99-01
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RESOLUTIONS
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BM&O DRAFT #3
04/16/99
#3]70
RESOLUTION NO. 99-01
A RESOLUTION AUTHORIZING THE V ALIDA nON OF BONDS TO BE
ISSUED UNDER ORDINANCE NO. 6378-99; PROVIDING FOR THE
ISSUANCE OF NOT TO EXCEED $7,500,000 STORMWATER SYSTEM
REVENUE BONDS; PROVIDING THAT SUCH BONDS SHALL BE ISSUED IN
FULL BOOK ENTRY FORM; PROVIDING CERTAIN OTHER MATTERS IN
CONNECTION THEREWITH; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, on April 15, 1999, the City Commission of the City of Clearwater, Florida (the
"Cityl1 or the "Issuertl) enacted Ordinance No. 6378-99 (the HBond Ordinancelr) to provide for the
issuance of bonds in an aggregate principal amount of not to exceed $30,000,000 of the City's
Stormwater System Revenue Bonds, Series [to be determined], in one or more series from time to
time payable from Net Revenues of the Stormwater System (as defined therein); and
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WHEREAS, it is in the best interest of the City to designate the initial portion of such bonds
to fimmce the Series 1999 Project as "Stormwater System Revenue Bonds, Series 1999/, (the "Series
1999 Bondstl); and
WHEREAS, it is in the best interest of the City to validate the issuance of all bonds under
the Bond Ordinance, including, but not limited to, the not to exceed $7,500,000 of Series 1999
Bonds;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY
OF CLEARWATER, FLORIDA. as follows:
SECTION 1. VALIDATION AUTHORIZED. The City's Bond Counsel, in consultation
with the City Attorney, is hereby authorized and directed to file, on behalf of the City, a Complaint
in Validation of all of the bonds authorized to be issued under the Bond Ordinance, including but
not limited to the Series 1999 Bonds, in accordance with the procedures set forth in Chapter 7St
Florida Statutes.
SECTION 2. AUTHORIZATION OF SERIES 1999 BONDS, SERIES
DESIGNATION AND 1999 PROJECT. That portion of the not to exceed $30,000,000 of the
Stonnwater System Revenue Bonds, Series [to be determined] authorized by the Bond Ordinance
being offered pursuant to this resolution is hereby designated as the not to exceed $7,500,000 City
of Clearwater, FloridaJ Stormwatcr System Revenue Bonds, Series 1999 (the "Series 1999 Bonds"),
which Series 1999 Bonds are hereby authorized to be issued, provided however. that if the Series
1999 Bonds arc not issued during calendar year 1999, the city reserves the right to make a different
'-/ series designation. The proceeds ofthe Series 1999 Bonds shall be used to pay (i) a portion of the
~esolu"-h'on qq-ol
~ costs of the 1999 Project (as hereinafter identified), (ii) the costs of issuing the Series 1999 Bonds,
" (iii) the premium on the Bond Insurance Policy and (iv) the premium for the debt service reserve
fund surety bond or to make n deposit to the Reserve Fund. The proceeds orthe Series 1999 Bonds
not required to pay the amounts described in clauses (ii) through (iv) in the immediately preceding
sentence shall be deposited into the subaccount in the Construction Fund (created by the Bond
Ordinance) for the 1999 Project. The 1999 Project shaH consist of those capital projects of the
, System approved by action of the City Commission as part of the 1998-1999 fiscal year capital
budget.
SECTION 3. BOOK ENTRY ONLY BONDS. It is in the best interest of the City and the
residents and inhabitants thereof that the Series 1999 Bonds be issued utilizing a pure book-entry
system of registration. In furtherance thereof, the City has previously executed and delivered a
Blanket Letter of Representations with the Depository Trust Company. For so long as the Series
1999 Bonds remain in such book entry only system of registration, in the event of a conflict between
the provisions of the Bond Ordinance and of the Blanket Letter of Representations, the terms and
provisions of the Blanket Letter of Representations shall prevail.
SECTION 4. EFFECTIVE DATE. This resolution shall take effect immediately upon
adoption.
o
'Passed and adopted by the City Commission of the City ofCleanvater, Florida, this 6th day
of May, 1999.
CITY OF CLEAR WATER, FLORIDA
Approved as to form:
~ Akin, City Attorney
Attest:
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fJ1I Cynth'
audeau, City Clerk
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EXHIBIT A
COMMITMENTS FOR MUNICIPAL BOND INSURANCE POLICY AND
DEBT SERVICE RESERVE SURETY BOND
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COMMITMENT TO ISSUE A
FINANCIAL GUARANTY INSURANCE POLICY
Application No.: 1999-001595-01
Sale Date: March 1999 (T)
Program Type: Negotiated DP
Re: $7 ~200~OOO (Est.) City of Clearwater, Florida~ Stormwater Revenue Bonds~ Series 1999
(the "ObHgationstl)
This commitment to issue a financial guaranty insurance policy (the "Commitment")
dated March 1O~ 1999, constitutes an agreement between CITY OF CLEARWATER. FLORIDA
the C'Applicant") and MBIA Insurance Corporation (the "Insurer"), a stock insurance company
incorporated under the laws of the State of New York.
Based on an approved application dated March 8~ 1999, the Insurer agrees, upon
satisfaction of the conditions herein, to issue on the earlier of (i) 120 days of said approval date
or (ii) on the date of delivery of and payment for the Obligations~ a financial guaranty insurance
policy (the t1policy") for the Obligations~ insuring the payment of principal of and interest on the
Obligations when due. The issuance of the Policy shall be subject to the following terms and
conditions:
. 1. Payment by the Applicant, or by the Trustee on behalf of the Applicant, on the date
) of delivery of and payment for the Obligations, of a nonrefundable premium in the amount of
,:. .259% of total debt service, premium rounded to the nearest thousand. The premium set out in
this paragraph shall be the total premium required to be paid on the Policy issued pursuant to
this Commitment.
2. The Obligations shall have received the unqualified opinion of bond counsel with
respect to the tax-exempt status of interest on the Obligations.
3. There shall have been no material adverse change in the Obligations or the
Resolution, Bond Ordinance, Trust Indenture or other official document authorizing the issuance
of the Obligations or in the final official statement or other similar document, including the
financial statements included therein.
4. There shall have been no material adverse change in any information submitted to
the Insurer as a part of the application or subsequently submitted to be a part of the application
to the Insurer.
5. No event shall have occurred which would allow any underwriter or any other
purchaser of the Obligations n01 to be required to purchase the Obligations at closing.
6. A Statement of Insurance satisfactory to the Insurer shall be printed on the
Obligations.
7. Prior to the delivery of and payment for the Obligations) none of the information or
documents submitted as a part of the application to the Insurer shall be determined to contain
any untrue or misleading statement of a material fact or fail to state a material fact required to
be stated therein or necessary in order to make the statements contained therein not misleading.
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8. . No material adverse change affecting any security for the Obligations shall have
occurred prior to the delivery of and payment for the Obligations.
9. This Commitment may be signed in counterpart by the parties hereto. .'
10. Compliance with the Insurer's General Document Provisions (see attached).
Dated this J Oth day of March, J 999.
MBIA Insurance Corporation
By ~4f ~ {(U/
Assistant Secretary
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CITY OF CLEARWATER, FLORIDA
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GENERAL DOCUMENT PROVISIONS
Noticc to the lnsurcr The basic lcgal documents must provide that any notices required to
be given by llny party should also be given to the Insurcr, Attn: Insured Portfolio
MtlllUgCIllCIlt.
AmendIllC!l1li. In the basic legal document, there arc usually two methods of amendment.
The first, which typically does not require the consent of the bondholders, is for
amendments which will cure ambiguities, correct formal defects or add to thc security of
the financing. Thc second, in which bondholder consent is a prerequisite, covers the more
substantive types of amendments. For all financings, the Insurer must be given notice of
any amendments that arc of the first type and the Jnsurer's consent must be required for all
amendments of the second type. AU documents must contain a provision which requires
copics of any amendments to such documents which are consented to by the Insurer to be
sent to Standard & Poarls.
C. Supplemental Legal Document. If the basic legal document provides for a supplemental
legal document to be issued for reasons other than (1) a refunding to obtain savings; or (2)
the issuance of additional bonds pursuant to an additional bonds test, there must be a
requirel11rnt that the Insurer's consent also be obtained prior to the issuance of any
additional bonds and/or execution of such supplemental legal document.
D. Evcnts of Default and Remedies. All documents normally contain provisions which define
the events of default and which prescribe the remedies that may be exercised upon the
,-" occurrence of an event of default. At a minimum, events of default will be defined as
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A.
'B.
I. the issuer/obligor fails to pay principal when due;
2. the issuer/obligor fails to pay interest when due;
3. the issuer/obligor fails to observe any other covenant or condition of the document
and such failure continues for 30 days and
4. the issuer/obligor declares bankruptcy.
The Insurer, acting alone, shall have the right to direct all remedies in the event of a default. The
Insurer shall be recognized a3 the registered owner of each bond which it insures for the purposes
of exercising all rights and privileges available to bondholders. For bonds which it inr.ures, the
Insurer shall have the right to institute any suit, action, or proceeding at law or in equity under
the same terms as a bondholder in accordance with applicable provisions of the governing
documents. Other than the usual redemption provisions, any acceleration of principal puymcnls
must be subject to the Insurer's prior written consent.
E. Defeasance requires the deposit of:
]. Cash
2. U.S. Treasury Certificates, Notes and Bonds (including State and Local Government
,,---,. Series -- II SLGsII)
3. Direct obligations of the Treasury which have been stripped by the Treasury itself,
CATS, TIGRS and similar securities
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4. Resolution Funding Corp. (REFCORP) Only the interest component of REFCORP
strips which have been stripped by request to the Federal Reserve Bank of New York in
book entry form arc acceptable.
5. Pre-refunded municipal bonds rated "Aaall by Moody's and IlAAA" by S&P. If
however; the issue is only rated by S&P (i.e.; there is no Moody's rating), then the pre-
refunded bonds must have been pre-refunded with cash. direct U.S. or U.S. guaranteed
obligations, or AAA rated pre-refunded municipals to satisfy this condition.
6. Obligations issued by the following agencies which are backed by the full faith and
credit of the U.S.:
a. U.S. Export-Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
b. Farmers Home Administration (FmHA)
Certificates of beneficial ownership
c. Federal Financing Bank
d. General Services Administration
Participation certificates
e. U.S. Maritime Administration
Guaranteed Title XI financing
f. U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed public
housing notes and bonds
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F. Agents:
1. In transactions where there is an agent/enhancer (other than the Insurer), the trustee,
tender agent (if any), and paying agent (if any) must be commercial banks with trust
powers.
2. The remarketing agent must have trust powers if they are responsible for holding
moneys or receiving bonds. As an alternative, the documents may provide that if the
remarketing agent is removed, resigns or is unable to perfonn its dutiest the trustee
must assume the responsibilities of remarketing agent until a substitute acceptable to
the Insurer is appointed.
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COMMITMENT TO ISSUE A
DEBT SERVICE RESERVE SURETY BOND
Application No.: 1999-001595-02
Sale Date; March 1999 cn
Program Type: Negotiated DP
. RE: $720,000 (Est.) Debt Service Reserve Fund for the $7.200,000 (Est.) City of Clearwater.
Florida, Stormwater Revenue Bonds, Series 1999
(the "Obligations II)
This commitment to issue a debt service reserve surety bond (the "Commitment")
constitutes an agreement between CITY OF CLEARWATER. FLORIDA, (the "Applicant"),
and MBIA Insurance Corporation (the "Insurer"). a stock insurance company incorporated under
the laws of the State of New York.
Based on an approved appliC'atiol1 dated March 8, 1999, the Insurer agrees, upon
satisfaction of the conditions herein, to issue on the carlier of (i) 120 days of said approval date
or Oi) on the date of delivery of and payment for the Obligations, a debt service reserve surety
bond (the "Surety Bond"), for the Obligations, guaranteeing the payment to the issuer of up to
$720,000 (Est.) on the Obligations. The issuance of the Surety Bond shall be subject to the
following term's and conditions:
1. Payment by the Applicant, or by the Trustee on behalf of the Applicant, on the date
of delivery of and payment for the Obligations. of a nonrefundable premium in the amount of
2.75% of total surety bond amount, premium rounded to the nearest thousand. The premium set
out in this paragraph shall be the total premium required to be paid on the Policy issued pursuant
to this Commitment.
2. The Obligations shall have received the unqualified opinion of bond counsel with
respect to the tax-exempt status of interest on the Obligations.
3. There shall have been no material adverse change in the Obligations or the
Resolution, Bond Ordinance, Trust Indenture or other official document authorizing the issuance
of the Obligations or in the final official statement or other similar document, including the
financial statements included therein.
4. There shall have been no material adverse change in any information submitted to
the Insurer as a part of the Application or subsequently submitted to be a part of the Application
to the Insurer.
5. No event shall have occurred which would allow any underwriter or any other
purchaser of the Obligations not to be required to purchase the Obligations at closing.
6. Prior to the delivery of and payment for the Obligations, none of the information or
documents submitted as a part of the Application to the Insurer shall be determined to contain
any untrue or misleading statement of a material fact or fail to state a material fact required to be
stated therein or necessary in order to make the statements contained therein not misleading.
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7. No material adverse change affecting any security for the Obligations shall have
'~ occurred prior to the delivery of and payment for the Obligations.
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8. This Commitment may be signed in counterpart by the parties hereto.
9. Compliance with the Insurer's Term Sheet for Debt Service Reserve Fund Program
(see Attachment A). .
Dated this 10th day of March, 1999.
sura nee Corporation
By
Assistant Secretary
CITY OF CLEARWATER, FLORIDA
By:
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(Attachment A)
TERM SHEET FOR DEBT SERVICE RESERVE FUND PROGRAM
Introduction
The Insurer can, under certain circumstances. issue a debt service reserve fund surety bond
(the IISuret)' Bondll), to be used as a replacemcnt for a cash funded reserve, in any amount up to
the full amount of the debt service reserve fund requirement.
The Insurer requires that the issuer and/or the underlying obligor of the bonds enter into a
Financial Guaranty Agrcement with the Insurer providing for, among other things, the
reimbursement to the Insurer of amounts drawn under the Surety Bond. A sample draft of such
an agreement is attached.
The Insurer will undertake its standard credit analysis of the issuer and/or obligor which
may result in requests for modifications of the structure or. certain provisions of the bond
documents. These changes would be in addition to the specific changes required in all
financings where a Surety Bond will be issued (see Required Terms below).
The Surety Bond may be structured to provide debt service reserve fund replacement for the
, current issue of bonds and any other debt issued on a parity therewith. However, in all cases, the
Surety Bond will expire on the final maturity date of the current issue.
Tbe program criteria are subject to change by the Insurer.
General Terms
Provision should be made in the bond documents for the creation of a debt service reserve
fund and there should be a requirement to maintain that fund at a certain level. It should also be
provided that this requirement may be satisfied by cash or a qualitied surety bond or a
combination of these two (Note: A IIqualified surety bond" means a surety bond issued by an
insurance company rated in the highest rating category by Standard & Poor's and Moody's and.
if rated by A.M. Best & Company. must also be rated in the highest rating categorY by A.M.
Best & Company).
In those instances where the issuance of parity debt will cause the debt service reserve fund
requirement to increase, the Insurer requires that at the time of issuance of such parity debt,
either cash or a qualified surety bond be provided so that the increased requirement will be
satisfied.
In any event where the debt service reserve fund contains both an the Insurer Surety Bond
and cash, the Insurer requires that the cash be drawn down completely before any demand is
made on the Surely Bond. In any event where the debt service reserve fund contains a surety
bond from another entity and an INSURER Surety Bond, the documents should provide for a
pro-rata draw on each of the surety bonds.
With regard to replenishment, any available monies, as defined in the Indenture or
Resolution, should be used first to reimburse the Insurer, thereby reinstating the Surety Bond,
nnd second to replenish the cash in the debt service reservc fund.
The rate covenant should be expanded so that, in addition to all other coverage requirements)
there are sufficient monies nvailable to pay all amounts owed to the Insurer under the tenns of
the Financial Guaranty Agreement.
If the documents provide for the issuance of additional bonds that do not share a common
reserve fund with the current issue, the Insurer can issue a surety bond that is, by its terms)
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available only as a reservc for the current issue. In such cases, the Insurer would require a
covcnant that any revenues available for debt service must be distributed between the current
issue and any additional bonds on a pro rata basis without regard to the existence of a funded
debt service reserve or a surety bond.
The bond documents should require the Trustee to deliver a Demand For Payrncnt (see
attached form) at least three days prior to thc datc on which funds arc required.
RCQuired Terms
With respect to any security interest in collateral granted to the bondholders, the lnsurcr
should be granted that same interest subject only to that of the bondholders. This would apply to
existing security, ifany, as well as any to be granted in the future.
The Insurer should receive an opinion from counsel to the issuer/obligor that the Financial
Guaranty Agreement is a legal, valid and binding obligation of the issuer/obligor and is
enforceable against the issuer/obligor in accordance with its terms.
In general terms, the "flow of funds" would be structured as follows:
All gross revenues should be paid in the following order with the priority indicated:
(I) expenses of operation and maintenance;
(2) debt service on the bonds;
(3) reimbursement of amounts advanced by the Insurer under the Surety Bond;
(4) reimbursement of cash amounts, if any, drawn from the reserve fund;
(5) replenishment of Renewal and Replacement Fund;
(6) payment to the Insurer of interest on amounts advanced under the Surety
Bond;
(7) all other lawful uses, including the debt service payment on any subordinate
bonds.
Provision must be made for the Insurer to be paid all amounts owed to it under the terms of
the Financial Guaranty Agreement or any other documents before the bond documents may be
terminated.
It will be the responsibility of the trustee/paying agent to maintain adequate records, verified
with the Insurer, as to the amount available to be drawn at any given time under the Surety Bond
and as to the amounts paid and owing to the Insurer under the terms of the Financial Guaranty
Agreement.
There may be no optional redemption of bonds or distribution of funds to the issuer and/or
the underlying obligor unless all amounts owed to the Insurer under the terms of the Financial
Guaranty Agreement or any other documents have been paid in full.
8/]2/93
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