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Home My WebLink AboutExhibit 3Draft PRELIMINARY OFFICIAL STATEMENT DATED P2009 NEW ISSUE — BOOK ENTRY ONLY Ratings: Standard and Poor's: Moody's: Fitch: " (See "Ratings" herein) In the opinion of Foley & Lardner LLP, Miami, Florida, Bond Counsel, under existing law assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Series 2009 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. See, however, "TAX MATTERS" herein for a description of certain federal minimum and other special taxes that may affect the tax treatment of interest on the Series 2009 Bonds. CITY OF MIAMI, FLORIDA Limited Ad Valorem Tax Bonds, Series 2009 (Homeland Defense/Neighborhood Capital Improvement Projects) Dated: Date of Delivery Due: [January 11, as shown on inside cover The $ * City of Miami, Florida Limited Ad Valorem Tax Bonds, Series 2009 (Homeland Defense/Neighborhood Capital Improvement Projects) (the "Series 2009 Bonds") are being issued by the City of Miami, Florida (the "City") pursuant to the Constitution and laws of the State of Florida, including Chapter 166, Part II, Florida Statutes, the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to Ordinance No. 12137 enacted on October 11, 2001 (the "Initial Ordinance") and Resolution No. R- adopted on (the "Series 2009 Bonds Resolution", together with the Initial Ordinance, the "Resolution"). The issuance of the Series 2009 Bonds was approved by the qualified electors of the City at a referendum election held on November 13, 2001 in satisfaction of the requirements of Article VII, Section 12 of the Florida Constitution. The Series 2009 Bonds are being issued for the purpose of (i) funding the Project (as described herein), and (ii) paying certain costs and expenses incurred in connection with the issuance of the Series 2009 Bonds, including a portion of the premium for a municipal bond insurance policy. This cover page contains certain information for quick reference only. It is not, and is not intended to be, a summary of the issue. Investors must read the entire Official Statement to obtain information needed for the making of an informed investment decision. The Series 2009 Bonds are being issued by the City as fully registered bonds, which initially will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Individual purchases will be made in book -entry form only through Participants (defined herein) in denominations of $5,000 and integral multiples thereof. Purchasers of the Series 2009 Bonds (the "Beneficial Owners") will not receive physical delivery of certificates. Transfers of ownership interests in the Series 2009 Bonds will be effected by the DTC book -entry system as described herein. As long as Cede & Co. is the registered owner as nominee of DTC, principal and interest payments will be made directly to such registered owner which will in turn remit such payments to the Participants (as defined herein) for subsequent disbursement to the Beneficial Owners. Interest on the Series 2009 Bonds is payable semi-annually on each January 1 and July 1, commencing July 1, 2009. Principal of, premium, if any, and interest on the Series 2009 Bonds will be payable by U.S. Bank National Association, as Paying Agent and Bond Registrar. �FT Certain maturities of the Series 2009 Bonds are subject to optional redemption prior to their respective maturities, as described herein under "DESCRIPTION OF THE SERIES 2009 BONDS — Optional Redemption." Payment of the principal of, premium, if any, and interest on the Series 2009 Bonds shall be secured by a pledge of the Limited Ad Valorem Tax, as defined herein and, to the extent necessary, a covenant of the City to budget and appropriate a limited portion of its Non -Ad Valorem Revenues in an amount not to exceed 10% of the Maximum Annual Debt Service on the Series 2009 Bonds in any given Fiscal Year. The Series 2009 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional or statutory provision or limitation and the City is not obligated to levy any ad valorem taxes other than the Limited Ad Valorem Tax for the payment thereof, as described herein. Neither the full faith and credit nor the taxing power of the State of Florida or any political subdivision or agency thereof (except the taxing power of the City, but only to the extent of the Limited Ad Valorem Tax, as described herein) is pledged to the payment of the principal of, premium, if any, and interest on the Series 2009 Bonds. The scheduled payment of principal of, and interest on the Series 2009 Bonds when due will be guaranteed by a municipal bond insurance policy to be issued concurrently with the delivery of the Series 2009 Bonds by (the "Insurer"). [Insert Logo] See the inside cover page for maturities, principal amounts, interest rates, prices or yields, and initial CUSIP numbers. The Series 2009 Bonds are offered when, as, and if issued and received by the Underwriters, subject to the opinion on certain legal matters relating to their issuance by Foley & Lardner LLP, Miami, Florida, Bond Counsel and Law Offices Richard Kuper, P.A., Miami, Florida, Associate Counsel. Certain legal matters will be passed upon for the City by Julie O. Bru, Esq., City Attorney, and by KnoxSeaton, Miami, Florida, Disclosure Counsel to the City. Certain legal matters will be passed upon for the Underwriters by Akerman Senterfitt, Miami, Florida. First Southwest Company, Aventura, Florida is serving as Financial Advisor to the City. It is expected that the Series 2009 Bonds in definitive form will be available for delivery to the Underwriters in New York, New York at the facilities of DTC on or about MERRILL LYNCH & CO. SunTrust Capital Markets, Inc. Dated: *Preliminary, subject to change. Raymond James & Associates, Inc. J.P. Morgan Banc of America Securities LLC -Dow -F SERIES 2009 BONDS MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES OR YIELDS AND INITIAL CUSIP NUMBERS $ SERIAL BONDS Maturity Principal Price or Initial CUSIP anua 1 Amount Interest Rate Yield Number % Term Bond Due January 1, 20_ Yield % Initial Cusip Number $ % Term Bond Due January 1, 20_ Yield % Initial Cusip Number =A No dealer, broker, salesman or other person has been authorized by the City or the Underwriters to give any information or to make any representations in connection with the Series 2009 Bonds, other than as contained in this Official Statement, and, if given or made, such information or representations must not be relied upon as having been authorized by the City. 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 Series 2009 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the City, the Insurer, DTC and other sources that are believed to be reliable. The Underwriters listed on the cover page hereof have reviewed the information in this Official Statement in accordance with and as part of their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The information and expressions of opinion stated herein are subject to change, and neither the delivery of this Official Statement nor any sale made hereunder shall create, under any circumstances, any implication that there has been no change in the matters described herein since the date hereof. IN CONNECTION WITH THIS OFFERING OF THE SERIES 2009 BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH SERIES 2009 BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. All summaries herein of documents and agreements are qualified in their entirety by reference to such documents and agreements, and all summaries herein of the Series 2009 Bonds are qualified in their entirety by reference to the form thereof included in the aforesaid documents and agreements. Other than with respect to information concerning (the "Insurer") contained under the caption "MUNICIPAL BOND INSURANCE" and "APPENDIX F - SPECIMEN MUNICIPAL BOND INSURANCE POLICY" attached hereto, none of the information supplied in this Official Statement has been supplied or verified by the Insurer and the Insurer makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of such information, (ii) the validity of the Series 2009 Bonds, or (iii) the tax exempt status of the interest on the Series 2009 Bonds. NO REGISTRATION STATEMENT RELATING TO THE SERIES 2009 BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION') OR WITH ANY STATE SECURITIES COMMISSION. IN MAKING ANY INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATIONS OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SERIES 2009 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THIS OFFICIAL STATEMENT SHALL NOT CONSTITUTE A CONTRACT BETWEEN THE CITY OR THE UNDERWRITERS AND ANY ONE OR MORE HOLDERS OF THE SERIES 2009 BONDS. THE CITY OF MIAMI, FLORIDA 3500 Pan American Drive Miami, Florida 33233 MAYOR Manuel A. Diaz CITY COMMISSIONERS Joe M. Sanchez, Chair Michelle Spence -Jones, Vice Chair Angel Gonzalez Marc D. Samoff Tomas P. Regalado CITY MANAGER Pedro G. Hernandez CITY CLERK Priscilla A. Thompson CITY ATTORNEY Julie O. Bru, Esq. CHIEF FINANCIAL OFFICER Larry Spring FINANCE DIRECTOR Diana M. Gomez BOND COUNSEL Foley & Lardner LLP Miami, Florida ASSOCIATE COUNSEL Law Offices Richard Kuper, P.A. Miami, Florida DISCLOSURE COUNSEL KnoxSeaton Miami, Florida FINANCIAL ADVISOR First Southwest Company Aventura, Florida N4 F-—F TABLE OF CONTENTS Contents Page INTRODUCTION...................................................................................................................................................... 3 PURPOSE OF THE ISSUE......................................................................................................................................... 4 THEPROJECT............................................................................................................................................................ 5 ESTIMATED SOURCES AND USES OF FUNDS.................................................................................................. 6 DEBT SERVICE SCHEDULE.................................................................................................................................... 7 DESCRIPTION OF THE SERIES 2009 BONDS...................................................................................................... 8 General.................................................................................................................................................................... 8 Book -Entry Only System...................................................................................................................................... 8 OptionalRedemption......................................................................................................................................... 11 Notice and Effect of Redemption...................................................................................................................... 11 Registration, Transfer and Exchange................................................................................................................ 11 Replacement of Bonds Mutilated, Destroyed, Stolen or Lost....................................................................... 12 MUNICIPALBOND INSURANCE....................................................................................................................... 12 APPLICATION OF SERIES 2009 PROCEEDS...................................................................................................... 12 AMENDMENT OF RESOLUTION....................................................................................................................... 13 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS ................................................. 13 LimitedAd Valorem Tax................................................................................................................................... 14 Covenant to Budget and Appropriate Non -Ad Valorem Revenues............................................................ 15 Special Investment Considerations................................................................................................................... 16 ADVALOREM TAXATION................................................................................................................................... 17 General.................................................................................................................................................................. 17 Constitutional Amendments Related to Ad Valorem Taxes......................................................................... 18 Recent Constitutional and Legislative Amendments Affecting Ad Valorem Taxes .................................. 19 Truthin Millage Bill............................................................................................................................................ 20 Property Assessment Procedures..................................................................................................................... 20 Levyof Ad Valorem Taxes................................................................................................................................ 21 Exemptions........................................................................................................................................................... 21 MillageRates........................................................................................................................................................ 23 AssessedValuations........................................................................................................................................... 24 TaxCollection...................................................................................................................................................... 24 TaxDeeds............................................................................................................................................................. 25 THECITY OF MIAMI............................................................................................................................................. 26 Background.......................................................................................................................................................... 26 CityGovernment................................................................................................................................................. 26 Adoption of Investment Policy and Debt Management Policy.................................................................... 27 CapitalImprovement Plan ................................................................................................................................. 28 Fiscal and Accounting Procedures.................................................................................................................... 29 GeneralFund....................................................................................................................................................... 29 Budget................................................................................................................................................................... 31 Indebtednessof the City..................................................................................................................................... 32 DirectDebt........................................................................................................................................................... 34 OverlappingDebt................................................................................................................................................ 36 DebtRatios........................................................................................................................................................... 37 LEGALMATTERS................................................................................................................................................... 37 LITIGATION............................................................................................................................................................. 37 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS........................................................... 37 TAXMATTERS......................................................................................................................................................... 38 FederalTax Matters............................................................................................................................................ 38 OriginalIssue Discount...................................................................................................................................... 39 OriginalIssue Premium..................................................................................................................................... 40 RATINGS................................................................................................................................................................... 40 FINANCIALADVISOR.......................................................................................................................................... 40 AUDITED FINANCIAL STATEMENTS............................................................................................................... 40 UNDERWRITING.................................................................................................................................................... 41 CONTINGENTFEES............................................................................................................................................... 41 ENFORCEABILITY OF REMEDIES...................................................................................................................... 41 CONTINUINGDISCLOSURE............................................................................................................................... 41 ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT................................................................ 42 FORWARD-LOOKING STATEMENTS................................................................................................................. 42 MISCELLANEOUS.................................................................................................................................................. 42 AUTHORIZATION OF OFFICIAL STATEMENT............................................................................................... 44 APPENDICES APPENDIX A: GENERAL INFORMATION REGARDING THE CITY OF MIAMI APPENDIX B: DESCRIPTION OF NON -AD VALOREM REVENUES APPENDIX C: FORM OF THE BOND RESOLUTION APPENDIX D: GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2008 APPENDIX E: FORM OF BOND COUNSEL OPINION APPENDIX F: SPECIMEN MUNICIPAL BOND INSURANCE POLICY APPENDIX G: FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT ii OFFICIAL STATEMENT relating to CITY OF MIAMI, FLORIDA Limited Ad Valorem Tax Bonds, Series 2009 (Homeland Defense/Neighborhood Capital Improvement Projects) INTRODUCTION The purpose of this Official Statement, including the cover page and appendices, is to set forth information concerning the City of Miami, Florida (the "City") and the City of Miami, Florida Limited Ad Valorem Tax Bonds, Series 2009 (Homeland Defense/Neighborhood Capital Improvement Projects) (the "Series 2009 Bonds"), in connection with the sale of the Series 2009 Bonds. The City is situated at the mouth of the Miami River on the western shores of Biscayne Bay. It is the county seat of Miami -Dade County, Florida. The City comprises 34.3 square miles of land and 19.5 square miles of water. The City's diversified economic base is comprised of light manufacturing, trade, commerce, wholesale, and retail trade and tourism. For more information about the City, see "APPENDIX A — GENERAL INFORMATION REGARDING THE CITY OF MIAMI." The Series 2009 Bonds are being issued pursuant to the Constitution and laws of the State of Florida, including Chapter 166, Part II, Florida Statutes, the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to Ordinance No. 12137 enacted on October 11, 2001 (the "Initial Ordinance") and Resolution No. R- adopted on (the "Series 2009 Bonds Resolution", together with the Initial Ordinance, the "Resolution"). Ordinance No. 12137 which authorized the issuance of not exceeding $255,000,000 principal amount of bonds (the "Voter Approved Bonds"), provided for the levy and collection of ad valorem taxes at a rate not to exceed the debt millage of 1.218 mills, together with other outstanding general obligation debt (as of November 13, 2001), and the holding of an election. Subsequently, the issuance of the Voter Approved Bonds was approved by the qualified electors of the City at a referendum election held on November 13, 2001 in satisfaction of the requirements of Article VII, Section 12 of the Florida Constitution. The Series 2009 Bonds are being issued, on a parity as to source and security for the payment with the (i) $153,186,405.85 original aggregate principal amount of City of Miami, Florida Limited Ad Valorem Tax Bonds, Series 2002 (Homeland Defense/Neighborhood Capital Improvement Projects), currently outstanding in the amount of $40,058,765 (the "Series 2002 Bonds"); (ii) $103,060,000 original aggregate principal amount of City of Miami, Florida Limited Ad Valorem Tax Refunding Bonds, Series 2007A (Homeland Defense/Neighborhood Capital Improvement Projects), currently outstanding in the amount of $103,060,000 (the "Series 2007A Bonds"); and (iii) $50,000,000 original aggregate principal amount of City of Miami, Florida Limited Ad Valorem Tax Bonds, Series 2007B (Homeland Defense/Neighborhood Capital Improvement Projects), currently outstanding in the amount of $50,000,000 (the "Series 2007B Bonds", and together with the Series 2007A Bonds, the "Series 2007 Bonds"). Payment of the principal of, premium, if any, and interest, on the Series 2009 Bonds shall be secured by a pledge of the Limited Ad Valorem Tax, as defined herein (the "Limited Ad Valorem Tax") and, to the extent necessary, a covenant of the City to budget and appropriate a limited portion of its non -ad valorem revenues in an amount not to exceed 10% of Maximum Annual Debt Service of the Series 2009 Bonds in any 3 -1 e v given Fiscal Year. The Series 2009 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional or statutory provision or limitation and the City is not obligated to levy any ad valorem taxes other than the Limited Ad Valorem Tax for the payment thereof, as described herein. Neither the full faith and credit nor the taxing power of the State of Florida or any political subdivision or agency thereof (except the taxing power of the City, but only to the extent of the Limited Ad Valorem Tax, as described herein) is pledged to the payment of the principal of, premium, if any, and interest of the Series 2009 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS" herein. Payment of the principal of and interest on the Series 2009 Bonds will be guaranteed by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 2009 Bonds by (the "Insurer"). The summaries of and references to all documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by reference to each such document, statute, report or instrument. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the Resolution, unless the context would clearly indicate otherwise. A copy of the Resolution is attached hereto as "APPENDIX C — FORM OF THE BOND RESOLUTION." All documents of the City referred to herein may be obtained from the City's, Finance Director, 444 S.W. 2nd Avenue, 61'' Floor, Miami, Florida 33130, Telephone (305) 416-1324. PURPOSE OF THE ISSUE The Series 2009 Bonds are being issued by the City, pursuant to the Constitution and laws of the State of Florida, including Chapter 166, Part II, Florida Statutes, the Charter of the City, and other applicable provisions of law and pursuant to the Resolution. The Series 2009 Bonds are being issued for the purpose of (i) funding the Project (as defined herein) and (ii) paying certain costs and expenses incurred in connection with the issuance of the Series 2009 Bonds, including a portion of the premium for a municipal bond insurance policy. [Remainder of page intentionally left blank.] 4 THE PROJECT The project consists of certain capital improvements including a homeland security program, neighborhood improvements, capital projects and infrastructure improvements, all as originally provided for in Ordinance No. 12137 (collectively, the "Project"). The Project will include, but not be limited to, remaining ongoing and future portions of those Projects as provided for in the original Ordinance No. 12137 as follow: PUBLIC SAFETY Police Training Facility Police Homeland Defense Preparedness Initiative Fire -Rescue Homeland Defense Preparedness Neighborhood Fire Stations & Training Facility PARKS & RECREATION Little Haiti Park Land Acquisition & Development Virginia Key Park Improvements Bicentennial Park Improvements Pace Park Improvements Neighborhood Park Improvements & Acquisition Citywide Waterfront Improvements Orange Bowl Stadium Ramps & Improvements Jose Marti/East Little Havana Parks Expansion Soccer Complex Development Marine Stadium Renovation Fern Isle Cleanup and Renovation STREETS & DRAINAGE Flagami Storm Water Mitigation Grand Avenue Improvements Calle Ocho Improvements Model City Infrastructure Improvements Design District/FEC Corridor Improvements Downtown Infrastructure Improvements Coral Way Improvements NE 2nd Avenue Improvements (36 St to 78 St ) QUALITY OF LIFE Greenways Improvements Neighborhood Gateways Improvements Museum of Science Art Museum HISTORIC PRESERVATION Historic Preservation Initiatives ESTIMATED SOURCES AND USES OF FUNDS SERIES 2009 BONDS The table that follows summarizes the estimated sources and uses of funds to be derived from the sale of the Series 2009 Bonds: SOURCES: Principal Amount of Series 2009 Bonds $ .00 [Plus Net Original Issue Premium] [Less Net Original Issue Discount] TOTAL SOURCES USES: Deposit to Construction Account Costs of Issuance(') TOTAL USES $ '> Includes municipal bond insurance premium and underwriting discount, financial advisory and legal fees and expenses, and miscellaneous costs of issuance. DEBT SERVICE SCHEDULE The following table sets forth the aggregate debt service requirements for the Series 2009 Bonds, the Series 2007 Bonds and the Series 2002 Bonds. *[Insert Updated New Table]* DESCRIPTION OF THE SERIES 2009 BONDS General The Series 2009 Bonds shall be issued as fully registered, book -entry only bonds in the denomination of $5,000 each or any integral multiple thereof through the book -entry only system maintained by The Depository Trust Company, New York, New York. The Series 2009 Bonds shall be numbered consecutively from one (1) upward preceded by the letter "R" prefixed to the number. The principal of and redemption premium, if any, on the Series 2009 Bonds shall be payable upon presentation and surrender at the principal office of U.S. Bank National Association (the "Paying Agent"). Interest on the Series 2009 Bonds is payable semi-annually on January 1 and July 1 of each year, commencing July 1, 2009. Interest shall be paid by check or draft drawn upon the Paying Agent and mailed to the registered owners of the Series 2009 Bonds at the addresses as they appear on the registration books maintained by the Bond Registrar at the close of business on the 15th day (whether or not a business day) of the month next preceding the interest payment date (the "Record Date"), irrespective of any transfer or exchange of such Series 2009 Bonds subsequent to such Record Date and prior to such interest payment date, unless the City shall be in default in payment of interest due on such interest payment date; provided, however, that (i) if ownership of Series 2009 Bonds is maintained in a book -entry only system by a securities depository, such payment may be made by automatic funds transfer (wire) to such securities depository or its nominee or (ii) if such Series 2009 Bonds are not maintained in a book -entry only system by a securities depository, upon written request of the holder of $1,000,000 or more in principal amount of Series 2009 Bonds, such payments may be made by wire transfer to the bank and bank account specified in writing by such holder (such bank being a bank within the continental United States), if such holder has advanced to the Paying Agent the amount necessary to pay the cost of such wire transfer or authorized the Paying Agent to deduct the cost of such wire transfer from the payment due such holder. In the event of any default in the payment of interest, such defaulted interest shall be payable to the persons in whose names such Series 2009 Bonds are registered at the close of business on a special record date for the payment of such defaulted interest as established by notice deposited in the U.S. mails, postage prepaid, by the Paying Agent to the registered owners of the Series 2009 Bonds not less than fifteen (15) days preceding such special record date. Such notice shall be mailed to the persons in whose names the Series 2009 Bonds are registered at the close of business on the fifth (5th) day (whether or not a business day) preceding the date of mailing. Book -Entry Only System THE FOLLOWING INFORMATION CONCERNING DTC AND DTC'S BOOK -ENTRY ONLY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE CITY BELIEVES TO BE RELIABLE, BUT NEITHER THE CITY NOR THE UNDERWRITER TAKE ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS THEREOF. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Series 2009 Bonds. The Series 2009 Bonds will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered certificate will be issued for each of the Series 2009 Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of N the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instrument (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and titi�vw.dtc.or. Purchases of Series 2009 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2009 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2009 Bond ('Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2009 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2009 Bonds, except in the event that use of the book -entry system for the Series 2009 Bonds is discontinued. To facilitate subsequent transfers, all Series 2009 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2009 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2009 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2009 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2009 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2009 Bonds, such as defaults, and proposed amendments to the Bond Ordinance. For example, Beneficial Owners of Series 2009 Bonds may wish to ascertain that the nominee holding the Series 2009 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. 0 7 Redemption notices shall be sent to DTC. If less than all of the Series 2009 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series 2009 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2009 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Series 2009 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the City on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Series 2009 Bonds held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Series 2009 Bonds at any time by giving reasonable notice to the City. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2009 Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Series 2009 Bond certificates will be printed and delivered to DTC. THE CITY AND THE PAYING AGENT WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO THE BENEFICIAL OWNERS, DTC PARTICIPANTS OR THE PERSONS FOR WHOM DTC PARTICIPANTS ACT AS NOMINEES WITH RESPECT TO THE SERIES 2009 BONDS, FOR THE ACCURACY OF RECORDS OF DTC, CEDE & CO. OR ANY DTC PARTICIPANT WITH RESPECT TO THE SERIES 2009 BONDS OR THE PROVIDING OF NOTICE OR PAYMENT OF PRINCIPAL, OR INTEREST, OR ANY PREMIUM ON THE SERIES 2009 BONDS, TO DTC PARTICIPANTS OR BENEFICIAL OWNERS, OR THE SELECTION OF SERIES 2009 BONDS FOR REDEMPTION. [Remainder of page intentionally left blank] 10 Optional Redemption The Series 2009 Bonds maturing on and after [January] 1, , are subject to redemption at the option of the City on or after January 1, , in whole or in part at any time, in such manner as shall be determined by the Bond Registrar, at a redemption price equal to the principal amount thereof, plus accrued interest to the date fixed for redemption without premium. Notice and Effect of Redemption Notice of redemption shall be given by deposit in the U.S. mails of a copy of a redemption notice, postage prepaid, at least thirty (30) days before the redemption date to all registered owners of the Series 2009 Bonds or portions of the Series 2009 Bonds to be redeemed at their addresses as they appear on the registration books to be maintained in accordance with the provisions hereof. Failure to mail any such notice to a registered owner of a Series 2009 Bond, or any defect therein, shall not affect the validity of the proceedings for redemption of any Series 2009 Bond or portion thereof with respect to which no failure or defect occurred. Such notice shall set forth the date fixed for redemption, the rate of interest bome by each Series 2009 Bond being redeemed, the name and address of the Bond Registrar and Paying Agent, the redemption price to be paid and, if less than all of the Series 2009 Bonds then Outstanding shall be called for redemption, the distinctive numbers and letters, including CUSIP numbers, if any, of such Series 2009 Bonds to be redeemed and, in the case of Series 2009 Bonds to be redeemed in part only, the portion of the principal amount thereof to be redeemed. If any Series 2009 Bond is to be redeemed in part only, the notice of redemption which relates to such Series 2009 Bond shall also state that on or after the redemption date, upon surrender of such Series 2009 Bond, a new Series 2009 Bond or Series 2009 Bonds in a principal amount equal to the unredeemed portion of such Series 2009 Bond will be issued. Any notice mailed as described in this Section shall be conclusively presumed to have been duly given, whether or not the owner of such Series 2009 Bond receives such notice. The Bond Registrar shall not be required to transfer or exchange any Series 2009 Bond after the mailing of a notice of redemption nor during the period of fifteen (15) days next preceding mailing of a notice of redemption. Registration, Transfer and Exchange So long as the Series 2009 Bonds are registered in the name of DTC or its nominee, the following paragraphs relating to transfer and exchange of Series 2009 Bonds do not apply to the Series 2009 Bonds. The Series 2009 Bonds issued under the Resolution shall be and have all the qualities and incidents of negotiable instruments under the law merchant and the Uniform Commercial Code of the State of Florida, subject to the provisions for registration of transfer contained in the Resolution and in the Series 2009 Bonds. So long as any of the Series 2009 Bonds shall remain outstanding, the City shall maintain and keep, at the office of the Bond Registrar, books for the registration of transfer of the Series 2009 Bonds. The registration of any Series 2009 Bond may be transferred upon the registration books upon delivery thereof to the principal office of the Bond Registrar accompanied by a written instrument or 11 instruments of transfer in form and with guaranty of signature satisfactory to the Bond Registrar, duly executed by the Bondholder or his attorney-in-fact or legal representative containing written instructions as to the details of the transfer of such Series 2009 Bond, along with the social security number or federal employer identification number of such transferee. In all cases of a transfer of a Series 2009 Bond, the Bond Registrar shall at the earliest practical time in accordance with the terms of the Resolution enter the transfer of ownership in the registration books and shall deliver in the name of the new transferee or transferees a new fully registered Series 2009 Bond or Bonds of the same maturity and of authorized denomination or denominations, for the same aggregate principal amount and payable from the same source of funds. The City and the Bond Registrar may charge the Bondholder for the registration of every transfer or exchange of a Series 2009 Bond an amount sufficient to reimburse them for any tax, fee or any other governmental charge required (other than by the City) to be paid with respect to the registration of such transfer, and may require that such amounts be paid before any such new Series 2009 Bond shall be delivered. The City, the Bond Registrar, and the Paying Agent may treat the registered owner of any Series 2009 Bond as the absolute owner of such Series 2009 Bond for the purpose of receiving payment of the principal thereof, and the interest and redemption premium, if any, thereon. Series 2009 Bonds may be exchanged at the office of the Bond Registrar for a like aggregate principal amount of Series 2009 Bonds, or other authorized denominations of the same Series and maturity. Replacement of Bonds Mutilated, Destroyed, Stolen or Lost If any Series 2009 Bond is mutilated, destroyed, stolen or lost, the City or its agent may, in its discretion (i) deliver a duplicate replacement Series 2009 Bond, or (ii) pay a Series 2009 Bond that has matured or is about to mature. A mutilated Series 2009 Bond shall be surrendered to and canceled by the Bond Registrar. The Bondholder must furnish the City or its agent proof of ownership of any destroyed, stolen or lost Series 2009 Bond; post satisfactory indemnity; comply with any reasonable conditions the City or its agent may prescribe; and pay the City or its agent's reasonable expenses. Any such duplicate Series 2009 Bond shall constitute an original contractual obligation on the part of the City whether or not the destroyed, stolen or lost Series 2009 Bond be at any time found by anyone, and such duplicate Series 2009 Bond shall be entitled to equal and proportionate benefits and rights as to lien on, and source of payment of and security for payment from, the funds pledged to the payment of the Series 2009 Bond so mutilated, destroyed, or stolen or lost. MUNICIPAL BOND INSURANCE APPLICATION OF SERIES 2009 PROCEEDS Series 2009 Bonds The proceeds, including premium, if any, received from the sale of the Series 2009 Bonds shall be applied by the City, simultaneously with delivery of the Series 2009 Bonds, as follows: A. An amount set forth in the Proceeds Certificate shall be deposited in a separate account designated "City of Miami 2009 Limited Ad Valorem Tax Bonds Construction Account" (the "Construction Account") which is hereby established with the City and shall be disbursed to pay the costs of the Projects. 12 Any balance remaining after payment or provision for payment of such costs of the Projects shall be transferred to the Paying Agent for deposit in the Principal and Interest Account and the Bond Amortization Account, if any, and used solely to pay principal of, Amortization Installments (with respect to Term Bonds), and interest on the Series 2009 Bonds. Any investment income earned with respect to deposits in the Construction Account may be used, at the option of the City, to pay costs of the Projects or may be transferred to the Paying Agent for deposit in the Principal and Interest Account and used to pay interest on the Series 2009 Bonds. B. The remainder of the proceeds as set forth in the Proceeds Certificate shall be deposited in a separate account designated "City of Miami 2009 Limited Ad Valorem Tax Bonds Cost of Issuance Account" which is hereby established with the City and shall be disbursed for payment of expenses incurred in issuing the Series 2009 Bonds. Any balance remaining after payment or provision for payment of such expenses has been made shall be transferred, at the option of the City, to either the Construction Account for the payment of costs of the Projects or to the Paying Agent for deposit in the Principal and Interest Account and the Bond Amortization Account, if any, and used solely to pay principal of, Amortization Installments (with respect to Term Bonds), and interest, on the Series 2009 Bonds. In the event any portion of the Series 2009 Bonds are issued as Term Bonds, there is hereby established with the Paying Agent, an account designated "City of Miami 2009 Limited Ad Valorem Tax Bonds Amortization Account" (the "2009 Bond Amortization Account") in which amounts are to be deposited to pay the Amortization Installments on such Term Bonds. On or before each interest or principal payment date for the Series 2009 Bonds, the City shall transfer to the Paying Agent for deposit in the Principal and Interest Account and the Bond Amortization Account, if applicable, an amount sufficient to pay the principal of, Amortization Installments (with respect to Term Bonds), redemption premium, if any, and interest on the Series 2009 Bonds then due and payable, AMENDMENT OF RESOLUTION The Resolution may be modified an ended by the City from time to time prior to the issuance of the Series 2009 Bonds. Thereafter, no mo fication or amendment of the Resolution or of any resolution amendatory thereof or supplemental there o materially adverse to the Bondholders may be made without the consent in writing of the registered owne s of not less than a majority in aggregate principal amount of the Outstanding Series 2009 Bonds; provide however, if the Series 2009 Bonds are insured by a municipal bond insurance po i the issuer of such poli shall have the right to consent to modifications and amendments to this Resolution in lieu of the Bondholders. Notwithstanding the foregoing, no modification or amendment shall permit a change (a) in the maturity of the Series 2009 Bonds or a reduction in the rate of interest thereon, (b) in the amount of the principal obligation of any Series 2009 Bond, (c) that would affect the unconditional promise of the City to levy and collect the Limited Ad Valorem Tax as provided in the Resolution, or (d) that would reduce such percentage of registered owners of the Series 2009 Bonds required above for such modifications or amendments, without the consent of all of the Bondholders. For the purpose of Bondholders' voting rights or consents, the Series 2009 Bonds owned by or held for the account of the City, directly or indirectly, shall not be counted. See "APPENDIX C — FORM OF THE BOND RESOLUTION." SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS The payment of the principal of, premium, if any, and interest on the Series 2009 Bonds shall be secured by a lien on the Limited Ad Valorem Tax and, to the extent necessary, a covenant of the City to 13 budget and appropriate its non -ad valorem revenue in an amount not to exceed 10% of Maximum Annual Debt Service on the Series 2009 Bonds in any given Fiscal Year. The "Limited Ad Valorem Tax" is defined in the Resolution to mean an ad valorem tax levied by the City on all the taxable property within the City (excluding exemptions as provided by applicable law) for the purpose of paying the principal of, redemption premium, if any, and interest on the Voter Approved Bonds; provided, however, that such ad valorem tax shall be levied at such millage rate, that when added together with the City's other ad valorem tax millage levied with respect to voter approved bond referenda, as of November 13, 2001, excluding the debt millage with respect to the Voter Approved Bonds (the "Debt Millage"), results in an aggregate millage rate that does not exceed 1.218 mills (it being understood that this millage rate limitation applies only to the Voter Approved Bonds, and does not apply to, or in any way affect, the City's obligation to assess, levy and collect ad valorem taxes, without limitation as to rate or amount, on all taxable property within the corporate limits of the City, for the payment of the principal of and interest on the City's full faith and credit general obligation bonds). In each Fiscal Year while any of the Series 2009 Bonds are outstanding, the City shall levy and collect the Limited Ad Valorem Tax to pay the principal of, and interest on the Series 2009 Bonds as the same shall become due. Further, as a condition to the issuance by MBIA Insurance Corporation ( the "2002 Insurer") of the 2002 Insurer's policy, the City has agreed not to issue to any additional Voter Approved Bonds unless the City provides a certificate of a certified independent public accountant demonstrating that based on the City's then current assessed valuation, revenues generated by the Limited Ad Valorem Tax will equal or exceed 1.0x coverage of principal of and interest on: (i) the Outstanding Voter Approved Bonds, (ii) outstanding full faith and credit general obligation bonds and (iii) any additional Voter Approved Bonds proposed to be issued. For more information on the Limited Ad Valorem Tax see "Limited Ad Valorem Tax" below and "AD VALOREM TAXATION" herein. See also "Recent Constitutional and Legislative Amendments Affecting Ad Valorem Taxes" herein for a discussion on certain action that could impact Ad Valorem taxation. For more information on the City's non -ad valorem revenues see "Covenant to Budget and Appropriate Non -Ad Valorem Revenues" below and "APPENDIX B - DESCRIPTION OF NON -AD VALOREM REVENUES" herein. Limited Ad Valorem Tax The Limited Ad Valorem Tax assessed, levied and collected for the security and payment of the Series 2009 Bonds shall be assessed, levied and collected in the same manner and at the same time as other ad valorem taxes are assessed, levied and collected and the proceeds of said tax, except as provided in the Resolution, shall be applied solely to the payment of the principal of, Amortization Installments, redemption premium, if any, and interest on the Series 2009 Bonds; provided, however, that in the event of a deficiency in the amount of ad valorem taxes collected to pay the principal and interest on the City's full faith and credit general obligation bonds issued prior to November 13, 2001, or issued to refund general obligation bonds issued prior to November 13, 2001, revenues collected from the Limited Ad Valorem Tax shall be applied first to cure any such deficiency. As of September 30, 2008, the City had $42,275,000 aggregate principal amount of outstanding full faith and credit general obligation bonds which were issued prior to November 13, 2001. The Limited Ad Valorem Tax which secures the Series 2009 Bonds, the Series 2007 Bonds and the Series 2002 Bonds may not be levied in excess of a millage rate that, when added to the millage rate needed to meet the debt service on the City's outstanding full faith and credit general obligation bonds issued prior to November 13, 2001 or issued to refund general obligation bonds issued prior to November 13, 2001, exceeds 1.218 mills. Therefore, 14 HUM the total amount of Limited Ad Valorem Tax which can be levied is limited by the 1.218 mills approved by the voters and such limitations may prevent the collection of ad valorem tax revenues sufficient to pay the Series 2009 Bonds, the Series 2007 and the Series 2002 Bonds. The Series 2009 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional or statutory provision or limitation and the City is not obligated to levy any ad valorem taxes other than the Limited Ad Valorem Tax for the payment thereof, as described herein. Neither the full faith and credit nor the taxing power of the State of Florida or any political subdivision or agency thereof (except the taxing power of the City, but only to the extent of the Limited Ad Valorem Tax, as described herein) is pledged to the payment of the principal of, premium, if any, and interest of the Series 2009 Bonds. The City has covenanted in the Resolution to diligently enforce its right to receive Limited Ad Valorem Tax revenues, to diligently enforce and collect such taxes and to not take any action that will impair or adversely affect its rights to levy, collect and receive said taxes, or impair or adversely affect in any manner the pledge made in the Resolution or the rights of the Bondholders. Covenant to Budget and Appropriate Non -Ad Valorem Revenues The City has covenanted in the Resolution, to the extent permitted by and in accordance with applicable law and budgetary processes, to prepare, approve and appropriate in its annual budget for each Fiscal Year, by amendment if necessary, and to transfer to the Paying Agent for deposit to the Principal and Interest Account and Bond Amortization Account, if applicable, legally available non -ad valorem revenues in an amount which, together with the amounts on deposit from the Limited Ad Valorem Tax in the Principal and Interest Account and Bond Amortization Account, if any, is sufficient to pay the principal of, redemption premium, if any, and interest on the Series 2009 Bonds then due and payable; provided however, the amount of non -ad valorem revenues budgeted and appropriated with respect to the Series 2009 Bonds in such Fiscal Year shall not exceed 10% of the Maximum Annual Debt Service on the Series 2009 Bonds. Such covenant and agreement on the part of the City to budget and appropriate sufficient amounts of legally available non - ad valorem revenues shall be exercised by the City only to the extent necessary to pay principal of, premium, if any, and interest on the Series 2009 Bonds, after taking into account any moneys that are available pursuant to the Limited Ad Valorem Tax. The covenant to budget and appropriate legally available non -ad valorem revenues shall be cumulative, and shall continue until such legally available non -ad valorem revenues in amounts sufficient to make all required payments under the Resolution, as and when due, including any delinquent payments, shall have been budgeted, appropriated and actually paid into the appropriate funds and accounts under the Resolution; provided, however, amounts so budgeted and appropriated shall not exceed ten percent (10%) of the Maximum Annual Debt Service on the Series 2009 Bonds in any given Fiscal Year. Such covenant shall not constitute a lien, either legal or equitable, on any of the City's legally available non -ad valorem revenues or other revenues, nor shall it preclude the City from pledging in the future any of its legally available non -ad valorem revenues or other revenues to other obligations, nor shall it give the Bondholders a prior claim on the legally available non -ad valorem revenues. The obligation of the City under the Resolution shall be secured only by the legally available non -ad valorem revenues actually budgeted and appropriated and transferred to the Paying Agent for deposit into the funds and accounts created under the Resolution. The City may not expend, in any year, moneys not appropriated or in excess of revenues budgeted in such year. The obligation of the City to budget, appropriate and make payments under the Resolution from its legally available non -ad valorem revenues is subject to the availability of non- ad valorem revenues after satisfying funding requirements for obligations having an express lien on or pledge of 15 ,NIFT such revenues and after satisfying funding requirements for essential governmental services of the City. Such covenant is, however, cumulative and shall carry over from year to year. Enforcement of the City's obligation to budget and appropriate legally available non -ad valorem revenues shall be through appropriate judicial proceedings. The City has issued and may issue other bonds or debt obligations secured by a similar covenant. See "APPENDIX B - DESCRIPTION OF NON AD VALOREM REVENUES - Schedule of Principal and Interest for Non Ad Valorem Revenue Bonds and Loans". In addition, various contracts of the City which do not constitute debt may be secured in a similar manner. The City has not covenanted to maintain any programs or other activities which generate non -ad valorem revenues. Furthermore, the obligation of the City to budget and appropriate non -ad valorem revenues is subject to a variety of factors, including the payment of essential governmental services of the City and the obligation of the City to have a balanced budget. For a description of additional limitations see "Special Investment Considerations" herein. For a description of the City's non -ad valorem revenues and other outstanding debt secured by non -ad valorem revenues, see "APPENDIX B - DESCRIPTION OF NON -AD VALOREM REVENUES" herein. Special Investment Considerations The Series 2009 Bonds are secured by a lien on the Limited Ad Valorem Tax and, to the extent necessary, a covenant to budget and appropriate its non -ad valorem revenue in an amount not to exceed 10% of the Maximum Annual Debt Service on the Series 2002 Bonds, the Series 2007 Bonds and Series 2009 Bonds. The Limited Ad Valorem Tax will be levied at a mill age rate, that when added together with the City's other Debt Millage, results in an aggregate millage rate that does not exceed 1.218 mills. This millage rate limitation applies only to the Voter Approved Bonds, and does not apply to, or in any way affect, the City's obligation to assess, levy and collect ad valorem taxes, without limitation as to rate or amount, on all taxable property within the corporate limits of the City, for the payment of the principal of and interest on the City's full faith and credit general obligation bonds. Limitations of Limited Ad Valorem Tax Pledge. The pledge of Limited Ad Valorem Tax revenues securing the Series 2009 Bonds is not identical to the unlimited pledge of such revenues securing the City's full faith and credit general obligations bonds. While the City is obligated to increase the millage rate, if required, to collect tax revenues sufficient to pay debt service on full faith and credit general obligation bonds, such is not the case with the Series 2009 Bonds. The Limited Ad Valorem Tax which secures the Series 2009 Bonds, the Series 2007 Bonds and the Series 2002 Bonds may not be levied in excess of a millage rate that, when added to the millage rate needed to meet the debt service on the City's outstanding full faith and credit general obligation bonds issued prior to November 13, 2001 or issued to refund general obligation bonds issued prior to November 13, 2001, exceeds 1.218 mills. In the contract with the 2002 Insurer, the City has restricted its ability to issue Voter Approved Bonds by covenanting to not issue such additional debt without having revenues generated by the Limited Ad Valorem Tax which will provide at least 1.0x coverage of outstanding Voter Approved Bonds, General Obligation Bonds and the proposed bonds to be issued. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS" herein. Such covenant may be waived or modified by the Insurer at any time. Based on currently available information, the City believes that the revenues derived from ad 16 valorem taxes collected at a millage rate of up to 1.218 mills will be sufficient to pay debt service on the Series 2009 Bonds, the Series 2007 Bonds, the Series 2002 Bonds, as well as the currently outstanding full faith and credit general obligation debt of the City issued prior to November 13, 2001 or issued to refund general obligation bonds issued prior to November 13, 2001. A decline, however, in property values within the City or a decline in tax collections could create a situation where Limited Ad Valorem Tax revenues would not be sufficient to pay all such debt service. In such circumstances, (1) Limited Ad Valorem Tax revenues would be utilized first to pay full faith and credit general obligation debt of the City issued prior to November 13, 2001 or issued to refund general obligation bonds issued prior to November 13, 2001, (2) increases in revenue reflecting an increase in the millage rate would be required only to produce revenue for the payment of full faith and credit general obligation debt, and (3) Limited Ad Valorem Tax revenues might not be available for the payment of any debt service on the Series 2009 Bonds. Factors leading to such circumstances might include local, regional or national economic downturns; natural disasters such as hurricanes or floods; changes in state legislation; judicial challenges to tax rates and collections; and the inability of the Miami -Dade County Property Appraiser to properly assess such taxes and the Miami -Dade County Tax Collector to collect such taxes efficiently. Limitations of Covenant to Budget and Appropriate from Non -Ad Valorem Revenues. The City's covenant to budget and appropriate funds from legally available non -ad valorem revenues in any given year is limited to 10% of the Maximum Annual Debt Service on the Series 2009 Bonds. Such amounts therefore would not be sufficient to ensure payment of all debt service on the Series 2009 Bonds if the amount of debt service due and not covered by the revenues available from the Limited Ad Valorem Tax exceeded such 10% amount. As described above, the City's covenant to budget and appropriate such funds does not constitute a lien, either legal or equitable, on any of the City's revenues. The amount of such revenues available to make payments on the Series 2009 Bonds may be effectively limited by the requirement for a balanced budget, funding requirements for essential governmental services of the City, and the inability of the City to expend revenues not appropriated or in excess of funds actually available after the use of such funds to satisfy obligations having an express lien or pledge on such funds. All of these factors may limit the availability of non -ad valorem revenues available to pay a portion of the debt service on the Series 2009 Bonds. In addition, there can be no certainty as to the outcome of any judicial proceedings to enforce the City's obligation to appropriate such funds. Furthermore, the City is not restricted in its ability (1) to pledge such revenues for other purposes or to issue additional debt specifically secured by such revenues or by a covenant similar to that securing the Series 2009 Bonds or (2) to reduce or discontinue services that generate non -ad valorem revenues. All of these factors may limit the availability of non -ad valorem revenues available to pay a portion of the debt service on the Series 2009 Bonds. AD VALOREM TAXATION General Under Florida law, the assessment of all properties and the collection of all county, municipal and property taxes are consolidated in the office of the Miami -Dade County Property Appraiser and Miami -Dade County Tax Collector. The laws of the State of Florida regulating tax assessment are designed to assure a consistent property valuation method statewide. 17 W%F7- Article VII, Section 9(b) of the Florida Constitution limits the aggregate rate of ad valorem taxes that may be levied on real and personal property. The limitation, except as noted below, is ten (10) mills each for all City and municipal purposes. A mill is equal to one-tenth (0.1) of one cent of one dollar or $1.00 for every $1,000 of assessed value. Article VII, Section 9(b) excludes from the general 10 mill cap ad valorem taxes which are necessary to pay debt service on general obligation bonds. Each respective millage rate, except as limited by law, is set on the basis of estimates of revenue needs and total taxable property valuations within the taxing authority's respective jurisdiction. Ad valorem taxes are not levied in excess of actual budget requirements. Section 4 of Article VII of the Constitution of the State provides, with certain exceptions: "By general law regulations shall be prescribed which shall secure a just valuation of all real property for ad valorem taxation." The factors considered in arriving at a just valuation, as set forth in Section 193.011, Florida Statutes, as amended, are summarized as follows: (1) the present cash value of the property; (2) the highest and best use to which the property can be expected to be put in the immediate future and the present use of the property; (3) the location of the property; (4) the quantity or size of the property; (5) the cost of the property and the present replacement value of any improvements to the property; (6) the condition of the property; (7) the income from the property; and (8) the net proceeds of the sale of the property after deduction of certain reasonable fees and costs of sale. Constitutional Amendments Related to Ad Valorem Taxes By voter referendum held on November 3,1992, Article VII, Section 4 of the Florida Constitution was amended by adding thereto a subsection which, in effect, limits the increases in assessed just value of homestead property to the lesser of (a) 3% of the assessment for the prior year or (b) the percentage change in the Consumer Price Index for all urban consumers, U.S. City Average, all items 1967=100, or successor reports for the preceding calendar year as initially reported by the United States Department of Labor, Bureau of Labor Statistics (the "Save Our Homes Amendment"). Further, the Save Our Homes Amendment provides that (1) no assessment shall exceed just value; (2) after any change of ownership of homestead property or upon termination of homestead status, such property shall be reassessed at just value as of January 1 of the year following the year of sale or change of status; (3) new homestead property shall be assessed at just value as of January 1 of the year following the establishment of the homestead; and (4) changes, additions, reductions or improvements to homestead shall initially be assessed as provided by general law, and thereafter as provided in the Save Our Homes Amendment. The effective date of the Save Our Homes Amendment was January 15, 1993, and the base year for determining compliance with the restrictions is 1994. The 1995 tax roll year was the first year such limitations were effective. For the 2008 tax roll year, the increase in assessed just value of homestead property in the City was limited pursuant to the Save Our Homes Amendment to 3% of the assessment for the prior year. In the November 7, 2006 general election, the voters of the State approved Amendments 6 and 7 to 18 the State Constitution, which provide for an increase in the homestead (ad valorem tax) exemption to $50,000 from $25,000 for certain low-income seniors effective January 1, 2007 and provide a discount from the amount of ad valorem taxes for certain permanently disable veterans effective December 7, 2006, respectively. The Florida Legislature completed its special session on June 14, 2007. During this session the legislature passed legislation which would reduce ad valorem taxes that may be levied by local governments, other than school districts, in Fiscal Year 2007-08 to below the level of taxes levied in Fiscal Year 2006-07. The legislation limits the growth of ad valorem tax levies in future years (except those levied by school districts) to the growth in a jurisdiction's population as measured by new construction and the statewide growth in per capita personal income. However, local government governing bodies may increase ad valorem tax levies by extraordinary votes or by referenda. Any county or municipality that levies in excess of the amount permitted under the legislation will forfeit participation in the half -cent sales tax revenue sharing program for a twelve month period. Recent Constitutional and Legislative Amendments Affecting Ad Valorem Taxes Several amendments to the Florida Constitution affecting Ad Valorem Taxes have been approved by voters in the past including the following. Constitutional amendments related to ad valorem exemptions. On January 29, 2008, in a special election held for such purpose, the requisite number of voters approved amendments to the State Constitution exempting certain portions of a property's assessed value from taxation. The following is a brief summary of certain important provisions contained in such amendments: 1. Provides for an additional exemption for the assessed value of homestead property between $50,000 and $75,000, thus doubling the existing homestead exemption for property with an assessed value equal to or greater than $75,000. 2. Permits owners of homestead property to transfer their "Save Our Homes" benefit (up to $500,000) to a new homestead property purchased within two years of the sale of their previous homestead property to which such benefit applied if the just value of the new homestead is greater than or is equal to the just value of the prior homestead. If the just value of the new homestead is less than the just value of the prior homestead, then owners of homestead property may transfer a proportional amount of their "Save Our Homes" benefit, such proportional amount equaling the just value of the new homestead divided by the just value of the prior homestead multiplied by the assessed value of the prior homestead. 3. Exempts from ad valorem taxation $25,000 of the assessed value of property subject to tangible personal property tax. 4. Limits increases in the assessed value of non -homestead property to 10% per year, subject to certain adjustments. The cap on increases would be in effect for a 10 year period, subject to extension by an affirmative vote of electors. The amendments are effective for the 2008 tax year (2008-09 fiscal year for local governments). At this time, it is impossible to estimate with any certainty the level of impact that the constitutional amendments will have on the City, but the impact could be substantial. A lawsuit challenging the constitutionality of at least part of the amendments was filed prior to the 19 referendum approval by the voters. In Bruner v. Hartsfield, filed in the Circuit Court in and for Leon County, Florida in November 2007, new Florida homestead owners (having paid ad valorem taxes for the past four years) filed a class action lawsuit challenging the constitutionality of the Save Our Homes assessment cap and the portability provision. The lawsuit charges that Save Our Homes constitutes an unlawful residency requirement for tax benefits on substantially similar property, in violation of the State Constitution's Equal Protection provisions and the Privileges and Immunities Clause of the Fourteenth Amendment to the United States Constitution. The lawsuit argues that the portability provision simply extends the unconstitutionality of the tax shelters granted to long-term homeowners by Save Our Homes. The lawsuit requests a declaration of the unconstitutionality of both provisions and injunctive action preventing continued application of those provisions. On October 29, 2008, the Circuit Court dismissed the plaintiff's complaint with prejudice. The plaintiffs have appealed the decision to the First District Court of Appeals. At the present time, it is impossible to predict the plaintiffs' chances of success in an appeal or the impact to the City's finances if an appeal is successful. On October 18, 2007, the same Court, in Lanning v. Pilcher, a case filed by out-of-state residents challenging the constitutionality of the Save Our Homes assessment cap, rejected the plaintiffs arguments that the Save Our Homes assessment cap violates either the Commerce Clause or the Privileges and Immunities Clause of the U.S. Constitution or the Equal Protection Clause of either the U.S. or Florida Constitutions and dismissed the plaintiffs' allegations with prejudice. The Lanning Court noted that its decision was limited to the plaintiffs' complaints regarding the Save Our Homes assessment cap. The case is currently on appeal. A lawsuit brought by out-of-state residents (DeLuccio v. Havill) challenging the constitutionality of the Save Our Homes assessment cap and the portability provision was filed with the same Court on May 2, 2008. The allegations and relief requested by the plaintiffs in each of these cases are very similar, except that the portability provision was not challenged in Lanning v. Pilcher since the case was filed prior to the approval of the amendments implementing portability. As noted above, this Court rejected such arguments in Lanning v Pilcher with similarly situated plaintiffs. On November 4, 2008, the Circuit Court in DeLuccio dismissed the plaintiffs' complaint with prejudice. The plaintiffs have appealed the decision to the First District Court of Appeals. At the present time, it is impossible to predict the likelihood of the plaintiffs' success on appeal in any of these lawsuits or, if successful, the impact of these lawsuits on the City's finances. Truth in Millage Bill In 1973, the State of Florida enacted legislation to encourage public awareness of spending and taxing decisions made by local elected officials known as the Truth in Millage Bill (the "Trim Bill"). This legislation provides that if the tax rate established by the governing board exceeds the rolled -back tax rate, the taxing authority shall publish notice of the proposed tax increase prior to the public hearing required to be held for the adoption of the final budget and millage rate. Under Section 200.065, Florida Statutes, a "rolled -back tax rate" is defined as the millage rate that would produce the same amount of ad valorem taxes in each current year as were levied in the prior year, exclusive of any increase in assessments resulting from new construction, additions to structures, deletions, rehabilitations which increase the assessed value by 100% and property added due to geographic boundary changes. Property Assessment Procedures Real and personal property valuations are determined each year as of January 1 by the Miami -Dade County Property Appraiser's Office. The assessment roll is prepared between each January 1 and July 1, with each taxpayer given notice of the proposed assessed value of his property. 20 F7 - The property owner has the right to file an appeal with the Miami -Dade County Property Appraisal Adjustment Board, which considers petitions relating to assessments and exemptions. The Miami -Dade County Property Appraisal Adjustment Board certifies the assessment roll upon completion of the hearing of all appeals. Millage rates are then computed by the various taxing authorities and certified to the Miami - Dade County Property Appraiser, who applies the millage rates to the assessment roll. This procedure creates the tax roll which is then annually turned over to the Miami -Dade County Tax Collector on or about the first Monday in October. Levy of Ad Valorem Taxes A notice is mailed to each property owner on the tax roll for the taxes levied by cities, counties, school boards, and other taxing authorities. All taxes are due and payable on November 1 of each year or as soon thereafter as the certified tax roll is received by the Tax Collector. Taxes may be paid upon receipt of such notice with discounts at the rate of 4% if paid in the month of November; 3% if paid in the month of December; 2% if paid in the month of January; and 1% if paid in the month of February. Taxes paid during the month of March are without discount. Taxes become delinquent on April 1 following the year in which they are assessed or 60 days after mailing of the original tax notice, whichever is later. If the delinquency date for ad valorem taxes is later than April 1 of the year following the year in which taxes are assessed, all dates or time periods specified in the Florida Statutes relative to the collection of, or administrative procedures regarding, delinquent taxes shall be extended a like number of days. Exemptions Exemptions from the ad valorem tax include the first $25,000 of assessed value for a homestead; homestead property of totally and permanently disabled persons; improved real property on which a renewable energy source device is installed and operated; inventory; property used by not-for-profit hospitals, nursing homes and homes for special services; property used by certain not-for-profit homes for the aged; property used exclusively for educational purposes by educational institutions or other exempt organizations, including charter schools, for educational purposes; property owned by certain charitable, literary, religious or scientific organizations and used predominately for such purposes; property owned and used for educational purposes by labor organizations; property of certain community centers; certain property used for affordable housing; property owned and used by certain governmental units; property of certain not-for-profit sewer and water companies; and the first $500 of property of every widow, widower, blind person or disabled person. In addition, pursuant to Section 196.075, Florida Statutes, beginning with fiscal year 2001, an additional homestead exemption of $25,000 may be granted by a city or municipality relating to ad valorem taxes payable to persons 65 or older, subject to certain income limitations. The City has adopted such exemption for the period commencing with fiscal year 2001. Such exemption should not have a material impact on the amount of ad valorem taxes levied or collected by the City. 21 [Remainder of page intentionally left blank] 22 DST Millage Rates The City has reduced its millage rate each year beginning with Fiscal Year 2000. The reduction gives the City capacity to increase taxes for an emergency. The following table shows millage rates for the City for fiscal years ending September 30, 1998 through September 30, 2008. THE CITY OF MIAMI, FLORIDA PROPERTY TAX RATES Note: All millage rates are based on $1 for every $1,000 of assessed value. The following table shows the millage rates for the general obligation debt, the Series 2002 Bonds, the Series 2007 Bonds and the Series 2009 Bonds for Fiscal Years 2002- 2009. Figures for Fiscal Year 2009 are projected. THE CITY OF MIAMI, FLORIDA MILLAGE FOR VOTED DEBT SERVICE _ General Fiscal Year Tax Roll Year Operations Debt Service Total City 1998 1997 9.5995 1.9200 11.5195 1999 1998 10.0000 1.7900 11.7900 2000 1999 9.5000 1.4000 10.9000 2001 2000 8.9950 1.2800 10.2750 2002 2001 8.9950 1.2180 10.2130 2003 2002 8.8500 1.2180 10.0680 2004 2003 8.7625 1.0800 9.8425 2005 2004 8.7163 0.9500 9.6663 2006 2005 8.4995 0.7650 9.2645 2007 2006 8.3745 0.6210 8.9955 2008 2007 7.2999 0.5776 7.8775 Source: City of Miami Comprehensive Annual Financial Report FY 2008 and Miami -Dade County Property Appraiser's Office. N/A 0.5776 2009 .1983 Note: All millage rates are based on $1 for every $1,000 of assessed value. The following table shows the millage rates for the general obligation debt, the Series 2002 Bonds, the Series 2007 Bonds and the Series 2009 Bonds for Fiscal Years 2002- 2009. Figures for Fiscal Year 2009 are projected. THE CITY OF MIAMI, FLORIDA MILLAGE FOR VOTED DEBT SERVICE 23 General Series Fiscal Obligation 2002 Series 2007A Series 2007B Year Debt Bonds Bonds Bonds Series 2009 Bonds Total 2002 1.2180 N/A N/A N/A N/A 1.2180 2003 .8599 .3581 N/A N/A N/A 1.2180 2004 .7941 .2859 N/A N/A N/A 1.0800 2005 .6456 .3044 N/A N/A N/A 0.9500 2006 .4496 .3154 N/A N/A N/A 0.7650 2007 .2850 .3360 N/A N/A N/A 0.6210 2008 .2196 .1577 .1345 .0658 N/A 0.5776 2009 .1983 .1753 .1400 .0668 N/A 0.5803 , Source: City of Miami, Florida Finance Department 23 Assessed Valuations be ► -f The following table shows the assessed valuations for the City for fiscal years ending September 30, 1999 through September 30, 2008.. THE CITY OF MIAMI, FLORIDA NET ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Fiscal Year Real Property Estimated Ended Residential Commercial Personal September 30, Proj2eM ProperProperjy Properjy 1999 $ 5,476,130,675 $ 5,564,886,455 $1,334,992,653 2000 5,796,864,025 5,835,981,002 1,480,211,283 2001 6,000,474,083 6,113,340,757 1,657,551,519 2002 6,612,151,524 6,730,517,606 1,770,392,311 2003 7,679,048,886 7,380,571,799 1,878,266,085 2004 8,789,474,779 8,369,950,851 1,711,697,688 2005 10,364,157,774 9,870,433,741 1,695,110,542 2006 12,959,276,770 12,341,927,389 1,676,173,129 2007 20,320,801,612 11,038,460,135 1,673,647,599 2008 24,279,025,389 11,727,240,945 1,749,572,760 Source: Miami -Dade County Property Appraiser's Office Net Assessed Total City Estimated Value Tax Millae Actual Value $12,376,009,783 11.79 $17,901,918,921 13,113, 056, 310 10.90 18, 857, 553, 034 13,771,366,359 10.28 20,061,032,742 15,113,061,441 10.21 22,035,829,555 16,937,886,770 10.07 24,759,964,620 18,871,123,318 9.84 27,717,908,682 21,929,702,057 9.67 32,133,104,422 26,977,377,288 9.26 39,120,899,711 33,032,909,346 7.88 47,925,276,742 37,755,839,094 8.25 55,249,891,635 Note: Property in the City is reassessed each year. State law requires the Property Appraiser to appraise property at 100% of market value. The Florida Constitution was amended, effective January 1, 1995, to limit annual increases in assessed value of property with homestead exemption to 3 percent per year or the amount of the Consumer Price Index, whichever is lower. The increase is not automatic since no assessed value shall exceed market value. Tax rates are per $1,000 of assessed value. Tax Collection It is the Miami -Dade County Tax Collector's duty on or before June 1 of each year to advertise and sell tax certificates on real property delinquencies extending from the previous April 1. The tax certificates must not be less than the amount of the taxes plus interest from April l to the date of sale, together with the cost of advertising and expense of sale. Delinquent real property taxes bear interest at the rate of 18% per year from April 1 until a certificate is sold at auction, at which time the interest rate is as bid by the buyer of the certificate not to exceed 18%. Delinquent taxes may be redeemed prior to sale of the tax certificates upon payment of all costs, delinquent taxes, and interest. The minimum interest for delinquent taxes paid prior to the sale of a certificate is 3%. A tax certificate may be redeemed by paying the Miami -Dade County Tax Collector the face value of the certificate, interest, costs, charges and omitted taxes, if any, plus a redemption fee of $5. The redeemer must pay the interest rate due on the certificate or 5% of the face amount of the certificate, whichever amount is greater, unless the certificate was bid at no interest. Florida law provides a different method for the collection of delinquent tangible personal property 24 taxes, which includes the possible seizure and sale of the tangible personal property. Tax Deeds After two years from April 1 of the year of issuance of the tax certificate and before seven years of the date of issuance, a private holder of any unredeemed tax certificate may apply for a tax deed to the property. Miami -Dade County, for tax certificates that it has acquired, also has a two-year minimum wait period for purchase of a tax deed, beginning April 1 of the year of issuance of the certificate. Such procedures are governed by State law applicable to all Florida counties. The request for a tax deed is referred to the Clerk of the Circuit Court of Miami -Dade County who will hold an auction after the proposed sale of the tax deed has been advertised for four consecutive weeks in a newspaper as prescribed by law. The following table shows tax levies and tax collections in the City for the last ten fiscal years. THE CITY OF MIAMI, FLORIDA PROPERTY TAX LEVIES AND COLLECTIONS Source: City of Miami, Finance Department and Miami -Dade County Tax Collector's Office 25 Collected Within the Fiscal Year of the Lew Fiscal Year Total Tax Collections in Total Collections to Date Ended Levied for Percent Subsequent September 30, Fiscal Year Amount of Lew Years Percent Amount of Lew 1998 134,743,241 127,911,000 94.93 6,330,294 134,241,294 99.63% 1999 145,913,155 143,515,000 98.36 1,405,841 144,920,841 99.32% 2000 142,932,314 136,028,063 95.17 6,174,244 142,202,307 99.49% 2001 141,425,410 134,535,715 95.13 5,959,373 140,495,088 99.34% 2002 152,339,301 146,185,141 95.96 4,079,641 150,264,782 98.64% 2003 167,490,551 157,339,038 93.94 7,735,274 165,074,312 98.56% 2004 186,253,134 183,845,937 98.71 1,640,252 185,486,189 99.59% 2005 • 208,091,814 199,072,981 95.67 2,379,977 201,452,958 96.81% 2006 242,077,783 234,361,909 96.82 3,801,414 238,163,323 96.38% 2007 284,049,684 278,643,733 97.76 7,111,337 278,643,733 97.75% 2008 304,540,649 292,307,274 95.98 --- 292,307,274 95.98 Source: City of Miami, Finance Department and Miami -Dade County Tax Collector's Office 25 As of 2008, the City's ten largest ad valorem taxpayers, the nature of their activities, the assessed values of their properties (in thousands of dollars), and their relative percentage of total assessed property values in the City follows: TEN LARGEST TAX ASSESSMENTS 2008 ASSESSED VALUES Taxpayer Net Assessed Percent of Value Total City Net Assessed Value Florida Power & Light $374,704,167 1.13% SRI Miami Ventures, LP 281,063,160 0.85% Teachers Ins. & Annuity Association of America 274,800,000 0.83% Bellsouth Telecommunications 235,219,075 0.71% Crescent Miami Center 178,000,000 0.54% 1111 BrickelI Office LLC 138,566,380 0.42% Knight-Ridder Newspapers 121,709,457 0.37% Terremark Brickell II 103,758,786 0.31% Trustees of L&B 103,191,113 0.31% Blue Capital US East 96,296,304 0.29% Total 5.76% Source: City of Miami Comprehensive Annual Financial Report, September 2008 THE CITY OF MIAMI Background Now 113 years old, the City is part of the nation's eleventh largest metropolitan area. Incorporated in 1896, the City is the only municipality conceived and founded by a woman - Julia Tuttle. According to the U.S. Census Bureau, the City's population in 1900 was 1,700 people. Today it is a city rich in cultural and ethnic diversity with more than 362,470 residents (as of the 2000 Census), 58.2% of them foreign born. In physical size, the City is not large, encompassing only 34.3 square miles. In population, the City is the largest of the 35 municipalities that make up Miami -Dade County and is the county seat. For additional information concerning the City, see "APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF MIAMI." City Government Since 1997, the City has been governed by a form of government known as the "Mayor -Commissioner plan." The City Commission is the legislative body of the City. There are five Commissioners elected from designated districts within the City. The Mayor is elected at large every four years. As official head of the City, the Mayor has veto authority over actions of the Commission. The Mayor appoints the City Manager who functions as chief administrative officer. 26 nc4i Fr The Mayor of the City is presently Manuel A. Diaz whose term expires November 2009. The current members of the City Commission and expiration of their current terms of office are: Commission Members Date Term Expires Joe M. Sanchez, Chair November 2009 Michelle Spence -Jones, Vice Chair November 2009 Angel Gonzalez November 2011 Marc D. Samoff November 2011 Tomas P. Regalado November 2011 The City Manager, Pedro G. Hernandez, is a full-time employee and is the chief administrative officer of the City. The City Manager is responsible for directing the administrative and operational aspects of the City in compliance with the policies set by the Commission and the Mayor. Mr. Hernandez has been City Manager since July 2006. He is responsible for an organization that has more than 3,954 employees and administers a budget of more than $523 million. Prior to his current position, he served as Deputy County Manager of Miami -Dade County and was charged with the oversight of the Departments of Aviation, Police, Corrections, Juvenile Services, Fire Rescue, Emergency Management, Homeland Security and the Office of the Medical Examiner. He also served as liaison to the Ethics Commission, Clerk of Courts, International Trade Consortium and the planning committee for the Super Bowl. He holds a Bachelors of Science Degree in Civil Engineering from the University of Miami and is a registered Professional Engineer in the State of Florida. The City's Chief Financial Officer is Larry Spring. His primary responsibilities include the oversight of the budget development process as well as developing and maintaining the performance indicator systems whereby department performance can be monitored and provide for budget accountability. He was appointed the interim Chief Financial Officer in July 2006 and appointed the Chief Financial Officer in February 2007. He served as Assistant City Manager for Strategic Planning, Budgeting and Performance from February 2003 to February 2007. Prior to that, Mr. Spring spent the bulk of his career in the commercial banking industry primarily in the areas of accounting and treasury management. His last position prior to joining the City was as Vice President and Controller of TOTALBANK in Miami. He holds a Bachelor of Science degree in Accounting from the A.B. Freeman School of Business at Tulane University and is a member of the Government Finance Officers Association. The City's Finance Director is Diana M. Gomez. She reports to the Chief Financial Officer. She is responsible for managing and investing public funds, accounts payable, general ledger, grants monitoring, payroll, treasury management and preparation of routine accounting reports as well as the City's annual financial statement. Ms. Gomez was appointed as the Finance Director on February 11, 2006. Ms. Gomez has been Assistant Director of Finance/Comptroller since her employment with the City on August 27, 2001. Prior to joining the City, Ms. Gomez was a Supervising Senior Auditor/C.P.A. for five years with KPMG LLP, one of the "big four" accounting firms. Ms. Gomez received a Bachelor of Arts in Psychology from Rutgers College, N.J., and a Masters in Business Administration in Professional Accounting from the University of Baltimore, MD. She is a Certified Public Accountant. Adoption of Investment Policy and Debt Management Policy The City adopted a detailed written investment policy on May 10, 2001, that applies to all cash and investments held or controlled by the City and identified as "general operating funds" of the City with the exception of the City's Pension Funds, Deferred Compensation & Section 401(a) Plans, and such funds related 27 W, to the issuance of debt where there are other existing policies or indentures in effect for such funds. Additionally, any future revenues, which have statutory investment requirements conflicting with the City's Investment Policy and funds held by state agencies (e.g. Department of Revenue), are not subject to the provisions of the policy. The primary objective of the investment program is the safety of the principal of those funds within the portfolios. Investment transactions shall seek to keep capital losses at a minimum, whether they are from securities defaults or erosion of market value. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. The portfolios are required to be managed in such a manner that funds are available to meet reasonably anticipated cash flow requirements in an orderly manner. Return on investment is of least importance compared to the safety and liquidity objectives described in the policy. In accordance with the City's Administrative Policies, the responsibility for providing oversight and direction in regard to the management of the investment program resides with the City's Finance Director. The Finance Director has established written procedures for the operation of the investment portfolio and a system of internal accounting and administrative controls. The City's investment policy may be modified from time to time by the City Commission. Subject to the exceptions in the City s investment policy, the City may invest in the following types of securities: (a) The Florida Local Government Surplus Funds Trust Fund, (b) United States Government Securities, (c) United States Government Agencies, (d) Federal Instrumentalities, (e) Interest Bearing Time Deposit or Savings Accounts, (f) Repurchase Agreements, (g) Commercial Paper, (h) Corporate Notes, (i) Bankers' Acceptances, (j) State and/or Local Government Taxable and/or Tax -Exempt Debt, (k) Registered Investment Companies (Money Market Mutual Funds) and (1) Intergovernmental Investment Pool. Also, the City may invest in investment products that include the use of derivatives. As of September 30, 2008, approximately 85.1% of the City's investment portfolio was invested in United States Treasury Obligation and obligations of agencies of the United States Government. Approximately 14.9% of the City's investment portfolio was invested in commercial paper. All are rated in the highest rating category for each of the rating agencies. The City adopted a Debt Management Policy on July 21, 1998 to provide guidance governing the issuance, management, continuing evaluation of and reporting on all debt obligations issued by the City and to provide for the preparation and implementation necessary to assure compliance and conformity with the policy. It is the responsibility of the City's finance committee to review and make recommendations regarding the issuance of debt obligations and the management of outstanding debt. The finance committee has approved the Series 2009 Bonds and their negotiated sale to the Underwriters. The following policies concerning the issuance and management of debt were established in the Debt Management Policy: (a) the City will not issue debt obligations or use debt proceeds to finance current operations; (b) the City will utilize debt obligations only for acquisition, construction or remodeling of capital improvement projects that cannot be funded from current revenue sources or in such cases wherein it is more equitable to the users of the projects to finance the project over its useful life; and (c) the City will measure the impact of debt service requirements of outstanding and proposed debt obligations on single year, five, ten and twenty year periods. Capital Improvement Plan 28 =FJ The City's fiscal year 2008-2012 five year Capital Improvement Plan (the "Capital Plan"), covering the period from October 1, 2007 through September 30, 2012, earmarked funding estimated at $800.5 million for 490 projects throughout the City. Streets and sidewalks projects account for the largest portion of the total Capital Plan funding at $256.2 million or 32%. Parks and recreation projects are the second largest, accounting for $162.0 million, or 20.2%, and public facilities projects are the third largest accounting for $86.1 million, or 10.8%, of the total Capital Plan. Bonds issued by the City represent the largest share of funding for the Capital Plan, accounting for 45.5% of the total. Capital project revenues (impact fees, storm water utilities, optional gas tax, etc.) account for 30.5%, funding derived from Miami -Dade County accounts for 14.9% and the remaining 9.1% of funding is from federal, State and other private donations. Fiscal and Accounting Procedures The accounts of the City are organized on the basis of funds or account groups, each of which is considered a separate accounting entity in accordance with generally accepted accounting principles, as defined by the Governmental Accounting Standards Board ("GASB"). The operation of each fund is accounted for in a separate, self -balancing set of accounts which comprise its assets and other debits, liabilities, fund equities and other credits, revenues and expenditures. Individual funds that have similar characteristics are combined into fund types. For the past 3 years the City has received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada. For a complete description of the fund types and account groups, see "Notes to General Purpose Financial Statements of the City" in Appendix C herein. General Fund The General Fund is the general operating fund of the City. It accounts for all financial resources except for those required to be accounted for in another fund. The largest source of revenue in this fund is generated from ad valorem taxation. Operations will be removed from the General Fund only when they can be operated as true enterprise operations. [Remainder of page intentionally left blank.] 29 WWT The following chart shows information regarding the General Fund over the five year period ending September 30, 2008. Summary Schedule of Revenues, Expenditures and Net Changes in Fund Balance for the General Fund Revenues Taxes Franchise Fees/Other Taxes Licenses and permits Fines and forfeitures Intergovernmental Charges for services Fines and forfeitures Interest Other Total Revenues Expenditures General government Planning & development Community development Community redevelopment areas Public works Public safety Public facilities Parks and recreation Risk management PensionsM Organizational supportM Non-departmentalM Debt Service: Principal Interest and Other Charges Debt Insurance Costs Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other financing sources and (uses): Operating transfers in Operating transfers out Refunding Bonds Issued Payments to Refunded Bond Escrow Agent Bonds Issued Loan Capital Leases Sale of Capital Assets Total other financing sources, net Net Change in Fund Balances Debt Service as Percentage of Non - Capital Expenditure Fiscal Year Ended September 30th 2004 2005 2006 2007 2008 $159,391,679 $178,979,987 $214,329,257 $294,251,152 34,988,629 35,918,724 41,342,214 100,356,351 23,011,688 27,394,427 28,468,593 32,848,055 4,732,357 4,980,002 5,175,457 7,541,812 49,260,814 49,790,494 53,266,529 150,040,391 87,591,034 91,979,456 91,980,596 89,589,154 5,438,411 4,404,529 11,144,320 23,837,450 - - - 4,017,110 5,828,412 3,949,489 5,563,166 9,369,810 $370,243,024 $397,397,108 $451,270,132 $711,851,285 Source: The City of Miami, Florida 64,208,736 36,419,744 38,809,265 71,862,845 10,722,800 9,136,666 9,440,759 11,862,685 - - - 35,325,497 - - - 5,314,468 56,926,608 48,251,766 50,573,908 56,484,364 243,181,936 181,871,226 187,938,096 270,988,501 5,911,254 6,597,590 7,355,457 13,637,506 14,763,846 14,621,171 15,111,916 30,637,506 - 29,162,254 ' 25,546,486 18,115,929 73,862,309 78,864,757 70,708,285 23,917,033 25,161,646 35,122,459 12,926,933 13,204,324 - - 20,887,276 24,346,064 6,988,908 - - - 1LY,GOY,LL7 $395,715,180 $436,766,692 $452,006,614 $796,364,961 (25,472,156) (39,369,584) (736,482) (84,513,676) 49,400,444 43,484,074 52,097,226 278,006,434 (32,142,211) (23,862,197) (42,209,286) (278,006,434) (131,775,000) 3,204,349 20,462,582 19,621,877 9,887,940 59,538,238 $(5,009,574) $ (19,747,707) $9,151,458 $(24,975,438) (1) The City, in the 2005 fiscal year, revised the reporting for these functions in the governmental funds. Previously, these amounts were included in other functions. 30 Budget The City's Fiscal Year 2008 Budget was adopted on September 27, 2007. The Fiscal Year 2008 Budget is approximately $523,713,803, an increase of 3.14% ($15.6 million) from the Fiscal Year 2007 Budget. The millage rate increased from 7.2999 mills in Fiscal Year 2007 to 7.6740 mills in Fiscal Year 2008. 2008 APPROPRIATED BUDGET The chart below shows the City's Fiscal Year 2008 Budget versus the Fiscal Year 2007 Budget. Revenues Property Taxes Franchise Fees and Other Taxes Interest (Transfers) Fines and Forfeitures Intergovernmental Revenues Licenses and Permits Other Revenues (Inflows) Charges for Services Total Revenues (Inflows) Expenditures General Government Planning & Development Public Works Public Safety Public Facilities Parks & Recreation Risk Management Organizational Support -Group Benefits Pension Non -Departmental (Transfers) Total Expenditures (Outflows) FY 2008 FY 2007 FY 2007 Adopted Adopted Increase Revised Budget Budget (Decrease) Budget $261,026,148 $255,377,267 $5,648,881 $255,850,418 37,005,000 36,060,759 944,241 39,631,617 8,115,000 8,101,000 14,000 16,101,000 39,492,737 37,637,086 1,855,651 61,411,040 5,208,555 4,595,500 613,055 4,885,500 41,151,996 40,871,218 280,778 53,847,248 29,658,555 26,461,392 3,197,163 28,497,592 19,205,100 7,772,750 11,432,350 14,263,997 82,850,712 78,222,917 4,627,795 87,287,917 $523,713,803 $495,099,889 $28,613,914 $561,776,329 45,570,476 49,814,161 (4,243,685) 48,438,618 11,771,871 11,134,289 637,582 10,990,135 56,820,488 58,123,410 (1,302,922) 56,405,839 215,692,574 185,831,680 29,860,894 234,369,728 7,478,665 7,443,216 35,449 7,436,454 21,732,908 20,048,319 1,684,589 20,239,248 52,420,609 33,768,550 18,652,059 18,115,929 0 26,736,867 (26,736,867) 35,209,120 65,945,032 85,066,764 (19,121,732) 70,769,063 15,959,691 30,168,930 (14,209,239) 35,773,177 34,321,489 0 34,321,489 -49,052,224 $527,713,803 $508,136,186 $19,577,617 $488,695,087 31 Indebtedness of the City Pursuant to the Debt Management Policy, the City's debt issuance is subject to the following constraints: (i) the Net Debt Per Capita and the Net Debt to Taxable Assessed Value percentages, which shall be determined by the finance committee by bench marking the City to current industry standards, and (ii) the maximum maturity shall be the earlier of (a) the estimated useful life of the capital improvements being financed or (b) thirty years or (c) in the event debt was issued to refinance outstanding debt obligations the final maturity of the debt obligations being refinanced, unless a longer term is recommended by the finance committee. Pension Fund. The City's employees participate in two separate, single employer defined benefit contributory pension plans under the administration and management of separate Boards of Trustees: The City of Miami Fire Fighters' and Police Officers' Retirement Trust ("FIPO") and the City of Miami General Employees and Sanitation Employees' Retirement Trust ("GESE"). The plans cover substantially all City employees who contribute a percentage of their base salary or wage on a bi-weekly basis. The City's elected officials participate in a single employer defined benefit non-contributory pension plan under the administration and management of a separate Board of Trustees, the City of Miami Elected Officers' Retirement Trust ("EORT"). This plan covers all elected officials with 7 or more years of elected service. City employees are required to contribute 10% of their salary to GESE and no more than 7% to FIPO. The EORT is a non-contributory plan. Contributions from employees for FIPO and GESE are recorded in the period the City makes payroll deductions from participants. The City is annually required to contribute such amounts as necessary on an actuarial basis to provide FIPO and GESE with assets sufficient to meet the benefits to be paid. The ordinance covering the FIPO (the "Pension Ordinance") provides for actuarial methodology for evaluating assets to be a moving market value averaged over three years. The result cannot be greater than 100 percent of market value or less than 80 percent of market value. The Pension Ordinance also provides for the FIPO Board of Trustees' actuary to use the actuarial assumptions adopted the FIPO Board. Currently, the City and the FIPO are in discussions regarding the amount needed for contribution. However, if the City's actuary and the FIPO's actuary cannot agree, together they may appoint a third independent actuary. The third actuary is required to submit a funding recommendation to the FIPO Board and the City Commission. The City Commission is then required to fund the amount recommended by either the FIPO's actuary or the City's actuary, whichever recommendation is closer to the recommendation of the third actuary. The City's net pension obligation for each of the FIPO, the GESE and the EORT is $0. The annual pension costs have been fully contributed by the City for the fiscal years ended September 30, 2004, 2005, 2006, 2007 and 2008. Additionally, the City has established a qualified governmental excess benefit plan to continue to cover the difference between the allowable pension to be paid and the amount of the defined benefits, so the benefits for eligible members are not diminished by the changes in the Internal Revenue Code (the GESE Excess Plan"). Plan members are not required to contribute to the GESE Excess Plan. The payment of the City's contribution of the excess retirement benefit is funded from the City's General Fund and paid annually at the same time as the City's annual contribution to normal pension costs. The City's net pension obligation for the GESE Excess Plan as of September 30, 2008 was $4,265,603 and the annual pension costs have been fully contributed by the City for the fiscal years ended September 30, 2004, 2005, 2006, 2007 and 2008. 32 _WZW:�T Accrued Compensated Absences. Under terms of Civil Service regulations, labor contracts and administrative policy, City employees are granted vacation and sick leave in varying amounts. Additionally, certain overtime hours can be accrued and carried forward as earned time off. Unused vacation and sick time is payable upon separation from service, subject to various limitations depending upon the employee's seniority and civil service classification: The amount accrued as of September 30, 2008 is $70,759,099 of which $4,405,699 is the current portion. Every three years the maximum number of hours which can be carried forward is renegotiated with FIPO and GESE. Other Postemployment Benefits. In accordance with Section 112.0801, the City provides medical coverage and life benefits to its retirees. Although not required by law, the City pays a portion of such cost of participation for its retirees. As with all governmental entities providing similar plans, the City will be required to comply with the Governmental Accounting Standard's Board Statement No. 45 - Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions ("GASB 45") no later than its fiscal year ending September 30, 2008. The City has historically accounted for its other post employment benefit ("OPEB") contributions on a pay as you go basis. GASB 45 applies accounting methodology similar to that used for pension liabilities to OPEB and attempts to more fully reveal the costs of employment by requiring governmental units to include future OPEB costs in their financial statements. While GASB 45 requires recognition and disclosure of the unfunded OPEB liability, there is no requirement that the liability of such plan be funded. The City has not yet retained an actuary to review its OPEB liabilities. While the City does not know at this time what its OPEB liabilities will be in connection with GASB 45 compliance in the future or the amount it will budget in future years, it expects its OPEB liability to be significant, but manageable within its normal budgeting process. [Remainder of page intentionally left blank.] 33 Direct Debt PPT The City has met certain of its financial needs through debt financing. The table which follows is a schedule of the outstanding debt of the City as of September 30, 2008, including that which is payable from sources other than ad valorem taxes. Special Obligation and Revenue Bonds and Loans: Amount Outstanding DESCRIPTION Issued Balance General/Limited Ad Valorem Obligations: 11,500,000 2,010,000 General Obligation Refunding Bonds, Series 1992 $ 70,100,000 $ 6,385,000 Homeland Defense/Neighborhood CIP, Series 2002A 153,186,406 40,058,765 General Obligation Refunding Bonds, Series 2002A 32,510,000 26,795,000 General Obligations Bonds, Other Issues 23,190,000 880,000 General Obligation Refunding Bonds, Series 2003 18,680,000 4,100,000 General Obligation Refunding Bonds, Series 2003B 4,180,000 4,115,000 Homeland Defense/Neighborhood CIP Refunding Bonds, Series 2007A 103,060,000 103,060,000 Homeland Defense/Neighborhood CIP, Series 2007B 50,000,000 50,000,000 Special Obligation and Revenue Bonds and Loans: Special Revenue Refunding Bonds, Series 1987 $ 65,271,325 $ 6,224,609 Community Entitlement Revenue Bonds, Series 1990 11,500,000 2,010,000 Special Obligation Non -Ad Valorem, Series 1995 22,000,000 1,245,000 Special Obligation Non -Ad Valorem Revenue, Series 1995 72,000,000 30,875,000 Special Revenue Refunding Bonds, Series 2002A 27,895,000 27,330,000 Special Revenue Refunding Bonds, Series 2002B 13,170,000 0 Special Revenue Refunding Bonds, Series 2002C 28,390,000 21,790,000 Non Ad Valorem Var Rate Refunding Bonds, Series 2006 30,615,000 29,010,000 Sunshine State Governmental Financing Commission Loans 27,630,900 7,581,900 Sunshine State Governmental Financing SEOPW - Section 108 HUD Loan 5,100,000 3,150,000 Wynwood - Section 108 HUD Loan 5,500,000 2,610,000 Wagner Square — Section 108 HUD Loan 4,000,000 3,999,000 Sunshine State Governmental Financing Commission - Secondary Loan 3,500,000 1,195,000 Parrot Jungle 5,112,000 4,312,000 Special Revenue Bonds, Series 2007 80,000,000 80,000,000 Sunshine State Governmental Financing Commission Loans 6,600,000 6,600,000 Sunshine State Governmental Financing Commission Loans 42,500,000 42,500,000 Gran Central Corporation Loan 1,708,864 1,708,864 Total Loans $453.493, $272,141,372 Total Debt X908,399,495 $,507,535 137 Source: City of Miami Finance Department 34 l) The following sets forth the aggregate debt service requirements for the City's outstanding general obligation debt as of September 30, 2008. This table does not include the Series 2002 Bonds, the Series 2007 Bonds or the Series 2009 Bonds. Fiscal Year Ended September 30 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Principal $ 10,335,262.40 10,309,047.50 10,357,664.20 10,373,375.50 9,932,644.00 10,287,518.50 10,299,948.50 12,773,304.40 14,765,000.00 15,525,000.00 16,315,000.00 17,150,000.00 18,025,000.00 18,945,000.00 7,325,000.00 7,705,000.00 8,095,000.00 8,515,000.00 8,950,000.00 9,410,000.00 Interest $ 11,390,034.22 11,420,388.15 11,375,053.32 11,374,472.05 11,482,534.80 11,577,285.28 11,614,486.53 9,142,130.62 7,148,772.52 6,387,078.77 5,598,525.02 4,765,045.02 3,887,796.89 2,968,693.76 2,316,443.76 1,940,693.76 1,545,693.76 1,130,443.76 693,818.76 235,034.38 Total $235,393,765.00 $127,994,425.13 [Remainder of page intentionally Ieft blank.] 35 Total Debt Service $ 21,725,296.62 21,729,435.65 21,732,717.52 21,747,847.55 21,415,178.80 21,864,803.78 21,914,435.03 21,915,435.02 21,913,772.52 21,912,078.77 21,913,525.02 21,915,045.02 21,912,796.89 21,913,693.76 9,641,443.76 9,645,693.76 9,640,693.76 9,645,443.76 9,643,818.76 9,645,034.38 $363,388,190.13 Overlapping Debt The table set forth below summarizes the general obligation debt of the Miami -Dade County and the School Board of Miami -Dade County as of September 30, 2008. While the City believes the amount of debt of the School Board of Miami -Dade County and Miami -Dade County set forth below to be accurate, it should be understood that this amount was derived from source materials which were not compiled by and are not subject to verification by the City. Accordingly, no assurance can be given as to the absolute accuracy of these amounts. Percentage Amount Net Applicable to Applicable to Debt the City of the City of Governmental Unit Outstanding Miami(') Miami Debt Repaid with Property Taxes: Miami -Dade County $472,236,000 Miami -Dade County School Board 475,919,000 Subtotal, Overlapping Debt City of Miami, Florida Direct Debt* Total Direct and Overlapping Debt 19.00% $89,724,840 19.00 90,424,610 180,149,450 235,393,765 $415,543,215 Sources: Data provided by the Miami -Dade County Finance Department and the Miami -Dade County School Board. * (Excludes special obligation, revenue bonds, loans and capital leases.) (1) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values -values that are within the City's boundaries and dividing it by the County's and School Board's total taxable assessed value. This approach was also used for the other debt. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Miami. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. iW Debt Ratios General Obligation & Limited Ad Valorem Debt Per Capita $643.40 General Obligation & Limited Ad Valorem Debt as a Percentage of Taxable Value 0.62% Non -Self Supporting Revenue Debt Per Capita $726.10 Non -Self Supporting Revenue Debt as a Percentage of Taxable Assessed Value 0.70% General Governmental Debt Service (non -self supporting) as a Percentage of Non -Ad Valorem General Fund Expenditures 88.37% General Government Direct Debt Per Capita $643.40 Net Direct Debt as a Percentage of Taxable Assessed Value 0.62% General Government Debt Service as a Percentage of Non -Ad Valorem 88.98% General Fund Revenues Source: Data provided by the City of Miami Finance Department LEGAL MATTERS Certain legal matters incident to the validity of the Series 2009 Bonds are subject to the approval of Foley & Lardner LLP, Miami, Florida, Bond Counsel, whose approving opinion in the form attached hereto as "APPENDIX E — FORM OF BOND COUNSEL OPINION" will be furnished without charge to the purchasers of the Series 2009 Bonds at the time of their delivery. The actual legal opinion to be delivered may vary from that text if necessary to reflect facts and law on the date of delivery. Certain legal matters will be passed upon for the City by Julie O. Bru, Esq., City Attorney, and by KnoxSeaton, Miami, Florida, Disclosure Counsel to the City. Florida. Certain legal matters will be passed upon for the Underwriters by Akerman Senterfitt, Miami, LITIGATION There is no pending or, to the knowledge of the City, any threatened litigation against the City of any nature whatsoever which in any way questions or affects the validity of the Series 2009 Bonds, or any proceedings or transactions relating to their issuance, sale, execution, or delivery, or the adoption of the Resolution, or the levy of the ad valorem taxes. Neither the creation, organization or existence, nor the title of the present members of the City Commission or other officers of the City is being contested. DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS Rule 69W-400.003, Rules of Government Securities, promulgated by the Office of Financial Regulation of the Financial Services Commission, under Section 517.051(1), Florida Statutes ("Rule 69W- 400.003"), requires the City to disclose each and every default as to the payment of principal and interest with respect to obligations issued by the City after December 31, 1975. Rule 69W-400.003 further provides, however, that if the City in good faith believes that such disclosures would not be considered material by a reasonable investor, such disclosures may be omitted. The City has not defaulted on the payment of principal 37 or interest with respect to obligations issued by the City after December 31, 1975. TAX MATTERS Federal Tax Matters The Internal Revenue Code of 1986, as amended (the "Code"), contains a number of requirements and restrictions which may apply to the Series 2009 Bonds, including investment restrictions, a requirement of periodic payments of arbitrage profits to the United States, requirements regarding the use of bond proceeds and the facilities financed therewith, and certain other matters. The City has covenanted to use its best efforts to comply with all requirements of the Code that must be satisfied in order for the interest on the Series 2009 Bonds to be excluded from gross income for federal income tax purposes. Failure to comply with certain of such requirements could cause interest on the Series 2009 Bonds to be included in gross income retroactive to the date of issuance of the Series 2009 Bonds. Subject to the condition that the City comply with the pertinent requirements of the Code, under existing lav, in the opinion of Bond Counsel, interest on the Series 2009 Bonds will be excluded from the gross income of the owners thereof for federal income tax purposes and will not be treated as an item of tax preference in computing the alternative minimum tax for individuals and corporations. Reference is made to a proposed form of the Co -Bond Counsel opinion attached hereto as APPENDIX E for the complete text thereof. In rendering the opinion, Bond Counsel will rely upon certificates of the City with respect to certain material facts relating to the property financed with the proceeds of the Series 2009 Bonds and the application of the proceeds of the Series 2009 Bonds. The Code contains numerous provisions that could affect the economic value of the Series 2009 Bonds to certain owners of the Series 2009 Bonds. The following is a brief summary of some of the significant provisions that may be applicable to particular owners of the Series 2009 Bonds. Prospective owners of the Series 2009 Bonds, however, should consult their own tax advisors with respect to the impact of such provisions on their own tax situations. The Series 2009 Bonds will not be "qualified tax-exempt obligations' within the meaning of Section 265(b) of the Code. Interest on indebtedness incurred or continued to purchase or carry the Series 2009 Bonds, or in the case of banks or certain other financial institutions, interest expense allocable to interest on the Series 2009 Bonds, will not be deductible for federal income tax purposes. Insurance companies (other than life insurance companies) are required for taxable years beginning after 1986 to reduce the amount of their deductible underwriting losses by 15% of the amount of tax exempt interest received or accrued on certain obligations, including the Series 2009 Bonds, acquired after August 7, 1986. If the amount of this reduction exceeds the amount otherwise deductible as losses incurred, such excess may be includable in income. Life insurance companies are subject to similar provisions under which taxable income is increased by reason of receipt or accrual of tax exempt interest, such as interest on the Series 2009 Bonds. Interest on the Series 2009 Bonds must be included in the "adjusted current earnings" of corporations (other than S corporations, regulated investment companies, real estate investment trusts and REMICs), and the alternative minimum taxable income of such corporations must be increased by 75% of the excess of 38 lw-r adjusted current earnings over alternative minimum taxable income (determined without regard to this adjustment and prior to reduction for certain net operating losses). Certain recipients of social security benefits and railroad retirement benefits are required to include a portion of such benefits in gross income by reason of receipt or accrual of interest on tax exempt obligations, such as the Series 2009 Bonds. For foreign corporations that operate branches in the United States, Section 884 of the Code imposes a branch level tax on certain earnings and profits in tax years beginning after 1986. Interest on tax exempt obligations, such as the Series 2009 Bonds, may be included in the determination of such domestic branches taxable base on which this tax is imposed. Bond Counsel's opinion represents its legal judgment based upon its review of existing law and reliance on the aforementioned information, representations and covenants. Bond Counsel's opinion is not a guarantee of a result. Existing law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that existing law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Series 2009 Bonds. Original Issue Discount Some of the Series 2009 Bonds may have an issue price that is less than the amount payable at the maturity of such Series 2009 Bonds (hereinafter called the "Discount Bonds"). Under existing law, the original issue discount in the selling price of the Discount Bonds, to the extent properly allocable to each owner of a Discount Bond, is excluded from gross income for federal income tax purposes to the same extent that any interest payable on such Discount Bond is or would be excluded from gross income for federal income tax purposes. The original issue discount is the excess of the stated redemption price at maturity of such Discount Bond over the initial offering price to the public, excluding underwriters or other intermediaries, at which price a substantial amount of such Discount Bonds were sold (the "issue price"). Under Section 1288 of the Code, original issue discount on tax-exempt obligations accrues on a compound interest basis. The amount of original issue discount that accrues to an owner of a Discount Bond during any accrual period generally equals (i) the issue price of such Discount Bond plus the amount of original issue discount accrued in all prior accrual periods multiplied by (ii) the yield to maturity of such Discount Bond (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of each accrual period), less (iii) any interest payable on such Discount Bond during such accrual period. The amount of original issue discount so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, and will increase the owner's tax basis in such Discount Bond. The adjusted tax basis in a Discount Bond will be used to determine taxable gain or loss upon a disposition (e.g., upon a sale, exchange, redemption, or payment at maturity) of such Discount Bond. Owners of Discount Bonds who did not purchase such Discount Bonds in the initial offering at the issue price should consult their own tax advisors with respect to the tax consequences of owning such Discount Bonds. 39 Owners of Discount Bonds should consult their own tax advisors with respect to the state and local tax consequences of the Discount Bonds. It is possible that under the applicable provisions governing the determination of state and local income taxes, accrued original issue discount on the Discount Bonds maybe deemed to be received in the year of accrual, even though there will not be a corresponding cash payment until a later year. Original Issue Premium Some of the Series 2009 Bonds may have an issue price that is greater than the amount payable at the maturity of such Series 2009 Bonds (hereinafter called the "Premium Bonds"). Any Premium Bond purchased in the initial offering at the issue price will have "amortizable bond premium" within the meaning of Section 171 of the Code. An owner of a Premium Bond that has amortizable bond premium is not allowed any deduction for the amortizable bond premium. During each taxable year, such an owner must reduce his or her tax basis in such Premium Bond by the amount of the amortizable bond premium that is allocable to the portion of such taxable year during which the owner held such Premium Bond. The adjusted tax basis in a Premium Bond will be used to determine taxable gain or loss upon a disposition (e.g., upon a sale, exchange, redemption, or payment at maturity) of such Premium Bond. Owners of Premium Bonds who did not purchase such Premium Bonds in the initial offering at an issue price should consult their own tax advisors with respect to the tax consequences of owning such Premium Bonds. Owners of Premium Bonds should consult their own tax advisors with respect to the state and local tax consequences of the Premium Bonds. RATINGS Moody's Investor's Service ("Moody's"), Fitch Ratings ("Fitch") and Standard & Poor's Ratings Services ("S&P") have assigned their municipal bond ratings of "_," "_" and respectively, to the Series 2009 Bonds with the understanding that upon delivery of the Series 2009 Bonds, the municipal bond insurance policy will be issued by the Insurer. In addition, Moody's, Fitch and S&P have assigned underlying ratings of "_" and "_", respectively, without giving any regard to such municipal bond insurance policy. The ratings reflect only the views of said rating agencies and an explanation of the ratings may be obtained only from said rating agencies. There is no assurance that such ratings will continue for any given period of time or that they will not be lowered or withdrawn entirely by the rating agencies, or any of them, if in their judgment, circumstances so warrant. A downward change in or withdrawal of any of such ratings, may have an adverse effect on the market price of the Series 2009 Bonds. FINANCIAL ADVISOR The City has retained First Southwest Company as Financial Advisor in connection with the City's financing plans and with respect to the authorization and issuance of the Series 2009 Bonds. The Financial Advisor did not participate in the underwriting of the Series 2009 Bonds. AUDITED FINANCIAL STATEMENTS The General Purpose Audited Financial Statements of the City for the fiscal year ending September 40 CA = 30, 2008 (the `Audited Financial Statements"), and report thereon of Rachlin Cohen & Holtz LLP (the "Independent Certified Public Accountant") are attached hereto as 'APPENDIX D — GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30,2008." Such statements speak only as of September 30, 2008. The Audited Financial Statements have been included as a public document and the Independent Certified Public Accountant has not consented to the inclusion of such Audited Financial Statements in this Official Statement nor have they participated in the preparation of the Official Statement. UNDERWRITING The Series 2009 Bonds are being purchased by the underwriters shown on the cover of the Official Statement (collectively, the "Underwriters") at an aggregate purchase price of $ (the par amount of the Series 2009 Bonds, plus net original issue premium of $ , less Underwriters' discount of $ J. The Underwriters' obligations are subject to certain conditions precedent described in the Bond Purchase Contract entered into between the City and the Underwriters, and they will be obligated to purchase all of the Series 2009 Bonds if any Series 2009 Bonds are purchased. The Series 2009 Bonds may be offered and sold to certain dealers (including dealers depositing such Series 2009 Bonds into investment trusts) at prices lower than such public offering prices, and such public offering prices may be changed, from time to time, by the Underwriters. CONTINGENT FEES The City has retained Bond Counsel, Financial Advisor and Disclosure Counsel with respect to the authorization, sale, execution and delivery of the Series 2009 Bonds. Payment of the fees of such professionals and an underwriting discount to the Underwriters are each contingent upon the issuance of the Series 2009 Bonds. ENFORCEABILITY OF REMEDIES The remedies available to the owners of the Series 2009 Bonds upon an event of default under the Resolution and the Policy are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically the federal bankruptcy code, the remedies specified by the Indenture, the Series 2009 Bonds'and the Policy may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2009 Bonds, including Bond Counsel's approving opinion, will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. CONTINUING DISCLOSURE The City will covenant for the benefit of the Series 2009 Bondholders to provide certain financial information and operating data relating to the City and the Series 2009 Bonds in each year, and to provide notices of the occurrence of certain enumerated material events. The City has agreed to file annual financial information and operating data and its audited financial statements with each nationally recognized municipal securities information repository then approved by the Securities and Exchange Commission (the "NRMSIRs"), as well as any state information depository that is established in the State (the "SID"). Currently, there are no such SIDS. The City has agreed to file notices of certain enumerated material events, 41 when and if they occur, with the NRMSIRs or the Municipal Securities Rulemaking Board, and with the SIDs, if any. The obligation undertaken is an obligation to provide only limited information at limited times and may not include all information necessary to value the Series 2009 Bonds. The specific nature of the financial information, operating data, and of the type of events which trigger a disclosure obligation, and other details of the undertaking are described in "APPENDIX F - FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT" attached hereto. The Disclosure Dissemination Agent Agreement shall be executed by the City prior to the issuance of the Series 2009 Bonds. These covenants have been made in order to assist the Underwriters in complying with the continuing disclosure requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "Rule"). With respect to the Series 2009 Bonds, no party other than the City is obligated to provide, nor is expected to provide, any continuing disclosure information with respect to the Rule. The City has never failed to comply with any prior agreements to provide continuing disclosure information pursuant to the Rule. ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT The references, excerpts, and summaries of all documents, statutes, and information concerning the City and certain reports and statistical data referred to herein do not purport to be complete, comprehensive and definitive and each such summary and reference is qualified in its entirety by reference to each such document for full and complete statements of all matters of fact relating to the Series 2009 Bonds, the security for the payment of the Series 2009 Bonds and the rights and obligations of the owners thereof and to each such statute, report or instrument. The appendices attached hereto are integral parts of this Official Statement and must be read in their entirety together with all foregoing statements. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder is to create, under any circumstances, any implication that there has been no change in the affairs of the City from the date hereof. FORWARD-LOOKING STATEMENTS This Official Statement contains certain "forward-looking statements" concerning the City's operations, performance and financial condition, including its future economic performance, plans and objectives and the likelihood of success in developing and expanding. These statements are based upon a number of assumptions and estimates which are subject to significant uncertainties, many of which are beyond the control of the City. The words "may," "would," "could," "will," "expect," "anticipate," "believe," "intend," "plan," "estimate" and similar expressions are meant to identify these forward-looking statements. Actual results may differ materially from those expressed or implied by these forward-looking statements. MISCELLANEOUS Any statements made 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 that may have been made verbally or in writing is to be construed as a contract with the owners of the Series 2009 42 43 �b rcsf--r AUTHORIZATION OF OFFICIAL STATEMENT The execution and delivery of this Official Statement has been duly authorized and approved by the City. At the time of delivery of the Series 2009 Bonds, the City will furnish a certificate to the effect that nothing has come to their attention which would lead it to believe that the Official Statement (other than information herein related to the Insurer, the Municipal Bond Insurance Policy, DTC, the book -entry only system of registration and the information contained under the caption "TAX MATTERS" as to which no opinion shall be expressed), as of its date and as of the date of delivery of the Series 2009 Bonds, contain an untrue statement of a material fact or omits to state a material fact which should be included therein for the purposes for which the Official Statement is intended to be used, or which is necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. THE CITY OF MIAMI, FLORIDA By: City Manager P'd oo &-, %1 Jpa(d e z- 44 APPENDIX A GENERAL INFORMATION REGARDING THE CITY AND THE COUNTY General Now 113 years old, the City of Miami, Florida (the "City") is part of the nations eleventh largest metropolitan area. Incorporated in 1896, the City is the only major municipality conceived and founded by a woman, Julia Tuttle. According to the U.S. Census Bureau, the City's population in 1900 was 1,700 people. Today it is a city rich in cultural and ethnic diversity with more than 362,470 residents (as of the 2000 Census), 58.2% of them foreign born. In physical size the City is not large, encompassing only 34.3 square miles. The City is situated at the mouth of the Miami River on the western shore of Biscayne Bay, the main port entry in Florida. The City is the southernmost major city and seaport in the continental United States. The nearest foreign territory is the Bahamian Island of Bimini, 50 miles from the City's coast. In population, the City is the largest of the 35 municipalities that make up Miami -Dade County and is the county seat. Population Source: University of Florida, Florida Statistical Abstract 2005, U.S. Census Bureau Government Since 1997, the City has been governed by a form of government known as the "Mayor -City Commissioner plan." The City Commission is the legislative body of the City. There are five Commissioners elected from designated districts within the City. The Mayor is elected at large every four years. As official head of the City, the Mayor has veto authority over actions of the Commission. The Mayor appoints the City Manager who functions as chief administrative officer. City elections are held in November every two years on a non-partisan basis. Candidates for Mayor must run as such and not for the Commission in general. At each election, two or three members of the Commission are elected for four-year terms. Thus, the terms are staggered so that there are always at least two experienced members of the Commission. The City Manager serves as the administrative head of the municipal government, charged with the responsibility of managing the City's financial operations and organizing and directing the administrative infrastructure. The City Manager also retains full authority in the appointment and supervision of department directors, preparation of the City's annual budget and initiation of the investigative procedures. A-1 City of Percent Miami -Dade Percent State of Percent Year Miami Change Coun1y Change Florida Change 1960 291,688 -- 935,047 -- 4,951,560 -- 1970 331,553 13.6 1,267,792 35.6% 6,791,418 37.2% 1980 346,865 4.6 1,625,509 28.2 9,746,961 43.5 1990 358,648 3.4 1,937,194 19.2 12,938,071 32.7 2000 362,470 1.0 2,253,362 16.3 15,982,378 23.5 Source: University of Florida, Florida Statistical Abstract 2005, U.S. Census Bureau Government Since 1997, the City has been governed by a form of government known as the "Mayor -City Commissioner plan." The City Commission is the legislative body of the City. There are five Commissioners elected from designated districts within the City. The Mayor is elected at large every four years. As official head of the City, the Mayor has veto authority over actions of the Commission. The Mayor appoints the City Manager who functions as chief administrative officer. City elections are held in November every two years on a non-partisan basis. Candidates for Mayor must run as such and not for the Commission in general. At each election, two or three members of the Commission are elected for four-year terms. Thus, the terms are staggered so that there are always at least two experienced members of the Commission. The City Manager serves as the administrative head of the municipal government, charged with the responsibility of managing the City's financial operations and organizing and directing the administrative infrastructure. The City Manager also retains full authority in the appointment and supervision of department directors, preparation of the City's annual budget and initiation of the investigative procedures. A-1 Z�F7 In addition, the City Manager takes appropriate action on all administrative matters. Climate Miami's climate is sub -tropical -marine, characterized by long summers with abundant rain fall and mild, dry winters. The average temperature in the summer is 81.4 degrees Fahrenheit and 69.1 degrees Fahrenheit in the winter, with an average annual temperature of 75.4 degrees. Parks and Recreation Outdoor recreational activities like golf, tennis, running, bicycling, rollerblading, boating and fishing can be enjoyed year-round. Altogether, Miami -Dade County has over 300 parks and recreational areas totaling over one million acres, including Everglades and Biscayne National Parks. Eighteen public golf courses and 504 public tennis courts are available throughout the county. Miami -Dade County's area's 22 public beaches comprise 1,400 acres, which are freely accessible and are enjoyed year round by residents and tourists. Athletics for spectator sports fans are held at the Miami Convention Center and the Miami Arena. Dolphin Stadium, which is used by the Miami Dolphins and the Florida Marlins, is located in North Central Dade County. Sports competition includes professional and college football, basketball, baseball and championship boat races. Other athletic events include amateur football, basketball, soccer, baseball, motorcycle speedway racing and rowing events. Education Miami -Dade County's public school system is the fourth largest in the United States. The countywide school district offers a wide variety of programs to meet the needs of its 365,784 students. For example, Miami-Dade's magnet schools provide intensive levels of instruction in subjects like science and technology, foreign languages, health care, architecture, the performing arts and marine sciences. Other public school programs serve students with different academic, physical or emotional needs, including gifted, advanced and remedial courses. Miami -Dade County is also noted for its high quality private schools, which include Gulliver Academy, Miami Country Day School and Ransom Everglades, as well as numerous schools affiliated with religious organizations. Overall, 80% of graduating seniors, accounting for over 282,000 students, continue their education in a post -secondary institution. Miami -Dade County is also home to Miami -Dade College, the largest comprehensive community college in the United States. Florida International University has two convenient and highly rated academic programs. The University of Miami, a private undergraduate and graduate institution, includes diversified research facilities and exceptional schools of law, music, medicine, and marine sciences. Barry University, St. Thomas University, and Florida Memorial University offer degrees in a variety of subjects. A-2 j(zAfT Medical Miami -Dade County has the largest concentration of medical facilities in Florida, with 32 hospitals and more than 32,000 licensed health care professionals. Nursing homes, adult congregate living facilities and home health care services also serve the region. The University of Miami Jackson Memorial Medical Center, the second-largest public hospital in the nation, forms the hub of the region's medical centers, which includes world-renowned specialized facilities like Bascom Palmer Eye Institute, the Mailman Center for Child Development and the Sylvester Comprehensive Cancer Center. Miami -Dade County has an extensive network of community hospitals, such as Mount Sinai Medical Center, Cedars Medical Center, Baptist Hospital, Mercy Hospital and Miami Children's Hospital. Nine area hospitals have formed the Miami Medical Alliance, a cooperative effort to serve patients from Latin America and the Caribbean. Transportation Miami -Dade County has a comprehensive transportation network designed to meet the needs of residents, travelers and area businesses. The county's internal transportation system includes Metrorail, a 22.1 mile above -ground system linking Kendall, South Miami, Coral Gables, Brickell Avenue, Downtown Miami, the Medical Center, Northwest Dade and Hialeah. Metromover, a 4.4 mile automated loop, carries passengers around downtown Miami, Brickell Avenue and the Omni shopping center areas. Miami -Dade County's Metrobus covers 38 million miles per year and over 100 passenger trips annually. The County also provides para -transit services to qualified riders in the amount of 1.4 million passenger trips annually. Cargo rail service is available from both the airport and seaport, and Amtrak has a passenger station in the City. Tri -Rail, a 72 -mile train system, links West Palm Beach, Boca Raton, Fort Lauderdale, Hollywood and Miami International Airport. Miami International Airport. Miami International Airport is one of the busiest airports in the world for both passengers and cargo traffic. It ranks sixteenth in the nation and twenty eighth in the world in passenger traffic through the airport. The airport ranks fourth in the nation and eleventh in the world in tonnage of domestic and international cargo movement. In 2008 over 34 million air travelers were serviced by Miami International Airport, and approximately 2.08 million tons of cargo was handled. More than 85 airlines serve Miami International Airport, flying passengers non-stop to more than 100 destinations on four continents. Port of Miami. The Port of Miami, known as the "cruise capital of the world," is operated by the Seaport Department of the Miami -Dade County. In 2008, over 4 million passengers sailed from the Port aboard one of the 8 cruise companies who operate out of Miami. The Port of Miami is also a hub for Caribbean and Latin American commerce. These countries account for over half of the 7.43 million tons cargo transferred in the port in 2008. The Port of Miami is also reaching out to the global community where trade with Asian countries accounted for almost 23% of the total cargo handled at the Port. The Port is also important to the U.S. economy, contributing in excess of $17billion annually, which should increase after the completion of the Port's five year, $369 million capital improvement program. A-3 7) P - k F--) Economy The economic base of the City has diversified in recent years, shifting from reliance on the tourism industry to a combination of motion picture production, manufacturing, services industries and international trade. The area's advantages in terms of climate, geography, low taxes and skilled labor have combined to make the Miami area a prime relocation area for major manufacturing firms and international corporate headquarters. The following major companies have their Latin American headquarters located in the City: ABN AMRO Bank AT&T Latin America Caterpillar Clorox Latin America ExxonMobil Inter -America IBM Corporation Olympus Latin America Stanley Latin America Terra Networks USA Source: Beacon Council Acer Latin America Black & Decker Latin America Group Chevron -Texaco Eastman Chemical Latin America Federal Express Corporation Johnson & Johnson Oracle Latin America Tech Data The Gap American Express Canon Latin America Cisco Systems Ericsson Hewlett Packard Co. Latin America Komatsu Latin America Sony Broadcast Export Corporation Telefonica USA United Parcel Service Distribution of Major Employment Classifications for Miami -Dade County, Florida Source: Miami -Dade County Annual Report to Bondholders A-4 Percentage Occupational Title Employees of Totals Construction 43,400 4.1 Manufacturing 49,600 4.7 Mining and Natural Resources 400 0 Transportation, Warehousing, and Utilities 61,300 5.9 Wholesale Trade 75,100 7.2 Retail Trade 115,800 11.1 Information 28,400 2.7 Finance Activities 69,900 6.7 Professional and Business 163,400 15.6 Education and Health Services 137,700 13.2 Leisure and Hospitality 101,700 9.7 Other Services 45,400 4.3 Government 154,400 14.8 Total Employed 1.046,500 100.0 Source: Miami -Dade County Annual Report to Bondholders A-4 Source: Bureau of Labor City of Miami, Florida Principal Employers Name Miami -Dade County Public Schools Miami -Dade County U.S. Federal Government State of Florida Publix Super Markets Baptist Health Systems of South Florida Public Health Trust/Jackson Health System University of Miami American Airlines Miami -Dade College Number of Employees 50,000 32,000 20,400 17,000 10,826 11,000 10,500 9,874 9,000 6,500 Source: The Beacon Council/Miami-Dade County Florida A-5 Florida Unem-olovment Rate 5.7% 5.3 4.7 3.8 Percentage of Total county Employment 4.19% 2.68 1.71 1.43 0.92 0.91 0.88 0.83 0.75 0.55 Labor Force and Employment Statistics City of Miami, Florida Civilian Unemployment Period Employment Labor Force Rate 2002 142,555 156,153 8.7% 2003 144,075 156,283 7.8 2004 146,734 158,039 7.2 2005 150,038 157,380 4.7 Source: Bureau of Labor City of Miami, Florida Principal Employers Name Miami -Dade County Public Schools Miami -Dade County U.S. Federal Government State of Florida Publix Super Markets Baptist Health Systems of South Florida Public Health Trust/Jackson Health System University of Miami American Airlines Miami -Dade College Number of Employees 50,000 32,000 20,400 17,000 10,826 11,000 10,500 9,874 9,000 6,500 Source: The Beacon Council/Miami-Dade County Florida A-5 Florida Unem-olovment Rate 5.7% 5.3 4.7 3.8 Percentage of Total county Employment 4.19% 2.68 1.71 1.43 0.92 0.91 0.88 0.83 0.75 0.55 Record of Building Permits, 2003 through 2008 City of Miami, Florida New Commercial Other New Commercial Residential Building Building Permits Permits Fiscal Building Estimated Year Permits Cost 2007-2008 257 1,713 2006-2007 $584,487,135 3,908 2005-2006 11 $21,020,425 2004-2005 10 $15,881,915 2003-2004 352 $337,574,182 Source: City of Miami, Florida Building Department Year 2003 2004 2005 2006 2007 2008 �:) P-ff F_ 7 Other Residential Estimated Building Cost Permits 116 146 $23,395,497 246 101 256 $41,468,365 257 1,713 4,347 $584,487,135 3,908 Per Capita Personal Income Source: Florida Research and Economic Database (1) Data is for Miami -Dade County Miami(') (dollars) Florida(dollars) $27,891 $30,330 29,817 32,618 32,025 34,798 33,712 36,720 N/A 38,444 N/A N/A A-6 APPENDIX B DESCRIPTION OF NON -AD VALOREM REVENUES The following describes the sources of the City's Non -Ad Valorem Revenues: Franchise Fees Franchise fees are levied annually on utility companies by the City in return for granting a privilege sanctioning a monopoly or permitting the use of public property. Such fees are currently levied against Florida Power and Light Co. and over 24 solid waste haulers doing business in the City of Miami. Public Service Tax The Public Services Tax is imposed, levied and collected by the City pursuant to Section 166.231, Florida Statutes, and other applicable provisions of law, on the purchase of electricity, fuel oil, metered or bottled gas (natural liquefied petroleum gas or manufactured), water service, and other services on which a tax may be imposed by law. Florida law authorizes any municipality in the State of Florida to levy a public service tax on the purchase within such municipality of electricity, metered natural gas, liquefied petroleum gas either metered or bottled, manufactured gas either metered or bottled, water service and fuel oil as well as any services competitive with those specifically enumerated. This tax may not exceed 10% of the payments received by the sellers of such services from purchasers (except in the case of fuel oil, for which the maximum tax is four cents per gallon). The purchase of natural gas or fuel oil by a public or private utility either for resale or for use as fuel in the generation of electricity, or the purchase of fuel oil or kerosene for use as an aircraft engine fuel or propellant or for use in internal combustion engines, is exempt from the levy of such tax. Pursuant to the Constitution of the State of Florida, Florida Statutes and a resolution of the City, the City levies a Public Services Tax, within the incorporated area of the City at the rate of 10% on sales of all services for which it is allowed to tax, except telecommunications service, and with the restriction that the tax on fuel oil cannot exceed 4 cents per gallon. Florida law provides that a municipality may exempt from the public service tax the first 500 kilowatts of electricity per month purchased for residential use. The City has not adopted such an exemption but it does exempt purchases by the United States Government, the State of Florida, Miami -Dade County, the City and its agencies, boards, commissions and authorities from the levy of such tax. In addition, the City exempts purchases used exclusively for church purposes by any State of Florida recognized church. The Public Services Tax must be collected by the seller from purchasers at the time of sale and remitted to the City. Such tax will appear on a periodic bill rendered to consumers for electricity, metered and bottled gas, water service and fuel oil. A failure by a consumer to pay that portion of the bill attributable to the public service tax may result in a suspension of the service involved in the same fashion as the failure to pay that portion of the bill attributable to the particular utility service. B-1 Local Communications Services Tax The Communications Services Tax Simplification Act, enacted by Chapter 2000-260, Laws of Florida, as amended by Chapter 2001-140, Laws of Florida, and now codified in part as Chapter 202, Florida Statutes (the "Communications Services Tax Act") established, effective October 1, 2001, a communications services tax on the sale of communications services as defined in Section 202.11, Florida Statutes, and as of the same date repealed Section 166.231(9), Florida Statutes, which previously granted municipalities the authority to levy a utility services tax on the purchase of telecommunication services. Florida Statute Section 202.19 provides that counties and municipalities may levy a discretionary communications services tax (the "local communications services tax') on communications services, the revenues from which may be pledged for the repayment of current or future bonded indebtedness. The City set the rates for its local communications services tax pursuant to a resolution adopted on June 14, 2001. Communication services are defined as the transmission conveyance, or routing of voice, data, audio, video, or any other information or signals, including cable services, to a point, or between or among points, by or through any electronic, radio, satellite, cable, optical, microwave, or other medium or method now in existence or hereafter devised, regardless of the protocol used for such transmission or conveyance. The term does not include: (a) Information services. (b) Installation or maintenance of wiring or equipment on a customer's premises. (c) The sale or rental of tangible personal property. (d) The sale of advertising, including, but not limited to, directory advertising. (e) Bad check charges. (f) Late payment charges. (g) Billing and collection services. (h) Internet access service, electronic mail service, electronic bulletin board service, or similar on-line services. Any sale of communications services charged to a service address in the City is subject to the City's local communications services tax at a rate of 5.62%. The Communications Services Tax Act further provides that, to the extent that a provider of communications services is required to pay a tax, charge, or other fee under any franchise agreement or ordinance with respect to the services or revenues that are also subject to the tax, such provider is entitled to a credit against the amount of such tax payable to the State in the amount of such tax, charge, or fee with respect to such service or revenues. The proceeds of said local communication services tax less the Florida Department of Revenue's cost of administration is deposited in the local communication services tax clearing trust fund and distributed monthly to the appropriate jurisdictions. Intergovernmental This category includes federal, state and other local units grants, and revenues shared by the state and other local units. The largest component is the half -cent sales tax. The State of Florida (the "State") levies and collects a sales tax on, among other things, the sales price of each item or article of tangible personal property sold at retail in the State, subject to certain exceptions and B-2 3)9 --WT dealer allowances. In 1982, the Florida legislature created the Local Government Half -Cent Sales Tax Program (the "Local Government Half -Cent Sales Tax Program") which distributes a portion of the sales tax revenue and money from the State's General Revenue Fund to counties and municipalities that meet strict eligibility requirements. In 1982, when the Local Government Half -Cent Sales Tax Program was created, the general rate of sales tax in the State was increased from 4% to 5%, and one-half of the fifth cent was devoted to the Local Government Half -Cent Sales Tax Program, thus giving rise to the name "Half -Cent Sales Tax." Although the amount of sales tax revenue deposited into the Local Government Half -Cent Sales Tax Program is no longer one-half of the fifth cent of every dollar of the sales price of an item subject to sales tax, the name "Half -Cent Sales Tax" has continued to be utilized. Section 212.20, Florida Statutes, provides for the distribution of sales tax revenues collected by the State and further provides for the distribution of a portion of sales tax revenues to the Local Government Half -Cent Sales Tax Clearing Trust Fund (the "Trust Fund"), after providing for transfers to the General Fund and the Ecosystem Management and Restoration Trust Fund. The entire sales tax remitted to the State by each sales tax dealer located within a particular county (the "Local Government Half -Cent Sales Tax Revenues") was deposited in the Trust Fund and earmarked for distribution to the governing body of such county and each participating municipality within that county pursuant to a distribution formula. As of July 1, 2004, the percentage of Local Government Half -Cent Sales Tax Revenues deposited in the Trust Fund was effectively reduced to 8.805%. The general rate of sales tax in the State is currently 6.00%. After taking into account the distributions to the General Fund (historically 5% of taxes collected) and the Ecosystem Management and Restoration Trust Fund (.2% of the taxes collected), effective July 1, 2004, for every dollar of taxable sales price of an item, approximately 0.501 cents is deposited into the Trust Fund. The Local Government Half -Cent Sales Tax Revenues are distributed from the Trust Fund on a monthly basis to participating units of local government in accordance with Part VI, Chapter 218, Florida Statutes (the "Sales Tax Act"). Florida law also allows counties to impose a sales surtax of up to 1% to fund infrastructure improvements upon approval by a vote of the electors. As of October 1, 2001, the Trust Fund began receiving a portion of certain taxes imposed by the State on the sales of communication services (the "CST Revenues") pursuant to Chapter 202, Florida Statutes. Accordingly, moneys distributed from the Trust Fund now consist of funds derived from both general sales tax proceeds and CST Revenues required to be deposited into the Trust Fund. [Remainder of page intentionally left blank.] B-3 The Local Government Half -Cent Sales Tax collected within a county and distributed to local government units is distributed among the county and the municipalities therein in accordance with the following formula: County Share (percentage of total Half -Cent = Sales Tax receipts) Municipality Share (percentage of total Half -Cent = Sales Tax receipts) unincorporated + 2/3 incorporated area population total county population area population 2/3 incorporated area population municipality population total county + 2/3 incorporated population area population For purposes of the foregoing formula, "population" is based upon the latest official State estimate of population certified prior to the beginning of the local government fiscal year. Should any unincorporated area of Miami -Dade County become incorporated as a municipality, the share of the Local Government Half - Cent Sales Tax received by Miami -Dade County and the City would be reduced. The Local Government Half -Cent Sales Tax is distributed from the Trust Fund on a monthly basis to participating units of local government. The Half -Cent Sales Tax Act permits the City to pledge its share of the Local Government Half -Cent Sales Tax for the payment of principal of and interest on any capital project. To be eligible to participate in the Local Government Half -Cent Sales Tax, the counties and municipalities must comply with certain requirements set forth in the Half -Cent Sales Tax Act. These requirements include those concerning the reporting and auditing of its finances, the levying of ad valorem taxes or receipt of other revenue sources, and certifying certain requirements pertaining to the employment and compensation of law enforcement officers, the employment of fire fighters, the auditing of certain dependent special districts, and the method of fixing millage rates for the levying of ad valorem taxes. Although the Half -Cent Sales Tax Act, does not impose any limitation upon the number of years during which the City can receive distribution of the Local Government Half -Cent Sales Tax from the Trust Fund, there may be future amendments to the Half -Cent Sales Tax. To be eligible to participate in the Trust Fund in future years, the City must comply with certain eligibility and reporting requirements of Chapter 218, Part VI, Florida Statutes, otherwise, the City will not be entitled to any Trust Fund distributions for twelve (12) months following a "determination of noncompliance" by the State Department or Revenue. Licenses and Permits These are revenues derived from the issuance of local licenses and permits, including professional and occupational licenses required for the privilege of engaging in certain trades, occupations and other activities. B-4 Charges for Services Charges for various services provided by the City to residents, property owners, and grants received from other governments, including the following: • General Government: all money resulting from charges for current services; i.e., photographs, reports and ordinances. • Public Safety: fees for police services, fire protection services and emergency services. • Physical Environment: charges include cemetery fees. • Building and Zoning Inspections: fees for inspections such as plumbing, electrical, elevator and mechanical inspections. • Marina Fees: all fees associated with operations of the various City marinas. • Recreational and Special Events: fees for parks and recreation activities and events. • Other: fees for services not specifically mentioned above, i.e., engineering services, public hearing fees. Other Revenue and Financing Sources • This category includes a variety of revenues and transfers from other funds, including: • Interest earnings on invested funds. • Fines and forfeitures imposed by local courts. [Remainder of page intentionally left blank.] B-5 V► 1 The following table represents the City's determination of legally available non -ad valorem revenues for the Fiscal Years Ending September 30, 2004 through September 30, 2008. THE CITY OF MIAMI, FLORIDA LEGALLY AVAILABLE NON -AD VALOREM FUNDS YEAR ENDED SEPTEMBER 30a' 2004 2005 2006 2007 2008 Revenues: Franchise and Utility Taxes $34,988,629 $35,918,724 $41,342,214 $42,257,282 Licenses and Permits: 21,819,892 22,802,208 25,800,341 25,505,412 Business Licenses and Permits $ 6,975,040 $ 7,817,841 $ 7,078,534 $ 7064,358 Construction Permits 16,036,648 19,576,5860) 21,390,059 25,766,010 Total Intergovernmental $23,011,688 $27,394,427 $28,468,593 $32,830,368 Intergovernmental: State and Revenue Sharing $10,418,123 $13,002,038 $13,044,234 $13,073,886 Half -Cent Sales Tax 21,819,892 22,802,208 25,800,341 25,505,412 Fine and Forfeitures 4,732,357 4,980,002 5,175,457 5,283,695 Other 17,022,799(3) 13,986,248 3,341,711 15,517,110 Total Intergovernmental $53,993,171 $54,770,496 $47,361,743 59,380,103 Charges for Services: Engineering Services(2) $46,495,695 $50,264,889 $44,917,693 $46,587,956 Public Safety 9,947,278 10,429,442 11,025,330 22,952,364 Recreation 572,253 451,451 662,557 3,488,492 Other 30,575,808 30,833,674 35,375,016 4,145,343 Total Charges for Services $87,591,034 $91,979,456 $91,980,596 $77,174,155 Interest Income $5,438,411 $4,404,529 $11,144,320 $16,248,307 Other $5,828,412 $3,949,489 $16,643,409 $4,950,826 Component Units Operating: Transfers In from other Funds $49,400,494 $43,511,074 $52,097,226 $61,411,040 Total Sources of Legally Available Non -Ad Valorem Funds $260,251 789 $261f901,195 $289,038,101 $294,252,081 Source: City of Miami Finance Department (1) This increase was due to growth in the City and in new development. (2) This increase is due to amounts reclassified from "Other" to "Engineering". (3) This increase was due to hurricane grants from FEMA. �nr7 The following table represents current debt service on obligations payable from legally available non - ad valorem revenues as of September 30, 2008. CITY OF MIAMI, FLORIDA SCHEDULE OF PRINCIPAL & INTEREST FOR NON -AD VALOREM REVENUE BONDS AND LOANS Fiscal Year Principal Interest Total 2009 $ 14,639,622.02 $ 20,337,352.67 $ 34,976,974.69 2010 15,223,628.50 19,818,927.28 35,042,555.78 2011 15,032,810.20 19,144,745.57 34,177,555.77 2012 16,920,515.30 17,228,049.72 34,148,565.02 2013 17,677,229.50 16,426,795.14 34,104,024.64 2014 18,585,160.00 15,434,388.41 34,019,548.41 2015 19,786,406.90 14,148,284.08 33,934,690.98 2016 19,150,000.00 8,524,177.77 27,674,177.77 2017 8,613,000.00 7,407,680.52 16,020,680.52 2018 9,081,000.00 6,930,038.77 16,011,038.77 2019 6,879,000.00 6,428,364.65 13,307,364.65 2020 7,446,000.00 5,993,297.28 13,439,297.28 2021 7,877,000.00 5,545,423.26 13,422,423.26 2022 8,344,000.00 5,074,388.50 13,418,388.50 2023 8,830,000.00 4,580,143.50 13,410,143.50 2024 9,356,000.00 4,050,825.47 13,406,825.47 2025 9,510,000.00 3,479,534.64 12,989,534.64 2026 8,530,000.00 2,906,990.03 11,436,990.03 2027 9,650,000.00 2,373,037.50 12,023,037.50 2028 3,215,000.00 2,010,843.75 5,225,843.75 2029 3,385,000.00 1,837,593.75 5,222,593.75 2030 3,570,000.00 1,655,025.00 5,225,025.00 2031 3,760,000.00 1,462,612.50 5,222,612.50 2032 3,965,000.00 1,259,831.25 5,224,831.25 2033 4,175,000.00 1,051,375.00 5,226,375.00 2034 4,385,000.00 837,375.00 5,222,375.00 2035 4,610,000.00 612,500.00 5,222,500.00 2036 4,850,000.00 376,000.00 5,226,000.00 2037 5,095,000.00 127,375.00 5,222,375.00 TOTALS $272.141,372.42 197.062.976.01 $469 204,348.43 Source: City of Miami Finance Department As described herein, the obligation and the ability of the City to budget and appropriate non -ad valorem revenues is subject to a variety of factors, including the obligation of the City to provide essential governmental services and the obligation of the City to have a balanced budget. B-7 THE CITY OF MIAMI, FLORIDA HISTORICAL ANTI -DILUTION TEST YEAR ENDED SEPTEMBER 301h (1) Debt Service is based on the maximum estimated annual loan payments on the Sunshine Loans during the remaining fiscal years until the date of maturity of such loans and maximum annual debt service on bonds or other debt obligations payable from Non -Ad Valorem revenues outstanding as of September 30'h. ('-) Variable Interest Rate Debt on the Sunshine Loans is calculated at 15% which is the maximum rate pursuant to the covenants of loan agreements securing the debt of Sunshine State Governmental Financing Commission. (3) Coverage is based on 200% Debt Service. 2004 2005 2006 2007 Non -Ad Valorem Funds Available to Pay Debt Service $260,251,789 $261,901,194 $289,038,101 $294,252,081 Debt Service (1)(2) $ 21,725,438 $ 21,046,555 $ 21,583,712 $ 15,534,423 200% Debt Service $ 43,450,876 $ 42,093,110 $ 43,167,424 $ 31,068,846 Coverage(3) 5.99x 6.22x 6.70x 9.47x (1) Debt Service is based on the maximum estimated annual loan payments on the Sunshine Loans during the remaining fiscal years until the date of maturity of such loans and maximum annual debt service on bonds or other debt obligations payable from Non -Ad Valorem revenues outstanding as of September 30'h. ('-) Variable Interest Rate Debt on the Sunshine Loans is calculated at 15% which is the maximum rate pursuant to the covenants of loan agreements securing the debt of Sunshine State Governmental Financing Commission. (3) Coverage is based on 200% Debt Service. b r T c, APPENDIX E FORM OF BOND COUNSEL OPINION E-1 APPENDIX D GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2008 D-1 1-6 9c cQ,�� Wpti APPENDIX C ��G �E107 -7 FORM OF THE BOND RESOLUTION C-2 APPENDIX F SPECIMEN MUNICIPAL BOND INSURANCE POLICY -D) AkF-T betr-n APPENDIX G FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT This Disclosure Dissemination Agent Agreement (the "Disclosure Agreement"), dated as of 2009, is executed and delivered by The City of Miami, Florida (the "City") and Digital Assurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the "Disclosure Dissemination Agent" or "DAC') for the benefit of the Holders (hereinafter defined) of the Bonds (hereinafter defined) and in order to provide certain continuing disclosure with respect to the Bonds in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (the `Rule"). SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in the Official Statement (hereinafter defined). The capitalized terms shall have the following meanings: "Annual Report" means an Annual Report described in and consistent with Section 3 of this Disclosure Agreement. "Annual Filing Date" means the date, set in Sections 2(a) and 2(f), by which the Annual Report is to be filed with the Repositories. "Annual Financial Information" means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement. "Audited Financial Statements" means the financial statements (if any) of the City for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(b) of this Disclosure Agreement. "Bonds" means the bonds as listed on the attached Exhibit A, with the 9 -digit CUSIP numbers relating thereto. "Certification" means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Audited Financial Statements, Voluntary Report or Notice Event notice delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements, Voluntary Report or Notice Event notice required to be submitted to the Repositories under this Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the City and include the full name of the Bonds and the 9 -digit CUSIP numbers for all Bonds to which the document applies. "Disclosure Representative" means Finance Director or her designee, the senior member of the City or his or her designee, or such other person as the City shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information to the Disclosure G-1 Dissemination Agent. "Disclosure Dissemination Agent" means Digital Assurance Certification, L.L.C, acting in its capacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure Dissemination Agent designated in writing by the City pursuant to Section 9 hereof. "Holder" means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes. "Information" means the Annual Financial Information, the Audited Financial Statements (if any) the Notice Event notices, and the Voluntary Reports. "Notice Event" means an event listed in Sections 4(a) of this Disclosure Agreement. "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 1513(b)(1) of the Securities Exchange Act of 1934. "National Repository" means any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The list of National Repositories maintained by the United States Securities and Exchange Commission shall be conclusive for purposes of determining National Repositories. Currently, the following are National Repositories: Bloomberg Municipal Repository 100 Business Park Drive Skillman, New Jersey 08558 Phone: (609) 279-3225 Fax: (609) 279-2066 h ttp://w�vw.bloomberg. com/markets/rates/municontacts. h tmI Email: Mums@Bloomberg.com 2. DPC Data Inc. One Executive Drive Fort Lee, New Jersey 07024 Phone: (201) 346-0701 Fax: (201) 346--0720 httj2:/A4rww.dpcdata..com Email: nrmsir@dpcdata.com 3. FT Interactive Data Attn: NRMSIR 100 William Street, 15th Floor New York, New York 10038 Phone: (212) 269-6300 Fax: (212) 771-6987 G2 �e#FT http://-,v,Anv.ftid.com Email: NRMSIR@interactivedata.com 4. Standard & Poor's Securities Evaluations, Inc. 55 Water Street 45th Floor New York, New York 10041 Phone: (212) 438-4595 Fax: (212) 438-3975 ht!p://-,vkNq,v.disc]osuredirectorv.standardandi2oors.com/ Email: nrmsir repository@sandp.com "Official Statement" means that Official Statement prepared by the City in connection with the Bonds, as listed on Appendix A. "Repository" means the MSRB, each National Repository and the State Depository (if any). "State Depository" means any public or private depository or entity designated by the State of Florida as a state information depository (if any) for the purpose of the Rule. The list of state information depositories maintained by the United States Securities and Exchange Commission shall be conclusive as to the existence of a State Depository. Currently, the following depositories are listed by the Securities and Exchange Commission as available State Depositories: Municipal Advisory Council of Texas P.O. Box 2177 Austin, Texas 78768-2177 Phone: (512) 476-6947 Fax: (512) 476-6403 httl?://NNqN�v.mactexas.com Email for filings: mac@mactexas.com 2. Municipal Advisory Council of Michigan 1445 First National Building 600 Woodward Avenue Detroit, Michigan 48226-3517 Phone: (313) 963-0420 Fax: (313) 963-0943 http://iaq,%.-w.macmi.com Email for filings: mac@macmi.com 3. Ohio Municipal Advisory Council 9321 Ravenna Road, Unit K Twinsburg, Ohio 44087-2445 Phone: (330) 963-7444 Toll-free: (800) 969-OMAC (6622) Fax: (330) 963-7553 G-3 httl2://�N,-xvw.ohiomac.com ht!p://11ivw.ol-iiosid.com Email for filings: sid filings@;ohiornac.com "Voluntary Report" means the information provided to the Disclosure Dissemination Agent by the City pursuant to Section 7. SECTION 2. Provision of Annual Reports. (a) The City shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, together with a copy for the Paying Agent, not later than 30 days prior to the Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to each National Repository and the State Depository (if any) not later than not later than June 30th of each year, commencing with the fiscal year ending September 30, 2008. Such date and each anniversary thereof is the Annual Filing Date. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 3 of this Disclosure Agreement. (b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the City of its undertaking to provide the Annual Report pursuant to Section 2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification) no later than two (2) business days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent in writing that the City will not be able to file the Annual Report within the time required under this Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent that a Notice Event as described in Section 4(a)(12) has occurred and to immediately send a notice to each National Repository or the MSRB and the State Depository (if any) in substantially the form attached as Exhibit B. (c) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 12:00 noon on the first business day following the Annual Filing Date for the Annual Report, a Notice Event described in Section 4(a)(12) shall have occurred and the City irrevocably directs the Disclosure Dissemination Agent to immediately send a notice to each National Repository or the MSRB and the State Depository (if any) in substantially the form attached as Exhibit B. (d) If Audited Financial Statements of the City are prepared but not available prior to the Annual Filing Date, the City shall, when the Audited Financial Statements are available, provide in a timely manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certificate, for filing with each National Repository and the State Depository (if any). (e) The Disclosure Dissemination Agent shall: (i) determine the name and address of each Repository each year prior to the Annual Filing Date; (ii) upon receipt, promptly file each Annual Report received under Section 2(a) with G4 �T)2-F-7 each National Repository, and the State Depository, (if any); (iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(d) with each National Repository, and the State Depository (if any); (iv) upon receipt, promptly file the text of each disclosure to be made with each National Repository or the MSRB and the State Depository (if any) together with a completed copy of the MSRB Material Event Notice Cover Sheet in the form attached as Exhibit C, describing the event by checking the box indicated below when filing pursuant to the Section of this Disclosure Agreement indicated: 1. "Principal and interest payment delinquencies," pursuant to Sections 4(c) and 4(a)(1); 2. "Non -Payment related defaults," pursuant to Sections 4(c) and 4(a)(2); 3. "Unscheduled draws on debt service reserves reflecting financial difficulties," pursuant to Sections 4(c) and 4(a)(3); 4. "Unscheduled draws on credit enhancements reflecting financial difficulties," pursuant to Sections 4(c) and 4(a)(4); 5: "Substitution of credit or liquidity providers, or their failure to perform," pursuant to Sections 4(c) and 4(a)(5); 6. "Adverse tax opinions or events affecting the tax-exempt status of the security," pursuant to.Sections 4(c) and 4(a)(6); 4(a)(7); 7. "Modifications to rights of securities holders," pursuant to Sections 4(c) and 8. 'Bond calls," pursuant to Sections 4(c) and 4(a)(8); 9. "Defeasances," pursuant to Sections 4(c) and 4(a)(9); 10. "Release, substitution, or sale of property securing repayment of the securities," pursuant to Sections 4(c) and 4(a)(10); 11. "Ratings changes," pursuant to Sections 4(c) and 4(a)(11); 12. ."Failure to provide annual financial information as required," pursuant to Section 2(b)(ii) or Section 2(c), together with a completed copy of Exhibit B to this Disclosure Agreement; 13. "Other material event notice (specify)," pursuant to Section 7 of this Agreement, together with the summary description provided by the Disclosure Representative. G5 (v) provide the City evidence of the filings of each of the above when made, which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination Agent under this Disclosure Agreement. (f) The City may adjust the Annual Filing Date upon change of its fiscal year by providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent and the Repositories, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year. SECTION 3. Content of Annual Reports. (a) Each Annual Report shall contain Annual Financial Information with respect to the City, including the information provided in the Official Statement under the headings: (i) The City of Miami, Florida Property Tax Rates (ii) The City of Miami, Florida Assessed Value of Taxable Property (iii) The City of Miami, Florida Property Tax Levies and Collections (iv) Ten Largest Tax Assessments (v) Summary Schedule of Revenues, Expenditures and Net Changes in Fund Balance for the General Fund (vi) Direct Debt (vii) Overlapping Debt (viii) Debt Ratios (ix) Appendix B - The City of Miami, Florida Schedule of Principal & Interest for Non - Ad Valorem Revenue Bonds and Loans (x) Appendix B - The City of Miami, Florida Legally Available Non -Ad Valorem Funds (xi) Appendix B - The City of Miami, Florida Historical Anti -Dilution Test (b) Audited Financial Statements prepared in accordance with generally accepted accounting principles ("GAAP") will be included in the Annual Report; provided, however, if the audited financial statements of the City are not completed prior to June 301' of any year, the City shall provide unaudited financial statements on such date and shall provide the audited financial statements as soon as practicable following their completion. Audited Financial Statements (if any) will be provided pursuant to Section 2(d). Any or all of the items listed above may be included by specific reference from other documents, including official statements of debt issues with respect to which the City is an "obligated person" (as defined by the Rule), which have been previously filed with each of the National Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The City will clearly identify each such document so incorporated by reference. SECTION 4. Reporting of Notice Events. (a) The occurrence of any of the following events, if material, with respect to the Bonds constitutes a Notice Event: Principal and interest payment delinquencies; G-6 2. Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; Unscheduled draws on credit enhancements relating to the Bonds reflecting financial difficulties; Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Modifications to rights of Bond holders; Bond calls; Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds; 11. Rating changes on the Bonds; 12. Failure to provide annual financial information as required; The City shall promptly notify the Disclosure Dissemination Agent in writing upon the occurrence of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c). Such notice shall be accompanied with the text of the disclosure that the City desires to make, the written authorization of the City for the Disclosure Dissemination Agent to disseminate such information, and the date the City desires for the Disclosure Dissemination Agent to disseminate the information. (b) The Disclosure Dissemination Agent is under no obligation to notify the City or the Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within five business days of receipt of such notice, instruct the Disclosure Dissemination Agent that (i) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant to subsection (c), together with the text of the disclosure that the City desires to make, the written authorization of the City for the Disclosure Dissemination Agent to disseminate such information, and the date the City desires for the Disclosure Dissemination Agent to disseminate the information. (c) If the Disclosure Dissemination Agent has been instructed by the City as prescribed in subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure Dissemination Agent shall promptly file a notice of such occurrence with the State Depository (if any) and (i) each National Repository, or (ii) the MSRB. SECTION 5. CUSIP Numbers. Whenever providing information to the Disclosure Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports, Audited Financial Statements, notices of Notice Events, and Voluntary Reports filed pursuant to G-7 Section 7(a), the City shall indicate the full name of the Bonds and the 9 -digit CUSIP numbers for the Bonds as to which the provided information relates. SECTION 6. Additional Disclosure Obligations. The City acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the City, and that the failure of the Disclosure Dissemination Agent to so advise the City shall not constitute a breach by the Disclosure Dissemination Agent of any of its duties and responsibilities under this Disclosure Agreement. The City acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement. SECTION 7. Voluntary Reports. (a) The City may instruct the Disclosure Dissemination Agent to file information with the Repositories, from time to time pursuant to a Certification of the Disclosure Representative accompanying such information (a "Voluntary Report"). (b) Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information through the Disclosure Dissemination Agent using the means of dissemination set forth in this Disclosure Agreement or including any other information in any Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice, in addition to that required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice in addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice. SECTION 8. Termination of Reporting Obligation. The obligations of the City and the Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to an issue of the Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds of such issue, when the City is no longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that continuing disclosure is no longer required. SECTION 9. Disclosure Dissemination Agent. The City has appointed Digital Assurance Certification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. The City may, upon thirty days written notice to the Disclosure Dissemination Agent and the Trustee, replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC's services as Disclosure Dissemination Agent, whether by notice of the City or DAC, the City agrees to appoint a successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure Dissemination Agent under this Disclosure Agreement for the benefit of the Holders of the Bonds. Notwithstanding any replacement or appointment of a successor, the City shall remain liable until payment in full for any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure Dissemination Agent may resign at any time by providing thirty days' prior written notice to the City. SECTION 10. Remedies in Event of Default. In the event of a failure of the City or the Disclosure G-8 ,7)P4WI-r Dissemination Agent to comply with any provision of this Disclosure Agreement, the Holders' rights to enforce the provisions of this Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the parties' obligation under this Disclosure Agreement. Any failure by a party to perform in accordance with this Disclosure Agreement shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rights and remedies shall be limited to those expressly stated herein. G-9 SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent. (a) The Disclosure Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Disclosure Dissemination Agent's obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the City has provided such information to the Disclosure Dissemination Agent as required by this Disclosure Agreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosures or notice made pursuant to the terms hereof. The Disclosure Dissemination Agent shall have no duty or obligation to review or verify any Information or, any other information, disclosures or notices provided to it by the City and shall .not be deemed to be acting in any fiduciary capacity for the City, the Holders of the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibility for the City's failure to report to' the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to determine, or liability for failing to determine, whether the City has complied with this Disclosure Agreement. The Disclosure Dissemination Agent may conclusively rely upon certifications of the City at all times. THE CITY AGREES TO INDEMNIFY AND SAVE THE DISCLOSURE DISSEMINATION AGENT AND ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, HARMLESS AGAINST ANY LOSS, EXPENSE AND LIABILITIES WHICH THEY MAY INCUR ARISING OUT OF OR IN THE EXERCISE OR PERFORMANCE OF THEIR POWERS AND DUTIES HEREUNDER, INCLUDING THE COSTS AND EXPENSES (INCLUDING ATTORNEYS FEES) OF DEFENDING AGAINST ANY CLAIM OF LIABILITY, BUT- EXCLUDING .LIABILITIES DUE TO THE DISCLOSURE DISSEMINATION AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The'obligations of the City under this Section shall survive resignation or removal of the Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds. (b) The Disclosure Dissemination Agent may, from time to time, consult with legal counsel (either in-house or external) of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder, and neither of them shall incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. The fees and expenses of such counsel shall be payable by the City. SECTION 12. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City and the Disclosure Dissemination Agent may amend this Disclosure Agreement and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert 'in federal securities laws acceptable to both the City and the Disclosure Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests of Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule; provided neither the City or the Disclosure Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or obligations without their consent thereto. Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the right to adopt amendments to this Disclosure Agreement necessary to comply with modifications to and G-10 interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from time to time by giving not less than 20 days written notice of the intent to do so together with a copy of the proposed amendment to the City. No such amendment shall become effective if the City shall, within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent in writing that it objects to such amendment. SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Trustee of the Bonds, the Disclosure Dissemination Agent, the underwriter, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 14. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of New York (other than with respect to conflicts of laws). SECTION 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. G-11 The Disclosure Dissemination Agent and the City have caused this Continuing Disclosure Agreement to be executed, on the date first written above, by their respective officers duly authorized. DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Disclosure Dissemination Agent By:_ Name: Title: THE CITY OF MIAMI, FLORIDA, as City By:_ Name: G-12 -bRaFr EXHIBIT A NAME AND CUSIP NUMBERS OF BONDS Name of City The City of Miami, Florida Obligated Person(s) The City of Miami, Florida Name of Bond Issue: Limited Ad Valorem Tax Bonds, Series 2009 (Homeland Defense/Neighborhood Capital Improvement Projects) Date of Issuance: Date of Official Statement CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: G-13 1 r, EXHIBIT B NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT City: The City of Miami, Florida Obligated Person: The City of Miami, Florida Name of Bond Issue: Limited Ad Valorem Tax Bonds, Series 2009 (Homeland Defense/Neighborhood Capital Improvement Projects) Date of Issuance: 2009 NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with respect to the above-named Bonds as required by the Disclosure Agreement, dated as of between the City and Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent. The City has notified the Disclosure Dissemination Agent that it anticipates that the Annual Report will be filed by Dated: cc: City Obligated Person Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent, on behalf of the City G-14 EXHIBIT C MATERIAL EVENT NOTICE COVER SHEET This cover sheet and material event notice should be sent to the Municipal Securities Rulemaking Board or to all Nationally Recognized Municipal Securities Information Repositories, and the State Information Depository, if applicable, pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D). Issuer's and/or Other Obligated Person's Name: Issuer's Six -Digit CUSIP Number: or Nine -Digit CUSIP Number(s) of the bonds to which this material event notice relates: Number of pages of attached material event notice: Description of Material Events Notice (Check One): 1. _Principal and interest payment delinquencies 2. —Non -Payment related defaults 3. _Unscheduled draws on debt service reserves reflecting financial difficulties 4. _Unscheduled draws on credit enhancements reflecting financial difficulties 5. _Substitution of credit or liquidity providers, or their failure to perform 6. _Adverse tax opinions or events affecting the tax-exempt status of the security 7. _Modifications to rights of securities holders 8. _Bond calls 9. _Defeasances 10. _Release, substitution, or sale of property securing repayment of the securities 11. _Rating changes 12. _Failure to provide annual financial information as required 13. _Other material event notice (specify) I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly: Signature: .................................................................................................................................................................................................. Name: ............................................................................ Title:.............................................................................................. Employer: Digital Assurance Certification, L.L.C. Address: ............................................................................................................................................................................. City, State, Zip Code: .................................................................................................................................................... G-15 7j��R-AFT VoiceTelephone Number: ................................................................................................................................................... Please print the material event notice attached to this cover sheet in 10 -point type or larger. The cover sheet and notice may be faxed to the MSRB at (703) 683-1930 or sent to CDINet, Municipal Securities Rulemaking Board, 1900 Duke Street, Suite 600, Alexandria, VA 22314. Contact the MSRB at (703) 797-6600 with questions regarding this form or the dissemination of this notice. G-16