enforcement thereof may be affected by bankruptcy, insolvency, or other laws or the
application by a court of equitable principles generally affecting creditors' rights; and
the City has duly authorized and approved the consummation by it of all other
transactions contemplated by the Ordinance, the Official Statement and this Purchase
Contract to have been performed or consummated at or prior to the Date of Closing.
(d) The execution and delivery of the Bonds, this Purchase Contract, the
Escrow Agreement and the adoption and implementation of the Ordinance, and
compliance with the obligations on the City's part contained herein and therein, will not
conflict with or constitute a material breach of or material default under the Act or any
federal or Florida constitutional provision, law, administrative regulation, judgment,
decree, loan agreement, indentun?, bond, note, Ordinance, agreement or other instrument
to which the City is a party or to which the City or any of its properties or other assets
is otherwise subject, nor will any such execution, delivery, adoption, implementation or
compliance result in the creation or imposition of any material lien, charge or other
security interest or encumbrance of any nature whatsoever upon any of the properties or
other assets of the City under the terms of any such provision, law, regulation, document
or instrument, except as provided or permitted by the Bonds and the Ordinance.
(e) All approvals, consents and orders of any governmental authority,
legislative body, board, agency or commission having jurisdiction which would constitute
a condition precedent to or the absence of which would materially adversely affect the
due performance by the City of its obligations under this Purchase Contract, the
Ordinance, the Escrow Agreement and the Bonds have been, or prior to the Closing will
have been, duly obtained; provided, however, that this representation and warranty does
not apply to such approvals, consents and orders as may be required under the Blue Sky or
securities laws of any state in connection with the offering and sale of the Bonds, or to
such official action by the City which the Ordinance contemplates is to be taken from
time to time after the Closing.
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(f) The Bonds, when Issued, registered and delivered in accordance with
the Ordinance and sold to the Underwriter as provided herein and in accordance with the
provisions of the Ordinance, will be valid and legally enforceable obligations of the City
in accordance with their terms and the terms of the Ordinance; and the Ordinance will
provide, for the benefit of the holders from time to time of the Bonds, a legally valid and
irrevocable lien upon and pledge of the Net Revenues as such term is defined in the
Ordinance.
(g) The information contained in the Preliminary Official Statement and
the Official Statement pertaining to the City, the Bonds, the Ordinance and the Escrow
Agreement was and is true and correct In all material respects and does not contain any
untrue statement of a material fact or omit to state a material fact which is necessary
to make the statements therein, in the light of the circ=imstances under which they were
made, not misleading.
(h) Except as described in the Official Statement, there Is no action, suit,
proceeding, inquiry or investigation, at law or In equity before or by any court,
governmental agency or public board or body, pending or, to the best knowledge of the
City, threatened:
(1) Which may affect the existence of the City or the titles of
their officers to their respective offices;
(2) Which may affect or which seeks to prohibit, restrain or enjoin
the sale, issuance or delivery of the Bonds, or the collection or disbursement of the Net
Revenues to pay the principal of and interest on the Bonds and premiums, if any, and to
make other payments under the Ordinance;
(3) Which In any way contests or affects the validity or
enforceability of the Bonds, the Ordinance, the Escrow Agreement or any of them;
(4) Which would cause the interest on the Bonds to be included In
the federal gross income of the holders of the Bonds; or
(5) Which contests in any way the completeness or accuracy of the
Preliminary Official Statement or the Official Statement or which contests the powers
of the City or any authority or proceedings for the issuance, sale or delivery of the
Bonds, or the due adoption of the Ordinance or the execution and delivery of this
Purchase Contract or the Escrow Agreement or any of them;
nor, to the best knowledge of the City, is there any basis therefor, wherein an
unfavorable decision, ruling or finding would materially adversely affect the validity or
enforceabiliL of the Bonds, the Ordinance, or any of them, or this Purchase Contract.
(1) The City will furnish such information, execute such Instruments and
take such other action not inconsistent with law in cooperation with the Underwriter as
the Underwriter may reasonably request in order (i) to qualify the Bonds for offer and
sale under the Blue Sky or other securities laws and regulations of such states and other
jurisdictions of the United States as the Underwriter may designate, and (ii) to determine
the eligibility of the Bonds for Investment under the laws of such states and other
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BND /7260PCon/910815
jurisdictions, and will use its best efforts to continue such qualifications In effect so long
as required for the distribution of the Bonds; provided that the City shall not be obligated
to qualify to do business or to take any action that would subject it to general service of
process in any state where it is not now so subject.
Closing any event shall occur which would orlmight cause Cthe rinformation contained in
the Official Statement, as then supplemented or amended, to contain any untrue
statement of a material fact or to omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, the City shall notify the Underwriter
thereof, and if In the reasonable opinion of the Underwriter such event requires the
preparation and publication of a supplement or amendment to the Official Statement, the
City shall cooperate with the Underwriter in supplementing or amending the Official
Statement, the printing of which will be at City expense, in such form and manner and at
such time or times as may be reasonably called for by the Underwriter. If it is necessary
in the reasonable opinion of the Underwriter to prepare and publish a supplement or
amendment to the Official Statement as a result of Information contained in the Official
Statement supplied by the Underwriter, the cost of printing such amendment or
supplement shall be borne by the Underwriter.
(k) The City covenants to comply with the requirements of the Internal
Revenue Code of 1986, as amended (the "Code ") in order to maintain the exemption_ of
the interest on the Bonds from federal income taxation. These requirements include, but
are not limited to, provisions which prescribe yield and other limits within which the
proceeds of the Bonds and other amounts are to be Invested and require that certain
investment earnings on the foregoing must be rebated on a periodic basis to the Treasury
Department of the United States.
7. The Closing. At 10 :00 a.m., Eastern Daylight Savings Time, on September 4,
1991 (such date herein called the "Date of Closing"), or at such later time or on such
later date as may be mutually agreed upon by the City and the Underwriter, the City
shall, subject to the terms and conditions hereof, deliver the Bonds to the Underwriter in
New York, New York in definitive form (all the Bonds to bear proper CUSIP numbers),
duly executed and authenticated, together with the other documents hereinafter
mentioned, and, subject to the terms and conditions hereof, the Underwriter shall accept
such delivery and pay the purchase price of the Bonds as set forth In Paragraph 1 hereof
in Federal Funds to the order of the City (such delivery of and payment for the Bonds
herein called the "Closing"). The uncashed check referred to in Paragraph 5 shall be
returned to the Underwriter at the closing. The Closing shall occur at the offices of the
City, 112 South Osceola Avenue, Clearwater, Florida, or such other place as shall have
been mutually agreed upon by the City and the Underwriter. The Bonds shall be prepared
and delivered as a separate, single certificated, fully registered Bond for each of the
maturities of the Bonds registered in the name of Cede & Co.
8. _Closing Conditions. The Underwriter is entering Into this Purchase Contract
In reliance upon the representations, warranties and agreements of the City contained
herein, and In reliance upon the representations, warranties and agreements to be
contained in the documents and Instruments to be delivered at the Closing, and upon the
performance of the covenants and agreements herein, as of the date hereof and as of the
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date of the Closing. Accordingly, the Underwriter's obligation under this Purchase
Contract to purchase, to accept delivery of and to pay for the Bonds shall be conditioned
upon the performance of the covenants and agreements to be performed hereunder and
under such other documents and instruments to be delivered at or prior to the Closing,
and shall also be subject to the following additional conditions:
(a) The representations and warranties of the City contained herein shall
be true, complete and correct on the date hereof and on and as of the Date of Closing, as
If made on the Date of Closing.
(b) At the date of execution hereof and at the Closing, the Ordinance,
and the Escrow Agreement shall have been duly approved and adopted by the City, shall
be in full force and effect, and shall not have been amended, modified or supplemented,
except to the extent to which the Underwriter shall have given its prior written consent
and there shall have been taken in connection therewith and in connection with the
issuance of the Bonds all such action as, In the opinion of Bryant, Miller and Olive, P.A.,
Bond Counsel, and Lawson, McWhirter, Grandoff & Reeves, Counsel for the Underwriter,
shall be necessary and appropriate in connection with the transactions contemplated
hereby.
(c) At the Closing there will be no pending or threatened litigation or
proceeding of any nature seeking to restrain or enjoin the issuance, sale or delivery of
the Bonds, or the pledge, collection or application of the Net Revenues to pay the
principal of and interest on the Bonds or in any way contesting or affecting the validity
or enforceability of the Bonds, the Ordinance, the Purchase Contract or the Escrow
Agreement or contesting in any way the proceedings of the City taken with respect
thereto, or contesting in any way the due existence or powers of the City or the title of
any of the members of the City Commission or officials of the City to their respective
offices and the Underwriter will receive the certificate of the Mayor and Finance
Director of the City to the foregoing effect or an opinion of M.A. Galbraith, Jr., Esquire
City Attorney, that any such litigation is without merit.
(d) There shall have been no material adverse change in the financial
condition of the City's Gas System Enterprise Fund since September 30, 1990.
(e) At the Closing, the Underwriter shall receive the following
documents, each dated as of the Closing:
(1) An opinion of Bryant, Miller and Olive, P.A., Bond Counsel,
substantially In the form attached to the Official Statement as Appendix "D ";
(ii) An opinion of Bond Counsel, addressed to the Underwriter,
stating that the Underwriter may rely upon the opinion referred to In (1) hereof as though
addressed to it and to the effect that the information contained in the Official
Statement under the headings "The 1991 Bonds", "Security," "Flow of Funds," and
"Covenants" (apart from any engineering, financial and statistical data contained therein
as to which no opinion or belief needs to be expressed), insofar as such information
purports to be the descriptions or summaries of the items addressed therein, is correct as
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to matters of law and, to the extent Indicated therein, constitutes accurate and fair
statements or summaries of the matters set forth or documents referred to therein and
further states that the information under the heading "Tax Exemption" is correct.
(iii) An opinion, dated the date of the closing and addressed to the
Underwriter, of M.A. Galbraith, Esq., City Attorney to the effect that (1) this Purchase
Contract has been duly authorized, executed and delivered by the City and constitutes a
legal, valid, and binding agreement of the City in accordance with its terms except to
the extent that the enforceability of the rights and remedies set forth herein may be
limited by bankruptcy, insolvency or other laws affecting creditors' rights generally; (ii)
the City has authorized, executed and delivered the Official Statement; (ill) the
Information In the Official Statement as to legal matters relating to the City, the Bonds,
the Ordinance and the Escrow Agreement Is correct in all material respects and does not
omit any statement which, in his opinion, should be included or referred to therein and, in
addition, such counsel shall state that, based upon his participation in the preparation of
the Official Statement as City Attorney and without having undertaken to determine
independently the accuracy, completeness or fairness of the statements contained in the
Official Statement (except to the extent expressly set forth in this Subparagraph (iii)), as
of the date of the Closing nothing has come to his attention causing him to believe that
(A) the Official Statement as of Its date contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were
made, not misleading (except for the financial and statistical information contained In
the Official Statement as to all of which no view need be expressed), or (B) the Official
Statement (as supplemented or amended pursuant to Paragraph (j) of Section 6 hereof, if
applicable) as of the date of the Closing contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to make the
statements therein, ;in the light of the circumstances under which they were made, not
misleading (except as aforesaid); (iv) to the best of his knowledge the City is not In
material breach of or material default under any applicable constitutional provision, law
or administrative regulation of the State or the United States or any applicable judgment
or decree or any loan agreement, indenture, bond, note, material Ordinance, material
agreement or other material instrument to which the City is a party or to which the City
or any of its property or assets is otherwise subject, and no event has occurred and is
continuing that with the passage of time or the giving of notice, or both, would
constitute a default or event of default under any such instrument; and the execution and
delivery of the Bonds, this Purchase Contract, the Escrow Agreement and the adoption of
the Ordinance and compliance with the provisions on the City's part contained therein,
will not conflict with or constitute a material breach of or default under, any
constitutional provision, law, administrative regulation, judgment, decree, lean
agreement, indenture, bond, note, Ordinance, agreement or other instrument to which
the City Is a party or to which the City or any of its property or assets is otherwise
subject, and any such execution, delivery, adoption or compliance will not result in the
creation or imposition of any lien, charge or other security interest or encumbrance of
any nature whatsoever upon any of the property or assets of the City under the terms of
any such law, regulation or instrument, except as expressly provided by the Bands, the
Ordinance or the Escrow Agreement; (v) the City has the right and power under the Act
to adopt the Ordinance and the Ordinance has been duly and lawfully adopted by the
8 _
BND/7260PCon/910815
City, is in full force and effect and constitutes the legal, valid and binding obligation of
the City, enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity (regardless of whether enforcement is
sought In a proceeding in equity or at law), and no other authorization is required for the
City to adopt the Ordinance; (vi) to the best of his knowledge, there Is no action, suit,
proceeding, inquiry or investigation at law or in equity before or by any court,
government agency, public board or body, pending or threatened against or affecting the
City, nor is there any basis for any such action, suit, proceeding, Inquiry or Investigation,
wherein an unfavorable decision, ruling or finding would have a materially adverse effect
upon the transactions contemplated by the Official Statement or the validity of the
Bonds, the Ordinance, the Escrow Agreement or this Purchase Contract, except as
described in the Official Statement; and (vii) all authorizations, consents, approvals and
reviews of governmental bodies or regulatory authorities then required for the City's
adoption, execution or performance of the Bonds, the Ordinance, the Escrow Agreement
and this Purchase Contract have been obtained or effected and, to the best of his
knowledge, he has no reason to believe that the City will be unable to obtain or effect
any such additional authorization, consent, approval or review that may be required in
the future for performance of any of them by the City; and, in addition, he shall give his
opinion to the same effect as set forth under the caption "Litigation" in the Official
Statement.
(iv) A certificate, dated the Date of Closing, signed by the Mayor
and Finance Director, or other appropriate officials satisfactory to the Underwriter, to
the effect that, to the best knowledge of each of them: (1) the representations of the
City herein are true and correct in all material respects as of the date of Closing; (ii) the
City has performed all obligations to be performed hereunder as of the date of Closing;
(iii) except as disclosed in the Official Statement, there is no litigation of which either of.
them have notice, and to the best knowledge of each of them no litigation is pending or
threatened (A) to restrain or enjoin the issuance or delivery of any of the Bonds, (B) in
any way contesting or affecting any authority for the Issuance of the Bonds or the
validity of the Bonds, the Ordinance, the Escrow Agreement or this Purchase Contract,
(C) in any way contesting the corporate existence or powers of the City, (D) to restrain
or enjoin the collection of revenues pledged or to be pledged to pay the principal of,
premium, if any, and interest on the Bonds, (E) which may result in any material adverse
change in the business, properties, assets and the financial condition of the City taken as
a whole, or (F) asserting that the Official Statement contains any untrue statement of a
material fact or omits any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; (iv) since
September 30, 1990, no material adverse change has occurred in the financial position or
results of operations of the City except as set forth In or contemplated by the Official
Statement; (v) the City has not, since September 30, 1990, incurred any material
liabilities other than in the ordinary course of business or as set forth in or contemplated
by the Official Statement; and (vi) the Official Statement did not as of its date, and does
not as of the Date of Closing contain any untrue statement of a material fact or omit to
state a material fact required to be included therein or necessary in order to make the
statements contained therein, In light of the circumstances in which they were made, not
misleading.
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BND/7260PCon/910815
(v) An opinion, dated the Date of Closing and addressed to the
Underwriter, of Lawson, McWhirter, Grandoff & Reeves, Tampa, Florida, counsel for the
Underwriter, to the effect that (1) the Bonds are not subject to the registration
requirements of the Securities Act of 1933, as amended, and the Ordinance is exempt
from qualification pursuant to the Trust Indenture Act of 1939, as amended; and (11)
based upon their participation and their review of the Official Statement as counsel for
the Underwriter and without having undertaken to determine independently the accuracy,
completeness or fairness of the statements contained in the Official Statement, as of the
date of the Closing nothing has come to the attention of such counsel causing them to
believe that (A) the Official Statement as of its date contained any untrue statement of
a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, In the light of the circumstances under which
they were made, not misleading (except for the financial and statistical Information
contained In the Official Statement as to which no view need be expressed), or (B) the
Official Statement (as supplemented or amended pursuant to Paragraph (j) of Section 6
hereof, if applicable) as of the date of the Closing contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were
made, not misleading (except as aforesaid).
(vi) An opinion of Bryant, Miller and Olive, P.A., Boni Counsel,
addressed to the City, the Underwriter and Underwriter's Counsel, to the effect that the
Bonds are not "arbitrage bonds' within the meaning of Section 148 of the Internal
Revenue Code of 1986, as amended.
(vii) Written verification from Ernst & Young of the accuracy of (a)
the arithmetical computation of the adequacy of the maturing principal amounts and
interest earnings thereon of the Federal Securities to be held under the Escrow Deposit
Agreement and held in the Escrow Account to pay when due all principal of and all
interest and redemption premiums on the City`s Gas System Revenue Bonds Series 1983
(the 111983 Bonds") and (b) the computations of actuarial yields supporting the conclusion
that the 1991 Bonds are not "arbitrage bonds" within the meaning of Section 148 of the
Internal Revenue Code of 1986, as amended.
(viii) An opinion, dated the Date of Closing, and addressed to the
Underwriter from counsel for AMBAC Indemnity Corporation ("AMBAC "), to the effect
that: (1) AMBAC Is a stock insurance company, duly organized and validly existing under
the laws of the State of Wisconsin and dully qualified to conduct an insurance business in
the State of Florida; (11) AMBAC has full corporate power and authority to execute and
deliver the Municipal Bond Insurance Policy (the "Policy") and the Policy has been duly
authorized, executed and delivered by AMBAC and constitutes a legal, valid and binding
obligation of AMBAC enforceable in accordance with its terns except to the extent that
the enforceability (but not the validity) of such obligation may be limited by any
applicable bankruptcy, insolvency, liquidation, rehabilitation or other similar law or
enactment now or hereafter enacted affecting the enforcement of creditors' rights; (111)
the execution and delivery by AMBAC of the Policy will not, and the consummation of
the transactions contemplated thereby and the satisfaction of the terms thereof will not,
conflict with or result In a breach of any of the terms, conditions or provisions of the
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BND /7260PCon/910815
Certificate of Incorporation or By -Laws of AMBAC, or any restriction contained In any
contract, agreement or instrument to which AMBAC is a party or by which it is bound or
constitute a default under any of the foregoing; (iv) proceedings legally required for the
Issuance of the Policy have been taken by AMBAC and licenses, orders, consents or other
authorizations or approvals of any governmental boards or bodies legally required for the
enforceability of the Policy have been obtained; any proceedings not taken and any
licenses, authorizations or approvals not obtained are not material to the enforceability
of the Policy; (v) the statements contained in the Official Statement under the heading
"Municipal Bond Insurance," insofar as such statements constitute summaries of the
matters referred to therein, accurately reflect and fairly present the information
purported to be shown and, insofar as such statements describe AMBAC, fairly and
accurately describe AMBAC; and (vi) the form of Policy contained in Appendix "C" to the
Official Statement is a true and complete copy of the form of Policy.
(ix) An opinion, dated the Date of Closing and addressed to the
City, Bond Counsel, the Underwriter, Underwriter's Counsel and AMBAC, of Foley &
Lardner, counsel for the Escrow Agent, to the effect that (1) the Escrow Agreement has
been duly authorized, executed and delivered by the Escrow Agent, (ii) constitutes a
legal, valid and binding obligation of the Escrow Agent enforceable in accordance with
its terms (except as the enforcement thereof may be affected by bankruptcy, insolvency,
or other laws or equitable principles generally affecting creditors rights) and (iii) the
performance by the Escrow Agent of its obligations under the Escrow Agreement will not
conflict with, or result in a breach of any provision of its Certificate of Incorporation or
By -Laws.
(x) Such additional legal opinions, certificates, instruments and
other documents as the Underwriter may reasonably request to evidence the truth and
accuracy, as of the date hereof and as of the Date of Closing, of the City's
representations and warranties contained herein and of the statements and information
contained in the Official Statement and the due performance or satisfaction by the City
on or prior to the Date of Closing of all the agreements then to be performed and
conditions then to be satisfied by it. ,.
(f) AMBAC shall have issued its policy to insure the Bonds and Standard
& Poor's Corporation and Moody's Investors Service, Inc. shall have assigned their
municipal bond ratings of "AAA" and "Aaa," respectively, to the Bonds.
(g) Evidence that First Union National Bank of Florida has been approved
by the City as the Paying Agent and Bond Registrar for the Bonds.
Ali of the evidence, opinions, letters, certificates, instruments and other
documents, mentioned above or elsewhere in this Purchase Contract shall be deemed to
be in compliance with the provisions hereof if, but only if, they are in form and substance
satisfactory to the Underwriter and the City.
If the conditions to the obligations of the Underwriter to purchase, to accept
delivery of and to pay for the Bonds contained in this Purchase Contract are not
satisfied, or if the obligations of the Underwriter to purchase, to accept delivery of and
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BND /7260PCon/910815
to pay for the Bonds shall be terminated for any reason permitted by this Purchase
Contract, this Purchase Contract shall terminate and neither the Underwriter nor the
City shall be under any further obligation hereunder, except that the respective
obligations of the City and the Underwriter set forth In Paragraph 11 hereof shall
continue in full force and effect and the deposit specified in Paragraph 5 hereof shall be
returned to the Underwriter.
9. Indemnification. The Underwriter agrees to indemnify and hold harmless the
City, Its officers and employees against any and all losses, damages, liabilities and
expenses (including reasonable costs of investigation) caused by any untrue statement of
a material fact contained in the Official Statement, or in any amendment or supplement
thereto, or caused by an omission to state therein a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading in any material respect, except insofar as such losses, damages, liabilities or
expenses are caused by any untrue statement or omission which is based upon information
that is (1) furnished in writing to the Underwriter by the City expressly for use in
connection with the Official Statement, or (11) neither ascertainable from the public
records of the City nor of which the general public has common knowledge.
10. Termination. The Underwriter may terminate this Purchase Contract by
notice to the City in the event that between the date hereof and the Closing (a)
legislation shall be enacted by the Congress of the United States or adopted by either
House thereof or a decision by a court of the United States or the Tax Court of the
United States shall be rendered or a ruling, regulation or official statement by or on
behalf of the Treasury Department of the United States, the Internal Revenue Service or
other governmental agency shall be made, with respect to Federal taxation of revenues
or other income of the general character expected to be derived under the Ordinance by
the City or upon interest received on securities of the general character of the Bonds or
which would have the effect of changing, directly or indirectly, the federal income tax
consequences of receipt of interest on securities of the general character of the Bonds in
the hands of the holders thereof, which in the reasonable opinion of the Underwriter
would materially adversely affect the market price of the Bonds; (b) the United States
shall become engaged in hostilities that have resulted in a declaration of war or a
national emergency; (c) there shall be in force a general suspension of trading on the New
York Stock Exchange as the result of an event affecting the national economy; (d) a
general banking moratorium shall have been established by federal, New York or Florida
authorities; or (e) any event shall have occurred or shall exist which, in the reasonable
opinion of the Underwriter, would or might cause the information contained in the
Official Statement, as then supplemented or amended, to contain any untrue statement
of a material fact or to omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading as of such time and which would materially adversely
affect the market price of the Bonds.
11. Expenses.
(a) Whether or not the Bonds are sold by the City to the Underwriter
(unless such sale be prevented at Closing by the Underwriter's default), the City shall be
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BND /7260PCon/910815
obligated to pay the following expenses: (1) the cost of preparing and printing or other
reproduction of the Ordinance; (ii) the cost of preparing and printing the Bonds, the
Preliminary Official Statement, the Off.icIal Statement, any Blue Sky and Legal
investment Surveys, and this Purchase Contract; (iii) the fees and disbursements of
Bryant, Miller and Olive, P.A. Incurred in its capacity as Bond Counsel; (iv) the fees and
disbursements of the Paying Agent and Registrar; (v) costs of the escrow agent; (vi) the
fees and disbursements of any other experts, accountants, consultants or advisors
retained by the City; and (vii) the cost of newspaper advertisements.
(b) Whether or not the Bonds are sold by the City to the Underwriter
(unless such sale be prevented at Closing by the City's default), the Underwriter shall be
obligated to pay the following expenses and shall be permitted to pay such expenses from
their discount: (1) all advertising expenses (except the cost of newspaper advertisements)
in connection with the public offering of the Bonds; (ii) the fees and disbursements of
Lawson, McWhirter, Grandoff & Reeves, Counsel to the Underwriter; and (iii) all other
expenses incurred by them in connection with the public offering of the Bonds.
12. Notices. Any notice or other communication to be given to the City under
this Purchase Contract may be given by delivering the same in writing to the address set
forth above and any notice or other communications to be given to the Underwriter under
this Purchase Contract may be given by delivering the same in writing to Smith Barney,
Harris Upham & Co., Incorporated, Attn.: Worth T. Blackwell, 1 Tampa City Center,
Suite 3500, Tampa, F L 33602.
13. Parties in Interest.
(a) This Purchase Contract is made solely for the benefit of the City and
the Underwriter (including the successors or assigns of the Underwriter) and no other
person shall acquire or have any right hereunder or by virtue hereof. All of the
representations, warranties and agreements of the City contained in this Purchase
Contract shall remain operative and in full force and effect, regardless of: (1) any
investigations made by or on behalf of the Underwriter; (ii) delivery of and payment for
the Bonds pursuant to this Purchase Contract; or (111) any termination of this Purchase
Contract, but only to the extent provided by the last paragraph of Section. 8 hereof.
(b) No covenant, stipulation, obligation or agreement contained in this
Purchase Contract shall be deemed to be a covenant, stipulation, obligation or agreement
of any member, agent or employee of the City Commission in his individual capacity and
neither the members of the City Commission nor any official executing this Purchase
Contract shall be liable personally under this Purchase Contract or be subject to any
personal liability or accountability by reason of the execution hereof.
14. Effectiveness. This Purchase Contract shall become effective upon the
execution of the acceptance hereof on behalf of the City by the Mayor and attestation by
the City Clerk, all In accordance with the requirements set forth in the City Charter,
and shall be valid and enforceable at the time of such acceptance.
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15. Counterparts. This Purchase Contract may be executed in several
counterparts, which together shall constitute one and the same instrument.
16. Florida Law Governs. The validity, interpretation and performance of this
Purchase Contract shall be governed by the laws of the State of Florida.
17. Entire Agreement. This Purchase Contract when accepted by the City in
writing as heretofore specified shall constitute the entire agreement between us.
18. Headings. The headings of the Sections of this Purchase Contract are
Inserted for convenience only and shall not be deemed to be part hereof.
Very truly yours,
SMITH BARNEY, HARRIS UPHAM
& CO., INCORPORATED
By:
Vice President and
Authorized Officer
Accepted as of the date hereof:
CITY OF CLEARWATER, FLORIDA
By:
Rita J. Garvey, Mayor
ATTEST:
By: —
Cyndie -Goudeau, City Clerk
Approved as to form and legality:
M.A. Galbraith, Jr., City Attorney
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Appendix I
$7,680,000
CITY OF CLEARWATER, FLORIDA
GAS SYSTEM REVENUE BONDS
SERIES 1991
MATURITY SCHEDULE
$2,900,000 Serial Bonds
Due
Amount
Coupon
Price
Due
Amount
Coupon
Price
09/01/95
150,000
5.600%
100.000
09/01/2000
300,000
6.100%
99.317
09/01/96
240,000
5.750%
100.000
09/01/2001
320,000
6.200%
99.265
09/01/97
255,000
5.800%
99.500
09/01/2002
340,000
6.300%
99.218
09/01/98
270,000
5.900%
99.435
09/01/2003
360,000
6.400%
99.175
09/01/99
285,000
6.000%
99.374
09/01/2004
380,000
6.500%
99.135
$2,325,000 6.50% Term Bonds Due September 1, 2009 @ 96.912%
$2,455,000 6.50% Term Bonds Due September 1, 2013 @ 95.506%
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BND /7260PCon/910815
Appendix II
Mandatory Redemption,
The Term Bonds maturing on September 1, 2009 and September 1, 2013,
respectively, are subject to mandatory redemption in part prior to maturity by lot at the
principal amount thereof (without premium) plus accrued interest to the date of
redemption, from funds which the City has covenanted to deposit In the Bond
Amortization Account in the Sinking Fund in the amounts and upon the dates specified as
follows:
Term Bonds Due September 1,2008
Date of Redemption Amount
Term Bonds Due September 1, 2013
Date of Redemption Amount
September 1, 2005
$410,000 September 1, 2010
$560,000
September 1, 2006
435,000 September 1, 2011
595,000
September 1, 2007
465,000 September 1, 2012
635,000
September 1, 2008
490,000 September 1, 2013
$665,000
September 1, 2009
$525,000
Money held for
the credit of the Bond Amortization Account is required to be
applied to the retirement of term obligations as follows:
(1) Subject to the provisions of paragraph (3) below, the City may purchase
Term Bonds then outstanding at the most advantageous price obtainable with reasonable
diligence, such price not to exceed the principal of such Term Bonds plus the accrued
interest to the date of delivery thereof. The City is required to pay the interest accrued
on such Term Bonds to the date of delivery thereof from the Interest Account and the
purchase price from the Bond Amortization Account, but no such purchase may be made
by the City within the period of 45 days immediately preceding any interest payment
date on which Term Bonds are subject to call for redemption, except from money in
excess of the amounts set aside or deposited for the redemption of Term Bonds.
(2) Subject to the provisions of paragraph (3) below, whenever sufficient money
is on deposit in the Bond Amortization Account to redeem $5,000 or more principal
amount of Term Bonds, the City may call for redemption from money in the Bond
Amortization Account such amount of Term Bonds then subject to redemption as, with
the redemption premium, if any, will exhaust the money then held in the Bond
Amortization Account as nearly as may be practicable. Prior to calling Term Bonds for
redemption, the City is required to withdraw from the Interest Account and from the
Bond Amortization Account and set aside in separate accounts or deposit with the paying
agents the respective amounts required for paying the interest on and the principal of
and redemption premium applicable to the Term Bonds so called for redemption.
(3) Money in the Bond Amortization Account is required to be applied by the
City in each fiscal year to the retirement of Term Bonds then outstanding in the
following order:
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(a) The Term Bonds of each series of Bonds, to the extent of the
Amortization Installment, If any, for such Fiscal Year for the Term Bonds of each such
series 'then outstanding, plus the applicable premium, if any, and, if the amount available
In such Fiscal Year shall not be sufficient therefor, then In proportion to the
Amortization Installment, If any, for such Fiscal Year for the Term Bonds of each such
series then outstanding, plus the applicable premium, if any; provided, however, that If
the Term Bonds of any such series are not then subject to redemption from money in the
Bond Amortization Account and if the City is at any time unable to exhaust the money
applicable to the Term Bonds of such series under the provisions of this clause or In the
purchase of such Term Bonds under the provisions of paragraph 1 above, such money or
the balance of such money, as the case may be, must be retained in the Bond
Amortization Account and, as soon as it is feasible, applied to the Term Bonds of such
series; and
(b) Any balance then remaining, other than money retained as described
in the first clause of this paragraph 3, is required to be applied to the retirement of such
Term Bonds as the City In its sole discretion determines, but only, in the case of the
redemption of Term Bonds of any series, In such amounts and on such terms as may be
provided in the resolution or ordinance authorizing the issuance of the obligations of such
series.
The City is required to pay from the Sinking Fund all expenses in connection with
any such purchase or redemption.
Optional Redemption.
The Bonds maturing in the years 1995 through 1999, inclusive, shall not be
redeemable prior to their stated dates of maturity. The Bonds maturing September 1,
2000 and thereafter, shall be redeemable prior to their stated dates of maturity, at the
option of the City, in whole or in part, and if in part, in inverse order of maturity, on
September 1, 1999 or on any interest payment date thereafter, at the redemption prices
(expressed as a percentage of the principal amount to be redeemed) set forth below,
together with accrued interest to the date fixed for redemption:
Redemption Period Redemption Price
September 1, 1999 - August 31, 2000 102%
September 1, 2000 - August 31, 2001 101%
September 1, 2001 and thereafter 100%
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DISCLOSURE STATEMENT
The undersigned, as Underwriter, proposes to negotiate with the City of
Clearwater, Florida, for the sale of $7,680,000 amount of its Gas System Revenue Bonds,
Series Information is hereby furnished tohthdate. ty°Prior to the award of the Bonds,
1. Set forth is an itemized list of the nature and estimated amounts of expenses
to be incurred by the Underwriter in connection with the issuance of the Bonds:
(Per Bond)
2. Set forth below are the names, addresses and estimated amounts of
compensation of all "finders ", as defined in Section 218.386, Florida Statutes:
NONE
3. The amount of the underwriting spread expected to be realized by the
Underwriter is $112,715.55, which includes the following:
Underwriter's expenses
Management fee
Underwriting f ee
Average take -down
(Per Bond)
3.53
3.75
.25
7.15
4. The management fee to be charged by the Underwriter is $28,800.00 ($3.75
per Bond).
5. Set forth below are all other fees, bonuses and other compensation estimated
to with the Bond issue to all ersons not regularly employed or retained by to m. connection
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BND /7260PCon/910815
$1,152.00
0.15
Clearance
Underwriter's Counsel Fees and
2.00
15,360.00
Expenses
0.00
0.00
Computer
0.00
0.00
Closing and travel expenses
580.80
0.08
MSRB, PSA, CUSIP
Federal Express, Telephone, Communications
0.20
Duplicating, and Printing
1,536.00
7,065.60
0.92
Advertising
230.40
0.03
Day Loan
$11152.00
0.15
Federal Funds
27,076.80
3.53
2. Set forth below are the names, addresses and estimated amounts of
compensation of all "finders ", as defined in Section 218.386, Florida Statutes:
NONE
3. The amount of the underwriting spread expected to be realized by the
Underwriter is $112,715.55, which includes the following:
Underwriter's expenses
Management fee
Underwriting f ee
Average take -down
(Per Bond)
3.53
3.75
.25
7.15
4. The management fee to be charged by the Underwriter is $28,800.00 ($3.75
per Bond).
5. Set forth below are all other fees, bonuses and other compensation estimated
to with the Bond issue to all ersons not regularly employed or retained by to m. connection
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BND /7260PCon/910815
Underwriter's counsel fee and expenses $15,360.00
6. The name and address of the Underwriter connected with the Bonds is as
follows:
Smith Barney, Harris Upham & Co., Incorporated
1 Tampa City Center, Suite 3500
Tampa, FL 33602
IN WITNESS WHEREOF, the undersigned has executed this Disclosure Statement
on behalf of the Underwriter this 15th day of August, 1991.
SMITH BARNEY, HARRIS UPHAM
& CO., INCORPORATED
By:
Vice President and
Authorized Officer
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BND /7260PCon /910815
The Depository Trust
55 Water Street
New York, New York
Attention: General
EXHIBIT B
LE'T'TER OF REPRESENTATION
, 1991
Company
10041
Counsel's Office
Re: $7,680,000 City of Clearwater, Florida
Gas System Revenue Bonds, Series 1991
Gentlemen:
The purpose of this letter is to set out certain matters
relating to the issuance by the City of Clearwater, Florida (the
"Issuer ") of $7,680,000 in aggregate principal amount of its City
of Clearwater, Florida, Gas System Revenue Bonds, Series 1991 (the
"Bonds "). First Union National Bank of Florida, St. Petersburg,
Florida (the "Agent ") , is acting as Paying Agent and Bond Registrar
of the Issuer with respect to the Bonds pursuant to Ordinance No.
5118 -91 of the Issuer authorizing the issuance of the Bonds enacted
August 15, 1991, as amended and supplemented (collectively, the
"Document "). Smith Barney, Harris Upham & Co. Incorporated (the
"Underwriter ") are distributing the Bonds through The Depository
Trust Company ( "DTC").
To induce DTC to accept the Bonds as eligible for deposit at
DTC and act in accordance with its Rules with respect to the Bonds,
the Issuer and the Agent, if any, make the following
representations to DTC:
1. Subsequent to Closing on the Bonds on , 1991, the
Issuer will cause the Underwriter to deposit with DTC
one Bond certificate registered in the name of DTC's
nominee, CEDE & CO., for each stated maturity of the
Bonds in the face amounts set forth on Schedule A here-
to, the total of which represents 100% of the principal
amount of such Bonds.
2. In the event of any solicitation
voting by holders of the Bonds,
shall establish a record date for
DTC notice of such record date not
days in advance of such record
possible.
B -1
of consents from and
the Issuer or Agent,
such purposes and give
less than 1.5 calendar
date to the extent
q1`,'(
3. In the event of a redemption or any other similar trans-
action resulting in retirement of all Bonds outstanding
or a reduction in aggregate principal amount of Bonds
outstanding ( "full or partial redemption ") or an advance
refunding of all or part of the Bonds outstanding, the
Issuer or Agent shall give DTC notice of such event not
less than 30 days nor more than 60 days prior to the
redemption date or, in the case of an advance refunding,
the date the proceeds are deposited in escrow.
4. In the event of a partial redemption or an advance
refunding of part of the Bonds outstanding, the Issuer
or Agent shall send DTC a notice specifying: (1) the
amount of the redemption or refunding; (2) in the case
of a refunding, the maturity date(s) established under
the refunding; and (3) the date such notice is to be
mailed to Bondholders or published ( "Publication Date ") .
Such notice shall be sent to DTC by a secure means (e.g.
legible facsimile transmission, registered or certified
mail, overnight express delivery) in a timely manner
designed to assure that such notice is in DTC's posses-
sion no later than the close of business on the business
day before the Publication Date. The Agent will forward
such notice either in a separate secure transmission for
each CUSIP number or in a secure transmission for multi-
ple CUSIP numbers which includes a manifest or list of
each CUSIP submitted in that transmission. (The Issuer
or Agent sending such notice shall have a method to
verify subsequently the use of such means and timeliness
of the notice.) The Publication Date shall not be less
than 30 days nor more than 60 days prior to the redemp-
tion date or, in the case of an advance refunding, the
date the proceeds are deposited in escrow.
5. In the event of an invitation to tender the Bonds, notice
to Bondholders by the Issuer or Agent, specifying the
terms of the tender and the date such notice is to be
mailed to Bondholders or published ( "Publication Date ")
shall be sent to DTC by a secure means (e.g., legible
facsimile transmission, registered or certified mail,
overnight express delivery) in a timely manner designed
to assure that such notice is in DTC's possession no
later than the close of business on the business day
before the Publication Date. (The Issuer or Agent
sending such notice shall have a method to verify
subsequently the use of such means and timeliness of the
notice.)
6. All notices and payment advices sent to DTC shall contain
the CUSIP number of the Bonds.
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7. Notices to DTC by facsimile transmission shall be sent
to DTC's Call Notification Department at (516) 227 -4039
or (516) 227 -4190. Notices to DTC by mail or any other
means shall be sent to:
The Depository Trust Company
Muni Reorganization Manager
Call Notification Department
711 Stewart Avenue
Garden City, New York 11530
8. Interest payments shall be received by CEDE & CO., as
nominee of DTC, or its registered assigns in next day
funds on each payment date (or the equivalent in
accordance with existing arrangements between the Issuer
or Agent and DTC). Such payments shall be made payable
to the order of "CEDE & CO."
9. Payments of principal shall be received by CEDE & CO.,
as nominee of DTC, or its registered assigns in next day
funds on each payment date. Principal payments shall
be made payable to the order of "CEDE & CO.," and shall
be addressed as follows:
The Depository Trust Company
Muni Redemption Department
55 Water Street - 50th Floor
New York, New York 10041
Attention: Collection Supervisor
10. DTC may direct the Issuer or Agent to use any other
telephone number for facsimile transmission, address, or
department of DTC as the number, address or department
to which payments of interest or principal or notices
may be sent.
11. In the event of a redemption, acceleration or any other
similar transaction (e.g., tenders made and accepted in
response to the Issuer's or Agent's invitation) necessi-
tating a reduction in aggregate principal amount of Bonds
outstanding or an advance refunding of part of the Bonds
outstanding, DTC, in its discretion, (a) may request the
Agent to issue and authenticate a new Bond certificate
or (b) shall make an appropriate notation on the Bond
certificate indicating the date and amounts of such
reduction in principal except in the case of final
maturity, in which case the certificate must be presented
to the Agent prior to payment.
12. In the event the Issuer determines pursuant to the
Document that beneficial owners of the Bonds shall be
able to obtain certificated Bonds, the Issuer or Agent
B -3
shall notify DTC of the availability of Bond certifi-
cates, and shall issue, transfer and exchange Bond
certificates in appropriate amounts as required by DTC
and others.
13. DTC may determine to discontinue providing its service
as securities depository with respect to the Bonds at any
time by giving reasonable notice to the Issuer or Agent
(at which time DTC will confirm with the Issuer or Agent
the aggregate principal amount of the Bonds outstanding)
and discharging its responsibilities with respect thereto
under applicable law. Under such circumstances, whenever
DTC requests the Issuer and the Agent to do so, the Agent
and the Issuer will cooperate with DTC in taking appro-
priate action to make available one or more separate
certificates evidencing the Bonds to any DTC Participant
having Bonds credited to its DTC account.
14. Nothing herein shall be deemed to require the Agent to
advance funds on behalf of the Issuer.
Very truly yours,
FIRST UNION NATIONAL BANK
OF FLORIDA
Approved as to form
and legality:
City Attorney
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
BY:
Authorized Officer
cc: Underwriter
By:
CITY OF CLEAWWATER, FLORIDA
By:
Mayor
ATTEST:
Clerk
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eP a ;�I1
r
CITY OF CLEARWATER, FLORIDA
Gas System Revenue Bonds, Series 1991
Dated; September 1, 1991
BOOK-ENTRY-ONLY
Dom September 1, (as sbovm below)
The City of Clearwater, Florida (the City') is issuing $7,680,000 Gas System
Revenue Bonds, Series 1991 (the "1991 Bonds") (1) to provide the funds necessary to
advance refund the City'h outstanding c� oIssuance of Revenue Bonds,
Bonds. Series 1983 (the " 1983 of the net
Bonds') and (ii) to pay
proceeds from the 1991 Bonds will be used to purchase Federal rinciPal,tinte t andc any
Of and interest on which, when due, will be used to he! inc Bonds."
redemption premiums on the 1983 Bonds. See "Purpose of t
The 1991 Bonds will be Issued under and pursuant to Chapter 166, Florida Statutes,
the amended and City Commission on August 15, 1991 as supplemented Ordinance . enacted by revenues derived
The 1991 Bonds are secured by a prior (fie pledge of cmotai °s and Investments
by the City from the operation of its gas system
deposited in certain funds and accounts established by the Ordinance and earnings
thereon.
The 1991 Bonds will be issued as registered bonds without coupons an orkill be
initially registered only in the name of The Depository Trust Company, New
York f'DTC ") or its nominee, which will act as securities depository for the 1.991 Bonds.
The 1991 Bonds will be available to purchasers in denominations of $5,000 or any integral
multiple thereof. The 1991 Bonds are available only under the book -entry system
maintained by DTC through brokers and dealers who are, or act through,,D n
o
participants. Interest on the 1991 Bonds will be payable semi-annually o
begin g
March 1, 1992, and on each March 1 and September 1, thereafter.
The 1991 Bonds will be subject to redemption prior to maturity as more fully
described herein under the caption "The 1991 Bonds."
The payment of the principal of and interes, on the 1991 Bonds when due will be
insured by simultaneously nicipa with the delivery of tyhe to 19b Bonds by AMBAC Indemnity
Corpora r
(INSERT AMBAC LOGO HERE)
'The 1991 Bonds wBl nt coustitute a debt of the City or a pledge Of the faith and
credit of the City within the meaning of any cowtiftdknd or fftUtbwy provigh= or
of the 1991 Bawds will wt directly Or indirectly or
limitagent �d the ad valorem tam wlaateaw therefor and the
�tl�ientty obligate the City to pledge any to the power of ad vabxem i mtkm-
holders of the 1991 Bonds will have no recourse
BND /Clearwater /91081 S
In the opinion of Bond Counsel, assuming continuing compliance by the City with
various covenants in the Ordinance, under existing statutes, regulations and judicial
decisions, the interest on the 1991 Bonds will be excluded from gross income for Federal
Income tax purposes of the holders thereof. The 1991 Bonds are, under existing laws and
regulations, also exempt from intangible taxes Imposed pursuant to Chapter 199, Florida
Statutes. See "Tax Exemption" herein for a description of alternative minimum tax
treatment and certain other tax consequences to holders of the 1991 Bonds.
AMOUNTS, MATURMES, RATES AND PRICES OR YIELDS
Price or Price or
Amount Maturity Rate Yield Amount Maturity Rate Yield
150,000 1995 5.600 100.000 300,000 2000 6.100 99.317
240,000 1996 5.750 100.000 320,000 2001 6.200 99.265
255,000 1997 5.800 99.500 340,000 2002 6.300 99.218
270,000 1998 5.900 99.435 360,000 2003 6.400 99.175
285,000 1999 6.000 99.374 380,000 2004 6.500 99.135
x1000 6.50% Term BOOds due September 1, 2009, Price 96.912%
$2,454,000 6—W% Term 1300tls due September 19 2013, Price 951.506%
(Plus Accrued Interest)
The 1991 Bonds are offered when, as and If Issued and received by the Underwriter,
and subject to the opinion as to the legality of the 1991 Bonds by Bryant, Miller and
Olive, P.A., Tallahassee, Florida, Bond Counsel. Certain legal matters will be passed
upon for the City by M.A. Galbraith, Jr., Esquire, City Attorney. Certain legal matters
will be passed upon for the Underwriter by Lawson, McWhirter, Grandoff & peeves, P.A.,
Tampa, Florida, Counsel to the Underwriter. It Is expected that the 1991 Bondy in book -
entry form will be available for delivery in New York, New York, on or about September
4, 1991.
E
MiFM BARNEY, HARRIS UPHAM & CO., INCORPORATED
M
The date of this Official Statement is August 15, 1991
BND /Clearwater /010815
/Ilzk
No dealer, broker, salesman or other person has been authorized to make any
representations, other than as contained in the Official Statement, and, if given or made,
such other information or representations must not be relied upon. This Official
Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor
shall there be any sale of the 1991 Bonds by any person in any Jurisdiction in which It is
unlawful for such person to make such offer, solicitation or sale. The Information
contained in this Official Statement has been obtained from public documents, records
and other sources considered to be reliable and, while not guaranteed as to completeness
or accuracy, is believed to be correct. Any statements in this Official Statement
involving estimates, assumptions and matters of opinion whether or not so expressly
stated, are intended as such and not as representations of fact, and the City expressly
makes no representations that such estimates, assumptions and opinions will be realized
or fulfilled. No information, estimates, assumptions and matters of opinion contained in
this Official Statement, or any sale made hereunder, shall under any circumstances,
create any implication that there has been no change in the affairs of the City since the
date hereof.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVERALLOT
OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE
OF SUCH 1991 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
Table of Contents
Page
SummaryStatement ............ ............................... iv
Introduction ................... ............................... 1
Authorityfor Issuance . . ....... ............................... 1
Purpose of the 1991 Bonds ......... ............................... 1
The Refunding Plan .. ..... . I ....................... 1
Verification of Arithmetical Computations ........................ 2
The1991 Bonds ............................................... 2
Book- Entry-Only- System ..... ............................... 2
Redemption Provisions ....... ............................... 4
Security.. ................. ..............................6
Municipal Bond Insurance ....... ..... . ........... 7
............. ...
Payment Pursuant to Municipal Bond Insurance Policy ................ 7
AMBAC Indemnity Corporation ................................ 9
The City of Clearwater and Pinellas County .......................... 19
TheSystem .. ......... ............................... 11
Physical Description ......... ..............................1 I
Management............... .............................11
GasSupply.. ........... .............................12
Rates, Fees and Charges ..... ............................... 13
ServiceArea ............. ............................... 13
InternalLoan ...... ............................ . .... 15
Consultant's Recommendation ...................... . ......... 15
Comparative Financial Statement .. ............................... 16
Debt Service Amortization Schedule .............. . ........... 17
Coverage of Maximum Debt Service by Net Revenues ................... 18
Sources and Uses of Funds ........ ............................... 18
Flow of Funds .................. .............................19
Covenants ..................... .............................21
f/ °3l
Table of Contents
(Cont'd.)
Page
Governmental Reorganization ....................................
25
Underwriting. .. ............. .............................25
Certain Legal Matters .......... ...............................
25
Tax Exemption ................ ...............................
25
Litigation ................... ...............................
27
Ratings......... ............. .............................27
Miscellaneous .........
27
Authorization of and Certification
Concerning Official Statement ... ...............................
25
APPENDIX A - Excerpts from the City's Comprehensive
Annual Financial Reports and related explanatory note
APPENDIX B - Ordinance No. 5115 -914 as amended
APPENDIX C - Form of Municipal Bond Insurance Policy
APPENDIX D - Form of Bond Counsel Opinion
®
1
i
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'/ -31
Richard Fitzgerald
Sue Herfleld
CITY OF CLEARWATER, FLORIDA
(BOARD OF CITY Ct3Mb9MONERS
Rita J. Garvey
Mayor - Commissioner
CITY MANAGER
Michael Wright
CITY ATTORNEY
M.A. Galbraith, Jr.
CITY CLERK
Cyndie Goudeau
UTTLrn-ES FINANCE MANAGER
Carole L. Greiner
FINANCE DIRECTOR
Daniel J. Delpan, C.P.A.
BOND COUNSEL
Bryant, Miller and Clive, P.A.
Tallahassee, Florida
Atlanta, Georgia
FINANCIAL ADVISOR
Raymond ,tames & Associates, Inc.
St. Petersburg, Florida
William Nunamaker
Lee Reguiski
,11-.51
SUAU61ARY SPATE CENT
This Summary Statement is subject in all respects to more complete information
and to the deflnitlons contained or incorporated in this Official Statement. The offering
of the 1991 Bonds to potential investors is made only by means of this entire Official
Statement. No person is authorized to detach this Summary Statement from the Official.
Statement or otherwise to use It without this entire Official Statement.
pure of the 1991 Boodt The 1991 Bonds are being issued (1) to provide funds for
the advance refunding of the City's outstanding Gas System Revenue Bonds, Series 1993
in the original principal amount of $7,100,000, of which $6,710,000 in principal amount is
currently outstanding, and (11) to pay certain costs of issuance of the 1991 Bonds.
Severity for the 1991 Bonds. The payment of the principal of and the interest on
the 1991 Bonds is secured equally and ratably by an irrevocable lien on the Net Revenues
of the System prior and superior to all other liens or encumbrances on the Net
Revenues. The Net Revenues are the Gross Revenues of the System, less Costs of
Operation and Maintenance. Gross Revenues include all money received from rates,
fees, rentals or other charges or income derived from the investment of funds, unless
otherwise provided In the Ordinance, by the City or accruing to it in the operation of the
System. The Costs of Operation and Maintenance of the System Include all current
expenses, paid or accrued, for the operation, maintenance and repair of all facilities of
the System, as calculated in accordance with sound accounting practice, and include
without limiting the generality of the foregoing, insurance premiums, administrative
expenses of the City related solely to the System, labor, touts of materials and supplies
used for current operation, and charges for the accumulation of appropriate reserves for
current expenses not annually recurrent but which are such as may reasonably be
expected to be Incurred in accordance with sound accounting practice, but excluding any
reserve for renewals or replacements, for extraordinary repairs or any allowance for
depreciation. The 1991 Bonds are further secured by a prior lien and pledge on the
monies and investments deposited In the Funds and Accounts established by the
Ordinance except for monies and investments deposited in the Operation and
Maintenance Fund.
The 1991 Bonds will not constitute a debt of the City or a pledge of its faith and
credit within the meaning of any constitutional or statutory provision or limitation. Nor
will the 1991 Bonds constitute a lien upon the System, or any part thereof, or on any
other property of the City, other than the Net Revenues In the manner provided in the
Ordinance.
Munlc#W Band lamaxe. AMBAC Indemnity Corporation C'AMBAC Indemnity")
has Issued a Commitment for Municipal Bond Insurance (the "Commitment for Municipal
Bond Insuranc8") to issue a bond insurance policy (the "Municipal Bond insurance Policy")
relating to the 1991 Bonds effective as of the date of Issuance of the 1991 Bonds. Under
the terms of the Municipal Bond Insurance Policy, AMBAC Indemnity will guarantee the
payment of the principal of and Interest on the 1991 Bonds when due to the extent that
sufficient funds for such payment have not been provided. The text of the Municipal
Bond Insurance Policy is set forth in Appendix C. The insurance will extend for the term
of the 1991 Bonds and once issued, cannot be cancelled by AMBAC Indemnity.
1v
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�1
Pro Forma_ Coverage of Maximum Annual Debt Service by Net Revenues
Rate Covenant. The City has covenanted that it will fix, establish, revise from
time to time whenever necessary, maintain and collect always, such fees, rates, rentals
and other charges for the use of the product, services and facilities of the System which
will always provide Gross Revenues in each year sufficient to pay, and out of such funds
pay, 100% of all Costs of Operation and Maintenance of the System in such year and all
reserve and other payments provided for in the Ordinance and 125% of the Bond Service
Requirement due in such year on all outstanding 1991 Bonds.
Additkxmd Parity Obligatims. Additional Parity Obligations may be issued provided
that Net Revenues either during the immediately preceding Fiscal Year, during any
twelve (12) consecutive calendar months of the eighteen (18) calendar months
Immediately preceding the sale of the proposed Additional Parity Obligations, or during
the last twelve (12) month period for which the City has audited Financial Statements for
the System, at the option of the City, shall have been not less than 125% of the
Maximum Bond Service Requirement which will become due in any calendar year
thereafter on (1) the 1991 Bonds then outstanding, (2) any Additional Parity Obligations
issued and then outstanding and (3) the Additional Parity Obligations then proposed to be
issued. Such Net Revenues, for this purpose, may be adjusted by the Consulting Engineer
to reflect rate changes and/or acquisitions to the System, as provided in the Ordinance.
The City of Clearwater. The City of Clearwater, the county seat of Pinellas
County, is located In the middle of the west coast of Florida on the Gulf of Mexico, 22
miles west of Tampa. The 1989 population of the City was estimated at 102,600. The
economy of the City is based primarily on light manufacturing, tourism and related
services.
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Audited
Year
1988 1989 1990
Net Revenues
2,158,510 1,901,892 2,122,152
Coverage of Maximum
Debt Service on 1991
Bonds ($721,030)
2.99x 2.63x 2.94x
Rate Covenant. The City has covenanted that it will fix, establish, revise from
time to time whenever necessary, maintain and collect always, such fees, rates, rentals
and other charges for the use of the product, services and facilities of the System which
will always provide Gross Revenues in each year sufficient to pay, and out of such funds
pay, 100% of all Costs of Operation and Maintenance of the System in such year and all
reserve and other payments provided for in the Ordinance and 125% of the Bond Service
Requirement due in such year on all outstanding 1991 Bonds.
Additkxmd Parity Obligatims. Additional Parity Obligations may be issued provided
that Net Revenues either during the immediately preceding Fiscal Year, during any
twelve (12) consecutive calendar months of the eighteen (18) calendar months
Immediately preceding the sale of the proposed Additional Parity Obligations, or during
the last twelve (12) month period for which the City has audited Financial Statements for
the System, at the option of the City, shall have been not less than 125% of the
Maximum Bond Service Requirement which will become due in any calendar year
thereafter on (1) the 1991 Bonds then outstanding, (2) any Additional Parity Obligations
issued and then outstanding and (3) the Additional Parity Obligations then proposed to be
issued. Such Net Revenues, for this purpose, may be adjusted by the Consulting Engineer
to reflect rate changes and/or acquisitions to the System, as provided in the Ordinance.
The City of Clearwater. The City of Clearwater, the county seat of Pinellas
County, is located In the middle of the west coast of Florida on the Gulf of Mexico, 22
miles west of Tampa. The 1989 population of the City was estimated at 102,600. The
economy of the City is based primarily on light manufacturing, tourism and related
services.
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OFFICIAL STATE 07%ff
$7,680,000
CITY OF CLEARWATER, FLORIDA
GAS SYSTEM REVENGE BONDS, SERIES 1991
INTRODUCTION
The purpose of this Official Statement, Including the cover page, summary
statement and appendices, Is to provide information concerning the City of Clearwater,
Florida (the "City") and the $7,680,000 Gas System Revenue Bonds, Series 1991 (the
1991 Bonds%
Definitions of certain words and terms having Initial capitals used herein and in the
Ordinance are contained in the Ordinance in Appendix B hereto.
The references, excerpts and summaries of all documents referred to herein do not
purport to be complete statements of the provisions of such documents, and reference Is
directed to all such documents for full and complete statements of all matters of fact
relating to the 1991 Bonds, the security for the payment of the 1991 Bonds, and the
rights and obligations of holders thereof.
The information contained in this Official Statement Involving matters of opinion
or of estimates, whether or not so expressly stated, are set forth as such and not as
representations of fact, and no representation Is made that any of the estimates will be
realized. Neither this Official Statement nor any statement which may have been made
verbally or in writing is to be construed as a contract with the holders of the 1991
Bonds.
AUTHORITY FOR iSSJANCE
The Bonds are being issued pursuant to the Constitution and Statutes of the State of
Florida, including particularly Chapter 166, Florida Statutes, and other applicable
provisions of law and Ordinance No. 5118 -91, enacted by the City on August 15, 1991, as
supplemented (the "Ordinance ").
The Ref m Plan. The City will use part of the proceeds of the 1991 Bonds to
refund Its $7,100,000 Gas System Revenue Bonds, Series 1983, $6,710,000 of which are
currently outstanding (the "1983 Bonds"). After paying certain costs of issuing the 1991
Bonds, the City will deposit a portion of the 1991 Bond proceeds, with First i.r_jtion
National Banat aiz Florida as escrow agent (the "Escrow Agent") pursuant to an Escrow
Deposit Agreement (the "Escrow Deposit Agreement"). The Escrow Deposit Agreement
requires that the Escrow Agent use the amounts escrowed thereunder to purchase
Federal Securities. Federal securities are direct obligations of the United States of
America and obligations the principal of and Interest on which are fully guaranteed by
the United States of America and which obligations are not redeemable prior to their
maturity at the option of the United States and interest on obligations of the Resolution
Funding Corporation.
In the opinion of Bond Counsel, the lien of the ordinance pursuant to which the
1991 Bonds were Issued will be released and discharged upon the issuance by the City of
the 1991 Bonds, the simultaneous purchase of the Federal Securities required pursuant to
the refunding plan and the pledging and setting aside pursuant to the Escrow Deposit
Agreement of such money and obligations for the payment of the principal of, premium,
if any, and interest on the 1983 Bonds, the expenses of the Paying Agent for the 1983
Bonds and the costs of the Escrow Agent.
Verification of Arithmetical Computations. Upon delivery of the 1991 Bonds, Ernst
Young, independent accountants, will deliver a report on the mathematical accuracy of
certain computations contained In schedules provided to them by the Underwriter
relating to (a) the adequacy of the maturing principal amounts of the Federal Securities
held in the escrows for the 1983 Bonds to be refunded, interest earned thereon and
certain other moneys to pay all of the principal or redemption price of and the Interest
on such 1983 Bonds as such principal or redemption price and interest become due and
payable, and (b) the computations of yield used by Bond Counsel to support its opinion
that the 1991 Bonds are not arbitrage bonds within the meaning of Section 148 of the
Internal Revenue Code.
The report of Ernst & Young will include the statement that the scope of their
engagement was limited to verifying the mathematical accuracy of the computations
contained in such schedules provided to them and that they had no obligation to update
their reports because of events occurring or data or Information coming to their
attention subsequent to the date of such report.
The monies and Federal Securities held in accordance with the Escrow Deposit
Agreement, all interest or other income thereon, and any proceeds from the disposition
thereof will be used only to pay the 1983 Bonds and will not be available for payment of
the debt service on the 1991 Bonds.
THE 1991 BONDS
Book-Entry-Only System. DTC, New York, New York will act as securities
depository for the 1991 Bonds. Upon the issuance of the 1991 Bonds, one fully registered
bond for each maturity will be registered in the name of Cede & Co., as nominee for
DTC. So long as Cede & Co. is the registered owner of the 1991 Bonds, as nominee of
DTC, references herein to the owners of the 1991 Bonds shall mean DTC or its nominee,
Cede & Co., and shall not mean the Beneficial Owners (hereinafter defined) of the 1991
Bonds. DTC is a limited- purpose trust company organized under the laws of the State of
New York, 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, as
amended. DTC was created to hold securities of Its participants (the "DTC
Participants") and to facilitate the clearance and settlement of securities transactions
among DTC Participants in such securities through electronic book -entry changes in
accounts of the DTC Participants, thereby eliminating the need of physical movement of
securities certificates. DTC Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations, some of whom
(and/or their representatives) own DTC. Access to the DTC system is also available to
others such as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a DTC Participant, either directly or indirectly (the
"Indirect Participants").
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Purchases of the 1991 Bonds under the book -entry system may be made only
through brokers and dealers who are, or act through, DTC Participants. The DTC
Participants shall receive a credit balance in the records of DTC. The ownership interest
of each actual purchaser of each 1991 Bond (a "Beneficial Owner") will be recorded
through the records of the applicable DTC Participant. Beneficial Owners will receive
from the applicable DTC Participant or Indirect Participant a written confirmation of
their purchase providing details of the 1991 Bond acquired Transfers of ownership
interests in the 1991 Bonds will be accomplished by book entries made by the DTC
Participants who act on behalf of the Beneficial Owners and If necessary, In turn by
DTC. No 1991 Ban& will be registered to the Carnes of the Bemefilclal Owners, except In
the event participation In the book-entry system Is d sconthumd as described below.
The City will recognize DTC or its nominee as the owner of the 1991 Bonds for all
purposes, Including notices and voting. Conveyance of notices and other communications
by DTC to DTC Participants and by DTC Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among DTC, DTC Participants and
Indirect Participants, subject to any statutory and regulatory requirements as may be in
effect from time to time. Beneficial Owners may desire to make arrangements with a
DTC Participant or an Indirect Participant so that all notices of redemption or other
communications to DTC which affect such Beneficial Owners, and notification of all
interest payments, will be forwarded in writing by the DTC Participant. Any failure of
DTC to advise any DTC Participant, or of any DTC Participant or Indirect Participant to
notify the Beneficial Owner, of any notice of redemption and its content or effect will
not affect the validity of the redemption of the 1991 Bonds called for redemption or of
any other action premised on such notice.
Payments of principal of and premium, if any, and interest on the 1991 Bonds will
be made to DTC or its nominee, Cede & Co., as registered owner of the 1991 Bonds.
Upon receipt of monies DTC's current practice is Immediately to credit the accounts of
the DTC Participants In accordance with their respective holdings shown on the records
of DTC. Payments by DTC Participants and Indirect Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is now the case
with municipal securities held for the accounts of customers In bearer form or registered
in "street name," and will be the responsibility of such DTC Participant or Indirect
Participant and not of DTC, or the City, subject to any statutory and regulatory
requirements as may be in effect from time to time. The City cannot and does not give
any assurances that DTC, DTC Participants, Indirect Participants or others will
distribute payments of principal of or interest or any premium on the 1991 Bonds paid to
DTC or its nominee, as the registered owner, or any redemption or other notices, to the
Beneficial Owners or that they will do so on a timely basis or will serve and act in a
manner described in this Official Statement. The City Is not responsible or liable for the
failure of DTC, any DTC Participant or any Indirect Participant to make any payment or
give any notice to a Beneficial Owner in respect of the 1991 Bonds or any error or delay
relating thereto.
For every transfer of the 1991 Bonds, the Beneficial Owner may be charged a sum
suffIcient to cover any tax or other governmental charge that may be Imposed In relation
thereto.
DTC may discontinue providing its services with respect to the 1991 Bonds at any
time by giving notice to the City and discharging Its responsibilities with respect thereto
under applicable law, or the City may terminate Its participation In the system of book-
-3-
— _ .....;,, -
entry transfers through DTC at any time. Upon receipt by the City Of written notice
from DTC (1) to the effect that DTC has received written notice from the City or from
Participants having Interests, as shown In the records of DTC, In an aggregate principal
amount of not less than fifty percent (50`t )of the a
outstanding 1991 Bonds to the effect that tt tp requirement that all en
the outstanding 1991 Bonds be regist a conn t of the ered In the registration books kept by the Bond
Registrar In the name of Cede, as nominee of DTC, Is not in the best Interest of the
Beneficial Owners of the 1991 Bonds or (11) to the effect that DTC Is unable or lmwilling
to discharge Its responsibilities and no substitute deposit _
functions of DTC hereunder can be found which is wory willing to undertake the
functions upon reasonable and customary terms, such h 991n Bonds willanno ong be
restricted to being registered In the registration books kept by the Bond Registrar in the
name of Cede, as nominee of DTC, but may be registered In whatever name or names
registered owners transferring or exchanging
accordance with the provisions of the cg�g such 1991 Bonds shall designate, in
Ordinance.
In the event that such book- entry-only system is discontinued, the following
provisions will apply: principal of the 1991 Bonds and redemption premium, if any,
thereon will be payable at the rinci
Bank of Florida In Jacksonvllleg Florida ((tthrate trust office of First Union National
Bonds will be payable by check or draft Bond Registrar"). Interest on the 1991
registered owners thereof as shown on the ma to the respective addresses of the
Registrar at the close of business on the 15th registration o books ontthh(w ether or not a
business day), the Bond
Date ") Irrespective next preceding the Interest payment date for the 1991 Bonds (the "Record
spective of any transfer of the 1991 Bonds
and prior to such Interest payment date unless the City mis default In s thhe rd Date
Interest due on such Interest payment date. In the event of any such default, h�e
defaulted interest will be payable to the registered owners at the close of business on a
special Record Date for the payment of defaulted Interest as established by notice
mailed to the persons in whose names the 1991 Bonds are r
business on the 5th day preceding the date of ma metered l the close of
as registered bonds without coupons In denominations of e 1991 Bands will g issued only
thereof. The transfer of 1991 Bonds will be r $stile ri any integral multiple
office of First Union National Bank of Florida upon the at the principal corporate trust
Registrar's reasonable fees and any tax, fee or other the payment of the Crequ and Bond
Paid with respect to such transfer. governmental charges required to be
inclusRedemall tnot provislam ro redeemable epBonds
their stated dates of maturity. years 1995 through 1999,
maturing September 1, 2000, and thereafter, tY• The Bonds
dates of maturity, at the option of the City, in whole or redeemable an prior to their stated
order of maturity, on cv—Ptem.ber 1, 1999, or on any interest�t, and if !a , in inverse
the redemption prices (expressed as a payment date thereafter, at
redeemed) set forth below, t percentage of the principal amount to be
redemption: together with accrued Interest to the date fixed for
-4-
t
Redemption Period Redemption Price
September 1, 1999 through August 31, 2000 102%
September 1, 2000 through August 31, 2001 101%
September 1, 2001 and thereafter. 100%
Mandatory Rebemptinn. The Term Bonds maturing on September 1, 2009 and
September 1, 2013, respectively, are subject to mandatory redemption in part prior to
maturity by lot at the principal amount thereof (without premium) plus accrued interest
to the date of redemption, from funds which the City has covenanted to deposit in the
Bond Amortization Account in the Sinking Fund In the amounts and upon the dates
specified as follows:
Term Bonds Due September 1, 2009 Term Bonds Due September 1, 2013
Date of Redemption Amount Date of Redemption Amount
September 1, 2005 410,000 September 1, 2010 560,000
September 1, 2006 435,000 September 1, 2011 595,000
September 1, 2007 465,000 September 1, 2012 635,000
September 1, 2006 490,000 September 1, 2013 665,0008
September 1, 2009 525,000'
'Final Maturity
Money held for the credit of the Bond Amortization Account is required to be
applied to the retirement of term obligations as follows:
(1) Subject to the provisions of paragraph (3) below, the City may purchase
Term Bonds then outstanding at the most advantageous price obtainable with reasonable
diligence, such price not to exceed the principal of such Term Bonds plus the accrued
interest to the date of delivery thereof. The City is required to pay the interest accrued
on such Term Bonds to the date of delivery thereof from the Interest Account and the
purchase price from the Bond Amortization Account, but no such purchase may be made
by the City within the period of 45 days Immediately preceding any interest payment
date on which Term Bonds are subject to call for redemption, except from money in
excess of the ,amounts set aside or deposited for the redemption of Term Bonds.
(2) Subject to the provisions of paragraph (3) below, whenever sufficient money
is on deposit IS the Bond Amortization Account to redeem $5,000 or more principal
amount of Term Bonds, the City may call for redemption from money In the Bond
Amortization Account such amount of Term Bonds then subject to redemption as, with
the redemption premium, if any, will exhaust the money then held in the Bond
Amortization Account as nearly as may be practicable. Prior to calling Term Bonds for
redemption, the City Is required to withdraw from the Interest Account and from the
Bond Amortization Account and set aside In separate accounts or deposit with the paying
agents the respective amounts required for paying the Interest on and the principal of
and redemption premium applicable to the Term Bonds so called for redemption.
-5-
(3) Money in the Bond Amortization Account is required to be applied by the
City in each fiscal year to the retirement of Term Bonds then outstanding in the
following order.
(a) The Term Bonds of each series of Bonds, to the extent of the
Amortization Installment, if any, for such Fiscal Year for the Term Bonds of each such
series then outstanding, plus the applicable premium, if any, and, if the amount available
in such Fiscal Year shall not be sufficient therefor, then in proportion to the
Amortization Installment, If any, for such Fiscal Year for the Term Bonds of each such
series then outstanding, plus the applicable premium, If any; provided, however, that if
the Term Bonds of any such series are not then subject to redemption from money in the
Bond Amortization Account and If the City is at any time unable to exhaust the money i
applicable to the Term Bonds of such series under the provisions of this clause or in the
purchase of such Term Bonds under the provisions of paragraph 1 above, such money or
the balance of such money, as the case may be, must be retained in the Bond
Amortization Account and, as soon as it Is feasible, applied to the Term Bonds of such
series; and E
1
(b) Any balance then remaining, other than money retained under the
first clause of this paragraph 3, is required to be applied to the retirement of such Term
Bonds as the City in its sole discretion determines, but only, in the case of the
redemption of Term Bonds of any series, In such amounts and on such terms as may be
provided In the resolution or ordinance authorizing the issuance of the obligations of such }
series.
i
i
The City is required to pay from the Sinking Fund all expenses In connection with
any such purchase or redemption.
i
SECURITY
The payment of the principal of and interest on the 1991 Bonds Is secured equally s
and ratably by an irrevocable lien upon and pledge of the Net Revenues derived by the j
CIty from the operation of the System. "Net Revenues" is defined I
A Reserve Account within the Sinking Fund has been established pursuant to the
Ordinance. Within the Reserve Account, there will be established a separate subaccount
for each series of Bonds. Revenues must be applied by the City to maintain in each
subaccount in the Reserve Account a sum equal to the Reserve Requirement, if any, for
any subsequent year on each series of Bonds, which sum will initially be deposited therein
from the proceeds of the sale of the 1351 Bonds and other funds of the City. To the
extent the City determines pursuant to a subsequent resolution to fund a subaccount
within the Reserve Account for a respective series of Bonds, the City may provide that
the difference between the amounts on deposit in such subaccount and the Reserve
Requirement for such series of Bonds shall be an amount covered by obtaining bond
Insurance issued by a reputable and recognized municipal bond insurer, by a surety bond,
by a letter of credit or any combination thereof or by such other forth of credit
enhancement as shall be approved by a resolution of the City adopted prior to the
issuance of the series of Bonds for which such subaccount is established. Such resolution
may also provide for the substitution of such credit enhancement. For further
information concerning the Reserve Account, please refer to the section entitled "Flow
of Funds" contained herein.
Notwithstanding any provision of the Resolution to the contrary, moneys In each
subaccount In the Reserve Account may be used only for the purpose of the payment of
maturing principal of or interest or making Amortization Installments on the Bonds for
which such subaccount was established when the other moneys in the Sinking Fund are
Insufficient therefor, and for no other purpose including the payment of any other series
of Bonds.
The Bonds do not constitute an indebtedness, liability, general or moral obligation,
or pledge of the faith, credit or taxing power of the City, the State of Florida, or any
political subdivision thereof, within the meaning of any constitutional, statutory or
charter provisions. Neither the State of Florida, nor any political subdivision thereof,
nor the City shall be obligated (1) to levy ad valorem taxes on any property to pay the
principal of the Bonds, the interest thereon, or other costs incident thereto or (ii) to pay
the same from any other funds of the City except the Net Revenues, in the manner
provided in the Ordinance.
MUNICIPAL BOND LNSURANCE
PaYment Purmmt to Municipal Bond hmrance PaUcy. AMBAC Indemnity has
made a commitment to issue a municipal bond insurance policy (the "Municipal Bond
Insurance Policjf') relating to the Bonds effective as of the date of Issuance of the
Bonds. Under the terms of the Municipal Bond Insurance Policy, AMBAC indemnity will
pay to the United States Trust Company of New York, In New York, New York or any
successor thereto (the " n ,*a_nce Trustee ") that portion of the principal of and interest
on the Bonds which shall become Due for Payment but shall be uppaid by reason of
Nonpayment by the City (as such terms are defined in the Municipal Bond insurance
Policy). AMBAC Indemnity will make such payments to the Insurance Trustee on the
later of the date on which such principal and interest becomes Due for Payment or within
one business day following the date on which AMBAC indemnity shall have received
notice of Nonpayment from the Bond Registrar. The fin=ance will extend for the term
of the Bonds and, once issued, cannot be cancelled by AMBAC Indemnity.
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p ,,:V
The Municipal Bond Insurance Policy will Insure payment only on stated maturity
dates and on mandatory sinking fund Installment dates, in the case of principal, and on
stated dates for payment, in the case of interest. If the Bonds become subject to
mandatory redemption and insufficient funds are available for redemption of all
outstanding Bands,. AMBAC Indemnity will remain obligated to pay principal of and
interest on outstanding Bonds on the originally scheduled interest and principal payment
dates including mandatory sinking fund redemption dates. In the event of any
acceleration of the principal of the Bonds, the insured payments will be made at such
times and in such amounts as would have been made had there not been an acceleration.
In the event the Bond Registrar has notice that any payment of principal of or
Interest on a Bond which has become Due for Payment and which is made to a Bondholder
by or on behalf of the issuer has been deemed a preferential transfer and theretofore
recovered from its registered owner pursuant to the United States Bankruptcy Code In
accordance with a final, nonappealable order of a court of competent jurisdiction, such
registered owner will be entitled to payment from AMBAC Indemnity to the extent of
such recovery If sufficient funds are not otherwise available.
The Municipal Bond Insurance Policy does not insure any risk other than
Nonpayment, as defined in the Policy. Specifically, the Municipal Bond Insurance Policy
does not cover:
1. payment on acceleration, as a result of a call for redemption (other
than mandatory sinking fund redemption) or as a result of any other
advancement of maturity.
2. payment of any redemption, prepayment or acceleration premium.
3. nonpayment of principal or interest caused by the insolvency or
negligence of any Trustee or Paying Agent, If any.
If It becomes necessary to call upon the Municipal Bond Insurance Policy, payment
of principal requires surrender of Bonds to the Insurance Trustee together with an
appropriate instrument of assignment so as to permit ownership of such Bonds to be
registered in the name of AMBAC Indemnity to the extent of the payment under the
Municipal Bond Insurance Policy. Payment of interest pursuant to the Municipal Bond
Insurance Policy requires proof of Bondholder entitlement to interest payments and an
appropriate assignment of the Bondholder's right to payment to AMBAC Indemnity.
Upon payment of the insurance benefits, AMBAC indemnity will become the owner
of the Bond, appurtenant coupon, If any, or right to payment of principal or interest on
such Bond and will be fully subrogated to the surrendering Bondholder's rights to
payment.
In cases where the Bonds are Issuable in book entry form, the Insurance Trustee
shall disburse principal and Interest to a Bondholder only upon evidence satisfactory to
the Insurance Trustee and AMBAC indemnity that the ownership Interest of the
Bondholder In the right to payment of such principal and Interest has been effectively
transferred to AMBAC Indemnity on the books maintained for such purpose. AMBAC
Indemnity shall be fully subrogated to all of the Bondholders' rights to payment to the
extent of the Insurance disbursements so made.
-8-
The insurance provided by the Municipal Bond Insurance Policy is not covered by
the Florida Insurance Guaranty Association.
A jHAC Indemnity Corporation. AMBAC Indemnity is a Wisconsin - domiciled stock
insurance corporation regulated by the Insurance Department of the State of Wisconsin
and licensed to do businesss in 50 states and the District of Columbia, with admitted
assets of approximately $1,259,700,000 (unaudited) and statutory capital of
approximately $752,200,000 (unaudited) as of March 31, 1991. Statutory capital consists
of AMBAC Indemnity's policyholders' surplus and statutory contingency reserve. AMBAC
Indemnity was formerly a wholly -owned subsidiary of Citicorp Financial Guaranty
Holdings, Inc. C'Holdings") (formerly known as AMBAC, Inc.), a financial holding company
and Itself a wholly -owned subsidiary of Citibank, N.A. ("Citibank").
On May 1, 1991, AMBAC Inc. C'AMBAC Inc. "), a financial holding company recently
formed by Holdings, registered for sale with the Securities and Exchange Commission
17,600,000 shares of its common stock. The registration statement with respect to such
sale was declared effective on July 11, 1991. As a result of the sale, Citibank, through
its affiliate Holdings, owns approximately 49% of the total equity of AMBAC, Inc., with
a right to cast 20% of the total number of votes of all shares of outstanding common
stock of AMBAC Inc. until such time as Citibank, including its affiliates, reduces its
equity ownership to less than 25% of AMBAC Inc. (at which time the shares owned by it
become non - voting). As of the date of the consummation of the sale of common stock,
AMBAC Indemnity becomes a direct wholly owned subsidiary of AMBAC Inc. The
Wisconsin Insurance Department has stated that the sale of common stock described
herein does not require Its prior approval. Both Moody's Investors Service, Inc. and
Standard & Poor's Corporation have reaffirmed that the sale of the common stock of
AMBAC Inc, does not affect AMBAC Indemnity's triple -A claims- paying ability rating.
Copies of AMBAC Indemnity's financial statements prelpared in acordance with
statutory accounting standards are available from AMBAC Indemnity. The address of
AMBAC Indemnity's administrative offices and Its telephone number are One State
Street Plaza, 17th Floor, New York, New York, 10004 and (212) 668 -0340.
AMBAC Indemnity has entered Into pro rats reinsurance agreements under which a
percentage of the insurance underwritten pursuant to certain municipal bond insurance
programs of AMBAC Indemnity has been and will be assumed by a number of foreign and
domestic unaffiliated reinsurers.
AMBAC Indemnity has obtained a ruling from the Internal Revenue Service to the
effect t4.at the insuring of an obligation by f Merest de�ch ty will not andt tthe
treatment for federal income tax purposes
Insurance proceeds representing maturing interest paid by AMBAC Indemnity under
policy provisos substantially identical to those contained in !pal bond
r as
Insurance policy shall be treated for federal income tax purposes in the same
if such payments were made by the Issuer of the Bonds.
AMBAC Indemnity makes no representation regarding the Bands or the advisabiilty
of Investing in the Bonds and makes no representation regarding, nor has It participated
In the preparation of, the Official Statement other than the information supplied by
AMBAC Indemnity and presented under the heading "Municipal Bond Insurance:'
Em
THE Crry OF CLEARWATER AND PINELLAS COUNTY
The City of Clearwater, the County Seat of Pinellas County, is geographically
located in the middle of the west coast of Florida on the Gulf of Mexico. It is situated
approximately 22 miles west of Tampa and 16 miles north of St. Petersburg. Standing on
the highest coastal elevation of the State, the City limits comprise approximately 32 -1/2
square miles, Including 8 -1/2 square miles of waterways and lakes.
Clearwater Beach, a corporate part of the City, is an active beach community and
is connected to the main part of the City by Memorial Causeway, a four -lane, tall-free
drive stretching almost two miles across Clearwater Harbor. Business on Clearwater
Beach is mainly tourist - oriented, with its hotels, motels and gift shops. Many fine
homes, apartments, and condominiums offer pleasant, semitropical accommodations to
permanent residents and winter and summer visitors.
The 1989 population of the City of Clearwater was estimated to be 102,600 persons,
or approximately 12% of the estimated County population. The following chart shows
the historical population of the City for the ten -year period 1980 -1989.
CITY OF CLEARWATER, FLORIDA
HISTORICAL POPULATION
1980 -1989
Year Population
1980 85,528
1981 87,859
1982 89,707
1983 91,879
1984 93,648
1985 95,330
1986 97,882
1987 99,124
1988 100,900
1989 102,600
Source of Population Figures: U.S. Census, 1980, U.S. Bureau of Census
Estimates 1981 - 1989.
The City of Clearwater and the other municipalities served by the System are
located in Pinellas County, Florida. Pinellas County is the second smallest county in the
state in land mass, but is the third most populated county in Florida and the most densely
populated with nearly 825,000 residents. Major private employers In the County include
an electric utility holding company, the utility, a television merchandiser, several
hospitals, a newspaper publisher, and a retailer's corporate headquarters. Tourism is the
largest industry in the County employing over 37,000 people In hotels, shops, restaurants
and other related businesses. Annual visitors exceed 3.6 million people,
-10-
• k
THE SYSTEM
Physical Descrfptk. The City's Gas System began in the 1920's and included
production, distribution and sale of manufactured gas. The System was converted to
natural gas in 1959. In addition to serving the City of Clearwater, the System has
expanded into, and has franchise agreements with, the cities of Bellealr, Belleair Bluffs,
Dunedin, Indian Rocks Beach, Largo, Oldsmar, Safety Harbor, and Tarpon Springs. The
franchise agreements expire respectively in 2020, 20029 20209 2018, 2001, 2014, 2001 and
2013, which in some Instances is prior to the maturity of the 1991 Bonds. It is
anticipated that such franchise agreements will be renewed upon their expiration,
however, there can be no assurance of such renewals. Each franchise agreement
authorizes the respective municipality to terminate the franchise agreement in the
event the Ci,: :ails to furnish gas as required by the agreement for causes within the
control of the City for a period of 72 hours. In addition, the franchise agreements with
Dunedin, Belleair Bluffs, Largo and Safety Harbor authorize the municipality to purchase
from the City the property used with respect to each franchise at the expiration of the
franchise. The franchise agreements with Oldsmar and Tarpon Springs authorize Oldsmar
and Tarpon Springs to purchase such property during the term of the franchise as well as
at expiration. The System also services the unincorporated area between these cities.
The System currently serves approximately 11,650 customers and is comprised of 403
miles of gas main.
Aftnagement: The City Is a commission manager municipal government. The Mayor
and Commissioners are elected by the City's voters on an at -large basis. All have voting
power at Commission meetings which are chaired by the Mayor. The City Commission
appoints the Manager and the Manager is responsible for appointing all officers and
employees in the Administrative Service of the City, including the Gas System Manager.
The Clearwater Gas System is administered by the Gas System Manager reporting
directly to the City Manager and is one of five utilities billed by the Clearwater
Utilities Department (Water, Sewer, Gas, Sanitation, Stormwater).
Charles A. Hunsicker currently serves as Assistant City Manager and Interim Gas
System Manager reporting directly to the City Manager. He received his Bachelor of
Science degree in Rural Sociology from the University of Wisconsin - Madison in 1975 and
Masters degree in Urban and Regional Planning from Florida State University in 1982.
He has served as Interim Gas System Manager since March 4, 1991. Mr. Hunsicker had no
experience with natural gas systems prior to assuming his current responsibilities with
the City as Assistant City Manager.
Prior to joining the City of Clearwater in 1989, Mr. Hunsicker served as Acting
Director, Division of Mining Regulation (1987 - 1989), Deputy Director, Public Works
Department (1986 - 1989), and Acting Assistant County Administrator (1985 -1986) all with
Manatee County, Florida.
4
-l1-
.4
Terry Neenan has served as Gas Superintendent of the System since 1986. Prior to
that he served as Assistant Superintendent from 1982 to 1986, Service Survisor from
1979 to 1982, Utilities Serviceman 11 from 1970 to 1979 and Utilities Servicemann I from
1968 -1970 all with the City of Clearwater. He holds a
with Pinellas County and Master Gas Fitter License Witt, Master
inellas County License
and holds other licenses and certificates related to natural nd the City,
from Largo Senior High School in 1960 and has attended St. Pet Mr.
Junior = graduated College
and the Florida Gas Transmission School in Sanford, Florida. o the He has as Secretary g Section of the
and Treasurer and currently serves as Vice Chairman f Operating
Florida Natural Gas Association. served
TransmGassio om The City purchases Its suPP1Y Of natural
pny i` FGT' ), The present supply of gas from the Florida Gas
agreements between the City and FGT effective as of Nogvem er 989 s These
agreements provide a maximum daily quantity of
during the months of November through April, 46,500 toxi mstely 110,000 therms of gas
through September and 49,000 therms in October not to exceed a yearly entittlehs
19,499,000 therms of gas. The service
notwithstanding then FGT °s agreements provide that FGT does not have and,
faith efforts, may not have In the future, sufficient gas
supplies to supply the City with the
agreements. The service quantities of gas specified In the Service
liable in damages or otherwise for any volumes of gas as t the City may not hold FGT
receive as a result of curtailment of deliveries by FGT the City is not permitted to
and Conditions on file with the Federal Energy Y Pursuant to FGT General Terms
to the extent such curtailment is shown to be the ra Regulatory ofCFGT�i� C'FERC "), excefst
fault or willful misconduct. The service agreements expire in November, e1994.bad faith,
Natural gas is supplied to the City by FGT
the FERC Docket No. RP89- 50.000, et al. FGT ttuuralegas mS amended In
meaning of the Natural Gas Act and is engaged in, among other thin co Pant within the
of natural gas for others and the sale and delivery of natural �' the transportation
ultimate use. At the present time FGT is a wh011 �' for resale and for
Corporation which is owned equally by Enron Corh0l
Corporation and subsidiary of Citrus
Corporation, through its subsidiaries Sonat, Inc. Enron
miles of transmission pipeline from Texas to the Canadianeborder�anpp ®m California 00
Florida. Sonat, Inc., although considered an Industrial cord
community, through its subsidiaries, owns and has Interest hr natural gas by the financial
facilities that provide service In the states of Florida, Geo Ids transportation
Tennessee, Mississippi, and Texas as well as the Federal offshore South Carolina,
the State of Louisiana, Domain In and around
FGT Florida which Considering constructing an additional gas Pipeline along
evould increase the Supplies of the west coast of
reservation d�its from gas Purchas?rs t gas
the to the demand for such�tncreased
PPiy The City has paid FGT reservation
delivered in approximately 1994 which would charges for additional quantities of gas d ly be
quantity to 132,000 therms. While FGT Is considering e City maximum winter dally
Pipeline, It is not obligated to do so nor is it Obligatet c pnstructing the additional
urnish the City with any
-12-
T does not construct the pipeline, the City is entitled to
additional supplies of gas. R FGT and
Of its reservation deposit. Daps. interruptible customers
the above
the return into two gr call for delivering effect.
The gysteMss customers are divide
se eements
Although service has a supply restriction plan In ye the
to mers. led by the CltY, titles of gas, FGT is required cut o
general castes City in turn may cut of4 the
quantities of if t� deliver suif icient �m not experienced ally
went. The City has
Should FGT be prior notice of any notice. Tile a winter of 1976 -1927.
City 4 hours p since the aliment of service.
interruptible f services to ninterrupt] custome� enced c rtall past five years was
curtailment of se S teal have never exPe
General Customers B�f�e for both customer groups
December 23, 1989• b the
The maximum declared an open access pipeline
wn gas and the
102,740 therms and occurred line was slow their
t 1990, the FGT Pipe As such, their other saPP
In Augur + Regulatory under mis'' t option agreements be suppliers,
Federal Of othe n the PIPe Is adMted in
the City and FGT. The purchase Price for naturaleII General Terms and
and Gas Adjustment per FGT-- schedule of rates
established a sch
Itatce
Fees ith FG" , RC. City Cammissioe �t adjustment Provision allw of
accordance
n on file with FERC. in the purchase price
s by ordinanceg which includes sine ease or decreasee ng or revising
and charges pass - through to custom Ilation by any state agency In wave ranged from lows
the City is not subject to re9L eneral and interruptible rates have r ° 51.658 Per
gas. The City t, 1986 to highs 70.778t are as follows:
its rates. In the last f ive y the g
of 53.380` and 35.3074 per therm in Augur
1591 reactively. The current rates and charges r therm
therm in February, Rat—�-
Ratf Iheduie 66.6824
47.663¢
General table d northern
InterruP covers central an is bounded
System's present serve miles. The service area
ounty line on
Selvice ArM The S ro amately 135 sq the Pasco
unty, an area of aPP a Gulf of Mexico on the wes� adeiitlOn to the City of
Pinellas line on 'the east. Bellesir Blois, Dunedin,
by Ulmerton Road on the south, County Bellealro as well as
d the vice area L eludes the cities r and Tarpon Springs,
the north the service area
Indian Rocks Beach, Largo, Oldsmar, Safety County
portions of the unincorPt
tee. areas of Pinellas ormation is readily
the latest date as of which the to table:
As of "bruasy, 198 ?, located as shown in the following
available, the S;em' customers were Lora
13-
Number of
Location Meters Percentage
Bellealr 167 1.5%
Belleau Bluffs 12 0.1
Clearwater 6,913 62.3
Dunedin 1,102 9.9
Largo 1,138 10.3
Oldsmar 16 0.2
Safety Harbor 378 3.4
Tarpon Springs 81 0.7
Unincorporated Areas 1,283 11.6
Total 1110913 100.0%
The City provides service to non - interruptible and interruptible classes of
customers. The System derives less than one percent of its revenues from the largest
non - interruptible customer.
The following table shows the five largest interruptible customers by peak monthly
consumption and the percent of the System's revenues derived from such customers
during the 12 months ending June 30, 1991:
Interruptible Peak Monthly Therms % of Gross Revenues
Metal Industries, Inc. 62,950 4.0
Morton F. Plant Hospital l 56,900 3.0
ARA Healthcare Textile
Services, Inc. 55,630 4.0
Aubrey T. Moorefield Paving
Contractors, Inc. 36,570 2.0
Plasti -Kraft Corp. 24,850 1.0
I currently using an alternative fuel service
The City's consumers have grown from 8,914 in 1985 to 11,650 in 1990. The City's
11,650 connections represent a market penetration of approximately 6%.
The following table shows the breakdown of the City's customers by category as
well as the volume of gas sold to each category and the sales revenues generated by each
category:
No. Gas Gas
Customers Volume Sales
Interruptible 11 20% 13%
Residential 9,777 22% 26%
Commercial 1,862 58% 61%
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Internal IA=- Prior to 1990, the City funded a portion of the System's capital
Improvements through an Internal loan from other Enterprise Funds. This non - interest
bearing internal loan was historically classified on the balance sheet as the current
liability "Deficit In Pooled Cash and Investments." As detailed in Appendix A, the
remaining balance on this internal loan was reclassified as "Due to other Funds" in the
City's financial statements as of September 30, 1990 (and netted with other amounts due
to or from other funds).
Consultantls Recommendation. The City recently engaged a national firm of
accountants and management consultants to prepare a business plan for the System. The
consultants identified the strategic goals and objectives the City should seek to
achieve. First, to retain current System customers and obtain new connections, the
consultant recommended the City Improve its level of service to System customers by,
among other things, providing additional training of System employees, adding staff to
meet customer demand, providing service more promptly and improving customer
relations. Second, to preserve the System's development potential, the con.stultant also
recommended the City expand the System north Into Pasco County. The City is
Implementing plans designed to accomplish both recommendations.
■
-15-
0
CITY OF CLEARWATER, FLORIDA
U rILrry SYSTEM - GAS DW19ON
CON[PARATIVE FINANCIAL. STATE EN •T(1?
Fiscal Year
1988
1939
1990
GROSS REVENUES:
$8,993,905
$8,715,030
$9,026,884
322,993
Sales to Customers
Service Charges
326,814
272,091
180,972
210,076
Earnings on Investments
146,385
517
2,187
6,206
Other-----------
--------------------------
— --------------
------
$9,467,621
$9,170,280
$9,566,159
Total Gross Revenues
COST OF OPERATION AND
MAINTENANCE
Personal Services
$1,418,352
$1,561,460
39873,581
$1,600,482
3,933,.459
purchases for Resale
4,073,384
Oper. Materials,/
139,128
80,195
85,225
222,952
Supplies
Transportation
290,007
27,328
287,117
28,069
39,488
Utility Service
142,178
192,179
256,671
Repairs & Maintenance
Interfund Admin.
540,838
486,222
484,820
239,903
Charge
Taxes
227,741
212,797
546,768
581,007
Other
450,155
Total Cost of Operation
a.*ad Maintenance $7,309,111 $7,268,38,8 $7,444,007
$2,158,510 $1,9111,892 $2,122,152
Net Revenues -- - - - - --
Source: City of Clearwater, Annual Financial Statements.
t
(1) Excludes Depreciation
-16-
- 17 -
DEBT SERVICE AMORTIZATION SCHEDULE
YEAR
PRINCIPAL
INTEREST
TOTAL
1992
$488,020.00
$488,020.00
1993
488,020.00
488,020.00
1994
488,020.00
488,020.00
1995
150,000.00
488,020.00
638,020.00
1996
240,000.00
479,620.00
719,620.00
1897
255,000.00
465,820.00
720,820.00
1998
270,000.00
451,030.00
721,030.00
1999
285,000.00
435,100.00
720,100.00
2000
300,000.00
416,000.00
718,000.00
2001
320,000.00
399,700.00
719,700.00
2002
340,000.00
379,6W.00
719,850.00
2003
360,000.00
358,440.00
718,440.00
2004
380,000.00
335,400.00
715,400.00
2005
410,000.00
310,700.00
720,700.00
2006
435,000.00
284,050.00
719,050.00
2007
465,000.00
255,775.00
720,775.00
2008
490,000.00
225,550.00
715,550.00
2009
525,000.00
193,700.00
718,700.00
2010
5650,000.00
159,575.00
719,575.00
2011
595,000.00
123,175.00
718,175.00
2012
635,000.00
84,500.00
719,500.00
2013
6651000.00
43,225.00
708,225.00
Total
$7,680,000.00
$7,335,300.00
$15,035,300.00
- 17 -
� 4r
COVERAGE OF MAXIMUM DEBT SERVICE BY NET REVEIvUES
Fiscal Year Ending
1988
1989
Gross Revenues (1)
$9,467,621
$9,170,280
Cost of Operation
Accrued Interest
$7,680,000.00
and Maintenance(l)
4,066.83
735.675.00
7,309.111
7,268,358 _
Net Revenues
$2,158,510
$1,901,892
Maximum Annual Debt
Deposit Pursuant to Escrow
Service
$721,030
$721,030
Coverage of Maximum
Interest Account
Annual Debt Service
4,066.83
Original Issue D� t
by Net Revenues
Iss��?nce Expenses
200,025.10
200,025.10
(1) City of Clearwater, Annual Financial Reports (Audited)
SOURCES AND USES OF P'i NDS
Sources of Funds
Par Amount of Bonds
Accrued Interest
$7,680,000.00
Existing Reserve Account Moneys
4,066.83
735.675.00
Total Sources of Funds
$8,419,741.83
Uses of Funds
Deposit Pursuant to Escrow
Deposit Agreement
Sinking Fund.
$7,242,784.96
Interest Account
Reserve Account
4,066.83
Original Issue D� t
721,030.00
Iss��?nce Expenses
200,025.10
200,025.10
251,834.94
Total Uses of Funds
$8,4 19,741.83
(1) Includes underwriting discount, insurance premium, other Issuance costs and Issue
size rounding.
FLOW OF FUNDS
intent Of Funds and Accawts. The following Funds and Accounts have been
established pursuant to the Ordinance:
Revenue Fund
Operation and Maintenance Fund
Sinking Fund
Interest Account
Principal Account
Reserve Account
Bond Amortization Account
Renewal and Replacement Fund
A separate subaccount 1s required to be maintained In the Reserve Account for
each series of Bonds.
Priority of Fkm of Fug. The entire Gross Revenues, except the income from
investments (hereinafter discussed), derived from the operation of the System must be
deposited In the Revenue Fund. The Revenue Fund constitutes a trust fund for the
Purposes provided In the Ordinance, and must be kept separate and distinct from all other
funds of the City and used only for the Purposes and in the manner provided in the
Ordinance.
All revenues at any time remaining on deposit In the Revenue Fund must be
disposed of on or before the fifteenth (15th) day of each month, commencing In the
month immediately following the delivery of the 1991 Bonds only In the following manner
and In the following order of priority:
1. Revenues must first be used to deposit In the Operation and Maintenance
Fund, such sums as are necessary for the Cost of Operation and Maintenance for the next
ensuing month.
2. Revenues must next be used for deposit Into the Interest Account, such sums
as will be sufficient to pay one -sixth (1/6) of all interest becoming due on the 1991 Bonds
on the next semi - annual interest Payment date.
3. Revenues must next be used for deposit into the Principal Account, In any
bond year In which a Serial Bond matures, such sums as will be sufficient to pay one -
twelfth (1/12) of the principal maturing on Serial Bonds In such year.
4. Revenues must next be used for deposit into the Bond Amortization Account,
In any bond year In which an Amortization hutaliment is due, such sums as will be
sufficient to pay one- twelfth (1/12) of the Amortization installment required to be made
in such year. Such payment will be credited to a separate special account for each series
of Term Bonds outstanding, and If there Is more than one Stated maturity for. Term Bonds
of a series, then Into a separate special accoua-it In the Bond Amortization Account for
each such separate maturity of Term Bonds. The funds and Investments In each such
separate account are pledged solely to the payment of principal of the Term Bonds of the
series or maturity within a series for which it Is established and will not be available for
-19-
payment, pure or redemption ountfin Term the Siinkingf Fund other makeeup anytdeficie ties in
for transfer to any other
required payments therein.
it in each of the separate special accounts in the Bond
Mweys on di for the open market purchase or the
Amortization Account are required
t to the Ordinance of the series or maturity of Term
tO
redemption of Term Bonds, Pursuant ate special account is established or may
Bonds within a series for which such and
remain in said separate special account and be invested antil the stated date of maturity
of the Term Bonds.
The required a req
its to the Principal Account, interest Account and Bond
Amortization Account are requlredt to be In order to take into account the
amount of money currently on deposit
lied by the City to maintain in each subaccount ent
5, Revenues must next be app for any subsea
equal to the Reserve Requirement,
de�ited therein from the
the Reserve Account a sum eq which sum will initially be To the extent the
year on each series of Bonds+
proceeds of the sale of the 1991 Bondi a d other �t to °fund a lsubaccount vlde within the
that
the
City determines pursuant to a subsea the City may P
Reserve Account for a respective series of Bonds,
t in such subaccount and the Resew
difference between the amounts on de as amount covered by obtaining
Requirement for such series of Bonds municipal bond insurer, by a surety bond,
insurance issued by a reputable and recognized other form of credit
combination thereof or the such adopted prior to the
en a letter of credit or any lisped. Such resolution
enhancement as shah be approved by a resolution of the City
issuance of the series of Bonds for which such subac�unt is established.
may also provide for the substitution f such credit thereof retch t. Bond f r ie�t
surety bond+ a letter of credit or any ited in the subaccount !n the Reserve
enhancement may in the future be oveQl bysquent resolution of the Clty, provided
for the 1991 Bonds as may be PP �gn r a e and ne Of Corporation and
that the provider of such
credit enhancement gTt) luythen rated in one of the two highest
Moody's investors Service, lnc�
Any withdrawals from any subacc Oust in the Reserve Account are required
subsequently restored from the first moneys available In the Revenue Fund on a current
prra subsea is in the Reserve Acc oUl after d (inc required all
prorate basis as to all subaccoun
Payments for the Operation and Maintenance Fund and Sinking
Funds) ha been deficiencies in prior payments to those ve ° made In full-
deficiencies in
Notwithstanding any prolq count n of the Resolution o ly r the t purpose of the
each subaccount in the Reserve for inrest orymakinS Amortization Installments on the
payment of maturing principal was established when the other moneys in the Sinking
Bonds for which such subaccoun t
Including the payment of any
Fund are insufficient therefor, and for no other purl
other series of Bonds• may withdraw
in the event of the refunding of any series of Bonds, the City
from the subaccount within the Reserve Account for such series of Bonds' all or any
za
portion of the amounts accumulated therein with respect to the Bonds being refunded and
deposit such amounts as required by the resolution authorizing the refunding of such
series of Bonds.
6. The City must next deposit Into the Renewal and Replacement Fund an
amount equal to one- twelfth (1/12) of an amount equal to 5% of prior year`s Gross
Revenues; provided, however, that so long as there shall be on deposit In such Renewal
and Replacement Fund a balance of at least $300,000, no additional deposits In such Fund
are required. The moneys In the Renewal and Replacement Fund may be used only for
the purpose of paying the cost of extensions, enlargements or additions to, or the
replacement of capital assets of the System and emergency repairs thereto. Such
moneys on deposit In such Fund are also required to be used to supplement the Reserve
Account if necessary, in order to prevent a default In the payment of the principal or
Amortization. Installments of and Interest on the Bonds.
7. The balance of any moneys remaining In the Revenue Fund after the above
required payments have been made may be used by the City for any lawful purpose.
8. The Operation and Maintenance Fund, the Sinking Fund, the Renewal and
Replacement Fund, the Revenue Fund, and all accounts therein and any other special
funds established and created under the Ordinance constitute trust funds for the purposes
provided herein for such funds. All such funds shall be continuously secured In the same
manner as City deposits are authorized to be secured by the laws of the State of Florida
COVENAN75
Rate Covenant. In and by the Ordinance, the City has covenanted that It will fix,
establish, revise from time to time whenever necessary, maintain and collect always,
such fees, rates, rentals and other charges for the use of the product, services and
facilities of the System which will always provide Revenues In each year sufficient to
pay, and out of such funds pay, 100% of the Cost of Operation and Maintenance of the
System In such year and all reserve and other payments provided for In the Ordinance and
125% of the Bond Service Requirement due In such year on all outstanding Bonds. The
City has covenanted that such rates, fees, rentals, or other charges shall not be reduced
so as to be insufficient to provide Revenues for such purposes.
Additkwal Parity Obigatimm Additional Parity Obligations, payable on a parity
from Net Revenues of the System with the 1991 Bonds, may be issued after the Issuance
of any 1991 Bands, for construction and acquisition of additions, extensions and
Improvements to the System or for refunding purposes and upon the following conditions:
1. The Net Revenues derived or which would have been derived, if adjusted as
set forth below, from the System, either during the immediately preceding Fiscal Year,
during any twelve (12) con ecutive calendar months of the eighteen (18) calendar months
Immediately preceding the sale of the proposed Additional Parity Obligations or during
the last twelve (12) month period for which the City has audited financial statements for
the System, at the option of the City, shall have been not less than 125% of the
Maximum Bond Service Requirement which will become due in any calendar year
thereafter on (a) the 1991 Bonds then outstanding, (b) any Additional Parity Obligations
Issued and then outstanding, and (c) the Additional Parity Obligations then proposed to be
issued.
- 21 -
In determining the amount of Net Revenues for the purposes of paragraph (1) above,
the Consulting Engineers may adjust the Net Revenues by adding thereto the following.
a. The Net Revenues (computed for such utility on the same basis as net
revenues are computed for the System) of any gas utility which the City shall have
acquired prior to the .issuance of such Additional Parity Obligations or which the City
shall be acquiring from proceeds of such Additional Parity Obligations; and
b. In the event a change has been made In the rate schedules for services
from the System prior to the Issuance of the proposed Additional Parity Obligations for a
part of such 12 month period referred to in (1) above, and such change has resulted in an
Increase In Net Revenues, such amount of additional Net Revenues which the Consulting
Engineers estimate would have been received by the City during such 12 month period if
such change in such rate schedule had been In effect during the entire 12 month period;
and in the event a change has been made in the rate schedules for services from the
System prior to the Issuance of the proposed Additional Parity Obligations for a part of
such 12 month period referred to in (1) above, and such change has resulted in a decrease
in Net Revenues, by subtracting therefrom such amount of the Net Revenues which the
Consulting Engineers estimate would not have been received by the City during such 12
month period referred to in (1) above, if such change in such rate schedule had been in
effect during the entire 12 month period,
2. Each resolution or ordinance authoriWing the Issuance of Additional Parity
Obligations will recite that all of the covenants contained In the Ordinance will be
applicable to such Additional Parity Obligations.
3. The City shall not be In default in performing any of the covenants and
obligations of the Ordinance, and all payments required to have been made into the
accounts and funds, as provided in the Ordinance, shall have been made to the full extent
required.
Operatlan and Maintenance. The City covenants it will maintain the System and all
parts thereof In good condition and will operate the same In an efficient and economical
manner making such expenditures for equipment and for renewals, repairs and
replacements as may be proper for the economical oration and maintenance thereof.
Operating Bw%et. The City covenants to annually prepare and adopt prior to the
beginning of each of its Fiscal Years, a detailed budget or budgets of the estimated
expenditures for the operation and maintenance of the System during such next
succeeding Fiscal Year.
AnwAd Au it. At least once a year, within sir months after the clone of its Fiscal
Year, the City covenants to cause the books, records and accounts relating to the System
to be properly audited by a recognized independent firm of certified public accountants.
No Mortgage or Sale of the System. The City has covenanted not to sell, tease,
mortgage, pledge or otherwise encumber the System, or any substantial part thereof, or
any revenues to be derived therefrom, except as described below,
-22-
Notwithstanding the foregoing, the City has :curved the right to sell, lease or
otherwise dispose of any of the property comprising a part of the System which the City
hereafter determines, In the manner provided in the Ordinance, to be no longer
necessary, useful or profitable in the operation of the System. Prior to any such sale,
lease or other disposition of said property, If the amount to be received therefor is not In
excess of $50,000, the City Manager of the Issuer or other duly authorized officer in
charge thereof is required to make a finding in writing determining that such property
comprising a part of the System is no longer necessary, useful or profitable In the
operation thereof.
If the amount to be received from such sale, lease or other disposition of said
property is in excess of $50,000 but not in excess of $ 100,000 such City Manager or other
officer is required to first make a finding in writing determining that such property
comprising a part of the System is no longer necessary, useful or profitable in the
operation thereof, and the governing body of the Issuer must, by resolution or ordinance
duly adopted, approve and concur in the finding of such City Manager or other officer,
and authorize such sale, lease or other disposition of said property.
If the amount to be received from such sale, lease or other disposition of said
property Is In excess of $100,000 but not in excess of 10% of the value of fixed assets of
the System according to the most recent annual audit report, such City Manager or other
officer must first make a finding in writing determining that such property comprising a
part of the System is no longer necessary, useful or profitable in the operation thereof,
and the Consulting Engineer must make a finding that it is In the best interest of the
System that such property be died of, and the governing body of the City must by
resolution or ordinance, duly adopted, approve and concur In the findings of such City
Manager or other officer and of the Consulting Engineer, and authorize such sale, lease
or other disposition of said property.
Anything in this section to the contrary notwithstanding, nothing restricts the
governing body of the City or, to the extent such authority has been vested in him by
such governing body, the City Manager in the exercise of his discretion, from authorizing
the sale or other disposition of any of the property comprising, a part of the System, If
the Consulting Engineer certifies that the Net Revenues of the System will not be
materially adversely affected by reason of such ,sale or d sposition.
Such, proceeds must be placed in the Renewal and Replacement Fund or used for the
retirement of outstanding 1991 Bonds, in such proportions to be determined by the
governing body of the City upon the recommendations of the City Manager. The
payment of such proceeds Into the Renewal and Replacement Fund do not reduce the
amounts required to be paid Into such Fund by other provisions of the Ordinance.
Anything in this section to the contrary notwithstanding, nothing prohibits the City
from transferring owners of the System to another governmental entity in accordance
with the Ordnance without complying with the provisions described in this section. See
"Governmental Reorganization" herein.
No Free Servioe. The City has covenanted not to 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. Whenever the City, including its departments,
23
agencies and iL3trumentalities, shall avail itself of the product, facilities or services
provided by the System, or any part thereof, the same rates, fees or charges applicable
to other customers receiving like services under. similar circumstances shall be charged
to the City and any such department, agency or instrumentality. Such charges shall be
paid as they accrue, and the City is required to transfer from its general funds to the
Revenue Fund sufficient sums to pay such charges. The revenues so received will be
deemed to be Revenues accounted for in the same emanner as other Revenues ues derived from such operation the
System.
Enformment of Collections The City has covenanted to enforce and collect the
rates, fees and other charges for the services and facilities of the System herein pledged;
to take all steps, actions and proceedings for the enforcement and collection of such
rates, charges and fees as shall become delinquent to the full extent permitted or
authorized by law; and to maintain accurate records with respect thereof. All such fees,
rates, charges and revenues pledged pursuant to the Ordinance will+ as collected, be held
in trust to be applied as provided in the Ordinance.
The City will, under reasonable rules and regulations, to the full extent permitted
by law, shut off the connection of any users of the System for non - payment of fees,
rentals and other char;es for the services of the System and will not furnish him or
permit him to receive from the System further service until all obligations owed by him
to the City on account of services have been paid In full.
No Competing System. To the full extent permitted by law, the City has
covenanted not to hereafter grant, or cause, consent to, or allow the granting sf, any
franchise or permit to any person, for the furnishing of competing gas
within the boundaries of the service area of the City; provided, however, that if the Gas
System Manager renders an opinion that it would not be feasible for the City to provide
such services to any specific area within the three years succeeding a request to provide
such service, the City may authorize or allow the granting of such franchise or permit
for such area upon such terms and conditions as it may approve.
Unlawful Connection Profited. The City has enacted an ordinance making it
unlawful for any person or persons to tamper with, change or make any connection with
the System without the written consent of the City, or to awake any reconnection with
the System when service has been discontinued for delinquent charges, until such
delinquent charges have been paid in full, including Interest, reasonable penalties and
reconnection charges. The City will r yvi to the g the provisions permitted
co by la n,
enforce this covenant and prosecute any pe
or any penal ordinance relating to the sae.
Amendamt of the O In the Ordinance, the City has reserved the right to
amend or supplement the Ordinance for certain purposes without the consent of
Bondholders If the amendment or supplement does not adversely affect the rights of
Bondholders. Otherwise, no material modification or amendment of the Ordinance may
be made without the consent in writing of the Bondholders of fifty -one percent or more
of the principal amount of the 1931 Bonds of each Series so affected a change
outstanding; provided, however, that no modification or amendment may permit
in the maturity of such 1991 Bonds or a reduction in the rate of Interest thereon or in the
-24-
amount of the principal obligation thereof or affecting the promise of the City to pay the
principal of and Interest on the 1991 Bonds as the same become due from the Net
Revenues of the System or reduce the percentage of the Bondholders required to consent
to any material modification or amendment of the Ordinance without the consent of the
Bondholders of all such obligations. For purposes of this paragraph, to the extent that
any 1991 Bonds are secured by a Credit Facility and such 1991 Bonds are then rated in
one of the two highest rating categories (without regard to gradation) by either Standard
& Poort Corporation or Moody's Investors Service, Inc., or successors and assigns, then
the consent of the Credit Facility Issuer will be deemed to constitute the consent of the
Bondholders and in such case no consent of the Bondholders Is required.
GOVERNIWENTAL REORGANIZA71ON
In the future the City may determine It Is in the best interest of the City or the
System to reorganize the governmental structure of the City, including merging or
consolidating the City with another public body or transferring the System to another
public body. Nothing in the Ordinance prohibits such action, provided that any
reorganization which affects the System or any transfer of the System must provide that
the System shall be continued as a single enterprise and that any public body which
succeeds to the ownership and operation of the System Is required to also assume all
rights, power, obligations, duties and liabilities of the City under the Ordinance and
pertaining to all Bonds.
UNDERWRITING
The 1991 Bonds are being purchased by the Underwriter, Smith Barney, Harris
Upham 114 Co. Incorporated. The Underwriter has agreed to purchase the 1991 Bonds at
an aggregate purchase price of $7,367,259.35, plus accrued Interest from the dated date
to the date of delivery. The initial public offering prices set forth on the cover of this
Official Statement may be changed by the Underwriter, and the Underwriter may offer
and sell the Bonds to certain dealers and others at prices lower than the public offering
prices.
CERTAIN LEGAL MATTERS
Certain legal matters in connection with the issuance of the 1991 Bonds are subject
to the approval of Bryant, Miller and Olive, P.A., Tallahassee, Florida, Bond Counsel
whose approving opinion will be available at the time of delivery of the 1991 Bonds.
Certain legal matters will be passed upon for the Underwriter by its counsel, Lawson,
McWhirter, Grandoff & Reeves, P.A., Tampa, Florida. Certain legal matters will be
passed upon for the City by M.A. Galbraith, jr., Esquire, City Attorney.
TALC E%Ebilyi ON
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 1991
Bonds in order that interest on the 1991 Bonds be and remain excluded from gross income
for purposes of Federal income taxation. Non - compliance may cause interest on the
1991 Bonds to be included in Federal gross income retroactive to the date of issuance of
the 1991 Bonds, regardless of the date on which such non - compliance occurs or is
-25-
ascertained. These requirements include, but are not limited to, provisions which
prescribe yield and other limits within which the proceeds of the 1991 Bonds and the
other amounts are to be invested and require that certain investment earnings on the
foregoing must be rebated on a periodic basis to the Treasury Department of the United
States. The City has covenanted in the Ordinance to comply with such requirements in
order to maintain the exclusions from Federal gross Income of the interest on the 1991
Bonds.
in the opinion of bond counsel, assuming compliance with the aforementioned
covenants, under existing laws, regulations, judicial decisions and rulings, interest on the
1991 Bonds Is excluded from gross income for purposes of Federal income taxation.
Interest on the 1991 Bonds is not an item of tax preference for purposes of the Federal
alternative minimum tax imposed on individuals or corporations; however, interest on the
1991 Bonds may be subject to the alternative minimum tax when any 1991 Bond is held by
a corporation. The alternative minimum taxable income of a corporation must be
increased by 75% of the excess of such corporation's adjusted current earnings over its
alternative minimum taxable income (Before this adjustment and the alternative tax net
operating loss deduction). "Adjusted Current Earnings" will include Interest on the 1991
Bonds. The 1991 Bonds are exempt from all present intangible personal property taxes
imposed pursuant to Chapter 199, Florida Statutes.
Except as described above, Bond Counsel will express no opinion regarding the
Federal income tax consequences resulting from the ownership of, receipt or accrual of
interest on, or disposition of 1991 Bonds. Prospective purchasers of 1991 Bonds should be
aware that the ownership of 1991 Bonds may result In collateral Federal Income tax
consequences, including (1) the denial of a deduction for Interest on Indebtedness Incurred
or continued to purchase or carry 1991 Bonds, (li) the reduction of the loss reserve
deduction for property and casualty insurance companies by 15% of certain items,
including interest on the 1991 Bonds, (iii) for taxable years beginning before 1996, the
inclusion of interest on 1991 Bonds in "modified alternative minimum taxable income" for
purposes of the environmental tax imposed on corporations, (iv) the inclusion of interest
on the 1991 Bonds in earnings of certain foreign corporations doing business in the United
States for purposes of a branch profits tax, (v) the inclusion of interest on 1991 Bonds in
passive income subject to Federal income taxation of certain Subchapter S corporations
with Subchapter C earnings and profits at the close of the taxable year, and (vi) the
inclusion of interest on the 1991 Bonds in "modified adjusted gross Income" by recipients
of certain Social Security and Railroad Retirement benefits for purposes of determining
whether such benefits are included in gross income for Federal Income tax purposes.
PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE 1991 BONDS AND THE
RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY HAVE ADVERSE
FEDERAL TAX CONSEQUENCES FOR CERTAIN INDIV[DUAL AND CORPORATE
BONDHOLDERS. PROSPECTIVE 1991 BONDHOLDERS SHOULD CONSULT WITH
THEIR TAX SPECIALISTS FOR INFORMATION IN THAT REGARD.
During recent years legislative proposals have been introduced in Congress, and in
some cases enacted, that altered certain Federal tax consequences resulting from the
ownership of obligations that are similar to the 1991 Bonds. In some cases these
proposals have contained provisions that altered these consequences on a retroactive
basis. Such alteration of Federal tax consequences may have affected the market value
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Aft
of obligations similar to the 1991 Bonds. From time to time, legislative proposals are
pending which could have an effect on both the Federal tax consequences resulting from
ownership of 1991 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 1991 Bonds.
F.i°Y'HGA77ON
There is no litigation pending or threatened that seeks to restrain or enjoin the
Issuance or delivery of the 1991 Bonds or the proceedings or the authority under which
they are to be issued. Neither the creation, organization or existence of the City is
contested. There is no litigation pending which in any manner questions the right of the
City to pledge the Net Revenues of the Gas System to the payment of the 1991 Bonds
and the interest thereon.
The CIty experiences routine litigation and claims incidental to the conduct of its
affairs. In the opinion of the City Attorney, there are no actions presently pending or
threatened, the adverse outcome of which would impair the City's ability to perform its
obligations to the holders of the 1991 Bonds.
r Y
Standard & Poor`s Corporation and Moody's Investors Service, Inc. have assigned
their municipal bond ratings of "AAA" and "Aaa," respectively, to the 1991 Bonds with
the understanding that upon delivery of the 1991 Bonds, a policy Insuring the payment
when due of the principal of and interest on the 1991 Bonds will be issued by AMBAC
Indemnity Corporation.
The ratings reflect only the views of the respective rating agencies and are based
on current information furnished by the City or obtained from other sources considered
reliable by each rating agency. Any explanation of the significance of the ratings may be
obtained from the respective rating agency.
A securities rating is not a recommendation to buy, sell or hold securities. There
can be no assurance that a rating will remain in effect for any given period of time or
that it will not be revised downward or withdrawn entirely by a rating agency, if in its
Judgment, circumstances so warrant. Any such downward revisions or withdrawal of a
rating may have an adverse effect on the market price of the 1991 Bonds.
hC[SCELLANEOW
The information in the foregoing pages is presented for the information of
prospective purchasers of the 1991 Bonds described herein. The Information has been
compiled from offIcIal and other sources and, while not guaranteed by the City, is
believed to be correct. So far as any statements made In this Official Statement and the
Appendices hereto involve matters of opinion or estimates, whether or not so expressly
stated, they are set forth as such and not as representations of fact, and no
representation is made that any of the estimates will be realized.
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AI)THORIZATION OF AND CERTIFICATION
CONCERNING THE OFFICIAL STATEMENT
The Official Statement has been authorized by the City of Clearwater, Florida.
Concurrently with the delivery of the 1991 Bonds, the undersigned will furnish their
certificate to the effect that, to the best of their knowledge, this Officiall Statement did
not as of its date, and does not as of the date of the delivery of the 1991 Bonds, contain f
any untrue statement of a material fact or omit to state a material fact which should be
included therein for the purposes for which this Official Statement is to be used, or i
which is necessary In order to make the statements therein, in the light of the
circumstances in which they were made, not misleading.
CITY OF CLEARWATER, FLORIDA
Mayor
City Manager
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