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Home My WebLink AboutExhibit 16THE CITY OF MIAMI, FLORIDA MAYOR Manuel A. Diaz CITY COMMISSIONERS Angel Gonzalez, Chairman Joe M. Sanchez, Vice Chairman Tomas P. Regalado Michelle Spence -Jones Linda M. Haskins CITY MANAGER Pedro G. Hernandez INTERIM CHIEF FINANCIAL OFFICER Larry Spring FINANCE DIRECTOR Diana M. Gomez CITY ATTORNEY Jorge L. Fernandez, Esq. BOND COUNSEL Squire, Sanders & Dempsey L.L.P. Miami, Florida DISCLOSURE COUNSEL Bryant Miller Olive P.A. Miami, Florida FINANCIAL ADVISOR First Southwest Company Miami Lakes, Florida No dealer, broker, salesman or other person has been authorized by the City or the Underwriter to give any information or to make any representations in connection with the Series 2006 Bonds, other than as contained in this Official Statement, and, if given or made, such information or representations must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2006 Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the City, the Insurer, DTC and other sources that are believed to be reliable. The Underwriter listed on the cover page hereof has reviewed the information in this Official Statement in accordance with and as part of their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinion stated herein are subject to change, and neither the delivery of this Official Statement nor any sale made hereunder shall create, under any circumstances, any implication that there has been no change in the matters described herein since the date hereof. IN CONNECTION WITH THIS OFFERING OF THE SERIES 2006 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH SERIES 2006 BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. All summaries herein of documents and agreements are qualified in their entirety by reference to such documents and agreements, and all summaries herein of the Series 2006 Bonds are qualified in their entirety by reference to the form thereof included in the aforesaid documents and agreements. Other than with respect to information concerning ( the "Insurer") contained under the caption "MUNICIPAL BOND INSURANCE" and "APPENDIX E - SPECIMEN MUNICIPAL BOND INSURANCE POLICY" attached hereto, none of the information supplied in this Official Statement has been supplied or verified by the Insurer and the Insurer makes no representation or warranty, express or implied, as to (i) the accuracy or completeness of such information, (ii) the validity of the Series 2006 Bonds, or (iii) the tax exempt status of the interest on the Series 2006 Bonds. NO REGISTRATION STATEMENT RELATING TO THE SERIES 2006 BONDS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR WITH ANY STATE SECURITIES COMMISSION. IN MAKING ANY INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATIONS OF THE CITY AND THE TERMS OF THE OFFERING, INCLUDING THE ME%ITS AND RISKS INVOLVED. THE SERIES 2006 BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THE FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. TABLE OF CONTENTS Conte. s Paee INTRODUCTION 1 PURPOSE OF THE ISSUE 2 PLAN OF REFUNDING 2 ESTIMATED SOURCES AND USES OF FUNDS 3 DESCRIPTION OF THE SERIES 2006 BONDS 4 General 4 Interest Rates and Interest Rate Periods 5 Conversion From Weekly Rate Period or Daily Rate Period 7 Optional Tender 8 Mandatory Tender 8 Delivery of Series 2006 Bonds 10 Payment of Purchase Price 10 Remarketing 11 Redemption 12 Book -Entry Only System 13 Registration, Transfer and Exchange 15 Replacement of Bonds Mutilated, Destroyed, Stolen or Lost 16 LIQUIDITY FACILITY 16 General 16 Purchase of Tendered Bonds by the Liquidity Facility Issuer 17 Events of Termination 17 Events of Default 18 Remedies 20 MUNICIPAL BOND INSURANCE 21 SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2006 BONDS 21 Description of Non -Ad Valorem Revenues 24 Special Investment Considerations 31 Creation of Funds and Accounts 31 Additional Bonds Payable from Covenant Revenues 32 Additional Debt Payable from Non -Ad Valorem Funds 32 Claims 33 Pledge of Non -Ad Valorem Funds 33 Pledge of Designated Revenues 33 SWAP TRANSACTION 34 THE CITY OF MIAMI 35 Background 35 City Government 35 Adoption of Investment Policy 36 Adoption of Debt Management Policy 37 Capital Improvement Plan 38 Fiscal and Accounting Procedures 38 General Fund 38 Recent Financial Developments 40 Indebtedness of the City 40 FUTURE BORROWINGS 42 LEGAL MATTERS 42 LITIGATION 42 DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS 42 TAX MATTERS 43 RATINGS 43 FINANCIAL ADVISOR 43 AUDITED FINANCIAL STATEMENTS 43 CONTINUING DISCLOSURE 44 UNDERWRITING 44 CONTINGENT FEES 44 ENFORCEABILITY OF REMEDIES 45 ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT 45 FORWARD -LOOKING STATEMENTS 45 MISCELLANEOUS 45 AUTHORIZATION OF OFFICIAL STATEMENT 46 APPENDICES APPENDIX A: APPENDIX B: APPENDIX C: APPENDIX D: APPENDIX E: APPENDIX F: APPENDIX G: GENERAL INFORMATION REGARDING THE CITY OF MIAMI MASTER INDENTURE AND FORM OF SERIES 2006 INDENTURE GENERAL PURPOSE AUDITED FINANCIAL STATEMENTS OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2005 FORM OF BOND COUNSEL OPINION SPECIMEN MUNICIPAL BOND INSURANCE POLICY FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT INFORMATION REGARDING WACHOVIA BANK, NATIONAL ASSOCIATION (THE "INITIAL LIQUIDITY FACILITY ISSUER") ii OFFICIAL STATEMENT relating to THE CITY OF MIAMI, FLORIDA Non -Ad Valorem Variable Rate Refunding Revenue Bonds Taxable Pension Series 2006 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 Non -Ad Valorem Variable Rate Refunding Revenue Bonds, Taxable Pension Series 2006 (the "Series 2006 Bonds"), in connection with the sale of the Series 2006 Bonds. The City is situated at the mouth of the Miami River on the western shores of Biscayne Bay. It is the county seat of Miami -Dade County, Florida. The City comprises 34.3 square miles of land and 19.5 square miles of water. The City's diversified economic base is comprised of light manufacturing, trade, commerce, wholesale, and retail trade and tourism. For more information about the City, see "APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF MIAMI" herein. The Series 2006 Bonds are being issued pursuant to the Constitution and laws of the State of Florida, including Chapter 166, and Chapter 159, Part VII, Florida Statutes, the Charter of the City, and other applicable provisions of law (the "Act") and pursuant to Resolution No. 95-564 adopted on July 13, 1995, Resolution No. R-04-0697 adopted on November 13, 2004 authorizing issuance of art aggregate principal amount of Non -Ad Valorem Variable Rate Refunding Revenue Bonds, Taxable Pension Series 2006, in an amount not to exceed $75,000,000 to refund a portion of the outstanding City of Miami Non -Ad Valorem Revenue Bonds, Taxable Pension Series 1995 and Resolution No. R-06- adopted on November , 2006 authorizing the issuance of Non -Ad Valorem Variable Rate Refunding Revenue Bonds, Taxable Pension Series 2006, in an amount not to exceed $35,000,000 (collectively, the "Resolution"), the Master Trust Indenture, dated as of December 1, 1995 (the "Master Indenture") between the City and U.S. Bank National Association (successor to First Union National Bank of Florida), as Trustee, as supplemented by the Series 2006 Indenture dated as of December 1, 2006 (the "Series 2006 Indenture") between the City and the Trustee. The Master Indenture and the Series 2006 Indenture are refered to herein as the "Indenture". The Series 2006 Bonds are being issued for the purpose of refunding and redeeming a portion of the City' outstanding Non -Ad Valorem Revenue Bonds, Taxable Pension Series 1995 (the "Series 1995 Bonds"). See "PURPOSE OF THE ISSUE" herein. Payment of the principal of, premium, if any, and interest on the Series 2006 Bonds shall be secured by a pledge of the Covenant Revenues (as defined in the Master Indenture). The Series 2006 Bonds do not constitute a general indebtedness of the City within the meaning of any constitutional or statutory provision or limitation and the City is not obligated to levy any ad valorem taxes for the payment thereof, as described herein. Neither the full faith and credit nor the taxing power of the State of Florida or any political subdivision or agency thereof is pledged to the payment of the principal of, premium, if any, and interest of the Series 2006 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2006 BONDS" herein. The Series 2006 Bonds are being issued as Additional Bonds payable on a parity with the unrefunded portion of the Series 1995 Bonds, Payment of the principal of and interest on the Series 2006 Bonds will be guaranteed by a municipal bond insurance policy to be issued simultaneously with the delivery of the Series 2006 Bonds by (the "Insurer"). The summaries of and references to all documents, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by reference to each such document, statute, report or instrument. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings set forth in the, Indenture, unless the context would clearly indicate otherwise. A copy of the Master Indenture and Form of the Series 2006 Indenture is attached hereto as "APPENDIX B - MASTER INDENTURE AND FORM OF SERIES 2006 INDENTURE" herein, All documents of the City referred to herein may be obtained from Diana M. Gomez, CPA, Finance Director, 444 S.W. 2nd Avenue, 6th Floor, Miami, Florida 33130, Telephone (305) 416-1377. PURPOSE OF THE ISSUE The Series 2006 Bonds are being issued for the purpose of (i) refunding and redeeming a portion of the outstanding Non -Ad Valorem Revenue Bonds, Taxable Pension Series 1995 (the "Series 1995 Bonds"), as described below and (ii) paying certain costs and expenses incurred in connection with the issuance of the Series 2006 Bonds, including the premium for a municipal bond insurance policy. PLAN OF REFUNDING The Series 2006 Bonds are being issued to refund on a current basis and redeem $29,470,000 aggregate principal amount of the Series 1995 Bonds maturing on December 1, 2007, 2008, 2009 and 2025 (the "Refunded Bonds"). Concurrently with delivery of the Series 2006 Bonds, a portion of the proceeds of the Series 2006 Bonds shall be deposited into a separate account in the 2006 Proceeds Fund (the "Escrow Account"), pursuant to the terms and provisions of the Series 2006 Indenture. The moneys deposited into the Escrow Account shall be applied to pay the principal of, premium, and interest on the Refunded Bonds. Upon deposit of such moneys and the application thereof all in accordance with the Series 1995 Indenture, the Refunded Bonds will be deemed paid and discharged for purposes of the Master Indenture and the Series 1995 Indenture and the holders of the Refunded Bonds shall be entitled to payment solely out of the moneys deposited in the Escrow Account, pursuant to the Series 2006 Indenture. The Refunded Bonds will be called for redemption prior to their maturities on December 1, 2006 and paid from the Escrow Account at a premium of 102%. 2 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 2006 Bonds: SOURCES: Principal Amount of Series 2006 Bonds TOTAL SOURCES USES; Deposit to Escrow Account Costs of Issuance) Municipal Bond Insurance Premium Underwriter's Discount TOTAL USES $ () [Includes financial advisory and legal fees and expenses, and miscellaneous costs of issuance.] [Remainder of page intentionally left blank.] 3 DESCRIPTION OF THE SERIES 2006 BONDS This Official Statement generally describes the terms of the Series 2006 Bonds only while the Series 2006 Bonds bear interest at the Weekly Rate or the Daily Rate. Reference is hereby made to the Series 2006 Indenture for the complete terms and provisions thereof and for the terms and provisions of the Commercial Paper Rate, the Dutch Auction Rate and the Term Rate. General The Series 2006 Bonds will be issued as fully registered bonds without coupons in denominations of $100,000 and integral multiples of $5,000 in excess thereof so long as the Series 2006 Bonds bear interest at a Daily Rate or Weekly Rate. The Series 2006 Bonds will mature, subject to prior redemption, on December 1, 2025 (the "Maturity Date"). The Series 2006 Bonds, when issued, will be registered in the name of Cede & Co., as nominee for DTC. Payment of the principal of and interest on the Series 2006 Bonds will be made directly to DTC or its nominee, Cede & Co., by the Trustee. See "DESCRIPTION OF THE SERIES 2006 BONDS — Book -Entry System" herein. Initially, all of the Series 2006 Bonds will be issued in the Weekly Rate Period. At any given time, any Series 2006 Bond may operate in one of five Rate Periods: a Daily Rate Period, a Weekly Rate Period, a Period, a Dutch Auction Rate Period or a Term Rate Period (each, a "Rate Period"). While in any of these Rate Periods, such Series 2006 Bond will bear interest at a Daily Rate, a Weekly Rate, a Commercial Paper Rate, a Dutch Auction Rate or a Term Rate, respectively. See "DESCRIPTION OF THE SERIES 2006 BONDS — Conversion from Weekly Rate Period" herein. The Series 2006 Bonds, while bearing interest at the Daily Rate or Weekly Rate, are subject to optional and mandatory redemption as described below under the caption "DESCRIPTION OF THE SERIES 2006 BONDS — Redemption" and, while bearing interest at a Daily Rate or Weekly Rate, are subject to optional and mandatory tender for purchase as described below under the captions "DESCRIPTION OF THE SERIES 2006 BONDS — Optional Tender" and "DESCRIPTION OF THE SERIES 2006 BONDS — Mandatory Tender." The following table provides a brief summary of the terms applicable to the Series 2006 Bonds while they are in a Weekly Rate Period and does not purport to be comprehensive or definitive and is subject in all respects to the complete terms and provisions set forth in the Indenture. Investors must read the entire Official Statement to obtain information essential to making art informed investment decision. So long as the Series 2006 Bonds are in book -entry form, each Beneficial Owner (as defined herein) of a Series 2006 Bond may desire to make arrangements with a Participant in DTC to receive notices or communications with respect to matters described in the table. See "DESCRIPTION OF THE SERIES 2006 BONDS — Book -Entry Only System" herein. [Remainder of this page intentionally left blank.] 4 WEEKLY RATE PERIOD TERMS. Interest Payment Date: Regular Record Date: Rate Determination Date: Date on Which Rate Becomes Effective: Notice of Rate: Notice period for optional tender: Payment for Series 2006 Bonds tendered: Mandatory tender: Rate Period Change Date Notice from City to Notice Parties: Rate Period Change Date Notice Mailed to Series 2006 Bond Owners: Conversion Date: Interest Rates and Interest Rate Periods First Business Day of each calendar month commencing January 2, 2007. The last Business Day of the calendar month preceding on Interest Payment Date. Weekly Rate determined not later than 5:00 p.m. on Tuesday, or if, such Tuesday is not a Business Day, the next succeeding Business Day. The first day after the Rate Determination Date. Remarketing Agent notifies Trustee by not later than 1:00 p.m. on the day after the Rate Determination Date. Written or electronic notice not later than 5:00 p.m. on a Business Day not fewer than seven days prior to the Purchase Date. Before 2:00 p.m. on Purchase Date in immediately available funds. On a Conversion Date or prior to the expiration or termination of the Liquidity Facility or the delivery of an Alternate Liquidity Facility which results in the reduction or withdrawal of the then current rating on the Bonds. Not less than 20 days before a Conversion Date from a Weekly Rate Period. Not less than 15 days before a Conversion Date from a Weekly Rate Period. Any Interest Payment Date. Initially, the Series 2006 Bonds will bear interest at a Weekly Rate. The Series 2006 Bonds may also bear interest at a Daily Rate, Commercial Paper Rate, Dutch Auction Rate or Term Rate. The interest rate on the Series 2006 Bonds will be determined by the Remarketing Agent (other than a Dutch Auction Rate) as the lowest rate of interest which in its judgment will cause the Series 2006 Bonds to have a market value, on the commencement date of such Rate Period equal to the principal amount of the Series 2006 Bonds plus accrued and unpaid interest, if any, taking into account prevailing market conditions as of such date of determination; provided that the interest rate may not exceed the Maximum Rate (the lesser of 18% per annum or the maximum interest rate permitted by State law). Interest on the Series 2006 Bonds will be calculated on the basis of a 365 or 366-day year, as appropriate, for the actual number of days elapsed, based on the calendar year in which the Weekly Rate Period commences, while the Series 2006 Bonds bear interest at a Daily Rate or Weekly Rate. Interest on the Series 2006 Bonds will be paid to the registered owners thereof with respect to Series 2006 Bonds bearing interest at a Weekly Rate or a Daily Rate on the first Business Day of each calendar month 5 following a month in which interest at such rate has accrued. The first Interest Payment Date for the Series 2006 Bonds will be January 2, 2007. Weekly Rate Period; Weekly Rate. Except with respect to the initial issuance of the Series 2006 Bonds, Weekly Rate Period will commence on a Wednesday of each week and end on Tuesday of the following week and each Weekly Rate Period will be followed by another Weekly Rate Period until the Rate Period of the Series 2006 Bonds is converted to another type of Rate Period; provided that (i) in the case of a conversion to a Weekly Rate Period from a different Rate Period, the Weekly Rate Period will commence on the Conversion Date and will end on Tuesday of the following week and (ii) in the case of a conversion from a Weekly Rate Period to a different Rate Period, the last Weekly Rate. Period prior to a conversion shall end on the last day immediately preceding the Conversion Date to the new Rate Period. The Weekly Rate for each Weekly Rate Period shall be effective from and including the commencement date of such period and will remain in effect through and including the last day thereof. Each such Weekly Rate will be determined by the Remarketing Agent no later than 5:00 p.m. (New York City time) on the day preceding the commencement date of the Weekly Rate Period to which it relates and be given to the Trustee by the Remarketing Agent by 1:00 p.m. (New York City time) on the commencement date of such Weekly Rate Period and confirmed in writing by the Remarketing Agent to the Trustee. Daily Rate Period; Daily Rate, A Daily Rate Period will commence on the Conversion Date, which will be a Business Day, and on each Business Day thereafter until the type of Rate Period for the Series 2006 Bonds is converted to another type of Rate Period and will extend to, but not include, the next succeeding Business Day. Series 2006 Bonds in a Daily Rate Period will bear interest at a Daily Rate. When interest on the Series 2006 Bonds is payable at a Daily Rate, the Remarketing Agent will determine the Daily Rate by 10:30 a.m. (New York City time) on the Business Day that is the commencement date of the Daily Rate Period to which it relates and shall notify the Trustee of any change in the Daily Rate by 1:00 p.m. (New York City time) on the day such Daily Rate is determined by telephone or other Electronic Notice and shall confirm in writing to the Trustee each month the Daily Rates in effect during that month, provided that if there has been no change in the Daily Rate for a Daily Rate Period, the Remarketing Agent is not required to notify the Trustee of the determination of such Daily Rate. The Daily Rate for each Daily Rate Period will be effective from and including the commencement date thereof to, but not including, the next succeeding Business Day. Rates Binding. All determinations of the Applicable Variable Rate on the Series 2006 Bonds as described above will be conclusive and binding on the Holders of the Series 2006 Bonds, the City, the Paying Agent, the Insurer, the Liquidity Facility Issuer and the Trustee. The Applicable Variable Rate in effect for the Series 2006 Bonds will be available to the Holders of the Series 2006 Bonds on the date such Applicable Variable Rate is determined, on or after 5:00 p.m. (New York City time) from the Remarketing Agent at its designated office. In any case, where the date of payment of any principal or purchase price of or interest on any Series 2006 Bond is a day that is a Saturday, a Sunday or a legal holiday or the equivalent for banking institutions generally (other than a moratorium) at the place where payment thereof is to be made, then such payment may be made on the next succeeding day which is not one of the foregoing days without additional interest and with the same force and effect as if made on the specified date for such payment. Failure of Remarketing Agent to Determine Rate. If the Remarketing Agent fails for any reason to determine the Applicable Variable Rate for any Rate Period, then the Series 2006 Bonds to which such Rate 6 Period applies will bear interest at the last effective rate established for such Rate Period in accordance with the Series 2006 Indenture. The Trustee will promptly notify the City and each Holder of such Series 2006 Bonds of such fact. Conversion Fronk Weekly Rate Period or Daily Rate Period At the option of the City, all, or a portion of the Series 2006 Bonds, in Authorized Denominations, may be converted from a Weekly Rate Period or Daily Rate Period to another Rate Period. Conversion Date. The Conversion Date will be an Interest Payment Date for the Rate Period from which the conversion is to be made; provided, however, if the conversion is from a Weekly Rate Period to a Daily Rate Period or a Daily Rate Period to a Weekly Rate Period, the Conversion Date must be on an Interest Payment Date. Notice of Conversion by City. The City will give written notice of any such conversion to the Remarketing Agent, the Trustee and the Liquidity Facility Issuer not fewer than 20 days in the case of a conversion from a Weekly Rate Period. Such notice will specify (a) the proposed Conversion Date, (b) the type of Rate Period to which the conversion will be made, and (c) in the case of conversion to a Term Rate Period, the length of such Term Rate Period. Notice of Conversion to Bondholders. Not fewer than 15 days prior to the Conversion Date in the case of a conversion from a Weekly Rate Period, the Trustee shall mail, by first class mail, a written notice of the conversion to each Holder of Series 2006 Bonds being converted at the Holder's address as it appears on the Register. Such notice shall state (a) the type of Rate Period to which the conversion will be made and the Conversion Date; (b) that the Series 2006 Bonds being converted will be subject to mandatory tender for purchase on the Conversion Date and the Purchase Price of such Series 2006 Bonds; and (c) if such Series 2006 Bonds are no longer in Book Entry Form and are therefore in certificated form, information with respect to required delivery of bond certificates and payment of the Purchase Price as determined in the Series 2006 Indenture. Conditions Precedent to Conversions. Any conversion from a Weekly Rate Period to any other Rate Period is subject to the condition that on or before the Conversion Date, the City (i) will have delivered to the Issuer, the Trustee and the Remarketing Agent an opinion of Bond Counsel to the effect that the conversion is authorized under the Indenture (except that no such opinion shall be required for conversions between a Daily Rate Period and a Weekly Rate Period) and (ii) will have complied with all applicable federal securities laws in connection with remarketing the Series 2006 Bonds. Any conversion to a Term Rate, if a Liquidity Facility is to be in effect, shall be subject to the condition that a Liquidity Facility provides for an amount equal to 186 days' accrued interest on the Series 2006 Bonds. Additionally, any conversion to a Commercial Paper Rate Period, if a Liquidity Facility is to be in effect, shall be subject to the condition that a Liquidity Facility provides for an amount of accrued interest on the Series 2006 Bonds equal to the number of days in the Commercial Paper Rate Period plus three days. Failure of Conversion. If for any reason a condition precedent to a conversion of all or any portion of the Series 2006 Bonds is not met, such conversion will not be effective, and such Series 2006 Bonds will be maintained in a Weekly Rate Period and bear interest at the Weekly Rate determined by the Remarketing Agent as of the date on which the conversion was to occur. The Trustee will promptly notify the City and 7 each Holder of such Series 2006 Bonds of the failure of conversion to any Interest Rate Period. Optional Tender The Holders of any Series 2006 Bonds (except Bank Bonds or Series 2006 Bonds owned by the City) bearing interest at a Daily Rate or a Weekly Rate may elect to have their Series 2006 Bonds (or portions thereof in an Authorized Denomination) purchased at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, accrued from the immediately preceding Interest Payment Date (the "Purchase Price") as described below: Weekly Rate Tender. Series 2006 I3onds bearing interest at a Weekly Rate may be tendered for purchase on any Business Day upon written or Electronic notice of tender to the Paying Agent, not later than 5:00 p.m. (New York City time) on a Business Day not fewer than seven days prior to the Purchase Date Daily Rate Tender. Series 2006 Bonds bearing interest at a Daily Rate may be tendered for purchase on any Business Day upon telephonic (promptly confirmed in writing) or Electronic notice of tender given to the Paying Agent not later than 10:00 a.m. (New York City time) on the date of purchase. Notice of Tender. Each notice of tender (i) must, in the case of a written notice, be delivered to the Paying Agent at its designated office (initially, U.S. Bank National Association, 500 Cypress Creek Road, Suite 560, Fort Lauderdale, Florida 33309, Attention: Corporate Trust Services) and be in form satisfactory to the Paying Agent; (ii) must state (A) the principal amount of Series 2006 Bond or Series 2006 Bonds to which the notice relates, (B) that the Holder irrevocably demands purchase of such Series 2006 Bond or Series 2006 Bonds or a specified portion thereof in an amount equal to an Authorized Denomination, (C) the date on which such Series 2006 Bonds or portion thereof is to be purchased, and (D) payment instructions with respect to the Purchase Price; and (iii) will automatically constitute (A) an irrevocable offer to sell the Series 2006 Bonds (or portion thereof) to which the notice relates on the specified Purchase Date at the Purchase Price, (B) an irrevocable authorization and instruction to the Registrar to effect transfer of such Series 2006 Bonds (or portion thereof) upon payment of the Purchase Price to the Paying Agent on the Purchase Date, (C) an irrevocable authorization and instruction to the Registrar to effect the exchange of the Series 2006 Bonds to be purchased in whole or in part for other Series 2006 Bonds (or portion thereof to be purchased), and (D) an acknowledgment that such Holder will have no further rights with respect to such Series 2006 Bond or portion thereof upon payment of the Purchase Price thereof to the Paying Agent on the Purchase Date, except for the right of such Holder to receive such Purchase Price upon delivery of such Series 2006 Bonds to the Paying Agent, and that after the Purchase Date such Holder will hold any undelivered certificate as agent for the Paying Agent. The determination of the Paying Agent as to whether a notice of tender has been properly delivered pursuant to the foregoing is conclusive and binding upon the Holder. Mandatory Tender The Series 2006 Bonds are subject to mandatory tender for purchase at the Purchase Price, as follows: Mandatory Tender upon Conversion between Certain Rate Periods. Series 2006 Bonds to be converted from one Rate Period to a different Rate Period are subject to mandatory tender on the Conversion Date. Mandatory Tender with respect to the Liquidity Facility. (a) On the last Interest Payment Date prior to the 8 Expiration Date (being the date upon which the Liquidity Facility Issuer's obligations to purchase Series 2006 Bonds under the Liquidity Facility is scheduled to expire (taking into account any extensions of the Expiration Date in accordance with its terms)). (b) On the Business Day preceding the effective date of any Alternate Liquidity Facility where the delivery and effectiveness of such Alternate Liquidity Facility will result in the reduction or withdrawal by any Rating Service of the then current rating on the Series 2006 Bonds. (c) (i) On the Business Day following receipt by the Trustee of written notice from the Liquidity Facility Issuer to the effect that a Termination Event (as defined in the Liquidity Facility) has occurred under the Liquidity Facility and, as a consequence thereof, the Liquidity Facility has terminated automatically, and (ii) on the fifth Business Day preceding the date on which the Liquidity Facility will terminate following receipt by the Trustee of written notice from the Liquidity Facility Issuer to the effect that an event of default which is not a Termination Event has occurred under the Liquidity Facility and, as a consequence thereof, the Liquidity Facility Issuer will terminate the Liquidity Facility, unless the City has elected to discontinue maintenance of a Liquidity Facility and has met the requirements for such election under the Indenture or the City has delivered to the Trustee an Alternate Liquidity Facility which meets the requirements set forth in the Indenture and that, based on written evidence from any Rating Service then rating the Series 2006 Bonds, will not result in the reduction or withdrawal by any Rating Service of the then current rating on the Series 2006 Bonds. See "LIQUIDITY FACILITY — Events of Termination "and" - Events of Default" herein. (d) On the date on which the Liquidity Facility then in effect will terminate following the City's voluntary termination of the Liquidity Facility unless the City has elected to discontinue maintenance of a Liquidity Facility and has met the requirements for such election under the Indenture or the City has delivered to the Trustee art Alternate Liquidity Facility which meets the requirements set forth in the Indenture and that, based on written evidence from any Rating Service then, rating the Series 2006 Bonds, will not result in the reduction or withdrawal by any Rating Service of the then current rating on the Series 2006 Bonds. In the case of (a), (b), (c), or (d) above, the existing Liquidity Facility will be drawn upon to pay the Purchase Price, if necessary, rather than the Alternate Liquidity Facility, unless in the case of (c)(i) above the existing Liquidity Facility cannot be drawn upon with respect to payment of the Purchase Price. Notice of Mandatory Tender, Notice of a mandatory tender for purchase in the case of mandatory tender upon conversion between certain Rate Periods shall be given to each Holder of a Series 2006 Bond subject to such mandatory tender for purchase. When applicable, this notice may be combined with the notice of conversion of Rate Period delivered by the Trustee as described herein under the caption "DESCRIPTION OF THE SERIES 2006 BONDS — Conversion From Weekly Rate Period" herein. In the case of mandatory tender pursuant to paragraph (a) under "DESCRIPTION OF THE SERIES 2006 BONDS — Mandatory Tender - Mandatory Tender with respect to the Liquidity Facility" above, the Trustee shall give notice of such mandatory tender at least 20 days prior to the last Interest Payment Date prior to the Expiration Date. In the case of mandatory tender pursuant to paragraph (b) under "DESCRIPTION OF THE SERIES 2006 BONDS —Mandatory Tender - Mandatory Tender with respect to the Liquidity Facility" above, the Trustee shall not later than 20 days prior to the Business Day preceding the effective date of any Alternate Liquidity Facility, give notice of such mandatory tender. In the case of mandatory tender pursuant to paragraph (c) under "DESCRIPTION OF THE SERIES 2006 BONDS —Mandatory Tender - Mandatory Tender with aspect to 9 the Liquidity Facility" above, the Trustee shall immediately upon receipt of written notice from the Liquidity Facility Issuer, give notice of such mandatory tender. With respect to a mandatory tender pursuant to paragraph (d) above, the Trustee will not later than 15 days prior to the date on which the Liquidity Facility will be terminated by the City, (following receipt of notice of such termination by the City or the Liquidity Facility Issuer), give notice to each affected Holder that such Holder's Series 2006 Bonds are subject to mandatory tender for purchase on the termination date of the Liquidity Facility. No failure on the part of the Trustee to give such notice will affect the requirement that Series 2006 Bonds be tendered for purchase on the mandatory tender date. Delivery of Series 2006 Bonds A Holder of a Series 2006 Bond tendered or required to be tendered for purchase must deliver its Series 2006 Bond to the Trustee at or before 12:00 noon (New York City time) on the purchase date in the case of Series 2006 Bonds accruing interest at a Weekly Rate. Delivery of a beneficial owner's interest in a Series 2006 Bond while Cede & Co. is the sole registered owner of the Series 2006 Bonds will occur when the ownership rights in such Series 2006 Bond are transferred by a Direct Participant on DTC's records (as these terms are defined below) in accordance with DTC's customary procedures. If a Holder has elected to tender any Series 2006 Bond for purchase, or if any Series 2006 Bond is subject to mandatory tender for purchase, and if, in either case, the Paying Agent is in receipt of an amount sufficient to pay the Purchase Price, then such Series 2006 Bond (or portion) will be deemed purchased on the purchase date, and ownership of such Series 2006 Bond (or portion) will be transferred to the purchaser thereof. Any Holder who fails to deliver such Series 2006 Bond for purchase will not be entitled to any payment other than the Purchase Price for such Series 2006 Bond upon surrender of such Series 2006 Bond to the Paying Agent. Payment of Purchase Price Payment of the Purchase Price of Series 2006 Bonds to be purchased upon optional or mandatory tender as described herein will be made by the Trustee at or before 2:30 p.m. (New York City time) on the date of purchase and upon receipt by the Trustee of 100% of the aggregate Purchase Price of the tendered Series 2006 Bonds, in immediately available funds. The Purchase Price of the Series 2006 Bonds tendered for purchase will be paid by the Trustee from the: (a) money held in the Remarketing Proceeds Account relating to those Series 2006 Bonds; (b) money held in the Liquidity Facility Proceeds Account relating to those Series 2006 Bonds; and (c) money held in the City Proceeds Account relating to those Series 2006 Bonds and furnished by the City for payment of the Purchase Price, Series 2006 Bonds purchased with moneys described in clause (c) above, but only to the extent that moneys are due and owing to the Liquidity Facility Issuer, shall be registered by the Trustee in the name of the Liquidity Facility Issuer (the "Bank Bonds") and delivered by the Trustee to the Liquidity Facility Issuer or as otherwise provided in the Liquidity Facility (or if the Bonds are held in the Book -Entry System, such Series 2006 Bonds shall be recorded in the books of the Depository for the account of the Liquidity Facility 10 Issuer or as otherwise provided in the Liquidity Facility). Remarketing The City has entered into a remarketing agreement (the "Remarketing Agreement") with Morgan Stanley & Co. Incorporated with respect to the Series 2006 Bonds (the "Remarketing Agent"). The terms of the Remarketing Agreement is described herein. Unless otherwise instructed by the City, the Remarketing Agent will offer for sale and use its best efforts to find purchasers for all Series 2006 Bonds or portions thereof for which notice of tender has been received or which are subject to mandatory tender. The terms of any sale by the Remarketing Agent will provide for the payment of the Purchase Price for tendered Series 2006 Bonds by the Remarketing Agent to the Paying Agent on the purchase date in immediately available funds at or before 10:30 a.m. (New York City time) on the Purchase Date. The Remarketing Agent will use its best efforts to remarket any such Series 2006 Bonds as soon as possible but no later than 30 days after the date of their purchase. The Remarketing Agent shall not sell any Series 2006 Bonds as to which notice by the Trustee has been given of either (i) the conversion from one type of Rate Period to another type of Rate Period or any other event triggering a mandatory tender for purchase or (ii) the redemption thereof, unless the Remarketing Agent has advised the Person to whom the sale is made of such proposed conversion, event, or redemption. Any purchaser so advised must deliver a notice to the Paying Agent stating that such purchaser will purchase such Series 2006 Bonds on the related tender date. In no event shall Series 2006 Bonds tendered for purchase be remarketed to the City. The Remarketing Agent will not remarket any Series 2006 Bond (i) if an Event of Default (as defined in the Indenture, see "APPENDIX B — MASTER INDENTURE AND FORM OF SERIES 2006 INDENTURE") with respect to the payment of principal, interest, premium, if any, or Purchase Price has occurred and is continuing with respect to the Series 2006 Bonds, (ii) if the Series 2006 Bonds are required to be tendered for purchase on the last Interest Payment Date prior to the Expiration Date, unless and until the Liquidity Facility has been extended or renewed or an effective Alternate Liquidity Facility has been delivered to the Trustee or the City has elected to discontinue use of a Liquidity Facility in accordance with the terms of the Indenture or (iii) if the Series 2006 Bonds are required to be tendered for purchase on the fifth Business Day preceding the date on which the Liquidity Facility will terminate following receipt by the Trustee of written notice from the Liquidity Facility Issuer to the effect that an event of default has occurred under the Liquidity Facility and the Liquidity Facility Issuer is terminating the Liquidity Facility, unless and until an effective Alternate Liquidity Facility has been delivered to the Trustee or the City discontinues use of a Liquidity Facility in accordance with the provisions of the Indenture. Unless a Liquidity Facility is no longer in effect, in no event shall Series 2006 Bonds be remarketed unless the Liquidity Facility Issuer has reinstated, or will simultaneously reinstate, the amount available under the Liquidity Facility to an amount sufficient to pay the Purchase Price for such Series 2006 Bonds. Series 2006 Bonds which have been duly tendered for purchase and which have not been remarketed will be purchased on the Purchase Date with funds provided under the Liquidity Facility; provided that (i) during any period the Series 2006 Bonds are not supported by a Liquidity Facility (including any period during which a Liquidity Facility Issuer is not required, pursuant to the terms of its Liquidity Facility, to provide for the Purchase Price of tendered Series 2006 Bonds), or (ii) if the Liquidity Facility Issuer fails in its obligation to provide for the Purchase Price of tendered Bonds, then such Series 2006 Bonds will be 11 purchased by the City on the Purchase Date. No assurance can be given that the City would have sufficient funds available on any optional or mandatory tender date to purchase tendered Series 2006 Bonds. Redemption Optional Redemption During Daily or Weekly Rate Period. While the Series 2006 Bonds bear interest at a Daily Rate or a Weekly Rate, the Series 2006 Bonds are subject to optional redemption in whole or in part, by the City, on any Business Day with respect to the Series 2006 Bonds bearing interest at a Daily Rate or a Weekly Rate, at an optional redemption price equal to 100% of the principal amount thereof, together with interest accrued thereon, if any, to the redemption date. Redemption of Bank Bonds. The Bank Bonds are subject to optional redemption in whole or in part in Authorized Denominations at any time, as more fully provided in the Liquidity Facility. If fewer than all of the Series 2006 Bonds are to be optionally redeemed, Bank Bonds shall be redeemed prior to any other Series 2006 Bond. In addition, the Bank Bonds are subject to mandatory redemption, as more fully provided in the Liquidity Facility. Mandatory Sinking Fund Redemption of the Series 2006 Bonds. The Series 2006 Bonds shall be subject to mandatory sinking fund redemption by the City at a redemption price of 100% of the principal amount redeemed plus accrued interest to the redemption date on December 1 in each of the years listed below and in the aggregate principal amount shown opposite such year: Year Amount Year Amount *Final Maturity of the Series 2006 Bonds. Provided, however, the principal amount of the Series 2006 Bonds required to be redeemed on each such sinking fund redemption date will be reduced by the principal amount of the Series 2006 Bonds as specified by the City's request at least 45 days prior to the redemption date that have been either (i) purchased by or on behalf of the City and delivered to the Trustee for cancellation, or (ii) redeemed other than through the operation of the provisions of this paragraph, and that have not been previously made the basis for a reduction of the principal amount of the Series 2006 Bonds to be redeemed on a sinking fund redemption date. Notice of Redemption. The Trustee shall mail by first class mail, postage prepaid, to the registered owners of all Series 2006 Bonds to be redeemed, at the address shown on the registration books, notice of redemption at least 30 days nor more than 60 days prior to the redemption date. Each notice of redemption of the Series 2006 Bonds will identify the Series 2006 Bonds or portions thereof to be redeemed and will state, among other things, the redemption price, the redemption date, the place or places where the redemption price is payable and that on the redemption date such Series 2006 Bonds called for redemption (provided funds for the redemption of such Series 2006 Bonds are on deposit at the place of payment) will cease to bear 12 interest. The failure of a Holder to receive notice by mailing or any defect in that notice regarding any Series 2006 Bond will not affect the validity of the proceedings for the redemption of the Series 2006 Bonds. Book -Entry Only System THE FOLLOWING INFORMATION CONCERNING DTC AND DTC'S BOOK -ENTRY ONLY SYSTEM HAS BEEN OBTAINED FROM SOURCES THAT THE CITY BELIEVES TO BE RELIABLE, BUT NEITHER THE CITY NOR THE UNDERWRITER TAKE ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS THEREOF. The Depository Trust Company (DTC"), New York, New York, will act as securities depository for the Series 2006 Bonds. The Series 2006 Bonds will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered certificate will be issued for each of the Series 2006 Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instrument from over 100 countries that DTC's participants ("Direct Participants) deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, FICC, 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, Inc. 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"). The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission, More information about DTC can be found at wwW.dtcc.com and www.dtc,org. Purchases of Series 2006 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2006 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2006 Bond ('Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records, Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2006 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on 13 behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2006 Bonds, except in the event that use of the book -entry system for the Series 2006 Bonds is discontinued. To facilitate subsequent transfers, all Series 2006 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 2006 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2006 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2006 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 maybe in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Series 2006 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series 2006 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 2006 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 2006 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 finds and corresponding detail information from the City on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Series 2006 Bonds held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the Paying Agent or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Series 2006 Bonds at any time by giving reasonable notice to the City. Under such circumstances, in the event that a 14 successor securities depository is not obtained, Series 2006 Bond certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Series 2006 Bond certificates will be printed and delivered to DTC. THE CITY AND THE PAYING AGENT WILL HAVE NO RESPONSIBILITY OR OBLIGATION TO THE BENEFICIAL OWNERS, DTC PARTICIPANTS OR THE PERSONS FOR WHOM DTC PARTICIPANTS ACT AS NOMINEES WITH RESPECT TO THE SERIES 2006 BONDS, FOR THE ACCURACY OF RECORDS OF DTC, CEDE & CO. OR ANY DTC PARTICIPANT WITH RESPECT TO THE SERIES 2006 BONDS OR THE PROVIDING OF NOTICE OR PAYMENT OF PRINCIPAL, OR INTEREST, OR ANY PREMIUM ON THE SERIES 2006 BONDS, TO DTC PARTICIPANTS OR BENEFICIAL OWNERS, OR THE SELECTION OF SERIES 2006 BONDS FOR REDEMPTION. Registration, Transfer and Exchange So long as the Series 2006 Bonds are registered in the name of DTC or its nominee, the foIIowing paragraph relating to transfer and exchange of Bonds do not apply to the Series 2006 Bonds. So long as there are any Series 2006 Bonds issued under the Indenture which have not been paid in full, the Trustee will cause books for the registration and transfer of Series 2006 Bonds (the "Register"), as provided in the Master Indenture, to be maintained and kept at the designated office of the Registrar. Except as provided below, at the option of the Holder, Series 2006 Bonds shall be transferable by the Holder in person or by his attorney duly authorized in writing only upon surrender thereof together with a written instrument of transfer satisfactory to the Registrar (which shall set forth the name, address and Social Security Number or other federal income tax identification number of the transferee) duly executed by the Holder or his duly authorized attorney. Upon the transfer of any such Series 2006 Bond, the City shall issue in the name of the transferee a new Series 2006 Bond or Series 2006 Bonds of the same series, subseries, tenor and maturity in Authorized Denominations and in an aggregate principal amount of the Series 2006 Bonds being transferred. At the option of the Holder thereof and upon surrender hereof at the designated office of the Registrar with a written instrument of exchange satisfactory to the Registrar duly executed by the Holder or his duly authorized attorney, Series 2006 Bonds may be exchanged for a like principal amount of Series 2006 Bonds of the same series, subseries, tenor and maturity of any other Authorized Denominations. In all cases in which Series 2006 Bonds are exchanged or transferred hereunder, the City shall execute, and the Registrar or other Authenticating Agent shall authenticate and deliver, Series 2006 Bonds in accordance with the provisions of the Master Indenture. There shall be no charge for any such exchange or transfer, but the City or the Registrar may require payment of a sum sufficient to pay any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer. All Series 2006 Bonds issued upon any exchange or transfer shall be the valid obligations of the City and shall evidence the same debt and shall be entitled to the same benefits under the Indenture as the Series 2006 Bonds surrendered upon exchange or transfer. Neither the City nor the Registrar as the case may be, shall be required to make any exchange or transfer of a Series 2006 Bond during a period beginning at the 15 opening of business fifteen (15) days before the day of the mailing of a notice of redemption of Series 2006 Bonds and ending at the close of business on the day of the mailing or to transfer or exchange any Series 2006 Bonds selected for redemption, in whole or in part, following the mailing. Replacement of Bonds Mutilated, Destroyed, Stolen or Lost If any Series 2006 Bond is mutilated, lost, wrongfully taken, improperly canceled or destroyed, in the absence of written notice to the City or the Registrar that the lost, wrongfully taken or destroyed Series 2006 Bond has been acquired by a holder in due course, the City shall execute, and the Registrar shall authenticate and deliver, a new Series 2006 Bond of like date, maturity and Authorized Denomination, as applicable, as the Series 2006 Bond mutilated, lost, wrongfully taken, improperly canceled or destroyed; provided, that (i) in the case of any mutilated or improperly canceled Series 2006 Bond, such Series 2006 Bond shall be surrendered first to the Registrar; and (ii) in the case of any lost, wrongfully taken or destroyed Series 2006 Bond, there shall be furnished first to the City, the Trustee and the Registrar, evidence of the loss, wrongful taking or destruction satisfactory to the City, the Trustee and the Registrar, together with indemnification satisfactory to each of them and to the Authorized Official. If any lost, wrongfully taken or destroyed Series 2006 Bond shall have matured or has been called for redemption, instead of issuing a new Series 2006 Bond, the Paying Agent shall pay that Series 2006 Bond, without surrender thereof, upon the furnishing of satisfactory evidence and indemnification, as in the case of issuance of a new Series 2006 Bond. The City, the Trustee and the Registrar may charge the Holder of a mutilated, lost, wrongfully taken or destroyed Series 2006 Bond their reasonable fees and expenses in connection with theft actions pursuant to the Master Indenture, except for improper cancellation by the Registrar. LIQUIDITY FACILITY The following descriptions of provisions of the Liquidity Facility are only brief discussions of some of the provisions thereof, and do not purport to summarize or describe all of the provisions thereof. Copies of the Liquidity Facility are available as described in the Introduction herein. General The Liquidity Facility provides that the Liquidity Facility Issuer shall purchase those Series 2006 Bonds tendered or deemed tendered from time to time pursuant to an optional or mandatory tender by owners thereof in accordance with the terms and provisions of the Indenture, in each case, to the extent such Bonds are not remarketed by the Remarketing Agent. The Liquidity Facility will expire on November 30, 2011, unless extended or terminated pursuant to its terms. See description of the Liquidity Facility Issuer in APPENDIX G attached hereto. Under certain circumstances described below, the obligation of the Liquidity Facility Issuer to purchase Series 2006 Bonds tendered or deemed tendered by the owners thereof pursuant to an optional or mandatory tender may be suspended or terminated. In such event, sufficient funds may not be available to purchase Series 2006 Bonds tendered or deemed tendered by the owners thereof pursuant to an optional or 16 mandatory tender. In addition, the Liquidity Facility does not provide security for the payment of principal of or interest or premium, if any, on the Series 2006 Bonds. Purchase of Tendered Bonds by the Liquidity Facility Issuer The Liquidity Facility Issuer will purchase from time to time during the Purchase Period (as defined in the Liquidity Facility), at the Purchase Price, with immediately available funds, Series 2006 Bonds which are bearing interest at a Weekly Rate or a Daily Rate and which are not Bank Bonds or Series 2006 Bonds owned by or for the account of, the City (the "Eligible Bonds") which are tendered pursuant to (i) an Optional Tender or (ii) a Mandatory Purchase which, in each case, the Remarketing Agent has been unable to remarket. The Liquidity Facility Issuer will pay the Purchase Price with its own funds. The aggregate principal amount (or portion thereof) of any Eligible Bond purchased on any Purchase Date shall be an Authorized Denomination, and in any case will not exceed the Available Principal Commitment (as defined in the Liquidity Facility) (calculated without giving effect to any purchase of Series 2006 Bonds by the Liquidity Facility Issuer on such date) at 2:00 p.m. on such date. The aggregate amount of the Purchase Price comprising interest with respect to the Eligible Bonds (the "Interest Component") purchased on any Purchase Date shall not exceed the lesser of (i) the Available Interest Commitment on such date and (ii) the actual aggregate amount of interest accrued on each such Eligible Bond, other than Defaulted Interest, to such Purchase Date; provided that if the applicable Purchase Date is also an Interest Payment Date for the Eligible Bonds to be purchased, no accrued interest on such Eligible Bonds shall be included in the Purchase Price. Provided, however, that in no event shall the Liquidity Facility Issuer be obligated to extend credit for the payment of the portion of the Purchase Price representing accrued interest on the Series 2006 Bonds in excess of the Available Interest Commitment as such amount may be reduced pursuant to the terms of the Liquidity Facility. Events of Termination The occurrence of any of the following events, among others, will constitute an Event of Termination under the Liquidity Facility. Reference is made to the Liquidity Facility for a complete listing of all Events of Termination: (a) Non Payment of Insured Amounts. Any principal or interest due on the Series 2006 Bonds is not paid when due and such principal or interest is not paid by the Insurer when, as, and in the amounts required to be paid pursuant to the terms of the Policy; or (b) Invalidity or Contest of Validity of Policy. The Insurer shall in writing claim that the Policy with respect to the payment of principal of or interest on the Series 2006 Bonds is not valid and binding on the Insurer, and repudiate the obligations of the Insurer under the Policy with respect to payment of principal of or interest on the Series 2006 Bonds or Term -out Payments, or the Insurer shall initiate any legal proceedings to seek an adjudication that the Policy, with respect to the payment of principal or interest of the Series 2006 Bonds or the Term -out Payments is not valid and binding on the Insurer, or any court or governmental authority with jurisdiction to rule on the validity of the Policy shall announce, find or rule that the Policy is not valid and binding on the Insurer; or 17 (c) Insurer Insolvency; Insurer Downgrade Below Investment Grade. Either (i) the occurrence of art Insurer Event of Insolvency, or (ii) the withdrawal for credit reasons by S&P, Moody's and Fitch of the financial strength rating of the Insurer or the reduction of such rating, in the case of Moody's, below Baa3, in the case of S&P, below BBB-, and in the case of Fitch, below BBB-; or (d) Termination of Policy. The Policy is (i) canceled or terminated for any reason without the consent of the Liquidity Facility Issuer or (ii) is amended or modified in any material respect without the consent of the Liquidity Facility Issuer. (e) Insurer Default on other Policies. Any default by the Insurer in making payment when, as and in the amounts required to be made pursuant to the express terms and provisions of any other bond insurance policy issued by the Insurer insuring publicly -rated bonds; or (f) Permitted Minimum Bond Insurer Rating. The Insurer shall fail to maintain the Permitted Minimum Bond Insurer Rating for a period of thirty (30) consecutive days. Events of Default The occurrence of any of the following events, among others, will constitute an Event of Default under the Liquidity Facility. Reference is made to the Liquidity Facility for a complete listing of all Events of Default: (a) Misrepresentation. Any material representation or warranty made by the City under or in connection with the Liquidity Facility shall prove to be untrue in any material respect on the date as of which it was made; or (b) Non -Payment of Fees. Non-payment of any amounts payable under the Liquidity Facility (together with interest thereon at the Default Rate) within ten (.10) days after the Paying Agent, the Tender Agent, the Insurer and the City have received written notice from the Liquidity Facility Issuer that the same were not paid when due; or (c) Other Non Payments. Non-payment of any other fees or amounts payable under the Liquidity Facility (together with interest thereon at the Default Rate) within twenty (20) days after written notice thereof to the City, the Paying Agent, the Tender Agent and the Insurer by the Liquidity Facility Issuer; or (d) Certain Breaches. The breach by the City of (i) any of the terms or provisions of the use of proceeds under the Liquidity Facility (in respect of proceeds from the purchases of Series 2006 Bonds), (ii) any amendments to the Policy, (iii) the Indenture or other Related Document (in a material respect) which was not consented to by the Liquidity Facility Issuer,(iv) permit the appointment of a successor Remarketing Agent without consent of the Liquidity Facility Issuer, and (v) maintenance of the City's existence; or (e) Other Breaches. The breach by the City of any terms or provisions of the Liquidity Facility for which no cure period is otherwise specifically provided with respect thereto which is not remedied within thirty (30) days after written notice thereof from the 18 Liquidity Facility Issuer shall have been received by the City; provided, however, that in the event such breach or failure is such that it can be corrected but cannot be corrected within said 30-day period, the same shall not constitute an Event of Default under the Liquidity Facility if (x) corrective action is instituted by the City within said 30-day period and is being diligently pursued and (y) such breach or failure is corrected within 90 days or such longer period to which the Liquidity Facility Issuer shall consent in writing; or (f) Insolvency. (i) The City shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding -up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or the City shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the City any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in an order for such relief or in the appointment of a receiver or similar official or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there shall be commenced against the City any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets, which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the City shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; or (v) the City shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts; or (vi) the Governor or the Legislature of the State shall have declared the City to be in a state of financial emergency as provided by Florida law; or (g) Invalidity. Any material provision of the Liquidity Facility or any Related Document (other than the Policy) shall at any time for any reason cease to be valid and binding on the City or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by the City or by any governmental authority having jurisdiction, or the Cityr shall deny that it has any further liability or obligation under any such document, or such document is cancelled or terminated without the Liquidity Facility Issuer's prior written consent; or (h) Cross Default. The occurrence of any "event of default" as defined in any of the Related Documents (which is not waived pursuant to the terms thereof) which is not otherwise described in "Events of Default" -Section 7.02 of the Liquidity Facility, other than the failure of the Liquidity Facility Issuer to provide funds for the purchase of Tendered Bonds when required by the terms and conditions of the Liquidity Facility; or (i) Other Debt. The City shall have defaulted in the payment or performance of any obligation of a principal amount of $5,000,000 or more, which constitutes Debt ranking on a parity of payment with the Series 2006 Bonds, and such default permits the acceleration of the payment of moneys. 19 Following the occurrence of any of the above described Events of Default, the Liquidity Facility Issuer may take any one or more of the following actions, among others (the "Remedies"). Reference is made to the Liquidity Facility for a complete listing of all consequences of Events of Default. Remedies (a) Immediate Termination. In the case of an Event of Termination specified in paragraphs (a), (b), (c), (d) or (e) under the subsection "Events of Termination" above, the Available Commitment and Purchase Period and the obligation of the Liquidity Facility Issuer to purchase Series 2006 Bonds shall immediately terminate without notice or demand (a "Termination Event"), and thereafter the Liquidity Facility Issuer shall be under no obligation to purchase Series 2006 Bonds. Promptly upon the Liquidity Facility Issuer obtaining knowledge of an Event of Termination specified in paragraphs (a), (b), (c), (d) or (e) under the subsection "Events of Termination", the Liquidity Facility Issuer shall give written notice of the same to the Paying Agent, the Tender Agent, the City, the Remarketing Agent and the Insurer; provided, that the Liquidity Facility Issuer shall incur no liability or responsibility whatsoever by reason of its failure to give such notice and such failure shall in no manner affect the immediate termination of the Available Commitment and of the Liquidity Facility Issuer's obligation to purchase Series 2006 Bonds pursuant to the Liquidity Facility. (b) Termination with Notice. In the case of an Event of Termination specified in paragraph (f) under the subsection "Events of Termination" or an Event of Default specified in paragraphs (b) or (c) under the subsection "Events of Default", the Liquidity Facility Issuer may terminate the Available Commitment and Purchase Period by giving written notice to the Paying Agent, the Tender Agent, the City, the Remarketing Agent and the Insurer, specifying the date on which the Available Commitment and Purchase Period shall terminate (a "Notice of Termination"), which date, the Purchase Termination Date (which shall also be a mandatory Purchase Date pursuant to the Series 2006 Indenture), shall be not less than thirty (30) days from the date of receipt of such notice by the Paying Agent and the Tender Agent. On and after the Purchase Termination Date, the Liquidity Facility Issuer shall be under no further obligation to purchase Series 2006 Bonds under the Liquidity Facility. (c) Suspension relating to Policy. During the pendency of an Event of Termination pursuant to paragraph (c) under the subsection "Events of Termination" above (with respect to an order described in clause (a) of the definition of Insurer Event of Insolvency) (a "Potential Event of Termination"), the Liquidity Facility Issuer's obligations to purchase Series 2006 Bonds shall be immediately suspended without notice or demand and thereafter the Liquidity Facility Issuer shall be under no obligation to purchase Series 2006 Bonds until the Available Commitment is reinstated as described in this paragraph (c). Promptly upon the Liquidity Facility Issuer obtaining knowledge of any such Potential Event of Termination, the Liquidity Facility Issuer shall give written notice of the same to the City, the Paying Agent, the Tender Agent, the Remarketing Agent and the Insurer of such suspension; provided, however, that the Liquidity Facility Issuer shall incur no liability or responsibility whatsoever by reason of its failure to give such notice and such failure shall in no way affect the suspension of the Liquidity Facility Issuer's obligations under the Liquidity Facility. In the event such Potential Event of Termination is cured prior to becoming a Termination Event, the Liquidity Facility Issuer's obligations shall be automatically reinstated and the terms of the Liquidity Facility will continue in full force and effect (unless the Liquidity Facility shall otherwise have 20 terminated or been suspended by its terms or in accordance with paragraphs (a) or (b) under the subsection "Remedies"). (d) Other Remedies. In addition to the rights and remedies set forth in paragraphs (a), (b), and (c) under the subsection "Remedies", in the case of any Event of Termination specified in the Liquidity Facility or in the case of any Event of Default specified in the Liquidity Facility, upon the election of the Liquidity Facility Issuer: (i) all amounts payable under the Liquidity Facility (other than payments of principal and redemption price of and interest on the Series 2006 Bonds or payments of Excess Bond Interest) shall upon notice to the City become immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the City; and (ii) the Liquidity Facility Issuer shall have all the rights and remedies available to it under the Liquidity Facility, the Related Documents, the Policy or otherwise pursuant to law or equity; provided, however, that the Liquidity Facility Issuer shall not have the right to terminate its obligation to purchase Series 2006 Bonds or to declare any amount due hereunder due and payable except as expressly provided herein, or to accelerate the maturity date of any Series 2006 Bonds except as provided in the Indenture. Without limiting the generality of the foregoing, the Liquidity Facility Issuer agrees to purchase Series 2006 Bonds on the terms and conditions of the Liquidity Facility notwithstanding the institution or pendency of any bankruptcy, insolvency or similar proceeding with respect to the City. The Liquidity Facility will not assert as a defense to its obligation to purchase Series 2006 Bonds under the Liquidity Facility (y) the institution or pendency of a bankruptcy, insolvency or similar proceeding with respect to the City, or (z) a determination by a court of competent jurisdiction in a bankruptcy, insolvency or similar proceeding with respect to the City that the Liquidity Facility is not enforceable against the City under applicable bankruptcy, insolvency or similar laws. MUNICIPAL BOND INSURANCE The following information has been furnished by (the "Insurer"), for use in this Official Statement and, neither the City nor the Underwriter guaranty its adequacy or accuracy. Reference is made to Appendix E for a specimen of the Policy. [To come] SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2006 BONDS The payment of the Debt Service on the Series 2006 Bonds and Other Bond Service Charges shall be secured by Covenant Revenues and the moneys and any Eligible Investments on deposit in the Funds and Accounts established in the Indenture (except for the Escrow Account in the Proceeds Fund, the Liquidity Facility Proceeds Account, the Remarketing Proceeds Account and the Bank Bonds Account in the Bond Purchase Fund) and any investment income thereon (collectively, the "Additional Security"). "Covenant Revenues" are defined in the Master Indenture to mean the legally available Non -Ad Valorem Funds which have been budgeted and appropriated pursuant to Section 2.04 of the Master Indenture and disbursed or deposited in a Fund for use in accordance with such appropriation. "Non -Ad Valorem Funds" are defined in the Master Indenture to mean all revenues of the City derived from any source other than ad valorem taxation 21 on real or tangible personal property, which are legally available to make payments required in the Indenture, but only after provision has been made by the City for the payment of the cost of services and programs which are for essential public purposes affecting the health, welfare and safety of the inhabitants of the City or which are legally mandated. The City has covenanted in the Master Indenture that so long as any Bonds are outstanding, it will appropriate in its annual budget, by budget amendment if necessary, from Non -Ad Valorem Funds lawfully available in each such Fiscal Year amounts which, together with any other funds held in trust by the City and to be deposited in trust for such purpose under the Indenture and which are legally available for the uses described below, will be sufficient to permit the City to pay when due or required the following amounts: First, there shall be deposited to the Current Debt Service Fund the amounts which are necessary to pay any past due Debt Service, any past due Payment Obligations owed to Credit Facility Providers and arty Past Due Hedge Payments plus such additional amounts as may be necessary to cause the Current Debt Service Fund to be funded at the then required level of funding (deposits to the Current Debt Service Fund shall be made not less often than monthly) in accordance with the Series. Indentures under which the Bonds Outstanding from time to time are issued); the amount to be deposited to the Current Debt Service Fund shall be increased to the extent necessary to provide for and pay any Hedge Payments the City expects to make and may be decreased by any Hedge Receipts the City expects to receive (which Hedge Receipts shall be deposited in the Current Debt Service Fund upon receipt); Second, the amounts needed to pay when due all Payment Obligations to Reserve Facility Providers and to make deposits in any Reserve Funds that are necessary to cause the same to be at the levels of funding required by the Series Indentures under which the Bonds Outstanding from time to time have been issued (there is no Reserve Requirement for the Series 2006 Bonds); Third, the amounts needed to pay when due any Administrative Charges or to make deposits in any Administrative Charges Funds that are necessary to cause the same to be at the levels of funding required by the Series Indentures under which the Bonds Outstanding from time to time have been issued; Fourth, the amount needed to pay when due any Rebate and to make deposits in any Rebate Funds that are necessary to cause the same to be at the levels of funding required by the Series Indentures under which any Tax -Exempt Bonds Outstanding from time to time have been issued; Fifth, the amounts needed to make deposits to any other Special Funds which are necessary to cause such other Special Funds to be at the levels of funding required by the Series Indentures under which the Bonds Outstanding from time to time have been issued and to pay when due any other amounts required by the Series Indentures to be paid; and Sixth, the amounts needed to pay when due any Hedge Termination Payments. The covenant on the part of the City to budget and appropriate such amounts of Non -Ad Valorem Funds is cumulative to the extent not paid and will continue until all such Non -Ad Valorem Funds or other legally available funds in amounts sufficient to make all such required payments will have been budgeted, appropriated and actually paid. Notwithstanding the foregoing, the City does not covenant to maintain any services or programs, now provided or maintained by the City, which generate Non -Ad Valorem Funds. 22 The covenant to budget and appropriate does not create any lien upon or pledge of Non -Ad Valorem Funds (except for Covenant Revenues which have been deposited in a Fund), nor does it preclude the City from pledging in the future any of its Non -Ad Valorem Funds, nor does it require the City to levy and collect any particular Non -Ad Valorem Funds, nor does it give the Holders of the Series 2006 Bonds, the Trustee, any other Fiduciary, any Credit Facility Provider, any Reserve Facility Provider, any Hedge Facility Provider or any other Person a prior claim on the Non -Ad Valorem Funds, as opposed to claims of general creditors of the City. Such covenant to budget and appropriate Non -Ad Valorem Funds is subject in all respects to the payment of obligations secured by a pledge of such Non -Ad Valorem Funds heretofore or hereafter entered into. However, the covenant to budget and appropriate in its general annual budget for the purposes and in the manner stated in the Master Indenture shall have the effect of imposing on the City a positive duty to budget and appropriate, by amendment if necessary, amounts sufficient to meet its obligations under the Indenture; subject, however, in all respects to the restrictions of Section 166.241, Florida Statutes, as amended (or any successor provision), which provides, in part, that "the governing body of each municipality shall adopt a budget each fiscal year. The amount available from taxation or other sources including amounts carried over from prior fiscal years, must equal the total appropriations for expenditures and reserves. It is unlawful for any officer of a municipal government to expend or contract for expenditures in any fiscal year except in pursuance of budgeted appropriations." Such covenant is, however, cumulative and shall carry over from year to year. THE SERIES 2006 BONDS AND THE DEBT SERVICE THEREON AND OTHER BOND SERVICE CHARGES RELATING THERETO ARE NOT GENERAL OBLIGATIONS OF THE CITY, BUT ARE LIMITED AND SPECIAL OBLIGATIONS OF THE CITY WHICH WILL BE PAYABLE SOLELY FROM AND ARE SECURED SOLELY BY THE TRUST ESTATE AND THE ADDITIONAL SECURITY. EXCEPT FOR THE TRUST ESTATE AND ADDITIONAL SECURITY, THE SERIES 2006 BONDS, THE DEBT SERVICE THEREON AND OTHER BOND SERVICE CHARGES RELATING THERETO ARE NOT SECURED BY A PLEDGE OF OR LIEN UPON ANY PROPERTY OWNED BY THE CITY OR SITUATED IN THE CITY OR ANY AD VALOREM TAXES OF THE CITY. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, MIAMI-DADE COUNTY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF ARE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY OR INTEREST ON THE SERIES 2006 BONDS OR FOR THE PAYMENT OF ANY OTHER AMOUNTS PAYABLE UNDER THE MASTER INDENTURE, THE SERIES 2006 INDENTURE OR UNDER ANY AGREEMENT RELATING TO THE SERIES 2006 BONDS. NO HOLDER OF ANY SERIES 2006 BOND, NO LIQUIDITY FACILITY PROVIDER, CREDIT FACILITY PROVIDER NOR HEDGE FACILITY PROVIDER SHALL, ON ACCOUNT OF THE SERIES 2006 BONDS OR ANY AGREEMENT ENTERED INTO BY THE CITY IN CONNECTION THEREWITH, HAVE THE RIGHT TO COMPEL THE AD VALOREM TAXING POWER OF THE CITY, MIAMI-DADE COUNTY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF OR TAXATION OF ANY REAL OR PERSONAL PROPERTY THEREIN TO PAY THE PRINCIPAL OF, PREMIUM, IF ANY OR INTEREST ON THE SERIES 2006 BONDS OR THE PAYMENT OF ANY OTHER AMOUNTS PAYABLE UNDER THE MASTER INDENTURE, SERIES 2006 INDENTURE OR UNDER ANY AGREEMENT RELATING TO THE SERIES 2006 BONDS. Enforcement of the City's obligation to budget and appropriate legally available Non -Ad Valorem Funds shall be through appropriate judicial proceedings. The City has issued and may issue other bonds or debt obligations secured by a similar covenant. See "- Schedule of Principal and Interest for Non -Ad Valorem Revenue Bonds and Loans" below. In addition, various contracts of the City which do not constitute 23 debt may be secured in a similar manner. The City has not covenanted to maintain any programs or other activities which generate Non -Ad Valorem Funds. Furthermore, the obligation of the City to budget and appropriate Non -Ad Valorem Funds is subject to a variety of factors, including the payment of essential governmental services of the City and the obligation of the City to have a balanced budget. For a description of additional limitations see "Special Investment Considerations" herein. Description of Non -Ad Valorem Revenues The following describes the sources of the City's Non -Ad Valorem Revenues; Franchise Fees Franchise fees are levied annually on utility companies by the City in return for granting a privilege sanctioning a monopoly or permitting the use of public property. Such fees are currently levied against Florida Power and Light Co. and Southern Bell. Public Service Tax The Public Services Tax is imposed, levied and collected by the City pursuant to Section 166.231, Florida Statutes, and other applicable provisions of law, on the purchase of electricity, fuel oil, metered or bottled gas (natural liquefied petroleum gas or manufactured), water service, and other services on which a tax may be imposed by law. Florida law authorizes any municipality in the State of Florida to levy a public service tax on the purchase within such municipality of electricity, metered natural gas, liquefied petroleum gas either metered or bottled, manufactured gas either metered or bottled, water service and fuel oil as well as any services competitive with those specifically enumerated. This tax may not exceed 10% of the payments received by the sellers of such services from purchasers (except in the case of fuel oil, for which the maximum tax is four cents per gallon). The purchase of natural gas or fuel oil by a public or private utility either for resale or for use as fuel in the generation of electricity, or the purchase of fuel oil or kerosene for use as an aircraft engine fuel or propellant or for use in internal combustion engines, is exempt from the levy of such tax. Pursuant to the Constitution of the State of Florida, Florida Statutes and a resolution of the City, the City levies a Public Services Tax, within the incorporated area of the City at the rate of 10% on sales of all services for which it is allowed to tax, except telecommunications service, and with the restriction that the tax on fuel oil cannot exceed 4 cents per gallon. Florida law provides that a municipality may exempt from the public service tax the first 500 kilowatts of electricity per month purchased for residential use. The City has not adopted such an exemption but it does exempt purchases by the United States Government, the State of Florida, Miami -Dade County, the City and its agencies, boards, commissions and authorities from the levy of such tax. In addition, the City exempts purchases used exclusively for church purposes by any State of Florida recognized church. The Public Services Tax must be collected by the seller from purchasers at the time of sale and 24 remitted to the City. Such tax will appear on a periodic bill rendered to consumers for electricity, metered and bottled gas, water service and fuel oil. A failure by a consumer to pay that portion of the bill attributable to the public service tax may result in a suspension of the service involved in the same fashion as the failure to pay that portion of the bill attributable to the particular utility service. Local Communications Services Tax The Communications Services Tax Simplification Act, enacted by Chapter 2000-260, Laws of Florida, as amended by Chapter 2001-140, Laws of Florida, and now codified in part as Chapter 202, Florida Statutes (the "Communications Services Tax Act") established, effective October 1, 2001, a communications services tax on the sale of communications services as defined in Section 202.11, Florida Statutes, and as of the same date repealed Section 166.231(9), Florida Statutes, which previously granted municipalities the authority to levy a utility services tax on the purchase of telecommunication services. Florida Statute Section 202.19 provides that counties and municipalities may levy a discretionary communications services tax (the "local communications services tax") on communications services, the revenues from which may be pledged for the repayment of current or future bonded indebtedness. The City set the rates for its local communications services tax pursuant to a resolution adopted on June 14, 2001. Communication services are defined as the transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals, including cable services, to a point, or between or among points, by or through any electronic, radio, satellite, cable, optical, microwave, or other medium or method now in existence or hereafter devised, regardless of the protocol used for such transmission or conveyance. The term does not include: (a) Information services. (b) Installation or maintenance of wiring or equipment on a customer=s premises. (c) The sale or rental of tangible personal property. (d) The sale of advertising, including, but not limited to, directory advertising. (e) Bad check charges. (f) Late payment charges. (g) Billing and collection services. (h) Internet access service, electronic mail service, electronic bulletin board service, or similar on-line services. Any sale of communications services charged to a service address in the City is subject to the City's local communications services tax at a rate of 5.62%. The Communications Services Tax Act further provides that, to the extent that a provider of communications services is required to pay a tax, charge, or other fee under any franchise agreement or ordinance with respect to the services or revenues that are also subject to the tax, such provider is entitled to a credit against the amount of such tax payable to the State in the amount of such tax, charge, or fee with respect to such service or revenues. 25 The proceeds of said local communication services tax less the Florida Department of Revenue's cost of administration is deposited in the local communication services tax clearing trust fund and distributed monthly to the appropriate jurisdictions. Intergovernmental This category includes federal, state and other local units grants, and revenues shared by the state and other local units. The largest component is the half -cent sales tax. The State of Florida (the "State") levies and collects a sales tax on, among other things, the sales price of each item or article of tangible personal property sold at retail in the State, subject to certain exceptions and dealer allowances. In 1982, the Florida legislature created the Local Government Half -Cent Sales Tax Program (the "Local Government Half -Cent Sales Tax Program") which distributes a portion of the sales tax revenue and money from the Skate's General Revenue Fund to counties and municipalities that meet strict eligibility requirements. In 1982, when the Local Government Half -Cent Sales Tax Program was created, the general rate of sales tax in the State was increased from 4%Q to 5%, and one-half of the fifth cent was devoted to the Local Government Half -Cent Sales Tax Program, thus giving rise to the name "Half -Cent Sales Tax." Although the amount of sales tax revenue deposited into the Local Government Half -Cent Sales Tax Program is no longer one-half of the fifth cent of every dollar of the sales price of an item subject to sales tax, the name "Half -Cent Sales Tax" has continued to be utilized. Section 212.20, Florida Statutes, provides for the distribution of sales tax revenues collected by the State and further provides for the distribution of a portion of sales tax revenues to the Local Government Half -Cent Sales Tax Clearing Trust Fund (the "Trust Fund"), after providing for transfers to the General Fund and the Ecosystem Management and Restoration Trust Fund. The entire sales tax remitted to the State by each sales tax dealer located within a particular county (the "Local Government Half -Cent Sales Tax Revenues") was deposited in the Trust Fund and earmarked for distribution to the governing body of such county and each participating municipality within that county pursuant to a distribution formula. As of July 1, 2004, the percentage of Local Government Half -Cent Sales Tax Revenues deposited in the Trust Fund was effectively reduced to 8.805%. The general rate of sales tax in the State is currently 6.00%. After taking into account the distributions to the General Fund (historically 5% of taxes collected) and the Ecosystem Management and Restoration Trust Fund (.2% of the taxes collected), effective July 1, 2004, for every dollar of taxable sales price of an item, approximately 0.501 cents is deposited into the Trust Fund. The Local Government Half -Cent Sales Tax Revenues are distributed from the Trust Fund on a morithly basis to participating units of local government in accordance with Part VI, Chapter 218, Florida Statutes (the "Sales Tax Act"). Florida law also allows counties to impose a sales surtax of up to 1% to fund infrastructure improvements upon approval by a vote of the electors. As of October 1, 2001, the Trust Fund began receiving a portion of certain taxes imposed by the State on the sales of communication services (the "CST Revenues") pursuant to Chapter 202, Florida Statutes. Accordingly, moneys distributed from the Trust Fund now consist of funds derived from both general sales tax proceeds and CST Revenues required to be deposited into the Trust Fund. The Local Government Half -Cent Sales Tax collected within a county and distributed to local government units is distributed among the county and the municipalities therein in accordance with the 26 following formula: County Share (percentage of total Half -Cent = unincorporated + 2/3 incorporated Sales Tax receipts) area population area population Municipality Share (percentage of total Half -Cent = Sales Tax receipts) total county + 2/3 incorporated population area population municipality population total county + 2/3 incorporated population area population For purposes of the foregoing formula, "population" is based upon the latest official State estimate of population certified prior to the beginning of the local government fiscal year. Should any unincorporated area of Miami -Dade County become incorporated as a municipality, the share of the Local Government Half - Cent Sales Tax received by Miami -Dade County and the City would be reduced. The Local Government Half -Cent Sales Tax is distributed from the Trust Fund on a monthly basis to participating units of local government. The Half -Cent Sales Tax Act permits the City to pledge its share of the Local Government Half -Cent Sales Tax for the payment of principal of and interest on any capital project. To be eligible to participate in the Local Government Half -Cent Sales Tax, the counties and municipalities must comply with certain requirements set forth in the Half -Cent Sales Tax Act. These requirements include those concerning the reporting and auditing of its finances, the levying of ad valorem taxes or receipt of other revenue sources, and certifying certain requirements pertaining to the employment and compensation of law enforcement officers, the employment of fire fighters, the auditing of certain dependent special districts, and the method of fixing millage rates for the levying of ad valorem taxes. Although the Half -Cent Sales Tax Act, does not impose any limitation upon the number of years during which the City can receive distribution of the Local Government Half -Cent Sales Tax from the Trust Fund, there may be future amendments to the Half -Cent Sales Tax. To be eligible to participate in the Trust Fund in future years, the City must comply with certain eligibility and reporting requirements of Chapter 218, Part VI, Florida Statutes, otherwise, the City will not be entitled to any Trust Fund distributions for twelve (12) months following a "determination of noncompliance" by the State Department or Revenue. Licenses and Permits These are revenues derived from the issuance of local licenses and permits, including professional and occupational licenses required for the privilege of engaging in certain trades, occupations and other activities. 27 Charges for Services Charges for various services provided by the City to residents, property owners, and grants received from other governments, including the following: • General Government: all money resulting from charges for current services; i.e., photographs, reports and ordinances. • Public Safety: fees for police services, fire protection services and emergency services. • Physical Environment: charges include cemetery fees. • Building and Zoning Inspections: fees for inspections such as plumbing, electrical, elevator and mechanical inspections. • Marina Fees: all fees associated with operations of the various City marinas, • Recreational and Special Events: fees for parks and recreation activities and events. • Other: fees for services not specifically mentioned above, i.e., engineering services, public hearing fees. Other Revenue and Financing Sources • This category includes a variety of revenues and transfers from other funds, including: • Interest earnings on invested funds. • Fines and forfeitures imposed by local courts. 28 The following table represents the City's determination of legallyavailable non -ad valorem revenues for the Fiscal Years Ending September 30, 2001-September 30, 2005. THE CITY OF MIAMI, FLORIDA LEGALLY AVAILABLE NON -AD VALOREM FUNDS YEAR ENDED SEPTEMBER 30t'' Revenues: Franchise and Utility Taxes Licenses and Permits: Business Licenses and Permits Construction Permits Total Licenses and Permits Intergovernmental: State and Revenue Sharing Half -Cent Sales Tax Fine and Forfeitures Other Total Intergovernmental Charges for Services: Engineering Services Public Safety Recreation Other Total Charges for Services Interest Income Other Component Units Operating Transfers In Proceeds from State of Florida Transfers In Total Sources of Legally Available Non- Ad Valorem Funds 2001 2002 2003 2004 2005 $19,081,242 $15,775,689 $31,556,387 $34,988,629 $35,918,724 $ 5,987,513 $ 6,605,985 $ 6,925,360 $ 6,975,040 $ 7,817,841 14, 346, 019 14, 770, 008 14,544,613 16,036,648 19,576,586 $20,333,532 $21,375,993 $21,469,973 $23,011,688 $27,394,427 $ 8,008,077 21,901,606 4,818,554 3,778,563 $38,506,800 $14,061,255 7,309,338 209,945 62,753, 739 $84,334,277 $ 8,172,375 20,910,283 4,051,483 11,369,009 $44,503,150 $11,639,867 10,906,517 487,479 72,545,573 $95,579,436 $ 9,217,247 21,213,998 5,049,412 13,640,279 $49,120,936 $45,392,136 11,366,612 581,244 28, 842,835 $86,182,827 $15,909,309 $10,102,103 $7,280,372 $ 5,506,192 $ 5,371,152 $3,688,147 $ 2,410,000 $ 2,255,454 $ 1,708,642 $10,418,123 $13,002,038 21,819,892 22,802,208 4,732,357 4,980,002 17,022,799 13,986,248 $53,993,171 $54,770,496 $46,495,695 $50,264,889 9,947,278 10,429,442 572,253 451,451 30,575,808 30,833,674 $87,591,034 $91,979,456 $5,438,411 $4,404,529 $5,828,412 $3,949,489 $ 1,982,616 $ 1,887,466 $39,959,469 $45,111,061 $47,691,802 $47,417,878 $41,596,608 $226,040,821 $240,074,038 $199,298,642 $260,251,789 $261,901,195 29 The following table represents current debt service on obligations payable from legally available non -ad valorem revenues as of September 30, 2005 (excluding the Series 2006 Bonds). CITY OF MIAMI, FLORIDA SCHEDULE OF PRINCIPAL & INTEREST FOR NON -AD VALOREM REVENUE BONDS AND LOANS Fiscal Year Ending September 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Total Principal Interest Total $ 8,795,771.00 $ 12,584,508.21 $ 21,380,279.21 9,713,753.00 12,370,216,76 22,083,969.76 11,726,363.25 12,114, 312.01 23,840,675.26 10,335,758.40 11,853,454.86 22,189,213.26 10,714,628.50 11,514,681.26 22,229,309.76 10,466,810.20 11,152,195.06 21,619,005.26 10,847,515.30 10,526,753.46 21,374,268.76 8,806,229.50 10,103,404.32 18,909,633.82 9,136,160.00 9,624,330.26 18,760,490.26 7,054,406.90 8,872,709.36 15,927,116,26 6,765,000.00 3,971,638.76 10,736,638.76 6,450,000.00 3,592,076.76 10,042,076.76 6,820,000.00 3,216,565.76 10,036,565.76 4,520,000.00 2,874,456.26 7,394,456.26 4,830,000,00 2,567,643.76 7,397,643.76 5,155,000.00 2,238,723,76 7,393,723.76 5,505,000.00 1,885,890.00 7,390,890.00 5,885,000.00 1,506,790.00 7,391,790.00 6,285,000.00 1,101,040.00 7,376,040.00 6,720,000.00 666,840.00 7,386,840.00 5,610,000.00 201,960.00 5,811,960.00 $162,142,396.05 $134,540,190.62 $296,682,586.67 As described herein, the obligation and the ability of the City to budget and appropriate non -ad vaIoiem revenues is subject to a variety of factors, including the obligation of the City to provide essential governmental services and the obligation of the City to have a balanced budget. 30 Non -Ad Valorem Funds Available to Pay Debt Service Debt Service (OM 200% Debt Service THE CITY OF MIAMI, FLORIDA HISTORICAL ANTI -DILUTION TEST YEAR ENDED SEPTEMBER 30th 2001 20Q2 2003 $226,040,821 $ 20,767,527 $ 41,535,054 Coverage 5.44 (1)Debt Service is based on the maximum estimated annual loan payments on the Sunshine Loans during the remaining fiscal years until the date of maturity of such loans and maximum annual debt service on bonds or other debt obligations payable from Non -Ad Valorem revenues outstanding as of September 3061, including Series 1995 Bonds. $240,074,038 $ 22,198,698 $ 44,397,396 $250,581,519 $ 21,807,281 $ 43,614,562 2004 $260,251,789 $ 21,725,438 $ 43,450,876 5.41 5.75 5.99 (Wadable Interest Rate Debt on the Sunshine Loans is calculated at 15% which is the maximum rate pursuant to the covenants of loan agreements securing the debt of Sunshine State Governmental Financing Commission. 2005 $261,901,194 $ 21,046,555 $ 42,093,110 6.22 Special Investment Considerations As described above, the City's covenant to budget and appropriate Non -Ad Valorem Funds does not constitute a lien, either legal or equitable, on any of the City's revenues. The amount of such revenues available to make payments on the Series 2006 Bonds may be effectively limited by the requirement for a balanced budget, funding requirements for essential governmental services of the City, and the inability of the City to expend revenues not appropriated or in excess of funds actually available after the use of such funds to satisfy obligations having an express lien or pledge on such funds. All of these factors may limit the availability of Non -Ad Valorem Funds available to pay a portion of the debt service on the Series 2006 Bonds. In addition, there can be no certainty as to the outcome of any judicial proceedings to enforce the City's obligation to appropriate such funds. Furthermore, the City is not restricted in its ability (1) to pledge such revenues for other purposes or to issue additional debt specifically secured by such revenues or by a covenant similar to that securing the Series 2006 Bonds or (2) to reduce or discontinue services that generate Non -Ad Valorem Funds. All of these factors may limit the availability of Non -Ad Valorem Funds available to pay a portion of the Debt Service on the Series 2006 Bonds and Other Bond Service Charges. In addition, there can be no certainty as to the outcome of any judicial proceedings to enforce the City's obligation to appropriate such funds. Creation of Funds and Accounts Current Debt Service Fund. The Master Indenture creates the Current Debt Service Fund and provides that the moneys and Eligible Investments therein shall be used solely and exclusively for the payment of Debt Service as it becomes due on each Interest Payment Date, at stated maturity, by redemption or pursuant to any Amortization Requirements, provided, that moneys therein shall also be used to pay Payment Obligations payable to Credit Facility Providers with respect to amounts advanced under Credit Facilities (but not with respect to amounts advanced under Reserve Facilities) and to make Hedge Payments (but not 31 Hedge Termination Payments). The Current Debt Service Fund is pledged for such purposes. The City will withdraw from the Current Debt Service Fund moneys which are available therein for the purpose of paying, and which are sufficient to pay, the aforesaid amounts as they become due and payable (whether on each Interest Payment Date, at stated maturity, by redemption, acceleration or otherwise). The City covenants that it will so notify the Trustee and the Paying Agent at least five (5) days before any Principal or interest Payment Date, if the amounts in the Current Debt Service Fund are not sufficient to pay the Debt Service coming due on such date, the amount of such shortfall and whether such shortfall will necessitate a draw or advance of funds under any Credit Facility (which shall be identified) or arty Reserve Facility (which shall be identified), or both. Proceeds Fund. The Series 2006 Indenture creates the Proceeds Fund for the purpose of securing and assuring the proper expenditure of the proceeds of the Series 2006 Bonds and creates therein a Cost of Issuance Account and an Escrow Account to which, respectively, the City will deposit amounts sufficient to pay the costs of issuance of the Series 2006 Bonds and to pay at redemption the principal of, redemption premium and interest on the Refunded Bonds. The City anticipates, that the moneys deposited in the Proceeds Funds will be expended simultaneously with the issuance of the Series 2006 Bonds and will not be available at any time to pay Debt Service. Additional Bonds Payable from Covenant Revenues Additional Bonds payable from Covenant Revenues and investment income thereon in the Current Debt Service Fund may only be issued if the City is then able to issue additional debt payable from Non -Ad Valorem Funds, as described below. Additional Debt Payable from Non -Ad Valorem Funds The City will not issue additional obligations (Additional Bonds and additional parity debt) payable from the Non -Ad Valorem Funds of the City, or any portion thereof, or voluntarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or other charge on its legally available Non -Ad Valorem Funds, in each case, having priority to or being on a parity with the City's obligation to budget and appropriate legally available Non -Ad Valorem Funds for the payment of the Series 2006 Bonds, except to the extent permitted and upon the terms and conditions specified in the Master Indenture. The City will not issue any Additional Bonds under the Master Indenture on a parity with the Series 2006 Bonds or any Parity Debt or any additional Priority Debt unless the City shall have complied with the conditions set forth below. (1) There shall have been obtained and filed with the Trustee a letter of an independent certified public accountant evidencing that the total amount of legally available Non -Ad Valorem Funds received by the City for the most recent Fiscal Year for which audited financial statements are available were: (a) at least 2.00 times the Maximum Annual Debt Service on all Bonds issued under the Master Indenture, all Parity Debt and all Priority Debt (collectively "Included Debt") which will be outstanding immediately after the issuance of the Included Debt proposed to be issued, and (b) evidencing that any other financial tests required for the issuance of Included Debt contained in any ordinance, resolution, instrument or agreement of the City will be met; in connection with clause (b) above, such letter may rely on a written opinion of the City Attorney which sets forth in the body thereof or in attachments thereto, such financial tests. 32 (2) The Trustee will have received a certificate of the Finance Director certifying that: (A) the City is not in default in the performance of any of the covenants and obligations assumed by it under the Master Indenture or under any ordinance, resolution or other enabling instrument of the City pursuant to which outstanding included Debt has been issued, and (B) all payments required to have been made into the Funds and Accounts provided by the Master Indenture, any Series Indenture or by such other ordinance, resolution or enabling instrument shall have been made in full to the extent required. (3) The City Attorney will have delivered to the Trustee a written opinion to the effect that the issuance of such additional Included Debt has been duly authorized and that all conditions precedent to the delivery of such additional Included Debt have been fulfilled. CIaims The Series 2006 Bonds, all Additional Bonds issued pursuant to the Master Indenture and any other Parity Debt payable from legally available Non -Ad Valorem Funds, regardless of the time or times of their issuance shall have an equal claim for payment therefrom equally without preference of the Series 2006 Bonds or any Additional Bonds over any other Parity Debt, except to the extent that Non -Ad Valorem Funds have been pledged to the payment of any Additional Bonds or other indebtedness of the City; provided, however, that any Parity Debt not issued as Bonds under the Master Indenture will not be secured by or have any lien on the Covenant Revenues, the Current Debt Service Fund or any Special Fund or any money or investments held therein and, provided further, that if a Special Fund or an Account or subaccount therein is established for a particular purpose the moneys and investments therein and investment income thereon shall be applied only as provided in the Series Indenture that created such Special Fund. Pledge of Non -Ad Valorem Funds No specific source of Designated Revenues or Non -Ad Valorem Funds are pledged to the payment of the Series 2006 Bonds. Certain sources of Non -Ad Valorem Funds are pledged for the payment of other indebtedness of the City as shown herein. Future issues of Bonds and future issues of other indebtedness of the City may be secured by a pledge of Non -Ad Valorem Funds as described below. Pledge of Designated Revenues If the conditions set forth below are met, the Series Indenture under which particular Bonds are issued may pledge to the payment of any or all of such particular Bonds all, or any portion, of any one or more of the Designated Revenues: All Bonds which are designated in the Series Indenture under which they are issued as being secured by a pledge of any source of Designated Revenues or portion thereof shall, together with any other Bonds and Parity Debt secured by such source of Designated Revenues be equally and ratably secured by the pledge of such Pledged Revenues. Any pledge of any one or more Designated Revenues to the payment of any Bonds shall be subject and subordinate to any previously issued and outstanding Priority Debt and any Priority Debt thereafter issued which is secured by a pledge of or lien upon such source of Designated Revenues. None of the Designated Revenues or any other source or sources of Non -Ad Valorem Funds shall be 33 pledged to secure the payment of any particular Bonds or Included Debt unless such pledge is necessary (and only to the extent such pledge thereof is necessary) to obtain an investment grade rating for such particular Bonds from one or more of S & P, Moody's or Fitch, which ever shall actually rate such Bonds. In the event any such Designated Revenues are pledged to secure any particular Bonds, the necessity for such pledge (and for the extent of such pledge) shall be established by either (i) a letter, rating commitment or certificate of such Rating Agency, a copy of which shall be delivered to Bond Counsel which is serving in connection with the issuance of such particular Bonds or Included Debt (a copy of which will be included in the transcript of proceedings for such particular issue of Bonds or Insured Debt) prior to or contemporaneously with the issuance of such particular Bonds or Included Debt, stating that such pledge is a condition to the issuance of such rating or (ii) if the particular issue of Bonds or Included Debt is to be rated on the basis of a Credit Facility and has no independent rating, the necessity for such pledge shall be established by a letter, commitment or certificate of Provider of such Credit Facility, a copy of which shall be delivered to the Bond Counsel which is serving in connections with the issuance of such particular issue of Bonds or Included Debt, stating that such pledge is a condition to the issuance of such Credit Facility, SWAP TRANSACTION On November 15, 2004, the City entered into a swaption with Morgan Stanley Capital Services, Inc. ("Morgan Stanley") as a means to lock in the rate associated with refunding of the Refunded Bonds. The City sold to Morgan Stanley the right to enter into an interest rate swap agreement in exchange for annual payments from December 1, 2005 through December 1, 2025. Morgan Stanley has exercised its option, so that the swap becomes effective on December 1, 2006. At this date, the City will deliver the Series 2006 Bonds and enter into the swap. Under the swap, the City will pay a fixed rate of _% and receive a floating rate based on the one -month Libor. [Remainder of this page intentionally left blank.] 34 THE CITY OF MIAMI Background Now 110 years old, the City is part of the nation's eleventh largest metropolitan area. Incorporated in 1896, the City is the only municipality conceived and founded by a woman - Julia Tuttle. According to the U.S, Census Bureau, the City's population in 2004 was 378,654 people. Today it is a city rich in cultural and ethnic diversity with more than 386,417 residents, 58.2% of them foreign born. In physical size the City is not large, encompassing only 34.3 square miles. In population, the City is the largest of the 35 municipalities that make up Miami -Dade County and is the county seat. For additional information concerning the City, see "APPENDIX A - GENERAL INFORMATION REGARDING THE CITY OF MIAMI." City Government Since 1997, the City has been governed by a form of government known as the "Mayor -Commissioner plan." There are five Commissioners elected from designated districts within the City. The Mayor is elected at large every four years. As official head of the City, the Mayor has veto authority over actions of the Commission. The Mayor appoints the City Manager who functions as chief administrative officer. The Mayor of the City is presently Manuel A. Diaz whose term expires November 2009. The current members of the City Commission and expiration of their current terms of office are: Commission Members Angel Gonzalez, Chairman Joe M. Sanchez, Vice Chairman Tomas P. Regalado Michelle Spence -Jones Linda M. Haskins Date Term Expires November 2007 November 2009 November 2007 November 2009 November 2007 The City Manager, Pedro G. Hernandez, is a full-time employee and is the chief administrative officer of the City. The City Manager is responsible for directing the administrative and operational aspects of the City in compliance with the policies set by the Commission and the Mayor. Mr. Hernandez has been City Manager since July 2006. He is responsible for an organization that has more than employees and administers a budget of more than $ million. Prior to his current position, he served as Deputy County Manager and was charged with the oversight of the Departments of Aviation, Police, Corrections, Juvenile Services, Fire Rescue, Emergency Management, Homeland Security and the Office of the Medical Examiner. He also served as liaison to the Ethics Commission, Clerk of Courts, International Trade Consortium and the planning committee for the Super Bowl. He holds a Bachelors of Science Degree in Civil Engineering from the University of Miami and is a registered Professional Engineer in the State of Florida. The City's Assistant City Manager for Strategic Planning, Budgeting and Performance is Larry Spring and he is currently serving as Interim Chief Financial Officer. He oversees the development and maintenance of performance indicator systems whereby department performance can be monitored and provide for budget accountability. He was appointed the Assistant City Manager for Strategic Planning, 35 Budgeting and Performance in February 2005 interim Chief Financial Officer in 2006. Prior to that, he was Vice President and Controller of TOTALBANK in Miami. He holds a degree in from University. He is also licensed as a CPA in the State of [and is a member of the Florida Government Finance Officers Association]. The City's Finance Director is Diana M. Gomez. She reports to the Chief Financial Officer, She is responsible for managing and investing public funds, accounts payable, general ledger, grants monitoring, payroll, treasury management and preparation of routine accounting reports as well as the City's annual financial statement. Ms. Gomez was appointed as the Finance Director on February 11, 2006. Ms. Gomez has been Assistant Director of Finance/Comptroller since her employment with the City on August 27, 2001. Prior to joining the City, Ms. Gomez was a Supervising Senior Auditor/C.P.A. for five years with KPMG LLP, one of the "big four" accounting firms. Ms. Gomez received a Bachelor of Arts in Psychology from Rutgers College, N.J., a Masters in Business Administration in Professional Accounting from the University of Baltimore, M.D. She is a Certified Public Accountant. 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 primary objective of the investment program is the safety of the principal of those funds within the portfolios. Investment transactions shall seek to keep capital losses at a minimum, whether they are from securities defaults or erosion of market value. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. The portfolios are required to be managed in such a manner that funds are available to meet reasonably anticipated cash flow requirements in an orderly manner. 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 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 36 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, 2005, approximately 90% of the City's investment portfolio was invested in United States Treasury Obligation and obligations of agencies of the United States Government. Approximately 10% of the City's investment portfolio 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 who 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. 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. The finance committee has approved the Series 2006 Bonds and their negotiated sale to the Underwriter. 37 Capital Improvement Plan The City's fiscal year 2005-2006 five year Capital Improvement Plan (the "Capital Plan"), covering the period from October 1, 2005 through September 30, 2011, has earmarked funding estimated at $780.3 million for 519 projects throughout the City. Streets and sidewalks projects account for the largest portion of the total Capital Plan funding at $319.9 million 41%. Parks and recreation projects are the second largest, accounting for $136.6 million, or 17.5%, and public facilities projects are the third largest accounting for $93.8 million, or 12%, of the total Capital Plan. City bonds represent the largest share of funding for the Capital Plan, accounting for 49.9% of the value. Capital project revenues (impact fees, storm water utilities, optional gas tax, etc.) account for 30.4 %, funding derived from Miami -Dade County accounts for 13% and the remaining 6.7% of funding is from federal, State and other private donations. Fiscal and Accounting Procedures The accounts of the City are organized on the basis of funds or account groups, each of which is considered a separate accounting entity in accordance with generally accepted accounting principles, as defined by the Governmental Accounting Standards Board ("GASB"). The operation of each fund is accounted for in a separate self -balancing set of accounts which comprise its assets and other debits, liabilities, fund equities and other credits, revenues and expenditures. individual funds that have similar characteristics are combined into fund types. For the past 2 years the City has received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada. For a complete description of the fund types and account groups, see Notes to General Purpose Financial Statements of the City in Appendix 13 herein. General Fund The General Fund is the general operating fund of the City. It accounts for all financial resources except for those required to be accounted for in another fund. The largest source of revenue in this fund is generated from ad valorem taxation. 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 five years of balanced budgets, the City has rebuilt its reserves. Operations will be removed from the General Fund only when they cart be operated as true enterprise operations. 38 The following chart shows information regarding the General Fund over the five year period ending September 30, 2005. Summary Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) for the General Fund and Fund Balance (Deficit) Beginning of Year Revenues Taxes Franchise Fees/Other Taxes Licenses and permits Fines and forfeitures Intergovernmental Charges for services Fines and forfeitures Interest Other Total Revenues Expenditures General government Planning & development Community development Community redevelopment areas Public works Public safety Public facilities Parks and recreation Risk management Pensions(2) Organizational supportm Non-departmental(2) Debt Service: Principal Interest and Other Charges Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other financing sources and (uses): Operating transfers in Operating transfers out Fiscal Year Ended September 30th 2001 2002 2003 2004 $119,683,851 19, 081,242 20,333,532 33,688,246 84,334,277 4,818,554 15,909,309 5,506,192 $303,355,203 $151,466,110 82,420,792 21,375,993 7,873,608 119,200,594 112,810,566 14,361,868 2,518,983 11,819,604 $523,848,118 $165,276,692 90,536,519 21,469,973 6,171,539 95,596,305 98,801,168 12,869,537 1,016,942 9,518,349 $501,257,024 $186,501,954 102,811,047 23,011,688 5,649,452 124,153,113 102,172,563 9,054,422 3,743,183 15,370,429 $572,467,851 2005 $208,091,814 92,714,383 27,394,427 5,777,697 161,745,250 110,483,424 8,715,234 9,256,637 5,721,312 $629,900,178 $24,592,817 5,759,424 40,975,451 132, 844,965 4,547,020 9,358,344 33,305, 868 18,653,241 23,148,843 7,891,729 $301,077,702 2,277,501 42, 369,469 32,934,411 90,559, 876 8,697, 063 47,497,163 6,055,846 46,334,524 181,544,596 7,926,285 12,920,245 23,073,400 19,336,603 45,276,403 $489,222,004 34,626,114 142,497,540 (142,497,540) 39 79,149,782 10,060, 699 32,025,868 6,935,388 50,591,533 209,518,537 7,867,401 14,987,253 22,056,400 17,834,229 42,570,640 $493,597,730 7,659,294 71,744,631 12,420,765 39,073,478 4,610,070 56,926,608 265,574,068 10,243,068 16,682,057 19,839,464 22,694,233 54,707,004 $574,516,251 (2,048,400) 162,945,393 224,948,344 (162,945,393) (224,948,344) 44,713,551 12,858,675 57,803,782 4,608,027 48,266,766 222,377,919 11,426,487 17,261,022 29,162,254 73,862,309 23,917,033 12,926,933 18,770,229 21,822,857 94,680,930 $694,458,774 (64,558,596) 204,015,209 (204,015,209) Refunding Bonds Issued 73,575,000 47,070,000 4,180,000 Payments to Refunded Bond Escrow Agent (69,980,000) (46,592,593) (4,062,502) Bonds Issued 155,130,087 Capital Leases - 3,204,349 Sale of Capital Assets - 500,000 Total other financing sources, net 9,435,058 158,725,087 477,407 3,321,847 500,000 Net Change in Fund Balances 193,351,201 8,136,701 1,273,447 (64,058,596) Debt Service as Percentage of Non - Capital Expenditure 9.55% 8.84% 8.18% 6.76% Source: The City of Miami, Florida Data not available prior to fiscal 2002 implementation of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. E) The City, in the 2005 fiscal year, revised the reporting for these functions in the governmental funds. Previously, these amounts were included in other functions. Recent Financial Developments [TO COME] Indebtedness of the City Pursuant to the Debt Management Policy, the City's debt issuance is subject to the following constraints: (i) the Net Debt Per Capita and the Net Debt to Taxable Assessed Value percentages, which shall be determined by the finance committee by bench marking the City to current industry standards, and (ii) the maximum maturity shall be the earlier of (a) the estimated useful life of the capital improvements being financed or (b) thirty years or (c) in the event 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. 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 hi -weekly basis. The City's elected officials participate in a single employer defined benefit non-contributory pension plan under the administration and management of a separate Board of Trustees, the City of Miami Elected Officers' Retirement Trust ("EORT"). This plan covers all elected officials with 10 or more years of elected service. City employees are required to contribute 10% of their salary to GESE and no more than 7% to FIFO. 40 The EORT is a non-contributory plan. Contributions from employees for FIPO and GESE are recorded in the period the City makes payroll deductions from participants. The City is annually required to contribute such amounts as necessary on an actuarial basis to provide FIPO and GESE with assets sufficient to meet the benefits to be paid. The ordinance covering the FIPO (the "Pension Ordinance") provides for actuarial methodology for evaluating assets to be a moving market value averaged over three years. The result cannot be greater than 100 percent of market value or less than 80 percent of market value. The Pension Ordinance also provides for the FIPO Board of Trustees' actuary to use the actuarial assumptions adopted the FIPO Board. Currently, the City and the FIPO are in discussions regarding the amount needed for contribution. However, if the City's actuary and the FIPO's actuary cannot agree, together they may appoint a third independent actuary. The third actuary is required to submit a funding recommendation to the FIPO Board and the City Commission. The City Commission is then required to fund the amount recommended by either the FIPO's actuary or the City's actuary, whichever recommendation is closer to the recommendation of the third actuary. The City's net pension obligation for the FIPO, GESE and the EORT are $0. The annual pension costs have been fully contributed by the City for the fiscal years ended September 30, 2003, 2004 and 2005. Additionally, the City has established a qualified governmental excess benefit plan to continue to cover the difference between the allowable pension to be paid and the amount of the defined benefits so the benefits for eligible members are not diminished by the changes in the Internal Revenue Code (the GESE Excess Plan"). Plan members are not required to contribute to the GESE Excess Plan. The payment of the City's contribution of the excess retirement benefit is funded from the City's General Fund and paid annually at the same time as the City's annual contribution to normal pension costs. The City's net pension obligation for the GESE Excess Plan as of September 30, 2005 was $3,265,393 and the annual pension costs have been fully contributed by the City for the fiscal years ended September 30, 2003, 2004 and 2005. Accrued Compensated Absences. Under terms of Civil Service regulations, labor contracts and administrative policy, City employees are granted vacation and sick leave in varying amounts. Additionally, certain overtime hours can be accrued and carried forward as earned time off. Unused vacation and sick time is payable upon separation from service, subject to various limitations depending upon the employee's seniority and civil service classification. The amount accrued is currently $ The City has set aside $ in the budget for fiscal year 2007 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. Other Postemployment Benefits. In accordance with Section 112.0801, the City provides medial coverage and life benefits to its retirees. Although not required by law, the City pays a portion of such cost of participation for its retirees. As with all governmental entities providing similar plans, the City will be required to comply with the Governmental Accounting Standard's Board Statement No. 45 — Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions ("GASB 45") no later than its fiscal year ending September 30, 2007. The City has historically. accounted for its other post employment benefit ("OPEB") contributions on a pay as you go basis. GASB 45 applies accounting methodology similar to that used for pension liabilities to OPEB and attempts to more fully reveal the costs of employment by requiring governmental units to include future OPEB costs in their financial statements. While GASB 45 requires recognition and disclosure of the unfunded OPEB liability, there is no requirement that the liability of such plan be funded. The City has not yet retained an actuary to review its OPEB liabilities. While the City does not know 41 at this time what its OPEB liabilities will be in connection with GASB 45 compliance in the future or the amount it will budget in future years, it expects its OPEB liability to be significant, but manageable within its normal budgeting process. FUTURE BORROWINGS The City expects to issue debt within the next twelve months to provide for additional capital improvements within the City in an aggregate principal amount of $ . Such debt may or may not pledge certain revenues which make up the City's Non -Ad Valorem Funds. LEGAL MATTERS Certain legal matters incident to the validity of the Series 2006 Bonds are subject to the approval of Squire, Sanders & Dempsey L.L.P., Bond Counsel, Miami, Florida whose approving opinion in the form attached hereto as "APPENDIX D - FORM OF BOND COUNSEL OPINION" will be furnished without charge to the purchasers of the Series 2006 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 Jorge L. Fernandez, Esq., City Attorney, and by Bryant Miller Olive P.A., Miami, Florida, Disclosure Counsel to the City. Certain legal matters will be passed upon for the Underwriter by Broad and Cassel, Orlando, Florida. LITIGATION [To be updated] 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 2006 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. DISCLOSURE REQUIRED BY FLORIDA BLUE SKY REGULATIONS Rule 69W-400.003, Rules of Government Securities, promulgated by the Office of Financial Regulation of the Financial Services Commission, under Section 517.051(1), Florida Statutes ("Rule 69W- 400.003"), requires the City to disclose each and every default as to the payment of principal and interest with respectto obligations issued by the City after December 31, 1975. Rule 69W-400.003 further provides, however, that if the City in good faith believes that such disclosures would not be considered material by a reasonable investor, such disclosures may be omitted. The City has not defaulted on the payment of principal 42 or interest with respect to obligations issued by the City after December 31, 1975. TAX MATTERS General In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law interest on the Series 2006 Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Series 2006 Bonds and the income thereon are exempt from taxation under the laws of the State of Florida, except estate taxes imposed by Chapter 198, Florida Statutes, as amended, and net income and franchise taxes imposed by Chapter 220, Florida Statutes, as amended. Bond Counsel will express no opinion as to any other tax consequences regarding the Series 2006 Bonds. NO ATTEMPT HAS BEEN MADE TO COMPLY WITH CERTAIN REQUIREMENTS RELATING TO THE EXCLUSION FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES OF INTEREST ON THE SERIES 2006 BONDS. NO OPINION IS RENDERED WITH RESPECT TO THE EXCLUSION OF INTEREST ON THE SERIES 2006 BONDS FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES OR AS TO ANY FEDERAL TAX CONSEQUENCES OF OWNERSHIP OF THE SERIES 2006 BONDS. EACH PURCHASER SHOULD CONSULT ITS OWN TAX ADVISOR TO DETERMINE THE FEDERAL TAX CONSEQUENCES OF OWNING THE SERIES 2006 BONDS. RATINGS Moody's Investor's Service ("Moody's"), and Standard & Poor's Ratings Services ("S&P") have assigned their municipal bond ratings of and "," respectively, to the Series 2006 Bonds with the understanding that upon delivery of the Series 2006 Bonds, the municipal bond insurance policy will be issued by the Insurer. The ratings reflect only the views of said rating agencies and an explanation of the ratings may be obtained only from said rating agencies. There is no assurance that such ratings will continue for any given period of time or that they will not be lowered or withdrawn entirely by the rating agencies, or any of them, if in their judgment, circumstances so warrant. A downward change in or withdrawal of any of such ratings, may have an adverse effect on the market price of the Series 2006 Bonds. FINANCIAL ADVISOR The City has retained First Southwest Company as Financial Advisor in connection with the City's financing plans and with respect to the authorization and issuance of the Series 2006 Bonds. The Financial Advisor did not participate in the underwriting of the Series 2006 Bonds, AUDITED FINANCIAL STATEMENTS The Comprehensive Annual Financial Report of the City for the fiscal year ended September 30, 2005 (the "Audited Financial Statements"), and report thereon of the City are attached hereto as "APPENDIX C - COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF MIAMI FOR FISCAL YEAR ENDED SEPTEMBER 30, 2005" as a part of this Official Statement have been audited by Rachlin Cohen & Holtz LLP, 43 independent certified public accountants, as set forth in their report dated April 13, 2006, whose report is also appended hereto as part of said APPENDIX C. Rachlin Cohen & Holtz LLP has not participated in the preparation or review of this Official Statement. The Audited Financial Statements are attached hereto as a matter of public record. Such statements speak only as of September 30, 2005. CONTINUING DISCLOSURE The City has covenanted for the benefit of the Series 2006 Bondholders to provide certain financial information and operating data relating to the City and the Series 2006 Bonds in each year (the "Annual Report"), and to provide notices of the occurrence of certain enumerated material events. Such covenant shall only apply so long as the Series 2006 Bonds remain outstanding under the Indenture. The covenant shall also cease upon the termination of the continuing disclosure requirements of Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Rule"), by legislative, judicial or administrative action. The Annual Report will be filed by the City with each Nationally Recognized Municipal Securities Information Repository (the "NRMSIRs") described in the Form of Disclosure Dissemination Agent Agreement attached hereto as APPENDIX F, as well as any state information depository that is subsequently established in the State of Florida (the "SID" ). The notices of material events will be filed by the City with the NRMSIRs or the Municipal Securities Rulemaking Board, and with the SID, if any. The specific nature of the information to be contained in the Annual Report and the notices of material events are described in "APPENDIX F - FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT" attached hereto, which shall be executed by Citizens at the time of issuance of the Series 2006 Bonds. Failure of the City to comply with the provisions of the Disclosure Dissemination Agent Agreement shall not constitute an event of default under the Indenture. It is the position of the City that the sole and exclusive remedy of any Series 2006 Bondholder for enforcement of the provisions of the Disclosure Dissemination Agent Agreement shall be an action of mandamus or specific performance to cause the City to comply with its obligations thereunder. These covenants have been made in order to assist the Underwriter in complying with the Rule. UNDERWRITING The Series 2006 Bonds are being purchased by the Morgan Stanley & Co. Incorporated (the "Underwriter") at an aggregate purchase price of $ (the par amount of the Series 2006 Bonds, less Underwriter's discount of $ ). The Underwriter's obligations are subject to certain conditions precedent described in the Remarketing Agreement entered into between the City and the Underwriter, and they will be obligated to purchase all of the Series 2006 Bonds if arty Series 2006 Bonds are purchased. The Series 2006 Bonds may be offered and sold to certain dealers (including dealers depositing such Series 2006 Bonds into investment trusts) at prices lower than such public offering prices, and such public offering prices may be changed, from time to time, by the Underwriter. CONTINGENT FEES The City has retained Bond Counsel, Financial Advisor and Disclosure Counsel with respect to the authorization, sale, execution and delivery of the Series 2006 Bonds. Payment of the fees of such professionals and an underwriting discount to the Underwriter are each contingent upon the issuance of the Series 2006 Bonds. 44 ENFORCEABILITY OF REMEDIES The remedies available to the owners of the Series 2006 Bonds upon an event of default under the Resolution and the Municipal Bond Insurance Policy are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically the federal bankruptcy code, the remedies specified by the Indenture, the Series 2006 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 2006 Bonds, including Bond Counsel's approving opinion, will be qualified, as to the enforceability of the remedies provided in the various legal instruments, by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors enacted before or after such delivery. ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT The references, excerpts, and summaries of all documents, statutes, and information concerning the City and certain reports and statistical data referred to herein do not purport to be complete, comprehensive and definitive and each such summary and reference is qualified in its entirety by reference to each such document for full and complete statements of all matters of fact relating to the Series 2006 Bonds, the security for the payment of the Series 2006 Bonds and the rights and obligations of the owners thereof and to each such statute, report or instrument. The appendices attached hereto are integral parts of this Official Statement and must be read in their entirety together with all foregoing statements. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder is to create, under any circumstances, any implication that there has been no change in the affairs of the City from the date hereof. FORWARD -LOOKING STATEMENTS This Official Statement contains certain "forward -looking statements" concerning the City's operations, performance and financial condition, including its future economic performance, plans and objectives and the likelihood of success in developing and expanding. These statements are based upon a number of assumptions and estimates which are subject to significant uncertainties, many of which are beyond the control of theCity. 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 2006 Bonds. 45