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HomeMy WebLinkAboutR-91-0644RESOLUTION NO, 91 w 644 A RESOLUTION, WITH ATTACHMENT(S), OF THE CITY COMMISSION OF THE CITY OF MIAMI, FLORIDA, AUTHORIZING THE SUBSTITUTION OF A RESERVE ACCOUNT SURETY BOND FOR CASH ON DEPOSIT IN THE DEBT SERVICE RESERVE ACCOUNT SECURING THE CITY'S OUTSTANDING GUARANTEED ENTITLEMENT REVENUE BONDS, SERIES 1989, AND DIRECTING THE DEPOSITORY OF THE DEBT SERVICE RESERVE ACCOUNT TO ACCEPT SUCH SURETY BOND; APPROVING THE FORM, EXECUTION AND DELIVERY OF A FINANCIAL GUARANTY AGREEMENT; DIRECTING THE APPLICATION OF THE CASK RELEASED AS A RESULT OF SUCH SUBSTITUTION; AUTHORIZING FURTHER OFFICIAL ACTIONS TO EFFECT SUCH SUBSTITUTION; AUTHORIZING THE APPOINTMENT AND PAYMENT OF SPECIAL COUNSEL TO THE CITY; PROVIDING SEVERABILITY; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, The City of Miami, Florida (the "City"), pursuant to the Constitution and other laws of the State of Florida, including Chapter 166, Florida Statutes, the Charter of the City (Chapter 10847, Special Laws of Florida, 1925, as amended), and Resolution No. 89-443, adopted May 11, 1989, as amended and supplemented by Resolution No. 89-549, adopted June 7, 1989, collectively, the "Bond Resolution"), has heretofore issued its Guaranteed Entitlement Revenue Bonds, Series 1989, in the aggregate original principal amount of $6,500,000 (the: "Series 1989 Bonds") accompanied by an approving legal opinion from Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., as bond counsel to the City; and WHEREAS, pursuant to Section 304(D)(3) of the Bond Resolution, the City intends to deposit to the credit of the Debt Service Reserve Account (the "Reserve Account") established under the Bond Resolution a reserve account surety bond meeting the requirements of said Section 304(D)(3) in an amount equal to the debt service reserve requirement for the Series -1989; Bonds in substitution for the cash on deposit therein, which cash will i�a .ATTACHMENTS I CONTAINED SEP 11 . .Aw ltl Sx Y Y} A�o1ut+n are h+sr+aby declared to be ovisions of►. � 13,oab to the pr�ortisions 'of this inapplicable Resolution, hi 1 tY1V.al� dty. to +else $1'ly, ,, ,► 1ati tha provisions ref this Resolution stall for any or"►� of ? ' or held to be fllagal or invalid, such illegality y b ,road clot affect any other provision of this invalidity shall - Resolution shall be construed and enforced u ' Res oi�i ion, but this illegal or invalid provision had not been contained if such as' herein. �1 Effective. This Resolution shall section Reso:» ion become effective immediately upon its adoption. PASSED AND ADOPTED this 11t 1991. day of u; XAVIER 01 SUARE , MAYOR ATT MAT HIRAI ' CITY CLERK PREPARED AND.. APPROVE D BY: .: _ a ... a .... _ M- RAFAEL D AZ CITY A EY CHIEF ASSISTANT APPROVED AS TO FORM AND CORRECTNESS: i4 ♦ f A QUI N J0 E II ACTING CIT TTORNEY ' ROD:gb:M25 3' a. ` t� rM - x r' n Y rt eur,,. i! f } iota'! t 1 �y�5 S 7 k'ii F ►. �l; �My. Al I Y rCi GVAPAM A428MUT made as of 3une 1991 (the "Agreement") by and between, THE CITY OF MIAMI, FLOAZDA (the "Issuer") and MUNICIPAL BOND IMSTOkS ASSDRANC'E OOP.PORATION (the "Insurer"), organized under the laws of the state of New yOtk. WHEREAS, the Issuer has or will issue the Obligations; and WHEREAS, pursuant to the terms of the Document the Issuer agrees to make certain payments on the Obligations; and WHEREAS, the Insurer will issue its Surety Sonde substantially in the form set forth in Annex A to this Agreement, guaranteeing certain payments by the Issuer subject to the terms and limitations of the Surety Bond; and WHEREAS, to induce the Insurer to issue the Surety Bond, the Issuer has agreed to pay the premium for the Surety Bond and to reimburse the Insurer for all payments made by the Insurer under the Surety Bond, all as more fully set forth in this Agreement; WHEREAS, the Issuer understands that the Insurer expressly requires the delivery of this Agreement as part of the- considera-tion for the execution by the Insurer of the Surety Bond; and NOW, THEREFORE, in consideration of the premises and of the - agreements herein contained and of the execution of the Surety Bond, the Issuer and the Insurer agreeasfollows': ARTICLE I DEFINITIONS; SURETY BOND Section 101 Definitions. The terms which are capitalized herein, including the 'recitals hereto, shall have the meanings specified in Annex B hereto. Section 1.02. Surety B`on_d. (a) The Insurer will issue the Surety Bond on the'date of this Agreement in accordance with and subject to the terms and con- ditions ofthe Commitment. (b) The maximum liability of the Insurer underthe Surety Bond and the coverage and term thereof shall be subject to and limited by the terms and conditions of the -Surety Bond. z; 4 s F �5 1 Section 1.03, ZUZ. In consideration of the Insurer agreeing to issue the Surety Bond hereunder, the Issuer hereby agrees to pay or cause to be paid the Premium set forth in Amex B hereto. The premium on the Surety Bond is not refundable for any reason. Section 1.04. certain. other_Exgenses. The Issuer will pay all reasonable fees and disbursements of the Insurer's special counsel related to any modification of this Agreement or the Surety bond. ARTICLE II RBIMSORSEM UT AND XNDEMM PXCATION OBLIOATIOV8 Oh IBBVER AND $BCVRITY TnREFORB Section 2.01. Reimbursement for Payments_ Under. _the. Surety Bond and EX2enses;'- Indemnification. (a) The Issuer will reimburse the Insurer, within the Reim- bursement Period, without demand or notice by the Insurer to the Issuer or any other person, to the extent of each Surety Bond pay- ment. with interest on each Surety Bond payment from and including the date made to the date of the reimbursement at the lesser of the Reimbursement Rate or the maximum rate of interest permitted by then applicable law. (b) The Issuer also agrees to reimburse the Insurer immedi- ately and unconditionally upon demand, to the extentpermitted'by state law, for all reasonable expenses incurred by the Insurer in connection with the Surety Bond and the enforcement by the Insurer of the Issuer's obligations under this Agreement, the Document and any other document executed in connection with the issuance of the Obligations, together with interest on all such expenses from and including the date incurred to the date of payment at the rate set forth in 'subsection (a) of this Section 2.01. (c) The Issuer agrees to indemnify the Insurer, to the extent permitted by state law, against` any and all liability, claims, loss, costs, damages, fees of attorneys and other expenses which the Insurer may sustain or incur by reason of or in consequence of (i) the failure of the Issuer t0 perform or'compl, with the 'covenants or conditions of this Agreement or (ii) reliance by the Insurer upon any representations made by the Issuer or a default by the Issuer under the terms of the Document or any other documents executed in connection with the issuance of the obligations. (d) The Issuer agrees that all amounts owing to the Insurer pursuant to this Section 2.01 must be paid in full prior to any optional redemption or refunding of the Obligations. 2 - y ,n -n 91 (a) All payments shall be paid in lawful ately available funds at Armonk,. Nov York 10504, Departments, or at such Insurer* made to the Insurer under this Agreement currency of the united states in immedi- the.In6urer10 office at 113 sting Street, Attentions 'Accounting and Surveillance other place as shall be designated by the Section 2.02. Allocation -of -Payments. The Insurer and the Issuer hereby agree that each payment received by the Insurer from or on behalf of the Issuer as a reimbursement to the Insurer as required by Section 2.01 hereof shall be applied by the Insurer first, toward repayment of the aggregate Surety Bond Payments made by the Insurer and not yet repaid, payment of which will reinstate all or a portion of the Surety Bond Coverage to the extent of such repayment (but not to exceed the Surety Bond Limit); and second, upon full reinstatement of the Surety Bond Coverage to the Surety Bond Limit, toward other amounts, including, without limitation, any interest payable with respect to any Surety Bond Payments then due to the Insurer. Section 2.03. Security. for_Pavments: Inst=ents of Further gsgurance. To the extent, but only to the extent, that the Docu- ment, or any related indenture, trust agreement, ordinance, reso- lution, mortgage, security agreement or similar instrument, if any, pledges to the Owners or any trustee therefor, or grants a securit3 interest or lien in or on any collateral, property, revenue of other payments ("Collateral and Revenues") in order to secure the Obligations 'or provide a source of payment for the Obligations, the Issuer hereby grants to the Insurer a security interest in or lies on, as the case may be, and pledges to the Insurer all such Collat- eral and Revenues as security for payment of all amounts due here- under and under the Document or any other document executed ii connection with the issuance of the Obligations, which securitl interest, lien and/or pledge created or granted under this Sectioi 2.03 shall be subordinate only to the interests of the Owners ant any trustee therefor in such Collateral and Revenues. The Issuei agrees that it will, from time to time, execute, acknowledge anc deliver, or cause to be executed, acknowledged and delivered, an] and all financing statements, if applicable, and all other further instruments as may be required by law or as shall reasonably b4 requested by the Insurer for the perfection of the security inter. est, if any, granted under this Section 2.03 and for the preserves tion and protection of all rights of the Insurer under this Sectio 2.03. Section 2.04. Unconditional obligation. on. hereunder are absolute and unconditional and will formed strictly in accordance with this Agreement, limitations of the Document, irrespective of: - 3 - n The Obligations be paid or per - subject to the (a) any lack of validity or enforceability of, or any amendment or other modification of, or waiver with respect to the Obligations, the Document or any other document executed in connection mith the issuance of the obligations; or (b) any exchange, release or honperfection of any security interest in property securing the Obligations or this Agreement or any obligations hereunder; or (c) any circumstances that might otherwise constitute a defense available to, or discharge of, the issuer with respect to the obligations, the Document or any other document executed in connection with the issuance of the Obligations; or (d) whether or not such Obligations are contingent or matured, disputed or undisputed, liquidated or unliquidated. Section 2.05. S brocation Richts. To the extent of payments made and expenses incurred by the Insurer in connection with the obligations and this Agreement, the Insurer shall be fully sub- rogated to the rights of the Paying Agent and the Owners against the Issuer, which rights shall be subordinate to the rights of the Owners to receive regularly scheduled principal and interest on the obligations. Section 2.06. can-Goi na Tnjormation Obligations of Issuer. (a) Records. Reiports and Audits. The Issuer shall provide to the Insurer all records, reports and audits distributed to other parties pursuant to Section 304(I) of the Document, at the same time such records, reports and audits are distributed to such parties. The Issuer will grant the Insurer reasonable access to any project financed or refinanced by the Obligations and will make available to the Insurer, at reasonable times and upon reasonable notice, all books and records relative to any project financed or refinanced by the Obligations. The Issuer shall keep or shall direct the paying agent for the Obligations to keep adequate records pertaining to amounts available to be drawn on the Surety Bond and amounts paid and owed to the Insurer under this Agreement: (b) Qomnliance Certificate. On an annual basis the Issuer will provide to the Insurer a certificate confirming compliance y with all covenants and obligations hereunder. ARTICLE III AMENDMENTS TO DOCUMENT So long as this Agreement is in effect, that it will not agree to amend the Document, written -consent of the Insurer. - 4 - gym 8 of Del AULT t mEM0228 Section 4.01. Events of Default. The following eventsshall constitute Events of Default hereunder: (a) The Issuer shall fail to pay to the Insurer' any aMOUht payable under Sections 1404 or 2.01 hereof and such failure shall. have continued for a period in excess of the Reimbursement Period; or (b) Any material representation :�r warranty made by the Issuer under the Document or hereunder or any statement in the application for the surety Bond or any report, certificate, finan- cial statement, document or other instrument provided in connec- tion' with the Commitment, the Surety Bond, the obligations, or herewith shall have been materially false at the time when made; or (c) Except as otherwise provided in this Section 4.010 the Issuer shall fail to perform any of its other obligations under the Document, any other document executed in connection with the 'isttu- ance of the Obligations, or hereunder, provided that such failure continues. for more than 30 days after receipt by the Issuer of written notice of such failure to perform or (d) The Issuer shall (i) voluntarily commence any proceeding or file any petition seeking relief under the United States Bankruptcy 'Code or any other Federal,, state or foreign bankruptcy, insolvency or similar law, - (ii):consent to'- the institution of, or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition', (iii) apply for or consent to the appointment of a receiver`, trustee, custodian, sequestrator or similar official for such party or for a substantial part of its property, (iv) file an answer admitting the material allegations of a petition filed ,against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or. (vii) take action for the purpose of effecting any of the foregoing; or (e) An involuntary proceeding' shall be commenced `or an involuntary petition shall be filed in a court of competent.juris- diction seeking (i) relief in respect of the Issuer, or of a sub- stantial part of its property, under the United States' Bankruptcy Code or any other Federal, state or foreign -bankruptcy,` insolvency r or similar law or (ii) the appointment of a receiver" trustee';:.Ccus- todian; sequestrator or similar official,for the Issuer or 'for''a 5 - 3 pk Irk F t'7tFr -. 7.(t „_ 4 rclry• Co substantial part of its propertyt.and suc shall, continue undismissed for 60 days approving or ordering any of the foregoing and in effect for 30 days. h proceeding or petition or an order or decree shall continue unstayed section 4,02, ►tidies. If an Event of Default shall occur and be continuing, then the Insurer may take whatever action at law or in equity may appear necessary or desirable to collect the amounts due and thereafter to become due under this Agreement or to enforce performance of any obligation of the Issuer to the Insurer under the Document or any related instrument, and any obligation, agreement or covenant of the Issuer under this Agree- ment; provided, however, that the Insurer may not take any action to direct or require acceleration or other early redemption.of the Obligations or adversely affect the rights of the owners. All rights and remedies of the Insurer under this Section 4.02 are cumulative and the exercise of any one remedy does not preclude the exercise of one or more of the other available remedies. ARTICLE V BETTLEXENT The Insurer shall have the exclusive right to decide and determine whether any contest, suit or judgment made or brought against the Insurer, the Issuer or any other party on the Surety Bond shall or shall not be paid, compromised, resisted., defended, tried or appealed, and the Insurer's decision thereon; if made in good faith, shall be final and binding upon the Insurer, the Issuer and any other party on the Surety Bond. An itemized statement of payments made by the Insurer, certified by an officer of the Insurer, or the voucher or vouchers for such payments, shall be prima facie evidence of the liability of the Issuer, and if the Issuer fails to reimburse immediately the Insurer upon the receipt of such statement of payments, interest shall be computed on such amount from the date of any payment made by the Insurer at the rate set forth in subsection (a) of Section 2.01 hereof. ARTICLE M XXBCELLMEOUS Section 6.01. Interest Computations. All computations of interest due hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days. Section 6.02. Exercise of Rights. No failure or delay on the part of the Insurer to exercise any right, power or privilege under this Agreement and no course of dealing between the Insurer and the Issuer or any other party shall operate as a waiver`of anv 4 ON such right, power or privilege, .nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any ether aright, power or privilege. The rights and remedies herein expressly pro- vided are emulative and not exclusive of any rights or remedies that the Insurer would otherwise have pursuant to law or equity. no notice to or demand on any party in any came shall entitle such party to any Esther or further notice or demand in similar or other circumstances, or constitute a waiver of the right of the other party to any other or further action in any circumstances without notice or demand. Section 6.03. Amendment and Waiver. Any provision of this Agreement may be amended, waived, supplemented, discharged or terminated only with the prior written consent of the Issuer and the Insurer. The Issuer hereby agrees that upon the written request of the Paying Agent, the Insurer may make or consent to issue any substitute for the Surety Bond to cure any ambiguity or formal defect or omission in the Surety Bond that does not materi- ally change the terms of the Surety Bond nor adversely affect the rights of the owners, and this Agreement shall apply to such sub- stituted surety bond. The Insurer agrees to deliver to the Issuer and to the company or companies, if any, rating the Obligations, a copy of such substituted surety bond. (a) This Agreement shall bind, and the benefits thereof shall inure to, the Issuer and the Insurer and their respective successors and assigns; provided, that the Issuer may not transfer or assign any or all of its rights and obligations hereunder with- out the prior written consent of the Insurer. (b) The descriptive headings of the various provisions of this Agreement are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. Section 6.05. Other sureties. If the Insurer shall procure any other surety to reinsure the Surety Bond, this Agreement shall inure to the benefit of such other surety, its successors and assigns, so as to give to it a direct right of action against the Issuer to enforce this Agreement, and "the Insurer," wherever used herein, shall be deemed to include such reinsuring surety, as its respective interests may appear. Section 6.06. Sicmature on Bond. The Issuer's liability shall not be affected by its failure to sign the Surety Bond nor by any claim that other indemnity or security was to have been obtained nor by the release of any indemnity, nor the return -or exchange of any collateral that may have been obtained 7 - 91- 644 Section 6.07. Waiver, The Issuer waives any defense that this Agreement was executed subsequent to the date of the Surety Bond, admitting and covenanting that such Surety bond was executed pursuant to the Issuer r s request and in reliance on the Issuer $ o promise to execute this Agreement. station 6.08. x2ticel. nea'uests._nemands. Except as other- wise expressly provided herein# all written notices, requests,, demands or other communications to or upon the respective parties hereto shall be deemed to have been given or made when actually received, or in the case of telex or tsiecopier notice sent over a telex or a telecopier machine owned or operated by a party hereto, when sent, addressed as specified below or at such other address as any of the parties may hereafter specify in writing to the others: If to the Issuer: Director of Finance City of Miami 3006 Aviation Avenue, 3rd Floor Miami, Florida 33313 If to the Paying Agent: First Union National Bank of Florida 100 N.E. Third Avenue Fort Lauderdale, FL 33301-1155 Attention: Corporate Trust Department If to the Insurer: Municipal Bond Investors Assurance Corporation 113 King Street Armonk, New York 10504 Attention: Surveillance Department Section 6.09. Survival of Representations and Warranties. All representations, warranties and obligations contained herein shall survive the execution and delivery of this Agreement and the Surety Bond. Section 6.10. Governing Law. This Agreement and the rights and obligations of the parties under this Agreement shall be gov- erned by and construed and interpreted in accordance with the laws of the State. Section 6.11. Countercarts. This Agreement may be executed in any number of copies and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument. Complete counterparts of this Agreement shall be provided to the Issuer and the Insurer. Section 6.12. Severability. In the event any provision of. this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. t n f i i 4 Section 6. is Survival ___of_-.Obii�ation,�6 Notwithatand nel i. anything to the contrary contained in this Agreement, the oblioam tion of the issuer to pay all amounts duo hereunder and the rights of the -Insurer to pursue all remedies shall survive the. expiration, termination or substitution Of the Surety Bond and this Agreemefnt. IN wjTxzqs W'HER Off', each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. THE CITY OF MIAMI, FLORIDA By• Title: Mayor MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION Authorized Officer Authorized Officer f. I � I g _ 1. 3,1+ T' � St � st �gyY f r Y IiT ( Lr� � `ft le4 t n a :.. � e lomb I ' E pravid6 j}( i i i - , i F 1 If r 4 I � 1 1� 1 t q 4i c i { { U s i f �t1 wh l� F Ji ! barZYMONS For all purposes of this Agreement and the Surety bond, except as otherwise expressly provided heroin or unless the context otherwise requires, all capitalized terms shall have the meanings as not out below,, which shall be equally applicable to both the singular and plural tome of such terms. IsAgrassent" means this Financial Guaranty Agreement, #'Closing Dater means June _, 1991. loccalsitaentle means the commitment to issue Municipal Bond Guaranty Insurance in the form attached hereto an Annex C. 91Debt.' Service laymentsil means those payments required to be made by or on behalf of the Issuer which will be applied to payment of principal of and interest on the Obligations. "Demand for Paymentle means the certificate submitted to the Insurer for payment under the Surety Bond substantially in the form attached to the Surety Bond as Attachment 1. I'Documentll means Resolution No. 89-443 adopted by the City Commission of the City of Miami, Florida (the "Commission") on May 11,, 1989,, as amended and supplemented by Resolution* No. 89-549 adopted by the Commission on June 7. 1989 and by Resolution No. 91- adopted by the Commission on June 13, 1991, as may be further amended and supplemented thereafter. "went of Default9l shall mean those events of default set forth in Section 4.01 of.the Agreement. '11Xnsurer11 has the same meaning as set forth in.the .�_.rfirst paragraph of this Agreement. "Issuer" means The City of Miami, Florida. "Obligations" means the Issuer's Guaranteed Entitlement Revenue Bonds, Series 1989 (together with any bonds issued on'a parity therewithr excluding bonds issued for the purpose, of refunding'the obligations). $'Owners#$ means the registered owners of any Obligation as indicated in the books maintained by the Paying Agent,, the Issu.er�­ or any designee of the Issuer for such purpose. B-1 "Perm►# Agelit" means First union National Bank of Florida, successor to Florida National Bang, or any successor thereto under the Document, NPremiumil means $ Payable to the Insurer on or prior to the Closing Cate. MoLuburseaent Period++ means, with respect to a particular Surety Bond Payment, the period commencing on the date of such Surety Bond Payment and ending on the earlier of the date of can - collation of the Surety Bond due to nonpayment of Premium when due or on the expiration of 12 months following such Surety Bond Payment. "Reimbursement Rats" means Citibank's prime rate plus three (3) percent per annum, as of the date of such Surety Bond Payment, said "prime rate" being the rate of interest announced from time to time by Citibank, N.A., Now York, New York, as its prime rate. The rate of interest shall be calculated on the basis of the actual number of days elapsed over a 360-day year. $$State" means the State of Now York. ►08urety Bond" means that surety bond, attached hereto as Annex A and issued by the Insurer guaranteeing, subject to the terms and limitations thereof, Debt Service Payments required to be made by.the Issuer under the Document. "surety Bond coveragell means the amount available at any particular time to be paid under the terms of the Surety Bond, which amount shall never exceed the Surety Bond Limit. 96suretY Bond Limiter means $ I'eurety Bond Payment$' means an amount equal to the Debt ! Service Payment required to be made by the Issuer pursuant to the Document less (i) that portion of the Debt Service Payment paid by _? or on behalf of the Issuer, and (ii) other funds legally available for payment to the owners, all as certified in a Demand for Payment. =r a =I L B-2 r 5 d i t SC t f i t " t jk 1 - CITY OF MIAMI, PLM6A INTMOPPICE MEMARANDIUM Honorable Mayor and members to : 4+ of the ity Commission GATE : ,MAY 1 ' PILE: - 9UEUECT : City Comission Aganda Item Cesar H. Odio Ji FROM : REFERENCES City Manager <t ENCLOSURES: RECOMMENDATION: It is respectfully recommended that the attached resolution S Y authorizing the substitution of a Reserve Account Surety Bond for cash on deposit in the Debt Service ,Reserve Account securing the City's outstanding Guaranteed Entitlement Revenue Bonds, Series 1989, and directing the depository of the Debt Service Reserve Account to accept such surety bond; approving the form, execution and delivery of a financial guaranteed agreement; directing the application of the cash released as a result of _ such substitution; authorizing further official actions to effect such substitution; authorizing the appointment and payment of special counsel to the City; providing severability; and providing for an effective date, be approved. BACKGROUND: The City issued $6,500,000 Guaranteed Entitlement Revenue Bonds, Series 1989 on June 15, 1989. The bonds were insured :by Municipal Bond Investors Assurance Corporation (MBIA), making the = bonds AAA rated. The trust indenture for the bonds required a debt service reserve { account- equivalent to the highest annual debt service which - approximates $612,000. At this time MBIA has agreed to. issue a reserve account surety, bond`in-substitution for the cash on deposit in the debt service reserve account, at a premium of 4% of the surety bond amount,,tq. be paid from`the funds released by the placement of the surety y _ bond. The released cash will be used to fund- debt service - payment for these bonds, of which approximately $391,500 will be paid this fiscal ,year, and $196,000 will be paid .next fiscal - year. This. transaction will save the General Fund'$587,500 in _ debt service payments. a tits i � R p x t i