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Home My WebLink AboutExhibit 3Exhibit "C" Preliminary Official Statement �� Be SDR ----D F CR- s PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER2009 NEW ISSUE — BOOK -ENTRY ONLY SS&D Draft #2 10/08/09 Standard and Poor's: °Lf Moody's: " " (See `Ratings" herein) In the opinion of Bond Counsel, assuming compliance by the City with certain covenants, under existing statutes, regulations, and judicial decisions, the interest on the Series 2009A Bonds and the Series 2009C Bonds will not be included in the gross income for federal income tax purposes of the holders thereof, except no opinion is expressed as to the exclusion from gross income of interest on any Series 2009C Bonds for any period during which Series 2009C Bonds are held by a person who is a "substantial user, " within the meaning of Section 147(a) of the Internal Revenue Code of 1986, as amended, of the project financed with the proceeds of the Series 2009C Bonds or a "related person" to such a "substantial user. " HOWEVER, INTEREST ON THE SERIES 2009B BONDS WILL NOT BE EXCLUDED FROM GROSS INCOME FOR PURPOSES OF FEDERAL INCOME TAXATION. In addition, interest on the Series 2009A Bonds and Series 2009C Bonds will not be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and will not be taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax on corporations. See "TAX MATTERS" herein for a description of other tax consequences to holders of the Series 2009 Bonds. $ CITY OF MIAMI, FLORIDA TAX-EXEMPT SPECIAL OBLIGATION PARKING REVENUE BONDS, SERIES 2009A (MARLINS STADIUM PROJECT) Dated: Date of Delivery D CITY OF MIAMI, FLORIDA TAXABLE SPECIAL OBLIGATION PARKING REVENUE BONDS, SERIES 2009B (MARLINS STADIUM PROJECT) $ CITY OF MIAMI, FLORIDA SPECIAL OBLIGATION PARKING REVENUE BONDS, SERIES 2009C (MARLINS STADIUM PROJECT) Due: July 1, as shown on the inside cover The $ * aggregate principal amount of City of Miami, Florida Tax -Exempt Special Obligation Parking Revenue Bonds, Series 2009A (Marlins Stadium Project) (the "Series 2009A Bonds"), $ * aggregate principal amount of City of Miami, Florida Taxable Special Obligation Parking Revenue Bonds, Series 2009B (Marlins Stadium Project) (the "Series 2009B Bonds") and $ * aggregate principal amount of City of Miami, Florida Special Obligation Revenue Bonds, Series 2009C (Marlins Stadium Project) (the "Series 2009C Bonds" and, collectively with the Series 2009A Bonds and the Series 2009B Bonds, 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, Florida Statutes, Chapter 159, Part VII, Florida Statutes, the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to Resolution No. R-09- adopted on October 22, 2009 (the "Resolution"). Capitalized terms not defined herein shall have the meanings ascribed thereto in the Resolution. shall serve as Paying Agent and Bond Registrar for the Series 2009 Bonds. The Series 2009 Bonds are being issued to provide funds, together with other available moneys, to (i) finance the cost of construction of parking facilities, including but not limited to, surface lots and parking structures for approximately 6,000 parking spaces located at the site of the Marlins Baseball Stadium (the "Project"), (ii) fund a deposit to the Reserve Fund or pay the cost of a Reserve Product, and (iii) pay the costs of issuance of the Series 2009 Bonds. See "PURPOSE OF THE ISSUE" and "THE PROJECT" herein. * Preliminary, subject to change. M1AMU4245431.2 The Series 2009 Bonds are being issued by the City as fully registered bonds. Interest on the Series 2009 Bonds will be payable semi-annually on January 1 and July 1, commencing July 1, 2010. Each of the series of Series 2009 Bonds 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 principal denominations of $5,000 each or any integral multiple 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 for subsequent disbursement to the Beneficial Owners. The Series 2009 Bonds are redeemable prior to their stated maturities as described herein. Payment of the principal of, premium, if any, and interest on the Series 2009 Bonds shall be secured by a lien upon and pledge of the Pledged Revenues and the Pledged Funds. "Pledged Funds" are defined in the Resolution to mean collectively, the Pledged Revenues, all monies, including Non -Ad Valorem Revenues deposited in the Funds and Accounts and earnings on investments in Funds and Accounts established under the Resolution, pursuant to the provisions of the Resolution (with the exception of the Rebate Fund). "Pledged Revenues" means the Convention Development Tax, the Parking Revenues and the Parking Surcharge, as described herein. See "CONVENTION DEVELOPMENT TAX," "PARKING REVENUES" and "PARKING SURCHARGE" herein. The City has also covenanted in the Resolution, if the Pledged Revenues on deposit in the Revenue Fund are not sufficient to pay the Series 2009 Bonds, on the fifth (5h) day prior to the due date, the City has covenanted to budget and appropriate, by amendment if necessary, and to deposit into the Revenue Fund, Non -Ad Valorem Revenues of the City lawfully available in an amount which is equal to the deficiency in the funding of the Annual Debt Service Requirement with respect to all Bonds outstanding in each applicable Fiscal Year, plus an amount sufficient to satisfy all other payment obligations of the City under the Resolution for such Fiscal Year. "Non -Ad Valorem Revenues" are defined in the Resolution to mean all revenues of the City derived from any source other than ad valorem taxation on real or personal property, which are legally available to make the payments required under the Resolution, excluding Pledged Revenues. 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 for the payment thereof, as described herein. Neither the full faith and credit nor the taxing power of the City, the State of Florida or any political subdivision or agency thereof is pledged to the payment of the principal of, premium, if any, and interest on the Series 2009 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS" and "DESCRIPTION OF NON -AD VALOREM REVENUES" herein. This cover page contains certain information for quick reference only. It 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 offered when, as, and if issued and received by the Underwriters, subject to the opinion on certain legal matters relating to their issuance by Bryant Miller Olive P.A., Miami, Florida, Bond Counsel. Certain legal matters will be passed upon for the City by Julie O. Bru, Esq., City Attorney, and by Squire, Sanders & Dempsey L.L.P., Miami, Florida, Disclosure Counsel to the City. Certain legal matters will be passed upon for the Underwriters by their counsel, Akerman, Senterfttt, P.A., Jacksonville, 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 December 2009. MERRILL LYNCH & CO. RBC CAPITAL MARKETS MORGAN KEEGAN & COMPANY, INC. GOLDMAN SACHS & CO. RAYMOND JAMES & ASSOCIATES, INC. Dated: November , 2009 MIAMI/4245431.2 Maturity Jul 1 $ Maturity Jul 1 Maturity Jul 1 $ MIAMI/4245431.2 SERIES 2009A BONDS MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS, PRICES AND INITIAL CUSIP NUMBERS $ Serial Bonds Principal Initial CUSIP Amount Interest Rate Yield Price Number $ Term Bond Due , 1 at % Yield % Price Initial CUSIP: SERIES 2009B BONDS MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS, PRICES AND INITIAL CUSIP NUMBERS $ Serial Bonds Principal Initial CUSIP Amount Interest Rate Yield Price Number $ Term Bond Due , 1 at % Yield % Price Initial CUSIP: SERIES 2009C BONDS MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, YIELDS, PRICES AND INITIAL CUSIP NUMBERS $ Serial Bonds Principal Initial CUSIP Amount Interest Rate Yield Price Number $ Term Bond Due , 1 at % Yield % Price Initial CUSIP: THE CITY OF MIAMI, FLORIDA MAYOR Manuel A. Diaz CITY COMMISSIONERS Joe M. Sanchez, Chairman Michelle Spence -Jones, Vice Chair Angel Gonzalez Tomas P. Regalado Marc D. Sarnoff CITY MANAGER Pedro G. Hernandez CHIEF FINANCIAL OFFICER Larry Spring FINANCE DIRECTOR Diana M. Gomez CITY ATTORNEY Julie O. Bru, Esq. BOND COUNSEL Bryant Miller Olive P.A. Miami, Florida DISCLOSURE COUNSEL Squire, Sanders & Dempsey L.L.P. Miami, Florida FINANCIAL ADVISOR First Southwest Company Aventura, Florida MIAM1/4245431.2 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 or the Underwriters. 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, 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 contained under the caption "MUNICIPAL BOND INSURANCE" and APPENDIX E -- SPECIMEN MUNICIPAL BOND INSURANCE POLICY herein, none of the information in this Official Statement has been supplied or verified by 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 OR REGULATORY AUTHORITY. 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 MIAMI/4245431.2 ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. THIS PRELIMINARY OFFICIAL STATEMENT IS DEEMED "FINAL" BY THE CITY WITHIN THE MEANING OF RULE 15C2 -12(b) UNDER THE SECURITAS EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT FOR ANY INFORMATION PERMITTED BY SUCH RULE TO BE OMITTED. MIAMI/4245431.2 TABLE OF CONTENTS Page INTRODUCTION......................................................................................................................... 1 PURPOSE OF THE ISSUE........................................................................................................... 3 THEPROJECT.............................................................................................................................. 3 ESTIMATED SOURCES AND USES OF FUNDS..................................................................... 4 DESCRIPTION OF THE SERIES 2009 BONDS......................................................................... 4 General............................................................................................................................... 4 OptionalRedemption......................................................................................................... 4 Mandatory Sinking Fund Redemption............................................................................... 5 Noticeof Redemption........................................................................................................ 7 Defeasance......................................................................................................................... 8 Book -Entry Only System................................................................................................... 8 Registration, Transfer and Exchange............................................................................... 11 Replacement of Bonds Mutilated, Destroyed, Stolen or Lost ......................................... 12 MUNICIPAL BOND INSURANCE........................................................................................... 12 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS ................... 12 General............................................................................................................................. 12 Covenant to Budget and Appropriate.............................................................................. 13 Establishment of Funds and Accounts............................................................................. 14 LimitedObligations......................................................................................................... 16 ReserveFund................................................................................................................... 16 Issuance of Additional Indebtedness............................................................................... 17 CONVENTION DEVELOPMENT TAX.................................................................................... 18 General............................................................................................................................. 18 Distribution of the Convention Development Tax........................................................... 19 Historical Collections of the Convention Development Tax ........................................... 20 PARKINGREVENUES.............................................................................................................. 21 PARKINGSURCHARGE........................................................................................................... 22 General............................................................................................................................. 22 Levy of Parking Surcharge and Uses............................................................................... 22 Collection......................................................................................................................... 22 PROJECTED COLLECTION OF PLEDGED REVENUES...................................................... 23 DESCRIPTION OF NON -AD VALOREM REVENUES.......................................................... 24 Special Investment Considerations.................................................................................. 32 Additional Debt Payable from Non -Ad Valorem Revenues ............................................ 32 Pledge of Non -Ad Valorem Revenues............................................................................. 33 MANAGEMENT DISCUSSION OF BUDGET AND FINANCES [UPDATE WITH 2009-2010 BUDGET]...................................................................................................... 33 MIAMI/4245431.2 i TABLE OF CONTENTS (continued) Page PROPERTY TAX REFORM...................................................................................................... 36 FUTUREDEBT........................................................................................................................... 39 DEBT SERVICE SCHEDULE.................................................................................................... 40 PRO FORMA DEBT SERVICE COVERAGE........................................................................... 41 THECITY OF MIAMI................................................................................................................ 42 Background...................................................................................................................... 42 CityGovernment.............................................................................................................. 42 Adoption of Investment Policy and Debt Management Policy ....................................... 43 Capital Improvement Plan [Update with FY 2009-2010] ............................................... 44 Fiscal and Accounting Procedures................................................................................... 45 GeneralFund.................................................................................................................... 45 Indebtednessof the City................................................................................................... 47 LEGALMATTERS..................................................................................................................... 48 LITIGATION............................................................................................................................... 49 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS ............................. 49 TAXMATTERS.......................................................................................................................... 49 Series 2009A Bonds and Series 2009C Bonds................................................................ 49 OtherTax Matters............................................................................................................ 51 Tax Treatment of Original Issue Discount....................................................................... 51 Tax Treatment of Bond Premium.................................................................................... 51 Series2009B Bonds......................................................................................................... 52 RATINGS.................................................................................................................................... 55 FINANCIAL ADVISOR............................................................................................................. 55 AUDITED FINANCIAL STATEMENTS.................................................................................. 56 CONTINUING DISCLOSURE................................................................................................... 56 UNDERWRITING...................................................................................................................... 57 CONTINGENTFEES................................................................................................................. 57 ENFORCEABILITY OF REMEDIES........................................................................................ 57 ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT .................................... 57 FORWARD-LOOKING STATEMENTS................................................................................... 58 MISCELLANEOUS.................................................................................................................... 58 AUTHORIZATION OF OFFICIAL STATEMENT................................................................... 59 MIAMI/4245431.2 ii TABLE OF CONTENTS (continued) APPENDICES Page APPENDIX A: GENERAL INFORMATION REGARDING THE CITY OF MIAMI APPENDIX B: COPY OF RESOLUTION NO. R -09 - APPENDIX C: GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2008 (EXCERPT OF THE CITY OF MIAMI COMPREHENSIVE ANNUAL FINANCIAL REPORT) APPENDIX D: FORM OF BOND COUNSEL OPINION APPENDIX E: FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT MIAMI/4245431.2 111 CITY OF MIAMI, FLORIDA TAX-EXEMPT SPECIAL OBLIGATION PARKING REVENUE BONDS, SERIES 2009A (MARLINS STADIUM PROJECT) OFFICIAL STATEMENT relating to CITY OF MIAMI, FLORIDA TAXABLE SPECIAL OBLIGATION PARKING REVENUE BONDS, SERIES 2009B (MARLINS STADIUM PROJECT) INTRODUCTION CITY OF MIAMI, FLORIDA SPECIAL OBLIGATION PARKING REVENUE BONDS, SERIES 2009C (MARLINS STADIUM PROJECT) The purpose of this Official Statement, including the cover page, inside cover, and appendices, is to set forth information concerning the City of Miami, Florida (the "City") $ * aggregate principal amount of City of Miami, Florida Tax -Exempt Special Obligation Parking Revenue Bonds, Series 2009A (Marlins Stadium Project) (the "Series 2009A Bonds"), $ * aggregate principal amount of City of Miami, Florida Taxable Special Obligation Parking Revenue Bonds, Series 2009B (Marlins Stadium Project) (the "Series 2009B Bonds"), and $ * aggregate principal amount of City of Miami, Florida Special Obligation Parking Revenue Bonds, Series 2009C (Marlins Stadium Project) (the "Series 2009C Bonds" and, together with the Series 2009A Bonds and the Series 2009 Bonds, 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" attached hereto. The Series 2009 Bonds are being issued pursuant to Chapter 166, Florida Statutes, as amended, Part VII of Chapter 159, Florida Statutes, as amended, Article VIII, Section 2 of the Constitution of the State of Florida, the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to Resolution No. R-09- adopted by the City Commission of the City (the "Commission") on October 22, 2009 (the "Resolution") authorizing the issuance of an aggregate principal amount of Series 2009 Bonds, in an amount not to exceed one hundred million dollars ($100,000,000). The Series 2009C Bonds are being issued as Recovery Zone Facility Bonds in accordance with the American Recovery and Reinvestment Act of 2009 ("ARRA"). Pursuant to Resolution No. adopted by the Commission on , 2009 the City designated the area in which the Project is to be located a "Recovery Zone" under the ARRA. * Preliminary, subject to change. MIAMI/4245431.2 The Series 2009 Bonds are being issued to provide funds, together with other available moneys, to (i) finance the cost of construction of parking facilities, including surface lots and parking structures for approximately 6,000 parking spaces located at the site of the Marlins Baseball Stadium (the "Project"), as described herein, (ii) fund a deposit to the Reserve Fund or pay the cost of a Reserve Product and (iii) pay the costs of issuance of the Series 2009 Bonds. See "PURPOSE OF THE ISSUE" and "THE PROJECT" herein. Payment of the principal of, premium, if any, and interest on the Series 2009 Bonds shall be secured by a lien upon and pledge of the Pledged Revenues and the Pledged Funds. Pledged Revenues are comprised of the Convention Development Tax allocated to the City pursuant to the Interlocal Agreement, the Parking Revenues and the Parking Surcharge, all as described herein. See "CONVENTION DEVELOPMENT TAX," "PARKING REVENUES" and "PARKING SURCHARGE" herein. "Pledged Funds" are defined in the Resolution to mean collectively the Pledged Revenues, all monies, including Non -Ad Valorem Revenues deposited in the Funds and Accounts and earnings on investments in Funds and Accounts established under the Resolution, pursuant to the provisions of the Resolution (with the exception of the Rebate Fund). The City has also covenanted in the Resolution, if the Pledged Revenues on deposit in the Revenue Fund are not sufficient to pay the Series 2009 Bonds on the fifth (5ffi) day prior to the due date, the City has covenanted to budget and appropriate, by amendment if necessary, and to deposit into the Revenue Fund, Non -Ad Valorem Revenues of the City lawfully available in an amount which is equal to the deficiency in the funding of the Annual Debt Service Requirement with respect to all Series 2009 Bonds outstanding in each applicable Fiscal Year, plus an amount sufficient to satisfy all other payment obligations of the City under the Resolution for such Fiscal Year. "Non -Ad Valorem Revenues" are defined in the Resolution to mean all revenues of the City derived from any source other than ad valorem taxation on real or personal property, which are legally available to make the payments required under the Resolution, excluding Pledged Revenues. 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 for the payment thereof, as described herein. Neither the full faith and credit nor the taxing power of the City, the State of Florida or any political subdivision or agency thereof is pledged to the payment of the principal of, premium, if any, and interest on the Series 2009 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS" and "DESCRIPTION OF NON -AD VALOREM REVENUES" herein. The City's covenant to budget and appropriate Non -Ad Valorem Revenues does not constitute a lien, either legal or equitable, on any of the City's legally available Non -Ad Valorem Revenues. The amount of legally available Non -Ad Valorem Revenues available to make payments on the Series 2009 Bonds maybe 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 legally available Non -Ad Valorem 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. Furthermore, except as provided in the Resolution (and described herein under the caption "DESCRIPTION OF NON -AD VALOREM REVENUES — Additional Debt Payable From Non -Ad Valorem Revenues"), the City is not restricted in its ability (i) to pledge such legally available Non -Ad Valorem Revenues for other purposes or to issue additional debt specifically secured by such revenues or by a covenant similar to that securing MIAMI/4245431.2 2 the Series 2009 Bonds or (ii) to reduce or discontinue services that generate Non -Ad Valorem Revenues. 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 B — COPY OF RESOLUTION NO. R-09- " All documents of the City referred to herein may be obtained from Diana M. Gomez, CPA, Finance Director, 444 S.W. 2nd Avenue, 6th Floor, Miami, Florida 33130, Telephone (305) 416-1324. PURPOSE OF THE ISSUE The Series 2009 Bonds are being issued to provide funds, together with other available moneys, to (i) finance the cost of the Project (as described below), (ii) fund a deposit to the Reserve Fund or to pay the cost of a Reserve Product, and (iii) pay the costs of issuance of the Series 2009 Bonds. See "THE PROJECT" below. THE PROJECT In connection with the construction of a new baseball stadium (the "Stadium") by Miami - Dade County, Florida (the "County"), to be used by the Florida Marlins, L.P. (the "Marlins"), the City has entered into a City Parking Agreement dated April 15, 2009 (the "City Parking Agreement"), by and among the City, Marlins Stadium Operator, L.L.C. (the "Stadium Operator"), and the County, pursuant to which the City has agreed to construct certain parking appurtenances and ancillary facilities, including but not limited to retail space, parking structures and surface lots that will contain no more than 6,000 total parking spaces (the "Project"). [Remainder of Page Intentionally Left Blank] MIAMI/4245431.2 ESTIMATED SOURCES AND USES OF FUNDS The table below summarizes the estimated sources and uses of funds to be derived from the sale of the Series 2009 Bonds [and other available moneys]: (1) Includes underwriters' discount, financial advisory and legal fees and expenses, and miscellaneous costs of issuance [including the cost of the Reserve Product]. DESCRIPTION OF THE SERIES 2009 BONDS General Each Series of 2009 Bonds will be issued as fully registered bonds without coupons in principal denominations of $5,000 each or any integral multiples thereof through the book -entry only system. The Series 2009 Bonds shall be numbered consecutively from one (1) upward preceded by the letter "R." Interest on the Series 2009 Bonds will be payable semi-annually on January 1 and July 1 of each year, commencing July 1, 2010. The Series 2009 Bonds, when issued, will be registered in the name of Cede & Co., as nominee for DTC (as defined herein). Payment of the principal of, redemption premium, if any, and interest on the Series 2009 Bonds will be made directly to DTC or its nominee, Cede & Co., by U.S. Bank National Association, Miami, Florida, as the Paying Agent and Bond Registrar for the Series 2009 Bonds. Optional Redemption Series 2009A Bonds. The Series 2009A Bonds maturing after July 1, are subject to optional redemption and payment on or after July 1, , at any time, at the option of the City, as a whole or in part at a redemption price equal to 100% of the principal amount of the Series 2009A Bonds to be redeemed, together with accrued interest to the redemption date. The City may select amounts and maturities or portions of maturities of Series 2009A Bonds for optional MIAMI/4245431.2 4 Series 2009A Series 2009B Series 2009C Bonds Bonds Bonds Total SOURCES: Principal Amount $ $ $ $ Net Original Issue Discount/Premium [Other available moneys of the City] TOTALSOURCES $ $ $ $ USES: Deposit to the Construction Fund $ $ $ $ [Deposit to Reserve Fund] Deposit to Costs of Issuance Account(l) TOTAL USES $ $ $ $ (1) Includes underwriters' discount, financial advisory and legal fees and expenses, and miscellaneous costs of issuance [including the cost of the Reserve Product]. DESCRIPTION OF THE SERIES 2009 BONDS General Each Series of 2009 Bonds will be issued as fully registered bonds without coupons in principal denominations of $5,000 each or any integral multiples thereof through the book -entry only system. The Series 2009 Bonds shall be numbered consecutively from one (1) upward preceded by the letter "R." Interest on the Series 2009 Bonds will be payable semi-annually on January 1 and July 1 of each year, commencing July 1, 2010. The Series 2009 Bonds, when issued, will be registered in the name of Cede & Co., as nominee for DTC (as defined herein). Payment of the principal of, redemption premium, if any, and interest on the Series 2009 Bonds will be made directly to DTC or its nominee, Cede & Co., by U.S. Bank National Association, Miami, Florida, as the Paying Agent and Bond Registrar for the Series 2009 Bonds. Optional Redemption Series 2009A Bonds. The Series 2009A Bonds maturing after July 1, are subject to optional redemption and payment on or after July 1, , at any time, at the option of the City, as a whole or in part at a redemption price equal to 100% of the principal amount of the Series 2009A Bonds to be redeemed, together with accrued interest to the redemption date. The City may select amounts and maturities or portions of maturities of Series 2009A Bonds for optional MIAMI/4245431.2 4 redemption at the City's sole discretion, except that any Term Bonds will reduce pro -rata remaining sinking fund redemption amounts. Series 2009B Bonds. The Series 2009B Bonds maturing after July 1, are subject to optional redemption and payment on or after July 1, , at any time, at the option of the City, as a whole or in part at a redemption price equal to 100% of the principal amount of the Series 2009B Bonds to be redeemed, together with accrued interest to the redemption date. The City may select amounts and maturities or portions of maturities of Series 2009B Bonds for optional redemption at the City's sole discretion, except that any Term Bonds will reduce pro -rata remaining sinking fund redemption amounts. Series 2009C Bonds. The Series 2009C Bonds maturing after July 1, are subject to optional redemption and payment on or after July 1, , at any time, at the option of the City, as a whole or in part at a redemption price equal to 100% of the principal amount of the Series 2009C Bonds to be redeemed, together with accrued interest to the redemption date. The City may select amounts and maturities or portions of maturities of Series 2009C Bonds for optional redemption at the City's sole discretion, except that any Term Bonds will reduce pro -rata remaining sinking fund redemption amounts. Mandatory Sinking Fund Redemption Series 2009A Bonds. The Series 2009A Bonds maturing on July 1, shall be subject to mandatory sinking fund redemption by the City on each July 1 of the years specified below, in the amounts of the Amortization Requirement set forth below at a redemption price of 100% of the principal amount thereof. Amortization Year Requirement *Maturity The Series 2009A Bonds maturing on July 1, shall be subject to mandatory sinking fund redemption by the City on each July 1 of the years specified below, in the amounts of the Amortization Requirement set forth below at a redemption price of 100% of the principal amount thereof. Amortization Year Requirement * *Maturity MIAMI/4245431.2 5 Series 2009B Bonds, The Series 2009B Bonds maturing on July 1, shall be subject to mandatory sinking fund redemption by the City on each July 1 of the years specified below, in the amounts of the Amortization Requirement set forth below at a redemption price of 100% of the principal amount thereof. Year *Maturity Amortization Requirement The Series 2009B Bonds maturing on July 1, shall be subject to mandatory sinking fund redemption by the City on each July 1 of the years specified below, in the amounts of the Amortization Requirement set forth below at a redemption price of 100% of the principal amount thereof. Year *Maturity Amortization Requirement Series 2009C Bonds, The Series 2009C Bonds maturing on July 1, shall be subject to mandatory sinking fund redemption by the City on each July 1 of the years specified below, in the amounts of the Amortization Requirement set forth below at a redemption price of 100% of the principal amount thereof. Year *Maturity MIAMI/4245431.2 6 Amortization Requirement The Series 2009C Bonds maturing on July 1, shall be subject to mandatory sinking fund redemption by the City on each July 1 of the years specified below, in the amounts of the Amortization Requirement set forth below at a redemption price of 100% of the principal amount thereof. Amortization Year Requirement *Maturity However, the principal amount of the Series 2009 Bonds required to be redeemed on each such sinking fund redemption date shall be reduced by the principal amount of such series of the Series 2009 Bonds specified by the City at least 45 days prior to the redemption date that have been either (i) purchased by or on behalf of the City and delivered to the Bond Registrar for cancellation, or (ii) redeemed other than through the operation of the provisions of this paragraph, and that have not been previously made the basis for a reduction of the principal amount of the Series 2009 Bonds to be redeemed on a sinking fund redemption date. Notice of Redemption. Notice of redemption is to 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 of the Resolution. 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 such failure or defect has occurred. So long as all Series 2009 Bonds are held under a book -entry system by the Securities Depository, notices of redemption shall be sent only to the Securities Depository or its nominee. Selection of book -entry interests in the Series 2009 Bonds called, and notice of the call to the owners of those interests called, is the responsibility of the Securities Depository (or any successor securities depository) pursuant to its rules and procedures, and of its participants and indirect participants. Any failure of the Securities Depository (or any successor securities depository) to advise any participant, or of any participant or any indirect participant to notify the owner of a book -entry interest, of any such notice and its content or effect shall not affect the validity of any proceedings for the redemption of any Series 2009 Bonds. Such notice shall set forth the date fixed for redemption, the rate of interest borne 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 MIAMI/4245431.2 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. If applicable, in the case of optional redemption only, such notice may be given as a conditional notice of redemption, in which case such notice shall state the condition and provide that if such condition is not met on or prior to such redemption date, no such redemption shall occur. Defeasance If, at any time after the date of issuance of the Series 2009 Bonds: (a) all Series 2009 Bonds secured under the Resolution or any maturity thereof shall have become due and payable in accordance with their terms or otherwise. as provided in the Resolution, or shall have been duly called for redemption (if applicable), or the City gives the Paying Agent irrevocable instructions directing the payment of the principal of, redemption premium, if any, and interest on such Series 2009 Bonds at maturity or at any earlier redemption date scheduled by the City, or any combination thereof, (b) the full amount of the principal, redemption premium, if any, and the interest so due and payable upon all of such Series 2009 Bonds then outstanding or any portion of such Series 2009 Bonds, at maturity or upon redemption (if applicable), shall be paid, or sufficient moneys shall be held by an escrow agent who shall be an Authorized Depository or any Paying Agent (other than the City) in irrevocable trust for the benefit of such Bondholders (whether or not in any accounts created under the Resolution) which, when invested in Government Obligations maturing not later than the maturity or redemption (if applicable) dates of such principal, redemption premium, if any, and interest, will, together with the income realized on such investments, be sufficient to pay all such principal, redemption premium, if any, and interest on said Series 2009 Bonds at the maturity thereof or the date upon which such Series 2009 Bonds are to be called for redemption (if applicable) prior to maturity; and (c) provision shall also be made for paying all other sums payable under the Resolution by the City allocable to such Series 2009 Bonds, then and in that case the right, title and interest of such Bondholders under the Resolution shall thereupon cease, determine and become void; otherwise, the Resolution shall be, continue and remain in full force and effect. 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 UNDERWRITERS TAKE ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS THEREOF. MUMU4245431.2 8 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 maturity of the Series 2009 Bonds, each in the aggregate principal amount of such maturity, 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 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, corporate and municipal debt issues, and money market instruments 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 www.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 nominee do not MIAMU4245431.2 9 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 redemptions and proposed amendments to the Series 2009 Bond documents. 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. 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 any 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). Principal, premium, if any, and interest 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 the 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, the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and interest 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 MIAMI/4245431.2 10 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. Thereafter, Series 2009 Bond certificates may be transferred and exchanged as described in the Resolution. See "-Registration, Transfer and Exchange" herein. 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. Registration, Transfer and Exchange 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 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. MIAMI/4245431.2 11 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 or has been called for redemption. A mutilated Series 2009 Bond shall be surrendered to and cancelled 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 reasonable expenses of the City or its agents. 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, stolen or lost. MUNICIPAL BOND INSURANCE [TO COME] SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2009 BONDS General The principal of, redemption premium if any, and interest on the Series 2009 Bonds will be payable from and secured by a lien upon and a pledge of (i) the City's portion of the proceeds of the CDT (defined below) allocated under the Interlocal Agreement (the "Convention Development Tax"), described herein, (ii) all parking fees and charges received by the City from the Stadium Operator with respect to the Project in connection with MLB Home Games (as described below) pursuant to the Parking Agreement (the "Parking Revenues"), and (iii) eighty percent (80%) of the City's Parking Surcharge which is derived from the Project in connection with the Parking Revenues ("Parking Surcharge"). Pledged Revenues are defined under the Resolution as the Convention Development Tax, the Parking Revenues and the Parking Surcharge. The individual components that comprise Pledged Revenues are described herein under "CONVENTION DEVELOPMENT TAX", "PARKING REVENUES" and "PARKING SURCHARGE". In addition to Pledged Revenues, the principal of, redemption premium if any, and interest on the Series 2009 Bonds will be secured by a lien upon and a pledge of all monies, including Non -Ad Valorem Revenues deposited into the Funds and Accounts and earnings on investments in the Funds and Accounts established under the Resolution, with the exception of the Rebate Fund (collectively, the "Pledged Funds"). MIAMI/4245431.2 12 . Covenant to Budget and Appropriate As more particularly described in the following paragraph, if the Pledged Revenues on deposit in the Revenue Fund are not sufficient to pay principal and interest on the Series 2009 Bonds on the fifth (5"') day prior to the due date of such payments and other payment obligations due under the Resolution, the City has covenanted in the Resolution to budget and appropriate, by amendment if necessary, and to deposit into the Revenue Fund, Non -Ad Valorem Revenues of the City lawfully available in an amount which is equal to the deficiency in the funding of the Annual Debt Service Requirement with respect to all Bonds outstanding in each applicable Fiscal Year, plus an amount sufficient to satisfy any other payment obligations of the City under the Resolution. "Non -Ad Valorem Revenues" are defined in the Resolution to mean all revenues of the City derived from any source other than ad valorem taxation on real or personal property, which are legally available to make the payments required under the Resolution, excluding Pledged Revenues. See "DESCRIPTION OF NON -AD VALOREM REVENUES" herein for a description of the revenues that may be available for such use. 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 deposit to the credit of the Revenue Fund, Non -Ad Valorem Revenues of the City lawfully available in an amount which is equal to the deficiency in the funding of the Annual Debt Service Requirement with respect to all Bonds outstanding under the Resolution for the applicable Fiscal Year, plus an amount sufficient to satisfy the other payment obligations of the City under the Resolution for the applicable Fiscal Year. 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 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 created and established under the Resolution; provided, however, that 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. All obligations of the City under the Resolution shall be secured only by the legally available Non -Ad Valorem Revenues actually budgeted and appropriated and deposited into the Funds and Accounts created under the Resolution, as provided for in the Resolution. The City may not expend moneys not appropriated or in excess of its current budgeted revenues. 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 legally available Non -Ad Valorem Revenues after satisfying funding requirements for obligations having an express lien on or pledge of such revenues and after satisfying funding requirements for essential governmental services of the City. However, the covenant to budget and appropriate in its general annual budget for the purposes and in the manner provided in the Resolution shall have the effect of making available, in the manner described in the Resolution, Non -Ad Valorem Revenues and placing on the City a positive duty to budget and appropriate, by amendment, if necessary, amounts sufficient to meet its obligations under the Resolution; subject, however, in all respects to the restrictions of Section 166.241, Florida Statutes, which provides, in part, that MIAMV4245431.2 13 the governing body of each municipality make appropriations for each Fiscal Year which, in any one year, shall not exceed the amount to be received from taxation or other revenue sources; and subject further, to the payment of services and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated by applicable law. Notwithstanding the foregoing, the City does not covenant to maintain any services or programs now provided or maintained by the City which generate Non - Ad Valorem Revenues. Establishment of Funds and Accounts The Resolution establishes several Funds and Accounts, including the "Construction Fund," the "Revenue Fund," the "Sinking Fund" and three accounts therein designated the "Principal Account," the "Interest Account" and the `Bond Amortization Account," and the "Reserve Fund," all of which Funds and Accounts shall be held in trust by the Director of Finance (or an Authorized Depository designated by the Director of Finance), in each case who shall act as trustee of such funds for the purposes of the Resolution, and shall at all times be kept separate and distinct from all other funds of the City and used only as provided in the Resolution. Moneys held in the Funds and Accounts, are Pledged Funds and shall be subject to a lien and charge in favor of the holders and registered owners of the Series 2009 Bonds as provided in the Resolution. The City has covenanted and agreed that it will pay or cause to be paid into the Revenue Funds, as promptly as practicable after receipt thereof, all Pledged Revenues, after the payment of the costs of operation and maintenance of the Project, and to the extent of any deficiency in the Funds and Accounts, Non -Ad Valorem Revenues appropriated in each Fiscal Year for the payment of the principal of, redemption premium, if any, and interest on the Bonds, shall be applied in the following manner: 1. To the full extent necessary, for deposit into the Interest Account in the Sinking Fund, on the fifth (5th) day preceding each Interest Payment Date, such sums as shall be sufficient to pay the interest becoming due on the Bonds on each such Interest Payment Date; provided, however, that such deposits for interest shall not be required to be made into the Interest Account to the extent that money on deposit therein is sufficient for such purpose. The City shall, on or before each Interest Payment Date, transfer to the Paying Agent moneys in an amount equal to the interest due on such Interest Payment Date or shall, prior to such Interest Payment Date, advise the Paying Agent of the amount of any deficiency in the amount so to be transferred. 2. (a) To the full extent necessary, for deposit in the Principal Account in the Sinking Fund, on the fifth (5th) day preceding each principal maturity date, the principal amount of Serial Bonds which will mature and become due on such maturity dates; provided, however, that such deposits for principal shall not be required to be made into the Principal Account to the extent that money on deposit therein is sufficient for such purpose. The City shall, on or before each principal payment date, transfer to the Paying Agent moneys in an amount equal to the principal due on such principal payment date. MIAMI/4245431.2 14 (b) To the full extent necessary, for deposit into the Bond Amortization Account in the Sinking Fund, on the fifth (5th) day preceding each redemption or maturity date, the Amortization Requirements as may be necessary for the payment of the Term Bonds payable from the Bond Amortization Account on such redemption or maturity dates. The moneys in the Bond Amortization Account shall be used solely for the purchase or redemption of the Term Bonds payable therefrom. The City may at any time purchase any of said Term Bonds at prices not greater than the principal amount thereof and credit the principal amount purchased against the Amortization Installment due. The City is mandatorily obligated to use any moneys in the Bond Amortization Account not applied to purchase Term Bonds for the redemption prior to maturity of such Term Bonds in such manner and at such times as the same are subject to mandatory redemption. If, by the application of moneys in the Bond Amortization Account, the City shall purchase or call for redemption in any year Term Bonds in excess of the Amortization Requirements for such year, such excess of Term Bonds so purchased or redeemed shall be credited in such manner and at such times as the Director of Finance of the City shall determine over the remaining payment dates. The City shall, on each redemption or maturity date, transfer to the Paying Agent moneys in an amount equal to the payments due on the Term Bonds on such redemption or maturity date. 3. To the full extent necessary, for deposit in the Reserve Fund, on or before the next succeeding interest or principal payment date following a draw on the Reserve Fund, an amount which, together with funds on deposit therein, will be sufficient to make the funds on deposit therein, except as otherwise hereinafter provided, equal to the Reserve Requirement for the Bonds. Moneys in the Reserve Fund shall be used only for the purpose of payments of Amortization Installments, principal of or interest on the Bonds when other moneys allocated to the Sinking Fund are insufficient therefore, and for no other purpose. If funds on deposit in the Reserve Fund exceed the Reserve Requirement with respect to the Bonds, such excess shall be transferred to the City annually to be used for any lawful purpose, provided that such excess shall be first applied to cure any deficiencies in the Sinking Fund, including the Accounts therein, and then shall be released to the City to be used for any lawful purpose. 4. The City shall not be required to make any further payments into the Sinking Fund, including the Accounts therein, and the Reserve Fund, when the aggregate amount of funds in the Sinking Fund, including the Accounts therein, and the Reserve Fund, are at least equal to the aggregate principal amount of the Bonds then outstanding plus accrued interest thereon, or if all of the Bonds then outstanding have been otherwise defeased pursuant to the Resolution. The balance of any monies remaining in the Revenue Fund after payment of all required payments in paragraphs 1. through 4. above may be used for any lawful purpose of the City. MIAMI/4245431.2 15 Limited Obligations The Series 2009 Bonds shall not be deemed to constitute general obligations or a pledge of the faith and credit of the City, the State or any political subdivision thereof within the meaning of any constitutional, legislative or charter provision or limitation, but are payable solely from and secured by a lien upon and a pledge of the Pledged Revenues and the Pledged Funds, in the manner and to the extent provided in the Resolution. No Bondholder shall ever have the right, directly or indirectly, to require or compel the exercise of the ad valorem taxing power of the City, the State, or any other political subdivision thereof or taxation in any form on any real or personal property to pay the Series 2009 Bonds or the interest thereon, nor shall any Bondholder be entitled to payment of such principal of, redemption premium, if any, and interest from any other funds of the City other than the Pledged Revenues and the Pledged Funds, all in the manner and to the extent provided in the Resolution. The Series 2009 Bonds and the indebtedness evidenced thereby shall not constitute a lien upon any real or personal property of the City, or any part thereof, or any other tangible personal property of or in the City, but shall constitute a lien only on the Pledged Revenues and the Pledged Funds, all in the manner and to the extent provided in the Resolution. Enforcement of the City's obligation to budget and appropriate legally available Non -Ad Valorem Funds shall be through appropriate judicial proceedings. The City has issued and may issue other bonds or debt obligations secured by a similar covenant. See "DESCRIPTION OF NON -AD VALOREM REVENUES - The City of Miami, Florida Schedule of Principal and Interest for Non -Ad Valorem Revenue Bonds and Loans" below. 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 "DESCRIPTION OF NON -AD VALOREM REVENUES - Special Investment Considerations" herein. Reserve Fund The Resolution requires the City to maintain on deposit in the Reserve Fund an amount equal to the Reserve Requirement. The Reserve Requirement for the Series 2009 Bonds is equal to $ . Such Reserve Fund shall be funded with a portion of the proceeds from the Series 2009 Bonds simultaneously with the delivery of the Series 2009 Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS" herein. In lieu of or in substitution for cash or securities on deposit in the Reserve Fund, the City may fund the Reserve Requirement, in whole or in part, with a Reserve Product issued by a Reserve Product Provider in an amount equal to the difference between the Reserve Requirement and the sums then on deposit in the Reserve Fund or to remain on deposit in the Reserve Fund. Such Reserve Product must provide for payment on any Interest Payment Date (provided adequate notice is given) on which a deficiency exists (or is expected to exist) in moneys held hereunder for a payment with respect to the Series 2009 Bonds which cannot be cured by MIAMI/4245431.2 16 moneys in any other Fund or Account held pursuant to the Resolution and available for such purpose, and which shall name the Paying Agent or an Authorized Depository who has agreed to serve as trustee for the benefit of the holders of the Series 2009 Bonds as the beneficiary thereof. In no event shall the use of such Reserve Product be permitted if it would cause an impairment in any existing rating on the Series 2009 Bonds. If a disbursement is made from a Reserve Product, the City shall be obligated to reinstate the maximum limits of such Reserve Product on or before the next succeeding Interest Payment Date following such disbursement or to replace such Reserve Product by depositing into the Reserve Fund from the first Non Ad Valorem Revenues available for deposit pursuant to the Resolution, moneys in the maximum amount originally payable under such Reserve Product, plus the amount necessary to reimburse the Reserve Product Provider for previous disbursements made pursuant to such Reserve Product, or a combination of such alternatives, and for purposes of the required deposits into the Reserve Fund, as described in the Resolution, amounts necessary to satisfy such reimbursement obligation and other obligations of the City to a Reserve Product Provider shall be deemed required deposits into the Reserve Fund, but shall be used by the City to satisfy its obligations to the Reserve Product Provider. Issuance of Additional Indebtedness The City will not issue any obligations (other than the Series 2009 Bonds) secured by or payable from the Pledged Funds, or any portion thereof, or voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge, in each case, having priority to or being on a parity with the lien securing the Series 2009 Bonds issued pursuant to the Resolution upon the Pledged Funds or any portion thereof. Notwithstanding the foregoing, the City may at any time or from time to time issue evidences of indebtedness that are payable in whole or in part out of the Pledged Funds and which may be secured by a pledge of the Pledged Funds on a parity with the Series 2009 Bonds solely for the purpose of financing the costs necessary to complete the Project. Such Additional Parity Obligations (as defined in the Resolution) may not exceed 10% of the initial principal amount of the Series 2009 Bonds. The Series 2009 Bonds together with Additional Parity Obligations are referred to herein as the "Bonds." Notwithstanding the foregoing, the City may at any time or from time to time issue evidences of indebtedness that are payable in whole or in part out of the Pledged Funds and which may be secured by a pledged of the Pledged Funds on a parity with the Series 2009 Bonds if such Additional Parity Obligations to be issued are refunding bonds, that is, delivered in lieu of, or in substitution for, or to provide for the payment of one or more series of Series 2009 Bonds or portions thereof, originally issued under the Resolution if the City shall cause to be delivered a certificate of the Finance Director setting forth the Total Debt Service Requirement (i) for the Series 2009 Bonds then outstanding and (ii) for all Bonds to be immediately outstanding thereafter and stating that the Total Debt Service Requirement pursuant to (ii) above is not greater than that set forth pursuant to (i) above. M"1/4245431.2 17 CONVENTION DEVELOPMENT TAX General One of the sources of the Pledged Revenues include, among other things, certain proceeds of the tax imposed by the County on the exercise within its boundaries of the taxable privilege of leasing or letting transient rental accommodations at the rate of three percent (3%) of the total consideration charged therefor authorized pursuant to Section 212.0305(4)(b), Florida Statutes, and imposed by Section 29-60 of the County Code of Ordinances and Ordinance No. 83-91, enacted by the County on October 4, 1983, as supplemented and amended, including without limitation, by Ordinance No. 84-43, enacted by the County on June 5, 1984 (such tax hereinafter referred to as the "CDT") pursuant to Section 212.0305, Florida Statutes, as amended and supplemented (the "Convention Development Tax Act"), Pursuant to the Convention Development Tax Act, the County is authorized to levy and impose a convention development tax on the privilege of leasing or letting transient rental accommodations at a rate of up to three percent (3%) of the total consideration charged for such accommodations, (a) two-thirds of the proceeds (net of certain administrative costs not to exceed 2% of collections) of which are initially required to be applied to extend, enlarge and improve the largest existing publicly - owned convention center in Miami -Dade County, Florida and after completion of that convention center, to acquire, construct, extend, enlarge, remodel, repair, improve, plan for, operate, maintain, or manage one or more convention centers, stadiums, exhibition halls, arenas, coliseums, auditoriums or certain other projects (the "County CDT"); (b) and one-third of the proceeds (net of certain administrative costs not to exceed 2% of collections) of which are initially required to be applied to construct a new multipurpose convention/coliseum/exhibition center/stadium in the most populous municipality in Miami -Dade County, Florida, and after completion of any such project, to operate an authority created pursuant to Section 212.0305(4)(b)(4) of the Convention Development Tax Act or to acquire, construct, extend, enlarge, remodel, repair, improve, operate or maintain one or more convention centers, stadiums, exhibition halls, arenas, coliseums, auditoriums, golf courses or related buildings and parking facilities in the most populous municipality in Miami -Dade County, Florida (the "City CDT" and, collectively with the County CDT, the "CDT Receipts"). Pursuant to the Convention Development Tax Act and Ordinance No. 83-91 enacted by the County on October 4, 1983, as supplemented and amended by Ordinance No. 84-43 enacted by the County on June 5, 1984, which created Part VI of Chapter 29 of the County Code (collectively, the "CDT Ordinance"), the County imposes a convention development tax of 3% of the total consideration charged for the leasing and letting of transient rental accommodations within the County, except for those accommodations located within the Village of Bal Harbor and the City of Surfside, which are exempt. Pursuant to the Convention Development Tax Act, the CDT Ordinance provides, among other things, that the persons collecting the CDT remit the same to the County directly, rather than to the State Department of Revenue, and that the CDT be administered in accordance with Section 212.0305(5) of the Convention Development Tax Act, which authorizes the County to retain up to 2% of the CDT collected by it to defray related administration costs. Pursuant to Chapter 29, Article VI of the County Code, the County's Tax Collector collects the CDT directly MIAMU4245431.2 18 from the person or entity charging the tax and deposits the receipts, less administrative expenses of 2% in the Miami -Dade County Convention Development Tax Trust Fund on a monthly basis. Any person who fails or refuses to charge and collect the CDT when required to do so under the Convention Development Tax Act is personally liable for the payment of the tax and guilty of a misdemeanor of the first degree. Any person who willfully advertises or holds out to the public in any manner that he will absorb or pay any part of the CDT, that he will relieve the person paying the rental of the payment of all or any part of the CDT, or that the CDT will not be added to the rental or lease consideration, or that, if added, will be refunded (in whole or in part) or refused, is similarly punishable. Distribution of the Convention Development Tax The CDT Receipts will be distributed by the County to the City pursuant to an Interlocal Agreement dated July 1, 2009 (the "Interlocal Agreement"). The Interlocal Agreement provides that the County will transfer a portion of the CDT Receipts to the City (that portion being referred to as the "Convention Development Tax"). Such distribution will be subordinate to the County's prior obligations to distribute the CDT Receipts as set forth in the table below. Convention Development Tax Receipts Priority Maximum Annual Debt Current Bonds Amount Service (2) Subordinate Spec. Obligation Bonds, $ 368,757,288 Annual Debt Service Payments $ 68,937,750 Series 1997A, B & C (outstanding principal amount) Subordinate Spec. Obligation Bonds, 184,312,247 Annual Debt Service Payments 35,520,000 Series 2005A & B (outstanding principal amount) Subordinate Spec. Obligation Bonds, 91,207,213 Annual Debt Service Payments 25,510,000 Series 2009 (outstanding principal amount) Other Obli¢ations Miami Beach $ 4,500,000 Annual Payment(') American Airlines Arena 6,400,000 Annual Payment incr. to $6.5 in 2022-28 Cultural Grants 1,000,000 Annual Payment Performing Arts Center Trust 1,700,000 Annual Payment incr. to $2 in 2012 South Miami -Dade Cultural Center $ 770,000 Annual Payment Source: Interlocal Agreement. (1) Annual Payment may be increased if CDT Receipts exceed a threshold that is greater than anticipated CDT Receipts. (2) Payable from other sources including the CDT Receipts. After the obligations listed in the table above have been satisfied on an annual basis, the County has agreed pursuant to the Interlocal Agreement to pay to the City annually $2,000,000 in 2009; $3,000,000 in 2010 through and including 2015; $4,000,000 in 2016 through and including 2020; $5,000,000 in 2021 through and including 2025; $6,000,000 in 2026 through and including 2030; and $8,000,000 in 2031 through and including 2038. Such payments of the Convention Development Tax are subject to certain conditions provided in the Interlocal Agreement, if the City or the County default under the agreements entered into for the operation MIAMI/4245431.2 19 and construction of the Stadium (the "Stadium Agreements"), or if the Stadium Agreements are terminated. The County is to pay the City the Convention Development Tax payments in equal monthly installments from the CDT Receipts received by the County that month until the annual Convention Development Tax payments are paid in full. If the CDT Receipts received by the County in any year are insufficient to pay the annual Convention Development Tax payment for such year (a "Shortfall"), and if in subsequent years the amount of CDT Receipts exceed the annual Convention Development Tax payment (a "Surplus"), then the County shall remit such Surplus to the City up to the amount of any Shortfall. Such Surplus shall be paid until all Shortfalls have been paid in full. Historical Collections of the Convention Development Tax Below is a chart setting forth historical CDT Receipts for the past ten Fiscal Years, as well a comparison of gross collections for the first nine months of Fiscal Years 2008 and 2009. Fiscal Year Ending Taxable 9/30 Revenue Historical - Unaudited Miami -Dade County, Florida 3% Convention Development Tax Historical Collections Growth Tax Gross Rate Rate Collections Administration Net Fees Collections 1999 $ 899,981,600 13.1% 3.0% $26,999,448 $539,989 $26,459,459 2000 992,779,933 10.3 3.0 29,783,398 595,668 29,187,730 2001 1,054,395,633 6.2 3.0 31,631,869 632,637 30,999,232 2002 872,460,633 (17.2)x) 3.0 26,173,819 523,476 25,650,343 2003 944,280,333 8.2 3.0 28,328,410 566,568 27,761,842 2004 1,102,877,633 16.8 3.0 33,086,329 661,727 32,424,602 2005 1,278,074,492 15.9 3.0 38,342,235 766,845 37,575,390 2006 1,410,500,066 10.3 3.0 42,315,002 846,300 41,468,702 2007 1,519,773,047 7.8 3.0 45,593,191 911,864 44,681,327 2008 1,597,469,115 5.1 3.0 47,924,073 958,481 46,965,592 First [111 Months 2008 [$38,566,5401 2009 [(13.23%)1 [33,462,5331 Source: Miami -Dade County Finance Department. (1) Reflects initial impact of September 11, 2001 terrorist attacks. For the period of October 1, 2008 through [August] 31, 2009, gross collections of CDT Receipts were [$33,462,533], which represents a decline of [$5,104,007], or [13.23%1, from CDT Receipts reported for the same nine-month period in Fiscal Year 2008. CDT Receipts fluctuate based on general economic conditions, including trends in the hotel and tourism industries. A significant decline in the amount of CDT Receipts due to a sustained economic downturn could impair the ability of the City to pay principal of and interest on the Series 2009 Bonds. MIAMI/4245431.2 20 PARKING REVENUES Another component of Pledged Revenues under the Resolution is Parking Revenues. Parking Revenues are defined in the Resolution generally as revenues received by the City from the Stadium Operator with respect to the Project in connection with MLB Home Games. Pursuant to the City Parking Agreement, the City, through the Miami Parking Authority or through a third party manager, shall have the exclusive right, authority and responsibility to operate, manage, maintain and control the Project, provided, however, the Stadium Operator., together with their employees and guests have exclusive use of two hundred -fifty (250) of the parking spaces at no cost (the "Reserved Parking Spaces"). The City Parking Agreement provides that except with respect to Stadium Events as described below, the City shall have the exclusive right to establish prices for and to collect and retain all parking fees for the Project. The City Parking Agreement provides that with respect to any event held at the Stadium, including scheduled or rescheduled home baseball games, including exhibitions, spring training, regular season, playoff and World Series games ("MBL Home Games") and events, team practices, clinics, promotions and fan activities; and other professional or amateur sporting events or exhibitions, concerts, trade shows, conventions, general audience, family or other targeted audience shows, performances or exhibitions, but shall not include community events of the City or the County (collectively, "Stadium Events"), the Stadium Operator shall have prior and exclusive use of all the parking spaces in the Project. In connection with the use of the Project during Stadium Events, the City Parking Agreement provides that the Stadium Operator shall pay or cause to be paid, to the City an amount representing the purchase of the number of parking spaces in the Project made available to the Stadium Operator not including the Reserved Parking Spaces at the following amounts per space: Years Prices 1-5 $10.03 6-10 10.10 11-15 10.20 16-20 10.86 21-25 11.56 26-30 12.29 31-35 12.53 The payment by the Stadium Operator for parking during MBL Home Games, including other incremental cost payments pursuant to the City Parking Agreement is hereinafter collectively referred to herein as "Parking Revenues." MIAMI/4245431.2 21 PARKING SURCHARGE General Another portion of the Pledged Revenues under the Resolution are Parking Surcharge revenues. The Parking Surcharge is defined in the Resolution to mean eighty percent (80%) of the portion which is derived from the Project in connection with the Parking Revenues of the 15% parking surcharge to be charged at public parking facilities within the City approved by the electorate of the City on November 4, 2003, imposed pursuant to Section 166.271, Florida Statutes and pursuant to Ordinance No. 04-12563 enacted by the City Commission on July 22, 2004, as amended by Ordinance No. 09-13063 enacted by the City Commission on May 14, 2009. Levy of Parking Surcharge and Uses Pursuant to Section 166.271, Florida Statutes, the State authorized the City to impose and collect, subject to referendum approval by voters in the City, a discretionary per vehicle surcharge of up to fifteen percent (15%) of the amount charged for the sale, lease, or rental of space at parking facilities within the City which are open for use to the general public and which are not airports, seaports, county administration buildings, or other county projects. The Parking Surcharge was approved at an election on November 4, 2003. Collection The Parking Surcharge amounts due shall be collected by the operator of a parking facility at the time of, and in addition to, collection of any other amounts for the parking of a motor vehicle in a parking facility, whether charge is made on an hourly, daily, weekly, monthly, yearly, event, validation programs, valet or any other basis. All operators shall be required to maintain a valid operational license. The occupational license of an operator shall be revoked upon the failure to remit the surcharge amounts for three consecutive months. No operator shall be permitted to operate the parking facility until all arrears are paid. No later than the twentieth (20th) day of each calendar month, the operator of every parking facility shall remit to the City the funds collected pursuant to the Parking Surcharge, net of refunds, for the preceding calendar month. The operator shall keep records of such funds collected. Whenever any operator fails to keep records from which the Parking Surcharge may be accurately computed, the City may make use of a factor developed by surveying other operators of a similar type parking facility, or otherwise compute the amount of Parking Surcharge due, and this computation shall be prima facie correct. Whenever any operator fails to collect or remit to the City the Parking Surcharge imposed within the time limit therefor, the City shall assess the operator the amount of Parking Surcharge due as determined by the City, plus interest at the rate of one percent (1%) per month or any fraction thereof, and a penalty of ten percent (10%) of the Parking Surcharge due on uncollected or unremitted amounts. The operator of a Parking Facility who; (1) fails, neglects or refuses to collect the Parking Surcharge; or (2) fails, neglects or refuses to remit the Parking Surcharge; or (3) fails, neglects or refuses to keep accurate records; or (4) submits any incomplete, false or fraudulent return; or (5) refuses to permit the City to examine books, records and papers relating to the Parking Surcharge; or (6) MIAMI/4245431.2 22 fails to fully comply with any or all rules or regulations promulgated by the City, or to keep complete and proper records as required, shall be subject to the following penalties for each offense: (i) have his or her occupational license revoked; and/or (ii) have a lien placed upon the parking facility for the sums owed plus interest pursuant to law; and/or (iii) be subject to an administrative fine in the amount of $500.00; and/or (iv) be required to comply with stricter reporting requirements. PROJECTED COLLECTION OF PLEDGED REVENUES The following table sets forth the amount of projected Pledged Revenues collected by the City for the fiscal years ended September 30, 2009 through August 31, 2039. Pledged Revenues Fiscal Year (Ended Sept. 30th) CDT(') Parking Revenues(2) Parking Surcharee(3) Total 2009 $ 2,000,000 - - $ 2,000,000 2010 3,000,000 - - 3,000,000 2011 3,000,000 - - 3,000,000 2012 3,000,000 $ 4,492,738 $ 806,274 8,299,012 2013 3,000,000 4,492,738 806,274 8,299,012 2014 3,000,000 4,492,738 806,274 8,299,012 2015 3,000,000 4,492,738 806,274 8,299,012 2016 4,000,000 4,492,738 806,274 9,299,012 2017 4,000,000 4,524,093 846,588 9,370,681 2018 4,000,000 4,524,093 846,588 9,370,681 2019 4,000,000 4,524,093 846,588 9,370,681 2020 4,000,000 4,524,093 846,588 9,370,681 2021 5,000,000 4,524,093 846,588 10,370,681 2022 5,000,000 4,568,886 889,051 10,457,937 2023 5,000,000 4,568,886 889,051 10,457,937 2024 5,000,000 4,568,886 889,051 10,457,937 2025 5,000,000 4,568,886 889,051 10,457,937 2026 6,000,000 4,568,886 889,051 11,457,937 2027 6,000,000 4,864,520 933,665 11,798,185 2028 6,000,000 4,864,520 933,665 11,798,185 2029 6,000,000 4,864,520 933,665 11,798,185 2030 6,000,000 4,864,520 933,665 11,798,185 2031 8,000,000 4,864,520 933,665 13,798,185 2032 8,000,000 5,178,071 980,429 14,158,500 2033 8,000,000 5,178,071 980,429 14,158,500 2034 8,000,000 5,178,071 980,429 14,158,500 2035 8,000,000 5,178,071 980,429 14,158,500 2036 8,000,000 5,178,071 980,429 14,158,500 2037 8,000,000 5,505,060 1,029,343 14,534,403 2038 8,000,000 5,505,060 1,029,343 14,534,403 2039 500,000 5,505,060 1,029,343 7,034,403 TOTAL $319,524,784 Source: City of Miami. (1) Scheduled Convention Development Tax distributions as mandated by the Interlocal Agreement. (2) Assumed 5,530 spaces (5,780 total spaces less Reserved Parking Spaces) times 81 MLB Home Games times rates specified in "PARKING REVENUES" herein. (3) Assumed spaces times MLB Home Games as specified in footnote (2) above times gross retail parking rates anticipated by the Stadium Operator times 15% Parking Surcharge times 80%. MIAMI/4245431.2 23 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. Additionally, the City has granted non- exclusive commercial solid waste franchises and levies certain fees thereunder against commercial solid waste service providers. Public Service Tax The Public Service 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 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, Florida Statutes and a resolution of the City, the City levies a Public Service 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, 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, 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 recognized church. The Public Service 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. MIAMI/4245431.2 24 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 Statutes, Section 202.19, as amended, provides that counties and municipalities may levy, by ordinance, 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 Ordinance No. 12078 enacted 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; or (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 to a local taxing jurisdiction 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 amount of such credit shall be deducted from the amount that the local taxing jurisdiction is entitled to receive. MIAMI/4245431.2 25 The Local Communications Services Tax must be collected by the provider from purchasers and remitted to the Florida Department of Revenue ("DOR"). The proceeds of said Local Communications Services Tax less the DOR's cost of administration is deposited in the Local Communications Services Tax clearing trust fund and distributed monthly to the appropriate jurisdictions. 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. 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. Half Cent Sales Tax. 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 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") is 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. The percentage of Local Government Half -Cent Sales Tax Revenues deposited in the Trust Fund is 8.804%. 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), for every dollar of taxable sales price of an item, approximately 0.501 cents is deposited into the Trust Fund. 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 MIAMU4245431.2 26 202, 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. The 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 = unincorporated + 2/3 incorporated Sales Tax receipts) area population area population Municipality Share (percentage of total Half -Cent = Sales Tax receipts) total county + 2/3 incorporated population 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 Half -Cent Sales Tax received by Miami -Dade County and the City would be reduced. The Half -Cent Sales Tax is 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"). The Sales Tax Act permits the City to pledge its share of the Half -Cent Sales Tax for the payment of principal of and interest on any capital project. To be eligible to participate in the Half -Cent Sales Tax, the counties and municipalities must comply with certain requirements set forth in the 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 Sales Tax Act does not impose any limitation upon the number of years during which the City can receive distribution of the Half -Cent Sales Tax from the Trust Fund, there may be future amendments to the Sales Tax Act. 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 DOR. MIAMI/4245431.2 27 State Revenue Sharing. A portion of the taxes levied and collected by the State is shared with local governments under the provisions of Chapter 218, Part II, Florida Statutes. The amount deposited by DOR into the State Revenue Sharing Trust Fund for Municipalities is 1.3409% of available sales and use tax collections after certain required distributions, 12.5% of the Florida alternative fuel user decal fee collections, and the net collections from the one -cent municipal fuel tax. To be eligible for State Revenue Sharing funds, a local government must be audited, with certain exceptions; must have filed its annual financial report with the Florida Department of Financial Services; must certify certain requirements pertaining to the employment and compensation of law enforcement officers and the employment of firefighters; must levy an ad valorem tax of at least 3 mills or collected equivalent alternative revenues from a combination of the following sources available to municipalities: a remittance from the county pursuant to Section 125.01(6)(a), Florida Statutes, occupational license taxes, utility taxes, and ad valorem taxes. Eligibility is retained if the local government has met eligibility requirements for the previous three years, even if the local government reduces its millage or utility taxes because of the receipt of the Half -Cent Sales Tax. The amount of the State Revenue Sharing Trust Fund for Municipalities distributed to any one municipality is the average of three factors: an adjusted population factor; a sales tax collection factor, which is the proportion of the local municipality's ordinary sales tax collected within the municipality to the total sales tax collected within all eligible municipalities in the State; and a relative revenue -raising ability factor, which measures the municipality's ability to raise revenue relative to other qualifying municipalities in the State. Each municipality is entitled to receive a minimum amount of State Revenue Sharing funds known as the "guaranteed entitlement" as defined in Section 218.21(6), Florida Statutes. To be eligible to participate in State Revenue Sharing in future years, the City must comply with certain eligibility and reporting requirements, otherwise, the City will not be entitled to distributions for a period of time. Fines and Forfeitures. These are revenues derived from fines and forfeitures imposed by local courts. Charges for Services Charges for various services provided by the City to residents, property owners, and grants received from other governments, including the following: (a) General Government: all money resulting from charges for current services; i.e., photographs, reports and ordinances; (b) Public Safety: fees for police services, fire protection services and emergency services; (c) Physical Environment: charges include cemetery fees; MIAMI/4245431.2 28 (d) Building and Zoning Inspections: fees for inspections such as plumbing, electrical, elevator and mechanical inspections; (e) Marina Fees: all fees associated with operations of the various City marinas; (f) Recreational and Special Events: fees for parks and recreation activities and events; and (g) 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 the interest earnings on invested funds. [Remainder of Page Intentionally Left Blank] MIAMI/4245431.2 29 The following table represents the City's audited determination of legally available Non -Ad Valorem Revenues for the Fiscal Years Ended September 30, 2004 through September 30, 2008, and unaudited for Fiscal Year ended September 30, 2009. THE CITY OF MIAMI, FLORIDA LEGALLY AVAILABLE NON -AD VALOREM REVENUES YEAR ENDED SEPTEMBER 30th Revenues: Franchise and Utility Taxes Licenses and Permits: Business Licenses and Permits Construction Permits(i) Total Revenues Intergovernmental: State and Revenue Sharing Half -Cent Sales Tax Fine and Forfeitures Other Total Intergovernmental Charges for Services: Engineering Services Public Safety Recreation Other Total Charges for Services Interest Income Other Component Units Operating: Transfers In Transfers In from other Funds Total Sources of Legally Available Non -Ad Valorem Revenues General Fund Expenses Not Paid with Ad Valorem Taxes Net Non -Ad Valorem Revenues Available for Debt Service $ 1,982,616 $ 47,417,878 $260,251,789 $ 1,887,466 $ 41,596,608 $261,901,195 Source: City of Miami Finance Department (1) This increase has been due to growth in the City and in new development. (2) This increase was due to hurricane grants from FEMA. MIAMI/4245431.2 30 $ 2,000,000 $ 50,097,226. $289,038,101 $ 61,411,040 $294,252,081 $ 76,817,851 $290,957,360 2009 2004 2005 2006 2007 2008 unaudited) $ 34,988,629 $ 35,918,724 $ 41,342,214 $ 42,257,282 $ 35,319,051 $ 6,975,040 $ 7,817,841 $ 7,078,534 $ 7,064,358 $ 7,769,633 16,036,648 19,576,586 21,390,059 25,766,010 22,019,185 $ 23,011,688 $ 27,394,427 $ 28,468,593 $ 32,830,368 $ 29,788,818 $ 10,418,123 $ 13,002,038 $ 13,044,234 $ 13,073,886 $ 12,187,197 21,819,892 22,802,208 25,800,341 25,505,412 24,719,050 4,732,357 4,980,002 5,175,457 5,283,695 6,031,799 17,022,799(Z) 13,986,248 3,341,711 15,517,110 14,414,695 $ 53,993,171 $ 54,770,496 $ 47,361,743 $ 59,380,103 $ 57,352,741 $ 46,495,695 $ 50,264,889 $ 44,917,693 $ 46,587,956 $ 47,079,358 9,947,278 10,429,442 11,025,330 22,952,364 22,596,110 572,253 451,451 662,557 3,488,492 3,144,370 30,575,808 30,833,674 35,375,016 4,145,343 2,178,334 $ 87,591,034 $ 91,979,456 $ 91,980,596 $ 77,174,155 $ 74,998,172 $ 5,438,411 $ 4,404,529 $ 11,144,320 $ 16,248,307 $ 10,086,415 $ 5,828,412 $ 3,949,489 $ 16,643,409 $ 4,950,826 $ 6,594,312 $ 1,982,616 $ 47,417,878 $260,251,789 $ 1,887,466 $ 41,596,608 $261,901,195 Source: City of Miami Finance Department (1) This increase has been due to growth in the City and in new development. (2) This increase was due to hurricane grants from FEMA. MIAMI/4245431.2 30 $ 2,000,000 $ 50,097,226. $289,038,101 $ 61,411,040 $294,252,081 $ 76,817,851 $290,957,360 The following table represents current debt service on obligations payable from legally available Non -Ad Valorem Revenues as of March 31, 2009. THE CITY OF MIAMI, FLORIDA SCHEDULE OF PRINCIPAL AND INTEREST FOR NON -AD VALOREM REVENUE BONDS AND LOANS Fiscal Year Principal Interest Total 2009 $ $ $ 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 _ Total $ $ $ 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. MIAMI/4245431.2 31 THE CITY OF MIAMI, FLORIDA HISTORICAL ANTI -DILUTION TEST YEAR ENDED SEPTEMBER 30n' (1) Figures for Fiscal Years Ended September 30, 2004 through September 30, 2008 are audited. 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, 2008. (2) Variable Interest Rate Debt on the Sunshine Loans is calculated at 12% which is the maximum rate pursuant to the covenants of loan agreements securing the debt of Sunshine State Governmental Financing Commission. (3) overage based on 100% debt service. (4) Coverage based on 200% debt service. Special Investment Considerations As described above, the City's covenant to budget and appropriate Non -Ad Valorem Revenues 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 (i) the requirement for a balanced budget, (ii) funding requirements for essential governmental services of the City, (iii) a decrease in one or more of the sources of Non - Ad Valorem Revenues, for example, a fluctuation in the Half -Cent Sales Tax collections due to changes in economic activity and a decrease in the dollar volume of purchases in Miami -Dade County, and (iv) 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. Furthermore, except as provided in the Resolution (and described herein under the caption "DESCRIPTION OF NON -AD VALOREM REVENUES — Additional Debt Payable From Non -Ad Valorem Revenues"), the City is not restricted in its ability (i) 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 (ii) to reduce or discontinue services that generate Non -Ad Valorem Revenues. All of these factors may limit the availability of Non -Ad Valorem Revenues 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. Additional Debt Payable from Non -Ad Valorem Revenues Pursuant to the Resolution, the City may incur additional debt that is payable from all or a portion of the legally available Non -Ad Valorem Revenues only if the total amount of legally MIAMI/4245431.2 32 2004 2005 2006 2007 2008 Non -Ad Valorem Revenues $260,251,789 $261,901,194 $289,038,101 $294,252,081 $290,957,360 Available to Pay Debt Service Debt Service (1)(2) $21,725,438 $21,046,555 $21,583,712 $25,142,742 $30,160,086 Coverage (3) 11.98x 12.44x 13.39x 11.70x 9.64x 200% Debt Service $43,450,876 $42,093,110 $43,167,424 $50,285,484 $60,320,172 Coverage (4) 5.99x 6.22x 6.70x 5.85x 4.82x (1) Figures for Fiscal Years Ended September 30, 2004 through September 30, 2008 are audited. 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, 2008. (2) Variable Interest Rate Debt on the Sunshine Loans is calculated at 12% which is the maximum rate pursuant to the covenants of loan agreements securing the debt of Sunshine State Governmental Financing Commission. (3) overage based on 100% debt service. (4) Coverage based on 200% debt service. Special Investment Considerations As described above, the City's covenant to budget and appropriate Non -Ad Valorem Revenues 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 (i) the requirement for a balanced budget, (ii) funding requirements for essential governmental services of the City, (iii) a decrease in one or more of the sources of Non - Ad Valorem Revenues, for example, a fluctuation in the Half -Cent Sales Tax collections due to changes in economic activity and a decrease in the dollar volume of purchases in Miami -Dade County, and (iv) 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. Furthermore, except as provided in the Resolution (and described herein under the caption "DESCRIPTION OF NON -AD VALOREM REVENUES — Additional Debt Payable From Non -Ad Valorem Revenues"), the City is not restricted in its ability (i) 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 (ii) to reduce or discontinue services that generate Non -Ad Valorem Revenues. All of these factors may limit the availability of Non -Ad Valorem Revenues 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. Additional Debt Payable from Non -Ad Valorem Revenues Pursuant to the Resolution, the City may incur additional debt that is payable from all or a portion of the legally available Non -Ad Valorem Revenues only if the total amount of legally MIAMI/4245431.2 32 available Non -Ad Valorem Revenues for the most recent Fiscal Year for which audited financial statements are available was at least 2.00 times the aggregate Maximum Annual Debt Service of all debt (including all long-term financial obligations appearing on the City's most recent audited financial statements and the debt proposed to be incurred) to be paid from legally available Non - Ad Valorem Revenues (collectively, "Debt"), including any Debt payable from one or several specific revenue sources. Pledge of Non -Ad Valorem Revenues No specific source of Non -Ad Valorem Revenues (which includes Public Service Tax revenues, franchise revenues, occupational license tax revenues, the guaranteed entitlement portion of the State Revenue Sharing funds and fines and forfeitures) are pledged to the payment of the Series 2009 Bonds. Certain sources of Non -Ad Valorem Revenues are pledged for the payment of other indebtedness of the City as shown herein. Future issues of other indebtedness of the City may be secured by a pledge of Non -Ad Valorem Revenues as described above. See "FUTURE DEBT" herein. MANAGEMENT DISCUSSION OF BUDGET AND FINANCES [UPDATE WITH 2009-2010 BUDGET] The City's Fiscal Year 2009-2010 Budget was adopted on September 29, 2009. The Fiscal Year 2008-2009 Budget is approximately $779,200,000 and overall increased by 6.6% ($48.2 million) from the Fiscal Year 2007-2008 Budget. The millage rate increased from 7.674 mills in Fiscal Year 2008-2009 to mills in Fiscal Year 2009-2010. Such variance can be attributable to tax reform due to constitutional amendments at the State level, decreasing assessed and taxable values due to the declining housing market and a general decline in the national and local economy. Other impacts include rising fuel costs which have required an increase in the Fiscal Year 2008-2009 Budget for fuel, a reduction in state shared revenues and an increase in the cost of providing employee benefits. The City preliminarily predicted a $35 million shortfall, but they were able to balance the Fiscal Year 2008-2009 Budget by taking the following actions: (i) deferring $15 million of annual contributions to OPEB until Fiscal Year 2009- 2010; (ii) reserving $5.3 million in outstanding litigated claims in the General Fund Balance at the end of Fiscal Year 2007-2008 instead of providing allocation in the Fiscal Year 2008-2009 Budget; (iii) eliminating 39 vacant positions and freezing hiring of 51 full-time vacant positions; (iv) reducing general fleet vehicle purchases; (v) deferring the purchase of fire -rescue equipment until Fiscal Year 2009-2010; (vi) reducing professional service allocations to the police department; (vii) reducing the purchase of new solid waste equipment; (viii) reducing reserves for emergency expenses; and (ix) reducing departmental budgets by a total of $13.5 million. In addition to the items mentioned above, the City is also further reviewing its OPEB obligations. The City has taken specific steps to decrease the rising costs of providing employee benefits by reviewing its health insurance plan and making recommendations that it anticipates will save the City money over a period of time. The City is also reviewing its self-insurance claims on a more frequent basis and adjusting the amounts budgeted for such claims. MIAMI/4245431.2 33 By taking those reductions, the City was able to add new police officer positions, provide funding for parks and recreation, provide for the purchase of needed solid waste equipment, and increase the Fiscal Year 2008-2009 Budget for anticipated fuel and utility expenses. The City anticipates that amounts expended for Fiscal Year 2008-2009 ending September 30, 2009 will be very close to the amounts budgeted. However, the revenues in Fiscal Year 2008-2009 are expected to be less than budgeted due to lower interest income and lower anticipated collections from State Revenue Sharing funds and Half -Cent Sales Tax. Management is developing a plan to minimize the impact to the General Fund. See the table below which compares actual revenues and expenditures to budgeted amounts through March, 2009. [Remainder of Page Intentionally Left Blank] MIAMI/4245431.2 34 Actual vs. Budgeted Revenues, Expenditures and Net Changes in Fund Balance for the General Fund through [August or September] 2009 [UPDATE] Revenues Property Taxes Franchise Fees/Other Taxes Licenses and permits Fines and forfeitures Intergovernmental Charges for services Interest Fund Balance Allocation Other Total Revenues Expenditures General government Planning & development Public works Public safety Public facilities Parks and recreation Risk management Pensions Non -departmental Total Expenditures Excess (Deficiency) of Revenues Over(under) Expenditures $487,898,540 $313,198,481 $ 49,545,839 $ 22,120,695 % of Actual Budget Actual to Budget $276,396,874 $211,879,769 76% 36,053,231 11,449,083 32% 30,784,757 15,975,601 52% 5,967,326 2,646,818 44% 39,584,950 15,763,311 40% 83,182,214 47,787,415 57% 8,800,000 2,268,545 26% 5,000,000 0 0% 2329,188 5,427,939 255% $487,898,540 $313,198,481 $ 49,545,839 $ 22,120,695 47% 11,870,461 5,275,047 44% 61,755,649 25,022,073 41% 227,832,442 115,460,367 51% 5,741,123 2,251,451 39% 23,808,813 13,435,104 56% 47,246,138 27,908,208 59% 66,814,932 62,599,408 94% (3,907,736 15,705,618 402% $490,707,661 $289,777,971 $ (2,809,121) $ 23,420,510 Other financing sources and (uses): Operating transfers in $ 37,210,390 $ 22,898,616 Operating transfers out (,34,401,269) (15,395,702) Total Other financing sources and uses $ 2,809,121 $ 7,502,914 Net Change in Fund Balance Source: The City of Miami, Florida $ 0 $ 30,923,124 The City has recently adopted the Fiscal Year 2009-2010 Budget which will differ slightly from the Fiscal Year 2008-2009 Budget. For the Fiscal Year 2009-2010 Budget, the City expects assessed values to decrease, but also expects that the increase in new construction will produce a net decrease of 6.6% in real property assessed values. This will result in a 5% increase in ad valorem tax revenues. The City does not expect more interest income and MIAMI/4245431.2 35 recognizes a need to continue to reduce expenditures. Additionally, one of the biggest issues facing the City will be the funding of its employee pension plans. See "THE CITY OF MIAMI - Indebtedness of the City — Pension Fund" herein for a discussion of the City's employee pension plans. The City expects that its annual required contribution for all employee pension plans for Fiscal Year 2009-2010 will increase by approximately $32 million, if no changes are made. Management is developing a plan of action to reduce this amount. As a part of this plan, the FIPO pension ordinance was changed to provide that fire fighters would contribute an additional I%, resulting in a total employee contribution of 8%. Further, if certain results are not achieved by September 30, 2009, and September 20, 2010, an additional employee contribution of 1% each year will be triggered, resulting in a total potential employee contribution of 10%. Additionally the City is in discussions with the GESE Board of Trustees regarding the leveling or "smoothing methodology' for its contributions to the pension plan. PROPERTY TAX REFORM. During a special legislative session that ended on June 14, 2007, the State of Florida (the "State") Legislature adopted Chapter 2007-321, Laws of Florida, which appears to have a significant impact on the amount and rate of ad valorem taxes levied by local governments. Among other things, Chapter 2007-321 statutorily requires each county, municipality, and special district to roll back their millage rates for Fiscal Year 2007-2008 to a level that, with certain adjustments and exceptions, will generate the same level of ad valorem tax revenue as in Fiscal Year 2006-2007. Depending upon the relative growth of each local government's own ad valorem tax revenues from 2001 to 2006, such rolled back millage rates will be determined after first reducing Fiscal Year 2006-2007 ad valorem tax revenues by zero to nine percent or to the non -voted millage rate levied in Fiscal Year 2006-2007 if such increase is approved by two- thirds vote or unanimous vote, respectively of the governing body of the local government. The City fell under the 0% ad valorem tax revenue reduction category, as a result of the City falling under a special financial concern exemption. As a result, the City's millage rate was reduced from 8.3745 mills in Fiscal Year 2006-2007 to 7.2999 mills in Fiscal Year 2007-2008. Subsequent to the adoption of the Fiscal Year 2007-2008 millage and budget, the State Legislature held a special session in October 2007, where a bill was passed which resulted in the City being removed from the special financial concern exemption and now being in the 9% ad valorem tax revenue reduction category for Fiscal Year 2008-2009. The City's statutory rollback millage rate for Fiscal Year 2009-2010 is 9.1060 mills (based on preliminary assessed values). Management is looking at options to present to the City Commission related to the final millage rate to be adopted. Chapter 2007-321 also limits the growth of ad valorem tax levies in future years (except those levied by school districts) based upon the growth in a jurisdiction's population, as measured by new construction, and the statewide growth in per capita personal income. Notwithstanding the foregoing, the governing body of a county, municipality, or special district may levy a millage rate in excess of the then applicable rolled back millage rate upon a two- thirds or unanimous vote of such governing body (or three-fourths vote for jurisdictions that have a governing body comprised of nine or more members) depending on the level of the proposed increase. The rolled back millage rate may also be exceeded based on an affirmative vote of the voters in such jurisdiction. The City applied the authority granted in this provision and upon the MIAMI/4245431.2 36 City Commission's approval increased the City's millage rate from 7.2999 to 7.6740 mills for Fiscal Year 2008-2009. Furthermore, Chapter 2007-321 provides that in the event a county or municipality fails to comply with certain requirements of the legislation, such county or municipality will forfeit its distribution of the Half -Cent Sales Tax for the 12 -months following the determination of non- compliance. The City is in compliance with the requirements of the legislation. In addition, on October 29, 2007, the State Legislature adopted a tax reform package that included Senate Joint Resolution 2D, Senate Bill 4D (an implementing bill) and Senate Bill 6D (a special election bill). Joint Resolution 2D set forth several constitutional amendments which required approval by Florida voters. On January 29, 2008, the constitutional amendments proposed by Joint Resolution 2D were approved, with the affirmative vote of 64% of the voters. Such approval enacted the following ad valorem tax reforms: (1) an additional residential homestead exemption of $25,000 applied to the assessed property value above $50,000; (2) a cap of 10 percent on yearly assessment increases on non -homestead residential and commercial property; (3) portability of the three percent cap on homestead residential property, up to $500,000, when relocating to a new home in the state; and (4) a $25,000 exemption from the tangible personal property tax. The 10 percent cap on assessments went into effect on January 1, 2009. All other reforms took effect retroactive to January 1, 2008. While the constitutional amendments passed on January 29, 2008 did not impact the City's Fiscal Year 2007-2008 Budget, they have impacted the City's budgets for Fiscal Year 2008-2009 and Fiscal Year 2009- 2010. See "MANAGEMENT DISCUSSION OF BUDGET AND FINANCES" herein for a discussion on the City's efforts to mitigate the impact of the constitutional amendments. These amendments reduced the City's preliminary gross taxable values by $1.2 million for Fiscal Year 2008-2009. This made the overall yearly change in the City's preliminary gross taxable values 1.6% compared to 14.5% in Fiscal Year 2007-2008. [Add FY 2008-20091 Although no further action is required on the part of the State Legislature to implement these amendments, a lawsuit challenging the constitutionality of at least part of the amendments was filed prior to the January 2008 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 State statute which 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 (referred to as "Save Our Homes") and the portability provision. The lawsuit alleges 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 relief preventing continued application of those provisions. On October 27, 2008, the Circuit Court dismissed with prejudice the MIAMI/4245431.2 37 Complaint. However, the plaintiffs have filed an appeal. The appeal is fully briefed, but the First District Court of Appeals has yet to set a date for oral arguments. On October 18, 2007, the same Circuit Court in and for Leon County, Florida, 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 State 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 plaintiff appealed to the First District Court of Appeals. Oral arguments were held on June 16, 2009. On July 8, 2009, the First District Court of Appeals upheld the lower court and ruled that the Save Our Homes assessment cap is constitutional. One or more lawsuits similar to Lanning v. Pilcher have been filed against other defendants in the State. 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, the Circuit Court rejected such arguments in Lanning v. Pilcher with similarly situated plaintiffs. At the present time, it is impossible to predict the likelihood of the plaintiffs' success in any of these lawsuits or, if successful, the impact of these lawsuits on the City's financial condition. In addition to the legislative activity described above, the constitutionally mandated Florida Taxation and Budget Reform Commission (required to be convened every 20 years) (the "Commission") completed its meetings on April 25, 2008 and placed several constitutional amendments on the November 4, 2008 general election ballot. Three of such amendments were approved by the voters of the State, which will, among other things, do the following: (a) allow the State Legislature, by general law, to exempt from assessed value of residential homes, improvements made to protect property from wind damage and installation of a new renewable energy source device; (b) assess specified working waterfront properties based on current use rather than highest and best use; and (c) beginning in 2010, provide property tax exemption for real property that is perpetually used for conservation; and, for land not perpetually encumbered, require the State Legislature to provide classification and assessment of land use for conservation purposes solely on the basis of character or use. At this time, the extent to which these amendments may affect the ad valorem tax collections of the City in future years is not currently known, but it may be substantial. In May 2009 the State Legislature passed SB 532 which proposes a statewide referendum to be placed on the November 2010 general election ballot for two measures: (i) an additional homestead exemption for first-time homebuyers; and (ii) a 5% assessment limitation on all commercial and non -homestead, residential property. The additional homestead exemption for first-time homebuyers, which would apply to anyone who has not owned a principal residence in the State during the previous eight years, provides an exemption of 25% of the just value of the property up to $100,000. The exemption is then reduced each year thereafter by 20% of the difference between the capped value and the just value, whichever is greater, until assessment on MIAMU4245431.2 38 the just value is attained. The first-time homebuyers' exemption, if approved by voters, would be available for properties purchased on or after January 1, 2010 and would take effect on January 1, 2011. The State Constitution currently provides a 10% limitation over the prior year's assessment value on all commercial and non -homestead, residential property. Therefore, if approved by voters, the referendum proposed by SB 532 would not allow commercial and non - homestead, residential property to be assessed at a value greater than 105% of the prior year's assessed value. The commercial and non -homestead, residential property assessment cap would take effect January 1, 2011. Additionally, the State Legislature also adopted HB 833 in May 2009, which provides an additional homestead exemption for deployed military personnel. The exemption would equal the percentage of days during the prior calendar year that the military homeowner was deployed outside of the United States in support of military operations designated by the Legislature. This measure also requires approval of voters in the November 2010 general election. If this measure is approved by the voters, it would take effect January 1, 2011. At the present time, it is impossible to predict the likelihood of SB 532 or HB 833's proposed referenda being approved by voters or, if approved, the impact these measures would have on the City's financial condition. Non -Ad Valorem Revenues do not include ad valorem tax revenues. However, pursuant to the Resolution funding requirements for essential governmental services of the City must be satisfied prior to budgeting and appropriating Non -Ad Valorem Revenues for the payment of the Series 2009 Bonds and other obligations payable from Non -Ad Valorem Revenues. Ad valorem revenues have historically been used in part by the City to fund essential services of the City. Therefore, a decrease in ad valorem tax revenues may in turn increase the amount of Non -Ad Valorem Revenues required to fund essential governmental services of the City and thereby reduce the amount of Non -Ad Valorem Revenues available to be budgeted and appropriated to satisfy the obligation of the City under the Resolution to pay the Series 2009 Bonds. FUTURE DEBT The City expects to issue additional debt in the future which may include: (i) its Special Obligation Bonds (Street and Sidewalk Improvement Program) in an estimated amount of $115,000,000 payable from certain dedicated sources of non -ad valorem revenues, which include local option gas tax, parking surcharge revenues and transportation surtax revenues, the proceeds of which will be used for various capital improvements within the City, expected to be issued in 2009, and (ii) the Omni District CRA Bonds and the Southeast Overtown Park West District CRA Bonds, in an amount as yet determined by the City, both payable from tax increment revenue of each area, expected to be issued in 2009. MIAMI/4245431.2 39 DEBT SERVICE SCHEDULE The following table sets forth the debt service for each Fiscal Year for the Series 2009 Bonds and the City's outstanding non - ad valorem Debt, all as of the date of delivery of the Series 2009 Bonds. Series 2009 Bonds Series 2009A Bonds Series 2009B Bonds Series 2009C Bonds Fiscal Year Total Debt (Ended Sept. 30`h) Principal Interest Principal Interest Principal Interest Total Service 2010 $ $ $ $ $ $ $ $ 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 TOTAL $ $ $ $ $ $ $ $ MIAMI/4245431.2 40 PRO FORMA DEBT SERVICE COVERAGE The following table sets forth the projected coverage available to pay the debt service on the Series 2009 Bonds. Fiscal Year Pledged Series 2009 Bonds Debt Service (Ended Sept. 301h) Revenues(') Principal Interest Total Coverage 2009 $ 2,000,000 $ $ $ $ 2010 3,000,000 2011 3,000,000 2012 8,299,012 2013 8,299,012 2014 8,299,012 2015 8,299,012 2016 9,299,012 2017 9,370,681 2018 9,370,681 2019 9,370,681 2020 9,370,681 2021 10,370,681 2022 10,457,937 2023 10,457,937 2024 10,457,937 2025 10,457,937 2026 11,457,937 2027 11,798,185 2028 11,798,185 2029 11,798,185 2030 11,798,185 2031 13,798,185 2032 14,158,500 2033 14,158,500 2034 14,158,500 2035 14,158,500 2036 14,158,500 2037 14,534,403 2038 14,534,403 2039 7,034,403 TOTAL 319.524.784 $ $ $ (1) See "PROJECTED COLLECTION OF PLEDGED REVENUES" MIAMI/4245431.2 41 THE CITY OF MIAMI Background Now 113 years old, the City is part of the nation's seventh 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 of approximately 424,662 residents, 58.9% 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" attached hereto. 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 every four years 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 City Commission, however, the City Commission can override such veto with a 4/5 vote. The Mayor appoints the City Manager who functions as chief administrative officer. 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, Chairman November 2009 Michelle Spence -Jones, Vice Chair November 2009 Angel Gonzalez November 2011 Tomas P. Regalado November 2011 Marc D. Sarnoff 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 City 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 $525 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. Ije holds a Bachelor of Science Degree in Civil Engineering from the University of Miami and is a registered Professional Engineer in the State of Florida. MIAMU4245431.2 42 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 had 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, NJ, and a Masters in Business Administration in Professional Accounting from the University of Baltimore, MD. She is a Certified Public Accountant in the State of Maryland. 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 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. MIAMI/4245431.2 43 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, 0) 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 , 2009, approximately [80.1%] of the City's investment portfolio was invested in United States Treasury Obligations and obligations of agencies of the United States Government and approximately [19.9%] 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 [Update with FY 2009-20101 The City's Fiscal Year 2008-2009 six year Capital Improvement Plan (the "Capital Plan"), covering the period from October 1, 2008 through September 30, 2014, earmarked funding estimated at $737.2 million for 540 capital projects throughout the City. Street and sidewalk projects account for the largest portion of the total Capital Plan funding at $191.9 million or 26%. Parks and recreation projects are the second largest, accounting for $156.7 million, or 21%, and storm and sewer projects are the third largest, accounting for $105.1 million, or 14%, of the total Capital Plan. Bonds issued by the City represent the largest share of funding for the Capital Plan, accounting for 41.5% of the total. Capital project revenues (impact fees, storm water utilities, optional gas tax, etc.) account for 28.6%, funding derived from Miami -Dade County accounts for 13.1% and the remaining 16.8% of funding is from federal, State and other private donations and grants. MIAMI/4245431.2 44 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 two 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 attached hereto. 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 are removed from the General Fund only when they can be operated as true enterprise operations. [Remainder of Page Intentionally Left Blank] MIAMI/4245431.2 45 The following chart shows audited information regarding the General Fund for the Fiscal Years Ended September 30, 2004 through September 30, 2008. Summary Schedule of Revenues, Expenditures and Net Changes in Fund Balance for the General Fund Revenues Property Taxes Franchise Fees/Other Taxes Licenses and permits Fines and forfeitures Intergovernmental Charges for services 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 Pensions(l) Organizational Support/Group Benefits (1) Non-departmental(l) Debt Service: Principal Interest and Other Charges 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 Proceeds from sale of property Payments to Refunded Bond Escrow Agent Bonds Issued Loan Capital Leases Sale of Capital Assets Total other financing sources (uses) Net Change in Fund Balance 2009 2004 2005 2006 2007 2008 unaudited $159,391,679 $178,979,987 $214,329,257 $258,756,957 $258,294,391 34,988,629 35,918,724 41,342,214 42,257,282 35,319,051 23,011,688 27,394,427 28,468,593 32,830,368 29,788,818 4,732,357 4,980,002 5,175,457 5,283,695 6,031,799 49,260,814 49,790,494 53,266,529 54,096,408 51,320,942 87,591,034 91,979,456 91,980,596 77,174,155 74,998,172 5,43 8,411 4,404,529 11,144,320 16,248,307 10,086,415 5,828,412 3,949,489 5,563,166 3,448,782 6,954,312 $370,243,024 $397,397,108 $451,270,132 $490,095,954 $472,433,900 64,208,736 36,419,744 38,809,265 61,208,626 57,525,471 10,722,800 9,136,666 9,440,759 10,814,727 10,788,224 56,926,608 48,251,766 50,573,908 56076,608 54,858,769 243,181,936 181,871,226 187,938,096 249,794,879 249,881,480 5,911,254 6,597,590 7,355,457 7,419,797 6,248,557 14,763,846 14,621,171 15,111,916 20,201,873 24,276,993 - 29,162,254 25,546,486 18,115,929 28,796,859 73,862,309 78,864,757 70,708,285 65,116,477 - 23,917,033 25,161,646 35,122,459 27,751,691 - 12,926,933 13,204,324 - - $395,715,180 $436,766,692 $452,006,614 $529,763,183 $525,244,521 (25,472,156) (39,369,584) (736,482) (39,667,229) (52,810,621) 49,400,444 43,484,074 52,097,226 61,411,040 76,817,851 (32,142,211) (23,862,197) (42,209,286) (49,052,224) (30,879,926) 1,502,044 3,204,349 - - - - 20,462,582 19,621,877 9,887,940 13,860,860 45,937,925 $(5,009,574) $(19,747,707) $9,151,458 $(25,806,369) $(6,872,696) Source: The City of Miami, Florida (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. MIAMI/4245431.2 46 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 (`BORT"). 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 Retirement Trust, the GESE Staff Trust and the EORT is $0. The annual pension costs have been fully contributed by the City for the Fiscal Years ended September 30, 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 MIAMI/4245431.2 47 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, 2006, 2007 and 2008. 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 $84,479,266 of which $5,430,784 is the current portion. Such amount only includes the primary government employees and does not include employees of component units. 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 112.080 1, the City provides medical coverage and life insurance 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 was 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 retained Gabriel Roeder Smith & Company (the "Actuary") to perform an actuarial valuation of its OPEB liabilities. The City's Actuary identified the City's OPEB liabilities as of October 1, 2006 as $146,802,156 for all covered employees and retirees (except police officers) and $333,517,656 for police officers (including retirees) with its net OPEB liability for the year ended September 30, 2008 being $5,524,398 and $21,668,339, respectively, based on GASB 45 methodology. The City is considering a variety of strategies for reducing this liability, including changing to a defined contribution plan for retirees and changing the prescription drug plan design. Also the City is considering establishing a trust fund using pay -as - you go funds. The establishment of such fund is expected to decrease the City's liability. Additionally in Fiscal Year 2010-2011, another valuation will be prepared using Fiscal Year 2009-2010 figures. The City anticipates that a new valuation may decrease liability. LEGAL MATTERS Certain legal matters incident to the validity of the Series 2009 Bonds are subject to the approval of Bryant Miller Olive P.A., Bond Counsel, Miami, Florida whose approving opinion in the form attached hereto as "APPENDIX D - FORM OF BOND COUNSEL OPINION" will be furnished without charge to the purchasers of the Series 2009 Bonds at the time of their delivery. MIAMI/4245431.2 48 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 Squire, Sanders & Dempsey L.L.P., Miami, Florida, Disclosure Counsel to the City. Certain legal matters will be passed upon for the Underwriters by Akerman Senterfitt, P.A., Jacksonville, Florida. 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 or interest with respect to obligations issued by the City after December 31, 1975. TAX MATTERS Series 2009A Bonds and Series 2009C Bonds The Internal Revenue Code of 1986, as amended (the "Code") establishes certain requirements which must be met subsequent to the issuance of the Series 2009A Bonds and Series 2009C Bonds in order that interest on the Series 2009A Bonds and Series 2009C Bonds be and remain excluded from gross income for purposes of federal income taxation. Non- compliance may cause interest on the Series 2009A Bonds and Series 2009C Bonds to be included in federal gross income retroactive to the date of issuance of the Series 2009 Bonds, regardless of the date on which such non-compliance occurs or is ascertained. These requirements include, but are not limited to, provisions which prescribe yield and other limits within which the proceeds of the Series 2009A Bonds and Series 2009C Bonds and the other amounts are to be invested and require that certain investment earnings on the foregoing must be rebated on a periodic basis to the Treasury Department of the United States. The City has covenanted in the Resolution to comply with such requirements in order to maintain the exclusion from federal gross income of the interest on the Series 2009A Bonds and Series 2009C MIAMIJ4245431.2 49 Bonds. Interest on the Series 2009B Bonds is included in gross income for federal income tax purposes of the holders thereof. In the opinion of Bond Counsel, assuming compliance with certain covenants, under existing law, interest on the Series 2009A Bonds and the Series 2009C Bonds is excluded from gross income for purposes of federal income taxation, except no opinion is expressed as to the exclusion from gross income of interest on any Series 2009C Bonds for any period during which Series 2009C Bonds are held by a person who is a "substantial user," within the meaning of Section 147(a) of the Internal Revenue Code of 1986, as amended, of the project financed with the proceeds of the Series 2009C Bonds or a "related person" to such a "substantial user." In addition, interest on the Series 2009A Bonds and the Series 2009C Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations and is not taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax on corporations. Except as described above, Bond Counsel will express no opinion regarding other federal income tax consequences resulting from the ownership of, receipt or accrual of interest on, or disposition of the Series 2009A Bonds and the Series 2009C Bonds. Prospective purchasers of the Series 2009A Bonds and the Series 2009C Bonds should be aware that the ownership of Series 2009A Bonds or Series 2009C Bonds may result in collateral federal income tax consequences, including (i) the denial of a deduction for interest on indebtedness incurred or continued to purchase or carry Series 2009A Bonds or Series 2009C Bonds; (ii) the reduction of the loss reserve deduction for property and casualty insurance companies by fifteen percent (15%) of certain items, including interest on the Series 2009A Bonds and the Series 2009C Bonds; (iii) the inclusion of interest on the Series 2009A Bonds and the Series 2009C Bonds in earnings of certain foreign corporations doing business in the United States for purposes of branch profits tax; (iv) the inclusion of interest on the Series 2009A Bonds and the Series 2009C Bonds in passive income subject to federal income taxation of certain Subchapter S corporations with Subchapter C earnings and profits at the close of the taxable year; and (v) the inclusion of interest on the Series 2009A Bonds and the Series 2009C Bonds in "modified adjusted gross income" by recipients of certain Social Security and Railroad Retirement benefits for the purposes of determining whether such benefits are included in gross income for federal income tax purposes. As to questions of fact material to the opinion of Bond Counsel, Bond Counsel will rely upon representations and covenants made on behalf of the City, certificates of appropriate officers and certificates of public officials (including certifications as to the use of proceeds of the Series 2009A Bonds and Series 2009C Bonds and of the property financed thereby), without undertaking to verify the same by independent investigation. PURCHASE, OWNERSHIP, SALE OR DISPOSITION OF THE SERIES 2009A BONDS AND THE SERIES 2009C BONDS AND THE RECEIPT OR ACCRUAL OF THE INTEREST THEREON MAY HAVE ADVERSE FEDERAL TAX CONSEQUENCES FOR CERTAIN INDIVIDUAL AND CORPORATE SERIES 2009A AND SERIES 2009C BONDHOLDERS, INCLUDING, BUT NOT LIMITED TO, THE CONSEQUENCES DESCRIBED ABOVE. PROSPECTIVE SERIES 2009A AND SERIES 2009C MIAMU4245431.2 50 BONDHOLDERS SHOULD CONSULT WITH THEIR TAX SPECIALISTS FOR INFORMATION IN THAT REGARD. Other Tax Matters Purchasers of the Series 2009A Bonds and Series 2009C Bonds should consult their tax advisors as to the tax consequences to them of owning the Series 2009A Bonds and Series 2009C Bonds in their particular state or local jurisdiction. During recent years, legislative proposals have been introduced in Congress, and in some cases enacted, that altered certain federal tax consequences resulting from the ownership of obligations that are similar to the Series 2009A Bonds and Series 2009C Bonds. In some cases, these proposals have contained provisions that altered these consequences on a retroactive basis. Such alteration of federal tax consequences may have affected the market value of obligations similar to the Series 2009A Bonds and Series 2009C Bonds. From time to time, legislative proposals are pending which could have an effect on both the federal tax consequences resulting from ownership of the Series 2009A Bonds and Series 2009C Bonds and their market value. No assurance can be given that legislative proposals will not be enacted that would apply to, or have an adverse effect upon, the Series 2009A Bonds and Series 2009C Bonds. Tax Treatment of Original Issue Discount Under the Code, the difference between the maturity amount of the Series 2009A Bonds maturing on and the Series 2009C Bonds maturing on (collectively, the "Discount Bonds"), and the initial offering price to the public, excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers, at which price a substantial amount of the Discount Bonds of the same maturity was sold is "original issue discount." Original issue discount will accrue over the term of the Discount Bonds at a constant interest rate compounded periodically. A purchaser who acquires the Discount Bonds in the initial offering at a price equal to the initial offering price thereof to the public will be treated as receiving an amount of interest excludable from gross income for federal income tax purposes equal to the original issue discount accruing during the period he or she holds the Discount Bonds, and will increase his or her adjusted basis in the Discount Bonds by the amount of such accruing discount for purposes of determining taxable gain or loss on the sale or disposition of the Discount Bonds. The federal income tax consequences of the purchase, ownership and redemption, sale or other disposition of the Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those above. Bondholders of the Discount Bonds should consult their own tax advisors with respect to the precise determination for federal income tax purposes of interest accrued upon sale, redemption or other disposition of the Discount Bonds and with respect to the state and local tax consequences of owning and disposing of the Discount Bonds. Tax Treatment of Bond Premium The difference between the principal amount of the Series 2009A Bonds maturing on and the Series 2009C Bonds maturing on (collectively, the "Premium Bonds"), and the initial offering price to the public (excluding bond houses, brokers or similar MIAMI/4245431.2 51 persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of such Premium Bonds of the same maturity was sold constitutes to an initial purchaser amortizable bond premium which is not deductible from gross income for federal income tax purposes. The amount of amortizable bond premium for a taxable year is determined actuarially on a constant interest rate basis over the term of each of the Premium Bonds, which ends on the earlier of the maturity or call date for each of the Premium Bonds which minimizes the yield on such Premium Bonds to the purchaser. For purposes of determining gain or loss on the sale or other disposition of a Premium Bond, an initial purchaser who acquires such obligation in the initial offering price is required to decrease such purchaser's adjusted basis in such Premium Bond annually by the amount of amortizable bond premium for the taxable year. The amortization of bond premium may be taken into account as a reduction in the amount of tax-exempt income for purposes of determining various other tax consequences of owning such Premium Bonds. Bondholders of the Premium Bonds are advised that they should consult with their own advisors with respect to the state and local tax consequences of owning such Premium Bonds. Series 2009B Bonds Tax Matters. Interest on the Series 2009B Bonds is not excluded from gross income for federal income tax purposes. Except as described. herein, Bond Counsel will express no opinion as to any other tax consequences regarding the Series 2009B Bonds. Holders of the Series 2009B Bonds should consult their tax advisors with respect to the inclusion of interest on Series 2009B Bonds in gross income for federal income tax purposes. The following is a summary of certain anticipated United States federal income tax consequences of the purchase, ownership and disposition of the Series 2009B Bonds by certain persons. The summary is based upon provisions of the Code, the rules and regulations promulgated thereunder and rulings and court decisions now in effect, all of which are subject to change. This summary is intended as a general explanatory discussion of certain consequences of holding the Series 2009B Bonds, limited to those persons who hold the Series 2009B Bonds as "capital assets" within the meaning of Section 1221 of the Code. This summary does not purport to address all aspects of federal income taxation that may affect particular investors in light of their individual circumstances or certain types of investors subject to special treatment under the federal income tax laws, including but not limited to financial institutions, insurance companies, dealers in securities or currencies, persons holding the Series 2009B Bonds as a hedge against currency risks or as a position in a straddle for tax purposes, foreign investors or persons whose functional currency is not the United States dollar. This summary does not address alternative minimum tax issues or the indirect consequences to a holder of an equity interest in a holder of the Series 2009B Bonds. Potential purchasers of the Series 2009B Bonds should consult their own tax advisors in determining the federal, state or local tax consequences to them of the purchase, ownership and disposition of the Series 2009B Bonds. As stated above, interest on the Series 2009B Bonds is not excluded from gross income for federal income tax purposes. Purchasers other than those who purchase the Series 2009B Bonds in the initial offering at their principal amounts will be subject to federal income tax accounting rules affecting the timing and/or characterization of payments received with respect to such Series 2009B Bonds. Generally, interest paid on the Series 2009B Bonds and recovery MLAMU4245431.2 52 of accrued original issue and market discount, if any, will be treated as ordinary income to the bondholder, and, after adjustment for the foregoing, principal payments will be treated as a return of capital. Original Issue Discount. The following summary is a general discussion of certain federal income tax consequences of the purchase, ownership and disposition of Series 2009B Bonds issued with original issue discount ("Series 2009B Discount Bonds"). A Series 2009B Bond will be treated as having been issued at an original issue discount if the excess of its "stated redemption price at maturity" (defined below) over its issue price (defined as the initial offering price to the public at which a substantial amount of the Series 2009B Bonds of the same maturity have first been sold to the public, excluding bond houses and brokers) equals or exceeds one quarter of one percent of such Series 2009B Bond's stated redemption price at maturity multiplied by the number of complete years to its maturity. Generally, a Series 2009B Discount Bond's "stated redemption price at maturity" is the total of all payments provided by the Series 2009B Bonds that are not payments of "qualified stated interest." Generally, "qualified stated interest" includes stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually at a single fixed rate. In general, the amount of original issue discount includible in income by the initial holder of a Series 2009B Discount Bond is the sum of the "daily portions" of original issue discount with respect to such Series 2009B Discount Bond for each day during the taxable year in which such holder held such Series 2009B Discount Bond. The daily portion of original issue discount is determined by allocating to each day in any accrual period a ratable portion of the original issue discount allocable to that accrual period. An accrual period may be of any length, and may vary in length over the term of a Series 2009B Discount Bond, provided that each accrual period is not longer than one year and each scheduled payment of principal or interest occurs at the end of an accrual period. The amount of original issue discount allocable to each accrual period is equal to the difference between (i) the product of the Series 2009B Discount Bond's adjusted issue price at the beginning of such accrual period and its yield to maturity (determined on the basis of compounding at the close of each accrual period and appropriately adjusted to take into account the length of the particular accrual period) and (ii) the amount of any qualified stated interest payments allocable to such accrual period. The "adjusted issue price" of a Series 2009B Discount Bond at the beginning of any accrual period is the sum of the issue price of the Series 2009B Discount Bond plus the amount of original issue discount allocable to all prior accrual periods minus the amount of any prior payments on the Series 2009B Discount Bond that were not qualified stated interest payments. Under these rules, holders will have to include in income increasingly greater amounts of original issue discount in successive accrual periods. Certain holders may elect to include all interest (including stated interest, acquisition discount, original issue discount, de minimis original issue discount, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium) on the Series 2009B Discount Bond by using the constant yield method MIAMI/4245431.2 53 applicable to original issue discount, subject to certain limitations and exceptions. Such holders should consult their own tax advisors with respect to whether or not they should so elect. Holders of Series 2009B Discount Bonds should consult their own tax advisors as to the determination for federal income tax purposes of the amount of original issue discount properly accruable in any period and as to other federal tax consequences and the treatment of original issue discount for purposes of state and local taxes on, or based on, income. Market Discount. If a bondholder purchases the Series 2009B Bonds for an amount that is less than the adjusted issue price of the Series 2009B Bonds, and such difference is not considered to be de minimis, then such discount will represent market discount. Absent an election to accrue market discount currently, upon a sale, exchange or other disposition of the Series 2009B Bonds, a portion of any gain will be ordinary income to the extent it represents the amount of any such market discount that was accrued through the date of sale. In addition, absent an election to accrue market discount currently, the portion of any interest expense incurred to carry a market discount bond is limited. Such bondholders should consult their own tax advisors with respect to whether or not they should elect to accrue market discount currently, the determination and treatment of market discount for federal income tax purposes and the state and local tax consequences of owning such Series 2009B Bonds. Bond Premium. If a bondholder purchases a Series 2009B Bond at a cost greater than its principal amount, the bondholder may elect to treat such excess as amortizable bond premium. As the tax accounting treatment of bond premium is complex, such bondholders should consult their own tax advisors with respect to whether or not they should elect to amortize such premium under Section 171 of the Code. Sale, Exchange or Redemption. Upon a sale, exchange or redemption of the Series 2009B Bonds, bondholders will generally realize a capital gain or loss on the Series 2009B Bonds equal to the difference between the amount realized on the sale, exchange or retirement (less any accrued qualified stated interest which will be taxable as such) and the bondholder's adjusted tax basis on the Series 2009B Bonds. The bondholder's adjusted tax basis for the Series 2009B Bonds is the price such owner pays for the Series 2009B Bonds plus the amount of any original issue discount and market discount previously included in income, reduced on account of any payments received (other than qualified periodic interest payments) and any amortized bond premium. The legal defeasance of the Series 2009B Bonds may result in a deemed sale or exchange of such bonds under certain circumstances, in which event an owner of the Series 2009B Bonds will also recognize taxable gain or loss as described above. Owners of such Series 2009B Bonds should consult their tax advisors as to the federal income tax consequences of such an event. Information Reporting and Backup Withholding. Interest paid on bonds such as the Series 2009B Bonds is subject to information reporting to the Internal Revenue Service. In conjunction with the information reporting requirement, the Code subjects certain non -corporate owners of Series 2009B Bonds, under certain circumstances, to "backup withholding" at (i) the fourth lowest rate of tax applicable under Section 1(c) of the Code (i.e., a rate applicable to unmarried individuals) for taxable years beginning on or before December 31, 2010; and (ii) the rate of 31% for taxable years beginning after December 31, 2010, with respect to payments on MIAMI/4245431.2 54 the Series 2009B Bonds and proceeds from the sale of 2009B Bonds. This withholding generally applies if the owner of Series 2009B Bonds (i) fails to furnish the payor such owner's social security number or other taxpayer identification number ("TIN"), (ii) furnished the payor an incorrect TIN, (iii) fails to properly report interest, dividends, or other "reportable payments" as defined in the Code, or (iv) under certain circumstances, fails to provide the payor or such owner's securities broker with a certified statement, signed under penalty of perjury, that the TIN provided is correct and that such owner is not subject to backup withholding. Backup withholding will not apply, however, with respect to certain payments made to bondholders, including payments to certain exempt recipients and to certain Nonresidents (defined below). Prospective purchasers of the Series 2009B Bonds may also wish to consult with their tax advisors as to their qualification for an exemption from backup withholding and the procedure for obtaining the exemption. Nonresidents. Under the Code, interest and original issue discount income with respect to Series 2009B Bonds held by nonresident alien individuals, foreign corporations and other non - United States persons ("Nonresidents") may not be subject to withholding. Payments on the Series 2009B Bonds to a Nonresident that has no connection with the United States other than holding the Series 2009B Bonds will generally be made free of withholding tax, as long as such holder has complied with certain tax identification and certification requirements. Nonresidents should consult their own tax advisors in determining the federal, state or local tax consequences to them of the purchase, ownership and disposition of the Series 2009B Bonds. Circular 230 Disclosure. The above discussion was written to support the promotion and marketing of the Series 2009B Bonds and was not intended or written to be used, and cannot be used, by a taxpayer for purposes of avoiding United States federal income tax penalties that may be imposed. Each taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. RATINGS Moody's Investor's Service and Standard & Poor's Ratings Service have assigned underlying ratings of "" and "," respectively, to the Series 2009 Bonds. 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 affect on the market price of the Series 2009 Bonds. FINANCIAL ADVISOR The City has retained First Southwest Company, Aventura, Florida, 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 is not obligated to undertake and has not undertaken to independently verify or to assume responsibility for the accuracy, completeness or MIAMU4245431.2 55 fairness of the information contained in this Official Statement. The Financial Advisor did not participate in the underwriting of the Series 2009 Bonds. AUDITED FINANCIAL STATEMENTS The Comprehensive Annual Financial Report of the City for the Fiscal Year ended September 30, 2008 (the "Audited Financial Statements"), and report thereon of McGladrey & Pullen LLP, as independent certified public accountants, are attached hereto as "APPENDIX C - COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2008" as a part of this Official Statement. McGladrey & Pullen LLP has not participated in the preparation or review of this Official Statement. The Audited Financial Statements are attached hereto as a matter of public record. Such statements speak only as of September 30, 2008. CONTINUING DISCLOSURE The City has covenanted 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 the Municipal Securities Rulemaking Board (the "MSRB") 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, when and if they occur, with the MSRB, 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 City's continuing disclosure undertaking are described in "APPENDIX E - 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 undertaken certain continuing disclosure obligations in prior continuing disclosure certificates in connection with its outstanding debt to provide certain financial and operating information and notices to each nationally recognized municipal securities information repository then approved by the Securities and Exchange Commission (the "NRMSIRs"), and SID, if and when one is established, and others. In 2003, the City's annual reportfor certain outstanding obligations was filed a few days past the required filing date, and in the years 2001 through 2004, the City did not timely file certain information relating to its Parking System Bonds. Upon recognizing the omission of certain information related to the Parking System Bonds, the City promptly filed all required information, together with a notice of late filing, with MIAMI/4245431.2 56 each NRMSIR. The City has determined that its non-compliance was the result of inadvertence and not due to any conscious disregard for its duties and responsibilities. In addition, due to a change in auditors and financial management system (which was changed to an Enterprise Resource Planning System), the City did not timely file its 2007 annual report. Such report has been filed, and as of the date hereof, the City is in compliance with all of its continuing disclosure obligations, in all material respects, and has implemented procedures to assure future compliance with all of its continuing disclosure obligations. UNDERWRITING The Series 2009 Bonds are being purchased by Merrill Lynch, Pierce, Fenner & Smith Incorporated and Banc of America Securities LLC (collectively, the "Underwriters") at an aggregate purchase price of $ ($ , the par amount of the Series 2009 Bonds, less Underwriters' discount of $ , [plus] [less] [net] original issue [premium] [discount] of $ ). The Underwriters' obligations are subject to certain conditions precedent described in the Bond Purchase Agreement 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, the 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, including the fees of Underwriters' counsel, 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 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 Resolution and the Series 2009 Bonds 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. 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 MIAMI/4245431.2 57 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. 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 Bonds. [Remainder of Page Intentionally Left Blank] MIAMI/4245431.2 58 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 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, contains 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 -00 MIAMI/4245431.2 59 City Manager APPENDIX A GENERAL INFORMATION P.EGARDING THE CITY OF MIAMI MIAMI/4245431.2 A-1 APPENDIX B 04-f i-i� �� Nl4Aq OFFiCZfiL S`T� %r �V T COPY OF RES LUTION NO. R `j FPC slli-f, h IV A L 0 V-Fi L- ST#Tf rri E' MIAMI/4245431.2 B-1 APPENDIX C GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2008 L oee-Pkmlibel) Fol SSC, MIAMV4245431.2 C-1 APPENDIX D /b FORM OF BOND COUNSEL OPINION -7o-f3e JIP�DtD -W2 Ste. lVD t-t19Ve7ff> R p psi Nk- MIAMU4245431.2 D-1 APPENDIX E P12c9Q'1yl 1*l0W FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT 7o 66 W Dff`f/) Fi S L,f . fid C�.rJSfi MIAMI/4245431.2 E-1