HomeMy WebLinkAboutexhibits contd.OFFICIAL STATEMENT
relating to
$4,160,000*
THE CITY OF MIAMI, FLORIDA
General Obligation Refunding Bonds
Series 2003B
INTRODUCTION
The purpose of this Official Statement, including the cover page and appendices, is to set
forth information concerning The City of Miami, Florida (the "City") and The City of Miami,
Florida General Obligation Refunding Bonds, Series 2003B (the "Series 2003B Bonds"), in
connection with the sale of the Series 2003B 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, retail trade and tourism. For more information about
the City, see "APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF
MIAMI."
The Series 2003B Bonds are being issued pursuant to the Constitution and laws of the State
of Florida, including Chapter 166, Part II, Florida Statutes, Sections 132.33 through 132.47,
Florida Statutes, the Charter of the City, and other applicable provisions of law (the "Act") and
pursuant to Resolution No. R-03- of the City adopted by the City Commission of the City (the
"City Commission") on November _, 2003 (the "Resolution").
The Series 2003B Bonds are being issued for the purpose of refunding certain outstanding
general obligations of the City. See "PURPOSE OF THE ISSUE" herein.
The Series 2003B Bonds constitute general obligations of the City to which the full faith
and credit and taxing power of the City are pledged. The City has covenanted in the Resolution to
levy and collect a tax, without limit as to rate or amount on all taxable property within the City
(excluding exemptions as provided by applicable law) sufficient in amount to pay the principal of
and interest on the Series 2003B Bonds. The full faith, credit and taxing power of the City are
irrevocably pledged to the payment of the principal of and interest on the Series 2003B Bonds. See
"SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2003B BONDS" herein.
Payment of the principal of and interest on the Series 2003B Bonds will be guaranteed by a
municipal bond insurance policy to be issued simultaneously with the delivery of the Series 2003B
Bonds by (the "Insurer").
The summaries of and references to all documents, statutes, reports and other instruments
referred t o h erein d o n of p urport to be c omplete, c omprehensive o r d efinitive, and e ach s uch
Preliminary, subject to change
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summary and reference is qualified in its entirety by reference to each such document, statute,
report o n nstrument. A 11 c apitalized t erms used in t his 0 fficial S tatement and n of o therwise
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 - FORM OF
THF, RESOLUTION."
All documents of the City referred to herein may be obtained from Scott Simpson, CPA,
Finance Director, 444 S.W. 2nd Avenue, 6th Floor, Miami, Florida 33130, Telephone (305)
416-1377.
PURPOSE OF THE ISSUE
The Series 2003B Bonds are being issued by the City, pursuant to the Act and the
Resolution.
The Series 2003B Bonds are being issued for the purpose of (i) refunding on a current basis
the City's term General Obligation Refunding Bonds, Series 1992, maturing on December 1, 2013,
currently outstanding in the aggregate principal amount of $4,045,000 (the "Refunded Bond") and
(ii) paying certain costs and expenses incurred in connection with the issuance of the Series 2003B
Bonds, including the premium for a municipal bond insurance policy.
THE REFUNDING PLAN
The City has determined that it can achieve a present value savings in annual debt service
payments by providing for the refunding of the Refunded Bond. Such refunding will be
accomplished through the issuance of the Series 2003B Bonds and the use of a portion of the
proceeds thereof.
Upon delivery of the Series 2003B Bonds, Wachovia Bank, National Association, Miami,
Florida (the "Escrow Agent") will enter into an Escrow Deposit Agreement (the "Escrow
Agreement") w ith t he C ity t o p rovide for t he r efunding o f t he R efunded B ond. The E scrow
Agreement creates an irrevocable escrow fund (the "Escrow Fund") which is held by the Escrow
Agent, and the money and securities held therein are to be applied to the payment of principal of,
redemption premium, and interest on the Refunded Bond, as the same becomes due and payable,
whether at maturity (if applicable) or upon redemption prior to maturity. Immediately upon the
issuance and delivery of the Series 2003B Bonds, the City will deposit certain of the proceeds from
the sale of the Series 2003B Bonds, together with other available money, into the Escrow Fund.
Substantially all of such money is expected to be invested in certain noncallable direct obligations
of the United States of America (the "Government Obligations"). The maturing principal amount
of and interest on the Government Obligations and any cash held in the Escrow Fund will be
sufficient to pay the principal of, redemption premium and interest on the Refunded Bond, and will
be pledged solely for the benefit of the holders of the Refunded Bond, and will not be available for
payment of debt service on the Series 2003B Bonds.
The initial cash deposit plus principal and interest on the Government Obligations in the
Escrow Fund will he sufficient to pay the Refunded Bond to its redemption date according to the
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schedules prepared by the [Financial Advisor] and as verified by the verification agent. See
"VERIFICATION OF ARITHMETICAL COMPUTATIONS" herein.
In reliance upon the above -referenced schedules and verification, at the time of delivery of
the Series 2003B Bonds, Bond Counsel shall deliver an opinion to the City to the effect that the
right, title and interest of the holders of the Refunded Bond under the resolution authorizing the
Refunded Bond (the "Refunded Resolution") shall thereupon cease, determine and become void
and that the Refunded Bond is no longer outstanding under the Refunded Resolution.
ESTIMATED SOURCES AND USES OF FUNDS
The table that follows summarizes the estimated sources and uses of funds to be derived
from the sale of the Series 2003B Bonds:
SOURCES:
Principal Amount of Series 2003B Bonds $
TOTAL SOURCES $
USES:
Deposit to Escrow Fund $
Costs of Issuance(1)
TOTAL USES $
(I) Includes municipal bond insurance premium and underwriting discount, financial advisory and Legal fees and
expenses, and miscellaneous costs of issuance.
[Remainder of Page Intentionally Left Blank]
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DEBT SERVICE SCHEDULE
The following table sets forth the aggregate debt service requirements for the City's
outstanding general obligation debt, after the issuance of the Series 2003B Bonds and the
refunding of the Refunded Bond,
General Total
Fiscal Year Obligation Series 2003B Series 2003B Series 2003B General
Ending Total Bonds Bonds Bonds Total Obligation
September 30 Debt Service) Principal Interest Debt Service Debt Service
TOTAL
(1) Does not include debt service an the Refunded Bond.
DESCRIPTION OF THE SERIES 2003B BONDS
General
The Series 2003B Bonds shall be issued as fully registered, book -entry only bonds in the
denomination or $5,000 each or any integral multiple thereof through the book -entry only system
maintained by The Depository Trust Company, New York, New York. The Series 2003B Bonds
shall be numbered consecutively from 1 upward preceded by the letter "R" prefixed to the number.
The principal on the Series 2003B Bonds shall be payable upon presentation and surrender at the
principal office of Wachovia Bank, National Association, Miami, Florida (the "Paying Agent").
Interest on the Series 2003B Bonds is payable semi-annually on June 1 and December 1 of each
year, commencing June 1, 2004 and shall be paid by check or draft drawn upon the Paying Agent
and mailed to the registered owners of the Series 2003B Bonds at the addresses as they appear on
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the registration books maintained by the Bond Registrar at the close of business on the 15th day
(whether or not a business day) of the month next preceding the interest payment date (the "Record
Date"), irrespective of any transfer or exchange of such Series 2003B Bonds subsequent to such
Record Date and prior to such interest payment date, unless the City shall be in default in payment
of interest due on such interest payment date; provided, however, that (i) if ownership of Series
2003B Bonds is maintained in a book -entry only system by a securities depository, such payment
may be made by automatic funds transfer (wire) to such securities depository or its nominee or (ii)
if such Series 2003B Bonds are not maintained in a book -entry only system by a securities
depository, upon written request of the holder of $1,000,000 or more in principal amount of Series
2003B Bonds, such payments may be made by wire transfer to the bank and bank account
specified in writing by such holder (such bank being a bank within the continental United States),
if such holder has advanced to the Paying Agent the amount necessary to pay the cost of such wire
transfer or authorized the Paying Agent to deduct the cost of such wire transfer from the payment
due such holder. In the event of any default in the payment of interest, such defaulted interest shall
be payable to the persons in whose names such Series 2003B Bonds are registered at the close of
business on a special record date for the payment of such defaulted interest as established by notice
deposited in the U.S. mails, postage prepaid, by the Paying Agent to the registered owners of the
Series 2003B Bonds not less than fifteen (15) days preceding such special record date. Such notice
shall be mailed to the persons in whose names the Series 2003B Bonds are registered at the close of
business on the fifth (5th) day (whether or not a business day) preceding the date of mailing.
Book -Entry Only System
THE FOLLOWING INFORMATION CONCERNING DTC AND DTC'S
BOOK -ENTRY ONLY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE
CITY BELIEVES TO BE RELIABLE, BUT THE CITY TAKES NO RESPONSIBILITY FOR
THE ACCURACY THEREOF.
The Depository Trust Company ("DTC"), New York, NY, will act as securities depository
for the securities. The Bonds will be issued as fully -registered Bonds 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 Series 2003B Bond certificate will be
issued for each maturity of the Series 2003B Bonds, and will be deposited with DTC.
DTC, the world's largest depository, is a limited -purpose trust company organized under
the N ew Y ork B anking Law, a "banking o rganization" w ithin t he m eaning o f t he New Y ork
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 2 million issues of U.S. and non-U.S. equity issues, corporate and
municipal debt issues, and money market instruments from over 85 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
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subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned
by a number of Direct P articipants of DTC and Members of the National Securities Clearing
Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and
Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries
of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC,
and the National Association of Securities Dealers, h-ic. 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.
Purchases of Series 2003B Bonds under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Series 2003B Bonds on DTC's records. The
ownership interest of each actual purchaser of each Series 2003B Bonds ("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 2003B 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 the Series 2003B Bonds, except in the event that use of the book -entry
system for the Series 2003B Bonds is discontinued.
To facilitate subsequent transfers, all Series 2003B 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 2003B
Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do
not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial
Owners of the Series 2003B Bonds; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Series 2003B 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 the Series
2003B Bonds may wish to take certain steps to augment the transmission to them of notices of
significant events with respect to the Series 2003B Bonds, such as redemptions, tenders, defaults,
and proposed amendments to the Series 2003B Bonds documents. For example, Beneficial
Owners of Series 2003B Bonds may wish to ascertain that the nominee holding the Series 2003B
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.
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Redemption notices shall be sent to DTC. If less than all of the Series 2003B Bonds within
an issue 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 Series 2003B Bonds unless authorized by a Direct Participant in accordance with DTC's
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 2003B Bonds are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Series 2003B 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 or the Paying Agent, on
payable date in accordance with their respective holdings shown on DTC's records. Payments by
Participants to Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant and not of DTC nor
its nominee, the Paying Agent, or the City, subject to any statutory or regulatory requirements as
maybe in effect from time to time. Payment of redemption proceeds, distributions, and dividend
payments to Cede & Co. (or such other nominee as may be requested by an authorized
representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such
payments to Direct Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Series 2003B
Bonds at any time by g iving reasonable notice to the City or the Paying Agent. Under such
circumstances, in the event that a successor depository is not obtained, Series 2003B Bonds
certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book -entry transfers through DTC
(or a successor securities depository). In that event, Series 2003B Bonds certificates will be
printed and delivered,
Redemption
The Series 2003B Bonds are not subject to redemption prior to maturity.
Registration, Transfer and Exchange
So long as the Series 2003B Bonds are registered in the name of DTC or its nominee, the
following paragraphs relating to transfer and exchange of Bonds do not apply to the Series 2003B
Bonds.
The Series 2003B Bonds issued under the Resolution shall be and have all the qualities and
incidents of negotiable instruments under the law merchant and the Uniform Commercial Code of
the State of Florida, subject to the provisions for registration of transfer contained in the
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Resolution and in the Series 2003B Bonds. So long as any of the Series 2003B Bonds shall remain
Outstanding, the City shall maintain and keep, at the office of the Bond Registrar, books for the
registration of transfer of the Series 2003B Bonds.
The registration of any Series 2003B Bond may be transferred upon the registration books
upon d clivery t hereof t o the p rincipal o ffice o f the B and R egistrar accompanied b y 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 2003B Bond, along
with the social security number or federal employer identification number of such transferee. In
all cases of a transfer of a Series 2003B 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 2003B Bond or Series 2003B 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 2003B 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 2003B Bond shall be delivered.
The City, the Bond Registrar and the Paying Agent may treat the registered owner of any
Series 2003B Bond as the absolute owner of such Series 2003B Bond for the purpose of receiving
payment of the principal thereof, and interest thereon. Series 2003B Bonds may be exchanged at
the office of the Bond Registrar for a like aggregate principal amount of Series 2003B Bonds, or
other authorized denominations of the same series and maturity.
Replacement of Series 2003B Bonds Mutilated, Destroyed, Stolen or Lost
If any Series 2003B Bond is mutilated, destroyed, stolen or lost, the City or its agent may,
in its discretion (i) deliver a duplicate replacement Series 2003B Bond, or (ii) pay a Series 2003B
Bond that has matured or is about to mature. A mutilated Series 2003B Bond shall be surrendered
to and canceled by the Bond Registrar. The Bondholder must furnish the City or its agent proof of
ownership of any destroyed, stolen or lost Series 2003B Bond; post satisfactory indemnity;
comply with any reasonable conditions the City or its agent may prescribe; and pay the City or its
agent's reasonable expenses.
Any such duplicate Series 2003B Bond shall constitute an original contractual obligation
on the part of the City whether or not the destroyed, stolen or lost Series 2003B Bond be at any
time found by anyone, and such duplicate Series 2003B 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 2003B Bond so mutilated, destroyed, stolen
or lost.
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MUNICIPAL BOND INSURANCE
The following information has been furnished by Insurer, for use in this Official Statement.
Reference is made to Appendix E for a specimen of the policy (the "Policy").
[to come from Insurer]
SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2003B BONDS
General
The Series 2003B Bonds constitute general obligations of the City to which the full faith
and credit and taxing power of the City are pledged. See "AD VALOREM TAXATION" herein.
In each fiscal year while any of the Series 2003B Bonds are Outstanding, there shall be assessed,
levied and collected a tax, without limitation as to rate or amount, on all taxable property within
the corporate limits of the City (excluding exemptions as provided by applicable law), in addition
to all other taxes, sufficient in amount to pay the principal of and interest on the Series 2003B
Bonds as the same shall become due.
The tax assessed, levied and collected for the security and payment of the Series 2003B
Bonds shall be assessed, levied and collected in the same manner and at the same time as other
taxes are assessed, levied and collected and the proceeds of said tax, except as herein provided,
shall be applied solely to the payment of the principal of, and interest on the Series 2003B Bonds.
The full faith, credit and taxing power of the City are hereby irrevocably pledged to the punctual
payment of the principal of, and interest on the Series 2003B Bonds as the same become due and
payable.
The City covenanted in the Resolution to diligently enforce its right to receive tax
revenues, to diligently enforce and collect such taxes and to not take any action that will impair or
adversely affect its rights to levy, collect and receive said taxes, or impair or adversely affect in
any manner the pledge made in the Resolution or the rights of the Bondholders.
The City is currently operating under an Escrow Agreement dated March 17, 1997 entered
into by First Union National Bank (now known as Wachovia Bank, National Association and
herein referred to as "First Union"), the Financial Oversight Board (described later herein under
"ISSUES RELATED TO FINANCIAL EMERGENCY"), and the City (the "Agreement"). The
Agreement provides for the City to deposit into two separate holding accounts_ its pledged
revenues and certain ad valorem tax revenues which are paid to the City by Miami -Dade County,
Florida. At least five days prior to the due date of any principal, interest or redemption payment
for any outstanding obligations as outlined in the Agreement, the City shall give notice to First
Union regarding the amount due and the appropriate paying agent. First Union shall then pay the
appropriate amount to the appropriate paying agent from the applicable account, including the
Paying Agent for the Series 2003B Bonds. The parties may terminate the Agreement at any time.
There is no assurance that the Agreement will be maintained for the life of the Series 2003B
Bonds. In the event the Agreement is terminated, the City will transfer payments directly to the
Paying Agent for the Series 2003B Bonds for deposit into the account created for the Series 2003B
Bonds pursuant to the Resolution.
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Amendment of Resolution
The Resolution may be modified and amended by the City from time to time prior to the
issuance of the Series 2003B Bonds. Thereafter, no modification or amendment of the Resolution
or of any resolution or ordinance amendatory thereof or supplemental thereto materially adverse to
the Bondholders may be made without the consent in writing of the owners of not less than a
majority in aggregate principal amount of the Outstanding Series 2003B Bonds. Notwithstanding
the foregoing, no modification or amendment shall permit a change (a) in the maturity of the Series
2003B Bonds or a reduction in the rate of interest thereon, (b) in the amount of the principal
obligation of any Series 2003B Bond, (c) that would affect the unconditional promise of the City to
levy and collect taxes as herein provided, or (d) that would reduce such percentage of owners of
the Series 2003B Bonds required above for such modifications or amendments, without the
consent of all of the Bondholders. For the purpose of Bondholders' voting rights or consents, the
Series 2003B Bonds owned by or held for the account of the City, directly or indirectly, shall not
be counted. See "APPENDIX B - FORM OF THE RESOLUTION."
AD VALOREM TAXATION
General
Under Florida law, the assessment of all properties and the collection of all City, municipal
and property taxes are consolidated in the office of the Miami -Dade County Property Appraiser
and Miami -Dade County Tax Collector. The laws of the State of Florida regulating tax assessment
are designed to assure a consistent property valuation method statewide.
Article VII, Section 9(b) of the Florida Constitution limits the aggregate rate of ad valorem
taxes that may be levied on real and personal property. The limitation, except as noted below, is
ten (10) mills each for all county and municipal purposes. A mill is equal to one -tenth (0.1) of one
cent of one dollar or $1.00 for every $1,000 of assessed value. Article VII, Section 9(b) excludes
from the general 10 mill cap ad valorem taxes which are necessary to pay debt service on general
obligation bonds which have been approved by a vote of the electorate or bonds which refund such
bonds, such as the Series 2003B Bonds.
Each respective millage rate, except as limited by law, is set on the basis of estimates of
revenue needs and total taxable property valuations within the taxing authority's respective
jurisdiction. Ad valorem taxes are not levied in excess of actual budget requirements.
in 1973, the State of Florida enacted legislation to encourage public awareness of spending
and taxing decisions made by local elected officials. This legislation provides that if the tax rate
established by the governing board exceeds the rolled -back tax rate (as defined herein), the taxing
authority shall publish notice of the proposed tax increase prior to the public hearing required to he
held for the adoption of the final budget and millage rate. Under Section 200.065, Florida Statutes,
a "rolled -back tax rate" is defined as the millage rate that would produce the same amount of ad
valorem taxes in each current year as were levied in the prior year, exclusive of any increase in
assessments resulting from new construction, additions to structures, deletions and property added
due to geographic boundary changes.
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Section 4 of Article VII of the Florida Constitution provides, with certain exceptions: "By
general law regulations shall be prescribed which shall secure a just valuation of all real property
for ad valorem taxation." The factors considered in arriving at a just valuation, as set forth in
Section 193.011, Florida Statutes, as amended, are summarized as follows:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
the present cash value of the property;
the highest and best use to which the property can be expected to be put in the
immediate future and the present use of the property;
the location of the property;
the quantity or size of the property;
the cost of the property and the present replacement value of any improvements to
the property;
the condition of the property;
the income from the property; and
the net proceeds of the sale of the property after deduction of all usual and
reasonable fees and costs of sale.
Save Our Homes Amendment
By voter referendum held on November 3, 1992, Article VII, Section 4 of the Florida
Constitution was amended by adding thereto a subsection which, in effect, limits the increases in
assessed just value of homestead property to the lesser of (a) 3% of the assessment for the prior
year or (b) the percentage change in the Consumer Price Index for all urban consumers, U.S. City
Average, all items 1967-100, or successor reports for the preceding calendar year as initially
reported by the United States Department of Labor, Bureau of Labor Statistics (the "Save Our
Homes Amendment"). Further, the Save Our Homes Amendment provides that (1) no assessment
shall exceed just value; (2) after any change of ownership of homestead property or upon
termination of homestead status, such property shall be reassessed at just value as ofJanuary 1 of
the year following t he year o f s ale o r c hange o f s tatus; (3) n ew h omestead p roperty s hall b e
assessed at just value as ofJanuary 1 of the year following the establishment of the homestead; and
(4) changes, additions, reductions or improvements to homestead shall initially be assessed as
provided by general law, and thereafter as provided in the Save Our Homes Amendment. The
effective date of the Save Our Homes Amendment was January 15, 1993, and the base year for
determining compliance with the restrictions is 1994. The 1995 tax roll year was the first year
such limitations were effective.
For the 2002 tax roll year, the increase in assessed just value of homestead property in the
City was limited pursuant to the Save Our Homes Amendment to 3% of the assessed value for the
prior year.
Truth in Millage Bill
The Florida Legislature enacted the Truth in Millage Bill (the "Trim Bill") requiring that
only governing bodies of taxing authorities fix the millage rate and requiring that all property be
assessed at one hundred percent (100%) of just value. Sections 200.071 and 200.091, Florida
Statutes prohibit the millage for taxing authorities from being set by referendum, except as
provided in the Florida Constitution.
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Property Assessment Procedures
Real and personal property valuations are determined each year as of January 1 by the
Miami -Dade County Property Appraiser's Office. The assessment roll is prepared between each
January 1 and July 1, with each taxpayer given notice of the proposed assessed value of his or her
property.
The property owner has the right to file an appeal with the Miami -Dade County Property
Appraisal Adjustment Board, which considers petitions relating to assessments and exemptions.
The Miami -Dade County Property Appraisal Adjustment Board certifies the assessment roll upon
completion of the hearing of all appeals. Millage rates are then computed by the various taxing
authorities and certified to the Miami -Dade County Property Appraiser, who applies the millage
rates to the assessment roll. This procedure creates the tax roll which is then annually turned over
to the Miami -Dade County Tax Collector on or about the first Monday in October.
Levy of Ad Valorem Taxes
A notice is mailed to each property owner on the tax roll for the taxes levied by cities,
counties, school boards, and other taxing authorities. All taxes are due and payable on November
1 of each year or as soon thereafter as the certified tax roll is received by the Tax Collector. Taxes
may be paid upon receipt of such notice with discounts at the rate of 4% if paid in the month of
November; 3% if paid in the month of December; 2% if paid in the month of January; and 1% if
paid in the month of February. Taxes paid during the month of March are without discount. Taxes
become delinquent on April 1 following the year in which they are assessed or 60 days after
mailing of the original tax notice, whichever is later. If the delinquency date for ad valorem taxes
is later than April 1 of the year following the year in which taxes are assessed, all dates or time
periods specified in the Florida Statutes relative to the collection of, or administrative procedures
regarding, delinquent taxes shall be extended a like number of days.
Exemptions from t he ad v alorem t ax i nclude t he first $ 25,000 o f a ssessed v alue for a
homestead; homestead property of totally and permanently disabled persons; improved real
property on which a renewable energy source device is installed and operated; inventory; property
used by not -for -profit hospitals, nursing homes and homes for special services; property used by
certain not -for -profit homes for the aged; property used exclusively for educational purposes by
educational institutions or other exempt organizations, including charter schools; property owned
by certain charitable, literary, religious or scientific organizations and used predominately for such
purposes; property owned and used for educational purposes by labor organizations; property of
certain community centers; certain property used for affordable housing; property owned and used
by certain governmental units; property of certain not -for -profit sewer and water companies; and
the first $500 of property of every widow, widower, blind person or disabled person.
In addition, pursuant to Section 196.075, Florida Statutes, beginning with fiscal year 2001,
an additional homestead exemption of $25,000 may be granted by a county or municipality
relating to ad valorem taxes payable by persons 65 or older, subject to certain income limitations.
The City has adopted such exemption for the period commencing with fiscal year 2001. Such
exemption should not have a material impact on the amount of ad valorem taxes Ievied or collected
by the City.
MR677527;4 }
12
Further, pursuant to Section 193.703, Florida Statutes, a county may provide a reduction in
the assessed value of homestead property which results from the construction or reconstruction of
the p roperty for the p urpose o f p roviding 1 iving quarters for one o r m ore n atural o r adoptive
parents or grandparents of the owner of the property or of the owner's spouse if at least one of the
parents or grandparents for whom living quarters are provided is at least 62 years of age. The
reduction may not exceed the lesser of the increase in assessed value relating from such
construction or reconstruction or 20% of the total assessed value of the property as improved.
Millage Rates
The City's current millage rate for the fiscal year ended September 30, 2004 is 8.7625 for
City Operations and 1.0800 for Debt Service, for a total of 9.8425. The following table shows
historical millage rates for the City for fiscal years ending September 30, 1994 through September
30, 2003.
Fiscal Year
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
THE CITY OF MIAMI, FLORIDA
PROPERTY TAX RATES
City Operations
8.8500
8.9950
8.9950
9.5000
10.0000
9.5995
9.5995
9.5995
9.5995
9.5995
Debt Service(t)
1.2180
1.2180
1.2800
1.4000
1.7900
1.9200
2.1060
2.1060
2.1060
2.1060
Total
10.0680
10.2130
10.2750
10.9000
11.7900
11.5195
11.7055
11.7055
11.7055
11.7055
(1) Millage for voted debt service on general obligation bonds is excluded from the 10 mill cap set forth in Article
VII, Section 9(b) of the Florida Constitution.
Source: The City of Miami, Florida FY 2002 and FY 2003 Budgets.
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{OR677527;4 )
13
Assessed Valuations
The following table shows the assessed valuations for the City for fiscal years ended
September 30, 1993 through September 30, 2001
Fiscal
Year
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
THE CITY OF MIAMI, FLORIDA
ASSESSED VALUE OF TAXABLE PROPERTY
Real
Property
$15,910,546,490
14,511,547,850
13,136,337,196
12,646,212,266
11,383,265,849
11,039,083,007
10,702,353,382
10,232,545,197
9,991,788,807
10,216,460,668
Personal
Property
$1,910,405,287
1,770,392,311
1,657,551,519
1,334,992,653
1,329,476,797
1,323,876,600
1,301,197,462
1,264,806,533
1,241,431,753
1,258,998,820
Total
$17,820,951,777
16,281,940,161
14,793,888,715
13,981,204,919
12,712,742,646
12,362,959,607
12,003,550,844
11,497,351,730
11,233,220,560
11,475,459,488
Source: Miami -Dade County Property Appraiser's Office.
Tax Collection
Homestead
Exemptions
$1,185,021,022
1,168,878,720
1,022,522,356
1,013,367,239
1,015,773,092
1,013,566,813
1,012,060,207
1,007,531,594
1,006,367,133
1,005,657,230
Net Assessed
Value
$16,635,930,755
15,113,061,441
13,771,366,359
12,967,837,680
11,696,969,554
11,349,392,794
10,991,490,637
10,489,820,136
10,226,853,427
10,469,802,258
It is the Miami -Dade County Tax Collector's duty on or before rune 1 of each year to
advertise and sell tax certificates on real property for which ad valorem taxes are delinquent from
the previous April 1. The tax certificates must not be less than the amount of the taxes plus interest
from April 1 to the date of sale, together with the cost of advertising and expense of sale.
Delinquent real property taxes bear interest at the rate of 18% per year from April 1 until a tax
certificate i s s old a t a uction, a t w hich t ime t he i nterest r ate is as b id b y the b uyer o f t he t ax
certificate. In case there are no bidders, the tax certificate is issued to Miami -Dade County, and the
county, in such event, does not pay any consideration for such tax certificate. Proceeds from the
sale of tax certificates are required to be used to pay ad valorem taxes, any non -ad valorem
assessments included in the tax bill, interest, costs and charges on the land described in the
certificate. Delinquent taxes maybe redeemed prior to sale of the tax certificates upon payment of
all costs, delinquent taxes, and interest. The minimum interest for delinquent taxes paid prior to
the sale of a certificate is 3%.
A tax certificate may be redeemed by paying the Miami -Dade County Tax Collector the
face value of the tax certificate, interest, costs, charges and omitted taxes, if any, plus a redemption
fee of $5. The redeemer must pay the interest rate due on the certificate or 5% of the face amount
of the certificate, whichever amount is greater, unless the certificate was bid at no interest.
Florida law provides a different method for the collection of delinquent tangible personal
property taxes, which includes the possible seizure and sale of the tangible personal property.
{ OR677527;41
14
Tax Deeds
Subject to the 2-year abeyance period described below, any holder, other than a county, of
a tax certificate which has not been redeemed has seven (7) years from the date of issuance of the
tax certificate during which to act against the land that is the subject of the tax certificate. After an
initial period ending two (2) years from April 1 of the year of issuance of a tax certificate, the
holder of a certificate may apply for a tax deed to the subject land. The applicant is required to pay
to the Miami -Dade County Tax Collector all amounts required to redeem or purchase all
outstanding tax certificates not held by the applicant covering the land, any omitted or delinquent
taxes and non -ad valorem assessments, current taxes and non -ad valorem assessments, and
interest, if due, covering the land. I f Miami -Dade County holds a tax certificate and has not
succeeded in selling it, the county must apply for a tax deed on all tax certificates on properties
valued at $5,000 or more two (2) years after April 1 of the year of issuance. Miami -Dade County
may apply for tax deeds on county -held tax certificates on property valued at less than $5,000, but
is not required to do so. Miami -Dade County pays costs and fees to the Miami -Dade County Tax
Collector but not any amount to redeem any other outstanding tax certificates covering the land.
Thereafter, the property is advertised for public sale. Any outstanding tax certificates will be
satisfied from the proceeds received at such public sale.
In any such public sale, the private holder of the tax certificate who is seeking a tax deed is
deemed to submit a minimum bid established by statute. If there are no higher bidders, the holder
receives title to the land and the amounts paid for the tax certificate and in applying for a tax deed
are credited towards the purchase price. If there are higher bidders, the holder may enter the
bidding. The highest bidder is awarded title to the land. The portion of proceeds of such sale
needed to redeem the tax certificate (and all other amounts paid by such holder in applying for a
tax deed), plus interest, are forwarded to the holder thereof or credited to such holder if such holder
is the successful bidder. Excess proceeds are distributed first to satisfy governmental liens against
the land and then to the former title holder of the property (less service charges), lienholder of
record, mortgagees of record, vendees of recorded contracts of deeds, and other lienholders and
any other person to whom the land was assessed on the tax roll for the year in which the land was
assessed, all as their interests may appear.
If there are no bidders at the public sale, Miami -Dade County may, at any time within
ninety (90) days from the date of offering for public sale, purchase the land for a statutorily
prescribed minimum bid. After ninety (90) days have passed, any person or governmental unit
may purchase the land by paying the amount of the minimum bid. Seven (7) years from the date of
offering for public sale, unsold lands escheat to Miami -Dade County or if within the boundaries of
an incorporated municipality, to the municipality, and all tax certificates and liens against the
properly are canceled.
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( OR677527;4 1
15
The following table shows tax levies and tax collections in the City for the last ten fiscal
years.
FISCAL YEAR
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
FISCAL YEAR
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
THE CITY OF MIAMI, FLORIDA
PROPERTY TAX LEVIES AND COLLECTIONS
TOTAL TAX LEVY
$152,339,301
141,425,410
142,932,314
145,913,155
134,743,241
132,850,000
128,661,000
120,805,000
125,169,000
130,701,000
TOTAL TAX
COLLECTIONS
$148,629,526
136,827,422
138,283,717
143,485,898
130,407,000
131,773,000
123,464,000
119,643,000
119,720,000
121,3 77,000
COLLECTION OF
CURRENT YEAR'S
TAXES
$146,185,141
134,535,715
136,028,063
143,515,000
127,911,000
128,783,000
120,519,000
115,936,000
113,966,000
115,746,000
COLLECTIONS AS
% CURRENT
LEVY
97.56%
96.75
96.75
98.34
96.78
99.19
95.96
99.04
95.65
92.87
(1) Net of reserve of approximately 5% of total tax levy.
Source: The City of Miami, Florida
COLLECTION
PERCENT OF DELINQUENT
LEVY COLLECTED TAXES
95.96% $2,444,385
95,13 2,291,707
95.17 2,255,654
98.36 2,522,000
94.93 2,496,000
96.94 2,990,000
93.67 2,945,000
95.97 3,707,000
91.05 5,754,000
88.56 5,631,000
TOTAL OUTSTANDING
OUTSTANDING DELINQUENT
DELINOUENT TAXES AS % OF
TAXES(1) CURRENT LEVY
$2,291,707 1.50%
2,255,654 1.59
3,633,429 2.54
2,427,257 1.66
1,666,079 3.22
4,067,000 0.81
1,552,000 4.04
2,683,000 0.96
1,673,000 4.35
3,942,000 7,13
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(OR677527;4)
16
THE CITY OF MIAMI, FLORIDA
TEN LARGEST TAX ASSESSMENTS
2002 ASSESSED VALUES
TAXPAYER
1. Teachers Ins & Annuity Assoc.
of America
2. Florida Power & Light
3. Bellsouth
4. Prudential Insurance Co
5. 1111 Brickell Ofc LLC
6. Biscayne Tower Group
7. NOP LLC
8. Brickell Equities Corp
9. Cedars Healthcare Group LTD
10. Walton Stic Investors II LLC
i 1. All others
TOTAL
NATURE OF ACTIVITY ASSESSED VALUE PERCENT
Real Estate Investments $ 186,186,520 1.14
Utility
Utility
Real Estate Investments
Real Estate Investments
Office Building
Real Estate Investments
Real Estate Investments
Medical
Real Estate Investments
Various
Source: Miami -Dade County Property Appraiser's Office.
THE CITY OF MIAMI
Background
172,663,013 1.06
138,024,456 0.85
131,000,000 0.80
91,800,000 0.56
83,000,000 0.51
79,500,000 0.49
64,700,000 0.40
62,531,855 0.38
51,190,595 0.31
15,21,343,722 93.49
$16,81,940,161 100,00
Now 107 years o ld, t he C ity i s p art o f t he n ation's e leventh 1 argest m etropolitan area.
Incorporated in 1896, the City is the only municipality conceived and founded by a woman -- Julia
Tuttle. According to the U.S. Census Bureau, the City's population in 1900 was 1,700 people,
Today it is a city rich in cultural and ethnic diversity with more than 362,000 residents, 60% 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 31 municipalities that comprise Miami -Dade County and
is the county seat. For additional information concerning the City, see "APPENDIX A -
GENERAL INFORMATION REGARDING THE CITY OF MIAMI."
City Government
Since 1997, the City has been governed by a form of government known as the
"Mayor -Commissioner plan." There are five Commissioners elected from designated districts
within the City. The Mayor is elected at large every four years. As official head of the City, the
Mayor has veto authority over actions of the City Commission. The Mayor appoints the City
Manager who functions as chief executive officer and is accountable to the Mayor and City
Commission.
In October 2002, the Mayor reorganized the City's administration, appointing a Chief
Financial Officer, Chief Information Officer and a Chief of Neighborhood Services. These
officers have taken over functions previously performed by Assistant City Managers and some
functions have merged. Additionally, the Budget Office has become the Office of Strategic
Planning, Budgeting and Performance.
1OR677527;4)
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The Mayor of the City is presently Manuel A. Diaz and his term of office expires in
November, 2005.
The current members of the City Commission and expiration of their current terms of
office are:
Commission Members Date Term Expires
Johnny L. Winton, Chairman
Arthur E. Teele, Jr., Vice Chairman
Angel Gonzalez
Tomas P, Regalado
Joe M. Sanchez
November, 2003
November, 2005
November, 2003*
November, 2003*
November, 2005
*Messrs. Gonzalez and Regalado are running uncontested. Their new terms shall run through November, 2007 upon
the expiration of their current terms of office.
The City's City Manager is Joe Arriola. The City Manager is a full-time employee and is
the chief executive 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. Joe Arriola has been City Manager since January, 2003. He is
responsible for an organization that has more than 3,400 employees and administers a budget of
more than $385 million. Prior to his current position, he was Chairman and Chief Executive
Officer of Avanti/Case-Hoyt Press for 26 years.
The City's Chief Financial Officer is Linda M. Haskins. She is responsible for the
following departments: finance, human resources, risk management, purchasing, economic
development, community development and public facilities. She was appointed the Chief
Financial Officer in February, 2003. Prior to that she was the Director of Management and Budget
for the City. She holds a BBA degree in accounting and a MBA in finance from East Texas State
University. She is also a member of the State of Florida CPA Society and the Florida Government
Finance Officers Association.
The City's Finance Director is Scott Simpson, CPA, CGFO. He reports to the Chief
Financial Officer. He is responsible for managing and investing public funds. The finance
department is responsible for accounts payable, general ledger, grants monitoring, payroll,
treasury management and preparation of routine accounting reports as well as the City's annual
financial statement. Mr. Simpson joined the City in October 1998 as the Assistant Finance
Director and was appointed the Finance D irector in May 2001. Prior to j oining the City, Mr.
Simpson was the Chief Accountant for the City of Winter Park, Florida for approximately three
years. Mr. Simpson has been previously employed in private industry in the position of
Accounting Manager and Controller. Mr. Simpson graduated from North Carolina State
University with a B.A. in Accounting. He is licensed as a CPA in the State of North Carolina and
is a member of the American and Florida Institutes of Certified Public Accountants and the
Government Finance Officers Association of the United States and Canada.
{OR677527;4J
18
ISSUES RELATED TO FINANCIAL EMERGENCY
Background
For the period 1984 through 1995, the General Fund of the City had a small but positive
fund equity. During the same twelve year period the enterprise funds were recording losses in each
year. The internal service funds recorded losses in eight of the twelve fiscal years. The internal
service funds and the enterprise funds are collectively referred to as the proprietary funds. While
the General Fund equity was being supported by transfers from the proprietary funds, the retained
earnings in the proprietary funds were becoming more negative each year. By 1995, the enterprise
funds had negative retained earnings of over $65 million and the internal service funds had
negative retained e arnings o f o ver $ 7 m illion. In t he 1996 C omprehensive Annual Financial
Statements, the City recognized that the General Fund was the guarantor of the "proprietary
operations" and collapsed the proprietary funds into the General Fund since they were not being
operated as proprietary funds. This resulted in a negative equity of $21.8 million in the General
Fund.
Appointment of Financial Oversight Board
In 1996, both Standard and Poor's Rating Group and Moody's Investors Service, Inc.
lowered the City's bond rating to below investment grade. Unable to obtain credit, and projecting
a cash deficit hampering the City's ability to make payroll, or pay bills, the City requested that the
Governor advance its State shared revenue payments to the City prior to the date they were due.
Pursuant to Executive Order 96-318, the Governor advanced $22 million to the City. Although the
City was not technically in a financial emergency, as defined by the Florida Statutes, the Executive
Order required the City to adopt a plan to resolve the financial situation by November 17, 1996.
Unable to establish a plan to resolve the situation, the City Commission declared the City to be in a
financial emergency. Pursuant to the City's request, the Governor issued Executive Order 96-391
effective December 11, 1996, creating the Financial Oversight Board (the "FOB") to monitor the
financial affairs of the City. The FOB was established as a five -member board, appointed by the
Governor. Also, Executive Order 96-391 directed the FOB to enter into an Intergovernmental
Cooperation Agreement (the "ICA"). The ICA was entered into between the City, the Governor
and the FOB and it is through the ICA that the FOB received its power and authority. Further, the
ICA established a corrective action plan and outlined an approval process for all functions key to
the financial recovery process.
Pursuant to the corrective action plan the City implemented the following: (1) A financial
recovery plan for fiscal year 1997 was developed by the City and approved by the FOB to
eliminate the $68 million deficit and structurally balance recurring revenues with recurring
expenditures; (2) All budgets developed by the City for five fiscal years of balanced operations
were approved by the FOB before final adoption; (3) Monthly financial reports were prepared by
the City and submitted to the FOB, which monitored budget to actual revenues and expenditures
and explained trends and variances; (4) A five year plan was developed by the City and approved
by the FOB for fiscal year 1997 through fiscal year 2001, which included forecasts of revenues and
expenditures (both recurring and non -recurring), addressed managerial, operational and other
deficiencies and set forth how the City planned to balance its operations in each year (this plan was
updated annually by the City and approved by the FOB); (5) The City was prohibited from
(OR677527;4)
19
expending funds on anything but debt service payments if it was not operating under an FOB
approved budget; (6) An official Estimating Conference made up of professional staff including
the FOB's financial advisor, reviewed and approved all revenue and expenditure estimates used in
the budgets and Five Year Plan (as defined herein) of the City; (7) A Fiscal Sufficiency Advisory
Board was created to ensure the City establishes and maintains segregated debt service payment
accounts and that appropriate balances in the debt service funds were kept, and timely payment of
debt service on bonds was made by the City; (8) A Contract Review Committee was established
and the City was required to submit any amendment, renewal, extension or new contract with a
value of $4,500 or more to the Contract Review Committee for approval before the City could
enter into the contract (the amount was later amended upward to $10,000 or more); and (9) A time
frame was provided for all required actions in the ICA. See "CURRENT FINANCIAL STATUS
OF THE CITY" for a description of City policies resulting from the ICA's corrective plan.
Since 1997, the FOB met 46 times in fulfillment of its role and pursuant to the
requirements set forth in the ICA. Pursuant to its terms, the ICA terminates once the City has
ended each of five consecutive fiscal years with balanced operations. The City's external auditors
have audited the results of operations for each of the five fiscal years (fiscal years 1996 through
2000) and have issued unqualified opinions. No other financial emergency conditions pursuant to
Section 218.503, Florida Statutes have arisen concluding the terms of the ICA. With the release of
the fiscal year 2001 Audited Financial Statements, which was released March 7, 2002, the City has
fulfilled all of its obligations pursuant to the ICA. Consequently, the Governor, by Ietter dated
March 19, 2002, declared that the City is no longer in a state of financial emergency. Therefore,
the FOB was officially dissolved.
Securities and Exchange Commission Actions
On September 22, 1999, the SEC instituted an Administrative Proceeding against the City
of Miami, Florida, its former City Manager, Cesar Odio, and its former Finance Director, Manohar
Surana, AP File No. 3-10022. The SEC's Division of Enforcement (the "Division") alleged that
the City violated Sections 17(a)(I), 17(a)(2) and 17 (a)(3) of the Securities Act of 1933 and Section
10(b) of the Securities Exchange Act of 1934, and Rule 10(b)(5) thereunder, in connection with the
sale of three bond offerings (the "Bond Offerings"), all of which occurred in 1995. The Division
also alleged that the City's two former officials were a cause of these violations. Messrs. Odio and
Surana each subsequently reached settlements with the SEC.
The Division alleged, among other things, that the Official Statements for the Bond
Offerings and the City's 1994 Comprehensive Annual Financial Report omitted to disclose that the
City's cash position had materially declined since the close of fiscal year 1994 and the Official
Statements for the Bond Offerings failed to disclose that "Operation Right -Size" (a plan instituted
by the City to reduce costs), would not have been sufficient to remedy the City's immediate
economic problems. The SEC did not seek to impose monetary fines or penalties against the City,
nor has the City been requested to re -state any previously issued financial statements. The sole
remedy sought against the City was the entry of a cease and desist order.
In March 2000, the Division and the City proceeded to trial. On June 22, 2001, the
Administrative Law Judge ("ALJ") issued an Initial Decision ("Initial Decision"), in which the
ALJ concluded that the City violated the federal securities laws and ordered that the City cease and
{ 0 R677527;4 )
20
desist from further violations of Exchange Act Section 10(b) and Rule 10(b)(5) thereunder, and
Section 17(a) of the Securities Act.
The City appealed the Initial Decision contending that the ALF's Initial Decision was
erroneous and should be reversed and set aside by the SEC. On March 21, 2003 the SEC rendered
its d ecision a nd o rdered t he C ity t o c ease and desist from c ommitting or c ausing any further
violations or future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the
Securities Exchange Act of 1934 and Exchange Act Rule 10b-5.
In connection with the foregoing proceedings, the SEC instituted an action against
Rauscher Pierce Refsnes, Inc., now known as RBC Dain Rauscher Inc. ("Rauscher") alleging that
as underwriter of the City's $72 million Pension Bond Offering in 1995, Rauscher should have
known certain material information regarding the City's financial condition and that the official
statement failed to disclose the City's true financial condition to investors. On September 27,
2001, the SEC ordered Rauscher to (1) cease and desist from committing or causing any violation
and any future violation of Sections (17(a)(2) and (3) of the Securities Act, Section 15B(c)(1) of the
Exchange Act and MSRB Rule G-17; (2) pay a civil money penalty in the amount of $200,000 to
the United States Treasury and (3) comply with all provisions of the SEC Order.
RBC Dain Rauscher Inc., successor to Rauscher Pierce Refsnes, Inc. is acting as financial
advisor to the City for the Series 2003B Bonds.
In 1997, the City filed a professional malpractice action against the City's former external
auditing firm. A counterclaim was filed against the City alleging abuse of process in which the
compensatory damages being sought were not specified. Both parties have come to an agreement
and the cases have been settled.
CURRENT FINANCIAL STATUS OF THE CITY
The City has made progress toward implementing the ICA's corrective plan. The FOB
provided 1 eadership a nd g uidance t o t he C ity when a nd where n ecessary. T he C ity's p resent
management h as b een s table a nd i is k ey se nior management p ositions ( those p ositions w hich
report to the City Manager) are filled with trained professionals. The City has adopted several
policies, as outlined below, to help it to continue its long term growth and prevent significant
problems from developing again.
Adoption of Financial Integrity and Anti -Deficiency Ordinances
The City's Anti -Deficiency Ordinance was passed in fiscal year 1999. The
Anti -Deficiency Ordinance includes several provisions aimed at financial accountability,
including holding department heads personally responsible for departmental overruns. The
Anti -Deficiency Ordinance provides that no contract or other agreement may be entered into for
future payment of money in excess of those funds approved in the current year budget. Further, if
it is reasonably believed or anticipated that the annual budget of an agency or department may
exceed the sum appropriated in the approved budget, then written notice shall be provided to the
Mayor, City Commission, City Manager, City Attorney, City Clerk and the Chief of Strategic
Planning, Budget and Performance.
{ OR677527;4 }
21
In January 2000, the FOB and the City's staff developed a Financial Integrity Ordinance.
The ordinance augments the City's Anti -Deficiency Ordinance. The Financial Integrity Ordinance
was enacted as a preventative measure setting forth financial practices that would prevent the
recurrence of a financial emergency. It also includes a self-governing provision whereby the City
Auditor is required to prepare an annual report on the City's adherence to these principles. The
Financial Integrity Ordinance addresses the following integrity principles: (i) Structurally
Balanced Budget, (ii) Estimating Conference Process, (iii) Interfund Borrowing, (iv) Reserve
Policies, (v) Multi -year Financial and Capital Plan, (vi) Financial Oversight and Reporting,
(vii) Basic Financial Policies, (viii) Evaluation Committees, (ix) Full cost of Service and
(x) Promoting Operating Efficiencies. The City has implemented this ordinance.
The City's internal auditor issued its first report on July 3, 2001 for the period of
February 1, 2000 through September 30, 2000, a second report on July 1, 2002 for the period of
October 1, 2000, through September 30, 2001, and a third report on July 1, 2003 for the period
October 1, 2001 to September 30, 2003. Although, the City's internal auditor found some areas
which the City needs to improve upon, such as the budgeting of non -recurring revenues, the
budgeting of unanticipated expenditures for some departments and special revenue funds, filing
for reimbursements on a timely basis and recording of reimbursements due to the City as accounts
receivable, overall, the report was satisfactory. The City internal auditors noted in the 2003 report
that budget forecasting procedures be enhanced to ensure that all expenditures are properly
included in the budget. The City continues to take steps to improve those areas identified in the
reports.
Adoption of Five Year Financial Plan
On October 12, 2000, the City adopted its Five Year Financial Plan for fiscal years
2001-2005 (the "Five Year Plan"). The City's total budget is projected to grow from the $510.4
million approved for fiscal year 2001 to $535.9 million in fiscal year 2005. The Five Year Plan
contemplates no increase in the ad valorem tax rate, no increase in the fire fee and a five percent
increase in business licenses for fiscal year 2002 and fiscal year 2004. The chart below shows a
summary of the remaining two-year projection of revenues and expenses by fund:
Revenues FY 2004 FY 2005
General Fund $343,475,342 $355,911,253
Special Revenue Funds 142,562,153 143,430,573
Debt Service Fund 37,947,005 36,508,987
Total All Funds $523,984,500 S535,850,813
Expenditures
General Fund $343,475,342 $355,911,253
Special Revenue Funds 142,562,153 143,430,573
Debt Service Fund 7,947,005 36,508,987
Total All Funds $523,984,500 S535,850,813
The d iscussion i n t his s ection i s b ased, i n p art, o n p rojections a nd forward s tatements
related to fiscal years 2004 through 2005. No assurance can be given that the budget estimates and
{oa677527;4;
22
forward statements discussed below will or will not be realized. The accuracy of the budget
estimates and forward statements related to the fiscal year 2004 budget cannot be verified until the
close of the fiscal year, September 30, 2004. In addition, the accuracy of 2004-2005 projections
and forward statements is dependent on a number of factors including (1) general economic factors
that effect local source revenues such as real property taxes and sales taxes, (2) the effectiveness of
monitoring of City expenditures and (3) year-end accruals of revenues and expenses.
The Five Year Plan anticipates that the City will have a structurally balanced budget with
recurring revenue capacity to resolve small deficits projected in expenditures over revenues in
fiscal year 2004 and fiscal year 2005. Reserve levels are consistent throughout the period.
Although the Five Year Plan has not been updated as a separate report, projections have
been included as part of the City's budget. The primary changes in the projections as provided in
the Fiscal Year 2004 Budget from the Five Year Plan include a dramatic increase in the pension
fund contributions due to the declining economy which are to be funded by decreases in operating
expenses on a citywide b asis, increases in contributions to the Capital Improvement Nan and
increases for personnel expenses.
The City is preparing a five year capital improvement plan that is separate from the Five
Year Plan discussed above. See "CURRENT FINANCIAL STATUS OF THE CITY- Capital
Improvement Plan" herein.
Adoption of Investment 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 foremost 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. Investment portfolios are required to be designed with the
objective of attaining a market rate of return throughout budgetary and economic cycles, taking
into account the investment risk constraints and liquidity needs. 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. Pursuant to the policy, the City
may employ an investment advisor to assist in managing some of the City's portfolios, but has not
oa677527;4)
23
done so at this time. To the extent possible, an attempt shall be made to match investment
securities with known cash needs and anticipated cash flow requirements.
The City's investment policy may be modified from time to time by the City Commission.
Subject to the exceptions in the City's investment policy, the City may invest in the
following types of securities: (a) The Florida Local Government Surplus Funds Trust Fund, (b)
United States Government Securities, (c) United States Government Agencies, (d) Federal
Instrumentalities, (e) Interest Bearing Time Deposit or Savings Accounts, (f) Repurchase
Agreements, (g) Commercial Paper, (h) Corporate Notes, (i) Bankers' Acceptances, (j) State
and/or Local Government Taxable and/or Tax -Exempt Debt, (k) Registered Investment
Companies (Money Market Mutual Funds) and (1) Intergovernmental Investment Pool. Also, the
City may invest in investment products that include the use of derivatives as long as the dollar
amount invested by the investment product is minuscule to the total dollar amount invested by the
investment product.
The City's Finance Department strives to achieve maximum permissible financial return on
available cash resources. Idle cash balances are invested on a daily basis within the constraints
imposed by applicable law and City policies. Substantially all of the City's investments are either
insured, registered or physically held in the City's name in order to safeguard its investments. For
purposes of maximizing interest earnings, substantially all of the City's cash and investments are
pooled, except where separate cash and investments accounts are maintained in accordance with
applicable legal requirements. The City's cash equivalents and investments consist of demand
deposits with banks, and money market fund investments with original maturities of three months
or less and equity in the City's cash management pool.
As of September 30, 2003, 86.66% of the City's investment portfolio was invested in
United States Treasury Obligations and obligations of agencies of the United States Government,
and 17.88% was invested in commercial paper.
Adoption of Debt Management Policy
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 consists of seven voting members —
five members of the local business community which are appointed by the City Commission, the
City Manager or his designee and the City's Finance Director. The finance committee considers all
issues related to outstanding and proposed debt obligations, votes on issues affecting or relating to
the credit worthiness, security and repayment of such obligations, including but not limited to
procurement of services, structure, repayment terms and covenants of the proposed debt
obligation, and issues which may affect the security of the bonds and ongoing disclosure to
bondholders and interested parties.
{OR677527;4 1
24
done so at this time. To the extent possible, an attempt shall be made to match investment
securities with known cash needs and anticipated cash flow requirements.
The City's investment policy may be modified from time to time by the City Commission.
Subject to the exceptions in the City's investment policy, the City may invest in the
following types of securities: (a) The Florida Local Government Surplus Funds Trust Fund, (b)
United States Government Securities, (c) United States Government Agencies, (d) Federal
Instrumentalities, (e) Interest Bearing Time Deposit or Savings Accounts, (f) Repurchase
Agreements, (g) Commercial Paper, (h) Corporate Notes, (i) Bankers' Acceptances, (j) State
and/or Local Government Taxable and/or Tax -Exempt Debt, (k) Registered Investment
Companies (Money Market Mutual Funds) and (1) Intergovernmental Investment Pool. Also, the
City may invest in investment products that include the use of derivatives as long as the dollar
amount invested by the investment product is minuscule to the total dollar amount invested by the
investment product.
The City's Finance Department strives to achieve maximum permissible financial return on
available cash resources. Idle cash balances are invested on a daily basis within the constraints
imposed by applicable law and City policies. Substantially all of the City's investments are either
insured, registered or physically held in the City's name in order to safeguard its investments. For
purposes of maximizing interest earnings, substantially all of the City's cash and investments are
pooled, except where separate cash and investments accounts are maintained in accordance with
applicable legal requirements. The City's cash equivalents and investments consist of demand
deposits with banks, and money market fund investments with original maturities of three months
or less and equity in the City's cash management pool.
As of September 30, 2003, 86.66% of the City's investment portfolio was invested in
United States Treasury Obligations and obligations of agencies of the United States Government,
and 17.88% was invested in commercial paper.
Adoption of Debt Management Policy
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 consists of seven voting members --
five members of the local business community which are appointed by the City Commission, the
City Manager or his designee and the City's Finance Director. The finance committee considers all
issues related to outstanding and proposed debt obligations, votes on issues affecting or relating to
the credit worthiness, security and repayment of such obligations, including but not limited to
procurement of services, structure, repayment terms and covenants of the proposed debt
obligation, and issues which may affect the security of the bonds and ongoing disclosure to
bondholders and interested parties.
1 Olt677527;4
24
In the Debt Management Policy, the following policies concerning the issuance and
management of debt were established: (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. This analysis will consider debt service maturities and payment patterns as
well as the City's commitment to a pay as you go budgetary capital allocation.
Capital Improvement Plan
The City does not currently have a capital improvement plan, but has hired Post, Buckley,
Shuh and Jernigan as consultants to prepare a fifteen -year capital improvement plan along with a
current condition assessment of the City's infrastructure. The study is currently underway and is
expected to be complete by the end of October, 2003. Proceeds of the City's limited ad valorem tax
revenue bonds, together with additional revenue bonds and other legally available funds of the
City will be used to fund a portion of the capital improvement plan. Such capital improvement
plan shall be implemented subject to the approval of the City Commission.
Information Technology
Improvements in the City's intellectual infrastructure will be stressed during the next five
years. As the City emerges from its financial difficulties it has the additional resources to address
software and hardware needs. Information technology will constitute a critical element in the
overall strategic plan formulated by the City. The City has formulated a long-term strategic plan
and is in the process of the implementing of the plan. The City Manager has created an
Information Technology Steering Committee composed of senior executives from all the City's
critical functional areas. This committee is charged with the responsibility of reviewing and
approving all major technology projects based on a sound business evaluation, establishing the
priorities of major projects, allocating resources of time, personnel and equipment to meet the
needs of these projects, approving major software development and/or hardware and software
acquisitions, and setting the goals and scope of a disaster recovery and business continuity plan.
The technology improvements will be partially funded under the capital improvement plan. See
"CURRENT FINANCIAL STATUS OF THE CITY- Capital Improvement Plan" herein.
Fiscal and Accounting Procedures
Governmental Accounting Standards Board ("GASB") Statement No. 34 sets forth
minimum criteria (percentage of assets, liabilities, revenues or expenditures/expenses of either
fund category or the governmental and enterprise combined) for the determination of major funds.
Funds that meet these criteria are labeled as such. The nonmajor funds are combined in a column
in the fund financial statements and detailed in the combining section of the report.
For the past 3 years the City has received the Certificate of Achievement for Excellence in
Financial Reporting from the Government Finance Officers Association of the United States and
;012677527;41
25
Canada. For a complete description of the major governmental funds and non -major
governmental funds, see Notes to Basic Financial Statements of the City in Appendix "C" herein.
GASB 34
In June 1999, GASB issued GASB Statement No. 34, Basic Financial Statements - and
Management's Discussion and Analysis - for State and Local Governments. This statement has
substantially affected the City's financial data accumulation and financial statement presentation
processes. The effective date of the new pronouncement required implementation by the City for
its fiscal year ended September 30, 2002. The City staff has participated in various GASB
Statement No. 34 training sessions offered by the Florida Institute of Certified Public
Accountants, Government Finance Officers Association and Florida Government Finance Officers
Association and has prepared internally a pro forma GASB 34 Model. The City has prepared its
financial statements attached hereto as Appendix "C" using GASB 34.
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. The revenues and expenditures of the
General Fund have stabilized at levels below the 1996 combination of proprietary operations into
the fund. In addition to the six years of balanced budgets, the City has rebuilt its reserves.
Operations will be removed from the General Fund only when they can be operated as true
enterprise operations.
The following chart shows information regarding the General Fund for the year ended
September 30, 2002.
[Remainder of Page Intentionally Left Blank]
} 012677527;4 }
26
City of Miami, Florida
Statement of Revenue, Expenditures, and Changes in Fund Balances
Total Governmental Funds for the Year Ended September 30, 2002
Revenues
Property Taxes $151,466,110
Franchise Fees and Other Taxes 82,420,792
Licenses and Permits 21,375,993
Fines and Forfeitures 7,873,608
Intergovernmental Revenues 119,200,594
Charges for Services 112,810,566
Interest 14,361,868
Impact Fees 2,518,983
Other 11,819,604
Total Revenues $523,848,117
Expenditures
Current Operating:
General Government $90,559,876
Planning and Development 8,697,063
Community Development 47,497,163
Community Redevelopment Areas 6,055,846
Public Works 46,334,524
Public Safety 181,544,596
Public Facilities 7,926,285
Parks and Recreation 12,920,245
Debt Service:
Principal 23,073,400
Interest and Other Charges 19,336,603
Capital Outlay 45,276,403
Total Expenditures S489,222,004
Excess of Revenues Over Expenditures S34,626,113
Other Financing Sources (Uses)
Transfers from Other Funds $ 142,497,540
Transfers to Other Funds (142,497,540)
Proceeds Received from Refunded Debt 73,575,000
Payments to Escrow Agent (69,980,000)
Proceeds of Long -Term Capital -Related Debt 155,130,087
Total Other Financing Sources (Uses) Si 58,725,087
Net Changes in Fund Balances $193,351,200
Fund Balances - Beginning as Restated 284,139,846
Fund Balances - Ending $477,491,046
Source: City of Miami.
;O10775.74
27
Recent Financial Developments
The City's Fiscal Year 2004 Budget was adopted on September 25, 2003. [add discussion
about 2004 Budget]
LIABILITIES OF THE CITY
Insurance Considerations Affecting the City
Section 768.28, Florida Statutes, provides limits on the liability of the State of Florida and
its subdivisions of $100,000 to any one person, or $200,000 for any single incident or occurrence.
See "Ability to be Sued, Judgments Enforceable" below. Under the protection of this limit and
Chapter 440, Florida Statutes, covering Workmen's Compensation, the City established a Self
Insurance Fund to provide coverage for all areas of liability including Workmen's Compensation,
General Liability, Auto Liability, Police Professional Liability and Public Officials Liability. The
City is self -insured for most liability activities. In addition, the City has purchased an excess
liability policy (the "Excess Coverage") to limit catastrophic losses. This Excess Coverage policy
has a self -insured retention of $350,000 with limit of $5,000,000. The City also purchases
commercial insurance for property, liability coverage for the James L. Knight Center and Bayfront
Park and Marinas Operators Liability for the City's marinas. The property insurance has a
deductible of $100,000 for all perils except windstorm, which has a separate deductible of 5°A. of
the insured value with no limit for all named storms and hail damage. The liability policies have a
S5,000 and $500 deductible for James L. Knight Center and Bayfront Park respectively and the
Marinas policy has a $2,500 deductible.
Settled claims have not exceeded coverage in the past three years. The General Fund
accounts for all risk of loss to which the City is exposed, including general liability, property and
casualty, workers' compensation, employee health and accident and environmental. Claims
expenditures and liabilities are reported when it is probable that a Toss has occurred and the amount
of that loss can be reasonably estimated based on an independent actuarial valuation. The
budgeting process utilizes information developed in the previous year's actuarial report in addition
to historical information and present knowledge on the status of claims. The City established a
fund to meet unanticipated losses. Currently, there is $3,300,000 in such fund.
Workers Compensation. The City has been working very hard to reduce the backlog of
workers compensation claims recently. The City has reduced the total number of open workers
compensation claims from a high of 2,971 to approximately 1,300 over the last three years. In the
last year the City's reduction equates to a 19% decrease. The City is continuing to work on a
program to further reduce claims and costs. The table below shows the six year history of the
amounts paid by the City.
; 012b77527a
28
City of Miami
Workers Compensation Reserve Analysis as of September 30, 2002
Ultimate Reconciliation
($000's)
Estimated Selected
Policy Selected Reported Paid Total Case IBNR* Ultimate
Year Ultimate Amounts Amounts Reserve Reserve Reserve @9/00 Chanze
1997 $10,148 $6,316 $5,387 $4,761 $929 $3,832 $10,902 $(754)
1998 8,944 5,108 3,964 4,980 1,144 3,836 8,475 469
1999 9,975 4,380 3,410 6,565 970 5,595 9,295 681
2000 11,032 4,455 3,287 7,745 1,168 6,577 10,715 317
2001 11,240 4,132 2,454 8,785 1,677 7,108 13,146 (1,906)
2002 11,257 3,409 1,506 9,751 1,903 7,847 12.930 (1,674)
Total $ ,5 $27_800 $20,008 $42 587 $7 791 $,7. 5 $65.43 $_(?mil
*IBNR - incurred but not reported.
Source: City of Miami - draft Actuarial Report as of September 30, 2002.
Health Insurance. The City has a group accident and health policy whose premiums are
tied to the City's experience rating. Certain employees and retirees of the City contribute through
payroll deductions or deductions from pension payments, to the cost of group benefits. The
remainder of the funds necessary are contributed by the City based upon the number o f participants
in the plan. There was a less than 20°/0 increase in the premiums of the City's plan this past year
and the City anticipates a possible additional increase next year.
Ability to be Sued, Judgments Enforceable
Notwithstanding the liability limits described below, the laws of the State of Florida
provide that each city has waived sovereign immunity for liability in tort to the extent provided in
Section 768.28, Florida Statutes. Therefore, the City is liable for tort claims in the same manner
and, subject to limits stated below, to the same extent as a private individual under like
circumstances, except that the City is not liable for punitive damages or interest for the period prior
to judgment. Such legislation also limits the liability of a city to pay a judgment in excess of
S 100,000 to any one person or in excess of S200,000 because of any single incident or occurrence.
Judgments in excess of $100,000 and S200,000 may be rendered, but may be paid from City funds
only pursuant to further action of the Florida Legislature. See "Insurance Considerations
Affecting the City" herein. Notwithstanding the foregoing, the City may agree, within the limits of
insurance coverage provided, to settle a claim made or a judgment rendered against it without
further action by the Legislature, but the City shall not be deemed to have waived any defense or
sovereign immunity or to have increased the limits of its liability as a result of its obtaining
insurance coverage for tortious acts in excess of the $100,000 or $200,000 waiver provided by
Florida Statutes. See "L,1TIGATION" herein.
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
percent;rgcs, 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
29
useful life of the capital improvements being financed or (b) thirty years or (c) in the event they
issued to refinance outstanding debt obligations the final maturity of the debt obligations being
refinanced, unless a longer term is recommended the finance committee.
Direct Debt
The City has met certain of its financial needs through debt financing. The table which
follows is a schedule of the outstanding debt of the City as of September 30, 2002, including that
which is payable from sources other than ad valorem taxes,
DESCRIPTION
General Obligations:
General Obligation Refunding Bonds, Series 1992
General Obligation Refunding Bonds, Series 1993
Sanitary Sewer Improvement Bonds, Series 1995
General Obligation Refunding Bonds, Series 2002A
Limited Ad Valorem Bonds, Series 2002A
General Obligation Bonds (other)
Total General Obligation Bonds
Special Obligation and Revenue Bonds:
Special Revenue Refunding Bonds, Series 1987
Community Entitlement Rev. Bonds, Series 1990
Special Obligation Non -Ad Valorem Rev. Bonds, Series 1994
Special Obligation Non -Ad Val. Rev. Bonds, Series 1995 (Pension)
Special Obligation Non -Ad Val. Rev. Bonds, Series 1995
Special Revenue Refunding Bonds, Series 2002A
Special Revenue Refunding Bonds, Series 2002B
Total Special Obligation and Revenue Bonds
Loans:
Sunshine State Gov, Financing Commission Loans
Revenue Bond Program
Commercial Paper Program
Commercial Paper Program
Section 108 HUD Loan
Section 108 HUD Loan
Section 108 HUD Loan - Wynwood Foreign Trade Zone, Inc.
Sunshine State Gov. Financing Commission - Secondary Loan
Gran Central Corporation Loan
Total Loans
Total Debt
Source: City of Miami,
Amount
Issued
S70,100,000
31,860,000
22,500,000
32,510,000
153,186,406
39,075,000
S349,231,406
$65,271,325
11,500,000
18,000,000
72,000,000
22,000,000
27,895,000
13,170,000
S229,836,125
$ 27,630,900
15,190,000
30,000,000
4,800,000
2,500,000
5,500,000
3,500,000
1,708,864
$ 90 829,764
$669,897/19.5
[Remainder of Page Intentionally Left Blank]
Outstanding
Balance
$39,390,000
21,880,000
100,000
32,410,000
156,351,553
2,745,000
2 2,876,553
$ 42,705,786
2,740,000
785,000
66,745,000
4,300,000
27,409,956
12,994,738
$ L5 Z, 8Q,480
$ 16,068,300
2,695,000
25,780,000
4,500,000
1,050,000
4,540,000
2,535,000
1,708,864
58,877,164
$7'1.2,31,197
;01Z677527.4
30
Overlapping Debt
The table set forth below summarizes the general obligation debt of the Miami -Dade
County and the School Board of Miami -Dade County as of September 30, 2002. While the City
believes the amount of debt of the School Board of Miami -Dade County and Miami -Dade County
set forth below to be accurate, it should be understood that this amount was derived from source
materials which were not complied and are not subject to verification by the City. Accordingly, no
assurance can be given as to the absolute accuracy of these amounts.
Miami -Dade County
Total net debt net of reserves
Percent applicable to the City- 19%(1)
Miami -Dade County School Board(2)
Total net debt net of reserves
Percent applicable to the City- 19%t1i
$257,022,369
$995,324,613
$48,834,250
189,111,676
$237,945,927
(1) Based upon the percentage of the County tax roll valuation comprised of real and personal property situated in the
City of Miami.
(2) The amounts provided by the school board are as of fiscal year ended June 30, 2002.
Debt Ratios
Net direct general obligation debt as a percentage of taxable assessed valuation
Combined net direct and overlapping general obligation debt as a percent of
taxable assessed valuation
Net direct general obligation debt per capita
Combined net direct general and special obligation debt per capita
Combined net direct and overlapping general obligation debt per capita
Combined net direct and overlapping general and special obligation per capita
Other Obligations
1.50%
2.93%
$688.92
$1,166.75
$1,345.37
$1,823.20
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
10R677527;41
31
Trustees, the City of Miami Elected Officers' Retirement Trust ("EORT"). This plan covers all
elected officials with 7 or more years of elected service.
City employees are required to contribute 10% of their salary to GESE and no more than
7% to FIPO. The EORT is a non-contributory plan. Contributions from employees for FIFO 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 "FIPO 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 FIPO Pension Ordinance also provides for the FIPO Board of Trustees' actuary to use the
actuarial assumptions adopted the FIPO Board. Under the FIPO Pension Ordinance, the City and
the FIPO determine 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 has challenged the normal costs contributions for two years and arbitration of this
issue is still pending. As a result, the City only paid a normal cost contribution of $5.4 million in
October 2000 instead of $6.9 million and in October 2001, a normal cost contribution of S5.4
million instead of $5.6 million. The City has paid approximately $15 million normal cost
contribution in October 2002, which takes into account certain credits from previous years. [The
City Commission has accepted and approved a S32,959,003 normal cost contribution
recommended by the FIPO actuary. The City will have sufficient funds from its General Fund to
fund the recommended amount accepted by the City Commission.]
The ordinance covering the GESE (the "GESE Pension Ordinance") provides for actuarial
methodology for evaluating assets to be a moving market value averaged over three years. The
projected actuarial value is compared to the market value of the assets. One third of the difference
plus prior deferrals is added to the projected actuarial asset value to equal the actuarial asset value.
The remaining two-thirds of the difference is deferred to each of the next two years. The result
cannot be greater than 120 percent of the market value or less than 80 percent of the market value.
The GESE Pension Ordinance also provides for GESE Board of Trustees' actuary to use the
actuarial assumptions adopted by the GESE Board of Trustees. [The City Commission has
accepted and approved an $1 1,206,123 normal cost contribution recommended by the GESE
actuary. This report has not been finalized and is still subject to review. The City will have
sufficient funds from its General Fund to fund the recommended amount accepted by the City
C011]1111SSion.]
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
32
limitations depending upon the employee's seniority and civil service classification. The amount
accrued is currently $60,188,579. The City has set aside $4,500,000 in the budget for fiscal year
2004 and pays such amounts as needed. Every three years the maximum number of hours which
can be carried forward is renegotiated with FIPO and GESE.
FUTURE BORROWINGS
The City is currently contemplating issuing not to exceed $13 million of its community
redevelopment bonds for the purpose of refunding certain outstanding obligations and
construction of certain capital improvements within the Southeast Overtown/Park West
Redevelopment area. In addition, the City may issue up to $102,000,000 in Limited Ad Valorem
Tax Bonds authorized by the City for various capital improvement projects in the next three to five
years.
LEGAL MATTERS
Certain legal matters incident to the validity of the Series 2003B Bonds are subject to the
approval of Hogan and Hartson, L.L.P., Miami, Florida, Bond Counsel to the City 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 2003B Bonds at the
time of their delivery. The actual legal opinion to be delivered may vary from that text if necessary
to reflect facts and law on the date of delivery.
Certain legal matters will be passed upon for the City by Alejandro Vilarello, Esq., City
Attorney, and by Akerman Senterfitt, Miami, Florida, Disclosure Counsel to the City.
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
2003B 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,
The City experiences claims, litigation, and various legal proceedings which individually
are not expected to have a material adverse effect on the operations or financial condition of the
City, but may, in the aggregate, have a material impact thereon. In the opinion of the City
Attorney, however, except as described below, the City will either successfully defend such
actions or otherwise resolve such matters without any material adverse consequences to the
financial condition of the City.
Parking Surcharge Ordinance Litigation. On July 13, 1999, the City Commission
approved Ordinance No. 11813 (the "Parking Surcharge Ordinance") pursuant to Section
218.503(5), Florida Statutes, which institutes a 20% surcharge for parking transactions at parking
facilities within the limits of the City. The effective dale for the implementing of the surcharge
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was September 1, 1999. The surcharge is applicable to all parking facilities, public or private,
where there is a charge, fee or exchange for parking. It also applies to parking associated with
valet service, events and parking validations. Various parties sued the City challenging the
Parking Surcharge Ordinance. The lawsuits involve a class action claim wherein invalidation of
the City's Parking Surcharge Ordinance is sought on the grounds that the enabling statute is a
special, rather than general, law. The statute was upheld by the trial court, but invalidated by the
Third District Court of Appeals in July 2001. The City appealed to the Supreme Court of Florida,
oral argument was held in February 2002 and the Supreme Court ruled on July 11, 2002, that the
statute was unconstitutional and the case was remanded to the Third District Court of Appeal for
further proceedings. The statute was amended in November, 2001 and the legislature ratified the
statute and all acts and proceedings taken in connection with the surcharge imposed. The City
Commission approved a settlement for all class members on October 11, 2002, that resolved any
challenges to both the original and amended Statute. The settlement requires the City to contribute
no more than $8 million to a fund of $14 million, with the remaining money to be provided from
parking surcharges retained by Miami -Dade County. However, the settlement has not yet been
approved b y t he c ourts and t here are m otions t o i ntervene p ending t hat w ere filed b y c ertain
operators of parking facilities. Such motions to intervene have been denied by the trial court and
are currently on appeal. If the court does not approve the settlement or if the intervenors are
successful, the City could be required to return a 11 amounts collected prior to the amendment
which would be approximately $25 million, or could be required to return only the sums collected
between Ju ly, 2 001 a nd the d ate o f t he a mendment, approximately $ 5 m illion. T he C ity h as
reserved approximately $14 million for the payment of any refunds to date, a portion from its own
funds and expects to receive the remaining funds from Miami -Dade County.
Fire Rescue Litigation. This is a class action challenge to the City of Miami Fire
Assessment Ordinance which essentially contends that the assessment is an unconstitutional tax
on real property. The Florida Supreme Court recently held in the City of North Lauderdale v.
SMM Properties, Inc that a similar ordinance was unconstitutional to the extent it included a
charge for e mergency medical services. The City o f Miami's a ssessment for the fiscal years
1998-1999 and 1999-2000 included emergency medical services. Subsequent assessments,
however, did not include emergency medical services. Because of the City of North Lauderdale
decision, the litigation now concerns the question of whether the City will be required to refund
the emergency medical services component of the assessments for the fiscal years 1998-1999 and
1999-2000. Under Florida decisional law, a special assessment later declared to be invalid will
not result in a refund where equitable considerations are in favor of the governmental entity. In
this regard, a court is governed by the following factors: (1) whether the assessment is
non-discriminatory because it applied across the board to all property owners; (2) whether the
governmental entity acted in good faith in levying the assessment, or, in contrast acted without a
legal basis; (3) whether the assessment conferred a commensurate benefit; (4) whether the
assessment was voluntarily paid without protest and not under legal compulsion; and (5) whether
a refund would work great hardship on the governmental entity in proportion to the interests of the
individual property owners in receiving a refund.
The financial exposure for the Emergency Medical Services components of the Fire
Rescue Assessment Services for fiscal year 1998/1999 could range from $5,117,092 to
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$9,520,172, and the financial exposure for fiscal year 1999/2000 could range from $4,969,780 to
$9,246,102.
DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS
Pursuant to Section 517,051, Florida Statutes, as amended, no person may directly or
indirectly offer or sell securities of the City except by an offering circular containing full and fair
disclosure of all defaults as to principal or interest on its obligations since December 31, 1975, as
provided by rule of the Florida Department of Banking and Finance (the "Department"). Pursuant
to Rule 3E-400.003, Florida Administrative Code, the Department has required the disclosure of
the amounts and types of defaults, any legal proceedings resulting from such defaults, whether a
trustee or receiver has been appointed over the assets of the City, and certain additional financial
information, unless the City believes in good faith that such information would not be considered
material by a reasonable investor. The City is not and has not been in default on any bond issued
since December 31, 1975 which would be considered material by a reasonable investor.
TAX MATTERS
General
The following discussion is a summary of the opinion of Bond Counsel that is to be
rendered on the tax-exempt status of interest on the Series 2003B Bonds and of certain federal and
state income tax considerations that may be relevant to prospective purchasers of the Series 2003B
Bonds. This discussion is based upon existing law, including current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), existing and proposed regulations under the
Code, and current administrative rulings and court decisions, all of which are subject to change.
Upon issuance of the Series 2003B Bonds, Hogan & Hartson L.L.P., Bond Counsel, will
provide an opinion to the effect that, under existing law, interest on the Series 2003B Bonds is
excluded from gross income for federal income tax purposes, and is not included in the
computation of the federal alternative minimum tax imposed on individuals, trusts, estates, and,
except as provided in the following paragraph, corporations.
For corporations only, the Code requires that alternative minimum taxable income be
increased by 75% of the excess (if any) of the corporation's adjusted current earnings over its other
alternative minimum taxable income. Adjusted current earnings includes interest .on the Series
2003B Bonds. An increase in a corporation's alternative minimum taxable income could result in
imposition of tax to the corporation under the corporate alternative minimum tax provisions of
Section 55 of the Code.
The foregoing opinions will compliance by the City with requirements of the Code
that must be met subsequent to the issuance of the Series 2003B Bonds in order that the interest
thereon be, or continue to be, excluded from gross income for federal income tax purposes. The
City will certify, represent and covenant to comply with such requirements. Failure to comply
with such requirements could cause the interest on the Series 2003E Bonds to be included in gross
income, or could otherwise adversely affect such opinions, retroactive to the date of issuance of the
Series 2003B Bonds.
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The opinion of Bond Counsel will also provide to the effect that, under existing law the
Series 2003B Bonds are exempt from intangible taxes imposed pursuant to Chapter 199, Florida
Statutes.
Other than the matters specifically referred to above, Bond Counsel expresses and will
express no opinions regarding the federal, state, local or other tax consequences of the purchase,
ownership and disposition of the Series 2003B Bonds. Prospective purchasers of the Series 2003B
Bonds should be aware, however, that the Code contains numerous provisions under which receipt
of interest on the Series 2003B Bonds may have adverse federal tax consequences for certain
taxpayers. Such consequences include the following: (i) Section 265 of the Code denies a
deduction for interest on indebtedness incurred or continued to purchase or carry the Series 2003B
Bonds or, in the case of financial institutions, that portion of the holder's interest expense allocable
to interest on the Series 2003B Bonds; (ii) with respect to insurance companies subject to the tax
imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss
reserves by 15% of the sum of certain items, including interest on the Series 2003B Bonds; (iii)
interest on the Series 2003B Bonds earned by certain foreign corporations doing business in the
United States could be subject to a branch profits tax imposed by Section 884 of the Code; (iv)
passive investment income, including interest on the Series 2003B Bonds, may be subject to
federal income taxation under Section 1375 of the Code for Subchapter S corporations that have
Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross
receipts of such Subchapter S corporation is passive investment income; and (v) Section 86 of the
Code requires recipients of certain Social Security and certain railroad retirement benefits to take
into account, in determining the inclusion of such benefits in gross income, receipts or accrual of
interest on the Series 2003B Bonds.
The Internal Revenue Service (the "Service") has an ongoing program of auditing state and
local government obligations, which may include randomly selecting bond issues for audit, to
determine whether interest paid to the holders is properly excludable from gross income for federal
income tax purposes. It cannot be predicted whether the Series 2003B Bonds will be audited. If an
audit is commenced, under current Service procedures the holders of the Series 2003B Bonds may
not be permitted to participate in the audit process. Moreover, public awareness of an audit of the
Series 2003B Bonds could adversely affect their value and liquidity.
Amendments to federal and state tax laws are proposed from time to time and could be
enacted in the future. There can be no assurance that any such future amendments will not
adversely affect the value of the Series 2003B Bonds, the exclusion of interest on the Series 2003B
Bonds from gross income or alternative minimum taxable income, the exclusion of the Series
2003E bonds from state taxation, or any c ombination from the date of i ssuance of the Series
2003B Bonds or any other date, or that such changes will not result in other adverse federal or state
tax consequences.
Bond Counsel will render its opinion as of the issue date, and will assume no obligation to
update its opinion after the issue date to reflect any future facts or circumstances, or any future
changes in law or interpretation, or. otherwise. Moreover, Bond Counsel's opinion is not binding
on the courts or the Internal Revenue Service; rather, such opinion represents Bond Counsel's legal
judgment based upon its review of existing law and upon the certifications, representations and
covenants referenced above.
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Prospective purchasers of Series 2003B Bonds should consult their own tax advisors
as to the applicability and extent of federal, state, local or other tax consequences of the
purchase, ownership and disposition of Series 2003B Bonds in light of their particular tax
situation.
Original Issue Premium
If a holder purchases a Series 2003B Bond for an amount that is greater than its stated
redemption price at maturity, such holder will be considered to have purchased the Series 2003B
Bond with "amortizable bond premium" equal in amount to such excess. A holder must amortize
such premium using a constant yield method over the remaining term of the Series 2003B Bond,
based on the holder's yield to maturity. As bond premium is amortized, the holder's tax basis in
such Series 2003B Bond is reduced by a corresponding amount, resulting in an increase in the gain
(or decrease in the loss) to be recognized for federal income tax purposes upon a sale or other
disposition of the Series 2003B Bond prior to its maturity. No federal income tax deduction is
allowed with respect to amortizable bond premium on a Series 2003B Bond. Purchasers of Series
2003B Bonds with amortizable bond premium should consult with their own tax advisors
regarding the proper computation of amortizable bond premium and with respect to state and local
tax consequences of owning such Series 2003B Bonds.
Original Issue Discount
Certain of the Series 2003B Bonds (the "Discount Bonds") are being offered and sold to the
public in their original public offering at an original issue discount. Generally, original issue
discount is the excess of the stated redemption price at maturity of any Discount Bond over the
issue price of the Discount Bond. Bond Counsel has advised the City that under existing laws and
to the extent interest on any Discount Bond is excluded from gross income for federal income tax
purposes, the original issue discount on any such Discount Bond that accrues during the period
such person holds the Discount Bond will be treated as interest that is excluded from gross income
for federal income tax purposes with respect to such holder, and will increase such holder's tax
basis in any such Discount Bond. Purchasers of any Discount Bonds should consult their own tax
advisors regarding the proper computation and accrual of original issue discount premium and
with respect to state and local tax consequences of owning such Series 2003B Bonds.
RATINGS
Moody's Investor's S ervice ("Moody's"), F itch R atings and S tandard & Poor's R atings
Group ("S&P") are expected to assign their municipal bond ratings of ["," " " and " ,l
respectively, to the Series 2003B Bonds with the understanding that upon delivery of the Series
2003I3 Bonds, the Policy will he issued by the Insurer. In addition, Moody's, Fitch Ratings and
S&P have assigned underlying ratings of [ ", " " and " ' j, respectively, without
giving any regard to the Policy.
The ratings reflect only the views of said rating agencies and an explanation of the ratings
may be obtained only from said rating agencies. There is no assurance that such ratings will
continue for any given period of tine 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
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change in or withdrawal of any of such ratings, may have an adverse effect on the market price of
the Series 2003B Bonds.
FINANCIAL ADVISOR
The City has retained RBC Dain Rauscher Inc. as Financial Advisor in connection with the
City's financing plans and with respect to the authorization and issuance of the Series 2003B
Bonds.
AUDITED FINANCIAL STATEMENTS
The Basic Financial Statements of the City for the fiscal year ended September 30, 2002,
and report thereon of KPMG LLP (the "Independent Certified Public Accountant") are attached
hereto as "APPENDIX C - BASIC FINANCIAL STATEMENTS OF THE CITY OF MIAMI
FOR FISCAL YEAR ENDED SEPTEMBER 30, 2002." Such statements speak only as of
September 30, 2002. The Independent Certified Public Accountants have consented to the use
thereof herein.
PURCHASE OF SERIES 2003B BONDS
The Series 20038 Bonds are being purchased by the purchaser shown on the cover of the
Official Statement (collectively, the "Purchaser") at an aggregate purchase price of
S (the par amount of the Series 2003B Bonds, plus net original issue premium
of S and less a discount of $ ). The Purchaser's obligations are
subject to certain conditions precedent described in the Notice of Sale.
VERIFICATION OF ARITHMETICAL COMPUTATIONS
The accuracy of the arithmetical computation of the adequacy of the maturing principal
amounts of, and interest on, the Government Obligations together with any uninvested amounts, to
be held in the Escrow Fund to pay the principal, interest and redemption premium, if any, on the
Refunded Bond, will be verified for the City by [ ] (the "Verification Agent").
Such verification will be based on certain information supplied to the Verification Agent by the
Financial Advisor.
CONTINGENT FEES
The City has retained Bond Counsel, Financial Advisor and Disclosure Counsel with
respect in the authorization, sale, execution and delivery of the Series 2003f3 f3onds. Payment of
the fees of such professionals is contingent upon the issuance of the Series 2003I3 Bonds.
ENFORCEABILITY OF REMEDIES
The remedies available to the owners of the Series 2003B Bonds upon an event of default
under the Resolution and the municipal bond insurance policy are in many respects dependent
38
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, the Series 2003B Bonds and the municipal bond insurance
policy may not be readily available or may be limited. The various legal opinions to be delivered
concurrently with the delivery of the Series 200313 Bonds, including Bond Counsel's approving
opinion, will be qualified, as to the enforceability of the remedies provided in the various legal
instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar
laws affecting the rights of creditors enacted before or after such delivery.
CONTINUING DISCLOSURE
The City will covenant for the benefit of the holders of the Series 2003B Bonds to provide
certain financial information and operating data relating to the City and the Series 2003B Bonds in
each year, and to provide notices of the occurrence of certain enumerated material events. The
City has agreed to file annual financial information and operating data and its audited financial
statements with each nationally recognized municipal securities information repository then
approved by the SEC (the "NRMSIRs"), as well as any state information depository that is
established in the State (the "SID"). Currently, there are no such SIDs. The City has agreed to file
notices of certain enumerated material events, when and if they occur, with the NRMSIRs or the
Municipal Securities Rulemaking Board, and with the SIDS, if any.
The specific nature of the financial information, operating data, and of the type of events
which trigger a disclosure obligation, and other details of the undertaking are described in
"APPENDIX F - FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT"
attached hereto. The Disclosure Dissemination Agent Agreement ("Disclosure Agreement") shall
be executed by the City and Digital Assurance Certification, L.L.C. ("DAC") as the initial
Disclosure Dissemination Agent prior to the issuance of the Series 2003B Bonds. The covenants
contained in the Disclosure Agreement covenants have been made in order to assist the
Underwriters in complying with the continuing disclosure requirements of Rule 15c2-12
promulgated by the SEC (the "Rule").
With respect to the Series 2003B Bonds, no party other than the City is obligated to
provide, nor is expected to provide, any continuing disclosure information pursuant to the Rule.
The City has never failed to comply with any prior agreements to provide continuing disclosure
information pursuant to the Rule.
ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT
The references, excerpts, and summaries of all documents, statutes, and information
concerning the City and certain reports and statistical data referred to herein do not purport io be
complete, comprehensive and definitive and each such summary and reference is qualified in its
entirety by reference to each such document for full and complete statements of all matters of fact
relating to the Series 2003B Bonds, the security for the payment of the Series 2003B 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
OI07 7:27,4 ;
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opinions herein are subject to change without notice and neither the delivery of this Official
Statement nor any sale made hereunder is to create, under any circumstances, any implication that
there has been no change in the affairs of the City from the date hereof.
FORWARD -LOOKING STATEMENTS
This Official Statement contains certain "forward -looking statements" concerning the
City's operations, performance and financial condition, including its future economic
performance, plans and objectives and the likelihood of success in developing and expanding.
These statements are based upon a number of assumptions and estimates which are subject to
significant uncertainties, many of which are beyond the control of the City. The words "may,"
"would," "could," "will," "expect," "anticipate," "believe," "intend," "plan," "estimate' and
similar expressions are meant to identify these forward -looking statements. Actual results may
differ materially from those expressed or implied by these forward -looking statements.
MISCELLANEOUS
Any statements made in this Official Statement involving matters of opinion or of
estimates, whether or not so expressly stated are set forth as such and not as representations of fact,
and no representation is made that any of the estimates will be realized. Neither this Official
Statement nor any statement that may have been made verbally or in writing is to be construed as a
contract with the owners of the Series 2003B Bonds.
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 2003B Bonds, the City will furnish a
certificate to the effect that nothing has come to their attention which would lead it to believe that
the Official Statement (other than information herein related to the Insurer, the municipal bond
insurance policy, DTC, the book -entry only system of registration and the information contained
under the caption "TAX EXEMPTION" as to which no opinion shall be expressed), as of its date
and as of the date of delivery of the Series 2003B Bonds, contain an untrue statement of a material
fact or omits to state a material fact which should be included therein for the purposes for which
the Official Statement is intended to be used, or which is necessary to make the statements
contained therein, in the light of the circumstances under which they were made, not misleading.
THE CITY OF MIAMI, FLORIDA
By:
Mayor
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